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MONTHLY REVIEW OF B U S IN E S S C O N D IT IO N S ISAAC B. NEWTON, Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. X V II San Francisco, California, April 20,1933 TW ELFTH 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 Twelfth District business fluctuated consid erably during March and averaged somewhat lower than in February, being influenced by banking holidays during the first half of the month and by the earthquake in the Los A n geles region on March 10. Practically the entire decline in both industry and trade came in the early part of the month, most fields of activity having recovered approximately to February levels by the end of March. Marketing of agri cultural products proceeded about as usual, since necessary facilities to finance transactions involving food and feed products were pro vided throughout the banking holiday. Prices of commodities important in the Twelfth Dis trict averaged slightly higher in March than in February, and after a brief decline at the beginning of April, continued their advance. Weather conditions in most parts of the Dis trict were more satisfactory for the growth of range feed and planted crops in March than in February. Reports of farmers' intentions to plant indicated that acreage sown to spring wheat would be about 33 per cent larger this year than in 1932. This increase in spring wheat acreage is the result of the relatively small win ter wheat crop which was damaged by cold weather last autumn. Larger acreages than in 1932 are expected to be planted to beans and oats, while planting of barley and potatoes will probably be smaller. Crude oil production averaged 433,000 barrels daily during March, or somewhat lower than the proration schedule of 440,000 barrels daily, but the daily average increased to 466,000 bar rels during the first half of April. Although lumber production did not increase by the full seasonal amount during March, operations were stimulated late in the month by a rising volume of orders. The value of engineering construc tion changed little, but building permits were considerably higher in March than in Febru ary. Output of cement increased sharply. About the usual change in industrial employment was reported to have taken place during March. No. 4 The seasonally adjusted index of department store sales receded from 65 per cent of the 1923-1925 average in February to 58 per cent in March, a new low level since 1919. New auto mobile registrations were the fewest in number since 1922. The value of wholesale sales and the volume of intercoastal traffic increased somewhat more than is usual from February to March. Between March 22 and April 19, currency and coin returned to the Federal Reserve Bank of San Francisco totaled 38 million dollars. This made a net return of 127 million dollars since March 13, the day on which currency and coin in the hands of commercial banks and the public reached its record high point, compared with withdrawals amounting to 133 million dollars between mid-January and March 13. In addition to the 38 million dollars received dur ing the four weeks ending April 19 as a result of redeposits of currency, banks were supplied with 26 million dollars of funds through local disbursements by the United States Treasury in excess of collections. These funds were used by banks to rebuild their deposits with eastern correspondents and to meet payments resulting from net transfers of funds out of the District, part of which was caused by purchases of se curities in eastern markets. Only a small part of the redeposited currency was used to reduce borrowings or to increase reserve balances at the Federal Reserve Bank of San Francisco. Considerable progress was made during the first three weeks of April in restoring operations in banks which had not been licensed to reopen in March. Agriculture Although weather conditions in the Twelfth District during March were extremely variable, their influence on the agricultural situation was more favorable than in February. In Washington, western Oregon, and northcoastal California, rainfall during March ap proximated normal, while the volume of rainfall ranged from near normal in the remainder of northern California, in eastern Oregon, and in Idaho to far below normal in southern Califor nia and Arizona. Higher temperatures in March improved growing conditions for most crops. Ranges in the lower altitudes also bene fited from warmer weather, although the effects