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MONTHLY REVIEW OF B U S I N E S S C O N D I T I O N S ISAAC B. NEWTON, Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. XIII San Francisco, California, April 20,1929 No. 4 S U M M A R Y O F N A T IO N A L C O N D IT IO N S Prepared by the Federal Reserve Board Volume of industrial production and of trade increased in March and wholesale prices ad vanced somewhat. There was a growth of com mercial loans of member banks in leading cities during March and the first half of April, while investments and loans on securities of these banks showed a reduction for the period. Production. Output of manufactures reached a new high level in March. Autom obile pro duction was exceptionally large, and steel ingot output was reported to be. above rated capacity. Output of refined copper, lumber, cotton and silk textiles, and sugar was also large for the season. There was some seasonal recession from February in production of w ool textiles and of leather, and a further decline in produc tion by meat packing plants. The volume of factory employment and payrolls continued to increase during the month and was substan tially above the level of March, 1928. Produc tion of minerals as a group declined sharply, reflecting reduction in output of coal by more than the usual seasonal amount. Output of nonferrous metals continued large and petroleum production increased. During the first part of April industrial activ ity continued at a high rate, although prelimi nary reports indicated a slight slowing down in certain branches of the steel industry and a decline in output of coal and petroleum. The value of building contracts awarded increased seasonally during March and the first two weeks in April, reflecting in part the award of a few large contracts, chiefly for commercial and PER PER CE N T \ O ... f - Î CENT N /* M A N U FAC: t u r e s / 1V industrial projects. The total volume of build ing, however, continued smaller in March than a year ago. Contracts for residential building and public works and utilities were substan tially below the level of March, 1928, while in dustrial and commercial building was in larger volume. Distribution. Railroad shipments of com modities declined somewhat in March but were larger than in the same period of the preceding year. The decline from February reflected smaller shipments of coal and coke, grain prod ucts and livestock, shipments of these com modities also being below March a year ago. Loadings of ore and miscellaneous freight in creased substantially over February and con tinued larger than in 1928. Sales by wholesale firms in all lines of trade reporting to the Fed eral Reserve System were seasonally larger than in February. In comparison with the same month a year ago, however, sales in most lines of trade showed a decline, except in the case of dry goods, men’s clothing, and hardware. D e partment store sales showed a larger increase in March than is usual at this season, and were larger than in the same month last year, partly on account of the fact that Easter came in March this year. Prices. W holesale prices of commodities dur ing March averaged slightly higher than in February, according to the index of the United States Bureau of Labor Statistics. There were marked increases in prices of copper and lead, and smaller advances in prices of iron and steel y ' V / '' /M I N E R A L S t I / ' >UvV— : = - r ; -----P R O D U C T IO N O F M A N U F A C T U R E S A N D M IN E R A L S Index numbers of production of manufactures and minerals, ad justed for seasonal variations (1923*1925 average=100). Latest figures, March, manufactures, 120; minerals, 110. Index of United States Bureau of Labor Statistics (1926*100, base adopted by Bureau). Latest figure, March, 97.5. 26 M O N TH LY REVIEW OF BUSINESS CONDITIONS and cotton goods, as well as of certain agricul tural products, particularly cotton, livestock, meats, and hides. Prices of grain and flour were lower during the month and the price of leather declined, reflecting an earlier decline in prices of hides. Silk and rayon textiles and raw wool PER a CENT A p r il, 1929 of member bank loans to brokers and in the bank holdings of investments. Loans chiefly for commercial and agricultural purposes showed a rapid increase, and at the end of the period were near the high level of last autumn. During the same period the volume of reserve M IL L IO N S O F DOLLARS 1 1 TOTAL R E SE R V E B A N K ; C R E D IT l ' ^ J V \ \ y D IS C O U N T S F O R M EM B ER BAN IKS "^ C O M M E R C IA L PAPER R A T E ' — R E S E R V E B A N K O IS C O U N T R A T E — ACCEPTAN CE RATE | 2W 1925 1926 1927 1926 \ a c c e p t a n c e s _______ __ _ 1 1929 M O N E Y RATES M on th ly rates in the open m arket in N e w Y o r k : com m ercial paper rate on 4- to 6-m onth paper and acceptan ce rate on 90-day ban kers’ a c c e p t ances. Latest figures are averages of first 22 days in A p ril. were also somewhat lower in price than in the previous month. In the middle of April, prices of livestock and raw silk were higher than at the end of March, while cotton and w ool had declined in price. A m ong non-agricultural products there were marked declines in prices of copper, lead, tin, and zinc, a further decline in the price of rubber, and increases in prices of pig iron and finished steel during the first weeks of April. Bank Credit. Between March 20 and April 17 there was a considerable decline in the volume "-" 1926 SE:c u r i t i e s 1927 1926 1929 R E SE R V E B A N K C R E D IT M on th ly averages o f daily figures fo r 12 F ederal reserve ban ks. Latest figures