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From the Board room
Troubled Prosperity
Rapid Lending Pace
Active Central Banking
Twelfth Federal Reserve District

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From the Boardroom

A pe r usa l of the hi st o rical rec ord of 1973 leaves the
rea der w ith di sti n ct ly mi xed feeli ngs. We ca n be proud
of the ec on omic g row th wh ich permi tted the nati on
(a nd the West) to se rve as g ra na ry as we ll as wo rks hop
for the wo rld . At the sa me time, we can o nly be dis ­
ma yed by the persistence of the in flation which d id so
much to di sturb the econ omic a nd politi ca l stability
of the nati on.
The financial sys tem last year fel t the ful l im pact of th e
pressures ge nerated by th e in flati ona ry boo m, b ut it
perfo rmed creditab ly in meeting the h ea vy de mand s
p laced upon it. The doll ar figur es a lo ne wer e im pressive.
For example, banks in the Sa n Franci sco (Twel fth)
Fed era l Reserve District recorded a 13-p erc e nt in creas e
in loans and in vestm ents in 1973, to a year -end tot al
of $92 billion. Eve n more impre ssive was the sy stem 's
ability to meet the frenzied credit demand s of early 1973
and then settle down to a more susta inab le pa ce in the
latter part of the year.




: ( --;

rt - ?J
T h e Fe d e ra l Rese rve 's m o re restrictiv e policy sta n ce
p layed a m aj o r ro le in th is tra nsitio n. T h roug h our pa r­
ticip ation in th is po licy-m a king p rocess, we a ttem pted
to b ri ng a bou t a re tu rn to a no n- in fla tio na ry g ro w th path,
full y re a lizing the co m p lex ities of th is task in th e new
atm os phe re of s u p pl y shortages .
O u r Ban k ma d e a major im p ro vemen t in the mo ney
pa y m e nts sys tem last ye a r, w ith th e es ta b lishme n t of
four regi o na l check-process ing cen te rs to provi de ove r­
n igh t proce ssing and se tt lement of ch ec ks in the ir servi ce
a reas. Even so, this ad vanc e only repres en ts an in ter im
step along the roa d to an e lectro n ic pay m en ts sys tem .
We a re deter m ined to procee d fu rth e r alo ng tha t roa d,
b uild in g on our ongoi ng work w ith electron ic fun ds
tra nsfe rs and au to m ated clearing ho uses.
In its supervi so ry activities, th e Ba n k faced a m ajor
prob le m w ith th e fai lure of a la rge So uthe rn Ca lifo rn ia
ba nk , bu t it coopera ted wi th o ther s upervisory ag e ncies
in th at a ctio n to p rotect the interests of ind ivid ual depos ­
ito rs a n d of the regio na l ec onomy. In o th er opera tions,

we co ntinu ed to sup po rt th e smooth pe rfor man ce of th e
Western econo m y, through the p rov ision of fiscal, coi n,
cu rre ncy a n d oth er services . A lso, we worked to im p rove
th e efficie n cy of interna l a dm in istration, nota bl y th ro ugh
o ur in itia tives in budget making and pe rso nnel p ractices .
O ur thank s go to the financial, industry, and com m un ity
lea ders who served as d irectors in 1973, he lp ing to gu ide
the Ba n k th rough that difficu lt yea r. In pa rtic u la r, we
shou ld note o ur a p preciatio n for those w ho com pl eted
term s as di rec tors d ur ing the period : Marron Ke nd rick
(Presid en t an d Boa rd Cha irm an, Schlage Lock Co m pany )
at H ead O ffice; Ru th Ha nd le r (Pre side n t, M a tt e I, In c.).
Ca r! E. Ha rtna ck (Presid ent, Security Pac ific Na ti ona l
Bank ), and Ed ward A. Sloa n (Presi dent, Sloan 's D ry
Clea ne rs) at Los A ngel es; an d Fra nk And er so n (Fa rmer)
at Por tla n d . A special note of appreci ation is du e A. B.
M e rr itt, who re ti red la st year as First Vice - Presi den t
af ter a dis ti nguis hed and prod uc tive 30-year caree r
as a central banker.

O . M e red ith W ilso n
C ha irman

~ J .~
John J. Balles
Presiden t


Troubled Prosperity

The nation's economic performance was mixed in 1973;
a number of things went wrong, but a number of things
also went right during the year. Real output grew 5.9
percent, nearly matching the performance of 1972, while
a gain of over 3 million jobs helped bring unemployment
to its lowest level of the past three years. The trade
balance with other nations, in deficit since 1971, turned
around in the wake of devaluation and the institution of
floating exchange rates. The resultant price differential
in this country's favor helped stimulate a heavy export
trade, first in agricultural commodities and later in
industrial goods.
The record of prosperity was badly flawed, however, by
the resurgence of inflationary pressures. An increase
of 5.3 percent in the general level of prices was well
above the 3.2-percent price advance of 1972. Indeed,
almost everything that could go wrong on the price front
apparently did so during the year.



Severe price pressures developed first in the farm­
products and food category, partly because of the effect
of massive grain exports on domestic food stocks. These
pressures were accentuated by seemingly unrelated
phenomena, such as the upsurge in soybean prices
caused by the disappearance of the Peruvian anchovy,
another major animal feed. Meanwhile, on the demand
side, sharply rising incomes supported strong demands
for meat at a time when available supplies were down
from a year ago. Although the increase in retail food
prices decelerated in the final quarter, by year-end prices
were still 20 percent higher than a year earlier.
In addition, the massive industrial expansion which had
developed over the preceding year and a half kept many
industries operating near the limits of their physical
capacity during 1973 . Shortages of many industrial com­
modities became endemic, leading to a IS-percent rise
during 1973 in that category of the wholesale price
index. Late in the year, the energy crisis resulted in sharp
increases in prices of petroleum and other fuels, thereby
creating increased pressures on the overall indexes.
During the year, price controls of one type or another
were utilized - Phase III, Freeze II and then Phase IV­
but these attempts to keep inflation under control
generally failed , because of the severe shortages and
heavy demand pressures which beset an economy with
very little unused capacity.

Triumphs and defeats
The Western economy experienced the same production
triumphs, and suffered the same price defeats, as did
its national counterpart. The regional boom was based
mostly on heavy national and international demands for
the products o(Western farms , forests and mines.
Pockets of weakness remained in some geographic areas
and regional industries, but the overall boom supported
a strong IO-percent advance (to $16S billion) in personal
income in the states of the San Francisco Federal Reserve
District (California, Hawaii, Oregon, Washington,
Alaska, Idaho, evada, Utah and Arizona).
Nonfarm employment increased 4.2 percent in 1973, on
the basis of impressive gains in manufacturing, con­
struction, finance and services . Only the Federal govern­
ment reported a decline in employment during the year.
By state, employment gains ranged from 2.0 percent in
Hawaii and 3.6 percent in California (matching the U.s.
gain), all the way to an 8.S-percent increase in Arizona.


Employmm t rises more thlm 4 percent in the W est, with strong
gains in factory and con struction jobs
M illio ns

uufacturir g... ..p ther




!.J' ve r n rn en r




- ­ i5tiribution



' 67

' 68

' 70




' 69



' 72

' 71

Regional unemployment falls from recession levels, but still
rem ains high by national standa rds
Rate (Perce n t)



Une m p loy m e nt a ve rage d 6.4 pe rce nt of the la bo r fo rce
for th e regi on as a w ho le, d o wn so mew ha t from th e
6.S- pe rce n t figure of th e pre vio us year. Se ve ra l states
which had be e n h it h a rd est by the turn -o f-th e- d ecade
rece ss ion , n otably W ashin gton and Cal ifo rn ia, showed
the strongest improv e m e nt in this re ga rd in 1973. Still ,
unem p loy m ent rema in ed a pro blem in th ese a nd other
re gi o na l s ta tes, and onl y Arizo na , w ith a 3.7-perce n t job­
less rate, fell co m fo r ta b ly be low th e nat ional norm o f
4.9 percen t. Mo reover, u ne m pl oy m en t appe ared to be on
the in cr ease again a s the ye a r came to a n end.





U ...,



' 69

' 70

' 71

' 72

' 73

Strength ill demand
The stro ng ga ins in e m p loy m ent and income we re
re flec ted in an ll- pe rce n t rise in retail sa les. Auto and
o th e r d urabl e-goods sa les rose s harp ly, a ltho ugh not so
s tro ng ly as in the prece ding two-ye a r period. Su p e r­
ma rk e t a nd restaura n t sa les al so expa nd ed ra pid ly, but
this gai n in dollar volu me was far oversh ad owed by a
sharp rise in prices, su ggesti n g a shift by h o useho ld s
away from more exp ens ive food ite m s.

The consumer buying surge was partly financed by a
16- percent rise in co m mercia l-b a nk instalm en t loa ns.
The increase was sm aller than 1972's, however, partly
because of a late -year slowdow n in auto fina nci ng .
Consume r buying was suppor ted by large Federal
inco m e- ta x refunds ea rly in th e year, due to tax ove r­
withh olding d ur ing the previo us yea r. T hese windfa ll
refunds often were used as down-payments on autos
and app lia nces, with th e remai ning ba lances fina nce d
by instalment-credit loans.
The strong pa ce of b us iness sal es went han d-in- ha nd
with a regionwide demand for increased investment,
and re la te d heavy borrowing for new plan t, equipment
a nd inventories . Des pite record loan rates, business
fir m s re lied h eavily on comme rcia l-ban k cred it, espe­
cia lly long-term loans, for financing the ir purchases .
Moreover, d u ring muc h of th e year, ma ny firms fo und
borrowing at the bank pr ime ra te to be more profitable
th a n borro wing at high e r com m ercial -pa per rat es.

Durable-goods manufacturers in general, an d mac h inery
pr odu cers in par ticu la r, were a m ong the hea viest ba nk
b o rr owers, as Western industries geared up to increase
the ir prod uc tive capaci ty. Food ma n u fa ctu rers a lso re lied
heavily on bank cre dit to finance sharply higher inv en­
to ry costs. H owever, th e larges t in cr ease in ban k loans
oc cu rred in th e servi ce sector, reflecting th e strong
growth of tourism and other services.

