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MONTHLY REVIEW OF B U S IN E S S C O N D IT IO N S Federal Reserve Agent Federal Reserve Bank of San Francisco Yol. X X San Francisco, California, April 20,1936 No. 4 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 Twelfth District business activity expanded seasonally during March. Practically all meas ures of production, trade, employment, and pay rolls were substantially higher than in March 1935. Increased activity in building, particularly of houses, has contributed materially to expansion in business during the past year. Building permits value continued to increase during March, the total for 90 district cities exceed ing the February figure by 33 percent. This increase was principally the outcome of contin ued rapid expansion in residential building, although nonresidential construction and al teration and repair work also increased. Con tract awards for public works, however, de clined further during March. Output of lumber expanded sharply in ac cordance with the seasonal tendency for the month, but no appreciable reduction was ef fected in the large accumulated supply of orders. Cement output was larger than in any March since 1929. Although daily average crude oil output was much lower in March than in February, the decline reflected conform ance to voluntary curtailment agreements. A c tivity at refineries remained practically un changed. Vegetable canning, flour milling, and livestock slaughter increased as is customary during March. Industrial employment ad vanced by about the usual seasonal amount. Seasonal expansion in daily average sales value of department stores was reported from all parts of the district during March. A ggre gate sales were 12 percent larger than a year ago. Preliminary figures of new automobile sales increased sharply in March, follow ing decreases in January and February. Railway carloadings and intercoastal freight traffic through the Panama Canal increased sea sonally. Condition of crops and livestock continued generally satisfactory during March and early April, although frosts toward the end of this period caused some slight damage to crops and delayed normal growth of early lambs. V o l ume of marketing was larger than in March of last year. Prices of farm products remained unchanged from mid-March to mid-April. District banking reserves were greatly en larged between March 18 and April 15. A t the end of the period they were considerably above the previous high level reached in early March before quarterly income tax payments and Treasury financing operations temporarily re duced them. The supply of funds was aug mented during the period by a substantial ex cess of Treasury disbursements over collections and by the temporary deposit with district banks of proceeds of several large refunding issues. The temporary deposit of funds because of refunding operations also was reflected in the moderate increase in adjusted demand deposits of district banks during the four-week period ending April 15. Little net change occurred in time deposits or in the various classifications of earning assets during the period, total loans and investments remaining near the relatively high level to which they had risen in midMarch. Agriculture Seeding and development of grains and field crops proceeded satisfactorily during March and early April, although weather conditions were not uniformly favorable. There was little or no rainfall during most of March, but soil moisture except on some livestock ranges was adequate. Rain and snow storms were wide spread during late March and early April. Low temperatures and dust storms caused some damage to the wheat crop in the Pacific Northwest during March, and the condition on April 1 was below that of a year ago. Soil moisture is satisfactory, however, and the pro duction outlook at present is reported to be fairly good. W eather conditions in California were favor able for the planting and growth of grain and field crops during March and the first half of April. Cold weather is reported to have dam aged deciduous fruits and nuts slightly, but 26 MONTHLY REVIEW OF BUSINESS CONDITIONS no important reduction in output is expected to result. Volum e of Tw elfth District agricultural products marketed during March was about the same as in February and somewhat larger than in March 1935. Prices paid farmers ad vanced slightly from mid-February to midMarch and averaged from 5 to 10 percent higher than a year earlier. The increase re flected higher livestock and livestock product quotations, since most crop prices were slightly lower than last year. These data indicate that farm income during March continued to be somewhat higher than a year ago. The latest report from the United States Department of Agriculture covers January and February and shows that Tw elfth District farm income from crops during those months was 2 percent higher than a year ago, while income from livestock and livestock products was 14 percent larger than a year ago. Deciduous fruit growers are now attempting to secure adoption of an agree ment under provisions of the Agricultural A d justment