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MONTHLY
BUSINESS
REVIEW
o f t he
Volume 82
FEDERAL
RESERVE
BANK
Dallas, Texas, October 1, 1947
of
Dallas
Number 10
SPECIAL PROBLEMS OF SMALL BUSINESS
FOREWORD: The Committee for Economic Development recently published a statement of its Research Committee entitled "Meeting the SPecial Problems of Small Business."
In our opinion, that statement of the Research Committee is of such significance and
value to those who are interested in the future of the small business organization as a
vital element in the country's economic system as to warrant wide distribution. Consequently, we have taken the opportunity to summarize some of the more significa1ti features of the statement in this issue of our Monthly Business Review. Copies of the complete
statement may be obtained by writing to Mr. Henry R; Johnston, Executive Director,
Committee for Economic Development, 285 Madison Avenue, New York 17, New York.
Additional copies of this summarization may be obtained by writing the Research Department, Federal Reserve Bank of Dallas.
The Place of Small Business in Our Economy
Although the Committee accepts the fact that small business is more virile and more durable
than might be deduced from the hue and cry heard for many years as to the disadvantages under
which that type of business organization labors, it recognizes, nevertheless, that small businesses are
confronted with special problems and difficulties that are very real. Moreover, it considers it to be
of vital importance to all business, large and small, and to all citizens that conditions unfavorable to
small business be remedied wherever possible. With that objective, the Committee in its report considers briefly the fundamental place of small business in our economy and then treats in some detail
the special problems which confront in varying degrees the many small businessmen of the nation.
Recognizing the necessity of determining for the purposes of its report what properly constitutes a small business, the Committee states that usually a small business will show two or more of
the following characteristics:
(1) Management is independent. Usually the managers are also the owners.
(2) Capital is supplied and ownership held by an individual or small group.
(3) Area of operations is mainly local. Workers and owners are in one home community.
Markets need not be local.
(4) Relative size within the industry-the business is small when compared to the biggest
units in its field. The size of the top bracket varies greatly, so that what might seem
large in one field would be definitely small in another.
Obviously, there are a number of different standards of measurement as to what constitutes a small
business, including such measures as sales volume, total resources, and number of employees, but on
any basis it is clear that only a small fraction of the businesses of this country properly can be considered "big"; therefore, the vast majority of the nation's business units come within the scope of
the Committee's report. In fact, official figures show that 98 per cent of the business units in America
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
146
MONTHLY BUSINESS REVIEW
have fewer than 50 employees and would be classed by anyone as small business. Included among
these business units are the retail store; the small shop, mill, or factory; the myriad sales and service
establishments of every kind. Also, small business includes the self-employed: the piano tuner, the
man who nllls the radio repair service, the one-woman beauty shop, as well as the corner drug store,
the grocery, the trucking line, and the barber shop.
Although the Committee's study and discussion relate only to nonfarm small business concerns,
the modern farm exhibits many of the characteristics of a business operation and plays a similar role
to industrial, commercial, and service establishments in the national economy. Most farms, too, fall
in the category of small businesses, based on freedom of individual enterprise, and many farmers in
the conduct of their business encounter managerial and financial problems closely comparable to
those of the small manufacturer, merchant, or service operator.
The Committee emphasizes the fact that healthy small business is vitally important to the fabric
of American life and that small business is a manifestation of one of the basic freedoms of American life, i.e., the freedom to enter or leave business at will, to start small and grow big, to expand,
contract--or even to fail; that this freedom to be enterprising is an aspect of our economic democracy
without which our political democracy cannot exist. The American small business system means that
there are about 3,500,000 centers of initiative where experiments may be authorized and where
innovations may be started. As the Committee points out, it is difficult to imagine how a regimented
economy with relatively few centers of initiative can compete in dynamic drive and in technological
progress with an economy that has several million such vital driving centers.
Among the values of small business, the Committee enumerates such recognized advantages as
the fact that small firms help to keep big firms alert and active; that the little fellows frequently
force competition in price, design, and efficiency; that they help to check the development of
monopoly; that the small businessman has an intimate knowledge and a personal stake in the home
community; and that the ingenious small enterpriser often is a source of new materials, new processes, new services that older and better established firms sometimes are reluctant to offer. Perhaps
the greatest value of small business, however, both to society and to business enterprise, grows out
of the often unappreciated fact that business produces men as well as goods. It is the small business
enterprise particularly which gives a man a chance to develop a well-rounded business experience
and trains him in business action, leadership, and independence of decision. From the ranks of men
thus trained, big business often draws its most successful executives.
Another value of small business in the total national effort of production and distribution is
its greater degree of flexibility, as compared with big business. As the Committee points out, small
business may be "small" in size yet great in achievement. This was dramatically demonstrated during
the war. Small business could often get into action faster and operate more flexibly than big business.
Turning to the special problems of small business, the Committee's report considers that they
fall into three major categories: management, financing and taxation, and competitive opportunity.
In each of those broad areas it is recognized that the businessman can do much on his own initiative
and in cooperation with his fellow enterprisers, but there are limits to the experience and information of a single enterpriser, and there are some conditions unfavorable to small business which are
beyond the co.ntrol of any individual businessman.
Management Problems
It is recognized generally and is accepted by the Committee that the number-one problem of
small business lies in the field of management, for more failures are due to lack of skill in running a
business than to any other single cause. Too frequently businessmen begin their ventures because
they have an interest or a skill in one major phase and overlook the fact that building a successful
business is a complicated process. It is not enough for the small businessman just to know how to sell
or to produce. On the contrary, to be successful in his business venture he must know something of
buying, display, bookkeeping, cost accounting, advertising, and many other things, as well as selling
and production. But, how can a man broaden his knowledge of these various business operations to
such an extent as to give him reasonable assurance of success ? As a first step toward this end, the
Committee's report urges that methods must be found by which businessmen can draw upon the
experience of others. More specifically, in the Committee's opinion , one such method stems from the
natural concern of manufacturers and other suppliers for the success of their small business customers.
MONTHLY BUSINESS REVIEW
147
It is simply good common sense for these suppliers wherever possible to make available to such customers, in ways and language understandable to the layman, services and suggestions relating to
credit policies, accounting, merchandising, technical knowledge, research findings, and other similar
requirements for good management. Moreover, trade associations might well afford to devote a larger
portion of their efforts to problems of management, training, and guidance, with particular reference to the problems of the small business enterprise. These are not untried suggestions; their value
has been established by experience.
Moving beyond the small businessman's suppliers and trade associations, the Committee's report
places proper emphasis upon the real value which might be obtained from a local community program under which organized effort is directed consciously to mobilize the business, educational, and
professional resources of the community in such a way as to improve the general levels of business
efficiency and promote high employment. If, however, a community program is to be a vital thing
in the development of business efficiency, not only must many organizations in the community participate, but some one organization must take the lead in initiating the program. Virtually every
community has such an organization in its chamber of commerce, junior chamber of commerce, its
service clubs, veterans' organizations, or some other community group which could assume the responsibility of bringing together the businessmen of the locality in clinics, discussion forums, industrial
councils or committees for the purpose of giving direct help to businessmen in the improvement of
their management methods. Most importantly, particular attention should be given to those business
enterprisers who are just starting their ventures, for some friendly suggestions or hints from fellow
businessmen in the same community might save costly mistakes.
Educational institutions and research agencies also might profitably give increased attention in
their programs to training for careers in small business. The Committee states that the best asset that
can be provided the potential small businessman is the resourcefulness acquired through a good general education-learning how to think and how to find information. Our schools and colleges can
do much in addition to that which they are doing toward equipping young men to go into business.
They can provide instruction in specific skills and can assist in developing new horizons for small
business through research and study projects. The programs of our educational institutions, however,
as the Committee states, should guard against the tendency which is perhaps now too evident of overemphasizing the specialized type of training which leads to a job in a big business. There are challenging opportunities of ownership or management for resourceful young people in small and mediumsize firms, and training to meet the requirements of those types of business should not be neglected
by our educational institutions. Extension services, short, intensive courses of the type which were
proved so useful during the war, and the preparation and publication of training and operating
manuals offer means by which these educational institutions may reach more deeply down into the
mass of potential small businessmen and further their training in the problems with which they will
be confronted in their daily business operations. Such an extension of our present business education program, however, must be founded on sound research which establishes the requirements for
training for small business. To improve the quality of business courses in the schools, as well as to
make possible a more effective attack on small business problems, basic research is needed to develop
the factors which influence the decisions of individuals to go into business, to analyze the specific
problems they face, and to find what determines their success or failure.
In discussing the relations of businessmen with government, the Committee's report states that
the businessman would be helped greatly in his dealings with governmental agencies of all kinds if
there were a central information agency to which he could go to find out what reports and other
forms are required of him and what government regulations apply to him. Furthermore, through
such a central information agency, the businessman could learn what government services are available to him. In this connection, it is emphasized that through its strategically located field offices
the Department of Commerce might act as a feeder to research bureaus and local civic organizations
or counseling agencies that can serve small business firms in their localities. By expanding and improving its function as a clearinghouse to serve the needs of small business and to disseminate information
collected by all federal agencies, the Department of Commerce could increase greatly its usefulness
to the smaller firms.
To be more specific than the Committee could be on this point, the Department of Commerce
might intensify its efforts to bring to the attention and service of small businessmen in every com-
148
MONTHLY BUSINESS REVIEW
munity the numerous studies which it has published in recent years relating to the establishment
and operation of specific types of small businesses. The businesses discussed in publications currently
available include, by way of example: apparel stores, automobile repair shops, bakeries, restaurants,
laundries, dry cleaning establishments, electrical appliance and radio shops, variety and general merchandise stores, small print shops, brick and tile manufacturing plants, grocery stores-wholesale
and retail-, real estate and insurance brokerage, motor courts, and small sawmills. Examples of
available publications of general interest to small businessmen in many lines include: "Credit Sources
for Small Business," "Store Arrangement and Display," "Selecting a Store Location," "A Merchandising Policy for Manufacturers," "Small Business and Government Regulation," "Packaging for
Consumer Appeal," "The Advertising Appropriation for a Retail Store," "Basic Tax Information
for Small Business Enterprises," "Veterans and Small Business," "Working Capital," and "Boosting
Worker Productivity." The Department welcomes the cooperation of trade associations, chambers
of commerce, banks, and other groups or firms in letting businessmen know about the business information which the Department has to offer.
