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Business Review
-

Social SecurityBenefits Continue to Rise,
But So Do Revenue Needs
District AgricultureExpansion in Beef Cattle
Leads Advance in 1971

December 1971
---.~

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

Social Security-

Benefits Continue to Rise,
But So Do Revenue Needs
Social Security is now firmly implanted as an institutional feature
of the American fiscal and political
structure. With more than 26
lllillion people drawing benefits
under the program, it provides
one of the primary means of supPort for a group almost 30 percent
as large as the civilian labor force.
. Last June, these recipientsretired workers and their wives,
Widows and widowers, and disabled workers and dependent
~hildren-received a 10-percent
Increase in benefits, retroactive to
~anuary 1. The increase, the fourth
SInce 1965, added about $3.6 billion to the annual flow of transfer
Payments under Social Security.
Revenue to finance the increase
~as raised through another boost
In payroll taxes. The tax rate has
been raised six times since 1961,
and the amount of maximum earnings subject to Social Security
taxes has been raised twice.
liow the system works
The Social Security system is a
C~lllbination of old-age, survivors',

dIsability, and health insuranceoften referred to as OASDHI. ProViding only old-age retirement
benefits when it was established
.
In 1935, the system has since been
greatly expanded in both the types
of Workers covered and the bene~ts provided. Benefits were added
or dependents and survivors in
1939, disabled workers in 1956,
and dependents of disabled workers in 1958. Health insurance for
?ld people (Medicare) was added
In 1965.
Originally conceived as an insurance program, with individual
Contributions treated as premiums
that would be invested to build up
nUsiness Review / December 1971

equity for eventual payment of
benefits, Social Security has long
since developed into a program of
taxation and expenditure for the
redistribution of income from the
working population to the retired
and disabled and their dependent
survivors. Where a sizable surplus
was accumulated ·in the early years
of the program and invested in
Government securities, the program now operates on a pay-asyou-go basis-with current benefits
paid from current revenues. Although a large trust fund is still
maintained as a backup to the program and this fund continues to
grow, it would no longer be enough
to pay benefits at current rates for
more than about a year.
A worker becomes eligible for
protection merely by taking
employment covered by Social
Security. Nine out of ten jobs are
covered. In most cases, coverage is
compulsory, with workers paying
taxes out of their wages (or selfemployment income) up to an
annual maximum set by law (currently, a wage of $7,800) and
employers matching the contributions of their employees.
Although there are maximum
and minimum payment levels,
monthly cash benefits to workers
and their dependents (or sur-

vivors) are based generally on a

~orker's earnings over the years of
~lS covered employment. For prac-

tICally all workers claiming retirement benefits, covered earnings are
averaged for the years from 1950
through the year before the worker
reaches retirement age, which is
ordinarily 65 for men and 62 for
women. The worker's five years of
lowest earnings are dropped before
his average monthly earnings are
computed.
A man receives the maximum
benefit for his average earnings
when he retires at age 65. If he retires earlier, his benefit is reduced
five-ninths of a percent for every
month he receives retirement benefits before age 65. If he retires at
62 (the earliest age for claiming
retirement benefits), payments
amount to only 80 percent of his
maximum potential benefits. Wives
usually receive benefits amounting
to 50 percent of the benefits their
husbands receive. Beginning at age
62, widows receive 82.5 percent.
The program is supported by a
tax on earnings (mostly wages and
salaries), but not on total income.
Fringe benefits and such nonwage
sources of personal income as
dividends, rents, and interest are
not taxed. As a result, the $504
billion in wages earned in covered

FINANCIAL STATUS OF SOCIAL SECURITY PROGRAMS1
(Million doll ars)

Item

Total receipts· .. . . .. .. ..
Total expenditures' ......
Accumulated trust funds ..

1950

1955

$2,367
784
12,893

$5,525
4,427
21,141

FIscal years
1960

$11,394
11 ,606
22,996

1965

1970

$17,681
17,456
22,187

$41,740
35,228
40,397

1. Includes old-age and survIvors' Insurance for all years, dIsabilIty Insurance sInce 1956, and health
Insurance sInce 1965
2. Includes payroll taxes, Interest earned from trust fund assets, and transfers from general revenue
3. Includes cash benefits, rehabilitatIon servIces, payments for servIces, and admInIstrative expenses
SOURCE: SocIal Security Admlnlstral/on

1

employment in 1969 (the latest
year for which data are available)
made up slightly less than 68 percent of personal income that year.
Also, not all earnings in covered
employment are taxed-only those
up to the maximum wage and
salary base. Earnings subject to
the Social Security tax amounted
to only 80 percent of total earnings
in covered employment in 1969.
The benefit side
Increases in retirement and disability benefits in recent years have
been substantial-for every level of
earnings. Through amendments to
the Social Security Act, the whole
scale of benefits was raised in 1965,
1967 (effective in 1968), 1969 (effective in 1970), and 1971. As a
result, workers earning average

monthly incomes between $100
and $400 are eligible for"
about 53
percent more benefits than ten
years ago. The minimum benefit a
worker can receive (based currently on average earnings of less
than $76 a month) has increased
76 percent. The maximum has increased 172 percent.
The increase in the maximum
benefit reflects more than acrossthe-board boosts in payments.
Amendments in 1965 and 1967 also
increased the amount of earnings
subject to the Social Security tax,
allowing the increase to be included
in the determination of average
covered earnings. Up through 1965,
the maximum single benefit, $127 a
month, went to workers with covered earnings averaging $400 a
month. But the amendment that

Amendments raise Social Security payments
and increase amount of earnings covered
MONTHLY BENEFITS
$280--------------------------------------------~----

230------------------------------------

180 ------------------------

130 -------------

80=~~
30~I-----rI----~I----~I------I~----TI----~I------r1

o

$100

$200

$300

$400

$500

AVERAGE MONTHLY COVERED EARNINGS
SOURCE: Social Security Administration

2

$600

$700

year raised maximum taxable earnings to $550 a month, boosting
maximum benefits for that average
level of earnings to $168. The
amendment in 1967 raised maximum taxable earnings to $650 and
maximum benefits to $218.
Although still based on average
covered earnings of $650 a month,
the maximum benefit is now
$275.80. And next year, when
maximum taxable earnings are
scheduled to rise to $750 a month,
maximum benefits will move up to
$295.40.
Increases in maximum benefits
tied to higher levels of earnings do
not, of course, affect the benefits of
workers already retired. Their
benefits are based on earnings
during their working years. MainlY,
the increases affect younger work-

