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TWENTIETH ANNUAL REPORT
TO THE

FEDERAL RESERVE BOARD
BY THE

FEDERAL RESERVE AGENT
FEDERAL RESERVE BANK
SAN FRANCISCO

FOR THE

YEAR ENDED DECEMBER 31,1934




TWENTIETH ANNUAL REPORT
TO THE

FEDERAL RESERVE BOARD
BY THE

FEDERAL RESERVE AGENT
FEDERAL RESERVE BANK
SAN FRANCISCO

FOR THE

YEAR ENDED DECEMBER 31,1934




DIRECTORS AND OFFICERS
OF THE

FEDERAL RESERVE BANK OF SAN FRANCISCO
January 1, 1935
Term

DIRECTORS

Expires

Dec. 31
1937

Class Group
C. K. MCINTOSH, San Francisco, California
A

President, The Bank of California, N. A., San Francisco,
California.

A

2

THOMAS H. RAMSAY, Red Bluff, California

-

1935

President and General Manager, Pacific National Agricultural Credit Corporation, San Francisco, California.
A

3

KEITH POWELL, Salem, Oregon

-

1936

B

1

President, Salem Federal Savings and Loan Association,
Salem, Oregon.
A. B. C. DOHRMANN, San Francisco, California Chairman of the Board, Dohrmann Commercial Company
and The Emporium Capwell Corporation, San Francisco,
California.

-

-

-

-

-

-

1935

B

2

MALCOLM MCNAGHTEN, LOS Angeles, California

1936

3

President, Broadway Department Store, Inc., Los Angeles,
California.
ELMER H. COX, San Francisco and Madera, California
President, Madera Sugar Pine Company, Madera, California.

-

1937
1935

Chairman.
WALTON N. MOORE, San Francisco, California

-

1936

Deputy Chairman,
President, Walton N. Moore Company, San Francisco, California.
ANDREW WELCH, San Francisco, California

-

1937

Chairman of Board, Welch and Company, San Francisco,
California.
MEMBER OF FEDERAL ADVISORY COUNCIL
M. A. ARNOLD,

President, First National Bank,
Seattle, Washington
OFFICERS
JNO. U. CALKINS,

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



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
M. MCRITCHIE, Acting Assistant Cashier

DIRECTORS AND OFFICERS OF BRANCHES
January 1, 1935
SPOKANE BRANCH
Term

Directors

Expires

Dec. 31

STANLY A. EASTON,*
C h a i r m a n
. . .
PETER MCGREGOR* .

R. M. HARDYf

-

Officers
D. L. DAVIS, Managing Director

.
.
.
.
.

.

• •

D. W. TWOHYI

.

.

.

D. L. DAVisf

.

.

.

1935
1935
1936
1935
1935

FRED C. BOLD, Assistant Manager

A. J. DUMM, Assistant Cashier

SEA!
CHARLES H. CLARKE,*
C h a i r m a n
. . . .
H E N R Y A. R H O D E S * .
#M. F . BACKUS f .
.
.

.
.
.
.
.

G. H . G R E E N W O O D t •

C. R. SHAWf

.

.

.

.

1935
1935
1936
1935
1935

C. R. SHAW, Managing Director
B. A. RUSSELL, Assistant Manager
G. W. RELF, Assistant Cashier

PORT1
HARRY M. HALLER,*
C h a i r m a n
. . .
EDWARD C. P E A S E * .

.
.
.
.

.

RICHARD S. SMITHf •

J. C. AlNSWORTH f
R. B . W E S T !

.

.

.

.

1935
1935
1936
1935
1935

R. B. WEST, Managing Director
S. A. MACEACHRON, Assistant Manager
J. P. BLANCHARD, Assistant Cashier

SALT LAKE CITY BRANCH
LAFAYETTE H A N C H E T T , *
Chairman
M . W. SMITH*
. . .
E . O. H O W A R D f . .
H . E . HEMINGWAYf .
W. L. P A R T N E R ! . .

.
.
.

1935
.
1935
.
1936
. 1935
.
1935

W. L. PARTNER, Managing Director
W. M . SMOOT, Assistant Manager
W. M . SCOTT, Acting Assistant Cashier

LOS ANGELES BRANCH
CHARLES B. VOORHIS,*

Chairman .
JESSE B. ALEXANDER*

VICTOR H. RossETTif
F. J. BELCHER, J R . | •
W. N. AMBROSE f

1935
1935
1936
1935
1935

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, f Appointed by Federal Reserve Bank.
/Deceased February 15, 1935. Succeeded by J. W. MAXWELL.




LETTER OF TRANSMITTAL

Federal Reserve Bank,
San Francisco, California,
May 4, 1935.
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, 1934.
Yours respectfully,

Assistant Federal Reserve Agent.
Federal Reserve Board,
Washington, D. C.




