TEXAS BUSINESS REVIEW Bureau of Business Research The University of Texas Vol. XIV, No. 9 October, 194.0 A Monthly Summary of Business and Economic Conditions in Texas and the Southwest Bureau of Business Research, The University of Texas, Austin, Texas Entered u 11econd cla6' matter on May 7, 1928, at the po.1t office at .Austin, Texas, under Act ef Augu•t 24, 1912 T~f.ND Of ~[.SID[.NTIAL POW[.~ CON5UMPTION IN Tt.XA5 AND T~E. AVL~AG[. RATE. PE.~ K.W.1-L 1929-1939 BuP.£.Au oF Bus1Nt~~ P.r.~E.AP.cH THE. UN1vtll..51Tv OI' TE...xA5 ---AVEP.AGt MONTHLY f :WI-I. Pt?. CU5TOME.?­ --Avu>.AatM0NrnLYll.tv1..Nut HP.CusTOMt?. -NuMBtl>. or Cu:;roMEP.5 -AvtP.AQE. ~AH. Pi.12. K .W.1-l 175 z 125 0 d aJ Q. 1 NOTE.: f>A5E.D ON 1>.tl>OP.T5 OF TWLLVt LARQL TE.XA5 ~LtCTP..IC POWE.fl. COMPANlt5 50 A ,f l192911930 Jt931 J 1932J1933Jt934I1935l 1936Jt9.37J 19~8J19.39 1940 )/t> .... " A.V TEN CENTS PER COPY ONE DOLLAR PER YEAR TEXAS BUSINESS REVIEW INDEXES or BUSINESS ACTIVITY IN TEXAS AVERAGE MON TH O F 19 30=100/, WEIGHT IM cot.iPOS1TE I NDEX C M PL OVMENT ---2~% FR EICH T CARLOAOINCS---20% PAY ROLLS 2S% CRUDE OIL RUNS . 5%' DEPARTMENT STORE SALES·IO % ELE CTR I C POWER CO NSUMPTION-IS % 61Jreau of Business Rtsearch .The of Te.us Business Review and Prospect NATIONAL DEFENSE In the opening paragraph of his financial article in this issue of the Review, Dr. Irons calls attention to four significant stages or factors in the national defense pro­gram-first, the letting of contracts on the basis of money already appropriated by Congress, a phase which is now nearing completion; second, the production of goods and the payment therefor, a phase which will grow in significance for many months ; third, the finan­cial problems involved in raising the funds and making payment as goods are delivered, as well as assisting in new plant construction ; and fourth, the .development of a policy which will result in the maximum progress of the defense program, while at the same time causing the minimum of disturbance to normal business activity and standard of living. In other portions of his article Dr. Irons points out the need of sound, orthodox methods of financing the defense program and the avoidance of needless experi­mentation; the elimination of non-essential federal ex­penditures and the reduction of expenditures for work relief programs and public works as the defense ex­penditures get under way; the need of a system of taxation which will suppo~t as large a part of the cost of the defense program as possible without restricting industrial activity; and the adoption of a policy whereby the funds to be raised by borrowing may come from the sale of government securities to individual investors instead of through the commercial banking system, in order to minimize the dangers of inflation. GENERAL BUSINESS Physical volume of business in the week ended Oc­tober 12, as measured by Barron's index, advanced to 87.6 from 87.2 the preceding week. This figure repre­sents a new high since the last week in January and is only about six points below the peak reached during December, 1939, when the index rose to nearly 94. There is every reason to expect that the index will con­tinue throughout the fall to maintain at least its present narrow margin of about three per cent over a year ago. After the turn of the year, this margin of improvement is expected to widen substantially during the first six months since the index receded during the early months of 1940, whereas, it is expected to trend upward during 1941. It should perhaps again be pointed out that the Barron's index cited above has for its base the period 1923-1925, and that it differs from other national in­dexes in common use in that it is adjusted not only for seasonal variation but also for long time trend including population growth. Because of this fact, Barron's index continues to make a highly unfavorable showing with 1929, the peak pre-depression year, when Barron's index reached ll5. Thus, with the population increase of nearly 12,000,000, which has taken place during the past ten years, had the trend in the standard of living which prevailed during the period from 1900 to 1930 continued during the past decade, the rate of activity in industry and trade would now be 27 points higher than it actually is. This situation is reflected in our about eight to nine millions who are still unemployed and the comparatively -low standard of living which still prevails among a large percentage of those who are employed. TEXAS BUSINESS Texas industry increased its tempo of activity sub­stantially between August and September, while main­taining a fair margin of improvement over September, 1939. All of the factors adjusted for seasonal variation used in the composite index, except department store sales, showed a gain from August to September; while all but miscellaneous freight carloadings and oil re­fining showed a gain over September, 1939. INDEXES OF BUSINESS ACTIVITY IN TEXAS Sept. Sept. Aug. 1940 1939 1940 Employment ---------------------------92.5 90.4 90.3 Pay Rolls -------------------------------100.0 93.0 95.9 Miscellaneous Freight Carload­ ings (Southwest District) ___ 62.5 67.4 60.8 Crude Runs to Stills ------------188.4 195.l 179.0* Department Store Sales _________ 115.3 109.4 125.3 Electric Power Consumption ___ 138.3 134.9 136.2* COMPOSITE INDEX -------------102.3 100.3 100.6* *Revised. An upward trend in the Texas business index is con­fidently expected during the remaining months of the current year and during at least the early months of 1941. The bases for this expectation are to be found in the strengthening of prices and the increase in mar­ketings of a number of important farm products (of which Texas has huge surpluses) resulting largely from increasing industrial activity in the North and East; the growing pay rolls from Texas industry; and federal dis­bursements in connection with the national defense pro­gram. What makes the favorable showing with September last year especially significant is the fact that industry and trade were then being stimulated to a marked ex­tent by the outbreak of war in Europe, so that current comparisons are made upon a relatively high base. FARM CASH INCOME Cash income from the sale of farm products in Texas during September, as computed by this Bureau, totalled $76,227,000 compared with $80,074,000 during Septem­ber last year, a decline of 4.8 per cent; for the first nine months of the current year aggregate farm cash income is estimated at $264,940,000, while for the cor­responding period last year farm cash /income was For Other Texas Data, See Statistical Tables at the End of This Publication estimated at $287,822,000, a decline of nearly 8.0 per cent. This decline in income from a year ago is almost entirely the result of smaller ginnings of cotton during August and September. Since production of cotton this year is estimated at about 3,500,000 bales, and ginnings to the end of September were only 1,487,007 bales, there remains to be ginned more than 2,000,000 bales during the current cotton ginning season which is nor­mally almost completed by the end of the year. Last year with an actual crop of about 2,800,000 bales, 1,968,000 hales h~d been ginned by the end of Septem­ber, leaving only about 832,000 bales to he ginned during the remainder of the season. Thus, assuming that the value per hale of cotton and cottonseed con­tinues to be virtually the same as during the correspond­ing period a year ago, the value of cotton still to he ginned in Texas this year is about $100,000,000, whereas, last year the value of the cotton and cottonseed ginned after September was only about $40,000,000. This difference of $60,000,000 in itself insures a consid­erably larger farm cash income during the current year than in 1939. It is less certain, but highly probable moreover that cash income from Texas livestock and livestock products during the remainder of the year will be well above that received from these sources during the last three months of 1939. The indexes of farm cash income for the State and for the various crop reporting districts in Texas are as follows: INDEX OF AGRICULTURAL CASH INCOME IN TEXAS Cumulative Income Districts Sept. 1940 Aug. 1940 Sept.• 1939 Jnn.·Sept. 1940 Jan.