of scant rainfall during February are still evi dent. Feed has been developing satisfactorily on summer ranges in the higher altitudes where soil moisture has been plentiful. According to a report of the United States Department of Agriculture as of March 1, farm ers in the District intended to plant an acreage of spring wheat 33 per cent greater than that harvested in 1932. This increase in spring wheat acreage would compensate in part for the sharp decrease in the estimated production of winter wheat which was damaged by freezing weather in December and February. The acre age planted to beans and oats this year is ex pected to be greater than the 1932 harvested INTENTIONS TO PLANT-1933 (In per cent of 1932 harvested acreage) Ariz. Calif. Ida. Nev. Ore. Utah Wash. Spring Wheat....................... 92 75 256 90 130 Oats .................. 110 90 115 100 105 105 110 Barley .............. 120 75 95 90 105 102 90 R ic e ............................ 100 .................................................. Potatoes ............ 110 85 90 100 105 80 95 Beans ................................... .....108 ... 100 ................. Tame Hay ........ 95 100 105 102 98 100 103 Source: U.S. 97.5 97.0 98.2 86.7 94.6 99.6 101.1 United States Department of Agriculture. acreage of those crops, while barley and potato acreages are expected to be reduced. Little change is anticipated in the area planted to rice and tame hay. The actual volume of crops harvested in the District frequently varies from these intended acreages considerably, depend ing upon the influence of subsequent climatic and economic factors. Reliable estimates of the condition of decidu ous fruits in California are not yet available. Weather conditions have generally favored the A g r ic u ltu r a l M a r k e tin g A c tiv ity — t-------- March-------- > t— Season to Date — \ Carlot Shipments Apples ............ Citrus Fruit . . . Vegetables Exports Wheat (bu.) . . Receipts Cattle* .............. Hogs* ............... Sheep* .............. Eggs (cases) . .. Butter (lb.) Wheat (carlots) Storage Holdings (end of month) Wheat (bu.) Beans (bags) . . . Butter (lb.) Eggs (cases) . . . 1933 4,142 5,552 6,680 1932 4,119 7,943 6,416 833 782,500 410,707 105,941 59,859 216,327 182,347 194,798 6,817,7 59 2,689 360,000 ,107,110 147,486 194,042 1933 44,615 10,020 30,107 1932 45,167 13,647 36,580 2,542,721 19,014,050 6,644,514 3,017,890 183,704 205,166 686,099 761,080 710,604 554,614 443,251 460,313 6,193,271 18*358,705 18,161,233 34,127 42,473 2,141 66,833 238,990 223,970 178,110 2,464,000 1,568,711 433,916 222,355 *Receipts at Ogden not included. April, 1933 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS 26 development of those crops, however, during recent weeks. It is estimated that the District's 1933 win ter wheat crop will be 42,742,000 bushels, a re duction of 43 per cent from the 74,621,000 bushels harvested in 1932. FALL SOWN WHEAT Condition Indicated Har(Per cent of Normal) Production vested Dec. 1, April 1, 1933 1932 1933 1932 1932 (in thousands of bushels) 91 96 80 880 609 74 84 76 7,665 10,674 69 87 73 9,056 14,996 97 87 95 50 19 54 87 90 5,670 15,020 83 88 70 3,104 3,128 37 83 86 16,317 30,175 . . .. .. 42,742 74,621 59.4 75.8 68.9 334,087 462,151 t— April 1 -^ Arizona ................ California ............ Idaho .................... Nevada .................. Oregon .................. Utah .................... Washington ........ Twelfth District . United S tates___ Source : United States Department of Agriculture. During the last three months there have been only slight changes in the estimates of citrus fruit production in California. A t the end of March the 1932-1933 Navel orange crop was estimated to be 14,219,000 boxes, while the current lemon crop was estimated to be 6,266,800 boxes. The forthcoming Valencia orange crop developed more satisfactorily during March than in February. Receipts of butter and eggs at Pacific Coast markets increased from February to March as is usual during this season of the year. The volume of those products in storage on April 1, while greater than on March 1, was consider ably smaller than a year ago. Data on receipts and inventories of butter and eggs indicate that consumption has been well maintained. The early lamb crop in the District is conE m p lo y m e n t— f------- California-------- < - Oregon No. of No. of r-Employees-> No. /— Employees —s Mar., Mar., of Mar., Mar., 1932 1933 1932 1933 Firms 120 12,518 114,511 122,950 13,496 (-7.2) (—6.9) 4,342 3,806 No. of Industries Firms All Industries* .1,219 Stone, Clay, and Glass Products. 