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MONTHLY BUSINESS REVIEW o f the ~lume 27, No.7 --- .. I fEDERAL RESERVE BANK Dallas, Texas, September 1, 1942 DISTRICT SUMMARY The value of construction contracts awarded in the Eleventh ~istrict rose to a new peak in July and maintained a wide margin of gain over the corresponding month of 1941. The daily average production of crude petroleum, which had increased moderately in May and June, declined during July. Drilling operations decreased further and were sharply lower than in july last year. Cotton consumption at Texas mills continued to eltpand during July but was about 15 per cent below the high leve.l of July, 1941. Production at plants turning out military eqUlpment and supplies was maintained at a high level but reports indicate that in some instances operations are being retarded by the inability to obtain adequate supplies of raw materials. Consumer buying at department stores during July decreased by a smaller amount than is usual in that month and Was 6 per cent larger than in July, 1941, when sales were at a comparatively high level for the summer season. Furniture sales continued to reflect a substantial decline from a year ago. Cr?p prospects are generally favorable, the August 1 production eS~lm~tes of the Department of Agriculture for most crops in ~his dIstrict being well above the ten-year average harvest and In most instances higher than the 1941 production. BUSINESS ,Consumer buying at department stores in the Eleventh DistrtCt, which had evidenced a downward trend during the second dua~ter of 1942, showed a smaller than seasonal contraction urlng July, and the value of sales was 6 per cent higher than in that month of 1941. After allowance for seasonal factiors, July sales Were at a higher level than in any other month of record, except August, 1941 and January, 1942 when intensified de~ands created by special conditions raised sales to exceptionally gh levels. Sales of representative weekly reporting firms during t e first half of August this year showed a decline of only 2 per cent from those in the corresponding period of 1941 when busine~s Was unusually heavy. The same trends that have been in bVl~ence during recent months continued to be reflected in July U~lUess. The proportion of cash sales to total sales has continued t? Increase. Collections have exceeded credit sales by a substantIal margin with the result that the volume of outstanding ac~OU~ts has dropped to a lower level. The ratio of collections U1'Jng July on regular accounts outstanding on the first of the mOnth rose to 57 per cent as compared with 52 per cent in June ~nd 42 per cent in July last year. The ratio of July collections on Instalment accounts outstanding at the beginning of the month 'Ycis 19 per cent, which was slightly higher than in June and conSl erably above that in the corresponding month last year. Inventories of reporting department stores declined about 2 r C~nt further during July, but as the decrease was smaller r an IS usual at this season, the seasonally adjusted index of stocks The to a new peak of 114 per cent of the 1923-1925 average. d ~ amount of orders outstanding, which had declined sharply Juf1n g the second quarter of 1942, increased seasonaHy during th y, but at the end of the month was about 15 per cent smaller ~ t~e large volume on the corresponding date last year. b . Ur1ng the first seven months of the current year the distritlon of merchandise through wholesale trade channels in the re eVen t!l District was about 15 per cent greater than in the corinSpondlng period last year. Sales by the various types of reportse; wl~olesale firms, las reflected by the operations of 71 firms in en hnes of trade, increased about 6 per cent from June to July h ih l::r o f Dallas 'fhis copy is released for publication in morning papers-Aug. 31 and were about 14 per cent above those in July, 1941. Sales of drugs, groceries and surgical equipment increased somewhat during July and were well above the level of the same month last ye~r, where~s, the distribution of mac~nery, equipment and suppires, electncal goods, and tobacco and ItS products was in smaller volume than either June this year or July, 1941. Inventories at reporting wholesale firms, which were unusually large at the beginning of the year, fell off sharply in subsequent months, with the result that at the end of July they were slightly below the level on that date last year. In line with the trend throughout the country, business failures in the Eleventh District declined further in July and were fewer than in any month in nearI.y 23 years. There was also a sharp decline in the indebtedness of defaulting firms. According to Dun and Bradstreet, Incorporated, there were eight commercial failures in July and the indebtedness of defaulting firms amounted to only $33,000. AGRICULTURE During July and the first half of August, weather conditions continued to have varying effects upon crop development in the Eleventh District. Moisture conditions were generally favorable for crop growth in most of northwest Texas, but excessive moisture in much of the southern third of the State interfered with the progress of some crops. In most other areas of the district, crops were affected adversely by the lack of moisture. According to the August 1 estimates of the Department of Agriculture, production of most crops in Texas will exceed the tenyear average (1930-1939) and that of principal crops will be larger than the 1941 harvest. The harvesting of .t~e large Texas ~hea~ crop was completed unde~ favorable condItIOns. Per acre Yields m the principal wheat growmg areas were much better than average and the grain was of high quality. The lack of adequate storage facilities and transportation difficulties interfered with the movement and storage of the crop during the harvesting season. Progress of the Texas corn crop varied considerably from section to section during July but the changes in prospects in the several sections were largely offsetting with the result that the indicated production remained unchanged at 81,270,000 bushels as compared with last year's harvest of 73,875,000 bushels. While some further deterioration in the condition of the crop occurred in the northern part of the State during the first half of August, it was