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MONGJrHL'lC

RBVIBW
FED ERA L

RES E R V E

BANK

DALLAS, TEXAS

Vol. 36, No.3

o

F

DALLAS
March 1, 1951

THE DEFENSE PROGRAM-WHAT DOES IT MEAN TO AGRICULTURAL PRODUCTION
IN THE SOUTHWEST?
CARL

H. MOORE, Agricultural Economist
Federal Reserve Bank of Dallas

Developments in the international picture resulting in the
decision of this country to embark upon a defense program
which is likely to be large and of long duration will continue
to have a profound effect upon agriculture. The importance
of certain farm commodities in a defense economy is illus·
trated by the sharp rise in prices of cotton, wool, and mohair
--commodities vital to the program of rearmament but, at
the present time, in critically short supply. Already, "agricultural surpluses" have become "strategic reserves," virtually all-out production has been requested, and problems
of labor and material shortages are arising as obstacles to
the needed increase in production.
The defense program ruld the announced policy of the
United States to take the lead in supporting the United
Nations throughout the world - even with armed forceshave changed basic economic conditions and, with them, the
broad outlook for agriculture. While forecasts of the future
are subject to many errors and frequently must be altered
in light of changing conditions, farmers and ranchers must,
of necessity, make production plans months, and even years,
prior to the ultimate harvest of needed crops and marketing
of livestock products. They cannot "wait and see." Thus, a
review of the new set of conditions occasioned by events in
Korea and their probable impact upon agriculture of the
Southwest is in order.
The Over-all Outlook

Thc broad outlook for agricultural production reflects the
probable future demand for farm products, including the
need for building reserve stocks of certain commodities, and
the problems of production, such as labor and material
shortages. The demand for agricultural commodities is close·
ly related to the levels of employment and wages in industry,
the prospects for exporting agricultural commodities, and the
food and fiber needs of the armed forces. With full employment and relatively high wages, people tend to buy
more £00.1 and especiaUy more of the so-called luxury foods,
such a., milk, meat, fresh leafy vegetables, and fruit. The
armed forces tend to buy these fooels in relatively larger

quantities than civilians, as every attempt is made to provide
servicemen with the best posi!ible diet. Thus, a larger armed
force further accentuates the demand for these foods.
Domestic Consumption

Continued full employment and some further increase in
wages and incomes during the foreseeable future are indio
cated by the economic and business outlook. So long as needs
of the defense program call for a substantial percentage of
total output of the Nation, there is little possibility that employment or incomes will decline materially. Moreover, increases in the size of the defense budget appear more probable
than decreases. Thus, this stimulant to a higher rate of indusI rial production may tend to push employment to steadily
higher levels.
In view of this outlook for full employment and high purchasing power, per capita demand for farm products is
expected to be as high as or higher than present levels. Currently (1948·50), average per capita consumplion of milk
and dairy products, vegetables, and fats and oils is fractionally lower than during the years 1935·39, but consumption
of meat is up 14 percent; poultry, 38 percent; eggs, 29 percent; turkeys, 62 percent; cotton, 10 percent; wool,S per·
cent; and fruits, 4 percent. Increases in per capita consumplion are most likely in meats, milk, fresh vegetables, and
fruits. During most of World War II, per capita consnmption
of these items was somewhat higher than present levels. More·
over, a population growth of about 2,000,000 persons annually will increase further the total demand for food and
fiber.
Military Need.

Food and fiber needs of the military program will increase
largely in relation to the increase in the number of men
serving in the armed services. Present plans call for a force
of (rom 3,000,000 to 3,500,000 men by early 1952. This
would be a threefold increase over Jnne 1950. As men·
tioned earlier, this stimulant to the demand for food will

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

30

MONTHLY BUSINESS REVIEW

be strongest for meat, dairy products, eggs, fruit, and, for
troops stationed in the Continental United States, fresh leafy
vegetables. Cotton and wool wi\! be in strong demand by
the armed services, since these fibers play a vital role not
only in clothing and housing personnel but also in the
manufacture of equipment. However, the total quantity of
agricultural products needed by the military will be small
in comparison with purchases during 1943, 1944, and 1945,
the period when lend·lease purchases were also important,
aud in comparison with the total demand. But it will be an
important factor in the demand picture, since this need will
have a high priority and, if the supply is short, civilian con·
sumption or exports (or both) wi\! be reduced.
Ex ports

Exports of agricultural commodities during the next few
years probably will be near the levels of 1948·5.0, although
changes in world conditions and in available supplies from
the United States could cause substantial shifts. For example,
under the International Wheat Agreement this country is
expected to export about 240,000,000 bushels of wheat, but
crop failures in other exporting countries or critical shortages in importing countries could make it desirable to export
a substantially larger quantity. Also, if supplies of cotton in
this country should become adequate to justify such a move,
exports of that commodity probably could be increased
above the current level of about 4,000,000 bales. Nevertheless,
no great increase in , total amount of agricultural commodities exported is anticipated during the next 5 years. Foreign
production can be expected to be stimulated by the increases
in prices of many farm products; also, if all-out war occurs,
exports of many conIDlOdities might be curtailed sharply be·
calise of lack of shipping space or inability to deliver the
goods for other I·easons.
Th e Supply Situallon

In addition to the annual needs for civilian and military
consumption and exports, adequate reserve supplies of essential commodities now are of vital importance. The Nation
therefore, should build up adequate reserves of these com·
modities as a safeguard against the possible loss in pI·oduc·
tive capacity that might occur if several years of unfavorable
weather should reduce materially agricultural outPl!t. Cotton,
wool, wheat, livestock, and many other farm products are es·
sential not only to the well·being of agriculture but as raw
materials for industry and as food and clothing that will keep
our labor force working at maximum capacity. Moreover, in
tbe position as leader in world affairs, the counh'y must have
available extra supplies for aiding friendly nations whenever
such action is deemed to be in the best interest of the
United States.
What is the situation with respect to reserve supplies of
agricultural products? In general, the supply of most agri·
cultural products except cotton, wool (including mohair),
and fresh fruits and vegetables is adequate to meet current
needs for domestic consumption, anticipated military purchases, and exports at 1950 levels. In other words, except
for the items mentioned, the needs of the defense program in
1951 can be met without reducing seriously supplies for
civilian consumption or exports. Moreover, reserve stocks,

as measured by anticipated carry-over, will provide a reason·
ab le margin of safety with respect to supplies of wheat, rice,
fats and oils, peanuts, and, to a lesser extent, feed grains.
The curren t shortage of fresh vegetables is due largely to
severe freezes and drought in major producing areas. This
situation will be corrected if spring production is at or near
anticipated levels. Supplies of fresh vegetables, as weI! as
fruits, vary from season to season, depending very largely
upon weather conditions, and even most processed fruits and
vegetables ordinarily are not carried over more than 12
months. Thus, the supply picture may change drastically
from year to year, but with favorahle weather conditions
production can be quickly increased. Stocks of processed
vegetables, although slightly below the level of a year ago,
are ample for the current seaSOn.
This does 110t mean that increased prodnction of meat particularly beef - milk, and other luxury foods, as well
as wool, cotton, and vegetables, is not desirable or needed,
for additional supplies would help to prcvent further price
increases and would permit a higher per capita consumption.
Nevertheless, it is true that our standard of living as
mcasured by the consumption of these foods is not likely to
suffer seriollsly because of military needs unless th ese need s
expand markedly.
There is, however, much more to the supply picture than
is suggested by these rather encouraging statements. Wool,
including mohair, is in critically short supply both in the
United States and in the world. Stockpiles are virtually de·
pleted in most conntries, and there is a scramble to buy
available supplies even at record-high prices.
The critical collon supply situation is indicated by the
fact that stocks at the end of this season (July 31) are
expected to be sufficient for less than 2 months' consumption
at current rates, and exports have been placed under quotas
in order to insure adequate domestic supplies. In view
of these facts, the Department of Agriculture has set a goal
of 16,000,000 bales for cotton production in 1951. This
is somewhat higher than probable average requirements during the next several years but was deemed necessary in
order to rebuild reserve stocks as quickly as possible.
Achievement of such a production goal in 1951 should permit
tbe addition of from 1,000,000 to 2,000,000 bales to reserve
supplies in the 1951·52 season.
An appraisal of the supply situation also must consider the
longer-term demand, for if future needs are likely to be
even higher than current requirements, then present reserves
should not be depleted unreasonably in meeting this year's
demand. Thus, since the demand for livestock productsmeat, milk, eggs, etc. is likely to increase, breeding
stock should not be liquidated to meet the present need_
In fact, it may be necessary to reduce current production
slightly in order to build breeding herds and flocks to even
higher levels.
Thus, it seems probable that the long-run, as well as the
short·run, national agricultural policy will be to encourage
a high level of agricultural output. Comments by government
officials and farm leaders indicate that every effort will be
made to "produce in abundance" the commodities needed
to meet civilian and military demands.

4

MONTHLY BUSINESS REVIEW
Estimated National Requirements
In order to gain a more accurate picture of the job ahead,
it is necessary to examine probable requirements in more
detail. What "high level" of production will be needed?
Total agricultural output, aided by 7 years of favorable
weather, reached record levels during the past decade, and
new "highs" were established for production of many crops
and livestock products. Any estimate of specific quantities
of a commodity that may be needed during the next few
years could easily prove to be in error as national and world
conditions change, but in light of experience during the
past dccade and best estimates of the future, the minimum
annual requirements for major agricultural commodities
shown in the accompanying table appear to be reasonable.
SELECTED CROPS, ESTIMATED AVERAGE ANNUAL PRODUCTION
REQUIREMENTS, 1951-55, AND AVERAGE ANNUAL
DISAPPEARANCE AND PRODUCTION, 1946.50

United States

31

total disappearance of the grain for any year of record,
This high requirement seems justified by the very great un·
certainty of political conditions in Asia, the major riceproducing area of the world. Currently, the United States
is the largest exporter of rice outside of the Asiatic countries
(including the Philippine Islands). Egypt and Brazil are
the only othcr non-Asiatic countries exporting substantial
quantities of the grain. Continued high production in the
United States is desirable to insure our ability to meet possible expansion in world trade of rice or to use this important food grain in aiding friendly nations.
Peanut production below average disappearance during
3 of the past 5 years is suggested, since increased output of
cottonseed oil, lard, and beef tallow as by-products of other
crop and livestock production will reduce somewhat the need
for peanut oil; and exports and consumption as food are not
expected to increase materially.
LIV ESTOCK, ESTIMATED AVERAGE NUMBER REQUIRED
1951 -5 5, AND AVERAGE NUMBER, 1946·50

Estimated
average annual

Crop
Wheat •••••••..••• . ••• •

Cotton ••••••••••••••••••

Unit

sorghums, and barley ••• •

Rice ••••••••••••••••••••
Peanuts ••••••• ••••••••••
1
I

AYerage annual

OMIK11

dlsappeargnce
1946.50 1

p roduction

1951·55

estimated
average number
required

Average
number

Item

1951·55

19.46·50

All cottle Clnd calves l ••••••••••••• •••••• •• •••••••• •
Mille cows!........... .. ..... . ........ ..... . ......

85,000,000
25.000,000
40,000,000

80,068,000
23,720,000
29,753,000

1946-50

Bushels
Bales

1,000,000,000 1,129,859,000
15,000,000
13,095,000

Tons
Sags'
Pounds

125,000,000
118,700,000
121,400,000
39,000,000
36,481,000
36,585,000
2,000,000,000 2,150,000,000 2,094,800,000

Feed grains (corn, oats, grain

United State$

Average

productloll
requirements

1,200,342,000
12,278,000

Domestic cOlUumption, including seed, military purchoses, export" and shipmenn.
100.pound bags of rough rice equivalent.

