Full text of Review (Federal Reserve Bank of Dallas) : January 1974

View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Business
Review
-

't ~

District AgricultureRecord Advances Made in 1973
Lay Bases for More Gains in 1974
Bank StructureTexas Banks Find Changes
In Market Shares Come Hard

- .::=:>

""'A~--;;;;;;.:::;;;l~:--~

- -

January 1974

..~
LIBRARY

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

FEDERAL RESEo'P

BANK

r:::" i\~

District Agricul ture-

Record Advances Made in 1973
Lay Bases for More Gains in 1974
For farmers and ranchers in the
Southwest, 1973 was a historic
year. Despite a slow start, farmers
harvested bumper crops-for which
t~ey received record-high prices.
LIvestock producers encountered
a number of new situations and
problems, but they also made substantial gains.
. On balance, higher prices combmed with increased production to
send cash receipts to new highs.
Costs of production also rose
sharply. The rise was not enough,
however, to keep net income from
fa~ e~ceeding even the most opti~st~c level anticipated at the beglDDlng of the year.
~ow, with few signs of demand
easmg in the year ahead, the outlo~k for agriculture may be the
brIghtest ever. This could be especially true in the Southwest
where farmers and ranchers h~ve
renewed their efforts to consolidate
farmland into larger units and increased their outlays for machinery, ~quipment, and fixed capital.
Barrmg some major setback-such
. as an unfortunate turn in the
weather-the base laid in 1973
should carry them to a new plateau of production this year.
Income and prices
!he record rise in farm and ranch
mcome occurred in all five states
of the Eleventh District-Louisi~na, Texas, Oklahoma, New MexICO, and Arizona. The rise was
spurred by increased demand for
farm products at home and abroad
that drew down farm stocks and
p.revented price breaks despite consIderable increases in production.
At home, consumer incomes increased substantially, strengthenBUSiness Review I January 1974

ing demand for all farm products.
Abroad, where afHuence was also
increasing, poor harvests, improved
trade relations, and-possibly most
important-devaluation of the dollar further boosted demand for
U.S. farm output. Given the combination of declining stocks and
growing demand, prices were
driven to historic heights.
These changes were particularly
important in states of the District, where farm income advanced
faster than in the nation as a
whole. Total cash receipts in these

states increased 39 percent in the
first ten months of 1973. During
that time, cash receipts rose
nationwide by 37 percent.
Income increased faster in the
Southwest primarily because the
increase in crop production was
greater than in the nation. For
the year as a whole, cash receipts
from farm and ranch marketings in
these five states may reach close to
$11 billion, compared with $7.5
billion in 1972. If so, with the
prices they received rising faster
than the prices they had to pay,

Outlays lag receipts in Southwest,
allowing faster gains in farm income
BILLION DOLLARS

12
CASH RECEIPTS FROM FARM MARKETINGS

.
,,'

"",

~,'

.------------

TOTAL NET FARM INCOME

-.,. .,.

------------------o I

1969

1971

.,. ... .,..,.-

1973

1973 estimated
SOURCES : U.S . Department of Agriculture
Federal Reserve Bank of Dallas

the region's farmers and ranchers
should post a record net income
totaling nearly $3.5 billion-an advance of nearly a third over 1972.
At mid-November, the index of
prices received by farmers and
ranchers in Texas was half again
higher than the average for 1972.
Both livestock and crop prices contributed to the rise, but the biggest
gain was in crop prices.
After trending upward in the
first half of the year, crop prices
continued to rise sharply in the
third quarter as exports of grain,
rice, and cotton exceeded expectations. These price increases were in
marked contrast to most years, as
prices usually drop when the harvest season approaches.
The price increases were evident
for most major crops. In the first
11 months of the year, average
prices of grain sorghum, corn, and

rice were close to 50 percent more
than those for 1972. Wheat prices
were 86 percent more.
Although increasing less, on balance, than crop prices, livestock
prices also reached new highs. With
beef cattle making up nearly 70
percent of the region's livestock,
an average rise of nearly a third in
the price of beef pushed livestock
receipts for the first 11 months
up substantially.
But even greater increases in
other livestock prices were posted.
Although milk prices rose only
slightly more than a tenth, average
prices of hogs, sheep, eggs, and
broilers rose 50 percent or more
and wool prices more than doubled.
Nationwide, the prices farmers
and ranchers paid advanced fairly
steadily, reaching an average for
the first 11 months of the year 13
percent higher than the 12-month

Nearly all major crops in the Southwest
show gains in production in 1973 ...
PERCEN1 CHANGE FROM 1972

WINTER
WHEAT
RICE

:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::~ COR N

:::::::::::::::::::::::::::::::::::::::::::1
::::::::::::::::::::::::::::::1

HAY

o
o

G RA INS 0 RG HUM

COTTON

PEANUTS

I
40

1973 indicated December 1
SOURCE: U .S.Departmentof A9riculture

I
100

average for 1972. Contributing
considerably to this increase were
the higher prices of such farmoriginated supplies as grains and
livestock purchased as inputs to
feeding operations.
Crop production
Encouraged by expectations of
sharply higher prices, farmers in
the Southwest planted the largest
acreages in many years and tilled
them more intensively. At the
same time, growing conditions were
generally favorable. The results
were record yields and production
that was more than a fifth greater
than in 1972.
The biggest gain was in wheat,
the region's third most important
cash crop. After the surge in exports and prices in 1972, wheat
farmers in the Southwest increased
their acreage by almost 50 percent.
And with almost ideal moisture
conditions, yields averaged over
30 bushels per acre. With the
increase in acreage and gain in
yields, output for the five states
spurted ahead almost 90 percent.
In Texas alone, the wheat crop
totaled almost 100 million bushels'"
three times the crop harvested in
the below-average season of 1971That was the biggest wheat crop
in Texas since 1947, even though
acreage-at 3.4 million-was less
than half that in 1947.
Production of grain sorghum,
the region's second largest crop,
was nearly 30 percent larger than
in 1972. With Government relaxation of acreage restrictions, farmers responded by planting more
grain sorghum. In Texas, where
more than two-fifths of the nation's crop is grown, acreage was
increased by a fourth. And with
much larger acreages in New Mexico and Oldahoma, the five-state
area grew half of the U.S. crop.
Cotton is the largest crop in the
Southwest. But with cotton prices
depressed during much of the 1972

e
s
72

harvest season and with the prospect of strong grain and soybean
prices, farmers were faced with
considerable uncertainty as to
planting decisions. As a result,
District farmers were cautious,
planting only 5 percent more cotton acreage than in 1972. Since the
average yield for the five states
changed little from the 442 pounds
per acre of last season, the crop
was only moderately larger.
Texas, which grows more than
a third of the nation's cotton, accounted for most of the increase
in the District. Farmers there increased their acreage by 10 percent, providing most of the boost
to the five-state total. Cotton
acreage in Arizona, New Mexico,
and Oldahoma changed little, but
acreage in Louisiana declined by a
fourth because of floods last spring.
Only rice, of the four major cash
crops in the Southwest, failed to
show a rise in production. Although rice acreage in Louisiana
and Texas had been increased
nearly a fifth, Hurricane Delia
caused moderate to heavy lodging,
and SUbsequent rains slowed harvesting, causing some of the grain
to sprout. Ill' addition, little second
cutting was possible. As a result,
average yields in Texas were about
20 percent less than in 1972, and
those in Louisiana fe1110 percent.
The lower yields offset the increased acreage and left growers
with a crop that was about the
same as in 1972.
As prices of soybeans rise, farmers of the District find this crop
more attractive. Louisiana still has
the most soybean acreage of any
~tate in the District. But acreage
I~ Oldahoma was expanded conSIderably last year, and acreage in
Texas was more than doubled.
Total crop production was fur~her boosted by continued growth
lU the output of barley, corn, hay,
oats, peanuts, and rye. Diversion
of land to other crops resulted in
BUSiness Review / January 1974

CROP ACREAGES
Five Southwestern States 1
(Thousand acres)

Crop

For
harvest
1973

Harvested
1972

7,004
442
1,169
8,045
2,338
9,183

6,673
430
990
6,524
2,047
6,270

Cotton .. . .. . . . ..
Peanuts ... . .....
Rice . .... . ' . . .. .
Grain sorghum ...
Soybeans .......
Winter wheat ....

