The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
MONTHLY REVIEW OF B U S IN E S S C O N D IT IO N S ISA A C B. NEWTON, Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. X Y I San Francisco, California, December 20,1932 No. 12 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 Declines in Twelfth District industrial and trade activity during November were greater this year than has been customary during No vember of other recent years. The condition of reporting city member banks improved some what during the month, although pressure con tinued evident in country areas. Demand for currency decreased, contrary to the seasonal tendency, during the second half of November and the first two weeks of December. Rainfall had approached the normal seasonal total in the Pacific Northwest in mid-December, but was less than normal in California and the Intermountain States at that time. Snowfall and unusually cold weather in California dur ing early December damaged winter vegetables and citrus fruits, particularly in northern and central California, and retarded the growth of forage on ranges. Winter wheat was damaged considerably by the cold weather in the Pacific Northwest. Volume of crops marketed was sea sonally smaller in November than in October, but approximated the movement in November, 1931. Agricultural prices receded further in November and the first half of December. Petroleum production in California changed little in the six-week period ending Decem ber 17, remaining considerably in excess of proration schedules. Refinery runs to stills de creased slightly, and crude oil stocks continued to rise. Output of lumber decreased more than seasonally from October to November. Some decline was recorded in cement production, after allowance for seasonal factors. The value of both engineering contracts awarded and building permits issued was considerably en larged as a result of the letting of Golden Gate Bridge contracts. About the seasonal decreases in employment were reported. Few wage re ductions were reported in November. Department store sales were markedly smaller in November than in October, although some increase is usually recorded between these months. Freight carloadings declined more, and automobile registrations less than seasonally. There was a decline in intercoastal traffic fol lowing an advance in the three preceding months. Reserve bank credit employed in the Twelfth District decreased considerably in the five weeks ending December 21, reflecting princi pally an inflow of funds from other parts of the United States and Treasury expenditures in excess of collections in the District. Reserve balances at the Federal Reserve Bank of San Francisco were further increased during this period as time deposits of member banks in creased moderately. Both loans and invest ments of reporting member banks increased slightly from mid-November to December 21. Agriculture Unusually low temperatures were recorded throughout the Twelfth District during the first half of December. Crop damage was re ported in northern and central California where winter vegetable crops and citrus fruits were struck by frost. In the Pacific Northwest the low temperatures resulted in considerable dam age to the winter wheat crop, which did not have the usual protective covering of snow. Approximately the normal seasonal amount of rain and snow had fallen in Idaho, Oregon, and Washington by December 15, but seasonal pre cipitation was below normal and considerably less than a year ago in California on that date. Ordinarily, December, January, February and March are the months of heaviest rainfall in California, while the season of heavy rainfall in the Pacific Northwest begins in November and ends in April or May. Although estimates of cash income from 1932 crop production are not yet available, it is clear that the figures will be well below those of a year ago, both the volume of marketings and prices received thus far having been consid erably lower this year than last. Unsatisfac tory marketing conditions have been the major factor contributing to this condition, since the volume of production was larger tha.n in 1931. The 1932 commercial apple crop in the prin cipal apple producing states of the District was estimated to be 36,036,000 bushels on Decem ber 1. Last year, 36,588,000 bushels of apples were harvested commercially in these states. The total crop of apples this year is five per cent smaller than in 1931. Carlot shipments for the season to December 1 were also about five per cent smaller than last year. The estimate of the California Navel orange crop as of December 1 was about the same as a month earlier, 14,992,000 boxes. During the 1931-1932 shipping season ended June first, 13,247,850 boxes of Navel oranges were mar keted. The supply of lemons available for mar keting this year is estimated to be 6,507,600 boxes, compared with 5,073,840 boxes actually marketed during the 