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MONTHLY
REVIEW
BUSINESS
of

the

FEDERAL

RESERVE

BANK

of

Dallas

Dallas, Texas, February 1, 1948

Volume 33

Number 2

THE EUROPEAN RECOVERY PROGRAM AND ITS EFFECTS
UPON THE SOUTHWEST
R. B.

Industrial Economist
Federal Reserve Bank of Dallas
JOHNSON,

Since the end of the war, the United States has extended peacetime foreign aid on an unprecedented scale while converting its industry and attempting to satisfy accumulated domestic demands.
During the period from July 1, 1945, to June 30, 1947, $16,300,000,000 were made available to
foreign countries in the form of loans, property credits, grants, and other relief, of which $10,100,000,000 were for Great Britain and other western European countries and $2,100,000,000 for tbe rest
of the European continent. Despite this large volume of assistance, the economy of western Europe
has deteriorated, and the President of the United States has recommended authorization of an additional $17,000,000,000 to support a 4-year program of rehabilitation in that area.
The Genesis of the Aid Problem
The difficulties of the European economy which have created the need for outside aid are the
result of extensive disruption of political and economic processes as well as widespread physical destruction. The western European peoples had developed an intricate economic structure which before the
war enabled them to maintain a standard of living somewhat higher than most other parts of the
world despite the relative scantiness of the resources at their disposal. This economic organization,
founded on very productive agriculture and industry, on highly developed international trade, and
on world-wide services to other countries, achieved its productivity, however, at the price of instability. Even minor variations in the output of agriculture abroad, changes in the preferences of consumers, and vagaries in monetary policies of other countries were apt to set in motion undercurrents
of imbalance which disturbed their profitable dealings with one another and with the rest of the world.
The war destroyed the delicate equilibrium which permitted them to support superior standards
of living and advanced cultures. Nor was it possible when the war ended to reconstitute immediately
the balance between them and other countries, for the tools and skills upon which their specialties had
been constructed were impaired or destroyed, and the flow of international commerce to which they
once had contributed importantly had been diverted to new channels. When the war ended, European
transport was nearly at a standstill, iron and steel production almost completely shut off, and the
important fuel industries seriously impaired by mechanical breakdown and labor shortages. Rehabilitation efforts were retarded by Germany's inability to fulfill her prewar role as principal supplier of
many basic materials, fabricated products, and capital items. Population had been displaced, skilled
mechanics lost, and many managerial groups destroyed. Agriculture also had suffered grievous injury
through depletion of soils, liquidation of livestock, and deterioration of equipment.
Despite the many hindrances, recovery of western Europe outside the occupied areas appeared
to proceed encouragingly during the first eighteen months after the end of fighting. Industrial production was increased to near prewar levels in some countries and recovered substantially in all others.
Agricultural output was raised significantly from the low levels prevailing during the war. Generous
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

18

MONTHLY BUSINESS REVIEW

aid from the United States appeared to be assisting the European peoples in restoring economic health
outside the occupied areas more rapidly than had been anticipated.
During the winter and spring of 1946-1947, however, the encouraging trends of the preceding
eighteen months were reversed. An especially severe winter reduced already short coal supplies and
injured crops in England and throughout much of the European continent. The summer drought
which followed burned out grains and other crops, reducing yields to abnormally low levels. These
set-backs were transmitted throughout the economy of western Europe. Shortage of coal hampered
transport, reduced steel output, and thereby cut industrial operations generally; shortage of grains
further jeopardized the already low caloric diet of Europeans and contributed to unrest. It seems
likely, moreover, that the recovery trend could not have been sustained even had the winter and
summer weather been favorable, for the 1945-1946 recovery in production was achieved in large
part by depletion of stock piles and by reliance upon United States aid in forms which provided
current support but assisted very little in rehabilitation and could not be continued indefinitely.
The Proposals of the Sixteen Western European Nations
On June 5, 1947, the Secretary of State proposed that all Europe cooperate in devising a plan of
self-help which the United States might support. Russian opposition developed immediately, however,
and the nations bordering Russia did not participate in the Paris conference which was called to
develop an economic recovery plan. The sixteen European nations' which participated, and western
Germany, which was included in their general planning, have a total population of 270,000,000. They
include the areas of Europe in which industry and agriculture were most highly specialized before
the war and which in the past have been most dependent upon foreign trade. Although they perhaps
have suffered no more devastation than the eastern sections of Europe, the disruption of international
commerce has affected them more acutely, since they are not self-sufficient in agricultural products
and other raw materials. The report2 submitted to the Secretary of State by the Paris conferees
consolidated the anticipations and needs of the sixteen nations and western Germany, thus constructing
a picture of western Europe· as an integrated economy. The recovery program proposed by the report
is based upon four points:
a. A strong productive effort by the participating countries
b. Creation of internal financial stability in each country
c. Maximum cooperation between the countries
d. A solution of the problem of the participating countries'
trade deficit with the American continent.
By 1951 it is proposed that the western European area restore cereal production and increase other
foodstuff output appreciably; rehabilitate its major industries, including coal mining, electricity
generation, oil refining, and steel production, and expand their capacity considerably above prewar
levels; restore and expand inland transport and bring merchant fleets to prewar levels; and supply
from European production most of the capital equipment required by these programs.
In order to provide an environment conducive to energetic production efforts, the countries
propose to restore and maintain internal financial and monetary stability. All have been affected by
some degree of inflation, either "open" and directly reflected in rapid increases in prices, or "suppressed," in which case disparities between costs and prices, and the presence of excessive purchasing
power have caused serious disorders in the economy by reducing incentives and thus retarding production and diverting workers into unproductive trading or speculative activities. The imperative
need for diminishing inflationary pressures and providing monies which people will "seek and save"
is recognized by the conferees, but specific programs of monetary control are not advanced.
Economic cooperation also is proposed to achieve the objectives of the 4-year plan. The governments pledge themselves to abolish as soon as possible the abnormal restrictions at present hampering their mutual trade and to aim at a sound and balanced multilateral trade system. Mutual
lUnited Kingdom, Austria, Belgium, Denmark, France, Greece, Iceland, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland, and Turkey.
'Committee of European Econonllc Cooperation, Vol. I, General Report, September 21, 1947, Vol. II, Technical Reports,
July-September 1947, United States Department of State.
•"Western Europe" is a misnomer, since Greece and Turkey are included. This area is also and more properly referred to
as the CEEC countries (Le., Committee of European Economic Cooperation Countries).

MONTHLY BUSINESS REVIEW

19

cooperation is pledged also in other efforts to stimulate production, including arrangements for
free movement of labor, development of common planning for the exploitation of new sources of
electrical power, standardization of equipment, pooling of freight cars, and general exchange of
information concerning availability of various goods, particularly steel.
The core of the committee report is the estimate of imports necessary to accomplish the general
rehabilitation plan. In order to carry out the production program, the participating countries estimate that they and western Germany will need a continuous flow of goods and services from the
rest of the world. Import needs during 1948-1951
TABLE I
are estimated at $ 57,300,000,000. This import proIMPORT PROGRAM OF WESTERN EUROPE *
gram is somewhat above the normal prewar vol(Billions of dollurs at prices of J uly I, H147)
ume, and the indicated sources of goods are markl" rom Other Non-Western
From
From Rest of
Total
Euro~cl1l ('.oulltrics
Year
U.S. A.
American Continent
edly different. Before the war, some 45 per cent
13 .9
3 .2
4 .7
1949
G. O
of the participating countries' imports from the
5 .4
14. 5
104!J
5.3
3 .9
14.5
1950
4 .8
3.8
5.9
rest of the world came from the American con6. 2
14 .4
1951
4 .3
3.!l
22.2
57 . 3
tinent; it is proposed that in 1948 the proportion 1948 -1051 20.4
14. 7
*Sixteen CEEC nations (excluding their dependent territories)
be two-thirds. The change in the sources of
and Western Germany.
impo.t;ts as compared with the prewar experience,
SOURCE: Commit tee of E uropcHn Economic Cooperation.
which reflects primarily the effects of war devastation in eastern Europe and dimunition of imports from that area, the Soviet Union, and Asia, is
not expected to be permanent. A westward flow of food and agricultural and forestry products
within Europe is expected gradually to be resumed, and as rehabilitation progresses, requirements
for fuels, many capital goods, and other imports from the American continent are expected to
decline. The 4-year program, however, involves heavy dependence upon American sources, particularly the United States. Total import requirements from the United States are estimated at
about $20,400,000,000 to be distributed as follows:
42 per cent-food, fuel, and fertilizer
27 per cent-other raw materials
25 per cent-capital equipment
6 per cent-other goods.
Foods and fertilizer are placed among the most important categories of imports. Import requirements fot wheat, rye, and coarse grains are very high initially and scale down rather slowly. Important
quantities of sugar, fats and oils, meat, oil cake, fruits, and vegetables also are requested, as well as
of nitrogen fertilizer, an urgent requirement to restore the productivity of Europe's soils, which
must be imported by the western European countries in large quantities during the first two years
of the rehabilitation program in order to meet agricultural goals set by the Paris committee. Estimated
raw-material requirements from the United States
TABLE II
other than raw food and fertilizer are comparaIMPORT PROGRA:vI OF WESTERN EUROPE *
tively small, and consist principally of coal, petroFROM THE AMERICAN CONTINENT
leum, and iron and steel. Requirements for many
(Dillions of dollars at priees of July I, 1047)
other basic raw materials which must be obtained
--19018
1!l48-.1051Total
Tota.l
in part from the United States were not considu.!=l. A. America U. S. A. America
ered specifically by the technical committees of the
Food , fertilizer..... .......
1. 5
3.3
fi .4
13 .7
Coal.. ............ .. .....
0.3
0 .3
0 .7
0. 7
Paris conferees nor dealt with in detail in the Paris
Petroleum products . .. . ...
0 .5
0 .5
2 .2
2.2
report. Such commodities are included, with others,
I ro n and steel...........
0.4
0 .4
1. 2
1. 3
0 .1
0 .3
0 .4
1.0
T imber... .. . ..... . .... . .
in the miscellaneous classification of imports reE quipmclltt ... .. . ........
1. 1
1.1
3. 3
3.4
quired from the United States and are estimated
Otherimp~rtst ...........
2. 1
3.3
7 .2
12.9
Totalllnporl s........
G. O
9 .2
20.4
35.2
in Table III. Among these unclassified m aterial
Shipping serviccs. . . . . . . .
0 .6
Il.(i
1. 7
1. 7
*Sixteen CEEC naliulb (excluding thei.r dcpendeuL l.'rriturirH) requirements are included large amounts of cotand Westem Germany.
ton, some wool, nonferrous ores, and metals, hides
tSee Table 3 for detailed breakdowns.
and leather, and chemicals.
SOCRCE: Committee of European Economic Cooperation.

Another important category of imports
requested of the United States is machinery and other capital equipment. Imports of tractors, plows,
and other agricultural equipment were scheduled in large volume in the initial stages of the agricultural rehabilitation and reduced onI} a little for later years in the program. Mining equipment, petro-

20

MONTHLY BU

NESS REVIEW

leum refining equipment, and various machine ols also will be important components of imports,
if the Paris conference plan is effected. Total
TABLE III
imports of capital equipment from the AmerIMPORT REQUIREMENTS OF WESTERN EUROPE
ican continent, nearly all to be obtained in the
FROM AMERICAN COUNTRIES
United States, is set at $1,368,000,000 in 1948
Selected Categories of Commodities
and at $4,533,000,000 during the 1948-1951
(Millions of dollara)
period.
--1948----:1948-1051-Total
Total
American
U. S.
Ameriron
U.S.
In addition to these goods, various serv~ces
5,879 13,200 22,219
.
Scheduled Requirements> .. 3,800
wou Id be reqUlre d w h'ICh add to t htota 0 11 ar
e Id
Food, fuel and fertilizer .. 2,300
4,162
8,300 16,570
l
deficit in trade of the European aid countries,
Stcel, timDcr, and other
636
1,600
2,264
500
the principal service being shipping, in which
raw materials ........ .
Equipment ............ . 1,000
1,081
3,300
3,385
1,188
N.E.
370
the western European nations are deficient, in
Agricultural ......... . N.E.
220
N.E.
80
contrast with their position before the war when
Coal mining ......... . N.E .
. N.E.
Inland transport. ....
N.E.
490
203
168
N.E.
555
.they carried a very substantial part of ocean
Petroleum ....... . ... . N.E.
N.E.
100
400
N.E.
commerce,
Steel plant ... ..... .. .
Timber . .......... .. .

N.E.

10

N.E ..

