VOL. III AUSTIN, TEXAS, AUGUST 27, 1929 NO. I THE MONTH General business and industrial conditions in Texas and the Southwest remained on a satisfactory basis during July. Despite the fact that a few industries, notably lumber and petroleum, weakened a little, activity in most lines held above normal for this season of the year. Sub­stantial gains in freight car loadings indicate that com­modities are moving into distributive channels in very large volume even though most of the increase is due to the heavy grain movement. Financial conditions re­main sound but the unfavorable credit developments over the past few weeks will act as a retarding influence on business. The half-year earn­ing reports of most corpora­tions show a gain in profits over the same period of 1928. Employment conditions in the State are as good and pos­sibly better than they were last year at this time. De­mand for farm labor is gain­ing and transportation and storage companies are finding it necessary to add to their working forces in order to handle the increasing traffic. Industrial concerns also added more workers during the month. There was a gain of 1.7 per cent in the number of workers on the payrolls of 501 comparable firms located in 40 industrial centres of the State on July 15 as compared to Business activity during July was main­tained at the high level of May and June. Not only did the expected summer curtailment fail to materialize in most lines but many indus­tries actually recorded gains. Aside from tighter credit, financial conditions continue sound and no serious shortage of funds is anticipated for fall expansion. Agriculture shows some improvement and prospects for the livestock industry are encouraging. Most industries continue active. Employment con­ditions in the State are good and the distri­bution of merchandise at wholesale and retail is in larger volume than it was a year ago at this time. While it is true that the present high rate of activity cannot be extended in­definitely convincing signs of a business de­pression are still lacking. June 15. Average weekly wages per worker, however, declined from $25.26 to $24.42 during the month, the first drop so far this year. Especially large gains were re­ported in Austin, Beaumont, and San Antonio while de­creases occurred in Galveston and Houston. The reversal in the trend of interest rates is the most important feature in the financial situation during the month. Interest rates generally were higher and the credit outlook is not so bright as it was a month or 6 weeks ago. Bank debits in the Dallas Federal Reserve District for the 4-week period ending July 31, totaled $801,000,000 compared to S742,000,000 for the same periorl of 1928, a gain of 8 per cerit. :Vfember bank borrowing:" at the Dallas Federal Reserve Bank increased sharply over the month. Deposits at member banks fell off some­what but total loans were higher. The 5 per cent re­discount rate remained unchanged. Wholesale prices continued the advance which began in the previous month. The volume of trade at both whole­sale and retail is above that of last year and stocks of merchandise are small in most cases. Sales of 70 de­partment stores located in 26 cities of the State amounted to $3,530,000 in July compared to $3,489,000 in July 1928, a gain of 1.2 per cent. Commercial failures show a big gain and the number of new corporations organized was the largest on record for July. Freight car loadings in the district are running about 8 per cent above those of last year at this time according to the Southwest Shippers Ad­visory Board. Shipments of grain, building materials, and forest products are unusually heavy. Box cars suitable for shipping wheat are getting scarce. Export and import trade is passing through a pe­riod of summer dullness. Building permits in 33 cities of Texas totaled $7,829,000 compared to $8,441,000 in July 1928. Construction and engi­neering projects were 43 per cent above those in June and nearly double the amount reported in July last year. Production and shipments of cement were increased as a result of the operations of a new plant. The lumber industry made only a fair showing. A new high record was established in crude oil production for the State and field work was more active. Cotton mills experienced an active month for this season of the year but the spinners margin of