/'i ) .J Vol. XVII, No. 10 N ovemher, 1943 -A Monthly Summary of Economic and Business Conditions in Texas By the Staff of the Bureau of Business Research, The University of Texas F. A. Buechel, Editor. T R [ N D 0 f ANNUAL f A I\ M C A S H N C 0 Mt [) y Pl\ODUCTS IN T t X A S I 9 2 7 - 9 4 z 01\ S AT AND 5Y DISTl\I C T S I i DUU•U or CUl lNl ll Ulta(n . In l UMIV[UllV or TlUI • ! I ~ UCl 'i I~ I t S • ·HOT IJ.(ll.IDt~· }; I j»n~~i':'H•'il, •l ,i[,,,p-. ·•f 'lll11%l•9J111°, .l1~l9r,'rn}iH' T,,, -j,.,.!•' S T h T E Eo1ered u eeeoad clue matter on May 7, 1928, at tho po•t of5co at Auatin, Teu-.. under Act of Au.rut U, 1912 TEN CENTS PER COPY ONE DOLLAR PER YEAR TEXAS BUSINESS REVIEW Business Review and Prospect In marked contrast with the mental attitude which prevailed during World War I, there is in this country today great popular concern regarding our Post-war Economy. As ultimate military victory for the democ­racies becomes more and more certain and as the period shortens within which this objective will have been achieved, there is developing a mass psychology in which hope is mingled with fear over our economic future. The prolonged and deep economic depression of the 30's, which has become popularly associated with the dislocations caused by World War I, is no doubt contributing to this atmosphere of uncertainty. If, it is being asked, the relatively restricted sphere of intensive military operations of twenty-five years ago could bring in its wake the world-wide economic reper­cussions which occurred during the past decade, what may be expected from the present conflict which is now affecting every spot on the globe in a direct and vital way? It is entirely possible that the more thoughtful attitude of the people regarding post-war economic problems in contrast with the relative indifference con­cerning them which prevailed a generation ago under similar circumstances, may contribute substantially to­ward averting the thing which is now feared. The term inflation has come to symbolize, among the rank and file of people, the economic dangers confront­ing us. This is a wholesome sign, although actually price inflation of commodities, except in the case of farm products, has advanced only moderately since 1939 in comparison with the similar period following the out­break of the war in 1914. As to the probable course of commodity price infla­tion during and following the war, much will depend upon the duration of the war and the policies adopted by private industry and the government. If the assump· tion is made, which is now quite commonly done, that the European phase of the war will end in 1944 and the Oriental phase, in 1945, dangerous inflation should be preventable. Among the factors which will contribute toward ameliorating inflation are: First, the increasing production of goods for civilian use as production for war purposes diminishes; second, equitable rationing of goods which are limited in supply; third, a high rate of taxation; fourth, the purchase of government bonds; fifth, payment of past debts and a low level of credit buying of consumer goods. The first factor mentioned has the greatest poten­tialities for averting runaway inflation. Moreover, it is the one upon which our greatest hope must rest for a permanently better economy and better living standards for all. Nor is this hope without sound foundation. De­velopments of the past two years have demonstrated a production capacity in this country which was not be­lieved possible before its actual accomplishment. A year ago it was generally predicted that the quantity of goods available for civilian consumption would be far less by this time than it has actually turned out to be. Dollar sales at retail for the current cnlendar year will be well above a year ago, a result it is true. of the rise in prices rather than an increase in physical volume of sales; yet the quantity of goods available for civilian use has been and is much greater than was anticipated a year ago. A portion of this increase has been at the expense of inventory but new production accounts for the bulk of it. This fact is all the more astonishing since only about thirty per cent of the country's industrial organization is being used for the production of civilian goods; the balance of our industrial capacity, or seventy per cent, being employed in the production of war goods. With such a huge potential capacity which will become available for the production of civilian goods after the war, the question may well be asked, as was done in the September issue of the REVIEW: Is there not a greater likelihood of post-war deflation than of inflation? Further striking testimony as to the industrial achieve­ment during the war is provided by a revision of the Federal Reserve Board's industrial production index, giving effect to new data on man hours of employment and to productivity per man hour. This revision raised the July index from 203 to 239 (1935-39=100) and established August and September at 242 and 243 re­spectively. In other words, the Board has concluded that instead of being double the pre-war level, production is nearly two and one-half times that level. It has been well stated in a current publication that "The central task, recognized by all, is to establish a post-war economy which will require the employment of 56 million persons. All of them should be employed productively and those who do not contribute to a stockpile of goods and services will merely be con­tributing to inflation by receiving dollars which are not counterbalanced by things people can buy. For years the crying need of the country will be production­to absorb dollars-not only the wartime backlog of sav­ings but also the new buying power generated by post­war employment itself. Government-sponsored public works can be either inflationary or non-inflationary, de­pending on their nature. In general, leaf-raking, moun­ment building and the like, contributing nothing to the country's material wealth, are inflationary and econom­ically unjustified at a time when wealth as measured by dollars exceeds the supply of purchasable goods or services. On the other hand, such works as the building of needed roads, bridges, dams, and airports are counter­inflationary even if government-sponsored, because they tend to facilitate the movement of goods and thus enlarge the country's production capacity. "In American life, the basic economic unit is the com­munity. In the earlier stages of post-war planning, men talked as if post-war employment had to be instantaneous, on a nation-wide basis. Now there is less talk of dealing with the problem on a nation-wide basis and more of dealing with it on a community basis. Communities can list with reasonable certainty such factors as plant capacity, availability of materials, size of the manpower pool and housing. Most business men even can deal with the labor problem on a local, community basis, although of course, there are important exceptions to this rule." TEXAS B USINESS Industry and trade in Texas during October main­tained approximately the same level of activity as that which prevailed during the preceding month, but the rate of activity continued well above that of the corre­sponding period last year. 0 TOBER I DEXES OF BU I ES ACTIVITY IN TEXAS (Average Month of 1930=100%) Oct., 1943 -Oct., 1942 Sept., 1943 Employment ---------------------------160.3 132.l 155.8 Pay Rolls -----------------------------271.8 200.4 265.1 Miscellaneous Frei1d1t Carload­ ing ( outhwest District) ______ 107.2 116.4 108.2 Run of rude Oil to Stills ------232.4 191.7 224.6 Department tore ales --------184.3 145.1 193.2 Electric Power Con umption ___ 241.7 220.2 258.0 CO 1PO ITE --------------------195.8 163.4 196.1 Both employment and pay·roll indexes made sharp gains. The index of runs of crude oil to stills, adjusted for seasonal variation, also gained sharply, but the season­ally adjusted indexes of department store sales and electric power consumption were down. The October composite index remained virtually at the level of the preceding month. FARM CASH INCOME Cash income from agriculture in Texas during Octo­ber, as computed by this Bureau, amounted to $162 million. This compares with $177 million during the corresponding month last year, or a decline of seven per cent. October was the only month during the current calendar year to make an unfavorable comparison with the corresponding month in 1942. Aggregate income, according to the Bureau's computations, for the first ten months of the year, totalled $890 million, which com­pares with $732 million during the corresponding period last year, a gain of nearly twenty-two per cent. I DEXE OF AGRIC LTURAL CA H INCOME IN TEXA (Average month of 1928-1932=100) Computed Cash Income Cumulative Di lricto Oct., 1943 s p l., 1943 Oct., 19•12 J unuary to November 19•13 1942 1- ------­ 251.6 213.5 143.7 94,164 71,553 1- ------­ 377.l 53 .4 330.l 79,488 59,510 2 ---------­ 148.5 147.7 235.7 85,188 93,472 3 ----------­ 168.4 207.5 202.1 40,874 40,404 4 ---------­ 138.7 111.8 155.8 155,687 140,916 5 -----------­102.7 81.8 124.8 74,545 52,047 6 ---------­172.4 232.9 216.3 38,393 31,095 7 ------­127.7 138.9 143.8 61,152 60,575 8 --------­141.4 135.5 154.6 97,065 73,540 9 -------­244.4 194.2 217.5 70,760 50,299 10 ------------­10-A _________ 244.6271.0 160.7 69.4 264.6 399.8 28,191 64,302 17,702 40,795 ST ATE ____ 173.2 129.0 189.5 889,809 731,908 NOTE: Fann cash income a~ computed by thia Bureau undcratntee actual form caeh income by from eix to ten per cent. Thia situation results from the fnct that menns of securing complete local marketings, especially by truck, hnvo not yet been fully developed. In addi1ion, mcnns have not yet been developed for computing cash income from slJ agricultural specialities of local importance in scattered arcu throughout tho State. This siluation, however, docs not impair the accuracy of the indexes to any npprceinblc ex tent. The increase in the cash income during October, 1942, over that of the current year was the result mainly of larger income from the substantially heavier marketings of cotton a year ago. Income from cotton lint during October last year was $83 million against $66 million during the same month of the current year; while cotton· seed brought in $3 million more a year ago. Prices of both seed and lint were above those of October a year ago but not enough higher to offset the decline in market­ings. A decline in the marketing of cattle, calves, and sheep, with little if any advantage in price, also was a factor in the decline in cash income. Income from hogs showed an increase both as a result of larger marketings and higher prices; the same was true of poultry. Egg marketings declined moderately but were more than off­set by a substantial increase in prices, resulting in a gain in cash income. The income from rice increased in spite of lower prices while that from milk and milk products and peanuts was above a year ago because of higher prices, marketings having fallen off sub­stantially. F. A. BUECHEL. Natural Gas A paper dealing with the facts and figures of natural gas--and such facts are relatively plentiful, and the figures Ia.