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MO NTHLY BUSINESS REVIEW of the BANK FEDERAL RESERVE o f Dallas =======================================~============= VoIUtne 26, No.1 II T M 1 This copy is r elensed f or pubDa as, exas, arc 1 1,1941 Iicntion in morning pnper sMar. 2 ~~=~~~============================================================~====~~~~;;~~~======== DISTRICT SUMMARY The output of manufactures in the Eleventh District and ~he distribution of commodities to consumers continued heavy In January, exceeding the respective totals for the opening Illonth of 1940 by a substantial margin. Employment and payrolls Were maintained at a considerably higher level than a year ago. Department store sales declined by less than the average seasonal amount from December to January, and on a seaSonally adjusted basis they were near the all-time high. At repOrting wholesale trade firms business increased noticeably to a level 17 per cent higher than in January last year. The Value of construction contracts awarded declined somewhat from the record total reported in December, but continued Illu.ch greater than in the corresponding month a year earlier. Dally average crude oil production declined fractionally from December to January, but refinery operations were stepped up, Crude oil runs to stills being the highest of record. Production and shipments of lumber increased sharply, following the usual Year-end decline. Operating schedules were above those of a YCar ago at meat-packing establishments and at mills producing ~O~ton textiles, cottonseed products and flour. Producti~n of rick and tile and structural iron and steel products contmued to. expand. The high level of business and industrial activity is Stimulating the demand for bank credit; total loans at weekly repOrting banks in this district increased during the first six Weeks of this year, although a decline ordinarily occurs at that time. BUSINESS d' C~nsumer purchases at reporting department stores in this IStrtct during January were at the highest level of record for that particular month, and on a seasonally adjusted basis they Were near the all-time peak. This bank's index of department :t~re sales, which makes allowance for customary seasonal varinlOns, rose from 116 per cent of the 1923-1925 average in ecember to 126 per cent in January. The latter figure comares with an index of 113 per cent in January, 1940. The dolar value of sales in January was 14 per cent greater than a Year earlier, and reports show that the gain was general among ~eporting stores located througho~t t~e district. Durin.g the rSt half of February, the distnbutiOn of merchandIse at ~eekly reporting department stores was one-fifth greater than In the corresponding period of 1940. hThe value of merchandise inventories at reporting firms S OWed little net change during January, but at the monthhnf stocks on hand were valued 2 per cent higher than those e d at the close of January, 1940. T~e aggregate distribution of merchandise through 72 re~~rtl.ng wholesale firms operating in six lines of trade in this stnct increased 5 per cent from December to January, and ~Otal sales in the latter month were 17 per cent greater than ~n January, 1940. Only one line of trade failed to participate In the gain over the year, which was the largest reported in :any. months. The distribution of durable goods, including '" achinery and equipment, electrical supplies, and hardware d as sharply higher than a year ago, and sales of groceries and ;Ugs exceeded those in January last year by a substantial margin. Inventories of merchandise at reporting firms were in~reased seasonally in January and at the close of the month the i Otal averaged about 7 per cent higher than on the corresponde~g d.ate a year earlier. Stocks at electrical supply houses were ea~;.clally heavy on January 31, exceeding those on hand a year ler by more than one-third. r Employment and payrolls in Texas, which had shown substantial increases during the final five months of 1940, declined seasonally in January, but continued well above the totals of a year ago. According to data compiled by t he Bureau of Business Research of the University of Texas employment declined 5 per cent from December to January and payrolls were reduced 6 per cent. In comparison with January, 1940, when, according to the Bureau of Labor Statistics, 941,000 persons in Texas were employed in nonagricultural businesses, employment was up about 4 per cent and payrolls were 8 per cent greater. The number of commercial failures in the Eleventh District increased considerably from December to January, but the average liability of defaulting firms showed a noticeable decline, with the result that the aggregate indebtedness declined 28 per cent to a point moderately below that in the initial month of 1940. Dun and Bradstreet reported 41 insolvencies during January with liabilities totaling $272,000. AGRICULTURE On the whole, physical conditions during January were favorable to the agricultural and livestock industries in most sections of the Eleventh District. Farmers generally were able to make considerable progress with plowing operations despite delays caused by intermittent rainfall; nevertheless, much field work remains to be completed, especially in central and east Texas, and north Louisiana. The growth of small grains in Texas made good progress during January. The condition of wheat and oats appears to be normal or better for this season of the year over most of the winter grain producing area, and the current outlook points to above-average yields. A good subsoil season obtains in virtually all sections of the district. During the first half of February, strong winds dried out surface moisture over a large part of Texas and caused considerable shifting of soil in the north and northwest portions of the State. The most unfavorable development to agriculture in this district during January occurred in portions of the truck growing area of south Texas, where a heavy frost in the latter half of the month destroyed limited quantities of winter vegetables, including snap beans, eggplant, peppers and squash. It is believed that some damage also occurred to the st rawberry, tomato and spring corn crops. In addition to the damage resulting from frosts, many fields of beets, carrots, onions and spinach in the Lower Rio Grande Valley suffered heavy losses from torrential rains. Harvesting operations have been delayed in virtually all sections of the vegetable growing area. LOANS AND INVESTMENTS OF REPORTING MEMBER BANKS , , ELEVENTH FEDERAL R£SERvt l.