The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
MONTHLY
-BUSINESS
REVIEW
of
the
FEDERAL
Volume 33
RESERVE
BANK
of
Dallas
Dallas, Texas, June 1, 1948
Number 6
THE SYNTHETIC RUBBER INDUSTRY IN THE SOUTHWEST
R. B.
JOHNSON,
Industrial Economist, Federal Reserve Bank of Dallas
During the past three decades rubber has become an indispensable contributor to the industrial
community. Its services are less conspicuous than those of petroleum fuels, coal, and steel, but it is an
important and essential component of the machine society because of its use in cushioning impacts,
insulating against moisture, and confining electric current. The United States and other advanced
economies cannot operate efficiently without its services.
Prior to the war the United States, which accounts for more than one-half of the world consumption of rubber products, depended upon the rubber·producing plantations of the southeastern
Orient to supply its requirements for crude rubber. When Japanese forces pushed into the Southern
Pacific, severing trade routes to the Malaysian region and interrupting the flow of natural rubber to
United States industry, the successful operation of the American economy was seriously jeopardized.
American chemists, physicists, and industrial technicians succeeded, however, in perfecting practicable industrial processes to synthesize large quantities of chemical substitutes. Synthetic rubber plants
built in the United States during the war have a productive capacity roughly equivalent to one-half
the total acreage of the natural rubber-producing areas of the world and, if necessary, could meet minimum rubber requirements of the Nation's industry.
The Character and Location of the Synthetic Rubber Industry
Although the structure of the natural rubber molecule is known, chemists and physicists have not
succeeded in producing true rubber commercially. Rubber-like plastics are synthesized commercially
from natural gas, refinery gases, alcohol, and other hydrocarbons. These synthetic or chemical rubbers
differ from natural rubber in their molecular structure and in their characteristics and behavior. Some
synthetic rubbers are adequate substitutes for the natural product in nearly all uses, while others are
superior in special functions.
Nearly aU synthetic rubber produced in the United States is Buna-S, butyl, neoprene, or thioko!.
Buna-S (also called GR-S) , the synthetic most like natural rubber, is generally excellent in resistance
to abrasion and tearing. Butyl, which is generally stable chemically, excels in resistance to sunlight,
ozone, and diffusion of gases; in these characteristics it is superior to natural rubber. Neoprene also is
generally excellent in resistance to sunlight and ozone but costs somewhat more to produce than Buna-S
or butyl. Thiokol has the characteristics of butyl and neoprene and, in addition, excels in resistance to
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
92
MONTHLY BUSINESS REVIEW
swelling from oil, but it also is a high-cost product. Many other synthetic or chemical rubbers have
been produced by slight variations in processing techniques; further development of synthetic rubbers •
with specialized characteristics for particular uses may be expected.
•
Buna-S and butyl, the mainstays of the synthetic rubber program, are derived principally from
fractions of crude oil and natural gas, which can be made available readily in refinery centers, either as
by-product refinery gases or as products of special refinery units. Buna-S also can be made with alcohol.
Manufacture of thiokol likewise relies principally upon refinery by·products. Neoprene is the only
prominent synthetic rubber of which petroleum fractions are not important components, coal and
limestone being the principal materials used in its process.
Commercial production of the important synthetic rubbers consists of three operations. Hydrocarbons first are gathered from sources of supply and then synthesized into new hydrocarbon molecules
at special purpose plants. The products of these special plants are transferred to "polymerization"
plants, where they are linked into the desired synthetic.
In 1941, the annual capacity of the synthetic rubber industry of the United States was about
10,000 long tons or 1.2 percent of domestic consumption of all new rubber. During that year about
60 percent of synthetic rubber produced was neoprene type, while butadiene types accounted for
about 30 percent of production, and thiokol, the remainder. At that time, synthetic rubber plants were
located principally in the Middle-Atlantic coastal area, then the center of the Nation's chemical industry; none were in the Southwest.
The Reconstruction Finance Corporation entered into contracts in 1941 with major rubber manufacturers for the construction and operation of four synthetic rubber plants-three at Akron, Ohio,
and one at Naugatuck, Connecticut. The possibility that the United States might be cut off from
sources of natural rubber, a factor which had led the RFC to enter into these contracts, became more
threatening early in 1942. Measures to conserve crude rubber and rubber products and to redevelop
Central and South American sources of natural rubber were initiated but could not offset the loss of
Oriental rubber. Broadening the synthetic rubber program appeared more reliable insurance. Synthetic
rubber could be produced in virtually limitless quantities if costs were disregarded, since the amount of
synthetic rubber output was limited only by the availability of materials to construct the required
special purpose plants and the speed in attaining quantity production depended principally upon the
dispatch with which technical problems of commercial synthesis and copolymerization could be solved.
Decisions concerning the types of rubber to be produced and the processes to be used were very
important in determining costs and speed of the program. Concentration on the production of Buna-S
rubber was desirable because it was the best general substitute for natural rubber and the least expensive of the several commercial synthetics. Since either grain alcohol or petroleum is a satisfactory source
of butadiene, the base stock of Buna-S, grain was considered in some respects the better source when
the broadened synthetic rubber program was initiated, because less time and fewer materials were
required for construction of grain distillation units than plants to process petroleum hydrocarbons.
Advocates of the use of grain alcohol also pointed out that if grain were used, competition between
the synthetic rubber and the aviation gasoline programs for scarce materials would be minimized, a
replaceable farm resource would be used instead of a depletable mineral resource, and a wider segment
of the economy-the farm community-would be benefited.
On the other hand, use of petroleum had one very significant advantage-lower operating cost;
in addition, design and process improvements which reduced requirements for scarce materials in
petroleum-using butadiene plants soon were developed. A portion of authorized Buna-S rubber capa-
•
•
93
MONTHLY BUSINESS REVIEW
city was designed to use the alcohol process for producing butadiene, but a larger part of butadiene
output was scheduled to be produced by the
TABLE I
petroleum process. The program, authorGOVERNMENT BUNA-S COPOLYMERIZATION PLANTS
ized in May 1943, provided for 428,500
COSTING OVER $5,000,000 EACH
Design ca pacity
tons of butadiene from petroleum hydroInvestment (in thousand!
(in thousands of long rons
or dollan)
annually)
Plaut location and operator
carbons and 230,000 tons from alcohol.
Port Neches, Texas-Firestone Tire and Rubber Co. $ 16,04.6
16,047
Port Neches, Texas- B. F. Goodrich Co . ........ .
8,842
Borger, Texas- B. F . Goodrich Co ..... ....... , ' ,
7,829
Baytown, Texas-General T ire Co. , . , . , , , ' . ' , , , ,
13,415
R onston, Texas-Goodyear Synthetic Rubber Corp.
7,332
Baton Rouge, La.-Copolymer Corp. , . , , , . , , , ' , .
13,061
Lake Charles, La.-Firestone T ire and Rubber Co.
7,548
Akron, Ob!o-G.oodyear Synthetic Rubber Corp., .
7,766
Akron, OhlO- Fll'estone Tire and R ubber Co. , , . , '
11,120
Louisvillc, K y.-B. F. Goodrich Co . . . . .... " ... .
6,865
Louisvillel Ky.- Kational Synthetic Rubber Corp.
Los Angeles, Calif.- Goodyear Synthetic Rubber
10,000
Corp . .. ,.,.,., .. , " " "", ... , .,. " ..... , . ,
5,080
Los Angeles, Caiif.-U. S. R ub ber Co . . .. , ' , , , , , ,
8,357
Naugat uc~I.Conn.-U . S. R ubber Co. , ... , , . ' ... '
18,398
Institute, 'tV. Va.-U. S. Rubber Co., , , , , ... , . ' . ,
60
60
45
30
60
30
60
30
30
60
30
The proper location of synthetic rubber
facilities requires a choice between location
near centers where rubber products are fab·
ricated and location close to the sources of
raw materials. The first choice would have
led to further concentration of the new in60
dustry, principally in the Akron, Ohio,
30
30
area, where three of the four initial gov90
ernment plants had been authorized. The
705
Total United States .... , . , . , . , , , ' , . , , , , ... , . .. ' $157,706
nature of the synthetic rubber process to be
Total Southwest " .. , . , , , , , . . , . , ... , , , , . . . 5 82,572
345
used, however, dictated the other choice. In255
Total E leventh District , .. . ' , . ' . ' , , ,. $ 62,179
360
Total ot her states .. ' . ..... .. .. ," , ...... 5 75,134
asmuch as petroleum and refinery gases are
"Texas and Louisiana.
transmitted best by pipe line, physical proxSOURCE : War Assets Administra tion, as reported June 1946.
imity to the source of the base materials is
desirable. Likewise, the most important synthetic bases-butadiene, styrene, and other hydrocarbonsare transportable by pipe, tank car, or barge; consequently, copolymerization plants operate most efficiently when located relatively close to their sources of supply. On the other hand, the product of
copolymerization is a stable, compact solid easily transported for long distances. Under these circumstances, it was desirable to locate the synthetic rubber industry near its raw materials or in areas where
the petroleum-refining industry was cenTABLE II
tered. Other considerations involved in the
GOVERNMENT BUTADIENE PLANTS COSTING
location of plants included adequate transOVER $5,000,000 EACH
Design capacity
Investment
(in thousands
portation, available construction labor, and
(in thousands of short tons
of dollars)
annually)
Pla.nt. location and operator
security from enemy attack.
Butadiene-from Petroleum
Baytown, Texas-Humble Oil and R efining Co . .. ,. S 18,790
Port Neches, Texas-Neches Butane Products Co.
56,693
Houston T exas-8inclair Rubber, Inc" , , . , ' , ' , , .
30,889
130
00
50
~~~~rR~~~~:'~ifa~~:~do~ilc~'r'i\i~~ 'je~~~y 3~:~~
i~
Lake Charles, La.-Cities Service Co .. " " " ." "
Los Angeles, Calif,-8hell Union Oil Corp .. """,
Los Angeles, Caiif.- Southern Calif. Gas Co ... ,.,.
El Segundo, Calif.-8tandard Oil Co. of Calif" , ' ,
Toledo, Ohio-Sun Oil Co .. ,." .. ,., . """.",.
55
55
17,029
19,917
127', 88599
1
rg
7,361
15
Total United States, " , ' , , , , , , , , , . , . ' , . ' .' .. , ,. $215,171
413
Total Southwest', .. , ' .. , . , . , .. , .. , .. , . . . $167,845
T otal E levent h District, , ," " " ", .. S$l!~"g~
Total other states ... , , . ' , ' , , , , , , , ...... .
Butadiene- from Alcohol
Institute,W.Va.- Carbide and Carbon Chern. Corp. S 38,486
Louisville Ky.-Carbide and Carbon Chern. Corp,
34,952
K obuta, Pa.-Koppers Co., Inc. ".,',.,',',.,,'
42,000
m
295
80
60
80
Total United States " "", ,., "'" "' ,',., ' ,.,' 115,438
220
'Texas and Louisiana.
SOURCE: War Asset. Admill i"tl',ttioll, fl" I'epol'ted .J une 1946.
No area in the United States fulfilled
these requirements quite so well as the Gulf
Coast area of the Southwest. Nearly 40 pert
f fi
't
f th e Nt" IS
cen 0 re nery CapaCI y 0
a IOn
concentrated in a strip of coastline between
Corpus Christi, Texas, and New Orleans,
Louisiana. This region can supply necessary
hydrocarbons abundantly from existing refineries through a network of pipe lines, inland waterways, and railroads. Moreover,
when sites for synthetic rubber plants were
b
l
d h I b f
f h'
eing se ecte , tea or orce 0 t IS area
was able to meet the industry's requirements for construction workers and plant
operators. It also was relatively isolated
from attack, despite its coastal position, since it is deep in the crescent of the Gulf of Mexico. In addition, a growing chemical industry which could supply some needed materials and skilled craftsmen
existed in the region.
