The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
r"-"'~ -.. . .---.. . .---.. . .-.-.. .------.. ---.. . . . . . . . .-.. .· . ·.. . . ·.·.. · . ·.. . . . . . . . ·.. . . . . . . . ·.. . __·- -.. . .1 . . I MONTHLY REVIEW OF BUSINESS AND I INDUSTRIAL CONDITIONS j IN THE I ELEVENTH FEDERAL RESERVE DISTRICT I Volume 6 w. F RAMSEY, ~,~~:~~R~~~~~~VE BAN~~: C~~l~L~.~n<F~~1 ~.~. A~". Dallas. Texas. November 15. 1921 No. 10 GENERAL SUMMARY Steady if not normal activity in most lines of industry and business is reflected in the October reports of our correspondents throughout the Eleventh District. The lively movement in wholesale trade which began so auspiciously in September as a result of the impressive rise in the cotton market was well sustained throughout October, while trade at retail was generally reported as even more buoyant than in the opening month of the fall season. Early in November, however, this new current of purchasing and liquidating power, which flowed strongly through the first two months of the autumn, encountered a serious check when the unexpectedly large total shown by the Census Bureau's ginning report caused the price of cotton to undergo the severest decline of the year. Other factors, including the continuance of unseasonably warm weather, the tightness of the financial situation in localities where the cotton crop was a failure, and the still serious unemployment situation, have added somewhat to the depressing effect of the break in cotton values and the generally weak state of the cattle market. These unfavorable developments are in some measure responsible for the unusually large number of failures, both in banking and mercantile institutions, which have been reported in this district in recent weeks. Despite these setbacks, however, evidence is by no means lacking as to the present and potential recu- perative powers of the district's chief industry, agriculture. In many sections where a fair yield of cotton and other crops has been realized debts are being wiped out and bank deposits are accumulating at a healthy rate. That the buying power of the farmers is by no means destroyed and is still amenable to the attractions of price reductions is strikingly shown by the fact that a substantial price reduction made in October by our reporting firms in the farm implement trade was followed by a 100 per cent increase in their sales for that month, an increase which, though due in part to other causes, was largely a direct result of the long-expected cut in implement prices. The livestock industry is apparently making every effort to take advantage of the financial relief offered through the government's indirect loan agencies established in the district during the past month. While only $2,800,000 of these loans have been made in this district so far, a large and growing volume of applications indicates that substantial relief will in due time be received by the livestock growers of the Southwest. That such aid comes to them at a highly opportune time is convincingly shown by reports from our correspondents to the effect that to the financial and industrial problems of the Southwestern livestock grower is now added the threat of another drouth, as many ranges in Texas and New Mexico are beginning to suffer from a protracted period of rainless weather. CROP CONDITIONS October and the first half of November were marked by the continuance of a period of dry sunshiny weather which began in this district several months ago and which has created an unusual crop situation. Precipitation in the vicinity of Dallas during the past four months has amounted to only This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) 2 MONTHLY REVIEW OF BUSINESS AND INDUSTRIAL CONDITIONS 2.4 inches, being the lightest rainf~ll for this period during the past forty years. Elsewhere light rains have occasionally visited the district, but on the whole rains are much needed for the proper cultivation and growth of winter grain and truck crops. In the South Plains section of West Texas the continued dry weather has been favorable to the harvesting of the cotton crop, and in many instances fields have been picked clean during the first picking. In fact, very little cotton remains to be picked in any part of the district, and it is estimated that harvesting operations will be entirely completed between December 1st and 15th. In North and Northwest Texas the weather has been too dry for plowing and seeding wheat, and a considerable amount of the usual wheat acreage has not yet been sown. Early sown wheat is generally in poor condition on account of the drouth. The dry weather during the past month has also reduced the district's yield of rice and sweet potatoes, the reduction in the sweet potato crop being estimated at 1,000,000 bushels. Harvesting of corn has been accelerated during the past thirty days, due to an augmented supply of harvest labor. Yields have been generally good, particularly in New Mexico, where the largest crop ever grown in that State has been produced this year. Reports from Louisiana are to the effect that the dry weather which has prevailed during the past three months has seriously retarded the growth of sugar cane, resulting in a marked deterioration of that crop. The movement of cotton from the port of Galveston last month reached a total of 421,245 bales, an increase of 67 per cent over the previous month and an increase of 13 per cent over October, 1920. There was a sharp increase in the export movement during the last half of the month, when 290,000 bales were cleared, as compared with only 131,000 bales during the first fifteen days. Cotton Exports Increase. Receipts at this port since August 1st passed the million mark in October, the total for the season at the end of the month being 1,020,940 bales, which compares with last season's total of 874,824 bales. Exports from all United States ports during the past three months have totaled 1,716,761 bale£, as against a total of only 1,055,772 bales for the corresponding period of last year. COTTON MOVEMENTS THROUGH THE PORT OF GALVESTON O.'t.oh<!:r. 1920 0.1;0""", 1921 Gross Receipts ...... Exports -----------------Stocks. Oct. 31st.... 534,820 1,020,940 372,466 862,753 .-.... ...- 400,874 508,717 421,245 .- - lAst Season This Season 874,824 639,555 344,555 GALVESTON STOCK STATEMENT _--- For Great Britain ... .......... ----........ For France Far other fOl'eign porta ....................... For co twise ports ._.......... _.... _....... In compresses ... _.... _.. _.......... _....... _.... ........... o-....... Total ~. _ __ • _ _ .. .. o- _ _ _ • • • • • • • •• • • • • • __ ~ ~ .... _ ••• _ .. ......... __ ......... _ ••• October 31. October 31. 