TWENTIETH ANNUAL REPORT
FEDERAL RESERVE AGENT
FEDERAL RESERVE BANK OF SAN FRANCISCO
Industrial and trade activity continued to expand in the Twelfth
District during 1934, and practically all indicators of business averaged higher for the year than in 1933. The advance was particularly
sharp in the first three months of the year, but labor difficulties associated with the marine workers' strike restricted both the production
and the movement of goods in the second quarter of 1934. Termination
of the labor disputes in July was followed by an irregular business
recovery. Although the volume of manufacturing showed little or no
net increase between January and December 1934, measures of nonferrous metals output, employment, purchases by consumers, the
transportation of goods, and prices paid for agricultural commodities
produced in the Twelfth District, all showed increases during the
twelve-month interval. This business improvement was not accompanied by increased lending by banks. A substantial expansion in
member bank credit outstanding did take place, however, as a result
of extensive purchases of securities. In addition, substantial amounts
of credit were extended within the district by the Farm Credit Administration and the Home Owners' Loan Corporation. Large expenditures by the United States Treasury stimulated business and
increased the supply of funds available to banks. The unprecedented
excess of bank reserves, together with the insurance of deposits and
continued efforts by supervisory authorities, strengthened the banking
structure and eased money conditions. Unlike expansion in business
activity, the upward course of which was characterized by temporary
setbacks of several months' duration, improvement in banking and
credit conditions was continuous throughout the year.
BANKING AND CREDIT
Monetary and credit policies of the Federal Government and the
financial activities of the Treasury in connection with the relief and
recovery program accounted almost entirely for the principal changes
in the Twelfth District banking situation. Devaluation of the dollar
under the provisions of the Gold Reserve Act of 1934 provided the
Treasury with a huge cash balance from the "profit" on gold. Following that action forces were set in motion which resulted in large imports of gold into the United States. As usual, most of these imports
were for the accounts of New York City banks, and the immediate
effect was to expand greatly the excess reserves of those banks. This
huge excess of funds made money conditions in New York extremely
easy. It was natural, therefore, that a considerable part of the borrowing required for the large Federal expenditures should be done in
that city. The actual disbursement of funds, however, was widely



6

TWENTIETH ANNUAL REPORT

diffused throughout the country. The Twelfth District received 270
million dollars more from the United States Treasury in 1934 than it
paid in through Government borrowings, tax collections, and other
revenues.
When the Government disbursed the large amounts referred to,
deposits of individuals and corporations receiving Treasury checks
or warrants were built up at Twelfth District banks. Member bank
reserve balances at the Federal Reserve Bank of San Francisco were
increased in like amount, when that institution, as fiscal agent for the
Treasury, cashed the checks and warrants.
Part of the increase in banking reserves resulting from Treasury
operations was offset by a continuous movement of funds out of the
district in settlement of commercial balances of individuals and busiCHANGES IN FACTORS AFFECTING RESERVE DEPOSITS
OF MEMBER BANKS

TWELFTH DISTRICT

January 1 to December 31, 1934
(Millions of
dollars)

Transactions Which Increased Reserves
United States Treasury Operations
This figure shows the net amount by which Federal Government expenditures in the district exceeded collections during the year.
Gold Purchases by United States Mint
This figure shows the amount that the mint paid out to
individuals and business houses because of its purchases
of newly mined, imported, and reclaimed gold.
Funds Otherwise Made Available
This figure shows the total of a slight reduction in demand
for currency, of a moderate decrease in non-member bank
deposits with the Federal Reserve Bank of San Francisco,
and of a moderate reduction in other Federal Eeserve Bank
accounts.

270

102

13

TOTAL TRANSACTIONS INCREASING MEMBER BANK RESERVES . . .

Transactions Which Decreased Reserves
Reserve Bank Credit
This figure shows the reduction that took place in local use
of reserve bank credit, principally through a decrease in
holdings of bills purchased.
Inter-district Payments
This figure shows the net amount of funds paid to other
districts in settlement of commercial and financial transactions.

385

10

305

TOTAL TRANSACTIONS DECREASING MEMBER BANK RESERVES . . .

315

Member Bank Reserve Deposits at Federal Reserve
Bank of San Francisco Increased

70




FEDERAL RESERVE BANK OF SAN FRANCISCO

7

nesses. Banks also transferred large amounts to eastern money markets
on their own accounts to purchase United States Government and
other securities. Despite the outflow of funds because of these interdistrict commercial and financial transactions, a considerable portion
of banking reserves gained from United States Treasury disbursements during the year remained in the district, and exerted a powerful
influence upon Twelfth District banking and credit conditions generally. Excess reserves of member banks increased 47 million dollars
during the year to about 83 million dollars in December, an amount
much larger than at any time prior to 1934.
In an effort to increase loans, banks reduced interest rates charged
customers as much as 1 percent in San Francisco on some loan classifications, and reductions in other reserve cities of the district were also
substantial. Principal decreases were to large borrowers from city
banks, there having been but little change in rates charged customers
of country banks or in rates to small enterprises in cities. Activities
of the Farm Credit Administration and the Home Owners' Loan
Corporation resulted in lowering the average rates paid by farmers
and by home owners. Banks reduced rates paid to depositors on savings
and other time deposits.
MILLIONS OF DOLLARS
2OO0I

MILLIONS OF DOLLARS

MILLIONS OF DOLLARS
2000J

TOTAL LOANS

DEMAND DEPOSIT
INVESTMENTS

CONDITION OF ALL MEMBER BANKS—Twelfth District
Figures taken from member bank call reports

Despite the reduction in interest rates, there was practically no
change during the year in the amount of bank loans outstanding. Bank
credit did increase substantially, however, because of the purchase of
investments in national markets and within the Twelfth District. In
addition to the increased credit extended by commercial banks, financial
agencies of the Federal Government, particularly the Farm Credit
Administration and the Home Owners' Loan Corporation, made additional amounts of credit available to this region during 1934. The
amount of loans granted during 1934 by the Federal Reserve Bank of
San Francisco under the Loans to Industry Act was not large, but
Reserve Bank activities stimulated a considerable volume of lending in
the industrial loan field by member banks.