(1t.L. 400 300 200 wroNr_ y -.cl A~' ""' -1 -'_ TOTAl. l.OANS " i ~ldJ~J)tJ~~.,-~,,~~ "-ii--'----1- I ' .I.,'; I .... ,LJ_ '>0 J rUAMJJA, 300 TOTAl. ~---_.!. I S ONO INVESTMENTS I .. ---'S""-L-l_J....---.,' -rrr 200 u s. COV'T fl.T 1 19. 1 0.0 - - - 19.0 _ _ '00 '"'' I-- f-- ,..~r- "r--TI-rr-t-, 1111-,/ I OISTRICT J f DIRECT OBLI GATIONS I I It' I _/\ C ..... '--' MAM.lJA S ONO This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) '00 MONTHLY BUSINESS REVIEW 2 Although January weather was unfavorable to growing crops in south Texas, it was generally favorable to the outlook for crop production in the dry-land areas of that district. According to the Department of Agriculture, there will likely be a considerable increase in the early seeding of commercial truck crops in non-irrigated areas. Shipments of vegetables and citrus fruit from south Texas prior to February 16 totaled approximately 13,000 car loads, which was about one-third smaller than in the corresponding period of the preceding season. The indicated production of oranges and grapefruit in Texas showed no change in January and reports indicate that citrus groves are in good condition, with most of the fruit remaining for harvest of relatively large size. The preliminary 1941 cotton acreage allotment for Texas has been placed at 9,777,000 acres by the Agricultural Adjustment Administration. This figure, however may be increased somewhat due to allowances under the minimum allotment provisions of the Agricultural Adjustment Act of 1938. The preliminary allotment for Texas is 139,500 acres less than that allotted in 1940, which represents 38 per cent of the total reduction for the United States. The condition of livestock ranges in the Eleventh District continued well above the average during January. Excessive moisture in limited areas of east and southeast Texas caused some additional grass-rot, but elsewhere the generally favorable moisture conditions and mild temperatures were conducive to the growth of winter weeds and grasses. The outlook for livestock grazing on early spring feeds is favorable provided unseasonably cold weather does not occur during the remainder of the winter. Livestock weights remained above-average in January. In those areas where range feed is short, considerable supplemental feeding has been resorted to, but the plentiful supply and use of these feeds have prevented a heavy shrinkage in animal weights. Reports indicate that the demand for cattle is strong and some contracts for spring delivery have been closed at comparatively high prices. Some ranchers, however, have shown a reluctance to sell in the hope of obtaining higher prices. The strong physical condition of sheep and the relatively high contract prices being offered indicate that there may be a much heavier spring movement of yearling lambs to market than was the case a year ago. According to the Department of Agriculture, the number of livestock on feed in Texas at the beginning of 1941 was much greater than that a year earlier. This development may be accounted for in part by the generally good condition of WHOLESALE AND RETAIL TRADE STATISTICS , . - - - Percentage cbange in:----.. Net Sales Stocks' Number January, 1941 January, 1941 of reporting compared with oompared with Retail trade: firms Jan., 1940 Deo., 1940 Jan., 1940 Deo.,1940 Dopartment stores: Total Eleventh Distriot. ... .. ... 46 +14 - 50 + 2 - 1 Dallas........................ 7 +10 -47 + 9 + 2 Fort Worth.............. .. .... 4 +25 -55 - 3 - 8 Houston....................... 7 +11 -51 - 6 -21 San Antonio ......... ~......... 5 +19 -45 + 4 - t Shreveport.................... 3 +14 -58 Oth~r cities.................... 20 +13 -53 - 6 i; Indel"'ndent stores:t ArIZona. . . . . . . . . . . . . . . . . . . . . . . 251 + 10 -20 Now Mexico................... 158 +14 -17 Oklahoma. . . . . . . . . . . • . . . . . . . . . 542 +21 -33 To.as. . . . . . . . . . . . . . . . . . . . . . . .. 1,059 +20 -32 Wholosale trade:t Maobincry, e~uipment & supplies. 5 +36 +40 + 5 - 1 Drugs.(inoludln~ liquors).... .... 9 + 9 -12 +13 + 2 EleotrlCal supplies... .. . ..... ... 10 +56 -10 +38 + 4 Grocerics...................... 32 +13 +12 + 2 + 9 Hardware...................... 12 + 7 + 4 + 3 +7 Tobacoo and produots. . . . . . . . . . . 4 - 1 -28 'Stooks at olose of month. tCompiled by United States Bureau of Census. tCbange less tban one·balf of one per oent. +' INDEXES OF DEPARTMENT STORE SALES AND STOCKS (1923·1925 averago=100) January Decembor November January 1941 1940 1940 1940 Sales (daily average) without seasonal adjustment ... .. .. .... . .. .. .. . . . .. . 96 201 131 86 Sales (daily average) with seasonal ad· justment .........................• 126 116 117 113 Stocks without seasonal adjustment .... . 62 62 77 61 Stooka, with seasonal adjustment ........ 