profits continues unfavorable. Agricultural c·onditions were improved. Farm prices made large gains and crop prospects are encouraging. Some districts of the State are getting rather dry and cotton especially, shows considerable deterioration. Farm purchasing power is gaining, Shipments of fruits and vegetables reflect a large seasonal decrease. The outlook for the livestock industry is rather bright. Animals are holding up remarkably well despite dry ranges and hot weather. Wool markets are slightly firmer and prices for most classes of meat animals are holding steady. WHOLESALE PRICES Wholesale prices moved upward in July and reached the highest level since September 1928. Most of the gain was due to advances in the farm products group although rubber, sugar, hides and many minor commodities were higher. Textiles, fuels and some building materials de­clined. The Annalist index advanced from 146.6 in the first week of July to 148.7 for the first week of August. Bradstreet's stood at 12.63 on August 1 against 12.49 on July 1 and Dun's advanced 31h points to 192.2. The Bureau of Labor all commodity index based on 1926 as "'lUal to 100 advanced from 96.4 in June to 98.0 in July, or to a level only .3 of a point below that in July 1928. FINANCIAL Possibly the reversal in the trend of interest rates is the most significant development in the financial situation during July. Interest rates began easing late in May and continued downward for most of June. The rate was then reversed and it appears now that lower interest rates are unlikely for some months to come. July opened with call rates in New York City at 10 per cent. A short time later, it had dropped to 6 per cent and then mounted rapidly to 15 per cent. The rate then fluctuated from 8 per cent to 12 per cent and closed the month at 10 per cent. Time money advanced to 9 per cent against a low of about 71h per cent in June. Com­mercial loans held mostly around the 6 per cent level as a result of the Federal Reserve policy in handling com­mercial paper. The increase of the rediscount rate to 6 per cent by the New York Federal Reserve Bank on Au­gust 8 was rather unexpected. So far none of the other Federal Reserve banks have followed this lead. Bank debits were slightly above those in June and about 8 per cent greater than in July last year. Checks cashed in the district for the 4 weeks ending July 31 as reported by the Dallas Federal Reserve Bank totaled $801,000,000 compared to $742,000,000 for the same period of 1928. This increase indicates that business generally is on a satisfactory basis. Member bank borrowings at the Dallas Federal Reserve Bank increased from $11,000,000 at the beginning of J-u}y to $24,000,000 at the beginning of August. Member banks are finding it necessary to increase their borrowings in order to supply funds for expanding business. Large sums are needed for the movement of the wheat crop and additional credit will be required for harvesting the cotton crop so that these borrowings are expected to show ·further gains. Demand deposits at member banks de­clined from $281,000,000 to $277,000,000 over the month while time deposits were reported at $142,000,000 or $3,000,000 less than in the month previous. Government securities held by member banks of the district also show a reduction. At the close of July, member banks owned but $81,000,000 of Governments, the smallest amount for any month this year. Loans at member banks on July 31 amounted to $355,000,000 against $343,000,000 a month earlier and $334,000,000 on the corresponding date of 1928. These loans are likely to increase as fall business expansion gets under way. " FINANCIAL STATISTICS FOR THE DALLAS FEDERAL RESERVE DISTRICT"' Bank Debits (four weeks)······-------------------------------------------$ Govarnment securities owned, end of month_____________________ _ Member bank borrowings, end of month --------------------------­ Demand deposits, end of month_____________________________ _ _______ _ Time deposits, end of month..