The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
M c w th R lu FEDERAL RESERVE B A N K OF S A N e w ie u r F R A N C ISC O APRIL 1, 1943 G o v e r n m e n t Finance and Bank Credit W a r expenditures of the United States Government increased further in February to an average daily rate of $253,400,000. These and future expenditures of even greater magnitude underlie the principal financial event scheduled for April— the Second War Loan Drive — and the primary financial operation which occurred in March— unparalleled income tax collections. The S e c o n d W a r Loan Drive The Second War Loan Drive will begin on April 12. Its goal is to raise 13 billion dollars in the country as a whole. The goal for the drive of last December was orig inally set at nine billion dollars but final sales approxi mated 13 billion, of which 5.1 billion or 39 percent were to commercial banks and 7.8 billion to other investors. These proportions were reversed in the Twelfth District where 800 million dollars were raised, 61 percent from commercial banks and only 39 percent from other investors. The district objectives in the forthcoming drive are not only to distribute a considerably larger dollar volume of securities but also to increase the proportion of sales to investors other than banks. A goal of 675 million dollars in sales to non-bank investors in the Twelfth Federal Reserve District has been set, more than twice the sales to this group in the December drive. Fund Committee and the War Savings Staff under the direction of the War Finance Committee to increase sales to non-bank investors, particularly to individuals. Corpo rate investors should not require as much urging to sub scribe. Lack of alternatives for the disposal of investment funds is considerably more effective in channeling funds of insurance companies and other corporations into Gov ernment securities than it is in accomplishing the same end with cash holdings of individuals. Municipal and corporate financing has been negligible in the district during recent months. The only important securities flotation since the first of the year was a nine million dollar issue of City of Seattle Municipal Trans portation System 2>y2 percent revenue bonds, offered in March. This issue was floated to refund, at a lower rate, bonds held by the RFC. Sales of Securities fo N on -Ba n k Investors Too great emphasis cannot be placed upon increasing the proportion of sales to inves tors other than banks. As pointed out many times in this Review and elsewhere, if crea tion of additional bank deposits is to be mini mized, resort to commercial banks as a source of funds to finance Treasury requirements must be kept to a minimum. Special efforts will therefore be made in April by the Victory Banks a nd the Loan Drive Even with outstanding success in the sale of Government securities to individuals and other non-bank investors, a substantial volume of sales must be made to commer cial banks in order to attain the April goal. Banks in the Twelfth District should be able to absorb their share without difficulty. Banks have continued to add to their Government security holdings since the De cember drive, those of weekly reporting member banks in the district having in:reased by 10 percent from 2,180 million dollars on December 30 to 2,400 million on March 24. Holdings of other securities de clined and total loans outstanding reported by those banks fell from 1,020 million dol lars to 950 million during the same period. Total earning assets of these banks in creased, however, by about 4 percent from 3,500 million dollars to 3,640 million. WAR FINANCE "W e should remember . . . that helping to finance the war is the privilege mainly of those who still enjoy the receipt of incomes as civilians during the war. It is a modest contribution toward victory when we compare it with the contribution of those in the fighting forces." — From the President's Budget Message, January 1 ] , 1 9 4 3 . ★ ★ ★ ★ THE SECOND WAR LOAN DRIVE STARTS APRIL 12 ★ ★ ★ ★ 24 FEDERAL RESERVE BANK OF SAN FRANCISCO Demand deposits of all district member banks increased by approximately 9 percent from late December through mid-March. The consequent increase in required reserves slightly more than offset increases in total reserve bal ances, and excess reserves averaged 229 million dollars in the first half of March, compared with 251 million in late December. In co m e Tax C o lle ctio n s Income tax collections during March 1943 were sub stantially larger than in any prior year. Deposits of income tax receipts in the Treasurer’s account at the Federal Reserve Bank of San Francisco in March totaled 348 million dollars, 60 percent and 333 percent higher than in March 1942 and 1941. Larger incomes in 1942 and a substantial increase in the number of income re ceivers in the district, together with the higher tax rates and lower exemptions incorporated in the Revenue Act of 1942 accounted for the larger receipts. The increase in the tax liability of the public resulting from these factors is not fully revealed in the March figures of collections, however, in view of the fact that taxpayers more gener ally than heretofore elected to meet their obligations on 1942 incomes in quarterly instalments rather than by pay ment of a lump sum prior to or on March 15. M e a n s of Paym ent Treasury notes (tax