94
MONTHLY BUSINESS REVIEW
Twenty-eight plants costing more than $ 5,000,000 each were built in the United States between
1942 and 1945 to produce butadiene and butadiene rubber with an investment in these major Buna-S
and related plants totaling $488,315,000, as indicated in Tables I and II. N early 56 percent of the
investment was in thirteen major plants in the Coastal and Panhandle areas of Texas and the southern
area of Louisiana. Nine of the plants are
TABLE HI
within the boundaries of the Eleventh DisGOVERNMENT BUTYL, NEOPRENE, AND STYRENE PLANTS
trict. Louisiana and Texas received seven of
COSTING OVER $5,000,000 EACH
Design capacity'
the fifteen copolymerization plants and six
Investment (in thousands
(in thousands
of tons
of dollars)
annually)
of the ten butadiene plants, accounting for
Plant location and operator
49 percent of the copolymerization capaButyl
Southwest
city and 71 percent of the petroleum-buta30 .0
Baytown T exas-Humble Oil and Refining Co . . . $ 25,900
38. 0
25,900
Baton ~uge, La.--Standard Oil Co. of N. J .. . .
diene capacity.
The Southwest also received an important share of the total investment in major
butyl and styrene plants, as all butyl production capacity and a little more than onehalf of styrene production capacity were located in Texas and Louisiana. No neoprene
plants were built in the Southwest, but a
privately financed thiokol facility was authorized near Freeport, Texas.
51,800
68. 0
Total United States ... _. . . . . . . . . . .. . ... . . . . . . .. S 51,800
68. 0
Styrene
Southwest
Velasco Texas- Dow Chemical Co ....... . .... . $ 17,SOO
18, 300
Texas City, Texas-Mons..~nto Chern. Co . . . . .. .
50 .0
50 .0
$ 36,100
Other states
Institute,W.Va.-Carbide and Carbou Chern . Co. $ 9,800
12,600
Los Angeles, CaliL- Dow Chern. Co ...... . .
18,SOO
K obuta, Pa.- Koppcrs Co., Inc .. . . . . .. . ...... .
100 .0
$ 41,200
87 . 5
$ 77,300
187 .5
Total United States .. . ........... . ........ .
25. 0
25. 0
37 .5
The expansion of carbon black capacity,
Neoprene
which centered in the Southwest, may be Un ited States
60.0
Louisville, Ky.- E. 1. du Pont de N. & Cu. . . . . . S 38,400
considered a part of the synthetic rubber
"Butyl and neoprene in long tons, tyrene in short to ns.
program. The manufacture of rubber proSOURCE: War Assets Administration, as reported June HH 6.
ducts absorbs about 90 percent of total carbon black production. Moreover, greater quantities of carbon black are required in fabricating synthetic than natural rubber. The increase in output of rubber products for military uses and the switch
from natural to synthetic rubber conseTABLE IV
quently necessitated an expansion of carGOVERNMENT CARBON BLACK PLANTS
bon black plant capacity. Capacity was inDesign capacity
Investment
(in millions
creased from about 630,000,000 pounds an(in thousallds
of pouDda
Plant location and operator'
of dollars)
annually)
nually in 1940 to about 1,500,000,000
Odessa, Texas-United Carbon CO.. . . . . . . . . . . . . .
9,095
41
Seagraves, Tcxas-Golurnbia Carbon Co. . . . . . . . . .
2,127
13
pounds by the end of 1945.
Sunray, Texss-Gontinental Carbon Co. . . . . . . . . .
Monument, New Mexico-C. E . Johnson . .... .. ..
Eunice, New Mexico-Panhandle Carbon Co . ....
Guyrncn, Oklahoma-Cabot Carbon Co. . . . . . . . . .
1,971
1,960
1,705
2,212
20
15
15
The carbon black industry had centered
in North Louisiana, Southeast New Mexico,
Total United States... . . . .
. . . . . . . . . . . . . . $19,070
119
and the Coastal and Panhandle areas of Tex....
.
519,070
119
Total Southwest t· . . . . . .
as, where large natural gas deposits supply
Total Eleventh District . . . . . . . . .
$16,858
104
• All plants except Cabot Carbon Company plant at Guyrnen Oklahoma. the requisite raw material at comparatively
are in Elevent h Federal Reserve District.
'
low cost, and the principal wartime carbon
tTexas, New Mexico, and Louisiana.
SOURCE : War Assets Ad ministration, as reported June 1946.
black plants also were located in these areas.
Much of the expansion was accomplished
by private financing, but six large publicly financed facilities were built in the United States, of which
three are in T exas, two in New Mexico, and one in Oklahoma.
15
As indicated in Tables I-IV, the investment in major government-financed synthetic rubber and
associated plants in the United States totaled $675, 000,000, of w hich approximately $357,500,000 or
53 percent was in four southwestern states-45 percent in Texas. In addition to the major government
95
MONTHLY BUSINESS REVIEW
installations, many smaller government and privately financed facilities were located in the Southwest,
including units to assemble materials which
TABLE V
were converted to butadiene, styrene, and
other base materials of synthetic rubber; AUTHORIZED EXPENDITURES ON RUBBER INDUSTRY FACILITIES IN THE ELEVENTH FEDERAL RESERVE DISTRICT
smaller synthetic rubber and carbon black
1940-45
processing units; and rubber fabricating
(Ill thousands or dollars)
Total
Public
Private
units. The magnitude and character of the Carbon black . . .Product
... . ........ . ... . . . . 11 16,772 11 6763 $ 10,009
51;878
94,440
total authorized investment in the synthetic Synthetic rubber rase materials * . ... . 146,318
13,477
236,289
Synthetic intermediate materials . . ... . 249,766
rubber industry in the Eleventh Federal Re- Copolymer plants . . .... ...... . . ... . . 62,207
62,207
10,086
998
serve District, 1942 - 45, are indicated by Rubber fabrication . . . .... .. .... .... . 11,084
Total. . . . . . . . • . . . . . . . . . .. $486,147 5358,135 $128,012
Table V.
Texas . . ..... . .. . .. ........ . .
Total public and private wartime expen- Southeast New .Mexico . . ........ .. ..... .. 5477,328 $355,921 $121,407
4,319
2,163
2,156
..
51
4,199
4,250
ditures authorized in rubber industry facili- North Louisiana . . ......... .. .. .. . .. .
250
250
Southeast Oklahoma ....... . . . .. . .. . .
ties in the District were $486,147,000 as
Total. . . . . . .. . . . . . .. .. . .. $486,147 5358,135 $128,012
compared with $1,471,094,000 authorized
*Also utilized in aviation gasoline.
for all wartime industrial facility expansion
SOURCE: War Production Board.
in the District. This very large investment
in facilities to produce synthetic rubber and closely related products far exceeded the inve~tment of
. any of the other major industrial categories, including $219,600,000 in ordnance plants; $125,600,000
in aircraft plants; $120,400,000 in nonferrous metals facilities; $86,800,000 in establishments to produce iron and steel, their products and machinery j and $ 58,000,000 in shipyards.
~
The synthetic rubber industry of the Eleventh Federal Reserve District and the Southwest is
highly concentrated geographically. The facilities which produce butadiene, styrene, and other base
components cluster about the great refinery center in the Gulf Coastal area, reflecting the strong pull
which availability of by-product refinery gases has exerted upon the synthetic rubber facilities which
MAJOR SYNTAETIC- RUBBER AND ASSOCIATED FACILITIES AUTHORIZED 1942-1945
'-;~-"I
IilO~ :
:
I
·,k.iNS<>Y1
-
. ~"~-.J:.~~~~
~
p;
!O~N~
:
-1
...
1
'.
ARIZONA
....
~
O
,..
~
e
,....
"fjj/I
JL~J:e_1
....
. NEW MEXICO
i
..----S\ .. -
.. ~.
. . . -..1"
CARBON BLACK PLANTS
~!EA'!!!P
\
"'-.
Ie I
~,§.
-~
' tE~AS
~/~l
~~.
BASIC SYNTHETIC RUBBER MATERIALS
INTERMEOIATE SYNTHETIC flUBBER MATERIALS
~~
"...., -pJ.t'\ QJ'
..~;<t\~yoo
.
."roN
5 ..
", 'WI'
"'-"
\
'.
0 \ '"
jr--.. . . . .
'.
LOUISIANA
~~.
....\
COPOLYMER PLANTS
RUBBER FABRICATING PLANTS
· .- .
L
'\
S N!!!!'E;."d.s);;Y·
A
'-,
'\
({':I-
N UCCC"?
i
""'---J
\
ELEVENTH
FEOERAL RESERVE DISTRICT
96
MONTHLY BUSINESS REVIEW
utilize hydrocarbon raw materials. Copolymerization plants are centered in the same region, with the
exception of a major facility in the Texas Panhandle. The base stock collecting and processing plants
likewise tend to congregate in the refining area, although more widely scattered in order to tap crude
oil and natural gas reserves. The carbon black facilities, as has been indicated, are concentrated in the
Texas Panhandle and Southeast New Mexico and, to a lesser extent, in North Louisiana and Southeast
Texas. An expansion of rubber fabricating establishments occurred at Waco, in Central Texas, which
was the center of that type of activity in the Southwest.
t
The Postwar Position of Synthetic Rubber
Some of the synthetic rubbers perform certain tasks so well that they are preferred to natural
rubber, even though they may be more expensive. Neoprene and thiokol, for example, are used extensively in chemical conduits, oil hose, and other products because of their superior resistance to oil. Butyl
also has advantages over natural rubber in some uses, particularly in inner tubes, because of its "airtight" qualities. Small quantities of these and other specialty synthetics .probably will be produced for
selected uses, irrespective of the price and availability of natural crude.
The synthetic rubbers-particularly Buna-S, which makes up the bulk of total United States
chemical rubber production-must compete with natural rubber, however, for use in tires and other
rubber products, which account for 70 percent or more of total rubber consumption. In this competition they are at some disadvantage because they are more difficult and more costly to fabricate than the
natural product. Should·world consumption exceed for a time the output of the principal natural rubber producing areas of the world, the synthetic rubber industry might effect economies in production
and improvements in quality which would enable its products to compete on favorable terms for a
share of the international rubber market. On the other hand, early development of an international
rubber surplus and aggressive price competition would reduce the chances of chemical rubber sharing
significantly in that market unless assured a share by government action. The world demand-supply
situation and the comparative costs of natural and synthetic rubber, therefore, are likely to be
important in determining the future of tbe syntbetic rubber industry of tbe Southwest and the Nation.
Postwar Supplies of Rubber. In the decade preceding the entrance of the United States into
the war, world production of natural rubber varied from a low of 710,000 tons in 1932 to a high of
1,528,000 tons in 1941. It declined to 252,000 tons in 1943 but expanded rapidly in 1946 and 1947,
totaling 1,240,000 tons in the latter year. Present theoretical capacity of existing natural rubber-growing areas has been estimated by analysts in tbe rubber industry at about 2,000,000 tons annually. It is
unlikely tbat capacity will be increased significantly during the 1948-55 period, since five to seven years
are required to bring Hevea trees to efficient yielding size. Moreover, under normal conditions, output
probably cannot be raised above 80 percent of theoretical capacity. Maximum natural rubber output
TABLE VI
during the 1948-55 period probably will range be- WORLD PRODUCTION OF NATURAL Al'lD SYNTHETIC
tween 1,500,000 tons and 1,600,000 tons annually,
RUBBER
according to industry estimates.
(Tn Inog to",,)
Year
World synthetic rubber capacity may be as
high as 1,050,000 tons annually and can be increased rapidly. Capacity probably will not be enlarged,
however, unless access to natural rubber supplies is
threatened. United States rated capacity is about
850,000 tons per year, distributed as follows: Buna-S, 705,000 tons; butyl, 68,000 tons; neoprene,
60,000 tons; Buna-N types, 18,000 tons; and thiokol, nominal.
Na.tu ral Rubber
Synthetic Rubber·
Total
1947 t
1,240,000
511,000
1,751,000
1946
950,400
740,000
1,690,000
1945
268,600
820,373
1,088,973
1944
274,300
762,630
1036930
1943
251,700
231,722
'483:422
1942
400,800
22,434
423,234
1941
1,527,800
9,540
1,537,340
1,389,000
3,260
1940
1,392,260
1935
863,000
863,000
1930
821 ,800
821,800
·United State" only .
tEstimated .
SOURCE: Ull itpd Hta t.,s O" I':LI'Lmont or Commerce.