-------------·-----·--------·-----­ •From the Federal Reserve System. July 1929 June 1929 July 1928 801,000,000 81,000,000 $ 797,000,000 86,000,000 $ 742,000,000 86,000,000 24,000,000 11,000,000 20,000,000 277,000,000 281,000,000 281,000,000 142,000,000 145,000,000 132,000,000 TEXAS CHARTERS The large number of new corporations receiving char­ters in Texas each month indicates that the outlook for business over the next few months is generally optimistic. Even though most of the new companies were small, as has been the case over thE! past year, several organiza­tions were capitalized at $500,000 to nearly $2,000,000. A total of 235 new enterprises with capitalization of $10,898,000 was granted charters by the Secretary of State in July, a new high record for that month. This compares with 179 corporations capitalized at $81,190,000 in June and 214 new companies having capitalization of $9,085,000 in July a year ago. Permits were granted to 27 outside companies during the month whereas 45 out­side permits were issued in July 1928. Twenty-one oil companies were organized in July com­pared to 8 in July last year, while public service corpora­tions remained unchanged at 5. New manufacturing con­cerns numbered 37 against only 20 in July 1928 and finan­ cial institutions increased slightly to 11. New real estate and building firms declined from 31 in June to 21 in July and compare with 19 in July a year ago. The general list was also below that of last year. TEXAS CHARTERS July June July 1929 1929 1928 Number ----------------235 -179 214 Capitalization ....$10,898,000 $81,190,000 $ 9,085,000 Foreign permits.. 27 17 45 Classification of new corporations: Oil -------------------21 15 8 Public service__ 5 3 5 Manufacturing 37 29 20 ­Banking -Fi­ nance -----------­9 11 10 Re a l estate- Building _____ 21 31 19 General __ __ ___ ___ . ~ 152 . 140 92 STOCK PRICES The stock market moved to sharply higher levels in July: Aside from the severe setback during the early part of the month due to tighter credit conditions, the mar­ket advanced almost daily. New high records for all time were established by many issues and the upward trend has continued so far in August. Even the higher re­discount rate at the New York Federal Reserve Bank failed to check the advance except for a day or two. While most industrials made large gains, the rails showed unusual advances in so short a period. Four of the seven industrials comprising the index of the Bureau of Business Research advanced sharply and three suffered small losses resulting in a gain of 11 points in the index for the month. This brings the index to 267, or only 4 points under the high of last April. All of the issues except one included in the rail index ad- INDEX OF RAILROAD STOCKS Average High 1923-24-25=100 January -------------------­February ------------------·­March -----------------------­April -------------------------­May ---------------------------­June --------------------------­ July _:_________ _____________ August -----------------------­September -----------------­October -------------------­November ----------------­December ------­ 1929 1928···1927 1926 1925 216 183 145 136 118 218 178 157 133 123 216 183 164 125 123 209 191 175 126 118 217 199 179 127 122 218 193 190 133 117 238 197 192 136 119 _____ 203 190 140 125 ------215 189 144 126 ______ 215 186 138 124 221 182 139 126 ------212 183 143 133 ~1,,......----..----.-----..---....----.....--....----.....--......---- SOOfBllBS!&RN STOCK PRICE INDEX !SOl----1 or .lyerage Monthly Highs 1----1-------- ATerage Month ·1923-24-25 • 100 Indust r ials --­ vanced, bringing this index to 238, a new high record. So far this year the rail index has advanced 22 points whereas the industrial index has gained but 3 points. Trading was very heavy on most days but the volunw in any session fell far short of the 8,000,000 share-day established some time ago. In constructing this index of rail and industrial stock prices, the Bureau of Business Research aimed to select companies which are representative of conditions in Texas and other Southern States and at the same time listed on the New r9rk Stock Exchange where quotations are available for a number of years back. The aTeraire .weekly high for the years 1923-24-l'i is the base equal to 100. Included in the industrial stock inde, &re Coca Cola, Freeport-Texas, Gulf States Steel, Tennessee Coppe1 •nd Chemical, Texas Company. Texas Pacific Coal and Oil, and Texas Gulf Sulphur. The railroad• used in the index are the Atchison, Topeka & Santa Fe; Chicago, Rock Ialand & Pacific; Gulf, Mobile & Northern ; Missouri, Kansaa & Texas; Missouri Pacific; New Orleans, Texas & Mexico; St. Louis & Southwestern; Southern Pacific ; and Texas Pacific. INDEX OF INDUSTRIAL STOCKS Average High 1923-24-25=100 January ----'---------------­February ·----------------­March ----------------------­April ---------------------­May -------------------­June -----------------------­July -------------------------­August ---------------------­September ---------------­October ------------------­November ---------­December -----------· 1929 1928 . 