8

TWENTIETH ANNUAL REPORT

Time and demand deposits of individuals, businesses, and Governmental agencies increased 571 million dollars at Twelfth District
member banks during 1934. This expansion in deposits was a reflection
principally of an increase in investments of member banks, which
amounted to 410 million dollars, of the disbursement by the United
States Treasury of 270 million dollars more than was collected in this
district, and of gold purchases by the United States Mint at San Francisco totaling 102 million dollars. The only important factor tending to
reduce bank deposits during 1934, the net transfer of 305 million dollars to other districts because of industrial, commercial, and financial
transactions, was much more than offset by the factors tending to
increase deposits. Insofar as local banks purchased securities in other
districts, the increase in investment holdings and the transfer of funds
to other districts were in excess of their actual influence upon Twelfth
District bank deposits.
Changes in Banks and System Membership
The number of unrestricted banks in the Twelfth Federal Reserve
District decreased from 733 at the beginning of 1934 to 731 at the end
of the year. At the beginning of 1934, 61 district banks had a restricted
status—that is, they had not been licensed to resume ordinary operations subsequent to the banking holiday in 1933, but neither had they
been reorganized or placed in liquidation up to that time. A number
of these 61 banks were reorganized during 1934, others were closed for
liquidation, and several were merged with other institutions. A few
banks which had been in operation without restrictions at the beginning of 1934 gave up their charters to merge with or become branches
of other banks. The net result was that the number of banks permitted
to carry on full banking business at the end of 1934 was 731, while
only 10 banks remained in restricted status at that time.
LICENSED BANKS IN OPERATION

TWELFTH DISTRICT

December 31, 1934
, Member Banks \
Number
Assets

Nonmember Banks*
Assets!
Number

Arizona . . .
California .
Idaho
Nevada . . .
Oregon . . .
Utah
Washington
Twelfth
District . . .

28
4
4(5
26
111

10
280
63
10
105
58
205

$ 36,915
3,763,127
78,695
21,812
241,796
139,625
460,313

352

$662,928

731

$4,742,283

3
134

94

379

$4,079,355

6
59
32

(000 omitted)

$ 7,695
476,872
17,688
3,849
29,972
26,152
100,700

$ 29,220
3,286,255
61,007
17,963
211,824
113,473
359,613

7
146
35

,
All Banks*—
Assets!
Number

(000 omitted)

(000 omitted)

* Includes mutual savings banks and trust companies.
t Includes corporate assets of trust companies, but not trust funds held by
them in fiduciary capacity.



FEDERAL RESERVE BANK OF SAN FRANCISCO

9

Of the 731 licensed Twelfth District banks at the end of 1934, 379
were members of the Federal Reserve System. One of the 10 restricted
banks was a member. Reorganization of unlicensed banks and admission of nonmember banks to membership more than offset reductions
in the number of members because of mergers and withdrawals from
the System. No member banks which were licensed for unrestricted
operations at the beginning of 1934 were suspended during the year.
CHANGES IN BANK MEMBERSHIP DURING 1934—TWELFTH DISTRICT
,
NumberNational
State

Member Banks, December 31, 1933
Unrestricted
Eestricted
Additions to Membership:
Organization of National Banks
Conversion of nonmember banks to
National banks
Admission of State banks
Absorption of nonmember banks by
member banks
Eesumption following suspension

TOTAL LOSSES

Net Change
Member Banks, December 31, 1934
Unrestricted
Eestricted

402

-Assets—\
(000 omitted)

$3,483,018
3,464,05 Or
18,968r

74
68
6

372
30

11

328
304
24

11

19,280

10*

59,088

10*

11

TOTAL ADDITIONS

Losses to Membership:
Mergers between member banks
Suspension **
Withdrawal of State banks
Absorption of member by nonmember
banks

Total

19
8

1
4

11

$

78,368

19
9
4

$

13,5921
2,744
1,850
4,942

1

1
28

5

33

—28

+1 6
80
80

380
379
1

9,536

—22

300
299
1

$

XJ

$4,079,945
4,079,355
590

* Does not affect total number of member banks,
t Does not affect total resources of member banks.
** Eepresented final disposition of banks that were under restrictions at the
beginning of the year,
r Eevised.

A larger proportion of Twelfth District banks were members of the
Federal Reserve System at the end of 1934 than at any previous time.
The proportion of Twelfth District banking assets in the Federal
Reserve System was also higher at the end of 1934 than on any earlier
date. A part of the increase in resources during the year was the
result of acquisition by a member bank of a large number of branches



10

TWENTIETH ANNUAL REPORT

formerly belonging to a nonmember institution. Some gain in resources resulted from admission of banks to membership. The bulk
of the increase, however, reflected growth in assets of the banking
structure, chiefly in the form of additional investments.
Branch Banking
Branch banking continued to expand throughout the Twelfth District during 1934, and at the year end 62 district banks were operating
923 branch offices, compared with 53 licensed banks operating 881
branches twelve months earlier. Some expansion was apparent in all
seven states of the district, although growth was not spectacular in any
state. More national banks were operating branches at the year end
than at any previous time, and the proportion of branch offices operated by national banks was larger than it had been on any earlier date.
BRANCH BANKS IN OPERATION

TWELFTH DISTRICT

,
Branches
\
Banks Operating
,
Operated by 1 Located
Branches
\
State NonOutNo, of
Na- State NonNa- Mem- mem- In
side
Licensed
tional Mem- memtional ber ber Home Home
Banks Total Banks ber ber Total Banks Banks Banks City City
i

State

December 31, 1933

Arizona*
Californiaf
Idaho
Nevada
Oregon
Utah
Washington
Total

10
286
67
12
100
60
198

2
37
2
0
3
3
6

0
10
1
0
2
3
3

1
5
1
0
0
0
1

1 12
0
9
3
0 12
22 787J 524 147 116 254 533
0 23
7 16
0
1 22
0
0
0
0
0
0
0
1 27 26
0
1 10 17
0
9
9
0
0
2
7
2
23
18
3
2
12 11

