Full text of Review (Federal Reserve Bank of Dallas) : September 1, 1950

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MONTHLY
BUSINESS
REVIEW
oft h e
Volume 35

FEDERAL

RESERVE

BANK

of

Dallas

Dallas, Texas, September 1, 1950

Number 9

FARM LEASES-AN IMPORTANT FACTOR IN EXPANDING
LIVESTOCK PRODUCTION
Agricultural Economist
Federal Reserve Bank of Dallas

CARL H. MOORE,

The terms of most farm leases encourage misuse of the land and are not conducive to the building
of a satisfactory livestock program. Such deterrents to agricultural progress always are undesirable
but now take on added significance in view of the present international situation, which intensifies
the need for a balanced crop program and a larger output of livestock products.
Events in Korea and the decision of this country to step up its defense and preparedness program
have given rise to a new set of conditions within which the outlook for agriculture, as well as other
parts of the economy, must be considered. Whereas only a few months ago our economy appeared
to be threatened with surpluses and probable price declines of moderate proportions, now we find
the threat of surpluses has given way to the possibility of shortages of some types of goods, while most
economic indicators point toward a general upward price trend. In agriculture, instead of restricted
acreages and perhaps lower support prices, higher production goals and price ceilings are a possibility.
The extent or magnitude of these recent changes and their ultimate effect on agriculture cannot now
be determined or even forecast accurately. It is clear, however, that the national defense budget and
total budget expenditures will be higher in the next few years than in recent years, that inflationary
rather than deflationary pressures are likely to prevail, and that a relatively high demand for food
and fiber will continue.
Within this framework of changed economic conditions and outlook, agriculture must make its
contribution to the national defense effort by providing the needed supplies of food and fiber. Farmers
of the Nation have proved their ability to produce enormous quantities of food, having increased output about 40 percent during World War II and having met the high domestic and export demand
for nearly all farm products in recent years. This record was accomplished, however, with the aid of
nearly 10 years of extremely favorable weather; in addition, considerable cropland, idle at the beginning of the period, was put under cultivation. Moreover, the higher production was obtained at a
sacrifice of soil fertility as maximum acreage was seeded to soil-depleting crops, such as wheat, oilseeds, corn, and other feed crops.
It is essential, especially in view of existing conditions and outlook, that agriculture place itself
in a position to produce at levels needed to meet a high civilian and increased military demand for food
and fibers. This may involve shifting land and other resources from the production of commodities
temporarily in excess supply to those in short supply or, if necessary, an increase in output to meet
the needs of an all-out war effort. Either task requires the development of a long-range programfor agriculture as a whole and for individual farms--designed, first, to provide that balance between
soil fertility "deposits" and "withdrawals" which will maintain or increase per acre crop yields and,
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

146

MONTHLY BUSINESS REVIEW

second, to produce the maximum output of meat, milk, and other livestock products so essential in
maintaining the stamina and morale of fighting forces and the health of the Nation.
These objectives require that individual farm operations be planned for more than 1 year. Crop
rotations and the use of legumes and grasses, so necessary in a well-balanced cropping program to
maintain soil fertility, require time and careful planning. Increased livestock production requires
several years to build breeding herds and achieve maximum production.
The importance of livestock production and the need for its expansion to meet the requirements of the next decade--especially if total mobilization should become necessary-are illustrated
by the magnitude of military procurements of food during World War II. Annual military purchases
during the war years averaged 4,000,000,000 pounds of meat, 14,123,000,000 pounds of milk and
milk products, and nearly 600,000,000 dozen eggs-I7 percent, 12 percent, and 13 percent, respectively, of total production. The problem of ways and means of increasing livestock production on a
more efficient basis is especially significant to the Southwest-a major livestock producing area.
Livestock Production and Farm Leases

Most farm leases in use on the 40 percent of"iarms in the Southwest operated by tenants do not
encourage the building of a livestock program. A recent study ·by the United States Department of
Agriculture shows, for instance, that of the farms studied in the Blackland Prairie Area of Texas all
farm owners kept some livestock-most of them a substantial number-whereas, more than one-half
of the tenant farmers had no livestock except perhaps one or two milk cows which produced milk
and cream for the farm family.
Most farm leases, generally based on custom, provide that the landlord shall pay one-fourth of
the cost of fertilizer, insecticides, and ginning and shall receive one-fourth of the cotton crop and
that the tenant shall furnish all other operating expenses, including labor and machinery, and receive
three-fourths of the lint and seed. In the case of other crops, the division is usually on a basis of
one-third to the landlord and two-thirds to the tenant. Most leases are verbal and frequently no
mention is made of livestock.
From the standpoint of developing a livestock program, there are three major weaknesses in
the most common types of leases used in the Southwest. First, no provision is made for sharing the
investment, expense, and income involved in livestock production. It is customary for the tenant
to own any livestock kept on the farm and for the landlord to give the tenant use of permanent pasture and sufficient feed from the corn or sorghum crop to raise a few chickens and fatten two or
three hogs. Such arrangements may be satisfactory if major emphasis is placed on the production of
cash crops; but if increased livestock production is anticipated or essential, the landlord and tenant
should share in the livestock program.
Second, farm leases are usually on an annual basis and tenants frequently move to a different
farm almost every year. Even those who remain on the same farm for several years usually plan
their farming operations on a year-to-year basis, since they have no assurance that their lease will
be renewed. Under such conditions, the tenant finds it advantageous to obtain the highest possible
income from the farm each year, with little or no regard to improving the long-run earning capacity.
He has no incentive for making plans a year or more in advance, because he has no assurance of sharing in the benefits of such planning. Consequently, he is encouraged to plant the maximum acreage
of annual cash crops which can be sown, harvested, and marketed within one season; very rarely
will he develop a 3- or 5-year program, so essential to profitable livestock production.
Third, arrangements are not made to compensate the tenant for contributions to the future
income of the farm in the event the lease is terminated before such income is realized. Thus, a
tenant who plants a cover crop in the fall receives no benefit from his efforts if his lease is terminated
the following spring.
Under such lease arrangements it is virtually impossible to build a satisfactory livestock program. Building a livestock program is a long-run task. The cropping system of the farm must be

~

MONTHLY BUSINESS REVIEW

147

arranged to include the growing of the most productive hay and pasture crops, such as legumes
and grasses-a change that requires more than one season. Furthermore, although the entire beef or
dairy herd could be purchased the first year, thereby making possible a full program the first season, in view of the high cost of such animals it is more desirable to buy only the foundation stock
and, through the use of high-quality sires, raise replacements and additions until the herd has been
built to the desired size. Such a plan not only reduces the financial risk but, equally important, makes
it possible for the operator to become intimately familiar with the problems of livestock production
before assuming the responsibility of managing a large herd.
Two other factors also make it highly desirable to build a livestock program on a long-term
plan. First, maximum returns from the program are not obtained until it has been in operation from
3 to 5 years. During the first 2 or 3 years the increase in stock, that normally would be sold annually,
must be retained to build the herd. Moreover, the skills of management and feeding and the quality
of the animals usually increase as the operator gains in experience and knowledge. Thus, production
per animal usually is greater after the program has been in operation a few years.
Second, livestock production requires a sizable investment in fences, buildings, and equipment,
and to charge the cost of this investment to 1, 2, 3, or even 5 years places an undue financial burden
upon the operation of the farm. For example, the construction of a Grade A dairy barn which is
expected to be useful for perhaps as long as 20 years may cost from $2,000 to $4,000. If the dairy herd
is charged with the cost of this barn during the first 5 years of its use, the annual cost would be much
higher than if spread over the life of the building. Under very favorable price relationships, returns
from the dairy herd might pay the higher annual cost, cover all other expenses, and yield a profit;
in other years, however, the price of dairy products might not be high enough to yield a profit under
such high costs.
In the case of swine, poultry, and lamb and cattle feeding operations, the length of the period
requjred for the building of a satisfactory program is somewhat shorter. Obviously, the size of cattle
feeding operations can fluctuate from year to year. Likewise, a swine program can be expanded and
contracted within 18 months to 2 years. Nevertheless, the experience of farmers and ranchers
throughout the Nation clearly indicates that benefits from livestock production are greatest for those
who enter the business with a long-range plan of operation.
The development of such a program involves the investment of additional capital. The amount
depends upon the type of livestock and the size of the operation. In the case of beef cattle, probably
no additional buildings will be needed. However, adequate fencing and crossfencing, as well as provisions for a water supply, are essential. Dairy cattle are likely to require some additional buildings
or remodeling of present buildings, especially if it is anticipated that the farm will sell Grade A milk.
Furthermore, a longer period is required for a turnover of the investment than is the case in cash-crop
farming. For example, the investment in a beef or dairy herd may require from 3 to 7 years for turnover, whereas investment for crop production usually is turned over annually.
New management problems-the most important of which is the adjustment of the labor load
-are involved in building a livestock program. Livestock require more regular year-round labor,
with fewer peak seasons, than crop enterprises. Thus, it is necessary to plan the operation of the farm
so that the harvesting of crops and other field work can be accomplished without disrupting care of
the livestock. This problem is particularly important in the case of a dairy herd, where labor requirements are very regular and inflexible. The herd must be cared for daily throughout the year, and while
the amount of labor required anyone day may be relatively light, it must be available every day
throughout the year.
Solution of these problems of finance and management requires more careful attention when
two parties, such as landlord and tenant, share in the planning and operation of the farm. It becomes
necessary to decide how much additional capital the landlord will contribute, which items he should
own, and which items should be owned by the tenant. Because of the large capital requirements of
farming today, it may be desirable for the landlord to provide most of the capital investment at the
beginning of the lease period, with the provision that the tenant will increase his investment as earn-

