A VOLUME VI, Nl1MBER 6 July 23, 1932 Enclosed wiih this copv of the TEXAS Bcsi:\1-:ss REVIEW is a rcque~t that mu indicate ,,·hetl:cr you ,,·ish us to continue sending you this publication. The Bureau of Business Research is cai!f'r to make the informa­tion contained in the REVIEW available to anyone desiring: it. Since ,,-e wish to aniid anv waste circulation, however, the REYIEW will be mailed only to those who return the card properly filled out. GREAT progress has been made in the last few weeks toward laying a sound basis for business recovery the world over. Only extreme pessimism and disappoint­ment engendered by three years of depression, combined with normal midsummer lethargy, could have developed a public psychology so utterly oblivious of the con­structive developments which have been taking place. Reparations, which for nearly a decade and a half have stood as a dark cloud over Europe, obstructing normal economic relations between nations and con­stantly threatening even worse developments, are now definitely a matter of history. It is unfortunate, but not vital, that the great achievemert at Lausanne should be marred by the dust which has been raised over the con­nection between the reparations agreement and the war debts. The United Stales still has to accept the inevit­able, but with the countries of Europe in their pre.:ent frame of mind and manifestly anxious to find a way for joining this country in a program of arms reduction, a similar compromise on our war claims is sure to follow. Many hurdles remain to be crossed and some major explosion may force further delay, but the month of July started with every indication that the worst con­fusion that has ever hit the business exchan;!eS of the world has settled toward a place where common sense meeting of men's minds will gradually shape the series of compromises which the nations of the world will have to make. Further reassurance of progress toward normal inter­national relations is found in the strong position of lead­ership which Great Britain is again assuming in world affairs. To her, largely, belongs credit for breaking the impasse at Lausanne and hf'r growing strength al home is indicated by the recent stPps takf'Tl to refund the nation­al debt from a 5 per cent to a 31/:z per cent basi~. thus saving $150,000,000 interest charges annually on her na­tional debt. Also the Imperial Economic Conference at Ottawa which began July 18 has tremendous possibilities for the promotion of world economic stability. Thus, world financial leadership, which was virtually thrust upon New York after the war, may now be slipping back to London because American financiers have proved themselves incapable of measuring up to the responsibili­ties involved. Congress has adjourned. Much of the legislation it enacted is constructive and in time will contribute toward business improvement. The benefits may be delayed for several months, however, on account of the activities usually associated with a national election which this year may be magnified because of the present abnormal economic situation. Certain commodity prices have shown considerable strength during the past few weeks. Especially is this true of livestock, sugar, and to a lesser extent rubber. Cold storage stocks of a number of other farm products, including butter, cheese, eggs, and poultry, are consid­erably below the July 1 five-year average and, should demand be fairly well maintained during the next few months, strengthening of prices in these commodities too may be expected. \Vhile the past month has bf'en notable for construc­ti\·e dewlopmcnts of a hasic character, it is not to be expected that there wili be a rndden rcvirnl in either securities or in trade. Thf! difficulties yet to he met are numerous and complex and the earnings Hatemcnts com­ing in for the second quarter are not calculated to cli~si­pate the gloom. Morf'OYCL ,,·ith the present loll" Phh of industry and trade, larg:el