View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

MONTHLY
BUSINESS
REVIEW
of

the

Volume 34

FEDERAL

RESERVE

BANK

of

Dallas, Texas, November 1, 1949

Dallas
Number 11

BANKING IN THE ELEVENTH DISTRICT
DURING ECONOMIC READJUSTMENT
Although exact timing of a change in the course of economic activity always is difficult and uncertain, even when considered retrospectively, it is perhaps roughly accurate to say that the turn from
postwar inflation to recession or readjustment began to take definite hold during the latter part of the
third quarter or early in the fourth quarter of 1948. It is true that some indexes of business and financial activity continued to advance after that time, but on the whole, the number of signs that the postwar inflation had lost much of its vigorous force-at least for the time-increased steadily as the
fourth-quarter months of 1948 passed.
Different terms, ranging from "postwar deflation" to a "healthy readjustment," have been used
to characterize the economic events of the past 12 months, the difference in emphasis tending to reflect
the confusion and uncertainty customarily associated with changes in the course of the business cycle.
Also, to some extent, differences of opinion among businessmen and analysts regarding the seriousness
or-perhaps-"healthfulness" of the decline in business activity have been a result of the rather wide
variation that has occurred with respect to the degree of the decline in economic factors. For instance,
the volume of new manufactures as reflected by the index of industrial production declined approximately 18 percent between November 1948 and July 1949 and unemployment more than doubled,
although the decline in the annual rate of consumer expenditures was comparatively unimportant,
almost full employment continued to prevail, and income payments to individuals showed a decline
of only approximately 3 percent. Likewise, in the field of prices very sharp declines have been experienced in some categories and by some specific commodities, while other categories or groups of commodities have shown strong resistance to price changes.
During the late summer of the current year forces of deflation or readjustment began to show
a loss of strength, with the consequence that the trends of activity in most of the major economic areas
first began to level out and then turned upward. The moderate recovery continued through September-in fact, until interrupted by the current siege of strikes and labor-management difficulties that
are plaguing the Nation's vitally important basic industries and are gradually extending their damaging influences in widening circles throughout the economy.
Whether the recent improvement in business conditions marks a real end of the first postwar
period of deflation or whether it represents only a reflection of a degree of seasonal activity which normally might be expected at this time of year, supplemented by a certain amount of inventory restocking by businesses which may have been overzealous in their efforts to reduce stocks, probably cannot
be forecast with assurance at this time. On one side of the question there seem to be factors which
establish reasonably strong grounds for concluding that the readjustment has not yet been fully accomplished, especially with respect to the level and balance of the price structure; on the other side,
however, it is virtually certain that during t he months ahead the Government will engage in substanThis publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