·Sept. 1939 1-N 1-S ____ ___________134.2 _______________ _l 74.3 80.0 120.l 133.0 331.5 (000 Omitted) 23,763 23,642 14,392 15,724 2 -----------------­61.9 70.9 84.1 21,505 22,328 3 ----------------­83.6 111.7 89.7 15,220 15,490 4 5 6 7 ------------­----­-64.7 ---------­-----­45.5 _ _______________150.2 ________ ____ ________112.1 25.6 26.8 97.2 72.8 64.9 58.4 174.4 99.8 48,710 19,992 12,963 32,914 61,180 28,869 14,525 26,755 8 ------­-----------­78.2 9 _______ _ ________100.6 10 --­-------------­65.2 10-A -------------­67.9 STATE --­----­69.8 37.0 131.7 24.2 79.8 49.0 53.4 74.0 52.6 22.1 73.3 26,716 22,678 9,118 16,969 264,940 29,750 18,281 10,619 20,659 287,822 *Revised. It will be noted that the current September index for the State as a whole is well above that of the preceding month but slightly below September, 1939. The wide variations in the district indexes in a number of instances during September this year compared with a year ago are the result, primarily, of the earlier ginning of cotton last year. F. A. BUECHEL. The Southwest Is Not the Southeast The one economic feature peculiarly common to both the Southwest and the Southeast is that of the growing of cotton. But even in this regard, cotton is grown in the Southwest under conditions quite different indeed from those in the Southeast: It may be noted paren­thetically that I am using the term Southwest to include what has sometimes been called the Gulf Southwest, and as I am using it, the Southwest does not include the Far Southwest, the latter comprising the California region. The reason the Southwest is not the Southeast lies in the decrees of Nature. The natural resources pattern, the usable combinations of resources, and even the geographic orientation of the Southwest are all very different from those of the Southeast. Fundamental differences between these extensive portions of the United States are those of physical geography-and the essential elements of a region's physical geography are not readily modified by man. By physical geography is not meant a simple concept of areal physiography hut rather a regional science that has evolved during the past few decades. In historical background the Southeast differs sharply from that of the Southwest-so much so that the terms, the Old South, or the Deep South, are never applied to · the Southwest. In their economic background there is one fundamental resemblance-both have been im­portant primarily as surplus producers of raw ma­terials; but in this regard, these regions are not unlike the Northwest. In the history of the growth of internal commerce in the United States (which means the rise of the vast home market that is so important an element in Ameri­can economy) the very important position of the Old South has been severely neglected by economic historians~ Concerning the economic activities of the Southeast and the Southwest, it is well to keep in mind that, in spite of certain overlappings, the two major regions are quite unlike. Economic activities have to be considered as a function of resources utilization (which factors are largely internal to the region concerned) and. the impingement of outside or external factors which con· dition the rate or degree of utilization. Of external factors, the imposition of freight rates is a typical exam­ple, and in this regard freight rate differentfals for the Southwest are more unfavorable than for the Southeast. The conception, commonly held, that cotton is the one outstanding agricultural enterprise of the South hardly applies to the Southwest; for the Southwest has long been, is now, and for a long time will be one of the very important livestock surplus producing regions of the United States. In contrast, save for exceptional areas, the Southeast does not now and never has produced livestock in any considerable volume except for local consumption. The Southeast is not a surplus corn producing region, although normally the acreage in corn is approximately equal to that in cotton. Corn yields in the Southeast (except in certain favored areas) are low, and the corn is grown for local consumption. The Southwest grows some corn, but the characteristic feed grain crop is grain sorghums. Western Texas and adjacent areas in Oklahoma can aptly be designated as the Grain Sorghums Belt of the United States. Also, the South­west grows wheat, in areas along and north of the northern limit of cotton growing. Furthermore, most of the wheat produced in the Southwest is of very high quality. The Southeast is not and never has been a wheat producing region. Nor is the Southeast, taken as a whole, a rich grass or pasture region. Producing neither high yielding grains nor rich grasses, except in favored localities, the Southeast does not have a basis for an important livestock industry such as is charac­ teristic of the Southwest. Cotton growing in the Southeast is a function of large applications of chemical fertilizers, for most of the cotton lands of the Old Cotton Belt are poor sandy soils which require fertilization for continued production of cotton. The qualities of these soils are functions of the geographic geology and the climatic environment of the areas concerned. Cotton growing in the Southwest is a function of soils chemically rich-the alluvial low­lands, the Prairies, and the sub-humid Plains-hut in the western portions soil moisture is the limiting factor to crop growth. Furthermore, the cotton lands of the Southwest are mostly smooth _plains areas on which power machinery can be advantageously utilized. This is indeed a con­ trast to the prevailing conditions of the Southeast in which the darky, a mule, and a single-shovel plow have long been and still are so characteristic of cotton farming. There are other contrasts too. Most of the cotton grown in the Southeast is consumed in domestic mills; most of the cotton grown in -the Southwest has been exported. Now that foreign markets for raw cotton from the United States have severely contracted, the cotton problem of the Southwest has indeed become a critical one. The characteristics of agricultural and range produc­ tion and their contrasts in the Southeast and the South­ west are largely associated with differences in the physi­ cal geography of these regions. Disposal of the surplus production is primarily dependent upon economic con­ ditions and forces outside these regions. The Southeast is a forest region-one of the major forest regions of the United States. The Gulf Timber Belt of southern pines and hardwoods extends well into the Southwest, merchantable timber being grown over most of East Texas, east of the Black Prairies and north of the Brazos River. The Southeast remains an im­ portant lumbering region but it is in the industrial utilization of its forests in pulp and paper manufacture that interest now centers. The extensive use of Southern woods for paper making may be said to have arrived. In metallics · and non-metallics the contrasts between the. Southwest and Southeast are as sharp and striking as m the other resources already mentioned. The Southeast has in the Birmingham area an im­portant iron ore resource; and the near-by coal fields are able to supply coal for fuel and for coke making. As a matter of fact, the Great Warrior coal field is one of t~e more important coal deposits of the nation. The Southeast has considerable water power and the growth and expansion of electricity using industries has been one of the accompaniments of T. V. A. Owing to its geographic orientation the Southeast is importing bauxite, which at Mobile is reduced to alumina. The latter is then shipp~~ to Alcoa, Tennessee, to he made into aluminum through the utilization of electric energy. Then the Southeast has industries based upon its own non-metallics, such as clays, granites, phosphate rock, and the manufacture of fertilizers. Iron and steel and associated enterprises concentrated in the Birmingham district, electro-chemicals and elec­tric using industries in the T. V. A. district, and pulp and paper plants scattered throughout the forest lands reflect one type of industrial development in the South­east. Another type is reflected in the textile and tobacco industries. Still another feature of this type is repre­sented in the rayon mills of the Southeast. Comparatively speaking, industry of the Southeast is rather diversified; its agriculture is highly specialized. In contrast, the agricultural and range enterprises of the Southwest are diversified, taking the region as a whole, and its industry is highly specialized inasmuch as quite a bit of it centers about the oil industry or the closely related natural gas industry. The oil industry is basic to the Southwest, and the Southwest's oil industry is one of the big items in the economics of the United States. Wherever other indus­tries, such as the rise of the chemical industry for instance, are developing in the Southwest, they, with few ~~ceptions, are closely associated with the use of natural gas. This brief presentation seeks only to outline the high points of the more important regional aspects of the South, of the regional distribution and differentiation of the South's resources-of the Southeast and the South-· west. Policies of concern to the South cannot be ex­pected to advance the welfare of the people of the South unless these fundamental regional characteristics are fully taken into consideration. It should not be necessary to have to emphasize these fundamental characteristics of the South. That it is necessary means, simply, that wide gaps exist in our educational procedure. Those dealing with either economics in the accepted sense or with specific aspects of the South's development and future apparently have not come to grips with the essential factors, as un­fortunately is so obviously attested by recent and cur­rent conditions in the South, in both the Southeast and the Southwest. Natural resources have to be considered as something more than a lump of real estate, to be considered as something merely from which income can he squeezed. Regions have to be considered as something more than geometrical divisions