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MONTHLY REVIEW OF BUSINESS CONDITIONS ISA A C B. NEWTON, Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. X V II San Francisco, California, August 21,1933 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 industry and trade contin ued to expand sharply during July, and activity in practically every important line of produc tion and distribution was higher than in July, 1932. Employment conditions improved sub stantially during the month. Aggregate wage payments also increased, and for the first time since the autumn of 1929 industrial payrolls in California exceeded those in the corresponding month of the preceding year. Harvests of the district’s field, grain, and fruit crops are expected to be smaller in the aggregate this year than in 1932. Estimates of the output of most field and grain crops in creased from July 1 to August 1, but produc tion forecasts for several important fruit crops declined. Marketing prospects are more favor able than a year earlier. Most of the July ad vance in farm products prices was cancelled by declines toward the end of that month, and at the middle of August prices averaged about the same as at the close of June. Consumption of electrical energy increased considerably more than is customarily ex pected in July. Daily average petroleum pro duction advanced further during July and the first two weeks of August, reaching about 500,000 barrels for the first time since the spring of 1932. Lumber mill operations, stimulated by substantial unfilled orders, continued to expand during July, but declined during the first part of August. New orders for lumber fell off con siderably during July, following rapid increases in April, May, and June. Value of engineering contracts awarded was extremely small during July, but building permits issued increased somewhat further. Daily average sales of department stores in creased approximately 6 per cent in value dur ing July, although a moderate decline is cus tomary during that month. The seasonally ad justed index of freight carloadings also ad vanced. Intercoastal traffic, however, increased less than is usual from June to July, reflecting smaller eastbound petroleum shipments. Sales of new automobiles remained comparatively high, although the adjusted index was lower than in June. Twelfth District banking funds were reduced as a result of Treasury operations and commer cial transactions with other districts during the four weeks ending August 16, notwithstanding which total reserve deposits of member banks increased. In order to obtain funds for these purposes member banks borrowed additional amounts from the Federal Reserve Bank of San Francisco. Demand for currency decreased in the early part of this period, but increased slightly in the first half of August. Neither net demand deposits nor time de posits of reporting member banks changed ap preciably from July 19 to August 16. Loans for commercial purposes and on securities ex panded slightly during this period. District banks and individuals were allotted 55^4 mil lion dollars of United States securities at the time of the August 15 financing. As usual, these allotments were accompanied by increases in city bank investments and in Government de posits at those banks. Agriculture Weather conditions during July and the first half of August were not favorable for the growth of crops in the Twelfth District. A b normal temperatures resulted in declines in production estimates of some fruit crops, and, although the expected volume of production of several other crops increased somewhat, their quality was unfavorably affected. It now seems probable that aggregate crop production will be smaller this year than in 1932, in which year considerable amounts of crops were unhar vested because of unsatisfactory marketing conditions. Market prospects are somewhat better this year, however, with farm prices for nearly all crops currently higher than in 1932. Estimates of wheat production in the district were revised upward during July, harvesting of the winter wheat crop having indicated that the yield will be greater than was anticipated earlier in the season. The August 1 forecast of 58 M O N T H L Y REVIEW OF BUSINESS CONDITIONS the 1933 barley crop was larger than that for July 1, but smaller than the 1932 harvest. Pro duction estimates of all field crops except rice were increased from July 1 to August 1. Har vesting of some of these crops is now under way. Estimates of deciduous fruit production in the Pacific Northwest were about the same on August 1 as on July 1. In California, estimates of the grape and peach crops were reduced be cause of damage from insects and hot weather during July. DECIDUOUS FRUITS AND NUTS—PRODUCTION (In thousands) California Apples* .................... Apricots .................. Cherries .................. Grapes...................... Raisin .................. Table .................... Wine .................... Peaches .................... Clingstone............ Freestone ............ Pears ........................ Plums........................ Prunes...................... Almonds .................. Walnuts.................... Oregon Apples* .................... Cherries.................... Pears........................ Prunes (dried) ........ Prunes (fresh) ........ Washington Apples*.................... Cherries........ ............ Pears ........................ Peaches .................... Prunes (fresh) ........ Idaho Apples*.................... Prunes (fresh) ........ United States A pples*.................... Pears........................ Peaches.................... Unit Forecast Forecast Aug. 1,1933 July 1,1933 9,275 9,275 251 251 23 23 1,650 1,548 924 1,013 257 270 367 367 534 563 343 365 191 198 241 241 59 59 186 186 1932 9,045 270 19 1,926 1,221 317 388 547 340 207 238 68 33 12 33 172 14 46 12 3,965 4,030 4,950 3,034 2,812 2,808 30,960 16 4,368 304 30,530 13 4,316 352 30,960 16 3,723 1,320 5,520 5 5,658 4 4,200 26 146,831 22,281 45,553 149,598 21,805 45,113 140,775 22,050 42,443 12 22 20 20 12 20 20 21 12 20 36 22 *Total crop. Source : United States Department of Agriculture. The current crops of lemons and Valencia oranges in California are larger than in 1932. The proration plan adopted by marketing or ganizations limits the volume of oranges to be shipped this year. Probably as a result of this marketing control plan, orange shipments from California during May, June, and July were 5 per cent smaller than during the corresponding months a year ago. Lemon marketings in creased 9 per cent between these two periods. LAMB AND WOOL PRODUCTION Arizona .......................... California ...................... Idaho.............................. Nevada .......................... Oregon .......................... Utah .............................. Washington .................. Twelfth District............ United States .............. Lambs Docked (in thousands) 1933 1932 502 521 1,942 2,106 1,489 1,555 410 410 1,556 1,648 1,178 1,151 525 567 7,602 7,958 28,998 29,727 Wool Production (in thousands of pounds) 1933 1932 4,988 5,220 22,825 24,219 16,125 16,500 5,967 6,705 19,720 18,630 17,890 18,160 5,640 5,506 93,155 94,940 348,194 344,354 Forage and water on district cattle and sheep ranges, excepting those in the higher altitudes, continue inadequate. Prospective feed condi August, 1933 tions on fall and winter ranges are not as satis factory this year as they were a year ago. Cattle are generally in better condition than sheep, but the number of both feeder cattle and lambs in marketings this fall will be rela tively greater than was the case last year. A scarcity of hay for supplemental feeding is also anticipated this autumn, although grain is ex pected to be available in ample quantities. The 1933 lamb crop in the district was 5 per cent smaller, and this season’s wool clip 2 per cent smaller than in 1932. GRAIN AND FIELD CROPS-PRODUCTION (in thousands) Forecast Forecast Aug. 1,1933 July 1,1933 1932 Cotton (bales) 256 Arizona, California .................. 198 12,314 United States ............................ 13,002 Beans (bags) 4,197 California, Idaho ...................... 4,131 3,544 United States ............................ 9,365 10,154 10,164 Tame Hay (tons) Twelfth District........................ 11,481 11,356 12,481 64,910 United States ............................ 66,047 69,794 Hops (pounds) California, Oregon, Washington 35,518 32,596 24,120 Potatoes (bushels) Twelfth District........................ 37,827 36,781 40,429 United States ............................ 292,668 306,423 357,679 Rice (bushels) 6,042 California .................................... 6,042 7,040 34,203 33,927 United States ............................ 39,356 Sugar Beets (tons) California, Idaho, Utah............ 2,807 2,791 2,811 United States ............................ 9,955 9,682 8,991 Oats (bushels) Twelfth District........................ 25,165 24,507 24,705 666,745 698,941 United States ............................ 1,238,231 Barley (bushels) Twelfth District........................ 36,791 34,550 52,232 157,634 169,951 United States ............................ 299,950 Wheat (bushels) Twelfth District........................ 96,359 91,759 112,695 495,681 United States ............................ 726,831 499,671 Source: United States Department of Agriculture. Although receipts of butter and eggs during July were smaller than in June, they were larger than a year ago. Storage holdings of both these products increased rapidly during the later month and on August 1 were larger than a year earlier. Prices for dairy and poul try products did not increase in June and July as rapidly as did prices for other agricultural products, although grains for poultry feeding nearly doubled in price during these months. Industry Twelfth District industrial activity increased considerably further during July, reaching the highest level since late in 1931. Consumption of electrical energy increased more than season ally, showing for the first time in two years an increase over figures of a year earlier. The number of industrial employees in Cali fornia industries rose 7 per cent further from June to July, and was 8 per cent larger than in July, 1932. In June, employment was about 4 per cent above that of a year earlier, while in March of this year there was a year-period de cline of 12 per cent, indicating that unemploy- August, 1933 59 FEDERAL RESERVE AG EN T A T SAN FRANCISCO ment has been reduced considerably as a result of the recent rise in general industrial activity. There was a