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MONTHLY
BUSINESS
REVIEW
oft h e

FEDERAL

Volume 35

RESERVE

BANK

of

Dallas

Dallas, Texas, November 1, 1950

Number 11

THE BUILDING MATERIALS SITUATION IN RELATION
TO THE SOUTHWEST
KEITH

W.

JOHNSON,

Industrial Economist

Federal Reserve Bank. of Dallas
The Korean crisis, which brought about the immediate formulation of plans for an expanded
defense program, created new problems for the building materials industries. Throughout the first
half of 1950 the rising tide of construction activity had placed added burdens upon many such plants
which were already operating at or near capacity. In fact, a growing tightness in the supply situation
had been taking place for several months; and in the case of a few items, critical shortages were in
prospect as a result of transportation difficulties, demand in excess of capacity production, and other
factors.
The impact upon the building materials industries of the outbreak of hostilities in late June was
immediate and extensive. The initial development was an intensive wave of speculative buying by
contractors and distributors who were endeavoring to cover near-term requirements for projects
under way and to accumulate a backlog of supplies as a protection against sharp price advances and
future shortages or priorities. Manufacturers immediately stepped up their operations and, at the same
time, bought heavily of raw materials. This unusually heavy demand, imposed upon an already tight
supply situation, induced sharp price increases, especially on some items. Wholesale prices of building materials increased about 11 percent from late June to early October, and much sharper advances
occurred on such items as lumber.
The above-mentioned conditions were aggravated by widespread efforts of owners and contractors to rush completion of present projects and to get new projects under contract as rapidly as
possible. Prospective homeowners closed contracts for home purchases in anticipation of higher prices
and restrictions on mortgage credit. Many industrial concerns which had been considering plant
expansion entered into definite contracts when it became evident that prospective demand would
justify immediate action. The result of these developments has been record volumes of both residential and total construction.
It is inevitable that the stepped-up defense program will have repercussions upon the building
materials industries, as certain basic materials are diverted from civilian construction to military construction or to the production of war materiel. Estimates indicate that construction this year had
been using substantially all the cement produced, 70 percent of the lumber, a third of the lead, 14
percent of the steel, 10 perr.ent of the aluminum, and 5 percent of the copper, all of which have
important military uses.
Types of building requiring especially large amounts of defense materials are likely to be most
seriously affected by cutbacks. Large industrial and commercial building projects, unless needed
directly or indirectly in connection with the defense program, could be particularly handicapped
by tightness of steel. Steel and other metals are used in some of the key components of many types
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

178

MONTHLY BUSINESS REVIEW

of buildings, e.g., in structural steel; nails; plumbing, heating, and electrical equipment; and builders' hardware. Scarcity of one or several of these items can seriously retard or discourage construction projects almost as fast as shortages of the bulkier structural materials-lumber, brick, and cement.
Shortages of lumber, while affecting most types of construction, will particularly handicap residential
building, which, alone, has been using a third of the Nation's lumber output and accounting for
nearly half of the use of lumber in construction.
On the other hand, except for some local military construction, many important construction
materials are of small military significance, e.g., sand and gravel, stone, slate, brick and other clay
products, gypsum, and asphalt. These materials, together with lumber, cement, and steel, account for
the bulk of the basic materials used in construction. It may be noted, also, that many of the military
requirements are for materials of relatively little direct significance to the construction industrymodern warfare requires immense quantities of petroleum, textiles, food, paper, and numerous other
nonconstruction materials.
Moreover, the defense program at its present and prospective levels will not require the immense
quantities of construction materials used during World War II. With most of the war plants built
during that war still available on either a stand-by or a conversion basis, far less war plant construction will be required. The industrial plants built during the postwar period also, in many cases, will
make less necessary the building of additional war facilities. The airfields, military bases, and other
military and naval construction of the last war will lessen the need for such work during the present
emergency. The use of raw materials in the production of war materiel also will be less than during
World War II-at least so long as the defense program does not become an all-out war effort.
The impact of military requirements upon
WHOLESALE PRICES OF BUILDING MATERIALS
bui1ding materia Is shouId be gradua1, since defense
IN THE UNITED STATES
expenditures, which averaged about $1,300,000,- """"
".,,"
""
!'''
000 per month before the Korean crisis, are not ~O'ci r· ---.----r--'----'---"-----''---!· i;hp
expected to rise to a rate of $3,000,000,000 per , oOf-- --j-- - + -- - + -- + - - - f - --I--f
month until about mid-1951 and may not reach
$5,000,000,000 monthly until about mid-1952. , oof-- --j-- - + - - - +- -+ - - - f - --I--I- --l.oo
However, it is anticipated that only about two- 'o~J---+--+---+--+---f---+,I-,-=l'oo
thirds of the increase in expenditures will be for
hard goods. Furthermore, many such defense goods >
ooJ-..--/A- - + --:-::+:--:-::-+--- f -c:;;"'o/"----oJ>oo
are highly processed, so the cost of the basic materials will be but a fraction of the total cost of the
finished products. Nevertheless, it seems certain that
sizable quantities of materials will be required each O~--;;';;;:__---;=--~;__-;:!;;_----==;;---:f.-:---::!~
year for defense purposes and that some of these ,.,
",.
",.
.
us
reqUIrements WI'11 b e at t he expense 0 f t h e con- ",. "'"'' "".,,"
struction industry. In the case of certain materials,
it is probable that defense requirements can be met largely by bringing into use presently idle plant
or mine capacity, particularly marginal capacity, and through operation of existing plants for longer
hours. Moreover, expansion of gross productive capacity at even 2.5 percent per year, a rate often
accepted as the typical peacetime rate of growth, could provide a sizable percentage of the increase
in defense production, particularly if the expansion should occur largely in industries producing for
defense purposes. In line with the latter assumption is the announcement that steel production capacity is to be increased by over 9 percent during the next 2 years. This increase of steel capacity by
9,400,000 tons per year would equal over 80 percent of the steel requirements of the construction
industry in 1950.
SOUftG[

1L/1't(,I U Of' L.A IO!! STAl lSTlGS

Hence, considering the expansion of productive capacity and its most effective utilization, the
gradualness of the unfolding of defense expenditures, the fact that many building materials are of
small military use, and the fact that much of the military requirements are for nonconstruction materials, it seems likely that the contraction in construction will result chiefly from relatively moderate
military inroads on certain material supplies, particularly steel and other metals, and the diversion
of construction labor to other fields of activity. ' Only full-scale war would be likely to lead to a
duplication of the 1943-45 period of wartime restrictions on construction.
,
.
.
'

MONTHLY BUSINESS REVIEW

179

As to how much of each type of building will be possible during the next 2 years, a few observations may be made. It is generally agreed that residential building will be cut back substantially,
reflecting the high costs and shortages of building materials and the regulation of real estate mortgage
credit on new construction."C The all-time peak this year of about 1,300,000 housing starts is expected
to be reduced to some 800,000 to 850,000 dwelling-unit starts annually during the next year or so.
However, even 800,000 units a year would exceed the number of starts in any but peak or near-peak
boom years prior to 1949.
Nonresidential construction is likely to show divergent trends, comprising as it does a wide variety of types of construction of differing significance to the defense program and requiring varying
amounts of defense materials. Those types of nonresidential construction of value to the defense effort
are likely to be encouraged. Military structures and a few defense plants are obvious examples, but
justification on the basis of contribution to defense industries can be made for many kinds of construction, including much road and street work, sewer and water works, and utility and other
construction improving the efficiency of community life and economic activity. Numerous cities
over the country are in urgent need of additional hotel facilities. In many areas more office space will
be required for essential governmental activities. Contract awards for various other kinds of commercial, as well as industrial, building have been increasing for some months. Such building appears
economically justified even at high costs for construction, since the very high level of general business activity, especially in the larger cities, will continue to generate both business confidence and a
strong demand for larger floor space on which to conduct the tremendous and expanding volume of
American business and production. Modernization of many plants will also be pushed.
In the oil and gas and related industries, numerous construction projects, including refineries,
petro-chemical plants, and pipe lines, were planned prior to the Korean crisis and are likely to be
pushed to completion, if sufficient materials are available. A high proportion of these projects, of
course, are in the Southwest.
On the other hand, several types of nonresidential construction projects, the need for which
is not urgent, may be deferred indefinitely either because of the high cost factor or because of the
shortages of labor or basic defense materials such as steel, copper, and aluminum. The amount of such
construction to be deferred is likely to increase and to extend to a wider variety of projects as defense
production is accelerated. On the whole, however, it appears that total nonresidential construction
may be better sustained than residential building, partly because the urgency of some types of construction will counterbalance the effect of restrictions on other types and partly because nonresidential construction prior to -the Korean crisis did not reach, relatively, the high level attained by
residential building.
In view of the fact that the construction materials supply situation may have an important bearing upon the future volume of total construction, as well as its distribution among the various types
of construction, a review of the economic importance of the industry, its growth during the past
decade, and some of the more important technological developments in recent years should be beneficial in appraising the outlook for building materials supplies and for the various types of construction.
'On July 19 the initial controls over housing credit went into effect, pl'Oviding an additional 5 percentage points
on down payment l'cquircments for all J!'HA loans, FHA appraisals on the basis of July 1 costs, reduction of the maximum mortgage limit on single-family dwellings from $16 ,000 to $14,000, and down payments of at least 5 percent on
GI loans. The availability of Federal Home Loan Bank credit to member institutions was cut, public housing starts dUl'ing the last half of the year were restricted to 30,000 dwelling units, and effective August 1 a down payment requiremen t
-10 percent-was set for FHA-insured loans for the modernization and repair of houses.
Effective October 12, Regulation X covering conventional loans and companion regulations covering FHA and VA
loans brought under still stricter contl'Ol all privately financed 1- and 2-family houses started after noon of August 3 and
on which commitment s were not made prior to the effective date of the regulations. These l'egulations cover loans for
more than $2,500 with more than lS-month maturity on major improvements and additions, as well as new construction.
The down payment requirements range from 10 percent for houses selling for $5,000 and under to 50 percent on houses
costing $24,250 and up. The down payment s must be cash and cannot be borrowed, except against equities in life insurance policies. The maximum maturity is 20 years, except for mortgages on houses priced at $7,000 or less, on which properly amortized loans may "un as long as 25 years. Compliance is required of all lenders who, during the past year, made
three or more real estate loans aggregating more than $25,000.