SOCIAL SECURITY TAXES
ers. By the time they retire, they
have qualified for benefits based on
Maximum annual l ax
Tax ral e
higher average levels of earnings.
Employer
Employer· employee
Tax
Selfand
With the increases of recent
Selfbase
Period
Each
Combined
employe d
employee
employed
years-both from the upward ad$4,800
3.0%
1961 .. . . ...
6.0%
4.5%
$144.00
Justment in benefits and from new
$216.00
4,800
3.125
1962 . . . .
6.25
4.7
150.00
225.60
recipients qualifying for higher
4,800
3.625
1963-65 . .. .
7.25
5.4
174.00
259.20
benefits on the basis of higher
6,600
4.2
8.4
1966 . . . . . . .
6.15
277.20
405.90
6,600
4.4
8.8
1967 .... . . .
6.4
earnings-average monthly pay290.40
422.40
7,800
4.4
8.8
1968 . . . . . . .
6.4
343.20
ments to retired workers (the
499.20
7,800
4.8
9.6
1969-70 ....
6.9
374.40
538.20
largest group of Social Security
7,800
5.2
10.4
7.5
1971
405.60
585.00
recipients) have been pushed up9,000
5.2
10.4
7.5
1972' .. . . . .
468.00
675.00
1
ward. Where benefits to retired
1. Schedul ed to go Into effecl on January 1
~orkers averaged $75.65 a month
SOURCES : Social Security Admini stration
Federal Reserve Bank of Dallas
In 1961, they averaged $118.10 in
1970. And the increase in benefits
increase has been from 6.0 percent
in 1971 brought average payments sistent inflation. Even with periodic increases in Social Security
to lOA percent. The rate for selfto about $131. The total increase
employed workers increased from
since 1961-a rise of mqre than $55 benefits, recipients are totally dependent on legislation to adjust
4.5 percent to 7.5 percent. The
a month-represents a compound
the benefit scale to changes in price latest increases were in January
annual rate of growth of nearly 6
1971, when the employer-employee
levels.
percent.
rate went up from 4.8 percent and
These increases brought a
The revenue side
the self-employed rate went up
worker that retired (or was disfrom 6.9 percent.
To keep the program on a pay-asabled) in the early 1960's with
The tax rate applied only to the
you-go basis, revenues flowing into
average covered·earnings of $300
first $4,800 of annual earnings in
the system have had to be in~ month an increase of 53 percent
creased as benefits were raised. The 1961, but the tax base was raised
In current-dollar benefits-an adto $6,600 in 1966 and $7,800 in
vance from $105 a month ten years additional revenue has come pri1968. Existing legislation calls for
marily from changes in the tax
ago to $160.90 today. But in real
the base to rise to $9,000 in Janbase and tax rate. The amount of
purchasing power, this worker's
uary 1972, although with current
maximum earnings on which the
Increase amounted to only 13
Government attitudes, this inSocial Security tax is paid was
percent ($15.35 at mid-1971) . In
crease may be postponed.
raised 62 percent between 1965
fact, measured in 1967 dollars,
With the increases already in
and 1971, while the tax rate was
" rea I" b enefits through 1969 actueffect, the maximum liability of
raised about 70 percent.
ally declined $1.43. For this
covered workers has climbed
Revenues have also increased
Worker, all the increase in real
steadily. Employers and employees
with expansion in the number of
bUYing power was achieved in the
workers covered by Social Security, were each subject to a maximum of
pa~t two years. Advancing prices
$144 ~ year in Social Security
but since most major working
~UICkly wiped out the gains made
taxes III 1961,. By 1967, this liagroups are already covered, the
In 1965 and 1968. And further
bility had more than doubled
increase from this source has been
pr~ce increases could wipe out the
reaching $290.40. In 1971 th~
fairly modest. In recent years, in
gaInS made in 1970 and 1971.
.
'
maX
Imum climbed to $405.60-an
fact, the number of workers covThis, of course, points up the
increase of 181 percent since 1961
ered has increased only about in
problems of retired people in genAnd if the base is raised in J an- .
line with growth in the labor force.
eral. Living on fixed incomesuary, the maximum tax liability
Six increases since 1961 have
Whether from pensions, annuities,
brought the tax rate from 3 percent will reach $468 next year.
or earnings from capital-they face
Where self-employed workers
of basic earnings to 5.2 percent.
drastic reductions in real income
covered by Social Security were
As this rate must be paid by both
and value of accumulated wealth
liable for a maximum annual tax
employer and employee, the total
when forced to contend with per-

--

1. The gap between average benefi ts received by men a nd women has narrowed. Where benefits ~o men were 87 percent higher t han those to women in
1961, t hey w ere 29 percent higher in 1970. The shift, however, has r esulted not from cha nges In t he p rogl'8m but from women remuining in t he
labor force longer and Qua lifying for higher-payinll' jobs.

Busmess Review /
.

December 1971

3

Buying power of Social Security benefits
eventually outpaces growth in real wages
1961=100

130-------------------------------------------------------

125-----------------------------------------------/ t!
120-----------------------------------------------

~

115---------------------------------------------110------------------___- - - - - - - - - - /
105 -----------:::..",~------- -""w:::--------- , -----------------100-- - - - -________~~-----------------------------RETIREMENT BENEFITS
95~----rl--~I--~~--r---~I----~I--~I--~I----TI--~1

'61

Year

1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971

'62

'63

'64

'65

Average monthly
retirement benefits
Current
Constant
dollars
dollars1

$75.65
76.19
76.88
77.87
83.92
84.35
85.37
98.86
100.40
118.10
131.00e

$84.43
84.09
83.84
83.82
88.80
86.78
85.37
94.88
91.44
101.55
107.90e

'66

'67

'68

'69

'70

Average weekly earnings of
private nonagricultural workers
Manufacturing workers
All workers
Current
Current
Constant
Constant
dollars
dollars1
dollars
dollars1

$82.60
85.91
88.46
91 .33
95.06
98.82
101.84
107.73
114.61
119.46
' 127.57

$92.19
94.82
96.47
98.31
100.59
101.67
101.84
103.39
104.38
102.71
2105.00

$92.34
96.56
99.63
102.97
107.53
112.34
114.90
122.51
129.51
133.73
' 143.51

$103.06
106.58
108.65
11 0. 84
113.79
115.58
114.90
117.57
117.95
114.99
2118.12

1. Adju sted to 1967 consumer prices
2. June figure
e-Estlmated
NOTE : Retirement beneflls based on Social Security payments to single workers retiring at age 65.
Earn ings of workers based on wages of nonsupervlsory production workers.
SOURCES : Bureau of Labor Statistics
Social Security Administration
Federal Reserve Bank of Dallas

4

'71

of $216 in 1961, they were liable
for a maximum of $585 in 1971.
And their tax is scheduled to reach
$675 in 1972.
While much of the tax increase
has been needed to finance general
increases in benefits, other factors
have also been at work. Benefits
have been extended to some
workers that had not contributed
significantly to the program. In the
midsixties, for example, a special
monthly retirement benefit was
provided for people at least 72
years old and not otherwise qualified for Social Security benefits.
Also, with the creation of health
insurance in the form of Medicare,
a whole new area of coverage was
added, requiring still more revenue
so that coverage could be extended
to retired people immediately.
The matter of adequacy
Despite the increases in Social
Security benefits since the midsixties, there may still be some
doubt about the adequacy of benefits to meet current living costs.
The level of income considered
adequate for people that do not
work and must rely, even partly, on
Social Security benefits has never
been determined. And without
such a standard, it is hard to say
how close these benefits come to
meeting the needs of the retired
and disabled workers. But since
Social Security benefits are broadly viewed as a means of partially
compensating for the wages a

worker loses when he retires or
becomes disabled, the success of
the program can be partially
checked by comparing trends in
benefits with trends in earnings of
workers.
In real purchasing power, average Social Security benefits have
increased more than earnings of
private nonagricultural workers
since the early 1960's. Compared
with an increase of 27 percent in
monthly Social Security benefits
through mid-1971, real average
weekly earnings of production
workers had increased about 14
percent.
There were marked differences
in the timing of these advances,
however. Most of the increase in
real average earnings was made
between 1961 and 1966, when
consumer prices were not rising
rapidly and most of the currentdollar wage increases represented
real income gains. By contrast,
real average Social Security retirement benefits rose only slightly
during that time, lagging well
behind gains in the purchasing
power of average wages.

Business Review I December 1971

But increases in Social Security
benefits after 1967 pushed up the
real value of Social Security payments at a time when real wages
were growing slowly. Real wages,
in fact, declined during the recession of 1970-a year of sharp boosts
in Social Security benefits. And
benefits were boosted again this
year, even though real wages were
advancing only slowly.
New developments possible
Although most of the original features of Social Security are still
recognizable, changes have been
extensive in recent years-so much
so, in fact, that proposals for further change in one form or another
have become regular items on the
congressional calendar. Congress
is currently considering a range of
further modifications in the program-several of which could be
enacted in the next few years.
One proposal increases the minimum benefit for qualified workers
from $70.40 a month to $100. An
estimated third of all Social Security recipients now receive less than
$100 a month. Another proposal

increases the amount recipients
can eru:n from part-time jobs without losmg benefits. Earnings up to
$1,680 a year are now allowed.
Another cuts the reduction in
benefits men must take when retiring before age 65. And still
another ties benefits to increases in
the consumer price index.
This last change, proposed as a
means of maintaining the real income of recipients, would be similar to the cost-of-living escalation
clauses in some collective bargaining contracts. A corresponding
change has also been proposed f0r
the maximum salary base on which
Social Security taxes are collected.
With tax increases also tied to increases in consumer prices, new
revenues could be generated to pay
for the cost-of-living increases in
benefits.
But even if none of these changes
is enacted soon, developments of
the past decade clearly indicate an
uptrend in both benefits and taxes
-a trend very apt to continue in
the years ahead.
-Leonard G. Bower

