The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
business
•
revIew
february 1970
fEDERAL RESERVE
BANK OF DAllAS
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
contents
Industrial development
on the Mexican border
3
District highlights .... ..... .. ....... ........ 13
Industrial development
on the ~exicaD bOl-delAmerican companies are increasingly taking
advantage of opportunities favoring the establishment of assembly plants just across the
border in Mexico. Where the Mexican government had authorized 73 American-owned plants
near the border in October 1967, by mid-1969
the number had swelled to 147. Of these, 103
were in operation.
The incentive for Americans to operate plants
on the other side of the international boundary
is clearly the abundance of cheap but productive labor in Mexico. The feasibi lity of such operations depends, however, on American tariff
regulations and on recent changes in Mexican
poIicies that allow Americans, to operate assembly plants in Mexico, ordinarily within 12 miles
of the border.
American tariff regulati~ns pl:o~ide that when
component parts are exported from the United
States for assembly into final products abro,ad,
they can be brought back into this country at a
much lower tariff than other exports. These
regulations were first applied to imports from
American plants in such low-cost areas as
Korea, Taiwan, and Hong Kong. But in an effort
to cope with unemployment along its American
border, Mexico devised a program to encourage
American companies to sh ift assembly work
South of the border.
The program under which this work is authorized - the Programa de lndustrializacion
Fronteriza (the border industry program) - is
important for several reasons. First, it allows
both countries to make better allocations of their
resources, an alternative that demonstrates the
principle of comparative advantage. Mexico,
with its surplus of low-wage workers, has the
advantage in carrying on labor-intensive assembly operations, while the United States has the
advantage in the production of components, an
essentially capital-intensive process. Second, the
program creates employment not only on the
Mexican side of the border, where unemployment is extremely high, but also on the American side, which includes large areas that are
essentially agricultural and where industrial
employment has also been low. And, finally, the
program has basically favorable implications for
the balances of payments of both countries.
Broader consideration of these points depends
first, however, on a description of Mexico's
border industry program and the developments
leading up to it.
Popltlation and poverty
The Mexican government launched a program early in the 1960's designed to slow the
rise of unemployment along the border by better
integrating the country's northern regions into
Lacy H. Hunt , II, the author of this article, has based the discussion primarily on
information furnished by several U.S. and Mexican agencies and on interviews with
bankers and businessmen on both sides of the border.
business review/ feb ruary 1970
3
the national economy. This program, called the
Programa Nacional Fronterizo (the national
border program), was tuned primarily to the
rehabilitation of border cities, largely in hopes
of attracting tourists to the border from both the
United States and the interior of Mexico. Funds
were allocated for new facilities to be used in displaying native arts and crafts. Recreational facilities were built, and - perhaps most in line
with the drive for higher incomes - educational
facilities were expanded all along the border.
Some objectives of this pregram have been
achieved. The appearance of many towns was
improved, especially ports of entry, contributing
to gains in tourist trade. Between 1965 and
1967, tourist traffic into Mexico increased 11
percent. In 1968, the year of the Olympics in
Mexico, tourism increased 18 percent. But the
central objective - higher levels of income and
employment on the border - proved elusive.
Not only were the country's northern reaches
less developed than much of the interior, but
population was also increasing far faster in the
north than in the rest of Mexico. With its population increasing 3.5 percent a year, Mexico has
long been plagued with the problems of providing employment for one of the world's fastest
expanding popUlations. Through its border program, it was undertaking to grapple with the
problems of some of its most persistent pockets
of poverty at the time when they were probably
swelling fastest.
For years, Mexicans had been pulled to the
border in response to American demand for
braceros - migrant farm workers. With agreement between the United States and Mexico on
Programa de Industrializacion Fronteriza
The border industry program dates, for
all practical purposes, from June 1966, when
the Mexican government established procedures for allowing foreign companies to
operate assembly plants in northern Mexico.
The program is an outgrowth of studies
conducted by the Mexican government to
devise means of providing American industry "an alternative to Hong Kong, Japan,
and Puerto Rico" in the location of assembly
plants.
The idea of encouraging Americans to
establish plants in Mexico was first advanced
by Octaviano Campos Salas, Mexico's secretary of industry and commerce, in May
1965, following a trip to the Far East, where
he observed American-owned plants assembling goods for the U.S. market. In Septem-
4
ber 1965, in his Report to the Nation, President Gustavo Diaz Ordaz announced the
government's acceptance of the program as
a means of coping with unemployment on
Mexico's northern border.
Operational procedures providing the government the means of processing applications
of companies wanting to open plants in the
border zone were established in two intersecretarial agreements in June 1966: No.
164 Hacienda (June 1) and No. 4132 Industria y Comercio (June 20) . Again, in'his
Report to the Nation in 1966, President Diaz
Ordaz affirmed the government's commitment to the development of the border economy, emphasizing his belief that the border
industry program would create employment
on the border.
a formal bracero program in 1951, even more
Mexican workers had migrated northward to
the border towns, where, with U.S. permits,
many of them could find temporary work in this
country as farm laborers. As workers crowded
into the towns looking for employment, urban
population along the border soared, increasing,
for example, more than twofold in Mexicali,
across from El Centro, California.
Even at the height of the bracero program,
the supply of workers at the border almost always exceeded the demand. Then, when the
United States terminated the program in late
1964, these workers and their families were
caught at the border, without employment or
the means of returning to their homes in the interior. Already high levels of unemployment
rose at staggering rates in urban but essentially
nOnindustrial centers. Of the nearly 136,000
workers avaiJable in Ciudad Juarez, across from
El Paso, in 1968, 15 percent were without jobs,
and unemployment rates were even higher in
some other cities. Half the work force in Nogales was unemployed .
The Mexican government was quick to recognize the serious implications of the cutback in
the bracero program and to realize that, with
the cutback, the border development program
Was rendered inadequate. In 1965, the government began moving unilaterally toward the development of industry on its northern border
by creating an environment that offered American companies an alternative to their increasing
Use of low-cost labor in Puerto Rico and the Far
East. In his Report to the Nation that year, the
PreSident of Mexico announced the Programa
de lndustrializacion Fronteriza - the border
industry program.
Provisions of the program
Procedures allowing American companies to
operate plants as wholly owned subsidiaries
Within a 12-mile border zone were established
in agreements between agencies of the Mexican
government. Under these agreements, American
companies can import equipment and materials
into the border zone duty free . They can also
export products of these plants duty free. And
Americans can cross the border every day to
work in plants in the zone. The only restriction,
other than location, is that products of the
plants cannot be sold in the Mexican market. ]
To ensure compliance with all provisions of the
program, the Mexican government requires that
American companies post bonds guaranteeing
that all imports are temporary - a requirement
that bas caused plants established under the
program to be called "in-bond" plants.
While the United States Government has
taken no official steps to encourage plants on
the border, its tariff schedules favor border
plants by imposing duties on products assembled abroad from components manufactured in
this country only to the extent that value is
added to products abroad. According to U.S.
tariff schedules, the value added to a product
consists of foreign labor costs, overhead costs
of foreign plants, and an estimated profit on the
foreign operation. To qualify for this preferential treatment, a product must have been assembled from components made in the United
States, the components must have been exported ready for assembly without further fabrication, the shape or form of the component
l11ust not have been changed, and - except for
assembly or operations incidental to assembly,
such as oiling, greasing, or painting - the con1 Even the restriction on location can apparently be
lifted in some instances. The Mexican government announced in 1967 that it would allow American companies to operate assembly plants in the interior of Mexico. There has been no significant implementation of
plans to encourage plants in the interior, however.
Plants permitted beyond the border zone have been
operated by companies already established in Mexico.
Julio B. Trevino, " Border Assembly Operations,"
M exicall-Am ericall R evie w, American Chamber of
Commerce of Mexico, Mexico City, April 1969, p. 33
(As reprinted in Select ed R eprints of A rlic/es 011 M eJ.:ico's Border flldustrial Program , McAllen Chamber of
Commerce, McAllen, Texas).
business reviewlfebruary 1970
5
dition of the component must not have been
changed or its value increased.