180

MONTHLY BUSINESS REVIEW

The production of building materials has followed, to a considerable extent, the fluctuations
of construction but has been influenced by the level of general business activity, since many building materials are widely used outside of construction. The index of construction materials production
ot the United States Department of Commerce, after rising during the war construction boom of
1941-42 and faUing thereafter until 1945, rose to a peak in 1948. After a decline in 1949, the index
recovered and this year may rise even higher, to about 50 percent above the 1939 level. However,
the industrial production index of the Board of Governors of the Federal Reserve System rose appreciably more, 75 to 80 percent, during the same 1939-50 period. The somewhat smaller rise of the
construction materials index reflects, in part, the relatively high level of this type of production in
the base year, 1939. Another factor is that during the war period building materials were, for the
most part, less required than some other manufactured products. After the war the production of
buildmg materials was hindered somewhat, in that such production had to expand in an economy
already running near full capacity. Important, also, have been the technological advances in construction, resulting in a gradual decrease in the amount of materials required to build houses and
many other types of construction. If the construction materials index should include such products
as glass, building blocks, synthetic products of various types, asphalt tile, air-conditioning equipment,
and certain other materials-the production and use of which expanded rapidly in the postwar period
-a gain somewhat larger than 50 percent might have been registered for the 1939-50 period.
Though building materials as a group did not rise as much as total industrial production during
the 1939-50 period, some individual building materials made spectaclilar gains. The increasing acceptance of gypsum lath a,nd board in place of wooden lath is reflected in a 600-percent rise in the production of gypsum board and a 124-percent rise in the case of gypsum lath. The residential building
boom has absorbed very large amounts of these two products. Similarly, the output of softwood
plywood, use of which was stimulated by wartime experience, rose 150 percent. Warm-air furnace
production rose 90 percent, a gain resulting from the housing boom, as well as from the switch
from heating systems requiring cast-iron radiators. The production of the latter by 1950 was down
45 percent from the 1939 level. The switch from coal furnaces to oil and gas heat in residences is
reflected in the drop of mechanical stoker output by 1950 to about 80 percent below 1939. Other
materials which have shown large production gains include fabricated structural steel, cement, and
asphalt-prepared roofing.

An appreciable part of these production gains has been made in the Southwest, notably in such
industries as gypsum products and cement. An indication of the magnitude of building materials production is value added by manufacture. In the five southwestern states wholly or partly in the Eleventh
Federal Reserve District-Arizona, Louisiana, New Mexico, Oklahoma, and Texas- value added by
manufacture of building materials in 1947 approximated $400,000,000, or 13 percent of the total
for all manufacturing in this area. In the Nation, only 8 percent of the total value added by manufacture was accounted for by building materials production, although such production involved
value added of over $6,000,000,000 in 1947.
Employment in building materials manufacturing in the five southwestern states, which has
averaged recently about 100,000 persons, represents 2 percent of total employment in the area, or
about the same percentage as in the Nation. An even larger contribution to employment results
when the building materials are utilized by the construction industry, which employs about 300,000
men in the five southwestern states and about 2,500,000 in the Nation.
The building materials industries are particularly large users of certain natural resources. Construction, which is the end-use of a high proportion of the total output of numerous basic materials, absorbs about 85 percent of the gypsum, 80 percent of the sand and gravel, 75 percent of the
clay, 75 percent of the stone, about 70 percent of the lumber, and over a third of the lead, as well
as most of the slate, asbestos, and asphalt. Many of these resources are widely available and of too
Iowa value per pound to be shipped great distances. Such resources gain their value chiefly because
they are put to use by the building materials producers and the builders of the region. In this respect,
tbe resources utilized in building materials tend to be of more immediate advantage to the Southwest than some other resources of potential future value.

MONTHLY BUSINESS REVIEW

181

Important factors in the tendency toward localized utilization of building materials resour::es
are the wide dispersion of construction ac.tiviry, which takes place in every community; the rather
low value per pound of many of these materials; and the wide availability of many of the basic construction materials. Such materials as sand and gravel are nearly always obtained within a comparatively short distance of the building site, while cement, brick, and tile are also preferably produced
near the point of use. As a result of these tendencies, both construction and the building materials
industry tend to stimulate local and regional business activity.
The strength of this stimulus to business activity is an important factor in sustaining income
and employment, as is indicated by the fact that in 1949 construction accounted for about 17 percent of all production in the Southwest and about 12 percent in the Nation. This construction activity, in turn, is necessary for the normal functioning of all other industries. In the Southwest it is
particularly important, since a continued flow of construction materials is necessary for the erection
of the plants and equipment, houses and stores, and other buildings and structures required for the
dynamic economic growth of the area.
Another way in which the building materials industry contributes to the economic development
of the Southwest is through its very large requirements for, and hence stimulation to, transportation.
Even though long hauls of many of these materials are avoided when possible, building materials
account for a considerable proportion of the pay load of the railroads, trucks, ships, and barges of
the Nation. The total weight of the 1947 output of building materials in this country exceeded
550,000,000 tons, an amount greater than that of all the agricultural production in the Nation. It is
probable that building materials account for about one-fourth of the tonnage of commodities hauled
in this country. Such materials represent about one-sixth of all rail shipments and keep approximately a million trucks busy.
Nearly every type of building material of any
economic importance is produced in the Southwest.
Both in this area and in the Nation the most important single material is lumber. Its output in the
five southwestern states has averaged about 9 percent of the national total in recent years, with
Texas accounting for about 4 percent and Louisiana, almost as much. Lumber production in the
Nation in 1950 is expected to exceed the 1948
postwar peak of 36,000,000,000 board feet. Production this year is up about 18 percent from 1939
in the Southwest and 23 percent in the Nation.
The larger rate of gain for the Nation reflects the
increased tapping of the rich timber resources of
the West Coast. These gains are appreciably less
than those made in the production of most other
building materials. This fact is in keeping with the
trend of lumber output over the last half-century, during which the all-time peak in lumber
production in the United States was achieved in 1906 and 1907, when annual production totaled
46,000,000,000 board feet. This record was not equaled during the building boom of the 1920's,
and it is unlikely to be equaled during the present boom. The relative lag in lumber output as compared with other building materials reflects widespread shifts to other types of materials, induced,
in part, by the higher cost of lumber, resulting from decreased supplies from eastern forests and
the heavier reliance upon western forests more distant from the major consuming centers.
LUMBER

PRODUCTION IN THE SOUTHWEST
AND THE NATION

• " "IZOH A, NEW MEXICO, OIIlAHO t,l A
SOURCE US OCPAIIITMfHT OF CO M"' ERct

In addition to lumber itself, the planing mills and related plants and shops in the Southwest
.
provide a large, diversified, and widely distributed output of doors, window sash, moldings, screens,
Venetian blinds, and cabinet work. Much of this processing of lumber, as well as related materials,
could be classed as off-site construction. This is even more true of prefabrication of houses and other
buildings in a number of cities of the area. Also important in the Southwest is the production of
railroad cross ties, piles, poles, plywood, veneer, and wooden awnings in large volume for local consumption, as well as for sale in other areas.

182

MONTHLY BUSINESS REVIEW

A factor in the loss of relative standing of
GYPSUM BOARD AND lATH. AND FLOOR AND WAll rilE.
lumber among the building materials, particularly
PRODUCTION IN THE UNITED STATES
in the Sou thwest, has been the rise in the u tiliza tion """ ••'"' '". ''''
nOOft
nu:
800
of gypsum board and lath. The 1950 production .,000
of these gypsum products in the Nation is expected ,,"00
'
' \ . - } 000
to reach about 5 times the 1929 output and 3.4
/ V
times that of 1939-gains made largely at the ex- .poo
.00
pense of wooden lath. Despite these gains and a 10/
percent increase in output capacity within the 3,000
>00
GYPSUM BOARD : " ' /
current year, shortages have been widely reported
ANO LATH---...!
~
throughout the country. Factors inducing the ',000
/ 1
'
200
switch to gypsum board and lath include the more 1.000 ~
I ./ ~
r~L~~~T~~~.------,..J~--- 100
rapid rise of lumber prices than of gypsum prod01--',,,",,,>--,
"'"-:-"":--r
0
uct prices j the rise in wages of lathers j the saving
.,,"
""
"..
...,
.••
in labor time, as well as wages, to be made by the ~:,::;";~;~,i,~~:~:::;·"··"'"
change; the greater standardization of construction . ..... ".. mow"'.
in multiple-unit projects; the saving of construction time when early completions are desired; and liberalization of building codes to permit the use
of gypsum board and lath. Gypsum board is in especial demand on jobs where quick, inexpensive,
dry-wall construction is desired. Gypsum products, including plaster as well as board and lath, are
produced in five Texas cities and in Arizona and Oklahoma. With recent increases in capacity, Texas
probably ranks first among the states producing gypsum products.
AltO WAU..
IIIIUIOIfI 01' SQ UARE f££f

"' 11.1.101015 OIF SCUARE HU

J

-

Another southwestern product replacing, to
some extent, a timber product is asphalt roofing.
Prepared asphalt roofing, as well as asphalt shingles
and roll roofing, has been used increasingly to provide water-tight, fire-resistant construction. Other
forms of asphalt, as well as road oil, are used in
street and highway construction. The southwestern
petroleum refineries produce about one-fourth of
the national output of asphalt.

/---1-"
,

'------(

/

CEMENT AND GYPSUM PRODUCT PLANTS IN THE SOUTHWEST

0 «""" """'
OCUOt,.. ""'" "ou
In cement production, the Southwest has been
gradually improving its position relative to that of
the Nation. Cement production has set new records
each year since 1947, and this year should approximate 17,000,000 barrels in Texas and 210,000,000 barrels in the Nation, with Texas accounting for
about 8 percent of the national total. Texas production in 1950 will exceed that of last year by about
13 percent, while the increase since 1939 will approximate 13 3 percent. These gains considerably exceed
those of the Nation. The Southwest, as a whole,
tends toward approximate self-sufficiency in cePORTLAND CEMENT PRODUCTION
ment production, with Texas producing somewhat
IN THE UNITED STATES AND TEXAS
TU~ more than it uses and, hence, supplying part of the
'''''IUl!
•'LUOHS
•• requirements of adjoining states. However, occa•,.,
sional shortages may lead to movements of cement
00
o from distant centers of production. Cement plants
_UN I TED STATES
are located in seven cities in Texas, as well ali in the
~
I
Arizona. Plants
/ " / • states of Oklahoma,ofLouisiana, andproducts as conf or the production
such cement
l..\_ _ ,. /
I
00
o crete block, pipe, and post are found in numerous
I
I
,I \
cities in the Eleventh District.
'........." ...
,
~tT~.n_

U!fIT[O SUT£S

""LLION S Of' 376 - POUHtl 'ARREL

0# 376-"eU NO

\

'0

~

0

19U

..

