TEXAS BUSINESS REVIEW Issued monthly by the BUREAU OF BUSHJESS RESEARCH THE UNIVERSITY OF TEXAS AUSTIN, TEXAS Vol. 1 No. 4 July 23, 1927 The business situon for optimii;;m be cause of the stub.i'.l.ized· position vrhich industry is er.joying at the present time. Financial and Banking .. Checks cashed in the 11th Federal Reservo District declined season­ally in June and were 1.3% smal.ler than thos0 of June last year. Debits to individual accounts in 17 principal citics, a.s reported by too Federal Reserve System for the 5 vr•Y.)ks 0ndinr; ._Tune 29, amounted to $802 ,000 ,000 against $836,000,000 in May anrl $813,000,000 in Juno , 1926. June Changes with Comparisons* (in $1 ,000) .June, 1927 May, 1927' June, 1926 Bank Debits' (17 ci tie :::;) $802,000 $836,000 $813,000 Goverllir.ent Se curiti0s Qvm0d 64 ,073 59,657 Reserve Bank Loans (3nd 5. 918 \) of month) 4,922 12,294 ' •From Fcdoral Reserve System r0ports / The investment of member banks in Government i>ncurities increased TEXAS BUSINESS-REVIEW nearly $5,000,000, or from $59,657 ,000 in May to.$.64,073,000 at the end of June. Total loans decreased by $2 ,000 ,000. r'otal deposits recorded very few and small changes during the month; net demand deposits fell off $3 ,000 ,000, while time deposits gained $2 ,000 ,000. Total bills dis­counted amounted to $5,918,000,000 on June 29 compared to ~4,922,000 a month earlier and $12,294,000 on June 30 _last year. The numqer ·of commercial failure's wo.s smaller by 5 than those of May and 5 greater than those of June last year. R. G. Dun and Company report 42 insolvoncies with liabilities of $531 ,000 whe-reas there were 47 failures with liL.bilit:ies of $833,000 in May. Only three companies had liabilities of 835,000 or over; all the others were under $30,000. It has been pointo1 out before that smaller companies account for the bulk of the fai::.c.1 r•J<.; , and each month the trend is· in the same direction. This tendency ::_1)1~i >1t0s at lea.st that competition is rather keen and that profits to tlLi smr·.llor concerns a,re becoming more difficult to ac­quire. Conune rcial Failure~ilc June, 1927 -May, 1927 : . 42 47 .·; . ; Liabilities $531,000 t·s36 ,ooo Assets 2921000 352 ,000 *From R. G. Dun anq C9mpany ,___..;;.._...,.....__________, ­ 0 Stock Prices Industrial stocl: prices movod shar-ply upvrard again in June for the sixth con.S'J ci.;.ti·\i ,:; Lonth. After a tenporsr:1 S·3 tback at th$ end of May, the bull mov0::-r:0nt .was in control and new highs ·,70 r.J recorded during the s..:cond -.10..::lc of Jun·~ . During tho last bro vred:s of the month prices vrnre slightly dovmward and part of the rsain Vla.S lost. Appreh0n­sion has been expr0ssod for some timv past ovar r:-.ountinr, brokers loans secured by stocks and bonds c..nd ov•_)r thu fact ·that mc..ny stocks are s•J ll­ing abov0 their uurning c::i.pacity. So far, this sentiment has met with littlo faYor, and as ido from o. few :r:inor ruuctions thD bulls have bo0n in control of thu market. Using th::: av<.:r'.1.ga vw·~kly hie;h for thG years 1923-24-25 as equal te> 100, the Bureau of Business Re:::earch index of seven industrials listed on the I~ew York Stock Exchange advanced 5 points to another new high record, a total rise of 29 points during the first . ' . . half of the year. Industrial Stock Index'·· Average High , 1923 -24-25 June May April a rch 100 146 141 137 130 I•· In constructing thisindex, the University of Texas Bureau of Business Research aimed to select companies which are representative of industrial conditions in Texas and ether South:ern States and at the same time listed on the New York Stock Exchange where quotations are available for a number of years. back. Included in. t}:i~ index are two sul­phurs, one steel 1 one soft,-drink . company• . one cnemica!