Essentially, provisions for tariff exemption
apply when no operation has been performed
abroad on the component itself, except to attach it to other components. Examples of products qualifying for such interpretation are condensers soldered to other components to form a
radio or precut pieces sewn to form a garment.
Force lifting, pressing, gluing, and similar operations are generally applicable. Because the
tariff schedules apply to components made to
fit other components, they do not apply to
liquids, gases, or powders (and, therefore, not to
chemical products or food ingredients, although
they do apply to food packaging) . Nor do they
apply to material exported in continuous lengths
to be cut to specific lengths abroad.
Tariffs and the Border Program
Successful development of the border
zone has depended as much on U.S. tariff
schedules as on unilateral action by the
Mexican government to open its northern
frontier to foreign investment. Regarding
the import of products assembled from
components manufactured in the United
States, Sections 806.30 and 807.00 of the
Tariff Classification Act of 1962 provide
that duties on imports into this country
must be paid only on essentially the value
added to products abroad .
These provisions merely make explicit,
however, what has long been understood
as the intent of U.S. import duties. In
1954, the U.S. Customs Court ruled that,
under the Tariff Act of 1930, duties were
not required on the import of components
originally manufactured in this country.
6
Proliferation of plants
Plants spread rapidly under the border industry program. According to information released by the Mexican government, the number
of plants almost doubled in the past two years.
Where in October 1967 the government had
authorized 73 companies to make a total investment of $6 million on the border, by July 1969
the number had reached 147 and the total authorized investment had risen to $14.2 million.
The size of plants also increased. During that
time, the average investment rose almost
$16,000 and approached $100,000 per plant.
Officially, these plants were expected to employ
nearly 16,000 workers, or about 110 workers
per plant, but unofficial estimates are closer to
17,000.
Of the 147 plants authorized at mid-1969,
103 were in actual operation. The heaviest concentration was in Baja California, where 71
plants were assembling components made in
the United States. Of these, 68 were in the two
largest cities, Tijuana and Mexicali. Thirty were
spread along the northern reaches of Mexico
bordering on the Eleventh Federal Reserve
District. Most of these plants were in Ciudad
Juarez, Nuevo Laredo, and Matamoros.
More than a third of the plants were assembling electronic equipment, primarily in Baja
California, where most of the plants were operated in connection with California's highly
developed electronics industry. Nearly a third
were manufacturing garments from goods cut in
the United States. By contrast, only 2 percent
of the plants were used in processing food products (mainly packaging of shrimp) and 4 percent were used in assembling wood products.
Four general types of American companies
have undertaken Mexican operations: those that
already had other foreign operations, those with
plants on the American side of the border and,
therefore, some familiarity with conditions on
the Mexican side, those with problems that led
them to cut costs, and those that, having seen
other companies with successful operations on
the border, moved to claim similar advantages
for themselves. 2
In aU cases, of course, the incentive to establish Mexican operations was low-cost labor. A
Survey conducted by the American Chamber of
Commerce of Mexico in mid-1969 shows that
of 63 companies responding, all considered low
labor costs their primary reason for establishing
plants in Mexico.s More than half the companies reported, however, that the availability
of labor in Mexico was also an important consideration.
Plant productivity
The difference in wage rates makes costs per
unit of output far lower in the border zone than
in the United States. And when allowances are
made for other costs, some operations are even
cheaper than those in the Far East. The minimum daily wage for unskilled workers in Ciudad Juarez, for example, is currently $2.84
(35.50 pesos). By contrast, the average minimum daily wage in the United States (before
fringe benefits) is $12.80. Elsewhere on the
border, rates vary from $2.70 a day in Matamoros, Reynosa, and Nogales to $3.68 in
northern Baja California.1 With fringe benefits, the $2.70 rate rises to about $3.76.
According to several companies in the border
Zone, Mexican workers are highly productive.
Even with the lower wage rates, low productivity would, of course, cut into the advantages
of using Mexican workers. But American companies operating under the border industry program report almost universal satisfaction with
-
~ John M. Richards, HEI Paso-Juarez Economic Siamese Twins," from Official Transcript of Executive
~onference on World Trade, University of Texas at EI
baso, April 28, 1969 (EI Paso, Texas: EI Paso Cbamer of Commerce).
. 3 "Survey on Border Development Program" (MexICO City, 1969).
1 McAllen (Texas) Monitor, January 1, 1970.
the performance of Mexican workers. Of the
63 companies surveyed by the American Chamber of Commerce of Mexico, 61 were satisfied
with the efficiency of employees on the border.
Others have pointed out that absenteeism, tardiness, and turnover - all matters of concern in
the United States - present only minor problems on the border.5
The productivity of Mexican workers has
also been rising. Based on information furnished by the Mexican government, cumulative
payrolls through 1968 amounted to 37 percent
of the value added at plants operated under the
border industry program. In the first seven
months of 1969, tlle proportion of value added
represented by labor costs declined to 29 percent. Cumulative payrolls of Mexican workers
in the border program, tht'Ough 1968, amounted
to slightly more than 9 percent of the total value
of production, including the cost of components
manufactured in tlle United States. But in the
first seven months of 1969, this ratio dropped
to less than 3 percent. Value added declined
from 25 percent of the total value of output at
the end of 1968 to about 9 percent for the first
seven months of 1969. The decline in these
three ratios probably reflects - in addition to
increased productivity of Mexican workersboth increased capital investments in border
plants and shifts in production components.
Women are employed extensively in border
plants. According to Banco Longoria of Nuevo
Laredo, women account for almost 80 percent
of the workers in plants across from Laredo.
The proportion in plants at Matamoros is more
than 90 percent.
Although wages and labor costs are low in
Mexico, they are not as low as in the Far East,
where wage rates may be no more than twothirds as high. But because of their proximity to
the United States, Mexican-American operations have several clear advantages over Amer5
EI Paso (Texas) H erald-Post, September 27, 1969.
business review/ february 1970
7
ican operations in the Far East. The most important, of COUTse, is lower transportation costs,
which can go far in offsetting the advantage of
lower labor costs. Many products can be assembled cheaper in the Far East than in Mexico - even with the much higher transportation costs - but they are almost all small,
lightweight items . As the weight of exported
components and imported products rises, the
long distances to such countries as Korea and
Taiwan give Mexican locations an increasing
cost advantage.
Closely related to transportation costs is the
ease of supplying foreign plants with materials
other than components. If the supplies cannot
be provided locally - and most industrial supplies cannot - they, too, must be shipped.
Their shipping costs become another factor in
site selections, as does the time required for
shipments.
Problems of supply, all significant in Far
Eastern operations, are relatively unimportant
along the border. Not only are border plants
close to sources of supply, but Mexican authorities have arranged for imports to clear customs
in as little as a day. The time required for companies to import goods to their plants in Mexico
varies from two hours to three days, depending
on the port of entry. Of the companies surveyed
by the American Chamber of Commerce of
Mexico, 52 reported having no trouble importing materials and supplies into the border zone.
The time required for imports through ports
of entry from Agua Prieta west to Tijuanaa strip called the "free zone" - averages one
day. From Ciudad Juarez east, the time averages about three days. The difference is due to
the permits required for goods entering Mexico
along the Texas border. In the free zone - a
region long favored by tariff policies designed
to offset the disadvantages of vast, barren
stretches far removed from Mexican centers of
government, business, and industry - permits
are required for only a few items.
8
Other factors influencing the cost and efficiency of foreign operations include the availability and costs of plant facilities, utilities, and
parts and services for the maintenance and repair of equipment - most of which are available in Mexico. A plant in Mexico can quickly
summon maintenance and repair service from
the United States. Although comparable utility
services cost slightly more in Mexico than in
the United States, the services are more reliable
than in some competing countries in tlle Far
East. Utilities are available in most areas, frequently furnished from tlle American side of
the border, and the quality of electrical service
is usually well regulated.