Percent
Increase

5%
3
18
23
14
46

1. Arizona, Louisiana , New Mexico, Oklahoma, and Texas
SOURCE: U.S. Department of Agriculture

... but ground was lost
in production of most livestock items .
PERCENT CHANGE FROM 1972

Il1fti~~~

CATTLE AND CALVES

HOGS

EGGS
TURKEYS
WOOL
MOHAIR
MILK
ALL LIVESTOCK AND
LIVESTOCK PRODUCTS

·20

·10

1973 partly estimated
SOURCES : U.S. Department of Agriculture
Federal Reserve Bankof Dallas

enced by unusually good grazing
Because of market distortions,
smaller flaxseed and potato crops
conditions. Many of the cattle that [I
cattle slaughter numbers and
last year, but these two crops acmight have been placed on feed
pounds of beef produced do not
count for only 1 percent of the
and slaughtered last year were
reflect the growth of the southarea's crop production.
held on grass and will be marketed
western cattle industry in 1973.
Citrus crops in Texas and Ariin 1974.
zona will probably total close to 27 Growth in the number of cattle on
Given the uncertain market COIl'
million boxes this season-the same feed was fairly steady in 1973 but
ditions last year, perhaps the best
as last season. Both the orange and marketings, feedlot placements,
indicator of the expansion of the
grapefruit crops are appreciably
and slaughter were all irregular as
region's beef industry is the growth ~
larger in Texas. In Arizona, howfeeders and packers responded to
of the cow herd and the increase
ever, the grapefruit harvest is
changing market conditions. The
in the calf crop. These provide the
moderately larger than last season result was a backlog of fed cattle
base of the beef industry, and both
while the orange crop is off sharply. that led to a surge in marketings
promise continued expansion in
with the lifting of the price freeze
Livestock production
beef production.
in September.
At midyear, the five states had
At the same time, the number
Livestock producers should have
nearly
10 million beef cows-over a
of lightweight cattle on feed in late
experienced a record year in 1973.
million
more than a year earlier.
1973
was
somewhat
below
normal.
Range and livestock conditions
This
gives
these states nearly a
In
spite
of
some
additional
feedlot
turned favorable after a severe
fourth
of
the
nation's beef herd.
capacity-with
occupancy
at
about
winter and, on average, were betIn
Texas,
the
cow herd numbered
80
percent-feeders
resisted
placter than in any other recent year.
more
than
6.6
million head-a gaill
Prices were pushed to record highs ing more cattle on feed because of
of
16
percent
from
July 1972. And
marketing
problems
and
high
feed
for most livestock products by
the
1973
calf
crop
was
estimated
costs.
Their
decision
was
influstrong demand-especially for red
meat. Coupled with favorable
prices in 1972, these developments
would normally have stimulated
significant expansion in producWith only distortions of livestock markets
tion. But only an increase in beef
to dampen rising Texas farm prices ...
marketings late in 1973 carried
District livestock production
1967=100
slightly above the previous year.
250----------------------------------------~------~
The failure of livestock producLIVESTOCK AND LIVESTOCK PRODUCT PRICES
tion to show a larger increase in
1973 was due to the many market
disruptions last year. The retail
price ceiling on beef in the spring
brought some instability to the
200market, and the consumer boycott
in April jolted the normal marketing pattern for beef. The main distortion came, however, with the
midyear freeze of all livestock
prices except those at the farm
150level, and the freeze on beef prices
continued into September. Producers also faced sharply higher prices
for feed and livestock, especially
feeder calves. Poultry producers
and dairy operators were particu100~1r-----------------~----------------~~
larly hard hit by the sharp rise in
1972
1973
feed prices. With profit margins
SOURCE: U.s. Department of Agriculture
narrowed, expansion in livestock
production was dampened.
4

at 6.3 million-a gain of 15 percent.
Both Oklahoma and New Mexico
had 4-percent increases in their
cow herds, and calf crops were up
5 per~ent in Oklahoma and 8 percent m New Mexico.
Pork production was off, andunlike cattle-so was the number of
hogs. Uncertain about how well
h~g prices would hold up and faced
wlth higher feed costs, breeders
~ere slower than usual in respondmg to higher hog prices. By fall,
~owever, they were intending to
mcrease farrowings 6 to 8 percent
?ver a year before. And as these
mtentions continued into winter
there was the signaling of a re- '
surgence in pork production.
B~cause of smaller herds, production of lamb and mutton in
973 also lagged 1972 levels, as did
~e output of wool. The number of
seep and lambs in southwestern

states totaled 4.6 million at the
beginning of 1973-down 6 percent
from a year earlier. Poor weather
and low prices through most of
1971 and 1972 had caused herd
reductions in the five states.
By contrast, the goat herd was
larger. In Texas, for example, there
were 1.6 million head at the beginning of 1973-7 percent more
than in the previous January. And
mohair production increased,
though not to the level reached in
1971. With higher prices and improvements in range conditions,
growers have been rebuilding their
herds. The result should be more
sheep and goat production in 1974.
As usual, poultry production was
the most responsive to changes in
market conditions. Egg production
fell as a cost-price squeeze developed last year. Production of broilers slowed for the same reason. The

... farmers escape cost-price squeeze
that once discouraged farm output in Texas
1967::100

250--______________________________________________

PRICES RECEIVED FOR TEXAS FARM PRODUCTS

200-

150-

--------------;;PRICES PAID BY U.S. FARMERS
100,'________________________~------------------~~
1972
1973
SOURce·. US
. . Department of Agriculture

B .

USlness Review I January 1974

resulting production gap that developed over the first eight months
of the year could not be made up,
even though production picked up
in the last four months. Advances
were made in turkey production,
but these gains contributed little
to the region's livestock total.
Despite market disruptions and
narrowing profit margins, livestock
producers experienced an improved
cash flow last year-about a fourth
higher than in 1972. Because of
the large buildup of range herds,
beef production will, no doubt,
lead expansion of livestock production in 1974. But dairy, poultry, hog, and sheep producers are
also expanding their operations as
conditions stabilize and the outlook improves.
Agricultural expansion
Demand for farm products also
pushed investment in agriculture
to new heights in 1973. As spending rose, so did farm credit. Nationwide, agriculture increased its
debt nearly $8 billion, with total
credit outstanding to farmers
reaching about $80 billion. Coming
on top of the increased cash flow to
farmers and ranchers, the rise indicates significantly more spending
on land and other capital items
than in 1972.
Much of this additional borrowing was in the southwestern states.
Commercial banks in the Eleventh
District, for example, reported agriculturalloans outstanding at
midyear totaling close to $2 billion.
That was 22 percent more than a
year before, compared with a 16percent increase nationwide. Increases in credit extended in the
five states under the Farm Credit
System were also above the
national average.
Most of the increase in farm
credit went to help finance expansion of the District's agricultural
capital base. Commercial banks
participated in this expansion by
5

....
half in Oklahoma, Louisiana, and
Texas from 1972.
Real estate loans also expanded
rapidly as farmers actively tried to
expand their land base. By midyear, commercial banks in the District had increased their real estate
loans outstanding to farmers and
ranchers to a total of $364 million23 percent more than a year before. Federal land bank associations in Texas had increased their
loans to $791 million by late summer-26 percent more than a year
before. And responding to the new

boosting their outstandings of nonreal-estate loans to farmers to a
midyear total of $1.6 billion. By
late summer, production credit associations in Texas alone had increased their loans outstanding to
$518 million, an advance of 21 percent over a year earlier.
Reflecting this increase in credit,
tractor purchases in the Southwest
jumped about a fourth, for example, and purchases of other
items of farm equipment advanced
even more sharply. Sales of combines and balers were up nearly a

