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BUSINESS
REVIEW
OCTOBER 1959
Vol. 44, No. 10
TJiiE ROLE OF P.IPELINES IN THE ECONOMY
OF THE SOUTHWEST
The profitable exploitation of crude oil and natural gas reserves
and much of the industrial strength of the Southwest are dependent
upon a large network of pipelines, which provide the cheapest and
most reliable method of overland transportation of liquid and
gaseous materials yet devised by man. Natural gas, crude oil, and
major refined petroleum products are "exported" from the Southwest through pipelines to consumption centers all over the Nation,
and principal southwestern industries receive their fuels and substantial quantities of industrial chemicals through pipelines.
Great technical improvements in pipeline construction and
operation have enabled the pipeline industry to grow very rapidly
in recent years until, today, the total mileage substantially exceeds
total railroad track mileage. In 1957, there were 660,000 miles of
petroleum and natural gas pipelines in the United States, compared
with 390,000 miles of railroad tracks; in the Eleventh District
states, pipeline mileage was over six times the number of track
miles. Although both petroleum pipelines and railroads are g~n
erally common carriers, pipelines usually serve only a single industry. Crude oil lines, for instance, ordinarily connect only petroleum
producers and refiners.
The petroleum and natural gas industries are particularly
dependent upon pipelines, and they have constructed the vast
majority of the pipelines operating in the United States. In 1956,
75 percent of all crude oil received by refineries and 17 percent
of refined petroleum products were shipped via pipelines. Practically all natural gas is gathered, transported, and distributed
through pipelines.
FEDERAL
RESERVE
DALLAS,
BANK OF DALLAS
TEXAS
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
History of Petroleum Pipelines in the Southwest
The pipeline industry has developed at differing rates
of growth among the southwestern states. Although
the first line in Texas was built in response to the discovery of oil at Spindletop in 1901 and ran from
Spindletop to a refinery at Port Arthur, 20 miles away,
the Texas pipeline industry developed slowly because
only short pipelines were required to bring crude oil
from the east Texas fields to the refineries located near
the Gulf Coast. In contrast, Oklahoma oil producers
and refiners, without easy access to the gulf, were immediately dependent upon long-distance pipelines to
move their products to eastern and northern markets.
In 1905, a pipeline from Oklahoma to Chicago was
completed; and in 1908, a line connected Tulsa with
the gulf. By 1910, pipelines had been constructed from
the gulf to the northeastern states, so that Oklahoma
and Texas crude oil found markets throughout the
major northern consuming areas. Following the discovery of large oil reserves in west Texas and New
Mexico in the 1920's, that area was also linked by
pipelines to the gulf and midcontinent markets.
During the 1920's, the location of new refineries
near market areas - many miles from major producing
oil fields - encouraged a flurry of pipeline construction. By 1930, there were 88,728 miles of interstate
pipelines in the United States, although most were
small-diameter and relatively high-cost lines compared
with modern pipelines. Several larger lines were laid
and techniques of pipeline construction were substantially improved in the 1930's, but it remained for the
famed Big Inch (24-inch) and Little Inch (20-inch)
pipelines, constructed by the Government during World
War II, to demonstrate the economies of largediameter, long-distance lines. Following World War II,
many new pipelines were constructed, and the industry
rapidly replaced old multiple small-diameter crude oil
lines with single large-diameter lines.
The majority of the existing products pipelines have
been laid since World War II; during the 1930's, however, several significant small-diameter products lines
were constructed in the Southwest, and techniques were
improved to allow batching of various products in the
same line without excessive mutual contamination.
Since 1945, products pipelines have been constructed
to connect refineries with most major cities.
The development of products pipelines has affected
both the size and the location of refineries, as such lines
allow a single refinery to serve several market areas
I~USINESS
REVIEW
efficiently. They also tend to encourage the location of
refineries at intermediate points between crude-producing and products-consuming areas, which reduces the
transportation facilities needed to serve a market area.
History of Gas Pipelines in the Southwest
The natural gas industry moved to the Southwest
following the depletion of northern fields and the discovery of rich natural gas fields in Oklahoma and Texas.
The first compressor station in the Southwest was
completed in 1910 in a project that supplied Fort Worth
and Dallas with natural gas. By 1930, after the introduction of high-strength seamless pipe, natural gas lines
had been constructed from the Southwest to as far as
Atlanta, St. Louis, Kansas City, and Denver; and in
1931 , separate lines reached Chicago and Muncie,
Indiana.
From 1931 to 1945, the natural gas pipeline industry
developed rather slowly, although a 1,265-mile 24-inch
line was laid during World War II from south Texas
to West Virginia and was subsequently extended to New
England. In the postwar period, expansion has been
very rapid, with west Texas natural gas fields linked by
a 26-inch line to southern California and the first 34inch pipe being used for a long-distance line from the
Southwest to San Francisco. By 1951, separate lines
connected Texas with Michigan, Ohio, two cities in
Illinois, and New York; and a natural gas pipeline
reached the Pacific Northwest in 1956.
The Pipeline Industry Today in the Southwest
In 1957, there were 75,603 miles of petroleum pipelines and 118,140 miles of natural gas pipelines in the
District states. In that year, the District states accounted
for 52 percent and 23 percent, respectively, of the total
petroleum and natural gas pipeline mileages in the
Ullited States. The accompanying tables indicate the
distribution of pipeline mileage among the District
states and the general types of pipelines included in the
totals. Because of its large area and extensive oil and
gas production and processing facilities, Texas dOlllinates the totals for the District states. It is estimated
that well over $1 billion is invested in pipelines in
this State.
Most southwestern crude oil is delivered to refineries
through pipelines, with the proportion so distributed
varying from 99 percent in Oklahoma to 69 percent
in Louisiana. The greater use of water transportation
accounts for the lower rate in Louisiana. Refiners located outside the District receive about one-third of
MAJOR SOUTHWESTERN CRUDE OIL PIPELINES
SOURCE '
lli Ql! '!,!!!i Gal Journal.
their crude oil from District states, the bulk of which
is delivered through pipelines.
The availability of inexpensive natural gas has been
a multiple blessing to the Southwest. Because pipeline
transportation charges are based mainly upon distance
and over 50 percent of the Nation's reserves are located
here, southwestern consumers enjoy a considerable cost
advantage over fuel purchasers in most other parts of
the Nation. This availability has been a particularly unportant economic incentive to industrial location in the
Southwest. Nevertheless, pipeline transportation
charges are still low enough to allow the profitable export of southwestern petroleum and natural gas to most
other areas in the country.
Petroleum and natural gas pipelines crisscross much
of the Southwest, although Texas, Oklahoma, and
Louisiana have the greatest concentrations. The map
above illustrates that crude oil produced in the District
states generally flows to southwestern refining centers,
to the coast for water shipment, or to midwestern refineries. West Texas crude oil, for instance, flows to
several major refining centers, including the El Paso
area, the Gulf Coast, and those in the midcontinent and
Great Lakes states. East Texas crude mainly flows to
the gulf, although some is piped to the northeastern
part of the Nation. Southern Louisiana crude oil flows
to the gulf, but much northern Louisiana crude moves
northward.
Because the Southwest is an important refining
center, it is also the origin of many major refined products pipelines. Refined products are shipped from the
Houston-Baytown area by pipelines to northern states
and to major consuming areas in the Southwest. El
Paso refineries ship products via pipelines to New Mexico and Arizona, while refineries located near Amarillo
distribute to parts of central Texas, Colorado, and the
Midwest. Wichita Fails, another north Texas refining
center, is the origul of several products pipelines. Gasoline is the most important refined product transported
by southwestern pipelines, but large quantities of distillate fuel oil and lesser amounts of kerosene, liquefied
petroleum gases, and other fuels are carried too.
The Southwest is also the origin of major natural gas
pipelines, with natural gas flowing from west Texas to
BUSINESS REVIEW
I
MAJOR PIPELINES COMPLETED OR SCHEDULED SINCE 1956
_
PETROLEUM PIPELINES COMPLETED
SINCE DECEMBER 31,1956
___ PETROLEUM PIPELINES PROPOSED
OR UNDER CONSTRUCTION
_ _ NATURAL GAS PIPELINES COMPLETED
SINCE DECEMBER 31,1956
.......... NATURAL GAS PIPELINES PROPOSED
OR UNDER CONSTRUCTION
California and from east and south Texas into the Eastern Gulf States. In addition, significant quantities of
natural gas flow from many parts of Texas and
Louisiana to midwestern and northeastern states. Texas
is the largest exporter of natural gas among the states,
followed by Louisiana, New Mexico, Oklahoma, and
Kansas.