148

MONTHLY BUSINESS REVIEW

ings of the farm permit him to accumulate capital. This may be the only way many young men can
enter the farming business today.
Farm expenses must be defined. What is an operating expense? What is a capital investment?
And what share of each shall the landlord and tenant contribute? The problem of division of income
must be settled to the mutual satisfaction of both parties. How will the increase in breeding stock be
divided? How will the products be divided? When should settlement be made to the landlord? These
are other questions that must be answered.
Basic Considerations in Drawing Up a Farm Lease
In working out the lease arrangements, it is desirable to keep in mind certain fundamental principles. First, both landlord and tenant should share in the investment, risk, and income pertaining to
the operation of the farm. If there is a reasonable division of these items, each party will have an
incentive to promote and execute the best possible program of operation. As indicated earlier, there
may be conditions under which the landlord may furnish most or all of the investment. But in such
cases it is desirable for the tenant to assume some of the risk of that investment by giving the landlord
a note for a share in the livestock or machinery.
Second, the landlord must be reasonably assured that his investment in land, improvements, and
other facilities will be protected against unnecessary loss or damage. Unless such a provision is made,
he will be justly reluctant to carry out the necessary improvements and capital investments that may
be needed for the most profitable operation of the farm.
Third, the tenant must be given assurance that he will have a fair opportunity to exercise his
managerial ability and to use his labor and other investments, such as livestock and machinery, in a
profitable manner. Unless he is given this assurance, the tenant is not likely to be interested in developing a long-range program. With this assurance, he will be encouraged to carry out the farm plan to
the best of his ability and to participate actively in the planning and building of a more progressive
and more profitable operation.
Fourth, any lease should provide for the recovery of contributions made by either party to the
future income of the farm in the event the lease is terminated. Thus, the tenant who contributes labor
in the planting of a legume crop, spreading of fertilizer, or plowing of fields should be given adequate
compensation if the lease is terminated before the benefits of this labor are evident in income to the
farm.
Contents of the Lease
A farm lease should be in writing and copies provided for the landlord and tenant. It is also
desirable that a copy be filed with a third person or at the courthouse. Such a procedure will help to
eliminate misunderstandings as to the terms of the agreement and, also, can serve as a reference for
both landlord and tenant regarding the responsibilities and duties pertaining to the farm operations.
In addition to the legal phrases and terminology necessary to make the lease legally binding, there
are certain general provisions that should be included in every lease.
Term of Lease
This section should state clearly the period of time to be covered by the lease. It may be so worded
that it continues in effect from year to year, unless written notice of termination is given by either
party a stated period of time prior to the expiration of the current year. This provision is desirable
so that both parties will have an opportunity to make plans well in advance of the next season. Six or
more months' notice is necessary to provide adequate time for adjustments and plans for the next year.
Rental Rates and Arrangements

Crops-The general crop rotation to be used should be specified in this part of the lease. It should
contain a list of the crops to be grown, the approximate acreage, and the kind and amount of rent

~

MONTHLY BUSINESS REVIEW

149

to be paid by the tenant-cash rent per acre or a given amount or a share of the crop. If the crop
is to be fed to livestock, this condition should also be noted.

Livestock-The general livestock program to be followed (beef cattle, dairy, dairy and poultry,
or other) should be indicated. The number of each kind of livestock to be kept, the share to be furnished by each party, and the division to be made of the increase in the herd and of the income from
the sale of livestock and livestock products should be stated clearly.

Payment of Rent-This section of the lease should indicate the time, place, and method of paying the rent-whether it is cash or a share of livestock or livestock products. Such a provision may
merely indicate that the tenant is to deposit the landlord's share of the receipts from the sale of livestock in a specified bank or that he is to send a check directly to the landlord. This may seem relatively
unimportant, but unless the conditions of settlement are clearly understood, misunderstandings are
likely.
Operating Expenses
The items that are to be included as operating expenses should be listed and the share to be paid
by landlord and tenant indicated clearly. Items usually included in this section are: purchased feed,
veterinary fees, supplies, fuel and oil for the tractor, seed, fertilizer, lime, insecticides, and other current operating expenses.
Soil Conservation and Capital Improvements
This section of the lease is particularly important when an extensive soil conservation and
improvement program is to be carried out on the farm. It is advisable to set forth the conservation
practice, measure, or improvement to be made; the date it should be completed; and the amount of
materials, labor, and other expenses to be furnished by the landlord and by the tenant. In addition,
it is highly desirable to indicate the money value of the tenant's contribution to each of these practices
or improvements, together with the rate of annual depreciation of such contribution. To illustrate,
the tenant's contribution to the building of a sodded waterway may be estimated at $100 and the
rate of annual depreciation at 10 percent. If these facts are stated in the lease, they provide a basis
for compensating the tenant when, and if, the lease is terminated. Thus, if the tenant moves 5 years
after the installation of the sodded waterway, the landlord would pay him one-half of the value of
his con tribu tion ($ 50) .
This section of the lease should be drawn up annually as a supplement, so that the program may

be adjusted each year to fit the needs of the farm and the resources of the tenant and landlord.
Payment for Preparing and Seeding Land
Disagreements will tend to be minimized by stating clearly in this section the payment that will
be made to the tenant for preparation or seeding of land. The usual custom is to list the acreage of
cropland that has already been plowed or seeded when the tenant moves on the farm. This acreage
then can be compared with that at the time the lease is terminated and compensation made for any
difference.
Additional Agreements
Certain general provisions pertaining to the duties of the landlord and of the tenant also should
be included in the lease. While the items contained in each lease may vary, depending upon the wishes
of the tenant and landlord, the following are usually included, either for legal reasons or to prevent
misunderstandings:
(1) The terms of the lease can be changed from year to year by mutual agreement.
(2) The lease shall not be deemed to give rise to a partnership relation.

(3) Any differences between the parties under the lease that cannot be settled by thorough discussion shall be submitted for arbitration.

150

MONTHLY BUSINESS REVIEW

(4) The degree to which the farm will be operated in compliance with government programs.
(5) Method of selling jointly owned livestock.

(6) Method of dividing jointly owned livestock at termination of the lease.

(7) Agreement by the tenant that he will operate the farm in an efficient manner. Furthermore,
that he will take reasonable care of the landlord's property and use due care to prevent damage or
waste in the operation of the farm.
(8) Agreement by the tenant that he will not lease or sublet any part of the farm or rent
additional land without written consent of the landlord and that he will permit the landlord or his
agent to enter the farm at any reasonable time for repairs, improvements, and inspection.
(9) Agreement by the landlord that he will keep the dwelling, barns, and other improvements
in a good state of repair and that if he sells or otherwise transfers the farm, he will do so subject to
the provisions of the lease.
(10) A list of items, such as space for a family garden, feed for a small laying flock, and a certain quantity of milk and other livestock products for the tenant's use, which shall be free of rent.
(11) A provision stating that the terms of the lease shall apply to the heirs, executors, administrators, successors, and other assigns of both landlord and tenant.
Types of Livestock-share Leases
The terms governing the investment in livestock, the costs of operating the business, and the
division of income can be arranged in any manner that is agreeable to both landlord and tenant. However, experience has shown that unless such division is on a fair and equitable basis that gives each a
return in proportion to his contribution to the farming operation, dissatisfaction is likely to occur,
resulting in termination of the lease. It is imperative, then, that the division of income be in proportion to the money, labor, and land contributed. In an attempt to provide assistance in arriving
at this fair and equitable arrangement, the United States Department of Agriculture and various
state colleges have prepared lease forms containing various types of livestock-share leases. Copies of
these forms can be obtained by writing directly to the United States Department of Agriculture,
Washington 25, D. c., or to the state agricultural colleges.
There are two general forms of these livestock-share leases. One can be described as the "fiftyfifty livestock-share lease" and the other as the "landlord's half-and-three-fifths livestock-rental
agreement."
Fifty-fifty Livestock-share Lease
Under the fifty-fifty livestock-share lease the landlord furnishes the land and buildings, including fences; provides one-half the investment in livestock; and pays one-half of all operating expense~
pertaining to the production of crops and livestock. In return for this he receives one-half of the
income from the sale of livestock and livestock products, one-half of the increase in breeding stock,
and one-half of all crops sold as cash crops.
The tenant furnishes all labor (including hired labor), machinery, power, and equipment necessary to operate the farm properly; provides one-half of the investment in livestock; pays one-half
of all operating expenses; and hauls all materials for repairs and improvements to buildings and fences.
In return for this contribution, the tenant receives one-half the income from the sale of all livestock,
livestock products, and crops, as well as one-half of the increase in breeding stock.

MONTHLY BUSINESS REVIEW

151

Expenses for such items as lime and fertilizer, which may benefit crop production more than
1 year, should be divided 50-50-the same as current operating expenses-with a provision compensating the tenant if the lease is terminated before the value of these items has been realized. While it
is impossible to determine accurately the period of time fertilizer, lime, and other soil-improving
materials will influence crop production, 5 years for lime and 3 years for fertilizer (except nitrogen,
which generally is used entirely by the first crop) can be used as guides.
When dairy production is a major enterprise on the farm, receipts from the sale of dairy products may be divided 40 percent to the landlord and 60 percent to the tenant. Such a division is sometimes thought to be more equitable than 50- 50, since labor, which is furnished by the tenant, represents a higher proportion of total cost in the dairy enterprise than in other livestock production.
Landlord's Half·and·three·flfths Livestock·rental Agreement
This arrangement is designed for use when the landlord furnishes the equipment and livestock,
as well as land and improvements. In addition, the landlord pays three-fifths of all operating expenses.
In return for this contribution, he receives three-fifths of the income from the sale of livestock and
livestock products and from all crops except cotton, of which he receives one-half. The landlord
also receives three-fifths of the increase from all livestock.
The tenant furnishes all labor, including hired labor, to operate the farm and pays two-fifths
of all operating expenses. In return for this contribution, he receives two-fifths of the income from
the sale of livestock and livestock products and of all crops except cotton, of which he receives onehalf, and two-fifths of the increase from all livestock.
These two lease arrangements probably represent the most common arrangements when livestock
is a major part of the farm program, although variations of these somewhat basic plans should be
used if necessary to provide an equitable and fair distribution of income from the farm.
In drawing up the lease, it is desirable to have the assistance of a third party, such as the county
agricultural agent or banker, who can give guidance in the arrangement of details. If the parties to
the farm operation will sit down together, discuss every phase of the farm operation, and put into
writing such agreements as have been discussed above, a major step will have been taken toward making possible the building of a profitable livestock program. Before either landlord or tenant has committed himself to the program, differences of opinion regarding the operation of the farm can be
discussed and settled in a friendly atmosphere. Even minor disagreements, if permitted to accumulate
or remain unsettled, can lead to deeper misunderstandings, and it may become virtually impossible
to settle differences without termination of the lease. Once an unfriendly atmosphere has been created, all points become difficult to settle to the satisfaction of either party. Proper preparation of
the lease can prevent many such situations.

