~~ TEXAS Bu«~~":'~~~s REV11EW A Monthly Sum~ary of Busi ness ~~~ci_.•::;:;" <,.-li,,~tions in Texas and the Southwest ...~ c-:::--.... ,,.-;~~........ // »;....:)~--~~:~;,'' -.,.~~-S ','"u"~. ~y-' Bureau of~ss Research The University of Texas En~.rE!d as second-class matter on May 7, 1928, at the postoffice at Austin, Texas, under the Act of August 24, 1912 VOL. III AUSTIN, TEXAS, JANUARY 23, 1930 No. 12 Favorable Factors: Unfavorable Influences: 1. Declining industrial production1. Lower interest rates 2. Smaller freight car movement2. Smaller brokers loans 3. Lower building permits3. Ample credit 4. Small cotton crop 4, Heavy shipments of fruits and vegetables 5. Low farm prices '5. Many new charters 6. Increasing failures ;: :6: Little speculation 7, Lighter exports 8. Unemployment gaining't ..Relatively high wages 9. Decreasing bank debits 10. Poor wholesale and retail trade THE MONTH General business and industry receded further during December. Activity in many basic industries is approach­ing the low points reached in 1924 rather than stopping at the levels obtaining in the mild recession of 1927. The outlook for agriculture is uncertain while money and banking, interest rates and credit remain doubtful. Trade at wholesale and retail is poor. Moreover, conditions in many foreign countries are unsettled and the uncertainty in the national political situation is causing some concern. Many unfavorable features of previous business de­pressions, however, are conspicuously absent in the pres­ent situation and a few months more of caution are likely to present a very much brighter picture. It appears that 1930 will develop a trend just opposite to that of 1929, i. e., the year will make a poor start and end favorably. Compared to the rest of the country, employment con­ditions in the State are fairly good; but each month shows a further reduction in total wages paid to em­ployees. There was a drop of 2. 7 per cent in the number · o! workers on the payrolls of 511 comparable firms lo­cated in 55 cities on December 15 compared to November 15. Average weekly wages declined from $27.68 in No­vember to $27.27 in December. Practically all cities ex­cept Houston and Wichita Falls reported losses. Although part of the decrease is due to seasonal influences, the loss .is greater than can be explained in that way. Money markets were easier in the early part of De­cember following the easy credit policy adopted a few weeks ago by ·the Federal Reserve System. The usual :;1easonal firming tendency was in evidence just before the i hclidays but easiness developed again after the new year began. Call money in New York City was quoted around 41h per cent in the first part of the month, advanced to 6 V2 per cent over the holidays and then fell back to around 41h per cent. Time rates held at 41h per cent to 4 % per cent, or about the same as in November, while 90­day bills fell to 3 'll! per cent to 4 per cent. Three more Federal Reserve Banks reduced their rediscount rates to 41h per cent but the Dallas bank remained unchanged at 5 per cent. Bank debits fell off sharply in December which is con­trnry to the normal trend. Checks cashed in the District for the four weeks ending December 31, according to the Dallas Federal Reserve Bank, amounted to $872,000,000 against $956,000,000 for the same four weeks of 1928, a decline of 8.8 per cent. Loans at member banks fell off slightly while member bank borrowings declined to the lowest level for the entire year. Demand deposits increased slis:htly over the month but time accounts re­mained unchanged. That the distribution of merchandise is falling off is indicated by a shrinkage in car loadings. Freight car shipments in the first half of December were 31h per cent below those of last year for that period according to the Southwest Shippers Advisory Board. Exports de­clined sharply and coastal trade was quiet. Trade at retail slumped. Sales of 81 department stores located in 26 cities of the State amounted to $9,624,000 in De­cember against $10,275,000 in December, 1928, a loss of 6.3 per cent. This is somewhat larger than the aver~e for the United States. Wholesale prices continued the downward trend but the rate of decline was less. A rather unexpected increase occurred in the number of new corporations organized in December. A total of 162 new companies capitalized at $8,423,000 were char­tered against 123 companies having capitalization of $64,413,000 in December, 1928. Commercial failures re­flect a small seasonal gain. Forty-seven companies with liabilities of $1,185,000 went into bankruptcy during De­cember against fifty-four failures having liabilities of $1,085,000 in December a year ago. Production of crude petroleum recorded a further de­cline, bringing daily average flow to 850,000 barrels. Field activity fell off also. The building industry re­flected some improvement. Permits in 35 cities totaled $8,785,000 in December, which is a loss of 7.4 per cent from December, 1928. Practically no change was re­corded in the operating schedules of lumber mills. De­spite the fact that cement plants curtailed rather sharply, stocks incr~ased to record proportions. Textile mills were less active than for any month of the year. Agricultural conditions remain uncertain. Farm in­come was impaired due to a smaller cotton crop and fall­ing prices.· Farm work lagged because of cold wet weather. Acreage planted to winter wheat was increased last fall and the young plants are doing well so far. Movement of fruit and vegetables is on a large scale. There were 3,008 cars of these products shipped in De­CE:mber against 1,503 cars in December last year. Crops suffered extensive damage in the recent cold spells. The outlook for the livestock industry is not so bright ar. it was last year at this time. Prices for livestock and many livestock products are considerably under those ob­taining a year ago at this time. Ranges in many areas are poor and the condition of range animals is somewhat below normal. Losses have been rather heavy so far this winter. FINANCIAL Money markets were easier during the early part of December following the easy credit policy adopted by the Federal Reserve System a few weeks ago. However, just before the holidays, interest rates advanced as was to be expected at that season of the year. After the holiday period, rates declined as funds were returned to the larger centers. The effect of gold exports during the month was offset by the open market operations of the Fede~al Reserve System. It is interesting to note that although brokers loans have declined about 50 p(lr cent in the past two months, the amount of reserve credit in use is almost the same. Interest rates averaged lower. Call money was quoted ar 4 % per cent early in the month and reached 6% per cent as the month closed. Recently, lower rates have ruled