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Monthly Review of Business and Industrial Conditions in the Eleventh Federal Reserve District, Federal Reserve Bank of Dallas W. F. RAMSEY. Chairman and Federal Reserve Agent. Volume 5 CHAS. C. HALL. Assistant Federal Reserve Agent. Dallas, Texas, September IS, 1920 So far as the Southwest is concerned the credit situa~ tion, which in this district, as elsewhere, is the most widely discussed phase of the business situation, exhibited but little change in the month of August, although there was another moderate increase in the volume of bank loans and some decline in deposits. Despite this condition, however, a spirit of unyielding optimism still pervades in most quarters concerning the outlook for the immediate future, based on the strong position which the district is believed to hold on account of its crop prospects. Trade authorities are counting strongly upon a heavy fall business, which in tum is largely predicated upon the outcome of the cotton crop. Excessive rains and the decline in the cotton market which occurred in August created for a time widespread pessimism among the cotton growers and not a little apprehension on the part of business and financial circles. Since the advent of a period of clear weather, however, which began about September 10th, the crop outlook and business situation have exhibited a steady improvement, and, while the district's cotton crop will undoubtedly be materially smaller than was generally expected thirty days ago, it is still possible to produce a fair sized crop provided weather conditions from now on are propitious. Since the Government report of Aubrust 25th, showing the condition of the Texas cotton crop to be 7 points below the July 25th condition, reports from many North Texas and East Texas counties indicate that deterioration continued in those sections through the first ten days in September. This year, however, is no exception to the rule that crop results vary radically in different geographical sections of the district, and, as in previous years, while the 1920 cotton crop will be considered a failure in some sections, in others (notably South and West Texas) a good yield seems to be assured. As a result of the recent depression in the cotton market, efforts are being made to perfect an organization among the cotton growing interests to foster a general holding movement for the purpose of obtaining a much higher price for the staple. There appears to be some difference of opinion as to the extent to which this holding movement should, or can, be carried out. There is a sentiment among some of the growers, particularly those who are financially independent, in favor of warehousing the crop for an indefinite period of time, or until they are able to practically dictate the price of cotton. On the other hand there is a well organized group of producers, who are apparently in the majority, whose program contemplates not an indefinite holding of the crop, but a gradual market~ ing of their product distributed practically throughout the year, releasing from time to time only a sufficient amount to liquidate the indebtedness incurred to finance the planting and growing of the crop, and to prevent any general dumping on the market of cotton for which there is little or no demand. No.8 With the latter plan the Federal R eserve:Bank:of Dallas is in entire accord and sympathy, and believes that its position is generally shared by its member banks. In other words it favors ordinarily only such extensicm of credit as will assist the growers to realize a normal price, that is t o say such a price as would naturally follow the operation of the laws of supply and demand where the crop is marketed gradually and over a series of months, as distinguished from allowing it to be either unloaded upon the market too precipitately or indefinitely withheld Crom ilie market for t he purpose of obtaining an arbitrary price. Any other course is not only clearly incompatible with the present credit and warehouse situation, but would be inconsistent and indefensible in a period of readjust.. ment such as the present time, when each industry is entitled to receive its share of available credit in return for be..'\.ring its share of t he common burden. The harvesting of the cotton crop delayed by. wet wca ther, is now making good progress. There IS a scarcity of labor for picking, but complaints on this score have not reached alarming proporLions. The movement of the grain crop is proceeding slowly. .Range condit ions in most sections of the district were lffiproved. by the August rainfall. The transportation situation has showed considerable improvement during the past 30 da~, but our reports would indicate that t his improvement 1S traceable not so much to an enlargemen of the car supply ~ to a slacke~~ ing in the volume of goods offered . for shipm ent . This is especially true wi.th respect to livestock and .lumber traffic. Building activity was notably quiet dunng t he past month, due in part to an aC1;lte scarcity of many classes of building material, particularly cement and builders' hardware. Retail trade is still quiet and seems to be "marking time" pending the marketing of the district's crops. On the other hand wholesale houses, despite the unsettled status of prices and other disturbing ~uences, report a heavy increase in orders booked dunng the month of August as compared wit.h the previous m onth, a great deal of t hen" transactions representing eleventh hour orders for fall merchandise placed by retailers who, though still inclined to postpone buying unt il they could recover their confidence in prices, found further postponement impossible on account of the increasing pressure of their immediate needs for the fall trade. The August failure record shows excellent