Full text of Economic Review (Federal Reserve Bank of San Francisco) : April 21, 1930

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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 IV

San Francisco, California, A p ril 21,1930

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
Industrial production declined in March,
while factory employment and payrolls showed
little change, and wholesale prices continued
to decline. There was an increase in construc­
tion, as is usual at this season. Interest rates
continued to decline in the first three weeks of
March, but later became somewhat firmer.
Production. Production in basic industries
declined in March, contrary to the usual sea­
sonal trend. Average daily output of steel, coal
and copper decreased substantially, while out­
put of cotton and w ool textures declined at
about the usual seasonal rate. Production of
automobiles and lumber increased for the first
quarter of the year. Taken as a whole, output
of basic industries was considerably smaller
than in the unusually active first quarter of
1929 and smaller than in any other first quar­
ter since 1925. In the steel and automobile in­
dustries output for the first three months,
though smaller than in 1929 was about the
same as in the corresponding months in 1928,
while in most of the other major industries it
was smaller than in either of the two preced­
ing years. Building contracts awarded in­
creased substantially in March as is usual at
this season, according to reports of the F. W .
D odge Corporation. In comparison with a year
ago a large increase in contracts for public
works and utilities was more than offset by a

decrease in residential building. Average daily
awards in the first half of April were somewhat
larger than in March but continued smaller
than a year ago.
Em ploym ent. Factory employment and pay­
rolls, which usually increase during March,
changed little from February and continued to
be considerably smaller than in other recent
years. The number of workers employed in
the automobile industry increased somewhat
less than is usual at this season, and reductions
in employment and in earnings were reported
in the iron and steel, machinery, and car build­
ing industries.
Distribution. Freight carloadings, which have
been at low levels in recent months, did not
show the usual seasonal increase during
March. Department store sales continued in
smaller volume than a year ago.
Prices. W holesale prices, which began to de­
cline last summer continued to move down­
ward in March to the lowest level since 1916,
the decline reflecting chiefly sharp decreases
in prices of agricultural products. Prices of
imported raw materials, such as sugar, coffee,
and silk, fluctuated around the low levels
reached in February. The price of silver ad­
vanced slightly from the low point reached
early in March. During the last week in March
and the first week in April there were advances
PER CENT
1-... - ...........—

P E R CEN T

1
PAYRO LLS
/* » .

A

A.

f

A
A /n

A
/ -

. /

1

i 1

'
s

f

EMPILOYMENT

Wv.._

1926

1927

1928

1929

___________ M t

1930

IN D U S T R IA L P R O D U C T IO N

F A C T O R Y E M P L O Y M E N T A N D PAYROLLS

Index number of production of manufactures and minerals, combined,
adjusted for seasonal variations (1923-1925 average = 100).
Latest figure, March, 105.

Index numbers of factory employment and payrolls, without adjust*
ment for seasonal variations (1923-1925 average = 100). Latest
figures, March, employment 92.7, payrolls 98.0.




26

MONTHLY REVIEW OF BUSINESS CONDITIONS

in prices of agricultural products, especially
grains and cotton, while the price of steel de­
clined. On April 15, the price of copper was
sharply reduced, and in the same week prices
of a number of other important commodities
also declined.
Bank Credit. A t member banks in leading
cities total loans and investments increased in
BILLONS OF DOLLARS

April, 1930

gold from the Orient. In the third week of
March money rates in the open market reached
the lowest levels since 1924, but in the next
three weeks were somewhat firmer. Rates on
commercial paper declined to a range of 3 ^ .-4
per cent on March 24 and remained steady at
that level. Rates on 60-90 day bankers’ accept­
ances were reduced to
per cent on March
PER CENT
7
— COMMERCIAL PAPER RATE
" —- RESERVE BANK DISCOUNT RATE
---ACCEPTANCE RATE
/\
6

-

-

-

f

y

-

1926
M E M B E R B A N K C R E D IT
Monthly averages of weekly figures for reporting member banks in
leading cities. Latest figures are averages of first three
weeks in April.

the four week period ending April 16, reflect­
ing a grow th of 184 million dollars in loans on
securities and of 80 million dollars in invest­
ments, offset in part by a further decrease of
186 million dollars in “ all other” loans. M em­
ber bank indebtedness at the reserve banks and
total reserve bank credit declined further be­
tween the weeks ending March 15 and April
12, reflecting primarily additional imports of

yZ|/\__
f/
/ \j
1 /
— XI— J /
/
1927

I92Ô

»1
vl
\
\T
ì \V ......■
1929

\
1930

M O N E Y RATES
Monthly rates in the open market in N ew Y o rk : commercial paper rate
on 4- to 6 -month paper and acceptance rate on 90-day bankers’ accept­
ances. Latest figures are averages of first 20 days in April.

20, but later advanced to three per cent. Bond
yields, after declining during most of March,
increased gradually in the first half of April.
During April the rediscount rates of the Fed­
eral reserve banks of Richmond, Atlanta, St.
Louis, Minneapolis, and Dallas were reduced
to four per cent, the rate prevailing at all of
the reserve banks except New Y ork where the
rate is 3y2 per cent.