5trorzg fiscal position
West ern govern mental uni ts ma inta ined a st ro ng fin an­
cial position during 1973. Revenues expanded on the
basis of a booming eco nomy, pas t tax increases, and th e
inflow of Federal revenue -sharing funds. However,
go ve rn m ent spendi ng grew at a slower pace-especially
fo r public ed uca tio n, as the post-World W ar II baby crop
continued to wend its way out of school and in to th e
la bo r force . Many sta tes were in s uch good fiscal shape
that they actually re d uced their ta x rates, instead of
bo osting them, as they had don e in earlie r y ea rs.

Ca lifo rn ia built up a large bud get su r plus, pa rtly becaus e
of the fac to rs noted abo ve, but a lso be cau se o f th e initi­
at io n of ta x wi th hol d ing in 1972. Con se qu entl y, th e
legi sl ature voted to allow a ta x cre d it o n 1973 income
taxe s, and also su spe n d e d a sch eduled in cr ease in th e
sa les- ta x ra te for a s ix- mo nt h perio d . Th e Governor
proposed a plan to limit s ta te s pe n d ing to a decl ining
perce nta ge of Ca lifo rn ia p ers onal incom e, with th e lim it
dropp in g from 83,!.1 percent in fiscal 1974 to 7 percent in
1990. H owever, th is propos al was rejected by the elec ­
to ra te, partly because of fears tha t it would le a d to
spe n di ng redu cti ons as large as $6 30 milli on in the first
ye a r of the plan (fisca l 197 5 ).

Mun ic ipal-bo n d fina ncin g g rew sha rp ly despite the
eas ier fiscal position o f s ta tes and mu nic ipali ti es .
W est e rn gove rn me n ta l units borro w ed rou ghl y $3 .3
bill ion duri ng the yea r- m ore th an 15 percen t abov e th e
19 72 figur e a n d about eq u a l to th e 1971 record . Despite
th is inc re as e d fin a n ci ng , bo rr o wi ng co sts were ro ug h ly
in line w ith earlier le vel s of rates, wi th a S.l S- p e rcent
a verage y ie ld o n rat ed ge ne ra l o b lig a tio n s. S ta te gove rn ­
m ents, pr im ar ily Wa sh in gton, O regon, Ca lifo rn ia and
Alaska, b orr owed ab out $1.2 billion . Local go vernments,
le d by Cal ifo rnia, Ari zo n a a n d W ashington un its, went
into the mark et for a bout $ 2.1 bill ion .

Ore gon 's legislat u re a tte mp ted to comb ine a tax-ref o rm
plan with a s hi ft in the sch ool- finan cing bu rd en . T he
Ore gon plan ca lle d for prope rt y-ta x re lie f for lo w- and
mid dl e- income taxp ay e rs, incre ase d sta te fina nci ng of
publi c school costs, and an acce le ra tio n in corporate­
inc om e taxes. A rel ated pro p os al for an in crease in per­
so na l ta xes w ill go be fo re the vo ters this spr ing . But
Wa shington vo te rs overw he lmi ng ly rej e ct ed a legi slati ve
pr o p os al fo r th e ini tia ti o n of a g ra d ua ted in co me tax , in
a re form packa ge which als o ca lle d for state assumption
of th e ful l cost o f p u blic ed u cation, th e p has ing o u t of
th e business-in ventory ta x a nd a limit o n sa les -tax rates .

The farm boom provid ed bedro ck support fo r the
reg io n a l prosp er ity, as eve ry single W estern sta te
re po rte d siza b le ga ins in fa rm in com e durin g th e y ear.
In total , cas h rec eipts so are d 34 perce nt to a rec o rd $12
billion-almo st entire ly be ca u se o f h igher prices, sin ce
th e physi cal vo lu m e o f marketings failed to increase
sig n ifica n tly ove r th e ye ar. The surge in farm sal es stim ­
ulated a stro ng ga in in n et in come, to $4 bil lion , far
offs e tting th e impact of a rec ord r ise in produ cti on cos ts
and a sh arp declin e in go ve rn m e n t payments to farm e rs .

Spectacular farm boom

A spectacular 43-percent gain in crop receipts reflected
a very strong market demand for Western crops against
a tight supply situation worldwide . Du ring the summer
period, crop prices skyrocketed in the wake of soaring
exports, dwindling stocks and fears of worldwide short­
ages. Prices then began to drift lower in the fall , when
bumper crops were harvested and worldw ide produc­
tion prospects improved. Even so, average crop prices
at year-end remained sharply higher than a year earlier,
especially for wheat (up 90 percent) and cotton (up
58 percent) .
The expansion of export sales provided a strong impetus
to the pace of farm activities, with Western farm
exports rising 50 percent in fiscal 1973 to a record $1.5
billion . Wheat, cotton and rice exports in particular
posted very sharp gains. On the production side, fruit
and vegetable output benefited from an expansion of
acreage and good yields . Wheat was another story, how­
ever; output actually declined in the Paci fic Northwest
because of a prolonged drought which offset a 20­
percent rise in planted acreage.

Soaring cro p and livestock sales rej1eet strong U.S. and foreign
demand fo r foo d and fiber
Change (Percent)








I 1

Change (Percent)

' 71



' 73


Aerospace 011 recovery path

Lives tock producers rep o rt ed a 25-percen t gain in cash
rec e ip ts in the face of fall ing output, soaring feed costs
and mark et un ce rta in ties . Lives to ck production fell sub­
stantia lly, und e r th e impact of th e consu m e r bo yco tt a nd
severe w ea t her conditions in the spring pe riod, followed
by the price freeze and related cos t squeeze d u ring the
summer. But production prospects later improved ­
measured by the rising nu mber of ca ttle a nd calves on
feed -after the lift ing of p rice ceilings and th e ex pansion
of feed-grain and soybean suppl ies .

The Wes tern aerospace industry con tinu ed on a recovery
path as activity picked up in a ll major produ ction lines­
aircra ft, e lectro n ic equipment, ins truments and ord­
nan ce . Em p loyment increased 8 percent -tw ice the
previous year's gai n - to 587,000 at ye a r-en d . But this
repres en ted only a partia l recovery from the p rolo nged
slump of the 1968 -71 period, sin ce ind ustry employment
sti ll re mained abou t 22 percen t below its earlier peak.

Agric u ltu ra l len ding inc reased sharply in the West
dur ing the year. Productio n Credi t Associations reported
a 21-percent y ea r-t o-year gain in outstanding loans (end
of Oc tober) on the bas is of expanded farm production at
higher cos ts, and co m m ercia l-ba n k farm le nding grew
apa ce . Federal Land Banks posted a co m pa rab le gai n,
reflecti ng the impact of sh arp in creases in lan d va lues
on mor tgage-deb t dem a nd .

Military prime con tra ct awards to Western firms rose 4
percent duri ng fisca l 1973 to $8 .2 b illio n, increasi ng the
region' s share to 27 percent of total Pen tago n spe n d ing.
Few new mili tary projects were sta rted dur in g the yea r,
but ongoing aircraft and m issile projects rece iv ed a dd i­
tio nal funding . Space spending rose sharp ly to $0.7
b illion, but this sti ll equa led only about one- third of the
earl ier (1965) peak . Developmental work o n the space­
sh utt le project pro vid ed the ma jor upward thrus t, and
th e Skylab pr oject also remaine d im po rta n t.

Despite the im pro ved outlook in these two secto rs, th e
co m m e rcia l market for aircraft and electronic eq u ip­
ment pr ovided the in d us try' s main support durin g the
yea r. Even in the face o f the disappo int ing g rowth o f
a irline pa ssenger trave l, domestic and foreign ca rrie rs
substant iall y increased their orders, especiall y for
Boein g's w ide -b odi ed 747 mode l and me di um-ra ng e
737 m od el. Th e picture darkened towa rd year- e nd, ho w­
eve r, as air lines continued to post poor earn in gs re por ts
a nd as fue l shortages necessitated cutbacks in sc he d u led
flights . Deficit-plagued Lockheed began to lay o ff
w o rkers late in the year, in response to a deci si on by a
maj or cus to m e r to postpone delivery on nine L-10n's .

Mixedcons/ruction results
Last year turned out to be another strong year for th e
We stern co n str ucti o n industry despite a significant
de cline in residential activity. Total construction awards
ros e 6 percent to a record $16.6 billion, with almost every
sta te sharing in the gain. Heavy construction awards
rose 8 per cent, thanks largely to an increase in awards

A erospace secto r benefits from military co ntracts. . . co mmercia l
backlog lags despite rise in new orders
Billion s of Do lla rs


bm m
---- ~ r--.ercia l Backlogs

, "

Milita ry ri~
Contract lA.wa rds







S pace Pr o urement


' 66

Fisca l Year







' 72

' 73

for water-supp ly and e lec tric-power projects . No nr es i­
de n tia l activi ty, on th e hee ls of a major boom in 1972,
s urged 20 percent more last year in response to rising
de m an d for new fac tories, stores, schools an d public
buildings. Awards in both th ese ca tegori es con tin ued
high at yea r-end, p resaging contin ued strength in 1974.
For the residential sector, it was a somewhat different
story. Following seven years of almost uninterrupted
expansion, housing star ts dropped during 1973 to
370,000 units, an d th e decline apparently gained
momentum as the year went on . This IS-percent (greater­
th an -national) declin e reflected a fall -off of a ct ivity in
IS of the region's 16 majo r metropo litan markets. How­
ever, th e n umber of complet ed u n its (390,000) and the
num be r of mobile- ho m e sales (90,000) rou ghly appro xi­
m ated 1972 's record to ta ls . In view of the modest growth

of pop ulation in th e region, the co nti nued strong expan­
sion of th e region's ho us ing stock appears inordina tely
large, and provides gro und for worry abo ut 1974 demand.
The sharp d rop in new housing activity refle ct ed not just
the growing imbalance of hous ing supply, b ut also a
sharp rise in home prices and (especially) a surge in
mortgage borrowing cos ts after midyear. T he median
price of new single-family homes rose IS percen t to
$34,000, in response to soaring la nd and material cos ts .
The rise in home prices was accompanied by a continued
in crease in homeownership costs, as region al in creases
in p ro pe rty taxes, ins u ran ce, maintenance and utility
costs genera lly excee d ed th ose recorded nationa lly.
Mortgage- bo rr ow ing costs rose apace wit h the soaring
cost of funds to lenders; th e average rate on conventional
new-home loans went from 7.75 percent early in the year
to 8.95 percent a t year-e nd , wi th a peak of 9.40 perce nt
in October.