A ct to control marketing of fresh fruits, except apples, during the forthcom ing season. Navel orange shipments continued smaller than a year ago during March. This was partly the result of a smaller crop this year, partly a result of disrupted transportation facilities in the East, and partly because shipments of oranges from Florida were heavier than in March 1935. Prices continued to average higher than a year ago, although some decline took place in relation to February. The forthcom ing Valencia orange crop is estimated to be 20,335,000 boxes, 23 percent smaller than the record 1935 crop but 17 percent larger than average output from 1928 through 1932. Although the crop is expected to ripen somewhat later this year than last, export shipments, usually com paratively small in amount, have commenced earlier than in 1935. Canada and the United Agricultural Marketing Activity— (---------- March---------- n Carlot Shipments Apples and Pears. Citrus Fruits . . . . Vegetables .......... 1936 1935 3,590 6,657 9,507 3,265 7,188 7,281 Wheat ( b u . ) .......................... Barley ( b u . ) ___ 357,791 835 113,166 ,— Season to Date— \ 1936 1935 33,430 25,791 50,849 39,223 30,225 50,518 Exports 50,161 7,598,238 2,789,993 3,662,827 Receipts* Cattle .................. Hogs .................... Sheep .................. Eggs (cases) . . . Butter (lbs.) ___ Wheat (ca rlots). . Barley (ca rlo ts).. Storage Holdings* (end of month) Wheat (bu.) ___ Beans ( b a g s ) ___ Eggs (cases) . . . . Butter ( l b s . ) ___ 85,414 163,314 204,440 214,422 6,504,754 3,358 559 (-------------1936------------- n March February 5,086,000 1,470,000 146,000 77,000 5,497,000 1,562,000 .............. 230,000 *At principal district markets. 73,712 133,758 193,431 186,347 6,097,757 3,113 373 265,453 244,088 471,560 444,480 628,294 617,196 557,951 501,504 16,989,834 15,464,116 52,749 40,340 7,454 7,261 ( March 1935------------February 3,171,000 2,913,000 1,351,000 1,562,000 176,000 ................... 44,000 75,000 April 1936 Kingdom are the chief export markets for Cali fornia oranges. Both prices and shipments of lemons from California increased from Feb ruary to March. Prices averaged $3.95 per box during March compared with $1.82 per box a year ago, and shipments were 25 percent larger than in March 1935. Production of grapefruit in Arizona and Cali fornia during the current season is estimated at 4,365,000 boxes, or 24 percent of the United States crop, and the farm value of grapefruit grown in those two states is expected to total about $5,300,000. Only in recent years has the raising of grapefruit in Arizona and California been an important source of farm income. Dur ing the five years 1924-1928, the average grape fruit harvest in these states was 822,000 boxes, or 8 percent of total United States production. Since 1928, the number of bearing trees and average yield per tree in Arizona and Cali fornia have increased more rapidly than in the United States as a whole. This increased pro duction has been sold largely in Pacific Coast and midwestern markets. In both Pacific and midwestern markets, Tw elfth District grape fruit has been in active competition with the product of Florida and Texas, the only other states producing grapefruit commercially. Ranges were in good to excellent condition on April 1 in all states of the district except W ashington. Snow and rain over the month end relieved dryness in that State, and pros pects for satisfactory spring range forage are good throughout the district. Storms in late March and early April caused some loss of weight in cattle and death losses of early calves in the Pacific Northwest. Stock in other parts of the district are in fairly good condition, although grass-fat beef in California are reaching satisfactory market weight som e what later than in 1935. Farm prices of cattle, which have declined slightly since the begin ning of 1936, ranged from 6 to 22 percent lower on March 15 than a year earlier. Cold weather in the Pacific Northwest re duced the early lamb crop in that section. The early drying up of range forage has retarded the development of spring lambs in California, and during the first ten days of April eastern shipments included a relatively large propor tion of lambs which will be fattened in midwestern and eastern yards before slaughter. Range conditions in both the Pacific N orth west and in California were improved by rain fall at the end of March. Spring lambs are currently selling somewhat higher than in April 1935. Last year, however, a large volume of spring lambs had been sold on contract early in the season at prices well above those prevailing in April. This year, early contracting for lambs was negligible, and April 1936 most shipments are therefore being made at current prices. The number of lambs to be marketed from California and Arizona this spring is expected to be somewhat larger than a year ago, but the average weight will be below last year’s unusually high figure. Industry Twelfth District industrial production in creased by about the usual seasonal amount during March. The customary advance in the number of employed also