56 Lumber and Wood ^ 12.3) 6,271 6,924 Manufactures . . 125 9,267 11,628 46 (— 20.3) (— 9.4) 8 968 Textiles ................ 16 1,305 1,666 831 (16.5) (— 21.7) Clothing, Millinery, 9,771 12,101 and Laundering. 158 128 138 St (— 7.2) (- -19.3) Food, Beverages, and Tobacco.. . 307 26,166 26,258 31 1,038 1,130 (— 8.1) (— .4) Public Utilities... 49 45,723 49,875 (— 8.3) Other Industries'}'. 499 57,693 60,086 (— 4.0) 6,869 30 4,113 6,503 4,473 Miscellaneous 58 (— 5.3) (— 8.0) Wholesale and Retail................ 216 27,219 31,183 (— 12.7) *Public utilities and wholesale and retail figures not included in this total, flncludes the following industries: Metals, ma chinery, and conveyances; leather and rubber goods; oils and paints; printing and paper goods. JLaundering only. Figures in parentheses indicate percentage change from March, 1932. April, 1933 FEDERAL RESERVE A G EN T AT SAN FRANCISCO siderably smaller than a year ago, both because there were fewer ewes in breeding flocks and because there were greater than usual losses of ewes and new born lambs. In California, short ages of feed have been reflected in marketing of lambs of relatively poor quality. Cattle are in better condition this spring than in 1932, sufficient grain and hay having been available during the past winter to meet the requirements for cattle feed where range condi tions were unsatisfactory. The supply of grassfed cattle in California will be smaller than a year ago and the movement to market will be delayed considerably. Industry The banking holiday in early March wras ac companied by some decline in industrial activ ity, although production of many industries was not apparently affected. In addition to the influence of the banking difficulties, production in southern California was affected by the earthquake in that area on March 10. Lumber production declined in the first half of March, but recovered later in the month when the volume of orders increased. Output of electric power, affording a measure of activity in a wide variety of industries, increased slightly during March, after allowance for seasonal factors. Building activity was stimulated to some extent by reconstruction in areas affected by the earthquake, while operations in the oil indus try were curtailed substantially following that disturbance. Cement production increased con siderably. Employment conditions remained about the same in March as in February, the year-period decrease in the number of indus trial employees in California being slightly less than 7 per cent in both months. Lumber mill operations expanded by slightly less than the seasonal amount from February to March. The increase was larger than usual in the Douglas Fir region but adjusted indexes of production in the Western Pine and Califor nia Redwood areas declined. Incoming orders were greater in the last half of March and in early April than in the corresponding period of 1932. Shipments of lumber also increased. A t the time of the earthquake in southern California, it was feared that damage to pipe line and storage facilities had increased the fire hazard. As a result, production of both crude and refined oil in that area was restricted. The full force of this curtailment was evident during the week ended March 25, when output aver aged only 373,000 barrels. During late March and the first half of April, crude output ad vanced to about 470,000 barrels daily, again ex ceeding by a considerable margin the proration allowable of 440,000 barrels announced last October 1. The volume of crude runs to refinery stills recovered more rapidly than did produc tion following the earthquake, and crude oil stocks were reduced somewhat. Small decreases in gasoline inventories continued to be reported. Since late 1929, when voluntary agreements to restrict production of crude oil were first adopted, considerable difficulty has been ex perienced in securing adherence to proration schedules. Early in 1930, the discovery of large oil reserves in the Elwood and Ventura fields increased temporarily the potential production and accentuated the difficulties involved in the curtailment program and in equitably prorating output. Within a period of about four months, however, output was reduced by almost 150,000 barrels daily, this reduction being accompanied by a decline of nearly the same amount in esti mated potential production. After the middle of PER CENT 27 ELECTRIC