•· and t'NO oils• The weekly high of each stock was a:v:eraged for ·the inonth, and ·the average of all seven stock.s fqr the years ;J..923-24-25 . is tl!e 'base equal. to 100. The follovTing are the companies incluqea iri._the 'list as they a·ra listed on the New York S.tock Exchange: Coco Cola, Freeport-Texas, Gulf States Steel, Tennessee Copper and Chemical, Texas Company, Texas Pacific Coal and Oil, and Texas Gulf -. Sulphur. · Texas Charters That business conditions continue favorable and that the future .•looks promising ·is indicated by .the nuinber of' new enterprises receiving charters in the State. · Each month many new companies are ·organized and old ones are increasing their capitalization. During June, 244 companies having a capitalization of $34,094,600 received charters, as compared to 186 companies with i; capitalization of $16,136 ,000 in May • . Thir.ty-two coinpartie-s ·incre~sed ·their·eapitalUa.tion by $3,000,000, and 4() outside companies we re issued permits to operate within the State. In the first half of the year, charters were granted to 1129 corporation~ as compared td 1105 in 1926 ~ The numbe:r of oil and manufacturing companies decreased while pub~ic service and rer+l. ~state firms increased. ·...'. There were only 21 oil companies·chartered in June~ against 28 in May and 33 ·in June last y~ar. •... . th~ riuinber of manufacturing concerns went up from 5 to 22; in 1926 there were only 7. ·· · · Texas Charters Juno-Mti.y June.. First Half 1927 1927 1926 .1927 1926 Number chartered 244 ,186 175 1129 1105 Capitalization, In thousands, $34,094' $16,136, $9,944 $129,954 $87,703 Classifi cation of new corporations : Manufacturing 22 5 16 84 96 Banking and Finance 18 18 7 94 92 Real Estate and Building 25 26 8 140 67 Oil 21 28 33 124 150 Public Service 10 1 4 23 11 General 1<18 109 107 663 689 Foreign Permits 40 32 49 176 221 Building The building industry in Texas fell off some~vhat in June from the ''f"ec.brds of· the prev ious-months.. ...Building .pe ;rynij;~ -. of .. ~? . ~i.ties reporting to the University of T~xas. Bureau of ~usiness Resear ch droppe'Cl from $10 ,"84-0iOOO in May to $9 ~ ·076, -000 in Jurie:;· making· a total of $62 296 ooo f or the first six months. of the year< Comparable figures for these' TEXAS· BUSINESS REVIEW o.ities ·are not available, but an estimate shoWs that pennits in 1927 are considerably ahead of any former yeo.r. Most of· the decrease in June is accounted for by the drop of almost $2,000,000 in San Antonio. Building Penni ts First June , 1921 May, 1927 Half , . 1927 No . Amount · No . Amount · A.'11ount* 6:3 $146 ,150 60 $372 ' 925 $1 ;724 A.maril lo 96 690 ,040 464 ,468 . ·5 '704' Austin 47 267 ,071 46. 96 ,194 550 Be c.umont Brownsville 181 27 447 ,712 215,000 . 192 18 340 ,664 210 ,000 -3,196 7001 Brownwood 23 178,950 31 245 ,800 1 ,212 ·Cis.co l G 94 ,150 14 31.,380. 194 . Coqus Ch risti ..53 428 ,075 69 644 ,065 1,68.7 Co'rsican::t 9 27,025 9 35,500 26.13 . . Da lla s 260 1 ,_4:66,225 2·16 703 ,423. 4,802 D~H·· Rio · ·22 . 25 ,890 1.2 . -21,963 102 EI Pn.so 55 93 ,986 61 63 ,515 409 Fqrt 1!fo rth 363 1 ,206 ,487 289 1,262,133 7 ,311 Ga:lve ston, , 206 202,161 247 199 ,994 ~ ,029. Houston 519 2,235,981 477 :1 ,993 ,332 ·15,857 Laredo 31 103 ,000 22 340 ,000 807 ' Lubbock 22 81,055 15 40 ,225 535 McAllen 64 ,890 67 ,480 1,381 Ma r shall 55 43,997 59 26 ,848 . 