Ind ee d, muc h o f 1973's h ou s ing story was writte n in th e
cred it markets, wh e re th e cost of mortgag e fu nd s was
m aterially affected by the sharp rise in yi elds on money ­
m a r ket ins tr ume n ts a nd a n a tte ndan t re d uc tio n in sav­
ings in flows in to d epo s it in stitut ions. 5avi ngs-a nd- loa n
assoc iat ions record ed a $3 .6-bi llion s avings inflow-less
than one-half the 1972 record pace- whil e co m m ercia l
banks made a so m e w hat be tter relati ve showing wi th a
$2 .2- b illi on in flo w. As a refl ecti on of this differen ce in
savings infl ows, banks rep o rted a 26- pe rcen t in cr ease
in n et mortgage loans to $3 .7 bi llion, wh ile 5&L's
re por ted a 23-percen t de cli ne to $5 .3 billion . T he lat ter
figure still represented the second largest ga in in 5& L
hi st o ry, but it was ac h ieve d only th ro ugh s u bs ta n tia l
bo rro w ing from Home Loan Ban k s a nd liquidation of
in vest m en ts, plus a h igh vo lume of loan repayments .

The hou si ng outlook at year -end re m a ine d clo ud ed , not
si m ply becaus e of demand problems and the co n tin ue d
high cost of mortgage money, b u t a lso becau se of th e
exte nde d rise in co ns tr uc tio n cos ts and growi ng mate­
rial s s ho rtages , incl uding those of certain petrol e um
deri vatives . In additio n, the industry was tro ub led b y a
nu mb er of energy-crisi s problems- co ncerning, for
exampl e, th e imp ac t of energy-rel at ed pr oduction cut­
backs and job layo ffs on overall hou sin g d emand, and
the impa ct of possib le gasoline ra tio ni ng on the de ma nd
for subu rban housing in pa rti cu la r.

Boom in lumber and steel
The nati on wid e co ns tr uc tio n boo m e na b le d th e W estern
lum ber industry to experi ence its third co nsecu tive year
of pr odu ction and em pl oy m ent gains . Lum ber mills
boosted prod uc tion o n ly slightl y, bu t stil l a p p roached
1959's re co rd lev el. Prices meanwh ile ro se sharply­
28 percent for lum ber and 25 pe rcent for p ly wood ­
reflecting signi fican t crosscu rren ts in m arket con di tions .

Strong demand from the nation's homebuilders, together
with the Phase III removal of mandatory controls, sent
lumber prices soaring during the January-May period,
extending an uptrend which began in early 1971. Prices
then trended downward throughout most of the remain­
der of the year, as housing demand slowed and the
Federal government took various steps to increase timber
supplies. Lumber and plywood prices already were
dropping from their peaks when the 60-day freeze was
imposed in mid-June, and the Cost of Living Council
consequently exempted the industry from Phase IV price
controls. The second-half decline in lumber prices was
relatively mild, however. Plywood prices, which had
dropped more severely, spurted upward again late in the
year, because of a wave of scare buying which developed
when a shortage of fuels and glues forced the closure
of six Oregon mills. As a means of overcoming the
industry's evident shortages, several major forest­
products firms announced major capacity-expansion
plans during the year.

The regional steel industry set a new production record,
with output soaring 18 percent above 1972's pace to
7.4 million tons. The industry benefited not only from a
strong demand for structural steel for construction, but
also from a slowdown in the flow of foreign imports.
The import decline was steeper in the region than
nationally, since the devaluation of the dollar raised the
price of Japanese steel relative to domestically-produced
metal, causing customers on the West Coast to turn
increasingly to regional suppliers.
Domestic steel producers raised their prices by less than
3 percent for the year, posting increases on a wide range

of structural and tubular products in early January and
on flat-rolled sheet products in early October. Further
increases were recorded in early 1974, in response to the
industry's plea for higher prices to finance the huge
capacity expansion that would be required to meet
projected demands for structural steel.

Boom in nonferrous metals
Demand for a lumin um was exce p tiona lly strong, but
Northwest produce rs were ha rd-p ress ed to satisfy cus­
tomers' requirem e nt s beca use of a sho rtag e of hydro­
electric power. Pro d ucers were fo rced to sh ut down a
portion of th ei r ca paci ty in m id- Ap ril, whe n the
Bonneville Power A dminis tra tio n red uced its inter­
ruptib le powe r su pply in respo nse to a low strea m
ru n off. D ro ug ht conditio ns subsequently necessitat ed a
furth er cutback in power, idli ng one-quar ter of the
regiona l industry's to tal capacity by mid-Ju ly. Hea vy
ra in fa ll late in the year prevented fu rth e r d isr upti o ns,
ho wever, a nd b y ea rly 1974 m ost p roducers were ab le to
reac tiv a te id le ca pac ity beca use of th e im p ro ved po wer
si tua tio n . M ean wh ile, wi th d ema nd soari ng, th e se ll ing
price fo r primar y ingo t jumpe d sharp ly du ring th e firs t
qu arter to th e pu bli sh ed level of 25 cen ts a po u nd, end­
ing more than three years of price d iscou nti ng. The price
rem ai ned stab le until lat e D ecem be r, whe n the Co st of
Living Cou n cil granted the in dustry permissio n for
another boost to 29 cents per pou nd.

O utput rises ill major extract ive industries, with very strong
gains in steel and petroleu m
Change (Percent)



1 5




n 1~


II lJ •

II .

- 5






;' II 11


197 1



- 20




Refined Petroleum

Silve r pr ices trended upward in 1973, extending the
spe ctacular advance that be gan in late 1971 . Over the
course of the year, th e New York dea le r price jumped
from $2.03 to a reco rd h igh of $3 .27 an o unce . S up p ly
problems a nd stro ng ind ustrial dem and co n trib ute d to
the ad va nce, as a four-month strik e at Idaho's Sunshine
m ine d epressed production in the face of a furth er
incr ease in industr ia l consu mpti o n . But the strongest
stimu lus came from the worldwide co m mo d ity in flation
and uncertain intern atio nal-cu rren cy situat ion, wh ich
inc reased the specu lat ive demand for s ilver by those
who view ed the meta l as a sa fe store of va lue .

Copper and other nonferrous me tals a lso were in
extremely sh o rt supply, as equipment breakdowns,
po llution-control requirements, and ot her problems
restricted the growth of producti on in the face of record
demand . A devalued dollar and strong market con di­
tions abroad con tribu ted to the squeeze, leading to an
upsurge in nonferrous -metal pr ices during th e first fo ur
months of the yea r. Serious s hortages de ve loped as the
year progressed , since p rice controls hel d domestic
pri ces stabl e in the fa ce of soaring world pr ices, contrib­
uting to an o utflow of meta l to o ve rseas markets. Fina lly,
in Decembe r, the Cost of Living Counc il de contro lled
the p rices of lea d and z in c, as a means o f dis courag ing
exports and encourag ing expansion of domestic capacity,
and granted co p pe r producers permission to ra ise prices
from 60 to 68 ce nts a pound .

f :






Energy pinch
Western oil refin eries achi eved a 7-pe rcent increase in
o u tp ut in 1973 , d esp ite th e impac t of the late-ye ar Ara b
oil emba rgo . But dome st ic so u rces s u pp lie d a d eclin in g
po rtio n of th e reg ional in d ustry's total cr ude requ ire­
ments-55 percent, co m pare d with 63 percent in 1972­
as crude prod uc tio n co nti n ued to decline in both
Cali forn ia a n d Alas ka. For eign impo rts flo wed in at an
incr ea sed rate, es pecia lly a fter mid-Ap ril, when the
Adm in ist ration s us pe n d ed o il-i m port q uo tas and re­
moved ex isting ta riffs on crude and products. Th e Arab
nati o ns were res po nsible for mos t of th is in crease an d,
ind eed , had be com e the largest foreign so u rce of s up p ly
prio r to the emba rgo, ac cou nt ing for over o ne - third of
the tot a l cru d e oil imported into the Pacific regi on.
Thereaft er, the e m ba rgo and re lated cu t ba cks in Cana ­
d ia n an d ot h er s upplies significan tly a ffect ed W este rn
refin ery o pe ra tio ns , redu cin g output about 7 per cent
bet we en earl y No ve m ber an d late D ece mber.

A rece n t decisio n of the Ca lifo rn ia State Lands Co m­
mission, 'pe rm itting the resu mption of drilling on existi ng
offshore dri lling p lat forms on sta te lands, p ro m ises to
reverse th e p ro longed decl in e in California cr u de-oil
production . That decline began in 1969, whe n the di sas­
trous blow-o ut in th e Sa nta Barb a ra C han n el led to a
moratorium on offsh ore drilling. Development al so is
lik ely on 7.7 m illio n acres -of Federal lan ds ex ten d ing as
fa r as no mil es offs ho re, in vie w o f th e Int eri or D epa rt­
ment's req ue st to o il co m pan ies to p ro pose tracts for
possible leasing early in 1975 .
The W est w ill p laya ma jo r role in the longer- ter m
solu tio n to th e e ne rgy crisis . A highli ght of 1973 was
Pres id ent Nix on 's signi ng of the Trans-Alas ka Pipel ine
Bin, auth orizing con struction of a 789-m ile pipeline
be tween th e Prudhoe Bay fie ld an d the po rt of Vald ez .
The first s h ip me nts of oil from A laska 's North Slo pe
sho ul d reach Wes t Coast mar kets by 1977, wi th th e
pipeline re ach ing its full capacity of 2 million ba rr e ls
pe r day by 1980. The recent and prospect ive rise in fue l
pr ices has a lso stim u lated in tere st in th e expl oitatio n of
Rock y M ountain coa l and sha le-o il resources- wit ness
the specta cu lar bids rec e ive d by the Fed e ra l governme nt
recentl y for a western Colorad o sha le- oi l tract.