1920 192.1 17,6'18 10,006 50,'740 10,000 312,465 28,150 20,177 55,740 4,000 236,488 400,874 344 555 SEASON'S RECEIPTS, EXPORTS AND STOCKS AT ALL UNITED STATES PORTS Receipts since Aug. 1, 1921.. .. Exports: Great Britain ......... . France .......... __ ......... . Continent _._ ... _ ........ . Japan-China ........... . Total foreign ports Stocks at all U.S. ports Oct. 31 This Season 1 2,212,699 420,966 267,019 692,625 336,151 1,716,761 1,537,825 Last Season 1,617,532 440,678 179,328 429,616 6,150 1,055,772 1110;898 Grain Movements. A sharp shrinkage in receipts of wheat at the district's principal centers was a noteworthy feature of grain movements during October. At the port of Galveston October exports of wheat amounted to only 2,200,000 bushels, which compares with 7,700,000 in September and 6,000,000 in October, 1920. The following table shows receipts of principal grains at the cities of Dallas, Fort Worth, Wichita Falls, Waco, and Galveston. COMPARATIVE GRAIN RECEIPTS Wheat .. _ _ ..... .......................................... . Corn ....................................................... . Oats ........................ _ .......................... _ . ... O"tol)ur (ean) 3,087 199 201 September (c ..... ) 8,022 99 267 LIVESTOCK The prospects for an improvement in the financial condition of the livestock industry have been materially enhanced during the past thirty days by the functioning of the War Finance Corporation's Livestock Loan Agency at Fort Worth, the establishment of a similar agency at Albuquerque, New Mexico, and the organization of a large corporation with headquarters at Fort Worth, for the purpose of mak- J MONTHLY REVIEW OF BUSINESS AND INDUSTRIAL CONDITIONS ing direct loans on livestock with funds secured from the War Finance Corporation. The better feeling engendered among cattlemen by the launching of these organizations has to some extent dissipated the pessimistic view of the future taken by many breeders of livestock in this district as a result of the depressed condition of the livestock market and the reappearance of drouth in many sections of the range country. Despite the extremely dry weather of the past several months, the condition of livestock and ranges in Texas is still fair to good, and in Arizona it is excellent. Only in the extreme edge of Southwest Texas has the drouth seriously affected the condition of livestock. There is, however, a growing shortage of both grass and stock water in North and Northwest Texas, which threatens to become serious unless general rains occur at an early date. The record - breaking number of calves marketed in October, and the strength displayed by calf values were easily the outstanding features of the past month. In the Fort Worth market 66,000 calves were handled during the month, the largest number appearing at that market in October during the past nineteen years. Notwithstanding this fact, however, the demand was both broad and well sustained, and carried the price steadily upward during the month, which ended with values approximately $1.50 higher than at the opening. Oustide buying was in part responsible for the ready manner in which all offerings were absorbed, local packers taking only their usual quota. Movements and Prices. Advances from 25 to 50 cents were also recorded in the hog and sheep markets during the month. Stocker cattle were in stronger demand than for many months past, all offerings of a desirable kind being readily taken at satisfactory prices. There was only a moderate demand for beef steers and at the close of the month buyers had forced prices to a basis ranging from 25 to 50 cents lower than at the opening of the month. FORT WORTH LIVE STOCK RECEIPTS October 1921 Sept. 1MI Lot!>! or Cltin Cattle .. ,.. 64,027 50,861 G 13,166 Calves .66,635 69,943 L 3,!i0 Hogs _ ,.26,728 28,71 L 1,9 6 Sheep _____ ...32,379 17,032 G 15,847 Oct oJx,r 1920 Loss o r Gai n 63,430 31,657 27,005 15.109 G 597 G 34,978 L 277 G 17,270 COMPARATIVE TOP LIVESTOCK PRICES October, 1921 Beef steers ........................... . Stocker steers ....................... . Butcher cows ............. ......... .. Stocker cows ........................ .. Calves ................................... . Hogs ....................................... . Sheep ..................................... . Lambs .................. ................. . September, 1921 $6.50 5.00 4.40 3.50 7.25 8.75 5.00 8.25 $6.60 5.25 4.50 3.25 7..25 9.25 5.00 7.85 October, 1920 $10.00 8.65 9.00 6.50 10.75 15.35 8.50 12.25 WHOLESALE TRADE. Continued improvement characterized the wholesale trade situation during the month of October. A better demand was in evidence for groceries, furniture, hardware, farm implements, and dry goods. Drugs remained practically on a par with the demand during the last two months. The very slight increase shown in dry goods sales simply means that the peak of fall distribution has been reached, and does not denote any unfavorable development in this line of trade. Sales in all lines are now showing a better comparison with the previous year, not only because of the upward trend of this year's business, but also because of the general slump in wholesale trade which occurred just at this period a year ago. Country trade in all lines has shown a lack of activity, but a marked improvement has been noticeable in city trade. Buying for future delivery has not as yet appeared as a feature of the current season; it being evident that the retailers are determined to cling to a conservative buying policy pending a clearer view of the future. Collections, while they can not be considered good, have been satisfactory in most lines, and fall accounts, which have been paid earlier than usual, were in larger volume than was expected at the beginning of the season. Dry Goods. The net sales of twelve dry goods firms registered a one per cent increase over last month, and were 13.7 per cent larger than during October, 1920. However, it should be remembered that it was during October, 1920, that the big slump first hit the wholesale lines of distribution in this district, and dry goods was among the first to suffer from the depression. Concurrently with the slump in business during the last quarter of 1920 came the revision of wholesale dry goods prices put into effect by both manufacturers and jobbers. This period also witnessed the closing of many of the textile factories, resulting in widespread unemployment in the rank and file of the textile workers. Although wholesale distribution appears to be some- 4 MONTHLY REVIEW OF BUSINESS AND INDUSTRIAL CONDITIONS what dull at this period, it is holding up well considering present conditions, and many trade factors seem to be more'settled, even though buying continues cautiously and very conservatively. August and September of this year witnessed a large seasonal