Problems of Financing and Taxation
In presenting its specific recommendations for improvement in financing of small business, the
Committee's report states that there is a tendency to forget or ignore during periods of prosperity
the fundamental difficulties of small business financing. The last few exceptional years have been
prosperous ones for small business, and financing has not been the problem it is in ordinary years.
From a long-run standpoint, however, the financing of small and medium-size business appears to
have become progressively more difficult, thus leading the Committee to emphasize in its report that
one of the fundamental needs of small and medium-size business is more adequate financing, more
long-term credit relative to short-term, more dependable access to credit in times of depression, and
.
more ownership funds relative to borrowed funds.
In spite of the excellent educational program which the American Bankers Association is carrying on and the outstanding work that is being done by some individual banks, the Committee is,
nevertheless, of the opinion that banks often fail to realize the full possibilities for wider service in
the field of credit for small business. Obviously, banks and small businesses depend upon each other
heavily, since the overwhelming majority of bank loans go to small enterprises; yet, in existing banking operations, both banks and businessmen too frequently show the need for better education in
getting together. Often the enterpriser is reluctant to approach a bank, or when he does so, his presentation may be inadequate. He may not provide the banker with all the needed facts, or he may
fail to organize the information supplied in such a way as to enable the banker to make an intelligent judgment on his application.
To be prepared to act intelligently under such conditions, the banker who is alert to his institution's opportunity and responsibility in serving the credit needs of small business in his community
devotes some of his time to acquiring knowledge of the problems of business management and operation, general and local, and to developing specific information concerning the economic assets and
business risks of the community. He also maintains accurate credit files of up-to-date information
regarding the financial position of each local businessman among his bank's clients. With the fund
of knowledge derived from these procedures, he is in position to judge and to advise as to the soundness of a new business enterprise for which bank credit is sought. He can also give his clients the benefit of frequent analysis 9f developments affecting the businesses in which they and the bank have a
mutual financial interest. He thus becomes a trusted financial counselor to the small business executives
of his community, each of whom from time to time encounters a credit problem of peculiar urgency
to himself, for the solution of which he needs the benefit of the experience the banker has gained in
dealing with the similar problems of other local businessmen. Bankers in every community may well
exert themselves to achieve such a position of usefulness as that in the maintenance and development
of community enterprises, by acquiring and applying intimate knowledge and understanding of
the economic problems, needs, and resources of their locality and of their small business clients.
Of course, one of the most serious financial problems to confront small and medium-size businesses is the danger that the credit that has been extended to them will be withdrawn in case of
recession or depression. Obviously, thjs danger should be minimized by making credits available to
small businesses on a longer term basis and by establishing conditions which will help avoid such
contraction of bank reserves as would cause the banks to withdraw credit which they have granted
MONTHLY BUSINESS REVIEW
149
to business. The Committee believes that banks should reduce to a minimum the calling of their
loans to business in periods of recession, and that they can do this if they themselves keep liquid.
Thus the Committee states, it is of the utmost importance for the financing of business that banks
be able to borrow freely from the Federal Reserve System in times of stringency.
Believing that there are opportunities for banks to expand their services to their smaller business clients, the Committee suggests that many large banks might expand and improve their small
business departments by providing adequate counseling facilities along with the credits which are
granted to their clients. Toward the end of encouraging a proper expansion in the use of term credit
and of guidance services for small borrowers, the Committee suggests that bank examiners and
supervisory authorities might give constructive encouragement in their relations and contacts with
bankers. Speaking further of means of improving the relations of the businessman with his bank,
the Committee recommends that the banking fraternity should prepare an authoritative manual
setting forth the principles and standards which help to determine the eligibility of business for
specific types of loans. Such a manual should be of great help both to the banker and to the businessman in bringing them together on a more solid common ground, for it should indicate to the bank's
customers the accounting methods and other tests by which they may judge the type and amount
of financing they require and the tests which ordinarily are used to evaluate the risk element involved
in the loans for which they apply. Carrying further its views as to means of developing a more desirable banker-businessman relation, the Committee suggests that bankers' associations or individual
banks should give consideration to annual clinics where basic problems of business finance might be
considered. According to the Committee, large city banks with established correspondent relations
are in an especially strategic position to assume leadership in an educational program of this type.
Assuming, however, that small businesses are given better and more stable access to short-term
banking funds, the Committee recognizes that the serious financial problem of obtaining adequate
equity funds for new enterprises and small established businesses will remain. It is accepted generally
that for a number of reasons private investors are not so ready and willing to provide capital for
new businesses and for expanding small businesses as they have been in times past. Present banking
facilities should be supplemented, according to the Committee, to open up for the small enterprise
new channels for capital loans and equity capital. Toward this end, the Committee suggests the formation of new capital banks as an extension of the present commercial banking system. Such capital
banks, under the Committee's plan, would be chartered under the Federal Reserve System and would
operate under banking rules adapted to their special purposes of supplying small business firms with
long-term and equity capital. The Committee is also of the opinion that, in so far as the support of
business credit by an instrument of the Federal Government becomes necessary or desirable, the
Federal Reserve Banks are in a logical position to serve. To quote from the report, the Committee
would favor granting powers to the Federal Reserve to guarantee, up to a stipulated percentage,
term and capital loans made by any commercial bank, and repealing present powers to make direct
loans. Guarantee by the Federal Reserve Banks would keep such financing within the business structure, under auspices closely geared to changing business requirements, and in line with central banking policy. Loans to new as well as established businesses should be eligible for guarantee and should
be for such time periods as best meet the needs of business. With such authority, the Committee is
of the opinion that the Federal Reserve System could serve as an agency of stimulation and education in normal times and in periods of emergency be in position to bring its extended credit powers
into full use.
In discussing the desirability of government aid to business, the Committee states its opinion
that the Federal Government should avoid subsidies, direct loans, or unrestricted guarantees on commercial loans to business except in periods of grave emergency. The Committee sees very serious
dangers to independent competitive enterprise in an approach involving direct governmental loans
or governmental guarantees of private loans. Outright government guarantees of business loans,
in the words of the Committee, tend to undermine the business structure in at least two respects:
(1) by relieving the original lender of most of the risk, they tend to encourage the granting of
loans on factors other than the competence of the management and other prerequisites for the success of the business; (2) they create the danger that during bad times the Federal Government
would have either to take over numerous small businesses or to continue to advance funds to unsuccessful enterprises.
150
MONTHLY BUSINESS REVIEW
The Committee emphasizes that in carrying out any plans to improve the financing of American
business, an accurate foundation of fact is essential. To that end, it recommends that the bankers'
associations, in cooperation with the Department of Commerce and the Federal Reserve System, should
sponsor systematic and continuing studies of the experience with small and medium-size business
financing through various stages of the business cycle. These studies would be designed to determine
more definitely the character of the risks involved and the adequacy of the banking services afforded
to small business under varying conditions. They would help banks and other lenders in adapting
credit arrangements to the special character of small businesses and in supplying a more satisfactory
loan service to business borrowers.
Although the Committee does not advocate creating tax privileges in favor of small business
as a special class, it is of the opinion that many of the provisions of our tax laws bear with special
severity upon smaller business, and therefore tax reform is favored. Reaffirming the position taken
in its policy statement on taxation in 1944, the Committee states its opposition to the theory of
so-called incentive taxation, which attempts to stimulate enterprise by means of special tax differentials for different types of income. Such differentials raise a host of administrative problems and
are likely to result in a vicious cycle of special subsidies which can be paid for only by added tax
burdens on other types of income. Instead, the Committee states its belief that moderate and equitable
tax treatment for all groups in the economy will be more conducive to an expansion of production
and employment. Although the Committee's tax proposals are presented in no sense as a full tax
program, they are presented as long-run suggestions of especial importance to small business. These
tax suggestions include the following:
As rapidly as is consistent with the maintenance of high employment and production
without further inflation, there should be a general reduction of both business taxes and
personal income taxes. This is a prime necessity in order to free money for risk capital and
to encourage investment in an extension of business enterprise.
Both corporate and noncorporate businesses should have the right to carry forward
losses from business operations to apply against subsequent earnings for a period of six years.
The tax burden should be equalized by permitting tax payers to average their income
tax over a period of years (say five) to reduce present discrimination against those with
irregular incomes.
Greater latitude should be given both corporate and noncorporate business in making
annual allowances for depreciation.
Double taxation of corporate income should be eliminated, not only as a matter of fairness but also to stimulate the flow of funds into equity investment. The present discrimination against corporate profits is a serious deterrent to precisely the kind of financing that
is most needed by small business-equity financing from internal or external sources.
Problems of Competitive Opportunity
Concluding its report with a discussion of competitive opportunity as it relates to small business, the Committee states that it is to the long-run interest of business, both large and small, to
govern their actions so as to preserve a maximum of competitive opportunity. In the words of the
Committee, some laws and regulations obviously are needed to prevent abuses, but every proposed
law should be examined for its long-term implications lest the enterprise system be strangled in a
net of legislation passed ostensibly to preserve it. Our problem is not so much to seek new laws as
to clarify those we have and see that they are enforced.
