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TW ELFTH FEDERAL RESERVE DISTRICT FEDERAL RESERVE BANK OF SAN FRANCISCO The Year of the D og in Brief Review . 182 New Energy for the Northwest . . . 187 The Year of the Dog in Brief Review' N sharp contrast to the brightly optimistic picture currently being drawn, the nation’s economic outlook a year ago was dark and gloomy. In the opening months of 1958 em ployment, personal income, and production continued the downward course that had been under way since the previous July. Economic activity sank under the weight of a record run-off in inventories and there was also a large decline in business capital outlays. Con sumer demand for durables such as automo biles weakened further, and private construc tion activity slackened. The main impact of these adverse changes in demand was felt in durable goods industries, where activity was cut sharply, but nearly all sectors of the econ omy— except agriculture— suffered. I Because of the recession 1958 will not be remembered for having fattened the record books. Nevertheless, the year is distinguished for having brought a dramatic reversal in business activity. Even as the recession had carried far enough to establish itself as the worst since World War II, spring brought greater-than-seasonal increases in nearly all major indicators. This turnaround appears to have been the result of a number of forces. While order placements for defense goods began to climb after Sputnik, actual outlays for military weapons continued to decline through the first quarter. Nearly all other Government payments increased, however, including unemployment and social security benefits, construction outlays, and interest payments to the public. The net impact of Federal fiscal operations was more expan sionary than the increase in payments indi cates, for tax revenues had declined more than proportionately to the fall in profits and income in the private sector of the economy. Also in the first quarter, consumers stepped up purchases of nondurables and services, 182 1 Our Chinese friends inform us th a t 1959 will be the year of the pig, but it is doubtful th a t these symbols can be used for predictive purposes. and there was a significant easing of mone tary and credit policy, which will be reviewed briefly below. Somewhat later, construction activity joined the list of expansionary forces as residential building received special stim ulus from a liberalization of credit for Gov ernment-insured housing. Economic activity approaches pre-recession levels In the fourth quarter of 1958, a number of indicators were close to or above pre-reces sion levels. Indeed, personal income and con sumer spending surpassed previous highs in the third quarter. Further gains for these in dicators are certain in the closing months of the year and it is also likely that Gross N a tional Product rose to a new record above the $446 billion mark attained in the third quar ter of 1957. One major indicator— total nonfarm em ployment— has responded sluggishly to the recovery. Nonfarm payrolls were reduced 2,790,000 in the downswing (after seasonal adjustment) and only 30 percent of this loss had been recovered by November. Thus, em ployment in November was still 2 percent short of the year-earlier total. Consequently, unemployment has remained relatively high. As is typical during a recovery, output gains in commodity-producing industries have been achieved without a corresponding increase in the number of workers. Average workweeks have lengthened, but there has also been a substantial increase in output per man-hour. While it portends an upturn in corporate profits, and perhaps increased price stability, the gain in productivity has also helped to ac count for the failure of unemployment to fall significantly. In addition to the stimulus that may be gained from increases in production and sales of consumer durables, the recovery is cur rently benefiting from a reduced rate of de- December 1958 M O NTHLY REVIEW dine in business investment. Manufacturing inventories leveled in October for the first time in over a year. This suggests that the in ventory run-off was drawing to an end. Inven tory accumulation may now be imminent, giving a further boost to the total demand for goods. The fourth quarter may show a slight increase in plant and equipment spending, fol lowing the improvement in corporate profits in the last half of 1958. Because of increased spending and reduced revenues, the largest demand for funds came from the United States Treasury. About $19 billion of new money issues were floated in calendar 1958, half of which were acquired by commercial banks. In line with expanded programs