32

It is the expectation of the participating
Nonprogrammed require7,170 12,750
2,059
3,255
190
countries that, if the imports indicated can be
mF~;ct~·.·. ::::::::::::::: 51
110
550
1,970
3,900
8,400
968
provided, the western European economy can be
Other raw materials ... . . .
3,000
400
600
2,000
restored by the end of 1951 to a tenable balance
~;~~...... : : : : : : : : : : : :
5
80
350
200
50
750
40
which will provide a minimum healthy standard
Hides and leather .... .
85
10
27
lO
of living for their peoples. The serious problem
~f';'i~il~' : : :: : : : : :: : 260 310 850 1,000
50
195
550
which the participating nations face is that dur~d~~·. :::::::::::::
125
1
46
350
140
280
25
85
ing the period of rehabilitation their economies
Zinc ............ ,.,.,
60
90
will not be able to supply goods and services for
Ii~~~~
102
2
300
25
235
65
930
export in sufficient volume to provide the means
Other nonferrous metals
150
200
490
715
of payment for the imports which rehabilitaOther raw materials ...
530
525
1,750
1,800
tion will require. A common account for the
~h~~~~;: ::::::::::: 15
25
70
110
participating countries and western Germany
Semlmanufactures .... .
250
370
760
1,390
Consumer goods ..... .
500
250
250
500
was prepared by the committee which shows
Ships and airplanes . .. .
9,134 20,370 34,969
deficits in their trading relations with the AmerTotal requirements ... . . .. . 5,859
ican continent of $8,040,000,000 in 1948 and
"By CEEC countries.
tEstimated by House Select Committee on Foreign Aid.
$22,440,000,000 for 1948-1951. Since such deN.E.-Not estimated; account for principal portion of total
ficits must be settled principally in dollars, the
American equipment.
.
problem of supporting the necessary imports is
SOURCES: Reports of Committec of Europenn EQonomic Coessen t'la11y a pro bl em 0 f d0 II ar aval'Iabili'ty, an,
d
operation lind Preliminary Report Nine, Breakdown of European
.
Requirements by Major Categories, House Select Committee on
ill the words of the report of the Paris conferees,
Foreign Aid.
"Unless means can be found of filling this gap,
Europe will be unable to receive the flow of goods and services which the recovery requires, and a
catastrophe will result."
Over the 4-year period, the committee estimates that under very favorable circumstances the
trade deficit with the American continent could be reduced to a point at which it could be counterbalanced by trade surpluses with other parts of the world, but attainment of this objective
would require the successful completion of the
recovery program, rapid expansion of exports to
TABLE IV
the American continent from $2,160,000,000 in
WESTERN EUROPEAN' DEFICIT WITH THE
1948 to $3,940,000,000 in 1951, and developAMERICAN CONTINENT
(Billions or dollars)
ment of a new balance of world trade in which
1948
1949
1950
1951
1948-1951
the western European nations participate at least
U.S.A .......... . 5.64
4.27
3.28
2.62
15.81
to the same degree as before the war. Meanwhile,
Rest of American
1.82
1.30
0.91
Continent .. ... . 1.94
5.97
the full trade deficit could be met only by grants
Total. . . .... . 7.58
6.09
4.58
3.53
21.78
of aid in dollar resources or in commodities,
Deficit of Depen0.26
dent Territories . 0.46
0.07
0.13t
0.66
principally by the United States, although a
Total. ...... . 8.04
6.35
4.65
3.40
22.44
small portion could be met by loans by the inter"Sixteen CEEC nations and Western Germany.
tSurplus.
national financial institutions.
SOURCE: Committee of European Economic Coopemtion.
The dollar-aid figures and the quantitative
estimates of need involve important assumptions, The dollar-import and trade-deficit figures assume

. . . ::::::::

MONTHLY BUSINESS REVIEW

21

that United States prices will decline from the level of July I, 1947, that trade with Eastern Europe
and the Orient can be revived rapidly, and that the United States will import more than formerly
from the CEEC countries.' The estimates of quantities to be imported assume that the United States
and other sources of supply will be able to produce and transport the goods which are desired. Obviously, the amount and kind of aid needed and our Nation's ability to supply it cannot be measured
exactly in advance, partly because of difficulties arising from inadequacies of data and also because
of the impossibility of anticipating all developments over a 4-year period. The general magnitude
of aid likely to be required from the United States in order to restore the European economy to a
tenable balance probably is indicated, however, by the Paris Conference estimates of need.
Appraisal of the Effects of an Aid Program Upon the American Economy

Voluminous reports have been published which appraise the foreign aid requirements, our ability
to support them, and the possible effects upon our domestic economy. The first of these reports,
issued October 9, 1947, by the Secretary of the Interior, titled National Resources and Foreign Aid,
and generally referred to as the Krug report, reviews foreign needs and United States' capacities,
but does not propose a specific program for the United States. The second, the report to the President
by the Council of Economic Advisers concerning The Impact of Foreign Aid Upon the D01nestic
Economy, submitted October 28, 1947, focuses mainly upon the effect of exports on domestic production, consumption, and price level. The third, submitted November 7, 1947, was prepared by
the President's Committee on Foreign Aid. This nonpartisan committee, appointed June 22, 1947,
to advise the President on the limitations within which the United States might safely and wisely
plan to extend economic assistance to foreign countries, consisted of twenty private citizens under
the chairmanship of the Secretary of Commerce. Its report, known as the Harriman report, complements the Krug and Council reports in that it prescribes the conditions upon which an aid program should be provided, appraises the magnitude of aid which is possible, scaling down the Paris
requests, and proposes techniques for administration of a European recovery plan.
In addition to these reports, Congressional committees have prepared analyses of the proposed
aid program and its probable effects upon the availability of specific commodities and the rate of
depletion of domestic resources. These committees also have considered various proposals for administration of an aid program.
Analysis of the. magnitude and effects of aid to western Europe obviously must leave unanswered
many questions which the aid program raises, since the course of the future is unpredictable and
the extent of American responsibility cannot be measured precisely. It is not clear, for example,
whether the European Recovery Program will be the principal obligation of our Nation abroad
during the 1948-51 period, or whether it will be necessary to supplement it with additional support
to Europe and to other areas. There is no assurance that the European Recovery Program will succeed in its broad purpose of renewing the economic vigor and the political stability of the western
European nations. The vagaries of nature and the failures of men may seriously limit the success
of the recovery plan, thus confronting the United States with perhaps still greater foreign demands.
Moreover, the long-range consequences of aid are not easily anticipated. To the extent that aid is
advanced in the form of loans, how will the indebtedness ultimately be repaid, and will it impose
a heavy debt-service burden upon western Europe which will further complicate that area's trade
balance problems? Will the international order to which an aid program may lead provide a secure
and productive world economy?
Such questions, although germane to the aid problem, at this time are imponderable. It is possible,
however, to evaluate with greatcr precision the immcdiate effects of the contemplated western European recovery plan upon the domestic economy, although here, too, definitive answers are impossible.
As the Council of Economic Advisers points out in its report, high levels of net exports have
been supported by the United States for several years, with dollar values and physical quantities
since the end of the war vastly exceeding prewar totals. The annual rate of United States exports
of goods and services to all countries reached the extraordinary figure of $19,850,000,000 during the
first six months of 1947, as compared with the 1936-1938 average of $4,100,000,000, and the export
'The CommIttee of Economic Cooperation CountrIes.

22

MONTHLY BUSINESS REVIEW

surplus of the country amounted to $11,850,000,000, as compared with $500,000,000 in the earlier
period. Thus far, however, the export surplus has not prevented attainment of record domestic levels
of real consumption and capital accumulation. In fact, shipments of goods overseas have not
excessively reduced the domestic availability of
TABLE V
goods in general, although substantial portions of
our output of wheat, fats and oils, coal, freight UNITED STATES TOTAL EXPORTS AND IMPORTS OF
GOODS AND SERVICES
cars, trucks, and steel have been exported. Nor
(Billions of dollars, annual rate)
have exports absorbed an unusually large portion
Export
U.S. Govt.
Total
Total
Exports- ImportsSurplus
rudl
of the national output. Even at the peacetime rec- 1936-38 Period
0.5
average... ...... ..
4.1
3.6
ord level of exports during the first half of 1947, 1945-Third quarter....... 13.8
6.5
5 .5
8.3
6.1
5.3
Fourth quarter....... 13.0
6.9
the export surplus accounted for only 5.3 percent
7.1
5.0
194&-First quarter....... 14.3
7.2
of the gross national product.
9 .9
6.5
Second quarter..... 16.4
6.5
7.9

5.8

Third quarter. . . . . . . 15.0
7.1
Very considerable portions of United States
4.2
7.7
Fourth quarter .. . .. 15 .3
7.6
postwar exports have been to CEEC countries. 1947-First quarter. . . . . .. 18.7
10.7
5.3
8.0
7.1
13 .0
Second quarter. . ... 21.0
8.0
During the January-June period of 1947, comlO.3
7.8
Third quarter ®..... 18 .3
8.0
modity exports to those countries were at an annual
*Include income on investments.
tExcludes Government investment in and disbursements by
rate of $ 5,922,000,000, and constituted approxithe
mately 40 per cent of all United States commodity the International Bank for Reconstruction and Development and
International Monetary Fund.
exports. The United States export balance to CEEC
®--Preliminary.
countries, supported partly by liquidations of their
SOURCE: U. S. Department of Commerce.
gold and foreign exchange holdings but principally
by United States aid, was at an annual rate of about $4,600,000,000, and constituted nearly 50 percent
of the total United States commodity export balance during the period.

The annual rate of dollar assistance to the
CEEC countries proposed by the President does not
EXPORTS AS PERCENT OF TOTAL UNITED STATES differ appreciably from the aid extended annually
OUTPUT OF SELECTED COMMODITIES·
to them since the end of the war. From July 1,
Commodity
1939
1946
19471
Meat... ....... . .... .... . ........
1.4
5.1
1.3
1945, to June 30, 1947, the United States made
Dairy products . .. .... . . . . ... .....
0.4
5.2
2.9
available to the sixteen western European countries
~~a~~~~~~.d.~~~::::::::::::::::: 1~:~ !g:~ !~:~ and Germany approximately $10,100,000,000 in
Eggs......... . ............ ......
0.1
8.9
3.4
the form of loans and property credits, grants, and
Ag~~:~~~l .~~.ch~~~ .~~~ .i~~l.":".. 16.6 15.9 N.A.
other relief, of which $770,000,000 were for the
Chemicals and related.... .... .. .. . 5 .3
6.1
N.A.
support of Germany. About $8,400,000,000 of the
Coal, anthracite..................
5.8
11.5
14.3
total were used during the period, or an annual
Coal, bituminous......... . . .. .. ...
3.0
7.7
9.6
Electrical machinery and apparatus. .
5.9
6.8
8.3
average of $4,200,000,000, as compared with the
tei~t cars ... ill···products........ . 0.7
··· ··· ·· ........ 4.4
19.5
41.0
annual rate of aid of about $4,000,000,000 proposed
urn er, saw m
2.1
4 .2
19.7
21.5
by the President. It appears, therefore, that in the
Motor trucks. .... . .. ............. 21.4
Passenger cars....................
5.7
6.7
7.7
h E
I ·f·
Crude petroleum........... . ......
5.8
2.5
2.4
aggregate t european recovery pan, 1 mauguRolled steel products..............
7.2
9.0
10 .5
rated and maintained in the form and magnitude
w:;::~ ~!'t~~~ti~~ 'h,'~~s~'~i ~~~i·C~tu~'}ProdU~k.~ prod:~t~on proposed by the President, might no more than
in case of manufactured and mined products.
continue the export surplus to western Europe
tl947 based on first six months or longer period, where avail- which has been supported recently by the United
able.
States. The aggregate dollar aid to that area would
N.A.-Not available.
SOURCES: U.S. Departments of Agriculture and Commerce
constitute only a small part of the product of the
. United States, absorbing no more than 2 or 3 percent of our national income during the life of the program.
TABLE VI

The aid program, nevertheless, would be a significant factor in the United States economy
during 1948-1951. Although the export surplus which aid would support would be small relative
to the economy's output, it would be a net withdrawal of goods from which an early return in kind
could not be expected. The withdrawals probably would be taken from the economy at a time when
resources, manpower, and facilities could be fully employed in satisfying domestic requirements, and
aid c~uld be continued, therefore, only at the cost of limiting consumption at home.
Furthermore, the effect of the program would not be distributed evenly throughout the four
years. The President has requested $6,800,000,000 to support United States aid to western Europe
from April 1, 1948, to June 30, 1949, or 40 percent of the total authorization requested· for 1948-

MONTHLY BUSINESS REVIEW

23

1951. This scheduling appears realistic. Western Europe's most acute needs probably confront the
United States now, and, it is hoped, will rapidly diminish.

In addition, the impacts of the aid program would be unevenly distributed among different commodities. The crucial immediate import needs of Europe are foods (particularly grains), fertilizer,
raw materials, and the fuels and machines with which to produce and process these products. Principal demands on the United States to fulfill European requirements will be for wheat, fertilizer,
steel, and capital equipment, especially farm machinery and other agricultural equipment, freight
cars, and mining equipment. These desired commodities, for the most part, can neither be supplied
from surpluses nor easily met by increasing production, and all are in great demand by domestic
consumers and producers. The number of direct "supply impacts" is small, but the commodities
involved are basic items of consumption or essential in the operation of our economy, and any
changes in demand for them which create supply difficulties and stimulate price increases will be
felt throughout the economy and probably transmitted to many other commodities which are not
shipped under the aid program.
As well as "supply impacts," there would be several critical "resource impacts" if high levels
of domestic activity were coupled with maintenance of an export surplus: upon land, which may
be wasted by soil erosion resulting from intensive utilization of land stimulated by high prices for
agricultural products; upon metals-particularly iron ore, copper, lead, and zinc; and upon coking
coal and petroleum.