Some reduction below current levels of disappearance of
wheat is suggested, since present carry-over stocks are equal
~o nearly one·half of average annual disappearance and
exports are not expected to increase materially. The level of
production indicated would provide for current needs and
permit some further increase in reserve supplies,
Requirements for cotton are indicated at a level above
average disappearance during 1946·50, since reserve supplies
are currently very low and domestic consumption and exports may well total more than thc 13,095,000-bale average
for the past 5 years. Under the stimulus of a higher rate of
industrial activity and incI'eased military needs, domestic
consumption may average from 9,500,000 to 10,000,000 bales
and exports from 4,000,000 to 5,000,000 bales.
Produclion of feed grains above recent high levels will be
needed to build and maintain an expanded livestock production program, The 125,000,000 tons suggested also would
pcrmit the maintenancc of present gcnerally adequate reserve suppJie$ aDd would encourage a more intensive feeding
program for dairy and beef cattle_ The amount of concentrates available for these animals is an important factor in
the production of dairy products and "finished" beef. In·
crease<1 use of improved pastures would reduce somewhat
the need for grains for dairy and beef cattle, On the other
hand, production of pork, eggs, and poultry cannot make
extensive use of pastures, since about 90 percent (dry
weight ) of the rations of hogs and poultry is feed grains.
Thus, output of these products will be very directly limited
by the supply of feed grains.
Rice requiremen ts of 39,000,000 100·pound bags are larger
than annual production in any year except 1949 and exceed

Sheep and lambs S••••••••••.••••••••••••••.•.••.•

1 N umber on forms and ranches. January 1.
I Average number on forms, excluding heifers that had not freshene~
, Number of sheep and lambs shorn.

Requirements for livestock products are indicated by
referen ce to numbers of animals on farms and ranches, since
this fi gure is more generally used and since it is a more
accurate indication of production - and potential production - over a period of years, For example, new supplies
of beef in anyone year may be rather high or low, dependiog upon the degree of liquidation of breeding stock, and,
thus, not reflect accurately the actual production during
the year.
The number of all cattle and calves needed to produce
the estimated beef and veal requirements of about 12,000,000 pounds is higher than actual numbers in any year except 1944 and 1945. Such an increase seems desirable in light
of the anticipated high demand for meat, which was discusscd earlier. In fact, an even larger number may be needed,
but it is very doubtful that numhers can be increased and
Illaintained beyond this figure. Another reason for setting
the requirement relatively high is that beef cattle are being
marketed at lower weights than was true 10 years ago;
hence, more cattle are required to produce the same quantity
of beef.
Milk production from the 25,000,000 milk cows suggested
shou Id be about 125,000,000 pounds - a record high wi thout an)' increase in production per cow, Further increases in numbers may be desirable but are highly im·
probable in view of the expected shortages and high cost of
labor. Small additional increases in production per cow are,
however, quite probable as more emphasis is placed on
better feeding and breeding practices,
The Nation can use any increase in wool output that the
sheep industry is capable of producing in the next few years,
since production is curren tl ), only about one·fifth of con-

MONTHLY BUSINESS REVIEW

32

sumption of all wool, including carpet wool. In fact, the clip
from 40,000,000 sheep and Iambs would still be well below
total domestic requirements, but it is very unlikely that
numbers can be increased even to that level by 1955. There·
fore, it would be unrealistic to place the goal higher. If severe
drought or labor shortages should occur in major range
areas, some further decline in sheep numbers is possible.
However, considerable expansion is probable in the humid
areas of the Nation.
Production of eggs, broilers, and turkeys, while not listed
in the table, should be increased somewhat in order to assure ample supplies. Production of these items is already
at record levels but could be increased further within a
relatively short time if the need arises and if adequate feed
is available and the price situation favorable.
It should be recognized that estimated annual requirements, such as those listed in the accompanying table, must
be subject to constant revision as changes in the needs of
the nation require different quantities of agricultural products. If the need for fats and oils increases materially, more
oilseed production w:ill be required; or if it becomes neces,ary to provide food for additional countries, more wheat
and rice may be needed. Moreover, unusually high production in anyone year might make it desirable to shift considerable acreage from one crop to another. In fact, production of individual crops might need to be varied within
rather wide limits from year to year. Thus, the agricultural
plant must be maintained in a position of flexibility, in so
far as possible, so that it can be adjusted to the variations in
weather conditions and still be able to meet new requirements that may be placed upon it.
The Southwest's Share

During thc decade of the 1940's the Southwest produced
about 40 percent of the cotton, 14 percent of the wheat, 57
percent of the rice, 23 percent of the peanuts, 20 percent of
the cattle, 26 percent of the sbeep and wool, and 6 percent
of the milk used in the Nation. Similar ratios probably will
prevail d'ming the next few years, although changes out·
side of agriculture, such as stepped-up industrialization and
rapid growth of urban population, may necessitate the
production of a larger proportion of feed crops in the South·
west to support a growing livestock industry. This will be
especially true of dairy cattle and poultry. Also, as mechanization becomes an increasingly important factor in cotton
production, a somewhat larger proportion of the crop may be
produced in areas such as the Texas High Plains and irri·
gated sections of New Mexico and Arizona, where large·
scale operations and level terrain are favorable for wide·
spread use of machines.
Estimates of production and acreages required to meet
the Southwest's share of national requirements and the
Southwest's local needs are shown in the accompanying
table.
Figures in this table suggest that a comparatively high
level of output will be required of the Southwest. Except for
wheat, increases over the 1946·50 average production are
indi cated. In the case of cotton, the increase is substantial,
and the estimate of required output is higher than produc·

tion in all but 3 of the past 20 years and all but! of the
pa,t 10 years.
SELECTED CROPS, ESTIMATED AVERAGE ANNUAL PRODUCTION
AND ACREAGE REQUIREMENTS, 1951-55, AND AVERAGE
ANNUAL PRODUCTION AND ACREAGE, 1946·50

Five Southwestern States'
Eltirnat.d average annual
requirements,

Crop
Wheat ...•.•..•
CoHan ••••••••• •

Feed grains Icom,
oafs, and grain
sorghums) .•...

Rice ••• •••••••••

Production
135,000,000 bu.

Average annual production

and acreage, 1946·50

1951·55
Acreage'

Production

Acreage

10,300,000

163,537,000 bu.

12,410,000

6,500,000 bale, 14,000,000

4,864,000 bole' 10,505,000

7,000,000 tons 14,000,000
22,000,000 bogs' 1,150,000
840,000

6,710,000 toOl 13.360,000
20,697,000 bags 1.082.000
923.000
483,000,000 Ib5.

Pe(lnuts •....... . 450,000,000 Ibs.

1 Ari~ona. louisiana, New Mexico. Oklahoma. and Texas.
1 Based on average per acre yiel d, 1946·$01 wheat. 13.2 bushels, cotton. 221 paunds
lint, feed grains. 1.000 poundss rice, 1,914 poundsJ and peanuts, 531 pound,.
, 100·pound bags af rough rice equivalent.

Method of Arriv ing 01 These Requirements

In general, these figures represent a percent of estimated
nalional requirements, based on the Souhtwest's share of
production of these crops during 1946-50. Cotton require·
ments were adjusted upward 500,000 bales, in view of the
trend of cotton production toward the western statcs. Feed
!lrain requirements were also adjusted upward, as increased
output of dairy products suggested for the Southwest will
require additional feed grains. Some of this needed increase
in livestock feed can be provided by greater use of improved
pastures. In fact, recent studies by Texas A. & M. College
show that an acre of improved pasture may produce total
digestible nutrients (a measure of feeding value) equal to
75 or 80 bushels of corn. Also, the cost of producing 100
pounds of digestible nutrients from pastures is less than
one-third as high as the cost of producing the same amount
of feed from concentrates, largely as a result of a saving in
labor costs. The potential expallsion of feed production on
i III proved pastures is very great in the Southwest, since
considerable acreage which is now idle is well adapted to
pasture crops. Much of this idle acreage will not, of course,
produce at the high levels mentioned above, but it can add
materially to the output of feed. Moreover, these pasture
crops, if properly fertilized and managed, aid in rebuilding
soil rertility.
LIVESTOCK, ESTIMATED AVERAGE NUMBER REQUIRED
t95t ·55, AND AVERAGE NUMBER, 1946-50

f ive Southwestern States l

Item

Estimated
overoge number
required
1951-55

Average
number
1946·50

All cattle and calves' ..... ................... • . ....
Milk cows' ..................... . ..... .. ..... . . . . .
Sheep and lambs' . . ........... .. . ......... .. ... . .

16,000,000
2,500,000
, 1,000,000

14.882.000
2.242.000
9.547,000

I Arizona. louisiona, New M.)(ico, Oklghoma, and Te)(as.
, Number on forms and ronches. January 1.
AVerage number on farms. e)(cluding heifen Ihal had not freshened.
• Humber of sheep and lambs shorn.

S

Number of sheep and lambs suggested' is about 2,000,000,
or nearl y 30 percent above the 1950 level. Such a goal will be
difficult to reach and may be considered by some as undesiral,l e if m08t of the expansion takes place on the ranges. Over.
grazing in the past has reduced the carrying capacity of

MONTHLY BUSINESS REVIEW

33

PRODUCTION AND ACREAGE OF SelECTED CROPS, 1930-50

Five Southwestern States1
COTTON
Year

Production

Acreage

Bales

WHEAT
Production

FEED GRAINS

Production

Acre oge

Bu;hels

1930 ......• ..
1931. • ... •...
1932 .........
1933 .........
1934 ......•..

5,861,000
7,697,000
6,336,000
6,361,000
3,414,000

22,358,000
20,256,000
18,355,000
15,459,000
14,159,000

1935 .••......
1936 ... .. ....
1937 •..•.....
1938 .••... , . .
1939 .........

~,289,OOO

14,493,000

4,286,000
7,507,000
4,617,000
4,421,000

15,573,000
16,938,000
11,856,000
11,705,000

1940 ..•...•..
1941. ....•...
1942 ..•. •....
1943 .•• ... . ..
194~ .........

4,815,000
3,970,000
4,643,000
4,185,000
01.152,000

1945 ..••.. , ..
1946 .........
1947 ... • . ....
1948 .........
1949 ••••.....
1950 • •••.....

Acreage

PEANUTS
Acreage

7,643,000
9,263,000
7,742,000
6,271,000
6,801,000

4,970,000
7,540,000
7,600,000
",710,000
3,150,000

13,728,000
16,421,000
14,807,000
14,588,000
12,535,000

47,231,000
49,053,000
100,203,000
93,268,000

5,2 11,000
6,165,000
8,960,000
9,789,000
7,401,000

6,740,000
4,260,000
6,100,000
6,300,000
5,330,000

11,751,000
10,758,000
11,231 ,000
10,612,000
9,572,000

90,391,000
78,604,000
109,881,000
70,618,000
160,795,000

7,151,000
7,335,000
6,632,000
6,897,000
8,880,000

2,689,000
2,478,000
4,685,000
4,847,000
8,119,000

7,959,000
8,084,000
10,710,000
11,078,000
13,959,000

125,013,000
154,393,000
238,7 12,000
161,941 ,000
194,995,000

4,190,000

8,695,000

67,643,000

13,2~8,OOO

Production

Acreog.