checked by rains around the middle of the month. The acreage planted to grain sorghums was 3 per cent larger than in 1941, but the indicated production on August 1 was 69,152,000 bushels as compared with last year's harvest of 79,724,000 bushels. However, - oth the per acre yield and the b indicated production ~re well above the respective ten-year averages. The harvestmg of hay has proceeded rapidly under generally favorable conditions and an excellent harvest has been obtained in most sections. The production of tame hay in Texas is indicated at 1,617,000 tons as compared with 1,330000 tons a year ago, reflecting the increased acreage harvested. ' In conformity with the Government's program to increase the production of peanuts, farmers in Texas increased the acreage planted to that crop sharply during the current season and the crop has made excellent progress. On August 1 the estimated production was placed at 556,500,000 pounds which is more than three and one-half times production during 1941 and nearly six and one-half times the ten-year average harvest. The per This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) 2 MONTHLY BUSINESS REVIEW acre yield is indicated at 525 pounds as compared with 470 pounds last year. Reflecting high per acre yields and increased acreage, a record crop of 22,464,000 bushels of rice has been forecast for Texas this year. The indicated harvest is about 65 per cent higher than the small 1941 crop and more than double the ten-year average production. At mid-August harvesting of early fields was in progress and the crop on much additional acreage was approaching maturity. The Texas pecan crop is the smallest since 1936 and the estimated production of 12,420,000 pounds is substantially below last year's harvest and only about one-half of the ten-year average production. The Texas cotton crop, although affected adversely by weather conditions in some areas, has made generally satisfactory progress. Rains in portions of north, central and east Texas around the middle of August were beneficial to plants but increase~ the danger of insect damage. Leafworms, which have caused considerable damage in parts of south Texas, are becoming more numerous in other sections. Harvesting is proceeding rapidly in south Texas and is being gradually extended northward, with first bales being reported in various north and east Texas counties. On August 1 the condition of the crop was better than a year ago in nearly all section of the State and the Department of Agriculture estimated the Texas crop at 3,177,000 bales which compares with 2,652,000 bales produced last year. The per acre yield is indicated at 184 pounds as compared with an average of 165 pounds harvested last year. In Louisiana the per acre yield and total production are more than double last year's poor harvest. Higher per acre yields and larger production are also estimated for Oklahoma, New Mexico and Arizona. WHOLESALE AND RETAIL TRADE STATISTICS ~-----Pereentage ehange i n : - - - - - Number Net sales,---~--Stoeks~-~ of July, 1942 from Jan. 1 to July, 1942 from reporting July, June, July 31, 1942 July, JuDO, Retail trade: firma 1941 1942 from 1041 1041 1942 Department stores: 47 + 6 - 8 + 8 + 40 - 2 Tota1l1th Dist ... . 7 - 2 - 5 + 3 +31 - 1 Dallas .... ...... .. + 8 +56 - 1 4 + 4 - 2 • Fort Worth ....... . -13 + 0 +57 - 4 7 + 5 Houston .. ... ..... . San Antonio ...... . 4 +19 - 7 +18 +45 - 3 -13 +16 3 + 5 Shreveport .... ... . 22 +10 -12 + 8 Other oities ...... . . Independent stores:' +7 -5 Arizona.. .. .. .. .. . 231 +11 -t New Mexioo....... 170 +t +1 Oklahoma ........ . Texas ............ . Wholesale trade:' Machinery, eqp't & supplies. .. .. .. . . 3 -34 -20 .... Drugs (iDCI.liquors). 12 +28 +15 +20 +i:i Electrical supplies. . 5 -20 - 8 - 8 Groceries.......... 30 +21 +17 +18 Hardware......... 12 + 0 - 5 +18 Surgical cqp't...... 5 +11 + 4 +19 Tobaeco & products. 4 - 4 - 10 + 3 ·Compiled by United States Bureau of Census. tChange less than one-half of one per oent; ~Stook.e at end of month. INDEXES OF DEPARTMENT STORE SALES AND STOCKS (1923·1925 average = 100) May July June 1942 1042 1942 &les (daily average): 100 100 126 Without seasoDal adjustment ....... . 126 143 123 With seasonal adjustment ...... . ..•. Btocks (ond of month): 103 104 106 Without seasonal adjustment ..• • '" . 114 110 105 With se.sonal adjustment .......... . July 19U 93 132 73 80 CASH FARM INCOME FROM THE SALE OF PRINCIPAL FARM PRODUCTS (In thousands of doUars) - - May, 1942 Total reoeipts----~ Receipts from: ~ May May Jan. 1 to May 31 Crops Livestook· 1042 1941 1942 1941 ALoriuzo,.s?'aan.a................................ 2,948 3,198 6,146 6,687 45,653 31,632 5,000 3,638 8,608 10,220 51,743 37,407 New Mexico. . . . . . . . .. . . . 1,241 3,403 4,644 3,329 20,418 14,897 Oklahoma. . . . . . . • . . . .. . . 2,350 15,866 18,216 12,459 86,547 58,635 Texas........ .......... . 13,495 48,717 62,2 12 53,470 268,338 179,076 Total. ..... . . . . . 25,094 74,822 99,916 86,165 472,609 ·Inoludes reeeipts from the sale of livestook and livestock products. BOURCE: United States Department of Agrieulture. 321,647 Improvement in range conditions during July was limj~ed principally to those areas in south and southwest Texas which received he:::vy rains early in the month. In other parts of the Eleventh District below normal rainfall and high temperatures which depleted surface moisture checked the growth of range feeds. In most of these sections, however, a good crop of grass had already matured and furnished good grazing for livestock. On August 1 ranges in the Edwards Plateau and Trans-Pecos areas of Texas and in much of Arizona and New Mexico were dry and needed rain to make fall feeds. The condition of livestock has been well sustained. Cattle have made generally satisfactory gains and on the whole are in good flesh . Reports indicate that marketings are generally heavy but ranchmen are showing a tendency to cull old cows from herds and to hold young cows and heifers. Sheep and goats re in about average condition. Contracting of lambs for fall elivery has been less active than usual, reflecting the tendency of ranchmen to hold for higher prices. The Department of Agriculture estimated the 1942 Texas lamb crop at 4,445,000 head, which was 6 per cent below the record crop of 1941. Although