Bureau of Business Research • The University of Texas at Aus!~n 

Texas Business Review 
Published by the Bureau of Business Research, University of Texas at Austin Charles C. Holt , Director Lorna Monti, Associate Director 
The Authors 
Ernest W. Walker 
Professor ofFinance University of Texas at Austin 
Charles T. Franckle 
Instructor ofFinance University of Texas at Austin 
Carol T .F. Bennett 
Research Associate Bureau of Business Research 
Staff Lewis J. Spellman, Editor Lois Glenn, Publications Manager Barbara D. Terrell, Managing Editor Mildred Anderson, Marylyn Donaldson, Jean 
Vol. LI, No. 11/12, November-December 1977 

237 Securities Registration in Texas, 1970-1977, Ernest W. Walker 
241 Current Interest Rates in Perspective, Charles T. Franckle 244 Beaumont-Port Arthur-Orange: A Processing Center for Ex­tractive Industries, Carol T.F. Bennett 
Tables 

237 Sale of U.S. Corporate Securities, 1970-1976 
238 Selected Indexes in Texas, 1970-1976 
238 Securities Registration in Texas, Fiscal Years 1969-1977 
239 Securities Registration in Texas, Fiscal Years 1970-1977 
240 Licenses Issued by State Securities Board, Fiscal Years 1970-1976 
241 Relationship between U.S. Short-Term Interest Rates and Inflation, 
1970-1976 242 A Comparison of the Level and Volatility of U.S. Long-Term Interest Rates, 1860-1976 243 A Comparison of the Level and Volatility of U.S. Four-to Six-Month Prime Commercial Paper Rates, 1860-1976 
246 Nonagricultural Civilian Payroll Employment Percentages, Beaumont­
Port Arthur-Orange SMSA and United States, July 1977 
247 Percentage of Personal Income by Major Sources, Beaumont-Port 

Arthur-Orange SMSA and Texas 248 Manufacturing Plants with More Than 500 Employees, Beaumont-Port Arthur-Orange SMSA, 1976 249 Age Structure of the Population, Beaumont-Port Arthur-Orange SMSA and Texas 249 Household Effective Buying Income Profile, Beaumont-Port Arthur-
Orange SMSA and Texas 
250 Selected Barometers of Texas Business 
251 Gross Sales by Standard Metropolitan Statistical Area, Texas 
255 Local Business Conditions 

Barometers of Texas Business (inside back cover) 
Hall, and Mercedes Torres, Data Compilation 
Charts 
Daniel P. Rosas, Printing Coordinator Joan Farnham, Compositor 

239 Securities Registration in Texas by Quarter, 1970-1977 
Shirley Ritz, Manuscript Typist 

240 Securities Registration in Texas by Fiscal Year, 1970-1977 243 Year-to-Year Changes in the Annual Average Long-Term Interest Rates for Selected Periods: 1930-1939, 1950-1959, and 1967-1976 
Cover : Photograph courtesy of the 

250 Residential and Industrial Electric Power Use in Texas 
Beaumont Chamber of Commerce. 

251 U.S. Wholesale and Consumer Prices 
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Securities Registration in Texas 

In spite of poor economic conditions throughout the United States, the registration and sale of securities in the primary market in Texas between 1970 and 1976 exceeded all expectations.* Several economic indicators illustrate the "lackluster" economic conditions prevalent in the United States throughout the period. First, gross national product (GNP) expressed in 1972 dollars increased 18.5 percent during the years 1970 to 1976; this amounted to an annual growth rate of only 3 .l percent. In current dollars GNP increased 73.7 percent at an annual rate of 12.3 percent. Consumer and wholesale prices showed average increases of 
7.8 and 10.7 percent annually. It is clear that we were experiencing depressed growth rates on one hand and inflation on the other. 
Second, the gross domestic product of nonfinancial corporate businesses expressed in 1972 dollars rose only 

11.7 percent during this period, or 1.95 percent annually. Profits of these businesses after taxes were well below those of the last four years of the 1960s; profits as a percentage of net worth averaged 6 .8 percent from 1966 to 1969, but from 1970 to 1976 they averaged 4.6 percent, a decline of 
32.3 percent. 

Third, "cost of capital" not only rose but also fluctuated substantially between 1970 and 1976. To illustrate, the average price/earning ratio equaled 15 .8 in 1970, 8.6 in 1974, and 11.2 in 1976. This means that the "cost" of common stock financing to the firm rose from 6.3 percent in 1970 to 11.6 percent in 1974 then declined to 9.2 percent in 1975. Interest rates also increased during the period; for example, interest rates of Aaa bonds rose from 
6.12 percent to 8.43 percent between 1969 and 1977. The prime rate not only rose but also fluctuated widely throughout the period; it rose from 6.75 percent at the end of 1970 to 10.25 percent at the end of 1974 then fell to 
7 .25 percent by the end of 197 5. 
While only a few indicators have been noted above, it is clear that the economy was far from "healthy" during this period, and it follows that the market for securities would be relatively weak. In fact, the level of new equity issues sold in the United States was 51.4 percent higher in 1972 than in 1970 but in 1974 declined 52.2 percent from 1972. Sales rose during 1975 and 1976, but it should be emphasized that the volume of stock sold in 197 6 did not equal the amount sold in 1971, 1972, or 1973 (see table l ). 
A quick and cursory review of the economic conditions that prevailed in Texas during this period reveals that while 
1970-1977 
Ernest W. ''TaI k er 

the economy was adversely affected, we did not experience the recession to the same degree that other sections of the country did. Unemployment, for instance, never rose above 
5.6 percent in Texas, though in the United States it reached 
8.5 percent. 
While the national economy suffered severely in 1973 and 1974, the Texas economy resisted the recession. The index of Texas business rose substantially in every year during the period except 1975, when it declined slightly from 198.l to 195.5. The index of industrial production also increased during every year of the period except 1971 and 1975. From these data we can see that the environment was more conducive to the sale of securities in Texas than in the United States during this period (see table 2). 
A comparison of the volume of securities authorized for sale in the state of Texas with the volume of actual sales of stock in the United States reveals that Texas authorizations surpassed those for the entire United States. For example, after total securities authorized for sale in Texas declined 
22.5 percent in 1970, they increased 30.6 percent, or 5.1 percent compounded annually, from 1971 through 1976 (see table 3). It is important to note that registration of securities for sale by the State Securities Board does not necessarily mean that the securities actually sold. The volume of renewals, however, does denote the degree of success that issuers had during the preceding period. That is, when sales are very low, renewals will rise since securities are only certified for sale for one year. If they are not sold within the year, they must be renewed if management wishes them to remain on the market. When the economy is slack, renewals typically increase considerably. The pattern 
Table 1 
Sale of U.S. Corporate Securities, 1970-1976 

Sale o f all corporate  
Sale of equity issues  issues in U.S.  
Years  (dollars)  (dollars)  

1970  8,630  38,94 5  
19 71  12 ,9 15  44,9 14  
1972  13 ,062  40 ,787  
I ':1 7 3  11 ,122  33,39 1  
1974  6,247  38,3 13  
1975  10,8 63  53,6 19  
19 7 6  11 ,094  53,326  

Source: Board of Governors, Federal Reserve System, The Federal Reserve Bulletin, 1970-1977. 
NOVEMBER-DECEMBER 1977 of renewals during this period was typical in that they increased relative to registrations in 1971 , decreased in 1972, then increased for three consecutive years, ultimately reaching 45 .0 percent of all securities registered in 1975. In 1976 renewals dropped to 32. l percent of the registered total and declined even further in 1977. Thus renewals reflected the state of the economy from 1971 to 1975, as well as the recovery that began in 1975. 
Of the various types of securities approved by the commissioner of the State Securities Board during fiscal years 1970 through 1976 , original applications declined 
32.8 percent in 1970 but rose $489. l million, or 60.8 percent, over the 1971-1976 period . This amounted to an average annual increase of l 0.13 percent compounded, which exceeded the growth in actual stock sales that took place in the United States by 6.06 percent annually. While original applications approved for sale fluctuated during the period, it is believed that the degree of fluctuation was not as great as that for the United States as a whole. For example, original applications declined 13. l percent at the end of 1974, the year in which such applications hit their lowest level. On the other hand, stock sales in the United States declined 27.6 percent between 1969 and 1975, and , again, 1974 was the year in which stock sales reached their lowest level of the period. This would indicate that the environment in Texas was somewhat better for the sale of securities than that in the rest of the United States. 
The growth of all original applications is certainly an important indicator of the strength of the securities industry in Texas, but it is also important that we examine the component parts of this total (see table 4 ). Original issues are made up of applications of securities for sale by mutual investment companies, Texas corporations, and all "other corporations." The total volume of applications approved for mutual investment companies increased in every year except 1974, when they declined 23.5 percent. This decline was completely reversed the following year, when they increased 82.0 percent. It is important to note that securities approved for sale by this group increased 200 percent between 1969 and 1977. This amounted to a spectacular compounded annual growth rate of 33.4 per­cent. 
The volume of application of Texas corporations ap­proved by the commissioner during the period from 1970 through 1976 fluctuated widely; for example, applications approved in 1975 declined 60 percent from 1974, yet 
Table 2 
Selected Indexes in Texas, 1970-1976 
Consu mer  Industrial  Texas busi- 
Year  Unemploy ment  prices •  prod uction  ness activity  
1970  3.5  117.9  114.0  137.2  
1971  4 .1  121.3  113 .0  150.7  
1972  3.8  124.9  119 .7  165 .8  
1973  4.1  131.9  125.5  179.6  
1974  4.3  145 .5  12 8.5  198.1  
1975  5.6  158.2  125.8  195 .5  
1976  5.8  167 .7  130.5  228.3  
•Dallas-Fort Worth SMSA only .  
238  


