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SIXTEENTH ANNUAL REPORT
TO THE
FEDERAL RESERVE BOARD
BY THE
FEDERAL RESERVE AGENT
FEDERAL RESERVE BANK
SAN FRANCISCO
FOR THE
YEAR ENDED DECEMBER 31, 1930
SIXTEENTH ANNUAL REPORT
TO THE
FEDERAL RESERVE BOARD
BY THE
FEDERAL RESERVE AGENT
FEDERAL RESERVE BANK
SAN FRANCISCO
FOR THE
YEAR ENDED DECEMBER 31, 1930
DIRECTORS AND OFFICERS
OF THE
FEDERAL RESERVE BANK OF SAN FRANCISCO
January 1, 1931
DIRECTORS
p
Class Group
C. K. MCINTOSH, San Francisco, California
A
Dec. 31
THOMAS H. RAMSAY, Red Bluff, California
1932
1931
President, Bank of California, N. A., San Francisco,
California.
President and General Manager, Pacific National Agricultural Credit Corporation, San Francisco, California.
A
3
KEITH POWELL, Woodburn, Oregon
-
-
-
-
-
-
President, Bank of Woodburn and First National Bank,
Woodburn, Oregon.
1932
A. B. C. DOHRMANN, San Francisco, California -
Chairman of the Board, Dohrmann Commercial Company
and Emporium Capwell Corporation, San Francisco,
California.
MALCOLM MCNAGHTEN, LOS Angeles, California
-
1933
President, Broadway Department Store, Inc., Los Angeles,
California.
ELMER H. COX, San Francisco and Madera, California
- President, Madera Sugar Pine Company, Madera, California.
1931
ISAAC B. NEWTON, LOS Angeles, California
1932
Chairman of the Board.
WALTON N . MOORE, San Francisco, California 1933
Deputy Chairman,
President, Walton N . Moore Companj T , San Francisco, California.
W M . SPROULE, San Francisco, California
1931
President-Retired, Southern Pacific Company; President,
Central Pacific Railway Co. a n d Southern Pacific Railroad Co., San Francisco, California.
MEMBER FEDERAL ADVISORY COUNCIL
HENRY M. ROBINSON, representing District No. 12
Chairman of the Board, Security-First National Bank,
Los Angeles, California
OFFICERS
ISAAC B. NEWTON,
Chairman of the Board and
Federal Reserve Agent
S. G. SARGENT,
Assistant Federal Reserve Agent,
Chief Examiner, and Secretary
OLIVER P. WHEELER,
Assistant Federal Reserve Agent
F. H. HOLMAN, General Auditor
R. T. HARDY, Auditor
JNO. U. CALKINS,
Governor
WM.
A. DAY,
Deputy Governor
IRA CLERK,
Deputy Governor
W. M. HALE, Cashier
CHESTER D. PHILLIPS, Assistant Cashier
C. E. EARHART, Assistant Cashier
H. N. MANGELS, Assistant Cashier
E. C. MAILLIARD, Assistant Cashier
FRED C. BOLD, Assistant Cashier
J. M. OSMER, Assistant Cashier
DIRECTORS AND OFFICERS OF BRANCHES
January 1, 1931
SPOKANE BRANCH
Term
Expires
Dec. 31
Directors
G. I. TOEVS*, Chairman
1931
PETER MCGREGOR* .
D. W. TWOHYJ .
R, M. HARDY!
.
.
D. L. DAVIS!
.
.
1932
1931
1932
1931
Officers
D. L. DAVIS, Managing Director
J. M. LEISNER, Assistant Manager
SEATTLE BRANCH
CHAS. H. CLARKE*,
.
.
.
.
.
Chairman .
HENRY A. RHODES* .
M. A. ARNOLD! .
M. F. BACKUS! .
C. It. SHAWt .
.
.
.
1931
1932
1931
1932
1931
C. R. SHAW, Managing Director
B. A. RUSSELL, Assistant Manager
G. W. RELF, Assistant Cashier
PORTLAND BRANCH
NATHAN STRAUSS*,
Chairman .
.
.
.
.
.
EDWARD C. PEASE* .
J. C. AlNSWORTHf
JOHN F. DALY!
R. B. W E S T ! .
.
.
.
.
1931
1932
1931
1932
1931
R. B. WEST, Managing Director
S. A. MACEACHRON, Assistant Manager
J. P. BLANCHARD, Assistant Cashier
SALT LAKE CITY BRANCH
LAFAYETTE HANCHETT*,
Chairman
. . . .
G. G. WRIGHT* .
.
H. E. HEMINGWAY! •
E. 0. HOWARD! .
W. L. PARTNER! •
.
.
.
.
.
.
1931
1932
1931
1932
1931
W. L. PARTNER, Managing Director
H. M. CRAFT, Assistant Manager
W. M. Smoot, Assistant Cashier
LOS AI
CHARLES B. VOORHIS*,
Chairman
. . . .
J. B. ALEXANDER*
F. J. BELCHER, J R . ! .
A. J. CRUICKSHANK!
W. N. AMBROSE!
.
.
.
.
.
1931
1932
1931
1932
1931
W. N. AMBROSE, Managing Director
M. MCRITCHIE, Assistant Manager
A. J. DUMM, Assistant Cashier
L. C. MEYER, Assistant Cashier
*Appointed by Federal Reserve Board.