series) were utilized in payment of income taxes to a greater extent in 1943 than in the preceding year. Payments in these notes amounted to 71 million dollars, 20 percent of the district total during March, compared with 10 percent of the total in the like month of 1942. Apparently cash balances of taxpayers held in currency were drawn upon heavily for tax payments, the currency being both paid directly to the Collector of Internal Reve nue and used to purchase money orders and bank drafts. Currency in circulation in the district declined by 15.8 million dollars in the week ending March 17 and by 11.8 million in the succeeding week. These withdrawals of cur rency from circulation exceeded those in any two-week period since January 1941 when a larger post-Christmas reduction in circulation took place. In the corresponding two weeks of last year, currency in circulation declined by only 8.6 million dollars. Effect of Tax Paym ents on Bank Reserves The concentration of large income tax collections at the first quarterly income tax payment date swells total receipts of the Treasury and tends to reduce member bank reserve balances because at such times the funds trans ferred from taxpayers’ bank deposits to the Treasurer’s account in the Reserve banks exceed those being dis bursed by the Treasury. From March 3 to 24, however, district member bank reserves declined by only a small amount from 1,318 million dollars to 1,290 million dol lars, and were well above the March 3 level on all but the last day of the two weeks ending March 24. A p ril 1, 1943 One factor contributing to this result was the smaller proportion of tax payments made by checks drawn against taxpayers’ deposits in 1943 than in other recent years. As already noted, increased use was made of tax notes. These notes are offered for sale by the Treasury throughout the year and are purchased by many taxpayers in anticipation of the due date of their tax obligation, so that a concen trated drain on reserve balances of banks is avoided. Similar in immediate effect upon reserves was the use of currency drawn from cash balances and of funds obtained through redemption of Government securities. In each of these three circumstances, the drain upon reserves had occurred at the time the securities were purchased or the currency originally paid into circulation. Treasury C a lls on W a r Loan A c c o u n ts Another factor contributing to the relatively small de cline in member bank reserves was the suspension of calls by the Treasury upon war loan deposit accounts during the period of heavy income tax payments. If they are qualified war loan depositaries, banks subscribing to Treasury issues for their own account or for the account of their customers are priviliged, within certain limits, to pay for the securities by deposit credit. When the Treas ury needs funds to meet its current obligations it “ calls” for payment of these deposits, and the banks make pay ment by authorizing the Reserve banks to debit their reserve accounts and credit the account of the Treasury. Thus, a greater degree of balance is achieved in the flow of funds in to and out of the Treasurer’s account with the Reserve banks. In the two months following the heavy Treasury financing operation of last December frequent and large calls were made. Calls were suspended, how ever, during the period of heavy income tax collections. As a result, this drain upon member bank reserve bal ances was removed and, with disbursements of the Fed eral Government continuing unabated, total Treasury disbursements in the district, despite heavy income tax receipts, exceeded total collections by 270 million dollars during the three weeks ending March 24. Banking and Credit— Averages of Wednesday figures (millions of dollars) 1943 M a r.1 Change From ,---------1943---------> Feb. Jan. 1942 Mar. Condition Items of W eek ly Reporting Member Banks Commercial, industrial, and agricultural lo a n s ............................. Open market paper............................. Loans to finance securities transactions ....................................... Real estate' lo a n s .................................. All other lo a n s ...................................... Total investm ents...................................... United States Government secu rities.............................................. A ll other securities............................... Adjusted demand deposits................... Time' d e p o sits............................................ . United States Government deposits. . 954 — 13 — 36 — 193 430 12 — 10 0 — + 24 1 — — 77 4 44 349 119 2,636 + 5 — 5 — 3 —}—44 + 5 — 9 — 9 + 112 — 2 — 39 — 71 + 1,158 2,344 292 2,232 1,153 133 +45 — 1 +45 +22 — 39 + 115 — 3 + 87 + 28 — 78 + 1,173 — 15 + 739 + 58 — 24 +46 + 99 + 656 +32 + + 69 30 + 611 + 301 Coin and Currency in Circulation Total (changes o n ly ) ............................... Federal Reserve N otes of F . R . B. of S. F ......................................................... , 1,367 Member Bank Reserves............................. . 