Full text of Economic Review (Federal Reserve Bank of San Francisco) : February 1952

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

MONTHLY REVIEW
TWELFTH

F E DERAL

R ESERVE

DISTRICT

F e d e r a l r e s e r v e Ba n k o f S a n F r a n c is c o

February 1952

REVIEW OF THE YEAR
l e v e r p h r a s e m a k e r s w ill fin d u n u s u a l o p p o r tu n itie s

in g b e lief th a t th e o b je c t iv e o f e c o n o m ic sta b ility a n d

f o r th e u se o f e p ig r a m m a tic titles in th e e c o n o m ic

o r d e r ly g r o w th ca n be m o r e n e a r ly a c h ie v e d b y a j u d i­

e v e n ts o f 1 9 5 1 . I n a n u m b e r o f re sp e c ts th e p a s t y e a r w a s ,

c io u s b le n d in g o f th e s o -c a lle d n e w e r te ch n iq u e s w ith

C

in fa ct, u n iq u e in th e e c o n o m ic h is to r y o f th e la st tw o

so m e o f th e s o -c a lle d tr a d itio n a l d e v ic e s f o r in flu e n c in g

d e c a d e s. D e s p ite ra p id ly e x p a n d in g e x p e n d itu r e s b y G o v ­

e c o n o m ic d e v e lo p m e n ts . T h e ste p s ta k e n to w a r d g r e a te r

ern m e n t, in fla tio n d id n o t e n g u lf th e e c o n o m y as w a s

u se o f c o n v e n tio n a l te ch n iq u e s in th e im p le m e n ta tio n o f

w id e ly fe a re d e a r ly in th e y e a r . N o t o n ly w a s th is tru e in

m o n e ta r y p o lic y a re e v id e n c e o f a g r e a te r d e te r m in a tio n

the U n it e d S ta te s , w h e r e th e im p a c t o f in fla tio n , a t lea st

to re strict th e a v a ila b ility o f m o n e y w h e n it is to o p le n ti­

a fte r th e first fe w m o n th s o f th e y e a r , h a s b e e n re la tiv e ly

fu l, to lim it th e a b ility to sp en d w h e n it o th e r w ise w o u ld

m ild c o m p a r e d w ith o th e r e c o n o m ie s , b u t it a lso w a s

be to o s tr o n g , a n d to sh ift s o m e o f th e risk s o f e c o n o m ic

a p p a r e n t to v a r y in g d e g r e e s in m o s t o f W e s t e r n E u r o p e .

m a n a g e m e n t fr o m ce n tr a l g o v e r n m e n ts to th e d e c isio n ­

T h e re v iv a l o r re h a b ilita tio n o f th e m o r e co n v e n tio n a l

m a k in g u n its in th e e c o n o m y .

m e a n s o f e c o n o m ic s ta b iliz a tio n , a b r o a d a s w e ll as h e re ,

M o n e t a r y a n d fiscal p o licie s w h ic h a ssu r e an a lm o s t

w a s a d e v e lo p m e n t o f g r e a t sig n ific a n c e in th e fr e e w o r ld

lim itle ss s u p p ly o f ch e a p m o n e y p re se n t o p p o r tu n itie s fo r

in 1 9 5 1 . D u r in g th e y e a r th e re w a s g r e a t re lian ce o n m o r e

in d iv id u a l b u sin e ss o p e ra tio n s to p ro fit a t little o r n o risk

tr a d itio n a l m o n e t a r y a n d c r e d it p o lic ie s , a n d g r o w in g

o f lo ss. T h i s n o t o n ly e n c o u r a g e s d e m a n d in e x c e s s o f th e

e ffo r ts to

o b je c t iv e , in

v a lu e o f p r o d u c tio n a t sta b le p r i c e s ; it a lso lea d s to the

m a n y E u r o p e a n c o u n tr ie s , w a s n o t m e r e ly to h o ld d o ­

ba la n ce n a tio n a l b u d g e ts .

in efficien t u se o f la b o r a n d m a te ria l re so u rc e s. S u c h c o n ­

m e s tic in fla tio n in ch e ck , b u t a ls o to r e e sta b lish e x te r n a l

d itio n s m a k e it e a sie r f o r in efficien t p r o d u c e r s to s u r v iv e ,

e q u ilib r iu m

v ia

an

im p e r s o n a l

The

re s tr ic tio n

of

d em an d

in cre a se b o th th e m o n e y a n d th e real c o sts o f p ro d u c tio n ,

ra th e r th a n s o le ly b y a d m in is tr a tiv e c o n tr o ls o v e r im ­

a n d d iv e r t to o la r g e a sh a r e o f la b o r a n d m a te ria l in to less

p o r ts . U ltim a te ly , th e r e fo r e , th e g o a l in v ie w is a p r o g r e s ­

e ssen tia l u se s to th e in ju r y o f th e e c o n o m y as a w h o le .

siv e fr e e in g o f cu r re n c ie s f r o m a r b itr a r y c o n tr o ls o v e r
in tern a tio n a l tr a n s a c tio n s . T h e r e a d o p tio n o f th e se m e th ­
o d s m a r k s a c o n s c io u s e ffo r t to u se c o m p r e h e n s iv e in ­
s tr u m e n ts to m e e t e c o n o m ic p r o b le m s . I t re p re se n ts a

Domestic economy achieves stability despite
rise in defense spending
T h e s e sh ifts in m o n e t a r y a n d fiscal p o licie s b e g a n in

d e p a r tu r e f r o m h e a v y re lia n c e o n e x h o r ta tio n o r m o r a l

late 1 9 5 0 , a n d b y th e e n d o f th e first q u a rte r o f 1 9 5 1 th e y ,

su a s io n f o r m e e tin g th e c h a lle n g e o f u n w a n te d situ a tio n s.

a lo n g w ith ch a n g e s in th e in te r n a tio n a l o u tlo o k , w e r e

I t a ls o r e p re se n ts to s o m e e x te n t a d is p la c e m e n t o f n o n -

la r g e ly re sp o n sib le f o r a fe e lin g o f g r e a te r co n fid e n ce in

fin an cial o r d ire c t m e a s u r e s o f c o n tr o l w h ic h a p p e a r to b e
c o m in g u n d e r m o r e critic a l sc r u tin y b o th in th is c o u n tr y
a n d a b r o a d . T h e s e d e v e lo p m e n ts h a v e o c c u r re d in so m e

An nu a l Review, 1951

fo r e ig n co u n tr ie s la r g e ly a s a re su lt o f th e g r o w in g b e lie f
th a t th e c o n tr o ls p r e v io u s ly e m p lo y e d h a v e b e e n in e ffe c ­
tiv e in p r e v e n tin g b a la n ce o f p a y m e n ts p r o b le m s f r o m
r e g u la r ly r e a c h in g cr isis p r o p o r tio n s .
T h e r e is n o a p p a r e n t in ten t to s tr iv e fo r d e a r m o n e y
m e r e ly f o r th e sa k e o f n o t h a v in g c h e a p m o n e y . In s te a d
th e re a p p e a rs to b e a g r o w in g re a liz a tio n th a t n o m a tte r
h o w d etailed d ire ct c o n tr o ls o f m a te r ia ls , w a g e s , p ric e s,
an d im p o r ts m a y b e , a n e x c e s s iv e e x p a n s io n o f th e m o n e y
su p p ly a lo n g w ith a n u n im p e d e d a b ility to s p e n d w ill
n e c e s s a r ily lea d to u n d e s ira b le r e su lts. T h e r e is a g r o w ­




Banking and Credit in an Unpegged Market
Industry Steps Ahead Though
Some Lines Falter
Retail Trade Lags in 1 9 5 1
Pacific Coast Foreign Trade Tacks
Out of the Doldrums
District Farmers Harvest Record Crop
of Greenbacks

14

FEDERAL RESERVE B A N K OF S A N FRA N C ISCO

February 1952

o u r a b ility to e sta b lish a n d m a in ta in a re a so n a b le d e g re e

h o u se sp a ce se e m e d th e o n ly se rio u s n eed fo r a w h ile .

o f e c o n o m ic s ta b ility . P r ic e s , p r o d u c tio n , a n d sp e n d in g

T h e s e tw o fa c to r s a lla y e d fe a rs c o n s id e r a b ly a n d th e r e b y

c o n tin u e d to rise s h a r p ly in th e e a r ly p a r t o f th e y e a r , re ­

re d u ce d th e u r g e n c y w ith w h ic h b u sin e ss a n d c o n s u m e r s

fle c tin g in c o n s id e r a b le p a r t p u b lic re a ctio n to the e n ­

m a d e e x p e n d itu r e s .

tr a n c e o f th e C h in e s e C o m m u n is ts in th e K o r e a n co n flic t.
I n la r g e p a r t th is p r e s s u r e w a s a n tic ip a to r y a n d re su lte d
in a v e r y s u b sta n tia l m e a s u r e o f in cr e a se d p r o d u c tio n an d
c o m p e titio n fo r civ ilia n g o o d s . I n v e n to r y a c c u m u la tio n
o f r a w m a te r ia ls a n d fin ish e d p r o d u c ts p ro c e e d e d a t a
ra p id p a ce as d id c o n s u m e r sp e n d in g , p a r tic u la rly o n
d u ra b le g o o d s .

F u r t h e r m o r e , th e p ric e in cr e a se s in so m e lin e s w e r e
m u c h m o r e ra p id th a n a re a so n a b le ra te o f e x p e n d itu r e
b y c o n s u m e r s in th e p re se n c e o f a d e q u a te su p p lie s w o u ld
h a v e ju s tifie d . A s a re su lt o f th is c o m b in a tio n o f c ir c u m ­
sta n c e s, c o n s u m e r

s p e n d in g

slip p e d

sh a r p ly

in

M arch

a n d c o n tin u e d at m o d e r a te le v e ls fo r th e re m a in d e r o f
th e y e a r . B u s in e s s in v e n to r ie s o f reta il g o o d s , p re d ic a te d

B y m i d -F e b r u a r y , h o w e v e r , th e p ace b e g a n to sla ck e n .

o n a c o n tin u e d re c o rd rate o f d e m a n d a n d p o ssib le s h o r t­

B a s ic c o m m o d it y p ric e s, a lm o s t h a lf a g a in as h ig h as in

a g e s , b e c a m e b u r d e n s o m e . C o n tin u e d re c o rd p r o d u c tio n

J u n e 1 9 5 0 , sta rte d to d ec lin e. W h o l e s a l e p ric e s le v e le d o f f

th r o u g h M a r c h , a n d re la tiv e ly m o d e s t cu tb a c k s in the

in M a r c h a n d th e n d e c lin e d m o d e r a te ly th r o u g h S e p te m ­

s e c o n d q u a rte r , c a u se d in v e n to r ie s to b a c k u p th r o u g h o u t

b e r. C o n s u m e r p ric e s , w h ic h d id n o t tu r n d o w n at all,

th e d istr ib u tio n s y s te m . T h i s re su lte d in su b se q u e n t sh a r p

a c h ie v e d a d e g r e e o f s ta b ility in M a r c h a n d ro s e ra th e r

re d u c tio n s in o u tp u t a n d s o m e fo r c e d in v e n to r y liq u id a ­

m o d e r a te ly d u r in g m o s t o f th e p e r io d th e r e a fte r . C o n ­

tio n .

s u m e r s p e n d in g d e c lin e d s h a r p ly in M a r c h a n d c o n tin u e d
a t a m u c h m o r e c o n s e r v a tiv e le v e l in th e r e m a in d e r o f the
year.

T h o u g h th e re v e r sa l o f f o r m b y c o n s u m e r s m a y be re ­
g a r d e d as a m a jo r fa c to r in d a m p e n in g the in fla tio n a r y
sp ira l, c o n s u m e r a ttitu d e s r e c e iv e d a fe w

P r o d u c tio n

c o n tin u e d to e x p a n d

th r o u g h A p r i l

but

in stitu tio n

o f p ric e c o n tr o ls

in la te

a s s is ts . T h e

Jan u ary

p r o b a b ly

e d g e d a w a y f r o m th e p e a k d e sp ite e x p a n d in g m ilita r y

h e lp e d th e

p r o d u c tio n . L o w e r o u tp u t re fle cted cu tb a c k s in p r o d u c ­

str in g e n t re str ic tio n s o n in sta lm e n t sale s t h r o u g h J u n e

tio n o f c iv ilia n d u ra b le g o o d s , p a r tly as a re su lt o f m a ­

re ta rd e d th e a b ility o f c o n s u m e r s to sp e n d . S u b s e q u e n t

te ria ls r e s tr ic tio n s , b u t th e lo w e r rate o f c o n s u m e r e x ­

r e la x a tio n o f th e se r e str ic tio n s d id n o t re su lt in a n y s u b ­

re a ctio n

th a t c o n s u m e r s

r e g iste r e d .

F a ir ly

p e n d itu re fo r c e d s o m e c u ts in p r o d u c tio n o f civ ilia n h a rd

sta n tia l im p r o v e m e n t in sales in th e a b se n c e o f re a listic

g o o d s b e lo w th a t re q u ire d b y m a te ria ls c e ilin g s . P r o d u c ­

price a d ju s tm e n t s . C r e d it r e str ic tio n s o n re sid e n tia l a n d

tio n o f c iv ilia n s o ft g o o d s d r o p p e d o f f c o n s id e r a b ly , to o .

o th e r ty p e s o f b u ild in g a lo n g w ith m a te r ia ls lim ita tio n s

D e fe n s e s p e n d in g r e su lte d in g r e a te r o u tp u t o f m ilita ry

a lso re d u ce d th e d e m a n d f o r g o o d s . T h i s h e lp e d k ee p th e

g o o d s a n d sra ise d to ta l d u ra b le g o o d s p r o d u c tio n . T h is

a d d e d d e m a n d s o f th e d e fe n se p r o g r a m f r o m b e in g e x ­

w a s n o t su fficien t, h o w e v e r , to o ffs e t all o f th e d ec lin e in

p r e s s e d in c o n tin u e d p ric e rises.

c iv ilia n o u tp u t, m u c h o f w h ic h wTa s d u e to a d r o p in in ­
v e n to r y a c c u m u la tio n a n d c iv ilia n d e m a n d .

In fla tio n w a s re stra in e d n o t o n ly b y c o n s u m e r d e c isio n s
a n d d ire ct c o n tr o ls w h ic h r e str icte d d e m a n d , b u t a lso b y
m o n e ta r y a n d fiscal d e v e lo p m e n ts w h ic h h e lp e d to c o n ­

C¿mb¡nation of circumstances aid
to restrain inflation

tr o l th e g r o w th o f th e m o n e y s u p p ly . F o r th e fiscal y e a r
e n d in g J u n e 3 0 , 1 9 5 1 , th e T r e a s u r y re p o r te d a su b sta n tia l

S p e n d in g f o r d e fe n s e in 1 9 5 1 w a s the p r im a r y e x p a n ­

ca sh su r p lu s w h ic h w ith d r e w $ 7 .6 b illio n f r o m th e s p e n d ­

siv e fo r c e in th e e c o n o m y . I n th e la st q u a rte r o f the y e a r ,

in g str e a m . I n a d d itio n , th e T r e a s u r y sp e n t s o m e w h a t le ss

m ilita r y s p e n d in g f o r g o o d s a n d se rv ic e s re a ch e d a n a n ­

ra p id ly in the se c o n d h a lf o f 1 9 5 1 th a n h ad b e e n a n tic i­

n u a l ra te o f a b o u t $ 4 4 b illio n o r a lm o s t d o u b le th a t o f

p a te d a n d in cre a se d t a x ra tes a d d e d to T r e a s u r y re ce ip ts.

th e s a m e p e r io d in 1 9 5 0 . T h i s e x p a n s io n in th e d e m a n d

T h e in je c tio n s o f ca sh b y th e T r e a s u r y in to th e m o n e t a r y

f o r g o o d s a n d s e rv ic e s w a s m e t to s o m e e x te n t b y in ­

str e a m w e r e m u c h le ss, th e r e fo r e , th a n h a d b e e n e x p e c te d .

c r e a s e d o u tp u t, b u t to a n in c r e a s in g e x te n t, as th e p r o ­
g r a m re a ch e d h ig h g e a r , th e d e m a n d s w e r e m e t b y r e ­
d u c in g s o m e ty p e s o f o u tp u t f o r civ ilia n c o n s u m p tio n .

I n M a r c h , th e F e d e r a l R e s e r v e S y s t e m a n d th e T r e a s ­
u r y a g r e e d to a p r o g r a m w h ic h p e r m itte d a m o r e fle x ib le
p o lic y in th e G o v e r n m e n t se cu ritie s m a r k e t. O p e n m a r k e t

Y e t , a fte r M a r c h , th e fo r c e s o f in fla tio n w e r e co n ta in e d .
P e r h a p s h is to r ia n s w ill a r g u e th a t th e in fla tio n o f late
1950

and

e a r ly

1 9 5 1 , w h ic h w a s la r g e ly a n tic ip a to r y ,

m a d e fu r th e r in fla tio n u n n e c e s s a r y . T h i s lin e o f a r g u m e n t
h a s its m e r it s . I n v e n to r y a c c u m u la tio n a n d sca re b u y in g
p r o c e e d e d at a p ace w h ic h in d ica te d th a t b u sin e ss a n d
c o n s u m e r s e x p e c te d a lm o s t a ll-o u t w a r a n d a lm o s t im ­
m e d ia te

s h o r ta g e s

of

goods

th a t

w ere

sca rce

d u r in g

p o lic y o f th e F e d e r a l R e s e r v e S y s t e m th e r e a fte r re su lte d
in a d ec lin e o f lo n g -t e r m se c u r ity p ric e s b e lo w p a r . T h e
m o s t im m e d ia te im p a c t o f th is d e v e lo p m e n t w a s fe lt in
th e re sid e n tia l real esta te field . I n s u r a n c e c o m p a n ie s a n d
b a n k s w ith d r e w f r o m the fin a n c in g o f la r g e tr a c ts in v o lv ­
in g lo a n s at 4 p e r c e n t o r e v e n

A y 2

p e r ce n t. L e n d in g p o li­

cie s g e n e r a lly w e r e r e e x a m in e d , p a r tly o n th e b a sis p r o ­

I I . T h e s e e x p e c ta tio n s w e r e n o t re a lize d .

vid e d b y the V o lu n t a r y C r e d it R e s tr a in t P r o g r a m , a n d

e x p a n s io n o f the w a r in K o r e a d id n o t o c c u r a n d

in te r e st ra tes m o v e d u p . B a n k lo a n s in th e se c o n d h a lf o f

s h o r ta g e s o f g o o d s w e r e s o s lo w in a p p e a rin g th a t w a r e ­

th e y e a r ro se o n ly s e a so n a lly . N e v e r t h e le s s , if fr e e a c ce ss

W o r ld
An

W ar




February 1952

15

M O N T H L Y R E V IE W

to a su p p o rte d m a rk e t h ad b een a v a ila b le , th e p ossib ilitie s
o f e x p a n s io n w o u ld h a v e been c o n s id e r a b ly g r e a te r.

T r e a s u r y w ith d r a w a ls f r o m th e sp e n d in g str e a m d u r in g
the first h a lf o f 1 9 5 2 w ill p r o b a b ly be c o n sid e r a b ly less
th a n a y e a r a g o . T h e m o n e y su p p ly , e x c e p t fo r a se a so n a l

Inflationary lull may

d eclin e in the e a r ly p a r t o f 1 9 5 2 , w ill p r o b a b ly co n tin u e

not continue

to g r o w . S in c e o u tp u t o f civ ilia n d u ra b le s in 1 9 5 2 m a y

I n sp ite o f th e T r e a s u r y s u r p lu s in th e first h a lf o f the

be sm a lle r th a n in 1 9 5 1 , a re su m p tio n o f ra p id c o n s u m e r

y e a r a n d the m o r e s tr in g e n t m o n e t a r y p o lic y a fte r M a r c h ,

sp e n d in g co u ld in d u ce sh a rp in fla tio n a r y p re ssu re s. T h e

the m o n e y s u p p ly in cr e a se d n e a r ly $ 9 b illio n . H a d it n ot

battle is n o t y e t e n d e d . O ^ l y tw o p h a se s h a v e b een d ea lt

been f o r th e d ec lin e in c o n s u m e r s p e n d in g a n d th e s lo w ­

w i t h : the first, im m e d ia te ly a fte r K o r e a , w a s lo s t to in fla ­

in g o f in v e n to r y a c c u m u la tio n a c tin g to re d u ce th e tu r n ­

tion ; the se co n d m a y be r e g a rd e d as h a v in g b een w o n .

o v e r o f m o n e y , c o n s id e r a b le in fla tio n c o u ld h a v e re su lte d .

T h is tie, h o w e v e r , is n o a ssu r a n c e fo r the fu tu r e . S tr o n g e r

T h o u g h ta x e s h a v e b e e n in c r e a se d , T r e a s u r y e x p e n d i­

m e a su r e s m a y be n e e d e d , e v e n th o u g h in th e p re sen t situ ­

tu re s w ill a ls o be m u c h la r g e r a n d c o n s e q u e n tly th e n et

a tion th ere a p p e a rs n o im m e d ia te ca u se fo r a la rm .