Pipelines have contributed greatly to the spectacular
growth of the gulf coast chemical industry. Since World
War II, about 75 petrochemical plants, most of which
receive raw materials through pipelines, have been constructed in the Texas-Louisiana gulf coast area. The
availability of industrial chemicals and fuels via pipelines has been a major industry attraction of the gulf
coast area. Although low-cost natural gas is the most
important product supplied to the chemical industry
by pipelines, liquefied petroleum gas, ethylene, butylene, chlorine, hydrogen, acetylene, and other chemicals
are carried by pipelines between 32 major plants and
7 storage salt domes in the Houston Ship Channel area.
Moreover, the pipeline industry is important to the
Southwest as an employer, taxpayer, and purchaser of
I
BUSINESS REVIEW
SOURCES : Federal Power Commlulon.
The Q!! ~ ~ Journal.
materials. Because of the high ratio of capital investment to manpower, direct employment by pipeline
companies is very low relative to other companies of
equal size, but southwestern pipeline companies stin
employ approximately 12,000 persons. As major purchasers of the goods and services of other firms, pipeline
companies are the chief customers of over a dozen large
and many small pipeline contractors and of several
manufacturers of pipe, fittings, and other construction
materials.
Pipeline Construction and Operation
Remarkable advances in construction and operating
techniques highlight the history of the pipeline industry.
From 1953 to 1958, the cost of shipping a barrel of
crude oil 100 miles decreased from 2.7 cents to 2.5
cents because of automation of operation and largerdiameter lines. Despite a 28-percent gain in traffic
during these years, the number of pipeline employees
declined 10 percent. Pipeline tariffs are now significantly lower than during the J 930'8 and are sometimes
one-third lower than the charges made by other types
of tran'sportation.
PETROLEUM PIPELINES, BY TYPE, DECEMBER 31, 1957 1
Five Southwestern States a nd Un i ted States
(In mi les)
Tru:'Ik li nes
Area
Gathering
lin os
Crud e oil
RoAn e d oil
Te xas . . • .... . .• .• .•
1,49 1
2,084
6,00 1
22,703
2,392
680
5,934
25,025
567
973
389
2,398
4,966
Tota l ...... ...... .
United States . . ... .
32,279
52,077
34,031
61,379
9,293
31,780
Arizona • • . • . .. . .. . .
Louisiana •••• •••••••
N ew Mexico ••• • . • . .•
Okla homa .••. . ..•..
Total
567
4,856
3, 153
14,333
52,694
75,603
145,236
1 For re porting companies only.
SOURCE: Inte rstate Comm erce Commiss io n.
The natural gas pipeline industry has also experienced
remarkable technical development in recent years. A
major improvement in the long-distance transmission
of natural gas has been the use of underground storage
facilities near consumption areas, which allow pipelines
to operate at more uniform rates and more profitably
throughout the year. Furthermore, the industry has invested heavily in high-capacity compressors, which
enable pipelines to transport natural gas economically
over long distances and which compensate for reduced
wellhead pressures.
Financial and Operating Characteristics of Pipelines
In recent years, major advances in pipe quality ,
The dominant features of the financial structure of
coatings, ditching equipment, and laying equipment petroleum pipeline companies are a heavy investment
have improved efficiency, thus offsetting the general rise in fixed assets and substantial long-term indebtedness,
in other pipeline construction costs. Pipeliners have On December 31 ,1957, investments in carrier property
proved that high-strength, thin-walled pipe, properly comprised 80 percent of the total assets of interstate
coated, is able to withstand high operating pressures petroleum pipeline companies, and long-term funded
and the forces of abrasion and corrosion. Mod6rn elec- debt accounted for 47 percent of the capitalization of
tric, diesel, and turbine-powered pumps are used to these concerns.
increase the capacity of existing pipelines; when comAfter all taxes and interest payments, interstate combined with large-diameter pipes, they provide several
mon-carrier
petroleum pipelines earned $155 million
times the operating capacity of pipelines used only a
in
1957,
which
represented returns of 7.3 percent on
few years ago.
their net assets and 16.3 percent on stockholder equity.
The application of electronics has been particularly Earnings of natural gas transmission companies have
important in the development of the pipeline industry. not been as large as those of petroleum pipeline comTechniques for fully automatic gauging and delivery panies but compare reasonably well with earnings of
of crude oil froin leases directly into pipeline systems other industries. Net earnings of natural gas transmishave been developed . Some major crude lines now re- sion companies in 1957 were 6.5 percent of net assets
ceive up to 50 percent of their crude "directly from the and 11.2 percent of stockholder equity.
wellhead" via automatically controlled gathering
Both petroleum and natural gas pipelines are
systems. In addition, electronic computers currently are
government-regulated
industries. Interstate petroleum
being installed by major pipeline companies to perfonn
pipelines
have
common-carrier
status under the regulathe job of over-all control of pipeline operations. Comtion
of
the
Interstate
Commerce
Commission, and most
puters are more accurate and efficient than human
natural
gas
pipelines
are
public
utilities regulated by
operators in handling the complicated problems of presthe Federal Power Commission. In addition, various
sure control and traffic scheduling.
state agencies regulate pipeline practices. As common
carriers, petroleum pipeline companies are required to
NATURAL GAS PI PELINES, BY TYPE, DECEMBER 3 1, 1957
transport all properly offered production which is conFi ve Southwestern Sta tes and Un ited States
nected to their lines or to prorate pipeline space if offerl in mi les )
ings exceed capacity. Generally, crude oil pipelines are
Type of lines
not required to connect with producers unless they
Field a nd
desire
to do so, although a pipeline in Texas may be
Distribution
Tota
l
Transmission
gathering
Are a
required
to connect with local producers if there are
7,870
4,300
3,570
Arizona •••.• . . . . • 0.,
0
20,650
7,990
10,480
2, 180
l ouisio na • • • . . . .. .. .
no
other
pipelines
in the area.
10, 160
2,280
3,400
New Mexico •• • •••• • •
4,480
Oklah oma • .. •.•. • ..
Texas . • .. . . . • .. .• • .
3,320
7,220
6,230
25,040
7,9 10
29,740
17,460
62,000
Total .. ...... . ....
Un ited Sta tes • . ... •
17,200
50,020
48,720
157,540
52,220
307,400
118,140
51 4,960
SOU RCE, Ame rica n Gas Association.
As common carriers, petroleum pipelines have their
tariffs regulated by the ICC and by various state regulatory bodies. However, petroleum pipelines usually
BUSI NE SS RE VI EW
I
are not built to earn revenue as common carriers. Most
crude oil and products lines have been built by major
petroleum companies to connect producing, refining,
and consuming areas. Crude oil gathering lines and
connecting trunk lines afford refiners substantial competitive advantages in purchasing crude oil and a means
of low-cost transportation from wellhead to refinery.
The products pipelines provide low-cost access to
consumption areas.
About 90 percent of the crude oil transported by
pipelines is carried in lines controlled by integrated oil
companies. Small companies have been slow to build
pipelines because of high construction and operating
costs, and small refiners make little use of commoncarrier facilities since the refiners are frequently located
near producing areas and generally serve only local
markets. On the other hand, major oil companies are
increasing their utilization of available common-carrier
facilities, and their long-distance shipments of crude
oil or products often travel over several interconnected
pipeline systems.
There appears to be a trend toward the construction
of large joint-interest petroleum pipelines to take full
advantage of the impressive scale economies of pipeline
construction and operation and to reduce the cash
investment and risk of individual companies. It is
estimated that the lowest costs in crude oil transportation are generally achieved in pipelines with capacities
in excess of 400,000 barrels per day, but no single
refinery or group of refineries owned by an individ ual
company in a particular area can use 400,000 barrels
per day. Uncertainties of common-carrier business and
management problems have spurred the construction
of joint-interest pipelines.
Major natural gas pipelines have been built either
by large distributors of natural gas who are desirous of
secure sources of production or, more commonly, by
companies which specialize in the purchase of natural
gas at the wellhead for sale to distant distribution companies. Natural gas transmission companies are not
common carriers, although large utilities sometimes
purchase natural gas directly in the field and contract
for transmission by established pipeline companies.
However, the control of natural gas pipelines is generally more complete than the regulation of petroleum
pipelines. Permission must be secured from the FPC
to build natural gas pipelines by demonstrating that
their construction is in the public interest, and a new
company usually must establish the availability of a
I
B US INES S RE V IEW
PIPEli NE MI LEAGE OPERATED AT CLOSE OF YEAR
Five Sou thwestern Sto tes
(In miles)
1947
Area
1949
1951
1953
1955
1957
NATURAL GAS TRANSM ISSION LINES
Arizona ..•. ....
louisiana ... ....
New Mexico .. . ..
