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MONTHLY REVIEW OF BUSINESS CONDITIONS Federal Reserve Bank of San Francisco Vol. X X San Francisco, California, December 21,1936 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 Business recovery, which continued in other parts of the United States, was checked in November in the Tw elfth Federal Reserve District as a result of the maritime strike. The direct effects of the cessation of water-borne commerce were felt principally by producers whose agricultural and industrial products are normally marketed by water. A m ong the more important products shipped by water are wheat, barley, cotton, beans, dried and canned fruits, lumber, and flour. Industries which de pend upon cargo shipments for their supplies of raw materials were also affected. Supplies such as steel and certain manufactured prod ucts and industrial raw materials were cut off or received by rail at increased cost. The shortage of raw materials and loss of markets contributed to a reduction in indus trial and building operations. After allowance for customary seasonal influences, industrial employment in the three Pacific Coast states was reduced by 1 percent and pay rolls by 2 percent between m id-October and m id-Novem ber. Shrinkage in income o f workers directly involved in maritime commerce, together with the small curtailment in pay rolls received by industrial employees and a reduction in re ceipts from the sale of agricultural products, apparently had relatively little effect on retail purchases. Department store sales increased by the customary seasonal amount and this bank's seasonally adjusted index of retail fur niture store sales increased 5 percent. There was, however, a smaller expansion in retail purchases in this district than in other parts of the country. Credit extended by city banks increased considerably during Novem ber and the first half of December. This reflected mainly pur chase of new Government securities on De cember 15, but there was also some extension of additional loans for commercial and indus trial purposes and on real estate. The usual seasonal increase in demand for currency took place during the week immediately preceding Christmas. Agriculture W arm dry weather during November aided harvesting of a few late field and fruit crops but interfered with soil preparation for wintersown crops and delayed germination of grains already planted. Conditions were re lieved somewhat by rain and snow in early December but are still unsatisfactory. Marketing conditions were also unfavorable during November, and it is estimated that agricultural income increased over the year period by less than in other recent months. W ater-borne shipments were at a standstill, a factor which affected not only movement from seaports but also the movement from country terminals to the waterfront. On the other hand, prices of several important com modities advanced during this period and later sales of products may give higher aggregate returns. Because of dryness, acreage planted to win ter wheat in W ashington, Oregon, and Idaho is expected to be much smaller than a year ago. This does not, however, necessarily mean that total wheat production in the Pacific North west will be smaller in 1937 than in 1936, since any reduction in acreage or abandonment of fall-sown wheat is likely to be offset by in creased planting in the spring. The current navel orange crop in California, marketing of which started in November, is expected to be slightly larger than production last season. The crop is reported to be of un usually good quality. From now on, severe competition in eastern markets is expected from the large Florida winter orange crop. The average f.o.b. price received by shippers in November was $2.83 per box, compared with $2.35 per box in November 1935. Volum e of oranges shipped was about the same in the two months. Production estimates indicate that the 1936-1937 California lemon crop will be about 7 percent larger than output last season. A l though eastern shipments during November were the largest on record for that month, prices averaged about 25 percent below the 90 M O N T H L Y REVIEW OF BUSINESS CONDITIONS December 1936 comparatively high level of November last year. Bean growers in the Twelfth District are in a favorable position. W hile total output of dry beans in the United States was about 22 per cent smaller than in 1935, production in the Tw elfth District in 1936 was of near-record volume. Prices paid growers advanced slightly during Novem ber and in the middle of Decem ber were about 50 percent higher than a year ago. Reflecting the extremely large California rice crop, prices to growers were reduced 27 cents to $1.31# per hundred pounds late in Novem ber. Demand by millers was active at the re duced price, notwithstanding slowness in mill shipments because of the maritime strike. Stocks of rough rice at mills and in country warehouses on December 