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April 1959
Revjew of Business Conditions . .
50
Farm Production Prospects-1959
57
Review of Business Conditions
A L THOUGH national economic recovery
_fl_ proceeded at an uneven pace during the
winter and early spring, the Twelfth District economy continued to expand rapidly.
Longer-term growth factors (including the
sustained influx of people and business firms
from other states, growing state and local
governmental expenditures, and Federal outlays for national defense) helped to maintain
the West's greater-than-national expansion.
Moreover, the current low level of fixed investment by business firms is presumably
having a more adverse effect on eastern areas
than on the Twelfth District, even though
plant and equipment surveys suggest that
business investment here bas declined relatively more than the national average. Business fixed investment, judging from industrial
patterns, accounts for a substantially smaller
proportion of goods and services produced in
this district than in the rest of the nation, while
demand by private households and Government is of greater importance.
Milita ry outlays buoy
District expansion
50
This Review has frequently noted the key
role played by defense-related Federal spending in growth of the western economy. Over
25 percent of total military prime contracts
awarded during the past several years have
gone to firms in this district, and in 1958,
with the highest net volume of prime contracts awarded since the Korean War, awards
to firms located here amounted to $6.8 billion-30 per cent of the national total. The
transition from manned aircraft to missiles
and other space-age weapons systems caused
fears that major aircraft fabricators (many of
which are located in this district) would be
hard pressed to compete effectively with
other types of firms for missile contracts, but
such bas not been the case. Aircraft firms experienced a net reduction in their order backlogs for new military planes amounting to
more than $3.4 billion in the past two years,
but most of them are actively engaged in the
development and production of missile systems, which has offset a sizable part of this
loss on their order books. Electrical machinery, instrument, and ordnance manufacturers
have expanded their military electronics and
missile business also, and a substantial portion of such work is being done in this district.
Employment data afford some perspective
on the degree of industrial change which has
occurred during the past two years as a result
of the shift in defense procurement policies.
Between the spring of 1957 (when major cutbacks began in orders for manned aircraft)
and the end of 1958, District aircraft fabricators reduced payrolls about 30,000 workers, but ordnance, instruments, and electrical
equipment firms boosted employment by approximately 33,000. While the District thus
experienced a small net increase in employment, nationally a decline of almost 200,000
workers occurred in these four industries.
Nondefense industries and firms have also
grown rapidly here, and they have been fairly
independent of military expenditures. During
sharp contractions in defense expenditures
over the postwar period, advances made by
other industries have shown the resiliency of
the western economy and the wealth of its still
unused resources. We shall examine some of
these other industries which have had an important influence on the recent economic upturn, population trends, and the expansion of
state and local spending in three of the District's major economic areas, roughly related
to the service areas of this bank's head office
and branches. 1
Recent economic activity in the Seattle and
Portland areas has been dominated by the
1
To eliminate repetition where there are common characteristics,
the areas served by the Pacific Northwest offices (Seattle and
Portland) and the California offices (Los Angeles and San Francisco) will be examined jointly, and tben the Salt Lake City
territory will be considered.
April1959
MONTHLY REVIEW
course of Federal spending, revival of the construction industry, and the shifting markets
for primary metals. The Pacific Northwest
was troubled with severe unemployment during the past year, and in Oregon the problem
extends back as far as 1956. This winter,
however, has seen a reduction in unemployment to less than 6 percent of the labor force
on a seasonally adjusted basis, and the improvement has been most pronounced in
Oregon.
Seattle, the largest metropolitan area in the
Pacific Northwest, was able to maintain a
fairly continuous balance in its labor market
during the recession mainly because of the
addition of over 15,000 jobs at the area's aircraft plants during the past year. At the end
of 1958, Boeing Airplane Company, which
accounts for almost all of Seattle's aircraft industry, reported a backlog of $2.4 billion,
and early in 19 59 it was announced that the
company had received an additional award
of $300 million for missile production. In
late January, however, Boeing began moderate employment cutbacks as shifts in production schedules brought lower requirements for semi-skilled and unskilled personnel which were only partially offset (numerically) by larger professional staffs. By midMarch, a net reduction of 1, 700 jobs had occurred.
The other three major labor market centers in the Pacific Northwest-Portland, Tacoma, and Spokane-were still classified as
areas of substantial labor surplus in midMarch. At Tacoma and Spokane, reduced
operating schedules at aluminum production
and fabrication plants during the recession
have been only partially restored. Even
though national aluminum production was at
an all-time high during the first quarter of
this year, the Spokane area reported that
moderate cutbacks there were again under
way. Newer facilities located closer to eastern markets have cast Pacific Northwest
plants in a role close to that of a residual pro-
ducer until demand catches up with the expanded national capacity. Portland and Tacoma have both felt a pickup in demand for
forest products after sharp declines during
the recession, and there has also been expansion into electronics at Portland.