Thus it appears that the foreign demands arising from the aid program may exer't pressures
upon the United States economy much greater than the aggregate dollar trade deficit figures indicate.
Foreign aid probably can be extended by the United States without injuring the domestic economy
if the aid program is properly devised and steps are taken in advance to counteract the effects of
intensive utilization of our productive capacity. An export surplus of the size contemplated should
not prevent continued advancement in the &"eneral standard of living of the American people unless
crop years are unfavorable or other factors retard production, although in the short run its effects
may be to slacken the speed of the advance and to maintain inflationary pressures by limiting additions to domestic supplies. As the Krug report points out, however, high levels of net exports and
domestic activity probably cannot be maintained without comprehensive programs for expanding,
developing, and replenishing our basic resources, for adding materially to our productive capacity
in key industries, and for importing raw materials where domestic supplies are inadequate.
'It is questionable whether such programs can be effected in time to assist in the foreign aid
program. Moreover, even if they could be completed in time to make a significant contribution, the
diversion of manpower and materials from production of goods for current consumption to longerrange projects might seriously curtail the output of goods available for export during the period of
most urgent need. It has been suggested, alsQ, that expansion of facilities and other enlargements
of productive capacity might over-equip the economy in terms of post-aid requirements for some
commodities.
For these reasons it has been proposed that domestic controls of various types be authorized
in anticipation of impacts arising from the aid program. The President's Council of Economic
Advisers indicates that relative shortages of specific commodities require export controls, allocations for domestic use, discouragement of misuse or excessive use, efficient transportation and distribution, and the curbing of speculation and hoarding of goods. As well, the combined impact of
foreign and domestic demand is said to require the continuation of tax revenue at present levels,
maximum economy in government expenditures, stimulation of individual saving, and the enlargement and aggressive use of measures to control dangerous expansion of credit. The Krug report
emphasizes the necessity of greater efforts i.n conservation of resources, and Congressional analyses
have strongly advised stockpiling of materials delivered by CEEC countries in partial payment of
aid extended by the United States.
Emphasis also has been placed upon the desirability of careful American government supervision of the aid program. The Harriman Committee proposes that an aid program exten ded to
Europe should be on a year-to-year basis and subject to the constant vigil and review of the United
States Congress, since changing circumstances may effect significant shifts in needs. It also proposes
direct administration of the aid program through a new federal administrative unit with a chief

24

MONTHLY BUSINESS REVIEW

representative in Europe to deal with the continuing committee set up by the participating countries and to coordinate the activities of the various local representatives of the organization in those
countries.
Implications of the Aid Program to the Southwest

The supply and resource impacts of foreign aid upon the United States inevitably will make
associated impacts upon the regional economies of the country. No section will be isolated from the
effects of continuation of a large export surplus, shifts in the character of aid as the program progresses, and termination of some types of exports when the aid program is completed. The Southwest may prove more susceptible and more responsive to these influences, however, than some other
regions, since it is an important supplier of some of the principal raw materials required by Europe
and a potential competitor with Europe for some ,scarce materials and equipment.
Perhaps the most important implication to the Southwest of the European Recovery Program
is its sustaining influence in the national and regional economies. The aid program, however, is no
guarantee against domestic readjustment. Decline in the volume of domestic expenditures for new
productive facilities and equipment, cessation of inventory accumulation and subsequent liquidation of stocks, or cutback of personal consumption expenditures could more than counterbalance
the stimulus to the economy derived from net exports created by the aid program. Moreover, variations in the quantity and character of foreign purchases may occasion severe readjustments in some
industries and in specific agricultural products during the 4-year period. Nevertheless, by providing
virtually a guaranteed market for a significant portion of the output of several basic agricultural
and industrial products, the European recovery plan will tend to offset minor, and to ameliorate
major readjustments arising from domestic influences. On the whole it may be a strong factor
in sustaining employment, demand for materials, and prices in the Nation and in the Southwest,
particularly at the inception of the program.
Maintenance of demand for agricultural products and diversion of potential agricultural surpluses abroad will tend to support higher and more stable prices for the principal a'gricultural products of the Southwest than were expected to follow the war. The foreign aid program is expected
to provide a sizable 4-year demand for wheat and other grains, among them Southwestern grain
sorghums, rice, and corn. Cotton, as an important raw material component of the aid program,
likely will be exported in volume approaching that of the 1946-1947 season, and Southwestern
vegetable oil products will find a more ready sale abroad than before the war. As well, total agricultural demands will tend to be maintained by the stimulus which domestic employment and consumer incomes derive from the production and processing of industrial commodities required in
the aid program. Thus the European Recovery Plan may be considered a stabilizing factor in agriculture, permitting Southwestern farmers to undertake improvement programs with greater assurance.
Comparable benefits also may accrue to Southwestern industry. Much of the industry of the
area is new and untested by a period of severe economic readjustment. The facility expansions of
the war are not completely assimilated into peacetime operations, and the efficiencies which are gained
by experience in operating on a large scale probably are not yet fully realized in all plants. Market
positions of many new manufacturers are still unconsolidated, and potential markets which the
plants may serve if given time are not yet developed. A sudden cutback in industrial demands
might prevent full realization of the potentials of Southwestern industry and defer for some time
further industrial growth of the region. To the extent that the aid program sustains industrial
activity, it will provide time for the consolidation of Southwestern industrial progress.
All Southwestern industries may derive benefits from the general stimulus of the aid program,
and several appear in virtually assured positions. Manufacturers of agricultural machinery and equipment already are filling foreign and domestic orders based in part upon the anticipated aid program;
producers of oilfield and refining equipment will encounter foreign demands in addition to domestic

MONTHLY BUSINESS REVIEW

25

requirements which already are taxing their capacity; new iron and steel facilities in the area may
benefit from direct orders from abroad, and certainly will participate in supplying the enlarged
domestic requirements for iron and steel created by extension of aid; producers and processors of
nonferrous metals may experience similar impacts; and the petroleum and chemical industries will
find a ready foreign market for most of their products which can be diverted from domestic channels.
Southwestern transport also will feel the impact of continuation of heavy traffic arising directly
from exports and indirectly from high levels of domestic activity created in part by export demand.
The great tonnage of cargo carried by Gulf ports in 1946 and 1947 probably will be duplicated or
exceeded while the aid program continues, and equivalent demands will face Southwestern inland
transport. Timber requirements, as dunnage and for other industrial uses, as well as for construction, will reflect the stimulus of continued foreign aid. Industrial and commercial construction
will receive indirect support from expanded needs based upon foreign market anticipations.

It should be observed that exports to western Europe will tend to deprive the Southwest of
materials and equipment needed to support its economic growth. To the extent that agricultural
machinery, equipment, and fertilizer are diverted abroad, Southwestern agriculture may be deprived
of needed supplies, and thereby may be unable to achieve the efficient levels of operation which large
domestic and foreign demands make desirable. Export of pipe and other iron and steel products
may limit expansion of the petroleum and chemical industries of the area and may curtail operation
of new metal industries. On balance, however, the Southwest probably will gain at least initially
from the support derived from the maintenance of large volumes of exports under the aid program.
Whether permanent benefits are derived will depend largely upon the wisdom with which agricultural and industrial operations are conducted in the Southwest during the 1948-51 period. Should
Southwestern farmers impair their positions by accumulating heavy indebtedness and by further
depleting soil resources in an attempt to maximize returns during the aid program, the transient
benefits derived may be far outweighed by subsequent readjustments. In appraising the agricultural
outlook, the possibility should be considered that, before the aid program is terminated, favorable
weather in Europe, combined with greater use of fertilizer and more extensive cultivation, may yield
bumper crops and reduce the need for grain and other crop imports from the United States. Moreover, eventually western Europe may turn again to the sources of supply from which it derived
most of its raw materials and foods prior to the war. Prudent planning would seem to dictate caution on the part of farmers in undertaking large financial obligations during the period when agriculture is receiving unusual stimulation from United States extension of foreign aid.
Southwestern industry also, in order to derive permanent benefits from the stimulating effects
of the aid program, may find it well to take advantage of the 1948-51 period to effect the consolidation of its position. Should Southwestern industrial plants which are greatly benefiting £i'om the
boom and which stand to derive additional benefits from the continuation of foreign aid neglect
the opportunity to achieve the efficiency of careful administration, postwar readjustments in them
may have been only delayed, not avoided.
More important to the Southwest than these relatively short-run possibilities, however, are the
changes which acceptance of the aid plan may bring about in the relations of the national and
regional economies with the world economy. The new role the United States is assuming abroad may
require basic changes in our traditional attitudes toward foreign economic and political affairs. The
isolationism and protectionism which frequently have dominated economic policy in past decades seem
unlikely to survive four years of intimate participation in the economic processes of an area containing 270,000,000 people. Changes in tariff policies and rates, modifications of regional specialization in production of certain commodities, and increased reliance upon exporting and importing
appear likely to be continuing consequences of the aid program, with possibly significant effects
upon the Southwestern area.

26

MONTHLY BUSINESS REVIEW

Review of Business. Industrial. Aqricultural. and Financial Conditions
DISTRICT SUMMARY
Significant developments and trends of the year 1947 in
the business, agriculture, finance, and industry of the Eleventh Federal Reserve District are reviewed and summarized on
this and following pages. During the closing month of the year,
dollar volume of sales in department stores of the district rose
to a new peak, exceeding the previous record sales for the same
month in 1946 by 16 percent and those for the previous month
by 35 percent. The seasonally adjusted monthly index of sales
stood at 388, as compared with 348 in December of the preceding year and with the all-time record of 415 set in November
1947. Sales of retail furniture stores likewise reached a new
high, with the total rising 27 percent above that of December
1946, and 23 percent above the preceding month and with
credit sales sharply exceeding those of comparable earlier periods.
Indicative of the brisk movement of trade in the district, the
total bank debits in 24 reporting cities during December passed
the $4 billion mark, setting a new record. Production of crude
oil in the district during December was at an average daily rate
of 2,579,000 barrels, only 14,000 barrels below the record set
in October and 386,000 barrels in excess of the daily average
rate a year earlier. Construction contract awards for the month,
estimated at $50 million, approximated those of the previous
month and exceeded the awards made in December 1946 by
about 16 percent. Aided by generally favorable weather conditions, small grains and range feeds made good progress during
December and early January, overcoming in part the effects of
the drought that had prevailed in important western sections of
the district until mid-November. Texas wheat acreage for harvest in 1948 was estimated on December 1 at about 8 per cent
less than the record acreage harvested in 1947, and, based on
condition of the crop on that date, production was estimated
at about the 10-year average, or one-third as large as last year's
unprecedented crop of 124 million bushels. Commercial vegetables made good growth during December and the first half of
January, and vegetable shipments were running at a higher
rate than at the same time a year ago. A record production
of citrus fruits is forecast, but shipments continued to lag
throughout December and early January, due chiefly to the late
maturing of the crop.

responding months of 1946. Nevertheless, the desire for a great
variety of consumer goods, and purchasing power sufficient to
transform desire into effective demand, largely offset consumer resistance to high prices and pushed total spending to a
new record.
Industrial production, with better balanced output and suffering fewer interruptions than ill 1946, made possible replenishment of distributors' stocks of many items which had been
scarce at the beginning of the year. Exceptions were chiefly in
such durables as automobiles, some silverware and fine furniture, mechanical refrigerators, and certain important building
materials. A peacetime record volume of exports diverted from
domestic consumption a sufficient quantity of agricultural
products, raw materials, semiprocessed, and processed goods to
exert additional upward pressure on prices of those goods in
the domestic market.
WHOLESALE AND RETAIL TRADE STATISTICS

Percentage change
Netaales
December 1947 from
Jan. 1 to
reporting December November Dec. 31.1947
Retail trade:
from HI46
19i6
1947
firma
Department et.ores:
7
Total 11th DisL.....
48
16
35
48
5
DalL........ ... ....
4
IS
1
Corpus Christi . ....
10
34
7
7
Fort Worth . .. . ....
4
14
4\
12
Houston .... . . . ... .
7
3t
3'
34
5
San Antonio . . . ....
6
J4
Sh reveport La ... ...
Jl
39
9
S
13
Other cities .. , .....
18
16
37
Retail furniture:
Totaillth D~I.....
43
27
23
Dallalo............
3
33
11
Houston. . .. . . . . . . .
5
33
28
Port Arthur. . . ... .
..
46
10
San Antonio . . . . . . .
..
20
30
Wholesale trade·:

Number
of

D"""'...... .... ...

3

8

19

9

-

In terms of dollar volume of goods sold, wholesale and retail
trade in the United States and in the Eleventh District for the
year 1947 rose to the highest totals in history. Contributing to
this result were: a continuing strong demand for consumer

goods of almost every type; income payments and disposable
income of individuals reaching the highest annual rate yet
known; a declining rate of personal savings; an expanding output of many consumer goods, particularly durables, which had
been in short supply; rising price levels, especially during the
second half of the year; and a continuing notable expansion in
the usc of consumer credit. When consideration is given, how-

ever, to the effect of sharply rising prices on the unit volume
of wholesale and retail sales, it appears that there was little, if
any, increase-possibly a slight decrease-from 1946 in the
physical volume of goods passing through domestic trade channels during 1947. The January index of wholesale prices was
up 32 percent from January 1946, and the December ·index
stood 15 percent above that of the same month a year before.
The extent of the rise in retail prices is suggested by the fact
that the index of consumers' prices was 18 percent higher in
January and 8 percent higher in November than in the cor-

1046
10
I
-7
11
35
11

1947
-12
12
-15
-17
-6
-7

is

-ii

10
7

-

1
6

4:

-

1

-

2

14

17

7
- t
-18
17
18
Tobacco Ii: products.
7
10
C
8
·Compiled by United States Bureau of Census. (Wholesale trade figurea preliminary.)
;StockJ at end of month.
fCbaDge leu than one-half of one per cent.

INDEXES OF DEPARTMENT STORE SALES AND STOCKS
Daily average aales-(1g35-1939=100)

----Unadjuated'
District.

BUSINESS

Stocks t

December 1!J47 from
DC(X'mbcr November

No,hg.

GroC'eries.. .. . .. ...
Hardware . . .. . ....

in

Dollalo. . . . ..
Houston. .. . .

Dec.
1947
633
579
726

Nov.
1947
607
467
5%

October
1947
396
382
419

Dee.
1946

Dec.
1!H7

567 t
547r
585r

388

366
457

Adju.ted---Nov.
1947
415
SSG
4!l1

October
1947
360
347
381

Dec.
1946
348 t
34(ir
368r

Stocks- ( 1935-1939 -100)
----Unadjusted·--------Adjusted----Dec.
Nov.
October
Dee.
Dec.
Nov.
October
Dec.
1947
1947
1047
1946
1947
1947
1!H7
1946
District . . ...
337®
382
3.(6r
306
401 ®
357
300r
364
·Unadjusted for 8e&60nal variation.
r-Revised.
®Preliminary.