for the construction of highways and public buildings, state and local bond is sues are expected to top the $7.1 billion of fered in 1957 by 10 percent. Credit demand slack in 1958 Monetary policy aids recovery Monetary policy during the past year has reflected the changing economic picture. The policy of credit ease that led to stepped-up open market operations and cuts in the dis count rate in late 1957 was accelerated in the first quarter, Four successive cuts in the dis count rate brought it down from 3 Vi to 13 A percent by April. The proportionate amount of reserves that member banks are required to hold against their demand deposits was re duced three times between February and April of this year, thereby freeing about $1.5 billion of reserves. In spite of the fact that some reserves were lost through the outflow of gold, monetary policy made possible a substantial expansion in the money supply. In the face of a reduc tion in overall spending, the money supply continued to expand through November at an annual rate of 4 percent on a seasonally adjusted basis. Demand deposits and cur rency held outside the banking system rose about $5.4 billion from the beginning of the year, compared to a contraction of $1.2 bil lion in the same period in 1957. The very rapid growth in time deposits at commercial banks through 1957 and the first half of 1958 slowed in the third quarter of the year. During the latter part of 1958 there was a shift toward less ease in the nation’s credit markets. This began with a speculative upset in the Government bond market in June when Credit demands in the private sector of the enonomy for the first eleven months of 1958 lacked the vigor demonstrated in 1957. On December 3 total loans at reporting banks in the nation had risen only $147 million over the same week in 1957. At the same time, commercial and industrial loans stood $1,067 million below the corresponding week a year ago. Weakness in business loans was evident throughout the year in line with reduced spending for both inventories and fixed in vestment. Real estate loans and agricultural loans demonstrated consistent strength dur ing the year, however, reflecting activity gains registered in both of these sectors. Loans to consumers increased moderately after March, but only a little more than enough to offset the decline of the first quarter. Corporate demands for long-term credit also declined, with a 10 percent drop from the record level of $9.4 billion in the first three quarters of 1957. Preliminary estimates for the entire year are for $10.8 billion of securities offerings, down about 13 percent from 1957 but still the third highest level ever attained. This year the proportion of issues in bonds, notes, and preferred stock— rather than common shares— increased. While most issues were designed to finance acquisition of new plant and equipment, considerably more of the proceeds from new issues was slated to retire outstanding securities than was the case last year. 183 FEDERAL RESERVE BA N K OF S A N FRA N CISC O it was realized that a recovery was under way and that higher interest rates almost certainly would result. As investors and speculators sold securities, bond prices dropped and in terest rates rose. Following a swift rise in short-term open market rates, the discount rate was raised in August and again in Oc tober and now stands at 2 Vi percent. In Aug ust, the Federal Reserve System cautiously began to permit a tightening of the reserve position of member banks. Total free reserves (excess reserves minus borrowing from the System), which had averaged around $500 m illio n d u rin g th e M a rc h -J u ly p e rio d , dropped close to the zero mark by Decem ber. In addition, margin requirements were raised over the year in order to restrain the use of credit in a booming stock market. Twelfth District Recovers More Rapidly Than Nation 1 84 as in Pacific Coast states, dropped in Novem ber to about 6 percent— still above January 1958 levels. For individual industries, employment changes engendered by the recovery in the District from April to October are similar in direction but relatively greater in magnitude than those in the nation. Commodity-producing industries show the largest gains as man ufacturing payrolls rose 47,000 (3 percent) followed by construction with 45,000 (11 percent). Government employment rose by 35,000 (3 percent), service industries in creased payrolls by 24,000 (3 percent), and net hirings at retail and wholesale establish ments amounted to 21,000 (2 percent). Changes in other industries have been neg ligible. Durables pace recovery in manufacturing According to employment figures for Pa cific Coast states, and