In 1947, the world produced a little more than 1,800,000 tons of natural and synthetic rubber.
On the basis of available estimates, it appears that during the next five to ten years total annual
~
MONTHLY BUSINESS :REVIEW
97
production could be raised to about 2,700,000 tons with existing plantation areas and synthetic rubber
installations, about one· third of the total being accounted for by facilities built in the United States
during the war. Should output of natural rubber again reach 1941 levels and synthetic rubber continue
at 1947 rates, world production would total 2,100,000 tons per year as compared with the prewar peak
of 1,roo,000 tons in 1941 and an average of 9ro,000 tons annually during the 1935-39 period.
Postwar Demand for Rubber. World consumption of new rubber reached an all-time peak of
1,720,000 tons in 1947, roo,ooo tons above the prewar peak in 1941 and about 700,000 tons above the
193r-39 average. As Table VII indicates, the United States consistently has been the principal consumer of crude rubber, accounting for from ro percent to 65 percent of the world total prior to the
war and 73 percent and 65 percent of the total in 1946 and 1947, respectively. Since the end of the
war, United States consumption of new rubber has
been at rates more than double those of most years
prior to 1939 and 30 percent to 40 percent above
the prewar peak in 1941. In addition, consumption
of reclaimed rubber has been maintained at very
high levels, attaining in 1947 a near peak volume
. h th
o f 289 , 000 tons as compared Wit
e 19H -39 average of 150,362 tons. Total United States consumption of all rubbers in 1947 was about 12 r
percent above the 1935 _39 averag~.
TABLE VII
CONSUMPTION OF NEW NATURAL AND SYNTHETIC
RUBBER
(In long ton. )
Y
ear
Nalu ..'
1947
1946
1945
1944
1943
1942
1941
1940
1935
1930
562,000
277,600
105,400
144,100
317,600
376,800
775,000
648 500
491:500
375,700
U~::lh~tt~--- O\a ' -T-560,000
761,700
693,600
566,700
170,900
17,600
6,300
2,900
1,122,000
1,039,300
799,000
710,800
488,500
394,400
781,300
651,400
491,500
375,700
Workl.
Total
1,720,000
1,368,000
1,136,000
897,000
703,000
699,000
1,220,000
1,066,000
940,000
685,000
This markedly higher level of consumption
SOURCE : United States Department of Commerce.
principally reflects enlarged production of tires and
tubes. The backlog of replacement demand for these products apparently was satisfied in 1947, and
sales may turn down sharply this year. Original equipment sales should increase as automobile production expands but are unlikely to offset the anticipated decline in replacements. Consumption of other
rubber products appears to be leveling off. Although it may remain considerably above prewar rates,
United States consumption probably will not continue at the 1947 level unless unforeseen develop.
ments raise requirements. Foreign needs for rubber products are extremely large, but effective demands
are curtailed by shortages of foreign exchange, and, consequently, consumption abroad may not rise
very much above the 1947 rate of about 600,000 tons. If orderly international trade is restored and
world income is sustained, world consumption of new rubber may range between 1,500,000 and
1,7ro,000 tons annually during the 1948-H period as compared with somewhat less than 1,000,000
tons prior to the war.
World capacity to produce natural and synthetic rubber probably will exceed world consumption
substantially during the 1948-r r period, and perhaps much longer. As indicated earlier, production of
natural rubber may be raised to about 1,600,000 tons, approximating anticipated world requirements
for all new rubber in the foreseeable future. In addition, the synthetic rubber industry can produce
perhaps 1,050,000 tons of rubber Maximum anticipated annual requirements for new rubber, therefore, are about 1,000,000 tons below the production potential of synthetic and natural rubber. Should
world consumption decline to prewar levels, it would absorb only about 35 percent of world capacity
and could be supplied easily either by natural or by synthetic rubber.
While consumption in the United States remains at the 1947 level, substantial imports of natural
rubber will be required, since the total is about 300,000 tons above the existing capacity of the synthetic rubber industry. Should United States requirements decline to prewar levels, however, they
could be met easily by the domestic synthetic rubber industry. Even in 1947, imports of natural rubber
could have been held considerably below prewar rates by utilizing the total capacity of synthetic rubber plants.
Under these circumstances, competition between synthetic and natural rubber can become
extremely vigorous in the United States market unless the Government intercedes. Success in a freely
competitive battle between natural and synthetic rubber probably would be determined chiefly by
MONTHLY BUSINESS REVIEW
98
price considerations, with the market shifting to the rubber which could undersell its competitor. The
comparative costs of producing the natural and artificial products, therefore, are. important factors
in determining whether the synthetic industry can operate on a large scale wlthout government
assis~ance.
The Cost of Natural and Synthetic Rubber
The consumption of rubber goods, consisting largely of tires and tubes, is subject to wide fluctuations because of the alternate contraction and expansion of business activity and consumer incomes;
on the other hand, production and deliveries of natural rubber tend to fluctuate within narrow limits
because of the necessity of meeting heavy fixed costs and of maintaining at a minimum level the labor
force and shipping facilities. The relative inflexibility of supply, combined with the marked variations
in demand, therefore, produced wide fluctuations in prices of natural rubber in the United States and
world markets prior to the war. These marked price variations occurred despite the efforts of producers in the principal rubber-growing areas to stabilize prices through assignment of production
quotas.
As Table VIII indicates, during the 10 years
TABLE VIII
CRUDE RUBBER PRICES
Average of one price weekly, Plantation Ribbed,
Smoked Shce~, Spot, at New York
preceding the entry of the United States into the
war, the average price per pound of crude rubber
delivered at New York fluctuated between a low
(In cents per pouDd)
y",
Average
Average
Year
Yea'
of 3.45 cents during 1932 and a high of 22.34 cents
6 . 15
1921
1931
1941
22 .34
during 1941. The average price for the decade was
1920
20 .25
1930
11.93
1940
1929
20 .65
1919
1939
17 .97
about 12 cents. During the war and for a consid1918
1928
22.36
1938
14. 72
erable period thereafter, prices of both natural and
1917
19 .44
1927
37.9
1937
1916
1926
48 .6
1936
16. 46
synthetic rubber were controlled by the Govern1915
12 .36
1925
72 .5
1935
ment. While under government price control, nat1914
1924
26 .2
1934
12 .95
29 .7
1913
1923
1933
5 .96
u-ral rubber was quoted within a range of 22.5 cents
17.6
3. 45
1922
1932
and 25.75 cents per pound; however, since the resSOURCE : New YorkJlrUrna!ojCommerce.
toration of a free market in April 1947, price fluctUations have been more pronounced, ranging from about 14 cents to 25 cents per pound.
Average
16 .4
36 .3
48.7
60.2
72 .2
72 .5
65 .7
65.3
82.0
.
Should world stocks of rubber become abundant and vigorous competition for markets develop,
natural rubber might sell considerably below the prices of the last decade. Estimates based on data
assembled by the War Production Board indicate that total United States requirements for rubber
probably could be supplied by the more efficient plantations and small holdings at out-of-pocket costs
. of less than 9 cents per pound. Analysts of the industry have stated that adaptation of the Far Eastern
plantations to peacetime conditions will tend to reduce average costs, making operations profitable at
less than 8 cents per pound.
Synthetic rubbers have not yet been sold in large quantities on an unregulated market. Prior to
the war, neoprene and other specialty rubbers sold for as much as 65 cents per pound at a time when
-natural rubber was available at about 20 cents. Controlled selling prices were reduced considerably as
the larger synthetic plants came into production. Prices quoted for the principal synthetic rubbers by
the Rubber Reserve Corporation as of August 1, 1947, were as follows: Buna-S, 18.5 cents per pound;
. butyl, 18.5 cents per pound; and neoprene, 32.0 cents per pound. Since the reopening of the free
m~rket, natural rubber frequently has been quoted considerably below these prices.
The out-of-pocket costs of producing the several synthetic rubbers vary considerably. Government and private estimates of costs indicate variations of 50 percent or more between different types
of synthetics and between plants producing much the same type of sy nthetic product. Neoprene is
estimated to h ave cost about 24 cents per pound during the war but now might be produced for somewhat less. Butyl, which has ranged as high as 22 cents per pound, perhaps could be reduced to about 10
cents. The cost of Buna-S has been estimated at about 12 cents per pound. According to industry
•
•
MONTHLY BUSINESS REVIEW
99
analysts, postwar reduction in the costs of butadiene and styrene produced from petroleum hydrocarbons might lower out-of-pocket cost of Buna-S to 11 cents per pound. With further experience,
variable costs as low as eight cents per pound for Buna-S are said to be feasible. On the basis of available
data it appears that total out-of-pocket manufacturing costs of the several synthetics, plus selling and
shipping expense, ral1ge about as follows, depending upon the level of operation of plants and the type
and cost of base stock: Buna-S, 11 to 17 cents per pound; neoprene, 20 to 29 cents per pound; and
butyl, 11 to 27 cents per pound.
The fixed costs, which also might be included in selling prices, will be determined principally
by the valuations placed upon the government-owned facilities. Since they were built under duress of
war, the plant investment might be allocated to war costs, thereby minimizing fixed expenses of producing synthetic rubber. Moreover, fixed costs per unit of output probably would comprise only a
small part of total cost per unit, if a large portion of the original investment were amortized over the
postwar life of the facilities, provided operations were maintained near capacity rates. Available data
indicate that fixed costs might fall below two cents per pound in the larger facilities at full-scale
operation.
It appears from these estimates that, at present, in an intense competitive battle natural rubber
would have an advantage in general uses over synthetic rubber, because of lower costs. Although some
general purpose synthetic might be produced for about 10 or 11 cents per pound, a large part of the
output of natural rubber probably can be delivered at a lower price.
The Future of the Synthetic Rubber Industry of the Southwest
Despite its cost disadvantage in competition with natural rubber, the synthetic rubber industry
may continue to operate at a rate considerably above that required to supply synthetics for specialty
uses. If rubber consumption for a time is sustained at high levels, technological progress may reduce
costs of producing synthetics, increase their workability, and improve their quality. Even though costs
of synthetics are not reduced, demands for them may continue in substantial volume, since combinations of general purpose synthetics with natural rubber yield standard products with superior characteristics and further experimentation with synthetics may develop new uses which will increase greatly
the amount consumed. Moreover, considerations of national welfare and international economic policy
may require continued operation of a significant portion of synthetic rubber capacity.
In the immediate future, considerations of national welfare may be the most important factor in
determining the disposition of synthetic rubber facilities and the levels at which they are to be operated. National security probably demands that the principal synthetic rubber plants be retained intact
while there is a possibility that the ocean commerce of the Nation can be disrupted. Conversion of
some facilities to other uses is feasible, but for others it would be technically difficult and possibly
undesirable. Styrene has alternative uses which will absorb the output of existing facilities. Plants which
produced alcohol for butadiene also find ready markets for their products. On the other hand, extensive plant modifications would be required to shift petroleum butadiene, butyl, and copolymerization
plants to other uses, and their efficiency as components of the synthetic rubber industry might be
impaired. The advantages of keeping operating crews intact, providing practical laboratories for further experimentation, and maintaining efficient inter-industry relations with refinery sources of supply and with fabricating establishments also will be considerations in determining whether operations
are to be continued.
Complex considerations of domestic and international policy may influence the level at which synthetic rubber production is to be maintained. Synthetic rubber production could be stepped-up to supplement imports of natural rubber if demand expanded rapidly or could be decreased sharply if consumption diminished. The industry's operations thus might contribute to greater stability of rubber
prices in the United States market, reducing the great inventory risks of rubber fabricators.
The effects upon inter national trade w hich might result from curtailing United States imports of
crude rubber also m ay be an important consideration in setting production levels for the synthetic
rubber industry. For many years before the war, natural rubber was one of the principal import items
100
MONTHLY BUSINESS REVIEW
of the United States, its value often exceeding that of any other single commodity import. In 1947,
United States imports of crude rubber amounted to $323,000,000, accounting for about 6 percent of
total imports, despite synthetic rubber supplying about one-half the requirements of the domestic marketo Moreover, natural rubber is potentally more important as an import now than before the war,
since other commodities which were significant components of the Nation's import list prior to 1940,
particularly silk and certain manufactured goods, may not recover their prewar positions for several
years because of limited production capacity or shifts in consumer preferences to substitutes produced
in the United States. Maintenance of consumption of synthetic rubber at high levels by limiting
imports of natural rubber might deprive foreign nations of critically needed dollar exchange, thus
partly offsetting the United States' foreign aid extended to assist in world recovery and amplifying the
already badly unbalanced position of world trade.
