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Food Prices-

Slippages in Supplies Explain
Only Part of Recent Changes
The recent surge in food prices
has come with several unexpected
~evelopments over the past year.
hortages in crop supplies appeared last fall as unseasonably
Wet weather reduced harvests. And
with demand up sharply, some of
~he most important shortages were
In Soybeans and grains.
h Growth in livestock production
h~s remained sluggish, despite
19her meat prices. Much of the
lack of growth in beef production
Was due to the severity of the win-

ter. The cattle industry was under
stress for several months and suffered heavy losses. But expansion
in beef slaughter was also slowed
by cattlemen holding back on marketings to expand their breeding
herds in anticipation of further
increases in demand. Because of
low returns to producers over the
past several years, pork and broiler
production had actually been cut
back.
Meanwhile, with the poor world
showing in grain crops and the

~s

disposable income goes up,
oOd takes a smaller share

1960 = 100
250 __________________________________________

PERCENT

20_ ~~__- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

15--'I--,-~--~~--~~~~--.__r--r__r--r
1960

I

1962

1964

~972

I

1966

preliminary
OURCE: U.S. Department of Agriculture

--Bu'

Slness Review I May 1973

I

1968

1970

1972

opening of trade with Communist
countries, foreign demand suddenly soared. This was, perhaps,
the most unexpected development
of all. Where, in the past, most
farm exports had been surpluses
shipped under concessional sales,
Americans found themselves, for
the first time, competing in world
markets for farm products.
The net effect was a sharp rise in
farm prices. And while the rise was
dampened by narrQwing market- .
ing margins, retail prices soared.
By early this year, food prices
were running well ahead of the rate
of advance in prices of other consumer items. In February alone,
they advanced 2.2 percent, mainly
reflecting a 5-percent rise in meat
prices.
In the wake of this surge, the
President moved in March to slow
the rise by ordering a ceiling on
beef, pork, and lamb prices, except
at the farm level. Until then, consumers had shown a stubborn resistance to shifts to less expensive
foods. Much of the driving force
behind the acceleration in food
prices had, in fact, been the persistence of basic shifts in consumer
tastes and preferences toward more
expensive items.
Consumers shift to meat
In the past, when prices of particular food items increased sharply,
consumers shifted to lower-priced
foods. And the effect of such substitutions was a moderation in the
rise in food prices overall. That, _
however, has not been :th~ resp'on~E:l
in recent months.
.
Although prices of meats and
other fresh foods have been rising
rapidly, these items have been in
increasing demand. And although
processing costs have mounted rap1

-

2

The big change came in 1972.
Spurred by farm prices that averaged 12.5 percent higher than the
year before, food prices spurted forward 4.3 percent. Meanwhile, the
rate of rise in the average price consumers paid for nonfood items
slowed to 3 percent.
That was the first time in six
years that retail prices of nonfood
items rose less than food prices.
And yet, not until well into this
year were there signs that consumers might be willing to trim back on
demands for higher-priced foods.
The difference between this period since early 1972 and the years
just before is that inflationary pressures on many consumer items had
lessened in 1972. But in foods, the
effects of shifts in consumption
were being reinforced by unexpected scarcities in some farm commodities. And some of these com-

run, even minor changes in purchases have been enough to force
major changes in prices.
But not until very recently have
consumers taken much notice of increases in food prices. This insensitivity was buttressed not only by
higher incomes, which allowed consumers to purchase more items that
would have been higher priced anyway, but also by the fact that food
prices were low compared with
other prices.
Food prices have been rising rapidly since 1969. But even with their
very fast average advance of 5.3
percent in 1969 and 1970, they did
not rise as fast as consumer prices
as a whole. And with the development of surpluses in several important commodities, the rate of advance slowed to 3 percent in 1971,
compared with an increase in all
consumer prices of 4.3 percent.

-

Farm prices tend to swing
opposite to changes in output . ..
1960=100

140--------________________

~

idly, consumers have shown little
inclination to give up any of the
convenience of foods processed for
greater ease in preparation and
serving.
Some of this persistence is
understandable. Although total
spending on food has increased
about three-fourths since 1960, it
has actually declined as a proportion of all consumer expenditures.
Where Americans typically allocated 20 percent of their budgets
for food in 1960, with more than
twice as much disposable personal
income in 1972, they allocated less
than 16 percent for food.
So while population has increased 16 percent since 1960, driving up the amount of food bought,
the ability to buy has increased
faster than the capacity to consume. And as people have become
more able to afford the foods they
want, they have bought not merely
more food but appreciably more expensive foods.
Increased purchases of more expensive foods have, no doubt, been
one of the side effects of recent increases in Government food programs. The food stamp and other
food distribution programs expanded 13 percent in 1972. Although totaling $3.5 billion, food
bought under these programs accounted for less than 3 percent of
the total food expenditures last
year. But given the much greater
propensity of low-income groups to
improve their diets, these outlays
probably had considerable influence on purchases of certain items,
especially meat.
The reluctance of consumers to
give up their choices of food when
prices are rising results in demand
for food being far more stable than
food supplies. And because the demand for many food items has been
slow to respond to price advances,
even small variations in food supplies have been enough to cause
sharp increases in farm prices.
Equally important, however, with
supplies fairly fixed in the short

__________________

130-

PRICES OF FARM PRODUCTi

120-

.---,0

110-

100-~

A<:/,

OUTPUT

9°-rI--'---r--'---Ir-~---'I--~--rl--~--'1
1962

1964

1966

1972 output preliminary
SOURCE: U.S. Department of A9riculture

1968

1970

1972

r

modities were those in increasing
demand well into 1973.
One of the strongest demands
~as, of course, been for beef. In a '
little more than 20 years, Americans have doubled their beef consUmption. With per capita consUmption having reached 116
Pounds in 1972, producers simply
?ould not keep up with the growth
In demand. As a result, retail beef
Prices advanced more than 9 percent during the year.
In the past, consumers might
have been expected to switch to
Pork. But hog production had
~ropped sharply after a record year
In 1971, and pork prices moved up
nearly 16 percent in 1972.
SUPplies respond slowly
Other unexpected factors besides
the slowness of growth in livestock
production have also contributed

to the rise in farm prices. Harvests
of fruits, vegetables, feed grains,
and soybeans were limited by unfavorable turns in the weather.
Also, in some cases, production had
been cut back because of low returns to farmers in prior years. Depressed broiler and egg prices, for
example, combined with higher
feed prices to contribute significantly to the lower production
levels since early 1972. And with
the opening of trade with Communist countries, farm exports rose.
Plagued with poor growing seasons, the Soviet Union and Mainland China bought unexpectedly
large volumes of American farm
products. Most of the shipments
were in wheat and feed grains,
which were thought to be in more
plentiful supply than needed.
As grain stocks fell, the costs of
feedstuffs were driven up, impact-

... with movements in the pork market
prOViding a good example
DOLLARS
MILLION POUNDS
36________________________________________________ 18

-15
SLAUGHTER PRODUCTION OF PORK

-

121.-~1~~~-T-r-r-r1-r1~~I"-,-.I~I~I~I-,-I
1954

1957

1960

1972 p .