!Appointed by Federal Reserve Bank.
LETTER OF TRANSMITTAL
Federal Reserve Bank,
San Francisco, California,
March 2, 1931.
Sirs:
I have the honor to submit the following report concerning conditions in the Twelfth Federal Reserve District and the operations of
the Federal Reserve Bank of San Francisco, for the year ended
December 31, 1930.
Yours respectfully,
Chairman of the Board
and Federal Reserve Agent,
Federal Reserve Board,
Washington, D. C.
ECONOMIC REVIEW OF THE YEAR 1930
TWELFTH FEDERAL RESERVE DISTRICT
The 1930 decline in business in the Twelfth District was one of the
most severe thus far experienced in this area. Operations in nearly
all industries were greatly reduced as compared with 1929 and total
industrial output was the lowest since 1924. Distribution of commodities through both primary and secondary channels was likewise
smaller than in any recent year. In conjunction with the decrease in
production and distribution of commodities, unusually large numbers of workers were discharged and others were placed on a parttime working basis, resulting in what appears to have been an
unprecedented reduction in payrolls. "Wholesale prices for many
products which are important in this District declined during 1930
to the lowest levels in several years. In addition to the sharp decreases in prices of nearly all agricultural and livestock products and
their manufactures, there were also marked declines in prices of
copper, lumber, lead, zinc, paper and pulp, rubber, silk, and silver—
the last two reaching the lowest quotations yet recorded. At the
close of the year the cost of living in the principal cities of the District was about 6 per cent lower than at the close of 1929, according
to data compiled by the United States Bureau of Labor Statistics.
Business failures increased in both number and liabilities, the number exceeding all previous years save 1928, and the liabilities being
the highest of record. Credit was in abundant supply throughout
the year, and interest rates were at unusually low levels.
Agriculture
The agricultural situation in this District during 1930 was characterized by favorable weather conditions, a record volume of crop
production, difficult problems of marketing, an unusually low level
of prices for farm produce, and, according to this Bank's estimates,
the smallest aggregate returns to growers for any year since 1924.
Compared with 1929, the volume of crops produced increased 6 per
cent while their value declined 21 per cent. The principal increases
in production were among field crops and deciduous fruits, while the
only important decline in production was in citrus fruits.
INDEXES OF CROP PRODUCTION
Twelfth Federal Reserve District
(1925-1927 Annual Average = 100)
/
1930
, r
1929
N ,
1928
, ,
1927
, ,
1926
>
Volume Value Volume Value Volume Value Volume Value Volume Value
Grains
Field Crops...
Fruits
Vegetables ...
All Crops
103
118
116
135
115
60
93
97
120
89
99
106
113
133
109
93
124
111
128
113
115
105
112
117
109
96
107
102
117
104
114
105
110
106
109
110
95
106
105
103
93
96
102
105
98
88
92
93
103
92
Available supplies of nearly all crops, of dairy and poultry produce, and of livestock and livestock products were excessive in
relation to demand during 1930, and as a result marketing conditions
were generally unsatisfactory. In the livestock industry overexpansion of sheep raising during recent years (not only in the Twelfth
District but in many other parts of the world) was reflected in a
drastic decline in market prices for lambs and wool, following upon
b
SIXTEENTH ANNUAL REPORT
a declining tendency in prices for those products during most of
1929. Cattle raisers experienced a less satisfactory year in 1930 than
in 1929 but the unfavorable turn of marketing conditions was not
so marked in their case as it was in the case of sheep raisers.
Industry and Trade
A sharp drop in industrial output at the close of 1929 was followed
by a moderate upturn in production during the spring months of
1930. That increase in activity proved to be of short duration, however, and operations in most industries declined steadily during the
last seven months of the year. Curtailment was evident in about the
same proportions in the extractive, manufacturing, and construction
industries. Reduced demand for lumber, copper, and many other
products was accompanied by sharp declines in prices of those commodities. Practically the only phase of industry in which output
compared at all favorably with that of 1929 was the manufacture of
food products, in which industry the canning and preserving of
fruits and vegetables was stimulated by record-sized crops. The
continued decline in construction, evident since 1925, was particularly marked in residential building, although most types of engineering construction were also sharply reduced. Building of highways and some other projects of a public or semi-public character
were relatively well maintained, largely reflecting attempts to alleviate unemployment caused by the general contraction in industry.