1 totaled 4,145,000 bags compared with 2,479,000 bags so held a year earlier. Quotations for barley in leading markets of the district continued to advance during N o vember and the first half of December, reach ing a level about 70 percent higher than a year ago. The sharp advance in barley prices during the past few months has resulted partly from strong local demand for supplemental livestock feeds and partly from a steady demand from the midwest where the 1936 corn crop was un usually small. Exports of barley were only 92,706 tons from June 1 through November compared with 120,934 tons shipped during the corresponding six months last season. Production of eggs was about 16 percent larger in November this year than last. M ove ment of eggs out of storage was also season ally heavy during November. Reflecting these added market supplies, prices, which had ad vanced during the first half of November, de clined considerably between November 28 and mid-December. On December 21, United States #1 extras sold for 3 2 ^ cents per dozen at San Francisco, compared with 38y2 cents per dozen on November 20, and with 2 5 ^ cents on D e cember 20, 1935. Butter production during N o vember continued substantially larger than a year ago, and storage supplies are more than twice as large. The large quantity of butter available for market was reflected in a decline in the San Francisco wholesale quotation from 35 cents per pound early in November to 3 3 ^ cents per pound in mid-December. Last year, prices advanced from 3\]/2 cents to 35 cents per pound during the corresponding period. Shortages of rainfall and consequent lack of forage on ranges indicate that supplemental feeding of livestock will be heavier than usual this winter. Feed prices have advanced re cently, a factor which adds materially to the costs of carrying stock animals. Partly because of continued poor range con ditions, the number of cattle in feedlots is 16 percent larger than a year ago. These cattle will be marketed during the winter and spring months. In addition to cattle fed locally, slaughter demand in the Twelfth District in past years has necessitated shipments from midwest states during the winter and spring. The number of lambs in Tw elfth District feedlots is about 80 percent larger than either one year or two years ago. Large increases are reported from all three of the principal lamb feeding states— Utah, Idaho, and California. United States Department of Agriculture re ports state that the most important factor caus ing the increase in feeding of lambs has been slow demand with consequent declines in prices. Buying of 1936 w ool and contracting for 1937 fleeces was active throughout the district dur ing November. Although prices paid by w ool buyers show considerable range according to the quality and the shrinkage of the wool bought, average quotations were approximately 12 percent higher than those paid last spring when most of the 1936 clip was sold. A gricultural M arketing A ctivity— Industrial output customarily declines in November as a result of seasonal curtailment in most district food and building materials industries. This year, the decrease was some what more than usual, however, and between mid-October and mid-November industrial em ployment and pay rolls in the three Pacific Coast states declined slightly more than sea sonally. The principal factor contributing to the more than seasonal reduction in industrial activity was the cessation of water-borne ship ments resulting from the maritime strike, al though other strikes influenced operations in a number of relatively small industries. Value of private and public construction started in November was considerably smaller than in O ctober and operations on projects initiated /------November------ \ Carlot Shipments D e cid u o u s fru its . C itrus f r u it s ........ V e g e ta b le s .......... 1936 8,717 4,674 9,343 r---- Season to Date---- * 1935 7,240 4,553 7,156 1936 77,586 4,674 88,010 1935 73,645 4,553 81,972 38,329 959,165 1,544,812 3,405,474 50,161 5,145,867 Exports W h e a t ( b u . ) ........ .................... B a rley ( b u . ) ........ 139,666 Receipts* C a ttle .................. H ogs .................. Sheep .................. E g g s (c a s e s ) . . . . B u tter ( p o u n d s ) .. W h e a t ( c a r l o t s ) .. B a rley (c a r lo t s ) . Storage Holdings* (end of month) W h e a t ( b u . ) ........ B eans ( b a g s ) ___ E g g s ( c a s e s ) ___ B u tter ( p o u n d s ) . 