sharp seasonal expansion in em ployment at canneries during July. Further en largement of motion picture forces brought em ployment in that industry to a level 67 per cent higher than in the preceding year. The num ber employed in miscellaneous industries also continued to expand. Aggregate wage pay ments increased 3 per cent from June to July and for the first time since late 1929 were greater than in the corresponding month of the preceding year. Improvement in employment conditions was more marked in Oregon than in California. The number of employees reported by firms in each industrial group was larger than in July, 1932, and in the lumber, textile, and food industries the year-to-year increase in employment was approximately 50 per cent. California production of crude oil averaged 488.000 barrels daily in July, compared with 478.000 barrels in June, 1933, and 472,000 bar rels in July, 1932. Operations were further ex panded to 507,000 barrels daily during the first two weeks of August, following another ad vance in proration schedules from 452,500 bar rels to 459,600 barrels daily. Most of the increase in production as well as in allotments was re corded for the Huntington Beach field, where new producing wells caused potential output to rise. Refineries were somewhat more active in July and the first half of August than in June, and operations approximated those of a year earlier. Inventories of gasoline did not change appreciably during these weeks. Activity at lumber mills increased further during July, although ordinarily considerable decline is recorded in that month. This bank’s seasonally adjusted index of lumber production showed another marked rise from 53 to 62 per cent of the 1923-1925 average. The later figure is nearly double that for July, 1932, and ap proximately at the level of July, 1931. New or ders received by the mills fell off sharply dur ing the month, but shipments continued to in crease, reflecting deliveries on orders already received. Although unfilled orders remained relatively large during the first half of August, production slackened somewhat. The value of engineering contracts awarded during July was extremely small, amounting to 5 million dollars as compared with a monthly average of more than 20 million dollars in the first half of the year. Actual operations, how ever, were fairly well sustained by work on previously awarded contracts. Building per mits issued, which ordinarily reflect construc tion to be undertaken almost immediately, were slightly larger in value in July than in either June, 1933, or July, 1932. Flour milling was more active in July than in June. Millers’ inventories of flour remained practically unchanged, but stocks of wheat con tinued to increase, reaching the highest levels in more than three years. Slaughter of live stock decreased by about the seasonal amount during July. Preliminary estimates indicate that the size of the Alaskan salmon pack this year will approximate that of the 1932 pack of 5,260,000 cases. Employment— Industry— r-------- Califorma-------- s r ----- Oregon No. of No. of No. r-Employees —* No. <— Employees —s of July, July, of July, July, Industries Firms 1933 1932 Firms 1933 1932 All Industries* .1,163 133,853 123,855 116 18,736 13,635 ( + 8.1) (+37.4) Stone, Clay, and 3.960 3,384 Glass Products.. 52 ( + 17.0) Lumber and Wood 38 10,463 Manufactures .. 122 12,306 11,608 6,900 ( + 6.0) ( + 51.6) 15 1,497 1,190 Textiles................ 8 1,337 885 (+25.8) (+51.1) Clothing, Millinery, and Laundering. ' 141 8,973 9,706 211 7Î 202 ( + 8.2) ( + 4.5) Food, Beverages, 33 2,837 and Tobacco. . . . 289 37,244 35,172 1,949 ( + 5.9) ( + 45.6) Public Utilities . . . 47 43,266 46,785 (— 7.5) Other Industries!. 491 63,317 59,758 ( + 6. 0) 3,770 30 53 5,823 3,888 3,699 Miscellaneous . . . . ( + 54.5) ( + 5.1) Wholesale and Retail................ 236 26,558 26,262 ( + 1. 1) * Public utilities and wholesale and retail figures not included in this total, flncludes the following industries: Metals, ma chinery, and conveyances; leather and rubber goods; oils and paints; printing and paper goods. iLaundering only. Figures in parentheses indicate percentage change from July, 1932. Trade Lumber shipments on railroads in the Pa cific Northwest, which usually fall off sharply during July, changed little in that month this year, with the result that the seasonally ad justed index of total carloadings as well as the Indexes of daily average production, adjusted for seasonal variations (1923-1925 daily average=100) -----1933 — July June May General Carloadings— Industrial.. 55 45 37 Electric Pwr. Production. 14OH 136 133 Manufactures 53 . 62 38 Refined Mineral Oilsf. . . 144 127 ! 123 115 127 Slaughter of Livestock. . , 91 91 Cement............................ .! 54 47 52 96 93 Wool Consumption! . . . . . 93 Minerals Petroleum (California)!,. 7411 72 72 41 37 Lead (United States)t . . , 36 Silver ( United States ) $. 36 Building and Construction§ Total ................................, 28 52 43 Building Permits— Value 11 10 Larger Cities .............. 14 Smailer Cities ............, 13 12 13 Engineering Contracts Awarded— Value Total ........................ 