~
A long run policy for the synthetic rubber industry has not yet been adopted by the United States,
although regulations now in effect require the use of certain proportions of synthetic rubber in the
manufacture of designated products. Several bills have been introduced in Congress, however, which
outline general conditions for the industry's operation until 1950. These bills propose that the President
be empowered to issue regulations to assure domestic consumption of specified percentages of general
purpose synthetic rubber in such items as tires, camel-back, and flaps and any or all special purpose
synthetic rubber in pneumatic inner tubes. Generally, they provide, as well, for maintenance at all times
of rubber-producing facilities, public and private, with total production capacity sufficiently large to
meet minimum domestic requirements. The annual capacity of general purpose synthetic rubber which
shall be maintained is set at 600,000 tons annually, and the capacity for special purpose rubber, at
between 65,000 and 75,000 tons. Adoption of these or similar provisions would assure the maintenance
of a major part of the synthetic rubber industry in the Southwest, and possibly continued operation of
a portion of the facilities.
Despite its youth, the synthetic rubber industry is a moderately important component of the
industrial structure of the Southwest. The heavy wartime investment in Buna-S arid other synthetic
rubber plants, totaling about $486,000,000 in the Eleventh District, is considerably greater than the
aggregate investment in many other important manufacturing industries in the area and represents
probably one-third of the total investment in chemical facilities. Employment in synthetic rubber
plants in the Southwest is estimated to total 6,000 workers at present, of whom perhaps 4,500 are
engaged in "non-convertible" facilities.
Continued operation of the synthetic rubber industry might prove an important stimulus to further industrialization of the Southwest. An important potential development is the possibility that
other industries might be attracted to this area to be near the sources of materials which are the intermediate products of the synthetic rubber plants. Styrene, for example, is a base for many plastics as
well as an important component of Buna-S. Its availability, combined with that of other important
chemical materials abundant in the coastal region, such as salt, limestone, and sulphur, already has influenced chemical expansion along the Gulf Coast since the end of the war.
Availability of specialty and general purpose synthetic rubbers over a longer period also may influence strongly the location of additional rubber fabricating establishments in the southwestern area. In
fact, the Gulf Coastal area may prove exceptionally attractive to rubber fabricators, for besides being
the center of the synthetic rubber industry, its ports and intercoastal waterways provide excellent
means of bringing natural and synthetic rubbers to plant sites and transshipping rubber products by
cheap ocean and barge transport to important marketing areas in the United States and abroad. The
regions in which the principal rubber fabricating facilities now are located cannot duplicate these
advantages.
Should the rubber fabricating industry be developed further in the Southwest to utilize the synthetic rubbers produced in the area and to benefit from the locational advantages of the port region, a
substantial "heavy industry" would be added to the economic organization of the southwestern area.
The additions to pay roll and income and the diversification of industrial activities which would be
achieved thereby would far exceed in importance the contributions which the synthetic rubber indus.
try alone might make toward the industrial development of the Southwest.
~
MONTHLY BUSINESS REVIEW
101
Review of Business. Industrial. Agricultural. and Financial Conditions
DISTRICf SUMMARY
\'V'eather conditions in the District during the past month
had diverse effects upon developments in the agricultural and
livestock industries. The generally favorable conditions prevailing in the eastern half of the District were partly counterbalanced by the growing intensity of the severe drought in
much of the western portion. In the latter area, where only
light rains haye fallen, planting operations and the growth of
crops and range feeds arc being retarded because of inadequate
moisture, and substantial numbers of livestock are being moved
to market or to other areas where pasturage and water are available. In the eastern half of the District moisture conditions
generally are satisfactory, and crops and pasture feeds are making good growth.
The value of department store sales was sustained in April
at a level 15 percent above that in April last year. After adjustment for seasona l factors and the early date of Easter, April
sales were in record volume. Sales of furniture stores increased
further from March to April and were one-fifth larger than in
A pril last year.
t
Daily average production of crude petroleum reached a new
peak in April, exceeding the rate a year ago by 12 percent. According to a recent report prepared by the Economic Advisory
Committee of the Interstate Oil Compact Commission, the demand for crude petroleum and petroleum products in the United
States is expected to rise substantially during the next year.
The magnitude of the requirements will exert a strong pressure
toward increased output of crude petroleum in this District. The
value of construction contracts awarded in the District increased from March to April and was nearly one-fourth larger
than in April 1947.
The loans, investments, and deposits of weekly reporting
member banks in leading cities of the Eleventh District turned
upward during the four-week period between April 14 and
May 12, after having declined substantially during the preceding three months.
BUSINESS
The dollar value of department store sales in the District
during April was sustained at the March level, although normally a decline occurs when Easter falls in late March. Factors
contributing to the favorable sales experience included aggressive post-Easter clearance of spring merchandise, widespread
promotional sales, and generally favorable shopping weather,
which· were successful in stimulating consumer buying interest.
In comparison with April laSt year, sales were up 15 percent,
bringing cumulative sales for the first four months of 1948 to
12 percent above those for the corresponding period of 1947.
The adjusted index of department store sales, which makes
allowance for seasonal factors and the variable date of Easter,
rose in April to 448 percent of the 1935-39 average, the highest
of record and well above the 384 percent in March this year and
377 percent in April last year. The favorable sales experience
during April was characteristic of trade throughout the United
States, but the gain over last year in this District was more
pronounced than th at for the country.
The ratio of cash sales to tool sa les declined slightly in April,
offsetting the small inc.rease thar occurred in March. The ratio
of 35 percent for April compares with 41 percent in the corresponding month of 1947. The ratio of April collections on
regular charge accounts to accounts receivable outstanding at
the first of the month was 56 percent as compared with 53
percent in March, 51 percent in February, and 55 percent in
April last year. Collections during April on instalment accounts
outstanding declined seasonally, being 20 percent of receivables
outstanding at the first of the month as compared with 25 percent in March, 19 pacent in February, and 29 percent in April
1947.
Merchandise inventories at reporting department stores remained at approximately the same level in April as in the previous month but were about one-fourth larger than in the same
month of the previous year. The downward trend in outstanding orders, which was evident in February and March, continued
in April. At the end of April the total was 21 percent below that
at the close of March and only 2 percent above the low leyel
to which it had fallen on April 30, 1947. For several months
department stores have kept receipts of new merchandise well
in line with sales, and, as delivery schedules are reduced, forward commitments are trimmed accordingly. Moreover, many
stores arc placing orders for only a portion of fall requirements,
pending a more accurate appraisal of business trends later in
the year.
WIIOI,ESAT.E AND RETAIL TRADE STATmTICS
Number
of
Percentage change in
Net sales
SIoclcs t
Jan. I to
Apri l 1948 from
April 1948 rrom
April
April
Ma.rch Apti130. 1948
March
1947
1948
from HH7
1947
1948
15
12
24
1
t
- 3
-I
- 10
-t
t
- 4
12
7
16
1
13
2
11
31
5
-2
31
25
43
2
10
10
8
24
-2
20
-3
19
- ·i
10
7
22
4
rerrrtiDg
Retail trade:
,rna
Department stores:
(8
Totailltb Dist.... .
(
Corpus Christi . . .
Dallas ..... .. .
7
(
Fort Worth ...
Houston ..... .
7
San Antonio .. . .
5
Shreveport. la . . ...
3
18
Other cities . ... ... .
Furrut\lf'C stores:
20
7
40
10
I
Total 11th Dist.....
30
- 10
20
-3
Dallas .. . ...... .
18
II
HOU3ton ....... .
.()
4
6
-31
-I
Port Arthur . ...
12
- 4
4
San Antonio .......
WhC"llesale trade:·
Maohioery, equip't,
-4
75
and 6u Plies .....
3
-4
13
Industria supplies ..
3
26
1
-14
-32
3
Jewelry . ..
_·0
-4
3
Drugs . ....
5
1
-2
12
Dry good •.
6
-3
1
17
4
5
14
30
- 4
Groceries . .
12
2
15
5
10
5
Hardware ...... . . .
18
10
3
Tobacco &: product.e.
6
t
·Compiled by United States Bureau of Cen8US. (Wholesale trade figures prelim.inary.)
tStocb lit end of montb.
tTndicatcs change less than ollc-half of one percent.
,
,
1
-·i
-.
I:-IDEXES OF DEPARTMENT STORE SALES AND STOCKS
Daily avcrngc salcs- (l935-39-IOO)
Huuston
April
1948
448
395
472
Adjusted
:Marcb February
1948
19.B
384
368
374
3M
408
502
Stoeks-(1935-39= 100)
Unadjusted·
April
Mareh February April
1948
1948
194B
ItH7
316
1II
377
399
11 th Dist rict.
Dalln!:! .. . '"
April
1941$
390
363
.53
Adjusted
March February
1948
194B
(24
.20
Unadjusted·
Marcb February
19.8
1948
324
384
320
3r>3
447
350
April
1MB
Jlth District. 409
·Unadjust..cd for OO880nll l vruiation.
April
1947
347
326
346
April
1947
377
35.
300
April
1947
326
The dollar value of sales at reponing furniture stores in the
District co ntinued to increase in April, being 7 percent greater
than in March and one-fifth above that of April 1947. Credit
sales rose 7 percent from the previous month and constituted
102
MONTHLY BUSINESS REVIEW
86 percent of total sales in April as compared with 82 percent in April 1947. The marked rise in credit sales during the
past year has been reflected in a steady growth of end-ofmonth receivables, which rose 4 percent in April to a level 56
percent above that at the end of April a year ago. Collections
have been increasing at a much slower rat~ than receivables, indicating a decrease in the collection ratio. April collections
were in about the same volume as in March and were only 13
percent greater than in April last year. Inventories at the end
of April showed a further increase of 1 percent over those a
month earlier and were 10 percent greater than at the end of
April 1947. Although furniture output · has increased substantiallyover the past year, retail stores have evidenced a disposition to maintain purchases weI! in line with current and
prospective sales.
AGRICULTURE
Favored by open weather and adequate moisture, ranges and
most growing crops in the eastern half of the District made
satisfactory to excellent progress during April and early May.
The western half of the District, however, has received only
light rains, and there is an urgent need for additional moisture
to stimulate growth of crops and range feeds and to enable
farmers to complete spring planting. In the Lower Rio Grande
Valley, crops are suffering severely from inadequate soil moisture and the depletion of irrigation water supplies. Livestock
made slight improvement during April but on May 1 were still
substantially below average condition for this season of the
year.
Cotton has made fair to good growth in central and southeast Texas and in north Louisiana, where cultivation and chopping are proceeding rapidl y. In south Texas much of the crop ..
is blooming and fruiting. In the northern and northeastern •
counties of the State more than half of the crop is planted,
but seeding in northwest Texas is being retarded by the drought.
The condition of the Texas hay crop on May I, while slightly
above average for that date, was considerably below the condition of the crop a year ago. Due to an unusually long winter
feeding period caused by the extended cold weather and the
spring drought, the stoc ks of old hay on Texas farms were
reduced to an estimated 136,000 tons on May I-the lowest
level for that date since 1935. Largely because of losses from
the freeze, the Texas peach crop is expected to amount to only
about 961,000 bushels, compared with a 1947 crop and an average production of nearly 1,700,000 bushels.
Growing conditions in the Lower Rio Grande VaHey have
been unfavorable for commercial vegetables, as irrigation water
is at a very low level and strong winds and high temperatures
in late April and early May depleted the meager supply of soil
moisture. In other areas, however, tomato, cantaloupe, watermelon, onion, and early potato crops have made good p1'Ogress
under favorable moisture and growing conditions, although
some crops are late. The supplies of commercial vegetables have
become more plentiful with the increase in harvest of potatoes,
corn, and tomatoes in the Lower Valley and of early cucumbers
and onions in the Coastal Bend and Raymondville distric ts.
