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BUSINESS REVIEW FEBRUARY 1962 Vol. 47, No.2 DISTRICT COMMERCIAL BANK PARTICIPATION IN 1961 TREASURY FINANCINGS Commercial banks in the Eleventh Federal Reserve District were active participants in the Government securities market during 1961, both as underwriters of several large new Treasury financings and as direct purchasers for their own accounts. The District banks purchased $2.5 billion of the $149 billion of new Treasury offerings, accounting for about 5 percent of the Nation's commercial bank acquisitions. These large acquisitions were instrumental in increasing member bank holdings of Government securities by 10 percent within both the Nation and the District. During the year ended December 27, 1961, total member bank holdings advanced $5.1 billion in the Nation and $260 million in the District, attaining levels of $54.2 billion and $2.9 billion, respectively. Approximately $168 million, or 64.6 percent, of these new holdings in the District centered in the country banks. In order to obtain the requisite funds, the Treasury operated throughout the whole spectrum of the securities market during 1961. The Treasury appeared to be faced with the following difficult, and sometimes conflicting, considerations: (1) to issue sufficient securities to provide the funds for increased Government expenditures; (2) to redeem or refund the large amounts of maturing securities; (3) to extend the average maturity of the public debt; (4) to support short-term interest rates because of their influence on the outflow of short-term funds to foreign markets; and (5) to hold down long-term interest rates in order to stimulate capital expenditures and reduce interest charges on the FEDERAL RESERVE DALLAS , BANK OF DALLAS TEXAS This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) public debt. Whenever the Treasury entered the market, these considerations had to be weighed and evaluated bu~ .its ultimate decision was also tempered by the pre: vaIlmg tone of the market and expectations as to the uncharted course of future economic and financial trends. Th~ Treasury, however, was not alone in attempting to strike a balance of alternatives. The suppliers of funds were also confronted with numerous alternatives e~en though differing ~onsiderably in nature and mag: mtude from those facmg the Treasury. The suppliers' ,:,orld revolves around the present and future expectations of safety, liquidity, and income in uncounted v~riations of composition and form. This task is espeCIally complex for commercial banks, which must consider the additional factors of seasonal, cyclical, and random changes in loans, deposits, and other investments. These alternatives and factors were brought into clear perspective by the decisions of the commercial banks in the Eleventh District during 1961. A large majority of the commercial banks in the ?istric~ struck a balance on the side of increased liquidIty dunng the past year. This was achieved through both the purchase of short- and intermediate-term securities with new resources and the shifting of funds obtained by liquidation of longer-dated issues into short- and intermediate-term securities. Prime considerations that guided these actions were the prospective need fo~ funds to meet anticipated loan demands, e~pectatlOns of changes in interest rates, the shifting ~Ield spreads between investJ.nents of varying maturitles, and the cash and reserve positions of the banks. . The reduction in holdings of long-term investments I~ ~e portfol.ios of District banks eliminated the possibIlity of capItal loss from future liquidation of these securities. The shortening of investJ.nent maturities wh~n bo~d prices approach the expected high of theIr cyclIcal movement, as well as the lengthening of these maturities when bond prices seem to reach their l0v.:, giv~s the flexibility in bank portfolio management ~h!ch WIll provide liquidity at the proper time and maxlmize retu.rns over the course of an interest rate cycle. CommercIal banks in the District generally acted in concert with this ideal over the past year; their actions were strengthened by the apparent belief that even if ~he prophesied upturn in loan demand did not ~aterial ~ze, these funds would still be available for reinvestment m longer-term securities at expected higher rates of interest. It was anticipated that these higher rates would mor~ than compensate for the income sacrificed by holdmg short-term securities in the transition period. I I2 BUSINESS REVIEW 2:1962 COMMERCIAL BANK PARTICIPATION IN TOTAL TREASURY OFFERINGS, 1961 AND 1960 Elevenlh Federal Reserve Di strict (Dollar amounts in millions) 1961 Item Total Treosury offerings l .• • ..•• .. . • . . . . Total purchases by commercial bonks, Eleventh District . ............ . As percent of national total .. •......... Average ranking among 12 Federal Reserve districts .. ................. . 1 1960 $148,700 $142,000 $2,977 2.0 $2,273 1.6 8 9 Includes refunding s, advance refunding s, and new cosh offerings. Both reserve city banks and country banks in the District were active participants in Treasury financing operations during 1961, even though they sometimes pursued divergent courses of action. The r'eserve city banks generally refrained from more than nominal participation in Treasury offerings unless credit to Tax and Loan Accounts was permitted or unless the pricing of the particular issue was exceptionally favorable. When securities with a Tax and Loan Account feature were acquired, these banks generally sold them far in advance of maturity. In many instances, the reserve city banks acted upon a "feel of the market" in order to obtain short-term capital gains. Since loans are generally more profitable than investments (with the possible exception of tax-exempt municipal bonds), the size and composition of reserve city bank investment portfolios were significantly affected by an intensification of loan demands. Usually, short-term Government securities are liquidated to accommodate loan demands since these securities possess the highest marketability and the lowest current yield. In a number of instances, continued favorable customer relations necessitated such transfers, even if they were not justified upon a profitability basis. The investment holdings of the District's reserve city banks were concentrated in Government securities. A small but increasing proportion of total investments was accounted for by municipal obligations, while corporate bonds continued to be sparsely held. Reserve city banks concentrated upon short- and intermediate-term securities in their municipal bond portfolios; longer maturities attained greater importance toward the end of 1961, when banks began to seek cover for their increased interest payments to savings and time deposit customers. . Com~ar~d with the reserve city banks, country banks m t?e DIstr~ct generally obtained a larger percentage of then total lllcome from investJ.nent portfolios because loan opportunities were more limited. With significant proportions of their deposits residing in less volatile accounts, country banks concentrated upon investing in securities of longer maturities and higher yields, thus reducing securities turnover. The country banks generally are not in a position to be aware of the feel of the market, as are the reserve city banks, and are content .to place greater reliance upon yield to maturity than upon short-term capital appreciation. These banks also maintained considerable excess reserves, in sharp contrast with reserve city banks, thereby obtaining increased liquidity and safety at the expense of maximization of returns. The country banks usually purchased new issues of Treasury bills through noncompetitive bidding, seldom purchasing more than nominal amounts. With respect to other Government issues, these banks retained such securities for extended periods of time. Since the country banks engaged in relatively small and stable purchases of new Treasury securities, the size and volatility of the District's participation were dependent upon the reserve city