208 Port Arthur 118 124 ,646 109 132 ,240 730 Pa'.fis 14,575 14 ,440 234 Saii Angelo 51 231 ,636 102 . 218 ;939 1~352 San. Antonio 269 1,067 ,695 262 2 ,935 ,470 1;054 Sherman 17,425 12 ,450 269 Tyrer 91 ,020 63 ,128 270 Waco 25 --11 1 ,190 18 '41,085 632 " Wichita Falls 78 282 ,660 69 166 ,065 2 ,090 ').'ota} $9 ,875, 692 ~10 , 839 ,736 $62 ,296 * In Thousands 1. Fo.r t hreB months :P>err..i ts were ago.in hiGhe.r ~n the larger cities; Dallas, Fort Worth, and Sa.n :Antonio sh"<:w;'3.d ·above a million dol l~us , and l-Iou0ton reported over $2,000,000. In th0 six months, Houston is far in the lead with nearly $16 ,ooo·,oob in permits , fc;>llovrnd by .Fcrt 17otth and Sn.n Antonio with over $7,000,000 en.ch. Dallas reports -$4,800,000, Final figures for. construction costs for Juno declined over a point and a.re now about 3% ·below the levo l of n. yearn.go, according to S. W. Straus and Company. Building mn.teri(ll prices based on 1913 a.s equ""l to 100 decreased from 165.6 in May to 164a3...in -June, coraparod to 171.2 for the same month last ;,r:ntr. Prices of building mate rial n. re relatively high in comparison with tho gomral wholesale price of o.11 commoJ.ities, which stood at 143. 7 for last month.· · · · Building pe rmits ovGr th8 entire cou:i.try fo ll off slightly in Juno, TEXAS BUSINESS REVIEW · , '. · from May, but the contracts 1et were the highe,st for any month on record, according to the F. W. Dodge Corporation. Lumber The lumber industry has experienced some unfavorable influences during the past few months which have not been altogethe:r encouraging. Among these dampening factors may be mentioned the substitutionsfor lum­ber in industry and the fear of a bui~ding slump which was expected soon after the turn of tho year. As the year advances, no signs of a building curtailment have materialized, and the new 'uses for wood together with normal consumption have maintained tl~e lumber industry about on the same level as that of 11. year ago. The June report of the National Lumber As-. sociation says that 11 in general~ reported lumber p;roduction in thE'. year ; to date has becm approximately the same as ' or slightly below what it:was; last year in the South. Despite· an t-i.verage of 10 fw1er mills repott:l.tig ~ weekly to the Southern Pine Associati'or. so far ih 1927 than"' in 1926·~ · ! production shows a decline of about 6. 7%~" The Lumber Situut ioh* : ' ~.; ... ( in M Feet ) ' · · ' '. ..June , . 1927 May, 1927­Preliminary report of 104 . ' .': '' ' Mills in the Southwest Aver age product ion per mill 2,690 2,258 ·Ave rage shipmnnts per mill 2,654 2,349 Avernge unfiU:ed order$, per week 1,935 2,134 Final report of 34 Texas mills Production 70,311 72,85G Shipments . . 60,981 74 , 325 Stocks on harid on June 30 208 ,:578 176,459 '·. · . ' *From t he Southern Pine.Associatiort· Not e-Bef'_;innincs ·viith this issuo , the .HEVIEW will contain com­ parative monthly fi urds for 34 T,n:as sa'Vv :mills. These fi­ gurt:s u.re possiblo through the cou·r-t-esy of t ho ·S-outhe rn Pine Associ ation . Producti on of 104 mills reporting 'to th~ Squthe rn Pine .Associa­i:iion for the fiv~1 W\rnks i3nding .,July 1 runduntod ·to 2 ;690 ,000 feet against 2 ,258 ,000 f eet for the four woeks in May. Shipinents amounted to · 2,654,000 foot, cornpo.red to 2,349,000foet in )1?-Y "f thisyoo.r. Average wocJkly unfilled orders fell from 2, ~'34.1,QOO. _fleet ~n. l\1&y to 1,935 ,000 foot in June. · · · Coment ·. ' Production of cement in Texas ."1i1ls conHnudd at record rate ii-{ June. During tho month, 469,000 barrols were produced, compn.red to . 