1,315 1March 31, 1943 not included. +41 April 1, 1943 T r e a s u r y F in a n c in g b y t h e R e s e r v e B a n ks The Treasury policy of suspending calls on war loan deposit accounts in March permitted most banks through out the country, even in areas where income tax payments were particularly heavy, to maintain their reserves above required levels. By this procedure, the Treasury deprived itself of a source of funds with which to meet the large and increasing war expenditures of the Federal Govern ment. To replenish its working balance with the Reserve banks just preceding and during the period of large in come tax collections, the Treasury sold special one day certificates of indebtedness to the Federal Reserve Sys tem. These special certificates were sold as of the close of business on one day and retired on the following day. Not only did this practice permit the Treasury to forego mak ing calls upon war loan deposit accounts but the disburse ment of funds realized through this extension of Reserve bank credit increased bank reserves. This is in contrast to the disbursement of funds realized from taxes and sales of securities which do no more than restore reserves pre viously reduced by the payment of those funds into the Treasurer’s account. F ederal Reserve Purchases of Treasury Bills from Banks Although Treasury disbursements in the Twelfth Dis trict as a whole exceeded collections during the three weeks ending March 24, drains upon the reserve balances of all banks were not balanced by receipts. In a few cases it was necessary for banks to obtain funds temporarily in order to maintain their reserves at required levels. This was done by the sale of Treasury bills, under repurchase agreement, to the Federal Reserve Bank of San Fran cisco. These sales were made at the established discount of of 1 percent offered by the Reserve System, approxi mately the discount at which the weekly issues of Treasury bills have been originally distributed in recent months. Holdings by this bank of locally purchased Treasury bills fluctuated widely from day to day, ranging from a mini mum of 2.6 million dollars to a maximum of 88 million during the three weeks ending March 24. Agricultural Credit Total loans of district member banks declined 281 mil lion dollars during 1942 to 2,170 million at the year end. Included in this reduction was a decline in loans on farm real estate of 14 million dollars to 67 million. Other agri cultural loans of member banks increased, however, the only classification of loans to show a gain over the year. Both farm mortgage and total other agricultural loans of agencies of the Farm Credit Administration declined in the Twelfth District. G e n e ra l D e clin e in Farm M o rtg a g e Loans Farm mortgage loans are made by the Federal Land Banks and the Land Bank Commissioner, banks, insur ance companies, and private investors. In the four years 1939-42, outstanding farm mortgage loans of member banks and of the two Federal agencies in the Twelfth 25 MONTHLY REVIEW District have declined at an increasing rate, despite some rise in farm land values. District member bank loans secured by farm land declined at a little more rapid rate than mortgage loans held by Federal farm loan agencies but the difference is not large. Throughout the period, farm real estate loans F a r m M ortgage L o an s O u t s t a n d in g — T D w e lfth is t r ic t (in thousands of dollars) Member banks California ............... Pacific N orthw est. Intermountain . . . Dec. 31, 1938 87,533 4,832 3,618 Dec. 31, 1939 87,037 5,152 3,705 Dec. 31, 1940 81,495 5,415 3,724 Dec. 31, 1941 72,244 5,280 3,498 D ec. 31, 1942 95,894 90,634 81,022 67,215 135,228 76,024 69,355 132,942 74,670 68,093 126,771 70,290 67,489 114,834 60,819 57,232 261,392 232,885 95,983 T otal. Farm Credit Administration1 C a lifo rn ia ................. 142,580 Pacific Northw est. 78,530 Intermountain . . . 72,256 T o ta l............... 293,366 280,607 275,705 5 9 ,6 3 2 4,235 3,349 1Loans of Federal Land Banks and Land Bank Commissioner. of California banks amounted to between 50 and 60 per cent of Federal mortgage loans, in sharp contrast with the situation in other states of the district where bank loans were less than one-tenth of those of the two Federal agencies. Expansion in O the r A gricu ltu ra l Loans of Banks in 1942 Loans to farmers other than those secured by real es tate, are made principally by banks and by agencies of the Farm Credit Administration. Such loans held by Twelfth District member banks totaled $158,600,000 on December A g r ic u l t u r a l L o a n s L o a n s O u t s t a n d in g ) — T w e lfth D ( e x c l u d in g M ortgage is t r ic t (in thousands of dollars) Member banks California ........................ . Pacific N orthw est.......... . Intermountain ............... , Dec. 31, 1938 75,658 22,566 26,059 Dec. 31, 1939 77,195 25,125 27,609 Dec. 31, 1940 74,128 27,136 29,490 Dec. 31, 1941 74,073 44,005 34,955 Dec. 31, 1942 71,100 54,607 32,860 130,754 153,033 158,566 Farm Credit Administration Loans to cooperatives Bank for cooperatives and Federal intermediate credit bank (direct loans) California ................. 10,669 11,865 13,587 19,800 Pacific N orth w est.. 7,502 6,098 5,960 7,463 Intermountain . . . . 1,501 1,758 1,804 3,008 21,038 7,499 3,769 32,306 T o ta l................... . 124,283 129,929 T o ta l................... 19,672 19,721 21,351 30,271 Agric. M ktg. A c t . . . . (1 ) (1 ) 5,441 5,386 2,388 T o ta l................... (1) (1) 26,792 35,657 34,694 Short term credit (2) California ................. Pacific N orthw est.......... Intermountain ............... . 