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
Business activity expanded in the Twelfth
Federal Reserve District during March, but by
a smaller amount than in the corresponding
month of most recent years. Both industrial
output and trade increased somewhat less than
seasonally and demand for credit showed prac­
tically no change from the preceding month.
Declines in com m odity prices became less
numerous during the latter part of the month
and slight advances in the wholesale price
level were reported in early April.
D uring March, favorable weather conditions
continued to be the most important influence
in the agricultural outlook. Crops now grow ­
ing in the District developed satisfactorily and
range conditions improved during the past six
weeks. Some livestock, particularly spring
lambs in California, have been slow in attain­
ing satisfactory market weights.
Greater than seasonal increases in the lum­
ber and building industries of the District were
reported for March, but declines in the output
of crude oil, refined petroleum products, nonferrous metals, cement, flour, and of practically




all manufactured commodities resulted in a
small decrease in total industrial production.
The large gains in lumber production and
building during March as compared with
February were chiefly due to the fact that
activity in both of those industries was excep­
tionally low in February. The number of work­
ers employed in the District increased some­
what less than is customary during March.
Trade activity increased somewhat less than
seasonally from February to March. Largely
as a result of the lateness of Easter Sunday
this year, retail sales were smaller in value
during March, 1930, than in March, 1929, but
their increase from February was fully equal
to seasonal expectations. Reported figures of
wholesale trade showed an increase during
March, but considerably less than is ordinarily
expected. Intercoastal trade of the District was
smaller in volume than in either the preceding
month or March, 1929. Railroad freight carloadings increased by about the seasonal
amount but were well below loadings in March
a year ago.

FEDERAL RESERVE AGENT AT SAN FRANCISCO

A pril, 1930

Credit ease continued throughout March and
the first half of April and interest rates de­
clined slightly. Loans of reporting member
banks declined during this period. The funds
thus released were employed to increase in­
vestment holdings and relatively large trans­
fers of funds to the New York money market
were also recorded. There was little additional
borrowing by member banks from the Reserve
Bank, and discounts of that Bank continued at
the low levels of January and February.

increased 51 per cent between the same dates,
and total stocks of grain in these storages on
March 1, 1930, were 30 per cent larger than on
the same date a year earlier.
A ccording to reports received by the United
States Department of Agriculture, farmers of
the District intended (on April 1) to plant
somewhat larger acreages of most field crops
in 1930 than were harvested in 1929. W hether
or not these intentions are carried out depends
on weather and other conditions existing at
planting time.

Agriculture

I N T E N T I O N S T O P L A N T -1 9 3 0
(in per cent of 1929 harvested acreage)

Weather and soil conditions have been more
favorable for agriculture in the Tw elfth D is­
trict during the past month than have market
conditions. During recent weeks mild weather
has aided the planting of field and other crops,
stimulated the growth of fall-sown grain and
favored the early development of fruits. The
usual improvement of livestock ranges was re­
ported during March and was reflected in the
improved condition of livestock generally.
On the basis of its condition on April 1, the
District’s 1930 winter wheat crop was esti­
mated at 57,500,000 bushels. In 1929 the harvest
was 74,625,000 bushels. (Estimates of the acre­
age of winter wheat to be harvested this year
are not available.) The condition of this crop on
April 1 was generally better than on December
1, 1929, when soil moisture was inadequate, but
the latest condition figures are still below those
of either one year ago or the ten-year average.
Fall-sown wheat, particularly in W ashington,
failed to germinate well last autumn and it has
been necessary this spring to reseed a consid­
erable proportion of the winter wheat acreage
in that state.
F A L L -S O W N W H E A T
Condition
Indicated
(Per cent of normal)
Production
H arApr. Apr. A p r .l, D ec.
A p r .l,
vested
1,
1. 1920-29 1,
1930
1929
1930 1929 Average 1929(In thousands of bushels)
90
91
95
Arizona .......................... 98
California ...................... 85
82
84
71
12,100
12,240
I d a h o ............................... 86
90
91
77
9,400
11,440
N evada .......................... 98
96
95
79
O regon ........................... 85
86
90
54
16,900
19,712
91
94
86
3,200
3,403
U tah ............................... 91
W ashington ................. 50
75
83
40
15,900
27,830
Tw elfth D i s t r i c t .......................................................
57,500
74,625
United States ............ 77.4 82.7 80.9 86.0
550,300
578,336
S o u rce:

27

United States Department of Agriculture.

Sluggish marketing of the 1929 wheat crop
continued during March and the first half of
April. Exports of wheat from Puget Sound and
Columbia River ports (amounting to nearly
21,000,000 bushels for the season to date) have
been 18 per cent smaller than they were during
the period from July 1, 1928, to April 1, 1929.
Although farm stocks of wheat in Idaho, Ore­
gon, and W ashington were slightly smaller on
March 1, 1930, than on March 1, 1929, stocks
in country mills and warehouses in those states




A riz. Calif. Idaho N ev. Ore. Utah W ash.
U . S.
Spring W h e a t.....................
95
115
120
105
110
100.1
O a t s ...................130
110
104
110
112
102
110
102.5
Barley .............. 110
100
106
110
115
100
105
101.7
............................................................ 112.1
R i c e ...........................
137
Grain Sorghum 130
110
..
..
..
..
..
108.2
Tam e H a y . . . 1 1 0
95
104
102
100
100
103
99.2
Potatoes
(white) . . . . 1 0 0
100
110
115
100
105
105
103.4
Beans ( d r y ) . . 200
108
112
..
..
..
..
114.6
Source:

United States Department of Agriculture.