during 1976 they rebounded, increasing 71 percent. While the securities registered by this group exceeded the 1970 level, they were still approximately half the volume issued in 1972. This decline, as well as the volatility of these securities, reveals the impact that such factors as high cost of capital, inflation, and depressed economic activity have had on the issuance of securities by Texas corporations. 
Securities approved for sale by "other corporations" not only declined in number over the period but also fluctuated widely in volume. It is interesting to note that the greatest decline in the registration of the securities of other corporations came in 1973, but the major drop in Texas corporations did not occur until 1975. The activity from 1970 to 1976 as depicted by these securities tends to indicate that other corporations were more sensitive to adverse economic conditions than Texas corporations. However, it is only fair to point out that this variation is small and that it is difficult to draw any significance from these data regarding the impact of the economy on the securities industry in Texas. 
As earlier noted, renewals are issued by those firms that fail to sell their securities within twelve months after approval for sale. The total volume of renewals is inconse­quential; it is their relative volume that is significant. Renewals fluctuated in comparative size rather widely throughout the period from 1970 to 1976 (see table 3). Renewals grew in 1971, 1973, 1974, and 1975. Thereafter they declined in importance, accounting for only 32.1 percent of all registered securities in 1976. The one surprise is the relative decrease in 1972. Another interesting point is the major decrease in renewals by Texas corporations during 1976. These data suggest that Texas firms were highly successful in selling their securities during this period, thus eliminating the need for renewals. Equally notable is the small volume of renewals by Texas and other corporations relative to renewals by mutual investment companies and pension funds. Finally, renewals during the 1970-1976 period were considerably higher than during the 1965-1969 period, when they never accounted for more than 27.2 percent of the total. In fact, in 1968 they amounted to only 19.7 percent and 21.8 percent in 1969. Interestingly, only in 1962 and 1963 did they ever amount 
Table 3 
Securities Registration in Texas Fiscal Years 1969-1977 (Millions of dollars) 
Renewals 

Total Original Years applications applications Dollar volume Percent of total 
1969  1,531.6  1,197.9  333.7  2 1.8  
1970  1,201.7  804.5  397 .1  33.0  
197 1  1,238.0  769.4  4 68.6  37 .9  
1972  1,569.4  1,0 92.9  4 76.5  30.4  
1973  1,428.8  931.8  49 7 .0  34 .8  
1974  1 ,163.3  699.3  4 6 4 .0  39.9  
1975  1,39 1.4  881.5  5 10.0  45 .0  
1976  1,569 .2  1,062.2  50 3.9  32 .l  
1977  1,9 88.3  1,4 12.7  57 5.6  28.9  

Source: Office of the State Securities Board, "Summary of Secu­rities Registered ," for each fiscal year. 
TEXAS BUSINESS REVIEW 

Figure 1 Securities Registration in Texas by Quarter 1970-1977 

Millions of dollars 440 420 400 380 360 340 320 300 280 260 240 220 200 180 160 140 120 100 80 0 Quarter 2 3 4 2 3 4 Year 1975/ 1976 1976/1977 to more than 30 percent, yet during the 1970-1976 period they never fell below 30 percent. Certainly we can conclude that renewals move in the direction opposite that of the general market. We should, therefore, expect renewals to decline in importance in the near future since it appears that we are beginning to experience a more prosperous primary securities market. 
The licensing of individuals to sell securities, like the volume of securities certified for sale, reflects the market environment. Throughout the period in question the number of licenses issued remained relatively stable (see table 5). The decline in 1975 is somewhat surprising since the volume of securities registered increased quite substan­tially. It may be assumed that if the high degree of activity continues, the number of licenses will also increase. 
Activity during 1977 

The total of all securities registered with the commis­sioner increased 26.7 percent in 1977. While this is the largest single increase in securities registration during this decade, it is also the third consecutive increase in as many years and the point at which the dollar volume of securities for sale reached its all-time high. In fact, the total volume of $1 ,988.3 million exceeded the previous high in 1972 by some $419 million. 
Not only did total registrations reach their highest level but registrations resulting from original applications also reached their all-time peak in 1977. Original applications amounted to $1,412. 7 million, exceeding the previous high of $1,092.9 million in 1972 by 29.3 percent. The differ­ence between the growth in total applications and that of original applications approved for sale amounts to $71.5 million. In other words, the rise in the total volume stemmed from the growth in original registration rather than from renewals. 
While the annual growth in total dollar volume was extremely favorable-a 26. 7 percent increase in 1977-the pattern of growth by quarters fluctuated rather widely. For example, total securities increased 21.6 percent from the first to the second quarter but declined 15.4 percent during the third quarter. In the fourth quarter they again rose, but only by 10.8 percent. An examination of registrations by quarters in previous years reveals that such a growth pattern is common; that is, the volume of registration of securities tends to fall during the third quarter of each year but generally recovers in the fourth quarter. The only excep­tions so far in this decade occurred in 1972 and 1975. 
Table 4 
Securities Registration in Texas, Fiscal Years 1970-1977 (Mill ions of dollars) 
Type 1970 1971 1972 1973 1974 1975 1976 1977 
Original applications  
Mutual investment com panies  35 8.6  267 .7  3 2 5.4  505 .3  386.5  703.5  790.7  1,077.2  
All other corporate securities  
Texas com pan ies  144.2  205.3  295 .6  253.8  21 3.4  85 .3  14 5.9  168. 1  
Other com panies  301.7  296.4  4 7 1.9  172.6  99.4  92 .6  12 8.6  167.4  
To tal  804.5  769 .4  1,092.9  93 1. 8  699 .3  88 1. 5  1,065 .2  1,41 2.7  
Renewal applicatio ns  
Mutual investment compan ies  375 .8  4 50.7  4 52.8  472. 5  4 39.5  487 .7  497.8  570.6  
All other corporate securities  
Texas compan ies  9 .4  9 .5  14 .3  11.0  2 1.0  11.2  1.7  3.6  
Other compan ies  12 .0  8 .3  9.4  13.5  3.5  11.0  4.4  1.4  
Total renewals  39 7.1  4 68.6  4 76. 5  497.0  4 64 .0  5 10.0  503.9  575 .6  
Grand to tal  1,201.7  1,23 8.0  1,569.4  1,4 28.8  J , 163.3  1,391.4  J ,569. 2  1,988.3  

Source: Office of the State Securities Board, summary report of securities registrations for each fiscal year. NOVEMBER-DECEMBER 1977 
While the total dollar volume of renewals actually increased during 1977, they decreased as a portion of the total; that is, they increased in volume 14.2 percent but declined in relative importance from 3 2.1 percent to 28.9 percent of the total of all registered securities. This decline is notable in that it further demonstrates that general market conditions are improving. This is the second straight year in which the relative size of renewals has declined. It is also believed that renewals may actually decline in the near future to levels recorded during the 1960s. 
An examination of the volume of securities registered for sale by Texas and other corporations further reveals the recovery that is taking place in the securities industry. To illustrate, securities registered by Texas companies in­creased 15.2 percent in 1977. Securities registered by other corporations increased even more, that is, 30 percent. It is important to note, however, that the volume of securities issued by both groups is far below that reached during the early years of the 1970s; securities registered for sale by Texas and other corporations were 1.8 and 2.8 times larger in 1972 than in 1977. 
The number of licenses issued by the Securities Board also shows an increase in 1977. While the number of licenses did not equal the numbers issued in 1973 and 1974, the figure was higher than in any other year of this decade. Licenses issued to salesmen showed the greatest growth in 1977, when 270 more were issued than in the previous year. 
The data reviewed lead one to believe that the environ­
ment in Texas will continue to be favorable to growth in 
the volume 	of securities registered for sale. It is also 
believed that renewal rates will continue to decrease. 
Although the growth during 1978 is not expected to 
achieve that recorded in 1977, the securities market should 
remain strong. 
*In an article that appeared in the April 1977 Texas Business Review Andrew J. Senchack and Peter DeVito concluded that Texas investors "may be sitting on top of one of the most fruitful investment arenas in the country." The conclusion was supported by the fact that a special subset of over-the-counter securities traded in the Texas regional market outperformed securities in four national markets. This particular portfolio of securities "showed a 

Figure 2 
Securities Registration in Texas by Fiscal Year 
1970·1977 

1,500 .-----------------------, 
1,412.7
1,400 
1,300 
1,200 
1,100 
1.000 
900 
soo 
100 
699.3 
600 	R<newal 
510.0 
497.0
500 



503.9 
476.5 
464.0 
400 
300 
o~---------------------~ 
'70 '71 '72 '73 '74 '75 '76 '77 

sizably higher return, averaging 1.69 percent per month of approxi­mately 20 percent on an annualized basis," during the period between 1970 and 1975. The average monthly and annualized rates of return of the securities in the four national markets for the same period were far below those realized from the securities traded in the Texas market. It is important to note, however, that the Senchack and DeVito study pertained to the sale of a relatively small number of securities in the secondary market. In the present study the primary market for securities registered for sale in Texas between 1970 and 1977 is the focus. 
Table 5 
Licenses Issued by St ate Securities Board, Fiscal Years 1970-1976 