POWER PRODUCTION-Twelfth District Index numbers adjusted for seasonal variations (1923*1925 average»» 100) 28 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS 1930, potential output again increased, reach ing a peak in September, 1931. Since then it has declined considerably. Actual output has been greatly reduced since late 1929, but with a few exceptions has remained in excess of proration schedules. As indicated by the ac companying chart, output was less than the proration schedule only in July, 1930; in June and July, 1932; and in March of this year. CRUDE OIL PRODUCTION—California Dark area indicates excess of actual over “ scheduled" production. In July, 1930, in June and July, 1932, and in March, 1933, output was less than the schedules. Actual production in April _______ is an average for the first half of the month. Sources : Actual production—American Petroleum Institute. Potential and scheduled production—California Oil Umpire. The value of construction was somewhat higher in March than in February. Engineer ing contracts amounted to slightly more than 7 million dollars, compared with 6 million dol lars in February and 36 million dollars in Janu Jan. 44 146 40 138 107 83 42 96 76 59 38 40 19 23 73 120 tN ot adjusted for seasonal variations. ^Prepared by Federal Re serve Board. § Indexes are for three months ending with the month indicated, Preliminary. ary. The monthly average for the first quarter of 1933 was about the same as for the entire year 1932. Undertakings of the Federal Gov ernment comprised nearly one-third of all engineering construction, other forms of public works being exceptionally small. Building per mits issued in both “20 larger” and “ 70 smaller” cities increased in value during March. The total value of permits was larger than in any month since June, 1932. Marked increases oc curred in Long Beach, in Los Angeles, and in several other cities in the surrounding area, reflecting to a considerable extent the replacing and repairing of buildings damaged by the earthquakes. Flour milling increased by considerably more than the seasonal amount during March, but operations remained about 15 per cent below the relatively high level prevailing in March, 1932. Millers reported smaller stocks of flour, on the average, during the first quar ter this year than in the corresponding period a year earlier, but somewhat larger wheat hold ings, despite reductions during the past few months. Slaughter of livestock, another indus try in which the rate of activity is above the general average, declined somewhat during March, after allowance for seasonal factors. Trade Department store sales declined during March, a movement contrary to seasonal expec tations and reflecting the influence of banking holidays during the first half of the month. Adjusted indexes of sales of reporting stores in all cities except Salt Lake City were lower than in any previous month in this depression. As compared with March, 1932, which month in cluded Easter of that year, the value of sales D istr ib u tio n a n d T r a d e — In d u str y — Indexes of daily average production, adjusted for seasonal i (1923-1925 daily average*“ 100) -1932 /--------1933-1932 Mar. Feb. Jan. Dec. Mar. Feb. General 36 37 36 36 Carloadings— Industrial.. 144 145 Electric Pwr.Production. 13811 135 138 137 Manufactures 34 35 35 32 Lumber ............................ 28 29 133 131 115 122 129 Refined Mineral O ils t... 81 83 116 110 Flour ................................ 94 75 90 82 80 79 85 Slaughter of Livestock.. 80 42 44 35 37 40 Cement ............................ 52 87 76 108 Wool Consumption!. . . . Minerals Petroleum (California) f . 6611 71 76 76 71 71 40 54 40 Lead (United States)$ .. 45 45 55 30 30 28 31 Silver (United States) t . 44 36 Building and Construction § T o ta l.................................. 40 47 64 44 38 31 Building Permits— Value 10 10 9 21 19 Larger C ities.............. 10 12 Smaller Cities ............ 11 12 15 17 20 Engineering Contracts Awarded— V alue 69 Total ........................ 73 93 145 87 48 Excluding Buildings. 178 230 281 162 84 137 April, 1933 ,-------- 1933-1932 -------- x t------- 1932 -------* Mar. Feb. Jan. Dec. Mar. Feb. Jan. Indexes adjusted for seasonal variations ,-------------- (1923-1925 average-100)-------------- > Carloadingst 66 56 59 54 54 Total ...................... 81 67 74 76 68 Merchandise.......... Foreign Trade0 54 55 56 43 43 43 T o ta lt...................... 51 53 42 42 50 43 Importst ................ 