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MONTHLY REVIEW TWELFTH FEDERAL RESERVE DISTRICT F ed e r a l R e se r v e B a n k o f S a n F r a n c is c o D ecem b er 1951 REVIEW OF BUSINESS CONDITIONS w e lfth T D is t r ic t b u sin e ss in 1 9 5 1 re a ch e d a n e w a ll- tim e p ea k . P r o d u c tio n , e m p lo y m e n t, a n d c o n s u m e r e x p e n d itu r e s , stim u la te d b y th e d e fe n se b o o m a n d re c o rd D is tr ic t re ce iv e d 2 3 p e r ce n t o f th e m a jo r d e fe n se c o n tra c ts g r a n te d th rou g h January 1951. By S e p te m b e r 1 9 5 1 , h o w e v e r , th is ra tio h a d d r o p p e d to 1 8 p e rce n t o f civ ilia n a c tiv ity e a r ly in th e y e a r , all re a ch e d n e w h ig h s. the to ta l f o r th e c o u n tr y , a fig u re a b o u t tw ic e as la r g e as T h e im p r in t o f th e d e fe n se p r o g r a m w a s q u ite m a r k e d the D is t r ic t ’s p r o p o r tio n o f to ta l n a tio n a l in d u str ia l p r o th r o u g h o u t the y e a r , b u t e a r ly in th e y e a r th e la r g e v o l d u ctio n . u m e o f c o n s u m e r b u y in g a n d th e ra p id a c c u m u la tio n o f in v e n to r ie s b y b u s in e s s c o n tr ib u te d su b s ta n tia lly to th e g r o w th in b u s in e s s a c tiv ity . D u r in g th e first s ix m o n th s of 1 9 5 1 , th o se ac tiv itie s th a t d id n o t re ce iv e a d ire ct Effect of defense program not uniform N o t all b u sin e ss in th e D is t r ic t sh a re d in th e e x p a n s io n as the y e a r p r o g r e s s e d . T h e lu m b e r in d u str y fe lt th e im im p e tu s f r o m th e d e fe n s e p r o g r a m re a cte d to th e e x p e c p act o f a re d u ce d rate o f re sid e n tia l b u i l d i n g ; so m e retail ta tio n s o f th e e ffe c ts o f th e d e fe n se p r o g r a m . tra d e lin es e x p e r ie n c e d a re ce ssio n a fte r the first q u a r t e r ; Construction illustrates one result the a p p a rel in d u s tr y w a s s lo w e r th a n in 1 9 5 0 b e ca u se o f of defense program d e c lin in g c o n s u m e r d e m a n d . T h e s e d e v e lo p m e n ts p o in t a u to m o b ile a s s e m b ly w a s cu t b y m a te ria l c o n t r o l s ; a n d T h o u g h c o n s u m e r s p e n d in g a n d b u s in e s s in v e s tm e n t u p th e fa ct th a t e v e n in th e p re sen ce o f a la r g e d e fe n se w e r e a ffe c te d b y th e se e x p e c ta tio n s , a c tiv ity in th e c o n p r o g r a m an a ssu r a n c e o f m a x im u m d e m a n d in all lin es str u c tio n field o ffe r s an e v e n b e tte r illu s tr a tio n . I n a n tic i is n o t lik ely . T h is is p a r tic u la rly tru e if m o n e ta r y a n d p a tio n o f re str ictio n s o n th e u se o f c r e d it a n d m a te r ia ls, a fiscal m e a su r e s are s tr o n g e n o u g h to p re v e n t a co n tin u in g la r g e ra p id in flatio n . v o lu m e of fin a n c in g c o m m it m e n t s , p rin c ip a lly F H A a n d V A , w a s o b ta in e d in S e p te m b e r a n d O c to b e r o f la st y e a r w h ic h re su lte d in r e c o rd h o m e co n s tr u c tio n in e a r ly 1 9 5 1 . In d u s tr ia l a n d c o m m e r c ia l b u ild in g a lso Employment sets a new record T o ta l n o n -a g r ic u ltu r a l e m p lo y m e n t rea ch ed a n o th e r ro se to a h ig h lev el a n d , a lo n g w ith e x p a n d in g m ilita r y n e w re co rd in 1 9 5 1 — 8 p e r ce n t h ig h e r th a n la st y e a r ’ s c o n str u c tio n , co n tr ib u te d to re c o rd s p e n d in g fo r c o n s tr u c p ea k . M a n u fa c t u r in g a n d G o v e r n m e n t e m p lo y m e n t w e r e tio n . A s cred it a n d m a te ria l r e str ic tio n s b e c a m e e ffe c tiv e , th e d o m in a n t fa c to r s in th e in cre a se . B o th reflected the h o w e v e r , th e te m p o o f a c tiv ity w a s re d u ce d . Production in the District reaches all-time high e x p a n d e d d e fe n se p r o g r a m — m a n u fa c tu r in g b e ca u se o f the im p e tu s to a irc r a ft a n d m a c h in e r y e m p lo y m e n t, an d G o v e r n m e n t b e ca u se o f jo b s at d e fe n se e sta b lish m e n ts. P r o d u c tio n in th e D is t r ic t co n tin u e d its p o s t -K o r e a T h e in cre a se in m a n u fa c tu r in g e m p lo y m e n t d o m in a te d , e x p a n s io n un til M a y a n d th e n te n d e d to lev el o f f a t w ell h o w e v e r , b o th in n u m b e r o f jo b s a d d e d a n d p e r c e n ta g e a b o v e th e 1 9 5 0 rate. M o s t o f th e g a in c a m e in th e d u ra b le g a in . T h e D is t r ic t g a in o f 1 4 p e r ce n t w a s tw ice th a t fo r g o o d s in d u s tr ie s , re fle ctin g s h a r p in cr e a se s in th e o u tp u t th e U n it e d S ta te s . I n a d d itio n , D is t r ic t m a n u fa c tu r in g o f a irc r a ft a n d a su b sta n tia l e x p a n s io n in m a c h in e r y o u t e m p lo y m e n t d id n o t s h o w th e te n d e n c y to d ec lin