733

53

19

8

26

881 584 175 122 279 602

December 31, 1934

Arizona*
California
Idaho
Nevada
Oregon
Utah
Washington
Total

10
280
63
10
105
58
205

2
40
4
2
3
3
8

0
12
2
2
2
3
4

1
8
1
0
0
0
2

731

62

25

12

1 17
0 13
20 804* 602 156
1 26
9 15
0
5
5
0
1 30 29
0
0 10 10
0
2
31
23
6

4
0 17
46 255 549
2
1 25
0
1
4
1 11 19
0
2
8
2
13 18

25

55

923

678

190

283 640

*Figures for Arizona do not include banks located in Eleventh Federal Reserve
District, and do not include one Twelfth District branch of a nonmember state
bank with home office located in Eleventh District. Figures do include 3
Eleventh District branches of member state bank with home office and 10
branches located in Twelfth District. tExcludes 2 unlicensed national banks
operating 3 branches in home cities and 2 unlicensed nonmember banks, one
with a home city branch and one with an outside branch. ^Includes Portland,
Tacoma, and Seattle branches of Bank of California National Association, San
Francisco. Does not include London branch of Bank of America National Trust
and Savings Association, San Francisco.
No unlicensed banks had branches at the end of 1934,



FEDERAL RESERVE BANK OF SAN FRANCISCO

11

The increase during the year in the number of branches operated by
national banks resulted largely from the transfer of a group of
branches from a nonmember state bank to a national branch system,
but there was also some opening of offices in new locations.
BRANCH BANK ASSETS

TWELFTH DISTRICT

(000 omitted)

t

December 31, 1933
National

Nonmember

State
Member

$

140,908
37,133
136,199
$2,189,938

$580,504

I 12,587
2,797,291
25,951

3,150

141,817
37,133
150,895

$395,232

$3,165,674

\

11,546

Twelfth District

2,135
389,038
909

$ 10,452
541,895
16,611

Arizona
California
Idaho
Nevada
Oregon
Utah
Washington

1,866,358
9,340

All
Branch
Banks

December 31, 1934—

Arizona
California
Idaho
Nevada
Oregon
Utah
Washington

$
2,171,178
14,640
13,339
156,849
46,107
171,808

$ 15,352
620,784
22,274

I 2,534
341,645
2,617

41,866

3,525

$ 17,886
3,133,607
39,531
13,339
157,890
46,107
217,199

Twelfth District

$2,573,921

$700,276

$351,362

$3,625,559

1,041

Total resources of branch banks in the Twelfth District were
$3,625,559,000 on December 31, 1934, compared with resources of
$1,116,724,000 in all banks in this district not operating branches. A
few of the banks included in the branch classification operate only one
or two branch offices.
INDUSTRY, EMPLOYMENT, TRADE
Trade activity and industrial production in the Twelfth District
fluctuated widely in 1934, averaging slightly higher than in the last
half of 1933. Considering the two years as a whole, practically all
business measures were higher in 1934 than in 1933, because of the
extremely depressed conditions of the first quarter of the earlier year.
As is usual, the course of business activity in this area was influenced
primarily by conditions in the nation generally. A special factor
affecting Twelfth District conditions, however, was the restricting
force of the longshoremen's strike and allied labor-employer difficulties beginning in early May and culminating in a general strike in San
Francisco in mid-July. After participating in the nation-wide upturn
in the first few months of the year, many lines of industry and trade
turned downward sooner in this area than in other parts of the country.
Conversely, a sharp gain in the manufacture and distribution of commodities in August was strictly a local phenomenon. This region was



12

TWENTIETH ANNUAL REPORT

but little affected by the national textile strike in September or by the
upturn in steel output and automobile production late in the year, and
business was more stable after July than in the country as a whole.
Employment conditions continued to improve in the Twelfth District during 1934. The increase in employment was particularly pronounced in the first quarter of the year. Despite wide fluctuations in
industrial and trade activity in the later months the number of workers
employed showed only seasonal changes be ween April and the end of
the year. Employment increases for the year as a whole were largest
in those activities in which previous declines had been greatest—
mining and manufacturing—although the number employed by retail
and wholesale firms and by financial institutions also increased appreciably. There was little change in employment by public utilities.
PER CENT
ISO

PER CENT
150

/

f

^

V

s

/

1921

1922

1923

1924

1925

1926

VOLUME OF INDUSTRIAL PRODUCTION—Twelfth District
Index adjusted for seasonal variation (1923-1925 average=100)

Industrial production fluctuated much more than seasonally during
the year, but averaged about the same as in the last half of 1933.
Output of lumber was larger than in the preceding year, but in no
month of 1934 did production equal the peak reached in the autumn
of 1933, reflecting in part production control through the lumber code
of fair competition. Petroleum production in California changed
little in 1934. Output at canneries, slaughterhouses, and other food
processing establishments increased considerably, and miscellaneous
manufacturing tended upward. Reflecting in large part higher prices
for gold and silver as a result of Federal Government policy, nonferrous metals mining increased substantially in the Twelfth District.
Not only did production of gold and silver advance, but activity at
copper, lead, and zinc mines having ores with a high precious metal
content was also stimulated.
Construction changed little from the extremely low levels of 1933,
although public works increased somewhat further to the highest point
on record. Except for residential building in smaller cities, practically all types of private construction declined further.