took place in indus try, but pay rolls were more than seasonally higher. Value of building permits, particularly for residential construction, increased sharply further during March. Output of practically all industries for which data are available was sub stantially higher than in March 1935. Industrial employment in California and Oregon increased seasonally from mid-Febru ary to mid-March. Moderate gains were re ported in most groups of industries in California, although a considerable decline took place in the number employed at fish canning and pack ing plants coincident with the close of the sar dine fishing season in northern California at the end of February. In Oregon, a substantial in crease in numbers of workers was reported in the important lumber and w ood manufactures industries and in the metals and metals products group. Declines occurred in the food products industry and in the stone, clay, and glass prod ucts group. Compared with March 1935, em ployment in identical reporting firms in Cali fornia was 5 percent and in Oregon 13 percent higher. Total industrial pay rolls in both Cali fornia and Oregon were considerably higher in Employment— --------- Californiia--------- \ r --------Oregon No. of No. of No. •— Employees —> No. *— Employees — March March of March March of Firms 1936 1935 Industries Firms 1936 1935 18,580 16.368 All Industries* . . . 1,386 147,671 140,369 106 (+5.2) (+13.5) Stone, Clay, and Glass Products. 63 110 131 5,776 6,698 3 (+ 1 6 .0 ) Lumber and W ood Manufactures .. 114 13,609 ( + 6.9) T e x tile s ................ 18 2,091 (— 10.9) Clothing, Millinery, and Laundering ’ 156 11,463 (+ 6 .0 ) Food, Beverages, and Tobacco . . . 293 30,190 (+ 2 .3 ) Public Utilities ,. 53 44,946 12,736 2,346 10,810 29,512 (— 16.0) 10,195 ( + 19.8) 1,853 8 ( + 7.5) 227 73: (+ 6 .6 ) 29 1,202 (— 6.5) 36 8,512 1,723 213 1,285 42,896 ( + 4 .8 ) Other Industries f . 688 71,289 (+ 4 .6 ) 54 12,331 Miscellaneous . . . . (+ 1 1 .7 ) Wholesale and R e ta il................ 342 44,800 (+ 2 .4 ) 68,151 11,038 23 4,993 (+ 1 0 .9 ) 4,504 43,755 * Public utilities, wholesale and retail figures not included in this total, iLaundering only, tIncludes the following industries: Metals, machinery, and conveyances; leather and rubber g o o d s; oils and paints; printing and paper goods. Figures in parentheses indicate percentage change from March 1935. 27 FEDERAL RESERVE AGENT AT SAN FRANCISCO March than in February, and were substantially above the totals reported for March 1935. Value of building permits in 90 Twelfth D is trict cities increased from 14.0 million dollars in February to 18.6 million dollars in March, the highest figure reported for any month in the last five years. In most of the 20 larger cities for which segregated data are available the value of permits for residential building increased sharply and in the aggregate ad vanced 55 percent. In these same cities a rise of 10 percent occurred in nonresidential per mits, while alteration and repair work increased 22 percent. Contract awards for public works amounted to 11 million dollars during March. During the first quarter of this year, awards totaled 73 million dollars, an amount more than twice as large as in the first quarter of 1935. U n usually large awards in January accounted for the higher quarterly total this year. Practically no new Twelfth District projects have been initiated directly by the Federal Government since January. District lumber production expanded sharply as is usual during March. Output was 21 per cent larger than in February and 29 percent larger than in March last year. New orders increased considerably during the month. A c cumulated orders remained at a high level, while inventories are reported to be in need of replenishment at many mills. Reflecting the improvement in demand, lumber prices in recent months have been appreciably higher than a year earlier. During February, Douglas fir quotations, f. o. b. mill, averaged approxi mately 25 percent higher than in February 1935. Trade sources indicate a slight decline in the mill price of Douglas fir during March. Petroleum output in California continued to Industry— Indexes of daily average production, adjusted for seasonal variation (1923-1925 daily average=100) ,-------- 1935-------- X ,--------- 1936 •1935Mar. Feb. Jan. Dec. Mar. Feb. Jan. General Carloadings— Industrial. Electric Pwr. Production 176H Manufactures Lumber .......................... 67ÏÏ Refined Mineral O ils f.. 15611 Flour .............................. 10811 C em ent............................ 97 W ool Consumption! . . . Slaughter of Livestock. 104 Minerals Petroleum (California)! 86H Lead (United States)$. Silver (United States) j . Building and Construction^ T o t a l................................ ’ 76 Building Permits— Value Larger Cities ............ 30 Smaller Cities .......... 54 Engineering Contracts Awarded— Value Total ...................... 