INDEXES OF INDUSTRIAL PRODUCTION
Twelfth Federal Reserve District
(1923-1925 Annual Average = 100)
Industrial Production
Carloadings, Industrial
Electric Power Production
Manufactures
Foods
Butter
Canned Fruits
Canned Vegetables
Canned Fish
Flour
Slaughter of Livestock
Wool Consumption
Lumber
Paper and Pulp
Kenned Mineral Oils
Cement
Metals and Metal Products
Minerals
Petroleum
Copper
Lead
Silver
Building and Construction
Building Permits
Larger Cities
Smaller Cities
Engineering Contracts Awarded
Excluding Buildings
1930
1929
1928
1927
1926
1925
1924
98
85
159
102
122
114
148
160
131
109
80
71
86
128
168
90
93
90
95
83
96
71
67
51
49
59
120
128
123
111
157
124
120
105
138
160
144
113
84
82
108
142
193
106
143
122
121
129
114
86
81
68
64
87
134
134
114
113
144
118
124
111
167
132
135
103
94
75
107
145
155
115
128
104
96
118
111
85
83
75
71
94
124
113
110
108
131
114
113
110
129
109
148
99
97
89
105
132
148
114
121
100
96
106
118
89
88
84
81
97
132
105
110
112
121
114
116
104
164
112
106
92
94
80
109
133
132
110
121
100
93
109
114
92
93
92
88
109
115
95
104
110
109
106
105
98
121
118
123
80
97
94
106
104
118
107
102
100
96
106
113
99
102
104
103
107
106
99
100
97
99
95
90
103
87
87
84
105
104
97
95
96
94
99
94
98
95
102
97
96
95
94
95
90
95
96
FEDERAL RESERVE BANK OF SAN FRANCISCO
• Records of the distribution of goods in this area during 1930
correspond closely with data of production, that is, they show a brief
increase in activity during the spring months followed by a continuous and steep decline during the remainder of the year. Both the
volume and value of trade transacted receded sharply, with decreases
in value data accentuated by downward movements in commodity
prices. The decrease in goods distributed for consumption within
this area evidenced lower wage and salary payments and smaller
agricultural income than in any recent year. For the first time since
1921 the annual department store sales index of this Bank failed to
show an increase over the preceding year and the value of sales of
reporting wholesale firms was the smallest in nine years. Chain
grocery systems reported some further expansion in the number of
units operated, but sales per store averaged 13 per cent lower than
in 1929. Severe declines in new car registrations of practically all
makes of automobiles were recorded, with sales of cars in the lowest
priced group showing the smallest declines. A 22 per cent decline in
the movement of industrial freight by rail corresponded closely with
the decrease in industrial output. Not since 1921 has the value of
foreign trade dropped so sharply as in 1930, while tonnage of intercoastal trade was the smallest recorded for any year since 1925.
INDEXES OF TRADE
Twelfth Federal Reserve District
U<)53-1925 Annual Avera?e = 100)
1930
1929
1928
1927
1926
1925
1924
Carloadings
97
Merchandise and Miscellaneous. . 107
112
117
114
117
112
116
112
113
108
107
96
99
Foreign Trade*
Imports*
Exports
109
105
110
141
128
147
130
116
138
121
114
124
125
120
127
102
104
102
106
101
108
Intercoastal Trade
Eastbound
Westbound
Wholesale Sales
Agricultural Implements
Automobile Supplies
Drugs
Dry Goods
Electrical Supplies
Furniture
Groceries
Hardware
Shoes
Paper and Stationery
87
98
80
87
109
137
93
108
128
155
72
89
Ill
118
68
88
103
124
96-122
118
123
81
99
82
101
94
103
89
80
120
102
139
93
116
89
121
110
102
96
106
96
97
94
110
97
132
94
108
88
112
97
89
94
110
98
99
96
107
100
134
96
110
90
112
102
94
99
104
102
85
82
96
101
120
98
108
95
106
101
97
98
99
101
100
102
91
98
87
99
101
99
99
98
99
96
90
97
Department Store Sales
Los Angeles
Salt Lake City
San Francisco
Seattle
113
116
97
107
110
120
125
110
114
120
117
122
111
113
117
114
121
103
110
107
111
115
104
109
103
105
107
103
105
102
99
99
98
99
100
Department Store Stocks
104
106
108
108
101
102
103
Automobile Registrations—New Cars 95
Passenger
90
Commercial
151
133
129
180
99
99
96
89
86
95
109
109
105
102
103
98
91
92
89
Digitized *for
FRASER raw silk.
Excluding
8
SIXTEENTH ANNUAL REPORT
The Credit Situation
At the beginning of 1930, banks in the Twelfth Federal Reserve
District found themselves in the early stages of a period of easy
money conditions. Diminishing production and declining commercial
activity generally had reduced the demand for commercial credit
accommodation while credit supplies, on the contrary, had increased
or were increasing as a result of reductions in loans to brokers and
dealers in securities following the collapse in securities prices in the
autumn of 1929, and because of a sharp drop in the amount of currency in circulation in the District during late December, 1929, and
January, 1930. These circumstances provided the banks with excess
funds which were utilized immediately in reducing borrowings at
the Federal Reserve Bank of San Francisco.
BANKER'S BALANCES
MILLIONS OFA DOLLAR T
30
-2
-3
19 2 6
10 2 7
20
INTEREST RATES AND BANKERS' BALANCES
DOTTED LINE—Per cent by which interest rates on demand security loans in San Francisco have
differed from New York call money rates.
SOLID LINE — Net balances due other banks by San Francisco banks.
A change in the interest rate differential has usually been followed in about two months by a similar
movement in net bankers' balances.