~

100·lb. bogs

TOM

78,043,000
152,374,000
79,676,000
48,629,000
65,267,000

11 2.918,000

RICE
Produetlon

10,591,000
10,861,000

683,000
663,000
601,000
543,000
563,000

63,000,000
86,000,000
98,000,000
109,000,000
79,000,000

152,000
175,000
189,000
180,000
257,000

15,188,000
12,764,000
14,032,000
14,397,000
13,809,000

11,691,000
14,258,000
15,179,000
15,487,000
16,430,000

579,000
683,000
778,000
762,000
754,000

129,000,000
105,000,000
108,000,000
143,000,000
1 61,000,000

232'000
264.000

6,940,000
6,620,000
6,560,000
6,730,000
7;770,000

14,799,000
14,995,000
14,68-4,000
16,3-47,000
17,486,000

15,932,000
14,396,000
17,676,000
17,276,000
17,355,000

760,000
849,000
985,000
991,000
953,000

2<7,000,000
205,000,000
557,000,000

11,560,000
12,437,000
14,724,000
12,841,000
14,208,000

5,760,000
6,080,000
5,640,000
5,750,000
7,040,000

13,691,000
14,115,000
12,739,000
12,416,000
11,975,000

18,~63,OOO

18,176,000
19,529,000
22,222,000
21,522,000

983,000
1,001,000
1,087,000
1,157,000
1,136,000

421,000,000
522,000,000
51 6,000,000
456,000,000

952,000
1,000,000
1,180,000
1,070,000
693,000

7,8"2,000

9,030,000

15,575,000

22,035,000

1,026,000

~56,OOO,OOO

670,000

11,983,000
11,~78,OOO

3~9,OOO,OOO

400,000,000

~6~,OOO,OOO

2~5,OOO

312.000
388,000
~31,OOO
42~,OOO

1,122,000
1,078,000
871,000

I Arizano, lauisiclna, HeW' Mexico, Oklahoma, and leJlas.
SOURCEa United States Oepartment of Agriculture.

these pastures, and it would be a mistake to overstock again.
However, some expansion from current low levels is both
feasible and desi rabie, and the urgent need for wool dictates that every effort should be made to increase sheep
numbers to the full capacity of ranges and' pastures. Considerable expansion could be undertaken in central and
eastern parts of the Southwest.
Rebuilding dairy herds to the level of 1942-45 would meet
the requirement of 2,500,000 dairy cows. Such expansion
would be counter to the trend since 1945 but is highly
desirable in order to meet the growing demand for fluid
milk and milk products. An increase in tbe number of dairy
cattle is entirely feasible, particularly in the eastern area
of the Southwest, although it may not occur because of the
shortage and high cost of labor and the relative profitableness of beef production.
LIVESTOCK, NUMBER ON FARMS, 1930·50

Five Southwestern Stotes 1
AU catlle
and calves1

Dairy
cows'

Sheep and
lambs 4

1930 ......... .. ... ... ................. . .
1931 •. •• . .. ...• • . ..••.. .• • ••••• •. .••... . .
1932 •••••.•.. . • •... • ....•••..• . .. . • ......
1933 ............ .. .... ......... ..... .. ...
193 ...... ... ....... . .......... ..... .. ....

11,221 ,000
11.493.000
12,113.000
13.357,000
14,737,000

2,099,000
2,204,000
2,342,000
2,477,000
2,499,000

9.866,000
10,623,000
10,795,000
11,586,000
11,333,000

1935 .. ............. .. . ...................
1936 ••.•......• ••. .. ••.. .....• ••...••....
1937 ... . .. . ... . ........... .. . .... ........
1938 . ••............ ••. ..• •• .. • .. . ...•....
1939 ....... . . ..... . .................... ..

13,238.000
12,580.000
13,172,000
12.738.000
12,530.000

2,385.000
2,378,000
2,379,000
2,"13,000
2,389,000

10,677,000
11.020,000
12,479,000
12,970.000
13,020,000

1940 ..........•.. . _ . ••... ..... • •....•....
1941 .. •.•.....•• •. . •.•. .....•...... . •....
1942 ... ••......• .. . .. •.. .. .. . ..•....•....
19.43 ••..•.•...••..•.......•.•.......•....
194.4 • • •.•.....•.... . .•....•.. ..•... .•....

12,659,000
13,1 88,000
1.4,260,000
15,465,000
16,089,000

2, 411,000
2.495,000
2.615,000
2,677,000
2,666,000

13,472,000
13,809,000
13,775,000
13,734,000
13,135,000

1945 ••••.......••...•....•....•....•. .. ..
1946 ..........•. ... •• • ....•..• . •.. .. •.. ..
1947 ..•.......... .. .•• ..• .... •.•. ..• • ....
1948 •.•.......• . . ...• •.. •••.. •• •..•••....
1949 ............. . ............. .. ...... .

16,185,000
15,686,000
15,273.000
14,435.000
1",2 46,000

2,594 ,000
2,436,000
2,310.000
2,158,000
2,107,000

12,206,000
11,407,000
10,083,000
9,196.000
8,432,000

T950 ........ ..................... . . ...... 14,767,000 2,200,000

8,617,000

Year

1 Arizona, louisiana, New Me,,;Co, Oklahoma, and l exas.
t Number on forms and ranches, January 1.
I A....rage number on forms, ucluding heifers that hod not freshened.
, Number of sheep and Icmbs shorn.
SOURCE: United Stote, Deportment of Agriculture.

Meeting These Production Requirements
The task of meeting the relatively high production requirements indicated for the Southwest is complicated by
the fact that they must be met without sacrificing any potential future production. In fact, it is imperative that farmers
and ranchers lay the foundation for expanding production in
the years to come, because requirements of 10, 15, or 20
years hence may be much greater and more imperative,
from the standpoint of national safety and individual wellbeing, than they arc today.
Thus, a carefully planned program is essential to enable
farmers and ranchers to cope successfully with day-to-day
operational problems and, at the S8lllC time, maintain or
improve the capacity of the agricultural plant. The problem is accentuated by the fact that the anticipated requirements include increased acreages of row crops, which tend
to deplete soil fertility at a faster rate than solid-planted
crops.
Meeting this challenge Lo southwestern agriculture can be
achieved best through a wider application of practices and
techniques for building soil fertility, improving plant varieties, increasing the productivity of livestock, and raising the
eAiciency of farm and ranch operations. Building such a
program will require the concentrated and cooperative efrort of individual farmers and ranchers. But the rewards
are worthy of a suprcme effort because as soil fertility improves, per acre yiclds will increase, livestock will produce
more efficiently, crop failures will become less frequent,
profits will increase, and the fuhue production from the
land will become more certain.
As already pointed ouL, an essential part of tbe task is
that of coping with operational problems. This is made more
difficult because the industrial requirements of tbc defense
program will reduce the amount of labor, equipment, and
supplies that can be made available to farmers and ranchers.
It is necessary for them, therefore, to take such steps as may
be required to overcome these handicaps.

34

MONTHLY BUSINESS REVIEW

labor Shortagel

An immediate impact on agriculture, which is already becoming apparent, is the shortage of labor_ It will become
more and more acute as voluntary enlistments and draft
calls into military service takc men in the 18-25 age-group
and as others find employment in the expanded industrial
plants_ The attraction of industry is, and will continue to be,
especially strong in the Southwest as the accelerated industTialization of the area creates local labor shortages. Men
and women capable of learning a skilled trade will be
in strong demand, and day laborers and tenants will be
temptcd to move to the city or to accept employment in local
industrial enterprises. The competition from industry for
labor may be met, in part, by increasing wages or by offer·
ing day laborers and tenants more incentives in the form
of modern housing, more time off, and even profit-sharing
plans. In the longer run , however, the solution to this prob.
lem of a declining labor supply will result in more widespread substitution of macbinery for' manpower and the
application of mOre efficient work methods.
Field operations, such as cotton and vegetable harvesting,
and livestock chores which are not easily mechanized will
be particularly hard hit by the shortage of labor. But some
inereasc in mcchanization is possible even with these operat ions, and improved work methods can bring about substantial savings in labor without additional machinery or
equipment. For instance, mechanical harvesting of cotton
can be increased throughout the Southwest by community
action in planting colton varieties adapted to mechanical
harvesting, in providing necessary machinery for ginning
mechanically harvested cotton, and in providing needed
custom operators of cotton pickers and strippers for small
growers. An example of savings in labor through efficient
work methods is found in the results of research in Kentucky, where the time required for dairy chores was reduced 53 percent.
These illustrations point the way to the solution of the
labor problem. Mechanization is desirable wherever it is
economically feasible or where it is necessary to obtain
needed production. However, the fact that steel and other
raw materials for making machinery will be limited to some
extent emphasizes the need for increased labor efficiency
through more effective work methods. The better work methods, which usually can be achieved with littl e or no additional equipment, not only accomplish more efficient agricultural production but also aid in conserving critical raw
materials.
Equipment and Supplies Limited

Machinery, insecticides, fertilizer, and many supplies such
as baling wire, fence, crates, and sacks may not be readily
available at all times. Materials used in manufacturing many
of these itcms arc also used in production of defense materials; thus, allocation and shortages will complicate the suppi)' situation. While it is anticipated that essential equipment
and supplies will be provided, in view of the importance of
agricultural production in the defense effort, farmers will
find it desirablc to anticipate their needs, order early, and
purchase minimum supplies of these items well in advance

of the planting and harvesting seasons. Such action will
insure adequate supplies at the farm when needed, will tend
to fix production costs for the farmer at the beginning of
the season, and will fa cilitate national planning.
Fanners should also make plans to utilize machinery
fully, in order to lower their own production costs, and to
make most efficient use of the equ ipmcnt allocated for agricultural production. Since most machines deteriorate about
as much from age and obsolescence as from use, there
is a great nced for making full use of machines and equipment each year and for giving careful attention to their
maintenance.
Higher Costs

Increasing cash operating costs and higher capital investments necessary for operating a farm or ranch during the
next few years will create some financial problems in meeting production requirements. Some farmers will not have
sufficient net worth to warrant the extension of credit needed
to place their operations on an efficient basis_ Purchasing
new or additional eq uipment and renting or buying addi·
tional land (wh ich may be needed for efficient use of some
equipmen t) may be desirable but will also be expensive.
Moreover, the higher cash opcrating costs will take a larger
share of total income, thus a below-average crop or crop
failure could quickly reduce the financial solvency of a
farmer by greatly reducing income to a point below cash
costs.

Responsibility of Formers and Ranchers

Responsibility for success in meeting the new challenge to
agricultural production rests upon individual farmers and
ranchers. It is not enough to meet the higher production requirements by short-run methods which would eventually
decrease the productive capacity of our land. Neither is it
feasible to expand greatly the total acreage of crops, since
t.he amount of new land avai lable is limited. Moreover, in·
creased total acreage would require larger amounts of
machinery and labor- two very scarce and expensive items.
Substantial increases in per acre yields are entirely feasible
and are being obtained by many southwestern farmers. A
complete discussion of methods used by these progressive
farmers to achieve morc cfficient and profitable production
is outside the scope of this article. Agricultural scientists arc
constantly developing new and better methods, and every
farmer and rancher in the Southwest can have technical assistance in developing a program to increase yields_ A few
examples of the techniques and their results will serve to
illustrate what can be accom plished through widespread
adoption of such practices.