162

MONTHLY BUSINESS REVIEW

tial deficit financing and thus create some degree of reviy.al of jnfl;ltio~a,ry stimuli. Numerous other
more or less conflicting factors might be mentioned which would demand consideration and appraisal
if one were developing a pattern of the probable trend of business and economic activity in the
months ahead.
For the purposes of this article, however, it is not necessary to attempt to review the business
situation in detail or to undertake to forecast the trend of events. Instead, these few introductory
paragraphs will suffice to picture in a broad, general manner the economic setting in which the banking system in this District has operated during the past 12 months. From this vantage point and
looking backward rather than forward, certain questions relating to developments in the field of
banking will be considered. How have the events of the past 12 months of economic readjustment
affected banking in this District? Have the trends of principal banking items followed a course
roughly comparable to the general economic pattern of the period, or has the impact of readjustment
been more--Qr less--severe upon the District's banking system? How have certain of the central
banking system's policies and actions affected the District's member banks? Is there any notable evidence that the member banks in the District have contributed to the recessionary developments of
the period? Is there any impressive evidence that the District's member banks were unduly restrictive
in their policies and operations as businesses and individuals were being subjected to the problems
of readjustment? Although each banker obviously is fully aware of the policies he has followed, a
general consideration of questions such as those indicated above with reference to the system of
member banks in the District may be of interest and, also, will tend to summarize the running sequence of happenings in the banking field in the area which have been discussed from month to
month in the pages of successive issues of this Review.
~~~'·l""W:<·""~:W::lli:::::'::~W~·

.

.

W
~:

AND LIABILITIES, WEEKLY REPORTING MEMBER BANKS .
. ,
. :;...
~.:

Two principal sets of banking data are used as a basis of the discussion of banking developments
which follows. One set of data, showing the changes in principal asset and liability accounts of the
weekly reporting member banks in the District, tends to reflect the collective character of banking
policies and practices at the banks in the several larger cities of the District. The second series of figures, showing monthly changes in selected major asset and liability accounts of all member banksReserve city banks and country banks, tends to give a broader, although somewhat less detailed,
picture of the District's banking developments. Although developments at the member banks of
the District or at the weekly reporting member banks in the larger cities of the District do not, of
course, represent the complete banking situation in the respective areas-because of the operations

MONTHLY BUSINESS REVIEW

163

of nonmember banks-the member banks do account for such a substantial proportion of the banking activity in the District and in these larger cities as to provide a satisfactory measure of the trend
of such important bank assets and liabilities as total loans and investments, total loans of different
major categories, and deposits.
During the 12-month period from September 29, 1948, to September 28, 1949, total loans and
investments, i.e., total bank credit, of the weekly reporting member banks of the District increased
from $2,252,000,000 to $2,412,000,000, although the period as a whole contained three more or
less distinct phases. Between September 29, 1948, and January 12, 1949-the first phase of the period
-the outstanding credit of these banks increased by approximately $91,000,000. That increase was
followed by a contraction during the late winter and early spring months of the year-the second
phase-amounting to approximately $127,000,000 by April 6. For several weeks then the volume
of bank credit remained relatively stable in the neighborhood of $2,250,000,000 and then, during
the third phase of the period, turned up rather sharply to reach the total of $2,412,000,000, referred
to above, on September 28.
Study of the volume of loans and the volume of investmer.ts of these selected banks in metropolitan areas tends to show the extent to which t he changes in total bank credit were the result of
changes in the effective demand for credit accommodation by businesses and individuals of the
area and of investment policies of banks seeking to place "surplus" funds into investment-principally into Government securities. Three phases are apparent also during the 12-month period in
the trend of total loans of the weekly reporting member banks, although these phases roughly coincide with those that were characteristic of total loans and investments only in the case of the first
period of about 3 months. From September 29, 1948, to January 12, 1949, the trend of commercial, industrial, and agricultural loans was generally upward as the selected member banks added
approximately $80,000,000 to the amount of this type of credit outstanding. The increase in this
type of bank credit, together with an increase in loans classified as "all other," accounted for the
total increase in bank credit during the period, inasmuch as investments in securities remained relatively constant.

It will be recalled that during the last quarter of 1948 the trend of business activity continued
upward, but as the forces of deflation gained strength the rate of increase was appreciably slower
than had been characteristic of preceding m onths. Likewise, the increase in commercial, industrial,
and agricultural loans between September 29, 1948, and January 12, 1949, which amounted to
about 11 percent, was substantially less than the rate of increase that prevailed during the comparable period in the preceding year-an increase of about 26 percent-when a comparatively easy
credit policy was in force. For some months prior to the fourth quarter of 1948 banks had been
urged to exercise caution in their lending practices, and then in September 1948 the reserve requirements of the District's Reserve city and country banks had been increased. Although factors such
as these tended to induce---or possibly in some cases force-a degree of caution in bank credit policies, it is evident nevertheless that the period of economic readjustment was not accompanied in its
early stages by a contraction of bank credit to business, industry, and agriculture. In other words,
perhaps it is accurate to say that while these banks continued to meet requirements for credit by
satisfying the effective demand, they also directed their attention and that of their borrowers
toward the goal of assuring that "their houses were in order" to withstand whatever conditions
might evolve out of the brewing economic uncertainty.
Around the turn of the year 1949, the upward trend of virtually all of the important business
indexes was checked, and the course of business activity turned moderately downward. A number
of factors exerted a direct effect upon the demand for credit by businesses and individuals during
the period of rather evident readjustment which extended through July. Inventory adjustments at
different levels of distribution became much more general and also m ore severe and represented
one of the important causes of the decline which occurred in business loans. Other developments
which tended to reduce the effective demand for bank credit included a seasonal decline in commodity financing requirements; a reduction in demand for construction financing, due to the completion of many projects and the hesitancy on the part of builders to init iate new projects under
the uncertainty which prevailed as to the economic outlook in general and t he future prospects

164

MONTHLY BUSINESS REVIEW

for real estate in particular; the moderately lower level of prices, which, together with shrinking
inventories, tended to reduce the cost of doing business and lessened working capital requirements;
a tendency on the part of businesses and banks to strengthen their positions-the former tending to
reduce their bank indebtedness as much as possible and the latter to improve loan portfolios by following firmer practices with regard to substandard credits; and some decline in the volume of
capital expenditures.
During this second phase of the period, extending from January 12, 1949, to August 3, 1949,
commercial, industrial, and agricultural loans declined by approximately $126,000,000 or almost
16 percent. The full decline, however, cannot be attributed only to the declining business situation
because of the seasonal factor which also was involved during the period. The decline in the volume
of commercial, industrial, and agricultural loans during the first 7 months in 1949, however, did
account for approximately all of the change in total loans.
In April, in view of the predominance of deflationary forces, the Board of Governors of the
Federal Reserve System announced a reduction in reserve requirements of Reserve city and country
member banks effective early in May. This action, which made an additional supply of funds available to the banks for investment or lending purposes, was promptly followed by an increase in the
Government securities portfolios of the banks in larger cities but, as might have been expected, did
not result in an immediate increase in loans. The decline that had been taking place in the loan
volume was not caused by an unwillingness on the part of banks to extend credit, nor was it due
to an inadequacy of loanable funds; instead, it was a reflection of a declining demand for bank
credit. Consequently since the funds released were not required for lending purposes at the moment,
they were promptly invested in short-term Governments: between May 4 and May 11 holdings of
Treasury bills increased by $24,235,000 and of certificates of indebtedness by $7,100,000.
The action of the System, however, did have the effect that was intended, namely, to place
the banks in a position with regard to loanable funds whereby there would be no question of their
ability to extend credit when and if such credit were demanded by credit risks reasonably sound
from a banking standpoint. Obviously, banks might be expected to sell Treasury bills, when their
earnings on such securities are in the neighborhood of 1 percent, in order to obtain loanable funds
for use in extending credit to businesses and individuals at a substantially higher rate of interest if
the demand should develop. The reduction in reserve requirements, although inducing banks at the
moment of reduction to increase their holdings of Governments rather than to expand loans, nevertheless, at the same time placed those banks in a position whereby subsequent sales of such securities
would provide them with loanable funds.
Later during the period-on June 30 and July 1 and then again at weekly intervals from
August 1 through September I-reserve requirements of member banks were reduced. On these
occasions, also, the volume of loans was unaffected, but holdings of bills and certificates increased
substantially: investment in Treasury bills rose by $14,500,000 between June 29 and July 6 and by
$61,000,000 between July 27 and September 7, while holdings of certificates of indebtedness during
the same periods rose by $3,200,000 and $17,600,000. Again, the objective of this series of actions
by the System was to assure that banks would be able and willing to meet the credit needs of business
if the demand for additional working capital funds should arise, but it was not expected that the
mere release of funds would lead to an immediate expansion of loans at the banks' initiative--it is
realized, of course, that banking does not operate that way.
Late in June the decline in commercial, industrial, and agricultural loans of the weekly reporting member banks showed clear signs of leveling off, and after a few weeks of minor fluctuation in
a more or less sideways direction the volume turned upward to rise from $670,000,000 on August
3 to $712,000,000 on September 28, an increase of about $42,000,000 during the 8-week period.
The increase that occurred in this class of loans during the third quarter of the current year exceeded the increase which was reported during the somewhat longer but comparable period last
year when, between June 9 and September 29, loans to business, industry, and agriculture expanded
by only $33,000,000. Of course, as has been stated, during the earlier period restrictive credit measures were enforced to combat the threatening inflationary trend, while during the more recent

MONTHLY BUSINESS REVIEW

165

period comparatively easy credit conditions prevailed. Inasmuch as banks were in a position during
each of the periods to expand credit, however, the determining factor in the volume of expansion
probably centered in the strength of business demand for funds.
The recent turnabout in the trend of commercial, industrial, and agricultural loans at member
banks in the District's larger cities coincided approximately with the turn in certain of the major
indexes of business activity. The index of industrial production rose by 7 points during August,
unemployment decreased, and reports from over the country reflected a resumption of buying to
restock inventories. In the District, nonagricultural employment showed further strength, retail
trade as reflected by department store indexes showed moderate improvement, a better situation
appeared in such important industries as petroleum and textiles, and in many quarters a more
optimistic attitude seemed to have replaced the feeling of uncertainty and mild pessimism of the
earlier months of the year.
In the light of this summary of loan activity during the 12-month period at these larger member banks in the District, it would appear that the trend of the loan volume has fluctuated in a
manner that has been generally consistent with business requirements under the conditions which
prevailed. For several reasons, including the fact that there always is-and must be-some indeterminate volume of requests for credit rejected by banks, it is never possible to determine with
statistical precision whether the volume of bank credit actually extended in any given period represents the optimum or "best" amount. A review .of the data available, however, seems to present no