again. Time loans held around 4% per cent t.:> 4 %. per cent, or about the same as in November, while 90-day bills fell to 3 % per cent to 4 per cent. Com­mercial paper was quoted at 5 per cent to 6*per cent, against 5 % per cent in NQVember and 6* per cent at the recent peak. The Deeember 15 short term Govern­ment notes carried a rate of 3 % per cent, a full 2 per cent decline from the June 16 issue. It appears, there­fore, that a period of easy money rates is in prospect over the next few months. Three more Federal Reserve Banlcs reduced thefr ;e­discount rates to 4% per cent, but the Dallas bank re­mained unchanged at 6 per cent. Bank debits fell off sharply in December as was . to be expected in view of the business recession which is under way. The decline from November to December is contrary to seasonal influences, which makes the decrease even more significant. Checks cashed in the district for the four weeks ending December 31, according to the Dallas Federal Reserve Bank amounted to $872,000,000 compared to $956,000,000 in the same period of 1928, a decline of 8.8 per cent. This is the first time during 1929 that debits fell below those in the corresponding month in 1928. Such a decline, coming as it did in December, is further evidence that the business recession is likely to be of greater proportions than expected. Total loans at member banks in this district show a small seasonal decrease and were reported at $376,000,­000 on December 31; last year on the corresponding date, these loans stood at $367,000,000. Member banks reduced their holdings of Government securities by $5,000,000, bringing the total held on December 31 to $63,000,000, compared to $95,000,000 at the end of 1928. Reductions from this time on are expected to be smaller. Member bank borrowings at the Dallas Federal Reserve Bank decreased from $25,000,000 on November 27 to $9 000,000 on January 1, or to the lowest point for the year. At the beginning of 1929, these loans amounted to $13,000,000. Some further reductions are expected since the rediscount rate continues at 5 per cent. De­mand deposits advanced from $288,000,000 in November to $293,000,000 in December, compared to $317,000,000 at the end of December, 1828. Time deposits remained unchanged at $138,000,000 or $2,000,000 under the amount reported at the close of December a year earlier. FINANCIAL STATISTICS FOR THE DALLAS FEDERAL RESERVE DISTRICT"' December November December 1929 1929 1928 Bank Debits (four weeks) ___________ __ ---------------------------------$ 872,000,000 $ 908,000,000 $ 956,000,000 GovP.rnment securities owned, end of month -------··------------­63,000,000 68,000,000 95,000,000 Member bank borrowings. end of month --------------------------­9,000,000 25,000,000 13,000,000 Demand deposits, end of month --------------------------------------­293,000,000 288,000,000 317,000,000 Time deposits, end of month -----------------------------------------------138,000,000 138,000,000 140,000,000 *F1•om the Federal Reserve System. WHOLESALE PRICES other commodities were lower, while cattle, lambs, and a few cured meats were higher. The Annalist index .fell Wholesale prices declined further, many of the farm from 140.9 in the first week of December to 140.2 for the products being especially weak. Several of the grains, initial week ofJanuary. Dun's stood at 189 in December butter, eggs, sugar, wool, rubber, fuels, metals, and many against 191.2 a month earlier, and Bradstreet's decreased from 12.24 on December 1 to 11.68 on January 1, the lowest level since April, 1922. The Bureau of Labor Statistics index based on 1926 as equal to 100 averaged 94.2 in December compared to 94.4 in November and 96.7 fo December, 1928. CHARTERS A rather unexpected increase occured in the number o:f new corporations organized in December. However, November made such a poor showing that the gain in December brings that month about in line with what might be considered the normal trend. Even though many of the new companies were small, the large gain is an encouraging feature, because general business usu­ally follows the same trend a few months later. A total of 162 corporations capitalized at $8,423,000 received charters from the Secretary of State in De­cember, the largest number for that month on record. This compares with 123 companies having capitalization of $64,4131000 in December, 1928. Aside from one public utility capitalized at $3,000,000 and a development company with capitalization of $1,000,000 most of the new concerns were small, as has been the case since early last summer. During the year, 2,630 corporations having capitaliza­tion of $285,612,000 were organized, a new high record as far as numbers are concerned. In 1928, charters were granted to 2,488 companies capitalized at $390,388,000. Fifteen oil companies were organized in December, n~aking 246 for the year against 174 during 1928. There were 9 banking and financial institutions chartered in December, which brings the total for the year to 139, or 17 fewer than were organized in 1928. It is interest­ing to note that there has been a strong tendency for mergers among financial institutions during the year just passed. But one public service corporation was char­tered in December, making 59 for the year, whereas 72 were organized during 1928. Sixteen new manufacturing concerns were formed in December, making a total of 382 for the year, compared to 213 in the year previous. The large gain in manufacturing companies emphasizes the growing importance of Texas as an industrial state. Increased activity in real estate is reflected by the large gain in real estate and building enterprises. During 1929. a total of 295 of these concerns received charters com­pared to 243 in the previous 12 months. Permits were granted to 26 outside companies in De­cember, making a total of 329 outside corporations which came into the State during 1929. The 329 outside com­panies added to the 2,630 Texas corporations make a total of 2,959 new enterprises entering the business structure of the State in 1929, or slightly more than the total of 2,942 new organizations established in 1928. TEXAS CHARTERS December November December Year 1929 1929 1928 1929 1928 Number -------­-------------------------­ 162 133 123 2,630 2,488 Capitalization ---------­-------------$8,423,000 $3,588,000 $64,413,000 $285,612,000 $390,388,000 Foreign Permits -----------------­ 26 19 35 329 454 Classification of new corporations: Oil ---------------------------------­ 15 17 10 246 174 Public Service ______________ 1 6 59 72 Manufacturing _____________ 16 18 18 382 213 Banking-Finance --­------­ 9 9 7 139 156 Real Estate-Building __ 14 12 10 295 243 General ------------------------­ 107 77 72 1,509 1,630 STOCK PRICES December was one of the dullest months that the stock exchanges have experienced in a long