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MONT H LY B USINESS REVIE W of the Volume 34 FEDERAL RESERVE BANK Dallas, Texas, May 1, 1949 of Dallas Number 5 SEVENTH ANNUAL DISTRICT SURVEY OF RETAIL CREDIT STORES: SUMMARY AND COMMENTS A moderate expansion in total dollar sales and a substantial decline in cash sales, together with consequent marked increases in instalment sales and receivables outstanding, constituted some of the developments at retail credit stores in the Eleventh Federal Reserve District during 1948. These trends are revealed by data obtained from the Seventh Annual Retail Credit Survey, conducted as part of a nationwide project of the Federal Reserve System. In addition, the data show that the experience of individual firms in each of the several lines of retail trade studied varied more widely in 1948 than in other recent years, while the total volume of business in each line showed smaller changes than in any other postwar year. The variation in the experience of individual firms reflects, in part, local conditions, operating policies, and a marked strengthening in competitive forces, as well as the effects of economic conditions which influenced the supply of and demand for goods in the particular lines of trade; moreover, increases in the stresses and strains within the economy brought about important shifts in consumer purchases of various types of goods. As in other recent years, the current survey covers data obtained from representative firms engaged in nine lines of retail trade in which credit sales normally constitute a significant proportion of total sales, namely, automobile dealerships, auto tire and accessory stores, and department, furniture, hardware, household appliance, jewelry, men's clothing, and women's apparel stores. The important items covered in the survey include total sales, cash sales, credit sales (chargeaccount and instalment), and receivables outstanding; inventories and bad-debt losses, included in previous surveys, were omitted from the 1948 study. Reports for the year 1948, with comparative figures for 1947, were received from 472 firms operating 594 retail outlets. These stores, located in 72 cities and towns throughout the territory of the Eleventh Federal Reserve District, reported aggregate sales in 1948 of approximately $960,000,000. Although a majority of the reports and the major portion of the sales were of establishments operating in the larger cities of the District, nevertheless, the reporting stores are well distributed among the nine lines of trade and on a geographical basis and appear to constitute a representative sample of these lines of retail trade in the Southwest. The activities of national chain store outlets were reported for the most part in consolidated form to the Board of Governors of the Federal Reserve System and are reflected in its analysis of national retail credit developments. Consequently, the sample of firms included in the survey for the Eleventh Federal Reserve District represents mostly independent stores and local outlets of chains operating in limited areas. Since the main purpose of the survey is to study developments relating to credit conditions in retail trade, those firms which sell for cash only were excluded from the sample. Total Sales. The trend of sales in the Eleventh Federal Reserve District during 1948 in the several lines surveyed was similar to the national pattern, but the over-all sales experience of firms in the District was more favorable than that for the country. A detailed comparison of the percentage This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) 66 MONTHLY BUSINESS REVIEW changes in sales for the District and the Nation may be obtained through a study of Table I in conjunction with Table III. The relatively moderate changes in total sales for 1948 as compared with 1947 tend to obscure the wide fluctuations that occurred during the course of the year, characterized by three broad movements. The general hesitation in buying that prevailed dlJring the first quarter of the year gave way to a wave of optimism, accompanied by renewed inflaTABLE I tionary pressures which brought about a PERCENTAGE CHANGE IN SALES-BY KIND OF BUSINESS marked upsurge in buying during the secBY YEARS, 1945-48 ond and third quarters. This upward Eleventh Federal Reserve District movement, however, was followed by a ..----Percentage change in total sales----noticeable slowing down in demand dur1948 o ve r 1947 over 1946 over 1945 over 1947 1946 1945 1944 ing the final quarter of the year, especially Ki nd of business 44 87 8 for durable goods. In some lines the net Automobile dealers _______ ________________ _ 21 tire and accessory stores __ _ 51 1 5 8 sales gains for the year as a whole reflect Auto Department stores ___ ______ _______ ____ _____ 4 13 8 25 Furniture stores ___ __ ___ ____ _____ __ ____ ___ __ _ 13 5 38 11 the higher average prices prevailing dur- Hardware stores _______________ _________ _ 5 15 39 20 ing the year rather than an increase in the Household appliance stores __ _ 115 47 20 6 Jewelry stores _____________________________ _ - 1 -10 19 8 physical volume of goods sold. Men's clothing stores __________________ _ - 2 Women's apparel stores ________ _____ __ 5 TotaL __ _________________ _ 8 1 -1 11 25 13 7 8 11 In analyzing the sales comparisons in 36 individual lines, as well as at individual stores, several significant developments should be taken into consideration. Of major importance were the appreciable changes in the demand and supply relationships as a result of which the emphasis during the year shifted from problems of production to problems of distribution and considerations of price and quality became increasingly significant in sustaining demand. In the nondurable lines, supplies of most items had come into balance with demand during 1947, with the result that in 1948 producers and distributors were confronted with buyers' markets. This condition led to a marked strengthening of competition, the reappearance of greater variety and improved qualities of merchandise, increased supplies of moderately and lower priced items, downward readjustments in prices of some items, and a return to the widespread use by retailers of special promotions and "mark-down" or "clearance" sales as a means of stimulating consumer demand. In the durable goods lines substantial backlogs of demand still existed at the beginning of 1948, and the production of major items either reached new peaks for the year or was only moderately under the peak output in 1947. In virtually all cases the output for the year was much larger than the average annual production during the prewar period. Reflecting the increasing availability of goods, the strong consumer demand maintained retail sales of such merchandise at levels well above those in 1947 during the first three quarters of the year, with buying exceptionally heavy during August and the early part of September following the announcement of the Board of Governors of the Federal Reserve System that controls over consumer instalment credit would be reimposed on September 20. This buying wave was induced by the indications that credit terms under the regulation would be somewhat more restrictive than those that had prevailed between November 1, 1947, and the effective date of the new regulation. In the final quarter of the year buying of durable goods leveled off and, as a consequence, sales in durables other than automobiles fell below the large volume in the corresponding quarter of 1947. Closely associated with the improved demand and supply relationships was the increasing consumer resistance to high prices. While the prices of some items declined during the year, prices of most commodities at retail increased further in 1948 and the averages for the year were higher than in 1947. Moreover, the upward trend in the cost of living which continued until late in the year had the effect of exerting pressure upon the incomes of a large segment of the population and required, to a greater extent than for several years, consumers to choose carefully among types of goods purchased. With their most urgent demands satisfied and with goods available in greater quantities and in wider varieties, consumers generally pressed for lower prices and better quality merchandise. These valueconscious demands found expression in buying shifts among types and qualities of merchandise, as well as a tendency to defer purchases whenever prices and quality of merchandise were not in line with consumer preferences. 67 MONTHLY BUSINESS REVIEW The strength of the competitive forces was manifested not only among stores in the same lines of trade but also by the intensified efforts of concerns in each line of trade to maintain or expand their relative share of the consumer's dollar. The data presented in Table IT are indicaTABLE II tive of the diversity of experience among N UMBER OF STORES REPORTI NG INCREASE OR DECREASE individual firms, as well as among lines of IN SALES-BY KIND OF BUSI NESS, 1948 OVER 1947 business. The number of firms reporting Eleventh Federal Reserve Dist rict increases in sales during 1948 as compared N umber of Number of stores reporting with 1947 greatly exceeded the number Kind of business stores Increase Decrease h th 79 10 t at experienced decreases; is was espeAutomobile dealers ............. _ 89 44 55 cially apparent among automobile dealers Auto tire and accessory stores .. 99 Department st ores ........................... . 66 ~g ~~ and furniture, household appliance, and Furniture stores ............................ . 104 16 27 women's apparel stores. On the other Hardware stores ............................. 43 Household appliance stor es ........... . 36 26 2~ hand, 36 percent of all reporting stores Jewelry stores .................................. . 42 ~~ 27 had smaller sales in 1948 than in 1947; Men's cl othing stor es ..................... . 50 Women's apparel stores ................ . 66 49 17 moreover, in three lines of trade a majority of the reporting stores experienced TotaL .......................................... . 