movement of goods, and the smallness of the October increase mer~ly reflects that the peak of the season's buying has been reached. Prices have remained practically steady during October, with a slight tendency downward. Reports show that they are more nearly approximating those of October, 1920, when the price revisions first went into effect. Fourteen grocery firms report an increase of 3.4 per cent in October net sales as compared with the previous month, this being the fourth consecutive m.onth for which such an increase has been shown. However, reports indicate that the country trade has been very spotted as a result of the economic conditions prevailing in the territories which each firm serves. Firms serving sections which have been hard hit by a small cotton yield have suffered a decrease in sales, while those serving sections which produced fairly good crops and- sections where the oil activity has been renewed or where new fields are booming, have enjoyed a good business, and in some instances their sales are ranging above those of last year. The falling off in demand of country trade may be partly attributed to the curtailment of consumption by farm laborers, who are now drifting back to the cities as they complete the harvesting of the cotton crop, and partly to the extended production period of fall gardens and truck patches resulting from continued warm weather. The demand for syrup, which is generally heavier during hard times, is lacking, due partly to the fact that during the past year there has been considerably more home-grown syrup to supply country needs. City sales of groceries have remained about constant, the demand showing very little variation from the previous month. Retailers continued to buy on a hand-to-mouth basis, and there is but little indication of any future buying. Reports state that the lack of demand for some items is due to a great extent to the holding up of orders in the expectation of lower prices. Although there have been many fluctuations in prices, as a whole they have developed steady tendencies and increases are noticeable in items for which the demand is heavy. Groceries. which in turn has generated more confidence in the market situation. A decrease of .6 per cent in the net sales of nine wholesale drug firms of this district was registered when compared with the previous month, and 27.8 per cent as compared with the same month a year ago. Although sales in dollar values have not reached those of a year ago, some firms state that the volume of sales is now equaling those of the prewar period, and in some cases running ahead. Future buying may be characterized as being almost at a standstill, even on staple goods, retailers being hesitant about placing orders for anything except their immediate needs. Firms which handle Christmas goods report that October orders were only a small percentage of normal purchases, which indicates that the retailer is holding off his buying in order to dispose of his holdover goods from last year, and intends to buy new goods only as the demand warrants such action. It has developed that the present trend of the demand is governed largely by the size of the community, the demand being stronger in large cities than in the smaller places where crop conditions have proved a big factor in the trade. A more optimistic feeling is now present among the retailers as the outlook promises a slow and gradual improvement. Drugs. A decided improvement in the wholesale hardware trade during October was evidenced by an increase of 21.9 per cent over last month in the net sales of ten reporting firms, which were only 25.4 per cent less than October, 1920. City sales have shown a heavy seasonal increase, but the country demand continues quiet. The inquiry for small building hardware and auto accessories was especially strong. Dealers report that city collections have been fair, but collections from farming communities have been very poor. Hardware. Farm Implements. The October net sales of reporting fal'm implement firms, although 49 per cent less than the total for the corresponding month last year, showed an increase of 100 per cent over September. This large increase is attributable to the seasonal demand for implements needed for fall and winter plowing and seeding, In most sections collections have been very good the rise in the price of cotton, and the general reducand have come in earlier than was expected, due to tion in prices which was put into effect during Septhe early crop movement. Throughout all sections a tember and the early part of October. The price rebetter feeling has developed among the retailers, ductions (which averaged about 20 per cent) had two 5 MONTHLY REVIEW OF BUSINESS AND INDUSTRIAL CONDITIONS effects: first, to place implement prices more nearly on a parity with prices of farm products, and, second, to create a feeling that prices had reached a point of stability for some months to come. Although the buying demand is still weak, the outlook is now brighter than it has been for some months past. CONDITION OF WHOLESALE TRADE DURING OCTOBER, 1921 Percentage of Increase or Decrease in Groceries ......................................... .. Dry Goods ....................................... .. Farm Implements ........................... .. Hardware ........................................... Drugs ............................................... .. Furniture ........ _. __ .......................... NEl' SALES Ju ly llIt to NET SALES dato compor d STOCKS PRICES October. 1921. compared with with 8a OU! October. 1921. compared with October. 1921. compared with 1)Criod 1920 Sept .. 1921 Oct .• 1920 Sept.• 1921 Oct., 19110 Sept .• 1921 Oct•• 1920 - 15.5 +13.7 -49.4 - 26.4 -27.8 + 5.1 + 3.4 + 1.0 +100.7 + 21.9 .6 + 25.8 RETAIL TRADE A further seasonal expansion of trade in retail channels, which began in September with the opening of the fall season, was noted in the October sales of twenty department stores which reflect an increase of 25.4 per cent over the sales of the previous month. While sales for this month were 16.7 per cent less than the same month a year ago, the volume of goods moved this year compares favorably with that of last year in view of the reductions which have occurred in prices during 1921. The fall business has been retarded somewhat, however, by the unseasonable weather which has prevailed throughout this district. The public continues to scan values very closely and to demand goods which represent the money invested. The buying demand is still confined to actual necessities. Stocks on hand at the close of October were practically equal in volume to those on hand at the close of the previous month, but were 25 per cent less in value than those held at the close of the same month of 1920. October inventories indicate that retailers have now increased their stocks to the extent that they can depend upon replacement orders and those outstanding for future delivery to take care of the demand. The ratio of stocks to sales for the four months ending October 31st was 511 per cent, which compares with a ratio of 559 per cent at the close of September. The continued decrease in this ratio for the past two months represents the large seasonal increase in business which the department stores have enjoyed, despite the dullness prevailing in many other channels of distribution. The percentage of outstanding orders at the close of October was 6.1 per cent as compared to 7.8 per cent at the close of September and 8.7 per cent at -25.9 -34.3 -70.3 -36.6 -28.8 -16.4 -30.0 -48.8 +8.8 -1.3 -16.2 -21.2 - 2.3 + .6 ..