~ !7

Rapid Lending Pace

Last year was an active year for bankers-a year of strain
under the pressure of seemingly insatiable financing
demands. Banks paid higher and higher rates for the
deposits needed to satisfy the demands for loans from
all sectors of the economy. Yet many banks reported rec­
ord or near-record net income, as operating earnings
were swelled, first, by record loan rates collected on very
large increases in loan assets, and secondly, by burgeon­
ing income from foreign-exchange transactions and
overseas operations.
Financial activity, nationally and regionally, moved at a
frenzied pace in the first half of 1973, and then slowed to
a more sustainable pace during the second half as mon­
etary policy became less expansive. The narrowly
defined money supply (currency plus demand deposits)
fluctuated erratically from quarter to quarter, but
expanded 5 1/ 2 percent for the year as a whole, somewhat
be low the 8 V2 percent growth ra te of 1972.
In an attempt to combat severe inflationary pressures,
the Federal Reserve made a number of restrictive moves
during 1973. The discount rate was raised seven times,
from 4 1/ 2 percent at the beginning of the year to 7% per­
cent in August. At midyear, reserves on demand deposits
(over $2 million) were increased V2 percentage point, and
marginal reserve requirements were placed on large­
denomination CD's and certain other liabilities. (A
further increase in these marginal requirements was
applied in September, but rescinded toward the end of
the year.) In May, however, all interest-rate ceilings on
large CD's were suspended, so that banks thereafter
could bid competitively for such funds.
In the face of restrictive policy moves and record-high
levels of loan rates, commercial-bank credit expanded
$71 billion (12 1 percent) to a year-end total of $630 bil­
lion for the nation as a whole. Unlike the previous year,
the increase was concentrated almost entirely in loans;
total investments remained almost stable, with a sharp
reduction in I.l .S. Treasury security portfolios offsetting
a substantial gain in Federal agency and other securities.










Soaring rates

M ortgage-lending instituti ons still lend heavily despite sharp
redu ctions in savings inflows
C ha nge (Billio ns of Dollars)



~ -,

Sa vin s Acco un t IS& LsL



Savinzs &
' O ther Co sumer Ac ou nts
. lban k0....









' ", t;'/

- 2
C ha nge (Billio ns o f Dollars )


' 66

-­ ' 67


M pr tgage Lo ns (S&Ls) t/' /""

' 68

' 69


' 70







I--\ Mo rtg<pE' LOa nS
(ba ks )



' 72

'7 3

Short-term interest rates rose spectacularly, reflecting the
strength of short-term demands for credit. For example,
the three-month Treasury bill rate increased ove r 3%
percentage po int s to a peak of over 8 1/ 2 perce nt in Au gust,
bu t th en flu ctua ted conside rab ly for the rest of the year.
Lon g-term rate s were so m ewha t more stable b ecause of
the mo d e ra tio n of ca pital - mark et dem and s, es pe ciall y
o n th e pa rt of corpo rat ion s, wh o were b oth flus h wi th
ca sh a nd hea vily de pendent o n sho rt-ter m ban k loans .
Treas ury- bo rr ow ing needs were mo der ate be cau se of
the rel atively small Fede ral de ficit, but in co n tras t,
Fed e ra l-agenc y financing boomed as m o rtga ge -related
agen cies turned to th e capita l market fo r s up p le me nta ry
fund s to sustain a record volume of mortgage fina ncing.


Th e upsu rge in interest rates cou ld b e traced a lso to the
virule nce o f th e inflation d isease, w hic h im pe lled bor­
rowe rs, sa vers a nd inve st or s to ad d a n in flation p re miu m
to th e interes t ra tes a t whic h th ey were wi lling to do
busi nes s. In a ddi tio n, th e u psu rge re flected the assu mp­
tion by mo net a ry po licy of th e major share of th e bu rd e n
of curbing inflation, after fiscal pol icy had prod uce d
inflation -fue ling de ficits during the forma tive stages o f
the boom . Also, a growing share of cred it restraint was
ac hieve d th ro ug h th e price mec hanism, rat her than
throug h nonprice restraints on cred it avai lab ility, suc h
as the Fede ra l Reserve forme rly had imposed through
Reg ula tio n Q rate ceili ngs on la rge negoti a b le CD 's.

Soaring Western demand
Western ba nks succ essfully n egotia ted th e year 's
haz a rd ou s co urs e to rec ord a $10- bill io n (13 percent)
in crease in ban k credit- fa r above even the strong 1972
incre ase-to a year-end total of $92 billion . The boom in
ban k lending to business dominated th e credit scene;
thi s loan ca tegory rose 17 per cent over the year, with
ab out half of the total increa se co ncen tra ted in the fren ­
zie d first q uarte r. During th at pe riod, b urgeo ni ng cre d it

d e mand s refle cted bot h the booming dom esti c economy
an d the' inte rna tiona l mon etary crisis, as well as a sh ift
of bo rrowe rs to ban ks fro m th e co m m e rcia l-pa per m a r­
ke t. Busi ness -loa n growth lat e r slacke ned as th es e facto rs
weake ne d over th e co ur se of th e year; for e xample, some
loan de mand s hif ted back to the co m mercial-paper
market whe n bank business -lo an rates regaine d their
tra ditiona l d ifferentia l ove r paper rat es .
Mortgage-loan de ma nd at Western banks contin ued
very strong throughout the yea r, in an expan sion w hic h
excee de d eve n the acce lera te d pace of 1972. Indeed,
for th e third con secutive year, th e do llar increase in
mortgages was grea ter than th at of a ny othe r loa n ca te­
gory. Co ns u me rs, too, added to th e loan e xpa nsio n by
sharp ly inc reasi ng the ir cred it de mands for autos an d
other consum er items .
Western banks obtained so m e funds for finan cing the
loan build-up by redu cing their portfolios of U.S.
Treasury securities, especially Treasury bill s. These
redu ctions, concent rat ed in th e first quarte r, crea ted
co lla teral -sh ortage probl e ms for som e banks. But th a t
d ifficu lty was alleviated in th e final q uar ter, wh en ba nks
bega n to repl en ish th eir de pl et ed stocks of short-ter m
Treasur ies. Th rou gh out the yea r, ban ks adde d to th ei r
holdings of Fed e ral age ncy iss ues in o rde r to profi t from
th e ad va n tageo us ra tes of re tu rn on such sec uri ties .


Bank loans rise rapidly in West as in rest of nation, with special
strength in business and mortgage loans
Billion s o f Do lla rs

: "' -~.....-





.... ­

----. /


Billion s o f Doll a rs






.. '"


-" Real Es pte Loans



Ot he Secu ritie s


- --



<, /




Loa ns/


Busi ress Loan s


CD's increased ve ry sharply in earl y spr ing, and again
in mi dsummer after the rem o val of CD rate ceilings,
wh e n agg re ss ive bidding for such funds push ed rates to
a record 11 p e rce nt. The role of CD's in th is expa ns ion
differed from th e situation in the similar 1969 bo o m,
when Reg Q ceilings h el d CD rates below competi ti ve
money-mark et ra tes, forc ing banks to turn to altern ati ve
so u rces of funds suc h as Eurodollars a n d bank holding­
company paper. In the severely restrictiv e atmospher e
of 196 9, CD's actually decl ined, in contrast to the sharp
increase of 1973.



L S. C o v't. C e c u r i t i e ~





' 66

' 67

' 68

' 69



'7 0

' 73


Cha nge (Perce n I)

20 .---

















10 H - i-----C!c-H -+- -+-I:--1-++ + + -+-I---- - t O l--''--=~~.L.-f----''-------''--+------"------I-

-10 1-- --'= '-j-- - - - -+- - - ­
- 20 ' - - -- - - - ' -Total
Ban k Cre d it



Reliance on CO's
On e of the year' s ma jor developments , h owever, was
the ba nks' h eavy reliance on large negotiabl e CD's as
a sourc e of funds to support the massive loan e xpansion .
Total deposits of District ban ks grew by 9 perc e n t in
1973, but over half of the $7-billi on in c rease was a ttrib­
uta bl e to CD's, which jumped 54 percent over the year.
In o ther tim e-de pos it ca tegories, pa ssbook savings
droppe d 5 percen t while o ther consumer- type deposits
rose 15 percen t, reflec ting differences in ra tes paya b le
on these two deposi t ca tegories ,



-I-+-·+-+--t-t-- - - --j

- - - - - - ' - - - - ---'--- - -- "------ - ----'
u.s. GOy' t.
Bus iness
O the r
Loa n s
Se cu rities
Se cur ities

La rge District ba nks s uffered outflows of passbook
sav ings, a t least part ly beca use ma ny of th e m paid be low ­
cei ling ra tes on s uc h deposi ts. In Ju ly, fo r e xa mp le, when
th e Reg Q cei lin g o n suc h deposi ts was raise d to 5 per­
cent, man y banks hel d th e ir own ra tes a t 4 1/ 2 percen t,
and subseque ntl y encountered some disin termedia tio n
of funds as mone y-ma rket rates moved toward their
hi ghs for the year. In contrast, banks recorded sub st anti al
inflo ws in the form o f consumer-type tim e deposits,
especially after raising the rates on th os e instruments
to the new Reg Q ce ilings at m idyea r. (Abou t one-fourth
of the total ga in came in fou r-yea r time certificat es,
which w e re not sub jec t to ra te ce ilin gs during th e Ju ly­
Octob e r period .) Still, part of these funds prob ably
re presented transfers from passbook savings rath e r than
n ew depos its.

Rising costs

Past andfuture

T he cost of ba n k funds (exc ept household savings) rose
last year in tan dem w ith the soaring rise of money ­
market rates . As a re flecti o n of th e removal of ra te ceil ­
ings , rates on large CD's ranged from a low of 5% perce nt
to a p eak of 11 percent, with the yea r-e nd ra te hovering
aroun d 9% p ercent. The effective rat e on Federal funds
(inte rbank loans of unused balances with th e Fede ral
Rese rve) fo llo wed essentially the sam e pa th , al tho ug h
end ing the y ea r just below 10 pe rcent. Al so, me m be r­
ban k borro w ings from the Fed be ca m e more expensive
as the discount ra te rose from 4% p ercent in Jan uary to
a final level of 7% percen t in Aug ust.