The Committee strongly emphasizes, however, its view that American business has a primary
obligation to undertake effective self-policing. Several steps are suggested which should be taken
voluntarily by business firms to promote equality of opportunity for all business and to strengthen
free and fair competition. Businessmen are advised that they will find it to their interest to recognize
the need for removing as far as possible barriers to interstate trade. Also, the Committee urges that
business firms not permit themselves to become parties to collusive arrangements with other firms
or with labor unions to limit competition or shut out new products. Price concessions and allowances
to large buyers, in the opinion of the Committee, should be exposed to the test of whether they arc
employed to freeze out small buyers. On this point, although the Committee believes that self-regulation would be ideal, it is convinced from the record that such legislation as the Robinson-Patman Law,
MONTHLY BUSINESS REVIEW
151
forbidding larger concessions than are justified by actual savings 'in filling large orders, is a needed
bulwark for small business and should be enforced. Again, big business is urged to avoid exclusive
franchises, tie-in sales, and other monopolistic practices which, in many cases, clearly are unfair to
small business. Finally, the Committee believes that trade associations can help small business by
placing emphasis on positive measures to better the position of the small businessman, such as grouping of resources for more effective merchandising, buying, advertising, branding, and joint improvements in technology, rather than by lobbying for punitive or restrictive legislation that narrows the
area of competition. Many of the more enlightened trade associations are doing excellent work along
the lines suggested by the Committee, and their efforts should be encouraged.
Instead of new laws of business competition, the Committee strongly recommends that existing
legislation-Federal, State, and local-be re-examined and recast into a consistent body of law that
clarifies objectives and represents the application of reasonable principles and methods to further
these objectives. This recommendation stems from the Committee's conviction that laws and regulations covering competition are complex and confused, sometimes inconsistent, and even contradictory; that the small businessman at times finds it practically impossible to obtain a clear understanding of what he or his competitor mayor may not legally do; and that frequently he can find
out what is legal only by the expensive and time consuming process of trial and error.
Labor-management relations as affecting the competitive opportunity of small business are the
final problem considered by the Committee. It is pointed out that in this field small business has
some great advantages and a number of special problems. Among the advantages recognized by the
Committee is the fact that the proprietor of a small business, because of the close personal contact
he has with his employees, can develop effective teamwork and high morale by taking a personal
interest in the welfare of his employees and by using good "horse sense" in handling human relations.
Thus, the proprietor of a small business, once he understands the factors involved, can achieve good
employee relations more quickly and easily than the manager of a large concern.
Although small businesses for the most part are not unionized, the Committee notes that in
some cases such enterprises, when unionized, are at a disadvantage, particularly in dealing with large
and powerful unions, inasmuch as union rules and policies are customarily developed in negotiations
with big business and the inclination of labor leaders is to apply to the small business the pattern
developed in such negotiations. Moreover, if workers are hired through unions, business agents may
favor larger companies and refer low-quality workers to the small enterprise. Where union organization in on a craft basis, the Committee finds an additional problem for the small businessman in
the fact that union rules may restrict workers to a single trade when the nature of operations and
the small number of employees make it imperative that they work in more than one craft to insure
the most productive use of their time.
Another serious problem, according to the Committee, which the small businessman encounters
is that of attracting and holding good personnel in the face of his inability to offer the security and
stability of employment believed to be characteristic of big business. Large enterprises, furthermore,
are in better position than small businesses to offer employees low-cost life and accident insurance,
pensions, and other benefits which provide a measure of economic security.
As aids in dealing with the problems of the small businessman in the field of labor relations,
the Committee offers some constructive recommendations. It suggests that appropriate government
agencies, or universities, or both, make case studies of industrial relations in small business enterprises and that these studies, or "working models of industrial relations in small enterprise," be widely
distributed to employers and unions. It also recommends that the special problems of small business
operating under union contract be brought to the attention of the top leaders of the labor organization involved, with a view to their working out jointly with employers procedures to minimize
the disadvantages of small employers relative to larger enterprises in unionized industries and to
formulating a positive program to achieve flexible and cooperative relations between unions and
small firms. A final suggestion is that the proprietors of small business, through their trade organizations or other appropriate channels, examine the possibilities of arranging employee security programs for groups of businesses, in which the costs and benefits of such programs may be made
comparable to those achieved by larger enterprises. The successful establishment and operation of
such programs would do much to preserve competitive opportunity for the small businessman in
attracting and holding good personnel.
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MONTHLY BUSINESS REVIEW
Review of Business, Industrial, Agricultural, and Financial Conditions
DISTRICT SUMMARY
Drought and extreme temperatures in northern and western
parts of the Eleventh District during most of August sharply
depleted moisture supplies, retarded the development of lateplanted crops in those areas, and caused deterioration in the condition of ranges and some shrinkage in cattle and sheep. Rains
at various times during August and September in many sections
helped, however, to maintain agriculture and livestock conditions generally in the district at or near average levels. Harvesting of cotton, rice, and other maturing crops made good progress, though interrupted at times by rain, with yields of the
important crops equalling or exceeding 10-year averages as well
as the yields of last year.
Strong demands for petroleum products indicate that district
production of crude oil will continue for the remainder of the
year at or near the peak reached in August of two and one-half
million barrels per day. Construction activity in the district during A ugust and September apparently maintained the pace set
in late spring and early summer.
Reflecting a shift in volume of consumer spending to food
and to automobiles and other major durable goods, sales of department stores in the district during August and early September continued the moderate decline noticeable since May from
corresponding months of last year. At retail furniture stores,
however, total sales in August were somewhat ahead of the same
month in 1946, despite a substantial decline in the volume of
cash sales.
BUSINESS
A gradual levelling down in both rate and volume of consumer spending in department stores of this district is clearly
revealed by the trend of sales in these stores since May. Each
month since then their total sales have dropped slightly to moderately below the total for the corresponding month of the preceding year, reversing a succession of year-to-ycar increases in
monthly sales which reached back to September 1942. With
total retail sa les of all goods and services continuing at record
levels, this downward trend of spending in department stores
apparently reflects both a considerable shift in consumer buying
from soft goods to major durables and a growing lack of balance
between prices in different segments of the economy and between
cost-of- living prices generally and consumers' incomes.
During August, the dollar volume of sales of reporting department stores in the district fell six percent below the high
level of the same month in 1946, when the adjusted monthly
sales index of these stores stood at an all-time high. In view of
the general upward movement of commodity prices for the past
year, the unit volume of sales probably underwent a more significant decline during August than the dollar volume. The
increase in cumulated sales from the first of the year over those
of the same eight months a year ago dropped to three percent,
continuing the downward trend which has been in progress
since February. Compared with July of this year, however,
dollar sales in August registered a seasonal gain of 14 percent,
which closely approximates the average July-to-August percentage increase of the prewar decade and of the period 19411946. Cash sales constituted 39 percent of total sales, as compared with 45 percent in August of last year. The average collection period on charge aCcounts was 58 days, in comparison
with 49 days at the same time a year ago.
Dollar sales of weekly reporting department stores for the
first twO weeks in September were five percent less than for the
same period last year, indicating that sales for the month may
continue the recent trend and fall below those of September
1946. Comparative weekly indexes suggest, however, that sales
for the month will exhibit a normal seasonal gain over those of
August.
A t retail furniture stores of the district, total sales in August
showed a nominal gain of one percent over August of last year.
The entire gain was due to an increase in credit sa les, as cash
sales, continuing the trend observable since the first of the year,
fell 25 percent below those of August 1946 and constituted 17
percent of the total sales. End-of-month roceivables showed a
risc of 35 percent over the same month a year ago, as compared
with a gain of six percent in collections.
Department store stocks at the end of August were only
slightly greater than at the same. time last year and showed a
very moderate rise of six percent from the previous month. Inventories at furniture stores exhibited a somewhat different
trend, having risen 30 percent within the year and declined
nominally from the previous month.
WHOl,ESALE AND RETAIL TRADE STATISTICS
Retail trade:
Department stOre!:
Totaillth Dist .. . ..
Dallas . ... . . . . ... .
Corpus Christi . . . .
Fort Worth .. . . . .
Houston . . ... . . .
San Antonio . ... .. .
Shreveport, La .. ...
Other cities ..
Number
of
reporting
Retail furniture:
Total 11th Dist.
Dallas .. .. . . _.
Houston ..... .
Port Arthur . ....
San Antonio .. .
firms
48
7
4
4
7
5
3
18
'6
4
Wholesale trade:·
Electrical supplies . .
Groceries ... . . . . . . .
Hardware . ... . . . ..
Tobacco & products.
percentage change in
Net 81.l lca
Stock! I
August 1947 from
Jan. 1 to
.I\UltUst 1947 from
August
July
Aug. 31, 1947 August
July
Hl47
from 1946
UI46
1946
1947
-6
14
3
3
6
-j
15
-8
7
-10
0
20
1
5
-4
-j
14
21
6
-6
9
3
6
9
-4
22
2
5
10
10
5
- 4
II
t.
-.
-
1
j
-
1
j
6
10
-
7
- 10
6
3
-
3
- 10
- 12
14
20
Jj
-20
2
10
12
7
9
-20
3
30
16
21
8
-3
14
-14
49
64
44
-I
I
.;
·Compiled. by United States Bureau of Cen8u8 (whole8ale trade figures preliminary.)
tStocks at end or month.
I:>DEXES
tJndicates c.hange of less thall oD'J-half of one per cent.
O~' DEPARTME~T
STORE SALES AND STOCKS
Daily average sales- (193S· 1939= 1(0)
District. ..
DallM .. .
Houston . .. .
District . . . .
August
19.7
327
308
331
AuglLSt
1047
318
Unadjusted·
July
June
August
11M;
19.7
1946
334,
307r
288
3U,
267
289
329
r
338r
305
Stock.-(ID35-1939 UnadjustedJuly
JUlie
August
1947
1947
1946
2911
298
296
August
1947
376
362
376
Adjusted
July
June
1947
1947
378
361 r
3it
352
37Sr
377
August
1046
384 ,
382r
384 ,
IOO)
.~djusted
August
1947
282
·Unadjusted for aca.sClBlli variation.
July
1947
277r
June
1947
308
August
1946
262
r-Revised.
AGRICULTURE
Growing crops and ranges deteriorated rapidly during A ugust and the first half of September over most of the northwestern and some western parts of the district, due to continued
high temperatures and acute shortages of moisture. In other
arcas, however, rains falling during the latter part of August
and the first half of September relieved droughty conditions
and generally improved crop and range prospects. A small reduction in Texas cotton crop prospects, compared with a month
earlier, and
il
significant increase in the prospective production
of rice were indicated in the September 1 crop report of the
MONTHLY BUSINESS REVIEW
United States Department of Agriculture. The indicated production of other major crops remained unchanged from earlier
estimates. Cattle made good gains in those parts of the district
where ranges were improved but showed considerable shrinkage
in other areas in spite of supplemental feeding.