banks. Nevertheless, because of greater retention periods and purchases through secondary market channels, country banks in the District showed a larger increase in Government securities holdings during 1961. With a majority of their bids noncompetitive in nature, District banks were not active participants in the Treasury's weekly bill offerings, although there was a weekly increase of $100 million in such offerings during the year. In 1961 the District's commercial banks purchased $764 million of 91-day bills and $198 million of 182-day bills for weekly averages of approximately $14.7 million and $3.8 million, respectively. Among the 12 Federal Reserve districts, the highest rankings the Eleventh District reached in any weekly bill offering were fifth in the 91-day securities and sixth in the 182-day securities. The average ranking of the District for these issuances was ninth and eighth, respectively. District commercial banks purchased less than one-half of 1 percent of these weekly offerings. It should be noted, however, that the New York, Chicago, and San Francisco districts combined accounted for over 86 percent of the weekly bill purchases in 1961. The commercial banks in the District also demonstrated a lack of interest in the four I-year bills issued by the Treasury during 1961. The District accounted for $60.5 million, or less than 1 percent, of the $7.5 billion total, ranking tenth in three of the offerings and eighth in the other. The absence of Tax and Loan Account credit and the relatively long maturity dates, which were only partially compensated for by higher yields, encouraged District banks to concentrate their purchases in other types of securities. An additional restraining factor was the lower than anticipated auction yields. Only in the April 15 issue, when there was an improved yield differential between the weekly bills and the I-year bill, did the District banks participate actively. In all bill offerings where credit to Tax and Loan Accounts was permitted, District banks were exceptionally active. Of the three Tax Anticipation bills issued during 1961, the District banks purchased $696 million, or more than 9 percent of the $7.5 billion total; the District ranked fourth on two of the occasions and third on the other. These purchases were concentrated at the larger reserve city banks, with the securities being retained for relatively short periods of time. Tax and Loan Account credits were also allowed in one of the two "strip" bill offerings during the year. This $1.8 billion issue attracted $157 million from District banks for a District ranking of fourth in the Nation. The other strip of bills, totaling $800 million, was marketed near the conclusion of 1961, but District banks purchased less than $1 million and the District ranked twelfth in the Nation. Reserve city banks demonstrated a complete lack of interest in the issue, partly because sales of excess reserves in the Federal funds market were a profitable alternative and partly because loan demands were rising and fewer investment funds were available. The very active bidding by District banks on securities issued under Tax and Loan Account privileges was influenced by some of the following factors: (1) the percentage applicable to Treasury Tax and Loan Accounts; (2) the expected time period before the Treasury would draw down the enlarged balance; (3) the desire for an improvement in deposit positions before a bank statement date; (4) the size, price, and relative yield of the new issue; and (5) the ease and cost of meeting increased required reserves either through the sale of securities or by means of borrowings from commercial banks or the Federal Reserve bank. During the year, a $2 billion note also was issued under a Tax and Loan covenant, but this issue encountered a passiven.ess among District banks, which purchased only $90 million. Accounting for this lack of interest were the facts that pricing of the issue was not considered exceptionally favorable, the Tax and Loan I BUSINESS REVIEW 2:1962 31 COMMERCIAL BANK PARTICIPATION IN TREASURY OFFERINGS OF CERTIFICATES, NOTES, AND BONDS, 1961 Eleventh Federal Reserve District (Dollar amounts in thousands) Purchases by commercia l banks, Eleventh District Treasury afferings Issue date February 15 . •....... March 15 ..... . • ..• . May 15 . •.•..•....•• August 1 .. ' " . • ...•• September 15 ...• • .•. October 11 ••.••..•.• November 15 • .•.••.• December 15 ...•.••• Coupon rate (Percent) 3\4 3% 3% 3 3\4 3\4 3% 3% 3Y2 3Y2 3Y2 3\4 3\4 3% 3% 3¥s Year of maturity 1962 1966 1967 1962 1963 1962 1964 1968 1980 1990 1998 1963 1963 1966 1974 1968 Size of issue $7,324,440 2,441,835} 3,605,521 5,506,570} 2,754,205 6,077,0001 5,019,000 746,000) 1,274,472} 1,296,446 1,186,676 2,294,529 3,641,676} 2,382,979 517,368 320,315 Total Certiflcates Notes $ 7,324,440 $130,797 140,266 6,047,356 8,260,775 $118,694 65,657 57,562 79,295 11,842,000 24,798 33,865 32,760 23,895 3,757,594 89,743 95,339 2,294,529 74,122 2,532 9,942 6,542,023 320,315 $46,389,032 Bonds $120,661 $118,694 $508,257 Total Treasury offerings of certiflcates, notes, and bonds . . •••.•••..••..••••••...•••. . Total purchases of certificates, notes, and bonds by commercial banks, Eleventh Distriel .. • •...•...•• . ••••...••...•••.•.•••••..••• As percent of national total ..•.••••••...••...••..••• . ••••.••••...•••••.••••••• Average ranking (unweighted) among 12 Federal Reserve districts ....•••• . .••• • •••.. As percent of national total 1.6 5.4 3.9 2.2 2.4 .9 1.6 3.3 2.7 2.5 2.0 3.9 2.6 3.1 .5 3.8 Ranking among 12 Federal Reserve districts 9 5 5 8 9 9 9 7 4 6 5 8 9 9 10 12 $472,977 1$46,389,032 $ 1,099,928 2.4 7.8 ' 0f this total, approximately $3.2 billion was new funds, and the remainder was exchange offerings or advance refundings. Although determining their rate of participation in Treasury financings on the basis of self-interest, the District banks were a part of the necessary underwriting effort which markets Treasury securities. Purchases for There were eight Treasury offerings, totaling $46.4 their own account and for customers and correspondent billion, outside the bill area during 1961. As shown in banks brought the District's larger banks into both the the accompanying table, wide variances in the rate of new and the secondary market and, thus, provided a participation by District banks characterized these sustaining demand for Government securities and a offerings as banks evaluated the many alternatives of means of profitably investing otherwise idle funds. cost and return, as well as their individual liquidity and LEONARD JAY SANTOW reserve positions. Financial Economist credit was only partial, the funds were expected to be used by the Treasury in a short period of time, and there was a relatively high Federal funds rate. I BUSINESS REVIEW 2:1962 OPERATIONS OF. THE FEDERAL RESERVE BANK OF DALLAS IN 1961 The changes in earnings, expenses, and the financial condition of the Federal Reserve Bank of Dallas are a partial reflection of economic and financial developments in the Eleventh Federal Reserve District and the Nation. The recession in economic activity which began in 1960 reached its low point early in 1961, and a somewhat unique period of economic recovery followed. Unlike most periods of recovery, there was a singular lack of inflationary pressure; as a result, monetary policy remained easy throughout the year, though special moves were occasioned by the international financial problems of the Nation. Interest rates displayed exceptional stability over the year, with average rates somewhat below those of 1960. Other factors, including a strongly developing internal shift toward automation and the impact of the move into new or completely remodeled quarters in late 1960, also influenced the Bank's financial condition. High lights for the year for the Dallas Federal Reserve Bank encompassed not only the developments described above but also the impact of the new Texas sales tax upon cash shipments, the effects of a hurricane and other severe weather upon check collections, the handling of a heavy volume of Treasury