are averages o f first 22 days in A p ril. bank credit in use declined further as a conse quence of additions to the country's stock of monetary gold. A continued rapid reduction in holdings of acceptances carried the total to the lowest point since the autumn of 1924. Security holdings also decreased somewhat, while dis counts for member banks increased. Open market rates on bankers’ acceptances and commercial paper increased further during the four wreeks ending April 17. Rates on col lateral loans increased sharply in the latter part of March but declined in April. T W E L F T H F E D E R A L R E S E R V E D IS T R IC T C O N D IT IO N S Unfavorable developments in the agricultural situation during March and early April cast a shadow over the progress made in other fields of activity in the Twelfth Federal Reserve District during that period. Severe frosts in northern and central California seriously dam aged important fruit crops in that area, and lack of seasonal rainfall in many parts of the District has adversely affected farm crops and livestock ranges. Difficulty in marketing the District’s w ool clip at prices acceptable to pro ducers has also become an agricultural problem of first importance. Industry and trade expanded seasonally dur ing March and continued at the relatively high levels established during the closing months of 1928, and the first two months of 1929. Industrial production was larger during both March and the first quarter of 1929 than during the similar periods in 1928. Although produc tion of petroleum decreased during the month, daily average output was substantially above the average of recent years. Mine production of copper declined slightly during March, but mines of the District were still operating on heavy production schedules. Follow ing a period of winter curtailment, the lumber industry re sumed active operation, and output was larger than in any previous March. Trade activity during the month was m od erately above the levels of a year ago. Exports to foreign countries, domestic shipments through the Panama Canal, and sales of new automobiles were substantially larger than last year, while general trade at retail and at wholesale showed only small changes over the year period. Prices reached a peak for the first three or four months of 1929, during the early part of March, and the general price level has receded gradually since that time. Commercial loans of reporting member banks of the District increased during March, but their security loans and their investments were re duced by a larger amount, with a resulting de cline in their total loans and investments. The Federal Reserve Bank of San Francisco reduced its holdings of purchased bills and securities during the six weeks ending April 17, while discounts for member banks showed little net change for the period. The amount of Federal Reserve Bank credit outstanding at mid-April was smaller than in the previous two months. FEDERAL RESERVE AGENT AT SAN FRANCISCO A p ril, 1929 Agriculture Scant rainfall and subnormal temperatures during March and early April were highly un favorable factors in the agricultural situation. The relatively poor condition of winter wheat and the absence of seasonal improvement in the District’s livestock ranges reflected, in particu lar, the unusually light rainfall of the winter and spring months. Freezing temperatures were most destructive in northern and central Cali fornia where fruit and nut crops were seriously damaged. Although the outlook for the fall-sown wheat crop of the District has improved since Decem ber 1, 1928, current condition figures compare unfavorably with both one year ago and the ten-year (1919-1928) average. F A L L SOW N W H E A T t-------------- C o n d it io n ---------------* H arvested A r i z o n a ....................................... C a lifo rn ia ............................... Id a h o ........................................ N e v a d a .................................... O re g o n ...................................... U ta h ........................................... W a s h in g to n ........................... U n ite d S t a t e s ........................ S ource : (Per cent of Normal) A p r . 1, A p r .l, A p r .l, 1919-1928 D e c .l , 1929 1928 A v era ge 1928 90 86 91 96 82 88 86 91 90 89 91 86 95 96 94 91 86 93 91 85 91 96 94 87 75 94 83 70 82.7 68.8 80.9 84.4 (In thousands o f bushels) 1928 1,269 16,380 10,488 104 20,088 3,726 35,600 578,964 U n ite d S tates D e p a rtm e n t o f A g ric u ltu re . In contrast to the situation in this District, the condition of fall-sown wheat in other im portant producing areas of the United States was reported, on April 1, to be better than one year ago and above the average for the past ten years. Freezing temperatures throughout central and northern California during two successive week-ends in late March and early April seri ously damaged the 1929 crop of deciduous fruits and nuts. Preliminary reports indicate that this year’s production of apricots, cherries, peaches, pears, plums, prunes and almonds will be re duced by from one-sixth to one-half of the 1928 harvest, and the yield of grapes may be mate rially reduced. Fruit grow ing areas in Oregon and W ashington have also experienced freezing temperatures during the past six weeks but the damage done was not comparable to that re ported in California. Shipments of the large 1928-1929 Navel orange crop from California during March, 1929, totaled 6,762 carloads. In March, 1928, it was estimated that 6,033 carloads of Navel oranges were shipped. Heavy shipments of lemons were also reported during the month, 1,079 carloads moving from the state as compared with 844 carloads in March, 1928. Theforthcom ingValencia orange crop has matured slowly and sizes are somewhat smaller than usual. The 1929 lemon crop is reported to be in excellent condi tion and is now estimated to be substantially larger than a year ago, when production ap proximated 4,519,546 boxes. 