improvement over that of the previous month, the decrease in number of business failures being 24%, while liabilities involved show a decrease of 179%. AGRICULTURE August weather conditions in the Eleventh District were generally adverse to those crops and.farmi?g operations which demand dry weather at thIS peno<i, thus This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) counteracting to a considerable degree the excellent progress made in the month of July. On the other hand conditions were propitious for the best growth of such crops as corn and grain sorghums. Cotton The average condition of the Texas cotton Deteriorates crop on August 25, 1920, was placed at 67 per cent of normal, compared with 74 on July 25th, or a net loss of 7 points, according to the official estimate of the Bureau of Crop Estimates. Ex~ cessive rains and subnormal temperatures in North and East Texas during August and the first two weeks in September resulted in a slow but steady deterioration in the condition of the cotton crop in those sections. The wet weather not only gave an impetus to the activities of worms and weevils, but also interfered with picking and retarded the opening of boUs, so that the present outlook is for a much later harvest season than was indicated at the end of July. The lateness of the crop has necessarily contributed more than usual uncertainty to the estimates of the 1920 production. Ordinarily it is possible to make these estimates with reasonable accuracy by the first of September. This year, however, September would seem to be the critical period in the fruition of the plant, and the unofficial reports coming in from the leading cotton counties since the end of August indicate such a spotted and rapidly shifting situation with respect to the condition of the crop that probably no reliable estimates of the final outcome can be made until October 1st. For example, from a number of North and East Texas counties, where on August 25th, the prospects were for a crop as good or better than normal, have recently come reports that their outlook now is for a production of one·half to a third of a normal yield, due to the recent heavy rains. In other states partially included in the Eleventh District the condition of cotton during the past month has exhibited a less noticeable change. From New Mexico reports are to the effect that the drought which locally had begun to assume serious proportions in July had been broken by fairly abundant rainfall during August, particularly in Luna, Hidalgo and Grant counties. In Luna County, where the staple is being grown this year for the first time, prospects are for a successful year, which will tend to encourage the further spread of the cotton growing industry in that state. In Southern Oklahoma counties cotton is showing the effects of cool weather and excessive moisture. In ad~ dition to insect damage, some rust and boll rot have been reported from that section. According to the Bureau of Crop Estimates the con~ dition of cotton on August 25, 1920, indicated that the Texas 1920 crop would yield 3,690,000 bales, as against a production of 3,065,000 bales last year. For the district as a whole the 1920 production is estimated at 4,284,000 bales, compared with the 1919 total of 3,097,000. For two weeks following the date on which these estimates were made the heavy rains which began in August con~ tinued to fall over a large area in North, Central~West and East Texas, giving further encouragement to the destructive work of weevils and worms and contributing greatly to the uncertainty of the yield in sections which ordinarily produce a large percentage of the state's output. This situation, coupled with the hazard of an early killing frost in the Northern portion of the belt (which is a possibility of more than usual significance this year on account of the lateness of the crop), emphasizes the probability that fall weather conditions will t his year exert a greater effect than usual upon t he outcome of t be cotton crop. At this writing these conditions are be· coming more favorable both for the best growth of the plant and the picking of the crop and in the absence of further rains or early frosts the district should be able to produce a crop of satisfactory size. For the five year period from 1914 to 1918, the first l<illin ,. frost of the autumn occurred in this district on the average, durin 5 the first week in November. Corn Corn, which ranks second only to cotton in the district's agricultural production, came through the month in excellent condition, which is an exceptional accomplishment for that crop in the month of August. Shipments began moving from t he Rio Grande Valley early in the month, followed closely by shipment.'> £rom the San Antonio region. A production of 169931,000 bushels in the state of Texas is forecasted from the condition percentage of August 25th. For the . entire district the 1920 production forecast, as of September 1st was 196 997 000 bushels compared with last year's production of 22 ' ,243, 0 bushels. The district's 1920 wheat production, based on the latest available reports, is estimated at 14,406,000 bushels, as compared with a total of 32,707,000 bushels raised last year. Winter Wheat Oats and Hay Oats and hay, though adversely affected by excessive rains, have yielded fairly well, the quality of such hay as could be harvested being exceptionally good. Texas has apparently raised the largest crop of grain sorghums in its history, the production being estimated at 59,620,000 bushels. Heavy August rains extending through the Panhandle and South Plains section have made possible this record~breaking yield, following the planting of an unusually large acreage amounting to 1,906,000 acres. Grain Sorehums The estimated Texas production of rice this year is 9,223,000 bushels; sweet potatoes, 8,775,000 bushels; peanuts, 4,710,000 bushels. Other Crops Cotton Movements By comparison with last season, exports of cotton moving through the port of Galveston in August showed a decrease of 87,644 bales or 53 per cent. Receipts and stocks on hand at the end of the month were about equal to those of the corresponding period last year. The general volume of the export trade, both foreign and coastwise, is expected to continue comparatively small until October, on account of the backwardness of the new crop. AUGUST COTTON MOVEMENTS through the Port of Galveston August 1920 Receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 86,965 Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,602 Stocks August 31st........ . .............. 119,449 August 1919 80,882 164,246 119,205 GALVESTON STOCK STATEMENT Aug. 30 1920 8,268 For Great Britain .. .. . .. . , .. . . ... .. . . .. . . 4,601 For France ... . . . .. .. . . .. . . . .. .... . . . ... . 9,371 For other foreign ports ... ..... .... . . . ... . 1,000 For coastwise ports .. .. . . . . .. . .. . . . . . .. . . In compresses ...... .. ........ . .. ..... ... . 96,209 Aug. 30 1919 25,999 Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 119,449 119,205 --- 10,196 200 82,810 COTTON MOVEMENTS, ALL U. S. PORTS This Season Receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 160,418 Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 159,467 Stocks, August 31st. . . . . . . . . . . . . . . . . . . . . . 709,024 Last Season 243,317 503,084 839,807 Grain Movements Wheat receipts at five of the principal grain centers during the past month exceeded those of July by 14 per cent. Supplies of oats and corn, however, showed a decrease for the month, the ne:v crops not having made their appearance to any apprecIable extent. Comparative receipts as reo ported by grain inspectors, are tabulated below. ' COMPARATIVE GRAIN RECEIPTS August (cars) Wheat . .... . ............ . .. .. . . . . . . . ... . . 6,350 Corn ...... . .... . ..... . .......... . . . .. . . . 66 Oats . ........ . ............ .. ... . . ...... . 635 July (cars) 5,570 176 862 Grain Price Movements Local grain quotations followed an ir· regular course during the past month, but at the end of August prices ruled at higher levels as a result of light receipts, increased export demand and the upward trend of the general market. Wheat advanced from $2.30 to $2.55, No.3 corn from $1.20 to $1.33, and No.3 oats from 68c to 82c. LIVESTOCK Range Conditions Sufficient rainfall occurred in August in all sections of the district except Arizona and parts of New Mexico to maintain the ex~ellent condition which the ranges generally have enJoyed throughout the past summer. In some sections of Arizona observers reported at the end of the month that the rangers were drying and stock water was becoming scarce. Good rains which fell in the first week of September, however, relieved this situation, and as this is written the present condition of livestock and ranges in all parts of the district is ex~eptionally good, and pros· pects for an abundance of WInter feed were never more encouraging. Most of the Panhandle section was visited by heavy rains since our last report was issued. At Amarillo there was a total of 6.04 inches of rainfall between August 3rd and September 7th. August Livestock Prices August was another dull month in the Eleventh District livestock markets. At no time was there a respectable demand for cattle or calves, and notwit,b.standing cattle l'eceipis were about 35% smaJ.ler than those of July, beef steers, calves and butc)ler cows showed a steady depreciation throughout the month. of August. The demand for stocker cattle displayed some symptoms of renewed strength towards t~e middle of the month, but the rally was of short duratlOn and the market suffered a quick relaps~ to the depressed condition which has been mani· fest ~I1 this division throughout the summer. The best grade of beef steers sold as high as $12.25 but there was a scarcity of fat animals and the bulk of the offerings consisted of light grass-fed steers which found a sluggish sale at from $8.25 to $9.50. Butcher cows ranged in value from $5.50 to $7.50, while calves opened the month at $12.25, declined as low as $9.75, and at the end of August commanded $11.25. Hogs reached a maximum of $16.60, but on the last day of August were quoted at from $15.70 to $15.90. Sheep and lambs also underwent declines in the course of the month's trading, lambs recording a net loss of $2.50. A comparison of top prices for August, 1920, with those of August, 1919, throws an interesting light upon the probable relation of hide and wool values to livestock prices. The recent declines in the market price of these by-products may be plausibly cited as an important factor in the present prices of cattle, sheep and lambs. For example, at the Fort Worth market the top lamb price in August of this year was $13.60, compared with $16.50 for August, 1919. The Federal Bureau of Markets has estimated that, considering the depression in the value of by-products, lambs costing this year $12.50 on foot produced dressed carcasses at the same cost as a lamb which cost $17.00 in August, 1919. Similar figures might be cited to explain the influence of the present leather market upon current cattle quotations. TOP LIVESTOCK PRICES IN AUGUST 1920 Beef steers ........... .. .. . . .. . ........... . $12.25 Stocker steers ....... . ... . . .. . .. . ....... . . 8.60 Butcher cows ....... . . .. . .. . . .... . .... .. . . 8.75 Stocker cows ....... . ... . . ... . .. . . . . . . ... . 7.75 Calves .. . .. . .. . . . ... .. . .. .. ....... ... . .. . 11.25 16.60 Hogs .. . . .... . . ... . . . .. . . . . .......... . .. . . Sheep . . .. . ..... . .... ... . ... .. . . ... .. . . .. . 