evidence that these larger banks of the District have exerted either an unduly repressive or an expansive influence upon the business situation since the onset of the business readjustment.
Fluctuation in other major categories of loans at these selected member banks showed no
changes which might be related significantly to the variations in the business trend. Real-estate loans
reflected virtually no change during the entire period, as even week-to-week changes rarely exceeded $1,000,000. The amount of this class of loans outstanding on September 29, 1948, was approximately $88,000,000, as compared with about $89,000,000 just 1 year later. It will be recalled
that throughout the postwar period until the fall of 1948 real-estate loans increased steadily and
substantially. During the second and third quarters of 1948, however, some of the edge seemed to
be taken off of the real-estate boom as resistance to rising prices increased and then turned to an
expectation of price declines, which in fact appeared in varying degrees during succeeding months.
These developments may have contributed to the wholesome cautiousness that banks seem to have
shown in respect to the extension of credit into this important economic area during the past 12
months, when new loans have only approximated repayments.
Deposits of the larger member banks in the District have shown a very high degree of stability
during the past 12 months, with the trend during most of the period being slightly upward. Only
during the first quarter of the year was a decrease of any significance noted, and that was offset
entirely by the steady growth reported between mid-April and the end of September. In fact, with
the exception of such temporary factors as income tax payments and a few others, the steady growth
of deposits in the District has been virtually unbroken. Total deposits of these larger member banks
in the District were approximately $67,000,000 higher on September 28, 1949, than a year earlier,
while the increase in adjusted demand deposits amounted to about $16,000,000.
In view of the unusually rapid increase that occurred in the deposit growth of the District's
member banks during the war period, there has been some questioning from time to time as to
whether those gains would be held. Actually, however, since the end of the war the relatively more
favorable position of the banks in this District with respect to deposit growth has continued, and
there is no evidence in the figures of the past 12 months that would point toward a change in the
situation being likely in the foreseeable future. Of course, this District's ability to hold its deposit
gains depends primarily on the ability of its businesses, industries, and agriculture to keep pace,
collectively speaking, with the average levels of the country as a whole. Deposit shrinkage resulting
from such general factors as a loss of population, increased currency circulation, or significant
repayment of government debt out of budgetary surpluses does not seem to be particularly likely
at this time. The principal possibility of deposit losses would appear to be a loss to other parts of

166

MONTHLY BUSINESS REVIEW

the country as a result of this District experiencing an unfavorable balance of trade in relation to
other areas and to the rest of the country as a whole.
Even during the past 12 months of economic readjustment, however, business trends in this
District have compared favorably with those for the Nation or with those of other parts of the
country. Instead of anticipating a loss of deposits, it seems more reasonable at this time, in view of
all factors deserving consideration, that the volume of deposits of the banks of the area will continue to expand. Of course, the rate of expansion naturally is expected to be less than that which
the area experienced during the war years and part of the postwar period, but nevertheless it should
be generally steady and appreciable. Certainly there will be interruptions in the growth trend from
time to time, but they do not appear likely to be of such proportions as to cause serious problems
-any declines that may occur probably will be more in the nature of seasonal movements or shortrun, temporary dislocations than longer term cyclical trends.

A summarization of the principal asset and liability accounts of the District's Reserve city and
country member banks for the 12-month period, presented as Table I, shows in a general manner
the changes that have taken place at all member banks in the area and at the two major classes of
banks. As was shown by the more detailed figures presented in preceding paragraphs relating to the
credit operations of the larger banks in reporting cities, the more general figures reported by all
banks in the District also show no evidence that banking policies and practices have aggravated
problems of readjustment during the past 12 months. In fact, on the contrary, it appears that the
member banks of the District have met the credit requirements of business that might have been
expected to prevail and, in so doing, have been able to maintain a very sound liquid position at a
high, stable level.
Loans and investments of the District's member banks increased by approximately $195,000,000 during the 12 months, with about 78 percent of the increase accounted for by the Reserve city
banks and 22 percent by the country banks. Most of the increase in bank credit at the Reserve city
banks, however, was in the form of an increase in investments in Government securities, while the
loan increase at country banks was substantially greater but was accompanied by a decline of more
than $50,000,000 in holdings of Governments. As study of Table I shows, loans of Reserve city
banks increased by only $13,000,000, as contrasted with an increase of $91,000,000 at country banks,
but additional funds amounting to $134,000,000 were invested in Government securities by the

167

MONTHLY .BUSINESS REVI.EW

Reserve city banks-most of these investments being short-term issues-while country banks disposed of Governments in the amount mentioned above.
Although the total deposits of all member banks in
the District and of the Reserve city banks showed moderate increases of $35,000,000
and $74,000,000, respectively, a slight decrease amounting to less than 1 ~ percent
occurred during the period at
the country banks. In view of
the tremendous importance

TABLE I
SUMMARIZED BALANCE SHEEP
MEYlBER BANKS-BY CLASSES OF BANKS
ELEVENTH FEDERAL RESERVE DISTRICT
(In millions of dollars)
~All

member banks----.. ..--Rcsetve cit)' banks-- Country hanks'September September September September September September
1949
1948
1949
1948
1949
1948

Assets
Loans and investments . . : , .
. $4,350
Loans and discounts. , . , , , , ... , 1,823
Government obligations . . ..... . 2,212
315
Other securities .... . .... ,., ..
Reserves, cash and balances ..... . 1',718
, 79
Other assets.,." ..... , ... , ... , .
Total assets .. ......... ... .. _.', . [6,l.47

$4,155
1,719
2,130
306
1,857
64
6,076

52,203
1,005
1,090
lOS

846

$2,051
992
956
103
917
43
3,011

$2,147
818
1,122
207
872
30
3,049

$2,104
727
1,174
203
940
21
3,065

of agriculture to the country
49
3,008
banks of this District and the
fact that-despite the very Liabilities and capital
. • .;,~
2,816
2,866
2,905
5,721
2,800
Total deposits, , .......... Y . ' , ": . ' 5,756
favorable agricultural situa2,640
2,696
2,470
2,437
Gross demand deposits, ... ,. , ..
5,110
5,133
tion that has prevailed-agri200
420
379
226
588
Time deposits. . . . . . .... , ' . ,
646
6
7
14
20
16
23
Other liabilities. , , .. , , , , ....... .
cultural prices have declined
176
154
192
181
335
T olal capital accounts, .. ... . ... ,
368
and net cash farm income has
3,065
6,076
3,098
3,011
3,040
Total liabilities and capital. . , ... . 6,147
been reduced perhaps by 5 to
·Partlyestimated.
8 percent during the last
year, the shrinkage that has
occurred in country bank deposits seems surprisingly small. In contrast with the partially offsetting
movements that occurred with respect to total deposits at different classes of banks, time deposits continued to expand, rising $41,000,000 at the Reserve city banks and $17,000,000 at the country banks.
Perhaps there are several
measures that might be used
PRINCIPAL EARI.'1INGS AND EXPENSE ,ACCOUNTS
to attempt to judge the efMEMBER BANKS-ELEVENTH FEDERAL RESERVE DISTRICT
fect of a given set of eco(In thousands of dollars)
nomic circumstances upon a
~6 Months ended June 30, 1 949~ --8 Months ended June 30. 1948-system of banks, but cerReserve city Country All member Reserve city Country All member
banks
banka
banks
banka
bank:;,
banks
tainly one measure which is
Interest and dividends on
U.S. Government securities. , .... $ 7,S32 5 9,477 517,309 $ 7,780 $ 8,867 $16,647
readily understood and is genInterest and discounts on loans, . , ., 19,305 23,316 42,621
17,248 20,104 37,352
erally of interest to bankers
Total earnings from current operations 33,721 40,943 74,664
30,599 36,620 67,219
is the effect upon bank earnTotal current operating expenses. . . .. 20,'134 21,934 42,368
18,4.21 19,550 37,971
ings. Table II summarizes the
Net earnings from current operations 13,287 19,009 32,296
12,178 17,070 20,248
principal earnings and exRecoveries, transfers from reserves,
and profits, .. , .. , , , , , , , , , , , ... , 1,614
1,366
2,9S0
1,086
2,714
3,800
pense accounts of the Reserve
Losses, charge-offs, and transfers to
city and country member
reserves . ....... , .......... .... . 4,377
8,427
5,336
4,050
6,409
11,745
Profits before income taxes ........ , JO,524 16,325 26,849
banks in this District for two
6,855 14,448 21,303
Taxes on net income . ............. . 3,732
2,987
4,037
3,498
6,485
7,769
comparable periods- the first
Net profits, , , , , , ... , , , .. , , , , , ... , 6,792 12,288 19,080
3,868 10,950 14,818
6 months of 1948 and the
first 6 months of 1949. It is
realized, of course, that the first 6 months of the current year did not span the entire period of readjustment under consideration; but on the other . hand, mild though the readjustment has been, the
most severe features of the development occurred during the first 6 months of this year. Study of
these data shows clearly that the economic ' readjustment through which the area has been passing has
not had a notably unfavorable effect upon the banks of the District. In fact, quite to the contrary,
net profits after taxes of all member banks in the District amounted to $19,080,000 during the first
6 months of 1949, in contrast with $14,818,000 during the comparable period in 1948. Furthermore,
both country banks and Reserve city banks enjoyed significant increases in net profits, with the former
reporting net profits after taxes of $12,288,000 as compared with $10,950,000 during the preceding
period and Reserve city banks $6,792,000 as compared with $3,868,000.
TABLE II

168

MONTHLY BUSINESS REVIEW

Review of Business, Industrial, Agricultural and Financial Conditions
DISTRICT SUMMARY
Sales at department stores in the Eleventh District continued
the upturn noted in August with a substantial, greater-thanseasonal increase in September. Sales were 17 percent higher
than in August, although 9 percent below the unusually high
level of September a year ago. Furniture store sales decreased
further by 5 percent from August to September and were 25
percent smaller than in the corresponding month last year.
Reflecting the increase in the demand for crude petroleum,
daily average production in the District increased by 13 0,000
barrels from August to September but was still about 500,000
barrels lower than in September last year. Production allowables
in Texas were increased further by 32,000 barrels daily for
October and by 138,000 barrels daily for November.
The value of construction contracts awarded in the District
during September totaled $65,000,000, reflecting a decrease of
4 percent from those in August but a gain of 51 percent over
those in September of last year. Residential awards in September
and the third quarter were unusually large and exceeded greatly
those for the corresponding periods of last year.
Production estimates of some major crops have been increased
substantially, reflecting largely the favorable weather and moisture conditions during the past 2 months. Record or nearrecord production and pec acre yields are in prospect for several
crops, and present indications are that southwestern agriculture
will experience one of its most productive years in 1949. Ranges
and pastures are providing an abundance of feed, and an expansion in breeding herds is taking place. Good to excellent wheat
pasturage is in prospect for the winter. Cattle and sheep are
entering the winter in good flesh, and there is an abundance of
cured range feed, as well as of roughage and grains.
During the 4-week period ended October 12, the loans of
weekly reporting member banks in leading cities of the District
increased further by about $45,000,000, with the gain concentrated in commercial, industrial, and agricultural loans. On
the other hand, investments were decreased by approximately
$21,000,000 after having been increased sharply during the
preceding 4 weeks. Total deposits of these banks declined by
$16,000,000 as the result of a decline of almost $36,000,000
in demand deposits, exclusive of Government and interbank deposits which showed an offsetting increase of about $22,000,000.

The proportion of cash sales in September declined for the
second successive month, in line with the usual seasonal pattern.
Nevertheless, it should be noted that the cash-to-total sales ratio
of 29 percent was the lowest for any month since before the
war. Moreover, the ratio of collections to instalment accounts
was down from 18 percent in August to 16 percent in September, also the lowest for any month since December 1940. Collections of regular accounts, averaging 50 percent in September,
continued to run at about the same rate as in earlier months of
the year.
WHOlXSALE AND RETAIL TRADE STAT[STICS

Retail trade:
Department stareR:
Tota.l Eleventh District .•

~:. .~~~~i:.,,:: :: :: :

Forl Worlh ............

HOllston ...... ..... . •..
San Antonio ...........
Shreveport, La ... . .....
. Other cities ...... . . ....
Furniture stores:
Total Eleventh District ..
Dallas ..... .. , . , ...... ,
Holl81:on .••••••• ,. , • •••
Porl Arthur .... ........

San Antonio ...........
Shreveport. La " ...... ,
Wichita F&1J.a ........ " ,
Wholesale trade:·
Automotive supplies ....
Drugs and suodriee .....
Dry goods . ......... . ..
Grocery (fuU·lino wholosalers no~ !poDsoring