FEDERAL RESERVE BANK OF SAN FRANCISCO

13

INDEXES OF INDUSTRY, EMPLOYMENT, TRADE
Twelfth Federal Reserve District
(1923-192 5 Annual Average=100)
1927

Industrial Production
Manufactures
Foods
Butter
Canned Fruits
Canned Vegetables
Canned Fish
Flour
Slaughter
Wool Consumption
Lumber
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



1928

1929

110
114
113
110
129
109
148
100
96
89
105
148
116
121
100
96
106
118
89
88
84
81
97
105
131

114
118
124
111
167
132
135
111
101
75
108
155
116
128
104
96
118
111
85
83
75
71
94
113
144

123
98
124 102
120 122
105 114
138 148
160 160
189 167
115 105
99
99
82
71
110
84
193 168
107
93
143
93
122
90
121
95
129
83
114
96
86
71
81
67
68
51
64
49
87
59
134 128
157 159

105
106
97
98

105 112
107 116
99 102
99 104

110
108
Ill
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
119
103
135
130
180
154

1930

99
98
90
88

1931

1933

1934

75
58
65
76
59
70
106
94 112
121 122 124
110
82 126
77
83 109
118
79 110
102
90
89
108 107 110
89 101
96
58
35
46
140 134 127
71
46
53
59
39
51
71
57
53
79
74
72
62
27
21
68
51
51
47
38
36
62
37
42
31
14
12
29
13
11
36
14
12
191 132 166
156 139 139

1932

70
75
124
118
123
157
137
97
123
85
51
123
67
60
57
73
30
52
48
42
12
11
18
161
149

80
72
74
63

66
51
59
40

71
51
69
46

80
60
73
54

96
75
84
57
105
89
109
72
105
64
110
76
86
71
80
66
106
84
93 73
128
72
72
54
68
52
103
70
96
77
118 105
81
60
82
62
94
79
111
98
101
87
97
67
91 62
151 114
131 103

57
37
74
48
43
50
54
50
67
55
43
43
37
41
49
86
43
47
63
75
68
34
32
57
74

58
43
70
47
43
49
70
69
75
56
43
41
42
45
66
85
47
51
62
71
61
48
46
75
69

66
48
81
59
51
64
76
76
78
67
72
45
48
61
69
99
58
58
75
77
63
63
58
121
78

14

TWENTIETH ANNUAL REPORT

Like the movements in industrial production, the course of trade
was sharply irregular during 1934. This irregularity was, of course,
due in part to strike conditions which prevailed in the middle of the
year. Distribution to consumers as indicated by department store sales,
chain store sales, and automobile registrations tended upward during
the year and averaged substantially higher than in 1933. Some of
the increase in value figures resulted from advances in prices. Transportation of commodities on district railroads increased during 1934
as did intercoastal shipments through the Panama Canal and foreign
trade of Pacific Coast ports.
AGRICULTURE
Although drought conditions were relatively mild in this section
during 1934, shortages of water, particularly for irrigation, reduced
agricultural output to some extent throughout the district. Prices of
agricultural commodities advanced considerably, however, and it is
estimated that total value of crops was 16 percent larger than in 1933.
The livestock industry shared to only a small degree the improvement
in income experienced by other branches of agriculture during 1934.
Marketing of sheep, lambs, and hogs declined during the year, while
shipments of cattle increased considerably, reflecting Federal Government purchases of cattle in drought stricken areas. Increases in
prices of sheep, lambs, and hogs offset to a considerable extent the
reduction in marketings. Cattle prices remained near the lowest levels
reached in 1933. From the grower's standpoint, the decrease in cattle
on district ranges was a favorable result of heavier shipments.
INDEXES OF CROP PRODUCTION
Twelfth Federal Reserve District
(1925-1927 Averasre=100)
1926

Volume—All Crops
Vegetables
Field Crops
Grains
Fruits
Value—All Crops
Vegetables
Field Crops
Grains
Fruits

1927

1928

1929

1930

98
105
96
93
102
92
103
92
88
93

109
106
105
114
110
103
105
95
110
106

109
117
105
115
112
104
117
107
96
102

109
133
106
99
113
113
128
124
93
111

110 96 106 100 94
137 128 141 129 133
105 85 88 91 88
95 75 98 87 72
121 116 122 112 107
84 58 46 56 65
123 94 85 78 96
81 57 45 56 65
54 36 31 45 50
100 68 47 57 68

1931

1932

1933

1934

Government regulation of and assistance to Twelfth District agriculture was of more significance in 1934 than in any previous year.
Marketing agreements for several important crops under the Agricultural Prorate Act of California and the Agricultural Adjustment Act
helped to increase immediate returns to growers. In addition, Government rental payments for cotton, wheat, and corn-hog reductions
totaled over $21,500,000 during the year. The Farm Credit Administration continued to refinance debt burdened farmers and to assist in
financing the marketing of farm products.



15

FEDERAL RESERVE BANK OF SAN FRANCISCO

OPERATING STATISTICS
Volume of Operations

Member banks generally held excess reserves throughout 1934, and
as a result discount operations of the Federal Keserve Bank of San
Francisco declined to negligible proportions. The small amount of
discounts held during the early part of the year was rapidly liquidated
and little borrowing took place in the last half. Average borrowings
were smaller than in any year since 1916. No locally purchased acceptances were held by the bank during the greater part of the year.
V O L U M E OF OPERATIONS
1934

Number of Pieces Handled—(In thousands)
Bills discounted
1
Notes received as collateral
13
Bills purchased for own account
..
Currency received and counted
132,043
Coins received and counted
130,186
Shipments of coin and currency to outof-town banks
54
Payments of coin and currency to city
banks
10
Checks handled for collection
49,517
Collection items handled—
United States Government coupons
paid
1,240
All other drafts, notes, coupons
690
United States Government securities
issued, redeemed, or exchanged*...
215
Transfers of funds
106

1933

1932

10
54
5
126,920
130,013

38
59
4
127,217
139,273

48

43

11
43,268

11
48,513

1,108
768

1,053
426

150
120

72
117

Amounts Handled—(In thousands of dollars)
Bills discounted
29,488
1,045,057
3,990,835
Bills purchased for own account
7,219
80,570
75,040
Currency received and counted
726,615
811,817
774,135
Coins received and counted
35,204
66,047
37,142
Shipments of coin and currency to outof-town banks
215,396
299,969
193,822
Payments of coin and currency to city
banks
460,596
536,898
512,567
Checks handled for collection
10,328,061
8,642,927
9,617,628
Collection items handled—
United States Government coupons
paid
27,356
22,757
22,655
All other drafts, notes, coupons
368,053
299,707
217,719
United States Government Securities
issued, redeemed, or exchanged*...
654,299
598,764
506,240
Transfers of funds
8,093,289
8,417,474
10,274,165
*Includes redemption of Federal Intermediate Credit Bank debentures and
Federal Farm Loan bonds.