PRODUCTION OF SELECTED SPRING VEG~'TABLES IN TEXAH
The drought in the winter wheat belt of northwest Texas
and New Mexico is gradually becoming more critical. Although
light rains or showers have afforded temporary relief from
time to time, the wheat crop in some areas has continued to
deteriorate. While abandonment of seeded acreage has not been
excessive thus far, an increasing number of fields ace being
grazed or plowed in anticipation of planting other crops. Grain
in some areas is already heading short. Despite the very unfavorable moisture conditions and acreage abandonment, the
United States Department of Agriculture forecast for Texas
on May 1 a wheat crop of 49,136,000 bushels-276,OOO bushels above the April 1 forecast. This estimate, although less
than 40 percent of the crop harvested last year, is more than 7
percent above the la-year ( 1937-46) average production. The
acreage of wheat left for harvest on May 1, including volunteer, was estimated at 6,142,000 acres, about 16 percent below
the record of 7,310,000 acres last year but 55 percent above the
IO-year average. The estimated yield per acre of 8.0 bushels
compares with 17.0 bushels last year and an average of 11 .6
bushels.
Corn is in good condition throughout most eastern and
southern sections of the District, with early corn in the southern counties of Texas nearing maturity. Some hail and wind
damage has occurred in scattered parts of northcentral and
northeast Texas. The sorghum crop continu es to make good
progress in southcentral and southern counties of Texas, where
the crop is heading out. Early sorghums are making fair to
good progress in central and northern counties of Texas. In the
Plains areas of the State, however, planting is being delayed due
to the lack of soil moisture. The Texas oat crop on May 1 was
reported to be in the poorest condition for thal date since 1936.
The mid-March freeze caused severe losses both to acreages and
.tands, and limited moisrure supplies in important producing
areas have further reduced yield prospects. I>Ianting of rice in
Texas was about completed by May 1, and growing conditions
have been favorable.
(In thousands of units)
100yea r (1937"'{6)
Crop
Snap bcuns---earll' .. . .
Cucumbcnt--early . . .
Garlic-early . . .
Oillons--carly . . .
Ouion.s-L'ltc . .. .. .. .
Irish poLatocs*-ea.riy.
Irish potatoes-late ....
Strn,wbcrries-ea.rly.
TOUlat~·-eariy ..
.
TomuLOCfl-late .
Units
Bushels
nushels
Sacb
Sack!
Sack!
Dush.~
Bushels
Cratea
BU3hels
Bushels
Elitinmlt'tl
1948
average
JlM7
30.;
328
1~7
2M
273
8
3.969
M3
1,215
578
63
2.197
2.618
222
13
3.760
1.206
798
M3
79
2.24'
2.103
9
4.004
1.019
1.152
555
39
2.912
2.700
·Lowcr Rio Grande Valley only.
Range feeds in the eastern half of the District made rapid
growth following the rains in late April and are now in generally good condition. Although the April rains temporarily
relieved droughty conditions in scattered areas of the western
portion of the District, precipitation generally has been too
light to relieve the critical drought. While supplemental feeding is being continued on many ranches, the movement of
livestock to market or to better grazing areas is taking place
on considerable scale. The condition of range feeds in Texas on
May 1 was reported to be slightly improved from a month
earlier but still about 8 percent below average for this season
of the year. Cattle and calves in the eastern half of the District
made rapid improvement on the plentiful supply of new feed
during ApriL In most other areas cattle made poor to only fair
gains on the limited new feed supplies. Cattle in Texas on
May I, although in slightly better condition than a month
earlier, were still six percent beloW' average for this season.
Reflecting poor range conditiuns, stock sheep generally came
thcough the winter in very poor flesh despite heavy supplemental feeding. L,mb 10""" have been considerable and many
young animals have been stunted. Repo rts indicate that many
spring lambs intended for ma rke ting i'} late Mayor June may
be held for fall marketing beco use of retarded growth and lack
of finish. In the northeastern Edwards Plateau counties lambs
103
MONTHLY BUSINESS REVIEW
arc making good gains on the improved feed supply. The
slightly improved condition of sheep and lambs in Texas on
.. May 1 was still 12 percent below average for this date. Partly
., because of the unfavorable price of mohair, goats are being
marketed in considerable volume.
CASH RECEIPTS FROM FARM MARKETI l\G8
(In thousands of uollanl)
March 1948
State
Arizona . .... .
Louisiana . .. . , .
New Mexico,.
Oklahoma . ... .
Texa.!! . .. .• ...
Total, .
March
Cumulative receipts
IM7
-Jan. t to M ar. 31.---1948
1947
I 50,943 I 40,155
69,293
47.705
30,2ft>
24.726
117,942
115,400
411,235
287,243
Crops
Livestock
I 10,831 1 6,326
13,937
9,135
3,656
6,609
6,944
21,1I7
67,379
57,149
Total
I 17.157
23,072
10,265
28,061
124,528
I 12,784
13,194
8.915
39,239
104,46D
1102,747
1203,083
1178,601
1100,336
Total
1679,678
5515,229
SOURCE: United States Department of Agricullure.
Livestock moved to market in heavy volume from Texas
farms and ranches during April, reflecting both the usual seasonal increase and the acute shortage of range feeds in many
areas, April receipts of cattle at the Fort Worth and San Antonio markets, combined, were more than double those of
March and slightly higher than during April 1947. Receipts of
calves were up 55 percent above the previous month and 25
percent above April of last year, while receipts of hogs were
up more than 50 percent over the previous periods, Receipts of
sheep and lambs in April rose 79 percent above March and were
40 percent above April receipts last year,
LIVESTOCK RECEIPT8-(Numbe,)
~
---r~ort
Worth
April
Class
March
April
1M7
78.544
15,010
61.702
105.746
1948
34,354
9,609
56,239
70,524
...
........
San Antonio - - _
April
March
1Q48
32.849
22,649
9,177
56,397
85,583
Cattle . ....
Calves.
Hogs .. , .
Sheep .. .
April
1948
14,3L8
97,001
1403.232
1947
37,194
14,630
6,344
29,323
1948
21,191
14,281
8,512
37,266
COMPARATIVE TOP LIVESTOCK PRICES
(DolL'1r8 per hunc.lrcdwcight)
C....
Beef steen.
Stocker steers .. ......
Heifers and ycarlings.
Butcher cows.
Calves . .
Hogs ........ .
LamOO .. .. .
_ - -Fort Worth
April
April
1948
1947
$30 .50
$25.00
'28.50
20 . 75
24 .,\0
30.00
24 .00
17 .50
23.00
30 .00
22 .S0
23.75
25 . 00
23.75
March
1948
129 . 00
26 . 50
29.25
23 . 00
2Q .OO
26.50
23.50
April
1948
$30.50
30.50
23.50
30 .00
21. 7.'>
23.50
San Alltonio - - Apl'il
March
1947
1948
123.00
128. 75
'2300
17.25
23.00
26 . 50
22.90
28.75
23 .00
28 .00
23 .25
22 .00
Prices received by Texas farmers for most agricultural products continued to advance during the month ended April 15,
according to the mid-month price report of the United States
Department of Agriculture, Advances in prices received for
cattle and cotton, together with gains made in March, have
more than offset the sharp declines which occurred in February, Feed grains have regained a substantial part of the midFebruary price de.cline, Other prices showing significant increases during the month ended April 15 were those received
for wheat, potatoes, cowpeas, cottonseed, and wool. Dairy and
poultry products registered only limited price changes, while
declines occurred in prices received for hogs and citrus fruits,
Varied price movements were registered in the commodity
markets between mid -April and mid-May, Prices for cotton
and most classes of lives rock made slight gains, and prices of
spring lambs were up almost one-fourth, Prices received for
sorghums showed little change, but prices received for other
feed grains and wheat declined substantially.
Present Rice Outlook 1
Production of rice in the United States has increased steadily
since 1942, when, with the outbreak of war, supplies from the
Orient were cut off and the demand for American rice increased
sharply to meet the requirements of Cuba, Canada, and our
European allies, as well as to fill domestic and military needs, As
the result of this increased demand and rising prices, the acreage
devoted to the production of this crop increased sharply each
year between 1942 and 1947, and a ncar-record acreage is indicated for 1948 . Production of rough rice in the United States
last year rose to a record level of 79,345,000 bushcls-l0 percent above the previous record crop harvested in 1946 and 59
percent above the prewar (1935-39) average. In Texas, production rose from a prewar average of 12,236,000 bushels to 17,700,000 bushels in 1946 and to 23,700,000 bushels in 1947,
World production in the 1947-48 (August-July) season,
which is expected to total about 7,100,000,000 bushels, will
be about 2 percent above that harvested during the 1946-47
season but still 5 percent below the prewar average, Despite
the recent gain in total production, world supplies available for
export in the 1947-48 season are estimated at only 200,000,000
bushels of rough rice, compared with a prewar average of 600,000,00 0 bushels and 170,000,000 bushels during 1946-47,
The major part of the increased production during the 1947-48
season occurred in the war-affected countries of Asia, China is
estimated to have produced 2,348,000,000 bushels, compared
with 2,329,000,000 bushels harvested during the preceding
season and a prewar average of 2,623,000,000 bushels. Production in Burma totaled 270,000,000 bushels during the 1947-48
season--about 39 percent above the preceding year's crop but
still 23 percent below prewar. A substantial increase in production also occurred in Formosa, Siam, and Korea, In India and
Japan, however, production was somewhat lower than in the
preceding season, European production was substantially above
that of 1946-47 and even slightly above the prewar average.
Production in that area, however, still falls substantially below
requirements. The South American crop is expected to be somewhat lower during 1)/47-48 than III the preceding season, but
the indicated crop of 160,000,000 bushels is about 79 per cent
above the prewar average. The reduction in South America
this season is due entirely to the sharp decl ine in the acreage in
Brazil.
PRODUC1'ION OF ROUGH RICE
(In thousands of bushels)
Avcragc
Nortb America t ........ ... ...... ..
United States.
Texas ... .
Europc"t.
Asia't ....................... . ... .
Burum .
Chinn .. ..
Formosa ... .
India ..
Korea ............... . .... .
Jupa.o ..
Siam
South America!.
Drazil ....
Africa!
1935.;16 to 1939-40 1946-47
52,900
91,600
49,852
72,216
12,235
17,716
41,000
53,100
7,1 11,700
6,499,400
104,114
348,634
2,328,736
2,623,383
85,704
.55,109
2,104,78 1
1,904,8 19
110,1 12
195,763
561 ,082
595 ,R45
213,079
128,000
162,40[t
89,500
118,0()IJ
66,424
106,000
136,000
1047.481.
100,400
79,345
23,700
04,200
6,508,000
270,500
2,348,082
73, 100
2,050,000
128,650
545,447
143,000
159,400
Ill,ooo
104,300
6,950,000
7,086,000
Total World. .
7,442,000
terop harvested during firot half of the crop sea.son.
tCrop harvested during latter haJr of the crop seaSOD .
l> Indicated.
"Excluding U. S. S. R.
SOURCE: U. S. Uepartment of Agriculture. Office of Foreigu Agril!uit.uml Rc1aLions.
lThis article brin~s Ufo to date some information contained in an article entitled "The Rice nduSU'y in Texas" which appeared in tbe November
I, 1947 issue of tbe Monthly Business Review.
'0·1
MONTHLY BUSINESS REVIEW
Coincident with the decline in production abroad and the increased demand for American rice during the war period, foreign shipments from this country, including exports and shipments to possessions and occupied areas, increased sharply, rising from an average of only 18 ,660 ,000 bushels in the prewar
(1935-39) period to 40,290,000 bushels in the 1946-47 season.
Moreover, estimates mad e by the United States Department of
Agriculture indicate that shipments in the 1947-48 season will
at least equal those of the preceding year and may be well above
that level. During the first seven months of th e current season,
commercial exports of 19,500,000 bushels were 3 percent above
those during the same period in 1946-47. Cuba, the most important foreign market for United States rice, received 67 percent
of the exports during this seven-month period, compared with
36 percent in 1946-47 and a prewar average of 77 percent. Canada, historically the second most important importer of United
States rice, received 8 percent of the exports during the sevenmonth period, compared with 4 percent last season and 5 percent in the prew ar peried. China, which imported only very
small quantities from the United States prior to the war, received 12 percent of the shipments made during the sevenmonth period and 8 percent of the shipments in 1946-47. The
European Continent, whi ch received 12 percent of the rice exported from this country in the prewar years, received less than
2 percent during the first seven months of the current season.
