Full text of Review (Federal Reserve Bank of Dallas) : March 1970
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business • revIew march 1970 fEDERAL RESERVE BANK OF DAl lL AS This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) contents Current banking developments. . . . . . . . . . . . . . . 3 District highlights . . . ..... . ............. . ... 9 CURRENT BANKING DEVELOPMENTS An Addl'ess by Philip E. Coldwell President Fedel'al Reserve Bank of Dallas to the Houston Chapter American Institute of Banking February 19, 1970 evening I would like to review with you So Ole of the trauma of 1969 and some possible lessons to be learned from the financial developlllents, monetary policy actions, and banking responses of the past year. More specifically, ~y speech will take a retrospective look at banklUg conditions, credit policies, bank adjustments and policy problems developing from these, and the general environment of the past 12 months. I believe we can quickly summarize the year's economic and financial developments since all of you are familiar with them. THIS We entered 1969 on a note of urgency to begin restraining an inflation which had accelerated nearly beyond control. After seven years of growth cumulating in an overextension of our reSOurces, we had developed an inflationary en- virolilllent where expectations were feeding an acceleration of wage and price increases. After a slow start, stabilization measures began to take effect in midsummer. The massive shift in budget position contributed to some slowing of consumer demand but the burden of stabilization fell upon monetary policies, and, after midyear, monetary restraint intensified. The principal impact of monetary restraint through the early months of 1969 was a lessening of liquidity and a sharp runoff of largedenomination certifi.cates of deposit. Credit demands were strong, especially for business, security, and real estate loans. In addition, the introduction of credit cards spurred consumer credit totals, and seasonal agricultural credit needs were large. Thus, interest costs rose, with the prime rate moving to 8lh percent. Meantime, Regulation Q ceiling rates were held constant, forcing a growing disintermediation of deposits. We must admit, however, that while the cost of doing banking business advanced, there was an even larger return as funds were recaptured from lower-yielding investments and placed into loans at higher rates. I have not seen an average of the increased profits of banks, but I have seen many reports of 15- to 25-percent gains and a few at nearly 100 percent. In the second half of 1969, with monetary policy pressing even more strongly on the available supply of credit, bank liquidity moved toward irreducible minimums and credit rationing intensified. As competition for available funds increased, interest rates rose further and disintermediation accelerated. Bank loan demand from businesses remained strong, especially near tax and dividend dates, but security and real business review/ march 1970 3 estate demands slackened - at least, the accommodation of these loan requests slowed sharply as the year progressed. Througbout the year, prices continued upward at a modestly decelerating pace, but wage settlements appeared to grow as labor sought compensation for past inflation and protection against future inflation. Expectations of continuous and accelerating inflation were dampened somewhat, but business attitudes appeared to harden that only a small interruption in the inflationary environment was in prospect. The primary impact of credit restraint and rising interest costs appeared to fall on the housing industry, state and local governments, and small and new businesses. However, the transmission of this restraint went primarily through the member banks of the Federal Reserve System. Banking became a substantially more difficult business for many commercial banks, especially the money market banks and those relying upon large negotiable certificates of deposit for lendable funds. There were many others, though, that found 1969 a distinctly pleasurable experience as the cost of funds was restrained while tlle rate charged on loans advanced sharply. A few banks found an investment outlet in the Federal funds market at very attractive rates and appeared to minimize their responsibilities for servicing community credit needs. Still others were tight in the periods of seasonal demand but able to invest heavily in the Federal funds market at other times. Thus, tlle impact of monetary restraint was far from uniform for all banks. Even the agricultural banks found the usual participation outlets drying up, and many saw customers move to other financial institutions. The incidence of credit needs for the newly expanding cattle feeding industry was, unfortunately, timed witll this period of heavy monetary restraint, and banks could not palticipate as much as they would have done under more normal conditions. This was just one of probably many spe- 4 cial credit situations facing our banks during 1969. Others I have heard about include special oil equipment financing, foreign loans, automobile dealer floor plan loans, and, of course, a large number of special municipal credit needs. Bank responses to the disintermediation of deposits, the restraint on new reserves, and the heavy loan demand varied by bank and bank management. Initial reactions were almost uniform in the liquidation of short-dated or maturing securities and the reduction of commitments to purchase new securities. However, some banks found themselves with heavy portfolios of long-dated and deep-discount Government and municipal securities. For these banks, adjustments