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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 Vol. X V I I I San Francisco, California, August 20,1934 No. 8 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 records showed greater fluctuation from June to July than is customary in one month, and the movements were more diverse than usual. Sharp declines in certain measures of industry and trade were accompanied by equally sharp advances in others, making it difficult to determine if there was any concerted movement upward or down ward. Industrial employment appears to have decreased fairly definitely, but even in that field increases in the important canning and preserving and motion picture industries were more than seasonal. Employment in most other large industries declined, however, as did total employment after allowance for seasonal fac tors. The marine workers’ strike and other labor disputes associated with it doubtless had a significant influence upon employment re ports for the month. Although lumber mill operations declined for July as a whole, they were stimulated by announcement late in the month that the long shoremen’s controversy had been submitted to arbitration. By mid-August, production, ship ments, and orders had been restored almost to the levels prevailing in early May prior to the strike. Crude oil produced and run to refineries continued to increase during July, reaching a peak for the year. Electric power production also averaged higher than in the preceding month. Including large awards on the Grand Coulee Dam project in W ashington, contracts for public works construction expanded sharply to the highest level for any month since April 1933, when San Francisco Bay Bridge contracts were let. Privately financed building remained about as low as at any time in recent years. Retail trade at department stores decreased considerably during July in several parts of the district, notably the San Francisco Bay region and principal ports of the Pacific Northwest. These declines were offset by gains in Los Angeles and at interior cities with the result that total sales, adjusted for seasonal variation, increased slightly from the level of the preceding month. Sales of new automobiles increased less than is usual during July, but were larger than in any other month of this year. W ater-borne commerce through the Panama Canal was re stricted substantially further, but freight carloadings continued to expand, although there is ordinarily some decrease during July. Compared with the United States as a whole, the agricultural outlook in this district con tinued good. Prospective returns from the marketing of farm products were improved by price advances during the first half of August. W eather conditions were favorable for harvest ing during July, and there was no material change from earlier production forecasts, which indicate that most crops will be but little smaller than the average of other recent years. Although livestock ranges in the lower alti tudes are in poorer condition than at any time on record, it has been possible to move animals to higher ranges or to secure sufficient supple mental feed to keep them in fair condition. There was little net change in the credit situation from mid-July to mid-August. The Federal Government continued to disburse sub stantially more than it collected in this area. Funds derived from this source were used by banks to purchase investments in eastern mar kets and for the partial settlement of other commercial and financial balances with areas outside the Twelfth District. In order to help settle the adverse balance of payments, member banks reduced their deposits with the Federal Reserve Bank, but the amount of reserves in excess of requirements remained near the highest levels on record. Interest rates moved downward further, with rates on some types of loans declining to new low levels. Deposits of reporting member banks expanded moderately during the period under review, and both loans and investments also increased. Agriculture W arm, dry weather during July and early August favored the harvesting of grains and of some field crops and the maturing, harvesting, and drying of fruits. D ry weather was detri- 58 MONTHLY REVIEW OF BUSINESS CONDITIONS mental to ranges and livestock and to feed and water supplies throughout most of the district, however, and during July and the first half of August several additional counties in the Tw elfth District were listed in the drought areas by the Farm Credit Administration. For the most part these additions to the official list of drought-stricken counties are primarily live stock regions located in Arizona, Utah, Ne vada, southern Idaho, eastern Oregon, and southern California. Crop production in this district is expected to be only moderately smaller this year than last, when the volume of crops harvested totaled about 5 per cent less than the average of the preceding five years. C R O P P R O D U C T I O N —Twelfth District ( i n thousands) Wheat (bu.) ........................ Barley (bu.) ........................ Oats (bu.) .......................... Cotton (b a le s )...................... Beans (bags) ...................... Tame Hay (tons) .............. Hops (p o u n d s ).................... Potatoes (bu.) .................... Rice (bu.) ............................ Sugar Beets (tons) ............ Apples (bu.) ........................ Apricots ( t o n s ) .................... Cherries (tons) .................. Grape's ( t o n s ) * .................... R a is in ................................ Table ................................ Wine ................................ Peaches ( b u . ) * .................... Clingstone ........................ F reeston e.......................... Pears (bu.) .......................... Plums (tons) ...................... Prunes (tons) ...................... Almonds (tons) .................. Walnuts (tons) .................... Average 1927-1931 113,196 35,648 24,018 325 5,020 11,617 29,331 45,128 7,823 1,667 53,423 215 45 2,020 1,206 379 435 23,294 15,460 7,834 15,208 62 236 12 35 1933 100,969 36,539 27,982 313 5,234 11,303 39,500 46,175 6,042 3,367 47,720 268 62 1,660 970 270 420 22,335 14,876 7,459 16,334 57 199 13 33 Forecast 1934 80,447 31,090 20,528 324 4,605 10,180 35,272 41,125 6,930 1,815 48,099 132 48 1,654 962 249 443 21,752 14,418 7,334 16,619 61 227 11 40 *California only. S ource: United States Department of Agriculture. Tw elfth District production estimates of most grains and field crops decreased slightly during July, but few if any sections of this district will experience anything like a crop failure this year. Expected harvests are com pared with production in previous years in the preceding table. Harvesting of grain crops progressed satisfactorily during the month throughout most of the district. Cash and future wheat prices in the Pacific Northwest advanced considerably, accompanying predic tions of the smallest crop in the United States since 1893 and moderate world supplies of wheat. Cotton continued in good to excellent condi tion during July and early August except in restricted sections of the San Joaquin and Imperial Valleys where water for irrigation is inadequate. August 1 estimates of the Califor nia and Arizona cotton crop indicate a total production of 324,000 bales, compared with 313,000 bales harvested in 1933 and an average annual output of 325,000 bales for the years 1927-1931. Prices for cotton advanced during August 1934 the first half of August to the highest level since June 1930. Sugar beets in Utah and southeastern Idaho have deteriorated consider ably because of hot weather and lack of water, but a moderate-sized crop of good quality and high sugar content is being harvested in Cali fornia. The hay crop is expected to be about 25 per cent smaller than last year. That factor, together with improved demand for supple mental feed, was responsible for a sharp ad vance in alfalfa hay prices in both the San Francisco and Los Angeles markets during July and August. The California rice crop was re ported to be in excellent condition on August 1, and production of 6,930,000 bushels was fore cast, an amount 15 per cent larger than in 1933 but approximately 10 per cent below the aver age crop during the period 1927-1931. The price of Japan extra fancy California rice in the San Francisco market remained steady at $3.85 per hundred pounds. Although production estimates of most Cali fornia deciduous fruit crops changed little dur ing July, grapes were damaged slightly by ex cessive temperatures and lack of moisture, and in some districts peaches matured before they had attained full size. The picking and drying of peaches, prunes, and raisin grapes began in July and continued into August. Through the organization of surplus control and marketing agreements with the Agricultural Adjustment Administration it is hoped that marketing of these crops will be more effective and that growers will be paid higher prices. Producers of other early deciduous fruits have had a fairly satisfactory season, both the volume of eastern shipments and prices averaging slightly higher than a year ago. In the Pacific Northwest, the harvesting of apples, pears, peaches, and prunes was well under way in early August and most fruit was of good quality. Notwithstanding the prospect of smaller European markets, the outlook for Agricultural Marketing Activity— Carlot Shipments Deciduous F ruit.. Citrus Fruit . . . . Vegetables .......... Exports Whe'at (bu.) . . . . Barley (bu.) . . . . Receipts Eggs (cases) . . . . Butter (lbs.) . . . . Wheat (carlots). . Barley (carlots). Storage Holdings (end of month) Wheat (bu.) . . . . Beans (bags) . . . . Butter (lbs.) . . . Eggs (cases) . . . t-----------July-----------\ f-----Season to Date----->v 1934 1934 1933 1933 18,119 11,766 4,537 7,086 7,899 6,948 55,375 54,061 85,957 8,599 12,649 94,793 545,763 147,708 1,768 498,208 545,763 147,708 1,768 498,208 40,355 58,666 586,577 454,231 129,009 126,045 1,501,291 1,592,092 482,308 470,934 2,399,735 2,245,890 140,174 116,705 1,194,512 1,069,784 6,944,902 7,249,733 49,027,145 45,681,940 6,119 4,416 4,416 6,119 564 613 564 613 1Í1O 2/Í1 ^ r 1/00 ’v r July June July June 3,638,000 3,610,000 4,028,000 2,024,000 744,000 937,000 364,000 529,000 8,051,000 7,062,000 10,268,000 7,542,000 722,000 735,000 788,000 779,000 * Excluding receipts at Los Angeles during July. August 1934 FEDERAL RESERVE AGENT AT SAN FRANCISCO apple growers in the Pacific Northwest is favorable, since production is expected to be larger than last year and approximately the same as average annual production of the last few years, while total United States produc tion is estimated to be the smallest since 1921. Production estimates of the current Califor nia Valencia orange crop and of the 1934 lemon crop were about the same at the beginning of August as a month earlier. Output is expected to be moderately larger than last year. Eastern shipments of oranges during July were slightly smaller than in that month last year, but total returns to growers were larger because of the higher prices received. Extremely hot weather in other parts of the United States created a good demand for lemons. Eastern shipments were larger and prices paid during the month considerably higher than in July 1933. The serious lack of irrigation water in the Imperial Valley has damaged the grapefruit crop which was estimated to be 69 per cent of a full crop on August 1. Condition of that fruit on com parable dates in previous years was 76 in 1933, 73 in 1932, 87 in 1931, and 86 in 1930. Pastures and ranges in most areas of the dis trict deteriorated during July. W inter range feed prospects are poor and inasmuch as this year’s hay crop will be light, feed prices gen erally are advancing. Although this favors hay and feed producers, it has an unsatisfactory bearing upon the outlook for the livestock industry. During the past six weeks, cattle in the drought-stricken areas of the district have been moved to new feed, maintained on supple mental feed, or bought by the Government to Employment— t---------California---------r~~-------------Oregon------------\ No. of No. of No. r- Employees —> No. r— Employees —> of July July of July July 1933 Industries Firms 1934 1933 Firms 1934 112 17,470 19,182 All Industries*___ 1,127 158,834 132,507 (-8 .9 ) Stone, Clay, and (+19.9) 69 50 Glass Products. 