71 71 69 70 M pastures, the abundance of supplemental feeds and the can' tinued growth of the livestock industry in that State. The number of cattle on feed January 1, 1941, amounted to 168,· 000 head, which was the largest for any recent year and 17 per cent greater than a year earlier. The number of sheep and lambs in Texas at the beginning of the current year that were being fed for subsequent marketing totaled 290,000 head, which was nearly 60,000 head greater than a year earlier. It is probable that the number of Texas lambs on feed throughout the United States is the largest on record. FINANCE In contrast with a decline that ordinarily occurs at the beginning of each year, total loans at weekly reporting mem' ber banks in the Eleventh District showed a further net el(' pansion during the first six weeks of 1941, reflecting chieflY a sustained demand for funds to finance the high level of business and industrial activity. On February 12 total loans outstanding at reporting banks amounted to $322,000,000, which was nearly $3,000,000 higher than at the close of 1940 and $46,500,000 greater than a year earlier. The expansion ill loans during the first six weeks of the current year compares with a ten-year, 1931-1940, average decline of $12,000,00 0 for that period. Among the individual classes of loans, advances for commercial, industrial and agricultural purposes rose $3,800,000 during the six-week period and "all other" loans, including chiefly personal and instalment loans, el(panded by about $1,000,000. These increases were partially oftset, however, by declines in other classes of loans, particularlY loans to customers for trading in securities. Investments of reporting banks showed a net expansion of $5,400,000 betweell \ December 31 and February 12, reflecting increases in holdingS of direct obligations of the United States Government and ill corporate and municipal securities. Total loans and investmentS \ on February 12 were at an all-time peak, exceeding those of ~ \ year ago by $52,000,000. Following the usual temporary withdrawal of funds during the ~nal week of December, adjusted demand deposits at t~ portmg banks, which include chiefly individual, partnershiP and corporation deposits, showed one of the sharpest rises oll record during the subsequent six weeks, and on February 12 they were at a new record high. Other classes of depositS evidenced a net decline of $4,400,000 during the period as a result of substantial withdrawals of United States Governmellt deposits. Nevertheless, total deposits on February 12 were $30,000,000 greater than at the beginning of 1941, and $68,000,000 above those of a year ago. The expansion in depositS at I CASH FARM INCOME FROM THE SALE OF PRINCIPAL FARM PRODUCTS AND GOVERNMENT BENEFIT PAYMENTS (In thousand8 of dollars) -------:November, 1 9 4 0 - - v - - T o t a l reacipts-----RecClpts from: Govern· , . - - - - - . - - , ment Nov. Nov. Jan. 1 to Nov. 30 Crops LIvestock' payments 1940 1930 1940 1939 Arizona....... 3,555 4,700 366 8,681 10,040 52825 53,oBS Louisiana. ..... 14,443 2,808 1,020 17,831 19,281 104:309 Il 8,09~~ Now Mexico... 2,401 9,550 292 12,243 14,472 54175 51, Oklahoma. . . . . 14,491 8,140 2,254 25,185 20,255 185:705 179,8~~ Texas .. .... ... 34,000 22,141 8,992 05,199 54,316 531,930 ~ Total... . . 68,950 47,269 12,924 129,139 118,370 929,004 007,416 'Inoludes receipts from the 8ale of livestock and livestock produots. SOURCE: United States Department of Agriculture. LIVESTOCK RECEIPTS-(Number) ,.---Fort Worth----v-- San Antonio---; January January December January January DccolXlbe 1941 1940 1940 1941 1940 1940 Cattle................... 39,521 41,449 42,181 15,726 14 894 12,720 Calves.................. 24,952 23,475 27,565 20,721 17;923 2~,3U Hog..................... 67,438 40,664 68,867 15,903 13,172 13,6 Sheep..... .... .......... 26,223 38,776 28,738 6,908 5,230 4,29 9 COMPARATIVE 'l'OP LIVESTOCK PRICES (Dollars per hundredweight) ,.---Fort Worth---.,--- San Antonio--;;January January December January January DecclXl 1041 1940 1940 1941 1040 19 40 Beef steers ..... .... . . . .. . $11.60 $ 9.35 $11.00 $12.00 $ 8.60 $1\.00 Stooker steers ........... . 11.50 8.50 9.75 10.25 725 7. 60 Heifers and yearlings ... . . 11 .60 10.00 12 .00 11.60 9:50 i2.66~ Butoher oows ........... . 7.25 0.60 0.75 6.85 6.50 6. Calves .. ....... .. ... . .. . 10.00 9.00 9.00 9.75 8.60 o.~~ 6 Hogs . ...•____ .. __...._ ~ ........ . . 8.45 5.85 6.85 8.25 5.85 8 '00 Lambls .• ••• 9.75 8.60 8.75 8.60 7.26 • 8 MONTHLY BUSINESS REVIEW these banks since the turn of the year has resulted in large additions to their reserves at the Federal Reserve Bank and to their deposits at other domestic commercial banks. Reserve balances of all member banks in tlus district have followed a noticeable upward trend since the turn of the year, and On February 14 they had reached a record high of $257,000,000. During the first half of February total reserves averaged $250,000,000 daily, wluch was $32,000,000 greater than the average for the first half of February, 1940. The expansion in member bank reserves since the beginning of the C urrent year has been much greater than the increase in required reserves, resulting from the gain in commercial bank deposits, and as a consequence daily average excess reserves 7eached a new peak during the first half of February, exceedIng by a substantial margin the previous maximum of $90,000,000 recorded in July last year. Total earning assets of the Federal Reserve Bank of Dallas showed little change between January 15 and February 15, although member bank borrowings, which had been in small yolume, were completely liquidated on the latter date. Follow~ng the Christmas holiday, Federal Reserve notes of this bank In actual circulation showed the usual downward trend until January 24. After that date a substantial increase in the deIlland for currency developed, with the result that by February 15 note circulation had risen to a point only moderately below the all-time peak of $98,400,000 established on December 23, 1940. The recent increase in note circulation reflects primarily shipments of currency to meet payrolls of workmen at army cantonments that are under construction and to pay the sala~ies of soldiers at the several army camps located in this district. INDUSTRY The value of construction contracts awarded in the Eleventh District during January was much smaller than that reported for the preceding month due chiefly to a reduced volume .of awards for National Defense projects. The December total meluded the value of contracts for several defense projects that had been awarded earlier in the year, but had not been included in construction figures at that time because of inSufficient detail information. Nevertheless, the value of conStruction work initiated during January closely approximated the monthly average for 1940, which was an all-time high, and Was more than one-third greater than in January last year. The value of residential building, which was augmented ?Y the letting of additional contracts for United States HousIng Authority projects, was nearly double that in the opening month of 1940. The value of contracts awarded for nonresirential building was likewise sharply higher than in ~alluary ast year, reflecting chiefly increased awards for pnvat~ly ~nanced manufacturing structures. Engineering constructlOn, Including public works and public utilities construction, was about one-fifth lower than a year ago due to smaller awards for streets and highways and electric light and power projects. 