financi~g, and special emphasis upon System monetary polIcy problems. In order to handle the ever-expanding volume of checks the Federal Reserve Bank of Dallas has continued'to work with the member banks in this area toward the goal of eventual magnetic imprinting of all checks. Most departments of the Bank have been preparing to shift to more-automated methods of operation, which will be made possible by the introduction early this year of an electronic co~puter .. The computer will serve to improve the operatll1.g. efficIen~y of the Bank and will be a valuable addItIOn to Its research facilities. The total number of all types of checks and collection items handled by the Transit Department of the Bank rose 4 percent in 1961, or at about th.e same rate as in previous years. The volume of com payments to banks by the Cash Departm~nt also increas~d noticeably, with a substantial portIOn of the g~ll1 accounted for by an increase in the need for penmes associated with the new Texas sales tax. The heavy participation in the Federal funds market by the District's member banks was demonstrated by the enlarged number of transfers of funds handled by the Federal Reserve Bank of Dallas. The number of such transfers advanced 3 percent during 1961, while the dollar volume rose almost 7 percent. In connection with its role as fiscal agent for the United States Government, the Federal Reserve handles the purchase, sale, and redemption of securities issued by the United States Treasury. The total dollar volume of marketable United States Government securities issued, exchanged, and redeemed by the Fiscal Agency Department of this Bank during 1961 increased 23 percent, but the number of pieces involved in such transactions declined approximately 3 percent. All of these developments and events had a direct or indirect effect upon the Bank's earnings and expenses. The expansion in economic activity and the easy monetary policy induced considerable improvement in commercial bank earning assets, but these factors and the stable interest rate pattern caused net earnings of the Federal Reserve Bank of Dallas to be reduced nearly one-fifth during 1961. The most important source of income for the Federal Reserve Bank of Dallas arises from interest earnings on United States Government securities. Increases or decreases in earnings from this source account for virtually all of the changes in total current earnings. The extent to which each Federal Reserve bank participates in the holdings of securities in the System Open Market Account, and the earnings therefrom, is determined each year on the basis of the bank's share of the daily average total assets of the System for the 12 months ending the last day of February. During 1961, there was an increase in the total amount of Government securities held by the Federal Reserve Bank of Dallas as a result of an expansion in the total holdings of the Federal Reserve System and the Bank's somewhat higher participation ratio due to the faster growth in total assets at the Federal Reserve Bank of Dallas relative to other Federal Reserve banks. Another important factor influencing income from securities holdings occurred in February 1961, when the Federal Open Market Committee modified its policy of dealing in bills preferably and extended operations to the full range of maturities. The effect of this policy can be seen in the composition of holdings of Government securities by the Federal Reserve Bank of Dallas. Holdings of Treasury notes rose 61 percent BUSINESS REVIEW 2:1962 I 51 over the year, and holdings of United States Government bonds increased 52 percent. Treasury certificates, on the other hand, declined 81 percent; increased issues of longer-dated Treasury bills have generally reduced the need for certificates, and only one issue of Treasury certificates remains outstanding. Despite the higher level of total holdings of Government securities by this Bank and the larger proportion of higher-yielding, longer-dated securities, earnings from the securities portfolio decreased 12.7 percent, reflecting the lower average yield on the System's portfolio during 1961. The average yield in 1961 amounted to 3.42 percent, down from 4.11 percent in 1960. EARNINGS OF FEDERAL RESERVE BANK OF DALLAS AND AVERAGE YIELD ON HOLDINGS IN SYSTEM OPEN MARKET ACCOUNT EARNINGS MIl.LIONS OF DOL.l.ARS YIEL.D PERCE NT 10 50 40 ~------------------------/ 30'1-1------------------===/ '- - - - - - - - - l 20'~--~ _____ .1' - - - - - - - - - - - -"/ - l0l---=_-==~ AVERAGE YIELD ON U,S, GOVERNMENT SECURITIES HELD IN SYSTEM OPEN MARKET ACCOUNT 2 g,L52--~--~-19~5-5~~~--~195-8--~~--~19J The only other significant source of income to the Federal Reserve Bank of Dallas is its earnings on discounts and advances to member banks. The earnings which the Bank derives from this source depend upon the amount and cost of such borrowing, and the extent to which the member banks utilize the discount window depends largely upon their reserve positions and the relative cost of alternative sources of funds. The member banks in the Eleventh District were in a comfortable reserve position throughout 1961. The reserve accounts held at the Federal Reserve Bank declined slightly from the high levels reached in December 1960, but the effect of this reduction was partially offset by an increase in member bank vault cash holdings, all of which were allowed as reserves in late 1960. The ability of the member banks to extend loans was further improved by a more rapid growth in time I BUSINESS REVIEW \6 2:1962 deposits than in demand d~po~its, since .the reserve requirement on time deposIts IS substantially lower. The discount rate (or the interest cost to mem~er banks borrowing from the Reserve bank) ~as ma1l1tained at 3 percent throughout 1961, averagl,ng somewhat lower than in the previous year. The ~a1l1tenan~e of the discount rate at such a relatively high level 111 a period of recession and early recovery ,is in sharp contrast to recent cyclical patterns. The dIscount rate was relatively high compared with short-term market rates, a fact which encouraged the mem.her banks to rely heavily upon Federal funds transactlOns to make reserve adjustments. The number and amount of notes discounted and advances made by the Federal Reserve Bank of Dallas for member banks declined substantially in 1961, with the number of banks receiving such loans decreasing from 94 to 33. The dollar volume of ~~er age daily borrowings declined to about $1. 8 mIllion during 1961 from more than $31 million in 1960. As a result of the reduced amount of borrowing from t~e Federal Reserve and the lower average level of dIScount rates during 1961, the earnings of the Bank on discounts and advances were sharply reduced . In su~ mary, with decreases in earnings from both the seCUflties portfolio and discounts and ~d~ances, total current earnings declined to $38.0 mIlllOn, or 15 percent below 1960. Total current expenses rose moderately to $9,302,935 in 1961, or 6.4 percent over 1960, continuing the secular expansion which has been evident for some years. The growth in expenses came largely from higher employee salaries, increased depreciation on the new building, and an accounting entry on repairs and alterations connected with the completion of the Dallas building program. Among other expenses, the original cost of Federal Reserve currency, including shipping charges, showed a relatively sharp expansion. T~is resulted from the larger amounts of currency WhICh were printed and shipped to the Federal Reserve Bank of Dallas in response to increased demands for Federal Reserve notes; Federal Reserve notes issued by this Bank and in actual circulation reached a newall-time high of $874 million on December 20, 1961, up $33 million from the previous high reached on December 22, 1960. The result of the decline in earnings but increase in expenses was the reduction of the Bank's net earnings to a level of $29,802,806, compared with $37,562,473 in 1960. After the expenses of each Federal Reserve bank have been paid or provided for, the member banks receive an annual cumulative dividend of 6 