Oklahoma ••.•••
Texas . . . . ..... .
Total •••. . • • ••
1,730
4,340
2,160
4,890
15,010
2,450
6,500
2,500
5,190
18,290
2,8 10
7,450
2,700
5,500
21,000
3,000
8,850
3,180
5,710
23,050
3,570
10,480
3,400
6,230
25,040
28,130
34,930
39,460
43,790
48,720
CRUDE O I L TRUNK LI NES'
Arizona . ... . ...
louisiana . ......
New Mexico . ....
Oklahoma ••••••
Texas ...... . .. .
2,370
403
7,552
24,144
Total •••. . • .. •
34,469
2,459
594
8,447
26,409
2,476
515
6,940
25,916
2,304
640
6,909
26,710
2,437
593
6,494
26,928
2, 392
680
5,934
25,025
37,909
35,847
36,563
36,452
34,031
567
973
389
2,39 8
4,966
9,293
REFINED OIL TRUNK LINES'
Arizono ... .....
460
544
694
528
Oklahoma ••••.•
Texas . ....... . .
681
1,185
1,137
2,625
1,314
2,474
1,057
2,480
694
225
1,9 19
3,221
Total ••• ••• •• •
2,326
4,306
4,482
4,065
6,059
louisiana . .. . ...
New Mexico . ....
1
For reporting compani es only.
SOlJRCES, American Gas Association.
I nterstate Commerce Commission.
20-year supply of natural gas reserves. Natural gas
pipeline companies also are restricted as to the price
that they may pay at the wellhead for natural gas and
the price at which they may sell natural gas to distributing companies. The FPC does not regulate intrastate sales of natural gas nor the prices received by
transmission companies on interstate sales made directly to industrial or commercial users.
The Future of Pip elines
It appears that the rate of expansion of crude oil and
refined products pipelines is slowing markedly. Few
major new petroleum pipelines are currently under
construction; 4,127 miles of new oil pipelines were constructed in 1958, compared with 5,014 miles in 1957
and an average of 5,456 miles in 1952-56. Some additional gathering lines and local trunk lines are likely to
be constructed in the future to market the crude oil
produced from extensions of existing o.il fields and the
development of newly discovered fields, but a substantial mileage of new long-distance crude oil pipelines
from the Southwest to major market areas is not expected without the discovery of large new low-cost
crude oil reserves . The capacity of the present interstate
pipeline system, allowing for gradual modernization
and limited additions, will probably be sufficient to
transport projected petroleum shipments from tbe
Southwest to northern markets. Perhaps additional refined products lines will be needed to improve the
distribution of products and to provide for the anticipated rise in consumption.
In contrast to the outlook for petroleum pipelines,
the current boom in the construction of natural gas
pipelines may continue for several years. Over 10,000
miles of natural gas lines are scheduled for construction
in 1959 at a cost of nearly $1.5 billion, and capital
spending on transmission facilities in 1959-62 may be
as much as 27.5 percent greater than in 1955-58.
The future may also hold additional advances in
pipeline technology which may render many existing
petroleum and natural gas pipeline systems obsolete,
and further use of pipelines in the transportation of
chemicals, ores, and other materials is indicated. Recently, a major chemical company announced plans
for an 800-mile pipeline to carry solvents from the
Gulf Coast to eastern markets. Progress is also being
made in the transportation of wood pulp through pipelines, and Canada is experimenting with pipelines to
transport wheat. Greater quantities of liquefied petroleum gases are likely to be shipped via pipelines, and
in-transit processing is being studied.
The future of pipelines, however, is not completely
free of problems. Pipelines still remain very long-term
investments, subject to the risks of changing economic
conditions and obsolescence. Petroleum pipelines face
the rise of natural gas as a major competitor, and both
pipeline industries may be affected by technical advances made by competing forms of transportation . For
instance, recently developed large plastic, nonrigid
cargo tanks promise bOtll lower-cost rail and barge
transportation of some petroleum products. In addition,
increased tanker deliveries of Middle Eastern and
Venezuelan crude oil to eastern refineries could substantially reduce the demand for southwestern crude oil
and products in much of the northeastern portion of
tlle Nation.
Established southwestern pipelines also face the
eventual depletion of connected producing wells. Declining production rates in many old fields result in
underutilization of pipeline capacity, which is reflected
in higher unit costs of operation. In general, crude oil
gathering fees are reasonably uniform without regard
to rates of flow so that declining pipeline traffic is not
offset by higher tariffs. Nevertheless, because pipelines
provide the most economical transportation of a wide
range of products, they should continue to show growth
with respect to the number of industries served and the
total tonnage transported.
THEODORE R. ECK
General Economist
BUSINESS REVIEW
I
BUSINESS
REVIEW
BUSINESS, AGRICULTURAL, AND FINANCIAL CONDITIONS
Substantial improvement in
sales of consumer durables, together with the enthusiastic re sponse to summer clearance
sales and prefall promotions of
wearing apparel, boosted Eleventh District department store sales to a new seasonally adjusted record
in August. Seasonally adjusted inventories remained
at the July level and were still well above a year
earlier. Total new car registrations during August in
the four most populous areas in the District registered
both month-to-month and year-to-year gains.
Declining demand for petroleum products and
further increases in crude runs to refinery stills have
augmented the already large stocks of petroleum
products. Prices of gasoline and distillate and residual
fuel oils have declined; further reductions in crude oil
production have been scheduled. Although imports of
refined products were substantially lower during
August and the first part of September than a year
earlier, greater quantities of crude oil were imported.
Construction awards in the District states turned
downward in July, led by a reduction in nonresidential
building. A further decrease was indicated by
August building permits.
Customers of the District's
department stores responded well
to summer clearance sales and
early promotions of fall merchandise during the month of August.
As a result, sales scored a more than seasonal rise of 13
percent over July and were 10 percent above a year ago.
The seasonally adjusted department store sales index
rose to a new high of 189, compared with 174 in July
and 172 a year earlier. During the first 2 weeks in
September, sales continued strong a nd showed an 8percent gain over the corresponding period last year.
Cumulative sal~s through August were 9 percent higher
than those dunng the comparable 1958 period.
I BUSINESS
REV I EW
Strikes continued to dominate changes in nonfarm
employment in the District states. The return of construction workers to jobs in Arizona and normal
seasonal increases raised total employment by midAugust, despite new and continuing strikes in other
areas. Later in the month, several thousand workers
were idled by the copper strike. Industrial production
in Texas also increased during August.
Cotton and sorghum harvesting dominated District
agricultural activity during the past month. Cotton
prospects declined but remain above those of last
year. The excellent grain sorghum crop being combined may exceed the record 1958 output. Prospective outturns of rice and peanuts are promising but
are somewhat below estimates a month earlier. Livestock conditi,ons are good in most sections.
Investment accounts at weekly reporting member
banks in the District declined sharply in late August
and early September, reflecting bank liquidation of
recently acquired Treasury bills and the reduction in
bank holdings of Government notes and bonds. Cash
accounts registered a sizable increase, while loans
and deposits rose moderately. The reserve positions
of country banks tightened during August, but the
city banks' reserve positions eased.
Year-to-year sales gains were recorded in all of the
major metropolitan areas in the District. The largest
percentage gains were registered in the Houston and
INDEXES OF DEPARTMENT STORE SALES AND STOCKS
Eleventh Fed eral Reserve District
(1947-49
= 100)
SALES (Doily overage)
STOCKS (End of month)
Se a sonall y
Dote
Unadjusted
ad justed
Unadj usted
Seasonally
adjuste d
1958, Augus'........
1959, June . . . . . . . ..
July..........
August_ .. _....
160
160
155
176
172
176
174
189
163
169
· 171
180p
163
181
180
180p
p -
Preliminary,
DEPARTMENT STORE SALES AND STOCKS
(Percentage chang o in rotail value)
STOCKS
(End of month)
NET SALES
Aug . 1959 from
8 mos. 1959
Aug. 1959 from
Jul y
Aug .
compo with
Jul y
1959
1958
8 mos. 1958
Aug .
Are a
1959
1958
Totol Eleve nth District. • . . . . . . . •. . .
Corpus Christi.. . . . . . . . . . . . . . . . . . .
Dolla s. ... . .. . . . . . .. . .. . . .. .... .
EI Paso.. . • . . . . . . . . . . . . . . . . . . . . •
Fort Worth . . . . . . . • . . . • . . . . . . . . . .
Houston. . . • . . . . . . . . . . . . . . . . • . . .
San Anton io . . . . . . . . . . • . • • . . . . . . .
Shreveport, la .. . . . . . . . . . . . . . . . . .
Waco.. . .. . ... . .... . .. ..... . . . .