594 881 218 decreases in sales from 1947 to 1948. The increase of 21 percent in the sales of automobile dealers during 1948 as compared with 1947 was much larger than that for any other line of trade, although smaller than the increase which occurred in the preceding year. This increase reflects not only the larger supplies of automobiles available for distribution but also the continued strong demand for repairs and parts to maintain old cars in satisfactory operation. Because of the size of the backlog of demand and the limitation on productive capacity, it has taken the automobile industry longer to meet the deficiency; consequently, although the production of automobiles was in near-record number, supplies were still inadequate at the end of 1948 to meet the demand. Despite the fact, however, that the deTABLE III mand for cars at the end of 1948 was still PERCENTAGE CHANGE IN SALES-INDEPENDENT STORES relatively strong, there was some weakenBY KIND OF BUSINESS, 1947·48 ing in the extraordinary pressures that had United States prevailed throughout the postwar period, P ercentage chan". in total . ale. Kind of bus iness 194 8 over 1947 1947 over 1946 especially in the market for used cars and Motor-vehicle dealers............................................ 17 64 for higher priced new models. One factor Accessory, tire, battery dealers......................... - 1 - 8 in the weakening demand has been that ~i~r:~~n:t~;~~~~::::::::::::::::::::::::::::::::::::::::::::::::: ~ more people are finding it diflicult to pur- Hardware stores.................................................... 2 14 chase cars at existing prices in view of Household appliance dealer s.............................. 5 85 J ewelry st ores........................................................ - 6 - 9 increasing pressure upon their budgets. Men's, boys' clothing and f urnishings stores. - 5 1 1: Women's r eady-to-wear stores........................... 8 - 2 By the end of 1947 most items sold SOURCE , United States BUreau of the Cen. u•. by auto tire and accessory stores were in ample supply to meet consumer demand, and competitive forces were coming to the forefront. These forces were reflected in price declines in some items and efforts to improve the quality of products; these trends were accentuated during 1948 when competition became even keener. In an effort to meet consumer preferences for price and quality more adequately, there was a noticeable trend toward the improvement of product; furthermore new lines were introduced, and-in the case of such items as tires and batteries- goods were offered in several price ranges. As the year drew to a close the downward trend of prices of many items handled was accentuated. As pressure on consumer budgets increased, greater inducements were offered to consumers in the form of easier credit terms. While 1948 sales were only 1 percent higher than in 1947, the volume was maintained at an exceptionally high level. The large volume of home building during 1948 and the strong demand for major household appliances continued as important factors in sustaining the business of furniture and household appliance stores. On the other hand, the price increases on many items of furniture and appliances and the inadequate supplies of goods that would meet consumer preferences from the standpoint of quality and price served as deterrents to buying. In the field of household appliances the deferred demand for smaller items had been satisfied in earlier years and distribution tended to slacken in 1948. In most 68 MONTHLY BUSINESS REVIEW of the major durable items, however, production reached new peaks in 1948, and the increased supplies moved rapidly into consumer hands until the fourth quarter of the year, when buying leveled off. As a result, supplies began to accumulate in the hands of both manufacturers and distributors, necessitating some cutbacks in production. The increase of 6 percent in the sales of hardware stores during 1948 as compared with 1947 is indicative of the strong demand for hardware, especially builders' hardware, some items of which continued in short supply during much of the year. As in some other lines, the high prices prevailing for most items of hardware met with consumer resistance, with the result that as the year advanced stores found it increasingly difficult to maintain sales of many items at existing prices. The downward trend which began in 1946 in the sales of jewelry firms continued during 1948. Even at the reduced level, sales in this line were still greatly in excess of those during the prewar years. The decline in jewelry sales during most of the postwar period corresponds with the downward movement in the sales of virtually all luxury goods and reflects the shift of consumers' purchases to other goods as supplies have become available in greater quantities. The supplies of men's TABLE IV clothing and furnishings, which WHOLESALE PRICES BY GROUPS OF COMMODITIES were inadequate to meet the demand during the early postwar (1926= 100) years, had reached an equilibri...---December-----. ...--Annual average8~ Percent Percent um with demand during 1947. HU8 1941 chan ge 1948 1947 change In 1948, sales were stimulated All commodities................................... 165.0 152.1 162.3 163.2 - 1 8 177.3 196.7 -10 4 Farm products ................................ 188.3 181.2 by some downward price read170.2 178.4 - 5 6 Foods ................................................ ~79.1 168.7 justments in many items of 5 153.0 145.5 11 Other commodities-total ...... .160.7 135.2 146.7 148.0 - 1 Textile products ............. ........ 148.6 141.7 5 men's furnishings, but prices of 137.0 124.6 10 23 Fuel and lighting materials ..... 134.1 108.7 clothing continued to advance. 173.8 151.5 15 13 Metals and metal products ...... 163.6 145.0 11 202.1 191.0 6 Building materials ......................199.0 179.7 Throughout most of the year 3 185.3 203.4 - 9 Hides and leather products ...... 188.0 182.4 there was strong consumer re130.6 135.0 - 3 Chemicals and allied products 135.1 127.3 6 148.4 139.4 6 Housefumishing goods .............. 144.5 131.1 10 sistance to advancing prices, and Miscellaneous ............ 120.5 115.5 4 118.5 121.5 - 2 this development, together with 172.1 182.0 - 5 Raw materials .................................. 178.4 165.6 8 the. fact dthat supplies in the 157.5 154.9 3 2 I Manufactured products .................. ~50.4 146.0 pnce an qua ity ranges pre- SOURCE, Bureau o( Labor St at; stics. ferred by consumers were inadequate, had deterrent effects upon consumer demand. The radical style changes in women's apparel, together with price advances on most items, had held down the demand for women's apparel during the greater part of 1947, with the result that sales for that year showed a slight decline. During 1948, however, there was a rebound in sales as women adjusted to the new styles, even though prices tended to advance somewhat. In view of the diversified business of department stores, the factors affecting sales in most of the lines mentioned above influenced the total sales of department stores. The 8 percent increase in sales during 1948, which was larger than that in 1947, reflects, in part, the aggressive merchandising policies of department stores generally and the tendency to make quick adjustments to changes in underlying conditions. These factors found expression in frequent promotion and price reduction sales, widespread advertising, and the better assortment of improved quality merchandise. Cash sales. The year-to-year decline in cash sales during 1948 was more general and more pronounced than in any other postwar year. Perusal of Table V indicates that eight of the nine reporting lines of trade had smaller cash sales in 1948 than in 1947, the decreases ranging from 1 percent in the case of department stores to 18 percent at household appliance stores. Moreover, Table V indicates that in each reporting line cash sales in 1948 constituted a smaller percentage of total sales than in 1947. It should be observed, however, that cash sales represented 40 percent of total sales in the lines surveyed, a much larger percentage than was characteristic of prewar years. The high ratio of cash sales to total sales at automobile dealerships during 1948-58 percent-reflects to a considerable extent MONTHLY BUSINESS REVIEW 69 the increasing tendency during recent years of consumers to raise funds to purchase automobiles, as well as some other durable goods, by borrowing directly from financial institutions. The lowest percentage reported-15 percent-was at furniture stores, where merchandise traditionally is sold largely on a credit basis. TABLE V Credit sales. The trend tow~rd the shifting of merchanSALES BY TYPE OF BUSINESS TRANSACTION AND END-OF-YEAR dise sales from a cash to a credit RECEIVABLES BY KIND OF BUSINESS basis, which has been in evidence Eleventh Federal Reserve District since the late war years, continPercentage change 1948 over 1947 ~---->Sales .--Recelvables end-of-year-----. ued at a substantial rate during Charge Total Charge Instalment Kind of business accounts In stal ment t\Ccounts accounts accounts Casb 1948. The aggregate of credit 16 101 16 25 35 8 sales at all reporting stores dur- Automobile dealers ...... Auto tire and accessory ing 1948 exceeded that in 1947 stores ................................. -12 34 -6 45 35 -10 11 47 18 9 69 by 16 percent, or about double Department stores.............. - 1 Furniture stores ................. -17 13 30 31 8 25 the net increase in total sales. Hardware stores.................. - 7 16 65 -1 26 3 Although credit sales increased Household appliance stores ................................. -18 4 27 17 -4 44 substantially in all reporting Jewelry stores ..................... -14 5 17 24 5 8 17 17 9 16 21 lines, the shift from cash to Men's clothing stores...... .. -12 apparel stores.. - 6 14 13 13 16 14 credit sales was more pro- Women's TotaL ........................... - 1 11 29 20 11 43 nounced at auto tire and accessory, hardware, and household appliance stores. Perhaps the most potent factors contributing to the increased use of credit in 1948 were some easing in credit terms, the decrease in or the exhaustion of the backlog of savings of a large number of families, and the pressure exerted by rising prices upon the budgets of many families, making it necessary for them to use more of their readily available cash funds to purchase foods and other related items sold largely on a cash basis. Retail outlets also continued aggressive efforts to establish credit relationships with potential customers and to induce existing customers to make greater use of their credit resources as a means of increasing the number of regular customers and the aggregate volume of business. TABLE VI Charge-account sales increased further in 1948 at stores in all reporting lines of trade except auto Eleventh Federal Reserve District tire and accessories, but the size of ~-::--,--:Percentnge of tot&! sal.. the gains varied considerably, rang1948C"~947 Ch~fs' "<~~~~ts 1~:8tal~~~~ ing from 4- percent at household apKind or business 13 pliance stores to 25 percent at auto15 Automobile dealers ..... 