9.50 Lambs . . . . .. . . .. . .. .. . .. . ...... . . . . .. . ... . 13.60 1919 $13 .50 10.25 9.75 7.75 15.50 23.40 10.00 16.50 August LiveThe month of August saw pracstock Movements tically the last of the season's cattle shipments from South Texas. Arizona and New Mexico ranges also made small contributions to the markets. West Texas contributed a substantial quota of cattle to the markets in August, though the bulk of the offerings from that section was of rather poor quality, very few of its consignments being classed as fat or finished stock. North Texas was well represented in shipments of feeders, but the demand was never sufficient to attract any considerable number of fed cattle. The August receipts of hogs at the Fort Worth market were the smallest of any month during the present year except those of July. The movement of calves was about equal to the August average for the past four years, while the volume of sheep consignments was approximately 50% smaller than the amount normally marketed in August. FORT WORTH LIVESTOCK RECEIPTS August August Loss or July 1920 Gain 1919 1920 101,731 L. 35,913 79,180 Cattle .. .. 65,818 1,202 33,553 35,749 L. Calves . .. 34.547 13,928 G. 2,549 14,034 H ogs ... .. 16,477 16,469 G. 420 24,177 Sh ep . . .. 16,889 Loss or Gain L. 13,362 G. 994 G. 2,443 L. 7,288 LUMBER Production and distribution of lumber in the Eleventh District proceeded on a more restricted scale in August than in the preceding month, according to reports from our correspondents. Eleventh District pine mills reporting to the Southern Pine Association headquarters showed an average weekly production during August equal to 67% of their normal production, as compared with 72% in July; and average weekly new business booked amounting to 64% of normal output, as against 86% for the preceding month. The decline in activity was coincident with a marked decrease in building operations at the larger cities. It is possible that the reduction in the mill output for the month was partially due to a feeling of. uncertainty on the part of the operators as to the effect of the increase in freight rates on August 26th. Some anxiety was expressed prior to that date as to the pos- sibility of numerous cancellations of orders which could not be filled before the new rates went into effect. From the best information available, however, the number of cancellations which followed the change in rates was comparatively small. Unfilled orders on the books of 32 reporting pine mills as of August 27th amounted to 75,778,486 feet, which is equivalent to approximately one month's normal pro- duction o(such mills. This is about the same carryover as was reported at the end of July. Throughout the greater part of the month there was an acute scarcity of freight cars available for lumber ship- . ments, and while reports indicate that in some localities _ cars were becoming more plentiful towards the close of the month there appears to be no basis for expecting general relief in this direction until after the completion of the crop movement. Below is presented a comparative statement of pine mill operations in the Eleventh District for the past two month~. COMPARATIVE PINE LUMBER STATISTICS August 2 Number of reporting mills .................................... . .. . Average weekly p rod uction . .......... . .... . ......•............... ] 1.263 ,102 ft. Average weekly shlpm nts . . ................................. . .. . 10. 47,377 " .7 0 If Average we k lyorders ceived ................................ . 10. UnfiUed orders on b and AugustY27 and July 30 . ............ . ..... . 7- ,77 ,4 6 fI Average weekly normal production . . . . . ... .. . ........... . ...... . 16,737,372 I f July 31 10,713,763 ft. 9,932,441 " 12,863,966 " 68,423,965 " 14,815,734 " OIL Production Eleventh District oil wells showed 21,000 to 22,000 barrels per day, its flow having been Shows an increased production last month. apparently obstructed by sand. In the vicinity of this Increase The total output during August was producer a number of wells are nearing the pay depth and 12,343,886 barrels, which represented a gain of 719,640 barrels, or 6%, over the July record. The daily average are being watched with interest, as this section seems yield in August was 398,189, as against 374,975 for the capable of developments of major importance in the previous month. Incidentally the district's petroleum near future. The North Texas daily average production production for August was its largest for any month on for August was 4 per cent smaller than in July, while in record, and brings the total for the first eight months of in North Louisiana there was a loss of 2 per cent. 1920 up to 90,720,069 barrels, an amount equal to more than 80 per cent of its entire production in 1919. The The banner production increase for the month was made following table showing the monthly oil production of the by the coastal section, where there was a gain of 25,943 Eleventh Federal Reserve District during the first eight barrels in daily average runs. This showing was, of months of the current year reflects the steady rate at which this industry is developing in Texas and Northern course, made possible by the output of the 25,OOO-barrel well at West Columbia, which came in during the latter Louisiana: part of July. 10,934,061 barrels January February March April May JlUle July August 10,473,094 11,132,024 11,024,345 11,714,413 11,474,000 11,624,246 12,343,886 " For the fifth consecutive month the Central West Texas fields registered a gain in daily average flow, the daily rate of production having risen from 82,659 barrels for the month of March to 109,670 barrels for the month of August. In monthly production this section took the lead among Texas fields in June and has maintained it since that time. Stephens County was again first in monthly production