time. Trading in most sessions was unusually light and no trend in either direction was in evidence. Each rise brought out in­creased sales, while on recessions enough buying appeared to absorb the offerings. This situation is to be expected as an aftermath of a severe stock crash and in the light of an uncertain business outlook. If the market follows a similar course to that in previous severe declines, no upward tendency is in immediate prospect. Price fluctuations were very narrow in December. Four of the seven industrials comprising the Bureau of Business Research index advanced slightly and three de­clined, resulting in the index remaining unchanged at 227, compared with 255 in December, 1928. The high point of this index was reached last April when it stood at 271. During the past year, the index declined 27 points where­a>' there was a gain of 1 7 points in the year previous. The rail index remained unchanged also over the month. Five issues were lower, but the gains of the other four were large enough to make up the loss. At 197 in December, the index compares with 212 in December, 1~28, and the high for 1929 of 239 reached in August. This index declined 15 points during the past year, whereas it gained 29 points in the year previous. It is interesting to note that the rail index fell to a level slightly below where it was when the O'Fallon decision was handed down by the United States Supreme Court last May. That decision started a bull movement in rails which continued until the middle of September. The course of the market over the next few months is likely to be determined by general business developments. 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 Kew York Stock Exchange where quotations are available for a number of years back. The average weekly high for the years 192~24-25 is the base equal to 100. Included in the industrial stock index are Coca Cola. Freeport-Texas, Gulf States Steel, Tennessee Copper and Chemical. Texas Company, Texas Pacific Coal and Oil, and Texas Gulf Sulphur. The railroads used in the index are the Atchison. Topeka & Santa Fe; Chicago, Rock Island & Pacific: Gulf, Mobile & Northern; Missouri, Kansas & Texas; Missouri Pacific; New Orleans, Texas & Mexico; St. Louis & Southwestern ; Southern }'a\!ific; and Texas Pacific. INDEX OF RAILROAD STOCKS Average High 1923-24-25=100 1929 1928 1927 1926 1925 January --------------------216 183 145 136 118 February ------------------218 178 157 133 123 March ---------------------216 183 164 125 123 April -----------------------209 191 175 126 118 May --------------------------217 199 179 127 122 June ---------------------218 193 190 133 117 July ----------------------238 197 192 136 119 August ------------------------239 203 190 140 125 September 238 215 189 144 126 October ----------------------230 215 186 138 124 November 197 221 182 139 126 December 197 183 143 133 ------------------212 INDEX OF INDUSTRIAL STOCKS Average High 1923-24-25=100 1929 1928 1927 1926 1925 January ----------------------264 245 167 142 108 February 265 233 174 146 112 March 269 239 184 136 110 April ------------------------271 255 194 135 106 May -----------------------263 260 199 137 116 June ----------------256 243 203 146 120 July ------------------------267 246 208 151 124 August ------------------------270 247 210 154 127 September ----------------269 259 224 153 126 October ---------------------261 257 225 154 135 November ------------------· 227 262 226 159 144 December -----------------227 255 238 164 139 The record for the entire year is very favorable. Not only were failures the fewest since 1920, but alsoA small seasonal gain is reflected in the number of total liabilities were the smallest on record. During thecommercial failures in Texas during December. Failures year, 515 concerns having liabilities of $8,720,000 failed,have been increasing slowly since September, when the number of bankruptcies was the smallest for any month went into bankruptcy in 1928. Liabilities per failure in 10 years. Moreover, the trend is expected to be upward during 1929 averaged $17,000 against $22,000 in 1928. over the next two or three months if a normal course is It appears, therefore, that the year just·passed was pos­followed again this year. sibly the most favorable one in the past decade from In December, 47 insolvencies having liabilities of the standpoint of profits. $1,185,000 were reported, compared to 54 failures with The commercial failures record for the United States liabilities involving $1,085,000 in December, 1928. Dur­is also more favorable than it was in 1928. During the ing November, 44 companies with liabilities of $522,000 year, 22,909 defaults with liabilities of $483,000,000 were went out of business. Although there were only three reported compared to 23,842 bankruptcies having liabili­more failures in December than in November, liabilities ties of $490,000,000 in the year previous. The improved were more than doubled indicating that many larger showing indicates that 1929 generally was a better year cC1mpanies were eliminated. than 1928 as far as profits are concerned. COMMERCIAL FAILURES* December November December Year Number -----------------------------------­ 1929 47 1929 44 1928 54 1929 515 1928 547 Liabilities -----------------------------­$1,185,000 Assets ______:_______________________________ 582,000 $522,000 275,000 $1,085,000 472,000 $8,720,000 $11,858,000 •From R. G. Dun & Co. BUILDING Compared to November, the building industry in Texas made a fairly good showing but activity was considerably ;_under that in December a year ago. Not only were build­ing permits down but also the value of construction and cengineering projects let fell off sharply. The slowing up 'in Texas building is a little less than that for the industry ,,_over the entire United States. ' During December, permits in 35 cities of the State totaled $8,785,000 compared to $9,486,000 in December, 1928, a decline of 7.4 per cent. Permits for the entire year ·in these cities amounted to $114,502,000 against $12.7,­1205,000 in 1928, or a decrease of 10 per cent. Twenty­ one cities showed losses in 1929 compared to the year '{previous, and 14 reported gains. While permits fell off during the year, the showing is not unusually poor when it is remembered that the industry was faced with high construction costs and interest charges in the first three quarters and a declining business trend in the final quarter. Construction and engineering projects let in the State during December, according to the F. W. Dodge Corpo­ration, amounted to $12,000,000, making a total of $217,­000,000 for the year. This compares with $17,000,000 in December, 1928, and a total of $231,000,000 for the year. On the other hand, contemplated work in Decem­ber was reported at $31,000,000 against but $14,000,000 in November