16

TWENTIETH ANNUAL REPORT

Under the provisions of section 13b of the Federal Reserve Act
approved June 19, 1934, Federal Reserve banks are permitted to participate with banks, trust companies, and other financial institutions
in making loans for the purpose of providing working capital to
established industrial or commercial businesses. Following the approval of that section, the Federal Reserve Bank of San Francisco sent
a circular letter to all banking offices and to a large number of chambers of commerce and interested individuals in the Twelfth District
outlining the procedure to be followed in connection with applications for loans. To assist in carrying out the provisions of this section,
an Industrial Advisory Committee for the Twelfth Federal Reserve
District was appointed and confirmed by the Federal Reserve Board.
The personnel of the Committee at the end of 1934 was as follows:
RALPH H. BURNSIDE,

Pacific Spruce Corporation,
Portland, Oregon.
SHANNON CRANDALL,

California Hardware Company,
Los Angeles, California,
HENRY D. NICHOLS,

Tubbs Cordage Company,
San Francisco, California.
STUART L. RAWLINGS,

Calaveras Cement Company,
San Francisco, California.
H. L. TERWILLIGER,

Ingersoll-Rand Company,
San Francisco, California.
For the purpose of acquainting banks and individuals with the
provisions of the industrial loan legislation, members of the Industrial
Advisory Committee and officers of this bank attended meetings of
banking groups, chambers of commerce, and similar organizations.
A large number of calls were made by officers of the Reserve Bank
upon banks throughout the district to discuss requirements for working capital by industries in the various localities and to explain the
procedure involved in applying for loans.
Up to December 31, 1934, 634 applications had been received for
loans aggregating $18,703,787 and ranging in amount from $400 to
$500,000. Of this number, 92 applications for loans totaling $2,586,300
had been recommended and approved by the Bank Executive Committee. The committee rejected 279 applications for loans amounting
to $6,461,934. Work involved in the investigation of each application
made it necessary to assign a large number of employees to the department handling industrial loans during the autumn of 1934.
It has been the policy of the Reserve Bank to encourage banks and
financing institutions to advance the funds requested by applicants



FEDERAL RESERVE BANK OP SAN FRANCISCO

17

whenever possible. Whenever the financing institutions have so desired,
the Reserve Bank has made commitments with respect to the discount or
purchase of such industrial loans meeting the requirements of the Act.
Almost no acceptances were purchased for the account of this bank
during 1934, and average holdings of bills during the year were the
lowest recorded since the bank was organized. The Federal Reserve
Bank of San Francisco held no locally purchased bankers' bills during
the last six months of 1934, holdings being composed entirely of the
dollar amounts of bills payable in foreign currencies purchased
through the Federal Reserve Bank of New York.
Statistics on the number and value of check transactions show a
marked increase over 1933 and a more moderate gain over 1932. A
large part of the increase in the number of items handled took place
during the first half of 1934 and was caused by increased payment of
checks drawn on the Treasurer of the United States. During the early
part of the year this heavy volume of Government checks represented
to a great extent funds disbursed through the Civil Works Administration. The increase in the dollar value of all check collections was
greater proportionally than the increase in volume, a reflection probably of the increase in the general price level as well as in the volume
of transactions. Collections of drafts, notes, and coupons other than
Government coupons declined somewhat in number, although the dollar
amount was greater than in 1933. There was a marked increase in
Government coupons paid, principally because of the payment of
coupons of the Home Owners' Loan Corporation and Federal Farm
Mortgage Corporation which are fully guaranteed by the United States.
The number and value of telegraphic transfers of funds by this bank
decreased during 1934 as compared with 1933. One factor causing
this decrease was the elimination of interest on demand deposits which
resulted in banks carrying a large part of their surplus funds with the
Federal Reserve Bank as excess reserves instead of transferring them
to their correspondents.
The number of pieces of currency received and counted at the Federal
Reserve Bank of San Francisco was larger in 1934 than in any year
since 1930 although the dollar amount declined as compared with 1933.
This decrease in value is explained by the fact that in 1933 a great
deal of currency of large denominations was returned to the Reserve
Bank following the banking holiday, prior to which it had been withdrawn for hoarding. The increase in number of pieces of currency
received reflected the increased circulation of currency of smaller denominations during 1934 in consequence of expanding trade activity.
There was little change in the quantity of coin received and counted,
although the value of such coin decreased sharply from the high figure
for 1933 when a large amount of gold coin was turned in to this bank
in accordance with an Executive Order of the President.
The Gold Reserve Act of 1934 prohibited private holding of monetary
gold and required the Federal reserve banks to deposit with the United
States Treasury all gold coin and bullion, in payment for which they
were to be given credits in the Treasury payable in gold certificates.
In accordance with the provisions of that Act, the title to all gold