50 108 90 Excluding Buildings., 83 214 198 -1932A Apr. July June May 35 34 32 34 134 137 139 135 29 133 105 85 42 79 34 131 85 87 53 82 34 144 103 90 45 108 32 137 72 45 36 72 31 40 71 49 41 76 59 49 47 29 29 33 10 12 14 13 14 17 15 97 223 53 96 49 92 111 13 100 83 56 55 53 tNot adjusted for seasonal variations. $ Prepared by Federal Re serve Board. § Indexes are for three months ending with the month indicated. UPreliminary. August, 1933 M O N T H L Y REVIEW OF BUSINESS CONDITIONS 60 index of industrial loadings in the district in creased. Merchandise shipments decreased slightly after allowing for seasonal movements. California loadings showed no change during the month. The volume of traffic in the dis trict was about 10 per cent larger in July, 1933, than in July, 1932. PER CENT sonal factors, this represented an increase of 5 per cent from the figures for April and May. Automobile registrations were the same in July as in June, although there is usually a moderate increase during the later month. Thus, the seasonally adjusted index declined from 64 to 57 per cent of the 1923-1925 average. Even so, registrations remained at a high level as compared with any month in 1932 or the first four months of 1933. RETAIL TRADE-Twelfth District Percentage changes in value of sales and stocks with no adjustment for price changes t------------ 1933 compared with 1932 ■ ■ —\ ,----------- NET SALES------------ \ STOCKS January 1 to end July of July July CARLOADINGS — Twelfth District Indexes adjusted for seasonal variations (1923-1925 average= 100). For the fourth consecutive month, season ally adjusted department store sales increased during July, the index advancing to 82 per cent of the 1923-1925 average as compared with 72 in June. In March, 1933, the adjusted index was 57, the lowest point reached since the be ginning of 1919. Sales ordinarily decrease dur ing May, June, and July, followed by expansion during the autumn months, but during the cur rent year more than the seasonal rise took place from March to April, since when daily average sales have shown little net change. This im provement has been general throughout the district, although most evident in Los Angeles, San Francisco, and Oakland. The value of PER CENT TVa/ INV ENTORIES ¡Ü S A L E S / — — — — 12.0 10.7 12.7 15.9 9.0 -1 0 .9 -1 2 .9 — 16.9 — 15.8 21.9 ■ 9.5 — 10.1 — 13.5 — 12.0 12.5 ( 64) D e p a rtm e n t Stores . . . 19.0 ( 7) L o s A n g e le s ............... 12.3 ( 6) O th e r S outhern Calif. 4.4 ( 4) O ak lan d ........................ 14.5 ( 7) San F ra n cis co .......... 11.7 ( 15) B a y R e g io n ................. 6.1 ( 6) Cen tral C a lifo rn ia . . . 7.3 ( 8) P o r t la n d ! ...................... 7.0 ( 4) Seattle .......................... S p o k a n e ........................ — 4.0 ( 4 ) 6.0 (. 4 ). Salt L a k e C i t y .......... 17.4 ( 2 5 ) A p p arel S tores ............... 59.7 ( 2 5 ) F u rn itu re S t o r e s ............ 18.0 (1 1 4 ) A ll S t o r e s ........................... ( 63) ( 7) ( 6) ( ( 7) ( 15) ( ( ( ( ( 4) ( 24) ( 32) (1 1 9 ) Wholesale trade increased slightly further during July, bringing the gain over the corre sponding month last year to 21 per cent. Most lines of activity either decreased less than is customary from June to July or else showed an increase. Furniture and shoe wholesalers ex perienced a sharp expansion in business, con trary to seasonal expectations, and more than the usual increase in sales of dry goods and paper and stationery wholesalers was reported. Purchases of wholesalers during July were more than enough to make up for the increased amount of goods turned over to retailers and at the end of July wholesale stocks were larger than at the end of June. July, 1932 Cumulative 1933 compared with 1932 29.1 14.4 8.2 93.5 35.9 166.9 1.1 37.8 76.3 17.6 21.4 — 21.0 — 10.5 — 14.7 11.8 — 4.8 9.0 — 7.7 — 3.5 — 1.3 — 12.3 — 7.0 July,1933 r-----compared with----- > . June, 1933 1928 1929 >930 1931 1932 1933 DEPARTMENT STORE SALES AND STOCKS Twelfth District Indexes adjusted for seasonal variations (1923-1925 average=100). July, 1933, sales exceeded that of July, 1932, by 13 per cent, in contrast with a year-period re duction of 15 per cent during the first half of the year. The number of sales transactions during July was 3 per cent greater than a year earlier. According to the Fairchild index, re tail prices of department store goods increased 5 per cent from July 1 to August 1 and were slightly higher than in August, 1932. Inven tories at the end of July were the same in value as at the end of June. After allowance for sea- (4 7 ) ( 7) ( 4) ( 4) ( 7) (1 5 ) ( 5) ( 8) ( 4) ( 4) ( 3) (1 5 ) (2 1 ) (8 3 ) ! In c lu d e s s ix apparel stores w h ich are n o t in clu d ed in D istr ic t d epa rtm ent store total. F ig u re s in parentheses in dica te nu m ber o f stores re p o rtin g . WHOLESALE TRADE—Twelfth District Percentage changes in value of sales with t for price changes 1927 -1 1 .2 -1 0 .8 5.8 -1 4 .2 — 9.3 — 10.1 1.3 — 19.2 — 21.1 — 15.2 7.3 — 3.1 -2 7 .8 — 13.1 A g ric u ltu ra l Im p lem en ts A u to m o b ile Supplies D ru g s ....................................... D r y G o o d s ............................. E le ctrica l Supplies ............ F u rn itu re ............................... G ro ce rie s ............................... H a r d w a r e ............................... Sh oes ....................................... Pa per and S t a t i o n e r y .. . . A ll L in e s ............................... 