tFard~~·.".~: :: ::::: :::

Tobacco ....................

~i~W!PJ1!::b~=': .

------~--Perc:ee.n~~~e~~~.~ng~e~in~~~~==
Numw - - - - Net salesStocla! t
of
Sept. 1049 [rom
9 mo. 1949
Sept. 1949 from
reporting SeI't.
August compowith
Sept.
AU~U8t
firms
1948
1049
9 mo. 1948
1948
1949
~8

4
7
4
7
5

3
18
49
3
4

4

3

5

-9
-6
-7

-4
-17
-6
-1
-7

-26

-30
-32
-36
-23
-26
-7

-6

17
8
24
12
17
6
24
20

-1
-8
- 4
-8
-7
-1

-5

-10

4
-8

-10

-13
-11

5
15
2
8
4
6

':":'ii
-13
- 18

4
11

- 13

-32

4

6

:'::2

-5
- 10

- 5

-,

27
5

10

7

-4

16
13
-34

6

75
7
-2

-33

-3

':":36

-2

-4
-11

5

-3

-4
18
-6

4
-6
3

-28

-6

i;
-23

-5

-16
3

-1 3
- 1

·Preliminatt data. Compiled by United States Bureau of Census.
tlndicates c ange of less than one-halr of 1 per cent.
Stocks at end of month.

INDEXES OF DEPARTME NT STORE SALES AND STOCKS

Daily average salea-(l93H9=100)
__- _ UnadjU.!lted*
Sept. AugU!l July
Sept.
Sep~
1949
1949
19~9
1949
1948
378
Eleventh District.
404
310
4~3r
333
347
263
416
Dall .... ......... 386
299
364
421
Houston ... . ..... m
371
642r

Adjusted
August July
1949
1949
360
387
352
365
422
450

Sept.

1948
41g,.
375
50fk

8100.....(1935-39=100)

--::----,-Unadjusted'-::----::---c Ad ju8ted-----

BUSINESS
Consumer buying in department stores in the Eleventh Federal Reserve District, continuing the upward trend noted in
August, showed a substantial, greater-than-seasonal increase in
September. Dollar sales were 17 percent higher than in August
but 9 percent lower than in September a year ago. when heavy
sales of consumer durable goods-prior to reimposition of Regulation W-raised the total to an exceptionally high level for
that month. Reflecting the greater-than-seasonal increase, the
adjusted sales index rose from 366 in August to 378 in September but was still helow the 386 average of the first 7 months
of this year.
Department store stocks showed a moderately greater-thanseasonal increase in September, with stocks at the end of the
month up 5 percent from August but 10 percent below the
same date a year ago. NeW orders were up 11 percent in September but were 12 percent smaller than in September a year ago.
The year-to-year decline has decreased steadily since the peak
decline of 51 percent in June.

Sept. AugU8t July
1949
1949
1949
B67p
346
333
Eleventh District.
p-Preliminary.
·Unadjusted for seasonal variation.

Sept.
1948
411r

Sept. August
1949
1949
369p
342

July
1949
347

Sept.
1948
403r

r-R.vlsed.

Furniture store sales this fall have not shown the upturn
which usually occurs at this time of year. In September, furni ture store sales registered a moderate contraseasonal decline of
5 percent and fell 25 percent below the high level of the corresponding month of 1948, which preceded the reimposition of
Regulation W. While cash sales were practically unchanged
from the previous month, credit sales were down 6 percent.
Both cash and credit sales were about one-fourth lower than in
September a year ago.
The uninterrupted decline in furniture store stocks which
began in May was halted at least temporarily in September, with
stocks at the end of that month about 4 percent higher than a
month earlier. The stock position in relation to year earlier
levels, however, continued to show an appreciable decline in
September, dropping 13 percent below the same date last year.

169

MONTHLY BUSINESS REVIEW
Accounts receivable of furniture stores in September showed
a small rise for the sixth successive month. Accounts receivable
were 2 percent higher than in August and 13 percent higher
than in September 1948. Collections, on the other hand, appeared to slow somewhat, showing a 4-percent decrease from
August to September and falling about 5 percent below collections in September last year.
AGRICULTURE
Near-record production of wheat, grain sorghums, rice, and
hay; a record crop of flaxseed; a cotton crop estimated to be
one of the largest produced in the last half century; and unusually productive ranges and pastures are expected to raise
total agricultural production in the' District in 1949 to record
or near-record levels. In fact, 1949 gives promise of being one
of the most productive years in the history of southwestern
agriculture, largely as a result of abundant rainfall, near-record
acreage, and the use of improved seed, increased amounts of
fertilizers, and improved cultural practices, including widespread use of machinery.
A Texas cotton crop of 5,500,000 bales, second only to the
record 5,628,000-bale crop harvested in 1926, is forecast by the
Bureau of Agricultural Economics, based on conditions as of
October 1. This estimate is 500,000 bales, or 10 percent, above
that made on September 1, 1949, and 1,050,000 bales above the
initial estimate of August 1. The indicated yield per acre of
256 pounds of lint compares with 176 pounds last year and the
10-year (1938-47) average of 170 pounds and, if achieved,
will be by far the highest per acre yield obtained during the
present century. About 45 percent of the increase in the estimate of the crop came as a result of unusually favorable conditions in the High Plains and Low Rolling Plains counties. The
favorable weather conditions prevailed into late October, giving
further assurance of a bumper crop in these areas. Cotton yields
in the Blacklands also have exceeded earlier expectations. Harvest has been completed as far north as central Texas, with rapid
progress being made in other sections, although showers have
delayed picking and lowered grade of the crop in some localities.
Total ginnings prior to October 1 were reported by the Bureau
of the Census at 2,088,000 running bales, compared with
1,561,000 bales at the same date last year and 1,263,000 bales
in 1947. The October 1 forecast also indicates cotton crops of
480,000 bales in Oklahoma, 70,000 bales above the September
1 estimate; 630,000 bales in Louisiana, an increase of 5,000;
460,000 bales in Arizona, an increase of 10,000; and 286,000
bales in New Mexico, a decline of 24,000 bales.

Indicated 1949
1947
10.1
946
494
15
810
185
113
32
315
129
287

1948

Sept. 1

115

L ...........
5 ... . ... . . . ... . .....•..
6 . .....................
7 ......................
8 .. .. .. ................
9 ...... ................
10 . .....................

1946
36
198
270
a
482
96
99
15
185
46
229

558
495
22
773
226
140
20
280
170
351

175
1.400
790
60
900
245
190
45
435
175
585

Oct. 1
190
1.500
900
50
1.025
310
190
55
480
190
610

State ....... .. . . ........

1.669

3.431

3,1SO

6,000

5,500

Texas production of sorghums for grain in 1949 was estimated on October 1 at 78,518,000 bushels by the Department
of Agriculture. This is an increase of about 7,000,000 bushels
over the September 1 forecast and would make this year's production second only to the 96,724,000 bushels produced in
1944. The estimated yield per acre, 22 bushels, is 5 liz bushels
above last year's yield, more than 5 bushels above the average,
and, if obtained, would be the highest since 1928. Early September rains were timely in assuring an excellent crop in the northwestern areas, and favorable weather conditions well into October have been important factors in this year's near-record
production. Harvest of the crop is well past the peak except in
the High Plains. Texas 1949 corn production was estimated on
October 1 at 52,332,000 bushels, a decline of about 2,500,000
bushels from the estimate a month earlier but still substantially
above production in 1948.
Based on conditions as of October 1, Texas rice production
was estimated at 23,782,000 bushels, the same as the September
1 estimate. This figure, however, docs not allow for any loss as
the result of the tropical storm on October 4 and subsequent
rains which struck the center of the Texas Rice Belt. Standing
rice in the eastern half of the area, where only about 15 to 20
percent had been harvested, was damaged severely. In the
western half of the rice area about one-half of the crop had
been harvested, and as a result, damage was not so extensive.
Rains since the storm have hindered salvage and harvest operations. The extent of the loss of Texas rice growers will not be
known until harvest of the damaged rice is completed; however, it now appears that yields per acre may average at least 5
bushels below the October 1 estimate of 46 bushels, which
would reduce the total crop by approximately 2,500,000 bushels.
CROP PRODUCTION
(In thousands of bushels)
Texas

Winter wheat ...
Corn ....... . ...
Oats .... . ... .
Barley ....
CottOllt ... .... .... ..... .

All bay· ............ . ....
Potatoes, Irish . ..........

Potatoes, sweet ...........
Rice •.. . ...............•

Estimated
October 1.
1949
10.1.096
52.332
31.800
2.489

5.500

1.467
3.686

5.500

23.782

1948
66.200
44.698
a.240
1.891
3. ISO
1.311
4.356
3.250
23.040

State! in Eleventh District.

Estimated
Average October 1.
1931H7
1949
1948
53.944 200.3581 159.1271
67.694
101.646
96.178
33.917
52.539
35.560
4.125
10.13 41
10,5631
2.722
7.356
4.844
1.423
4.857
4.726
4,419
7.364
8.813
5.229
13.3501 10.9731
16.416
47.782+ 46.562+

Average
1938-47
125.5801
119.200
65.418
12.5461
4.064
4.42 1
9.978
i4,4841

37.958'"

1949 ..

*Figures are aombined totals (or the five states lying wholly or partly in the Eleventh Federal Reserve District: Texas, Arizona, Louisiana, New Mexioo. Rtld Oklahoma.
tin thousands of baleso
t Arizona, New Mexico; Oklahoma, and Texa&
tLouiaiana, Oklahoma, and Tems.
I4uisiana and Texas.
-In thousands of tons.

per cent
of 1948

SOURCE: United States Department of Agriculture.

TEXAS COTTON PRODUCTION BY CROP REPORTING DISTRICTS
(In thousands nf balco-SOO lb. gross wt.)

Crop reporting district
I·N ............ . .......
1-8 ...... .......... .. ..
2 ................ . .....
3 ..............

compared with 5,305,456 and 3,907,801 as of the same date in
1948 and 1947, respectively.

165
269
182
227
133
137
136
275
171
112
174
175

SOURCE: United States Department of Agricultur~.

The estimate of the United States cotton crop, based on conditions as of October 1, was placed at 15,446,000 bales, an increase of 503,000 bales over the September 1 forecast. While
reductions are indicated for all eastern belt states except Georgia,
larger production is in prospect for most central and western
stat es. Ginnings prior ro Ocrober 1 for the United States were
reported by the Bureau of Census at 5,309,000 running bales,

The Department of Agriculture's initial forecast of 1949-50
Texas grapefruit production is placed at only 4,80 0,000 boxes,
compared with 11,300,000 boxes in 1948-49,23,200,000 boxes
in 1947-48, and a 1943-47 average of 22,300,000 boxes. This
year's very small crop is largely the result of damage to trees
by the severe freeze of last January. Production of Texas oranges
for the current seaSOn is estimated at 1,400,000 boxes, compared with 3,400,000 boxes in 1948-49, 5,200,000 boxes in
1947-48, and the 1943-47 average of 4,600,000 boxes. United
States production of grapefruit in 1949-50 is estimated at 32,200,000 boxes, 27 percent less than the 1948 crop and 47 percent below the crop in 1947. The lower estimate of production
in the 1949-50 seaSOn is largely the result of greatly reduced
crop prospects in Texas and extensive damage to the Florida
crop by the late August hurricane. Total production of early
and midseason oranges for the United States is etimated at

170

MONTHLY BUSINESS REVIEW

50,600,000 boxes, based on conditions as of October 1. This is
7 percent above las, vear's crop but 6 percent below the 194748 crop.
Seeding of wheat under very favorable conditions has been
virtually completed throughout the District. Much of the wheat
crop is up to a good stand, and early fields were providing some
grazing by mid-October. Surface and subsoil moisture supplies
are generally adequate and the most favorable in several years,
although showers would be helpful in assuring a good stand in
a few communities.
Sweet potato prod uction in Texas, estimated on October 1
at 5,500,000 bushels, is unchanged from the September 1 estimate. Harvest of the crop is nearing completion, with good to
excellent yields obtained. The Texas pecan crop is forecast at
36,000,000 pounds, compared with 57,000,000 pounds in 1948
and the average of 26,215,000 pounds. Harvest of this year's
crop is well under way. Rains during October in many sections
of Texas interrupted peanut han'est and caused some damage
to the crop. As of October 1, production was estimated at about
309,000,000 pounds, compared with the estimate of 315,000,000
pounds on September l.
Fall-crop commercial vegetables continue to make good
progress in all areas, and conditions have been favorable for
planting of hardy-type crops for early winter harvest. Eggplant, peppers, and squash are being harvested in increasing
quantities in all sections, and harvest of the fall-crop lettuce
in the Panhandle s.ection is virtually completed. The tomato
crop continues to show prospects of good yields in all areas. The
generally favorable moisture conditions in the nonirrigated
areas have been favorable to earlier than usual planting operations

Winter range feed supplies throughout the District are generally more plentiful than they have been for several years. As
a result, most ranchmen expect to carry their cattle and sheep
through the winter without any supplemental feeding except
cake. However, if needed, tllere is an abundant supply of roughage and grain available for winter feeding. Wheat pasture prospects are very favorable, with early fields providing pasturage
by mid-October, although most fields were not ready for
grazing until late October. The condition of all ranges was reported at 88 percent on October 1. This is the highest reported
for this season of the year since 1942 and is 7 points above the
10-year average.
LIVESTOCK RECEIPTS
(Number)
Fort Worth market

Class
Cattle ..... ... .....
Calves ....... .. . .. ...... .
Hogs , .......•. • .........

Sheep .......

...........

Sao Antooio market

Sept.

Sept.

August

Sept.

Sept.

August

1949
52,846
27,002
33.881
58,343

1948
75,140
37,811

1949
61,912
20,164
37,781
66,421

1949
25,329
13,934

1948
29.133
23,607

51,507

87,148

1949
29,388
13,339
8,147
56,557

33,675
102,S98

6,900

9,055

TOP LIVESTOCK PRICES
(Dollan per hundredweight)
Fort Worth market

San Antonio market

Sept.

Sept.

August

Sept.

Sept.

August

1949
$24.50
21.50
18 .00

1048
$31.00
28.00
22 .50

1949
124.50
22 . 25
17.25

1949
122.00

1948
$27 . .\0

1949
122 . .\0

17.00

22.00

.. ..

26.00

31.00

25.00

Slaulhterlambs..........

23.00
22 . .\0

25.50

23.50

29.50

22.25

CIMs