152

MONTHLY BUSINESS REVIEW

Review of Business. Industrial. Agricultural. and Financial Conditions
DISTRICT SUMMARY
During July and into August, business and industrial
activity in the Eleventh Federal Reserve District were maintained at very high levels. The total volume of agricultural
production promises to be lower this year than in 1949 but,
nevertheless, will approximate the average of the past few
years. Principal asset and liability accounts of the District's
member banks showed substantial increases during the latest
full month for which figures are available.
Retail trade as reflected by figures of reporting department
stores was much more active throughout July than a year
earlier, and although there was a notable decline in the buying splurge during August, weekly sales ran above the comparable weeks of 1949. Heavy buying of durable goods was
reflected in a very sharp increase in instalment sales. Collections of receivables outstanding continued to be som.e what
less favorable than a year earlier.
Industrial activity in the District was supported by a
continuation of the construction boom, more favorable developments in the petroleum industry, and a rise in nonfarm
employment in August, possibly to a record level. Residential
construction during July was second only to the May 1950
record, while in the Nation July was the best homebuilding
month in history. All indications point to further growth in
petroleum production during September, as demand continues
strong in view of international and domestic requirements.
The price situation in the petroleum industry continued
strong, while drilling activity was maintained at a high rate.
Nonfarm employment should continue to rise throughout the
remainder of the year.
Crop production conditions during August were generally
favorable, particularly for such commodities as cotton, grain
sorghums, peanuts, corn, and rice. As a result of generally
available range and pasture feed, livestock are said to be
in good condition throughout most of the District.
The dem.nd for bank credit during the 5 weeks ended
August 16 was strong at the weekly reporting member banks,
with the consequence that loans moved upward sharply. In
response to the high level of business activity and the strength
of loan demand, deposits of the weekly reporting member
banks showed a substantial increase, with demand deposits of
individuals and businesses being the principal factor in the
advance.
BUSINESS
With war-scare buying declining sharply during August, department store sales in the Eleventh Federal Reserve District
have returned more closely to the pattern which prevailed prior
to the outbreak of hostilities in Korea. Department store sales
in the week ended August 19 were 21 percent above yearearlier levels, as compared with an increase of 24 percent in
the preceding week and a 71-percent increase in the week
ended July 22, when war-scare buying was at its peak. The
btest reported increase over comparable figures of last year
compares with year-to-year increases during June ranging
from 3 percent to 12 percent.
The drop in war-scare buying undoubtedly reflects a growing confidence of the Consumer in the continued availability
of supplies. Then too, some consumers with hoarding tendencies have undoubtedl), satisfied their desires, while others

are unable to continue heav y buying due to a lack of available
funds. Moreover, the wearing off of the immediate shock of
the Korean war, together with the campaigns of government
offi~ials, the press, merchants, and others against hoarding and
the threat of legislation penalizing such action, have tended
to deter SCare buying. Although some buying in advance of
actual need may continue, a recurrence of the July hysterical
buying splurge is not anticipated.

STORE

DEPARTMENT

ELEVENTH. FEDERAL RESERVE
1 93~

PERCENT

-3 9

~

roo

SALES
DISTRICT
PERCENT

WITHOUT SEASONAL ADJUSTMENT

700

700

l-

600

I
II
,J

500

600

I

500

400

300

1950
~ ~~
~ .... 'j949

...

-~/

/,

'1--_ .... --(

/.r-.. .

400

300

'l'I'n~LY

000

200
400

100
'00

~

~~ ;f' ____ L--j
-Ig~

1949

~

, ' .,

a
F

M

A

M

J

,I

'......

'
A

,

s

000

-

zoo

-

100

400

'00

A

a

N

D

o

District department store sales for July, which is normally
one of the poorer selling months, were the highest for any
Jul)' on record and were higher than in an)' month since last
December, exceeding even the heav)' pre-Easter bu)'ing. The
dollar volume of sales was up 18 percent from June and Was
43 percent higher than July a year ago. Department stores in
the Nation as a whole showed a July increase of 29 percent
over the year-earlier level. Although the larger increase in the
District may reflect heavier scare buying, the District has led
the Nation in sales during most of the current year.
Some impression of the amount and character of the warscare buying in July can be obtained from the sales data on
individual departments. Sales of major household appliances
and of furniture far exceeded previous records, showing gains
of 132 percent and 53 percent, respectively, over the high
volumes of Jul)' a year ago. Moreover, sales of the radio-television department registered a year-to-year increase of 166
percent and the domestic floor-covering department, 65 percent. While the consumer durable goods received the brunt
of the SCare bu),ing, soft goods items such as hosiery, linens,
and sheetings showed sensational increases, with sales of hosiery
and linens more than double and sheeting sales more than
fo ur times as large as in J Diy of last year.
The heavy buying of durable and specific soft goods, howevcr, did not detract from sales of other department store merchandise; July sales of all major departments were higher than
a year ago. Men's clothing sales, which made a favorable showing during the entire first half of the year, increased 12 percent. Moreover, sales of women's and misses' apparel and
dresses, which experienced noticeable weakness during the
earl)' months of the year, continued the improvement of recent months, rising 8 and 1 percent, respectively, over yearearlier levels. Basement store sales registered an 8-percent

153

MONTHLY BUSINESS REVIEW
gain in July, after having shown year-to-year decreases in
each of the first 6 months of this year. Silverware and jewelry
sales were up 12 percent over July a year ago.

•

WHOLESALE TRADE STATISTICS
Eleventh Federal Reserve District

:===~hl. PerceD.tage change in
Net sale.!
July 1950 (rom
July
June

7 mo. 1950
eomp. with

7 mo. 1949

1949

Automotive lupplice . . . . . . . .
DrUgs and sundries .... . .....

Dry goods. . . . . . . . . . . . . . . . . . . .
Grocery (full-Ii De wholet!aler1 not
sponsoring groupe) ............
Hardware . . . . . . . . . . . . . . . . . . . .
Industrialauppliea......... . ...
Machinery equipment and supplies e.lcepL electrical . . • . . .
Tobacco producta . . . . . . . . . .
Wines aud liquon. . . . . . . . . . . . .

1950

105
J2

LiOe3 of Trade:'

51
0

76

15
Z7
12

32
- 1

13
3

22

,
13

1949

1950

-7
1
22

87

16
62
19

Stocks t
July 1950 (rom
July
June

-9
2

-3
1
-1

-2
-7

3

-I

8
13
-25

17

-17
-8

14

26

WirioK 8upplies. corurt.ruction rnatcriala distributonl ..... , .. .. . .
33
- 1
• Preliminary da.ta. Compiled by United States Bureau of Cenlus.
t Stock! at end of month.
I Indicatea chana:e of less than one·balC of 1 peroont.

-20

RETAIL TRADE STATISTICS
Percentage change in
Net sales
July 1950 from
July
June

1949

Dc+:!iEi!,,:::SOistriet.

g:rd:. ~.h~~t~ : : :. :. :. :. :. :..:
Fort. W'lrth .....

Houston ............ . . .
San Antonio ..•.....•..
Shreveport, La•.... ....

Other cities ............
Furniture stores:
Total Eleventh District.
DaUaa ...... . . ... ... ..
HOUlton ..•••.... . ...
Port Arthur ..........

San Antonio ...........
Shrevepori, La•.... ....
Wichita Falls . .........
Household appliances stores:
Total Elenntb District.

1950

43
33
42
42
43
48
41
45

7 mo. 1949

18
16
18
24
23
13
16
16

29
14
63
16
14
42
42

7 mo. 1950

compo with

23
34
43
43
23
10
22

11
11
11
11

5
16
8
14

Stocks"

July 1950 from
July
June
1949
1050

8
4
2
13
8
18

- 3
-2
-2
- 6
- 4
- I
-

18
-10

1

rose from 12 percent in June to 18 percent in July, to establish a new record high.
Collections of receivables outstanding continued the slowing tendency evident in recent months. The ratio of collections to instalment accounts outstanding, at 12 percent, was
unchanged from June but was substantially below the ratio
of 18 percent prevailing in July last year. The charge account
collection ratio declined slightly, from so percent in June
to 49 percent ill July. Meanwhile, instalment receivables outstanding shot up to a new high and at the end of July were
12 percenr higher than a month earlier and 100 percent higher
than on the corresponding date of last year. Charge account
receivables showed only moderate increases. Although the delinquency rate on accounts outstanding continues to be
low, there are reports of some increase in repossessions. The
increase in repossessions appears to be due, in part, to men
being taken into the Armed Forces, as well as to overextended
buying by some consumers and other factors.
Under the impact of heavy sales, department store stocks
in the aggregate showed a small decline during July. The 3percent decline in total stocks, however, conceals tbe sharp
reductions in the stocks of certain items which many stores
experienced during the height of the scare buying. Stocks of
some models of refrigerators were seriously depleted, and some
stores became practically sold out on sheets. Despite the buying
surge in hosiery, stores were generally able to maintain stocks.
Nevertheless, the reduction in the inventories of some critical
items Was only temporary, since during August most stores
have been able to rebuild their stocks. Moreover, the total stock
position of district stores during July was maintained, with
month-end inventories 8 percent higher than a year earlier,
or the same year-to-year change prevailing at the end of June.

2
-I

DEPARTMENT STORE ORDERS OUTSTANDING

-2

"46
-2

'ELEVENTH FED ERAL RESERVE

DISTRICT

10
-4

78
-14
-38
41
DalW .......... . ....
"StockJ at eEld or month.
I Indicatea change of less than one·h"lr of 1 percent.

INDEXES OF DEPARTMENT STORE SALES AND STOCKS
DAily average .alel-(1935--39 - 100)

---Unadj",ted'-...,-,--.,..,--" Adj ..t.d ---,,-_
July
June
May
July
July
June
May
July
1950
1950
1950
1949
1950
1950
1950
1940
429
353
391
30&
537
410
403
384,
Eleventh Diatrict
302
352
263
510
369
375
365
Dallu ..... .... . ... . 367
503
400
424
364
621
460
442
449,
Howton .... ... . .... .