the number of breeding ewes on ranches on January i, 1942 was the highest of record, the number of lambs docked per hundred ewes was substantiallY smaller than in 1941. The low percentage this year refleoted principally the poor condition of ewes as a result of the severe drouth during the first quarter of 1942. The 1942 production of wool in Texas was estimated at 79,289,000 pounds which was nearly 1,000,000 pounds below the crop of 1941. While the number of sheep shorn in 1942.was slightly larger than in the preceding year, the average weIght per fleece was smaller, since the fleeces were cleaner than last year because of the heavy rains during the spring season. FINANCE . On April 30, 1942, the Federal Open Market Committee dIrected the twelve Federal Reserve banks to purchase for the System Open Market Account all Treasury bills that may be offered to such banks, on a discount basis at the rate of % per d CROP PRODUCTION-(In thouOBnds of units) ~--Toxas Eleventh Distriot]; Estimated Produotlon Estimated Prodl~~11 Crop Unit Aug. I, 1942 1041 Aug. I, 1942 Cotton.... .... .. .. ..... . Bales 3,177 2,652 4,000 3,1~~ Corn.... .. .............. Bushels 81,270 73,876 05.122 ~~'~66 ~~~t.e~.\~~~~::::::::::::: ~~:~~l: m~~ ~7,1~~ 48'm 41'148 5 4'034 70,9 0 11 7'905. 20'083' Bat 1 7r.0 oy.. ............... . Bushels " , 13'6001 Rice.. .. .. .. .. .. .. ... .. . Bushels 22,464 13,600 22,464 1 2S'800t Broomoorn.............. Tons 3,200 4,400 10,8001 03'161' Grain sorghums ..... .. . .. Bushels 60,152 70,724 80,841 I 1'001 Tame hay. . .... . .. . .•.. . Tons 1,617 1,330 2,164 02'240' Peanuts. .. . .. .. . . . . .... . Pounds 556,500 156,040 724,250* 2 6'160 Potatoes, Irish. . . . . . . . . . . Bushels 5,520 6,030 6,317 12'090' 4,800 5,400 11,000· 3'160' Potatoes, sweet . . . . .•. . . . Bushels Peaches................. BlIshels 1,610 2,475 2,601 Y 58'SOO' Pocans. ....... ... .... . . . Pounds 12,420 22,100 26,812+ , 'co' · Texas, Oklahoma, New Mexieo, Arizona; tTexas only; lTexas, Oklahoma, NewA~f:~pa: 'Texas, Oklahoma; +'I'exas, Oklahoma, Louisiana, 'Texas, Oklahoma, New Mexico, r Louisiana. Other data for Eleventh District dorived from estimates by states. SOURCE: United States Department of Agriculture. LIVESTOCK RECEIPTB-(Numbor) - - - F o r t Worth---~--San Antonio--Juno July July June July Ju Iy 104 2 1042 1041 1042 1042 1041 201 Cattle .... .. .... ...... . .. 76,540 53,018 71,163 15,99B 23,254 ;~'82B 28,352 22,242 23,052 17,786 17,832 H'ISI Calvos ............... '" 44,872 28,020 59,447 8,072 11,700 14'959 ~~!~ 122,808 88,571 173,980 11,856 10,383 ' ....... ::::::::::::::: COMPARATIVE TOP LIVESTOCK PRICES (Dollars per hundredweight) . ___ - - - Fort Worth---~-- San AntonIO Jun s July July June July July 1042 1042 1941 1042 1942 1041 15 512.50 $ 0.75 $11. . $11.50 S13 .50 Beef steers .............. . $13.75 Stooker steers . . . . . . ... .. . 12.50 11.00 13.00 '1'3'.'5'0 ' '1'0'.'5'0' 'jS'60 Heifers and yearlings .... . 14.00 12.00 13 .75 0)0 Butoher oows .. ..... .. .. . Calves . ....... ... . .. . .. . 14 .60 11.10 14 .25 14.25 11.00 2'1)(1 13.00 10.50 13.75 10 .00 8.50 I . f~~i;s :::::: : :: :::::: ::: t~:~~ lUg t~:~~ &~ lU~ l~'~ MONTHLY BUSINESS REVIEW r ( cent per annum. That action was supplemented on August 3, 1942, when the Federal Reserve banks were authorized to give the seller of any Treasury bills so offered an option, if desired, to repurchase the bills at the rate of % per cent per annum at any time before maturity. The reserve balances of member banks in the Eleventh District increased sharply after the middle of July, reaching an all-time peak of $373,600,000 on August 14. Although there Was a decline of approximately $15, 000,000 on the following ~ay when settlements were made for purchases of the new ISSue of Treasury Certificates of Indebtedness, the total on August 15 was $36,500,0 00 higher than a month earlier and $105,000,000 above that on the corresponding date last year. Although the expansion of customer deposits at member banks had the effect of greatly increasing required reserves, average excess reserves during the last half of July were slightly above $100,000,000, the largest of record, and the average during the first half of August was at an even higher level. The demand for currency in this district has continued to expand at a substantial rate. Federal Reserve notes of this Bank in actual circulation on August 15 amounted to $177, 000,000 which was $11,600,000 higher than the total a month earlier and $67,9 00,000 above that on the corresponding date last year. .The loans of 33 weekly reporting member banks in this district showed a further contraction of $10,713,000 during the five weeks ended August 12, and the total of $314,503,000 on t~e latter date was nearly $60,000,00 0 lower than at the beginnil1g of the year and approximately $15,800, 000 lower than a year earlier. The continued downward trend in loans during the five-week period contrasts with the marked expansion during the corresponding period of 1941. On the other hand, the rePOrting hanks continued to add substantially to their investment holdings. Total investments, which amounted to $442,510?000 on Augut 12, were $43,87 0,000 larger than five weeks earher and approximately $150,000,000 higher than a year ago. During the five-week period the increases in investments occur~~d chiefly in United States Treasury bills and Treasury bonds. 