The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
ty NINETEENTH ANNUAL REPORT TO THE FEDERAL RESERVE BOARD BY THE FEDERAL RESERVE AGENT FEDERAL RESERVE BANK SAN FRANCISCO FOR THE YEAR ENDED DECEMBER 31,1933 NINETEENTH ANNUAL REPORT TO THE FEDERAL RESERVE BOARD BY THE FEDERAL RESERVE AGENT FEDERAL RESERVE BANK SAN FRANCISCO FOR THE YEAR ENDED DECEMBER 31,1933 DIRECTORS AND OFFICERS OF THE FEDERAL RESERVE BANK OF SAN FRANCISCO January 1, 1934 Class A A B DIRECTORS Group C. K. MCINTOSH, San Francisco, California President, The Bank of California, N. A., San Francisco, California. THOMAS H. RAMSAY, Eed Bluff, California " . " " . " President and General Manager, Pacific National Agricultural Credit Corporation, San Francisco, California. KEITH POWELL, Salem, Oregon - - - - - - Receiver, First National Bank, Salem, Oregon. A. B. C. DOHRMANN, San Francisco, California Chairman of the Board, Dohrmann Commercial Company and The Emporium Capwell Corporation, San Francisco, California. Term Dec. 31 Expires 1934 1935 1936 1935 1938 B MALCOLM MCNAGHTEN, LOS Angeles, California B President, Broadway Department Store, Inc., Los Angeles, California. ELMER H. COX, San Francisco and Madera, California President, Madera Sugar Pine Company, Madera, California. 1934 C ISAAC B. NEWTON, LOS Angeles, California 1935 - - Chairman. C 1936 Deputy Chairman, President, Walton N. Moore Company, San Francisco, California. WALTON N. MOORE, San Francisco, California ANDREW WELCH, San Francisco, California - 1934 President, Welch and Company, San Francisco, California. MEMBER OF FEDERAL ADVISORY COUNCIL M. A. ARNOLD, President, First National Bank, Seattle, Washington 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, WM. Governor 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 J. M. OSMER, Assistant Cashier H. F. SLADE, Assistant Cashier DIRECTORS AND OFFICERS OF BRANCHES January 1, 1934 SPOKANE BRANCH Term Expires Directors Officers Dec. 31 D. L. DAVIS, Managing Director PETER MCGREGOR,* Chairman . 1934 FRED C. BOLD, Assistant Manager 1935 1934 1935 1934 STANLEY A. EASTON* R. M. HARDY! . . D. W. TWOHYI . . D. L. DAVIS! . . A. J. DUMM, Assistant Cashier SEATTLE BRANCH HENRY A. RHODES,* 1934 1935 1934 1935 1934 Chairman . CHARLES H. CLARKE* M. F. BACKUS! . . M. A. ARNOLD#f C. R. SHAW! . . . C. R. SHAW, Managing Director B. A. RUSSELL, Assistant Manager G. W. RELF, Assistant Cashier PORTLAND BRANCH EDWARD C. PEASE,* Chairman . 1934 1935 1934 1935 1934 HARRY M. HALLER* RICHARD S. SMITH! J. C. AINSWORTH! R. B. W E S T ! . . R. B. WEST, Managing Director S. A. MCEACHRON, Assistant Manager J. P. BLANCHARD, Assistant Cashier SALT LAKE CITY BRANCH M. W. SMITH,* Chairman . LAFAYETTE HANCHETT* E. 0 . HOWARD! . . H. E. HEMINGWAY! . W. L. PARTNER! . 1934 1935 1934 1935 1934 W. L. PARTNER, Managing Director W. M. SMOOT, Acting Assistant Manager W. M. SCOTT, Acting Assistant Cashier LOS ANGELES BRANCH JESSE B. ALEXANDER,* Chairman . CHARLES B. VOORHIS* A. J. CRUICKSHANK! F. J. BELCHER, J R . ! . W. N. AMBROSE! 1934 1935 1934 1935 1934 W. N. AMBROSE, Managing Director H. M. CRAFT, Assistant Manager Jos. M. LEISNER, Assistant Manager L. C. MEYER, Assistant Cashier *Appointed by Federal Reserve Board. !Appointed by Federal Reserve Bank. /Resigned January 18, 1934, to become member of Federal Advisory Council. Succeeded by G. H. GREENWOOD on that date. LETTER OF TRANSMITTAL Federal Reserve Bank, San Francisco, California, April 9,1934. 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 31,1933. Yours respectfully, Chairman of the Board and Federal Reserve Agent. Federal Reserve Board, Washington, D. C. NINETEENTH ANNUAL REPORT FEDERAL RESERVE AGENT FEDERAL RESERVE BANK OF SAN FRANCISCO Considered as a whole, 1933 was a year of decided improvement in business and banking conditions in the Twelfth Federal Reserve District, although that improvement was not continuous throughout the year. During January and February, trade and industrial activity declined and, as in the remainder of the United States, the banking situation became progressively more critical, culminating early in March in the complete cessation of normal banking functions and in a brief period approaching stagnation in the general economy of the district. During the period from mid-March to late summer, rehabilitation of the banking structure proceeded rapidly and business improved substantially. Production and distribution fluctuated considerably during the last four months of the year, but in November and December were only moderately below the highest levels reached in the summer months. The position of banks was further strengthened during these months, partly in anticipation of the plan for insurance of deposits which became effective January 1, 1934. BANKING AND CREDIT The Banking Crisis and Banking Reserves The closing in January, 1933, of important banks in the Sacramento Valley resulted in a moderate increase in demands upon other banks to supply currency for hoarding, as public apprehension regarding the safety of bank deposits spread to other communities. With the declaration in February of banking moratoria in Michigan and other eastern states, the feeling of uncertainty among Twelfth District depositors mounted rapidly. In the last few days of February heavy runs upon banks developed, reaching a climax on March 2 and 3 when banking holidays became effective in all states of the district three days prior to the declaration by the President of a nation-wide bank moratorium MILLIONS OF DOLLARS \ 1 A/ 1 I / 1931 1932 DEMAND FOR CURRENCY Twelfth District Changes cumulated from January 2, 1929. Monthly average figures. 