The Pacific Northwest's advance in construction activity during 1958 continued into
the first part of 19 59, although the rate of increase in contracts awarded for new residential housing was not so sharp as a year ago
and there was little change in nonresidential
building awards. Awards for public works and
utilities projects improved in Washington,
however, and the amount of overall construction work currently in progress insures a high
level of employment during 1959. Employment in the industry is now at the highest level
since 1955 in Washington, while in Oregon
it has not been so high since 19 51.
The burst in national and local construction activity brought new life to the region's
key lumber and wood products industry during 1958, but the real test of market strength
for 19 59 is just beginning with the opening
of the building season in eastern areas. Log
shortages acted as a partial restraint on production in the Douglas Fir region early this
year, but during March production exceeded
the year-ago level. In the Western Pine area,
weekly reports showed production during the
first three months of 1959 more than 10 percent ahead of last year. Both regions report
order files much improved, and inventories
are well below the level of early spring 1958.
Lumber prices averaged almost $12 per thousand board feet above last year during March,
with green fir up over $16. In late March,
however, green 2 x 4's slipped contraseasonally, from $74 per thousand board feet to
$72, as buying in the important Southern
California and Arizona markets slumped and
poor weather delayed the opening of the
building season in a number of areas in the
East and Midwest. Demand for plywood remains strong, and most producers announced
51
FEDERAL RESERVE BANK OF SAN FRANCISCO
new price lists in late March. The 1;4 inch
sanded variety, often used as an index of the
level of plywood prices, was marked up $5 to
$85 per thousand square feet.
The available indicators of retail trade activity for the Pacific Northwest (principally
department store sales and automobile sales)
show a definite improvement over 1958, although less than in other District areas. New
automobile registrations in Oregon and Washington during January and February exceeded
those for the first two months of 1958 by 43
and 27 percent, respectively, and they were
also higher than in early 19 57. Department
store sales (seasonally adjusted) were at an
all-time high.
Population growth in the Pacific Northwest during recent years has been just a little
better than the national average of 1. 7 percent per year, while the average growth rate
has been twice that high for other Twelfth
District states. During the recession, and even
before because of the slump in the lumber industry, there were net withdrawals from the
labor force and some out-migration to other
areas. Recent estimates made of personal income in the two states show a moderate increase above the prerecession level, and a
slight increase on a per capita basis. These
factors help to explain the comparatively
small increase in retail spending.
52
The San Francisco and Los Angeles areas,
which include California, the more populated
portions of Nevada, and most of Arizona
within their service areas, show the sharpest
rate of expansion in economic activity during
early 19 59. Recent growth of defense-related
manufacturing has been sizable in California,
despite the decline of its aircraft industry,
while in Nevada service industries connected
with tourist attractions have expanded. In
Arizona, where the recession was reflected
mainly by a brief hesitation in overall economic growth, it is difficult to single out one
or several industries from the many which
are currently achieving rapid gains. Only nonferrous metals mining, transportation, and
communications firms have not shown appreciable gains over the past year. All three
states have received a sizable influx of migrants from other regions in recent years.
During the winter, unemployment dropped
markedly from last summer's high level even
with new residents seeking jobs, and in California unemployment is now about 4.5 percent of the labor force. The brisk upswing in
construction activity felt by these states during 19 58 showed some signs of faltering in
California early in 1959, however.
The decline in Defense Department ordering of manned aircraft over the past two
years has been reflected in reduced employment by the major aircraft fabricators in California, but as in Washington, most of these
firms were among the first to begin missile
research and development projects, so that
the net payroll reduction by California aircraft companies over the two years has been
limited to about 40,000 workers. Growth of
electrical machinery, ordnance, and instruments firms in the same period has offset
more than three-fourths of this loss, and all
of these industries, including aircaft, report
net increases in employment during early
1959. Military prime contracts awarded in
California amounted to 23 percent of the national total in 1958, a greater proportion than
for any other state, and the value of $5.3 billion exceeded even the annual amount of
awards during the Korean War years.
Although California as a whole has gained
in defense work, there have been marked
shifts over the past two years in the location
of defense-connected manufacturing. The Los
Angeles area maintains predominance in this
field, and about half the employment decline
among aircraft firms there since early 1957
has been offset by gains at other types of
firms in the missiles and space fields. San
Francisco bas also had a decline in its small
April1959
MONTHLY REVIEW
aircraft industry and an expansion among
electronics firms, but Bakersfield and Fresno
have seen an almost complete cessation of
large-scale defense work in their areas as a
result of closure of aircraft manufacturing facilities. San Diego has experienced little net
change over the past two years in its sizable
defense-connected manufacturing, on the
other hand, while Sacramento and San Jose
are currently the fastest growing areas in the
state, primarily because of the establishment
of new defense manufacturing plants.
Arizona firms received about 1 percent of
military prime contracts during 1958, almost the same as in previous years. Prime
contracts in Nevada, which are usually quite
small in terms of national totals, were nevertheless up a moderate 5 percent from 1957.