BANKING AND CREDIT IN AN UNPEGGED MARKET
n th is c o u n tr y th e m o s t im p o r ta n t ste p d u r in g 1 9 5 1

T h e V o lu n t a r y C r e d it R e s tr a in t P r o g r a m , in a u g u ra te d

to w a r d g r e a te r re lian ce u p o n tr a d itio n a l tech n iq u es

in M a r c h la st y e a r , h as b e e n o f g r e a t aid to co m m e rc ia l

I

o f c o n tr o l to o k the fo r m o f a b a n d o n in g F e d e r a l R e s e r v e

b a n k s a n d o th e r le n d in g in stitu tio n s in r e str a in in g the

su p p o r t o f lo n g -te r m G o v e r n m e n t se cu ritie s at p a r. S in c e

e x p a n s io n o f cred it fo r less e ssen tial p u rp o se s. F u n d s

th e

o b ta in e d th r o u g h th e sale o f n e w issu e s o f se cu ritie s h a v e

T r e a s u r y -F e d e r a l

R eserve

accord

w as

a n n o u n ce d

e a r ly in M a r c h 1 9 5 1 , th e p rices o f G o v e r n m e n t se cu ritie s

a lso b een w ith in th e sc o p e o f th e p r o g r a m th r o u g h the

h a v e b een d e te r m in e d in a fre e m a r k e t, w ith th e F e d e r a l

p a r ticip a tio n o f in v e s tm e n t b a n k e rs.

R eserve

in te r v e n in g o n ly w h e n

n ecessary

to m a in ta in

T e r m s o f R e g u la t io n W

w e r e r e la x e d s o m e w h a t on

o r d e r ly co n d itio n s in the m a rk e t. A lt h o u g h th e p ric es o f

J u ly 3 1 , a n d o f R e g u la t io n X

lo n g -t e r m G o v e r n m e n t se cu ritie s q u ic k ly d r o p p e d b e lo w

fo r m w ith c h a n g e s in th e la w m a d e b y C o n g r e s s . E a s ie r

p a r a n d h a v e r e m a in e d th e re sin ce , th e e x te n t o f the d e ­

te rm s u n d e r R e g u la t io n W

clin e h as be e n m o d e r a te a n d th e re h as b e e n n o p an ic in

p a n sio n in the a m o u n t o f c o n s u m e r in sta lm e n t c r e d it o u t­

the m a r k e t.

sta n d in g d u r in g th e se c o n d h a lf o f 1 9 5 1 , in co n tr a st to a

U n p e g g in g

th e m a r k e t h as

w ork ed

as a tw o -e d g e d

s w o r d in re s tr a in in g c r e d it e x p a n s io n . O n th e o n e h a n d ,
the g e n e ra l tig h te n in g o f cred it th a t it im p lie s lea d s le n d ­

o n S e p te m b e r 1, to c o n ­

c o n tr ib u te d to a m o d e r a te e x ­

sm a ll d eclin e d u r in g th e first h a lf.

Dem and for credit less than in 1950

ers to scree n loa n a p p lica tio n s m o r e c a r e fu lly , ca u ses th e m

T o t a l lo a n s o f c o m m e r c ia l b a n k s in cre ase d o n ly t w o -

to re v ise th e ir e x p e c ta tio n s as to th e g e n e r a l o u tlo o k fo r

th ird s as m u c h in 1 9 5 1 as in 1 9 5 0 — $ 6 .1 b illio n co m p a re d

b u sin e ss an d c o m m o d it y p ric e s, a n d , b e ca u se o f th e g e n ­

w ith $ 9 .3 b illio n . W h i l e m o r e e ffe c tiv e g e n e ra l cred it c o n ­

eral u n ce r ta in ty c o n c e r n in g fu tu r e d e v e lo p m e n ts , te n d s
to in cre a se th e ir d e m a n d fo r liq u id ity . P o te n tia l b o r r o w ­
e rs, o n th e o th e r h a n d , are d is c o u r a g e d f r o m o b ta in in g
n e w o r a d d itio n a l cre d it b e ca u se o f th e re su lta n t rise in
in te re st rates. T h e first e d g e o f th e s w o r d is u n d o u b te d ly
the m o r e e ffe c tiv e o f th e tw o . I t is g e n e r a lly re c o g n iz e d
that th is fa c to r , in s o fa r as c r e d it c o n tr o ls w e r e a n in ­
flu e n ce , p r o b a b ly d id m o r e to re stra in th e e x p a n s io n o f

tro ls w e r e p a r tly r e sp o n sib le f o r th is sm a lle r in cre a se ,
th ere w a s a lso e v id e n c e o f a le sse n e d d e m a n d fo r cred it
d u r in g th e y e a r . T h i s s te m m e d fu n d a m e n ta lly f r o m the
m o r e m o d e r a te rate o f c o n s u m e r s p e n d in g a fte r the first
q u a rte r a n d f r o m th e fa ilu re o f th e d e fe n se p r o g r a m to
p ro c e e d as ra p id ly as h ad been p la n n e d . A s a co n se q u e n c e ,
o u r e c o n o m y w a s ab le to fu lfill b o th c o n s u m e r a n d m ili­
ta ry d e m a n d s w ith c o m p a r a tiv e ease a n d in d u str ia l p r o ­
d u ctio n re m a in e d r e la tiv e ly sta ble th r o u g h o u t the y e a r .

real estate cred it d u r in g 1 9 5 1 th a n d id th e te r m s o f R e g u ­

W h o le s a le p ric es d rifte d d o w n w a r d s lig h tly d u r in g the

la tio n X .

y e a r . C o n s u m e r p ric e s ro se , h o w e v e r , w h ic h in d ica te d
th a t th e y w e r e still in the p ro c e ss o f a d ju s t in g to th e

Other credit restraints

h ig h e r le v e ls o f w h o le sa le p ric es a n d o f p r o d u c tio n c o sts

O t h e r ste p s, in a d d itio n to u n p e g g in g th e G o v e r n m e n t
se cu ritie s m a r k e t, w e r e ta k e n d u r in g

1951

to

re stra in

c r e d it e x p a n s io n in th e U n it e d S ta te s . R e s e r v e re q u ire ­

th a t h ad d e v e lo p e d in th e se co n d h a lf o f 1 9 5 0 a n d e arly
1951.
A str ik in g in d ica tio n o f th e c h a n g e in p ace o f c o n su m e r

m e n ts o f all m e m b e r b a n k s w e r e in c r e a se d in g r a d u a l

b u y in g is fo u n d

step s in J a n u a r y a n d e a r ly F e b r u a r y , a n d sin ce th en h a v e

cred it o u ts ta n d in g in cre a se d o n ly a b o u t $ 2 9 m illio n d u r ­

in th e fa c t th a t c o n s u m e r

in sta lm e n t

s to o d at th e ir leg a l m a x im u m s , e x c e p t in th e ca se o f th e

in g 1 9 5 1 c o m p a r e d w ith a rise o f $ 2 .6 b illio n in 1 9 5 0 .

re q u ire m e n ts o n d e m a n d d e p o s its fo r c e n tra l re s e rv e city

R e g u la t io n W

b a n k s. T h e s e re m a in tw o p e r c e n ta g e p o in ts b e lo w th e

fe ren c e, sin ce it w a s in e ffe c t th r o u g h o u t 1 9 5 1 in c o n tra st

leg a l m a x im u m .

to o n ly a b o u t th e la st q u a rte r o f 1 9 5 0 ; b u t the p rim a ry




w a s p a r tly re sp o n sib le fo r th is m a rk e d d if­

16

February 1952

FEDERAL RESERVE B A N K OF S A N FRA NC ISCO

fa c to r w a s th e m o r e m o d e r a te ra te o f c o n s u m e r s p e n d in g
— a d e v e lo p m e n t q u ite in d e p e n d e n t o f R e g u la t io n W

as

LOANS OUTSTANDING AT TWELFTH DISTRICT MEMBER BANKS
(End of June and December, 1949-51)

su ch .
C r e d it

c o n tr o ls ,

( R e g u la t io n X

b o th

th e

gen eral and

th e

se le ctiv e

a n d th e re la ted F H A a n d V A c o n t r o l s ) ,

p r o b a b ly p la y e d a la r g e r p a r t in re s tr a in in g th e e x p a n ­
s io n o f rea l esta te c r e d it d u r in g th e y e a r th a n w a s th e ca se
fo r c o n s u m e r cr e d it. T h e p ic tu re fo r th e y e a r as a w h o le
is d isto r te d b y th e fa c t th a t d u r in g th e first h a lf a la r g e
p r o p o r tio n o f th e h o u s e s s o ld w a s e x e m p t f r o m th e te r m s
o f R e g u la t io n X . D u r in g th e s e c o n d h a lf o f th e y e a r , h o w ­
e v e r , th e ra te o f g r o w t h o f rea l e sta te c r e d it sla ck e n e d
s u b sta n tia lly . A t c o m m e r c ia l b a n k s , f o r e x a m p le , th e in ­
cr e a se in rea l e sta te lo a n s o u ts ta n d in g w a s o n ly $ 4 0 0 m il­
lio n , c o m p a r e d w ith $ 6 0 0 m illio n d u r in g th e first h a lf o f
th e y e a r a n d $ 1 .1 b illio n d u r in g th e la s t h a lf o f 1 9 5 0 . A
c o n sid e r a b le p a r t o f th is sla c k e n in g w a s u n d o u b te d ly d u e
to th e r e s tr a in in g e ffe c ts o f c r e d it c o n tr o ls , b u t th e re w a s
a ls o e v id e n c e o f s o m e d e c lin e in th e d e m a n d f o r h o u se s

1949

1950

1950

1951

1951

in d e p e n d e n t o f th e e ffe c t o f c r e d it c o n tr o ls .
B u s in e s s d e m a n d s f o r c r e d it s h o w e d th e le a st c h a n g e
f r o m 1 9 5 0 to 1 9 5 1 . B u s in e s s lo a n s o u ts ta n d in g a t c o m ­
m e r c ia l b a n k s in c r e a s e d $ 4 .1

b illio n d u r in g 1 9 5 1

com ­

th e U n it e d S ta te s in c r e a se d in a sim ila r m a n n e r a n d at
th e e n d o f th e y e a r w e r e a lso a b o u t 11 p e r c e n t g r e a te r
th a n at the e n d o f 1 9 5 0 .

p a r e d w ith $ 4 .9 b illio n in 1 9 5 0 . H o w e v e r , all o f th e e x ­

C o m m e r c ia l a n d in d u str ia l lo a n s a c c o u n te d f o r a b o u t

p a n sio n in 1 9 5 0 o c c u r r e d in th e se c o n d h a lf o f th e y e a r ,

7 0 p e r c e n t o f th e d o lla r in cre a se in to ta l lo a n s o f D is t r ic t

a n d th e in c r e a se d u r in g th a t p e r io d w a s tw ic e a s la r g e a s

m e m b e r b a n k s d u r in g 1 9 5 1 . T h e i r ra te o f in cre a se — 2 3

th a t in th e c o r r e s p o n d in g p e r io d o f 1 9 5 1 . B u s in e s s firm s

p e r c e n t— w a s s o m e w h a t g r e a te r th a n a t m e m b e r b a n k s in

o b ta in e d m o r e fu n d s th r o u g h sale o f s e cu ritie s in 1 9 5 1 ,

th e

h o w e v e r , th a n in 1 9 5 0 — $ 6 .5 b illio n c o m p a r e d w ith $ 4 b il­

g r o w t h o f b u sin e ss lo a n s re fle cted in p a r t th e c u r r e n t a n d

c o u n tr y

as

a w h o le — 1 9

p e r c e n t.

T h is

c o n tin u e d

lio n . O v e r $ 5 b illio n o f th is a m o u n t w a s f o r p la n t an d

p ro s p e c tiv e e x p a n s io n in d e fe n se o u tp u t r e q u ir in g la r g e

e q u ip m e n t e x p a n s io n , re fle c tin g h e a v y b u s in e s s d e m a n d

ca p ita l in v e s tm e n t. B u s in e s s lo a n s f o r n o n d e fe n s e p u r ­

f o r lo n g -t e r m e x te r n a l fin a n c in g , p a r tic u la r ly b y firm s

p o se s a lso in cr e a se d su b sta n tia lly , h o w e v e r . S p e c ia l ta b u ­

w h ic h h e ld d e fe n s e c o n tr a c ts o r w e r e e n g a g e d in d e fe n s e -

la tio n s o f a s a m p le o f th e ir b u sin e ss lo a n s su b m itte d b y

re la te d a c tiv itie s.

th e la r g e r b a n k s o f th e D is t r ic t a n d th e n a tio n f o r th e N a ­
tio n a l V o lu n t a r y C r e d it R e s tr a in t C o m m itt e e s h o w th a t

Loans and investments of Twelfth District
member banks continued to grow

th e

o v e r -a ll

in cr e a se

in

lo a n s

o u ts ta n d in g

fro m

M ay

t h r o u g h D e c e m b e r w a s la r g e r f o r lo a n s f o r n o n d e fe n s e

T h e y e a r 1 9 5 1 s a w a c o n tin u in g g r o w t h in th e a m o u n t

p u r p o s e s th a n f o r d e fe n se a n d d e fe n s e -s u p p o r tin g u se s

o f lo a n s o u t s ta n d in g a t T w e l f t h D is t r ic t m e m b e r b a n k s.

c o m b in e d , b o th in th e U n it e d S ta t e s a n d in th e T w e l f t h

T h e in c r e a se d u r in g th e y e a r , c lo s e to $ 7 8 0 m illio n , w a s

D is t r ic t. M u c h o f th e in cre a se in n o n d e fe n s e lo a n s w a s

s u b sta n tia lly b e lo w th e $ 1 .2 b illio n in cr e a se d u r in g 1 9 5 0 ,

se a so n a l in ch a ra c te r, h o w e v e r .

h o w e v e r , a n d re p re s e n te d a g r o w th o f o n ly 11 p e r c e n t as

T o t a l c o n s u m e r lo a n s o f m e m b e r b a n k s s h o w e d little

c o m p a r e d w ith th e p r e v io u s y e a r 's 2 0 p erce n t. M o r e o v e r ,

c h a n g e d u r in g 1 9 5 1 , in c r e a sin g le ss th a n 3 p e r c e n t in th e

th e ra te o f e x p a n s io n o f lo a n s w a s fa ir ly s te a d y t h r o u g h ­

n a tio n a n d d e c lin in g s o m e 2 p e r ce n t in th e D is t r ic t. D u r ­

o u t 1 9 5 1 w h ile a lm o s t all th e g r o w t h in 1 9 5 0 h a d o c c u r re d

in g 1 9 5 0 th e se lo a n s h a d in c r e a se d s o m e 2 7 p e r c e n t in th e

d u r in g th e s e c o n d h a lf o f th e y e a r a fte r th e K o r e a n w a r

U n it e d S ta te s a n d 3 0 p e r c e n t in th is a r e a a s c o n s u m e r s

b e g a n . T o t a l lo a n s o u ts ta n d in g a t all m e m b e r b a n k s in

b o r r o w e d in o r d e r to fin an ce th e h e a v y v o lu m e o f p u r ­
ch a se s m a d e th a t y e a r . A s fe a r s o f s h o r ta g e s d e c lin e d ,

M ember B a n k D eposits a n d E a r n in g A ssets —
T w e l f t h D istrict

h o w e v e r , c u r re n t fu n d s w e r e u se d to p a y o f f e x is t in g in ­
d e b te d n e ss a n d n o su b sta n tia l n e w b o r r o w in g o c c u r r e d .

(in m illio n s, as o f D ecem ber 31)

Demand deposits of individuals,
1941
partnerships, and corporations........ $2,778
Time deposits2 ......................................
2,390
United States Government deposits..
144
Loans .......................................................
2,451
United States Government securities..
1,738
Other securities............ ..........................
542

1949
$8,043
6,203
332
5,925
7,016
1,066

1950
$8,917
6,233
266
7,093
6,415
1,373

1 Partly estimated.
1 Excluding interbank and United States Government deposits.




1951*
$9,675
6,615
280
7,866
6,533
1,449

R e a l esta te lo a n s o u ts ta n d in g c o n tin u e d to rise , b u t a t
a s lo w e r rate th a n in 1 9 5 0 . T h i s w a s e sp e c ia lly tr u e f o r
m em ber

bank

lo a n s

se c u re d

by

re sid e n tia l

p r o p e r tie s

w h ic h in c r e a se d a r o u n d 7 p e r c e n t d u r in g 1 9 5 1 , in b o th
th e T w e l f t h D is t r ic t a n d th e U n it e d

S ta t e s , c o m p a r e d

w ith in cr e a se s o f 1 5 p e r c e n t a n d 2 2 p e r c e n t r e s p e c tiv e ly
in 1 9 5 0 .

February 1952

L o a n s to fa r m e r s fo r c u r re n t p r o d u c tio n in cre a se d su b ­
sta n tia lly — n e a r ly 4 0 p e rce n t in th e D is t r ic t a n d 2 7 p e r ­
cen t in th e n a tio n as a w h o le . T h o s e lo a n s to fa r m e r s g u a r ­
a n teed b y th e C o m m o d ity C r e d it C o r p o r a tio n , h o w e v e r ,
co n tin u e d th e d eclin e b e g u n in
o p e ra tio n s

fo r

17

M O N T H L Y R E V IE W

1 9 5 0 as p ric e

a g ric u ltu ra l c o m m o d itie s

w ere

su p port
re d u ce d

m a r k e d ly .

The money supply expanded
T h e n a tio n ’s p r iv a te ly h e ld m o n e y su p p ly in cre a se d
m o r e in 1 9 5 1 th a n in 1 9 5 0 d esp ite th e su b sta n tia lly s m a ll­
er in cre ase in b a n k lo a n s in 1 9 5 1 . T h e d e m a n d a n d tim e
d e p o sits a n d c u r r e n c y h o ld in g s o f in d iv id u a ls a n d b u s i­
n e sse s in cre a se d $ 8 .8 b illio n c o m p a r e d w ith a n in cre ase
o f $ 7 .1 b illio n in 1 9 5 0 . T h e e x p a n s io n in b a n k lo a n s a n d

I n co n tr a s t to th e s u b sta n tia l d ec lin e th a t o c c u r re d in

in v e stm e n ts o th e r th a n U n it e d S ta te s G o v e r n m e n t se c u ­

1 9 5 0 , m e m b e r b a n k h o ld in g s o f U n it e d S ta te s G o v e r n ­

rities c o n tr ib u te d th e b u lk o f the in cre a se in th e m o n e y

m e n t se cu ritie s d id n o t c h a n g e s u b s ta n tia lly d u r in g the

s u p p ly , w ith in cre a se d h o ld in g s o f G o v e r n m e n t se cu ritie s

y e a r , in c r e a s in g less th a n 2 p e rce n t in th e T w e lft h D i s ­

b y F e d e r a l R e s e r v e B a n k s p r o v id in g m o s t o f th e b a la n ce.

trict an d d e c lin in g a b o u t 1 p e r c e n t in th e c o u n tr y as a

I n 1 9 5 0 a su b sta n tia l d eclin e in c o m m e r c ia l b a n k h o ld in g s

w h o le . H o ld in g s d ec lin ed sh a r p ly d u r in g the e a r ly m o n th s

o f G o v e r n m e n t se cu ritie s a n d a la r g e o u tflo w o f g o ld p r o ­

o f the y e a r as b a n k s s o ld se cu ritie s to m e e t th e h ig h e r

v id e d m a jo r o ffs e t s to th e e x p a n s io n in th e m o n e y su p p ly

re se rv e re q u ire m e n ts th a t b e c a m e e ffe c tiv e in J a n u a ry

a r is in g f r o m the g r o w th in b a n k lo a n s. T h e s e o ffs e ts w e r e

and

o n ly o f m in o r siz e in 1 9 5 1 , h o w e v e r .

e a r ly

F ebru ary.