H igher loan rates, when applied to the h uge increase in
loan asse ts, produced a st rong level of earnings for mos t
(b ut no t all) Western banks last year. Som e large banks
with international operations ben efited fro m boo m
co nd itio ns overseas, augment ed by the favorab le earnings
impa ct of the revaluation of m aj o r foreign cu rre ncies .
H owever, those banks that rel ied heavily on la rge CD's
an d borrow ings to finance their expanded ass ets did not
fare as well because of th e record high co st of such funds .

Bank-loan rate increases were limited to some exten t by
the g u id e lines of the Committee on Inte rest and
Dividends . In the first qu arter, the preva iling prime
bu sin ess-l oa n rat e rose only from 6 to 6 1/ 2 perce nt, w hi le
marke t ra tes genera lly rose a fu ll pe rce n tage poi nt or
m o re. This situa tio n hel p ed tr igger heavy d ra wd own s
aga ins t loa n com mi tmen ts, as bo rro wer s shifted fro m
th e co mmercia l-paper mark et to ta k e advan tage of th e
m o re favorab le ba nk- loa n rates. H ow ever, the situation
cha nged considerably following the CID's development
of a two-t ier rate system in Apri l. Thereafter, the banks
had more flexibility for ad ju sting the rates charged large
borrowers, in exchang e fo r co ntin uati o n of relatively
stable rates on loans to sma ll bus inesses and households .
T he prime rate th us rose rapid ly in 16 separate upward
adjustme nts, to a 10-percent peak in la te September,
befo re edg ing down to 9 314 percent in the last q uarter.
Req ui re d rese rves of District member bank s in creased
$381 m illion, as a consequence of bot h strong gains in
depos its an d se vera l changes in reserve req uirem ents .
H igher requirements, as noted ea rlie r, a ffected not only
demand deposits but a lso la rge C D ' s a nd certain other
liabilities. Increased res erve press ure became evident
from the sizable increas e in m ember banks' total borrow­
ings. Borrowing from th e Fed era l Reserve Bank of
Sa n Fra ncisco jumped fro m a da ily a ve rage of $20
m ill ion in 1972 to $158 mi Jlion in 1973, a nd la rge ban ks
pu rch a sed (bo rrowed) $646 m illi on in Fed funds fro m
ot her ba nks on a da ily average ba sis, in co ntras t to th ei r
net sa les (le ndi ng) posi tion th e previous year.

Western banker s, lik e every b ody else, are starting the
New Year with m any unanswered questions about the
co urse of the economy in 1974. With the co nti nuation
of inflation, invento ries may be more cos tly to fina nce,
creat ing increase d loan d emand . Also, wi th th e s ho rtage­
imposed nee d fo r new bu siness investme nt , fina nci ng
req uiremen ts ma y expa nd for both s hor t- ter m a nd long­
te rm fu nds , a ltho ug h some of thi s dem an d probab ly
ca n be m et by inc reased re liance on the capital markets .
Mortgage lending likely will suffer substantia lly from
demand weaknesses a nd en ergy shortages, while th e
pace of consumer len d in g m ay lag in response to rising
unemployment, ri sing prices of necess ities, and the very
hea vy debt obligatio ns of many hou seh o ld s. As overa ll
loan deman d de celerates, howeve r, ban ks sho uld b e a b le
to reb uil d their depleted security portfoli os.
In view of the expectation of more m od erat e loan
dema n d, loan rates may move down from the ir record
h ighs of 1973 . The cost of funds for banks also should
fall if consum e rs expand the ir savings flows in anticipa ­
tion of a soften ing econom ic situ ation . On the other hand ,
corpo rate treasurers m ay be less able to put money into
CD's , partly because of their need for funds for capita l­
goods purchases, but mostly because of the impa ct of
a sluggish economy on corpora te profits .
T he slo wdo w n in th e economy iron icall y co u ld bene fit
Weste rn ba nks du rin g 1974, acco rd ing to most marke t
observers. T he slowdow n s hou ld ease loa n d em an d
enoug h to pe rmi t ban ks to b id less aggressive ly fo r
deposi ts a nd ot he r fun ds, a nd in particular, to place less
re lia nce on vo lati le CD 's as a source of funds. This could
m ean im p roved pro fit m argins, b ecaus e of a wi der
sp read between what banks will pay fo r m oney a n d
wha t they will charge for the ir funds .


Active Central Banking

The Federal Reserve Bank of San Francisco, through its
many operating functions, played an important support­
ing role in 1973's regional expansion. (The bank's service
area includes the five states on the Pacific Rim , plus
Idaho, Utah, evada and all but the southeastern corner
of Arizona.) The Bank also continued to develop proce­
dures for more efficient check-handling-and continued
to prepare for that coming day when checks lose their
function as the principal means of money payments.
The Federal Reserve adopted a more restrictive anti­
inflationary policy stance during much of the year, as was
described earlier. In implementation of this policy, Sys­
tem open-market operations tightened, reserve require­
ments increased, and the San Francisco Reserve Bank's
discount rate rose from 4 1/ 2 to 7V2 percent. The Reserve
Bank accommodated 21 member banks at the discount
window during the year, the same as in 1972, but those
banks accounted for 1,435 separate borrowings, far more
than in the previous year. As another indication of
strained financial markets, daily average borrowing
jumped from $20 million in 1972 to $158 million in 1973.


As part of its long-range effort to improve the operation
of the discount window, the Board of Governors revised
its Regulation A in April, authorizing a seasonal-borrowing
privilege for member banks experiencing significant sea­
sonal needs for funds, and providing a number of techni­
cal changes which broadened the types of collateral
acceptable to secure advances. The Reserve Bank accom­
modated five member banks under this seasonal-borrow­
ing privilege during the year.

RCPC achievement
The Bank's major operational achievement in 1973 was
the opening of its first regional check-processing centers
(RCPC's). The RCPC's in Los Angeles, Portland, Salt Lake
City and Seattle all began operations, and the San
Francisco office planned for the opening of facilities early
in 1974. (These highly computerized operations achieve

overnight processing and settlement for checks payable
in specific geographic areas.) Altogether, more than 50
banks have already changed their deposit patterns to
utilize RCPC's, and this has led to a significant growth of
deposits, up to 20 percent in Portland.
The emphasis on increasing the efficiency of check­
handling through RCPC's stems from a real fear that
increasing check usage will overwhelm the payments
system. With check volume rising 7 percent annually,
the total could rise in a decade to 50 billion checks
nationwide. Incidentally, this Reserve Bank alone han­
dled an ll-percent increase in commercial-bank checks
last year.
Check volume is likely to increase because of both the
growth of the national economy and the growth in the
number of check users. At the same time, the difficulties
of such a system could increase because of the labor­
intensive nature of check handling, involving substantial
amounts of manual paperwork and physical transfers of
paper. This paper glut could result in higher user and
purveyor costs, reductions in the productivity of financial
transactions, and numerous other problems associated
with an overloaded system of paper-conveyed payments.


Paper j700d of checks co ntinues rising at San Fran cisco
Federal Res erve Bank
Mi llion s of Pieces



















Billions of Do llar s






'6 9	


'7 1

' 72


RCPC procedures for improving check -hand ling repre ­
sent a significant im p ro ve m e nt in the nation's payments
s ystem, but they should be viewed primarily as a tran ­
sitional step along the road towards the adoption of an
electronic-payments system. In late 1973, the Board of
Governors proposed revisions to its Regu lation J whi ch
are de s igned to redu ce rel iance on checks fo r e ffect ing
m oney payments. Among other th ings, th is p roposal
cod ifies the rights and respons ib ilities of the parties to
electronic debit-and-cred it transfers when Fede ral Re ­
serve facilities are involved, and thus it represents an
impo rtant phase in the evolution of the nation 's pay­
ments system . Only a large-scale conversion to electroni c
payments can forestall the gro wth in check usage that
threatens to impede the flow of fund s in the economy,
and the proposed rev is ion outl ines a framework fo r an
orderly transition.

D u ring 19 73 also, the Reserve Bank con tinued to support
an electron ic- transfer system called th e Californ ia Auto­
mated Clearing House Association (CACHA). This sys­
tem , designed to offer an a lternative to the rising tide of
paper checks, provides a co m puterized clearing system
for payrolls, dividend payments and preauthorized
charges. The employees of participating firms (including
the Reserve Bank's California employees) can have their

.... ..


• _eO.,..
,a 11 .. Ol.

!i'''~~ .J

• • 6 .. . ~

!!1!l fir-·!!]

.. . .

Iii 1IIl--:J

t ' . : ...

0· - ""
•• 0 6 c,; "·



Ifj JiJ


~o c~c"o®


~' -



~ c<­ ~~ ~
.. ~




• I




pay deposited a u to m a tica ll y in banks of their ch oi ce
with out checks be ing prepa red or proc essed. The pro­
gra m is a lso d es igned to pe r m it in divi dua ls to pa y mo rt­
gages, ins ura n ce premium s a n d o ther re curring bill s in
the sa me way.
T h e a u to m a tio n of go vern men t tran sfe r pa y me n ts, b eing
de vel oped initi all y fo r Air For ce pa yr oll s, rep resents
a no ther s ignifican t a dvance in th e check - p rocessi ng field .
If th is project is su ccessf ul a n d is e xte n d ed to oth e r go v­
ernment agenc ies, the Bank s h ou ld expe rie n ce a sig n if­
ica nt decli n e in th e numbe r o f go ve rnme nt ch ecks a n d a
cor respondin g increa se in th e efficie n cy o f pro cessing
gove rn m en t payme n ts.
Th e Reserve Ban k comp leted the W e st ern link in a
nati o nw id e fun d s-transfer sw itc h by expa n di ng its sy s ­
tem fro m Sa n Fran ci sco to includ e a ll of th e bran ch cities.
T he cha nge to m achine - p roc essing o f w ir e tr a nsfe rs pe r­
mitted s h a r p in creases in productivity las t year; for
exa m pl e, the Los A ngeles o ffice red u ced its sta ff in this
act ivity by 50 pe rcent, w hi le e xpa nd ing vo lu me by m ore
th a n 40 perce nt. Th e na tionwid e sys tem , w h e n co m­
p leted , w ill u ti lize a switch a t Cu lp eper, Virgi n ia to tran s­
fer fu n d s alm o st in sta n ta n eo usly fr om o n e commercial
bank to a no ther anywhere in the co un try.