During recent weeks the 1930 deciduous fruit
crops in California have gone through a critical
period of their development and production
prospects are now much better than a year
ago. In Pacific Northwestern and Intermoun­
tain fruit producing areas some damage to
apricot, cherry, and peach buds resulted from
the freezing temperatures of last January, but
apple and pear trees suffered relatively little
injury.
The 1930 Valencia orange crop in California
which is usually harvested between May 1 and
November 1 is developing satisfactorily and
is now estimated at 12,279,000 boxes. In 1929
the Valencia orange crop was 17,600,000 boxes.
The decline in estimated production of Valen­
cia oranges this year is not quite so large as
the decline in the 1929-1930 Navel orange crop
which is now estimated at 9,489,000 boxes as
compared with 17,500,000 boxes in the preced­
ing season.
Some improvement was reported in the mar­
ket for dairy products during March, and the
wholesale price of 92-score butter at San Fran­
cisco advanced from 36 to 40 cents per pound
during the month. On April 21 the quotation
stood at 38 cents per pound. Butter production
of Pacific Coast creameries increased from
week to week during March, as is usual, and
receipts at Portland, Los Angeles, and San
Francisco were eight per cent larger than in
March, 1929. Cold storage holdings of butter
in the United States decreased 34 per cent
from March 1 to April 1, 1930, but on the later
date they were six times as large as on April 1,
1929. Although egg prices have declined sea­
sonally in recent weeks, they remain about nine
per cent higher than a year ago.
Livestock ranges were benefited by the rains
and warm temperatures of early March, and

28

MONTHLY REVIEW OF BUSINESS CONDITIONS

the condition of livestock, with the exception
of spring lambs in California, improved corre­
spondingly. Cattle have matured later this
year than in 1929 and the usual market m ove­
ment of “ grass-fat” animals has been somewhat
delayed.
L I V E S T O C K R E C E IP T S — Twelfth District

Cattle .........................................
H o g s .........................................
Sheep .........................................

March
1930
69,251
169,654
171,931

March
1929
63,202
202,327
154,144

Jan.-M ar. Jan.-M ar.
1930
1929
202,742
192,292
580,950
678,721
510,696
483,516

There have been few losses of lambs this
year in the early lambing sections of the D is­
trict, and the total number of early spring
lambs is reported to be larger than it was last
year. Feed conditions generally have been
favorable for a rapid growth of lambs except
in some sections of California, Nevada, and
W ashington. Although range conditions have
improved during recent weeks in California,
lambs have attained satisfactory market weights
slowly. No shipments of California spring
lambs to eastern markets were reported during
March, whereas shipments to those markets in
March, 1929, amounted to about 10,000 head of
live and dressed lambs. During the past six
weeks lamb prices at local markets, induced
partly by heavy receipts, have continued to
decline and were lower during the first part of
April than at any time since 1922. Lamb prices
also declined sharply at the Chicago market.
The domestic w ool price as represented by the
Fairchild average has declined nearly 15 per
cent since the beginning of this year and is now
32 per cent lower than in April, 1929.

In d ustry
Industrial activity in the Twelfth District
increased by slightly less than the seasonal
amount during March and nearly all lines of
industry were substantially less active than in
the corresponding month of last year. Greater
than seasonal increases in the output of lumber
and in the value of building permits issued and
engineering contracts awarded may be con­
trasted with substantial declines in the output
of crude and refined oils, non-ferrous metals,
and manufacturing industries generally. Re­
ductions in the number of hours worked each
week in many industries during the past sev­
eral months have tended to keep actual unem­
ployment below its potential volume, and at
present seasonal demands of agricultural activ­
ities and of a slowly expanding volume of road
and public construction work are requiring an
increasing number of unskilled laborers. Never­
theless, expansion in the number of workers
employed in the District is reported to have
been less during March and early April this
year than has been customary during recent
years.




A pril, 1930

Production of lumber increased more than
seasonally during March. Shipments and orders
also increased during the month, but failed to
keep pace with the increase in output, and the
ratios of both shipments and orders to produc­
tion declined by more than the usual small
amount. Eastbound shipments of lumber
through the Panama Canal were somewhat
larger than in February, 1930, or March, 1929,
while shipments of lumber by rail increased
considerably but were still below those of a
year ago. A five-day week and seven-hour day
have been adopted by many of the important
lumber producers in this District.
Notwithstanding a definite improvement
during March, activity in the building and con­
struction industry remained well below the
general level of recent years. The value of
building permits issued in ninety cities in
the District was 38 per cent larger than in
February, when building activity was at un­
usually low levels, and 35 per cent smaller
than in March, 1929. The value of permits
issued in Los Angeles, though showing a sub­
stantial increase as compared with February,
was considerably smaller than during March of
last year, when the value of permits in that
city was relatively large. In San Francisco
there was a marked increase in the value of
permits issued as compared with both Febru­
ary of this year and March a year ago, but the
value of permits issued in the earlier periods
was relatively small. Permits issued in Port­
land increased sharply from February and were
slightly larger than in March, 1929, while per­
mits issued in Seattle were about the same in
value as in the preceding month but were 45
per cent less than a year ago. Activity in nearly

(A ) Employment—
Industries
A ll Industries*
Stone, Clay and
Glass Products.