Year Corporate 
19 70 197 1 1972 1973 1974 1975 1976 1977 
664 76 1 840 775 7 19 70"1 696 735 
Individ ual 
19 1 205 185 189 193 190 184 174 
Dealers in oil and gas in terest 
760 636 595 55 0 55 0 538 5 11 500 
Salesmen 
8,8 35 8,569 8,679 9,04 3 9,246 8,7 38 8, 699 8,9 2 9 
In vestment adviso rs 
65 102 11 5 125 14 8 14 9 176 195 
Real estate investment trust Total 
2 	10,5 17 10,273 10,41 4 
7 10,689 25 10,88 1 43 10,359 45 10,311 48 10,581 

Source: Office of the State Securities Board, "License Activity Summary ," for each fiscal year. 
Current Interest Rates 

To make any financial decision, one must consider the relevant current interest rate, which can be easily obtained from numerous printed sources. Perhaps of greater impor­tance, however, is the future level of the interest rate. If the current rate is 8 percent, for example, a decision to borrow or lend will be affected by anticipation of lower (say 7 percent) or higher (say 9 percent) rates for tomorrow. 
Recently the average yield on prime corporate bonds has been below 8 percent, a lower yield than we have become accustomed to during the past few years. Does this mean that we have entered an era of declining rates? Or does it perhaps mean that the earlier rates were normal and we can now expect a return to higher levels? 
Expectations about interest rate changes are affected by the relation between the current rate and our impression of the normal rate of interest. But what is a normal rate of interest? A glance at the rates of the last few years shows that the recent long-term rate is below the October 1974 daily average of 9 .27 percent and that the current short­term rate of 6 percent is far below the July 1974 average of 
11.72 percent.1 The trend of long-term rates since 1946 suggests that this decline in rates is indeed an aberration. From a low of 2.37 percent after World War II , the long-term rate has persistently increased with only short­lived retreats from the long-term upward movement. The short-term rate has followed a similar upward trend from an even lower and earlier base of 0.SO percent in 1941 . 
In order for these rates to reach the low levels recorded in the 1940s, however, they had to decline from a higher level. In fact, the one consistent feature of long-term interest rates since 1860 is the occurrence of prolonged periods of rising rates and prolonged periods of falling rates. Although space does not permit a listing of all the annual rates, the decennial averages from 1860 to 1969 and the average for the first seven years of the 1970s give some indication of these trends. Within this span of time the periods of decreasing rates were from 1860 until the tum of the century and from 1920 until the 1940s, with rising 

in Perspective 


Charles T. Franckle 

rates during the remaining periods. This pattern is not as clearly defined for short-term rates; however, since they are more volatile, it is not surprising that the trends for short-term rates are more difficult to recognize. The one thing that can be inferred with some degree of confidence is that rates will continue to rise and fall. 
The question that remains unanswered is whether we have reached a turning point in interest rates. The highest long-term rate attained in the previous cycle was only 5.56 percent in 1920, and before that the highest comparable rate was 8.23 percent in 1857. Furthermore, the recent short-term rate of 11 .72 percent in 1974 is higher than any since the 16.50 percent rate recorded in 1873. What factors account for the fact that interest rates have recently been at century-high levels? 
The main impetus for higher rates must be attributed to expected inflation. Loans are usually contracted in money terms ; for example, loan $100 today and expect to receive $100 plus interest one year from now. If inflation occurs during the year, then the $100 received at the end of the year is worth less than the $100 lent at the beginning. Therefore a lender who expects inflation during the period of the loan feels that he should be compensated for a loss in 
Relationship between U.S. Short-Term Interest Rates and Inflation, 1970-1976 

Average annual  Annual change in  Real rate of  
yie ld  consumer price index  return (col. 1  
Year  (percent)  (percent)  m in us col. 2)  

1970  7.7  5 .5  2.2  
1971  5.1  3.5  1.6  
1972  4 .7  3.5  1.2  
1973  8.2  8.8  - 0.6  
1'}74  9.9  12 .2  - 2.3  
1975  6.3  7 .0  - 0 .7  
1976  5.4  4.8  0.6  

Sources: U.S. Department of Labor, Bureau of Labor Statistics and 
U.S. Department of Commerce, Survey of Current Business, various issues. 

NOVEMBER-DECEMBER 1977 
purchasing power by a higher interest rate than would be charged if he expected no inflation. If he cannot get the higher rate, he may prefer to buy a real asset that will increase in nominal value as prices rise. The borrower will probably be willing to pay a higher interest rate to purchase a real asset if he thinks it will appreciate. Thus interest rates should rise with increases in expected inflation. This does not mean that if the rate of inflation is expected to be 10 percent, the interest rate should be 10 percent higher than it would be if no inflation were expected. There may not be many viable alternatives for holding wealth other than by means of financial assets, even though their value is eroded 
by inflation. 
When the depreciative effect of inflation is considered, 

the high short-term rates of the 1970s have actually 
provided a very small and sometimes even negative real rate 
of return for lenders. The short-term rate is a better 
indicator of the rate of return in any one year than the 
long-term rate because the long-term rate is the average 
yield over the life of the bond and, thus, is not an accurate 
indicator of the rate of return for any one year. However, 
there is a positive relationship for all rates; if a rise in the 
rate of inflation causes expectations of further inflation, 
then interest rates will probably rise further. That we in the 
United States have not yet reached the possible limit of this 
effect is illustrated by Chile's experience in 1976, when the 
rate of inflation was 254 percent and the short-term 
interest rate ranged between 160 and 340 percent.2 
If inflation is responsible for our high rates, shouldn't we 

have had very low rates during the depression years, when 
prices actually fell? The same rationale should hold for this 
case; yet the long-term rate was over 4 percent. This fact 
can be accounted for by the special circumstances of that 
era. The entire economy was in such a poor state that there 
existed substantial uncertainty and risk associated even 
with high-grade bonds. To compensate for the uncertainty 
and risk, it was necessary to offer a higher interest rate in 
order to sell the bonds. 
Thus a period of deflation does not necessarily mean low 

interest rates. On the other hand, does a time of abnormally 
low interest rates mean that it must also be a time of deflation such as during the 1940s? No, since these unusually low rates can be attributed to the behavior of the Federal Reserve. In order to prevent the public from delaying purchase of the securities of the U.S. Treasury issued to finance World War II, the Federal Reserve announced that it would purchase these securities in sufficient quantities to maintain low interest rates for the duration of the war, a policy it continued to pursue until the Treasury-Federal Reserve accord of March 4, 1951. 
Every period, including the present, in which interest rates have seemed abnormally high or low relative to historical levels has been characterized by peculiar circum­stances that make those rates seem normal for that time. However, there appears to be a basic change in the behavior of recent rates, a change that sets them apart from earlier periods-that is, an increase in their volatility. This can have a detrimental effect on the flow of funds in the financial market and thus on saving and real investment. A potential lender would be cautious about purchasing a long-term bond if there were a good chance that interest rates would rise and decrease the value of his financial investment. Borrowers would also be more reluctant to commit themselves to a long-term obligation at any rate of interest if rates were as likely to fall substantially as they are to rise. 
One measure of this volatility is the difference between the highest and lowest monthly average for each year. For short-term rates, the seven-year average of this spread during the 1970s is higher than the average for any other decade in the nineteenth century. The large differences that occurred previously can probably be attributed to the fact that the Federal Reserve was not in operation prior to 1914. During this earlier period, currency could not expand sufficiently to meet the periodic demands caused by fluctuations in real production. Banks had to call in loans from other sectors to meet these demands, thus creating a liquidity crisis and a sharp rise in short-term rates. 
The increased volatility is even more apparent in the long-term rates. Their average annual spread for the last seven years is much greater than for any previous decade. Even the high average of the 1960s was caused by the more recent fluctuations. If we consider the decade from 1967 to 
A Comparison of the Level and Volatility of U.S. Long-Term 
Interest Rates, 1860-1976 

Average annual  Greatest spread between  Average annual  
yield  mo nthly averages during  spread between  
Period  (percent)  any o ne year  monthly high and low  
1860-1869  5.90  1.20  0.583  
1870-1879  5.67  0.44  0 .255  
1880-1889  4 .00  0.46  0.175  
1890-1899  3.53  0 .35  0.199  
1900-1909  3.47  0.44  0 .146  
19 10-19 19  4 .23  1.00  0 .268  
1920-1929  4 .56  0.64  0.312  
1930-1939  3.64  0.67  0 .371  
1940-1949  2.61  0.33  0.135  
1950-1959  3.33  0.65  0.371  
1960-1969  5.00  I.I 7  0.505  
1970-1976  7.99  1.44  0.709  
1967-1976  7.46  1.44  0.781  

Sources: For years through 1962 all interest rates were taken from Sidney Homer, A History ofInterest Rates (New Brunswick, N.J .: Rutgers University Press, 1962). More recent data were found in U.S. Department of Commerce, Survey of Current Business, various issues. 
TEXAS BUSINESS REVIEW 1976, we see that the average spread is 0.781 percent, against an average of 0.314 percent for 1960 to 1966. Ignoring the Civil War period, we see that the greatest previous changes seem to have occurred during the 1930s and 1950s. A comparison of the year-to-year change in annual yields during these periods with those of the last ten years reaffirms the distinct character of the current situation. Although the interest rates were changing during both of the earlier periods, some regularity exists in that changes were mainly decreases during the 1930s and increases during the 19 50s. In the latest decade, however, we have had large changes in both directions. Thus, not only are the changes greater, but also the direction is more uncertain. 