18

TWENTIETH ANNUAL REPORT

coin and gold bullion held by the Federal Reserve Bank of San Francisco was transferred to the Treasury on January 30, 1934.
A considerable increase in activity was noted in connection with the
issue, redemption, and exchange of United States Government obligations. Allotments of new and exchange issues of Government securities
in this district totaled $381,000,000 in 1934, compared with $354,000,000 in 1933. In contrast with other years, Treasury bills formed a
much larger proportion of the issues of short-term Government securities than did certificates of indebtedness. Only one issue of Treasury
certificates of indebtedness was offered during 1934.
Exchanges and redemptions of matured United States Government
securities were somewhat larger in 1934 than in 1933. A large part of
the securities redeemed represented Fourth Liberty Loan bonds.
In addition to activity in connection with securities issued directly
by the United States, a considerable amount of work was performed by
the bank in its capacity as fiscal agent for the Federal Farm Mortgage
Corporation, Home Owners' Loan Corporation, and the Reconstruction
Finance Corporation. The services rendered these agencies are
analogous in many respects to those performed by the Federal Reserve
Bank as fiscal agent of the United States in handling Government
securities.
Earnings and Expenses
Earnings of the Federal Reserve Bank of San Francisco were
smaller in 1934 than in either 1933 or 1932. Earnings on bills discounted for member banks and on acceptances purchased were negligible in amount. Earnings on United States Government securities
increased further and were the largest recorded for this bank in any
year. This increase was due principally to larger holdings of securities, although the average rate of return was higher than in the three
preceding years. Additions to earnings included a profit of $552,730
on United States Government securities sold.
On January 10, 1934, $9,850,328.30 was withdrawn from surplus as
a subscription to Class B capital stock of the Federal Deposit Insurance Corporation in accordance with provisions of section 12b of the
Federal Reserve Act as amended by the Act approved June 16, 1933.
That amount represented 50 percent of the surplus of this bank on
January 1, 1933.
Operating expenses were smaller in 1934 than in 1933 and the cost
of printing Federal Reserve currency was much lower than in the
previous year. Assessments to cover expenses of the Federal Reserve
Board increased. In addition to the normal amounts for depreciation,
charge-offs included $100,000 to reduce the book value of land occupied
by the building of the Los Angeles Branch and $360,000 which was
provided as an additional reserve to meet other losses. Inasmuch as
expenses incurred in connection with industrial advances under
section 13b of the Federal Reserve Act were greater than the income
derived from that source, the net deficit of $2,668.39 after payment
of dividends was charged to surplus designated as section 13b, leaving



FEDERAL EESERVE BANK OF SAN FRANCISCO

19

a balance in that fund on December 31, 1934 of $584,931.61. Surplus
under section 13b had been created from payments by the Secretary
of the Treasury aggregating $587,600 transferred to this bank for
the purpose of making industrial loans.
INCOME AND DISBURSEMENTS
Earnings
1934
On Loans
$ 30,759.51
On Acceptances Purchased
15,991.03
On United States Government Obligations Owned 3,086,621.31
Other Earnings
89,048.60

1933
$1,152,067.31
133,269.57
2,495,527.61
121,333.87

Total Earnings

$3,222,420.45

$3,902,198.36

Additions to Earnings

$ 597,427.43

$ 100,579.36

Deductions from Earnings
For Current Bank Operations
$2,369,716.51
For Assessments for Federal Reserve Board
Expenses
98,150.72
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
42,473.76
For Furniture and Equipment
12,098.56
For Depreciation on Bank Premises
219,879.79
For Reserves for Losses
433,323.07
All Other
3,631.78

$2,459,999.98
56,540.54

179,457.20
67,994.73
174,370.40
613,726.40
21,584.23

Total Deductions from Earnings
$3,179,274.19
Net Income available for dividends and additions to surplus
$ 640,573.69

$ 429,104.24

Distribution of Net Income
Dividends Paid to Member Banks, at the rate of
6 percent on paid-in capital
$ 643,242.08
Excess of Dividends over Net Income
$
2,668.39

$ 634,633.40
$ 205,529.16

Deductions from Surplus Account
Excess of Dividends over Net Income

$ 205,529.16

$

2,668.39

$3,573,673.48

SECURITIES EXCHANGE ACT AND REGULATION T
In accordance with provisions in the Securities Exchange Act of
1934, regulations were issued by the Federal Eeserve Board late in
September governing the extension and maintenance of credit by
brokers, dealers, and members of national securities exchanges. Inasmuch as this district has important securities markets, considerable
work was involved in keeping the financial community, including
banks, informed as to the regulations of the Federal Reserve Board.
Efforts were made to answer all questions and to cooperate with the
securities markets in making the new rules effective with a minimum
of disturbance to established business procedure.



20

TWENTIETH ANNUAL REPORT

CHANGES IN DIRECTORS, OFFICERS, AND EMPLOYEES
Isaac B. Newton, Chairman of the Board and Federal Reserve Agent,
died on June 22, 1934. Mr. Newton had been a director of the bank
and had held the office of Chairman of the Board and Federal Reserve
Agent since March 1, 1926. At the end of the year a successor had not
been appointed to fill Mr. Newton's place.
At the annual election held in 1934, C. K. Mclntosh, President of
the Bank of California N. A., San Francisco, was reelected by member
banks in Group 1 (those having a combined capital and surplus in
excess of $599,999), as a Class A director for a term of three years
ending December 31, 1937. Elmer H. Cox, President of the Madera
Sugar Pine Company, San Francisco, was reelected by banks in
Group 3 (those having a combined capital and surplus of less than
$125,000), as a Class B director for a similar three-year term.
The Federal Reserve Board reappointed Andrew Welch, Chairman
of the Board of Welch and Company, San Francisco, as a Class C
director for a term of three years ending December 31, 1937.
The Federal Reserve Board redesignated Walton N. Moore, President of Walton N. Moore Company, San Francisco, Deputy Chairman
of the Board of Directors for 1935.
M. A. Arnold, President, First National Bank of Seattle, Seattle,
Washington, was reappointed as a member of the Federal Advisory
Council to represent the Twelfth Federal Reserve District during
1935. This is the second successive year of Mr. Arnold's membership
in the Advisory Council.
At the end of 1934 the number of employees on the staff of the bank
was larger than at the end of 1933. This increase was caused by
activity in connection with extension of loans to industry and expansion in the operations of the bank in its capacity as fiscal agent for
the United States and the various Government agencies.
PERSONNEL AND SALARIES
(including Branches)
(