462,000 barrels in May, and 416,000 barrels .in June last year. This is ~ . .. . . .. .{ ~ . TEXAS BUSINEs's REVIEW tho first year since 1.922 that the .output h.aa recorded an increase from May.to June,: indicat,ing a stea.dy'demand.J.'or the product. During the first half of the year, 2,644,000 barrels were manu­factured, against 2 ,456 ,000 P\lrrels fo.r. the same period in 1926, an in­crease of 7. 7'fo. Shipmenti; . a.nioonted to ·'454 ,000 barrels, the same as in June la.st year, but considerably ~aller than the 573,000 barrels loaded · in May. · Stocks on hand show a slight increase of 16,000 ba rrels over the May· r·igu.re and a re smaller by 31% than stocks at this time. last year. Cement Statistics~ . ,., _. June May • ! Jun~ First Half 192.7 1927 :· . 1921 1927 1926 . :Pr6duction, in · .. thousands cir barreis 469 462 216 2 , 644 2 ,456 Shipments , in ·:thousands '' of barrels 454 573 " 454 stocks, in thousands of barrels 330 314 '4.78 *From 'the 'Department of Commerce Petroleuirt The petroleum industry is slowly yielding to the low prices of crude. Although production continue.s at a. very high rate, slowing up moveme·ntS are il:i evidence in most fields and a more hopeful attitude is shown by the larger producers. Curtailment of ope rations during the month was ·general throughout the country, but the slump in field activi­ty in. the State was esp0cially severe. Stocks of crude in the th:ree states of Texas, Louisiana, and Arkansas on, J une 1 were e::;timated at about 100,000,0DO, as compared with an. estimate of ·9o,ooo,ooo barrels on Mb.y 1. ' The Pet.rol~um Situation* In Thousands of Barrel~ ·Jun~-May June · First Half 1927 1927 1926 1927, 1926 Production 20,609. 21,300 12,900 124, 510 72,180 Daily Average Pro­duction ' 683 687 ... We ll..s. c.ompleted 556 5'73· Producers 304 361 *From the OIL 'WEEKLY .. Prices of crude recorded ve ry few changes during the month and the market tone was considerably firmer than in MfW. G:tsolino prices were marked up a fraction of a cent. in some localities in lino with si­ -milar advances during the previous month •.Production amounted to 20,609 ,000 barrels of crude oil n:~o.inst 12 ,900,000 ba.rrors in June , 1926. New wells complrJted durinr, the month a.mounted to S56, of which 304 were produc0rs, compared to 573 in May, 361 of which wer8 producers. · Daily avGra :·o prcduction fGll f!'(lm 687 ,000 barrels in Msy to 683,000 barrels in Ju;1e. ·· Cotton _Consumed Cotton textile mills ih June experienced one of .the most active months in the .histo1·y 'of the industry in this State. All of the 17 mills except ;) reporting to th_e University -of Texas Bureau of Business Research show l&.rge increases over IV:ay in the amount of cotton used. Practir,alJ.y al 1 of tho J.55 ,000 spindles were active during .the .month, and sevr~ral of the mills we.rG·r-\inning ni·ght ·shift's~ , . However, cottol). goods ~;r:.lc:.:. foll off nearly 50/~ and unfilled orders dropped materialJy so tha.t the industry over the 11.CXt fevr ;months is quite likely to sl~w up son,evrhat from the pr,esent r~~te, At;; t}).e present rate of productiqn, unfilled orders arr~ eq~al to about two months ~utput. ' Durin~~ t~w month, the~ 17 mills l~'TOrting; manufactured 7 ,264 ,opo yards of cloth und rot:mn 484 ,000 .poundf' of yarn, ·compared to 6'.,807 ,oop yarns of cloth 1..;.:nd G51 ,000 pounds of yr.rn in May. .Cotton c;oods sale~ foll off from 21,000,000 yards .in May to 15,000,000 yards in June an4 yarn salos went up from 159,000 pound:" to ;378,000 pounds. In the first h::LH'.... e·f---th'0-yeu:r thcis'e' compa.nf~~ -~;~;fa~·tured 40,734 bales of cotton into 31,564,000 yards of cloth and 2,988,000 pounds of yc.i.rn. The 17 mills reprose~t.. about 80% of the industry in Texas . . , : .