*

The yield of cotton on a central Texas farm where
timely and thorough early and late-season applications of
insecticides were applied was 594 pounds of lint per acre.
This compares with a yield of 178 pOl1l1ds of lint on an adjoiniJI/! field of simi lar soil and with identical care but
without any insect control measures. In 1950, community
action in the control of cotton insects in a central Texas

MONTHLY BUSINESS REVIEW

community is credited with increasing the yield of cotton
to an average of 502 pounds of lint per acre, compared with
289 pounds per acre on adjoining untreated areas.

*

The planting of a legwne crop in the rotation with cot·
ton has increased yields of lint from 50 to 100 percent. Com·
parison of colton yields on fields where cotton was grown
continuously and field s where cotton was grown 2 years out
of 3, with a legume grown on the land a third year, shows
an increase of over 100 pounds of lint per acre in favor
of the colton and legume rotation. In fact, farmers who have
tried this practice believe that it enables them to produce
more cotton in 2 years than was formerly grown in 3 years.
Corn yields have been doubled and tripled with the use
of fertilized legumes in the rotation. In 1949 and again in
1950, several farmers in the Southwest made yields of more
than 100 bushels of corn per acre by following an in·
tensive program of fertilization and the use of legumes.
Yields of 40 and 50 bushels per acre have been common
where such practices were followed.

*

In the Gulf Coast area of Texas the carrying capacity
of pastures was increased to more than two cows per acre by
draining and plowing the land and the application of 550
pounds of 20'percent superphospbate, 100 pounds of 6Q.per.
cent muriate of potash, and 100 pounds of 16·percent ni.
trate of soda, plus the seeding of White Dutch clover and
Dallis grass - two improved pasture plants.
Practical tests with fertilizer on Ladino clover, alta fescue,
and perennial ryegrass pasture mixtures in New Mexico
increased yields of dry forage per acre from 3.19 tons to as
high as 8.00 tons.

*

Topdressing rice fields with nitrogen fertilizer when
the plants are from 6 to 9 weeks old has given increases in
yields of from 5 to 7 barrels per acre. At the Rice Pasture
E.xperiment Station at Beaumont, Texas, 4·year average
)'lelds were 19.18 barrels per acre when nitrogen fertilizer
was applied, compared with a yield of 12.09 barrels per acre
on unfertilized fields.

*

In tests which covered relatively large areas of meso
quite·infested land in west Texas, control of mesquite
through the use of 2·4·5T sprays increased the yield of beef
per acre by as much as 50 pounds.

* In the dairy industry, an

outstanding alld significant

i~lu8tration of increased productivity is the average produc.

tlon per ':01\' of about 6,000 pounds of milk annuallynearly l\VJce the state average - obtained b), members of
Texas Dairy Herd Improvement Associations. These dairy.

35

men make widespread use of improved feeding, breeding,
and management practices.

*

The use of artificial lights in the poultry laying house
during the shorter days of late fall and winter has increased
egg production substantially over comparable flocks where
no artificial lights were used. In some cases, the increase may
mean the difference between profit and loss in the poultry
operation.
Feeding a protein supplement to balance a ration of
corn or grain sorghums results in a saving of 70 pounds of
feed per 100 pounds of pork produced. Pastures can also
increase the efficiency of swine production by reducing the
amount of needed grain and concentrates by as much as
20 percent. Measured in quantity of feed, this saving would
amount to 1,000 pounds of corn and 400 pounds of tankage,
or its equivalent, for every acre of good pasture.

*

*

A test of the ability of soil to absorb heavy rains and,
thus, prevent erosion of topsoil and disastrous floods was
conducted near Fort Worth, Texas, in the spring of 1949.
In these tests it was found that land upon which a deep·
rooted legume had been growing for 2 years absorbed water
at the rate of 7 inches per hour, although a lO·inch rain
had already fallen upon that area. In contrast to this high
rate of water absorption, a field upon which sudan grass
had been growing became almost completely saturated after
the application of 1 inch of water and sbowed a rate of abo
sorption equivalent to about one·fourth of an inch of rain
per hour.

*

In the range areas of west Texas, New Mexico, and
Arizona, one of the practices recommended for conservation
of range feed is deferred grazing. Ranchers have found that
trus method not only permits the re-establishment of desir·
able grasses and conserves moisture but also produces more
beef per acre than continuous grazing.

J t does not take a great deal of arithmetic to determine that
widespread application of the practices that have been
discussed above would enable southwestern agriculture to
meet with ease the production requirements suggested earlier.
Tt is true that the application of these practices will not
always bring forth the results described here. On the other
hand, many farmers and ranchers already are obtaining
far greater increases than those which have been described.
Full use of improved production methods, such as these, not
ollly will make it possible to meet current production require·
ments but also will stop the decline in soil fertility and reo
build soils of the area to an even higher state of productivity.
Such a program is the quickest route to higher yields, offers
the greatest opportunity for profit, and will provide the most
permanent improvement in southwestern agriculture.

36

MONTHLY BUSINESS REVIEW

REVIEW OF BUSINESS, INDUSTRIAL, AGRICULTURAL, AND FI NANCIAL CONDITIONS
Business and industry in the Eleventh
Federal Reserve District were unusually
active in January and into February,
despite a few sethacks caused by crippling weather conditions_ While the influence of the defense
program became a little more apparent in the area's economy, the high level of civilian demand, intensified to some
extent by the expected effects of the defense program, continued to be the prime spark to business activity_
Consumer bu ying in the District continued strong during
February, although unfavorable weather caused sharp dips at
the beginning and middle of the month. January buying was
very heavy, with district department store sales showing a
28-percent increase over a year earlier, the largest yearto-year gain for any month since last July, when war-scare
buying was at its peak. While particular interest continues
in items expected to become in short supply, the heavy
consumer buying has been extended to most lines-women's
apparel and other soft goods, as well as hard goods. Merchants' inventory buying increased markedly in January,
with department store orders outstanding at the end of the
month up 52 percent from the year earlier and department
store stocks 27 percent higher. Sales at district furniture
stores in January were 9 percent higher than in the corresponding month of last year, which contrasts with the
noticeable year-to-year declines during the fourth quarter
of 1950, following the imposition of Regulation W.
Although nonfarm employment in Texas was down about
1 percent from December to January, this decline was only
about half as large as usual for this time of year. A rise
in manufacturing employment, particularly in the aircraft
industry, partly offset the drop in trade and service employ.
ment.
Texas oil allowables were suddenly raised at mid-January
to meet the heavy demand occasioned by the coldest weather
in the Nation in several years_ A further increase in allowabies was announced for March, with production for that
month expected to equal the record high of September 1950.
Construction contract awards in the District in January,
although down somewhat from the high December total,
were 65 percent greater than a year earlier. Residential
awards were buoyed by fears of further building restric·
tions, reaching the second highest level on record. Although
nonresidential awards dropped sharply, due in part to a
freeze instituted near the middle of the month on new commercial construction, two of the larger industrial projects
in recent years for this District were announced-an aluminum plant in the Corpus Christi area and a steel plant at
Daingerfield, Texas.
Severe cold weather, accompanied by sleet, ice, and snow
ill many parts of the District during the past month, seri-

ously damaged commercial vegetable crops and citrus fruits
and caused some losses to livestock. The additional moisLUre, however, helped alleviate somewhat the severe drought
conditions prevalent in many areas. Prices of farm com-

modities continued to advance, with prices of many commodities now at record high levels.
Deposits of district weekly reporting member banks in
the 4-week period from Januar y 17 to February 14 declined $108,318,000, due largely to a shrinkage in interbank
deposits. To meet these withdrawals and the higher reserve
req uirements, hanks drew down balances wi th other banks
by 8l,929,OOO and reduced investments in United States
Government securities by $47,348,000. Commercial, industrial, and agricultural loans, as well as real estate loans,
turned down after having shown a sharply rising trend
since last June. The small decreases, however, were offset
by moderate increases in other loan categories and, as a
result, total loans on February 14 were near the all-time
record level of January 31.
Cons umer buying in the Eleventh Federal Reserve District in FebTllary continued to be characterized by strength,
allhough sleet, snow, and ice over many
parts of the area sharply curtailed buying at the beginning
and near the middle of the month. Advance buying of items
likely to become in short supply continued to be evident,
although this type of huying had toned down somewhat
from the high January level. The imposition of the price
freeze in late January may have heen responsible for modera ting this anticipatoI'y buying, since the substantial rise
in prices durin g the past several months has been a factor
encouraging consu mer buying.

J auuary sales at retail stores in the District were unusuall) high for that Lime of year. Department store sales,
which were 28 percent higber than a year earlier, showed
the largest year-to-year gain for any month except last July,
when war-scare buying was at its peak. This outstanding
sales record at district department stores was either matched
or exceeded by department stores in many other sections
of the country and was almost the same as the national
average increase. The extremely heavy January sales, COllling on top of the record-breaking December volume, were
achieved despite a relative thinness in the seasonal clearance
sales and a conspicuous scarcity of genuine "bargains_"
The markedl y rising level of consumer income bas contributed significantly to the high level of retail sales in
I'eeent months. Personal income for the Nation in December,
the latest month for which data are available, was over 15
percent higher than a year earlier, according to Department of Commerce figures. The increase in income in this
District probably showed a comparable gain_ Furthermore,
individuals have tended to spend a larger proportion of
their income, and a substantial number have even dipped
into their savings as a means of buying. Then, too, credit
has played a part, as instalment buying picked up noticeably
in December and January, despite the tighter credit terms
prevailing under Regulation W.
The heavy consumer buying of January, unlike the warscare buying of last summer, extended to most lines of

MONTHLY BUSINESS REVIEW
WHOLESALE TRADE STATISTICS

37

appliance sales, after having shown year-to·year declines in
the preceding 3 months, in January were 9 percent higher.

Eleventh Federal Reserve District
(Percentage change)

NET SALESp

STOCKSl p

JQnl.lory 1951 from

January 1951 from

Jan.
1950

Dec.
1950

Automotive supplies.. ••••• ••.•.• ......
Drugs and sundries... . . . . . . . . . . . . . . . • .

90
18

-12
24

Dry good'...... ........ .............

34

79

20
20

-1

27
54
71

12
40
14

16
23
30

15
10
16

28
10
.4

_ 14
-12

2
72
64

line of trade

Grotery (full· line wholesalers not
sponsoring groups]. .. .............. .
Hardware... . • • . . • . . . . • . . • . . . . . . . . . .
Industrial supplies... • • • . • • • • . • • • . •• • • •
Machinery equipment and supplies .):capl
electrical.. . • . • . • . • • • • . . • . . . . . • . . . .
Tobacco products... ....•..•.. ...•...•

Wines and liquors....................

Jan.
1950

-42

Dec.
1950

,

_

5
2
70

1 Stocks at end of month.

p-Prt>lim'nary.
, Indicates change of leu than one·half of 1 percent.
SOURCEl United States Bureau of CensUI.

RETAIL TRADE STATISTI CS
(Percentog. chongel
NET SALES

OEPARTMBH STORES
TOlol Eleventh District ••• •••• •••••••••••••••••
Corpus Christi •.. •••• . •••••• •• •• ••••••• . ••.•
Dallas ••••••••••••••..••••••••••••.•••••••
Fort Worth •••••••.•••••••••••.•.••.....•••
Houston ••••• •• .••••••••••••••••••••••. , •••
San Antonio •••.•••••••• , •••• , •••••.•.••••.
Shre ....eport. Lo .•• •••••• •••••••••••••••••••••
Other dtles ••••••••••••••••.•••••••••.• , ••
FURNITURE STORES
Total Ele.....nth District •••••••••••••••••••• •• ••
Austi.......................................
OCIlla ••••••.••••••••••••••.•••••• • ••••• •• •
HOu5ton ••••••••••••••••••••••••••••••••• • •
Port Arthur ••••••••••• • •••••••••••••••••.••
San Anlonio •••••••••• • ••.•••••••• • • •• ••••.
Shr ...... port. La .••••••••••••••••••••••••• _•••
Wichita Faits •••••••••••••••••••• • ••••••••••
HOUSEHOLD APPLIANCE STORES
Tolal Eleventh District ••••••••••.••••...•••••.
Dallas •••• • ••••••••• •• ••. • •• • •• • ••••••• _ ••
I

Jon. 1951 from

Jon_
1950

line a. trade
by area

STOCKSl

Jan. 1951 from
Dec.
1950

Jon.