The historically high level does not mean that interest rates must start falling. As long as the prospect of continued inflation is with us, we can anticipate relatively high rates. A development that may be more unsettling for the financial markets than the high level of rates is the increased uncertainty about rate movements. If this interest rate instability continues, lenders and borrowers will both become reluctant to make long-term financial commit­ments, a development that could adversely affect our economy in the long run. This is not to say that high rates are preferable to unstable rates. After all, the demise of the economies of Babylonia, Greece, and Rome was preceded by historically high interest rates. 3 
Notes 

1. 
The long-term rates are Macaulay's Adjusted Railroad Bond Average from 1857 through 1899, Durand Basic Yields of Corporate Bonds for thirty-year prime corporate bonds from 1900 through 1962, and Moody's Aaa corporate bond series for the remainder of the period. The short-term rate is for four-to six-month prime commercial paper. For years through 1962 all interest rates were taken from Sidney Homer, A History of Interest Rates (New Brunswick, N.J.: Rutgers University Press, 1962). More recent data were found in U.S. Department of Commerce, Survey of Current Business, various issues. 

2. 
Inter-American Development Bank, Economic and Social Prog­



ress in Latin America, 1976 Report (Washington, D.C., 1977), p. 
191. 
3. A History of Interest Rates, pp.63-65 . 

Year-to-Year Changes in the Annual Average Long-Term Interest Rates for Selected Periods: 1930-1939, 1950-1959, and 1967-1976 
Changes in 
percentage points 

1.2 
1.1 
1.0 
0 .9 

0 .8 


0.7 
0.6 
0.5 0.4 0.3 0.2 0.1 0 
-0 .1 -0 .2 -0 .3 
-0.4 
-0.5 -0.6 -0.7 
1st

Source : For the years through 1959 all interest rates were taken from Sidney Homer, A History of Interest Rates (New Brunswick, N.J.: Rutgers University Press, 1963). Interest rates for the last period were found in U.S. Department of Commerce, Survey of Current Business, various issues. Calculations are those of the author. 


A Comparison of the Level and Volatility of U.S. Four-to Six-Month 
Prime Commercial Paper Rates, 1860-1976 

Average annual  Greatest spread between  Average annual  
yield  monthly averages d uring  spread between  
Perio d  (percent)  any one year  mo nthly high and low  

1860 -1869  7 .07  7.50  3.30  
1870-1879  6 .46  10 .06  3.94  
1880 -1889  5 .14  2 .80  1. 8 7  
1890-1899  4 .5 1  7 .22  2.74  
190 0-190 9  5 .60  2.45  1.60  
19 10 -1919  5.19  3. 32  1.3 3  
1920 -1929  5 .0 9  2.75  1.29  
1930 -1939  1.56  2. 38  0 .9 6  
1940 -1949  0 .87  0.25  0 . 11  
1950-1959  2 .58  1.99  0 .8 5  
1960-1969  4 .64  2.31  0.9 1  
1970­1976  6 .75  4.45  2. 46  

Sources: For years through 1962 all interest rates were taken from Sidney Homer, A History of Interest Rates (New Brunswick, N.J. : Rutgers University Press, 1962). More recent data were found in U.S. Department of Commerce, Survey of Current Business, various issues. 
NOVEMBER-DECEMBER 1977 

Beaumont-Port Arthur-Orange Processing Center for Extractive Industries 

Carol T.F. Bennett 
The Beaumont-Port Arthur-Orange metropolitan area has the strongest manufacturing concentration of any SMSA in Texas. Over one third of personal income derives from manufacturing, which is heavily specialized in the processing of extractive materials: petroleum, wood, and ore. Despite a high unemployment rate, area income is high and past trends toward out-migration are slowing and may be reversing. With its economy focused on a small number of goods-producing industries, the Beaumont-Port Arthur­Orange area has exhibited greater instability owing to business cycles than have most Texas urban areas. The upturn in the national and international economies is expected to have a larger positive impact on this area than it has had on others in the state. Furthermore, the SMSA's own policies may result in future expansion for the local economy where contraction had occurred in the past. 
Raw materials have always been processed in the Beaumont area. This fact was determined early in its history by the four natural bodies of water that serve the area: the Neches and Sabine rivers, Sabine Lake, and the Gulf of Mexico. By 1840 Beaumont had become the processing and trade center for the East Texas lumber industry, a function that Orange was later to share, as logs were floated down the Neches and Sabine rivers to the mills. Man-made transportation access was enhanced in the 1890s when Port Arthur was chosen as the southern terminal for the Kansas City Southern Railroad and the Port Arthur Canal was built to allow oceangoing ships to dock at the city. Other canals followed, and today the area is served by the Gulf Intracoastal Waterway and the Sabine-Neches Ship Channel. The port of Beaumont handles the second largest tonnage of all ports in the state, and Port Arthur ranks fourth. 

Spindletop, by far the largest producing oil field to the date of its discovery in 190 l, was located just a few miles to the south of Beaumont. By 1903 three large refineries had been established at Beaumont and Port Arthur, and oil refining still constitutes the largest single economic activity. The manufacturing of oil field equipment began soon after, and large-scale shipbuilding started during the 1930s. Petrochemical production began during and just after the second world war, developing with the technology in the petrochemical industry. The most recent major manufac­turing industry to locate in the Beaumont-Port Arthur­Orange area is primary steel production. 
Population, Employment, and Personal Income 
The Beaumont-Port Arthur-Orange SMSA consists of Jefferson, Orange, and Hardin counties. The Bureau of the Census estimates the July 1975 population at 350,521 persons, while the Beaumont Chamber of Commerce estimates the 1977 area population at some l 0 percent higher. The official statistic shows less than 1 percent population increase over the five years since the census of 1970, with out-migration of about 3 percent offsetting the larger number of births than deaths. 

Jefferson County and the city of Beaumont actually lost population in the decade of the 1960s despite the 16.9 percent growth of Texas overall. Although Jefferson Coun­ty had a smaller number of residents in 1975 than it had in 1960, the growth of Hardin and Orange counties has more than compensated. Orange County grew about 5.6 percent from 1970 to 1975, on top of a 17 .9 percent increase in the 1960s. Hardin County grew 13 .6 percent in the recent time period after increasing by 21.8 percent from the earlier decade. In recent years most of the growth in Hardin County has been due to in-migration, while most of the growth in Orange County has been the result of natural increase. Out-migration from Jefferson County has been significant in past years, though the trend is slowing. Since 
NOVEMBER-DECEMBER 1977 Beaumont is situated at the intersection of the three-county area, any growth of the city to the north or the east is likely to draw population from Jefferson County into the other two counties. 
The Bureau of Economic Analysis projects the popula­tion of the Beaumont-Port Arthur-Orange SMSA to be significantly higher by 1990 than it is at present. Construe­

. tion statistics, which indicate growth of an area, support this projection: the value of building permits in the area is 63 percent higher in 1977 than in 1976, when the value was itself 49 percent higher than in 1975. Both nonresidential 
and  residential  construction  statistics  show  sizable  in­ 
creases.  
The  manufacturing  sector  clearly  dominates  the  

Beaumont-Port Arthur-Orange economy. Of the nonagricul-
The Beaumont-Port Arthur-Orange SMSA 



tural civilian labor force , 29 .9 percent work in the manufacturing sector, and because these workers tend to be well paid, manufacturing accounts for 35 .69 percent of total personal income in the SMSA. This statistic represents well over double the state average manufacturing percent­age and 84 percent more than the national average. 
The most important industry in terms of numbers of employees is petroleum refining. Over 13 ,800 workers are employed in refineries in Jefferson County; according to County Business Patterns, this sum represents 43.3 percent of Texas refinery workers and 13. 7 percent of national employment in that industry. Nearly one half of all manufacturing employees in Jefferson County work at the four major and several smaller oil refineries. 
Chemicals and allied products are second in importance, with more plants but fewer employees than are engaged in refining. Nearly 15 percent of all Texas chemical employees work in Jefferson and Orange counties, and in Orange location of oil, gas, and sulphur mmmg in the area. Contract construction is important in the SMSA, employing a portion of the labor force over twice the national average in recent months. The statistics for the first half of 1977 show a gain of 63 percent from the impressive 49 percent gain in 1976. Most of the gain for 1976 was in residential construction, while a very large increase in nonresidential building has occurred in 1977. According to statistics compiled by the Bureau of Business Research in Building Construction in Texas, the cities of Port Neches, Beaumont, and Orange show high levels of construction value per capita. 
Transportation, communication, and public utilities appear more significant to the area economy than they do to the state or national economies on the average. This sector is dominated by water transportation and marine cargo handling at the dock facilities. Trucking and ware­housing of shipped goods is also a major employer. Gulf 
More than 43 percent of Texas refinery 
workers are employed in Jefferson County. 