1 FollOWing a sharp seasonal year-end decline,. operations at Umber mills in this district were stepped up m January to about the average level prevailing during the latter half of 1940. Production of lumber during the month averaged nearly one-third higher than a year earlier and shipments exceeded ~hose of a year ago by more than 50 per cent. As forward buyIng showed a marked increase, unfilled orders on the books of bep~rting mills rose sharply to a level about double that at. the eglUning of February, 1940. Mill stocks of lumber contmue to decline. I)'Da~ly average production of crude oil in the Ele:enth IStrlct and in the United States during January contmued ~he moderate downward trend that had been in progress since . eptember, 1940. Although the month-to-month curtailment ~n c.rude oil output since last September has been small, the ecllUe over the period for the United States has amounted to 144,000 barrels daily. Lower production allowables in the Eleventh District and a sustained downward trend in output in Illinois have accounted for about four-fifths of the decline. Aggregate output in the country as a whole is currently near the lowest level recorded since the Mid-Continent shutdown in August, 1939. In contrast with the curtailment in crude oil production during the five months ended in January this year, refinery CONDITION OF THE FEDERAL RESERVE BANK (In tholl8llnds of dollnrs) Fob. 15. Fob. 15, 1941 1940 Total cnsh reserves. . . . . . . . . . .... ... . . . . . ... ... . .. $31h06n060 $248,636 69 j'j Discounts for momber banks.. ......... ........... . Other bills di.eounted........... . ... .. . ........... None 161 278 483 Industrial ndvances.. . . .. . .. .. . .. . .. .. . . .. .. .. . .. . United St.tes Govornmont seourities. . .. .. .. .. .. .. .. 86,834 94,362 Total earning n""ets.... . ......................... 87, 11 2 95,065 Momber bank reserv~ deposit. . ..... . . . ...... .... .. 256,005 217,682 Federal reservo notes in aotual oiroulalion............ 97,225 80,431 Jan. 16, 1941 $207,081 12 18 278 86,835 87,143 244,118 96,110 CONDITION STATISTICS OF MEMBER BANKS IN LEADING CITIES (In thousand. of dollars) Fob. 12, Feb. 14, J.n. 8, 1941 1940 1941 Tolalloans and inve.tments....................... $589,238 $537,126 $582,364 Totallonns...................................... 321,677 275,186 315,695 Commeroial, industrial and agrioullurallo.ns. . . ... 222,975 182,522 216.133 Open market paper ............... ........ .... ·· 1,413 2,040 1,517 4,676 2,892 5,033 Lo.ns to brokors and dealers in .eourities... . . . . .. . Othor loan. for purchasing or oarrying soouritios . ... 12,186 13,963 12,640 Real estate loans .. . .......... , . .. . ... . . . ....... 22,509 21,921 23,268 Loans to bonks..... .. .. .. .. .. .. .. .. .. .. .. .. .... 686 246 508 All other loans . . ........ . .......... · .... ·...... 57,232 51,602 56,606 United States Governmenl direct, obligations. .. .. . . . . 166.872 153,167 167,218 Obligations.(~lIy guaranteed by United Stoles Govt.. 38,855 61,936 40,423 Other .eourltlCs. . . . . ... . . . . . . . . . .. . . . . ... .. .. .. .. 61,834 56,837 59,028 Reservo wilh Federal Reserve Bank. . . ..... . ....... 169,837 141,473 149,204 Balances with domeslio banks. . . . . . . . . . . . . . . . . . . . . . 291,806 294,248 282,698 Demand deposits-adjusted" . . . ..... . .... ... . ... . .• 542,989 474,822 620,377 Timo deP,oo.lts .. . . .. . . . . . .. .. . . . .. .. .. .. .. .. .. .. .. 136,967 135,788 135,936 United Stales Government depooits. ................ 22,787 31,016 29,609 interb.nk deposita..... . .. .. .. ... ... . ...... . ...... 289,715 282,547 279,592 Borrowings (rom Federal Reserve Bank. .. .......... None None None "Inoludes .11 demand deposits other than interbank and United States Government, leu 08.h itoms roported as on hand or in tho proccsa of ool1oolion •. DEBITS TO INDIVIDUAL ACCOUNTS (In Ihousands of dollars) January January Petg.ob.nge Doeember Potg obange 1941 1940 ovor yoar 1940 ovor'month Abilone ................. $ 11,552 $ 9,060 +28 10,130 +14 Austin .. ...... ... ....... 38,416 36,084 + 5 43,056 -11 Beaumonl.. ............. 27,136 25,262 + 7 28,286 - 4 4,310 3,646 +22 4,171 + 3 Corsic.na.. ............ . DaIl8.. . . ..... . . .. ..•. .. 304,493 277,437 +10 334,728 - 9 EI Paso ....... , . .... .. .. 49,634 31,518 +57 50,595 - 2 100,418 80,184 +13 100,502 - 8 Fort Worth............ .. 26,790 28,306 - 6 32,932 -19 Galveston. . . .. ... . . .. .. . Houston................. 280,628 257,617 + 9 292.633 - 4 Port Art.hur. . . . . . ... . . . . 10,919 9,773 + 12 10,605 + 3 Roswell................. 4,856 4,255 +14 6,744 -15 San Antonio. . . . . . . . . . . . . 84,657 70,445 +20 84,077 + 1 Shrevoporl. . . ...... .... . 63,227 47,817 +11 53,845 - 1 Texark.na".............. 10,002 7,272 +38 9,951 + 1 Tuoson.................. 14,360 12,358 +16 13,120 + 9 rl~~~::::::::::::::::::: Wiohita Falls............ U::~~ 17,660 U:~~~ 16,057 :m +10 t~:m 17,521 :!: ~1 + Total. .... .. .... $1,069,181 S052,728 +12 11,130,377 - 5 "Inoludes figures of two banks in Texarkana, Ark.nsa., looated in tho Eighth Distriot. I, GROSS DEMAND AND TIME DEPOSITS OF MEMBER BANKS (Average of daily figures-in thousands of dollars) Country b.nks Combined total Resorve oity banks V' Gross Gross Groos Time Timo domand demand Time demand $99,876 $672,662 $123,805 $519,402 January, 1039 ...... . . . . $1,192,054 $223,681 104,035 129,436 564,592 775,643 233,470 Janunry, 1940 . . .. . ..... 