127 273 77 63 1791T 179 68 172 50 152 54 154 50 154 70 156 101 87 128 101 75 152 101 120 112 98 72 157 93 112 110 99 53 125 107 58 98 91 60 127 93 53 132 97 52 120 102 56 132 101 89 103 63 95 103 70 68 75 55 50 75 50 65 76 48 50 97 88 90 69 40 44 54 29 50 25 44 24 38 20 23 17 21 13 20 167 374 182 337 118 217 61 132 80 176 118 211 tNot adjusted for seasonal variation. JPrepared by Board of Gov ernors of the Federal Reserve System. #Indexes are for three months ending with the month indicated. 1fPreliminary. 28 be reduced under the voluntary curtailment agreement from a daily average of 587,000 bar rels in February to 566,000 barrels in March. The later figure was still in excess of the limit of 538,800 barrels daily which it was desired to attain for March, but all except a few of the larger independent producers had con formed to schedules. Despite reduced output of crude oil, refinery production remained rela tively high and an upturn in consumption of gasoline did not result in any reduction in inventories. Nevertheless, gasoline quotations were raised 2y2 cents per gallon on April 2, thus cancelling the reduction on March 3, and on April 14 another advance of 2 cents per gallon was announced. Quotations have now been restored to the level prevailing last August. A n advance in fuel oil prices was also announced during March. Output of copper during the first quarter of 1936 was at a higher rate than in the second half of 1935, according to reports from copper pro ducers in the district. M ining and smelting of copper during the first quarter of 1936 was also substantially more active than in the first three months of 1935, when operations were restricted. Corresponding changes have taken place in em ploym ent at copper mines and smelters. A l though there has been considerable expansion during the past year, output of copper is still low in relation to the years 1922-1930. A rise in the rate of shipments during recent months has been accompanied by a reduction in refinery inventories and a gradual strengthening in prices of copper. In mid-April, the prevailing quotation on domestic copper was 9y> cents per pound, the highest since April 1931. District output of silver, lead, and zinc was also greater in the first quarter of 1936 than in the first quarter of 1935 and above the level prevailing in the last half of 1935. Exploration w ork to develop ore bodies containing a high silver ratio continues active under the stimulus of the Federal Government’s price of 77.57 cents a fine ounce for newly mined domestic silver. On April 20, this figure was 31.82 cents higher than the open market price in New York for all other silver. Increased output of silver has been an influence in stimulating larger lead and zinc production, but demand for these latter metals has improved considerably in the past few months and quotations have tended upward. Present quotations for lead are the highest since January 1931, and for zinc, the highest since April 1930; both are approxi mately 25 percent above the level prevailing at this time last year. Tin can factories in the district have ex panded operations since the first of this year and were more active in March than a year earlier. Part of the increase over the year April 1936 MONTHLY REVIEW OF BUSINESS CONDITIONS period may be attributed to earlier deliveries to vegetable canners this year than last, when the season was retarded somewhat. Total re quirements for early vegetable canning are expected to approximate those of a year ago. Fish canneries have been using a much larger number of cans than in 1935, reflecting in creases in packs of tuna, sardines, and mackerel. Output of general line cans has been increasing during recent months and is considerably larger than a year ago. This expansion has resulted from increased demand for various established uses, such as for coffee, paints and varnishes, and petroleum products. Introduction of beer cans has provided some stimulus to output during the past year, and has resulted in addi tions to plant capacity on the Pacific Coast. Prices of tin cans have remained practically unchanged since early 1934, when they were advanced approximately to the 1929 level. Canning of spinach was commenced during March, but slight delays were caused by rains late in the month. Asparagus canning became active in early April. No marked change from last year is expected in the pack of either of these vegetables and the carryovers are re ported to be low. Opening prices for both vege tables this year are slightly higher than for the 1935 pack. Sardine canning in the southern California area increased considerably in the last six weeks of the season which ended on March 31. Preliminary statistics indicate that the total California pack was considerably larger than in the preceding season. Sales have been large, however, and there was a moderate rise in prices in March. Deliveries of tuna to canneries were also larger than in February. Trade Department store sales value increased sea sonally during March. Since Easter Sunday came on April 12, March sales figures probably included but little Easter buying. Sales of all Distribution and Trade— -19351-1936 -1935Mar.. Feb. Jan. Dec. Mar. Feb., Jan. Indexes adjusted for seasonal variation (1923-1925 average=100) 85 70 68 74 85 7811 79 92 85 89 85 89 97 t— Carloadingsi .. Merchandise................ Intercoastal Trade 76 Total ............................ 75 65 69 78 65 68 99 96 79 W estbound .................. 89 105 81 69 54 61 73 Eastbound .................. , . 66 65 63 Retail Trade Automobile Salest T o t a l ........................ 121 106 208 69 107 104 Passenger............... 117 103 200 102 97 65 210 155 236 154 229 128 Commercial ........... Department Store Sales* .......................... 85 85 84 88 79 80 79 Stocks § ........................ 65 65 65 64 62 62 61 Collections# t—rm ----- :---- Actual Figures R e g u la r.................... 49.0 48.1 49.3 48.8 48.1 45.3 48.C Installm ent............. 18.4 18.0 18.4 17.6 18.5 16.8 18.7 tDaily average. §At end of month. #Percent of collections during month to amount outstanding at first of month. IfPreliminary, April 1936 29 FEDERAL RESERVE AGENT AT SAN FRANCISCO reporting department stores were 12 percent larger than in March 1935. In Utah and south ern Idaho, the increase was 1 percent; in the Pacific Northwest, 10 percent; and in California and Arizona, 13 percent. Sales of apparel and furniture stores continued to expand, increases of 24 and 32 percent, respectively, being re corded in comparison with sales in March 1935. RETAIL T R A D E —Twelfth District Percentage changes in value of sales and stocks (---------------1936 compared with 1935--------------\ STOCKS t---------NET SALES---------N Jan. 1 to end March* of March March Department Stores. .. 11.9 ( 82) 10.3 4.0 ( 57) Los A n g e le s.......... Other So. California O a k la n d ................ San Francisco . . . . Bay R e g io n .......... Central California. P o r tla n d !.............. Seattle .................. Spokane1 ................ T a c o m a t................ Salt Lake C ity. . . . Apparel S to r e s ........ Furniture Stores . . . . All S to r e s .................. 14.2 11.8 12.5 14.1 13.7 2.4 15.5 9.5 11.4 5.3 1.9 24.0 31.5 15.4 ( 6) ( 9) ( 5) ( 8) ( 18) (6 ) ( 9) ( 4) ( 6) ( 7) ( 4) ( 41) ( 35) (158) 12.0 9.7 10.9 11.0 10.9 4.1 13.0 7.2 5.9 7.8 7.6 19.4 35.6 14.2 4.1 ( 6) 4.5 ( 6) 4.7 ( 5) 3.0 ( 7) 4.0 ( 16) 9.0 ( 6) 1.9 ( 8) 2.7 ( 4) 10.3 ( 6) 16.2 ( 5) — 2.7 ( 4) 14.3 ( 27) 11.2 ( 25) 6.1 (109) t Includes five apparel stores each in Portland and Tacoma which are not included in district department store total. Figures in parentheses indicate number of stores reporting. *March 1936 had the same number of trading days as March 1935. Charge sales of department, apparel, and fur niture stores increased somewhat more than did cash sales, but the ratio of collections to ac counts outstanding continued higher than a year ago. The 13 percent increase in daily average railway carloadings in the district during March approximated seasonal expectations. Loadings were 18 percent larger than in March 1935. In part because of difficulties experienced in making deliveries in the Midwest and East where unusually severe weather and flood con ditions prevailed, lumber shipments by rail did not increase by the full seasonal amount. In view of the predominant influence of lumber shipments, Pacific Northwest loadings did not advance as much as usual, but in California the rise was of full seasonal proportions. W H O L E SA L E T R A D E —Twelfth District Percentage changes in value of sales Agricultural Implements .. Automobile S u p p lies........ Drugs .................................. Dry G o o d s .......................... Electrical S u p p lies............ F urniture............................ Groceries ............................ H ardw are............................ Shoes ................................. Paper and S tationery........ All L in e s ............................ March 1936 t-----compared with----Feb. 1936 Mar. 1935 63.8 59.3 15.5 19.4 2.5 8.3 24.2 11.5 36.2 49.1 1.2 — 10.8 12.7 9.6 18.0 21.0 36.8 22.7 9.3 3.6 16.7 16.9 Cumulative 1936 compared with 1935 48.0 12.7 9.7 4.7 39.5 — 0.8 7.6 23.9 10.8 13.0 15.3 A rise of 17 percent in the value of wholesale sales from February to March was larger than the average increase between those months. All reporting lines showed increases over the pre vious month, the expansion in sales of electrical supplies being the largest February-March in crease for that line since figures were first col lected in 1924. Total sales were 17 percent greater than in March 1935, all lines with the exception of furniture reporting increased business. Intercoastal water-borne tonnage increased seasonally from 625,000 tons to 704,000 tons in March, bringing the total for the first quarter of this year to 1,922,000 tons, slightly larger than in the first quarter of 1935. The rise for the month came entirely in shipments from the Atlantic Coast and reflected chiefly larger iron and steel shipments. Eastbound traffic re mained unchanged, a reduction in lumber ship ments being offset by increased petroleum and other cargo. During the first three months of this year, shipments of petroleum and iron and steel were smaller than in the first quarter of 1935, but the movement of lumber and of gen eral cargo increased sharply. Prices W holesale com m odity prices changed little during March and the first two weeks of April, according to the Bureau of Labor Statistics’ index. In mid-April, prices of farm products and foods were 5 percent lower than a year earlier, whereas the index for all commodities was about the same. Cost of living for wage earners and lowersalaried workers in larger Pacific Coast cities Arizona Phoenix .......... .