y seasonal in character. earn­ings promise to continue low for Sf'\·eral "·eeks more in spite of the drastic ccon'omie~ \rhir:h have been introduced in all lines of industrv. ·----···-·-----· . -­ ---·-------· -------·· ------·-----------­ F INANCIAL The hanking situation appears to have taken an un­fortunate turn for the \rnrse during the past month. It is true that the gold flow has reversed after a net loss of some 15503,000,000 between April 6 and June 15, hut the net inflow since the latter date has been small and exchange rates on the leading gold standard countries continue at a substantial premium. Rates in the s}1ort term money market continue to rule at very low levels, the New York and Chicago Reserve Banks having low­errd their iwliscount rates to 21h per cent on June 23 and .Tune 2S re~pecti\·ely. The Reserve Board, apparently, has given up its open market buying campaign without having he1·n able to induce rnPrnber hanks either to in­crease thr ir local lending or to buy investment bonds in any volurnr. The hond market, ho\\'f!ver, has been im­proving ,-li:!htly hut sll·adily since the first of June. Th:· 1110.'t ominous development of the month is the sharp i111T1!a"c in hank fail1ires. Bank suspensions in Jnne totakd 13L as compared with 80 in May, 7.S in April, S:l in :\1arch, 128 in February, and 362 in January. Coincident 11·.ith the rising trend of failures has come a sharp increase in the currency in circulation from $5,­rl73,000,000 on June l l to SS,703,000,000 on Julv 2. At the present figures, the volume of currency in cir~ulation has risen practically to the high level or' early .T a•·twry. This increase, as indicated hy reserve notes in circula­tion, has appeared in practir:ally all of the reserve dis­tricts, but the vast bulk of it has taken place in the Chicago Distril'l as a result of a second damaging wave of bank failures in Cook County. The reserve note cir­culation of the Chicago Federal Reserve Bank has in­creased frolll 8556,000,000 on June 8 to S728,000,000 on July 6, a jump of some Sl 72,000,000. It is now becoming apparent that the Reconstruction Finance Corporation has not permanently strengthened the commercial banking system: it has merely provided emcrgcrH:\' fu1 1d~ to meet a temporary crisis. The crying nct'd is r()I" a thoroughgoing reform of the whole hank­ing ~lrnctun-, involving the complete elimination of dual banking and tl1e creation of nationwide branch hanking systems under Olle supervision. Obviously, however, illany more hanks must suspend before sufficient public opinion can he mobilized to secure the enactment of realIy constructive legislation. Banking lrcnds for Juiw in the Dallas Federal ReserYe District continue al mo;;t unchanged from the precr.ding month.. A\'f!rage wcPkly dehits.,.to inrli\ idual af'i;ounts were slrghtl y under thl regarded as serious in licw of the fact that :\1id-C1Jlltinent refiners ha,·e curtailed runs lo stills In· an a\·erage of more than 50.000 barrels since June l.'J. and it is thou'.!ht that prices will hold. Most encouraging of all are the figures of the L"nited States Bureau of Mines issued for May, which indicate a very favorable balance between supply and demand factors. The barometer accompanying the report shows the weighed index of supply to be 97.4, whereas the weighed index of demand stood at 97.1. :\ew discoveries in undeveloped areas and new devel­opments in old fields were notably meager. Perhaps it is the mid-summer heat, but it is also a fact that new pools are becoming rarer. Two extensions to the pro­ducing area were recorded in northern Duval County, a "-ildcat well drilled by Concord Oil Company in Colo­rado County encountered gas, and Texas & Pacific Coal and Oil Company completed the largest well yet drilled in southern Ward County, west Texas. In 19 hours the 11ell produced 680 barrels of pipeline oil from a depth of 2.310 fret. :\o other features of sufficient importance to reach the