1931-1932 season. An un determined amount of damage to the citrus fruit crop in central California resulted from the freezing temperatures of early December. Receipts of butter and eggs at Pacific Coast markets during November continued at the low volumes of October. Heavy seasonal with drawals from storage have been necessary, and storage stocks of butter and eggs on Decem ber 1 were smaller than on the same date in either of the past two years. During the second half of November, advances in butter and egg prices at Pacific Coast markets stimulated ship ments of these products from outside the Dis trict, a factor no doubt partly responsible for declines in local quotations during the first ten days of December. W ith the exception of California, where rains and warmer weather are needed to accelerate the growth of range feed, the condition of live stock ranges in the Twelfth District is gen erally satisfactory and much improved as com pared with a year ago. Light snowfall on desert ranges during early December furnished water for sheep and opened these areas for winter grazing. The condition of cattle and sheep is generally satisfactory throughout the District A g r ic u ltu r a l M a r k e tin g A c tiv ity — Carlot Shipments Apples and Pears. Citrus Fruit.......... Vegetables ........... Exports Wheat ( b u .) .......... Barley (bu.) ........ Receipts Cattle* .................. Hogs* .................... Sheep*..................... Eggs (cases) ........ Butter ( l b .) .......... Wheat (carlots) .. Storage Holdings (end of month) Wheat ( b u .) .......... Beans (bags) ........ Butter (lb.) .......... Eggs (cases) ........ —Novembei 1932 1931 5,460 6,090 5,750 5,864 6,165 6,523 /— Season to Date — > 1932 1931 40,792 36,138 5,864 5,750 16,406 15,093 348,599 636,314 2,302,615 235,526 ,034,447 13,856,368 ,047,934 2,647,147 48,529 166,554 207,488 92,636 4,868,141 3,511 64,735 193,060 256,840 134,311 5,660,826 5,211 484,372 540,528 ,854,502 1,596,264 ,620,335 4,350,061 ,489,041 1,724,424 ,503,280 72,751,367 23,680 28,948 3,054,000 2,183,234 1,389,309 133,129 8,339,000 2,532,916 1,487,199 141,510 * Receipts at Los Angeles not included. December, 1932 M O N T H L Y R E VIEW OF BUSINESS CONDITIONS 90 and hay and grain for supplemental feeding are more plentiful this winter than a year ago. Receipts of cattle and sheep at Pacific Coast markets have been somewhat smaller in number than a year ago, while the number of hogs re ceived has been considerably larger. Feed con ditions were much better throughout the grazing season in 1932 than in 1931, resulting in heavier average weights per head of live stock shipped to market. It is probable, there fore, that there will be little difference in total weight between the cattle and lambs marketed this year and those marketed a year ago. Sheep and cattle in feedlots west of the Con tinental Divide are less numerous than a year ago and receipts of sheep at Pacific Coast mar kets during November and early December were drawn from a more widespread area than in 1931. Industry Industrial activity in the Twelfth District receded further from October to November, ap proaching the mid-year low levels. Declines in production of lumber and cement were larger, while the decrease in output of flour was smaller than is customary during November. The value of building permits and construction contract awards was higher in November than in October. Electric power production de creased seasonally. There was little change in the petroleum situation. Employment was reported to have been re duced considerably during November in most parts of the District, principally because of sea sonal decreases in both agricultural and inE m p lo y m e n t— -Oregon— No. of No. r~ Employees —* No. r-Employees — of Nov., Nov., of Nov., Nov., 1931 Firms Industries Firms 1932 1932 1931 All Industries*----- 1,257 130,639 141,704 125 14,833 16,508 (-7.8) -10.1) ( Stone, Clay, and Glass Products.. 61 4,588 5,905 Lumber and Wood (— 22.3) 7,540 8,693 48 Manufactures . . 138 12,738 16,544 (— 23.0) ( - -13.3) 1,114 1,763 1,764 1,268 8 Textiles................ 17 (— .1) ( - -12.1) Clothing, Millinery, 272 310 and Laundering. 167 11,485 12,600 7$ (—8.8) ( - -12.3) Food, Beverages, 32 1,517 1,418 and Tobacco ... 306 33,174 32,323 (2.6) (7.0) Public Utilities. . . 45 47,200 51,854 (— 9.0) .. Other Industriesf. 515 59,405 65,083 (— 8.7) 4,390 7,486 7,485 30 4,819 Miscellaneous . . . 53 (— 8.9) (a) Wholesale and .. Retail................ 