in contrast to national developments, activity in durable goods man ufacturing rose 5 percent from April to Oc tober, while nondurables slipped about 2 per cent. All durables shared in the gain. Lum ber output, following the nationwide boom in construction (particularly in residential building) jumped 7 percent. Other durables, the category which contains industries receiv ing contracts for the new weapons, such as ordnance and instruments, shows an employ ment expansion of 10 percent. Similarly, ris ing defense outlays have helped account for a 5 percent growth in aircraft employment and a 3 percent gain in machinery payrolls. The latter includes electrical machinery (and electronics), which has grown very rapidly in recent months. The lack of employment expansion in non durable manufacturing reflects primarily the early curtailment of canning activity. Other nondurables such as apparel, paper, and printing show moderate recovery. Although it had not fallen so far, business activity turned up at approximately the same time in the Twelfth District as in the nation and has since risen more rapidly. At the start of the fourth quarter, total nonfarm employ ment in District states had advanced 3 per cent from the April low— a gain approxi mately twice as large as that of the nation. In the Twelfth District, two-thirds of the em ployment loss over the recession has been re covered, compared with one-third nationally. The West has not enjoyed a significantly more favorable unemployment record, how ever. In Pacific Coast states, for which such data are available, the civilian labor force grew 2 percent in the first ten months of 1958. This rate of growth exceeds that in the same period in 1957 and has permitted only a nominal drop in unemployment. The jobless numbered 6.5 percent of the Coast civilian labor force in October (after seasonal adjust ment) compared with 7.1 percent in the na tion. According to preliminary estimates, unemployment in the nation as a whole, as well December 1958 M O NT H LY REVIEW Construction contract awards increase A boom in construction activity since June has more than made up for weakness that was evident in the opening months of 1958. Cum ulatively, contracts awarded in the eleven western states during the first ten months of 1958 were up 6 percent from those of the same period in 1957. Although street and highway awards ran 28 percent higher this year, total heavy engineering contracts were down 17 percent. For the most part, this re flects a sharply reduced level of utilities con struction. While the West shows less strength than the nation as a whole in heavy engineer ing projects, the boom in residential construc tion has been more pronounced. Awards for apartment buildings and for one- and twounit dwellings are up 33 and 21 percent, re spectively, compared with 33 and 7 percent for the nation as a whole. The West also chalked up a 4 percent gain in nonresidential construction awards, including a 6 percent gain in commercial awards and a 40 percent loss in manufacturing buildings. Nationally, nonresidential awards ran 3 percent below 1957 during the first ten months of 1958. Production declines from 1957 levels Although an aggregate measure of indus trial production is not available for the Twelfth District, it is clear that losses from 1957 have been quite substantial. Most of the declines that appear when cumulative totals for 1958 are matched with those of 1957 overstate the impact of the recession since comparisons between the worst months of 1957 and the final or best months of 1958 are not yet possible. Production of refined petroleum in the first three quarters of 1958 fell 8 percent below that of a comparable period in 1957. While d em an d has sh o w n le s s - th a n -e x p e c te d growth, the accumulation of residual fuel in ventories reflects primarily the loss of mar kets to competing products. In the District’s lumber industry, a strong showing by housing starts has brought a de mand and price situation more favorable than that which existed at the close of 1957. Pro duction has not completely made up for losses that occurred early in 1958, however, so that at the ten-month mark output of Douglas fir, western pine, and redwood lagged 3, 2, and 9 percent from their respective totals in the comparable period in 1957. Through November, steel production of the three largest District producers was down about 20 percent from the 1957 figure. This difference is certain to shrink as operating rates are expected to have risen in Decem ber, whereas they were falling at the end of 1957. Man-hours worked in Pacific Coast manu facturing firms— a measure that tends to un derstate manufacturing production