The movements in wholesale and retail trade were much
more brisk and confident during the second half of 1947 than
in the first half. At the beginning of the year growing consumer resistance to rising prices-manifested chiefly in greater
selectivity in buying and more concern about the quality of
merchandise--inspired a feeling of caution among retailers of
soft goods and off-brand durables, leading to curtailment in
orders and advance commitments and to special efforts to reduce excess inventories and avoid the dangers of an unsound
accumulation of stocks. Contributing to this mood of caution, were the widely advertised forec .. ts and predictions made
during the closing months of 1946 that the postwar boom in
business was heading for a recession-if nOt a mild depressionduring the second or third quarter of 1947. Adjusted national
indexes of dollar sales of department stores showed a tendency

27

MONTHLY BUSINESS REVIEW
to level off during the first half of the year, and in this district
there was a moderate dip from the high levels of the previous
year extending froIn June through September. Employment
remained at high levels, however, and wage increases affecting
most of the workers of the Nation helped to maintain consumer purchasing power in the face of rising prices.
As the year progressed and both consumers and businessmea
noted the continuation of inflationary forces and the failure of
prices to come down, a significant change occurred in the attitude of the business community. Consumer buying increased,
and businessmen, in fear of shortages and a renewal of price
increases, began replenishing inventories more actively. Concurrently, rising trends began in other fields of activity, such
as construction and the replacement and expansion of capital
goods and equipment. Export trade, though declining moderately from the peak reached in May, continued during the rest
of the ye.1r at a nte high enough to add support to both the
price structure and the national income.
These developments were reflected nationally and regionally
in an upturn soon after midyear in the rate of consumer spending and in dollar volume of wholesale and retail trade. The more
rapid rise in prices of food than of most other commodities occasioned some shifts in the pattern of spending-mostly affecting apparel and luxury items. Stimulated by the buying or
building and furnishing of an abnormally large number of
homes and by an unremitting scramble to buy automobiles at
high prices, expenditures for durables appear to have regained,
if not exceeded, their prewar ratio of total consumer spending.
Cumulated total sales for the year of monthly reporting department stores in this Federal Reserve District exceeded those
for 1946 by 7 percent. The moderateness of this year-long gain
and the effect of the leveling off in sales which characterized
much of the year are evident when it is recalled that total sales
of these same stores in 1946 exceeded thooe of 1945 by 28 percent. Other facts regarding sales trends of these stores during
the year are reflected in the accompanying table. Sales of retail

Eleventh District Department Store Sales, 1947
Percentage change
from same
period in 1946
January .......
. ......... .. ........... . .. .
20
January-March . ........................•....
10
January..June . . ............. ................ .
6
3

i:~~~;t~~~~:: :::::: ::: ::::::::: :::::::

Jaouary-December . ................... . ..... .
®-Preliminary,

•
7

Adjusted index, final
month of period
[n

194:7
363
347

361

376

368
388®

In 1116
306
336
368

381
376
318

furniture stores in the district followed a similar but somewhat
stronger upward trend, registering a gain of 11 percent for the
year. The sharpest increases over 1946 occurred during September, when the cashing of large numbers of Armed Forces
Leave Bonds made money available to ex-servicemen for cash
buying or for down payment on instalment purchase of furniture, and during November and December, following termination on November 1 of the restrictions of Regulation \V Oil
the terms of instalment credit.
Indicative of cautious inventory policies among department
stores of the district, orders outstanding month by month
throughout the year until December were down from the totals
for corresponding months in J 946, the margin of difference
running to more than 50 percent in the period from March
through June, but diminishing thereafter as store executives
developeJ more confidence during the third and fourth quarters. The value of merchandise on hancll at the beginning of the
year was high by comparison with the situation a year earlier,

but as a result of energetic efforts to reduce excessive inventories of soft goods, coupled with sharp cutbacks in orders,
the margin of year-to-year increase in value of stocks dropped
to 8 percent by midyear-less than offsetting the effect of
rising prices-and remained at or near that figure for the rest
of the year. The upturn in sales during the second half of
the year, of course, also contributed to holding stocks down
to conservative levels.
Increased use of credit was an important factor contributing
to the gains made in wholesale and retail trade during 1947.
Rapid expansion of commercial loans both nationally and in
this district reflected the increase in use of credit by wholesalers
and retailers for carrying inventories. Consumer credit of all
types showed significant gains, and total consumer credit outstanding in the United States probably exceeded $13 billion
at the end of December, compared with the prewar record
figure of slightly less than $10 billion at the end of 1941
and with $5., billion on December 31, 1943. Charge accounts incre.1sed nearly 20 percent during the first 11 months
of the year. Total instalment sale credit registered a gain of
more than 60 percent during the same period, although still
f alling considerably short of the record total of $3.7 billion of
Stich credit outstanding in the United States at the end of 1941.
Apparently the potential of instalment sale credit is far from
exhausted in view of the much smaller ratio between total consumer credit and total individual incomes at present than in
1941.
At department stores and furniture stores in this district the
ratio of credit sales to total sales increased throughout the year,
constituting 61 percent of depa1·tment store sales and 83 percent of furniture stores sales during December, as compared
with 56 percent and 78 percent, respectively, in December
1946. End-of-month receivables at these stores increased month
by month at a rapid pace over corresponding months in 1946,
usually exceeding the gain in total collections. The ratio of
collections to receivables on department store charge accounts
was from 3 to 10 poin,s lower month by month, except December, during 1 q47 than in the preceding year. On department
store instalment accounts the ratio declined from 31 percent to
27 percent during the y~ar, and collections on furniture instalment accounts showed a similar trend. Even so, collection rates
are regarded by most retailers as satisfactory, and many stores
are m.king aggressiH bids for new credit accounts.
At the end of 1947, businessmen generally appeared to share
the view of many economists and business forecasters that
business will continue at or near current levels through at
least the first half of 194&. To many business executives at
the beginning of the new year there seemed to be more basis for
confidence in the short-term future than there was at the same
date in 1947.
AGRICULTUHE
Weather conditions throughout the district during December and early January genemlly were favorable to small grains,
commercial vegetables, and citrus crops and facilitated completio:1 of cotton, peanut, and pecan harvesting. The condition
of cattle was reported to be from fair to good, with supplement.l feeding continuing in many western areas. Range and
pasture feeds continued to improve but were still quite short,
and small grains were furnishing only limited grazing. The
6,980,000 acres of wheat for harvest in Texas in 1948, while
about 8 percent below last year's recorel high of 7,587,000
3crc~, is greater than in any prior to 1946 and iii almost onehalf larger thall the 10-year (1936-45) average. In the important northwest wheJt area of Texas, seeding opera lions were delayed by prolonged drought, but considerable volunteer wheat

28

MONTHLY BUSINESS REVIEW

came up. Even though mid-November rains afforded growers
an opportunity to plow up and reseed much of the volunteer
growth, an unusually large acreage of volunteer wheat was
left on land originally intended for seeding. On December 1,
thc Department of Agriculture forecast for 'fexas a production
in 1948 of 41,880,000 bushels, which would be about an average crop but only one-third as large as last year's crop. Shipments of citrus .continue to lag, but the movement of vegetables is considerably ahead of last season, and shipments up to
mid-January were about 20 percent above those made prior
to the same date a ycar ago.
'fatal agricultural production in the Eleventh Federal Reserve District during 1947 was at a very high level despite an
unfavorable late growing season throughout much of the arca.
The production of cotton, wheat, rice, peanuts, and citrus was
particularly large compared with the crops of 1946, and considerably above average. Other crops which exceeded the previous year's totals were oats, barley, hay, and pecans. On the
other hand, production of corn, sorghums, Irish and sweet potatoes, and peaches declined in 1947 as compared with the previous year.
CROP PRODUCTlON-(1'holl3llnda of unils)

---Texas
Cotton ...... , .....•.....
Corll ..... .. .•......•... ..

Wint.er wheat ....•••..... .
Oat.s ... . .... . ........•...
Barley ... ... ... . .........
Riee ... .. . .. .... . . ..... . .
Broomcorn ... . . . ...... , "

Five Statcst--

1936-45
1946 average
1947
1946
3,021
4,570
2,478
1.669
55,012 71,963 87.664 98,502
62,916 41,287 238,712' 154,393 2
36,366 33,236 69,006 65,022
3,913
2,610
9,230' 8,00.;1
17,716 14,877 45,1551 40,392'
4
6
ZO'
25'
73,742 50,164 77,130 84,1 SO
2,920
3,970
4,.1.15
1,025
2,921
1,240
1,263
1,149
4,044
3,989
191
199
100
638'
700'

Unit
1947
Bales
3,360
Bushels 48,592
Bushela 124,270
BlI8hels 31,248
Bushels
2,520
Bushels 23,700
Tons
6
Bushels 68,313

103H5
average
4,529
124,624
102,467'
63,484
11 ,617'
36,120'
23'
62.«4
5,570
3,467
635'

Sorghums fot p:nin ...... _.
Sorghums ror orage ....... Tons
Tame hay. . . . . . . . . . .... TOll 8
Wild hay .. ... . . . ..
. ... Tons
Peanu ts picked and
lh reshed .... . . . . .
. ... Pound8 372,725 395,005 211,538 540,750' 521.455' 271.642'
Yrish potatoes ......
. ... Bushels
4,530
5,883
4,009
9,260 11.839
9,676
Sweet potatoes .••••
.... Bushels
4,676
6,570
4,828 12,665' 17.890~ 13.763'
. .. Bushels
2,640
Peaches ........•.•
1.696
1,856
1,628
2,554
3.20S
Oranges ..........•... . . BDxe8
5,000
5,800
7,160' 6.610'
3.927'
2,942
Graperruit . ............... BOIes
24,000 23,300 16,121 28,100' 27,4001° 19.162"
Pecan8 . .......... . . . . . ... Pounds 21 ,000 22,500 25,605 49,900' 38,500' 61,4 66'
lArizooa, Louisiana, New Mexico, Oklahoma, Texas.
tArlsoua, New Mexico, Oklahoma,
Teus.
'Louisiana and Texas.
'New Mexico, Oklahoma, Texae.
'Louisiana New
Mexico, Oklahoma , Texas .
eLouisilw8, Oklahoma, Tcxaa.
lAnzona, Louisiana, Texas,
December 1 estimate.
' Arizona, Lowsiana, Texa.t!I.
'Arizona, TCXll8. December 1 estimate.

IDAriJona. Texas.
SOURCE: United States Department of Agriculture.

duction in the five states lying wholly or partly in the Eleventh
Federal Reserve District was 4,570,000 bales.
The 1947 'fexas wheat crop was estimated at 124,270,000
bushels, which was almost double the 62,916,000 bushels produced in 1946 and three times the 10-year average of 41,287,000 bushels. Moisture conditions were favorable for the seeding and growth of the crop, and acreage abandonment was
small. 'fhe acreage harvested was estimated at 7,310,000 acres,
or 22 percent above the previous record of 5,992,000 acres
harvested in 1946 and more than twice the average annual
acreage, 'fhe 1947 yield of 17 bushels per acre was 50 percent
above the 10-year average and has been exceeded in only three
years since 1865.
Corn acreage in 'fexas continued' its downward trend in
1947, as only 2,945,000 acres were harvested, compared with
3,236,000 acres in 1946 and a 10-year average of 4,538,000
acres. 'fhe sunmler drought reduced yields on late-planted corn,
but good yields on early-planted acreage brought the State's
average corn yield up to 16.5 bushels per acre, compared with
17.0 bushels in 1946 and an average yield of 15,8 bushels per
acre. The year's corn production amounted to 48 ,592,000
bushels, which was about 12 percent below the 55,012,000
bushels produced in 1946 and about two-thirds of average.
Due principally to the expansion of wheat acreage in the
northern High Plains and to the increase in cotton acreage in
the southern High Plains, the acreage of grain sorghums in
'fexas in 1947 was considerably less than that planted in 1946.
The 1947 crop included 3,801,000 acres of sorghums harvested
for grain, which comprised 66 percent of the total acreage
and represented a continuation of the trend toward a higher
utilization of the sorghum acreage for grain. Production of
sorghum grain was estimated at 68,313,000 bushels, or 7 percent less than the 73,742,000 bushels harvested in 1946, but 36
percent above the 10-year average, Yield per acre harvested was
estimated at 18 bushels, or 2 bushels above the 1946 yield. Also
included in the 1947 sorghum crop were 1,750,000 acres harvested for forage and 72,000 acres harvested for silage. Forage
production, set at 270,000 tons, was more than one-fourth below that of 1946 and 71 percent below average.
VALUE OF TEXAS CROPS

'fhe acreage of crops harvested in 'fexas in 1947 has been
estimated by the United States Department of Agriculture at
28,696,000 acres, compared with 26,937,000 acres harvested
in 1946 and a 10-year average of 27,296,000 acres. Large increases in the acreages of wheat and cotton and substantial increases in acreage of rye, flaxseed, rice, hay, cowpeas, and peanuts more than offset declines in corn, oats, barley, sorghums,
and potatoes. 'fhere were increases in total acreage harvested
also in Arizona, Louisiana, New Mexico, and Oklahoma.
The 'fex.s cotton crop of 3,360,000 bales produced in 1947
was about twice as large as the 1,669,000 bales harvested in
1946, and considerably above the 10-year average of 3,021,000
bales. Weather conditions in 1947 were generally favorable for
cotton production in most areas of the State. Spring rains,
though causing some delay in planting, favored early growth,
while the dry summer and fall kept insect infestation at a low
level and at the same time favored harvesting operations. As a
result, a yield of 195 pounds of lint per acre was produced on
the 8,273 ,000 acres harvested, compared with a yield of 134
pounds of lint per acre from 6,000,000 acres in 1946, The 10year average yield is 168 pounds of lint per acre from an average of 8,620,000 acres. Cotton production in the 'fexas High
Plains, in the Lower Valley, and in the 'frans-Pecos counties
reached aIt-time records in 1947. The total 1947 cotton pro-

Value of Production
Percent of total
-(Tho....,d. of dollan)- -- - - - -1947®
Cro..
Corn . •... . . .... •..• . . . .•. •......• . .. I 102,043
279,608
Wbeat. ..• ••. •... •• •••• •••••• ••• . •• ••
67.645
~~ . ..... . ... .. ........ •.•. •.• .. .. .
116.815
Sorghums for grain .. .. . . .. ........ . . .
37,175
Ot.lier grains .. . ... .................. .
35.782
Poonut8 ror nuts .. . . . . . . . .. . . . .•... . .
CotLon lint . .. ..... . ... ...... . ...... . S14,OSO
116,705
Cotton seed .... •• •••••. •. • .. . . . . . ....
94,293
Vegetablee and fruits . .. ......... . . .. .
82.173
Other crops . •. .... ... . . . •.. . •. . .•.•. ,

19.6
$ 84 .718
113,878
4e,038
103,976
38,594
33,970
268,438
50.870
1l1 ,IOS
86,6.IJl

Total value of fie.ld ctOpe. fru its. nuh

aDd feed..ro.. ... ....... .. .... . .... $1,446,210

1932,248

1947®
7. 1
19 .3
4. 7
8.1
2.6
2. 5
35 .5
8 .0
6 .5
5 .7
100.0

1946
9.1
12 .2
4.3
11.2
U
3.6
28 .8
5.5
11.9
9.3
100 .0

®-Prelimioary.
SOURCE: Unit«! SLates Department or Agriculture.