among the Central West Texas fields, showing a gain over its July record, with Ranger and Desdemona ranking second and third, respectively. Each of the latter two fields reported a loss in production compared with their July figures. At the end of August the average daily production of Stephens County wells had reached 80,000 barrels, which compares with 87,000 barrels report;;d by Wichita County. Among the outstanding developments of the month were the completion of a number of important wells in the Breckenridge pool, the beginning of a vigorous reclamation campaign in the Desdemona area, a general slackening of activities in North Texas and North Louisiana, and a falling off in the flow of the 25,000-barrel well in the West Columbia section of the coastal field. Late advices indicate that the West Columbia well is now making from August completions in this district decreased 18 per cent as compared with those of July. Practically all fields shared the decline in drilling activities and results. In addition to the fallip.g off in the number of wells completed during the month, there was an unusually large percentage of failures and abandonments in proportion to the wells which proved to be producers. For the first time in many months the total number of failures was more than half the total number of producers. Difficulty in securing funds and material for drilling purposes is referred to by our correspondents in explanation of the reduced scale of drilling operations which prevailed during the past month. The scarcity of casing seems to be traceable partly to transportation troubles and partly to the manufacturing situation. The mills appear to be concentrating their efforts in the direction of catching up with the heavy demand for plate and sheet goods, which has for the time being made it necessary to postpone the rolling of tubing for drilling purposes. Drilling Results Disappointing Wildcat operations in August showed comparatively little activity, a great deal of this class of drilling being temporarily suspended awaiting supplies or a more favorable state of affairs in the financial situation. OIL PRODUCTION Total e August July Increase or Decrease Daily Total Av!'rage Dec. 4,242 Dec. 131,508 Inc. 3,473 Inc. 107,679 Inc. 26,705 Inc. 827,884 7 200 Inc. Inc. FieldNorth Texas . .. . .. . . . . , . . . .. .... . , , . 2,882,690 Central-West Texas . . .... •. .. . . .. .. . 3,292,099 Texas Coastal ......... .. . .. . . . .. .. . 2,262,282 Corsicana Misc .... . . .. . . . . ... .. . . . . 50,300 Daily Average 92,990 106,197 72,977 1,622 2,751,182 3,399,778 3,090,166 50,500 Daily Average 88,748 109,670 99,682 1,629 Totals, Texas .... . . . .. . .. .. •. . . .... . 8,487,371 North Louisiana ...... . . . .... .. . . .. . 3,136,875 273,786 101,189 9,291,626 3,052,260 299,729 98,460 Inc. 804,255 Dec. 84,615 Inc. 25,943 Dec. 2,729 Totals, 11th District . . . .. ... .. . . . . .. 11,624,246 374,975 12,343,886 398,189 Inc. 719,640 Inc. 23,214 Total AUGUST DRILLING RESULTS FieldCompletions North Texas. ..................... 209 Central-West Texas. . . . . .. . . . . . . . .... .. . 277 Texas Coastal . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Texas Wildcats. .. . . . .. . . . . . . . ........ . . 33 Producers 132 163 57 6 Failures 77 114 5 27 Initial Production 11,830 50,314 25,435 127 Totals, Texas. . . . . . . . . . . . . . . . . . . . . . . . . . . North Louisiana. . . . . . . . . . . . . . . . . . . . . . . . 581 125 358 83 223 42 87,706 15,499 August totals, District. . . . . . . . . . . . . . . . . . July totals, District. . . . . . . . . . . . . . . .. ... 706 868 441 616 265 252 103,205 156,912 CRUDE OIL PRICES Texas: Corsicana light . . .. . .. ...... .. . . .. . .... .. ... ... . . .. . .. $3 .50 Corsicana heavy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 75 Texas Coastal fields . . ... . ...... . ..... .. ... .. ....... . . 3.00 All other Texas fields. .. . .. . ... .. . . .. . . .. . , . .. .. ..... 3.50 (Oil statistics complied by The Oil Louisiana (38 gravity and above): Caddo . .. . .... ..... . ........... ... . . . . . .. .. . . . ..... .. $3 .50 Homer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 3.25 Bull Bayou .. .. .. ... ... . ........... .. .. .. . .. ..... .. . .. 3.15 De Soto .. . .... .... .. .. . . . , .. . . ........... . . . .. ... .. . . 3.40 Weekly, Houston, Texas .) TRADE Wholesale Trade Reports from representative wholesalers indicate that there was a more spirited activity in hardware, drY goods, fann implements and drugs during the month of August than prevailed in t he preceding month. Sales of dry goods, measured by selling values, showed an average increase of 13%, despite an average decline of 2% in August prices as compared with those of July. Both hardware and fami implements scored an improvement upon their sales record for the previous month, though August orders in these lines were not up to the volume of business booked in the corresponding month last year. In the wholesale grocery trade our reports show that the volume of August transactions was below both the July, 1920, record and that of August, 1919. This condition was also in evidence in the statistics of automobile supply houses, which reported an average decrease of 10% in net sales for August as compared with the previous month. The slowing up of the buying demand in the grocery line is attributed by dealers to the unsettled condition of prices. In view of the recent course of values in sugar and other staple foods the retailers seem disposed to postpone stock replenishments pending a clearer view of the future. Automobile supply houses report that retail dealers are well stocked and that factories are curtailing production as a result of the lessened demand for tires and accessories. Hardware wholesalers explain that the drop in