4l.0ldings of Treasury bills were increased each week, bringing total holdings on August 12 to $65,3 56,000, which was $16,26 0,000 higher than on July 8. The expansion in holdings of ~reasury bonds reflected primarily allotments against subscrip}Ions to the new issue dated July 15, but reporting banks made urther investments in Treasury bonds in subsequent weeks. Deposits at reporting banks increased sharply between July ~ and August 12. In that period adjusted demand deposits rose . y nearly $5 0,000,000 and there were increases of $22, 300,000 ~n United States Government deposits and of $6,900,000 in iI1terbank deposits. The increase in deposits was much more pronounced than the expansion in loans and investments with ~he result that these banks added $27,000,000 to their reserve alances with the Federal Reserve Bank and $16,500,000 to th . elr balances with correspondent banks. INDUSTRY D.l'h.e value of construction contracts awarded in the Eleventh tnct during July exceeded the previous all-time peak estabIS ed in May this year by about 4 per cent. Awards during July, :vhich totaled approximately $98,40 0,000 were more than thur ~lInes those in July last year. As in the previous two months, e high rate of activity reflected almost entirely the letting of Cintracts for projects connected with the war effort, and inh.u~ed Contracts for the construction of oil storage facilities, aI~l Octane gasoline plants, synthetic rubber plants, pipe lines, ast furnace and coke ovens, and a steel manufacturing plant, as well as additions to existing industrial plants. Privately-fin;nced construction, which fell off sharply during May and June : tel' the \Var Production Board placed restrictions on nonsSential building, Wl\S at a low level in July. In the latter part of 8 CONDITION OF THE FEDERAL RESERVE BANK (In thousands of dollars) August 15, August 15, 1942 1941 Total eash re80rvcs ........... . .. ... .. ...... . . .. .. $438,112 5356,437 Discounts for member banks .. . ............. ...... . 156 515 Industrial advanccs .. .. " .. . ............. . ...•.... 141 333 United States Govornment 8Oouritics ........ . .. . •... 131,209 8~,83 0 All other invcstments ........ .............. ... ... . 43 None Total earning assets ......... . ...... . ............ . 131,549 86,678 Member bank rCBCrve deposits . ............ . ...... . 358,799 253,774 Federal Reserve notes in actual oiroulation ... ...... . 176,994 109,099 July 15, 1942 $429,359 10 208 118,024 43 118,285 322,261 165,390 CONDITION STATISTICS OF MEMBER BANKS IN LEADING CITIES (In thousands of dollars) August 12, August 13, July 8, 1942 1941 1942 Totalloaus nnd investments. . . . . . .. . . . . . .. . . . .. .. . $757,013 5624,077 &723,856 Total leans .. .. .. . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . 814,503 330,846 325,210 Commeroial, industrial and agrioultural loans. . . . .. 225,545 222,419 234,287 Open market paper. .. ... . . . . .. . . . . . . . . .. . . . . . .. 1,973 2,470 2,074 Loons to brokers and dealers in seourities.......... 3,325 3,598 2,788 Other loons for purohasing or oarrying seourities.... 13,540 13,732 12,916 Real estate loaus..... . .... . ...... . . .... . . .. .... 21,119 23,062 21,286 Loons to bonks..... . . .. .. .. . . . .. .. .. . . . . . . . .. . . 322 616 315 All oth~r loons.. .. .. .. .. .. .. .. .. .. .. .. .. . .. .. .. 48,670 64,449 50,650 United States Government direot obligations. .. . . . . .. 846,204 187,356 305,514 Obligations fully guaranteed by United States Gov't .. 37,292 46,143 34,846 Other soourities. . ..... .. ........ ................. 59,014 60,232 58,280 Resorl'es with lIed oral Resorve Bonk.... . . . .. .. . . . .. 233,492 162,377 206,497 Balanoes with domestio bonks................. ... . . 281,433 310,732 264,007 Demand doposits- adjusted' . . . . .... ......• ... .. .. 714,101 593,190 664,540 Time dO]lOslts... . ... . . . . .. . . .. . . . . . . . . .. ... . . . . .. 130.043 133,555 131,484 United StatcB Government deposits... .. .... ........ 49,736 38,344 27,401 Intorba)lk deposits..... . . .. ..... .. .............. . . 327,034 280731 321071 BorrowlDgs from Federal Reserve Bonk. .. .. ... .. ... None None None 'Inoludes all demand deposits othor than intorbank and United States Government leas eRsh itoms reported as on hand or in procoas of colleotion. ' NOTE: Bbginning July 8, 1942, reoiprocal interbank domand balanoes reported on not basis. DEBITS TO INDIVIDUAL ACCOUNTS (In thousands of dolla,,) July July Petg.ohange 1942 1941 over year Abilone ................. $ 14,174 $ 12,429 +14 $ 40,532 Amarillot ... ............ .. 34',33S 45,374 Austin .. .. .............. +32 34,718 31,sa9 Beaumont .............. . +0 4,367 Corsionna ............... 3,755 +16 34,091 Corcus Christit ... . . . .... . 33'0',700 388,716 Dnl as ............. .. . .. +is 46,012 El Paso ...... .. ......... 41,502 :j:11 134,983 102,828 110rt Worth .............. 31 36,209 30,004 Galveston ........... .. .. +18 374,132 320,572 Houston ................. +17 7,622 Laredot .... · .......... . 17,358 Lubboo \; ............ .. 14,016 Monroe, a.t .... ...... .. .. 'l'l',aoi ag 15,747 Port Arthur .. ..... ...... 6,981 4,538 54 Roswoll, N. M ........... 14,825 Son Angolot ............. .. ii1',aSO 103,396 Son Antonio ........ ..... +i:i 64,003 51,375 Sh,oveport, La ........... +25 17,150 0,372 'toxarkana * .... .. ........ +88 21,407 14,069 Tucson, Ariz ............. +52 14,427 13,101 -9 ~Ier .... . . . .... ........ 24,635 16,754 000 .. ....... .... ...... +47 10,736 21,700 -0 Wiohita Falls ........ . .. . i June 1942 13,163 31,346 45,352 36,212 4,114 31,898 368,500 44,223 127,433 33,530 855,192 7,181 17,941 15,097 16,440 7,669 14,532 106,098 00,921 22,180 22,042 13,988 22,477 18,864 Potg.ohan~ over mont :j:2~ +t -4 +0 +10 +5 +4 +6 +8 +5 +6 -8 -7 -4 - 0 +2 -3 +5 -23 -7 -6 +10 +5 Total-18 eities .. .. . . . ... $1,364,901 $1,143,706 +19 $1,319,307 + 3 $1,437,302 + 4 Total-24 eities.......... 1,494,240 'In eludes tbe figures of two bonks in Texarkana, Arkansas, looated in the Eighth Distriot. tNew reporting oenter, data for year ago not available. tLeas than ono·half of one peroent • GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS (Avorage of doily figures-in thousunds of dollars) Combined total Reserve eity banks Country bank. GrolS Groas Time demand demand July, 1940 ............ . $1,332,386 $234,758 $ 778,481 912,501 July, 1941. ............ 1,555,000 239,153 227,091 1,036,818 Mareh, 1942 .......•.. , . . 1,804,123 April, 1942 ............. 1,803,410 227,515 1,038,595 May, 1942 .... .. .... . .. 1,820,563 227,607 1,039,887 June, 1042 .. .. , ........ 1,856,567 226,503 1,058,847 July, 1942 .. . ...... .. .. 1,914,513 226,947 1,095,607 ,. h Gross Time demand Time $129,001 $553,905 S105,757 133,588 642,409 105,565 126,307 767,805 100,784 127,278 760,815 100,237 127,482 780,670 100,175 127,416 797,720 99,087 127,615 818,006 09,322 SAVINGS DEPOSITS July 81, 1042 Boaumont . .............. Dallas . ............ ..... El Paso . .. ..... . ... ..... Fort Worth ... . ........ . . Galveston ...... . ........ Houston .... . ........ ... . Lubbook .... ............ Port Arthur ....... . ..... Son Antonio ... ... ...... . Shreveport, La ........ ... Waoo ......... . ......... Wiohita Falls .......... .. All olbor ................ Total. .. ... ..... Number of regortin g anks 3 8 2 3 4 10 3 2 5 3 3 3 02 111 Peroentaae ebange in savings eposits from Number of Amount of JUly 31, savings savin~s June 30, depOSIts 1941 depositors 1942 10,498 S 4,213,413 .9 .0 :j: .4 25,553,289 - 3.0 88,902 6,065,960 - 6.1 18,176 .6 + 32,299 12,427,517 - 4.7 .6 10,646,228 - 8.1 18,213 + .2 31,825,697 - 1.9 73,094 + .0 1,330 569,535 + 2.0 +1.7 3,145,204 + 3.0 5,436 +1.0 17,749,245 22,092 .3 + .01 24,837 11,955,012 + .04 .1 4,1l2,06U - 6.7 7,323 .1 3,315,807 - 3.2 0,686 - 2.1 27,160,115 - 6.4 51,733 .5 - - - 362,419 $159,640,591 - 8.4 - + .2 4 MONTHLY BUSINESS REVIEW the month the War Production Board made slight modifications in restrictions on non-essential building but this action had no perceptible effect on the volume of privately-financed co?tracts awarded during the month. Publicly-financed constructIOn accounted for about 97 per cent of the total value of contracts awarded in this district during July, which was about the same percentage as in June. In July, 1941, only about 41 per cent of total awards represented publicly-financed projects. Important developments affecting the petroleum industry during July and the early part of August centered around str~n uous efforts to relieve the acute shortage of transportatIOn facilities which has caused a deficiency in both light and heavy fuel oils on the East Coast. To relieve that situation, industrial and household users of fuel oils have been urged to convert to other types of fuel wherever possible; the area affected by the gasoline rationing system has been extended and the basic. rationing unit reduced; and numerous steps have been taken to Increase the efficiency of existing transportation equipment and to provide additional facilities. Under a new policy instituted on August 1, railroads will concentrate tank cars into solid trains and move them on standard schedules; and 5,000 additional tank cars have been diverted from service in other sections of the country to the movement of petroleum products to the East Coast. The Defense Plant Corporation has agreed to finance the conversion of existing steel dry-cargo vessels into tank barges, as well as the construction of new barges. To facilitate the use of tank trucks for short hauls, the Office of Price Administration extended to September 1 the effective date for price ceilings on transportation by tank trucks other than common carriers. An increased volume of petroleum products is also being transported by Great Lakes oil tankers for shipment to the East Coast via the New York Barge Canal. Further progress has been made in the construction of the 24-inch pipe line from Texas to Illinois and work has already begun on the removal of a pipe line from East Texas for relaying across North Florida. Maximum prices on gasoline and other petroleum products on the Eastern Seaboard, which had been permitted to rise in June, were reduced on August 5 under an arrangement whereby the Reconstruction Finance Corporation will absorb the abnormal transportation costs involved in moving petroleum products from the Gulf Coast and inland points to the Atlantic Seaboard. The daily average production of crude petroleum in the Eleventh District, which had increased moderately in May and June, declined 8 per cent in July and was 27 per cent below the VALUE OF CONSTRUCTION CONTRACTS AWARDED (In thousands of dollars) July July JUDO January 1 to July 31 1942 1941 1942 1942 1941 Eleventh Distrio~total.. . $ 98,350 S 23,138 $ 86,877r $ 411,181 $ 185,541 Rcsidontial. . . . . . . . . . . . 10,441 9,312 15,403 79,965 64,459 All othor. .... ......... 87,909 13,826 71,474r 331,216 121,082 United Statcs"-total. . . . . 943,796 577,392 1,190,264 4,667,521 3,064,324 Residential. ........... 127,382 205,049 185,471 1,112,962 1,154,043 All other............. . 816,414 372,343 1,004,793 3,554,559 1,910,281 r-Revisodl "37 states enst of tbo Rooky Mountains. SOURCE: F. W. Dodge Corporation. STATISTICS ON COTTONSEED AND COTTONSEED PRODUCTS ~--- Texas United States~ August 1 to July 31 August 1 to July 31 This soason Last season This soason Last Beason Cottonseod reooived at mills 9as ,008 1,007,210 3,959,330 4,489,698 (tons) .............. . . .... . 974,814 1,085,763 4,008,436 4,398,011 Cottonseed crushed (tons) .. . . . Cottonseed on hand July 31 35,338 27,194 81,423 130,529 (tons) .. ..... .......... ... . Produotion of produots: 333,827 1,240,840 280,586 1,425,471 Crude oil (thousand lbs.) ... . 426,202 507,518 1,752,603 1,953,589 Cake and meal (tons) .. .... . 251,652 275,031 1,107,222 991,350 Hulls (tons) .......... .... . 209,273 265,063 1,188,871 Linters (run ning balcs) . . .. . . 1,207,920 Stooks on hand July 31: 1,791 7,812 8,657 Crude oil (thousand lbs.) . . . . 1,562 31,207 192,910 104,444 Cake and meal (tons). . . . . . . 43,580 01,313 44,403 151,439 Hulls (tons). . . .. .. . .. .. .. . 15,009 28,148 43,403 123,154 Linters (running bales)...... 17,095 SOURCE: United States Bureau of Census. all-time peak reached in February this year. The daily a~erage output in other sections of the country during July was shghtly higher than in either June this year or July, 1941. The downward trend in stocks of crude petroleum in t~e United States continued during July, while stocks in this dIstrict, which had reached the highest level in about four years during June, were maintained at the higher level during the past month. The rate of drilling activity in this district, which has been declining since September, 1941, fell off about 16 per cent frorn June to July, and was only about a third of that in July, ~9~1. For the first seven months of the current year the rate of dnlhng activity in this district was about 35 per cent below that in the corresponding period last year. Operations at cottonseed oil mills in Texas and the United States decreased about 10 per cent during the 1941-1942 season, reflecting mainly a smaller supply of seed available for processing. Seed crushing and the manufacturing of products in the United States averaged between 10 and 12 per cent less than in the preceding season, and in Texas these operations fell o~ about the same amouat. Domestic mill shipments of cottonSee oil, and cake and meal for the 12 months ended July 31, 1942 were