57 6,318 5,131 3 ( + 38.0) Lumber and W ood (+ 2 3 .1 ) 42 9,818 11,126 Manufactures . . I l l 13,991 12,040 ( + 16.2) (— 11.8) 1,292 Textiles ................ 10 1,034 1,140 1,337 8 (— 3.4) Clothing, Millinery, ^ and Laundering. 146 9,949 10,452 145 145 6$ (0) Food, Beverages, ^ and Tobacco' . . . 275 47,430 36,212 2,190 26 1,525 ( + 31.0) (— 30.4) Other Industriesf. 477 67,995 59,397 ( + 14.5) 27 4,621 M iscellaneous___ 51 12,117 8,135 4,334 (+ 4 8 .9 ) (+ 6 .6 ) Public Utilities .. 48 44,545 43,465 (+ 2 .5 ) Wholesale and Retail .............. 215 28,074 25,903 _______ (+ 8 .4 ) * Public utilities and wholesale and retail figures not included in this total, flncludes the following industries: Metals, machinery, and conveyances; leather and rubber g o o d s; oils and paints; printing and paper goods. ^Laundering only. Figures in parentheses indicate percentage change from July 59 be slaughtered for relief purposes. The condi tion of cattle in all states in the Twelfth Dis trict on August 1 was reported lower than a year ago and considerably below the 10-year average condition at the beginning of August. There was little net change in cattle prices in most district markets from mid-July to midAugust, with only a small number of choice grade cattle received. The total United States 1934 w ool clip was estimated to be slightly smaller than last year, but 1934 w ool production in this district was approximately the same as in 1933. As com pared with a year ago, however, the decline in the number of head shorn was relatively larger in the Twelfth District than in the United States as a whole. Lamb prices have declined season ally. M ost current sales from northern Cali fornia, Oregon, and Nevada are for California markets. In d u stry Twelfth District industrial production de clined by more than the usual seasonal amount during July. The reduction in operations re flected increased difficulties in connection with local labor disputes as well as the indirect influ ence of the general decline in business through out the nation as a whole. W hile the total number employed in Cali fornia industries increased 5 per cent from midJune to mid-July, the gain was smaller than that which usually has been caused by the employment of large numbers of additional cannery workers at this season. This bank's seasonally adjusted index, which excludes can ning and preserving of fruits and vegetables, decreased from 83.4 to 80.5 per cent of the 19231925 average. Declines were quite general throughout the state. In Los Angeles county, the motion picture industry was the only one of consequence to report more employment than a month earlier. The number of employed in San Francisco decreased considerably, re flecting in part the effects of strike conditions which prevailed in that city in mid-July. A l though employment reports refer to conditions immediately prior to the middle of the month, whereas the general strike of union labor in the San Francisco Bay area took place on July 16, 17, and 18, figures of the number of workers employed were doubtless influenced by the disturbed labor conditions then pre vailing. Despite larger aggregate employment than in June, there was a 4 per cent decrease in payrolls, and average weekly earnings declined 9 per cent. These declines reflected not only the fact that some workers received smaller weekly wages but also the increase in the relative pro portion of low-wage cannery employees. 60 MONTHLY REVIEW OF BUSINESS CONDITIONS Employment in Oregon, after allowance for seasonal tendencies, showed a somewhat greater decline than was recorded in California. Daily average crude oil production in Cali fornia increased from 515,000 barrels in June to 518,000 barrels in July. Production in the later month represented an average daily ex cess of 9,000 barrels over proration allowables, as compared with an average excess of about 16,000 barrels daily since September 8, 1933, when the oil code became effective. Under strict interpretation of the code, excess produc tion is supposed to be charged against future allotments. A recent order of the oil adminis trator provides, however, that the amount of excess production up to June 3, 1934 may be placed in a suspense account if producers ad here to proration agreements and other code regulations thereafter. Proration schedules have been reduced from 509,000 barrels for July to 490,000 barrels for August in an at tempt to reduce inventories at refineries. Pro duction during the first three weeks of August averaged 508,000 barrels daily. A ctivity at oil refineries, as indicated by the amount of crude oil run to refinery stills, con tinued to increase during July, despite sharp curtailment in the second and third weeks of that month when strike conditions made it difficult to maintain marketing facilities on the Pacific Coast. Reflecting in part the increase in refinery output and in part the effect of re duced consumption during the period when strikes prevented gasoline delivery in the San Francisco Bay region and in Portland, inven tories of gasoline were higher at the end of July than at its beginning, reversing the de clining tendency of other recent months. Gaso line prices remained unchanged during the period under review. Industry— Indexes of daily average production, adjusted for seasonal variation (1923-1925 daily average=100) -1933 -------N ------ 1934----June May Apr. July June May General 37 45 49 42 55 44 -Industrial. 50U Carloadings141 139 135 147 155 154 Manufactures 37 51 61 51 49 Lumber .......................... 3711 40 130 130 131 136 144 127 Refined Mineral Oilsf 112 117 124 98 89 97 Flour ...................................... 