on a map, particularly lines drawn by swivel-chair experts. Regions, and the resources associated with them, have to be considered as a source of wealth; that is, of a means of advancing the material well-being of the community, anq not as merely a means of realizing an income. Nor can the concept of regions and resources be lumped together as land considered as one of the economists' factors of "production," even if the economist were interested in factors of "production" in the sense of material production. In this case the economist would indeed be interested in differentiation of resources and their classification on the basis of fundamental characteristics. The point in making these observations at this place is that resource economics together with the regional implications involved have something positive and sub­stantial to offer in understanding present day economic life, and in looking into the future, scientific analyses of resource utilization and regional environments be­come essentials. ELMER H. JOHNSON. Economic Geography Notes AIRCRAFT PLANT The Pacific Coast airplane producer, North American Aviation, Inc., 30 per cent of which is owned by General Motors Corp., and which specializes in military planes has completed plans for a $7,000,000 plant at Dallas; this plant is to be ready for operation in March, 1941. The Texas plant will employ from 10,000 to 12,000 men. CARBON BLACK PLANT United Carbon Company is expected to begin con· struction of a new carbon black plant some 2 miles north of Aransas Pass. This new unit will use residue gas from the gas~line plant of the Natural Gasoline Corporation a few miles distant. This will be the second carbon black plant in the Gulf Coast region. UNITED STATES TIN SMELTER Although the United States is the largest consumer of tin the the world (normal consumption amounts from 70,000 to 80,000 tons annually) it produces but small amounts of tin ore; nor does this country possess tin smelting facilities. Tin ore is produced in British Malaya, Siam, Dutch East Indies (Banka and Billiton, two small islands being outstanding as tin producers), in Bolivia and more recently from Nigeria and the Belgian Congo. Tin looms rather large as a strategic metal and the United States is actively considering the building of a tin smelter to care for imports from Bolivia. No definite results on the establishment of a tin smelter in the United States thus far have been an· nounced, and so far there is no indication of where such a smelter would be built. SCRAP IRON EMBARGO Japan is largely dependent upon imports for her iron and steel industry which in 1939 attained the highest volume of output in the history of Japan. Japan has been importing large quantities of scrap from the United States as well as some pig iron and certain ferro-alloys. In 1939 Japan secured more than 90 per cent of her iron and steel scrap from the United States. A considerable part of this scrap has been sup· plied from Texas during the past decade. At the same time she has been getting iron ore, pig iron, scrap, and molybdenum from India and Malaya. These supplies are now being cut off from Japan; hut it is believed that Japan has built up stocks of these essential materials to last a year on the basis of the 1939 output of steel. TOLUOL AT BAYTOWN It has been announced that Humble Oil and Refining Company will build a government.financed plant at Baytown for the making of Toluol. This plant is esti· mated to cost around $12,000,000. It will he located near Humhle's Baytown refinery. ELMER H. JOHNSON. Financial Review Business and financial developments of the past few months have reflected the progress of the national de­fense program and the substantial British demand for war materials. The first phase of the defense program is now approaching completion, with the obligation of all appropriations expected to he made by November 1. As the program moves into the second stage involving the production of goods and the payment therefor, the effects upon business activity may be expected to he· come even more significant. Moreover, the financial problem involved in raising the funds which will he required in increasing amounts by the Treasury to make payment as goods are delivered, and also to assist in financing new plant construction, will have to he met. Finally, it will he necessary to determine policy in respect to controlling the economic disequilihria which may he expected to accompany the enormous productive demand and financial expenditures. During the past four months, or from the ap­proximate date of the inception of the national defense program to the date of writing this article, the principal commercial hanking assets and liabilities-as reported by the member banks in 101 leading cities-have in· creased moderately. Between May 29 and October 9 total loans of the reporting banks increased by $325,000,000 from $8,475,000,000 to $8,800,000,000; commercial, industrial, and agricultural loans increased from $4,367,000,000 to $4,672,000,000, an increase of $305,000,000. During the same period the reporting banks increased their holdings of United States ·Government Securities by $378,00,000, or from $11,480,000,000 to $11,858,000,000. The increase in the amount of bank credit, together with gold im­ports, has been reflect~d in an increase !n the de_mand deposits of the reportmg banks amountmg to slightly less than one billion dollars during the four month period. Very substantial gold imports, however, have more than offset the demands of these banking develop­ments upon the reserve funds of the reporting banks, and consequently excess reserves of the hanking system have increased from $6,360,000,000 to $6,820,000,000. Industrial production, factory employment, and fac­tory payrolls have also increased steadily during the period. The Federal Reserve Board index of indus· trial production advanced from 116 at the end of May to an estimated 124 at the end of September. Very substantial increases in the production of airplanes, ma­chine and tool equipment, iron and steel, and other products for which a war demand exists have been the most important factors in this development, although numerous other products have been favorably affected. Between May and August (the latest date reported) factory employment, as indicated by the index of the Bureau of Labor Statistics, rose from 99 to 104, with the largest gain in the durable goods industry; factory payrolls followed a similar course, advancing from 96 to 108. Total non-agricultural employment is estimated to have increased by approximately 750,000 during the period, with most of the increase occurring in manufac­turing establishments and the construction industry. Although there has been some inventory accumulation in anticipation of increased demand, and also because of probable restriction later in the output of certain pro­ducts, the inventory situation is not viewed unfavorably. Likewise, as yet there is no evidence of any serious distor­tion ~n the price situation, ialthough :administration officials are watching price developments closely in certain lines, and warning against unwarranted price increases. The trend outlined in the preceding paragraphs probably will continue its upward course even more sharply during the coming months. Up to the present, actual expend;itures for defense purposes have been relatively small as compared with the appropriations obligated by contract. Likewise, production on defense orders is only just getting underway. During the remainder. of the fiscal year, however, a great speeding up of expenditures and production must take place if even the revised estimates of Treasury expenditures­ahout $3,500,000,000 as against an earlier estimate of approximately $5,000,000,000-prove to be correct. During the remainder of this fiscal year and, perhaps, for several succeeding fiscal years, the economic system will be subjected to an abnormal sort of stimulation-a form of pump-priming involving the heavy industries­that may be expected to influence strongly the tempo of business activity. Merely because the causal factors underlying these expenditures may he of an emergency nature and essential, thus compelling the expenditures, this fact in no way mitigates the dangers inherent in the situation. Therefore, it is imperative that sound, orthodox methods of financing be utilized exclusively just as long as it is possible to do so; the present is certainly no time for experimentation with untested theories or for continued resort to fiscal policies which have been of uncertain efficacy during the past several years. The method by which the Treasury raises the funds needed to finance the defense program is a case in point. If recognition is given to the practical fi;nancial aspects of the situation, and assuming that devaluation, currency issues, or other unorthodox monetary methods are disregarded-and surely they must be by a re­sponsible government-then it is obvious that a sub­stantial proportion of the funds must be obtained through the sale of government securities. However, the extent to which deficit financing should he used by the Treasury, and th!! method of deficit financing