- .... ....... ._- -....... -29.7 + 2.5 -17.5 -16.2 None .8 -36.0 -30.6 - 2.7 -18.7 the close of August, which shows that buyers have been gradually limiting future commitments. The ratio of October collections stood at 38.9, being a very slight increase over the September ratio of 37.9. BUSINESS OF DEPARTMENT STORES Net Sales- Increase or Decrease October, 1921, compared with October, 1920 ....................................................................-16.7% October, 1921, compared with September, 1921 .................................................................... +25.4% Net SalesJuly 1st to date compared with same period last year ..............................................................-21.1 % Stocks at end of October, 1921Compared with October, 1920..........................-25.0% Compared with September, 1921.. .................. + .3% Ratio of stocks to sales ............................................ 511.3% Ratio of outstanding orders to last year's purchases .................................................................. 6.1 % Ratio of October collections to Accounts Re· ceivable, due and outstanding October 1, 1921 .................................................................... 38.9% FINANCIAL. The volume of public spending as represented by individual debits to depositors' accounts for the last week in October showed a gain of approximately 4 per cent over the last week in September. Bank clearings in the larger cities of the district for the month of October showed a proportionate increase of 3.2 per cent over clearings in same cities during September. These figures reflect the increase in volume of trade which was evident during the month. MONTHLY REVIEW OF BUSINESS AND INDUSTRIAL CONDITIONS 6 CHARGES TO DEPOSITORS' ACCOUNTS WEEK Th'UlNG October 26, 1921 Albuquerque .............................................................................................. Austin ........................................................................................................ Beaumont ............................................. ..................................................... Dallas ... __ ... _._ ............. _ ... _..... _..... _ ..... _ ........_..... _.................... __ .... EI Paso ................................................ __ ..._. __ ._.. _............................... Fort Worth .. _...................................... _................................................... Houston ................................................._....... _...... ___ ........................ _..... San Antonio .. _.................... _............. __ .•.. _...... __ ........................ _..... Shreveport ..'........ ....... __ ..................... _._ ..... _........ ..._......._ ....... _ .... Texarkana, Texas ..................... _........... _.... _ ...._.................................. Tuscan .......... _._ ..~.......................................... ..... .................... .. ...... ... Waco .................................................... ...... _ ........_ ..... _ ......... _............ $ September 28, 1921 1,771 ,000 2,757,000 3,111 ,000 39,202,000 7,044,000 28,842 ,000 2 ,550,000 6,123,000 7,103,000 1,473,000 1,696,000 4,262,000 $ 1,401,000 3,128,000 2,361,000 39,206,000 6,494,000 23,210,000 30,230,000 6,336,000 6,957,000 1,268,000 1,379 000 5,085,000 October 27, 1920 $ 1,688,000 4,275,000 4,071,000 48,061,000 9,841,000 28,461,000 45,032,000 8,018,000 7,710,000 1,878,000 1,485,000 4,977,000 Totals, Eleventh DistricL. ..................._............................ __ ._ $ 131,934,000 $ 127,055,000 $ 165,497,000 Totals all l'epo1-ting cities in U 11 j led ::>tates ..._ .... .....::..:....:~~I-._..:a:~I!,;:;427 ' 7 6 5:z..: ~ :.....:.:.::..: :. ;,: . :. ;, ... .. '7 :=,:..l.:.;::.: '0::.:0 0l..-_":':":";,2 =..4 ,7 2 6;.:,;:;.;;0..;;. $ $'7 :::8 ;::...:..;:..: ,0 0,--~9 '..;;.,;;.;2 ,;;.;;;..,1""",,,,, 0---, $", 30 ;;.:"31 0 0,,- BANK CLEARINGS Ina. or I nc. or Oct .• 1921 Sept., 1921 Austin .................. $ 7,186,858 $ 7,416,935 Beaumont.. ............ 4,039,274 4,346,699 Dallas ................... 137,064,289 116,826,952 EI Paso .................. 20,725,70(! 19,281,710 Fort Worth .......... 57,010,731 52,828,536 Galveston.............. 38,049,072 33,187,636 Houston ................. 110.834,457 120,757,820 28;261,495 28,335,951 San Antonio.......... 18,109340 16,443,965 Shreveport ............ 14,472,051 14,841,200 Waco ...................... Wichita Falls ....... 8,684,305 7,319,179 Totals ................. $439,883,527 $4261140,594 Since Jan. 1st, 1921 Si nce Jan. 1st. 10Z0 Oet.. 1920 - 3.1 + 7.6 +17 .3 + 7.5 + 7.9 -12.8 - 8.2 - 0.3 +10.1 - 2.5 +18.7 ,155, 63 6,217,9 1 1,378,552 .2 ,340,916 85,126,118 47,276,400 154,476,561 37,406,197 19,850,703 17,764,212 15,767,589 -11.9 -30.1 -24.4 -26.9 -33.0 -31.1 -28.3 -24.4 - 8.8 -18.5 -44.9 $ 3.2 $601 1761 1151 -26.9 $3,8621899,775 + October reports indicate that the accepting banks of this district created acceptances amounting to $3,691,580.74, showing a gain of $1,205,580.74 over the total amount outstanding on September 30th, which was $2,486,000.00. Of this amount $2,325,659.12 represented domestic shipments and storage of goods, while $1,365,921.62 was based on import and export transactions. The total amount of bankers' acceptances held by this bank on October 31st was $205,000, the increase during the month being from $70,000, the amount held on September 30th. All Acceptance Market. Dec. Dec. ° 59,329,077 45,107,792 1056070,692 219,599,219 509,062,150 321,948 ,503 9 9,605,974 296550,837 163,150,393 106,734,954 91,740,184 Inc. or .Dec. $ 70,938,603 64,273376 1,577,494,676 .288,55 ,962 852 963,299 323,249,767 1,250,200,049 357,321,065 215,049,977 140,166,421 201,254,463 -16.4 -29.8 -33.1 -23.9 -40.3 - 0.4 -20.8 -17.0 -24.1 -23.9 -54.4 $5.345.470.658 -27.7 acceptances held were executed but not endorsed by banks of this district. The condition reports of banks in reserve cities during October reflected the crop movement in the way of increases in deposits. Loans and investments of these banks showed an approximate decrease of $800,000, while deposits increased about $7,000,000. The ratio of loans to deposits showed the improvement in conditions by a decrease from 113 per cent on September 28th to 109 per cent on October 26th. Condition of Reserve City Banks. CONDITION STATISTICS OF MEMBER BANKS IN SELECTED CITIES Oct. 26. 