·ge-might he important in bringing together in orderly form the apparently scattered threads that form the web of this industrial fabric; but it would miss the main points that are deserving of consideration­ those points that are indicative of the potential position natural gas can achieve in our national economy. After all, the quantitative aspects pertaining to production and distribution in the natural gas industry, large as they are, and important as they are acknowledged to he, are hut reflections of those qualitative features that are de­ terminative in evaluating the economic aspects of the industry. Nor can the natural gas industry be properly viewed if it is considered as being, per se, a self-contained indus­ try; like other industries, natural gas is not only clos~ly associated with other established industries such, for m· stance, in this case, as the oil industry, hut, in a larger sense, it is to be viewed, in the United States, with ref· erence to its relations to industry in general-to our economic life at large. This is to say, natural gas must he considered in its relations to the over· all economic and industrial picture of the nation as a whole. The thing, however, that is so impressive about natural gas is concerned with the immensity of its potentialities, not from some visionary standpoint, but from the van· tage-ground of facts pertaining to the actual develop­ ments already in progress, most of which have not as yet achieved their fuller expression in industry uses. IN THE UNITED STATES Of all the countries of the world only the United States can be said to have a full-fledged natural gas industry, even of the conventional type. The steadily advancing position of this industry in the United States is well known in its larger outlines, but for various reasons the particular aspects of the industry, why they have de­veloped as they have, the special place they occupy in the larger picture of industry and so on, are not so well known and therefore cannot be very fully appreciated. No one questions the excellence of natural gas as a fuel, for heat and power uses. It is universally regarded as a superexcellent fuel for general as well as for special heating purposes; in addition, natural gas ~as come to be extensively used in the fields of metal heatmg and heat treating. Quoting from the article by Adams in Chemical & Engineering News, June 25, 1943: "Natural gas is used in fabricating aluminum, forging projectiles, form· ing glass, hardening armor plate, hardening cartridge cases, tempering instrument mechanisms, annealing bright steel, annealing gun turrets, heating rivets, melt­ing soft metal, baking china in continuous ceramic kil.ns, drying foods, and in a wide variety of other heatmg operations." Its gaseous nature gives to natural gas not only a mobility not possessed by other fuels, whether as viewed as a fuel for domestic heating and cooking, or for its adaptability to long-distance pipeline transporta· tion, but also renders it susceptible to close control in heating uses. Rendering natural gas available in adequate volume to markets distant from the sources of supply made possible by pipeline transport is, in itself, of cour11e, a remarkable industrial achievement. Nor have these things .inst happened; they have required a marshaling of factors and conditions so as to bring about an organiza­tion that is highly efficient in making the natural gas from fields far removed from centers of consumption readily accessible to these markets. In these accomplish­ments, technologic advances have had their place, too, as exemplified in techniques not only in manufacturing suitable pipe for the transport lines, but also in laying the pipe as well as in equipment for facilitating the effective flow of natural gas once the lines are opened. The mutual association of petroleum and natural gas is also known in a general way, and the utilization of natural gas in efficient oil production has become rather common knowledge during the past decade or so; the inherent features of this association that have proven so fundamentally significant are not, however, as well ap­preciated as they might well be. As Wallace Pratt has written in "Oil in the Earth": "While we search for oil fields and record our discoveries in terms of barrels of oil, what we really find is gas, with which is associated a subordinate quantity of oil. The search for oil in the United States over the last ten years has brought to light greater reserves of energy in the form of gas than in the form of oil. The gaseous component of our recent discoveries of oil in the earth exceeds the liquid not only in volume, but in actual weight and, therefore, in the total horsepower or the total calorific value made available to society. We seek oil because we have learned to utilize oil for a variety of purposes and have adapted our economy and technique to its use: oil lends itself readily to storage and transportation at low cost and without waste. We are less keenly interested in gas be­cause we have not as yet found needs for it as compell­ing as our needs for oil and to convert gas into the liquid state convenient for wide use is difficult and expensive. But what we really find in our search is gas rather than oil." In this connection, too, the contrasts already evident in the comparative data as to our oil reserves as dis­tinguished from our natural gas reserves are worthy of considerable emphasis, especially at this particular time. As to oil, the falling rate of discoveries of reserves is occasioning considerable anxiety. As concisely sum­marized in the Industrial Bulletin of Arthur D. Little, Inc., October, 1943: Petroleum has been so cheap and plentiful in the United States and its use has become a characteristic hoth of Americans and American industry. Nevertheless, trends in action since the mid. thirties indicate that the rate of finding new oil fulls far short of our consumption and that we ure consequently drawing on our reserves. Unless these trends are reversed our prospects are for more expensive oil, partially imported, for more careful use, and ultimately for liquid fuels from non-petroleum sources such as coal and tar sands. During 1934 to 1938, new oil reserves were discovered at the average rate of 2,000 million barrels per year. During this period the size of the average new field decreased from 19.7 million harrels to 11.4 million barrels, but the increased number of fields found maintained the rate of total discovery. After 1937, however, the rate of new discoveries decreased markedly, from somewhat over 900 million barrels of ultimately producible oil found in that year to 400 million found in 1941 and 250 million in 1942. During this period the size of new fields continued to decline, from 5.6 million barrels in 1939 to 1.2 in 1942, and greater num­bers of new fields, to maintain the rate of discoveries at the level of the early thirties, could not be found. Most of the decline in rate of discovery came before the war imposed difficulties on random exploratory drilling. CURRENT D1scoVERIES The current rate of discovery, 250 million barrels in 1942, compares with a prewar consumption rnte of about 1.250 million barrels per year end a current wartime rate of 1,400 million barrels. Even today's restricted civilian consumption is gr~ater than the rate of new discoveries. Except for a few locnt10ns, every field in the nation [ "."ith few e;cceptions]. is now producing et or in excess of its maximum efficient capacity and must con· tinue to do so to meet wartime demand. Estimates of our present petroleum reserves are based on the assumption of a productio.n rate below these maxima. It is feared damage caused by this overproduction may offset any possible upward revision in our reserves based on more precise knowledge of established fields. Estimation of our ultimate oil supplies is a controversial ques· tion since some big new discovery often vitiates predictions based on ~ast statistics. However, the more oil is discovered, . the le~ is left for discovery; and since the total amount ava1lable 1s fixed within the human scale of time, the limits of discovery in the nature of things will inevitably be reached at some time. The falling rate of discoveries is due to the growin~ difficulty of finding new geologic traps for oil. Obvious and easily mapped structures have been drilled and most of the shallow prospects have been tested by drilling. The remaining undiscovered reserves are thus largely either in regions not yet explored because of unpromising prospects, in reservoi~ deeper ~hen .those already reached in producing structure, or m reservoirs without surface or geophysically detected identification. In the ulti.mnt~ sense only those regions compose~ entirelr of the underlying ~gneo'.1s rock formations can be considered without prospect of havmg 011, but in a practical sense there are other limitations. Even !he most unpromising of possihle regions has had some explorat10n in recent years. Another appropriate statement of the problem in per­spective is the summary of Frolich's recent address be­fore the American Chemical Society occurring in In· dustria/, and Engineering Chemistry, November, 1943. This statement is as follows: Our 11:rowing dependence on the products of the oil industry has resulted in considerable concern regarding the ability to supply our future needs for liquid hydrocarbons. The proved re· i;erves of crude oil correspond to fifteen years' consumption at the prewar rate. However, the excessive wartime requirements for petroleum have led to such a high rate of withdrawal from these undt>rground re~ervoirs thnt we may not be ahle to keep up with the demands for long. In addition to the proved reserves of petroleum known to be present in the earth, large but ~s y~t undiscovered petroleum resources may he expected to exist m various parts of the world. How long we can c~ntinue to .find this oil and bring it to the surface at the desired rnte 1s a question, but it is certain that eventually a sh?rtage in natural petroleum will occur. When that time comes, 1t should be pos­sible to supply our needs for gasoline and other hydrocarbon products from such alternate sources as natural gas, shale oil, and coal. It is conduded that there need be no sudden change es far as the supply and consumption of gasoline and other pet roleum derivatives are concerned. Future developments in this field will probably be characterized by further technological progress, increased drilling for oil on a world-wide basis, nec~ssary adjustments in supply and demand, and a gradual shift to synthetically produced hydrocarbons. A great deal of attention is currently being devoted to the petroleum situation. Until a short while ago we were primarily concerned with the transportation problem. The question of getting available petroleum products to where they were needed seemed to overshadow ell other considerations. Now that the transportation difficulties gradually are being overcome, our in· terest in turning to the question of the country's ability to produce crude oil to supply the present and future demands for petroleum products. In regard to natural gas reserves, although the ulti· mate total of these in the United States is much more speculative than is the case for oil reserves, the follow· ing quotation from an article by Ralph E. Davis in The Oil and Gas Journal,, October 8, 1942, is indeed pertinent to the larger aspects of the problem: The known reserves [of natural gas] today are greater than in the previous year. This statement is based upon the fact that In every recent year very substantial additions to the known natural· gas reserves have been madeand in amounts annually exceeding the total gas withdrawals. For example, within the lest 2 or 3 years very notable discoveries of large reservoirs filled with gas at very high pressure have been found along the Wilcox trend in a belt that crosses South-Central Louisiana and South Texas, and exploration along this trend is in en early stage. Deep drill· ing along the Gulf coastal plain in both South Louisiana and in Texas has added enormously to known reserves within the past 5 to 10 years. In the region of the Sabine uplift proven reserves today are substantially greater than were known in 1930. No one familiar with this development will deny that known gas reserves of the nation have been climbing from year to year and et a substantial rate. SOURCE REGIONS OF NATURAL GAS The sequence in the commercial development of natural gas producing regions of the United States has paralleled rather closely that exemplified in oil pro· duction. In both cases the vast regional shifts from the Appalachian district across the Mid-West into the Gulf Southwest and California are outstanding performances. It is, of course, a well-recognized fact that the truly large concentrations of either oil or natural gas reserves are limited to only a few areas. Also, in the case of both oil and gas, one result of these geographic shifts in production was the opening up of the truly large reserves of oil and gas in regions distant from the large centers of consumption; on the other hand, the rise of large oil production in these new regions has had a remarkable effect upon the stimulation of regional industrial