becanle more difficult. A second response of many banks was to enlarge their purchases of Federal funds and/or increase borrowings from the Federal Reserve or correspondent banks. In the first week of 1969, there were 267 member banks of the E leventh Federal Reserve District participating in the Federal funds market, with daily average purchases of $583 million and daily average sales of $459 million for a net of about $125 million of purchases. Of these banks, there were four which showed daily average net purchases in excess of their respective reserve requirements prescribed by law. In contrast, the first week of 1970 showed 368 banks active in the Federal funds market, witll $1,155 million of daily average purchases and $641 million of daily average sales for a net purchase level of about $500 million per day. There were 14 banks whose purchases each day exceeded their reserve requirements, and several of these banks were purchasing a dailY average of twice their reserve requirements. On the other hand, there were 107 banks which made net daily average sales exceeding their reserve requirements. For the District as . a whole, there has been an apparent import ot Federal funds amounting to about $500 million per day. It is evident that some of our District banks have turned to the Federal funds market for continuous purchases to sustain an overloaned position. It is interesting to note that in the first week of 1970, a selected large-bank sample of 19 reporting banks accounted for $782 million of purchases, or 68 percent of the total, but only $305 million, or 47 percent, of total sales. Thus, of the District net purchases of $500 million per . day, these 19 banks accounted for 95 percent. A further refinement shows that eight of the largest District banks more than accounted for the net purchases of the District. Borrowings from the Federal Reserve Bank of Dallas also rose sharply during 1969. Loans Were made to 112 banks this past year, 56 percent more than in 1968, and daily average borrowings rose 134 percent to $52,863,000. Even these facts scarcely tell the story of the heavy borrowings by banks which were overextended in loans and short on liquidity. Borrowings from the Reserve Bank were not, and are not designed to be, the primary source of borrowed funds. Even if 1969 had not been a year of monetary policy restraint, borrowings would have been curtailed by the very nature of the lending procedure and objectives. If Federal Reserve credit through the disCOunt window were available in unlimited amOunts or for indefinite periods of time, the banks would use this source of funds as a substitute for new capital. More importantly, the volunle of Reserve Bank credit outstanding would be sharply increased and would require massive offsetting open market sales to keep monetary pOlicy objectives in sight. The fundamental difference between Reserve Bank credit and other sources of funds is the fact that when a Reserve Bank loan is made, it creates new reserves in the banking system while purchases of Federal funds or loans from other commercial banks merely utilize reserves already in existence. New Reserve Bank credit under our fractional reserve requirement rules will support a multiple expansion of commercial bank loans or investments, but other types of credit cannot support such a multiple expansion. All commercial banks are not the same as to their management, composition of assets and liabilities, or the local environnlent in which they do business. Given these differences, the Reserve Bank seeks to treat all banks in like circumstances as nearly the sanle as is possible within the context of overall System guidelines in the issuance of Reserve Bank loans. Reserve Bank loans are not made merely to reduce the cost of the adjustment process but, instead, are made to permit an orderly adjustment. Thus, we do not expect banks to seek loans from us just to avoid the higher cost of purchasing Federal funds when the banks really intend to make no fundamental adjustment in their balance of assets and liabilities. We know some loan requests are precisely for the purpose of avoiding the high cost of these otller adjustment procedures, but repetitive or continuous use of the discount window for this purpose will result in quicker administrative contacts. Since the Federal funds market has limits and Reserve Bank borrowings are largely for short-nUl adjustments and seasonal problems, the District banks, along with others in the nation, have turned to off-balance-sheet or nondeposit sources of funds. Loans or participations were sold to affiliates, and commercial paper was issued by banks' affiliates or customers guaranteed by the banks' irrevocable letters of credit. After midyear, Eurodollar drawings were an important source of funds as a few large District banks opened foreign branches or established contacts with foreign banks. These off-balance-sheet and nondeposit sources of funds rose from about $250 million in June 1969 to more than $950 million in early 1970. In addition to the foregoing, a few banks sought to relieve their tight positions by a runoff business review/ march 1970 5 of reserves and thus encountered severe reserve deficiencies. Slightly more than 100 District member banks showed five or more reserve deficiencies, while 35 percent of aU the banks had no deficiencies during 1969. Only a very few banks made a conscious decision to violate the reserve requirement regulations, and these were contacted frequently . A number of District member banks had difficulty in maintaining reserves, not only because of the tight credit situation but also because of the shift to oneweek reserve periods for all banks and the impact