... --"

.. --

r-/'
.'V ,------

'\

........

'''0

SOURC[ , U '.BUREAU 0' N INES.
ItI~O

fi GURES E5TI ".UE O.

_
..

- ...

\~

-.
1/t.1
•

/'TEXAS

193'

1940

~"

~

0

The long-term trend in brick consumption has
been downward during the past 40 years, as other
materials have been gradually displacing brick,
especially in such uses as paving, sidewalks, large

MONTHLY BUSINESS REVIEW

183

commercial buildings, and certain other types of buildings. Cement and steel, in particular, have
gained at the expense of brick. On the other hand, brick as a fire-resistant material has made some
inroads on lumber consumption, particularly in larger cities. During the postwar construction boom,
brick production has increased somewhat. In 1950 about 5,400,000,000 bricks should be produced
in the United States, representing little change from last year and a gain of only 14 percent from
1939. The 1950 output will equal little more than one-half the 1925 production and about a fourth
of the 1910 peak output. Reflecting the long-term decline of the industry is the obsolescence of many
brick plants, particularly in the less rapidly growing parts of the country. In the five southwestern
states, brick production has amounted to about 8 percent of the national total in recent years. Since
brick and structural clay tile are made from a rather widely available raw material, these products are
produced in the vicinity of most of the larger cities of the Southwest. However, lack of suitable clay
has prevented production in some regions of the area, as in parts of West Texas. Drain tile is also widely
produced in the Southwest, while tile for walls, floors, roofing, and chimneys is made in or near many
of the larger cities. The decentralized character of the brick industry has resulted in wide geographical
variations in production trends, with declines in some areas during recent years but increases in the
Southwest, where some spot shortages have been reported.
The structural steel used in the erecticn of
large and medium-sized buildings, as well as in
"OJ"'" ",""" bridges and some other types of construction, is
400
•2
I
largely fabricated from basic steel shapes produced
in steel mills. While the basic steel production is
2 000
I
concentrated chiefly in the older industrial areas
a~
I600
of the North, the fabrication of basic shapes into
U~~cW~:;
..- ..... __
'\:
finished structural steel is somewhat more widely
!
~l:.t_/.- I
,_ \ , _ _ _ , _,
,,
'00
distributed geographically, with considerable fab•
,
' ~l<"'<'
rication of this type taking place in the larger cities
r"./;:.;:/\~,~ f.t
?~
Y.
_
8 00
4
of the Southwest. The commencement of steel pro"-'J
\
,- :
, '
duction within the Southwest is favorable to the
4 00
2
.~
further expansion of structural steel output in the
2,
area, where even in 1947 there was produced nearly
0
"
7 percent of the total national output. The recently
announced program for the expansion of steel capacity in the Nation by nearly 10 percent by the
end of 1952 improves the longer range outlook for steel product supplies.
BRICK. TILE.AND CLAY SEWER PIPE PRODUCTION
IN THE UNITED STATES

COMI,ION AHe F.C~ 8RI0il
I LLI~S

~,

.

'I.\\C\...,.. SEWER PI P[

\'

la2~

1930

tr

~ ~O"'I.IOH

.'" ' ' '1

19l~

AND

19~a

1''' 5

SOURCE ' U S DEPAR TMENT OF COllfM[ I'I e [
1'~ FIG URES E5TI /IIATt:~
~ 1932·19)' ($T1WATEo.

At a number of industrial centers in the Southwest, steel pipe, concrete reinforcing bars, metal
lath, nuts and bolts, screws, and wire nails are produced; while ornamental iron and such sheet metal
products as ducts, gutters, downspouts, flashing, and vents are made in dozens of cities in the area.
Other southwestern steel products include sinks,
smokestacks, metal roofing, window frames, screens,
STEEL CONSTRUCTION MATERIALS PRODUCTION
Venetian blinds, and metal awnings. Aluminum is
IN THE UNITED STATES
also used in making the latter five products, as well 3:~\)'i""""
"~'''''i'-''''-i'i2'
'';--'''~~. .~~~,--~--,-~~'''''''''''''~
as in shutters and interior trim.
Paint and related materials for prolonging the
life and improving the appearance of buildings and
structures are produced in the larger cities of the
Southwest, Output in the Nation in 1950 is expected to be up about 5 percent from 1949 and
about 60 percent above 1939.

2,500}----+--- -f---- - J---+---.,/----J

2,0001---+-_--1_ _ _-41.

'--+---""''-=+'-----1 '00
Among the more highly fabricated building
materials and components produced in the Southwest, fans, ventilators, and air-conditioning and
'f . .
. 11 .
d ·""·"".""."''',,,"m.
pun ylng equipment are especla y Important an
are made in numerous cities of the area. The warm
summers, together with rising incomes, have been important in the encouragement of this type of
$OIJRC[· U S Oe:'UTIoIe:IrIT 01' GOWfllE ll CoL

11 $0 FIGUR ES (6T l fllAIEO.

184

MONTHLY BUSINESS REVIEW

production in the Southwest. In this field the growth in recent years has been as large as or larger than
in any other section of the country. Furnaces, space heaters, and hot-water heaters are also made in a
number of cities in the area.
Allied in purpose to both the heating and the air-conditioning equipment are the insulation
materials used to conserve heat in winter and to keep out heat in summer, as well as to increase fire
resistance. Among the insulating materials produced in large volume in the Southwest are rock wool,
sawdust, cottonseed hulls, fire-proofed cotton, vermiculite, and perlite. Vermiculite is a type of mica,
while perlite is a volcanic glass; both expand when heated, becoming lightweight aggregate with
excellent thermal and acoustical insulation properties.
The foregoing review of developments in the construction and building materials industries
highlights the facts that over-all construction, as well as most of its important components, is running
at or near the all-time peak, that comparatively rapid strides have been made during recent years in the
production of many building materials, and that in the case of most of these products, output capacity
has kept pace with demand. It has been emphasized that most of the materials used in construction are
widely distributed throughout the country and are available in ample quantities to meet prospective
demands. The major deterrents to the maintenance of construction at current levels, under existing
and prospective conditions, are likely to be the uncertain or decreased availability of construction lab:>r
and of supplies of certain products which are essential to most types of construction. In the case of
both labor and specific materials, it seems likely that the defense program will compete to an increasing extent.
Steel could prove to be an important bottleneck if defense requirements should reduce the amount
available for the production of such key building items as nails, pipe, concrete reinforcing bars, structural steel, and plumbing, heating, and electrical equipment. As supplies of iron and steel available to
the building materials industry are reduced, the output of the plants affected will be curtailed correspondingly. Similarly, the nonferrous metals, including particularly copper and aluminum, deserve
watching, since they are vital to the prodlJction of electrical equipment, copper pipe and tubing, and
some types of roofing, wall panels, window frames, blinds, awnings, and a variety of other building
products. A shortage of electrical equipment would prove particularly serious to the building industry,
while many of the other products requiring copper or aluminum are either necessary or desirable for
the maintenance of quality standards in construction.
The fabricating facilities for the production of plumbing, heating, electrical, and other metal or
partially metal products might prove insufficient for the construction industry if an appreciable proportion of such facilities were diverted to the production of defense products. This could retard
construction just as effectively as an insufficiency of the metals used in making these products. Similarly, with both the Armed Forces and defense production absorbing increasing numbers of workers,
a labor shortage might develop in the building materials field, particularly in the lumber, brick, and
other industries where wage rates tend to be lower than in defense plants. Loss of output of building
materials from this source, likewise, would reduce construction activity.
Transportation could also prove to be a bottleneck, with distant supplies of lumber, plumbing
goods, and other building products being less available to the construction industry of the Southwest
if defense shipments should utilize a substantial proportion of the transportation system. Government
controls over the production or use of materials could further affect the availability of materials for
construction, while additional controls over certain types of construction could affect the demand
for materials. Such controls would tend to allocate the resources and productive capacity of the country to those industries and uses deemed of greatest importance to defense. It should be recognized, however, that to the extent that natural forces bring about a desirable distribution of labor, materials, and
plant capacity between the building materials and construction industries and defense requirements,
the need for controls will diminish.

MONTHLY BUSINESS REVIEW

185

Review of Business, Industrial. Aglicultural, and Financial Conditions
DISTRICT SUMMARY

Department store sales in the Eleventh Federal Reserve District in recent weeks returned to more normal seasonal levels,

Department store sales in the Eleventh Federal Reserve District in September, although showing a less-th an-seasonal increase from the high August level, registered a 15-percent increase over sales of September last yea r. Heavy buying of
consumer durable goods in the week immediately preceding the
reimposition of consumer instalment credit controls contributed significantly to the large September sales volume.
During the first 2 weeks of October, sales returned to more
normal seasonal levels, with the year-to-year gain amounting
to only 5 percent. Department store stocks at the end of
September, reflecting heavy inventory buying in the weeks
immediately following the outbreak of Korean hostilities, rose
to a record high. Furniture store sales in September showed a
slight decline for the second consecutive month but were
almost one-third higher than in the same month last year.
Nonfarm employment in Texas reached its fourth successive
new peak in October at a level about 4 percent higher than
a year earlier. The value of construction contract awards in
the District in September, although 21 percent below the
August record, was 71 percent higher than a ycar earlier and
9 percent higher than the average for the first 9 months of
this year. Both residential and nonresidential awards declined
as compared with those in August. Crude oil production in the
District reached a new peak in September of 2,929,000 barrels
daily but declined moderately in October as a result of lower
Tcxas allowables.
Benefiting from open weather, farmers in the District have
made good progress in recent weeks in harvesting mature crops
and seeding small grains and winter legumes. The outlook for
total crop production in the District has changed only slightly
during the past 2 months, as crop losses in some areas generally
have been offset by improved prospects in other sections.
Livestock are in good condition throughout most of the District, being favored by a plentiful supply of range and pasture
grass. The general level of farm prices in Texas, after rising
for nine consecutive months, was halted in October when
prices of most major commodities held steady or declined.
Loans of the weekly reporting member banks in the District
increased $63,334,000 between September 13 and October
18, to reach a record total of $1,386,743,000. Commercial,
industrial, and agricultural loans accounted for approximately
67 percent of the gain. Total investments declined $45,679 ,000, as holdings of Governments dropped rather sharply. Total
deposits increased $33,624,000, despite the decrease of $25,094,000 over the first 4 weeks of the period.