11,240 11,081 15,537 9,087 8,598 13,971 9,855 9,266 13,901 10,902 10,634 13,540 10,115 9,704 10,921 T o ta l................... . 37,858 31,656 33,022 35,076 30,740 (1) N ot available. (2 ) Includes loans of production credit associations, emergency crop and feed loan section, and regional agricultural credit corporations. Federal intermediate credit bank loans to and discounts for Farm Credit Adm in istration agencies and private financing institutions excluded. 31, 1942. As shown in the accompanying table, this total was more than twice as large as the aggregate loans out standing held by the Farm Credit Administration agencies. Behavior of these other agricultural loans in 1941 and 1942 was markedly different from that of farm real estate loans. In addition, there were noticeable differences be tween the changes in bank and Farm Credit Administra- 26 FEDERAL RESERVE BANK OF SAN FRANCISCO tion holdings of such loans. In contrast with the continued decline in loans secured by farm land, other agricultural loans increased considerably in 1941. In 1942 they ex panded further at district member banks, but a decline occurred in the Farm Credit Administration total. Loans of the latter in California, the Pacific Northwest, and the intermountain states conformed roughly to the district pattern, but bank loans in California and in the Pacific Northwest did not. Loans of California member banks have declined slowly since the end of 1939 and did not reflect the 1941 increase at all. In Oregon and Washing ton, on the other hand, bank loans increased over the period more rapidly than either bank or Farm Credit Administration loans in any other area. The increases in Oregon in 1941 and in Washington in 1941 and 1942 were particularly large. P roduction, W a g e P a ym en ts and Trade With the advent of more favorable weather, and despite continuing critical manpower shortages, industrial activ ity in the Twelfth District attained a new high level dur ing February. Pacific Coast shipyards, excluding naval establishments, delivered 70 vessels, compared with 54 in January and a monthly average of 30 in 1942. The Febru ary total, a new record, included 56 Liberty and other standard merchant ships, a tanker, and several special type vessels for the armed forces. Operations at district air craft plants were also increased during February and activity was at a higher level than in any previous month. Production in the important lumber industry rose some what more than seasonally in February from the low point reached in January. During January and February lumber output totalled 1,530 million board feet, a decline of 450 million board feet, or 23 percent, from production in the like two months of 1942. Unusually severe weather in January impeded operations of the industry, but more important is the continued severe labor shortage, particu larly at logging camps. On February 26 the War Man power Commission placed the lumber and nonferrous metals industries under the provisions of the President’s executive order of February 9 decreeing a 48-hour week. Production and Employment— Index numbers, 1923-25 average—100 W age Differentials in Manufacturing Generally speaking, manpower shortages have been felt most keenly in industries in which heavy work precludes employment of women and in which wage scales and average earnings are below those prevailing in war indus tries, notably shipbuilding. Lumbering has been seriously handicapped, and mining and smelting, crude petroleum producing, railroad repair, and certain other heavy indus tries have also experienced severe manpower losses, par ticularly in classifications not involving high degrees of skill. Other essential industries having comparatively low average wage scales, but involving work requiring manual dexterity rather than heavy lifting have had less difficulty in replacing men lost to the armed forces and to better paid war industries by drawing upon women. In the CaliA v era g e H o u r ly E a r n in g s S e le c te d D u r a b le G ood s M a n u f a c t u r i n g I n d u s t r ie s — C a lifo r n ia — F e b ru a ry 1943 Engines and turbines............................................................... Shipbuilding and repairing................................................... Sheet metal products, nonferrous....................................... Blast furnaces, steel works, rolling m ills........................ Structural steel and ornamental metal w ork................. Automobiles and equipment................................................. General industrial and metal working machinery. . . Construction, mine, oilfield, and related m ach in ery.. Iron and steel foundries.......................................................... C e m e n t ............................................................................................ Lumber and timber.................................................................... Aircraft and parts...................................................................... Ele'ctrical machinery and equipment............................... Structural clay products.......................................................... Earnings $1.32 1.31 1.31 1.22 1.22 1.17 1.12 1.10 1.08 1.05 1.02 1.00 .98 .83 Hours Worked 52 46 44 44 49 47 48 46 45 45 42 46 44 43 Source: California Division of Labor Statistics and Law Enforcement. fornia electrical machinery and equipment industry, for example, nearly half the total number of wage-earners employed in January were women. In May 1942 (the first month for which data are available) the proportion was 36 percent. Average hourly earnings of wage-earners employed in a selected cross-section of California durable goods in dustries are shown in the accompanying table, together with the average number of hours worked per week in mid-February. These figures do not reflect base rates of With SeasonalWithout Seasonal Feb. Lumber2 ................................p l3 4 Refined O ils........................... — Cement ............................................ W hea t F l o u r ........................ 146 Petroleum ............................. — Electric P o w e r ....................p386 ,— 1942— , Jan. Dec. Feb. Feb. Jan. Dec. Feb. 123 — 243 144 — 382 134 — 254 137 — 369 162 — 176 124 — 308 p97 p l8 2 .. 146 p i 16 p354 85 179 171 144 116 353 103 191 186 137 117 349 120 158 156 124 98 282 335 383 287 262 244 284 210 182 .. 389 .. .. .. 381 .. .. 325 377 273 249 230 272 189 167 578 624 510 503 368 423 318 271 .. 659 .. .. .. 633 .. .. 563 622 479 483 341 402 280 244 Factory Employment and Payrolls3 Employment Pacific C oast......................................... California .................... 406 404 Oregon .............................................. W a s h i n g t o n .................................... Payrolls Pacific C oast......................................... California .................... 694 680 O regon .............................................. W a s h i n g t o n .................................... 1 Daily average. •Converted to 1935-39 base. ■Excludes fish, fruit, and vegetable canning. pPreliminary. More complete utilization of available manpower in the lumber industry is imperative if 1943 production goals are to be attained. /------- Adjustment-------*t— ■■Adjustment----------> ,— 1943— \ ,— 1942— >,— 1943— N Industrial Production1 April 1, 1943 Distribution and Trade— Index numbers, 1935-39 daily average=100 With Seasonal Without Seasonal /---------Adjustment---------\ /---------Adjustment-------- ,— 1943— \ ,— 1942— x,— 1943— x ,— 1942— * Retail Trade Feb. Jan. Department Store Sales (value) Twelfth D is tr ic t............ p238 195 Southern California . . . p228 194 Northern California. . . p 2 15 175 Portland .......................... p251 186 W estern W ashington. .p306 229 Eastern W ashington and Northern Idah o.p 230 193 Southern Idaho and Utah ............................. P250 221 P h o e n ix ............................. p255 220 Carloadings (num ber)1 Total .......................................p l l 3 p l0 9 Merchandise and Misc. .p 120 p l2 0 Other ............................... p 97 p 95 1 1923-1925 daily ave’rage = 100. pPreliminary. D ec. Feb. 173 175 152 188 209 Feb. Jan. D ec. 166 165 145 172 217 p l8 4 p l9 3 p l7 2 p205 p l9 3 160 150 175 174 177 165 109 116 101 126 137 113 Feb. 150 158 136 152 169 296 300 274 288 364 132 140 115 141 163 p l5 2 123 246 99 p l73 p224 150 179 306 309 121 145 p 93 p 86 p l0 4 plO l p 80 p 68 96 103 88 104 114 92 April 1, 1943 M O N T H L Y R EVIEW pay only. They are influenced by overtime work at the higher overtime rates of pay and some part of the differ ences between industries therefore reflects the varying length of the average workweek prevailing in mid-Feb ruary. Average hourly earnings in shipbuilding have been among the highest received in the district and the ability of the shipbuilding industry to attract workers from other activities has been an important factor in its marked ex pansion. That the aircraft industry, in which average hourly earnings were lower, was able to continue expand ing sharply despite the drain on its personnel is explained by the fact that much of the work performed in airframe plants can be done by women. Recruiting of women for the industry has progressed rapidly since mid-1942. More than 92,000 women wage-earners, a large proportion of the total, were employed in California plants during Jan uary 1943, compared with 12,000 in May 1942 and less than 500 in February 1941 when total wage-earner em ployment in California plants exceeded 60,000. In ship building, on the other hand, the proportion of women employed as wage-earners remains comparatively small. Wage Stabilization in the W est Coast Aircraft Industry Differentials in wage rates and earnings as between industries have been one factor influencing the shift of workers from job to job. Inequalities in the wage rates paid to different individuals in the same labor group within an industry and even within the same plant have also operated to increase labor turnover. In the Pacific Coast shipbuilding industry, wages for given occupations among the various yards, and among individual workers in the same yard, have attained a high degree of uniform ity as the result of a series of wage stabilization agree ments first effective in April 1941. In the West Coast aircraft industry, substantial progress was made toward wage stabilization and standardization under the ruling of the War Labor Board on February 4, 1943, affecting the nine major West Coast aircraft companies and their employees in California and Washington. This decision covered both wage rates and job classifications. It pro vided for a general wage