The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Monthly FEDERAL RESERVE B A N K OF S A N FRANCISCO A P R I L 1945 The San Francisco Conference and Coordinate International Agreements h e United Nations Conference on International Or ganization in San Francisco is one of a continuing T series of inter-Allied conferences and discussions. The objectives of these discussions have been two-fold: to seek agreement on broad principles in a number of fields, and to set up the machinery for continuing consultation and agreement among national governments and for in ternational action when that is desirable. The proposed agreements and organizations outlined below do not cover the complete list of problems calling for interna tional action, nor are all of these proposals in final form. No attempt is made here to discuss or evaluate the nu merous issues which have arisen in connection with them, but merely to indicate the forms which joint discussions and actions have taken so far. The Organization to be drawn up at the San Francisco Conferences is to serve two basic purposes. It would, first, deal specifically with the problems of maintaining peace and security. It would constitute an agreement among the participating nations to settle disputes peace fully among themselves and to take diplomatic, economic, and if necessary military action against nations threaten ing war. It would provide an organization to study dis putes between nations, to propose peaceful solutions, and to prescribe measures necessary to preserve peace. Sec ondly, in recognition of the interdependence of political, social, and economic problems, the Organization is to act as a coordinating agency for the activities of various other bodies which are proposed to deal with specific problems in these fields. The structure of the world Organization proposed by four nations at Dumbarton Oaks and which forms the basis for present consideration by all the United Nations at San Francisco reflects this two-fold purpose. Its two chief organs would be the Security Council and the Gen eral Assembly: the former is charged with the mainte nance of international peace and security, while the latter would be primarily concerned with defining the under lying political, economic, and social prerequisites for a peaceful world. The General Assembly is intended to meet annually to study and discuss constantly all aspects of international problems, to coordinate the activities of various specialized agencies, and to recommend to mem ber nations policies in the common interest. All members wrould be represented in the General Assembly and would have an equal voice in its decisions; most decisions would require only a simple majority. The Assembly would be empowered only to recommend action and not to take measures to enforce it. The Security Council would meet continuously to rec ommend and encourage the peaceful settlement of dis putes between nations; to determine when a threat to peace exists; and to prescribe measures, in which mem bers wrould be obligated to assist, to meet such a threat. In recognition of the primary responsibility of the major powers to enforce the decisions of the Council, they would have a predominant voice in the Council. Of the eleven seats on the Security Council, five would be held perma nently by representatives of the five major nations, and the remaining six would be filled by representatives of other nations, elected for two-year terms by the Assembly. The Economic and Social Council would be composed of the representatives of 18 countries, elected for threeyear terms. It would meet continuously. Its work would be carried on through expert commissions, which would collect and analyze information, make special studies under direction of the Economic and Social Council, and act as advisory agencies to it and to the Assembly. A further important function of the Economic and Social Council would be to coordinate the activities of various specialized organizations set up in accordance with spe cially negotiated international agreements in a number of fields. These organizations differ widely in scope and powers, and their relation to the general international Organization would therefore be determined by agree ment between each such agency and the Economic and Social Council. International agreements on a variety of subjects have been or are now being negotiated. They have not come as parts of an integrated and symmetrical program, but rather as attempts to reach agreement on certain limited aspects of the economic and social relations between na tions that are generally admitted to require cooperative action. Relief and rehabilitation of war-devastated coun tries, common action to raise standards of living and promote the welfare of labor and rural populations, the regulation of international civil aviation, and international monetary stabilization are some of the subjects on which ★ tyosi V ictouf, ★ ßu4f> W an ßan d i ★ Ke&p. ^Uem ★ 34 FEDERAL RESERVE BANK OF SAN FRANCISCO agreement has been reached or proposed agreements have been drafted. Relief and rehabilitation in liberated areas have been recognized as responsibilities not only from a humani tarian viewpoint, but as a pressing military necessity. The United Nations Relief and Rehabilitation Adminis tration was established by 44 United and Associated Na tions in an Agreement signed November 9, 1943. It is a temporary organization which provides for the contribu tion of supplies and assistance by countries not invaded by the enemy to peoples in liberated areas. U N R R A is composed of a Council, with one representative for each of the 44 member governments, which meets not less than twice a year; a Central Committee of representatives of China, Russia, United States, and the United King dom, which is empowered to make emergency decisions if necessary, subject to later review by the Council; a number of standing committees, which advise the Coun cil and the Central Committee; and a staff under the Director General. U N R R A , in cooperation with the combined boards,1 recommends distribution of supplies and services in ac cordance with its determination of need and in relation to available shipping and transportation facilities. It co operates with the Army in balancing essential civilian needs and demands for military supplies. Available sup plies are then allocated according to urgency of need; resources contributed by non-invaded countries are drawn upon to supply countries without the foreign exchange to pay for their requirements. The basic emergency re lief needs supplied by U N R R A are for food, clothing, and medical supplies. Qualified professional service in helping to establish public health agencies and for emer gency relief work are provided. Relief and repatriation of displaced persons is a vital necessity in which U N R R A assists military authorities and member governments. Lastly, some agricultural rehabilitation and a limited amount of industrial rehabilitation must be undertaken to help the destitute peoples of invaded areas to provide for themselves as speedily and efficiently as possible. U N R R A is to help provide essential materials and equip ment and to organize practical immediate programs in accordance with available resources. The proposed Food and Agriculture Organization of the