Othe r cities . . . . • • . • . . . . . . . . . . . • .
13
24
13
19
10
10
14
1
1
8
14
18
7
10
11
20
13
9
2
12
5
8
13
5
7
10
11
5
7
4
11
7
4
2
- 2
6
8
11
1
16
4
7
25
-1
6
2
7
1
3
6
Dallas areas, where sales rose 18 percent and 14 percent,
respectively. Substantial month-to-month gains also
occurred in all the metropolitan areas, as is shown in
the accompanying table. Outstanding were increases of
24 percent in Corpus Christi and 19 percent in EI Paso.
Year-to-year sales increases over August 1958 were
reflected in all of the major departments at the District
stores that report separate data on sales by type of
goods. Consumer durable goods sales, in contrast with
the pattern in recent months, showed the largest gains.
Sales of radios, television sets, and musical equipment rose 42 percent above a year earlier; and sales of
domestic floor coverings and major household appliances rose 28 percent and 21 percent, respectively.
Wearing apparel sales were higher than in August last
year, but the increases were generally smaller than
those in the hard goods lines. The larger gains occurred
in sales of women's and misses' dresses, which were up
16 percent, and sales of men's clothing, which advanced
9 percent.
Inventories at the District's department stores at the
end of August rose seasonally from July and were 11
percent higher than a year ago. Orders outstanding were
below those at the end of July, as usual, but remained
well above a year earlier. New orders continued to show
a year-to-year increase and also registered a contraseasonal 11-percen t rise over July. The rise between the
2 months this year may indicate that, in view of their
Success in August, merchants are revising upward their
sales expectations for this fall and are preparing to meet
the expected demand.
New car registrations during August in the four most
populous areas in the District were 2 percent greater
than in July and were 61 percent above August 1958.
Dallas registrations scored the largest gains, rising 20
percent above July and over 80 percent above a year
earlier. Substantial year-to-year gains ranging from 43
percent to 66 percent were recorded in the Fort Worth,
Houston, and San Antonio areas. Compared with July,
registrations in San Antonio showed a 19-percent gain,
but month-to-month decreases of 9 percent and 12
percent, respectively, were reported in Fort Worth and
Houston . Total cumulative registrations at the end of
August were 38 percent greater than in the same period
in 1958.
Harvesting of cotton and sorghums highlighted agricultural
activity during the past month .
Periodic rainfall generally has
been a nuisance and has slowed
harvesting in eastern sections of the District. However,
many western areas remain dryas the growing season
approaches an end. Wheat planting increased in the
High Plains, and seeding of oats and other winter
pasture crops is under way in southeastern and eastern
sections of the District.
Cotton harvesting in the District, as a whole, is about
one-fourth complete. Recent rains delayed harvest in
Louisiana and in the Coastal Bend and central Texas
areas. In the Lower Valley, cotton stalks have been
destroyed, and harvest is about four-fifths complete in
south Texas and the Coastal Bend. In the Blacklands,
growers have made good progress in defoliating and
stripping the crop, and harvest is estimated to be about
one-fifth complete. The movement of cotton to gins in
the South Plains is increasing in tempo as lack of moisture has hastened opening in dry-land fields.
CROP PRODUCTION
Texas and Five So uthwestern States
(In thou sonds of bushe ls)'
TEXAS
Estimat ed
Crop
Se pt. 1, 1959
1958
Cotton' , . .. . ... .
Corn • .... . .. .. .
4,525
41,366
56,440
24,156
6,884
135
13,136
276,912
385
2,409
229,100
2,620
1,680
26,000
4,308
42,973
73,040
53,130
10,143
338
11,938
273,066
336
2,487
224,110
2,285
1,210
26,000
Winter wheat ....
Oots .. .. ..... ..
Barl ey_ .••.. . . ..
Rye ......... . ..
Rice ' ... .. .. . ...
Sorghum grain . . .
Flaxse ed . .... ..
Hoy ' ...........
Peanuts5 •
•.• ••• •
Irish potatoeso . . .
Swe et potato cs(, .•
Pecons iJ •
• ••• ••••
FIVE SOUTHWESTERN STATES'
Estimated
1948· 57 Se pt. 1, 1959
Average
3,956
41,073
35,358
24,373
2,206
223
13,013
113,524
753
1,753
193,061
'1,513
' 1,351
35,040
6,525
68,311
150,771
38,636
29,586
1,025
25,820
309,110
455
6,576
361,750
5,852
6,639
71,900
1958
5,953
70,560
196,780
77,823
35,848
1,679
23,158
305,047
361
6,773
371,060
5,19 2
6,107
60,000
Avera ge
1948-57
5,962
70,487
103,644
38,987
13,757
853
25,360
132,824
1,023
5,156
297,879
' 3,543
' 6,366
73,180
Ari zona , loui siana, New Mex ico, Oklahoma, and Texas.
In thou sand s of bales.
In thou sand s of bag s containing 100 pound s e ach.
,I In thou sand s of ton s.
;; In th olJsen ds. of pound s.
II In th ousand s of hundredwe ight.
7 Ave rag e, 1949-57 .
SOURCE , Un ite d States De partme nt of Agriculture .
J
~
:1
BUSINESS REVIEW
I
COTTON PRODUCTION
Texas Crap Reporting Districts
(In thousands of bolos -
500 lb. gross wt.)
1959
Indicated
Sept. 1
1958
1957
1958
9 - Coastal Prairies .•... ... .. .. . .
1 O·N - South Texas Plains ..• •.. . . .. ..
10·S - lower Rio Grande Valley •••.••
500
1,450
285
315
25
475
60
75
300
50
155
145
165
65
460
530
1,502
261
282
19
425
43
54
289
34
99
17 2
156
47
395
379
1,196
2 17
263
17
424
70
72
272
21
115
115
156
36
279
94
97
109
11 2
13 2
112
140
139
104
147
157
84
106
138
116
State ........................ . .
4,525
4,308
3,632
105
Crop reporting district
l ·N l ·S 2·N 2·S 3 4 -
Northern
Southern
Red Bed
Red Bed
High Plains •••.••....
High Plains • .....•.. •
Plains •..•.. • ..•....
Plains •••.•. . •.•..•.
Western Cross Timbers . .......
Black end Grand Prairies .. .•..
S·N - East Texas Timbered Plains . ..•
5 · S - East Texas Timbered Plains . ...
6 - Trans-Pecos . ................
7 - Edwards Plateau •••..••....•.
B·N - Southern Texas Prairies .... . . ..
8-5 - Southern T ex~s Prairies •. ......
1959
as percent of
SOURCE, United Stotes Deportment of Agriculture.
CROP REPORTING
DISTRICTS OF TEXAS
The cotton crop in the District states is estimated, as
of September 1, at 6,525,000 bales, or one-tenth greater
than the outturn in 1958. The indicated production in
each of the District states exceeds that of last year. In
Texas, production is placed at 4,525,000 bales, or 5
percent below the month-earlier estimate but 5 percent
more than a year ago. Outturns in all of the Texas crop
reporting districts are expected to surpass those in 1958,
except in the Northern and Southern High Plains and
the Southern Texas Prairies.
Combining of the State's prospective record-high
grain sorghum crop is continuing in the Southern High
Plains, and harvesting operations in the District have
about reached the halfway mark. In earlier sections of
I
BUSINESS REVIEW
the Blacklands and in south Texas, harvesting has
virtually ceased, and most stalk fields have been plowed.
Grain sorghum production in the District states is
placed at slightly above 309 mill ibn bushels, or 4 million
bushels larger than the previous record crop in 1958.
The peak in rice harvesting has been passed, in spite
of interruptions due to rain. Rice production declined
during August as a result of poor growing conditions
but, as of September 1, remained 11 percent higher
than output a year earlier. Corn picking is well advanced
in most sections of the District, and record yields have
maintained production within 3 percent of last year's
crop, despite the decline in harvested acreage. Conditions in late peanut areas have generally been unsatisfactory, and the most recent forecast indicates that output has declined 6 percent from early-season estimates
and is now placed at 3 percent below the outturn in
1958.
Generally good progress in south Texas commercial
vegetable areas was made during the past month,
despite interruptions from rain. Plantings of winter
vegetables in the Lower Valley are being stepped up,
and seedbeds for later transplanting are developing
nicely. Early seedings of broccoli and cauliflower in the
Winter Garden area are making good growth, and
harvesting of cucumbers and eggplant is under way.
Cantaloupe harvest continues in a few Panhandle areas;
and fall-crop carrots and lettuce are making good
growth, although ear worms have damaged some fields
of lettuce.
The condition of range feed in most sections of the
District is improved as compared with a year earlier.
Rain is needed in most western sections of the District
to promote continued development of forage supplies.
