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MONTHLY REVIEW
B U SIN E SS C O N D IT IO N S IN T H E 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
Federal Reserve Bank of San Francisco
u s in e s s
volumes in the Twelfth Federal Reserve Dis
B trict were considerably larger in the closing months
of 1939 than in the corresponding months of 1938. Some
broad similarity occurred in movements of business in the
two years, in that contraction was apparent in the first half
of each and expansion occurred in the second half. The
rise in the second half of 1939 was much more pronounced
than a year earlier, however, owing to the heavy buying
following the outbreak of war in Europe on September 1.
This movement was also accompanied by considerable
rise in prices which was not the case in 1938. On the
whole, it appears that business has been more active in
this region during the past few months than at any time
in the past decade, except for a brief period in mid-1937.
Despite a small reduction (after seasonal allowance) in
factory payrolls during the first three months of 1939,
consumer incomes and expenditures were relatively well
maintained and inventories in many lines were reduced in
the first half of the year. The decrease in inventories,
prompted partly by uncertainties originating in the acute
political situation in Europe and by weakness in commod
ity prices, was accompanied by a substantial reduction in
loans of district banks for commercial and industrial pur
poses. Residential building became more active during
the spring months, however, than at any time in the previ
ous ten years. The resulting demand for building mate
rials, both locally and elsewhere in the United States,
stimulated activity in the lumber and related products
industries during the late spring, and was a factor helping
to bring about a slight revival in operations in other lines
during the summer.
Some recovery in district business activity was conse
quently in the making at the time of the outbreak of the
European conflict in September. Announcement that ac
tual hostilities had begun precipitated a widespread wave
of buying, participated in by consumers as well as
by manufacturers, processors, and distributors. The in
creased purchases were almost entirely of domestic ori
gin, and resulted mainly from efforts to build up inven
tories in anticipation of higher prices and of a larger
volume of sales. Sheer speculative buying, however, was
also a factor. In succeeding weeks, as it became apparent
that the war would be less of a direct and immediate stim
ulus to business than had been anticipated at first, new or
dering fell off considerably. Prices of numerous com
modities which had advanced in September likewise
declined, although quotations generally were somewhat
higher at the year-end than during the summer months.
The large volume of orders placed during the early fall
of 1939 stimulated industrial operations and increased
factory employment and payrolls. Demand for bank
credit also increased, particularly from commercial and
industrial enterprises, and during the autumn months a
considerable volume of loans was made. Interest rates
remained as low as had prevailed earlier in the year or
lower. Factory employment in the Pacific Coast States
February 1, 1940
had risen by December, on a seasonally adjusted basis, to
122 percent of the 1923-1925 average, compared with 109
in August. This was the highest level since August 1937.
Factory payrolls reached 121 percent of the 1923-1925
average, a record high excepting July and August of 1937
when the seasonally adjusted index was 123. Some im
provement in farm income also resulted during the fall of
1939, owing mainly to price advances. Foreign buying,
except in the case of aircraft and pulp and paper, contrib
uted but little in the way of an increased market for the
larger volume of goods produced in the district during the
last four months of the year. While demand for mate
rials and labor originating in capital expenditures by pri
vate firms for the renovation, repair, and extension of
production facilities increased, the additional demand for
goods from that source was relatively small. During the
last few weeks of the year and early in 1940 new orders
were in much smaller volume than in September and
October, and were lower than current production in some
industries.
Despite the expansion in consumer income, retail trade
lagged during the fall months of 1939, except in the case
of new automobile sales which advanced sharply. During
November, however, more widespread gains in retail trade
became evident, and in December a greater than seasonal
advance took place. In that month, value of department
store sales was equal to the December 1936 peak, and
larger than in any other December since 1929, when retail
prices were much higher.
B uilding and H eavy Construction
More houses were built in the Twelfth District in 1939
and their aggregate value was greater than in any year
since 1928. Many of these houses were built by operative
builders, but available information indicates that there
was no important accumulation of unsold houses. Al-
R E S I D E N T I A L B U I L D I N G P E R M IT S — Twelfth District
Index of value of permits, adjusted for seasonal variation.
(1923-1925 average=100).
though something like 65,000 or 70,000 new family ac
commodations came onto the market during the year,
vacancies at the year-end continued at the low levels of
the past few years, and rents generally remained firm.
Total value of non-farm dwellings on which construction
started during the year approximated $235,000,000, com
FEDERAL RESERVE B A N K OF S A N FRA N C ISCO
6
pared with $190,000,000 in 1938. In the 1939 total were
several multi-family projects sponsored by the United
States Housing Authority having a contract value of more
than $7,000,000. Activity was at a high level in nearly all
parts of the district throughout the year, the adjusted
index of permits value averaging 55 percent of the 19231925 base with a range, on a quarterly basis, from a low
of 50 in the third quarter to a high of 64 in the last quar
ter of the year.
While residential construction was considerably larger
in 1939 than in 1938, nonresidential building other than
heavy engineering projects was about the same in each of
those years, totaling $100,000,000 annually. More than a
third of the 1939 total consisted of publicly financed
structures such as schools and postoffices.
Contracts for heavy engineering construction for which
permits were not issued amounted to $211,000,000 during
1939, a total about a third lower than the 1938 figure.
Excluding two contract awards made in 1938 in connec
tion with the Grand Coulee and the Shasta dams, on which
projects actual construction was more active in 1939 than
in the preceding year, the decline was about 12 percent.
Most of this decrease was accounted for by a reduction
in awards for street and road construction from $91,000,000 to $53,000,000, reflecting a reduction in W .P.A. al
lotments for that type of work. Among the larger proj
ects undertaken in 1939 was Friant Dam, a unit in the
Central Valley Project in California, for which contracts
amounting to $9,000,000 were awarded, and the Lake
Washington pontoon bridge in Seattle for which awards
approximated $8,000,000. Additional contracts in excess
of $20,000,000 for cement, aggregates, equipment, and
for the relocation of a railroad were awarded in connec
tion with the Shasta Dam undertaking which, like Friant
Dam, is a unit in the Central Valley Project in California.
B uilding M aterials I ndustries
Among industries manufacturing building materials,
the decline in operations in the first part of 1939 was ar
rested earlier and expansion set in earlier than in most
other lines. In the important lumber industry, which em
ployed roughly half of all industrial wage-earners in
Oregon and Washington during 1939, production de
clined sharply during the first quarter. With demand from
the building industry continuing active, mill operations
expanded after March and in May had attained a higher
level, on a seasonally adjusted basis, than in any month of
1938. Further gains took place during the summer months
and particularly after September. In December, output
on a seasonally adjusted basis was as high as the monthly
average reported in the years 1923-1925 and was 23 per
cent higher than in December 1938. The marked rise in
production during the fall and early winter reflected
heavy war-inspired buying by distributors which resulted
in mills accumulating a large volume of unfilled orders.
