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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.