County this industry employs nearly half of all manufactur­ing workers. Synthetic rubber, plastics, and industrial chemicals are the principal products. Shipbuilding and repairing are also major industries in the area. About five thousand workers are engaged in shipbuilding in the Beaumont-Port Arthur-Orange SMSA; this number consti­tutes almost 40 percent of Texas employment in the industry. The lumber industry is concentrated in Hardin County, where it employs 45 percent of all manufacturing workers there. 
Mining employs the same percentage of the labor force in the Beaumont-Port Arthur-Orange SMSA as it does in the United States generally, though far less than it does in Texas on the whole. Jefferson County is the primary 
Nonagricultural Civilian Payroll Employment Percentages 
Beaumont-Port Arthur-Orange SMSA and 
United States, July 1977 

Beaumont- 
Port Arthur- United  
Category  Orange SMSA  States  
Mining  1.0  1.0  
Contract construction  10.5  5.0  
Manufacturing  29.9  23.9  
Transportation ,  
communication, and  
public utilities  7 .5  5.6  
Trade  20.4  22.3  
Finance, insurance ,  
and real estate  3.6  5.6  
Services  13.9  18.8  
Government  13.2  17.8  


Sources: Beaum ont-Port Arthur-Orange data obtained from Labor Market Review (Texas Em ployment Commission, August 1977). 
U.S. data from Employment and Earnings (U.S. Department of Labor, August 1977). 

States Utilities, the third largest power company in the state, is headquartered in Beaumont. 
The wholesale and retail trade sector is quite small relative to trade employment in most urban areas. Trade employs just over 20 percent of area workers, but this fraction is smaller than in all but a few other Texas SMSAs and smaller than the entire U.S. average, which includes nonmetropolitan areas. According to County Business Patterns, retail trade is the more important component, employing 78.7 percent of trade workers; the state average ratio is 72.6 percent. 
One reason for trade appearing as a relatively minor aspect of area income is that manufacturing dominates the economy to such a degree that all other sectors are dwarfed in comparison. Another factor is the proximity of Houston to the Beaumont area. Where some SMSAs have large trade areas surrounding the city, much of the population sur­rounding the Beaumont-Port Arthur-Orange SMSA is drawn to Houston, rather than to the more proximate cities, for major consumer purchases, business orders, and entertain­ment. 
The same factors account for services appearing as a fairly small part of income and employment. As in the case of trade, service centers are expected to be found in large urban areas, in which people from outlying areas receive medical care, attend conventions, and purchase professional and personal services. However, services employ only 13.9 percent of Beaumont area workers, against a national average of 18.8 percent. Similarly, finance, insurance, and real estate are smaller sectors than in most SMSAs since many of the larger transactions are negotiated in Houston. 
Despite the present levels, there are indications that the trade and service sectors of the Beaumont-Port Arthur­Orange economy may grow. Both wholesale and retail trade facilities have been expanded recently. Attempts are being made to attract tourist and convention business: the new civic center, scheduled for completion in 1979, will have the potential to attract some of the larger conventions. Developments in progress at the Big Thicket National Preserve, much of which is located in Hardin County, and at Sea Rim State Park in southeast Jefferson County, are expected to generate tourist business in the area. Recently Beaumont has begun building on its own history with, among other things, a reconstruction of the Spindletop boom town of Gladys City and a monument to Babe Didrikson Zaharias, the great woman athlete and Beaumont native. Orange, too, is investing in civic construction. 
The government sector is another area that shows a sharp divergence with statewide income patterns. Where over 6 percent of Texas income is derived from federal civilian and military employment, only one fourth of that percentage results from federal sources in the Beaumont­Port Arthur-Orange SMSA. State and local government income as a percentage of total area income approaches the Texas average. Under this category is Lamar University, which employs four hundred faculty members and has a student enrollment of twelve thousand. In addition to a liberal arts curriculum Lamar has a strong orientation toward engineering and other technical specializations and houses the Oil and Gas Drilling Institute. 
Income earned through labor and proprietorship, espe­cially in the private sector, is a large portion of total area income. Unearned income sources-dividends, interest, rent, 
Percentage of Personal Income by Major Sources 
Beaumont-Port Arthur-Orange SMSA and Texas 
Beaumont-Port Arthur-Source Orange SMSA Texas 
Agriculture  l.l l  2.63  
Mining  1.15  3.52  
Constructio n  6.24  5. 56  
Manufacturing  35.69  15.14  
Transportation, communication,  
and public utilities  7.10  5.84  
Wholesale and retail trade  10.65  14.54  
Finance, insurance,  
and real estate  2.19  4.04  
Services  9.18  11.45  
Other industries  0.11  0 .27  
Total private labor and  
proprietor income  73.42  62 .99  
Federal civilian  0.90  3.29  
Federal military  0 .63  2.79  
State and local  6.84  7.66  
Total government earnings  8.37  13.74  
Total labor and proprieto r  
income (place of work)  81.79  76.73  
Less: Personal contributions  
for social insurance  4.13  3 .7 8  
Residence adjustment  -1.32  0 .15  
Net labor and proprieto r  
income (place of residence)  76.34  73.10  
Dividends, interest , and rent  12 .79  15.64  
Transfer payments  10.87  11.26  
Total personal income  
(place of residence)  100.00  100.00  

Source: Developed from 1975 data compiled by the Regional Economics Information System, Bureau of Economic Analysis, Department of Commerce. 
and transfer payments-are correspondingly lower than the state average. Finally, the residence adjustment statistic indicates that 1.32 percent of income earned in the Beaumont-Port Arthur-Orange SMSA accrues to people who live outside the three-county area. The residence adjustment figures for the counties show a great deal of commuting to Jefferson County, probably as a result of Beaumont being situated at the junction of all three counties. 
Key Manufacturing Industries 
Manufacturing in the Beaumont-Port Arthur-Orange SMSA is heavily concentrated in the petroleum refining and petrochemical industries. The largest plants are petroleum refineries: Texaco is the largest employer in the area, with over five thousand workers at its Port Arthur plant, while Gulf in Port Arthur and Mobil in Beaumont each have plants that employ one thousand to five thousand workers. All three of these refineries were established in the first years of the century; Union Oil arrived in the 1920s. 
The largest shipbuilding plants were established in a second wave of manufacturing enterprise in the Beaumont area just before and after the two world wars. Levingston Shipbuilding in Orange and Bethlehem Steel in Beaumont, which manufactures both offshore drilling platforms and ships, each employ from one thousand to five thousand workers, while Gulfport and other shipbuilding and repair­ing firms are somewhat smaller. 
Most petrochemical plants were established in the 1940s and 1950s. The 1976 Directory of Texas Manufacturers lists fifteen petrochemical plants with more than one hundred employees in the Beaumont-Port Arthur-Orange area, and over half of these plants employ more than five hundred persons. The largest petrochemical plant in the SMSA is the Du Pont facility in Orange with over one thousand employees. Five of the fifteen plants produce synthetic rubber, often in conjunction with other petro­chemical products. The oldest plants in this industry tend to be the largest; the most recently established plants have tended to be among the smallest. 
The metal fabrication industry is a significant one in Jefferson County, where many of the products are used in 
Tank cars, area refinery 


NOVEMBER-DECEMBER 1977 
Selected Barometers of Texas Business (Indexes-Adjusted for seasonal variation-1967=100) 
Percent change  
Index  Sep 1977  Aug 1977  Year-to-date average 1977  Sep 1977 from Aug 1977  Year-to­date average 1977 from 1976  

Crude oil production  I00.6p  100.7p  101.8  ••  - 5  
Total electric  
power use  202.3p  204.2p  204.6  l  11  
Residential  228.6p  236.3p  252.6  3  10  
Industrial  I 75.3p  171.0p  172.1  3  12  
Total industrial  
production  141.3p  139.0p  138.0  2  
Urban building  
permits issued  411.6p  357.8p  315.5  15  35  
New residential  604.7p  480.8P  395.7  26  57  
New nonresidential  
(unadjusted}  256.3p  242.lp  243.6  6  14  
Total no nfarm  
employment  I SO .Ip  148.3p  148.4  3  
Manufacturing  
employment  l 34.9p  I 33.3p  132.5  3  
Average weekly earn- 
ings-manufacturing  204.7p  I 99.3p  194.2  3  7  
Average weekly hours- 
manufacturing  98.9p  98.2p  96.8  l  2  
Total unemployment  174.7  169.8  169.6  3  4  
Insured unemployment  272.6  280.9  255.6  3  4  
PPreliminary.  
**Change is less than one half of I percent.  





Statistics 


RESIDENTIAL AND INDUSTRIAL ELECTRIC POWER USE IN TEXAS 
300 
250 
I 
Res1den111I '\ I '°\
\,'°"\


,,,,,} /'

200 
''\ J 
.. ).·\ lnduun.11 ..
150 
1970 1971 1972 1973 1974 1975 1976 Source, Reports by electric power companies and Federal Power 
Commission . 



in Review 

Gross Sales by Standard Metropolitan 
Statistical Area, Texas* 

Percent change
Values in 
1976
thousands of dollars 
from Area 1976 1975 1975 

Abilene Amarillo Austin Beaumont-Port Arthur-
Orange Brownsville-Harlingen-

San Benito Bryan-College Station Corpus Christi Dallas-Fort Worth El Paso Galveston-Texas City Houston Killeen-Temple Laredo Longview Lubbock McAllen-Pharr-
Edinburg Midland Odessa San Angelo San Antonio Sherman-Denison Texarkana § Tyler Waco Wichita Falls 
1,409,179 2,015 ,960 2,688,950 
3,945,414 
1,008,981 413,316 5,I I 5 ,360 32,849,743 3,395,974 2,256,342 37,915,459 949,009 553,049 1,946,863 2 ,024,467 
1,243,451 677,055 1,585,774 622,368 6,854,177 703,170 439,125 962,985 1,436,1 77 942,496 
1,243,994  13  
1,675,9 16  20  
2,332,444  I 5  
3,469,732  14  
911,319  11  
342,037  21  
4,389,021  17  
27 ,555,961  19  
3,111,959  9  
2,142,592  5  
33,842 ,37 1  12  
777,559  22  
5 14,256  8  
1,671,894  16  
1,689 ,052  20  
1,076,554  16  
62 1,369  9  
1,474 ,888  8  
5 19,347  20  
5,903,690  16  
782,901  - 10  
388, 173  13  
869,955  11  
1,2 79,210  12  
860,293  10  

*Gross sales as reported by all establishments to Sales Tax Division, State Comptroller of Public Accounts. § Bowie County, Texas, o nly . 
U.S. WHOLESALE AND CONSUMER PRICES 
180 160 140 
120 
19'1 19'1 19'3 1975 
Source Bureau of Labor Stat1sllcs. US Department of Labor. 