68 61 27 26 37 21 24 Auto tire and accessory stores ... 42 48 2~ mobile dealerships. The decline in 42 54 53 8 Department stores 38 60 charge-account sales at auto tire and 19 21 Furniture stores.. 15 21 64 7 43 Hardware stores .. 46 53 47 3~ accessory stores is explained chiefly 37 35 Household appliance stores 27 32 38 16 by the marked increase in the use of 42 18 Jewelry stores. ..... 37 42 45 Men's clothing stores .. 46 45 3 52 51 3 instalment credit. From Table VI it 49 2 45 53 Women's apparel stores 49 1~ will be noted that the ratios of 14 Total. .......................... 40 44 46 45 charge-account sales to total sales increased at stores in seven of the nine lines of trade. The lines in which instalment sales are relatively unimportant, such as department, hardware, men's clothing, and women's apparel stores, had the higher ratios as well as the larger increases in such ratios in 1948 as compared with 1947. PERCENTAGE OF CASH AND CREDIT SALES TO TOTAL SALES BY KIND OF BUSINESS Instalment sales increased during 1948 in all reporting lines of trade, the aggregate being 29 percent larger than in 1947. The percentage gains were impressive in the case of automobile dealers and hardware, department, and auto tire and accessory stores. Substantial percentage gains were also reported in all other lines except jewelry, where the increase was moderate. In those lines which handle durable goods, the increase in instalment sales was accentuated by the larger supplies of goods and a wider distribution among those customers who find it necessary to make use of maximum credit terms in order to acquire such goods. It is significant, however, that despite the large percentage gains in 70 MONTHLY BUSINESS REVIEW instalment sales during 1948 as compared with 1947, the aggregate of such sales last year constituted only 14 percent of total sales. The largest percentage-64 percent-was reported by furniture stores and reflects the f act that merchandise handled by such stores is normally handled on an instalment basis, a trend that persisted throughout the war period in contrast to developments at most other types of stores. At auto tire and accessory stores where 37 percent of the year's total sales were made on an instalment basis, the increase in 1948 as compared with 1947 reflects the wider use of instalment credit, with its longer pay-out periods, as a competitive factor in attracting customers and stimulating sales. In the case of household appliances, the increase in the relative importance of instalment sales is indicative of the fact that many dealers who were able to sell the available merchandise for cash or on a limited credit basis during the period of shortages have had to shift increasingly to an instalment credit basis as supplies have become more plentiful. At men's clothing and apparel stores, where credit sales are handled mostly through regular charge accounts, the volume of instalment sales continued negligible and the ratio to total sales remained unchanged in 1948 as compared with 1947. Receivables. The continued expansion during 1948 in the volume of receivables outstanding at reporting stores in the Eleventh District constituted merely a part of nationwide developments. From Table VII it will be observed that the TABLE VII volume of consumer credit outstanding at the end of 1948 totaled nearly $16,000,ESTIMATED CONSUMER CREDIT OUTSTANDING 000,000, representing an increase of United States about $2,500,000,000 or 19 percent. (Amounts in millions of dollars) While the increase was smaller than in Percent Amount outst.anding e nd~f.y ea r change either of the preceding two years, it is 1948 1941 1948 over 1947 Type of credit significant not only from the standpoint Instalment credit-tota1. .......................... . $ 8,196 $ 6,187 32 44 4,095 2,839 Sale credit-totaL ................................. . of the amount but also because of the Automobile ............................................ 1,961 1,151 70 extent to which credit has been a factor 874 34 Department and mail order stores .. 650 20 Furniture stores .................................. 528 631 in sustaining sales. As in other recent 52 62 Household appliance stores .............. . 84 years, most of the increase during 1948 192 209 9 J ewelry stores ...................................... 266 26 336 All other stores ................................. . occurred in the instalment credit segInstalment loans.............. ..................... . 4,101 3,348 22 ment, where the rate of growth was oc- Single payment loans ................................. 2,902 2,707 7 3,612 7 casioned by a gradual lengthening of av- Charge accounts ......................................... . 3,854 Service credit ................................................ 972 920 6 erage maturities, as well as a rapid rise Total consumer credit........................ $15,924 $13,426 19 in new credit extensions. During the first three quarters of 1948 the expansion in SOURCE: F ederal R eaer1J4 BuUetin, March 1949. the volume of consumer instalment credit was more pronounced than in the comparable period of 1947, but in the fourth quarter the increase was only about one-half the amount in that quarter of 1947. This slackening in the rate of growth of instalment credit was largely a consequence of the leveling off of consumer purchases of durable goods in the latter part of the year. The net increase of $2,000,000,000 in instalment credit outstanding during 1948 brought the total of such credit at the end of the year to $8,200,000,000, representing a fourfold increase since the close of the war. In 1948 the increase in instalment sale credit, which was about as large as in 1947, was occasioned in large part by the 70 percent rise in automobile sale credit outstanding. While other types of instalment sale credit increased, the growth was at a much slower rate than in 1947. The volume of outstanding instalment loans made by various lending institutions showed an increase during 1948 of 22 percent, a rate about one-half that for total instalment sale credit. In comparison with the large increase in instalment credit, charge-account credit rose only 7 percent in 1948. This rate was also much smaller than the 18 percent increase experienced during 1947. In the Eleventh District the changes during 1948 in outstanding receivables varied widely, both among the several lines of trade surveyed and as between charge accounts and instalment accounts. Charge-account receivables reflected net declines during the year at stores in three reporting lines of trade and showed increases of about 25 percent in two lines. In tlle other four lines the increases generally were of moderate proportions. In four lines which handle durable goods, the net changes 71 MONTHLY BUSINESS REVIEW in charge-account receivables during 1948 indicate that collections on charge accounts exceeded new credits extended, but this development may have reflected, in part, the conversion of some charge accounts to an instalment basis during the course of the year. With respect to TABLE VIII instalment accounts the increases in receivables outstanding in seven of the PERCENTAGE CHANGE IN SALES-BY KIND AND LOCATION nine lines of trade were more proOF BUSINESS nounced than the respective increases in Eleventh Federal Reserve District instalment sales. Moreover, in the case .....--Percentage change 1948 over 1947----. Num'ber Total Cash OpeQ. of of automobile dealers and furniture sales s ales credit Instalment stores Kind o( business by location stores, the increases in instalment re- Automobile dealers: Corpus ChristL _____ ______________ 3 25 32 19 24 ceivables were greater than the national Dallas _____ ___________ ___ _ _____________ 8 28 32 10 2 _____________________ 6 F ort Worth____ average. In most of the lines handling 143 13 26 26 Galveston ______ __________________________ 4 9 74 14 24 durable goods, the increase in instalLubbock____________ __ _________ _______ ___ ____ 6 46 29 28 30 ment receivables outstanding is under- Auto tire and accessory stores: Houston _________________________ 3 37 3 -1 -3 stated to some extent because of the Department stores: substantial increase in the volume of Abilene ________________ ____________ _____ _____ 3 13 10 6 -2 Austin _______ _______________ __ __________ ______ 3 19 11 1 6 instalment paper sold to financing inCorpus ChristL ____ ________ ______ ____ 3 19 10 2 -7 Dallas ______ _ ______ __ _ ____ _ _ _ _ _ ___ _ ____________ 6 stitutions. 8 47 5 -9 The information on credit developments made available through the current Retail Credit Survey and from other sources confirms the fact that in 1948 consumers made use of larger amounts of credit to purchase merchandise and that many of them found it increasingly difficult to meet credit terms, which resulted in a noticeable slowing down in the rate of repayments. Moreover, the changes were most significant with respect to instalment credit, where the consumer could Denton ________ __ _______ ___ ___ ________________ Fort Worth__________ ___________ Houston ____ ___ ___ ________ _______ ___________ San Antonio ______________________________ Fur niture stores: Dallas ____________________________________ ._ ... Fort Worth.... ________ ..... ____ ...____ ... Houston ______ .. __ .. _.. ____ .. __ . _____________ Port Arthur __________________ ________ .. San Antonio_____ . __ . ________ .________ Shreveport.. ____ . __ .. Texarkana _____ . __ .. ____ J ewelry stores: Dallas ____ . ______ ... __ .. _____ ... _______ . __ . ____ Houston _. _____________________ .______ . Men's clothing stores: W~~~~~~n~pp~;~I ·~t~~~~-: ·· - o 3 3 5 4 -1 6 6 3 9 4 6 3 3 8 3 16 10 8 -6 4 -33 -14 -15 -13 -19 -26 -4 -4 o 1 7 5 3 -1 -1 -14 -12 9 6 32 • -12 14 o -1 7 -7 -8 15 4 Dallas ____ .. _______________ ----------.... --... 3 Houston ______________ ____ ____ . ____ ... ____ ... 