to be used, are problems of the utmost significance. In the first place, expenditures which are non-essential should be entirely eliminated, and those expenditures might be classified as not urgently essential should be reduced to an absolute minimum. The two classes of expenditures which should off er the greatest possibility of diversion of funds to defense purposes are those covering work relief programs, and public works and investments. The 1940-1941 federal budget included an estimate of $1,300,000,000 for the former and $1,100,000,000 for the latter, or over 25 per cent of budgeted expenditures. By confining public works to those projects which serve an essential ··purpose in connection with the defense program, and by effecting sharp economies in public relief programs, a substantial sum should be available from each of these items, especially in view of the fact that during the remainder of the current fiscal year the pump-priming effects of the original budget will be supplemented by the addi­tional pump-priming expenditures of defense produc­tion. 1 Secondly, a sound program of taxation should be designed to sup_J>ort as large a part of the cost of de­fense as possible without restricting industrial activity, upon which the completion of the program is dependent, to such an extent as to defeat the very purpose for which the taxes are imposed. Steps in this direction have already been taken in the form of an excess profits tax expected to raise approximately $500,000,000-although there is a possibility that it will be revised before taxes are paid under it. Other tax revisions are expected to raise about $150,000,000 during the current fiscal year and at least a billion dollars annually thereafter. Ad­ditional tax legislation may be anticipated, and sooner or later the increasing tax burden must fall heavily on the shoulders of the large middle class income group of the nation, the group from which the largest propor­tion of the nation's tax revenue is drawn. Burdensome though these taxes may become, the burden is preferable to the cost of continuing huge deficits, weakened gov­ernment credit, and subsequent inflation. The remainder of the needed funds must be raised by borrowing, with the Treasury financing as large a part of the deficit as possible through the sale of its securities to individuals and individual investors, instead of through the commercial banking system, in order to minimize the dangers of inflation. From ihe point of view of government credit there may be little difference, if any, whether the government sells its securities to the commercial banks or to the public, but there is a significant difference both in respect to the soundness of the banking system and the volume of available funds. Financing through the banking system affects the nature of the bank assets, and it creates additional deposits; whereas, the sale of securities to the public leaves bank assets unaffected and instead of creating additional deposits, results in a shift of existing deposits from the accounts of savers and depositors to the ac­counts of the government. Commercial bank deposits have been increasing steadily for several years past, and are now greater than at any other time in the nation's history. These deposits represent money just as truly as ff they were printed by the printing presses. If an excessive issue of money in the form of currency possesses inflationary potentialities, then so ·does this huge volume of bank money. To date these funds have not reacted with in­flationary force because their turnover--or velocity­has been very low; the bank money has remained unused; it has not been an effective inflationary force. But as business activity increases and industrial produc­tion expands, the increasing demand for goods will tend to increase the circulation of this huge hoard of bank money, and then it will tend to exert a strong inflationary influence in the economic system. Because of this danger, which will become ~ore real as the months pass, the Treasury should draw on the savings of the nation and avoid the creation of additional purchasing power through deficit financing. WATROUS H. IRONS. Changing Markets for American Cotton Vast changes have taken place in the markets for American cotton. A hundred years ago, or in 1840, the United States consumed only about eleven per cent of its cotton production; and seventy per cent of the 236,525 bales consumed in the United States was outside the cotton growing states, and sixty-seven per cent in New England. The real market for American cotton, however, at that time was not in the United States at all hut was the export market, for it took about eighty-nine per cent of United States production. Moreover, all exports went to Europe; and two countries, the United Kingdom and France, took ninety-five per cent of all exports to Europe. The fact is that in 1840 New England and Europe furnished the market for 95.5 per cent of the cotton production of the South. The United Kingdom alone consumed almost half of the American crop. Much of the cotton consuming power of the cotton growing states was destroyed during the Civil War, so much so that in 1870 less than nine per cent of the cotton consumed in the United States was consumed in the cotton growing states. In 1870 the South con­sumed only about two per cent of its cotton production, and, therefore, furnished a negligible home market for its cotton. New England and Europe furnished ninety· seven per cent of the market for the 2, 714,000 bales of American cotton marketed in 1870. However, the market in Europe was broadening, for in 1870 the purchases of the United Kingdom and France had de­clined to seventy-eight per cent of total exports of American cotton to Europe. The rise of cotton manu­facturing in Germany accounts for most of this change. During the thirty years from 1870 to 1900 important changes took place in the markets for the cotton crop of the South. The total number of bales marketed during the latter year was 10,074,000, and thirty-eight per cent of it was consumed in the United States and sixty-two per cent exported. New England and Europe, the original markets for American cotton, still supplied seventy-six per cent of the demand for it in 1900, the cotton growing states and the rest of the United States, 15.4 per cent, and exports to countries outside of Europe, mostly Japan and Canada, 4.6 per cent. The European market during this period was characterized by a further relative decline of the United Kingdom and France as markets, and pronounced increases in the importance of Germany and Italy. The trends in the development of markets established between 1870 and 1900 continued down to 1929, even though interrupted temporarily by the World War be­ginning in 1914. During the year 1928-29 the United States consumed and exported 15,135,000 bales of cotton, included in which were 458,000 bales of foreign grown cotton con· sumed in the United States. New England and Europe, the original markets for American cotton, took only fifty per cent in 1929, compared with seventy-six per cent of it in 1900, and ninety-seven per cent in 1870. The big decrease in the relative importance of these markets was due on the one hand to a decrease in cotton consumption in New England and only a slight increase in the consumption of American cotton in Europe from 1900 to 1928; and, on the other, to the very rapid rise in the consumption of cotton in the cotton growing states and Japan. The cotton growing states furnished a market for about thirty-seven per cent of its production in 1929, 15.4 per cent in 1900, and only two per cent in 1870. The great depression and its aftermath have wrought tremendous changes in Markets for American cotton. During 1938-39, the tenth year. after the depression began, the United States exported 3,327,000 bales of cotton and consumed 6,858,000 bales. Of the latter, 150,000 bales were foreign grown cotton, making a total sale of American cotton of only 10,035,000 bales in 1938-39, compared with 14,677,000 hales in 1928-29 and 10,074,000 bales in 1900. The markets for American cotton have been vastly changed during the past ten years. During 1938-39 New England and Europe furnished markets for only 28.6 per cent of the cotton consumed in and exported from the United States, compared with fifty per cent in 1929, seventy-six per cent in 1900, and ninety-seven per cent in 1870. The one bright spot of the cotton situation for the cotton growing South is the continued rise in the ability of the region to furnish a market for its own cotton. During 1938-39 the cotton growing states consumed fifty-seven per cent of all the cotton consumed in the United States and exported from the United States. The cotton growing South is now its own biggest market for cotton. In the course of one hundred years the cotton states have grown from a 70,000-bale cotton market to almost one hundred times that, or a 7,000,000-bale market. CAUSES OF SHIFTING MARKETS What have been the causes which have brought about these far-reaching changes in markets for the South's major crop, cotton? Many forces and factors have doubtless played a part in the wide dispersion