Both oats and barley suffered severe &amage in northcentral
'fexas from thc hard winter freeze in January last year. Due
partly to this condition and partly to reduced acreage as compared with 1946, the 1947 'fexas oat crop of 31,248,000 bushels was down 14 percent from 1946 and 6 percent below average. 'fhe acreage of oats, estimated at 1,488,000 acres, was 10
percent below that of 1946 but slightly above average. Yields
were estimated at 21 bushds per acre, as compared with 22
bushels in 1946. The 1947 'fexas barley crop was the smallest
in 9 years-production totaling 2,520,000 bushels in comparison with 2,610,000 bushels produced in 1946 and an average
of 3,913,000 bushels.

29

MONTHLY BUSINESS REVIEW
The 474,000 acres of rice harvested in Texas in 1947 are
the largest acreage ever reported in the State, exceeding the
previous record of 1946 by about 15 percent. The early part of
the rice-growing season was extremely dry, and irrigation facilities were taxed to capacity in some instances until heavy,
beneficial rains came in late August. The year's production of
23,700,000 bushels was one-third above the previous record
crop produced in 1946. The yield per acre, estin13ted at 50
bushels, was about 7 bushels above that of 1946 and 2 bushels
above average.
Peanuts harvested in Texas in 1947 totaled 372,725,000
pounds, compared with 395,005,000 pounds in 1946. Although
the 877,000 acres harvested were about 14 percent above the
acreage of 1946, excessively high sum.mer temperatures with
below normal rainfall were unfavorable to peanuts, especially
in the northern area, resulting in a yield of only 425 pounds per
acre, compared with 515 pounds in 1946 and an average of 446
pounds. Texas flaxseed production of 864,000 bushels and average yield of 9.5 bushels per acre were 56 percent and 30 percent, respectively, above the record production and yield of
1946. Flax acreage was estimated at 91,000 acres, compared
with 76,000 acres in 1946. Production of sweet potatoes was estimated at 27 percent and of Irish potatoes at 23 percent below
the crops of the preceding season. The production of hay and
other roughage combined, estimated at 3,679,000 tons, was
about 23 percent less than the 4,799,000 tons harvested in
1946.
CASH FARM INCOME
(Tbousands or dollara)

_--O_~l';[s :r~~=-:"-O:-c-to"'he-'-O:c"
c~~) re~~~. 1 to Oct a1
Crops Lh'eatock·
)947
1 7.370 1 7.006 1 14.375
49.857
9.656
59.413
New Mexico ............ .
12.608
23.921
36.529
Oklahoma .....•...•..•.•
80.556
40.092
39.6M
Te:ta.S .. . . .. .......... _• . 189.442
73,450
262,692

t~z:r:n·a·.·.·.:::::::::::: :

)946
194.7
1946
1 15.661 I 135,177 I 121,067
47.471
235,431
173,960
9S,487
31.608
128,883
66.061
562,614
376,209
177,182 1,566,045 1,087,878

Total.. ....
1300,209 1153.496 $453,76.\ 1337,983 12,628,150 11,857,591
·(ncludes receipts from the sale of livE6tock and livestock products.
SOURCE: Uuited Slutes Department of Agriculture.

parts of the district, caused some damage to ranges and deterioration in the condition of livestock, The inaprovement during the spring in ranges and the condition of cattle was interrupted by lack of moisture in some western, extreme southern, and southeastern portions of the district and by cool.,
wet weather in other areas. During the early summer, grazing
areas throughout the district continued to supply range feed,
but drought conditions developing during July over most of
the western part of the district extended through the fall,
causing rapid deterioration of ranges, delay in seeding winter
grains, and loss of weight by livestock in spite of supplemental
feeding. About mid-November, however, rains fell throughout
most of the range and grazing areas of the district and brought
some improvement in gr;lzing conditions. Grain fields provided
only limited grazing, however, due to the lateness of the crop
and the need for additional moisture in many areas. Pastures
and ranges were inaproved but still short. As the year ended,
livestock were in fair to good condition, but supplemental
feeding was continuing.
Receipts of livestock at the Fort Worth and San Antonio
markets showed divergent trends during 1947, as compared
with 1946. Reflecting the influence of abnormally high prices
and of a tight feed situation, cattle received at the two markets in 1947 totaled 1,413,602, or 13 percent more than were
marketed the preceding year. Receipts of hogs likewise were
higher, amounting to 764,145 head, compared with 669,140
head in 1946. Receipts of calves, however, declined fractionally
to a total of 730,556, while sheep receipts, declining 24 percent from the he,,'y marketings of 1946, amounted to 2,268,386 head. Diminished receipts at these markets during December of all categories of livestock except hogs followed seasonal patterns.
LIVESTOCK RECEIPTS-(Numbe,)

---Fort Worth. - - - - - - Sao Antooio-- Dee.

Cattle ......... .
Calves ..
Hop ..
Sheep.

The total value of all crops produced ill Texas during 1947
reached an all-time high of $1,446,219,000, or 55 percent
above the 1946 total and nearly double the value of the crop
produced in 1945. The increase during 1947 was accounted for
primarily by higher returns from cotton and cottonseed, wheat,
and rice. The value of cotton and cottonseed totaled $630,785,000, or about double that in 1946, reflecting entirely an increase in production. A record production of wheat and all-time
high prices raised the value of that crop to $279,608,000 in
1947, compared with 113,878,000 in 1946. An increase in the
value of the rice crop from $40,038,000 in 1946 to $67,545,000 in 1947 was due also to a combination of record production
and high prices. The value of citrus and all classes of commercial truck crops, however, declined about 14 percent in 1947
and totaled only $65, 101,000, compared with $76,136,000 in
1946.
Range and livestock conditions in the district during 1947
were sharply, and for the most part adversely, affected by
weather conditions. At the beginning of the year the situation
was unfavorable, due principally to below freezing temperatures which extended as far south as the Rio Grande. Cold
weather killed or retarded development of grains in many areas,
and grazing of grain pastures was reduced, Unseasonally cool,
dry weather over most of the district continued into February, retarding field work and checking the growth of crops
and the development of range feeds . Moisture conditions were
generally improved during early March, but low temperatures,
accompanied by snow or sleet in the northern and western

1947
68.315
38,405
... 103.042
54,222

Dcc.

Nov.

Dec.

Dec.

Nov.

1946
75,8 16
49,954
71,457
66,373

1947
81,671
60,153
65,911
89,45S

1947
27,007
20,583
11,712
27,429

1946
41,048
24,6.\0
0,793
25,508

1947
41,934
35,691
7,184
32,266

COMPARATIVE TOP LIVESTOCK PRICES
(Dollsn! per hundred weight)
_ - - F o r t Worth

Dee.
Heef steers ...............
Stocker steers . .. .........
Heifers and }·earlings .. ...
Butcher cows ............
Calves .. . ........ ,., ....
Hogs .......... . . . . .... ..
Lambs."" ... ,

1947
$32.00
24 .00
33.00
20 .00
28.QO
28.00
23.50

0 ...

Nov.

0 ...

1946
$25 .00
18.00
27 .00
16 .00
20 .00
25.00
22.00

1947
131.90
22.00
26.00
18.25
24.00
26.50
23.60

1947

126 .50
27.50
21.00
26.00
27.00
22.75

San Antonio - - 0,.,.
Nov.
1946
121.00

1947
125 . 00

.;7:00

'25:00

1'.50
21.00
25,00
19.50

17.00
22.00
25.75
21.00

Prices received by Texas farmers for most products continued to move upward during the last month of the year, and
prices of dairy products, turkeys, and many grains and meat
animals reached new record levels. For the year as a whole,
prices received averaged wel1 above those of 1946. The most
noteworthy increases occurred in the prices of grains, meat animals, milk cows, and eggs, although moderate increases occurred also in the case of cotton, cottonseed, and dairy products. Prices received for sweet potatoes and hay were at about
the same level as in 1946, while those received for chickens,
citrlls fmits, and wool were generally lower.
FINANCE
During 1947, most of the principal items of condition of the
weekly reporting member banks in the Eleventh Federal Reserve District e:;<perienced substantial expansion. Exceptions to
this trend were total investments, which declined by slightly
more than 1 per cent as a result of reductions in holdings of

30

MONTHLY BUSINESS REVIEW

Treasury bills, certificates of indebtedness, and Treasury notes;
United States Government deposits, which declined almost 54
percent; and loans to brokers and dealers and to others for purchasing or carrying securities, which declined by about 24 percent.
Commercial, industrial, and agricultural loans of the weekly
reporting banks, following a decline of about 2 percent during
the first six months of the year, increased rapidly to total $711,487,000 on December 31, in contrast with a total of $560,005,000 on the first of the year, an increase for the year as •
whole of about 27 percent. Real-estate loans also showed a very
substantial increase during the year, as the total rose from $59,637,000 on December 31, 1946, to $76,979,000 on December
31, 1947. The increase in commercial, industrial, and agricultural loans occurred entirely during the last six months of the
year, whereas a very substantial part of the increase in real-estate loans occurred during the first six months. "All other"
loans of these banks declined during the first six months of the
year but then reversed their trend to end the year at a level
almost 11 percent higher than that which prevailed on December 31, 1946.

8.6 percent. Whereas the rate of increase of demand deposits adjusted accelerated during the last six months of the year, the
upward trend of time deposits was at a much slower rate during that period, possibly indicating that the rising cost of living was pressing heavily upon savings and current income.
GROSS DEMA!lD AND TIME DEPOSITS OF MEMBER DANKS
Ele\'enth Federal Reserve Distrid
(Average of daily tiguree in thOl1ll0011 of dollar!)
Combined total

December 1945 ..
December
August
8eptembcr
October
November
December

. '5,109,360
1946.
..... 4,837.618
1047 . .... .... 4.845.031
1947 , ..•. .... 4,925.009
1947
... 5.100.591
1947 ...... ... 5.286,063
1047 ...... ... 5,284,150

(TbOU8lloDda of dollara)
January 7,
1948
Totalloalll!l and inv08tment.s ...•.••..•.•....•..•... $2,267.461
Tot·al1oona . ...... ,.... ..... ................... I,023.2M

Commercia.l, iodwtrial, and a~riculturalloan8....
LoaU8 to broken aud dealers In securiliea:...... . .
Other loans ror purchasing or currying securities..

716.747
7.030

Dec. la,
1947
12.307,081
1.000.312
707,348

13,645

6.887

83.456
67,172
60,171
76,166
368
H)3
154.761
14.,890
151.M6
Total iQVCIlItmeota ....•.•. . . •. •.•.••• .•••••••.•. 1,244,196
1,273,737
1,297,769
U. S. T ....ury bills. ............. ............ .
8,642
41.4SS
40.884
U. B. Treasury certifieaLes o( indebtedneJII.......
167,862
268,656
172.468
119,033
132,661
127,286
U. S. Treasury ootes....... .......... .........
U. B. Government boods (inc. gtd. ob!.)........
839.191
762.363
845.680
Other aecuritieJ. . . .. .• .. .. .. .. .. .. .. .. .. .. .. .
109,568
88.773
1l1,461
502,386
.57.193
607,180
Reserves with Federal Rese.rve Bank........... . ....
Balances with domestic banks......................
307,268
270,337
267,184
Demand depoets-sdjw!l.(!(.l· .. ................ .... 1,865,466
1,724,467
1,876.223
Time decta . .... ....... ,...... .................
384,920
364,012
376.449
United tates Government depoeilll... . .............
10,890
43.552
20,144
Interbank depoeil.5..... .. . . . . . . . . .. . . .. .. .. .. .. .. .
678,494
592,984
676,465
Borrowings (rom Federal Reserve Bank.............
2.500
1,500
12,500
-lnclud61 all demand deposita other than interbank and United Statu Gonrnmcll&, leu
cuh HeIDI reported as on hand or in procesa of collection.
Real estate loons .. ........ ..... . .............
Leans to banu...... .• .• .. .. .. .• .. .• .• .• •• •• •
All other loans............. . .................

66,999
77.439
289

These changes with respect to loans of the weekly reporting member banks paralleled, to some extent, the trend of business activity in the district during the period and reflected the
rather strong revival of inflationary forces and the upward
turn of business which occurred during the latter half of the
year. It will be recalled that, following some halting tendencies in business activity at times during the first six months of
1947, there developed a shift in business and Consumer attitudes and lctions as deflationary expectations gave way to
a revival of business optimism and inflationary movements.
Holdings of Treasury bills, Treasury notes, and certificates
of indebtedness declined .20.4 percent, 10.4 percent, and 5.9
percent, respectively, during the first half of 1947, but those
losses were more than offset dollarwise by gains of 6.5 percent
and 7.7 percent, respectively, in United States Government
bonds and other securities. Considering the second half of the
year as a whole, the shift to long-term holdings of Government
and other securities continued, and holdings of United States
Government bonds increased to a total of $846,210,000 and
holdings of other securities rose to $108,776,000.
Increases in demand deposits adjusted and in tinle deposits
during the yeat more than offset a substantial decline in
United! States Government deposits, with the consequence that
total deposits of the weekly reporting member banks at the end
of 1947 amounted to $3,204,029,000, as compared with $2,949,799,000 at the end of 1946, an increase for the) ear of

Percentage change ill
.ving!! deposits from

December 31, 1941

"'r,:rti.a
•• Iea

Number of
saTinp
deposit.on

Amo~n'

of

oavmp

Wichita Falla ......... ,.,
AU other ... .. . . . . .. .....

8
8
2
3
4
8
2
2
6
3
3
3
56

12.012
138,884
84,893
42.168
23.186
105,497
1,314
6,024
3M81
32,800
10,102
6.978
63,292

dePD811.5
I 6.578,916
79,442,310
23.976.992
34,937.643
21,880.207
70.120,88S
1.947,215
4,!H3,132
48.236,036
25.896,579
9,750,116
4.672,570
6S,440,228

Total .........