and $32,000,000 in December a year ago. If this contemplated work is actually let later on, it ap­pears that the outlook for the building industry next spring and summer is rather encouraging. BUILDING PERMITS IN TEXAS December November December 1929 1929 1928 Abilene ----------------------------------$ 596,ooo $ 23,000 $ 62,000 Amarillo --------------------------------162,000 90,000 46,000 Austin ------------------------------------932,000 86,000 181,000 Beaumont ------------------------------80,000 189,000 918,000 Brownsville ---------------------------5,000 47,000 34,000 Brownwood ---------·----------------12,000 350,000 121,000 Cleburne ---------------------------------72,000 23,000 7,000 Corpus Christi ____ ----------------· 46,000 341,000 97,000 Corsicana --------------------------------5",000 18,000 25,000 Dallas ------------------------------------533,000 531,000 447,000 Del Rio ----------------------------------12,000 81,000 26,000 Denison ---------------------------------3,000 9,000 4,000 El Paso ---------------------------------447,000 949,000 363,000 Eastlan -------------------------------63,000 85,000 44,000 Fort Worth ----------------------------341,000 931,000 499,000 Galveston ------------------------------37,000 92,000 251,000 Houston ----------------------------------1,177 ,000 2,194,000 4,266,000 J acksonvills-_________________________ 43,000 6,000 9,000 Laredo ------------------------------------17,000 60,000 116,000 Lubbock ----------------------------------16,000 250,000 109,000 McAllen ----------------------------------10,000 15,000 58,000 Marshall --------------------------------17,000 16,000 7,000 Paris --------------------------------------86,000 17,000 26,000 10,000 154,000 Plainview ------------------------------26,0.00 Port Arthur --------------------------87,000 52,000 58,000 41,000 Ranger -----------------------------------3,000 ---------------­San Angelo ----------------------------441,000 134,000 400,000 San Antonio ·-------------------------3,111,000 568,000 645,000 Sherman --------------------------------26,000 21,000 7,000 9,000 Snyder ------------------------------------8,000 1,000 Sweetwater ----------------------·-----29,000 28,000 40,000 Temple ------------------·-----------------114,000 66,000 71,000 27,000 36,000 ·~n~~ _::::::::::::::::::::::=:::::::::::::: 1~~:~~~ 93,000 224,000 49,000 131,000Wichita Falls ------------------------8,000 Total ------------------------------$8,785,000 $7,452,000 $9,486,000 Year 1929 1928 $ 2,498,000 $ 2,031,000 1,805,000 2,896,000 3,791,000 4,213,000 2,659,000 4,346,000 491,000 1,031,000 1,446,000 2,476,000 730,000 229,000 2,309,000 5,194,000 417,000 230,000 9,774,000 8,408,000 771,000 1,043,000 96,000 103,000 4,389,000 2,050,000 313,000 771,000 11,733,000 12,816,000 3,661,000 2,632,000 30,575,000 39,731,000 285,000 241,000 388,000 649,000 3,528,000 3,158,000 369,000 499,000 659,000 276,000 304,000 286,000 1,026,000 1,395,000 2,703,000 1,890,000 79,000 142,000 2,710,000 4,704,000 18,076,000 15,420,000 315,000 760,ooo · 151,000 261,000 750,000 772,000 1,579,000 1,785,000 845,000 569,000 2,666,000 2,291,000 1,011,000 1,907,000 $114,502,000 $127 ,205,000 DEPARTMENT STORE SALES Wholesale and retail trade suffered a large loss in De­cember due partly to unfavorable weather and partly to the general business recession. Moreover, the first part of January has been extremely dull with trade showing further shrinkage. Sales of 81 department stores located • 24 cities of the State amounted to $9,624,000 in De­rn ber compared with $10,275,000 in December, 1928,::i: loss of 6.3 per cent. The sharp increase during De­cember brought total sales for the year to a level only .1 per cent above the volume of business in 1928, where­as in the first half, sales were 1.4 per cent greater. Sales for the year of the 81 comparable stores reporting amounted to $72,440,000 against $72,382,000 for the year 1928. Retail trade in the United States in December was 1.8 per cent above December 1928, according to the Fed­eral Reserve System. All of the districts except three reported declines, the losses ranging from 1.3 per cent in the case of Cleveland to 8.2 per cent in the Minneapolis district. DECEMBER TENDENCIES IN TEXAS DEPARTMENT STORE SALES Percentage Change Dec. 1929 Dec. 1929 Year 1929 No. of Stores from from from Reporting Dec. 1928 Nov. 1929 Year 1928 Abilene 4 -22.1 + 9.9 -8.4 Austin -·------------4 -5.5 +33.0 + 7.5 Beaumont _______ 6 -6.6 + 40.5 + 3.3 Dallas _____________ 6 -3.1 + 31.4 + 3.5 El Paso ____________ 5 -4.5 + 40.1 -0.5 Ft. Worth ______ 8 -9.6 + 42.0 -1.9 Galveston ________ 3 -15.. 3 + 34.5 + 2.0 Houston 9 -2.4 +40.9 +2.4 San Angelo ____ 3 -3.8 +34.9 -5.3 San Antonio ____ 11 -7.8 +26.9 -4.1 Tyler ______________ 3 -19.6 + 22.3 -2.2 All Other s* ____ 19 -16.3 + 18.0 -5.6 State ----------------81 6.3 + 34.4 + 0.1 Sales of 81 comparable Store~ 1929 1928 December ---------------·$ 9,624,000 $10,275,000 November ------------------7,158,000 Year ----------------------------$72,440,000 $72,382,000 *All others include: Amarillo, Cleburne, Corsicana, Del Rio, Denison, Marshall, Paris, Temple, Waco, and Wichita Falls. CEMENT Possibly the most striking development in the Portland c€:ment industry in Texas for the past year is the gain of more than 1,000,000 barrels in output. The increase is even more pronounced when it is noted that the indus­try in the State has more than doubled in the past 8 years. This is a much greater rate of growth than is shown for the United States as a whole. It appears that present capacity is sufficient to supply all needs of the State for the next year or two at least. During December, Texas plants turned out 593,000 barrels, a decline of 9 per cent from November which is about in line with seasonal influences. This compares with an output of 472,000 barrels in December, 1928. It should be noted that one more plant was in operation in December this year than last. A total of 7,369,000 barrels was produced in 1929 compared to 6,345,000 barrels in 1928, or a gain of 16.1 per cent. This is by far the highest output on record for Texas. Shipments fell from 523,000 barrels in November to 450,000 barrels in December and compare with 375,000 barrels in December, 1928. During the year, 7,084,000 barrels were loaded whereas 6,282,000 barrels were shipped in the previous year. The statistical position of the industry is a little weaker this year than last in that shipments gained less than production resulting in larger stocks. Moreover, prices are lower and immedi­ate demand is less optimistic. Stocks on January 1 totaled 813,000 barrels, a new high record. On December 1, stocks were 665,000 barrels and on January 1, 1929, they were reported at 522,000 barrels. The extra plant accounts for part of the gain. While stocks are unusually heavy, the increase for the year is not out