of the automatic charge to reserve accounts for cash letters and TT&L withdrawals. Finally, a few banks sought to take advantage of the direct sending privilege, and such sendings rose sharply. With heavy personnel turnover and markedly rising check volumes, the quality of check processing deteriorated and errors increased. Much of this was inadvertent, as were many of the reserve deficiencies. Of course, to many banks, the primary answer to monetary restraint was tighter screening of loan requests and increased turndowns. Some borrowers withdrew from the market because of higher rates of interest, but many more who were willing to pay the going rate were denied bank loans because of lack of availability of lendable funds. The problems of containing the inflationary pressures have not passed, and some of the banking responses of 1969 may be sharply altered in 1970. Yet there are certain developments, trends, and policies which we can tentatively appraise in order to sort out those of lasting significance. From a monetary policy-making standpoint, I think it is fairly safe to conclude that the efficiency and equity of policy steps are under considerable question. Both inside and outside the Federal Reserve System, there are complaints of too concentrated an impact on housing, too much of a burden on banks, and too 6 little restraint on aU other segments of the economy. Similarly, tllere is considerable dissatisfaction with the use of Regulation Q as a monetary policy tool. If monetary policy is to bear the main burden of economic stabilization, then we should develop ways of more equitably distributing its impact and devise methods to limit credit extension without massive disintermediation of deposits or crippling illiquidity. It seems clear that restraints imposed through monetary policy are strong enough to slow the economy, but the price in lost housing, unemployment, illiquid banks, and record interest rates is, indeed, costly. If desired results can be obtained by broadening the base of action and spreading the impact, steps should be taken in this direction. Such steps could include uniform reserve requirements for all banks, credit limits on other financial institutions, a sharing of impact throughout the economy, and, perhaps, even some credit direction in periods of intense pressure. Another element of policy encountering stiff resistance is the regulatory plugging of loopholes such as the reserve requirement on Eurodollars, the proposed application of reserve requirements to commercial paper issued by bank affiliates, the application of Regulation Q ceilings to commercial paper issued by bank subsidiaries, and the multiple amendments to Regulation Q defining and redefining deposits. I aD1 convinced that commercial bankers can innovate faster ilian we can regulate. But the root cause is a failure to permit free competition for deposits. There are some lessons in commercial banking which may be worth careful study. Some banks clearly schedule deficit operations and rely upon borrowings to sustain their position. As long as Federal funds are available or other sources can be tapped, the deficit banker call probably "ride out the storm." But any failure to find adequate funds immediately places the banker in an almost insolvent posltlOn. Some bankers take the monetary policy actions of restraint almost as a personal affront or a game to be played, with innovation and regulation the primary tools of combat. They wash their hands of any public responsibility and deliberately seek ways to accommodate all borrrowers, whether their customers or those of a more conservative bank. The banking industry needs to police these overaggressive elements, or monetary policy may have to shift from aggregate limitations to mandatory and specific curbs. A number of banks have entered or indirectly supported the commercial paper market, which some bankers see as a threat to the traditional banking business. Thus, these bankers have been particularly unhappy at the thought that reserve requirements or ceiling rate limits might be imposed on bank issuance of commercial paper. Perhaps the commercial paper market will assume a larger role in financing, but one is always tempted to declare today's conditions as tomorrow's requirements. If rate structures can be modified, there is little reason ~o believe that borrowers will pay higher rates JUst for the privilege of obtaining funds through commercial paper. On the other hand, that market is particularly efficient in meeting certain borrowers' and investors' requirements, and I Would hope that banks could continue to partiCipate in the commercial paper market in periods of lessened inflationary pressures. . Of greater concern for normal banking relatIonships has been the customer loss to other financial lenders. The Government-sponsored farm credit agencies, with an ability to raise capital funds, have taken away a significant s~are of bank agricultural lending. Similarly, ?lrect cOl!porate financing and some brokered Individual investor financings have established at least short-run patterns of borrowing which may be slow to reverse. Those screened out of borrowing by tight credit standards may have long memories, especially if they feel there were Unfair or inequitable limits imposed. One apparent characteristic of monetary restraint is the very uneven impact between banks in states where unit banking exists and where correspondent relations are relied upon to equalize the loan and deposit picture. The transmission of monetary restraint through correspondent relations appears to be an uncertain and irregular process, dependent in part upon the condition of the upstreanl, or city, correspondent. Some