United Nations is the outgrowth of discussions ini tiated at a Conference held at Hot Springs, Virginia, in May-June, 1943. The purpose of the Organization is to promote separate and collective action of member nations to raise levels of nutrition and standards of living, to secure more efficient production and distribution of agricultural products, and to better the condition of rural popula tions. In pursuance of this objective, the Organization would be authorized to collect, analyze, and disseminate information, to recommend national and international action on specific problems, to furnish technical assistance 1The Combined Food and Production and Resources Board— United States, Great Britain, and Canada ; and the Combined Raw Materials B o a r d United States and Great Britain. A p ril 1945 to member governments, and to require reports from members on progress toward achieving the general pur poses of the Organization and on action recommended by it. The Organization would be composed of a Confer ence which would meet at least annually and in which each member nation would have one representative; an Executive Committee, with from 9 to 15 members, which would exercise powers delegated to it by the Conference ; and a permanent staff which would carry on the day-today work of the Organization under the supervision of a Director-General. The proposed Constitution has been accepted by 18 nations and is now before the United States Congress. Acceptance by 20 nations would enable it to begin functioning. The International Labor Conference met in Philadel phia in April-May, 1944, w7ith representatives of 41 na tions in attendance. The Conference is the policy- making body of the International Labor Organization which was established in 1919 to study problems affecting the wel fare of labor and to make recommendations to member nations. This meeting, the first since 1941, was to con sider the organization policies and program of the ILO in relation to post-war needs for economic and social planning. The Declaration of aims and purposes adopted at this meeting of the Conference envisaged an extension of the Organization’s function to include study of the whole range of social, economic and financial conditions bearing on social welfare. Among the specific tasks with in the scope of the Organization were listed the promo tion of full employment and of rising standards of living, the study and application of policies with regard to wages, hours and conditions of work, the promotion of labor-management cooperation and recognition of the principles of collective bargaining, and the fostering of programs for the extension of social security measures. A committee to study the structure and practices of the ILO and its relation to other international agencies was authorized by the Conference. Each nation is repre sented in the Conference by four delegates, two represent ing the Government, one representing management and one representing labor. Each of the three sections speaks and votes independently. The Governing Body or execu tive council of the Organization is made up of 16 Govern ment representatives, 8 representatives of management and 8 representatives of labor, and exercises general su pervision over the work of the International Labor Of fice, which is the permanent expert staff. The International Civil Aviation Conference, held in Chicago during November-December 1944, was attended by representatives of over 50 nations. The convention drafted by the Conference provides for an International Civil Aviation Organization, consisting of an assembly of all participating nations and a 21-member council which is to have advisory and technical functions but is not empowered to regulate the economic phases of air transport. An interim organization is to begin functioning when it has been accepted by 26 nations. Technical an nexes drafted by the Conference provide for common A pril 1945 MONTHLY REVIEW rules and practices regarding communications, traffic control, aircraft registration, airworthiness requirements, et cetera. These are to receive further study. Two sep arate agreements were drafted by the Conference respect ing rights of transit and commercial entry. The Interna tional Air Services Transit Agreement is a multilateral agreement among nations to grant, for private or com mercial airline operations, the right of innocent passage and the right to land for non-traffic purposes (refueling, repair, emergency). The International Air Transport Agreement provides for the extension of these two rights, plus three others : the right to carry traffic from the coun try whose nationality the aircraft possesses to other coun tries ; the right to carry traffic from such other countries back to the country whose nationality the aircraft pos sesses; and the right of international airlines to carry traffic between intermediate countries. Countries accept ing the Transport Agreement may accept or reject the multilateral extension of the latter right. At present the Transit Agreement has been adopted by 37 countries and the Transport Agreement by 23. The International Monetary Fund was proposed, to gether with the International Bank for Reconstruction and Development, by the representatives of 44 nations meeting at Bretton Woods during July, 1944. The Fund proposal represents, first, an agreement by adhering na tions to establish as soon as possible and to maintain free and stable currency systems. It provides, second, a pool of foreign exchange reserves available, under certain specified conditions, to members whose trade relations with other countries are temporarily unbalanced. Subscriptions totaling $8,800,000,000 would be made by each member nation in its own currency and in gold in accordance with established quotas. Each nation would be entitled to draw upon the Fund, for specific purposes, in amounts not ex ceeding 25 percent of its quota in any one year and not exceeding in total the amount of its quota plus its gold contribution. In return for its privilege of drawing on the resources of the Fund, each member would agree to main tain the exchange value of its currency, agreed upon on admission to the Fund, within narrow limits (changes totaling more than 10 percent would not be permitted without the approval of the management of the Fund). It would agree also not to impose new restrictions on the making of payments and transfers for the settlement of current international transactions and to remove existing 35 restrictions as rapidly as conditions permit such action. The management of the Fund would consist of a Board of Governors, which would meet at least annually, on which each member would be represented by one gov ernor. The votes which the governor representing each nation is entitled to cast would be determined roughly in accordance with the quota of that country. The Execu tive Directors, who would be responsible for the general management of the Fund and for the appointment of the Managing Director, would meet in continuous session. There would be 12 directors of which the five members having the largest quotas would each appoint one and the remainder would be elected by the other members. The management of the Fund would have important powers in collecting information and in advising and consulting with members on any aspect of their economic