So

1963

rice preliminary
URCE: U.S. Department of Agriculture

---

BUs'

Iness Review I May 1973

1966

1969

1972

9

6

ing on the livestock industry as it
tried to meet the increased demand
for meat. Feed prices early this
year averaged more than a third
higher than a year before.
Although demand has been increasing and there have been
marked reductions in supplies, results of efforts to expand production cannot be expected until late
this year-nearly two years after
food prices began to move out of
line with other consumer prices.
And because factors governing
farm production are vastly different from those governing the output of most industries, the outlook
for supplies is uncertain even then.
Weather, for example, which is
certainly not a factor in the production of most goods, is a primary
determinant of farm production.
Paced already by biological processes the grower cannot control,
production of both crops and livestock is subject to the vagaries of
the weather at every stage in the
production cycle. Such problems
as diseases and insects that constantly threaten growers are also
matters of little concern to industrial producers.
But because agricultural production, unlike the production of most
goods, cannot be quickly adjusted
to fluctuations in demand, the outlook is clouded even beyond 1973.
The interaction of shifts in income
and food preferences and in exports
and farm stocks causes cyclical
movements in commodity markets
that producers can adjust to only
after considerable lag. Because of
the volatility of farm prices resulting from the disruption of markets,
expected changes in any of the factors governing either supplies or
demand keep farmers constantly in
the position of trying to anticipate
changes by adjusting production.
Since their decisions are uncoordinated, the many producers
making up American agriculture
tend to respond to high prices or
short supplies by increasing output.
The result of so many independent
3

Total rise in consumer prices slows in 1972,
but farm prices soar
PERCENT CHANGE

15 --------------------------------------------------

1m CONSUMER PRICES-ALL
•

ITEMS

CONSUMER PRICES-FOOD

ma PRICES RECEIVED

BY FARMERSALL FARM PRODUCTS

10 -

5-

o
SOURCE: Economic Indicators

Spending on food increases
with farm value and marketing bill
BILLION DOLLARS

120--------------------------------------_____

80-

40

1960

1962

1964

1966

1971 and 1972 preliminary
SOURCE: U.S. Department of Agriculture

4

1968

1970

1972

decisions is often overproduction,
which farmers respond to by cutting back sharply on output-allowing the cycle to repeat itself.
These factors influencing supply
and demand bring wide swings in
farm prices. Recent movements in
hog prices provide a case in point.
The average price farmers received
for hogs at the start of 1973 was
more than twice the price they received two years before. At 15 cents
a pound, the price in early 1971
was less than the cost of production. Producers were discouraged
from raising hogs, and supplies fell
off. But at 38 cents in March, hogs
looked highly profitable this year.
Their profitability has, no doubt,
encouraged fresh efforts to produce
them, and the outlook could again
be for burdensome supplies and another drop in prices.
Such cyclical variations are espeCially characteristic of livestock
production and prices. With supplies shifting against highly inelastic demand, even a small drop in
supplies brings a sharp rise in
prices. And the result is often increased production and sharply
lower prices. The time for these
countermovements varies with the
life cycle of the commodity, frorn
at least three years for beef to less
than six months for broilers.
Price rises cushioned
Changes in the prices farmers receive, however, only partially affect
the prices consumers pay-and usually after some lag. Since farrn
prices account for well under half
the price of an average food purchase, any change in farm prices
is dampened by the much larger
costs of marketing. And since costs
of assembling, processing, transporting, and distributing food are
so important in the determination
of final prices, changes in farm
prices are weakened in their tranSmission to consumers.
As a result, farmers have not
shared consistently in the alrnost
uninterrupted rise in food prices

Prices of food change more
than prices of other commodities,
but less than farm values
PERCENT CHANGE
15--_________________________________________

10 _

5_

.---- .......... . .

0 _ _ ___

V

-

-5--rl--,---~--r_~--~--~--~--~~r__,_

1962

I

1964

I

1966

I

1968

1970

I

1972

SOURCE: Economic Indicators

Ov~r

the past 20 years. In fact,
~hIle the increase in population
f as created additional demand for
.ood and the increase in disposable
~ncorne has worked basic changes
~h the selections shoppers make,
f e resulting higher prices have
ten b~en moderated by weak
arrn pnces. Food prices rose 5.5
Percent in 1970, for example, and
3 Percent in 1971. But in both
Years, the prices farmers received
rOse less than 2 percent.
This dampening effect is often
strong enough to insulate consumel'~ frorn the volatility of farm
pr~ces. Unlike most consumer
prIces, which have been showing a
tong uptrend, farm prices can acually decline.
In 1966, farm prices soared 7
ihrcent over the year before but
e average for all consumer prices
rose less than 3 percent. The next
Year, when farm prices fell almost

r

BUsiness Review I May 1973

5 percent, consumer prices continued their moderate rise, advancing
nearly 3 percent .
There was much the same situation in 1964. The difference was
only in degree. Farm prices were
off moderately that year, and the
change in consumer prices was also
moderate, but on the rise.
The marketing system-Between
the farmer and the consumer lies a
vastly complex marketing system
of some 600,000 separate businesses that accounts for the very
considerable difference between
the amounts consumers pay for
food and the amounts farmers receive. And part of the rising cost
of food must be attributed to the
growing importance of this marketing system to the types of food
people buy.
Consumers have long paid for
more convenience in their foods.
Much of this is to be expected

merely from the division of labor
involved in feeding the nation. Very
little food, in fact-mostly only
fresh fruits and vegetables-moves
from the farmer to the consumer
without significant changes.
And as a result, this marketing
system not only moves large
amounts of food from the farm gate
to the checkout counter but also
increasingly transforms commodities into precut, frozen, and often
precooked foods before they reach
the shelves at supermarkets.
While this practice of almost
nationwide participation in the
preparation of meals helps reduce
waste ~d maintain quality, it also
adds SIgnificantly to the costs of
food. Last year, when sharply rising
farm prices brought the farmer's
share of expendi,tures on domestic
food to $39 billion, marketing ~osts
reached $77 billion.
Rising income has also allowed
people to eat out more, a~d their
tendency to do so cannot be ignored in an evaluation of changes
in food prices. More than a fifth of
the weight assigned to food in the
consumer price index represents
food eaten away from home.
The labor involved typically
causes prepared foods and restaurant meals to cost much more than
the equivalent nourishment in
homecooked meals. But the service
costs included in restaurant prices
keep changes in farm prices from
affecting the costs of eating out
as much as the costs of preparing
meals at home. Prices of restaurant
meals increased nearly twice as fast
as grocery prices in recent years.
Costs of marketing-While part
of the increase in food costs is the
result of changes in the types of
food people buy, not all the increase can be laid merely to the
fact that people have been buying
more such food. Some of the increase is due to the sharply rising
costs of processing these foods.
The biggest part of the cost of
marketing foods goes for labor. Direct labor costs of processing and
'5

Labor costs rise faster than other marketing costs
BILLI ON DO LLARS

80

(f)

C
II.

0

a:
c..
w

40

l-

e:(

a:
0

c..

a:
0
U

20

1960

1962

1964

1966

1968

19 70

1972

1971 preliminary
SOURCE: U .S. Department of Agriculture

distributing food totaled about $37
billion in 1972. Accounting for
close to a third of the nation's total food bill, that was nearly twice
as much as a decade before.
Some of the increase was due to
the greater number of workers required to meet the demand. But
much of it was due to higher
wages, salaries, and benefits to employees. Wages in the food processing and distribution industries
have been rising rapidly for several years. Although the rate of
rise slowed to 5.9 percent in 1972,
the August-to-August rate in 1971
was 7.3 percent.
While retailers and restaurateurs
pay a large part of this cost, the
largest part is paid by processors.
And except where they have been
6

offset by gains in productivity,
higher labor costs have been reflected in wider spreads between
consumer prices and farm prices.
By and large, food distributorswhether processors, wholesalers, retailers, or restaurateurs-have only
partially offset their rising costs by
boosting productivity.
To labor costs must be added
the costs of packaging, which become increasingly important as
more foods are processed. For foods
such as breakfast cereals and some
canned fruits and vegetables, containers can cost as much as the
labor used in processing the food.
Transportation adds further to
the nation's food bill. Costs of shipping foods from production areas
all across the country into com-