of proportion to that o~ other years-in fact it is less. The gain this year in stocks amounted to 23 per cent, in the year previous it was 28.2 per cent, and from 1922 to 1923 the increase was slightly over 55 per cent. Producers can improve the situation by hold­ing production down for a few months longer than usual tJ1is spring when shipments are gaining. No price changes were reported for the month. The basic price* on January 1, delivered f. o. b. cars on the job was $2.20t per barrel in Dallas and $2.30t in Houston. Ten cents per barrel is allowed for cash and 40c for cloth sacks where returnable. *Heretofore. prices as quoted in the Review were warehouse prices. tPrices quoted through the courtesy of the Lone Star Cement Com­pany Texas. THE CEMENT SITUATION* (In Thousands of Barrels) Dec. Nov. Dec. Year 1929 1929 1928 1929 1928 Production ·---593 661 472 7,369 6,345 Shipments _____ 450 523 375 7,084 6,282 Stocks ____________ 813 665 522 •From the United States Department of Commerce. PETROLEUM Despite the fact that production of crude petroleum in Texas is considerably above output at this time last year, the outlook for the industry is a little more fav­orable. While output is still excessive-around 850,000 barrels daily, the trend has been downward since last August, when daily flow averaged 906,000 barrels. More­over, production in other leading States has been cur­tailed so that output has been brought more nearly in line with consumption. Field development also has been reduced in recent months. In the year just passed, many new fields have been discovered and old ones extended, indicating that the potential supplies of oil are sufficient for some time to come. As a result, the petroleum industry is entering a period of stability, a situation which has been somewhat lacking in this industry in the past. Daily flow in Texas averaged 850,000 barrels during December against 874,000 barrels in November and 739,000 barrels in December, 1928. During the month, 26,353,000 barrels were gathered, making a total of 307,010,000 barrels for the year. This compares with a total output of 259,279,000 barrels for the year, 1928. The 307,010,000 barrels is by far the highest on record for the State. A similar trend has been in evidence over the entire United States, but recent curtailment measures over the country are likely to hold this year's flow to a smaller quantity. There were 575 new wells completed in December, which brings the total for the year to 7,677. Last year in December, 568 wells were drilled, making a total of 6,744 completions in 1928. Of the 575 new wells com­pleted in December, 299 were producers, whereas there ·were 349 successful wells among the 568 completions in December, 1928. During the entire year, a total of 4,136 producers were brought in compared to 3,774 in 1928. Prices for Texas crude were about unchanged in De­cember. However, the price trend over the year was downward and present quotations are considerably under those obtaining a year ago. Crude prices have been unusually steady over the past few months. On the other hand, gasoline prices show further reductions. Cuts were put into effect during December which bring refinery prices to around 6c per gallon in some areas. Any further reductions are unlikely because the season of increased demand is approaching and production of crude is on the decline. THE PETROLEUM SITUATION* (Production in Thousands of Barrels) Dec. Nov. Dec. Year 1929 1929 1928 1929 1928 Production- Total __________ 26,353 26,220 22,909 307,010 259,279 Daily Avg. 850 874 739 New Wells 575 532 568 7,677 6,744 Producers 299 281 349 4,136 3,774 •From the Oil Weekl11. SPINNERS MARGIN A loss of one point occurred in the spinners margin during December, indicating that the spinning industry is still operating on an unfavorable basis. The loss, although small, is disappointing when it is noted that the ratio has been below normal for nearly 2~ years. As long as this situation exists, no advance of conse­quence in raw cotton is likely because replacement mar­gins are not sufficient to encourage spinners to buy on a large scale. American middling cotton in Liverpool m·craged 9.4 5d ir December and 32-twist cotton yarn in :\lan<:hester averaged 14.18d against 9.G-ld for cotton and 1-L53d for yarn in November. The rc!ativc dec:line of yarn was greater than that of cotton resulting in a decline of one point in the ratio, or from 151 in ?\oYember to 150 in December. Last year in December, the ratio stood at 151 and in December 1926 it ayeraged 186. The margin has held consistently at about se\'en points below normal (157) over the past two years and it is likely to be some time yet before the normal level is reached. Spinners Margin refers to the ratio between the price of American 32-twist cotton yarn in Manchester and the Liverpool price of mid­dling American cotton. Normally, the price of 32-twist should be 60 per cent above the spot price of American middling cotton. If prices change so that the ratio increases, the spinners margin of profit is increased and thereby the demand for cotton is strength­ened. On the other hand, when the ratio decreases, the spinners margin is also relatively decreased, and then the demand for cotton falls. SPINNERS MARGIN 1929 1928 1927 1926 January 152 149 174 150 FebruaryMarch ____________ 151 148 151 150 179 173 160 156 April ------------­May _____ 150152 149 149 168 165 155 153 June ---­-----------­July _ ___. _ _ August __________ 151148 151 148 147 154 172 167 164 157 158 160 September ----­148October _________ _ 149 152 148 156 156 166 194 November -----­ 151 152 148 187 December -----­ 150 151 147 186 Normal= 157. iiol.....ll...--9~5~.L.~..l.~~.L.~1-92:"72 9i""".1...~....1 2:'"'::"~s__JL...~...1.~~.L-.i1i'99~22??~.J...~....Jl.....~..J..~1L99L22Eei""".J..~.....1~~...1..~1i"99~~ 1 LUMBER Average output of 2G Texas mills reporting to the Southern Pine Association in December declined 2 per Little or no improvement was noted in the lumber cent or from 1,492,000 feet in November to 1,463,000 industry. The statistical position changed only slightly feet in December, due largely to seasonal influences. the n10 nth indicating that millmen are maintaining over • Shipments averaged 1,378,000 feet, or a decline of a better balance between production and shipments. It A per cent from November, while unfilled orders fell appears, therefore, that the industry ~ill resp~nd. rather .