102 1 Numbel' of reporting banks ........................................................ ___ ............... U. S. Securities owned ......................_..... __ ............................................. .. Loans secured by U. S. War Obligations... _...................... __ ...................... . All other loans and investments ........................ ......... __ ... _....._..................... . Net demand deposits ....................................... _ ..... _........................ _......... . Reserve with Federal Reserve Bank ............. __._....................................... .. Bills payable with Federal Reserve Bank.. .... ............................................... . Percentajre of loans to deposit.s.................... ... ........... ............................... .. 52 $ 39,198,000 6,822,000 200,422,000 189,989,000 21,655,000 22,579,000 109% Sept. 28. 1021 52 $ 41,194,000 6,534,000 199,531,000 182,808,000 20,116,000 22,736,000 113% Oct. 29, 1920 51 $ 50,080,000 8,247,000 238,624,000 224,172,000 24,539,000 50,476,000 110% MONTHLY REVIEW OF BUSINESS AND INDUSTRIAL CONDITIONS Operations of Federal Reserve Bank. During the month of October this bank reduced its indebtedness with other Federal reserve banks from $16,393,609.30 to $9,427,003.50, or about 42 per cent. A reduction amounting to $10,759,373.49 occurred in our loans to member banks, which on September 30th stood at $76,463,965.84 as compared with $65,704,592.35 on October 1st, distributed as follows: Rediscounts: on hand ........$4.2,932,982.17 With other F. R. Banks.. 9,427,003.50 Member banks' collateral notes ............................... . Open market purchases (Bankers' acceptances) .. 7 387.00 on September 30th, which represents a decrease of $1,854,111.00. Member banks' reserve deposits on October 31st stood at $40,618,411.03 as compared with $38,930,458.43 on September 30th, representing an increase for the month of $1,687,952.50. Effective November 4, 1921, the Federal Reserve Bank of Dallas reduced the discount rate on all classes of paper from 6 per cent to 5% per cent. In the following table is presented the "high," "low" and "customary" rates charged by commercial banks in the cities listed below for the thirty-day period ending November 15th. An increase in the customers' paper rates is noted at Fort Worth and San Antonio, and a decrease in this class of paper at Dallas. Discount Rates. $52,359,985.67 13,139,606.68 205,000.00 65,704,592.35 Federal reserve notes outstanding on October 31st totaled $39,660,276.00, as compared with $41,514,- OCTOBER DISCOUNT RATES Prime commercial paper: Customers' 30 to 90 days .............. Customers' 4 to 6 months Open market 30 to 90 days .......... Open market 4 to 6 months ............ Interbank loans ........ Collateral loans, demand .................... Collateral loans, 3 months ----- ........ _---. Collateral loans, 3 to 6 months .......... Cat.tle loans .............. Loans secured by warehouse receipts, Bs-L, etc. Loans secured by Government securities ..-... __ ................ Savings Accounts Dallas H L EI Paso San Houston Ft. Worth H Waco L C n n 8 7 8 8 7 8 Ant Oni O H --i.-c- C H L C H L C II L C n n 6 7 8 6 6 7 8 6 8 6 7 10 7 8 8 7 8 8 6 7 10 8 8 8 7 8 8 6 7 8 8 8 8 61 n . ... .... ..... .... ....- .. 8 8 8 8 7 6 6 7 61 8 8 8 7 8 7 ..... ..- ..... .. 7 6 6~ ..... 7 ..... ..... 6 .... 8 6 6 8 7 8 7 8 7 8 6 7 10 5~ 8 10 6 8 8 6 7 8 6 7 8 8 8 8 6 n 10 8 8 10 6 8 8 6 7 6 7 8 8 8 8 8 6 7 n n 10 10 8 8 8 9 10 10 6 8 8 8 8 7 6 7 7 7 8 9 6 6 n 7 8 8 8 8 8 8 8 7 n 10 8 8 8 7 8 8 7 7 8 ·6 n 8 7 8 8 6 8 10 6 8 .8 6 8 8 6 7 8 6 6i 8 6 8 Savings deposits of ninety-nine reporting banks of this district, which were practically $40,000,000 in January, 1920, showed a gradual increase since that • 0 • • month until a peak of $49,000,000 was reached in June, 1921. During July of this year a million-dollar decrease occurred, and only about $350,000 of this amount had been regained at the close of October. SAVINGS DEPOSITS 1921 January 31st ................................... ............................................................................................................. . $48,457,234 February 28th .................................... ~ .......... _........................................___..... .............. ....................... . 48,826,771 March 31st ........ ................... _... _.. . _............................ ._._ .................... _........ _ .................... _ ........ . 48,886,161 April 30th ............................................................... ........................ ............................... ................ ......... .. 48,556,344 48,982,967 49,030,040 July 31st ..... " .. .................... ..................................................................................... ..................................... . 47,853,160 August 31st ............ ......... .... ....... :.................... .......................................................................................... .. . 48,136,902 September 30th ..... ......................................... ................................................... .............. .......................... . 47,988,649 October 31st ..... . ....... __ . __ .._ ._ ... _ ._._........ ....................................................................................... .. 48,204,070 N ovember 30th ............................................................................................................................................. . .. ..................... .. December 31st .... ............. ......................... ...................................... ............................. ¥u: ~~~L::::·.·::::·::::::::.-:_ ::::::::::::::::.-::·:: : .-: .- -.-: :::::::::::::::::::::::::::::::::::::::::::::::::::::::.::::::::::::::::::::::::::::::::::::::: 1920 $39,900,797 41,789,891 43,013,255 43,811,405 44,939,669 45,510,016 45,479,494 46,748,755 47,558,643 47,433,360 47,883,901 48,373,804 8 MONTHLY REVIEW OF BUSINESS AND INDUSTRIAL CONDITIONS FAILURES. October failures numbered 109, involving liabilities to the amount of $2,455,126. This was a decrease of about $500,000 from the October, 1920, figure. The month's record was about equal to that of September, when 104 firms suspended owing $2,872,281. COMMERCIAL FAILURES 1920 1921 Number Number Liabilities January ................................._... _ ............................. _ ..................................... . February ...................................._ ..._............ _...... _............................._........._ ... March __ ... _.................. _.... _.......... _................_......................_ ................... _..... April ..........._.......... __ ................._.......... _..... _ .......................... _................... . May ....................... _.............. _ .... __ ................ _................ __ .___........._.......... . June ..... _............._._ ................._....................................................................... . July......... _............ _........................ _................ _............. _ .................................. . August ............. _................................................................. _.................... _ ..... .. September __ ........................__ ............_ .............. __................ _. _____ . October ................................. _.................................. _ .......................... _........... .. 155 137 98 98 92 105 114 137 104 109 $ 3,359,871 2,117,068 2,702583 2,905,847 1,851,774 Total Eleventh District ........................ _........................ _....................... .. 1,149 26,622,719 PETROLEUM. 2,588,7~~ 3,778,09 1,991,2 4 2,87.2,281 2,455,126 83 31 19 16 15 35 41 33 36 Liabilities $ 284,096 42 1,830,522 203,445 100,582 168,165 278,668 1,148,614 411,027 864,924 2,947,957 301 $8,238000 Oil Prices. The Eleventh District oil wells showed another decrease in production during the past month. The total output during October was 9,941,748 barrels, which represented a 20,282-barrel decrease from the September production. A proportionate decrease was registered in the Midcontinent field as a whole, including the States of Kansas and Oklahoma. Production in the North Louisiana field registered a gain of 264,359 barrels over the previous month, but this was more than offset by the decline in Texas fields. New completions in the Eleventh District numbered 192 wells, of which only 92 were producers. This compares with 171 completions, including 116 producers, during the month of September. The revival of the practice of paying premiums was followed by another sharp advance in the prices of all grades of crude oil. In the Louisiana fields a fiftycent rise per barrel was posted. In the Texas fields the rise ranged from fifteen cents to fifty cents per barrel. Crude oil in the Central West Texas field is now bringing $2.25 per barrel at the well, and the demand for this oil by the pipe line companies and crude oil buyers has been sufficient for the buyer to pay premiums on his purchases. These prices mean that the field is again proving attractive and operators are now attempting to operate old wells which were abandoned during the period of low prices. With the fifty-cent boost in price at the North Texas fields there has been a general resumption of drilling in that section, and a period of sustained activity in all Southwestern fields seems to be assured. OlL PRODUCTION Total Odober DAlI), Ava:. September Total lnereue or Decrease Dall)' Avrz. Total DailY Ava:. Field North Texas ...._ ... _............... _........ _. ___ Central-West Texas ........................... _........ Texas Coastal ................................................ 2115,770 2,534,065 3,136,264 68,261 81,744 101,169 2,142,050 2,659,530 3,269,160 71402 88,651 10 ,972 Dec. 26,280 Dec. 125,466 Dec. 132896 Dec. 3,151 Dec. 6,907 Dec. 7,803 Totals, Texas ............................. __ ................ North Louisiana .. __............. _.. _... _... _ ....... 7,786,099 2,155,649 251,164 69,537 8,070,740 1,891,290 269,025 63,043 Dec• .284,641 Inc. 264,369 Dec. 17,861 Inc. 6,494 .- ... 9,941,748 320,701 9,962,030 332,068 Dec. 20282 Dec. 11,367 Totals, 11th Distrlct ............. •• • & . ~ • 9 MONT HLY REVIEW OF BUSINESS AND INDUSTRIAL CONDITIONS OCTOBER DRILLING RESULTS Completions Field Central-West Texas ......... _....... _... _ ... _........................... _.... _.......... _..... _..... . North Texas ... _._ ............... _........................ _ ... _. ___ ... ___........................_.. . Texas Coastal ___...... _. __ .. _..._................. __ ........ _.......... _...... _ ..... _.......•__ . Texas Wildcats ................... _.......................... _....... _ ....... _....... _ ................__ . Producers 57 56 27 20 Fallurco 14 22 19 12 InitW Production 43 34 8 8 9,741 5,385 37,915 166 Totals, Texas •............ _.... _.............. _... _....._..... _................................. _._........ 160 67~3 53207 North Louisiana ........................ - ..... - .......... --.-..... - ........ --.. - .......... - ........ --.1 _ _ __ 8_21 _ _ _ _ 2_5 7 _ _1_6_,5_3_5 October Totals , District .... _...............................................•.......................... _. Sept ember Totals, District...____ ... _........................ __.__ ._. ___ ...... _.. 192 171 92 116 1 100 55 69,742 75,930 CRUDE OIL PRICES Nov. 12. 1921 TEXAS Corsicana light .............................................. $1.20 Cor.sicana heavy ............................................ .85 Texas Coastal fields...................................... 1.25 All other Texas f ields .................................... 2.25 Mexia .................................................................75 Nov. 13. 1920 LOUISIANA (38 gra vity and above ) Nov. 12. 1921 Nov. 18. 1920 ~~~~r··::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::$~:~~ $3.50 1.75 3.00 3.50 $3.50 3.25 Bull Bayou ..................... ....... .......................... 1.90 De Soto ............................................................ 2.00 3.40 (Oil Statistics compiled by The Oil Weekly, Houston, Texas) LUMBER. The October production rate of Southern pine mills did not show any noticeable increase over the previous month. Shipments, however, have been moving in a larger volume and as a result mill stocks are being gradually depleted. The unfilled orders on hand at thirty-five reporting mills on October 28th amounted to about 43,000,000 feet as compared to 42,000,000 feet reported by thirty-two mills on September 30th. The volume of new orders during the month of September was ninety per cent of normal production, which was slightly greater than the September percentage. The price of the upper grades of lumber have remained about constant, but prices on lower grades have been slowly but steadily increasing. OCTOBER PINE MILL STATICTICS Number of reporting mills.............. 