1930 1931 1932 MEMBER BANK DEPOSITS Twelfth District Time and net demand deposits combined. Monthly average figures. 6 NINETEENTH ANNUAL REPORT which placed all banks completely under Federal supervision. Between mid-January and the first week in March, the net amount of currency and coin outstanding in the district increased by the unprecedented amount of $120,000,000, despite the seasonal tendency for currency circulation to decline during that period. There was some demand for gold for hoarding, although gold constituted less than 8 per cent of the currency withdrawn from banks during this period, indicating that the principal fear concerned the banks rather than the currency. As is shown in the following table, local banks secured funds with which to meet the withdrawals by recalling balances carried with New York banks, by borrowing from the Federal Eeserve Bank of San Francisco, and to some extent by reducing reserve deposits. PRINCIPAL CHANGES IN TWELFTH DISTRICT BANKING RESERVES January 18 to March 8, 1933 (Millions of Demands upon banks: dollars) Currency withdrawals by depositors 120 Other demands 7 Banks met these demands by: 127 Withdrawing balances from eastern correspondents and using other funds received from outside d i s t r i c t s . . . . 55 Increasing their use of Reserve Bank credit 54 Using reserve deposits 14 Using funds from other sources 4 127 A large majority of banks in the district were authorized by the Secretary of the Treasury to reopen on March 13, 14, and 15. No special restrictions were imposed upon these banks except a prohibition against the payment of currency for hoarding and against the payment of gold coin or certificates for any purpose. As soon as these reopened banks, which held all but a small percentage of district bank deposits, were again doing business as usual, hoarders began to redeposit currency as rapidly as they had withdrawn it previously. Between March 15 and March 29, $95,000,000 of currency, including $8,000,000 of gold, was returned to the Federal Reserve Bank of San Francisco, while $15,000,000 of gold coin had been returned by banks, partly in exchange for other currency, between March 6 and March 15. This return of currency was the immediate factor reducing the strain on the district banking structure and enabling commercial banks to rebuild their balances with eastern banks, which had been seriously depleted prior to the banking holiday. The following table shows how these funds were used. PRINCIPAL CHANGES IN TWELFTH DISTRICT BANKING RESERVES March 15 to March 29, 1933 (Millions of Banks gained funds through: dollars) Eedeposits of currency 95 Banks used these funds: To make transfers to other districts 84 To meet withdrawals of funds due to United States Treasury collections in excess of disbursements in this district. . . 7 Other uses 4 95 FEDERAL RESERVE BANK OF SAN FRANCISCO 7 From the beginning of April to the end of the year, the predominant factor supplying district banks with funds was the United States Treasury's disbursement in this area of $139,000,000 in excess of local collections. In addition to the usual Government expenditures, Treasury disbursements during this period included large amounts in the form of special loans and grants under the Reconstruction Finance Corporation, the Farm Credit Administration, the Civil Works Administration, and other emergency organizations. Such disbursements were of considerable importance in stimulating business activity. These funds entered the banking structure through various channels, the most important of which were : (1) deposits of individuals or business firms; (2) repayments by farmers and livestock producers of bank loans with money received from the Government; (3) direct loans to banks by the Federal Government; (4) payments to banks for their preferred stock or debentures. The reserves gained from net Government disbursements, together with a further return of currency, enabled banks to make transfers to other districts, to liquidate nearly all the Eeserve Bank credit they had been using, and to increase their reserve deposits, as indicated in the following table. PRINCIPAL CHANGES IN TWELFTH DISTRICT BANKING RESERVES March 29 to December 31, 1933 ....... . (Millions of Banks gained funds through: Net United States Treasury disbursements Eedeposits of currency Banks used these funds: To make transfers to other districts To reduce Eeserve Bank credit To build up reserve deposits dollars) 139 45 184 70 66 47 183 Rehabilitation in the Last Half of the Year The work connected with the rehabilitation of banks was well under way by August, and a period of almost complete absence of pressure upon banks followed. Deposits of member banks and total credit extended by those institutions increased, interest rates were lowered, and there was a further marked accumulation of excess bank reserves—the customary indications of a period of easy money conditions. During the last three months of the year the Federal Reserve Bank of San Francisco extended less credit to district banks than at any time since the first few years of its operation. At the same time banks were readjusting their condition in anticipation of the Temporary Deposit Insurance Fund which was to become operative January 1, 1934. Some loans and investments were liquidated or written off the books, and in many cases where impairment of