5

District Agriculture-

Expansion in Beef Cattle
Leads Advance in 1971
Agricultural production in states of
the Eleventh Federal Reserve
District continued to advance in
1971-despite the drouth. Although
lack of moisture in the first half
of the year slowed crop production,
total agricultural output from
these five southwestern statesLouisiana, Texas, Oklahoma, New
Mexico, and Arizona-rose with
the increase in livestock production. Although milk and pork
production made sizable contributions to the advance, most of the
gain was in cattle, especially fed
cattle.
Feeding margins-the spread
between the selling price for
finished animals and the buying
price for feeder calves-improved
sharply this year, giving new
impetus to the cattle feeding
industry in the Southwest. After
the high costs of feeders and
capital slowed growth of the industry last year, cattle feeding has
expanded rapidly in the District's
four main cattle feeding states. By
midyear, Texas had replaced Iowa
as the nation's number one cattle
feeding state. And with nearly 2.5
million head on feed in Texas,
Oklahoma, New Mexico, and
Arizona, these four states accounted for nearly a fourth of the
cattle on feed in the 23 major
feeding states.
Drouth conditions in the first
half of the year led to sharp setbacks in the production of winter
Wheat, oats, barley, and rye crops.
But with improvements in moisture conditions after midyear
helping boost production of cotton,
rice, and several minor crops,
estimates are for total crop production in the five states to be about
5 percent below that in 1970.
6

Cattle on feed in Southwest
boosted by growth in Texas
MILLION HEAD

3 ------------

2------------

1 -----------------------

o

I

1970

1971

SOURCE: U.s. Department of Agriculture

With the rise in total agricultural production, gross farm
income in these states probably
advanced in 1971. But with the
rise in production costs, net farm
income probably changed very
little. A strong demand for grain
and cotton combined with a
reduction in stocks to raise the
index of prices farmers in the
Southwest received for their crops.
And with the continued growth in
demand for beef, prices received for
beef cattle held up very well, even
in the face of expanding produc-

tion. The same was true for milk
prices. Because of large supplies,
however, prices of most other livestock and livestock products,
including poultry, dropped below
levels of a year before.
Crop production off
With the cotton crop in these
states expected to total 4.6 million
bales, prospects are for the District's most important crop to be
only 2 percent larger than last
year. If realized, this will be the
largest cotton crop since 1968,
when the harvest reached 5.2
million bales. The increase is due
mainly to a gain in average lint .
yield. Acreage for harvest is about
the same as last year, but the
harvest has been improved by the
shifting of some cotton acreage to
the District's more productive
areas. In Texas, below-average
yields in some dryland areas will
probably be more than offset by
above-average yields in irrigated
areas in the western part of the
state.
Although the grain sorghum
acreage for harvest is 5 percent
greater than last year, drouth in
the early part of this year has cut
yields in some areas, leaving the
expected crop at 383 million
bushels-only slightly less than in
1970 and well below the record of
409 million bushels set in 1967.
Compared with 1970, the winter
wheat crop dropped about a third.
With a reduction in harvested
acreage and a,drop in yield, this
year's crop of 115 million bushels
was only slightly more than half
as large as the 1969 crop. Much
of the loss in Texas was due to
extremely dry weather during the
planting and growing seasons.

Drouth in first half of year reduces
winter wheat and small-grain harvests,
cutting Southwest ' s total crop production
PERCENT CHANGE , 1971 FROM 1970

PEANUTS
SORGHUM GRAIN

WINTER WHEAT

OATS
RICE

I
-80

I
-60

-40

I

-20

I

o

I
20

I

40

I
60

I

80

1971 indicated November1
SOURCE: U.S. Department of A9,riculture

Rice acreage in Louisiana and
Texas is about the same as last
year, but prospects are for a
~oderately larger crop. Most of the
ll1crease comes from the sharp
gain in average yield in Texasprobably about 5,000 pounds per
acre, compared with 4,450 pounds
last year. In Louisiana, the
average yield was expected to ease
downward from 3,900 pounds per
acre last year to 3,850 this year.
Prospects for most minor crops
are mixed. The outlook is for
production of corn, peanuts,
pecans, and soybeans to show
gains over last year. Production of
hay is expected to be near last
year's crop. And smaller'crops are
Seen for oats, barley, rye, flaxseed,
and potatoes.
Citrus crops in Texas and
Arizona are ex~ected to total 21.6
million boxes this season, or about
3 percent fewer than in 1970. The
outlook in Arizona is for the orange
crop to be down sharply and
Business Review I December 1971

In response to the growth in urban
population, milk production in
these states increased 4 percent
this year.
. But while growth in beef production was greater than in 1970 the
increase was due mainly to the
Livestock production up
greater utilization of existing
Expanded cattle production in the feedlots. The increase in number
five states will help boost livestock of feedlots-a trend that has
production 7 percent above its level characterized livestock developments in the Southwest for several
in 1970-a significant gain, since
livestock accounts for more than 60 years-apparently slowed. In Texas
'
for example, 98 percent of the
percent of the agriculture of the
cattle on feed were in 195 lots with
Southwest. Cattle in these states
average capacities of nearly 11,500
numbered more than 22 million
head. On average, these lots were
head at the beginning of the year,
operating at only 70 percent of
compared with 21.6 million a year
before. And by the end of 1971, the capacity, indicating substantial
increases in beef production could
number is expected to increase
be handled without increases in
another half million.
Most of this advance has been in feedlot capacities.
Many cattle operations were
beef herds, which have been exhindered, of course, by the drouth
panded to meet the increased
which encouraged early placement
demand for feeder calves in the
of calves into feedlots and exten.District. But there has also been
sive culling of herds. The situation
a slight increase in dairy herds.
grapefruit production to be off
moderately. Prospects are for the
orange crop in Texas to be about
the same as last year. The harvest
of Texas grapefruit is likely to be
off some.

7

Hog production advances rapidly in 1971,
but most of the total gain in livestock
still due to region's cattle industry
PERCENT CHANGE, 1971 FROM 1970

..J-6oIWi6lllW"