& per cent and averaged 754,000 feet on December 1. quickly to any improvement recorded m the bm:dmg and This is the lowest average for any month in 192[). On other wood-consuming industries. Several mills were the other hand, stocks recorded a slight gain and aver­closed down during November and December. aged 5,630,000 feet. Prices continued the slow downward trend which began several months ago. Both hard woods and soft woods declined. Demand was slack and markets were dull. The situation should improve as spring approaches. THE LUMBER SITUATION* (In Thousands of Feet) Per cent change from Dec. Nov. Nov. 1929 1929 1929 Preliminary report of 143 Mills 145 mills in the Southwest- Av. production ________ 1,216 1,360 -10.5 Av. shipments __________ 1,082 1,287 -15.9 Av. unfilled orders____ 1,076 1,014 + 6.1 Final repor t of 37 Mills 26 Texas mills­Av. production 1,463 1,492 -2.0 Av. shipments ______ __ 1,378 1,383 .4 Av. stocks ------------------5,630 5,598 + .6 Av. unfilled orders____ 754 760 -.8 •From the Southern Pine Association. COTTON The cotton crop in Texas this year was rather dis­appointing. Production in the State is the smallest in a~out five years, and prices are 2c under those obtain­ing a year ago. Then, too, cotton seed and its products will be reduced accordingly. As a result, total income to producers from the cotton crop will be materially under that of 1928. Markets for raw cotton have· been dull over the past month or two and prices have held around the level at which the Farm Board is willing to advance funds on it. Exports have fallen off recently and the spinning phase of the industry is unpromising right now. Some new bullish influences are needed to change the present sidewise movement of the market. During December, 454,000 bales were consumed in the United States compared with 544,000 in November and 534,000 in December, 1928. Prices were about un­changed in the 30 days, although there was a spread of about lhc between the high and low of the month. May New York futures closed on January 15 at 17.57c com­pared to 17.54c on December 15. COTTON MANUFACTURING Textile mill activity reflects the sharpest curtailment for any month this year. One mill was shut down for the entire month, and several others were operating on part-time schedules. Cotton goods sales show a large increase and the gain in unfilled orders is encouraging, although the gain may be due partly to reduced opera­tions and smaller shipments. During December, 21 Texas mills manufactured 5,795 bales of cotton into 5,052,000 yards of goods, whereas these same mills used 7,277 bales of cotton and turned out 6,136,000 yards of cloth in December, 1928. A total of 95,106 bales was used and 75,465,000 yards of cloth were produced by the 21 mills in 1929 against the con­sumption of 89,679 bales and an outturn of 76,106,000 yards of cloth in the year previous. Cotton goods sales amounted to 3,382,000 yards in December, making 60,415,000 yards for the year, com­pared to sales of 3,962,000 in December and total sales of 53,701,000 yards for the year 1928. These figures are exclusive of cotton used in the manufacture of mat­tresses which amounts to some 15,000 to 18,000 bales. Unfilled orders increased from 6,940,000 yards on De­cember 1 to 7,032,000 yards on January 1, the first gain in nearly a year. Last year on January 1, bookings were 10,032,000 yards. Unfilled orders are equal to about six weeks run at present operating schedules. TEXAS COTTON MANUFACTURERS REPORT December November December Year 1929 1929 1928 1929 1928 Mills reporting -------------------­Bales of cotton used___________ 21 5,795 21 7,324 21 7,277 95,106 89,679 Yards of cloth- Produced --------------------­ 5,052,000 6,317,000 6,136,000 75,465,000 76,106,000 Sales --------------------------­ 3,382,000 2,698,000 3,961,000 60,415,000 53,701,000 Unfilled orders (end of period) ______ 7,032,000 6,940,000 10,032,000 -------------------­ -------­-----------­ Active spindles ------------------• 188,000 196,000 196,000 ------------------­ ------------------­ Spindle hours ---------------------­45,845,000 48,500,000 85,680,000 632,641,000 807,152,000 COTTON BALANCE SHEET On January 1, the indicated supply of cotton in the United States was 10,467,000 bales, compared to 9,495,­000 bales on January 1, 1929, and a seven-year av­erage on that date of 9,806,000 bales. In December, 454,000 bales were used in the United States and 910,000 bales were exported, making a total disappearance of 1,364,000 bales. During the first five months of the present cotton year, supplies have been reduced by 6,905,000 bales, whereas reduction in the same period of 1928 amounted to 7,561,000 bales. Most of the de­ crease this year is accounted for by smaller exports al-· though domestic consumption is down also. The final estimate of the crop isssued in December was larger this year. These bearish factors, coupled with the low spinners margin, are the weakening influences in the cotton market. The indicated supply of cotton in the United States on January 1 was 972,000 bales above that on January 1, 1929. Changes in supply on January 1 in the past seven years have amounted to 14,560,000 bales and changes in price have totaled 4,382 points, or a change of about 29 points for each change of 100,000 bales in supply. At the same ratio, an increase of 972,000 bales should be accompanied by a decline of 281 points from Ii:st year's price. On this basis and allowing for gen­eral price changes, New Orleans spots on January 1 should have been about 16c. This price is not corrected for the low spinners margin. On a replacement basis and allow­ing for price changes since last January, the price should be about 15.30c. The actual price last year at this time was 1hc below the calculated price, but it was corrected a little later. When the 50 points are added to the calculated price, New Orleans spots based on United States supplies alone should be about 15.80c. European supplies of American cotton were smaller on January 1 than a year earlier and the price should be correspondingly higher. On January 1, stocks in and cotton ·afloat to Europe totaled 1,853,000 bales AGRICULTURE Agricultural conditions changed very little during De­cember. The situation in Texas is somewhat spotted in I TEXAS CROPS AS OF DECEMBER 1* (Production in thousands) 1929 1928 Cabbage, tons --------------------------118 92 Onions, bushels ----------------------3,763 3,546 Cotton, bales ---------------------------3,950 5,106 Corn, bushels -------------------------86,127 99,162 All Wheat, bushels ---------------37,800 22,176 Barley, bushels ----------------------5,075 3,276 Oats, bushels ----------------------------47,096 35,751 Rice, bushels -------------------------7 ,524 8,096 Grain Sorghums, bushels ____ 46,920 69,000 Rye, bushels ---------------------------240 180 Wild Hay, tons ------------------------246 208 Tame Hay, tons ----------------------744 733 Alfalfa Seed, bushels ------------8 4 Cowpeas, bushels -------------------1,600 1,782 Peanuts, pounds ----------------------94,080 109,200 Pecans, pounds ---------------------10,800 17,000 Broomcorn, tons -------------------1 1 Potatoes, bushels --------------2,393 2,690 Sweet Potatoes, bushels --------7,384 8,284 Sorgo Sirup, gallons -----------2,088 2,656 Sugar Cane Sirup, gallons __ 1,056 1,760 Apples, bushels ---------------------230 216 Peaches, bushels ----------------1,953 1,612 Pears, bushels -----------------------455 390 Grapes, tons ---------------------------2 1 Oranges, boxes --------------------128 68 Grapefruit, boxes ------------------1,275 772 --;p;:;m U. S. Department of Agriculture. against 2,280,000 bales a year ago, or a decrease of 427,000 bales. Applying the ratio of 2fl points and allowing for general price changes and the low spinners margin, New Orleans spots, on a world basis, should be about 16.DOc, or practically in line with present quota­tions (January 16). The statistics issued by the Cotton Textile Merchants of New York City for December were more optimistic than those of November. Production of cloth for the month totaled 244,000,000 yards and sales were 303,000,­000 yards, or 124.3 per cent of output. Shipments amounted to 214,000,000 yards, or 87.9 per cent of production, while stocks gained 6.9 per cent and totaled 461,000,000 yards on January 1. Unfilled orders went up from 342,000,000 yards on December 1 to 431,000,000 yards on January 1, a gain of 25.9 per cent. This is possibly the most favorable part of the report. COTTON BALANCE SHEET AS OF J ANUARY 1 IN THE UNITED STATES (In Thousands of Running Bales) Year Carry-over Imports Estimate Total Consumpt10n Exports Total Balance August 1 since Dec. 1 since since August 1 August 1 August l 1923-1924 2,325 70 10,081 12,476 2,518 3,291 5,809 6,667 1924-1925 1,556 99 13,153 14,808 2,358 4,293 6,651 8,157 1925-1926 1,610 97 15,603 17,310 2,593 4,648 7,241 10,069 1926-1927 3,543 134 18,618 22,295 2,830 5,512 8,342 13,953 1927-1928 3,762 145 12,789 16,696 3,044 3,819 6,863 9,833 1928-1929 2,532 151 14,373 17,056 2,783 4,778 7,561 9,495 1929-1930 2,313 140 14,919 17,372 2,743 4,162 6,905 10,467 The cotton year bea:ins on Augpst 1. Jmports In 600-pound bales. that the cotton crop is smaller and prices are lower, while a bumper crop of wheat was harvested. Produc­tion of fruits and vegetables was also larger in 1929 than in 1928, but the corn crop turned out to smaller. The year generally was characterized by slightly smaller crops, somewhat higher prices, and the enactment of legislation whereby Federal aid will be extended to agriculture. In the meantime, acreage planted to fall wheat has been increased, and the plants are in excellent condi­tion. Farm work has been held up in some areas due t.• stormy weather and wet fields. Practically all the cotton crop has been gathered and most of it has been s0ld; lower prices recently indicate a cut in next year's acreage. Frost did considerable damage to fruit and truck crops in the southern part of the State, but the full extent of the loss will not be known until later on. Shipments of these products are much heaYier than those of last year at this time. Price movements were mixed but the trend over the twelve months was downward. What effect the Farm Board will have on prices over the next few years re­mains to be seen. FRUIT AND VEGETABLE SHIPMENTS Winter movement of fruits and vegetables is expand­ing rapidly and the volume is very much larger than that of last year at this time. Normally, ;;hipments from Texas continue to gain until about l\iay or June when the peak for the year is reached. If the present rate of increase is maintained, 1930 will be another record year. Expansion of the fruit and vegetable industry in the State has been very rapid over the past four or five years. · During December, 3008 cars of fruit and vegetables were loaded in Texas compared to 1,503 cars in De­c~mber, 1928, a gain of more than 100 per cent. In the twelve months, a total of 48,816 cars went out, or some 3,000 more than in 1928. In addition, it is esti­mated that more than 3,000 cars moved by truck so that total production was well over 50,000 cars during 1929. While most of the increase is due to larger ship­ments of citrus fruit, larger quantities also of mixed vegetables, spinach, carrots, and tomatoes were loaded. On the other hand, fewer watermelons, potatoes, and sweet potatoes were shipped. Frost did considerable damage in November and again in December. In some districts, plants were killed outright, while in others growth was checked and plants were injured. The full effect of the freeze will not be known until later on, but it can safely be assumed that damage will prove to be heavy. Twenty-five fruits and vegetables moved in sufficient quantities ·to be listed separately. Mixed vegetables is at the top of the·list again with 8,237 cars, followed by cabbage and spinach with 7,357 and 7,031 cars respec­tively. Grapefruit is in fourth place with 5,948 cars and tomatoes come next with 5,050 cars. Watermelons fell far short of last year's shipments due to an unfav­orable growing season and rather low prices. Possibly the most outstanding change is the gain in citrus fruit loadings. There were 859 cars of grapefruit loaded in December and 3,059 for the year, whereas in 1928 but 1,009 cars were reported. Shipments of oranges increased from 29 cars in 1928 to 80 cars in 1929, and mixed citrus loadings gained from 100 to 349. Total citrus loadings amounted to 3,478 cars in 1929 against 1,138 cars in 1928, a gain of more than 200 per cent. Moreover, a recent survey shows that there are nearly 5,200,000 citrus trees from one to five years old in the Lower Rio Grande Valley. When the younger trees come into bearing, marketing of the crop will be a prob­lem. The past year was rather favorable for deciduous fruit growers. Loadings of this group, which includes apples, pears, peaches, prunes, etc., were far in excess of those in 1928 and prices generally were higher. Total income to the State from this source in 1929 is likely to compare favorably with that of the year pre­vious. While prices in many cases were lower during a large part of the year, the larger crops coupled with higher prices for a few of the more important 'com­modities tend to offset losses. The potato deal was much more satisfactory this year than last and all types of fmits generally sold at better figures. Sweet potatoes were also higher. The cabbage and onion crops were rather disappointing to producers. • TEXAS FRUIT AND VEGETABLE SHIPMENTS* (In Carloads) December November December Year 1929 1929 1928 1929 1928 Mixed vegetables -----------------------------------------655 127 412 8,237 7,624 855 51 458 5,948 5,275 Spinach ---------------------------------------------------------­Cabbage -----------------------------------------------------­ 159 8 111 7,357 7,214 1,009 Grapefruit --------------------------------------------------859 734 312 3,059 8weet Potatoes --------------------------------------------169 123 72 730 769 Cauliflower ----------------------------------------------------3 34 