Reserve Bank's wi re- transfer volume soars to over $3 tril/i on­
double the level of two years ago
Trillio ns of Dollar s







' 69

' 70




' 72

' 73

By mea ns of the Reserve Bank computer, commercial
banks located throughout the San Francisco District are
able to make fund s transfers on behalf of their customers,
using com pu ter te rm inals located in thei r own offices .
T he conven ience, efficien cy a nd secu rity of th is mes sage
sy ste m led to a sig nif icant in cr eas e in wire transfers in
1973 . D istr ict ban k s bough t and sold ov er $3.4 trillion
du ri ng th e yea r, a 28-percent increase . To t ran sfer such
astound ing sums, m e m b er ba n ks sent and recei ved o ver
1.1 m ill ion telegrap h ic me ssa ges, up 37 pe rcent fo r 1973.
Al so in the computer field , the Sa lt La ke City branch
converted from a special-purpose check-processing
ma ch ine to a full-scale computer, increasi ng the branch 's
ch ec k-proces sing capacity by almos t two -th irds . Th is
step wa s a p re req ui site for estab lish ing the Sa lt La ke
City RCPC and in tim e it wil l also perm it au tom ation of
th e branch's accounting a n d other operations .

a ll of the nation 's coin and cur re ncy. The System, inc i­
dentally, absorbs al l handling and transportat ion co st s
fo r s h ip m ents to and from o ffi ces of me mber banks, a nd
as su mes the risk of loss on su ch sh ip men ts.
A s fiscal agent fo r th e U.S. Government, the Bank wa s
bu sy last year issu ing and red eem ing U.S . Treasu ry
secu rities, includ in g savin gs bonds. Marketab le secu ri­
ties iss ued, exchanged and re de emed at the Ban k's five
offices almost doub led in do lla r vo lume to $220 bi llion.
Th e number of p ieces hand led increa sed s u bsta ntiall y,
although the Bank continued to extend to member ban ks
a book-entry safe- keeping se rvice for the depos it of
Treasu ry and Fede ra l agencyse cur ities . Pa rt icipa t ion by
indi vid u al inv es tors in the T re as ury- b ill m arket incre ase d
seve ra l-fold, reflect ing a s ha rp rise in b ill rate s during
the year; the low for the three-mon th bill , 5.16 percent,
almo st eq ualled the 1971-72 highs for the rate .

Cash and securities
Despite th e emp hasis o n checks a nd e lec tron ic fu nds
t rans fe rs, coin a nd currency remained in heavy d e m a nd
th rough o ut the Dis trict last yea r. The Reserve Bank
handled 1.9 billion pieces of coin (a 9-percent increa se )
and 1.0 billion p iece s of currency (a 3-percent increase) .
In do lla r ter ms , th is amounted to $24 6 m illion in coi n
and $8 .9 billion in cu rrency. As in o ther years, the Fed ­
eral Re serve w as respons ible for placing into circulation



- ----------~-_.:.?

..r- _

~ ";:O;;

• ....

. ~.


u.s. sa vings-bond redemp tions continued to exceed
sale s in the Distr ict -with the marg in w iden ing from
$114 mil lion in 1972 to $158 million in 1973 - partly
because of th e attractivenes s of Treasury-b ill and other
ma rket ra tes. Howe ver, sa vings-bond sales aga in in­
creased at a good cl ip , especially aft er the Treasury's
December announcement that it wo uld rai se the yield on
E and H bonds to 6 percen t when hel d to ma turity.

Reserve Bank handles almost one billion pieces of currency and
Iwice Ih al number of coin s

Mil lio ns of Pieces







W ith respect to th e processing and de st ruction of food
coupons, volume increased on ly mod erately at Ba nk
offices last yea r - an d 1974 volum e is not expected to
increas e dr amatically unless the re is a major program
change broadening eligibility requ irement s. Th is reflects
the fact that eligibl e recipien ts ha ve for som e time ta ke n
full ad vantage of the program, especiall y in California .



Mi llion s of Piece s










Superviso ry role

I niemai changes

D ur in g the y ea r, 35 new ban ks a nd 2 trust co mpa n ies
were o rga n ized in th e San Fra n cisco Distri ct-th e highe st
rigure in the past decad e. As a result of bank sales an d
merge rs, th e n um b e r of m e m be r ba nks re mained stable
a t 143, but me m ber- ba nk offices rose by 3 perce n t to
4,547. T h e number of n o n m e m be r ba nks meanwh ile
increased b y 16 to 287, and the n um be r of nonmem b e r
ban k offices rose by 10 percent to 1,387.

In its inte rn a l opera tions, the Reserv e Bank adopted a
ma jo r change in its budgeting sys te m , sh iftin g fr o m a
semi -ann ual functio n a l forma t to an an n ua l b ud get with
a " se rv ices structure" format. The n ew budget brea k ­
dow n pe rmi ts th e o utlini ng of Bank p la ns a nd objec­
tives at each le v el of service pe rfo rmed by the Bank .
The Ban k also ret ai n ed a managem ent-consulting firm to
co n d u ct a salary st ud y, to ensure that th e Bank's sal ary
sca le co nti nu es to be co m peti ti v e with progress ive firm s
elsewhere. As part of this project, th e cons ultan t firm
in trod uced a n ew job-evaluation program w hich was
im pl e m e nt ed fo r officia l an d mi d- leve l s taff posi tio ns .

Th e Bank beca me involved in emergency lending to t he
forme r u.s. Na tiona l Bank of Sa n Diego . Worki ng close ly
with the Comptroller of th e Currency and the Federa l
Depos it In su ra n ce Co rp oration, the Fed e ral Reserve sta ff
spen t several mo n ths investi gat ing U.s. Na ti on al' s
cond itio n a n d h el p ing to d evi se a sol uti on to t he p ro ble m .
Th at so lu tion involved the FD IC's ass umption of the
ba n k's ba d lo ans as receiver for th e ba nk, and the sa le
of the res t of its asse ts (incl udi ng 65 Sou thern Ca lifo rnia
branches) to Crocker N ational Bank .
Th e Reserve Bank co n tin ued to expa n d its s uperv iso ry
role in international banking during the year, partly
th rou gh ro u tine con tro l of m e mber-ba nk app licat io ns for
ove rseas ac tivi ty, bu t a lso th ro ugh its s upervisio n of 20
Edge Act corporatio ns and subs idiari es . (These corpora­
tio ns a re ban k- o wn ed subs id ia ries whi c h e ngage in for­
eig n banking a nd/o r overseas fina n cing th rough equity
in terests in foreign entities .) Last ye a r the Bank pro c­
essed 67 app lica tions involving new or expanded over­
seas acti vi ty by Ed ge Ac t corpora tio ns a nd Dis trict
member banks.


To carry o n its ex pa n ded activi ties , th e Bank im pl e­
me n ted a n ew ma n age men t supe rviso ry prog ra m, and
accomplished its o bj ecti ves wit h a m od est increase in
staff. T h is s taff included a wide range of job categories:
acco u nta n ts, programmers, g uards a n d econom ists;
planners, clerks, typists and personnel experts; a ud itors,
secreta ries, buildi n g sta ff and messengers. A ll co ntrib­
u ted nota bl y to meeting th e Bank 's goal s in th is diffi cu lt
yet re wardi ng pe rio d .

Federal Reserv e Bank of San Francisco
Summary of Operations
Coin and currency
Coin ve rified by piece cou nt
Currency verified by pie ce count

Number (thous ands )

Value ($ mi llion s)

19 73


7,92 7


1,76 1, 16 1
96 1,55 7


l77, 8 1 J
42,31 2
6 ,365

127 ,736

7,4 25
78 0

28 ,80 2

4,40 I




21 *

203 ,552

8,2 72
108,70 7
7, 16 6

11 6
3 14


6 40
79 8


13 ,527
14 ,545

12,2 24
34 7

2,1 75
39 ,105

1,8 29
22 , 188

356,1 78

292,8 80
5,4 95
31 7,455




8 27

19 73





Ch eck co llections
Comm ercial bank checks
Govt. check s (incl. pos tal o rde rs)
Return item s
Nonca sh collec tio ns .

Discounts and advances
Total di scount s and ad vances
Da ily average borrowings.
Number banks accomm od ated


240 *

22 *

Fisca l agency
Marketable secur ities
Issu an ce .
Exc ha nges a nd t ran sfe rs
Rede m p tio ns
Savi ngs bonds
Issua nce .
Reiss ue s a nd rep lace me n ts
Re tire me n ts
Curren cy ve rified and destroyed .
Federal ta x dep os its pr ocessed
Food sta m ps rece ived and processed

Transfer of funds
W ire tr an s fers .
"actual numb er


Twelfth Federal Reserve

The Federal Reserve System came into being 60 years
ago with the signing of the Federal Reserve Act by
President Woodrow Wilson on December 23, 1913.
The System was given broad powers to " furn ish an
elastic currency, to provide facilities for discounting
commercial paper, and to improve the supervision
of banking:'
Federal Reserve functions are carried out through 12
Federal Reserve Banks and their 24 branches, under the
coordination of the Board of Governors in
Washington, D.C.




Decentralization is one of the important characteristics
of the System 's operation. Each of the 12 Federal Reserve
Banks is a corporation organized and operated for public
service, with its shareholders being its member banks.
On November 16, 1914 the doors of the Federal Reserve
Bank of San Francisco opened to serve the banking com­
munity of the West. Originally the Twelfth District
included the states of California, Oregon, Washington,
Idaho, Nevada, Utah, and all but the southeastern
portion of Arizona . Alaska and Hawaii were included in
the District as they became states, and the service area
has since been expanded to include certain territories
such as Guam and American Samoa .