■California—
t --------- — Oregon------- ——>
N o. of
N o . of
t— Employees
N o. r-Em ployees
N o.
M ar.,
M ar.,
of
of
M ar.,
M ar.,
1930
1929
1929
Firms
Firms 1930
146
22,840
24,769
734 146,048 157,608
( - 7 .8 )
( - 7 .3 )
5,901
(— 9.9)

6,547

19,109

22,165

1,979
16
( -4 .8 )

2,079

10
9§

44

Lum ber and W ood
Manufactures . . 113
T e x t i l e s ....................

(— 13.8)

54

7,415
(— 4.8)

7,791

Food, Beverages
and T o b a c c o .. .

153

24,224
(— 3.4)

25,077

Public U t i li t i e s !..

25

18,246
(— 4.0)

19,000

Other Industries#. 327

80,354
(— 8.5)

87,860

7,066
(16.0)

6,089

27

221

157

(4 0 .8 )

Clothing Millinery
and Laundering.

Miscellaneous!! . .

4
52

13,480

15,361

1,513
(— 8.5)

1,654

460
(— 1.1)

465

42

1,639
(— 1.9)

1,670

29

5,527
(1 .2 )

5,462

(— 12.2)

*Public utilities not included in this total. tE lectric railway and
bus operations added. JM otion picture producing and de­
veloping added. § Laundering only. ^Includes the following
industries: metals, machinery and con veyan ces; leather and
rubber g o o d s ; chemicals, oils and p a in ts; printing and paper
goods.

Figures in parentheses indicate percentage changes from March,
1929.

April, 1930

29

FEDERAL RESERVE AGENT AT SAN FRANCISCO

all classes of engineering construction expanded
during March and total contracts showed a
slightly greater than seasonal increase.
Production of crude oil in California declined
from an average daily output of 747,000 barrels
in February to 635,000 barrels in March. Dur­
ing the first half of April crude oil output aver­
aged about 610,000 barrels daily, thus approxi­
mating the industry’s objective of reducing
production to about the same or lower levels
than current consumption. The greatest reduc­
tions were attained in the Santa Fe Springs
and Signal Hill fields. Output of refined oils
P E R CEN T

Output of non-ferrous metals continued to
decline during March. In some of the mines
the reduction was accomplished through short­
ening the working week for individual workers,
rather than by reducing the number of men
employed. Despite the decline in production of
copper (daily average output was the smallest
for any month since May, 1923) there was a
slight increase in mine stocks of that metal
and a substantial increase in refined stocks.
Sales, however, were reported as being some­
what improved as compared with those of
previous months. The reduction in the price of
refined copper from 18 cents per pound to 14
cents per pound, delivered Connecticut Valley
points, on April 15 came just a year after the
18 cent level had been established.
Flour mills of the District reduced produc­
tion schedules sharply during March. A t the
same time millers’ stocks of flour continued to
decrease, but the decline was less than the de­
cline in output. Export sales were reported to
be poor and domestic demand fair during the
month.

Trade
R E F IN E D O IL P R O D U C T IO N A N D G A S O L IN E
S T O C K S — California Refineries
Indexes of daily average refined oil production and gasoline stocks at
end of month. (1923-1925 average = 100).

continued to decline during March, reaching
levels which approximated those of the latter
part of 1928. Stocks of gasoline also' declined
during the month, that reduction being the
first recorded since January, 1929. There was
but little change in stocks of heavy and light
crude oils during the month. Shipments of
petroleum and petroleum products to the A t­
lantic Coast during March were at about the
minimum level of such shipments for the past
several years.

Smaller than seasonal increases were ap­
parent in most lines of trade during March, and
records for the first quarter of this year show
that activity in trade decreased noticeably from
the high level reached in the corresponding
period of 1929. The lateness of Easter this year
as well as the current business recession was
manifested in reduced retail sales during

(C ) Distribution and Trade• 1930----------- V 1929
Feb.
Jan.
Mar.
M ar.
/-----------1 ndex N iimbers*132
149
134
1170
143
157
147

Foreign T rade0
Im p ortst ................................................
Intercoastal Trade0

(J3) Industry—
Indexes of daily average production, adjusted for seasonal variations
(1923-1925 daily average = 100)
M anufactures:
Flour ............................................................
Slaughter of Livestock ......................
Lum ber .......................................................
Refined Mineral O ilsf ......................
Cement ............ ..........................................
W o o l C o n s u m p tio n f.............................
Minerals :
Petroleum (California) f ....................
Copper (United States) $ ...................
Lead (U nited States) $ ......................
Silver (United States) % ...................

.
...
. .
,..

.. .
. ,
!!!