This heavy buying started at a time when mill stocks had
been reduced to relatively low levels and, despite sharp
expansion in output and shipments, unfilled orders at the
year-end were larger than in December 1938. For the
year as a whole, district lumber production was 83 percent
of the 1923-1925 average, a rate considerably higher than
the average of 67 in 1938, and about the same as in 1937.
Cement production increased to above the 1937 level of
109 percent of the 1923-1925 average, a gain of 25 percent
from the preceding year. The gain in 1939 partly reflected
February 1, 1940
residential building demand but more particularly was the
result of the resumption of concrete work at Grand Cou
lee Dam in March. Consumption of cement in the Pacific
Northwest was of record proportions in 1939 and mills in
that area operated nearly 85 percent of their current ca
pacity. In California, production averaged somewhat less
than 50 percent of mill capacity.
MILLIONS OF BOARD FEET
L U M B E R P R O D U C T IO N A N D N E W O R D E R S —Twelfth District
Daily average. By months, January 1934 to December 1939 (preliminary).
Output figures adjusted for seasonal variation.
Expansion in local building activity stimulated produc
tion of both common and face brick, particularly during
the latter half of the year. Output of these products was
considerably larger than in the preceding year and slightly
exceeded that of 1937.
O ther M anufacturing
During the first half of 1939 steel ingot output in the
district was maintained at about two-thirds of capacity.
Beginning in August, operations were advanced substan
tially and during the last quarter averaged above 90 per
cent of capacity. The new business received by local steel
mills, which probably supply less than a third of the dis
trict demand for steel, was widely diversified. At the turn
of the year new orders were well below the record high
levels of September and October, but a considerable vol
ume of unfilled orders still existed at local plants, accord
ing to available information.
A marked revival of merchant shipbuilding on the Pa
cific Coast occurred during 1939, owing to contracts
awarded by the Maritime Commission to Pacific Coast
yards for construction of 23 vessels having a value of
about $45,000,000. This brought about considerable ship
yard renovation prior to actual start of work on the ships.
Most of the steel and power equipment to be used in the
ships will come from the East, but construction of the
ships in this region is providing a considerable increase in
local employment and payrolls.
The paper and pulp and aircraft industries were di
rectly and substantially stimulated by the war in Europe.
Until September, district pulp mills were producing at
the depressed levels to which activity had declined in mid1938— somewhere near 50 percent of capacity. A rush of
new business in September came from both domestic and
foreign consumers who anticipated that hostilities would
interfere with shipments from the customary sources of
supply. Production was promptly increased and near
capacity operations during the final quarter of the year
were reported.
The district aircraft industry continued to grow rap
idly during 1939. Value of output is estimated at more
February 1, 1940
M O N T H L Y R E V IE W OF B U S IN E SS C O N D IT IO N S
than $100,000,000, about 60 percent above the 1938 figure
which was a record up to that time. The rise in output
was accompanied by a doubling of employment over the
year-period, the number of wage-earners at all district
aircraft plants approximating 28,000 in mid-December.
Despite record production and deliveries, unfilled orders
at major district plants totaled around $237,000,000 at
the year-end. New orders for planes totaled about $250,E
stI m ated
V
o l u m e of
I n d u s t r ia l O
utput
T w e l f t h D is t r ic t
(expressed as percentages of 1929 output)
1929
Lumber ..................................... .... 100
Refined o i l s ................................... 100
M otion pictures ( c o s t ) ............. 100
Smelting and refining-............. .... 100
Paper ......................................... .... 100
Pulp ................................................ 100
Automobile a ssem blies........... ....100
Rubber tires ............................ .... 100
Aircraft (value) .......................... 100
Steel i n g o t s ...................................100
C e m e n t....................................... .... 100
Canned fruit ............................ .... 100
Canned vegetables ................. .... 100
Canned f i s h ................................... 100
M e a t ................................................100
Sugar ......................................... ....100
Flour ......................................... ....100
Butter ....................................... .... 100
Cheese ....................................... .... 100
Glass co n ta in e rs ..........................100
W ool co n su m p tio n ................. .... 100
Copper ....................................... ....100
Lead ................................................100
Zinc ................................................ 100
Gold ................................................100
Silver .............................................. 100
Petroleum .....................................100
Natural g a s ...................................100
Coal ................................................100
1933
43
66
76
31
87
99
48
58
100
63
49
93
69
82
111
115
84
112
127
111
98
16
44
56
r93
41
59
76
53
1936
73
80
r ll3
r69
120
154
129
125
700
114
107
110
143
119
114
103
94
105
143
173
122
62
58
99
195
99
73
94
66
1937
76
85
rl3 3
90
130
200
135
123
rl0 3 8
112
102
125
153
114
117
100
98
106
150
210
114
87
69
116
215
122
82
96
76
1938
61
82
129
63
111
139
79
1939
76
81
129
77
135
142
94
1400
82
83
86
116
102
116
110
96
112
163
166
100
56
56
96
224
107
86
99
58
2200
115
103
108
122
96
118
121
107
111
161
185
114
77
55
95
249
106
77
98
56
r Revised.
000,000 in 1939. Although commercial orders revived
sharply, military demand was of dominant importance,
accounting for 85 to 90 percent of the total. Somewhat
over half the military orders were from foreign govern
ments, and more than 50 percent of those orders came
after the lifting of the embargo on shipments of arms
and munitions on November 4.
By the end of 1939 increased demand for aircraft had
brought substantially all idle capacity in the industry into
intensive operation and had prompted a wave of plant
construction. Every major firm in the district made sub
stantial additions to capacity through either construction,
purchase, or lease during the year, or was engaged in con
struction on December 31. Several smaller plants also ex
panded and one new concern had nearly completed a large
plant at the year-end.
Crude petroleum output was reduced 10 percent in
1939 to 615,000 barrels daily, partly as a result of con
certed efforts to reduce petroleum stocks which had as
sumed burdensome proportions in 1938. These efforts
were likewise reflected in a further decline in drilling of
new wells for the year as a whole, although drilling activ
ity turned upward toward the end of 1939. Refinery oper
ations, however, were about unchanged and, with a slight
increase in aggregate demand for petroleum and its prod
ucts, total inventories decreased moderately.
Foreign sales of petroleum declined during 1939 re
flecting principally smaller shipments to Japan. The out
break of war in Europe appears to have had no important
effect upon the volume of exports of the principal pe
troleum products, although export prices for gasoline,
which had been marked down in January and July, rose
sharply later in the year following an advance in quota
tions at the Gulf Coast. Prices of the various grades of
heating and fuel oils generally declined in the first half of
the year but recovered somewhat in the fall months. Re
tail prices of gasoline were generally unchanged through
out the year.