S u b s e q u e n tly , h o ld in g s

w ere

re ­

tu rn e d to n e ar th e ir f o r m e r le v e ls th o u g h th e re w a s n o ­
ticea ble sh iftin g in th e ty p e s o f secu ritie s h e ld . H o ld in g s
o f lo n g -te r m b o n d s a n d n o te s d e c lin e d , w h ile s h o r t-te r m
T r e a s u r y b ills a n d ce rtificates o f in d e b te d n e ss in cre a se d
s u b sta n tia lly . T h is reflected in co n s id e r a b le p a r t sh ifts in
th e c o m p o s itio n o f the p u b lic d eb t th a t o c c u r re d as a re ­
su lt o f r e fu n d in g o p e ra tio n s d u r in g th e y e a r , an d in p art
the d e sir e o f b a n k s fo r g r e a te r liq u id ity . M e m b e r b a n k

T h e tu r n o v e r o f d e m a n d d e p o sits, th e p rin c ip a l c o m ­
p o n e n t o f the m o n e y su p p ly , d e c lin e d d u r in g the se co n d
h a lf o f the y e a r , h a v in g re a ch e d a p o s tw a r p e a k in the
se c o n d q u a rte r o f 1 9 5 1 . T h e d eclin e re flected the m o r e
m o d e r a te rate o f s p e n d in g b y c o n su m e r s a n d b u sin e sse s
th a t b e g a n to d e v e lo p in th e se c o n d q u a rte r a n d co n tin u e d
th r o u g h o u t the b a la n ce o f th e y e a r .

h o ld in g s o f c o rp o r a te a n d m u n ic ip a l se cu ritie s co n tin u e d

M e m b e r b a n k d e m a n d d e p o sits h e ld b y in d iv id u a ls,

to in cre a se in 1 9 5 1 as h ad be e n th e ca se in th e p re v io u s

p a r tn e r sh ip s, a n d c o r p o r a tio n s ro se d u r in g 1 9 5 1 a n e sti­
m a te d 9 p e r ce n t in th e T w e lf t h D is t r ic t a n d 5 p e r ce n t in

tw o y e a r s .

th e U n it e d S ta te s , in cre a se s j u s t s lig h tly m o r e th a n h a lf,

Yields moved to a higher level
in

p e r c e n ta g e w ise , th o se in 1 9 5 0 . T h e g r o w th in tim e d e ­

7957

p o sits w a s su b sta n tia lly g r e a te r th a n in 1 9 5 0 , h o w e v e r ,

Y i e ld s o n U n it e d S ta te s G o v e r n m e n t a n d o th e r s e c u ri­
ties ro se c o n s id e r a b ly d u r in g

1951

as th e d e m a n d f o r

cred it co n tin u e d re la tiv e ly h ig h a n d th e s u p p ly o f fu n d s
w a s s o m e w h a t re stricted . F o llo w in g th e w ith d r a w a l o f
the F e d e r a l R e s e r v e S y s te m f r o m its g e n e r a l s u p p o r t o f
the G o v e r n m e n t b o n d m a r k e t in M a r c h , p ric es o f G o v ­
e r n m e n t se cu ritie s, b o th lo n g -t e r m a n d s h o r t-te r m , f e l l ;
y ie ld s ro se ra th e r sh a r p ly a n d , w ith th e e x c e p tio n o f a
d ec lin e in th e th ird q u a rte r , c o n tin u e d to rise m o d e r a te ly
th e re st o f th e y e a r . T h e a v e r a g e y ie ld

o n lo n g -t e r m

w ith in cre a se s o f 6 p e r c e n t in th e D is t r ic t a n d 4 p erce n t
in th e n a tio n . C h a n g e s in d e p o sits w e r e n o tic e a b ly la r g e r
p e r c e n ta g e w ise in th e sm a lle r sta te s o f th e D is tr ic t th a n
in C a lifo r n ia , W a s h i n g t o n , a n d O r e g o n . T h e n et issu e o f
c u r r e n c y in 1 9 5 1 in cre a se d su b sta n tia lly in th e T w e lft h
D is t r ic t, th e first su ch a n n u a l e x p a n s io n sin ce 1 9 4 5 . C u r ­
re n c y in c ir c u la tio n a lso in cre a se d in th e c o u n tr y as a
w h o le , in c o n tr a st w ith a v e r y sm a ll c h a n g e th e p re v io u s
year.
P r iv a te

d em an d

d e p o sits

d e c lin e d

s h a r p ly

th e

first

G o v e r n m e n t s ro se a b o u t o n e -th ir d o f a p e r c e n ta g e p o in t

q u a rte r o f 1 9 5 1 b e ca u se o f th e d ra in f r o m in c o m e t a x p a y ­

d u r in g the y e a r . I n D e c e m b e r th e ra te o n o n e issu e o f n e w

m e n ts. I n 1 9 5 0 th e d ra in h a d b e e n c u sh io n e d b y th e p a y ­

T r e a s u r y b ills w a s 1 .8 6 5 p e r ce n t, th e h ig h e s t sin ce 1 9 3 2 .

m e n t o f a la r g e v e te r a n s ’ in su r a n c e r e fu n d , b u t in 1 9 5 1 it

A lt h o u g h th e a v e r a g e y ie ld d u r in g th e y e a r o n h ig h -

w a s n o d o u b t a c ce n tu a te d b y th e in stitu tio n o f th e “ M i l l s ”

g r a d e m u n ic ip a l b o n d s w a s o n ly .0 2 o f a p e r c e n ta g e p o in t
h ig h e r th a n in 1 9 5 0 , th e D e c e m b e r

1951

average w as

a b o u t o n e -th ir d o f a p o in t a b o v e th e p r e v io u s D e c e m b e r
fig u re. Y i e ld s

o n c o r p o r a te is su e s

ro s e fa ir ly

ste a d ily

p la n w ith its c o lle c tio n o f c o r p o r a te in c o m e t a x o n an
a c ce le ra te d b a sis. D e p o s it s in c r e a se d , h o w e v e r , th e rest
o f th e y e a r as lo a n s e x p a n d e d a n d T r e a s u r y e x p e n d itu r e s
e x c e e d e d re ce ip ts.

th r o u g h o u t th e y e a r a n d a t y e a r -e n d w e r e n e a r ly f o u r -

T i m e d e p o sits in c r e a se d th r o u g h o u t th e y e a r . I n 1 9 5 0

te n th s o f a p e r c e n ta g e p o in t h ig h e r th a n in D e c e m b e r

th e re h ad been so m e d e c re a se d u r in g th e la st h a lf as b a l­

1950.

a n c es w e r e liq u id a te d to fin an ce the la r g e s p e n d in g sp re e,

A v e r a g e ra te s c h a r g e d b y b a n k s o n s h o r t-te r m b u sin e ss

b u t th is d eclin e w a s m a d e u p b e fo r e th e m id d le o f 1 9 5 1

loa n s in cre a se d a b o u t fo u r -te n th s o f a p e r c e n ta g e p o in t

a n d sa v in g s d e p o sits h a v e in cre a se d ra th e r su b sta n tia lly

d u r in g the y e a r . T h e rate ch a rg e d p r im e c o m m e r c ia l b o r ­

sin ce. G o v e r n m e n t d e p o sits m o r e th a n d o u b le d th e first

r o w e r s w a s ra ise d th re e tim e s d u r in g th e y e a r — in J a n u ­

h a lf o f 1 9 5 1 b u t b y th e en d o f th e y e a r h a d d ec lin ed so th at

a r y 1 9 5 1 , b a n k s w e r e c h a r g in g

th e o v e r -a ll in cre a se d u r in g th e y e a r w a s 5 p e rce n t in the

2Y\

p e rce n t; by D e c e m ­

b e r th e ra te w a s u p to 3 p e r c e n t, th e h ig h e s t in 1 7 y e a r s.




D is t r ic t a n d a b o u t 1 5 p e r c e n t in th e U n it e d S ta te s.

18

February 1952

FEDERAL RESERVE B A N K OF S A N FRA NC ISCO

Member bank reserves were tighter
On

D ecem ber

31,

1951,

T w e lfth

SoURCES AND USES OF TWELFTH DISTRICT MEMBER BANK
D is t r ic t

R eserves

m em ber

b a n k re s e rv e s to ta le d $ 2 ,2 6 9 m illio n , th e in cre a se o f $ 2 4 4
m illio n o v e r th e sa m e d a te in 1 9 5 0 b e in g th e la r g e s t y e a r ly
g r o w t h sin ce the e n d o f W o r l d W a r I I . R e s e r v e b a la n ce s

(in m illion s o f d ollars)

Sources of member bank reserves
(factors w h ich w h en p ositive
increase reserves)

1 9 3 6 -4 0
(average)

a fte r th e c u r r e n c y d e v a lu a tio n s in o th e r c o u n tr ie s in S e p ­

Reserve bank credit . . . . . . . . +
1
Change in credit extended to
member banks in the District
by the Federal Reserve Bank
of San Francisco.
Commercial operations ......... — 180
Net payments from other
Districts to banks and the
public in the Twelfth District
(net Twelfth District pay­
ments to other Districts—')•
United States Treasury
operations ............................ +311
Net payments from the
Treasurer’s account at the
Federal Reserve Bank of
San Francisco to banks and
the public (net payments to
the Treasurer’s account— ).

te m b e r 1 9 4 9 . A n e t in flo w o f g o ld a n d a n in cre a se in f o r ­

Total ................................ +132

o f all m e m b e r b a n k s in th e U n it e d S ta te s at th e en d o f
th e y e a r w e r e a t th e h ig h e s t le v e l sin ce 1 9 4 8 , h a v in g in ­
c r e a se d o v e r $ 2 .3 b illio n d u r in g 1 9 5 1 .
R e s e r v e s w e r e b u ilt u p q u ic k ly in J a n u a r y in o r d e r to
m e e t th e in cr e a se d r e se rv e re q u ire m e n ts w h ic h w e n t in to
e ffe c t in J a n u a r y a n d e a r ly F e b r u a r y . D u r in g th e rest o f
th e y e a r th e n e ed f o r re s e rv e fu n d s c o n tin u e d h ig h as d e ­
p o sits in b a n k s g r e w a n d th e v o lu m e o f c u r r e n c y in c ir ­
c u la tio n e x p a n d e d . J u ly , h o w e v e r , m a r k e d th e e n d o f the
o u tflo w o f g o ld f r o m th e U n it e d S ta te s w h ic h h a d sta rted

e ig n a c c o u n t d e p o s its in F e d e r a l R e s e r v e B a n k s c o n tr ib ­
u te d to th e g r o w t h in r e s e rv e b a la n ce s d u r in g th e se co n d
h a lf o f th e y e a r .
A s in f o r m e r y e a r s , 1 9 5 1 F e d e r a l G o v e r n m e n t e x p e n d i­
tu r e s in th e T w e l f t h D is t r ic t e x c e e d e d c o lle c tio n s fr o m
th is a r e a , th u s a d d in g s u b s ta n tia lly to b a n k r e s e rv e s . B o th
in 1 9 5 0 a n d in 1 9 5 1 th is n e t p a y m e n t in to th e D is t r ic t w a s
v e r y la r g e as e x p e n d itu r e s f o r d e fe n se p u r p o s e s w e r e in ­
cr e a se d . O n th e o th e r h a n d , in te r d istric t se ttle m e n ts on

1948
+ 17

1949
+ 13

+

1950
39

1951
— 21

+472

— 930

— 1141

— 1582

— 482

+378

+1198

+1983

+

7

— 539

+

96

+

380

-209

— 65

14

+

189

—

53

Uses of member bank reserves
(factors w h ich w h en positive
reduce reserves)

Demand for currency............ +
Change in holdings of coin
and currency by banks and
the public.
Change in nonmember de­
posits and other Federal Re­
serve Accounts .................. +

36

Total ................................ +

39

+ 93

Change in member bank
reserves ......................

3

+

22

+

— 211

— 43

—

6

+

136

+218

— 496

+

102

+

244

c o m m e r c ia l a c c o u n ts c o n tin u e d to act as a d ra in o n re ­
se rv e s as p a y m e n ts o u t o f th e D is t r ic t e x c e e d e d re ce ip ts

e rly h a d be e n ab le to d o , th e y h a d e ith e r to ta k e lo s s e s o n

in to th e D is t r ic t. N e t p a y m e n ts a n d tr a n s fe r s to oth er

th e se se cu ritie s o r u se o th e r m e th o d s to

a r e a s f o r g o o d s , s e r v ic e s , a n d secu ritie s in 1 9 5 1 w e r e the

M a n y b a n k s in cre a se d th e ir u se o f d is c o u n t fa cilitie s a t

se cu re fu n d s .

la r g e s t sin ce 1 9 4 6 , e x c e e d in g e v e n th e h ig h 1 9 5 0 figu re

F e d e r a l R e s e r v e B a n k s ; th is b o r r o w in g re a ch e d a n 1 8 -

b y a su b sta n tia l a m o u n t.

y e a r h ig h in th e U n it e d S ta te s d u r in g th e first w e e k in

A s p ric es o f G o v e r n m e n t se cu ritie s fe ll d u r in g th e y e a r ,

D e c e m b e r . H o w e v e r , b a n k s are re lu c ta n t to b o r r o w in th is

b a n k s a n d o th e r in v e s to r s b e c a m e less w illin g to sell at a

m a n n e r e x c e p t f o r te m p o r a r y p e r io d s , a n d th e p r e ssu r e

lo s s , a n d y ie ld s m a d e th e se in v e s tm e n ts m o r e a ttra ctiv e

to p a y o f f the in d e b te d n e ss te n d e d to u se u p n e w fu n d s

f o r h o ld in g . W h e n b a n k s n e e d e d a d d itio n a l r e s e r v e s, in ­

b e c o m in g a v a ila b le w h ic h m ig h t o th e r w is e h a v e b e e n u se d

ste a d o f se llin g G o v e r n m e n t s a t p a r o r b e tte r as th e y f o r m -

fo r m o r e lo a n s o r in v e stm e n ts.

INDUSTRY STEPS AHEAD THOUGH SOME LINES FALTER

r

' r e s p o n s e to th e g r e a tly e x p a n d e d d e fe n s e p r o g r a m ,

lim ita tio n s, to ta l c o n str u c tio n a c tiv ity d e c lin e d as th e y e a r

b u s in e s s a c tiv ity in th e T w e l f t h F e d e r a l R e s e r v e D i s ­

p r o g r e s s e d . T r a d e a n d th e v a r io u s se rv ic e s s h o w e d little

tr ic t re a ch e d a n e w h ig h in 1 9 5 1 . U n lik e p r io r b o o m y e a r s

if a n y real g a in . I n m a n u fa c tu r in g , lu m b e r p r o d u c tio n in ­

sin ce th e e n d o f W o r l d W a r I I , th e r e w e r e m a r k e d d i­

cr e a se d m o d e r a te ly f o r th e y e a r as a w h o le , la r g e ly as a

v e r g e n c e s in e x p e r ie n c e a m o n g d iffe r e n t s e g m e n ts o f the

re su lt o f a sh a rp g a in in th e e a r ly p a r t o f th e y e a r . A p p a r e l

e c o n o m y . S o m e lin e s s h o w e d w e a k n e s s e s a n d , in a fe w in ­

o u tp u t te n d ed to d ec lin e a lm o s t c o n tin u o u s ly a fte r th e

sta n c e s , d e c lin e s in a c t i v i t y ; b u t e v e n in su ch ca ses v o lu m e

first fe w m o n th s o f 1 9 5 1 . Y e t , e v e n in th e se c a se s o u tp u t

w a s h ig h c o m p a r e d w ith m o s t y e a r s o th e r th a n

a n d e m p lo y m e n t w e r e n o t so d e p r e s s e d a s to b e o f se r io u s

1950.

E m p lo y m e n t , a fa ir ly c o m p r e h e n s iv e m e a s u r e o f b u sin e ss

c o n c e rn . T h e e x p a n s io n o f a ir c r a ft, m a c h in e r y , m e ta ls ,

a c tiv ity , r o s e s ig n ific a n tly in th e D is t r ic t. M a n u fa c t u r in g

a n d sh ip b u ild in g e m p lo y m e n t a b s o r b e d la r g e n u m b e r s o f

e m p lo y m e n t w a s th e m o s t im p o r ta n t e le m e n t in th e g a in ,

w o r k e r s a n d re d u ce d u n e m p lo y m e n t to e x c e p tio n a lly lo w

fo llo w e d b y th e in c r e a se in G o v e r n m e n t jo b s . I n co n tr a st,

le v e ls , a v e r a g e u n e m p lo y m e n t f o r th e y e a r b e in g 4 5 p e r ­

th e g a in s in c o n s tr u c tio n a n d tr a d e e m p lo y m e n t w e r e e x ­

ce n t b e lo w th a t f o r 1 9 5 0 .

c e e d in g ly s m a ll.

T h e o v e r -a ll b o o m in th e e c o n o m y ca n b e a ttr ib u te d to

A m o n g th e m a jo r lin e s e x h ib itin g w e a k n e s s e s , c o n ­

th e d e fe n se e ffo r t, as e x p r e s s e d in m ilita r y c o n tr a c ts let

str u c tio n w a s th e m o s t c o n s p ic u o u s . P a r t ly b e c a u se o f

in th e D is t r ic t, a n d its im p a c t o n c o n s u m e r a n d b u sin e ss

c r e d it a n d m a te r ia ls c o n tr o ls and. s o m e sp ec ific b u ild in g

b u y in g f o r n o n d e fe n s e p u r p o s e s . T h e w e a k n e s s in s o m e




February 1952

M O N T H L Y R E V IE W

19

I n dexes of I n dustrial P roduction — T w e l f t h D istrict

A s the y e a r p r o g r e s s e d a n d civ ilia n d em a n d ab ate d s o m e ­

(1947-49=100)

w h a t, the slack in c o n s u m e r g o o d s w a s m o r e th a n o ffs e t

Industrial production
1943 1944 1945 1946 1947 1948 1949
Copper.............................. 125 112 90
71 106101
93
Lead ................................ 100
90 78
70
94 105 101
Zinc ..................................
81
91 88
81
98 100 102
Silver................ ’............... 114
93 76
64 100105
95
G o ld ..................................
82
67 58
71 101100
99
Iron ore ..........................
79
93 102
101 102
94 104
50
73 72
60
95107
98
Steel ingots ....................
Aluminum........................ 107 117 71
51
90 102 108
Petroleum........................
85
93 97
94 100101
99
Refined oils ....................
83
93 9891
98 100 103
Cement ............................
79
63 65
81
96 104 100
Lumber............................
90
90 72
85
97104
99
Wood pulp ......................
74
79 78
82
96 103 101
Paper ..............................
77
80 79
88
96 102 102
Douglas fir plywood . . . .
80
80 67
78
91 104 105
Wooden boxes................ 113 136 124
124 11598
87
Canned fruits..................
67
87 80
125 101
99 100
86
93 91
123 10992
99
Canned vegetables ........
M eat...... ...........................
52
73 67
49 101102
97
Sugar ..............................
82
82 82
90 11989
93
Flour ................................
98 101 112
108 11398
88
Butter ................ ............. 138 124 91
69 105
92 103
Cheese..............................
85
93 100
99 10398
99
Ice cream........................
74
81 90
131 11396
91

1950 1951*
115 115
109 89
101 96
122 114
117 99
103 107
126 147
119 126
98 106
103 112
112 128
112 114
120 141
109 120
142 150
94 96
96 120
110 175
119 178
105 97
86 95
99 76
104 96
94 98

b y la r g e g a in s in a ircr a ft, m a c h in e ry , a n d m e ta ls e m ­
p lo y m e n t. B e c a u s e o f th e n a tu re o f th e d e m a n d fo r D i s ­
trict p ro d u c ts, d u ra b le g o o d s e m p lo y m e n t w a s o n e -fifth
h ig h e r in 1 9 5 1 th a n in 1 9 5 0 , w h ile the n u m b e r o f w o r k ­
ers in n o n d u ra b le s in cre a se d less th a n 4 p erce n t. A t y e a r en d e m p lo y m e n t in te x tile s an d ap p a rel w a s lo w e r th a n
tw e lv e m o n th s e arlier. T h e sp ecu la tiv e b o o m in th ese lin es
in late 1 9 5 0 an d e a r ly 1 9 5 1 w a s n o t m a in ta in e d , an d the
v o lu m e o f a c tiv ity d eclin ed . E m p lo y m e n t in the p a p er
in d u s tr y , d esp ite a g a in fo r th e y e a r as a w h o le , w a s a b o u t
the sa m e in late 1 9 5 1 as in 1 9 5 0 a n d reflected a m o d e ra te
re d u ction fr o m th e su m m e r lev el. I n co n tr a st, fo o d , c h e m ­
ica ls, p e tro le u m , a n d ru b b e r e m p lo y m e n t g a in e d a t least
m o d e ra te ly d u r in g th e y e a r .
I n the d u ra b le g o o d s g r o u p , a ircra ft e m p lo y m e n t led
the e x p a n s io n w ith a g a in o f m o r e th a n 55 p ercen t. M a ­
c h in ery e m p lo y m e n t also in cre ase d sh a r p ly — m o r e th a n

1Preliminary.
Note: Data given above supersede all previously published annual indexes.

o n e -th ir d , an d sh ip b u ild in g m a d e its first su b stan tial g a in

lines is attrib u ta b le in p art to c o n tr o ls a n d in p art to the

tio n a lso re p o rte d a g o o d in cre ase , a p p r o x im a te ly 15 p e r ­

sin ce th e end o f the w a r . M e t a ls p ro d u c tio n an d fa b r ic a ­

re v ersa l o f e x p e c ta tio n s ba sed on th e initial im p a c t o f th e

cen t, b u t lu m b e r s h o w e d v e r y little g a in . I n fa ct, late in

e x p a n d e d d efe n se e ffo r t.

th e y e a r lu m b e r e m p lo y m e n t d ro p p e d b e lo w th e c o m p a r ­

T h o u g h in d iv id u a l lines su ffe re d s o m e w h a t, th e re w a s
n o re a so n fo r se rio u s co n ce rn . F o r if all s e g m e n ts o f the
e c o n o m y h ad p ro ce ed e d a h ea d at fu ll b la st, th e c o m p e ti­
tio n fo r ra w m a te ria ls, la b o r, a n d ca p ital w o u ld h a v e been
su ch as to p ro d u c e c o n tin u o u s ra p id in fla tio n . M o d e r a te
slack in a fe w lin e s, e sp e cia lly o f su ch a n o r d e r th a t little
if a n y a b so lu te lo ss is e x p e r ie n c e d , is ce rta in ly a re a s o n ­
ab le p rice fo r a v o id in g in flatio n .

Employment in District reflects impact
of defense program
T w e lft h D is tr ic t n o n a g r ic u ltu r a l e m p lo y m e n t reach ed
a n e w h ig h in 1 9 5 1 , a v e r a g in g 7 p erce n t a b o v e the re co rd
lev el o f

1950.