development-that is, large oil production greatly aided the geographic dispersion of industry into these regions that now have become so outstanding in oil and gas resources. The nucleii of these new industry developments ini· tially centered about oil refining enterprises; in the meantime, the oil refining industry itself has steadily climbed to a high position among the manufacturing industries of this country. Industrial growth and concentration of urban popula· tion in turn provided expanded regional markets for the growing volumes of natural gas that were being made available. What is quite apparent is that oil and gas resources have been basic to the changing regional econ· omy particularly of California and of Texas as well as the other states of the Gulf Southwest. Unquestionably, these are not only basic natural resources as regards the economic development of these regions, but also they are to be regarded as essentials upon which further in­dustrial development in these regions will largely be based. California, for instance, is a large producer of natural gas but none is transported out of that State. On the other hand, the Gulf Southwest, although now a large consumer of natural gas, ships vast quantities to other sections of the country by way of large trans­continental pipelines, most of which have been laid since the middle 1920's. In fact, the great stimulus for this transport of gas came with the discovery of the gigantic Panhandle gas field, with it possibilities for large pro­duction on a scale never before witnessed anywhere. Since the opening of this enormous field in the middle 1920's other large reserves have been added to the Texas total. The major proportion of the derivatives from the Texas oil industry is sold outside Texas; but the Texas oil refining industry processes a large part of Texas crude oil production, and Texas therefore benefits from these refining operations. Natural gas, on the other hand, ordinarily requires nothing so elaborate or com­plicated as the oil refining industry to render it available for conventional uses as a fuel. Total volume of natural gas delivered to consumers in the United States from 1906 to 1941 inclusive has been placed by the Bureau of Mines at slightly more than 45 trillion cubic feet. To this total amount perhaps at least as much as 25 per cent should be added for gas lost and wasted. Data are not available as to the amount of gas produced or lost and wasted prior to 1906. Ralph Davis has estimated that the grand total of natural gas produced, lost, and wasted in the United States to date is in excess of 65 trillion cubic feet. EAST OF THE MISSISSIPPI The Appalachian district parts of New York State, Pennsylvania, Ohio, Kentucky, and most of West Vir­ginia) is the oldest gas producing district of the United States. Its total production of gas marketed, but not including the loss and waste, from 1906 to 1941, is, according to Bureau of Mines data, in excess of 13 tril­lion cubic feet. The comparable national figure, a little more than 4.5 trillion cubic feet, is 3.5 times that of the Appalachian district. The marketed production of this district in 1941 was 422 billion cubic feet, or 14.5 per cent of the total national output for that year. From the standpoint of its position in annual produc­tion, in relation to the national output, the future of the Appalachian district lies in the past. As regards the regional importance of the district, the annual produc­tion is very important indeed, as attested by the explora­tion programs that have been instituted there, particu­larly in the search for the Oriskany sand sheet, which gives deep gas production in eastern portions of the region. The main point, however, from the standpoint of na­tional perspective, the Appalachian district is becoming a deficit region, and just at a time when its chemical industry is demanding larger supplies of natural gas hydrocarbona. This is a region in which natural gas commands a high price. In 1941, according to the Bureau of Mines. the average value of gas at wells in West Virginia, the main producing State of the district, was 12.1 cents a million cubic feet; this, of course, is in great contra~! with Texas, the main producing State of the nation, for which the comparable figure was 2 cents a million cubic feet. In Pennsylvania, the comparable figure was 21.5 cents, and in New York State, 19.6 cents. The average value of West Virginia gas at points of consumption was 39.5 cents a million cubic feet, in contrast with the comparable figure for Texas of 14.9 cents. The comparable figure for New York State was 75.1 cents. The North-central district (Indiana, Michigan, and Illinois) is a minor one in the national picture at large, from the standpoint of both production and reserves; although locally important, production is minor in rela­tion to the market demands of this district. The Rocky Mountain States, although a minor district in the national picture, has greater reserves than the North-central district and also the reserves of the Rocky Mountain States are fairly high, not in relation to the national market but as regards the region's market re­quirements. CALIFORNIA California neither imports nor exports natural gas. In California, natural gas production has always been closely related to oil production; much of the natural gas has come from gas-caps in the oil fields. It should be noted that California has rather strict conservation laws regulating natural gas-a reflection of the high place natural gas occupies in the regional economy of the State. In 1941, California produced 375 billion cubic feet of marketable natural gas. Ralph Davis places California's recoverable natural gas reserves at from 9 to IO trillion cubic feet. THE GULF SOUTHWEST OR THE Mm-CONTINENT-GULF COAST D1sTRICTS The Gulf Southwest as here used includes Texas, Louisiana, Arkansas, Oklahoma, Kansas, and eastern New Mexico. This large region is admitted by all to be the great storehouse of natural gas reserves of the United States. Estimates of natural gas reserves vary; the need of much better estimates than we have is admitted by all. But in the over-all picture for the nation at large and for the Gulf Southwest as a whole, the estimates of proven recoverable reserves do not vary greatly. Those given by Ralph Davis in The Oil & Gas Journal of October 6, 1942, will be used in this paper as represent­ing a general consensus of opinion. Davis places the total proven recoverable reserves of natural gas in the United States at 85 trillion cubic feet. According to Davis, the total proven reserves out­side the Gulf Southwest add up to nearly 16 trillion cubic feet. This leaves for the Gulf Southwest at large the amount of nearly 70 trillion cubic feet as proven re· serves, according to Davis' data. Thus the Gulf South­west has more than 80 per cent of the nation's total known reserves of recoverable natural gas, on the basis of what are regarded as conservative figures. As to potential reserves of the United States, over and above the actual proven reserves, Davis tentatively placed the volume at around 85 trillion cubic feet, a figure quantitatively equal to the proven recoverable reserves of the nation as a whole. But as the potential reserves of the Appalachian and North-central districts, together with the Rocky Moun­tain states, are considered as relatively small in magni­tude and those of California being as yet an open question, this leaves the bulk of potential reserves of the nation in the Gulf Southwest. Summarizing Davis' conclusions as to the Gulf South­west, the following items appear as outstanding: 1. Eastern Kansas and northeastern Oklahoma, being older producing areas, have largely depleted their gas reserves. 2. Reserves of 1 trillion cubic feet, or more, are con­sidered as proven in southern and southwestern Okla­homa. "There can be no doubt that additional substan­tial gas reserves will eventually be found in western and southwestern Oklahoma. Here the producing formations lie at great depth, exploration will be expensive and once the search for oil in the region proves to be satis­factory the ultimate discovery and development of the potential supplies of this region will doubtless involve a long-time period." 2. The Amarillo and Hugoton gas fields, situated in the Texas Panhandle, in southwestern Kansas and the Oklahoma Panhandle have enormous gas reserves. As a matter of record, it should be stated that the discovery well in the Texas Panhandle was one that was put down in search for oil; this was in 1918, resulting in the dis­covery of a 15-million cubic foot gas well. Three years later oil was found in another location. It was not until 1925 and 1926 that the large proportions of the Amerillo field began to be realized. Davis places the total proven reserves of the Panhandle and Hugoton fields at more than 30 trillion cubic feet; this is regarded as a con­servative figure, as the fields are only partially developed. Concerning the ultimate reserves of the fields, Davis has written: "My guess is that with the passage of time natural gas will become more valuable and we will find it economical to withdraw gas from reservoirs such as Hugoton and Amarillo even when the productive capacity of wells has declined below that which today would be economic. These large reserves now recog­nized as proven but classed as nonrecoverable may be­come recoverable. Such reserves are potentially recov­erable just as are the known reserves of iron ore which because of their grade cannot be economically mined today...." 4. The gas fields of North and Central Texas are widely scattered; Davis places the proven recoverable reserves at from 2 to 3 trillion cubic feet. 5. The Permian Basin of West Texas and southwestern New Mexico has proven reserves of 4 to 5 trillion cubic feet. In regard to this district as a whole Davis com­ments as follows: "The market demand for gas from this area has been so limited that careful over-all studies of the region have not been made so far as I know. Nevertheless, we are aware of the great extent of natural gas, much of it in producing formations that have been cased off in wells reaching deeper for oil." 6. The Sabine Uplift district is an oil and gas pro­ducing area embracing northwest Louisiana, southwest Arkansas and adjacent northeast Texas. Davis places the proven recoverable portions of gas reserves of this district at 3 trillion cubic feet. The Sabine Uplift district does not include the Monroe gas field of north-central Louisiana, which has produced more than 3 trillion cubic feet and has a remaining recoverable reserve estimated at 2 trillion cubic feet. 7. The Gulf Coastal Plain currently deserves more consideration apparently than any of the other gas producing districts. With respect to natural gas, Davis has summarized this region as follows: "The Gulf Coastal Plain is the storehouse of our natural gas reserves, both proven and potential. The presently known recoverable gas reserves of the Gulf Coastal Plain west of the Mis­sissippi and north of the Rio Grande are, in my judg­ment, 25 trillion cubic feet. This estimate does not in­clude several trillion cubic feet of gas dissolved in oil and currently making slight contribution to the used-gas supply of the region. The potentialities in this region are great. Many new fields have been found in every recent year and in spite of the fact that new oil reserves are becoming increasingly difficult to discover there is no indication that we will have any early difficulty in adding to our known gas reserves whenever it may be worth while to do so. It is recognized that the deeper formations of the Gulf Coastal Plain are relatively rich in gas and condensate as compared to petroleum. We may expect the future to bring forth many additional producing areas and that deeper drilling in presently productive areas will, if the economics justify, discover new reserves of the order of at least the quantity now known." GENERAL Vrnw OF THE NATURAL GAs SITUATION IN THE GULF SOUTHWEST I. The total marketed gas production of this large terri­tory 1906 to 1941 inclusive, according to Bureau of Mines data, amounted to 24.7 trillion cubic feet. There was marketed production prior to 1906; and further­more, no one knows how much gas has been lost and wasted in this province. 