59 44 44 57 57 44 Exports .................. 41 Intercoastal Trade 51 56 61 55 58 51 T o ta l........................ 59 80 80 58 58 89 56 Westbound ............ 57 42 59 55 48 48 56 63 Eastbound.............. Retail Trade Automobile? Salesî 48 35 33 34 Total .................. 27 35 40 32 45 Passenger .......... 27 34 38 30 31 62 42 58 84 Commercial........ 33 62 61 Department Store 84 80 85 65 58 60 68 Sales* ................ 78 61 74 76 Stocksff .............. 56 58 61 Collections# t--------------------Actual Figures-------------------- \ 39.4 41.1 42.6 40.7 41.9 40.4 42.5 Regular .......... 13.4 13.7 14.1 12.8 14.6 14.6 14.6 Installment . . . iDaily average. 0Indexes are for three months ending with month indicated. t Excluding raw silk. lAt end of month. #Per cent of collections during month to amount outstanding at first of month. April, 1933 FEDERAL RESERVE AG E N T A T SAN FRANCISCO declined 30 per cent, while the number of net sales transactions decreased 17 per cent. The year-period decrease in the Fairchild index of retail prices of department store goods amounted to 12 per cent, although there was little change from February to March. RETAIL TRADE—Twelfth District Percentage changes in value of sales and stocks with no adjustment for price changes t----------- 1933 compared with 1932 ------------% ,----------- NET SALES------------ > STOCKS January 1 to end March of March March Department S tores.... — 30.2 ( 67) — 27.7 ( 67) — 22.4 (50) Los Angeles ............ — 30.1 ( 8) — 28.0 ( 8) — 20.6 ( 7) Other Southern Calif. — 39.7 ( 7) — 28.5 ( 7) — 17.8 ( 5) Oakland .................... — 36.6 ( 4) — 33.0 ( 4) — 27.2 ( 4) San Francisco.......... — 26.6 ( 7) — 24.9 ( 7) — 20.1 ( 7) Bay Region ............ — 29.4 ( 15) — 27.1 ( 15) — 22.0 (15) Central California . . . — 28.9 ( 6) — 28.3 ( 6) — 17.7 ( 6) Portland! .................. — 30.0 ( 7) — 28.3 ( 7) — 26.5 ( 7) Seattle ...................... — 31.9 ( 4) — 28.1 ( 4) — 31.1 ( 4) Spokane .................... — 38.6 ( 4) — 32.8 ( 4) — 16.4 ( 4) Salt Lake City.......... — 18.5 ( 4) — 22.6 ( 4) — 17.2 ( 3) — 26.9 ( 27) — 22.2 (17) Apparel Stores ............ — 31.1 ( 27) Furniture Stores.......... — 36.1 ( 35) — 36.8 ( 34) — 25.9 (23) All Stores .................... — 30.8 (129) — 28.7 (128) — 22.8 (90) ■¡•Includes five apparel stores which are not included in District Department store total. Figures in parentheses indicate number of stores reporting. Note: These figures take no account of operating costs. Somewhat more than the usual expansion in wholesale trade was reported during March, activity in all lines, except automobile supplies, increasing from levels of the preceding month. Value of sales was 20 per cent smaller than in March, 1932, compared with a year-to-year de cline of 23 per cent in February. There was a slight increase in the level of wholesale com modity prices during March, but it remained about 10 per cent lower than a year earlier. WHOLESALE TRADE—Twelfth District Percentage changes in value of sales with March, 1933 Cumulative 1933 t----- compared with----- > > compared Agricultural Implements Automobile Supplies . . . . Drugs ................................ Dry Goods........................ Electrical Supplies.......... Furniture .......................... Groceries .......................... Hardware.......................... Shoes ................................ Paper and Stationery. . . . All Lines .......................... Feb., 1933 47.7 — 2.6 3.2 20.0 18.7 17.0 15.3 23.2 37.3 19.3 15.0 Mar., 1932 — 48.4 — 28.5 — 26.1 — 25.8 — 17.3 — 32.1 — 12.1 — 24.7 — 30.3 — 18.4 — 20.2 with 1932 — 47.8 — 21.0 — 21.0 — 22.1 — 24.5 — 33.2 — 16.7 — 23.8 — 24.5 — 23.5 — 21.0 Note: These figures take no account of operating costs. Automobile registrations were only slightly higher in March than in February, whereas sales usually expand considerably between these months. Consequently, this Bank’s ad justed index declined from 35 to 27 per cent of the 1923-1925 average, a new low point since figures were compiled in 1922. The decline in the adjusted index of commercial vehicle sales was 23 per cent, while the decrease in the index of passenger car registrations was 21 per cent. About the seasonal increase in intercoastal traffic was recorded during March. Tonnage was only slightly smaller than in March, 1932, 29 one of the highest months of that year. Cargo transported from the Pacific to the Atlantic Coast was considerably greater than in the cor responding month of last