$ California Bakersfield B erk eley .......... March 1936 35,292 $ /— First three months— v March 1936 1935 1935 30,593 $ 105,098 $ 87,181 10,960 13,534 20,359 30,365 651,274 66,784 22,404 79,376 8,074 38,395 775,816 18,351 9,966 3,423 14,381 14,169 12,766 43,840 39,286 8,800 7,758 26,152 22,433 6,069 174,671 15,074 4,645 153,086 11,306 15,971 456,230 37,882 11,818 382,242 30,597 15,162 59,178 11,328 52,706 41,881 174,165 37,136 153,981 5,341 6,644 191,084 41,362 30,032 5,136 11,610 4,983 5,629 152,229 34,168 24,722 4,421 11,960 15,407 19,044 517,457 114,829 85,062 12,792 31,730 13,315 15,373 411,132 94,656 67,801 11,986 30,691 Total ........ .$2,751,224 $2,285,762 $7,903,199 $6,349,419 Long Beach . . . Los Angeles . .. . Oakland .......... Pasadena ........ Sacramento . . . . San Bernardino. San Diego . . . . San Francisco . . San J o s e .......... Santa Barbara Santa R o s a ... . S to ck to n .......... Idaho Nevada Oregon E u g e n e ............ P o rtla n d .......... . 38,710 54,030 71,208 97,667 2,346,306 248,152 77,677 314,641 24,297 135,547 2,640,176 63,287 34,022 11,471 48,468 32,867 42,595 59,114 81,599 1,838,166 190,520 62,757 228,147 21,509 105,887 2,145,949 51,408 27,622 9,860 41,791 12,458 17,266 22,490 31,545 789,274 85,143 25,597 101,380 8,171 44,233 941,736 19,916 11,641 3,961 16,789 Utah Salt Lake City. Washington Bellingham Everett ............ Spokane .......... T a co m a ............ . Walla Walla .. . Y a k im a ............ . *In thousands of dollars. 30 increased approximately 1 percent during the three months ending January 15, 1936. This advance reflected primarily increases in food prices, although slight increases in rent and fuel and light costs were also factors in the rise. Since mid-January retail food prices have de clined and living costs in mid-March are esti mated to have been about the same as a year earlier or only slightly higher. W holesale quotations for canned and dried fruits showed no concerted change during March and early April. Both rubber and coffee prices declined somewhat, while refined sugar quotations continued the advance begun early in March. T he Credit Situation On April 15, reserve balances of Twelfth District member banks reached a new all-time high level. A considerable portion of the rise in reserves during the past few weeks, however, occurred in connection with special financial transactions. Part of the proceeds of several large refunding operations were transferred from New Y ork City to this district and tem porarily deposited with local banks. Practi cally all of these funds immediately became a part of the supply of member bank reserves. A portion of the balances was subsequently withdrawn and further large reductions will take place within the next few weeks as pay ments are made in connection with the redemp tion of maturing securities. A fter allowance for the gain, more or less temporary, from these special transactions, Reserve Bank Credit 1936— Feb. 12........ Feb. 19........ Feb. 26........ Mar. 4 ........ Mar. 11........ Mar. 18........ Mar. 25........ Apr. 1........ Apr. 8 ........ Apr. 15........ + 2.4 — 1.0 — 3.0 + 2 .0 — 1.1 + 4.2 — 5.9 + 4 .4 — 4.3 + 2 .2 Commercial Treasury Operations Operations — .8 — 5.0 — 5.4 — 7.4 — 4.3 + 26.6 +19.3 +18.0 + 4.5 — 3.6 + 2 .7 + 8.9 +10.9 + 5.3 +18.9 — 48.1 — 1.9 + 9.5 +19.1 + 10.6 Total Supply + 4.3 + 2.9 + 2.5 — .1 +13.5 — 17.3 +11.5 +31.9 +19.3 + 9.2 Ending Week Demand for Currency 1936— Feb. 1 2 .......... Feb. 1 9 .......... Feb. 2 6 .......... Mar. 4 .......... Mar. 1 1 .......... Mar. 1 8 .......... Mar. 2 5 .......... Apr. 1 .......... Apr. 8 .......... Apr. 1 5 .......... + 2 .9 — 1.7 — .5 + 6 .7 — 1.3 — 2.3 — 3.0 + 3 .9 + 5 .8 — 4.1 + .9 + 5 .9 + 3 .0 — 6.6 + 1 4 .5 — 15.2 + 7 .6 + 3 0 .3 + 1 3 .4 + 1 3 .9 *Change less than $50,000. The Board of Governors of the Federal R e serve System announced on March 25 that margin requirements for customers’ accounts Total Bills and Securities. .. Bills D iscou n ted .............. Bills B o u g h t...................... United States Securities.. Total Reserves .................... Total D ep osits...................... Reserve Note Circulation. . . Ratio— Reserves to Deposit and Note L iabilities........ April 15 1936 April 8 1936 Mar. 18 1936 April 17 1935 201 201 201 195 199 510 409 285 199 497 390 288 Ì99 458 363 282 193 336 307 208 73.5% 73.3% 71.0% 65.2% C O N D IT IO N OF REPORTING M EM BER BANKS Twelfth District (Amounts inmillions of dollars) April 15 April 8 Mar. 18 April 1Î 1936 1936 1935 1936 USES OF FUNDS Member Bank Reserve Deposits Securities Markets (Amounts inmillions of dollars) SOURCES OF FUNDS Week Ending member bank reserve balances increased m od erately during the four weeks to a level only slightly higher than that recorded immediately prior to the mid-March financial operations of the United States Treasury. Aside from the funds gained in connection with refunding op erations, interdistrict commercial and financial payments resulted in a small net loss in dis trict bank reserves between March 18 and April 15. The United States Treasury added 37 million dollars, net, to local bank reserves during the four weeks, however, as a result of disbursements in excess of collections. Gains from that source plus the special transactions discussed previously were principally respon sible for a net increase of 65 million dollars in reserve deposits of member banks during the four weeks. Although reporting member bank reserve de posits and balances carried with other banks increased between March 18 and April 15, earn ing assets showed no significant change. In vestments in direct obligations of the United States Government were reduced moderately, but changes in other security holdings and in loans were negligible. The only m ajor change in liabilities of the banks was a sharp rise in adjusted demand deposits, which resulted largely from the temporary deposit of the pro ceeds of refunding operations. C O N D IT IO N OF FED ER AL RESERVE BANK OF SAN FRA N C ISCO SOURCES A N D USES OF BA N K IN G RESERVES Twelfth District Changes in millions of dollars during the weeks indicated April 1936 MONTHLY REVIEW OF BUSINESS CONDITIONS Other F.R.B. Accounts + — .5 1.3 * — + + + 6 — + — .2 .3 .2 .9 2.3 .1 .6 Total Demand + 4 .3 + 2.9 + 2 .5 — .1 + 1 3 .5 — 17.3 + 1 1 .5 + 3 1 .9 + 1 9 .3 + 9.2 Loans and Investments— T ota l.. Loans to Brokers and Dealers.. Loans on Securities to Others (except banks) ........................ Acceptances and Com’l Paper. . Loans on Real Estate.................. Loans to B a n k s............................ Other L o a n s .................................. U. S. Gov. Direct Obligations.. Obligations Guaranteed by U. S. Other Securities............................ Reserve with F. R. B a n k ............ Due from Domestic B a n k s........ Demand Deposits— Adjusted . . . Time Deposits .............................. U. S. Gov. D ep osits...................... Deposits of Other B a n k s............ 2,141 22 2,137 21 2,155 19 1,995 27 169 23 367 1 360 696 138 365 239 249 818 1,031 115 275 170 23 367 1 361 692 138 364 228 234 792 1,028 118 262 168 26 367 2 358 711 137 367 181 218 761 1,031 117 267 169 20 363 1 313 665 70 367 167 202 713 992 83 238 April 1936 FEDERAL RESERVE AGENT AT SAN FRANCISCO with brokers and dealers, as prescribed by Regulation T, would be changed effective April 1. Under the new provisions, the maxi mum loan value of registered securities is 45 percent of the current market value. Registered securities pledged by brokers or dealers with other brokers or dealers in connection with loans for the purpose of enabling the borrower to carry customers’ accounts are given a maxi mum loan value of 60 percent of the current market value instead of 80 percent which had previously been applicable. The maximum loan value of registered securities securing a loan to another broker or dealer for the purpose of underwriting or distributing a security is left at 80 percent. A t the same time, the Board announced its Regulation U, effective May 1, relating to loans by banks for the purpose of purchasing or carrying registered stocks. Under this regula tion, the maximum loan value of any stock is 45 percent of the current market value, except that loans to brokers or dealers on securities carried for the account of customers are subject to a special maximum loan value of 60 percent of the current market value for registered stock. Loans to brokers and dealers 31 for distributing purposes are exempted from the provisions of the regulation. The volume of trading on Pacific Coast stock exchanges during the five weeks ending April 20 continued to decline and was smaller than at any time since O ctober 1935. Averages of share prices fluctuated within a narrow range during most of the period. A decline in the last few days resulted in a slight net loss for the five weeks. Price trends of Pacific Coast corporation bonds were mixed, gains approximately offset ting losses. The decline in yields on highgrade long-term issues was checked. Prices of municipal bonds advanced, follow ing declines in mid-March. Yields nearly reached the pre vious record low point established in late Feb ruary. Offerings of new municipal bonds were small, totaling approximately $3,250,000. New corporate bond issues, however, were relatively large. The total was $137,000,000 including $90,000,000 Pacific Gas and Electric Company 3% % First and Refunding Bonds, Series H, due in 1961, the largest issue registered to date with the Securities and Exchange Commission. There were also two stock offerings aggregating approximately $3,750,000. 