Accompanying these changes, interest rates in San Francisco declined sharply during the opening weeks of 1930 and continued to
move downward for the first nine months of the year, but strengthened slightly during the last quarter. The declines in rates in San
Francisco and other financial centers of the Twelfth District were
not so great as in New York, however, and there soon existed a sufficiently large differential in rates to attract substantial amounts of
excess funds of banks in eastern centers to the larger cities of this
District, particularly to San Francisco. Also seeking the most profitable money markets, balances from tributary country banks were
attracted to San Francisco and to other District cities in greater
amounts than usual. These balances, together with funds made available through the decrease in currency in circulation and an excess of
United States Treasury expenditures over collections, increased
credit resources of member banks. The availability of these funds—
FEDERAL RESERVE BANK OF SAN FRANCISCO
9
increased bankers' balances, currency that had come out of circulation, and expenditures of the United States Treasury in excess of
receipts—largely explains the ability of city banks of the District to
remain out of debt at the Reserve Bank during most of 1930, and at
the same time to satisfy demands made upon them for commercial
credit, to maintain and even to expand slightly their security loans,
and to build up their investment portfolios. Country banks also used
less Reserve Bank credit during 1930 than in most other recent years.
Because of the circumstances enumerated above, the volume of
credit extended by the Federal Reserve Bank of San Francisco was
at lower levels during 1930 than at any other time in post-war years.
The entire decline was accounted for by reduced discounts, since
there was an increase in Reserve Bank holdings of government securities and but little change in holdings of acceptances. Acceptance
buying rates of this Bank were reduced by a greater amount than
was its discount rate early in the year. The condition created by the
establishment of these relatively lower acceptance rates favored the
obtaining of Reserve Bank credit through the acceptance market
rather than by means of discounting and rediscounting, a situation
which continued throughout the year. The volume of acceptances
held by this Bank was greater during most of 1930 than was the
volume of its discounted bills, reflecting the increased use of acceptances by District banks and the decreased need for discounting to
maintain reserve positions, which were adjusted through the use of
bankers' balances previously discussed.
Declines of country bank balances in the larger Pacific Coast cities
at the end of the third quarter and small increases in commercial
loans during the fourth quarter reduced the supply of surplus funds
in the District. During September, October, and November, therefore, it was the excess reserves of eastern banks ("Federal" funds
available on a day-to-day basis) that enabled city member banks to
maintain their reserve positions without borrowing from the Reserve
Bank. During December, however, the expansion of currency circulation and the closing of some eastern banks prompted banks in New
York, Philadelphia, and other eastern banking centers to keep their
excess reserves at home. Circulation of money expanded in the
Twelfth District also during December, the increase being induced
chiefly by seasonal requirements and secondarily by the closing of
certain financial institutions. As a result of these conditions, borrowings from the Reserve Bank rose sharply in the last three weeks of
December to the highest levels of the year.
Considering the year as a whole, total credit extended by, and total
deposits of, reporting member banks tended upward during 1930 and
averaged slightly higher than in 1929. Commercial loans declined
during the first three quarters of the year, following which they increased moderately. During the first nine months of the year, security loans remained at the high level to which they had risen late in
1929, but during the fourth quarter they declined sharply. Investments increased almost continuously throughout the year.
The number of bank failures in the District increased during 1930
although less rapidly than in the country as a whole, there being 21
suspensions during the year compared with 16 in 1929 and 10 in 1928.
Deposits of suspended banks in the three years were, respectively,
$16,145,000, $20,254,000, and $4,768,000.
10
SIXTEENTH ANNUAL REPORT
STATEMENT OF CONDITION
Federal Reserve Bank of San Francisco
RESOURCES
Dec. 31,1930
Cash Reserves held by this bank against its
deposits and note circulation:
Gold and Gold Certificates in vault
$ 43,003,674.95
Gold in the Gold Settlement Fund lodged with
the Treasurer of the United States for the
purpose of settling current transactions
between Federal Reserve Districts
27,057,475.41
Gold Held by the Federal Reserve Agent as
part of the collateral deposited by the bank
when it obtains Federal Reserve notes. This
gold is lodged in his name partly in the
vaults of the bank and partly with the
Treasurer of the United States
215,702,550.00
Gold Redemption Fund in the hands of the
Treasurer of the United States to be used
to redeem such Federal Reserve notes as
are presented to the Treasurer for redemption
4,520,086.43
Legal Tender Notes, Silver, and Silver Certificates in vaults of the bank (available as
reserve against deposits only)
8,392,116.00
Total Cash Reserves
Dec. 31,1924
$ 27,106,664.24
48,783,508.67
211,762,550.00
6,450,166.90
ll,39S,038.00
$298,744,902.79
$305,509,927.Sl
Loans and Investments
Loans to Member Banks:
On the security of obligations of the United
States
*
$ 5,893,005.00
By the discount of commercial or agricultural paper or acceptances
9,590,701.58
Acceptances bought in the open market
31,023,120.89
United States Government Bonds, Notes, etc. 51,082,350.00
$ 11,628,200.00
Total Loans and Investments (or Earning
Assets)
$ 97,589,177.47
$ 85,941,704.70
Uncollected Items
Checks and Other Items not yet collected. . . $ .".1,560,282.05
$ 36,113,847.28
Miscellaneous Resources
Bank Premises
$ 4,620,990.03
Non-Reserve Cash, consisting largely of National Bank notes and minor coin
5,310,820.80
All Other Miscellaneous Resources
Total Miscellaneous Resources
TOTAL RESOURCES
27,884,410.84
34,613,243.86
11,815,850.00
$ 4,261,326.41
7,834,503.86
783,629.84
397,748.26
$ 10,715,449.67
$ 12,493,578.53
$438,609,811.98
$440,059,058.32
FEDERAL RESERVE BANK OF SAN FRANCISCO
11
LIABILITIES
Dec. 31, 1930
Currency in Circulation
Federal Reserve Notes in actual circulation,
payable on demand. These notes are secured in full by gold and discounted and
purchased paper
$185,838,075.00
Deposits
Reserve Deposits maintained by member
banks as legal reserves against the deposits of their customers
Dec 31, 1929
$189,377,825.00
182,583,846.72
175,314,983.46
United States Government Deposits
1,409,493.75
2,910,845.10
Other Deposits, including foreign deposits,
deposits of non-member clearing banks, etc.