0.3 1.5 3.6 17.9 1.9 66.0 . — 0.8 — 5.0 21.0 8.1 2.2 — . — increased by a smaller volume during July than has been recorded in most other recent years, although total tonnage exceeded that of both July, 1932, and July, 1931. Foreign trade of Pacific Coast Ports im proved slightly in the second quarter of the year, low points having been reached in Feb ruary for exports and in April for imports. A u g u st, 1933 FEDERAL RESERVE AG EN T A T SAN FRANCISCO Prices Commodity prices, as indicated by the vari ous weekly indexes, moved downward moder ately during the last week of July, but changed little during the first half of August. Prices of a number of agricultural products important in the Twelfth District were lower at the middle of August than a month earlier, quotations for commodities in this group having declined more rapidly during late July than prices for other raw materials. The price of wheat on the Chicago market fluctuated considerably during the four weeks under review, although certain limitations on price movements were in effect during that period. The September contract sold for $ .8 6 ^ per bushel on August 21, compared with a range from $.90 to $1.08 per bushel on July 20, $1.20 on July 18 (the highest point for that contract since September, 1929), and $.79*4 per bushel on June 20, 1933. Prices for grains on the Pa cific Coast fluctuated about the same as did Chicago prices during this period. In midAugust, extra fancy Japan rice (grown in Cali fornia) was quoted at $3.35 to $3.50 per hun dredweight at San Francisco, the highest price received since October, 1931. Cotton prices de clined sharply during the latter part of July and in mid-August were about the same as in late June. Prices for other field crops— potatoes, beans, hay, and hops— were about the same in the middle of August as a month earlier. Re turns for deciduous and citrus fruits sold in eastern markets during August were about the same as in August, 1932. Cattle and hogs sold at Pacific Coast mar kets in mid-August brought prices which were generally lower than in late June and early July, but quotations for good to choice grade Distribution and Trade— Carloadingst ,-------------- 1933------------ N ,---------1932--------July June May Apr. July June May Indexes adjusted for seasonal variations ------------ (1923-1925 average=100)-------------- T o ta l ........................ 62 58 70 M erch a n d ise .......... . 68 F o r e ig n Trade® 39 T o t a l f ........................ 35 I m p o r t s f ................. 42 E x p o r ts .................... In tercoa sta l T r a d e , 63 72 79 100 W e s t b o u n d ............... E a stb ou n d ............... 55 69 R etail T ra d e A u to m o b ile S a le s î 64 T o ta l ................... . 57 P a ssen ger .......... . 53 59 C om m ercia l . . . . . 110 98 D ep a rtm en t S tore 72 S a lest ................... . 82 57 S t o c k s § ................. 57 C o lle c t io n s # R e g u l a r ............ 42.9 43.5 14.9 In sta llm en t . . . 16.1 53 67 52 67 57 74 55 75 55 74 38 34 39 37 36 38 45 39 48 45 42 47 46 41 49 68 61 70 60 60 60 45 72 39 51 57 50 54 66 59 48 46 70 37 36 48 30 28 50 47 45 71 32 30 59 69 54 72 67 74 70 70 72 39.8 13.4 41.. 13.: 72 54 A * 41.4 13.9 39.2 13.2 $ D a ily average. " In d e x e s are fo r three m on th s e n d in g w ith m on th indica ted , t E x c lu d in g raw silk. § A t end o f m on th . # P e r cent o f c ollectio n s d u rin g m on th to a m ou n t o u tsta n d in g at first o f m on th . lambs reached the highest levels attained since July, 1931. California dried fruit prices declined slightly during the first two weeks of August, follow ing advances during July. Spot prices for canned pears did not change during July or the first half of August, while prices for canned apricots were revised upward in mid-July and again in mid-August. A maximum and a mini mum price for canned peaches was set under the marketing agreement for peach growers and canners. Choice grade yellow cling peaches in No. 2 size cans are to be sold by the canner at from $1.30 to $1.55 per dozen cans. These prices are higher than were received for canned peaches in 1932 and 1931. Opening prices for the 1933 pack of canned peaches announced on August 18 were the same as prices that had prevailed for several preceding weeks. Canned salmon prices were advanced during July. Movements of flour prices closely followed changes in the wheat market. The price of a representative grade of flour at San Francisco was about 12 per cent lower in mid-August than a month earlier. Prices for lead, zinc, and copper rose slightly throughout July and were stable during the early part of August. Silver quotations, which had also advanced up to mid-July, declined in the last half of that month to June levels. There was practically no change in silver prices dur ing the first half of August. Crude oil prices in California did not change during July or the first two weeks of August. Bank Debits* — A riz o n a P h o e n ix ............ C a liforn ia B akersfield . . . . B e rk eley .......... L o n g B ea ch . . . L o s A n g e le s . . . O ak lan d ............ Pasadena .......... S a cram en to San B erna rd ino San D ie g o . . . . San F r a n c is c o . . . San J ose ............ Santa B a rb ara. S to c k to n .......... Id a h o $ July, 1933 18,380 $ July, 1932 17,555 f----- First 7 M o n th s ------ \ $ 1933f 123,015 1932 153,830 $ 7,081 12,621 12,964 25,429 598,552 160,777 20,119 25,9 97 4,671 31,737 738,445 13,996 7,645 12,840 7,112 13,275 13,392 24,999 528,140 161,971 17,884 38,374 4,346 33,186 662,814 15,817 8,548 13,325 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 10,497 10,569 58,128 72,265 6,385 8,551 31,565 54,256 3,237 112,436 3,396 92,012 19,503 664,072 709,768 11,334 42,526 9,432 39,912 58,510 266,970 61,607 306,133 4,464 5,328 132,325 23,409 19.866 6,814 4,649 5,357 122,438 25,679 19,161 7,571 26,490 30,664 782,932 136,408 121,075 42,411 33,361 39.828 929,641 2 00,212 154,677 54,913 53,271 105,039 109,087 194,905 4,055,111 1,185,521 160,483 277,788 44,526 250 ,290 4,696,52 7 114,684 67,662 93,563 N evada O re g o n P ortla n d U tah ............ . Salt L a k e C i t y . . W a s h in g to n B ellin gham E v e re tt ............... * u* . A c c u f l i J r ig u r e s 44.7 15.3 61 S pok an e .............. Y a k im a .............. T o t a l ............ $2,069,875 28,112 $1,909,465 $12 ,306,480 $14 ,207 ,06 0 *In thousands of dollars, flncludes banking holiday period. 62 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS Lumber prices continued to rise during July and by the end of the month quotations had reached the levels of late 1930. Miscellaneous commodities of importance in the Twelfth Dis trict which showed price increases from July to August were sugar, wool, steel, and hides, while raw silk and tin prices declined. Rubber and coffee prices were unchanged. The Credit Situation Banks in the Twelfth District increased their use of reserve bank credit considerably during the four weeks ending August 16. During the spring months, borrowings of member banks at the Federal Reserve Bank of San Francisco declined rapidly from the comparatively high figure of 87 million dollars in March to 8 mil lion dollars in the second week of July, the lowest point in two years. During the remain der of July and the first ten days of August, a small expansion in the need for reserve bank credit resulted from commercial transfers of funds out of this district to other parts of the country. In the third week of August, how ever, a sharp increase in borrowings at the re serve bank took place, reflecting largely the fact that the United States Treasury withdrew funds from local markets by collecting consid erably more than it disbursed in this area. SOURCES AND USES OF BANKING RESERVES Twelfth District Changes in millions of dollars during the weeks indicated Week Ending 1933 July 5 July 12 July 19 July 26 August 2, August 9. . August 16.. SOURCES OF FUNDS Reserve Bank Commercial Treasury Credit Operations Operations — 9.0 + 10.6 — 4.2 — 10.7 + 9.0 — .2 — 18.4 + 9.1 + -9 -j- 3.9 — 7.9 — .7 — 1.3 + 2.7 + 2.6 — .4 — 5.6 + 10.0 + 10.3 + 8.4 — 13.9 Week Demand Ending for Currency 1933 + 9.7 July 5. — 10.7 July 12. — 3.8 July 19. — 5.1 July 26. August 2. ., + 1.5 August 9. . + .6 August 16. ., — .1 USES OF FUNDS Member Non Unexp’d Bank Reserve member Capital Deposits Deposits Funds * — 12.1 — .2 * + 8.7 * — 5.8 + 1.2 + .4 — .2 + -2 * + 1.8 + -7 * — 1.0 + 4.4 — .2 + 5.0 + .1 Total Supply — 2.6 — 1.9 — 8.4 — 4.7 + 4.0 + 4.0 + 4.8 Total Dem’d — 2.6 — 1.9 — 8.4 — 4.7 + 4.0 + 4.0 + 4.8 * Change smaller than $50,000. The increase in reserve bank credit during this period was accompanied by an increase in member bank reserve deposits notwithstanding the fact that many banks already had reserves in excess of legal requirements. Reserve ac counts of country member banks increased by a small amount as a result of transfers of bal ances from city correspondents to the Federal Reserve Bank of San Francisco, but most of the expansion took place in reserves of banks in the larger cities of the district, principally San Francisco. In interdistrict or local trans August, 1933 fers of funds during any given period, it is al most invariably the case that some of the banks show net gains while others lose more deposits than they receive. If banks having excess re serves experience net losses of deposits, it is likely that they will draw upon those reserves instead of borrowing from the reserve bank; if those banks have net gains from their trans fers, it is probable that the funds received will accumulate as additional excess reserves. If, on the other hand, banks having no excess re serves sustain a loss on balance due to com mercial or financial transfers, they are likely to secure needed funds by borrowing from the reserve bank. Conversely, a borrowing bank gaining deposits locally or from other districts would ordinarily reduce indebtedness in pref erence to building up reserves. The combina tion of such circumstances may, as it did dur ing the period from July 19 to August 16, result in an addition to the aggregate excess reserves of member banks at the same time that total borrowings of those banks increase. Those banks having more reserves than were required experienced a net receipt of funds. On the other hand, those discounting at the reserve bank were called upon to furnish funds for transfer to other districts or to other banks within the district, or for deposit in the United States Treasurer’s