2. Davis puts the proven recoverable gas reserves of this area at 70 trillion cubic feet. As to the potential reserves, Davis concludes: "The potentialities of the re­gion for additional gas not now actually known may, if you like, be anybody's guess.... If gas reserves of this category ["large reserves now recognized as proven but classed as nonrecoverable ••."] can be included as potential, then I would guess the ultimate reserves of the Mid-Continent-Gulf Coastal region to be of an order approaching the presently proven recov· erable reserves. . . . With wastage now under substan­tial control and with greater control expected for the future it seems to me reasonable to expect a future marketable production of the order I have suggested." 3. As to Texas, the total marketed production in 1941 of natural gas in this State, according to the Bureau of Mines was 1,086 billion cubic feet. Texas in that year exported, in round numbers 257.3 billion cubic feet and imported 46.6 billion, thus giving a net export of 211.7 billion cubic feet. This amount subtracted from the total of 1,086 billion leaves 874.6 billion as the amount consumed in Texas in 1941. Of this State total, 540 billion cubic feet were used for industrial purposes, including that consumed in petroleum refineries and electric public-utility power plants. The industrial uses of gas in Texas therefore account for 50 per cent of the marketed gas produced in the State. This suggests, on the face of it, from a consideration of merely volume alone, that industrial uses of natural gas are already far more important in the economy of the State than is generally recognized. Data when available for 1942 will no doubt show increases over these various figures for 1941. 4. Finally, there is the practically all embracing prob­lem as to the industrial possibilities of Texas as based on its natural gas resources. Industrial uses for natural gas in Texas, other than for carbon black, have been mainly as fuels-for heating and power purposes. The production of natural gasoline and other liquefied hydro­carbons--the so-called liquefied petroleum gases--has grown into a considerable industry in recent years; this trend has, of course, been greatly intensified as a result of the war effort. The quantitative aspects of gas for fuel in the State were noted brieffy in the preceding section. Uses of natural gas as an industrial fuel, in reference to various industries dependent upon it, were briefly considered in an article in the TEXAS BUSINESS REVIEW for January, 1943. The qualitative aspects of natural gas as an industrial fuel, however, appear to be of even greater importance in Texas than the quantitative volumes so used seem to indicate. Another qualitative feature of great potential im­portance in any evaluation of the natural gas resources of Texas is that concerned with the widening uses of natural gas and its several components as raw materials for chemical manufacturing. CHEMICAL CONVERSION OF NATURAL GAS Natural gas is an inffammable gas which occurs in porous rocks of the subsurface, the gas accumulations being capped by impervious strata. Like oil pools, natural gas accumulations are evanescent features in the geologic history of the earth's crust. Chemically, natural gas is composed of hydrocarbons of the paraffin series. The primary hydrocarbons of natural gas are methane, ethane, propane, and butane, but also there are others, such as pentanes, hexanes, and heptanes. In addition, helium, carbon dioxide, and nitrogen. are . present. o-call d sour gas" somehmes s e " contains hydrogen sulphide and organic sulphur com­pounds. In sum, natural gas may be designated as a complex mixture of compounds of carbon and hydrogen; these compounds mostly include methane and etlrn1H' as well as propane, butanes, pentanes, hexanes, and so on. Commercial natural gas, mainly methane, is a mixture of methane and some ethane, which on the avernge com­prises 90 to 95 per cent of the original con!t>nt of natural gas as it occurs in geologic formations. For long-distance transportation the hydrocarbon compounds other than methane are largely extracted in order to facilitate the transmission of the gas in pipelines. These extracted hydrocarbons (propane, butane, pentane, etc.) are nat­ural gas ingredients around which so many new develop­ments have been built-such as a wide list of organic chemicals, solvents, explosives, synthetic rubber, and high-octane gasolines. In brief, chemical conversion of natural gas hydro­carbons gives to natural gas a much higher field of utilization than is afforded by its conventional uses as a fuel or in specialized heat treatment of metals and the like. For practical purposes gas fields may be classified into three categories: ( 1) Dry gas fields in which the gas is not associated with either oil or distillate; (2) Casinghead fields in which gas is produced with oil· ( 3) Distillate or condensate fields in which the heavier hydrocarbons are recovered through recycling operations and the merchantable gas is returned to the producing geologic formation. K. S. Adams, President of Phillips Petroleum Company, emphasizes the impor­tance of this latter gas in stating that it will "make up a large portion of our supply in the distant future." In brief, the natural gas industry has been concerned primarily with what is designated as "high-line" natural gas, for use as fuel. This phase has constituted the bulk of commercial developments characteristic of the natural gas industry. More recently, however, the rise of chemical deriva­tives from natural gas has begun to broaden the fields of natural gas utilization at large, and has stimulated considerable interest in what are universally regarded as vast potentialities which natural gas possesses as bases for great chemical developments. It is hardly necessary to add that the growth in these newer fields has been greatly accentuated by technologic advances in newer phases of hydrocarbon chemistry. The impor­tant fact to emphasize here is that natural gas is a veritable storehouse of compounds and derivatives that are of profound importance in our national life; they are sources of supply of vital materials in war and in peace. In fact, the diversity of processes applied to these numerous hydrocarbon groups result in the pro­duction of a bewildering array of intermediates and re­sulting products. These newer developments pertaining to chemical con­version applied to natural gas are of two main groups: 1. Those that convert these hydrocarbons into liquid fuels, the properties of which are superior to natural or thermally cracked liquid fuels. 2. Those that convert these hydrocarbons by chem­ical synthesis into other lines of products, those generally classed as synthetic organic chemicals. CONVERSION TO LIQUID FUELS Hydrocarbon compounds such as ethane, propane, butane, and pentane are found in appreciable percent· ages in natural gas; these are the compounds ordinarily extracted from natural gas in processing it for trans· mission purposes. These gases are also present in resid­ual gases from oil refineries, as by-products of cracking operations; in this latter case these hydrocarbons of the paraffin series are associated with the corresponding olefin {unsaturated) hydrocarbon compounds-and these latter have long been recognized as especially desirable for purposes of chemical syntheses, but which until recently have been to a great extent consumed in what is designated as low-value utilization. However, the processes by which these gases are con­verted to liquid fuels are quite complex-involving such complex operations as thermal cracking, dehydrogena· tion, polymerization, hydrogenation, alkylation, and iso· merization. In line with Adams' summary, the following state· ments are pertinent to the situation at large: (a) Low-pressure pyrolysis (thermal cracking) ap· plied to these gas compounds, which was the earliest of processes used in this line of development, demon· strated that such aromatics as benzene, toluene, and zylenes, as well as heavier aromatics could be produced from natural gas. Formerly, the production of these aro· matic compounds was limited to their derivation from coal-tar products. In addition to these aromatics, this process, described as an extremely versatile one, can be used to produce olefin hydrocarbons, which are valuable indeed in the synthesis of organic chemicals. One of these olefins, ethylene, is widely used for the manufacture of such substances as tetraethyl lead, neohexane, industrial alco· hol, and ethyl benzene. Ethel benzene is especially im· portant for the production of styrene, which besides its uses as a raw material in making polystyrene plastics, is now an important intermediate in making Buna-S rubber. Higher olefins, similarly produced, are exceed­ingly important in supplying raw materials for aviation gasoline and butadiene, the latter being the major inter­mediate for Buna-S. (b) High-pressure pyrolysis of natural gases was used to produce premium gasoline from these gases which previously had been largely wasted. In the p~e­war period it is said that some 30 per cent of the ava.11­able butane was being processed by these methods, giv­ing an annual output of some 15 million barrels of high quality gasoline. ( c) Then in what has been called the "race for oc­tanes" polymerization, hydrogenation, and dehydrogena­tion came to be used for the manufacture of isooctane and other high-octane constituents of motor fuels. (d) Later came the application through alkylation of a discovery made some years ago that the proverbially inert paraffin hydrocarbons could be made to react with hydrocarbons of the olefin series to give a saturated product-alkylate, which is now stra~egically imp?rt~nt in providing blending agents for high-octane av1at10n fuel. Concerning the military importance of this product, Adams states: "It is to this chemical reaction of paraffin alkylation, a tool which has many unexplored applica­tions in the field of chemistry, that the United Nations owe their present superiority over the Axis nations in aviation fuels." (e) Normal butane is ordinarily plentiful; but it is isobutane that is required in producing alkylate. As a result, the process of catalytic isomerization has be­come important in converting normal butane into iso· butane, thus supplying the required raw materials for making isooctane or other high-octane blending agents. By isomerization the molecular structure of normal butane is rearranged into the isomeric compound, iso­butane. Adams concludes as follows: "The volumes of selected fuels and selected fuel ingredients currently being pro· duced is, of course, a military secret. We know that the volumes are large and that new facilities are constantly being created to make still larger volumes. No one can risk a guess as to what these fuels will make possible in the way of new pleasure cars and commercial aircraft for the simple reason that the same technological revo· lution is going on in other industries. Along with new light metal alloys and new plastic materials of con­struction, the effect of fuel quality will be only one of the items which will cause us to scrap our prewar models of cars and aircraft." NATURAL GAS AND THE CHEMICAL INDUSTRY Historically considered, the use of hydrocarbons on a large scale as chemical raw materials had its beginnings in Germany in the latter quarter of the 19th century. The rise of the organic chemical industry in Germany was based on the use of coal tar products-which in turn were by-products of the coking industry that was expanding rapidly in that country along with the growth of the German iron and steel industry. World War I brought to the United States, as well as Great Britain, the sudden, almost tragic realization that neither of these countries had very much in the way of organic chemicals industry; for these products, both countries had been dependent upon Germany. A con· sequence of this situation was the building up of an organic chemicals industry in the United States, which continued to expand substantially in the post-war period. This industry, like that of Germany, was