BUSINESS
On October 13 the Board of Governors of the Federal Reserve System announced that Amendment No. 1 to Regulation W, tightening instalment credit controls, would become
effective on October 16. This amendment reduces the maximum maturities on instalment credits from 21 to 15 months
for automobiles and from 18 to 15 months for appliances and
furniture. The minimum down payment on automobiles remains at one-third; the down payments on appliances are increased from 15 percent to 25 percent and on furniture from
10 percent to 15 percent. The maximum maturity on home
improvement credits remains at 30 months and the minimum
down payment at 10 percent. Down payments are now required on all articles costing $SOar more.

as consumer hard goods sales declined noticeably following the
reimposition and subsequent tightening of consumer instalment credit controls. Total sales at reporting department
stores in the first half of October were 5 percent above a year
earlier, or a little lower than the year-to-year increases prevailing in the months immediately prior to the initiation of
hostilities in Korea.
September sales at district department stores showed a lessthan-seasonal rise over the inflated volumes of July and August, when scare buying was rife. Nevertheless, sales were the
highest for any September on record, rising 9 percent above
the August volume, 15 percent above September a year ago,
and 2 percent above September 1948. Heavy anticipatory buying of television sets and other consumer durable goods in the
week immediately preceding the reimposition of Regulation W
on September 18 was an important factor boosting September
sales.
The year-to-year increase in district sales in September was
noticeably larger than that shown in department stores
throughout the Nation, but district stores experienced a
smaller increase in sales from August to September than the
national average. For the first 9 months of this year, sales
at district department stores have averaged 13 percent higher
than in the corresponding period of 1949, as compared with
a 5-percent increase for the Nation's department stores.
Sales of consumer durable goods, with the exception of television sets, declined noticeably in September from the extremely high levels of July and August but equaled or exceeded
the high volumes of the pre-Korean months, May and June.
Major household appliance sales, for instance, although down
2 percent from August, were slightly higher than in June
and were 34 percent larger than in September a year ago. Sales
of furniture and bedding were 4 percent lower than in August and 9 percent lower than in July but were higher than
in any other month on record, exceeding year-earlier levels by
25 percent. Domestic floor covering sales showed a similar picture. On the other hand, "les in the television, radio, and
phonograph department were 5 5 percent greater than in August and 261 percent higher than in September 1949, when
television sales were still in relatively modest volume.
Soft goods departments generally had satisfactory sales records in September but continued to lag behind the durable
goods departments. Sales of women's and misses' apparel and
accessories showed year-to-year increases for the fifth consecutive month. Women's and misses' dress sales were 12 percent above a year ago, following a 2'I-percent year-to-year increase in the previous nlonth, while women's and nlisses' coat
sales were 2 percent higher than a year earlier as compared
with a 7-percent gain in August. Moreover, women's and
misses' accessory sales were up 5 percent over a year ago, after
having shown a 17-percent year-to-year increase in the preceding month. Men's clothing sales continued their favorable
showing, with a year-to-year gain of 11 percent, and silverware and jewelry sales showed a large increase over year-earlier
levels for the fourth consecutive month with a 39-percent
rise.
Although instalment sales were noticeably lower in thc last
half of September after Regulation W was imposed, total
instalment sales for the month showed a 4-percent gain over
the high August volume and were 40 percent above Septem-

186

MONTHLY BUSINESS REVIEW

ber of last year. It should be noted, however, that this yearto-year increase is the smallest for any month this year.
Charge account and cash sales continued for the fifth consecutive month to show ga ins over year-earlier levels, with increases of 10 and 4 percent, respec tively. The September ratio
of collections to instalment receivables outstanding remained
unchanged at 12 percent for the fourth successive month. Instalment receivables, nevertheless, rose 6 percent during the
month and at the end of September were almost double the
amount outstanding on the same date of 1949. Charge account
receivables, also, showed a marked increase and at the month's
en d were 16 percent higher than a year earlier.
WHOLESALE TRADE STJ.TISTIOS

- - - - -Percentage changei n ' - - -- _
- - - - - 'Net sales,- -- - - - Stockst-Sept. 1950 from 9 mo. 1950 Sept. 1950 from
Sept.
Aug. compo with Sept.
Aug.
1949
1960 9 mo. 1949 1949
1950

Linea of trade :·
Automotive supplies . ........ .
-21
-29
Drugs and sundries . .... .... , .
16
5
Dry goods .. ......... , ........ . . .
-22
Grocery (voluntary-group and ruuline wbolesalers not sponsoring
groups) ..... . ....... ......... ,
2
- 5
Hardware .. . . . . . ........ ,."....
15
-13
Industrialsupplies . .. ........ . , . . .
34
7
Tobacco products ........ ,.......
10
- 3
Wines and liquors . .... . .. , .. . . . .. - 8
-48
• Preliminary data. Compilcd by Uruted States Bureau of CensWl.
t Stooks a.t end or mouth.
I fndica.t.e3 chauge of lel;5 than one-balf or 1 percent.

,

is

- 14

1

27
U6

14

9
2

4
1
-6

4

-5

-4

3

16

35

RETAIL TRADE STATISTICS
- - - - - Percentagechange i n ' - - - - _
- - - - N c t sa.1cs---_- _ Stocks'-Sept. 1950 from 9 mo. 1950 Sept. 1050 rrom
Sept.
Aug. compo with Sept.
Aug.
1949
1950 9 mo. 1941) HJ49
)950

Departwent 8torClj:
Total Elevcnth District ..
CorpUli Christi .
..............
Dallaa . ... . ....
............
Fort Worth . ... .
Houston ...... . ..... .......... ..
San Anklnio . ....... ... .. .. .. .. .
Shreveport, La .. ....
Other cities . .. ....
Furniture store!:
Total Eleventh District .. .........
Dallas ......................

Houston ............. .. .. . ...... .
Port Arthur . ...... , ..........
San AotOllio ............... .. .. . .
Shreveport, La.. ............ .. . . .
Wichita FalliL ........ . . .... ...
Household Rppliance stores:
Total Eleventh District . ....
Dallas .......... ... . . ...
• Srock! at end of month.

15
5
14
16
17

9
-12
13

4

10
4
13
9

22

7
13
32
32
30

13
12
13
13
9
17
9
15

24
14
25
13
26
32

23

- 1

19
66
18

26
25

20
-11
-13
-7
6
-2

108
120

8
12
9
1
15
5

7
10

8
31

14

26

14

3i

io

5

11

Daily average sales-(1935-39 = 100)

- - - Unadjusted·--_---Adjustcd _ __
Sept. AUg. July Sept. Sept. Aug. July Sept.
195U 1950 1950 1949 1950 1960 1950 1949
4H
399
429
405, 420
449
537
375,
438
376
367
385
395
443
610
347
472
405
503
4SOr 441
460
621
420r
Stocks- ( 193~9 = 100)

-

- - Una.djusted' - - ----Adjusted-- _
Sept.
1950

Eleventh District.. ..........

Aug .
1960

July
1950

Sept.
1949

Sept.
1950

Aug.
1950

July
1950

Sept.
1949

439p

402

351

367

4.26p

406

374

Wholesale prices in the aggregate have tended to level out
during the past several weeks, following a marked rise in July,
August, and the first half of September. The sensitive Daily
Spot Index of 28 Basic Commodities of the Bureau of Labor
Statistics on October 20 was about 1 percent below the postKorean high on September 15, although 25 percent above the
level immediately preceding the opening of Korean hostilities .
Moreover, the BLS All Commodity Wholesale Price Index,
after reaching a high point in the week ended September 19,
declined for three consecutive weeks and then rose slightly in
the week ended October 17 to 168.7 percent of the 1926 average. At this level, the index was 0.6 percent lower than 4
weeks earlier but 7.2 percent higher than in the immediately
pre-Korean week. Prices of farm products and foods have
shown a small decline since the middle of September, while
prices of other commodities have continued to show a rising
tenden cy.

District farmers, taking advantage of open weather during
recent weeks, have made rapid progress in harvesting mature
crops, in preparing land, and in seeding small grains and winter
legumes. Seeding of winter wheat in the northwestern section
is virtually completed, despite the interruption caused by
earlier rains. Grain seeded during August in the northern High
Plains is making rapid grow th and is in need of grazing. Early
October rains in the Lower Valley improved commercial vegetables and the prospects for citrus fruit production, but more
moisture is needed in the coastal areas and in scattered parts
of the range country.

356r

r Revised.
~

Furniture store sales in this Di,trict in September showed
a small decline for the second consecutive month but were
almost one-third higher than a year earlier and were slightly
above the former record September volume of 2 years ago.
Credit sales, in contrast with total sales, actually rose slightly,
despite consumer instalment credit controls which became effective in the latter part of the month, and were 33 percent
larger than in September 1949. On the other hand, cash sales
were down 11 percent from August, although showing a
substantial increase (18 percent) over year-earlier levels for
the third successive month. Collections were little changed,
and accounts receivable outstanding, although up 3 percent
from the previous month, continued to show about the same
25-percent gain over year-earlier levels as in July and August. Furniture store stocks in September rose 7 percent, following a 3-percent increa se in August and a 2-percent increase
in July, and at the end of the month were 26 percent higher
than a year earlier.

AGRICULTURE

INDEXES OF DEPARTMENT STORE SALES AND STOCKS

Eleventh District ..
Da.llM ..
.
Houston ......... .

the corresponding date of bst year. Part of this increase in
stocks is undoubtedly due to the higher prices on stock replacements, but the physical volume of stocks is now probably at
an all-time high. Orders outstanding declined moderately, in
accordance with the normal seasonal pattern, but at the end
of September were 35 porcent higher than a year earlier and
15 percent higher than on September 30, 1948.

Preliminary,
Unadjusted ror 6easoDaJ varia.tion.

The heavy invent ory buying on the part of merchants in
the weeks immediately following the outbreak in Korea is now
being reflected in a substantial increase in stocks. Stocks at
district department stores on September 30 reached the highest
level on record, showing a greater-than-seasonal (8 percent)
rise f rom a month previous and a 24-percent increase over

Cotton harvest has made excellent progress in the southern
Low Rolling Plains and is active over the southern High Plains.
Picking is virtually complete in the upper coastal and southcentral counties of Texas, but harvest has continued in northcentral and northeastern counties where opening of bolls has
been retarded by excessive rains during September and by
heavy foliage. The generally favorable outlook for cotton in
west Texas appears to have compensated for losses sustained
by farmers in the northcentral and northeastern counties, as
the Department of Agriculture has made no change in its

MONTHLY BUSINESS REVIEW
estimate of 2,775,000 bales for the State. The estimate of the
United States crop was lowered only 13,000 bales, or to 9,869,000 bales On October 1.
Cotton ginnings in Texas through September 30 totaled
slightly more than 1,000,000 bales, or 36 percent of the estimated crop, compared with 35 percent to the same date last
year. Cotton ginned in the State through this date averaged
higher in grade and longer in staple length than that ginned
during the corresponding period last season.
TEXAS COTTON PRODUCTION BY CROP REPORTING DISTRICTS
(In thousands of bales-500 lb. grOM wt.)