headlines happened. Daily awragc production of petroleum as reported by the American Petroleum Institute is as follows: (In Barrels) 1932 )lay June June 1932 1931 Panhandle _ ------------­ 53,790 51,788 59,062 North Texas --------­ 50,450 50,150 57,4-02 West-Central Texas -------­ 24,540 25,312 27.963 West Texas --­ --­ -180,410 183.412 211.875 East-Central Texas --­ ---­ 57,100 56,750 59,350 East Texas -----------334.420 336,950 352,887 Southwest Texas __________ 54,750 54.188 59,013 Coastal Texas --------­ 115,410 112,712 145,438 TATE _____ -----------­ 870,870 871.262 973,050 U:\'ITED STATES ____ 2,164,630 2,221,012 2,465.587 Imports -- ---­ ---287,057 254,678 173,750 :\cw de\ elopments according to the Oil Weekly, were as follows: June• )lav Ju'\C 1932 1932 1931 Permits for ew Wells____________ 1,119 1.115 521 Wells Completed ---------­ 1,143 -833 541 Producer~: Oil Wells -----------­------­ 967 428 Gas Wells ____ _______ ___ 14 8 Initial Production (In Thousands of Barrels ) _________ 6,900 4,869 2,949 •five weeko. Gasoline sales in Texas, as indicated by taxes collected bv the State Comptroller, totaled 62,629,000 gallons in :\fav, as compared with 61.476,000 gallons in April, and 73,090,000 gallons in May, 1931. The international position and economic significar~ce of oil as a source of mechanical energv is definitely re· fleeted by the recent international conferences of men actively engaged in the oil industry. Even though the:e conferences do not at once result in the taking of measures that seem desirable to those best acquainted with the facts, as a possible basis for better understand· ing in the future their importance may be very great. COTTON According to the United States Department of Agri­culture, the area in cultivation in cotton in the United States, July 1, was 37,290,000 acres. This represents a decline of 9.5 per cent from the acres in cultivation on the same date last year. This is a greater reduction than comparative prices indicated. It was also a bigger de­cline than was indicated by private estim~tes. It is in­teresting to note that the area in cotton in the United States this year is less than the area planted to cotton in 1913, and only about a million acres more than the fiYe· year, pre-war average. Unofficial reports from other cotton growing areas of the world indicate reductions in cotton acreage with per­haps the exception of Russia. If the rest of the world reduces acreage in cotton an average of 10 per cent, the world acreage will again be about in line with the growth of population as compared with pre-war condi­tions. SPINNERS MARGIN Spinners margin declined from 189 in May to 187 in June. This decline represents actual pence margin which declined from 4.0ld in May to 3.79d in June. The loss was brought about· by an advance in the price of cotton in Liverpool from 4.18d to 4.tl9, whereas the price of 32's twist yarn advanced from 8d to 8.37d. 1932 1931 1930 1929 1928 January ---------------------------176 166 148 152 149 February ----------------------172 162 154 151 151 March ----------------------------178 161 154 148 150 April -------------------------------183 170 148 150 149 May -------------------------------------189 173 148 152 149 June --------------------------------------187 178 152 151 148 July ---------------------------------------180 154 148 147 August 213 160 151 154 September ------------------------------211 156 148 152 October Normal = 157. Spintlf'rs .\Iargin ref,..-.. t" tli•· r:ttin lwt\•.-.·n th•· 1•ri1·,. oi :\.m··~i1·:tn 3~· tWi!t rrJtton y . .trn in ~lan<:h··~kr ;1i,d tlw Lv.-rl'""l p ri ··" ,,f midd lin:! ..\meric~1 n rotton . :\orrna JJy . tht• ftricr of :;::: .1 wi:-I .. h.,u!.! J,, . . 'l:' ]"'r t'!'IJl ;1h11\1\ the !0-p(lt prirt• 0£ :\m,·rfran middling (·otton. 1i J'Ti•··· .. ··h.!11;.:•· .. ,i th :n th,· :.1t:11 i1H·r,·.1se.;. tht"' ~pinnt.: r;; margin l) f profit i.. i111·r,·a-o·d .t"d d:· ·r.