109,545 107,917 1,039,170 929,960 192,454 120,660 1,654,563 1,316,860 339,282 290,278 4,066,789 4,700,628 112,076 131,095 1,871,882 1,806,322 4,963,831 4,659,618 67,524,517 68,383,699 3,594 4,532 35,496 39,422 376 879 6,071 5,611 t 1936----------- % r----------- 1935----------- \ November October November October 4,708,000 4,710,000 6,185,000 6,299,000 2,760,000 2,669,000 2,813,000 2,613,000 61,000 272,000 139,000 349,000 7,566,000 8,487,000 3,415,000 5,058,000 *At principal district markets. Industry December 1936 fed eral reserve b a n k of sa n before the end of October were curtailed some what as a result of interruptions in shipments of building materials. Curtailment of industrial output in Novem ber occurred principally in the production of Douglas fir lumber and flour. The industries producing these two products, when combined, contribute nearly 10 percent to the total value added to products by manufacturing operations in the Twelfth District and any change in their volume of output is reflected appreciably in total production. The seasonally adjusted index of Douglas fir lumber production decreased 39 percent and the index of flour milling declined 24 percent. Since about half of the Douglas fir lumber and flour produced in this district is marketed by water, those industries were af fected seriously by the cessation of water borne commerce. Production also was reduced in several rela tively small industries which normally receive a large portion of their raw materials by water. A m ong these were the soap, vegetable oil, chemical, and refined cane sugar industries, a group which accounted for about 3 percent of total output in the Tw elfth District. In ad dition, activity was curtailed in a number of other lines as a result of strikes. Output of a great many industries producing a major portion of the total industrial output of the district was not reduced appreciably by the stoppage of water-borne freight traffic. In cluded in this group were those which normally receive their raw material supplies and market E m ploym ent— -California---------* ,------------ Oregon— No. of No. of No. (—Employees—>v No. t— Employees — v of Nov. Nov. of Nov. Nov. Industries Firms 1936 1935 Firms 1936 1935 All Industries* . . . 1,573 161,300 149,869 99 20,076 19,340 (+7.6) (+3.8) Metals and Metal 530 484 Products ........ 277 21,869 17,780 8 ( + 23.0) ( + 9.5) Transportation Equipment . .. 73 21,990 17,440 (+ 2 6 .1 ) Lumber and Allied 11,004 Products ........ 114 11,988 11,603 36 9,766 ( + 12.7) ( + 3.3) Stone, Clay, and Glass Products. 69 7,087 6,006 3 91 155 ( + 18.0) (— 41.3) Textiles and Their Products ........ 111 7,712 7,602 1,416 1,958 8 (— 27.7) ( + 1.4) Tires and Rubber 19 6,130 4,401 Goods ............ (+ 3 9 .3 ) Food and Kindred Products ........ 377 30,601 33,378 2,360 25 2,711 (— 12.9) (— 8.3) Paper and Printing 169 8,988 8,173 6 1,463 1,281 ( + 10.0) (+ 1 4 .2 ) Petroleum, Chem icals, and Allied Products ........ 221 22,703 22,175 ( + 2.4) Miscellaneous 143 22,232 21,311 13 3,212 2,985 ( + 4 .3 ) ( + 7.6) Public Utilities.. 754 48,198 44,292 ( + 8.8) Wholesale and Retail ............ 1,803 48,504 45,684 ( + 6.2) *Public utilities, wholesale and retail figures not included in total. Figures in parentheses indicate percentage change from November 1935. f r a n c is c o 91 their finished products by transportation agen cies not affected by the strike and those which handled their shipments in that manner in November. Also included were lines in which adequate supplies were accumulated in antici pation of the strike and those which normally manufacture for stock rather than immediate delivery. A m ong the industries which are re ported to have shown about the usual changes in operations during October and November were those producing canned fruit and vege tables, motion pictures, crude and refined oil, furniture, rubber tires and tubes, steel ingots, cement, and coffee. The more than seasonal decline in industrial output in November was not accompanied by a correspondingly large reduction by midNovember in total industrial employment and pay rolls in the three Pacific Coast states. D e creases this year of 9 percent in factory em ployment and 9 percent in pay rolls compared with average losses during the past five years of 8 percent and 7 percent. In California, the reductions in the totals this year were no greater than in most recent years, although unusually large declines were recorded at cane sugar refineries and fish canneries. In Oregon and W ashington, however, the declines some what exceeded seasonal expectations. The sea sonally adjusted index of industrial employ ment in those two states was 6 percent lower than in mid-October and the pay rolls index was 11 percent lower. That industrial employment and pay rolls declined little more than seasonally between mid-October and mid-November is partially explained by the fact that the figures were compiled from reports covering the pay roll period ending nearest the fifteenth of the Industry— Indexes of daily average production, adjusted for seasonal variation (1923-1925 daily average=100) ,------------1936------------ . ,------- 1935-------- V Nov. Oct. Sept. Aug. Nov. Oct. Sept. General Carloadings— Industrial. 71ÏÏ 77r 72 75 61 62 66 Electric Pwr. Production 186ÏÏ 188 190 187 171 169 168 Manufactures 60ÏÏ 79 64 71 71 65 69 Refined Mineral O ilsf.. 143ÏT 154 159 165 156 158 150 75 99 107 134 114 110 114 83 138 114 119 105 69 65 121 169 127 68 101 106 W ool Consumption!. . . . Slaughter of Livestock. 