percent on the paid-in capital stock. Each bank which is a member of the Federal Reserve System must subscribe to the capital stock of the Federal Reserve bank in its district in an amount equal to 6 percent of the member bank's capital and surplus. (The member bank's paid-in subscription equals 3 percent, and an additional 3 percent is subject to call.) Consequently, as the capital accounts of the member banks expand, these banks purchase additional stock in the Federal Reserve bank in order to maintain their paid-in subscriptions at 3 percent, and the paid-in capital of the Federal Reserve bank rises. Moreover, an expansion in paid-in capital is paralleled by an increase in the dividends paid by a Federal Reserve bank; in 1961 the dividends paid by the Dallas Bank increased 5.4 percent. Furthermore, since it is the policy for each Federal Reserve Bank to maintain its surplus account at a level equal to twice the paid-in capital, this Bank's surplus, paid-in capital, and dividends all showed approximately the same relative expansion. After the expenses have been discharged, the dividends have been fully met, and the surplus has been brought into the desired relationship with the paid-in capital, the remaining net earnings are paid to the United States Treasury. Last year, the Federal Reserve Bank of Dallas paid approximately $25.5 million to the Treasury, or almost one-fourth less than in the previous year, reflecting the effect of the lower level of net earnings in 1961, the further increase in dividends, and the additional expansion in capital accounts. The total assets of the Federal Reserve Bank of Dallas showed only a minor change in 1961. An increase in securities holdings was more than offset by a decline in discounts and advances and a substantial reduction in gold certificate reserves. For the year as a whole, the Federal Reserve Bank of Dallas and its three branches in El Paso, Houston, and San Antonio handled a larger volume of work with approximately the same number of employees as in 1960. During the coming year, additional improvements in operating functions are anticipated, both by the use of new dataprocessing equipment and by the results of continued cooperation between this Bank and the member banks of the Eleventh Federal Reserve District. WILLIAM N. GRIGGS Financial Economist ELEVENTH FEDERAL RESERVE DISTRICT ~ Dallal Hood Office Terrltor.Hou l ton Bronch Territory mrrn I!:!:!:!:;:I Son Antonio Branch Territory ~ EI PO l O Branch Torrllory BUSINESS REVIEW 2:1962 I 71 BUSINESS REVIEW BUSIN ESS, AGRICULTURAL, AND FINANCIAL CONDITIONS Department store sales in December were the largest in total dollar volume ever recorded in the Eleventh Federal Reserve District for any month. Department store sales in 1961 were approximately 2 percent above 1960 and were about the same as the 1959 record. The seasonally adjusted index of sales rose from 178 percent of the 1947-49 average in November to 185 in December. New car registrations in December in the four major Texas markets combined were above November 1961 and December 1960. The most severe cold weather of record was the dominant feature of the District's agricultural situation during January. Losses of vegetables and citrus fruits were especially great as a result of the subfreezing temperatures, and livestock shrinkage was heavy. Cash receipts from farm marketings in the District states during the first 11 months of 1961 were slightly larger than a year earlier. The Texas industrial production index remained at 178 in December. Estimated nonagricultural employment in the five District states reached a record 4,551,500 during the month. The value of construction contracts in the five states increased substantially during November. Loans, investments, and time and savings deposits advanced at the weekly reporting member banks in the District during the 4 weeks ended January 17, but demand deposits declined. Time and savings deposits increased noticeably, perhaps in response to changes in regulation Q. District crude oil production and drilling activity rose moderately in December and early January. Refinery operations declined somewhat in December but expanded in early January. The rise in Eleventh District department store sales in December was substantially above the usual seasonal gain for the month, lifting the seasonally adjusted index from 178 percent of the 1947-49 average in November to 185 in December, compared with 171 in December 1960. the 2 weeks ended January 13 was 8 percent below, the comparable 2 weeks in 1961. New passenger car sales registered in four major Texas markets in December reached the highest total for any month in 1961 , rising 6 percent above November - the 1961 month with the second highest total and 21 percent above December 1960. In Dallas and Fort Worth, the December 1961 gains over a year Despite the fact that there was one less business day earlier were 36 percent and 20 percent, respectively. than a year earlier, sales in December were the largest Registrations in San Antonio rose 15 percent over in total dollar volume ever recorded in this District for DEPARTMENT STORE SALES any month, exceeding the previous high, in December (Percentage chang o in retail valu e) 1960, by 4 percent. For the full year 1961, department store sales were approximately 2 percent above Dece mb e r 1961 from 12 months, 1960 and were about the same as the record achieved November Dece mber 1961 from Area 1961 1960 1960 in 1959. District department store sales continued above a year ago in the first week of January 1962 but declined substantially in the second week because of the extremely adverse weather throughout the District. As a consequence, the unadjusted dollar volume of sales in I BUSINESS REVIEW Total Ele venth Di.trlct , • , , , , , , • Corpus Christi ••••••••••.•• • •• Dalla • • • ••. •••• ••• •• •.• •• •.• EI Pa . o •••.•••• • ••.•..•• ••• • Fort Worth ........ .. ..... .. . Houston • • • • •••••• • ••••••••• San Antonio • ..• •• • • • • •.• • •• • Shreveport, la . • •... .. ..•... • Waco .. ... .. . ........ . .. . . . Othe r citle ... ... ... .. .. . ... . 53 66 54 50 56 58 51 42 52 47 4 -8 5 -2 8 9 5 13 1 -1 -5 1 -5 3 6 4 7 o o J of cattle were taken off wheat fields in the Texas Panhandle when grazing became limited on dormant fields. INDEXES OF DEPARTMENT STORE SALES AND STOCKS Eleventh Federal Reserve District (1947-49 = 100) SALES (Daily averag e ) STOCKS (End 01 month) Date Unadjusted Seasonally adjusted Unadjusted 1960, December. • • • • 1961 , October... .. .. November. • • . • December. • • • • 293 177 206 317 171 174 178 185 170r 213r 217 178p r p - Seasonally adjusted 182 193r 197 191p Revised . Preliminary. December 1960, and Houston showed an increase of 13 percent. Despite the gains in the last quarter, however, total 1961 registrations in the four markets combined trailed those of 1960 by 10 percent. The most severe and extensive cold weather of record dominated District agricultural developments during January. The subfreezing temperatures resulted in considerable damage to winter vegetables, citrus fruits, f;lax, and some small grains and clovers. Livestock shrinkage was heavy, but deaths were limited mostly to newborn calves and lambs. Little precipitation accompanied the norther, and moisture continues to be inadequate over much of the Plains and western and southern areas of Texas. In the south Texas commercial vegetable region, losses from the January freeze are estimated by the United States Department of Agriculture to be in excess of $8 million, excluding any expenses for replanting of damaged crops. Virtually all of the sweet corn, potatoes, tomatoes, green peppers, and other spring crops that were up to a stand will have to be replanted. Citrus fruit losses in the Lower Rio Grande Valley of Texas are indicated to be around $9.5 million; however, fruit salvaged for processing will reduce the losses somewhat. Citrus fruit remaining for harvest at the time of the freeze was estimated at 4.3 million boxes of grapefruit and 2.4 million boxes of oranges. Although young citrus trees (those under 5 years of