113 115 120 Slaughter of Livestock. 110 110 111 105 47 52 73 54 61 74 Cement .......................... 58 95 96 93 89 W ool Consumption . . . . 85If 84 101 Minerals 72 72 74 74 73 78 Petroleum (California) f 78 41 37 66 36 56 56 Lead (United S ta te s )!. 30 34 24 45 44 45 Silver (United States) $. Building and Construction# 39 29 29 28 52 43 Total .............................. 64 Building Permits— Value 9 14 11 10 Larger Cities ............ 10 10 10 19 15 19 13 12 13 Smaller Cities .......... 16 Engineering Contracts Awarded— Value 77 56 61 50 108 90 Total ...................... 69 Excluding Buildings 234 151, 114 114 83 214 198 fNot adjusted for seasonal variation, iPrepared by the Federal Reserve Board. #Indexes are for three months ending with the! month indicated. flPreliminary. August 1934 After seasonal allowance, lumber output in the Douglas fir regions of the Pacific North west remained unchanged during July at the record low level of the preceding month. Out put of lumber in the western pine area declined during July, causing total district lumber pro duction to recede further. This bank’s adjusted index, at 37 per cent of the 1923-1925 average, was 3 points lower than in the previous month and only about two-thirds as high as in July 1933, when, however, it was higher than at any time since the latter part of 1931. New orders and shipments reached a low point for the year in mid-July, but recovered sharply late in the month. In mid-August, both shipments and orders were as large as in early May, prior to the beginning of the longshoremen’s strike. Due to the letting of contracts amounting to 29 million dollars on the Grand Coulee Dam project in W ashington during July, there was a further large increase in contract awards for public works, including those financed entirely or in part by the Federal Government and those financed by private capital entirely. E x cluding the Grand Coulee project, the amount of construction undertaken was smaller than in June, but approximated the average for other months during the past year. Federal Govern ment projects exclusively were larger than in any other month since March 1931, when con tracts for Boulder Dam were awarded. NonFederal work for which loans and grants were authorized under the Public W orks Adm inis tration has been slower in getting under way than that financed wholly by the Federal G ov ernment, but more recently has increased in volume and in July was larger than at any time since the program was initiated. Up to July 11, allotments for this type of work in states of the Twelfth District aggregated 67 million dollars, 27 million dollars of the total being for utilities construction, 17 million dollars for public build- Distribution and Trade— —1933— 15 >34-----A July June May June May Apr. Indexes adjusted for seasonal variation (1923-1925 average=100) 62 58 67 66 65 53 741Í 79 68 70 67 9311 90 85 r ■" July Carloadingst T o t a l .................. Merchandise . . . . Intercoastal Trade ---------- 64 79 86 63 48 100 67 73 88 W estb ou n d ........ 75 55 62 82 86 Eastbound ........ 41 Retail Trade Automobile Sales? 74 62 60 57 T o t a l .............. 66 69 55 Passenger . . . 62 57 53 121 120 112 98 Commercial . . 110 Department Store 72 72 71 ' 71 82 Sales$ ............ 65 Stocks§ .......... 62 66 64 57 A # ■ 1 Ï7 * X Collections# A c tu a l F ig u r e s Regular . . . . 44.6 47.1 47.8 45.1 41.9 17.2 17.3 16.0 Installment. 17.5 17.5 72 79 69 68 61 70 64 59 110 48 46 70 72 57 72 54 42.8 14.8 > 43.3 15.0 JDaily average. §At end of month. #Per cent of collections dur ing month to amount outstanding at first of month. UPre liminary. ings, 6 million dollars for railroad projects, 6 million dollars for waterworks, and 11 million dollars for streets, roads, and other types of construction. Only a small proportion of this work actually has been completed, although contracts have been awarded for a considerable part of it. The accompanying tabulation of building permits issued in 11 of the larger cities in the district indicates the small amount of private building that is currently being undertaken as compared with 1929. All types of building activity, including alterations and repairs of existing structures, tended sharply downward from 1929 through 1932. Practically no im provement has taken place in total private building since then, although more recently the decline appears to have been arrested. Permits P R IV A T E B U I L D I N G A C T I V I T Y I N E L E V E N L A R G E (in millions of dollars) New New N on- Alterations Residential Residentialf and Repairs 112 78 47 17 13 5* 92 81 47 24 16 7* 34 24 18 11 16 8* immediately prior to the effective date of the retail sales tax in California. Retail prices of department store commodities continued to de cline in July. Department store inventories were reduced to the lowest level recorded this year. R E T A I L T R A D E —Twelfth District Percentage changes in value of sales and stocks f--------------1934 compared with 1933-------------f______ N E T S A L E S -------- \ ST O C K S Jan. 1 to End of end of July July July Department S tores........ Los Angeles .............. Other So. California. Oakland ...................... San Francisco .......... Bay R e g io n ................ Central California . . . Portland! .................... Spokane ...................... Salt Lake C i t y .......... Apparel Stores .............. Furniture S tores............ All Stores ...................... — 7.9 — 13.1 2.5 — 10.1 "-18.3 — 14.7 5.4 3.2 2.5 25.1 9.4 — 9.3 — 33.3 — 12.2 71) 7) 7) 5) 8) 18) 6) 8) 4) 5) 4) 34) 36) (141) ( ( ( ( ( ( ( ( ( ( ( ( ( 8.7 4.4 10.7 4.2 6.4 6.4 13.0 11.5 13.8 31.7 16.1 13.5 8.2 9.1 9.8 8.5 — 9.5 13.3 10.6 10.7 — 2.1 11.7 12.5 10.4 16.9 16.5 9.8 9.6 53) 7) 5) 5) 7) 16) 6) 8) 4) 5) 3) 23) 27) (103) ( ( ( ( ( ( ( ( ( ( ( ( ( fIncludes five apparel stores which are not included in district department store total. Figures in parentheses indicate number of stores reporting. C IT IE S O F T H E T W E L F T H D IS T R I C T 1929 1930 1931 1932 1933 1934 61 FEDERAL RESERVE AGENT AT SAN FRANCISCO August 1934 Total 238 183 112 52 45 20* ♦First six months, partly estimated. fSince 1930, includes some public works, although most buildings of this type do not require permits. Source: Bureau of Labor Statistics. issued for alterations and repairs, however, which ordinarily constitute but a minor part of total construction, advanced in 1933 and ac counted for a larger proportion of the total for that year than did either residential or nonresidential building. This tendency, which had been grow ing in the four preceding years be cause of the relatively greater declines in the amount of new building, continued during the first half of 1934, with alterations and repairs amounting to 40 per cent of the total. An increase in freight carloadings during a month in which there is ordinarily a decline resulted in this bank's seasonally adjusted in dex rising from 67 (1923-1925 = 100) in June to 74 in July. The latter figure is the highest since mid-1931. Continued diversion of traffic from water to rail shipment, the early agri cultural season, and the unusual movement of livestock from drought areas were the prin cipal factors contributing to this increased v ol ume. Merchandise and miscellaneous loadings PER CENT Trade Total sales of department stores decreased by slightly less than the seasonal amount dur ing July, this bank's adjusted index advancing from 72 per cent to 73 per cent of the 1923-1925 average. Larger declines than are customary occurred in San Francisco and Oakland, areas affected particularly by the tie-up of shipping and other trade facilities incident to labor diffi culties in May, June, and July and in which pur chasing power consequently was diminished. These decreases were offset by increases, after seasonal allowance, in sales in Los Angeles and Spokane. As compared with a year earlier, sales were 8 per cent smaller in value, the first yearperiod decline since last October. Part of this decrease over the year-period may be attrib uted, however, to the exceptionally high value of sales of California stores in July last year, C A R L O A D I N G S — Twelfth District Index adjusted for seasonal variation (1923-1925 average=100). remained comparatively large and a decline in industrial loadings was smaller than is usual from June to July. California carloadings in creased substantially, although there is usually little change in July, and loadings in the Pacific Northwest remained unchanged, although a sharp decline is customary in that area in July. New automobile registrations increased fur ther during July and were only slightly below those recorded in the corresponding month in 1931. Sales during July were larger than in any previous month of 1934, but the increase over June was less than seasonal and the ad- MONTHLY REVIEW OF BUSINESS CONDITIONS 62 justed index declined from 74 per cent of the 1923-1925 average to 66 per cent. No doubt reflecting restricted purchases of retailers because of the labor situation, whole sale trade decreased by moderately more than the seasonal amount during July and, for the first time since April 1933, was smaller than a year earlier. Sales of groceries and furniture declined less than is usual during July. Drug, W H O L E S A L E T R A D E —Twelfth District Percentage changes in value of sales July 1934 t— compared with— June 1934 July 1933 Agricultural Im p lem en ts.... Automobile Supplies ............ Drugs ...................................... Dry Goods ............................ Electrical S u p p lies................ Furniture!................................ Groceries ................................ H a rd w are ................................ Shoes ...................................... Paper and S ta tion ery .......... All Lines ................................ — 22.7 — 2.8 — 6.3 — 5.3 — 7.6 — 15.2 — 5.6 — 14.4 — 14.5 — 8.2 — 8.8 6.1 — 0.1 9.5 — 32.2 20.5 — 47.9 12.1 — 1.8 — 11.1 — 1.2 — 1.6 Cumulative 1934 compared with 1933 Bank Debits* — I N T E R C O A S T A L W A T E R -B O R N E S H IP M E N T S Index adjusted for seasonal variation (1923-1925 average=100). which held up fairly well because they are transported in tankers loaded by pipe line, all eastbound water-borne commerce was negli gible. Lumber shipments, at 3,000 tons, were only 2 per cent of the average of recent years. Prices July 1934 27,231 $ July 1933 18,380 First seven months 1933t 1934 $ 177,986 $ 123,015 46,924 80,601 81,695 156,360 3,485,368 1,122,779 127,558 191,664 32,000 200,490 4,209,243 89,049 48,551 72,455 8,179 16,615 15,496 23,703 538,326 151,204 17,189 60,132 5,790 28,777 657,647 17,544 8,547 14,559 7,081 12,621 12,964 25,429 598,552 160,777 20,119 25,997 4,671 31,737 738,445 13,996 7,645 12,840 58,524 136,002 113,598 157,516 3,788,202 1,110,067 130,466 365,895 40,086 208,254 4,760,275 108,121 55,756 93,652 13,100 10,497 77,760 58,128 8,087 6,385 50,126 31,565 3,858 114,984 3,237 112,436 26,716 825,911 19,503 664,072 11,204 46,264 11,334 42,526 79,328 322,265 58,510 266,970 4,474 4,644 134,130 29,874 20,745 4,651 8,965 4,464 5,328 132,325 23,409 19,866 3,658 6,814 31,409 35,601 935,341 199,743 153,169 27,719 63,629 26,490 30,664 782,932 136,408 121,075 19,587 42,411 T otal............ $1,995,919 $2,073,533 $14,133,117 $12,326,067 *In thousands of dollars. tMarch 1933 figures were incomplete for some cities during the banking holiday period. of the marine workers’ strike upon W est Coast shipping. Although shipments passing through the Panama Canal from the Atlantic to the Pacific actually increased during the month, eastbound cargoes, which represent the bulk of traffic, reached levels below any recorded previously during the depression, seasonal fac tors allowed for. This bank's adjusted index of eastbound shipments has declined steadily from a seven-year high point of 105 (1923-1925 aver age = 1 0 0 ) in March to a twelve-year low point of 41 in July. Except for petroleum cargoes, 80.2 13.2 27.5 12.9 47.1 13.5 15.0 33.9 24.9 28.0 25.0 electrical supplies, and automobile equipment wholesalers reported about the customary changes in business. Sales of dry goods and paper and stationery houses, which ordinarily increase from June to July, declined this year. Decreases in sales of hardware, agricultural implements, and shoes were greater than is usual during July. Intercoastal traffic declined sharply from June to July, reflecting the direct influence Arizona Phoenix ............ $ California Bakersfield . . . . Berkeley ............ F re s n o ................ Long Beach . . . . Los Angeles . . . . Oakland ............ Pasadena .......... Sacramento . . . . San Bernardino. San Diego ........ San Francisco. . . San Jose .......... Santa Barbara. . . Stockton ............ Idaho B o i s e .................. Nevada Reno .................. Oregon Eugene .............. Portland ............ Utah O g d e n ................ Salt Lake C ity .. Washington Bellingham . . . . Everett .............. S e a ttle................ Spokane ............ T a c o m a .............. Walla W a lla .... Y a k im a .............. A ugust 1934 Most wholesale com m odity prices for which quotations are available in the Twelfth District increased moderately from mid-July to midAugust. On August 10, contract wheat prices at Chi cago reached the highest point since July 1933, but declined several cents per bushel in the third week of the month. Cash wheat quota tions at Portland moved about the same as prices at the Chicago market, but at a slightly lower level. In San Francisco, all cash grain prices advanced sharply and in mid-August they were higher than in August 1933, when the peak for 1933 was reached. Bean quota tions were slightly higher in mid-August than a month earlier. The dried fruit market showed little change except in quotations for prunes, which con tinued to decline. Canned fruit prices tended upward. The principal advance was in prices of canned apricots. Copper and zinc prices remained unchanged during July and the first half of August, while lead quotations declined slightly. By a presi dential proclamation issued August 9, silver was nationalized and the Federal buying price fixed at 50.01 cents per ounce for all silver August 1934 FEDERAL RESERVE AGENT AT SAN FRANCISCO 63 Loans made by Tw elfth District city banks increased during the four weeks ended A u gust 15. These banks also added to their investment holdings as new deposits became available through Federal Government expend itures in excess of local collections. Excess reserves of member banks continued at a high level and interest rates charged customers again declined sharply. A ctivity on district stock exchanges was lower than at any time thus far this year. There was a reversal of the downtrend of loans at city banks in mid-July, loans other than those on securities showing steady expan sion from that time to August 15. Total loans on securities at the middle of August were about the same as a month earlier, notwith standing reductions in loans to brokers and dealers in securities. Banks added to their holdings of Government bonds and other se curities through open market purchases, since but a small part of the new issues of recent weeks was allotted by the Treasury to banks in this district. Less than 2 million dollars of the 3 per cent Federal Farm Mortgage Cor poration bonds dated August 1 and less than 6 million dollars of the three series of Home Owners' Loan Corporation bonds dated A u gust 15 were allotted to this area. Only small amounts of Treasury bills offered between mid-July and m id-August were secured by local bidders. A n outflow of funds from this district due to purchases of securities in eastern markets and to an unfavorable balance of other commer cial and financial transactions was larger in amount than the funds gained through United States Government disbursements in excess of collections in this area. As a result, both mem ber bank reserve balances and non-member bank deposits at the Reserve Bank declined moderately. W hile excess reserves decreased appreciably from their large volume in midJuly, they continued to fluctuate around the high level that has prevailed since early April. Banks accepted a moderate amount of bills during July, but holdings of this class of paper at the end of the month were smaller than at the end of June. Forward purchases and sales of foreign exchange have also been reduced during the past two months and in addition, foreign banks have lowered their deposits with local institutions. Local dealers are keeping unusually small deposits with foreign corre spondents. Trading on the principal stock exchanges of the district decreased sharply during July and August, to the lowest total this year. Prices of securities also declined. S O U R C E S A N D U SE S O F B A N K I N G R E S E R V E S F E D E R A L R ESE R VE B A N K OF SA N F R A N C IS C O Twelfth District (in millions of dollars) bullion. Silver mined from natural deposits in the United States or any place subject to the jurisdiction thereof after Decem ber 21, 1933 was exempted from this order and is still being purchased by the United States Treasury at 62j/ 2 cents per ounce. A m ong other commodities important in the Twelfth District, rubber, sugar, and coffee in creased slightly in price, while lumber quota tions showed small reductions during the period under review. The Credit Situation t-------------------- Condition--------------------- ^ Changes in millions of dollars during the weeks indicated Aug. 15 SO U RCES O F F U N D S W eek Ending 1934 June 6 . . . June 13. . . June 2 0 ... June 27. . . July 4 . . . July 1 1 . . . July 1 8 . . . July 2 5 ... August 1. August 8 . Reserve Bank Credit + — + + + — — — + + + .3 .3 -9 *7 4.9 5.1 .8 1.7 .2 1.1 .1 Commercial Operations Treasury Operations Total Supply + 10.1 + *5 — 7.0 — 20.0 + -1 — 12.5 + 5.4 — 20.0 — 14.9 — 5.0 + 4.0 + 5.5 + 3.1 — 2.8 + 12.6 + 9.5 + 22.1 + 8.5 + 3.3 + 1.4 + 9.3 + 5.0 + 15.9 + 3.3 — 8.9 — 6.7 + 14.5 + 4.5 + 13.1 — 18.4 — 13.3 + 5.4 + 9.1 1934 Total Bills and Securities.......... 