account at the reserve bank. Changes in the demand for currency had relatively little effect upon banking reserves during the period under review. Small amounts of currency continued to be returned to banks during most of July. During the first half of August, however, currency circulation in creased slightly, as is not unusual at that time of year. The increase was confined almost en tirely to currency of the smaller denominations. For the first time in more than three years loans of commercial banks have recently shown some evidence of stability. After allowing for certain changes which appeared as a decrease in reporting member bank figures, but which did not actually reduce the amount of credit outstanding, loans of reporting member banks have shown no net decline in three months. Investment holdings have decreased moder ately since mid-year, however, and total credit extended by city banks declined to the low point of early March. Neither time nor net de mand deposits have varied appreciably in re cent weeks. A slight downward tendency in time deposits since the beginning of May has been more than offset by increased demand de posits and their total is currently at a level ap proximating that of the last half of 1932. Government securities amounting to 55^4 million dollars were allotted to Twelfth District banks and individuals on August 15 as a result of the Treasury financing of that date. Matur ing securities to the amount of 9 million dollars August, 1933 FEDERAL RESERVE A G E N T A T SAN FRANCISCO were tendered toward payment for these securi ties, 42 million dollars was paid by crediting Government deposit accounts at subscribing banks, and the remaining 4^4 million dollars was paid in cash. A large part of the recently acquired securities was sold for cash locally and in eastern markets by subscribing institutions. These transactions were reflected in the condi tion of city member banks which, during the week ending August 16, reported increases of only 12 million dollars in holdings of United States securities. REPORTING MEMBER BANKS—Twelfth District (in millions of dollars) ,------------- — C on elit io n ----- ------------- ^ A u g. 16, A u g. 9, July 19, A u g . 17, 1932 1933 1933 1933 1,675 1,662 1,670 1,688 L oa n s and In v e stm e n ts— T o t a l . . 973 875 882 879 L oa n s — T o t a l .................................. 219 239 222 222 O n Secu rities ........................... 734 660 657 656 A ll O th er .................................... 715 783 795 793 In v estm en ts— T o t a l ...................... 476 391 478 466 U n ited States Secu rities 324 319 315 317 O th er Secu rities ...................... 87 82 92 97 R eserve w ith R eserv e B a n k ......... 554 539 555 548 N et D em a n d D e p o s it s ...................... 866 870 871 868 T im e D ep osits .................................... 135 132 133 133 D u e fro m B a n k s .................................. 143 133 157 130 D u e to B a n k s ...................................... 4 58 10 B o rro w in g s at R eserv e B a n k . . . . 20 District banks accepted a larger amount of bills during July than in any month since May, 1932. Purchases of acceptances also increased more than seasonally, and the amount held at the end of July was higher than at any other time during the past year. The volume of bills accepted and purchases by banks reached the lowest level in several years during June, prob ably resulting from the exceedingly small vol 63 ume of exports at that time. The rise during July reflected principally the movement of Cali fornia fruits and other seasonal products to for eign markets. FEDERAL RESERVE BANK OF SAN FRANCISCO (in millions of dollars) r ----- Condi ition------- --------- —"\ A u g. 16, A u g. 9, July 19, A u g. 17, 1932 1933 1933 1933 206 148 156 167 T o ta l B ills and S ecurities .......... 79 10 16 26 B ills D i s c o u n t e d ........................... 3 1 1 1 B ills B o u g h t .................................. 123 137 140 139 U n ite d States S e c u r itie s ............ T o ta l G o ld R eserves and O th er 270 213 265 261 144 167 180 174 T otal D e p o s i t s .................................... Federal R e se rv e N o te s in 222 250 218 217 C i r c u l a t i o n ....................................... F ed era l R e se rv e B a n k N o te s in 4 4 4 C ircu la tio n ....................................... R a tio o f T o ta l G old R eserves and O th er Cash to D e p o s it and F ed era l R e se rv e N o te L ia 53.9 67.8 69.5 65.6 bilities C o m b in e d ...................... A t the end of March, 740 banks in this dis trict were operating on an unrestricted basis, and 158 district banks were unlicensed. By the end of July the number of licensed banks had increased to 758 while the number of unlicensed banks had declined to 107. Thus, there was a decrease of 33 in the total number of banks, licensed and unlicensed. The principal factors accounting for the decrease during this period were the closing of 10 banks and the rapid ex tension of branch banking. This spread of branch banking took place chiefly in Washing ton and Oregon, where several small unit banks were absorbed by other institutions, thereby reducing the number of operating banks with out curtailing the number of banking offices. 