situations. It would have considerable discretionary power to deter mine whether a country’s use of the Fund’s resources was in accordance with the purposes of the Fund. The International Monetary Fund is not intended to provide funds for long-term reconstruction and develop ment purposes. To meet these needs, the International Bank was proposed as a companion agency to the Fund. Members of the Bank would be required to be members of the Fund. The Bank would, in general, supply funds only to meet foreign exchange requirements growing out of projects for reconstruction and development and only such requirements as cannot be met on reasonable terms through regular investment channels. It would act, in the first instance, to promote and facilitate the flow of private capital. It could do this in two ways: by guar anteeing privately made loans or by borrowing on its own account and relending the proceeds to other countries. Of the Bank’s authorized capital of ten billion dollars, 80 percent would be subject to call only to meet losses on its guarantees or on loans made from funds borrowed by it. If funds were not available from private sources, how ever, the Bank could use the remaining 20 percent of its capital directly for making or participating in loans. This 20 percent could also be used if necessary for meeting losses incurred in its other operations. As in the case of the Fund, voting rights in the Bank would be determined roughly in accordance with the subscription of each mem ber. The Bank’s management would consist of a Board of Governors, Executive Directors, a President and staff, organized along lines similar to the Fund. Retail Credit Survey— 1944 1,000 retail firms in nine lines of business sub mitted reports to the Federal Reserve Bank of San Francisco in connection with the third annual Retail Credit Survey conducted on a nationwide basis by the Federal Reserve System. Figures furnished by retailers partici pating in the Survey covered 1944 and, for purposes of comparison, 1943 sales, receivables, and selected balance sheet items. Sales and receivables were segregated by type of payment. N early Since concerns participating in the Survey are con fined to credit-granting stores, changes in their total sales do not necessarily measure changes in the combined sales of all firms, including retailers selling for cash only, in the same and in other lines of trade. This applies particu larly to recent years, during which expansion in credit sales has been discouraged, and during which cash pur chases have been stimulated by unprecedentedly high average incomes. Most retail credit outstanding origi 36 A pril 1945 FEDERAL RESERVE BANK OF SAN FRANCISCO nates in the nine lines covered by the Survey, however, and figures of these businesses offer satisfactory measures of changes in retail credit sales and outstandings by type of payment. With the exception of household appliance stores, in which a moderate increase in cash sales was not sufficient to offset a further substantial reduction in credit sales, total Twelfth District sales of the nine lines included in the Survey advanced generally in 1944. The average in crease was about 10 percent. Available information indi cates that total retail trade, including sales of stores not covered by the Survey, advanced by about the same pro portion to a new high level. The upturn reflected prima rily a larger volume of merchandise sold and a further shift on the part of consumers to higher-priced and higher-grade merchandise. Unit price increases contrib uted far less to the rising dollar volume of sales than was the case earlier in the war. The sharpest gain in total sales in the Twelfth Dis trict was reported by hardware stores (20 percent), fol lowed by automobile tire and accessory stores (17 per cent). Department, men’s clothing, and women’s apparel stores reported smaller gains, averaging 12 percent, and automobile, furniture, and jewelry dealers reported still smaller increases, averaging 7 percent. Sales of most of these lines of business have increased continuously since before the war. Household appliance store sales have fallen off from year to year, however, and in 1944 the value of merchandise and service sales by this group was little more than a tenth as large as in 1941. Automobile dealer sales, which also include repairs and other services, have regained a small part of the 77 percent decline ex perienced in 1942 but remain little more than a fourth as large as in 1941. Both cash and credit sales increased in 1944. Cash sales, which have advanced more rapidly than credit sales since 1941, increased further in relative importance. All lines reported increases in cash sales in 1944, ranging from 10 to 24 percent, and the proportion of cash to total sales also increased in all cases. In several groups the shift to cash sales has been unusually marked during the war period. For the most part these have been stores in which cash sales wrere unimportant relative to total sales before the war; for example, furniture, jewelry, and household appliance stores. More than one-half the total sales of household appliance and jewelry stores were for cash in 1944, compared with approximately one-seventh three years earlier. On the other hand, there was prac tically no change in the ratio (42 percent) of cash to total sales of automobile dealers over the same period. At department and men’s clothing stores in which cash sales had about the same relative importance as cash sales of automobile dealers in 1941, the ratio advanced to well over 60 percent in 1944. Increases in credit sales from 1943 to 1944 were fairly general. The largest advances in the Twelfth District were reported by hardware stores (18 percent) and auto mobile tire and accessory stores (14 percent). Small gains not exceeding 6 percent were reported by automo bile dealers and department, furniture, and apparel stores. Jewelry »store credit sales were unchanged from the 1943 level, and among household appliance dealers credit sales receded sharply. Almost all gains in credit sales resulted from increased charge sales, since in all groups except hardware and men’s clothing stores instalment sales declined, although instalment trade at furniture and jewelry stores receded only one and two percent, respectively, in 1944. Retail in stalment sales at apparel and department stores, relative to total sales of those groups, are comparatively unim portant. Instalment sales are largest, with respect to total sales of the group concerned, at furniture and jewelry stores and automobile dealers. Wartime declines in open credit receivables have been considerably smaller than in instalment receivables, which, with instalment sales, were affected to a greater degree by production limitations on consumer durable goods. Charge receivables of District firms for the nine lines combined declined by about a third in 1942, and fell off slightly further in 1943. In 1944, a 14 percent gain oc curred, and by the year end charge receivables were above the level of two years earlier, although remaining substan tially lower than in 1941. The gain in charge receivables during 1944 was fairly general, although at furniture and jewelry stores this item was unchanged. Increases re ported by stores in other lines of business ranged from 5 percent at hardware stores to 23 percent at department stores. S a l e s b y T y p e of P a y m e n t , A c c o u n t s R e c e iv a b l e , a n d I n v e n t o r ie s Kind of store A u t o m o b ile ........................ Auto tire and accessory. D ep artm en t........................ Furniture ........................... Hardware ........................... Household appliance. . . . Jewelry ................................ M en’s clothing.................... W om en’s apparel............... Total .................................... of stores ting sales1 234 90 91 217 63 100 59 71 46 971 Percent change in sales -1944 compared with 1943----(---------Credit salesReg. InstalCash Total ment charge sales sales + + + + + — + + + + 7 17 12 6 20 12 7 13 10 10 + 12 + 24 + 16 + 18 +22 + 10 + + + + 15 17 19 17 + 4 + 6 + 2 + 14 + 18 — 29 0 + 6 + 1 + 4 + + + + + — + + + + 16 16 9 6 16 26 7 6 3 7 — 8 — 9 — 16 — 1 + 65 — 40 __ 2 + 1 — 7 — 5 Ratios of cash and credit sales to total sales ----------------------------- (in percent)------------------- *--------,----------------- Credit sales-----------------Regular InstalCash —sales— -T o t a l-charge—N — ment— 1944 1943 1944 1943 1944 1943 1944 1943 42 33 64 28 42 54 51 67 55 50 41 32 62 25 41 43 48 64 51 48 58 67 36 72 58 46 49 33 45 50 59 68 38 75 59 57 52 36 49 52 32 62 33 31 54 37 14 31 36 34 29 62 34 31 56 43 14 33 38 34 26 5 3 41 4 9 35 2 9 16 30 6 4 44 3 14 38 3 11 18 Percent change 1944 compared with 1943 t-------------(year end)------------- \ Accounts Inventories receivable (at retail) + + + — + — — + — + 15 11 17 1 7 30 1 15 1 6 — 16 0 — 9 — 14 + 12 — 5 + 9 — 11 + 1 — 8 1 Stores reporting inventories and stores reporting accounts receivable are not entirely the same as those reporting sales but the differences are small in almost all cases. A pril 1945 M O N T H L Y REVIEW Instalment receivables declined by nearly one-half in 1942, were halved again in 1943, and receded 6 percent further in 1944. The largest declines in instalment receiv ables since 1941 were reported, as would be expected, by automobile, furniture, and other stores featuring durable consumer goods. Changes during 1944 in instalment re ceivables showed mixed tendencies. In contrast with the overall decline of 6 percent, instalment receivables of automobile dealers, and hardware and men’s clothing stores advanced from 11 to 15 percent. These changes reflected, in the case of automobile dealers, a substan tial decline in the volume of instalment paper sold; in the case of hardware and men’s clothing stores, an up turn in instalment sales during 1944. Instalment receiv ables of other businesses declined in that year, in degrees roughly proportionate to the respective declines in in stalment sales. Inventories wrere reduced in several lines of trade dur ing 1944, continuing, in some instances, a process of liquidation in effect since 1941. In general, the most rapid wartime declines took place in lines where merchandise scarcities could not adequately be met by saleable “ vic tory model” substitutes. Automobile dealers’ stocks are a case in point. These declined 48 percent between the end of 1942, the first date for which Twelfth District fig ures are available, and the end of 1944. Stocks of auto mobile tire and accessory, furniture, and household ap pliance stores likewise receded markedly. In other lines of business small declines or even increases were reported over the war period. Businesses in which inventories in creased include department, hardware, and jewelry stores. Department store stocks, which are considerably larger than those of any other business classification covered by the Survey, attained a record high in mid-1942, and de spite increasingly severe shortages of many standard 37 items of merchandise, have subsequently remained above prewar levels. With the exception of hardware and jewelry stores, business firms generally increased their cash holdings in 1944, and all groups increased their holdings of U. S. Government securities substantially. Increased liquidity has been characteristic of most retail operations during the past two years, owing in large part to the freeing of working capital as retailers found themselves unable to replace inventories. In 1944, reductions of cash holdings at hardware and jewelry stores were accompanied by inventory gains. Notes payable to banks, wThich had declined sharply in all business classifications in 1943, rose somewhat in 1944 owing entirely to substantial increases at hardware, household appliance, and women’s apparel stores. Other current liabilities including trade payables also increased in 1944 after a decline in 1943, but the increase was spread more widely among the various lines. In the United States as a whole, total consumer credit arising out of retail sales amounted to 2.6 billion dollars at the end of 1944, compared with 5.5 billion at the end of 1941, and an average of 4.3 billion during the five-year period 1936-40. A shrinkage in instalment credit has ac counted for the bulk of the contraction in short-term con sumer credit since 1941, in large part because of war time production limitations on automobiles and other durable goods and the restrictions of Regulation W . A l though the importance of consumer credit in the national economy is currently much less than before the war, a re laxation of Government controls after the end of hos tilities will be conducive to a marked expansion in con sumer credit. N o te : More detailed tabulations based upon the 1944 Retail Credit Sur vey are available upon request. Changes in Twelfth District Banking Structure— T944 he number of banks in the Twelfth District declined during 1944 from 534 to 525, but the number of bank T ing offices, includiiig branches and facilities, increased from 1,667 to 1,691. Further expansion of Government security holdings raised total assets of Twelfth District banks to 16 billion dollars at the end of 1944 from 13 billion a year earlier. The number of member banks was reduced from 273 to 270, but member banks held about the same share of total assets at the end of the year, just over 90 percent, that they held in 1943. During 1944, eight banks, six of which were member banks, were absorbed by other banks and one nonmem ber institution liquidated voluntarily. Six previously in dependent nonmember banks in Washington were com bined to form a new branch system. Five new banks, all but one in the Pacific Northwest, were established. Three institutions, including one new bank, became members of the Federal Reserve System. Sixteen branch offices were opened last year, but only four represented additional banking offices, as eleven branches replaced unit banks, and one branch office was discontinued. Banking services at military and naval posts in the Twelfth District were further increased. In addition to six branches of District banks at military installations, 73 facilities were in operation at the end of the year, com pared with 55 a year earlier. During 1944, 22 facilities were established and four discontinued. The Twelfth Dis trict, with its many army and navy establishments, has more such banking offices than any other Federal Re serve District. These facilities, all established in 1943 and 1944, are temporary offices that accept deposits and ex tend other banking services, such as delivering funds for payrolls, cashing pay checks, providing cashiers’ and travelers’ checks, and handling United States savings bonds and stamps. Banks operating military banking fa cilities are permitted to invest, within specific limits, in special 2 percent depositary bonds of the United States redeemable by the Treasury upon short notice at the option of either the depositary bank or the Treasury. 