Crop reporting district

I. N.... .......................
1.s •.
....................
2 ....
.................
3 ... . ... . ...... . . ............
4 ... . . . . . ................. ...
5 ..... . . . .•.•.........•......
6 .......... .... .. ........ .......
7 ..........
8 ......

9.. ......

10 ....... ... ...... ...

1948
116
558
496
22
773
226
140
20
278
170
355

1949
U9
I,m
1,119
61
1,069
360
190
88
505
212
626

State. ............... ..............
3,153
6,<H0
SOURCE, United States Department of Agriculture.

1950
indioated

October I
90
776

465
14
460
110
146
40
210
118
358
2,775

1950 ..
percent

of 1949
35
49
42
23
42
31
76
45
42
56
57

46

The movement of cottonseed to crushing mills increased
seasonally in Texas and Oklahoma during October, The quality
of seed marketed was very good on the whole, although seed
in SOme localities contained an excessive amount of moisture;
also, occasional lots of .eed contained unduly large amounts of
free fatty acid. Wagon lot prices for cottonseed at Texas gin
points at mid-October ranged from $75,00 to $100,00 per
ton, with an average price of $90,30 per ton, which compares
with $37,80 per ton about the same time a year ago. Crude
cottonseed oil sold at terminal points in Texas on October 27
at 18.25 cents per pound, f,o.b. tank cars, which compares
with 15.75 cents a month earlier and the season's high of 19
cents on September 1.
The cotton market has been in a very unsettled condition
during the past several weeks. On October 10 the Department
of Agriculture announced interim export allocations for
United States cotton for most importing countries other than
Canada, This action, which provides for export of 2,000,000

NORTHERN
.HIGH PLAINS

I-N

187

bales of cotton from tills countl'y in the period from August
I, 1950, through March 31, 1951, establishes country-bycountry allocations to insure equitable distribution among importing countries and to assure an adequate domestic supply,
The effect of this announcement on the cotton market was
immediate and sharp; cotton fell $2 0.00 per bale within a
week. Subsequent reports that the export allocations would
be reviewed gave new strength to the market; prices then rose,
regaining much of their previous losses. The Secretary of
Agriculture announced on October 23 that the export allocations would be increased to 2,146,000 bales for the period
ending next March. The controls continue, however, to have
a deflationary effect on the domestic cotton market, although
prices on foreign markets have skyrocketed since American
Cotton exports were placed under control.
Combining of grain sorghums on the High Plains continued
in October, but there is some danger of losses of late planted
acreage if frosts occur early. Harvest is complete in other
areas. The estimate of production of sorghum grain in Texas,
placed at 121,000,000 bushels, is a record high for the State and
compares with about 93,000,000 bushels harvested in 1949, The
large crop this year is attrib utable to a large increase in
acreage, as yields, averaging 22.5 bushels per acre, are down
1.5 bushels from a year ago. The market for grain sorghums
weakened during the past 2 months under the pressure of
record production. Prices on the Fort Worth market in late
October were about 15 cents per cwt. below the July peak,
CROP PRODUCTION
(In thousands (If units)

To."",

States in Eleventh District-

Estimated
Estimated
Oot. 1,
Average
Oct. I,
Unit
1950
1949
1939-48
1950
1949
ConI . ..
64,272
120,410 108,626
bu.
M,730
58,208
Oats.....
bu.
31,000
34,020
31,195
50,535
55,682
Burley •..
10,160
bu.
1,750
2,774
4,009
10,550
4,282
Cotton .. .
bale
2,775
6,040
2,720
8,119
Hay ............. Ion
5,022
4,827
1,420
1,358
1,366
h ish potatoes .... bu.
4,560
6,780
2,720
3,686
7,U3
Sweet. potatoes ... bu.
5,119
16,37S
14,555
5,500
6,776
R ice ............ cwt.
10,178
7,873
21,323
21,229
10,879
Sorghum gra.in .... bu.
92,676
02,954
142,083
114,426
121,006
333,450
283,952
398,975
456,130
Peauuts ....
lb.
283,200
4,7101
18,8001
29,2001
Broomoornt.
ton
4,3001
9,3001
·Arizona, Louisiana, New Mexico, Oklahoma, and Texas.
~Droomcorn data are in t.crill8 of toIlS rather than thousands of tons.
OUnCE: United State::! Depu.rtmcnt of Agriculture.

Average
193~8

114,406
61,468
12,822
4,088
4,519
10,011
14,326
17,755

76,018
384,143
23,0101

Excessive rainfall in northcentral and northeast areas of
Texas during September caused some loss to the State's corn
crop. Production was estimated on October 1 at 65,730,000
bushels--<lown about 1,600,000 bushels from the September 1
estimate, The current estimated yield per acre at 21 bushels
compares with 22,5 bushels last year. Corn price support rates
for the 1950 crop will average $1.47 per bushel on a national
basis, compared with $1.40 for the 1949 crop,
Prospects for rice production in Texas improved during recent weeks as harvest has made good progress without interference from storms or excessive rains, Production in the State
is estimated at 10,879,000 100-lb. bags, or 700,000 bags over
last year. Yield per acre, at 2,300 pounds, is a near-record . The
rice market in Texas and Louisiana held steady during the
past month; demand was principally from domestic trade, as
export demand was limited. Zenith and Blue Bonnet varieties
sold during most of October at $8.40 and $11.30 per cwt"
milled basis, respectively, at Texas and Louisiana cornmon
points. These prices, however, are about $1.00 to $ 1.50 below
prices prevailing when harvest of the new crop began.

CROP REPORTING
DISTRICTS OF TEXAS

Production data relative to other important field crops
in Texas and in the five states of the Eleventh District are
shown in an accompanying table, It will be noted that, as
compared with last year, smaller crops of oats, barley, Irish

188

MONTHLY BUSINESS REVIEW

potatoes, peanuts, and broomcorn have been or will be harvested. In most instances, the smaller production of these crops
is due to reduced acreage, although in some instances smaller
yields have been a factor. In contrast to these declines, the
five states probably will harvest larger crops of hay and sweet
pota toes this year.

of feeder cattle, at record levels, is causing a cautious attitude
on the part of both cattle feeders and financing group'. Feeder
and stocker steers sold on the Fort Worth morket at the end
of Oc tober for a top price of $30.00 per cwt., compared with
$22.50 a year carlier.

Production of citrus fruits in Texas during the 1950-51
season will about double that of last season, which was the first
full growing season since the January 1949 freeze disaster. The
grapefruit crop is estimated at 12,000,000 boxes, while production of oranges is estimated at 3,500,000 boxes. The development of this year's citrus crops was mostly under favorable conditions. Trees, for the most part, had made a surprising recovery from the severe free ze damage and were in
good condition for the 1950 bloom. In contrast to the increase
in citrus fruit production, smaller crops of peaches and pears
were harvested in the State, as shown in the accompanying
table.

TOP LIVESTOCK PRICES

(Dollal1l per hundredweight)
Fort Worth market

~t'oe1~~t!!;;~: .::::::: :::::: :: ::::::::: ::

Slaughter cows ............•..•.•.•••... . • ..