7,432,342.65
8,934,645.99
$191,425,683.12
$187,160,474.55
30,793,003.42
31,924,115.63
Total Deposits
Deferred Availability Items
Deferred Items, composed mostly of uneollected checks on banks in all parts of the
country
Miscellaneous Liabilities
Reserves and All Other Miscellaneous
Liabilities
$
573,755.21
Capital and Surplus
Capital Paid In, equal to 3 per cent of the
capital and surplus of member banks
$ 11,504,300.00
Surplus as permitted by law
$
668,912.78
$ 11,414,100.00
18,474,995.23
10,513,630.36
Total Capital and Surplus
$ 29,979,295.23
$ 30,927,730.36
TOTAL LIABILITIES
$438,609,811.98
$440,059,058.32
12
SIXTEENTH ANNUAL REPORT
PRINCIPAL OPERATIONS
FEDERAL RESERVE BANK OF SAN FRANCISCO
The following table presents in comparative form for the past three years the
volume of the principal operations of the bank, which are of such character that they
can be expressed in quantitative terms:
1930
1929
1928
Supplying Currency and Coin
Currency Received and Counted:
123,437,000
134,955,000
125,680,000
Individual notes counted
Dollar amount received and
$880,097,000
$912,188,000
$899,442,000
counted
Coin Received and Counted, a service previously performed largely
by the Subtreasury, but now entirely in the hands of the Federal
Reserve Bank:
Number of coins handled in re115,675,000
135,439,000
124,060,000
ceiving and counting
Dollar amount received and
$26,484,000
$74,913,000
$29,887,000
counted
Making Loans and Investments
BillsDiscountedforMemberBanks,
either discounted customers'
paper or advances against notes
of member banks secured by
collateral in the form of United
States government securities or
commercial or agricultural paper:
16,117
16,000
21,000
Number of bills discounted
$1,109,586,000 $4,089,446,000 $5,488,828,000
Dollar amount*
Bills Purchased for the Account of
this Bank:
22,403
28,000
19,000
Number
$337,467,000
$446,841,000
$301,741,000
Dollar amount
Collecting Checks, Drafts, Notes,
and Coupons
Checks handled for collection for
banks in all parts of the country:
79,903,000
67,180,000
76,800,000
Number of items
$15,322,015,000 $15,399,865,000 $15,136,437,000
Dollar amount
Collection Items handled, including
drafts, notes, and coupons:
1,437,000
1,572,000
2,161,000
Number of items
$364,992,000
$387,186,000
$353,899,000
Dollar amount
Supplementary Services
United States Government Securities issued, redeemed, or exchanged, including government
bonds, notes, and certificates of
indebtedness:
Number of items
51,000
94,000
367,000
Dollar amount
$311,343,000
$453,845,000
$477,401,000
Funds Transferred to and from all
parts of the country for the Treasury Department and for member
DanKS:
Number of transfers
Dollar amount
153,000
149,000
158,000
$25,282,661,000 $16,561,947,000 $16,399,407,000
*Includes paper discounted for the Federal Intermediate Credit Banks at Berkeley, California, and
Spokane, Washington, amounting to $5,581,000 in 1930; $16,374,000 in 1929; and $5,882,000 in 1928.
FEDERAL RESERVE BANK OF SAN FRANCISCO
13
OPERATIONS OF THE FEDERAL RESERVE BANK OF
SAN FRANCISCO DURING 1930
Certain phases of the economic situation, particularly the shrinking demand for credit during the business depression in 1930, were
reflected in the routine functional operations of the Federal Reserve
Bank of San Francisco. Other influences, including changes in methods of procedure and in organization combined with economic circumstances in effecting a slight reduction in the volume of checks,
drafts, notes and coupons collected and in the volume of government
securities issued, redeemed and exchanged during the year. Economic conditions were chiefly responsible, however, for changing
volumes in such operations as the handling of currency, the telegraphic transfer of funds through the gold settlement fund and
acceptance and discount operations. For example:
(1) The decline in volume of currency in circulation in the Twelfth
District and the importation of approximately $34,000,000 of
United States gold coin from the Orient during 1930 were accompanied by a considerable increase in the number of pieces
and in the dollar amount of coin and currency received and
counted at this Bank during the year.
(2) The interest rate differentials between Pacific Coast and eastern money markets, discussed in a preceding section of this
report, stimulated use of the Federal reserve system's telegraphic transfer facilities and the amount of funds transferred
by this Bank between the Twelfth District and other parts of
the United States was larger than in any previous year.