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 Board of Governors of the Federal Reserve System Production and employment at factories in creased from February to March, while output of minerals declined. There was considerable expansion in retail trade. Production and Employment. The Board’s combined index of industrial production, which includes both manufacturing and mining and makes allowance for seasonal changes, re mained unchanged in March at the February figure of 94 percent of the 1923-1925 average. Production of automobiles rose sharply in March to a total of 425,000 passenger cars and trucks and continued to increase during April. There was a seasonal increase in output of steel in March, follow ed in the first three weeks of April by a rapid rise in activity. Estimates o f the rate of production in that period aver aged around 67 percent of capacity as com pared with the rate of 59 percent reported for March. Production of cement and lumber in creased more than seasonally from February to March, and activity at meatpacking estab lishments and at silk mills also increased, al though a decline is usual in these industries at this time of the year. There was little change in output at cotton textile mills, while at woolen mills activity decreased by more than the usual amount. Production of anthracite and bituminous coal showed a substantial re duction from the relatively high level of Feb ruary and this decrease accounted for the de cline in total output at mines. Factory employment increased by more than the usual seasonal amount from the middle of February to the middle of March, and pay rolls showed a larger increase. Employment in creased in the machinery industries, at saw mills, and at establishments producing wearing apparel. There was a decrease in the number of workers at plants producing rubber tires and tubes, where a strike was in progress in the middle of March. A t automobile factories the number employed declined slightly, while pay rolls showed a considerable increase. 32 April 1936 MONTHLY REVIEW OF BUSINESS CONDITIONS The value of construction contracts awarded, according to figures of the F. W . D odge Cor poration, showed a seasonal increase from Feb ruary to March. Awards for residential build ing increased seasonally and contracts for other private construction advanced to the highest point since 1931. Value of awards for publiclyowned projects continued considerably smaller than in Decem ber and January, when the dollar volume of such contracts was relatively high. and the middle of March, showed relatively little change in the follow ing four weeks. R e tail prices of foods declined during March. Bank Credit. Excess reserves of member banks, after declining sharply in the last half of March, increased by about $300,000,000 in the first three weeks of April to a total of $2,640,000,000. This increase, like the preceding decline, was due chiefly to operations of the Treasury. After the middle of March Treasury PER CENT 1929 1930 1931 1932 1933 1934 1935 1936 IN DU STRIAL PRODUCTION Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average=100. By months, January 1929 to March 1936. Distribution. Retail trade, which had been reduced in January and February by unusually severe weather, increased considerably in March. Sales at department and variety stores and by mail order houses serving rural areas showed a more than seasonal increase. The number of new automobiles sold was also larger than in February. Freight carloadings of most classes of comPER CENT DEPARTM ENT STORE SALES Indexes of value of sales, 1923-1925 average=100. By months, January 1929 to March 1936. balances at the Federal Reserve banks were built up through the collection of taxes and receipts from the sale of new securities, and in April these balances were drawn upon to meet expenditures. Partly as a result of these expenditures, de posits at reporting member banks in leading cities, which had declined in March, increased in the first half of April, when total loans and BILLIONS OF DOLLARS total EMPLOYMENT /xT-rjiji-Excess*reserve:5 -\ / 1929 1930 1931 1932 PAYROLLS 1933 1934 EQU1REDRESERVES^« 1935 1936 F A C T O R Y EM PLOYM EN T AN D PAY ROLLS Indexes of number employed and pay rolls, without adjustment for seasonal variation, 1923-1925 average=100. By months, January 1929 to March 1936. Indexes compiled by the United States Bureau of Labor Statistics. modities increased from February to March by more than the usual seasonal amount. Total loadings declined somewhat from the relatively high level of the three preceding months, how ever, reflecting a sharp reduction in shipments of coal. Com m odity Prices. The general level of whole sale com m odity prices, which had declined somewhat between the third week of February 1932 1933 1934 1935 1936 MEMBER BANK REQUIRED AN D EXCESS RESERVES Wednesday figures of total member bank reserve balances at Federal Reserve banks, with estimates of required and excess reserves, January 6,1932 to April 22, 1936. investments of these banks also increased From February 26 to April 15 total loans anc investments of reporting member banks showec an increase of about $800,000,000, reflecting in creases of $380,000,000 in investments, of $180, 000,000 in loans to brokers and dealers in secu rities, and of $240,000,000 in so-called “ other' loans, which include loans for commercial, in dustrial, and agricultural purposes.
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