In Arizona and New Mexico, widespread August rains
freshened cured feed, encouraged new growth of grasses
and weeds, and replenished stock-water supplies. The
outlook for fall and winter grazing in these states is noW
well above average. In the western half of Texas south
of the Canadian River, ranges and pastures are especially in need of rain. In eastern areas of the State,
forage supplies remain ample.
Prices received by southwestern farmers and ranchers
(as evidenced by the midmonth index of prices received
by Texas farmers) during January-August averaged
3 percent higher than in the same period of 1958. prices
for crops were up 3 percent, and those for livestock
and livestock products were 2 percent greater.
CASH RECEIPTS FROM FARM MARKETINGS
Five Southwestern States and United States
CONDITION STATISTICS OF WEEKLY REPORTING
MEMBER BANKS IN LEADING CITIES
(Dollar amounts in thou sands)
Ele venth Fe deral Reserve Di strict
(I n thousand s of dolle rs )
January- June
- - - - - - - - - - - - - Perc entag e
1959
1958
Oklahoma .............. ... .
Texas . ......•.............•
207.483
123.265
71.081
227.027
773.566
215.845
123.138
56.645
227.305
855.552
Totel ..... ...... . .. . . .... .
Unit. d Stot.s .. . ..... ..... .
$ 1.402.4 22
$13.906.403
$ 1.478.485
$ 13.957.939
Area
Arizona . ••• . • ...... •..... ..
louisia na ••• ..•. . . . .. .. .....
New Mexico ••••• ••• • •• .•••.•
change
-4
o
o
25
- 10
- 5
o
SOURCE: Unit ed Stal es De portm e nt of Agriculture .
Investment accounts of weekly
reporting banks in the District
til> J~FINANCE JJ. j declined $105 million as the
\~: <{~~ ;$.A{ <liJ" ~;./ banks sold appreciable amounts
......"..,...........
.",',............
of bills acquired in recent Treasury cash financings and, to a lesser extent, liquidated
note and bond holdings during the 4 weeks ended
September 16. This change was reflected in a large
increase in cash balances and more moderate gains in
loans and deposits.
....... m.......
................
/~. (q' {~""'l~"~: .~;\
Gross loans (excluding interbank loans) at the
reporting banks, continuing to recover from a lull
recorded earlier in the summer, rose $13 million
between August 19 and September 16, which compares with an increase of $7 million during the corresponding period in 1958. Loans to nonbank financial
institutions registered the largest gain during the 4
weeks. Business loans advanced a modest $3.7 million,
as sizable net repayments of construction firms were
offset by increases in the borrowings of commodity dealers, trade firms, and manufacturers of metal, petroleum,
and chemical products. Reductions in business loans
in the latter part of August were more than offset by
gains during the first half of September.
For the first time in almost a year, a decline ($3.1
million) occurred in consumer-type lending. The
decrease, however, was less th an that registered in the
comparable 1958 period. A rise in Ieal-estate advances
was somewhat more than offset by decreases in agriculturalloans and loans for purchasing or carrying sec urities.
Demand deposits at the weekly reporting banks,
rising $51.8 rilillion during the 4-week period , were
approximately 2 percent above the year-earlier level.
Large gains in the demand accounts of individuals,
businesses, and banks were partially offset by a sizable
decrease in United States Government balances. Time
Se pt. 16.
1959
Item
Aug . 19.
1959
S. pt. 17,
1958
ASSETS
Commerc ial and industria l loans ... . .. . .. ... . . $1.507.386 $ 1. 503.709 $
Agricultural loon s . •••••.....••... .. .••••• .•
34.930
40.545
41.214
738
12,0 85
768}
15,353
20,352
10,89 2
179.929
7.61 1 }
183,713
182.343
129,849
115,655
34 }
22,588
All other loa ns •••• . ... ... •••••• ...........
136.293
125.067
59
29,480
2 19.3 44
715,3 30
213.406
718.409
Gross loons . ......... . .. .... .. . .. . .... .
l ess reserves and unallocate d charg e- offs ••
2.97 1,533
51,031
2,95 1,640
50.763
2,707.6 12
45.8 18
Loan s to brokers and dealers for purc ha si ng
or carrying:
U. S. Gov ernm e nt securities . .• .. ..... .. ....
Oth e r sec uri ti es . ............. . ......•.. .
Oth er loon s for purcha sing or carrying:
U. S. Government securities . ... . .. .... .. .. .
Other securities ... ..... .. . ............. .
loons to nonbank flnoneial jnttitutions:
Sales Anance, p ersonal Ananco, e tc ... .. ...•
Savings bon ks, mtg e. cos., ins. cos., e tc ...... .
loons to for e ign banks ...... .. . ... .. .... .. .
Loons to dom estic commercial bonk s ..•.. . ....
Re ol·estate loans ....... . . ..... . ...... • . .. .
18.939
231.429
N e t loon s . ..... . .. . .. . .... .. .. .. .. ....•
2,920.502
2.900,877
2.66 1.794
Tre a sury bills ... . ............... . ...... . . .
Tre a sur y ce rtiAcates of indebte dness . ... ..... .
Tre a sury notes and U. S. Government bands,
in cludin g guaranteed obligations, maturing:
Within 1 ye a r ... ........... ... .. . .... . .
After 1 but within 5 ye ars . . •. •...... ..•. • .
Aft er 5 years . . .. ... ............•.• . ....
Oth e r securities .•................. •..... ..
54.836
50.696
147.743
47,698
69,4 33
199,877
4 1.313
845,532
296,859
333,712
52,593 }
842.873 1,193. 408
301.725
335,466
323, 127
Total Investments. . . . . . . . . . • . . . . . . .. . . . . .
1,62 2.948
1.728,09 8
1,785,845
Cash items in proc ess of collection . ... . ... . . . .
Balances with banks in the Unite d States ... .. . .
Balances wi th banks in fo re ig n countri es . •. ..•.
Currenc y and coin ..... .. ..........•.... ...
Re ser ve s wi th Fe d eral Reserve Bonk .•.•.......
Other a sse ts •... . .. ........ ..... .. . ..... . •
548.464
519.544
1,816
50,877
591.286
167.528
500.644
487,408
1,610
50,383
537,964
162.320
480.907
543,247
1,444
49.220
576. 190
175,892
TOTAL ASSETS .. ..... . ............... ..
6,42 2,965
6,369,304
6,274,539
Demand de posits
Individuals, pa rtn ers hips , and corporations ••. .
Unit e d States Gov er nm en t ......•........ .
States and politic al sub divisi on s .. .. . .....• .
Banks in th e Unite d States .••... .. . . .......
Bonks in fo reig n countries ..... . ..........•
Ce rtiA e d and officers' checks, e tc . .•.. ......
3,007.607
137,875
169.180
1.042.977
16.63 4
79,547
2.937.955
250,177
190.516
938,728
19. 811
64,827
2.93 1.438
69,283
143.66 1
1.127,875
15.924
68.917
Total d e mand d e posits . •. ..... . . '" . ...
4,453,820
4,402.014
4.357.098
Tim e d e posits
Individual s, pa rtn ers hips, and corporations . • ..
Unit e d Stotes Government . ............ .. .
Posta l savings . . .. . ... . ............ . ... .
States and political subdivisions ........... .
Bonks in the U. S. and for eig n countries .. ... .
1.059,366
7,035
421
166.517
7.774
1.068.379
7.035
42 1
173,430
2,873
1,073,360
7,455
421
22 1,291
7.070
lIA81l1TIES AND CAPITAL ACCOUNTS
Total tim e d e posits .•..................
1. 241,1 13
1,252, 138
1,309.597
Total d e p os its .............•.. .. . ...
Bills pa yabl e , rediscounts, e tc . ..• •.•.••.. ....
All other liabilities .. .. ........... . .. . ..... .
Capitol accounts ..• • . .. ... ..•....•.... .. ..
5.694,933
128,956
65,555
533,521
5.654,152
119.606
60.513
535,033
5,666,695
34.250
82.927
490,667
TOTAL LIABILITIES AND CAPITAL ACCOUNTS
6,422,965
6,369,304
~
NOTE . -Effoc ti ve July 1 , 1959 , thi s se ri es was rev ise d . Th e revise d form includ es
seve ral new items, th e most important of w hich is loan s to Anancia l institution s , previou sly reported a goi nst othor loon cat eg ori es. Comparable year-e arli e r Agures for th e
new it e ms w ill be sh o wn w he n th ey becom e ovai labl o.
deposits aga in declined, the decreases occurring in the
acco unts of individuals, businesses, and state and local
gove rnments. On September 16, time deposits were 5
percent less than a year ago.