e th a t w a s p u t. E x c e p t fo r th e d ec lin e in th e a p p a r e l in d u s tr y , the a p p a r e n t n a tio n a lly d u r in g the s u m m e r . A s a re su lt D i s n o n d u r a b le lin e s re p o r te d m o d e r a te g a in s o r little c h a n g e trict u n e m p lo y m e n t d ec lin ed m o r e ra p id ly th a n in the fr o m 1 9 5 0 . A f t e r the e a r ly p a r t o f th e y e a r , d u r in g w h ic h in v e n to r y a c c u m u la tio n , c o n s tr u c tio n , a n d c o n s u m e r s p e n d in g w e r e at v e r y h ig h le v e ls , th e e x p a n d in g d e fe n se p r o g r a m left Also in This Issue c r a ft a n d m a c h in e r y m a n u fa c tu r in g a n d th e su sta in e d Revised Indexes of Twelfth District Department Store Sales and Stocks lev el o f m e ta l fa b r ic a tio n re flected th e u n u su a l v o lu m e o f Annual Index, January-December 1 9 5 1 a m a r k e d im p r in t o n D is t r ic t p r o d u c tio n . G a in s in a ir d e fe n se o r d e r s in th is D is t r ic t. I n d o lla r a m o u n t, th is 94 December 1951 FEDERAL RESERVE B A N K OF SAN FRANCISCO n a tio n , a n d th e ra te o f u n e m p lo y m e n t, f o r m e r ly h ig h e r flu e n c e s, w h ic h re su lte d in la r g e lo a n s to th e f o o d in th a n th e n a tio n a l a v e r a g e , a p p ro a c h e d th a t f o r th e c o u n tr y d u s tr y in th e se c o n d h a lf o f the y e a r , a r e p a r tly r e s p o n sib le f o r th e h ig h p r o p o r tio n o f th e in cr e a se a ttr ib u ta b le a s a w h o le . to n o n d e fe n se b u sin e ss. C o m m e r c ia l a n d in d u str ia l lo a n s Farm income higher f o r th e y e a r as a w h o le in cr e a se d 1 9 p e r c e n t. I n th e se c o n d T h e c u r r e n t y e a r h a s b e e n a p ro fita b le o n e f o r D is t r ic t h a lf o f th e y e a r , h o w e v e r , b u sin e ss lo a n s in cr e a se d 9 p e r a g r ic u ltu r e , a s fa r m in c o m e ro se m o r e th a n p r o d u c tio n ce n t c o m p a r e d w ith a 3 2 p e r c e n t in c r e a se in th e sa m e c o sts. T h e in cr e a se in c a s h re ce ip ts w a s p r im a r ily th e p e r io d o f 1 9 5 0 . A c o m b in a tio n o f fa c t o r s , in c lu d in g a m o r e re su lt o f h ig h p ric e s re c e iv e d f o r liv e s to c k a n d liv e sto c k str in g e n t m o n e t a r y p o lic y , v o lu n ta r y c r e d it re str a in t b y p r o d u c ts th r o u g h o u t 1 9 5 1 . O n th e o th e r h a n d , th e p ric es le n d e rs, m o d e r a tio n o f c o n s u m e r d e m a n d , m a te r ia l c o n fa r m e r s re c e iv e d f o r th e ir c r o p s , w h ic h in 1950 ro se th r o u g h o u t th e y e a r , fe ll o f f s h a r p ly b e tw e e n F e b r u a r y tr o ls , a n d s o m e ta p e r in g o f f in th e e x p a n s io n o f c iv ilia n b u sin e ss, s lo w e d th e g r o w t h in th e la st p a r t o f 1 9 5 1 . a n d S e p te m b e r o f th is y e a r . D u r in g th e fo u r th q u a rte r , h o w e v e r , fa r m c o m m o d it y p ric e s s tr e n g th e n e d a n d n e t fa r m in c o m e in th e D is t r ic t, as w e ll a s in th e n a tio n , is Defense program important in current outlook The e ffe c t o f th e d e fe n se p rogram on th e D is t r ic t e x p e c te d to to ta l m o r e in 1 9 5 1 th a n la s t y e a r . A l l fa r m e r s e c o n o m y h a s b e e n in c r e a sin g ly im p o r ta n t d u r in g 1 9 5 1 . w ill n o t sh a re in th e in cr e a se e q u a lly , h o w e v e r . P r o d u c e r s I t r e m a in s a n im p o r ta n t fa c to r in a s s e s s in g th e c u r r e n t o f m e a t a n im a ls a n d c o tto n w ill lik e ly fa re th e b e st— the situ a tio n . In c r e a s e s in d e fe n se a c tiv ity in th is D is t r ic t f o r m e r b e ca u se o f h ig h p ric e s , th e la tte r b e ca u se o f m u c h se e m lik e ly d u r in g n e x t y e a r . P a r t o f th is e x p a n s io n w ill la r g e r m a r k e tin g s a s w e ll as fa v o r a b le p ric es. C a s h re p r o b a b ly c o m e as a n a d d itio n to c u r r e n t le v e ls o f o u tp u t tu r n s f o r fr u it g r o w e r s w ill p r o b a b ly be less th a n in 1 9 5 0 . a n d tra d e . F o r th e m o s t p a r t, h o w e v e r , it a p p e a rs th a t T h o u g h th e fru it c r o p w a s s o m e w h a t la r g e r th a n la st y e a r , in cre a se s in d e fe n se a c tiv ity w ill re su lt in re str ic tio n o f p ric e s h a v e b e e n g e n e r a lly lo w e r th a n a y e a r a g o . c iv ilia n p r o d u c tio n . T h e im p a c t o f th is re str ic tio n is n o t lik e ly to be se r io u s, h o w e v e r , b e ca u se d e fe n s e p r o d u c tio n Banking developments reflect impact of defense program in th is D is t r ic t p r o b a b ly w ill n o t e x p a n d to th e sa m e e x te n t n e x t y e a r a s it d id in 1 9 5 1 . S in c e a s ig n ific a n t S o m e fu r th e r e v id e n c e o f th e im p a c t o f th e d e fe n se d iv