paratively few population centers
have climbed rapidly in recent
years. Where the movement of food
by rail and truck cost only sli?htly t
more than $4 billion in 1961, It cos
$6 billion in 1971.
By comparison, profits of como.
panies marketing food add very little to the total bill. Usually about
1 percent of sales, after-tax pro~ts
averaged slightly less than that In
1972. This decline kept the percentage return on food sales well
below the return to most industries.
Outlook remains cloudy
Several nonfarm factors continue
to influence food prices and possibly cloud the outlook for them.
One is the Phase III program.
Guidelines for economic control

could be dampening the markup in
~~nsumer prices, as was probably
e case with the Phase II program.
th Another is the devaluation of
e dollar. With the change in the
Value of the dollar in world mar~ets, the tendency is for the nalon's export position to improve
and prices of imports to rise. As regar.ds food, either tendency would
.e lU the direction of higher domest IC prices.
th But the most important factor in
e near term is still apt to be cons~mer demand. Whatever the net
: ect o~ other future developments
p~ PossIble dampening from the
li ase III program, a drain on supP es from continued export demand, and higher import prices~o~sumer demand will almost cero~~nIY be the primary determinant
ood prices in 1973.
P Although food supplies are exge?ted to increase this year, the
a: lns are not apt to be sizable. And
the economy moves ahead
reach' h'
'
lU
lUg 19her levels of employent an~ spending, consumer inco
Su mes WIll continue to rise. If cony mel'S follow patterns of recent
char~ and use their additional purhi ~lng power for more food of
su; er quality, additional presfur~h on supplies will tend to press
T er on food prices.
el{ he pattern of food prices and
er~lenditures set over the past sevYears suggests that last year's
t rend
th s can probably be extended
Su:~gh at .lea~t the end of 1973.
adv a projectIon shows food prices
Per anc~g even faster than the 5.5ave~:n~ lllcrease in 1970, possibly
high glllg as much as 10 percent
11er than in 1972.
in thuch of t?e increase is expected
of it ~ fir~t SIX months, with most
Pri onung from higher farm
Of ~es'l Moderately larger supplies
\Teg~tU try, fish, dairy products, and
Year b1es are expected later this
resp~ ut be~ause of the sluggish
nse of livestock production,

B

nUs'Iness Review I May 1973

Wages in food industries increase
faster than productivity
1960=100

200------------------------------------------

180-

120-

100 -

c:;;,,_....

I

1960

I

1962

I

1964

I

1966

I

1968

I
1970

I
1972

1970 and 1971 preliminary
SOURCE: U.S. Department of Agriculture

meat supplies will probably be very
tight until near the end of the year.
By then, a small increase in pork
production can be expected and,
with slight gains in beef production, supplies of meat are likely
to expand.
Generally, however, pressures on
food prices may be slow to abate.
Because of the considerable delays
involved in increasing production
of most farm commodities, recent
policy moves to increase food supplies are not apt to affect prices
until late in the year or maybe
even until 1974.
And since food prices include
more marketing costs than commodity values, retail food prices
will not change as much as farm
prices. The rapid rise in farm prices
since last year has squeezed marketing margins. Where the marketing bill increased 9 percent in 1970
and 6 percent in 1971, it increased
only slightly more than 2 percent

in 1972. This suggests that even
when farm prices eventually turn
down, these margins will widen,
dampening the effects of lower
farm prices on retail food prices.
While patterns of supply and demand have major impacts on food
prices at the farm level, prices at
the retail level are affected even
more by costs of transporting,
processing, and marketing food.
And the uptrend in these costs has
not abated.
Most families will, nevertheless,
very probably continue upgrading
their consumption of food. Although the increase in family expenditures on food can be slowed
by careful shopping and substitutions of lower-priced foods of comparable nutritional values, more
and more people appear willing to
pay the additional costs for better
and more convenient products.
-Carl G. Anderson, Jr.

7

Discount Window-

Seasonal Borrowing Privileges
Will Help Banks and Communities
Federal Reserve Regulation A,
governing the discount mechanism, has been revised to formalize
a "seasonal borrowing privilege."
The revision marks a major change
in the handling of seasonal discount credit without changing the
basic objectives of the regulation.
It is intended, in fact, to improve
the ability of the Federal Reserve
System to respond to the needs of
individual banks and communities
while helping to smooth the administration of monetary policy.
This change was made in response to a growing awareness
that many small and medium-size
banks face recurring seasonal
fluctuations in the supply and
demand for funds. Because most
of these banks do not have direct
access to major money markets,
they are forced to internally manage their assets in anticipation of
seasonal changes in the availability of funds and the demand for
them. The resulting strategies of
asset management have often been
detrimental to the long-term positions of the banks and their service areas.
Preliminary analysis by the
Board of Governors of the Federal
Reserve System indicates that
fully a third of all member banks
face the dual problems of limited
access to money markets and seasonality of available funds. The
proportion was found to be even
higher in the Eleventh District,
45 percent.
The new seasonal borrowing
privilege is aimed at alleviating
some of the problems of these
banks while furthering the underlying principles of Regulation A• To provide credit to member
banks to accommodate commerce, industry, and agriculture
8

• To assist in the maintenance
of a sound and orderly financial
system
• To meet temporary requirements for funds so orderly adjustments can be made
• To maintain an awareness by
Federal Reserve banks of the
general character and needs of
their member banks
Seasonality of funds
The funds available to a bank are
defined as deposits less loans. Seasonality of available funds can depend on significant seasonal increases in loan demand, deposit
withdrawal, or (as is often the
case) a combination of the two.
Because of the patterns of agricultural production, credit needs,
and marketings, seasonality has
usually been associated with rural
banks-or at least agricultural
banks. But while the incidence of
seasonality is higher at these
banks, large proportions of urban
banks and banks that are primaril~ nonagricultural also have sigmficant seasonal dips in available
funds. A seasonal pattern of avail-

-

able funds is apt to develop in anY
situation where much of the local
economy is based on a seasonal
industry-such as tourism, say-or
where a large part of the deposits
of an individual bank are strongly
influenced by seasonal factors.
Analysis of banks with less than
$250 million in deposits suggests
two-fifths of the banks outside
metropolitan areas and one-fourth
of the banks within such areas
have seasonal fund patterns that
probably qualify them for the new
borrowing privilege. In fact, be~
cause of their typically larger SIze,
the metropolitan banks that may
qualify account for more than ~alf
the estimated seasonal borrowIng
needs.
The size of the banks-and, in
some cases, their location-prohibits judicious use of national moneY
markets, creating the need for
other external sources of funds.
New borrowing privilege
In response to this situation, the d
Board of Governors has broadene
elements of seasonal borrowing in
Regulation A to make such bor-

ILLUSTRATION OF A BANK'S POTENTIAL SEASONAL CREDIT NEED
(Million dollars)

----------------------------------------~ I
Net fund availability
Seasonal pattern
Total
Diffe rence
(D eposits
from
Potenti al
Month
~ve rag e
Average
less
peak
seasonal
_______________e p~s s __~lo= s __~lo~ s~)__~m~o~n~th~~b~Or~ro~w~ gl_________
~ o ~it~
a n~
a~n
l n~
~

January .....
February . . . . .
March ... ....
April ...... . .
May . . . . . . . . .
June ... . . .. .
July . . . . . . . . .
August . •
September ...
October .. ...
November . ..