117 114r 117 111 101 107 97 Minerals 88 88 102 Petroleum ( California)! 88 88 98 97 Lead (United States)!. 60 60 67 71 59 68 Silver (United States) % 111 88 68 75 71 Building and Construction# Total .............................. 75 72 71 66 58 56 51 Building Permits— Value 44 Larger Cities ............ 45 44 42 22 22 24 Smaller Cities .......... 65r 62 69 59 37 35 36 Engineering Contracts Awarded— V alue Total ...................... 101 99 110 106 82 99 96 Excluding Buildings 160 168 164 158 173 169 148 tN ot adjusted for seasonal variation. ^Prepared by Board of Governors of the Federal Reserve System. #Indexes are for three months ending with the month indicated. ^Preliminary. rRevised. 92 M O N T H L Y REVIEW OF BUSINESS CONDITIONS month, and hence did not reflect any losses that may have occurred late in November. It also is probable that many establishments which curtailed their output substantially did not reduce their working forces correspondinglyA ctivity on building and construction proj ects started before the end of October was reduced somewhat during November as a re sult of shortages of certain materials which normally are shipped by water. Although a substantial portion of the construction mate rials used in the district is produced locally, over three-quarters of the structural and re inforcing steel and many highly fabricated products are shipped through the Panama Canal to the Pacific Coast. In addition, over one-third of the lumber consumed in California is shipped by water from the Pacific North west. The curtailment caused by lack of ma terials occurred principally on a number of large engineering projects, and private build ing was reduced only slightly, if at all. The value of construction initiated was con siderably smaller in November than in O cto ber. Value of public works started declined 42 percent, largely as a result of decreases in awards for public buildings and streets and roads. A decline of 10 percent in the value of permits issued in 152 cities for new private building resulted almost entirely from a re duction in the nonresidential classification, since the value of new residential building started in November was almost as large as in October. Trade Department store trade increased by the seasonal amount during November and regis trations of new automobiles increased consid erably. Sales o f wholesalers declined by more than the usual seasonal amount. Effects of the strike of maritime workers were shown by a drastic reduction in water-borne commerce and by a sharp expansion in the volume of freight m oving on district railroads. Despite the slowness in sales of winter wear ing apparel because of unusually mild weather in California, department store trade expanded by the full seasonal amount. Sales of San FranRETAIL TRAD E—Twelfth District Percentage changes in value of sales and stocks /------------1936 compared with 1935------------ * STOCKS ,-------- NET SALES-------- s Jan. 1 to end November* of November November Department Stores. . . . 2.3 ( 85) 9.8 5.8 ( 54) Los Angeles ............ 2.0 ( 6) 10.2 8.6 ( 6) Other So. California 1.5 ( 10) 6.5 10.7 ( 6) Oakland .................... 0.7 ( 5) 9.7 1.3 ( 4) San Francisco ........ 2.3 ( 8) 9.6 3.6 ( 7) Bay Region . . . . . . . . 1.8 ( 18) 9.5 3.0 ( 15) Central California. . . —- 2.9 ( 5) 6.7 ( 5) 5.9 13.3 ( 9) 15.8 11.7 ( 7) Portland! ................ 7.3 ( 5) — 2.1 ( 4) 10.5 9.0 ( 6) 11.1 10.8 ( 5) Tacomaf .................. —- 0.2 ( 6) 10.1 11.8 ( 5) Salt Lake C ity........ —- 5.8 ( 4) 5.8 9.5 ( 4) 3.6 ( 40) 16.0 16.4 ( 25) Apparel Stores ............ Furniture Stores ........ 15.6 ( 32) 25.8 20.3 ( 23) 3.9 (157) 12.4 8.7 (102) tlncludes five apparel stores in Portland and four in Tacoma which are not included in district department store total. Figures in parentheses indicate number of stores reporting. *November 1936 had one less trading day than November 1935 and in November this year there were four Saturdays as compared with five a year ago. cisco stores increased considerably more than is usual in November. Reductions in income of maritime workers caused by the strike appear to have had some depressing effects upon trade at stores in certain locations, but during the month of November that influence was more than offset by such factors as the celebration at the opening of the San Francisco-Oakland Bay Bridge, declarations of extra dividend and wage payments, and a general tendency for indus trial activity to expand. In the Pacific North west, considerable expansion in sales was re ported, while in Salt Lake City and in southern California small reductions took place. W HOLESALE TR AD E —Twelfth District Percentage changes in value of sales Distribution and T ra d e— ,----------- 1936----------- x ,--------1935--------s Nov. Oct. Sept. Aug. Nov. Oct. Sept. Indexes adjusted for seasonal variation CarloadingsJ (1923-1925 average=100) Total ............................ 