102

fj16,681

Fort Worth ... . . .... .....
Galveston •.......•.•.•.•
Houstoo ..•.•.....•. , • , .•

Lubbook .. ..............
Port Arthur .. ....••. .• .•
Rnn Antonio .............
Shreveport. La ... . .......
WllCO ••••••••• •••• • •••••

Nov. 30,
1947
- 0.6

Deo.31.
1946
-13.6
4.4
0.6
2.6
6.6

1387,822.859

Beaumont •........... , .•
Dallas . ..... ..... . ......

January 8,

Time
demand
Time
Time
demand
$451,887 12.634.630 1285.371 12.m.nO 1166.616
506,672 2.323.619 321.379 2,1113 ,999 185.?93
540.172 2,324.633 338.401 2.620.398 201.771
540.511 2.360,755 337.863 2.564.254 202.648
541.604 2.437.292 337.197 2.663.299 204,a07
543.6SS 2.624.890 337.324 2,761,173 206.361
549,698 2,616,849 342.638 2.767.301 207.060

Number

El Paw .................
1947
12.114.622
840,886
638,356

Country bank!

OrOM

SAVINGS DEPOSITS
Reporting Banb-Ele't'onth Federal Reserve District

CONDITION STATISTICS OF WEEKLY REPORTING MEMBER BANKS
IN LEADING CITIES-Eleventh Federal Reserve Diatrict

Reserve city bann

Or...

Or...
demand

1.2
-

-1.3

-11.0
- 6.9
,.6
- 1.9
3.4
0.6
'.1

-

l.i

0.9
0.7
0.7
0.4
3.6
1.2
2 .1
0.4
1.1
0 .6
1.3
0.8

Figures of bank debits received from 24 reporting CItIes in
the district showed an increase of approximately 20 percent
in December 1947 as compared with December 1946. Largest
increases were reported by banks in Lubbock, where the increase amounted to 47 percent, and banks in Tucson, Arizona,
and in Abilene, Amarillo, Dallas, Houston, and San Angelo,
Texas, which reported increases ranging from 22 percent to 29
percent. On the other h"nd, banks in Laredo and Austin reported the smallest increases, namely, 1 percent and 2 perBANK DEBITS. END.QF.MONTH DEPOSITS. AND ANNUAL RATE OF TURNOVER
OF DEPOSITS
(Dollar figurce in 'houaanda)
_ _ _ Debit. _ _ _

Dee.
City
Tue80n, An. •.... . . .

Monroe. La .. . •.... . .

Sbreverrt, La •••••..
Roswe ,N. M ........
Abilene .............

Amar!!:o .. . . . . ..... .
Austin ..•.....•.. . •.
Beaumont ... . ... . ...
Corpus Christi ... . . ..

Corsicana •.••.....•.
DaHlIs ..............
E1P""' .............

Fort Worth ..........

GalW!t;.on ...........

Houet.on ..... . . . ... ..
LKrotIo . . ' ...•... . .••
IAlbbock ...... . .....

POtt Arthur . . ...... .
Sall Angelo ..... .. .. .

San Antonio .........

Texarkana t ....
T vler •. . ...
Wnro

Wichit~ 'F~i~: :

1947
64.763
36.222
131,941
15.689
37.017
80.234
101.848
84.046
70.471
12.896
1,130,925
131.059
366,159
67,246
1.053,901
17.'fl7
SS.538
33,817
32.466
269.099
16.666
40.916
56.666
54.026

Pct'ee~~o~~r End~f~month
1946
25
11
0
12
24
28
2
II
8
14
22
II
16
12
29
1
47

17
26
12
6
17
12
16

lIM7
22
-2
9
7

11
3
6
-1
6
26
22
14
20
11
17
13
-2
9

11
21
6
13

11
12

deposits-

I

84.724
43.933
160.053
19.778
42.387
84.807
106.333
99.735
76 .547
20,610
709.SS9
121,666
274.561
92.9SS
855.3 18
18.990
72.868
41.692
38.970
321.937
23.788
52.774
66.750
79.024

Annual rate o( turoOVll'

Dec.

Dee.

IIM7
9.2
10 . 0
10.2
9.6
10. 8
12.6
1l .8
10 .3
12.1
7.6
19.2
13.4
15.8
8.8
15.1
10.3
14.9
10.1
10.0
10.1
8. 5
9.7
10.2
8.3

1IM6
7.9
9.5
10.0
8.3
9.1
11.3
12.7
10 . 6
12 . 2
7.1
16 .9
12.7
13 .9
8.8
13 . 2
9.8
12.1
9.0
8.0
9.0
7 .9
9.5
9 .•
8.3

Nov.
IIM7
7.7
10. 4
0. 7
9 .1
10.0
12.1
11.3
10.7
II .8
6.0
15.8
12 .6
13 . 1
80
13 .3
8.9
16 .6
9.5
8.9
8.4
8.4
8.9
9.1
7.7

'Total-24 cities .. . .. $4,004.777
20
16
$3,510,059
13 . 9
12 .5
12.2
- Demand and time deposita at the fIld of the month include certified and officers' cbeeks
out.standing but exclude deposiis to the credit of banks.
tThis fil(Ure includes only one bank in Texarakana Teus. Total debita for all banks in
Texarkan3, Te:tas-Ark:msa8. including two blob IoCllt~ in tbe Eighth District amounteJ to
127,673.

MONTHLY BUSINESS REVIEW
ANNUAL TOTAL BANK DEBITS TO INDIVIDUAL ACCOUNTS AND ANNiJAL
RATE OF TURNOVER OF DEPOSITS

(Dollar figures in thousa.nds)

Debita

my

1947
Tucson, An•...... ... , ... S 621,442 $

Monroe, La... . . . . . . .. . . .

358,289

Amarillo................

1,357,197
152,038
352,182
943,710

Corsicana...............

117,966

Shreverrt. La...........
Roswe ,N. M .... .... . , .,
Abilene .•••.•.. "" . . ...

Austin..................
Beaumont. . . . . . . . . . . . . . .
Corpus Christi. . . . . . . . . . .

1,163.280
898,040
843,046

Dalla3....... ...........
EI Paso.................
Fort Worth.. .. .. .. .. .. ..

10,317,692
1,222,995
3,5B8,000

Houston.. ...............

9.926,109
190.644:
696,615
364,914
313,325
2,714,839
169.213
413.042
663,732
652.396

Galveston...............

Laredo..... . ............

Lubbock................
Port Arthur. . . . .. . •. .. ..
San Angelo.. . . .
San Antonio.............
Texarkana·...... . .......
~ler ..... .. ...... " " ..
aco. . . . . . . . . . . . . . . . . . .
Wichita Falls. , . . . . . . . . . .

716,411

1946
6.l3,Boo
3OB,193
1,172,3B6
144,1J1J9
295,4B6
725,424
1,097,828
749,64B
776,257
1oo,B49
B,625,615
I,OBl,920
2,965,554
641,410
B,I83,04O
1BI,43.1
503,394
317,359
286,692
2,485,139
150,096
371,241
508,705
479,237

Peroentnge
change
£rom 1946
12
16
16
5
19
30
6
20
9
17
20
13
21
12
21
5
38
15
9
9
13
11
11

15

Annual rate of turnover
1947
7.7
9.3
9.3
B.5
9.1
12.1
11.7
10.4
12.1
6.1
15.5
11.3
13.0
8.1
12.8
0.3
11.9
9.3
8.5
8.6
7.6
8.8
9.0
7.9

1946
7.4
7.7
7.9
7.5
7.3
10.0
ILl
9.0
11.3
5.3
12.2
9.8
10.5
7.6
10.5
8 .5
9.2
7.9
7.6
7.6
6.1
7.8
7.4
6.7

Total-24 cities ..... . .... 138,656,606 $32,705,707

18
11.8
9.8
·Thi3 fill:uro includes only one bank: in Texarkana, Tcxa,. Total debita for all banks in
Texnrkalla, Texas-Arkansa.!, including two banks locuted in the Eighth Oiatrict amo'luted to
1287,604 for the year 1947.

31

this bank in actual circulation occurred during the following
months, and early in November total notes in circulation exceeded the all-time high of $627,029,000 which had been set
previously in December 1945. By December 2'4 of this year,
note circulation had risen to a newall-time peak of $632,48 1,000, followed by a decline of approximately $7,500,000 during the last week of the year.
MEMBER BANK RESERVES AND RELATED FACTORS
Eleventh Federal Reserve District
(Million. of dollara)
Change! in weeks ended

Jan. 14, Jan. 7; Dee. 31,
19~8
1947
Federal Reserve Credit- 1948
locaL .•.....•••.......
0.6 - 0.6 -13.0
[ntordistrict commercial &:
financial transactions.... - 0.8 - 34.2
12.4
Treasury operations ... , . .
1.5
8.1
13.7
Currency tl'lLDsa.ctions.....
9.0
11.0
8.1

Ot~:d:'r~e~ot~~nk ... _ 0 .3 0.5 - 0.6
Other Federal Reserve
Accounts ............ .. - 0.1
0.6
0.7
Member Bank reserve
balancC8
18.6
9.9 -11.9

....... ..... ..

Cumulative change!

5 weeks
ended
Jan. 1 to
Dee.24, Dee.l7, Jan. 14; Jan. 14,
1947
1947
1948
1948
- 0.8
5.6 - 8.2
-

17.3 - 8.7
4.9 -18.3
2.0
1.6

-H.O
0.1
27.6

-35.0
15.2
17.1

0.3

0.8

0.7

0.2

0.5

0.7

2.4

0.5

10.4 -18.4

8.6

-

2.0

NotG: Amounta preceded by a minus aigo reducea reservcs; aU othCl"l add to reserves,

cent, respectively. Bank debits during December in each of the
two largest cities of the district, Dallas and Houston, were in
excess of $1 billion-the first time for a single month in the
history of either city. The average annual rate of deposit
turnover reported by banks in the 24 cities covered by the
series was 13,9 in December 1947, as contrasted with 12.5 for
the same month a year ago, Inasmuch as bank debits indicate,
to a large extent, the activity of the use of funds by depositors,
the trend of debit figures, especially during the last part of
1947, was in line with what might have been anticipated because of the very high level of business activity and the large
volume of consumer and business purchasing. Bank debits,
however, do reflect the volume of check transactions arising
from all types of deposits andl include payments for a variety
of financial transactions, property transfers, and other types
of tr!lnsactions which are not closely related to the production
and distribution of goods. Consequently, when relating bank
debits to business activity, allowances for such limiting factors must be made.
During the early months of 1947, actual note circulation of
the Federal Reserve Bank of Dallas followed a somewhat irregular but downward trend to reach a seasonal low for the year 011
May 25 at $569, 559,000, Expansion in the volume of notes of

CONDITION OF THE FEDERAL RESERVE BANK OF DALLAS
(Tbousands of dolla.rs)
January IS, January 15,
1948
1947
Total gold certificate reserves .......•.•.•.• .•.. ....
Discounts fo~ member ba.nks ..•.• , ................ .

&~rS~~ol~:~~~~nf~~urit'i~::::::::::::::::::::::

:
Total earning assets .................. . . ..... .... .
Member banks reserve deposits ................... .
Federal Reserve Notes in actual circulation . ...... .. .

$541,672
1,500
2,747
972,846
977,093
8{1(),641
611,881

$494,865
1,750
4,505
904, 115
glO,3iO
777,750
5G3,95<l

Dec. I~J
1947
$515,079
11,000
1,313
975,344
997,657
830,SOI
627,735

Principal changes in the condition of the Federal Reserve
Bank of Dallas during the past year, as measured by figures reported on January 15, 1947 and 1948, were an increase of approximately 547,000,000 in gold certificate holdings and an
increase in total earning assets of about $67,000,000, The increase in total earning assets was represented by an increase in
holdings of United States Government securities amounting
to over $68,000,000, offset in part by a slight decline in discounts for member banks and foreign loans on gold, Member
bank reserve deposits with this Federal Reserve Bank during
the period rose from $777,7 50,000 to $860,641,000.