e r s io n o f p la n t, e q u ip m e n t, a n d m a n p o w e r h a s o c p r o g r a m is a p p a r e n t f r o m b a n k in g d a ta . R e p e a t in g th e cu r re d a lr e a d y , fu r th e r sh ifts to m e e t p r o s p e c tiv e d e e x p e r ie n c e o f W o r l d W a r I I , d e p o s its d u r in g 1 9 5 1 in m a n d s p r o b a b ly w ill be re la tiv e ly m o r e m o d e r a te in th e ir cr e a se d m o r e ra p id ly in th e D is t r ic t th a n in th e c o u n tr y e ffe c ts. S im ila r ly , th e e x p a n s io n o f p r o d u c tio n m a y b e as a w h o le . T h e g r e a te r in cre a se in m a n u fa c tu r in g h e re sm a lle r th a n th is y e a r in a b so lu te as w e ll as r e la tiv e te r m s a n d the h ig h e r le v e l o f m ilita r y c o n s tr u c tio n th a n in th e b e ca u se o f th e p r o s p e c tiv e sm a lle r in cr e a se in d e fe n se n a tio n c o n tr ib u te d to th is g r e a te r e x p a n s io n . T h o u g h c o n tr a c ts. T h i s in cr e a se , h o w e v e r , a lo n g w ith su sta in e d d e fe n se c o n tr a c ts co n tr ib u te d sig n ific a n tly to th e e x p a n o r m o d e r a te ly b e tter v o lu m e in m o s t n o n d e fe n s e b u s in e s s , s io n o f lo a n s , le n d in g f o r n o n d e fe n s e p u r p o s e s h a s a c w ill re su lt in la r g e r in c o m e p a y m e n ts to c o n s u m e r s , w h ic h co u n te d f o r a b o u t 7 0 p e r c e n t o f th e in cr e a se in c o m m e r c ia l m ig h t b e c o m e th e b a sis f o r s o m e c o n tin u e d im p r o v e m e n t a n d in d u s tr ia l lo a n s sin ce th e en d o f M a y . S e a s o n a l in - in reta il tra d e . A M E N D M E N T T O R E G U LA T IO N X T he following press statement released by the Board of Gov ernors of the Federal Reserve System on December 28 sum marizes changes in Regulation X : “ The Board of Governors of the Federal Reserve System an nounced today an amendment to Regulation X , Real Estate Credit, to exempt extensions of credit in connection with the leasing of nonresidential properties from the down payment and maturity requirements of the regulation. Concurrently, the National V olun tary Credit Restraint Committee issued a revision of its Bulletin N o . 4 concerning Loans on Real Estate to include a paragraph relating to such leasing arrangements where they are used as substitutes for mortgage financing. Leases on new residential construction are not affected by either the amendment to Regula tion X or the revision in the Voluntary Credit Restraint bulletin. “ In exempting nonresidential leases on new construction from Regulation X , the Board of Governors gave consideration to the fact that transactions of this particular kind tend to be specialized in character and to represent but a relatively small portion of aggregate financing. It is believed that such leasing arrangements, particularly sale-lease-back arrangements, may be effectively re stricted through the Voluntary Credit Restraint Program, which will call for a screening as to the purpose of any such contem plated credit extension. If subsequently it becomes evident that an excessive increase in new nonresidential construction has oc curred through abnormal employment of nonresidential leasing arrangements of the above type, consideration would be given to restoring nonresidential leases to coverage by Regulation X . “ Credit extended in connection with certain types of non residential leases continues to be affected by the regulation. This is described in a footnote to the nonresidential leasing amendment and includes cases where there is borrowing to finance non residential construction on leased land and cases where non residential leases are used as collateral for loans. “ In connection with new residential construction, lenders and builders should note the statutory provisions regulating certain kinds of leasing arrangements. In this respect, the Defense P ro duction A ct, as amended, defines ‘credit’ as including, among other things, ‘any rental-purchase contract, or any contract for the bailment, leasing, or other use of property under which the bailee, lessee, or user has the option of becoming the owner thereof, ob ligates himself to pay as compensation a sum substantially equiva lent to or in excess of the value thereof, or has the right to have all or part of the payments required by such contract applied to the purchase price of such property or similar property; any op tion, demand, lien, pledge, or similar claim against, or for the delivery of property or m oney; any purchase, discount or other acquisition of, or any credit under the security of, any obligation or claim arising out of any of the foregoing; and any transaction or series of transactions having a similar purpose or effect/ This definition of credit also has been incorporated in Regulation X . ” December 1951 95 M O N T H L Y R E V IE W REVISED INDEXES OF TWELFTH DISTRICT DEPARTMENT STORE SALES AND STOCKS