built largely around coal.tar products. As a result of this growth in the United States, Germany lost the large share of the American market for those organic chemicals in which it formerly had held a practical monopoly. World War I also stimulated a strong interest in pe· troleum which assumed, during that period and later, vital importance as a strategic commodity. Emphasis, however, was placed, and naturally so, upon the bulk production of conventional products from petroleum, which was tremendously stimulated by the almost spec· tacular growth of the American automobile industry during the two decades following World War I. During this period, however, there was developed a wide interest in research dealing with hydrocarbons readily supplied in such vast quantities by petroleum. ll The net result was that tremendous strides were made in science and technology pertaining to the hydrocarbon components of petroleum, evidenced in part by the fact that today's newspaper vocabulary embraces such terms as polymerization, alkylation, isomerization, catalytic cracking and so on-words which a decade ago were hardly heard outside laboratories. Since World War I, natural gas has risen to the status of an important American industry. Natural gas, like petroleum, is also a huge reservoir of hydrocarbons as previously stated and many of the techniques worked out in dealing with petroleum hydrocarbons and their derivatives, particularly those dealing with oil refinery gases, are applicable also to natural gas. The war effort naturally has given a tremendous impetus to the chemical conversion of natural gas hydro­carbons just as it has for those derived from petroleum. Natural gas, for instance, as a part of the war pro­gram, is being subjected to thermal cracking processes to yield hydrogen, which is reacted with nitrogen from the air to produce ammonia. Ammonia can be readily oxidized to give nitric acid, which combined with toluene forms TNT. Ammonia reacted with nitric acid yields ammonium nitrate, valuable either as a base for ex­plosives or for fertilizer. Ammonia reacted with picric acid yields ammonium picrate, a high explosive called Lyddite. This, however, does not exhaust the list of explosives derivable from natural gas. Egloff, writing in the National Petroleum News, October 28, 1943, stated: "One explosive considered the most powerful of all is tetranitromethane made when nitrating natural gas. In fact, natural gas may well develop into one of the most valuable explosive sources known due to the nitro paraffins, which have not been exploited as greatly as the nitrated products of the aromatic hydrocarbons. Methane when nitrated can take on as many as four nitro groups. This product is a very high explosive and the most destructive known to man." The possibilities of natural gas constituents in pro­viding raw materials for plastics merit thorough con­sideration. Egloff has briefly but aptly summarized this situation as follows: "We may expect that before many years the urge and drive inside the oil industry will build up many new types of resins or cheaper ones than are now on the market. "The raw materials from natural gas are available to produce phenol and formaldehyde. One commercial plant at least produces formaldehyde and methanol. The process is simple. It is just straight oxidation that con­verts methane and ethane into formaldehyde, methanol, acetic acid, and acetaldehyde. The phenol that was previously mentioned is combined with formaldehyde, and a Bakelite type of resin is the resulting product." Butane, a constituent of natural gas, is a basic mate­rial for butadiene, chief intermediate for Buna-S rubber. The isomerization of butane to isobutane has been men­tioned. Conversion of natural gas paraffin hydrocarbons to the corresponding olefins, either by processes involv­ing high temperatures .or catalytic re8:ctions, provi~es basic materials for a wide range of resms and plastics, and the synthetic rubbers as well. The olefinic com­pounds comprisin~ ethylene, p~opylene, and butyle~es are starting materials for a wide range of syntheucs. These hydrocarbons are now in great demand for the production of aviation gasolines and for the synthetic rubber program as well. Ethylene, the simplest of the olefins, is used to alkylntc isobutane to give neohexane, an important hydrocarbon ingredient for aviation gasoline. Ethylene is also im­portant, as mentioned elsewhere, to produce ethyl ben­zene by alkylation of benzene. Propylene alkylated with benzene gives cumene, an important aviation gas component. It should be noted that two natural gas components, normal hexane and heptane, both of which are low in octane ratings can be changed in structural configuration and in properties by catalytic processes into aromatic hydrocarbons. Hex­ane, a straight-chain hydrocarbon can be cyclicized to benzene. Shell Development Company has developed a process in which propane or propylene are chlorinated and then hydrolized to glycerine. Because of its use in making explosives such as trinitroglycerine, glycerine has be­come a strategic material. Concerning the production of organic chemicals from basic hydrocarbons, R. D. Stratford, Chief Research Chemist, Imperial Oil Limited, has recently summarized in Chemical Industries, October, 1943, the situation as follows: It is well known that methane ran be reduced to carhon monoxide and hydrogen, which can then be recombined to form methyl alcohol. By further oxidation methyl alcohol can be converted into formaldehyde, an important component of the phenol-formaldehyde type of plastics. While sufficient methane could be obtained from refinery gases for the manufacture of a large quantity of formaldehyde, a more probable source is natural gas. This occurs in great quantities in many parts of the country and consists for the most part of methane. The potential number of chemicals using ethylene as a basic substance amounts to many thousands .... By such processes as alkylation chlo·rination, sulfonation, and nitration, ethylene is converted into organic chemicals, such as styrene, ethylene glycol, ethyl alcohol and acetic acid. Many of the products so formed are used in the manufacture of synthetic resins, rubber and plastics.•.. By essentially the same methods as are used for ethylene, propylene may be converted to such products as acetone, glycerine, cumene, and others, which are used in a variety of materials ranging from cosmetics to explosives. For several years the butylenes have been used in the manu­facture of aviation alkylate, the synthetic fuel added to aviation gasolines to increase their octane number. The chief component of aviation alkylate is iso-octane, a hydrocarbon which only a few years ago cost $25.00 a gallon. As an indication of the economic significance of large scale production chemicals from petroleum, the cost of iso-octane today is less than 50 cents a gallon. Until the Japanese took control of this continent's chief sources of natural rubber, butylenes were used as a component of motor gasoline and in the manufacture of iso-octane and butyl alcohols. Now they are the chief source of synthetic rubbers. Buna-S syn­thetic rubber requires butylene as a basic raw material while Butyl synthetic utilizes isobutylene. Acetylene is another hydrocarbon of no small impor­tance, actually or potentially. Egloff, in the article already referred to, comments on acetylene as follows: It is likely the future will see the elimination of the calcium carbide method of making acetylene in electric furnaces from lime and coal, based on the competition of low cost hydrocarbons from natural gas or petroleum. We now have a method of mak­ing acetylene thermally and two commercial units are being in­atalled, one of which will produce 75 tons of acetylene a day. The charging stock can be either propane from natural gas, or light ends of natural gas or other fractions from petroleum. It is believed this method will produce acetylene at a lower overall cost than by the electric furnace [calcium carbide] method. The natural gas industry has the quantities of propane necessary to supply our entire needs for acetylene. Acetylene has many commercial uses. Germany makes it from calcium carbide and then converts it into a series of chemical products, winding up with butadiene. Acetylene is the base material from which is produced the butadiene for Germany's Buna-S rubber, Nylon is also produced from acety Jene as a base. Acelylene is a raw material for the production of cer­tain synthetic resins and plastics materials, such as the vinyl resins and the vinylidene chloride resins. The newer commercial method of producing glacial acetic acid is from acetylene. Acetic acid is used, for example, in the preparation of cellulose acetate, as well as for polyvinyl acetate. It is appropriate to note that the electrical discharge process developed by Dr. E. P. Schoch at The University of Texas is the only known process by which methane can be converted into acetylene economically. Inasmuch as the future supply of motor fuels, espe­cially in the face of declining petroleum resources, will apparently become an outstanding problem in the near future, attention should be directed to the possibilities of using natural gas to add substantially to our gasoline supplies. This matter has been concisely summed up by Frolich as follows: The domestically available energy source most closely related to crude oil is natural gas. The production and consumption of natural gas by states, although by no means identical to the distribution shown for crude oil •.. follows much the same pattern in that transportation by pipe line makes for a marked flexibility in distribution. To most of us it does not mean much when we are told that the country's proved natural gas reserves amount to some 95 trillion cubic feet. A little figuring will show, however, that on a weight basis this is equal to about 75 per cent of the proved reserves of petroleum. At the present rate of con­sumption proved gas supply should last about thirty years, or twice as long as the oil supply. Methods are known for con­verting these natural gas hydrocarbons into liquid petroleum frac­tions. The heavier constituents can be processed by such direct methods as cracking or dehydrogenation, followed by polymeriza­tion and alkylation. Methane, however, which is the major con­stituent of natural gas, can best be converted into gasoline by the Fischer-Tropsch process. In that case methane must first be reacted with steam to give a mixture of carbon monoxide and hydrogen, which is then treated with a catalyst to produce liquid hydrocarbons. Technical information is available on this proc~ but as yet this country has no large-scale operating experience. The process has been used commercially in Germany for some time, and a small pilot-plant unit for carrying out the Fischer­Tropsch synthesis is now in operation by the Bureau of Mines. It would be unwise at this time to make any prediction in regard to the amount of gasoline that might be produced in this manner. Owing to Texas' huge stake in the natural gas reserves of the nation, and even still more to the fact that methane is the major component of natural gas the following quotations from the paper by Egloff, which emphasizes still more the significance of the Fscher-Tropsch process, are appropriate. One big field in the utilization of natural gas that merits dis­cussion is the water gas reaction. In the U. S. we have an esti­mated 2,600 billion cu. ft. of natural gas produced yearly. Me­thane can be readily converted into hydrogen and carbon monoxide by high temperatures in the presence of steam. Hydro­gen and carbon monoxide react together, forming both formalde­hyde and methanol or wood alcohol. In Germany, the Fischer·Tropsch process has been developed whereby the reaction is controlled so that hydrocarbons are the primary products, made up of methane, ethane, ethylene, pro­pane, propylene, butane, butylenes, liquids including gasoline, 11:as oil, Diesel oil and even solids such as paraffin wax. The reaction takes place in the presence of a catalyst which may be the oxides of nickel, chromium or cobalt, with tempera­tures of 400° F. and 200 lb~. pressure•.