~~~~~t!!~.::::

Slaughter cows .....
Slaughter heifers and

y .... tinga..........

~~t~;';a\':~~:::::::::: ~:~

Hop... .................

i~:~

~t~

27.50

.. . .. .

22.00

24 .00

22 .00

21.50

28 .00

~tgg

~:~

~ .~

22 .00

Cattle, calves, sheep, and lambs are g6ing into the winter in
very good condition. Ranchmen continue to hold back young
heifer calves, solid-mouth ewes, and ewe lambs for replacement

purposes. Most of the feeder calf crop has moved to Corn Belt
feed lots, and available lambs have moved to feed lots or wheat
pastures. Delivery weights are heavier than usual hecause of
the abundant range feed that has been available during the
spring, summer, and fall.
As indicated above, many ranchmen are withholding cattle
and lambs from the market in order to increase their herds and
flocks and thus more effectively utilize the abundant range feed.
As the result, marketings of cattle at the Fort Worth and San
Antonio markets during the month of September were 14 percent below those of August and 25 percent below those in September 1948. Marketings of calves increased seasonally dming
September but were 33 percent below the volume marketed in
September a year ago. Receipts of sheep were sharply lower,
dropping 11 percent below August and 42 percent below September 1948. Marketings of hogs were also below those of
August and a year ago. Combined receipts of all classes of livestock at the two markets were 8 percent below August and 32
percent below September 1948.
Prices received by Texas farmers for all agricultural products
continue to decline, with the mid-September price index one
point below the mid-August figure and 15 percent below that
for September 15, 1948. Declines were reporred for corn, grain
sorghums, rice, sweet potatoes, cotton lint, cottonseed, hogs,
veal calves, and sheep, while increases occurred in the prices of
wheat, oats, barley, Irish potatoes, lambs, all poultry, eggs,
butterfat, and milk. Reports from spot markets indicate substantially lower prices for hogs and slightly lower prices for
other classes of livestock and for livestock products between
mid-September and mid-October. Cottonseed has continued to
decline in spite of the price-support program. Spot cotton prices
have remained very near the loan level, although declining
slightly since the mid-September report.
Cattle Feeding Situation
Developments in the cattle fceding situation in the United
States through September indicate a volume of cattle feeding
this season that may be as large as, or slightly larger than, the
record number fed last year, according to the October 1 report
of the Bureau of Agricultural Economics. Feed grain supplies
are abundant as a result of a new corn crop estimated to be the
second largest On record and a record carry-over of corn from
last year's crop. The movement of feeder cattle into the Corn
Belt since July 1 has been the largest since 1939, when records
of this movement began. This early movement into the Corn
Belt has been greatly accelerated by heavy movement of feeder
cattle from Montana and the Dakotas, where dry weather and
below average feed conditions forced early sales. Furthermore,
there has been a marked tendency in the more favored areas to
market feeders earlier. In the west, California probably will feed
nearly as many cattle as the record numher fed last year. In the
Pacific Northwest, cattle feeding will be on a lower level, due
chiefly to a reduced feed supply. Colorado will probahly feed
slightly more cattle than were fed last season. Due to greatly
improved feed conditions, Texas is expected to show an increase
in the number of cattle fed.
The price of feeder cattle at four large feeder markets for
the week ended September 29 was about $4.60 per hundred
pounds lower than for the same date last year. Feeder cattle
prices were very steady during the 2 y. months ended October
1; however, the seasonal drop in feeder cattle prices from the
high point last spring has been greater than a year ago.
FINANCE
Principal changes in the condition of selected member banks
in leading cities in the District during the 4-week period ended