$10.1
10.1
9.9
9.9
9.8
9.7
9.8
9.6
9.9
10.1
10.2

$5.7
5.7
5.4
5.5
5.9
6.1
6.1
6.2
5.9
5.7
5.7

$4.4
4.4
4.5
4.4
3.9
3.6
3.7
3.4
4.0
4.4
4.5

$0.1
.1
.0
.1
.6
.9
.8
1.1
.5
.1
.0

$0.0
.0
.0
.0
.1
.4
.3
.6
.0
.0
.0

~~D~e~ce-m-b~e-r~~--~10~.2~----5.-8-----4-.4------.1------.-0---------~ I
1. Difference In net fund avail ability between peak avail ability month end specified month, less 5 percenl
of average deposits for the preceding year and subject to possibl e ad justments

Wing formal privilege. Federal
R abanks are authorized to
eserve

identified only certain banks as
mechanism was the primary tool
potentially qualified, other banks
for implementing monetary policy.
establish a seasonal borrowing
are not excluded. Because of difAs the nation's economy, and espeprivilege for any member bank
ferences in reporting, variations in
cially its financial markets, exwith a seasonal need for funds. The asset management, and the very
panded and became more complex,
Privilege must be renewed from
newness of the program, some
Federal Reserve open market opYear to year. Eligibility for the
banks that could qualify may not
erations became more important
seasonal borrowing privilege is
have been identified. Any banker
and the discount window played a
~ased on three explicit qualificathat believes his bank is subject
smaller role in national monetary
tlOns . The seasonal need mustto major seasonal influences or
policy.
• Result from recurring loanfeels there is a latent seasonal
As a result, Regulation A was
deposit patterns
demand for funds in his service
reexamined in 1955. But banks
• Persist for at least eight conarea can discuss the situation with
were in a fairly liquid position
secutive weeks
the loan officer at his Federal Rethen, and there was no apparent
• Exceed a threshold level of 5
serve bank.
need for major changes. Certainly,
percent of the average deposits
Needs will be determined on
the need for a seasonal borrowing
for the previous year
an individual basis. Since no two
privilege had not become notice:r'wo additional qualifications are
banks are apt to have exactly the
able. The concept of Federal Relmplicit in the revision. The bank
same seasonal needs, the general
serve banks as lenders of last remustformula for determining eligibility
sort may, in fact, have become
• Lack generally reliable access to is only a starting point. Some
pervasive. Even when banks faced
other sources of funds
banks, in fact, may not be eligible
credit needs, they appeared reluc• Dse seasonal funds furnished by for special borrowing privileges
tant to approach their Federal Rethe Federal Reserve bank to
even though the formula shows the serve banks, turning instead to
meet the needs of its customers
availability of funds to them is
other sources of funds.
t Banks planning to take advanIt has since become clear, howseasonal. Seasonality must be
w~ge of the change in Regulation A
based on local demand-supply
ever, that not all banks had access
ill be expected to arrange for
to other sources of funds. Also, desituations, and the bank's needs
nasonal credit with the Federal
must be based on the needs of the
pending on the general economic
eserve bank in advance of their
and financial conditions, many
community it serves.
ctUal needs. The Federal Reserve
sources were not reliable, espeFor these reasons, the Federal
tank can extend credit for only up
cially for smaller banks.
Reserve bank may require addinO 90 days. If a bank's seasonal
tional information before approvMany small banks manage their
needs are for a longer period, the
operations without outside help.
ing an application. In such case,
s' eserve bank will ordinarily conAnd the results are often less than
however, the requirement will be
lder extensions of credit under the only to ensure that the Federal
optimal allocations of resources for
seaS?nal credit arrangement.
both the bank and its community.
Reserve bank's response to the
Llke other bank credit, credit
Because of seasonal pressures,
application is appropriate to the
extended under the seasonal borthese banks have not been able to
needs of both the member bank
~~ng privilege must be secured
serve longer-term consumer and
and its community.
a 1 acceptable collateral. The
investment demands.
Reason for the change
mOunt and acceptability of the
The Federal Reserve is aware
~hUateral can be established before It was no accident that the reguthat while its open market operalation governing the discount
tions provide an efficient instru~~ctual need for credit arises.
ment of policy for the economy as
mechanism was designated "Regof th though preliminary analysis
e need for seasonal credit
ulation A." Initially, the discount
a whole, the effects of these opera-

b

! OURCES OF MEMBER BANK CREDIT AT FEDERAL RESERVE BANKS

~ge
_______

of total)
Source

1920-27

gpen market operations
F!~~funt window . . . .... . .

~~I' ~~~dit '
SOURc

llus'

.........

37.0%
59.0

~%

1928-33

1934-44

1945-50

1951-59

1960-68

1969-70

1971-72

65.0%
33.0
2.0
100.0%

96.0%
1.0
3.0
100.0%

97.0%
1.0
2.0
100.0%

95.0%
2.0
3.0
100.0%

95.0%
1.0
4.0
100.0%

93.9%
1.6
4.5
100.0%

95.0%
.5
4.5
100.0%

ES: Board of Governors, Federal Reserve System
Federal Reserve Bank of Dal las

Iness Review I May 1973

' 9

tions are not always felt equally at
all banks.
A reappraisal of the discount
mechanism began in 1965. The objectives were threefold: to assess
changes that might be made to
revitalize the discount mechanism,
to improve service to banks and
their service areas, and to make
more effective use of the discount
mechanism in implementing monetary policy. The seasonal borrowing privilege was one of the major
results of this reappraisal.
Careful consideration over the
past three years of the possible
usefulness of the seasonal borrowing privilege led to the conclusion
that this privilege could be very
helpful in achieving these objectives. The new privilege provides
a service of significant proportions.
Preliminary estimates indicate
that if all qualified banks make use
of this new privilege, average annual seasonal borrowings could approach $600 million-nearly twice
as much as the average discount
level for all banks in 1972. Borrowings could be even higher in
periods of peak demand.
Average potential borrowing by
banks in the Eleventh District was
estimated at more than $125 million-compared with an average discount level in 1972 of $14 million.
During June, the month of peak
demand in the Southwest, seasonal
borrowing may be half again
greater than the annual average.
Once a bank qualifies for the
seasonal borrowing privilege, it is
expected to have greater flexibility
in handling its assets and in serving its community. Since the bank
will not have to keep as much of
its portfolio in short-term or liquid
assets in anticipation of seasonal
demands, it can service more local
credit needs. It can also serve these
needs under more appropriate

10

terms than might be the case if it
were totally dependent on its own
resources for the satisfaction of
seasonal demands.
Because arrangements for use of
the seasonal borrowing privilege
should be worked out in advance,
the Federal Reserve banks will be
in a better position to anticipate
the timing and likely volume of
advances through the discount
window. This advance knowledge
should be useful in System assessments of overall needs for reserves,
which are provided principally
through open market operations.
Reassertion of intent
There has been some concern that
bankers might not understand the
administration of the discount
mechanism. Due, perhaps, to the
inadequacy of communications to
member banks concerning the
availability of funds at the discount window, many bankers seem
to have viewed the window as an
uncertain source of credit. Efforts
to implement a program of seasonal borrowing privileges, then,
are in line with System efforts not
only to improve the operations of
member banks and help them serve
their communities but also to dispel any misconceptions that may
have developed regarding use of
the discount window.
The new seasonal borrowing
privilege is expected to make a
major contribution in these areas.
The discount mechanism is the
Federal Reserve System's policy
tool for responding to the unique
problems of individual banks and
their service areas. It is also a
complement to the more general
instruments of policy-the conduct
of open market operations and the
setting of reserve requirements.
-Dale L. Stansbury

New member banks

The San Felipe National Bank, Houston, Texas, a newly organized institution
located in the territory served by the Houston Branch of the Federal Reserve
Bank of Dallas, opened for business March 30, 1973, as a member of the Federal
Reserve System. The new member bank has capital of $500,000, surplus of
$450,000, and undivided profits of $300,000. The officers are: S. Marcus Greer,
Chairman of the Board; Robert B. Sale, Jr., President; S. Ronald McLeod,
Senior Vice President; Julian C. Green, Jr., Vice President and Cashier; and
Melvin Corley, Assistant Cashier.