1927 1926 1925 264 245 167 142 108 265 233 174 146 112 269 239 184 136 110 271 255 194 135 106 263 260 199 137 116 256 243 203 146 120 267 246 208 151 124 247 210 154 1~7 259 224 153 126 257 225 154 135 262 226 159 144 255 238 164 139 ...... ...... ------......--"T"--.....,----..,...----r----'T""--...,.----~---, ---+-----------t----­ ,,,-··.... ............·,~ i s e e l 9 2 9 1 ~ i. 7 1 (I ?. G the month. Sales of 70 department stores located in 26 DEPARTMENT STORES SALES cities of the State totaled $3,530,000 compared to Demand for merchandise both in wholesale and retail S3,489,000 in July a year ago, or a gain of 1.2 per cent. lines appears to be holding up exceptionally well. Mer­For the year to date, sales are .7 per cent above those of chants are still exercising caution in stocking up goods, the same period of 1928. The decline of 23.6 per cent but a slightly more liberal policy was in evidence during from June to July is due entirely to seasonal influences. Eleven cities reported losses against gains in 15. the Federal Reserve System. Nine districts reported in­Retail trade in the United States in July shows a gain creases and three showed losses. July this year had 26 of 2.7 per cent over that in July a year ago, according to working days whereas there were 25 last year. JULY TENDENCIES IN TEXAS DEPARTMENT STORE SALES Percentage change from Number of July June Year-to-date Stores 1928 1929 1928 Austin --------------------------------------------4 +18.7 -23.9 +14.1 Beaumont ------------------------------------5 + 8.1 -21.5 + 2.3 Dallas ---------------------------------6 + 3.2 -26.8 + 3.4 Fort Worth ---------------------------------­8 -2.1 -22.1 + 0.1 Galveston -----------------------------------3 + 5.7 -19.2 +10.2 Houston ---------------------------------·--------8 -3.1 -27.7 + 1.8 San Anton i o -----------------------·-·--------8 + 2.7 -25.6 -8.0 Tyler -----·----------------------------·-·----------3 -6.0 -14.0 + 7.9 All others*------------------------------25 + 0.7 -7.5 -7.7 State ------------------------------------------70 + 1.2 -23.6 + 0.7 Sales of 70 comparable stores 1929 1928 $ 3,488,843 ~u~:i'r -t~-d;.:t~~~~~=~~~~~=:~::=::::=~~:=~:~:~:~:~:=:::~~:~::$3~'.~~~'.~b~ 31,895,565 -----;,ul others include: Abilene, Amarillo, Brownwood, Cleburne, Corpus Christi, Corsicana, Del Rio, Denison, El Paso, Marshall, Paris, San Angelo, Temple, Waco, and Wichita Falls. COMMERCIAL FAlLURES An unusually sharp increase is reflected in the busi­ness mortality rate in Texas during July. In the past ten years, there have been increases five times whi~e de­creases have occurred five times in the numbr of failures from June to July so that the seasonal change between the two months is not definite. However, the gain of nearly 40 per cent this year is the greatest since 1926. During the month, 41 commercial firms having liabilities of $919,000 went into bankruptcy compared to only 30 failures with liabilities of $564,000 in June. Last year in July, 51 bankruptcies with liabilities involving $755,000 were reported in the State. Moreover, failing firms were larger again, liabilities of the average insolvency amount­ing to $22,400 in July compared to $18,800 in June and $15,000 in July 1928. No bank failures were reported for the month. COMMERCIAL FAILURES* Number ----­-·­Liabilities .... $ Assets _________ July 1929 41 919,000 512,000 $ June 1929 30 564,000 226,000 $ July 1928 51 755,000 251,000 *From D. G. Dun & Co. CEMENT Due to the fact that a new plant began operating dur­ing July, cement production in the State showed a large increase. A total of 701,000 barrels were turned out by Texas mills compared to 554,000 barrels in June and 561,000 barrels in July 1928. In comparing this indus­try for Texas over the next few months, therefore, out• put and shipments for the new plant should be con­sidered. Shipments from Texas mills totaled 666,000 barrels against 579,000 barrels in June and 603,000 barrels in