of our large banks were very tight most of 1969, while others became tight only late in the year. As indicated by the pattern of purchases and sales of Federal funds, many small banks hardly felt the tight credit situation and Federal funds became a lucrative outlet for the small banks' surplus funds. Perhaps one of the problems of the 1969 environment which may carryover into future years is the commercial banks' relations with the Federal Reserve. There is little doubt that a member bank which overstays its borrowing from the Reserve Bank will feel resentment when told to terminate its borrowing. Human nature alone breeds such a reaction, but, in addition, there is a general lack of understanding of the role of Reserve Bank loans and why they must be limited in amount and duration. Inevitably, there are other strains between member and central banks, including regulatory requirements for reserves, ceiling rates on deposits, and limitations on market competition for funds by banks. All of these restrictions, relatively unimportant in times of monetary ease, become major points of aggravation in periods of restraint just when the member banker feels abused by the need to ration credit and by a declining liquidity. It seems as if the central bank has no sympathy or concern for the member bank's problems, but I assure you that such a position is not cOHect. We are concerned with banking problems and seek to guide and counsel with banks to alleviate or minimize the disruptions. Yet we in the Federal Reserve have a job to do, one which I believe most bankers, upon careful re- business review / march 1970 7 flection, would support. There are times when I wish they would provide a little more active support, both vocally and in bank policy. Still another problem with far-reaching significance to the commercial banks is the practice of granting lines of commitment to large out-of-state corporations. We have seen bank after bank get in trouble by the drawings on these commitments at the very time the bank is short of lendable funds and rationing credit to local customers. It is not conducive to good community relations to have banks accommodating the large national corporations but denying credit locally. I suggest that the practice of granting lines of commitment to out-of-state and even out-of-country customers should be reviewed to see if the balances carried are worth the pressure for loan accommodation in periods of stress. Finally, I think the commercial banking industry needs to rethink its use of a prime rate. Certainly, over the past year, the movement of the prime rate has been a primary source of political aninlosity and may also have been a ticklish problem in dealing with non-prime-Ioan customers. There are good arguments for having a uniform rate for national customers in a fluid and almost national credit market. On the other hand, such a rate pays little attention to the specific condition of a bank or to the relative rates charged other customers in the local community. Perhaps it is time to reset rates on a local basis, with a marginal prime rate for the locally unused balance of lendable funds. Banking can ill afford either the local or the national public relations problems which a prime rate move engenders. My catalog of lessons from 1969 is barely scratched, but if I have stimulated your thinking on these problems, I will count this review a success. Rather than continue with a historical perspective, let me use my few remaining minutes to comment on the current situation. I believe we are nearing the point at which visi- 8 bility of trends clarifies and decisions can be made for the future. The money and capital markets appear to be establishing a trading range which is easing away from the former peaks. And yet, the problems of bank deposit disintermediation are intensifying as more and more smaU- to medium-size savers seek the higher rates of the marketplace. Some time will be required to reverse this trend, and a declining money market rate will be essential. Thus, banks may face even tighter conditions in the near future before the dawn of relief. Despite this pessimistic short-range forecast, I think we are making progress in slowing the economy and expect that this slowing will eventually reduce credit demands. We hear a lot of talk about looking over the valley to the almost assured growth of tomorrow. The debate now centers upon the depth and breadth of the valley. I suggest that we might more usefully appraise the time needed to adjust our economy's imbalances, correct its distortions, and lay the foundation for the bright world of tomorrow. If that world is to be the brightest for all, it should be one based upon a noninflationary growth pattern, and I believe the time to balance our economy for this type of growth may be longer than many observers appear to be contemplating. A shortening of the valley in either depth or breadth could mean a premature resurgence of economic activity based upon inflationary expectations. In my opinion, the ultimate aim of noninflationary growth is worth waiting for, even if the valley is extended or deepened to the limits of political acceptability. A premature and material easing of restraints could terminate the corrective process and reinforce the still-virulent inflationary expectations. Such a development would only mean a renewed period of restraint, perhaps of greater intensity, and might require more drastic steps than in the present period. 