CROP PRODUCTION-(Tbou.,nd, of bush,b)
----Texas - - - - -Stutes in Elevellth District-Winter wheat.
Corn . . .
0.", . . . . . . . . . . ....• . .
Barley , . . . . ......... . .
Cotton l , . .
Tame hayl . .... .
Potatoee, Irish ..
Potatoes, IIweet •.
Rice." ..
Averallc
103&.45
41,287
71,963
33,236
3,913
3,021
1,149
4,009
4,828
14,877
Estimated Avcrnll;c
1946 Sept.l,19<17 1936-45
62,916
129,420
102,467'
65,012
50,193
124,624
36,366
31,248
63,484
2,610
2,572
11,6171
1,669
3,150
4,529
1,263
1,137
3,467
5,883
9,576
4,488
6,570
5,270
13,753(
17,716
21,t68
36,12OJ
1!l40
Estimated
Sept.I,IM7
154,:193 3
244.492'
98,502
65,022
8,005'
2,478
4,011
11 ,839
17,890'
40,392'
87,595
65,422
9,0581
4,330
3,981
9,360
J2."8O'
43,104'
·Figure8 are combined totals (or five stales lying wholly or partly in the Eleveoth Federal
Reserve District: Texas, Aritona, Louisiana, New Mcxico,n.nd Oklahoma.
lin thousands of
bides. 'Tn thousands of tons. 'Arizona, New Mexico, Oklahoma, rtnd Texas.
'l.oui!iana,
~1Auisiaoa and Tcxus.
Oklahoma, aod Tena.
SOURCE: United States Departmcnt. of Agriculture.
A United States cotton crop of 11,849,000 bales was forecast
on September 1 by the Crop Reporting Board of the United
States Department of Agriculture. This estimate, approximately
the same as that of August 1, is 37 percent above the 1946 crop
but falls about four percent below the 10-year (1936-45 average. The Texas crop, estimated at 3,150,000 bales, is 50,000 bales
below the forecast of a month earlier, but 89 percent above the
small 1946 crop and slightly larger than average. The estimated
8,273,000 acres for harvest in the State this year is 32 percent
above the acreage harvested last year but seven percent below
153
higher in grade and shorter in staple than ginnings during the
corresponding period last year.
Corn production in Texas of 50,193,000 bushels was foreCJSt on September 1, unchanged from the preceding month but
nearly 30 percent below the 10-year average. The acreage for
harvest was estimated at 3,042,000 acres, compared with an
average of 4,538,000 acres. The forecast yield of 16.5 bushels
per acre is slightly above average. Late-planted corn was damaged by dry weather in A ugust, but better than expected yields
were obtained from the early crop. Production of sorghum
grains in the State was forecast at 61,355,000 bushels, compared
with the large 1946 crop of 73,742,000 bushels and an average
production of 50,164,000 bushels. The estimated yield of 17.5
bushels is substantially above both the average yield and that of
last year. Prospects for early-planted sorghum were good at the
middle of September, and the late-planted crop, though still
badly in need of rain, was improved in some sections by scattered showers. Sorghum harvesting operations were well under
way in the southern Plains counties and had been started in the
north. The estimated hay production of Texas was unchanged
from the August 1 forecast of 1,310,000 tons.
The rice crop was damaged by a tropical storm in August
which covered part of the belt, but improvement in conditions
in the rice area as a whole more than offset the losses, so that the
estimated production was raised to 21,168,000 bushels, nine
percent above the August 1 forecast, 19 percent above the production in 1946, and 42 percent above the 10-year average. Harvesting operations were well under way throughout the Rice
Belt by mid-September, and rapid progress was being made under
ideal weather conditions.
TEXAS-COTTON PRODUCTION BY CROP REPORTING DISTRICTS
CASH FARM INCOME
(TboUlaoda of 60CH>ound gross weight bales)
(Tbousanda of dollanl)
I-N.
I-S.
2.
3.
4.
5.
6.
7.
8.
9.
10.
North Hi&h Plains . ..
South Hiah Plains . .
Permian Plains .. .
North Central .... .. . . .
Northern Texas Prairies
East Texas .. .
Trans-Pecos .. .. .
Edwards Plateau .. . ... .
Southern Texas Prnirics.
Coaatal Prairies ..... ... ...... . .
South Texas ...
Sept. 1, J947
£ortx:ast
55
785
520
20
750
155
110
25
330
125
275
1946
35
198
270
14
482
iI6
99
15
186
46
229
lO-year average
1936-45
55
462
539
51
816
383
74
52
327
-
---:-:---Total receipts-- -- _Rcceipts h'Om- May
May
Jan. 1 to May 31
Crops Lh·e6i.ock·
1947
1946
1947
1946
S 5,015 S 8,480 $ 13.495 $ \I ,811 $ 62,869 $ 64,248
14,634
7,192
21,826
lO,()()oI
705,303
66,010
1,119
8,913
10.032
6,694
39,201
33,063
13,63.~
24.632
38.267
1D,D3'
186,g63
104,312
41,618
96,464
138,082
91,D76
516,900
303,764
ArUona ...
Louisiana. _.
New Mexico
Oklahoma
Teua . ...
Total. .
. ... $ 76,021
133
129
Sta1. total
3,150
1,669
3,021
SOURCE: United States Department of Agriculture, Bureau of Agri~u1tural Economics.
average. The estimated yield for the State of 183 pounds per
acre compares with a forecast yield of 269 pounds for the Nation
and with a 10-year average yield for the State of 168 pounds.
In Louisia na, a crop of 525,000 bales was forecast on September 1, unchanged from a month earlier and more than double
the very small crop harvested in 1946. A crop of 300,000 bales
was forecast for Oklahoma, compared with a production of
262,000 bales in 1946.
Dry and unseasonally hot weather in August over most of the
district except southern Texas reduced cotton boll sizes and
caus ed excessive shedding and premature opening of bolls.
Growth of non -irrigated cotton in the Plains areas of Texas was
stunted and fruiting checked, with consequent reduction in
prospective yields in those areas. The effect of this reduction on
the total Texas production of COtton was partially offset, however, by improved crop prospects in the southern part of the
State and by improvement in late plantings in other orcas which
benefited by more moderate temperature and improved moisture supplies. Cotton harvest was nearl y completed in the extreme southern part of Texas by mid-September, but was delayed
by midmonth rains in some eastern and Blackland counties. Cotton ginned in Texas prior to September 1 averaged slightly
- May 1947 -
AriIlO!)!) ..•
l-'luisi:ma..
New Mexico.
Oklahoma. ...
Texas
Total. . . ...
1145,681
1221,702
1140,319
1880,236
$661,397
- - June 1941 - - -- - -'Tota.l receiptllo-c--:-....,..-Receipts fromJune
June
Jan. I to June 30
Crops
Livestock·
1947
1M6
1941
1946
$ 8,216 $ 5,9D2 $ 14,208 $ 13,897
77,077 $ 78,145
2,397
8,480
10,877
8,080
86,180
74.090
3,214
8,610
11,824
7,179
51,025
40,242
51.545
34,144
86,689
56,995
271,652 161,307
68,517
8D,~80
157,897
108,431
674,797 502,195
$133,889
1146,606
1280,4g5
1194,582 11,160,731 $865,919
-Includes receipts from the sale of livestock and livestock products.
SOURCE: United States Department of Agriculture.
The indicated Texas production of sweet potatoes, peanuts,
and pecans was unchanged on September 1 from a month earlier.
Estimated production of broomcorn was placed at 5,600 tons, to
be harvested from an estimated 30,000 acres.
Good rains in the Lower Rio Grande Valley in August stimulated the growth of citrus fruit and aided in overcoming some
of the delay in the development of the crop caused by the late
bloom and unfavorable growing weather earlier in the season.
Growing vegetable crops, though retarded by hot weather, were
reported to be generally in good condition at the middle of September and making satisfactory progress. Harvest of the Panhandle potato crop was completed in the early part of September,
with good yields reported. Harvest of green blackeyed peas continued during the first part of September in the Southern High
Plains, and picking of dried peas in east Texas was well under
way.
MONTHLY BUSINESS REVIEW
154
Continuation of drought conditions in most of the western
areas of the district during August and the first part of September resulted in furth er deterioration of ranges and caused shortQges of feed. However, sca ttered rains in southern and southwestern counties of Texas during early August and in the eastern part of the district during the latter part of August and
early September brought considerable improvement in range
conditions in those areas and assured a supply of faU range feed.
Dry grass was short and fall range feed prospects were fair to
poor over most of the northern Edwards Plateau and T ransPecos areas of Texas and in southern New Mexico and Arizona.
In northwest Texas, w here summer rainfall was substantially
below normal, feed was dry and becoming critically short on
most ranges by mid-September.
Cattle and calves gained rapidly in southern counties of Texas
during August and early September but were showing some
shrinkage as a result of the short dry grass and very high temperatures in western parts of the district, even though supplemental feeding was increased. However, the short supply of
range feed docs not appear to have stimulated the marketing
of cattle, for, as the accompanying table indicates, receipts at
the major Texas markets in August feU about 25 percent below
LIVESTOCK RECEIPT8-(liumber)
- - - F o r t Worth---_- - San Antonio - -Au~
August
July
August
August
July
1947
1946
1047
1947
1946
1947
C.tlle................
70,561
101.211
111,675
29,620
41.8 13
47,664
Calv...... .......... .... 45,276
56,339
35.228
20.026
20.099
26.961
Ho................. .
30.300
33,370
34,306
5,204
7,010
6,222
Sheep..
...........