increase of 4 cents an hour in Washington, but denied a general increase to California employees. It is estimated, however, that as a result of the 27 job classification plan recommended, about half of the California employees would receive increases averaging 7 Yz cents an hour. Under this plan, known as the South ern California Aircraft Industry Plan, ten grades of jobs are to be established and the number of rated occupations will be reduced by 75 percent. The War Labor Board based its decision on wages on a strict interpretation of the Administration’s stabiliza tion program and the Little Steel formula. This decision granted smaller wage increases than had been proffered by certain of the employers concerned, and allowed a substantial differential between wage rates for less skilled labor in aircraft and in shipbuilding to remain. It split the public members of the Board and elicited a strong protest from labor. Department Store Trade Customarily, retail trade in the Twelfth District is duller in February than in any other month of the year except January. This year, however, February trade was unusually active. This bank’s adjusted index of depart ment store sales advanced to a record peak of 238 percent of the 1935-39 average from 195 in January and an average of 192 in November-December. Preliminary data indicate that the index declined to about 186 in March. It is interesting to note that the dollar value of department store sales in February was equivalent to average December trade during the period 1936-1940. This sharp expansion in consumer buying was caused largely by fears of imminent rationing of clothing incited by the announcement of shoe rationing on February 7. Its abruptness and extent reflect the large volume of purchasing power held by the public and available for use in the market. In January and February department store stocks on hand were approximately the same as a year earlier when sales were 24 percent lower. Since September 1942 the volume of new orders placed by department stores has exceeded merchandise received by a considerable margin. As a result, the volume of orders outstanding has risen continuously. On February 28, orders outstanding were equivalent to 141 percent of stocks on hand, compared with 75 percent a year earlier and 45 percent on February 28,1941. C h a nges in th e T w elfth District Banking Structure — 7942 in the number of banking offices was the accommodations available to the public. By and large, the most noticeable change in the banking structure of the net result was an elimination of duplicate facilities with Twelfth District during 1942. At the year-end, 14 fewer an accompanying reduction not only in costs of operation banks and 13 fewer branches were in operation than on but also in the use of needed manpower and equipment. December 31, 1941. The number of banks has declined A total of 15 banks discontinued operations in the dis each year over the past decade, but the decrease in the trict in 1942. O f these, 10 were nonmembers and five were number of branches in 1942 represents the only interrup members of the Federal Reserve System. One former tion during the period to the persistent and offsetting nonmember bank was admitted to membership and the extension of branch banking. In practically all instances one new bank organized during the year, a state-chartered banks or branches discontinued during 1942 were consoli institution, also applied for and was admitted to member dated with offices in the same neighborhood, and in no ship. The 274 member banks accounted for 89.6 percent case was there appreciable curtailment in the banking •of the resources of all district banks on December 31, C o n t r a c t io n 28 April I, 1943 FEDERAL RESERVE BANK OF SAN FRANCISCO 1942. A year earlier, 2 77 member banks accounted for 88.2 percent of the total. O f the 15 banks which ceased operations, two in Wash ington and one in California liquidated voluntarily, and B B r a n c h a n k A ssets — T D w e lfth is t r ic t (assets in thousands of dollars) Member t— Branch Banks— 1941 1942 Arizona ................. 78,854 126,242 California ............ 4,436,506 5,620,869 Idaho ...................... 93,758 140,002 Nevada .................... 47,000 68,187 385,022 578,547 Oregon ................... Utah ........................ 57,374 96,431 W a s h in g t o n .......... 571,106 792,193 Twelfth D istrict. .5,66 9,6 20 7,422,471 Nonmember /—Branch Banks 1941 1942 6,020 9,054 432,350 484,782 3,792 4,909! 120 2,845 5,128 8,862 3,662 6,053 79,156 96,052 530,228 612,557 Ratio Branch Bank Assets to A ll Bank Assets 1941 1942 89.7 94.4 83.3 83.9 70.2 71.4 82.3 83.1 82.0 82.8 26.8 30.4 75.7 71.9 80.5 80.4 aFigures as of June 30, 1942. five in California, four in Idaho and one each in Oregon, Utah, and Washington were absorbed by other banks. Three of the banks absorbed, two in Idaho and one in Oregon, have since been operated as branches of the state wide branch systems with which they were merged. The three branches resulting from absorption of pre viously independent banks were the only new branches B a n k s in O p e r a t io n (Figures as of December 31. -M em ber B ankst—Number—> r -----------Asajets------------1942 1941 1942 1941 Arizona ........................ California1 ................... Idaho ............................. . Nevada ........................ Oregon ........................ U t a h ................................ W ashington ............... Twelfth District . ,.. established in 1942, while 16 branch offices were discon tinued. All but one of the branch offices discontinued had been operated in California and 14 had been units of large branch systems. In all cases, the business of the discon tinued branches was consolidated with other offices in the close vicinity. B r a n c h B a n k s N o. of Bks. December 31, 1941 Arizona . . . . . 8 California . . . . 2 2 0 . , 50 12 73 Utah . . , 60 Washington . .137 in O p e r a t io n — T w e lfth D is t r ic t -N u m ber of Branches•----- Operated by----- > State N onNat. M em . M em . Total Bks. Bks. Bks. Banks Operating —BranchesA State N onNat. M em . M em . Total Bks. Bks. Bks. 3 32 7 3 6 5 10 2 9 6 2 2 2 6 0 7 0 0 0 0 1 1 16 1 1 4 3 3 25 850 37 11 68 12 8,7 21 683 35 10 64 8 83 0 125 0 0 0 0 1 4 42 2 1 4 4 3 Total . . . .560 66 29 8 29 1,090 904 126 60 December 31, 1942 Arizona . . 8 California . . . . 2 1 5 . . 46 . .. 12 72 , . , 59 Washington . .134 3 32 7 3 6 5 10 2 9 6 2 2 2 6 0 7 0 0 0 0 1 1 16 1 1 4 3 3 25 835 39 11 69 12 86 21 673 37 10 65 8 82 0 121 0 0 0 0 1 4 41 2 1 4 4 3 Total . . . .546 66 29 8 29 1,077 896 122 59 — T w e lfth D is t r ic t Assets in thousands of dollars) -Nonm em ber B anks( As¡sets----------- \ /"-Num ber 'x 1941 1942 1941 1942 r - Number-^ 1942 1941 -A l l Banks r ----------- A ssets 1941 — 1942 113 28 8 32 34 57 5 113 26 8 31 34 57 82,045 5,191,111 118,051 54,908 436,925 189,407 719,034 130,643 6,561,598 175,419 79,660 653,730 288,537 1,063,030 3 107 22 4 41 26 80 3 102 20 4 41 25 77 12,518 650,997 20,967 2,318 38,741 37,997 140,050 12,707 717,634 27,574 5,687 55,243 48,785 172,016 8 220 50 12 73 60 137 8 215 46 12 72 59 134 94,563 5,842,108 139,018 57,226 475,666 227,404 859,084 143,350 7,279,232 202.993 85,347 708,973 337,322 1,235,046 277 274 6,791,481 8,952,617 283 272 903,588 1,039,646 560 546 7,695,069 9,992,263 in clu d e s branches of Bank of California N . A ., San Francisco, located in Portland, Seattle, and Tacoma- Securities A vailable— S econ d W a r Loan Drive United States 2y2% Treasury Bonds—1964-69 To speed Victory and to meet your investment needs there is no safer or more vital investment to be made today than these 2 ^2 ’s. These bonds are available in unlimited amounts in coupon or regis tered form, in denominations as low as $500, and as high as $1,000,000. They are readily marketable and acceptable as bank collateral. Ideally suited for trust fund and estate investments, and to meet the requirements of most individual investors. A special feature provides that they may be redeemed at par and accrued interest for the purpose of satisfying Federal estate taxes. Issue price: par plus accrued interest from April 15, 1943 ex cept that no payment of accrued interest is required on individual subscription of $1,000 or less. United States of America 2 % Treasury Bonds of 1950-52 These bonds will find favor with individuals as well as with banks, savings and loan associations and corporations seeking a higher return than from shorter-term issues. They will be acquired by many as a secondary cash reserve, and provide added diversification in maturity schedules. Readily marketable and acceptable as bank collateral. Issu e p r ic e : par and accrued interest fr o m A p r il 15, 1943 e x cept that no payment of accrued interest is required on individual subscription of $1,000 or less. United States Treasury 7/s% Certificates of Indebtedness (Due April 1, 1944) Individuals and trusts often have funds for short-term invest ment which can be used to advantage in the purchase of Certifi cates of Indebtedness. These are issued in bearer form only, in denominations of $1,000 to $1,000,000. Can be used as bank col lateral. Issue price: par and accrued interest from April 15, 1943. United States Treasury Bills In addition to the new issues available for subscription during the period of the Second W ar Loan Drive beginning April 12, 1942, the weekly offering of United States Treasury Bills will continue to be made. United States War Savings Bonds—Series E United States Savings Bonds—Series F & G United States Treasury Tax Savings Notes—Tax Series C The above popular and widely held issues of Savings Bonds and Tax Notes will also be available for purchase under the same terms and conditions as heretofore. 29 M O N T H L Y REVIEW April 1, 1943 S u m m a ry o f N a tio n a l B u sin ess C o n d itio n s Released March 26, 1943—Board of Governors of the Federal Reserve System activity continued to advance in February and the early part of March. Retail sales of merchandise, particularly clothing, were exceptionally large in February but declined somewhat in March. Wholesale prices, particularly of farm products, ad vanced further. I n d u s t r ia l P Federal Reserve monthly index of physical volume of production, adjusted for seasonal variation, 1935-39 average = 100. Latest figure shown is for February 1943. DEPARTMENT STORE SALES AND STOCKS Federal Reserve monthly indexes of value of sales and stocks, adjusted for seasonal variation, 192325 average = 100. Latest figures shown are for February 1943. / / OTHER* ALL COMMOOlTIEi> 1 v A J Aj WSuv J V"" ^OTHERTHANFARMPROOU 1938 1939 1940 1941 D 1942 1943 WHOLESALE PRICES Bureau of Labor Statistics