1,340,235 104,862 562,604 128,161 783,742 233,023 Seplember, 1040 .... .. .... 1,346,346 106,028 128,295 593,960 814,555 233,323 Ootober, 1940 ... .. ..... 1,408,515 105,199 128,213 627,319 842,676 233,412 November, 1940 .......... 1,469,805 105,686 131,622 632,314 841,903 237,308 Deoember, 1940 .......... U74,217 106,395 133,199 639,618 850,234 239,604 January, 1941 .. ........ 1,495,862 SAVINGS DEPOSITS Pereent.ge ohango in January 31, 1041 savinge depo.its from r Number of Number of Amount of ~ Deo.81, Jan.31, savings snvio~8 reEorling 1940 1940 deposi 8 depositors anks 10,183 $ 4,282,956 + 9.0 + .9 3 Beaumont ...... . ........ 26,669,193 + .9 91,181 + .2 8 D.lla................ • .. - 1.8 8,406,888 + 1.0 19,298 2 EIPaso . ... . .... ........ .1 .7 13,108,305 36,019 3 Fort Worth .............. .6 .7 12,088,566 18,609 Galveston ............... + .3 32,201,714 + 4.2 77,505 10 Houston ......... · ..... · . - 2.3 3,235,927 + 3.4 5,877 2 Port Arthur ... . ......... -1.1 17,940,848 + .2 23,066 5 San Antonio ............. .4 12,208,328 +1.6 26,136 a Shreveport .. . ........... + 3.1 4,639,092 - 3.5 8,123 3 Wnco ....... · ........ · .. - .2 3,640,831 - 2.6 7,107 3 Wiohita Fallo ............ .4 30,919,089 + 2.0 62,323 69 All others ........... .... .. - • Total ••• __ • __ 116 383,421 $l60,331,827 --+1.6 - - .2 r I , MONTHLY BUSINESS REVIEW 4 operations have been well sustained. In this district daily average crude oil runs to refinery stills during January were at an all-time high level and in the United States as a whole they were only 1 per cent smaller than the peak recorded in June last year. The contraction in crude petroleum output and the heavy volume of crude oil runs to refinery stills over the past several months are reflected in above-ground stocks of crude oil, which were reduced by about 2 per cent between August 31, 1940, and February 1, 1941. On the latter date, stocks in the United States totaled 261,200,000 barrels. Stocks of gasoline increased sharply during January, and at the close of the month the volume on hand closely approximated that of a year ago. Inventories of heating oil in the United States showed a marked seasonal decline during the month, and stocks of industrial fuel oil decreased moderately. The domestic demand for cotton textiles continued heavy in the opening month of 1941 and cotton mill activity increased further. The volume of raw cotton consumed in the United States during the month aggregated 843,300 bales, which was an all-time high for any single month, exceeding the previous peak established in March, 1937, by 9 per cent. Notwithstanding the heavy production of cotton goods during January, mill sales of cotton textiles appear to have exceeded output with a consequent increase in unfilled orders. Prices of cotton goods showed further advances during the month. During the first half of the 1940-1941 cotton year, domestic mills consumed cotton at the rate of 737,900 bales monthly for a cumulative total of 4,427,000 bales. The rate of consumption during that period was at an all-time peak, and the aggregate amount of cotton utilized during the six months exceeded the previous maximum for that period recorded in the 19391940 season by about 10 per cent. Consuming establishments continued to make heavy purchases of raw cotton during January, though there was little net change from a month earlier in the volume of stocks on hand January 31 due to the high rate of consumption during the month. At the close of January mill stocks of raw cotton amounted to 1,875,000 bales, which was 6 per cent greater than the volume on hand a year earlier. Inventories of cotton in public storage and compresses on January 31 totaled 14,668,000 bales and of this amount slightly more than 11,000,000 bales represented Government loan stocks. According to the Commodity Credit Corporation, 2,984,000 bales of the 1940 cotton crop had been pledged as collateral for Government loans prior to February 12. Repossessions prior to that time amounted to approximately 118,000 bales, leaving a net total of 2,876,000 bales of the 1941 crop under the loan. VALUE OFj CONSTRUCTION CONTRACTS AWARDED (In thousauds of dollars) January January December 1041 1040 1040 15,344 41,221 r Eleventh Distriot-total.. . . . . . . • . . . . . . . • . . . . . . . . . . 20,768 Rcsidential. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,448 4,366 11,076r All other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . 12,320 10,078 29,245r United Statcs·-total.. . . . . . . . . . . . . . . . . . .. . . . . . . . . 305,205 106,191 456,189 Residential. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,306 77,400 159,276 All other. . . . .. . . . . . . . . .. . .. . . . . . . .. . .. . . . . . . . . 103,809 118,701 206,014 ·37 states east of tho Rooky Mountains. r-Rovised. SOURCE: F. W. Dodge Corporation. BmLDING PERMITS Percen tage ohange January, 1941 valuation from ~------------~v~------------~, Amarillo ...... . ....... . . ., ........ . . . Austin . . .. . ...... . ........... ........ . Boaumont ... . ...... . ...• .. . . ... . .... Corpus Ohristi. . ........ .. ...•....... Dall..• .. . . ... .. .. .. .. ..... ...... . .. . ElP..o ... . . . . ....... . ..... ... .. . . . . Fort Worth . ..... . . . •.. .... ... ..•.... Galveston . . ....... ... ..... . .... ... . • Houston . ... . ..... .. .. . .. . .... .. ... . . Port Arthur ... ... .. .... ... ... . .. . .. . San Antonio ........... ..... . . ...... . Shreveport ......... . ...... . ...... . . . Waoo .... .. . . .. . .. ..... . .. . . . ...... . Wichita Falls ... . . . .. .. . .. .... •. . .... Number 64 207 112 232 657 137 227 138 428 112 500 126 80 32 Total... .. .. . ..... . .... . .. .. 