The slightly higher utility costs in Mexico can
be offset by low rents. Buildings suitable for
light manufacturing can be leased in the border
zone at annual rates ranging from 50 cents to
$1.25 a square foot. Being situated so that families of American managers can live in the
United States, Mexican plants also offer an iInportant recruitment advantage over plants in
the Far East.
Progress on the border
The border industry program has provided
substantial employment gains in Mexico. In
addition to the new jobs in industry, it has undoubtedly created an important secondary layer
of related employment. Plants and industrial
parks have had to be built and maintained.
Some repair work has to be done, and some
supplies and materials are bought in Mexico.
But development of industry in the border zone
has also gone far in iInproving the outlook for
communities on the American side.
While not as acute as in Mexico, problems of
underdevelopment have nevertheless been significant on the American side of the border.
Essentially dependent on agriculture, many
border towns from Brownsville almost to San
Diego have long suffered from a lack of industrial income and employment. Between 1965
and 1969, the level of unemployment in
Brownsville and McAllen, for example, averaged twice as high as in Texas as a whole. In
lEI Paso, where unemployment levels were also
Significantly higher, wages averaged about 30
percent lower than in the rest of the state in
the first nine months of 1969, and the workWeek 3.5 percent shorter.
'\
r-----------T--------------;
' , I
'\'\ rJ
CAL I FOR N I A ''\, \
ANGELES
s .... \
AN OIEGO
I
,------.
I
I
i
!
/)!
'\
~OS
tenance of plant machinery and equipment are
often handled in Mexico. More difficult work
or work requiring large shops is usually done
on the American side, especially in the larger
cities, such as El Paso, Tucson, and Phoenix.
Still more complicated work is often channeled to even larger cities, such as Dallas,
Houston, and Los Angeles.
I
A R I Z 0 N A
,
PHOJNIX
EL CEblTIIO) .
\
~''-
NEW M E X leo
__
-------~'-_-,.r-
TU~SON
...........
---...\
I
I
C",_ ";'
TIJUANIt' MEXI~"""",,:
,
\
I
"DALLAS
I
i
I
DEMJNG
__
----.J
_1f_~L PASO
"-: __ ~OG~'!.::...._e&LOMAS CIUDAD JUAREZ
T E X AS
:
NOGA'LES
'-"
•
\
HOUSTON"
' ....
'··"',oDEL RIO
'-J
'
\
"SAN ANTON I O
~EAGLE
PASS
'0 7
PIEDRAS NEGRAS '..
" '. LAREDO
NUEVO LAR
ED~~
~ALLEN
[
~
oH RLiNGEN
"'i---.<>1Ul ow N SV ILL E
REYNOSA ~ATAMOROS
11)
MONTERREY
Supplies to support border industries are
bought in bOtll countries, the choice depending
on the availability and costs of goods. While
some furniture is bought in Mexico, most office
equipment, fixtures, and suppljes are provided
from the United States. Motor vehicles used in
~exican operations are almost always bought
In the United States and registered in southwestern states. Many of the components used in assemblies in Mexico are fabricated in new plants
on the American side, but some materials, such
as COpper and copper tubing used in television
sets, are cheaper to buy in Mexico.
. Plants in Mexico purchase services on both
sides of the border. Minor repairs and main-
Transportation services are furnished almost
entirely by American companies. While there
is little evidence that border industries have
added significantly to the freight hauled by the
few railroads serving border communities, shipments by air have increased. One small airfreight line has been established in South Texas
to serve new industries along the Lower Rio
Grande. The biggest gains, however, have been
in truck movements, both of components
shipped into Mexico and finished products
shipped back into the United States.
Probably the most important development
on the American side has been the construction of plants to complement operations in
business review/ february 1970
9
Mexico. By building "twin plants" on the
border, manufacturers can carefully coordinate
production requiring large amounts of labor
with processes requiring concentrations of machinery and technical competence. Construction of plants on this side has stimulated demand for land, personnel, and facilities in areas
of the Southwest that might otherwise have
made very little industrial progress. According to estimates by the El Paso Industrial Development Corporation, at the end of 1969,
twin plants at EI Paso were providing a basic
employment for 1,315 workers, plus secondary
employment for another 920. Investments in
these plants totaled an estimated $23 million .
The distribution of employment between
Americans and Mexicans varies from plant to
plant. The Valley National Bank of Arizona reported, however, that of 610 workers employed
in border industries at Agua Prieta at the end of
1969, about 20 were Americans. In addition,
the bank estimated that some 250 Americans
were employed in twin operations at Douglas,
on tllis side of the border.
Banks in the Southwest have shared increasingly in the growth spurred by industrialization
along the border. Many of the facilities housing
plants in Mexico were financed through loans
from American banks, as were plants built on
this side to support the Mexican operations.
Plants on both sides keep working balances at
banks on this side. These balances, along with
the new accounts of Americans working in the
plants and new businesses established to serve
them, have added significantly to deposits in
the Southwest. Also, because Mexican workers
must be paid in pesos, periodic transfers of
funds to Mexican banks for plants to use in
meeting payrolls have added to the foreignexchange business of banks in the Southwest.
The importance of border industry to the
southwestern states cannot be properly gauged,
however, merely in terms of what Americans
earn and spend on this side of the border. As
10
businessmen on the border have long understood, income and employment in Mexico also
have important implications fo r retail trade in
the United States. Following a survey of retail
trade in EI Paso in 1965, the Real Estate Research Corporation reported that residents of
Ciudad Juarez spent nearly $24.5 million in
EI Paso stores and that customers from elsewhere in Mexico spent another $4.3 million.
Together, these purchases represented 20 percent of the retail sales in EI Paso and 30 percent
of the sales in downtown stores. Since Ciudad
Juarez is the largest Mexican city on the border
and has the largest retail market competing with
stores on the American side, Mexican purchases
were probably even higher elsewhere on the
border. At one point, where there are very few
retail outlets on the Mexican side, almost all
purchases are made on the American side.
This does not mean, of course, that Mexican
workers spend most of what they earn in the
United States. Most of their income is spent in
Mexico, and some of what they spend in the
United States may eventually find its way back
into Mexico.
Other benefits of the border industry program
have been less tangible. One very real benefit
to Mexico - and possibly in time to tlle United
States as well- has been the improvement of
the quality of the Mexican labor force along the
border. Some groups in Mexico originally opposed the program, fearing that American companies, with their greater know-how, might take
over Mexican markets. Most of this opposition
has withered, however, in the face of the
achievements made in training Mexican workers. With plants in the border zone setting an
example of quality workmanship for the rest of
Mexico to follow, support for the program has
become broadly based.
A still more intangible advantage of the
program has been that it placed Mexico in a
better position to escape at least some of the
limitations of its resources. First, by relying 00
foreign investment to develop its border area,
Mexico can afford to concentrate more of its
development capital in the interior. Second, by
providing industrial employment, it can hope to
begin shifting workers out of agriculture. As in
most underdeveloped countries, agricultural
productivity is low and agricultural progress
hampered. If the border program and other
industrial development in the interior can draw
underemployed workers from the farms, they
will have contributed to the development of
Mexican agriculture.
The net effect on the U.S. balance of payments is perhaps even more elusive. Not only
is the extent of sales to equip and supply plants
in Mexico unknown, but so also is the extent
to which Americans substituted products of
Mexican plants for goods previously bought in
other countries or, conversely, the extent to
which Mexican-American exports increased as
a result of the improved competitive position of
American products. It is known, however, that
at least one company has shifted its operations
from the Far East to Mexico. And the American Chamber of Commerce reports that eight
American companies in Mexico either export
goods to countries other than the United States
or plan to start such exports.
The program also points to greater diversification of Mexican exports. Mexico, like other
developing countries, has generally been too
dependent on the products of agriculture and
mining as sources of foreign exchange. With a
more diversified base for exchange earnings,
any developing country is in a better position
to absorb the impact of fluctuations in demand
Or prices of its exports and, therefore, in a better position to maintain the flow of imports
needed for its economic development.