102,29 1
168,483
198,532
SO.014
55,397
62,706
those of the preceding month and of August last year. The average condition of cattle and cal ves in Texas on September 1 was
only slightly below that of a month eariier and was about normal for the season of the year. Sheep and lambs generally were
carrying good flesh in southwestern counties, where August
rains improved ranges, but were in only fair flesh in most other
areas. On the whole, however, the reported condition of sheep
and lambs in Texas on September 1 was slightly above that of
a month eariier and above average for the season of the year. The
movement of sheep in August was about 39 percent helow the
movement in July and 32 percent below that of the same month
last year.
mately $11,000,000, an increase in rota I loans of about $16,700,000, and a decline in total investments of $14,70 0,000.
All categories of loans reported by the weekly reporting member banks in the district showed increases during the month,
with almost $12,000,000 of the total increase being caused by
an expansion of commercial, industrial, and agri cultural loans.
The increase in this principal type of loans may be accounted
for to a considerable extent by the continuing high level of prices
and business activity and by seasonal factors involved in the
inventory increases which are normal at this time of year.
The weekly reporting member banks continued to reduce
their holdings of short-term Government securities and to increase their holdings of Government bonds. This trend, which
has been in effect for some time, may reflect an attempt on the
part of member banks to maintain earnings in the face of rising
costs by maintaining or extending somewhat the maturity average of their Government security holdings to gain advantage
of the higher yields on the long-term issues.
Principal increases in deposits occurred in dem and deposits
adjusted and United States Government deposits, which increased approximately $9,200,000 and $5,30 0,000, respectively.
Although time deposits of the weekly reporting member banks
reflected an insiginificant increase during the four-week period
ended September 10, total time deposits of all member banks in
the district declined by almost $2, 000 ,000. That decrease, which
was shared by both reserve city and country banks, represented
the first shrinkage in time deposits of the district since October
1945. A change in trend reflected by data for only one month
may be of no significance. However, it is general knowledge,
supported by surveys of the Board of Governors of the Federal
Reserve System, that the inflated price structure and the high
cost of living are bearing . with increasing severity upon large
groups of the population. It may be that in order to meet necessary expenditures further inroads upon savings will be inevitable. Therefore, the change in trend of this item deserves some
consideration, and its course should be observed closely in the
months ahead.
CON DITION STATISTICS OF WEEKLY REPORTING MEMBER DANKS
I N LEADIN G CITIES-Eleventh Federal Reserve District
(Thousand! o r dollars)
COMPARATIVE TOP LIVESTOC K PRICES
Sept. 10,
Sept. 11,
(Dollars per hundred weight)
1947
$2,144,206
854, 14 2
569.136
7,285
70,420
75,709
273
13 1,310
1,290,064
17,31 1
218,837
123,033
825,771
104,212
1946
$2.243,8 17
767,845
'70,061
11.321
110,890
M,033
371
112.179
1,475,972
'9,355
37 1.912
20' ,036
767.552
83, 117
467,109
2'3,096
_ - - F ort Worth
Beef steers .....
Stocker steers .. :: ..
Heifers and yoorlings
Butcher OOW8 •••.
Calves ..... ....
Hogs .......•.
lambs . . .......
August
1947
126.00
22.00
25.00
18.00
24.00
28 . 10
2'.00
August.
July
1946
$19.00
16.76
19.00
".00
17.00
25.00
22.00
1947
$25 .SO
22.50
25 . 50
19 .00
2' .SO
27.76
24.00
August
1947
124 .00
San Antonio - - August
July
1946
$19 .50
1947
$24.50
14 .00
17 .00
22.76
20.<0
18.00
23 .00
27.00
21.75
2 • . 50
17 .50
2• . 00
27.SO
21.75
15 .75
The midmonth price report of the United States Department
of Agriculture indicated that prices recei ved by farmers for
many farm products, especially grains, continued to advance
during the month ended August 15 . Prices of cotton, cottonseed, and Irish potatoes, however, dropped substantially, and the
prices of beef cattle declined moderately from the record level
of the preceding month. Prices of other classes of livestock remained relatively stable or increased slightly.
Spot commodity quotations reveal that prices of grains and
most classes of livestock increased from August 15 to midSeptember, but that a substantial decline occurred in the price
of cotton.
FINANCE
During the month ended September 10, principal changes in
the condition of weekly reporting member banks in the district
included an increase in total deposits amounting to approxi-
T ota l loans and inveatments . .
. .......
Total loans. ...................................
Commercial. industria l. and ar:riculturalloons. . . .
Loans to broken and dealers 1n securities ... . . ...
Other loans ror purehasing or carrying lCCuritiea. .
Real estate loans ......... ,................
Loans to banks .... , . . . . . . . . . . . . . . . . . . . . .
AU other loana ......... , .. . , . . ,..........
Total investme.nts . . , ., . , ., ..... , . . . .
U. S. Treasury bills .... . ... . , . ,.............
U. S. Treasury eerti6cates of indebtedness .. .....
U. S. Treuur y notes ....... . ... ... ..... , ... ,..
U. S. G over:n~ent bond, (incl. gtd. obI.). , . . . . . .
Other securities ...... , ....... ...... ... , ..... '
Resen'es with Federal Reserve Bank ...... ,"',.,', .
Balances with domestic banks . . . ..... , . , ..... , ., .. .
Demand deposits - adjusted· .... ",." .. , . ,.......
~~it~~~'Govero~e~i de~iis·.·, ~ ~::: ::::::::::
Interban k depoaits ......... , .. ,..........
Borrowings from .Federal Re9frve Bank .. ,
4-79,469
300,979
1,806,420
August 13,
1947
$2,142,228
837,430
557,226
6,805
69,158
75.645
1,719,1)12
3~~:~~
59~,' olSOn.
i'l
355.053
170,976
S93,729
600
148
128.448
1,304.798
26.984
229,083
127 ,391
820,602
101 ,738
479,250
304.546
1.797.207
378,369
2 1,011
60 1,808
7,000
-Includes all demand deposita other than interbank alld United Stal€'S Govemment. less
cub items reported 88 on band or in process of collection.
GROSS DEMAND AN D TIME DEPOSITS OF MEMBER BANKS
Ele.venth Federal Reserve District
(A ver;\f,C of daily figu res ID thousands of dollars)
Combined total
demand
August
August
April
May
June
July
August
1945 ..
11MB ..
1947 .
1947 .
IQ47 ..
1947 ..
1947 ,
.. $4 .504 ,20<
4,IH4.883
.... 4.6 17.M9
4.600,179
..... 4,049,262
. 4,758,677
4,845,031
Reserve city banks
G,,,,,
G, ...
Time
demand
Time
Couutry banks
Gross
demand
Time
$417,936 $2,293,633 $265,659 52,210,57 1 1152,277
~2',355
2,-402.647
2,208.463
533,204
540,000
642.083
540,172
496,842
2,20'1.446
316. 176
330.60.
336,549
2,234.~7
338,684
2.288.216
2,324.633
339,590
338,401
2,512,236
2,409,086
2,392,733
2,414 ,405
2,470,462
2,520,398
180.667
193.751
1!f7.70.5
2UUU6
202,493
201,771
155
MONTHLY BUSINESS REVIEW
Federal Reserve notes in circulation, which constitute the
most import ant form of currency ou tstandin g, increased subst antially durin g the month ended September 15, largely as a
result of t he combination of l abor D ay holiday requirements
an d rhe redemption in c2sh of the Armed Forces Leave Bonds
which was begun on September 2. Bet ween the 26th of August
an d the 8th of September, Federal Reserve notes of this bank in
ac t ua l circuhtion increased from approxim ately $591, 800,000
to almost $62 1,200,000. The increase during that period of less
than two weeks was the sharpes t increase which had occurred
in years and brought the total notes outstanding to a level only
abou t $6,0 00 ,000 under the all- t ime peak which had been
reached in mid -December 1945. Bet ween Sept ember 8 and the
middle of the month , there was a return flow of notes amounting to almost $5,000 ,000.
COND[TION
m'
THE F E DERAL RESERVE BANK OF DAL I,AS
(Tbousands of dollars)
Sept . 15.
Sept. 15.
August 15.
1947
1946
1947
Total gold cerLil'ica.te reserve. . . . . . . . . . .. . . . . . . .. . . $487.866
$4 81,491
$500,697
Discount8 ror member banks .. .. . .. . . . . . ...... . .
300
1,700
2,200
l<~orcign loatls on gold . ... . .. . . . . ... . ..•. .. .... .
974
4,160
974
U. S. Govcmment 8eClirities .•.................•.
950.148
896.925
953.480
956,654
Total eurnillg I'l85eta . •. . •.•. . . . . • . . . • . • . •.• .• .• . •.
9M.422
901,785
Member oonka reserve deposita ... . .. . . . . . ...... .
811.651
801,152
763.820
J:t' ederal Reserve Notes in actual circulation .... . . .
616,437
588,949
602.300
Bank debits, though generally holding well above the 1946
level, declined in 15 of the 24 repor ting cities during the month
of A ugust. The average annual rate of deposit turnover as reported by banks in thesc 24 cities fell slightly from the rate of
BANK DElliTS. END.m··MONTH DEPOSITS, AND ANNUAL RATE OF TURNOVER
OF DE POSITS
(Dollar fi gures in thousands)
- - -Debita- - - EDd~r-rnollth
Pctg. change from
dC)Xl6it.a
August AUll:ust
C;ty
1946
1947
7
T UC80D, Ariz .
.$ 47,238
Roewell. N.M . .. ..
10.830 - t
Monroe, La .........
25. 922 - 3
Shreveport , La . ...•.. IOB,OOB
9
14
27,237
Abilene .... .. ... . . . .
Amarillo . ...........
82,160
30
89,007
Aust.in . . • .•.•...... .
6
70.532
16
Deaumont .. .•. •
82,0015
10
Corpus Christi ..
8,225
COl'llicaoa •...•.
14
811.486
12
Dol ............
88,668
8
III Paao .. .....
292,697
13
Fort Worth ..
58,047
5
Galveston ..•.
8 19,364
IB
IIouston .. .. .
14,42
1
5
Larooo . . . . . . . . . . . . . .
30
Lubbock .......... ..
49.729
Port Arthur . . ..