•• The gasoline produced by this water gas reaction, starting from methane from natural gas, is poor in quality with about a 40 octane rating. It has to be cracked either thermally or catalytically into something more useful. The gasoline fraction boiling up to 300° F. contains between 40 and 50% olefina which may be combined one with the other to form lubricating oil. This lubricating oil was produced by Ruhr.Chemie in 1938, and some of it was very high grade. The balance of the gasoline fraction, the paraffins, hexanes, heptanes, etc., are thermally cracked under controlled conditions so as to make more olefins, which in turn are polymerized into lubricating oil fractions. They have from time to time cracked paraffin wax. This reaction of making hydrocarbons from carbon monoxide and hydrogen produces a very high grade Diesel oil, with over 100 Diesel index blending with lower grade Diesel oils. These are just a few of the important processes that are in operation or in the making in which hydrocarbons from natural gas can be used. However, progress is not made, as you all know, unless you put armies of men to studying and experimenting to convert this raw material into the higher uses to which we are entitled. Much work is going on but not enough. Two problems that we must solve in the greater utilization of natural gas are the commercial processing of methane and ethane. Methane is the most difficult of the hydrocarbons to convert into something else cheaply. You can do anything at a price. As a matter of fact, if you start with methane gas alone you can produce all the synthetic products that man has produced in organic chem­istry, and there are over 300,000 different ones, that may be utilized as fuels, lubricating oils, fatty acids and many others too numerous to mention. The hydrocarbon is there waiting to be converted into the manifold products that man requires in a modern civilization. In conclusion ,it hardly seems necessary to re· emphasize the tremendous stake Texas has in the natural gas resources of the United States or the immensity of the importance of natural gas to Texas-nor should it be necessary to stress the fact that in both these respects, the Texas situation will become progressively more significant in the next few years. The promise natural gas gives for substantially supplementing our future gasoline supplies alone would entitle Texas natural gas reserves to very careful consideration. The possibilities Texas has for the development of a vast synthetic organic chemicals industry based upon the State's wealth of hydrocarbons are almost breath-taking It is as yet impossible to do more than suggest some of the mile-posts that appear as certain on the horizon of future chemical developments based upon hydrocarbons which are readily supplied from petroleum and natural gas. What is certain is that these developments loom large and that they will occupy a highly important position in the expanding economy that will come in the post·war period. What is also certain is that modern chemical tech· nology can utilize the hydrocarbons of natural gas in many of these developments just as well as, if not better than, those obtainable from petroleum. In all these things Texas has a vital interest. Should not Texas be truly concerned as to their best use? ELMER H. JOHNSON. Cotton in the Post-War Economy of Texas Cotton production was the major activity in the de­velopment of Texas economy prior to 1914. Cotton gins were the essential enterprises around which other service trades and industries congregated to form many hun­dreds of towns in Texas to serve rapidly developing cotton communities. Cottonseed crushing became one of Texas' biggest manufacturing industries as early as 1889 and has continued to rank high in the expanding list of Texas industries. Cotton acreage continued to increase annually in Texas down to 1926-27, when it reached an all-time high of 17,700,000 acres; but even so, petroleum production and the in?ustries associated with it had already wrested leadership from cotton as the leading builder in development of the State. The place cotton occupies in the economy of Texas has been and will continue to be, determined by power­ful dyna'rnic factors and forces, some operating within the State and others beyond its borders. Some of these have their foundation in the physical environment, ma~y have resulted from technological developments, while others grew out of human characteristics and institu­tional forces. The purpose here is to interpret so~e of these forces as indicators of the place of cotton m the post-war economy of Texas. Since 1928 cotton has lost tremendously in importance in the economy of Texas. The area harvested in cotton in Texas has declined from the high of 17,700,000 acres in 1926 down to only 7,888,000 in 1943. The farm cash income received from cotton and cottonseed in Texas declined from over $500,000,000 in 1927 to a low of less than $150 000 000 in 1939, and a rebound 'to a little over S3oo:ooo:ooo in 1942 as a result of war prices. The Decennial Census of 1940 shows that there was a decline in employment in agriculture in Texas from 193.0 to 1940 of 194,000 jobs. This loss of employment is associated directly with the decline in cotton production. One of the most important problems confronting the people of Texas is to arrive at a clear understanding ?f the place this great industry can and should occupy m the State's post-war economy. Before t~is can be don~, it is necessary to come to an understandmg of the State s overall economy in the years ahead. The economy of Texas is evolving from a predom­inantly raw-material-producing dependent economy to an independent, specialized, region~l unit in o.ur g~eat ~a­tional industrial economy. The increased d1vers1ficat1on in agriculture, manufacturing, and service industries is making Texas relatively independent for most of the necessities of every day life, but it is still dependent on outside markets to purchase its sur~lus raw mat~rials and on outside sources for many important articles, especially manufactured goods in the luxury class. Texas' economy is now going through evolutionary changes due to the war and technological developments, which have suddenly thrust forward the industrial de­velopment of the State many years, provided a reasonable portion of the new war industries and developments be­ come permanent. It is assumed here that since most of the$e new indus­tries are built on a sound resource base in line with logical development, they will be permanent and that their products of magnesium, steel, rubber and many chemicals will become the raw materials for a large development of consumption goods manufacturing, and service industries and trades. These developing indus­tries and trades will continue to provide a widening base for continuing growth of Texas cities and industrial areas. It is into this changing structure of Texas' economy that we must visualize the place of cotton during the years following the war. The natural environment in Texas, due to its location on the globe, the North Ameri­can Continent, the Gulf of Mexico, and its physiographic features when taken in connection with the physical re· quirements of plants and animals becomes the dominant factor in determining what can be produced most ad­vantageously on Texas farms and ranches. In its pre­dominant features Texas has a slightly humid to sub­humid climate subject to droughts. It has a relatively smooth topography a 1943 1942 ii,";3'w 1943(1) 1943 1942 MANUFACTURING All Manufacturing lnduatries__.167,193 168,830 + LO + 4.1 5,314,663 5,499,714 + 3.5 +27.2 Food Prodltcts + 0.4 249,372 252,416 + L2 + 17.0 Baking -------------------------8,075 8,163 + 1.1 4,431 4,103 7.4 + 37.l 121,212 112,617 -7.1 +29.5 Carbonated Beverages ------­1,228 1,491 +2L4 +26.9 16,052 19,578 +22.0 +45.0 Confectionery ~---------­2,213 2,309 + 4.3 + 19.2 65,471 67,385 + 2.9 +57.0 Flour Milling ---------­1,481 1,397 5.7 + 4.9 37,613 35,964 -4.4 +16.8 Ice Cream ·--·--..----·---­6,381 6,897 + 8.1 + 0.9 209,525 232,329 +10.9 + 1L8 Meat Packing ·--------­ Textiles 5,704 5,695 0.2 -17.8 125,698 129,999 + 3.4 7.3 Cotton Textile Mills --·----·---· 4,149 4,190 + LO -19.7 69,200 74,528 + 7.7 3.2 Men's Work Oothing -------· Forest Products 1,650 1,795 + 8.8 -2.8 39,558 43,640 + 10.3 + 21.5 Furniture Planing Mi-ii~-·:=====~:=~-= 2,097 2,028 3.3 -12.3 53,912 54,920 + L9 -9.9 Saw Mills ____ .._______________.. 15,518 15,781 + L7 -4.5 292,218 304,260 + 4.1 +16.9 948 985 + 3.9 +45.4 20,424 23,343 + 14.3 +49.0 Paper Boxes -·--------------­ Printing and Publishing 2,361 2,316 1.9 + 0.7 76,386 75,919 0.6 + 18.0 Newspaper Publishing ---·----­ommcrcial Printing ------­4,164 4,223 + L4 8.9 120,971 125,643 + 3.9 + 5.7 Chemical ProdlLcts 3,553 3,705 + 4.3 9.0 57,336 64,085 + 11.8 +13.5 Petroleum Refining -------·--22,932 22,952 + 0.1 + 1.7 1,296,108 1,284,564 0.9 +29.0 Cotton Oil Mills ----·------· Stone and Clay Products 1,492 1,486 0.5 8.1 23,495 25,409 + 8.1 -0.1 Cement ·-------------­Brick and Tile ----------------­1,095 1,080 L3 -15.9 41,628 39,548 5.0 -13.9 Iro1 and Steel Products Structural and Ornamental I ron___ 2,869 2,777 3.2 3.3 81,677 82,245 + 0.7 + 16.9 NONMANUFACTURING Crude Petroleum Production___ 25,732 25,588 0.6 1.4 1,342,982 1,352,627 + 0.7 +27.6 (3) (3) (3) Quarrying -----------------------------L2 -14.8 (3) + 0.3 + 2.1 Public Utilities ----------------(3) (3) + 0.1 + 7.3 (3) (3) 3.0 + 15.7 Retail Trade ___________________226,305 234,433 + 3.6 + 12.7 4,864,808 5,128,166 + 5.4 + 21.6 Wholesale Trade ---------------60,393 60,613 + 0.4 -7.7 2,207,197 2,303,896 + 4.4 + 7.1 Dyeing and Cleaning 2,916 2,808 3.7 -3.8 60,987 60,256 1.2 + 14.2 Hotels ---------19,533 19,314 1.1 + 16.8 321,405 315,327 1.9 +47.0 Power Laundries ----------------13,968 14,192 + L6 -5.1 235,046 238,343 + L4 + 12.8 CHANGES IN EMPLOYMENT AND PAY ROLLS IN SELECTED CITJES <0 Employment Pny Rolls Employment Pn1• Rolls PeTCentage Chani::e Pcrccntn20 Chnnge Percent ni::o Change Per<'enl age Chanc:o Sept., 1943 Oct., 1942 Sept., 1943 Oct., 1942 Sept., 1943 Oct., 1942 Sept., 1943 Oct.. 1942 to to to to to to 10 to Oct., 1943 Oct., 1943 Oct., 1943 Oct., 1943 Oct.• 1943 Oct., 1943 Oct.. 1943 Oct., 1943 __ ._ ____ Abilene + 2.6 + 34.0 + 1.7 + 29.5 Galveston ........ + 4.3 9.9 + 21.1 + 37.3 Amarillc· 3.2 11.0 1.4 6.7 Houston + 0.1 + 11.8 5.2 + 19.2 Austin 0.6 7.2 L8 + 7.3 Port Arthur _.. 0.7 + 0.1 + 1.7 + 25.6 B aumont + 3.2 + 4.3 + 2.9 + 22.2 San Antonio .. + 0.5 1.0 + 1.3 + 7.7 Dallas ---------7.9 ---·-·· + + + 38.7 + 8.5 + 68.5 Sherman 1.3 + 3.1 + 1.5 19.5 El Paso _,,_____ + 0.3 6.7 + 0.5 + 12.8 Waco 2.0 0.5 0.4 + 5.5 Fort Worth + 3.6 + 97.5 2.1 + 111.4 Wichita Falls.. + 2.3 11.8 + 5.2 + 18.4 STATE -------·-+ 2.9 + 21.4 + 2.5 + 35.7 ESTIMATED NUMBER OF EMPLOYEES IN NONAGRlCULTURAL BUSINESS AND GOVERNMENT ESTABLISHMENTS <» 1941 U> 1942<1 > 1943 194Jlll 1942(1) 1943 1,360,000(1) July _____________.........--. 1,156,000 January ..............---1,094,000 1,170,000 1,317,00Q 1,450,000(1) 1,199,000 1,367,00011) August _______ ........._ 1,176,000 1,352,000 1,441,000<•> F ebruary ........-----· 1,120,000 March ----·--------1,120,000 ' 1,226,000 1,384,000(1) September ---------·--1,203,000 1,373,000 April ________.._ 1114,000 1,222,000 1,402,000(0) Octob r ...._.._________ 1,219,000 1,384,000 May _________,,_ 1,120,000 1,251,000 1,427,000<•> November .......______ 1,219,000 1,389.000 1,291,000 1,448,00Q<•> December _.._.......... 1,222,000 1,413,700 June ·-------------1,134,000 •Doe• not include proprietors, 6rm members, officers of corporations, or oth r principal exccutivce. Factory employment excludc1 alao office, aale.1, technical and profe1 ional per onncl. Rev i1ed. C2> ubject to rrviaion. Cl) ot avaiJable. COOast d on unweighted 6(Ure1. ot including ctr-employed person.s. ca1ual workcn, or domestic 1ervant1, and exclu1ivc of military and maritime peraonncl. These figures are furnished by the Bureau of Labor Stat.i1tic1; U.S. Department of Labor. <•>No change. Prepared from report• from repres~t.at~ve Texas c1tabll1hme?t1. to th~ Burea u. o( B_usiness Rc~arcb coOper~ting with the Bureau of Labor Statiitici. Due to tho national emer1eocy, pubhcauon1 or data for certa10 1ndu1tr1e1 i1 be ng with held qntil further notice. OCTOBER RETAIL ALES OF INDEPENDENT STORES IN TEXAS Percentage Change• Number ol in Dollar Sales Estab· Oct., 1943 Oct., 1943 Ycnr 1943 li11hments from from from Reporting Oct., 19•12 Sopt., 1943 Year 1942 971 + 22.7 + 6.3 + 29.2 STORES GRO PED BY LINE OF GOODS CARRIED: APPAREL -------·-·-··--···-·----------------·······----------------·-····-----·-··--·----------·-····-······-·-· _ Family Clothing Stores ---···-·-··--·-·-·--------·-----····-·-----------------------------------·--·---··--···-----------­ TOT AL TEXAS --------------------------------------------------------------------------·· ·-·-·. ----·· ·-----····-··· 24 + 33.4 + 17.8 +50.l 32 +35.8 + 11.9 + 49.4 ~l~n:s &o~e~o~~~~!