~~--+---~-1---+--~200

IOO~~r--1--~~~---+---+---+---r---r---r--~ IOO

SIoek.-(1935-39 -100)
---UnadjWiled'---_- _ _ Adjusf<d - - - _
July
June
May
July
July
Juno
May
July
1950
Ig50
1950
1949
1950
1950
1950
1949
Eleventh
360p
363
380
333r 373p
375
380
364,
, UnadjusLed for '>easonal variation.
r-Reviaed.
p----Prelimiuaty.

Oiatrie .
t..

The principal impact of the heavy consumer demand during
July and early August was felt in instalment selling, although
cash sales also increased. Instalment sales rose to a record level
65 percent above June and 95 percent above July of last year.
Charge account sales were up noticeably from June and were
36 percent higher than a year earlier; while cash sales, although only slightly higher than in the previous month,
showed a year-to-year increase of 14 percent. Because of the
relatively larger increase in instalment sales, the proportion
of instalment-to-total sales at reporting department stores

o
J

F

A

t.I

J

A

s

o

H

o

o

The buying policy of department stores, also, reflected the
effect of heavy consumer buying and anticipations regarding
future demand, availability, and prices of goods in view of the
changed outlook affecting the domestic economy. Stores ordered heavily to replace stocks disappearing under the rush
of consumer buyin g and, also, to prepare for the possibility
of later reductions in the supplies of some civilian goods,
higher prices, and a higher level of sales resulting from increased incomes during the stepped-up defense program. Orders outstanding at the end of July were at the highest level
in more tban 2 y, years, increasing 60 percent from a month
earlier and 68 percent from the corresponding date of last
year. The effects of this heavy ordering will undoubtedly begin to be reflected in the August 31 inventories.

154

MONTHLY BUSINESS REVIEW

The buying hysteria which boosted department store sales
was also evident in sales at district furniture stores. July sales
at furniture stores showed a large contraseasonal increase, being up 23 percent from June and 29 percent from July a
year ago. Both cash and instalment sales rose sharply from
June to July and exceeded year-earlier levels by 21 and 22
percent, respectively. While collections increased markedly,
the rise was insufficient to offset the increases in credit buying, and accounts receivable outstanding showed an increase
for the fourth successive month. Receivables outstanding at
the end of July were 3 percent higher than at the end of the
previous month and were 24 percent above the level of the
same date last year. Despite the heavy sales during the month,
inventories showed a small increase in contrast with the decreasing trend usually occurring at this time of year. Monthend inventories, up 2 percent from June, were 18 percent
higher than a year earlier. While part of this rise in inventories may reflect recent buying by merchants, induced by
their unexpectedly large sales volume, most of the orders for
stocks appearing in the July 31 inventory figures undoubtedly
had been placed before hostilities began in Korea. Furniture
store stocks had shown increases over year-earlier levels in
each of the preceding 3 months.

April, May, and June, rose 5.1 percent during July but in the
first 2 weeks of August moved irregularly, with a small gain
one week being offset by a corresponding decline in the succeeding week. Following the post-Korean rise, the index on
August 15 was 9.1 percent higher than its postwar low of
December 1949, although abo ut 3 percent below the postwar
peak of August 1948. The largest increase in wholesale prices
since the beginning of hostilities in Korea occurred in textiles,
with an increase of 9 percent, but gains of 7 percent were registered by foods, chemicals and allied products (including fats
and oils), and building materials. Building material prices,
which had been rising steadily in the 10 months prior to Korea,
are now at a postwar peak, about 14 percent above a year ago.
WHOLESALE

PERCEi'-NT'---._-._..._ ..._-'iF--'-'r=-_,_,_,-_, - '
P..,ERGENT
170~~---+--~--4---+---~

Basic commodities which have shown the largest price increases are imported commodities, particularly those whose
sources of supply in the Far East would be jeopardized in
case of the development of a major war. Rubber prices more
than doubled during the 6 weeks immediately following the
Korean outbreak but have subsequently fluctuated widely at
somewhat lower levels. Tin prices jumped up more than 40
percent, to approach the all-time high of 1918. Other imported
commodities showing large increases are wool tops, cocoa, burlap, silk, and shellac.
Among the domestic agricultural commodities, hogs and
cotton have shown the largest increases, rising 24 and 13 percent, respectively, since June 23. Reflecting the rise in cotton
prices, print cloth prices have risen substantially. Prices of
fats and oil, including cottonseed oil, lard, and tallow, have
shown sharp increases, with tallow prices up 63 percent from
the pre-Korean level. Moreover, hide prices have risen 16 percent. On the other hand, prices of grains, of which large
surpluses are held in storage, have shown only small increases,
and steer prices are up only slightly. In the metals group, copper
and zinc prices have shown little change, while recent price
increases for lead have been announced. The steel scrap market,
after remaining stable during July, turned very strong during
the first 3 weeks of August.
Wholesale prices in the aggregate, as reflected by the Bureau
of Labor Statistics' All Commodity Wholesale Price Index,
have shown a more moderate increase since the opening of
Korean hostilities than basic commodity prices. The Wholesale Price Index, which had shown noticeable increases during

~+---~--~~170

~~-+-..~--+---, J--+--~--~--+---r-~ IGO

-.-~ -. _._._._._0_.,._._._.-

Price Movements
Prices generally moved upward in August, although the increases were more moderate and less widespread than during
the 5 weeks in1mediately following the outbreak of hostilities
in Korea. The United States Bureau of Labor Statistics' Daily
Index of 28 Basic Commodities, one of the most sensitive
price indices, rose about 4 percent between July 31 and August 24, as compared with an increase of 15 percent from
June 23 to July 31. This index, at 316.1 percent of the August 1939 average, has risen 20 percent since the outbreak in
Korea and is now 39 percent higher than the postwar low
of June 1949. It is still, however, substantially lower than the
postwar peak of 359.1 percent reached on November 28, 1947.

PRICES

u.s, BUREAU OF LABOR STATISTICS ALL eOIilt.fOOITY INDEX

~~--4---4---+---+---+---+---t---t---t--~150

140~-4---+---t--+---

130~~~~--~---+---

F

M

A

M

0

Retail prices, as reported by the Bureau of Labor Statistics'
Consumers' Price Index, have typically lagged behind the rise
in wholesale prices. Nevertheless, between June 15 and July
15 the index showed an increase of 1.4 percent and, at 172.5
percent of the 1935-39 average, was 3.6 percent higher than
the postwar low of February of this year. Higher food prices,
particularly for meats, have accounted for much of the increase in the Consumers' Price Index. Nevertheless, prices of
most groups, including housefurnishings, rent, fuel, and miscellaneous items such as the cost of services, edged higher. Data
showing developments through August 15, are not yet available,
but preliminary estin1ates seem to indicate the possibility of a
slight decline in food prices which may check, at least temporarily, the upward course of the index.
AGRICULTURE
Crop production prospects in the Eleventh District as of
the end of August indicate that the total volume of commodities harvested or to be harvested this year will fall far below
that of 1949 but will be near the average of the past few
years. Moderate to sharp declines in production of winter
wheat, oats, barley, cotton, Irish potatoes, and rice will be
partially offset by increases in production of corn, grain
sorghums, sweet potatoes, and hay. Production prospects as
of August 1 moved nearer realization during the month as the
hot and generally open weather was favorable for field work
and for application of measures to control boll weevils, bollworms, and other insects. In central and southern parts of the
District the weather was near ideal for harvest of cotton,

4

~

155

MONTHLY BUSINESS REVIEW
grain sorghums, peanuts, corn, and rice, although showers
were needed in some areas to check deterioration of pastures
and late maturing crops.
CROP PRODUCTION
(In thousands of busheb)

Texas

States in Eleventh District-

E3tiroated
Average Estimated
Average
August 1,
)939-48 August I,
1939-48
1950
1949
1950
1949
Winter wheat. .
21.560
102,848
56,350
63,851
106,845
131,754
Com... . .
65.730
68.208
64.272
!l8,Boo
108,626
llM06
31.000
34.020
31,195
50.535
55.682
61.458
Barley..... . .
1,750
2.714
4,069
10,103
10,550
12.822
l
Cotton ..
3,000
6.040
2,729
4,282
8,119
4,038
All h.y·.... .
1,429
1,366
1,426
4,891
4,827
4.6 19
lrish potatoes.
2,720
3,686
4,560
tl,7t2
7,253
10,011
Sweet potatoes.... . .
5,500
5.776
6.119
15,575
14,555
14,326
Rices,... . ... . ..... . .
10,170
10.178
7.873
21,032
21,229
17,755
8orguhm.s for grain.. .
118,316
92,676
62,9M
137,632
114,426
76,018
P... u.. •.........
259,600
333.450
283,952
379.000
456,130
384,143
FI.",.ed . ...
1,404
1,974
448
1,639
2,930
998
• Figures are combined totals for the five stat-es lying wholly or partly within the EleYentb
Fodcral Reserve District: Arizona, Louisiana, New Mexico, Oklahoma, and Texas.
1-In thousanw of bales.
1-Io thousands of tons.
'-In thousands of bags (tOO lb.).
'-In thousands of pounds.
Source: United State3 Department of Agriculture.

0....

Spraying and dusting of cotton for control of insects produced fairly satisfactory results in most areas during August,
with the exception of some eastern and northcentral counties
of Texas. Harvest is virtually complete in the Coastal Bend
and extreme south Texas counties and had been extended as
far north as the Red River prior to September 1. Late August
prospects for cotton production gave rise to hope that harvest
may exceed the Government's August 1 estimate of a Texas
crop of 3,000,000 bales, which was considerably below private estimates at that time. The sharp decline from the 6,040,000 bales produced last year is due to both reduced acreages
and lower yields. The indicated yield of 205 pounds of lint
per acre is 61 pounds below the yield harvested last year but
still greater than in any other year since 1912.
TEXAS COTTON PRODUCTION BY CROP REPORTIKG DISTRICTS
(In thousands of bales-500 lb. gross wt.)