Cattle on feed in Texas and Arizona
hit record highs in 1973 ...
MILLION HEAD

3.0----------------------______________=-_____

" ,. ___~r

----------~~

2.5-

2.0

. . . but marketings and placements
reflected market uncertainties
THOUSAND HEAD

SOURCE: U.s. Department of Agriculture

SON

financial strength of farm borrowers, insurance companies began
making agricultural loans again
after two years of declining interest in them.
With the increased demand and
the availability of credit, land
prices continued to surge. Nationwide, the average price of farmland
rose 13 percent in the year ended
in March 1973 and 20 percent in
the year ended in November. In
the five District states, the average
price of farmland rose 11 percent
in the year ended in March 1973,
and all indications are that prices
have advanced even faster since
then. Land prices in Oklahoma led
the advance in the District, moving
up an average of 15 percent by
March. Values in Texas trailed
only slightly, however, advancing
13 percent, and New Mexico
posted an average rise of 11 percent. In Arizona and Louisiana,
land prices were up 7 percent.
All this was in marked contrast
to other recent years. Declining
farm incomes, persistent surpluses
of farm products, and adverse
weather combined to reduce investment in agriculture in 1970
and 1971, slowing credit demand
and dampening the rise in land
values. In 1970, the rise was the
slowest in a decade. In Arizona
and some parts of Texas, prices of
farmland actually declined.
Demand for agricultural credit
declined, of course, during those
years. Even when farmers and
ranchers wanted to expand their
operations, few of them could service loans at the interest rates being asked. In 1973, with interest
rates even higher than in 1970 and
1971, they were both willing and
able to undertake additional debt.
Outlook for production ...
Growth in agricultural production
seems likely to continue this year.
With the expansion in productive
capabilities made last year and

markets for farm products expected to remain strong, gains
could far exceed those made in
1973. This is especially true in the
Southwest, where much of the increase in capability has been in
cattle operations. The region's
beef industry accounts for close to
two-fifths of its total agricultural
production.
American agriculture certainly
has the capacity to expand its output much further. Less than half
the acreage released from Government controls last year, for example, was put into production.
Part of the gap between the
acreage released and that planted
was due to rain at planting time.
But much of it was due to late recognition of the persistence of world
temand for U.S. farm products. In
he year coming up farmers will
have time to make full use of all
~e cr~pland they have available.
nd wIth more use of fertilizer
(assuming supplies are adequ~te)
and the other technological adv~nces that have been made in agflculture, they can expand their
cropl~nd base extensively.
f ThIS, too, marks a radical change
rom the past. Because of the high
cost of bringing marginal land into
production, farmers had not been
ab~e to expand crop acreage at the
~lces o~ere~ for their products.
thOW , wIth hIgher prices for crops,
. ey not only can till land more
IntenSively but also can begin to
n;take Use of land previously con~~dered unsuitable for crops. Given
t !me and the capital inputs needed
o make such land productive
far~ers could probably expan'd the
nafitlOn'S cropland base by at least
a fth.
In line with such changes 1973
sa,,: continuation of the reo;ganizabon of agriculture into larger
Pfir?duction units, with greater efClen .
cles, better management and
result· .
,
t.. Ing Improvements in producIVlty. As a record year in capital
BUsiness Review I January 1974

expansion, it very probably saw the
process stepped up. Although the
effects of such changes would ordinarily take several years, with the
increases in prices and production
the last two years, some changes
are apt to be felt much quicker.
Now, with prices and incomes
running high and production freed
from Government programs geared
to cope with surpluses, agriculture
can make better use of the technology and resources available to
it. Barring weather that turns critically adverse, production should
continue to rise.

American farmers, exports have
been a secondary market. Because
world prices have often been lower
than U.S. prices, shipments often
depended on export subsidies. Concessional sales-a form of subsidyhave been significant in moving
U.S. agricultural products to less
developed countries. This market,
as a result, has not always been
dependable.
But very recent developments
suggest major underlying changes
in this market. And these are the
main source of current strength
in clemand. The best known, of
course, is the improvement in trade
... and demand
relations with Mainland China and
The domestic market is still central the Soviet Union. But while shipto the outlook for agriculture-dements to these countries have been
spite export gains of the past two
sizable, they are not the most sigyears. This is especially true in
nificant developments.
the Southwest, where much of the
Growing economic strength in
farm output finds its best markets
Europe and Japan has increased
at home. Rising personal incomes
demand for U.S. agricultural prodhave allowed basic changes in conucts. And barriers to these marsumption patterns in the United
kets are breaking down-slowly,
States, stimulating more demand
perhaps, but steadily-under the
for red meat and, therefore, for
pressure of consumer demand and
grain as feed. Both are major comthe hard fact that the United
modities in the Southwest.
States has absolute advantages in
This most notable aspect of the
the production of soybeans and
change in consumption-a further
feed grains, the two commodities
shift from bread to beef that
most in demand. Since the energy
boosted the domestic grain market situation has cast a shadow over
to a new plateau-is highly signifithe economic picture, these marcant for farmers in the Southwest.
kets will be somewhat uncertain
Grain crops that would have
this year. But fuel shortages in
created surpluses only a few years
Europe and Japan could increase
ago are now only barely adequate.
their need for agricultural imports.
Domestic use of corn last year,
Less developed countries are
for example, was more than a third also becoming more dependable as
greater than the annual average for markets. Once based primarily on
the first half of the 1960's. Use, in
concessional sales, these markets
fact, was about a billion bushels
are turning more commercial as
more than the average annual pro- the countries become urbanized,
duction in 1961-65. Use of grain
their commodity surpluses shrink,
sorghum has increased 50 percent
and the gains they were making in
since the early 1960's, and use
agricultural production level off.
of wheat as a feed has increased
With populations often expanding
nearly fivefold.
faster than their agricultural proThe most drama,t ic change has,
duction, the commodities they
nevertheless, been in the export
have most sought have been soymarket. While always important to beans and food grains.
7

Contributing further to the increase in export demand has been
the devaluation of the dollar. With
the increase in the purchasing
power of their currencies, many
countries are showing broader interest in buying farm products in
the United States.
With growth in demand for food
and fiber at home and abroad,
farmers and ranchers have seen the
fastest expansion of markets for
their products ever. And unlike
other periods of expansion, the
breadth and depth of this one suggest it can be sustained.
Aside from having larger stocks
on hand at the outset of this surge
in world demand, the United
States was one of the few major
agricultural countries that could
expand its farm output to keep
pace with the increase in demandespecially for feed grains and soybeans. Soybeans have been a star
performer in world farm trade for
some time. Now, so are feed grains.
In the domestic market, demand
for feed grains is tied to livestock
feeding. Of major importance to
growers of feed grains in the Southwest, of course, is the possibility
that livestock markets might
break, especially the market for
fed beef. But that possibility seems
remote. In spite of the many distortions last year, some of which
are still being worked out, domestic demand for beef appears unrelenting. Exports could probably
absorb any surpluses that did develop. This assurance of strength
in beef almost guarantees continued strong demand for feed grains.
The outlook for food grains depends mainly on foreign markets.
Unlike soybeans and feed grains,
wheat and rice are grown over
broad areas of the world. With production last year rising slightly,
some slowdown in export demand
is expected this year. But as world
population is expanding faster
than agricultural production-es8

pecially in less developed countries
-there is little likelihood of collapse in the market for these two
important southwestern crops.
Fashion has reestablished demand for cotton here and abroad.
And with many overseas competitors concentrating their agricultural efforts on food crops, export
demand for cotton has strengthened. In the marketing year ended
at mid-1973, 5 million bales were
shipped abroad. Exports this marketing year could exceed 6 million.
For all these factors favoring
demand for farm products, however, 1974 is not apt to establish
as many records as last year did.
Prices will very probably moderate
somewhat as supplies increase.
But incomes will most likely hold
up fairly well as lower prices are
offset by increases in production
and marketings.
On the whole, the future for
farmers and ranchers of the District is bright. Most of them are
in the best financial situation in
20 years. And for the first time in
even a longer period, their concern
is not with surpluses but how to
produce more.
-Carl G. Anderson, Jr.
Dale L. Stansbury