Reflecting the smaller number of wells drilled, expen
ditures for oil field development declined somewhat in
1939, and capital expenditures in refineries were likewise
reduced. Major programs of plant modernization and
construction had been undertaken in 1937 and 1938.
Activity in the motion picture industry, insofar as it is
reflected by the cost of production of pictures filmed, was
about unchanged in 1939 from the level of a year earlier,
when films costing $165,000,000 were produced. Profits
in the industry, however, were reported to have been re
duced somewhat owing to a 10 percent wage increase in
September and to the war, which has curtailed foreign
markets and led to unfavorable exchange developments.
Automobile assemblies, which declined considerably in
the spring of 1939, expanded sharply after the 1940 mod
els were introduced. On a seasonally adjusted basis both
output and retail deliveries during the closing months of
the year compared favorably with the highest levels of
1936 and 1937.
Production of canned fruits and vegetables was some
what greater in 1939 than in the preceding year. The pack
in 1938 had been reduced substantially, largely reflecting
the heavy inventories carried over from the preceding sea
son. Stocks of most important items had been reduced
to more normal proportions by mid-1939, however, and
that season’s pack was increased although not to the levels
of 1936 or 1937. Sales by canners during the late sum
mer were reported to be in good volume, partly reflecting
anticipated advances in prices from the low levels pre-
Production and Employment—
average=100
With
Seasonal
^-Adjustments
1939—N1938
Industrial Production*
Dec. N ov. Dec.
Manufactures (physical volume)
L u m b e r .................................... 100 94 81
—
—
—
Refined oils ...........................
Cement .................................... 138 122 135
W heat flour ........................... 110 87 109
Minerals (physical volume)
—
—
—
P e tr o le u m ...............................
83
57
Lead ( U . S . ) t ........................
91 85
Silver ( U . S . ) t ......................
Construction (value)
Residential Building
81 60
Permitst ........................
52
Twelfth District
Southern California . .
67 63
57
Northern California. . 125
50 48
Oregon ...........................
36 52 34
W ashington .................
56 56 35
Intermountain states .
85 108 59
—
—
Public works contracts. . . —
Miscellaneous
Electric Power Production 214 230 209
Factory Employment and Payrolls ÍÍ
Employment
Pacific C o a s t ........................... 122 118 109
California ........................... 135 130 118
Oregon ................................ 113 111 95
W ashington ...................... 101 99 87
Payrolls
Pacific C oast........................... 121 120 102
California ........................... 134 133 115
Oregon ............................... 112 107 96
98 100 79
W ashington ......................
Without
Seasonal
/^-Adjustments
f— 1939— \ 1938
Dec. N ov. Dec.
Annual
Average
1939 1938
77 91
64
163 171 164
102 122 100
110 96 109
83 67
158 159
110 88
123 111
93
93
86
98
98
58
86
62
57
41
93 104
§72 §61
§90 §93
55
44
58 64 49
86 44 33
21 41 20
32 49 20
55 95 39
135 204 203
60 49
48 38
32 24
42 30
79 59
185 275
202 217 198
212 194
118 120 102
132 133 116
108 110 91
96 99 82
110 102
122 115
104 91
90 83
117 120 99
132 133 113
101 105 86
94 99 76
108 96
121 109
99 86
87 74
*D aily average.
tPrepared by Board of Governors of Federal Reserve System.
$ Includes figures from 197 cities and Los Angeles County, unincorporated.
HExcludes fish, fruit, and vegetable canning.
§Eleven months’ average.
8
February 1, 1940
FEDERAL RESERVE B A N K OF S A N FRA N C ISCO
vailing during earlier months of the year. Early in the
fall, war-inspired buying prompted an unusually heavy
volume of sales and shipments, and prices generally were
advanced. As a result stocks held by canners were re
duced materially. On January 1, 1940, California can
ners reported that unsold stocks of canned apricots, cher
ries, pears, and peaches approximated 6,000,000 cases,
the smallest year-end carryover in three years.
The 1939 canned Alaska Salmon pack totaled 5,200,000 cases and was one of the smallest in recent years.
Since stocks accumulated during the previous year had
been well worked down prior to the 1939 packing season,
the canned salmon market became firm in August, even
before war was declared. Unusually active demand in
September further depleted available supplies and by De
cember 31, 1939 unsold stocks in canners’ hands had been
reduced to slightly more than 2,000,000 cases, the lowest
for that date in more than a decade. On January 1, 1940,
distributors’ stocks of canned salmon were 33 percent
higher than on the same date a year earlier.
Output of canned tuna expanded sharply in 1939 to
3,500,000 cases, the largest pack on record. In 1938 out
put amounted to 2,754,000 cases.
P r o d u c t io n a n d S t o c k s o f C a n n e d F r u it s a n d
V eg e ta ble s— C a l if o r n ia
( in thousands of cases)
Canners’ Stocks,
and Unsoldf-\
1938
1939
/ -------Production------- Sold
1937
1938
1939
Apricots ................................... 5,553 1,547 3,338
240
294
469
Cherries ...................................
Fruit cocktails ...................... 3,221 1,988 3,711
769 1,547
Fruits for salad...................... 1,255
Pears .......................................
1,499 1,626 1,347
Peaches ................................... 13,248
9,822 11,462
977
586
622
Other fruits ..........................
Asparagus ............................... 2,073 1,796 1,849
String beans ..........................
587
330
107
Peas ..........................................
282
245
212
S p in a c h ..................................... 2,198 1,040 1,509
Tom atoes ................................. 3,0451,994 2,769
Tom ato prod’s (excl. p a ste ). 5,404 3,4.194,312
Other vegetables ..................
894
656
964
fE n d of calendar year except as noted.
1937
3,202
89
1,295*
441*
793
8,315
1,509
80
1,412
445
869
7,457
1,266
309
2,056
547
578
6,441
900
838
547
759
2,816
4,424
473
1,918
3,462
434
1,614
3,161
*A s of June 1, 1938.
District flour production was the highest in at least 20
years, largely reflecting exceptionally heavy sales abroad,
principally to China, during the spring months. The prin
cipal factor prompting large foreign purchases at that
time was an increase in the export subsidy in March. Mill
activity attained levels higher than at any time since
monthly data became available in 1923, and these opera
tions continued through July. A decline subsequently took
place and, despite a sharp flurry in consumer buying of
flour in September, fourth-quarter output was lower than
in any other recent year.
Total district sugar production also attained record
proportions in 1939. Sharp expansion had taken place in
1938, the increase in that year and in 1939 reflecting sub
stantial increases in output of beet sugar which is refined
in five of the seven district states. Cane sugar output was
lower in 1938 and in 1939 than in any previous year since
1923.