indexes, August 1929 = 100. Thursday figures; latest figures shown are for March 20, 1943. o m m o d it y P r ic e s Prices of a number of commodities advanced further in February and in the early part of March. Farm products have continued to show the largest increases and prices received by farmers in the middle of March are estimated to be about 30 percent higher than a year ago. Fruit and vegetable prices are considerably higher now than during the same season last year. Prices of bread grains and grains used for livestock feeding have ad vanced sharply in recent months and livestock prices have also risen further. In retail markets the largest advances have continued to be in food prices. In the latter part of February maximum levels were established for leading fresh vegetables following sharp price increases resulting in part from the restrictions on retail sales of canned and dried vegetables and fruits. B MEMBER BANK RESERVES AND RELATED ITEMS Wednesday figures. Latest figures shown are for March 17, 1943. is t r ib u t io n Department store sales increased considerably in February and the Board’s seasonally adjusted index rose to a new high level of 167 percent of the 1923-25 average. Previous peaks had been 143 in January 1943 and 138 in January and November 1942. The increase in February reflected a new buying wave that began early in the month and centered chiefly in clothing items. In the first half of March the buying wave subsided somewhat and sales declined from the high level reached during February. Freight-car loadings showed more than a seasonal rise in February and the first two weeks of March and the Board’s adjusted index averaged 4 percent higher than in Janu ary. Large off-seasonal movements of grain continued to be the most unusual feature of carloadings. C i r o d u c t io n Total industrial output continued to increase in February and the Board’s adjusted index rose to 203 percent of the 1935-39 average as compared with 199 in January. Larger output at coal mines, steel mills, and armament plants was chiefly responsible for the rise in the index. February deliveries of finished munitions, including a record of 130 merchant ships, considerably exceeded the previous month. Activity at steel mills reached the peak set last October. Operations averaged 98 per cent of the mills’ capacity, which has been increased since that time to a figure above 90 million tons of ingots annually. Lumber production, which declined in January owing largely to unfavorable weather, increased in February somewhat more than is usual at this season. Output of textile products remained at the high level of other recent months. Cotton consumption was slightly lower than the corresponding month of the previous year, while rayon and wool consumption were somewhat higher than last year. Shoe production, un changed from January, was close to the level set by the W ar Production Board order which limits output of shoes for civilians in the six months beginning March 1 to the number produced in the last half of 1942. Meatpacking declined less than seasonally after a reduction in January, while output of most other foods was lower. Coal output rose sharply in February with the general adoption of the six-day work week in the mines. Operations in the anthracite mines increased to the high level of last summer while output of bituminous coal was the highest in many years. The value of construction contracts awarded in February was about the same as in January according to reports of the F. W . Dodge Corporation. Total Federal awards for war construction remained at a level about one-third as large as during last summer. Federal awards for housing continued to decline in February. a n k C r e d it Excess reserves of member banks remained generally above 2 billion dollars during the first two weeks of March, compared with an average of about 1.8 billion during the latter part of February. During the four weeks ending March 17 total Reserve bank holdings of Government securities showed an increase of 470 million dollars. Purchases of special Treasury one-day certificates moderated the effect of large scale shifts of funds over the tax payment period. These purchases began early in March and on March 17 the certificate outstanding was 980 million dollars. Holdings of other United States Govern ment securities declined by 510 millions. Reflecting the payment of taxes in cash, money in circulation rose less rapidly early in March and declined slightly around the middle of the month. The gain in reserve funds occurred mainly at banks outside the central reserve cities ; at New York City and Chicago bank reserves remained close to requirements. In the four week period ending March 17 member banks in 101 leading cities increased their holdings of Government securities by 920 million dollars. Prices of Government securities continued steady. Demand deposits at banks in leading cities increased sharply over the four week period. There were also increases in interbank deposits, indicating accumulation of funds by country banks. J Ì0 4 A t M tf-tye&dlojK u d i t y J o s i tl t ? FREEDOM IS W O R T H W H A T E V E R IT COSTS You can write y o u /i answer in subscriptions to the APRIL 1 9 4 3 They Qiv& their LIVES . . . You J le n d your M O N E Y For description of securities available see page 28
@FedFRASER