3,052 ·Inoludos Highland Park and Univ~rsity Park. Valuation Jnn., 1940 S 173,960 + 31 302,158 - 19 307,310 +200 1,202,464 - 8 1,048,691 + 20 223,032 + 64 500,882 + 77 111,029 - 67 2,004,075 - 45 84,416 + 29 1,083,085 +148 324,040 + 6 165,085 + 8 58,125 - 34 $7,670,252 - 8 Doc., 1940 - 20 - 39 +269 +387 - 65 + 66 +168 + 171 - 36 + 69 + 20 + 47 +104 - 04 - 23 , Domestic cotton prices, which had declined by nearly one and one-half cents per pound between June 15 and November 1 last year, recovered about one-half of that decline during the final two months of 1940. Since the beginning of the current year prices have fluctuated within narrow limitS around the level attained on December 31, 1940. On February 15 the price of raw cotton, middling, 15/16-inch staple, at ten designated spot markets averaged 10 cents per pound, which was 7 per cent above the 1940 low of 9.31 cents per pound recorded during the last half of October. The relative strength in cotton prices during recent weeks reflects in part the heavy domestic consumption of raw cotton and the comparative scarcity of cotton in commercial trade channels as a result of large Government loan stocks. Exports of cotton from the United States continued in small volume during January, totaling only 52,200 bales as against shipments of more than 1,000,000 bales in January, 1940. During the first half of the current season, exports totaled 653,600 bales, which was less than one-fifth the volume exported in the corresponding period of the preceding season, Shipments to the United. Kingdom and Russia account for about three-fourths of total cotton exports thus far this season, Operations at cottonseed oil mills in the United States during the first half of the 1940-1941 season averaged somewhat lower than in the corresponding period of the preceding season, due in part to a curtailment in the demand for cottonseed products. During the six months, August, 1940, through January, 1941, mill shipments of cottonseed oil and cake and meal were 10 per cent smaller than in that period a year earlier and movements of hulls and linters were about one-fourth smaller. In contrast with the decline in operations at all miUs in the United States, the volume of cottonseed crushed and the production of products at Texas mills have averaged appreciably higher than in the first six months of the 1939-194 0 season. Although shipments of cottonseed hulls and linters from Texas mills thus far this season have been considerably smaller than in the comparable period a year earlier, movementS of oil and cake and meal have shown an increase. STATISTICS ON COTTONSEED AND COTTONSEED PRODUCTS ~--- Texns----v-----United Stntes----August I to Janunry 31 August I to Janunry 31 This season Last season This season Lnst season Cottonaced received at mills 3,730,46 1 (tons) ... . '" . .. .. ... . . . .. . 996,207 850,533 3,014,555 3,061,686 Cottonseed orushed (tons) . ... . 804,002 776,108 2,876,981 Cottonseed on hand January 31 708,401 (tons) .... ....... . . _...... . 207,862 138,403 1,076,416 Production of products: Crude oil (pounds) . . .... . . . 243,073,203 056,043,5M 223,185,436 017,191,673 1,373,6 Cake nnd meal (tODS) .. . ... . 373,723 367,072 1,278,942 773,1 42 Hulls (tons) . .. .. . .... . ... . 204,817 200,671 722,085 770,313 Lintors (running bales) ..... . 196,650 178,257 767,220 Stooks on hand January 31: 80,865,104 Orudc oil (pounds) . ....... . 33,189,406 24,894,333 91,212,501 217,083 Cake and menl (tons) . . .... . 70,739 71,380 215,358 150,52~ Hulls (tODS ... . ..... . .... . ) 92,232 196,746 61,608 333,28 Linters (running bales) . . . .. . 76,201 106,923 250,942 SOUROE: Bureau of Census. RECEIPTS, EXPORTS, AND STOCKS OF COTTON AT THE PORTS OF HOUSTON AND GALVESTON-(Bnlcs) Jnnunry January Deeember August 1 to January 31n 1941 1940 1940 This scason Lnst sease Reoeipts .... . ........ .. " . 96,141 332,380 105,360 1,480,508 3,03:,g~~ Exports.... .. . . . ...... . . 85,679 519,240 08,013 612,021 2,41, Stooks, end of month. . . .. 1,967,962 1,570,608 1,066,026 ....... . CONSUMPTION, STOCKS, AND EXPORTS OF (;OTTON-(Bales) January JnnJnry December August 1 to Jnnunry 81 1941 This senson JJ6St sca son . 1940 1040 Consumption nt: 71,002 Texns mills .. .. .. . .. . .. 20,373 12,827 22,408 110,555 4,041,086 United State. mills ... .. 843,274 731,793 4,427,201 776,472 U.S. stooks-end of month: In consuming . stab'mts . 1,874,611 1,776,508 1,833,864 Publio stg. &: oompresses. 14,668,189 13,200,600 15,046,513 Ex-mrla from U. S. to: I 333,291 niled Kingdom . ...... 18,218 379,600 10,564 326,718 '487,674 Franco .. . . . ... . ... . . .. None 178,310 None None 31O,12~ Italy .. .... .. ..... . .... NODe None None 18,99 6~~~~ Germany ... . ... . . . .. .. None None None 815,525 5,305 Other Europe ........ .. 106,917 42,129 152,005 583,19 0 9,754 161,019 8,865 39,470 620,425 i'lr~~bo~ ~~;;~t~i~8·. '. : : : : 18,007 141,944 36,817 141,038 ----- ----4,169,83 1 Total exports .. .... _ 52,184 1,035,416 107,375 660,131 - r MONTHLY BUSINESS REVIEW March I, 1940 NATIONAL SUMMARY OF BUSINESS CONDITIONS (Compiled by the Board of Governors of the Federal Reeerve SYltem) . INDUSTRIAL PRODUCTION "" 0 'NT 140 0 120 f-- I "0 f-&0 I eo h/ 10 1I.l.i I V - / 100 J 1-/ v 130 J 120 r 10 ) I 00 90 r---.! 80 70 60 60 1934 1935 1936 1937 1938 1939 1940 In~ex of fhYSical volume of production, adjusted for = 100. By easona variation, 1935.1939 average months, January, 1934 to January, 1941. FREIGHT CAR LOADINGS POINT1IN TOTAl. INDEX 100 o 18~ Ig;sS 19M 1931 1938 1939 = WHOLESALE PRICES OF BASIC COMMODITIES '.