-

nus·

The Love Field National Bank, Dallas, Texas, a newly organized institution
located in the territory served by the Head Office of the Federal Reserve Bank
of Dallas, opened for business April 4, 1973, as a member of the Federal
Reserve System. The new member bank has capital of $400,000, surplus of
$400,000, and undivided profits of $200,000. The officers are: Michael A.
Myers, Chairman of the Board; V. P. Schumacher, President; William J. Cox,
Executive Vice President; and N. J. Alexander, Cashier.

Iness Review I May 1973

11

Federal Reserve Bank of Dallas
May 1973

Statistical Supplement to the Business Review

Total credit at weekly reporting
banks in the Eleventh District rose
substantially in the four weeks
ended April 18. The increase was
a~commodated mainly through a
SIzable inflow of deposits, although
~he banks also increased their net
orrowings in the Federal funds
Inarket.
Total loans expanded considerably, mainly due to larger than
fsual demands by businesses for
Oans to rebuild depleted inventories and to meet April tax dates.
In line with recent gains in retail
sales, consumer loan demand also
Was much larger than usual. The
rate of increase in real estate loans
Slackened somewhat, although deInand was about in line with the
a:rerage for the corresponding perIods of other recent years.
. The banks added to their holdIngs of securities in the four weeks,
as a reduction in U.S. Government
sec~rities was more than offset by
Increase in other securities, parIcularly municipal issues.
Total deposits expandetl consid~rably, primarily reflecting a rapid
Increase in large negotiable CD's
°litstanding. Demand deposits rose
s ghtly. With ample funds avail:ble through the sale of CD's and
f hrough purchases in the Federal
unds market, District banks modbrately reduced their borrowings in
?th the Eurodollar and commerCIal paper markets.

:?

Seasonally
i ent in theadjusted total employfive southwestern
Sates posted its sixth consecutive

~onthly increase in March reachIn
'
b g a level 3.8 percent above a year
before. This growth was outpaced
Yan expanding labor force, howe~er, and the unemployment rate
e ged up slightly to 3.7 percent

from February's 3.6 percent. In
March 1972, the unemployment
rate was 4.4 percent.
Employment in both manufacturing and nonmanufacturing
showed modest gains in the month.
The largest increase was in finance,
up 0.6 percent. In construction,
transportation and public utilities,
and government, employment advanced 0.3 percent. Mining employment was down 0.1 percent,
the only decline. All industries reported year-to-year increases, with
the largest being an 8.4-percent
gain in construction employment.
Registrations of new passenger
automobiles in Dallas, Fort Worth,
Houston, and San Antonio rose 31
percent in March. All four centers
reported increases, ranging from 9
percent for Dallas to 57 percent for
Houston. The level of registrations
was 28 percent higher than in
March 1972. Cumulative registrations for the first three months of
1973 were 23 percent greater than
for the same period in 1972.
Crude oil producers in the Eleventh
District states are unable to meet
the demands of buyers, even
though wells have been allowed to
produce at the maximum capacity
consistent with conservation since
early last year. Imports of crude
from the Middle East are helping
to bridge the gap between supply
and demand in Texas and are allowing refineries to operate nearer
capacity.
The President's recent energy
message laid the foundation for a
new national oil policy designed to
minimize future energy scarcity
and dependence on foreign imports
by encouraging domestic production and refining. The current

shortage has spurred some crude
price increases in the District, but
existing price ceilings will hold
these to modest levels. Rising
prices for natural gas are providing
much of the incentive for the pickup in drilling activity in the District states.
Department store sales in the Eleventh District were 12 percent
greater in the four weeks ended
April 21 than in the comparable
period in 1972. Cumulative sales
through that date were 10 percent
more than in the corresponding
period a year before.
Agricultural conditions are generally favorable in the Eleventh
District states. Winter wheat is
progressing well, grazing is good,
and an above-average grain crop
seems likely. Prolonged cold and
wet weather has delayed spring
planting, however, and the freeze
in early April caused moderate
damage to spring vegetables and
the fruit crop.
Cattle feeding remains strong,
with 3.4 million head on feed in the
District states on April I-up 18
percent from a year earlier. The
rate of occupancy in Texas feedlots
is slightly above 75 percent and is
near levels maintained in 1972.
The index of prices received by
Texas farmers and ranchers advanced 7 percent in the month
ended March 15 to a level 35 percent above a year before. Livestock
prices increased nearly 10 percent
in the month to a level 44 percent
higher than a year earlier, and crop
prices rose about 3 percent to a
level 22 percent higher.
Cash receipts from farm marketings in the five District states to(Continued on back page)

CONDITION STATISTICS OF WEEKLY REPORTING COMMERCIAL BANKS

Eleventh Federal Reserve District
(Thousand dollars)
Apr.18,
1973

ASSETS
Federal funds sol d and securiti es pu rcha se d
under agreements to resell . . ....... ...... .. .
Oth er loans and discounts, gross ..•...... .......

1,152,3 10
9,392,873

Commercial and industrial loan s .... .......... .
Agricultural loons, excl uding CCC
certiflcates of interest .••..... .............
Loans to brokers and d eal ers for
purchasing or carrying:
U.S. Gov ernment securitie s................ .
Other securities .......... ............... .
Other loons for purcha sing or carrying:
U.S. Government sec urities • .. ...... ....... .. .
Other securities . ... ............ ........... .
Loon s to nonbank flnancial institutions:
Sales flnance, p ersona l flnance, factors,
and other business credit companies •......

Other .. ............. ............... . . .
Real esta te loans ...................... ... .
Loons to dom estic commercial banks .. ........ .
Loans to foreign banks . .••.................
Consumer instalment loons. . .... ...• .. .......
Loons to fore ign governments, offlcial
institutions, central banks, and intern ational
institutions ...... ......... ....... . • .. ....
Oth er loans .•. . . . .. .... , .....•.......... : .
Total invest ments .• •.. ............... ... •..••
Total U.S. Government sec uriti es .............•

Trea sury bills •••.•..••..•..•........•...
Treasury certificates of indebtedness ••... . ..
Trea sury notes and U.S. Governm ent
bonds maturing:

Within I year ....................... ..
1 yeor to 5 years •..•.......... ....•..•
After 5 ye ars •........ ....•...........
Obligations of states and political su bdivisions:
Tax warrants and short·term notes and bills•••

All other . •. .••• ••••• •••••• • ..•....•.. ••
Oth er bond s, corporate stocks, and sec urities:
CertiRcates representing participations in
f ederal agency loons•.•........ ........
All other {including corporate stocks) ...•.....
Co sh items in process of coll ection •.•... .... .. .••
Reserves with Federal Re serve Bonk . . .. . ... . ... .
Currency and coin .•............•. .......•...
Balanc es with banks in the Unite d States . •.... . •.
Balances with banks in foreign countri es •.........
Oth er a ssets (including investments in sub si diari es
not consolidate d) ....•.........• ... ... .•...

Mar. 21,
1973

Ap r. 19,
1972

Ap r. 19,
1972

13,393,258

12,260,058

6,994,436
4,883,857
4,7 42,583
551,641
644,104
246,844 .
269,175
1,193,571
1,197,508

7,0 17,842
4,693,150
465,367
315,240
1,403,785

3,720
43,872
100,570
6,537,530

2,202
37,172
101,692
6,398,822

4,458
36,730
99,112
5,242,216

1,183,188
3,487,900
1,722,901
28,723
91,448

1,200,986
3,325,071
1,735,148
29,208
85,939

1,1 56, 158
2,68 1,073
1,287,897
7,149
87,039

13,250
10,120

11,250
11,2 20

21,800
1,100

2,481,318
372,306
500,115
160,762
13,951
1,174,310

lIA81l1T1ES

2,301,751
233,358
484,125
15 9,146
13,452
1,163,91 5

2,072,347
41,413
448,917
140,265
17,158
1,101,845

Total deposits ••••••••.•••.••••• ••• .•.••••••• 13,561,605
992,015
9,258,637

857,166
7,749,796

4,172,179

4,118,359

3,532,562

275,467

261,9 12

186,343

----

Total demand deposits ...... ................
Ind ividuals, partnerships, and corporations ....
State s and political sub divisions . .......... .