31.003
6
25,738
San Angelo .•.
5
San Antonio ..
207.86 1
t
13. 149
3
Texa rk.aoa~ . . . ...
6
33.765
44 .848
9
42,4<10
13
Wich ita Falls . .
ir~~::: :: : ....
Total- 24 cities . .
12
. $3.085,300
' End~r-month deposits, demand
July
1947
- 2
- 14
- 5
4
- I
- 15
6
I
15
-3
-5
- 1
Aujtust
1947
$ 78.921
17,391
3 B, 132
145.641
37,697
7B,891
97.043
86.875
70,031
18,751
659,991
104.360
-14
271 ,911
- 2
-2
-6
- 5
4
1
-6
4
89.239
774.960
20,463
54 .7BI
38.484
36.566
31 4.091
21.918
48.116
61.922
72,760
t
1
- II
-
4
Annua.l rate or turnover
August August
1947
1946
7.2
7.2
7.4
7 .1
8.2
8. 3
9. 0
8 .0
8. 5
7.1
12 . 5
10 . 4
11.2
10 . 3
10 . 1
9.2
14 .3
11 . 8
5 .3
4 .7
14 . 6
12 . 8
10 . 2
9. 1
13 .0
11. 0
7 .8
7 .8
12 . 7
10.9
8.4
S. 5
10.9
8. 4
9.6
8 .5
B.4
7 .4
7 .9
7.6
7 .2
6. 4
B.4
8.3
7.2
B.B
7.1
6. 4
11.4
$3 .238.935
10 . 1
July
1947
7.4
8 .9
8 .5
8 .8
8 .5
14 .9
10 . 6
10. 3
13 . 1
5. 4
15.4
10 . 3
15.0
8 .0
13 . 1
9 .0
11 .4
9. 2
8. 4
8. 4
7.0
8.5
8.B
B.3
12.0
and time . exclude deposita to the credit of ba.nks.
lIncludes oo ly one bank in Texa rkn na. Texas. Tolinl dcbiLB for all banks in Texnrkana.,
Tcxas-Ark.'lnsaa. including two banks locat ed in the Eighth District. amounteJ to $21 ,556.
tChange less Lhan one-half of one per cent.
MEMBER BANK RESERVES AND RELATED FACT ORS
Elev(!uLh Federal Reserve D ist rict
(Millions of dollars)
Changes in weeks cnc.lcd
Cu mulative- chAnges
4 weeka
Sept.l 0,
1947
Federal Reserve Credit local . .. . .. . ..... . . ... . - 5.0
Interdistriet commercial &;
fina.ncial transactions .... - 23 . 1
Tre:ulury OperatiofUl . . .. . .
52.4
Currency transactions ..... - 3 .0
Other derItts at t he
Fadera Reserve Bank.. .
0 .2
Othp.t Federal Reserve
Accounts ... . . . .
- 0.1
Me-mber Bllilk rese n 'e
21 4
balallces .
Note: Amounts preceded by a
Sept. 3,
1947
- 3 .5
Aug. 27.
Aug. 20,
1947
- 4.8
1947
4.7
19·17
- 8 .6
Jail. 1 to
Sept. 10,
1947
- 14 . 2
- 12.7
- 33.9
85 . 8
-34.7
- 409.0
449 .0
5.2
1.8
23.3
-27 . 5
-
0.1
12 .9
2.6
0 .2
-
0 .8
-
2 .8
1.6
- 0 I
5 b
m illl.ls ~igo
4 8
- 124
endeJ
Sept. 10.
0 .1
-
0.4
-
0.2
U
~.O
22 . 1
redu ce re'iCr\'cs ; Otill;-t::i iucre:,se reserves.
the preceding month but remained about 10 percent higher
than the yea r-ogo fi gure. Largest decreases in bank debits during August occurred in Roswell, N ew Mexico, Amarillo, Fort
Worth, and Wichit a Falls and ranged from 11 percent to 15
percent. Corpus Christi banks reported an increase of 15 percent, with several other cities reporting increases ranging from
four percent to six percent.
SA VI NGS DE POSITS
Reporting Hanks- E leventh Foocmt;Rcserve D ist rict
AuguBt 30. 1947
Pe rcen ta~e chauge in
savings epoaits from
Number
of Amount of
Number
July 31;
reJK)rting
e.·wings
Javinp
August 8li
depositors
deposita
1946
1947
banks
-1
3
-1
3
12.208 $ 6.835.380
Beaumunt . .....
6
78,044.291
Da.lIas .. ..
133.846
-t
8
-1
1,008
3
23.63
EIP... .. .. ...
2
33.70.;
34,560.02 1
4
Fort Worth . . . .
3
42.308
21,887.491
6
Ga.lvcston ...
4
22.822
-I
70.167,488
Houston ......
100.027
-t
8
-26
5
1,113
2
1.805.350
Lubbock . . . ........ .....
- 5
-I
6,548
5. 187 .235
2
Port Arthur . . .. . .. . .....
46,907.919
6
38.972
San Autonio ............ .
5
26,270,316
3
32.767
Shreveport, Ln . . . . •.
t
-1
4
9.64 1,83 1
Waco.
9.751
3
- 2
4,669,946
Wichita. Fa~ : : .: ....
3
6.954
t
1
53.809,955
5
63,369
All other ..
56
-f
.. .... .... .
=f
102
510.456 1383.498.201
Tohl.l. . . '
tTndicates change less than one--balf of oue per cent.
3
-t
New Member Banks
T he Citize1ZS State Bank, Anton, Texas, was admitted
t6 m embership in t he Federal R eserve System on September 9, 1947. This bank, w hich opened for business as a
primary organization on June 7, 1947, has total capital
funds of $49,000, including capital of $35,000, surplus
of $10,000, and "ndivided profits of $4,000. Its officers
are: S. N. T willey, Chairman; J. H. Howard, President;
Hobert Lewis, Vice President and Cashier; and E. R. Wil-Iiams, Assistant Cashier.
On September 24, 1947, the First State Bank, LaMarque,
T exas, located in the te rritory served by the Houston
Branch of the Federal R eserve Bank of Dalias, was admitted to mem bership in the Federal R eserve System . This
balik, 'IIlbich opened for busirtess as a primary organizatio" on A ugust 16, 1947, has a capUal fund of $70,000,
comprising capital of .$50,000, surpl1lS of $15,000 and
,m divideti fJrofi ts of $ 5,000. Its officers include W, F.
R emschel, Jr., Presidm t, a"d Walter A. Burns, Assista"t
Cashier.
New Par Banks
The Commercial State Bank, Houston, Texas, a newly
organized non-member bank located in the territory served
by the H alts ton Branch of t he Federal R eserve Bank of
Dallas, was added to the Federal R eserve Par List on opening date, September 12, 1947. This bank has capital of
$100,00 0, surplus of $20,000 and lm allocated funds of
$5,000. R . M. McKee is Presiden t ; L. E. Chapman, Vice
Presid'ent ; and W. Griffith, Cashier.
The Highland Park State Bank, San Antonio, T exas, It
1/ewly organized n01l11umber bank located in the t erritory
served by the San Antouio Branch of the Federal R eserve
Bank of Dallas, was added to the Federal R eser ve Par List
On openi1lg date, September 18, 1947. This bank has capital of $100,000, surplus of $3 0,000, and unallocated funds
of $20,000 . c, A . Slim p is President, and A . R. R eeves is
Executive Vice President.
On September 29, t he Treasury opened the books on a new
18-year, non-mar ketable, 2'!!, percent Treasury bond to institu_
tional inVCSCOi'S and co com mercial and industri,l banks holding
savings deposits or issuing tinle cerrifica tes of deposits. Subscriptions t o the issue are limited according to a formula. Purchases
156
MONTHLY BUSINESS REVIEW
by institutional investors are restricted to an amount not in excess of 25 percent of the increase in the amount of net assets
between December 31, 1946, and June 30, 1947, as shown by
the financial statements or the subscribers, or $250,000, whichever is greater, while purchases by eligible commercial and industrial bank subscribers are limited to an amount not in excess
of 25 percent of the increase in the combined amOunt of time
certificates of deposit issued in the names of individuals and of
corporations, associations, and other organizations not operated
for profit and of savings deposits, between December 31, 1946,
and June 30, 1947, as certified by an officer of the subscribing
bank, or $25,000, whichever is greater.
INDUSTRY
During August, average daily rates of production of crude
oil, increasing slightly from the previous month, attained new
peaks of 2,507,000 barrels in this district and of 2,663,000 barrels in the rest of the United States. Production in the United
States as a whole, which currently is about nine percent above
the 1946 average and 48 percent above the level of 1939, may
be increased further during coming months, since stocks of
crude oil and refined products, although at about the same levels
as a year ago, are considered somewhat small relative to present
and anticipated demands for petroleum products.
CRUDE OIL PRODUCTION-(BarreJa)
August 1947
Iocrea.ee or deereasc in da.ily
average production from
Total
Dailyavg.
production
production
Aup;ust 1946
July 1947
District 1. . . . ... . . . . .
728,700
23,506
4,001
1,253
2. . ..... . . . . . .... .
4.939.350
159.334
4,036
4,290
3 . . . . . . .•. .. ,
15,090.650
487,083
1,165
3,619
4.. ..... ... . .. .. .
7,481.750
241,348
16,842
10,487
5.. .. .... .... .....
1.225. 150
39,521
- 3,602
208
6.. .. .... ..
10,030~00
323,S58
6,693
- 1,136
Other 6.. .. ......
3,504,650
115.956
10,206
2,593
7h.. .. ... ..
1.216,450
39,2'0
6,638
1,890
70.....
1,225,500
39,632
11,613
530
8,.....
19,200,450
619.369
123,a-fO
32,113-4
9......
3,935,050
126.937
- Mil
832
10 ......
2,500,600
83,568
- 1,256
613
Total T.....
71,267,500
2,208,952
171,835
56,986
New Mexico. . .. .
3,3G8,300
108,f)M
8,604
215
North Louisiana ..
3,088,650
09,63416,328
2,552
Total District ... " .