of cotton manufacturing over the world during the nearly two centuries of its existence as a mechanized industry. At the time of the invention of the basic machinery for the mechanical manufacture of cotton in England in the latter half of the eighteenth century, climatic factors were of vital importance in the location of cotton mills because they had to be in a humid climate. Nearness to iron and steel industries, power resources, and ao· cumulations of capital were all vital forces and condi­tions in locating cotton factories in the early days of the industry. During th_e last fifty years, inventions and business organization have largely freed the industry from the dominance of climatic factors, of capital, of power and other factors as location determinants except as they influence costs of production and distribution. The necessity of locating the cotton textile industry in areas of 1931-1932 1932-1933 1933-1934 1934-1935 1935-1936 1936-1937 1937-1938 1938-1939 1939-1940 1940-1941 lowest costs of production has been the •Jn 500-pound Bales. ••Not available. The Cotton Year Begins August I. COTTON BALANCE SHEET FOR THE UNITED STATES AS OF OCTOBER 1 (In Thousands of Running Bales Except as Noted) -------------------·-------------------­ ------------------------------~----­ major force during the last fifty years in causing the rise and rapid growth of the industry in southern Europe, the South in the United States, and more recently in the Orient, Japan, India, and China, as well as its decline in New England and Great Britain. The powerful, persistent pressure of lower costs has occasionally been checked or stimulated in particular countries by governmental policies such as the provision of tariff protection for home markets; and in some instances bounties or their equivalents on exports of cotton manufactures have modified the broad pattern of the world industry, but have not changed it fundamentally. The major item in the cost of manufacturing cotton is labor. The low wage areas of the world are, there­fore, the great centers of cotton manufacture now, and the growth of concentration in these areas has been especially pronounced since 1918. Indeed, the cotton spinning spindles of the Orient have increased nearly two hundred per cent since the close of the first World War. Cotton manufacturing in Italy and the cotton growing states of the United States has likewise in­creased at the expense of New England in the United States and of the United Kingdom. Fundamental changes in the economic conditions in major cotton consuming countries and the adoption of many effective devices for controlling trade such as quotas, exchange controls, and bilateral trade agreements, may cause still further important changes in markets for American cotton. In view of the many controls now being used and the great increase in the volume of cotton grown in foreign countries, American cotton must not only meet with these cottons on a competitive price quality basis, but on what may be even more im­portant, on an equitable commodity trade basis. It seems certain now !hat exports of American cotton dur­ing the current cotton year will be the lowest for about seventy years, and the prospect for regaining normal volume of exports in the near future is very poor. A. B. Cox. Govern· ment Imports Estimate Carryover Aug. 1 to Oct. l * as of Oct. l* Total 6,369 13 16,284 22,666 9,682 14 11,425 21,121 8,176 23 12,885 21,084 7,746 19 9,443 17,208 7,138 14 11,464 18,616 5,397 22 11,609 17,028 4,498 14 17,978 22,490 11,533 29 12,212 23,774 13,033 10,596 22•• 11,928 12,741 24,984 Consump- Exports tion to to Balance Oct. 1 Oct. I Total Oct. 1 889 769 1,658 21,008 897 186 2,083 19,038 1,088 1,400 2,488 18,596 714 706 1,420 15,788 859 728 1,587 17,029 1,205 752 1,957 15,077 1,206 838 2,044 20,446 1,093 590 1,683 22,091 1,255 644 1,899 22,863 1,294 155 1,441 EMPLOYMENT AND PAY ROLLS IN TEXAS SEPTEMBER, 1940 Estimated Percentage Change Estimated Percentage ChangeNumber of from from Amount of from from Workers August September Weekly August September Employed• 1940 1939 Pay Roll 1940 1939 MANUFACTURING All Manufacturing Industries______________ 137,963 + 2.7 + 5.9 $2,800,438 + 5.9 + 11.3 Food Products Baking______ 6,894 + 4.4 + 8.3 150,052 + 1.7 +13.7 Carbonated Beverages____________ 3,271 2.6 + 8.7 77,252 0.2 + 15.5 Confectionery___________________ 661 + 11.8 9.3 6,781 +18.4 -7.2 F1our Milling______________________ 1,760 +10.9 + 17.7 38,524 +14.0 + 12.6 Ice Cream.___________________ 1,113 + 1.0 +27.2 18,983 + 0.6 +24.5 Meat Packing._ 4,142 + 5.2 + 1.7 95,983 + 4.9 + 2.6 Textiles Cotton Textile Mills__________________ 6,141 0.8 + 5.2 92,043 + 6.1 +28.0 Men's Work Clothing... 3,692 + 4.8 -I0.7 41,192 + 16.5 2.3 Forest Products Furniture_____________ 1,751 + 7.6 -5.2 44,861 + 13.7 + 8.7 Planing Mills_________________ 1,987 + 0.6 + 2.2 35,861 + 5.4 (1) Saw Mills___________________ ___ 17,026 + 5.6 +20.8 230,135 + 11.6 +36.7 (2) (Jl) Paper Products____ + 0.4 + 9.9 + 0.4 + 0.3 Printing and Publishing Commercial Printing_ ___________ 2,014 -11.2 -10.9 46,699 8.3 -10.4 - Newspaper Publishing_ 4,507 + 0.6 -0.5 120,971 + 4.6 + 0.1 Chemical Products Cotton Oil Mills___________ 3,562 +39.5 +37.3 38,825 +42.7 +31.7 Petroleum Refining._ 20,270 + 0.4 1.2 685,310 + 4.2 + 5.7 Stone and Clay Products Brick and Tile._ 2,004 2.2 + 0.7 27,115 + 2.4 +13.1 Cement_______ 1,060 + 3.5 1.8 25,961 + 6.6 6.5 Iron and Steel Products Foundries and Machine Shops..__ 10,704 2.0 + 6.0 285,193 0.5 + 9.0 Structural and Ornamental Iron.____ 2,089 + 2.9 +19.3 41,350 + 6.0 +28.0 NONMANUFi\CTURING Crude Petroleum Production 30,896 0.7 (1) 953,188 3.2 4.2 (2) (2) Quarrying -------------------------+ 0.9 + 1.2 + 2.6 + 9.9 (2) (2) Public Utilities 1.9 + 2.6 4.0 + 5.5 Retail Trade_________ 191,403 + 6.4 + 7.8 3,206,628 + 6.6 + 8.0Wholesale Trade_______________ 58,190 + 0.4 1.3 1,910,356 + 5.4 +17.4 Dyeing and Cleaning______ 2,478 0.2 5.2 36,752 + 7.7 + 0.3 Hotels________________ 13,947 + 0.8 1.6 166,780 +<•l +10.0 Power Laundries___________________ 9,845 + 0.1 + 2.7 124,829 0.2 + 6.4 CHANGES IN EMPLOYMENT AND PAY ROLLS IN SELECTED CITIES Employment Pay Rolls Employment Pay Rolls Percentage Change Percentage Change Percentage Change Percentage Change Aug. 1940 Sept. 1939 Aug. 1940 Sept. 1939 Aug. 1940 Sept. 1939 Aug. 1940 Sept. 1939 to to to to to to to to Sept. 1940 Sept. 1940 Sept. 1940 Sept. 1940 Sept. 1940 Sept. 1940 Sept. 1940 Sept. 1940 _____________... --13.6 -0.9 -1.5 Galveston Amarillo ------------------------------­ Abilene ------------------2.5 + 4.7 -12.2 +12.7 + 3.0 + 0.9 +29.8 + 3.5 +48.9 Houston + 3.4 + 0.8 + 4.0 + 5.4 Austin ------------------+16.7 + 6.4 +11.6 + 6.0 Port Arthur ----------+ 0.6 + 1.1 + 3.2 + 10.l + +14.3 San Beaumont ------------+ 3.2 + 3.2 9.0 Antonio 1.3 -2.1 + 0.3 + 2.8 _________________.. Dallas + 6.5 + 2.0 + 11.l +10.2 Sherman ------=-~:=::: + 6.0 +20.4 + 4.3 +59.5 El Paso ----------------+ 1.4 +10.9 + 5.1 +25.6 Waco -------------------+ 7.3 + 2.1 +13.4 + 6.4 ________.., Fort Worth --------------0.9 -0.7 + 2.8 + 2.7 Wichita Falls 5.5 -9.0 2.7 + 6.8 STATE---------------+ 2.4 + 2.3 + 4.3 + 7.7 ESTIMATED NUMBER OF EMPLOYEES IN NONAGRICULTURAL BUSINESS AND GOVERNMENT ESTABLISHMENTS«> 1940 May _______________967,000 January ----------------------~---941,000 February _____________________944,000 June --------------------963,000 March ------------------------962,000 July -------------------------------960,000 April ---------------------------954,000 August (revised) ----------------------963,000 September (preliminary) __________ 979,000 *Does not include proprietors, firm members, officers of corporation!ll, or other principal e'Xecutives. Factory employment excludes also office, sales, technica), and professional personnel. These figures are subject to revision. (l)No change. (2)Not available. Less than 1/20 of one per cent. <4>Not including self-employed persona, casual workers, or domestic aervants, and exclusive of military and maritime personnel. These figures are furnished by the Bureau of Labor Statistics, U.S. Department of Labor. Prepared from reports from representative Texas establishments to the Bureau of Business Research coOperatiog with the United State1 Bureau of Labor Statistics. BUILDING PERMITS Sept. Sept. Aug. Year to date, Year to date 1940 1939 1940 1940 1939 Abilene -----------------------------------------------------$ 30,330 $ 48,195 $ 128,763 $ 498,408 $ 538,729 Amarillo·----------------219,294 270,265 286,690 2,038,546 2,109,462 Austin_________________ 310,670 346,133 341,902 5,472,744 6,053,906 Beaumont___ 116,639 99,241 99,378 1,167,037 1,121,776 Big Spring 14,269 13,140 26,195 221,136 258,318 Brownsville ----------------------------------------------------18,195* 13,645* 23,753* 259,464 136,027 Corpus Christ~·----­181,089 225,709 1,060,497 7,122,195 2,854,552 Corsicana__ 9,983 2,070 11,457 141,304 152,772 Dallas_______________________________________________________ 1,626,900 787,276 1,455,738 11,414,805 9,753,826Del Rio._______ 4,385 3,635 8,400 79,287 81,252 Dent&n-------------·-----18,198 37,400 37,000 246,168 250,210 El Paso________ 200,842 871,520 967,242t 2,656,173 2,153,386 