Bank Structure-

Texas Banks Find Changes
In Market Shares Come Hard
he number of banks in Texas has
:rIncreased
rapidly in recent years.
Where the state had 999 insured
commercial banks at mid-1961 it
had 1,221 at mid-1972. And b;
June 1973, the number had grown
to 1,247.
This increase has come primarily
as a result of the state's unitbanking laws. Spurred by a robust
economy and the rapid rise in suburban population demand for
?anlting services l;as mushroomed
In so~e areas, pushing midyear
deposlts from a statewide total of
~11.8 billion in 1961 to $30.4 billion in 1972. And because branch
banlting is prohibited in Texas,
a large part of the increase in
demand was met through the formation of new banks.
. A study of this increase in bankIng activity shows that the high
rate of bank formations dampened
the growth of individual banks
holding the distribution of ma;ket
shares fairly constant. As a result,
the banking structure in Texas was
found basically rigid.
Industry characteristics
Rapid growth of the state banking
market and the marked increase in
the number of banks-along with
the resulting rigidity of Texas
banking-however, only partly
~haracterize the state's banlting
Industry. Also important have been
the wide disparity in the size of
banks a~d, in recent years, the
growth In the size and number of
multibank holding companies.
. Although there are many banks
In Texas, most are fairly small.
here are, in fact, very few really
arge Texas banks. Only four currently hold deposits over $1 billion.

r
B

.
U8mess Review I January 1974

More than half the banks hold
deposits of less than $10 million.
And the average deposit size of all
banks is about $25 million.
Banks are highly concentrated
in the more populated areas. Not
only are the largest banks in major
cities, but half of all banks are in
metropolitan areas. And these
banks hold more than 80 percent
of the deposits in the state. By
contrast, many small towns have
no bank at all.
This concentration has increased
in recent years with the expansion
of multibank holding companies.
The multibank holding company
movement began building up in
Texas in 1971 as large metropolitan
banks sought to penetrate rapidly
expanding suburban markets by
acquiring subsidiaries. Some of this
penetration was achieved through
the acquisition of existing banks,
and some through the formation of
new banks.
There were three multibank
holding companies in Texas at mid1970. Together, they controlled 11
subsidiary banks accounting for 8
percent of the state's deposits., By
mid-1973, the number of holding
companies had increased to 19.
And they had 103 subsidiaries
holding more than a third of the
state's deposits.
Despite this rapid spread of
multibank holding companies, however, control of subsidiary banks
has not appeared to be particularly
tight. As a result, most of the banks
in the state can be considered independent suppliers of bank services.
A rigid structure
The holding company movement
is indicative of yet another charac-

teristic of the banking industry in
Texas-the inability of individual
banks to make significant changes
in their market shares of deposits.
Despite the rapid growth of the industry overall, individual banks
have little chance of acquiring
enough additional deposits to make
any appreciable difference in their
market share, even over considerable time. Nor (as pointed up in
the technical note) need they ordinarily expect to lose enough deposits to drop back to a smaller size
category. The deposit structure of
the industry tends to a rigidity
that resists movement in either
direction.
That is the primary conclusion
drawn from the study, which was
devoted to an analysis of the mobility of banks within the state's
deposit structure. Mobility-defined as the ability of banks to
move from one deposit category to
another-was estimated with the
aid of a Markov chain model. This
model allows structural changes in
the banking industry to be viewed
in terms of probabilities-estimates
of the likelihood that individual
banks will follow certain paths of
deposit growth.
Results of the study show that
during the period from mid-1961 to
mid-1972, the banks least likely to
change their relative market positions were the largest (those with
deposits over $120 million) and
the smallest (those with deposits
under $7.5 million). By all indications, then, the state's largest
banks should be expected to keep
their dominant positions. And it
appears very hard for the smallest
banks to grow into the mediumsize deposit categories.
9

=
Technical note

The mobility of Texas banks-the probability that an individual bank will gain or
lose enough deposits to make a significant
change in its share of total deposits in the
state-was estimated with the aid of a
Markov chain model. Use of this model
offers certain clear advantages in the study
of structural changes in banking.l
One is that changes can be viewed in
terms of probabilities-estimates of the likelihood of banks following different paths of
growth. The probabilities of deposit change
were represented by a transition probability
matrix.
TRANSITION PROBABILITY MATRIX
Probability of gain

80
80
8,
82
83
84
85
8,

i
.0024
.0007
0
0
.0031
0

8,
82
83
84
0
0
0
0
.9553 .0419 .0003 .0001
.0527 .8996 .0463 .0007
.0007 .0552 .9098 .0343
.0015
0
.0534 .9231
.0031
0
0
.0282
0
0
0
0

85
0
0
0
0
.0220
.9375
.0405

8,
0
0
0
0
0

Probability of loss

Another is that banks that leave the industry can be viewed as having reached an
absorbed state-meaning that having once
been liquidated, they will not reenter the
industry. This is an important point.
In most studies of competitive markets,
firms are assumed to have freedom to enter
and leave an industry at will. But because
banks are regulated, such assumptions do
not fit realities of the industry. A bank that
fails does not later reopen for business.
Other banks may acquire its assets and take
over its deposits, but the bank itself can no
longer do business.
So that the mobility of banks of different
sizes could be compared, individual bank deposits for every midyear from 1961 to 1972
were deflated by the annual rate of increase
1. George T.

puncnn. and Lizbie G. Lin. I n f erence in
Mar/co1J Chams Ha1Jmg Stocha8tic Entry a.ul Ezit Fed.
eral Reserve Bank of Minneapolis. January 1971

•

in total st/:!.te deposits. The resulting deflated deposit data reflect changes in the
market share of individual banks.
From these data, banks were ranked according to deposits and grouped into seven
deposit categories for each of the 11 years.
The resulting breakout showed one category
of banks (Bo) as having failed. The other
six categories were based on ranges of deposit size, each twice as large as the previous category:
• Bcless than $7.5 million
• B.-from $7.5 million to $15 million
• B:-from $15 million to $30 million
• B 4-from $30 million to $60 million
• B5-from $60 million to $120 million
• Bo-more than $120 million
Each successive annual grouping was
then compared to determine which banks
had gained or lost enough deposits to be reclassified. These 11 year-to-year changes in
deposit shares were then compiled into a
composite matrix of bank movements for
the entire period.
The transition probability matrix represents the likelihood that banks in one deposit category would have moved to another
category during the years from 1961 to
1972. Considerable understanding of the
dynamic nature of Texas banking can be
drawn from this matrix.
Values of elements on the shaded diagonal (1, .9553, .8996, .9098, .9231, .9375,
and .9595) provide a case in point. All these
values are at the intersections of the columns and rows of the same deposit categories. They are either 1 or close to 1, implying a very strong tendency for banks to
remain in the same deposit categories from
year to year and providing a basis for the
view that the structure of Texas banking is
essentially rigid.
The absolute value of 1 for Category Bo
denotes. a total absence of any prospects for
movement. Having failed, banks at . that
point have no chance of entering the industry again.
The very largest and the very smallest
banks show the next greatest tendencies to
stay in the same deposit category. Banks in

b.oth categories (B 1 and B o) had probabilities of nearly 96 percent that they will not
move in any given year.
The most mobile banks were in Category
B 2 • The value of .8996 at the intersection
of the column and row for this category
leaves a roughly 10-percent probability that
banks in this category will either gain or
lose enough deposits to move out of that
deposit range.
Estimates of probabilities that banks will
gain or lose enough deposits to move into
another category size appear to the right
a.nd left of the diagonal. Elements to the
rIght are estimates of the probabilities that
?anks will acquire enough additional deposIts to move up to larger deposit categories.
Elements to the left are estimates of proba-