somewhat less than in the preceding season, whereas, the shipment of hulls increased approximately 12 per cent. Produc t tion of linters during the 1941-1942 season was slightly less t~a? in the preceding season, but in consequence of the expanded mill' tary requirements shipments increased somewhat, with the resu t that at the end of July mill stocks were the lowest since 1925. Inventories of cottonseed oil at the close of the past season were the smallest since 1937 and stocks of hulls were less than one-third as large as those last year. Mill stocks of cake and meal, however, showed an increase. CRUDE OIL PRODUCTION-(Barrols) . July, 1942 Inoroaso or deoreaso in dailY average production f~ Dailyavg. Total July. 1941 Juno, 1042 produotion production + 8,200 - 18,251 0,836,650 220,537 North Toxas .... ... ....... . . . _ 63,650 - 18,634 5,797,950 187,631 Wcst Texas ... ......... . . .. .. _ 60,013 - 69,018 352,011 East Toxas ................. . 10,912,350 _ 00,060 - 5,68: 4,187,050 135,066 South Toxas .. ....... . . .. .. .. - 33,998 - 18,13 7,023,850 226,676 Texas Coastal.. ............. . Total Texas ...... . New Mexico ................ . North Louisiana ......... .... . 34,757,850 2,091,150 2,921,150 1,121,221 67,456 94,231 - 100,539 - 41,581 + 17,492 Total district. . . . .. 30,770,150 1,282,908 -223,628 SOURCE: Estimated from Amerioan Petroleum Institute weokly reports. -120,61 8 - 0 ++ ~',~~4 .-:..---::: _ 117,347 DOMESTIC CONSUMPTION AND STOCKS OF COTTON-(Bales) July July June August 1 to July 31son 1942 1941 1942 This senson Last sen Consumption at: 25,184 29,607 23,005 252 237 241,66~ Texas mills ... ........ . 095,041 029,782 066,940 11,172:328 9,721,7 0 United States mills .. .. . U.S. stooks-ond of month: ... . 1,870,776 2,441 ,130 In oonsuming cstabm'ts. 2,252,600 9,703,070 8,458,012 Publio stg. & oompresses. 7,632,103 . ..... BUILDING PERMITS July, 1942 Abileno ......... . Amarillo . ........ Austin .... .... ... Beaumont ........ Corcus Christi .... Dalas ........... El Paso . ... .. .... Fort Worth . . ..... Galvcston .. . ..•. . Houston ... ...... Lubbook .... ..... Port Arthur . ..... San Antonio . . .. .. Shreveport, La ... Waoo ... . ........ Wiohita Falls ..... Percentage ohango valuation from Jan.ltoJuly 31,1042 No. Valuation July,1941 Juno,1042 - 15 20 S 70,812 +119 44 64,644 -74 +274 32,572 -9 1 - 32 70 142 64,163 -73 - 95 120 183,807 - 78 - 97 - 47 662 184,623 - 82 61,974 -82 66 +285 118,028 -80 190 - 96 28,690 - 05 08 -88 111,720 -03 136 + 22 47,118 - 76 60 - 52 17,382 78 -86 + 13 - 62 724 279,649 - 4 299,086 - 19 93 + 37 49 80,507 -89 + 90 44,415 27 - 81 +104 Total ..... . 2,584 $1,679,730 -78 - 85 Valuation No. 230 $ 1,170,223 261 534,608 070 1,436,450 1,222 2,282,010 043 8,879,214 4,828 5,257,866 459 1,896,371 1,851 8,822,557 756 2.275,381 2,008 10,621,475 742 2,001,141 513 312,798 5,589 3,354,838 674 l,483,30~ 421 851,07 231 419,110 Pereenlnge ef~:t~~n f~~1D 1941 + 62 _ 67 _ 69 + 7 _ 76 _ 34 +1I 0 :!:11a6 _16 _ 4 _ 67 _ 20 _ 32 _76 _ 67 --- -::::14 21,412 $51,607,304 MONTHLY BUSINESS REVIEW SEPTEMBER 1, 1942 NATIONAL SUMMARY OF BUSINESS CONDITIONS (Comviled by the Board of Governors of the Federal Reserve System) INDUSTRIAL PRODUCTION "'~ • til TOU\. 200 Industrial activity increased further in July and the first half of August, reflecting continued growth in output of military products. Retail sales increased during this period, following a decline on a seasonally adjusted basis, during the first half of the year. ' IIiOP mAL IHOU!lfIlIAL PRODUCTION 180 1.I PRODUCTION 1 60 140 -)1- 1 120 ~ 100 H· H j. 20 ,/ 00 o :EEtfEffj 1 936 1 938 1940 1 942 20 o 1 936 1940 1938 1942 Federal Reserve monthly index of physical volume of prOduction, adjusted for seasonal variarion, 1935·39 average 100. Sub·gtoups shown are expressed in terms of points in the coca 1 index. latest ligures shown ate for July, 1942. = DEPARTMENT STORE SALES AND STOCKS ~~~r----'----'-----r----r----~---,--~m~ 140 r----t----+----1----+----l----l:---,-1 14o w~ ~ 110 t--+--+---!---I---+_.I-\1'lf-NH- :: /·\J 130 120 I J.,..-J , II 100 100 / 60 "'~-=I.k----:I="""-7c..p.-=I'f'I!....+----'H"----I 90 · to r-:7I::A V eo 130 l/ 1\/ .....". IrI lro""" 70,r---","-""",,-1---4~ ~~o,..,....• ""'i''---+----I 70. ....... ~ e0r-~_+--4_---~ 1--~--+---4_-_l60 GO~~~--~--~---L---L---~--~C O 1 938 1037 1938 1939 1 940 1941 1 942 ~ed'i:"al Reserve monthly indexes of value of sales and ~ oc s, adjusted for seasonal variarion, 1923·25 aver· ge 100. latest figures shown arc or July, 1942. = ..r CllrT 120 120 110 110 100 100 90 90 eo 80 70 70 eo co tt .. · , .. •• .... _10 ... _____L-__ . -:~~--~ 1 936 ~~reau tage 1 937 1 938 1 939 60 ~ __ 1940 ~ ____L-__ 1 941 1 942 ~OO of Labor Statistics' weekly indexes, 1926 100. Latest figures shown for week ending August IS, 1942. = MEMBER BANK RESERVES II.L.ICMOIOOL.UII' 16 14~---r--__~__-+____+-~~~r.~~__~14 12 DISTRIBUTION I Distribution of commodities to consumers declined less than seasonally in July. The Board's adjusted index of department store sales, which had dropped from a peak of 13 8 per cent of the 1923-25 average in January to 104 in June, rose to 117 and sales bY' variety stores and mail-order houses also advanced, after allowance for usual seasonal changes. In the first half of August department store sales increased by more than the usual seasonal amount. Railroad freight-car loadings increased more than seasonally in July and rose somewhat further in the first half of August. Shipments of miscellaneous merchandise, which include most manufactured products, and of forest products continued to rise. Grain shipments also increased but the rise was less than is usual at this time of year. Loadings of coal declined somewhat from the high level of other recent months. COMMODITY PRICES WHOLESALE PRIOES 'U ~t/tf Industrial output rose further in July and the Board's seasonally adjusted index advanced from 176 to 180 per cent of the 193 5-39 average. Activity continued to increase in the machinery and transportation equipment industries and in other lines producing war products. Shipbuilding expanded further and 71 merchant vessels were delivered in July. These had an aggregate deadweight tonnage of 790,300 tons-an all-time record for a single month's deliveries. In the automobile industry armament production increased in July