5 24 2 -11 14 -1 9 19 -9 24 21 9 122 31 o 15 42 15 13 10 11 o -1 4 7 1 o o . JndicatE s change or less than one-half of one percent. spread repayments over a period of several months. These developments, as well as many other readjustments in the economy mentioned as being prominent during 1948, have continued thus far in 1949 and are indicative of the forces which may influence economic activity and the operations of individual concerns to a greater or lesser degree in the coming months. The problems growing out of these readjustments are not new and are common in some degree to all lines of business and industry and to each individual enterprise. It is important, therefore, that each business analyze the forces of readjustment and their implication and formulate sound business policies and practices for its operation within the framework of the general economic conditions, so that it can contribute to the strength of the economic system and to the stability of economic activity. 72 MONTHLY BUSINESS REVIEW Review of Business. Ind ustrial. Agricultural. and Financial Conditions DISTRICT SUMMARY The outlook for agricultural and livestock production in the Eleventh Federal Reserve District has improved materially during the past six weeks as a result of the generally adequate moisture supplies and the favorable growing and planting conditions in most areas. Range vegetation, which has made rapid growth, is providing ample grazing; as a result, livestock are making substantial gains in weight. The wheat crop is reported to be in good to excellent condition, with the estimate of 99,190,000 bushels for Texas indicating the second largest production of record for the State. Planting of spring crops is progressing satisfactorily, and early crops are making generally good, growth. According 'to the March 1 intentions of farmers to plant, the acreage seeded to spring crops in Texas this year may be substantially smaller than in 1948. Department store sales at reporting stores in the District increased by more than the usual seasonal amount from February to March, if allowance is made for the effect on sales of the late date of Easter this year. The dollar value of sales during Marcil exceeded that in February by 26 percent but was 8 percent smaller than in March last year. During the first quarter, sales were down 6 percent from those in the same period last year. Sales of furniture stores also showed a substantial seasonal increase from February to March but were 12 percent smaller than in March last year. The year-to-year decrease in March, while slightly larger than a month earlier, was lower than in each of the four months preceding February. The downward readjustment in the production of crude petroleum in die District continued during March and April, and the Texas Railroad Commission has reduced production allowables for the State in May by 54,000 barrels daily. The moderate reduction in May allowables apparently reflects the better balance between the demand for and the supply of crude petroleum in the District. Daily average production declined about 175,000 barrels from February to March, and a similar drop is indicated for April. The April production rate is running about 475,000 barrels below that in April 1948. Due partly to seasonal factors, the value of construction contracts awarded in the District during March rose substantially above the relatively low levels prevailing in January and February, the total for the month being 38 percent greater than in February and 12 percent larger than in March last year. While residential awards were higher than in February, they continued smaller than a year ago, with the total for the first quarter being about one-third lower than in the first quarter of 1948. The deposits of weekly reporting member banks in leading cities of the District increased about $30,000,000 between March 9 and April 13 and on the latter date were modera tel y larger than at mid-January. Loans and investments continued downward during the five-week period, and the total On April 13 represented a net decline of $118,000,000 during the preceding three months, with the decrease about equally divided between total loans and total investments. BUSINESS The seasonal increase of 26 percent in the dollar volume of sales at department stores in the Eleventh Federal Reserve District in March was greater than the usual seasonal rise for that month, if allowance is made for the late date of Easter this year. In consequence, the seasonally adjusted index of sales, which moved upward for the first time this year, was 376 percent of the 1935-39 average, compared with 358 percent in February and 384 percent in March 1948. Reflecting, in part, the effects of a three-weeks-Iater Easter in 1949 than a year earlier, however, March sales were 8 percent below those of the comparable month in 1948. The substantial year-to-year increase of 18 percent in sales which occurred in March 1948 was due to an unusually favorable set of circumstances, such as good weather, availability of merchandise, early spring shopping, and an early Easter; consequently, it is not surprising that sales during March this year fell below those of the same month a year ago. On the other hand, sales during March 1949 exceeded those of the 1947 month, despite an II-day earlier Easter in 1947. A comparison of t otal sales for the four weeks before Easter 1949 with the comparable weeks before the previous Easter indicates only a 3 percent decline from the 1948 dollar volume, a decrease due at least in part to lower prices and the seasonal influence of the shifting date of Easter. When the data are available, a comparison of total sales in March and April 1949 with those in the same months of 1948 will provide a much better indication of the trend of current I>usiness than a comparison of sales in either month considered separately. WHor,ESAT.E AKD RETAil. TRADE STATISTICS Ae:ail trado : Department. stores: Tot.'ll 11th Dial.. ~l~~~~~~i.... Fort Worth .. Houston ..... . S:m Antonio .. . Shreveport, t..a .... . . Other cit.ic5 .. . .. . •. Furniture stores: Tot.a.11lth Dist .... . Dallas ........ . . . Jlouston ........ . Port Arthur. San Antonio. Wholesale trade:· Automotive supplies Drugs and sundries. Dry goods ..... .. . Grocery (CulMine wholesalers not sponsoring groupJ) Hardware ......... . Tobacco products ..• 48 4 7 4 7 5 3 18 45 4 6 4 3 -8 - 4 -7 26 28 21 19 32 31 38 26 -12 2 -13 -27 -3 1 21 22 31 6 18 -8 16 9 -2 -8 - 10 - II -5 8 - 10 34 7 o - 2 - 11 - -7 -6 15 4 5 -5 -11 7 -2 -14 _0 o 4 7 10 - 5•• 5 4 -7 - 6 5 7 - 6 5 - 5 -15 18 13 8 -6 -3 - 7 -6 -5 -0 3 1 - I - 11 -4 5 4 8 -8 - -3 0 Wiring supplies, construction materials - 12 - 13 distributors .. ·Prc1imiruuy daL'l. COml)lied by United States Bureau of Census. tStocks at end o£ month. 0Indicates change of leJ!K tha.n one-ha lf of oue percent. I)/DEXES OF DEPARTMENT STORE SALES AND STOCKS Daily average sales-(1936-39- 100) Mar. Adjusted Jail , Feb. 1949 376 356 463 1949 358 323 386 Unadjwted Mar. 1949 11th Distrid . Dallas . Houston ... . . 3.\3 Feb. Jan, 1949 315 1949 306 277 303 335 311 399 340 Mar. 1948 384 363 449r 1949 3i8 Mar. 1948 384 338 466 363r 408r Adjusted Feb. Jan. Mar. StO<lks--(l935-39-IOO) ----Unadju..sted}'eb. Jan. Mar. 1949 392 1949 1949 346 362r · Unndjusted for 8e3.!IOnal variaticm. 11th District . Mar. 1948 404r Mar, 1949 413 1949 406 11}49 384 1948 42(lr r-Reviacd. Reports indicate that conSumers generally responded favorably to Easter and early spring promotions and price-reduction sales. Special price reductions on refrigerators and other appliances, radios and combiqations, nylon hosiery, and carpets and other floor coverings stimulated sales in those lines, with the result that the February to March gains were greater than MONTHLY BUSINESS REVIEW usual at this season. Moreover, the year-to-year decreases in sales of those items during March were smaller than in other recent months. Due at least in part to the lateness of Easter this year, the February to March increase in sales of women's and misses' ready-to-wear apparel and accessories was much smaller than in 1948, but the decrease from a year ago was much larger in March than in February. The sales of men's and boys' wear showed a moderate increase in March as compared with February and were about one-fifth smaller than in March last year. Reflecting the receipt of additional merchandise for the Easter season, the dollar value of inventories at reporting department stores continued upward in March, rising 7 percent from the level of the previous month. The earlier Easter last year, however, necessitated larger stocks on hand during March 1948, and inventories in March 1949 were 4 percent bclow those of the 1948 month. With virtually all forward commitments for Easter merchandise having been made prior to or early in March, the dollar volume of outstanding orders declined 26 percent from that in February. The decline of 35 percent in outstanding orders from the volume of the previous March also reflects the different Easter dates, as well as the all-time record level of sales during the spring of last year. TI,e ratio of collections during March to accounts receivable outstanding at the first of the month showed that the gradual downward trend on both regular accounts and instalments had been checked, at least temporarily. The rate of collections on regular accounts rose to 54 percent in March from 50 percent in the previous month and compares with 53 percent a year ago. The ratio of collections to instalment accounts increased for the third consecutive month and in March was 21 percent, or 1 percentage point above a month ago but still 4 points under the 1948 high reached in March. The increase in the rate of collections probably reflects in part the effects of tbe 1948 tax refunds, the average of which was higher this year than last, and the lower volume of durable goods sales. Credit purchases, however, continue to comprise an increasing share of total purchases. In March the ratio of credit sales to total sales was unchanged from tbat of ihe previous month at 66 percent but compared with a ratio of 64 percent in the corresponding month of the previous year. A seasonal upswing was reported in March sales at furniture stores in the Eleventh Federal Reserve District, the dollar volume being 21 percent above that of the previous month. This sales increase, however, was insufficient to equal last year's sales, and the March volume was 12 percent below that of March 1948. The dollar volume of furniture sales has shown decreases from the high levels of a year ago in each of the past six months. This slowing down in furniture buying apparently reflects the steadily diminishing backlog of demand, stronger resistance to high prices, the shift in buying to the more moderately priced furniture which is now available in larger volume, and the declining rate of home building, with the consequent smaller demand for furnishings. In line with the year-to-year declines in total sales of furniture, credit sales in each of the past six months have shown decreases from those a year earlier, but the percentage declines have been smaller than those in total sales. In consequence, the ratio of credit sales to total sales has continued the upward trend in evidence throughout the postwar period. This trend has reflected the marked expansion in furniture buying, the increasing pressures upon current inconlcs, and the dinlinisrung backlog of liquid reserves of an increasing number of families. 