M a n u fa c t u r in g

e m p lo y m e n t led

th e in ­

c rea ses w ith a g a in o f 13 p erce n t, re fle ctin g a ris in g lev el
o f d efe n se ou tp u t. G o v e r n m e n t e m p lo y m e n t re co rd e d the
se co n d la r g e st re la tiv e , as w e ll as a b so lu te , g a in — 11 p e r ­
cen t. E m p lo y m e n t g a in s in the o th e r n o n a g r ic u ltu r a l lines
w ere m o d e ra te , a n d tra d e e sta b lish m e n ts re p o rte d an in ­
crea se o f o n ly 1 p erce n t in th e a v e r a g e n u m b e r o f w o rk e rs
d u r in g th e y e a r .
E m p lo y m e n t e x p a n s io n in the T w e lft h

D is tr ic t w a s

s ig n ific a n tly ah ea d o f th e n ation a l a v e r a g e . N o n a g r ic u l­
tu ral e m p lo y m e n t g a in e d 5 p erce n t n a tio n a lly , an d m a n u ­
fa c tu rin g

e m p lo y m e n t

ro se

7

p erce n t,

c o m p a re d

w ith

g a in s o f 7 a n d 13 p erce n t re sp ec tiv ely in th is D is tr ic t. T h i s
reflected th e sh arp im p a c t o f th e d efe n se p r o g r a m o n the
T w e lft h D is tr ic t. I n a d d itio n , th is D is t r ic t te n d ed to s u f­
fe r less fr o m th e re strictio n s o n c iv ilia n p ro d u c tio n o f
su ch ite m s as a u to m o b ile s a n d h o u s e h o ld ap p lian ce s.
In the e a rly p a r t o f th e y e a r in cre ase s in T w e lft h D i s ­
trict m a n u fa c tu r in g e m p lo y m e n t w e r e

in flu en ced to

a

la rg e e x te n t b y re co rd p ro d u c tio n o f m a n y civ ilia n ite m s.




a b le 1 9 5 0 lev el.
PACIFIC COAST MANUFACTURING EMPLOYMENT
BY INDUSTRY
(Percent change in average monthly employment, 1950-51)
P ercen t

20

February 1952

FEDERAL RESERVE B A N K OF S A N FRA NC ISCO

Construction activity declines

NUMBER OF NEW DWELLING UNITS AUTHORIZED IN
URBAN AREAS—TWELFTH DISTRICT, 1950-51

E x p e n d it u r e s o n c o n s tr u c tio n h a v e b e e n o n e o f th e e x ­
p a n siv e fo r c e s d u r in g m o s t o f th e p o s tw a r p e r io d , b u t in
1 9 5 1 c r e d it a n d m a te r ia ls re s tr ic tio n s w e r e im p o r ta n t ele ­
m e n ts w h ic h b r o u g h t a b o u t a su b sta n tia l d o w n tr e n d a s
th e y e a r p r o g r e s s e d . I n th e first p a r t o f 1 9 5 1 co n s tr u c tio n
w a s w e ll a h e a d o f 1 9 5 0 . E a r ly in th e y e a r th e b a c k lo g o f
c o m m it m e n t s
FH A

to

and V A

u n d e r w r ite

m o r tg a g e s

is s u e d

by

the

a s w e ll a s o th e r m o r tg a g e c o m m itm e n ts

o u ts ta n d in g a t b a n k s a n d in s u r a n c e c o m p a n ie s f o r r e si­
d e n tia l b u ild in g e x e m p t f r o m c r e d it r e g u la tio n s w a s o n e
so u r c e o f s u b s ta n tia l a c tiv ity . M o r e o v e r , n o n re s id e n tia l
b u ild in g , m u c h o f w h ic h w a s sta rte d in a n tic ip a tio n o f
c o n tr o ls , p r o c e e d e d a t tw ic e th e ra te o f 1 9 5 0 e a r ly in the
y e a r . A s a re s u lt, in e a r ly 1 9 5 1 b u ild in g p e r m its a u th o r ­
iz e d in u rb a n a r e a s a n d a c tu a l c o n s tr u c tio n e x p e n d itu r e s
w e r e w e ll a h e a d o f th o s e f o r th e c o r r e s p o n d in g p e r io d o f
1950.
W h e n th e b a c k lo g o f h o u s in g e x e m p t f r o m c r e d it r e g u ­
la tio n s

d im in is h e d

and

m a te r ia ls

and

c r e d it

c o n tr o ls

s ta rte d to a ffe c t n o n r e s id e n tia l b u ild in g , th e v o lu m e o f
b u ild in g p e r m its fe ll b e h in d 1 9 5 0 . I n th is D is t r ic t, as w7ell
a s in th e n a tio n , p e r m its is s u e d la g g e d b e h in d 1 9 5 0 in
e v e r y m o n th s ta r tin g w ith M a r c h . N a tio n a lly , e x p e n d i­
tu r e s o n c o n s tr u c tio n , h o w e v e r , c o n tin u e d to ru n a h e a d o f
1950

th r o u g h J u ly , r e fle c tin g th e la r g e v o lu m e o f c o n ­

str u c tio n sta rte d late in 1 9 5 0 a n d e a r ly in 1 9 5 1 . I n A u g u s t ,
a s th e b a c k lo g o f w o r k in p r o c e s s w a s re d u c e d , e x p e n d i­
tu r e s o n c o n s tr u c tio n d r o p p e d b e lo w y e a r -a g o le v e ls a n d
w e r e s m a lle r th a n th e 1 9 5 0 v o lu m e f o r th e r e m a in d e r o f
th e y e a r . T o t a l e x p e n d itu r e s f o r th e y e a r ( i n co n tr a st to
p e r m its is s u e d )

w e r e a h e a d o f 1 9 5 0 , as a re su lt o f the

la r g e v o lu m e o f c o n s tr u c tio n in th e e a r ly p a r t o f th e y e a r .
L im it e d d a ta a v a ila b le in d ica te r o u g h ly th e sa m e e x p e r i­
en ce in th e D is t r ic t.
T o t a l c o n s tr u c tio n a u th o r iz e d in u r b a n a r e a s in th e
D is t r ic t d u r in g 1 9 5 1 w a s o f f 1 5 p e r c e n t f r o m th e 1 9 5 0
VALUE OF BUILDING PERMITS AUTHORIZED IN
URBAN A R EAS-TW ELFTH DISTRICT, 1950-51
M
illion«of




le v e l. H o m e b u ild in g le d th e d ec lin e w ith a d r o p o f 2 8
p erce n t. D e s p ite in cr e a se d fa c t o r y b u ild in g a n d m ilita r y
c o n str u c tio n , n o n re sid e n tia l b u ild in g p e r m its w e r e o f f 13
p e r c e n t. T h e la tte r d e v e lo p m e n t re fle cted th e im p a c t o f
m a te ria ls c o n tr o ls o v e r a w id e r a n g e o f b u ild in g a s w e ll
a s c r e d it c o n tr o ls u n d e r R e g u la t io n X

f o r s o m e ty p e s o f

n o n re sid e n tia l c o n str u c tio n . T h e p rin c ip a l d ec lin es in n o n ­
re sid e n tia l c o n str u c tio n a u th o r iz e d o c c u r r e d f o r a m u s e ­
m e n t p la c e s, p u b lic b u ild in g s , a n d sc h o o ls — a ll o f w h ic h
re fle cted

m a te ria ls

r e str ic tio n s.

F a c to r ie s

and

p u b lic

w o r k s re p o r te d th e m a jo r g a in s in n o n r e sid e n tia l c o n ­
s tr u c tio n . I t is in te r e stin g to n o te th a t a lth o u g h c o n s tr u c ­
tio n h a d a m o d e r a te ly la r g e r d ec lin e in th is D is t r ic t th a n
in th e n a tio n d u r in g 1 9 5 1 , C a lifo r n ia re m a in e d th e le a d in g
sta te in th e n a tio n in th e v o lu m e o f w o r k p u t in p la ce .
M ili t a r y c o n str u c tio n , w h ic h is n o t re fle cte d fu lly in
p e r m its issu e d , in c r e a se d sh a r p ly in th is D is t r ic t. T h e
to ta l v o lu m e a u th o r iz e d th r o u g h J u n e 1 9 5 2 a m o u n ts to
a b o u t $ 6 6 4 m illio n a n d re p re se n ts a b o u t 1 9 p e r c e n t o f
th e c o n str u c tio n a u th o r iz e d in th e U n it e d

S ta t e s . T h i s

v o lu m e w ill te n d to g iv e th e c o n str u c tio n in d u s tr y a firm
b a se d u r in g 1 9 5 2 b u t is n o t lik e ly to o ffs e t d e c lin e s in
re sid e n tia l a n d o th e r p r iv a te b u ild in g .

Lumber— a boom then a lull
P r o c e e d in g o n th e im p e tu s im p a r te d b y th e p o s t - K o r e a
b u ild in g a n d in v e n to r y b o o m , th e D is t r ic t lu m b e r in d u s ­
tr y set a n a ll-tim e r e c o r d d u r in g 1 9 5 1 . T h e h ig h le v e l o f
p r o d u c tio n d u r in g th e first h a lf o f th e y e a r , h o w e v e r , w a s
re sp o n sib le fo r th e n e w peak., I n th e first q u a r te r o f th e
y e a r p in e p r o d u c tio n w a s u p 2 6 p e r c e n t f r o m th e sa m e
p e r io d in 1 9 5 0 , a n d D o u g la s fir p r o d u c tio n w a s u p 2 3
p e r c e n t. I n th e se c o n d q u a rte r th e in cr e a se in b o th a r e a s
w a s a b o u t 5 p e r c e n t. D u r in g th e s a m e p e r io d r e d w o o d
p r o d u c tio n in c r e a se d , to o , b u t m o r e m o d e r a te ly . F o r th e
y e a r a s a w h o le th e in c r e a se fo r p in e w a s o n ly 2 p e r c e n t

21

M O N T H L Y R E V IE W

February 1952

a n d fo r D o u g la s n r a n d r e d w o o d o n ly 1 p erce n t. T h is
n a r r o w g a in re su lte d fr o m d e c lin in g o u tp u t in the se co n d
h a lf o f th e y e a r . A

INDEX OF LUMBER PRODUCTION-TWELFTH DISTRICT
(Adjusted for seasonal variation; 1947-49—100)

c h a n g e in d e m a n d w a s th e p rin c ip a l

fa c to r g i v in g rise to th e se d e v e lo p m e n t s ; b u t e x c e p tio n ­
a lly d r y w e a th e r , w h ic h lim ite d lo g g in g o p e ra tio n s b e ­
ca u se o f fire h a z a r d s , c o n tr ib u te d to th e d ec lin e in the
D o u g la s fir a re a d u r in g J u ly a n d A u g u s t .
T h e b o o m in th e e a r ly p a rt o f 1 9 5 1 re fle cted th e h e a v y
v o lu m e o f c o m m itm e n ts f o r a n d sta rts o f n e w h o u se s
w h ic h fo llo w e d th e o u tb r e a k o f h o stilitie s in K o r e a . In
a d d itio n , fe a rs o f s h o r ta g e s re su lte d in s to c k in g -u p by
b u ild e rs a n d lu m b e r y a r d s . I n th e se c o n d q u a rte r , h o w ­
e v e r, it b e ca m e a p p a r e n t th a t th e v o lu m e o f p r e -R e g u la tio n X

c o m m itm e n ts fo r n e w h o u s e s w a s b e in g w o r k e d

o f f ra p id ly a n d th a t d e m a n d u n d e r th e c r e d it te r m s o f
th a t re g u la tio n a n d th e related F H A

and V A

re q u ire ­

m e n ts w o u ld be c o n s id e r a b ly s m a lle r. E v e n w h e r e p r e R e g u la tio n

hou ses

w ere

a v a ila b le ,

con su m er

fe r v o r

d ro p p e d c o n s id e r a b ly w h e n it w a s re a liz e d th a t to ta l w a r
o r m o b iliz a tio n w a s n o t im m in e n t. H o u s i n g c o n s tr u c tio n
w a s a lso re ta rd e d b y th e w ith d r a w a l o f in su r a n ce c o m ­
p an ie s a n d b a n k s f r o m th e V A a n d F H A m o r tg a g e m a r ­
k et b e ca u se o f u n d ig e ste d c o m m itm e n ts a n d u n fa v o ra b le
p rices fo r G o v e r n m e n t se cu ritie s. I n a d d itio n to th e d e ­
re strictio n s

S e p te m b e r 1 9 5 0 . B e c a u s e o f the g r e a te r sta b ility o f o th er

a n d o th e r N P A lim ita tio n s re d u ce d th e v o lu m e o f a c tiv ­

clin e in

re sid e n tia l

co n s tr u c tio n , m a te ria ls

ite m s, h o w e v e r , a v e r a g e re a liz a tio n s w e r e o f f o n ly 5 p e r ­

ity in th e e re ctio n o f a m u s e m e n t p la c e s, c o m m e r c ia l an d

c e n t. P o n d e r o s a p in e N o . 3 c o m m o n l x S ’ s w e r e d o w n

p u b lic b u ild in g s , c h u r c h e s, a n d o th e r ty p e s o f n o n r e s i-

a b o u t 9 p erce n t in th e sa m e p e r io d . D u r in g D e c e m b e r ,

d en tia l str u c tu re s . In c r e a s e d m ilita r y c o n s tr u c tio n an d

h o w e v e r , all lu m b e r p ric es in cr e a se d slig h tly as o r d e r s

u se o f lu m b e r w e r e n o t su fficien t to o ffs e t th e d ro p in d e ­

w e r e fa ir ly str o n g f o r th e w in te r se a so n

m a n d f r o m o th e r so u r c e s. T h e s e fo r c e s , a lo n g w ith h ig h

th e y w e r e o ff c o n sid e r a b ly f r o m th e re co rd le v e ls o f late

e v e n th o u g h

in v e n to r ie s in b u ild e r s ’ a n d re ta ile r s ’ h a n d s , cu t th e m a r ­

1 9 5 0 . T h e c h a n g e o f p ace a fte r m id -y e a r c a n n o t be c h a r­

k et fo r lu m b e r a fte r th e first q u a rte r .

a c te riz e d as a se rio u s u p se t b u t m a r k s a lull f r o m the

D e s p ite the d eclin e in o r d e r s , w h ic h c o n tin u e d m o s t o f
the y e a r , p ro d u c tio n w a s m a in ta in e d

at a re co rd

rate

th r o u g h J u n e . E v e n a fte r J u n e th e d ec lin e in o u tp u t w a s
re la tiv e ly

m o d e ra te

e x c e p t d u r in g

th e

s e v e re

sum m er

d r o u g h t w h ic h re d u ce d lo g g in g o p e r a tio n s in the D o u g la s

h ectic te m p o o f e a rlie r m o n th s . P r ic e s at the en d o f 1 9 5 1
w e r e still w e ll a b o v e th e p r e -K o r e a lev el.

Plywood expansion continues,
but markets weaken

fir are a. S e p te m b e r b r o u g h t s o m e r e c o v e r y in D o u g la s fir

T h e D is tr ic t p ly w o o d in d u s tr y p ro d u c e d a b o u t 7 p e r ­

p ro d u c tio n , a n d im p r o v e m e n t w a s a ls o a p p a r e n t in O c t o ­

ce n t m o r e m a te ria l th a n in 1 9 5 0 to e sta b lish th e fifth su c ­

b e r in all a re a s. T h e w illin g n e s s o f th e in d u s tr y to m a in ­

c e ssiv e a n n u a l re c o rd . T w e l v e n e w p la n ts w e r e a d d e d in

ta in its o u tp u t in th e fa ce o f d e c lin in g d e m a n d re su lte d

th is D is tr ic t. O n e p la n t w a s a lso sta rted in B r itis h C o lu m ­

p a r tly fr o m th e e x p e c ta tio n th a t th e d e m a n d fr o m the

bia, a n d c o n str u c tio n b e g a n o n the first p ly w o o d p la n t

c o n str u c tio n

p a r tly fr o m

to be bu ilt in A la s k a . P ly w o o d m a n u fa c tu r e n o w e x te n d s

th e lo w le v e ls o f m ill in v e n to r ie s w h ic h e x is te d p r io r to

f r o m J u n e a u to L o s A n g e le s . I n a d d itio n a b o u t tw e n ty

June

s o m e in v e n to r y a c c u m u la tio n in th e

v e n e e r p la n ts w e r e sta rted in 1 9 5 1 , m o s t o f th e m w ith in

se co n d h a lf o f 1 9 5 1 , m ill sto ck s in th e D o u g la s fir re g io n

the b o rd e r s o f th is D is tr ic t. T h is e x p a n s io n in p ro d u c tio n

a m o u n te d to o n ly a little m o r e th a n a m o n t h ’s s u p p ly in

facilities c a m e at a tim e w h e n th e d e m a n d f o r p ly w o o d

te rm s o f n e w o r d e r s . I n th e p in e re g io n , in v e n to r y a c c u ­

w a s d e c lin in g so m e w h a t.

in d u s tr y m ig h t

1 9 5 1 . A fte r

in cre a se a n d

m u la tio n h as be e n m u c h m o r e su b sta n tia l a n d s to c k s in

A f t e r a n in te n se ly a c tiv e first h a lf, th e v o lu m e o f n e w

D e c e m b e r w e r e eq u al to a b o u t th re e m o n t h s ’ c o n s u m p ­

o r d e r s b e g a n to ease. M o s t o f th e d eclin e re su lte d fr o m

tio n . B e c a u s e o f th e a m o u n t o f p in e s o ld a s d r y lu m b e r ,

th e re d u ce d lev el o f h o u s in g sta rts. In c r e a s e d u se o f p ly ­

h o w e v e r , th is w a s n o t a n a b n o r m a l lev e l.

w o o d in th e c o n str u c tio n o f in d u str ia l p la n ts an d m ilita ry

P r ic e s o f m o s t lu m b e r p r o d u c ts re a cte d to th e lo w e r

in sta lla tio n s a n d in v a r io u s in d u str ia l a p p lica tio n s te n d ed

lev el o f d e m a n d . M o s t d ire c tly a ffe c te d w e r e th o se d i­

to o ffs e t a la r g e p a r t o f th is d ec lin e. A s a re su lt o f the e x ­

m e n sio n s a n d g r a d e s u se d in h o m e c o n s tr u c tio n . D o u g la s

p a n d in g d e fe n se p r o g r a m , p ly w o o d p ro d u c e r s had been

fir 2 x 4 ’ s d r o p p e d 8 p e r c e n t f r o m

d ire cte d to set a sid e 3 0 p e r c e n t o f th e ir p ro d u c tio n fo r




th e p e a k re a ch e d in

February 1952

FEDERAL RESERVE B A N K OF S A N FRA NC ISCO

22

m ilita r y u se . T h e fa ilu re o f d ire c t m ilita r y o r d e fe n se

m o r e th a n 4 p e r ce n t a h e a d o f o u tp u t in 1 9 4 8 , th e p r e v io u s

o r d e r s to ta k e u p a s ig n ific a n t p o r tio n o f th e s e t-a s id e s

p e a k y e a r . N a t io n a lly th e g r o w th w a s sim ila r b u t s o m e ­

co n tr ib u te d to w e a k n e s s in th e la st p a r t o f 1 9 5 1 .

w h a t m o r e m a r k e d as o u tp u t e x c e e d e d th e 1 9 5 0 le v e l b y

F o r th e first tim e in a lm o s t tw o y e a r s p ric e s o f p ly ­

1 4 p e r c e n t a n d th e p r e v io u s re c o rd o f 1 9 4 8 b y 11 p e r ce n t.

w o o d w e r e cu t in O c t o b e r . A f t e r th re e ro u n d s o f re d u c­

O u t p u t o f refin e d oil p ro d u c ts in th e D is t r ic t a lso re a ch e d

tio n s , p ric e s o f s o m e p ly w o o d ite m s w e r e a b o u t 2 0 p e r ­

n e w h ig h s a s p r o d u c tio n d u r in g 1 9 5 1 s u r p a sse d p r o d u c ­

ce n t lo w e r in e a r ly D e c e m b e r th a n th e y h a d be e n e arlier

tio n in 1 9 5 0 b y a lm o s t 1 0 p e rce n t.

in th e y e a r . P r ic e r e d u c tio n s te n d e d to s tim u la te d e m a n d ,

A

n u m b e r o f fa c to r s , e a ch w ith a m a jo r im p a c t o n th e

a n d a fa ir a m o u n t o f r e c o v e r y in n e w o r d e r s o c c u r re d in

p e tr o le u m

D ecem ber.

to ta l d e m a n d s fo r p e tro le u m p r o d u c ts to re c o rd le v e ls.