-1 1\ dw d1·rn~11;.l l"r cnll"n is .">lrt"nri:thcnr al.r;o ri:latin:ly 1932 1931 1932 1931 1932 1931 1932 1931 Total Interstate Plus Fort Worth --------____________ 4.56.007 480,887 129,344 142,417 74,092 83.429 797.368 923,469 Total Intrastate Omitting Fort Worth -------------90.283 133,524 70,804 75,788 14,416 39,326 140.224 76,298 TOTAL SIIIPME TS ______ ----------_______ . _________ 546.290 614,411200,148 218.205 88,508 122.7.55 937.592 999.767 Shipments Converted to a Rail Car Basist Cattle Cahes Swine Sheep Total 1932 1931 1932 1931 1932 1931 1932 1931 1932 1931 Total Interstate Plu• Fort Worth ___ -------15,200 16,030 2,156 2,374 926 1.043 3.189 3,694 21.471 23.141 Total Intrastate Omitting Fort Worth ____ -3,009 4,451 1,180 1.263 180 492 561 305 4,930 6,511 TOTAL SIUPME T ----------------·· ···--18,209 20,481 3,336 3,637 1,106 1,535 3,750 3,999 26,4-01 29,652 *These data arc furnished the United Statrs Bureau of Agricultural Economics by railway officials through more than 1,500 station agents, representing every Hve­stork shipping point in the State; the data are compiled by the Bureau of Busin· .. 5 Research. tRail-car basis: cattle, 30 head per car; c~h·es, 60; swine, 80; and sheep, 250. Uncludes receipts at "other" Texas r.oints from Fort Worth. §Represents all intrastate receipts, except those received at Fort Worth. Ufort Worth shipments nre combined with interstate forwardings in order that the bulk of market dig.appearance for the month may be shown. PUBLICATIONS OF THE BUREAU OF BUSINESS RESEARCH RESEARCH MONOGRAPHS MIMEOGRAPHED STUDIES "Economic Importance of Manufacturing and of Itsl~o. l. "The Possibilities of Cotton Manufacturing in Leading Lines in Texas," by Rudolph Grossmann. Texa.~. by Rudolph Grossmann. Price, 50c. Price, SOc. No. 2. "A Market Analysis of the Cattle Industry of "Graphic and Statistical Summary of Hog Movements Texas," by George M. Lewis. Price, $1. to and from Texas, 1923-1930," by F. A. Buechel andNo. 3. "What Place Has the Advertising Agency in John Clack. Price, SOc. Market Research?" by William J. Reilly, Ph.D. Price, $1. "Trends of Development of Texas Financial lnstitu·No. 4. "Methods for the Stndy of Retail Relation­ tions," by Robert V. Shirley and Bervard Nichols. Price. ships," by William J. Reilly, Ph.D. Price, $1. SOc. No. S. "A System of Accounting Procedure for Live­"A Balance Sheet Analysis of Texas State Banks," by stock Ranches," by Frederick W. Woodbridge. Price, Herschel C. Walling, C.P.A., and Jim Ed Russell. $1.SO. Price, $1. No. 6. "An Analysis .of Credit Extensions in Twenty­"Classified Directory of Manufactures in Eastern three Texas Department Stnres by Occupational Groups," Texas (Outside of Dallas and Houston)," by C. J. by Arthur H. Hert. Pri1,e, $1. Rudolph Grossmann. Price, SOc. No. 7. "An Analysis of Shipme.•ts of Texas Sheep and "Proceedings of the Texas Cotton Committee:" Goats," by George M. Lewis. Price, $1. No. VI, February, 1932. Price, SOc. No. 8. "The Natural Regions of Texas," by Elmer H. "Proceedings of the First Texas Business Planning Johnson. Price, $1. Conference." Price $1.00. BUREAU OF BUSINESS RESEARCH The University of Texas A. B. Cox___________________ _ ________ ,_______ .. _ ___ ______ ______________________Director F, A. BUECHEL____________________________ _ _________________Assistant Director ELMER H. JOHNSON..•.... ···---------------·····-Industrial Geographer RUDOLPH GROSSMANN______ ...... __ ______________ _.Industrial Engineer HERSCHEL wALLING_________ _______________________Research Accountant MARTHA ANN ZIVLEY..... -------------------------------------Secretary MILDRED DISCH ---······-----------------------------------------Stenographer FORREST LEDLOW ROBERT WHITE STERLING WILLIAMS C HARLES ZIVLEY .JACK KNIGHT MARJORIE VOGAN Those wishing the Texas Business Review regularly will receive it without charge upon application Entered as second-class matter on May 7, 1928, at the postoffice at Austin, Texas, under the Act of August 24, 1912.