901T 86 86 85 78 72 75 Merchandise ................ 105ÏÏ 93 98 94 92 80 83 Intercoastal Trade 27 75 76 77 66 71 69 Total .............................. Westbound .................. 24 97 127 128 95 102 77 Eastbound .................... 28 66 61 62 57 61 66 Retail Trade Automobile Sales$f Total .......................... 109 93 114 131 106 75 80 Passenger .................. 108 84 101 119 102 66 70 Commercial .............. 114 189 246 256 145 161 185 Department Store Sales* ........................ 95 95 93 92 89 88 85 Stocks^ ..................... 68 65 66 64 64 61 63 Collections# , Actual Figures------------------■ N R egular.................. 49.4 52.1 49.0 49.2 50.0 51.0 46.5 Installment............ 17.6 17.7 18.0 18.4 18.5 19.1 18.3 $Daily average. 4At end of month. #Percent of collections dur ing month to amount outstanding at first of month. flPreliminary. fNot adjusted for seasonal variation. December 1936 Automobile Supplies Drugs ........................ Dry Goods .............. Electrical Supplies . F urniture ................ Groceries .................. Hardware ................ Shoes ........................ November 1936 t----- compared with----- * Oct. 1936 Nov. 1935 — 2.2 6.7 — 2.1 13.9 — 16.5 — 7.5 — 8.7 27.1 0.7 — 8.7 — 19.7 — 5.5 — 16.6 5.7 — 27.6 9.2 6.9 — 24.9 — 13.0 4.8 Cumulative 1936 compared with 1935 12.9 12.2 6.0 33.4 — 0.9 8.3 22.5 15.7 11.9 14.6 Sales in most lines of wholesale trade de clined during November by more than the amounts customarily expected for this time of year. Part of the decrease reflected restricted distribution of some commodities because of unsettled labor conditions. Total sales were only 5 percent larger than in Novem ber 1935, the smallest year-period increase since March 1935. December 1936 The strike of marine and longshore unions at Pacific Coast ports, effective October 30, 1936, had a pronounced effect upon intercoastal commerce during November, the seasonally adjusted index falling to 27 percent of the 19231925 average, compared with a level of 75 to 77 percent during the three preceding months. Even this decline does not measure the full TH O U SA N D S OF LONG TO NS IN TER G O ASTAL SHIPM ENTS Monthly tonnage of goods shipped through Panama Canal, between Atlantic and Pacific ports of the United States. Not adjusted for seasonal variation. extent of decrease in shipments of goods. The volume of intercoastal trade is measured by the quantities passing through the Panama Canal, since there are no current figures of cargo loadings and unloadings at the several Pacific, Atlantic, and Gulf ports. Thus, many ships which were loaded shortly before O cto ber 30, the effective date of the strike, did not pass through the Canal until November, at which time their cargo was recorded in inter coastal traffic. Another important factor was the continuance of eastbound petroleum ship ments. Tankers are loaded by pipeline, and thus do not require longshoremen, and the seagoing personnel of the tankers is not affiliated with any of the striking maritime unions. W ith the exception of the tankers, there was virtually no loading or unloading of ships at Pacific ports during November. Tonnage of goods m oving out of Pacific ports in the intercoastal trade in the first ten months of 1936 was about twice as large as tonnage received from Atlantic and Gulf ports. The most important products included in eastbound traffic were lumber and petroleum, two of the principal commodities produced in the Twelfth District and shipped to other regions. These tw o items accounted for half of the total eastbound intercoastal traffic. Other important eastbound commodities, listed in order of ton nage recorded during the first ten months of 93 FEDERAL RESERVE B A N K OF SAN FRANCISCO 1936, included canned fruits, sugar, flour, canned fish, w ood pulp, dried fruits, copper, wheat, paper and paper products, canned vegetables, and beans. There is a seasonal movement in many of these products and in some instances the largest volume of shipments occurred be fore the strike. For example, October is gen erally the peak month in shipments of canned fruit and canned fish. Shipments of sugar usually are greatest from July through O cto ber. Flour shipments occur fairly regularly. Dried fruits appear to be shipped most during the winter months. W ater-borne shipments from United States Atlantic ports to the Pacific Coast include principally manufactured articles. Iron and steel products are most important, followed by sulphur, lubricating oils and greases, paper and paper products, automobiles, tinplate, textiles, chemicals, machinery, and miscellaneous man ufactured goods. The iron and steel shipped through the Panama Canal is used principally in construction in Pacific Coast states. Sul phur, originating in Texas and Louisiana, finds many uses here in the chemical, pulp, fertilizer, insecticide, and sugar industries. Tinplate shipped from the Atlantic Coast is used in the Twelfth District canning industry. It will be seen from these lists of com m odi ties that industrial output as well as trade in the Twelfth District is promptly affected by Bank Debits* — Arizona Phoenix ............ $ California Bakersfield ........ Berkeley ............ Long Beach . . . Los Angeles . . . . Oakland ............ Pasadena .......... Sacramento . . . . San Bernardino. San D ie g o ........ San Francisco .. . San Jose .......... Santa Barbara.. Santa Rosa . . . . Stockton .......... Idaho Nov. 1936 36,248 $ r- First eleven months-^ Nov. 1936 1935 1935 34,824 $ 387,508 $ 327,429 22,061 17,508 33,078 33,183 844,935 90,317 25,602 95,027 9,910 46,496 871,030 22,820 12,096 5,150 21,169 16,536 17,099 35,334 29,785 688,619 79,483 23,997 123,755 7,144 47,232 893,710 23,760 11,150 4,607 17,813 167,864 200,227 287,325 366,757 9,159,379 993,951 267,029 1,074,103 101,415 512,018 9,562,036 250,756 129,117 51,722 208,852 127,895 170,457 241,953 318,764 7,202,367 766,981 233,233 1,174,374 79,750 452,078 8,642,634 217,657 106,869 42,749 173,563 17,091 16,141 181,147 162,664 11,753 8,624 107,772 92,490 6,266 152,868 13,310 5,268 145,621 11,341 68,757 1,766,143 155,465 53,810 1,543,401 129,764 18,954 67,210 15,916 60,718 163,254 679,305 153,579 587,596 6,187 7,193 180,068 48,445 31,634 5,264 14,814 6,194 6,324 169,864 36,921 28,911 5,391 12,361 66,286 79,287 2,088,880 483,461 352,568 60,846 143,923 55,778 60,611 1,698,662 399,991 274,155 54,216 126,607 Nevada Oregon Eugene ............ Portland ............ Salem ................ Utah Ogden .............. Salt Lake City. Washington Bellingham . . . . Everett .............. . Spokane ............ Tacoma ............ Walla Walla . . . Yakima ............ Total .......... $2,767,687 $2,584,443 $30,117,153 $25,672,077 *In thousands of dollars. 94 December 1936 M O N T H L Y REVIEW OF BUSINESS CONDITIONS an event such as cessation of water-borne com merce. Although a good many industries, in anticipation of the strike, stored up raw and semi-finished materials usually obtained by water from the East Coast, it is reported that lack of supplies in November resulted in some curtailment or delay in the chemical and auto mobile industries and on large construction projects. DAILY AVERAGE LOADINGS ber. The decline in railroad carloadings in November this year was smaller than usual, and the seasonally adjusted index advanced from 86 percent of the 1923-1925 average in October to 90 percent in November. The un usually small decline in traffic resulted prin cipally from diversion to railroads of ship ments which ordinarily move by water. In California, the reduction was considerably smaller than is usual in November, while in the Pacific Northwest the decline was larger than in any November in at least thirteen years. Reduced shipments from interior points to seaboard terminals in Oregon and W ash ington contributed to unusually large declines in railroad shipments of logs and grains. These reductions resulted at least partially from the tie-up of water-borne commerce. Shipments of miscellaneous commodities in the Pacific Northwest also declined more than is cus tomary in November. Prices CARLOADIN GS—Twelfth District Daily average railway freight carloadings. Adjusted for seasonal variation. The shipment of Twelfth District products by rail generally declines considerably in N o vember after reaching a seasonal peak in O cto SOURGES A N D USES OF BANKING RESERVES Twelfth District Changes in millions of dollars during the weeks indicated SOURCES OF FUNDS Week Ending -Oct. 14. . . . Oct. 2 1 ... . Oct. 28 .. . . Nov. 4. . . . Nov. 1 1 ... . Nov. 18.. . . Nov. 25. .. . Dec. 2 .. . . Dec. 9 . . . . Dec. 1 6 ... . Reserve Bank Credit + 2.2 — 1.5 — 1.6 + 1.8 — .4 + .2 — 3.7 + 4.6 — 3.4 + 7.1 Commercial Treasury Operations Operations + 10.1 + 1.6 + 1.0 + -5 — 1.0 — .3 — 9.6 — .1 + 10.1 + 1.1 — 1.1 — 1.9 + 4.9 — 5.3 — .1 + 10.8 + 12.1 + 9.7 — 18.6 — 15.6 Total Supply + 13.9 * — 2.9 — 7.9 + 10.8 — 2.8 — 4.1 + 15.3 + 18.4 — 27.1 USES OF FUNDS Week Ending -Oct. 14.. Oct. 2 1 .. Oct. 2 8 .. Nov. 4 .. Nov. 11.. Nov. 18.. Nov. 25 .. Dec. 2. . Dec. 9 .. Dec. 16.. . • . . . . . . • . Demand for Currency — 1.2 + .1 — 4.8 + 9.5 + 1.8 — 5.2 — .9 + 3.2 + .7 — .8 *Change less than $50,000. Member Bank Reserve Deposits + 15.0 — 2.0 + 2.4 — 17.1 + 7.0 + 4.5 — 3.6 + 12.2 + 16.5 *—24.9 Other F.R.B. Accounts + •! + 1.9 — .5 — .3 + 2.0 — 2.1 + -4 — .1 + 1.2 — 1.4 Total Demand + 13.9 * — 2.9 — 7.9 + 10.8 — 2.8 — 4.1 + 15.3 + 18.4 — 27.1 Follow ing a period of tw o and one half months of relative stability, wholesale com modity prices, according to the index of the Bureau of Labor Statistics, advanced sharply in November and the first half of December. The index for all commodities increased from 81.3 percent of the 1926 average for the week ending November 7 to 83.4 percent for the week ending December 12. On the later date the index was at the highest level since Octo- CON DITION OF FEDERAL RESERVE BANK OF SAN FRAN CISCO (Amounts in millions of dollars) Total Bills and Securities. Bills Discounted .......... Bills Bought ................ United States Securities Total Deposits .................. Reserve Note Circulation. Ratio— Reserves to Deposit and Note Liabilities___ Dec. 16 1936 216 Dec. 9 1936 216 Nov. 18 1936 216 Dec. 18 1935 201 2Ì4 622 492 334 2Ì4 645 508 335 2Ì4 616 484 332 Ì99 422 326 280 75.2% 76.4% 75.5% 69.6% CONDITION OF REPORTING M EMBER BANKS Twelfth District (Amounts in millions of dollars) Loans and Investments— Total. Loans to Brokers and Dealers.. Loans on Securities to Others (except Banks) ...................... Acceptances and Com’l Paper. . Loans on Real Estate .............. Loans to Banks .......................... Other Loans ................................ U. S. Gov. Direct Obligations. Obligations Guaranteed by U. S. Other Securities .......................... Reserve with F. R. Bank.......... Due from Domestic Banks........ Demand Deposits— Adjusted. . . . Time Deposits ................ ............ U. S. Government D e p osits.... Deposits of Other Banks.......... Borrowings .................................. Dec. 16 1936 2,216 20 158 20 368 1 406 725 154 364 282 256 932 1,007 67 315 Dec. 9 Nov. 18 Dec. 1Í 1936 1936 1935 2,164 2,166 2,180 21 16 13 158 21 369 1 390 688 156 362 296 255 895 1,035 45 318 159 22 364 2 384 716 158 359 285 257 897 1,020 57 325 170 24 368 1 361 736 135 356 177 225 786 1,024 103 277 December 1936 FEDERAL RESERVE B A N K OF SAN FRANCISCO ber 1930. The upward trend in the index has been due to a general increase among all groups of commodities, with textile products, farm products, and food prices showing the largest gains during the period under review. In the nonferrous metals market domestic copper prices reached a six-year peak in midDecember when New York spot quotations increased % cent to 11 cents per pound. Export copper prices also advanced and continued slightly higher than quotations for domestic use. The spot price of foreign silver in New Y ork fluctuated with little net change around 45 cents per ounce while the Treasury's buy ing price for newly mined domestic silver remained unchanged at 77.57 cents per ounce. Prices of other commodities of importance in the econom y of the Twelfth District such as wheat, barley, cotton, potatoes, alfalfa hay, wool, sugar, rubber, and coffee shared in the upward movement of prices. T he Credit Situation The condition of Twelfth District banks was affected principally by United States Treasury operations between November 18 and Decem ber 16. During the first three weeks of the period Treasury disbursements exceeded local collections, a relationship which has existed almost continuously since 1929 and which re sults in additions to member bank reserves. In the week ending December 16, however, Treas ury collections were unusually large, reflecting quarterly financing operations and receipt of income taxes. As a result, the Treasury with 95 drew substantially more than it disbursed in the Twelfth District during that week. The net result of all factors adding to or taking from Twelfth District member bank reserve balances in the four weeks ending De cember 16 was that little change occurred, and in the aggregate, reserve balances continued well in excess of the amounts required by law. Not only do aggregate reserve balances of Twelfth District member banks exceed require ments by a substantial amount, but in the first half of November practically all banks had con siderably larger reserve balances than were required. In addition to the reserves which Twelfth District member banks carry at the Federal Reserve Bank of San Francisco, many banks have larger balances with correspondent banks than are needed for operating purposes. Reflecting the purchase of new Treasury bonds on December 15, district reporting mem ber banks increased their holdings of direct obligations of the United States Government 37 million dollars in the week ending Decem ber 16. The increase in that week slightly more than offset the reductions which had occurred in the three preceding weeks, and total hold ings on December 16 were 9 million dollars larger than four weeks earlier. City bank loans in the “ all other” classification advanced m od erately further during the four week period, and loans on real estate also increased. A s a result of these and other changes in earning assets of reporting banks, total loans and in vestments increased 36 million dollars during the four-week period. N A T IO N A L S U M M A R Y OF BU SIN ESS C O N D IT IO N S Prepared by the Board of Governors of the Federal Reserve System Production, wage payments, and the distribu tion of commodities to consumers increased con siderably from October to November. W h ole sale com m odity prices have advanced steadily since the end of October. Production and Employment. The Board’s index