T ow ard

th e

end

o f th e

m o n th

p ro d u c tio n

situ a tio n in th is D is t r ic t, c o m b in e d to ra ise

p ic k e d u p a n d , b e ca u se o f th e s tr o n g e r m a r k e t, p ric es

D u r in g 1 9 5 1

firm e d .

tic u la rly o f g a s o lin e a n d n a p h th a , e x p a n d e d b y s o m e 3 5

c o n s u m p tio n b y th e m ilita r y fo r c e s , p a r ­

p e r ce n t o v e r th e y e a r p r e v io u s , a n d f r o m a ll in d ic a tio n s

Paper production expands

th is u p w a r d tr e n d w ill be c o n tin u e d th r o u g h 1 9 5 2 . S h ip ­

P r o d u c tio n o f p a p e r in th e T w e lf t h D is t r ic t e x p a n d e d

m e n ts to the P a c ific O c e a n a re a , in c lu d in g K o r e a a n d J a ­

a b o u t 9 p e r c e n t d u r in g 1 9 5 1 . A l m o s t all o f th e a d d itio n a l

p a n , in cre a se d b y a b o u t 1 3 m illio n b a rr e ls in 1 9 5 1 , to ta l

o u tp u t re s u lte d f r o m in c r e a s e d c a p a city fo r th e v a r io u s

s h ip m e n ts e x c e e d in g th o se fo r 1 9 5 0 b y m o r e th a n o n e a n d

p r o d u c ts m a d e in th is D is t r ic t. S a le s o f p a p e r p ro d u c ts

o n e -h a lf tim e s. E v e n

in c r e a se d o r h e ld fir m d u r in g m o s t o f th e y e a r , a lth o u g h

s u c c e ssfu l in b r in g in g a b o u t a c e ssa tio n o f a c tu a l h o s ­

in th e s e c o n d h a lf th e re w a s a m o d e r a te s la c k e n in g , p a r ­

tilitie s, it is n o t e x p e c te d th a t d e m a n d f r o m

tic u la r ly in th e late fa ll. A s a re s u lt o f th e d ec lin e in o r ­

w ill s h r in k sig n ific a n tly a s th e situ a tio n w o u ld still call

d e r s, th e in d u s tr y d id n o t u tilize its ca p a city as in te n siv e ly

fo r th e m a in te n a n c e o f a c o n sid e r a b le m ilita r y fo r c e th e r e .

a s in re ce n t y e a r s . O p e r a tio n s w e r e j u s t b e lo w 1 0 0 p e r ­

T h e r e h a s be e n so m e a g ita tio n b y W e s t C o a s t o il p r o ­

if c u r r e n t p ea ce n e g o tia tio n s a re

th a t are a

ce n t o f ra te d c a p a c ity in 1 9 5 1 , w h ile in 1 9 5 0 th e y w e re

d u c e r s, c o n sc io u s o f p re se n t p r e ssu r e o n sto c k s o n h a n d

a lm o s t 1 1 0 p e r ce n t o f ra te d ca p a city .

a n d re se rv e s u n d e r g r o u n d , to sh ift s o m e o f th e P a c ific

D u r in g th e e a r ly p a rt o f th e y e a r p a p e r p ric es co n tin u e d

a re a d e m a n d to G u lf a n d E a s t C o a s t p r o d u c e r s . I t a p ­

the sh a r p rise th a t b e g a n in th e se co n d h a lf o f 1 9 5 0 . T h e

p ea rs lik ely that the P e t r o le u m A d m in is tr a tio n fo r D e ­

J a n u a r y p rice fr e e z e a r re s te d th is m o v e m e n t a n d p rices

fe n se w ill ac ce d e , at lea st in p a rt, to th e se d e m a n d s .

d id n o t ch a n g e u n til J u n e . A t th a t tim e s o m e p ric e s w e r e

T o t a l d e m a n d fo r D is t r ic t p e tr o le u m p r o d u c ts f r o m all

ro lle d b a c k ; th e m o s t p r o n o u n c e d cu t w a s m a d e in the

so u r c e s o th e r th a n the str ic tly m ilita r y in cr e a se d b y

p ric e o f w o o d p u lp . A f t e r J u n e th e p ric e o f p a p e r sta rted

p e r ce n t d u r in g 1 9 5 1 . R e d u c e d s tr e a m flo w , re s u ltin g f r o m

to m o v e u p u n d e r v a r io u s O P S

in a d e q u a te

r e g u la tio n s w h ic h p e r ­

p re c ip ita tio n , p a r tic u la rly

d u r in g

th e

7

su m ­

m itte d a d ju s tm e n t s f o r c o s t in cr e a se s. T h e p rice f o r p a p er

m e r , p la ce d h e a v y d e m a n d s u p o $ th e D is t r ic t o il in d u s ­

b o a r d re m a in e d s te a d y u n til O c to b e r d esp ite a sh a r p d e ­

tr y fo r fu el o ils to ru n s te a m e le ctric p la n ts a s h y d r o e le c ­

clin e in o r d e r s , a cu tb a c k in p r o d u c tio n w e ll b e lo w ca ­

tr ic p o w e r su p p lie s d im in ish e d . U t ilitie s c o n s u m e d r e si­

p a c ity le v e ls , a n d a sh a r p d ec lin e in w a s te p a p e r p ric es

d u a l fu el oil at the a v e r a g e rate o f 5 5 ,0 0 0 b a rr e ls p e r d a y

late in th e s u m m e r .

in 1 9 5 1 c o m p a r e d w ith a c o n s u m p tio n ra te o f a b o u t 3 8 ,-

T h e D is t r ic t p a p e r in d u s tr y c o n tin u e s to e x p a n d . T h e

0 0 0 b a rr e ls p er d a y d u r in g 1 9 5 0 , a n in cr e a se o f a lm o s t

in d u s tr y in B r itis h C o lu m b ia is a ls o g r o w in g at a ra p id

4 5 p e r ce n t. T h e s te p p e d -u p m o v e m e n t o f v e s s e ls in a n d

ra te. T h i s e x p a n s io n s u p p le m e n ts the facilities a v a ila b le

o u t o f p o r ts a lo n g the P a c ific C o a s t in c r e a se d th e d e m a n d

in th is D is t r ic t sin ce w o o d p u lp f r o m C a n a d a is d u ty fre e.

f o r b o th D ie s e l a n d re sid u a l fu e l o ils f o r u se in th e se sh ip s

N e w fa cilities c o m p le te d o r u n d e r w a y in b o th a re a s c o v e r

b y m o r e th a n 1 8 p e r c e n t. D e m a n d e m a n a tin g f r o m th e

n e w s p r in t, w h ite

D is t r ic t ’ s s m e lte r s, m in e s , a n d m a n u fa c tu r in g e sta b lis h ­

p a te n t-c o a te d p a p e r b o a r d s , b o x b o a r d , k r a ft p u lp a n d

m e n ts e x p a n d e d s h a r p ly , p a r tic u la r ly f o r s to v e a n d D ie s e l

a w id e

ra n g e o f p r o d u c ts , in c lu d in g

p a p e r , a n d co n ta in e r b o a r d . D u r i n g 1 9 5 1 s ix ce rtificates

o ils , re fle ctin g the in cr e a se d re q u ire m e n ts o f th e d e fe n se

o f n e c e s s ity to ta lin g a lm o s t $ 3 0 m illio n w e r e g r a n te d fo r

p r o d u c tio n p r o g r a m f o r m e ta ls a n d m a n y ty p e s o f m a n u ­

th e e x p a n s io n o f b o x b o a r d , k r a ft p u lp , c o n ta in e r b o a r d ,

fa c tu re d m ilita r y h a r d g o o d s . T h e in c r e a s in g d ie s e liz a -

a n d m is c e lla n e o u s p r o d u c ts .

tio n o f the ra ilro a d s is e v id e n c e d b y th e rise in th e r a il­

Dem and for District petroleum

a n d th e ir co n tin u e d r e d u c tio n o f re sid u a l fu e l o il c o n ­

reaches a new peak

s u m p tio n ( d o w n 2 2 p e r c e n t ) .

r o a d s ’ u se o f D ie s e l oil b y s o m e

2 7

p e r c e n t d u r in g 1 9 5 1

R is in g m ilita r y r e q u ire m e n ts fo r p e tr o le u m a n d p e tr o ­

A m a jo r d e v e lo p m e n t o n th e d e m a n d sid e o f th e p e t r o ­

le u m p r o d u c ts c o m b in e d w ith e x p a n d e d civ ilia n d e m a n d s

le u m p ictu re in 1 9 5 1 w a s th e a lm o s t c o m p le te d is a p p e a r ­

to d r iv e the le v e l o f o u tp u t o f th e D is t r ic t ’s p e tr o le u m in ­

a n c e o f D is t r ic t oil s h ip m e n ts to d o m e s tic m a r k e ts o n th e

d u s tr y to n e w h ig h le v e ls in 1 9 5 1 . T h e p r o d u c tio n o f cru d e

E a s t C o a s t o f th e U n it e d S ta te s. D u r in g 1 9 5 0 th e se m a r ­

o il in th e T w e l f t h D is t r ic t ro se to a le v e l in e x c e s s o f 3 5 6

k e ts a b so r b e d in e x c e s s o f 2 3 m illio n b a rr e ls o f D is t r ic t

m illio n b a r r e ls , 8 p e r ce n t a h e a d o f th e p r e v io u s y e a r a n d

o ils , w h ile in 1 9 5 1 th e to ta l o f su c h in te r c o a sta l sh ip m e n ts




February 1952

23

M O N T H L Y R E V IE W

w a s less th a n o n e -h a lf m illio n b a rr e ls , a d eclin e o f 9 8 p e r ­

o u tp u t o f steel is b a sed u p o n scra p su p p lie s. D e s p ite tig h t­

cen t. I t sh o u ld be re ca lle d , h o w e v e r , th a t th e re la tiv e ly

n e ss in th e scra p m a r k e t at v a r io u s tim e s, o p e ra tio n s w e r e

h e a v y s h ip m e n ts d u r in g 1 9 5 0 w e r e d u e to a su b sta n tia l

n o t im p e d e d sin ce s tr o n g e ffo r ts b y steel m ills w e r e su c­

p rice re d u c tio n b y D is t r ic t p r o d u c e r s in an a tte m p t to

c e ssfu l in m a in ta in in g a n a d e q u a te flo w to fu rn a c e s.

m o v e e x c e s s s to c k s o f h e a v y re sid u a l cr u d e s w h ic h h a d

D e m a n d fo r fin ish e d steel w a s ch a ra c te rize d b y an in ­

a c c u m u la te d d u r in g th e p r e v io u s y e a r o r tw o . T h e situ a ­

c r e a sin g v o lu m e o f o r d e r s f o r d e fe n se p r o d u c tio n , b u t

tio n c h a n g e d ra p id ly a fte r th e K o r e a n o u tb r e a k a n d the

th e re w a s v e r y little d ire ct p r o c u r e m e n t b y th e m ilita r y .

p r o b le m h as s h ifte d to o n e o f m a in ta in in g ad e q u a te a n d

M u c h o f the D is t r ic t ’ s p ro d u c tio n o f steel p la te co n tin u e d

b a la n ce d sto ck s at re fin e rie s. T h e p rice cu ts w e r e m o r e

to be c o n v e r te d in to la r g e d ia m e te r p ip e f o r g a s a n d oil

th a n m a d e up b y a se rie s o f p rice a d v a n c e s , th e last o f

p ip e lin e s. A

w h ic h to o k p la ce o n D e c e m b e r 1 2 , 1 9 5 0 . T h e sta b iliz a tio n

sh ip p ed to are a s o u tsid e the D is tr ic t. T h e m a rk e t situ a ­

p rogram

h as p ro h ib ite d a n y p ric e a d v a n c e s sin ce th en .

tio n fo r fin ish ed steel w a s c o m p lic a te d b y v a r io u s N P A

D e s p ite re c o rd p r o d u c tio n o f c r u d e a n d refin ed p r o d ­

o r d e r s w h ic h w e r e d e sig n e d to d iv e r t steel to m ilita ry

c o n sid e r a b le p o r tio n

o f th is

o u tp u t w a s

u cts d u r in g 1 9 5 1 , in v e n to r ie s h e ld b y D is t r ic t oil c o m ­

u se s. M a n y civ ilia n p r o g r a m s w e r e re str icte d b y th e re ­

p an ie s d e c lin e d f r o m m o r e th a n 1 0 0 m illio n b a rr e ls on

d u ce d a llo c a tio n s, a n d sc h o o l d istricts a p p ea led to d efe n se

h a n d at th e clo se o f 1 9 5 0 to s o m e th in g less th a n 8 9 m illio n

a g e n cie s fo r la r g e r a llo c a tio n s th a n w e r e o r ig in a lly e s ta b ­

b a rrels at th e clo se o f 1 9 5 1 . A l m o s t h a lf th e d ec lin e o c ­

lish e d . A s th e y e a r p r o g r e s s e d , th e e x p e c te d s tr in g e n c y in

c u r re d in fu el oil a n d re sid u a l oil c r a c k in g sto ck . R e c e ip ts

steel su p p lie s w a s n o t q u ite so se v e re a s h a d be e n a n tic i­

o f cr u d e oil f r o m so u r c e s o u ts id e th e D is t r ic t h a v e in ­

p a te d . I n r e c o g n itio n o f th is situ a tio n , steel w a s rele ase d

c r e a se d c o n s id e r a b ly in re ce n t y e a r s b u t still re m a in re la ­

to sch o o l d istr icts a n d o th e r co n str u c tio n p r o je c ts in s o m e ­

t iv e ly m in o r in te r m s o f to ta l D is t r ic t c r u d e p ro d u c tio n .

w h a t g r e a te r q u a n tities th a n o r ig in a lly sch e d u led .

A

co n s id e r a b le e x p a n s io n o f im p o r ts is co n te m p la te d in

1 9 5 2 , h o w e v e r , p a r tic u la rly in h ig h g r a v ity cr u d e s fr o m

Aluminum output to new highs despite
production handicaps

B o r n e o a n d S u m a tr a .
R e c o g n iz in g h ig h c u r re n t a n d p r o s p e c tiv e d e m a n d s,

A lu m in u m p ro d u c tio n in th e T w e lft h D is t r ic t, d e sp ite

e x p lo r a tio n a n d n e w d r illin g a c tiv ity ro se s h a r p ly d u r in g

so m e h a m p e r in g la b o r a n d p o w e r d ifficu lties on tw o se p ­

1951

arate o c c a sio n s, ro se to n e w h ig h le v e ls d u r in g 1 9 5 1 . T h e

fr o m

the p r e v io u s y e a r . A l m o s t 2 ,4 0 0 n e w w e lls

w e r e sta rted d u r in g 1 9 5 1 , r e p r e s e n tin g a g a in o f a b o u t

D is t r ic t rate o f e x p a n s io n , h o w e v e r , fell fa r sh o r t o f th e

o n e -t h ir d o v e r th e n u m b e r s ta rte d d u r in g 1 9 5 0 . I n d u s tr y

n a tio n a l in cre ase fo r th e a lu m in u m in d u s tr y .

s o u r c e s fo r e c a s t a lev el o f n e w d r illin g a c tiv ity f o r 1 9 5 2

the D is t r ic t in 1 9 5 1 in cre a se d 6 p e r ce n t o v e r th e p re v io u s

o n ly m o d e r a te ly la r g e r th a n 1 9 5 1 . P r o v e n u n d e r g r o u n d

y e a r , c o m p a r e d w ith a n a tio n a l g a in o f 1 6 p erce n t. D i s ­

O u t p u t in

re se rv e s , in sp ite o f th e s te p p e d -u p te m p o o f e x p lo r a tio n

trict p ro d u c tio n w a s a lm o s t 8 p e rce n t ah e a d o f th e p ea k

a n d d r illin g a c tiv ity , c o n tin u e d to d ec lin e in 1 9 5 1 . T h e

p r o d u c tio n rate re a ch e d d u r in g W o r l d W a r I I .

p r o p o r tio n o f d r y h o le s o u t o f to ta l n e w d r illin g s a lso

A p o w e r sh o r ta g e d u r in g S e p te m b e r a n d a la b o r strik e

c o n tin u e s qu ite h ig h , a b o u t 8 8 p e r ce n t d u r in g 1 9 5 1 . E x ­

at th e T r o u td a le , O r e g o n p la n t w e r e to a co n sid e r a b le

p e n d itu re s b y D is tr ic t oil c o m p a n ie s o n e x p lo r a to r y a c ­

e x te n t r e sp o n sib le f o r the re la tiv e ly p o o r e r s h o w in g o f

tiv ity are b e in g d ire cted m o r e a n d m o r e to are a s o u tsid e

the D is tr ic t as c o m p a r e d w ith the n a tio n . L a s t S e p te m b e r

the D is t r ic t a n d to C a n a d a , th e

M e x ic a n

G u lf C o a s t,

S o u t h A m e r ic a , B o r n e o , a n d S u m a tr a .

1 7 it b e ca m e n e c e ssa r y f o r th e B o n n e v ille P o w e r A d m i n ­
istr a tio n to cu t b a ck a lm o s t a q u a rte r m illio n k ilo w a tts o f
in te r ru p tib le h y d r o e le c tr ic p o w e r d u e to a d im in ish e d

District steel industry continues
to expand

str e a m flo w w ith th e re su lta n t c o m p le te s h u td o w n o f at
lea st tw o p o t-lin e s a n d a su b sta n tia l cu tb a c k in th e o p e r a ­

S te e l p r o d u c tio n in th e T w e l f t h D is t r ic t c o n tin u e d its

tio n s o f a th ird .

T h is

c u tb a c k in in te r ru p tib le p o w e r ,

s te a d y e x p a n s io n in 1 9 5 1 . T o t a l in g o ts p r o d u c e d e x c e e d e d

u p o n w h ic h the a lu m in u m in d u str y d e p e n d s fo r a b o u t

th e 1 9 5 0 v o lu m e b y 1 7 p e rce n t. P a r t o f th e in cre a se w a s

o n e -fifth o f its to ta l p o w e r re q u ire m e n ts, w a s re la tiv e ly

m a d e p o s s ib le b y m o r e in ten se u se o f fa c ilitie s, b u t th ere

b r ie f ( fu ll p o w e r w a s re sto re d o n O c t o b e r 1 ) , a n d the

w e r e a n u m b e r o f a d d itio n s to c a p a c ity . A n a d d itio n a l

lo ss in p r im a r y a lu m in u m p ro d u c tio n a m o u n te d to b u t

b la st fu rn a c e w a s b lo w n in at F o n t a n a in M a y , in c r e a s -

2 ,0 0 0 to n s. T h e strik e at th e T r o u td a le p la n t w a s c o n ­

in g p ig ir o n c a p a c ity . I n L o s A n g e l e s c a p a city w a s in ­

sid e r a b ly m o r e c o s tly in te r m s o f o u tp u t lo st, a b o u t 8 ,0 0 0

c rea sed b y th e a d d itio n o f an e le ctric fu r n a c e , a n d a sm a ll

to n s d ire c tly , a n d r e su lte d in the “ fr e e z in g u p ” o f th re e

electric fu rn a ce w a s a d d e d in S e a ttle . W o r k w a s u n d er

p o t-lin e s . A s a re su lt o f th is in te r ru p tio n , fu ll p ro d u c tio n

w a y at G e n e v a o n an o p e n h e a rth fu rn a c e a n d facilities

w ill n o t be f o r t h c o m in g f r o m th is p la n t un til s o m e tim e in

fo r th e p r o d u c tio n

F ebru ary 1 95 2 .

o f h o t ro lle d sh e e ts. A t

P itts b u r g ,

C a lifo r n ia , a d d itio n a l c a p a c ity f o r co ld re d u c tio n , e le c tr o ­
ly tic tin n in g , a n d g a lv a n iz in g w a s b e in g p u t in p la ce.