171

MONTHLY BUSINESS REVIEW
October 12 included a continuation of the increase in loans, a
decline in holdings of investments, and a decline in deposits.
The increase in total loans at these selected member banks
was very largely due to a further expansion in loans for
commercial, industrial, and agricultural purposes. Total loans
increased from $1,035,000,000 on September I4 to $1,080,000,000 on October 12, an increase of approximately $45,000 ,00 0. Almost $38,000,000 of this increasc was due to the
further expansion of commercial, industrial, and agricultural
loans, which rose from $693,000,000 to $731,000,000. All
other classifications of loans-with the exception of loans to
banks, which were unchanged-showed slight to moderate increases during the month. The classification "all other" loans,
including a substantial amount of loans to consumers, increased
about $5,700,000 during the period, bringing the total for
such loans to more than $202,000,000.
Reasons underlying the increase in loans continue to include
a reflection of seasonal requirements, together with some tendency on the part of businesses to counteract the effects of the
sharp reduction in inventories which occurred earlier in the
year by rebuilding stocks to a level more nearly approaching
that which seems consistent with consumer demand. In other
words, .1 though consumer demand, as such, has not increased
markedly, it has continued at a relatively stable, very high level;
and since businesses cut back inventories very sharply during
the past few months, the squeeze on inadequate stocks has
become more apparent, especially during this period that marks
the initiation of the holiday seasonal demand. Another factor
contributing importantly to the increase in this category of
loans is the movement of the unusually large agricultural production in this District. Crop-moving loans and loans involving
the guarantee of the Commodity Credit Corporation have added
to the loan volume of the period.
The decline in holdings of investments by selected member
banks in the District was entirely due to a reduc tion in holdings
of Government securities. Investments in United States Government bonds declined by almost $21,000,000 during the 4 weeks
ended October 12, with at least part of the decline due to the
redemption of the 2-percent bonds which were called on September 15 and which, for the most part, were converted into
an issue of 1 Va-percent 12-month certificates of indebtedness.
Partly reflecting this Con version is the increase in reported holdings of certificates of indebtedness by almost $9,000,000. During the period these banks also reduced their holdings of United
States Treasury bills by about $9,700,000 and their holdings of
United States Treasury notes by about $1,700,000. As a result
of these changes, total holdings of United States Government
securities on October 12 amounted to $1,229,000,000, as
compared with $1,252,000,000 on September 14. Despite the
decline that occurred during this latest month, holdings of
Government securities on the latest reporting date were $158,000,000 in excess of holdings on the comparable date a year
ago. A minor offsetting increase of about $2,000,000 in holdings of other stocks and bonds occurred to bring the total decline in security investments to almost $21,500,000.
During the first 2 weeks of the period the decline in demand
deposits of individuals, parrnerships, and corporations was especially heav y, amounting to about $89,0 00,000 and reflecting
largely the payment of third-quarter income taxes by individuals and businesses. During the following 2 weeks, however,
these demand deposits increased by about $6 1,0 00,000, as the
return flo w of funds began to make itself felt. It seems very
likely, in view of developing business trends, together with the
>easonal strength which lnay be expected &t this time of year,
that demand deposits will continue to increase during the relnaining months of the fourth quarter. Partly offsetting the

decrease in demand deposits of individuals, parrnerships, and
corporations which occurred during the 4-week period ended
October 12 were an increase of almost $8,000,000 in United
States Government deposits and an increase in interbank demand
deposits of approximately $15,000,000.
CONDITION STATISTICS OF WEEKLY REPORTING MEMBER BANKS IN
LEADING CITIES-Eleventh Federal Reserve District
an thousands of dollars)

October 12, Ootober 13.

Sept 14,

Item
1941)
Total loans and investments ... .... ,., ............ , 12,434,535

1948
12.260,804

1949
12,410.532

Loans to brokers and dealers In securities. , . . . . . .
6.962
Other loans for purchasing or carrying securities..
60.5-46
Real-estate loans... . .... ...... . ..............
89,001
Loans to banks.. . . . . . . . . . . . .... ... .. .. . . . . . . .
409
All other loans .. . " .... ,.....................
202,085
Total investments..... .... ........... .. ... . . . . . 1,364.:-188
U. S. TreasurybiUS.. ....... . . ......... . . ... . .
116.009
U. S. Treasury certiflcate3 of indebtedness. . . .
339,043
U. S. Treasury notes........... . ...........
44,101
U. S. Government bonds (inc. gtd. obligations)
729 .742
Other securitie:J. . ....................
125,493
Reserves with Fedeml Reserve Bank.....
460.377
298,607
Balances with domestic banks.............
D.emand deposits-Rdjustoo·............ . .
1,042,3.56
Time de.poslts cxrept Government.. .......
44!J,79S
United States Government deposits........
51,026
Interbank deOillnd deposits . ................... .
614,251
Borrowings trom Federal Rcscn'c Bank.. ... ...... . ..
0

6,890
58,093

6,879
48.941
88,597
409
196,398
1,375.843
125,728
330.1lP I
45.788
750,740
123,496
451,203

Total loans-NeU .............. ,.,.......... ... 1,070.215
Total loans-Gross ... , ......... , ......... ,.,... 1,080,147
Commercial. indu..
-'ttrial, and 3$1'iculturalloans,...
731,144

1,063,896
],070,070
742,256r
S8.654

456
173,721r
1.190.734
28.722
210,106
79,1)51
762,440
119.915
645,233
296,792
1,916,202
408,242r
46,347r
590,254
0

1,024.791
1,034.689
693,465

33~.507

1,9fS3.893
452,479
43.202
599,426
0

-Ineludes all demand deposits other than int.erbank and United States Government, less
cash items reported as on hand or in proc~ of collection.

tAfter deductions for reserves and unallocated cbarge-olJs.

r-Revised .

The deposit pattern for all member banks in the District
during the month of September was somewhat different from
that outlined above for the selected member banks in leading
cities of the District during the period extending from midSeptember to mid-October. All member banks in the District
reported an increase in gross demand deposits (on a basis of
averages of daily figures) from $5,020,000,000 in August to
$5,147,000,000 in September. This increase of approximately
$127,000,000 was shared about equally between the Reserve
city banks and the cowltry banks of the District, as the former
reported an increase of $60,000,000 while the latter reported
a $66,000,000 gain. Total time deposits of all member banks in
the District also continued the upward trend that has been
characteristic of preceding months and rose by about $13,000,000 to total $648,000,000. In contrast with the relatively
even distribution of the increase in demand deposits, the expansion of time deposits occurred priITL1rily at the Reserve city
banks, as this class of banks accounted for almost $1 I ,000,000
of the $13,000,000 increase.
GROSS DEMAND AND TIME DEPOSITS OF MEMBER BA:<KS
Eleventh Federal Reserve Di!trict
(Averages of daily figures. In thousands of dollars)
Combined total
Reserve city banks
Country banks

G_

Gross

demand
D.te
September 1947 .... 14.925.009
September 1048....

May 1949.

5.203,768

4.942.647

June 1949.......... 4,048,074
July 1949 ....... ... 4.917.743
August 1949 ..... .. . 5.020.319
September 1040 ... . 5.146.942

Time
1540.511
589.519

631.531
635.740
629.6SS
635.371
648,045

demand
$2.360.755
2.508.252
2.365.633

Time
1337.863
378.043
411.889
2.379,108
413.072
2.411.180 402.930
20443.350
410.182
2,503.549
421,452

G,,,,,
demalJd
Time
12.564.254 1202.648
2.695.516 210,576
2,577.014
219.642
2.568.966 222.668
2.559.963
226.125
2.577.029
224.589
2.643.393
226,593

Indicative of the more rapid pace of business activity during
recent weeks, bank debits reported by banks in 24 cities in the
District showed an increase of 4 percent during September.
Only two of the reporting cities showed minor decreases, while
several of the cities reported substantial increases, running up
to as much as 20 percent in Waco, 26 percent in Austin, 27
percent in Roswell, New Mexico, and 46 percent in Corsicana.
The increase in bank debits was accompanied by a more rapid
turnover of deposits at banks in thesc reporting cities, with the
tumover rate on an annual basis for September being reported
as 12.6, as compared with 12.2 in August. Both with respect to
bank debits and the turnover of deposits, however, recent figures
are slightly under those of a year ago, for bank debits in Sep-

MONTHLY BUSINESS REVIEW

172

tember were 1 percent below those of a year ago, with most of
the reporting cities showing declines, while the annual rate of
turnover during September last year was about 13.9.
BANK DEBITS, END-OF·MONTH DEPOSITS, AND ANNUAL RATE OF TURNOVER
OF DEPOSITS
(Amounts in thousands of doUa1'3)
- - - Debits+ - - -

City
Arizona.: Tucson ... .
Louisiana:
Monroe ........ ... .
Shreveport ........ ,
New Mexico: Roswell.
Texas:

Abilene ............
Amarillo .. " .......
Austin ........
Beaumont .........
Corpus ChristL ....
Corsicana ..........