MOHAIR

CATTLE AND CALVES

~~~~~~~---

TURKEYS

-.~~,.. ALL LIVESTOCK AND
I&iII~WiI LIVESTOCK PRODUCTS

I

-30

I

-20

I

-10

I

I

o

10

20

I

30

1971 partly estimated
SOURCES: U.S . Department of Agriculture
Federal Reserve Bank of Dallas

was reversed in the second half of
the year, however, as improvements in moisture conditions
brought better pastures and
brightened the outlook for winter
grazing and feed supplies.
Based on liveweight, the beef
slaughter in District states was
9 percent greater in the first nine
months of this year than in the
same period last year. This increase combined with a 21-percent
gain in the slaughter of sheep and
lambs and a similar increase in
the slaughter of hogs to give these
states an increase of 11 percent
in total red-meat production.
There were major declines in the
production of wool and mohair. As
the drouth continued into the
summer and more wool growers
gave up production in the face of
lower prices, the marketing of
sheep and lambs continued at high
levels. And although the large
lamb crop last year caused a slight
-S

increase in the number of sheep
shorn, wool production was off 4
percent this year. Part of the
decline was due to the lighter
average weight of fleece and part
was due to the slightly smaller
lamb crop resulting from the heavy
marketing of sheep. The effect of
lower prices and prolonged drouth
on mohair production was even
more pronounced. Both the
number of goats and the production of mohair were off 20 percent
from last year.
After a nearly 20-percent increase last year, turkey production
was up only 5 percent this year.
And elsewhere in poultry and eggs,
production was off. E gg production
was up in New Mexico and Oklahoma, but the increase in these
states was not enough to offset
declines in the other three states.
In reaction to extremely low
prices in the second half of 1970
and high feed costs in late 1970

and the first half of 1971, broiler
production through October was
down 5 percent from a year before.
Little change in income
Gross farm income in the five
states was probably higher than
the $7.1 billion reported for 1970.
But net income probably changed
very little from the $2.3 billion
realized last year. Reflecting strong
crop and beef prices, cash receipts
in the first nine months of this
year were 6 percent higher than in
the same period last year. Beginning in September, however, many
crop prices came under supply pressures that very probably slowed the
rise in average cash receipts for
the year.
Government crop payments in
the five states are expected to
amount to considerably less than
last year's $763 million. This decline was partly offset by other
commodity payments, however,

Crop prices received by Texas farmers
and with the drouth in the first
average sharply higher this year ...
part of the year and much flood
damage in the second bringing
1967=100
payments under emergency programs, total Government payments
are very likely to be close to the
PRICES FOR LIVESTOCK AND LIVESTOCK PRODUCTS
$811 million paid last year.
Through mid-October, the index 130 - - -, - - - - - - - - - - - - - - - - - , . , , - - -_ _
of prices received by Texas farmers
and ranchers was 5 percent more
than the average for 1970. Prices
were mixed, however. In the first
120----------' :---- 1- - - ten months of the year, prices of
all major crops were substantially
higher than in the same period a
110 - - - - - - - - - - year before. With average price
increases ranging from 5 percent
for corn to 17 percent for cotton,
the index of crop prices climbed
100------~
15 percent over the average for
1970. But while prices of cotton,
rice, and soybeans remained high,
the nation's bumper grain crop
90~I----------1-9-7-0--------.-------1-9-71-------1
has brought sharp declines since
midyear in prices of corn, sorghum,
SOURCE: U.S. Department ot Agriculture
and wheat.
By mid-October, the prices
Texas farmers and ranchers
received for their livestock were
off about 1 percent from the
average for 1970. Beef prices were
up slightly, as were milk prices.
. . . raising prices received for all products
faster than national average of prices paid
But prices for sheep, wool, hogs,
eggs, and chickens were off
1967=100
sharply. With some of these
130
declines amounting to as much as
38 percent, the livestock index
would have slipped much further
had beef and milk not accounted
for such a large proportion of
livestock production.
Even with the slippage in prices
of some crops and most livestock,
120-----------------~~~--,-------however, the index of prices received by farmers in all five states
is expected to be higher than in
1970. This is because prices for
PRICES RECEIVED FOR
cotton, rice, soybeans, beef, and
TEXAS FARM PRODUCTS
milk have all averaged higher than
a year before, and these commodities account for two-thirds of the
1971
1970
agriculture of these states.
Nationwide, the index of prices
SOURCE: U.s. Department ot Agriculture
paid by farmers and ranchers rose
about in line with inflation until

14o------------------------------------------______

Business Review I December 1971

9

May, when the index began holding steady, reflecting offsetting
increases and decreases in prices
paid. Later in the year, cheaper
feed prices and the wage-price
freeze tended to slow the rise in
prices of farm inputs. For the year
as a whole, prices paid by farmers
and ranchers in the Southwest will
probably increase less than the
prices they receive. But some farm
enterprises still face an extreme
cost-price squeeze.
Other developments
In line with the increase in beef
production, conversion of marginal
cropland to pasture continued, as
did the improvement of pastures
and the substitution of beef cattle
for other livestock operations. The
trend toward fewer and larger
farms also continued, with the rate
of decline in the number of farms
in states of the District probably
about the same as the 2 percent
reported for last year. Although
credit eased, this inducement to
consolidation was offset by uncertainties resulting from the low
prices of farm products last year
and the severity of the drouth
through the first half of this year.
With the cost of farm inputs
rising and farmers and ranchers in
the Southwest continuing to
mechanize their operations, the
use of farm credit in District states
has increased close to 10 percent
this year, compared with 8 percent
last year. All major types of farm
lending institutions showed steady
increases in their loan portfolios
throughout the first half of the
year, and this advance very
probably continued as the availability of loans improved somewhat. Insurance companies became
more active as the year progressed,
increasing their new loans considerably over the year before.
Production credit associations and
land banks also expanded their
loan volumes, as did commercial
banks.
10

The value of farm real estate
continued to rise, but the average
increase for the District-3 percent
for the year ended March I-was
much slower than the average for
the previous ten years. Arizona,
with a 4-percent decline, was the
only District state to show a loss
in average land values, although
areas of the High Plains of Texas,
where there has been concern
over the depletion of underground
water, also showed a decline in
average land prices.
Agricultural exports from the
five states rose 27 percent in fiscal
1971, reaching an estimated $980
million. Increased shipments and
higher world prices boosted the
export value of several of the
region's major crops. Exports of
cotton rose 42 percent, wheat 27
percent, and feed grains 11 percent.
But as world demand for rice
continued to fall and overseas
prices slipped still further, exports
of this crop declined 13 percent.