167 Bills Discounted .............................. Bills B o u g h t ...................................... United States Securities........ 166 Total Reserves ............................ 309 Total Deposits ............................ 250 Federal Reserve Notes in Circulation .............................. 209 Federal Reserve Bank Note's in C ircu lation.......................................... Ratio of Total Reserves to De posit and Federal Reserve! Note Liabilities Combined . . . 67.2 Aug. 8 July 18 Aug. 16 1934 167 ... ... 166 299 242 1934 168 ... 166 326 266 1933 167 26 i 140 261 180 209 212 218 ... ... 66.4 68.3 2 4 65.6 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) U SE S O F F U N D S W eek Ending 1934 June 6 . . . June 13. . . June 20. . . June 2 7 ... July 4 . . . July 1 1 ... July 1 8 ... July 2 5 ... August 1 . August 8 . August 15. Demand for Currency 4 - 4.9 — 1.0 + 4.4 — 1.4 + 11.2 — 5.2 + 4.1 — 7.7 + 1.2 + 3.5 + -9 Member Bank Reserve Deposits + 9.8 + 7.6 — 11.7 — 12.7 + 10.5 + 8.5 + 3.1 — 10.0 — 9.2 + 2.0 + 9.4 Other F .R .B . Accounts + — — + — + + — — — — 1.2 3.3 1.6 7.4 7.2 1.2 5.9 .7 5.3 .1 1.2 Aug. 15 1934 Total Demand + 15.9 + 3.3 — 8.9 — 6.7 + 14.5 + 4.5 + 13.1 — 18.4 — 13.3 + 5.4 + 9.1 Loans and Investments— T ota l.. 1,874 Loans— T o t a l ............................ 880 On Securities ...................... 223 All Other .............................. 657 Investments— Total ................ 994 United States Securities. . . . 627 Other Securities .................. 367 Reserve with Reserve B a n k .... 130 Net Demand D e p o sits................ 660 Time Deposits ............................ 945 Due from B a n k s .......................... 177 Due to B a n k s .............................. 197 Borrowings at Reserve Bank................. — Condition------Aug. 8 July 18 Aug. 16 1934 1934 1933 1,852 875 224 651 977 614 363 127 648 939 176 186 1,836 869 1,675 882 647 967 608 359 132 640 946 180 188 660 793 478 315 97 555 222 222 868 132 130 20 64 MONTHLY REVIEW OF BUSINESS CONDITIONS T u rn o v e r o f M e m b e r B a n k M ember bank reserve deposits have in creased steadily during the past year. Demand for banking accommodations has remained comparatively low. Reserves in excess of legal requirements have accumulated to an unusual extent, and the rate of turnover of these re serve deposits has decreased. Member bank reserve deposits are subject to withdrawal by check much as are individual deposits with a commercial bank. Debits to reserve accounts arise chiefly through the withdrawals of currency, repayment of dis counts, liquidation of Government deposits, payments for United States securities, settle ment of clearing house balances, or telegraphic transfers. Banks build up their reserve de posits by similar transactions but with pay ments in the opposite direction. The turnover of the deposits is therefore largely a measure of the movement of funds between banks and thus reflects inter-banking activity. A high rate of turnover indicates that banks are active in utilizing their funds. It indicates that payments between banks are relatively large and indirectly reflects substantial ex changes of commodities and services between individuals. Ordinarily there would be no ap preciable accumulation of excess reserves dur ing such a period. Between 1926 and 1930 the monthly turn over of reserve deposits— that is, the ratios of total checks drawn on the accounts each month to their daily average balance— increased from 10 times to approximately 13 times. This in crease resulted entirely from inter-district transactions, the turnover of reserves due to debits arising from local transfers having changed little during this period. Turnover due to inter-district payments and transfers was ab normally high during 1930 and early 1931 due to the daily transfers of large amounts of “ Federal” funds between the Pacific Coast and eastern money centers. Since 1931 the decline has been fairly steady, although the actual volume of transactions has increased since mid-1933. Low money rates and the smaller volume of credit used by national money mar kets have steadily reduced the interchange of funds between districts. The turnover due to local forces was high during 1932 when many banks were borrow ing heavily at the Reserve Bank and using their reserves to the best pos sible advantage. A fter declining up to the middle of 1931, turnover of member bank reserves arising from transactions within the district advanced sharply until early 1932. This increase, which took place at a time when business activity was declining substantially, was caused by a August 1934 R e s e r v e D e p o s it s strained banking condition and was accom panied by heavy withdrawals of currency and pronounced expansion of borrowings. Because of the unusual need for funds, banks found it necessary to use their reserves to the fullest extent possible. Banking conditions in the Twelfth District improved temporarily after February 1932 and the turnover of deposits due to local transfers began a rapid decline which has lasted to the present time. T IM E S PER MONTH T U R N O V E R O F M E M B E R B A N K R E S E R V E D E P O S IT S Federal Reserve Bank of San Francisco Turnover of reserves in the San Francisco area has been at a more rapid rate than for the entire district continuously during the period under review. This greater turnover in the largest banking center is to be expected, not only because of the large amount of settle ments made for depositors in other states who bank in San Francisco but also because of the heavy turnover of bankers’ balances from other parts of the district. As might also be expected, the decline in activity of reserve accounts in that territory since 1930 has been sharper than in other parts of the district, the rate decreasing from 21 times per month at the end of 1930 to 4 times at present. The large amount of excess reserves now available has contributed to the reduction in