CONDITION STATISTICS OF WEEKLY REPORTING MEMBER BANKS IN LEADING CITIES OF THE ELEVENTH FEDERAL RESERVE DISTRICT ON
DECEMBER 31, 1946, JULY 2, AND DECEMBER 31,1947, WITH CHANGES INDICATED ~'OR THE FIRST SIX MONTHS AND FOR THE YEAR 1947 AS A WHOLE

(DoUars in thousands)
December 31,
Principal Condition Itema
1946
Total loans and investments........
.................. . .............
$2,107,g16
Total loans ................................. . ........ . .. ,........................
865,012
Commercial, industrial. Qnd agricultural loans .............. . .................... ~..
560,005
Loans to brokers aud dcalcra in securities........................... . .... .. ........
9,557
Other loans for purchasing or carrying securities................. ..... .. .... .. ......
9O,990
Rcalcs"'tc loa""...............................................................
59,637
Loans to banks.....
.................
...............
930
All nther loans..... ............. .... . .............. ....... ..... . .....
143,893
Total inveatmcnu..... ... ....... . . . . . . . . . . . .............
...................
1,242,1:164
U. S. Treasury bills......... ... .... .. . . ....... ........ ............
32,524
U. S. Treasury certificates of indebtedne~ ... . ...... ,.
... . . . . ........
240,g99
U. S. 'f'n:!asury nntes.......... ............. ... ........ .... ..... ............... .
133,043
U. S. Govemment bonds (inel. gtd. ob1.)........ ........ ... . . . ... ............. . . .
747,115
Othe~ sccuritiClt ................... . . . ............... . , . . ....... . . . ..... . . . .....
88,684
Reserves with Federal Reserve Bank .... . . . ..... ......... . , . . ... . . ... ...
46g,191
BalU.llCCS with domestic banks..
. .. , . .. •. .. .. .. .. •. .. • . •. •. •. •. •. •. •. •. . . . . . .
289,857
Total deposita.
.. "" .... " .... """"""""""""",,...
2,949,799
Demand deposits-wljustoo· ....... .. . . . •.•. • . • . ........ . .•.•.•.•. •.• .•. • . • . •.•..
1,691,979

ti~i::1Wat~G~~~~;I~~~i d~~~i~·. ~::

':::::::::::::::::::::::::::: .. ::::::::::::

3~~:~~~

July 2,
1947
$2,084,,320
820,434
548,696 .
8,038
68,003
73,032
157
121,608
1,263,886
25.904
226.873
119.213
796,343
95,553
459,603
296,876
2,881,417
1,755,470

3~:~~~

December 31,
1947
$2,251,711
1,025,062
711,487
7,026
M,361
76,979
eg3
159,516
1,226,649
6,097
155,803
109,163
846,210
108,776
516,718
322,926
3,204,020
1,852,408

3~:~~~

Change between
Change between
_000.31 and July 2-_-Dec. 31 and Dee. 311946
1947
1946
1947
Dollal'S
Percent
Dollars
Percent
-23,656
- 1.1
143,735
6.8
-44,578
- D.2
160,050
18.5
. -11,309
- 2.0
151,482
27.1
- 1,519
-15.9
2,290
-26.5
-22,081
-24 .3
- 21,629
-23.8
13;395
22.S
17,342
29.1
113
-83.1
237
-25.S
-22,285
-15.5
15.623' 10.9
20,922
1. 7
- 15,315
- 1.3
- 6,620
-20.4
- 26.427
-81.3
-14.125
- S.g
- 85,195
-35.4
-13,830
-10.4
- 23,280
-11.5
48,628
6.5
98,495
13.2
6,869
7.7
20,092
22.7
- 9,588
- 2.0
47.521
10.1
7,019
2.4
33,069
11.4
-68,382
- 2.3
254,230
8.6
63.49 1
3 .8
160,429
9.5

-lb:~~f

In\e,bank deposits.......
__ .
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
643,622
572,641
70!1272,
-70,9Bl
BorrowiogB from Fcdcrol Reserve Bank.. ...... . . . ... . .. .............................
None
1,000
.N 0 n
1,000
-Includes :lll demand deposits other than inlerbank Bnd United States Governmen~, less caab items reported as on bund or in process of collection.

-7t~

-11 .0

_ 63,550
~~:rs~

-5~J

9.9

32

MONTHLY BUSINESS REVIEW

NEW MEMBER BANK
The National Bank of Sweetwater, Sweetwater, T exas,
a newly organized institution located in the territor),
serwd by the Head Office of the Federal Reserve Bank of
Dallas, opened for business on Jauuary 3,1948, as a member of the Federal Reserve System and of the Federal Deposit Insurance C<n-poration. The bank has total capital
fuuds of $200,000, including capital of $100,000, surplus of $50,000, and undivided profits of $50,000. Its
officers are: H. H. Simmons, President; E. M . Perkins, Jr.,
Vice President; and J, O. Kirk, Cashier.
NEW PAR BANK
Nortb Sicle State Bank, Houston, Texas, a newly organized nonmember bank located in the territory served
by tbe HOltston Brancb of tbe Federal Reserve Bank of
Dallas, was added to tbe Federal Reserve Par List on its
opetlhlg date, Jamurry 3, 1948. This- bank, a member of
the Federal Deposit In s1trance C<n-poration, has total capital funds of $251,250, incltlding capital of $17 5,000,
surplus of $50,000, alld undivided profits of $26,250. Its
officers are: Jesse Jones, Chair'man of the Board; Damon
Wells, President; Shanley Simpson, Vice President; H. D.
Brown, Cashier; and L. B. Mamy, Jr., Assistant Cashier.

INDUSTRY
Industry in the Eleventh District during 1947 participated
extensively in the prosperity which accompanied the Nation's
efforts to expand productive capacity, satisfy record consumer
demands, and support an unusually, large volume of exports. All
major divisions of industry in the Southwest reached new peaks
in employment and output for a peacetime year, and several
attained levels of operation exceeding those of the war.
During much of 1947 unbalanced inventories and continuing difficulties in securing delivery of basic materials prevented
many producers of metal products and other durables from expanding operations appreciably despite urgent demands for
their output. Many producers of soft goods and semidurables,
including apparel, textiles, and wood products, although generally able to obtain most basic materials in adequate quantities, also were deterred from expanding operations early in
the year by uncertainties concerning the stability of price,
and the magnitude of the market for their products. Late in
DOMESTIC CONSUMPTION AND STOCKS OF COTTON-(Bal<,)

December
1947
Consumption at:
Texas mills ............. .
12,726
United States mills ...... .
763,406
U. S. stocb--eod of lOonlh:
In oor\~uJUiu~ cstnbru'ta ... 2.153,547
Public stg. & OOillprc9I:ICII .• 5,478,623

December November .o\u~ 1 to December 31
194 7
ThIll season' Last Ya50n
194G
16,345
49,3IH
62,030
93,724
776,350 759,498
3,777,169
4,263,419

Total civilian nonagricultural employment in Texas also advanced duting 1947, due to increased employment in transportation, construction, finance, andl service, as well as manufac-

turing, and at the end of the year was at an aU-time high of
1,690,000, as compared with 1,640,000 a year earlier. Similar
gains in total nonagricultural employment occurred in other
sections of the Eleventh District and in surrounding states.
Strong demands for all classes of labor were general throughout
the Southwestern area, and unemployment was reduced to an
unusually low level, estimated at somewhat less than 2 percent
of the effective labor force.
The petroleum industry in the district in 1947 exceeded all
former records for output of cnlde oil and finished products.
The rate of crude oil production rose almost without interruption during the first 10 months of the year, attaining an
all-time peak of 2,593,200 barrels daily in October. At that
level, production approximately equaled maximum efficient
recovery rates in all sections of the district, and possibly exceeded them in several areas. Production could not easily be
sustained at the peak until additional developmental work in
the fields could be completed, and, despite growing requirements and potential deficiencies in crude oil supplies, production was reduced fractionally. At the end of 1947, however,
daily average production in the district still amounted to 2,579,000 barrels, as compared with 2,193,000 barrels a year
earlier and a prewar rate of somewhat less than 1,500,000 barrels.
CRUDE OIL PRODUCTION-(Barrels)
Dcoombcr 1947

Total

p~oduction

DUstrict. 1. ......• • . _•. ......
2 . ••.••..•....•.••.•
3 . ...•....... •......
4 .... . ............. .
5.. ............ .. . . .
6.. ........ . ... . ... .
Olber 6 .................. .
7b.. ....... ... . . ... .
70 . ........ . ... . ... .
8.. ......... . . . . . .. .
9 ....... . . . ..... ... .
10 .. ...... . . . . . . . ..•
Total TeDS .............. .
New Mexico ..•..............
North LouiRiaDa ..... .. .... . . .

2,230,258
60984,417

Total Diatrict . . .......... . .
Outside District.. . ... . . . . . ..
United. States .. .. .......... ..

SOURCE: Estimated from

COTTONSEED AND COTTONSEED PRODUCTS

---T.xaa-----Uniled States-August 1 to December 31 Au~st 1 to December:H
Thit!! 8ea800 Last eeUOD Thlssea3Cln Last. selSOn
1,033,357
519,316
3,583.155
2.674,588

CottoDllCOO recei\·oo at milia (toos) ...
Cottouaecd crushed (tons) ..•........
623,253
Cottollseed on htllld Dee. 31 (ton.s) .... .
464,532
Production of product.!!:
Crude oil (thousand pounds) . ....... .
IS9,80S
Cake and mea l (tons) .............. .
294,516
Hulls (tons)., ..... . . . ... . .... ".,.
139,558
Linters (running balea) .. . ....... , .. .
207,068
Stoeks on hand December 31:
Crude oil (thou8t1od pounrls) •. . .. . . . .
17,747
Cake and mool (Lons) ...•..... . .... .
13,433
Hulls (tons) ........... ... . ... .... .
20,170
Linters (running bales) ...... .. •...•.
40.155
SOURCE. United Statu Buruu of Censu~.

the spring, however, strengthening demands induced these
manufacturers to increase output, and thereafter, manufacturing employment in the district moved significantly upward. Ir
Texas, total employment in manufacturing establishments,
which had remained at about 325,000 from January through
May, rose rather steadily thereafter, principally reflecting increased activit), in apparel, food-processing, chemical, and other
nondurable goods establishments, and in iron and steel plants.
At the end of 1947 manufacturing employment in the State
totaled about 348,000, the highest level attained in a peacetime year.

399,659
176,01l

2,256,672
1,426,011

l,7l)6,915
1,035,479

Il S,4S6
IS7,525
88,313
136.335

639,6SO
1,042,907

546,354
776,103

702,223

560,737

8,265
39,460
35,m
17,989

SO,408
74,035
71,651
188,851

120,182
96,339

SIO,8ii

404,8 18
36,752

100,401

771,550
5,086,9SO
15,143,000
7,993,800
1,312,950
9,114,800
3,709,800
1,306,500
1,288,000
2O,129.2SO
4,245,200
2,770,400

Increase or decrease in daily
average production from

Daily &yg.

production
24,889
164,095
488,184
257,864
42.353
294,026
119,571
42,145
41.484
649,331
136.942
89,368
2,350.653
120.124
108,223
2,578,999
2,695,432
5,274,431

Nov. 1947
332
1,888
1,437
3,783
795
-10.126
2,124
695
-

174

5.671
3,207
1,195
72,8iO,2QO
10,827
3,723,8.\0
406
1,736
.,364,900
79,948,9SO
12,969
83,558,408
3,744
163,S07,353
16,713
American Peu-oleum Institute weekly reports.

Dec. 1946
6,029
28,973
64,926
48,591
7,708
- 21,609
20,124
7,~42

13,732
1SO,834
18.819
8,252
354,021
21,450
10,460
385,931
190,073
576,004

All other divisions of the petroleum industry also operated
intensively during 1947 to fulfill growing domestic requirements. Refineries in the Gulf Coastal region, as well as in other
areas, advanced production above rated capacity. Pipe-line and
barge carriers were fully employed, and additional loading and
transport facilities were nlshed toward completion. New records were established in the district, also, in total footage drilled
and in number of exploratory wells completed. Approximately
11,000 wells were completed, as compared with 9,600 in 1946,
including 2,500 exploratory wells-500 more than in 1946.
The results of exploration and development were generally

MONTHLY BUSINESS REVIEW
satisfactory, the number of productive tests being substantially
greater than in previous years and additions to proved reserves
apparently being sufficiently great to offset the very large
amount of crude oil produced during the year.
Resistance by potential home builders to high costs of residential construction and reluctance of prospective institutional,
commercial, and industrial organizations to undertake facility
expansion while costs and completion schedules were uncertain
appeared to be stalling the construction boom early in 1947.
The monthly value of awards in the Eleventh District declined
abruptly from the postwar peak reached early in the year, and
until late in the spring the dollar volume of awardS was somewhat below the level maintained during 1946. Removal of governmental restrictions on nonresidential construction, however,
and more extensive use in residential construction of loans guaranteed under Title VI of the National Housing Act contributed
to revival of the upward trend· of awards in mid-1947, and renewed optimism concerning the long-term outlook for business subsequently led to extensive commitments for new construction of nearly all types. The value of contract awards in
the district rose to a new postwar peak of $71,000,000 in October and continued near that level during the last two months
of the year.
VALUE OF CONSTRUCTION CONTRACTS AWARDED
(Tbousanda of dollars)
December Decemher November January I to December 31
1946
1947®
1947r
1947®
1946
Eleventh District-total.. .
50,078
43.34 t
68.361
684,364
564,394
Ru!lidential. . . .. .. . . .. .
14,511
14,980
27,698
244,074
229,846
All other. . . . . .. .. .. . . .
35,567
28.36 t
40.663
44C.290
334.548
United Ststes·-tot",l.. .. .
626,363
457,278
716.108
7.759.~68
7.459.722
Resident.ial. ..
226,796
193,365
290.220
3.163.773
3,142,102
All other.. .. .
398,667
263.913
424.888
4.606.095
4.347,620
·37 states e&8t of the Rocky Mountains.
®-Preliminary.
SOURCE: F, W. Dodg. Corporatioo;
r-Revised.

Total construction contract awards in the district during
1947 are estimated to have amounted to $684,000,000, or about
$120,000,000 above 1946 and more than three times the prewar
average. As in most years, awards for residential construction
made up the largest category, accounting for about 37 percent
of the total. The increase in the total value of award's as compared with 1946, however, was attributable principally to increases in public works and utilities, the former rising approxin1ately 50 percent and the latter about doubling.
BUILDING PERMITS

....:.D::.::ce:::m::be=.:I:::
•
r 04.::7_--=P~:1~~~~: {~~ge
No.
Abilene ......... .
89
Amarillo .. .. .... . 122
Austin . . ........ . 259
Beaumont ....... . 248
Corpus Christi ... . 244
Dallas . . . ..... .. . 1,355
EIP""' ......... .
60
Fort Worth ..... ..
473
Galveston ....... .
93
Houston ......... . 649
Lubbock ........ . 222
Port Arthur . .... .
25
San Antonio ..... . 1.097
Sflreveport, La .. . . 232
Waco ........... .
114
Wichita Falls .. .. .
48

J80.1 to Dec. 3t, 1047

Percentage
chRn~e

valuation
Valuation Dec.1946 Nov.1947 No.
Valu.a.lion from 1046
I 369,090
168
26
1.081' 4.382.956
10
524.485
71
- 48
2.086
8,70 1,903
20
1,480,948
73
- 16
4,932 19,827.376
11
1,392,664
286
334
3.9~6
7.125.840
84
878,077
32
23
4.056 14,952.122
48
5,700,91:t
206
37
16.921 58,460,649
26
484,683
126
- 66
1.497
7.992.815
78
1,984,430
84
- 38
7.420 27,696,264
21
434.556
674
69
1.822
2,857.666
19
7.321,050
574
28
8,445 72,401,114
43
1,172,610
249
104
2.444 11.130.866
24
70,660
40
- 70
1,904
2.253.349
11
2,383.917
85
- 42
14,784 28,97M84
24
662.357
54
- 67
4,037 12.392.619
40
703,234
- 15
18
1,762
9.078.885
58
639. 135
400
446
822
2.927,029
48

TotaL .... . .. 6,330 126.192.810
170
tChange less than ollc-half of one percent.