(3) The sluggish movement of warehoused commodities at home
and abroad and differences between various classes of interest rates were two factors which encouraged the use of acceptances rather than discounting or rediscounting at the
Reserve Bank during most of 1930 and both the number and
dollar amount of acceptances purchased during the year advanced sharply in contrast with a considerable decline in
discount operations. Due both to repurchase agreements and
to short maturities, the turnover of acceptance holdings was
rapid, however, and as already noted the buying rates were
low; consequently the earnings obtained from this operation
were less by 45.2 per cent in 1930 than in 1929.
It was inevitable that these conditions, particularly the relatively
small demand for Reserve Bank credit and the low rates charged for
its use, should have reduced this Bank's income. In fact, total earnings were less than half as large in 1930 as in 1929, and a deficit was
incurred on the year's operations.
Earnings and Expenses
During 1930, total earnings of the Federal Reserve Bank of San
Francisco reached the lowest levels recorded at any time since member banks commenced actively to use its facilities in 1918. The most
important factors contributing to this decline were the sharp reduction in holdings of discounted and rediscounted paper and the accompanying
low levels of interest and discount rates. Earnings from this
14
SIXTEENTH ANNUAL REPORT
source were $558,033 in 1930, compared with $3,487,429 in 1929, and
$2,696,669 in 1928, two years in which such earnings were larger
than at any time since 1921. Earnings on acceptances purchased
($753,758) were larger than were earnings on loans, but this class of
income was but little more than half as large in 1930 as in 1929.
Only twice before, in 1916 and in 1917, have earnings on acceptances
INCOME AND DISBURSEMENTS
Federal Reserve Bank of San Francisco
Earnings
On Loans to Banks and Paper Discounted for
Them
On Acceptances Purchased
1930
$3,487,428.82
1,375,555.55
1,017,171.06
485,727.65
On United States Government Obligations
Owned
Other Earnings
Total Earnings
79,548.44
117,363.44
$2,408,510.33
$5,466,075.46
Additions to Earnings
117,073.28
Deductions from Earnings
Tor Current Bank Operation
For Assessments for Federal Reserve Board
Expenses
For Federal Reserve Currency, mainly the cost
of printing new notes to replace worn notes
in circulation, and to replenish the stock unissued and on hand
For Furniture and Equipment
For Reserves and Depreciation, Self-Insurance,
Losses, etc
All Other
Total Deductions from Earnings
1929
$ 558,033.03
753,757.80
2,544.311
2,251,862.72
2,282,670.73
55,015.21
55,804.96
190,870.83
186,309.15
215,204.99
25,258.02
188,840.88
641,064.13
7,473.84
42,694.75t
$2,885,856.58
$3,262,697.58f
NET INCOME available for dividends, ad-
ditions to surplus, and payment to the
United States Government
$
355,689.02*
Distribution of Net Income
In Dividends Paid to Member Banks, at the
rate of 6 per cent on paid-in capital
$ 082,946.11
In Addition to Surplus—The bank is permitted
by law to accumulate out of net earnings,
after payment of dividends, a surplus amounting to 100 per cent of the subscribed capital;
and after such surplus has been accumu]ated
to pay into surplus each year 10 per cent of
the net income remaining after paying dividends
1,038,635.13*
In Payment to the United States Government,
as a franchise tax representing the entire net
income of the bank after paying dividends
and making additions to surplus (as above).
No balance remained for such payments in
1929 and 1930
—0—
TOTAL NET INCOME DISTRIBUTED
*Deficit.
fRevised figures.
$ 355,689.02*
$2,205,922.19
$ 670,085.39
1,535,836.80
—0—
$2,205,922.19
FEDERAL RESERVE BANK OF SAN FRANCISCO
15
exceeded earnings on loans. A partial offset to these reductions of
income accrued through earnings on United States security holdings.
These were more than twice as large in 1930 as in the previous year,
and furnished 42.2 per cent of total earnings, whereas they have constituted but 16.7 per cent of total earnings since the Bank's organization in 1914.
Although expenses for current bank operation, the largest single
item of expense, declined but slightly during the year, total expenses
were 11.6 per cent or $376,841 less than in 1929, the reduction being
due chiefly to the smaller amount of charge-offs for reserves, depreciation, etc. The decrease in charge-offs between 1929 and 1930 reflected the fact that no unusual items entered that category during
1930, whereas in 1929 a reserve of $500,000 was set aside to establish
a self-insurance fund. The decline of total expenses was much less
than the reduction of total earnings, however, and an operating
deficit of $355,689 was the result. Under authorization of the Board
of Directors, this sum together with $682,946 for payment of the
regular 6 per cent dividend on paid-in capital was withdrawn from
surplus, and that account was reduced from $19,513,630 on December 31, 1929, to $18,474,995 on December 31, 1930.
The principal sources of earnings of the Federal Reserve Bank of
San Francisco during 1930 and 1929, with an enumeration of the
major classifications of operating expenses, and a statement of distribution of net income, are presented in the table on page 14.
