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RewLeur MoritkLj, FEDERAL RESERVE BANK OF SAN F R A N C IS C O F E B R U A R Y 1, 1942 R e v i e w o f B u s in e s s C o n d i t i o n s in 1 9 4 1 expansion took place in all sectors of the Twelfth District economy during 1941 to levels sub stantially above anything attained in the past. Constantly increasing Government expenditures and increased pri vate spending generated therefrom were the major fac tors. The defense and war programs, however, did more than raise levels of production, building, employment, urban and farm incomes, and retail trade. Under their impetus, the framework of the Twelfth District economy has been materially altered. Its central supports now in clude large aircraft, shipbuilding, and metals industries. These programs have also made imperative, in the Twelfth District and in the country as a whole, increas ing Government direction of economic activity. For the first seven or eight months of 1941, expansion of industrial activity was general. In spite of difficulties over supplies of a few metals, notably aluminum, pro duction responded to increased military and civilian de mand. These increases in the outputs of nearly all goods could not continue, however, because available supplies of men, materials, and equipment simply were not suffi cient to satisfy all demands and industries began to com pete seriously with each other for a widening variety of limited resources. The importance and immediacy of armament needs and the dislocations and inequities that rapidly rising prices were sure to bring in their wake made it necessary to substitute, in part, other controls for those of the market over the uses of materials and the dis tribution of products. . The first of many priority and allocation orders, one dealing with aluminum, was issued in March. Others fol lowed with increasing frequency and in August accept ance by producers of defense orders ahead of others on their books was required. A production limitation order providing maximum quotas for passenger car and light truck output was issued in August, and additional quotas relating to other durable consumer goods have since been adopted. Less essential uses of scarce resources were also curbed by restricting consumer demand for certain prod ucts through other governmental action and as a result of price increases. Effective September 1, control over instalment credit was introduced, administered by the Board of Governors of the Federal Reserve System. New and increased excise taxes, effective October 1, were levied on various commodities, some of which were chosen with the partial objective in mind of restricting consumer purchases, although the tax rate in no case ex ceeded 10 percent. Retail prices, after desultory increases up to March, began to rise fairly rapidly. By the end of the year, living costs in the four largest Pacific Coast cities had risen about 11 percent over those of December 1940. Rationing of tires was begun this January, and M a r k e d automobile sales to civilians are now prohibited pending adoption of a rationing plan. Indnstry and Trade These developments checked activity in many lines, particularly those related to the production and sale of consumer durable goods, the output of which reached a peak in the country as a whole during the summer. In the Twelfth District, automobile assembling, tire manufac turing, some types of metal working, residential build ing, and wholesale and retail distribution of restricted products were adversely affected during the closing months of the year. Aggregate industrial activity con tinued to increase, however, since industries affected E s t im a t e d V o l u m e o f I n d u s t r ia l O u t p u t — T w e l f t h D is t r ic t (expressed as percentages of 1939 output) 1929 1933 1937 1938 134 57 102 81 121 80 102 99 Motion pictures (c o s t ) . 69 52 92 95 Smelting and refining. . . 128 40 115 81 Paper .................................. 78 67 99 86 Pulp .................................... 55 55 108 77 100 48 Automobile assemblies. . 135 79 100 Rubber tires...................... 123 76 58 Aircraft (v a lu e )............... 10 10 43 62 Shipbuilding (tonnage __ __ __ __ launched)* .................... 78 49 72 98 97 48 98 80 80 Canned fruit . 77 108 74 94 81 55 124 96 78 97 109 84 93 98 98 M eat . 94 92 Sugar 82 82 94 Flour . 79 92 90 Butter 90 101 97 101 61 78 91 99 Cheese 55 61 116 91 89 97 102 89 129 112 21 72 178 78 Lead 123 100 Zinc . 103 58 119 99 39 37 85 88 Gold . 38 115 101 94 77 130 106 111 75 95 90 98 C o a l ....................................... 152 81 115 90 1939 100 100 100 100 100 100 100 100 100 1940 110 99 100 125 112 130 136 105 167 1941 130 108 123 140 112 142 151 107 660 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 400 114 109 91 131 101 114 103 96 105 103 112 105 117 116 146 105 104 99 101 103 1,200 157 144 113 159 114 112 99 97 101 117 153 111 134 116 154 103 102 103 107 116 •Maritime Commission program only. were not of primary importance in the area and because of the sharp and continuous expansion in aircraft pro duction, shipbuilding, and related industries. To meet the needs of the aircraft industry for light metals, facilities for production of aluminum and mag nesium have been greatly increased in the United States and, primarily because of availability of electric power and the proximity of aircraft plants, a large share of these additional facilities have been located in the Twelfth Dis trict. These are new industries in so far as the district is concerned, and this district alone is expected to produce a greater tonnage of aluminum and magnesium in 1942 than was produced in the entire country in 1940. FEDERAL RESERVE BANK OF SAN FRANCISCO Production in older established major industries, in cluding lumbering, petroleum production and refining, fruit and vegetable canning, and mining and smelting of nonferrous metals also expanded in 1941, but the gains were relatively much smaller. Concentration upon production of aircraft and ships has meant that expansion in employment has for the most part occurred along the Pacific Coast. The Los Angeles, San Francisco, and Seattle industrial areas and San Diego, Richmond, Vallejo, and Bremerton in particular have experienced marked increases in population which created housing shortages and severe pressure upon school, transportation, and other community facilities. Migration to the coast states, however, apparently began to decline late in 1941. In the latter half of the year a number of large con tracts were awarded for construction of metal produc ing plants in the intermountain area of the district. These plants constitute a long stride in the industrialization of that otherwise primarily agricultural and mining region, and will lead to some influx of population to meet the de mand for industrial labor around the sites of these plants. Nonresidential building increased sharply in 1941, largely reflecting construction of facilities to be used di rectly by the Army and Navy and in the production of war materials and equipment. New residential building like wise attained large proportions, privately-financed con struction being supplemented by public projects, particu larly in defense areas. A peak in privately-financed resi dential building was attained in July, however, and marked curtailment from the level of that month was evi dent by the year-end. Production and EmploymentIndex numbers, 1923-1925 With Without Seasonal Seasonal ^-Adjustm ent—> ^-Adjustment—\ ,— 1941— N 1940 t— 1941— \ 1940 D ec. N ov. Dec. Dec. N ov. Dec. Industrial Production1 Manufactures (physical volume) Lumber .................................. 