13 175 65 Strawberries -----------------------------------------------­ 252 148 7,031 6,936 On ions ----------------------------------------------------------­Lettuce ---------------------------------------------------------­ 1 80 98 Toma toes -------------------------------------------------------­ 51 269 46 5,050 4,349 Oranges --------------------------------------------------------­33 31 5 80 29 4 15 2,579 3,273 Potatoes ------------------------------------------------------­ 16 Green Peas ---------------------------------------------------­ 12 37 21 353 281 ~i~;g ~i~~~~· :::::::::::::::::::::::::::::::::::::::::::::::: 150 104 31 349 100 Cucumbers ____ ---------------------------------------------­ 270 372 Watermelons -----------------------------------------------­ 3,995 6,385 Cantaloupes ------------------------------------------------­ 185 244 Peaches ----------------·----------------------------------------­ 562 266 Peppers ---------------------------------------------------------­ 2 8 Grapes ----------------------------------------------------------­ 26 3 Pears -----------------------------------------------------------­ 213 30 Apples __________ ----------------------------------------------11 Eggplants __ _·--------------------------------------------13 19 Deciduous Fruits ---------------------------------------­ 1 3 Carrots ----------------------·----------------------------------­ 26 3 7 2,252 1,391 TOTAL ____________________________________________:____ 3,008 1,503 1,503 48,816 45,888 *From the United States Department of Agriculture. J LIVESTOCK and mohair prices declined further over the month, and The outlook for the livestock industry is not nearly so bright as it was a year ago at this time. Prices of most classes of meat animals are lower and many live­stock products are down 25 per cent to 30 per cent from last year's quotation. Animals, in many cases, went into the winter in poor condition due to droughty conditions during the late summer and fall. Moreover, winter ranges have not improved as they generally do. Range trading is at a standstill. This last factor is possibly the most encouraging development over the past two months because it indicates that expansion is over for the present. The industry appears to be at the bottom and any change from now on is likely to be for the better. Cattle ranges in Texas on January 1 were rated at 77 per cent of normal by the United States Department of Agriculture, down 3 points from December and 7 points under the rating a year ago. Winter feeds scarcely grew at all due to cold weather. Cattle were placed at 81 per cent, the same as on December 1, but 6 points below the condition a year ago. December was an unusually cold stormy month, and snow covered large areas of the State most of the time. As a result, animals deteriorated in condition and considerable feeding was necessary. Some loss was reported. There are fewer cattle on feed this year than last, according to the United States Department of Agriculture. Sheep and goat ranges deteriorated 1 point, or from 81 per cent on December 1 to 80 per cent on January 1. Last year, these ranges averaged 88 per cent on January 1. Both sheep and goats lost flesh. Sheep declined from 85 per cent on December 1 to 83 per cent on January 1, while goats lost 3 points and were rated at 82 per cent. Sheep and goats were each rated 90 per cent of normal on January 1, 1929. Sheep feeding is on a larger scale this year than last, the number on feed in the United States on January 1 showing a gain of 15 per cent. Wool eastern markets are extremely dull. Markets for dairy and poultry products turned rather weak in December. Butter prices continued to decline and eggs moved at lower quotations for the first time in several months. C'old storage holdings of butter and frozen meats are still large. Holiday demand for tur­keys was met with large supplies and prices declined sharply after Christmas. Receipts of all classes of animals at Fort Worth de­ clined seasonally from November but were considerably above those in December a year ago, due to larger ship­ ments of cattle and sheep. Hog receipts declined. In December, 138,645 animals were unloaded in Fort Worth, making a total of 2,030,559 head for the year, accord­ ing to the Fort Worth Stock Yards Company. This com­ pares with 2,092,608 head for 1928. Unloadings of cattle and hogs declined while shipments of calves and sheep showed gains. Prices in most cases advanced in December. Prime beef steers on the Fort Worth market for the week ending January 12 were bringing 91/z c compared to 81h c to 91/zc a month ago and best calves brought lOc to llc, up 1h c in the month. The handy-weight class of hogs cleared mostly at 9c to 9 1,4 c, a gain of 1h c. Top lambs sold at lOc to 111/z c, or an increase of le from the month previous and sheep sold for 81/z c, up le in the 30 days. LIVESTOCK RECEIPTS AT FORT WORTH* Dec. Nov. Dec. Year 1929 1929 1928 1929 1928 Cattle ----58,600 73,102 55,085 761,798 885,908 Calves 28,126 48,656 23,432 327,334 325,206 Hogs ------. 26,538 21,216 29,234 401,740 423,710 Sheep ----25,381 31,496 18,165 539,687 457,784 Total 138,645 174,470 125,916 2,030,559 2,092,608 •From the Fort Worth Stock Ya rds Company. Those wishing the Texas Busine11 Review regularly will receive it without charge upon application Publication• of the Bureau of Business Research Research Monographs published by the Bureau of Business Research of the University of Texas now avail­able are: No. 1. "The Possibilities of Cotton Manufacturing in Texas,'' by Rudolph Grossmann. Price, 50 cents. No. 2. "A Market Analysis of the Cattle Induatr11 of Texas," by George M. Lewis. Price, $1.00. No. 3. "What Place Has the Advertising Agency in Market Research," by William J. Reilly, PH.D. Price, $1.00. No. 4. "The Retail Interrelationships Betu-een Different Sized Cities and Towns," by William J. Reilly, PH.D. Price, $1.00. BUREAU OF BUSINESS RESEARCH The University of Texas A. B. Cox__ _ ____________ ______ _ _____ ___________ __________________________Director F. A. BUECHEL________________________________________________Assistant Director GEORGE M. LEWIS_______________________________________.Livestock Specialist ELMER H. JOHNSON___________ _____________________ [ndustrial Geographer RUDOLPH GROSSMANN_____________________________ _/ ndustrial Engineer BERVARD NICHOLS___________________ .Editor Texas Business Review HERSCHEL WALLING_______________________________Research Accountant ARTHUR HERT____________________________Assistant in Market Research MARTHA ANN ZIVLEY__________ __________________ _______________________Secretary MILDRED DISCH________________________________________ ____________ __ __ Stenographer STUDENT ASSISTANTS Esther Lynn Dan Perry Charles Zivley R. V. Shirley Wade Bartlett Seth Lowther Jim Ed Russell Alice Root