when pro ductivity changes are substantial— cumulate to a total for the first three quarters of 1958 that is 10 percent less than the sum for the same period in 1957. Durables were hardest hit by the recession (particularly aircraft, ma chinery, and m etals) showing a drop in manhours worked of 12 percent. Nondurables, reflecting the relatively strong retail move ment of soft goods, fared better with a loss of 5 percent from 1957. As is the case with other indicators, gains registered in the clos ing months of 1958 are certain to reduce these margins of loss. Sales of hard goods drop Sales of retail establishments in the Dis trict (based upon data for stores operating from one to ten retail outlets) in the first nine months of the year recorded a loss of 3 per cent from the same number of months in 1957. This compares with a drop of about 1 percent for the nation as a whole. The largest declines are found for stores selling hard goods. Automobile establish ments suffered a sales decline of 15 percent 185 FEDERAL RESERVE B A N K OF S A N and furniture and appliance sales were off 6 percent. By contrast, sales of lumber, build ing materials, and hardware recorded a gain of 2 percent. The expansion in total sales of soft goods in the District amounted to about 1.4 percent, compared with a 4 percent national rise. At general merchandise stores, sales registered the biggest gain— 6 percent. Food stores and service stations followed with increases of 3 percent, while drugs recorded a 2 percent advance. Faring less well were eating and drinking establishments, apparel stores, and “other” retail firms— all experienced sales de clines. However, preliminary indications in early December point to record-breaking Christmas sales in department stores, a pick up in automobile sales, and a general im provement in retail trade in the Twelfth Dis trict. These year-end gains will eliminate a substantial part of the loss between 1957 and 1958 totals. 1 86 Agriculture fares well Cash receipts of District farmers for the first three quarters of 1958 were up 5 percent above those for the first nine months of 1957. This gain, about half as large as that nation ally, narrowed steadily as the year advanced. Receipts from livestock sales have held up relatively well and have been running about 8 percent above year-ago levels because of higher prices. Crop revenue, while still 2 per cent ahead of 1957, has been under pressure from lower prices for wheat, apples, and po tatoes. Consequently, District producers have delayed marketings of those crops. The cot ton harvest is about 7 percent larger than last year’s and may cause some improvement in crop receipts in the final months of 1958 in spite of lower prices. Although no overall gain in crop produc tion was reported, this year’s canning pack was up slightly from that of 1957. Because of smaller crops the fruit pack was reduced, but FRA N CISC O a near-record volume of tomato products brought an increase in the vegetable pack. Outstanding loans expand at District banks The demand for loans held up better in the Twelfth District than in the nation. By the last week of November total loans at weekly reporting banks had recorded an increase of $215 million or slightly less than the expan sion in a comparable eleven-month period in 1957. There are sharp contrasts in the com position of total loans, however. Business loans, which accounted for most of the 1957 gain, were the chief source of weakness in 1958 with a decline of $113 million. From the end of June to the end of November, business loans actually advanced by $145 million but this has not been sufficiently large to offset losses in the first half of 1958. Net repayments by sales finance companies and retail firms were mainly responsible for first half losses while food and liquor processors and commodity dealers account for the rise that has occurred since June. Real estate loans, which fell $58 million in the first 11 months of 1957, rose $301 million in the same period in 1958, provid ing the main basis for an expansion of total bank credit in this district and supplying funds for the increase in construction activ ity. Agricultural loans gained $78 million this year compared with a slight fall in 1957. Time deposits at District member banks rose $880 million in the first 11 months of the year compared with a $727 million gain in 1957. Most of the growth occurred before midyear. In contrast, demand deposits in creased $391 million, with most of the gain occurring after mid-year. Consequently, total demand deposits recently moved ahead of time deposits. Holdings of United States se curities at District reporting banks grew by $1,256 million, with the major part