113 109 110 87 103 85 — — — 174 176 159 Refined oils............................. Cement .................................. ... 211 177 159 156 177 118 W heat flour............................., 112 94 118 112 103 118 average=100 Minerals (physical volume) — Petroleum ............................. . Lead ( U . S .) 2........................ Copper ( U . S .) 2.......... ! 154 Construction (value) Residential building permits3 Twelfth D istrict............ . 58 63 Southern California. . Northern California. . 32 Oregon ........................ . 60 W ashington ............... . 65 Intermountain states . 166 Public works contracts. . , . — Annual Average 1941 1940 107 91 173 158 159 121 120 118 — — 127 116 152 145 96 99 91 128 118 155 156 146 96 93 118 116 153 142 100 107 65 131 155 79 39 43 213 83 93 97 — — 45 93 85 54 66 113 22 137 54 36 31 26 37 185 47 108 81 63 323 502 459 87 70 85 75 82 61 53 45 124 69 124 100 521 292 Miscellaneous Electric power production . 290 284 251 274 269 238 259 231 Factory Employment and Payrolls4 Employment Pacific C oast........................ . 212 California ......................... . 264 Oregon ............................. . 149 Washington .................... . 140 Payrolls Pacific C oast........................ California ........................ Oregon ............................. W ashington .................... . . . . 284 348 218 184 199 246 146 134 148 174 122 111 206 260 142 133 202 252 145 134 144 171 116 106 175 211 134 124 128 146 109 101 261 321 188 169 157 184 135 112 278 346 196 177 261 324 184 168 154 184 122 108 214 256 166 152 130 150 106 102 1Daily average. 2Prepared by Board of Governors of the Federal Reserve System. ( 1 9 3 5 -1 9 3 9 = 1 0 0 .) 3Includes figures from 197 cities and Los Angeles County, unincorporated. 4Excludes fish, fruit, and vegetable canning. February 1, 1942 Retail trade showed large gains in 1941, largely as a result of rising consumer incomes both in urban and agri cultural communities. Value of department store sales in the district, for example, was up 18 percent over 1940. Increases during the course of the year, however, were decidedly irregular, largely reflecting recurrent waves of anticipatory buying induced by expectations of further price advances, of the effect upon prices of newly enacted excise taxes, and of shortages in future supplies. Aircraft Manufacturing and Shipbuilding The West Coast aircraft industry established an un paralleled record of industrial expansion during the year and continued to be the major defense industry in the Twelfth District. Both employment and deliveries in creased throughout 1941, with increases much more pro nounced late in the year as new plants were brought into production. Expanding operations in both private and navy yards have made shipbuilding in recent months the fastest grow ing industry in the district. The serious need for addi tional shipping has brought about marked changes since 1939 in this industry which had been small and relatively dormant during the preceding two decades. Under the Maritime Commission program, activity in private yards has expanded rapidly. A construction program including both ways and ships, announced by the Commission in January, makes it apparent that the maximum scale of operations has by no means been attained, for contracts awarded to West Coast yards call for completion by the end of 1943 of 402 ships in addition to those for which contracts had previously been awarded. Naval construc tion is extensive both at Government and private yards. Continuous operation of coast shipyards is planned in an agreement worked out by Government, labor, and man agement. Building Materials Lumber production in the Twelfth District in 1941 ex ceeded that of the preceding year by 18 percent, the an nual index of production rising to 130 percent of the 1923-1925 average. During the first seven months of 1941, however, output did not match the growing volume of orders received by mills, and unfilled orders reached M IL LIO N S OF BOARD FEET LU M BER PRODUCTION A N D N E W ORDERS—Twelfth District Daily average. By months, January 1935 to December 1941. Output fig ures adjusted for seasonal variation. a peak of 1,600,000,000 board feet in July. From then until December, production exceeded orders. Reflecting some anticipation of the construction necessary for the expanded military program, orders increased sharply in February 1, 1942 December, unfilled orders rising 300,000,000 board feet to total 1,300,000,000 at the end of the month. Cement production also was affected by the heavy vol ume of construction, and was well above that of any other year. The peak was reached in September, but the de cline since that time has been small. Production in the three coast states amounted to the record total of 24,200,000 barrels, up 31 percent over a year earlier. Metals The district steel industry operated at 95 percent of capacity in 1941, a rate never previously attained, and produced 38 percent more steel than in 1940 and 57 per cent more than in 1939. The pressure upon the steel in dustry of the entire nation, coupled with the possibility that transportation facilities may be inadequate to move steel in sufficient volume to the Pacific Coast, led to the adoption of a large plant expansion program to be fin anced by the Federal Government. These new facilities will be located principally in the interior and will produce a wide variety of products ranging from pig iron to fin ished steel items. Military needs, especially in aircraft production, for aluminum and magnesium, have required a marked ex pansion in the production of those light metals as well as their nearly complete diversion from civilian uses. By the end of 1941, magnesium capacity in the district, non existent in 1940, was 4,000 tons per year, and by the end of 1942, capacity is expected to reach 96,000 tons. Aluminum plants for both the production and fabri cation of pig aluminum are under construction in the Pacific Northwest and in southern California. Annual productive capacity in the district, approximating 120,000 tons, was about four times as great at the end of 1941 as a year earlier, and is expected to be twice the present level by the end of 1942. Mining Mining and smelting of the principal non ferrous metals increased only moderately in 1941 over 1940, despite the pressure of demand for copper, lead, and zinc. As shown in the accompanying table, copper production was up 11 percent and zinc production 6 percent, while the output of lead was unchanged. Gold production declined slightly. Arizona continued as the leading copper producing state in the nation, California led in gold production, and Idaho M in e P roduction of N onferrous M etals — T w e l f t h D istrict * Gold (fine ou nces). Silver (fine ounces) Copper (t o n s ) . . . . Lead (t o n s ) ............ Zinc (t o n s ) ............... 7 M O N T H L Y REVIEW OF BUSINESS CONDITIONS 1929 1,060 40,728 665 317 108 (in thousands) 1933 1937 1938 991 2,282 2,272 16,638 49,819 43,583 109 577 374 138 219 178 61 126 104 1939 2,691 43,268 516 178 105 1940 2,832 44,920 611 206 153 1941 2,773 43,954 691 206 162 *D ata include all of Arizona, the five southeastern counties of which are in the 11th Federal Reserve District. had the largest silver, lead, and zinc output. Further impetus to production is expected from recent increases in lead and zinc price ceilings and from the prices above the ceilings at which output of copper, lead, and zinc in excess of 1941 quotas can be sold to the Metals Reserve Company. Food Industries District fish, fruit, and vegetable canneries were con siderably more active in 1941 than in either of the two preceding years. The vegetable pack set a new record for the district, California output approximating 20,500,000 cases. Tomatoes and tomato products accounted for threefourths of this amount. The fruit pack in California to taled 26,000,000 cases, about half of which were peaches. The Alaskan and Twelfth District output of canned salmon, 7,639,000 cases, was larger than in any year since 1936, and the district sardine pack of 5,050,000 cases ex ceeded that of any previous year by more than 1,000,000 P roduction a n d S tocks of C a n n e d F ruits an d V egetables— C alifo r nia (in thousands of cases) Apricots ...................... Cherries ...................... Fruit cocktails.......... Fruits for s a l a d . . .. P e a r s ............................. Peaches ...................... Other fruits............... Asparagus ................. String beans............... Peas ............................. Spinach ...................... Tomatoes .................... Tomato products (excl. p a ste ).......... Other vegetables. . . /— ■—Production----------- \ 1939 1940 1941 3,338 1,815 4,072 469 87 147 3,711 4,361 5,107 1,547 601 634 1,347 1,532 1,792 11,462 10,742 12,733 748 889 1,320 1,849 2,181 1,578 107 187 314 212 151 55 1,509 1,315 1,682 2,769 5,244 6,283 4,312 964 6,514 897 9,280 1,260 t— Canners Stocks----- N Sold and Unsold* 1939 1940 1941 1,266 878 1,294 309 135 69 2,056 2,406 2,484 547 445 354 578 923 722 6,441 5,304 4,294 — — — 547 801 610 — — — — — — 434 1,614 197 3,202 379 2,905 3,161 — 4,319 4,390 — — *End of calendar year. cases. Canning of tuna, however, declined to 2,828,000 cases from the record 1940 pack of 4,187,000 cases. District flour production for the year as a whole was about the same as in 1940. Activity at mills increased con siderably early in the year to attain record levels in the second quarter, but a marked drop took place in the last half of the year. Construction New construction undertaken in the district during 1941 had a value almost double that of 1940, which itself was well above the value of construction in recent years. New residential building in areas for which data are available reached an estimated total of $373,000,000, as compared with $298,000,000 in 1940, while nonresidential construction amounted to $734,000,000, more than double the 1940 total of $320,000,000. Residential building declined during the last half of 1941 as rising costs, uncertainty concerning the avail ability of materials, and priority regulations checked pri vate construction. Under a priority order issued in Sep tember preference ratings are allowed orders for most metal products used in construction, providing the pro posed housing is located in designated defense areas and providing the estimated market price of the dwelling does not exceed $6,000 or the proposed monthly rental $50 per family unit. Distribution and Trade— Index numbers, 1923-1925 average=100 „ Retail Trade1 Automobile sales (num ber)2 Total ......................................... Passenger ........................... Commercial ...................... Car loadings (number)2 Total ......................................... Merchandise and M isc .. O t h e r .................................... With Without Seasonal Seasonal /—Adjustment-^ /—Adjustment—\ f 1941 *\ 1940 ,— 1941— > 1940 Dec. N ov. Dec. Dec. N ov. Dec. — — — — — — — — — 114 110 97 132 128 107 91 89 84 Annual Average 1941 1940 106 78 161 95 73 157 222 137 200 149 128 140 123 240 190 100 111 118 128 79 91 105 90 116 99 91 79 85 95 73 d ep artm en t and furniture store indexes, customarily shown in this table, are in the process of revision. 2Daily average. 8 February 1, 1942 FEDERAL RESERVE BANK OF SAN FRANCISCO Federally-financed housing projects amounted to about 15 percent of the total, double their proportion in 1940. The relative importance of this type of housing probably will increase in the current year as building becomes more confined to lower cost housing in defense areas. Nonresidential construction clearly reflected the influ ence of the defense program. O f the $734,000,000 total, MILLIONS OF DOLLARS ticipation of excise taxes effective October 1. With con sumers’ holdings of various items built up, sales declined from the late summer and early fall peak. For 1941 as a whole, value of sales of these stores was 18 percent higher than in 1940. Sales of new automobiles likewise were affected by an ticipatory buying to a considerable degree. They attained a peak in May but were large through the entire 1941 model year, district sales of passenger cars during the first eight months of 1941 exceeding those during the like period of 1940 by 45 percent. With the introduction of new models in September, sales fell off sharply, how ever, because of previous advance buying and increased prices. Some increase in sales occurred in December, just in advance of the prohibition upon the sale of automo biles now in effect. Agricnltnre During 1941, large aggregate output of crops and of livestock products which sold at prices sharply higher than those of the preceding three years returned district farmers a record cash income. Receipts from farm mar ketings and Government payments totaled approximately T otal C a s h F a r m I n com e *— T w e l f t h D istrict (in thousands of dollars) N E W B U I L D I N G C O N S T R U C T I O N - T w e l f t h District M onthly value of new construction, January 1939 to December 1941. army and navy building amounted to some $219,000,000, and industrial facilities to $419,951,000. More than 90 percent of the industrial facilities contracts were fed erally financed. Metals and machinery plants accounted for $294,000,000, aircraft plants $22,000,000, and ship yards $64,000,000, leaving only some $40,000,000 in all other types of industrial construction. Other Industries Petroleum producing and refining operations, which were relatively stable in 1939 and 1940, expanded some what in 1941. Crude production rose by about 4 per cent in 1941 over 1940, the daily average production last year having been 631,000 barrels. The output of refined oils in 1941 rose by approximately 9 percent over that of 1940. Year-end stocks of petroleum products were at moderately lower levels in 1941 than in 1940. District pulp production, which had risen in 1940 to record levels, advanced further in 1941. Production was up 10 percent over the 1940 output. Activity in the motion picture industry increased in 1941, as the industry escaped, for the most part, major difficulties in regard to supplies of materials confronting many other industries producing consumer goods. Total costs of pictures produced, according to trade reports, were 23 percent higher in 1941 than in 1940, and employ ment increased moderately. Retail Trade Department store sales increased steadily in the first eight months of 1941 to record levels in August, the re sult of expanding consumer incomes and of expectations of future shortages, higher prices, and instalment credit regulation. Anticipatory buying occurred particularly in household appliances and silk hosiery, with fears of short ages and higher prices predominant. Furs, radios, and phonographs were also purchased in large amounts in an A r i z o n a ....... California . . . Id ah o ........ Nevada ....... Oregon ....... U tah .......... W a sh in g to n .. Twelfth D is t r ic t . . .. 1929 1932 1938 1939 1940 1941 68,030 23,410 58,048 60,963 63,465 88,500 649,750 334,460 577,751 614,858 658,048 834,400 115,980 41,220 87,240 98,521 100,023 129,900 18,720 5,850 11,865 13,054 13,906 16,800 113,840 46,360 103,142 111,397 117,363 158,400 58,150 25,160 45,618 46,868 48,209 64,000 183,320 79,170 135,159 155,901 151,785 204,800 ------------- --------------------------------------------------------------------------1,207,790 555,630 1,018,823 1,101,562 1,152,799 1,496,800 ^Includes Federal Government payments. $1,496,800,000, up 30 percent over a year earlier, and sur passed the 1929 figure of $1,207,790,000 as well as the 1937 figure of $1,225,882,000. As indicated in the ac companying tables, increases over the preceding year were general for all states and nearly all commodities. The largest gain occurred in Arizona, 39 percent, and the smallest in Nevada, 21 percent. Returns from district crops rose 31 percent and income from marketings of livestock and products advanced a similar amount. GovC a s h F a r m I n com e a n d G o ver n m ent P a y m e n t s — T w e l f t h D istrict (in thousands of dollars) t--------------- 1940-----Farm Crops Arizona . 31,813 California ..,412,627 , 42,883 Nevada . 1,633 Oregon . 49,556 U ta h ........ . 11,846 W ashington, . 83,444 rr«r.1f+!i District. .633,802 G o v ’t Livestock Pay and Prods. ments 27,666 3,986 223,581 21,840 48,973 8,167 12,047 226 62,108 5,699 33,533 2,830 61,898 6,443 469,806 49,191 t Farm Crop s 49,300 522,000 49,900 1,800 70,900 15,000 115,900 824,800 ----- 1941-----Livestock and Prods. 35,500 292,200 72,700 14,800 82,000 46,100 82,700 626,000 G o v ’t Pay ments 3,700 20,200 7,300 200 5,500 2,900 6,200 46,000 eminent payments amounted to about $46,000,000 or 3 percent of the total income. This represented a further decline from the peak of Government payments reached in 1939, but was still well above average payments in the preceding six years. Since production as a whole was only slightly greater than in 1940, a large proportion of the increase in income was attributable to higher prices. The increase in farm net income did not keep pace fully with the increase in gross income because pfoduc- February 1, 1942 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS real estate prices lagged far behind, with advances in the tion costs were higher in most categories— seed, feed, several states ranging only from 7 to 14 percent. fertilizer and spray materials, building supplies, miscel laneous equipment, and labor. Higher labor costs were Grain and Field Crops directly traceable to the decreased supply of farm labor arising out of the movement of workers into the armed With harvested acreage of grain and field crops in the services and into the defense industries. Twelfth District during 1941 approximately the same as With exports severely curtailed by war conditions in 1940, slightly higher per acre yields of many crops, throughout most of the world and foreign demand even especially in the Pacific Northwest, brought total pro lower in 1941 than in 1940, most of the rise in farm prices duction somewhat above the previously record-large out and income is attributable to expansion in domestic de put of 1940. Coupled with higher prices for all impormand, to Federal Government purchases, and to legisla A c r e a g e , P r o d u c t io n a n d F a r m V a l u e of P r i n c i p a l G r a i n tion directly or indirectly affecting prices. Under the a n d F ie l d C r o p s — T w e l f t h D i s t r i c t stimulus of lend-lease demand beginning in April, agri (in thousands) r-Farm Value-^ -------Prot iuction — A c res r cultural exports increased from the extremely low levels a (dollars) Harvested Average reached earlier in the year, but the emphasis was shifted Grains 1940 1941 1941 1940 1941 Unit 1930-39 1940 1,982 1,863 bu. 42,032 57,885 55,984 24,529 35,619 from cotton, grains, and fruits and nuts to products not 6,916 8,448 299 bu. 7,576 8,891 9,705 283 previously exported in large volume, including such items 4,798 11,595 254 bu. 4,308 5,522 8,849 163 Sorghums . . 8,974 13,114 835 bu. 26,968 27,115 29,364 860 as eggs, cheese, and dried and evaporated milk. For those 95 bu. 811 1,386 647 944 85 1,110 bu. 105,916 105,914 131,972 67,405 118,235 W heat, all . . 5,041 4,929 commodities for which export markets formerly were bu. 66,622 72,247 104,694 46,582 94,326 W inter . . 3,314 3,892 important outlets and for which foreign demand failed to Spring . . . 1,727 1,037 bu. 39,295 33,667 27,27 8 20,904 23,880 Field Crops revive, however, increased domestic demand and Gov Alfalfa seed. 188 120 2,834 bu. 335 393 231 3,243 ernment purchases, coupled with a continuation of the Beans, d r y .. 527 550 bag 5,503 7,3 45 7,199 22,515 32,784 Clover seed . 94 74 bu. 339 218 390 2,193 2,943 several Government programs beneficial to agriculture, 601 Cotton, lint. 568 bale 492 740 649 45,763 53,301 — were sufficient to raise prices over the levels prevailing — Cottonseed. . ton 219 329 289 7,230 14,548 162 219 Flaxseed . . . bu. 745 3,193 3,639 6,971 5,495 a year ago. Among these Government programs were in H ay, all____ 6,175 6,200 ton 12,325 13,266 13,619 98,954 130,750 35 H o p s ............ 33 174 202 9,915 13,020 bale 210 cluded the granting of non-recourse loans on wheat, cot Peas, d r y .. . 183 217 3,321 bu. 2,560 5,214 10,654 5,097 ton, barley, and rice by the Commodity Credit Corpora 247 bu. 50,562 63,454 Potatoes . . . 255 56,358 34,340 40,577 R i c e ............... 118 153 bu. 9.440 6,514 8,176 9,639 9,180 tion, the subsidization of wheat and cotton exports, the Sweet potatoes 12 12 bu. 1,204 1.440 1,500 1,742 1,725 ton Sugar beets. 