NOVEMBER-DECEMBER 1977 

Index 


Texas Business Review 


Volume LI 1977 

Askari, Hossein 
Bennett, Carol T.F. 
Bennett, Carol T.F. 
Bennett, Carol T.F. 
Bennett, Carol T.F. 
Bennett, Carol T.F. 
Bennett, Carol T.F. 
Blair, Calvin P. 
Blissett, Marian 
Boyle, James G. 
Briggs, Vernon M., Jr. 
Cannon, Susanne Ethridge 
Cannon, Susanne Ethridge 
Creasey, James 
DeVito, Peter A. 

Duke, Robert C. 
Firestine, Robert E. 

Franckle, Charles T. 
Franckle, Charles T. 
Gordon, Wendell 


Author Index 

Texas and OPEC: A Case of Economic Interdependence Amarillo and Lubbock: The Hubs of the Panhandle-Plains Region Beaumont-Port Arthur-Orange: A Processing 
Center for Extractive Industries El Paso Economic Profile The Lower Rio Grande Valley: An Area of 
Rapid Growth Midland-Odessa: An Economy Based on Energy San Antonio: A Military, Trade, and Service 
Center Mexico: Some Recent Developments Implementing the Energy Policy and Conservation 
Act in Texas Do Finance Companies Need to Raise Their Rates? The Problem of Illegal Immigration Remodeling in Texas Texas Construction Texas and OPEC: A Case of Economic Interdependence Investing in the Texas Over-the-Counter 
Securities Market Do Finance Companies Need to Raise Their Rates? Industrial Dispersal in a Growing Metropolitan 
Economy: The Case of Dallas Current Interest Rates in Perspective Inflation and Consumer Financial Wealth The Problem of Illegal Aliens September, p. 193 
June,p. 125 
November-December, p. 244 January, p. 4 
September, p. 204 March, p. 58 
July, p, 144 May, p. 98 
September, p. 197 
February, p. 32 
August, p. 171 
August, p. 176 
September, p. 210 
September, p. 193 
April, p. 76 
February, p. 32 
February, p. 27 November-December, p. 241 April, p. 73 August, p. 167 Knapp, Charles B. 

Knepper, Diana L. 
McDonald, Stephen L. McKie, James W. 
Monti, Lorna Monti, Lorna Monti, Lorna Niemeyer, E. Victor Pendleton, Randy Senchack, Andrew J ., Jr. 
Spellman, Lewis J. 
Spellman, Lewis J. 
Stephens, A. Hugh 
Walker, Ernest W. 
Weinstein, Bernard L. 
Winkel, Judy 
Wurtzebach, Charles H. 
Wurtzebach, Charles H. 
Wurtzebach, Charles H. 
Wurtzebach, Charles H. 
Wurtzebach, Charles H. 
Wurtzebach, Charles H. 
Wurtzebach, Charles H. 
Wurtzebach, Charles H. 
Wurtzebach, Charles H. 
Zlatkovich, Charles P. 
Zlatkovich, Charles P. 
Zlatkovich, Charles P. 
Zlatkovich, Charles P. 
Zlatkovich, Charles P. 
Zlatkovich, Charles P. 
Air Travel Patterns and Regional Orientation 

Stimulating the Economy : President Carter's Economic Recovery Package College Enrollment Shifts Anticipate Current 
Job Market Energy Policy and the Price System Natural Gas in the National Energy Plan: How 
Will It Affect Texas Industry? Current Trends in the Texas Economy How Oil Supports Prosperity in Texas Inflation and the Cost of Living in Texas Recent Income and Employment Trends in Texas Do Finance Companies Need to Raise Their Rates? Investing in the Texas Over-the-Counter 
Securities Market Inflation and Consumer Financial Wealth The Limits of the Housing Price Boom The Limits of the Housing Price Boom Securities Registration in Texas, 1970-1977 Industrial Dispersal in a Growing Metropolitan 
Economy: The Case of Dallas Do Finance Companies Need to Raise Their Rates? Construction Activity and the Tax Reform Act 
of 1976 The High Price of Housing Remodeling in Texas Texas Building Permit Fluctuations in the 
Seventies Texas Construction Texas Construction Texas Construction in 1976 Texas Construction: Seasonal Influences Texas Construction: SMSA Activity Air Travel Patterns and Regional Orientation Amarillo and Lubbock: The Hubs of the 
Panhandle-Plains Region El Paso Economic Profile The Lower Rio Grande Valley: An Area of 
Rapid Growth Midland-Odessa: An Economy Based on Energy San Antonio: A Military, Trade, and Service 
Center 


Title Index 
Charles P. Zlatkovich 
Amarillo and Lubbock: The Hubs of Charles P. Zlatkovich and Carol 
the Panhandle-Plains Region T.F. Bennett Beaumont-Port Arthur-Orange: A Processing Center for Extractive Industries Carol T.F. Bennett College Enrollment Shifts 
Anticipate Current Job Market Diana L. Knepper February, p. 21 
July, p. 141 October, p. 220 
June, p. 117 March, p. 53 January, p. l May, p. 93 October, p. 217 February, p. 32 
April, p. 76 April, p. 73 August, p. 16 l August, p. 161 November-December, p. 237 
February, p. 27 February, p. 32 
January, p. 8 July, p. 149 August, p. 176 
October, p. 232 April, p. 79 May, p. 96 February, p. 24 March, p. 56 June, p. 122 October, p. 225 
June, p. 125 January, p. 4 
September, p. 204 
March, p. 58 
July, p. 144 
October, p. 225 June, p. 125 
November-December, p. 244 July, p. 141 
NOVEMBER-DECEMBER 1977 
Construction Activity and the Tax Reform Act of 1976 Current Interest Rates in Perspective 
Current Trends in the Texas Economy Do Finance Companies Need to Raise Their Rates? El Paso Economic Profile 
Energy Policy and the Price System The High Price of Housing How Oil Supports Prosperity in Texas Implementing the Energy Policy and 
Conservation Act in Texas 
Industrial Dispersal in a Growing Metropolitan Economy: The Case of Dallas 
Inflation and Consumer Financial Wealth Inflation and the Cost of Living in Texas Investing in the Texas Over-the­Counter Securities Market The Limits of the Housing Price Boom 
The Lower Rio Grande Valley: An Area 
of Rapid Growth Mexico: Some Recent Developments Midland-Odessa: An Economy Based on 
Energy 
Natural Gas in the National Energy 
Plan: How Will It Affect Texas 
Industry? 

The Problem of Illegal Aliens The Problem of Illegal Immigration Recent Income and Employment Trends 
in Texas 
Remodeling in Texas 

San Antonio: A Military, Trade, and 
Service Center 
Securities Registration in Texas, 
1970-1977 

Stimulating the Economy: President 
Carter's Economic Recovery 
Package 

Texas and OPEC: A Case of Economic Interdependence Texas Building Permit Fluctuations 
in the Seventies Texas Construction Texas Construction Texas Construction Texas Construction in 1976 Texas Construction: Seasonal Influences 
Texas Construction: SMSA Activity 

Charles H. Wurtzebach 
Charles T. Franckle Lorna Monti Judy Winkel, Robert C. Duke, Randy 
Pendleton, and James G. Boyle Charles P. Zlatkovich and Carol 
T .F. Bennett Stephen L. McDonald Charles H. Wurtzebach Lorna Monti 
Marian Blissett 
Bernard L. Weinstein and Robert 
E. Firestine 
Charles T. Franckle and Lewis J. Spellman 
Lorna Monti Andrew J. Senchack, Jr., and Peter 
A. DeVito Lewis J. Spellman and A. Hugh 
Stephens Charles P. Zlatkovich and Carol 
T.F. Bennett Calvin P. Blair Carol T.F. Bennett and Charles P. 
Zlatkovich 
James W. McKie Wendell Gordon Vernon M. Briggs, Jr. 
E. Victor Niemeyer Susanne Ethridge Cannon and Charles H. Wurtzebach 
Carol T .F. Bennett and Charles P. Zlatkovich 
Ernest W. Walker 
Charles B. Knapp Hossein Askari and James Creasey 
Charles H. Wurtzebach Susanne Ethridge Cannon Charles H. Wurtzebach Charles H. Wurtzebach Charles H. Wurtzebach 
Charles H. Wurtzebach Charles H. Wurtzebach January, p. 8 
November-December, p. 241 March, p. 53 
February, p. 32 
January, p. 4 October, p. 220 July,p.149 January, p. 1 
September, p. 197 
February, p. 27 
April, p. 73 
May, p. 93 
April, p. 76 
August,p.161 
September, p. 204 
May, p. 98 
March, p. 58 
June, p. 117 
August, p. 167 
August, p. 171 
October, p. 217 August, p. 176 July, p. 144 November-December, p. 237 
February, p. 21 
September, p. 193 
October, p. 232 
September, p. 210 
April, p. 79 
May,p.96 
February, p. 24 
March, p. 56 
June,p. 122 