207 33,934 37,684 t 10.0) *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. JLaundering only, (a) Less than one-tenth of one per cent. Figures in parentheses indicate percentage change from Novem ber, 1931. December, 1932 FEDERAL RESERVE AG EN T A T SAN FRANCISCO dustrial activities. The percentage decrease in the number of industrial workers employed in California was about as large as that usually recorded from October to November. Large seasonal reductions in the number employed in canning activities were reported for that state and some workers were released from the tex tile, clothing, printing, and motion picture in dustries. Employment in the retail trades increased by a smaller amount than in Novem ber of most recent years. Average weekly earn ings declined slightly during the month. As compared with November, 1931, the number of industrial employees declined 8 per cent, a somewhat larger year-period decrease than was reported for October but smaller than in any previous month of this year. Output of crude oil averaged lower in the six weeks ending December 17 than in imme diately preceding weeks when capacity flow tests conducted in two of the principal Los A n geles basin fields contributed materially to a fairly large excess over proration schedules. Additional tests had been expected to take place in November, but were postponed. Storage stocks of crude oil increased further and con tinued to be larger than in the corresponding month of the preceding year. Crude oil runs to refinery stills decreased slightly from October to November, but gasoline inventories did not change appreciably. Lumber mill operations declined more than seasonally from October to November in the western pine and Douglas fir producing areas, while about the customary increase was re corded in the less important California red wood region. Despite the decrease for the District as a whole, this Bank’s index of total District production remained somewhat above the lowest levels of the current depression, reached late last spring. Shipments and orders of lumber receded less than did production, thereby continuing earlier reductions in inven tories. A sharp increase in the value of engineering contracts awarded in November was brought about almost entirely by the letting of con tracts amounting to 23 million dollars for the Golden Gate Bridge project. These contracts to the amount of about 4 million dollars cov ered construction to be undertaken in connec tion with the approach span located in San Francisco, and that amount was also included in building permits figures reported for San Francisco, raising the value of permits in that city to the highest point reached since October, 1928. Aggregate value of building permits is sued in 90 cities of the District nearly doubled between October and November, the advance being much more than accounted for by the large increase of San Francisco figures. Con 91 tracts awarded for most other forms of public construction and for commercial and industrial building were smaller in value in November than in October. Federal Government projects continued to be initiated on a larger scale than in most earlier months of the year. Cement production in the Twelfth District receded more than seasonally from October to November and this Bank’s adjusted index de clined to 40 (1923-1925 average = 100), as comPER CENT CEMENT PRODUCTION—Twelfth District Index adjusted for seasonal variations (1923-1925 average = 100). Latest figure, November. pared with 56 in November, 1931. That index reached a peak in January, 1929, subsequent to which it moved downward almost continuously to 35 in February, 1932, the lowest point recorded. A sharp advance took place in the following two months, since when there has been a resumption of the decline. Shipments of cement decreased about as rapidly as produc tion but from a lower level, and inventories in creased considerably in 1930 and 1931, reduc tions having occurred only in recent months. Present stocks are approximately 15 per cent smaller than in November, 1931. Industry— Indexes of daily average production, adjusted for seasonal variations (1923-1925 daily average*»!00) -1931------- * ,---------- 1932 Nov. Oct. Sept. Aug. Nov. Oct. Sept. General 54 42 40 31 51 Carloadings— Industrial.,. 40 51 152 148 155 Electric Pwr. Production. 1371Í 137 139 135 Manufactures 37 36 47 54 33 33 36 131 127 131 136 142 146 Refined Mineral Oilst •. . Flour ................................ 78 93 109 115 117 102 75 Slaughter of Livestock.. 91 92 98 102 88 94 61 40 41 46 46 56 63 132 115 91 Wool Consumption! 139 144 128 Minerals 76 77 76 Petroleum (California) f. 71ff 72 72 73 67 58 68 41 Lead (United States)!.. 45 38 33 41 39 40 Silver (United States) $. 37 40 36 36 Building and Construction§ 62 42 47 32 44 28 33 Building Permits— Value 10 24 26 30 10 10 Larger Cities................ 14 33 Smaller Cities.............. 13 13 28 29 13 13 Engineering Contracts Awarded— Value 52 63 69 78 107 Total ........................ 83 63 104 121 189 91 122 123 Excluding Buildings. 150 tN ot adjusted for seasonal variations. ^Prepared by Federal Re serve Board. § Indexes are for three months ending with the month indicated, ftPreliminary. 