Crop reporting diatrict

I.N ............. ..
1-8 .... .... .......... . .... . .

2 •.........•. . .....•.•.•.. . .
3 .......................... .

4.......................... .
5 ......•...•........ . . . ... . .

6.......................... .
7....... ............ .. .... ..

8 ................ , ......... .
9.. ............ , ........... .
10 . . ....... ..... ........... .

1948
115
558
496
22
773

226

140
20
278
170
355

United States Department of Agric ulture. Support prices for
the various grades differ greatly from last year, however, reflecting changes that have developed in market premiums and
discounts during the past season, A sharp reduction in the
support price for Strict Low Middling from 27.78 to 26.95
cents per pound virtually offset increases in support levels for
.most other grades,

1949

269

1,571
1,119
61
1,059
350
190
88
505
212
626

St&te.....................
3,163
6,040
Source: United States Departmont of Agriculture.

1950
indicated
August. 1
90
810
635
25
630
150
150
40
210
100
360

1960 as
percent
of 1949

3,000

Harvest of the District's corn crop made good progress
during August and was practically complete in southern sections. The generally favorable conditions for corn production
in the District since early June are reflected in the latest
official production estimates. Production in Texas is estimated
at 65,730,000 bushels, which is more than 7,000,000 bushels
above the 1949 crop and substantially above average. A yield
of 21.0 bushels per acre is well above average and the second
highest since 1926, exceeded in this period only by the 22.5
bushels per acre harvested in 1949. Production in the five
states of the Eleventh District is estimated at 118,607,000
bushels-IO,OOO,OOO bushels above last year.
A record crop of sorghum grain is in prospect for Texas
and the Eleventh District, greatly exceeding production in
any other year. The curtailed acreages of wheat and cotton
this year, due to acreage control programs and abandonment
of wheat acreage due to drought, permitted large expansion
in acreage of grain sorghums. The crop has received generally
favorable weather throughout the planting and growing season. Combining of early sorghums is about complete in southern and central areas and well advanced in northern counties.
The crop has made excellent progress in the northwest and
High Plains areas of Texas; plant lice and corn ear worms
caused some damage to the crop in those areas, although it
does not appear that the infestations have been serious. Present estimates indicate that production in Texas may exceed
118,000,000 bushels, or 26,000,000 bushels above last year's
crop. Yields in the State may average 22.0 bushels per acre5 bushels above average, although 2 bushels below the record
yield of 1949. The value of the 1950 crop may also set a new
record, despite the fact that support prices, at a national
average of $1.87 per cwt., will be 22 cents lower than last
year.

50

35
52
48
41
50
43
79
45
42
47
58

NORTHERN
.HIGH PLAINS

I-N

Cotton production in each crop reporting district of Texas
is expected to be substantially below last year. Total harvest
will be average or better, however, in the western half of the
State, while central Texas probably will produce a near·aver·
age crop. In the northern Blacklands and in east Texas, where
infestation of insects has been most severe, and in the Coastal
Bend, where yields were reduced by drought, production likely
will be below average. Sharp declines from 1949 production
are reported also for Louisiana, Oklahoma, New Mexico, and
Arizona. The United States crop estimate is placed at 10,308,000 bales, compared with 16,128,000 bales harvested last
year.
A program to support prices of the 1950 cotton crop ot 0
national average of 29.45 cents per pound, or almost the
same as for the 1949 crop, was announced recently by the

CROP REPORTING
DISTRICTS OF TEXAS

MONTHLY BUSINESS REVIEW

156

The Texas peanut crop has been favored by good growing
weather most of the season. Harvest waS active in southern
counties during August, and the crop in most late sections is
in good condition, although scattered areas need rain. The
acreage for harvest this year is substantially below that of
last year due to the acreage control program. The yield per
acre is estimated at 550 pounds-100 pounds above the 10year average but 100 pounds below the record of last year.
\Vith a reduced acreage and lower yield, a much smaller production is in prospect for the State this year- 259,600,000
pounds, compared with 333,450,000 pounds in 1949. It was
announced on August 8 that farm prices of 1950-crop Spanish and Valencias west of the Mississippi River will be supported at an average of 10.45 cents per pound, or $209 per
ton, which compares with $204 per ton for the 1949 crop.
The curtailment in acreage and the high costs of production
will far more than offset any contribution the higher support
price may make to income from peanut farming this year.
Growing conditions favored the Texas rice crop during
July and August, and irrigation water has been ample. The
estimate of 473 ,000 acres for harvest in the State this year,
which is only 10 percent below that harvested last year, indicates that many farmers did not comply with the acreage
control program. Furthermore, the increased yield per acre is
expected to offset the decline in acreage, with the result that
the crop estimate of 10,170,000 bags (100 pounds) about
equals last year's harvest and is 29 percent above average.

calves in these sections are expected to be materially heavier
than usual this fall. Ranchers are holding most top heifers
for replacements. Ewes and ewe lambs on the Edwards Plateau
and in the Trans-Pecos area generally are in good condition.
The Texas 1950 lamb crop is estimated at 3,416,000 head, or
7 percent above last year's crop. Smaller lamb crops are reported for other states of the District and for the United
States as a whole.
LIVESTOCK RECEIPTS
(Number)

Fort Worth market

July
1950

C....

52,971
18.309
35.495
82.029

Cattle .... .
Calves .. .
H ......... . . . ... . .
Sheep ............ .
• Includes goats.

July
Hl49
M.104

18,071
32,234
85.582

JUlie

1050
57,926
19,786

44.060
174.429

San Antonio

July
1950
28,212
14,835
5,096
18,327·

marke~

July
1049
23.730
10.505
5.163
42,705·

June
HI50

26.791
12.084
4,920
28,992·

The Texas wool clip for 1950 is estimated at 52,132,000
pounds, or about 1 percent below last year's clip and nearly
30 percent below average. The 6,760, 000 head of sheep shorn
and to be shorn is 3 percent above last year. Lighter fleece
weights are expected to more than offset the increase in number of sheep shorn. The United States 1950 wool clip, estimated at 218,239,000 pounds, is about 1,300,000 pounds
above last year and represents the first increase in wool production since 1942.
TOP LIVESTOCK PRICES

CASH RECEIPTS FROM

FAR~I

MARKETINGS

(Dollars per hundredweight)

([n thousands of dollars)
May 1950
State

Arizona . . . . .
Louisiana ... ,.
New Mexico ...
Oklahoma . .
Texas ..... .

Crops
Livestock
17.181
110.236
5.202
7.661
7.416
830
21,228
9.06"
28.742
85.855

Tota.l
117.417
12.863
8. 246
30,297
114,597

Total ..
.. 151.024 1132.396 1183,420
Source: United States Department of Agriculture.

Fort Worth market
May
1949
Total
118.798
14.398
10.732
31,623

!l8.765
1194,316

Cumulative receipt5
January 1 to May 31

1950
189.741
75.891
43.062
165.561
606.861
1982.010

1949
195.142
88.234
48.616
157,394

510.136
1899.421

CASH RECEIPTS FRm! ;'ARM MARKETI:-fGS BY MAJOR INCOME GROUPS
FOR THE STATES OF THE ELEVENTH FEDERAL RESERVE DISTRICT.
1949 COMPARED WITH 1948
(In thousands of dollars)

Livestock
and
livestock.
Year
products
$ 69.029
Arizona . . .. ....... ......... 1949
1948
81.229
1949
98,045
Louisjana .. .
1948
107,675
1949
111.651
~ew Mexico ... .
1948
119,269
1949
290.034
Oklahoma . . .
1948
345.259
1949
786.799
Texas ... .
1948
861.825
1.355.558
Five states . ... .............. 1949
1948
1.515.257
Source: United States Department of Agriculture.

CroPS
1177.276
143.065
238.941
246.827
81.957
71.378
313.202
337,749
1.270.284
1.101.187
2,081.660
1,900,296

Government
payments
745
I
1.792
9.093
8.558
1,064
2,552
6,654
5.676
14.739
16.438
32.295
35.016

Total

rarm

income
1247.050
226.086
346.079
363.060
194,672
193,190
609.R90
688.684
2.071.822
1,979.450
3.469.513
3,450.479

An ample supply of range and pasture feed is available in
all parts of the District except in south Texas and in sections
of New Mexico and Arizona. Hot, dry August weather reduced moisture reserves, however, and range and pasture feed
is cured in many areas. The condition of pastures and ranges
in the District in late .August was better than average for this
season of the year.
Livestock are in good condition throughout most of the
District, especially in areas where green feed is available. In
the western and northwestern parts of Texas, cattle have responded to the improved green feed supply this summer;

Slaughter steers ... .......
Stocker steers . ..... ......
Slaughter cows ... ..............
Slaughter beifers and yearlings .. .
S1a~ter calvea ..
SOOe ar calves ....
Slaugh." lambs ..
. . .. . .
H""' ....

......