of this increase accounted for by bonds and notes. December 1958 M O N T H LY REVIEW if ir* 'fj vr 4 : New Energy for the Northwest contain only 4 percent of recoverable re Pacific Northwest received a longserves, 1957 utility sales of natural gas in this awaited supplement to its fuel resources in the fall of 1956, when the first natural gas area were 15 percent of total United States sales. supplies arrived. With the connection of Ore gon, Washington, and Idaho to the wells of Peak load and sales problems the San Juan Basin,1 the last major geo Interstate pipelines have been transporting graphic frontier in the United States was gas from the producing fields of the South opened to the rapidly growing natural gas in west to distant consuming areas since the dustry. After Pacific Northwest Pipeline Cor 1930’s, and gas has established itself all over poration received authorization to serve the the nation as an efficient, clean, and econom Northwest from the San Juan area, it was also ical fuel. The ability of gas to compete with permitted to purchase Canadian gas. Al local fuels after having been transported over though this gas did not begin to flow into the a thousand miles is based on the low cost of system until October 1957, it is now a major gas at the wellhead, the low unit cost of supply source for the Pacific Northwest. tran sp o rtatio n achieved by moving large vol In the postwar years gas has become in umes of gas, and a differential pricing sys creasingly important in the energy-use pattern of the nation. It provided 13.4 percent of the tem1 at the point of ultimate consumption, energy consumed in the United States in which facilitates large volume sales. The raw 1946;2 by the end of 1957 it accounted for material, gas, accounts for only about 10 to 25.0 percent. The natural gas industry is par 15 percent of the average domestic consum ticularly important in the Twelfth Federal Re er’s bill (for the nation as a whole). The serve District, which lacks adequate supplies miles of large diameter, high-pressure trans of high-grade coal. Because of the high cost mission lines, the complex distribution equip of mining Northwestern coals or of hauling ment and its operation represent the major coal from Utah, Wyoming, and Montana, the cost elements. The overhead must be spread District must depend more on oil and gas over a large volume of sales if gas is to be than does the rest of the nation. While the sold at competitive prices to householders and seven District states account for only about 5 industrial users. percent of United States gas production3 and Residential demand for gas is seasonal, 1 The San Juan Basin area includes fields in northwestern New with the heavy load in the winter. A pipeline Mexico and southwestern Colorado. T he pipeline also picks up he T gas from the Rocky M ountain fields through which it passes. - From coal, petroleum and petroleum products, natural gas, and water power. 3 On a m arketed production basis, which is gross production m inus waste, losses, and gas used in repressuring. J This refers to the policy of charging different prices to various classes of users. Consumers who take large quantities of gas, particularly at off-peak periods, are charged lower rates than others. 187 FED E RA L R E S E R V E B A N K built to serve this peak load would be under utilized during the rest of the year. However, by contracting to sell gas to industry at rates low enough to compete with alternative fuels, with the provision that such service can be curtailed during severe weather or other peak load periods, the utilities are partially able to fill the summer “valleys” in demand. The firms benefit from the low fuel costs, even taking into consideration the necessity for maintaining standby equipment. 188 G as sales in the Pacific Northwest Special conditions in the Pacific Northwest have contributed to the formation of a dis tinctive sales pattern there. The Northwest ern states have available two rich sources of supply, the San Juan Basin and the Canadian fields. The abundance of gas and the ample size of the transmission lines, which were built with an eye to future expansion, have made it possible for the utilities to offer in dustrial users almost year-round service at interruptible rates which make gas cheaper to use than fuel oil. Also, many gas-using Northwestern industries are primarily sea sonal in nature, with their slack period in the winter. This combination of circumstances and an appreciation of the unique physical characteristics of gas have induced numerous industries to convert to natural gas, and in dustrial use (including interruptible and firm use) accounts for 82 percent of the physical