~-~'.~-~:-~'.~'.~~--:=:==:::::=.:::::-~=::::=:::=::::::==:::::::::-~:==~~=:=::::=::::::::=::::-~ 13 + 2.7 L9 +36.9 34 +2L5 0.1 +53.2 Women's pecialty Shops ·----------·--·-··----·-·--·------------·-·------------------·-------------­AUTO fOTIVE * _____ --------------------·-·--------·--·-·--·-·----------·-·-------------·--·-·---­Motor Vehicle Dealers --------·-·--···-----------------------·----------------···-----------·-·----------------·-··-·­ 66 + 22.8 5.5 +19.5 CO NTRY GE EH.AL ···-----------··---------·--·-·------____________ -------------------------------··----------98 + 16.5 + 5.0 +21.l DEPA RTME T STORES ________ --------------·-·-·-·------------· ------------------·-·---------···-------59 + 3L6 + 8.3 + 40.7 111 +18.5 + L7 +26.2 0 RUG STORES ------------------··-----··----------------···---·-·-------·-·--·------·----·--------·--··-·----· DRY GOODS A D GENERAL MER CHA DISE _·-----------··--···· -----··-------------········---3 + 8.5 + 8.3 + 8.6 FIL LI 1G ST A TI 0 NS --------------····-·---------------------------------------------·--------------------------------­ 32 + 15.6 + 12.7 +2L7 FLORISTS --------------·-··-·--·-··--·------------------------------------·----------------·--··----··----------------­ 19 + 38.4 + 15.5 + 45.0 FOOD* --------------------------------------------------·--·------------···------------------------·-···-­ 33 + 19.0 + 8.5 +17.5 Grocery Stores ------·---------------------------------------------------------------------·-----------­100 +13.7 + 0.8 +2LO Grocery and Meat Stores ---------------·· -------------···--------·-·-·-----·-·---------·----·---------------------­F R ITURE AND HOUSEHOLD* ·-·-·------·--------------------·--------·---------·-···-·---------·-------­ 66 + 5.0 + 14.8 +22.9 Furniture Stores ·--------·-------·--------------··----·-··-----------------------···--·-·--·-----------·-------­24 + 36.0 + 16.8 +36.1 JEWELRY ----------·-·--·------------------·------··-·------------------------------·-··------------------------­LUMBER, BUILDING, AND HARDWARE* -----------------------------···--·------------·----·-----­ 12 -15.7 + 0.3 -11.1 Farm Implement Dealers --··--·-··-·-·--···----·--·-------------···-·--·----------------------------··--·--­53 + 5.2 +14.8 -3.1 Hard ware Stores ------··---·--·----------·-·--------------·--·------------·-----------------------------·---------------­ -17.9 Lum her and Building Material Dealers ---------------·--·------··-------·-------·---·-----·--···---··--105 -3.7 + 8.3 27 + 1L7 -0.1 +28.2 RESTAU RANTS ------------· ---------·-------------------·---------------------·-·-··--------------·-· ALL OTHER STORES ---·--·-------------------------------------·--------------·--·--··------·----­ 7 + 27.9 + 25.8 +16.4 TEXAS STORES GROUPED ACCORDING TO POPULATION OF CITY: All Stores in Cities of-Over 100,000 Population --·------------------------------------------------------------------­ 151 + 30.0 + 6.7 +34.5 50,000-100,000 Population ------·--------------------------------·-·----·---------· 113 + 12.2 + 4.7 +22.7 476 + 19.l + 6.8 + 28.4 2,500-50,000 Population ----·-·---·-----·---------··--------------------------------··---·---------------­ Less than 2,500 Population --------------··------·-----------·------------------------·----------­ 231 + 15.9 + 5.8 +13.9 •Group total includes kinds of business other than the cloesification listed. Prepared from reports of independent retail 1tor e1 to the Bureau of Buaincu Research, coOperating with the U.S. Bureau of the Cen1u1. OCTOBER CREDIT RATIOS IN TEXAS DEPARTMENT AND APPAREL STORES (Expressed in Per Cent) Number Ratie of Ratio of Ratio of of Credit Salee Collec:itlon1 to Credh SaJariea Store• to Net Salee Out1tandinp to Credit Saleo Report in« 1943 1942 1943 1942 1943 1942 56 4-5.7 54.5 74.5 60.5 0.9 1.0 tores Grouped by Cities: AustirL----------·---------------·-------------··----------------·-­ All Stores-------------------------·-··----------·----··------·--·-· 6 40.9 4-5.2 75.2 69.7 1.0 1.2 Dallas .. _____________________________________________________ _____________________________ 8 53.5 59.1 93.3 58.2 0.7 0.7 El Paso__ ----------···--------------------------·---·----------------·-­ 3 41.6 44.6 66.5 59.9 LO L3 Fort Worth-------·--·--·----·---·----------------------------­ 5 42.0 51.2 7L3 62.1 1.0 1.1 5 44.9 55.3 57.5 57.6 1.4. 1.3 Hou ton ----··----·--·--------------------------------------------­an Antonio -----------·----------------------------------··--·----------·--­ 4. 39.4 40.0 65.3 63.5 L4 1.8 5 46.1 52.7 60.0 56.9 LO 0.9 Waco-···--·-··-·----·--·· .. ---------------·------·--·-----·----------------------------------­ AI! Others·--·-----------------··----------·-·-·-·----------·--·-··--·-·-------··-· 20 4L8 76.2 72.4 66.6 0.8 0.6 tores Grouped According to Type of Store : Department tores (Annual Volume Over 5500,000) --------------·---18 44.7 56.0 66.1 67.8 1.0 1.0 Departm nt Store (Annual Volume under 500,000) ____ ---··-------·-10 38.8 38.8 66.5 64.3 LO L3 Dry-C oods-A ppa rel Stores-----··---·--··-----·-----·--··-·-----------------·----··­3 39.6 44.5 70.7 63.7 1.5 1.6 Women's pecial ty hops ---------·--·------------------------------------­ 14 51.3 54.7 61.l 55.5 0.6 0.5 fen's Clothjng tores -··---_ ·--------·--·· ------·-·-----------·-·--· 11 44.2 52.0 69.4 59.7 LO 1.2 tore Grouped According to Volume of et Sales During 1943: 12 42.6 52.1 64.8 60.9 LO 1.0 Over 2,500,000 -------·--·------··--·· -------·-··· . --·------·-·--· ---------··-·--·­~2,500,000 down to 1,000,000 _ ---·----·-·-----· --·---·-·-----·---·---------12 46.9 49.5 65.0 60.5 0.9 0.8 1,000,000 down to 500,00Q.____ -----------------·-·-·· ---·------··· 8 32.0 40.5 65.0 64.1 0.9 L2 Le than 500,00Q______________________________ ------24 36.2 35.9 68.6 65.5 1.0 L5 Non: The ratioa aho'ffD for tJGch year, in the order in which they appear from left to right ue obtained by the following computation1: (I) Credit Sales divided by et Salei. (2) Collectione during the month divided by the total accounts unpaid on the 6rst of the month. (3) Salariee of the credit department divided by credit u.lct. The data arc reported to the Bureau of Bu1inea1 Reeearch by Tcxu retail 1tore1. 0 TOBER INDEPENDE POSTAL RE EIPT RETAIL LE OF T TORE TEXA October, 1913 October, 19'12 eptcmber, 19"3 Abilene ------------------------44,820 37,131 39,372(By Di trict ) Amarillo ----------------54,357 31,481 51 041 Pcrccn1ugc Changes us tin _----------------------84,627 87,830 8 ,103 No. o! Oct., 1943 Oct., 1943 Ycnr, 1943 Beaumont ------------------4·2,921 39,025 41503 E1tnblishmenta from from from Reporting Oct., 1942 Sept., 19,13 Year, 1942 Big pring ---------------11,540 9,578 8 765 Brown ville ------------13,294 8,360 10 036 TOTAL TEXAS + 23 + 5 + 29 -----971 Brownwood ----------------20,610 15,466 24"615 TEXAS TORES ChjJdress -----------5,579 4,427 6,243 GROUPED BY Cleburne ---------------4,853 4,312 4,632 PRODUCI GAREAS: Coleman -------------------4,218 3,725 3,450 Distri t 1-66 + 9 + 2 + 26 C01·pus Christi ------60,845 48,020 56,073 Amarillo ------------21 + 1 + 6 + 29 Corsicana ---------------10,643 8,263 8,186 Pampa --------------12 + 10 + 2 + 13 Dallas ------------------------512,785 477,673 502,831 Plainview -------------14 + 26 (1) + 27 Del Rio ----------------------6,373 4,546 5,271 All Others ------·--19 + 12 6 + 23 Denison ----------------------10,013 8,488 8,308 District 1-28 + 37 + 18 + 44 Denton -----------------12,694 12,092 9,707 Lubbo k -------------13 + 41 + 14 + 43 Edinburg ---·--------------4,220 3,554 4,220 All Others -----------15 + 30 + 26 + 46 El Paso _----------------------90,301 76,325 83,060 District 2 ·---------73 + 3 + 2 + 23 Fort Worth -------------------221,999 214,430 215,465 Abilene ---·----------11 + 2 8 + 35 Galveston -------------------48,000 44,445 43,754 All Others -------62 + 3 + 7 + 20 Gladewater -------------------4,419 3,797 3,404 3_____ ____ Di uict 36 + 19 2 + 18 Graham ---------------------3,544 2,938 2,783 District 4 -------·------233 + 30 + 9 + 37 Harlingen --------------------11,848 10,178 10,749 Corsicana ---------11 + 16 + 15 + 16 Houston --------------------355,361 310,375 315,296 Dallas ------·---------39 + 38 + 11 + 46 Jacksonville ---------------5,426 4,153 6,623 Ft. Worth ----------26 + 32 + 8 + 31 Kenedy -------------------2,656 2,035 2,385 her man -----------11 + 1 + 4 + 13 Kerrville ----------------4,338 3,262 3,581 T mple --·-----·--·---18 4 + 5 + 16 Lubbock --------------37,573 27,379 29,134 Waco ----------------21 + 14 + 4 + 42 Lufkin -------------------6,918 6,686 6,247 All Others ------------107 + 17 + 2 + 29 McAllen ------------------7,192 6,257 5,392 Di trict 5 -------------97 + 15 + 5 + 22 Ma1·shall -------------------10,770 10,466 9,192 Di trict 6 -------------------45 + 21 + 4 + 25 Palestine -----------------8,034 6,595 6,768 El Pao -----····-----------25 + 22 + 3 + 25 Pampa -------------------------10,249 8,880 8,827 All Other ------·------· 20 + 5 + 11 + 26 Paris ---------------------------18,708 10,751 19,868 Di tri t 7 ·---··---------49 + 14 + 3 + 20 Plajnview -----------------5,813 5,493 4,850 an Angelo 10 + 16 + 2 + 24 Port Arthur ----------------26,326 22,660 22,981 All Other ----·-· ··-39 + 11 + 5 + 19 an Angelo ---------19,937 17,034 18,290 Di trict 8 ·--------------162 + 12 + 4 + 23 an Antonio ---------·--258,553 209,459 225,856 Austin ------· ----------15 8 + 4 + 14 Sherman --------------------11,669 10,625 11,255 an Antonio ---------45 + 16 + 4 + 28 Snyder ------------------------2,662 2,171 2,224 Al! Other --------------102 + 20 + 4 + 19 Sweetwater -------------------7,647 5,131 6,463 District 9 _··-------------113 + 25 + 5 + 27 Temple ·--------------------15,579 11,445 14,828 B aumon t ------------11 + 15 + 6 + 28 Texarkana -------------------24,531 20,860 22,951 Galveston ------10 + 13 + 14 + 13 Tyler -----------------------------30,830 20,854 29,089 Hou ton ----------------40 + 32 + 3 + 28 Waco __ _ ---------------------51,389 45.272 46,534 Quanah -------10 + 32 + 17 + 32 Wichita Falls ------------42,137 37,345 39,810 All Others ------------42 + 15 + 5 + 25 TOTAL -----------------------2,248,801 $1,961,272 2,088,015 District 10 ------------27 + 26 + 6 + 33 District 10-A 42 + 58 + 25 + 30 NOTE: Compiled from repo rts from Texas chnmbere of commerce to the Bureuu of Business Research. Brown ville 11 +101 + 22 + 70 All Others 31 + 36 + 27 + 25 TEXAS CHARTERS Chnni;e or le11 than .5%. October October September NOTE: Prepared from reports of independent retail 1tore1 to the Bureau of 19·13 1942 19'13 Bu1ine11 Rctearch, coOperatin& with the U.S. Bure.au of the Cenan•. Domestic Corporations: Capitalization• -----------------------264 $ 325 $ 805 umber -------------------------21 39 37 COMMODITY PRICES Oct., 1943 Oct., 1942 Sept., 1943 Cla ification of new corporations: Wholesale Prices: Banking-Finance --------------2 0 2 U. . Bureau of Labor latisti Manufacturing ----------------4 5 3 (1926= 100%) 103.0 100.0t 103.1 t Merchandising 5 8 3 Farm Prices: Oil -----------------------­ 1 2 1 0 1 0 U. . Department of Agriculture Public ervice -------------­ Building _____________ 193.0t Real E tale 7 11 15 Tran portation 1 5 1(1910-1914=100o/o) U. . Bureau of Labor tali tics ---------------­ 1 7 12 (1926=100%) 122.2t 109.0 123.5t All Others -------­umber capitalized at less than Retail Prices: 7 17 12 5,000 -------------­ Food (U.S. Bureau of Labor ta­umber capi talized at $100,000 or li tics (1935-1939=100%) -138.2 129.6 137.4 more 0 0 2Dept. tore (Fairchild' Pub-Foreign Corporations lications, January, 1931=100%) 113.1 113.l 131.l ( 1umber) ---------------4 20 14 •Not available. •In tbousandt. fPreliminary. NOTE: Compiled from records of tbe Secretary o( State. lRevi1ed. PETROLEUM BUILDING PERMITS October, 1943 October, 1942 September, 1943 Daily Average Production (In Barrels) Abilene ·---------------------32,088 s 6,195 $ 3,588 October October September Amarillo --·------------------41,869 77,588 25,018 1943 1942 1943 Austin ------------------·-·---35,179 26,383 64,653 Coastal Texas* -----------519,350 313,750 483,200 Beaumont -------------------27,157 77,588 25,018East Central Texas______ 135,250 92,150 130,550 Brownsville ---------------4 469 6,076 12,281 East Texas -----------368,700 362,000 379,050 Coleman -----------------3,500 0 150 orth Texas -------------138,300 140,000 140,550 Corpus Christi --------93,153 127,913 147,265 Panhandle ---------88,100 88,600 103,350 Corsicana ---------------3,700 455 1,080 outhwest Texas --------288,150 165,300 260,400 Dallas -----------------·--------1,161,384 238,984 359,791 West Texas ----------354,050 209,750 325,050 Del Rio -------------------4,722 2,105 6 880 ta te ------------------1,891,900 1,371,550 1,882,150 Edinburg ----·---------------635 60 10,255 nited tates --------------4,398,750 3,894,400 4,327,400 Denton ---------------------6,675 6,750 6,300 El Paso ---------·---------20,319 470,300 27,807Ca olnie ales as indicated by taxes collected by the State Fort Worth -----·---------373,650 341,012 750,935Comptroller were: September, 1943, 101,616,354 gallons; Sep­Galveston --------·--102,029 19,351 70,667 tember, 1942, 117,225,000 gallons; August, 1943, 118,582,993 Gladewater --------------650 1,400 2,540 gallons. 