But while mobility is limited
there is some room for moveme~t.
Except for the smallest banks
t~er~ is ~ways the possibility' of
SlipPIng Into a smaller deposit
c~te~ory. And the probability of
slIPPIng is always greater than
the probability of moving up into
larger deposit categories.
The room for movement is very
S~all, however-for banks of all
SIzes. Although a handful of banks
made significant changes in their
market positions, most showed
only marginal movements. And
even When these significant
c?anges were made, it was usually
eIther When banks failed or when
new b~nks opened with enough
financIal baclting to boost their
shares rapidly during the first few
years of operations.
Implications for the future

:"..;

~easured in current-dollar depos~ s, then, the state's banlting maret.grew rapidly over this ll-year
perIod, expanding an average of
14.3 percent a year. Almost all
banks participated in this growth
at least to some extent.
'
B

.
USlness Review I January 1974

bilities that they will move down to smaller
categories. Generally, the probability that
a bank wiUlose its market share of deposits
is greater than the probability that it will
increase its share.
In anyone year, banks in the smallest deposit category had about a 4.2-percent
chance of moving up to Category B2 and an
even smaller chance of rising beyond that
size to Categories Ba and B'J' But chances
that they would fail were only about onefourth of I percent.
Since the largest category is open-ended,
chances of the growth of these banks were
not considered. But they had slightly better
than a 4-percent chance of their deposits
falling below the $120 million mark to put
them in Category B 6 •

But the study shows that, even
over time, few banks could change
their relative market positions.
And this rigidity-and the likelihood that it will not diminish much
in the foreseeable future-has implications for the course of banking
in this state in the years to come.
First, based on the experience of
recent years, it seems reasonable
to expect continued rapid economic
growth in Texas. Projections show
personal income in the state may
more than double by 1985. Along
with this growth will come needs
for expanded banking services.
And structural characteristics of
the state's banking system suggest
that much of these increased needs
will be met through the formation
of additional banks.
Second, with population trends
still showing net migration from
rural counties, most economic
growth will still center in metropolitan areas. Growth of existing
banks, therefore, should be faster
in metropolitan areas, as should
the formation of new banks. As a
result, both the number of banks
and volume of deposits should be

further concentrated in metropolitan areas.
Finally, the general inability of
Texas banks to make any great
change in their market shares
should result in the continuation
of the multibank holding company
movement. Although the market
shares of many banks will remain
fairly fixed, an individual bank
could be acquired by a multibank holding company, and these
companies are malting significant
changes in their market positions.
Further expansion in the size and
number of multibank holding companies seems likely, therefore, leading to continued concentration of
banking resources.
-Edward L. McClelland

New member banks

The Plaza del Oro Commerce Bank, National Association, Houston, Texas, a
newly organized institution located in the territory served by the Houston Branch
of the Federal Reserve Bank of Dallas, opened for business October 29, 1973, as a
member of the Federal Reserve System. The new member bank opened with
capital of $400,000, surplus of $400,000, and undivided profits of $200,000. The
officers are: William S. Pebworth, Jr., Chairman of the Board and Cashier;
Merrill V. Gregory, President; and Emil A. Beltz, Executive Vice President.
The National Bank of Texas at 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 November 29, 1973, as a member
of the Federal Reserve System. The new member bank opened with capital of
$300,000, surplus of $300,000, and undivided profits of $150,000. The officers are:
D. A. Weckwerth, Chairman of the Board; Joe C. Lane, President; and Gary W.
Shipp, Cashier.
New par bank

The Claiborne Bank & Trust Company, Homer, Louisiana, 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, December 10, 1973.
The officers are: George W. Cummings, Jr., President, and Ralph Edward
Spigener, Cashier.

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

Federal Reserve Bank of Dallas
January 1974

Statistical Supplement to the Business Review
The seasonally adjusted Texas industrial production index fell 0.4
perc~nt in November, following progreSSIvely slower rates of increase in
the previous two months. The
dow.nturn centered in the petroleum Industry, with crude oil mining,
petroleum refining, and the closely
rel~ted chemical industry all registermg declines. Moreover, total
~anu~acturing dropped for the first
tune SInce JUly. Production of nondurable goods fell, largely reflecting
~he weakness in petroleum-related
Industries. Growth in durable goods
oU1;put slowed for the second consecutive month. Total output of
utilities rose, as the distribution of
electriCity rebounded from the unseasonally low level in October.

Total deposits increased sharply
since demand deposits rose considerably more than usual. About
half of the rise was accounted for by
increased demand deposits of individuals and businesses. Demand deposits of the U.S. Government and
of domestic commercial banks also
rose substantially. The expansion in
total time and savings deposits was
about in line with comparable
periods of past years and mainly reflected a rise in the volume of large
CD's outstanding. With the weakness in credit demand and the sizable inflow of deposits, banks markedly reduced their borrowings from
nondeposit sources.

Seasonally adjusted new car registrations in the four largest metroTotal ~redit at weekly reporting
politan counties of Texas-Bexar,
anks In the Eleventh District rose
Dallas, Harris, and Tarrant-deess than usual in the four weeks
clined 4 percent in November, fol~nded D~cember 19, despite a sharp lowing a sizable increase in October
Increase In deposits. Banks used
that was largely attributed to the
most of the deposit increase to
filling
of fleet orders. Along with
make loans to domestic commercial
the
15-percent
drop in September,
b anks outside the District.
the decline suggests a softening of
T~e rise in District loans was
new car demand that roughly parc?nsl~erably less than at the same
allels the national trend. Registratime ~ other recent years. Largely
tions in Harris County (Houston)
reflectIng uncertainties caused by
and Dallas County were oft' B.6 perthe energy crisis, business loans incent and 7.5 percent in November,
~reased less than usual and real esbut those in Tarrant County (Fort
ate and consumer loans grew at
Worth) and Bexar County (San An~~ch s.lower rates than in compara- tonio) were 6.3 percent and 0.3 perpenods of the previous two
cent greater than a month before.
~ears. Another factor in the weaker Despite the recent weakness, cumuemand .for bank credit probably
lative registrations for the first 11
wasI the Increase in the prime rate in months of 1973 still were 10 percent
ear y December.
above the same period in 1972.
In the four-week period invest~ent ~or~folios of the ba~ks rose
After sluggish growth earlier last
t' out In hne with seasonal expecta- year, seasonally adjusted depart10~S: Holdings of Government sement store sales in the Eleventh
curltIes were unchanged on balDistrict have trended upward since
h
'
'
ance
hil
.
' w e oldings of municipal
April 1973. Sales for the four weeks
ISSUes were expanded moderately.
ended December 15 were 1.3 per-

cent higher than a month earlier.
Although sales continued to gain,
the growth rate fell sharply in the
four weeks. Cumulative sales
through mid-December were 11 percent greater than in the corresponding period in 1972.
Seasonally adjusted total employment in the five southwestern
states continued to climb in November but at the slowest monthly
pace since last June. New hirings
were up 0.2 percent, reaching a level
3.4 percent higher than a year before. The small increase in employment and a 13-percent drop in total
unemployment resulted in a decline
in the unemployment rate to 3.6
percent, down from 4.0 percent the
month before.
Fall harvesting and planting activities were nearing completion by
mid-December in all states of the
Eleventh District except Oklahoma, where inclement weather hindered field work. Harvesting of cotton was in the final stages for most
of the District and was well ahead
of a year earlier.
At the beginning of December,
the upland cotton crop in the District states was estimated at 6.4
million bales, about 6 percent more
than in 1972. Most of the increase is
in Texas, where the expected harvest of 4.7 million bales would be 11
percent more than the 1972 crop.
The number of cattle and calves
on feed in Texas and Arizona on
December 1 was down slightly from
a month earlier to just under 2.9
million head. That was only 10,000
more than a year earlier. Cattle
placements into feedlots had continued to decline in November and
were sharply below November 1972.
(Continued on back page)

CONDITION STATISTICS OF WEEKLY REPORTING COMMERCIAL BANKS

Eleventh Federal Reserve District

...