volume of gas sold by utilities in the Pacific Northwest. In the United States as a whole, total industrial sales account for 53 percent of the physical volume of gas sold. (Table 1) While industrial sales have exceeded ex pectations, residential sales are lower than an ticipated. In addition to the conversions from manufactured gas, utilities have added 50,000 space-heating customers since the advent of natural gas. But most of these new customers are owners of new homes. Gas units are considered to be cheaper to install and operate OF S A N FRA N CISC O in most areas, especially if gas is used for water heating and cooking as well as space heating. Conversion of older homes is moving slowly, however. Residents of the Pacific Northwest are unfamiliar with natural gas. Furthermore, unlike areas in the East and Midwest where the choice was usually be tween natural gas and coal, most of the older homes in the Northwest use oil heaters. Since oil heat is also clean and convenient, the householder may feel that the relatively small advantage of gas in yearly operating expense does not outweigh the capital cost of con version. Pacific Northwest utilities, therefore, have faced some problems not common to dis tributors in other parts of the Twelfth Dis trict and the nation. Construction difficulties delayed the arrival of gas until late in the 1956-57 heating season, too late for conver sion from other fuels in most cases. The late arrival, an unusually warm winter, the busi ness recession, the unfamiliarity of residen tial consumers with natural gas, and the higher-than-predicted prices resulting from overruns in construction cost affected the demand for gas. Sales were well below the initial volume on which distributors had counted. Low revenues and the high cost of conversion from manufactured gas resulted T able 1 P E R C E N T D IS T R IB U T IO N OF S A L E S AND R EVE N U ES OF N A TUR AL GAS U T IL IT IE S , 1957 Com mercial In dustrial 32 33 1I 35 9 10 7 10 53 47 82 45 Total United States 56 52 Total Tw elfth District 31 Pacific N o rth w e st O ther Tw elfth District 53 12 12 16 12 29 30 52 29 Sales1 Residential Total United States Total Tw elfth District Pacific N o rth w est Other Tw elfth District Other 5 10 — 10 Revenues 3 6 — 6 1 Physical volume of gas sold by utilities. Source: Based on data from 1958 Gas Facts, a publication of the American Gas Association. December 1958 M O NTHLY REVIEW C hart 1 N O R T H W E S T GAS SUPPLY L IN E S PE A C E R I V E R F I E L D S ESTCOAST PIPELINE SEATT POKANE ORT LAN P A C I F IC N 0 R T H W E S T 1 P I P E L I N E SAN J UAN BASIN in a bad year profit-wise for the utilities. The financial problems of some distributors were serious enough to result in the merger of one Washington gas company with an electric utility and the disposal of some properties by another in order to ease its cash position. Sales outlook for gas The shakedown period appears to be over now, however, and distributors are concen trating on the problem of enlarging residen tial and commercial sales. Expansion in this market depends mainly on public education and aggressive salesmanship. There is evi dence that the latter is forthcoming. Adver tising budgets are being enlarged, and the transmission company is cooperating in the sales campaign. Announcement by the Pacific Northwest Pipeline Corporation of increases in whole sale gas rates presents a more serious prob lem. At 35 cents per Mcf,1 the average price to interruptible users when gas was intro duced into the Northwest, gas is competitive with fuel oil selling at $2.23 per barrel.2 With the pipeline increase in rates, the price to in terruptible consumers has gone up to about 40 to 43 cents per Mcf., equivalent to a $2.55 rate on Bunker C grade oil. Meanwhile, there has been a significant change in the price of re sidual fuel oil as recession, warm weather, and the competition of gas have taken their toll of the residual fuel oil market. The estimated de livered price3 of Bunker C fuel oil in Seattle, for example, has dropped from $3.57 at the beginning of 1958 to $2.794 per barrel, and large volume users may obtain discounts. At present, therefore, the difference in fuel prices is relatively small. Some distributors tried to hold the line on gas prices, hoping that, in the final decision, the Federal Power Commis sion would refuse to grant the transmission company’s increase.5 Most raised their rates under protest. In the long run, the outlook is for greater gas use. Available supplies are ample, and the cost of Canadian gas will remain stable over the life of the twenty-year contract with Westcoast Transmission Company, Limited. Future reductions in the price of