The outlook for 1972
Further expansion in District
agriculture is expected in the year
ahead. Prospects for the biggest
gains are still in livestock, but
with improvements in moisture
conditions, crop production can
also be expected to increase. With
ample feedlot capacity already
available and lower grain prices,
cattle feeding will probably continue its growth of the past several
years, providing cattle producers,
in turn, a good market for feeder
calves.
Cotton growers, encouraged by
higher cotton prices this year, are
bound to increase their plantings,
providing the main boost to an
expansion in crop production. With
continued favorable weather, the
District's wheat crop should be
close to normal next year. But
because of a cutback in acreage
allotments, rice production could
be lower. Little change is expected
in the grain sorghum crop.

Although several Government
crop programs have been changed
to reduce production, the upland
cotton program will be about the
same as this year-a national base
acreage allotment of 11.5 million
acres, a national average loan rate
of 19.5 cents a pound, a preliminary set-aside payment rate of
15 cents a pound, and a set-aside
requirement of 20 percent of a
farm's base acreage allotment. As
a result, a cotton grower signing
up for the 1972 program and
complying with the set-aside and
conserving base requirements for
his farm can plant the acreage he
wants, depending on his own estimate of such market considerations
as supply, demand, prices, and
prospects for alternative crops.
Because of the large grain crop
in the nation this year, the new
feed grain program has been designed to boost the set-aside of
feed grain acreage to more than
twice the 18 million acres withheld from production in 1971. The
program raises the set-aside 5
percent (to 25 percent of the base) ,
increases set-aside payments, and
includes barley as a substitute
crop. Along with other adjustments, the new program offers
incentives for farmers to set aside
acreage beyond the required 25
percent and gives them more
flexibility in choosing how many
acres they will plant and to what
crops. The national average loan
rates for grain sorghum and barley
will be slightly higher than in 1971,
but rates for corn, oats, and rye
will be the same as this year.
The rice acreage allotment has
been lowered 10 percent as a
result of several factors cutting
into the market-increasing world
production, sagging export demand
for U.S. rice, lower prices, and
slow growth in domestic demand.
The loan rate for rice, however,
remains the same as in 1971.
An above-average harvest for
the nation's wheat crop has

brought on an increase in the
set-aside acreage for wheat. Setaside requirements next year will
be 83 percent of the domestic
allotment-an increase of 8 percent
over the rate for 1971. The national
average loan rate remains the
same, however-$1.25 a bushel.
Compared with the record value
of farm shipments this year, prospects for agricultural exports from
District states next year seem dim.
Because stocks of cotton and
soybeans have declined not only
here but also abroad, exports of
these commodities will probably
remain strong. But shipments of
wheat, feed grains, and rice are
apt to be smaller, and with the
increase in world supplies of
these commodities probably de-

pressing prices, the value of
shipments could also be less.
Consolidation of agriculture
into fewer and larger commercial
operations will doubtlessly continue next year, spurred in part
by the cost-price squeeze on some
farms and ranches. Caught in this
squeeze, many growers will try to
increase their productivity by
making use of the latest technological advances-an effort that tends
to encourage larger operations.
The rate at which this long-term
trend continues will, of course,
also depend on other factors, such
as changes in land values and the
availability of farm credit.
-Carl G. Anderson, Jr.
Dale L. Stansbury

New par bank

-

The Astro Bank, Houston, Texas, an insured nonmember bank located in the
territory served by the Houston Branch of the Federal Reserve Bank of Dallas,
was added to the Par List on its opening date, October 26, 1971. The officers are:
Waddell Moursund, President, and Rodney Preuit, Jr., Vice President and Cashier.

Business Review / December 1971

11

Research Department
Federal Reserve Bank of Dallas
Station K, Dallas, Texas 75222

Federal Reserve Bank of Dallas

December 1971

Statistical Supplement to the Business Review
The oil allowable in Texas was
increased from 62.5 percent of
maximum efficient production in
November to 63 percent in December. Allowables in other producing
states of the Eleventh District were
left at November levels.
The increase in Texas caught
many oil observers by surprise.
Nominations by major purchasers
of Texas crude oil are ordinarily a
good indicator of trends in allowables, and nominations for December had dipped slightly, leading
many to expect a continued decline
in allowables from the record highs
set earlier this year.
In raising the allowable, however, the Texas Railroad Commission pointed to a reduction in
crude inventories in November. But
with imports greater than a few
months ago, the commission held
the increase to only a marginal
advance. Tanker rates have eased
and authorizations to import crude
have become more available since
international oil companies and
producing countries reached agreements on crude prices overseas.
The seasonally adjusted Texas
industrial production index slipped
slightly in October after recovering in September from a midyear
slowdown. Falling 1.4 percent from
the September level, the index, at
179.4 percent of the 1957-59 base,
showed virtually no change from a
year before. Both manufacturing
and mining contributed to the fall.
Utilities remained unchanged.
While total manufacturing fell
slightly, production of durable
goods was up 0.4 percent from a
month before. Major gains in
these industries were reported for
lumber and wood products, up 9.4
percent; stone, clay, and glass

products, up 4.4 percent; and fabricated metal products, up 4.2
percent. The only significant decline in durable goods was in
electrical machinery production,
off 3.6 percent from a month earlier. Production of transportation
equipment continued to fall behind
the level for a year. before.
A decline of 1.9 percent in the
production of nondurable goods resulted primarily from a drop in
the output of chemical and allied
products. Although higher than a
year before, production in this
industry group was 4.5 percent
less than in September. This was
the largest month-to-month change
for industries producing nondurable goods. Increases from September were reported, however, in the
production of textile mill products,
up 3.3 percent; apparel and allied
products, up 2.4 percent; and paper
and allied products, up 2.0 percent.
The drop in mining was due primarily to a cutback in the output
of crude petroleum. Crude production fell 3.6 percent to a level 10.9
percent lower than a year earlier.
Production of metal, stone, and
earth minerals was also off, lagging
behind the level of a year before.
Total nonagricultural wage and
salary employment in the five
southwestern states continued to
rise in October, advancing 0.4
percent over a month before and
1.2 percent over a year before.
Employment expanded in both
manufacturing and nonmanufacturing, with both categories showing gains of almost 2 percent over
October 1970. With nonmanufacturing industries offering 0.4 percent more jobs in October than in
September, however, these industries were still the major source of

new employment in southwestern
states this year.
Although, overall, nonmanufacturing industries increased their