July
1950
13l.00
30.00
24.00
3l.oo
30.50
33.50
29.00
24.25

July
1949

126.25
22.00
18.00
26.75
26.00
2.1.00
25.00
22.50

June
1950
132.00
29.00
22.50
32.00
3l.oo
31.00

28.50
20.85

Although the general level of prices received by farmers
in Texas has risen sharply since the first of the year, the advance has been due almost entirely to price increases for
cotton and cottonseed and for corn, livestock, poultry, eggs,
and wool, including mohair. Prices of dairy products, potatoes,
turkeys, wheat, and grain sorghums have made little net
change or have declined. Most commodities registering price
advances rcached the highest levels of the year during June or
July. Cotton prices rose irregularly from last October to
July 28, when Middling 15/ 16-inch staple brought 39.05
cents per pound, 10-market average basis, compared with
29.45 cents per pound on October 5, 1949. Top prices paid
for hogs on the Fort Worth market rose from $16.00 per
cwt. in early January to a peak of $24.25 on July 11. Slaughter
steers at a top price of $31.00 per cwt. in June and July
were $3.00 above the January level. Cows at $24.00 per cwt .
were up $7.00. Adv-ances were registered also by heifers,
calves, and feeder and stocker steers. No. 2 white corn brought
$2.75 per bushel on the Fort Worth Grain and Cotton Exchan,';e in late July, compared with $1.64 on January 3.
Fryers in the Dallas wholesale market brought 33 cents per
pound in late March and 30 cents in July, compared with
21 cents in late Januar),. Egg prices held about steady from
January through May but advanced as much as 8 cents per
dozen during June and July. Wool prices have been advancing since last fali.
The movement of the general level of farm commodity
prices in Texas, which had been sharply upward, leveled out
01' declined slightly during August. As compared with the

4

MONTHLY BUSINESS REVIEW

year's highest levels in June or July, cotton prices on August
24 were off about 1 cent per pound; most classes of cattle on
the Fort Worch market were lower by $2.00 to $3.00 per
• cwt. Corn prices on the Fort \Vorth market had fallen as much
as 70 cents per bushel from the July peak. On the other hand,
prices of hogs-after declining irregularly-rose to the year's
high of $24.75 on August 24, prices of fryers and eggs in the
Dallas wholesale market held steady, while certificated spot
wool in the New York market continued to advance, reaching
$2.05 per pound, clean basis, compared with $1.51 to $1.53
during mid-June.
The rise in farm commodity prices since late 1949 and
early 1950 has had a stimulating effect upon the farm realestate market, according to a report released by the Bureau
of Agricultural Economics on August 14. Gains of from 1
to 3 percent in 34 states during the 4-month period ended
July 1 raised the United States index 2 percent above the
March level. Farm real-estate values in Texas and Oklahoma
rose 2 percent and 3 percent, respectively, during this period.
Land values in New Mexico and Arizona declined during the
year ended July 1, while values in Texas, Oklahoma, and
Louisiana increased from 1 to 4 percent.
FINANCE
The Board of Governors of the Federal Reserve System, the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the Home Loan Bank Board, and the National
Association of Supervisors of State Banks, recognizing clearly
the inflationary potentialities which threaten the domestic
economy as an outgrowth of the Korean conflict, issued a
statement on August 7 to banks and all other institutions engaged in extending credit urging that special care be exer• cised in lending and investment activities. Inasmuch as a continuation of the rapid growth of credit from consumer demand for houses and other goods and speculative accumulation
of inventories by business would add to inflationary pressures
and seriously handicap expansion of military production, banks
and other financial institutions were urged to decline to make
loans to business or consumers which might be used for speculative purposes or otherwise interfere with defense requirements.

On August 18 the Board of Governors of the Federal Reserve System approved, effective August 21, an increase in
the discount rate of the Federal Reserve Bank of New York
from 1 y, percent to 1 % percent. In a statement accompanying the announcement, the Board of Governors called attention to the very substantial increases in loans and holdings
of corporate and municipal securities during "the past six
weeks" and pointed out that such "expansion under present
conditions is clearly excessive." In view of this development
and in support of the Government's decision to rely in major
degree for the immediate future upon fiscal and credit measures to curb inflation, the Board stated that the Federal Reserve
System is prepared to use all means at its command to restrain
further expansion of bank credit, consistent with the policy
of maintaining orderly conditions in the Government securities market. Between August 18, when the discount rate of the
Federal Reserve Bank of New York was announced, and August
24, similar increases were announced for the other Reserve
Banks. The 1 %-percent discount rate of the Federal Reserve
Bank of Dallas became effective as of August 25.
,

Also on August 18, the Secretary of the Treasury announced two offerings of 13-month 1 Y4-percent Treasury
notes in exchange for the His -percent certificates of indebtedness and 2 percen t and 2 y, -percen t issues of Treasury bonds
maturing or called on September 15 and the 1 lis-percent issue

157

of certificates of indebtedness maturing on October 1. The
amount involved in this total refinancing operation is about
S13 ,570,000,000. The rate of interest on the latest exchange
offerings reflects no increase in the rate which the Treasury
offered on similar issues used in connection with previous refinancing requirements this year.
Reports of condition of all member banks in the District
as of June 30, 1950, show that the principal asset and liability
accounts increased from the levels prevailing on June 30,
1949. Increases in total loans, investments, and deposits during the 12-month period were especially notable.
Strength in the over-all business situation during the year
ended June 30, 1950, created a continuing demand for bank
credit from the agricultural, consumer, and business sectors
of the economy, resulting in a growth of $323,869,000 in
total loans-an increase of 19 percent. Loan volume outstanding on June 30, 1950, was $2,061,897,000. Holdings of
United States Government securities of the District's member
banks increased $206,535,000, or approximately 10 percent,
during the 12 months ended June 30, 1950, and on that date
amounted to $2,274,845,000.
The greatest change in member bank accounts between
June 30, 1949, and June 30, 1950, was an increase of $753,445,000 in total deposits, with about 57 percent of the growth
occurring in demand accounts of individuals, partnerships,
and corporations. Increases were reported in all categories
of deposits, with the result that total deposits amounted to
$6,393,363,000 on June 30.
An increase of 11.3 percent in total capital accountscarital stock, surplus, undivided profits, and reserves-during the latest 12-month reporting period maintained the upward trend which has been evident for many years and
brought the total of these accounts to $403,392,000 on June
30.
Earnings and dividends reports for the first 6 months of
1950 show that the trend of profits of the member banks in
the District was very favorable, as compared both with the
first half of last year and with the preliminary figures reported by all member banks in the Nation for the most recent
6-month period. Increased earnings from loans accounted for
approximately 82.3 percent of the increase in total current operating earnings, as the increase in earnings from interest on
Government securities was relatively small. Although total
current expenses increased by approximately 9.4 percent, an
increase in recoveries and a decrease in losses offset 41 percent
of the dollar increase in expenses so that profits before
income taxes for the first 6 months of the year amounted to
$31,989,000, as compared with $26,849,000 during the comparable months of last year. Net profits after taxes of the
626 member banks in the District amounted to $22,750,000
during the January to June period, representing an increase
of 19.2 percent over the comparable 6 months of 1949. All
member banks in the Nation showed a comparable increase of
10.3 percent.
Between July 12 and August 16, weekly reporting member
banks in selected cities of the District reported further growth
in loans, investments, and deposits but showed decreases in
balances with banks and reserves with the Federal Reserve
Bank. As a result of these movements, total resources increased by approximately $53,795,000.
Although all categories of loans showed increases during
the latest 5-week reporting period-with the exception of
loans to banks, which remained unchanged-growth in loans
for commercial, industrial, and agricultural purposes ac-

158

MONTHLY BUSINESS REVIEW

counted for more than 65 percent of the total increase of
$59,651,000. Further increases also were reported in loans to
finance security transactions, real-estate activity, and consumer purchasing. Successive weekly increases in total lending
activity carried the loan volume of these banks to a level
of $1,276,289,000 on August 16.
Figures reflecting the strength of loan demand in this
District become even more significant when it is recaIled that
on July 31 the Commodity Credit Corporation disbursed approximately $5 3,495,000 on account of principal and accrued
incerest to member banks to retire certificates of interest
which were held against pooled stocks of cotton. Since these
certificates of interest were carried as loans, their retirement
resulted in an equivalent amount of loan liquidation.
CONDITION STATISTICS OF WEEKLY REPORTING MEMDER DANKS
IN LEADING CITIES - Eleventh Federal Reserve District
(In thouaan.t. of dollan)

AIlgU!I 16
19.\0
S2.fl15,704
1,262.328
1,276,289
861,037
6.• 08
56,{lm
107,128
200
244 ,469
1,339,415

.~lIgU!t 17,
1~9

July 12,

1950
$2.653,453
1.203.275
1.218.638
822,027
6,2.\4

Total loons (gross) and inycrtment.s....
. ...
$2.33M04
Totalloorut-nctt. . . . . .. ... . .. . . .. . .
1.000.364
Total loaM"-Groea. . . . . . . . .. ... . ........ . ..
1.010.445
Commercial, industrial, and ap-iculturalloaos.l..
671,484
Loans to brokers aDd dcalcl'8 lU securities... . . . . .
6,206
Other loans fot purchasing or clltrying securities. .
50,225
54,221
Re!\I~tate loans. . . .................. . . . .....
88.780
102.033
J..oans to oonlaJ. ... .... . . .
380
2ilO
All other loans. . . . . . . . . . .
193.370
231,903
Total im·ef!tment8 .......
1,324,959
1,336.815
U. S. Treasury bills.
. .......
...
93,918
120,536
10',040
U. S. Tr8lUlury certificates o( indebred oe68 . .
121,788
31l.1,942
114,59 1
U. S. Treasury notes . .. . . . . .. .. .. .. .. .. .. . . . . .
295,423
44.271
287.500
U. S. Government bonda (inc. gtd. obligations) ...
6M,781
743.473
673.878
Other securities. . . . . . . . . . . ... . . .. .. . . .. . . . . .
143,505
123,233
140.310
Reserves with Federal Rellerve Ba.nk .....
467,592
468.210
47·.~38
Balances with domestic hanks .... . . . . .
340,277
370,227
306.289
Demand depoaita-&djusted· . . . . .. . ...
2,095.200
1,940.743
2,067.6.19
Time deposits except Government. . . . . .
442,978
448,992
450,1147
United Statea Government deposits.. . . .
68.475
35,204
73,719
InterbaJlk demand deposita . .. .............. . ... .
651,233
541,698
649,302
Borrowing! rrom Federal Reaerve Dank. . . . . .. . . ..
200
o
o
t After doduetioD8 ror reserves and unallocated charge-offs.
• Includes all demand deposits other than intel'bank and United States Government, less
cash itelllll reported &8 on hand or in protcs! of collection,;

From July 12 to August 16, weekly reporting member
banks in the District decreased their holdings of United States
Government securities by $595,000. A shift in the composition of portfolios occurred, however, indicating a lengthening
of maturities. Holdings of Treasury bills declined by $26,618,000, while investments in certificates, notes, and bonds
rose by slightly less than this amount. Investments in securities other than United States Government obligations increased by $3,195,000.

