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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

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