capital funds was disclosed assessments were levied upon shareholders or arrangements were made to sell preferred stock or debentures to the Reconstruction Finance Corporation or to others. By the end of 1933, the Twelfth District banking structure was in an unusually strong position and many banks were abundantly supplied with excess reserves that might be used in extending additional credit. NINETEENTH ANNUAL REPORT Member Bank Credit Extension of credit by member banks bore a general relationship to the previously discussed factors affecting their reserves. During the first two months of the year, when deposits were being withdrawn at a fairly rapid rate, loans also were being reduced. Loans continued to decline until mid-year, but deposits started to increase immediately after the banking crisis in March, reflecting the redeposit of hoarded currency and also the large net United States Government disbursements in this area. By August, total deposits were but slightly lower than at the beginning of the year and by the end of 1933 they approximated the levels of January, 1932. Entirely as a result of increased holdings of Government securities, investments of member banks increased during most of the year. Investments in securities other than obligations of the United States Government showed little change during 1933. After June, loans expanded slightly and total loans and investments at the year-end were about the same as in the spring of 1932. Member bank credit outstanding at the end of 1933 represented an appreciably larger proportion of total bank credit extended within the Twelfth District than it had at any previous time. The line in the right half of the chart below shows the ratio of total loans and investments of member banks to total loans and investments of all banks in the Twelfth District as of the June and December call dates during the period from 1924 through 1933. MILLIONS OF DOLLARS 3000 2000 > — L OAN: V s \ r —-' 1000 J — - INVE 5TMITNTS 0 1924 1925 1926 1927 1928 1929 1930 1931 1332 1933 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 MEMBER BANK CREDIT-Twelfth District Loans and investments of member banks. Total loans and investments of member Figures from member bank call reports for banks as percentages of total loans and June and December. investments of all banks. Changes in Banks and System Membership The number of Twelfth District banks operating without restrictions declined from 954 at the beginning of 1933 to 728 at the end of that year, a reduction larger than in any previous year. Only two new national banks and one new non-member state bank were organized in 1933. The net decrease of 226 in the number of banks included 73 which were closed for liquidation by state or national authorities during the year and 61 which were still in existence at the end of 1933 but which had not been licensed for ordinary banking operations. Most of FEDERAL RESERVE BANK OF SAN FRANCISCO 9 the other banks that gave up their charters were merged with institutions still in operation, although a few went into voluntary liquidation. Changes in the number of banks are shown in the following table. Banks are divided into two groups—''licensed" and "unlicensed"—in the March 31 and December 30 figures. The term "unlicensed" came into use following the banking holiday in March, and refers to banks which, although placed in the hands of liquidating agents, were not permitted to resume normal operations immediately after the holiday period. National banks operating under conservators as provided for in the emergency banking legislation passed by Congress March 9, 1933, are included in this group. State banks under similar agents or operating under special committees of their boards of directors are also included among the unlicensed banks. An unlicensed bank may subsequently be authorized to resume full operations, with or without reorganization, it may be merged with some other institution, or it may be placed in liquidation. B A N K S I N OPERATION T W E L F T H DISTRICT , Dec. 31, 1932 NonMem- member ber 7 Feb. 28, 1933 NonMem- member ber March 31,1933 December 30, 1933 s N , Licensed Unlicensed Licensed Unlicensed NonNonNonNonMem- mem- Mem- mem- Mem- mem- Mem- member ber ber ber ber ber ber ber Ariz. . . . 9 Calif. . .169 8 164 7 7 167 153 145 4 136 1 21 1 13 146 3 135 0 11 Idaho . .. 39 Nev 7 0 6 65 38 59 31 45 6 9 33 34 1 0 7 6 7 6 6 6 1 0 7 5 0 2 10 82 76 78 72 66 54 12 19 55 45 8 . . . 32 42 32 42 28 39 4 1 31 29 1 0 Wash. . .111 142 109 137 86 87 24 46 93 105 9 13 District . 449 505 436 476 369 371 69 89 372 356 30 ?l . Ore Utah The decline in the number of non-member banks was considerably greater than the decline in member banks, partly because 10 former non-member banks were admitted to membership during the year, but principally because a large number of individual non-member banks were absorbed by or converted into branches of member institutions. Twenty-seven member banks and 46 non-member banks were placed in liquidation during the year. Active member banks, excluding those unlicensed, totaled 372 at the end of the year, compared with 449 at its beginning, while active nonmember banks declined to 356 during the year. Thus, for the first time since the organization of the Federal Eeserve System the number of member banks in the Twelfth District surpassed the number of nonmember institutions. On December 31, 1933, aggregate resources of licensed member banks totaled $3,465,542,000, an amount $83,806,000 larger