38 A p ril 1945 FEDERAL RESERVE BANK OF SAN FRANCISCO The accompanying chart shows changes over the past 20 years not only in unit and branch banks but also in member, both state and national, and nonmember banks and, in 1934 and subsequent years, in insured and nonNUMBER OF BANKING OFFICES AND TOTAL ASSETS OF BANKS, BY CLASSES—Twelfth District NUMBER 2500r member banks are insured banks. At the year-end, there were IS noninsured banks in the District and only eight of these accepted deposits. All but about 20 of all Twelfth District banks accept deposits. Virtually all of those not accepting deposits are trust companies or branch agencies of foreign banks. Of the more than 500 banks accepting deposits, 23 are savings banks, which do not accept demand deposits, and three of these are mutual savings banks located in Oregon and Washington. B r a n c h B a n k s In O p e r a tio n — T w e l f t h D ecem ber 31, 1944 and Number of branches1 operated by---------N NonMember member (— banks— <—banks—^ (-------- Banks operating branches------------^ Non(—Member-^ r- member— > t------------ 1944 Arizona ........................2 California ................... 16 I d a h o .............................6 Nevada ........................3 Oreg-on ........................2 Utah .............................2 W ashington ............ ..8 1943 1944 2 1 16 16 6 1 3 1 2 4 2 3 8 4 Tw elfth D istrict. . . 39 39 30 19431944 1 16 1 1 4 3 3 29 D is tr ic t 1943 1943 23 21 794 3837 1312 6564 99 8785 1,029 1944 4 791 41 2 1 4 4 8 1,019 64 1943 4 41 2 1 4 4 3 59 3 N ot including 73 facilities at war centers in 1944 and 55 in 1943. In terms of banking structure, there are two principal differences between the Twelfth District and the nation: ( 1 ) the much greater importance in this District of branch banking, which is in several instances statewide; and (2 ) the much lesser importance in this District of savings banks, especially mutual institutions. The Dis trict has its share of savings deposits, but savings departB ran ch B a n k A sse ts— T w e lfth D ecem ber 31, 1944 and D is tr ic t 1943 (assets in thousands o f dollars) C a lifo r n ia .......... U t a h ................... W ashington . . 1929 Member (----- branch banks----- ^ 1944 1943 212,768 169,371 9,044,755 7,374,706 245,964 187,527 105,800 87,352 953,373 777,236 129,418 110,207 1,434,373 1,008,844 Twelfth District 12,126,451 1934 Year-end figures. insured banks. Little more than half of all Twelfth Dis trict banks are member banks, but they hold nine-tenths of all bank assets. Most nonmember banks as well as all 856,244 726,791 Branch bank as per cent of all bank assets 1944 1943 92.5 92.6 84.5 84.4 73.9 72.7 87.6 86.9 82.1 82.9 29.1 29.1 75.4 68.1 81.4 80.4 ments of banks accepting demand deposits are of much greater importance here than elsewhere. This is shown by the fact that at the end of 1944 member banks in the Twelfth District had 12 percent of total demand deposits N u m b e r a n d A s s e t s o f B a n k s in O p e r a tio n — T w e l f t h D ecem ber 9,715,243 Nonmember branch banks—\ 1944 1943 13,373 10,534 645,954 562,645 14,466 10,698 5,393 4,184 17,257 12,711 10,347 8,274 149,454 117,745 31, 1944 and D is tr ic t 1943 (assets in thousands of dollars) — A ll banksr Number f------------- Assets--------------^ 1944 1944 1943 1943 A r iz o n a ........................... California1 .................... Idaho ............................. N e v a d a ........................... O r e g o n ........................... U tah ................................ W a s h in g t o n ................. ____ ,.. . .... .. . . ,. Twelfth D istrict.......... .,. ( Member banks— Number t--------------Assets 1944 1943 1944 1943 244,481 11,462,715 352,488 126,861 1,182,158 479,606 2,100,764 194,303 9,402,031 272,584 105,295 953.050 407,164 1,655,189 5 110 26 7 32 34 56 5 112 26 8 32 34 56 220,053 10,470,163 306,500 119,101 1,098,902 405,434 1,821,677 175,133 8,563,398 235,637 99,104 887,700 345,774 1,429,735 3 96 71 57 128 8 208 47 10 72 57 132 525 534 15,949,073 12,989,616 270 273 14,441,830 11,736,481 8 206 in c lu d e s Portland, Seattle, and Tacoma branches of the Bank of California N . A ., San Francisco. Nonmember banks----------- ^ iber /-----------Assets---------- N 1944 1943 1943 39 23 72 3 96 21 2 40 23 76 24,428 992,552 45,988 7,760 83,256 74,172 279,087 255 261 1,507,243 20 2 19,170 838,633 M ember bank as percent of all r~bank assets—-, 1944 1943 65,350 61,390 225,454 90.0 91.3 87.0 93.9 93.0 84.5 86.7 90.1 91.1 86.4 94.1 93.1 84.9 86.4 1,253,135 90.5 90.4 36,947 6,191 A pril 1945 39 MONTHLY REVIEW of individuals, partnerships, and corporations in all member banks in the nation, but had more than 20 percent of all member bank time deposits of individuals, partner- ships, and corporations. The three mutual savings banks held only 1 percent of the national total of deposits in such institutions. Review of Business Conditions— Twelfth District Banking and Credit the Seventh War Loan Drive opens, the amount of JrTL bank deposits and coin and currency in the hands of potential subscribers in the Twelfth District is somewhat above the level at the opening of the Sixth Drive. In spite of this, the greater emphasis, in terms of kinds of securi ties available and restrictions upon subscriptions, that has been placed upon sales to individuals makes widespread participation necessary if goals are to be met. While the overall District goal is only slightly higher than for the Sixth Drive, the goal for sales to individuals is well above both goals and sales in previous drives. Banking conditions at the first of the year reflected the conclusion of the Sixth War Loan Drive. Bank loans and investments were at high levels because of the increases during the drive in Government security holdings and in loans for purchasing and carrying Government securities. Demand deposits other than Government and interbank were down appreciably from their pre-drive high, as funds had been shifted from private and state and local government accounts to war loan deposit accounts of the Treasury. Excess reserves of member banks were up somewhat from October and November but did not in crease as much as the increase in reserve-free war loan deposit accounts might have indicated, because of the newly-created deposits which resulted from the expan sion in bank credit. Primarily because of market pur chases of Government securities by the banks, about onethird of the securities sold in the Sixth Drive were, in ef fect, sold to the banking system, although direct sub scriptions of commercial banks for new securities were, as usual, accepted only on a very limited basis. During the subsequent four months, the usual inter drive pattern has been followed. Funds have been shifted through Treasury expenditure from war loan deposit to other accounts subject to reserve. By the end of April, de mand deposits, exclusive of Government and interbank, were about where they had been prior