turnover of deposits during the past year and a half. W hile this has been an important fac tor, however, the continued decline in intra district banking activity has also reduced the rate of turnover further. A part of the current unusually low rate of turnover of reserve deposits at this time may be due to the usual seasonal summer decline. The principal influences, however, continued to be the large excess reserves and the quiet state of banking and finance. In comparison with pre-depression years, other important factors are the small volume of trade and the lower level of general prices, including commodities, wages and salaries, securities, and other goods and services, the exchange of which is settled in terms of money values. MONTHLY REVIEW OF B U S IN E S S C O N D IT IO N S Federal Reserve Agent Federal Reserve Bank o f San Francisco Supplement San Francisco, California, August 20, 1934 Vol. XVIII No. 8 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 July. Fac tory employment and payrolls also decreased. Diminished output of steel was the chief factor in the decline of industrial activity, which was larger than is usual at this season of the year. The general level of wholesale commodity prices showed little net change for July and advanced in the first three weeks of August. Production and Employment. Volum e of in dustrial output, as measured by the Board’s seasonally adjusted index, decreased from 83 per cent of the 1923-1925 average in June to 76 per cent in July. This decline reflected chiefly a sharp reduction in the output of steel, due in part to previous accumulation of stocks by consum ers; and there was a further decline in steel operations during the first three weeks in August. A ctivity in the automobile industry decreased and there were considerable reduc tions in the output of pig iron and anthracite. A t textile mills, where operations had been at a low level in June, activity showed little change in July. Output of shoes showed a seasonal in crease. Accom panying heavy marketings of cattle from drought areas there was a consider able increase in activity at meat packing es tablishments. Factory employment decreased between the middle of June and the middle of July by 3 per cent, an amount larger than is usual at this season. There were reductions in many indus tries producing durable manufactures, such as iron and steel products and building materials, and also at establishments producing knit goods and wom en’s clothing. A t canning establishments, the number of employees in creased by less than the usual seasonal amount. Employment on public projects increased fur ther in July. Value of construction contracts awarded, as reported by the F. W . D odge Corporation, was about the same in July as in June. Department of Agriculture estimates, based on August 1 conditions, indicate that yields per acre for principal crops are 22 per cent smaller than the ten-year average, reflecting the effects of the drought. The wheat crop is estimated at 491,000,000 bushels, 37,000,000 bushels less than last year’s small harvest, and the corn crop at 1,607,000,000 bushels as compared with a five-year average of 2,516,000,000 bushels. The cotton crop estimate is 9,195,000 bales, about 4,000,000 bales less than last season and smaller than in any other year since 1921. Distribution. Total volume of freight carloadings declined in July, reflecting chiefly a I N D U S T R I A L P R O D U C T IO N FACTO RY EM PLOYM ENT Index numbers of industrial production, adjusted for seasonal varia tion (1923-1925 average*»100). Federal Reserve Board’ s index of factory employment with adjust ment for seasonal variation (1923-1925 average=100). reduction in miscellaneous freight, including steel shipments, offset in part by an increase in shipments of livestock. Department store sales showed a decrease of somewhat more than the estimated seasonal amount. Com m odity Prices. W holesale prices of farm products, after fluctuating widely in July, advanced considerably in the first three weeks volume of reserve bank credit showed little change. In the four weeks ending August 15, loans and investments of New York City banks de creased by $141,000,000, while those of weekly reporting banks in other leading cities in creased by $116,000,000. The decrease at New York banks reflected a reduction of nearly 1932 1933 1934 W H O L E S A L E P R IC E S M E M B E R B A N K C R E D IT Indexes of the United States Bureau of Labor Statistics. By months 1929 to 1931; by weeks 1932 to date. (1926=100). Wednesday figures for reporting member banks in 90 leading cities. Latest figures are for August 15. of August. Between the beginning of July and the third week of August, cotton, wheat, and hog prices showed substantial increases, while cattle prices declined somewhat. During this period prices of commodities other than farm products and foods as a group showed little change. B an k Credit. Member bank reserve balances increased further between the middle of July and the middle of A ugust and on August 15 were about $1,900,000,000 in excess of legal requirements. The increase in reserve bal ances reflected principally a further growth in monetary gold stock, offset in part during the first half of A ugust by a seasonal increase in the total volume of money in circulation. The $200,000,000 in loans to brokers and dealers in securities, follow ing a sharp decline in security prices in the latter part of July, and a decline of $52,000,000 in holdings of United States Government securities. A ll other loans and holdings of securities other than United States Government obligations increased substantially at New York banks and at banks outside New Y ork City. A t outside banks, holdings of United States Government securities also in creased. Average rates of discount on United States Treasury bills issued rose from .07 per cent in July to .23 per cent on August 22. Other open market money rates remained unchanged at low levels.
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