27 The growth of forage on livestock ranges was further retarded by cold weather during March and no improvement in the condition of live stock was reported during the month. The spring movement of grass-fed cattle to market has been delayed by the poor range feed condi tions, and slaughter supplies have been drawn principally from the District’s feed-lots. During March 63,202 head of cattle were received at the eight principal markets of the District, which is 2.9 per cent less than the 65,128 head received in March, 1928. As noted in the March Review, the early spring lamb crop in the District is estimated to be slightly larger in California, and smaller in Arizona, Idaho, Oregon, and Washington than the 1928 crop. Estimates of the late crop of lambs produced in the District this year are not yet available. Reflecting the lateness of the season, shipments of live and dressed spring lambs from California for this season totaled 34,908 head up to April 12 as compared with 81,953 head shipped by this date in 1928. Although w ool shearing is now under way in most of the sheep raising states of the District, relatively few sales of the 1929 wool clip have been made. W ool is being warehoused as soon as shorn with the exception of some small quan tities which have been shipped to market for consignment sale. W ith wool prices at Boston and at foreign w ool markets ranging downward at levels well below those of a year ago, buyers have been slow to purchase wool and farmers, in many cases, have been unwilling to sell their C^1i >* I N T E N T I O N S T O P L A N T -1 9 2 9 (In per cent of 1928 harvested acreage) A r iz . C a lif. Idaho N ev . O re. Utah W ash . S p r in g W h e a t ................................. 90 80 70 115 135 O a ts ................... ........... 115 100 116 110 103 108 110 B a rle y .......................... 100 101 122 85 115 100 110 R i c e ........................................... 85 .................................................. G ra in S o r g h u m s . . . . 120 100 .................................................. 102 99 104 103 102 96 T a m e H a y ................... 105 P o t a t o e s (w h it e ) . . . 90 75 77 85 88 90 81 S ou rce: U .S 108.3 99.2 106.2 93.3 100.7 102.7 89,4 U n ite d S tates D e p a r tm e n t o f A g ric u ltu re . Continuing its practice of recent years, the United States Department of Agriculture has recently collected data of farmers’ “ intentions to plant” certain crops in this and other D is tricts. The figures show substantial changes as compared with last year’s harvested acreage in the several states of the District but changes for this District as a whole, excepting white potatoes and rice, are relatively small. Industry Industry generally experienced a full sea sonal expansion during March and continued at the relatively high levels established during the last months of 1928 and the first two months of 1929. A high rate of activity in the mining, petroleum, and building industries has con tributed largely to recent industrial expansion in the southern part of the District, while sea sonal increases in lumbering, fishing, road con- A p r il, 1929 M O N T H L Y REVIEW OF BUSINESS CONDITIONS 28 struction, and food canning were the major factors in a similar expansion in the District’s northern area. IN D E X NUM BERS IN D U ST R IA L G A R LO A D IN G S—T W E L F T H DISTRICT Revised index adjusted for seasonal variation; 1923-1925 daily aver age =100. Latest figure, March 119. The value of construction work in the Dis trict during the first quarter of 1929 was greater than in the first quarter of 1928, the increase arising from the larger volume of engineering construction contracts awarded in the later year. The value of urban building construc tion approximated that of a year ago. P ro duction of copper, petroleum, lumber, cement and of iron and steel products was larger and output of flour smaller during the first quarter of this year than during the first quarter of 1928. In March, despite a decrease in the number of employees in the flour milling, petroleum, and motion picture industries, there was a seasonal increase in total volume of all employment. Mine production of copper declined slightly during March as compared with February but was still much larger than a year ago. Stocks of mine-copper increased slightly during the month but stocks of refined copper at eastern refineries declined by about 4 per cent, and were at the lowest levels of recent years. D e mand continued active through most of March and refined copper prices rose from 19^ cents per pound (Connecticut Valley points) at the beginning of the month to 24 cents per pound on March 22, but sales diminished at these Indexes of daily average production, adjusted for seasonal variation (1923-1925 daily average ** 100) ,----------- -1929 —------- ^ 1928 Feb. Jan. M a r. M ar. 107 118 124 119 89 105 81 850 120 105 94 113* 147 172 178 180 110 133 116 . 114 65 74 76 1210 136 99 88 114 129 1110 930 93 102 109 94 . 119 , 74 93 69 110 64 111 74 187 268 175 228 171 213 115 113 119* 135 97 "^P relim inary. f N o t a d ju s te d fo r _____ »nal v a r ia tio n . îP r e p a r e d b y F e d e ra l R e s e r v e B o a rd . § In d e x e s are f o r th re e m o n th s e n d in g o n th e m o n th in d ica te d . IfT w en ty citie s. O R evised. ( B ) Employment— Industries (A) Industry— M a n u fa c t u r e s : F lo u r ........................................................ S la u g h te r o f L iv e s t o c k ................. L u m b e r ................................................... R e fin e d M in e ra l O il s f ................. C em en t ................................................... W o o l C o n s u m p t io n ! ...................... M in e r a ls : P e tr o le u m ( C a l i f o r n i a ) t ............... C o p p e r (U n it e d S ta te s ) $ ............ L e a d (U n it e d S ta te s ) $ ................. S ilv e r ( U n it e d S t a t e s ) ? ............... G e n e r a l: C a rlo a d in g s — I n d u s tr ia l ............... V a lu e o f B u ild in g P erm its§ti. . . V a lu e o f E n g in e e r in g C o n tra cts A w arded§ T o t a l .............................................. ____ _ E x c lu d in g B u ild in g s ............. higher prices. By the middle of April demand had subsided to some extent and prices had de clined to 18 cents per pound. A ctive develop ment work was carried on by many of the larger mining companies of the District during the month. Employment at copper mines of the District was approximately 10 per cent larger on April 1,1929, than on September 1,1928, and wages of mine workers had advanced 25 per cent during the same period. Daily average production of petroleum in California was reduced during March, 1929, as compared with February, 1929, but was still substantially larger than in March, 1928. Large oil reserves in the deeper zones of the important Santa Fe Springs field and in a comparatively new field at Kettleman Hills in the southern end of the San Joaquin Valley have recently been discovered by drilling companies. Shipments of gasoline from California ports during the first quarter of 1929 were approximately double those of the first quarter of 1928. Shipments of California crude oil declined substantially as compared with a year ago, chiefly as a result of increased competitive shipments from V ene zuelan fields to Atlantic and Gulf Coast ports of the United States. During recent weeks definite attempts at regulation of petroleum production have been made by the larger oil companies in California. Follow ing a sharp curtailment of output dur ing the severe weather of February, lumber production in the Pacific Northwest expanded sharply during March, 1929, and was larger in that month than in any other March on record. The increase in output from January to March, 1929, was less than the usual seasonal increase during that period, but in making this compari son it should be remembered that January out put was the largest on record for that month. Demand for west coast lumber has been well maintained thus far in 1929. -California---------\ r ...... —Oregon------------* No. of No. of No. r - Employees f— Employees —\ No. Mar., of Mar., Mar., of Mar., Firms 1929 1928 1929 1928 Firms 755 S to n e , C la y and G lass P r o d u c t s . L u m b e r an d W o o d M a n u fa c tu r e s . . 157,998 (1.8) 155,268 6,521 ( — 5 .8 ) 117 22,906 ( — 5 .2 ) 6,924 43 24,153 146 24,877 (7.5) 157 (- - 3 0 . 5 ) 15,001 51 (1 0 .6 ) 9 2,118 (7 .5 ) 429 8* (0 .0 ) 1,620 43 (2 .8 ) 4 23,135 226 13,559 1,970 C lo th in g , M illin e ry 429 an d L a u n d e r in g . 64 8,765 8,726 ( 0 .4 ) F o o d s , B e v e ra g e s 1,576 a n d T o b a c c o . . . 169 23,889 33,744 (:— 2 9 .2 ) W a t e r , L ig h t and 7,548 P o w e r ................. 5 7,158 ( — 5 .2 ) 69,743 O th e r I n d u s t r ie s !. 326 84,179 (2 0 .7 ) 5,552 2,140 2,010 31 5,375 M is c e lla n e o u s 13 (3 .3 ) (6 .5 ) ^ L a u n d e r in g o n ly , f I n c l u d e s th e f o llo w in g in d u s t r ie s : m e t a ls ; m a c h in e r y and c o n v e y a n c e s ; le a th e r a n d r u b b e r g o o d s ; c h e m ic a ls , o ils an d p a i n t s ; p r in t in g an d p a p e r g o o d s . 18 2,440 (0 .8 ) 2,420 Figures in parentheses indicate percentage changes from March, 1928. A p ril, 1929 FEDERAL RESERVE AGENT AT SAN FRANCISCO Trade 29 of wearing apparel and of clothing accessories is a regular accompaniment of the Easter sea son. This influence varies in incidence with the shifting date of Easter Sunday. In 1928, April 8 was Easter Sunday, and the influence of that event upon monthly sales figures was distrib uted between March and April. This year Easter Sunday came on March 31 and presum ably all of the 1929 Easter trading was reflected in March sales reports. That this was largely true is shown by comparing March, 1929, sales Trade in the Twelfth District increased by more than the usual seasonal amount during March, 1929, and continued at levels above those of a year ago, so that the total volume of trade transacted during the first quarter of the year is estimated to have been greater than in the first quarter of 1928. Intercoastal shipping, exports of commodities from Pacific Coast ports, and sales of new au tomobiles in the District were substantially greater in volume both for the month and for IN P E X N U M B E R S the quarter than in the corresponding periods of last year. Imports through the District’s ports 130 of entry declined as compared with last year, PÌETAIL »A L E S while freight carloadings and value of trade at 120 v \J ** retail and wholesale showed relatively small • Ì 110 WH OLESALE changes over the year period. SALES it ryf V Sales at wholesale increased by less than the 100 usual seasonal amount during March, 1929, and ft __ v _ were slightly below the levels of March, 1928. 