292 225 2,897 4,548 3,352 23,127 20,213 purchase and distribution of surplus commodities through the food and cotton stamp plans and the school lunch program, and the development of marketing agreement tant products, the aggregate farm value of grain and field programs for fluid milk, hops, walnuts, and a wide range crops was about 40 percent larger than in 1940. The larg est price advance was recorded by cottonseed which more of fruits and vegetables. than doubled in price from $21.98 per ton in 1940 to The impact of the war upon agriculture, apart from $50.34 in 1941. Price gains over 1940, ranging from 33 the loss of foreign markets and higher costs of operations to 54 percent were recorded for barley, grain sorghums, traceable to defense activities, was generally beneficial oats, wheat, alfalfa seed, clover seed, beans, cotton, pota during 1941. Except for local and temporary difficulties toes, and rice. in obtaining some farm supplies and hardware, agricul The value of wheat produced in the Twelfth District ture, by the year-end, had not yet begun to feel antici during 1941, reflecting an increase in average prices re pated shortages of machinery, chemicals, and other sup ceived at the farm from 64 to 90 cents per bushel and plies needed in defense industries. Increased taxation, in an expansion in output from 105,914,000 bushels to 131,general, bore more heavily on other segments of the econ 972,000 bushels, amounted to $118,235,000 or 75 percent omy than on agriculture, while Government action with more than in 1940. Hay, second in importance among the respect to agricultural prices was a strengthening rather grain and field crops and used chiefly by the district live than a price limiting influence. Prices received by farmers stock industry, increased in value from $98,954,000 in increased more than 40 percent during 1941, and for the 1940 to $130,750,000 in 1941. Among all the principal year as a whole averaged 22 percent higher than in 1940, crops, only sugar beets and alfalfa seed, the output of whereas prices paid by farmers (including interest and which declined, and sweet potatoes, the price of which taxes but not including farm labor) averaged only 4 per was slightly lower, had a value in 1941 lower than in cent higher than in 1940. 1940. While acreage and output of sugar beets were Higher prices of farm products and larger farm in smaller than in 1940, the Twelfth District continued to come, coupled with the desire on the part of investors to be an important domestic source for this crop. purchase farm lands as a hedge against inflation, led to Fruit and Nut Crops renewed activity in the farm real estate market during 1941. Prices of agricultural land advanced, and towards The total value of deciduous fruit and nut crops to dis the end of the year some concern was expressed over the trict growers in 1941 was about 54 percent higher than danger of speculation in farm lands such as occurred dur in 1940. All the principal crops shared in the advance, ing the last World War. It is interesting to note, how with the largest gains recorded for filberts, apricots, ever, that on March 1, 1941, the last date for which esti pears, apples, and grapes, in that order. With the single mates are available, the average value of farm lands was exception of apricots, prices of which were unusually below the 1912-1914 average in all states of the Twelfth high in 1940 because of a crop failure, unit prices of all District except California. Between 1933 and 1941, when important products were higher in 1941 than in 1940. In cash farm income in the district more than doubled, farm general, physical output of both fruits and nuts was about 10 February 1, 1942 FEDERAL RESERVE BANK OF SAN FRANCISCO the same as in 1940 but somewhat larger than the aver age for the past five years. The greatest single change was a reduction in the almond crop to the lowest level in more than a decade, 40 percent below the short crop of last year and 57 percent below the 1934-1939 average. The average farm price of almonds rose from 10 cents per pound in 1939 to 16 cents in 1940 and to 33 cents in P r o d u c t io n a n d F a r m V a l u e o f D e c id u o u s F r u it a n d N u t C r o p s— T w e l f t h D is t r ic t z--------Production------- s (thousands of tons) Average 1930-39 1940 1941 Almonds . 14 . . 43,949 Apples* . 248 Apricots . 7 Avocadoes 61 Cherries . 78 Figs -----Fresh . 9 Dried . 23 Filberts . 2 2,000 Grapes . . 497 W ine . . Table 360 R a i s i n ............ 1,143 281 F r e s h .......... Dried . . . . 216 Olives ............... 24 Peaches* .......... 25,000 Clingstone ..1 5 ,1 4 3 Freestone . . . 9,857 Pears* ............... 18,266 Bartlett . . . . 13,582 Others .......... 4,684 Plums ............ 65 Prunes ............... 677 Fresh ............ 68 Dried ............ 232 W alnuts 46 ________ ............ 10 39,720 116 15 69 111 15 32 3 2,265 607 445 1,213 529 171 60 26,306 14,709 11,597 20,157 13,404 6,750 69 519 67 178 46 6 41,372 217 17 72 113 15 33 5 2,425 583 421 1,421 541 220 43 24,851 13,626 11,225 19,821 14,069 5,752 74 597 86 188 59 t----------------Farm Value--------------t----- Total------ Dollars <— Per Ton1941 1940 324.00 0.67 51.60 107.00 92.17 27.95 57.50 70.00 249.53 15.70 16.30 17.13 14.88 15.50 57.60 76.70 0.52 0.47 0.59 0.68 0.65 0.72 53.00 22.13 24.13 55.52 245.47 662.00 0.98 46.21 109.00 111.56 40.73 57.60 114.00 306.56 22.23 22.00 28.26 20.54 21.30 80.30 154.00 1.05 1.14 0.95 1.11 0.99 1.38 63.60 26.17 28.92 69.74 252.26 (thousands of dollars) 1940 1941 3,305 26,775 5,980 1,562 6,360 3,102 862 2,240 801 35,567 9,894 7,623 18,050 8,200 9,850 4,602 13,771 6,901 6,870 13,612 8,720 4,892 3,392 11,483 1,617 9,866 11,390 3,972 40,712 10,033 1,744 8,032 4,603 864 3,739 1,542 53,912 12,826 11,897 29,189 11,523 17,666 6,622 26,205 15,534 10,671 21,905 13,969 7,936 4,388 15,626 2,487 13,139 14,959 Production in thousands of bushels and price in dollars per bushel. 1941, thereby maintaining cash receipts from this crop. Grapes and apples continued to be the most important sources of income. Table grapes were in good demand with heavy shipments to eastern markets at prices averag ing 35 percent over 1940. Winery demand was strong, buyers taking all wine grapes at relatively high prices. Raisin prices more than doubled during the year as both Government and packers bid for the limited supply. De mand for practically all canned fruits, supported by heavy Government purchases, was active during the year, and despite heavy packs the aggregate supply of canners' stocks at the year-end was smaller than last year. With record orange and lemon crops, and with grape fruit production only slightly below the record produc tion of last year, total output of citrus fruit in California and Arizona was the largest in history. Increased pro duction of lemons was most outstanding, the 1941 crop P r o d u c t io n a n d F a r m V a l u e o f C i t r u s F r u i t C r o p s * — T w e l f t h D is t r ic t t----------Production--------- ^ (thousands of boxes) Average 1931-40 1940 1941 Grapefruit . . . . 3,273 Lemons ............ 8,815 Oranges, a l l . . . 37,450 Valencias . . 