1 hope that our stabilization efforts and the costs they have entailed thus far wiU not prove to have been in vain. Distl-ict highlights Nonagricultural wage and salary employment in the five southwestern states declined slightly less than seasonally expected in January. The decline placed total employment at 6,293,100, or 1.7 percent less than in December. All categories of employment slipped except finance, which increased fractionally. The greatest slippage was in nonmanufacturing groups. Manufacturing employment dropped 0.7 percent, compared with an expected seasonal decline of 1.1 percent. Trade payrolls fell 5.2 percent, reflecting a reversal of the buildup for holiday selling in December. There were also significant declines in construction and services. Employment in government, transportation and public Utilities, and mining all declined marginally. Employment in these states totaled 4.4 percent higher than a year earlier. It was 5.5 percent higher in manufacturing and 4.1 percent higher in nonmanufacturing. Of nonmanufacturing groups, transportation and public utilities Showed the greatest increase (9.2 percent), fOllowed by finance (6.6 percent). Construction, trade, and services increased 4 percent Or more. Mining showed almost no change from a year earlier, and government employment showed a 1.9-percent increase. Daily average crude oil production in the four producing states of the Eleventh District rOSe only slightly in January, to 6,716,400 barrels from 6,669,400 barrels in December. The daily average was nevertheless 8.7 percent higher tlIan in January 1969. Texas accounted fOr all the month-to-month increase. Production in louisiana and Oklahoma declined, and output in New Mexico was about the same as in December. The high production levels of recent months have been in response to the need to rePlenish stocks depleted through tlle winter, which was colder than usual. Stocks of crude oil east of the Rockies totaled 221.3 million barrels on February 6, or 9.9 million barrels less than a year earlier. Allowables in the District continue at high levels through March. The maximum efficient rate of production for Texas was set at 68 percent, unchanged from the previous two months, and tlle production allowable in Oklahoma continues at 100 percent. Daily production at wells in soutlleastern New Mexico was raised to 75 barrels, three more than in February. The allowable in Louisiana was raised from 47 percent of maximum efficient production in February to 48 percent in March. The growing importance of livestock in the agriculture economy of District states was apparent in the distribution of last year's cash r~ceipts . While cash receipts of farmers and ranchers in these five southwestern states totaled 5 percent higher than in 1968, the share contributed by livestock sales was 9 percent higher. This has been the direction of shift in the distribution of receipts for several years. Where livestock sales accounted for 44.5 percent of the total receipts in 1960, they accounted for 58.7 percent in 1969. Rising prices of livestock products are responsible for much of the increase in cash receipts. In Texas, for example, prices of livestock and livestock products averaged 16 percent higher in mid-January 1970 than at tlle same time in 1969. By contrast, crop prices averaged only 4 percent higher. Prices Texas farmers and ranchers received for all their products on January 15 averaged 1 percent higher than a month before and 11 percent higher ilian a year before. The index business review/ march 1970 9 of crop prices showed a I-percent drop from mid-December, but the price index for livestock and livestock products was 1 percent higher. Prices of all meat animals except sheep averaged higher in January than in December or January 1969. Livestock inventories in states of the District changed little between January 1, 1969, and January 1, 1970. The number of beef cattle in these states increased 5 percent. The number of dairy cattle was about the same, however, and the number of sheep dropped 3 percent and the number of hogs 4 percent. Livestock sales will probably continue to contribute a larger share of income than crop receipts for several years. But although the number of cattle on feed is substantially higher than a year ago, the number seems to be stabilizing, possibly because of the limited number of feeder calves available. Registrations of new passenger automobiles in the four largest metropolitan centers of Texas (Dallas, Fort Worth, Houston, and San Antonio) were 28 percent lower in January than in December. Registrations usually drop in January, but the decline this year was much more than normal. Compared with January 1969, new car registrations were down 16 percent. Department store sales in the E leventh District during the four weeks ended February 21 were 1 percent higher than in the corresponding period last year. Cumulative sales for 1970 were 2 percent higher than for the comparable period in 1969. The seasonally adjusted Texas industrial production index rose in January to 182.9 percent of the 1957-59 base. The most significant rise was in manufacturing, which advanced more than 1 percent. All other categories except mining showed some increase. Mining was unchanged. Production of nondurables accounted 10 for all the increase in manufacturing. Production of durable goods was essentially unchanged. Of all manufacturing industries, petroleum refining posted the largest rise. Compared with a year earlier, total production was up substantially. All major categories advanced. All major balance sheet items except total investments declined at weekly reporting banks in the E leventh District in the four weeks ended February 11. Loans adjusted declined $177 million, compared with a $5 million decline in the corresponding period a year earlier. Contributing most to the decline were drops of $57 million in business loans, $31 