90 Substantial increases over the year period were -------r r - r r - J reported in southern California, while few in creases and many declines were reported from R E T A IL A N D W H O L E S A L E T R A D E —T W E L F T H D IS T R IC T the remainder of the District. Indexes adjusted fo r seasonal variation. 1923-1925 average=100. D aily Sales at retail during the month were ap average figures o f departm ent store sales. M on th ly figures of sales at w holesale, figures for 1928 revised . proximately 4 per cent larger than a year ago. There was one less trading day in March, 1929, and stocks of certain individual departments than in March, 1928, but the effect of this differ with the figures reported for March, 1928. In ence was offset by the early date of Easter Sun creases were general in sales of men’s, wom en’s day this year, which brought about a relative and children’s apparel and accessories, ranging increase in March, 1929, sales volume. It is a as high as 40 per cent in some departments. On generally known fact that an increase in sales the other hand sales of piece goods, small wares, and house furnishings fell off sharply in the (C) Bank Debits*— year-to-year comparison. Stocks of wearing ap / - —F irst T h ree M o n th s— \ M arch , M arch , parel and accessories held by reporting stores 1928 1928 1929 1929 A r iz o n a at the end of March this year were much smaller $ 137,024 $ 101,995 34,881 P h o e n ix ..........$ 44,237 $ than at the end of March, 1928. A year ago, C a lifo rn ia 45,901 46,276 16,449 17,737 B a k ersfield . . . substantial amounts of goods for the Easter 65,716 B e r k e le y . . . . 21,177 23,415 66,950 trade were still in stock at the close of March, 95,806 98,796 31,886 33,743 F r e s n o .............. 202,417 160,336 L o n g B e a ch . 68,795 57,481 while this year stocks were reduced because 3,118,977 1,151,389 3,801,033 L o s A n g e le s . 1,365,530 739,863 723,693 263,322 261,175 O a k la n d .......... practically all of the Easter buying had already 128,000 45,261 141,711 46,275 P a sa d e n a . . . . taken place. 146,598 143,432 48,036 48,635 S a c r a m e n to . . vV'i 12,143 S an B e r n a rd in o 68,427 S an D ie g o . . . S an F r a n c is c o . 1,599,561 28,393 S an J o s e . . . . 18,156 S a n ta B a rb a r a 28,256 S tock ton .... Idaho 13,693 B o i s e ................. N ev a d a 11,593 R e n o ................. O regon 7,435 E u g e n e ............ P o r tla n d .... 2 0 0 ,4 6 7 t U ta h 18,156 O g d e n ............ 77,923 S alt L a k e C ity W a s h in g t o n 11,333 B e llin g h a m . . 13,588 E v e r e tt ............ 785 R it z v ille ......... 289,407 S e a ttle ............ 64,526 S p o k a n e .......... 53,062 T a c o m a .......... 14,141 Y a k im a .......... 10,956 67,023 1,684,138 27,535 14,459 28,208 34,886 205,398 4 ,3 45,354 84,740 51,257 81,206 13,742 43,106 41,231 9,332 32,000 26,344 30,767 188,138 4,487,737 81,574 41,883 89,232 21,094 558,736$ 19,215 464,484 17,295 74,511 54,885 231,503 52,952 221,310 10,808 13,881 890 273,681 62,021 52,157 14,420 30,147 39,467 2,656 794,721 177,345 148,087 39,605 29,060 36,722 2,746 696,962 164,308 133,246 38,097 6,586 165,165 T o t a l ...............$ 4 ,4 3 6 ,7 5 3 f $4,220,525 $12,352,637$ $11,434,088 * I n th o u sa n d s , fI n c l u d e s $16 ,962 ,00 0 at fo u r b a n k s n o t r e p o r t in g p r io r to w e e k e n d in g M a y 2, 1928. ^ In clu d e s $49,678,000 at fo u r b a n k s n o t r e p o r t in g p r io r t o w e e k e n d in g M a y 2, 1928. (D) Distribution and Trade— !-------- — 1929—-------- -N 1928 Feb. Jan. M ar. In dex N um bers*- M a r. C a rlo a d in g s T o t a l t ........................................................ 117 M e r ch a n d is e an d M is c e l la n e o u s !. 122 W h o le s a le T r a d e S a le s l .......................................................... 101 R e ta il T r a d e A u t o m o b ile S ales t 125 147 D e p a r tm e n t S to r e 125 S a le s t ................... 105 S t o c k TurnoverJI ............................. C o lle c t io n s # R e g u la r ........................................... ______ In s ta llm e n t .................................... .26 46.8 15.3 1080 1160 112 118 110 115 103 107 102§ 132 132 125 157 78 77 121 101 123 98 114 111 A ctual F ig u r e s 23 .24 45.2 14.6 47.7 15.9 .24 45.8 15.5 * A d ju s t e d f o r se a s o n a l v a r ia tio n s, 1923-1925 a v e ra g e — 100. t D a ily a v e ra g e , t M o n t h ly to ta ls o f ten lin es c o m b in e d . § M o n th ly to ta ls o f ele ve n lin es c o m b in e d . IfA t en d o f m o n th . ||P r o p o r t io n o f a v e r a g e s t o c k s s o ld d u r in g m o n th . # P e r c e n t o f c o lle c t io n s d u r in g m o n th to a m o u n t o u ts ta n d in g at first o f m o n th . ^ R evised . 30 M O N T H L Y REVIEW OF BUSINESS CONDITIONS Retail sales for the quarter ending March 31, 1929, were moderately larger than for the same period in 1928. Average stocks carried during the quarter were about 4 per cent smaller this year than last, so that the rate of stock turn over was higher than during the first three months of 1928. R E T A I L T R A D E — T w elfth D istrict ,---------N E T S A L E S * ----------, J a n .1 to M a r., 1929 M ar.31,192? com pared com pared with with Jan. 1 to M a r., 1928 M a r. 31,1928 D e p a r tm e n t S t o r e s f . . 4.1 ( 6 8 ) 3.6 ( 6 8 ) A p p a r e l S t o r e s ............ 6.8 ( 2 3 ) 6.4 ( 2 3 ) F u rn itu r e S to r e s . . . . — 2.4 ( 4 8 ) — 1.7 ( 4 8 ) A ll S t o res ...................... 