The reserve positions of country banks in the District
tightened in August. Although changes in their reserve
BUSINESS REVIEW
I
Discount rates at all Federal Reserve banks were
balances and required reserves were moderate, the
banks more than doubled their borrowings from the advanced from 3 ~ percent to 4 percent in September.
Federal Reserve Bank. The net result was a decline of At the Federal Reserve Bank of Dallas, the higher rate
$11.3 million in average free reserves at country banks. became effective on September 11.
On the other hand, reserve city banks eased their
On September 22 the President signed a bill to permit
reserve positions as they substantially curtailed borrow- the issuance of Series E and H United States savings
ings from the Federal Reserve Bank. Average net bonds at interest rates above the existing maximum. If
borrowed reserves of the city banks were reduced $19.5 held to maturity, new E and H bonds with issue dates
million in August.
of June 1, 1959, and after will earn 3.75 percent, instead
of the former 3.26 percent. All outstanding E and H
RESERVE POSITIONS OF MEMBER BANKS
bonds purchased prior to June 1, 1959, will earn at
El eventh Fed eral Reserve District
least one-half of 1 percent more than before from now
(Ave ra ges 01 daily flguros . In thousands of dollarsl
to next maturity, with lesser improvement in yields if
redeemed earlier.
August
Jul y
August
1959
1959
1958
$ 554,607
546,277
8,330
21,128
-12,798
$549,24 2
543,855
5,387
37,699
-32,312
$ 573,062
560,155
12,907
3,616
9,291
445,604
404,443
41,161
22,446
18,715
447,624
407,525
40,990
10,054
30,045
441,295
379,787
61,508
1,037
60,471
1,000,211
950,720
49,491
43,574
5,917
996,866
951,380
45,486
47,753
-2,267
1,014,357
939,942
74,415
4,653
69,762
Item
RESERVE CITY BANKS
Reserve balances ... ..... .. ..... ..
Require d rese rves • .• . .... .. .... . .
Excess rese rves . . ... . .... . . .. .. . .
Borrowing s. . .... .. . .. . . .. •. . . . ..
Free reserves . ... . . . ... . .. . .. • . ..
COUNTRY BANKS
Reserve balances .... . . . .. .... . ...
Requi re d re se rves • • . •..•.•..•..•.
Excess res erves . ... . .............
Borrowing s . . .. ... . .. . ... . . . ... ..
Free reserves • . .. . ... . . .. .... ....
MEMBER BANKS
Reserve balanc es .••. .. ...••••..•.
Required rese rves . ..........••. . .
Excess rese rves . ..... .. .. . . ... . ..
Borrowing s. ..... .. . ... . . . ...... .
Free reserves . . . .. . .....•......•.
NEW MEMBER BANKS
The First National Bank of Kermit, Kermit, Texas, a
newly organized institution located in the territory
served by the EI Paso Branch of the Federal Reserve
Bank of Dallas, opened for business September 11,
1959, as a member of the Federal Reserve System. The
new member bank has capital of $100,000, surplus of
$100,000, and undivided profits of $50,000. The
officers are: J. M. Waddell, President; W. R. (Bob)
Garner, Executive Vice President and Cashier; and
Fayne A. Mullen, Vice President.
Earning assets of the Federal Reserve Bank of Dallas
declined $7 .3 million during the 4 weeks ended September 16. A decrease in member bank discounts was only
partially offset by enlarged holdings of Government
securities. The Bank's gold certificate reserves showed a
substantial increase of $64.3 million. Federal Reserve
notes in actual circulation rose $12.3 million and, on
September 16, were 6.8 percent above the level on
September 17,1958.
The Gateway National Bank of Beaumont, Beaumont,
Texas, a newly organized institution located in the
territory served by the Houston Branch of the Federal
Reserve Bank of Dallas, opened for business September
12, 1959, as a member of the Federal Reserve System.
The new member bank has capital of $250,000, surplus
of $150,000, and undivided profits of $100,000. The
officers are : O. Eugene Davis, President and Chairman
of the Board; Ivan E. Brown, Executive Vice President;
and Ed Watson, Vice President and Cashier.
CONDITION OF THE FEDERAL RESERVE BANK OF DALLAS
The Fairbanks State Bank of Houston, Houston, Texas,
an insured nonmember bank located in the territory
served by the Houston Branch of the Federal Reserve
Bank of Dallas, was added to the Par List on its opening
date, September 1, 1959. The officers are: George J.
Knigge, President; Richard G. Honea, Executive Vice
President; G . C. Evans, Cashier; and Mrs. Helen G.
Elliott, Assistant Cashier.
(In thousands of dollars)
Item
Sept. 16,
1959
August 19,
1959
Sept. 17,
1958
Total gold certificat e rese rves ..•.. ... ... . . ..
Di scounts for me mb er banks . . . .. .. .. .. .... .
Oth er discounts and advanc es .. .... .... ... .
U. S. Government se cu rities .. . .... .. . . . . .. . .
Total e arning a sse ts• • .• .. ............. . ...
Memb er bank rese rve d eposit s.•.• . . .. . • . .. .
Fe d era l Reserve not es in actual ci rculation ••• • .
$ 736,948
20,810
36
1,063,419
1,084,265
983,307
804,072
$ 672,604
34,110
$ 741 ,684
6,150
°
1,057,45 2
1,091,56 2
926,778
791,746
°
975,940
982,090
966,613
752,772
The Treasury raised $400 million of new funds in the
latter part of August by increasing its weekly 91-day
bill offerings. However, the proposal to raise another
$ 100 million in this manner apparently has been
canceled.
I
BUSINESS REVIEW
NEW PAR BANK
Demand for the major petroleum products declined contraseasonally during August and the
first part of Sep.tember and averaged about 3 percent lower than
a year earlier. Gasoline demand, which was relatively
strong earlier this year, recently has been only 2 percent
higher than a year ago. Demand for distillate oils
decreased 3 percent during the 5 weeks ended September 11, contrasted witb a normal seasonal rise of 5 to
1 percent. Expectations of further declines in distillate
fuel oil prices may explain much of the buyers' disinterest in current offerings and why demand has
recently averaged 14 percent lower than a year ago.
Demand for residual fuel oil, which advanced less than
seasonally during August and early September because
of the steel strike, was 5 percent less than in September
last year.
°
Stocks of the major products advanced seasonally
during the first part of September and , at 443,634,000
barrels on September 11 , were 6 percent higher than a
year earlier. Gasoline stocks, which rose contraseasonally during early September, also were 6 percent more
than a year ago. Gasoline prices were firm during July
and much of August but have drifted lower under the
influence of rising gasoline stocks and seasonally
declining demand. Stocks of both kerosene and distillate fuel oils have been rising seasonally and, in early
September, were considerably higher than a year ago.
As a result, kerosene and distillate fuel oil prices have
been depressed to the lowest levels in several years,
although latest reports indicate some improvement in
light heating oil prices in the Southwest. Despite rapid
additions, stocks of residual oils were 14 percent below
the September 1958 level, and prices held remarkably
well.
Imports of both crude oil and refined products
increased during the 5 weeks ended September 11.
Imports in July were below the year-earlier total because
July was the first month of a 6-month quota allocation
period, but crude oil imports during August and September rose sharply to a level 21 percent higher than a
year ago. Imports of refined products continued to run
substantially lower than in 1958. Rapidly rising crude
oil imports from Canada, which are exempt from quota
control, accounted for a significant portion of the total
gain in crude oil imports.
Crude runs to refinery stills in the United States
advanced during early September and averaged 5 percent greater than a year ago. District crude runs, at
2,313 ,000 banels daily, rose 3 percent during September and were 6 percent higher than in September 1958.
Although District crude runs normally decline about
3 percent during the month, part of the rise in September production was due to the gradual increase in runs
at a strike-bound Texas City refinery which was being
operated by supervisory employees. On September 12,
crude oil stocks in the United States, totaling 249,155,000 barrels, were 4 percent higher than a year earlier,
and stocks of District origin were 5 percent higher.
Crude oil production in the Nation in the first part
of September was 4 percent lower than in September
1958, but District production was 12 percent lower.
With Texas production limited to 9 days and New
Mexico allowables less than earlier this year, daily
crude oil production in the District averaged about
2,860,000 barrels during the first half of September,
compared with 2,818,000 barrels in August and
3,245,000 barrels a year ago.
Although both large and small Texas crude oil purchasers favored 10 production days during October,
the Texas Railroad Commission has set a 9-day limit,
which should reduce daily output by 2 percent. The
commission's action probably reflects (1) industry
concern over mounting stocks of refined products, (2)
a United States Bureau of Mines prediction that crude
oil demand will decline in October, and (3) recent
price reductions for crude oil from the Four Corners
area and California. October marks the fourth consecutive month that Texas crude oil production allowables
have been limited to 9 days. Allowable crude oil production in Louisiana during October remains at the September level, except for increases to cover the output of
new wells. In response to a substantial increase in purchasers' nominations, October production allowables
in southeastern New Mexico have risen 6 percent.