The Philippines, which imported a large volume of United States
rice in 1946-47 to offset the small crop produced in that country, received less th an 20,000 bushels this season.
It is expected th at foreign shipments from the United States
this season will be maintained at a relatively high level, in spite
of the improved supply outlook in several major importing
countries in the Orient and the general shortage of American
dollars abroad. In fact, if foreign aid should be extended by
the United States in the amount now contemplated, foreign
shipments may be substantially above those of last Season. Recent reports on the European Recovery Program indicate that
SUPPLY AND DI STRIllUTlON OF ROUGH RICE-CON TI NENTAL UN ITED STATES
(III thousands of bushels)
AYerage
1935.:1610 1939-40
Total supply . . . .............. .
Civilian rood .. ,..... .
Seed and feed. . .... ...... . .
Used by brewers . .. . ..... .
Total U. S. tlisappcnrnnce.
Exports and shipmen ts ..
Military services and relie f . ..
.6.Indicated.
55,160
25,95O
3.720
920
30,590
18,660
194H7
73 .820
22.01 0
4.700
3.550
31 ,160
37,900
2,390
19.7.-4 8.6.
81,340
24.800
4.700
4.000
33.500
\43~
i 44 ,000·
· Availnble for foreign shipment ir a carryover equal to prewar average is maintained.
SOURCE: United States Department of Agrieu1ture, Bureau of Agricultural Econom ics.
between $35, 000 ,000 ,nd $40,000 ,000 may be provided under
the program for the purchase of rice in Western Hemisphere
countries for shipment to Europe alone between April 1948
and the end of June 1949. This amount is in addition to approximatel y $12,000 ,000 worth of rice which would be shipped
to Europe but paid f or f rom other sources. Total shipments to
Europe during the 15 -month period , therefore, may equal at
least $45 ,000,000 to $50,000,000, which would be far above
those of recent years and lPproaching the prewar average. Substantial aid also will be extended to China and, through the
Department of the Arm y, to Japan. The extension of foreign
aid will not only provide for a continued flow of rice and other
products to Europe and Asia but might also improve exchange
conditions generally t hrough the sale of goods by other countries
to rhe United States for shipment under the aid program. Such
purchases by the United s ta tes would provide other important
rice-producing countries such as Cuba and Canada with additional dollars with which to maintain their volume of rice purchases in the United States.
Foreign outlets will continue to be a very strong supporting
factor in the rice market for a number of years tf exchange
difficulties can be sol vcd. The Food and Agricultural Organization of the United N ations has estimlted that in spite of recent
improvement in production abroad, . five years may be r~quired
to restore production in the war-aftected countnes of ASia. In
addition, the popul ation in Asia has increased very rapidly, and
present demands for rice are considerably above prewar. Therefore, that area may provide a profitable outlet for Amencan
rice for several years. Continued large shipments to the Orient,
however, will depend upon an increase in total exports of goods
from that area or upon continuation of aid from the United
States.
In addition to the continued large foreign market, the domestic market should absorb an increased volume of rice in
the years ahead if the supply is available at prices competitive
with those of other cereals. During the war years, when a large
part of the United States supply was diverted abroad, the per
capita consumption of rice in this country decline~ significantly, falling from an average of 5.7 pounds of milled r~cc
during the prewar period to 4.1 pounds in 1945-46. Per capIta
consumption increased in 1946-47 to 4.9 pounds, and a furth~r
increase is anticipated in the 1947-48 season. Total domestIc
consumption for all purposes averaged 30,590,000 bushels in
the prewar period but, due to the increase in population a~d
expanded industrial uses of rice, rose to 31 ,160,000 bushels m
1946-47 and, according to estimates of the United States Department of Agriculture, is expected to rise to 33,500,000 bushels in 1947-48. Fur ther increases in domestic consumption,
however, might be limited by high retail prices for rice and
rice products, since reports indicate that consumers are. turnin~
to other and cheaper substitute cereals. At the same time, thIS
competitive f actor may tend to sustain consumption, if the
recent declines in prices of most grains should result in lower
prices received for rice.
The record production of rice in the United States in 1947
plus the carry-over of 2,000,000 bushels at the beginning of
this season prov ided a total supply of 81,345,000 bushels. If
total domestic consumption equals the 33,500,000 bushels
forecast by the United States D epartment of Agriculture and if
overseas shipments equal no more than the 40,290,000 bushels
moved abroad last year, a carry-over of 7,500,000 bushels would
result. Stocks of this size would be almost four times as large as
those of the preceding season and approximately double the prewar average. However, in view of the continued world-wide
shortage of rice, it appears probable that foreign shipments will
be well above those of last season , possibly totaling as much as
43,500,000 or 44,000 ,000 bushels, in which event this season's
carry-over would be reduced to between 4,000,000 and 4,500,000 bushels.
A near-record production of rice is expected in the United
States in 1948, since the indicated acreage of 1,666,000 acres
is only slightly below the record planting of 1947. The area
devoted to rice in T ex as is expected to total 483,000 acres and
RI CE ACREAGE
(I II thousands of acres)
Arkansas .. .
Louisiana . .
Texas ....
Calirornia .
Un ited St.:lteS.
Average 1937.-4 6
240
551
1947
343
185
474
237
213
1,31 9
1.687
1,666
360
616
Indicated 1948
360
61 0
SOURCE: United States Department of Agriculture, Bureau of Agricultural
483
E OOllO lUlCS.
4
~
,
III
,
MONTHLY BUSINESS REVIEW
to be about 2 percent above that of the preceding year. The
acreage in Arkansas is expected to remain unchanged, and only
a very small decline is indicated in ' Louisiana; however, a reduction of about 10 percent is expected in the planted acreage
in California.
.,
The short-run outlook for the price of United States rice at
this time appears to be generally favorable. The tendency of
per capita domestic consumption to rise toward the prewar
rate and the prospective strong foreign demand seem likely to
provide an outlet for probable supplies that will be available
through the middle of 1949. An appraisal of the price trend,
however, should take into consideration the effect of a possible
downward readjustment in prices of other grains, which might
cause the price of rice to show a sympathetic decline.
The longer-run outlook for the rice industry in the United
States seems to indicate a probable downward readjustment in
production and some modification of the favorable relationship
now existing between the price of rice and the price of nonagricultural products. The factors bearing upon the situation
include the following:
(a) After the initial period, it is anticipated that shipments
of food under the European R ecovery Program will
constitute a diminishing proportion of the total, and,
hence, rice shipments from the United States may be
reduced somewhat.
(b) Rice producers in the United States are likely to face
increasing competition, not only from the Orient as
production is restored or increased in those areas but
also from new areas in South America and Africa which
were brought into production during the war period.
(c) If the present shortage in dollar exchange should persist,
countries importing rice and other commodities f rom
the United States may turn to sources of supply where
exchange may be obtained with greater case.
Factors which may temper the long-run readjustment include:
(a) The possibility that increasing world population and the
food deficiencies in the Oriental countries may provide
a sufficiently strong demand for rice to absorb available
supplies for a long period.
(b) The possibility thor domestic consumption may absorb
an increasing proportion of domestic production.
(c) The possibility that domestic producers m ay reduce
acreage to permit a rebuilding of the soil which was
depleted through overcropping during the war and postwar periods.
(d) The probability that the Congress will enact legislation
providing a long-range price support program for agricultural products.
FINANCE
Figures of the weekly reporting member banks in the Eleventh District showing principal asset and liability accounts
reveal an increase in total loans and inves tments of approximately $ 14,450,000 du ring the four-week period ended May
12 and an in cl'~ase in adjusted demand deposits of almost $52,000,000 in the same period. Time deposits of the weekJ y reporting member banks declined slightly, while deposits of the
United States Government increased by almost $4,000,000.
105
Although the week to week movement of these accounts was
somewhat mixed, nO important change in the underlying trend
which has been in evidence since earlier in the year was apparent.
Commercial, industrial, and agricultural loans, which represent the principal loan category of these banks, decreased during
the weeks ended April 21 and May 5 but increased by more than
offsetting amounts during the weeks of April 28 and May 12.
As a result of a series of weekly decreases in commercial, industrial, and agricultural loans early in the year followed by an
alternating movement of moderate weekly increases and decreases, the total amount of commercial, industrial, and agricultural loans as of May 12 was approximately $6,000,000 less
than the amount outstanding on December 31, 1947. It appears
that during the first four and one-half months of this year
ban ks located in the larger cities of the District have been meeting business reqllirements for fmancing by lltilizing the proceeds
of loan repayments and have avoided adding significantly to
their loan volume. The demand for credit continues relatively
strong, according to reports; but there is no evidence that business firms needing funds are unable. to meet their requirements,
provided, of course, that the essentials of a sound, bankable
credit are met.
The category " al1 other" loans, compnslllg a miscellany of
fin ance type borrowings and consumer loans, showed moderate
decreases between April 14 and May 5 but increased by about
$2,650,000 during the week ended May 12. The net effect of
these movemen ts resulted in a total of al1 other loans amountiug
to $168,764,000 On May 12 in contrast with $169,715,000 on
April 14. Since the first of the year, however, this category of
loans has increased by about $9,200,000, probably reflecting a
gradual increase in 103 ns of a consumer credit character. Realestate loans increased by relatively minor amounts during each
week between A pril 14 and May 12. As has been the case with
commercial, industrial, and agricultural loans, however, new
credit extensions for real-estate purposes appear to have only
slightly exceeded repayments dupng the four-week period
en ded May 12, and since December 31, 1947, have increased by
something less than $5,000 ,000.
CONDITI O:; STATISTICS OF WEEnY REPORTING MEMBER BANKS
IN LEADI NG CITIES-Eleventh Federal Reserve District
Item
Total loans and investment!. . .
(In thoUSlllldll of dollnrs)
May 12,
1948
. . ..... $2,187,646
Total loans . . ... . .... . .. . . ... . . . . ... . . . . . . . ... 1,021.974
Commercial, industrial, and agricultural loans.. ..
705,054
Loans to brokers and dcalers in securitiC9 . . . . . . . .
6,255
69,(iO.i
Otber loans for purchasing or carrying aeeurit iC9 . .
Real-esta t-e loons.............................
81,83 1
Loans to banks. .. . .. . . . . . . . .. . .. . . . . .. .. . . . . .
466
All other loans....... . .
. .............
168,764
Total inyestments .. ... . .
. ....... . ... 1, 165,672
U. S. Treasury bills.... . . . . . . . .............
19,582
U. S. Treasury certificates of indebtedness..
163,558
U. S. Treasury notes..... . ...... . .............
93,418
U. S. Governmeut bonds (inel. gtd . ouligutions). .
774 ,089
Other securities..... .. .......... . .. . .........
115,025
492,069
Heserves with !,'ederal Reserve Bauk
Balances with aomdtic baniul. . . . . ..
316,032
Demand deposits adjusted·..... . .
1.893,801
D~rr~g~~~ ~~~~~~e~t d~~s;ts·. ~
3~~:~~~
lliy 14,
1947
$2,070,097
812,283
539,595
7,265
7 1,6<1 2
April 14.
1948
$2, 173,195
1,010,507
607,540
6,207
55,921
72,3SG
80,74 8
376
169,71 5
1, 162,688
1,752
11 9,673
1,2.'17,81 4
40,11 5
2.16,921
118,01 3
767,04 8
95,71 7
451 ,461
287,234
1,735,272
3£j:~f
11,311
163,011
03,007
118,822
116,537
467,488
300,408
1,841,953
3~~:~~
Interbank: deposits..... . . . . .. .. .. . . . . .
53Uo}(n)()
.
542,122
531,185
Borrowings from Fedcrul Reserve Balik .
N
None
None
. Includcs all demand aeposit..'l other t han interbank and United States GovenUIlent , Icss
cash itcms reported as on hand or in prooess of collection.