Da.llas ..•... ... • ...

EI Paso ....... . ....
Fort Worth . . ......
Gulveston ..•..•...•

Houston ...........

Laredo ...... . .....

L,bbook.. .........

Port Arthur ........
San Angelo ........
San Antonio .......
Texarkana·· .......

W'~.::::::::: ::::
Wichita Falla ..•.•..

SeP\.
1949
I 60,857
39.007
137,180
14.002
31.282
90,8;)5
141.721
90.9'9
84.789
14,765
1,056.400
114.494
310.388
67,235
1,028.040
15,104
54.033
34,174
29.917
248,319
14,290
41,041
57.037
52,958

Total-24 cities. . . • .. 13,820,687

Percentage
change over

Sept.
1948
-12
-3

-8
13
-13
-1
18
-10
6
15
3

-#

-5

-#
-5

-1
-8
- #
-5
4
-10
-3
5
-7
-1

Annual rate of turnover
End-()f-month

Sept.
Aug.
deposits·
1949 Sept. 30, 1949 1949
11
7.8
I 70,410
42,904
10.9
11
15
166.361
10.0
17,357
10.1
27
37,26Q
10.2
4
86.448
12.5
#
104,336
16.2
26
1
89.522
12.1
78.826
12.8
-5
20,0.57
46
9.0
778,260
2
16.3
116,515
11.9
3
12.4
-1
300,120
Q4,6i2
8.6
3
4
913.882
13 .•
2
20.851
8.6
]0.6
62.031
6
4
38.198
10.6
10
38.366
9.4
2
314.916
9.6
14
22.50.5
7.7
6
50.061
9.8
10.1
20
69.932
81,249
3
7.8
4 13,621,317
12.6

Sept.
1948
8.2
11.6
10.9
8.8
10.3
13.1
13.8
12.6
12.0
7.9
16.8
12.4
13.9
8.4
14 .•
8.0
11.3
10.6
9.8
9.0
8.3
9.4
10.2
8.3
13.9

Aug.

1949
6.8
9.5
8.8
7.9
9.7
12.6
13.1
11.9
13.6
6.4
16.3
11.6
12.7
8.3
13.1
8.4
10.0
10.1
8.6
9.4
6.7
9.2
8.8
7.7
12.2

!I>~~i~t~ dbea~rt O!el:~~~a~x~~thi~~~b;Je~~~~·nts.
·Demand and time de~its at t~e end of the montb include certified and officers' cbecb

outstandin~ but exc ude deposits to the credit of banks.
• "'bis fi~ure mcludes only one bank in Texarkana. Texas. Total debits for all banks in
Texar ana, Telas--Arkansas. including two banks loca.ted in the Eighth District. amounted

to 124,862.

SAVINGS DEPOSITS
September 30, 1949
City

Sept. 30,
1948

41.591 I 25,215,101
12.136
6,123.562
77,648.770
142.120
31,604
22.199,762
43,048
35.528.529
22,370
21.278.838
74,07A,367
07,259
3,216,174
1,776
4.M7.724
5.918
40,408
43.793,646
9,720 • 10,123,010
4,593,154
7,608
64,563
54.686,075
521,029 1383,042,721

1.5
- 0.8
- 0.1
0.8
4.6
- 2.7
1.7
-IU
- 5.2
- 3.1
3.0
- 0.01
1.7
0.6

reknt

Louisiana:
Shreveport .............
TeX&!:

Beaumont .... . ..... . . .
Dallas .............. . ..

E1 Paso ........ .. .... ..

~'ort Worth ...... ......
Galveston ... " ... .. . ...
Houston .............•.

Lubbock ...............

Port Artbur ............
San Antonio ...........
Waco .....•.•.•..•..•.
Wichita Falls ...........
All other ........ ....... ..

Toto!.. ....... ... ........

Percentage cbaD~e in
savings deposits rom

Number oC Kumber of Amount of
g
savings
savinsa
depositors
depo8l.ts

3
8
2
4
4
8
2
2
5
3
3
55
102

Aug. 31,

1949

-

0.2
1.2
0.2
0.1
0.2
0.2
0.3
0.9
0.8
- 0.7
0.2
0.3
- 0.1
- 0.2

Principal changes in the condition of the Federal Reserve
Bank of Dallas during the month ended October 15 included
an u.,:rease of about $30,000,000 in holdings of gold certificates; an increase of about $24,000,000 in total earning assets,
all of which was accounted for by an expansion in the Government securities portfolio; and an increase of about $11,000,000
in the circulation of Federal Reserve notes of this bank,
Sales and redemptions of savings bonds in this District during
September continued to show the improvement that has been
apparent throughout most of this year when figures are compared with those of the comparable months in 1948, During
September, redemptions were 113 percent of sales, whereas during the same month in 1948 they amounted to 131 percent of
sales. Looking back upon the trend for the first 9 months of
this year, figures show that sales of savings bonds in the District
amounted to approximately $165,000,000, or about $1,000,000
in excess of redemptions.
On September 21 the Secretary ' of the Treasury announced
an offering of I-year 1 Y8-percent certificates of indebtedness
in exchange for the 114 -percent certificates which matured

October 1 in the amount of $6,535,000,000. Preliminary reports indicate that the allotment of the new issue amounted to
$6,247,000,000, leaving a balance of approximately $288,000,000 of the maturing certificates to be reedomed by cash.
No announcement had been received from the Treasury up to
October 20 regarding the maturity or the rate on the Treasury
notes which the Secretary has indicated will be offered in connection with the refunding of three issues of Treasury bonds
which have been called for redemption On December 15 and
which amount to about $4,375,000,000.
CONDITION OF THE FEDERAL RESERVE BANK OF DALLAS
(In thousands or dollars)
October 15, October 15, September 15 I
Item

Total gold certificate reserves. . . . .. . .... . . . .. .
Discounts ror member banks •.........• • , • ••• •• ....

b~tgG~~:~:~f~~ftie's·.::::::::::::::::: :: ::: :

Total earning assets .................... .

Member bank reserve deposits ........... .
Federal Reserve notes in actual circulation.

1948
I 623.033
2.418
8,373
1,058.756
1,069,547
962.218
625,206

1949
1874,629
327
3.220
767,306
770.853
757,085
623.395

1949
1644,691
645
3,056
742.934
746,636
766.222
612,943

INDUSTRY
Activity in several important industries of the Eleventh Federal Reserve District has moved closely in line with recent
national changes in industrial production. Both nationally and
in the District, July marked a low point for petroleum production and for textile mill activity, but substantial increases
occurred in August and September. Construction activity likewise has been high in recent months, with a particularly large
increase in residential construction contract awards in the District in September.
In addition to the gain in petroleum production, refining
activity continued to increase moderately during September.
There was a corresponding increase in the demand for petroleum
and its products, with the result that an over-all balance between supply and demand continued throughout the month.
The expansion in crude oil production in the Nation during
the past 2 months resulted chiefly from increased allowables in
this District. In view of the heavier current and prospective
demand for petroleum, production allowables were increased
for both October and November. A further increase may be
made for December. The approach of the winter season has
stimulated the demand for fuel oils, and the heavier buying has
been accompanied by moderate price increases. Prices of other
products and of crude oil have remained steady to firm.
The production of crude petroleum in the Eleventh District
during September was 130,000 barrels more than in August,
an increase of 6 percent; however, this amOunt was 499,000
barrels less than production in September a year ago. Crude runs
to refinery stills increased 3 percent in September of this year
CRUDE OIL PRODUCTION
(B,mcb)

Area

Texas:
District 1. ... .............
2 .................

3.................
4.. ...............
5............ .....
6.................
Other 6...........
7b ............... .
7c ........... •....
8.............
9.. ...............

10 .........
Total Texas .. ...... ' .: .
New Mexico ............
North Louisiana .........
Total Eleventb District.
Outaide Eleventh District ..
United Statal .... ...........