-

Mar. 21,
1973

Apr. 18,
1973

---7,024,075

U.S. Governmbnt •••.••...••..••••.••••••
Banks in the United States •.. .. ............
Foreig n:

----

42
57,132

1,167
65,321

1,160
62,661

banks, and int ernational in stitution s ......
Comm ercial banks ............... ......

Certifled and offlcen' checks, etc ...... . . ....

4,976
523,415

5,477
510,562

4,809
463,144

196,519
710,321
1,291,179
40,678
64,805
1,004,7 12

179,661
703,332
1,275,408
33,132
54,264
987,851

143,710
560,403
965,547
27,161
35,053
848,574

0
1,051,448
4,115,174

0
1,062, 191
4,028,821

0
918,669
3,614,478

270,624
0

191,154
0

---982,507
186,256
0

---- ---1,063,662
1,059,204

Totol time and saving s d epo sits . . ......... ...•

Individuals, partnerships, and corporation s:
Savings de posits ... .................. ..
Oth er Hm e deposits •..... .. ... . .. .. . ...
States and political subdiyisions ..•........•
U.S. Government (including postal saving s) ....
Banks in the United States •.... •.....••....
Foreign:
Governments, offlcial institutions, central
bank s, and international institutions •• ... •
Comm ercia l bank s........ ..........•..
Federal funds purcha se d and securities sold
und er agree ments to repurchas e •. ... ..... ....
Oth er liabilities for borrowed money ... ... ......

Other liabilities •••• • •..•• •. ..•.•.• •••.• ••••••
Reserves on loans.... ...•.. . ...•.•.. .........
Reserves on securities ................. • ...• . .•
Total capital accounts ........................

- -- -

TOTAL lIA81LITIES, RESERVES, AND
CAPITAL ACCOUNTS ...... .. ........ .. . 18,264,367

132,559
507,676
156,016

123,900
512,314
152,366

281,307
2,538,877

255,948
2,472,692
10,445
230,532
1,407,193
839,299
110,814
378.009
15,481

21,705
234,545
1,686,573
1,040,863
99,733
450,534
11,295

750,099

718,736

571,565

17,749,005

-

16,082,0£

166,688
2,127,878

96,723
215,760
1,429,253
901,095
109,451
401,751
12,361

----

168,750
511,594
192,164

---17,749,005

DEMAND AND TIME DEPOSITS OF MEMBER BANKS

Eleventh Federal Reserve District

-

(Averages of dally figures. Million dollars)
DEMAND DEPOSITS

16,O82 ~

TIME DEPOSITS
U.S.

Total

Dote

Adjusted'

Government

Total

Sayings

1I,207r
12,118
12,470
12,268
12,320
12,529
12,420
12,619
12,866
12,844
13,439
13,636
13,270
13,203

7,848
8,515
8,696
8,530
8,553
8,694
8,824
8,933
9,034
9,321
9,688
9,802
9,516
9,454

205
300
314
3B4
280
289
226
254
264
222
289
317
379
395

9,548
10,978
10,938
11,075
11,233
11,304
11,441
11,492
11,618
12,009
12,261
12,501
12,811
13,038

2,292
2,430
2,640
2,660
2,68 8
2,714
2,717
2,7 44
2,770
2,786
2,812
2,815
2,817
2,848

-------------------------~-----------------------------------1971,March ••.• •
1972, March .••.•
April .. .. ..
May •• .•• •
June .. •• .. .

July ..••..•

CONDITION STATISTICS OF ALL MEMBER BANKS

August •• .. .
September.

Eleventh Federal Reserve District

Novemb er ..
Decemb er ..

October •••
I 973donuory ••.•

(Million dollars)

Fobruary ••.

Morch ....•

----------------------------------------------------------1. Other than those of U.S. Government and domestic comme rcial ba nks, leSS

Mar. 28,
1973

Feb. 28,
1973

Mor.29,
1972

Loans and di sco unts, gross ..•.............
U.S. Governm ent obligations •.••. ... .. •.•.
Oth er securities . .... . ......... .. . .......
Reserves with Federal Reserve Bank .. ......
Co sh in vault . . .•. .. ........ .... •. . •....
Balanc es with bank s In the United States ....
Balances with banks in foreign countdes e •. ..
Cosh items in proc ess of collection ••.• ......
Oth er a sse tse .. .. .......' ...........•...

18,065
2,525
5,832
1,380
321
1,246
13
1,585
1,336

17,755
2,493
5,723
1,552
309
1,353
15
1,829
1,346

15,484
2,461
4,902
1,529
289
1,257
13
1,514
1,114

TOTAL ASSETSe ..... .................

32,303

32,375

28,563

Eleventh Federal Reserve District
(Averages of dally figures. Thousand dollars )

ASSETS

LIA81LITIES AND CAPITAL ACCOUNTS
Dem and d eposits of bonks •.. ............
Other demand d eposits ................ ..
Time d ep osits .............•.... ........

1,645
11,431
13, 138

1,692
11,828
12,970

1,759
10,354
11,001

Total deposits ........................
Borrowings .......... ..................
Oth er liabilities e ..•........... , .........
Total capital accounts e •..... ............

26,214
2,790
1,066
2,233

26,490
2,603
1,057
2,225

23,114
2,222
1,297
1,930

TOTAL LIABILITIES AND CAPITAL
ACCOUNTSe •..•.•••.. •••.•...•••.

32,303

32,375

28,563

e-Estlmated

I

I

Governments, official institutions, centrol

TOTAL ASSETS.......................... 18,264,3 67

Item

,

(

c as h Items In process of collection
r-Revlsed

RESERVE POSITIONS OF MEMBER BANKS

4 weeks end e d

4 w eeks end ed

Item

Apr.4,1973

Mor.7, 1973

Total rese rves held... . • . . • . • • • • . .
With Federal Reserve Bank......
Currency and coin. • • . . • . • • • • . •
Required reserves... • . . . . • . . . • . . •

I 753796
1'468'761
,
,
285,035
1,747,194

I 742 461
1'459'789
,
,
282,672
1,742,23 2

Excess reserves... . . . . .. . . . . .. .. .

6,602

229

Borrowings.. .. .. .. .. .. .. ... .. ..
Free reserves. . . . • •• .•• . . . . . . . . .

95,053
-88,451

63,968
-63,739

----

5 weeks end ed

Apr.

5~

I 837,852
1'582,80 8
'255,04 4
I 843,459
'_5,6 07
82
7 9
_6,38

-----------------------------------------------

\

I

I

BANK DEBITS, END-OF-MONTH DEPOSITS, AND DEPOSIT TURNOVER

SMSA's in Eleventh Federal Reserve District
(Dollar amounts In thousands, seasonally adjusted)

-

DE81TS TO DEMAND DEPOSIT ACCOUNTS'
DEMAND DEPOSITS '

Percent change

Annual rate
of turnover

March 1973 from

March
1973

3 months,

1973 from
1972

Standard metropolitan

(Annual-rate

February

March

statistical area

basis)

1973

1972

ARIZONA, Tucson .•.•...••. . •.. . . . ......••••. . ......
LOUISIANA, Monroe •.• • .•.•••••....•..••.. .•....•• . .