age) suffered the greatest damage, bark splitting occurred on older trees and twigs were frozen back 18 to 24 inches. In addition, nurseries sustained heavy losses of citrus tree stocks. Cattle, sheep, and goats survived the inclement Weather remarkably well, as supplemental feeding had been stepped up prior to the cold front and livestock were generally in good condition. Increasing numbers Prices received by Texas farmers and ranchers for all farm products in 1961 averaged 4 percent above the preceding year. Prices for crops were up 6 percent, and those for livestock and livestock products were 2 percent higher. In the major crop categories, strength was centered in prices for cotton and oil-bearing crops. In the livestock and livestock products group, prices for meat animals and wool and mohair showed increases, while those for dairy products and poultry and eggs were lower. Cash receipts from farm marketings in the District states during January-November 1961 amounted to $3.6 billion, or 2 percent larger than in the corresponding period of 1960. A gain in receipts from livestock and livestock products accounted for virtually all of the 2-percent increase, as crop receipts were about unchanged. The Department of Agriculture has announced the 1962 price-support levels on a number of farm commodities. Rates for most of the commodities are the same as those for 1961; exceptions are increases for wheat, flaxseed, and mohair and decreases for cottonseed and soybeans. During the 4 weeks ended J anuary 10, loans and time and savings deposits expanded at the Nation's weekly reporting member banks, but investments and total demand deposits declined. There was an unusually large increase in time and savings deposits, perhaps reflecting the response to the higher interest rates offered by commercial banks following the revisions in regulation Q. The money market displayed an easier tone during the 4-week period, as money market banks were under less reserve pressure. Market factors provided substantial reserves, and the financing needs of dealers were reduced to more comfortable levels. The effective rate on Federal funds generally ranged from 2 percent to 2% percent during this period. Activity in the Government securities market was significantly affected by the Treasury's January financings, as well as anticipations of the sizable refunding operation to be carried out during February. In addition, a note of caution was injected into the market by continued signs of business improvement, discussion regarding the credit policy implications of recent business gains, reports of the near-term possibility of an BUSINESS REVIEW 2:1962 I 91 increase in the prime lending rate of commercial banks, and the President's statement that he would ask Con- gress to raise the debt ceiling. The yield on 91-day Treasury bills moved up 11 basis points from December 20 to reach 2.71 percent on January 19. CO NDITION STATISTICS OF WEEKLY REPORTING MEMBER BANKS IN LEAD ING CITIES In the 4 weeks ended January 17, loans, investments, and time and savings deposits advanced at the District's weekly reporting member banks, but total demand deposits declined. Cash accounts and total assets both decreased. Gross loans (excluding interbank loans) rose $20.1 million, primarily as a result of gains in commercial and industrial loans and consumer-type loans, which reflected improved business conditions and larger consumer purchases of durable goods. The expansion in commercial and industrial loans was centered in loans to trade concerns and businesses engaged in transportation, communications, and public utilities. During the comparable period in 1961, gross loans declined $43.1 million because of decreases in loans to brokers and dealers and loans to nonbank financial institutions. Eleve nth Federa l Reserve District (In thousands of dollars) Jon. 17, 1962 Dec. 20. 1961 Jon. 18. 1961 '1,760.598 53.223 1,732.755 48.017 1.551.631 32.092 274 60.048 17.274 62.464 28.247 21.402 4.677 '170.681 84.087 150 3.838 163.936 99.327 79 8,456 194.108 47.937 101 Sales flnonc e, personal flnance, e tc .•. • •..... Saving s banks, mtge. cos., ins. cos., etc ..•••.. Reo l-estate loans •••••••••. .. •• ...• •. .... •. All other loons ....••• . ........•••...•••... '91.203 '169.286 242.930 '770.828 91 .155 182.763 241.591 759.256 98.335 124.557 219.238 742.147 Gross loans •• . •.••••• . • . •••.•. •• •.. • • •• less reserves and unallocat ed charg e-offs •• 3.407.985 62.197 3.402.455 53.663 3.068.251 57.076 Item ASSETS Commercial and industrial loons ..•.. • .••.• • .• Agricultural loons •.•. . •....•••.•.•.••• .•• • • loons to brokers and d e al ers for purchasing or carrying : U. S. Gov e rnm ent securities •.•....•. •••• .•. Othe r securities •• .. . .• •• • . .. •.••••• . .. • • Other loons for purchasing or carryin g : U. S. Gov e rnm ent securities • • •.•••••.....•• Other securities ••..•....•••.....••.•..•. Loans to dom estic comme rcial banks ••••.• . ..•• loans to foreign banks ••.........•.•.....•• Loans to other flnancial institutions: Net loans ••• . • . .•• .. ••• . •••••. . • .•• • ••. 3.345,788 3.348,792 3.011. 175 Treasury bills ••.. • .•• • • . . . . • ••• ••• .•• • • ••• Treasury ce rtiflcates of indebtedness • • •• ..•• • . Treasury notes and U. S. Gov e rnment bonds, including guaranteed obligations, maturing : Within 1 year • •.......••••..•••••.••••• After 1 but within 5 years . • • ... .. .• . • •.. . • After 5 years • •.. .. • • •..•. ••• . •••.•• • • .• O ther securities •• •••• . • ... • ... • •....••• .• . 145.654 54. 132 136.816 58.1 16 130.629 48.295 227,728 769.375 347.8 16 419.250 195.324 786.883 356.071 415.278 146.617 733.436 369.430 385.686 Total investments • • .••.••....••••..•.• • • . 1.963.955 1.948.488 1.814.093 Cash Items in process of collection • ••.•.••• • . . Balances with banks in th e United States ••••• . • Balances wit h banks in for eign countries • ••• •• • Currency and coin ....•••..•••• . ... • •• •..•• Reserves with Fed e ra l Reserve Bank • • . • . .••••• Other a sse ts • • •... •• .......•.. • • • ... • •• • .. 610.840 497.557 2.518 58,7 42 595.323 217.427 614.5 10 559.482 2.057 61.641 589.365 218.441 532.810 509.017 2.157 54.961 588.370 223.077 TOTAL ASSETS •••..•••...••••..••••.. 7,292,150 7,342776 6735,660 LIA81l1TIES AND CAPITAL ACCOUNTS Demand d e posi ts Individuals, partnerships, and corporations •• • • Foreign gove rnments and offlclal instit utions, central banks, and international institutions.. United States Gove rnm ent • •.•.••••••.•.•• States and political subdivisions • ••. .•••..•• Banks in the United States, including mutual savings banks •••••• •..•• ••• . •••• Banks in foreign countries • •. ...• •• • ••• .•• • Certifled and ofAcers' checks, etc .••• . •••••. Total d e mand d e posits •••••••• . ••••••.• Time and savings d e posits Individuals, partnerships, and corporations Savings deposits .••. .....•••• ....• •••• Other time deposits .•. . ....••.....••••• Foreign gov ernm ents and ofRclal institutions, centra l banks, and inte rnationa l institutions .• U. S. Gov ernm ent, including postal savings . • • States and political su bdivisions ••.• • •• •... . Banks in th e Unite d States, including mutual savings banks .• ••••••• .•......•. Bonks in foreign countries •.... •.. . •••••••• ANNUAL BANK DEB ITS AND ANNUAL RATE OF TURNOVER OF DEMAN D DEPOSITS (Dollar amounts in thou sands) Demand deposits l 3.10 1.359 3.200,787} 2.946. 137 2.659 61.899 227.819 3.357 114.612 215.506 64.352 227.934 1.179.698 12787 76.876 1.228.463 14.927 61.229 1.156.817 14.562 49.468 4.663.097 4.838.88 1 4.459.270 842.188 604.552 805 7 544.971 3.005 7.317 325.153 3.005 7.317 307.810 6.321 1.200 OO} 4.487} 1.200 1.235.707 12.907 262.738 10.254 1.789.736 1.674.490 1.521 .606 Total d e posits • ••••••••••••••••.. Bills payable, rediscounts, e tc........... . . : : : All other liabilities Capitol accounts ......................... ........... .... ... ...... .. 6.452.833 108.116 113.676 617.525 6.513.371 96.050 125,7 42 607.613 5.980.876 58.025 124.643 572.116 TOTAL LIABILITIES AND CAPITAL ACCOUNTS. 7,292,150 7,342?76 6? 