than total resources of all member banks at the beginning of the year, resources of non-member banks admitted to membership or merged with member banks having much more than compensated for 10 NINETEENTH ANNUAL REPORT losses through bank failures and other causes. In addition to resources of the 372 licensed member banks, 30 member banks operating under restrictions had assets of $17,476,000 at the end of 1933. CHANGES IN BANK MEMBERSHIP DURING 1933 , National Number State 371 78 Member Banks, December 31, 1932 Additions to Membership: Organization of National Banks Conversion of non-member banks to National banks Admission of State banks Absorption of non-member banks by member banks Eesumption following suspension TOTAL ADDITIONS Losses to Membership: Mergers between member banks Suspension Withdrawal of State banks Absorption of member by non-member banks TOTAL LOSSES Net Change Member Banks, December 31, 1933 Unrestricted Eestricted —•—\ Total Resources (000 omitted) 449 $3,381,736 .. 4,127 2 .. 10 2 10 1,840 129,529 36* 1 15* 1 51* 2 36,539 1,345 5 11 16 $ 173,380 23 18 3 11 1 26 29 1 $ 7 .. 7 48 15 63 —43 —4 328 304 24 74 68 6 49,756t 56,059 4,154 3,744 $ 63,957 —47 + $ 109,423 402 372 30 $3,483,018 3,465,542 17,476 *Does not affect the total number of member banks. tDoes not affect the total resources of member banks. Branch Banking The spread of branch banking was one of the most important banking developments in the Twelfth District during 1933. Formation of branch banks was legalized in Idaho, Nevada, Oregon, Utah, and Washington during the year. In four of these states—Idaho, Oregon, Utah, Washington—the formation and expansion of branch banking systems actually took place during 1933, and by the end of the year 14 branch systems with 82 branch offices were in operation in the states enumerated. This expansion of branch banks was almost entirely among member banks, particularly among those having national charters. Of the 82 branches in Idaho, Oregon, Utah, and Washington, 60 were operated by national banks, 19 by state member banks, and 3 by non-member banks. The legal status and the number of banks and branches involved in branch banking in California and Arizona remained substantially unchanged during 1933. One important non-member branch system in 11 FEDERAL RESERVE BANK OF SAN FRANCISCO California was admitted to membership during the year, and another large state bank with two branch offices became a member. There were no failures of important branch systems during the year. BRANCH BANKS IN CALIFORNIA Number Number of of Banks Branches December 31, 1932: National banks having branches State member banks having branches Non-member banks having branches Total Resources 13 3 29r $2,838,350,000r 527 147 118 $1,866,358,000 541,895,000 389,038,000 41 Total r—revised. 793r 12 5 24 December 31, 1933: National banks having branches State member banks having branches Non-member banks having branches $1,885,310,000 413,318,000 539,722,000r 45r Total 528 92 173r 792 $2,797,291,000 BRANCH BANKS IN THE TWELFTH DISTRICT State Arizona California Washington Total Number of Banks - Branches Banks Operating , Operated by \ Located Branches i State NonOutNa- State NonNa- Mem- mem- In side tional Mem- memtional ber ber Home Home Total Banks ber ber Total Banks Banks Banks City City December 31. 1932 , 16* 336r 253 3 45r 3 605 51 2 13t 0 29r 793Jr528 2 4 2 0 13 1 14 4 33 810 530 9 92 0 101 4 0 13 173r 259 534r 2 2 2 179 261 549 December 31, 1933 Arizona California Idaho Nevada Oregon Utah Washington Total 10* 298 68 14 118 61 220 0 2 41** 12 1 2 0 0 3 2 3 3 6 3 1 5 1 0 0 0 1 3 0 12 9 1 121 0 24 792 % 527 147 118 258 534 1 22 0 0 23 7 16 0 0 0 0 0 0 0 1 27 26 0 1 10 17 2 0 0 7 9 0 9 2 12 11 2 23 18 3 789 57 8 28 886 587 175 124 283 603 21 *Does not include banks in that part of Arizona in the Eleventh Federal Eeserve District, tlncludes 3 branches of member state banks located in Eleventh Federal Reserve District with home office in Twelfth Federal Reserve District. Does not include 1 branch of non-member state bank located in Twelfth District with home office in Eleventh District. **Includes 2 national banks under conservators, operating 3 branches in home cities and 2 non-member banks operating under restrictions, one with a home city branch and one with an outside branch. ^Includes 3 branches of Bank of California, National Association, San Francisco, located in Oregon and Washington. Does not include foreign branch of Bank of America, National Trust and Savings Association, San Francisco, r—revised. 12 NINETEENTH ANNUAL REPORT INDEXES OF INDUSTRY, EMPLOYMENT, TRADE Twelfth Federal Reserve District (1923-1925 Annual Average=100) 1926 Industrial Production Manufactures Foods Butter Canned Fruits Canned Vegetables Canned Fish Flour Slaughter Wool Consumption Lumber Paper and Pulp Eefined Mineral Oils Cement Metal Products Minerals Petroleum Copper Lead Silver Building and Construction Building Permits Larger Cities Smaller Cities Construction excluding buildings Electric Power Production Industrial Employment Employment—California Payrolls—California Employment—Oregon Payrolls—Oregon Trade Carloadings Industrial Merchandise Foreign Trade, excluding silk Imports, excluding silk Exports Intercoastal Trade Eastbound Westbound Wholesale Sales Agricultural Implements Automobile Supplies Dry Goods Electrical Supplies Furniture Groceries Hardware Shoes Paper and Stationery Department Store Sales Department Store Stocks Automobile Sales—New