Slaugbter heifers Ilnd yearlings .•.•.•.••.. ... .

~~~~;e:a~~~::::::::::::::::::::::::::: :

Slaughter lambs

...................•.•..

Hogs ............... • .• . . " ..... ... . . .... .

September
IQ50
$30.00
30.00
23.W
30.26
30.00
35.00
29.00
23.75

September
1949
$24.60
21.60
18.00
26.00
24.60
24.60
23.00
22.60

August
1950
$30.00
30.00
22 .60
3000
30.00
30.00
30.00
24 .75

LIVESTOCK RECEIPTS
(N umbe, )

The Lower Rio Grande Valley vegetable area received good
rains during October, which were beneficial to growing crops
and stimulated growers' interest in planting hearty vegetables
for winter harvest . Much of the Coastal Belt is still very dry.
Tender-type vegetables in the Laredo, Winter Garden, and
Eagle Pass sections continue to make good progress. Early
planted winter vegetables in these areas show more advanced
growth than those in the Lower Valley. Reflecting the effects
of the droughty conditions in south Texas during the early
fall, production of late fall snap beans is estimated at 125,000 bushels--40 ,000 bushels below last season. The estimate
of the fall eggplant crop is placed at 94,000 bushels-down
6,000 bushels. The 592,000-bushel fall pepper crop is off 54,000 bushels. The acreage of late fall tomatoes is estimated at
13,300 acres, compared with 15,200 last year.
PRODUCTION 01' FRUITS AND NUTS

(10 t.housand!! of units)

Teuo
Estimated
Oct. 1,
19W
1949
bu.
783
2.400
Pears ......... bu.
270
484
Grapefruit ..... bo""
12,000
6,400
3,500
1,760
Or lOges •••.••• box..
PecaDll, •••..•. lb.
31,500
29,000
·Arizo~ Louisiana, New Mexico, Oklahoma,

Unit

Peaches .......

SOUR

State6 in Eleventh DistricL·
Estimated
Average
Oct. t.
193_8
1950
1.743
1,389
374
628
18.187
IMOO
3,676
4.840
29,616
W.590
and Texas.

1949
3,516
911
9,800
3,105
70,000

Average
1939-48
2,670
740
21,431

4,837
60,471

: United States Department. or Agricult:ll'e.

Range and pasture conditions are good throughout the District, except in southern, Coastal Bend, and upper coastal
counties of Texas and in scattered sections of New Mexico and
Arizona. Ranges generally are in better condition than in
September and are better than usual for this season of the
year. All classes of livestock are doing well on the plentiful
range and pasture grass, except in the dry coastal areas
where some cattle have been fed cottonseed cake to hold shrinkage to a minimum. Cattle have been turned on wheat in the
northern High Plains, and throughout the wheat belt there
was heavy contracting of stockers for November 1 delivery to
run on wheat pastures. Livestock continue to move to market at rates slightly below those of comparable weeks of last
year, since farmers and ranchers are still holding back breeding stock for further expansion of herds.
Developments in the cattle feeding situation point to a
continued high volume of cattle feeding this season. The movement of feeder cattle into the Corn Belt since July 1 is higher
than in the comparable period of most recent years, although
substantially below the record receipts last year when a greatly
accelerated early movement from the Northern Plains states
resulted from dry weather and shortages of feed. The price

Fort Worth market

Cattle .. . ....•.•. . .. ... . ... ...
Calvl!S ......... . . . . . . .... . .. .
l1eg8 .............. . . . .
Sheep . .......... .

Sept.
19W
49,614
40,909
46,656
36,39 1

Sept.
1949
62.846
27,002
33,881
bS.343

AU(.

19W
66.732
31,440
40,290
60,847

San Antonio market

Sept.
1950
24.139
23,707
7,268

Sept.
1949
25,329
13,934

22,347"

61,607-

6.900

A"".
1960
31,28.1
24,565
8,262
29,355'

'lnc1udea goata.

The number of sheep and lambs to be fed for the winter
and spring market is expected to be smaller than the number
fed last year. The small supply of lambs and a broadening
demand for breeding stock are the principal reasons for the
reduction in lamb feeding. The wheat pasture areas of Kansas,
Oklahoma, and Texas have made very good progress, but the
supply of lambs will not fulfill the demand for feeders, prices
of which have been at record levels. The top price for feeder
lambs on the Fort Worth market in late October was $26.00
per cwt. for common and medium classes.
Farm prices in Texas continue to average near the record
high level attained in September. The Agriculture Department's mid-September indcx of prices received by Texas farmers for alJ agricultural commodities, the most recent index
figure available, was 344 percent of the 1910-14 base, after
having increased for the ninth consecutive month. Contributing most to the advance were the sharp increases recorded for
cotton, cottonseed, and wool, together with moderate increases
in prices of meat animals, poultry, and dairy products. Price
developments since mid-September indicate that the upward
movement of the general level of farm prices in Texas may
have been halted, at least temporarily. On October 23, Middling 15 / 16-inch cotton sold in the 10 spot markets for an
average of 39.48 cents per pound, compared with the season's
high of 41.20 cents on September 23. As compared with midSeptember quotations, wheat prices on the Fort Worth Grain
and Cotton Exchange on October 23 were off fractionally,
barley was down 14 cents per bushel, white corn was down
58 cents per bushel, while oats and yellow corn made net gains
of 1 cent per bushel and grain sorghums rose 4 cents per cwt.
Most classes of cattle on the Fort Worth market held steady,
but hogs were lower b y $1.50 per cwt. Poultry prices on the
Dallas wholesale market, on the other hand, showed some
seasonal increase, with hens up 2 to 3 cents per pound and
eggs higher by 5 to 10 cents per dozen.
FINANCE
Reports from selected member banks in leading cItIes of
the District indicate that between September 13 and October
II loans increased, while investments and deposits declined.

189

MONTHLY BUSINESS REVIEW
Changes
balances
balances
327,000
period.

in other major accounts include an increase in reserve
with the Federal Reserve Bank and a decrease in
with domestic banks. Total resources declined $21,and amounted to $3,814,569,000 at the end of the

Loans of these banks increased $45,590,000 between September 13 and October II, as all c.lajor categories of loans
showed growth. Commercial, ind ustrial, and agricultural loans
rose by $29,578,000, while the category "all other," including
a substantial amount of consumer loans, increased by $8,328,000. Loans reached a record total of $1,368,999,000 on October II, reflecting a gain of $288,852,000 over those of a
year earlier.
The growth in loans during the 4 weeks ended October 11
represented a continuation of the uninterrupted week-to-week
increases in total loan volume w hich began July 12 . During this
13-week period, loans expanded by $15 2,361,000, or at an
average weekly rate of almost $12,000,000 . Approx:imately 72
percent of the growth occurred in loans for commercial, industrial, and agricultura l purposes, but real estate and "all
other" loans also showed rather sharp gains. The growth from
July 12 to October 11 resulted in the establishment of new
record highs in successive weeks after July 19. The underlying
strength of the increased loan demand during both the 4-week
and the 13-week periods ended October 11 was based, in large
measure, On the special circumstances created by the outbreak
of hostilities in Korea and on the emergence of seasonal factors
in the business situation. These two additional factors gave
an especially buoyant tone to the total demand of businesses
and others for bank credit, as they were superimposed upon
existing high levels of economic activity.
Total investments declined by $39,533,000 between Septcn1ber 13 and October II, as holdings of United States Government securities showed a decrease of $42,994,000. The
liquidation of investments affected all type~ of Government
securities with the exception of Treasury bills, which showed
an increase of $14,614,000, and was distributed approximately
evenly among certificates, notes, and bonds. Treasury refunding operations on September 15 and October 1 affected both
the composition and the level of holdings of Government securities-contributing directly to the decline in certificates
and bonds and indirectly to the increase in bills. Although total
proceeds from sales and cash redemptions of the maturing issues were not reinvested in Government securities, a portion
of the funds was devoted to increasing holdings of Treasury
bills. In contrast with the decrease in holdings of Governments, investments in other securities increased $3,461,000,
continuing the trend which has prevailed during the greater
part of the year.
The liquidation of holdings of Government securities provided funds to finance the greater part of the loan expansion
which occurred at the selected member banks in leading cities
of the District. Additional funds to meet the increased demand for loans and to increase by $23,650,000 the reserve
balances with the Federal Reserve Bank were obtained through
withdrawals of $20,899,000 from balances with correspondents and a reduction of $29,831,000 in cash items in the
process of collection.
•

Despite the fact that deposit growth created by loan expansion exceeded deposit liquidation due to the decrease in
investments, total deposits of the weekly reporting member
banks declined $25,094,000 during the 4-wcek period. All
categories of demand accounts-with the exception of interbank deposits, which increased $35,677,OOO-declined during
the reriod, with the total shrinkage more than accounted for

by the decrease in demand deposits of individuals, partnerships, and corporations. Quarterly income tax payments constituted a factor in the downward trend of demand deposits
of individuals and businesses, but these effects were largely offset in the last week of the period, as this category of deposits
increased $69,503,000. On October 11 total deposits were
$3,559,536,000, as compared with the year-earlier total of
$3,269,995,000.
Reports for the week ended October 18, the most recent
period for which data are available, indicate an extension of
the trends in loans and investments which prevailed during
the preceding 4 weeks; but the decrease in deposits in the
earlier period was more than offset by a sharp rise in demand
deposits during the following week. Demand deposits rose
by $59,997,000, as increases of $30,313,000 in domestic interbank deposits and $27,299, 000 in demand accounts of individuals and businesses were reported. Funds which were
otherwise available during the week were augmented by the
$6,146,000 decline in investments. The total supply of funds
was utilized, in part, to meet the increase in loans, amounting
to $17,744,000, and to add $18 ,248 ,000 to balances with correspondents. Also, reserves with the Federal Reserve Bank rose
$7,533,000 to a total of $494,787,000 on October 18, a record high for any weekly reporting date tlus year.
CONDITION STATISTICS OF WEEKLY REPORTING MEMBER BANKS
I~ LEADING CITIES - Eleventh Federal Reserve District
(In thousands of dOURrfI)
October II, October 12, Sept. 13,
Item
1950
1949
1950
Total loons (gross) and investmenb....
. 52,647.759 S2.434.~ 52.641.702
Tot.alloo.ns-netl... . . . . ................... . ... l,3M,501
1,070,215
1.309.862

TOfl~~c~Es~~~~e~~ifni;~~fti1~~·~:~:::: l'~~!:~i l'~!:iii l'~~:i~
Other loans for purcbasing or carrying securities..

60.576

50,546

Real-estate loans .. .. ............. . . ... . . .....
Loans to banks . .. . . . . . .. .. .. .. .. . .. . . . . . . . . . .

112,685

89,001

56.401
109,421

600
409
200
All otber loans.. .. .... .. ......... . . ... . ... ...
257,461
202,08.5
249,133
Tota investments. ... .. ............ ..... . . . . ... 1,278,760