73 The ratio of credit sales to total sales in March this year was 88 percent, as compared with 86 percent in March 1948 and 75 percent in March 1946. Collections on furniture accounts increased slightly during the month for the first month-to-month rise this year and were 6 percent above those of March 1948. Accounts receivable, reflecting in part the monthly increase in collections, continued to edge downward from the level of the previous month, despite the increase in credit sales from the February volume. Tbe year-to-year increase of 17 percent in receivables was the smallest gain reported since the middle of 1946, suggesting a leveling trend in the growth of accounts receivable. The value of inventories at District furniture stores turned upward in March for tbe first month-to-month increase since last November. The 4 percent increase in the value of furniture stocks during March as compared with February reflects the anticipated seasonal increase in spring sales, as well as the addition of several types of furniture designed primarily for spring and summer use. Despite this seasonal increase in stocks, the total at the end of March was 2 percent below that in March 1948. AGRICULTURE Moisture supplies throughout most of the Eleventh Federal Reserve District arc favorable for the germination and growth of early spring crops, although additional moisture would be beneficial in southern counties of the Rolling Plains of Texas and New Mexico. Weather conditions in late March and April generally were satisfactory and field work in most areas progressed about on schedule, although planting was delayed somewhat Iby wet fields in the eastern and Coastal Bend counties of Texas and by unseasonally cool weather in tbe western part of the State. Spring crops generall yare making good growth, except where retarded by cool nights. Damage from freezing temperatures in the northwestern sections of the District during the first part of April was slight and confined to early gardens. Livestock have improved greatly during the past month as ranges and pastures responded rapidly to the wanner weather and the improved moisture supply. On April 1, the United States Department of Agriculture forecast a 1949 wheat crop in Texas of 99,190,000 bushels. This estiDlate, which indicates the second largest production of record for the State, compares with 56,290,000 bushels produced last year and the 10-year (1938-47) average of 53,944,000 bushels. The seeded acreage, estiDlated last December at 7,630,000 acres, is the largest of record, and it appears that acreage abandonment may be relatively small. Wheat has made rapid growth during the past month and is reported to be in excellent condition, except for slight insect damage in the northern Blackland counties of the State. Although additional rainfall in some counties of the Southern High Plains and Low Rolling Plains would be helpful in insuring high yields, moisture supplies generally are reported to be adequate throughout the wheat-producing areas of tbe District. Oats are heading out in southcentral Texas, witb leaf rust damage rather heavy in some counties. There has also been ligbt damage to the crop from ruSt and insects in northcentral areas. Corn planting is virtually completed throughout Texas and Louisiana, but cool nights have retarded the growth of young corn in northern and eastern counties. Grain sorghums are up to a good stand in southern and Coastal Bend counties of Texas, with seeding well advanced in western areas. Maturity of the Texas An crop was retarded in some areas by early April rains but a good crop is in prospect, with excellent yields 74 MONTHLY BUSINESS REVIEW expected in the southern half of the flax area. Cotton was up to a good stand in the southern and south central counties of Texas at mid-April. Much of the cotton land in northern counties was ready for planting at that time and some acreage was seeded, but many farmers were awaiting warmer weather before planting. According to press reports, a record acreage of cotton has been planted in the Lower Rio Grande Valley, where production prospects are good . Progress in seeding the Texas rice crop has been relatively slow because of delay occasioned by wet fields. Pecan trees have leafed out well in all areas and have been blooming in the early producing sections. Conditions in the commercial vegetable areas during the past month were favorable for field work and growth of crops, except in the upper coastal counties of Texas where delayed by excessive rains. Harvest of the Rio Grande Valley early potato crop is well advanced, with yields and quality reported to be good. Planting of the Panhandle summer potato crop has been virtually completed. Melon crops in early areas are growing satisfactorily, although there has been some insect damage, and planting of melons in the later areas has been active under favorable moisture conditions. The tomato crop in the Lower Valley, although much later than usual, is making good growth, while transplanting of the east Texas tomato crop has been active. Snap beans, cucumbers, and north Texas onions have made good progress. Onion harvest is under way in the Raymondville and Laredo districts, and the crop in the Coastal Bend continues to show improvement. CASH RECEIPTS FROM FARM MARKETINGS (In thousands or dollars) Cumulative receipt.. February January 1 to February 28, February 1949 State Ariz!>~a .. , .. T.JOul81ana ...• New Mexico. Oklahoma ... Texas ....... Crope Liyestock $ 8,33 1 15,883 5,519 $ 5,410 4.840 3,914 17,278 41,102 9,707 51,493 Total $ 13,741 20,723 9.433 26.9&1 92,685 1948 Total I 11.1106 19.6110 8,635 37~09 113.0lI0 Total. .. . . $ 90,933 $ 72,634 $163,507 1190,270 SOURCE: United States Department of Agriculture. 1949 $ 37,305 61,446 23.881 65,124 209,553 1397,309 1948 I 32,677 46,976 20,002 89,847 280.084 --$469,586 CASH RECEIPTS FROM FARM MARKETINGS (In thouSllods of dollars) January 1949r State t:::~~: . . . :::::::::. New Mexico ....... . Oklahoma .........• Texas ... . . . . . ..... . Oro", $ 17.530 33 ,056 10.774 17.380 60,375 Livestock $ 6,034 7.667 3,674 20.759 47,493 January Total 1 23,564 40,723 14,448 38,139 116,868 TotAL ....... .•.. 1148.115 $ 85,627 $233,742 SOURCE: United Statoo Department of Agriculture. r-Revised. 1948 Total $ 21.071 27.316 11.367 52,538 167,024 1279.316 New range and pasture feed is plentiful to abundant over the eastern, central, and southern parts of the District and is showing marked improvement in western areas as weather becomes warmer. Both surface and subsoil moisture are favorable to good early summer grass. Supplemental feeding of livestock was discontinued during the early part of April as ranges and pastures began to supply adequate grazing. Estimates of range feed conditions in Texas on April 1 were about 9 percent above a month earlier and slightly above average for this season of the year. Cattle and calves gained flesh rapidly during March and April, on the improving supply of new green feed and are now carrying fair to good flesh. The calf crop in Texas has made rapid gains, due to the fact that the milk flow of cows became heavy as grazing conditions improved. Stocker cows and yearlings have been in very strong demand as ranchmen have attempted to build up their herds in anticipation of favorable feed supplies this year. It is expected that a larger-than-normal percentage of heifers and heifer calves will be retained for herd replacements. Movement of three and four year old steers to Flint Hill and Osage pastures of Kansas and Oklahoma during late April and early May is expected to be substantially smaller than last year. Sheep and lambs are improving rapidly on the generally abundant supply of early spring grass available in the main sheep country. Losses of lambs since the storms in January and early February arc reported to be unusually low, with the percentage lamb crop in Texas expected to be near average or above. Ewes have been giving an abundant supply of milk, which enabled lambs to develop rapidly. Because of the generally plentiful supply of green feed, stocker ewes and ewe lambs are very much in demand. The few yearling lambs that have been marketed during the last twO months generally have carried better-than-average flesh for that season of the year. I.TVEBTOCK RECEIPTS-(Numoo.) - - 'Fort Worth market - _ - - ; & 0 Antonio marketMar. Mar. Feb. Mar. :Mar. Feb. 1040 1948 1040 1949 1948 1049 C!.os 34,364 33.s65 26,311 23,062 21,190 Cattl•......... ....... . . . 39,160 9,509 9,366 13,607 14.99 7 8..187 Calves .. ............. . . . . 12,615 56.239 56,674 8.292 9,737 6,870 Hop ..... . . ... .•...•.... 68,924 36,925 75,524 25,772 17,4110 39,596 19.003 Sheep . .. . . ... • .•••.•... TOP LIVESTOCK PRICES (Dollars per hundredweight) - - Fort Worth market - - - - ; 8 6 0 Ant.onin marketMarch March February March March February 1949 1948 1940 1040 1948 1949 Cia" 128.75 $23.110 124.60 $29 .00 122.50 S1auliliter steers ......... . $25.00 StDclt.er steers . .......... . Slaughter cows ..•.• ... . .. S1augbtar heifers and yearlings .....•........ Slaughter calves ...... ... . Stocker calves ........... . Slaughter lambs ......... . Hop ............... . . . . . ~.50 27.00 26.50 20.00 23.00 18.110 ·2i:.iil ·23:00 ·i9:25 27.00 26.00 28.50 32.00 21.25 28.75 28.00 26.50 22.00 23.25 24.60 25 .60 25.00 24.00 20.75 25.50 28 .00 27.00 27.50 21.25 29 .25 29 .00 26 .50 22.00 24.75 2<1.00 23 .50 26.50 23.50 21.00 Combined receipts of livestock at the Fort Worth and San Antonio markets during March were 23 percent above those of February but 15 percent below receipts of March 1948. The increase over February resulted from larger marketings of each class of livestock, with receipts of calves up about 46 percent while other groups were larger by 20 to 22 percent. The fact that total receipts were lower in March than during the same month last year is due entirely to a decline of 53 percent in marketings of sheep and lambs, which was only partially offset by substantial increases in receipts of cattle and hogs. Prices received by Texas farmers averaged slightly higher at mid-March than a month earlier but still were fractionally below the level of March 15, 1948, and 11 percent below the high point reached in June and July of last year. During the month ended March 15, price changes of individual commodities varied considerably, with most livestock and grains showing increases, while dairy products, eggs, truck crops, and citrus reflected declines. Reports from commodity markets indicate that from March 15 to mid-April, prices of cotton, lambs, and most classes of cattle made slight to moderate advances. Grain prices fluctuated within narrow margins, while hog prices declined sharply. Prospective Plantings The Nation's farmers will plant one of the smallest acreages of spring-planted crops, other than cotton, in more than 10 years, according to their intentions to plant as reported by the United States Department of Agriculture. The decline from 1948, however, is offset partially by a much larger acreage MONTHLY BUSINESS REVIEW of winter wheat sown last fall. After allowing for duplications and for certain crops nOt yet surveyed, the Department estimates that the total 1949 acreage of 52 principal crops may be approximately 360,637,000 acres. This would be about 1,600,000 acres less than last year's planted acreage and well below the wartime peak reached in 1944. The total prospective acreage exceeds by about 1 percent the aggregate of allotments or goals suggested by the Department of Agriculture. The greatest decline in spring plantings will be in the feed grains, with smaller declines in the oil seeds-soybeans, flaxseed, and peanuts-and most other row crops. Increases are indicated for spring wheat, dry peas, and tobacco. In the five states lying wholly or partly in the Eleventh Federal Reserve District smaller acreages of corn, oats, barley, sorghums, Irish potatoes, sweet potatoes, cowpeas, peanuts, rice, and hay are expected. As in the Nation, the increased acreage of winter wheat in the five states constitutes a partial offset to the smaller acreages intended for other crops. Because of legal restrictions, the Department of Agriculture does not collect information on farmers' intentions to plant cotton. PLANTED ACRES-TEXAS AND FIVE STATES (Tn thousands of fLCmJ) Texas Crop Corn . Winter wheat :: .. Oats. __ , ..... . . . . Barley, Flax ... .... ...... .. ..... Rice ................ _,_. All sorghums ..• , ..•....•. Irish potatoes ...... . . .... Indicated 1949 2.544 7.630 1,360 130 277 507 6,079 38 41 5 158 678 1,385 Fin States1 Average 1948 2,765 5,752 1,600 188 227 512 7,324 44 S1 5 185 798 1,505 lW8-47 4.320 5.134 1,838 335 40' 364 7,184 52 62 21 432 591 1,481 Indicated 1949 4,925 15,7411 2,570 441t 1948 5.238 14,7101 2,965 553' 26{1t Average 1WIH7 7,625 11.086' 3,540 920' 320' 88' .l,14{}1 1,104' 0251 8,028 9,477 9,704 81 91 131 Sweet potatoell .... . ..... . 120' 136 e 17S' Soybeans alone l . . . . . . . • . . 140' 12S' 155' Cowpea, al:one' .. , .... . • . . 2750 303' 640' Peanuts alone 7 •••••••••.• g24' 1,119' 804' All hay•... . ... ......... . 3,511 3,717 3,569 lArirona, Lousiana, New Mexico, Oklahoma, and Texas, 2Arizona, New Mexioo, Oklahoma, and Te:ta.1!l. IShort-time average. 4Texas, Arilona and Oklahoma.. 5Loui8ianllo and Tex88. 'TeX88; Louisiana, and Oklahoma. 'Grown alone (or ah purposes. 8Louisian3, New Mexico, Oklahoma; and TIUM. ·Aereage harve8ted. SOURCE: United. States Department of Agriculture. The report of farmers' intentions to plant indicates that in Texas the acreage of all spring-sown crops, excluding cotton, may be 5 percent 'below the acreage planted in 1948 and 4 percent below the 10-year average. Plantings of wheat and flax in the State last fall were the highest of record, so the over-all crop acreage, excluding cotton, will be about 1,000,000 acres below both the 1948 acreage and the 10-year (1938-47) average. The prospective acreage of grain sorghums is 17 percent below last year, due partly to the expanded wheat acreage. A reduction of 31 percent is indicated for barley and 15 percent each for oats, cowpeas, and peanuts. The smaller acreages of oats and barley resulted partly from the severe and extended drought of last fall, while peanut acreage reduction is due to the acreage allotment program for 1949. The intended corn acreage, which represents a decrease of 8 percent from last year's planted acreage, is the lowest since 1879. The reduction in hay acreage would result chiefly from the smaller acreage of peanuts. In Louisiana, acreage reductions are indicated for all major crops (excluding cotton). Oklahoma farmers are expecting to increase plantings of soybeans by 19 percent and corn acreage by a small amount, while the intended acreages of all other spring-planted crops (excluding cotton) are smaller than in 1948, FINANCE Loans and discounts of the weekly reporting member banks in leading cities in the Eleventh District continued to decline between March 9 and April 13 and on the latter date amounted 75 to about $1,071,000,000. The decline in loans, which has been unbroken since the first of the year, was a result in part of the normal seasonaL trend but, in addition, shows the effects of the slowing down in business activity that has been characteristic in this District and throughout the Nation. This has been especially apparent in connection with commercial, industrial, and agricultural loans, which declined by over $31,000,000 during the five-week period ended April 13 and by almost $47,000,000 since the first of the year. More cautious inventory policies On the part of merchandisers and greater selectivity on the part of bankers have combined with other factors to bring about the steady decline in loans that has occurred. The slowing down in real-estate activity is reflected in the slight decline in real-estate loans at selected member banks in the District, This category of loans, which increased steadily throughout 1948, has shown a decline of about $1,000,000 this year to date, indicating that new loan volume and repayments have been in approximate balance. Loans at country banks in the District have increased slightly during the last three months, but the increase has not been large enough to offset the substantial decline that has occurred at banks in the larger cities. Consequently, the total loans of all member banks in this District are down moderately from year-end levels. It is estimated that loans and discounts of all member banks in this District amounted to $1,804,000,000 on the last reporting date in March, in contrast with $1,833,000,000 On the last reporting date in December 1948. As a result of a decrease in holdings of certificates of indebtedness amounting to approximately $21,000,000, offset in part by a slight increase in holdings of Government bonds, total investments of the selected member banks in the District declined rby about $18,000,000 during the five-week period. Holdings of Treasury bills and other bonds, stocks, and securities showed no significant changes. CONDITION STATISTICS OF WEEKLY REPORTING MEMBER BANKS IN JJEADING CITIES-Eleventh Federal Reserve District (In thousands of dollars) Item Apri11S, 1949 Total loans and iD\,'cstments ... . .............. .. ... $2,225,053 Total loans-Nett . ..... _. _. _.. .... "........... 1,000,820 Totalloans-GroB8 ................ ... ........... 1,070,957 April 14, 1948 $2,l73,1g5........ 1,010,507- March Di 1949 $2.274,074 l,OQ2,511 1,101,836 ~~~e~l~~~u:~~aJ!le~aFn~~~~[ti~~~: : : : 73~:As~ 69~fo~ 76~~f Other loans for pUN!hasing or carrying securities.. 52,341 55,g21 56,914 Real-estate loans........ .................... 87,152 80,748 88,247 Loans to banks.. .. .. .. . . .. .. .. .. ... . . . . . . . . . . 204 376 591 All other loan.!!.. . .. ..................... 189,048 169,715 183,588 Total investments . .. I,Ui4,096 1,162,688 1,172,238 U. S. Treasury bills.............. . . ..... ...... 28,051 11,311 28,450 U. S. Treasury certificates of indebtednesa....... 244,525 163,011 265,428 U. S. Treasury notes..... ..................... 39,838 93,007 41,529 U. S. Government honda (inc. gtd. obligationa)... 121,957 778,822 716,306 Other securities................ ........ . ... 119,719 116,537 120,525 Reserves with Federal Reserve Dank. ...... . .••.. 529,037 467,488 544,124 Balances with domestic banks.......... . ........... 312,870 300,408 251,552 Demand deposit.&-adjustecl.· .............. . . . ....... 1,Q39,029 1,841.953 1,935.686 Time deposLts except Govt.. . . .. ... .. . . . . . . .. .. .. . . 418,382 S94,073r 406,602 United States Government deposits.. ... . . . . . . .. .. . . 52,320 44,397r 51,062 Tnterbank demand deposits. . . . . . .. .. .. . . .. .. . . .. . . 516,471 531,185 526,563 Borrowings from Federal Reserve Dank.............. 0 0 1,000 -Includes all demand deposits other than interbank and United States GovernlUent. less cash items repr>rted as on hand or in process of collectir>n. r Revised. tArter deductions for reserves and unallocated charge-ofi's. -Prior to June 30 1M8, the individual e1assea ofloaIl.!l were reported net; however, the amount of rescrvps dedueted subsequent to June 30,1948, W'8! 