21,395 Navels, etc.. 16,055 4,892 11,983 44,945 26,904 18,041 4,633 17,099 49,978 30,006 19,972 ,-------------- Farm Value--------------,------- Total------ N Dollars (thousands r ~Per Box— of dollars) 1940 .42 1.59 1.06 1.13 .95 1941 .47 1.33 1.41 1.62 1.10 1940 2,032 19,053 47,724 30,501 17,223 1941 2,207 22,742 70,550 48,619 21,931 *Crop years ending October 31 of year shown. of 17,099,000 boxes exceeding the largest previous har vest by 43 percent. With per-capita consumption of fresh lemons relatively inelastic, much of the increased pro duction was diverted to by-products. Since returns from salvage operations are relatively low, even failing to re- pay the cost of growing and handling the fruit in some instances, the average return per box received by grow ers for the season declined from $1.59 in 1940 to $1.33 in 1941. Orange prices averaged about one-third higher during 1941 and grapefruit prices were up 12 percent. Despite the loss of European markets and scarcity of boat space, fresh citrus fruit exports during the first nine months of 1941 were above 1940 levels, largely reflect ing increased sales to the Hawaiian Islands and trans pacific markets. For the third consecutive year, the in crease in sales of citrus products was greater than in any preceding year. Truck Crops In response to the larger demand arising out of in creased population locally and larger purchasing power in the United States as a whole, acreage devoted to the production of commercial vegetable and melon crops in the Twelfth District continued to expand during 1941. Higher prices and slightly larger production of some crops combined to raise total farm value of truck crops A c r e a g e , P r o d u c t io n a n d F a r m V a l u e o f 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) For Market r~A creage-> ,--------- Production-------- \ 1940 1941 Unit 1940 1941 Artichokes . . Asparagus . . . Beans, s n a p .. Cabbage . . . . Cantaloups . . C a r r o t s .......... C auliflower. . C e le r y ............ Cucumbers . . 11 39 12 11 55 27 17 16 2 2 127 Onions .......... 14 Peas, green . . 53 Peppermint oil 4 Peppers, green 2 Potatoes,early 36 Spinach . . . . . 4 Strawberries . 27 Tomatoes 30 W aterm elons. 19 10 45 11 11 59 27 18 15 2 2 140 14 49 5 3 39 4 29 32 20 box crate bu. ton crate bu. crate crate bu. sack crate sack bu. lb. bu. bu. bu. crate bu. ea. 848 4,099 1,940 86 7,039 11,868 5,532 5,340 583 113 19,651 3,174 4,862 184 610 10,260 2,082 2,997 5,339 11,692 700 4,456 1,756 100 8,418 11,827 5,082 5,076 536 133 20,782 3,586 4,600 218 729 10,101 2,197 3,103 5,654 12,060 54 25 46 19 579 38 29 73 22 614 /------ Farm Value-------s Average 1930-39 1940 1941 $1,534 $1,442 $1,470 4,471 6,206 7,266 1,504 2,620 2.598 1,094 1,240 1,724 9,464 9,472 11,977 5,230 8,136 7,872 3,143 3,182 3,162 5,371 8,407 8,626 294 670 750 411 1,396 972 25,766 28,434 35,395 5,379 3,338 2,959 7,145 5,455 6,000 362 685 196 301 488 693 3,584 7,695 6,465 835 845 548 5,274 6,229 7,221 5,205 8,997 10,560 1,556 1,370 1,791 For Canning Asparagus . . Beans, s n a p .. Peas, g r e e n .. Sp in ach .......... Tomatoes . . . 49 6 60 10 72 40 8 50 7 83 ton ton ton ton ton — — — — — 4,720 1,279 2,193 276 7,300 4,050 1,681 3,308 382 8,476 16 percent above 1940 to the highest level on record. This important district industry, which accounts for a large share of the United States commercial output of fresh vegetables and for a substantial proportion of the canned output of tomatoes, as well as an important vol ume of other canned vegetables, returned to growers over $120,000,000 in 1941. In point of value, lettuce continued the most important truck crop and returned growers $35,395,000. Livestock The livestock industry during 1941 experienced its most favorable year in more than a decade, with cash in come exceeding $620,000,000. Marketings were large, and prices of most products advanced sharply in response to increased demand arising out of expanded consumer buying power, and out of Government purchases for military needs and export to our allies. Producers of dairy and poultry products were especially benefited by enlarged output and higher prices. Marketing of lambs and wool returned to growers the largest cash income from this source since 1937. To encourage greater pro- February 1, 1942 11 M O N T H L Y REVIEW OF BUSINESS CONDITIONS duction, the Federal Government has undertaken pro grams aimed at supporting prices of some livestock products at levels higher than those of recent years. Banking and Credit Developments during 1941 in banking, as in other seg ments of the Twelfth District economy, were largely the outcome of demands originating in the national defense effort and, after December 7, in the actual participation of this country in the world-wide conflict. These develop ments included a large expansion in bank credit, well over half the increase being accounted for by a marked rise in loans to customers and the remainder by substantial ad ditions of United States Government securities to bank investment portfolios. This increase in earning assets, together with unusually heavy net disbursements of the United States Treasury in the district, resulted in a large further growth of deposits, particularly of demand ac counts. In addition to contributing to the expansion in deposits, the heavy net Treasury disbursements led to a further increase in member bank reserve balances car ried with the Federal Reserve Bank of San Francisco. Another development marking 1941 was the pronounced acceleration of the increase, evident during the preceding two years, in withdrawals of currency into circulation. Various necessary war-time measures introduced dur ing 1941, both of a monetary and non-monetary char acter, had begun to affect banking operations by the yearend and the influence of these measures will be felt in creasingly during 1942. Priority and allocation orders restricting the availability of essential scarce materials in the production of civilian goods, and direct limitation by means of quotas upon output of a few civilian items, notably automobiles, were restricting the supply of con sumer durable goods late in the year. These measures were supplemented by the regulation of consumer instal ment credit which became effective September 1, and which tend to curb a growing demand for consumer durable goods through tightening the terms of instalment credit. One effect of the measures outlined above has been to lessen demands upon member banks for personal and retail instalment loans, a class of loans that expanded sub stantially during the first eight months of 1941. Demand for bank credit to finance the purchase or construction of new private dwellings was similarly affected late in the year. Other monetary measures executed during the year, in addition to the initiation of consumer instalment loan reg ulation, included an order by the Board of Governors of the Federal Reserve System raising reserve require ments, effective November 1, to the full amount per mitted under existing law. In the Twelfth District, the effect of this action was to increase required reserves of member banks by approximately $100,000,000. In the last half of October, required reserves averaged $598,100,000, while excess reserves averaged $322,300,000. Defense Savings Bonds Since the December 7 attack on Pearl Harbor, sales of defense savings bonds have increased abruptly. The stim ulus of that attack and this country’s consequent partici pation in hostilities have been particularly evident in sales of Series E bonds which are designed to attract the small investor. Between May 1 when they first became avail able and December 6, Series E bonds were sold to the amount of $71,023,000 (exclusive of Post Office sales) in the Twelfth District, the weekly average being $2,291,000. Total district sales of all other defense savings bonds (Series F and G) during the same period amounted to $98,595,000. The huge jump in sales of Series E bonds W e e k l y S a l e s of D e f e n s e S a v i n g s B o n d s — T w