- 1930
Feb.
Mar.
102
121
72
78
112
98
161
169
93
80
98
88
93

General :
Carloadings— Industrial ................... . . I l l
Value of Building Permits§
54
Tw en ty Larger Cities ...................
59
Seventy Smaller C it i e s ................... . . .
Value of Engineering Contracts
Aw arded§
T o t a l .................................................... . . . 124
Excluding Buildings ................. , . . 124

113
95
106
90

Jan.

120
77
82
180
78
61
107

1929
M ar.
118
80
113
184
118
73

101

119
135

92
91

93

112

97

82

119

50
58

51
57

74
93

120

149
117

187
267

115

fNot adjusted for seasonal variations. ^Prepared by Federal Re­
serve Board. § Indexes are for three months ending with
the month indicated.




940
128
89

1030
124
97

95
125
87

108

112

94
105

122

94

104

107

103

. . 102
Passenger Cars ............................. . . 96
Commercial Vehicles ................. . . 171

115
114
124

108
104
155

127
1230
1730

120

119
104

125
105

W estbou nd
.........................................
Eastbound ........................................... . .

86

Carloadings#
. . 108
Merchandise and M iscellaneous. . . I l l

117

W holesale Trade§
..
Retail Trade
Autom obile Sales$

Department Store
Sales$ ................................................ . . 121
Stocks!! ............................................. .. . 109
Stock Tumover|| ........................ . .
C ollection s#
Regular ......................................... .
Installment ................................. .. .

f

108

Actual Figures
.25
.20
.22

45.3
14.9

42.9
14.7

45.8
15.7

.26
47.0
15.3

hAdjusted for seasonal variations, 1923-1925 average = 1 0 0 . • In ­
dexes are for three months ending with month indicated,
t Excluding raw silk. $D aily average. § M onthly totals of
ten lines combined.
ffAt end of month.
||Proportion of
average stocks sold during month. # P e r cent of collections
during month to amount outstanding at first of month.
ORevised.

30

MONTHLY REVIEW OF BUSINESS CONDITIONS

March, 1930, as compared with March, 1929,
but the customary February-March increase
was reported. A s is expected at this season of
the year, there was an increase in the value of
sales at wholesale, but it was considerably less
than usual. The volume of both eastbound and
westbound intercoastal trade declined during
March while a full seasonal expansion was
recorded in loadings of freight on the District’s
railroads. A fter allowing for the seasonal

April, 1930

six other lines— agricultural implements,drugs,
electrical supplies, hardware, shoes, and paper
and stationery— decreases ranging from 13 to 3
per cent were reported. Sales of wholesale
grocery firms were one per cent larger during
March of this year than in March, 1929. In
nearly all lines collections were reported as
being definitely slower than a year ago.

PER CENT

/As
COMMERCIIAL / I
\
' VEHICLEs * /

•
I

V

rR
1» CARS
PASSENGEM

b h ' 1f»

*

.JL

VS. \

//M

v

!
■ l*
*1

W

1926

1927

1926

1929

1930

R E G IS T R A T IO N O F N E W A U T O M O B IL E S
Indexes of daily average registrations of new passenger and commer­
cial motor vehicles in the Twelfth District, adjusted for seasonal
variations (1923-1925 daily average=100).

R A IL R O A D F R E I G H T -G A R L O A D I N G S
Gars of revenue freight loaded in the Twelfth District as reported by
the American Railway Association. Index numbers adjusted
for seasonal variations, (1923*1925 daily average = 100).

movement, sales of new automobiles declined
sharply during March and were far below the
levels of March, 1929.
The value of sales of representative depart­
ment, apparel, and furniture stores of the Dis­
trict was 5.5 per cent smaller in March, 1930,
than in March, 1929, compared with a decline
of 12 per cent in sales of department stores for
the United States generally. Inventories of
stores in this District increased slightly more
than seasonally during March and at the end
of the month were practically the same in value
as a year earlier. Collections on open book ac­
counts continued to average somewhat slower
than in early 1929 while collections on install­
ment accounts showed little change over the
year period.
R E T A I L T R A D E — Twelfth District

Departm ent S toresf .
Apparel Stores ..........
Furniture Stores
A ll Stores ......................

.
.
,
.

,------------ N E T S A L E S *------------s
J a n .lto
M ar. 31.1930
M ar., 1930
compared
with
compared
Jan. 1 to
with
M
ar.
31,1929
M ar., 1929
— 2.3 ( 67)
— 3.7 ( 68 )
— 14.0 ( 31)
— 9.9 ( 31)
— 9.9 ( 46)
— 10.8 ( 47)
— 4.0 (144)
— 5.5 (146)

STO C K *
M ar., 1930
compared
with
M ar., 1929
1.1 (5 0 )
— 3.3 (1 9 )
— 4.1 (29)
0.0 (98)

* Percentage increase or decrease (— ). Figures in parentheses in­
dicate num ber of stores reporting, tlnclud es dry goods stores.

In March, the dollar value of wholesale trade
of 226 firms located in this District was eight
per cent smaller than in March, 1929, and sales
failed to show the usual increase in relation to
February. The largest decreases in comparison
with the same month a year ago (ranging from
25 to 21 per cent) were noted in sales of furni­
ture, dry goods, and automobile supplies. In




Sales of new automobiles after increasing
somewhat more than seasonally in February
declined sharply during March to the lowest
level in two years. This was the result en­
tirely of reduced sales of passenger cars, inas­
much as registrations of new commercial
vehicles increased during the month by more
than 40 per cent and were near record levels.