35 Average weekly produciton. ........ _...13,577,480 feet Average weekly shipment ............ _18,329,625 ieet Avel'8!,"El weekly ordro.·s received ._17 797,387 feet Unfilled orders October 28th ........ _43,035,244 feet Average weekly normal production ... __._ ... __ .. _.... _.......... __ ... _19,861,166 feet Production below hipment _.......... 4,752,145 ieet=26% Actual production below normal.. .. 6,283,686 feet=32 % Orders below normal roduction .... 2,063,779 feet=10 % BUILDING. According to the building permit statistics of nine cities there was a decrease of $2,083,026, or 36.7 per cent in total valuations of structures begun in October, as compared with the September record. However, the October permit valuation was 38.1 per cent greater than during the same month during 1920. There was an increase in the number of permits issued, which represents an increased activity in home building. BUILDING PERMITS October. 1021 No. Austin .......................................................................... Beaumont ................................................................. . Dallas ......................................................................... . El Paso ................................... ....... .......................... Fort Worth ............. .............. ............. ........................ Galveston ............................... ...... ......................... ..... Houston ..................................................................... . San Antonio ................................. ........................... . Shreveport .................................. " ........ ..................... . Total ..__ .. _........ _ ........ _... Valuation 73 $ 137,957 147 135,'767 314 1,081,277 160 405,8 3 249 471,292 498 241 383 646 11 ,293 640,185 402 247 365,905 September. 1021 No. Valuation 38 $ 68,614 754,875 131 360 1,383,408 165 603,500 511,207 196 163,423 486 697 1,135,169 243 6 9,335 282 471,437 2,736 .$8597942 2,598 5,680.968 Inc. or Dec. +101.1 - 82.0 - 21.8 - 32.7 - 7.8 + 47.7 - 859.6 + 8.6 - 22.4 - 36.7 Onlober. 19ZQ No. 12 307 213 85 135 342 383 223 174 1,874 Inc. or Dec. Valuation 10,845 141,218 790,68'7 189,605 502,201 38,216 443,025 232,520 256,250 +1,172.1 3.9 36.8 + 114.1 6.2 + 531.6 73.3 + 175.3 + 42.8 2,604567 + 3S.1 10 MONTHLY REVIEW OF BUSINESS AND INDUSTRIAL CONDITIONS Governor Harding's Reply to Criticisms Concerning the Contraction of Federal Reserve Currency. In an address delivered at Charlotte, N. C., on September 22, 1921, on the subject "What the Federal Reserve System Is, and What It Is Not," Governor W. P. G. Harding, of the Federal Reserve Board, completely exposed the fallacy of the theory that the recent general decline in prices was partially attributable to an arbitrary and preordained reduction of Federal Reserve notes in circulation. That part of his address relating to the note-issuing functions of reserve banks is reproduced below. There is perhaps even greater confusion in the public mind regarding the issue of Federal Reserve notes than there is regarding the rediscounting functions of the Federal reserve banks. The impression seems to prevail very generally that the Federal Reserve Board has power to expand or contract the currency of the country at will and some believe that it has exercised this power in a reckless and arbitrary manner. While the law prescribes that the Federal Reserve Board shall have the right, acting through the Federal Reserve Agent, to grant in whole or in part or to reject entirely the application of any Federal reserve bank for Federal Reserve notes, it has never exercised this right. On the contrary, it has always approved promptly every application which has been made for the issue of Federal Reserve notes. One of the purposes of the Federal Reserve Act, as stated in its caption, is to furnish an elastic currency, but there are many whose idea of elasticity is continuous stretching. Currency to be really elastic must be susceptible of expansion or the reverse, as the needs of industry and commerce may require. Many believe that there was a preordained contraction of the currency during the year 1920, determined upon in order to reduce prices. The facts, which can be readily ascertained from the figures which were published every week during the year 1920, show that this impression is absolutely unwarranted. It is not the function of the Federal Reserve Sys- tem or of any banking system to attempt to fix or control prices. Banks are concerned with prices only in so far as the security of their loans may be involved, and they are interested more in the stability of prices and their margin of collateral than in the price level itself. Banks do not create general conditions, but they must adjust themselves to changing conditions, which, in the recent eventful months, have been brought about by the irresistible force of popular sentiment throughout the world. There was not only no contraction in Federal Reserve note currency during the year 1920, but on the other hand the total volume of Federal Reserve notes in circulation shows an almost continuous upward trend during that year, rising from $2,844,000,000 on January 23rd, to $3,404,000,000 on December 23rd, a record high mark. Since that time the volume of Federal Reserve notes in circulation has been greatly reduced, until on September 14, 1921, it stood at $2,491,651,000. I wish to reiterate that neither the increase nor the decrease in the volume of Federal Reserve notes outstanding is the result of any preordained policy or premeditated design, for the volume of Federal Reserve notes in circulation depends entirely upon the activity of business, and upon the kind of activity which calls for currency rather than book credits. As I have already stated, one of the purposes of the Federal Reserve Act was to provide an elastic currency. United States notes, or legal tenders, are required by law to remain at a fixed amount, $346,681,016. National bank notes are secured by Government bonds and these notes do not have the qualities of elastic currency. Their volume has never depended upon the actual need for currency so much as upon the price of Government bonds which have the circulation privilege and there has been only a moderate change in the volume of- National bank notes outstanding for several years past. Federal Reserve e MONTHLY REVIEW OF BUSINESS AND INDUSTRIAL CONDITIONS e notes, on the contrary, are distinctly elastic. They may be issued to Federal reserve banks against collateral in an amount equal to the sum of the Federal Reserve notes applied for, which collateral security is required to be notes and bills discounted or acquired by the banks, or gold or gold certificates. The law provides further that each Federal reserve bank shall