$11,986,848
4,959,480
15,587,256
1,150,452
3,126,228
9,433,824
13,331,724
7,830,024
2,973,240
1,337,392
7,745,196
615,456
169,573,344
10,816,368
33,185,892
3,601,848
163,029,492
2,234,616
1,382,724
8,163,276
3,150,240
2,535,456
2,057,640
1,869,168
25,563,768
1,577,064
1,966,452
2,960,568
4,403,760
3,359,700

2%
10
5
10
7
II
- I
-2
12
0
-4
2
2
I
5
2
7
-2
9
17
7
0
4
-9
I
6
-I
2
-4
6

19
37
12
15
20
5
5
23
15
16
16
26
20
18
24
44
27
14
7
13
16
7
10
II
15
14

29%
27
19
3
17
28
8
13
15
10
8
27
14
17
15
17
20
22
19
29
21
15
9
18
14
II
II
21
19
II

4%

17%

17%

Shreveport .. ....•...••..................

NEW MEXICO, Roswell' .... . .. ........ ........... ... .
TEXAS, Abilene •.. •.•....•• ..•••.. • . ••.......••.•. ..
Amarillo ..... , ........... , .. ................

Austin .....•........... . .... . ... .• . . .. .... . .
Beaumont-Port Arthur.Orange • • ...... ...........
Brownsvill e· Hariing en-Son Benito .... .............
Bryan-Co ll oge Station • . " .. . ..... ...•... . .....

g~r2~~~~h~:.'~i::::::::::::::: ::::::::::::::::

:

~~;taW~;th::::::::::::::::::::::::::::::::: :

Galveston·Texas City ......... • ..... . ..........

Houston ••••...•••.••••..••••...• . ...••..•...

~I;:d';;: ~~:~~

: :::: :::::: :::::: :::: :::::: ::::
Lubbock ......... ... .. .. .... ...... . ........ .
McAllen· Pharr· Edinburg •• ••..•...••.•..•.. •••••

~~:~~1~~~·jLJ};;;;;;;;;;;;; IIIi;;; IIIIi III

Texarkana (Texas·Arkansas) .•.•••.••.•.•..•...•

-

~~iit~:~~lis:.:.::::::::::::::::::::::::::::::

:

Total_30 ce nters ...•..•• • . •. • •• .••..•. . ....•..• .• .•

$521,508,496

26%
30
14

March 31,

$336,068
123,140
306,441
44,953
135,581
216,134
444,515
280,214
113,095
55,982
278,498
4 1,023
2,871,634
324,709
860,184
127,600
3,301,959
112,314
57,748
212,698
164,409
154,244
98,877
83,578
891,638
80,192
89,188
124,728
149,687
136,164

---$12,217,195

March

February

1973

1973

1973

36.1
41.5
51.1
24.8
23.1
44.2
28.6
28.0
26.2
23.7
27.5
15.1
58.2
34.9
39.1
28.2
49.3
19.9
23 .9
38.5
19.6
16.3
21.2
22.5
28.3
19.8
21.9
24.0
28.7
24.6

35.9
40.5
49.1
21.4
21.6
40.9
28.5
28.8
23.5
23.6
28.3
15.5
56.8
35.7
37.8
27.4
45.8
20.2
22 .0
33.1
18.7
15.9
20. 1
24.5
27.7
18.6
22.1
23.8
29.4
22 .8

31.4
35.9
49.6
26. 1
23.1
38.9
28.7
25.6
26.5
25.5
27.6
14.7
58.0
33.6
37.2
23.7
46.5
18.7
24.3
31.3
18.3
14.7
18.0
22. 1
27.1
20.0
22.3
23.4
27.5
23.2

42.5

40.8

40.7

March

1972

1. Deposi ts
corporations and of states and politica l subdivisions
of
2. County basisIndividuals, p a rtnerships, and

CONDITION OF THE FEDERAL RESERVE BANK OF DALLAS

-

BUILDING PERMITS

(Thousand dollars)
Apr. 18,
1973

Mar. 21,
1973

Totolsgold certl'Rcote reserves •....... .. ... .•
loan to

236,172
213,869
0
57,214
3,318,590
3,589,673
1,485,961
2,265,558

480,092
126,683
0
55,629
3,121,989
3,304,301
1,424,540
2,224,959

479, 113
0
0
37,031
3,192,264
3,229,295
1,676,364
2,110,078

Oth
member banks •...................
Fed Or loon s.. . . ................... . .. ,. . . .
U.S.eGa~v~~e ncy obliga.t!ons ... . .. ...........
Tot I
nm ent seCUrities .. . . .. , ....... . ...
Me~b:~rb~gk assets •...... " .••.. .• ... . ....
Fed
n reserve depOSits .. • . ..... . ....
~ Reserve not es in actual circulation •... .

VALUATION (Dollar amounts in thousands)

Apr. 19,
1972

Ite m

Percent chang e

March 1973
NUMBER

from
3 monfhs,

March

3 mos.

March

3 mos.

1973

1973

1973

1973

551

1,680

$7,947

$52,597

90
430

238
1,252

2,238
4,622

5,924
33,626

95
154
597
201
117
388
1,616
26
498
477
62
2,179
72
190
98
136
145
100
2,266
38
53
244
99

204
395
1,508
485
289
976
4,174
60
1,495
1,080
176
7,035
173
490
255
292
277
249
5,358
99
148
594
241

3,754
3,613
34,555
1,916
1,004
4,272
33,532
310
13,1 09
18,498
2,335
90,448
7,712
11,456
652
1,406
793
637
25,176
499
547
6,648
2,155

Tota l-26 cities .. . 10,922

29,223

$279,834

Area

ARIZONA
Tucson •. ....• .

Feb.
1973

Mar,

1972

1973 from
1972

-59%-76%

-22%

34
-51

54
7

-25
157

9,603
368
37
13,170
45
22
67,071
102
42
7,775 -28 -10
7,324 -81 -38
18,718 -33 -67
89,142
49
46
484
93
131
36,402
8
54
37,507
58
179
3,3 17
373
488
217,320
66
4
8,541 2, 168 1,361
23,506
135
133
4,374 -78 -89
3,977
118
3
108
1,663
76
2,920 -23 -38
61,568
56
56
1,467
-4
-3
1,088
122
13
14,698
248
124
6,089
5
54

130
88
6
66
95
- 14
-32
-40
-38
107
44
33
110
73
-50
56
59
32
38
-26
54
106
45

LO UISIANA
Monroe-West
Monroe •.•..
Sh reveport .•..

TEXAS
Abi lene • .. .. .•
Amarillo. _ •.. Austin . .•.•.. •
Beaumont . •...
Brownsville . •.•
Corpus Christi •.

VALUE OF CO NSTRUCTION CO NTRACTS
(Million dollars)

.......

Da llas ••. . ••••
January-March

~rea and typo

March
1973

February
1973

January

1973

1973

1,110
532
439
138
8,644
4,643
2,707
1,294

826
460
248
117
6,839
3,277
2,229
1,333

945
455
380
110
6,795
3,195
2,420
1,180

2,882
1,450
1,067
365
22,267
11,143
7,333
3,791

FI~~ }OUTHWESTERN

Re .~ES""'"''''''' ' ''
N " ential building • . •• . ..

Nonresidentia l building ....
UNlonbuilding construction ....

R~E.~ STATES ............
N" entia I building • . •• • •.
N~nresid e "tio l building ....
~ding construction.. ..

1972
2,460r
1,276r
670r
5 14
18,795r
8,909r
5,673r
4,212r

1. Arl
r- R zona, Louisiana, New Mexico, Oklahoma, and Texas
NO,. evlse d
SOU E: De tails may not add to totals because of ro unding.
RCE: F. W. Dodge Division, McGra w-Hil i Information Systems Company

Denison •.... ..