ty p ic a l d e p a r tm e n t s to re se lls th o u s a n d s o f ite m s , in c o n ju n c tio n w ith sta tistica l a g e n c ie s o f th e G o v e r n f r o m “ b ig -tic k e t” d u ra b le g o o d s to n o tio n s a n d o th e r m e n t, to sh ift p u b lish e d in d e x e s f r o m th e 1 9 3 5 - 3 9 b a se h e T sm a ll w a r e s , in d iffe r e n t p ric e r a n g e s , to c o n s u m e r s o f p e r io d to a 1 9 4 7 - 4 9 a v e r a g e . A t th e sa m e tim e , th e S y s te m v a r io u s e c o n o m ic g r o u p s . B e c a u s e o f th e ir b r e a d th a n d a lso u n d e r to o k a r e v ie w o f th e fa c to r s u se d to a d ju s t the d iv e r s ity , a s w ell a s th e ir la r g e v o lu m e , d e p a r tm e n t sto re se rie s fo r se a so n a l v a r ia tio n . sa le s a re w id e ly re g a r d e d as a n im p o r ta n t in d ic a to r o f g e n e r a l b u s in e s s c o n d itio n s . T h e e ffe c t o f th a t p a r t o f the re v isio n b a sed u p o n a n e w d e fin itio n o f a d e p a r tm e n t sto re w a s to ra ise th e lev el o f T h e in d e x e s o f d e p a r tm e n t s to re sa le s a n d s to c k s c o m b o th the sto c k s a n d sa le s in d e x e s f o r th e T w e l f t h D is tr ic t. p ile d b y th e F e d e r a l R e s e r v e S y s t e m p r o v id e a m e a s u r e T h is m e n t o f a c tiv ity in th is im p o r ta n t s e g m e n t o f reta il tr a d e . d r o p p e d f r o m th e d e p a r tm e n t sto re c a te g o r y h a d g r o w n r e su lte d fro m th e fa c t th a t m a n y o f th e sto re s I n o r d e r to m a x im iz e the a c c u r a c y o f th is m e a s u r e m e n t m o r e s lo w ly b e tw e e n 1 9 3 9 a n d 1 9 4 8 th a n th o se w h ic h m e t and sta tistica l the n e w d e fin itio n . O w i n g to th e te ch n iq u e a p p lie d in se rie s, th e B o a r d o f G o v e r n o r s a n d th e F e d e r a l R e s e r v e m a k in g th e re v is io n , th e d iffe r e n c e b e tw e e n th e o ld a n d b a n k s h a v e re v is e d th e n a tio n a l a n d d istr ic t d e p a r tm e n t n e w in d e x e s in cr e a se s b e tw e e n 1 9 4 0 a n d 1 9 4 8 a n d th en sto re sale s a n d sto c k s in d e x e s f o r th e p e r io d 1 9 1 9 to d a te . re m a in s a b o u t th e sa m e . The to m a in ta in re v is io n d e v e lo p m e n t s : its has (1 ) c o m p a r a b ility been o c c a s io n e d to o th e r by th e fo llo w in g th e a d o p tio n b y th e U n it e d S ta te s New definition B u r e a u o f th e C e n s u s o f a n e w a n d n a r r o w e r d efin itio n o f th e d e p a r tm e n t s t o r e ; (2 ) th e a v a ila b ility of new I n th e 1 9 4 8 C e n s u s o f B u s in e s s , d e p a r tm e n t sto re s a re officia lly d e fin e d a s “ reta il sto re s c a r r y in g a g e n e ra l line “ b e n c h m a r k ” sa le s d a ta f r o m th e 1 9 4 8 C e n s u s o f B u s i of n e ss ; a n d ( 3 ) a d e c is io n b y th e F e d e r a l R e s e r v e S y s te m , h o m e fu r n is h in g s , a p p a rel, su ch as su its, c o a ts, d r e sse s, a n d f u r n is h in g s ; su ch a s fu r n itu r e , flo o r c o v e r in g s , c u r DEPARTMENT STORE SALES AND STOCKS-Twelfth District Revised monthly indexes of value of sales and stocks, adjusted for seasonal variation (1947-49 average ■» 100) 96 December 1951 FEDERAL RESERVE B A N K OF SAN FRANCISCO ta in s, d r a p e r ie s , lin e n s , m a jo r h o u s e h o ld a p p lia n c e s, a n d m e r c h a n d ise . F o r e x a m p le , a sto r e p r e v io u s ly liste d a s a h o u s e w a r e s , su ch a s ta b le a n d k itc h e n a p p lia n c e s , d ish e s, d e p a r tm e n t sto re w h ic h c a rr ie d n o fu r n itu r e o r m a jo r a n d u te n s ils . T h e s e a n d o th e r m e r c h a n d is e lin e s a re n o r a p p lia n c e s w a s re c la ssifie d b y th e C e n s u s as a d r y g o o d s m a lly a r r a n g e d in s e p a ra te s e c tio n s o r d e p a r tm e n ts w ith o r g e n e r a l m e r c h a n d is e s to r e in 1 9 4 8 . th e a c c o u n tin g o n a d e p a r tm e n ta liz e d b a sis. T h e d e p a r t m e n ts a n d fu n c tio n s a re in te g ra te d u n d e r a s in g le m a n a g e m e n t. E s ta b lis h m e n t s in c lu d e d in th is cla ssific a tio n m u s t n o r m a lly e m p lo y 2 5 o r m o r e p e r s o n s .” A lt h o u g h a n u m b e r o f sto r e s w e r e d r o p p e d f r o m th e T w e lf t h D is t r ic t sa m p le o f r e p o r tin g d e p a r tm e n t sto r e s to c o n fo r m to th e n e w d e fin itio n , th e “ c le a n e d -u p ” sa m p le a c c o u n te d f o r a b o u t 8 8 p e r c e n t o f 1 9 4 8 D is t r ic t d e p a r t T h is new d e fin itio n d e p a r ts fro m p r e v io u s C e n su s p ra ctic e b y d e s c r ib in g th e v a r ie ty o f m e r c h a n d is e th a t m u s t b e ca rr ie d , a n d b y e s ta b lis h in g a siz e c r ite rio n ba sed so le ly o n th e n u m b e r o f e m p lo y e e s . F o r th e 1 9 