Dec.

1950

1950

28
13
33
28
31
21
20
27

-46
-57
_42
_46
_49
_40
_54
-48

27

6

30

6

9
9
9
3
7

-29
-37
-16

42
79
72

3
2
5

-17
-33
-37
-25

29
31

- 14
22
3

-14

-

4

4
2
- 25 - 10
24
32
27

_44

-

-

1
11
1

2
4

-34
-22

Stocks 01 end of monlh.

INDEXES OF DEPARTMENT STORE SALES AND STOCKS
(1935·39 - 1 001
UNADJUSTED
Area

Jon.
1951

SALES-DoilY average
Eleventh DistrIct ••••••••••.• 375
Dollos •• ••• • ••.•• • • • •••••• 371
HOulton ••••••••••. •••.• •• • 3BB
STOCKS-End of month
Eleventh District •••••••••••. 411p

ADJUSTEOl

Dec. Nov. Jon.
Jon.
1950 1950 1950 1951

Dec.

Nov.

Jon.

1950 1950 1950

711
643
794

472
446
527

313
291
3"3r

475
452
497

433
407
499

400
369
435

396
355
.... Or

395

495

32B

442p 430

446

353

1 Adjusted for leolOnol variation.
r-Re . . ised.
p-Prellmlnory.

trade. Although the buying emphasis was apparent in hard
goods lines, which it was feared might become in short
supply, a heavy volume of buying also occurred in women's apparel and other soft goods. Among district departmel1t stores, the domestic floor coverings and furniture
departments made the most outstanding showing, with sales
in each of these departments reaching all-time peaks, 46
percent and 24 percent, respectively, higher than the year
carlier. Meanwhile, television sales continued strong, with
sales of the television, radio, and phonograph department
51 percent higher than the year-earlier level. Major household

Women's apparel sales, which had been making only a
fair showing during the past several months, rose markedly.
Sales of women's and misses' coats and suits, and also of
dresses, during January showed an unusual contraseasonal
increase from the December level and were 35 percent and
11 percent, respectively, above a year earlier. Women's
accessories sales registered a 26-percent year-to-year gain,
while men's clothing sales continued very strong, 19 percent
higher than in January 1950_ Basement store sales, after
making an irregular showing during the past 6 months,
rose 17 percent over a year ago. Moreover, silverware and
jewelry sales, indicative of the wide scope of January consumer buying, were 34 percent higher than a year earlier,
All types of department store sales - cash, charge, and
instalment - in January showed large year-to-year gains,
although each was down seasonally from its December high.
Charge sales were 32 percent higher than a year ago, instalment sales were 16 percent higher, and cash sales, 15 percent higher. Collections were up, in line with the usual
seasonal pattern, and receivables were down_ With Regulation W continuing to restrict growth of instalment credit,
instalment receivables outstanding on January 31 showed a
smaller increase over year-earlier levels--46 percentthan in any month during the past year_ Charge account
receivables at the end of January were 20 percent higher
than on the same date of last year.
The large volume of consumer buying in January was
accompanied by heavy inventory buying on the part of
merchants. Orders outstanding at district department stores
rose 29 percent during January and at the end of the month
were 52 percent higher than on the same date of last year.
This increase represents protective buying for inventory in
anticipation of difficulties in obtaining some goods, further
price increases, and lengthening delivery schedules.
Department stol'e stocks, in the aggregate, showed a moderate increase during January and at the end of the month
were 27 percent higher than a year earlier. In relation to
t.he recent heavy sales volume, stocks at present do not
appear to be unduly high, and part of the increase in
sLocks merely reflects the higher prices now prevailing.
Nevertheless, some merchants are reported to be concerned
over their sharply higher stock position, although merchants
generally feel that the present economic outlook justifies
the mruntenance of a heavy stock position.
Sales at district furniture stores in January, although
down seasonally from December, rose 9 percent over the
year-earlier level. This marks the first year-to-year gain
sillce last September, when instalment credit controls were
reimposed. Cash sales continued to show greater strength,
with a 17-percent increase over January a year ago. Credit
sales showed a year-to-year gain of 8 percent, as compared with declines in the previous 3 months. Accounts
receivable, after a moderate increase in December, showed
a small decline in January and at the end of the month were
only 8 percent higher than the year previous_ Meanwhile,
furniture store inventories, which had shown a small temporary declinc in December, resumed the upward trend

38

MONTHLY BUSINESS REVIEW

wbicb had been evident since the outbreak of hostilities in
Korea. Month·end stocks were at a record high , 3 percent
above those in December, and 42 percent higher than a
year earlier.

The extremely variable weather of the
past few weeks interrupted field work
and caused further damage to crops, but
th e accompanying moisture has been
very beneficial. In some eastern sections, winter cover crops
and grasses have made favorable response to the improved
moisture supply; also, preparation of land for spring plant·
ing has made progress. Throughout most of the western
hal f of the District, however, the drought of past months
continues unabated. The wi nter wheat crop is showing some
signs of improvement in parts of the Northern High Plains
where snows were received, although many fields appear to
have been damaged by cold weather. Deterioration of the
crop continues in the Low Rolling Plains and northcentral
counties of Texas, where the cold has caused further dam·
age to limited stands of drought·weakened wheat. Fall·
seeded oats and barley are expected to be a total loss. The
flax.growing areas in Texas have been without moisture for
months, and no acreage of the crop is expected this year.

Ranges and livestock in the District are in fair condition,
cons iderin g the lon g droughty period and the low tempera·
tures of recent weeks. Range feed is short in central and
west Texas and virtually nonexistent in the Coastal Bend
and south Texas areas. The condition of all range feed in
Texas was reported at 69 percent on February 1, compared
with 82 percent a year ago. There has been considerable
feeding of cattle and calves for some time, and supple.
mental feedin g of hay and cake was stepped up during the
cold spells. Shrinkage of cattle is heavy, but actual death
losses have been comparatively light, with deaths limited
mostly to some newbo rn calves in western areas and to
cattle weakened by the effects of freezing rains in south
and southeast Texas. The condition of cattle in Texas on
February 1 was reported at 77 percent, compared with 84
percent a year earlier. Sheep and lambs apparently survived
in goo d condition the extended drought and cold weather
of this winter. Dry feed on the sheep ranges has been sup·
plemented with hay and concentrates. Demand for breeding
stock continues heavy.
LIVESTOCK RECBPTS
(Numb.r)
FORT WORTH MARKET

Clau

Over· all production prospects of Texas commercial vege·
tables for winter and spring harvest were drastically reduced
by the January and February freezes. This is confirmed by
recent reports showing very light movement of vegetables
from the commercial areas. The volume of cabbage and
lettuce shipped durin g the 2 weeks following the freeze was
negligible, but considerable tonnage of carrots was moved,
mostly in bulk. Spinach has been moving in small volume
from the Eagle Pass and Winter Garden sections. The small
acreage of spinach at Laredo is in fairly good condition.
The onion crops at Lal·edo and Eagle Pass and in the Winter
Garden area suffered some damage, with both the quality
and yields being lowered. The Lower Valley potato crop was
cut back to the ground, and the tomato crop is a total loss.
Strawberries in the early sections that had prospects for
midwinter production are now expected to have only an
carly spring harvest.
The Texas citrus harvest sustained severe damage from
the cold wave which struck the Lower Valley on January 29.
Temperatures remained continuously below freezing for
64 hours and, except for about 5 hours at 35 degrees, were
below freezing for 92 hours. Some sections hl!d a low of
18 degrees. Loss of young citrus trees is expected to be
extensive, and wood damage to older trees probably is
serious. The lrees had started to bloom, and this new bloom
and buds were killed. Production of Texas grapefruit for
the current season is now estimated at 8,800,000 boxes, com·
pared with a prefreeze estimate of 11,000,000 boxes and last
season's crop of 6,400,000 boxes. About 6,000,000 boxes had
been utilized prior to the freeze, and the quantity of the
remaining fruit that will be utilized is somewbat uncertain.
The Texas orange crop is now estimated at 2,700,000
boxes, compared with an earlier estimate of 3,000,000 boxes.
About 2,400,000 boxes of oranges were harvested before
the freeze.

Cottle .. .... .. .•
Calves ......... .
Hogs •••••••••. •

Sheep ..........
1

SAN ANTONIO MARKET

Janvary
1951

January
1950

December

January

January

1950

1951

1950

41,294
20,530
94,714
31,587

30,562

31,897
20,637
72,970
23,144

30.685
30.166
8.473
110,0.40

24,306

15,049

63,277
25,5.46

15,834
7,945

116,06j

December

1950

19,254
20,915
7,168
'9,186

Includes goats.

Commercial meat production in Texas in 1950 totaled
about 805,500,000 pounds, or 5 percent more than in 1949,
according to the Bureau of Agricultural Economics. Cattle
slaughter, on a live·weight basis, was 770,000,000 pounds,
up 13,000,000 pounds over 1949. Calf slaughter totaled
353,000,000 pOllnds, up slightly. Hog slaughter, estimated at
376,000,000 pounds, was up 60,000,000 pounds. On the other
hand, slaughter of sheep and lambs amounted to 48,000,000
pounds, or slightly less than in 1949.
The United States Department of Agriculture has
announced price support for corn, oats, rye, barley, and
grain sorghums in 1951. Each of these commodities will be
supported at the same percent of parity as in 1950, altllough
the rate in dollars and cents was increased more for corn
than for other grains, because of revisions in parity formula
provided in the Agricultural Act of 1949. Loan maturIty
dat.es are the same as in 1950, but these dates may be
advanced or loans called to meet any foreseeable emergency
conditions which may arise.
The Government instituted price controls on a number of
farm commodities in late January. These controls apply to
prices of farm commodities after they leave the farm, as no
effort is made to control directly the price which the farmer
receives for his products. The original order became effec·
tive immediately on products which were selling above
parity, such as beef, lamb, veal, and rice. Prices of many
products which were selling below parity were to be permitted to )·ise to the parit), level. Fresh fruits and vegetables
were among those exempt from control. In February, how·
ever, controls were lifted from butterfat, chickens, eggs,

c

39

MONTHLY BUSINESS REVIEW

turkeys, milk, wheat, and many other commodities which
were selling below parity.
FARM COMMODITY PRICES
Top Prices Paid in local Southwest Markets
Comparable Comparabl.