92 December, 1932 M O N T H L Y R EVIE W OF BUSINESS CONDITIONS Operations at flour mills decreased less than seasonally from October to November. Inven tories were reported to have changed little, al though a reduction customarily takes place in November. Reporting millers’ stocks of wheat continued to increase and were larger than in any month since November, 1930. Trade A decrease in the value of department store sales during November was contrary to the movement usual during that month. Season ally adjusted indexes of sales in Los Angeles, RETAIL TRADE—Twelfth District Percentage changes in value of sales and stocks with no adjustment for price changes ■■ > f------------ 1932 compared with 1931 ,----------NET SALES---------- >STOCKS January 1 to end November of NovemberNovember Department Stores . . . . — 26.7 ( 64) — 24.4 ( 63) — 21.5 (48) — 20.2 ( 7) Los Angeles ............ — 30.8 ( 9) — 23.9 ( 9) Other Southern Calif. — 31.1 ( 7) — 26.0 ( 7) — 18.0 ( 4) Oakland .................... — 21.4 ( 4) — 22.7 ( 4) — 22.4 ( 4) San Francisco ........ — 23.1 ( 7) — 20.9 ( 7) — 19.8 ( 7) Other Northern Calif. — 20.8 ( 8) — 22.2 ( 8) — 10.7 ( 8) Portland!.................. — 23.3 ( 7) — 30.9 ( 6) — 33.4 ( 7) Seattle ...................... — 21.1 ( 5) — 29.0 ( 5) — 26.2 ( 5) Spokane .................... — 31.4 ( 4) — 24.5 ( 4) — 18.3 ( 4) Salt Lake C ity ........ — 31.6 ( 4) — 26.7 ( 4) — 16.9 ( 3) Apparel Stores ............ — 23.7 ( 25) — 24.6 ( 21) — 22.9 (14) — 27.2 (22) Furniture Stores.......... — 34.6 ( 33) — 29.6 ( 31) All Stores .................... — 27.4 (122) — 25.0 (115) — 22.2 (84) flncludes five apparel stores which are not included in District department store total. Figures in parentheses indicate number of stores reporting. Note: These figures take no account of operating costs. San Francisco, and Oakland were considerably lower than at any time during their decline of the past three years, while the indexes for Seattle and Salt Lake City stores approxi mated their late summer lows. The index for the entire District declined sharply to 63 per cent of the 1923-1925 average, compared with the year’s previous low point of 70 recorded in May. In November, 1931, the index stood at 92. An increase in department store inven tories was larger than is usual from October to November and was the first, after allowance for seasonal factors, since August, 1931. The value of inventories currently is about 30 per cent below average inventories carried in 1929. The number of retail sales transactions was 9 per cent smaller in November, 1932, than in October, 1932, and 13 per cent smaller than in November, 1931. PER CENT CARLOADINGS—Twelfth District Indexes adjusted for seasonal variation (1923*1925 average=100). Latest figures» November, Freight carloadings receded slightly more than seasonally during November. The decline in industrial carloadings was greater than in November of most other recent years, while the decrease in shipments of merchandise and miscellaneous freight was somewhat less. As shown on the accompanying chart, merchan dise loadings have been sustained at a much higher level, relatively, than have total load ings during the past three years. WHOLESALE TRADE —Twelfth District Percentage changes in value of sales with no adjustment for price changes November, 1932 t------compared with------- \ D istr ib u tio n a n d T r a d e — Carloadings^ Total .................... Foreign Trade0 Totalf .................... Imports'!" ................ Exports .................. Intercoastal Trade Total ...................... Westbound ............ Eastbound ............ Retail Trade Automobile SalesJ Total .................. Passenger .......... Commercial........ Department Store SalesJ ................ Stocks§ .............. ------------- 1932--------------s ,---------1931--------- x Nov. Oct. Sept. Aug. Nov. Oct. Sept. Indexes adjusted for seasonal variations f-------(1923-1925 average=100)-----67 59 71 52 66 58 59 72 82 74 68 78 84 73 46 39 50 47 38 51 46 40 49 58 53 61 64 58 67 75 63 81 58 66 57 62 70 58 55 53 54 49 61 47 55 74 51 71 78 67 80 86 76 32 30 52 28 26 50 33 31 47 29 28 48 45 41 86 46 41 89 58 54 97 63 63 75 61 73 63 73 63 92 82 95 84 92 86 41.9 13.9 45.5 15.7 41. 15. r'" Collections# Regular .......... 41.8 Installment .. . 13.4 4 43.3 14.7 39.6 14.0 1 17 • * 38.6 14.4 IDaily average. “Indexes are for three months ending with month indicated. fExcluding raw silk. §At end of month. #Per cent of collections during month to amount outstanding1 at first of month. Automobile Supplies Drugs ........................ Dry Goods................ Electrical Supplies . . Furniture.................. Groceries .................. Hardware ................ Shoes ........................ Oct., 1932 . . —20.3 . . — 5.1 . . — 11.4 . — 3.4 —23.4 . . — 12.6 . . —23.6 Nov., 1931 —41.8 —21.5 — 9.0 —21.5 — 34.0 —38.7 — 14.7 — 19.2 — 8.9 — 9.1 Cumulative 1932 compared with 1931 — 39.8 — 20.5 — 19.7 — 31.0 —42.3 — 36.0 — 18.6 — 28.7 —26.1 — 20.1 All Lines ........................ — 17.7 —25.3 Note: These figures take no account of operating costs. Value of wholesale trade was 8 per cent smaller in November than in October. This decline was slightly less than seasonal, reflect ing comparatively small decreases in sales of reporting drug and grocery houses. A reduc tion of 18 per cent from the corresponding month in the preceding year was the smallest recorded since June, 1931. Decreases in registrations of both new pas senger and commercial automobiles were smaller than is usual from October to Novem ber and this Bank’s adjusted index of the total December, 1932 number rose from 28 (1923-1925 average = 100) in the earlier month to 32 in November. Registrations were 30 per cent lower than in November, 1931. Intercoastal traffic through the Panama Canal decreased more than seasonally in No vember. Most of the advance of the past few months was retained, however, and total ship ments were larger than in the corresponding month of the preceding year for the first time since December, 1929. The November decline in eastbound traffic, which comprised approxi mately three-fourths of total tonnage, was rela tively small, in part reflecting increased lumber and petroleum shipments. Prices Commodity prices as a whole did not change much during November, and for the month averaged the same as in June, when the whole sale price index of the Bureau of Labor Sta tistics was the lowest since 1911. During the first half of December most of the leading weekly indexes reached new low levels for their periods of compilation. In the following table are presented price relatives for several important commodities produced in this region. A representative price in November, 1929, is considered to be 100, and the figures for other dates are expressed as per centages of the November, 1929, price. Most of these commodities are currently selling for conCOMMODITY PRICES Expressed as percentages of November, 1929, quotations. Nov., 1929 High Low Nov., Nov., Nov., Nov., Base 1920 1921 1925 1930 1931 1932 100 Wheat .............. 248 80 124 54 56 30 Barley .............. 100 237 80 107 66 73 37 100 134 94 191 Oranges............ 131 70 74 100 177 95 104 Apples .............. 73 58 48 119 100 61 73 Cattle .............. . 58 73 46 Lambs .............. 100 128 116 61 63 47 43 Butter .............. 133 65 113 100 79 67 56 Eggs ................ 100 170 49 113 70 72 83 o2 Prunes .............. 100 154 60 50 40 36 400 100 257 Raisins.............. 111 86 105 62 Flour ................ 100 190 99 118 77 68 61 100 Canned Peaches 94 166 88 72 66 52 Sugar ................ 100 104 109 526 89 82 95 Petroleum, Crud< 100 198 136 125 104 76 81 371 Gasoline............ 100 356 161 89 112 88 Copper .............. 100 100 67 81 30 58 38 Lumber ............ 100 215 60 95 76 64 51 News Print . . . . 100 206 111 114 85 77 69 Cement ............ 100 189 171 136 100 93 99 siderably less than half the 1929 quotations. Prices in 1929 were generally somewhat lower than in 1925, but slightly above the lowest quotations of 1921. Present prices for nearly all commodities listed represent but a small fraction of the high levels reached in 1920. During late November and early December the course of agricultural prices, with few ex ceptions, was generally downward. Wheat prices as measured by the December contract at Chicago reached an all-time low of 41 y 2 cents per bushel on November 25. Since that date 93 FEDERAL RESERVE A G EN T A T SAN FRANCISCO prices have recovered somewhat and on De cember 20 this contract was quoted at 43^2 cents per bushel. Prices for oats and rice were relatively stable during the month under re view, while barley prices improved in late N o vember in anticipation of a demand for this grain for brewing purposes. Cotton and bean prices declined in November. District quota tions for hay, potatoes, and hops increased. Quotations for apples produced in this District did not change during November, but were below their level in the autumn of 1931. Among the dried fruits, apples and prunes de clined slightly in price during November, while apricot and raisin quotations were compara tively stable. Since the establishment of open ing prices in early October, quotations for California canned fruits have changed little. Butter and egg prices, after increasing sea sonally during November, declined as is usual in December. Cattle prices declined during N o vember and early December, reaching new low levels for the post-war period. Hog prices de clined, while lamb prices increased slightly. Copper and silver prices reached record low quotations in early December. On Decem ber 14 sales of copper were made at 4 % cents per pound and on December 3 silver was quoted at 2 4 cents per ounce. Zinc and lead prices changed little, remaining at levels somewhat higher than the low prices reached in July. Crude oil prices in California have been maintained at the levels established last June B a n k D e b its* - Cumulative Nov., 1932 18,135 Arizona Phoenix .......... .$ California Bakersfield........ 8,755 Berkeley .......... 