3 9 C e n su s o f B u s in e s s th e m in im u m s iz e w a s b a s e d o n a n n u a l sales a n d set a t $ 1 0 0 ,0 0 0 , th o u g h a n a lte r n a tiv e o f 1 0 o r m o r e e m p lo y e e s w a s a llo w e d . M e r c h a n d is e lin e s “ u s u a lly ” c a r m e n t sto re sa le s, w h ic h to ta le d $ 1 ,2 9 0 m illio n a c c o r d in g to the B u r e a u o f th e C e n s u s . S a le s o f th e o ld sa m p le c o m p rise d a b o u t 8 0 p e r c e n t o f th e to ta l v o lu m e fo r all d e p a r t m e n t sto re s b a sed o n th e o ld c o n c e p t. I n b o th ca se s m a il o r d e r sa le s a re e x c lu d e d . Adjustment to 1948 Census ried w e r e liste d , w ith o u t sp ec ific r e q u ir e m e n ts . T h e a d o p tio n o f th e n e w d e fin itio n led to a sh a r p re d u c tio n in the n u m b e r o f r e c o g n iz e d d e p a r tm e n t s to re s in th e T w e lft h D is t r ic t, as e ls e w h e r e . D e s p ite th e p o s tw a r g r o w th in th e n u m b e r o f reta il o u tle ts , th e 1 9 4 8 C e n s u s o f B u s in e s s T h e first ste p in a d ju s tm e n t to th e C e n s u s w a s to m a k e th e la st p r e v io u s b e n c h m a r k d a ta p r o v id e d b y th e 1 9 3 9 C e n s u s o f B u s in e s s c o m p a r a b le w ith 1 9 4 8 d a ta , r e m o v in g f r o m th e 1 9 3 9 list all s to r e s n o t c la sse d a s d e p a r tm e n t liste d 3 1 6 d e p a r tm e n t s to re s in th e T w e l f t h D is t r ic t c o m sto re s in th e 1 9 4 8 C e n s u s . N e w to ta ls f o r 1 9 3 9 w e r e o b p a r e d w ith 5 4 4 in 1 9 3 9 . M o s t o f th e sto re s e lim in a te d ta in e d f o r e ach c ity a n d p r im a r y a r e a u s e d in p r e p a r in g w e r e b r a n c h e s o r sm a lle r c o m p o n e n ts o f ch a in o r g a n iz a the c o m b in e d tio n s, w h ic h w e r e e x c lu d e d f r o m th e C e n s u s d e p a r tm e n t w e r e th e n a d ju s te d to re fle ct th e c h a n g e in d ica te d b e tw e e n sto re lis t b e ca u se o f in su fficie n t siz e o r d iv e rs ific a tio n o f th e re v ise d 1 9 3 9 C e n s u s to ta ls a n d th e 1 9 4 8 C e n s u s to ta ls. T w e lfth D is t r ic t sa le s in d e x e s . DEPARTMENT STORE SALES-Twelfth District Revised monthly indexes of value of sales, adjusted for seasonal variation (1935-39 average = 100) In d e x es December 1951 97 M O N T H L Y R E V IE W F o r so m e cities a n d a re a s th e re la tiv e c h a n g e in sales v o l an d a re a s it w a s n e c e ssa r y to ra ise th é le v e l o f th e in d e x e s u m e w a s g r e a te r o n th e b a sis o f th e n e w list th a n o n th e sin ce 1 9 3 9 . I n a fe w ca ses th e o p p o site w a s tr u e , a n d th e o ld , sin ce th e sto re s d r o p p e d w e r e g e n e r a lly th o s e w h ic h lev el o f th e in d e x e s w a s re d u ce d . I n still o th e r ca se s, n o had g r o w n le ss ra p id ly th a n th e a v e r a g e ; f o r su c h cities a d ju s tm e n t w a s n e c e ssa r y . D epart m en t S tore S ales — T w e l f t h D istrict Monthly indexes of value of sales (1947-49 average == 100) Aug. Sept. Oct. Nov. Dec. Annual average 16 19 20 21 32 18 18 16 17 21 20 20 18 19 22 22 22 20 20 24 24 23 21 23 26 26 23 20 24 26 26 34 31 36 40 40 22 20 21 24 25 24 25 26 26 27 22 22 23 25 24 24 26 26 27 27 26 29 29 30 31 28 29 30 32 31 30 30 31 31 32 44 48 47 50 51 26 28 29 30 30 28 26 19 18 19 26 23 17 17 18 22 21 15 16 16 26 23 18 18 20 28 25 19 20 22 28 24 20 19 22 28 25 18 19 23 44 37 29 33 38 28 25 19 18 21 24 26 28 28 30 23 26 29 28 29 22 26 28 26 28 20 24 25 24 25 22 26 28 26 28 26 30 31 28 32 27 30 31 29 34 27 31 31 32 33 43 49 49 48 55 24 28 30 28 31 30 33 42 50 58 30 37 43 55 58 32 37 41 53 59 30 36 40 54 57 28 34 40 49 54 31 44 46 53 59 36 44 54 58 66 35 41 55 64 70 38 45 64 74 87 60 67 86 95 110 33 40 49 59 65 82 79 64 74 83 86 78 69 76 88 95 84 60 85 90 98 97 64 84 91 100 95 64 85 89 100 93 63 79 83 92 83 62 86 92 100 93 72 96 102 104 97 75 99 104 102 99 94 112 123 115 106 121 151 169 171 167 72 91 99 104 98 1950 ................ ............ 1951 ................ ............ 74 99 80 93 86 94 95 95 94 98 95 97 115 93 104 101 110 108 102 107 114 185 105 1 9 1 9 ................ ............ 15 16 17 17 18 19 19 19 20 1920 1921 1924 21 22 19 22 25 21 21 19 23 25 21 20 20 23 25 22 21 20 24 24 22 20 21 24 24 22 20 20 24 24 22 20 20 25 24 22 20 20 24 25 22 20 20 24 24 21 20 22 25 25 21 19 22 24 25 21 19 23 25 25 1925 1926 1927 1928 1929 25 27 28 29 30 25 27 28 29 30 26 28 29 28 29 26 28 29 30 30 26 27 29 29 30 26 28 29 29 30 27 27 28 30 30 26 28 29 30 29 26 28 29 30 30 26 28 28 30 30 28 28 29 29 30 27 29 29 30 31 1930 1931 1932 1933 1934 29 27 22 17 20 30 26 22 17 20 29 27 21 16 21 29 27 20 18 20 28 27 20 19 20 29 26 19 19 20 27 26 18 20 20 27 25 18 19 21 27 24 19 19 21 27 23 19 18 22 27 24 17 18 22 27 22 17 19 22 1935 1936 1937 1938 1939 23 25 29 29 30 23 26 30 28 30 23 27 31 28 30 24 27 30 28 31 23 27 30 29 30 24 28 30 28 30 24 29 30 28 30 24 28 30 28 30 25 29 30 27 31 26 29 30 28 32 25 29 29 30 31 25 29 29 29 33 1940 1941 1942 1943 1944 32 35 45 54 60 32 35 43 62 59 32 36 44 56 62 32 37 45 56 61 33 39 45 57 63 33 40 45 60 63 34 40 48 59 65 34 46 50 59 66 34 42 52 58 66 34 40 53 61 68 36 40 53 60 70 36 42 54 60 70 1945 1946 1948 1949 71 80 95 103 100 71 83 96 103 93 71 87 96 104 96 66 88 96 105 99 69 90 97 105 100 70 91 95 107 99 74 92 97 107 97 70 94 100 106 97 72 95 101 104 97 73 95 102 100 98 76 94 104 102 96 76 95 103 102 97 1950 1951 94 125 96 112 96 102 99 102 99 104 101 103 134 108 110 106 110 108 100 106 104 108 Jan. Feb. Mar. Apr. 1919 ................ ............ 13 13 14 16 1920 1921 1922 1923 1924 ................ ................ ................ ................ ................ ............ 19 ............ ............ ............ 18 20 22 17 18 16 20 22 19 19 17 22 22 20 19 19 22 24 22 21 22 25 24 21 19 19 23 23 1925 1926 1927 1928 1929 ................ ................ ................ ................ ................ ............ 22 ............ ............ ............ 24 25 26 22 23 24 25 25 24 * 26 26 26 28 25 26 28 29 28 26 27 28 29 30 1930 1931 1932 1933 1934 ................ ................ ................ ................ ................ ............ ............ ............ ............ ............ 25 23 18 14 16 25 22 18 14 17 26 25 20 14 20 29 26 19 18 19 1935 1936 1937 1938 1939 ................ .............. ................ ............ ................ ............ ................ ............ ................ ............ 18 20 23 23 23 19 21 24 22 24 20 24 29 24 27 1940 1941 1942 1943 1944 ................ ............ ................ ............ ................ ............ ................ .............. ................ ............ 25 28 37 44 49 26 30 38 55 52 1945 1946 1947 1948 1949 ................ ................ ................ ................ ................ ............ ............ 58 63 ............ ............ Year 1922 1923 1947 May June July Without seasonal adjustment 17 17 15 Adjusted for seasonal variation 16 18 18 98 FEDERAL RESERVE B A N K OF SAN FRANCISCO December 1951 DEPARTMENT STORE STOCKS—Twelfth District Revised monthly indexes of value of stocks, adjusted for seasonal variation (1935-39 average -100) A d j u s t m e n t o f th e sto c k s in d e x f o r th e T w e l f t h D is t r ic t w a s m a d e in th e s a m e m a n n e r a s f o r th e sa le s in d e x e s . A p r o c e s s o f in s p e c tio n a n d te s tin g s h o w e d n o s ig n ific a n t v a ria n c e in th e re la tio n s h ip o f sto c k s to sa le s r e s u ltin g f r o m th e c h a n g e s in c o m p o s itio n o f th e sa m p le . T h e r e fo r e so n a l a d ju s tm e n t fa c to r s h a v e b e e n d e v e lo p e d f o r th e y e a r s 1 9 4 6 to d ate. Shift to 7947-49 base period it w a s n e c e s s a r y o n ly to c o r r e c t th e le v e l o f th e T w e lf t h B e fo r e p u b lic a tio n o f th e r e v ise d in d e x e s , a d e c isio n D is t r ic t sto c k s in d e x b y th e sa m e p r o p o r tio n th a t th e to ta l w a s re a ch e d b y th e F e d e r a l R e s e r v e S y s t e m in c o n s u lta T w e l f t h D is t r ic t sale s in d e x h a d b e e n c h a n g e d . Review of seasonal adjustment factors tio n w ith G o v e r n m e n t sta tistical a g e n cie s a n d th e B u r e a u o f th e B u d g e t to a b a n d o n th e 1 9 3 5 - 3 9 b a se a n d su b stitu te th e p e r io d 1 9 4 7 -4 9 . I t w a s fe lt th a t th e d e p a r tm e n t sto re in d e x e s , as w e ll as o th e r c u r re n t se rie s, w o u ld be m o r e D u r in g th e w a r d e p a r tm e n t s to re sales w e r e a ffe c te d b y m e a n in g fu l if e x p r e s s e d in te r m s o f th is p o s tw a r re fe re n ce sh ifts in s e a so n a l s h o p p in g h a b its , a s s c a rc ity o f m e r c h a n p e r io d . W i d e d isp a ritie s in th e rate o f g r o w th o f d iffe r e n t d ise a n d th e n e c e s s ity o f m a ilin g C h r is tm a s g ifts to s e r v se c to rs o f th e e c o n o m y a n d o f d iffe r e n t g e o g r a p h ic a l a r e a s ic e m e n o v e r s e a s w e ll in a d v a n c e o f th e h o lid a y ca u sed sin ce p r e w a r h a v e m a d e c o m p a r is o n s o f c u r r e n t c h a n g e s c o n s u m e r s to b u y g ifts e a r lie r th a n n o r m a lly f o r C h r is t w ith th e in d e x e s e x p r e s s e d as p e r c e n ta g e s o f th e 1 9 3 5 - 3 9 m a s a n d , to a le s s e r e x te n t, f o r E a s te r . A v a ila b ilit y o f a v e r a g e s o m e w h a t m is le a d in g . m e r c h a n d is e re m a in e d a sig n ific a n t d e te r m in a n t o f s h o p S o m e u se rs o f th e d e p a r tm e n t sto re in d e x e s m a y w is h p in g p a tte r n s f o r se v e ra l y e a r s fo llo w in g th e w a r 's e n d , to c o n tin u e th e ir fig u r e s in the im m e d ia te fu tu r e o n a th o u g h o f d im in is h in g im p o