3.6 (1 3 9 ) 3.1 (1 3 9 ) STOCK* M a r., 1929 com pared with M a r.. 1928 — 4.4 (5 1 ) 3.2 (1 8 ) — 6.3 (2 6 ) — 4.0 (9 5 ) • P e r c e n t a g e in c re a se o r d e c r e a s e ( — ) . F ig u r e s in p a ren th eses in d ica te n u m b e r o f s to re s r e p o r tin g , fI n c l u d e s d r y g o o d s sto r e s. This Bank’s seasonally adjusted indexes of daily average sales of new automobiles re mained during March at the high levels of recent months, indicating a full seasonal ex pansion in this field of trade. Total volume of sales of new automobiles during the first quar ter of 1929 was larger than in any other first quarter of record. W hen adjusted for seasonal variation, fig ures of intercoastal traffic during February, 1929, show a decline of 11 per cent as compared with January, 1929, and are well below the levels of other recent months. Traffic from the Atlantic to the Pacific Coast increased during February and was large in volume, but there was a sharp drop in cargo movement from the Pacific to the Atlantic Coast, due to decreased shipments of lumber and general cargo. Preliminary reports for March indicate a further slight decline in intercoastal traffic during that month, though usually it increases at this season of the year. Shipments continue to exceed the low figures of early 1928. Total freight carloadings on railroads of the District increased more than seasonally dur ing March, as a result chiefly of increased loadings o f logs and lumber, shipments of which had been sharply reduced by unfavor able weather during February. Merchandise and miscellaneous carloadings also increased more than seasonally during the month and were larger than in March, 1928. Prices The general level of com m odity prices at wholesale reached a high point for the year to date during the first week of March. The rise which culminated at that time resulted from ad vances in prices of agricultural commodities and of metals, there having been but few im portant changes in the price levels of other com m odity groups, although rubber prices also reached a peak at the close of February. Follow ing the early March peak a slight dow n ward movement of the general price level was recorded, the result of declines in prices of A p ril, 1929 farm products follow ing the earlier advance. Most composite com m odity price indexes for March were somewhat higher than for Febru ary, however, the Bureau of Labor Statistics’ index of wholesale prices, for example, advanc ing from 96.7 in February to 97.5 in March. Prices for farm products with the exception of livestock declined during March, but these declines were largely offset b y advances in prices of non-agricultural commodities, particu larly metals, so that the net decline in average prices of all commodities during the month was slight. During the first half of April the upward movement in prices of non-agricultural com modities was reversed and this movement, to gether with continued reduction in prices of farm products, resulted in a relatively sharp de crease in composite price indexes. Probably the most important readjustment in quotations for an}^ com m odity during the first half of April was the sharp drop in copper prices. As was noted on page 28 quotations for that metal had risen in late March to 24 cents per pound (delivered Connecticut Valley points) although it is reported that very little copper was sold at that price. This was the highest quotation for refined copper since late in 1918. During the first ten days of April prices were reduced by nearly five cents per pound, and on April 16 sellers were quoting refined copper at 18 cents per pound. W heat quotations have declined since late February, the downward movement having now (April 22) exceeded the sharp advance during the preceding six weeks. A t mid-April wheat prices were approximately 20 per cent lower than a year earlier. Credit Situation During March and the first weeks of April reporting member banks of the District ef fected a net reduction in the volume of their loans on securities and cared for a seasonal increase in commercial demand for credit. B or rowings from the Federal Reserve Bank of San Francisco have changed little since early February, except for the temporary fluctua tions which accompanied the mid-March period of tax assessment, income tax payment, and United States Treasury financing. Total loans and investments of reporting member banks declined during March and the first half of April as a result of a reduction in investment holdings and security loans. All other loans of these banks, which are loans made chiefly for commercial purposes, in creased during this period which is a time of seasonal expansion in business. During March the decline in total loans and investments of the banks reflected reduced holdings of invest ments, while during April contraction of loans on securities was responsible for the decrease. Since the close o f March total loans on securi- A p ril, 1929 FEDERAL RESERVE AG EN T AT SAN FRANCISCO ties at reporting member banks have averaged lower than at any time this year. R EPORTING M EM BER BANKS — Twelfth District (In millions of dollars) /—Average Condition During Month-^ April, March, February, April, 1929* T o t a l L o a n s and I n v e s t m e n t s .. . 1,945 T o t a l L o a n s ......................................... 1,298 C o m m e rcia l L o a n s ........................... 885 L o a n s o n S e c u r itie s ........................ 413 In v e s tm e n ts ........................................... 647 768 N e t D e m a n d D e p o s it s ................... T im e D e p o s it s .................................... 977 B o r r o w in g s fro m F e d e ra l R e s e r v e B a n k ..................................................... 