The influence of strikes continued to obscure the basic seasonal
and cyclical changes in nonfarm
employment in the District states
during August. Strike settlements in the Arizona construction industry and normal
seasonal increases, mainly in trade and service employment, raised the 5-state employment total by 5,000
workers to a mid-August level of 4,290,100, or 1.8
percent higher than in August 1958. By mid-August,
more than 10,000 construction workers had returned
to their jobs in Arizona; however, about 4,000 steelworkers - plus a smaller number of workers in petroleum refining and other industries - remained on strike
in the region, and over 2,000 construction workers
had left their jobs because of a new labor dispute in
Texas. In addition, new labor disputes idled nearly
BUSINESS REVIEW
I
NONAGRICULTURAL EMPLOYMENT
INDUSTRIAL PRODUCTION
Five Southwestern States l
(Sea sonally adiu sted indexes, 1947·49
Percent chang o
Aug. 1959 from
Numb er of p erson s
August
Typo of emplo yment
1959p
Totol nonagricultural
wage and salary worke rs .•
4,290,100
775,300
N onmanufacturing . •..•. . • 3,51 4,800
Mining . . ........ . .. . .
256,200
Construction . .. • ... . . ••
324,000
Manufacturing . .. .. . . ... .
July
1959
August
1958r
July
1959
Aug.
1958
4,285,100
779,200
3,505,900
258,600
315,800
4,215,100
760,200
3,454,900
252,700
31 2,300
0.1
- .5
.3
- .9
2.6
1.8
2.0
1.7
1.4
3.7
399,500
1,043,200
192,600
508,000
788,200
400,400
1,033,500
187,800
499,100
769,100
.0
.4
- .2
.2
-.2
- .2
1.3
2.3
2.0
2.3
Tran sportation and public
utilities • • •. • •• , . ••.•
399,400
Trade •...... . .. . ..... 1,047,400
192,200
Finance ••• . . . . ....•• . •
509,100
Se rvice . .. .. .... ... . ..
786,500
Governm ent • ...• . .• •.•
1
Arizona, lou isiana, New Me xico, Oklahomo, and Texas.
p -
r-
Are a and ty pe of inde x
August
1959p
July
1959
Jun e
August
1959
1958
170
210
246
193
132
168
206
236
192
132
171
209
250
189r
135
164r
192r
222r
178r
138r
149
152
159
146
119
153
157
168
146
120
155
158
172
144r
125
136
138
144
133
120
TEXAS
Total industrial production ....
Total manufactures ..... . . ..
Dura ble manufactures . . . . .. .
Nondurable manufactures .. ..
Minerals. •....... . ... .. . . .
UNITED STATES
Total industrial production .. ••
Total manufactures . ...•. . ..
Durabl e manufactures. .. . .. .
Nondurabl e manufactures. • ..
Mineral s.. . .. . .. . ........ .
p -
r -
= 100)
Pre liminory.
Revise d .
SOURCES : Board of Governo rs of the Federal Reserve Sytlem.
Federal Reserve Bank ot Dallas.
Pre lim inary.
Revised.
SOURCE : State e mployment ag encies.
15,000 workers in the region's copper industry during
the second and third weeks of August.
Thus far this year, employment in several categories
has expanded at a lower rate than might have been
anticipated in view of the long-term trend. Perhaps the
greatest weakness has been in trade employment, which
in August was only 1.3 percent higher than a year ago.
Government is another major category that appears to
have registered below-normal growth during this
period. Prior to the steel strike, manufacturing had
reflected the greatest employment strength of all industries, increasing considerably more than usual during
the first 7 months of the year.
The unemployment level in Texas continued to improve, declining 7,900 workers in August to a level of
152,900, which is only 4.2 percent of the State's civilian
labor force. New and continuing claims for unemployment insurance benefits in the State reflected a further
reduction of 7 percent by mid-September.
The seasonally adjusted Texas industrial production
index during August rose 2 points from the revised
July level to reach 170, despite continued weakness in
petroleum production and the influence of the steel
strike. Durable goods production showed a sharp recovery from July, when output was depressed by extended vacations, especially in machinery industries;
gains were fairly general outside the primary metals
and transportation equipment industries. Nondurables
output also increased. However, by mid-September the
steel strike was beginning to have significant secondary
effects in a number of areas.
I
BUSINESS
REVIEW
The August index of Texas industrial production is
still below the peak reached earlier in the year. The
major industries accounting for the decline over this
period include - in addition to crude petroleum production - petroleum refining, transportation equipment manufacturing, and food processing. In contrast,
strong gains were registered by chemicals production
and, up to the time of the steel strike, by primary
metals manufacturing and most other metal-fabricating industries.
Compared with a year earlier, Texas industrial production in August was up 4 percent. Electric power
production in the region showed a stronger year-toyear gain of about 11 percent in August and was running 12 percent higher than a year ago during early
September.
The value of construction contract awards in the
District states turned downward in July to a level 18
percent less than a year earlier. Residential awards
fell to 5 percent below a year ago, while total nonresidential contracts were down nearly 27 percent.
Cumulative awards during the first 7 months of 1959
reflected a gain of 3 percent, with residential awards up
23 percent and "all other" awards down 10 percent.
However, the current rate of decline in contract awards
is particularly severe in Texas, where nomesidential
building contract awards in July were 47 percent lower
than in July 1958 and total contract awards were 25
percent lower. Reports on building permits issued in
various District cities during August indicate a further
reduction in building authorizations.
BANK DEBITS, END- Of- MONTH DEPOSITS
AND ANNUAL RATE Of TURNOVER Of DEPOSITS
CONDITION STATISTICS OF ALL MEM BER BANKS
El e ve nth Fe d e ral Rese rve Distri ct
(Dollar a mounts In thou sands)
(In mi llions of doll ars )
De bits to d e ma nd
d e p osit occounts l
Dem ond d e posits l
Aug. 26,
1959
Ite m
Perce nta ge
change from
August
1959
Are a
Jul y Aug.
1959 1958
Annual rate of turnover
Aug ust 31 ,
1959
Aug. Jul y Au g.
195 9 1959 195 8
ARI ZONA
Tucson •••• ••• • • • • • ••
16
$ 129, 4 18
18.6
2 1.4
19.4
- 10
-2
8
20
53,031
191 ,382
17.0
19.2
17.5
19.2
16.6
17.4
35,782 - 10
23
29,7 59
14.8
15.8
12.6
$ 19 8, 102 - 14
LOUISIANA
74,4 99
310, 207
Monroe •••• •• • ••• • ••
Shre ve port . .. . •• .• • •
NEW MEXICO
Roswell •• . .. . .... . .•
TEXAS
Abilene , ... . .. ......
91 ,700
232,899
22 0, 2 12
149,726
196,310
16,9 81
2,5 64,792
318,799
75 2,732
81,391
2,418,234
24,191
169,192
62,119
5 2,399
597,551
21 ,578
83,957
105,832
119,333
- 10
-3
4
- 8
- 3
7
- 3
- 4
- 10
- 12
-7
- 12
-5
- 9
- 12
- 8
- 6
- 8
- 5
- 8
12
29
31
12
5
8
19
13
12
- 6
11
5
16
0
12
16
18
10
12
22
6 4,265
118,563
149,775
9 8,994
113,980
20,087
1,1 20,992
171,153
379,040
65,684
1,2 18,574
2 1,703
110,527
4 2,776
45,628
401,08 4
15,572
61,059
67,472
103,717
17.2
23.6
17.0
18.1
20.8
10.1
27.4
22.8
2 4.1
15.2
23.5
13.2
18.7
17.3
13.8
18.0
16.7
16.7
19.1
13.8
19. 1
23.8
16. 1
19.4
21.6
9.4
28.0
2 4.5
27.0
17.3
24.8
14.6
19.9
18.7
15.7
19.7
17.6
18.1
19.8
14.6
16.4
18.5
15.8
15.6
20.2
8.5
24.5
2 2.3
2 2.0
15.2
2 1.8
12.8
17.3
16.4
13.2
16.2
13.4
14.8
16.9
10.9
Tota l-24 cities • ... .. .• $ 8,898,518
- 6
15
$4,794,2 35
22.2
23.4
20.3
Ama rillo •• ••• • •••• ••
Austin ••• • ••••••••••
Beaumont • •• . • .• ••••
Corpus Christi • • •• • •..
Co rsicana •• . . ••. .. . .