· ,.. . ~ Texa s Co~t:~n·:'_lv!~ntifttct~~e~n ;. Hep~rts :• i . ' ' t~r,st H~i,r>1; _: ~~~!~n;~e~o~~~~s~sed.. , .. _,.;J:~n.e/;,~~!~ '_ ·,.·:M,~r. ' s-~'~;~· . 4p, 73.4 . Ya rds of clot h produced: ·:.;.::1',2&4;606 ' 6_.~ .5:SJ7,qOO :3 ~-' 56.{l ,,000 .. Pounds of yam p r:oclµeed ,. '.. 4S-9 ~cJOO: ·" .551',QOO ... . 2, 9,8.8,,Q,00> Salos of cotton D'Oods rd.s :• ,.,. :.·.: ' · t.) .. c' · · ·.•yd.14,921,ooo__.21 ~ i o4 ,.ooo ....... --·49·;·65'6 ~ oon · ·• · . Sales of yarn, pouna:s· :. -·-·. · ·Y.y~ ,qqo .. l .5.9·1000 1,253 ,ooo Unfilled Orders, Cloth , Yards , 49,360,000 Unfilled orders , Yarni Pounds .g.ao ,ooo·. _990 ,000 Act iv8 Spindles '·: 155 ~000 . Spindle Hours 87,848,000 ~ . ..... . Spinners' Mar~~in Spinnors' Mar~in, as d.Gter.m~n.0.d by.the University of Texas ..Bureau of Business Research ~unt up shnrply in Jun9. From a ~igh point of 194 durin:c: laE;~ Octol:J:::r, thu ratio~has hc0n stoadily dovrnvm.rd at the rate of· 3 or 4 points a r.:.onth, until May. wh;;t1· 0. low point for tl:is movement was reached. Stanclint; at 165, or only . 5 i.'JOints abovo norin'.:11 .in M::ty, , the ratio vrcmt up 7 points to 172 j n Junu. 'T!·L~ ., dvancs i-r:1.s due to the .r.ise .in yarn priceE:, al thouch cotton also was hit;h~1r. Amuricn.n middl inr, cotton in Livorpool averaged 9.01-d in June against 8.71-d in May, and American 32-t\viSt yarn in Manchester averaged 15~50-d con:pared to 14.35-d in ~:!ay. Cotton prices have trended upWa.r«f since last fall at a greater rate than have yarn prices, thefoby causing the spinners 1 marp;in to fall. The situation W3.s reversed in June but it seems c;uita unlikely that the ratio will go mucL higher. A:::; the ratio increases, der.'.and for cotton is strengthened and prices are likely to advance. Spi~r:i~r~ ' ·i-Aargin .1927 1926 1925 January 174.;,.. 150 174 February . 170 160 168 Ma r ch .173 ,156 165 April '168 155 166 ~Jay 165 153 163 June 172 157 152 July 158 147 A r,ust . 160 153 Sopt omber ·166 153 October . . ~ 194 157 I ove;nber 187 163 December 186 162 ..._,___,___ ---_______, Spinners' margin refers .tc the r :?..tio betvmen the price of American 32-twist cot tor. yaril. i~--I·tan~·he s t0r and the Liverpool price of middling .American cottor:. Normally·, t!18 price of 32-twist should be 60% above the spot prir:e of Americru) middling Cf"tton. If prices chang'3 so that th9 ·r atio increases, the spinners' mar­gin of profit is increased and thereby the dema.'1d for cotton is s t rengthened. On the 'oth•Jr hand, when the rn.ti o decreases, the spinners' margin is also relatively decreased, and the!! t!10 demand for cotton falls. AgricultUre_ 'fhe aa;ricuJtural situation in Texas ent8rs the second half of the year rath•3r f:wor~i.bly. Aft er a -partial sGtback in 1.1'.l.y, conditions changed for the b cttr:.1 r in Juno c.nd ::i.an~.' 0Ł' the unfavorable factors· were overcor.1e. Hew:ficial n:..i:'.'ls foll genc:n'.lly o·rnr the 3tP..te end ended the drouth '.·rhid1 ':ras ch00king·the g;rovrth of ic;rops. Vlhile it is true that the moiflture carr:J r.::1. th·:~ r late ::!.rid thr'.t ·erops suff0red rn.aterially, yet improveraent ha::; he•J!l rapid 't!.rid the f c..r'mihr; situutiori looks much brig:hter now than it did at the beginning of Juno. Thrc:is!·;ing of whec.t and ·Oats has mo.d'G good progress so far this year. In some secti0ns the yield is reported as rather light and kernels are small b0cause of dry ••10a~~d-r ·