D em and

fo r

a lu m in u m

and

a lu m in u m

p ro d u c ts

in ­

c r e a se d as a re su lt o f th e la r g e d iv e r sio n o f th e m eta l into

O n e o f the p rin c ip a l p r o b le m s d u r in g th e y e a r in v o lv e d

d e fe n se a c tiv itie s, in c lu d in g so m e 1 0 ,0 0 0 to n s fo r a d d i­

the a v a ila b ility o f scra p . A la r g e p o r tio n o f th e D is t r ic t ’ s

tio n to th e n a tio n a l sto c k p ile , a n d re m a in e d w ell a h ea d




24

February 1952

FEDERAL RESERVE B A N K OF S A N FRA NC ISCO

o f s u p p ly th r o u g h o u t 1 9 5 1 . A llo t m e n t s o f a lu m in u m cut
c iv ilia n

u se s s e v e r e l y ; in

som e

ca se s

th ese m e ta ls b e ca m e n e c e ssa r y d u r in g 1 9 5 1 to in su r e an

q u a n titie s m a d e

a d e q u a te flo w to d e fe n se p r o d u c tio n a n d to p r o v id e f o r the

a v a ila b le w e r e less th a n h a lf th e a m o u n t u s e d in so m e

m e e tin g o f essen tia l civ ilia n r e q u ir e m e n ts. T h e p rin c ip a l

p e r io d s o f 1 9 5 0 . T h e a ir c r a ft in d u s tr y re ce iv e d a la r g e r

m e a su r e a p p lie d h a s b e e n th e C o n tr o lle d M a te r ia ls P la n ,

p r o p o r tio n o f to ta l a lu m in u m o u tp u t d u r in g 1 9 5 1 th a n in
a n y o th e r p o s t - W o r l d W a r I I y e a r , a n d p re s e n t p la n s fo r
the e x p a n s io n in th e n u m b e r o f a ir fo r c e g r o u p s w ill ten d

re in sta te d o n J u ly 1, th e m e th o d u se d to w a r d th e clo se
o f W o r l d W a r I I fo r th e a llo c a tio n o f c o p p e r , ste e l, an d
a lu m in u m .

to in cre a se th is p r o p o r tio n sig n ific a n tly in th e n e x t tw o
T h e to ta l s u p p ly o f re fin e d c o p p e r, in c lu d in g im p o r ts ,

o r th re e y e a r s .
T h e p r o d u c tio n ca p a c ity o f th e a lu m in u m in d u s tr y n a ­
tio n a lly is e x p e c te d to m o r e th a n d o u b le th a t in e x is te n c e
at th e o u tb r e a k o f th e K o r e a n W a r b y th e en d o f 1 9 5 4 .
A s o f th e en d o f 1 9 5 1 p la n n e d fa c ility e x p a n s io n to ta le d

th a t b e c a m e a v a ila b le d u r in g 1 9 5 1

w a s d o w n a lm o s t 3

p e r ce n t f r o m 1 9 5 0 , d e sp ite a rise in m in e p r o d u c tio n o f
re co v e ra b le c o p p e r n a tio n a lly to th e h ig h e st lev el o n re c ­
o r d . T w e lf t h D is t r ic t m in e p r o d u c tio n o f c o p p e r d u r in g

s h o r t to n s p er y e a r , a lm o s t 8 2

1 9 5 1 in cre a se d 2 p erce n t o v e r 1 9 5 0 , a n e w h ig h le v e l. L a ­

p e r ce n t o f to ta l n a tio n a l o u tp u t o f a lu m in u m d u r in g 1 9 5 1 .

b o r d ifficu lties, h o w e v e r , w e r e in str u m e n ta l in r e s tr a in ­

a p p r o x im a te ly 6 7 7 ,0 0 0

P r e s e n t in d ic a tio n s are th a t o n ly a v e r y m o d e s t sh a re o f

in g an e v e n g r e a te r rise in o u tp u t th a n th a t w h ic h a c tu a lly

th is e x p a n s io n w ill o c c u r in th e T w e lf t h D is tr ic t. O n e n e w

o c c u r re d . A

p r im a r y a lu m in u m p r o d u c tio n p la n t is c u r r e n tly b e in g

G a r fie ld , U t a h in J u ly in te r ru p te d th e s m e ltin g o f o r e

c o n str u c te d in th e C e n tr a l W a s h i n g t o n are a w ith a n a n ­

f r o m th e n a tio n ’s la r g e s t c o p p e r m in e a t B in g h a m , U t a h .

n u a l ra te d c a p a c ity o f s o m e 8 5 ,0 0 0 to n s . A d d it io n a l p o t-

T h e strik e o f n o n fe r r o u s m in e , m ill, a n d s m e lte r w o r k e r s ,

lin e s a d d e d to e x is t in g fa cilities d u r in g 1 9 5 1 w ill acco u n t

w h ic h b e g a n late in A u g u s t a n d e n d e d in e a r ly S e p t e m ­

fo r a n o th e r 2 2 ,0 0 0 to n s o f a n n u a l ca p a city . T h e s e e x p a n ­

b e r, h a m p e re d m in in g a n d s m e ltin g o p e ra tio n s th r o u g h ­

m o n t h -lo n g strik e a t th e c o p p e r sm e lte r a t

sio n s to ta l less th a n 15 p e r c e n t o f th a t in d ica te d fo r the

o u t th e c o p p e r p r o d u c in g a re a s o f th e D is t r ic t as w e ll a s

e n tire U n it e d S ta te s . I n c o n tr a s t, in 1 9 5 1 th e D is t r ic t su p ­

th o se e lse w h e r e in th e n a tio n . I t is e stim a te d b y th e U n i t ­

p lied a lm o s t 4 5 p e rce n t o f th e to ta l o u tp u t o f a lu m in u m in

ed S ta te s B u r e a u o f M in e s th a t m o r e th a n 2 5 ,0 0 0 to n s o f

the c o u n tr y as a w h o le .

c o p p e r w e r e lo st as a re su lt o f th e la tte r str ik e , a n d th is
lo s s

Nonferrous metals shortages

gave

rise

to

an

u n p re c e d e n te d

re le a se

of

a

lik e

a m o u n t f r o m th e n a tio n a l str a te g ic sto ck p ile . A n a d d i­

develop during the year

tio n a l w ith d r a w a l f r o m th e sto c k p ile o f s o m e 3 0 ,0 0 0 to n s

E x p a n d e d d e fe n s e re q u ire m e n ts d u r in g 1 9 5 1 c o m b in e d

w a s a u th o r iz e d in O c t o b e r to m e e t th e m o s t p r e s s in g

w ith c o n tin u e d la r g e civ ilia n in d u str ia l d e m a n d to ca u se

n e ed s. T h is , as w ell as the 2 5 ,0 0 0 to n s w ith d r a w n e a rlie r,

th e re tu rn o f critic a l s h o r ta g e s o f th e n o n fe r r o u s m e ta ls

m u s t be re p la ce d d u r in g 1 9 5 2 .

(a n d

m e ta ls in g e n e r a l)

re m in is c e n t

o f th e p e r io d

of

Im p orts

o f refin ed a n d

u n refin e d

copp er,

in c lu d in g

W o r l d W a r I I . I n d ic a tio n s are th a t su ch s h o r ta g e s w ill

sc r a p , fell so m e 2 7 p e r ce n t in 1 9 5 1 f r o m le v e ls atta in ed

co n tin u e th r o u g h o u t 1 9 5 2 as d e fe n se p r o d u c tio n rises to

th e y e a r b e fo re . T h e c o p p e r sh o r ta g e , w o r ld w id e in sc o p e ,

p la n n e d le v e ls a lth o u g h it n o w a p p e a rs lik e ly th a t th e

led to in tern a tio n a l m e a s u r e s f o r th e a llo c a tio n o f the

s h o r ta g e s w ill be c o n s id e r a b ly less str in g e n t th a n o r ig i­

m e ta l, a n d c o n s u m p tio n q u o ta s w e r e in stitu te d fo r the

n a lly a n ticip a te d . G o v e r n m e n t c o n tr o ls o v e r th e u se of

la st q u a rte r o f th e y e a r . T h e in a b ility to in cr e a se im p o r ts

MINE PRODUCTION OF RECOVERABLE NONFERROUS
METALS—TWELFTH DISTRICT, 1950-51

ab le s u p p ly o f the m e ta l a n d in 1 9 5 1 re fin e ry o u tp u t fr o m




d u r in g 1 9 5 1 w a s a m a jo r re str ic tiv e fa c to r in th e a v a il­
fo r e ig n o r e s d ec lin ed b y a lm o s t 2 0 p e r c e n t f r o m th e p r e ­
v io u s y e a r .
T h e D e fe n s e M in e r a ls P r o c u r e m e n t A g e n c y c o n tin u e d
its e ffo r ts to in cre a se c o p p e r p r o d u c tio n b y v a r io u s s o r ts
o f g o v e r n m e n ta l a ssista n c e to m a r g in a l h ig h c o s t p r o ­
d u c e r s . T h e s e b e n e fits in clu d e d ire ct G o v e r n m e n t lo a n s
to r e o p e n c lo se d p r o p e r tie s, G o v e r n m e n t p u rc h a se c o n ­
tr a c ts

w ith

o v e r -c e ilin g

p ric e

a r r a n g e m e n ts ,

and

ta x

a m o r tiz a tio n ce rtifica tes f o r n e w d e v e lo p m e n t a n d c o n ­
str u c tio n o f fa cilities. S i x m in e s w ith in th e T w e l f t h D i s ­
trict, fo u r in A r iz o n a a n d tw o in N e v a d a , w e r e ce rtified
b y th e D M P A f o r e x p a n s io n o f p r o d u c tio n u n d e r o n e o r
m o r e o f th e se p r o v is io n s d u r in g 1 9 5 1 .
T h e o u tp u t o f lea d a n d z in c in th e T w e l f t h D is t r ic t fe ll
o f f m a r k e d ly in 1 9 5 1 d e sp ite th e v e r y h ig h le v e l o f d e ­
m a n d f o r th e se m e ta ls a n d o th e r m e a s u r e s d e s ig n e d t o in ­

February 1952

25

M O N T H L Y R E V IE W

crea se p ro d u c tio n . L e a d p r o d u c tio n in th e D is tr ic t in 1 9 5 1
w a s a lm o s t 1 7 p e rce n t lo w e r th a n th e y e a r b e fo r e , w h ile

Aircraft production and shipbuilding
rise sharply

n a tio n a l p r o d u c tio n d ec lin ed le ss th a n 1 0 p erce n t. T h e
p ro d u c tio n o f zin c b y D is t r ic t p r o d u c e r s a lso d ec re a se d
d u r in g th e y e a r , 5 p e rce n t f r o m 1 9 5 0 , co n tr a s te d w ith a
g a in n a tio n a lly fo r th e s a m e p e r io d o f 9 p erce n t.

A ir c r a f t p r o d u c tio n in th e T w e lf t h D is t r ic t in cre a se d
a b o u t 6 0 p e r c e n t d u r in g 1 9 5 1 . E m p lo y m e n t in th e in d u s ­
tr y a v e r a g e d m o r e th a n 1 7 0 ,0 0 0 p e r so n s d u r in g th e y e a r
d esp ite a strik e o f 8 ,0 0 0 w o r k e r s a t a L o n g B e a c h p la n t

T h e r e la tiv e ly a d v e r s e s h o w in g o f th e D is t r ic t as c o m ­
p a red w ith th e n a tio n is d u e f o r th e m o s t p a r t to th e d e p le ­
tio n o f s o m e o f th e p rin c ip a l le a d -z in c o r e -b o d ie s loca te d
in D is t r ic t sta te s. I n A r i z o n a 1 9 5 1 o u tp u t o f lea d a n d
z in c d ec lin ed 3 4 a n d 1 2 p e r c e n t re s p e c tiv e ly , la r g e ly as
a co n se q u e n c e o f th e re d u c tio n in le a d -z in c o u tp u t o f on e
la rg e m in e a n d to s o m e e x te n t o f d e p le tio n o f o th e r m a jo r

d u r in g S e p te m b e r a n d O c to b e r . A t y e a r -e n d th e v o lu m e
o f e m p lo y m e n t w a s still e x p a n d in g . S in c e th e sta rt o f
h o stilitie s in K o r e a , th is D is t r ic t h a s re ce iv ed a p p r o x i­
m a te ly $ 2 .5 b illio n in a irc r a ft c o n tr a c ts, a b o u t 2 5 p erce n t
o f the n a tio n a l to ta l. E v e n t s so fa r in d ica te th a t th e v o l ­
u m e o f w o r k a llo tte d to firm s in th is D is t r ic t w ill c o n ­

le a d -z in c o r e -b o d ie s in th e sta te. I d a h o , w h ic h ra n k ed as

tin u e h ig h , th o u g h th e p r o p o r tio n m a y d ec re a se as in lan d

the n u m b e r -o n e z in c p r o d u c e r in the U n it e d

in sta lla tio n s are p u t in to o p e ra tio n .

S ta te s in

Two

1 9 5 0 , lo s t th is p o s itio n d u r in g 1 9 5 1 . O u t p u t in th a t state

sig n ific a n t d e v e lo p m e n ts h a v e o c cu rre d

in

the

d ec lin ed 9 p erce n t fr o m th e 1 9 5 0 le v e l la r g e ly as a re su lt

D is tr ic t a irc r a ft in d u s tr y . D u r in g W o r l d W a r I I a lm o s t

o f the s h u td o w n o c c a sio n e d b y th e A u g u s t -S e p t e m b e r

all

strik e a n d a s h o r ta g e o f e x p e r ie n c e d u n d e r g r o u n d w o r k ­

in so u th e rn C a lifo r n ia a n d a r o u n d S e a ttle , W a s h i n g t o n .

th e

D is t r ic t

a irc r a ft

p r o d u c tio n

w as

co n ce n tr a te d

e rs in se v e ra l le a d in g m in e s d u r in g th e y e a r . U t a h ’ s o u t­

D u r in g 1 9 5 1 , in c o n tr a st, the in d u str y h a s b e e n e x p a n d ­

p u t o f b o th lead a n d zin c e x p a n d e d , 1 5 a n d 9 p e rce n t r e ­

in g in to A r iz o n a , N e v a d a , a n d n o r th e rn C a lifo r n ia . I n

sp e c tiv e ly , ch ie fly o w in g to in cre a se d a c tiv ity at m in e s

A r iz o n a a p p r o x im a te ly 9 ,0 0 0 p e r so n s w e r e e m p lo y e d in

in the B in g h a m a n d P a r k C ity a re a s. Z in c p r o d u c tio n in

a irc r a ft p a rts a n d se rv ic e s d u r in g 1 9 5 1 . P la n ts w e r e a lso

W a s h in g t o n , d esp ite th e strik e an d la b o r s h o r ta g e s , ro se

e sta b lish ed

to re co rd le v e ls, 2 9 p e r ce n t m o r e th a n th e p r e v io u s re c ­

R ic h m o n d , C a lifo r n ia . T h e se co n d d e v e lo p m e n t is th a t

o r d e sta b lish e d in 1 9 5 0 .

in

R eno,

N evada,

F resn o,

C a lifo r n ia , a n d

a la r g e r p r o p o r tio n o f th e su b c o n tr a c ts fo r ite m s o th e r
th a n a ir fr a m e s are n o w b e in g let in th is D is t r ic t th a n in

Gold and silver production
declines

W o r l d W a r I I . C u r r e n tly a b o u t h a lf th e w o r k in v o lv e d in
p r im e c o n tr a c ts to D is t r ic t a ir fr a m e p r o d u c e r s is s u b ­

O u t p u t o f th e p re cio u s m e ta ls in th e T w e lf t h D is tr ic t

co n tr a cte d to o th e r firm s. I n W o r l d W a r I I a la r g e p r o ­

a n d th e n a tio n d ec lin ed s h a r p ly in 1 9 5 1 f r o m th e r e la ­

p o r tio n o f th e se su b c o n tr a c ts w e n t to firm s o u tsid e th is

tiv e ly h ig h le v e ls o f th e p r e v io u s y e a r . D is t r ic t o u tp u t d e ­
cre a se d m o r e th a n 15 p e rce n t d u r in g 1 9 5 1 , s o m e w h a t less
th a n th e 1 8 p erce n t d eclin e f o r th e c o u n tr y as a w h o le .
E v e r y p r o d u c in g area o f th e D is t r ic t sh a re d in th e p r o ­
d u c tio n d r o p , b u t m o s t a ffe c te d w e r e th o s e are a s w h e r e
o u tp u t is p rin c ip a lly f r o m p la ce r o r lo d e ty p e o p e ra tio n s.
I n c r e a s in g c o sts o f o p e ra tio n h a v e m a d e m in in g o f th e se
p ro p e rtie s u n p ro fita b le . I n I d a h o , f o r e x a m p le , all b u t
o n e o f th e m a jo r p la ce r o p e ra tio n s sh u t d o w n c o m p le te ly
d u r in g th e y e a r , a n d a c tiv ity is a t a lo w ebb at s im ila r
m in e s in C a lifo r n ia a n d O r e g o n . D e c r e a s e d o u tp u t o f the
n o n fe r r o u s o r e s in U t a h , A r i z o n a , N e v a d a , a n d W a s h i n g ­

D is tr ic t. T h e p o s tw a r g r o w th o f the e le ctro n ics a n d m a ­
c h in e r y in d u str ie s in C a lifo r n ia h as re su lte d in a h ig h p r o ­
p o r tio n o f su b c o n tr a c tin g f o r su ch ite m s in the v ic in ity o f
th e a ir fr a m e p la n ts. R e c ip r o c a t in g e n g in e s, j e t e n g in e s,
a n d p ro p e lle r s are still b e in g su b c o n tr a c te d fo r o u tsid e
th e D is tr ic t. T h e n e t re su lt, h o w e v e r , is th a t a v e r y su b ­
sta n tia l p r o p o r tio n o f th e s u b c o n tr a c tin g h a s re m a in e d in
th is D is tr ic t. I n a d d itio n , s o m e a irc r a ft p r o d u c e r s in o th er
p a rts o f th e n a tio n h a v e let se v e ra l su b c o n tr a c ts to firm s
in th is D is tr ic t.
S h ip b u ild in g g a in e d in a c tiv ity f o r th e first tim e sin ce
th e en d o f W o r l d W a r I I . E m p lo y m e n t a v e r a g e d 4 7 p e r ­
cen t m o r e d u r in g 1 9 5 1 th a n a y e a r e a rlie r a n d e x c e e d e d

to n , o f w h ic h g o ld is a b y -p r o d u c t, a c c o u n ts fo r th e r e ­

1 5 ,0 0 0 at y e a r -e n d , a lm o s t tw ic e th e D e c e m b e r 1 9 5 0 lev e l.

m a in d e r o f th e d eclin e in g o ld p r o d u c tio n in th is D is tr ic t.

M o s t o f the g a in re su lte d fr o m in cre a se d sh ip re p a ir a c ­

S ilv e r p r o d u c tio n , a ffe c te d b y th e s a m e fa c to r s as g o ld ,

tiv ity , p a r tic u la rly in th e S a n F r a n c is c o B a y a re a . S i g ­

d ec lin ed 7 p e r ce n t b o th in th e D is t r ic t a n d in th e n a tio n .

n ifica n t g a in s w e r e a lso re c o rd e d in th e P u g e t S o u n d area

T h e sm a lle r d ec lin e fo r s ilv e r is a c c o u n te d fo r b y th e su b ­

a n d a lo n g th e C o lu m b ia R iv e r in O r e g o n . F ir m s in th e se

sta n tia l in cre a se in o u tp u t o f le a d -z in c o r e s in th e B i n g ­

a re a s re ce iv ed c o n tr a c ts f o r m in e s w e e p e r s , o th e r sm a ll

h a m a n d P a r k C ity a re a s o f U t a h . L o d e a n d p la ce r o p e r a ­

cr a ft, a n d a m p h ib io u s v e h ic le s. T h e la r g e s t c o n tra ct, fo r

tio n s w e r e cu t b a c k s h a r p ly a n d w ill re m a in lo w un til

five c a r g o v e s s e ls , w a s d e la y e d f o r la ck o f a steel a llo ­

su ch tim e as a fa v o r a b le r e la tio n sh ip b e tw e e n c o sts a n d

ca tio n . I n N o v e m b e r , h o w e v e r , steel w a s a llo c a te d to the

p ric e s is re s to re d . T h e o u tlo o k fo r a n e x p a n d e d o u tp u t

S a n F r a n c is c o B a y a re a sh ip y a r d w h ic h h o ld s th e c o n ­

o f the n o n fe r r o u s m e ta ls in th e c o m in g y e a r o r tw o , h o w ­

tra c t, a n d c o n str u c tio n w ill p ro c e e d in 1 9 5 2 .

e v e r, m a y lea d to a c o n s id e r a b le in cr e a se in th e to ta l p r o ­
d u ctio n o f re c o v e ra b le s ilv e r.




A lt h o u g h r e c o v e r y in s h ip b u ild in g h as b een la rg e p e r ­
c e n ta g e w ise , th e re a p p e a rs to be n o p r o sp e c t fo r a la rg e

26

February 1952

FEDERAL RESERVE B A N K OF S A N F R A N C ISCO

e x p a n s io n on th e o r d e r o f th a t o f W o r l d W a r I I . C o n s id ­

c a n n in g . A lt h o u g h th e a p r ic o t c r o p w a s sm a lle r th a n in

era b le fa cilitie s e x is t w h ic h c o u ld b e u tiliz e d m o r e in te n ­

1 9 5 0 , m o r e w e n t in to th e c a n n in g o u tle t. S e v e r e s p r in g

s iv e ly o r a c tiv a te d if th e r e w e r e a n e e d f o r m o r e sh ip ­

fr o s ts a g a in d a m a g e d fr u it c r o p s in th e P a c ific N o r t h ­

b u ild in g . O n su ch c o n tr a c ts th a t a re let, a n d th e se a re fe w ,

w e s t. M o s t c r o p s in th a t r e g io n tu r n e d o u t a little la r g e r

E a s te r n y a r d s te n d to u n d e r b id P a c ific C o a s t firm s b y

th a n th e e x c e p tio n a lly p o o r c r o p s o f 1 9 5 0 , b u t p r o d u c tio n

m o r e th a n th e d iffe r e n tia l a llo w e d th e W e s t . I n a d d itio n ,

w a s still c o n s id e r a b ly b e lo w a v e r a g e .

th e n e ed fo r sh ip s a t p r e s e n t ca n be m e t in m a n y ca se s b y

T h e b ig g e s t n e w s in th e v e g e ta b le p a c k w a s , o f c o u r s e ,

r e v a m p in g sh ip s in s to r a g e . T h e s o u r c e o f fu tu r e b u sin e ss,

th e sp e c ta c u la r o u tp u t o f ca n n e d to m a to ite m s in C a lif o r ­

u n le s s th e re is a ra d ica l c h a n g e in c o n d itio n s , w ill c o n ­
tin u e to be re p a ir, sm a ll c r a ft, a n d an o c c a s io n a l co n tr a c t

n ia . E v e n th o u g h th e p la n te d a c re a g e o f to m a to e s w a s
d o u b le th a t o f the p r e v io u s y e a r , it w a s e x p e c te d th a t a
s h o r ta g e o f s to o p la b o r a n d lo w e r y ie ld s p e r ac re w o u ld

fo r c a r g o v e s se ls .

lim it th e in cre a se in o u tp u t. N e it h e r o f th e se fe a r s m a te ­

Record packs dominate canning scene

ria liz e d a n d th e p a c k w a s m o r e th a n 5 0 p e r c e n t la r g e r

T h e p a s t y e a r m a y w e ll tu r n o u t to b e a y e a r o f re c o rd s

th a n th e p r e v io u s a ll-t im e re c o rd . I n th e P a c ific N o r t h ­

fo r th e D is t r ic t ’ s c a n n in g in d u s tr y . W h e n th e final fig u res

w e s t, ca n n e r s h a v e p u t u p la r g e r p a ck s o f b o th p e a s a n d

are in , th e a g g r e g a t e D is t r ic t p a c k o f fr u its a n d v e g e ­

co rn th a n a y e a r a g o , a n d a p p a r e n tly a b o u t th e sa m e

ta b les w ill p r o b a b ly b e a n a ll-t im e h ig h . T h e in d iv id u a l

a m o u n t o f g r e e n b e a n s.