70 1929 1,948 1,305 883 422 643 .783 973 1929 1,946 1,295 877 418 651 796 972 1928 1,840 1,248 882 366 592 795 928 74 71 55 • A v e r a g e o f first th ree w e e k ly re p o rts in th e m o n th . There was a decrease in the amount of Fed eral Reserve Bank credit outstanding during the first half of April as compared with the preceding two months. The Federal Reserve Bank of San Francisco further reduced its holdings of purchased bills and securities dur ing March and early April while, except for a temporary increase during the first half of March and an equally temporary decrease dur ing the second half of that month, there was little change in the volume of its discount busi ness. City member banks’ borrowings were slightly lower at the close of the period than at its beginning. Borrowings of country mem ber banks increased, reflecting in some degree the agricultural marketing difficulties being experienced in certain sections of the District. Reduction in this Bank’s holdings of ac ceptances during March and April without a compensating increase in total discounts was made possible by a variety of factors includ ing (a) reduction in demand for currency at the Federal Reserve Bank, (b) an influx of funds into the District from other parts of the United States, (c) mint purchases of new gold, (d) issuance of Treasury notes in mid-March, the proceeds of which were not immediately withdrawn from the banks of the District where they were deposited, and (e) an excess of Treasury disbursements over Treasury re ceipts within the District during April. FED ER AL RESERVE BANK OF SAN FRANCISCO (In millions of dollars) r—Average Condition During Month—> April, March, February, April, T o t a l B ills an d S e c u r it ie s .......... B ills D i s c o u n t e d ............................. B ills B o u g h t .................................... U n ite d S ta tes S e c u r it ie s ............... T o t a l R e s e r v e s ................................ T o t a l D e p o s i t s .................................. F e d e ra l R e s e r v e N o te s in C ir c u la tio n .................................... 1929* 118 83 21 14 242 184 1929 136 86 35 15 226 184 1929 142 77 49 16 224 187 1928 114 62 24 28 248 187 157 159 159 156 • A v e r a g e o f first 17 d a y s. Recent developments in the credit situation make it seem desirable, at this time, to review certain events of the past two years which have affected the demand for member bank and Reserve Bank credit in the Tw elfth District. In this District the year 1927 was a year of moderate activity in industry and trade, and the available evidence clearly indicates that the total volume of business transacted was 31 smaller than in 1926. Reflecting this decline in business activity, member bank loans for com mercial purposes decreased during the year, as did the total volume of member bank loans. Loans on securities averaged higher in 1927 than in 1926, however, most of the increase com ing in the last four months of the later year, and accompanying a sharp rise in activity of security markets. Bank funds were plenti ful throughout the year, member banks in creased their investment holdings, demand for Reserve Bank credit was reduced, and interest rates remained at moderate levels. MILLIONS OF DOLLARS ............ .... . 1 S E C U R IT Y 1 LOANS & IN V E S T M E MILLIONS OF DOLLARS V 2100 900 C ~ O M M E R c iA L LOANS TOTAL t-OANS & INVES1rMENTS J 1800 600 IN V E S T M E N T S S 300 1 92 7 Y nET DEM/\ND & TIME DEPC>SITS e c u r it y l o a Ki s 1928 1929 1500 ¿»1200 C hart I C h a r t II M E M B E R B A N K C R E D IT M on th ly averages o f w eek ly figures o f T w elfth D istrict reporting m em ber banks. Latest figures are averages for the first three report dates in A p ril. In 1928 the appearance of ease in the credit situation, which characterized the year 1927, was not maintained. There was a relatively rapid increase in the use of credit and some increase in its cost, particularly in the case of loans on securities. These developments ac companied a moderate expansion of activity in industry and trade, and a marked expansion of activity in security markets in this District and in the country as a whole. Borrowing at the Federal Reserve Bank reached a higher level than in any recent year. Movements of significant items in the con dition statements of member banks during the M E M B E R B A N K S — T w e lfth D istrict A v era ge for the /- -Change from—* ---------- M on th o f ----------\ March, M arch , M arch , M a rch , 1928 to 1927 to R e p o r t in g M e m b e r B a n k s— 1929 1928 1927 1929 1928 T o t a l L o a n s an d I n v e s t m e n ts . .................................. 1,948 1,825 1,693 + 123 + 1 3 2 C o m m e r c ia l L o a n s ............ 884 911 887 —3 — 24 S e c u r ity L o a n s and I n v e s t m e n ts .................................... 939 1,065 782 + 126 + 1 5 7 422 S e c u r ity L o a n s ................... 353 321 + 69 +32 In v e s tm e n ts ........................... 585 643 461 + 58 + 1 2 4 N e t D e m a n d and T im e D e p o s it s ............................. 1,756 1,703 1,610 + 53 +93 770 D e m a n d D e p o s it s ................. 783 733 — 13 +37 T im e D e p o s it s ........................ 973 933 877 -4 0 +56 R a tio s to N e t D e m a n d and T im e D e p o s it s o f T o t a l L o a n s and I n v e s t 107.1 105.1 m e n ts .................................. 111.0 + 3.9 + 2 .0 C o m m e r c ia l L o a n s .......... 50.3 52.1 56.6 — 1.8 — 4.5 S e c u r ity L o a n s and I n 55.1 48.6 v e stm e n ts ........................ 