80 small as to have DO significant effoot upon the oomparability of the data. Following several weeks of decline, demand deposits at selected member banks in the District increased during the first two weeks of April and totaled $2,702,000,000 on April 13, or about $18,000,000 more than the total reported on March 9, The increase in deposits during the early part of April at these selected member banks partially offset the decline that had preceded the income tax date. Total demand deposits of 76 MONTHLY BUSINESS REVIEW these banks on April 13 , however, were approximately $150,000,000 less than the amount reported at the end of 1948. Changes that occurred in total deposits at these banks in leading cities were the result of increases in deposits of individuals, partnerships, and corporations and of states and political subdivisions, offset in part by the decline in interbank deposits. Gross demand deposits of all member banks in the District declined moderately during March and averaged during that month about $287,000,000 less than the daily average during December 1948. The daily average of gross demand deposits of the District's member banks, however, was about $120,000,000 larger during March of this year than during the same month a year ago. For the past three months, time deposits have shown virtually no change in this District, averaging about $607,000,000 since the first of the year. month ended April 15 from $659,357,000 to $688,998,000. Holdings of Government securities declined moderately and comprised the principal change in earning assets of the bank. Reflecting the declining trend of bank deposits, member bank reserve accounts with the Federal Reserve Bank of Dallas were approximately $31,000,000 lower on April 15 than one month earlier. CONDITION OF THB FEDERAL RESERVE BAN K OF DALLAS (Tn thouaandl! of doUars) April 15, 1949 Hem Total gold certificate reserves .... . 1688 ,998 2,280 Discounts ror member OOnks ..... . 5,323 FOrelgD loans on gold . ......... .. 915,534 U. S. Government securities ...... . 923, 137 Total earning assets ............. . 914,441 Member bank reserve deposita ........... . 593.368 Federal Reserve notel! in actual circulation .. AprilUi, 1948 $525,097 549 5,202 930,315 936,066 Mnrch 16, 1949 1659,357 4,100 5,320 '24,740 '34.160 9'5.807 597,042 i97,919 589,143 GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS Eleventh Federal Reserve District SAVINGS DEPOSITS (A veragea of daily figures. In thousands of dollars) Combined total Gross Date demand March 1047 ... $4 ,6.14,452 March 1948 ......... . 5,019,'6' November 1948 .. . . " 5,407,874 Dooember 1948 •..... , 5,427,633 Janua.ry 1949 ......... 5,430,929 February 1049 ....... . 5, 193,624 March 1049 .......... 5, 189,728 Country bow Reserve city bankl Gross Time demand 'lime $2,22.\,4 18 $326,&.l3 2,357,864 357,605 2,584,489 379,005 2,613,198 382,118 2,612,02.\ 300,682 2,474,757- 300,045 2,450,349 388,298 $517,295 569,800 594,12.\ 595,339 607,167 607,063 607 ,104 Gro.. demand BANK DEBITS. END·OF-MONTH DEPOSITS, AND ANNUAL RATE OF TURNOVER OF DEPOSITS (Amounta in t.housands of dollars) City 1949 1948 Arirona: Tu C80n .. . ... $ 6.\,4 17 - 1 1949 16 Mar.31,1949 $ 85,070 Annual rate or turnover Mar, 1949 9. 1 Mar. 1948 9. 1 Feb. 1949 7.7 LonWan.a : :Monroe •.. .•.••..•. Shreveport .. ....... New Mexico: Roswell . Texaa: 36,040 140,322 14,978 Abilene ...... 34,711 00,600 Amarillo Austin ............ . 160,207 Beaumont ..... .... 911,116 Corpos Christi. . . . . 77,972 Cormca.na .•....••.. 9,961 Dallaa.,., ... , .... , 1,059,239 EI Paso .... , ...... , 135,374 Fort Worth ....... . 310,101 Galveston . ... .•.•. 75,619 HOU8ton .........• . 1,147.191 lAredo ............ 17.6M Lubbock ........... 64,433 Port Arthur ....... . 34,219 San Angelo ....... , . 28,760 San Antonio ........ 257,526 Texa.rkaro·· ....... 14,293 44,059 ~::: :'.'.::::::::: 52,295 Wichita Falla ..... . . 69,660 Total-24 cities .... . . 14,029,747 5 '0 24 -2 -1 -2 8 6 6 3 9 3 -4 -14 -6 6 3 8 2 16 15 17 27 42,143 163, 100 18,266 10.2 10.2 9.7 9.8 10.0 9.& 8.8 8.8 7.6 16 36 6 16 11 15 13 15 20 12 10 18 I 19 20 16 22 14 18 37,900 82,566 106,101 98,59' 78,005 20,158 736,523 117,699 287,375 911,125 900,761 21,990 65,047 39,725 37,238 315,772 23,010 49,005 66,026 110,515 10.3 13.1 18. 4 11 .8 11.8 5.9 17. 2 13.6 12.7 9. 2 15. 1 9. 5 lU 10. 2 8.9 9.7 7,4 10.3 9,5 8.8 9.7 12.0 15.4 12.6 13.1 6.1 17.2 13 .2 13 .3 9.6 16 .4 9.5 11.8 11.9 9.8 9,4 7.3 9.7 9.8 8.0 8 ,4 10 .9 13 . 3 10.9 10, 1 5.2 14 .9 12 ,0 11.0 7.8 13.3 8.5 9,5 10 ,1 7,3 8,2 6.4 8.5 8,2 7. 4 15 $3,573,592 13.3 13,3 11,5 IQ March 31, 1949 'lim. $2,42U,00' $100,602 2,661,600 212,195 2,823,385 214 ,220 2,814,435 213,221 2,818,004 216,<85 2,718,867 217,018 2,1189,379 218,806 Debits of banks in 24 cities of the District were 7 percent larger during March 1949 than during the comparable month in 1948 and 15 percent more than the total reported for February of this year, Largest increases during March in bank debits were reported by banks in Austin, Wichita Falls, and Amarillo, while largest decreases were reported from Port Arthur and San Angelo. The annual rate of turnover of deposits increased from 11.5 times during February to 13.3 times during March. The annual rate of tUrnover during March of this year was the same as the rate reported during March of 1948. - - - Debits+ - - Pc~. chanv over End~f-month Mar. 1 ar. eh. deposita- Eleventh Federal Reserve Dilltrict +Debits LIl deposit accoWlts except interbank acoounts. 'Demand and time deposits at the end of the month include certified and officers' ched" out-. atandintt but exclude deposits to the credit of banks. '-This figure includes only one bank in Texarkan.'l. Texas. Tolal debits for all banks in Tu. arkana, Tens-Arkansas, including two banks located in the Eighth District,amountedl.o $26,486. Condition statistics of the Federal Reserve Bank of Dallas show an increase in total gold certificate reserves during the 3 37,364 Amount of savinp depomtll I 25,112,597 3 8 2 4 4 8 2 2 5 3 3 55 12,081 141,791 32,349 43,743 23,274 101,998 1,769 6.720 39,66.\ 9,602 7,393 63.607 6,308.445 78.292.905 22,859.158 36,147,456 21.312.966 74,016,151 3.445.657 4,1188,864 46,175,61 8 10.164,863 4.556.744 54,449.720 102 620,346 $385,531,144 Kumber or Numoor or City wuisiana: Shreveport. Texa8: Iknumont ......•.. Dallas ...... . .......... EIPaao ................ Fort Worth ...•.. • • •••• Galveston .. . ..... . ... . . Houst.on . .. ........... Lubbock .... Port Arthur ........... . Sun Antonio ..... Wa.co . .. ... ... .. Wichita Falls ..... All otber ...... .. Total ............. reporting bonks ISBvings tlc)XllSitors Peroont.a~e change in I18.vings epDflita from March 31, 1948 - 2.6 Feb,28. 19'9 - 0 ,6 - 0. 2 - 0 .9 -1.7 0.2 - 0.8 2.7 96 .0 - 5.2 - -5.1 - - 6.3 0.1 0.6 - 0.2 - 0 .2 0 ,02 1.3 0 .2 0.3 0.04 10.8 0.8 0.7 0.6 0.9 0.01 - 0.00 - A review of figures of currency circulation shows that the amount of money in circulation in the United States and the nOte circulation of the Federal Reserve Bank of Dallas continued to decline through March, although the total decline during the first three months of this year was less than during the same period in 1948 . During the first quarter of 1949, the decline in actual note circulation of this bank was about $28,300,000, as compared with a decline of about $34,100,000 during the same period in 1948. In the United States, money in circulation declined about $922,000, 000 during the first quarter of this year, or approximately $2 69,000,000 less than during the first quarter in 1948. Latest figures available show that on April 15 Federal Reserve notes of this bank in actual circulation amounted to $593,368,000, while money in circulation in the United States on April 13 totaled $27,507,000,000. The excess of sales of sa vings bonds over redemptions in this District during the first three months of this year amounted to about $6,600,000, in contrast with $2,700,000 during the first quarter of 1948 , A better sales record during February and a much smaller net vol ume of redemptions during March than during the two comparable months last year more than offset the less favorable record in January this year as compared with the same month in 1948. During March, redemptions of savings bonds in this Distric t amounted to $19,622,000 and were about $548,000 more than sales. In the United States, however, sales of savings bonds during March exceeded redemptions by almost $150,000,000, During the first quarter of this year, Treasury receipts from income taxes wi thheld by employers were about $543,000,000 less than during the same period last year, while other income tax receipts were $470,000,000 less tban during the comparable 77 MONTHLY BUSINESS REVIEW period in 1948. Treasury receipts from otber tban income tax sources also were less, wbile expenditures during the first quarter exceeded those of the same period last year. Larger expenditures hy tbe military establishments, tbe Economic Cooperation Administration, and the Commodity Credit Corporation contributed importantly to tbe larger volume of total expenditures reported during tbe first quarter of this year. NEW MEMBER BANK The First State Blft/k, H<fWkins, Texas, located in the territory served by the H ead Office of the Federal Reserve Ba·nk. of Dallas, was admitted to membership in the Federal Reserve System on April 4, 1949. This bank. has capital f'tnds of $73,900, including capital of $50,000, surplus of $15,000, and undivided profits of $8,900. The officers are: R. B. Smith, Chairman of the Board; C. C. Sims, Presidmt; J. E. Green, Vice President; J. T. Hallmark., Cashier. INDUSTRY Nonfarm employment in Texas is reported to bave followed tbe usual seasonal pattern with a moderate increase to 2,309,000 persons by mid-April, according to estimates of the Texas Employment Commission. The April level of nonfarm employment represents 26,000 or 1 percent more than tbat of February and 70,000 or 3 percent above tbe corresponding level of a year ago. An increase in employment since February bas been reported in practically all major cities of the State. Employment in construction sbows tbe largest gain, witb a prospective increase of 11,000 workers since the February seasonal low, while retail trade, accelerated by Easter and other spring shopping, added about 4,000 to its pay rolls. The food processing industry and the aircraft manufacturing industry also employed more workers. Employment in tbe Nation in Marcb sbowed the first definite improvement in five months, reacbing 57,647,000 workers. The number of unemployed workers declined to 3,167,000, a drop of 54,000 from February, althougb remaining 727,000 greater tban a year earlier. The number of employed persons actually at work in Marcb was 55,832,000, wbicb was 655,000 more tban in the previous month and was 687,000 more than in Marcb 1948. A seasona l expansion of employment in agriculture, construction, and some other industries counterbalanced the effect of further layoffs in other sectors of the economy. The reductions since the first of the year in domestic crude oil output and in imports have brought the Nation's supply of petroleum into better balance with demand at present prices. In the Eleventh Federal Reserve District, daily average crude oil production in March was 2,379,000 barrels, or 392,000 barrels and 14 percent under the November 1948 peak rate. The net reductions in daily allowable production for April of 222,000 barrels in Texas, 7,000 barrels in Louisiana, and 4,000 barrels in New Mexico may cut the District's daily average production to about 570,000 barrels below the November rate. Net allowable production has been reduced since December by 723,000 barrels per day in Texas, 25,000 barrels in Louisiana, and 6,000 barrels in New Mexico. The decrease in crude oil production in Marcb as compared to February amounted to 190,000 barrels daily or 4 percent in rhe Nation and 175 ,0 00 barrel s per day or 7 percent in the Eleventh District. As compared ro a year ago, production is down 3 percent in the Nation and 9 percent in the District. In April, production in the District is expected to drop to about 8 or 10 percent below March and 17 to 20 percent below a year ago. CRUDE OIL PRODUCTION-(Barrelo) March 1049 Area Texas: DisLrict 1 . ....... . . ... . . . 