Construction activity eases
in winter months
It appears that most of the impact on employment of the spurt in construction contracts during the second half of 1958 has
already been felt in California. Construction
employment leveled off at the end of the
year, and then declined about 2 percent
(15,000 workers) after seasonal adjustment
during January and February. Winter rains
probably accounted for most of this loss,
which was recovered by mid-March. Nevertheless, there has been no increase in construction employment since late last summer,
and contract awards during the first two
months of the year did not show unusual
vigor. Although the value of total awards remains well above that for any of the corresponding months in the previous three years,
the usual sharp gain in construction contracts
between December and January did not occur
this year-the increase was small-and then
there was a seasonal decline in February.
Most of the easing in contract awards so far
this year has occurred in residential building
-nonresidential building and heavy construction contracts have changed only by the
usual seasonal amounts. It is by no means
conclusive yet that this signals an end to the
upswing in residential housing; the first two
months of the year are usually the low point
in building activity, and builders may have
merely used this time as a breathing period
after the surge of new projects announced
last year.
The Federal Housing Administration reports that secondary market quotations on
mortgages which it insures averaged 97 percent of par on March 1 in the West, unchanged from the quotation three months before, but also almost 2 points below that of
last summer. This suggests a levelling in effective interest rates on mortgages, but it is
not yet apparent whether enough demand for
housing exists to enable the present rate of
building activity to continue.
Additional recovery in industries not related to defense occurred within the San Francisco and Los Angeles zones during early
1959. In terms of employment, the most pronounced increases occuried in the manufacture of paper and allied products, textiles and
apparel, chemicals, nonelectrical machinery
and primary metals, and in the service and
trade industries and Government. Employment at mining firms drifted slightly lower
after a moderate improvement late in 1958.
Production of steel attained a new all-time
high during the first two months of the year,
although in terms of output as a percent of
rated ingot capacity there was a sharp decline
because of the doubling of capacity at
Kaiser's Fontana mill. As a result of this increased capacity, the operating rate for California steel producers (as reported by the
American Iron and Steel Institute) dropped
from 91 percent of capacity in December
1958 to 65 percent in January 1959, even
though there was an absolute increase of 1
percent in steel tonnage produced. California
production rose further in February and
March, as steel consumers replenished inventories that were cut to extremely low levels
53
FEDERAL RESERVE BANK OF SAN FRANCISCO
during 19 58 and also ordered forward supplies in anticipation of a possible labor dispute in the industry at the end of June.
Retail trade climbs to new record
Partly as a result of population increases
and higher incomes, but also undoubtedly
stimulated by an atmosphere of greater confidence about the stability of employment
and incomes, spending by consumers in the
San Francisco and Los Angeles zones rose to
new highs in early 1959. Department store
sales in California during January rose to 159
percent of the 1947-49 average after seasonal adjustment, 14 percent above January
1958 and more than 2 percent above December's record. Further gains occurred in
February and March, and sales during the
Easter season were reported by many retail
stores as the best ever. Automobile sales in
California during the first two months of
1959 exceeded last year by 28 percent and
were only slightly under the record 1957level
of 97,600 cars. During the first half of March
an additional upsurge was reported. The
number of new automobile registrations in
Nevada during 1 anuary and February was
also up over one-fourth from last year to
1,600 cars, while in Arizona sales of 6,100
cars represented a gain of 50 percent over the
same period in 1958.
. --..,
54
Utah, eastern Nevada, and southern Idaho,
which are served by the Salt Lake City office
of this bank, emerged from the business
downswing last year suffering from adverse
developments in the market for nonferrous
metals, but also with more than offsetting increases in lumbering, construction, and
defense-connected manufacturing activities.
Employment totals expanded to new records
in early 1959, while the number of persons drawing unemployment compensation
dropped 20 percent or more below the same
period last year. The rate of population
growth in Utah and Idaho has not been up to
that in California, Arizona, and Nevada in recent years, but has slightly exceeded the rate
of increase in the Pacific Northwest. Idaho
and Utah have received a comparatively small
influx of migrants; as in Oregon and Washington, most of their net gain in population
has come from natural increase-the excess
of births over deaths.
Utah shares in defense
spending upsurge
Utah has recently experienced a marked
growth of defense-related manufacturing,
amounting to an addition of about 2,000
workers over the past year and of 800 workers in the first two months of 1959 alone. The
Utah Department of Employment Security reports that new contract awards will be rapidly translated into further increments in payrolls at these plants. Military prime contracts
awarded there during 19 58 were more than
double those signed in 1957 and exceeded
previous years' awards by an even greater
amount. Prime contract awards in Idaho, as
in Nevada, are usually quite small compared
with those in other District states, but again
there was an appreciable increase between
1957 and 1958. Steel production in Utah rose
sharply during early 1959, reaching a new
record in February, and growth of the state's
petroleum industry was reflected in crude
production six times that of early 1958. Other
Idaho manufacturing firms expanded moderately in early 1959, with most of the gain resulting from revival of the lumbering industry.