to the Sixth War Loan Drive both in the District and in the nation. Cur rency in circulation has continued to increase steadily so far in 1945, with the exception of the brief periods of post-Christmas and of income tax payment reductions, and time deposits have continued their persistent rise, as little affected by income taxes as by war loan drives. Total loans and investments of weekly reporting mem ber banks throughout the nation have declined somewhat since the Sixth Drive, although they are well above the pre-Sixth Drive level. Loans for purchasing and carrying Government securities have declined and there has been some shrinkage in total Government security holdings. Bond holdings of reporting banks have continued to rise but have not offset the decline in other issues, especially Treasury bills. On the other hand, Reserve System hold ings of Governments have increased in order to meet the increase in required reserves associated with the increase in deposits subject to reserve and to offset the continuing drain of the demand for currency upon reserves. In the Twelfth District, although there has been some reduction in excess reserves from the first of the year, net Treasury disbursements in the District have provided ad ditional reserves which have eased the pressure of in creasing required reserves and the demand for currency. Consequently, while loans have fallen off somewhat, Gov ernment security holdings of weekly reporting member banks have been well maintained, and were in fact slightly higher at the end of April than at the end of 1944. There has been, however, a substantial decline over the period in Treasury bills held by reporting banks. Also, although as yet limited to a few banks, borrowings by member banks from the Federal Reserve Bank of San Francisco appeared in recent weeks for the first time in more than a decade, except for a few instances of negligible amounts borrowed for brief periods. Such borrowings averaged 31 million dollars on the last three Wednesdays in April. Banking and Credit— Distribution and Trade— a s Averages of Wednesday figures (millions of dollars) Condition items of weekly reporting member banks Total loans.................................................. C om ’l., ind., & agric. loans. . . . . . Loans to finance transactions in : U . S. Government securities. . . Other securities ............................. Real estate loans.................................. A ll other loans...................................... Total in vestm en ts.................................... U . S. Government securities.......... A ll other secu rities............................. Adjusted demand deposits................... f----------Mar. 1.007 501 23 14 — — — — __ 5 2 0 2 4+ — 2 8 6 4- io + 8 + 2 + 47 — — _ 1944 Mar. 48 16 4- 21 + 1 28 3 0 — 1 4- 31 + 41 — 111 4 - 80 — 204 4 + 19 — 1 45 + 973 4919 + 54 + 531 + 364 — 76 2,776 + + 35 33 4- 79 + 76 + 756 + 729 1,715 + 35 4- 64 + 326 59 53 296 98 5 071 4,700 371 Tim e deposits ........................................... United States Government deposits. 1,762 826 Coin and currency in circulation Total (changes only) ............................. Fed. Res. Notes of F. R. B. of S. F. Member bank reserves............................... 1945— ------------\ Jan. Feb. _ __ Index numbers, 1935-39 daily average= 100 W ith seasonal Without seasonal / ------- adjustment-------- N f --------adjustment-------- >, /---------1945---------N 1944 M ar. Feb. Jan. M ar. Department store sales (value)1 Twelfth D is tr ic t................... 249 257 247 219 Southern California............ 255 260 256 226 Northern California............ 233 234 226 201 Portland .................................. 240 256 212 213 W estern W a s h in g t o n ------ 298 305 298 259 Eastern W ashington and Northern Idah o................. 228 266 247 207 Southern Idaho and U ta h . 234 256 238 220 Phoenix .................................. 269 296 283 222 Carloadings (num ber)2 Total ......................................... 116 136 129 rl2 0 Merchandise and m is c .. 128 156 146 rl3 0 O t h e r .................................... 83 111 107 107 ,--------- 1945— ^ 1944 M ar. Feb. Jan. Mar. 232 242 219 220 270 217 232 196 217 251 197 215 182 172 228 198 209 183 191 225 198 208 282 186 193 269 164 170 244 169 190 226 100 112 119 129 77 91 102 r 112 123 rl21 77 100 1 Revised series. Tabulations of back figures for these and other cities and areas will be made available upon request. 2 1923-25 daily average = 100. r Revised. April 1945 FEDERAL RESERVE BANK OF SAN FRANCISCO 40 Other supported commodities Support Prices for 1945 The W ar Food A d m in is tr a tio n has announced th e d e t a i ls o f p r i c e s u p p o r t s d u r i n g t h e f o r t h c o m i n g s e a s o n f o r a ll c o m m o d i t i e s e x c e p t f r u i t s f o r d r y i n g a n d c a n n i n g , w h i c h w i ll b e a n n o u n c e d l a t e r a f t e r c o n f e r e n c e s b e t w e e n G o v e r n m e n t a g e n c ie s a n d p r o d u c e r s a n d p a c k e r s . S u p port p ric e s fo r crops grow n in 1945 r e m a in in e ffe c t t h r o u g h J u n e 3 0 , 1 9 4 6 . T h e 1 9 4 5 s u p p o r t p r ic e s f o r liv e sto c k and liv e s to c k p ro d u c ts e x te n d to D ecem ber 31, 1 9 4 5 , e x c e p t th a t fo r h o g s a n d d a ir y p r o d u c ts th e p e r io d is e x t e n d e d t h r o u g h M a r c h 3 1 , 1 9 4 6 . T h e re are fe w d iffe r e n c e s b e tw e e n th is y e a r ’s p r ic e s u p p o r t p r o g r a m a n d th a t o f 1 9 4 4 . N o n e w c o m m o d itie s a r e b e i n g s u p p o r t e d , a n d n o n e is b e i n g d r o p p e d f r o m t h e li s t o f s u p p o r t e d c o m m o d i t i e s . T h e 1 9 4 4 w h e a t a n d c o t to n p u r c h a s e p r o g r a m s d o n o t a p p ly to th e 1945 crop , a n d n o n - r e c o u r s e lo a n s o n c o t t o n w i l l b e r e d u c e d f r o m 9 5 to 9 2 y 2 p e r c e n t o f p a r it y f o r 1 9 4 5 . A m o n g th e S te a g a ll P rice S u ppo r t P r o g r a m T welfth D for is t r ic t Basic commodities Corn.......................... . ................................. Cotton......................................................... Rice.............................................................. W heat......................................................... 1945 P ro d u c tio n C o m m o d it ie s 90 percent of parity as of Oct. I1 92 Y2 percent of parity as of Aug. I1 90 percent of parity as of Aug. I1 90 percent of parity as of July l 1 Steagall commodities Beans, dry Cleaned and bagged f.o.b. : Lima................................................... Pinto.................................................. Small white....................................... Thresher run on farms : Pinto.................................................. Small white..................................... Flaxseed At Los Angeles and San Francisco. At Portland............................................ Peas, dry..................................................... Potatoes Early and intermediate areas........... California early............................... Late areas.............................................. $7.75 per cwt. $6.00 per cwt. $6.75 per cwt. $4.50 per cwt.1 $5.50 per cwt.1 $3.20 per bu. $3.00 per bu. Also $5.00 per acre for flaxseed planted on goal acreage $4.50 per cwt.2 90 percent of parity as of Jan. 1 $2.20 per cwt. in April $2.05 per cwt. in May and June $1.95 per cwt. in July 90 percent of parity as of July l 1 H ogs............................................................ 90 percent of parity but not less than $13.00 per cwt. at Chicago or $1.75 below local ceiling prices3 Butterfat..................................................... Market price plus : 10c per lb., Jan.-March 17c per lb., April 10c per lb., May-June 13c per lb., July-Sept. 17c per lb., Oct.-Dec.4 M ilk.............................................................. Market price plus :5 60-80c per cwt., Jan.-April 25-45c per cwt., May-June 45-65c per cwt., July-Sept. 60-80c per cwt., Oct.-Dec.4 Chickens (except broilers and chick ens under Zx/2 pounds)...................... 90 percent of parity Eggs Candled................................................... Not candled.......................................... 27c per dozen 24c per dozen Turkeys....................................................... 96 percent of parity Barley....................................................................75-90c per bu.1 Fruits for canning and dryin g............ ..... N ot announced Grain sorghum s............................................... $1.60-$2.00 per cw t.1 H ay and pasture seeds............................. 6 R y e ......................................................................... 75c per bu.1 Sugar beets..................................................... ... $12.50 per ton7 Vegetables for canning Beans, snap................................................ ...$85.00 per ton7 Beans, green lim a.................................. ....$95-$115 per ton7 B eets............................................................ .... $19-$21 per ton7 Corn, sw eet................................................ ...$18.00 per ton7 Peas, green................................................ ... $83.50 per ton7 8 T om atoes..................................................... ...$25.25 per ton7 "W ool................................................................. .... Ceiling prices less transportation _______ and marketing costs 1 Non-recourse loans. 2 Farm price is this amount less processor’s or dealer’s margin. 3 Increased from $12.50 April 11. 4 This rate to apply through M arch 1946. 5 Supplementary payments vary by regions. M inim um applies to southern Idaho, maximum to southern California. 6 Non-recourse loans at support prices for 40 different seeds and seed mixtures. 7 Paid through processor for output of contracted acreage. Single amount is national average; actual support prices vary by areas. 8 Peas in pod, $50-$65 per ton. commodities there are also some changes. The support price for hogs was recently increased, and the schedule of supplementary payments for butterfat is considerably higher for the latter half of the year than last year’s sched ule. The support price for pinto beans when cleaned and bagged is reduced by 50 cents per cwt. and for lima and small white beans the support prices are increased by 25 cents. The loan price on thresher run pintos on the farm is reduced by $1.00 per cwt. Non-recourse loans on flax seed are increased by 20 cents per bushel in California and 5 cents per bushel in the Northwest. In addition there is a bonus of $5 for each acre planted to flaxseed, limited to the acreage goals established by the state and county War Boards. The dry pea support price is dras tically reduced in 1945 from $5.65 to $4.50 per cwt.1 1 The restrictions limiting price support to peas grown on goal acreage have been lifted. Prices for all dry smooth field peas, of designated varieties, will be supported. Production and Employment— Index numbers, 1935-39 average— 100 W ith seasonal f------- adjustment ------- ^ ,--------- 1945M ar. Feb. Industrial production1 . . . . 127 159 — — Refined oils2 ................. 138 W heat flour2 ................. ------ 141 156 — — Petroleum2 ................... Electric power2 .......... ------ 458 459 Factory employment and payrolls3 Employment Twelfth D istrict........................ 270 California ............ . . . . 301 310 Pacific Northwest 223 Oregon ............ 196 W ashington . . 239 Intermountain . . 137 Payrolls California ................. 626 653 1944 Jan. M ar. 148 161 — — 124 167 160 124 — — 457 481 274 r299 313 r356 231 232 210 198 243 252 132 132 664 r719 1 Daily average. 2 1923-25 average = 100. 3 Excludes fish, fruit, and vegetable canning, r Revised. Without seasonal f------- adjustment /---------1945- ------- V 1944 M ar. Feb. Jan. Mar. 112 116 115 133 238 221 239 233 114 123 118 124 138 156 160 122 137 136 135 125 427 420 423 448 300 625 266 308 218 188 236 124 268 r297 309 r354 224 229 199 196 239 248 121 121 647 653 r717 40A FEDERAL RESERVE BANK OF SAN FRANCISCO A pril 1945 INDUSTRIAL PRODUCTION National Summary of Business Conditions Released April 25, 1945— Board of Governors of the Federal Reserve System n d u str ia l activity was maintained at a high level in March. Value of retail sales was I at a record for this season of the year. I n d u s t r i a l P r o d u c t io n 1940 1942 1944 1940 1942 1944 Federal Reserve indexes. Groups are expressed in terms of points in the total index. Monthly fig ures, latest shown are for March. DEPARTMENT STORE SALES AND STOCKS Federal Reserve indexes. Monthly figures, latest shown are for March. WHOLESALE PRICES Output at factories and mines was maintained in March at the level of the preceding month, which was 236 percent of the 1935-39 average, according to the Board’s season ally adjusted index. A t iron and steel mills production continued to rise and was at about the same level as a year ago. Production of most nonferrous metals also continued to increase in March in response to military needs; zinc shipments rose to a new record level. Lumber pro duction, however, was 12 percent smaller in March than in the same month last year. Output of stone, clay, and glass products was maintained at the February level. In the machinery industries activity showed little change in March. Output of transportation equipment continued to decline owing to further curtailment of operations at shipyards. Aircraft production was maintained at the February rate. In most nondurable goods industries output showed little change from February to March and was at about the same level as in March 1944. Owing to increased military purchases in recent months, however, supplies available for civilians of such goods as food, textile, leather, and paper products were at the lowest level for the war period. The shortage of carbon black has continued to limit production of essential military and civilian tires and rubber products, but manufacturing facilities are being expanded for output of this critical material. In the chemical industry, production of explosives and small arms ammunition showed less increase than in recent months and output at other chemical plants was maintained at about the February level. Production of bituminous coal was at a slightly lower rate in March and declined further in the first week of April when wage contract negotiations interrupted mine operations. Output of anthracite increased in March and the early part of April and crude petroleum production was maintained in record volume. D is