Despite the problems of determining the effects of the border industry program on balances
of payments, possible improvement in the U.S.
position can be shown by a purposefully simple
but reasonable hypothetical case, such as the
example given in the Technical Note on the
following page.
Balance of payments
Perspective
The border industry program has almost
certainly strengthened the balance-of-payments
Positi0n of Mexico, and probably the position
of the United States. The extent of the strengthening is hard to determine, however, for not
only is the possible impact of border plants on
other trade between the two countries unknown
but so also is the impact of border plants on the
trade of these countries with aU other countries.
The border industry program allows both
the United States and Mexico to make better
allocation of their resources. By exporting components to Mexico for assembly, the United
States takes advantage of its highly capitalized
manufacturing capacity. By assembling these
parts for export back to the United States as
finished products, Mexico makes better use of
its labor, which because of the lack of industrial opportunity on the border, has gone largely
unemployed.
The value added on products imported into
the United States from Mexican plants was $3.4
~niLlion in 1966. These exports nearly doubled
lU 1967 and climbed to $23.7 million by the end
of 1968. But the net effect of this $20 million
increase on Mexico's balance of payments cannot be determined. It is not known how much
of the increase was spent in the United States.
Nor are the earnings of these plants known, or
their expenses in the United States.
Not only does the program improve the allocation of Mexican-American resources, however, but it may well represent an improvement
in the allocation of world resources. Certainly,
the spread of American plants along the border
indicates market acceptance of the program,
showing the plants can produce goods at competitive prices in world markets.
business review/february 1970
11
Technical Note
Possible effects of the border industry program on the U.S. balance of payments can be
shown by the hypothetical example of an American company participating in the program. Say
the company exports $250,000 in machinery
and equipment to set up an assembly plant in
Mexico. These exports are financed by a capital contribution of the parent company in the
United States (Step 1 in the table).
Since the American company will probably
also transfer working capital to its foreign subsidiary, it can be assumed that a demand deposit, say $50,000, is credited to the subsidiary
at an American bank. The result is an increase
in short-term liabilities to foreigners, or a new
credit item in the balance-of-payments account.
On the books of the parent company, its equity
in the border plant is then brought to a total of
$300,000 (Step 2).
If the components the American company
shipped to its subsidiary are worth $60,000,
the company's capital investment in the Mexican plant rises to $360,000 (Step 3).
Say the Mexican plant assembles final products valued at $100,000 for a total cost of
$90,000 ($60,000 for components manufactured in the United States, $15,000 for wages
to Mexican workers, $5,000 for other overhead
charges, and $10,000 for depreciation). The
plant will then show a profit of $10,000. Since
this profit represents service income in the
balance-of-payments accounts, it will probably
be reflected in a $10,000 credit on the current
account and, assuming that the American company reinvests the profit into the subsidiary
plant, a $10,000 debit in long-term capital investrq.ents (Step 4).
If the entire $100,000 inventory of final products is shipped to the United States, the parent
company will reduce its capital contribution to
the border plant by $80,000 and credit its subsidiary with $20,000 in cash (Step 5).
12
If the Mexican workers spend two-thirds of
the $15,000 payroll in the United States, U.S.
exports will increase $10,000 and the offset
item in the U.S. balance of payments will be a
$10,000 increase in short-term claims of foreigners (Step 6).
BALANCE·Of·PAYMENTS ACCOUNTS
CURRENT ACCOUNT
Credits
(Step 1)
(Step 3)
(Step 4)
(Step 6)
Debits
$250,000
60,000
10,000
10,000
(Step 5)
$100,000
SHORT-TERM CAPITAL
Credits
(Step 2)
(Step 5)
Debits
$ 50,000
20,000
$ 10,000
(Step 6)
LONG-TERM CAPITAL
Credits
Debits
$250,000
50,000
60,000
10,000
-80,000
(Step 1)
(Step 2)
(Step 3)
(Step 4)
(Step 5)
As a result of these six transactions, net imports from the plant - after elimination of the
exports financed under long-term capital transfers - will be $20,000. To evaluate the impact of these transactions on the U.S. current
account, assume (1) that imports of similar
products into the United States totaled $1 million a year before the plant was established
on the border, (2) that these imports had been
increasing 7 percent a year, and (3) that the
year the plant went into operation, imports of
the product increased only 3 percent. The net
effect of such an operation on the border would
represent a $40,000 displacement of imports,
more than enough to offset the $20,000 import
from Mexico. If, of course, the border plant
displaced less than $20,000 in imports, the
U.S. balance of payments suffered.
District highlights
The seasonally adjusted Texas industrial production index, at 177.6 percent of the 1957-59
base, was down fractionally in December from
the previous month. A decline in total manufacturing was nearly offset by a rise in mining
output. Utilities remained unchanged. In manufacturing, production of both durable and nondurable goods eased in December. The decline
in the output of durable goods was led by
reduced activity in transportation equipment,
electrical and nonelectrical machinery, and furniture and fixtures. The weakness in nondurable
goods production was attributed to paper and
allied products, leather and leather products,
food and kindred products, and chemicals and
allied products. The output of textiles rose significantly, however. Increased output of crude
petroleum accounted for all the gain in mining.
Industrial production in Texas was 6.7 percent higher than in December 1968. Manufacturing, mining, and utilities advanced with about
equal strength. Within manufacturing, however,
the rate of increase in the production of durable
gOods was more than twice the rate in noIl.durables. Sectors of nondurable goods showing
little or no year-to-year gains included food
and kindred products, textiles, and leather and
leather products. The strength in the production
of durables was concentrated in machinery and
metals. Crude petroleum production rose nearly
11 percent.
New passenger automobile registrations in
the four metropolitan reporting centers of Texas
were 9 percent higher in December than in November but 4 percent lower than in December
1968. Registrations for these four centersDallas, Fort Worth, Houston, and San Antonio
- totaled 3 percent less last year than in 1968,
despite a I-percent increase in Dallas.
Department store sales in the Eleventh District were up sharply in the four weeks ended
December 27, reaching a level 5 percent higher
than in the comparable period a year earlier.
Sales were especially high Christmas week. Department store sales for the year as a whole were
8 percent higher than in 1968. Year-to-year
gains were posted by all major metropolitan
areas for which separate data are available.
Sales for the four weeks ended January 17, a
period that also included Christmas week, were
13 percent higher than a year earlier.
Nonagricultural wage and salary employment
in the five southwestern states increased 0.8
percent in December and reached a level 3.3
percent higher than in December 1968. Almo~t
all the month-to-month increase was in trade
employment, which rose 3.9 percent. Manufacturing employment declined 0.6 percent, and
construction employment 1.1 percent. Only
very slight gains were registered in other employment sectors: government, mining, transportation and utilities, finance, and services.
Texas oil allowables continue in February at
68 percent of maximum efficient production a new high set in January, when authorized production was sharply increased to a daily average
of 3,869,658 barrels from 3,639,886 barrels in
December. Calculation of allowables based on
the 68-percent rate has been revised downward
for February, however, to 3,732,913 barrels a
day. Allowables in Louisiana were increased
from 46 percent of maximum efficient production in January to 47 percent in February. The
increase in southeastern New Mexico from a
daily average of 70 barrels per well in December to 72 barrels in January was continued
through February.
business review/ february 1970
13
The higher allow abIes reflect several factors:
growth in demand, difficulties in increasing output, and needs to replenish stocks. The Bureau
of Mines has forecast an increase in demand in
February that will require another 90,000 barrels a day of domestic crude production. Production in Texas has been less than allowables,
however. Production in January was expected
to fall 618,158 barrels a day short of the allowabIes. As the Texas Railroad Commission has
increased allow abIes above 40 percent of maximum efficient production, each added increment
of allowables has resulted in a progressively
smaller percentage increase in production.