Changes in Membership
1. 3 number of active member banks in the Twelfth District has
tended to decline slightly each year since 1921, the year of highest
numerical membership. The decline, which has been a natural accompaniment of the growth in average size of individual banks and
the spread of branch banking, has approximately paralleled the decline in number of all banks during that period and has been accompanied by a consistent, though slow, growth in the member banks'
proportion of all banking resources in the District. There were 9
additions and 35 losses to membership in 1930, a net loss of 26 banks,
and on the last day of the year member banks numbered 581. The
gross loss of 35 member banks was due chiefly to (a) the elimination
of 11 banks through mergers between member banks, (b) the elimination of 10 member banks through their absorption by non-members
and (c) suspension or insolvency of 5 member banks. Mergers between member banks although reducing their number do not reduce
their total resources. Those losses to membership falling in other
categories involved a loss of $24,451,000 in member bank resources
during 1930. This slight loss was much more than made up by the absorption of non-member by member banks, (an operation without
effect upon the number of member banks, but one which adds to
system resources) and changes in bank membership during 1930 resulted in a net addition of $294,259,000 to resources. Most of that gain
was offset by shrinkage in member bank resources during the year, however, and on December 31, 1930, total resources of members of the system were but $24,299,000 greater than on December 31, 1929. This
gain in total resources accruing to the membership of the Federal reserve system during 1930 contrasts with a small decline in the total
16
SIXTEENTH ANNUAL REPORT
resources of all banks in the Twelfth District from $5,729,771,000 on
December 31, 1929, to $5,444,501,000 on December 31, 1930. It is interesting to note that 77.3 per cent of all banking- resources in the Twelfth
Federal Reserve District were represented in the membership of the
Federal reserve system on December 31, 1930, compared with 73.0 per
cent on December 31, 1929, and an average of 71.8 per cent on December 31 of the past ten years. Detailed data concerning changes in bank
membership are presented in the following table :
CHANGES IN BANK MEMBERSHIP DURING THE YEAR 1930
(By Class of Bank)
I
/
National
Active member banks—December 31,1929 487
Additions to Membership:
Organization of National Banks
Conversion of non-member banks to
National banks
Admission of State banks
Eesumption following suspension
Conversion within the System
Succession between member banks of
same class
Absorption of non-member banks by
National and State member banks. .
TOTAL ADDITIONS
Losses to Membership:
Merger between member banks:
Intraclass
Interclass
Voluntary liquidation
Suspension or insolvency
Absorption of member by non-member
banks
Conversion of member to non-member
banks
Withdrawal of State banks
Termination of membership by reason
of expiration of charter
Conversion within the System
Succession between member banks:
Intraclass
Interclass
TOTAL LOSSES
Net Change
Active member banks—December 31,1930
Member Banks
Number
\
State
Total
120
N
Resources
(In thousands)
607
$4,182,149
2
..
2
897
3
..
2
..
..
3
2
..
..
4,290
4,072
..
2
980
..
2*
..
..
308,471
7
2
9
$ 318,710
7
2
9
2
..
5
($23,631)f
( 3,098)t
3
2
..
..
2
8
2
10
10,379
2
..
3
2
3
1,328
2,344
1
..
1
..
1,522
..
1
2
1
712
460
24
11
35
—17
—9
—26
+294,259
470
111
581
$4,206,448
2*
(9)*
*Changes not affecting total number of member banks.
fChanges not affecting total resources of member banks.
7,706
$
24,451
FEDERAL RESERVE BANK OF SAN FRANCISCO
17
BRANCH BANKING
There was no net change during 1930 in the number of banks operating branches in the Twelfth Federal Reserve District, although the
number of state banks having branches was reduced from 42 to 41 and
the number of national banks operating branches increased from 12
to 13. Consolidation of branches in some metropolitan areas
reduced the number of branches from 897 on December 31, 1929,
to 858 on December 31, 1930. The branch banking data appearBRANCH BANKS IN THE TWELFTH DISTRICT
f
Branches
——\
Banks Operating
i
Operated by ^ Located
Branches
1
Mem- Non
OutNumNaState Non
Naher Mem- In
side
ber of
tional Mem- Memtional State ber Home Home
Banks Total Banks ber
ber Total Banks Banks Banks City City
,
State
Statewide branch banking permitted:
Arizona*
25
6
..
1
5 22
. . 11 11 . . 22
California
421 54 13
4 37 830 541* 104t 185 275 555t
Establishment of branches prohibited—Operation of
existing branches permitted:
Oregon
225
1
1
..
..
1
1
1
Washington
330
3
1
2
5
2 . .
3
3
2
*Includes three branches of Bank of California, INT. A., located in Oregon and
Washington. fDoes not include one foreign branch of the American Trust
Company, San Francisco. *Does not include a part of the state of Arizona which
is in the Eleventh Federal Reserve District.
BRANCH BANKS IN CALIFORNIA
Date
December 31, 1929:
State Banks—Member*
Non-Member
Total number of State banks having
branches
Total number of National banks having
branchesf
Total
December 31, 1930.
State Banks—Member*
Non-Member
Total number of State banks having
branches
Total number of National banks having
branchest
Total
Number Number
of
of
Banks Branches
Total
Resources
5
37
105
278
$ 537,733,000
854,301,000
42
383
1,392,034,000
12
483
$2,001,575,000
54
866
$3,393,609,000
4
37
104
185
$ 533,892,000
562,879,000
41
289
$1,096,771,000
13
541
2,108,610,000
54
830
$3,205,381,000
*Does not include one foreign branch of the American Trust Company, San
Francisco.
flncludes Bank of California, N. A., San Francisco, California, with branches
at for
Portland,
Digitized
FRASEROregon, and Seattle and Tacoma, Washington.