Passenger Commercial Bank Debits 1927 1928 1929 1930 110 110 114 114 116 113 104 110 164 129 112 109 106 148 94 100 94 96 80 89 I l l 105 133 132 132 148 112 116 121 121 100 100 93 96 109 106 114 118 92 89 93 88 92 84 88 81 109 97 95 105 121 131 114 118 124 111 167 132 135 111 101 75 108 145 155 116 128 104 96 118 111 85 83 75 71 94 113 144 123 124 120 105 138 160 189 115 99 82 110 142 193 107 143 122 121 129 114 86 81 68 64 87 134 157 98 75 102 76 122 106 114 121 148 110 160 77 167 118 105 102 99 108 71 89 84 58 128 123 168 140 93 71 93 59 90 71 95 79 83 62 96 68 71 47 67 62 51 31 49 29 59 36 128 191 159 156 1931 1932 1933 107 106 105 104 105 106 97 97 105 107 100 98 112 116 103 103 99 98 91 88 80 72 74 62 67 52 60 40 74 53 70 45 Ill 112 Ill 125 120 127 98 96 104 100 134 96 90 112 102 94 99 104 102 Ill 104 109 109 106 118 110 108 111 121 114 124 98 95 107 97 132 94 88 112 97 89 94 110 98 114 106 89 88 97 130 113 111 114 130 116 138 87 79 114 102 139 93 89 121 110 102 96 106 96 117 105 98 98 98 148 112 109 114 141 128 147 97 87 132 108 155 89 88 124 122 123 99 101 103 120 103 135 130 180 154 96 84 105 109 105 110 86 80 106 93 128 72 68 103 96 118 81 82 94 111 101 97 91 151 131 75 57 89 72 64 76 71 66 84 73 72 54 52 70 77 105 60 62 79 98 87 67 62 114 103 57 37 74 48 43 50 54 50 67 55 43 43 37 41 49 86 43 47 63 74 68 34 32 57 74 58 43 70 47 43 49 70 69 75 56 43 41 42 45 66 85 47 51 62 70 61 48 46 75 69 58 63 59 67 94 112 122 122 82 126 83 109 79 110 90 89 107 110 101 96 35 44 128 135 134 127 46 53 39 51 57 54 74 72 27 22 51 50 38 36 37 42 14 12 13 11 14 12 132 166 139 139 13 FEDERAL RESERVE BANK OF SAN FRANCISCO INDUSTRY, EMPLOYMENT, TRADE With banking operations temporarily suspended during the first half of March, trade activity and production were further reduced. After the termination of the crisis stage of banking difficulties, business conditions commenced to improve. Expansion of activity was substantial in this district, although it was not so pronounced as in the more industrialized East. Perhaps the most favorable development was the sharp and well-sustained expansion in employment and payrolls beginning in April. This was a result in part of general business improvement and in part of the limitation upon working hours and the specification of minimum rates of pay incorporated in the codes of fair competition adopted by different lines of business. By late summer or earlier most individual measures of industrial production and distribution were higher than they had been since the period from mid-1931 to early 1932. PER CENT PER CENT 150 ISO j fry f \ / 1021 1922 1923 1924 1935 1928 1927 1928 1929 1930 1931 1932 1933 VOLUME OF INDUSTRIAL PRODUCTION-Twelfth District Index adjusted for seasonal variation (1923-1925 average =* 100) Increases were particularly pronounced in department store sales and in the important lumber industry, although other leading indicators, such as freight carloadings and electric power consumption, showed definite upturns. By the end of August rising prices for gold, which previously had not been available to producers in the United States, began to stimulate gold mining activity. Part of the increase in value measures such as department store sales, wholesale trade, and bank debits resulted from advances in prices, but a sizable expansion in the volume of goods produced and distributed also took place. A tendency to build up inventories in anticipation of price increases was evident among consumers, retailers, wholesalers, and producers, however, and in August and September sharp declines occurred in production and trade, while the rate of advance in prices also slackened appreciably during those months and some decreases, particularly in food and farm products prices, were recorded. The declining tendencies gave way to an upward movement in November and December, so that at the end of the year business activity was only moderately below the 14 NINETEENTH ANNUAL REPORT summer peak, and, with that exception, was higher than at any time since the spring of 1932. Commodity prices changed little during the last three months of 1933. AGRICULTURE Prices for district agricultural products rose sharply during the second and third quarters of 1933 and averaged substantially higher for the year as a whole than in 1932. Because of advances in prices, the value of crops harvested increased about 20 per cent over the previous year and was but slightly lower than in 1931. Amounts harvested totaled somewhat less than in 1932 and, with the exception of 1931, less than in any year since 1926. Production of grains was smaller than in the preceding year, while most field crops were larger in 1933 than in 1932. Deciduous fruit crops were smaller than in 1932, but the amount of such fruits harvested in 1933 was actually larger than in the preceding year, when low prices induced the abandonment of an unusually large amount of fruit on the trees. Citrus fruit production was also smaller in 1933 than in 1932, and since prices averaged lower in the later year, income from oranges, lemons, and grapefruit was reduced. Production of dairy and poultry products continued large during 1933 and prices remained low. Sheep and wool prices advanced substantially during the second quarter of 1933, but the market for cattle showed little net change during the year. INDEXES OF CROP PRODUCTION AND VALUE Twelfth Federal Reserve District (1925-1927 average=100) 1919 Value Volume 1921 1929 1930 1931 1932 1933 143 86 80 85 113 109 84 110 58 96 46 55 