E mployment and P ayrolls
At the close of 1939, factory employment and payrolls
in Pacific Coast States were but little short of the all time
highs reached in mid-1937, seasonal factors allowed for.
Both employment and payrolls had decreased somewhat
more than seasonally during the first quarter of 1939. The
declines were arrested in April, and during the succeed
ing five months small but persistent gains were reported.
By August both employment and payrolls at industrial
establishments were slightly higher than at the beginning
PERCEN T
F A C T O R Y E M P LO YM E N T A N D PAYROLLS
Indexes of number employed and payrolls, adjusted for seasonal variation,
1923-1925 average=100. By months, January 1929 to December 1939.
(Fruit, vegetable, and fish canning industries excluded
from Pacific Coast indexes).
of the year, and marked expansion between then and De
cember brought them to the near-record levels mentioned.
In December the number of employees was 15 percent
higher and payrolls were 18 percent higher than a year
earlier. Substantial increases were reported in all three of
the Pacific Coast States, the more marked increases oc
curring in the Pacific Northwest. Employment in Cali
fornia in December was 14 percent and payrolls were 17
percent higher than a year earlier, while increases of 17
percent and 22 percent were reported in the Pacific
Northwest.
M
in in g
District gold, silver, copper, lead, and zinc output in
creased from $211,000,000 in 1938 to $256,000,000 in
1939, but remained below the figure of $298,000,000 re
ported in 1937. The increase in 1939 over the previous
year reflected larger output of gold and copper, and higher
prices for all the metals except gold.
Output of gold advanced for the seventh consecutive
year. California accounted for 53 percent of total district
production. Estimated output of 1,406,000 ounces was the
largest for that State since the middle of the last century.
Although the price paid by the United States Treasury
for newly mined domestic silver was raised from 64.6
cents per fine ounce to 71.1 cents, effective July 1, district
production for the year as a whole was slightly lower than
M in e P r o d u c t io n of N o n f e r r o u s M e t a l s
T w e l f t h F e d e r a l R e se r v e D is t r ic t *
(in thousands)
1929
1,060
Gold (fine o u n ce s)..........................
Silver (fine o u n ce s )........................ 40,728
Copper ( t o n s ) ...................................
665
Lead ( t o n s ) ........................................
317
Zinc ( t o n s ) ..........................................
108
1932
1937
1938
1939
973
17,588
125
139
42
2,282
49,819
577
219
126
2,373
43,583
374
178
104
2,639
42,971
511
175
103
*Data include all of Arizona, part of which is in the Eleventh Federal
Reserve District.
in 1938. Activity at copper mines, concentrators, and
smelters was at reduced levels during the first eight
months of 1939. In September, however, a sharp increase
in sales, accompanied by advancing prices, stimulated
production, and near-capacity operations were reported
F eb ru a ry 1, 1940
during the fourth quarter. Lead and zinc output receded
slightly in 1939, although prices of both metals averaged
moderately higher than in the preceding year.
T
rade
For 1939 as a whole, aggregate value of district retail
trade is estimated to have been about 5 percent larger than
in 1938 but 8 percent lower than in 1937. The best levels
of sales, after allowance for the usual seasonal factors,
were attained in December. After moderate expansion
in late 1938, district retail trade declined slightly early in
1939. This decline was of short duration, however, and
was smaller than the spring decrease in industrial opera
tions. During the spring and summer months aggregate
PERCEN T
9
M O N T H L Y R E V IE W OF B U S IN E S S C O N D IT IO N S
PE R C E N T
which took place in late 1937 and early 1938. Depressed
conditions relative to 1937 were likewise reported by fur
niture departments of district department stores, which
reported sales of household furnishings only 1 percent
larger in 1939 than in 1938 and 14 percent lower than in
1937.
Excepting a two-month flurry, probably stimulated by
summer tourist traffic in part attracted by the Golden Gate
International Exposition, restaurant sales were generally
lower than in 1938 and 1937. Lower food prices may
partly explain the year-period decline. That factor may
also account in large part for the failure of grocery store
sales, measured in dollars, to increase in 1939.
New automobile sales in the district have fluctuated
widely since 1937. After a precipitous decline from the
fall of 1937 to the spring of 1938, sales recovered moder
ately but again declined in the first half of 1939, after
allowance for seasonal influences. From mid-1939 to the
end of the year, however, sales of new cars and trucks
were exceptionally active and during the final quarter ap
proached the record levels of 1936 and 1937.
Except for a short period immediately following the
outbreak of the European war, district retailers gener
ally appear to have observed a policy of buying to cover
only their normal requirements. Local wholesale trade
consequently tended to reflect the course of retail sales
and for the year as a whole showed about the same per
centage increase over 1938. Available information indi
cates that inventories of both retailers and wholesalers
remained fairly stable during the year, except for the
usual seasonal fluctuations.
A g r ic u l t u r e
With near-record production and a large carryover
from the preceding season, supplies of most Twelfth
District crops and livestock products were heavy in 1939,
while demand was relatively inactive and prices were low
during much of the year. In the final quarter, however,
Distribution and Trade—
Index numbers, 1923-1925
average=100
R E T A I L T R A D E — Twelfth District
Indexes of sales, adjusted for seasonal variation. 1937 daily average=100.
Value figures, except automobile sales.
By months, January 1937 to December 1939.
retail sales appear to have been relatively stable, reflecting
the well maintained level of consumer income during that
period. Retail sales of new automobiles held up some
what better than seasonally during the summer and ex
panded considerably with the introduction of new models
in the fall. Most other lines tended to lag behind the re
vival in industrial operations in September, and it was not
until the last two months of the year that any widespread
increase in retail trade made its appearance.
Department store sales were unusually stable through
out 1939. The seasonally adjusted monthly index in the
first quarter remained unchanged at 99 percent of the
1923-1925 average. By June it had declined to 97, but in
July it recovered to the level of the first quarter. There
after it fluctuated narrowly until the last two months of
the year when an unusually active Christmas trade re
sulted in an advance to 104 in December.
Despite expansion in new residential building in 1939,
sales of furniture stores increased only slightly and by
the year-end had regained only about half the large losses
Retail Trade
Department
store sales (value)*
Twelfth D istrict..................
California .............................
Los A ngeles....................
Bay R egion ......................
San F ra n cisco..................
Oakland ..........................
Pacific N orthw est.............
Portland ..........................
Seattle ...............................
Spokane ..........................
Salt Lake C ity ....................
Department
store stocks ( v a l u e ) f . ..
Furniture
store sales (value) *$. . . .
Furniture
store stocks ( v a l u e ) f .
Automobile sales (num ber)*
With
Seasonal
('-Adjustments
r -1 9 3 9 —>, 1938
D ec.N ov.D ec.