employment rolls in October there
was considerable variation f;om .
industry to industry. Government
continued to provide the primary
source of jobs in the region in. .
'
creasmg Its employment 1.8 percent over the previous month. Only
two other nonmanufacturing industries showed increases in employmenirconstruction, up 0.5
percent, and trade, up 0.3 percent.
The largest decline in employment was in the transportation and
public utilities industries. Employment in this grouping fell 1.7
percent to a level 1. 7 percent
lower than in October 1970. Employment in mining also fell, dropping 0.9 percent to a level 1.9
percent lower than a year earlier.
Service and finance showed little
change from September, but employment in both was significantly
higher than a year earlier.
Registrations of new passenger
automobiles in Dallas, Fort Worth,
Houston, and San Antonio were 22
percent higher in October than in
September. Registrations were 40
percent greater than in October
1970, and cumulative registrations
for the first ten months of 1971
were 14 percent greater than for
the same period a year earlier.
Department store sales in the
Eleventh District were 8 percent
greater in the four weeks ended
November 27 than in the corresponding period a year before.
Cumulative sales through that date
were 7 percent more than a year
before.
(Continued on back page)

CONDITION STATISTICS OF WEEKLY REPORTING COMMERCIAL BANKS

Eleventh Federal Reserve District
(Thousand doll ars)
Nay. 24,
1971

Oct. 27,
1971

Nay. 25,
1970

894,195
7,056,356

486,353
7,033,190

714,950
6,320,092

3,229,393

ASSETS

3,225,233

3,003,940

Fe deral fund s sold and securities purchased
und er agreements to rese ll •• •. ...• . ... . .....
Oth er loan s and discounts, gross . ...... . ...•....

Total deposits •••••••••••• ••• ••••• • ••••••• •• • 11,103,687

----

Comm erci al and industrial loan s • • .. .... . .....
Agricultural loans, ex clud ing
certiflcates of interest •••..••••• ........•..
Loans to brokers and d eal ers for
pu rcha sing or carry ing:
U.S. Government se curiti es • • • . • . . • .... •••. .
Oth er secu rities .•• . . .•..•••••••••••••••••
Other loan s for purcha sing or carr ying :
U.S. Governm ent securities • • • ••.••••.•.. . . .
Oth er sec uriti es . .. • .. .. .. ... .. .. ..... ..•.
Loan s to nonbank flnancial Institutions:
Sal es flnanc e, p ersonal finance, factors,
and oth er business credit companies • •••••.

ecc

145,713

128,374

104,910

512
51,652

512
56,083
6,184
444,688

971
440,303

11 5,274
495,167
898,303
21,688
27,496
804,552

126,438
502,803
873,424
18,676
34,75 1
799,032

243,840
384,423
646,656
4,7 19
9,136
736,482

0
839,602
3,188,037

0
816,992
3,198,583

0
699,268
2,804,791

1,021,627
78,618
0

1,001,335
77,591
0

----

Total U.S. Governm ent securities . . . . . . . .. .. . . .

Trea sury bills • • • ••••• •• •••••• ••• •. •• ••••
Treasury certiflcates of indebtedness •• . . •.••
Trea sury notes and U .S. Governm ent
bonds maturingl

Within 1 year • •• •• ••• • • . •••••••• ••• ••.
1 year to 5 y ea rs ••••• •• ••.• • ••. •.• . ••.
After 5 years ••••••••• • •. ••• . ••••• • • • •
Obligations of state s and political subdivisions:
Tax warrants and shortaterm notes and bills...

All other ••••. •• • • • •• • •• • •••••••••••••••
Other bond s, corporate stocks, and securities:
Certiflcates representing participations in
Fed eral ag ency loans •• ••.•.•.••.. . ••. .

All other (Including corporate stocks) • •• • ••• • •
Cash items in process of collection . •••• ••••••••••
Reserves with Fe deral Reserve Bank • . .. . . ••. . • . •
Currency and coin • . • •.•• . .• ••• ••••••••• • • • . •
Balances with ban ks in the United States . . •. •• •••
Balanc es with bonks In foreign countries •• . . • .• •• •
Other a ssets (includ ing investments in subsidiaries

not consolidated) ••• • • ••••• • • •• •• • •••• • ••••

---967,903
107,665
0

150,058
631,064
161,887

153,989
642,574
127,18 1

189,804
573,294
97,140

66,896
1,923,805

117,393
1,923,565

Certifi e d and officers' ch ecks, etc .•• .. . .. . . . .
Total tim e and sovings deposits ...• .. •..•.• ...

17,976
157,733
1,284,170
1,099,912
86,775
380,655
10,726

19,537
136,753
1,432,270
1,11 1,524
99,036
425,722
12,365

83,950
101,571
1,152,191
957,386
85,111
470,36 1
9,323

486,492

483,441

States and political subdivisions ••••.•• .. • . .

U.S. Goyernm ent (including postal sayings) •• • •
Bonks in the United States •••••••• • • ••••• • •
Fore ign:
Governments, offlcial institutions, central
banks, and International institutions •• . .. .
Commercial banks . .• •••.••• • ••••• •• •••
Federa l funds purchased and securities sold
under agre ements to re purchase • • . .•.•••• •. . .
Other liabilities for borrowed money . •• • •• . • .•. •

Other liabilities • • •••• • ••••• • ••• • • •• • • ••••• .• •
Rese rve s on loans ••• ••• •• •• • ••• •• • • . ••••• .. ••
Res erves on securities •• . .•.• .. • •• ... •••••••••.
Total capital accounts . •• • •. • ••••••••• •• •• ••••

1,077,273
2,695,59 1
1,042,674
11,564
50,670

1,069,793
2,64 1,117
1,011,033
13,559
57,180

935,726
2,500,841
847,000
39,023
56,945

22,300
1,100

17,285
1,100

1,714,800
42,05 1
384,299
135,224
22,109
1,085,148

1,355,209r
108,244r
360,515
120,883
35,003
1,083,106

1,054,760
95,159
359,941
128,846
16,989
1,026,065

---- - - - - ---14,282,484

12,973.738

---14,282,484

r-Revlsed

CONDITION STATISTICS OF ALL MEMBER BANKS

Eleventh Federal Reserve District
(MIllion dollars)

Item

459,533

12,973.738

Oct. 27,
1971

Sept. 29,
1971

Oct. 28,
1970

13,497
2,337
4,437
1,717
298
1,271

14,050
2,293
4,368
1,522
288
1,206
12
1,371
978

12,191
2,116
3,612
1,357
273
1,323
10
1,243
934

ASSETS

TOTAL ASSETSe •••..•• • • •••• •••••••••

14
1,668
995
26,234

2M88

2J.Q59

1,732
9,977
9,895

1,696
9,704
9,826

1,676
8,994
8,408

Borrowings . ••••.. . . . . .......••••••••••
Other liabilities e ••••.• . .• .••..••.••••..•
Total capital accounts e • • . ••••••• . •••• • ••

21,604
1,557
1,168
1,905

21 ,226
1,788
1,177
1,897

19,078
1,046
1,102
1,833

TOTAL L
IABILITIES AND CAPITAL
ACCOUNTSe • •• ••••••• • ••• •• • •• •••

26,234

2M88

23.DS9

LIABILITIES AND CAPITAL ACCOUNTS

Eleventh Federal Reserve District

Demand d e posits of banks •• • . . • •• ... ••• .

Other de mand deposits •••.. • ••• •••••••••
Time deposits • . ....•.••••..• .... •••. . ••

(Averages of dally figures. Thousand dollars)

Total deposits• •••• •••••• •• ••••••• • •••
4 wee ks end ed

5 wee ks ended

4 w eeks end ed

Nay. 3,1971

Oct. 6,1971

Noy.4, 1970

832,331
772,824
59,507
822,485
9,846
5,018
4,828

848,695
791,066
57,629
847,075
1,620
15,275
-13,655

765,711
710,627
55,084
773,047
-7,336
1,275
-8,611

898,337
696,857
201,480
875,215
23,122
3,978
19,144

886,034
688,101
197,933
868,771
17,263
703
16,560

794,847
605,499
189,348
772,1 11
22,736
2,315
20,421

1,730,668
1,469,681
260,987
1,697,700
32,968
8,996
23,972

1,734,729
1,479,167
255,562
1,715,846
18,883
15,978
2,905

1,560,558
1,316,126
244,432
1,545,158
15,400
3,590
11,810

COUNTRY 8ANKS .•••..• • •••••.•
With Federal Reserye 8ank •• .•

2,677
24,317
87,140
4,397,920

4,007,364
346,930
101,329
1,324,301

----

RESERVE POSITIONS OF MEMBER BANKS

Currency and coin . •. ...•..•.
Required reserves ••••• •..••.. ..
Excess re serves . • . .. . ... . .... •.
Borrowing s • ••.•••••••••••••••
Free reserves . . ........ . ... . .•

3,359
31,200
96,245
4,816,082

TOTAL LIABILITIES, RESERVES, AND
CAPITAL ACCOUNTS •• • • •• • • • •• ••••• •• • 14,487,318

Balances with bonks in the United States ••••

Total reserves held •••• ......•..

6,403,442
4,562,579
250,216
136,214
1,323,629

Ind ividuals, partnerships, and corporationsl

Balances with banks in foreign countrles e • • ••