Construction activity in Utah tended to
level off early this year after a sizable increase
during 1958, but there was an additional gain
in Idaho. The amount of new construction
contracts awarded in Idaho during January
and February was up seasonally, but in Utah
contracts for all types of construction were
off substantially from the end of 1958. Industrial plant expansion in Utah, which led to in-
Apri11959
MONTHLY REVIEW
creased contract awards even during the recession, has apparently halted for the present.
Department store sales in the Salt Lake
City Branch zone set new records during early
1959, as they did in the rest of the Twelfth
District, and new automobile registrations remained unseasonally high in Idaho. New auto
registrations in Utah showed a gain of 13 percent over last year during January and February to a total of 3,500. Although the rate
of increase over early 1958 was smaller than
in other District states, sales at that time last
year were also comparatively less depressed
in Utah.
District Governmental Units
Expansion of employment, increases in
construction contract awards, and successively higher budgets all indicate a rapid rate
of growth in expenditures by state and local
governmental bodies in the District. However, aggregate statistics on state and local
government outlays are not presently available, and the data at hand permit only a
rough approximation of proposed expenditures by state governments in fiscal 1960.
From an examination of recently published
state budgets, it appears that District states
will spend about $4.4 billion in the year beginning on July 1, 1959, an increase of
roughly 10 percent from fiscal 1957, the last
year for which official Census data are available.
Construction contracts awarded by public
authorities in the Twelfth District during the
first two months of 1959 were about onesixth higher than in early 1958, primarily because of an increased volume of public
works projects. Almost all of the increase in
government employment in the Twelfth District over the past year, which amounted to
5 percent (about 57,000 workers), occurred
among state and local authorities. The size
of this increment in employment over the past
year is a partial indication of the key part
these bodies have played in recent District
growth.
Loan Demond Quickens in
Total loans at weekly reporting banks in
the District rose $221 million in the threemonth period ended March 25, 1959, in
striking contrast to the decline of $396 million
in the same period in 1958. As in the last
half of 1958, most of the impetus for this expansion came from the growth in real estate
loans. In almost every category there was a
reversal in the direction of the change of
loans outstanding in the first quarter between
the two years . Commercial and industrial
loans increased by a modest $11 million, compared with a liquidation of $341 million in
the first quarter of 1958. Although business
loans have not expanded appreciably in the
first quarter-generally a period of seasonal
decline for business borrowing-the level outstanding at reporting banks in the District
caught up to and exceeded the record high of
December 1957.
Real estate loans rose $174 million in the
first three months of the year, compared with
a decline of $11 million in the same period
in 1958. Other loans (including consumer
loans) registered a net increase of $68 million, matching the dollar decline of a year
ago. Agricultural loans fell $21 million compared with an increase of $15 million in the
first quarter of 19 58, when the farm sector of
the economy was expanding.
A comparison of the portfolios of reporting banks for the first quarters of 1958 and
19 59 provides some interesting but not unexpected changes. A year ago, when general
activity was still falling, the demand for loans
was weak and reporting banks turned to investments as a source of earnings, adding
$4 77 million of United States securities to
their portfolios. In the first three months of
1959 with the situation reversed and recovery under way, reporting banks disposed of
55
FEDERAl RE SE RV E BANK OF SAN FRANCISC O
$560 million of United States securities, chiefly bills and certificates, and expanded their
loans and discounts. The wholesale liquidation of business loans gave way to a modest
advance, with metals and metal products producers showing about the same increase in
their borrowings as they did in the first quarter of 1956. R etail traders expanded their
bank credit in the same amount as they did in
the first three months of 1955. A first quarter
increase of $7 million in loans to wholesale
trading fi rms was even more remarkable, for
in seven of the eight years for which data are
avail able, these firms reduced their debt to
reporting banks in the first three months of
the year. R eal estate loans responded to the
lower levels of interest rates prevailing in the
money and capi tal market in the first half of
19 58, rather than to the level of general business activity, and have been the chief source
of strength in the expansion of total bank
56
credit in recent months. Loans to consumers
mirrored apprehensions regarding the outlook
in the first part of 19 58, and growing optimism in the first quarter of 1959, when the
public lost some of its reluctance to go into
debt to purchase durable goods.
Demand deposits, which generally experience a seasonal contraction in the first quarter, declined $486 million compared with a
decrease of $559 million in the first three
months of 1958. Time deposits, which had
demonstrated a phenomenal rate of growth
through most of 1958 (rising by $520 million
in the first quarter alone), fell off $100 million
in the first three months of 1959. This decline
in time deposits extended to savings deposits,
which had continued to grow in the latter part
of 1958, as rising interest rates on other
forms of short-term investments attracted the
funds of state and local governments and
foreign balances.