Among the problems slowing the increase in
production have been difficulties in disposing of
salt water, accumulations of hard-to-sell sour
crudes, and limitations of available production
and distribution facilities. As production has
lagged below allowables, stocks have been drawn
down, creating an additional reason for raising
allowables.
The investment outlook continues strong for
the industry. Department of Commerce estimates show the petroleum industry planning to
increase spending on new plant and equipment
faster than any other industry. The industry is
reportedly planning plant and equipment expenditures of $6,140,000,000 this year, compared with $5,250,000,000 in 1969.
Seven percent less winter wheat acreage has
been seeded in Eleventh District states than
in 1969. Although cold weather has slowed
growth, Texas wheat grazing prospects are fair
to good. Hay stocks on farms in the five states
totaled close to 5.1 million tons at the start
of the year - 22 percent less than a year earlier. Before January freezes in the Lower Rio
Grande Valley, the 1969-70 citrus crop in
Texas and Arizona was estimated at 21.3 million boxes - 12 percent more than in 1968-69,
compared with 3 percent more for the nation.
These two states were expected to produce 10.7
million boxes of oranges ,and 1,0.6 millio).l boxes
of grapefruit, or 8 percent more oranges than
in 1968-69 and 15 percent more grapefruit.
Production of major winter vegetables in Texas
was expected to total about 7 million hundredweight - 5 percent less than last season.
While killing frosts have retarded growth of
range feed throughout tlle District, the outlook
for winter grazing remains generally good. Cattle and calves were still in good condition in
December. Cattle and calves on feed in District
states totaled 2,377,000 head on January 1 22 percent more than a year earlier.
Prices Texas farmers and ranchers received
for their products on pecember 15 averaged
11 percent higher than a year before. This
increase reflected a 19-percent rise in the livestock and livestock products index and a 3percent rise in the index for all crops.
In the first 11 months last year, cash receipts
from farm marketings in District states totaled
6 percent higher than in the same period a year
earlier. Livestock receipts increased 14 percent,
but crop receipts declined 5 percent.
Total time and savings deposits at weekly reporting banks in the Eleventh District declined
$79 million over the eight weeks ended J anuary 14. All other major balance sheet items increased, primarily reflecting seasonal factors.
The contraseasonal reduction in time and savings deposits was due mainly to a $48 million
runoff of large certificates of deposit. Time and
savings deposits of individuals, partnerships,
and corporations dropped $139 million, while
such deposits of states and their political subdivisions rose $61 million. Total time and savings
deposits increased $16 million during the corresponding period a year earlier.
Loans adjusted increased $141 millionless than half the gain recorded for the corresponding period in 1969. Contributing to this
increase were advances of $113 million in busi-
ness loans, $10 million in consumer loans, and
$5.6 million in loans to financial institutions
other than banks. Real estate loans declined
$10 million, in sharp contrast to an increase of
$9 million a year before.
Total investments advanced $64 million.
This advance was due mainly to a $121 million
increase in holdings of long-term municipal securities. Holdings of U .S. Government securities
declined $25 million. An advance of $57 million
in holdings of U.S. Government securities with
less than one-year maturities was more than
offset by a $70 million decline in holdings of
long-term Government bonds and a $12 million
decline in holdings of Treasury bills. A year
earlier, total investments increased $33 million.
Total demand deposits rose $160 million,
compared with $256 million a year earlier. Increases of $162 million in deposits of individuals, partnerships, and corporations and $51
million in interbank deposits accounted for most
of the gain. Deposits of states and their political
subdivisions decHned $34 million, and deposits
of the U.S. Government declined $16 million.
The Bank of Crowley, Crowley, Texas, an insured nonmember bank located in
the territory served by the Head Office of the Federal Reserve Bank of Dallas,
was added to the Par List on its opening date, January 5, 1970. The officers are:
Harry Barnhill, President; Charlie Sewell, Vice President; and W. C. Hampton,
Cashier.
The First Danbury State Bank, Danbury, 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, Janu ary 19, 1970.
The officers are: E. E. Brewer, Chairman of the Board; C. E. Zwahr, President;
Jerry C. Truell, Executive Vice President and Cashier; and J. B. Ross, Vice
President (Inactive) .
The Galleria 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 19, 1970. The officers are :
Wayne G. Wickman, President, and Jay D. Barbee, Vice President and Cashier.
business review/february 1970
15
STATISTICAL SUPPLEMENT
to the
BUSINESS REVIEW
February 1970
FEDERAL RESERVE BANK
OF DALLAS
RESERVE POSIT IONS OF MEMBER BANKS
CONDITION STATISTICS OF WEEKLY REPORTING
COMMERCIAL BANKS
Eleventh Federal Reserve District
Eleventh Federal Reserve District
(Aye rag.s of doily figur.s. In thousands of dollars)
(In thousands of dollars)
5
Jon. 28,
1970
Item
D.c. 24,
1969
Oth e r loans and discounts, gross ... . ........... .
Commercial and industrial loans • ••..••. . •• •..
Agric.ulturol loan s, excluding
certiAcotes of intere st . .• • •..•••...•••....
loans to brokers and deolers for
purcha sing or carrying :
ecc
U.S. Government securities . .............. .
Other se curitie s .. . ....... . . ............ .
Other loons for purchasing or carrying :
U.S. Government sec urities . .............. .
Oth e r se curities . . .. . ................... .
loans to nonbank Anancia l institutions:
Sales flnonce, personal flnance, factors,
and other business credit companies ... . . . .
Oth.r ............. ···•·• .. ·· .. ··•• .. · .
Rea l estate loans .•.. . . .... . .. . . . . ...... . ..
loans to domestic commercial b a nks.. .. .•.....
loans to foreign banks . .... . ....... . ...•.. .
Consumer in stalment loans •. . ..•..........• ..
loans to fore ign governm ents, ofAcial
institutions, central banks, international
institution s•. . ....... . ...... • .. .. ...... ..
Other loons . ............................ .
Total investments . .... ... .. ....... .. ... .... . .
Total U.S. Government se curities .. .. ......... .
Trea sury bills . .. .. ..... ............. ... .
Trea sury certiAcates of indebtedne ss . ..• .• ..
Trea sury note s and U .S. Government
bonds maturing :
Within 1 year •.. .. ........... .....•..
1 year to 5 years . .. .. ..... . .. . ...... .
After 5 years .. .. •... .......... .......
Obligations of states and political subdivisions:
Tax warrants and dlort-term notes and bills . .
All oth.r ................. .... ......... .
Other bonds , corporate stocks, and securities:
CertiAcates repre se nting participations in
Federal agency loan s . .. ....... . . ..... .
All other (including corporate stocks) . . •.....
Ca sh items in process of coll ection . ..... .. ..... .
Reserves with Federal Reserve Bank •... .........
Currency and coin . ......................... .
Balances with banks in the United States ... .. ... .
Balance s with banks in foreign countri es . .•......
Other assets {including investments in subsidiaries
not conso lidated) . .. .... , ... . . ... ... .... .. .
.4 weeks ended
Dec. 3, 1969
4 weeks ende d
Jan.7, 1970
749,724
692,994
56,730
764,358
- 14.634
6,437
-2 1,071
731,700
679, 167
52,533
735,397
-3,697
4B,627
-52,324
753,327
695,595
57,732
774,782
-21,455
13,571
-35,026
786,188
599,549
186,639
769,379
16,809
19,585
-2,776
777,540
598,067
179,473
756,752
20,788
11,168
9,620
757,656
575,353
182,303
731 ,141
26,5 15
6,475
20,040
1,535 ,912
1,292,543
243 ,369
1,533,737
2,175
26,022
-23,847
1,509,240
1,277,234
232,006
1,492,149
17,091
59,795
-42,704
1,510,983
1,270,948
240,035
1,505,923
5,060
20,046
-14,986
weeks ended
Jon. I, 1969
RESERVE CITY BANKS
ASSETS
Federal fund s sold and securities purchased
und er agree men ts to re se ll. ...•..• • •.••••...