1,580 Harlingen ---------------475 400 0 Graham ------------500 0 •Iuclodcs Conroe. 168,036 673,5~0Houston ----------·--------330,245 Note : From American Pe troleum lnatituto. See accompanying map showing 1,025Jacksonville ----------------0 350 the oil-producing districts of Texas. Kenedy -------------------0 0 1,500 Kerrville ------------------777 260 365 Lubbock -------·-------------22.722 19,430 27,283 McAllen -----------·---------5,000 2,120 24,125 Marshall ------------·-----------7,110 9,986 5,760 Midland --------------------·--3,400 P.t.lOU,NDLl 2,251 1,600 New Braunfels --------1,525 24-0 4,088 Palestine -----------------2,100 1,920 330 Pampa ----------------------18,260 2,000 2,450 Paris ------------8,970 65,482 17.500 Plainview ------------4.650 0 7,000 Port Arthur ------------44,908 7,796 19,348 San Antonio ----·--------260,701 277,651 291,672 Sherman -------------------10,155 11,541 11,370 Snyder -------·-----------1,800 3,170 0 Sweetwater -----------15,305 4,155 1,520 Tyler --------------18,132 7,575 14,424 Waco ___ _ ------·-------32,777 124,871 37,397 Wichita Falls ---------23,699 64,903 16,817 TOTAL _________________$2,724,380 2,115,934 $2,688,927 Non: Compiled from reports from Tcxae chambers of commerce to the Bureau of Businc11 Research. CEMENT (In Thousands of Barrels) October October September 1943 1942 1943 LUMBER Texas Plants 788 1,076 730 (In Board Feet) Production --------·····-· October October September Shipments ·····------····­723 1,007 683 1943 1942 1943 Stocks -··-··-·-··--------··· 883 442 818 outhern Pine Mills: United States verage Weekly Production 18,263 11,380 Production ············-·-····-······-···· 11,189 per unit --------------238,575 279,210 222,702 20,344 12,296 Shipments ·····-···--······-·······-·· 11,288 Average Weekly Shipments Stocks --·---·-·-········--············ 19,604 10,627 19,704 per unit _------------222,181 305,485 244,757 Capacity Operated -·-·-····-·-· 53.0% 87.0% 56.0% Average nfilled Orders per ote : From U.S. Depnrtment of Interior, Burcnu of Mines. unit, end of month____l ,553,258 1,665,904 1,482,516 PERCENTAGE CHANGES IN CONSUMPTION NoTE: From Southern Pine A11ociatioo. OF ELECTRIC POWER October, 1943 October, 1943 from from October October September TEXAS COMMERCIAL FAILURES October, 1942 September, 1943 1943 1942 1943 + 20.0 12.8 Commercial ··-·--···----···--­ umber --------------··­0 8 0 Industrial ·-·-···-····----··-···· + 44.9 2.9 Liabilities* -------------­0 39 0 Re idential ···-·····-------·-·· + 18.1. 10.7 As et • All Others ·-···------····-·········· 0 25 0 +146.8 17.0 Average Liabilities per failure*---0 5 0 + 48.3 8.9 TOTAL ··-·-·---------­ • In thou94od1. Prepared from reports of 7 electric power companies to the Bureau Of Busineaa Re1carch. • E1tlmate of production made hr the Bureau of Buainesa Re.earch. tMilk equivalent of dairy produch wae calculated from production data by the Bureau of Bu1ineS1 Re1earch. 1Jnclude1 ice cream, 1herbert1, ices, etc. Non:: 10-Year Average production of creamery butter. ice cream and American Cheese ba1ed on data from the Divi~ion of A¥ricrnltural Stat11tlc1, 11.A.E. Non: From Dun and Bradstreet, Inc. DAIRY PRODUCTS MAN FACT RED IN PLANT IN TEXA Producte and Yeer J... Fob. Manib April May Juno July Au.a. Sept. Oct . Na•. D••· TOTA!. CREAMERY BUTTER (1000 lb.) 1943* -----------3,012 194 2* ----------2,341 1930--39 average _____ 2,074 3,001 2,076 2,109 2,724 2,131 2,392 3,446 3,311 3,138 4.,74-0 4,396 3,556 4,275 4,358 3,166 4,051 3,937 4,113 3,452 3,684 2,867 2,629 3,602 2,513 2,581 3,243 2,608 2,659 2,301 2,341 2,211 38,066 32.048 ICE CREAM (1000 gal.) 1943* ------­ 1,554 1,218 1,408 1,823:): 2,327:): 2,39U 2,758:): 2,763:): 1,999:): 1,622 1942* ----------­ 745 700 1,014 1,312 1,812 2,305 2,476 2,324 1,911 1,698 1,323 1,046 16,089 1930--39 average ______ 1,215 1,262 434 570 752 893 904 846 686 460 259 205 6,486 AMERICAN CHEESE (1000 lb.) 1943* --------­ 874 1,025 1,108 1,633 2,120 1,943 1,896 1,405 1,019 819 1942* ------­1930--39 average --­____ 1,308 554 1,302 590 1,644 737 2,204 1,050 2,756 1,215 2,674 1,129 2,580 1,119 2,048 1,025 1,604 866 1,221 852 713 718 735 641 20;717 10,496 MILK EQUIVALENT OF DAIRY PRODUCTSt (1000 lb.) 1943* 1942* ________________98,377 _____________75,435 90,422 77,913 88,540 115,788 154,491 142,700 143,120 124,558 93,186 85,084 83,621 105,047 148,707 145,064 145,868 131,841 119,279 104,273 83,502 72,806 1,237,136 1930--39 average ______54,675 57,139 67,456 89,641 104,323 97,562 97,075 89,185 76,165 73,444 60,119 55,872 922,656 OCTOBER. 1943, CARLOAD MOVEME T OF POULTRY ANO EGG Shipments from Texas Stations Can of Poultry Can of l:uo Sboll Chicken• Turkey• Shell Froun Drlod EquivaJend 00eot1aau-October October 11145 1942 1943 1942 1943 194% 1943 1942 1943 1942 1943 1942 TOTAL ---------------------------·---------------· 8 l3 3 8 28 33 67 71 85 119 842 1,127 lnlra tate ----------------------------------------­ 0 4 2 2 13 28 36 45 2 8 101 182 Interstate _________________---------------------·--·-8 9 1 6 15 5 31 26 83 111 741 945 Receipts at Texas Stations TOTAL _____ -----------------------------------···· 6 16 2 1 69 77 16 45 9 18 173 311 Intrastate ------------------------·----1 6 1 1 34 23 9 35 7 16 108 221 Interstate ________________________________________ ...... 5 10 1 0 35 54 7 10 2 2 65 90 •The deetination above ia the first destination aa ehown by the original Wll)'bill. Chances in destination brought about by di,creion fnctort nro not ehown. tDried ei?g• ftnd frozen egg" e.re con,•ertcd 10 a 1hcl1°cgg equivalent on the foll owing basis : l rnil cnrload of dried e1u;e=8 cnrload3 or shell CiJl9, nnd l earlond or frozen e~c· = 2 carloads of •hell egg•. Non: Theao data furnished to the Division of Agricultural Stati1tlc1, B.A.E., by railroad official& through a:enu at all 1tationa which orie;inatc and receive carload 1hipmen11 of poultry and eee:s. The data are compiled by the Bureau of Bu1ine8! Rc11earch. EPTEMBER HIPMENTS OF LIVE TO K 0 VERTED TO A RAIL-R BA I • Cattle Cal•e• Hop Shoe• Teta1 1943 19-12 1943 1!)42 1913 19U 19.\3 19 12 11145 1942 6 978 7,678 2,104 2,084 1,234 925 1,235 1,487 11,560 12,174 Total Intrastate Omitting Fort Worth ..... ___.... 791 1,916 221 392 88 49 301 520 1,401 2,877 TS_____.______ .... 2.325 2,476 1,331 974 1,536 2,007 12,961 15,051 Total Inter tate Plus Fort Worth ------.... TOTAL SHIPME 7,769 9,594 TEXA CAR-LOT• HIPME T OF LI E TO K FOR YEAR 1943 Cetde Ca lve• Hop Sbee1l Total 1943 1912 19-13 1942 19 13 1942 1943 1942 1943 1942 Fort Orth ___ .... 52,852 50,638 8,983 10,865 14,025 10,102 11,844 11,324 87,704 82,929 Tola) Int ra tale Omitting Fort Worth ___..... .. 6,917 6,738 l 780 1,377 666 279 1,120 1,4°95 10,483 9,889 TOT AL SHIPME TS 59,769 Total Jnler late Plu 57.376 10.76..1 12.242 14,691 10,381 12,964 12,819 98,187 92,818 •Rail·c.ar &111 : Cattle, SO bead per car; calve•, 60; hoa•. 80; and sheep, 250. Fort Worth ihipmentt are combined with inter1tate fonrardin11 in order that the bulk or market diaappearanco for tho month may be ahow·a. Non: Thete dat4 art' fumlibed the United Slate. Bureau of A~ricuhun1 Economies by railway olici1l1 tbrou1h more than 1,500 1tatloa. aaenta, repr•HatioJ .,._, live etock ebippias polot la tbe Stue. The data are compil~d by the Bure&u of Bu1iaeu Re.e.arch. TABLE OF CONTENTS PAGE Business Review and Prospect, F. A. BuecheL_·----------------------------------------------------------------------------------------------3 Natural Gas, Elmer H. Johnson___ _ _ ___ -----·· -----------------·--------------------···--·---------------------------------------------------------5 Cotton and Post-War Planning, A. B. Cox_______ --------------------··--·-·-----._----------·----------·----------------------------------··------------13 LIST OF CHARTS Indexes of Business Activity in Texas ·----------------------------------·---------------------------------------------------------------------------2 LIST OF TABLES Building Permits ------------· ____ -----------·-··----···-···--·-····----·-···---------··-----------------------------------··------------· ·-------------------------------· 18 Carload Movement of Poultry and Eggs______________-----------------··----------· -------------------------------------------------------19 Cement _______________ --·__________ ... __ ._·· --··-------·· _ --··--·-----------·...... ____________ --· ------------._ -----------------____.. _·-----·____________________ ---------·---.. 18 Charters 17 Commercial Failures ------------···--.. . . ·-. ----------··-····--------·----··---------·------------------------------···-----------· ·---·--------------· ··-··-···· ·· 18 Commodity Prices ____ --------------· -------·_______________----------------·---------------------.------------··-·-------.-----------------------------------------17 Cotton Balance Sheet ·-------------·____________ __ --··--·-------___----· ----------------·._______ _ __ __ ___ -------------------· ··-------------------······--------14 Credit Ratios in Texas Retail Stores ----------------------------------------------------------------------------------------------·-------. 16 Dairy Products Manufactured in Plants in Texas ------------·------------------------------------------------_--------------------·---·· -19 Employment and Pay Rolls in Texas -------------------------------------··-------------------------------·-··--------------------------------15 Lumber __ _ ______ --· __ _ ______· --------__ _____________________ ______ ··-----------------___ ------------______ _ .________··-··---___ .. ---------------------------------------18 Percentage Changes in Consumption of Electric Power ------------------·----------------------------------------------------------------18 Petroleum ..__ _ _______ ..._ _ ·-----··-----·---_____ __ ______ ...--------------------.--------... -----------------------.--------· -·------------------------------------18 postal Receipts _____---_--------_._··--__ __ ._··--________.__ ___ __ ___________________________ _ .___________.-------·_ _____ ------------------------------------------17 Retaii Sales of Independent Stores in Texas ------------------------------------------------------·----------------------------------------­16 Retail Sales of Independent Stores in Texas by Class of Establishment -----------------------·-----------·-----------·--------­16 Retail Sales of Independent Stores in Texas by Districts ------------------·-----------·------------------------·-----------··-----·--17 Shipments of Live Stock ··--------------· ___ _ ------------·-------------·· ___ _ ------··-----·--------------------------. _______ ____.·------------------------------19