(ThouSand dollars)

ASSETS

Dec. 19,
1973

Nov. 21,
1973

Dec. 20,
1972

Federal funds sold and securities purchased
under agreements to resell .......................... .
Other loans and discounts, gross .

1,722,914
9,807,100

1,280,908
9,705,980

1,426,193
8,769,102

4,388,114

4,318,616

3,844,157

298,511

294,952

228,941

473
51,521

435
45,519

1,340
85,438

4,474
463,907

4,829
458,418

6,773
471,444

151,768
714,758
1,389,793
33,951
53,470
1,054 ,133

144,482
693,264
1,378,918
35,919
59,336
1,051,892

169,601
790,237
1,181,469
24,486
15,750
957,837

20
1,202,207
3,998,927

20
1,219,380
3,943,037

0
991,629
3,803,437

950,182
130,414
0

949 ,796
125,853
0

985,988
192,957
0

LIABILITIES
Total deposlls ..

Commercial and Industrial loans
Agrlcu!turalloan s, excluding CCC
certificates of Interest ............ .
Loans to brokers and dealers for
purchasing or carrying:
U.S. Government securities .
Other securllies ........................... : ..... .
Other loans for purchasing or carrymg:
U.S. Government securities
................... .
Other securities ........... ....... .. ............ ..
Loan s to nonbank flnancl allnstltullons:
Sales finance , personal finance, factors,
and other business credit companies ..
Other ............ ..
Real estate loans ............ .. ................. .
Loans to domestic commercial banks
Loans to foreign banks ............. .
Consumer Instalment loans .. .... ' ......... ,..... .
Loans to foreign governmenls, official
Ins\llutlons, central banks, and International
Ins\llullo ns .. .
Other loans
.. ..
Total Investm ents .... .
Total U.S. Government securllies ..
Treasury bills . ....... .. ...................... ..
Tre asury certificates of Indebtedness
Treasury notes and U,S. Government
bonds maturing:
Wllhln 1 year ....... ........ .. ....................... .

lft:~~t~e~r:,~r~: .. ::::.::.,: ..

::::. ::::,: .. :"':
Obligation s of states and polillcal subdivisions:
Tax warrants and short-term notes and bills .. ..
All other . . .... .. ............................... ..
Other bonds, corporate stocks, and securilles:
Certificates representing partlclpallons In
federal agency loans ................. ..
All other (Including corporate stocks)
Cash Items In process of collection
Reserves with Federal Reserve Bank
Currency and coin ", ........ " ....................... "

Balances wllh banks In th e Unlled States ..
Balances with banks In foreign countries .............. .
Other assets (Including Investments In subsidiaries
not consolidated) ...........
....
.... ........... .

142,641
516,91 1
160,216

130,081
522,924
170,938

160,790
440,645
191,596

155,839
2,615,492

104,048
2,609,509

242,089
2,326,306

18,484
258,930
1,609,807
1,123,376
134,532
463,113
13,682

9,431
270,253
1,522,657
985,478
113,750
543,860
13,979

14,138
234,916
1,441,486
843,013
118,406
394,297
12,368

854,303

839,445

672,129

14,282,938

---6,870,508

13,820,853

7,293,081
Total demand deposits .
5,208,000
Individuals, partnerships, and corporations ..
371,633
States an d political subdivisions
234,1 17
U.S. Government ..... .. .......... ..
1,305 ,228
Banks in the United States .
Foreign:
Governments, official Institutions, central
5,916
banks, and International ins\llutlons ..
53,300
Commercial banks ........................ .
114 ,887
Certified and officers' checks, etc . . ,
6,989,857
Total time and savings deposlls ..
Individuals, partnerships, and corporallons:
1,145,466
Savings deposits ,
3,867,451
Other time deposlls .
1,835,545
States and political subdivisions ...................... ..
7,991
U.S. Government (Including postal savings) .. .
99,942
Banks in the United States ......
Foreign:
Governments, official Institutions, central
23,616
banks, and international Institutions ..
320
Commercial banks ..
Federal funds purchased and securities sold
3,300,638
under agreemen ts to repurchase ..
174,965
Other liabilities for borrowed money .
526,725
Other liabilities
168,962
Reserves on loans ...... .
14,614
Reserves on securities .. ..
1,258,912
Total capllal accounts .
TOTAL LIABILITIES, RESERVES, AND
CAPITAL ACCOUNTS ....

19,727,754

lIem
ASSETS
Loans and discounts, gross ...
U ,SoGovernment obligations
." ...............
Other securities ...
Reserves wllh Federal Reser:;e Bank '
Cash In vault ..... . ..... .. .........
.
Balances with banks In the United States
Balances with banks In foreign countrlese
Cash Items In process of coll ection
Other assetse ........
..
TOT AL ASSETSe
LIABILITIES AND CAPITAL ACCOUNTS
Demand deposlls,of banks
Other demand deposlls
Tim e deposits
Total deposits
Borrowings
Other lIabllltiese
TOlal capital accountse
TOTAL LIABILITIES AND CAPITAL
ACCOUNTSe
.......

Nov. 2B,
1973

Oct. 31,
1973

Nov , 29,
1972

19,461
2,239
6,130
1,571
377
1,376
16
1,704
1,608

19,091
2,225
6,213
1,599
347
1,386
16
1,886
1,574

17,021
2,338
5,340
1,350
31B
1,241
12
1,548
1,300

34~2

34 ,337

30,468

1,645
11 ,844
14,074

1,720
11,772
13,856

1,594
11,100
12,159

27,563
3,136
1,384
2,399

27,348
3,309
1,299
2,381

24,853
2,224
1,225
2,166

34,482

34,337

30,468

3,177
57,925
93,055
6,950,345
1,138,566
3,873,323
1,781,414
19,424
111 ,278
26,320
20
2,964,154
157,291
573,392
167,808
14,107
1,251,489

----

7 ,360,83~

5,099,2 0
527,33 4
246,09 4
1,289,113
2, 89 1
40 ,55 1
155,6 41
6,141,022
1210,151

3:249,73~

1,536,02
25 ,253
107,634
11 ,095
1,120
1 943,661
'244,609
472,2 14
142,0 45
17,4 13
1 158,623

18,949,094 17,480, $

Total

1971: November
1972: November .
December
1973: January ..
February ..
March .
April
May
June ..
July ...
August ......
September
October ..
November ..