(D) Bank Debits*—
Arizona
Phoenix

.............. $

M ar.,
1930
40,164

California
Bakersfield
13,261
19,757
Berkeley ............
42,936
Fresno ................
L o n g Beach . . .
50,479
L os Angeles . . . 1,088,138
222,784
Oakland ............ .
Pasadena ..........
39,456
Sacramento
45,728
10,950
San Bernardino
San Diego
57,803
San F r a n c is c o .. . 1,530,955
San J o s e ............
26,664
15,091
Santa Barbara.
S t o c k t o n ............
24,711
Idaho
B oise

.................

$

M ar.,
1929
44,237

<—•First Three Months —^
1929
1930
$ 137,024
$ 124,431

16,449
21,177
31,886
68,795
1,365,530
263,322
46,275
48,036
12,143
68,427
1,599,561
28,393
18,156
28,256

42,197
61,581
132,002
149,297
3,165,756
593,622
112,792
142,973
32,601
176,558
3,967,189
84,723
46,322
75,326

46,276
65,716
95,806
202,417
3,801,033
739,863
141,711
146,598
34,886
205,398
4,345,354
84,740
51,257
81,206

12,791

13,693

41,432

43,106

Nevada
10,687

11,593

32,813

32,000

O regon
Eugene ..............
Portland ............

6,649
180,543

7,435
200,467

19,329
506,318

21,094
558,736

U tah
O g d e n .................
Salt Lake C ity.

17,651
74,559

18,156
77,923

51,240
229,404

54,885
231,503

W ashington
Bellingham . . .
Everett ...............
Ritzville ............
Seattle ...............
Spokane ............
Tacom a ............
Yakim a ............

9,935
13,996
538
260,891
60,914
48,255
14,795

11,333
13,588
786
289,407
64,526
53,062
14,141

26,933
39,621
1,727
730,189
160,430
134,976
41,019

30,147
39,467
2,656
794,721
177,345
148,087
39,605

______ T o ta l............. $3,941,081
* In thousands of dollars.

$4,436,753 $10,922,801 $12,352,637

April, 1930

Intercoastal trade during March, 1930, de­
creased in comparison with both February,
1930, and March, 1929. W estbound shipments
through the Panama Canal declined more
noticeably than did eastbound tonnage. Lum­
ber shipments to the eastern coast were larger
in March of this year than in the corresponding
month of 1929, while eastbound shipments of
petroleum products were smaller than in the
same month a year ago.
Less activity was evident in the foreign trade
of Pacific Coast ports during February than
in other recent months or a year ago. Dollar
amounts of total imports during February,
1930, were smaller than in any February since
1921. Exports also declined more than is cus­
tomary during February, although this Bank's
adjusted index for the three months ending
with that month was slightly higher than the
index for the three months ending with Janu­
ary, 1930.

Prices
The decline of wholesale com m odity prices
which had persisted since the middle of 1929
came to a pause during late March and early
April. For the month of March as a whole,
however, the com m odity price level, as indi­
cated by the wholesale price index of the
United States Bureau of Labor Statistics, de­
clined by the same amount as in February,
reaching the lowest point since September, 1916.
That index at 90.8 (1926 average=100) was
0.6 per cent lower than the figure for January,
1922, previously the lowest point reached by
the Bureau of Labor Statistics’ index during
the post-war period. The fluctuations of most
weekly indexes show that the lowest level of
prices in the recent downward movement was
reached shortly after mid-March, since when
slight increases have been recorded.
A m ong the most significant of recent price
declines have been the reductions in quotations
for non-ferrous metals. Demand for those
metals has been slight for many weeks, and
in March quotations for lead, zinc, and tin
reached the lowest levels since 1922. On April
15 the price of copper was reduced to 14 cents
per pound, delivered Connecticut Valley points,
or four cents per pound less than the price
that had been maintained since April 16, 1929.
Prices for steel pipe, a large quantity of which
is used by the petroleum and natural gas in­
dustries in this District, were reduced on April
1 and increased sales are reported to have fol­
lowed upon the reduction.
Prices for agricultural products changed
little during the period from March 15 to' April
15. W heat quotations advanced moderately,
but relatively small sales of that grain were
reported from District markets. A large sup­




31

FEDERAL RESERVE AGENT AT SAN FRANCISCO

ply of lambs contributed to a further sharp unseasonal decline in lamb prices, which are cur­
rently about 40 per cent lower than a year ago.
There were slight declines in quotations for
cattle and hogs in the Chicago market during
March in contrast with small advances re­
ported at the District’s markets. Increased
shipments of oranges have been accompanied
by advances in prices for that fruit, which
were considerably higher during the first half
of April than in either the corresponding
period of last year or earlier weeks of this
year. Since the middle of March there has been
a small decline in lemon prices, but current
quotations are slightly higher than a year ago.
Little change has been recorded in wholesale
quotations for petroleum products in this D is­
trict since the advance in crude oil prices on
March 8. In recent weeks, however, there has
been considerable cutting of retail gasoline
prices in many Pacific Coast cities.
A slight decline in lumber prices, not cus­
tomary at this season of the year, was reported
during March and quoted prices were below
those of March, 1929.