Without
Seasonal
^-Adjustments
t— 1939— .V1938
D ec.N ov.D ec.
Annual
Average
1939 1938
100 100
100 102
92 92
111 107 112
101 99 98
179 105 170
181 105 175
156 95 153
201 115 194
179 108 174
264 136 252
175 104 160
163 107 153
195 107 173
152 92 142
185 r92 177
99 96
99 97
90 90
107 101
99 92
128 125
99 94
100 98
101 92
93 89
90 89
104
104
94
138 131 132
105 101 96
105 105 99
107 101 95
98 92 91
93 r85 89
62
66
65
80
83
68
76
74
66
—
—
—
— — —
Passenger ........................
Commercial .................... — — —
Carloadings (num ber)*
Total .......................................... 91 92 86
Merchandise and m isc.. . . 103 103 95
75 78 74
Other .....................................
Intercoastal Traffic (volum e)
Total .......................................... 69 75 62
Eastbound ..........................
53 56 50
W estbound .......................... 122 142 105
*Daily average.
fA t end of month.
60
64
65
116
86
99
78
72
75
77
65
69
70
58 r73
118 106 112
114 103 111
156 138 124
96 76
91 71
156 131
80 92
92 103
66 79
76
85
64
85
96
72
79
90
65
64 76
49 60
115 131
58
47
99
88
57
105
54
45
84
$1929 average — 100.
r Revised.
10
F ebruary 1, 1940
FEDERAL RESERVE B A N K OF S A N FRA NC ISCO
domestic demand recovered somewhat and prices tended
higher. District farm cash income from marketings of
crops and livestock products during the first nine months
of the year was consistently lower than a year earlier, but
greater than seasonal expansion thereafter resulted in
moderate year-period increases in the final quarter. For
the year as a whole gross income from marketings ap
proximated $996,116,000, slightly larger than in 1938.
T
otal
Cash
F
arm
I n com e*— T
w elfth
D
is t r ic t
(in thousands of dollars)
1929
Arizona . . .
68,027
California . . 649,751
Idaho .......... 115,982
Nevada . . . .
18,719
Oregon . . . . 113,842
Utah ............
58,154
W ashington. 183,317
Twelfth
D is tr ic t.. 1 ,207,792
1932
23,407
334,459
41,216
5,851
46,360
25.165
79.166
1936
48,273
616,741
99,475
12,072
110,083
43,252
163,049
1937
60,241
694,168
109,295
14,665
122,184
50,296
167,142
1938
58,051
545,039
84,541
11,893
102,360
46,168
133,341
1939
60,984
572,431
555,624
1,092,945
1,217,991
981,393
1,048,791
9 6 ,6 7 4
13,643
108,880
46,987
149,192
*Including Government payments.
In addition, Federal Government benefit payments to
farmers totaled $52,675,000, more than double the
amount of such payments in 1938. Including those pay
ments, total district farm cash income was approximately
7 percent higher in 1939 than in the preceding year.
The accompanying tabulation indicates gains in total
farm receipts in 1939 in all states of the district. O f the
more important district farm commodities, increases
were reported in receipts from apricots, cling peaches,
Ca sh F arm I ncom e
T
and
w elfth
G overnm ent P
D
aym ents
is t r ic t
(in thousands of dollars)
Arizona .................
California ............
Idaho ......................
Nevada .................
Oregon ...................
Utah ........................
W ashington ____
,----------------- 1938------------------ N
,----------------- 1939------------------N
G ov’ t
G ov't
Farm
Livestock Pay- Farm
Livestock Pay*
Crops
& Prods, ments
Crops
& Prods, ments
30,876
24,621
2,554
28,372
27,221
5,391
327,756
205,042
12,241
347,696 205,351 19,384
37,670
43,710
3,161
41,483
46,499
8,692
1,449
10,315
129
1,610
11,800
233
44,874
54,987
2,499
45,752
56,310
6,818
14,247
29,991
1,930
11,848
32,267
2,872
72,550
58,913
1,878
80,208
59,699
9,285
Twelfth D istric t..
529,422
427,579
24,392
556,969
439,147
52,675
pears, potatoes, sugar beets, truck crops, meat animals,
and wool. Decreases in income from citrus fruits, grapes,
and cotton were reported, as well as from eggs and dairy
products.
The direct benefit payments received by farmers dur
ing 1939 do not constitute an inclusive measure of the aid
accorded district agriculture by the Federal Government.
Indirect but substantial benefits were extended growers
of wheat, cotton, and hops by the granting of non-recourse
loans, the effect of which was to establish minimum prices
for those crops. Exports of wheat and flour from the
Pacific Northwest continued to be subsidized. The use of
the Food Stamp Plan method of distributing surplus agri
cultural products to relief recipients through regular com
mercial channels was extended both within and outside
the district, during 1939. Although that program has thus
far had but a negligible effect upon total demand for farm
produce, Twelfth District agriculture has shared in any
benefits that may have been derived from it, for 12 of the
16 commodities so distributed are produced in important
volume in this district. The orderly flow to market of sev
eral important district farm products was promoted by
Federal and state marketing agreements during the year
and funds were provided for the purpose of developing
new markets and new uses for farm products.
Prices paid by farmers for goods used in maintaining
their families, farms, and equipment and in production
were about the same in 1939 as in 1938 or slightly lower.
O f the more important overhead costs involved in farm
operation, interest rates on both long-term mortgage
credit and on short-term production credit continued low,
with a small further decline in rates on production credit
becoming effective in mid-summer. Taxes showed little
change from 1938 levels.
A
creage,
Y
ie l d , a n d
and
F
ie l d
P r o d u c t io n
C rops— T
r
Acres
/-H arvested-^
1938
1939
Unit
(thousands)
Grains
bu.
1,532
1,776
bu.
233
229
bu.
Sorghums . . 180
139
bu.
719
924
bu.
80
86
Rye .............. .
bu.
4,436
W heat, all. ,. 5,546
bu.
3,184
W inter . ,. 3,613
bu.
Spring . . ,. 1,933
1,252
Field Crops
Alfalfa seed . 140
Beans, dry. . 471
Clover seed .
89
Cotton, lint. 544
—
Cottonseed
53
Flaxseed . . !
H ay, all. . . .5,9 0 8
.2,781
Alfalfa . .
.
32
Peas, d ry . . . 148
Potatoes . . . 292
. 125
Sweetpotatoes 13
Sugar beets . 285
165
451
77
514
—
138
5,927
2,827
31
159
307
120
10
293
bu.
bag
bu.
bale
ton
bu.
ton
ton
bale
bu.
bu.
bu.
bu.
ton
of
P
w elfth
D
^-Per A cre->
1938
1939
27
27
30
31
27
31
33
37
12
11
22
24
24
23
22
24
3
13
4
1.1
3
12
4
1.3
—
—
16
2.1
2.9
5.6
18
228
67
117
14
15
2.1
2.8
6.4
19
226
75
120
15
r in c ip a l
G r a in
is t r ic t
f---------------Total —
Av.