p a ck s v a r ie d f r o m th e d is a p p o in tin g ly s m a ll o u tp u ts o f

D e s p ite th e la r g e p a c k s p u t u p la s t y e a r , th e m a r k e t

N o r t h w e s t p e a ch e s a n d a p p le s to C a lifo r n ia ’ s re c o rd p r o ­

re m a in e d r e la tiv e ly firm . I n itia l m o v e m e n t o f th e tr e m e n ­

d u c tio n o f ca n n e d c lin g p e a ch e s a n d to m a to e s . I n sp ite o f

d o u s to m a to p a c k e x c e e d e d th a t o f the p r e v io u s y e a r b e ­

la r g e r to ta l s u p p lie s , m o v e m e n t th r o u g h th e e n d o f th e

ca u se o f th e sh o r t p a ck s in o th e r p r o d u c in g a re a s a n d the

y e a r w a s g e n e r a lly g o o d a n d p ric e s f o r m o s t ite m s h e ld

e x c e p tio n a lly lo w c a r r y -o v e r s . T h o u g h s h ip m e n ts o f C a li­

a t o r s lig h tly a b o v e la s t y e a r ’ s le v e ls .

fo r n ia fru it p a ck s h a v e n o t been so la r g e as d u r in g th e

T h e y e a r sta rte d w ith o p tim is m p e r v a d in g m o s t o f th e

la st h a lf o f 1 9 5 0 , in itial m o v e m e n t h a s b e e n o r d e r ly . C a n ­

in d u s tr y . U n d e r th e s tim u lu s o f v e r y lo w c a r r y -o v e r s a n d

n e rs fo u n d a t y e a r -e n d th a t th e c u m u la tiv e s h ip m e n ts to

la r g e c iv ilia n a n d a r m e d fo r c e s d e m a n d , ca n n e r s e x p e c te d

th e s o -c a lle d sm a ll b u y e r h a d b e e n m o r e im p o r ta n t th a n

to p r o c e s s a s m u c h r a w m a te ria l as th e y c o u ld g e t th e ir

th e b ig p u rc h a se s o f th e la r g e b u y e r .

h a n d s o n . T h r o u g h o u t th e D is t r ic t, m o s t p r o c e s s in g c ro p

S e v e r a l fa cts w h ic h a sse r te d th e m s e lv e s ra th e r s tr o n g ly

p ric e s w e r e p u s h e d u p b y th e a c tiv e b id d in g o f th e ca n ­

la st y e a r m a y h a v e im p o r ta n c e to th e in d u s tr y in fu tu r e

n e rs . T h e h e a v y b u y in g o f ca n s e a r ly in th e se a so n a n d

y e a r s . O n e w a s th e in c r e a s in g ly s tr o n g p o s itio n o f th e

th e s u b s e q u e n t la r g e p a c k p u t a str a in o n w a r e h o u s e sp ace

g r o w e r as p a r tic u la rly e v id e n c e d b y th e n e w

a n d m a d e fin a n c in g a g r e a te r p r o b le m .

c o n tr a c t b e tw e e n c lin g p ea ch g r o w e r s a n d c a n n e r s. W i t h

fiv e -y e a r

T h e 2 6 p e r c e n t in cre a se in C a lifo r n ia ’s fr u it p a c k w a s

g r o w e r s h a v in g a g r e a te r v o ic e in th e d istr ib u tio n o f p r o c ­

d o m in a te d b y th e re c o rd o u ttu r n o f c lin g p ea ch e s. D e s p ite

e s s in g c r o p s , b e tter g r o w e r -c a n n e r re la tio n s b e c o m e in ­

la s t w in te r ’ s m ild w e a th e r , p e r fe c t g r o w in g a n d h a r v e s t­

c r e a s in g ly im p o r ta n t to th e in d u s tr y . A l s o n o t e w o r th y is

in g c o n d itio n s b r o u g h t in a re c o rd c r o p , a n d a le ss re ­

th e tr e n d to w a r d fe w e r a n d s tr o n g e r fir m s in th e in d u str y

str ic tiv e m a r k e t in g o r d e r m a d e m o r e fr u it a v a ila b le fo r

w ith p riv a te lab el p a ck e rs d e c re a sin g in n u m b e r .

RETAIL TRADE LAGS IN 19 5 1
n re ta il tr a d e , 1 9 5 1 m a y b e r e m e m b e r e d , w ith o u t e n ­

I

d u ra b le c a te g o rie s th e sh ift in c o n s u m e r b e h a v io r a fte r

th u s ia s m , as th e y e a r th a t c a m e in lik e a lio n a n d w e n t

F e b r u a r y f r o m p a n ic to le th a r g y w a s e sp e c ia lly a b r u p t

o u t lik e a la m b . S c a r e -b u y in g , s lu m p , m o d e r a te r e c o v ­

a n d , fo r m a n y r e ta ile r s, p a in fu l, sin ce it r e p re se n te d a

e r y , a n d a fin al y e a r -e n d d o w n tu r n w e r e c r o w d e d in to

r e v e r sa l o f tr a d e e x p e c ta tio n s .

a y e a r in w h ic h th e c o n s u m e r j u s t c o u ld n ’t se e m to d e ­

p la ce in th e h o m e fu r n is h in g s field , w ith se a s o n a lly a d ­

S h a r p e s t d e c lin e s

to o k

cid e w h a t to d o w ith h is m o n e y . T h e n et re su lt w a s a

ju s te d

y e a r -t o -y e a r g a in in n a tio n a l d o lla r sales v o lu m e o f 5 p e r ­

th r o u g h M a y to th e lo w e s t le v e l sin ce S e p te m b e r 1 9 4 9 .

retail sale s d im in is h in g s te a d ily f r o m

c e n t, a lth o u g h p e r s o n a l in c o m e a fte r ta x e s w a s u p 9 p e r ­

S a le s o f a u t o m o tiv e d e a le r s d r o p p e d

ce n t. C o n s u m e r p ric e s a v e r a g e d a b o u t 8 p e r ce n t h ig h e r

F e b r u a r y to A p r i l . S a le s o f b u ild in g m a te r ia ls a n d h a r d ­

th a n in 1 9 5 0 , so th e p h y s ic a l v o lu m e o f g o o d s s o ld a t re ­

w a r e d e c lin e d ste a d ily th r o u g h o u t th e y e a r , r e fle c tin g th e

ta il p r o b a b ly w a s le s s th a n th e p r e v io u s y e a r ’ s.

re d u ce d

v o lu m e

of

b u ild in g

20

F ebru ary

percen t fro m

c o n str u c tio n .

A fte r

J u ly

th e re w a s so m e p ic k -u p in m o s t d u ra b le lin e s, h o w e v e r .

Reaction from scare-buying
A lt h o u g h d u ra b le g o o d s a c c o u n t f o r o n ly a tv 'u t o n e -

A u t o m o b ile sales w e r e sta b iliz e d at a b o u t th e e a r l y -1 9 5 0
le v e l, a n d h o m e fu r n is h in g s a lso re g a in e d a p r e -K o r e a

th ir d o f all re ta il tr a d e in th e U n it e d S ta te s , th e y d o m i­

v o lu m e in A u g u s t . B u t the m o d e r a te u p w a r d tren d o f h a r d

n a te d th e flu c tu a tio n s th a t ch a ra c te riz e d 1 9 5 1 . F o r the

g o o d s sa le s w a s re v e r se d a fte r O c to b e r , a n d in D e c e m b e r




February 1952

27

M O N T H L Y R E V IE W

h o m e fu rn is h e r s as w e ll as a u to a n d h a r d w a r e d ea lers

ra p id ly as tra d e p ick ed u p . N o v e m b e r d e p a r tm e n t sto re
sales w e r e th e b e st sin ce F e b r u a r y , b u t th e D e c e m b e r in ­

e x p e r ie n c e d d ec lin es in s e a s o n a lly a d ju s te d sale s.
U n lik e th e ea rlie r s c a r e -b u y in g w a v e th a t to o k p la ce in

cr e a se w a s less th a n n o r m a l. F o r the y e a r as a w h o le ,

the th ird q u a rte r o f 1 9 5 0 , th e J a n u a r y sales s p u rt s tr o n g ly

T w e lft h D is t r ic t d e p a r tm e n t sto re sales w e r e up a b a re 3

a ffe c te d a p p a rel tra d e as w e ll as th e d u ra b le s . B u t the

p erce n t. W o m e n ’ s a p p a r e l d e p a r tm e n ts m a d e th e b e st

so ft g o o d s s p u rt w a s s h o r t liv e d ; a p p a re l sales w e r e re la ­

s h o w in g , u p a b o u t 6

tiv e ly sta b le a fte r M a r c h , a n d th e D e c e m b e r d o w n tu r n

t r a d e ; a p p a rel sale s w e r e e sp e cia lly s tr o n g in th e la st

w a s m o d e r a te . R e ta il a p p a rel p ric es s h o w e d a n et g a in o f

p e r ce n t d esp ite m e d io c r e

E a s te r

q u a rte r . H o m e f u r n is h in g s , o n the o th e r h a n d , m a d e little

6 p erce n t d u r in g th e y e a r , ju m p in g a lm o s t 3 p e rce n t in

n et g a in f o r th e y e a r . J a n u a r y b r o u g h t a 6 6 p e rce n t in ­

S e p te m b e r w h e n th e fall a n d w in te r lin e s w e r e in t r o ­

crea se f o r h o m e fu r n is h in g s a n d F e b r u a r y 3 3 p e rce n t, bu t

d u ce d . I n c o n tr a s t, h o m e fu r n is h in g s p ric es re a ch e d th e ir

the h ig h y e a r -a g o le v e ls w e r e n o t a tta in ed d u r in g th e se c ­

p ea k in M a y a n d m a d e a n et in cre a se o f 3 p e r ce n t f o r th e

o n d h a lf e x c e p t in N o v e m b e r ( w h ic h in 1 9 5 0 h a d been

y e a r . F o o d sales ro se ste a d ily th r o u g h o u t 1 9 5 1 , re fle ctin g

th e first m o n th o f th e e x c is e t a x o n te le v isio n s e t s ) .
S a le s at a p p a r e l sto re s in th e T w e lf t h D is t r ic t w e r e 5

an a lm o s t u n b r o k e n c lim b in p ric es.

p erce n t h ig h e r th a n in 1 9 5 0 , w ith w o m e n ’s c lo th in g u p 8

Trade stocks bulge

p erce n t. A lt h o u g h fu rn itu re sto re s r a n g u p a fir st-q u a r te r

L a s t y e a r m a y a ls o be r e m e m b e r e d as th e y e a r o f th e

in cre a se o f 2 3 p e rce n t, th e ir to ta l 1 9 5 1 sa le s w e r e s lig h tly

“ G r e a t G l u t .” R e ta il in v e n to r ie s , e s p e c ia lly o f ite m s e x ­

lo w e r th a n the p r e v io u s y e a r ; d u r in g th e la tte r h a lf o f the

p ecte d to be m o s t a ffe c te d b y w a r tim e s h o r ta g e s , so a re d

y e a r th e ir o n ly y e a r -t o -y e a r g a in c a m e in N o v e m b e r .

to u n p re ce d e n te d le v e ls . T h e v a lu e o f all retail in v e n ­

T o t a l ta x a b le retail sales in C a lifo r n ia are e stim a te d to

to rie s, s e a s o n a lly a d ju s te d , re a ch e d a M a y p ea k 3 3 p e r ­

h a v e been 5 p e r ce n t a b o v e th e 1 9 5 0 d o lla r v o lu m e .

ce n t h ig h e r th a n at th e sta rt o f th e K o r e a n w a r . F o r

Use of credit reduced

d u ra b le g o o d s s to re s, the g a in w a s 4 1 p e r ce n t. A u t o d e a l­

D u r in g

1951

th e u se o f in sta lm e n t cred it d ec re a se d

ers a n d h o m e fu r n is h in g s s to re s le d in a c c u m u la tin g in ­

f r o m th e a b n o r m a l 1 9 5 0 ra te. In s ta lm e n t o b lig a tio n s u n ­

v e n to r ie s — b o th e x p a n d e d sto ck s 5 0 p e r c e n t d u r in g the

d e r ta k e n d u r in g th e p a n ic b u y in g p e r io d d o u b tle ss a f ­

first 11 m o n th s o f the K o r e a n a c tio n . A f t e r M a y , h o w ­

fec te d the c u r re n t ra te o f n e w b o r r o w in g b y c o n s u m e r s ,

ev e r, th e e x p a n s io n o f s to c k s— w h ic h h a d sta rted as a

w h ile

v o lu n ta r y re a ctio n to th e o u tb r e a k o f w a r a n d b e ca m e in ­

R e g u la tio n

c r e a sin g ly th e in v o lu n ta r y re su lt o f th e s lu g g is h te m p o

in g s. T h e v o lu m e o f c o n s u m e r in sta lm e n t cre d it o u ts ta n d ­

heavy

re p a y m e n ts — sp ee d ed
W

in

r e q u ire m e n ts— h e lp e d

m any
re d u ce

ca ses

by

o u ts ta n d ­

o f retail tr a d e — w a s re v e r s e d . F o r th e re st o f 1 9 5 1 re ­

in g in the U n it e d S ta te s in cre a se d h a r d ly at all d u r in g

ta ilers w h ittle d a w a y at th e m o u n ta in o f m e r c h a n d is e , a n d

th e y e a r , c o m p a r e d w ith a 2 4 p erce n t g a in in 1 9 5 0 . C h a r g e

b y D e c e m b e r h ad tr im m e d it su b s ta n tia lly , th o u g h sto ck s

a c co u n t cred it e x p a n d e d m o d e r a te ly . A t T w e lft h D is tr ic t

o f so m e lin e s w e r e still fa r o u t o f b a la n ce w ith d e m a n d .

c o m m e r c ia l b a n k s, c o n s u m e r in sta lm e n t cre d it o u ts ta n d ­

S e a s o n a lly a d ju s te d in v e n to r ie s o f a u to m o tiv e d ea lers
d ro p p e d

a fte r M a y

as re d u ce d

a u to m o b ile p ro d u c tio n

o ffs e t the d eclin e in sale s. R e ta il h o m e fu r n is h in g s sto ck s
re m a in e d at p ea k le v e ls u n til m id -y e a r a n d th e n d w in ­
d le d ra p id ly d u r in g th e la tte r p a r t o f 1 9 5 1 . A p p a r e l a n d
g e n e ra l m e rc h a n d is e
q u a rte r b u t lev ele d

s to c k s

d e c lin e d

o f f to w a r d

d u r in g

th e th ird

th e y e a r ’ s e n d .

R e ta il

sto ck s o f b u ild in g m a te ria ls a n d h a r d w a r e — u n lik e m o s t
lin e s— re m a in e d a p p r o x im a te ly sta b le fo r m o s t o f 1 9 5 1 ,

in g d ro p p e d $ 3 4 m illio n o r a b o u t 3 p erce n t, in co n tr a st
to a 1 9 5 0 g a in o f $ 2 8 2 m illio n o r 31 p erce n t o f the a m o u n t
o u tsta n d in g at th e en d o f 1 9 4 9 . A n im p o r ta n t fa c to r in the
d eclin e w a s the re d u ce d sale o f a u to m o b ile s, w h ich a c ­
c o u n t fo r a b o u t h a lf th e c o n s u m e r in sta lm e n t cre d it o f
c o m m e r c ia l b a n k s in th e D is tr ic t. R e d u c e d d e m a n d fo r
d u ra b le h o m e fu r n is h in g s w a s a lso sig n ific a n t. In s ta lm e n t
sales o f b o th o f th e se ty p e s o f g o o d s m a y h a v e been in flu ­
e n ce d to so m e e x te n t b y th e re str ic tio n s im p o se d u n d e r
R e g u la tio n W , p a r tic u la rly p r io r to th e p artial re la x a tio n

a llo w in g fo r se a so n a l v a ria tio n .

o f th e R e g u la t io n o n J u ly 3 1 .

Twelfth District pattern similar

At

A lt h o u g h to ta l retail sales a re n o t a v a ila b le at th e D i s ­

T w e lft h

D is t r ic t

d e p a r tm e n t

s to r e s,

in sta lm e n t

sale s as a p r o p o r tio n o f to ta l sales la g g e d b e h in d 1 9 5 0 e x ­

tr ict le v e l, th e d e p a r tm e n t s to re <data c o m p ile d b y th is

ce p t d u r in g s c a r e -b u y in g in J a n u a r y a n d F e b r u a r y an d

b a n k p r o v id e in fo r m a tio n a b o u t m a n y d iffe r e n t m e r c h a n ­

d u r in g the last q u a rte r o f 1 9 5 1 , w h e n su ch y e a r -t o -y e a r

D is t r ic t d e p a r tm e n t sto re

sales im p r o v e m e n t as to o k p lace w a s c h ie fly reflected in

tr a d e re a cte d to co n d itio n s a ffe c tin g tr a d e g e n e r a lly , w ith

d ise lin e s.

In

in sta lm e n t sa le s. P r o b a b ly in re sp o n se to sh o r te r m a tu r ity

fir s t-q u a r te r

1951

T w e lfth

above

sch e d u le s re q u ire d b y R e g u la t io n W , th e ra tio o f c o lle c ­

1 9 5 0 — , s e c o n d -q u a r te r s ta b ility , th e n g r a d u a l im p r o v e ­

s c a r e -b u y in g —

sales

21

p e r ce n t

tio n s to in sta lm e n t a c c o u n ts re ce iv a b le e x c e e d e d th e c o r ­

m e n t fo llo w e d b y a m ild ly d is a p p o in tin g D e c e m b e r tr a d e .

r e sp o n d in g 1 9 5 0 ra tio in e v e r y m o n th o f 1 9 5 1 ; the sa m e

A p r i l w a s th e p ea k m o n th fo r s to c k s , a n d th e tr o u g h fo r

is tru e o f fu rn itu re sto re c o lle c tio n s o n re ce iv a b le s, w h ic h

sa le s. D e s p ite m a r k d o w n s a n d p r o m o t io n s , a n d c u ttin g

are p re d o m in a n tly o f th e in sta lm e n t ty p e . C h a r g e a c co u n t

b a ck o f s to re b u y e r s ’ o r d e r s , s to c k s r e m a in e d b u r d e n ­

c o lle c tio n s at d e p a r tm e n t sto re s w e r e m o d e r a te ly slo w e r

s o m e th r o u g h th e s u m m e r . A f t e r A u g u s t th e y d ec lin ed

th a n th e p r e v io u s y e a r .




28

February 1952

FEDERAL RESERVE B A N K OF S A N FRA N C ISCO

PACIFIC COAST FOREIGN TRADE TACKS OUT OF THE DOLDRUMS
A s m ig h t be e x p e c te d in v ie w o f h ig h le v e ls o f p r o d u c -

F u r t h e r im p r o v e m e n t, n e v e rth e le ss, w ill b e n e c e s s a r y if

-T jL tio n in m o s t p a r ts o f th e w o r ld , th e y e a r 1 9 5 1 w it ­

th e P a c ific C o a s t is to re g a in its p r e w a r sh a re , wrh ich

n e s s e d a re c o rd flo w o f in te r n a tio n a l tra d e . T h e v a lu e o f

w a s 1 0 .4 p e r ce n t in 1 9 3 8 . P a c ific C o a s t im p o r ts w e r e 8 .2

to ta l U n it e d S ta te s m e r c h a n d is e tr a d e re a ch e d $ 2 6 b il­

p e r c e n t o f th e n a tio n ’s to ta l in 1 9 5 1 , e x c e e d in g th e 1 9 3 8

lio n , e x p o r ts a m o u n tin g to $ 1 5 b illio n , in c lu d in g $ 1 b illio n

sh a re o f 7 .3 p e rce n t. O u r sh a re o f e x p o r ts , o n th e o th e r

o f m ilita r y g o o d s fin a n c ed u n d e r o u r M u t u a l A i d p r o ­

h a n d , w h ile it in cre a se d su b sta n tia lly f r o m 7 .3 p e r c e n t in

gram ,

and

im p o r ts

$11

b illio n ,

th e

h ig h e st

le v e ls

on

re c o rd . T h is su r p lu s o f $ 4 b illio n c o n tr a s ts w ith o n e o f
o n ly $ 1 .4 b illio n in 1 9 5 0 . T h e T w e l f t h D is t r ic t sh a re d
m o r e th a n e q u a lly in th e in cre a se in fo r e ig n tr a d e d u r in g
th e y e a r . T h e to ta l v a lu e o f th e m e r c h a n d is e fo r e ig n tra d e
h a n d le d b y th e P a c ific C o a s t a m o u n te d to $ 2 ,1 6 4 m illio n ,
an in cre a se o f 4 8 p e r ce n t o v e r th e 1 9 5 0 to ta l, c o m p a r e d
w ith a n a tio n a l in cre a se o f 3 6 p erce n t. T o t a l e x p o r ts o f
th e P a c ific C o a s t in c r e a se d 6 8 p e r c e n t to $ 1 ,2 6 5 m illio n ,
w h ile th e in cre a se fo r th e U n it e d S ta te s w a s 4 6 p erce n t.
T o t a l im p o r ts ro se 2 7 p e r c e n t to $ 8 9 9 m illio n , in c o n tr a st
to a n a tio n a l g a in o f o n ly 2 4 p erce n t.