100 TOfi *Preliminary. Federal Government activities played a more important part in district agriculture during 1933 than ever before. Attempts to place all or part of certain crops under marketing control agreements were more widespread than in former years. Lending and mortgage refunding activities through Federal agricultural credit agencies were greatly expanded during the year. 15 FEDERAL RESERVE BANK OF SAN FRANCISCO OPERATING STATISTICS Volume of Operations Nearly all features of the statistical record indicate that operating functions of the Federal Reserve Bank of San Francisco were less active in 1933 than in 1932. The banking holiday and the subsequent licensing of banks entailed a large amount of extra work not shown by the statistical record, however, and necessitated the employment of a considerable number of temporary employees during much of the year. The following tabulation shows changes in some of the more important routine operations which can be summarized statistically. V O L U M E O F OPERATIONS 1933 1932 1931 38 59 4 127,217 139,273 20 21 17 129,561 132,158 43 45 11 48,513 10 61,547 1,479 1,293 72 117 74 129 1,045,057 80,570 811,817 66,047 3,990,835 75,040 774,135 37,142 2,182,084 298,206 832,157 63,220 299,969 193,822 232,884 536,898 8,642,927 512,567 9,617,628 582,678 13,176,339 322,464 240,374 321,519 598,764 8,417,474 506,240 10,274,165 568,591 17,325,704 Number of Pieces Handled—(In thousands) Bills discounted 10 Notes received as collateral 54 Bills purchased for own account 5 Currency received and counted 126,920 Coins received and counted 130,013 Shipments of coin and currency to outof-town banks 48 Payments of coin and currency to city banks 11 Checks handled for collection 43,268 Other collection items handled — drafts, notes, and coupons 1,876 United States Government securities issued, redeemed, or exchanged*.. 150 Transfers of funds 120 Amounts Handled—(In thousands of dollars) Bills discounted Bills purchased for own account Currency received and counted Coins received and counted Shipments of coin and currency to outof-town banks Payments of coin and currency to city banks Checks handled for collection Other collection items handled— drafts, notes, and coupons United States Government securities issued, redeemed, or exchanged* . . Transfers of funds ^Includes redemption of Federal Intermediate Credit Bank Debentures and Federal Farm Loan Bonds. Both the number and amount of bills discounted for member banks declined sharply during 1933. Notwithstanding this fact, the number of notes presented as collateral approached the high figure of 1932, showing that the average face value of the notes held against member 16 NINETEENTH ANNUAL REPORT bank borrowings was smaller in 1933 than in 1932. To some extent, this decrease reflected an increase in discounts of the type permitted under section 10B of the Federal Eeserve Act. Section 10B was added to the Federal Reserve Act in February, 1932, and, under certain conditions, gave member banks with capital of $5,000,000 or less the privilege of discounting their notes secured by collateral not ordinarily acceptable at the Federal reserve banks. In March, 1933, this privilege was extended to all members. Purchases of bills for the account of this bank increased during 1933, but both the amount and the number of bills bought remained comparatively small. Factors of chief importance in explaining this low level of acceptance operations are: (1) the relative inactivity of commerce requiring the creation of such instruments, and (2) the desire of banks themselves to hold the bills, a condition induced by the general economic situation which limited the opportunities for investing funds profitably and safely. The number and value of check transactions declined during 1933. At least two factors contributed to this decrease: the continuation of numerous bank failures, especially in country areas, where cash transactions supplanted check payments in many cases; and the reduced use of checks resulting from the imposition of the Federal Government check tax and of bank service charges which had not been effective during all of 1932. The collection of other items increased considerably in number and amount during the year. While the number of telegraphic transfers of funds by the bank was about the same in 1933 as in 1932, the amount of such transfers decreased further. The reduction in the value of transfers is traceable in part to less frequent shifting of bankers' balances. Although bankers' balances moved into and out of the district in large volume immediately preceding and following the banking holiday, the shifting of excess funds between correspondent banks slackened greatly after April and such funds were allowed to accumulate as deposits in the Reserve Bank more consistently than at any previous time. The number of pieces of currency and coin counted during 1933 was smaller than in 1932, but the amount, both of coins and of bills, was considerably larger in the later year. The increase in amount reflects the return from circulation of gold coins and large bills which had been hoarded prior to the banking crisis in March. With the expansion in the national debt and the accompanying expansion in United States Treasury financing during 1933, the number and value of Government obligations issued, redeemed, or exchanged by this bank increased to relatively high levels. The number of pieces handled increased much more markedly than did the amount. Earnings and Expenses