April 1959
MONTHLY REVIEW
Farm Production Pros ects
growing conditions are as favorable as
they were in 1958, farmers' present production plans suggest that the record level of
crop output attained then may be overshadowed by even larger harvests this year. The
nation's farmers indicated on March 1 that
their planted acreage will exceed that of 1958
by about 2 percent. 1 In addition, if they plant
their full allotments for cotton as they usually
do, total acreage may be up 3 percent. Acreage increases will be concentrated in crops
which are already in plentiful supply or heavy
surplus-corn, cotton, and wheat. Augmented production of these crops would involve additional cash outlays for production
and capital items and would provide further
stimulation to livestock production, which is
already on the increase. It would also dim
prospects for reduction of the current high
level of Federal price support expenditures.
These prospective changes in the farm sector result in part from recent changes in Federal farm programs. Farmers have decided to
plant more land this year because 1) the
acreage reserve program of the Soil Bank has
been abolished, 2) acreage controls for corn
have been abandoned and price supports
raised, and 3) restrictions on cotton plantings
have been relaxed. 2 These factors all bear on
District production plans to some extent, but
the changes in cotton regulations will be most
important.
About 17 million of the nation's acres that
lay idle last year in exchange for Soil Bank
payments are now available for use. While
I
F
1
Crop p lanti ng p rospects discussed in this article are based
largely on farmers' planting in te ntions as of !\larch 1, reported
by the United States Department of Agriculture in Crop Pro·
ductio11-Prospective Plantings for 1959, issued ~larch 18, 1959.
' Corn price supports will actually be higher th an in 1958, despite a reduction in the official rate. Last year corn was sup·
ported at $ 1.36 per bushel when produced in compliance with
acreage control!, $1.06 otherwise. \V itb no ac reage con trols in
1959, all producers are elig ible lor an ave rage suppo rt rate of
$1.12 per bushe l. This represents an increase to most producers
because only 12 percent of the 1958 crop was grown within
acreage allotments. Corn is doubly attractive because support
ralCi for other feed crops were reduced in 1959 .
-1959
some of this land will stay out of production,
much of it will be planted. Compared with
last year, farmers will reportedly add 9 million acres of corn, 5 million acres of cotton,
and 2 million acres of wheat to their 19 59
plantings. Not all of this is net gain; part of
the increase stems from a reduction in acreage for feed crops other than corn (oats and
hay, for example), leaving the net gain at
about 10 million acres.
Last year farmers planted only 12.4 million of their 17.6 million acre cotton allotment, putting 5 million acres in the Soil
Bank's reserve program. This program has
been terminated, releasing the land for planting. Acreage allotment rules have also been
changed. Under old regulations, allotted cotton acreage was scheduled to be cut back in
1959 to 16.3 million acres. But the Agricultural Act of 1958 provided an alternative
whereby farmers could expand their plantings 40 percent beyond this amount in exchange for lower price supports. Farmers
who chose this alternative, known as Plan B,
are eligible for price supports on cotton at 65
percent of parity. Those who accepted the
smaller acreage allotments as originally
scheduled-Plan A-are eligible for 80 percent of parity.
The response to Plan B was smaller than
anticipated, however, as only one million
acres will be planted under this regulation.
Despite this, additions from the Soil Bank
and Plan B together may raise plantings 40
percent above last year's acreage. It appears
that cotton growers in most areas did not
think lower price supports could be offset by
expanding output to achieve lower unit costs.
However, Plan B proved to be quite popular
in the Twelfth District, where the predominance of large-scale, heavily mechanized operations makes this type of economy feasible.
57
FEDERAL RESERVE BANK OF SAN FRANCISCO
PLANTED ACREAGE AND PRODUCTION
District cotto n plantings rise
58
The most significant change in the production plans of District farmers involves an increase in cotton acreage under Plan B. Without this alternative, the District was slated for
a 10 percent cut in acreage allotments for this
important crop. But 35 percent of District
cotton farmers (representing 50 percent of
the 1958 acreage) have indicated that they
intend to expand their cotton acreage as permitted under Plan B. Acreage allotments were
increased accordingly. If District cotton producers plant their full allotment, total District cotton acreage will be 12 percent greater
than in 1958. In view of the rapid rise in
yields of recent years, this may mean an even
greater increase in production than acreage
figures alone suggest. District cotton acreage
was cut sharply when controls went into effect in 1950. They were removed the following year, reimposed in 1954, and have been
in effect since then. This provided an unusual incentive to increased yields, and production in the past three years has steadily
climbed toward the pre-acreage control levels. (See chart)
More land will be planted to wheat and rice
in the District in 1959, including land formerly in the Soil Bank. Farm output in other
lines appears to be headed upward this year
also. Crops that suffered from poor weather
last spring are in better condition thus far in
1959. Consequently, prospects in March
were for greater output of citrus and deciduous fruits and nuts, and a high level of vegetable production. The past winter has been
marked by lack of rainfall in many parts of
the District, particularly California and Arizona, but reserve supplies were generally adequate for this year's needs, and irrigation has
been heavily employed. Pastures and ranges
have suffered from the lack of moisture, but
stocks of supplemental feed are large. An increase in livestock production is under way,
pointing to heavier marketings in the months
ahead.