Holdings of Government securities of the weekly reporting
member ban ks showed rcl atiycly little over-aIl change during
the period , rising from $1, 04 6, 151,000 on April 14 to $1,050,64 7,000 on May 12. The increase of almost $4,500,000 in holdings of Govern men t seemities was accounted for by an increase
of approximately ~8, 271 , OOO in holdings of United St.1tes
Treasury bills, offse t in part by a decrease of $4,733,000 in
MONTHLY BUSINESS REVIEW
106
holdings of United States Government bonds. During the past
year, holdings of Government securities by the weekly reporting
member banks in this District bave declined by almost $111,500,000, witb most of tbe decline having resulted from smaller
investments in Treasury certificates of indebtedness and Treasury notes.
Averages of daily figures of gross demand deposits of all
member banks in the Eleventh District showed a decline of
almost $ 32,000,000 during April, with virtually all of the decline being reported by country banks of the District whose
gross demand deposits decreased from $2,661,000,000 to $2,633,000,000, a decline of $28,000, 000 . Time deposits of tbe
country banks of the District showed virtually no change during April, wbile this class 'of deposits of the reserve city banks
of the District increased by slightly less than $5,000,000.
GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS
Eleventh Federal Reserve District
(Averages or daily fi gurc8. In Lbousuuds of dollars)
Combined total
Apnl
Groos
demand
Dat.
1946 •. .•...... 15,012,062
April
1947 .......... 4.617,549
December 1947 .....•. , .• 6,284.150
1948 .......... 5,319,138
February 1948 .......... 5,088,150
11148 .......... 6,019,4M
March
April
11148 .......... 4,987,656
January
Country banks
Reserve city banks
Time
1472.155
524,355
549,698
557,671
564,973
569,800
574,507
Groos
demand
12.5~,721
2,~8,463
2,516,849
2,527,706
2.392,425
2,357,864
2,354,485
Tim.
1300,008
330,604
342,638
349,429
355,853
357,61)5
362,306
G_
demand
Time
$2,491,341 1171.247
2,4011,080 193.751
2,767,301 ~7,060
2,791,432 208,142
2,695,725 209,120
2,661,600 212.1SS
2,633,171 212,20 1
The relatively constant level of time deposits held by member
banks in this District is also reflected by figures received from
102 reporting banks, showing only a fractional percentage decline in this type of deposit during April.
SAVINGS DEPOSITS
Eleventh
l1~ederal
Reserve DiatricL
Percen~6 change in
savings eJX)8ita {rom
Number of Amount of
March 31,
savings
Bavings
Apri130.
depositors
depo8it.8
1947
1948
- 0,9
32,845 12M55,300 - 3.5
April 30, UW8
Number of
reporting
City
banks
Louisiana.: Shreveport ....
3
Teua:
Beaumont . . . ..... .. . . .
3
Dallaa ....... ... ......
8
E1 Paso . ............. .
2
4
Fort Worth . . ....•.•.•.
GalvCti(..on .............
4
Houston ...............
8
2
Lubbock . . ..........••
Port Arthur ... .....•.•
2
s...n Anwnio ........•.•
5
3
'Vaco .......... . . . • . . .
Wicbita Falls ........ . .
3
All other . ... ... .. . . ...•.
55
6,333,080
78,M2,859
23,315,556
94,623,390
21,915,203
72,082,747
1,8.14,342
4,959,969
47,125,726
9,597,342
4,538,704
M,423,152
-IU
102
516,792 1384,937,373
Total .........
tJndicatcs change of IC58 than one--balf of one percent.
0.5
12,0.\6
137,689
35,463
42,970
23,068
105,798
1,410
6,m
38,776
10,111
6,937
63,495
1.4
-
2.2
0.3
4.4
1.8
12 .1
- 6.7
1.6
-0.8
- 1.6
1.1
-
0 .1
0 .4
1.3
1.3
2.0
t
3.8
0.3
- 1.0
- 0.6
- 0.4
- 0 .7
-
0.4
In contrast with developments of the preceding month, bank
debits in twenty-four cities throughout the District showed a
decrease during April of approximately one percent from the
total of the preceding month, while the turnover of deposits
during this latest reporting month was at an annual rate of
13.1 in contrast with a rate of 13.3 during March. Decreases
in debit figures were reported by banks in eleven of the twentyfour reporting cities, with lorgest decreases being reported from
Austin and Port Arthur, while banks in other cities showed
relatively small increases or virtually no change from the
amounts of the preceding 1110nth. Despite the decline in bank
debits reported during April, total debits exceeded those of
April a year ago by approximately 25 percent, and the annual
rate of turnover of deposits as indicated above for April 1948
compared with a rate of 11.4 for the same month last year.
DANK DEBITS, END·OF-MONTH DEI'OSITS, AND ANNUAL RATE OF TURNOVER
01' DEPOSITS
(Amounts in th0US30ds of dollars)
Annual rate of turnover
_ - -Debits- - -Pctg.chan~ oyer End-of·month
April '-larcb
April
April March
April
defroita1948
IM7
1948 Apri 30, 10~8 194R
1947
1948
City
9.1
7.8
8.6
-6
I 84,924
Arizona: Tucson . .... 1 62.016 19
Louisian:'l.:
9.8
8.4
9.5
40.410
- 4
32,213 27
Monroe ....... .. ..
10 .0
8.8
156,321
10.4
4
135,578 ' 29
Shreveport. ...... ' .
8.2
9.5
9.1
17,785
-5
13,493 13
New Mexico: Roswell.
Tens:
9.7
10.0
8.9
40,341
2
33.756 24
AbHene ........
12.0
12.4
11.8
84,797
5
86.452 ~
Amarillo ... . ..
15.4
13.1
11.9
103,133
- 13
111,769 17
Austin ......
12.5
10.7
95,072
11.9
-1
94.137 30
Bea'Umont •.....
13.1
11 .9
12.5
75,046
-3
76.348 16
Corpus Christi .....
6.1
5.2
6.6
19,333
5
10,620 29
Corsicana ... .. ....
17 .2
14 .5
698,182
17 .2
I
992.1 83 26
Dallas ............
13.2
10.9
115,414
12 .7
-4
122,819 ?:I
EIPa.............
13.3
12 .4
13.4
270,68.1
2
301,754
8
,Ii'ort Worth ........
9.5
8.2
92,137
8.8
-8
67,293 17
Galveston ... ..... .
15.4
12.2
14 .8
855.tWI
-2
Houston ........... 1,031.937 37
9.5
10 .0
23,192
10.2
12
19.150 14
Laredo . . . , ........
11 .8
10. 1
70,453
11.5
67,233 43
t
Lubbock .. ....... .
11.9
9.0
39,424
10.4
-14
34.181 18
Pori Arthur .......
8.0
9.8
9.8
37,235
30,M5 34
t
San Angelo ........
9.4
8.8
9.5
313,471
2
348,327
9
San Antonio .. . ....
7.3
7.3
22,026
8.2
10
14
15.211
Texarkanat .... . ·· .
9.7
10.2
9.0
50,753
5
42,712 34
8.9
9.8
9.0
61,926
3
~~:::::::::::::: 46,407 26 -10
8.0
8.4
7.9
77,069
4
53,513
Wichita :Falls . . . . ..
4
13.3
11.4
13 . 1
-I
13,445,028
Total- 24 cities .. .... 13.729.807 25
'Demand and time deposits at the end of the month include certified and officers' checks
oubltaodiog but exclude depoe.ita w the credit of banks.
tJndicates change of less than one--hal£ of one percent.
tThis figure includes only one bunk in Texarkana., Texas. T?tal de~iLs ,for all banks in
Texarkana, Texas-Arkansas, including two oonks located 1U the Eighth District, amounted to
125,455.
Principal changes in the condition statement of the Federal
Reserve Bank of Dallas for the month ended May 15 included a
decline of approximately $6,000,000 in earning assets, accounted for by an almost equivalent decline ill holdings of
United States Government securities, an increase of approximately $25,000,000 in member bank reserve deposits, and a
slight decline in the amount of Federal Reserve notes of this
bank in actual circulation. A comparison of the condition
statement of this bank with the statement of May 15, 1947
shows substantial increases in all major accounts. Total gold
certificate reserves reflected an increase of almost $78,000,000,
holdings of Government securities amounted to about $924,000,000 in contrast with a portfolio a year ago of $890,835,000, while Federal Reserve notes of this bank in actual circulation totaled $587,678,000 as compared with $570,481,000.
CONDITION OF THE FEDERAL RESERVE BANK OF DALLAS
(In thousands of dollars)
April 15,
May 15,
Muy 15,
1948
1947
1948
Item
1525,097
1475,931
$554,203
Total go1d certi~cate I'C8CtVe6 •••••••••••••••••
549
200
795
Diaoouote roJ' member banks . . .. . . . . . . . . ..... .
5.202
719
5,338
Foreign loans on gokl .......•.......•.•......
930.315
800,835
924,029
U. S. Government securities .... ...... .. ..... .
936.066
891,754
930,162
Tot.n.l earning Q88Cta ..................... . .. .
797.919
749.787
822,066
Member bank reserve deposita ....... . ...•....
689,143
570,481
~87,678
Federal Reserve nol.e8 in actual cireulation ... . .
MEMBER BANK RESERVES AND RELATED FACTORS
Eleventh Federal Reserve District
(In millions of dollars)
in week.! e.nded
Changes
Cumulative changes
4 weeks
ended
May 12,
1948
Item
Federal Reserve. creditlocal. . ..•.••.•.•......
0.7
Interdistrict. commercial Ii::
financial transaction! . ..
5.1
Treasury operations . . . . . .
4.8
Curreoey transacUons ... .. - 0.2
OtP!d:~rn!!e~~:huallk ..
Otber io'ederal Reserve
aecounts ..... , .... . . ..
Member bank. reserve
balances.... ,.,.. .. ....
1.3
0.7
May 5,
11148
April 28,
1948
1.1
-42.3
22 .5
l.G
-
-
-
2.2
2.1
May 12,
1948
4.9
-1.7
5.7
23.2
- 4 .7
April 21,
11148
-
5.0
3.0
14.6
-4~.9
0.1
0.1
0.2
0.1
-
65.1
3.3
-
0 .0
3.1
Jan. 1 to
May 12.
11148
-
3.7
- 26.4
- 62.2
40 .6
-
O.~
4.7
-37.3
23.1
16 .•
- 19.8
12.4
13.8
Xote: Amounl.8 preceded by a minus sign reduce reserves; all oLhers add to reservC3.
~
MONTHLY BUSINESS REVIEW
NEW MEMBER BANK
Tbe America1t State Bank, Lubbock, Texas, a newly
organized i1lStitutio11 located in tbe territory servea by
t he Head Office of tbe Federal R eserve Bank of Dallas,
opetted for business On May 20, 1948, as a member of the
Federal Reserve System and of the Feaeral D eposit Insurance Corporation.. This ba1lk has total capital fU11as of
$250,000, including capital of $100,000', surplus of
$100,000, find undivided profits of $50,000. Its officers
are: Jack Payne, President; Earl B. Collins, Vice President; and J. W. La1lgston, Cashier.
of kerosene and distillate fuel oils are accumulated in the area
cast of the Rocky Mountains. Despite maintenance of record
levels of production since August last year, national stocks of
crude oil were about 14,000,000 barrels smaller on May 1
than a year earlier. Inventories of petroleum products, although
CRUDE OIL PRODUCTION-(Bm,b)
Tens:
Total
production
Area
District 1.................
2 .. .......... . ... .
3 ............••. • .
4 ••.•........•..••
6 •.•..•.•.•.••...•
6. .• .• • . • ....•.•..
Otber 6 ........ . ..
The First State Bank, El Paso, Texas, a newly organized
nonmember bank locatea in the territory servea by the
El Paso Brancl) of the Feaeral R eserve BflItk of Dalias, was
added to the Federal Reserve Par List on its opening date,
May 6, 1948. This bank, a member of tbe Federal Deposit
111SIIYance Corporation, has total capital funds of $150,000, incl1lding capital of $100,000, surplus of $25,000,
alia U1u/ivided frrofits of $25,000. Its officers are: Paul
Harvey, Pre sidmt; H. S. Bryan, Cashier; ana E. J.