1,364,388
1,318,293
U.S. Treuury bills..................... . ... . .
114,504
116.009
99.890
57,218
339,043
75,703
U. S. Treuury certificates of indebtedness.. . . . . .
U. S. Treaaury notes......... . .. . .............
319,739
44.101
337,439
U. S. Government bonds (inc. gtd. obligations)...
633.207
729,742
664,630
154,092
125.493
150.631
Other securities. . . . . .. . . . . . . . . . . . . . .
487,254
469,377
463.604
.Resen·es with Federal Resenre Bank.. .
llalances with domestic banks...........
333.255
298.607
354.154
Demand deposits-adiusted·...........
2,1 15,7 13
1,942,356
2,136.833
Time deposits except Government..........
439,019
4"9,705
436,376
United States GovernmCllt deposits.. . . . . .. .
57,1"5
51,026
69,608
Interbank demand deposits......... .......
689.555
614,257
653,878
Borrowings from Federal Rcsc.rvc Bank. • . . .
0
0
300
• Includes all demand deposits other than interbank and United States Government, less
casb items reported as on band or in proct8l!l of collection.
t After deductions (or reserves snd unallocated charge..affs.

GROSS DEMAND AKD TIME DEPOSITS OF MEMBER BANKS
Eleventh Federal.Reser\'e District
(Averaaes

ordaily figures. In thousands of dolla.rs)

Combined total

Gross

Date

demand

September 1048 .. .
Se l)tember 1949 ...
May 1950 ..
June 1950 . ..
July 1950 .. ..
August 1950.
.
September 1950 ...

15,203,768
5,1 046,942

5,481,505
5,550,468
5,640,371
6,685,670
5,726,835

Time
$580,519
1JoI8,045
670,514
669,715
660,748
656,792
659,286

Reserve city banks

Gross

12,508,252

Time
S.'l 78,943

2,503,549

"21.452

demand

2,627,316
2,684,393
2,757,150
2,779,305
2,806,806

Country banks

G_
423,428

424,252

416,753
409,987
410,905

demand
Time
$2,695,516 1210.576
2,643,393 226,593
2,854,189
247,086
2,866,075
245,463
2,883,221
243,995
2,906,265
245,805
2,919,829
248,381

Gross demand deposits of all member banks in the District
averaged $41,065,000 higher in September than in August,
with Reserve city banks accounting for approximately 67 percent of the gain. Time accounts also averaged higher in September than in August, with the increase at all member banks
amounting to $3,494,000 and with country banks accounting for approxin1ately 74 percent of the increase. Gross demand deposits of all member banks in the District averaged
$5,726,635,000 during September, while time deposits averaged $659,286,000.

190

MONTHLY BUSINESS REVIEW

Debits to deposit accounts reported by banks in 24 cities
of the District were 2 percent higher in September than in
August but 27 percent higher than in the comparable month
of last year. The strength of economic activity which has
prevailed in the Southwest throughout the greater part of the

changes for the new 13-month 1 Y4-percent note which was
offered to holders of the certificate amounted to $5,253,589,000, leaving approximatel y J 6 percent, which was retired in
cash by the Treasury.
SAVING S DEPOSITS

BANK DEBITS, END.oF·MONTH DEPOSITS, AKD ANKUAL RATE OF TURNOVER
OF DEPOSITS

Scplcmoo, 30, 1950
Number of

(Amollnts in thousands or doJlsl1I)

---Debita...

City
Arizona: Tucson
Louisiana:
Monroe ... .
Shreveport . ..

September

Depoeits ·

Percentage
change from
Aug.

Annual rate
September 30,
1950
81 ,497

or turnover

19bO
64,880

Sept.
1049
28

1950
8

42,641
160,187

9
17

-5
8

43,543
181,597

10,107

28

-2

22,118

10. 2

10.1

10.4

51,708
107,743
153,699
114,S09
111,728
14,314

65

5
-2
24
5
-8
16

47.860
92,672
109.573
88.657
91.139
20,304
877,224
127,166
324,853
95,962
1,029.936
21,632
80,49S
37,971
48,005
359,673
22,634
bO,600
78,502
91,868

13.0

13.8
16.8
16.2
14 .6
8.6
18. 4

10.2
12.6
16.2
12 .1
12.8
0.0
16. 3

13 .3

11.9

15.0
9.6
15.4
9 .6
12.2
11.2
10 .9
1l .3
10.3

12 .4
8.5
13 . 4
8.6
10 .6
10 .6
9.4

12.2
13.8
13.3
14.3
16 . 7
7.3
18 .6
13.4
14.9
8.9
15.4
10.1

Sept.
1950
9.5

Sept.
1949
7.8

Aug.

11.8
10 . 4

10.9
10.0

1l.8
0.8

1950
8.5

New Meneo:

Roswell . .
TeX&!:

Abilene ......... .
Amarillo ....... , .
Austin . . . .... , ...
Beaumont .. , .....
Corpus Christi .. ..
Corsicana .. . .... .

Dallu .......... . 1,328,29b
EJ Paso .... .. . . ..
141,368
Fort Worth
409,289
GalveatoD..
77,778
Houston .. .
1,314,381
Laredo ... ,
17,521
Lubbock ...
82,83b
Port Arthur . .

San Angclo . . ..
San Antonio . ..
Texarkanat .. .... .
~ler .......... . .
R ...... : ....
ca
Wichita FaU, . ... .

36,849
43.662
334,212
19,387
48,488
75.716
66.869

19
8
26
32
-3
26
23
32
16
28
16
51
6
46
36
36
IS
33
26

,

-2
2
8
1
-7

,
4

9

i

16
4
II
2

lU
11.6
8.6

11.0

10 .7
10 . 1
1l .3
8 .9
11.0
10. 6
8 .5

9.b
7.7
9.8
10 . 1
7.8

Total- 24 cities .... 54,836.465
I •. ,
27
$4,024,514
1404
12 .6
Indicates change of less than one-baIr of 1 ~rcent.
DebiLe to d~it. accounts except inlerbao accounts.
• Demand an time depoeits. including certified and offiecru' checks out&tanding but excJudina
deposita to the credit of banks.
t Thia figure includes only one bank in To:arklltla, TClI:lL8. Total debits for all banks in Te1atkana. Tela,a..Arkansaa, including two bauke locllted in t.he Eighth District. amounted t()
531,177,000 for the montb. of September 1050.

!

year continues to be reflected in the excess of month-to-month
debit figures over year-earlier totals. The turnover of deposits,
representing the average annual rate of use of deposit accounts,
was 14.4 in September as compared with 14.2 in August and
12,6 in September 1949.

City
Loumana :
Shreveport ......
Tcxas:
Beaumont . . . . .
Dallas ... . ... .
EI Pa.o .......
Fort Worth ....
Galveston .... .
Houston .. .........
Lubbock ..........
Port Arthur . ......
San Ant.onio .......
Waco ......•......
Wichita Falil . .....
All oLber . ...........
ToLaI. .. .

re~rting

anks

Number of
savings
depoeitors

Per ce n~e change in
savings cp05it.3 from

Amount of

eavins;s
de()06lL8

Sept. 30,
1949

August. 31,
1900

43,535

$ 24,036,404

-

4.7

0. 1

3

12.141
144,764

9.4
2.4
1.6
2.6
1.9
0.2
19.0
- 10.6
- 3.3
2 .8
0 .8
2.6

-U

S
2
4

-

-1.3

-0.5

8
2
2
b
3
3
M

67,408

M47.024
76.80.1.439
21.841.700
34.619.322
20.874.015
73,963,838
3.827,877
4,075,062
(2)154,724
10.411,4-43
4,631 .535
b6.121,602

102

530,OOS

1378,1l0,475

32.924
44.2l7
22.176
9'.344
2.108
6.000
41.647
10.492

4

8,289

- 0.7
- 0 .8
- 0.7
0.2
- O.b
-3 .3
- 1.4
- 0 .3
-0 .5
- 0 .03
-0 .3

INDUSTRY
Industrial activity in the Eleventh Federal Reserve District
continued at a very high level in September and October. The
Texas Employment Commission estimates that nonfarm employment in Texas rose to about 2,430,000 persons at midOctober, a level approximately 4 percent higher than a year
earlier. This marks the fourth consecutive record in such employment, with prospects that employment in November and
December wiIi establish successively higher records. The employment gains during September and October reflect major
increases in the aircraft, automobile assembly, and shipbuilding industries, as well as some rise of employment in the apparel, chemical, and fabricated metals industries. Outside of
manufacturing, employment increased in retail and wholesale
trade, schools, and service establishments. A moderate seasonal downturn occurred in construction employment.
VALUE OF CONSTRUCTION CONTRACTS AWARDED

Total earning assets of the Federal Reserve Bank of Dallas
increased $28,190,000 between September 15 and October 15,
with the growth more than accounted for by the increase in
holdings of United States Government s~curities. Other principal changes in the sta tement of condition include an increase of $49,456,000 in total gold certificate reserves, a decrease of $3,850,000 in discounts for member banks, and a
decrease of $3,365,000 in member bank reserve deposits. Notes
of this Bank in actual circulation on September 15 amounted
to $620,540,000, an increase of $7, 224,000 over the monthearlier total but a decrease of $2,855,000 from October 15,
1949,
CONDITION OF THE FEDERAL RESERVE DANK OF DALLA S

(In thous.a.ods of dollars)
October 15, October 15,
1950
1949
Total gold certificate reservCtJ ...... . .. ...... .... . $666,398
1674,629
Di.ecountH for member banks. ..
. ........ . . .. .
265
327
Foreign loam on gl)ld . ...................... . .
3,220
o
U. S. Government sccuritice ............. . . . .
767,306
886.671
Total earning 866ets . ................ .
886,936
770,853
\iember bank reserve deposits ....... .
S24,42b
767,98b
Federal Reeerve notes in actual circulation . .
620,MO
623,39b

Item

Sep~

15,
1950
$616,942
4,lIb

o

8M,631

abS,H6
827,790
613.316

On September 29 the Secretary of the Treasury announced
the completion of refunding operations for the 1 lis-percent
oertificate of indebtedness which matured October 1 and which
was outstanding in the amount of $6,247,587,000. Total ex-

(In thoUiJands of dollan)
September
1950p
$ 106,376
44,493
61.883
1,286,MI

September
19.9
$ 62,Q88
as.298
26,790
1,071,674
603,522
668,152

Eleventh District-total .. .
Residential . .......... .
All other . ............ .
United Stat.es·-lotal .... .
Residential .. . .. ...... .
M9.b8b
All other . ........ . . . . .
736,956
p-Pt-e.liminary.
·37 states east of the Rocky 'Mountains.
SOURCE: F. W. Dodge Corporation.

Au~ust

19bOp

$133.889
62.916
70,973
1,54S.S76
7M,106
794,770

January 1 to September 30
1950p
$ 876,676
407,346
469,330
11,109,746
5,235,896
5,S73,850

1949
$ 555,b67
204,504
351,063
7,393,908
2,867,b98
4,b26,310

The value of construction contracts awarded in the District during September totaled $106,000,000, or 21 percent
less than the all-time peak of the previous month but 71 percent above the level of a year ago. Despite the sharp drop from
August, the September figure is 9 percent above the 1950
monthly average. During the first '9 months of 1950, awards
totaled $877,000,000, or 58 percent more than during the
same period last year, exceeding all previous 12-month totals
except that for 1942.

Residential construction contract awards for September, ill
which amounted to $44,000,000, were 29 percent less than ..
in August, though 26 percent more than in September of last
year. The September 1950 level of residential awards is only 2
percent below the very high monthly average for the year
to date. Prior to this year, the September figure was exceeded

191

MONTHLY BUSINESS REVIEW
only by that for May 1946. During the first 9 months of
1950, residential awards totaled $407,000 ,000, or nearly twice
the year-earlier figure.
BUILDING PERMITS
September 1950

If the transaction price is

Percentage
Percentage change Jan, 1 to Sept. 3D, 1950 cbaD.JSe
valuation Crom_

valuation

City
Number Valuation Sept. 1949 Aug. 1950 Number Valuation Crom 1949
Lcmisiana:
Shreveport . .. . 479
4.157.468 149
49
3,724 , 25,818,798
43
Texas:

Abilene ..... .
210
Amarillo ... .
277
Austin ..... .
242
Beaumont .... . 316
Corpus Christi. 410
Dallas .. _
2.131
El Paso .....
315
l<'ort Worth ....
809
Galveston .... . 194
Houston ...... . 854
Lubbock .....
286
Port Arthur... . 200
San Antonio . .. I ,m
Waco .... . . . .. 195
Wichita Falls . .
55

1,513 ,480
1.913 ,475
3,161,708
542,899
1,572,302
14.338,251
1.794,939
3,700,140
246,540
12,008,900
1,563,771
383,218
4,936,947
789,431
281,860

Total . ... ...... . 8,490

$52,905,329

-

-

293
11
33
12
55
138
3
11
18
97
60
16
52
35
70
62

-20
-10
27
-62
-41
8
-40
-37

1.591
2,934
3.401
3.151
4.096
18.651
3,583
8,000
1,585

-40
79
-19
-74
-46

2,963
1,899
15,30.1
2,354
1,100

11.306,200
16.821,306
31,437,557
8,484.366
20,624,603
97,138,066
19,866,666
37,568,437
5,851,046
131,425,583
19.209.863
4,785,454
41,914,369
15,627,319
4,109,684

128
31
88
17
72
70
131
75
- 25
111
129
47
67
00
- 4

-28

85,482 $491,989,817

The maximum loan value is