Local Business Conditions 

Statistical data compiled by Mildred Anderson and Marylyn Donaldson. 
Standard metropolitan statistical areas (SMSAs) include one or Census. They represent only building authorizations within city more entire counties, as shown. All SMSAs are designated as such by limits and exclude federal contracts and public works projects, such the U.S. Bureau of the Census. Population figures are from the 1970 as highways, waterways, and reservoirs. Building statistics for the census and 1975 estimates by the Bureau of the Census. latest month are subject to revision. 
Building permit data are collected from municipalities by the Employment estimates include only wage and salary workers and Bureau of Business Research in cooperation with the Bureau of the are compiled by the Texas Employment Commission in cooperation with the U.S. Bureau of Labor Statistics. 
Indicators of Local Business Conditions 
for Texas Standard Metropolitan Statistical Areas 

Percent change Percent change from from 
Sep Aug Sep Sep Aug Sep Reported area and indicator 1977 1977 1976 Reported area and indicator 1977 1977 1976 
ABILENE SMSA CORPUS CHRISTI SMSA 
Callahan, Jones, and Taylor Counties; population: 122,164 (1970); Nueces and San Patricio Counties; population: 284,832 (1970); 

128,400 (1975 est.) 297,300 (1975 est.) Urban building permits ($1,000} 4,384 53 58 Urban building permits ($1,000) 8,239 -35 110 Nonfarm employment 46,620 •• 2 Nonfarm employment 104,200 I I 
Manufacturing employment 5,530 -2 -16 Manufacturing employment 11,900 •• 6 Unemployed (percent) 4.6 -12 s Unemployed (percent) 6.4 •• 2 
AMARILLO SMSA DALLAS-FORT WORTH SMSA 
Potter and Randall Counties; population: 144,396 (1970); Collin, Dallas, Denton, Ellis, Hood, Johnson, Kaufman, 

152,000 (1975 est.) Parker, Rockwall, Tarrant, and Wise Counties; Urban building permits ($1 ,000} 6,588 -34 I population: 2,378,353 (1970); 2,552,800 (1975 est.) Nonfarm employment 68,600 1 3 Urban building permits ($1,000} 143,893 -13 87 
Manufacturing employment 8,560 10 4 Nonfarm employment 1,173,600 I 4 Unemployed (percent) 3.9 11 s Manufacturing employment 256,600 2 3 
Unemployed (percent) 3.4 -13 -21 AUSTIN SMSA Hays and Travis Counties; population: 323,158 (1970); EL PASO SMSA 
394,800 (1975 est.) El Paso County; population: 359,291(1970);414,700 (1975 est.) Urban building permits ($1,000} 18,116 -40 48 Urban building permits ($1,000) 13,921 -24 10 Nonfarm employment 182,500 1 4 Nonfarm employment 137,450 2 ** 
Manufacturing employment 19,550 •• 10 Manufacturing employment 29,250 I S Unemployed (percent) 4.8 7 2 
Unemployed (percent) 11.9 2 -S 

BEAUMONT-PORT ARTHUR-ORANGE SMSA GALVESTON-TEXAS CITY SMSA 
Hardin, Jefferson, and Orange Counties; population: Galveston County; population: 169,812 (1970); 

347,568 (1970); 349,500 (1975 est.) 182,000 (1975 est.) Urban building permits ($1,000) 7,946 -43 2 Urban building permits ($1,000) 6,174 80 418 Nonfarm employment 137,900 •• I Nonfarm employment 72,460 -I 7 
Manufacturing employment 41,300 •• I Manufacturing employment 11,760 •• -I Unemployed (percent) 6.8 8 7 Unemployed (percent) 6.4 -12 -IS 
BROWNSVILLE-HARLINGEN-SAN BENITO SMSA HOUSTON SMSA 
Cameron County; population: 140,368 (1970); 169,300 (1975 est.) Brazoria, Fort Bend, Harris, Liberty, Montgomery, and Waller Urbanbuildingpermits($1 ,000) 9,859 125 406 Counties; population: 1,999,316 (1970); 2,297,300 (1975 est.) Nonfarm employment S1,300 I 3 Urban building permits ($1,000} 131,630 2 23 
Manufacturing employment 9,410 4 S Nonfarm employment 1,166,000 ** 6 Unemployed (percent) 10.0 3 7 Manufacturing employment 191,400 •• 2 
Unemployed (percent) 4.6 -2 -19 BRYAN-<::OLLEGE STATION SMSA Brazos County; population: 57,978 (1970); 72,300 (1975 est.) KILLEEN-TEMPLE SMSA Urban building permits ($1,000) 5,292 125 71 Bell and Coryell Counties; population: 159,794 (1970); 
(Monthly employment reports are not available for the 210,500 (1975 est.) Bryan-College Station SMSA.} Urban building permits ($1,000) 5,787 40 -63 (Monthly employment reports are not available for the Killeen-Temple SMSA.) 
NOVEMBER-DECEMBER 1977 

Percent change Percent change from from 
Sep Aug Sep Sep Aug Sep Reported area and indicator 1977 1977 1976 Reported area and indicator 1977 1977 1976 
SAN ANTONIO SMSA 
LAREDO SMSA 
Bexar, Comal, and Guadalupe Counties; population: 

Webb County; population: 72,859 (1970); 78,100 (1975 est.) 888,179 (1970); 977,200 (1975 est.)
Urban building permits ($1,000) 3,451 2 5 328 

Nonfarm employment 25,720 1 2 Urban building permits ($1,000) 16,597 -34 -10 Manufacturing employment 1,900 ** 10 Nonfarm employment 333,750 ** I Unemployed (percent) 14.2 10 -13 Manufacturing employment 42,700 ** 3 
Unemployed (percent) 7.4 ** 4 LONGVIEW SMSA Gregg and Harrison Counties; population: 120,770 (1970); SHERMAN-DENISON SMSA 125,300 (1975 est.) Grayson County; population: 83,225 (1970); 79,ooo (1975 est.) 
Urban building permits ($1,000) 12,904 104 252 Urban building permits ($1,000) 3,932 4 7 249 Nonfarm employment 52,480 1 3 Nonfarm employment 31,250 I 6 Manufacturing employment 17,010 1 6 Manufacturing employment 11,220 I 10 Unemployed (percent) 5.6 2 -16 Unemployed (percent) 6.6 -3 -32 
LUBBOCK SMSA TEXARKANA SMSA 
Lubbock County; population: 179,295 (1970); 196,700 (1975 est.) Bowie County, Texas; Little River and Miller Counties, Arkansas; 
Urban building permits ($1,000) 12 ,069 16 82 population: 113,488 (1970); 114,700 (1975 est.) 
Nonfarm employment 82,970 3 5 Urban building permits ($1,000) 5,479 57 191 

Manufacturing employment 13,870 3 19 Nonfarm employment 41,340 2 4 Unemployed (percent) 3.0 • • -6 Manufacturing employment 8,380 ** 11 Unemployed (percent) 6.5 -4 -28 McALLEN-PHARR-EDINBURG SMSA (Since the Texarkana SMSA includes Bowie County in Texas and Hidalgo County; population: 181,535 (1970); 220,700 (1975 est.) 
Little River and Miller Counties in Arkansas, all data, including population, refer to the three-<:oµnty region.)
Urban building permits ($1 ,000) 7 ,4 78 -29 60 Nonfarm employment 56,960 2 3 

TYLER SMSA 
Manufacturing employment 7 ,000 -3 3 Unemployed (percent) 12.7 13 6 
Smith County; population: 97 ,096 (1970); 107,400 (1975 est.) 

Urban building permits ($1,000) 10,705 54 191 MIDLAND SMSA Nonfarm employment 43,250 I 3 Midland County; population: 65,433 (1970); 69,700 (1975 est.) Manufacturing employment 12,120 1 I 
Unemployed (percent) 4.8 -17 -9
Urban building permits ($1,000) 4,056 -64 -20 Nonfarm employment 31,630 10 4 Manufacturing employment 3,500 7 5 

WACO SMSA 
Unemployed (percent) 2.7 8 -7 McLennan County; population: 147,553 (1970); 
156,700 (1975 est.) 

ODESSA SMSA Urban building permits ($1 ,000) 6,141 -18 116 Ector County; population: 92,660 (1970); 98,800 (1975 est.) Nonfarm employment 63,310 1 3 Urban building permits ($1,000) 5,459 73 6 Manufacturing employment 14,780 ** I 
Nonfarm employment 44,380 ** 6 Unemployed (percent) 4.6 8 -13 Manufacturing employment 5,950 ** 9 Unemployed (percent) 3.0 3 3 WICHITA FALLS SMSA Oay and Wichita Counties; population: 128,642 (1970); SAN ANGELO SMSA 
130,700 (1975 est.)Tom Green County; population: 71,04 7 (1970); 74,800 (1975 est.) 
Urban building permits ($1 ,000) 2,861 -57 -7 Urbanbuildingpermits($1 ,000) 3,835 10 10 Nonfarm employment 47,380 1 3 Nonfarm employment 29,720 1 7 Manufacturing employment 8,290 ** II Manufacturing employment 5,490 1 4 Unemployed (percent) 3.4 -3 -17 Unemployed (percent) 3.2 19 -2 7 
**Absolute change is less than one half of I percent. 