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 increased further from June to July, contrary to the seasonal tendency, and in recent weeks has continued at a rela tively high level. Since the middle of July there have been reductions in wholesale prices of leading raw materials, while prices of many other products have advanced. Production and Employment. Volume of in dustrial output, as measured by the Board's seasonally adjusted index, advanced from 91 per cent of the 1923-1925 average in June to 98 per cent in July, which compares with 60 per cent in March. The principal increase in July was at steel plants, where activity advanced from 46 per cent of capacity to 59 per cent. Production in the lumber and coal industries was also in larger volume and daily average output of automobiles showed none of the usual seasonal decline. Output at shoe factories and woolen mills continued at an unusually high rate, while consumption of cotton by domestic mills decreased somewhat. Cigarette produc tion declined sharply from the high level of May and June. Since the middle of July a de crease has been reported in the output of steel. W orking forces and payrolls at factories in creased considerably between the middle of June and the middle of July. As in other re cent months, the largest increases were gener ally at establishments fabricating raw materials into semi-finished products. Value of construction contracts awarded, as reported by the F. W . Dodge Corporation, showed a decline in July, followed by an in crease in the first half of August. Total awards during the six weeks were in about the same volume as in the preceding six weeks and in larger volume than in earlier periods this year. Department of Agriculture estimates as of August 1 indicate harvests generally smaller than a year ago. The cotton crop is forecast at 12,314,000 bales, a reduction of 700,000 bales 64 August, 1933 M O N T H L Y REVIEW OF BUSINESS CONDITIONS from last season, reflecting curtailment in acre age as a part of the program of the Agricul tural Adjustment Administration, offset in large part by an unusually high yield per acre. The wheat crop is estimated at 500,000,000 bushels, a reduction of 225,000,000 bushels from last year's small harvest, and feed crops are ex pected to be unusually small. Distribution. Freight traffic increased further from June to July by a substantial amount, but in recent weeks shipments, particularly of mis cellaneous freight and grains, have been some what smaller. Department store sales declined the value of the dollar in terms of the French franc advanced from a low of 69 per cent of its gold parity on July 18 to 75 per cent at the be ginning of August and since that time has fluc tuated between 73 and 75 per cent. Bank Credit. Net demand deposits of weekly reporting member banks in 90 cities declined between the middle of July and the middle of August, owing in large part to further with drawals of bankers' balances from banks in New York City and elsewhere. The banks' loans decreased by $71,000,000 during the pe riod, reflecting chiefly a reduction in loans to PER CENT PER CEN T 5 - _____ / V 5 rfPLOYMENT PAYROLLS W - v ft / 1926 19 2 9 1930 1931 1932 1 93 3 INDUSTRIAL PRODUCTION FACTORY EMPLOYMENT AND PAYROLLS Index numbers of industrial production, adjusted for seasonal varia tions (1923-1925 average=100). Indexes of factory employment and payrolls, without adjustment for seasonal variations (1923-1925 average=100). in July by about the usual seasonal amount; they were larger than a year ago, however, and trade reports for the first half of August indi cate an increase in sales. Wholesale Prices. Wholesale prices of com modities increased further during the first three weeks of July and, according to the index of the Bureau of Labor Statistics, there has been little change in their general level since that PCR CENT brokers and dealers in securities. Their hold ings of United States Government securities, after declining between July 19 and August 9, increased during the week ending August 16 in connection with Treasury financing at that time. Total reserves of all member banks in creased by $81,000,000 during the four week period ending August 16, reflecting chiefly the purchase of $42,000,000 of United States GovBILLIONS OF DOLLARS VALUE OF BUILDING CONTRACTS AWARDED MEMBER BANK CREDIT Indexes based on three-month moving averages of F. W. Dodge data for 37 Eastern states, adjusted for seasonal variations (1923-1925 average=100). Wednesday figures for reporting member banks in 90 cities. Latest figures are for Wednesday, August 16. time. Prices of grains, cotton, and many imported raw materials, however, were considerably lower in the third week of August than in the middle of July, while prices of textiles were higher, reflecting in part the application of the processing tax on cotton. Prices of leather and coal also advanced during this period. Foreign Exchange. In the exchange market ernment securities by the reserve banks and a return of $23,000,000 of currency from circulation. The growth in member bank reserves occurring at a time when reserve requirements were being reduced in consequence of a decline in their deposits, brought their excess reserves to a level above $550,000,000. Money rates in the open market generally continued at low levels.