17,724,450
2,507,240
195,767
59.763
Ouf.aide Oi8triet . .. . . . .
81,636,900
2,633,440
106.832
15,906
United Stat... . . . . . .
t59,36 1,350
5,140.689
a02,599
75,659
SOURCE: Estimated from American Petroleum Institute "eekly reports,
Recent estimates of the Bureau of Mines and of the Economics
Advisory Committee of the Interstate Oil Compact Commission
forecast moderate increases in petroleum consumption during
the next six months. The Bureau of Mines estimates that during
the first quarter of 1948 demand will exceed present requirements by perhaps five percent. The Economics Advisory Committee places daily average demand for petroleum products at
6,165,000 barrels during the first quarter of 1948, as compared
with 5,917,000 barrels during the first quarter of this year. Most
of the anticipated increase in consumption during the next six
months is expected to be met by small net imports, by some increases in natural gasoline production, and by seasonal withdrawals from stocks of crude oil and petroleum products rather
than by any large increase in crude oil production.
Should present consumption trends continue beyond the first
quarter of next year and larger production of crude oil be required, it might be necessary to exceed maximum efficiency
rates of production in some fields and to expand refining ca-
pacity. However, current production rates and refining capacities appear generally adequate to meet req uirements of the next
few months. The chief difficulties being encountered at present
are in transporting crude oil and refined products to the areas
of heavy consumption. The Economics Advisory Committee
reports that although pipe lines arc being operated at capacity
and substantial movements by tank cars already zre being made,
the present rate of deliveries into the Midwest docs not appear
adequate, and extraordinary efforts to increase movements to
that area will be required to meet demands fully during the coming winter. Heavier barge and rail movement of crude oil and
its products from this district to the Midwest and heavier tanker
movement to the east coast will be necessary until pipe lines now
under construction or projected have been completed.
PETROLEUM DEMAND AND SUPPLY FORECASTS- UNITED STATIlS
(ThoUMnds of barrels daily)
Actual - - Estimate8 - _
Actual
Estimate Ist Quarter 4th Quarter 1st. Quarter
1946
1947
HI47
1947
1948
Gasoline......... .. ......
2,138
2,27-4
2,005
2.265
2,080
X._n... .. .. .. ........
268
3M
393
31\0
410
Distillate (uel oil.........
746
870
1,130
1,015
1.250
Residual fuel oil... . . . . . . .
1,,1.13
1,425
1,557
1.480
I ,55!)
Olb.,.. .. .. .. .. .. .. .. .. .
836
933
832
920
871i
Total demand...... . .
5,321
5,805
5,9 17
6.0-10
6,165
7
9
Crude production. ... . ....
4'3'2 1
S,0435~
4,7 ?6
5'3'60
65
5'316700
Natural gasoline..........
1 / "
32
Imports. ......... . ...
370
' 37
482
410
440
Total supply ... .. . .
5,440
5,835
.7,630
5,935
5,970
Sloek chang............
119
30
-287
- 105
-195
SOURCE: EcoDomics Advisory Committee. Interstate Oil Compact Comm i8llion.
During August and September, construction activity in this
district apparently continued on the high plateau attained late
in the spring, Although the value of construction contracts
awarded thus far in 1947 is only slightly larger than during the
VALUE O!' CONSTRUCTION CONTRACTS AIV ARDED
(Thousanda or dollars)
August
August
Jnly
Jan. 1 to August 31
1947p
1046
1047
19.7p
1046
, 32,513
, 55,44' '45(,23' '409,301
Eleventh District- total. . . , 68,045
Residential. .. .
20,197
14,404
18,877
167,509
180,636
All other .. .
47,848
18.109
36,567
286,725
228,765
United Stateattotal ..
823,2 16
670 ,009
660 ,254
4,076,115
5,335,636
Reeidential. . . ... . . .
308,937
28' ,025
240,885
2,018,724
2,198,725
All other .. .. . . ... . .
514,279
305,884
419,369
2,957,3Ql
3,136,911
·37 states east of the Rocky Mountains.
p-PreJiminary.
SOURCE: F. W. Dodge Corporation.
comparable period last year, improved flow of materials and a
more ample supply of construction labor have permitted initiation of projects more promptly than during 1946, and the volume of construction actually begun probably is substantially
greater.
VALUE OF COKSTRUCTIO~ CO~TRACTS AW ARDEn-TEXA S
(Thousands of dollars)
Firm. 6 mOfithll Last 6 moutha First 6 months
Type of construction
1947
1946
19'6
Commercial building .... ........... .
, 18,080
I 21,'80
I 47.131
Industrial manufacturing building. , ..
68,373
40.345
40,231
Public and institutional. , .. . ... . ... .
33.139
18,205
22.ij75
Miscellaneous nonresidential building
1,767
5.344
1,916
Total residential building .... . . . . ... .
118,933
70,183
152.323
50,951
43,503
43.896
16,049
6,704
10,373
Total constructioD .. ....... . .. .
307,292
205,764
327,745
SOURCE: F. IV. Dodge Co'"""tiOD.
tt~~f:.~r.~::: : : : : ::: .......... .
As the accompanying table indicates, the value of awards for
industrial construction, public works, and utilities was greater
in Texas during the first six months of this year than during
either the first or the last six months of 1946, whereas awards
for commercial building were markedly smaller and awards for
MONTHLY BUSINESS REVIEW
residential building during the first half of this year were a relatively leos important constituent of total awards than during the
same period last year. Nevertheless, the estimatGd volume of residential construction actually in process in this district reached
newall-time peak rates above those attained in 1946. During the
first six months of 1947, a considerably larger number of dwelling units was started in metropolitan areas of Texas and of the
district than during comparable periods in 1946, although the
number of units starced in representative smaller cities was somewhat less. Moreover, since dwellings have been completed more
rapidly than last year, many more units probably have been made
available for occupancy.
ESTIMATED NUMBER OF NEW DWELLING UNITS STARTED IN URUAN AREAS·
Fint 6 months
Amarillo, .................... _......
Austin ....•..... ,... ... . . ..... ... . ..
Beaumont. . . . . . . . . . . . . . . • . • . . . . . • . • .
Corpus Christi. . . . . . . • . • . • .. . • . • . • . • .
Dallas!. . . . .. .. .. .. ..... . ... •. . . . . . .
EI
Paso........ .....................
Fort Worth .. ..... ,' ......... ,.. .
Galveston ..... . ... ............•.•. ,_
Uouatont . .. .. . . . .... ,.," .•.•.•. •...
Sao Antoniot. . . . . . . . . . . .. .. . . . . . . .. .
Waco. .............................
Total Texas Metropolitan . . . . . . . . . . . . .
Shreveport, La .......... , • , • " , . . .. . .
Tucson, Aril ..... . ....... , . . . . . . . . . . .
15 representative Southwestern cities of
10,000 to 50.0001...................
Lad 6 mooth!
114
1946
474
1.605
333
576
2,389
186
1,683
191
2.749
378
2.095
399
First. 6 mooths
1946
719
1.334
226
488
3,473
207
2,511
128
2,7M
1,008
444
16,363
680
224
12,900
b62
317
14.223
514
337
2,284
2.372
2,959
1947
623
1,170
362
908
4.774
203
1,968
3.226
2,!)l9
-Bureau of labor StatistiCl!l est.imate! baaed on building permits,
t Includes adjacent municipalit.ies in metropolitan arW!.
:Brownsville, Dryan, Denton, Laredo, Lubbock, Marshall, Port Arthur, San Angelo, Swcct.water. Tyler, Wichita FallA, Texaa: Mansfield and Monroe. Louisiana; Roswell and Carlsbad,
New Mexico.
BUILDING PERMITS
Percentago
August 1947
Percentp.ge change Jan. t toAug.31, 1947 chan~o
-,---,-,----valuation from - -- -- - - valuatIOn
No. Valuat.ion AUI.I946 July 1947 No.
Valuation from 1046
Abilene .... .
84 I 261.704
40
-10
732 I 2,009,947 - 8
AmBrillo ........ , 213
869,930
M
28
1,414
5,299.946 - 5
Austi n ......... . 339 1,857,609
43
-29
3.835 13,398,793
7
neaumont . ...... . 395
491,726
22
- 67
2,742
4,364,229
80
369 1,414.644
16
6
2.9IG 10,150,250
38
%!~~ ~~.r~t~:::: 1.603 5.086.499 - 18 - 3 11.047 34,542,077 - 3
Em........ .... . m
765,507
125
80
1,022
4,468,577
49
Fort. Worth ..... ..
704 2,568,704
63
45
4,805 15,882,850 -12
Galveston .... , .. ,
162
212,708
28
16
1,163
1,587,847 - 2
Ifouston ..... , ... . 781 6,636.652
244
- 8
5,500 44,715,506
7
I,ubbock ........ . 257
758.562
74
-35
1,603
7,833,6<13
8
Port Arthur ..... . 212
176,492
- 10
- 10
1,306
1,540,746 - 7
San Antonio ..... . 1.354 2,411.054
62
- 4
9,498 17,046,634 - 1
Shreveport, La... . 354
714.516
4
- 8
2.789
6,899,081
I
Waco ........... .
154
921,974
lab
- 13
1,126
5,837,HI3
67
Wichita Falls .... .
102
370.233
127
34
573
1,790,278
19
TotAl .... ,. i,218 f2-4,568,454
45
-6
52,161 1178,267,617
A sharp increase in cotton consumption by domestic mills
and large exports combined during the 1946-1947 season to reduce the United States carry-over of cotton on August 1 to
approximately 2,750,000 bales, the lowest level since 1930. Domestic mill consumption during the season, totaling 10,035,000
bales, although 10 percent below the all-time peak rate of the
1941-1943 period, was approximately .one-third above the prewar average for the 1936-1940 seasons. Export!. of United States
cotton, totaling 3,500,000 bales during the 1946-1947 season,
were somewhat smaller than before the war but considerably
larger thall during the war years.