~~ ;~: 100 eo r--t:.,-"""'/- 80 - 60 40 40 1934 1 935 1936 1937 1 938 PRODUCTION In January volume of indust ri~1 production declined less th~n se~sonally and the Board's adjusted index rose one point further to 139 per cent of the 1935 -39 average. There were further considerable increases in activity in industries making machinery, aircraft, ships, and similar products important in the defense program., and output of industrial materi.ls, such ~s steel .nd nonferrous metals, continued .t ne.r c.pacity rates. Lumher production also was in unusually large volume owing to demand arising from construction under the defense program as well as from private building. Automobile production, which ordinarlly declines considerably at this time of year, w.s maintained at • high rate in Janu.ry and the first half of February. This reflected in part .n unusually large volume of retail sales and in part the industry's efforts to build up dealers' stocks of cars as much as possible with a view to having an ~dequate supply on h~nd in case priorities or work on defense orders should necessitate curtailment of automobile production. Currently dealers' stocks of new cars are probably near record levels. In the cotton textile industry, activity in J~nuary showed some further increase from the record level reached in December but the rise w.s less than usually occurs at this se.son. At wool textile mills there was some decline from the high level of November .nd December, while output .t r.yon mills was maintained in large volume. Defense program orders for textiles, p.rticularly wool and cotton products, have been substantial for some time, .nd these combined with considerable civilian demand have resulted in the accumulation of large order b.cklogs at most mills. Activity at me~t packing est.blishments was reduced in Janu~ry owing chiefly to a sharp decline in hog sbughter, which had been exceptionally large in the I~tter part of 1940. Shoe production advanced by less than the usual season.1 amount following a high nte of output in November ~nd December. At mines output of most metals continued at record levels in January. Production of fuels was sustained in I.rge volume but w.s not at such high levels as output of other minerals owing in part to the existence of considerable stocks, particularly of petroleum products. 1940 ~~~;x of total loadings of revenue freight, adjusted Mi seasonal variation, 1923·1925 average 100. of ~C~lJaneous. coal. and all other expressed in terms Olnts in the total index. By months, January, 1934 to January, 1941. ... ..... Industrial ~ctivity continued at a high level in January ~nd distribution of commodities was maintained in large volume. 1 939 1 940 Value of construction contracts, as reported by the F. W. Dodge Corpor.tion, declined in January. The decr.. se reflected chiefly ~ sharp reduction in awards for public construction from the exceptionally large December total, which had included a number of defense projects not previously reported by the Dodge Corpor.tion for lack of detailed information. Contr.cts .worded for private nonresidential building declined somewh.t in Janu.ry but as in December were twice as large as the amount awarded in the corresponding period a year ago. Awards for private residential building increased and on a seasonally adjusted basis were at the highest level since the middle of 1929. DISTRIBUTION Distribution of commodities to consumers in J.nuary was maintained .t the high level reached in the btter part of 1940. Sales at department and variety stores declined seasonally following .n unusually large .mount of Christm.s trode, while sales of automobiles continued near the rate prevailing in December. In the early part of February department store s.les were sust~ined in large volume. Total freight-car loadings, which usually decline from December to Januory, showed little change this year and the Board's s..sonally ~djusted index rose two points further to 86 per cent of th.i: 192 3-25 average. WHOLESALE COMMODITY PRICES J:!e~er~1 Reserve groupings of Bureau of Lahar Statis· cs data. Thursday figures, January 4, 1934 to Fehruary 13, 1941. MONEY RATES IN NEW YORK CITY PrJt UH f 4 Prices of industri~1 m.teri.ls and foodstuffs generally showed little ch.nge from the middle of January to the middle of February. Some imported commodities, principally coffee, cocoa, rubber, .nd tin rose slightly and there were increases also in prices of lard and wool tops, while declines were reported for livestock ond ~ts, hides, groins, lumber. ~~d sc~.p ~et.ls. Prices of SOme finished commodities, particularly textile products, showed ~dv~nces In thIS period. BANK CREDIT Total loans and investment! ~t reporting member banks in 101 leading cities incre.sed substantially d ring January and the first half of Febru~ry, reflecting largely purchases of new Defense Notes is~ued by the Government. Commerci~~ loans at these banks incre~sed further while loans to New York security brokers and dealers dcclUled. UNITED STATES GOVERNMENT SECURITY PRICES 1936 1 937 1938 1939 1940 For weeks ending January 6, 1934 to February IS, 1941. Prices of United States Government securities continued to decline in the latter half of January d the first half of February, more th.n canceling the gains from the end of October to the peak on ~necember 10. The 1960-65 bonds on February 14 were selling on ~ yield basis of 2.28 per cent, compared with a low of 2.03 per cent on December 10. MONTHLY BUSINESS REVIEW PERTINENT FACTS ABOUT THE PETROLEUM INDUSTRY* The rate at which petroleum reserves in the United States were discovered declined for the third consecutive year during 1940, and the year's total discoveries of approximately 1,600,000,000 barrels were the smallest since 1935, but were still relatively high as compared with other years. Despite record production during 1940, the industry made a net addition of 252,000,000 barrels to proved underground reserves, bringing the total to an all-time peak of 18,735,000,000 barrels, a fourteen-year supply at the current rate of production. Accretions to proved reserves occurred principally in the states of Texas and Illinois. The largest net gain occurred in Illinois, where net additions amounted to 193,000,000 barrels and slightly exceeded those in Texas which totaled 182,000,000 barrels. The only other important additions were 52,000,000 barrels in Louisiana and 35,000,000 barrels in Kansas. In other states proved reserves either showed unimportant increases or actually declined. The significant declines included 157,000,000 barrels in California and 43,000,000 barrels in Oklahoma. In the matter of total