banks showed a further increase amounting to more than
$4,400,000. On the other hand, during this latest reporting
period, investments of these selected member banks declined
by more than $3,400,000, as a result of sales of Treasury cer- jj
tmcates of indebtedness in excess of purchases of Treasury 11
notes and Governmen t bonds. Demand deposit of these banks
also showed a decline during the week ended August 23, the
amount of the declinc-$47,600,000-approximateiy offsetting the increase of the preceding 5 weeks.
BANK DEBITS, END'()F.MONTH DEPOSITS. AND ANNUAL RATE OF TURNOVER
OF DEPOSITS
(Amou nts in thouaanda of dolIaJ'II)
- - - Debits +
Pctg. change From
July
1949

June
1950

July 31,
1950

July
1950

July
1~9

June
1950

59,880

22

-1

83,730

8.5

7.2

8.4

40.241
146.482

17
19

11
1

47,845
178.356

10.6
0. 8

0.8
0.1

10.0
0.7

17,756

13

-7

22,376

9.4

10.7

10.3

47.661
11l.1.46.1
116.777
101.053
108.798
11.286
1.337.683
EI Paoo.
146.830
Fort Worth ......
385.814
Galveston .....
70.805
Houston .........
1,214.317
Laredo ..........
17.049
Lubbock ........
79.796
P<rl Arthur . .... ..
31.729
San Angelo ........
38.682
San Antonio .......
323.433
Texarkana·· ...... .
17.677
48.082
69.789
Wichiw. Falls ......
66.112

61
11
11
9
49
87
40
34
23
-1
21
24
66
-7
54
41
31
22
32
18

-8
- 5
- 19
-1
8
6
- 2
2
-8

48.193
97.004
113.836
91.913
91.267

11.9
13 .3
12.4
13 .4
14 .4
6.7
18.6
13 .6
14 .3
8.9
14 .6
9.0
11.5
9 .7
9. 6
10.9
9.4
11.0
9.4
8.5

9.5
13.3

14.2

July
1950

City
Arizona:

Tuscon ............ 1

Louisiana:
Monroe .• ...•.. . .•
Shn:~port .. . . ..••
New Mexico:
Roswell ....
Texaa:
Abilene .. ... .. ....
Amarillo ..........
Austin ............
Beaumont .........
Corpus Christi . ....
Corsicana .....
Dallas ......

~.:;:::::::::::::

Oily

rera~ing

Total ...................

102

Date

Groos

demand
. .. $5,096,434
July HMO ......
4.077.743
March 1950 ....
5,566.562
5,521,595
tf.riI1950 ...
ay 1950 .. .
5,481,505
June 1950
5.5.10.468
July 1950 ...
5,640.871

July IM8 ...

Grosa

demand
Time
$.;87.716 $2.456.933
621l.655 2,417.780
646.645 2.643,667
656.387 2,034,090
670,514

2,627,316

669.715
660,748

2,684,393
2,757,150

Grou

Time
demand
$375.215 $2,639.501
402.930 2.559.003
405.065 2,922,R95
410,645 2.887.505
423.428 2.854.189
424.252 2.R66.075
416,753 2,883,221

Time
$212.501
226.72.\
241.580
245.7~2

247,086
245.463
243,995

During the week ended August 23, the latest week for which
figures are available, loans of the weekly reporting member

- /
- /

12
6
-4
-1

1,011.944.

22.930
84.650
38.687
48,320
354.472
22.4112
51.214
78.080
92.807

July 31. 1950
Number of

GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS

Country banks

1
5

4

SA VINGS DEPOSITS

8
2
2
5
3
3
65

Reserve cit.y hanb

2

853.018
129.244
323.149
96.019

11.9
11.4
6.2
15.1
11.6
12 .8
9.0
13 .4
7.9
10.0
10.4
8.0
8.9
7.3
9.2
8.4
8.4

15. 1
13.7
13.3
6.2
19 .2
13 .4
15. 6
8. 9
14 .4
9.0
11 .3
9.0
9.8
11.0
8.3
10 .•
10.6
8. 6

28 - 1
$4,001,785
13.8
12.1
14.0
+ Debits to d~t accounts except interbank actounts.
• Demand an time deposits, includina: certified and officers' cheeks outstanding but excluding deposits to the credit of banla.
"These figures include only one bank in Texarkana, Texas. Total debits for aU banka in
Tew bna, Texas~Ark.aO!aS, including two banka located in the Eighth District, amounted to
128,894.,000 for the month of July 1960.
I lndica&es change of lea than one-half of 1 percent.

Louisiana:
Shreveport ........•...
Tens:
Beaumont .......• .•...
DaJJa.s . .. .... . ..•. ... .
EI Paso .........• . •...
Fort Worth ... . ..... ...
Galveston ........ .•...
HoustoQ . .... ..... .....
Lubbock ..........•...
Port Arthur ....... . ...
San Antonio .......•...
Waco . . . ..... . ....• ...
Wichita Falls . . , .......
All other .. . .............

Combined total

I

-I

20.241

13 .3

12.2

Tot.al-24 cities ...... 14.593,097

Favorable levels of business actIvIty in the District and
growth in loans during the 5-week period were the principal factors underlying an increase of $49,964,000 in total
deposits at the weekly reporting banks, with demand accounts
of individuals and businesses more than accounting for the
increase. Total deposits at these banks on August 16 were
$365,613,000 in excess of the figure reported on the comparable date last year.

Eleventh Federal Reserve District
(Averages of daily fi gures. In thousand! of dollars)

Deposita·
Annual rate of turnover

July 30,
1949

June 30,
1950

$ 24.409.900

-5.0

-1.2

5.766.855
36.209.113
20.956.933
74.943.672
4.035.310
4.199.030
43.009.001
10.545.684
4.649.440
66.472.750

- 7.0
-1.7
0.9
-(lA
-1.7
0.6
34.1
-8.1
-3.4
4.0
2.9
3.3

-1.6
-2.1
-3.0
-2.1
- 1.7
- 1.1
-1.5
-1.6
-2.4
-1.9
-(l.8
-(l.7

531,611 $383,453,477

-0.4

-1.7

43.8~

3
8
2
4
~

Percen~e elu~ugc in
savings cposit8 from

Amount of
savings
dep05ita

Number of
aavinp
depositor3

12.178
145.025
32.6.\6
44.367
22.237
95,252
2,177
6.946
41,764

10.612
8.260
67.243

76.917.699

22.34~.100

Between July 15 and August 15, the principal changes in
the condition statement of the Federal Reserve Bank of Dallas
included a decrease of $21,651,000 in gold certificate reserves
and increases of $1,983,000 in Federal Reserve notes in actual
circulation and $1,171,000 in member bank reserve deposits.
Total earning assets increased by $17,275,000, which was
more than accounted for by an increase of $17,483,000 in ~
holdings of United States Government securities. The notes ~
of this bank in actual circulation on August 15 amounted
to $610,941,000, as compared with $603,134,000 on the
comparable date last year.

~

MONTHLY BUSINESS REVIEW
CONDITION OF THE F'EDERAL RESERVE BANK OF DALLAS
(in thousands of dollars)

H,m
Tota Jgold certi6cate ~servea ..
Discounts (or member banks .......... ..... ....

... ..........

Foreign loaos on gold . .........

U. S. Government securities .. .... ... .....
Total ~arnin~ assets ... . .....
. . . . . . . . . . .. .
Member ba.n reserve depoeits . . ..... , .....
Federal Reserve notes in actual cireulation ...

Augw115,
1950
$672,858
617
70
830,952
831.539
815.835
610,941

Aug ..115,
19'9
$668,139
408
3,680
786,445
790,433
797,871
603,134

July 15,

Ig50

$6~,509

200

696
813,469
814,264
814.664
608,g68

NEW MEMBER BANKS

The Texas State Dank, Austin, Texas, located in the
territory served by the San Antonio Branch of the Federal Reserve Bank of Dallas, became a member of the
Federal Reserve System on AUf!,ust 11, 1950. The bank
has capital of $200,000, surplus of $101,000, undivided
profits of $11 ,000, and total resources exceeding $2,900,000. The officers are: Dr. J. V. Siegmund, Presidmt; W. G. Pope, Executive Vice President; Mrs. Margaret Clark, Vice President; and E. O. Henkel, Cashier.
The Victoria Bank and Trust Company, Victoria,
Texas, located in the territory served by the Houston
Branch of the Federal Reser've Bank of Dallas, became a
member of the Federal Reserve System August 9, 1950.
The bank has capital of $1,000,000, surplus of $1,500,000, undivided profits of $390,000, and total resources exceeding $28,000,000. The officers are: J. V.
Vandenberge, Chairman of the Board; D. E. Blackburn,
President; Wm. J. O'Connor, Vice President; Dennis
O'Connor, Vice President; H. A. Jamison, Executive
Vice President; Earl W. Fischer, Vice President and
Trust Officer; D. R. Blackburn, Vice President and
Cashier; Arvle Elliott, Vice President; W. A. Huebner,
Assistant Cashier; Perry Wendtland, Assistant Cashier;
F. C. Urban, Jr., Assistant Cashier; and O. C. Pittman,
Assistant Cashier.

INDUSTRY
Construction activity has been maintained at or near record
levels in both the Nation and the District. The value of construction contract awards in the Eleventh District in July
increased 13 percent from the high June total, reaching the
fourth highest level on record. The July awards, which
amounted to over $105,500,000, were 10 percent more than in
July a year ago. During the first 7 months of 1950, awards
totaled $637,000,000 in the District, or 50 percent above
the level of the corresponding period of last year.

159

is second only to the May 1950 record. During the first 7
months of 1950, residential awards totaled $303,000,000, over
III percent more than during the same period in 1949. Nonresidential awards totaled $54,100,000 in July, or 5 percent
more than in June but 17 percent less than in July of last
year. Total nonresidential awards during the first 7 months
of 1950 amounted to $334,000,000, or 18 percent more than
during the corresponding period of last year.
In the Nation, new construction activity in July reached
a record total of $2,653,000,000, with residential construction
rising to $1,140,000,000. The total for the first 7 months
of 1950 is $14,442,000,000, or 19 percent above the same
period of last year. July was the best homebuilding month in
the Nation's history, with 144,000 new nonfarm dwelling
units being started, bringing the total for the first 7 months
of this year to a record 893,000 dwelling units, a figure
exceeded during a full year only three times in the history of
the industry.
BUILDING PERMITS
Percentage
Percentage change Jan. 1 to July 31, 1950 cban~a
v&luation from
valuation
Number Valuation July 1949 June 1950 Number Valuation froml949

1uly 1950

Cily
Louisian&:
Shreveport •..•
Tuaa:
Abilene . ..•...
Amarillo ......
AmLin ........
Bea.umont .....