Cash Items in process of coll ection • ••• . •• . ..
Oth er ossets e • • •• ••. . . .. .• • . .•• .. • ••• ••

Currency and coin • ••.... .. • •
Re quired reserves • ••• . .. . . . ••..
Exce ss reserves • • • ..... . •. . ••••
Borrowing s •• • ••• • ••••••••• •. .
Free rese rves . . ••• ••••• •.• .• . •

10,291,978

19,800
1,100

banks, and international institutions •.•...
Comm ercial banks ••• . . . .•• . .••••. .. .•.

Loans and discounts, gross•. •..•••••• • ••••
U.S. Governm ent obligations. .•• . .• . • . • . ••
Othe r securities ..••. ...••••••••••.. .. ••.
Reserves with Fed eral Rese rve Bank • • . .... .
Cash in vault • . •... .. •. . . ••• • •.•• . • ••• . •

With Federal Rese rye Bonk •• • •

---5,894,058

42,069
1,609,298

TOTAL ASSETS . .... ... ....... ... ..... .. . 14,487,318

Total reserves held ••• ••• •••••••

11,219,524

2,800
31,764
72,BBI
4,898,672

U.S. Governm ent . •..• . •• • . •• • ••••• • •••.•
Ban ks in the United States• • .. . • • •••••• • .. .
Foreign:

Savings de posits .... . •.. . . • ..••.•• ... •.
Other time de posits . ..•. . •. . . ...• •.. . ..

Other loons ••• ••• • • • •• • • • ••••• ..• • ••••••••

RESERVE CITY BANKS

Nay. 25,
1970

4,362,001
391,882
81,722
1,261,965

Total de mand deposits . . . ... . ... • ..•. •......
Individuals, partnerships, and corporations . . ..
States and political subdivisions •... . . . . . .. .

507
44,937

6,242
420,762

Other ••• ••••.•••• • •••. •• • .• •• ••••.•••.

Ite m

-6,205,015
---

Oct. 27,
1971

Governm ents, offlciol institutions, central

Real estate loans . .. •. . •.• .•• •. ..••. • . • .. . •
Loon s to dom estic commercial banks. •.••• • •..•
Loans to foreign banks . •• • •• . •. . . • . . . . . • ... .
Consum er instalment loans .. ••.• ..• ••••• .••• •
Loans to foreign governments, offlcial
institutions, central banks, and international
institutions ...... •.•.•• ••• •••••. •• . •• . •••
Total investments . • . . ..•...• . ••.••••••.•••• . .

Nay. 24,
1971

LIABILITIES

e-Estlmated

CONDITION OF THE FEDERAL RESERVE BANK OF DALLAS
(Thousand dollars)

Item

Nay. 24,
1971

Oct. 27,
1971

Nay. 25,
1970

538,687
78,395
0
3,128,476
3,206,871
1,716,543
2,081,632

628,238
50
0
2,650,378
2,650,428
1,498,680
1,881,012

ALL MEMBER 8ANKS
Total rese rves held . .•. ... . .....

With Fe deral Reserye 80nk ••• •
Currency ond coin • ..........
Required rese rves ••••. .....•...
Exce ss reserves ••. .•.. .•.. .....
Borrowing s • •.••.... ...... . . . .
Free reserves • •. . .•. . . . .. •• ...

Total gold certlflcate reserves •. . . .... . .. . •• •
Discounts for me mb er bank s. ... •.. ...•.. . ..
Oth er discounts and advances ••• . ..•. . • ...••
U.S. Governm ent securities •••.• •.•...•...•..
Total earning assets • .. . .. . . ........ . . ••• • •
Member bank reser ve deposits ••. .... . ... •.•
Federal Re se rve notes in actua l circulation • •••.

501,083
3,700

o

3,184,146
3,187,846
1,726,269
2,087,609

BANK DEBITS, END-OF-MONTH DEPOSITS, AND DEPOSIT TURNOVER

SMSA's in Eleventh Federal Reserve District
(Dollar amounts In thousands, seasonally adjusted)
DE81TS TO DEMAND DEPOSIT ACCOUNTS'
DEMAND DEPOSITS'

Percent change

Standard metropolitan

stati stical aroa

ARIZONA, Tucson ••.••••• ••••• •• • . • •.. ..• ••••• •• • •••
LOUISIANA, Monroe ••.• •...••.• • •• ••• .• . . •• . •• .• • •• •
Shreve port . . . •..... • . .. .. .•. .. .•... . ... .

NEW MEXICO, Rosw.II' •• •••. •••• ••••. • .• ••• ••·•• • ·• •
TEXAS, Abil. ne • ...••• ••• ••• •..•• • •.• ••• .•• • .. •• ..•.
Amarillo .. . ..•..•. ... • .....•....•• ·· •· · •··· .

Austin .........................

Annual rote
of turnover

Oelob.r 1971 from

Oclober
1971
(Annual·rale
basis)

II

•••

••

•

••

••

•

Beaumont· Port Arthur-Orang e . • ... . .• . ... •• .. . . .
Brown svill e-Harlin gen-San Benito ••••• .•..•••.•.. •

Corpus Christi .... . ....... .. .. ... .. . ... . ... ...
Cors icana 2 • • • ••••• • •••• ••••••••••• • •• •• •••••

Dallas ••••• •..••.. ••• .••• •• •• •• ..• • •• •• • •·• •
EI Paso ... . ............... ...... · .. · ........
Fori Worlh •••• •• ••• •• ••••• .•• • • •• •· •• • •• ·• ••
Galveston-Texa s City . .• ... . .. . .. ... . .. . . ......
Houston •••••••••• •••••••...•••.•• . •• .• ••••••
Laredo .. . .•.••.. .•.... •.. ..••.. ...•• .. .. .•.

Lubbock . .. .. ... .. ...... .. .... .. .... ........
McAllen·Pharr·Edinburg .. ... . .. .... .. . .. ... .. ..
' Midland .... . .. ... . . ... ...... ·• ••• • ••·•• • •• .
Od essa •. ... .••. .•... .•. •.. . ···· • ···• •• · •· . .

San Ang. lo ....... . .... .... ..... • •• •• •• ••• •• ·

San Anton io ... •.. •• •. ••• .. .. ... • .. ••• .. . ....
Sh erman· Denison .. • ... • . ..• •.• • ..••.•..•...•.
Texarkana (Texa s.Arkansas) .... .. •• ••.. • .••.. ..

Tyl.r . ...... . . . ...... .. . .... ... .. • • • ••·•••• •
Waco ........ •. .. ••. ••..•••....• • •... • •. •. .

Wichita Falls.... ... .. .. .. .. .. .. . . . ...... ... ..
TOlal-28 cent.rs ......... . . .......... • • •• ••· •• • •• ..

S.plember
1971

Oelober
1970

1971 from
1970

Oclob.r 31,
1971

Oclober
1971

$7,547,208
3,238,812
11,551 ,200
974,652
2,279,964
6,622,920
11,121,780
6,276,252
2,098,968
6,525,924
427,944
131,203,632
8,251,860
23,455,632
2,784,732
114,031,548
912,852
4,622,100
1,800,420
2,144,628
1,693,968
1,3 59,204
19,607,280
1,105,920
1,465,980
2,485,332
3,396,804
2,693,808

4%
-4
-12
-7
-1
-6
-1
-5
12
3
-3
-10
-13
-15
-17
-8
-14
-19
-1
-5
-4
-5
-9
-6
-9
0
-3
2

4%
24
35
7
6
11
23
4
6
-1
2
5
10
4
-3
13
0
1
12
6
2
15
4
11
6
4
17
9

17%
21
24
8
9
9
22
8
14
22
10
11
16
20
6
13
11
12
14
7
4
19
17
7
7
7
11
13

$300,498
100,114
277,188
44,035
109,291
171,022
378,336
256,648
89,605
264,007
31,723
2,408,854
269,433
716,941
114,044
2,858,991
43,780
177,835
114,467
146,075
92,846
68,044
720,800
70,235
80,752
103,229
131,997
125,229

25.7
32.2
42.4
22.9
20.9
39.2
30.5
24.3
23.7
24.7
13.3
55.1
31.1
32.9
24.0
41.1
21.4
25.7
16.0
14.9
17.9
19.1
27.2
15.7
18.9
23.5
25.6
21.7

27.5
33.2
47.7
25.2
20.9
40.6
32.7
25.4
22.1
23.9
13.3
60.2
34.7
39.0
28.8
45.1
25.0
30.8
16.7
16.0
18.1
19.1
29.0
16.6
21.5
23.3
26.0
21.2

31.1
30.4
35.5
23.8
20.8
37.9
30.0
25.6
25.4
24.0
14.0
57.7
31.2
35.5
25.1
40.8
22.8
26.3
16.2
15.3
18.9
17.8
29.6
15.4
19.4
24.8
25.1
21.3

-9%

9%

37.7

41.2

38.6

10 months,

$381,681,324

13%

$10,266,0 19

Seplemb.r
1971

Oclob.r
1970

1. Deposits of Individuals, partnerships, and corporations and of states and political subdivisions
2. County basis

INDUSTRIAL PRODUCTION
(Seasonally adjusted Indexes)
October

BUILDING PERMITS

Percent change

Oct. 1971
from

NUM8ER

Tucson • .... . ..

10 monthl,

10 mos.
1971

Ocl.
1970

S. pl.
1971

1971 from
1970

Ocl.
1971

10 mos.
1971

Oclob. r
1971

437

6,035

$8,365

$77,122

95
584

999
5,406

881
7,106

15,943
78,986

-32
-75

-8
220

26
196

50
146
436
169
120
500
1,493
30
437
376
66
2,433
42
162
116
82
98
47
1,286
32
26
264
74

534
1,410
5,102
1,570
1,120
7,536
17,809
347
4,933
4,181
679
35,939
523
1,978
734
848
798
647
15,878
562
399
3,000
802

771
4,540
19,437
1,579
463
3,903
15,897
207
6,585
4,888
1,666
44,093
596
2,504
4,028
1,011
140
345
11,338
95
169
1,721
425

10,749
29,353
156,241
16,790
8,895
55,248
257,785
2,598
99,036
102,772
10,344
530,686
6,819
58,797
12,404
7,272
5,536
9,480
104,505
4,757
6,958
21,269
17,713

-60
-28
-45
-50
-75
-55
-57
165
-57
-69
1,191
33
28
-13
1,139
94
-89
- 32
-4
-77
-25
-28
-85

106
348
57
303
-32
-1
-53
101
28
-21
46 1
49
86
-16
2,077
90
-34
-34
23
-94
-3
5
-45

44
8
45
107
62
140
-12
-17
19
38
67
39
12
30
221
- 15

ARIZONA

29% 101%

56%

LOUISIANA
Monro e -West
Monroe •... .

Shreveporl • •••
TEXAS
Abilene •••. • ••
Amarillo ••••••
Austin • ..•••. .
Beaumont •• •••
Brownsville . • • .
Corpus Christi ••

Dalla s ••••••••
D enison . •• .. • •

EI Pa so .... ...