35,660 1 .Becau se of reclassifications, th ose data are not strictly comparabl w',th yearearli e r data. e is ~~a~~bl Asffa ~~s uItA of . thang es in call re port instructions, additional information C e, 0 ec IVO pn 26, 1961, on t he deposit str ucture of me mber banks. omparable year-earlier Rgures will be shown whe n they become available. Annua l rate of turnover Debits to d e mand d e posit accounts 1 Area Total time and savings d e posits •••••..... BU S I NE SS REV IEW Total investments at the District's weekly reporting member banks advanced $15.5 million during the 4 weeks ended January 17, with increased holdings of ARIZONA Tucson •• • • • ••••• • ••• LOUISIANA Monroe • • ••. • • •• • .• • Shreveport • •• •••••• • NEW MEX ICO Roswe ll ... . . . . . . . . .. TEXAS Abilene .... ....... . . Amarillo • ••.••• • ••• • Austin ••.•••••••.• •• Beaumont • • •...••••• Corpus Christi ••• •. •• • Corsicana •••••• • • ••• Dallas • • •••. ••••• . • • EI Paso • ••.•• • •.•••• Fort Worth • • • • • • •••• Galveston • • • • •••••• • Houston •• •• , •..••.• Loredo ... . • • •.• , ••• lubbock • • ••..•• •• . • Port Arthur •••••• •• . . San Ang elo ••• •••• .• 5an Antonio ... • • •• • • Texarkana :! .•• ••• • .• Tyler ............... Waco •••••.•• • •• .•• Wichita Falls • • •••••. 1960 Perce nt change 1961 1960 $3.165.487 $2,780.8 10 14 22.6 20.9 1.023.114 3.973.601 989.826 3.970.0 17 3 0 19.6 21.9 19.0 21.3 578.53 1 500.128 16 15.9 16.4 1.180.360 2.637.535 2.561.638 1.927,758 2.290.904 203.665 34.681.621r 4. 139.36 1 9.294.782 1.068.055 30.913.925 338.912 2.585,722 766.405 640.720 7.220.697 276.093 1.0 10.38 1 1.282,783 1.406.894 3 3 9 4 3 0 8 1 3 3 7 -1 - 1 1 1 5 -2 4 2 0 17.6 23.1 18.1 19.8 21.5 10.3 30 .8 23.7 25.0 17.5 24.7 15.3 21.9 17.6 13.6 19.6 15.8 17.0 18.8 14.1 18.6 22.9 17.9 19.5 21.3 10.6 30.1 24.8 25.0 17.3 24.3 15.4 22.7 17.9 13.9 19.5 16.5 17 .3 18.7 14.2 $ 11 4.668.992r 6 24.1 23.8 1961 1.218.093 2,726.646 2,789.660 2.0 12.809 2.360.622 203.354 37.429.400 4. 193.468 9.552.312 1.101.135 32.968,7 19 336.758 2.556.851 773.585 646.812 7.607.684 271.842 1.046.039 1.310,447 1,404,788 Totol-24 cities •••••.•. $12 1.251,757 ----- s u~d~:i~f~~t:. of individuals, partners hips, and corporations and of states and po litical !l Th~ne flguros include only two bonks in Texarkana, Texas. Total de bits for all banks In Te xarkana, Texas-A rkan sa s, including one bank located in th o Eighth District, amou nted to $615.583.000 duri ng 1961 and $603.676.000 during 1960. r - Revised. Government securities accounting for $11.5 million of the gain. Holdings of Treasury bills and of Treasury notes and Government bonds maturing within 1 year moved upward, more than counterbalancing declines in Treasury certificates and in Treasury notes and Government bonds due after 1 year. In the corresponding period last year, total investments expanded $70.6 million, as holdings of both Government and non-Government securities increased. In the 4 weeks ended January 17, the weekly reporting member banks in the District experienced a $175.8 rnillion decrease in total demand deposits. A significant portion of this decline was in deposits of individuals, partnerships, and corporations; deposits of the United States Government and domestic commercial banks also moved downward. Time and savings deposits were up $115.2 million, with the predominant increase occurring in deposits of individuals, partnerships, and corporations. During the comparable period in the preceding year, total demand deposits declined $107.4 million, while time and savings deposits rose only $46.5 million. Total reserves at the District member banks increased moderately during the 4 weeks ended January 3. Excess reserves moved slightly lower, as decreases occurred at both reserve city banks and country banks. Borrowings expanded sharply from the low early-December level at reserve city banks, while country banks reduced their borrowings. As a result, reserve city banks showed net borrowed reserves, but free reserves declined only moderately at country banks. RESERVE POSITIONS OF MEMBER BANKS Eleventh Federal Reserve District IAverag es of daily flgures . In thou sand s of dollars) 5 weeks e nded Dec. 6, 1961 4 weeks end e d Jon. 3, 1962 606,9 17 563,882 43,035 600,663 6,254 8,969 -2,7 15 595,684 554,75 1 40,933 58B,477 7,207 829 6,37B 588,396 547,007 41,389 576,412 11,984 1,098 10,B86 544,133 436,089 108,044 48 1,269 62,864 34 1 62,523 538,793 432,860 105,933 471,60B 67,185 891 66,294 5 17,35B 415,593 101 ,765 439,738 77,620 1,189 76,43 1 1,151,050 999,971 151,079 1,08 1,932 69, 11 8 9,310 59,808 1,1 34,477 9B7,611 146,B66 1,060,085 74,392 1,720 72,672 1,105,754 962,600 143, 154 1,0 16,1 50 89,604 2,287 B7,317 4 weeks end e d Item RESERVE CtTY BANKS Total res erves held . . . ... .. . ... With Fed eral Reserve Bonk .. .. Currency and coin . .. . .. . . . .. Required reserves . ............ Excess reserves . . .. ... . .. . ...• Borrowings • ••... • ....•..•. . . . free reserves . .. .. .... ....... . COUNTRY BANKS Tola I reserves held . ... ... . .... With Fe d era l Reserve Bank .. .. Curr enc y and coin . . ......... Required reserves . ... ... .. .. . . Excess reserves . •••... .• .. .... Borrowing s•. .....•... ... ..... Free reserves • ....••...•...... ALL MEMBER BAN KS Tota l reserves hel d . ... ......•. With Fe de ral Res erve Bank .. .. Currency and coin . . . ...•. .. • Req uired reserves • • . ... ... ...• Excess reserves • . . . . . . . . . •.... Borrowing s• ..............•.•. Free reserves • .. •• ..• ...•...•. Jon. 4, 1961 NEW MEMBER BANKS The Gateway National Bank of Fort Worth, Fort Worth, Texas, a newly organized institution located in the territory served by the Head Office of the Federal Reserve Bank of Dallas, opened for business January 2 , 1962, as a member of the Federal Reserve System. The new member bank has capital of $400,000, surplus of $300,000, and undivided profits of $100,000. The officers are : J. D. Gamel, President and Chairman of the Board; D. A. Brogoitti, Executive Vice President; Jack S. Hart, Vice President and Cashier; and Barton Sandlin, Assistant Cashier. The Valley-Hi National Bank of San Antonio, San Antonio, Texas, a newly organized institution located in the territory served by the San Antonio Branch of the Federal Reserve Bank of Dallas, opened for business January 8, 1962, as a member of the Federal Reserve System. The new member bank has capital of $250,000, surplus of $250,000, and undivided profits of $100,000. The officers are : Pat legan, Chairman; H. B. Kaulbach, Vice Chairman; W. E. Eagle, President; B. O ' Neal Hillin, Executive Vice President; Jud Watson, Cashier; C. R. Headen, Assistant Cashier; Chester Allen, Assistant Cashier; and I. W. Ellison, Assistant Cashier. NEW PAR BANKS The First State Bank of Hitchcock, Hitchcock, Texas, an insured nonmember bank located in the territory served by the Houston Branch of the Federal Reserve Bank of Dallas, was added to the Par list on its opening date, January 3, 1962. The officers are : George O . Gillespie, President; lawrence Henckel, Vice President; and Marvin W. Briggs, Cashier. The Southside State Bank, Houston, Texas, an insured nonmember bank located in the territory served by the Houston Branch of the Federal Reserve Bank of Dallas, was added to the Par list on its opening date, January 10, 1962. The officers are: Henry M. Dudley, Jr., I, President; James N. Fowler, Vice President and Cashier; and Thomas C. Willis, Assistant Cashier. The First State Bank, Premont, Texas, a nonmember bank located in the territory served by the San Antonio Branch of the Federal Reserve Bank of Dallas, opened for business on January 2, 1962, and was added to the Par list on January 12, 1962 . The officers are: C. Woodrow laughlin, Chairman and President (Inacti've); Arlin Yeager, Executive Vice President; Otis E. Scales, Vice President; and Mrs. Jean Brown, Cashier. BUSINESS REVIEW 2:1962 11 I I District crude oil production rose moderately during December to a level of over 3 million barrels daily, the highest total since April 1961. The upward production trend continued in early January" though