Commodity and market

Week ended
week
Febrvary 22 lost month

Unit

COTTON, Middling 1 S / 16-ilKh. Dolles ....
WHEAT. No.1 hard, Fort Worth •••.......
OATS. No.2 whil., Fort Worth ••....•••••
CORN, No.2 yellow, Fort Worth •..... •••
SORGHUMS, No.2 yellow milo, Fort Worth
RICE, No.1 PCltno, milled, Houdon ••.•...•
HOGS, Good & (Mice, Fort Worth •.•...•
SLAUGHTER STEERS, Choice, Fort Worth •.•
SLAUGHTER CALVES, Choice, Fort Worth ••
STOCKER STEERS, Choice, Fort Worth •.•.•
SLAUGHTER LAMBS, Good & Choice, Fort
Werth ••.••..••.•..••.••.••••••••••
FEEDER LAMBS, Fort Worth •••••••.•.••••
HENS, 3-4 pourlds, Dollo~ .•••••.•••••••
FRYERS. local, Dallas •••••.•••...•••••••
TURI(EYS, No.1 hens, Dalles •••••.•..••••
EGGS, No.1 infertile, Dallas ••••••.•.•••
WOOL, 12·months, controct. west TellOol •.•
MOHAIR, kid, controct, we~t Texas •...•.••

(,)

lb.
bu.
bu.
bu.

$

2.761A
1.22~

$

..... 50
2.63
1.16*

2.03*
2.70
112.00
23.75
37.00
36.00
41.00

cwl.

cwt.
cwt,
cwl.

cwt.
lb.
lb.
lb.
lb.
lb.
lb.

*

3..00
3 •.00
.18
.27
.32
..5

' 1.50
s2.30

cwt.

2.65
11.75
21.25
35.00
35.00
35.00

38.50
37.50
.22
.28
.32
.48

cwl.
cwl.

i1.45
i2.20

1.91

we.k
10 It year

2 .• 5
.97
2 .• 5
17.75
28.00
27.00
26.00
26.00
25.50

.18
.28
.30

Arizona,l.oulslana. New

Mulco.o~rohomo.

ond TUGS

Jonnrt I 01 nch ytt r

'"20

~CQII!.

CASH RECEIPTS FROM FARM MARKETINGS
(In thousond. of dollars)
Cumulative rec:eipts
Jonuory-November

Stole

1950

1949

...rizono • •• •••••...••. .•• ..• .
louisiana •••••.•........•....
Hew Mexico •.••...•.... •. •••
Oklahoma •••.•....•..•••••••
Texas • . ••..••..•.•..••.••. .

$ 41,930

$ 37,185

62,853

51,744

38.252

171,650
485,4.45

287,994
171,967
554,221

345,752

34.152
61,007
310.269

1,798,685

1.809,687

Total •••...•..•.•.•.•.•..•

$554,626

$494,357

$2,963,674

$3.035.116

65,839

NUMBER OF CATTLE. SHEEP. AND HOGS
1111o",

Farm commodity prices ill the Southwest have continued
to rise, reRecting the strong consumer demand for food,
as wcll as other factors. Most grains are selling on the Fort
Worth market at Ihe highest prices since 1949 or earlier.
Livestock are bringing record high prices, with the excep·
tion of hogs whirh are selling at very high prices for this
season of the year. Wool and mohair contracts have sold in
Ih c Southwest in recent weeks at the highest prices on
record. The rice markets a re holding firm at relatively high
levels; occasional price advances are reported. Poultry have
made only minor increases in recent months, while eggs are
selling at seasonal lows. Operations on the cotton markets
were virtually suspended when price controls were inaugu·
rated and in latc February the Exchanges were still posting
no quotations as they awaited clarification of the control
orders.

1950
$

Cattle numbers increased 8 percent in Texas, 7 percent in
the five states, and 5 percent in the United States last year.
Cattle numbers in the five states, which declined between
1945 and 1948, had increased to a total of 15,715,000 head
on January 1, 1951. This number is only slightly under the
all·time high of 16,185,000 head on January 1, 1945. Most
of the increase in cattle numbers in the southwestern states
during 1950 was in the numbers of beef cattle, as the number of milk cows increased only about 1 percent. Expansion
in bcef cattle raising in the Southwest, as in other parts
of the country, was strongly cncouraged during the past 2
years by favorable cattle prices. However, the recent drought
over much of the Southwest has undoubtedly served to
retard expansion.

.85

1 Morkeh closed pending clariflcation of price central orden.
2 Week ended February 12.
I Week ended February 3.
j Week ended January 27.

November

goats, while numbers of horses and mules continued to
decline.

1949

22.,309
283,585

$211.247

SOURCE: Unit.d Stoles Deportment of Agriculture.

Changes in Numbers of Livestock on Farms in the
Southwest in 1950
Livestock numbers on farms in the five southwestern
states lying wholly or partly within the Eleventh Federal
Heserve District incrcascd 5 percent during 1950, the same
percentage recornerl for the United States; the increase in
Te"as \las 6 percellt. This was the second consecutive year
in which livestock numbers in the Southwest expanded;
increases occurred in numbers of cattle, sheep, hogs, and

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

~-

::::;;::, ...
=

,

···r···· ............
/

'""1

~

.....1

...... "'-........................

Io

7
~·-r-r-r~· ::j T-T-·-i-·-r-·,·_· _._.
1939

1941

194J

194>

1947

1949

5

..

,

Sheep numbers in the five southwestern states increased
·t percent during 1950, reaching a total of 9,181,000 head,
which compares with a peak of 14,384,000 head in 1943.
Much of the increase last year l·esulted from the 5-percent
increase in Texas. Numbers in the United States rose 2 per·
cent, the first increase in 9 years. Stock sheep numbers
increased 4 percent from the all·time recorded low on J anuary 1, 1950. The large holding of ewe lambs last year will
provide sufficient replacements to continue an upward trend
in sheep numbers during 1951. Texas had a relatively large
lamb crop in 1950 as conditions were generally favorable for
lamb production.
The number of hogs On farms in the five southwestern
slates, estimated on January 1 at 3,365,000 head, remained
virtually unchanged, despite an increase of 5 percent in
Texas. Indications of immediate expansion in hog raising
in the Southwest are noted in the increase over a year ago
of 6 percent in numbers of sows and gilts; the comparable
flgllfC in Texas was 13 percent. Hogs on farms in the
United States continued to increase during 1950, heing up
7 percent from a year ago.
The number of goats in Texas on January 1 was estimated
at 2,433,000 head, which indicates the first increase since
1944 and reflects the recent heavy demand for replacements,
.li mulated by tllP record high prices of mohair. The number
on farllls in the Stale at present is still considerably below
Ihe record 3,4,65,000 head on January 1, 1942.

MONTHLY BUSINESS REVIEW

40

LIVESTOCK ON FARMS, JANUARY 1
Texas, Five Southwestern States1 , and United States
(1,000 head)
Five souttIwesfem

states l

Texas

Class

1950

Horses and colts . •......
Mules and coltl .... ... .•

352
139

All cattle and calv ••.. •.
Milk cows' ..... . ... ..

8,574

1951p

United States

1950

1951p

324
120
9,260
1,309
1,786
261
7,119

816
294
14,658
2,368
3,364
496
8,827

759
265
15,715
2,402
3,365
527
9,181

1950
5,27A

2.149
80,052
24,573
60.502

1951p

',763
1,990
84,179
24,579
65,028
11 ,107
31,505

All shtUlp and lambs . ...

1,283
1,701
230
6,756

Ewes one-year old and
ovllr 4, ••••••••••. •

4,335

5,887
2,295

2,433

20.757
2,295

21,059

2,295

4,508
2,433

6,014

Goats' ............... .

Total obon specie•. . .

19,817

21,042

30,254

31,718

18 1,015

189,898

Chickens' ••..... .......
Turkeys ••••••••• •• •. • •

27,834
755

25,884
755

45,258
920

42,728
934

480,834
5,986

466.686
5,975

Hogs, including pigs .. ...
Sows and gills~ ••• • •. .

10.715

30.743

2,433

1 Arb.ana, louisiana. Hew Mexico, Oldahoma, and Texas.
2 Milk COWl included in "All cottle and calves."
a Sows and giltl induded in "Hogs, including pigs."
t Ewes one-yeor old and over included in "All sheep and lambs."
S Goat numbers are shown for Texas only, since estimates for other sloles are not available
and most of the gooh are on ranges H1 Texas .
, Ooes not include commercial broilers.
p-preliminory.
SOURCEI United Stotes Oeportm ent of Agricultvre.

The number of chickens, excluding commercial broilers,
on farm s in the five southwestern states, estimated on January 1 at '4,2,728,000. reflects a decline of 6 percent during
1950; this is the small est number reported since 1938. For
several years there has been a sh ift from production of farm
chickens to commercial broiler production, although the
increase in broiler production for the past several years has
more than compensated for the decline in raising of chickens, The number of chickens on farms in Texas and in the
United States also declined in 1950, Turkeys reported on
farms in the five states in 1950 totaled 934,000, or only
sli gh tl y ahove the number of a year earlier ; no change was
reported ror Texas. while United States numbers declined
2 percent,

In meeting deposit losses and to provide funds for other
purposes, the weekly reporting member banks withdrew ill
381.929.000 from their halances with other banks and 11
reduced inveslmellts in United States Government securities
by $1,7.348.000, Althou gh hi gher legal reserve requirements
became effective for these banks between Jan11ary 11 and
February L reserves with the Federal Reserve Bank were
reduced b) 87,027.000 during the 4·week period. Liquidation of Governments was confined to Treasury bills and
notes, as holdings of bonds rose $4,662,000. Sales or
redemptions of Treasury bills amounted to $28,342,000,
\I hile investmen ls in notes were reduced 823,668,000. In
co ntrast \I ith Ih e decrease in Governments, holdings of
municipal and other securities rose further by $4,043,000.
On February )1 investments in these securi ties amounted to
161.:~4.,\.000, or 13.4 percen t of total investments.
CONDITION STATISTICS OF WEEKLY REPORTING
MEMBER BANKS IN LEADING CITIES
Eleventh Federal Reserve District

lin thousands of dollars)
February 1"', February 15, January 17,

1951

Item

1950

Total loans (gross' and investments .•.......•. $2,698,472
Totolloans-Net1 •••••• ••••••••••• • •• •• •
1,479,409
Tofolloans-Gross •...... .. .. . ...... . . . .
1,494,082
Commercial, industrial, and agriculturo[
1,041,034
loons ... • •....................... .
loons to brolilln and dealen in securities . .
8,060
Other loans for purchasing or ca rrYing
securities .. ........•......... _ .. ...
5.4,"02
Real estate IocIns . ........... ... ......
121 ,473
lQans 10 banks ........ . ........ ..... .
1,256
All other loons . ...... • ...... . .... .. ..
267,857
Totol investments . .. •.... _ . .. ... ........
1,20 ",390
U. S. Treasury bills . ..................•
78,422
U. S. Treasury tertiflcates of Indebtedness . .
0
368,779
U. S. Treosury notes .. . . ...... .. .......
U. S. Government bonds {inc. gtd.
59S,8.t6
obligations) •.. .....................
161,3.43
Other securi'ies .•.. ... .. . .............
Reserves wilh Federal Reserve Bank •. ....... .
556,577
8alances with domestic banks ..•.•. ..........
3" 2,3 80
Oemond deposits-adjusted 1 • • •••••• •• ••••••
2,228,48 8
Time deposits e;w.cepl Government .•. _ ... . ....
"19,052
United States Government deposits .. __ .. . ... .
63,456
,"terbank demand d e posils .................
715,808
Borrowings from Federal Reserve Bank ... _ ....
0

1951

$2,554,718
1,189,920
1,201 ,382

$2,736,06.5
1,473,780
1,488,370

845,391
5,346

1,041,750
8,314

48,091
94,913
79
207,562
1,353,336
101,270
318.551
137,136

52,0 41
121,887
225
264,153
1,247,695
106,76.4
0
392,447

668,045
128,33.4
453,600
315,57.4
1,970,155
451,777
68,405
684,771
2,000

591,184
157,300
563,604
'24,309
2,268,675
426,003
45,069
811,750
0

Between January 17 and February 14,
the \>eekly reporting member banks in
leading cities of the Eleventh Federal
Reserve Distdct showed rather large
decreases in deposits, investments in United States Gov,
ernment securities, balances with domestic banks, and total
resources. Commercial, industrial, and agricultural loans
and real estate loan s declined fractionally, the first decreases
ill these categories in any 4- or 5-week reporting period
sin ce June 1950 and March 1950, respectively. Nevertheless,
total loans rose further, reflecting greater· than-offsetting
increases in other loan categories,

I After deductions fo r reserve. ond unallOCQted charge-ofh.
t Includes all demand deposils other thon Interbank and United States Government. less
cosh items reported OJ on hand or in proceu of collection.