World consumption of cotton also rose sharply last season
to an estimated 27,500,000 bales, or approximately 95 percent
of the prewar annual average, whereas the world crop was only
a little more than 20,000,000 bales, as compared with average
annual production of about 30,000,000 bales during the 19361940 period. It is estimated that the world carry-over from the
167
1946-1947 season is about 16,000,000 bales, which is somewhat
below the prewar average and 10,500,000 bales smaller than the
carry-over on August 1, 1945.
DOMESTIC
CO~SUMPTION
AND STOCKS OF CO'ITON-(Bales)
August.
Auauat
July
1947p
11,887
710,601
Consumption at:
Tcxasmills ..... .
United States mills.
..............
U. S. stock.s-end or month:
In consuming establishments .................. ' " 1,154,267
Public storage and compr688eS ...•......••..•...
833,113
p-Preliminary.
1946
18,899
BM,m
1947
12,9M
677,480
2,082,696
3,834,342
1,400,077
000,610
Domestic mill consumption declined substantially during the
last three months of the 1946-1947 season, and although it generally is expected to rise somewhat during the current season
from the levels of recent months, the near-record consumption
of last season may not be repeated in 1947-1948. The cotton
crop now being harvested in the United States, estimated at 11,850,000 bales, is about 3,200,000 bales larger than the crop of
last season. It appears likely, therefore, that supplies of cotton
will be adequate to fulfill domestic mill demands unless exports
are unusually large, although supplies of the higher grades and
of the longer fibers may be tight.
CO'ITONSEED AND CO'ITONSEEDlPRODUCTS
--,---Te... - - - : - - _ - :- ·Unitod Slate>t-------Augusl: 1 to August 31
Cottonseed received at mills
(Lanlll) ..•. ....• , •••••••••••
Co'Lonseed orusbed (too.) ••.•.
Cottonseed on hand (toOl) •..••
Production of prodllcts:
Crude oil (thousand Ibs.) .•••
Cake and meal {tous) .....••
Hulls (Lons) .............. .
Linters (running bales) ..... .
This season
Last season
August 1 to August 81
This seasou
lGst season
121.868
61.311
113.700
74.003
30,242
101,016
167,130
102,148
163.321
107,733
8R,033
137,106
t8,248
29,662
13,046
19,226
8,702
14,Ml
6.396
9,274
31,109
47.008
23.210
31,807
25,902
37,831
19,8M
26,073
4,606
6,362
12,100
20,836
3.272
5,263
6,936
13,500
8,472
26.416
340680
72.396
12.346
25.625
25.830
46,364
B~()Cks
on hand August 31:
Crude oil (thousalld Ibs..) .•..
Cake and meal (tOIllt) ...•.••
Hulls (tons) . ..... .... ... ..
Linters (running bak'S) ..... .
SOURCE: United Btates Bureau
or Census.
Mill consumption of cotton in Texas increased very little last
season over the previous year, remaining 23 percent below the
very high rates attained during the 1941-1943 period, when
coarse fabrics were required in large quantities by the military
services. Consumption during the season, nevertheless, exceeded
prewar rates by approximately one-third. The decline in rate of
consumption during the last months of the season was quite
severe, reflecting the drop in demand for many coarser weaves
which represent a significant portion of Texas mill output and
suggesting that consumption may not be restored to the levels
of 1946-1947 during the current season, since many Texas mills
are not equipped to produce the fabric grades which seem likely
to be in greatest demand.
Population Shifts and the Labor Force
During the past seven years, population movements of unusual magnitude in the United States have affected significantly
the regional distribution of the labor force and the relative significance of market areas. The general direction of these movements has been from rural to metropolitan areas, and from the
great interior plains and some of the southern states to the Great
Lakes, North Atlantic, Gulf Coast, and Pacific coastal regions.
158
MONTHLY BUSINESS REVIEW
Population estimates recently released by the Bureau of the
Census indicate the effect of these movements and of natural
growth upon the populations of the southwestern states. As
Table I indicates, the changes in the five southwestern states
of the Eleventh District from 1940 to mid-1946 were strikingly dissimilar. Arizona and Texas experienced increases of
24.7 percent and 8.5 percent, respectively, as compared with
the national increase of 6.2 percent; whereas the populations
of New Mexico and Oklahoma declined. The percentage increase in Louisiana slightly exceeded that in the nation. The
population of the five states as a whole increased by approximately 710,000, primarily reflecting an increase of 545,000
in Texas.
TABLE I
POPULATION OF UNITED STATES AND SELECTED STATES
..-Tota.l population excluding armed forces oveneaa- Civilian population __
July 1. 1946 Apr. I, 1940
United ~ta..... 139.893.400 13I.1M19,27~
-Change 19-40 to 1946Number
Pcr cent July 1, 1946 Apr. 1,1040
8,224 ,131
6.2
622.804
499.261
123.6'13
24.7
617,196
497,864
2,519,520
2,363,880
165,640
6.6
2,468,596
2,539,349
528.9Y7
531.818
2,821 -
0.6
61 8.934
531,785
2,224,939
6,959,481
2,336,434
6.414,824
111,495 544,667
4.8
8.5
2,211,417
6,808,813
2,332,800
6,389,349
Total five states 12,8.')5,741
12,146,217
709,524
5.8
12,624,956
12,291,147
Arizona .... . . .
I.ooisiona . .....
New Mexico . . .
Oklahoma .....
To....... . ....
138,394.474 13I,40I,9m;
SOURCE: U. S. Dep.utmcut CJ{ Commerce, Bureau of Cenlus.
From such current estimates of city and county population
as are available, it appears that shifts of considerable magnitude
have occurred also within each of these southwestern states.'
The war amplified trends which had characterized the preceding two decades, Movement of population to the north coastal
and south coastal areas of Texas was accelerated in response
to the rising labor demands of heavy industries and construction operations in those sections; metropolitan populations
throughout the Southwest increased substantially; towns of
moderate size generally gained in population; and large-scale
migration took place from rural areas and from many small
towns.
Since the end of the war the growth of most towns of 15,000
to 50,000 has continued, and the increase in population of many
of the larger cities of the region, which are experiencing substantial postwar commercial and industrial growth, has been
considerable despite the hampering effect of acute scarcity of
housing. The return of veterans and war workers to rural areas
and agricultural employment, which was expected to be an
important postwar development, apparently has not assumed
large proportions in the Southwest, Estimates based on data of
the United States Department of Agriculture indicate that a
net increase of 346,000 in farm population occurred between
January 1945 and January 1947, However, this increase offset
only about one-third of the decline that took place from 1940
to 1945, and the farm population of the area is still about 16
percent below the 1940 level.
The decade following the war is very likely to be characterized
by continued popubtion movements of considerable magnitude
in the Southwest. Should mechanization of farms proceed rap1 For a discussion and map of population shilts in tbe Eleventh Federal Re·
serve District, 1940 to 1943. rcfer to the Monthly BlIs;ntss Review of the FederaJ
Reserve Bank of Dallas, Vol. 28, No. 10, December 1, 1943. pp. 6 and 7.
idly, the present shortage of farm labor would be relieved, and
some further migration from rural areas might occur; growth
of heavy industry along the Texas coast will attract persons
to that region; and further industrial, service, and commercial
development may give impetus to additional growth of metropolitan areas, On the other hand, if economic activity should
decline significantly from present high levels, retarding the industrial and commercial expansion of coastal Texas and the
metropolitan areas of the Southwest, movement of population to
those areas would be slowed, and some migration from them to
rural areas and smaller towns would be possible,
Increases in total population and shifts of population to urban
areas already have expanded the labor force available for nonagricultural activities in the Southwest, and may continue to
do so. The magnitude of the growth of the labor force during
the war is indicated by Table II, The number of persons working or seeking work in the five southwestern states, including
those in the armed forces, rose from 4,671,000 in 1940 to 5,722,000 in 1945, an increase of 22 percent. Since the end of the war,
the total labor force of the region probably has been reduced
by return of women to their homes, by return of younger persons to school, and by voluntary retirement of older workers
who deferred retirement during the war. However, the return
of men from military service has augmented the civilian labor
force in urban areas, and the number of persons available for
employment in commercial and industrial activities probably
is greater than during the war.
TABLE 11
PROJECTED GROWTH OF LABOR FORCE, 1940 TO 1950
(Number
or per~:ms in thousands)
E.,timated labor force "N&tural" labor force "Normal" labor fon:e
- - -1945
19501-~
19501
Percentage
Percentage
P ercentage
change
change
Labor force
change
Number Crom 1940 Number from 1940 Number from 1940
1940·
20 .5
11.0
65,986
60,830
60,830
11.0
United States .. M,778
222
18 . 7
255
259
38.5
36.4
Arisona .....
187
17 .7
1,082
1,054
14.7
1,088
18 . 4
Louisiana ....
919
229
24 .5
184
202
9 .8
243
32.1
NcW' Mexico .
13.2
17 . 9
R20
-1.7
834
944
983
Oklahoma ...
28.1
2,004
16.4
2,943
2,M7
3,263
15 .5
Tuas ......
.
Total five stat.e8
4,671
5,722
22.5
5,480
17 .3
5,349
14 .5
·Rcviscd Bureau of Census data.
tAssumcs continuation of prewar trends in the pcrecntngo of the population that works or
&COQ work; econoolic conditions in 10:;0 similar t o those of 1940; and no intUlltate migration
betwccn 1940 and 1950.
tAssumptioll8 sa nbo ...e, footnote (f), el:cept that. interstate migration between HI40 aDd
1950 i8 assumed to be t.wice tbe 1935-1940 volume.
SOURCE : U. S. Department of Labor.
Projections prepared by the United States Department of
Labor indicate that if prewar trends of natural population
growth and interstate migration prevail, the labor force of the
five southwestern states may be approximately 15 percent larger
in 1950 than in 1940, as compared with an increase of 11 percent in the United States as a whole. These projections, which
indicate some decline in the labor force of the Southwest from
the present level, may prove too low, if industrial and commercial activity in the region continues to expand and provide
attractive employment opportunities for the natural increase
in the labor force of the Southwest and for migrants from other
regions.
@FedFRASER