wholesale gas are therefore possible, as the load is finally built up to the point where the pipeline is operating at maximum efficiency. Meanwhile, 1Mcf— thousand cubic feet; Mcf-d— thousand cubic feet per day. U tility sales are often quoted in therms, w ith one therm equal to 95-100 cubic feet. 1 Federal Power Commission, Natural Gas Investigation (Docket No. G-S80), Report of Commissioners N. L. Smith and H. Wimberley (U nited States Government Printing Office, 1948), p. 347. The price comparison is based on the caloric content of the fuels, with gas estim ated at 1,050 BTU per cubic foot, and oil a t 6.4 million BTU per barrel. s For the purposes of this article, the term delivered price refers to the terminal price, plus sales tax, plus an average delivery charge. The gas price is also a delivered price, including tax. ‘ Effective September 30, 1958 and still in effect as of December 1958. “ As of December 1958, the FPC had not rendered a final deci sion on the rate increase. 189 F ED E RA L R E S E R V E B A N K the long-run price trend of competitive fuels is upward. As the cost of meeting the demand for oil rises in future years, the prices of crude and of even the heavier fractions which supply the boiler fuel and heating markets are expected to rise. Additional hydroelectric capacity is also becoming increasingly expensive, even in the Northwest. Only about one-fifth of the re gion’s potential water power has been har nessed, and it is estimated that it would be economically feasible to develop about 50 or 60 percent of the potential. But the most de sirable sites are already developed, and con flicts over conservation, mineral, and Indian rights at present block several of the more likely dam sites. With prospects for rising cost curves for the major competitors of natu ral gas and the possibility of lower gas rates as consumption increases, the future of the distributing utilities should be easier. Several specialized industries have been attracted to the Pacific Northwest by the availability of natural gas. Heat-processing industries, such as glass making and metal fabrication, need the ease of temperature control which gas heat provides. Natural gas can also be used as a raw material for the petrochemical industry. The first company to 190 OF S A N FRA N CISC O take advantage of this fact was an anhydrous ammonia plant, which uses gas to produce fertilizer and other ammonia products for pulp and paper, mining, and smelter industries. While fuel costs are relatively unimportant to most industries, the presence of low-cost natural gas in ample quantities lowers two possible barriers to industry location and growth in the Pacific Northwest— high fuel costs and relative scarcity of energy sources. Northwestern factories can now obtain un limited supplies of natural gas at about the same cost as California firms, and the in creasing use of gas for space heating will free electricity for industrial uses, too. In spite of some unpleasant surprises for the utilities, natural gas has done well in the Northwest. When the introduction of gas was being considered by the Federal Power Com mission in 1953, it was estimated that by the fifth year of operation, the Northwest would be using 70 to 100 billion cubic feet per year. Actual sales by utilities during 1957, the first full year of operation, were 71 billion cubic feet. As industry and population grow, so will the demand for gas. The market is far from saturated, and there are still communities in the Northwest to which gas transmission and distribution systems can be extended. M O NTHLY REVIEW December 1958 B U SIN E SS INDEXES — TWELFTH DISTRICT 1 (1947-49 a v e ra g e = 100) Industrial production (physical volume)1 Petroleum* Crude Refined Steels Copper* Cement Year and month Lumber 1929 1933 1939 1949 1950 1951 1952 1953 1954 1955 1956 1957 95 40 71 100 113 113 116 118 116 121 120 107 87 52 67 99 98 106 107 109 106 106 105 101 78 50 63 103 103 112 116 122 119 122 129 132 54 27 56 100 112 128 124 130 132 145 156 149 1957 O ctober N ovem ber D ecem ber 102 103 100 101 101 101 132 131 124 19 58 Ja n u a ry F eb ru ary M arch A pril M ay Ju n e July A ugust Septem ber O ctober 107 105 104 97 103 100 102 109 110 113 100 97 95 94 93 93 92 93 93 93 122 114 119 119 124 123 127 128 129 130 Electric power Total nonagrtcultural employ ment Retail food prices ■< ■ Waterborne foreign trade*'5 Total mf'g employ ment Carloadlngs (num ber)1 Dep't store sales (value)2 Exports Imports 30 18 31 98 107 112 120 122 122 132 141 141 64 42 47 100 100 113 115 113 113 112 114 118 ISO 110 163 85 91 186 171 140 131 164 195 230 124 72 95 121 137 157 200 308 200 308 443 575 '24 97 125 146 139 158 128 154 