Item
Jon. 29,
1969 1
346,630
6,035,373
296, 085
6,160,670
1 6,312,131
3,029,871
3,078,674
3,026,870
109,915
110,591
97,646
555
41,316
555
48,334
1,001
137,153
861
397,505
950
392,026
387
387,685
130,720
339,766
639,015
11 ,163
11,179
727,827
144,631
358,914
657,744
11,860
7,969
728,264
140,38 1
356,498
608 ,510
252,856
6,770
636,825
750
594,930
2,611,202
0
620,158
2,590,139
0
659,549
2,754,366
105,762
0
929,481
41,383
0
1,162,708
107,737
0
165,670
595,758
115,813
139,668
619,438
128,992
192,236
619,050
243,685
17,175
1,489,596
9,062
1,527,039
36,060
1,327,528
Total reserves held . ...... . ....
With Federa l Reserve Bank .. . .
Currency and coin . ..........
Required reserves • ... . ........
Excess re se rves . •..... . . .. . •. .
Borrowings . ...... ... ...... . . .
Free reserves . .. . ... . . .... .. ..
COUNTRY BANKS
---983,003
Total rese rves held . ........ ...
With Fed eral Reserve Bank .. ..
Currency and coin . ..........
Required reserves . .. ..... .....
Excess reserves . ...... . .......
Borrowings . ... ... ....... .• . ..
Free re serve s. .. .. .. ... . .. ....
ALL MEMBER BANKS
Tota l reserves held • . ......... .
With Federal Re se rve Bank ... .
Currency and coin . ..........
Required reserves . ........ . ...
Excoss reserves . . .............
Borrowings . ....... . ...•.•. . ..
Free reserves •. ......... . ... ..
CONDITION OF THE FE DERAL RESERVE BANK OF DALLAS
(I n thousands of dol lars)
53,379
68,049
1,086,636
771,332
89,626
449,930
9,786
504,992
TOTAL ASSETS. . .. • . . . . .. • • • • .. . . . . .. .• 11,905,507
57,624
66,933
1,3 17,755
828,679
82 ,859
502,204
8,874
145,597
82,473
985,590
75 1,985
88,130
488,644
6,422
460,437
---11 ,748,944
Jon. 28,
1970
It em
Total gold certiAcate reserves ..... ....... . . .
Discounts for member bonk s. .............. .
Ot her discounts and adva nces . ..... . .•. ....
U.S. Government securities . .... ... .....•...
Total earning assets ... . . ....... .. .. . ..... .
Membor bank reserve deposits .... ......... .
Federal Reserve notes in actual circulation .... .
D.c. 24,
1969
Jo n. 29,
1969
433,102
35,250
499,251
24,450
222,365
92, 150
2,390,30 1
2,425,551
1,309,025
1,695,814
2,423,807
2,448,257
1,373,3 10
1,745,492
2,2,26,899
2,3 19,049
1,260,054
1,524,903
o
o
o
36 1,676
---12,247,702
COND ITI ON STATISTICS OF ALL MEM BER BANKS
LIA81L1T1ES
Total deposits . ........... . . . .. .. ... . .... ...
8,864,6 11
Total d.mand d.po sits .. .......... . ........
5,620,150
3,977,637
282,017
139,991
1,112,593
Individual s, partn erships, and corporations•...
States and politica l subdivisions . .. ...... .. .
U.S. Government . ......... •......••.....
8anks In the Unit.d States •.•.. •.. •••......
Foreign:
Governments, official institutions, central
banks, international institutions . ........
Commercial banks . ....................
CertiAed and ofAcers' checks, etc .. . .• ... ...
Total time and savings deposits . . .... ... . ....
Individuals, partnerships, and corporations:
Savings deposits . ....... .. .... . .• •... .
O ther time depo sits .. ..................
States and political subdivisions . ...........
U.S. Government (including postal savings) . . .
Banks in the United States.. . .. ...... ... ...
Foreign:
Governments, ofnc ia l institutions, central
banks, international institutions • ..•... . .
Commercial bonks . ...... . ...... . .. .. ..
Federal funds purchased and securities sold
under agreements to repurchase .. •.. . ......•
Other liabilities for borrowed money ............
Other liabilitie s . ........ . ...................
Reserves on loan s . ....... . . ........... . •....
Re se rves on securities . ... . . . .............. . . .
Total cap ital accounts . . . ........ ... . ..... . . ..
---5,673,150
6,095,782
4,196,095
248,294
259,859
1,274,855
Not ayallabl •.
Dec.31,
1969
Noy.26,
1969
D.c. 31,
1968
loans and discounts, gross t • ••••••••••••••
U .S. Government obligations .••.. .........
Other securities . . .. .. .•. . ........ . .....
Reserves with Fe deral Re serve Bank . . .. . ...
Cash in vault . ......... . . .. ............
Ba lance s with banks in th e United State s.• ..
Balances with bonks in foreign countries e .. ..
Cash items in proces s of collection . ... .....
Other a ssets e • .. .. . ........•...........
11,942
2,179
3,146
1,222
268
1,6 19
12
1,652
822
11,450
2,107
3,178
1,246
245
1,284
9
1,323
852
10,912
2,601
3,11 8
1,229
272
1,599
TOTAL ASSETS· . ... . .... ............
22,862
21,694
~
Demand de posits of banks . ..... . . .......
Othe r demand deposits . . .•. ..... .. .. .. ..
Time deposits •. .. ... ... ... .... . ........
1,919
9,926
7,246
1,525
9,004
7,220
1,947
9,837
7,597
941,246
Tota l deposits . . ... . .... •.. .....•... .
Borrowings .. .. . ....... .. ..............
Other liabilitics c . . .. . . . . ...............
Total capital accounts e . ....•...•...... "
19,091
1,159
901
1,71 1
17,749
1,146
1,071
1,728
19,381
722
329
1,61 1
11,748,944
TOTAL LIABILITIES AND CAPITAL
ACCO UNTS· ....... . ...... ........
22,B62
21,694
Item
ASSETS
2,770
26,57 1
87,338
3,34 1,668
9,563
22,284
77,35 1
3,882,231
92 1,265
1,604,884
688,831
2,104
18,527
947,070
1,7 16,740
647,970
2,587
18,44 1
1,009,358
2,116,820
7 10, 140
11,983
26,730
7,500
1,350
7,500
1,360
1,248,762
333,033
335,136
136,503
13,255
974,207
995,92 1
258,506
456,025
11 7,527
10,72 1
971,552
l
7,000
200
923,819
209,094
119,404
n.a.
---- ---12,247,702
Because of format revisions as of July 2, 1969, e:::lrlier da ta a re not comparab le.
n.a . -
(I n mi ll ions o f dollars )
3,905,127
360,198
163,460
1,135,167
2,933
25,252
79,727
3,244,461
TOTAL LIABILITIES, RESERVES, AND
CAPITAL ACCOUNTS •• . ...•.•. . ...•... 11,905,507
1
Eleve nth Federa l Reserve District
9,555,381
9,437,450
----
9
1,606
697
L1AB1LlTIES AND CAPITAL ACCOUNTS
J
~
Before. July 2, 1969, this item was pub lished on a net basis .
-
Esltmated.