year, while west bound traffic was substantially smaller. The value of foreign trade at Pacific Coast ports totaled somewhat less during the first quarter of this year than in the preceding three months and averaged 33 per cent lower than in the first quarter in 1932. Both exports and imports increased seasonally during March, however, following declines in the two preced ing months. Prices Commodity prices averaged higher in March than in February, reflecting widespread in creases during and immediately following the banking holiday. Fluctuations during the lat ter part of March and the first two weeks of April were irregular, but during the third week of April there was a sharp advance in whole sale prices. The most pronounced recent price increases have been among agricultural products. W heat prices advanced approximately 20 per cent from late March to mid-April, while smaller in creases were recorded in quotations for barley and rice. Potato and bean prices also increased, although hay prices declined. Cotton sold at the highest prices of the year in mid-April. Quotations for Pacific Northwest apples and California lemons advanced between Febru ary and March, while returns for California oranges declined. Dried prunes, apricots, and apples were quoted at higher levels in April than at any time since the beginning of 1932. Canned fruit prices remained unchanged. Cat tle and lamb prices advanced gradually throughout March, while hog prices, after in creasing during most of March, declined in the later part of that month. Pacific Coast quota tions for all three classes of livestock declined during the first half of April. Prices of butter increased during the first half of April, while egg prices were unchanged. There has been considerable stability in prices for wool during recent weeks and the current season’s clip is bringing District producers returns equal to those of a year ago. Prices for copper, lead, zinc, and silver were higher during the third week of April than at any time since last November. Reductions of from 1 to \ y 2 cents per gallon in gasoline prices in northern California were announced on March 27. Among miscellaneous commodities produced or used in large quantities in this region, sugar and hide prices advanced during March and April while prices for rubber, coffee, cement, and newsprint changed little. M O N T H L Y R EVIEW OF BUSINESS CONDITIONS 30 Credit Situation Currency and coin continued to be returned to the Federal Reserve Bank of San Francisco on practically every day during the four weeks ending April 19. By that date, the net amount of currency returned from circulation since SUPPLY OF AND DEMAND FOR FUNDS USED AS BANKING RESERVES —Twelfth District Changes in millions of dollars during the weeks indicated Week Ending 1933 February 22. March 1. March 8. 15. March 22. March 29. March 5. April April 12. 19. April SOURCES OF FUNDS Reserve Commercial Bank and Financial Treasury Total Credit Transactions Operations Supply 7.2 — .9 8.4 — .3 24.5 2.7 .5 21.3 1.0 41.3 22.8 17.5 6.6 7.2 — 1.5 .9 — 8.7 —69.1 — 59.2 — 1.2 — 25.9 .7 —26.2 — 1.0 — 3.0 — 14.2 10.2 1.0 10.8 — 5.1 — 5.4 — 10.5 — 13.2 — 5.7 2.9 4.6 Week Ending 1933 February 22. 1. March March 8. March 15. 22. March 29. March 5. April 12. April April 19. USES OF FUNDS Member Bank Unexp’d Demand for Reserve Capital Total Currency Deposits Funds, etc. Dem’d .0 7.2 6.2 1.0 3.4 24.5 41.9 — 20.8 40.9 — .7 1.1 41.3 — .8 8.5 — 1.1 6.6 — 69.1 — 74.0 1.0 3.9 — 21.6 — 4.9 — 26.2 .3 1.4 — 2.2 — 3.0 — 2.2 .2 — 5.1 — 9.6 4.3 — 2.2 1.3 — 5.7 — 4.8 the banking holiday totaled 127 million dollars, leaving the amount in the hands of the public about the same as the average of January and the first half of February. This return flow of coin and currency, together with accretions in cident to United States Treasury operations, added appreciably to the working funds of MILLIONS o r April, 1933 banks. Repayments of borrowings at the Re serve Bank were relatively small during the five weeks ended April 19. Transfers of funds out of the District, however, were unusually large. On March 2 and 3, when California banks were closed but eastern banks were still open, business houses in this area drew down eastern accounts or borrowed in eastern money markets. After the reopening of banks on March 13, local concerns restored these de posits in eastern banks or repaid loans in those markets and thus caused heavy commercial transfers of funds out of this district with a consequent use of local banking funds. In ad dition, some banks purchased a considerable amount of securities for their own account in eastern markets and Twelfth District bankers' balances placed with eastern correspondents increased sharply. There was practically no increase in reserve deposits at this Bank during this period. FEDERAL RESERVE BANK OF SAN FRANCISCO (in millions of dollars) t---------------------Condition---------------------Apr. 19, Apr. 12, Mar. 22, Mar. 15, Apr. 20, 1933 1932 1933 1933 1933 167 266 220 253 Total Bills and Securities. 