Total depo its of the weekly reporting member banks
declined $108,3] 8,000 during the 4 weeks, of which $95,9 t2,000 was in interbank demand deposits. The latter
decrease reflects \I ithdra wal o[ balances with correspondents
by cou nt ry banks to adjust their reserve position s when the
hi gher reserve requirements became effective on January 16
and Feoruar) 1 and 10 meet the seasonal Joan demand.
Demand deposi ts o[ individuals, partnerships, and corporations declined $22.171,000, largely as a result of income and
uther tax payment8, Time deposits declined S6,951,OOO, with
deposits of slates alld political suhdivisions accounting for
most of the decrease. On the other hand, Government depos·
its were increased $18,387,000.

GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS

Loans rose $5,712,000 during the 4 weeks, largely reflecting increases in loan s [or the purpose of financing security
transactions and in the category "all other" loans. The sharp
upward trend in commercial, industrial, and agricultural
loans which has been in ev idence since mid-1950 and the
more moderate. thou gh persistent. growth in real estate
loalls which prevailed during most of 1950 and tbe early
weeks of 1951 subsided som~what eluring the 4 wceks ended
Februa ry 14.
Eleventh Federal Reserve District
(Averages of dolly Rgurel. In thousands of dollars)
COMBINED TOTAL

RESERVE CITY B.t.NIC:S

G,...
Dote

demand

Time

Time

COUNTRY BANKS
Gron
demand

nm.

Janua ry 1949 ... $5.430.929 $607,167 52,612,025 $390,682 $2,818,904 $216,485
January 1950 ... 5.733,2 18 659,140 2,752.603 .423,289 2,980,615 235,851
September 1950. 5.726,635 659,286 2,806,806 410,905 2,9 19,829 248, 381
Odober 1950 . .. 5. 83 1,230 657,976 2,850,628 .411,759 2,980,602 2.46,217
November 1950. 6.087,614 657,258 2,951,134 "06,100 3.136,"80 251,158
December 1950 __ 6.256.210 6.46,999 3,04.4,765 397,983 3,211.,U5 2.49,016
January 1951 .. . 6.3"9,754 657,601
3,098, 119 .400,388 3,251,635 257,213

During Januar) gJ'O.S demand deposits of all member
banks in Ihe District 8\'eraged S6,349,754,000, reflecting an

MONTHLY BUSINESS REVIEW

increase of $93,544,000 over December and an extension
of the month·to·month upward trend which began in mid·
1950. This increase, which was largely seasonal, occurred at
bOlh reserve city and country banks, with the former
accounting for approximately 57 percent of the total
increase. Time deposits also avcraged higher in January
than ill December, reversin g the downward movement that
had prevailed in most months since May 1950.
BANK DEBITS, END·Of·MONTH DEPOStTS,
AND ANNUAL RATE OF TURNOVER OF DEPOSITS
IAmounts in thousands of dollors)

DEPOSITSI

DEBITSt

41

Reserve System, total capital accounts rose $46,987,000 during the year.
Member banks reported net profits after taxes of $41,·
923,000 during 1950, l'efiecting an increase of 24 percent
over net profits of the preceding year. Although total cur·
rent operating expenses rose $10,278,000, or 11.2 percent,
the improvement in total earnings from current operations
- arising principally from the increase in earnings on
loans - was more than twice as large. Also, net losses and
charge.ofTs and transfers to valuation reserves were appreci·
ably smaller in 1950 than in 1949. Net profits during the
year were 10.0 percent of total capital accounts, as com·
pared with 9.1 percent in 1949.

Percentage
change from
January

City
ARIZONA

Tucson •••••.• • ••• ·· • $

LOUISIANA
Monroe ••••••.••••••
Shreveport ••••••••••

NEW MEXICO
Roswell ••.•..•• • •. ••
TEXAS
Abilene •. • • . . ·•·· ·• •
Amarillo .• • . • .•...••
Austin •••••• • • ••·•· •
Beaumont ••••••• • • · •

Corpus Christi •.••..••
Corsicana •••. •• •... •
Dallas ••••..••.. ·• • .
EI Paso ••••. . • ..• . ••
Fort Worth •. . •...•• ·
Galveston •...•. • • ·• ,
Houston ••....•.•••••
laredo ••• •• ••••• •• .
lubbock ••••••• •• •..
Port ArthlK • • , . . ••• •.
Son Angelo •••••... . •
San Antonio •• • ...••.
Texarkana ' •••.••.•••
Tyler •••• • .• , •••.••.
Waco ••••••••••••• '
Wichita FolIl ..... , •..

1951
79,281

'9,639
180.085
2',962
58,954
137.661
195,794
116,3.42
118.526
17,036
1,569.472
199.656
487.610
75,035
, ,454,434
23,054
133.432
<1,916
45.239
378.722
18,416
54,934
70.124
77,586

Total-24 citiel •••••••• $5.607.910

Annual rat. of turnover

31-

Jan.
1951

92,586

10.'

8.6

10.4

49,82.4183,532

11.6
II.S

10.6
10.4

10.6
13.0

6

27,319

10.8

10.'

10.3

34
I
5
32
33
34
17
3
29
4
61
1
38 _ 6
21
6
38 _ 4
9
34 -10
3.
7
16
6
23
1
31
35
1
23
I
4
23
30 - 4
22
1

51.665
100.745
115.232
94,764
95,818
21,682
907.835
135.661
340.401
98,240
1,089,893
21.609
101,079
40,692
52,872
351,561
24,027
50.737
79.778
96,478

13.3
16.4
20.4
14.6
14.8
9.2
20.4
17.5
17.4
9.1
15.8
12.6
15.2
12.4
10.4
12.6
8.9
12.6
10.3
9.5

12."r 13.4
13.1
16.2
12.7
12.8
6.1
17.0
15.1
13.7
9.1
13.3
9.5
17.2
10.1
9.5
10.2
7.6
10.1
9.6
8.5

16.1
15.5
15.2
14.3
9.1
22.1
16.7
18.2
10.1
17.9
11.8
16.7
13.0
10.8
12.4
9.1
12.0
10.8
9.7

$4.224,030

15.7

13.3

16.6

Jan. Dec.
1950 1950

•

35

22
12
20 -11
35

-

•-

-•
-

32

-

•

January

1951
$

JCIn.
Dec.
1950 1950

Debih to deposlt accounll except interbank occount••
Demand and time deposits. including certiAed and officers' checks oUfstanding but e)l.·
dloKllng depolit. to the credit of banks.
• These Agurel include only one bank in Texarkana. Te)l.al. Total debits for all banks In
Texarkana, Texas-Arkansas. including two bonks located In the EIghth District, amounted to
$32,544,000 for the month of Janvary 1951.
r_Reviled.
, Indicates cnange of less than one·holf of 1 percent.
1
I

Debits to deposit accounts reported by banks in 24 cities
or the District declined 4 percent in January from the level
prevailing in December. On a year·to·year basis, however,
charges to deposit accounts of businesses, individuals, and
others continued to show a wide margin of increase as the
total for January was 32 percent above that for January
1950. The turnoyer of deposits, representing the average
mUlual rate of use of deposit accounts, was 15.7 in January,
as compared with 16.6 in December and 13.3 in January
1950.
l:letween January 15 and February 15 total earning assets
of the Federal Reserve Bank of Dallas rose $49,165,000,
with United States Government securities accounting fOT
practically all of the increase. Gold certificate reserves
declined $9,1r,3,000. The increase in member hank reserve
deposits during the month - amounting to $29,087,000was due primarily to higher legal reserve requirements which
became effective between January 11 and February 1. On
February 15 Federal Reserve notes of this Bank in actual
circulation amounted to $617,320,000, a decrease of $6,·
807,000 from January 15.
CONDITION OF THE FEDERAL RESERVE BANK Of DALLAS
(In thovland. of dollars)

February IS,
1951

Item

Figure" taken from the reports of condition of all member
banks in the Eleventh Federal Reserve District as of Decem·
ber 31. 19-,9, and December 30, 1950, show that total
1
rcsourccs rose $817,885,000 during the year and on the latter
date amounted to $7,657,094,,000. Although increases in all
major asset accounts were reported, the most notable factor
afT ecting the growth of resources was the sharp expansion in
loans. most of which occurred after midyear. On December
30. 1950, loans of the member banks amounted to $2,406,140,000, reflecting an increase of $375,302,000-0r 18.5
percent - from the year.earlier tolal. Substantial additions
were also made lo reserves, cash, and balances with other
banks. while the increase in holdin gs of United States Gov·
~rnment securiti es was lcss tJ,an half the amount reported
in 1949. Under the stimulus of the strong demand for loans,
the gain of fund s rrom other parts of the country, and the
growth in inlerbank deposits, total deposils of the member
banks rosc $760,022,000 durin g 1950. Of the total increase,
$5r,2,084.,000 - or 74.0 percent - occurred in demand
account s or individuals and businesses. As the result of
favorable earnings. conservative dividend poli cies, and the
addition of seven banks to membership in the Federal

Total gold certificate reserves ••.•••••••••
Discounts for member banks ••• •••• •. • •••
Foreign loon' on gold •••••• , •••.•• , _ , ••
U. S. Go.,ernment securities . • .••••• • •• • •.
Total earning Qssets •• • ••.••• • .. • •.. • •••
Member bank reserye deposits • •• •• ••••••
Federal Reserve notes In ccttKIl circulation.,

February 15,
1950

January 15,
1951

5602.099
200

$660,873
2,060
2,041
807,187
811,288
777,731
617,029

$611,262

o

1.043,376
1,043,576
993,839
617,320

o
o

99',411
994,411
96.),52
62 •• 127

SAVtNGS DEPOStTS
January 31, 1951

City

Number of Humber of
r.portlflg
tovings
depositor.
banks

LOUISIANA
Shre'teport •••.••••••
TEXAS
Beaumont •••••••••••
001101 •••••• • •••••••
EI Paso ••• •.••••••••
fort Worth ••• • •••• , .
Galveston •• • ••••••••
Houston ••• • •••• • • • ••
Lubbock ••••••••.•••
Port Arthur ••.•.•.•••
Son Antonio •••..••••
Waco ••• ••••••••• • •
Wichita Fall... . .. . . ..
All OTHER ••• ••• , ••• ••

3
8
2
4
4
8
2
2
5
3
3
55

Total ••••••••.•••••• • •

102

3

Amount of
loylngs
depo,il'

45•• 36 $ 23,89<,400
11,988
144,.471
33.931
43,984
22,350
93.818
2,217
5,595
.4.1,589
10,644
7,627
67,959

5,403.182
75,112,383
21,905,602
34,387,306
20,169,942
73,516,602
4,085,269
3,891,72'
42,252,636
10,602,476
4,459,167
56,3<6.073

531.609 $376,026,762

Percentage change in
savings deposits from
Jon. 31,
1950

-

'.3

9.3
3.1
3.4
3.4
- 4.0
- 2.1
19.8
-12.3
3.8
3.4
0.0'
0.7

-

2.'