Earnings of the Federal Reserve Bank of San Francisco were considerably lower in 1933 than in 1932 but were larger than in either 1931 or 1930. The decrease during 1933 resulted principally from a smaller volume of discounts for member banks, although earnings from FEDERAL RESERVE BANK OF SAN FRANCISCO 17 holdings of acceptances and miscellaneous sources also declined. Income from United States Government securities increased during 1933 and was much larger than in any preceding year. The increased earnings from that source were a result of larger holdings of securities, since the average rate of return was the same as in 1932, when it had been lower than in any previous year. While earnings decreased, expenses of operation increased, reaching the highest level since 1924. The greater expense of bank operation resulted from expansion of activities during the banking crisis in INCOME AND DISBURSEMENTS Earnings 1933 On Loans $1,152,067.31 On Acceptances Purchased 133,269.57 On United States Government Obligations Owned 2,495,527.61 Other Earnings 121,333.87 Total Earnings Additions to Earnings $3,902,198.36 $5,288,690.49 $ 100,579.36 $ 212,766.29 Deductions from Earnings For Current Bank Operations $2,459,999.98 For Assessments for Federal Reserve Board Expenses 56,540.54 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 179,457.20 For Furniture and Equipment 67,994.73 For Depreciation on Bank Premises 174,370.40 For Reserves for Losses 613,726.40 All Other 21,584.23 Total Deductions from Earnings 1932 $3,104,460.89 285,994.04 1,641,675.42 256,560.14 $2,187,228.39 50,255.80 120,484.21 44,189.96 188,840.88 601,699.90 2,648.01 $3,573,673.48 $3,195,347.15 Net Income available for dividends and additions to surplus $ 429,104.24 $2,306,109.63 Distribution of Net Income Dividends Paid to Member Banks, at the rate of 6 per cent on paid-in capital $ 634,633.40 Excess of Dividends Over Net Income $ 205,529.16 Addition to Surplus Additions to Surplus Account Net Earnings Restoration of Depreciation Reserve on United States Government Securities $1,657,520.55 $1,657,520.55 336,576.12 Total Additions to Surplus Account Deductions from Surplus Account Excess of Dividends Over Net Income $ 648,589.08 $1,994,096.67 $ 205,529.16 18 NINETEENTH ANNUAL REPORT March, 1933, and during the remainder of the year when the banking structure was undergoing rehabilitation. In addition to this increase, there was a rise in the cost to the bank of Federal reserve currency. As in 1932, a substantial amount was set aside as a reserve for losses, principally for losses on United States Government securities. Net income available for dividends and additions to surplus was less than dividend requirements of 6 per cent of paid-in capital, as provided in the Federal Reserve Act, and it was necessary to reduce surplus by $205,529.16 in order to pay dividends in full. Aggregate dividend payments were smaller in 1933 than in any year since 1928. CHANGES IN DIRECTORS, OFFICERS, AND EMPLOYEES In the annual election held in 1933, Keith Powell, Receiver, First National Bank, Salem, Oregon, was reelected a Class A director by banks in Group 3 (those having a combined capital and surplus of less than $125,000) for a three-year term ending December 31, 1936. The banks of Group 2 (those having a combined capital and surplus not exceeding $599,999 and not less than $125,000) reelected Malcolm McNaghten, President, Broadway Department Store, Inc., Los Angeles, California, as a Class B director for a similar three-year term. The Federal Reserve Board redesignated Isaac B. Newton, Los Angeles, California, Chairman of the Board and Federal Reserve Agent for the year 1934. The Federal Reserve Board also reappointed Walton N. Moore, President, Walton N. Moore Company, San Francisco, California, a director for a three-year term ending December 31, 1936, and redesignated him Deputy Chairman of the Board of Directors for 1934. Henry M. Robinson, Chairman of the Board, Security-First National Bank, Los Angeles, California, was selected to represent the Twelfth Federal Reserve District in the Federal Advisory Council during 1933. This was the third successive year of Mr. Robinson's membership in the Federal Advisory Council, and in keeping with the practice of changing that representative every three years, the directors selected M. A. Arnold, President, First National Bank, Seattle, Washington, to serve as the member of the Federal Advisory Council from this district during 1934. At the time of his appointment, Mr. Arnold was a member of the Board of Directors of the Seattle Branch of this bank. He was succeeded in that capacity by G. H. Greenwood, President, Pacific National Bank, Seattle, Washington, on January 18, 1934. There was only one change in the directorates of the five branches of this bank during 1933. M. W. Smith, Manager, Midland Elevator Company, Idaho Falls, Idaho, was appointed by the Federal Reserve Board to be a director of the Salt Lake City Branch, succeeding G. G. Wright, who died on April 9. Mr. Wright had been a director of the Salt Lake City Branch continuously since January 1, 1929, and had also served in that capacity for eight years prior to January 1, 1926. At the Head Office, H. F. Slade, who had been Acting Assistant Cashier since early in 1932, was made an Assistant Cashier on March 11, 1933. In November, M. McRitchie, formerly Assistant Manager at the Los Angeles Branch, was transferred to the Head Office. H. M. 19 FEDERAL RESERVE BANK OF SAN FRANCISCO