at a slower rate. Louisiana and New Mexico have retained their January allowables for February, but the Texas allowable schedule has been reduced to 8 producing days from 9 days a month earlier. Daily average output in the District should decline only slightly, however, as February has fewer days. Beginning with this issue of the Business Review, seasona lly adjusted indexes of marketed production of natural gas by quarters will be published, in addition to actual production figures, as they become available. The indexes have been computed for the first quarter in 1951 through the third quarter in 1961 and may be obtained by addressing a request to : District refinery activity declined slightly in December, partially because of a work stoppage at a major Texas Gulf Coast refinery; but the plant has since r.esumed normal operations. Crude oil runs to District refinery stills rose in early January. MARKETED PRODUCTION OF NATURAL GAS Drilling operations in the District advanced moderately in December and early January. The total number of wells completed rose about 4 percent during the 5 weeks ended January 6, and total footage drilled advanced 7 percent. The number of active rotary rigs increased 3 percent in the District during December. This rise in drilling equipment utilization reflects the likelihood of future expansion in District well completions. National crude oil output and imports expanded in December and early January. Nevertheless, this increase in new supplies was offset by a rise in crude oil demand, and inventories showed little change. Crude oil stocks in the Nation in early January were about 3 percent above a year ago. The seasonally adjusted index of demand for the four major refined products declined significantly in NATIONAL PETROLEUM ACTIVITY INDICATORS (S easonally adiusted ind exes, 1957-59 = 100) Dece mb e r 1961 p Indicator November Decemb er 1961p 1960 105 105 101 102 CRUDE OIL RUNS TO REFINERY STILLS (dail y ave rag e ). • • • • . . • • • • . . • • DEMAND (daily averag e ) Gasoline ........... . . . .. .. .. . .. . ... Kerosen e . • • • . . • • • • • • • . • • . • • • • • • • • • 107 Distillate fu e l oil.... . . . • . . . . . . . . . .. • . Residual fuel oil . . . . • • . . . . . . . • . . . . . . . Four reAned products. . • . • . • . . • . . . . STOCKS (end of month) Ga soline ......... . ... . .. .. . . ....... Ke rose ne. . • .. • . . . .. .. • . . • . . . . . . . . . Distillate fuel oil...... . . . . ..... .. . . . . Re sidual fu el oil.. . • .. . . . . . .... . . . ... Four re Aned products. . • • • • . • • . . . . . 102 92 101 109 118 105 93 105 103 113 110 97 105 103 117 109 84 104 103 110 104 79 101 104 11 3 99 82 100 Pre li minary. SOURCES : Am e rican Pe trol e um Instilute . United Sta tes Bure au of Min es . Fede ral Rese rve 8ank of Dallas. p - I BUSINESS REVIEW 112 2:'1962 ANNOUNCEMENT Research Department Federal Reserve Bank of Dallas 400 South Akard Street, Dallas 2 , Texas Seasonally adiuste d ind e x (1957-59 = 100) In millions of cubic feet Third Second Third Third Second Third quarter quart er quarter quarter quarter quart er Area 1961 1961 1960 1961 1961 1960 louisiana •• • • New Mexico .• Oklahoma . •• Texa s ....• •• 710,800 183,600 170,500 1,382,800 739,700 189,600 183,500 1,446,400 699,700 194,800 161,400 1,389,000 142 109 11 4 107 147 11 1 107 111 140 115 108 107 Total .. . ... 2,447,700 2,559,200 2,444,900 116 119 11 6 SOU RCES : United Sta tes Bureau of Mines. Fede ral Rese rve 8ank of Dallas. December, as substantial reductions were recorded in gasoline and kerosene consumption. In early January, however, refined product demand strengthened, paced by significant improvements in the consumption of both light and heavy fuel oils. Heating oil use was especially strong because of the very low temperatures registered in most of the sections of the Nation which use heating oil; prices of these products firmed as inventory levels declined, Gasoline demand in early January decreased as anticipated; stock accumulation began, and price discounting was noted in several areas of the country, The Texas industrial production index in December remained at 178 but was significantly above the 171 registered in December 1960. The month-to-month increase in mining output, with special strength apparent in crude petroleum production, offset declines in both durable and nondurable manufactures, The advance over December 1960 was shared by all manufacturing industries except lumber and wood products, fabricated metal products, petroleum and coal products, and "other" durable goods. Compared with a year earlier, mining showed a slight rise, as gains in crude petroleUl:ll and natural gasoline production offset reductions in NONAGR ICU L TURAL EMPLOYMENT INDUSTRIAL PRODUCTION (Sea sonally adiusted Indexes, 1947· 49 = Decemb er TEXAS Total industrial productic!:'", . • . . .. . Total manufactures . •.. . ..• . • . • . Durabl e manufacture s.. . ... . .•.. Nondurabl e manufactures • • •• • .• . Mining . . . .. ... . ...... .. .. .... UNITED STATES Total industrial production • •• . . Total manufactures . . . . •• . .•• Durabl e manufactures •• .• . • • . Nondurabl e manufactures . ... . . .• • •• ••• . .. Mining ... . . ... . . .......... . .. Utilities ••••.•••••• • •..• • •.•• •• p - 1961 October 1961 Decemb er Perc ent chang e 1960 Dec. 1961 from Number of p ersons Nov. 1961 De c. Decemb er 178 223 261 205 135 178 226 268 207 132 180 229 271 209 133r 171 210 237 197 133 175 173 179 172 132 319 173 172 177 170 132 317 171 170 174 169 131 318 156 154 156 156 129 287r Nove mb er Decemb er 1961e 1961 1960r wage and salary work ers . . Manufacturing .. , , , , , .... Nonmanufacturing .... .... Mining, ., ..... ... . .. . Construction . . . . ...... . Transportation and 4,551 ,500 772,200 3,779,300 240,500 271,300 4,516,800 778,700 3,738,100 240,200 288,100 4,520,900 774,600 3,746,300 243,400 272,400 .1 -5.8 0.7 -.3 .9 - 1.2 -.4 public utilities • .. . .. . • Trade • •••• . • • • • ... ••• 392,900 1,1 52,700 222,800 6 11,000 888,100 388,100 1,107,900 223,100 6 11,100 879,600 402,400 1,1 45,800 218,700 599,700 863,900 1.2 4.0 - .1 .0 1.0 -2 .4 .6 1.9 1.9 2.8 Typo of employment 1960 Total nonagricultural Finance . . • . . .. , ... . .. . Service . . .. . ....... .. . Governm ent . .. . . . ... .. Pre liminary . r- Nove mb er 1961 p Area and typ e of Index Five Southwestern Stotes' 100) 0.8 - .8 1.1 Rev ised . SOURCES: 80ard of Gove rnors of th e Fede ral Rese rv e Syste m. Federal Rese rv e 8ank of Dal las. 1 Arizona, Lou is iana, Ne w Mex ico, Oklahoma, and Texa s. Estimat ed . Re vi se d . a r- natural gas and metal, stone, and earth minerals production. Estimated nonagricultural employment in the District states reached a record 4,551,500 in December 1961, or 1 percent more than the year-earlier totaL Substantial employment increases in trade and government during the month and smaller gains in transportation and mining offset sizable employment declines in construction and manufacturing and slight reductions in finance and services. Unemployment in Texas during December increased 10,200 to 190,200, or 5.2 percent of the labor force. This rate compares with 4.9 percent in November and 5,5 percent in December 1960. The increase in unemployment was largely due to inclement weather, which slowed outdoor activity. The value of construction contracts in the District states increased 10 percent during November 1961 and, at $343 million, was more than 40 percent above any previous November of record. Residential building declined, as is normal during this month, but was above any previous November. The month-to-month decrease SOURCES , State e mployment ag oncies. Fedoral Rese rve Bonk of Da llas. in residential construction was more than offset by significant increases in nonresidential building and public works and utilities. The sharp advance in contracts during November placed the total for the first 11 months in 1961 at an all-time high of $3,720 million, or more than 7 percent above the comparable total in 1960; cumulative contracts increased for every major sector. VALU E OF CONSTRUCT ION CO NTRACTS (In millions of dollars) Janua ry- Nove mb er Octob er 196 1 Nove mb e r 196 1p 1960 1961p 1960 343 127 124 92 3,008 1,306 1,095 607 313 156 87 71 3,2 91 1,498 1,005 787 225 103 76 45 2,886 1,253 9 16 71 7 3,720 1,544 1,151 1,025 34,461 15,006 11,246 8,209 3,475 1,418 1,052 1,005 33,643 14,249 11,258 8,136 Nove mb e r Area and typ e FIVE SOUTHWESTERN STATES· • ••. . •. •.. .