More than $2,500 but not
more than $ 5 ,000

90 percent of the value

More than $5,000 but not
more than $9,000

$4,500 plus 65 percent of
excess of value over $5,000

More than $9,0 00 but not
more than $15,000

$7,100 plus 60 percent of excess of value over $9,000

More than $15,000 but not
more than $20,000

$10,700 plus 20 percent of
excess of value over $15,000

Over $20,000

$11,700 plus 10 percent of
excess of value over $20,000 but not less than 50
percent of value

77

~87

-so

11,071

Nonresidential construction contract awards in this District, which amounted to $62,000,000 during September, were
13 percent below the high August figure but 131 percent
more than the year-earlier figure and 19 percent above the
monthly average for 1950 to date, During the first 9 months
of 1950, nonresidential awards totaled about $470,000,000,
or a third more than during the corresponding period of last
year. Commercial, utility, and educational construction account for over half of the increase.

With the October 10 announcement of Regulation X by
the Board of Governors of the Federal Reserve System, credit
controls became effective on all privately financed 1- and 2family houses started after noon of August 3 and on which
commitments had nOt been made prior to October 12. Regulation X applies to conventional loans, as distinguished from
loans made, insured, or guaranteed by federal agencies. A
companion announcement by the Housing and Home Finance
Agency placed FHA loans under restrictions corresponding to
those of Regulation X; at the same time, the Veterans Administration announced new requirements whereby veterans have
an advantage over non veterans of from 5 to 10 percentage
points on maximum loan limits. These regulations have for
their aims the cutting back of the rate of home building by
about one-third of 195 volume, the easing of the inflationary
demand for building materials, and increased availability of
materials for defense. Regulation X covers loans for more
than $2,500 with more than 18-month maturity on 1- and
2-family unit housing, and its terms apply to major improvements and additions, as well as to new construction. The new
down payment requirements provided by this regulation range
from 10 percent for houses selling for $5,000 and under to 50
percent on houses costing $2 4,250 and up. Down payments
must be cash and must not be borrowed, except against equities in life insurance policies. All mortgages subject to the
new regulation will carry a maximum maturity of 20 years,
except mortgages on houses priced at $7,000 or less, on which
properly amortized loans may run as long as 25 years. The
regulation contains a hardship provision permitting any per~ son or builder who made substantial commitments before Au, gust 3 with a view to building new housing to apply for relief to his regional Federal Reserve Bank. Compliance with the
regulation is required of all lenders, a "lender" being one who,
during the past year, made three or more real estate loans
aggregating more than $25,000,

°

Under Regulation X the basic nllrumum down payments
are derived from the maximum loan values computed on the
following basis:

For FHA loans, the maximum loan value may be less than
indicated above when the appraised value is less than the
transaction price.
The minimum down payments for GI loans are computed
on the following basis, assuming a transaction price not
exceeding reasonable value:

If the transaction price is

The minimum down payment is

$5,000 or less

5 percent of value

More than $5,000 but not
more than $6,000

$2 50

More than $6,000 but not
more than $9,000

$25 0 plus 25 percent of excess of value over $6,000

More than $9,000 but not
more than $12,000

$1,000 plus 30 percent of
excess of value over $9,000

More than $12, 000 but not
more than $15,000

$1,900 plus 55 percent of excess of value over $12,000

More than $15,000 but not
more than $20,000

$3,550 plus 75 percent of excess of value over $15,000

More than $20,000 but not
more than $24,250

$7,300 plus 85 percent of excess of value over $20,000

Over $24,250

45 percent of value

Some easing of building materials shortages has been reported recently. The prices of a few lumber items have
declined moderately but are still above July 1 levels. Better
transportation has been a facror in this improvement, together with lessened demand for inventory accumulation. Cement and gypsum board continue in tight supply, and various
other materials are still subject to spot shortages.
Crude oil production during September reached new alltime peaks of 2,929,000 barrels per day in the Eleventh District and 5,901,000 barrels per day in the Nation. In the
District, production averaged 166,000 barrels daily more than
the previous month and 718,000 barrels daily more than a
year earlier. In the Nation, production was up 205,000 bar-

192

MONTHLY BUSINESS REVIEW

rels daily from August and 1,047,000 barrels daily from September last year. The production rates in early October in
both the District and the Nation were moderately lower than
in September, due to reduction of production allow abies in
Texas by 63,000 barrels daily as compared with those in effect
on September 1. A further reduction of Texas allowables
amounting to 38,000 barrels per day was announced for November.
CRUDE OIL PRODU CTION
(Barrels)
September 1950
Total
production

Dailyavg.
production

IncrCtlSC or decrease in daily
nvcrage production from

Sept. 1949

Aug. 1950

TUM

District
I South Central. ...
923,500
30,783
3,668
2 Middle Gulf....
4,588,550
152,952
30,782
3 Upper GuIr.....
14,175,850
472,529
101,299
7,129,300
237,643
48,878
" Lower Gulf......
5 East Central ....
1,324,700
44,157
9,777
6 Northe"'t......
12.340.400
411 ,346
84,891
Ea,t Texas. . . .. .. .
9,118,300
303,943
60,588
Other fie1d!.....
3,222,100
107,403
24,303
7b North CentraL..... .
2,252,100
75,070
13,895
70 West CentraL..
2,173,150
72,438
22,553
8 West.....
27,728,050
924,269
363,231
9 North............
4,694.400
156,480
16,385
10 Panhandle...........
2,142,900
91,430
-1,155
Total Texas. . . . .. . . . . .. . . . 80,072,000
2,669,097
694,2()4;
New Mexico................ .
4,042,500
134,750
12,330
North Louisiana. .. .. ... . .....
3,760,900
125,363
11,411
Total Eleventh District.... . 87,876,300
2,929,210
717,945
Outside Ele....enth District.... . 89,155,580
2,971,853
328,sro
United States........... ...
177,031,880
5,901,063
1,046,795
SOURCE: Estimated from American Petroleum Institute weekly reports.

1,260
9,641
21,826
11,856
2,980
33,640
27,700
5,940
2,507
4,146
76,530
2,307
-570
166,123
I,OQ7

i6Hfl
39,183
205,174

During September, refinery activity as indicated by crude
oil runs to refinery stills rose to 1,741,000 barrels daily in this
District, or 53,000 barrels per day more than in August, as
well as 13 6,000 barrels per day more than in September of
last year. Refinery runs in the Nation averaged 6,004,000 barrels per day, representing an 81,000-barrel daily decrease from
the record level of the previous month but amounting to 665,000 barrels daily more than in September 1949. During early
October, refinery runs in the Nation slightly exceeded the August record on a daily average basis.
Despite these high levels of refinery activity, stocks of crude
oil in the Nation increased by 3,525,000 barrels during September, due to the record rate of crude production, but were
still 16,669,000 barrels less than a year earlier. Following a
420,000-barrel decline during the first week of October, crude
oil stocks were more than 10,000,000 barrels lower than at the
first of the year but were 4,773,000 barrels above the year's
low point reached 4 weeks earlier on September 9.
Somewhat similarly, stocks of the four major refined products-gasoline, kerosene, gas and distillate fuel oil, and residual
fuel oil-increased during September by 9,447,000 barrels but
were still 31,245,000 barrels under the year-ago level. Stock
accumulation has been retarded by the heavy demand, with
the takings of these products by distributors aud consumers
during September apparently running about II percent above
a year ago. A gain of 893,000 barrels in stocks of residual
fuel oil did little to overcome the lag in building up inventories of this product, which remain 25,625,000 barrels under
the level of a year earlier. There has been relatively little change
in residual stocks during the past 6 months, and in this

case demand, being only about 6 percent higher than a year
ago, does not account entirely for the lag in stock accumulation. Refinery yields of residual fuel oil have not been incre.tsed
in accordance with the need to accumulate stocks but have
remained at about the levels of the past 6 months, which approximate those of a year ago.
The stock position of gas and distillate fuel oil is appreciably
better than that of residual oil and showed further improvement with a gain of 7,555,000 barrels during September, with
the result that such stocks were only 6,761,000 barrels below
year-earlier levels. Kerosene stocks also rose during September, reaching a leve! above that of a year ago. These gains in
s tocks of gas and distillate fuel oil and of kerosene were
achieved, in part, by increasing refinery yields and were
achieved despite increases in apparent demand over a year ago
of about 27 percent and 20 percent, respectively. Accounting
for a part of this increase in apparent demand has been the
quite apreciable building up of inventories in the tanks of consumers and distributors, in contrast to the more hesitant accumulation of such inventories a year ago. Gasoline stocks declined seasonally by 1,480,000 barrels during September but
were moderately above the year-earlier level. The apparent demand for gasoline has been declining seasonally but in September was about 8 percent higher than a year earlier. Refinery
yields of gasoline have been reduced in line with the seasonal contraction of demand. The over-all stock position, considering crude oil and the four major refined products, showed
a gain of nearly 13,000,000 barrels during September but remained 48 ,000,000 barrels lower than a year ago.
The price positions of crude oil and of refined petroleum
products continue very firm. Drilling activity as indicated by
well completions appears to be continuing at close to a record
rate. If steel items continue sufficiently available, new records
for well completions seem likely for 1950 in both the District
and the Nation.
DOMESTIC CONSUMPTION AND STOCKS OF COTTON
(Bales)

September
1950Total cOIl8Umption:
Texas milIa . .. . ... .
United States mills . .

D¥~x:,v~ilt:. ~~~~.~~~~~ ..
United States mill, .....

United States sLocks-end of month:
Consuming establishments ........... .
Public storage and compre88e8 . ... .
- Five weeki! ended September 30.
t Four wct!ks ended August 26.
n.a.-Not. available.
r-Revised.
SOURCE: United States Bureau of the Census.

September
1949

n.a.
968,484

12,898
708,623r

n.a.
39,530

32,959

1,237,815
4,890,637

n.D.

745,482r
6,134,OOOr

AUl1:oot

19501
12,533
807,840
627
40,392
1,144,250
4,568,889

The consumption of cotton in United States mills during
September declined to 39,530 bales per day, or 2 percent less
than the high August rate but 20 percent above the yearago rate. The August-September total for cotton consumption
was 30 percent more than during the corresponding initial
2-month period of the previous season. The high level of cotton
consumption during August and September reflects the recent
sharp rise in consumer demand for textiles, as well as present
and prospective military requirements. This rise in demand has
been reflected also in efforts to build up textile inventories.