Craft, Assistant Manager at the Salt Lake City Branch, was transferred to the Los Angeles Branch as an Assistant Manager, effective May 16, 1933, and Jos. M. Leisner, formerly Assistant Manager at Spokane, was made an Assistant Manager at Los Angeles, effective September 16, 1933. Effective on the date of Mr. Leisner's transfer, F. C. Bold, formerly Assistant Cashier at Los Angeles, was made Assistant Manager at Spokane. W. M. Smoot was made Acting Assistant Manager of the Salt Lake City Branch and W. M. Scott was made Acting Assistant Cashier at that Branch, both appointments being effective March 11, 1933. During the first six months of 1933, the Federal Reserve Bank of San Francisco operated under the share-the-work plan, in an attempt to distribute employment more widely. This plan was discontinued July 1, 1933, and effective August 1 the bank reduced the scheduled period of working time to a 40-hour week for all employees, without making any reductions in salaries. PERSONNEL AND SALARIES (including Branches) i—NumberJan. 1 Jan. 1 1934 1933 • Annual Salaries • » Jan.l Jan. 1* 1934 1933 32 OFFICERS 30 $ 262,700 $ 252,400 729 46 12 18 689 22 8 12 1,167,028 107,880 22,260 27,900 1,130,348 53,400 15,540 22,080 837 761 $1,587,768 $1,473,768 3 4 127 114 6,720 191,160 8,520 167,820 967 879 $1,785,648 $1,650,108 EMPLOYEES BY DEPARTMENTS : Banking Department Federal Eeserve Agent's Department Auditing Department Fiscal Agency Department TOTAL EMPLOYEES WHOSE SALARIES ARE BEIMBURSED TO BANK : Fiscal Agency Department Other Employees GRAND TOTAL *Before deductions from salaries as a result of the "i hare-the-work ' ' plan. 20 NINETEENTH ANNUAL REPORT STATEMENT OF CONDITION RESOURCES December 31, 1933 December 31, 1932 Cash Reserves held by this bank against its deposits and note circulation: Gold and Gold Certificates in vault $ 31,269,863.11 $ 29,585,282.15 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 30,612,128.04 15,810,144.01 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 181,762,550.00 177,262,550.00 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 5,816,284.62 5,621,623.34 Other Cash—United States notes, Treasury notes of 1890, silver certificates, national bank notes, Federal reserve bank notes, standard silver dollars, subsidiary silver and nickels and cents (Excludes Federal reserve notes and this bank's Federal reserve bank notes) 16,926,369.87 18,035,479.81* Total Cash Reserves $266,387,195.64 $246,315,079.31 Loans and Investments Loans: Against pledge of obligations of the United States $ 123,100.00 $ 1,844,010.00 Against eligible commercial, industrial, and agricultural paper or acceptances discounted or pledged, or the pledge of other collateral 1,314,801.99 21,215,968.93 Acceptances bought in the open m a r k e t . . . . 18,459,823.15 2,526,594.37 United States Government Bonds, Notes, etc. 166,330,500.00 123,443,500.00 Total Loans and Investments Assets) (or Earning $186,228,225.14 $149,030,073.30 Uncollected Items Checks and Other Items not yet collected $ 20,419,919.58 $ 17,752,090.71 Miscellaneous Resources Bank Premises All Other Miscellaneous Resources $ 4,089,847.40 3,469,500.96 $ 4,244,373.02 2,710,696.69 $ 7,559,348.36 $ 6,955,069.71 $480,594,688.72 $420,052,313.03 Total Miscellaneous Besources TOTAL RESOURCES *Includes $8,896,278.81 which was considered non-reserve cash prior to passage by Congress on May 12, 1933, of the Act making all currency legal tender. FEDERAL RESERVE BANK OF SAN FRANCISCO 21 LIABILITIES December 31, 1933 Currency in Circulation Federal Reserve Notes in actual circulation, payable on demand. These notes are fully secured. The security may be gold, discounted or purchased paper, or direct obligations of the United States $213,054,180.00 Federal Reserve Bank Notes in actual circulation, payable on demand. These notes are fully secured. The security may be discounted or purchased paper, or direct obligations of the United States Total Currency in Circulation December 31, 1932 $226,610,010.00 14,406,050.00 $227,460,230.00 $226,610,010.00 Deposits Reserve Deposits maintained by member banks as legal reserves against the deposits of their customers $187,630,581.22 $138,747,228.66 United States Government Deposits Other Deposits, including deposits of nonmember clearing banks, foreign deposits, etc Total Deposits 868,193.53 341,387.57 14,463,713.79 6,767,097.65 $202,962,488.54 $145,855,713.88 Deferred Availability Items Deferred Items, composed mostly of uncollected checks on banks in all parts of the country $ 18,373,821.01 $ 16,370,546.07 Miscellaneous Liabilities Reserves and All Other Miscellaneous Liabilities $ 1,665,821.72 $ 1,037,286.47 Capital and Surplus Capital Paid In, equal to 3 per cent of the capital and surplus of member banks $ 10,637,200.00 Surplus 19,495,127.45 $ 10,478,100.00 19,700,656.61 Total Capital and Surplus TOTAL LIABILITIES $ 30,132,327.45 $ 30,178,756.61 $480,594,688.72 $420,052,313.03 22 NINETEENTH ANNUAL. REPORT NOTE Statistics appearing in this report will be supplemented by additional statistical data pertaining to the Twelfth Federal Reserve District and the Federal Reserve Bank of San Francisco, 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. FEDERAL RESERVE BANK OF SAN FRANCISCO TWELFTH FEDERAL RESERVE DISTRICT Includes the States of Arizona, except the five southeastern counties, California, Idaho, Nevada, Oregon, Utah and Washington tOO MILES Map showing territory of Head Office and Branches of the Federal Reserve Bank of San Francisco 23