BANK DEB ITS, END-Of-MO NTH DEPOSITS, AND DEPOSIT TURNOVER
(Dollar ofllounts in thousand s, se asonally adiusted)
-
DE81TS TO DEMAND DEPOSIT ACCO UNTS'
DEMAND DEPOSITS'
Percent chang o
Annual ra te
of turnove r
December 1969 from
December
1969
12 months,
1969 from
1968
December 31,
December
Nove mber
December
1969
1969
1969
1968
26.0
31.7
36.6
24. 1
20 .6
36.2
29.9
27.0
26.3
24.8
14.3
55.7
30.0
33.8
24.5
39.5
23.3
25.9
18.4
15.5
24.4
17.7
27.3
17.9
21.8
23 .3
24.2
20.4
23.3
27.6
32.5
22.3
19.2
32.2
30.5
23.9
25.2
21.9
13.2
51.3
26.4
33.0
23.4
35.6
19.8
22.0
15.8
13.4
23.2
17.2
27.4
15.8
19.3
21.8
22.7
18.6
23.9
27.1
26.8
21.8
18.3
31.9
31.9
25.9
25.4
23.0
13.9
46.4
27.7
33 .7
21.9
35.7
22 .3
24.0
17.3
15.9
20.5
17.4
25.3
16.9
23.5
21.1
23.2
19.9
37.7
34.6
33.5
(Annual. rat e
Nove mb e r
Decemb er
statistical are a
basis)
1969
1968
AR IZONA: Tucson •.....•••....•.....••..•.••.•...•• •
LOUISIANA: Monroe .......... ... .. . ... ... ..... .....
Wichita Falls •.••...•. • •.•..•••.... • •••.•••••
6,012,408
2,642,100
9,255,276
945,972
1,974,696
5,925,456
8,293 ,872
6,494,328
1,884,492
5,196,432
412,428
121,529,280
7,174,368
21,218,808
2,611,572
97,768,908
926,484
4,139,856
1,734,072
2,059,428
1,710,696
1,263,684
16,677,408
1,093,536
1,543,788
2,225,580
2,85 1,956
2,285,064
14
14
18
15
6
15
-4
16
4
16
8
12
18
5
8
12
19
17
20
16
8
7
4
11
16
11
10
8
23
14
37
23
5
22
-2
5
4
10
1
22
15
5
12
17
9
12
10
1
20
11
10
12
-5
10
8
-1
19
16
28
23
8
7
31
7
6
8
4
27
15
12
6
16
12
14
6
10
18
11
10
10
5
16
12
4
233,582
81,597
250,604
41 ,11 2
96,635
162,368
270,780
241,439
71,688
217,225
28,197
2,198,31 2
242,676
636,020
110,198
2,447,532
39,217
159,903
96,034
132,529
70,949
73,395
644,321
60,250
7 1,3 37
96,157
120,984
111 ,279
Totol_28 centers • ••• •..••••••••..••......• •...• •. ..
$337,85 1,948
11
16
18
$9,006,320
Standard metropolitan
Shreveport ......•............ ... ........
NEW MEXICO: Ro swell' .. .... ... ......... ...........
TEXAS: Abilene •.••.. ••.. .. ......••••... . •• •..... ..•
Amarillo .............. .... ...... ............
Austin . . ...... . ..... .. . . .... ......... . ... ...
Beaumon t-Port Arthur- Orang e ••.• •.... .••••....
Brownsville-Harlingen-San Benito ...... . .........
C'lrpus Christi. . . ... .. ... ...... ....... ........
Corsicana 2 •••
. . . •••••••••••••••••.•• .. .•••••
Dalla s •• • ..•....... . • •.• ..••...•.. . • .......•
EI Paso •••....••....••....••.•... . •. ••• . ...•
Fort Worth ••. ...•••..••••••...•••...•.••••..
Ga lveston- Texas City •. .. .... ... . .. , . . .. ......
Hou ston ••. . .• . , ........... . ... . ..... .......
l aredo ................. . ........ , .......• . .
Lubbock •.••....•.....••...... ••. ...•• • •...•
McAlI en·Pharr·Edinburg •••••.••.•........••.•. .
Mid land ..••....••.•....•••. ..• •.. .... ..••.•
Od essa ..•..... • . .. .... . .......• ..... . ...•..
~~~ ~~~oe~~•.•. : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :
Sherman-Denison .........•........ . . . ...... ..
Texarkana (Texas- Arkansas) .... .. ... . . . ........
Tyler .............. .... . . .. . ..... .. ... . .....
Waco .. .......................... ...... ....
--------------------------------------------~~~~~~---------------------------------------------------~
Deposits of individuals, partnerships, and corporations and of stat es and political su bd ivisions.
COunty bosis .
ANNUAL BANK DEBITS AND ANNUAL RATE
O f TURNOVER O f DEMAND DEPO SITS
GRO SS DEM A ND AND TIME DEPOSITS O f ME MB ER BANKS
(Do ll ar omounts In thou sa nd s)
Eleven lh federa l Reserve District
Dem ond deposits I
IAvoragos of dolly flguros. In million. of dollars)
~~~=========================================
~ate
1967. 0
19
. ecember ..
68: Decembe r
1969: July . .•.. ::
August .. .•
SOptember.
Octob er •..
--
Novem ber . .
Dec ember . .
GROSS DEMAND DEPOSITS
TIME DEPOSITS
Country
Tota l
Re se rve
city banks
banks
Tota l
Reserve
city banks
Country
banks
9,84 1
10,682
10,3 16
10,250
10,497
10,306
10,373
10,692
4,589
5,007
4,783
4,746
4,867
4,726
4,750
4,947
5,252
5,675
5,533
5,504
5,630
5,580
5,623
5,745
6,571
7,598
7,474
7,353
7,272
7,223
7,268
7,203
2,762
3,185
2,806
2,74 1
2,685
2,646
2,690
2,628
3,809
4,413
4,668
4,612
4,587
4,577
4,578
4,575
---
Percent change from
FOs~lTSOUTHWESTERN
Lo ..ES .•...•. •• ....••.•
N~ISlMa ...............
Ok~ho~·lco .............
Tax
a .•.....••.....
G~li·c······ · ····· ···
W
oast • . ..........
.........
Ea:ts~!axa(. ,
P h xcs proper) .....
R:~ ~fdle
UNIT
state ••• • .••...•
~ATES ..... . . . ....
.......... ..
December
November
December
November
Dece mber
1969
1969
1968
1969
1968
6,669.4
2,4 16.2
344 .0
604 .5
3,304 .7
668.4
1,573.6
174.7
86.2
801.8
9,487.2
6,444.9
2,334.2
344.0
610.1
3,156.6
641.7
1,494.1
166.9
83,1
770.8
9,276.3
6,136.6
2,240.9
351.9
614 .1
2,929.7
576.8
1,370.0
136.9
86.8
759.2
8,907.9
3.5
3.5
.0
-.9
4.7
4.2
5.3
4.7
3.7
4.0
2.3
8.7
7.8
-2.3
- 1.6
12.8
15.9
14.9
27.6
-.7
5.6
6.5
SOURCES : American Petro le um Insti t ut e.
U .S. Bureou of Mines .
Federal Roserve Bonk of Dallas .
1969
1968
1969
1968
$
5,449,339
4,587,860
19
24.9
24.7
2,539,346
8,155,265
2,192,285
6,360,273
16
28
29.3
33.7
26.4
26.9
867,813
709,270
22
23.8
21.0
1,995,194
5,394,756
8,798,416
1,839,7 10
5,015,505
6,668,575
8
8
32
20.0
34.7
31.3
18.9
35.0
26.9
6,115,356
5,738,004
7
25.7
25.0
1,609;944
4,779,765
413,982
111,721, 182
6,582,438
20,382,808
2,567,365
91,791,897
833,366
4,265,858
1,526,2 42
4,436,184
397,752
88,11 7,293
5,715,373
18,270,187
2,408,954
79,3 10,522
740,959
3,758,183
5
8
4
27
15
12
7
16
12
14
22 .6
23.1
13.7
51.4
29. 1
32.8
24 .2
37.6
21.5
27.3
21.1
22.5
14.1
44.5
27.4
31.9
23.1
35 .0
21.0
24.8
1,557,683
1,947,546
1,570,617
1,162,398
15,872,168
1,013,6 17
1,460,432
1,761,650
1,333,737
923,457
7
11
18
11
10
10
17.2
14.6
21.2
17.3
26.2
16.6
17.0
13.6
20 .0
16.4
24.9
16.5
1,462, 181
1,857,358
2,479,2 12
2,180,9 11
5
16
12
4
21.8
22 .9
24.0
19.5
22.4
20.8
21.4
19.0
$266,770,648
19
36.0
32.4
LOUISIANA
Monroe ..... ........