18
SIXTEENTH ANNUAL REPORT
ing in the accompanying tables include figures
for all banks operating offices other than their head office, wThether such offices are
located in the same city as the head office or in another locality. The
states of Idaho, Nevada, and Utah prohibit the operation of branches
and have none in operation, while Oregon and Washington now prohibit the establishment of branches, but permit existing branches
to operate. Branch banking in the Twelfth District is centered chiefly
in Arizona and California, where the establishment of branches of
banks both in and outside of the city of head office is permitted.
Bank Organization and Personnel
In the annual election of directors held in 11)30, two places on the
Board of Directors were filled. The banks of Group Two (those having a combined capital and surplus of not less than $125,000 and not
more than $599,999) re-elected Malcolm McNaghten, President of
the Broadway Department Store, Los Angeles, as a Class B director
for a three-year term ending December 31, 1933. The banks of Group
Three (those having a combined capital and surplus of less than
$125,000) elected Keith Powell, President, Bank of Woodburn and
First National Bank, Woodburn, Oregon, as a Class A director for a
similar three-year term.
Isaac B. Newton of Los Angeles, California, a Class C director, was
redesignated Chairman of the Board and Federal Reserve Agent for
the year 1931. Walton N. Moore, President, Walton N. Moore Company, San Francisco, California, was redesignated Deputy Chairman
of the Board to serve during the year 1931. Effective March 1, 1930,
Allan Sproul resigned as Assistant Federal Reserve Agent and Secretary. Oliver P. Wheeler, formerly head of the Division of Analysis and Research, was appointed Acting Assistant Federal
Reserve Agent and S. G. Sargent was appointed Secretary, succeeding Mr. Sproul. Effective October 1, 1930, Mr. Wheeler wTas confirmed as Assistant Federal Reserve Agent.
To represent the Twelfth Federal Reserve District in the Federal
Advisory Council during the year 1930, the Board of Directors selected F. L. Lipman, President of the Wells Fargo Bank and Union
Trust Company of San Francisco, California.*
A new chairman of the board was appointed at each branch in conformity with a policy of alternation in that office of the two branch
directors appointed by the Federal Reserve Board.
At the year-end A. J. Cruickshank was appointed a director of the
Los Angeles Branch to succeed Henry M. Robinson, who had served
since January, 1920, and at the Spokane Branch, R. M. Hardy succeeded R. L. Rutter who had served since November, 1918. On
November 20, 1930, at the Salt Lake City Branch, H. E. Hemingway
succeeded C. II. Barton, deceased, and E. O. Howard succeeded L. 11.
Farnsworth, also deceased.
There was but one change in the official staff of the Bank during
*On January 8, 1931, Henry M. Eobinson was appointed to serve as the representative of the Twelfth Federal Eeserve District in the Federal Advisory
Council for the year 1931, to succeed Mr. Lipman, who had represented the
District for the past three years.
FEDERAL RESERVE BANK OF SAN FRANCISCO
19
the year. On May 31, 1930, Even Berg, Assistant Cashier at the
Spokane Branch, resigned.
Following is a comparative summary of the number of officers and
employees in the principal departments of the Bank, with corresponding aggregate annual salaries paid on January 1, 1930, and
January 1,1931 (figures are for Head Office and Branches combined) :
PERSONNEL AND SALARIES
Federal Reserve Bank of San Francisco
(including branches)
-Number
..
Jan. 1, Jan. 1,
1931
1930
OFFICERS
,
A n n u a l Salaries
>
Jan. 1,
Jan. 1,
1931
1930
30
31
$ 251,800
$ 259,400
662
27
7
11
699
29
8
16
1,090,370
63,840
16,080
23,220
1,124,495
73,320
19,230
30,930
737
783
$1,445,310
$1,507,375
EMPLOYEES BY DEPARTMENTS :
Banking Department
Federal Reserve Agent's Department
Auditing Department
Fiscal Agency Department
TOTAL
FISCAL AGENCY DEPARTMENT EMPLOYEES :
(Whose salaries are reimbursed by
the United States Treasury Department)
2
2
4,320
4,320
30
27
34,440
31,885
OTHER EMPLOYEES :
(Whose salaries are reimbursed to
the bank, including employees in
the bank cafeteria and employees
in building space rented to
tenants)
GRAND TOTAL
TEMPORARY EMPLOYEES
(not
769
812
$1,484,070
$1,543,580
7
5
6,408
7,080
included
above)
Los Angeles Branch Building
Construction work on the new Los Angeles Branch Building, a
five-story monumental type structure, was begun in April, 1929, and
completed in April, 1930. On April 14, 1930, the new building, which
is located at Tenth and Olive Streets, was occupied by the Los Angeles Branch.
NOTE
Detailed statistical tables pertaining to the Twelfth Federal Reserve District and the Federal Reserve Bank of San Francisco will
appear in the Annual Report of the Federal Reserve Board. Copies
of the Board's report may be obtained, when published, from the
Federal Reserve Board at Washington, D. C.
20
SIXTEENTH ANNUAL REPORT
TWELFTH FEDERAL RESERVE DISTRICT
Includes the States of Arizona, except the Five Southeastern Counties,
California, Idaho, Nevada, Oregon., Utah and Washington
SAN FRANCISC
Map showing territory of Head Office and Branches of the
Federal Reserve Bank of San Francisco
@FedFRASER