EI Paso . •.•.•.
Fort Worth ••.•
Galveston . . . • .
Houston .•• • ...
laredo • .• , ...

Lubbock •••• • .•
Mid land ••••••
Ode ss a .. • ... •

Port Arthur •• . .
San Angelo • • ••
San Antonio .••
Sherman ...• ..
Texarkana . . • •
Waco . ..... · .

Wichita Falls • •.

$729,871

41%

14 %

11 %

DAILY AVERAGE PRODUCTION OF CRUDE OIL

LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT

(Thous and barrels)

Five Southwestern States 1
Perc ent chang e from

(Seasonally adjusted)
I

Area

FOUR SOUTHWESTERN
STATES •.•. .••. . • •• .... •
louisiana ..... .. .. .... .. .
New Mexico . ....... . . . . .

Oklahoma ••••.••..••..•.
Texa s ................. .
Gulf Coast. •. ••..•• . ••
We st Texas .. .. ... ... .
East Texa s (p,oper) •••.•
Panhandle •••. ..• • ..•••
Rest of stat e •..• • , ••• • •

UNITED STATES •••. .• .. • •.•

Ma rch
1973

February

6,751.3
2,370.2
276.3
553.6
3,55 1.2
7 11 .7
1,796.1
244.7
59.3
739.4
9,316.4

February

1973

March
1972,

6,789.6
2,392.8
295.0
548.8
3,553 .0
716.2,
1,783.4,
246. 1,
62.5,
744.8,
9,372.8

6,854.4
2,422.9
308.4
592.4
3,530.7
693.9
1,741.7
219.7
70.7
804.7
9,456.2

-0.6%
- 1.0
-6.3
.9

1973

- .1

- .6
.7
-.6
-5.1
-.7
- .6%

March
1972

-1.5%

-2.2
- 10.4
-6.6
.6
2.6
3.1
11.4
-16.1
-8.1

-1.5%

Percent chang e

March

Fe bruary

March

It em

1973p

1973

1972,

Civilian labor force .. . . .... .

8,864 .6
8,533 .8
330.7
3.7%

8,837.7
8,518.6
319.0
3.6%

8,604.8
8,223.4
381.4

7.023.9
1,231.2
682 .2
549.1
5,792.6
234.3
489.9

7,008.5
1,229.9
682.0
547.9
5,778.6
234.5
488.2

6,707.3
1,169.4
637.2
532.1
5,537.9
232.8
451.8

477.9
1,676.1
376.1
1,144.6
1,393.7

476.3
1,674.4
374.0
1,141.9
1,389.4

464.2
1,593.3
352 .2
1,092.6
1,350.9

Total employment .......... .
Total un employm ent • .. . . ..•.
Un employmen t rat e . •.......
Total nonagricultural wage
and salary employment •• .•
Manufacturing . ... • ..... .
Durabl e •• •.. .. . .. . . ...

Nondu,able . • • .. ..• . .•
Non'!1~nufacturing •••• . •••

r-R evised
SOURCES : American Petroleum In stit ute
U.S. Bureau of Mines
Federal Rese rve Bank of Dall as

MIning ..... . .. ... . . .. .
Con struction . ......... .
Tran sportation and
public utilities ... • ....
Trad e ... . ... • .. . . .. • .
Finance .. .. ... ... .. .. .
Service .. . . . . .• .. .•...
Governm ent .. . ....... .

4.4%

Fe b.
1973

Ma,.
1972

0.3%
3.0%
.2
3.8
3.7 -1 3.3
' .1

'_.7
4.7
5.3
7. 1
3.2
4.6
.6
8.4

.2
.1
.0
.2
.2

- .1
.3
.3
.1
.6
.2
.3%

3.0
5.2
6.8
4.8
3.2 %

1. Arizona, Lou isia na. New Mexico, Oklahoma, and Texas
2. Actu al change
p-Prelimlnary
r-Revlsed
NOTE : Del al ls may not add to totals because of rounding.
SOURCES : State employm ent agenc ies
Federal Rese rve Bank of Dallas (seasonal adjustment)

PLANTED ACREAGES
Are a and typ e of in dex

Februa ry

January

1973

1973

March
1972

136.3
139.8
154.5
129.3
11 7.4
175 .1

136.9
140.9
15 4. 1
131.3
11 7.7
173. 1

133.1,
135.8,
149.0
126.3 ,
115.8,
173.5,

129.9,
132.0
138.7
127.2
116.5,
161.9,

Total industrial production . .. . . .
Manufacturing . •.. . . .. . ... .. • . .

Durable ... .. . . .. . . ...... . . . .
Nondurable . . . .... . . ........ .

Mining ••••• ••• • ..•. • • • • ...•.. .
Utilities ........ . ... . . .. .. .... .
UNITED STATES

Cotton •...........•.. .

Total industrial production .. . .. .
Manufacturing . • ••.... . .. ... . ..

121.7
121.0
117.2
126.6
108.6
153.6

120.9
120.2
116.1
126.2
108.6
151.6

119.9
119.2 ,
114.9,
125.3
108.5,
150.8,

111.2,
109.7,
103.4,
118.8,
108.5
139.7

Am erican Pima ......
Pea nuts ............. .
Rice .. . . . . .... . . . ....
Sorghums .. .... . . . . . .
SJyb ea ns .. • ... " . . ..
W int er wh eafz.. . .....

Durable . .. . ... . ............ .

Nondu,ob/e • .... .••.. • . •• ...•
Mining . .... . . . ... .. . . . . . . ... . .
Utilities . ..... . . .............. .

Five Southwestern States 1
(Thousand acres)

TEXAS

1972

1971

6,695
96
447
1,091
9,338
2,425
11,058

7,22 8
96
440
992
8,469
2,122
10,392

6,562
102
440,
994
9,566,
1,979,
9,173,

taled nearly $1.4 billion for the first
two months of the year, more than
a fifth higher than for the same period in 1972. The increase was due
mainly to higher prices for both
crop and livestock marketings.
These higher average prices and the
step-up in production planned by
farmers and ranchers should boost
farm incomes this year at least
moderately above 1972 levels.
The se~sona1ly adjusted Texas industrial production index eased

Pe rcent chang e

1973 f,om 1972

---------------------------------------------------7,324
6,664
6,791
-7%
Upland .• • ..... . .. • •

p-Prellmlnary
r- Revised
SOURCES: Board of Governors of the Federal Reserve System
Federal Reserve Bank of Dall as

-

Indicated
Ma,ch I, 1973

C,op

.
.
.
.
.
.

-7

o

2
10
10
14
6%

-----------------------------------------------------

1. Arizon a, Louisiana, New Mexico , Oklahoma, and Texas
2. Indicated December I, 1972
,-Revised
SOURCE: U.S. Department of Agriculture

slightly in March, falling 0.4 percent from the revised February
level. Both manufacturing and mining activity slowed slightly, while
utilities output continued to rise.
A drop in production of nondurable goods was responsible for the
decline in manufacturing. Only two
nondurable groups-textile mill
products and printing and publishing-showed month-to-month increases. Sharp drops were reported
in the production of food and food
products, apparel, and paper and

I
(
r

I
l
j

I

= 100)

March
1973p

r

r

INDUSTRIAL PRODUCTION
(Seasonally adjusted indexes, 1967

(

Ma,. 1973 f,om

Thousands of persons

paper products. Durable goods production showed a slight gain,
largely on the strength of an increase in output of fabricated
metal products.
Mining activity declined slightly
in March as production of both
crude petroleum and natural gas
fell. However, the output of metal,
stone, and earth minerals and natural gas liquids increased. Utiliti.es
gained 1.1 percent in March as diStribution of both electricity and
natural gas rose.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102