TWELFTH DISTRICT
1947 - 49 •100
1945·5~
200
150
100
50
0
1945
1950
1955
1947 · 49•100
140
WHEAT ANO RICE
120
100
80
1~0
FEEO GRAINS ANO HAY
140
120
100
80
0
1945
1950
1955
Source : U. S. Dept. of Agriculture, Agricultural Marketing Service, Crop Productio10 and Cotl010 Prod11ctio10, annual issues.
MONTHLY REVIEW
Apri11959
Feed grains and beef
Acreage controls on basic crops in the District, particularly cotton, have influenced beef
cattle production. As shown in the accompanying charts, production of feed grains began to rise sharply in 19 54, when acreage allotments were placed on cotton and wheat.
Acreage restrictions are still in effect on these
crops although acreage allotment requirements have been modified for cotton. The in-
crease in feed grain production seemed to
have no effect on the relative importance of
beef cattle production in the District, if
total cattle population figures are compared.
Eleven percent of the nation's beef cattle
was on District farms and ranches at the beginning of 1959, the same proportion as in
1954. But there have been substantial
changes in the composition of the District
beef herd relative to the rise in feed grain
TABLE 1
JOR FIELD CROPS, 1959
TED STATES
PROSPECTIVE PLANTI
TWELFTH D
(Thousands of acres)
Twelfth District
1959
1958
Indicated
Actual
Food Groins
Wheat, all'
Winter'
Spring'
Rice
Rye'
Feed Groins and Hoy
Hoy, oll 3
Barley
Oats
Corn
Sorghums, all
Other
Beans, dry edible
Potatoes
Sugar beets
Peas, dry field
Flaxseed
Sweet potatoes
Cotton'
Upland
Long staple
5,155
4,126
1,029
290
277
5,097
4,147
950
257
276
58,468
45,063
13,405
1,603
3,908
5,722
5,630
6,161
4,395
1,249
523
459
TOTAL
Percent Change from 1958
Twelfth
United
States
District
56,431
44,088
12,343
1,444
4,442
8
9
13
0
11
-12
63,979
62,317
2
3
6,229
4,429
1,375
493
419
70,499
17,093
35,998
83,921
20,440
73,033
16,268
38,430
74,654
21,176
-1
-1
-3
12,787
12,945
227,951
223,561
527
409
386
278
47
13
534
439
385
195
46
12
1,656
1,392
942
311
3,678
275
1,644
1,498
933
227
4,014
272
1,660
1,611
8,254
8,588
3
-4
1,276
30
1,136
36
17,328
71
12,375
80
12
-17
40
-11
1,306
1,172
17,399
12,455
11
40
23,172
1,702
1,161
24,900
1,755
1,081
-7
-3
26,035
27,736
-6
338,829
330,425
Other United States Crops
Soybeans'
Peanuts 11
Tobacco'
0
United States
1959
1958
Ind icate d
Actual
21,475
21,358
---
---
1
0.5
4
2
-9
5
-6
6
10
12
3
2
1
1
-7
-7
0
43
2
8
1
37
-8
7
0.5
3
1
Includes Durum wheat.
2 Based on December 1 estimates.
8 Acreage for harvest.
'Represents acreage allotment of 16.3 million acres, plus 1.023 million acres which could he planted by farmers who elected Plan B.
Acreage allotments are used to indicate prospective plantings. See text.
11
Includes only crops grown alone, excluding those interplanted with other crops.
• Published totals for United States. Subtotals add to more because they include extra cotton acreage and duplications noted above.
59
FEDERAL RESERVE BANK OF SAN FRANCISCO
production. A smaller proportion of the beef
herd is now composed of breeding stock
(cows and heifers over two years of age)
than in 1954, while a larger part of the herd
consists of steers over one year of age. The
rise in numbers of steers reflects the increased importance of cattle feeding operations in the District because the bulk of the
cattle in feed lots are steers in this age group.
The number of District cattle on feed increased 47 percent between 1954 and 1959.
This increase is especially significant when it
is compared with the 6 percent increase of
cattle on feed in the rest of the country during the same period.
Supplies of lower-grade beef have been less
abundant, partly as a result of the expansion
of cattle feeding operations in the District.
This has stimulated foreign imports of beef
and veal into the District for use largely in
processed foods. District beef imports in January of 1959 were four times as large as in
the same month of 1958. Recently these imports have totaled as much as 6 million
pounds in a week. This level of imports is estimated to account for about 10 percent of
the beef supplies available from Federally inspected plants in the District during a comparable period of time.
Value of assets rises although
income is reduced
A reduction of 5 to 10 percent in farm income is expected nationally this year. District net farm income, if it declines, should
not fall so much. One of the principal rea-
sons for the anticipated reduction in national
farm income is the prospect of substantially
lower prices for hogs in 1959 than in 1958.
Pork production is a farm enterprise of minor
importance in the District and will have little
effect on District farm income even if lower
hog prices materialize.