r ta n c e . B y 1 9 4 9 p r e w a r s h o p 1 9 3 5 - 3 9 b a se in o r d e r to m a in ta in c o m p a r a b ility w ith p in g h a b its h a d be e n a p p r o x im a te ly re s to re d . S in c e th e ce rta in o th e r in d e x e s n o t y e t sh ifte d to th e p o s tw a r b a se m o s t re ce n t re v is io n o f s e a s o n a l fa c to r s h a d b e e n d o n e in p e r io d . T h i s b a n k w ill m a k e a v a ila b le o n re q u e st ra tio s 1 9 4 8 , it w a s d e c id e d th a t a t h o r o u g h r e v ie w o f s e a so n a l w h ic h ca n be u se d to c o n v e r t th e in d e x e s b a c k to th e sa le s a n d s to c k s p a tte r n s c o v e r in g th e p o s tw a r p e r io d 1 9 3 5 - 3 9 b a sis. s h o u ld be u n d e r ta k e n . A s a re su lt o f th is s tu d y , n e w se a Note: A detailed description of the revisions is available upon request. December 1951 99 M O N T H L Y REVIEW A M E N D M E N T S TO RE G U LA T IO N W On December 24, the Board of Governors of the Federal R e serve System issued the following statement to the press concern ing changes in Regulation W : “ The Board of Governors has adopted effective December 31, 1951, a technical amendment to Regulation W , Consumer Credit, designed to conform the provisions of the regulation to certain regulations of the Office of Price Stabilization, including Ceiling Price Regulation 94, which establishes maximum retail prices for used automobiles. “ The amendment provides in substance that the maximum amount of money that can be loaned for the purchase of a listed article subject to Regulation W shall be not more than the specified percentage of the cash price but in no event more than that percentage of the maximum retail price established by Fed eral authorities. The specified maximum loan value percentages are unchanged: for automobiles, 6 6 2/ z percent; household appli ances, radios and television, and furniture, 85 percent ; home im provements, 90 percent. This restores the form of the provisions applying to maximum loan values that were in effect during the latter part of W o rld W a r I I .” * * * * * * On December 28, the Board of Governors of the Federal R e serve System issued the following statement to the press concern ing Amendment N o. 6 to Regulation W : “ The Board of Governors announced today that effective Janu ary 2, 1952, all 1942 and older model automobiles will be removed from the list of articles subject to the provisions of Regulation W — Consumer Credit. “Although about 40 percent of all passenger automobiles now in use are prewar models, the change is not expected to have any appreciable effect on the general credit situation. Greater risk is involved in financing older model cars and as a result terms actually made available by sellers and lenders have in general been more stringent than those required under Regulation W . ” 100 FEDERAL RESERVE B A N K OF SAN FRANCISCO December 1951 B U S I N E S S I N D E X E S — T W E L F T H D IS T R I C T 1 (1935-39 average = 100) Waterborne Total Car Dep't foreign m f’g loadings store Retail trade**1 Wheat Electric employ (num sales2 food Copper* flour* ber)2 (value)14 prices*'6 Exports Imports power ment4 Industrial production (physical volume)3 Year and month Petroleum» Lumber Crude Refined Cement Lead* 1929.............. 1931.............. 1933............ .. 1934.............. 1935............... 1936.............. 1937.......... 1938............ 1939.............. 1 940-.-......... 1941.............. 1942............ .. 1943-............ 1944............ . 1945............ 1946________ 1947............ . 1948________ 1949________ 1950________ 148 77 62 67 83 106 113 88 110 120 142 141 137 136 109 130 147 159 151 171 129 83 76 77 92 94 105 110 99 98 102 110 125 137 144 139 147 149 147 144 127 90 81 81 91 98 105 103 103 103 110 116 135 151 160 148 159 162 167 168 110 74 54 70 68 117 112 92 114 124 164 194 160 128 131 165 193 211 202 227 171 104 75 79 89 100 118 96 97 112 113 118 104 93 81 73 98 109 105 113 160 75 26 36 57 98 135 88 122 144 163 188 192 171 137 109 163 154 142 176 106 101 88 95 94 96 99 96 107 103 103 104 115 119 132 128 133 116 104 94 83 82 73 79 85 96 105 102 112 122 136 167 214 231 219 219 256 284 303 333 1950 September_________ October. __________ November_________ December_________ 176 187 167 168 148 153 154 154 177 177 179 173 248 252 229 229 104 106 111 118 175 176 195 195 105 99 97 120 1951 January___________ February__________ March____________ A pril_____________ May______________ June______________ July---------------------August____________ September_________ October___________ 187 171 168 189 199 190 154 174 160 180 154 155 155 155 155 157 156 157 158 158 176 187 179 180 179 179 182 187 188 186 239 255 246 247 278 266 330 319 313 302 101 110 106 101 101 98 90 72 80 181 178 180 195 182 175 171 161 172r 185 134 121 111 110 106 96 98 106 113r 114 ‘ *88 100 112 96 104 118 155 230 30« 295 229 181 187 191 183 197 135 91 70 81 88 103 109 96 104 110 128 137 133 141 134 136 142 134 126 131 112 92 66 74 86 99 106 101 109 119 139 171 203 223 247 305 330 353 331 353 132.0 104.0 86.8 . 