Credit Situation
The credit situation changed little during
March and the first half of April. Loans by
member banks tended downward slightly,
while their investments increased and their
borrowings from the Federal Reserve Bank re­
mained at a low level. Interest rates showed
some further slight decline during the four
weeks ended April 12.
R E P O R T IN G M E M B E R B A N K S — Twelfth District
(In millions of dollars)

f— ....
T otal Loans and Investm ents. . . ,
Total Loans .........................................
Commercial Loans ........................
Loans on Securities ......................
Investments .........................................
N et Dem and Deposits ...................
Tim e D eposits ..................................
Borrowings from Federal Re-

Condition

A p r. 23,
1930
1,968
1,350
900
450
618
729
1,025
3

Apr. 9,
1930
1,965
1,353
916
437
612
728
1,027
3

■—

M ar. 19, A p r.24,
1929
1930
1,940
1,960
1,355
1,300
910
888
412
445
640
605
758
719
1,014
975

0

66

Since the beginning of this year both com ­
mercial and-security loans of reporting member
banks (city banks) have tended to decline. In
order to employ their funds fully these banks
have steadily added to their investment hold­
ings and, during the past six weeks, have trans­
ferred large amounts of funds to New York
City for use in the call money market. Since
mid-January there has been almost no borrow ­
ing at the Reserve Bank by city member banks
except for a few days at the end of March. The
prevailing differential of one per cent between
the Federal Reserve Bank of San Francisco’s
discount and 90-day acceptance buying rates
has encouraged acceptance financing and lo­

32

April, 1930

MONTHLY REVIEW OF BUSINESS CONDITIONS

cally purchased acceptances held by this Bank
at the present time are approximately twice as
large in volume as are bills discounted. Bor­
rowings of country member banks continue
relatively large (ten million dollars) and ac­
count for nearly all of the present volume of
discounts.
M IL L IO N S

O F

D O L L A R S

deposited with commercial banks and the funds
thus made available quickly found their way
into member bank reserve deposits at the R e­
serve Bank. Concurrently with this movement,
and due to other causes, total deposits at mem­
ber banks declined slightly, reducing the
legally required amount of reserve deposits
(which member banks are required to carry
with the Reserve Bank) at a time when these
reserve deposits were tending to increase. The
funds made available by this process have been
an important factor in maintaining borrowings
from the Reserve Bank at current low levels.
As may be noted from the chart showing bills
discounted and the discount rate of this Bank,
the volume of discounts has been high or low
at the same time that the discount rate has
been high or low and the two have tended to
fluctuate together during the past ten years. It
thus appears that the present low volume of
borrowings at the Reserve Bank, accompanied
as it is by a relatively low discount rate, is not
unusual in the light of past experience.
F E D E R A L R ESE R VE B A N K O F SA N F R A N C IS C O
(In millions of dollars)
t ------------------ — Condiition---------

N E T C H A N G E S IN D E M A N D F O R C U R R E N C Y
Twelfth Federal Reserve District

The volume of currency in circulation has
declined rapidly in the Tw elfth District during
recent months. As is usual, the currency in
process of being retired from circulation was

Total Bills and Securities. . .
Bills Discounted ........................
Bills Bought ...............................
United States Securities
Total Reserves ...........................
Total Deposits ................. ..
Federal Reserve N otes in
Circulation ................................ . . .

Apr. 23,
1930
84
13
34
37
276
185

Apr. 9,
1930
77

M ar. 19,
1930
79

29
37
287
185

34
37
265
169

154

158

156

11

8

1929
109
80
17

12

246
180
153

F E D E R A L R E SE R V E B A N K OF SA N F R A N C IS C O
Volume of discounts compared with the discount rate.

Requests for early numbers of this Review have been received from universities and libraries whose files
of the publication are incomplete. It would be appreciated if those readers who have available copies of the
Review for months prior to January, 1923, would forward them to the Federal Reserve Agent, Federal Re­
serve Bank, San Francisco.




M O N T H L Y

R EVIEW

OF

B U S IN E SS CO N D ITIO N S
ISAAC B. NEWTON, Chairman of the Board and Federal Reserve Agent
Federal Reserve Bank of San Francisco
Supplement

San Francisco, California, April 21, 1930

In t e r e s t R a t e s i n

th e T w e lft h

Certain relationships between the discount
and acceptance buying rates of the Federal Re­
serve Bank of San Francisco and various rates
charged customers of commercial banks in the
Twelfth District may be observed in the re­
corded movements of interest rates. These
relationships are most clearly defined in San
Francisco, the principal money market of the
District and the banking center in which bor­
rowings from the Reserve Bank usually are in
greatest volume. The more important of them
may be illustrated in a comparative study of
the follow ing rates:

F ed era l R eserve

Vol. XIV No. 4

D is t r ic t

mercial credit and the available supply of funds
and thus may be taken as fairly representative
of open market rates in San Francisco. Com­
parison of the commercial paper rate in San
PER CEN T