the volume of August orders as compared with a year ago is not a matter of demand but of supply, it being extremely difficult to obtain from manufacturers, in needed quantities, such items as sheet goods, corrugated steel, and nails. On the other hand shelf goods and heavy hardware are reported to be moving at a satisfactory rate. In the wholesale dry goods trade the price situation, though still hedged about by the uncertainties that have been interfering with the normal movement of fall mer~ chandise, seems to have yielded its place as the uppermost issue in the mind of the retailer to the more imperative demand for prompt action as the advancing season cuts short his time for making a decision. Wholesale distributors of farm implements report that the recent rains in this district, by delaying the fall plant~ ing and sowing season, had the effect of reducing their August sales to some extent, though their actual turnover for that month, as well as the outlook in this line for the coming fall, may be described as generally satisfactory. According to the reports submitted by five of the leading £inns in the wholesale drug trade, August was a month of increased activity, particularly with respect to the inquiry for drug sundries and holiday goods. Prices are generally maintaining a steady level, sligh t reductions on some articles being about offset by advances in certain proprietary medicines. Special emphasis is laid in the reports from all lines of wholesale trade upon the retailer's persistent attitude of caution in placing orders. Added to the hesitation inspired by the disturbing possibilities of price read~ justments is the feeling of apprehension concerning t he effect of the recent deterioration of t he cotton crop upon the public's purchasing power in the coming fall and winter months. Notwithstanding t his situation, however , a hopeful feeling generally per vades the wholesale trade. Below is presented a tabulation of trade statistics showing the average changes in sales, prices and stocks of the Eleventh District wholesale firms reporting for the month of August. AUGUST, 1920, WHOLESALE TRADE, COMPARED WITH JULY, 1920, AND AUGUST, 1919. Groceries ..... ....... .. .... . , . . ... . . . . ........... Auto SlWplies ... ........................... " .... Drugs ...... . .... .......... . . .. .... . . . ..• ... .. . .. Dry Goods ....... . .... . .. .. . .. .. .. , . .. . . . .. . . , .. Hardware ..... . . ..... . . ............. . . . . . . . .... . Farm Implements . .. .. .. . .. . . ... . . . ... . .. . .. . . . . . Compared with July, 1920 Aug. 1919 July, 1920 Aug., 1919 July, 1920 Aug., 1919 July, 1920 Aug., 1919 July, 1920 Aug., 1919 July, 1920 Aug., 1919 Retail Trade Retail trade activity, as reflected in our department store reports for the month of August, showed a decrease of 6.6% as com· pared with the previous month. A slackening of sales is not unusual for this season of the year, however, and is therefore without any special significance. As a matter of fact, the volume of transactions in all reporting lines was greater by 10.5% (measured in monetary terms) than the volume of trade for the corresponding period last year. Even allowing for the generally higher scale of prices now prevailing in most lines of merchandise, the physical volume of trade at the present time seems to be fully as heavy as it was a year ago. The principal changes in the sit uation, as disclosed by a comparison of present conditions with those obtaining early last fall, are: a marked decrease in the demand for luxuries and semi-luxuries, and a noticeable slowing up in retail collections. .It is observed that the use of Liberty Bonds in the purchase of goods and in the payment of accounts, once Sales Dec. Dec. Dec. Dec. Inc. Inc. Inc. Inc. Inc. Dec. Inc. Dec. 2% 8% 10% 3% 2% 17% 13% 25% 6% 12% 27% 1% Selling Price Dec. 1% Dec. 2% Same Inc. 10% Same Inc. 7% Dec. 2% Inc. 3% Same Inc. 11% Same Inc. 11% Stocksatend of month Dec. 6% Inc. 6% Inc. 6% Inc. 71% Same Inc. 31% Dec. 6% Inc. 76% Dec. 2% Inc. 15% Inc. 4% Inc. 12% a cornmon practice, is now becoming a rare occurrence. While the slowing up in collections has not assumed alarming proportions, our reports show that the credit departments of many institutions which sell goods on 30 to 60-day terms are making slower headway in converting their accounts into cash than they ordinarily do even at this "between seasons" period of the year. The August reports of Eleventh District department stores show that their collections during that month averaged only 37.8% of their total outstanding accounts on August 1st. While some of these stores grant 60 day terms, the customary dating is 30 days, and in the light of this fact an average liquidation of only 37.8% would seem to indicate that August collections reached an unusually low stage. The statistics tabulated below show that there was an increase of 22.3% in average stocks on hand at the close of August, and a corresponding increase in the ratio of stocks to sales for the months of July and August. RETAIL TRADE OF DEPARTMENT STORES Net Sales: August, 1920 August, 1920, compared to August, 1919 . ..... . . .. ... . . .... . . . .. .. ... ....... . . . .. . . . ... .. . . . .. . . . . .. . . . .... Increase 25.6% August, 1920, compared to July, 1920 .. ....... ... . ......... " . . ...... .. ... . .. ... ......... " .... .. .. . . ..... Decrease .9% July and August, 1920, compared to same period 1919. . .. ... .. ... . . . .. . . ... .. . ... .. . , . . ... .... . . .. . ... ..... . Increase 25.2% Stocks at end of August, 1920: Compared to same month, 1919 . .. .. . .. . . .... . . . .... ...... ..... ... ...... . . . .. . . . .... .. . .. . • ....... . .. .. . , . Increase 59 .5% Compared to stocks at end of July, 1920 .... . ...... .. . ..... . ... . .. ............. . .. ......... . . . . . .. . . . . ..... Increase 22.3% Ratio of average stocks for period July 1 to August 31, to average sales for same period ..... . .... . . .. . . .. . ................ .425.5% Ratio of outstanding orders on August 31, 1920, to total purchases 1919 . . .................. . .. . . . . . ...................... . 12.7% Ratio of August collections to August 1st total of accounts receivable ........ , ............ . . . .. . . . .. . ..................... 37.8% FINANCIAL Federal Reserve Bank's Operations During the month of August the Federal Reserve Bank of Dallas granted loans to member banks amounting to $110,782,789.09, against which the retirement of maturing paper amounted to $102,877,717.39, resulting in a net increase of $ 7,905,071. 7 in advances to member banks. Our rediscounts with other federal reserve banks rose from a total of $26,166,000 on July 31st to the sum of $32,487,266.39 on August 31st, or an increase of $6,321,266.39. Thus while member banks in this district increased their bills payable with Federal Reserve Bank to the extent of $7,905,071.70, the amount of their paper held by the Federal Reserve Bank of Dallas on August 31st showed an increase of only $1,323,805.31 as ° compared with the amount held July 31st, the balance being represented by the augmented amount of E leventh District paper carried in outside districts. Paper purchased in the open market by the F ederal R eserve Bank of D allas stood at 457,500 on August 31st, compared with $717,500 on July 31st. For the same dates the totals of outstanding federal reserve notes were $83,325,595 and $82,684,995, respectively, the increase during August being only $640,600. Member bank reserve deposits totalled $48,744,511.92 at the close of August, which reflects a decrease of $5,159,167.77 from the total of July 31st. At the close of business on the last day of August the paper held by this bank, according to maturities, was distributed as follows: Due within 15 days, ......... . ... ... . .... . ..... . ... . . .. . .. . .. . , ... .. ..... $31,514,725 .92 Due 16 to 30 days ... . . . ... . . . ..... . . . .. . .. .......... .. ....... . . ... .. .. . , . 6,950,684.84 Due 31 to 60 days . .............. . . ....... . ..... . . . . .. ... . '" . .. . . .. .. .. . . 18,936,091.49 Due 61 to 90 days . ................ .. .. . . ........ .. . ... .. . .. ... .. .. .. ... .. 13,636,317.61 Due after 90 days. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4,652,023.92 Total.. . .. .................... . . .. . .. ................... .. .. .. . . .. . $75,689,843.78 e Condition of Member Banks in Reserve Cities A continued expansion of loans is reflected in the condition reports of reserve city banks at the close of business August 27th, as compared with their reports of July 30th. Contrary to the general rule that deposits usually decline as loans increase, but in line with the trend of deposit movements peculiar to this particular season of the year, there was an increase also in the net demand deposits of the reporting banks. Loans and investments showed an increase of $5,854,000, while the gain in deposits was $4,736,000. A noteworthy feature of the condition of reserve city city banks at this time, as compared with a year ago, is the fact that current loans and investments are $58,000,000 in excess of net demand deposits, reflecting a ratio of 125%, whereas a year ago this ratio was only 101%, the comparison showing the effects of the heavier demands made this year upon the loaning power of the banks in the larger centers. CONDITION STATISTICS OF MEMBER BANKS IN SELECTED CITIES July 30, 1920 49 49,804,000 8,320,000 268,429,000 219,866,000 24,570,000 41,992,000 Aug. 27 , 1920 Number of reporting banks . .............. . ... .. . .. ......... . .. , ... 51 U . S. Securities owned . . . . ............... ... . . .. . . .. . . ....... ... .. 49,973,000 Loans secured by U. S. War Obligations......... .. ... .... . . ...... . 8,496,000 All other loans and investments . .. . ... ... . ...... . . . .. . . ........ . .. 274,107,000 Net demand deposits ...... . . . .. . .. .. ... . ... . .............. ... . , . .. 224,602,000 Reserve with Federal Reserve Bank. . . .. . . . . ... .. . .. .. . . . .. . . .. . . . 25,631,000 Bills Payable with F. R. Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 43,563,000 Bank Clearings Aug. 29, 1919 43 83,308,000 6,854,000 190,585,000 194,344,000 22,692,000 18,424,000 corresponding period last year shows that while the 1920 levels continue higher than those of last year by 31.6%, the difference has been gradually diminishing during the past summer. August bank clearings at eleven cities in the district amounted to $474,686,260, which reflects a gain of 2.6% over July, and an increase of 9.6% over August, 1919. A comparison of clearings for the first eight months of 1920 with the BANK CLEARINGS e Austin ..... Beaumont . . . ....... Dallas .............. E l Paso ..... ........ Fort Wort.h ........ Go.lveslon ... ....... Houston ........... San Antonio . . . . .. . Sh'l'cveporL ......... Waco............... Wichita Falls ....•. Tota1. .. August 1920 5,693,702 6,003,126 123,091,965 28,000,000 84,865,476 27,911,256 121,162,794 33,661,878 18,229,477 10,302,295 15,764,291 Inc. or July 1920 Dec. 4,713,113 +2.8% 5,713,153 5.1% 127,890,000 -3.8% 28,744,062 -2.6% 84,760,302 ~.1% 26,084,530 .0% 105,634,274 +15.0% 31,192,293 +7.9% 19,078,188 -4 .4% 9,870,807 +4 .4% 18,758,000 -16 .0% August Inc. or 1919 Dec. 5,903,971 -3.6~ 4,703,064 + 27 .6% 117,523,111 +4.7% 23,843,875 J7 .4 () 75,982,596 11 . 7 42,543,100 -34.4~ 88,560,701 29,090,199 15 . 7 00 12,775,278 42.i ~ 9,806,561 + 5. 1% 22,385,483 -29.6% Eight Months Inc. or 1919 1920 D ec. 54,342,645 180,268,016 -69 9~ 46,196,456 52,041,082 12 . 7~ 1,246,184,673 899,509,859 85 236,047,718 192,298,103 22 . 