to an annual rate of about $ 5 billion as compared with a peak year's civilian output of $4 billion. Iron ore shipments down the Great Lakes reached a new record of 13.4 million gross tons in July and plans were announced for improving rail and harbor facilities so that shipments next season could exceed considerably prospective shipments of 90 million tons or more this year. Last season 80 million tons were shipped. In most other lines of manufacturing and mining, activity in July was maintained at about the levels prevailing in June. !here were report~ that.so~e plants were forced to curtail operations owing to lack of certain matenals, and further IDvestlgatlons were undertaken to determine present and prospective availability of material supplies. Value of construction contracts awarded in July showed a reduction of about 20 per cent from the record level reached in June, according to figures of the F. W. Dodge Corporation. Declines were reported for most types of construction; awards for manufacturing buildings, however, increased f urther and constituted about one-third of total contracts let. As in June, publicly-financed work amounted to over 90 per cent of the total. In the first seven months of this year, awards were about 50 per cent larger than in the corresponding period last year. r-+--+--I-~'rlC~-+--":':l-=:L...I12 10 r - - i - - - + - - i - , . L + - - + - - f = . . r - l I O .-r-~--+-J~+-~-- ~'!----j 4 Wholesale and retail food prices advanced further in July and the early part of August, while prices of petroleum produc:ts on the East Coast wer: reduced, and. those ~or most other consumer goods continued to show httle change: In raw n~atenal markets pnce declIDes occurred for cotton, inedible fats and oils, and some scrap Items, partlcularly non-ferrous metals and paper. Demand for materials used more exclusively for War products continued strong and prices of these materials were sustained at ceiling levels. Federal subsidies were arranged for additional commodities and Government war risk rates on shipments of imported commodities were reduced. These actions were taken to bring about price reductions, as in the case of petroleum products on the East Coast, and to prevent further price increases particularly for imported commodities. About 30 new. maximum price schedules were announced: chiefly for miscellaneous civilian products, a~d in so~e IDstances. these schedules permitted substantial increases over ceilings set by the General MaXImum Pnce Regulatlon. BANK CREDIT Excess reserves of member banks declined by about 200 million dollars in the four weeks ended August 19. An increase of about 400 million dollars of currency in circulation during this period was paralleled by a corresponding amount of Reserve Bank purchases of Government securities. There was an increase of 300 million dollars in required reserves resulting from a growth in deposits at member banks. Excess reserves in New York and Chicago reached the lowest levels since the third quarter of 1937. Effective August 20 reserve requirements on demand deposits at central reserve city banks were reduced from 26 per cent to 24 per cent by action of the Board of Governors of the Federal Reserve System. This had the effect of converting over 400 million dollars from required to excess reserVes. Member banks in leading cities continued to increase their holdings of United States Government securities, particularly in the week ended August 19, in which delivery of the new 11 y. months' % per cenC certificates of indebtedness was made. Loans, which had declined during the second quarter of the year, have recently shown little change. Adjusted demand deposits continued to increase at reporting banks, although purchases of Government securities, particularly the 2 y. per cent Treasury bonds of 1962-67, by investors other than banks temporarily reduced demand deposits of individuals and added to United States Government deposits. UNITED STATES GOVERNMENT SECURITY PRICES " .. 19;;;)::-6--'-1 93-7~-19-3-e-l.-19-39~'--19-4-0-l.--19-41~-19-4-2..J 0 Wed" nOt thSd ay figures. Required and excess reserves, bue e total, arc parely estimated. latest figures shown arc for August 12, 1942. Prices of United States taxable bonds have shown little change during the past month. Taxable notes of 3- to 5-year maturity arc currently yielding 1.26 per cent on the average as compared with 1.20 per cent in July. The rate of discount on new issues of Treasury bills has averaged 0.372 per cent for the past three weeks. THE UNITED STATES COTTON INDUSTRY -1941-42 SEASON During the season ended July 31, 1942, the cotton industry in the United States was affected mainly by developments in connection with the war effort. By the end of the season a substantial part of the industry had been converted to war production and new records had been established in the demand for cotton products, in the volume of raw cotton consumed and in cotton mill activity. Other important developments included sharp advances in cotton prices, a greatly increased demand for longer staple cotton, the placing of price ceilings on cotton products, substantial reductions in the amount of cotton owned by the Commodity Credit Corporation and in the amount held under Government loan. During the 1941-1942 season, activity at domestic cotton mills increased sharply and was limited mainly by the capacity of mills to produce, rather than by the demand for textiles. Throughout the season unfilled orders were in unusually large volume and many mills showed a reluctance to accept new orders for civilian goods, especially for distant delivery. After the United States entered the war, huge Government purchases and other orders with high priority ratings absorbed an increasing proportion of the output of domestic mills. In accordance with orders issued by the War Production Board, many miUs converted their plants to the production of goods to meet military and essential civilian requirements and a large part of the total supply of cotton linters was set aside for the chemical industry for use in the production of explosives. In an effort to meet the increased demand for textiles, many mills have been operating seven days per week on a three-shift basis. In March, 1942 the New York Cotton Exchange estimated that about 65 per cent of