-

t

78,038 $291,161,627

32

The volume of new construction actually put in place in
the district substantially exceeded that in 1946. Many projects
started in 1946 but delayed by shortages of labor and materials
were completed during 1947. In addition, im.proved flow of
materials and a larger and more efficient constru'ction labor
force permitted initiation of a substantially larger amount of
new construction. A greater amount of residential and com-

33

mercial building was completed in 1947 than in any prior yeaI'
of record, and the amount of industrial construction put in
place probably was exceeded only by that in 1943 and 1944.
Perhaps the most important industrial development in the
Southwest during 1947 was the extensive facility expansion
undertaken by every industry in nearly every section of this
district. The chemical industry led in dollar value of expansion during the year. Among the major chemical projects announced or initiated and the estimated cost of each project
were:
Carthage Hydrocol, Incorporated - Brownsville, Texas$20,000,000.
Standard Oil of Indiana-Brownsville, Texas-$15,000,000.
Southern Alkali Corporation--Corpus Christi, Texas--extension.

Dow Chemical Company .- Freeport, Texas - extension$20,000,000.
Rohm and Haas-Houston, Texas-$5,000,000.
Commercial Solvents Corporation-Gulf Coast-$20,000,000.
Diamond Alkali Company-Houston, Texas-$6,000,OOO.
Shell Chemical Corporation- Houston, Texas-$25,000,000.
Gulf Chemical Company-Houston, Texas-$1,500,000.
E. I. DuPont de Nemours and Company-Orange, Texasextension-$ 30,000,000.
Jefferson Chemical Company-Port Neches, Texas-$12,000,000.
McCarthy Chemical Company-Jefferson County, Texas$3,000,000.
Carbide and Carbon Chemical Corporation-Texas City,
Texas-$15,000,000.
Commercial Solvents Corporation-Sterlington, Louisiana
-$4,500,000.
These new facilities are to produce such diverse basic chemicals as synthetic methanol, vinylete resins, benzine, styrene,
synthetic glycerin, nylon salts, phosphates, chlorine, caustic
soda, soda ash, carbonic acid, and various other heavy chemicals anel hydrocarbons. They will add the product componencs
and the capacity which will establish the Gulf Coastal region
as the most important chemical center in the world.
Very important additions to the facilities of the petroleum
and natural gas industries also were undertaken in the district
during 1947, including several large gas conservation plants,
natural gasoline and recycling plants, and modern catalytic
refineries. Two new carbon black plants were projected during
the year for Noreh Louisiana and West Texas, record-breaking
pipe-line construction programs got underway throughout the
district, and construction of major new petroleum laboratories and loading facilities was started.
The potential capacity of the building materials industry
of the district was expanded by initiation of construction of
large factories to manufacture or process sewer pipe, roofing
and siding, cement, structural steel, and plate glass, as well as
of numerous smaller plants throughout the district to produce
brick and other building materials. Food processing plant expansions, although generally small, were very numerous, and
several major projects were included, among them bottling
plants; grain mills and feed processing facilities; the Corn Products Company, a $10,000,000 plant at Corpus Christi, Texas.
to manufacture starch and dextrose from grain sorghums; and
bakeries, including the $2,500,000 National Biscuit Company
plant at Houston.

34

MONTHLY BUSINESS REVIEW

Other industries in the district also participated in the expansion. Construction got underway on large new paper and
paper-products facilities at Houston, Texas, and Bastrop, Louisiana . In the iron and steel industry production was started
at t he Lone Star Steel Plant at Daingerfield, Texas, and facilit ies of manufacturers of plows and other agricultural equipment, oil- fi eld tools, and various heavy industrial equipment
were enlarged. The sulphur, potash, smelting, apparel, tex tile,
wood-products, and rubber-products industries undertook numerous additions to existing plants and construction of smaller
new installations. These and other facility expansions were accompanied by initiation of several power, water, rail, and POrt
f acility expansion programs which will enlarge the growth
potential of industry in the region.
Price Trends in 1947
Rising prices and movements within the price structure
were among the more significant factors influencing agricultural, business, and industrial operations during 1947. At the
beginning of the year, t he prices of some categories of goods
appelred to be moving toward stability after the rapid increase in m arket quotations which followed discontinuance of
price controls in N ovember 1946. There was a considerable
body of opinion tha t agricultural prices had reached such high
levels that a decline soon might be expected, while many believed that resistance of consumers to the rising prices of m anUfactured products might retard further price increases and perhaps even force downward adjustments. Contrary to these anticipations, the prices of most raw materials and many manuf actured goods moved upward during the yea r. In D ecember
1947, the average price of commodities at wholesale was 15
percent higher than a year earlier, and retail prices were up

an estimated 7 percent. Such important components of consumer's budgets as ou tlays for rent and household utilities rose
less rapidl y t han com modi ty prices in general, but the average
dollar cost of living for low-income families in metropolitan
areas nevertheless increased 8 percent durin.g the year.
The sharp increases in price levels during 1947 are t raceable
to the impacts of extraordinarily large demands for goods and
services upon a tau t econom y. Productive facilities and the Nation's labor force were being used about as fully as social, business, and labor restrictions and customs would permit. Major
increases in requirements could not be supplied from surpluses
or by pressing unused plant f acilities or manpower into production. Forecasts of early stabilization of prices and declines in
the prices of some important commodity groups were based
in part on the assumptions that many of the unusual demands
accumulated during the war had been largely satisfied and that
consumer resist ance to high prices would reduce t be demand
for many other cat egories of goods. Total demand, however,
contin ued t o move upward. Indust ry diverted m aterials and
la bor f rom production of goods for c,:,rrent consumption to
capital goods purposes as it attempted to modernize and expand facilities. Inventory accumulation continued at n early all
levels of manufacturing and distribution, shifting considerable
quantities of current production from the stream of current
consumption. C ruci al needs in W estern Europe led to re cord
exports which were not counterbalanced by proportionat e imports of goods. These developments combined to restrict the
quantity of goods available to domestic consumers at a time
when consumer demands and expenditures, supported by higher
wages, high business and agricultural incomes, expansion of
consumer and bank credit, and reduction in the rate of saving,
were on the increase.

SELECTED I NDE XES OF PllICES, UN ITED STATES
(1936-1 939- UlO)

Wholesale commodity prices CU. S. Depnriment of lAbor)
All commodities . . .............. . . . ... , .. .. .. . , .. ....
Farm products . .. . . . . . . . .. . . ... . . . ... . . . . . ... . . . . . ..
Foods . .• . . . . . . . . . . . . . ... . . . ... . . . ...•.•. . . .
Raw materiAls .... . . ..... . . . ......... . ... . . .
Manufact·ured ~rodtlct8 . ... . . . . . . . . . . . . ... . . .
Alilroducts ot er than farm products a nd foods.
iues and leather products . . . . . . . . .. . . . . .. .
Textile Smducte .. ... ....... . .. ... .
Fuel nn lighting materials . ... . ... .
Metals nud metal products .... . . . ...
Building materials .. .. . ... . ........
Chemicals and allied producte . . .....
Prices received by farmen (U. S. Department of Agricult ure) .... . .. .

... .... .....

CTood g;.ai~ : : : ::::: :·. : ·.: ·.::: ·.: ·. : ·. : ·. : ·.:·. : : : ·. : ·. : :: : :·.:::::·. ::

Cotton .... .... .. ....... ...................... .. ...........
LiMC&!f:ni~~fs~~~·.: : :::::: : ::::: : : : : : :::::::: : : :: :::: :: :
Dairy products . .. .... .. .... . ................ . ..............

Poultry aDd eggs . . . ............... . . . ... . . . . ... ... . . . . . . . . .
Prices pnitl by Carmcr,J (0. 8. Dcpartment of Agricult w-e) . . . ' .. . ....
Retail pric~,· all commodities CU. S. Department of Commerce) ... " .
Consumers' price index CU. S. Depart ment of Labor)
All items . . . . . ..... .... . . . .... . . . . . . . . . . . .... . ..... . .... . . . ..
Food . . .. . . . .. .• . . . •.. . .... .
Clothing . ....
Rent .... .. . . . . . . : : : ::::::: .
'Fuel, elcctricity, and ioo .. .. ..
Housefurnishings ..
. .
. . . . ..
Miscellaneous .. .. .

............................. .
... ....................... .. ...
..............................
.. ...........................
.. .. ..... ... ... . .. .
... ..... .. ..... .... ..... ......

December

Jun.

1930

19tO

1942

194t

1945

19t6

m6

1"7

107 . 2
116.2
114 .4
109.8
106.3
10·LA
104 .0
113 . 1
104 . 1
100 .3
100 . 3
11 2.7
129
12.1
99
129
116
113
119
117
117
)I .A.

97 . 5
89 . 1
00 . 1
93.6
98.6
102.2
105 . •
103.9
95 .1
104.4
105 .8
97 .8
93
91
89
93

122 .6
139 . 3
125 . 9
131. 0
119 . 1
117 . 6
123 . 1
136 . 5
104 . 1
113 . 1
12.1 .0
121.3

129.0
162.2
132.6
147 . 4
121. 7
121.3
122 . 1
138.6
110 . 1
11 3 .1
128. 9
]21.0
182

131.3
168 . 7
134 .3
152 .2
122 .9
122 . 8
123 .5
14 1.0
lI lA
114 . 1
13 1. 5
121 .0
IS9
297
183
206
174

150 . 2
19S. 9
165 .2
175 . 1
139 . 9
134.6
143 . 5
163 .8
119 . 5
125 . 9
148 .0
128 .8
218
2.13
214

174 .8
221.2
202 .4
199 . 5
163 . 9
153.6
184.8
189.7
127.5
146. 7
176.1
159 . 7
247
2a9
2.18
292
261
261
262
207
170
172 . 7

183 .1
23U
21)4 . 6
208 . 6
171.9
161.8
181.2
195.6
13 7.8
155 .3
194 . 6
152 . 7

119. 4
126.0
112.7
la7.5
111.4
108.9
105.1

1b3 . 3
185 . 9
176.5

un

200

98
100 . 6

146
128
ISO
US
158
136
139
122
124 .9

100.2
96.6
101 .7
104.6
99.7
100 . 5
101.1

116.5
123.9
124.2
108.5
105. 4
122 .2
11 0. 9

125.5
136.1
la8.8

96
93
100

88

· -Estimated .

The accom panying table, tracing the course of prices of selected categories of commodities, illustrates tbe unusual m agnitude of increase since 1940 and the rapidity of increase dur ing 1947. T he wholesale price average in D ecember was approximately double t hat of 1940. Prices of fa rm products were
nearly two and one-half times the 1940 level, and the average cost of living was 65 percent greater. Also, it will be observed that varying rates of increase among the commodity
classificati ons have created dislocations within the price struc-

176
198
166
168
166
160
141
137. 6

108.2

109.8
136.4
12L. 3

275
295
215

176
166
ISO
144
111.3

182
162
155 . 0

128 .4
139.1
145.9
lC8.3
1l0 .3
145 .8
124.1

13U
159 .6
160 .2
108 .6
1I2 . 5
159.2
128.8

203

11 5:5
177.1
186. 1

October November December
1"7
1"7
1"7

270
269
331
2.18
284
196
188
184
178.7

196.7
249.6
224 .8
227 .9
186 . I
172.3
200 . 5
201.4
153.7
164.6
297.4
163 .4
270
269
321
298
268
303
2.18
2.10
191
184 .9

19i .9
247 . 2
225.0
228.5
183. 7
175 .0
211. 7
293 . 8
156.6
165.0
209 . 3
172 .6
268
276
332
310
260
284
246

157 .1
100 . 5
185.7
109 . 2
1l1.1
182.6
139. 1

163.8
201. 6
189. 0
114 .9
125 .2
187 .8
141. 8

16< 0
292 . 7
100 . 2
115.2
126.9
188.9
143.0

2b3

222
194
N.A.

201.0·

258.0·
225.9
N .A.
)I.A .
177 . 9·
)I.A .
N.A .
N.A.
)I.A.
)I.A.
N .A.
281

290
338
aal
274

296
261
240
196
N.A.

N.A .

N.A.

N.A.
N.A .
N.A.
N.A.
N.".

N.A .-Not available.

ture. In gen~ral, prices of m anufactured products have ri sen
much less than prices of raw mat erials and agricultural commodities ; moreover, within certain cat egories of commodities
some prices have risen m uch more than others. Time m ay prove
t hat some of these divergences from prewar price relat ions arc
pcrnllnent, since changing costs of production and changing
ch aracter of demand rna)' have created new price patterns. It
appears, however, that the commodity price inflation whicb t he
country has been experiencing has ag~ra v a ted distortions in

MONTHLY BUSI:t:<ESS REVIEW

the ~r.ice structure, especially between certain competing commodltlrs and between commodities at different stages of production and distribution. This development has resulted in an unbalanced condition which may be incompatible with price ' stability and may lead ultimately to readjustments within the
price structure.
Inflationary forces still are operating. Abundant purchasing
power is available; the credit expansion potential which can be
used to support speculative accumulation of inventories, further extension of consumer credit, and competition for scarce
materials among producers is quite large; continued large foreign requirements appear virtually certain under the European
Recovery Program; and another round of wage increases seems
likely to supply additional purchasing power to domestic consumers. On the other hand, here and there are indications that

36

price levels may have entered vulnerable areas. Backlogs of
consumer demand for many soft and semidurable goods appear largely filled. Facility expansion, although at present at
record levels, may not continue to exert the drain on materials
and labor which was the case in 1947. Perhaps more important,
the fruits of greater productivity, arising from expanded plant
capacity and a more efficient labor force, may be passed on to
consumers through lower prices. Which of the conflicting forces
will prove dominant during 1948 seems likely to depend upon
such unforecastable influences as the weather and, its influence on agricultural production, the rapidity and success of
foreign rehabilitation, the discipline with which American consumers channel income into saving and prudent purchasing,
and upon the soundness and wisdom of the policies of the Nation's government, business, labor, and financial leaders.