July 1928. Stocks in storage on July 31 amounted to 546,000 barrels compared to 510,000 barrels a month earlier and 314,000 barrels on the corresponding date last year. The continued upward trend in stocks at this -­son of the year is an unfavorable feature and possibly indicates that production must be curtailed unless demand improves over the next few months. Prices of cement remained unchanged over the month. The basic price on August 1 was $2.25* per barrel at Dallas and $2.35* at Houston, ten cents being allowed per barrel for cash and 40 cents for cloth sacks·where returnable. *Prices quoted through the courtesy of the Lone Star Cement Com­ pany Texas. THE CEMENT SITUATION* (In Thousands of Barrels) July June Ju1y 1929 1929 1928 Production --------------------------------701 554 561 Shipments -------------------------------666 579 603 Stocks ------------------------------------546 510 314 •From the United States Department of Commerce. BUILDING Compared to the unusually poor month of June, the building industry in Texas during July made a much better showing. However, the industry is still rather slow and it is likely to be several months yet before ac­tivity reaches the level obtaining last spring. The build­ing industry over the entire United States made a good recovery during July from the month previous but most authorities feel that any sustained improvement is likely to be small. Building permits in 33 cities of the State in July amounted to $7,829,000 compared to $6,885,000 in June and $8,441,000 in July 1928. Large increases over those in July 1928 were reported in Abilene, Austin, Cleburne, El Paso, Galveston, Marshall, Temple, Tyler, and Waco while Brownsville, Del Rio, Denison, Port Arthur, San Angelo, Sweetwater, and Wichita Falls showed large losses. Engineering and construction projects amounted to $27,000,000 for July in the State, according to the F. W. Dodge C'orporation, an increase of 43 per cent from the month previous and nearly double those in July a year ago. On the other hand, contemplated projects declined from $32,000,000 in June to $21,000,000 in July and com­pare with $29,000,000 in July 1928. Construction costs remained about unchanged. - BUILDING PERMITS July 1929 June 1929 July 1928 Abilene ----­------­$ 198,000Amarillo _________ 146,000 $ 102,000 184,000 $ 116,000 154,000 Austin ------------­Beaumont _______ 468,000 278,000 135,000 169,000 107,000 300,000 Brownsville ---­ 20,000 50,000 76,000 Brownwood ----Cleburne __________ 48,000 70,000 -----­---------­28,000 237,000 21,000 Corpus Christi Corsicana ________ Dallas _ ____________ Del Rio______________ 183,000 50,000 417,000 38,000 357,000 67,000 470,000 73,000 284,000 23,000 878,000 239,000 Denison ---­-------­ 3,000 ---------------­ 18,000 El Paso --­--------­Fort Worth______ Galveston ________ 317,000 686,000 560,000 259,000 1,401,000 184,000 100,000 539,000 158,000 Houston ---------­ 1,634,000 1,597,000 2,586,000 Laredo ---­-------­ 14,000 27,000 20,000 Lubbock ---------­ 162,000 139,000 290,000 McAllen Marshall __________ Paris ________________ Plainview ________ Port Arthur____ Ranger ----------­-San Angelo______ San Antonio____ Sherman __________ Snyder Sweetwater Temple --------­--­Tyler ---------------­Waco ---------------­Wichita Falls__ 21,000 241,000 16,000 91,000 77,000 14,000 190,000 833,000 21,000 19,000 57,000 289,000 69,000 532,000 67,QOO 10,000 10,000 20,000 35,000 166,000 15,000 160,000 684,000 24,000 20,000 82,000 148,000 74,000 137,000 58,000 23,000 12,000 1,000 78,000 153,000 1,000 647,000 827,000 21,000 20,000 157,000 86,000 28,000 122,000 119,000 Total -------­---­$ 7,829,000 $ 6,885,000 $ 8,441,000 LUMBER The statistical position of lumber was weakened con­siderably during July. Production reflected a fairly large gain while shipments and unfilled orders fell off, due partly to seasonal influences and partly to poor demand. Greater activity in building and other wood consuming industries will have a tendency to hold up demand but prices are likely to work lower unless a better balance is maintained between production and shipments. The soft wood market appeared to be weaker than the hard wood branch. Output of 32 Texas mills reporting to the Southern Pine Association totaled G9,000,000 feet in July compared to a cut of 42,399,000 feet by 26 mills in June. Average production pei· mill g-aine