1928-37
1938
1939
(thousands)
40,634 41,774 48,824
6,895
6,983
7,690
5,597
3,702
3,946
23,374
34,577
26,227
975
742
937
106,499 131,486
99,118
71,818
67,066
85,982
45,504 27,300
39,433
326
5,267
197
439
195
515
12,323
7,859
170
3,204
50,573
7,827
1,116
2,369
361
6,221
364
620
276
822
12,612
8,167
176
2,690
66,713
8,375
1,521
4,066
412
5,582
313
647
288
2,079
12,192
8,046
197
3,054
69,380
9,000
1,200
4,294
Although total crop production in 1939 approximated
the records of the preceding two years, there was consid
erable shifting in acreage planted to different crops.
Wheat acreage was reduced in accordance with the agri
cultural adjustment program, while acreages planted to
barley, oats, and other field crops were enlarged. Flax
production, until recently of little importance in the dis
trict, had a value of $2,756,000 in 1939. Acreage of that
crop was more than double what it was in 1938 and, like
acreage of sugar beets, set a new record. Yields per acre
of almost all grain and field crops were approximately
normal. Combined with heavy carryovers from the pre
vious season, supplies were unusually large and portions
of several important crops, including apples, apricots,
grapefruit, hops, lemons, lettuce, oranges, peaches, pears,
plums, potatoes, and prunes, were left unharvested or
diverted to other than regular commercial channels.
The Twelfth District is the most important deciduous
fruit and nut growing area in the United States, and one
of the most important in the world. Fresh, dried, and
canned fruits produced locally supply the United States
with a large proportion of all deciduous fruit consumed
and are marketed in large quantities in the principal mar
kets abroad. United States commercial production of
several crops, including almonds, apricots, figs, raisins,
olives, cling peaches, prunes, and walnuts, is confined to
the Twelfth District. Bearing acreage of these crops
changed but little in the aggregate during 1939, and total
production declined only slightly from the record level«
of 1937 and 1938. Output of apricots, cherries, and fresh
F ebruary 1, 1940
11
M O N T H L Y R E V IE W OF B U S IN E S S C O N D IT IO N S
prunes was higher than in any previous year while the
almond, pear, and walnut crops were the second largest
produced. Apple production declined sharply to 28,340,000 bushels from 32,900,000 in 1938, but prices continued
low, reflecting an increase in the apple crop in Eastern
states and a loss of European markets that have been of
great importance to Pacific Coast apple growers in the
P r o d u c t io n o f D e c id u o u s F r u i t a n d N u t C rops
T w e l f t h D is t r ic t
(in thousands of tons)
Average
1928-37
12
36,766
232
,. ,
3
53
1936
8
31,913
248
6
62
1937
20
33,431
311
5
53
1938
15
32,864
166
14
85
1939
19
28,339
317
8
89
20
8
1,944
466
355
1,123
210
284
22
24,476
14,764
9,712
16,996
12,961
4,035
62
20
11
1,723
472
333
918
182
190
27
24,090
14,043
10,047
19,152
14,597
4,555
64
29
12
2,462
631
424
1,407
246
419
28
24,564
15,418
9,146
18,616
13,272
5,344
66
32
11
2,541
641
457
1,443
290
283
44
23,038
13,042
9,996
22,704
15,528
7,176
63
25
12
2,182
548
379
1,255
252
247
22
26,079
15,210
10,869
20,522
14,110
6,412
69
68
226
42
64
184
43
53
256
60
64
238
51
86
212
57
Almonds .................
Apples* ...................
A p r ic o ts ...................
A v o c a d o s .................
C h e rrie s...................
Figs
Fresh ...................
Dried ................... , . .
Grapes ......................
W in e ...................
Table ...................
R a is in ...................
Dried ...............
Fresh ..............
Olives ......................
Peaches* .................
C lin g sto n e ..........
Freestone ..........
Pears* ...................... . . . .
Bartlett ...............
Others .................
Plums ......................
Prunes
F resh ...................
Dried ................... , . .
W alnuts ..........................
*Thousands of bushels.
was larger than in any earlier season. Income of most
growers was above that of 1938, reflecting larger output
and slightly higher prices.
Production of livestock and related products, while
relatively less important as a source of farm income in
this region than in the country as a whole, accounts for
about 40 percent of total district farm income. During
1939, approximately $439,147,000 was returned to this
branch of agriculture, compared with $427,579,000 in
1938, and $438,000,000 in 1937. After the outbreak of
war abroad, prices of most livestock and livestock prod
ucts advanced from the low summer levels, but for the
A c r e a g e , P r o d u c t i o n , a n d F a r m V a l u e of T r u c k C r o p s
T w e l f t h D is t r ic t
(in thousands)
t-------Farm Value------- N
✓—Acreage—>, r-Production*-^ Average
For M arket*
1938
Artichokes ( b o x ) . . . . 10
Asparagus ( c r t . ) ........ 29
Beans, snap ( b u .) ------ 13
Cabbage ( t o n ) ............ 11
Cantaloupes ( c r t . ) . . . 52
Carrots ( b u .) .............. 24
Cauliflower ( c r t . ) . . . . 17
Celery ( c r t . ) .............. 17
Cucumbers ( b u .) ........
2
2
Garlic ( s a c k ) ..............
Lettuce ( c r t . ) ............ 135
Onions ( s a c k ) ............ 15
Peas, green ( b u . ) . . . . 59
Peppermint oil (lb s .).
3
Peppers, green ( b u .) . . 2
Potatoes, early ( b u .). 34
Spinach ( b u .) ............