proved reserves, Texas continues to lead by a wide margin, having a total of 9,950,000,000 barrels, or 53 per cent of the United States total. California ranks second with 18 per cent, while Louisiana, which ranks third, has only 6.5 per cent of known reserves in the United States. Well completions during 1940 exceeded those in 1939 by 11 per cent and with the exception of 1937 were the largest in 20 years. The 30,560 wells completed during 1940 included nearly 6,800 dry holes, although the number of failures in 1940 represented a slightly smaller percentage of total completions than was the case in the preceding year. In Texas, where the 9,775 wells drilled constituted nearly one-third of the United States total, the gain of 4 per cent in the number of completions as compared with 1939 was much smaller than the national average. Although large increases in drilling occurred in north Texas, in west-central Texas, and in the Texas Panhandle, those gains were nearly offset by sharp declines in other sections of the State. The most pronounced percentage increases in drilling took place in a few states where completions constituted a relatively small part of the Nation's total completions, but a very large percentage of completions in those states represented dry holes, probably indicating that the activity represented in large part wild-cat drilling. The states which had a large number of completions, as well as substantial percentage increases in activity, included Louisiana, Kansas and Indiana. A significant feature of drilling activity during the year was the large amount of this work carried on by the smaller companies, usually referred to as 'independents.' According to the data compiled by The Oil Weekly, the independents accounted for 72 per cent of all wells completed during 1940. Among the six major oil producing states, Illinois and California were the only states where the larger oil companies drilled more than one-half of the wells. In the other four states, the proportion of wells drilled by independents ranged from 56 per cent in Louisiana to 78 per cent in Oklahoma. The proportion was 62 per cent in Kansas and 66 per cent in Texas. Nearly all of the 10,000 wells completed outside these six states were drilled by independents. During 1940, completions of oil producing wells continued to exceed abandonments by a wide margin. At the end of the year, there were 392,000 producing wells in the United States, an increase of nearly 12,000 wells over the number a year earlier. In Texas there were net additions of approximately 5,000 wells, bringing the total at the end of 1940 to 95,50 0 producing wells, of which 40,600 wells, .or 43 per cent, were flowing wells. The ratio of flowing wells in New Mexico to the total number of producers in that State is much higher than in Texas, but that State has only 3,300 producing wells. These two states, together with Louisiana and California, at the end of 1940 had 47,473 flowing wells out of a total of 48,670 such wells in the United States. Notwithstanding the increase in the number of producing wells, the average daily output per well in the United Stat~S was slightly higher than in the preceding year, resulting In a record production of pGtroleum in 1940. Among the major oil producing states, Texas with a daily average per well output of 14.5 barrels ranks well above Oklahoma and Kansas, but ranks considerably lower than most other heavy producing states. The Texas per well output which showed a decline for the third consecutive year during 1940 was at a lower level than at any time in more than 20 years. Louisiana had a per well output of 59.9 barrels daily, the highest of any of the major producing states. California ranked second with a per well output of 41.2 barrels daily. During the past decade the average daily output per well in New Mexico has declined from 93.7 barrels to 34.2 barrels, reflecting a much more rapid growth in the number of producing wells than in the demand for petroleum from that State. In Illinois, the per well output was only 21.6 barrels daily, even though productio~ in that State is not subject to proration. The low average IS due primarily to the large number of wells in old fields where the recovery of oil is very small, but there is a tendency for output of wells in new fields to decline after being broug~t into production. During the first half of 1940, production In Illinois rose rapidly and reached a peak with a daily average output in excess of 500,000 barrels late in June of that year. Since that time, the trend of production has been downward and currently amounts to only about 325,000 barrels daily. During January this year, the daily average number of wells completed in the United States was the smallest for any mon~h since the early part of 1939 and 13 per cent lower than In January, 1940. Declines from a year ago in states included in this district were: Texas, 20 per cent; Louisiana, 16 per cent; and New Mexico, 68 per cent. In all of these states the number of drilling rigs in operation on February 1 was sharplY lower than on that date last year. CRUDl~ OIL PRODUC'rION- (Barrels) January. 1041 Inere880 or deere880 in dailY "'---o- I - - --aT taD i1y-a'-- ' 'R' average produetion ~ North Texa .... . ............ . West Texas ... . . ... . . ..... . . . Ea.t Texas .. .. . .... .. .. .... . South Texas . ... . . . . .. . . . . .. . Texa. Coastal .. ... . ..... . ... . produetion 5,303,050 7,308,250 13,320,150 5,755,050 7,300,050 produotion 171,006 238,658 420,073 185,n47 235,805 ' • Jan., 1040 0,497 - 20.270 - 44740 - 22:407 7,082 Total Texas .. .. . . . New Mexico .... . ...... . .. . . . North Louisiana ...... . . .. . .. . 30,005,450 3,125,900 2,137,700 1,261,144 100,835 68,058 - 10,037 - 3,365 308 + + + Total Distriet .... .. 44,350,050 1,430,037 - 82,904 SOURCE: Estimated from American Petroleum In. titute weekly reports. Doe., 1940 _ 10,857 2,147 - 2,317 - 1,769 1,301 + + _ 11,435 _ 401 302 + _ 11,540 *This article is based on data published by The Oil Weekiy, Houston, Texas.