11,141 Fresno .............. 17,836 Long Beach 20,609 Los Angeles , 469,033 Oakland ............ 168,701 Pasadena .......... 16,242 Sacramento 31,496 San Bernardino. 4,742 San Diego ........ 27,122 San Francisco .. 526.156 San Jose .......... 14,082 Santa Barbara .. 7,489 Stockton ............ 10,536 Idaho 9,271 Nevada 3,053 Oregon 3,392 Portland ............ 99,078 Utah 11,640 Salt Lake City.. 41,375 Washington Bellingham ___ 3,654 3,874 103,762 Spokane ............ 23,914 15,804 7,153 Total ............ $1,678,045 *In thousands of dollars. $ Nov., 1931 25,865 f---- Eleven Months-----\ 1932 $ 219,966 1931 $ 328,322 7,337 37,160 665,931 20.673 12,526 14,879 83,101 150,849 171,807 281,353 6,027,990 1,791,934 228,569 413,017 63,640 363,829 7,090.252 173.550 98,865 139,042 115,768 183,007 248.328 436,090 8,576,540 2,035,525 324,958 511,587 94,345 511,885 10,347,045 267.820 142,114 187,993 12,104 106,531 145,832 8,393 77,869 109,900 4,806 136,032 41,514 1,086,667 59,794 1,570,341 13,638 54,144 102,895 461,001 153,156 645,802 5,387 7,841 144,094 35,788 25,491 11,132 49,303 57,467 1,394,087 300,790 223,925 85,084 72,820 99,629 2,074,290 448,247 356,208 131,663 9,880 15,469 22,361 29,911 618,745 159,714 23,963 42,276 $2,165,540 $21,284,897 $30,179,009 94 December, 1932 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS and are higher than a year ago. Their relative stability has not been reflected in gasoline prices during recent weeks. During early De cember small producers in the Los Angeles area advanced the price of third grade gaso line from 12y2 cents to \Z y 2 cents per gallon, 4 /1 0 of a cent per gallon less than the price charged for the same grade of motor fuel by the major companies. In Portland and Seattle the tank wagon price of first grade gasoline was reduced y 2 cent per gallon recently to meet the competition of gasoline from the mid-Continent fields. The few available representative quotations for lumber show little change in November. For some time quoted prices have not been entirely satisfactory as indicators of current prices because of the large volume of transac tions completed at less than quoted levels. country banks suspended operations in N o vember, and 14 were closed during the first 21 days of December. Of those closed in Decem ber, 13 were located in Nevada and had been inoperative under a statewide banking morato rium since November 1. M IL L IO N S OF D O LLA RS Credit Situation Demand for Reserve Bank credit for use in the Twelfth District decreased during Novem ber and the first three weeks of December. A t the same time there was a slight increase in commercial loans and a considerable increase in security holdings of reporting member banks. The funds used to repay borrowings at the Re serve bank and to increase investment holdings SUPPLY OF AND DEMAND FOR BANKING FUNDS Twelfth District Changes in millions of dollars during the weeks indicated Week Ending 1932 November November November December December December Week Ending 1932 November November November December December December SUPPLY Monetary Gold Treasury Stock Operations + 7.4 1 6 .......... — 5.0 23 ........... — 2.7 +5.1 3 0 .......... — 6.0 + 1.0 7 ........... +19.0 + 2.7 14 ........... + .9 + 3.6 21 ........... — .1 +9.3 1 6 .......... 2 3 .......... 3 0 .......... 7 ........... 14 ........... 21 ........... Reserve Bank Credit — 3.2 — 4.7 — 2.9 — 10.8 — 10.4 — 4.9 Total Supply — .8 — 2.3 — 7.9 +10.9 — 5.9 + 4.3 DEMAND Member Demand Bank Unexpended for Reserve Capital Total Currency Deposits Funds, etc. Demand — 2.6 + 1.5 + .3 — .8 — 1.7 — 1.3 + .7 — 2.3 — 4.0 — 3.8 — .1 — 7.9 +4.2 + 7.2 — .5 +10.9 — 3.9 — 1.2 — .8 — 5.9 +2.7 + .8 + .8 +4.3 became available as a result of (a) a movement of funds into this District from other parts of the United States on account of non-Governmental commercial and financial operations, and (b) a continued excess of Federal Government expenditures over collections in the Twelfth District. Currency circulation declined contrary to seasonal expectations, during the four weeks ended December 14, but increased in the week of December 21, showing little net change dur ing the five weeks ended on that date. During the corresponding five-week period in past years, the amount of currency in circulation has usually increased considerably. Seven small EARNING ASSETS—Federal Reserve Bank of San Francisco Monthly averages of daily figures. Latest figures are averages of first 21 days in December. The movement of funds into and out of the Twelfth Federal Reserve District incident to non-Governmental commercial and financial transactions has been in approximate balance since April this year. The flow was outward FEDERAL RESERVE BANK OF SAN FRANCISCO (I n m illion s of dollars) Total Bills and Securities ........ Bills Discounted...................... Bills Bought............................ United States Securities........ Total Reserves ............................ Total Deposits ............................ Federal Reserve Notes in Circulation................................ Ratio of Total Reserves to De posit and Note Liabilities Combined ................................ ............. Condition ... —\ Dec. 21, Dec. 14, Nov. 16, Dec. 23, 1932 1932 1932 1931 149 159 156 185 24 30 67 59 2 2 2 32 123 123 59 123 247 239 213 250 153 151 153 163 228 64.9 226 63.0 232 55.7 233 63.0 during November, but reversed itself in D e cember and a net movement into the District of considerable proportions was recorded dur ing the first three weeks of the month. The unfavorable balance of payments for November was accounted for largely by net losses to the New York District, which has been continu ously gaining on balance from this District during the past few months. Part of the funds thus sent to New York were used to purchase Government and other securities in that market, and part were placed on deposit with other banks. The withdrawal of these latter funds by local banks was responsible for a large part of the net movement into the District during the three weeks ended December 21. The funds involved in these movements have been made available chiefly from two sources. First, and much the larger of the two, come Federal Government expenditures in excess of December, 1932 FEDERAL RESERVE A G E N T A T SA N FRANCISCO collections within the Twelfth District. These figures have represented a large and almost con stant accretion of funds to this District during the past three years. Such additional funds REPORTING MEMBER BANKS—Twelfth District ( i n m illio n s o f d ollars) -— Condition - —■> Dec. 21, Dec. 14, Nov. 16, Dec. 23, 1932 1932 1931 1932 1,721 1,854 1,731 Loans and Investments— Total. . 1,740 970 965 1,111 970 Loans— Total ........................ 290 242 241 240 On Securities...................... 821 730 723 729 All O th er............................ 743 756 770 761 Investments— Total .............. . 422 401 436 427 United States Securities.. . 342 334 334 334 Other Securities ................ 87 88 88 89 Reserve with Reserve Bank. 635 571 571 568 Net Demand Deposits.............. 930 892 921 911 Time Deposits .......................... 185 113 181 189 Due from Banks........................ 170 196 185 201 Due to Banks ............................ 56 22 46 Borrowings at Reserve Bank.., 15 reach the banks largely through the deposit of Government checks by individuals or business concerns receiving them in payment for services or commodities, or as loans. The deposits thus made require only a relatively small legal re serve and the remainder, if not drawn down by the depositor, is available to the bank receiving the deposit for use in extending loans, purchas ing securities, or making deposits with other banks. If the depositor does check out his funds, as is usually the case, they soon find their way back to some bank and thus become a part of banking funds again. Second, comes the receipt by city banks of 95 surplus funds from country banks within the District. Since the middle of 1932, deposits of country banks with District city banks have been increasing, although their volume has been well below that of other recent years. A t the same time the amount loaned by city banks to customers within the District has been declin ing and a surplus of funds has tended to ac cumulate in reserve cities of the District despite the appearance of banking tension at specific points. Since funds placed in the New York market have been as readily available as those deposited with the Federal reserve bank, there has been some urge to place these tempo rarily surplus dollars in New York at whatever return could be obtained rather than in the Federal Reserve Bank of San Francisco at no interest return. In this manner a certain amount of the excess reserves currently re ported by New York city banks has been con tributed by Twelfth District banks. On December 15, banks of this District were allotted 14 million dollars of the ¿4 per cent one-year certificates of indebtedness and 29 million dollars of the 2 % per cent four-year Treasury notes issued by the Federal Govern ment at that time. The allotment was paid for by an exchange of maturing securities to the amount of 19 million dollars, plus credits of 23 million dollars to W a r Loan Deposit accounts, plus one million dollars in cash. 