2 .. . ......... . ... . 3 ...... . . . . . . . Total production Daily average production Increase or decrease in da.ily average production rrom March 19-48 26.768 1.298 829.!IJO 139.319 - 31.140 4.318.000 - 83.979 12.631.700 407.471 204.281 - 48.932 6.332.700 4.. .... 4 1.873 1.632 1.298,050 5 ............... 274.137 - 48.502 8.498.250 6 ................. 97.405 - 23.8.\1 3.019.550 Other 6 ... ...•... . 50.845 17,668 1.886.200 7h ........ .. ...... 46,977 3.095 1.456.300 7c ...........•. 614.247 - 53.150 8 .... . ........... 19.041.650 - 9.486 126.274 3.914.500 9 .............. 87,261 3.809 2.705.100 10 ............ - 2i4,802 2.126,851 6.\.932.700 Total Texas ....... . .. 134,274 5,401 4,162 .500 New Mexico . .. ... . ..... 9.467 117,557 3.644.250 North Louisiana ......... - 259,934 2,378.692 73.739.450 Total Eleventh District 74,440 2.753.256 Outside Eleventh District ...... 85,350.950 - 185.494 5, 131,948 Uuited States ............ .. .. . 169,090.490 SOURCE: Estimated rrom American Petroleum Instit ute weekly reports. ... . - February 1949 - - --- -- 1.114 16.OM 33.696 16.212 2.772 a9.368 9.902 4.621 2.746 44.494 12.446 2.460 184.885 222 1.770 186.433 16.626 202.11.19 Imports of crude petroleum and refined petroleum products amounted to nearly 11 percent of the total n ew supply in the United States in January and 10 percent in February, compared :with 9 percent in February 1948. In 1939 such imports were only 4 percent of the total new; supply. After allowing for tbe effect of exports, net imports constituted 6 percent of the new supply for domestic use in January and February 1949, compared with 4 percent in February 1948. By contrast, exports had exceeded imports during each of the 25 years previous to 1948. While the over-all petroleum situation is becoming more balanced, the various sectors of the industry may continue to have problems of adjustment. Thus, the low gravity heavy crudes of east Texas and the sour crudes of west Texas are in surplus supply, while higher gravity lighter crudes and sweet crudes are in much better adjustment to requirements. Crude oiL runs to refinery stills in March averaged about 5,420,000 barrels daily in the Nation and approximately 1,660,000 barrels in the District, representing an increase of 2 percent in the Nation and a decrease of 5 percent in the District .s compared to the previous month. The national figure is up 1 percent from • year ago, while the District figure is unchanged. Due to the mild winter, the demand for heating oil was considerably smaller than had been anticipated last fall, resulting in the accumulation of heavy inventories; but in recent weeks the refineries have been reducing the yields of fuel oil and increasing the yields of gasoline in order to improve the relation between the supplies of and demands for these products. The seasonal rise in gasoline consumption during the spring and summer months should maintain a strong demand for gasoline. The prices of crude petroleum, for the most part, have remained firm, althougb price reductions have been made for Pennsylvania and West Coast crudes and weakness is reported in the price picture for low gravity and sour crudes. Gasoline prices, which had been declining earlier this year, remained firm in March, while increases have been announced recendy in some areas. Fuel oil prices have been declining for several months and future prospects are still uncertain. Drilling activity as measured by welL completions reflected to some extent the general uncertainty in the petroleum situation. In the Nation during February 2,351 wells were completed, or 430 Jess than in January and 34 less than during 78 MONTHLY BUSINESS REVIEW Februa·r y 1948. In the District, however, completion in February numbered 1,109, or 279 less than in January but 203 more than in February 1948. The dollar volwne of construction contract awards in the Eleventh Federal Reserve District in March amounted to $63,000,000, which is $17,000,000 or 38 percent more than in the previous month and $7,000,000 or 12 percent more than in March 1948. The increase was concentrated chiefly in nonresidential building and in public works. Residential building awards were 12 percent higher than in the previous month but were 22 percent less than during the corresponding month of last year. During the first three months of 1949, construction awards totaled only $154,000,000, which is $39,000,000 or 20 percent less than during the same period in 1948. Residential awards were 34 percent lower, while nonresidential awards were only 12 percent less than during the first quarter of last year. Despite the smaller volume of awards during the first quarter of the year, it is expected that the total for 1949 will exceed the high 1947 figure, although the 1948 record may not be equaled. BUILDING PERMITS Percentage Pereentagochaoge valuation rrom Jan. 1 to Mar. 31,1949 chaol;l:8 valuation Mar. Feb. Valuntion 1948 1949 Number Valuation from lQ48 Ma.rch lOt!) City Number Louisiana: Shreveport .. , .. 312 I 951,800 -92 -13 817 I 2,830,919 83 381,244 1,045,740 1,548,268 961,367 1,020,915 5,928,278 767,082 2,393,971 235,995 4,434,250 1,112,8S9 293,623 2,701,BOO 1,035,725 344,635 -45 -23 -35 18 39 -53 17 -11 21 -27 -3 45 -31 35 -21 - 10 --49 8 -19 16 33 13 36 -80 -25 54 -10 1,305.873 3.433.165 4.759,525 2,882.696 2,797,478 16.18f;225 2.195.402 5,786.894 2.073,635 2 25 -21 64 -66 -39 131 232 465 743 947 663 3,220 614 1,548 618 1,607 394 387 3.204 391 -# 20S 2,049 ,437 847,498 7,545,329 1.888,050 804,175 16,958 111.600,701 TClM: Abilene ........ Amarillo ......• Austin ........ Beaumont . .. .. Corpus Christi. Dallas ......... EI Paso ........ Fort Worth .. . . Galveston." .. . Houston .. ,., .. Lubbock ....... Port Arthur ..•. 111 258 290 426 165 1.563 271 723 151 628 253 183 San Antonio.... 1,318 \Vaco . • • • .•••• 194 Wichita Fall8 ... 108 Total ........... . 7,034 11 $25,157,652 -47 -I 'Indicates change of less than one-balf of one percent.. 14~12,200 -14 10 205 -55 - 34 80 - 22 - 5,\ - 35 -41 Favorable factors in the construction outlook in the District include greater availability of labor and materials, a small decrease in construction costs, a large backlog of public and institutional construction, and relatively low vacancy rates. The winter slackening of construction and the slightly easier housing and general construction market have reduced the demand for construction labor relative to supply so that, except for a few crafts such as lathers and pl:Hiterers, sufficient workers are reported to be available for current construction work. The shrinkage in construction employment since last fall is reported to have induced noticeably greater labor productivity. Adequate supplies of nearly aU construction materials are now available, except for a few steel items. While lumber has been reduced in price, very little reduction has yet occurred in the prices of some metal goods. However, the greater availability and more regular flow of materials have enabled contractors to lower the costs of construction, since there are now fewer work stoppages due to lack of materials. Some further reductions in costs of materials are anticipated this year. VALUE OF CONSTRUCTION CONTRACTS AWARDED (In thousands of dollars) Eleventh District-totaL.. Residential. .... . . . . . . . . AlIother........... .... United States·- totaL.... ResidentiaL........... All other......... March 1949 $65,712 18,396 March 1948 $56,601 22,852 47,316 33,749 747,619 261,770 49!i.849 689,763 276.541 413,222 February 1949 145,114 15,603 29,511 668,467 193.073 315.394 January 1 to March 31, 1949 1948 I 155,175 I 193,057 48,173 72,714 107,002 120,263 1,199.070 1.986.936 603.971 146.889 1,195,099 1,240,041 ·31 st.ates east of the Rocky Mountains. SOURCE: F. W. Dodge Corporation. Residential building activity in the District is noticeably less than a year ago, with fewer large apartment projects and fewer expensive homes now under way or planned, While construction of low-priced housing is being accelerated, often the houses are reported to be too small, poorly built, and overpriced in terms of their size and quality. The housing shortage has not disappeared, and practically all low-rent dwelling units are quickly rented except in a few communities where overbuilding has occurred. Residential vacancies are found for the most part among the higher rent dwelling units. A decline is expected in the building of warehouses and office buildings, while an increase is anticipated in the construction of schools, churches, and other public and institutional buildings. Due to a few large projects, awards for manufacturing buildings in the first three months of 1949 were 25 percent higher than the average quarterly rate in 1948, but were 17 percent under the record 1947 rate. The postwar volume of highway construction has been at a lower rate than in 1939, but a larger volume of such construction is planned or in prospect. Sewer and waterworks construction and utility construction should be large in volume, due to the necessity of increasing inadequate facilities now serving growing communities. DOMESTIC CONSUMPTION AND STOCKS OF COTTON- {Bales) March March February 1949 1948 1949 12,7S9 720,892 14,720 879,961 12,054 640,182 U. S. Stocks- end of month: In consuming establishments .. 1,559,2S5 Public storage and compresses. 6,S15,51S 2,287,552 3,S75,09O 1,617,962 7,500,407 Consumption at: Texas mills ... .... ..........• United Statesmilla .... Aug. 1 to Mar. 31, This season Last season 101,602 5,060,131 104,029 6,311,107