4
Strawberries ( c r t . ) . . . 28
Tomatoes ( b u .) .......... 31
Watermelons ( e a .) . . . 20
1939
1938
10
34
11
12
58
26
16
15
2
2
153
17
61
3
2
33
4
26
30
20
873
2,491
1,502
83
9,3 0 8
11,034
5,531
4 ,8 6 4
4 20
150
17,248
3,6 2 8
4,972
106
546
9,6 9 0
1,914
2,5 6 2
5,000
11,838
50
4
5
2
50
1
8
61
45
27
16
6 74
67
4
21
3 38
19391928-37
1938
1939
1,122 $ 1,5 70 $ 1,8 77
$ 2,0 20
3,160
4,595
3,399 4,3 1 2
1,653
1,373
1,478 1,687
97
1,122
1,103 1,224
8 ,009
10,731
9,5 3 6 9,599
11,589
4,3 5 7
6,616 7,173
5,117
3,291
2,9 1 4 2,8 3 0
4 ,5 3 2
4 ,7 8 2
6 ,8 3 4 6,491
500
2 50
378
4 50
154
391
450
485
2 1,2 99 2 5,8 49 2 6,3 87
2 8,9 80
4,495
3,7 1 8
3,463 2,196
6,4 0 9
6,809
6,7 7 9 8,032
129
148
197
2 32
6 36
2 34
437
509
11,089
2,9 0 8
5,039 5,023
2,425
485
784
797
2,525
5,988
5,604 5,840
4,7 1 8
4,515
7,334 7,320
12,817
1,384
1,447 1,522
past. In only one other year in the last two decades was
apple production in this district at a lower level. The grape
crop of 2,182,000 tons was about 12 percent below the
large crops of 1937 and 1938, but was more than 10 per
cent above the average for the ten years 1928 through
1937. Prices and total cash returns received by most de
ciduous fruit growers were higher than in 1938. Largest
increases were reported for the apricot, peach, pear, and
prune crops. Income from apples, grapes, and olives was
smaller than in 1938.
Total output of grapefruit, lemons, and oranges in this
district was smaller than in 1938 but larger than in any
other year except 1937. Prices were extremely low, how
ever, largely reflecting competition with heavy shipments
from Florida and Texas, and aggregate returns received
by district growers were about 16 percent smaller than in
1938 and approximately 40 percent below the high 1937
receipts.
year as a whole averaged only about the same as in 1938.
Hog prices, however, declined further in the last quarter,
reflecting plentiful supplies. Preliminary data indicate
that the total movement of livestock from district pas
tures and ranges to local and eastern markets, and the
aggregate consumption of livestock products were larger
than in 1938. The feeding of cattle for local markets
reached record proportions during the current winter
with 440,000 head in district feedlots, compared with
347,000 head last winter.
P r o d u c t i o n a n d F a r m V a l u e of C i t r u s F r u i t C r o p s !
B anking and Credit
T w e l f t h D is t r ic t
/-------- Production-------- t-------------------- Farm Valu e----------------- •
N
(thousands of boxes)
r------------ T o ta l----------Average
Per Box*
(thousands of dollars)
1927-38 1938
1939
1938 1939 1937
1938
1939
Grapefruit ................. 2,547 4,693
4,444
.58 .48 3,249 2,705 2,124
Lemons ...................... 7,881 9,360 11,322
2.34 1.47 23,192 21,902 16,643
Oranges, all.............. 34,895 46,264 41,582
.83 .87 58,571 37,567 33,871
V a le n c ia s .............. 19,380 29,234 23,245
.83
.96 35,501 23,527 21,444
Navels, etc............15,515 17,030 18,337
.84 .75 23,070 14,040 12,427
f Crop years ending Oct. 31.
^Dollars per box.
With stocks of canned vegetables less burdensome late
in 1938 than a year earlier, truck crop growers in this dis
trict expanded their acreage somewhat. Output of car
rots, lettuce, and early potatoes set new highs. Produc
tion of green peas for canning in the Pacific Northwest
was down considerably from the two previous years, but
For Canning*
Asparagus ( t o n ) ........ 48
Beans, snap ( t o n ) . . . .
6
Corn ( t o n ) ..................
6
Cucumbers ( b u .) ........
3
Peas, green ( t o n ) ____ 66
Pimientos ( t o n ) ..........
1
Spinach ( t o n ) ............
9
Tom atoes ( t o n ) .......... 52
48
17
14
4 66
54
4
28
390
4,0 0 8
615
48
369
1,594
174
581
3,992
3,175
1,291
2 32
382
3,511
147
249
4 ,0 2 8
3,466
879
162
228
2,169
142
326
4,993
*U nit designations apply only to data on production.
Banking and credit conditions in the Twelfth District
during 1939 continued favorable to the encouragement of
expansion in business activity. The part played by the
banking system, as in 1938, was largely passive in charac
ter, and it functioned in a manner conducive to recovery
by making credit readily available on liberal terms. Large
amounts of idle funds were held by most banks through
out the year, and banks were in a position to meet abun
dantly the credit requirements of their communities.
Those requirements which could be met legitimately with
bank credit rather than with equity capital were satis
fied at rates of interest that continued to drift downward
from the low levels prevailing in 1938. Demand for credit
from private borrowers, which had declined moderately
in 1938, revived during 1939 and was reflected by a con-
12
F ebruary 1, 1940
FEDERAL RESERVE B A N K OF S A N FRANC ISCO
siderable increase in loans and discounts of district mem
ber banks, particularly during the latter half of the year.
Credit extended public agencies likewise increased, banks
adding to their holdings of obligations of the United
States Government and of states, counties, and other ad
ministrative bodies. This gain in loans and investments
contributed to a further rise in deposits. Adjusted de
mand deposits rose to new record levels, while time ac
counts of individuals, partnerships, and corporations also
advanced.
CHANGES IN DEPOSITS
At the close of 1938 deposits of district member banks
amounted to $4,615,800,000, approximately 11 percent of
the total reported by all member banks in the United
States. Continuing the expansion of other recent years,
deposits rose to $4,901,000,000 on December 31, 1939,
the increase taking place principally in demand accounts.
Most of the increase in deposits in this district during
1939 reflected operations of the United States Treasury,
which continued to disburse larger amounts in the
Twelfth District than it collected locally. The larger
expenditures have been met by transferring funds from
some of the deposit, but since it has merely been trans
ferred to the account of a customer in some other bank it
continues as an addition to deposits of banks as a group.
Thus, any increase in loans results in a corresponding
gain in deposits of banks as a whole. Total loans of dis
trict member banks, which had declined slightly during
1938, increased from $1,868,737,000 on December 31 of
that year to $1,966,789,000 at the end of 1939. Increased
investments are generally similar to loans in their effects
upon district bank deposits, and expansion in securities
holdings of banks during the year also contributed to the
deposit growth.
In the absence of offsetting developments, a rise might
have been expected in deposits of Twelfth District mem
ber banks roughly approximating the large net Treasury
disbursements and the increase in loans and investments.
During the year, however, several factors drew down de
posits. The amount paid by local banks and their custom
ers to other parts of the country for goods, services, se
curities and the like was $192,242,000 larger than their
receipts from commercial and financial dealings with the
rest of the country. Consequently, in so far as the net
payments out of the district were for the accounts of cus
tomers of banks rather than for the banks themselves,
deposits were reduced. Another important factor drawing
down deposits was an increase of $30,614,000 in district
demand for currency, a somewhat greater than customary
proportion being for larger denomination bills.