(1) The Reserve Bank discount rate.
(2) The Reserve Bank buying
ninety-day acceptances.

rate

for

(3) W eighted average rates charged cus­
tomers by a group of member and non­
member banks for loans o n :
(a) Prime commercial paper eligible for
rediscount.
(b) Time and demand loans secured by
prime stock exchange collateral.
(c) Commodity paper, or loans secured
by warehouse receipts, most of
which are not eligible for rediscount
by reason of their maturity and for
other technical reasons.
The rates just enumerated are shown in the
accompanying chart, which presents them for
San Francisco only. Changes in the discount
rate have ordinarily follow ed rather closely
upon the m ajor downward or upward m ove­
ments of the acceptance rate during the past
ten years, and the latter rate has been lower
than the discount rate during the entire period,
with but one exception in 1929.*
The interest rate on prime commercial loans
is particularly significant in that it reflects the
ever shifting balance between demand for com ­
*A s indicated later on in this discussion the acceptance buying
rate of this Bank is practically identical to that of the
Federal Reserve Bank of New Y o rk which in # turn is in­
fluenced chiefly by open market rates in the national m oney
market.




IN T E R E S T R A T E S — San Francisco
Commodity Paper Loans, Demand Security Loans, and Commercial
Loans — Average rates at middle of month.
Discount Rate — Federal Reserve Bank of San Francisco.
Acceptance Rate — Federal Reserve Bank of San Francisco.

Francisco with the discount rate shows that
the former has follow ed a course almost con­
sistently at a level of about one per cent above
the discount rate. W hether continuing pre­
vious trends or reversing them, the more im­
portant changes in this rate ordinarily have
occurred within a period of a few weeks after
changes in the discount rate have been made,
both rates m oving in the same direction. O b­
servation of the chart also shows that shorter
period fluctuations of the commercial paper
rate have conformed reasonably well with the
pattern of the Reserve Bank’s acceptance buy­
ing rate, allowing for the lapse of a relatively

MONTHLY REVIEW OF BUSINESS CONDITIONS---- SUPPLEMENT

2

April, 1930

brief period of time. But this timing of the
movements has not been entirely uniform.
T w ice since 1926 (late in 1927 and during re­
cent months) the commercial paper rate has
failed to adjust itself to the average differential
of one per cent above the discount rate within
the usual period of time and its reactions to
changes in the acceptance buying rate have
been retarded. During both of these periods
of retarded adjustment between the rates there
has been considerable recession in general
business activity.

shorter-term fluctuations are more nearly like
those of the Reserve Ba.nk’s acceptance buying
rate. Furthermore, it is evident that the dis­
count rate is influenced by the major upward
and downward movements of the acceptance
buying rate. These facts may be related to the
national money market by observing that the
acceptance buying rate of this Bank has been
maintained practically identical to the corre­
sponding rate of the Federal Reserve Bank of
New York during recent years. Changes in
that rate occupy about the same position with

TENTHS

PER

OF

ONE

PER

CENT

c en t

D I F F E R E N T I A L B E T W E E N D IS C O U N T A N D C O M ­
M E R C I A L L O A N R A T E S — San Francisco
The base line of this chart represents the discount rate of the Fed­
eral Reserve Bank of San Francisco. That rate is shown as a straight
line regardless of changes in it, and the difference between the dis­
count rate and the rate on prime commercial loans in San Francisco,
in terms of tenths of one per cent, is shown by the irregular line.

Rates on security loans have follow ed the
commercial paper rate rather closely, but at a
level approximately one-half of one per cent
above that rate. The widening of this differ­
ential during the last half of 1929 was due
almost entirely to the action of securities mar­
kets during that period. There has been less
fluctuation in com m odity paper rates than in
either prime commercial or security loan rates,
and they have constantly been maintained at
higher levels than have rates on paper eligible
for rediscount at the Reserve Bank. The more
important factors influencing com m odity paper
rates appear to have been the longer term
trends of other rates and of supply and demand
conditions in the money markets.
It may be said that the various over-thecounter and open market interest rates in the
Tw elfth District, as represented by San Fran­
cisco, m ove in different planes and that their
main trends are similar to the main trends of
the Reserve Bank’s discount rate, while their




IN T E R E S T R A T E S IN N E W Y O R K A N D S A N F R A N C I S C O
Commercial Loans — San Francisco— Average rate at middle of
month.
Commercial Loans — N ew Y o rk — Average rate at middle of month.
Commercial Paper— New Y o r k — Monthly average open market rate
on 4 to 6 months prime commercial paper.
Acceptances— (H ea v y lin e) Monthly average open market rate on bank­
ers’ 90-day acceptances, N ew Y ork City.
(L igh t lin e ) Buying rate on 90-day acceptances, F ed­
eral Reserve Bank of New Y ork.

respect to other rates in New Y ork as in San
Francisco, and, in New York, are particularly
sensitive to the fluctuations of open market
rates. It is evident therefore that the course
of interest rates in San Francisco, particularly
the more sensitive open market rates, presents
about the same picture as does the course of
similar rates in New York, the San Francisco
rates generally m oving at slightly higher
levels.