FortWortL 437,784 264,535 400,827 3,742,370 4,399,598Galveston___ 112,810 112,501 348,259 1,693,479 1,132,119 Gladewater_________________ 50 2 1,675 35,684 57,266 Graham ------------------------------------------------------------7,134 1,790 9,497 73,649 133,836 Houston____ 1,589,568 2,521,210 2,900,135t 17,922,328 20,272,475 Jacksonville_ 12,650 1,200 14,500 130,582 68,375 Kilgore ----------------------------------------------------------------78,800 77,000 37,540* II 644,887t Longview____ _ 6,347 13,050 41,500 312,147 241,680Lubbock__________ _____________ 269,594 248,667 810,423 3,450,058 2,215,461 McAllen____________________ 16,260 29,240 10,475 282,053 286,000 Marshall________________________ _ 55,245 23,845 32,339 297,977 483,769 Mi di and ------------------------------·------------------------------36,510 4,135 113,022 II II Odessa...._________________ _______________ _____________ 51,420 21,626 73,525 II 681,237tPampa__________ 29,375 25,000 36,400 616,386 224,230 Paris ---------------------------------------·-----------------------------23,705 II II 11,770 9,675 Plainview ----------------------------------------------------------------5,850 4,625 25,750 83,386 75,504 Port Arthur_ ______________ 100,267 115,090 102,530 903,400 859,665San Angelo_ ______ 534,759 33,448 44,687 912,876 353,582 S11n Antonio_____________ 457,400 423,547 868,291 5,291,811 3,870,827 ShermaIL----------·----____ 101,725 24,037 35,212 357,158 269,875Sweetwater___ _ 6,230 15,470 4,910 106,470 110,276Tyler_________________________ 42,935 57,272 73,673 651,098 1,330,188Waco_ _______ 89,424 109,850 79,559 1,547,771 1,307,628Wichita Falls__ 140,732 83,965* 110,985 954,664 731,257 TOTAL $ 7,945,433 $ 6,939,009 $10,646,434 $71 ,682,614 $63,352,140 •Does not include public works. tNot included in the total. tlncludes housing projects. llNot available. Non: Compiled from reports from Texa1 chambers of commerce to the Bureau of Business Research. TEXAS CHARTERS Year to Year to COMMODITY PRICES Sept. Sept. Aug. Date Date 194-0 1939 1940 1940 1939 Domestic Corporations Sept. Sept. Aug. 1940 1939 1940 Capitalization* __________ l,309 1,785 1,205 20,785 17,446 WHOLESALE PRICES: Number ---------------------84 108 105 1,043 1,091 U.S. Bureau of Labor Classification of new corporations: Statisti cs (1926=100) ---------------78.0 79.l 77.4 Banking-Finance 2 6 2 31 33 The Annalist (1926=100) -------------80.2 81.3 79.5 Manufacturing --------11 24 16 185 198 FARM PRICES: Merchandising ________ 25 22 38 287 252 U. S. Department of Agricul- Oil ----------------------14 17 16 147 207 Public Service 2 3 1 17 7 ture (1910-14=100) -------------------97.0* 98.0 96.0 Real Estate-Building 13 10 9 96 120 U. S. Bureau of Labor Transportation ________ 1 1 4 47 35 Statistics (1926=100) -----~-------66.2 68.7 65.6 All Others --------------16 25 19 233 239 Number capitalized at R ETA IL PRICES: less than $5,000...~----38 38 40 427 461 Food (U. S. Bureau of LaborNumber capitalized at Statistics, 1935-39=100) --------------97.2* 98.4 96.2 $100,000 or more ____ 4 5 3 31 37 Department Stores (Fairchild'sForeign Corporations Publications, Jan. 1931=100) _ ___ 93.2 90.2 92.9 (Number) -----------------16 11 22 184 237 •In thousands. *Preliminary. NOTE: Compiled from records of the Secretary of State. SEPTEMBER RETAIL SALES OF INDEPENDENT STORES IN TEXAS PURCHASES OF SAVINGS BONDS Percentage Change in Percentage Sept, Sopt. Jan. 1-Sept. 1 Jan. 1-Sept. 1 Number of Sept. 1940 Sept. 1940 Number of Year 1940 Dollar Sales Change 1940 1939 1940 1939 Firms from from Firms from Abilene _____________$ 11,044 $ 5,325 $ 231,679 $ 155,457 Reporting Sept. 1939 Aug. 1940 Reporting Yearl939 Amarillo ----------­24,225 22,069 314,775* t TOTAL TEXAS______ l ,066 + 3.4 + 6.8 1,008 + 5.0 Austin ---------------­63,956 25,538 547,012 309,525 TEXAS STORES GROUPED BY Beaumont ----------7,444 29,325 427,118 381,414 PRODUCING 2,925 3,619 86,588 69,751 Big Spring _______ AREAS: 693 7,969 66,132 79,013 Brownsville ____ DISTRICT 1-f\ 61 2.2 -9.4 57 + 6.9 Dallas ------------­155,044 118,181 2,162,814 1,983,281 Amarillo____ 13 + 0.7 + 2.1 12 + 7.2 Del Rio ---------­94 488 15,714 6,245 Pampa_____ 8 6.4 -27.4 7 +13.6 Denison --------·-­7,669 1,406 109,802 92,137 Plainview______ 12 2.9 -9.1 11 + 9.4 Denton -------------­49,219 619 t 42,827* All Others____ 28 2.2 -6.3 27 -3.7 El Paso -------------74,231 70,144 1,036,164 671,212DISTRICT 1-S 15 + 4.1 -5.5 14 +13.7 Fort Worth ______ 63,225 All Others____ 10 -16.l +35.4 10 +13.5 Galveston ----------29,925 23,456 436,200 328,575 Gladewater _______ Lubbock______ 5 +14.3 -15.0 4 + 13.7 70,763 793,122 972,152 DISTRICT 2__ 86 + 0.01 + 9.1 81 1.1 1,931 12,206 71,643 80,815 Abilene______ 13 6.0 +30.2 13 4.0 Kenedy --------------· 375 19 11,363 7,163 Vernon _____ _ _ 6 + 9.7 + 8.7 5 + 4.5 Kilgore -----------­ 2,963 1,313 89,420 90,751 Wichita Fall! 13 + 4.7 + 0.1 11 + 4.4 Longview --------­11,044 4,106 215,551 197,102 All Others__ _ 54 -1.8 + 8.4 52 4.0 Marshall ----------­1,069 8,325 147,075 57,076DISTRICT 3____ 41 + 11.8 + 19.5 40 + 4.4 McAllen ------------2,513 6,938 64,220 54,151 Breckenridge 7 -6.6 + 14.1 7 6.1 Palestine ________ Brownwood___ 7 + 17.1 +29.5 7 0.2 3,188 3,150 t 118,125* Pampa _________ _ All Others___ 27 + 12.8 + 18.6 26 + 6.2 4,669 3,450 t 31,689* DISTRICT 4,____ 247 + 4.1 + 7.6 235 + 6.1 Paris ------------­4,819 5,213 t 101,457* Cleburne____ 7 + 3.6 +11.9 6 + 5.6 Plainview ----------7,894 694 48,395 55,314Corsicana_ __ 7 -1.3 +47.0 6 + 5.7 Port Arthur _____ 9,281 6,038 252,700 169,520 Dallas_________ 38 + 9.8 + 13.3 37 + 5.7 Odessa -------------656 3,375 33,768 t Denison_______ 9 +10.8 -8.3 9 + 18.2 San Angelo ____ ____ 4,706 2,288 143,268 108,563 Fort Worth___ 50 + 1.2 + 2.7 47 + 8.6 San Antonio _______ Sherman________ 6 -3.1 -3.6 92,888 73,706 1,441,632 1,252,914 6 +13.9 San Benito ________ Temple________ 8 -12.4 +24.6 8 1.5 3,206 3,431 37,182 22,388 Waco______ 29 -5.1 + 9.0 27 + 6.2 Sherman --------­5,400 1,388 79,013 67,277 All Others_. 93 -0.5 -5.7 89 + 0.5 Temple ----------­3,094 2,531 64,352* t DISTRICT 5___ 101 -0.4 + 5.6 96 + 4.9 Tyler ---------­2,663 9,150 228,656 221,137 Bryan________ 6 -IS.3 + 0.4 6 -1.0 Waco -------------19,125 33,900 541,066 407,905Longview ______ 7 -9.6 +25.1 4 + 13.5 Wichita Falls ___ 14,475 13,969 397,765 338,283 MarshalL___ 7 + 11.9 + 11.5 7 + 3.3 TOTAL ____________$ 685,653 $ 574,092 Tyler_________ 12 + 1.0 + 9.4 12 + 4.6 Palestine____ 5 5.0 + 0.5 5 + 6.1 $9,745,666 $8,179,121 *Not included in total. All Others___ 64 + 0.8 + 3.4 62 + 5.0 !Not available. DISTRICT 6____ 39 + 4.5 + 15.1 37 + 5.8 El Paso______ 23 + 5.4 +16.5 23 + 6.0 All Others____ 16 4.5 + 0.6 14 + 0.9 DISTRICT 7____ 56 6.2 + 9.0 53 SEPTEMBER, 1940, CARLOAD MOVEMENT Brady_________ 8 -13.5 +11.9 6 9.7 + 2.4 OF POULTRY AND EGGS San Angelo___ 9 0.7 +22.8 9 + 3.1 All Others__ 39 -9.6 -1.9 38 + 2.6 Shipments from Texas Stations DISTRICT g__ 210 + 0.9 + 2.6 204 + 3.7 Austin________ 24 -8.2 + 17.1 23 -0.2 Cara of Poultry Beeville ______ 5 -19.3 -11.5 5 -26.9 Live Dre.,ed Can of Eggal Corpus Christ 11 -5.5 -IS.I 11 + 0.2 Destination• Chickens Turkeys Chickens Turkey1 Lockhart___ 7 -5.5 +10.9 7 -17.0 Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. Sept. San Antonio__ 62 +Il.O -1.6 61 1940 1939 1940 1939 1940 1939 1940 1939 1940 1939 + 8.4 San Marcos____ 9 +26.6 -6.8 9 + 5.3 TOTAL ------------___ 14 9 ____ 2 79.5 55.0 All Others____ 92 -4.3 -7.0 88 + 2.7 Intrastate -----------_ _ 3.0 11.0 DISTRICT 9____ 147 + 6.6 +I0.9 134 + 4.8 [nterstate -----------____ 14 9 ____ 2 76.5 44.0 Bay City_______ l~ +75.7 +23.3 5 +31.6 Beaumont_____ + 7.5 +20.9 18 + 3.7 Galveston____ 18 + 7.2 -18.4 Origin Receipts at Texas Stations 16 + 5.2 Houston..______ 48 + 3.6 +22.7 43 + 2.3 TOTAL --------------___ _ 17.5 15.0 Port Arthur___ 16 +21.9 -5.3 14 + 13.8 Intrastate ----------___ 3.0 13.0 Victoria______ 3~ + 0.3 -3.3 7 2.0 All Others__ _ -0.5 -12.9 Interstate -----------___ _ 14.5 2.0 32 + 7.9 DISTRICT 10__ 63 +11.1 -4.8 56 + 2.1 Brownsville___ I~ -6.2 -11.0 8 -2.8 *The destination above is the first destination 88 shown by the original waybill. - Harlingen_____ +30.1 5.0 Changes in destination brought about by diversion orders are not shown. 5 -4.7 Laredo _________ 6 -13.0 -19.3 5 tPowdcred eggs and canned frozen eggs are converted to a shell egg equivalent. -11.9 All Others___ 41 +18.4 + 2.3 38 + 9.8 NoTE : These data are furnished the Agricultural Marketing Service, United States Department of Agriculture, by railroad officials through agents at all eta· tions which originate and receive carload shipments of poultry and eggs. The NoTE: Prepared from reports of independent retail stores to the Bureau of Business Research coOpcrating with the U.S. Bureau of the Census. data are compiled by the Bureau of Business Research. SEPTEMBER RETAIL SALES OF INDEPENDENT STORES IN TEXAS September, 1940 Year 1940 ,----A----,, Number Number Percentage of Pereentage Change of Change Firms Sept. 1940 Sept. 1940 Firme Year 1940 Re­from from Re-from porting Sept. 1939 Aug. 1940 porting Year 1939 TEXAS --------------------------------------------------------------------------------------------1,066 + 3.4 + 6.8 1,008 + 5.0 STORES GROUPED BY LINE OF GOODS CARRIED: APPAREL* ---------------------------------------------------------------------------------------104 + 6.2 +25.5 101 + 2.4 Family Clothing Stores --------------------------------------------------------24 + 3.1 +29.9 24 + 2.1 Men's and Boys' Clothing Stores...