CHANGES IN LOANS
1930
1931
1932
1933
1934
1935
1936
1937
1938
1938
L O A N S , I N V E S T M E N T S , A N D D E P O S IT S O F A L L
M E M B E R B A N K S — Twelfth District
Call report data; December 30, 1939 figures preliminary. Logarithmic
vertical scale; that is, equal vertical distances measure equal
percentage changes rather than absolute amounts.
other sections of the country, especially New York, where
receipts from the sale of securities and from taxes exceed
Treasury disbursements. With most payments of the
Treasury made to individuals and firms and ultimately
deposited in banks, and with Treasury collections largely
received in the form of checks drawn on deposit accounts
of individuals and firms, any net excess of disbursements
in the Twelfth District results in a corresponding in
crease in local bank deposits. During 1939 net Treasury
disbursements in the district amounted to $244,971,000,
moderately lower than the $275,588,000 in the preceding
year.
Expansion in local loans was another important source
of additional deposits of district banks in 1939. The pro
ceeds of a loan are customarily advanced in the form of a
credit to the account of the customer. As the customer
checks out the funds, the bank making the loan may lose
O f the increase of $98,000,000 in total loans of district
member banks during 1939, well over half was accounted
for by advances secured by real estate. Loans on residen
tial property, which had increased considerably during
the preceding two years, rose $54,000,000 further to
$563,000,000 on December 31, 1939. The bulk of this in
crease was accounted for by banks and branches of banks
located outside the larger district cities. Loans secured by
other urban real estate expanded moderately, but loans
on farm lands remained about unchanged as in the pre
ceding two years. Borrowing by commercial and indus
trial firms from district member banks decreased $48,000,000 during the first half of 1939, but there was a con
siderable increase in demand for credit in the fall months,
and at the year-end commercial loans were only $32,000,000 less than at the end of 1938. Loans in the miscel
laneous classification, which includes personal and other
instalment loans to consumers, increased considerably
during the year and moderate gains took place in credit
extended brokers and other customers to finance the pur
chasing and carrying of securities.
CHANGES IN INTEREST RATES
Such change as was evident in rates of interest charged
customers by district member banks was in the direction
of a further slight decline. A significant change took place
during the year in the cost of insured home mortgage
financing. Effective August 1, the F. H. A. announced a
reduction in the maximum interest rate on insured mort
gage loans from 5 to 4 ;[/4 percent, which brought the over
all insurance and interest rate on new loans of that type
to 5 percent. Rates charged customers by banks in the
principal district cities on advances for commercial and
industrial purposes were at least as low at the year-end
as in December 1938.
M O N T H L Y
Supplement
R E V I E W
February 1,1940
Federal Reserve Bank of San Francisco
S u m m a r y o f N a tio n a l B u sin e ss C o n d itio n s
Prepared by the Board of Governors of the Federal Reserve System
activity, after a rapid rise in recent months, declined less than season
ally in December. In the first half of January activity did not show the usual
seasonal increase. Distribution of commodities to consumers was maintained in
large volume.
I
n d u str ia l
P r o d u c t io n
I N D U S T R I A L P R O D U C T IO N
Index of physical volume of production, adjusted for
seasonal variation, 1923-1925 average=100. By
months, January 1934 to December 1939.
D E P A R T M E N T S T O R E S A L E S A N D ST O C K S
Indexes of value of sales and stocks, adjusted for seasonal
variation, 1923-1925 average=100. By months,
January 1934 to December 1939.
Industrial output decreased in December, but by a smaller amount than is usual
at this season, with the consequence that the Board’s index, which allows for usual
seasonal variations, advanced further from 124 to 128 percent of the 1923-1925
average. As in other recent months, the rise in the index continued to reflect mainly
increased activity in industries producing durable goods. Automobile production
rose sharply in December owing to the reopening of plants of one large producer
which had been closed for almost two months. Plate glass production also in
creased, at steel mills activity was maintained near the high level that prevailed in
October and November; fourth quarter production of steel ingots was greater
than in any other three-month period on record. Output of zinc and deliveries of
tin continued to increase in December, and lumber production declined less than
seasonally.
In the nondurable goods industries, where production had been at high levels
throughout the autumn, changes in output in December were largely seasonal in
character. A t woolen textile mills, however, there was a considerable reduction in
activity, and activity at silk mills declined to a low level, reflecting in part contin
ued high prices of raw silk. Output of crude petroleum continued at a high rate in
December, v/hile coal production was reduced, following a large volume of output
in the two preceding months.
In the first half of January steel ingot production was at a somewhat lower
level than in December, while automobile assemblies were maintained at about the
same high rate as in the previous month.
Value of construction contracts awarded, as reported by the F. W . Dodge Cor
poration, increased further in December, owing to the inclusion in the December
figures of a large amount for a dam under construction by the Tennessee Valley
Authority. Contracts for private building, both residential and nonresidential,
declined seasonally.
E m ploym ent
According to reports from leading industrial states, factory employment de
creased less than seasonally in December and payrolls showed a further advance.
D is t r ib u t io n
Distribution of commodities to consumers increased further in December.
Sales at variety stores showed about the usual sharp rise and sales at department
stores and mail-order houses increased more than seasonally.
Freight-car loadings declined by more than the usual seasonal amount from
November to December, reflecting chiefly a further reduction in coal shipments
and a decrease in loadings of ore, which had been at a high level in the previous
month.
W H O L E S A L E P R IC E S
Index compiled by the United States Bureau of Labor
Statistics, 1926=100. By weeks, 1934 to
week ending January 13, 1940.
C o m m o d i t y P r ic e s
Prices of wheat, which had advanced sharply early in December and continued
at the higher level during the rest of the month, declined considerably in the first
half of January. Smaller decreases occurred in some other commodities, including
hides, tin, and zinc. Prices of most other basic commodities, such as cotton, wool,
lead and steel scrap, showed little change.
G o v e r n m e n t S e c u r it y M a r k e t
Prices of United States Government securities continued to advance during
December and were steady during the first two weeks of January.
B a n k C r e d it
M E M B E R B A N K S IN 101 L E A D I N G C IT IE S
Wednesday figures for reporting member banks in 101 lead
ing cities, September 5,1934, to January 13,1940. Commer
cial loans, which include industrial and agricultural
loans, represent prior to M ay 19,1937, so-called
“ Other loans” as then reported.
Total loans and investments of reporting member banks in 101 leading cities
declined in the four weeks ending January 10, following an increase during the
first half of December. These changes reflected largely a temporary rise and a
subsequent decline in loans to security brokers and dealers in connection with the
Government’s flotation of a new issue of bonds. Total holdings of United States
Government obligations at city banks showed little net change during the period.
As a result chiefly of further increases in gold stock as well as the post-holiday
return of currency from circulation, excess reserves of member banks increased
sharply in the four weeks ending January 10.
@FedFRASER