219 72 87 97 78 Bills Discounted.......... 73 54 8 21 23 50 Bills Bought................ 62 125 125 125 United States Securities 125 259 222 214 219 213 Total Reserves................ 151 156 160 160 164 Total Deposits................ Federal Reserve Notes in 344 Circulation.................... 261 223 266 293 Ratio of Total Reserves to Deposit and Note Lia 46.5 59.4 50.8 51.4 51.9 bilities Combined........ Federal reserve notes comprised the bulk of the currency returned from circulation during the last half of March and the first half of April, with the result that the note liabilities DOLLARS DEMAND FOR CURRENCY—Twelfth District Changes cumulated from January 2, 1929. Latest figure is for April 19. April, 1933 FEDERAL RESERVE AG EN T A T SAN FRANCISCO of the Federal Reserve Bank of San Francisco were reduced considerably. In view of the heavy transfers of funds out of the District, however, the reserves of that Bank were also reduced and the reserve ratio continued to fluctuate around 50. By April 19, a large part of the banks that had been in operation prior to the banking holiday had reopened for business without restriction. The following table summarizes changes in the status of banks during the period March 1April 19. CHANGES IN TWELFTH DISTRICT BANKS March 1—April 19, 1933 Status of Banks Ariz.* Calif. Ida. Nev. Ore. Utah Wash. Total In Operation March 1. 15 317 96 13 152 74 248 915 Open without restric77 11 112f 69 175 731t tion April 19.............. 11 276 Not licensed to open without restriction : Closed for liquidation 5 0 1 4 0 16 March 1— April 19 2 4 Consolidated March 1— April 19 0 0 0 0 11 0 4 15 Other— April 1 9 . . . . 2 37 14 3$ 30 1 69 156$ •Excludes five southeastern counties in Eleventh Federal Reserve District, t Includes 2 newly chartered banks. $ Includes one bank in Nevada which was closed prior to March 1. Legislation permitting branch banking has been extended rapidly in the Twelfth District during 1933. Since the beginning of the year laws have been passed in all District states, 31 except Arizona and California where branch banking was already legal, permitting banks operating under state charters to establish branches. These laws are now effective in all states except Utah, where the new statute will not apply until the new 1933 Revised Code be comes effective a few months later. The restric tions upon the establishing of branch banks vary in the several states, but in all cases state laws are now more liberal than national laws on this subject. In some states a larger mini mum capital is required for state-wide branch banking than for city or country branch sys tems. Total dealings in securities on the District stock exchanges reached a new low level for the depression in March due to the restricted number of trading days. On a daily average the number of transactions was comparable with the number in other recent months. Trad ing activity and prices increased sharply on April 19 and 20, the increases being largely attributable to the official admission of the country’s departure from the gold standard. Bank Debits The usual bank debits table is omitted from this Review because figures for March, 1933, are not complete. S U M M A R Y O F N A T I O N A L C O N D IT IO N S Prepared by the Federal Reserve Board Production and distribution of commodities, which declined during the latter part of Febru ary and the early part of March, increased after the middle of the month. The return flow of currency to the reserve banks, which began with the reopening of banks on March 13, con tinued in April. Following the announcement by the President on April 19 that the issuance of licenses for the export of gold would be sus pended, the value of foreign currencies in terms of the dollar advanced considerably and there was increased activity in the commodity and security markets. Production and Employment. Production at factories and mines decreased from February to March, contrary to seasonal