93.2 99.6 100.3 104.5 99.0 96.9 97.6 107.9 130.9 143.4 142.1 146.3 167.4 200.3 216.1 209.6 209.8 124 90 72 86 88 86 112 108 107 86 118 76 69 74 103 110 114 82 90 96 ’ ¿8 85 57 55 59 '55 78 93 115 131 339 352 353 345 209 210 208 208 140 131 131 152 368 343 345 376 211.0 214.1 216.0 222.9 58 62 68 70 134 148 167 167 361 361 380 378 378 378 393 396 379 213 219 220 221 224 224 224 224 221 224 130 124 133 152 142 144 123 126 140 135 420 375 335 346 348 347 365 360 356 359 230.8 230.2 234.5 233.0 235.3 233.4 234.6 233.1 235.5 234.9 75 98 110 122 126 128 132 157 146 159 169 174 133 158 140 136 145 B A N K I N G A N D C R E D IT S T A T IS T IC S — T W E L F T H D IS T R IC T (amounts in millions of dollars) Year and month 1929 1931 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 Condition items of all member banks7 Loans U.S. Demand Total and Gov’t deposits time discounts securities adjusted8 deposits Bank rates on short-term business loans' Member bank reserves and related items10 Reserve bank credit11 2,239 1,898 1,486 1,469 1,537 1,682 1,871 1,869 1,967 2,130 2,451 2,170 2,106 2,254 2,663 4,068 5,358 6,032 5,925 7,093 495 547 720 1,064 1,275 1,334 1,270 1,323 1,450 1,482 1,738 3,630 6,235 8,263 10,450 8,426 7,247 6,366 7,016 6,381 1,234 984 951 1,201 1,389 1,791 1,740 1,781 1,983 2,390 2,893 4,356 5,998 6,950 8,203 8,821 8,922 8,655 8,536 9,254 1,790 1,727 1,609 1,875 2.064 2,101 2,187 2,221 2,267 2,360 2,425 2,609 3,226 4,144 5,211 5,797 6,006 6,087 6,255 6,251 3.20 3.35 + + + 34 21 2 7 2 6 1 3 2 2 4 107 214 98 76 9 302 17 13 39 1950 October November December 6,810 6,963 7,093 6,452 6,319 6,381 8,871 9,018 9,254 6,239 6,194 6,251 3.37 _ + + 1951 January February March April May June July August September October November 7,152 7,184 7,293 7,367 7,422 7,509 7,473 7,630 7,704 7,791 7,885 6,071 5,811 5,734 5,696 5,685 5,708 6,005 6,000 5,998 6,204 6,356 9,190 8,834 8,819 8,828 8,834 8,862 9,052 9,058 9,235 9,485 9,584 6,337 6,352 6,338 6,332 6,357 6,448 6,510 6,547 6,576 6,642 6,625 + _ + — + + — + + + + + + + 3.48 — — *3.67* + + — 3.65 + — — + Coin and Commercial Treasury currency in operations12 operations12 circulation11 Reserves Bank debits IM J . v index 31 cities8»1* (1935-39100)2 0 - 154 - 110 198 - 163 - 227 90 - 240 - 192 - 148 - 596 -1,980 -3,751 -3,534 -3,743 -1,607 - 510 + 472 - 930 -1,141 + 23 + 154 + 150 + 257 + 219 + 454 + 157 + 276 + 245 + 420 +1,000 +2,826 +4,486 +4,483 +4,682 +1,329 + 698 - 482 + 378 +1,198 6 48 + 18 4 + 14 + 38 + 3 20 + 31 + 96 + + 227 + 643 + 708 + 789 + 545 326 — 206 — 209 — 65 14 - 175 147 185 242 287 479 549 565 584 754 930 1,232 1,462 1,706 2,033 2,094 2,202 2,420 1,924 2,026 146 97 63 72 87 102 111 98 102 110 134 165 211 237 260 298 326 355 350 395 56 24 48 - 93 21 80 + + + 150 42 131 + 10 3 4 1,930 1,983 2,026 428 425 464 30 32 3 45 13 73 14 159 43 121 236 + - 59 38 124 200 162 113 342 80 18 143 239 + + + + + + + + + + + 168 6 130 226 150 199 298 86 42 283 118 68 21 8 26 36 39 19 41 32 17 18 2,284 2,206 2,186 2,180 2,149 2,217 2,186 2,312 2,293 2,291 2,392 455 444 461 431 449 461 429 443 445 462 470 _ + — + — + + + + + + + + 1 Adjusted for seasonal variation, except where indicated. Except for department store statistics, all indexes are based upon data from outside sources, as follows: lumber, various lumber trade associations; petroleum, cement, copper, and lead, U.S. Bureau of Mines; wheat flour, U.S. Bureau of the Census; electric power, Federal Power Commission; manufacturing employment, U.S. Bureau of Labor Statistics and cooperating state agencies; retail food prices, U.S. Bureau of Labor Statistics; carloadings, various railroads and railroad associations; and foreign trade, U.S. Bureau of the Census. 2 Daily average. * Not adjusted for seasonal variation. 4 Excludes fish, fruit, and vegetable canning. 6 Los Angeles, San Francisco, and Seattle indexes combined. • Commercial cargo only, in physical volume, for Los Angeles, San Francisco, San Diego, Oregon, and Washington customs districts; starting with July 1950, “ special category” exports are excluded because of security reasons. 7 Annual figures are as of end of year, monthly figures as of last Wednesday in month or, where applicable, as of call report date. * Demand deposits, excluding interbank and U.S. Gov’t deposits, less cash items in process of col lection. Monthly data partly estimated. 9 Average rates on loans made in five major cities during the first 15 days of the month. 10 End of year and end of month figures. u Changes from end of previous month or year. 12 Minus sign indicates flow of funds out of the District in the case of commercial operations, and excess of receipts over disbursements in the case of Treasury operations. 18 Debits to total deposit accounts, excluding inter bank deposits. 14 Revised series appears on page 97. r—revised.
@FedFRASER