e l f t h D is t r ic t (in thousands) Average M ay 1-Dec. 6, 1941.................... W eek ending Dec. 6, 1941.................... W eek ending Dec. 13, 194 1 ................... W eek ending Dec. 20, 1 941................... W eek ending Dec. 27, 194 1 ................... W eek ending Jan. 3, 1942.................... W eek ending Jan. 10, 1942.................... W eek ending Jan. 17, 194 2 ................... Series E* $ 2,291 2,651 4,290 9,013 9,699 12,188 14,441 16,093 Series F $ 731 400 615 527 899 2,456 1,793 900 Series G $2,449 2,656 1,557 2,210 3,410 3,887 3,401 3,003 ^Excludes Post Office sales. (exclusive of Post Office sales), which reached $16,093,000 during the week of January 17, is shown in the accompanying table, together with total current sales of all other defense savings bonds. One objective of the defense savings bond program is to encourage the public to assist in financing the war effort, and volume of sales is of major significance as an indication of the public’s willingness to make funds avail able to the Government. Another primary objective of the program is to encourage new and additional saving on the part of individuals who will thus voluntarily re duce their own demands for goods that are necessarily becoming scarcer because of national defense require ments. To the extent that bonds are paid for with funds withdrawn from existing savings deposits or with funds that would have been saved whether or not invested in defense bonds this objective is not realized. Loans and Investments Loans of district member banks increased $322,000,000 during the year to total $2,452,000,000 on December 31, 1941. This was a substantially larger gain than occurred in either of the two preceding years, the increase in 1940 amounting to $163,000,000 and in 1939 to $98,000,000. About half the expansion was reported by banks in the larger district cities, a much higher proportion than in other recent years. Much of the increase in demand for loans originated with customers seeking funds for commercial, industrial, and agricultural purposes. Loans of this character usu ally decline during the first half of the year, but increased $74,000,000 this year to $791,000,000 on June 30. A greater than seasonal increase took place during the last six months of the year, the expansion reported by city banks alone amounting to $73,000,000. The indicated ex pansion in loans for commercial, industrial, and agricul tural purposes of all district member banks is conse quently well over double the increase of $79,000,000 re ported in 1940. The almost persistent increase in loans for commercial, industrial, and agricultural purposes, evident during the preceding 16 months, was interrupted late in December. In the four weeks ending January 21, these loans reported by city banks declined $18,000,000. Loans to finance the purchase and sale of real estate continued to expand through much of 1941 and advances 12 February 1, 1942 FEDERAL RESERVE BANK OF SAN FRANCISCO in the “other” loan classification likewise increased further. “ Other” loans, principally personal and retail instalment paper, increased $44,000,000 during the first half of the year, compared with a gain of $37,000,000 in the full year 1940. A further increase took place in the succeeding two months, but by the year-end a small de cline was evident from the peak attained in the early fall. Loans to finance transactions in securities declined slightly further during 1941 and at the year-end were at the lowest levels reached in more than a decade. The defense, and later the war, effort resulted in large and increasing expenditures by the Federal Government during 1941. The Government’s program has been and remains one of raising as large a proportion of funds as possible to meet these expenditures from increased taxes and from the sale of securities to the public rather than to banks. But the needs of the Treasury for funds have not been fully met from those sources and substantial purchases of market issues of securities were made by banks in 1941. Member banks in the Twelfth District added $257,000,000 to their holdings of United States Government obligations during the year, their total in vestments in these securities amounting to $1,738,000,000 at the year-end. These banks increased their holdings of Government securities by $31,000,000 in 1940 and $126,000,000 in 1939. Investments in other classes of securities declined dur ing the year, holdings of obligations of states and politi cal subdivisions decreasing $31,000,000 to $397,000,000 on December 31, 1941. A decline of $13,000,000 in hold ings of other bonds, notes, and debentures to $126,000,000 was also reported. Deposits twofold. First, the increase in loans and investments dis cussed in some detail above resulted in additions to the total of these accounts outstanding. The second factor adding to deposits was the large net disbursements of the United States Treasury in the district. These net dis bursements totaled $1,000,000,000 in 1941, substantially larger than the total of $421,000,000 in the preceding year and the annual average of $267,592,000 in the years 1935 to 1939 inclusive. The increase in deposits originating in these two de velopments was partly offset, however, by several other factors, the most important of which was a large increase in the demand of the public for coin and currency. Net withdrawals of coin and currency from the Federal Re serve Bank of San Francisco totaled $227,000,000 in 1941. As shown in the accompanying chart, this figure substantially exceeded the increase in circulation in any recent year. Reserve Balances District banking reserves available as a basis for credit expansion continued to increase during the year in marked contrast to the situation in the country as a whole. In 1941 member bank reserve balances carried with the Federal Reserve Bank of San Francisco increased $176,300,000, while reserve balances of member banks in the United States declined $1,600,000,000. Factors influenc ing the reserve position of district member banks are summarized in the accompanying table. The gain of $176,300,000 in reserves of district mem ber banks was more than absorbed by the increase in re quired reserves incident to expanding deposits and the F a cto rs A ffe c tin g T w e lft h The large expansion in deposits reported in 1940 was exceeded by a somewhat greater gain in 1941. Adjusted demand deposits increased $367,000,000 during the first nine months of the year and, while final figures are not yet available for all member banks, indications are that this increase continued unabated during the last quarter D is tr ic t M em ber B a n k R e s e r v e B a l a n c e s , 1940 a n d (millions of dollars) fa c to r s w h ic h 1941 in c r e a s e d r e s e r v e s United States Treasury Operations............................... 421 1,000 The net amount by which Federal Government dis bursements in the district exceeded collections. Reserve Bank Credit............................................................ 2 4 Total of factors increasing member bank -----reserves............................... ................ ............... 423 ------1,004 The amount of increase in credit extended directly in the Twelfth District. fa c t o r s w h ic h red u ced re se r v e s Interdistrict Payments and Transfers of F u n d s.. . . 