tendency, and the Board’s seasonally adjusted index declined from 64 per cent of the 1923-1925 average to 60 per cent, compared with a low level of 58 per cent in July, 1932. A t steel mills there was a decline in activity from an average of 20 per cent of capacity in February to 15 per cent in March, followed by an increase to more than 20 per cent for the month of April, according to trade reports. In the automobile industry where there was also a sharp contraction in output when the banks were closed, there was a rapid increase after the reopening of banks. From February to March, production in the food and cotton textile industries showed little change in volume, activity in the woolen indus try declined sharply, and there was a reduction in daily average output at shoe factories. A t lumber mills, activity increased from the low rate of February, while output of bituminous coal declined by a substantial amount. The volume of factory employment and pay rolls showed a considerable decline from the middle of February to the middle of March. Comprehensive figures on developments since the reopening of banks are not yet available. Value of construction contracts awarded in the first quarter, as reported by the F. W . Dodge Corporation, was smaller than in the last quarter of 1932 by about one-third. Distribution. Volume of freight carloadings, on a daily average basis, declined from Febru ary to March by about 7 per cent, reflecting in large part a substantial reduction in shipments of coal. Shipments of miscellaneous freight and merchandise, which usually increase at this season, declined in the early part of March and increased after the middle of the month. De partment store sales, which had declined 32 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS sharply in the latter part of February and in the first half of March, increased rapidly after the reopening of banks. Wholesale Prices. Wholesale prices of lead ing commodities fluctuated widely during PE R C C N T April, 1933 19. Deposits of reporting member banks in New York increased rapidly after the reopen ing of the banks, and on April 19 net demand deposits were $620,000,000 larger than on March 15, reflecting in part an increase of $380,000,000 in bankers’ balances, as funds were re deposited by interior banks. Money rates in the open-market, after a tem porary advance in the early part of March, de clined rapidly, but were still somewhat higher than early in February. By April 21 rates on prime commercial paper had declined from 4 INDUSTRIAL PRODUCTION Index numbers of industrial production, adjusted for seasonal varia tions (1923-1925 average=100). March and the first three weeks of April. In this period grain prices increased sharply and prices of cotton, hides, non-ferrous metals, pig iron, scrap steel, and several imported raw materials advanced considerably. During the same period there were reductions in the prices of rayon, petroleum, and certain finished steel products. Bank Credit. Currency returned rapidly to the reserve banks and the Treasury following I TOTAL D / ____ .A 1929 ■ I9 à 0 " '■ S. SCCURI1 ICS ^P«£CgUNTS 1931 ^-NACCEETANCCS - 1932 “ ■■ ,9iy - J RESERVE BANK CREDIT Wednesday figures. Latest figures are for April 19. the reopening of the banks, and on April 19, the volume of money in circulation was $1,500,000,000 less than on March 13, when the peak of demand was reached. Funds arising from the return flow of currency were used to reduce the reserve banks’ holdings of dis counted bills by $1,035,000,000 and their hold ings of acceptances by $200,000,000. A t the same time member bank reserve balances in creased by $390,000,000. A s a result of the de cline in Federal reserve note circulation and an increase in Federal reserve bank reserves, chiefly through the redeposit of gold certifi cates, the reserve ratio of the twelve Federal reserve banks combined advanced from 46.5 per cent on March 13 to 61.5 per cent on April RESERVE BANK CREDIT AND PRINCIPAL FACTORS IN CHANGES Wednesday figures. Latest figures are for April 19. per cent to a range of 2-2 y 2 per cent; rates on 90 day bankers’ acceptances from 3 $4 per cent to ¥% per cent; and rates on renewals of call loans on the stock exchange from 5 per cent to 1 per cent. On April 7 the discount rate of the Federal Reserve Bank of New York was reduced from 3^4 to 3 per cent. That bank’s buying rate on 90 day bankers’ acceptances was reduced from 3 y i per cent on March 13 to 2 per cent on March 22.
@FedFRASER