Dec.30,
1950

-

-

0.'
1.0
1.8
1.9
1.2
0.9
1.3
0.D2
1.7
1.4
0.7
1.2
0.'
1.2

MONTHLY BUSINESS REVIEW

42

On February 14 the Secretary of the Treasury called the
2%-percent Treasury bonds of June 1951-54 for redemption
on June 15, 1951. It was also announced that holders of
the called bonds will be olTered an exchange issue of interest-bearing obligations of the United States', with the terms
of the refunding issue to be announced at a later date. The
called bonds are ou tstanding in the amount of 81,627,000,000.
Construction activity in the Eleventh
District was curtai led by the severe
weather during the second half of January and the first half of February, as
well as by the temporary stoppage of commercial construction and th e increased difficulties in contracting for
building materials supplies for future structures. Nevertheless, the yalue of construction contracts awarded in the
District during January continued at a relatively high level.
Total awards during the month of $103,000,000 were 14
percent under the exceptionally high total for December
but were 65 percent more than a year carlier_
VALUE OF CONSTRUCTION CONTRACTS AWARDED

lin thousands of dolla,,]
January
Area Gnd type

ElEVENTH DiSTRICT ....................... $

January

December

1951p

1950

1950

103.154

57,.406
Residential ••••••••••••••••••••••••••••
45,748
All other •• ••••••••••• • • •• •••••• ••• .•. •
1,043,248
UNITED STATESt •••••• , •••••••••••••..•••
.420,918
Residential •••••••••••••••••••.••••••.•
622.330
All other •••••••••• •••••••• •• •• ••• • .•••

$

62.429
26,297
36.132
730,855
343,501
387,354

$

nearly all nonresidential building except manufacturing,
mining. farm , school, hospital, church, puhlic utility, and
public construction. Despite the controls upon commercial ~
building, nonrcsidential construction in this District is
expected 10 continue in relatively largc volume because of
the large amount of indu strial plant construction and other
huildiug which has been planned or is in prospect. During
recent weeks some large industrial projects have been
announced, and others are under consideration.
BUILDING PERMITS
Percentgge change
in valuation from
January 1951
City

Number

LOUISIANA
Shreveport ••••••••. •• •• ••• .•
TEXAS
Abilene • ••••• •• •••.•••••••••
Amarillo ••••••••••••••••••••
Austin ••••••• • •••••••••••• • .
Beaumont •• . •••••••••••• ••••
Corpus Christl ••••••••••••••••
Dallas ••••••••••••••• • .••••.
EI Paso •••••••••••••••••••••
Fort Worth ••••.•••••••••••••
Galveston •• • •••• ••• •••••••••
Houston •••• • •••• •• •• • ••. ••• •
lubboc5! ••••••• •• •••••••••• •
Port Arthur •••••• •••••. ••••••
Son Antonio ••••• • ••••••••• ••
Waco ••••••••••••••••••••••
Wichita Falls •••••••••••••••••

121
388
298
284
498
1.810
284
811
118
218
377
138
1,648
240
134

Total ••••••••••••••••••••••••.

7,728

361

Vafuation

January
1950

$ 2,695,427

142

85'.670
2.599.315
3.537.018
93',187
5,059,225
16,168.802
1,821.0"
4,On.804
267.244
17,913.881
2.078.113
430,700
6,642,228
1,468,"5
424,777

1
91

December
1950

14

-49
- 185

-

--$66,973,210

112
36
11
53
64
42
10
42
56
61
54

212

-

22
'6
7
85
27
--41
52
22
131
10
2
100
2
37
34

-

15

120,619
48,980

71,639
1.168.432
478.583
689.849

I 37 slates edit of tho Roc5!V Mountoins.
p-Preliminarv.
SOURCEI F. W. Dodge Corporation.

The value of residential awards in January reached
57,000,000, or the sccond highest monthly total of record.
This amount is 17 percent more than in December and
U8 percent greater than in January a year ago. During
late December and January there was a resurgence of
demand for new houses, reflecting the uncertainty on the
part of prospective homeowners regarding the availahility
of new housing in a defensc economy. The extension of
credit controls to mortgages on multi-unit apartments by
means of Regulation X and companion regulations apparently had little immediate effect on the total volume of
residential awards since substantial commitments to finance
this type of construction had been made prior to January
12, 1951, when this amendment to the Regulation became
effective. Moreover, apartment building projects have been
of declining importance for several months.
Nonresidential construction contract awards in January
fcll to $46,000,000, being 36 percent less than in December
though 27 percent more than in January 1950. The National
Production Authority's temporary freeze on new commercial
construction effective January 13, together with uncertainties
as to materials, accounted for much of this decrease. Coincident with tlle National Production Authority licensing of
approved commercial construction, which began on February 15, the Board of Governors of the Federal Reserve
System broadened Regulation X to cover commercial con.truction. The new provisions require a 50-percent down
payment and amortization \I ithin 25 years in the case of

Crude oil production in the Eleventh District in January
averaged 2,837,000 barrels per day, or 158,000 barrels
daily morc than in December, as well as 623,000 barrels
daily above the year-earlier level. These increases in the
Eleventh District accounted for the greater part of the cor·
responding gains in the Nation. January production in this
Dist ri ct was the highest since last October, while the output
in early Fehruary was at a rate only moderately below the
September 1950 peak. Crude oil runs to refinery stills
a\"eraged 1,888,000 barrels per day in the Eleventh District
tlllTin g January, an increase of 112,000 barrels daily from
Decemher and Cl2,t,000 barrels daily from a year ago, with
gains in the , ation in corresponding proportion.
The increased activity in the petroleum industry during
January reflected both Ihe coldest winter in 3 years and
CRUDE OtL PRODUCTION
(Barrols)
Jgnuarv 1951
Area

ELEVENTH DISTRICT
Tua. R. R. Com. Oi.trids
1 South Central. •• • • . . • •
2 Middle Gulf. . • • • • . • • •
3 Upper Gulf •••..•.• •••
" lower Gulf. • . •• • • • • • •
5 Eo51 Central. • • • • • • • • •
/) Norlheast ............
Eglt Texas.........
Other field.........
7b North Central. • • • • . • . •
7c West Centrol. ••••••••
8 West ...............
9 North..... ...... .....
10 Pgnhondle........ . ...
Total Tuas ....... ..
New Muico. • • . • • • • . • • • • • •
North louisiana..... . .••••.•
Total Bnenth District •••.••

Total
production

1.005,350
4,803,550
14,586,850
7,425,700
1,429,400
11,696,950
8,432,000
3.264,950
2,402,550
2.655,900
26,218,700
4,875.400
2,790,000
79,890,350
".108,000
3,955,100
87,953,450
OUTSIDE ELEVENTH DISTRICT .. . 95.677.330
UNITED STATES •.. • ••• ••••..• 183,630,780

Dallyavg.
production

32,431
154.953
470.543
239.539
-46,110
377.321
272,000
105,321
77.502
85,674
845,764
157,271
90,000
2,577,108
132.516
127.584
2,837.208
3.086,365
5,923,573

Incr.cue or deereot. In dally
overage production fro..,
Jon. 1950

6.210
40,U7
94.769
58,682
13,394
70.394
50.402
19,992
15,171
38,674
272, 182
14,579
2.402
621,800
3.185
1.981
623.004
357,659
980,663

SOURCE: &timoled from Americon Petroleum Institute wee5!ly reports.

Dec. 1950

1,355
10.421
23.857
17.294
5,526
9.9.42
1.245
8.697
".762
5.353
66,751
7,936

o

153. 197
3.'00
1.83'
158.431
6,877
165.308

MONTHLY BUSINESS REVIEW
some falling off of imports from their high December level.
To meet the heavy cold· weather demand for heating oils,
~ refinery output was stepped up and refinery yields - par·
ticularly of gas and distillate fuel oil - were increased,
while gasoline yields were reduced.
Stocks of crude oil and refined products in the Nation
generally declined during January, about in line with the
IIsual seasonal trends. Gasoline stocks increased seasonally
as the result of the record level of over·all refinery activity
and a cUltailment of demand due to the severe weather. As
compared with a year ago, stocks of crude oil and the various heating oils were appreciably lower, with residual fuel
oil stocks continuing relatively low at 29 percent under the
level at the end of January 1950.
Steel for oil industry tubular goods in the amount of
1,890,000 tons per year has been planned under a program
worked out by the Petroleum Administration for Defense
and the National Production Authority. Steel mills have
been directed to roll 472,500 tons of tubular goods per
'luarter, starting April L This amount of steel is intended
to provide for the drilling of about 44,000 wells per year.
The estimated proved reserves of crude petroleum and
natural gas liquids on January 1, 1951, amounted to 29,·
952,500,000 barrels in the Nation and 19,887,000,000 bar·
rels in the Eleventh District states of Louisiana, New Mexico,
and Texas, according to recent figures of the Oil and Gas
Journal. Gains in reserves during the year 1950 amounted
to 4.6 percent in the Nation and 2.4 percent in the three
~ states. In the Nation in 1950, new discoveries added 703,000,000 barrels to rcscrves, while extensions and revisions
for existing fields amounted to 2,835,500,000 barrels. The
total gain of 3,538,500,000 barrels was partly offset hy
withdrawals represented by the 2,172,000,000 harrels pro·
duced during the year. Thus, the net increase in reserves in
the Nation was 1,366,500,000 barrels during 1950, or about
105,000,000 barrels more than the increase achieved duro
ing 1949.

43

Tn the three states - Louisiana, New Mexico, and Texas
- new discoveries during 1950 added 448,000,000 barrels
to reserves, and extensions and revisions accounted for
1,241,000,000 additional barrels, for a total gain of 1,689,000,000 barrels. These increases were partially offset by the
1,217,000,000 barrels of oil produced during the year. The
net increase in reserves in the three states, which amounted
to 472,000,000 barrels, was 38 percent less than that
achieved in 1919, when the Scurry County reef fields con·
tributed heavily to new reserves. The three states accounted
for only 35 percent of the national increase in reserves
during 1950 and had a rate of increase in reserves appre·
ciably below that which might be expected on the basis of
oil production. These three states last year accounted for
56 percent of the national total production, while their
proved reserves constituted 66 percent of the national total
at the end of 1950, as compared with 68 percent at the
close of the preceding year.
Reserves of natural gas also increased in 1950, with the
national tOlal reaching 184.,945,000,000,000 cubic feet, while
in the three Eleventh District states reserves rose to 135,500,000,000,000 cubic feet, each of these gains amounting to
" percent. The reserves of the three states accounted for 73
1
percent of the national total on January 1, 195L
According to the forecast made by the Oil and Gas
Journal, total demand for all oils during 1951 is expected
to reach 7,115,000 barrels per day, or 5 percent above
1950. To meet this rising demand, production in the United
States is expected to increase by 7 percent to about 5,769,000 barrels daily of crude oil and 528,000 barrels daily of
natural gasoline, for a total domestic output of 6,297,000
barrels per day. Imports of crude oil and refined products
a re expected to rise by from 4 to 7 ]Jercent, reaching a
levd of from 874,000 to 904,000 barrels daily. World pro·
duction is expected to increase by 13 percent and to approx·
imate 12,000,000 barrels daily during 1951.