---------------------------------------------35 + 4.6 + 9.5 33 1.5 Shoe Stores -------------------------------------------------------------------------16 + 3.7 +48.4 16 + 2.9 Women's Specialty Shops...-----------------------------------------------------------28 + 7.8 + 31.4 27 + 4.7 AUTOMOTIVE* ---------------------------------------------------------------------------------77 + 10.2 -18.2 74 +11.8 Motor Vehicle Dealers-----------------------------------------------------------------------------75 + 10.3 -18.5 72 + 11.4 COUNTRY GENERAL --------------------------------------------------------------------------105 + 0.3 + 3.1 98 + 4.2 DEPARTMENT STORES ---------------------------------------------------------------55 + 4.6 +25.7 52 + 4.8 DRUG STORES ---------------------------------------------------------------------------------------118 + 1.2 + 1.4 108 + 4.3 DRY GOODS AND GENERAL MERCHANDISE.._______________________________ 23 6.2 +24.3 22 0.2 FILLING STATIONS ---------------------------------------------------------------------43 6.4 -10.0 42 5.1 FLORISTS -------------------------------------------------------------------------------25 2.1 0.2 24 + 6.9 FOOD* ------------------------------------------------------------------184 9.1 6.6 172 1.6 Grocery Stores ------------------------------------------------------60 9.9 6.9 55 0.1 Grocery and Meat Stores·-----------------------------------------------------118 9.0 6.6 111 2.2 FURNITURE AND HOUSEHOLD------------------------------------------------58 0.8 + 0.4 55 + 3.3 Furniture Stores ----------------------------------------------------------------46 + 1.4 + 2.6 43 + 3.4 Household Appliance Stores.-------------------------------------------7 -15.1 -22.1 7 + 6.3 Radio Stores --------------------------------------------------------------------------5 + 0.4 +31.0 5 -2.9 JEWELRY ----------------------------------------------------------------38 + 12.7 +10.9 35 + 3.1 LUMBER, BUILDING, AND HARDWARE*-----------------------------------198 2.4 2.5 189 + 0.8 Farm Implement Dealers....--------------------------------------------------------------12 + 0.8 5.2 12 +11.4 Hardware Stores -----------------------------------------------------------------------58 3.5 + 9.3 56 + 7.2 Lumber and Building Material Dealers........------------------------------------------------126 1.2 5.3 119 1.1 RESTAURANTS -------------------------------------------------------------------25 0.6 5.0 23 0.3 ALL OTHER STORES·----------------------------------------------------------------------------13 -18.4 1.7 13 + 5.8 TEXAS STORES GROUPED ACCORDING TO POPU­LATION OF CITY: All Stores in Cities oL_ Over 100,000 Population --------------------------------------221 + 6.4 + 11.0 211 + 6.0 50,000-100,000 Population --------------------------------------------------105 0.6 + 6.6 98 + 4.1 2,500-50,000 Population ----------------------------------------------------------------------427 + 1.7 + 1.7 400 + 3.5 Less than 2,500 Population____________________________________ __________________ _________________ 313 1.0 -1.6 299 + 4.2 *Group total includes kinds of business other than · the classifications listed. No·rE : Prepared from reports of independent retail stores to the Bureau of Business Research coOperating with the United States Bureau of the Census. PETROLEUM Daily Average Production (In Barrels) Sept. 1940 Sept. 1939 Aug. 1940 Coastal Texas* --------------------219,650 232,750 187,950 East Central Texas --------------77,450 90,900 71,000 East Texas -------------------------393,200 410,150 374,900 North Texas -------------------------106,200 85,300 92,700 Panhandle _______________________ ,__ 77,650 59,100 65,500 Southwest Texas -----------------222,300 232,300 178,550 West Central Texas ---------------30,500 32,450 28,400 West Texas ------------------------233,400 255,400 194,450 STATE -------------------------------1,360,350 1,398,350 1,193,450 UNITED STATES ______________ 3,673,050 3,497,550 3,500,850 Imports -------------------------------202,643 153,143 209,429 *Includes Conroe. NOTE : From American Petroleum Institute. See accompanying map showing the oil producing districts of Texas. Gasoline sales as indicated by taxes collected by the State Comptroller were: August, 1940, 123,375,000 gallons; July, 1940, 117,729,000 gallons; August, 1939, 117,552,000 gallons. POST.AL RECEIPTS Year Year Sept. Sept. Aug. to Date to Date 1940 1939 1940 1940 1939 Abilen $ 16,528 $ 17,248 $ 6,115 $ 155,263 $ 146,363 Amarillo_ --------30,574 30,395 30,445 302,251 275,376 Austin._ 70,530 71,986 80,011 633,191 612,151 Ballinger ------------------------------------------------------1,692 1,686 1,662 • • Beaumon 26,435 25,703 27,799 240,310 234,451 Big Spring 5,542 5,520 5,930 54,002 51,444 Brownsville_ 5,265 4,842 5,079 52,193 51,272 Childress.-----------------------2,352 2,278 2,630 22,687 22,974 Coleman ----------------------------------------------------------2,090 2,037 2,123 • • Corpus Christi ---------28,762 23,915 31,342 252,456 220,883 Corsicana-----------------------------·---5,340 5,148 5,326 5,340 47,947 Dallas__ _______ -----------------364,695 376,110 374,310 3,270,260 2,809,685 Del Rio________________________ 3,807 4,496 3,314 36,121 35,416 Denison_______________________ 5,827 5,135 6,237 52,643 47,852 Denton_________ 6,534 6,988 5,617 65,072 62,207 El Paso_______________________________ 47,625 43,139 43,728 407,419 392,357Fort Worth_ _______________________________ 152,437 144,998 139,736 1,282,887 1,226,503Galveston_______________________ _______________ ______ 29,547 28,078 27,904 273,586 256,723 Gladewater 2,368 2,465 2,449 24,483 24,306 Graham 2,254 1,978 2,152 21,204 20,639 Houston__________________________ 245,989 234,913 246,361 2,276,626 2,252,105Jacksonville_ __________________ 2,968 2,763 2,961 27,804 29,047 Kenedy 1,197 1,125 1,295 11,292 10,974 Kilgore --------------------------------------------------------------5,383 5,082 5,579 52,451 51,534 Longview 7,844 8,322 8,928 81,662 81,228 Luboock___ ------------22,982 23,642 18,700 170,242 158,834 4,472 Lufkin ----------------------------------------------------4,393 4,086 41,475 39,577 McAllen_ _____________________ 3,914 3,710 3,918 46,522 43,677 Marshall________________________ 5,869 5,650 6,473 55,613 53,173Odessa______ ________________________________________________ 5,272 4,716 5,451 55,079 48,323 Palestine__ -------------4,773 4,882 6,539 48,102 47,453 Pampa_ ---------6,321 5,836 6,335 62,126 55,248 Paris -----------------------------------------------------------------------6,527 6,185 6,527 • • Plainview__________ ____ 3,376 3,941 3,913 35,266 35,351 11,936 11,238 13,704 Port Arthur --------------121,727 115,031 San Angelo -------11,500 11,416 11,332 105,463 103,018 San Antonio_____________________________________ _________ 122,965 114,382 123,488 1,135,203 1,066,859 San Benito____________________ 2,943 2,515 2,737 • • Sherman_____________________ 7,610 7,470 6,839 67,225 66,839 Snyder----------------------------------------------1,362 1,240 1,325 12,705 12,186 Sweetwater_______________ ________ 4,463 4,831 4,351 43,772 43,419 Temple ----------------------------------------------------6,714 6,734 6,647 60,754 59,443 Tyler_______________________________________________ 15,168 14,110 14,449 138,604 136,478 Waco____ ______________________________ 33,889 30,660 32,094 297,126 294,866 Wichita Falls -------+--------------23,154 22,348 23,159 212,731 203,084 TOTAL___________ 1,378,794 1,346,249 1,381,100 12,354,456 11,550,996 *Not Available. NoTE: Compiled from reports from Texas Chamber of Commerce to the Bureau of Business Research. unit, End of Month __ l,284,344 1,167,136 1,227,248 CEMENT (In Thousands of Barrels) LUMBER Sept. 1940 Sept. 1939 Au g. 1940 Year to Date 1940 Yea r to Date 1939 (In Board Feet ) Texas Plants Sept. 1940 Sept. 1939 Aug. 1940 Production ------­ 631 685 574 5,381 5,552 Southern Pine Mills: Shi pments 645 585 595 5,444 5,509 Average Weekly Production Stocks 848 822 862 per unit 341,323 298,289 314,445 United States P rod uction ____13,123 Shipments ___ ____14,760 Stocks _____ _____19,913 11,937 13,104 20,160 12,719 13,952 21,522 92,529 96,059 98,299 92,870 Average Weekly Shipments per unit -----------------------428,309 Average Unfilled Orders per 373,583 382,975 Capacity Operated -----63.0% 56.3% 57.9% NoTE: From Southern Pine Association. NOTE : From U.S. Department of Interior, Bureau of Mines. SEPTEMBER CREDIT RATIOS IN TEXAS RETAIL STORES (Expressed in Per Cent) Ratio of Ratio of Ra tio of Numb er of Credit Sales CoHections to Credit Sala riee Stores to Net Sales Ou tstandinga to Credit Sales Reporting 1940 1939 1940 1939 1940 1939 All Stores-----------------------------------65 68.7 67.8 37.0 37.3 0.8 0.9 Stores Grouped by Cities : Austin_______________________________________________ 5 63.6 62.4 43.7 45.5 LO 0.9 Beaumont_ ------------------------3 72.6 73.2 35.9 39.2 LO L3 