POl1drom, Assistant Cashier.
IJliDUSTRY
Daily average production of crude oil reached newall-time
peaks in April of 2,655,000 barrels in the District and 2,740,000
barrels in other areas in the United States. Total United States
production averaged 5,395,000 barrels daily as compared with
4,918,208 barrels in April 1947. The Economic Advisory Committee of the Interstate Oil Compact Commission estimates that
production of domestic crude oil and natural gas liquids must
increase further throughout 1948 and the first quarter of 1949
in order to meet all requirements. In addition, the country
must become a net importer of crude oil and its products for
the first time in a quarter century to assist in meeting domestic
needs. As the accompanying table indicates, total demand for
petroleum products IS expected to approach 6,400,000 barrels
daily during the 12 months ending March 31, 1949, as compared with 5,900,000 blrrels daily in 1947. Daily average demand during the first quarter of 1949 may exceed that of the
comparable period in 1947 by 395,000 barrels. This higher level
of consumption would require a stepping up of production of
crude oil by perhaps 290,000 barrels daily above current levels.
7b .•. ••.• . • ..•....
7c ••.•.••.•.•.•..•
8 .••••.•••...•....
9 .•• •• . •.• . .• . •••.
10 • .• ••...... . . . ..•
Total TeU8 .... . , ... .... ..
New Mexico ... . •. ........ ...
North Louisiana .. .... . . .... ..
Total Eleventh District .. . ..
Outside Eleventh District . .. ..
Demand
Gasoline. ,
Kerosene .........
Dist.illate fuel oils. ,
Residual fuel oils ..
Others . . .... ••• , ••
Total demand •• ..
Domestic demand, •...•...
Export .. . .. .... . . . ......
1,450
9'2
5.900
5,449
451
1948
2,100
435
1,320
1,580
900
2.5110
2611
820
1,400
995
2.655
240
7115
1,3110
1,110
2,480
410
1,205
1,6110
0.340
6,040
6.130
6.033
307
5,634
406
5.685
446
6.650
6,280
370
5,532
410
500
5,5iO
415
520
Supply required lo meet demand and stock: changes
5,335
5,475
Required crude P!'oduction .. 5,085
NBLural gas liqwds ..... , ... 364
395
400
JmporLB ..
437
475
475
............
ToW required supply ..... 5,880
WURCE: &onamia Advisory
6,205
Committ~,
UDS
25.780
172.235
493.186
253,290
46,990
316.870
121.390
44.4115
44.370
678.680
137,490
84.205
2.417.950
127.675
109,353
2.6114,078
2,740,386
6,395,365
310
1.776
1.132
177
2,485
-5,769
134
1,288
488
11,183
1,730
753
16,287
-1,198
1,263
16,3.12
61.570
77,923
April 1047
5,033
14.197
11.937
11.378
7.910
-16.668
9.890
7.4110
8,150
191.818
1.672
-690
252.087
24.395
13,235
280.717
187.439
471,157
VALUE OF CONSTRUCTION CONTRACTS A.WARDED
(In thousands of dollam)
April
April
1948
1947
Eleventh District-totaL.. $ 54,124
$ 43,816
Residential. . . . . . . . . . . .
19,697
17,867
All other .......... , ., .
34,427
25,949
United States·-tota1... .
873,882
602,388
Residential. .
351,604
256,658
AU other . . .
522,278
3"5,670
-37 states ea:lt of the Rocky Mountains.
SOURCE: F. W. Dodge Corporation.
March
1948
$ 50.409
20,403
30.006
1>89,763
276.541
413,222
January 1 to April 30
1948
$ 240.887
88.506
152,472
2.860,818
1,098,4113
1,761.325
1947
$ 231.195
89.074
142, 121
2,212.918 ·
1,005.359
1,207.559
The value of construction contracts awarded in the District
increased moderately in April, reflecting larger awards for
nonresidential construction, and was about 24 percent above the
level of April 1947. During the first four months of 1948,
however, the total value of awards in the Eleventh Federal Reserve District was only about 4 percent greater than during
the same period in 1947, whereas in the thirty-seven states east
of the Rocky Mountains awards were 29 percent greater.
DUIWDlG PERMITS
April 1018
2,450
337
1,028
1.475
1,000
1949
First
quarter
2,230
460
1,495
1,600
950
6,290
6,735
6.907
363
6.386
5,478
405
492
5,625
420
520
y"",
March 1948
773,(00
5,167,050
14.795,550
7,601,700
1,379,700
9,506,100
3,641.700
1,333,950
1,331,100
20,257.400
4,124.700
2,526,150
72,538,500
3,830,250
3,280,600
79.649,250
82,211 .600
161,8110,950
about 19,000,000 barrels above May 1947 levels, are small
relative to anticipated consumption during the coming summer
and winter seasons. The Committee estimates that net additions
of about 117,000,000 barrels to stocks of petroleum products
will be required during the second and third quarters of 1948
in order to assure adequate supplies at mid-winter.
(tn tbou9.1.nds of borrels--daily)
First Second Third Fourth
quarter quarter Quarter quarter
Dailyavg.
production
United States . . . .............
SOURCE: &tim.atcd from American Petroleum Institute weekly reports.
0,' DEMAND AND SUPPLY OF UNITED STATES
PETROLEUM PRODUCTS
Year
1947
2,308
301
899
Increase or dccrell3e in daily
average production from
April 1948
NEW PAR BANK
PROJECTIO~
107
350
6,350
6,442
6,505
0,375
6.665
Interstate Oil Compact Commission.
\Vinter demand, for petroleum products in 1948 probably can
be met, according to the Committee's report, only if all operations of the oil industry arc expanded promptly and large stocks
City
Louisiana:
Shrc'ieport. ••.••
Texas:
Abilene ..••• " •
Amarillo ..•...•
Austin •.. , .....
Beaumoo.t ... ...
~~~~ ~.h.r~~t.i : :
EIP""' . .. . ....
Fort. Worth .....
Galveston ....
Houston ...... , ,
Lubboek . .....
Porl Arthur •...
Ban Antonio ....
Waco .... . .....
Wie-hita J.o'aUs • . .
Tutal
... ..
~o .
Valuation
Percentage
Percentage thanga Jan. 1 to Apr. 30,1948 ch&D$e
valuation from
va.luatlon
.~pr.l947 Mar.1948
No.
Valuation (rom HJ47
362 $ 1,137,845
58
-91
110
789,180
627,146
212
412 3,211 ,325
455 1,166,317
399 1.392.321
1,646 10,053,472
140 1.094.080
747 3.696.222
426.264
230
884 7,707,340
260 1.091.739
210
244.835
1,364 2.974,666
167
874.680
86
574.955
-37
- 18
41
216
29
95
162
109
228
73
87
28
84
8S
397
14
34
44
89
-20
67
37
11 9
28
-5
21
-19
14
22
73
-22
-----7,684 $37.061,186
- 54
1,249 $ 17,569,696
391
2,072,445
3,375,970
9,239,349
3,033,096
7,661,533
36,767,466
3,640,&13
8.967,332
1,105,703
39,597,867
4,2 18,876
716,557
12,'70,151
5,051,177
1.805,6111
10
57
53
117
47
127
55
22
47
110
14
-7
80
128
206
25,413 $157,601.502
97
376
707
1,374
1,355
I,HlI
5,245
471
1,993
643
3,281
974
4&,
5,176
608
285
Wholesale prices of most building materials have changell
little during the past three months, but, as the accompanying
table indicates, prices of several important materials are con-
108
MONTHLY BUSINESS REVIEW
siderably higher than a year earlier. The combined index of all
building material prices increased about 8 percent from March
1947 to March 1948, duplicating the rate of increase of the
price index of all commodities. Prices of plumbing and heating,
structural steel, and brick and tile, which had risen more slowly
from March 1945 to March 1947 than many other commodities,
increased rapidly during the ensuing 12 months. Lumber prices,
also, increased considerably, although at a rate below that of
1947. Among important building materials, only paint and
paint materials declined in price, falling about 11 percent.
INDEX NUMBERS OF WHOLESALE PRICES OF BUILDING MATERIALS
UNITED STATES
(1926-100)
Groupe •
March 1948 March 1947 March 1046 March 1945 Mnrch 1940
AU commodities . ...... . . .
161.4
149.5
108 .9
105. 3
78.4
All building materials .... .
193.0
177 .5
124.0
117.1
93.3
Brick and tile ....... .. .
151.6
132 .4
117 . 4
110 .7
90 .4
Cement .............. .
127.4
112 .3
102.3
99.4
91.2
Lumber, .. " .... " ,. ,.
304 . 0
200 .3
167 .6
1154 .3
97 .8
Paint and paint mareriala
156 . 7
170 . 1
107 .8
106.3
87 . 2
Plumbing and heating . .
138. 7
117 .9
!lO . 1
92 .4
81.0
Structural steel. ....... .
140.4·
127 .7
120 . 1
107.3
IO .3
i
Other building materials.
159.4·
143 .5
112.3
103 ,8
92. 7
·Fcbruary 1948.
SOURCE: Dureau of labor Statistics.
The better flow of materials apparently has permitted an increase in construction efficiency during the past 12 months,
but the improvement probably has been insufficient to offset
the increases in building materials prices and in wage rates of
construction craftsmen. Reports from representative contractors suggest that costs of construction are now 5 to 8 percent
higher than a year ago.
Reflecting increased cotton production during 1947, receipts
of cottonseed at Texas cottonseed oil mills were larger during
the first 9 months of the current season than during the
comparable period of any season since 1937-38 and about dou-
ble the very low receipts of the first nine months of 1946-47.
Crushings for the period were at the highest level in a decade,
United States mill operations also exceeded substantially the •
1946-47 levels, Increased production of crude cottonseed oil, ,.
cake and meal, and hulls, resulting from the larger supplies of
cottonseed, have relieved the acute shortages of those products
which had persisted for several years. Mill stocks of cottonseed
and its products in Texas and the United States also have
been increased and at the end of April were somewhat larger
than at that time in several prior seasons. Stocks still are small,
however, when compared with either the typical prewar level or
the anticipated domestic and world demands.
COTTONSEED AND COTTONSEED PRODUCTS
April 1948
_ _ _ Texas _ _ _ _-Unitoo States- _
August I to April 30
August 1 to Apri130
This seaaon Le.st season This aeason last season
Cottonseed received at mills (tons) .. .. . 1,118,168
565,608
3,944,155
2,980,358
Cottonseed crt1!lhed (tons) . . ....... ... . 1,064,380
595,628
3,721,893
2,841,811
Cottonseed On hand April 30 (tOM) ... . .
108,216
27,234
321,790
256,253
Production of products:
Crude oil (thousand pounds). , ... . .. .
1,166,619
890,605
330,221
180,207
Cake and meal (tons) ... ... .. ...... .
1,725,662
1,252,316
279,711
601,863
Hulls (to..) ....• . ....•. . .. . . . , . .. .
242,159
132.6.'18
839.468
666.024
1,166,425
911,741
• Linters (running bales) ... ....... . .. .
353,636
203,500
SLocks on hand April 30:
14,734
13,471
2,165
Crude oil (thousand pounds). . ..... ..
4,309
127,17.
27.724
Cake and meal (tOilS). . .
23,462
92,080
H ulls (tons).. . .. . . . . . ... . .. . .. . .. .
12.815
11,996
42,084
45.869
Linters (running bales). .. . . . . . . . . .
52,081
103,800
10,835
149,342
SOURCE: United States Bureau of Ceosus.
DOMESTIC CONSUMPTION AND STOCKS OF COTTON- (B&les)
Consumption at:
Texas mills . . .. .. .. .
April
1948
13,338
829,730
United Slaws mills . .
U. S. stocks-cnd nf month :
In consuming cswbm'ts . .. 2,195 ,881
Public stg. & comprC88CS .. 2,860,277
April
1947
16,188
882,390
2.117,197
2,504,402
August 1 to April 30
March
1948
This season Last season
14.720
117,367
164,012
878,714 7,131,046
7.810,484
2.286.114
3,676,735
~
@FedFRASER