Fori Worlh • .• •
Galveston . .. ..
Hou ston • • ••• . .

Lar.do •• ••• ••
Lubbock • •••••
Midland ••••• •
Od ess a . •. ... .

Port Arlhur •• ••
San Ang elo ••••
San Anton io •••
Sherman • .....
Tex arkana . . .•
Waco . ...... .

Wichita Falls • ••

TOla l-26 cltlos ••• 9,601

1971

August
1971

OClober
1970

179.4
199.2
198.4
199.8
131.9
284.7

181.8
201.3
197.7
203.7
135.5
284.7

176.9r
194.8r
195.4
194.5r
132.0r
284.7r

179.3
194.3
200.6r
190.1r
142.5r
265.1r

106.3
104.9
99.1
113.4
97.8
139.7

106.1
104.0
97.5
113.5
106.3
140.5

105.3
103.6
96.6
113.5
106.0
136.9

103.7
101.4
95.7
109.7
112.4
134.0

TEXAS (1957- 59 = 100)
VALUATION (Dollar amounls in Ihousands)

Area

Septemb er

1971p

Area and type of ind.x

119,769

------$ 142,753 $1,708,058

-35%

19%

-22

0

22

-62
19
-30
63
28%

Total industrial production •• • •••
Manufacturing • •.• •• .....••.• ••

Durabl....... . ........ . .... .
Nonaurable •••••• •••• ••••••.•
Mining ......... .. .............
Utllltl.s .... .... ....... ... .....
UNITED STATES (1967 = 100)
TOlal induslrlal production ••••••
Manufacturing ••••....• •••.•...

Durable •••••• • • •••• •••• ••• ••
Nondurable ... ... ...... . . . ...
Mining ...... . .. . ..... .........
Ulilitles .. ......... . ......... ..

p-Prellmlnary
r- Revlsed
SOURCES : Board of Governors of the Federal Reserve System
Federal Rese rve Bank of Dallas

GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS

Eleventh Federal Reserve District
(Averages of dally figures. Million dollars)
GROSS DEMAND DEPOSITS
Reserve

TIME DEPOSITS

Counlry

Re serve

Date

Tolal

city banks

banks

TOlal

cily banks

Country
bank.

1969, Oclob.r • • •
1970, Oclober • ••
1971 , May • •• •.•
June . .... .
July .......
August .....
S.pl.mb.r.
October •••

10,306
10,684
11,348
11,354
11,507
11,468
11,571
11,562

4,726
4,860
5,216
5,224
5,314
5,246
5,3 11
5,246

5,580
5,824
6,132
6,130
6,193
6,222
6,260
6,316

7,223
8,317
9,516
9,573
9,588
9,615
9,735
9,977

2,646
3,305
3,688
3,691
3,696
3,714
3,769
3,819

4,577
5,012
5,828
5,882
5,892
5,901
5,966
6,158

VALUE OF CONSTRUCTION CONTRACTS

NO~AGRICULTURAL

(Million dollars)

Five Southwestern States'

EMPLOYMENT

January-October
Area and type
FIVE SOUTHWESTERN
STATES' . •••.... • . .••• . •
Resid ential building •••• •••
Nonresid e ntial building .•..
Nonbuild ing construction • . .•

UNITED STATES • . . ......•.•
Residential building ••..• ••
Nonresidential building • •• .
Nonbulld lng construction ••••

October
1971

September
1971

August
1971

1971

786
376
314
96
6,568
3,171
2,065
1,332

814
419
179
216
6,814
3,196
2,246
1,372

790
390
226
173
7,712
3,255
2,120
2,337

7,648
3,771
2,371
1,506
67,122
28,938
21 ,619
16,565

6,588
2,551
2,161
1,876
57.811
20,804
21 ,038
15,968

Percent change

1970r
Type of employment

1. Arizona, Louisiana, New Mexico, Oklahoma, and Texas
r- Re vlsed
NOTE.-Delalls may not add to totals because of rounding.
SOURCE: F. W. Dodge Division, McGraw-Hili Information Syste ms Company

Oct. 1971 from

Number of persons

October
1971p

September
1971

October
1970r

Sept.
1971

Oct.
1970

6,379,800
1,123,700
5,256,100
226,400
387,600

6,356,500
1,121,200
5,235,300
228,500
385,500

6,306,900
1,145,800
5,161,100
230,700
385,700

0.4% 1.2%
.2 -1.9
1.8
.4
-.9 -1.9
.5
.5

444,100
1,504,000
332,700
1,029,800
1,331,500

451,600
1,499,200
333,200
1,029,900
1,307,400

451,600
1,473,000
321,900
1,012,700
1,285,500

-1.7 -1.7
2.1
.3
3.4
-.2
.0
1.7
1.8% 3.6%

Total nonagricultural

wag e and salary worke rs • •
Manufacturing .• . ..... . ..
Nonmanufacturing •••• •• ••

Mining .......... . . . .. .
Construction .. • . •• •...•
Transportation and
public utilities • . • •••.•

Trade .•........ •• ••. •
Finance . . .............
Service ...... . . . . . • . • •
Governm ent . • •• . .• ....

1. Arizona, Louisiana, New Mexico, Oklahoma, and Texas
p-Prellmlnary
r-Revlsed.
SOURCE: Slate employment agencies

CROP PRODUCTION
(Thousand bushels)
TEXAS

Crop
Cotton 2 • •• • • • •• •
Corn ••.... . .. • •

Winter wheat .. ..
Oats •...• ••••• •
8arley ......... .
Rye .• .• • •••..••
Rice 3 ••• •• • • • • • •
Sorghum grain~ ••

Flaxseed • ••..•. •
Hay< .••• • ••.•.•
Peanuts 5 • •••••••

Irish patataes e . •.

~:c~~sr.~t~~~~s.e: :

Soybeans ••..•••

FIVE SOUTHWESTERN STATES'

DAILY AVERAGE PRODUCTION OF CRUDE OIL

1971,

1971,
estimated
Nov. 1

1970

1969

Nov. 1

3,132
33,120
31,416
5,994
1,320
378
23,350
318,292
70
3,776
417,150
3,779
788
25,000
4,185

3,214
32,391
54,408
29,032
4,224
566
20,782
329,616
1,125
4,037
429,930
4,593
1,040
38,000
4,424

2,859
25,124
68,856
25,460
3,290
684
21,646
309,800
1,300
3,45 1
389,070
4,437
780
23,000
7,598

4,649
44,316
115,014
11,466
22,784
1,158
43,486
382,746
70
9,817
661,310
7,026
3,988
87,000
45,894

estimated

1. Arizona, Louisiana, New Mexico, Oklahoma, and Texas
2. Thousand bales
3. Thousand bags containing 100 pounds each
4. Thousand Ions
5. Thousand ~ounds
6. Thousand undredwelght
SOURCE: U.S. Department 01 Agriculture

Credit at weekly reporting commercial banks in the Eleventh District rose considerably less than
usual in the four weeks ended
November 24. With deposits off
sharply, the rise in bank credit was
accommodated mainly through an
increase in net purchases of Federal funds.
Loan demand was weak primarily because of slack demands
from businesses, financial institutions other than banks, and
security brokers and dealers.
Demand for business loans was
down for the second consecutive
month, following a considerable

1970
4,561
43,554
169,437
38,304
33,954
1,502
41,179
386,05 1
1,125
9,811
640,196
8,075
5,205
69,700
45,413

1969
4,409
34,266
196,824
33,058
29,096
1,664
42,11 5
368,740
1,300
9,1 19
610,549
8,084
5,200
73,900
41,618

(Thou s and barrels)
Percent change from

Area

FOUR SOUTHWESTERN
STATES ... . . ...... . . .. ..
Louisiana . .. . . ..•••.• . • .•
New Mexico •.... .... . ...

Oklahoma .... .... . . . ... .
Texa s ..... .•• • • •. . •... •

Gulf Coast ............
W est Texas •• .. ..•. • . •

East Texas (proper) •....
Panhandle ... .. ..... .. .
Rest of state • ......... .

UNITED STATES . ...... . ....

October
1971

September
1971

6,678.4
2,571.6

6,816.3
2,575.9
320.3
602.0
3,318.1
670.0
1,599.0
215.0
71.0
763.1
9,482.1

316.0

592.9
3,197.9
639.9
1,550.5
205.9
68.6
733.0
9,331.5

October
1970r
7,265.3
2,687.4
342 .8
611.0
3,624.1
749.4
1,710.7
233.3
76.5
854.2
10,017.3

September

1971
-2.0%
-.2
-1.4
-1.5
-3 .6
-4.5
-3.0
-4.2
-3.4
-4.0
-1.6%

October
1970
-8.1%
-4.3
-7.8
-3.0
-11.8
-14.6
-9.4
-11.8
-10.3
-14.2
-6.9%

r-Revlsed
SOURCES: American Pelroleum Institute
U.S . Bureau of Mines
Federal Reserve Bank of Dallas

increase in these loans during the
preceding two months. Real estate
loans continued stronger than
usual, and consumer loans were up
slightly more than usual.
These banks reduced their investment portfolios somewhat in
response to the deposit outflow.
Holdings of Government issues
rose contraseasonally, however,
probably as a result of bank participation in the November refunding, prerefunding, and new cash
offerings, which, combined, totaled
about $8.6 billion. Holdings of
municipal issues declined sharply.
Although time and savings de-

posits rose more than seasonally,
there was a marked reduction in
inflows of demand deposits as
individuals and businesses made
sizable net withdrawals, causing Ii
significant contraction in total
deposits. The increase in time and
savings deposits was due largely
to a rise in consumer-type deposits.
The rise in large negotiable CD's
outstanding was about in line with
the average gain registered in
comparable periods of previous
years. In view of the decline in
total deposits, reporting banks
significantly increased their borrowings in the Eurodollar market.