maintain a reserve of forty per cent in gold against its Federal Reserve notes in actual circulation. As an evidence of the elastic quality of Federal Reserve notes may be cited the fact that on April 1, 1917, the total outstanding was $357,239,000; on August 1, 1919, the total amount outstanding had increased to $2,506,820,000 and, as has just been stated, the maximum amount ever in circulation, $3,404,000,000, was reached on December 23, 1920, although prices had already begun to decline several months before that date. Since the first of the present year the loans of the Federal Reserve banks to their member banks decreased up to September 1st about $1,200,000,000 and as the notes discounted with Federal reserve banks have been paid off Federal Reserve note currency has come back to the banks and in the absence of a demand for it, has not been reissued. Upon payment of commercial paper which has been deposited to secure Federal Reserve notes, there necessarily results either an immediate return of an equivalent 11 amount of notes to the bank or an automatic increase in the percentage of gold reserve available for their redemption. Federal Reserve notes are not legal tender, nor do they count as reserve money for member banks. They are issued only as a need for them develops and as they become redundant in any locality they are returned for credit or for redemption to the Federal reserve banks or to the Treasury at Washington. Thus, there cannot be at any time more Federal Reserve notes in circulation than the needs of the country at the prevailing level of prices and wages require, and as the demand abates the volume of notes outstanding will be correspondingly reduced through redemption. The increased volume of Federal Reserve notes in circulation from 1917 to the end of the year 1920 was, in so far as it was not the result of direct exchanges for gold and gold certificates, the effect of advancing wages and prices and not their cause, just as the reduction which has taken place during the present year is the result of lower prices and smaller volume of business, rather than their cause. Under the Federal Reserve system, as business expands, as labor is more fully employed and as production increases and distribution becomes more active, there follows a demand for great discount accommodations and a need for more currency, and the increased volume of discounts furnishes a mean of providing the necessary volume of currency required. 12 MONTHLY REVIEW OF BUSINESS AND INDUSTRIAL CONDITIONS COMPARATIVE STATEMENT FEDERAL RESERVE BANK OF DALLAS RESOURCES At Close of Business Nov. 16, 1921 Oct. 19, 1921 Gold and gold certificates............................................................................ $ 7,824,570.00 Gold settlement fund ........................................................ ............................ 3,948,035.26 $ 6,734,540.00 5,962,748.29 Total .............................................................................................. 11,772,605.26 12,697,288.29 Gold with Federal Reserve AgenL ............................................................. . Gold Redemption fund ................................................................................. . 12,787,985.00 2,327,072.40 11,872,835.00 3,643,122.40 Total gold reserves ....................................................................... . 26,887,662.66 28,213,245.69 Legal tender notes, silver, etc ..................................................................... 6,708,974.26 6,838,164.20 Total reserves ............................................................................... . 33,596,636.92 9,698,736.89 46,116,091.93 90,000.00 35,051,409.89 55,904,828.82 57,702,007.18 2,642,750.00 1,900,000.00 2,642,750.00 1,900,000.00 ... 60,447,578.82 62,244,757.18 Bank premises ............................................................................................. . 5% Redemption fund against F. R. Bank notes ........................................ Uncollected items ....................................................................................... . All other resources ..................................................................................... . 2,140,967.52 156,200.00 29,754,701.10 2,799,685.61 2,097,164.05 156,200.00 32,432,346.15 3,130,751.05 Total Resources .................. __ .. _ _ ._. __._.. _ ................ . $128,895,769.97 $135,112.628.32 Bills discounted (secured by U. S. Government obligations) ............... . All other ................................ _... ___ ...__ ._._...._._._ .. _....................... . Bills bought in open market ....................................................................... . Total bills on hand. _ _.__ .... _._ ..... _ ........ _.. _._. _ _ U. S. Government bonds and notes ..... _.._ _. _ _ .................... _ __. ~_ .. . .. One year Certificates of Indebtedness (Pittman Act) ........ ____....... All other Certificates of Indebtednes8.._ ._______ ...._ ... _._ ..__......... Total earning assets ..._ ..... _ .....___ ... _ ___.. ___. _.._ _ LIABILITIES Capital paid in................................................................................................ $ Surplus fund ___ .... __ ..____.. _.. __ ........ _........_..... _._._ .. _._.__ .... __....._._ 7,870,613.37 49,626,393.81 205,000.00 . $ , """ 7,112,677.7~ 4,274,750.00 7,112,677.72 DEPOSITS Government ................................................................................................. . Member Banks' Reserve Account ............................................................... . All other ........................................... _..... __....._ ... _._._.._. ____ .. __........ 1,924,143.32 43,220,309.37 305,856.62 4,953,596.42 42,357,812.57 483,923.48 Total deposits ............................................................................... . 45,450,309.31 47,795,332.47 F. R. Notes in actual circulation................................................................ .. F. R. bank notes in circulation-Net liability......................................... . Deferred availability items ........................................................................ .. All other liabilities...................................................................................... .. 37,888,253.00 2,534,440.00 29,826,005.72 1,884,184.22 40,246,011.00 2,888,550.00 31,043,822.47 1,751,484.66 Total Liabilities ................................................................. __ ........... $128,895,769.97 Rediscounts with other F. R. Banks__ ....... __............ __ .... __ ............................. $ 970,000.00 Contingent liability on bills purchased for foreign correspondents...... 832,000.00 $135,112,628.32 $ 8,224,720.22 844,478.35 4,199,900.00
@FedFRASER