of industrial production, which makes allowance for changes in the number of work ing days in the month and for the usual sea sonal variations, was 114 percent of the 19231925 average in November, as compared with 109 percent in October. Output of both durable and non-durable manufactures showed a con siderable rise. Production of steel ingots in creased further to a rate of 79 percent of capacity in November, and output of automo biles also increased. Figures for the first three weeks of December indicate continued expan sion in output of both steel and automobiles. In the plate glass industry, where there has been a strike, production was sharply reduced in November, and activity at lumber mills de clined, reflecting the effects of the maritime shipping strike on the Pacific Coast. Increases in output were reported at meat packing estab lishments and textile mills, and sugar meltings and output of tobacco products declined by less than the usual seasonal amount. A t mines, coal production increased and output of crude petroleum and iron ore showed a smaller than seasonal reduction. Value of construction con tracts awarded, according to figures of the F. W . Dodge Corporation, continued at about the same rate in November as in the previous month. Factory employment showed little change from October to November, although a decrease is usual at this season of the year, and the Board’s seasonally adjusted index ad vanced to 96 percent of the 1923-1925 average. The number employed at factories producing durable goods continued to increase, with the largest expansion in the automobile and ma chinery industries. There was a decline in em ployment at lumber mills and in the glass 96 December 193( M O N T H L Y REVIEW OF BUSINESS CONDITIONS industry. In the nondurable goods industries as a group, employment showed a smaller de cline than is usual in November. A t shoe fac tories and establishments producing wearing apparel, smaller than seasonal declines were reported, and there were increases in employ ment at cotton and woolen textile mills and at meat packing plants. Distribution. Department store sales in- cotton yarns, and worsted yarns advanced somewhat further and cotton, pig iron, and steel scrap prices also increased in this period Bank Credit. The reserve position of membei banks in recent weeks has been influencec largely by temporary seasonal developments ir connection with holiday currency requirements and mid-December financing by the Unitec States Treasury. Notwithstanding the increased PER C E N T 1929 1930 IN DU STRIAL PRODUCTION Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average=100. By months, January 1929 to November 1936. creased substantially in November, and there was also a rise in sales at variety stores and at chain grocery stores. Sales by general mer chandise stores and mail order houses serving rural areas declined from the high level re ported for October. Freight carloadings showed a smaller than seasonal decrease in November. Loadings of coal, coke, and grain increased, Indexes of value of sales, 1923-1925 average=100. By months, January 1929 to November 1936. contrary to the usual seasonal tendency, and shipments of miscellaneous commodities and of most other classes of freight declined by less than the seasonal amount. Com m odity Prices. The general level of wholesale com m odity prices continued to ad vance from the middle of November to the third week of December. There were substan tial increases in the prices of wheat, flour, nonferrous metals, and rubber. Prices of wool, 1932 1933 19 3 4 19 35 1936 W HOLESALE PRICES Indexes compiled by the United States Bureau of Labor Statistics, (1926=100.) By months 1929 to 1931; by weeks 1932 to date. Latest figure is for week ending December 19,1936. demand for currency for Christmas shopping there was a further growth in demand deposit* at weekly reporting member banks through th< first half of December, reflecting additions tc monetary gold stock, as well as a sharp in crease in bank loans. A t reporting banks out side New York City, holdings of Governmen1 securities increased by $140,000,000 in the foui B IL L I O N S OF D O L L A R S DEPARTM EN T STORE SALES 1931 B IL L IO N S OF D O L L A R MEMBER BANK CREDIT Wednesday figures for reporting member banks in 101 leading cities. September 5,1934 to December 16,1936. Loans on real estate, loans to banks, acceptances and commercial paper bought included in total loans and investments but not shown separately. weeks ending December 16, while at New Yorl City banks they showed a further small de cline. There was an increase of $100,000,000 ii loans to brokers and dealers in securities 11 New York City largely for the purpose of buy ing United States Government securities. Com mercial loans showed a further increase o $150,000,000, carrying the total volume of sucl loans to a level $800,000,000 higher than a yea ago.
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