total current production of cotton textiles was being absorbed in military and other war uses, as compared with between 10 and 20 per cent for the year preceding the outbreak of war between the United States and Japan. Thus, despite the heavy civilian demand for cotton products growing out of the rapidly expanding individual incomes, the large requirements for military and other essential uses brought about a sharp reduction in the output of cotton goods for civilian consumption. The War Production Board has announced production goals of 14 billion square yards of cloth for the calendar year 1942 and 15 billion yards for the calendar year 1943. Assuming the same yardage per bale as in the calendar year 1941, consumption of raw cotton must reach an even higher level than at present, if these goals are to be achieved. Reflecting the heavy demand for cotton textiles, cotton consumption exceeded the previous record established in the 19401941 season by a substantial margin. The high level of cotton consumption was attributable both to a sharp increase in mill activity and to a shift to heavier weight fabric to meet military requirements. Consumption during July, 1942, amounting to 995,041 bales, was only slightly under the all-time peak of 998,754 bales utilized in April this year and was 7 per cent greater than the amount consumed in July, 1941. During the twelve months ended July, 1942, processing establishments consumed 11,172,328 bales, which was 15 per cent above that of the preceding season and about 80 per cent greater than the ten-year (1930-1939) average. Cotton consumption at Texas mills, which was in exceptionally large volume during the 1940-1941 season, increased still further in the past seaSOll, reaching a total of approximately 252,000 bales. The high specifications which military goods must meet and the expanding output of the cotton textile industry have greatly increased the demand for longer staple and higher grade cotton. To assist in meeting this demand, the Department of Agriculture made direct appeals to farmers to expand the production of longer staple cotton. As a result of those efforts farmers increased their plantings of longer staple cotton this year and it is estimated that the production of American-Egyptian cot tOll this season wiU be about 106,000 bales, as compared with 60,000 bales in the previous season and a ten year (1931-1940) average production of 18,000 bales. Reflecting the increased demand for the higher quality cotton, the grade and staple premiums and discounts on July 24, 1942, were more than twice as wide as those prevailing a year earlier. On April 28, 1942 the Office of Price Administration broadened its control over cotton textile prices and placed absolute ceilings on all cotton textiles and manufactured textile products with respect to sales by manufacturers, wholesalers and retailers. \Vith certain exceptions, the ceilings were fixed at the highest prices actually existing in March, 1942. Despite advances in prices of raw cotton, mill margins, or the average spread between the price of a pound of raw cotton and the price of its cloth equivalent, which had about doubled during the 1940-1941 season, increased still further during the past season. Monthly averages of mill margins fluctuated within a narrow range of 20 to 20 ~ cents per pound between August, 1941 and April, 1942. Beginning in the latter part of April the price of raw cotton declined and miU margins increased correspondingly with the result that in June, 1942 they averaged 22.15 cents per pound, which was the highest since records became available in 1925. Although average mill margins declined to 21.27 cents per pound during July, they were still well above those prevailing in that month of 1941. During the past season, the average price of middling 15/16inch staple cotton at the ten spot markets fluctuated between 15.39 cents and 20.47 cents per pound. The price rose gradually after August, 194 1 and reached 20.47 cents per pound on AprIl 9, 1942, the highest since 1929. After that date the price of cotton declined irregularly, but the price on July 31, which averaged 18.67 cents per pound, was still more than double that prevailing when war broke out in Europe in September, 1939. In consequence of the higher level of cotton prices prevailing during the season, about 60 per cent of the 2,221,000 bales from the 1941 crop that had been pledged as collateral for Government loans was subsequently redeemed with substantial profits to producers, and in addition the Commodity Credit Corporation sold a sizable volume of its holdings. On July 31 Government-held stocks amounted to onI.y 4,400,000 bales as compared with 6,480,000 bales on July 31, 1941, and 8,733,000 bales on the corresponding date in 1940. On August 9 the Department of Agriculture announced that 1942 loans on cotton produced by farmers cooperating with the program of the Agricultural ~d justment Administration would average 85 per cent of panty, or about 16.02 cents per pound for middling ~-inch staple, which compares with an average loan rate of 14.82 cents per pound on the 1941 crop for middling 15/16-inch staple and 8.90 cents per pound on the 1940 crop of similar grade and staple. The Department of Agriculture estimated the domestic carryover of cotton on July 31, 1942 at 10,590,000 bales, or about 1,576,000 bales less than a year ago and 2,443,000 bales less t1~an the peak carry-over in 1939. Reflecting the high consumptlOi rate cotton mills maintained much larger stocks than usua throughout the season. On July 31 mill stocks were 2,253,000 bales, which was 20 per cent greater than a year ago, and waS equivalent to a 2 Y4 months' supply at the current rate of consumption. Stocks in public storage and compresses on July 31 amounted to 7,632,000 bales, as compared with 9,704,000 bales on the same date a year ago. At the end of July commercial interests apparently owned between 40 and 45 per cent of the cotton in public storage and compresses, which was somewhat larger than the proportion thus owned a year ago. On the basis of t~e carry-over and the August 1 estimate of cotton production thIS year, it appears that the total supply of cotton during the current season will amount to about 23,400,000 running bales, or about 700,000 bales more than last season.
@FedFRASER