60.6 + 5.5 + 6 .5 A ll M e m b e r B a n k s — B o r r o w in g s fr o m R e s e r v e 58 41 B a n k ......................................... 74 + 16 +17 All figures in millions of dollars except ratios which are in per cent. M O N T H L Y REVIEW OF BUSINESS CONDITIONS 32 past two years are shown in charts I and II and are summarized in the preceding table. It is apparent from these exhibits that the increase in volume of member bank credit in use during the past tw o years has resulted from an increase in loans on securities and in member bank investments. Loans granted pri marily for commercial purposes have shown practically no net change over the whole of the period under review. This is a significant de velopment. W hat is, perhaps, even more sig nificant from a bank credit standpoint is the fact that during the past few years there has been a disproportionate increase in the loans and investments of these banks as compared with their deposits. This tendency is revealed in charts III and IV , which present ratios of CURVE I CURVES 2& 3 PERCENT States, both on commercial and financial account and for the account of the United States Treasury. The net movement of funds out of the District, resulting from commercial and financial transactions is estimated to have ex ceeded 50 million dollars, a loss of more than 150 million dollars to the New Y ork district and of approximately 65 million dollars to other eastern and mid-western industrial dis tricts being partially offset by transfers of funds into this District from New England and from certain of the great agricultural dis tricts. Net Treasury withdrawals during 1928 amounted to 45 million dollars. There were certain minor offsetting factors in operation during the year, but the direct result of these movements of funds was a reduction in the rate of growth of deposits held in the District’s banks. No compensating reduction in loans and investments was recorded. MILLIONS OF DOLLARS C h a r t II I C h a r t IV L O A N -D E P O S IT R A T IO S IN T E R E S T R A T E S C H A R T I I I — L o a n -D e p o s it ratios, T w e lfth D istrict reporting m e m ber banks. M on th ly averages o f w eek ly figures. Latest figures are averages for first three report dates in A p ril. C u rv e 1. R atio total loans and investm ents to net dem and and time deposits. C u rv e 2. R atio com m ercial loans to net dem and and time deposits. C u rv e 3. R atio security loans and investm ents to net dem and and tim e deposits. C H A R T I V — R eserve B ank discou n t rate and averages o f prevailing interest rates charged b y banks in San F ra n cisco . Figures are as of m id dle o f each m onth, latest figures being for A p ril. loans and investments to deposits of report ing member banks in the Twelfth District and prevailing interest rates in San Francisco. In the past a continued increase in loans and in vestments of banks without a proportional in crease in their deposits has usually been accom panied by a rise in interest rates, and the year 1928 proved no exception to this general rule. The present upward movement of the ratio began in 1924 and was most rapid in 1928 and the first quarter of 1929. A t 111.5 for the first half of April, 1929, the ratio of total loans and investments to demand and time deposits at reporting member banks of the District was at the highest point reached since June, 1921. The grow ing spread between loans and in vestments and deposits of these banks during 1928 was aggravated and partially accounted for by a large movement of funds from the Tw elfth District to other sections of the United A p r il, 1929 MILLIONS OF DOLLARS R E SE R V E B A N K C R E D IT * C H A R T V — Principal factors affecting dem and fo r credit at Federal R eserve Bank o f San F ra n cisco . M o n th ly changes cum ulated from A p ril 1,1927. F igures are for report dates nearest the m iddle o f each m onth, latest figures being for A p ril 17. Solid line show s total o f : (a) dem and for cu rren cy, (b ) T reasu ry r e ceipts and disbursem ents, ( c ) im ports and exp orts o f gold, (d ) mint purchases o f new gold, (e) transfers o f funds betw een T w e lfth D is trict and other parts o f U nited States. B rok en line show s total bill and security holdings, F ederal R eserve B ank o f San F ra n cisco . C H A R T V I — M on th ly averages of daily figures, F ed era l R eserve Bank of San F ra n cisco . Latest figures are averages fo r first 17 days in A p ril. Not only has the transfer of funds out of the District played an important part in bring ing about the increased ratio of loans and in vestments to deposits at member banks, but it has also been the chief factor in the increased changed little during 1928 and early 1929, and Bank.* Reserve requirements of member banks changed little during 1928 and early 1929, and the net increase in demand for currency at the Reserve Bank was negligible during this period. Increased borrowing at the Federal Reserve Bank of San Francisco during the past year has arisen chiefly out of member bank needs for funds to be transferred to other districts. * T h e a m o u n t o f b ills and s e c u r itie s h e ld b y the F e d e ra l R e s e r v e B a n k o f San F r a n c is c o is n o t an e n tire ly a c c u r a te m ea su re o f T w e lft h D is t r ic t d e m a n d fo r R e s e r v e B a n k c r e d it. It in c lu d e s se cu ritie s (a n d b ills ) p u r c h a s e d o u ts id e o f the T w e lft h D is t r ic t an d d o e s n o t in c lu d e b ills p u r c h a s e d in this D is t r ic t an d a llo tte d t o o th e r F e d e ra l re s e r v e b a n k s.
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