(Million dollars)

----

(Averages of dally figures , Million dollars)

Date

Eleventh Federal Reserve District

13,501,860

Eleventh Federal Reserve District

TIME DEPOSITS ___

DEMAND DEPOSITS

CONDITION STATISTICS OF ALL MEMBER BANKS

4,910,567
506,434
88,639
1,210,711

Dec. 20,
1972

DEMAND AND TIME DEPOSITS OF MEMBER BANKS

TOTAL ASSETS ..

e-Estlmated

Dec. 19,
1973

Nov. 21,
1973

11 ,641
12,844
13,439
13,636
13,270
13,203
13,237
13,136
13,218
13,259
12,941
13,039
13,289
13,455

Adlusted '
8,231
9,321
9,688
9,802
9,516
9,454
9,550
9,502
9,551
9,567
9,492
9,442
9,461
9,816

U.S.
Government

Total
10,025
12,009
12,261
12,501
12,811
13,038
13,249
13,336
13,374
13,396
13,507
13,618
13,795
13,953

166
222
289
317
379
395
331
34 1
279
261
172
20B
239
167

---

Savlng~

2,491
2,786
2,812
2,815
2,817
2,848
2,855
2,859
2,884
2,86B
2,857
2,854
2,863
2,B71

1, Other than those of U.S. Government and domestic commercial banks less cash iteo"
In process of co llection
'

RESERVE POSITIONS OF MEMBER BANKS

Eleventh Federal Reserve District
(Averages of dally figures. Thousand dollars)

Item
Total reserves held . .. ......
With Federal Reserve Bank .
Currency and coin
Required reserves ......................... .
Excess reserves
Borrowings ...

Free reserves

4 weeks ended
Dec . 5,1973
1,B74,27 1
1,558,273
315,99B
1,865,914
8,357
53,797
- 45,440

5 weeks ended
Nov. 7, 1973
1,822,236
1,513,871
308,365
1,819,002
3,234
113,755
- 110,521

5 weeks ended
Dec . 6, 1972
1,734,60 4
1,454,85 4
279,750
1,668,625
65,979
48,802
17,17 7

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

SMSA's in Eleventh Federal Reserve District

(Dollar amou nts In thousands, seasonally adjusted)
DEB ITS TO DEMAND DEPOS IT ACCOUNTS '
DEMAND DEPOSITS'
Percent change

Standard metropoli tan
statistical area

ARIZONA: Tucson
.................................. .
LOUISIANA: Monro~ .. ..
NEW

MEXI CO~h~~~~e~l~t

. . . . . . ....

TEXAS: Abil ene
Amarillo ...................
.. ..................................... ..
~ u stin ........................................... .
eaumont-Port Arthur-Orange .... .. .............. .. .. ..
Brownsvilie-Harlingen-San Benito
Bryan-C ollege Station ..
Corpus Christi ............ ..
Corsicana'

m:~o ······::
. ··················· . ·
F
................... .

G~~~~~~\e~~sc';'ty

Houston .........
...................... .
Killeen-Temple
Laredo .................. · ........ .. ............ .. .. ..
Lubbock
MCA ll en-piiarr:Edl'';ii~;g '':
............................ .
Midland

~~~s:~g~I ~ :

~~n Antonio ........................ ..
Terman-Denison ................ ..
T~~~rkana (Texas-Arkan sas)
Waco ..... ,............... " ...
WIChlta 'Fall's'::
Total-30 centers .

Oct.
1973

Nov.
1972

20%
12
6

$16,051,087
5,247,178
18,552,918
1,341,391
3,643,310
11,344,992
16,378,652
9,673,631
3,476,915
1,755,913
9,706,9 18
673,798
226, 192,848
12,478,751
35,467,184
3,687,802
192,785,075
2,530,136
1,796,080
9,316,817
3,636,695
3,172,376
2,449,991
2,118,278
27,859,397
1,551,115
2,068,172
3,272,257
4,239,934
3,744,569

40%
21
23
35
35
30
18
30
31
25
19
19
32
13
19

11 months ,
1973 from
1972

25
23
37
73
31
31
30
18
16
19
14
- 10

- 13
1

37%
19
21
22
22
28
17
19
22
15
15
24
30
18
12
13
20
25
27
42
31
18
22
23
19
18
13
7
16
17

26%

23%

13
4

5
7
16

5
4
1
1
5
7
6
12
6
6
6
- 7
3

- 2
1

$636,214,180

1. 0

Annual rate
of turnover

November 1973 from

Nov .
1973
(A nnual-rate
basis)

Nov. 30,
1973

Nov.
1973

Oct.
1973

Nov.
1972

$335,669
120.567
325 ,053
51.218
143,870
220,492
436,998
288,103
119,120
58,271
283,714
42,124
2,829,758
297,604
849,116
129,557
3,388,652
119,179
61,583
225,004
162,241
170,217
102,110
88,036
906,954
80,250
90,237
118,274
155,879
151 ,649

46.5
43.1
55.8
26 .3
25 .8
50.7
37 .8
33 .3
28.5
30.4
34 .3
16.7
78.6
40.5
41 .1
28.8
57.9
21.6
28.4
42 .6
22.7
19.0
23.2
24 .6
30.6
19.1
22.8
26.9
27 .2
24.6

38.2
38.7
52.3
25 .5
23.5
48.0
37 .7
29.3
26.8
28.9
29.7
17.2
76.3
37 .6
40.4
28.9
55.3
20.2
25.5
38.4
22.0
18.2
21.6
28.3
30.1
19.3
22.2
25.2
32.2
24 .3

38.6
37.6
48.9
22.3
22.1
43.9
32.6
26.9
25.7
26.6
29.7
15.6
60.2
35.4
36.7
28.4
48.0
18.7
25.2
28.3
19.1
16.2
17.0
22.8
27.6
16.8
21 .3
30.6
27.1
23.7

$12,351,499

51.4

49.2

42.5

------

2. Ce
oPOslts of Individuals, partnerships, and corporations and of states and political subdivisions
unty basis

--------------~

CONDITION OF THE FEDERAL RESERVE BANK OF DALLAS
(Thou

sand dOllars)

BUILD ING PERMITS

=---

Item
Total gOI
Loans t d certificate reserves ..
Other looa~ember banks ............
Federal a ................................
U.S. G gency Obligations ....
Total e~~~rnment securities ......
..... "
Member b Ing assets ..................
Federal R an k re serve deposits ............ "
clrcUlat~serve notes In actual

... ,,"", .... ,

.... " .........

~ .~ .........

Dec. 19,
1973

Nov. 21,
1973

Dec. 20,
1972

658,072
51,630
0
77,710
3,346,149
3,475,489
1,774,638

488,130
31,895
0
77,257
3,309,812
3,418,964
1,637,433

211 ,268
191,155
0
51.019
3,294 ,919
3,537,093
1,392,108

2,439,627

2,395,277

2,280,725

VALUE OF CONSTRUCTION CONTRACTS

(Million dOllars)

Area and type
FIVE~

...
~

STA~E~~HWESTERN

Resldentlai ·buiiCiiii ······ .. ······
NonreSlde tl
g ..........
Nonb
n al building
UNITEDUlldlng constructlci~·:.

Reslde~~:~~~lciiii···
~~~~eSldential bUII~Ir:;~ '

Nov.
1973

Oct .
1973

Sept.
1973

1,011
368
339
304
7,905
3,299
2,655
1 ,951

1,132
385
356
391
8,983
3,673
2,758
2,552

904
385
368
152
8,151
3,638
2,719
1,794

-Ulldlng construct o'n":
1. AriZona
N-Revised LOUISiana, New Mexico, Oklahoma, and Texas
SOTE : Det I
OURCE' ~ IWmay not add to totals because of rounding.
. . . DOdge, McGraw-Hili , Inc .

January- November
1973

1972r

11 ,154
5,000
3,797
2,356
94,405
43,961
29,592
20,853

10,453
5,362
2,760
2,331
84 ,549
41 ,849
24,833
17,867

VALUATION (Dollar amoun ts In thousands)
Percent change
Nov. 1973
from

NUMBER

Area

Nov.
1973

ARIZONA
Tucson ..
360
LOU ISIANA
Monroe-West
Monroe ..
51
Shreveport..
413
TEXAS
Abilene ..
64
Amarillo ....
132
Austin ..
404
Beaumont
191
Brownsville .
112
Corpus Christi ..
208
Dallas ..
1,368
Denison .
21
EI Paso
380
Fort Worth .
350
Galveston
59
Houston ..
1,793
Laredo ..
38
Lubbock
114
Midland
64
Odessa ..
71
Port Arthur ....
60
San Angelo ......
65
San Antonio ..... 1,313
Sherman ..........
31
Texarkana ......
56
Waco ...........
159
Wichita Falls
70
Total-26 cities .