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 activity declined in November by somewhat more than the usual seasonal amount. Changes in factory employment and payrolls, reported for the middle of the month, were largely seasonal in character. Prices in whole sale commodity markets were somewhat lower, on the average, in November than in October, and declined further during the first three weeks of December. Volume of industrial production, as measured by the Board’s seasonally adjusted index, declined from 66 per cent of the 19231925 average in October to 65 per cent in No vember, compared with a low level of 58 per cent in July. Output at woolen mills, silk mills, and shoe factories declined in November from the relatively high levels of the autumn, while cotton mills continued active. Lumber produc tion declined by considerably more than the usual seasonal amount. Steel production de creased during November and the first three weeks of December, while automobile output increased considerably in connection with the introduction of new models. The number employed at factories declined somewhat from October to November, reflect ing in large part developments of a seasonal character. Working forces in the woolen, silk, shoe and canning industries were reduced, while at car building shops, and at factories producing automobiles and agricultural implements, there were increases in employment. Construction contracts awarded up to December 15, as re ported by the F. W . Dodge Corporation, indi cate for the last three months of the year a decline from the third quarter of somewhat more than the usual seasonal amount, following a non-seasonal increase from the second to the third quarter. Estimates of the Department of Agriculture, based on December 1 reports indicate a cotton crop of 12,727,000 bales, about 800,000 bales larger than the estimate a month earlier, but 4,400,000 bales smaller than last year’s unusu ally large crop. Wheat, tobacco, flaxseed, and other leading cash crops are also considerably smaller than a year ago, while feed crops are substantially larger. Acreage of winter wheat planted this fall was slightly smaller than a year ago, and condition of the crop on December 1 was unusually poor, according to the Depart ment of Agriculture. Distribution. Distribution of commodities 96 December, 1932 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS by rail decreased seasonally from October to November, while the dollar volume of depart ment store sales, which ordinarily expands at this season, showed a decline. Wholesale Prices. During early November the general level of wholesale commodity prices advanced somewhat, reflecting chiefly increases in prices of domestic agricultural products; in ume of member bank reserve balances. On D e cember IS there was a further increase of $95,500,000 in the stock of monetary gold in con nection with the current payment by Great Britain on the war debt. This amount of gold was earmarked in London for account of the Federal Reserve Bank of New York, and an equivalent credit was given by that bank to the PER CENT PER CENT 160 i 120 V ^S\ 80 _ . ^ ^ T O I rAL v % \ RESIDENTIAL 1927 INDUSTRIAL PRODUCTION Index numbers of industrial production adjusted for seasonal variations (1923-1925 average=100). the latter part of the month, however, prices of livestock, cotton, and grains declined consider ably; and, during the first three weeks of De cember, further declines in livestock prices were reported. By the third week of December prices of textiles, copper, and silver, as well as of livestock, were substantially lower than in the middle of November and the general aver age of wholesale prices was at a level slightly 1928 1929 1 1930 1 - 1931 1932 VALUE OF BUILDING CONTRACTS AWARDED Indexes based on three-month moving averages of F. W. Dodge data for 37 Eastern states, adjusted for seasonal variations (1923-1925 average = 100). United States Treasury. This transaction, to gether with other fiscal operations on Decem ber 15, resulted in a temporary addition of $100,000,000 to the reserves of member banks which were subsequently reduced by Christmas currency demands and an increase in Treasury deposits with the reserve banks. Loans and in vestments of reporting member banks declined by more than $100,000,000 between Novem- PER CENT WHOLESALE PRICES Index of United States Bureau of Labor Statistics (1926=100). below that prevailing before the advance that occurred last summer. Bank Credit. During the four weeks ended December 14, there was an addition of $85,000,000 to the country’s stock of monetary gold. The funds derived from this source were util ized in meeting an increase in the demand for currency, which was smaller than usual at this season, in further reducing by $23,000,000 the indebtedness of member banks to the reserve banks, and in increasing by $25,000,000 the vol- FEDERAL RESERVE BANK CREDIT AND PRINCIPAL FACTORS IN CHANGES Monthly averages of daily figures. Latest figures are averages of first 20 days in December. ber 16 and December 14, reflecting reductions in the banks’ holdings of United States Govern ment securities and in loans other than security loans. Loans on securities increased, both at New York City and at other reporting member banks. Money rates in the open market de clined further, rates on 90 day bankers’ accept per cent, ances declining from ^2 per cent to and rates on prime commercial paper from a range of lJ^-1^4 Per cen* to a range of l } 4 - l / 4 per cent
@FedFRASER