Dallas-----------------------------------·--··--10 76.l 74.0 37.5 35.9 0.6 0.8 El Paso ------------------------------------------------------3 6L5 6L4 34.4 34.4 LO LO Fort Worth__________ _ _______ ___________________ 5 67.6 65.6 36.2 37.5 0.9 LO Houston. ----------------------7 66.0 64.4 37.9 38.9 LO LO San Antonio--------------------------------------------5 6LO 65.2 4L2 45.2 0.9 0.7 Waco______________ ______________ _ _ ______________ 5 67.1 63.3 28.0 28.7 1.1 1.1 All Others------------------------------------·----·-----------__ 22 6LO 6L9 36.l 37.1 L4 L3 Stores Grouped According to Type of Store : Department Stores (Annual Volume Over $500,000) ___ ________________ _ 19 68.0 67.6 39.3 39.4 0.8 0.8Department Stores (Annual Volume Under $500,000) __ _____________ 11 6L4 62.6 33.4 34.6 L5 L4Dry Goods-Apparel Stores______________________ _________ 5 64.8 64.l 37.0 39.4 L6 L4 Women's Specialty Shops_15 73.7 71.1 32.9 30.4 0.5 0.8 Men's Clothing Stores___ ____________________________ _________ _ _ ___ 15 67.5 66.l 34.2 35.4 L3 L4 Stores Grouped According to Volume of Net Sales During 1939: Over $2,500,000____________________ _____________________ 9 70.9 70.8 40.3 39.2 0.7 0.8$2,500,000 down to $1,000,000__ __ _ _______________________________ 10 63.6 6L5 40.l 40.8 LO 0.9 $1,000,000 down to $500,00Q _ _____________ _________________ 10 62.5 61.1 37.8 39.l 1.1 1.1 $500,000 down to $100,000____________ ___ _ _____________ 25 66.7 65.0 36.1 38.3 L3 L3Less than $100,000_______________ _ _____________________ 11 61.1 60.7 36.1 36.6 2.6 3.1 Non: The ratios shown for each year, in the order in which they appear from left to right, are obtained by the following computations: (I) Credit Mlei divided by net sales. (2) Collections during the month divided by the total accounts unpaid on the firet of the month. (3) Salaries of the credit depart· ment div ided by credit sales. The data are reported to the Bureau of Businees Research by Texas retail 1toree. PERCENTAGE CHANGES IN CONSUMPTION OF ELECTRIC POWER TEXAS COMMERCIAL FAILURES Year to date Year Year 1940 Sept. Sep t. Aug. to Date to Date Sept., 1940 Sept., 1940 from 1940 1939 1940* 1940 1939 from from Year to date Sept., 1939 Aug., 1940 1939 Number -------------------22 17 28 213 242 _____ _ _$334 + 7.2 4.0 + 9.5 Liabilitiest $337 $822 S5,873 3,981 !ndustri a1 -----------------------­-12.8 2.0 9.0 Assetst ------~---------192 103 407 5,389 3,022 Residenti al --------------------­+ 2.7 2.4 + 5.7 Average Liabilities All Others --------------------­+ 5.2 0.6 + 5.1 per Failure --------15 20 29 28 16 TOTAL ----------------------3.4 2.4 0.7 Commercial --------------------­ tia thousands. Prepared from reports from 14 electric power companies to the Bureau of NOTE : From Dun and Bradstree t, Inc. Business Research. SEPTEMBER SHIPME TS OF LIVE STOCK CONVERTED TO A RAIL-CAR BASIS* Cattle Calvc8 Hogs Sheep Total 1940 1939 1940 1939 1940 1939 1940 1939 1940 1939 Total Interstate Plus Fort WorthW----------3,874 4,797 1,931 2,151 756 668 2,290 1,976 8,851 9,592 Total Intrastate Omitting Fort Worth________ 218 463 76 98 15 32 313 359 622 952 TOTAL SHIPMENTS_ ______ ______ 4,092 5,260 2,007 2,249 771 700 2,603 2,335 9,473 10,544 TEXAS CAR-LOT* SHIPMENTS OF LIVE STOCK-JAN. 1-0CT. 1 Cattle Calves Hogs Sheep Total 1940 1939 1940 1939 1940 1939 1940 1939 1940 1939 Total Interstate Plus Fort Worth rr ________ 31,223 38,617 8,997 10,274 6,278 6,692 9,095 8,484 55,593 64,067 Total Intrastate Omitting Fort Worth_____ 3,280 5,911 779 1,158 176 390 562 1,140 4,797 8,599 TOTAL SHIPMENTS_______ ____ 34,503 44,528 9,776 11,432 6,454 7,082 9,657 9,624 60,390 72,666 *Rail-car Basis: Cattle, 30 head per car; calves, 60; hogs, 80; and sheep, 250. Fort \Vortb shipments are combined with interstate forwardings in order that the bulk of market disappearance for the month may he shown. .NoTE: These data are furnished the United States Agricultural Marketing S crvice, U.S. Dept. of Agriculture by railway officials through more than 1,500 •lation agents, representing every live stock shipping point in the State. The data arc compiled by the Bureau of Business Research. BANKING STATISTICS (In Millions of Dollars) DEBITS to individual accounts__________________ Condition of reporting member banks on- AssETs: Loans and investments--tota Loans--total__________ Commercial, indu.strial, and agricultural loans________ Open market paper_____________ Loans to brokers and dealers in securities_____________ Other loans for purchasing or carrying securities_________ Real estate loans___________________________________ Loans to banks_____________________________________ Other loans___________________________________________ Treasury Bills________________________________________ Treasury Notes______ __________________________________________ U.S. Bonds----. ------------------------------------------­ Obligations fully guaranteed by U.S. Gov't______________________ Other securities___________________________________ Reserve with Federal Reserve Bank..__________________ Cash in vault__________________________________ _____ Balances with domestic banks________________________ Other assets--net________________________________________ LIADILITIES: Demand deposits-adjusted________ Time deposits___________________________________ U.S. Government deposits_____________________ Inter-bank deposits: Domestic banks-----------------------·----- Borr~:~:-~~~~=:=:=~==------=--===-=--== Other liabilities________________________ ___________ Capital account________________________ *Five Weeks. NoTE: From Federal Reserve Board. Sept., 1940 Sept., 1939 Dalla• United Dallao United District States District States $ 1,001• $41,056* $ 801 $33,483 October 2, 1940 September 27, 1939 543 24,329 516 22,419 278 8,785 263 8,350 184 4,630 173 4,229 2 297 2 316 2 446 2 533 14 460 14 510 23 1,220 22 1,180 1 41 35 52 1,691 50 1,547 38 628 13 419 40 2,112 49 2,137 85 6,540 80 5,881 48 2,582 55 2,232 59 3,682 56 3,400 144 11,646 133 9,794 11 485 12 486 287 3,307 271 3,018 30 1,196 30 1,220 499 21,152 456 18,333 135 5,359 136 5,231 32 530 31 540 256 8,734 248 7,667 1 678 753 1 1 4 716 5 700 88 3,793 86 3,712 Aug., 1940 Dallaa United District State• $ 733 $28,841 August 28, 1940 530 24,157 269 8,509 177 4,463 2 299 2 363 14 467 23 1,215 1 40 50 1,662 31 712 39 2,113 85 6,562 48 2,582 58 3,679 137 11,449 12 508 281 3,201 30 1,169 487 21,053 135 5,340 32 528 243 8,392 1 682 1 4 701 88 3,787 ANNOUNCEMENT The Texas Statistical Council has announced a meet­ing for Friday, November 8, 1940, The University of Texas, Austin, Texas. The primary purposes of the organization are set forth in the Constitution as adopted at the meeting in April of this year: "To formulate, adopt, and promote means which will result in the better distribution of reliable statistical material concerning the State of Texas; to bring about a greater utilization of the sta­tislical material now being compiled by numerous gov­ernmental, educational, and private institutions; to as­sist in initiating and setting up new statistical research projects which are needed in a thorough analysis of Texas resources; and to foster the practical application of these data to the commercial, agricultural, and indus-· trial development of the State of Texas." Since the use of statistical information is at present in greater demand than ever before those interested in or engaged in compiling or using statistical data are urged to attend this meeting. The program for the November meeting includes a discussion of the general program and policies of the Council, a series of fifteen-minute talks by representa­tives of the statistical departments of various organiza­tions, discussion of the report of the cotton committee, and a report on the petroleum industry. CONTENTS Page LIST OF TABLES Page Business Review and Prospect, F. A. Buechel___________________________ 3 Changing Markets for American Cotton, A. B. Cox__ ________________ 8 Economic Geography Notes, Elmer H. Johnson______________________ 6 Financial Situation, Watrous H. Irons_____________.._______________________ 6 The Southwest is not the Southeast, Elmer H. Johnson_________ 4 Annozmcements ---------------------------------------------------------------------16 LIST OF CHARTS Indexes of Business Activity in Texa•-----------------------------------2 Trend of Residential Power Consumption in Texas and the Average Rate per K.W.H. 1929-1939-----------------·-·-------------------­ ~~ii~l~~ ~~~~:~s__::::::::::::::::::::::::::::::::::::::::::::_~::::::::::::::::=::::::::=::=:::::: ~~ Ca rload Movement of Poultry and Eggs---------------··-----·-·-·----··---·--· ~ 4 [~~~E~::s~~12~2~~~~~!i Credit Rat10s m Texas Reta1! Store•-------------------·--------------­ 10 Employment and Pay Rolls m Texa•-----------------------·--------·-­ 14 Lumber -------------------·-··-----------------·-··---------------------------------·---·-l6 Percentage Change in Consumption of Electric Power__________ 13 ~~~~~:!:ciif~:~:i;::~~~~;=:::::::::::::::~~::~:::::::::::::::::::::::::::::::::::::=::::::: ~i Re~ail Sales of .independent Stores in Texas------------------------·:=.:_ lo Shipments of Livestock ----·----··-----------------·-------·-·-----·--------··-------··