million in real estate loans, and $24 million in loans to financial institutions other than banks. Agricultural and consumer loans also declined. Total investments advanced $36 million, compared with advances of $64 million in the previous reporti11g period and $53 million in the corresponding period a year earlier. Holdings of Government securities increased $30 million, with a $40 million increase in holdings of Treasury bills more than offsetting a $10 million decline in Government notes and bonds with maturities of less than one year. Total demand deposits declined $286 million, compared with a $199 million decline a year earlier. Declines of $308 million in deposits of individuals, partnerships, and corporations and $70 million in interbank deposits more ilian offset increases in deposits of the Federal Govenunent and states and ilieir political subdivisions. Total demand deposits were down 4.0 percent from the level a year earlier. Total time and savings deposits declined $11 million, compared with a decline of. $13 millioJl a year earlier. Deposits of individuals, partnersliips, and corporations declined $33 million, but those of states and their political subdivisions increased $21 million. Large certificateS of deposit declined $17 million. new Pfl'l· - bunk The Great Southern Bank, Houston, Texas, an insured nonmember bank located in the territory served by the Houston Branch of the Federal Reserve Bank of Dallas, was added to the Par List on its opening date, February 2, 1970. The officers are: R. C. Sanders, President, and Ernest Bomar, Vice President and Cashier. business review/ march 1970 11 STATISTICAl! SUPPLEMENT to the BUSINESS REVIEW March 1970 FEDERAL RESERVE BANK OF DALLAS I I I ~ \ CONDITION STATISTICS OF WEEKLY REPORTING COMMERCIAL BANKS BANK DEBITS, END-OF-MONTH DEPOSITS AND DEPOSIT TURNOVER Eleventh Federa l Reserve District (Dollar amounts in thou sa nd s, se asonally adju sted ) (In thousands of dolla rs ) Item Feb. 25, 1970 DEBITS TO DEMAND DEPOSIT ACCOUNTS' Jan . 28, 1970 Fob. 26, 1969 ' January DEMAND DEPOSITS' Perc ent chang e from Standard met rop olitan (Annual·rate Dec. stati stica l area basis) 1969 under agreements to rese ll •• .•••••• ••••• •• •• Other loans and discounts, gross ••••....• •••• •.. Commercial and industrial loans •..••..•••.. . • Agricultural loans, excluding CCC cartiAcotes of interest •••..••..•. •.... .• • . 348,150 5,970,685 346,630 6,035,373 l 6,437,652 ---3,011,646 3,029,87 1 3,055,587 5,943,372 - 1 21 2,584,092 9,854,388 106,535 109,915 103,939 500 42,111 555 41,3 16 1,001 134,471 944 382,994 86 1 397,505 368 408,650 131,585 310,390 612,862 16,099 10,02 1 727,163 130,720 339,766 639,015 11,163 11,179 727,827 140,404 370,014 608,053 300,665 6,512 642,338 750 617,085 2,500,2 17 750 594,930 2,611,202 0 665,650 2,674,735 910,690 43,9 15 0 983,003 105,762 0 1,113,552 109,7 16 0 153,830 627,561 85,384 165,670 595,758 11 5,8 13 129,204 666,275 208,357 loans to brokers and d ealers for -2 6 purcha sing or carrying : U.S. Government securities •.•• • ..• ••.• •••• Other securities ••..•... •• •.•.•••••••...• Other loan s for purchas ing or carrying: U.S . Government securities •.•.•... . • .••• •• O ther securities • ••• •••.••...•.•..• • ••. . . loans to nonbank financial in stitutions: Sales finance, personal Anance, factors, and other business credit companies ••••... Other ••• . • •• ..• . ••.•.•. . ••.. ·•·•• •··· . Real estat e loon s •. . ..•• .. .••••...• ... ••••. loons to dom estic commercial bonks •••• •.. . • .. loons to for eign banks • • .•.• . ••..•••..• .. .• Consumer instalment loans •••.• • ...•........• loans to foreign governments, offlcial in stitut ions, centra l bonks, international institution s •••• •. .•.• , •..•• . .••...• , •.. .• Other loan s •.•...••..•• .. • •. .. •. ..• •.... . Total investments •... •• .•••..••.. . . .•• ••....• Total U.S . Government securities ••.....•...•.. Treasury b ills • ... • •.. . • •...••.• .. .••...• Treasury certificates of indebtedness •. •. . . • • Tr e a sury notes and U.S . Government bond s maturing: Within 1 year ••• • ..• • ...•..•• ••.•.•.. 1 year to 5 years • • .•...•... • ...• •• ··· After 5 years ••••• .. ••.•• • .•••.• .••..• Obligations of states and political sub divisions: Tax warrants and short-term notes and bills •• All other ••. .. . .•.. .• . ..•.•••... ••···· ·· Other bonds, corporate stocks, and securities: Certificates representing participations in Federal ag ency loons •... ......•••. .. .. All other {including corporate stocks} •• ...... Cosh items in proc ess of collection • ..... ••.• . • •. Reserves with Federal Reserve Bank •• •.•• • . • •.. • Currency and coin ••..•••. . •• ...•.••• • •..••.. Balances with bonks in the United States • ••••. . •• Balances with bonks in foreign countries •••.•.•.. Other a ssets {including investments in subsidiaries not consolidated) ••••.•.•...•••.•••..••..•• 3,843 1,468,099 17,175 1,489,596 28,256 1,301,44 1 50,308 67,277 936,850 612,406 86,000 428,708 7,916 53,379 68,049 1,086,636 771,332 89,626 449,930 9,786 150,174 81,312 1,001,624 716,519 85,046 465,980 5,976 504,992 Shreveport •.....••.. NEW MEX ICO Roswell ' •..•.•....•• TEXAS Abilene •••. . •....... Amarillo •• .... ••••.. Austin ••......••.•.• Beaumont-Port ArthurOrang e •••.•. .. •• Brownsville- Harl lngenSan Benito ....... • Corpus Christi. ••..... Corsicana 2 •••••••••• Dalla s •••.. •••.... .. EI Paso .. •. •. ••..... Fort Worth .•.... ••.. Galveston-Texas Cit y .. Houston ••••.••. ••.. l aredo ...... .•• .... Lu bbock •.••........ McAllen·Phorr· Edinburg •••• . •.... Mid land •• . •........ Odessa •.•..•....... Son Ange lo . .•. . ... . San Antonio ......•.. Sherman-Denison . .