t r ib u t io n Department store sales in March showed a further sharp increase and the Board's seasonally adjusted index rose to 224 percent of the 1935-39 average as compared with 212 in February and 200 in January. In the first half of April sales continued large, after allowance for the usual post-Easter decline. Freight carloadings continued to rise in March and the early part of April, reflecting increased shipments of most groups of commodities except coal. In recent weeks, as a result of special efforts to move last year’s record wheat crop to market before the 1945 harvest, grain loadings have been in much larger volume than in the same period a year ago. Shipments of ore have also been much greater due to an early opening of the lake shipping season, C o m m o d i t y P r ic e s Prices of cotton, livestock, and some other farm products were higher in the third week of April than during March. Wholesale prices of industrial commodities, as a group, have continued to show slight increases in recent weeks. Bank Bureau of Labor Statistics indexes. W eekly fig ures, latest shown are for week ending April 14. MEMBER BANKS IN LEADING CITIES Demand deposits (adjusted) exclude U . S. G o v ernment and interbank deposits and collection items. Government securities include direct and guaranteed issues.Wednesday figures, latest shown are for April 18. C r e d it Banking developments during the latter half of March and early April, while fol lowing the usual interdrive pattern, were considerably influenced by the large volume of Treasury receipts associated with the March 15 tax date. Adjusted demand deposits at banks in leading cities and currency in circulation both decreased in the latter part of March but resumed their growth in April. The slackened rate of expansion in both deposits and currency was due primarily to tax payments by businesses and individuals. Required reserves of member banks increased by around 300 million dollars during the five-week period ending April 18. Excess reserves, which were at a temporarily high level in mid-March largely as a result of the reduction of Treasury deposits at the Reserve Banks in anticipation of tax collections, subsequently declined again to less than a billion dollars. An increase in Treasury and other deposits at Federal Reserve Banks in the latter part of March and early April and resumption of the currency outflowTcaused a drain on Reserve funds which was offset by a further increase of nearly 600 million dollars in Reserve Bank holdings of Government securities. A t banks in 101 leading cities, Government security holdings declined during the five weeks ended April 18 by 660 million dollars. Bill holdings were reduced sharply, re flecting to a considerable extent declines in the holdings of Chicago banks associated with the Illinois tax date. Certificate holdings declined generally while bond holdings continued to rise. Loans to others than dealers for purchasing and carrying Govern ment securities were reduced by 180 million dollars and commercial loans declined by 230 million dollars. SEVENTH WAR LOAN Summary of Information Regarding Securities Title of security Dated Due Cost price Yield Denominations Registration Redeemable for cash prior to maturity United States W ar Savings Bonds SERIES E 1st day of month in which purchased United States Savings Bonds SERIES F United States Savings Bonds SERIES G Treasury Savings Notes SERIES C % % Treasury Certificates of Indebtedness SERIES E-1946 l|/2% Treasury Bonds of 1950 2 !A % Treasury Bonds of 1959-62 21/ 2 % Treasury June 1,1945 June 1,1945 June 1,1945 June 15,1962 June 15,1972 1st day of month in which purchased 1st day of month in which purchased 1st day of month in which purchased June 1,1945 10 years from issue date 12 years from issue date 12 years from issue date 3 years from issue date June 1,1948 75% of maturity 74% of maturity value 100% of maturity value 100% value Varies— 2.90% if held to maturity Varies—2.53% if held to maturity $25 to $1,000 $25 to $10,000 Registered form only Registered form only At holder’s option, 60 days from issue date, on variable redemption schedule Varies—2 ^ % if held to maturity $100 to $10,000 Varies—1.07% if held to maturity (2) %% $100 to $1,000,000 Registered form only At holder’s option, At holder's option, on 1st of month on 1st of month following one following, one month’s notice, if month’s notice, if held for 6 held for 6 months (1) months 100% and accrued interest after June 1, 1945 (8) Inscribed form only December 15,1950 100% and accrued interest after June 1,1945(8) (9) 1 y2% Bonds of 1967-72 100% and accrued 100% and accrued interest after interest after June 1,1945(8) (9) June 1, 1945(8)(9) 2y*% 2% % $1,000 to $1,000,000 $500 to $1,000,000 $500 to $1,000,000 $500 to $1,000,000 Bearer form only Bearer or registered form Bearer or registered form Bearer or registered form At holder’s option, after 6 months, at 100% and interest (2) No No At Government’s At Government’s option, on or after option, on or after June 15, 1967, at June 15,1959, at 100% and interest 100% and interest No No Federal estate taxes only, on death of owner Yes Yes Yes Yes Acceptable in payment of Federal income, estate or gift taxes prior to maturity No No No Yes, during and after 2nd calendar month after month of purchase Use as collateral No No No For loans from banks only Salable in open market No No No No Yes, after June 30,1945 Yes, after June 30,1945 Yes, after Juno 30,1945 Yes, after June 30,1945 All investors (3) All investors (3) All investors All investors (6) (10) Individuals (6) (7) All investors (4) All investors (4) No limit No limit (6) No limit (6) No limit No limit Who may subscribe Individuals only Amount an eligible investor may buy Limited to $5,000 maturity value in one calendar year (5) Not more than $100,000 issue price of Series F and G together in one calendar year (1) On death of owner, redeem able at 100% after 6 months from issue date, if application is made within 6 months after death. (2) N otes owned by commercial banks bear interest only if used in paym ent of Federal taxes. (3) Com mercial banks perm itted to subscribe for only a limited portion of their savings deposits and certain time certificates of deposit. (4 ) Com mercial banks will not be perm itted to own until within ten years of m aturity. (5 ) Additional bonds m ay be purchased in coownership form in certain cases, and also when Series A Bonds are exchanged for Series JE Bonds during month in which peries A Bonds mature. Federal estate taxes only, on death of owner (6) Com m ercial banks permitted to subscribe for only a limited portion of their savings deposits and certain tim e certificates of deposit but m ay purchase in m arket after June 30, 1945. (7) The term “ individuals” includes partnerships (other than securities dealers and brokers) and personal trusts. Subscriptions will not be accepted from personal holding companies, corporate trusts, bonus funds, pension funds, or similar aggregations of individuals. (8) Subscriptions from others than individuals m ust include accrued interest to June 18, 1945, or such later date as paym ent is made to a Federal R eserve bank. (9 ) Accrued interest on subscriptions for $500 and $1,000 will be waived. (10) Subscriptions will not be accepted from securities dealers and brokers.