8".!~~:

'43 • 6,346,696
166
350
510
375
575
2,095
382
847
219
1,465
318
215
1,707
209
166

g41,828
2,508.756
5,079,077

859,392
2,361,392
13,749,212
l,g67,935

13

286

115
63
302

-2
47
52
60
7
14
- 48
7
- 38
31
58
-79
-16
- 31
14

-

54

336,060
4,701 ,938
1,087,090
662,982

102
72
52
35
74
275
310
71
88
120
35

Tolal.. ......... 10,041 $67,89.1,100

-

98

El Puo .......
Fort Worth .. ..
Galveston . .. ..
HowLon .......

Lubbock ... . ..
Port Arthur ••.

Saa .o\atonio ...

Waco .•...•.•.
Wicbila FalII ..

3,928.892

318,937
20,095,504
2,950,4,10

-

17

2,822 $ 18,872,605
1,193

2,313
2,791

2.4&1
3,211
14,lg2
2,763
6,202
1,094
8.419
2,236
1.532
12,120
1,869
\ 908

7,890,243
12,772,997
25,785,561
6,520.448
16,399.831
69,519,018
15,IM,849
27,974.466
3,684,012
95,410.557
15,M7,429
4,188,236
30,891,102
11,799,688
3,3M,305

31
93
36
112
19
124
66

165
91
- 49
104
139
84
65
148
11

66,129 1365,165,347

76

Among the various types of residential construction, onefamily dwellings built for sale continue to account for the
majority of awards. In Texas, during the first half of 1950,
awards for this type of dwelling were 111 percent higher
than during the same period in 1949. One-family dwellings
built for owner occupancy were up 86 percent, while apartment buildings were up 243 percent and duplexes, up 269
percent. Commercial building continued strong, with awards
during the first half of the year being 87 percent higher than

CRUDE OIL PRODUCTION

VALUE OF CONSTRUCTION CONTRACTS AWARDED
4

(In thousands of dollars)

July
19500

July
1949

$105,585

, 95,780

Residential............
51,446
All other. .. .. . . .
54,139
United States·-toW..... 1,420,181
Residential. . . . . . . . . . . .
675,080
All other. • . .. . . .. .. .. .
745,101

30,198
65,582
943,560
340,593
602,967

Eleventh District-toial.. .

4

JanllMY 110 July 31
June

1950
$ 93 ,417
41,772
51,645
1,345,463
628,051
111,412

19509
$636,536
302.761
333,775
8,274,329
3,932,205
4,S42,IU

m9
$42.\,1102
143.710
281,892
6,411.236
1,966.392
3.U5,8U

ELEVENTH .DISTRICT

-='-;-;-·:I~·... ,....
... ;!~:il:=:;:; I
.

2

C:

19~O

. - - ..

.--:::"-"'1

3

I I .-.- .-' _. '..
.

• - . _. - • ~~;~ "'''7''''-''''=-C;,::
' --'---!---!--+--1

2

p-Preliminary.
·37 .tates east of the Rocky Mountains.
Source: F. W. Dodge Corporation.

Residential awards in the District exceeded $51,400,000 in
J\lly, representing increases of 23 percent from the previous
month and 70 percent from a year earlier. The July figure

o

J

F

A

A

s

o

N

o

o

160

MONTHLY BUSINESS REVIEW

during the corresponding period of last year. Awards for
educational buildings were up 102 percent, while hospital, institutional, social, and recreational buildings also showed gains.
Awards for manufacturing buildings showed only a I-percent
increase.

The high volume of contract awards during July reflects,
in part, a spurt in the letting of contracts during the second
half of the month. Many builders and purchasers hesitated
to go ahead in view of current uncertainties in the international situation, possible credit restrictions, and potential
controls over materials; however, other contractors and buyers
attempted to get construction under way before restrictions
and shortages become more serious. Temporarily, at least, the
latter group appears to have exerted the greater influence
upon the level of construction activity.
The possibility of further restrictions on private building
was suggested recently by the United States Department of
Commerce. Since building materials producers ate operating
at near capacity to meet the record demand for residential,
commercial, and other types of construction, any increase
in military requirements for construction materials will be
largely at the expense of civilian users. Neither increases in
capacity nor larger imports can be relied upon to alleviate
appreciably this potentially tight situation.
CRUDE OIL PRODUCTION
(Barrels)
July IQ50

Are.
Texas:
District
1 South Central. ..
2 Middle Gulf .......
3 Upper Gulf . . . . . . .
4 Lower Gulf ......
5 East CCnt.rnl. ....
6 NortbeMt ...... .

Total
production

Daily o.vg.
production

Incr('Me or decrease in daily
average production (rom
July 1949

29.495
3.913
914,350
l4! ,455
32,039
4,38.1,100
412,511
76.535
12,787,850
221,081
45,778
6,8.\3,500
4,411
1,136,550
36,663
72,450
11,575.150
373,411
63,363
East Texas ........
8,537,550
275,405
3,038,200
98,006
19,087
Ot.her fiP.lds ........
2,238,100
72,197
1'-674
7b North CentraL .......
24,299
2,038,700
6.5.i64
70 West Central. .. .. ....
274,773
i76.134
8 West ....... . . . ..... . . 24,060,150
15,984
4,748,900
153,190
9 North .... " . ... . .....
- 1.298
2,866,760
92.476
10 Panhandle ........... .
663,658
73,505,700
2,374.377
Total Texas . ...... ........
- 3,438
4,050.950
130.675
New Mexicn .................
22,796
128.611
3,986,950
North Louisiana .... ..........
2,633.664
582.917
Total E1eyentb District . .... 81,643,600
246,610
2,880,079
89,282,450
Outside Eleventh District .. ...
829,427
5,513,743
United States .......... , ..... 170,926,060
Source: Estimated (rom American Petroleum Insti tute weekly reports.

June 1950

100
5,960
7,754
7,673
2,248
106
4,300
4,194
2,452
3,209
69,989
9,480
236
84,628
5,745
- 3,147
86,991
4,126
171,117

-

-

In the petroleum industry indications are that operations
during September will continue the expansive trend that has
been in evidence during the past 5 months, The demand for
petroleum has been strong, and there is an increasing urgency
to build up stocks of fuel oils for anticipated winter requirements. In addition, the international situation emphasizes the need for stronger stock and production positions.
The 1 exas Railroad Commission increased allowables for September by 244,000 barrels daily in Texas; consequently, production during the current month should establish a new
record.
Daily average production of crude oil in the District during July amounted to 2,634,000 barrels, representing a gain
of 87,000 barrels per day, or 3 percent from the previous
month,
Crude oil production in the Nation in July increased 171,000 barrels per day over the previous month and 830,000
barrels daily over year-earlier levels. More than half of the
increase was accounted for by this District.
Refinery activity as indicated by crude runs to stills increased in July by 93,000 barrels daily in the District and

202,000 barrels daily in the Nation. A new record of 5,844,000 barrels per day was established in the Nation during July;
but this, in turn, was exceeded during early August, with
a new weekly record of 6,044,000 barrels daily being attained
during the week ended August 12.

4

Stocks of crude oil in the Nation showed little change
during July, declining by 707,000 barrels to a level nearly
32,000,000 barrels below that of a year ago. Stocks of the
four major petroleum products increased by 7,000,000 barrels but were 36,000,000 barrels lower than a year earlier,
Reflecting the strong seasonal demand, stocks of gasoline decreased nearly 5,000,000 barrels during July. Stocks of burning oils showed moderate increases but continued well below
year-earlier levels, with residual fuel oil stocks being 37 percent below those of a year ago. The over-all stock position
as indicated by stocks of crude oil and its four major products is 68,000,000 barrels, or 13 percent lower than a year
ago,. although a 6,000,000-barrel gain was made during July.
The prices of petroleum products continued strong in practically all markets, with additional price increases being announced by various companies.
Drilling activity has continued at a very high level, with
well completions during the first half of 1950 totaling 19,457
in the Nation and 8,839 in this District, representing increases from the corresponding period of last year of 1,903
wells in the Nation and 1,484 wells in the District. Reports
for , July and early August indicate continuation of very
high levels of drilling activity in the Nation and particularly
in this District. In view of the growing demand for petroleum products, it would seem that materials uncertainties are
about the only obstacle to the attainment in 1950 of new
annual records for well completions in both the Nation and
the District.

~

DOMESTIC CONSUMPTION AND STOCKS OF COITON
(B.les)
July
1950*

Total consumption:
Texas mills..........
United States mills..........

D~:x:::;.m:. ~~~~~.~~~~~ ... .

10,488
610,555

July
1949

10,434
454,426

652
522
United States mills..........
32,134
22,721
U. S. Stocks-end-o£-montb:
Consuming establishments .... 1,307,560
884,730
PublicsWrage and compresses. 4,847.009 4,146,398
• Four weeks ended Ju1y 29.
l Five weeka ended July 1.
, Throug;b J ,Iy 29.
Source: Uuited States Bureau o( the Census.

June
19501

August t to July 31

Thill 8eil8Onl Last season

14,528

152,743

841,227

8,869,511

144,203
7,795,404

593
34,336

599
34,771

559
30,382

1.429.178
6,268,268

Preliminary estimates of nonfarm employment in Texas
indicate another new record in August at around 2,400,000
persons employed, exceeding the year-earlier level by about 4
percent and the previous peak of December 1949 by about I
percent. Contributing to this rise have been the contraseasonal
strength in trade activity, the continuing construction boom,
the expansion of personnel at military establishments, the sharp
increase in aircraft production, and gains in other types of
manufacturing associated with national defense.
During the faU, a further seasonal expansion of employment until Christmas is probable. Trade activity normally
rises during this period, while the food, apparel, and aircraft
and other defense industries this year are likely to employ
additional workers. Materials shortages may plague ~ome industries, particularly certain metal work plants and could cause
construction employment to decline more than seasonally.

~