•.. Texarka na (Te xa sArkansa s) • . ...•• . . Tyler .•. . ... ...•.... Waco •.••... . ...• •• Wichita Falls . • ....•• $ 224,5 18 25.9 26.0 23.9 16 49 87,084 232,789 30.6 40.8 31.7 36 .6 25.4 27.9 23 35,999 24.7 24.1 22.3 2,051,952 6,08 1,564 8,503,224 7 21 8 95,958 159,1 53 270,612 21.3 37.8 31.4 20.6 36.2 29.9 18.6 33.5 27.3 6,050,784 -7 239,292 25.2 27.0 25.3 10 9 -3 7 6 12 14 7 7 -6 70,461 196,437 29,547 2,106,569 227,589 627,039 111,1 76 2,431,355 37,854 142,Q59 25.5 24.8 14.1 52.9 29.6 32.6 26.7 38.5 21.7 23.0 26.3 24.8 14.3 55.7 30.0 33.8 24.5 39.5 23.3 25 .9 23.7 23.1 14.1 49.9 29.2 30.3 23.9 37.6 20.5 25.2 -8 -8 0 -3 3 -4 1 -3 16 13 14 6 97,634 131,497 75,025 67,104 591,784 54,237 16.5 14.3 23.5 17.5 27.8 18.3 18.4 15.5 24.4 17.7 27.3 17.9 20.7 16.7 24.9 16.3 1,351,272 -12 2,209,176 - 1 2,916,456 2 2,295,060 0 - 14 7 12 -4 69,396 88,449 114,064 11 5,088 19.2 23.9 24.8 20.3 21.8 23.3 24.2 20.4 23.2 21.9 22.6 20.9 $8,729,769 36.7 37.7 34.6 1,809,780 -4 5,128,980 - 1 406,752 - 1 11 3,923,524 -6 6,958,1 16 -3 20,590,428 -3 2,959,428 13 93,982,680 -4 837,204 -10 3,467,256 - 16 1,602,336 1,886,484 1,712,628 1,226,220 17,176,332 1,049,484 17.5 15.0 363,249 495.002 ---- -4 - ---- ---11 ,905,507 11.750,681 CONDITION STATISTICS OF All MEMBER BANKS Eleventh Federal Reserve Di strict 9,581,106 ---- ---5,620,150 8,761,963 8,864,611 5,475,240 3,832,534 302,366 155,695 1,077,310 ---5,684,777 3,977,637 282,017 139,991 1,112,593 3,971,317 317,684 159.D93 1,120,980 3,650 26,274 77,411 3,286,723 2,933 25,252 79,727 3,244,461 2,396 22,212 91,095 3,896,329 915,978 1,61 5,218 724,005 2,086 15,486 92 1,265 1,604,884 688,831 2,104 18,527 1,009,109 2,092,472 750,530 11,983 24,745 12,600 1,350 7,500 1,350 7,000 490 756,807 375,537 364,944 135,298 13,284 978,101 1,2 48, 762 333,033 335,136 136,503 13,255 974,207 TOTAL L1A8ILITIES, RESERVES, AND CAPITAL ACCOUNTS. . . . . . • • . . . . . . . . .. 11 ,385,934 11,905,507 Individuals, partn ership s, and corporations .••• States and political subdivis ion s •.•... • ••••• U.S . Gove rnment .• . ..••••....•.... •• .... Banks In the Unit e d States •••..• ...•• ••..•• Foreign: Governme nts, ofAcial institutions, central banks, international institutions •..•..• .. Commercial banks •..... •.. •••••..•.. .. Certifie d and offlcers' checks, etc •••.••. . . • Total time and sav ing s d e posits •. . ... •....••. Individuals, pa rtn erships, and corporations: Savings deposits • •. .•.....•...•••• . •.. Other tim e d e posits .•......••. . ...•.... States and pol itical sub divisions •... . ••• . •.. U.S. Gov ernment (including postal sa ving s) • •• Banks in the Un ite d States .. .. .. . .. .. ...... Foreign: Govern ments, official institutions, central bonks, in ternational institutions •.••...• • Commercia l bonks ....•...•••..••..•• .. Federal fund s purchase d and se curities sol d under agreeme nts to repurchas e •..•..•...... Other liabilities for borrowed mon ey .•.. .• .... •• Other lia bilities ••...••. •. .......••....••.•.• Reserves on loans • .•. .•. ...•... •.....•..•..• Reserves on se curities ••......••....•.....••.. Total capital accounts .... • •..••.....•..•• ••.. 1969 I 1 Deposits of individua ls, partnerships, and corporations and of states and politiCO subdivis io ns . !l Count y basis. L1A8ILITIES Tota l d emand d eposits •...•..••....•.•..•.. Jan. Dec. 1969 952,896 ARIZONA Tucson • .••....•• • •.. $ LOU ISIANA Monroe •••• ..• •• .• .• Jan .3 1, 1970 Jan. 1970 Total-28 centers • • . • •• $325,51 1,868 TOTAL ASSETS .................. ....... 11,385 ,934 Total d ep osits •• ••..••.• •• ...•• • ..• •.• .•••• • of turn ove r Jon. 1969 ASSETS Fe deral funds sold and securities purchase d Annual rate 1970 (In millions of dollars) Jan. 28, 1970 Dec .31, 1969 loans and di scounts, grossl • ..••••...•••.• U.S . Government obligations •••••....••• . . Other se curities ••..•..•....••••.•••.•.• Reserves with Fe d era l Reserve Bank •••• • •. . Cash in vault .•...•...... •• ....•.....•• Balances with banks in th e Unite d States •..• Balan~es with bon ks in foreign countriese .... Ca sh Ite ms in process of collection . •..••• . . Other o sse ts e •••••. .•... •••... . ....•• .. 11,498 2,151 3,267 1,309 269 1,203 12 1,235 801 11,942 2,179 3,146 1,222 268 1,6 19 12 1,652 822 TOTAL ASSETse .• •. . •• .. . . ••.•..•••• 21,7 45 22M2 Demon d d e posits of banks . .•••..... . .. .. Other d em and d oposits ••.•.... . •• ... .. •. Time depo sit s • • ...•••....•••.....••.... 1,45 6 8,880 7,079 1,919 9,926 7,246 946,714 Total d eposits •.••.•... . •. . .......... Borrowings •......•.. •.• .....• •. ....... Other liabilities e .•. •... . ...• ..•.. .• • ••. Total capital accountse .• •... .... ...... . • 17,415 1,637 96 1 1,732 19,Q91 1,159. 901 1,711 11,750,681 TOTAL LIABILITIES AND CAPITAL ACCOUNTSe ......••.•.... ..••. . .. Item ASSETS l 850,624 252,324 119,913 n.o. 1 Beca use of format revi sions as of Jul y 2,1969, ea rli er data are not fully comparable. n .a. - Not available. 10,809 2,539 3,155 1,260 266 1,19~ 1,117 488 - ~ L1A81LITIES AND CAPITAL ACCOUNTS 1 Be fore J.uly 2, 1969, th is item was published on a ne t basis. Estimated . e - 1,44 1 8,951 7,645 - 17,937 952 311 1,635 - GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS CONDITION OF THE FEDERAL RESERVE BANK OF DALLAS (In th ousa nds of dollars ) = - Fe b. 25, 1970 Jo n. 28, 1970 Fe b. 26, 1969 278,482 36,780 2,240 2,367,247 2,406,267 1,139,978 1,682 ,637 433,102 35,250 0 2,390,30 1 2,425,551 1,309,025 1,695,814 340,893 26, 140 0 2,11 3,276 2, 139,416 1,235,867 1,5 19,065 Ite m G ROSS DEMAND DEPOSITS ~~tal gold certifi ca te reserves • . . . . . ... . ..... O:hount ~ for member banks . . . .....•.••.... U .S .eG~~sco un ts and a~~a n ces •.......