Barometers of Texas Business 

(All figures are for Texas unless otherwise indicated.) 
All indexes are based on the average mo nths for J 967=100 except where other specification is made; all except annual indexes are adjusted for seasonal variation unless otherwise no ted. Employment estimates arc compiled by the Texas Employment Commission in cooperation with the Bureau of Labor Statistics of the U.S. Department of Labor. The sy mbols used below impose qualifications as indicated here: p preliminary data subject to revision; r-revised data; *-do llar totals for the fiscal year to elate; t -employmcnt da ta for wage and salary workers o nly. 
Sep Aug Sep Year-to-date average 1977 1977 1976 1977 1976 
GENERAL BUSINESS ACTIVITY  
Wholesale prices in U.S. (unadjusted index) .. .. ........ . ..... .  19S.3  194.6  1S4.7  193.2  lSl.9  
Consumer prices in Dallas (unadjusted index) .... • ...... ..... .  1S2.4  
Consumer prices in U.S. (unadjusted index) . .. . ... . . . ........ .  1S4.0  1S3.3  172.6  lS0.3  169.4  
Sales of ordinary life insurance (index) ...... . ... ........... .  314.3  297.7  267.4  2S3.S  2S0.3  
PRODUCTION  
Total electric power use (index) ... . ............. .. ....... . .  202.3p  204.2p  192.Sr  204.6  1S4.6  
Residential electric power use (index) ..... .. .. . ........... .  22S.6p  236.3p  22S.7r  2S2.6  230.0  
Industrial electric power use (index) . ... . .... ... ........ .. .  l 7 S .3P  171.0p  l 63.3r  172.l  l S3.S  
Crude oil production (index) . . ................. ... ... . ... .  100.6p  100.7p  10S.7r  101.S  106.S  
Average daily production per oil well (bbl.) ... . ..... . ........ .  17 .7  17.s  l S.6  lS.O  lS.9  
Industrial production-total (index) . .. ......... . ...... . .... .  141.3p  139 .OP  132 .Sr  l 3S.O  131.7  
Industrial production-total manufactures (index) ...... . .... .  149.6p  146.0p  l 3S .S r  14S.l  137.2  
Industrial production-durable manufactures (index) ... . . . ..•  l S4.6p  l S l.l p  139.2r  146.6  137.3  
Industrial production-nondurable manufactures (index) .. . .. .  14S .7p  142.0p  137.9r  143.9  137.l  
Industrial production-mining (index) .. .. .. . .......... . ... .  116.Sp  116.9p  l 14.3r  11 S.S  114.0  
Industrial production-utilities (index) . ... . ...... . ........ .  l S3.Sp  l S3.Sp  173.0r  1S3.6  169.9  
Industrial production in U.S. (index) .......... . .... . • .... . ..  l 3S.Sp  13S.2p  l 31.0r  136.S  129.l  
Urban building permits issued (index) .......... ............ .  4 l l.6p  3S7.SP  2S7.Sr  31 S.S  234.0  
New residential building authorized (index) . .... ... . ....... .  604.7p  4SO.Sp  334.2r  39S.7  2S l.7  
New residential units authorized (index) ................... .  2Sl.lp  23S.4p  214.Sr  l 9S.S  13S.2  
New nonresidential building authorized (unadjusted index) . ... .  2 S6.3p  243.6p  l 79.3r  243.6  213.4  
AGRICULTURE  
Prices received by farmers (unadjusted index) ... .... .. .. . .... .  lSS  190  19S  19S  194  
Prices paid by farmers in U.S. (unadjusted index) ............. .  201  202  19S  202  192  
Ratio of Texas fa rm prices received to U.S. prices paid  
by farmers ........... . ...... . ... .. . ...........•......  93.S  94.l  100.0  96.S  101.0  
FINANCE  
Bank commercial loans outstanding (index) ......... .... ... .. .  211.9  204.4  1S9.S  202.7  lSS.7  
Weekly condition report of large commercial banks,  
Dallas Federal Reserve District  
Loans (millions) .... . . . ............ .... ...... ... ...... $  l 3,S99  $ 13,3SS  $  11,604  $ 12 ,704  $ 11 ,091  
Loans and investments (millions) . . ... .. ...... .... ..... ... $  20,130  $ 19,SOS  $  17 ,s 19  $ 19,061  $ 16,Sl3  
Adj usted demand deposits (millions) .......... . .. . .. .... . .. $  S,193  $ S,302  $  4,923  $ S,139  $ 4 ,S 3S  
Revenue receipts of the state comptroller (thousands) ........... $  l ,OS9.7  $ SOS.3  $  426.S  $ 701.0  $ S79.6  
Federal Internal Revenue collections (millio ns) ... . ............ $  l ,9 Sl.7  $ 1,S 02 .7  $  1,941.2  $21,967.2*  $ 17,346.3*  
Securities registrations-original applicatio ns  
Mutual investment companies (thousands) . . ...•....... . .... $  120,136  $ 94,672  $  70,732  $ 120,136*  $ 70,732.  
All other corporate securities  
Texas companies (thousands) .. . ........... . . ........... $  9,S06  $ 7 ,9S4  $  19 ,940  $ 9,S06*  $ 19 ,940*  
Other companies (thousands) . . . .. . . . ...•........... . ... $  14,913  $ 16,426  $  10,72 7  $ 14,913*  $ 10,727*  
Securities registra!ion-renewals  
Mutual investment companies (thousands) .. .. .............. $ Other corporate securities (thousands) . ..... . .......... ... . $  21 ,321 0  $ lOS,666 $ 200  $ $  26,2S l 290  $ 21,321 * $ o•  $ 26,2Sl* $ 290*  
LABOR  
Total nonagricultural employment (index)t ... .. ......... ..• . .  1 SO. l p  14S.3p  14S.4r  14S.4  143.4  
Manufacturing employment (index)t ..... .. ......... . ..•..  l 34.9p  133.3p  130.Sr  132.S  12S.7  
Average weekly hours-manufacturing (index)t .. ......... . . .. .  9S.9p  9S.2p  97.Sr  96.S  9S.4  
Average weekly earnings-manufacturing (index)t .. . . ...... . .. .  204.7p  199.3~  l S4.4~  194.2  lSl.4  
Total nonagricultural employment (thousands)t ..... .. .. . .. .. .  4 ,S91.Sp  4,S40.9  4,737.6  4,S 19.7  4,6S9.7  
Total manufacturing employment (thousands)t .. . . . . .. .. . .. . Durable-goods employment (thousands)t ............... . . . Nondurable-goods employment (thousands)t .............. .  S96.Sp 497.1 p 399.7p  S90.9p 49 l.2p 397.7p  S6S.Sr 477.6r 39 l.2r  sso.o 4S4.3 39S.S  SS4.S 46S.1 3S6.4  
Total civilian labor fo rce in selected labor market  
areas (thousands) ..... . ............... . .............. .  4 ,7Sl.Sp  4,S77.9p  4,419.3r  4,S 1S.4  4 ,367.S  
Na~~:~rg~~~~~a~des)f'.~~~~~~ '.~ ~~l~~t·e·d· I ~~~~ '.1'.~r.k~'. ....... .. .  4,024.Sp  3,990.Sp  3,S7S .6r  3,9S7.0  3,S24.7  
Manufacturing employment in selected labor market areas (thousands)t ...... . ...................... . ... .  737.Sp  7 31.7P  71 7.Sr  723.2  709.9  
Total unemployment in selected labor market areas (thousands) ... .... ..... ..... . .... . . .......... ..... .. .  23S.Sp  244.Sp  2 61.Sr  243.6  267.2  
Percent of labor force unemployed in selected labor market areas ....... . .. .. . .. . . ......... .. ... . .. .. . Percent of total labor force unemployed . .. . . . ...... . . ... .. . .  S.2P s.oP  S.3P S.l p  S.4 S.2  6.1 S.9  

BUREAU OF BUSINESS RESEARCH SECOND-CLASS POSTAGE PAID AT AUSTIN, TEXAS THE UNIVERSITY OF TEXAS AT AUSTIN AUSTIN, TEXAS 78712 


1977·1978 





DIRECTORY 
OF 
TEXAS MANUFACTURERS 

The annual issue of the Directory of Texas Manufacturers is the most complete and up-to-date source of information on Texas manufacturing plants. It has been designed especially for agents or individuals selling to or buying from Texas manufacturers. For each of the more than 14,000 plants included, the Directory lists the name, address, and telephone number of the plant, name of the executive officer, and descriptions of products. Data have been obtained primarily from the manufacturers themselves, with supplementary information obtained from local chambers of commerce. 
Volume 1 contains an alphabetical listing of plants by firm name and a listing of plants organized by city. Volume 2 contains the product listings arranged by Standard Industrial Classification number and an alphabetical index of products with SIC numbers. 
ISBN 87755-273-8 $40.00 per set (Texas residents add $2.00) 
Bureau of Business Research • The University of Texas at Austin Austin, Texas 78712 

For information call 512/471-1616. Ms. Briceno or Ms. White.