•••• • Residentiat building • •• . .• . Nonresid entia l building • .•• Public works and utilities • .. UN ITE D STATES .. .. .... .... Resid e ntial building . . .. .. . Nonresid e ntial build ing . . . . Public works and utilities, • • l Arizo na, Lou is iana , Ne w Mexi co, Oklahoma, and Te xas. p - Preliminary. NOTE . - De tail s may not add to totals bocause of roundin g. SOU RCE : F. W. Dodg e Corporation . BUSINESS REV I EW 2: 1962 I CONDITION STATISTICS OF ALL MEMBER BANKS BANK DEBITS, END-OF-MONTH DEPOSITS AND ANNUAL RATE OF TURNOVER OF DEPOS ITS Eleve nth Fe deral Re serve D istrict (Dollar amounts in thou sands) (In millions of dolla rs ) Debits to de ma nd 196 1 Are a Nov. 29, 196 1 loans and di scounts. •.... . . .. . . . ••. . . . .. Unite d States Gove rnm ent o bligation s... ... O th er se curiti es .• .. . ... .. . . ... .. . . . .. . . Reserves with Fe deral Rese rve Bank .. .• .... Ca sh in vau lt e ••. .. . . .. .. . ... .. . •.. . . . . Balances with ban ks in the United States •.. . Ba lances with ba nks in foreign co untries e .. .. Ca sh items in process of coll ection .. .. .. . .. Oth er a ssetse • . ... .. . . • . ...• . .. . . .... .. 5,554 2,853 984 1,0 10 173 1,299 3 775 344 5,442 2,8 12 975 928 171 1,193 3 588 255 5,157 2,593 867 868 164 1,25 1 TOTAL ASSETSo ... .... . . .. ...... . . .. Percent chang e from Decemb er Dec. 28, 1960 Dec. 27, 196 1 12,995 12,367 11,794 1,494 7,317 2,855 1,303 6,965 2,822 1,373 6,745 2,504 .... .. . . .. . . . . . ........•. . .. .. .. . . .• .. ... . ... . . . . . . . . . .. 11,666 107 165 1,057 11,090 63 159 1,055 10,622 22 170 980 TOTAL LIAB ILITIES AN 0 CAPITAL ACCOU NTSe • • . •• • •• . •.•• •• • •• . .. • 12,995 12,367 De mand d e posits l de posit a cco unts! Nov. 1961 Item Annual rate of turnover 1960 Dec. De c. 31 , 1961 De c. 1961 Nov. 1961 Dec. 1960 ARIZONA Tucson .. ... . .. ...... $ LOUISIANA 343,754 4 42 $ 160,337 26.6 27.5 21.6 Monroe • •• • •• •• • • •• • Sh reve port • • .•...•.. 90,579 326,732 -6 0 13 -6 61,595 204,941 19.1 20.6 21.8 22 .3 17.6 21.5 23 39,235 16.3 16.3 ASSETS 16.4 NEW MEX ICO 53,526 Rosw ell • •••.•• . ..•• • LI ABIlIT IES AND CAPITAL ACCOUNTS TEXAS 108,862 232,979 250,840 184,400 212,308 18,399 3,840,387 398,804 852,798 104,595 3,163,989 30,784 307,002 64,5 11 53,842 663,9 12 25, 123 89,7 47 119,702 118,760 - I -2 9 4 I - 2 24 6 6 16 10 15 13 1 -1 3 4 -4 10 -2 3 6 23 8 9 2 8 5 I 10 8 2 0 -3 1 6 9 9 8 -6 Totol-24 cities • •• .. • •• $ 11,656,335 12 7 Abil ene ... • .. .. . ... . Ama rillo • . .. ... ... . . Austin .•... . ........ Beaumont • • • .....• •• Corpus Christi . ... . . . . Corsicana ... . . . . . ... Dallas .. . . ... ... .. . . EI Paso • . •.• .• • • .. .• Fort Worth .. . . . ... .. Galveston . .. •. . . .. .. Houston • • •••• • •• •• •• Lar edo .. . ... . .•.• .. Lubbock .. . .. . ..... . Port Arthur .... . . . ... San Ang e lo • •• •• • • • • San Antonio ..... . ... Tex a rkana :! . .. .. . •.• Tyle r .. .... ....... . . Waco .. . ......... . . Wichita Fa lls • • ••• •• • 1 77,168 126,304 160,915 112,33 1 119.170 21,986 1,437,547 193,283 418,753 68,29 1 1,548,396 24,45 1 137,368 43,687 5 1,137 413,242 17,648 68,37 1 73,682 107,836 - -- $5,687,674 17.6 22.9 18.7 20.3 22.0 10.4 34.3 25.7 25.3 18.7 26.2 15.7 27 .8 17.2 12 .7 19.7 17.3 16.6 19.8 13.8 18.6 24.1 17 .5 20.3 2 1.7 11.0 29.8 25.1 24.7 16.7 25.4 14.3 26.3 16.6 13.2 19.6 16.8 17.8 18.4 14.6 19.3 22.0 16.1 19.2 21.7 10.8 34.3 26.8 25.4 19.2 26.0 16.7 30.2 18.4 13.4 19.7 16.1 16.7 18.5 15.0 25 .8 24.5 Demand deposits of banks . .. .. .. .. . . . . . . Other d emand d eposits. . .•. • . • . .. •• .. . . . Tim e d e po sits.... .. ....... .. . .. . . ... . . . 25.7 Total d eposits .. •. .... . Borrowing se . . . . .. ... . .. . O ther lia biliti ese .. .... . .. Total capita l accoun tse .. . . e - Estimat ed . GROSS DEMAND AND TIME DEPOSITS O F MEMBER BANKS Ele ve nth Federa l Res erve D istrict (Ave ro gos 01 daily fl gures. In mil lion s 01 dollars ) Deposit s of individ ual s, par tne rships, and corporati on s a nd of states and political TIME DEPOSITS GRO SS DEMAN D DEPO SITS subd iv isions. ~ Th ese flgures include onl y two banks in Texarkana , Tex as. Tota l debit s for all amounte d to $54 ,965,000 lor th e month 01 De cem be r 1961. CO N DITION OF THE FE DERA L RESERVE BANK OF DALL AS Ja n. 17, 1962 Dec. 20, 196 1 Tota l gold certiflcate rese rves . .. •. _ . . ..••.. . Di scounts for memb er ba nks . ••.• . • . • .•• •.• • O th er discounts and advanc es • . •.. . ... . ... . U. S. Governm ent securities . • . .............• Total ea rning a sse ts........ . .. . . ... ...... • M emb er ban k rese rv e d eposits •••• . .. .. .. . .. Fed eral Rese rve notes in actua l circulation .. ... 685,652 16,159 1,509 1,154,38 1 1,172,049 996,3 15 853,797 655,209 200 o 1,1 76, 136 1,1 76,336 966,225 874,233 8,052 8,044 7,759 7,889 8,174 8,322 8,505 3,904 4,030 3,820 3,9 10 4,069 4,058 4,179 Septemb er . O ctob e r . . . Novemb er.. Dece mb er.. (In thou sands of do ll a rs ) Item Total Jan. 18, 196 1 721 ,1 74 100 522 1,084,537 1,085,159 971,44 1 822,631 Country banks Rese rv e Country Tota l city banks bonks 4, 148 4,0 14 3,939 3,979 4,105 4,264 4,326 Date Rese rve city banks 1959: Dece mb e r.. 1960: Dece mb e r.. 1961 : August. • • . ban ks in Texarkana , Tex as- Arkan sa s, incl udin g on e bonk located in th e Ei ghth Dis trict , 2 579 313 2,099 2,482 2,774 2,787 2,788 2,806 2,839 1,077 1,263 1,396 1,404 1,398 1,409 1,42 1 1,022 1,219 1,378 1,383 1,390 1,397 1,4 18 BUILDING PERM ITS VA LU AT ION (Doll ar amoun ts in thousan ds) Perc ent chang e Dec. 1961 NUM8ER DA ILY AVERAGE PRODU CT IO N OF CRUDE O IL De c. 1961 12 mos. 196 1 627 from 12 mon ths, Dec. 1961 12 mos. 196 1 Nov. 196 1 Dec. 1960 10,373 $ 1,960 $ 44,536 -54 -64 10 141 11 ,7 90 506 30,5 16 -52 -66 27 Wichita Falls • • 125 2 19 242 242 231 1,376 387 484 2 18 958 103 244 845 20 1 114 1,448 3,32 1 4,022 3,574 3,919 26,227 6,738 7,3 19 2,046 20,325 2,660 2,904 13,954 3,1 27 3,026 1,030 3,207 2,651 1,062 1,10 1 8,240 7,134 2,042 705 12,667 5,264 390 4,248 2,117 732 16,293 41,008 57,33 1 23,409 24,504 194,182 67,075 48,616 7,069 248,933 44,266 7,655 54,276 15,555 2 1,663 26 21 -59 -81 -24 -32 105 0 89 -18 105 -9 -6 158 - 17 68 14 1 -56 -33 77 -32 -46 - 12 349 -6 230 - 8 - 17 196 - 8 - 27 28 24 25 11 4 38 17 5 15 - 14 21 -23 -6 - 6 - 20 Total -17 cities • • 6,757 126,773 $55,056 $946,887 - 15 - 18 7 Area (I n thousa nds of barre ls ) 1961 from 1960 ARIZO NA Percent chang e from Decemb er Novemb er D ecemb er Novemb er Decemb er Area 1961p 1961 p 1960 196 1 1960 ElEVENTH DiSTRiCT • •• • . . • • 3,042.4 2,640.3 472.0 1,199. 1 135.8 107.6 725.8 27 2.3 129.8 4,3 17.0 7,359.4 2,929.6 2,527.2 458.7 1,124.6 128.1 107.2 708.6 274.9 127.5 4,263.9 7,193 .5 2,950.4 2,58 1.9 459.6 1,177.1 138.7 108.4 698.1 236.5 132.0 4,199.7 7,150. 1 3.9 4.5 2.9 6.6 6.0 .4 2.4 -1.0 1.8 1.2 2.3 3.1 2.3 2.7 1.9 -2.1 - .7 4.0 15.1 -1.7 2.8 2.9 Texa s. . . . . . . . • •• .. . . . • . Gull Coast ..... . .... .. W est Texa s • . .. .. . . •.• Ea st Te xas (prope r) .. . . . Panhandle • •• •••• ..••• Rest 01 Sta te . . .. . . .. .. Southeastern N ew M exico . . Northern l oui siana ••• . . . •• O UTSIDE ELEVENTH DISTRICT. UNITED STATES .. . . . . .... . . P- Pre liminary. Tucson • . •.... . LOUISIANA Shreve port ••• . TEXAS Abile ne •• • • .. • Am a rillo .. . . .. Austin . .. . .. •. Bea umont •. . . . Corpus Christi . • Dallas .. ... . . . EI Pa so .. .. .. . Fort Worth • • . • Ga lveston . . . • . Houston • . • . . . Lubb ock •. . . .• Port Arthur • . . . San An ton io .. . Wa co . • . .. . . . SO URCES , Am erican Pe tro le um Institute. United States Bu re au of Min es . Fede ral Rese rv e Bank 01 Dallas. BUSINESS REV I EW 14 2':1962