September 1949
Daily average
Total

production

production

813.460
3,665.100
11.136,900
5.662.950
1,031.400
7.300.650
2,493,000
1.835,250
1.496,550
16,831,150
4.202.850
2,777.550
59,246.800
3,672,800
3.418,550
66.337,960
79,290.100
145,628,0.50

27,115
122.170
371,230
188.765
34.380
243.355
83,100
61,175
49,885
561.038
140,005
02,585
1.974,893
122.420
113.952
2,211,265
2,643.003
4,854,268

Increase or decrease in daily
average production from

Sept. 1948
1.651
57.397
- 123,378
- 61,818
- 14.870
- 65.787
- 37.000
8.592
5,043
-146,737
95
5,843
-489.065
- 9,513
-85
-498.553
- 22,870
-521,533

-

SOURCE: EBtimated from American Petroleum Institute week1y reports,o

AUgUBt 1940

1.288
9,576
30,490
10.513
2.151
19.736
3.861
3.368
7.140
39.660
2.634
-1.518
128.899
-728
2.0!l.5
130.176
7.761
137.937

173

MONTHLY BUSINESS REVIEW
but were 10 percent less than in September 1948. In line with
seasonal changes in demand, gasoline production declined 6 percent during this September, while the production of other petroleum products increased somewhat.
Similar developments occurred in the Nation, with crude
petroleum production in September rising by 138,000 barrels
daily or 3 percent, runs to refinery stills increasing 2 percent,
and the production of gasoline decreasing 4 percent, while output of other petroleum pmducts rose.
As the result of increasing demand, crude oil stocks in the
District declined by 3,721,000 barrels or 3 percent during September but w~re still 7,637,000 barrels or 6 percent higher than
a year earlier. Stocks of gasoline were drawn down in line with
seasonal requirements, decreasing during September by 560,0 00
barrels or 3 percent, with the end-of-month figure being 1,277,000 barrels or 6 percent above the level of a year earlier.
Stocks of other petroleum products rose as refiners increased
their yields of these products in anticipation of seasonal increases
in demand. Total stocks of the four leading products-gasoline,
kerosene, gas and distillate fuel oil, and residual fuel oil-increased by 2,023,000 barrels or 4 percent during September,
with the figure at the end of the month being 3 percent under
year earlier levels. Total stocks of crude petroleum and these
four products declined I percent during September but were
5 percent higher than a year earlier.
Similar changes took place in stocks in the Nation, with crude
oil stocks decreasing 2 percent in September though remaining
11 percent more than a year ago. National stocks of the four
leading petroleum products at the end of September were 14
percent more than a year earlier.
Further increases in petroleum production and consumption
are in prospect in both the District and the Nation during the
remainder of 1949. Allowable production in Texas was increased
by 32,000 barrels daily for October and an additional 138,000
barrels daily for November, with a further increase generally
expected for December. Louisiana increased allowable production for October by 48,000 barrels daily. These increases in
allowable production reflect the continued improvement of the
industry's economic position since midyear. Except in CaliVALUE OF CONSTRUCTION CONTRACTS AWARDED
(In thousands of dollars)

September

September

1949
1948
Eleventh District-total .. S 85,255
S 43,123
RC8idential.".... ....
38.41\6
17,360
All other.... . . . ..... . .
26.71)0
25,763
United States·-totaL ... 1,071.614
762,192
Residential......... ..
503.622
219,658
All otber. .............
508,152
482,534
'37 ataf.es east of the Rocky Mountains.

August
1949
S 67,877
25,496
42,38 1
910,998
398,684
512,314

Jan . 1 to Sept. 30
1949
1048
I 558.734 I 58~.341
207.671
195.515
351.063
390,826
7.393.908
1,345.773
2.861.598
2.790,416
4.626.3 10
4,555,291

SOURCE: F. W. Dodga Corporation.
BUlLDL"'G PERMITS

City
Louisiana:
Shreveport .....

Texas:

Abilene .. . .
Amarillo . •... ..
Austin ...•.....
Beaumont .....

goJr:~~~::

EI Paso .. , .....
Fort Worth .•.•

Galve:non.,., ..
Howton ." . . . .
Lubbock ...... .
Port Arthur. , ..

Sail Antonio .. . .
Waco ..•. , , ...
Wichita Falls ...

TotaL ...........

Percentage cbange
Percentage
September 11149 ..- valuation from -Jan. 1 to Sept- 30,1949 chso.@:e
Sept.
August
valuatIOn
Number Valuation 1948
1949 Number Valua.tion
frow 1948
489 I 1.610.10.1
100
336
239
414
290
1.762
572
823
145
643
285
100
1,571
236
52

38.\.495
2.155,036
2.311.481
616.398
1.016.101
6.031.139
1.8.\0.666
3.324.78.\
209.651
6.090.146
9i6.2.57
454 •.512
3.258.661
1.209.528
951.615

8.147 132.672.682

13

-16

-6
137
63
8

-22
68
10
-46
-72
-3
74
-4
-24
-35
-12
-14
5
-46
185

992
2.461
2.193
3.174
2,601
12.898
2.518
5.890
1.441
6,599
1,824
1.537
10.068
1.508
819

4.969.046
12.8.\5.108
16.711.911
7.256.30.1
11.978.235
66,973.213
8.612.209
21.476.339
7.709.353
62.283.426
8.377.0.14
3.259.668
25.058,599
8,2 18,863
4.263.060

-4
-8
-20
8
-2
146
- 19
- 27
28
- 10
- 15
33

-15

59.335 1278.138.121

-11

11

-12
48
63
- 43
-22
-52
142
6
46
211

3.200 I 18,015.073

-27

23
50

-11

fornia, where an oversupply situation exists, adequate markets
for prospective production seem likely, at. least t~rough the
coming heating season. From the supply Side, the mcrease of
allowables and the larger stocks of crude petroleum and pr?ducts, as well as the possibility of increasing imports of forel~n
oil when necessary, suggest that a shortage of petroleum or Its
products during the 1949-50 heating season is unlikely. However, some local shortages may occur, due to strains upon the
storage and distribution system.
A 7.6-percent increase in domestic and export demand for
petroleum products during the next 6 ~onths as compared to
year earlier levels was forecast recently ill a report to the Independent Petroleum Association of America. This estimate pla~es
the requirements during the October 1949-March 1950 perIod
at 6,710,000 barrels per day, or 472,000 barrels more. than during the corresponding period of a yc:ar ,earl,ier. Domestic production of crude oil and natural gas lIqUIds IS expected to average
6,310,000 barrels daily, leaving a balance of 400,000 barrels
daily to be met by drawing upon stocks and by imports.
Despite these generally favor.able prospects for t~e petroleum
industry, a few problems remaIn. Thus, refinery YIelds ,:eed to
be adj usted further so that more fuel 011 and less gasolme are
produced. Progress in makin.g such adjustments .has be~n slowed
by the fact that gasoline pnces have been relatively high con:pared to prices of fuel oil. Recent moderate advance~ ill fu~1 OIl
prices could be regarded as at lea~t pa':'ttally correct~ve. FaIlure
to increase refinery yields of heatmg Oils so as to budd up sufficient stocks might accentuate the problems of distribution and
maintenance of adequate local storage in consuming areas.
The value of construction contracts awarded in the District
during September, which amounted to $65,000,000, was. 4 percent lower than in August but 51 percent larger than III September last year. Residential awards during September. as in the
2 preceding months, constituted a very large pe~centage of total
awards. In fact, residential awards dunng the thIrd quarter were
so high that the total for the first 9 ,month~ of the year was. 6
percent larger than in the correspondmg penod last year despite
a decline of 18 percent in the first 6 months of this year. The
recent heavy awards represent in large Rart ~ontracts for apa~t­
ment buildings, for one-family dwellmgs III the lower pnce
range for sale or rent, for low-rent public hous~g con~truction,
and for housing near military installations and mdustrlal plants.
Awards also have been heavy for highways, streets, water works
and sewer projects, and institutional buildings of all types. On
the other hand, awards for commercial buildings and manufacturing plants have shown a marked decline from a year ago
since about May. Despite the large volume of constructIOn
placed under contract in this District during the third quarter,
the total of awards for the first 9 months is still 5 percent
smaller than in the corresponding period last year.
Cotton consumption in both the District and the Nation increased again in September to add further to the rise since the
July low. Cotton textile mill activity during :he rema.inder of
the year should be sustained to meet consumption reqUIrements
for textile products and to replenish inventories. The consumption of textile products has held up well in recent months, and
prices in some lines have increased slightly.
DOMESTIC CONSUMPTION AND STOCKS OF COTTON
(B,l,,)
Sept.
1949

Sept.
1948

August
1949

Consumption at:
Texas mills . ..... , .. ,' ,.,.,.,
12.898
16.309
12.237
United States mills .. ,., ., " ., . 709.958 738,794 664.133
U. S. Stach-end of month :
In consuming establishments, . . 744.602 1.281.800 679.983
Public storage and compresses .. 6,136,997 4.147.278 3.954.662

August 1 to Sept. 30
This season Last season
25.135
1.374.091

27.399
1.467.6.\7