District farm production expenditures, on
the other hand, will undoubtedly rise. More
land will be in production as 353,000 acres
of farmland in the acreage reserve program
in 1958 will be available for production of
basic crops. In addition, some District plantings of cotton in excess of basic allotments
will occur on land which in 19 58 was devoted to the cultivation of crops less costly
to produce. Production expenses per acre for
cotton, for instance, are about three times as
large as for feed grains.
Although income prospects for District agriculture are not so favorable in 1959 as in
19 58, the financial position of District farmers may well improve. In 1958 income realized from District farming operations declined. Idaho was the only state with a
higher realized net income per farm. Nevertheless, the financial position of District farmers improved during 1958 as the value of
farm assets in the District increased considerably. Farmland appreciated in value about
$1.3 billion, an amount almost equal to the
net income operators of District farms realized from farming operations in 1958. In addition, the inventory value of livestock on
farms rose almost $400 million.
The Bishop National Bank of Hawaii, Honolulu, Hawaii, has become
a Member of the Federal Reserve System effective Apri113, 1959.
60
FEDERAL RESERVE BANK OF SAN FRANCISCO
April1959
BUSINESS INDEXES- TWELFTH DISTRICT 1
{1 947 -49 ..-enge
=
100)
Total
Industrial production (physical volume)'
Year
and
month
1929
1933
1939
1949
1950
1951
19-52
1953
1954
1955
1956
1957
1958
Total
mf'g
employ-
nonagri -
Petrol eum3
Electric
cultural
employ-
Carloadings
(number)'
Dep't
store
Retail
food
sales
prices
- - g,;
- - - - - - - - - - - - - - - --- - - -- - - - - -ment
- - - - - - - - - - - - - - - -'·'- Refined
Cement
107
109
106
106
105
101
94
78
.')0
63
103
10:1
112
116
122
11 9
122
129
132
124
54
27
56
100
112
128
124
130
132
105
104
97
103
100
102
109
109
113
1 14
11 9
97
9.5
94
93
93
92
93
93
93
93
fl3
120
118
92
92
Lumber
40
71
100
113
1t:l
116
118
1 16
12 1
120
107
106
1958
Febr uary
Mar ch
April
l\Iay
Ju ne
J uly
August
September
October
November
D ecember
Crude
87
:)2
67
0~)
I
~IS
]()()
Steel'
Copper'
power
156
149
158
146
139
158
128
154
163
172
141
105
17
80
93
115
116
1I5
113
103
120
13 1
130
116
29
26
40
108
11 9
136
1-14
161
172
192
2 10
224
228
121
120
12 7
134
138
137
114
11 9
119
124
123
127
128
129
130
127
124
I 12
11 2
129
176
178
179
179
179
186
159
165
134
139
132
139
140
112
132
148
152
168
IG5
128
125
120
106
10 1
79
91
119
132
139
129
22 1
226
218
227
234
232
232
228
238
23 1
236
136
136
13.')
136
137
138
138
138
139
140
140
12.')
126
16 1
H2
169e
189e
136r
142
238
14 1
14 1
2!
97
12:1
H.)
ment
(value)'
102
42
H
100
100
11 3
77
!l4
98
lOll
100
100
96
104
104
96
89
112
120
122
122
132
141
141
142
11.')
113
11 3
I 12
114
118
123
1.55
156
158
159
86
87
87
90
90
84
92
94
81
fl 1
97
135
137
14 2
142
14 3
140
148
1-!0
14 1
1-19
147
121
123
12,;
124
124
124
123
123
123
12-1
123
16 1
162
98
93
150
121 r
123
;) 7
lJ7
105
12 1
130
137
134
143
152
157
154
ll8
6~
30
18
31
(18
52
60
99
103
11 2
153
153
15 1
15 1
1.')3
153
1.~5
10 ~
Waterborne
for eign
trade'• •
Exports
Imports
---- ---124
!DO
72
110
163
95
s.5
121
91
137
I.S7
186
171
200
J.IO
308
131
260
16-!
308
19.')
443
575
230
537
174
149
160
171
193
190
180
18 1
178
174
178
170
358
422
4 4.5
468
6 17
602
5 13
607
7 12
5·15
762
1959
Ja n uar y
F Pb r uary
1 t),-)
BANKING AND CREDIT STATISTICS- TWELFTH DISTRICT
(amounts in millions or d oll a rs )
Member bank reserves and r elated items
Condition items of all member banks'
Year
and
month
1929
1933
1939
195 1
1952
1fl53
1954
1955
19,)6
19.57
1958
1958
l\ Ja r ch
Ap ril
M ay
Jun e
July
August
September
October
:\ovember
December
Loans
u.s.
and
Gov't
discounts
secu r ities
Bank
Factors affecting reserves:
rates on
Demand
deposits
adjusted'
Total
short-term
time
business
deposits
loanss
2,239
1,4 86
1,!107
7,866
8,839
9,220
9,·11 8
1 1.12·1
12,f.13
13, 178
13,8 12
495
720
1,400
6,-163
6.6 19
6,639
7,942
7,239
6.452
6.6 19
8,003
1,234
951
1,983
9,937
10,520
10,51'1
11,196
11,864
12 ,169
11 ,870
12,729
1,790
1,f\09
2,267
6,777
7,502
7 ,997
8.69\1
9 , 120
9 ,42!