In 1917 the Twelfth District's first branch was opened at
Spokane, Washington. Within a few months other
branches were established in Seattle and Portland.
Salt Lake City opened for business in 1918, and Los
Angeles in 1920. Each of these branches was established
to perform for the member banks in its territory the
same services and functions as the San Francisco head­
quarters conducts for member banks in its immediate
territory. (In October 1938, the Spokane Branch was
dissolved and its functions were taken over by the other
Pacific Northwest branches.)


Twelfth District People
As a qua s i-gove rnm ental institution, each Fed e ral
Rese rve Ban k is a corpo ra tio n orga nized a nd opera ted
for p ubl ic se rv ice . Its shareholders a re the m ember
bank s lo cated w ithin the di strict served b y the Re serve
Bank, but th ei r vo ting privileges ar e limited to the e lec ­
tion of six of th e Rese rve Bank's n ine d irecto rs. Th ese

dire ct o rs, w ho se rve staggered three-yea r te r m s, are
divided into three classes of three directo rs each and
m ay be rega rd ed as represent ing lend e rs, bo rrowers, an d
th e ge ne ral pub lic. Class A directors are ne arly alwa ys
me mber bank officers or d irecto rs . Class B directors
mus t be act ively engaged in the ir distr ict in comme rce ,
agricu ltu re, or some other ind ust rial pursuit and may no t
be dire cto rs, o ffice rs, or emp lo yees of a n y ban k. Class C
directo rs represen t the ge n e ra l public an d fre q uen tly
incl ude p rofessional peop le su ch as educators and
lawyers; t hey ma y not be d irect o rs, office rs, emp loyees
or stock ho lders of any ban k .




Class A and B directors are e lec te d by th e m ember
ba nk s, whi le Class C d ir ecto rs are app o int ed by the
Board of Govern o rs of th e Fed eral Reserve Sys te m in
Washingto n, D .C. One of the Class C director s is
appointed by the Board of Go vernors as Cha irman of
the bank's b oard an d another is designated as Deputy
Chair man . Th e Board of D ire cto rs is charged wi th
respons ibility for overse eing and directing the mana ge­
ment of th e Res er ve Ban k in or de r to acco m plish the
broa d pu bli c purposes of the Fed era l Re se rve Act, which
was pas sed by Congress in 19 13 and has bee n ame n d ed
several tim es in the interven in g years to furth e r serve
the public. O ne of the prima ry responsibilities o f the
Board of D irector s is to es tablish the discount ra te ,
su b ject to revie w by th e Board of G overnors .

In addition, ea ch of the Reserve Ban k 's branches h as a
Board of Directo rs. In the Twe lfth D istrict, the Los
An geles Branch has a seven-memb er board, four
ap po in ted by th e Sa n Francisco Reserve Bank's Board
of Directors and three by the Boa rd of Go verno rs. Each
of the other Branch offices - Po rtl a nd , Sa lt Lake Ci ty, and
Sea ttle - has five-m ember boards, three appointed by the
Sa n Francisc o Bank 's boa rd and two by the Board of
Gove rnors.
The present m emb er s of the Board of Directors ar e
Cha irm an O . Me red ith Wilson, Deputy Chairma n
Jose ph F A libra nd i, Carl E. Schr oe d e r, Ja m es E. Ph illips,
A. W. Clausen, Cha rles Raymond Dahl .I oseph Rosenblatt,
C la ir L Peck, and Ma s Oji . Th ese directors a re shown
he re al ong with President John J. Bal les and First
Vic e-President John B. Williams.




Changes in Boards of Directors

Boards Of Directors, Branch Offices

Because of the public nature of the directorships of the
Bank and the demands upon the time of th ose who
serve, changes occu r each year in the composition of
the var ious boards . Du ring 1973 the foll owing changes
and reappointments were announced :

Los Angeles Branch:

Appointment by the Board of Governors-

Board Of D irectors, Federal Rese rve Bank
Of San Francisco

Joseph R. Vaughan, President of Knudsen Corporation,
Los Angeles, to fill unexpired term ending December 31 ,
1974. (Designated Chairman of the Board for 1974 by
San Francisco Reserve Bank's Board .)

A ppointments by San Francisco Reserve Bank's Board-

Elected by M ember Banks in the Twelfth District:
Class A Direetor-

Linus E. Southwick, President, Valley National Bank,
Glendale, California, reappointed to a three-year term.
Robert A. Barley, President, United Californ ia Bank,
Los Angeles, newly appointed to a three-yea r term .

A. W. Clausen, President and Chief Executive Officer,
Bank of Ame rica, N.T.&S.A., reelected to a three-year
term ending D ec ember 31 , 1976.

Portland Branch:

Appointment by the Boardof GovenlOrs-

Class B DirectorClair L. Peck, Chairman of the Board, C. L. Peck
Contractor, Los Angeles, Cal iforn ia, newly elected to
a three-yea r term.

Appointments by th e Board of Governors, F
ederal Reserve System:
Class C DirectorsO. Meredith Wilson, President and D irector, Center for

Advanced Study in the Behavioral Sc iences, Stanford,

California . (Reappointed Class C Director fo r three-year

term ending D ec ember 31 , 1976 and reappointed

Chairman of th e Board for 1974.)

Joseph F. Alibrandi, President of Whittake r Corporation,

Los Angeles, red esignated Deputy Chairman for 1974.

Loran L. Stewart, President of Bohemia Inc ., Eugene,
Oregon, newly appo inted to a two-year term.

Appointments by San Fran cisco Reserve Bank's Board­
John R. Howard, President, Lewis and Clark College,
Portland, named Chairman of the Board for 1974.
LeRoy B. Staver, Chairman of the Board and Chief
Executive Officer, United States National Bank of
Oregon, Portland, reappointed to a two-year term .

Salt Lake City Branch:
Appointment by the Board of GouernorsTh eodore C. Jacobsen, Chairman of the Board , Jacobsen
Construction Company, Inc. , Salt Lake City, reappointed
to a two-year term.

Appointments by San Francisco Reserve Bank's Board­
Sam H. Bennion, Secretary-Treasurer of V-I Oil
Company, Inc., Idaho Falls, Idaho, named Chairman
of the Board for 1974.
Joseph Bianco, Cha irman and President, Bank of Idaho,
N.A ., Boise , reappointed to a two-year term.

Seattle Branch:
Appointment by the Board of GouernorsThomas Hirai, President and Director, Quality Growers
Company, Inc.. and Director and Executive Officer,
Panorama Seed Farms, Quin cy, Washington, reappointed
to a two-year term.

Appointments by the San Fran cisco Reserve Bank's Board­
C. Henry Bacon, JI., Vice Chairman, Simpson Timber

Company, Seattle, named Chairman of the Board

for 1974.

Joseph Cebert Baillargeon, Chai rman and Chief

Exe cutive Officer, Seattle Trust & Savings Bank, Seattle,

reappointed to a two-year term .


Changes in Official Staff
Donald V. M a sten, Vice Pre sident to Senior Vice
President, Janu a ry 1.

James M. Brundy, Assistant Vice Presiden t to Vice

President, January 1.

John B. William s, Se n ior Vice Presi d ent to Firs t Vice
President, June 1.

Wesley G. DeV ries, Vice Presi den t (Los An geles) to

Senior Vice Presid en t (San Francisco), June 1.

James J. C u rra n, Assistant Vice Pres ident (San Francisco)
to Vic e Presi dent (Seattle) June 1.

Jam es M . Davis, Assistant Vice Pres iden t and Assistant

Manager (Seattle) to Vice President (Los Angeles), June 1.

Richa rd C. Dunn, Assistant Vice President and Assistant

Manager (Po rtla n d ) to Vice Pres id en t (San Francisco),

June l.

W illiam K. Gi n ter, As sis ta n t Vice Presi de n t to Ass ista n t

Vice Preside nt an d A ssis ta n t Ma nager (Portla nd), June 1.

A. Gra n t H ol m an , Assista n t Vice Pres ide nt and Assista nt
Manager to Vice Preside nt a nd Ma nager (Sa lt La ke Ci ty) ,
October 1.
H. Peter Franzel, As sistant Vice Pres ident to Ass istant
Vice Pr esident and As si stant Manager (Sa lt Lake City),
Octobe r 1.
Wi lliam M . Burke, Assistant Vic e President to D irector

of Economic Publications, Ja nu a ry 1, 19 74.

Wilhelmine Stefansky, Se n ior Sta tistician to Director of

Research Stati sti cs, Jan uary 1, 1974 .

Kent O. Sims, Vice Presiden t to Senior Vice President,

February 1974 .

Martin S. Deppe r, Exami ni ng Officer to Assistant Vice

President a nd Chief Exami ner, Tr us ts, Feb ruary 1, 1974.

Ke n neth A. Grant, Assistant Vice President, Janu ary 1.

William J. Sumne r, Vice Pre sident, March 15 .

Robe rt H . Colfelt, Check Office r, Ju ne 1.

H. W illiam Pennington, Ac counting and Fiscal Officer,
Portland, Jun e 1.

Vera J. Tayl oe, Assistant Secre tary Board of

Directors, Jun e 1.

Michael W. Ker an, Direc tor of Resea rch, July 1.

Thomas E. Judge, Vice President-C ontroll e r, July 1.

Robert C. Johnston, Se nior Economis t, August 1.

Vern R. Lest er, Check O fficer (Sal t Lake City), August 1.

Ro be rt C. Dietz, Vice Pres ide nt -Bank Re latio ns,

A ugust 23.

Ken n eth L. Peterson, Check Offi cer (Los Angeles),

September 1.

Judith A. Sa hagen, Management Sc ien ces Office r,

Febr uary 1, 1974.

Rich ard L. Rasm us se n, Pla n n ing Office r (Los Angel es),

Febru a ry 1, 1974.

Wi lliam R. Sa nds trom , Vice Preside n t and M a nager

(Sea tt le), April 1.

Gault W . Lynn, Director of Resear ch , April 1.

D on ald M . Davenpo rt, Vice Presiden t, May 1.