7% 687,026,296 533,743,286 28 . 7% 236,473,007 212,801,148 11. 1 0 932,399;414 574,638,037 23% 232,209,114 280,838,386 20 . 9~ 176,978,645 96,279,875 3 0 105,276,684 77,862,507 5. 1 0 129,328,236 170,024,362 31 5% 474,686,260 462,438,722 433,117,939 4,177,632,912 + 2 .6% t 62 *36. Discount and Interest Rates Among the comparatively few changes reported in the discount rates of banks in the larger cities for the month of August as compared with the preceding month, increases slightly predominated over decreases. Dallas, Houston and San Antonio reported a total of 10 -- +9.6% 3,175,134,637 -- +31 .6% increases and 8 decreases, affecting various classes of paper, while at El Paso, Fort Worth and Waco the July rates remained in effect. "High"," low" and "custo~ mary" rates ruling at the six reporting cities during the 30-day period ending September 15th are shown in the table appended below. AUGUST DISCOUNT RATES H Prime Comm rcial Paper: Customen;' 30 to 90 days ....... Customers' 4 to 6 mos.. Open Market 30 to 90 days ........ Open Market 4 to 6 mos ........... In erbank loans. . . . . . . . . . .. . ....... Collaleral loans, demand .. Collater a l loans, 3 mos .........• . . . . Collatcralloans, to 6 mo ...... ... Cattle loans . . ....... ... ........ Loans secured by warehouse receipts, Bs-L, tc .. ...................... Loans secured by Govememt securities . ... ...... ..... ....... .. . Debits to Individual Accounts Dallas L C 8 8 8 8 7 8 8 8 8 7 6 6% 7 7 7 7 7 6 6% 6% 7 6 7% 6 7% 6% 7~ 8 6 8 6 H El Paso L C 10 10 8 8 8 10 10 10 10 6 6 7 7 6 7 7 7 8 8 8 8 8 8 8 8 8 8 8 8 7 7 7 10 10 10 9 6 7 7 7 6 6 6 6 7 7% 7% 7 7 6 8 8 8 8 7% 8 8 8 8 7 7% 10 6 8 8 6 Movements of credit, as reflected by the volume of checks drawn by individuals and firms against their bank accounts, and as distinguished from general bank clearings which include drafts drawn by banks upon other l Ft. Worth H L C H Houston C L San Antonio H L C 8 7 6% 7 6% 7 8 8 6 6 7 7% 8 8 8 6 6 6 6 7 6% 7 7 7 7% 7 8 8 8 8 7% 8 6% 7 6% 8 H Waco C L 7 7 6 6 6 6 6 8 8 8 8 6 8 8 7 7% 8 7% 8 7% 8 7 8 8 6 8 8 8 8 8 8 8 7 8 8 8 7% 8 6 7% 8 8 8 7 6 6~ 6 8 8 8 banks, are shown in the following comparative statistics based on reports from clearing house cities of the Eleventh District for the weeks ending August 27th, and July 30th, 1920. CHARGES TO DEPOSITORS' ACCOUNTS Week Ending July 30, 1920 August 27, 1920 $ 2,493,000 $ 2,882,000 Austin . ........... .. . . . .. . ..... .. .. . . . .. . .... . . . Dallas . . .. .. ...... . . ...... .. .. .. . . . ... . . .. . . .. . . 30,901,895 33,636,273 Fort Worth ..... . . . ................. ....... . .. . . 26,180,970 26,185,000 San Antonio . . . . . . ....... . ..... . ... . ....... . ... . 5,810,000 8,222,000 Shreveport .. . . . . . ........ . .. . . . .. . .. . . .. . . . . .. . 3,547,000 7,077 ,000 Texarkana . . ... . ........ . . .. ........ . .. .. . .. .. . . 1,290,992 1,221,763 2,973,900 3,447,000 Waco .. .... . .. ..... . ..................... . . .. . . . Totals.. ... .. . .. . .. . ... .. . . . . . . . .. . . . .. . . . $73,197,757 $82,671,036 FAILURES There were 33 commercial failures in the district during the month of August. which was 8 less than in July The combined liabilities of the insolvent concerns BUILDING According to the building permit statistics reported by nine cities for the month of August, there was a decrease of $4,588,000, or 60.8%, in the value of contracts awarded in that month as compared with the corresponding month last year. By comparison with the outlay for new buildings in July, 1920, August construction activity showed a shrinkage of $1,028,000, or 28%. In addition to the difficulties presented by the high cost of material and labor, there has recently developed an acute scarcity of certain building materials, particularly builders' hardware and cement. Such items as heating machinery, elevators, plate glass and nails are conspicuous among the articles $1,148,614 amounted to $411,027.00 as compared with for the previous month, and $249,603 for the month of August, 1919. which are difficult to secure from manufacturers. With respect to the extreme scarcity of cement, it is reported by local manufacturers that they have been getting steadily behind with orders for a number of months, due to lack of fuel, scarcity of cars for hauling their raw material, and an abnormal demand for their finished product due to the immense volume of highway construction now under way in Southwestern states. Manufacturers further declare that an appreciable part of the increased demand for cement is coming from farmers as a result of the current educational campaign now being conducted by cement associations in the form of advertising. BUILDING PERMITS Austin. . . . . .. ... . • . . . . . .. .. .... . .... ... .. .. . . . . . . . ... ... . Beaumont . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dallas . . .... .... ... .. . . .. .... . . . ...... . .... . .. ... . . ...... . EIPaso .. . . .... .. . . ... . .. .... .. ...... . .. . . ... .. . . . ... . . . . Fort Worth . ...... .. . . .. . . ....... " ... . . . . . . . . .... ... ..... Galveston .......... . . . . .. ... ... . .... .. . .... . ............ . Houston . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. San Antonio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. Shreveport. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. No. 19 88 174 73 211 485 405 240 137 TotaL ......... . .......... . . .... .................. .. 1,832 August 1919 No. Valuation 16,317 24 76,913 58 220 2,427 ,865 72,866 89 131 3,414,190 378 58,370 744,689 298 408,502 189 161 318,980 1920 Valuation 38,674 59,914 645,191 561,530 451,445 36,665 291,290 664,305 201,680 Inc. or Dec. +137 .0% -22 . 1% -73.4% +670.6% -86 .7% -37.1% -60.8% +62.6% -36 .7% 1,548 $2,950,694 -60.8% $7,538,692
@FedFRASER