Dallas • .• ... ..... . ..
EI Paso . .. . .........
Fort Worth .... . .....
Galv eston • • ••• . ...• .
Houston • •• •• • • • • •.•
la re do . . .. .........
Lubbock .. ......... .
Port Arthur . . . . ..... .
Son Ang elo •• •. • .•• •
San Antonio ••••• • •••
Tex arkana :! •• • .• •• • •
Tyler ... ..... .......
Waco .• .. . . . .... . . .
Wichita Falls . .. . . ...
1 De posits of Indi v idual s, pa rtn ers h ips, and co rpora ti on s and of states and political
subdi v ision s.
!.l Th ese figures include onl y one ban k in Texarkana , Texa s. Total de bits for all bon ks in
Texarkana , Texa s-Arkan sa s, including one ban k located in th e Eighth Dis tr ict, amounte d
to $48,701,000 for th e month of August 1959.
VALUE Of CONSTRUCTION CONTRACTS AWARDED
(In thousands of dolla rs )
Are a and type
January-July
July
195 9
Jun e
1959
Jul y
1958
1959
$ 4,765
2,585
8 15
939
146
954
2
502
26 8
$ 4,74 6
2,5 3 2
821
930
144
890
3
464
2 82
$ 4,364
2,732
749
971
136
1,057
TOTAL ASSETSe . .... . .. . . ........... .
10,976
10,812
10,666
1,062
6,67 8
2, 124
99 1
6,561
2, 132
1,18 1
6,425
2, 108
Total deposits . . . . . .•. . ......... .. ...
Borrowin gs e • . . ... • . .. . ••. .. •. .. ..•... •
Other 1I0bllitiese ....... . ..... .... . .... .
Total capitol a ccountse .• . • . . .•.. . • . . ....
9,864
11 2
86
9 14
9,684
135
83
9 10
9,7 14
11
93
84 8
TOTAL LIABILITIES AND CAPITALe ..... .
10,976
_
10,666
Estimate d.
GROSS DEMAND AND TIME DEPOSITS Of MEMBER BANKS
Eleventh Fe d e ral Re serve Dis trict
(Ave ra ges of dail y flg ures . In mil lio ns of dollars)
GROSS DEMAND DEPOSITS
Date
Total
Rese rv e
city bonks
1957: August . . ..
1958: August .. ..
1959: April .....
May .••. .
Jun e •• • ••
Jul y .. . .. .
August ....
$7,258
7,612
7,800
7,674
7,678
7,662
7,643
$ 3,539
3,799
3,797
3,751
3,771
3,760
3,770
TI ME DEPOSITS
Country
banks
Total
Reserve
city banks
Count ry
ban ks
$ 3,719
3,813
4,003
3,923
3,907
3,90 2
3,87 3
$ 1,639
2, 105
2,1 5 1
2, 156
2, 177
2,159
2,1 25
$ 884
1, 16 0
1,1 33
1, 125
1, 135
1, 122
1,099
$ 755
945
1,018
1,03 1
1,042
1,037
1,026
1958
BUILDING PERMITS
VALUATION (Dolla r amounts in thousands)
Pe rc enta ge cha nge
Ari zona, Loui siana, Ne w Mex ico, O klahoma , and Texa s.
SOURCE : F. W. Dodge Corp,oration.
NUMBER
Ar e a
CRUDE OIL : DAILY AVERAGE PRODUCTION
(In thou sands of barreis)
Chang e from
Are a
August
1959 '
Jul y
1959'
Aug ust
1958'
Jul y
1959
August
1958
ELEVENTH DiSTRiCT .•. ...•.
Texa s •• .••.• • . • .... • •••
Gulf Coast .... . .. ... . .
W est Texas • ••.•. • • •••
East Texas (prop er) .. .. .
Panhandle ...• . ..•..• •
Rest of State . . . . . .. . ..
Southea ste rn Ne w Mexico .•
No rth e rn Louisiana ••••. . . •
OUTSIDE ElEVENTH DISTRICT .
UN ITED STATES ... . . . ..... .
2,817.6
2,453.4
4 56.0
1,065.9
129.2
109.6
692 .7
249.9
114.2
3,992.2
6,809.8
2,857.5
2,4 84.0
4 6 2.8
1,094.2
128.7
106.9
691.4
25 8.2
11 5.3
3,981.4
6,839.0
3,102.2
2,731.3
514.1
1,187.4
155.4
106.6
767.8
256.7
114.2
3,837.0
6,939.2
- 39.9
- 30.6
- 6.8
-2 8.3
.5
2.7
1.3
- 8.3
- 1.1
10.8
-2 9. 2
-284.6
-277.9
- 58.1
-121.5
- 26.2
3.0
-75.1
- 6.8
.0
15 5.2
- 129.4
!!
1
4 12
244
LIABILITI ES AND CAPITAL
De mand d e posits of ban ks • .. .•..••.•.. . •
Othe r d emand d e posits .. . .... . ......... .
Time d e posi ts • • . . ••.. • •.• ... •....•• .. .•
1
1
Aug. 27,
1958
ASSETS
loans and di scounts • • • ... .. . . ..•.. . .. . . .
Unite d States Gove rnm ent obli gati ons ...• . .
Othe r securities . • ... • ... . •.... . ... .. . . .
Reserves with Fe d e ral Reserve Bank . ..•••.
Cash in voult e • . •• • •••••••...• . ... . •....
Balances with ban ks in the Unite d Sta te s . • . .
Balances with ban ks in foreign cou ntri ese ....
Cash items in process of co ll ection ••..... • •
Other osselse •••. . . ..• •..• .•• .. •... ....
FIVE SOUTHWESTERN
STATES' . .. . .. .... $ 361,7 83 $ 4 10,911 $ 443,419 $ 2,470,884 $ 2,397,15 5
164,85 4
160,310
174, 119
Reside ntial. .•. . • . .
938,552
1,1 5 6,982
196,929
All other . . ....... .
250,601
269,300
1,313,902
1,45 8,603
UNITED STATES...... 3,656,537 3,638,2 89 3,607,056 22,511,353 20,369,554
Resid ential. .•• . • .. 1,689,833 1,756,87 0 1,557,443 10,5 69,533
8,057,400
All other .. . . .. .... 1,966,704 1,881,419 2,049,613 11,941,820 12,312,154
SOURCES ,
July 29,
1959
Estimated from Ame rican Petrol e um In stitute week ly reports.
United States Bureau of Min es.
Au g.
195 9
ARIZONA
696
Tucson ••• • • . •
LOUISIANA
477
Shreve por t •• . .
TEXAS
23 6
Abil ene .... .. .
4 86
Amarillo . .. .••
337
Austin • • • ... ..
346
Be aumont • ••• •
89
Cor pus Christi . •
Dallas ... . . • . . 2,196
821
EI Paso .. . ... .
6 47
Fort Worth . •. .
111
Galveston . • •• •
Houston ••• ... 1,266
30 2
Lubbock . ... . .
189
Port Arth ur . . . .
San Antonio •.• 1,117
Wa co .• ..•. . •
269
Wichita Falls ••
260
Total- 17 cities • • 9,845
8 mos.
1959
Aug.
1959
8 mos.
1959
Au g. 1959
from
- - - - - 8 mos. 1959
J uly Aug.
camp. with
1959 1958 8 mos. 1958
5,280
$ 2,740
3,74 4
2,883
18,952
1,941
2,6 29
2,607
2,9 50
701
18, 264
5,090
6,556
9 20
12,270
2,824
1,558
11,738
1,840
1,4 95
2,3 12
4,373
5,050
1,3 85
1,084
14, 155
7,200
' 4,446
1, 116
14,30 8
3,595
841
3,77 1
7 30
61 3
20,972
27,089
3 9,0 24
13,966
15,3 28
123,710
4 3,372
42,2 11
3,0 4 3
142,72 3
42,463
7,30 8
42,508
11 ,46 3
10,730
- 38
62
30
- 61
- 78
-22
23
- 63
437
-2 9
-44
17
-44
-3 9
- 41
82,407
$70,60 2
$6 29,24 0
-29
$ 24,37 8
-54
172
122
-4 8
- 13
33
92
14 8
- 70
-40
4
- 8
- 19
466
-3 6
- 5
143
-4 1
-44
-34
62
49
24
-7
-13
16
-2
16
16
-7
60
-9
0
7
11 6
- 13
11
BUSINESS REV I EW
15
ELEVENTH FEDERAL RESERVE DISTRICT
~ Dalla l Head Office Territory
HOUlton Branch Terrllol),
nnm
li:!:!:;:!:1 S on Anlon lo Branth Tlrrllol),
~ EI PO l O Bronch Territor),
@FedFRASER