163 172 105 17 80 93 115 116 115 113 103 120 131 130 29 26 40 108 119 136 144 161 172 192 210 224 "99 103 112 118 121 120 127 134 138 “ 55 97 105 120 130 137 134 143 152 157 102 52 77 94 98 100 100 100 96 104 104 96 161 116 139 152 149 143 129 128 128 223 222 216 138 137 137 155 152 151 84 95 93 135r 139 139 119 118 119 199 210 178 684 582 610 135 112 112 129 176 178 179 179 179 186 132 134 139 132 139 140 112 132 148 152 126 128 125 120 106 101 79 r 91 119 223 221 226 218 227 234r 232r 232 228 137 136 136 135 135 136 137 137 138r 138 150 149 148 147 147 148 149 150 150 151 94 86 87 87 90 90 84 92 94 81 132 135 137 142 142 143 140 148 140 141 121 121 123 125 124 124 124 123 123 123 163 149 160 171 193 190 180 181 393 358 422 445 468 617 602 BANKING AND CREDIT STATISTICS — TWELFTH DISTRICT ( a m o u n t s in m i l l i o n s o f d o l l a r s ) Condition Items of all member banks' Year and month Loans and discounts U.S. Gov't securities Demand deposits adjusted' Total time deposits Member hank reserves and related Items Bank rates on short-term business loans* 1929 1933 1939 1950 1951 1952 1953 1954 1955 1956 1957 2,239 1,486 1,967 7,093 7,866 8,839 9,220 9,418 11,124 12,613 13.178 495 720 1,450 6,415 6.463 6.619 6,639 7,942 7,239 6,452 6.619 1,234 951 1,983 9.254 9,937 10,520 10,515 11,196 11,864 12,169 11,870 1,790 1,609 2,267 6,302 6,777 7,502 7,997 8,099 9,120 9,424 10.679 3.35 3.66 3.95 4 14 4.09 4.10 4.50 4.97 1957 N ovem ber Decem ber 13,185 13.178 6,357 6.619 11,770 11,870 10,304 10,679 K ti 1958 January F ebruary M arch April M ay Ju n e July A ugust S eptem ber O ctober N ovem ber 13,106 13,002 12,860 12,979 12.977 13,197 13,142 13.356 13.350 13,419 13,591 6,573 6,884 7,075 7,605 7,546 7,632 7,670 7,984 7.827 7,846 8,026 11,601 11,305 11,225 11,570 11.292 11,278 11,744 11,774 11.860 12,176 12,395 10,761 10,992 11,183 11,406 11.530 11,724 11,779 11,817 11,776 11,836 11,725 Factors affecting reserves: Reserve bank credit* Commercial1 8 Treasury5 4 34 2 2 39 21 7 14 2 38 52 31 0 - 110 - 192 -1 ,1 4 1 -1 ,5 8 2 -1 ,9 1 2 -3 ,0 7 3 -2 ,4 4 8 -2 ,6 8 5 -3 ,2 5 9 -4 ,1 6 4 + 23 + 150 + 245 +1,198 + 1,983 + 2,265 +3,158 + 2,328 +2,757 +3,274 +3.903 4" 14 18 - 298 454 + + 447 480 — + 16 12 62 43 11 59 52 2 4 0 48 + - 258 427 180 391 203 409 384 15 378 517 305 + + + + + + + + + + + 180 298 253 371 154 531 302 193 157 726 398 _ _ — 4.95 4.81 4.80 + + + + + 4" + + + + + + Bank debits Index 31 cities*'” (1947-49 = 100)* Money In circu lation’ Reserve*1 1 6 18 31 14 + 189 + 132 39 + 30 + 100 96 — 83 175 185 584 2,026 2,269 2,514 2,551 2,505 2,530 2,654 2,686 42 18 30 115 132 140 150 154 172 189 203 + 37 23 2,652 2,686 202 217 — + + 137 17 11 2 90 22 4 46 31 57 31 2,662 2,520 2,530 2.574 2,456 2,494 2,474 2,621 2,451 2.612 2,727 211 203 198 206 193 212 211 204 210 215 208 — + + + + + + + 1 A djusted for seasonal variation, except where indicated. E xcept for d e p artm e n t store statistics, all indexes are based upon d a ta from outside sources, as follows: lum ber, California Redwood Association and U.S. B ureau of the C ensus; petroleum , cem ent, and copper, U.S. B ureau of M ines; steel, U.S. D ep artm en t of Com merce and Am erican Iron and Steel In stitu te ; electric power, Federal Power C om m ission; n onagricultural and m anufacturing em ploym ent. U.S. Bureau of Labor S ta tistics and cooperating sta te agencies; retail food prices, U.S. B ureau of L abor S ta tistics; carloadings, various railroads and railroad associations; and foreign trade, U.S. B ureau of the Census. 2 D aily average. * N o t a d ju ste d for seasonal variation* 4 Los Angeles, San Francisco, and S eattle indexes com bined. s Com m ercial cargo only, in physical volum e, for Los Angeles, San Francisco, San Diego, Oregon, and W ashington custom s districts; sta rtin g w ith Ju ly 1950, “ special categ o ry ” exports are excluded because of security reasons. • A nnual figures are as of end of year, m onthly figures as of last W ednesday in m onth, 7 D em and deposits, excluding in te rb an k a n d U.S. G ov’t deposits, less cash item s in process of collection. M onthly d a ta partly estim ated. 8 Average rates on loans m ade in five m ajor cities. 8 C hanges from end of previous m onth or year. 1 M inus sign indicates flow of funds o u t of the D istric t in th e case of com m ercial operations, and exces3 0 of receipts over disbursem ents in the case of T reasury operations. 1 E nd of y ear a n d end of m onth figures. 1 12 D eb its to to ta l deposits except in terb an k prior to 1942. D ebits to dem and deposits except U.S. G overnm ent and in te rb an k deposits from 1942. p— Prelim inary. r— Revised. 191
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