A. B. Merritt, First Vice President, June 1.
Richa rd G. Retalli ck , Vice President, A ug ust 1.
Arth ur LeRoy Price, Vice Presiden t and Ma nage r
(Salt Lake City), October 1.
E. All en W ell s, Assista n t Vice Pres iden t, deceased
March 24.


Comparative Statement of Condition IIhou;nnds 01dollars}
A ssets
Gold ce rtificate account

Sp ec ial Drawin g Rights ce rtificate account

Fed er al Reserve no tes of othe r Fede ral Reserve ban ks

Other cas h.

December 3 1,1973


49, 000
17 0,935
2 8,0 39

'b 1,288 ,518
49 ,000
35 ,104

72,50 0

1 12,105

263 ,139


5,01 1,13 8
$1 0,'6 55, 725

4,166,6 71
5 , 152, 238
_ 48l2.3:? I
S 9,805,230
10, 188, 423

55 6
$ 14, 064, 149

24 .76 8
l51 ,175
S 13,044, 148



5 7,046,268

4,84 0,137
3 49 ,692

4 .74 7,686
37,4 to
S 5,025,237
6 0 8, 206

Loan s to M ember Banks:
Sec ure d by United States Government and Agen cy obligations
Oth er eligib le paper
O ther paper
Fed e ral Agen cy obligations
Unit ed Sta tes Gove rn ment secur ities :

Bills .

N ot es


Total United States Government sec uri ties
Tot al loan s and secu rities.

Cas h items in process o f collectio n .

Ban k p re mises

Oth er assets :

De nom inate d in foreign currencies

All other

Total assets
Fed e ral Reser ve notes
Dep o sit s :

M ember bank - reserve accou nt s

Unit ed Sta tes Treasu rer- general account

Fo reign .

Othe r de posit s .

Tot al de posit s

De fe rr ed avai la b ility cas h items

Oth e r liabil ities .

Total liabilities

December 31 , J 072


45, 000

_ ..75 69 7

512,845,40 Q

Capital Accounts
Cap ita l paid in
Surp lus .
Total Liabilities and Capital Accounts .
Con tinge n t liability on acceptances purch ased for for eign correspo nde nts


1 4,064,149


72 ,638


13,044, 14_8
23 ,091

Earnings and Expenses
Current earn ings

Disco un ts and advances

United States Governme nt securi ties .

Foreign curren cies .

All other

Total cu rr ent earni ngs



WII;'"1d; oj do/l" r;!


$676,5 3 6



4 6,820
3,21 0
$ 43 ,610

S 40,560
S 37,836




Current ex penses
To tal current expenses ,
Less Re imb urseme nt for cer ta in fiscal agency and other expenses
N e t expenses

Profit and ioss
Current net earnings
A d d iti ons to curren t n et earni ngs :

Profits on sal es of United Sta tes Government Sec uri ties (ne t) .

Profits on forei gn excha nge t ransactions.

All other

Total ad d itio ns
Ded uctions from current net earnings:

Lo ss o n foreign exchange transac tions (net)

Lo ss o n sa les o f Un ited S ta tes Governme n t Securi ties (ne t)

A ll o ther

Tot al d edu cti ons .
Ne t additions (+ )/ de d uctio ns (-).
Ne t earn ing s before payments to Un it ed S tates Treasury
Dividend s pa id .
Payments to United States Tre as ur y (interest o n Fed e ra l Reserve n otes )
Transferred to Surp lus .

Su r pl us Jan u a ry 1

Surpl us D ece m be r 31 .




5,92 7
4,82 5
$-1 0,636



S 6,~).97
S -6,1"2:2


5 99,37q


99, 370
$ 10 8,30 8

Fed e ral Reser ve Bank of Sa n Francisco ' PO . Box 7702 . Sa n Franc isco, Ca liforn ia 94120
Alaska ' Arizo na' Californ ia ' Hawaii ' Idah o' Ne vada ' Orego n' Uta h , Wash ington










Produced bv Uniplan Corporation.
ne Emb<H~adE"ro Center . San francisco .
Designer: Richard Burns, Illustrator : Ear! Thollander
Edited by Willi.1m Burke &. Karen Ru-k

Organization Chart

Rayburn S. Dezem ber
Chairman and President

American National Bank

Bakersfield, California

Robert A. Barlev

United California Bank

Los Angeles, California

W. Go rdon Ferguson

Linu s E. Southwick

j. R. Vaug ha n

Lelan d D. Pratt


Vallev Xatlonal Bank

Glendale, California

President, Kelco Company
San Diego, California

Chairman v{ thf Board

National Bank of vVhittier
 President, Knudsen Corporation
Whittier, California

Los Angeles, California


One Board of Directors' sea t
is presently vacant.

Gera ld R. Kellv
Senior Vice Presid;nt
and Manager

Adrian A. Ho rva y

john F. Lucey, jr.

Euge ne A. Th o mas

Assistant Vice President

Assistant Vice President

Assistant Vice President

Kenneth L Peterson

Los Angeles Branch

Check Officer

Roderick H. Browning

Rov W. Simmons

Sam H , Ben nio n

joseph Bianco

Th eod o re C. jacob sen


. President
Zions First National Bank

Chairman of the' Board
Secretarv- Treasurer

V- I Oil Company, Inc.

Idaho Falls, Idaho

Chairman and President
Bank of Idaho
Boise, Idaho

Chairman of the Board

Jacobsen Construction Company, Inc.

Salt Lake City, Ltah

Bank of Utah
Ogden, Utah


Salt Lake City, Utah


A. Grant Ho lma n
Vice President and Manager


H, Peter Fra nzel
Assistant Vice President
and Assistant Manager

Don W. Sheets
Assistant Vice President

Salt Lake City

Vern R. Lester, jr.
Check Officer

Harry S. Go odfellow

Robert C. W hitwam

Chairman of the Bo.:Hd & President
Old National Bank
American National Bank of Edmonds
of washington
Edmonds, Washington
Spokane. Wdshington

T ho mas Hira i

C. Henry Bacon, Jr.

Joseph Cebert Baillargeon

Ch'lirman j)( IheBoard
Vice Chairman
Simpson Timber Company
Seattle, Washington

Chairman & Chief Executive Officer

Grower, Packer,

Seattle Trust & Savings Bank

Shipper of Potatoes
Quincy, Washington

Seattle, Washington



Paul W. Cavan
Senior Vice President

and Manager


Parker R. Smith

E. Ronald Liggett

Assistant Vice President

Assistant Vice President

Seattle Branch

Frank L. Servoss

Jam es H. Stanard

John R. Howard

President, Crater National Bank
Medford, Oregon

Execut ive Vice President
First National Bank of McMinnville
McMinnvilie, Oregon

Chairman oftht' Board
Lewis and Clark Co llege
Portland , Oregon


LeRoy B. Staver

Loran L. Stewart

Chairman of the Board &
Chief Executive Officer
United States National Bank of Oregon
Portland, Oregon

President. Bohemia, Inc.


Willia m M. Brown
Vice President and Manager


Maynard C. Petersen
Assistant Vice President

Portland Branch

H. Will iam Penni ngton
Accounting and Fiscal Officer

Eugene, Oregon

Carl E. Schroeder

James E. Phillips


The First National Bank


National Bank in Port Angeles
Port Angeles, Washington

of Orange County

Orange, California

Wesley G . DeVries
Senior Vice President


John J. Carson

William J. Sumner

Angelo S. Carella

Richard C. Dunn

Vice President

Vice President

Personnel, fED Officer

General Auditor

Cash, Fiscal

Vice President
Checks, Payments Mechanism




Amedeo G. Conte

Jane W. Langhorne

William E. O'Donnell

Claude Woessner

Martin S. Depper

Assistant General Auditor

Assistant Vice President

Assistant Vice President

Assistant Vice President

Examining Officer

Robert H. Colfelt
Check Officer

Roy A. Karls

Chief Examin.


James E. Phillips

A. W. Clausen

Charles Raymond Dahl

o. Mer edit h Wilson



First National Bank in Port Angeles

President and Chief Executive Officer
Bank of America National Trust
and Savings Association
San Francisco , California

President and Chief Executive Officer
Crown Zellerbach Corporation
San Francisco, California

Choiinnan of the Board &
FtdtraI RiSatlt Agrnt
President & Directo r
Center for Advanced Study in the


Port Angeles, Washington

Behavi ore ,

~"l'"".": California

John J. Balles
Pres iden t


John B. Williams
First Vice President

Robert C. Dietz

Henry B.Jamison

Vice President

Vice President

Bank Relations

E".:Iminattons. Credits


Martin 5. Depper

Roy A. Karlsson

J. Norman Aam odt

Rob ert C. John sen

Roy A. Remedios

Examining Officer

Chief Examiner

Chief Examine r

Assista nt Vice President

Assistant Vice President

joseph Rosenblatt

Clair L. Peck

joseph F. Alibrandi


Honorary Chairman of the Board


Chairman of the Board
C. L. Peck Contractor
Los Angeles, California

D~puly Ch>linnan
Whittaker Corporation
Los Angeles. California

President , Oji Bros. Farm. Inc.
Yuba City, California

The Eimco Corporation

Salt wk. City, Utah
n the


Donald V. Masten
Senior Vice President

james M. Brundy

Thomas E. judge

Louis E. Reilly

Vice President Processing, Planning. Programming

Vice President-Controller

Vice President and


General Counsel

Elwood E. Bernstein

Ernest E. Livingston

George P. Galloway

William L. Cooper

Assistant Vice President

Assistant Vice President

Assistant Vice President

Associate General Counsel

Vera j. Tayloe
Assistant Secretary


Harold A. Rogers
President . Peoples National Bank of Washington

Seattle. Washington

Wilhelmine Stefansky
Director of

Research Statistics

am l. Cooper
te General Counsel

Michael W. Keran

William M. Burke

Warren H. Hutchins

Director of

Director of


Economic Publications

Vice President



Ernest C. Olson

Herbert R. Runyon

Senior Economist

Senior Economist

Federal Reserve Bank of San Fran cisco

Post Office Box 7702

San Francisco , Calif ornia 94120

Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102