•• . .. . Total e are~n m e nt securiti es .. • .. .... .. ...•.. b M Ele ve nth Fed e ra l Rese rve Di st ric t (Ave ra ges of da ily flg ures . I n millions o f dolla rs) nlng a sse ts . . . . ......... . ......... d - F rn or ba nk reserve de posits •.• .. . ........ e eral Reserve notes in a ct ual ci rculation .. , . . TIME DEPOSITS Reser ve Country Dote Total ci ty bonks bo nks Total cit y banks bo nks 196 8, January ••. 1969, Ja nuary •• . 9,923 10,752 10,250 10,497 10,306 10,373 10,692 10,793 4,560 4,935 4,746 4,867 4,726 4,750 4,947 4,910 5,363 5,817 5,504 5,630 5,580 5,623 5,745 5,883 6,698 7,627 7,353 7,272 7,223 7,268 7,203 7,1 08 2,815 3,135 2,74 1 2,685 2,646 2,690 2,628 2,568 3,883 4,492 4,61 2 4,587 4,577 4,578 4,575 4,540 Reserve Aug ust ...• Se pt em ber. October ... Novem ber .. Dece mb er . . 1970, Ja nua ry •. • Country RESERVE POSITIONS OF MEMBER BANKS El e v e nth Fe d e ral Rese rve Di strict (Avera ges of do il y Agures . In th ousands o f dolla rs ) =- - 4 weeks e nd e d Fe b. 4, 1970 R ESERV E CITY BANKS Tot~ reser ves held .. .. . .. . . . .. C ith Fed eral Reserve Ba nk . . .. R urrency a nd coin . .......... E oquire d reso rves . .. .. ........ B~~~~~roserves • . ••.... • .•••.. F ngs .. ... .. .. .... .. .... CO roe reserves . . ......... . . . ... TUNTRY BANKS o~ reserves held ..• .. . . . .... C ith Fe deral Rese rv e Bonk .... R urrency and coin . . ......... E: quired rese rves . ... ......... B cOss reserves . .. .. ...•... . .. orv es ... .. .. . . .... . ... io~ rese rves held •• . ... . . . ... MEMBER BAN KS C ith Federal Rese rve Bon k .. .. R e q~[::dCY and coi n . . ....... . . E)!.cess r reServes . . ........... ~:~~~:~s:.:.: :::::: : :::: : : CITRUS FRUIT PRODUCTION 5 wee ks end e d 749,724 692,994 56,730 764,358 - 14,634 6,437 -2 1,07 1 Jon. 7, 1970 Feb. 5, 1969 (In t ho usan ds of boxes ) 769,728 7 12,600 57,1 28 755,492 14,236 29,292 - 15,056 80 1,84 1 610,848 190,993 77 1,212 30,629 14,255 16,374 786,188 599,549 186,639 769,379 16,809 19,585 -2,776 775,262 589,8 14 185,448 747,4 18 27 ,844 9,046 18,798 1,561,111 1,315,517 245,594 1,506,329 54,782 42,8 10 11,972 F~:~O~I;g s • .. ..•••.... . . .. . . • A.l 5 weeks end e d 759,270 704,669 54,60 1 735,11 7 24 ,1 53 28,555 -4,402 It e m 1,535,912 1,292,543 243,3 69 1,533,737 2,1 75 26,022 -2 3,847 In dicate d 1969 1968 1967 5,1 00 3,100 5,380 2,5 10 3,120 3,740 4,700 7,500 Sta te and crop 4,500 6,700 1,800 2,800 ARI ZONA O ran ges . . . . .... . ........ . G rap efruit . ...... . ... . .. . . TE XAS 1,544,990 1,302,414 242 ,576 1,502,910 42 ,080 38,338 3,742 O ran gos •..... . ...... . . . . . G ra pefrui t .. ....... . .. ... . SOU RCE , U.S. Deport me nt of Ag ric ultu re. CASH RECEIPTS FROM FARM MARKETINGS (Dollar amount s in thou sand s) Are a Arizona .... .. .. .. . ..•... . .. Louisi ana . .. . ............. . . N ew Mexico .. •.....• . ....... BUILDING PERMITS ~~==================================== VALUATI O N (Dolla r a mo unts in thousands) Percent change Jan ua ry 1970 fro m NU MBER _____ Area Janua ry Jan uary January Dece mb er 1970 1970 1969 9 Tex a s. . . •.... . ... . ...... . . . 643,852 601,990 345,319 908,283 2,808,053 Total . ... .. . ... . .. .. ..... . Unite d Sta tes . .......•. . ... $ 5,307,497 $47,43 1,047 Oklahoma • •• . •............. Percent chan ge 1968 $ 587,187 628,743 322,353 845,983 2,669,03 1 10 -4 7 7 5 $ 5,053 ,297 $44,385,735 7 SOURCE , U.S . De portme nt of Agric ulture. 1969 4,673 1969 231 "RIZON" --...:...-------~------------ TUCson " ' "' ' ''' ' . 519 Monro e· w t M Shreve art es on roe • .... .. TEXAS P " • • • ••• • • • ••• •• 59 35 8 3,082 5,501 538 - 12 206 126 29 53 5 298 109 46 217 1,372 18 344 290 47 2,605 34 78 33 45 44 43 92 1 37 25 14 4 52 946 13,966 8,342 664 420 1,493 13,332 167 11,927 7,856 609 35 ,907 192 1,03 1 176 1,295 234 590 5,267 349 212 735 277 49 1 562 - 12 -26 65 106 - 9 120 226 35 2 23 - 11 -42 56 329 39 20 -32 30 51 7 -27 245 46 1 - 18 -37 - 86 1 -52 - 63 103 -38 57 - 13 -3 1 -37 - 61 252 -38 41 -49 9 83 -3 9 - 87 8,302 $ 11 9,243 31 - 8 lOUISIAN~" " " "bilene f~~~~L ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Co rp~:v~~~: .: . . .. . ...• •.. • Doli ISt l . . . . . . . . . . . . . . Gal orth .. .... . ........ . t~~fr:':' :: : : ::::::::: : :: : HQu:teston . .. .. . .......... . laredon . • .. ........•... . . lUb bo~k'" ...••.. .. . . •• .. Midland ···· · .. · .. ······· . Od ess . ...... . .....• .• .. P A~th~~ ' ..• .. ....... ... ort San A •. . .. • ........ . . San An g.I~ ... . . . .. .. .. .. . Sherrn ntonlo . ...... . ...... . T e)!.Qrk~~~·· . .. •.•.. . .•.•. ~kh~t~' F~;I;: ::::::::::::: T otal ~ies . ............ . $ LIVESTOCK ON FARMS AND RANCHES , JANUARY (In thousands) five southwestern stotes l Tex a s Unite d Stat es Speci es 1970 1969 1970 1969 1970 Cottle .. ... . .. Milk cottl e . • 8eef co ttl e •. Shee p ... ..... Stock shee p . 12,2 12 576 11,636 3,860 3,560 300 959 17,Q96 997 11 ,630 56 1 11,069 4,029 3,787 242 1,020 17 ,445 973 21,590 1,253 20,337 5,364 4,903 46 1 1,676 28, 189 ' 1,049 20,563 1,258 19,305 5,53 1 5,149 382 1,738 28,235 ' 1,007 11 2,330 21,1 95 91,1 35 20,422 17,578 2,844 56,743 43 1,533 6,674 Fee d ors . •.. Hog s' ..••. . . . Chicke ns:! . . .. . Turkeys ••••• .. 1969 109,885 21,6 16 88,2 69 21,238 18,332 2,906 60,632 419,635 6,604 Ari zona, Lou is iana , N ew M ex i co , O klaho ma , a nd Texa s. D oto aro (or Dece mber of precedi ng ye ar. Does not inclu de com merci a l bro i lers. .. Exclu des Arizona an d N ew Mexico, w hi ch were combi ned wi th Flori da, Montana, and W yo min g to ovo id di sclo sure of ind ivi dual s't a te ope rat ion s. 1 :! :I SOU RCE, U.S. De portme nt of Ag ri culture . Id o ho,