10,679
12 ,0 77
12.860
12 ,DI 9
12,9 77
13 , 197
13 , 142
13 ,3'>fi
13,3'>0
13,4 19
13,091
13,8 12
7.015
7,005
7,546
7,632
7,670
7,984
7,827
7,846
8,026
8,003
11,225
11 ,570
11,292
11,278
11,7-14
11 ,774
1 1,8()0
12, 176
12.39.')
12,729
11, 183
11.406
11,530
11,72-1
11 ,779
11 ,8 17
11.7 76
11,836
11 ,725
12 ,0 77
13 ,897
14,022
1-! , 176
8,099
7,735
7,-136
12,508
12,210
12,228
12.037
12,018
12 ,003
3.66
3.95
4. 14
4.09
'1.10
-1.50
4.97
4.88
4.95
4.8 1
4 .80
4.95
Reserve
bank
crediti
+
+
+
+
+
-
+
+
-
+
+
+
+
-
34
2
2
21
7
14
2
38
.52
31
89
February
n t arch
-1.97
+
+
-
Treasury to
ci al 10
0
110
192
- 1,582
- 1,912
-3,073
-2,448
-2 ,685
-
-3.z,;9
-4 ,164
- 3,058
-
23
+
+ 150
+ 2-!5
+1.983
+2.26.')
+ 3. 158
+ 2,328
+ 2,757
+3.274
+3,903
+3.645
62
·13
11
5fl
52
2
-!
0
48
54
+
-
180
391
203
400
384
15
378
.'; 17
305
.542
+
+
+
+
+
+
+
+
+
+
2.:)3
371
154
53 !
302
193
!.57
726
398
518
11
9r
-
,;17
431 r
;jH
+
+
+
389
386r
539
1959
Jan uary
Commer-
n
Mon ey in
circulationv
-
+
+
+
+
-
+
+
+
-
+
+
+
+
-
+
+
-
+
+
31
Bank
debits
Index
cities 3 , t~
Reserves n
(1947-49 =
100)'
6
18
31
189
132
39
30
100
90
83
63
175
185
584
2,269
2,5 14
2.55 1
2 ,5o.;
2,530
2,6.')4
2,686
2,658
42
18
30
132
140
150
1-54
172
189
203
209
11
2
90
22
4
46
31
57
31
11
2,530
2,574
2,456
2.494
2,474
2,62 1
2,451
2 ,612
2,727
2,6-58
198
206
193
2 12
211
20-l
210
21 ,)
208
23fl
10D
17r
4
2 ,656
2,602
2,588
226
23-1
210
1AdJusted for seasona l vanat1on, except where Jn(li cate d. E xce pt for departme n t store s tat istics, allmdexes are based upon data from outside :'iOurces. as
follows : lumber, California Hed wood Associatio n and U.~ . Bu reau of the Census; petrole um, cement, and copper, U.S . Bureau of ~1in c:5 ; s tee l, U.H.
Department of Commerce and America n Iron and ~tee! Institut e; electriC"' power . Federal Power Commission; nonagricultural and manufacturing
employment. C .S. Bureau of Labor Stat istics and cooperating stat e agencies; retail food price~. C.S. Bu reau of Labor ::-itatistics: c3rload ings, ,-arious
3 ::\ ot adjusted for seasonal Ya riat.ion.
rail roads and railroad a.~;;.sociations: and foreign trade, C.;;. Bureau of the Cens us.
2 D aily a\·erage.
4 Los Angt> les, San Francisco, and Seatt le ind e xes combi ned.
:, Commercial cargo only, i n physical YOlume, for Los .-\ ngeles, :-ian Francisco, San
Diego, Oregon, and \\"ashington cus tom s di st ricts; starting with .July 1!)50, "special catego ry" e xpo rts are excluded becausP. of security reaso ns.
6 Ann ua l figu res are as of e n d of year . monthly ligures as of last \Ved n esday in mont.h.
7 D emand depos its, excludi ng in terbank a nd U.S. Gov't
depos its. le:-;s cash ite ms in pr ocess of collection. l\ f o nt h l ~· rlata pa r t ly estima ted .
s AYe rage rates on loa ns made in fi ve major cities.
9 Changes
from end of p re\·ious month or _\: ear .
1o .\l inus s ign indicates fio\\' of fund s out of the District in the case of commercial oper3.tions, and excess
of receipts O\· e r d i ~burse ment s in th e ca.se of Treasu ry ope rati on:;.
II End of year and end o f month figures .
12 Debits to total depo ~ its except
interbank prio r to 19-!2. D e bits to demand deposits except C.S. Go\'ernment and interbank deposits f ron1 19-12.
e-Estimated .
r-He\·isecl.
60A
@FedFRASER