OFFICERS

Number ^
Jan. 1 Jan. 1
1935
1934

i

Annual Salaries
>
Jan. 1
Jan. 1
1935
1934

32

$ 242,600

$ 262,700

757
42
13
27

729
46
12
18

1,232,415
104,820
23,820
41,700

1,167,028
107,880
22,260
27,900

870

837

$1,645,355

$1,587,768

3
127

35,760
144,105

6,720
191,160

967

$1,825,220

$1,785,648

31

EMPLOYEES BY DEPARTMENTS :

Banking Department
Federal Beserve Agent's Department
Auditing Department
Fiscal Agency Department
TOTAL
EMPLOYEES WHOSE SALARIES ABE
EEIMBURSED TO BANK:

Fiscal Agency Department
Other Employees
GRAND TOTAL




21
97
988

FEDERAL RESERVE BANK OF SAN FRANCISCO

21

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.
This bank's statement of condition at the end of 1934 and 1933
appears upon the following two pages.




22

TWENTIETH ANNUAL REPORT
STATEMENT OF CONDITION
RESOURCES
December 31, 1934

Cash Reserves held by this bank against its
deposits and note circulation:
Gold Certificates on Hand and Due from United
States Treasury—Represents gold holdings of
the bank lodged in the Gold Settlement
Fund, held by the Federal Reserve Agent
as collateral to Federal Reserve notes, or held
in own vault
$310,252,132.68
Gold—This represents gold coin and gold bullion held in the vaults of the bank
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 Treasury for redemption
3,632,028.83
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 issued by this bank)
16,878,993.70
Total Cash Reserves

$330,763,155.21

Loans and Investments
Loans:
Against pledge of obligations of the United
States, direct and/or fully guaranteed...
$95,000.00
Against eligible commercial, industrial, and
agricultural paper, or acceptances discounted or pledged, or the pledge of other
collateral
37,590.50
Acceptances bought in the open market
390,537.83
Industrial advances
587,600.00
United States Government Bonds, Notes, etc... 166,330,500.00
Total Loans and Investments
Assets)

(or Earning
$167,441,228.33

December 31, 1933

$218,204,748.04
25,439,793.11

5,816,284.62

16,926,369.87
$266,387,195.64

$123,100.00

1,314,801.99
18,459,823.15
166,330,500.00
$186,228,225.14

Uncollected Items
Checks and Other Items not yet collected

$ 20,987,081.05 $ 20,419,919.58

Miscellaneous Resources
Bank Premises

$ 3,868,833.10

$ 4,089,847.40

3,168,960.99

3,469,500.96

$ 7,037,794.09

$ 7,559,348.36

$526,229,258.68

$480,594,688.72

All Other Miscellaneous Resources
Total Miscellaneous Besources
TOTAL RESOURCES




23

FEDERAL RESERVE BANK OF SAN FRANCISCO
LIABILITIES
December 31, 1934

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
$211,367,495.00

$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

14,406,050.00

$211,367,495.00

$227,460,230.00

Deposits
Reserve Deposits maintained by member banks
as legal reserves against the deposits of their
customers
$255,377,043.56

$187,630,581.22

United States Government Deposits

3,198,541.31

868,193.53

Other Deposits, including deposits of nonmember clearing banks, foreign deposits, etc. 12,641,869.96

14,463,713.79

Total Deposits

$271,217,454.83

$202,962,488.54

Deferred Availability Items
Deferred Items, composed mostly of uncolleeted checks on banks in all parts of the
country
$ 20,450,838.89

$ 18,373,821.01

Miscellaneous Liabilities
Reserves and All Other Miscellaneous
Liabilities

$

$ 2,204,189.20

Capital and Surplus
Capital Paid In, equal to 3 percent of the capital and surplus of member banks
$ 10,759,550.00
Surplus (Section 7, Federal Reserve Act)
Surplus (Section 13b, Federal Reserve A c t t ) . .
Total Capital and Surplus
TOTAL LIABILITIES

9,644,799.15*

1,665,821.72

$ 10,637,200.00
19,495,127.45

584,931.61
$ 20,989,280.76

$ 30,132,327.45

$526,229,258.68

$480,594,688.72

* On January 10, 1934, $9,850,328.30 was withdrawn from surplus account,
upon a resolution approved by the Board of Directors, as a subscription to
Class B stock of the Federal Deposit Insurance Corporation under the terms of
section 12b of the Federal Reserve Act as amended by the Act approved
June 16, 1933. This amount represented 50 percent of surplus account of this
bank on January 1, 1933.
t Represents amounts transferred by the Treasury in accordance with agreement between Secretary of the Treasury and Federal Reserve Bank of San Francisco with respect to industrial advances made by this bank in accordance with
the provisions of section 13b of the Federal Reserve Act.



24

TWENTIETH ANNUAL REPORT

TWELFTH FEDERAL RESERVE DISTRICT
Includes the States of Arizona, except the five southeastern counties,
California, Idaho, Nevada, Oregon, Utah, and Washington

SAN FRANCISC

100 MILES

Map showing territory of Head Ofl&ce and Branches of the
Federal Reserve Bank of San Francisco