Shreveport •. • • ...•••
NEW MEXICO
RosweIl 2 • •••••••••••
TEXAS
Abilene . . . •. . '" ....
Amarillo .... .. ......
Austin ..............
Beaum on t-Port Arthur·
Orange ••... ... ..
Brownsville·Harlingen·
San Benito ... .... .
Corpus Christi . ...•...
~~=======================================
Annual rate
of turnover
Percent
increa se
ARIZONA
Corsicana 1 •.•••• •• ••
lin th ousand. of borro ls)
Area
Standard
metropolitan
sta ti stica l area
Tucson ...... .•......
DAI LY A V ERAGE PRODUCTI ON O f CR UD E OIL
Debits to demand depo sit accounts l
Dallas •••......• •• ••
EI Paso • ....••....••
Fort Worth ..........
Galveston-Texas City ..
Houston .. ......... .
Laredo . . , . ..... ... .
lubbock •....•......
McAllen· Pharr·
Edinburg ....... . ..
Midland ........... .
Od essa • ••••. ...• • ..
Son Ang elo •........
San Antonio ....... ..
Sherman-Denison ... . .
Texarkana (Texas.
Arkansas) ....... . .
Wichita Falls .•..• • ..
1,539,1 72
2,15s.o34
2,780,553
2,276,781
Total-28 cent ers . .... .
$3 16,142 ,659
Tyler •••.....•......
Waco ......... . ....
ll:~~~:m
----
J Unadiust ed deposits of individuals, p:lrtnershi ps , and corporations and of states and
polit ical subdivisions,
2 County basis .
VALUE OF CONSTRUCTION CONTRACTS '
INDUSTRIAL PRODUCTION
(Seasonolly odiusted indexes, 1957·59
= 100)
Decemb er
November
1969p
1969
Area and type of index
(In mill io ns of dollars)
October
1969
December
January-December
1968
Decemb er
November
1969
1969
October
1969
1969
1968
530
203
219
108
5,228
1,744
2,168
1,317
462
193
164
106
4,406
1,675
1,566
1,165
613
256
234
123
6,240
2,290
2,502
1,449
6,793
2,792
2,290
1.711
67,425
25,219
25,667
16,539
6,688
2,677
2,095
1.9 16
61,732
24,838
22,5 13
14,382
Area and type
TEXAS
Total industrial production .. . •..
Manufacturing ...... •.. .... . ...
Durable ................. . . ..
Nondurab le .... ...........•..
Mining . . . . . . . . . . . . . . . . . .... · .
Utilities •.... ............... ·· .
UNITED STATES
Total industrial production ......
Manufacturing . ... .. ..... ...•..
Durable ...... .... , ..........
Nondurable .... ........ .. . ...
Mining ..............• ····· ·· .
Utiliti es .. ...... ...
o
p r _
•••
••
••••
•
•
177.6
201.0
220.4
188.1
130.7
247.1
178.4
204.2
224.7
190.5
128.1
247. 1
177.3r
201.0r
227.0
183.7r
127.4r
262.2r
166.4r
189.5r
202.2r
181.1 r
120.8r
231.2r
170.9
171.2
171.3
171.1
133.9
225.5
171.4
171.9
172.5
171.1
132.0
224.9
173.1
174.1r
177.3 r
170.1r
130.2r
224.4r
168.7
170.1
172.1r
167.5r
127.8r
210.6r
FIVE SOUTHWESTERN
STATES! ... . . __ ..... __ ..
Re si den tial building •..•.. .
Nonr esi dential building . ...
Nonbuilding construction . . .
UNITED STATES ......... __ .
Re si dentiol building • .. •...
Nonresi dential building ....
Nonbuilding construction ...
] Arizona, loui sian a, N ew Mexico, Oklahoma, and Texas.
NOTE . Deta i ls may not add to tota ls because of rounding.
SOURCE, F. W . Dodge, McGraw-Hili, Inc.
Preliminary.
Revised .
SOURCES, Board of Governors of the Federal Reserve System.
Federal Reserve Bank of Dallas.
BUI LD )NG PERM)TS
VA LU ATION (Doller amounts in thousands'
Percent change
....
Dec. 1969
NUMBER
Are a
_
from
12 months,
Dec .
12 mos.
Dec .
1969
1969
1969 from
1968
1969
12 mos.
1969
Nov.
1969
Dec.
1968
$ [62,237
-30
54
91
-49
88
-44
104
-43
58
-28 -23
-64
25
65
43
52
14
-33
55
- 14 -78
8 -53
-31 -41
-57
-5
-4
4
393 -20
13
0
125 -59
-73 -78
-79 -92
160 -61
19 -71
-26 -74
18
84
-15 -55
-60 -42
-1 -5 1
49 -57
48
113
14
-35
44
-53
2
-30
27
-19
-14
6
32
-23
-51
---------------------------------------------------------ARIZONA
524
7,256
$ 4,290
37
330
719
4,914
483
6,282
12,495
43,690
Wichita Falls .•
30
590
272
143
63
210
1,463
16
356
334
72
2,790
27
81
17
40
52
41
882
31
23
165
56
452
14,481
4,613
2,144
77 1
3,683
21,865
316
5,146
5,634
975
36,48 1
407
1,290
490
701
959
646
12,460
846
388
2,733
828
160
2,111
9,445
903
255
724
14,604
76
3,661
5,834
597
29,243
216
1,773
113
302
168
490
7,720
268
140
684
379
11 ,617
42,832
150,971
10,967
7,968
23,403
307,626
2,773
86,213
76,227
18,306
431,Q2 1
4,249
33,11 0
5,958
7,68 1
8,236
6,515
84,918
18,11 9
6,577
17,756
17,164
Totol-26 cities..
8,645
13 1,198
$90,921
$1,498,629
Tucson ..••....
LOUISIANA
Monroe-West
Monroe .....
Shrev eport •...
NONAGRICULTURAL EMPLOYMENT
1
Five Southwestern States
TEXAS
Abilene •.• •.. •
Percent chang e
Dec. 1969 from
Number of persons
Type of employment
December
November
December
Nov.
Dec.
1969p
1969
1968r
1969
1968
Amarillo ..... .
Austin ....... .
Beaumont. . .. .
Brownsville ... .
Corpus Chri sti . .
Dollas .. __ ••..
Denison ..... . .
Total nonagricultural
wage and salary work ers ••
Manufacturing ...........
Nonmanufacturing ...•.•..
Mining ••. . ...........
Construction ....... . ...
Transportation and
public utilities •••••...
Trade, ••• ••..•••••...
Finance •.•..•••......•
Service . ...... . . ......
Government ..... . . ....
6,342,600
1,165,000
5,177,600
232,200
401,500
6,289,300
1,172,100
5,11 7,200
232,000
406,tOO
6,138,300
1,13 1,300
5,007,000
231,500
398,700
0.8
- .6
1.2
.1
-1.1
3.3
3.0
3.4
.3
.7
470,400
1,500,600
312,300
975,600
1,285,000
467,700
1,444,900
311,300
972,000
1,283,200
456,000
1,440,700
294,200
929,800
1,256,100
.6
3.9
.3
.4
.1
3.2
4.2
6.2
4.9
2.3
Arizona, Louisiana , New Mexico, Ok lahoma , and Texas.
p Pre liminary.
r Revised .
1
SOURCE, State employment agendes .
EI Paso ______ •
Fort Worth .. __
Ga lveston .... .
Hou ston ..... .
Lare do ... ... .
Lubbock . • •..•
Midlond ...• •.
Od ess a .... •..
Port Arthur •.•.
San Ang elo ••.
San Antonio ..
Sherman . ....
Tex arkana . ..
Waco .. . .. . .
.
.
.
.
-7
- 15
-2
40
-35
-25
172
-50
5
56
3
@FedFRASER