7,947

11 mos .
1973

Nov.
1973

5,482

$5,288

$144,611

810
5,127

703
2,493

25,104
74,338

769
1,714
5,159
2,144
1,081
2,947
17,544
290
5,498
4,038
598
27,798
465
1,643
838
1,067
1,033
840
18,736
396
573
2,238
830

666
2,100
22,544
898
5,345
2,493
28,850
21
5,789
3,952
736
50,682
599
4,215
1,050
824
885
1,678
14,623
15,936
220
3,289
901

11 mos.
1973

Oct.
1973

Nov.
1972

- 4% - 52%

11 months,
1973 from
1972
- 10%

- 60
- 59

0
- 71

10
26

22,941
- 77
48 ,175 -69
224,151
34
34,844 -29
37,860 - 44
52,252 - 61
300,744
137
3,660 -97
162,229 - 66
109,026 - 74
10,851 - 74
639,533 - 28
16,178 - 31
70,403 -53
12,372
61
15,907 - 77
6,058
92
10,555
155
215,786
10
21 ,452 3,845
5,390 - 25
35 ,344
230
36,683 - 89

- 58
39
108
- 17
382
-36
- 12
- 98
- 44
- 33
- 2
- 3
100
-4 1
66
- 20
523
132
11
1,773
- 57
- 10
9

40
58
2
37
186
- 9
- 17
-5
1
29
- 13
9
29
20
- 28
- 30
22
31
3
193
-20
-2
160

109,658 $176,780 $2,336,447

- 17%

....,

DAILY AVERAGE PRODUCTION OF CRUDE OIL

LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT

(Thousand barrels)

Five Southwestern States'
Percent change from

Area
FOUR SOUTHWESTERN
STATES
Louisiana ...
New Mexico ....
Oklahoma .
Texas .......... ..... .
Gulf Coast .
West Texas .......... .
East Texas (proper) .....
Panhandle .
Rest of state ...
UNITED STATES

Nov.
1973

Oct.
1973

6,551 .3
2,134 .5
265.1
523.5
3,628.2
713 .0
1,882.2
243.0
60.4
729.6
9,130.5

6,754.6
2,24 1.8
267.6
527.0
3,718.2
732.4
1,918.1
251.2
64.2
752.3
9,342.6

Nov.
1972

Oct.
1973

6,871 .4
2,427.3
293.6
549.3
3,601 .2
721 .8r
1,813.2
212.6
62.2
791.4
9,442.4

- 3.0%
- 4.8
- 0.9
- 0.7
- 2.4
- 2.7
- 1.9
- 3.3
- 5.9
-3 .0
-2.3%

Nov.
1972
-4 .7%
- 12.1
-9 .7
- 4.7
.8
- 1.2
3.8
14.3
- 2.9
-7 .8
-3.3%

r- Revlsed
SOURCES : American Petroleum Insti tute
U.S. Bureau of Mines
Federal Reserve Bank of Dallas

(Seasonally adjusted)
Percent change
Nov. 1973 from

Thousands of persons
Item
Civilian labor force ....... "., ....
Total employment ..
Total unemployment.. ...........
Unemployment rate .......... , ...
Total nonagricultural
wage and salary
employment.. .. ...................
Manufacturing ..
Durable .....................
Nondurable " .. ,,, ... ........
Nonmanu facturing .......
Mining
...... "',, ....
Construction ........ .......
Transportation and
public utilities .. ..........
Trade .
Finance . ........
Service ...........
Government .. .. ..

Nov.
1973e

Oct.
1973

Nov.
1972r

Oct.
1973

Nov.
1972

9023.5
8703.3
320.2
3.6%

9052.6
8684.5
368.0
4.1%

8751 .3
8418.5
332 .8
3.8%

- 0.3%
.2
- 13.0

3.1%
3.4
- 3.8

7199.8
1256.9
710.1
546.8
5942.9
236.4
505.5

7174.7
1251 .3
705.1
546.2
5923.4
236.0
504 .2

487.9
1718.7
393.0
1176.9
1424.6

487.1
1714.0
391.5
1170.4
1420.2

'_. 5

'-.2

6914 .6
1208.8
668.6
540.2
5705.8
231.4
474 .9

.3
.4
.7
.1
.3
.2
.3

4.1
4.0
6.2
1.2
4.2
2.2
6.4

470 .2
1648.6
368.7
1125.0
1387.0

.2
.3
.4
.6
.3%

3.8
4.3
6.6
4.6
2.7%

1. Arizona, Louisiana, New Mexico, Oklahoma, and Texas
2. Actual change
e-Estlmated
r- Revlsed
NOTE : Details may not add to totals because of rounding .
SOURCES: State employment agencies
Federal Reserve Bank of Dallas (seasonal adjustm ent)

INDUSTRIAL PRODUCTION
(Seasonally adjusted Indexes, 1967 - 100)

Area and type of Index
TEXAS
Total Industri al production .
Manufacturing ............................... ..
Durable
..................... ..
Nondurable .
Mining .
Utilities ...
UNITED STATES
Total Industrial production .
Manufacturing
Durable .
Nondurable
Mining .................. .
Utilities

Oct.
1973

Sept.
1973

Nov.
1972

142.2
147.3
164.2
135.1
124.5
162.1

142.7
147.8
163.0
136.9
126.1
158.6

140.2r
145.4r
161 .3
133.8r
120.8r
165.7r

134.0
136.4
150.3
126.3
121 .5
160.0

127.2
126.9
124.0
131.1
111.4
152.9

127.0
126.4
123.9
130.1
112.1
155.6

126.8r
126.4r
123.4r
130.7r
11 2.0r
155.8

120.2r
119.5r
11 5.3r
125.6r
109.7r
148.2r

Nov.
1973p

p-Prellmlnary
r-Revlsed
SOURCES : Board of Governors of th e Federal Reserve System
Federal Reserve Bank of Dallas

Marketings of fed cattle in November slipped a little from the previous month but were greater than
a year earlier,
The index of prices received by
Texas farmers and ranchers rose
slightly in the month ended November 15, as higher crop prices
more than offset lower livestock
prices. The index was 49 percent
above the year-earlier level.
Average prices paid by U.S. farmers
also rose marginally in the month
ended November 15 and, for the
second consecutive month, were 16
percent higher than a year before.

TOTAL OIL WELLS DRILLED

Area

FOUR SOUTHWESTERN
STATES .... " ..........
Louisiana .............
Offshore .........................
Onshore ........... " ....
New Mexico .......
Oklahoma .
" " ......
Texas ..... ......................
Offshore ............... ,', .....
Onshore ........
UNITED STATES .....

...

Third
quarter
1973

Second
quarter
1973

1,379
207
72
135
59
219
894
2
892
2,497

1,426
188
49
139
61
221
956
2
954
2,219

Percent
change
- 3.3%
10.1
46.9
- 2.9
-3 .3
-.9
- 6.5

- 6.5
12.5%

Percent
change
from 1972

1973
cumulative cumul at~
4,208
638
216
422
212
636
2,722
6
2,716
7,190

- 17.2%
- 10.6
24 .1
- 21 .9
- 48.4
- 22.2
- 13.4

- 13.5
- 17.1%

SOURCE: American Petroleum Institute

Cash receipts from farm marketings in District states through October 1973 rose to nearly $8.4 billion-39 percent higher than in the
same period in 1972. Crop receipts
showed the largest relative advance,
as the $3.1 billion total was 73 percent more than in the same period a
year earlier. Livestock and livestock
product receipts, at nearly $5.3 billion, were 25 percent ahead of the
first ten months of 1972.

I
I

Full text of Review (Federal Reserve Bank of Dallas) : January 1974

FRASER