148 596 96 227 8 5 Total of factors decreasing member bank -----reserves................................................................ 252 -------828 The net amount paid to other districts in settlement of commercial and financial transactions. Demand for Currency........................................................... The amount by which holdings of cash by banks and the public increased, the cash being obtained by banks withdrawing part of their balances with the Reserve Bank in the form of coin and currency. Other Federal Reserve Accounts.................................... The amount of the increase in nonmember bank ac counts and other miscellaneous accounts at the R e serve Bank. ¡935 1936 1937 1938 1939 1940 1941 D E M A N D F O R G U R R E N G Y — Twelfth District Monthly changes, cumulated from January 15, 1935. of the year. In 1940, adjusted demand deposits rose $407,000,000. Time accounts, which had increased moderately in the preceding year, showed practically no change in 1941. The principal factors contributing to the large expansion in bank deposits in the Twelfth District in 1941 were Member bank reserve balances at the Federal Re serve Bank of San Francisco increased......................171 176 raise in reserve requirements effective November 1. As a result, excess reserves were somewhat lower at the end 0f the year than at its beginning. For district member banks as a group, these excess reserves averaged $226,800,000 in the last two weeks of December, compared with $255,900,000 in the like period a year earlier. M O N T H L Y R E V I E W February 1, 1942 Federal Reserve Bank of San Francisco Supplement S u m m a ry o f N a tio n a l B u sin ess C o n d itio n s Released January 21, 1942— Board of Governors of the Federal Reserve System activity declined less than seasonally in December and the first half of January, retail trade continued in large volume, and prices of many commodi ties rose further. I n d u s t r ia l P 1935 (936 1937 1938 1939 1940 1941 I N D U S T R I A L P R O D U C T IO N Federal Reserve index o f physical volume of production, adjusted for seasonal variation, 1935-39 average=100. By months, January 1935 to December 1941. POINTS IN TOTAL Iy POINTS INTOTAL IN F R E I G H T -C A R L O A D I N G S Federal Reserve index of total loadings of revenue freight, adjusted for seasonal variation, 1923-1925 average = 100. Subgroups shown are expressed in terms of points in the total index. By months, January 1935 to December 1941. D is t r ib u t io n Volume of retail trade, which had been large during most of the autumn, increased less than seasonally in December. This reflected to some extent a tempo rary slackening in sales around the middle of the month following this country’s entry into the war. In the first half of January sales at department stores showed less than the customary sharp reduction from the Christmas buying peak and were at a level substantially higher in comparison with a year ago than that prevailing in other recent months. Freight-car loadings of most products decreased by less than the customary seasonal amount in December. Coal shipments declined considerably in the latter part of the month but then increased sharply in the first half of January. Shipments of miscellaneous freight, which includes most manufactured products, were main tained in large volume for this season of the year. C W H O L E S A L E P R IC E S Bureau of Labor Statistics' indexes, 1926=100. “ Other” includes commodities other than farm products and foods. By weeks, January 5,1935 to January 17, 1942. r o d u c t io n In December total volume of industrial output declined less than is usual at this season and the Board’s adjusted index rose further to 168 percent of the 1935-1939 average. In the armament industries output continued to advance and at machinery plants activity rose sharply, following little change in November. Output of mate rials, such as iron and steel and nonferrous metals continued at peak levels and lumber production showed less than the usual seasonal decrease. Automobile pro duction declined sharply in the latter half of December, following announcement of sharp reductions in passenger car quotas, but early in January quotas for that month were increased and output rose considerably. Sales of new automobiles to civilians were halted at the beginning of January pending the establishment of a rationing system. Textile production declined somewhat in December owing to a reduction in activity at cotton mills from the record level reached in November. Output of wool and rayon textiles was sustained at about capacity. Output of manufactured food products and shoe production showed about the customary seasonal declines. Coal output decreased somewhat in December, while petroleum production and mining of nonferrous metals were maintained at the high November rate. Value of construction contracts awarded in December declined less than is usual at this time of year, according to figures of the F. W . Dodge Corporation. Awards for public projects showed little change, while those for residential construction declined less than seasonally following a considerable reduction in November. o m m o d it y P r ic e s Wholesale commodity prices increased sharply when this country entered the war early in December and then showed little change during the latter half of the month. In the first half of January prices again advanced, the principal increases being in agricultural commodities and chemicals. Federal action to impose maximum prices was accelerated with the outbreak of war and applied on a wider scale to industrial products. Ceilings were extended to products in later stages of production and distribution and in most instances cov ered consumers goods. Certain of the actions, like those relating to rubber and wool products, were associated with new federal production restrictions. In this period also there were advances in a number of price ceilings established earlier. B a n k C r e d it Total loans and investments of banks in leading cities, which had advanced sharply during the first half of December, have subsequently shown little further change. Treasury financing in the middle of December and heavy currency withdrawals during the holiday season absorbed close to 700 million dollars of excess reserves during the month. About 500 million of this was recovered in the first half of January, as the result of a decline in Treasury deposits at the Reserve banks and a return of currency from circulation. Recent changes in excess reserves have been almost entirely at banks outside of New York City. M O N E Y R A T E S IN N E W Y O R K C I T Y W eekly averages of daily yields of 3- to 5-year tax-exempt Treasury notes, Treasury bonds callable after 12 years, and average discount on new issues of Treasury bills of fered within week. For weeks ending January 5, 1935 to January 17, 1942. U n it e d S tates G overn m en t S e c u r it y P r ic e s Prices of Government securities were steady in the first half of January, follow ing a decline in December after the entry of the United States into the war.
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