1 9 5 0 to 8 .4 p erce n t in 1 9 5 1 , w a s still c o n sid e r a b ly b e lo w
th e 1 2 .4 p e r ce n t o f 1 9 3 8 .

Pacific Coast foreign trade moves
closer to a balance
T h e sin g le m o s t im p o r ta n t c h a ra c te ristic o f in te r n a ­
tio n a l tr a d e sin ce th e e n d o f W o r l d W a r I I h a s b e e n the
la r g e e x c e s s o f U n it e d S ta te s e x p o r ts o v e r im p o r ts , re ­
s u ltin g in a c o n tin u in g d o lla r sh o r ta g e fo r m a n y c o u n ­
trie s. T h i s e x c e s s o f e x p o r ts w a s fin a n ced to a c o n s id e r ­
a b le

e x te n t b y

la r g e -s c a le

U n it e d

S ta te s

fo r e ig n

a id .

W h i l e th e P a c ific C o a s t ’ s sh a re o f th e c o u n t r y ’ s im p o r ts
is a b o v e the p r e w a r lev e l, o u r e x p o r t sh a re is still c o n s id ­
e ra b ly b e lo w th a t le v e l. A s a re su lt, im p o r ts h a v e b e c o m e

Pacific Coast’s share of the nation's

r e la tiv e ly m o r e im p o r ta n t o n the P a c ific C o a s t, a n d o u r

foreign trade increasing

tra d e h as m o v e d fu r th e r to w a r d a b a la n ce . I n 1 9 3 8 o n ly
T h e in cre a se in th e v a lu e o f P a c ific C o a s t fo r e ig n tra d e
d u r in g

1951

p r o v id e d

s o m e ju s tific a tio n f o r in cr e a se d

o p tim is m a m o n g th e fo r e ig n tr a d e rs o f th e D is t r ic t. P a r ­
t ic u la rly e n c o u r a g in g to th o s e w h o d e p e n d o n

P a c ific

C o a s t fo r e ig n tr a d e f o r in c o m e w a s th e in cre a se d u r ­
in g 1 9 5 1 in th e sh a re o f th e n a tio n ’ s fo r e ig n tr a d e h a n ­
d le d o n th is c o a s t. T h i s is e n c o u r a g in g n o t so m u c h b e ­

3 9 p e r ce n t o f th e P a c ific C o a s t ’s e x p o r ts w a s c o v e r e d b y
i m p o r t s ; th is h ad in c r e a se d to 71 p e r c e n t b y 1 9 5 1 . F o r
th e n a tio n 7 3 p e r ce n t o f e x p o r ts w a s c o v e r e d b y im p o r ts
in 1 9 5 1 , c o m p a r e d w ith 6 3 p erce n t in 1 9 3 8 .
A la r g e p a rt o f th e T w e l f t h D is t r ic t ’ s e x p o r t b a la n ce in
1 9 5 1 w a s a c co u n te d fo r , h o w e v e r , b y b u t o n e o f th e fo u r
m a jo r c u s to m s d istr ic ts, O r e g o n , w h ic h d u r in g 1 9 5 1 c o v ­

c a u se o f th e m a g n itu d e o f th e in cre a se d sh a r e b u t ra th e r

ere d o n ly 1 4 p e rce n t o f its e x p o r ts b y im p o r ts . T h i s s itu ­

b e ca u se it m a r k s a c h a n g e in th e a d v e r s e situ a tio n w h ic h

a tio n is ch a ra cte ristic o f th e O r e g o n p o r ts b e c a u se , o n the

h as c h a ra c te riz e d th e p o s t - W o r l d W a r I I p e r io d . W h i l e

o n e h a n d , th e y are la r g e e x p o r te r s o f tw o b a sic c o m m o d i­

th e v a lu e o f th e fo r e ig n tr a d e o f th e P a c ific C o a s t h as

tie s, g r a in a n d lu m b e r , w h ile , o n the o th e r , th e y se rv e an

s h o w n an u p w a r d tr e n d d u r in g th e p o s tw a r p e r io d , th e

a re a th a t p r o v id e s b u t a lim ite d m a r k e t f o r m e r c h a n d is e

in cre a se h as b een sm a lle r re la tiv e ly th a n th a t fo r th e c o u n ­

im p o r ts .

tr y as a w h o le , a n d th e P a c ific C o a s t ’s sh a r e o f th e n a ­

th r o u g h P o r tla n d a n d o th e r O r e g o n p o r ts w e r e m o r e th a n

D u r in g

1951

g r a in

and

lu m b e r

sh ip m e n ts

tio n ’ s tr a d e h a s re m a in e d b e lo w th e p r e w a r lev e l. D u r in g

d o u b le th o se o f th e p r e v io u s y e a r . S h ip m e n t s o f g r a in

1 9 5 1 , h o w e v e r , th e P a c ific C o a s t ’s p o r tio n o f th e n a t io n ’ s

to I n d ia w e r e o f p a r tic u la r im p o r ta n c e d u r in g th e last

tr a d e in c r e a s e d to 8 .3 p e r c e n t f r o m 7 .6 p e r c e n t in 1 9 5 0 .

h a lf o f th e y e a r .

V a l u e of P acific C oast F oreign T rade, 1938, 1947-51
(in m illio n s o f d o llars)

Customs district
Exports :
San D iego....................................................

1938

......................

1 4 7 .1

1947

1948

1949

1950

1951

3 4 .5

3 4.4

3 5.0

4 0 .7

6 0.4

2 5 8 .6

1 8 3 .1

2 5 4 .3

2 4 9 .1

3 4 8 .7

3 9 7 .5

2 6 2 .9

3 0 7 .4
6 9.6

2 7 1 .4

3 7 1 .8

........................

2 9 .0

1 5 6 .1

6 3.0

.........................

6 9 .1

2 2 4 .7

1 8 5 .6

1 , 0 7 1 .4

7 2 9 .0

8 1 3 .4

7 5 3 .2

1 , 2 6 4 .6

Total United States .............................. .........................

3 ,0 9 4 .4

1 4 , 4 2 9 .7

1 2 , 6 5 3 .1

1 2 , 0 5 1 .1

1 0 ,2 7 4 .8

1 5 ,0 2 1 .5

1 4 7 .1

7 5 .7

2 3 7 .2

1 1 6 .3

2 4 6 .4

Imports :
1 1 .3

1 3 .0

16.9

1 1 2 .2

1 4 4 .8

1 5 1 .4

2 1 4 .3

2 8 2 .9

1 7 4 .6

8 .8

1 8 4 .1

1 3 .5

2 1 1 .4

2 6 9 .5

3 4 5 .4

1 9 .4

1 8 .1

1 6 .8

2 5 .9

3 3 .9

1 0 1 .1

1 4 6 .7

1 4 1 .0

1 8 5 .0

2 2 0 .1

4 1 6 .1

5 0 7 .2

5 3 1 .9

7 0 7 .7

8 9 9 .2

5 ,6 4 3 .3

7 ,0 9 2 . 0

6 ,5 9 1 .6

8 ,8 5 2 .2

1 0 ,9 6 1 .6

Note : This table includes trade by all methods' of transportation, excluding military shipments.
Source : Unifed States Department erf Commerce, Bureau of the Census, FT 970, T ra d e b y C u s to m s




D is t r ic t.

February 1952

29

M O N T H L Y R E V IE W

V olume

of

P acific C oast W

aterborne

F oreign T rade, 1938, 1947-51

(shipping: weight in millions of pounds)

Customs district
Exports :
San Diego..............................................................
Los Angeles...................................... ...................
San Francisco......................................................
Oregon ..................................................................
Washington ..........................................................
Total Pacific Coast..........................................
Total United States ......................................
Imports :
San Diego........................................................ ..
Los Angeles..........................................................
San Francisco......................................................
Oregon ..................................................................
Washington ..........................................................
Total Pacific Coast..........................................
Total United States ......................................

15,001.8
7,452.0
2,022.1
1,883.2
26,359.1
124,571.2

1947
3.9
7,775.8
5,449.8
4,495.9
2,960.0
20,685.4
248,636.5

1948
6.2
6,167.4
4,238.0
1,397.8
2,037.1
13,846.4
176,623.1

1949
2.4
6,807.0
3,809.0
1,473.2
1,466.6
13,558.2
143,729.2

1950
1.0
7,805.8
3,480.0
1,850.9
1,371.0
14,508.7
125,350.5

1,279.6
1,428.2
207.9
1,930.3
4,846.0
73,512.8

20.5
1,297.2
1,469.9
181.5
1,730.0
4,699.1
118,130.6

19.7
1,540.6
1,546.3
123.2
2,425.6
5,655.4
134,832.3

27.1
2,233.9
1,990.2
112.5
2,593.8
6,957.5
154,741.8

30.0
2,536.5
2,032.4
208.2
3,116.4

1938

Note: This table includes only nonmilitary vessel shipments.
Source: United States Department of Commerce, Bureau of the Census, FT 972,
T h e o th er th ree m a jo r c u s t o m s d istr icts, all o f w h ich
are m o r e im p o r ta n t th a n O r e g o n in te rm s o f th e v a lu e o f
tra d e h a n d le d , h ad a su r p r is in g d e g re e o f ba la n ce b e tw ee n
e x p o r ts an d im p o r ts . T h e S a n F r a n c is c o c u s to m s d istrict
m a tc h e d 9 3 p erce n t o f its m e rc h a n d ise e x p o r ts w ith im ­
p o rts d u r in g th e p a st y e a r , an e x tr e m e ly u n u su a l situ a ­
tio n fo r p o r ts in this c o u n tr y . I n th e W a s h i n g t o n cu s to m s
d istrict 8 9 p erce n t o f th e im p o r ts w a s c o v e re d b y e x p o r ts ,
an d in th e L o s A n g e le s d istrict 81 p ercen t. T h e recen t
tren d to w a r d a c lo s e r ba la n ce b e tw ee n e x p o r ts an d im ­
p o r ts a u g u r s w e ll fo r the fu tu r e d e v e lo p m e n t o f P acific
C o a s t fo r e ig n tra d e , p a r ticu la rly if th e w o r ld ’ s tra d e re ­
tu rn s to a n o r m a l c o m m e rc ia l b a sis.

7 ,9 2 3 .6

193,379.7

Jan.-Oct.
1951
0.5
12,113.2
4,672.9
5,157.3
2,770.7
24,714.5
191,678.6
25.9
2,347.1
2 ,6 7 3 .7

231.5
2,420.3
7,698.4
171,092.8

W a te r b o r n e T rad e b y U n ited S ta tes P o r t.

Physical volume of foreign
trade
T r a d e fig u res e x p r e s s e d in te rm s o f v a lu e o b v io u s ly are
in flu en ced b y p rice c h a n g e s a n d te n d to w e ig h t m o re
h e a v ily th e im p o rta n ce o f h ig h v a lu e — lo w w e ig h t c o m ­
m o d itie s . F o r s o m e p u rp o se s it is m o r e h e lp fu l to e x p re s s
c h a n g e s in trad e in te rm s o f actual p h y sic a l w e ig h t, p a r ­
tic u la rly in th e case o f sh ip p ers w h o s e in co m e d ep e n d s
la r g e ly o n th e w e ig h t o f c a rg o e s ca rried ra th er th a n on
th e v a lu e. H o w e v e r , th e ch a n g e s in th e sh ip p in g w e ig h t
o f total e x p o r ts a n d im p o r ts d u rin g 1 9 5 1 are sim ila r to
th e ch a n g e s p re v io u s ly co n sid e r e d in v a lu e te r m s . B e ­
ca u se o f th e lim ita tio n s in d ata a v a ila b le in p h y sic a l te rm s,
co n sid e ra tio n w ill be lim ited to w a te rb o rn e tr a d e 1 a n d to

Foreign trade by customs districts

the first ten m o n th s o f the y e a r.
In te rm s o f the v a lu e o f total fo r e ig n tra d e fo r 1 9 5 1 ,
the S a n F r a n c is c o cu s to m s d istrict ra n k ed first a m o n g
the c u sto m s d istricts on this co a st. E x p o r t s fr o m the p o r ts
in a n d a ro u n d S a n F r a n c is c o B a y to ta le d $ 3 7 2 m illio n in
1 9 5 1 , u p 3 7 p ercen t fr o m 1 9 5 0 , w h ile im p o r ts , a m o u n tin g
to $ 3 4 5 m illio n , in creased 2 8 p erce n t o v e r th e p re v io u s
y e a r . T h e S a n F r a n c is c o d istrict w a s fo llo w e d c lo se ly b y
L o s A n g e le s w h e r e e x p o r ts w e r e u p 4 0 p erce n t to $ 3 4 9
m illio n , w ith im p o r ts u p 3 2 p erce n t to $ 2 8 3 m illio n .
T h e la r g e s t in cre a se s in th e v a lu e o f fo r e ig n trad e ,
h o w e v e r , w ere s h o w n b y th e p o r ts o f th e P a cific N o r t h ­
w e st. T h e e x p o r ts o f th e O r e g o n c u s to m s d istrict to ta led
$ 2 3 7 m illio n d u r in g 1 9 5 1 , a n in cre a se o f m o r e th an 2 0 0
p erce n t o v e r th e p re v io u s y e a r ; im p o r ts w e r e u p a m o r e
m o d e s t 31

p erce n t to $ 3 4 m illio n . I n th e W a s h i n g t o n

cu s to m s d istrict the v a lu e o f to ta l e x p o r ts w a s u p o v e r 1 0 0
p erce n t to $ 2 4 6 m illio n , a n d im p o r ts in cre a se d a b o u t 1 9
p erce n t to $ 2 2 0 m illio n .
T h e S a n D ie g o c u s to m s d istrict a lso p articip a te d in
the in creased flo w o f fo r e ig n tra d e . E x p o r t s in cre ase d 4 8
p erce n t to $ 6 0 m illio n w h ile to ta l im p o r ts , a t $ 1 7 m illio n ,
w ere u p 3 0 p erce n t. S a n D ie g o is u n iq u e a m o n g P acific
C o a s t p o r ts in th a t th e g r o w t h o f its fo r e ig n tra d e h as
b een la r g e ly a p o s tw a r d e v e lo p m e n t.

In

1 9 3 8 e x p o r ts

w e r e o n ly $ 4 .6 m illio n a n d im p o r ts w e r e $ 3 .4 m illio n .




D u r in g th e J a n u a r y -O c to b e r 1 9 5 1 p erio d the to ta l to n ­
n a g e o f U n it e d S ta te s e x p o r ts in creased 8 5 p ercen t o v e r
th e sim ila r 1 9 5 0 p e rio d . T h e v o lu m e o f P a cific C o a s t e x ­
p o rts in creased 111 p erce n t, h o w e v e r , the total fo r th e first
ten m o n th s o f 1 9 5 1 e x c e e d in g the total fo r the en tire y e a r
1 9 5 0 . S im ila r ly fo r th e v o lu m e o f im p o r ts , the 2 3 p ercen t
in crease fo r th e P a cific C o a s t fa r su rp a sse d the n a tio n ’ s
8 p erce n t in crease.
A m o n g th e five P a cific C o a s t cu s to m s d istricts, the
la r g e st in crease in e x p o r t to n n a g e ( a s w e ll as in v a lu e o f
e x p o r t s ) d u r in g the first ten m o n th s o f the y e a r oc cu rre d
in th e O r e g o n d istrict, w h ich h ad an in crease o f 3 0 6 p e r ­
cen t. T h e W a s h i n g t o n d istrict w a s se con d w ith a g a in o f
1 6 0 p ercen t. T h e S a n F r a n c is c o cu s to m s d istrict h ad the
la rg e st in crease in im p o r t to n n a g e — 6 7 p ercen t.
1In addition to the obvious difference of coverage between statistics of
w a te rb o rn e foreign trade and statistics of foreign trade by all m eth o d s of
transportation (from which the value figures previously cited are derived),
they also differ in the method of accreditation of exports and imports to
the various customs districts.
For trade by all methods of transportation, exports are credited to the
customs district from which the goods leave the country, except for vessel
and air shipments, which are credited to the district of lading. Imports are
credited to the customs district in which the goods are entered into ware­
house or for immediate consumption, which may vary from the district of
unlading.
For waterborne trade statistics, exports are credited to the customs dis­
trict of lading, while imports are credited to the customs district of un­
lading.

30

February 1952

FEDERAL RESERVE B A N K OF S A N FRA NC ISCO

P a c ific C o a s t p o r ts ra n k d iffe r e n tly in te r m s o f sh ip p in g
w e ig h t th a n in te r m s o f v a lu e o f tra d e . O n th e e x p o r t sid e,

th e p r e v io u s y e a r ; h o w e v e r , c o a s tw is e a r r iv a ls w e r e u p
a b o u t 1 4 p erce n t.

S a n F r a n c is c o , w h ic h w a s first in te r m s o f v a lu e , re lin ­

I n th e P a cific N o r t h w e s t th e p ic tu re w a s sim ila r w ith

q u ish e s its first p la ce to L o s A n g e le s . D u r in g th e first ten

su b sta n tia l in cre a se s in th e n u m b e r o f sh ip s e n g a g e d in

m o n th s o f 1 9 5 1 th e L o s A n g e le s c u s to m s d istr ict h a n d le d

fo r e ig n se rv ice , d e c re a se s in in te r co a sta l se rv ic e , a n d w ith

a lm o s t h a lf o f th e P a c ific C o a s t ’ s to ta l e x p o r t to n n a g e . O n
the im p o r t sid e th e S a n F r a n c is c o c u s to m s d istr ict w a s
first in to n n a g e in 1 9 5 1 , as w e ll as in v a lu e .

little o r n o ch a n g e in th e c o a s tw is e se rv ic e . S h ip m o v e ­
m e n t d a ta f o r th e p o r t o f P o r tla n d are o f p a r tic u la r in te r ­
e st b e ca u se th e y sh o w th e la r g e s t p e r c e n ta g e in c r e a se o f
a n y P a c ific C o a s t p o r t in th e n u m b e r o f sh ip s e n g a g e d in

Ship movements

f o r e ig n s e r v i c e ; a r r iv a ls w e r e u p 3 0 p e r ce n t a n d d e p a r ­
A n o t h e r m e a s u r e b y w h ic h c h a n g e s in s h ip p in g a c tiv ­
ity ca n be g a u g e d is th e n u m b e r o f sh ip a r r iv a ls a n d d e ­
p a r tu re s a lo n g w ith th e n e t re g is te re d to n n a g e o f the
sh ip s. H e r e , to o , n e w re c o rd s w e r e se t b y th e p o r ts on
the P a c ific C o a s t in 1 9 5 1 . D u r in g th e y e a r 5 ,0 4 1 sh ip s
w ith c a r g o a r r iv e d at th e p o r ts o f L o s A n g e le s a n d L o n g
B e a c h , a n in cre a se o f 7 p e r c e n t o v e r 1 9 5 0 ; sh ip s d e p a r t­

tu re s u p 3 7 p e rce n t.
I t is in te r e stin g to n o te th a t w h ile th e n u m b e r o f sh ip s
e n te r in g a n d le a v in g P a c ific C o a s t p o r ts w a s la r g e r in
so m e p r e w a r y e a r s th a n in 1 9 5 1 , th e n e t r e g iste r e d t o n ­
n a g e o f all v e sse ls la st y e a r w a s a t a r e c o r d h ig h . T h i s
in d ica te s th a t the a v e r a g e siz e o f sh ip s h a s in cr e a se d s u b ­

in g w ith c a r g o n u m b e r e d 5 ,0 3 7 , a ls o 7 p e r ce n t o v e r the

s ta n tia lly sin ce p r e w a r y e a r s . F o r e x a m p le , th e la r g e st

p r e v io u s y e a r . O f th e to ta l a r r iv a ls 2 ,9 7 7 w e r e e n g a g e d in

n u m b e r o f sh ip a r riv a ls in S a n F r a n c is c o B a y w a s 7 ,8 0 6

fo r e ig n o r o f f s h o r e tr a d e , a n in cre a se o f 2 5 p e r ce n t fo r the

in 1 9 2 9 , w ith a n e t re g iste r e d to n n a g e o f 1 9 .6 m illio n

y e a r . T h e n u m b e r o f sh ip s e n g a g e d in in te r c o a sta l trad e

t o n s ; h o w e v e r , in 1 9 5 1 th e n e t r e g iste r e d to n n a g e o f the

a r r iv in g a t L o s A n g e l e s a r e a p o r ts w a s d o w n sh a r p ly —

4 ,4 3 0 a r riv a ls w a s 2 0 .9 m illio n to n s , a n a ll-t im e h ig h .

a b o u t 3 8 p e r c e n t— f r o m th e p r e v io u s y e a r . T h e n u m b e r
o f a r r iv a ls e n g a g e d in c o a s tw is e tr a d e re m a in e d re la tiv e ly

Military shipments
E v e n th o u g h th e fo r e ig n tr a d e o f th e T w e l f t h F e d e r a l

un ch an ged.
P a s s in g th r o u g h th e G o ld e n G a te in b o u n d f o r th e p o r ts

R e s e r v e D is t r ic t h a s s h o w n a su b sta n tia l in cr e a se d u r in g

o f S a n F r a n c is c o B a y w e r e 4 ,4 3 0 sh ip s, 11 p e r c e n t a b o v e

1951,

th e 1 9 5 0 fig u r e . O u t b o u n d sh ip s w ith c a r g o n u m b e r e d

situ a tio n . F o r se c u rity re a so n s n o in fo r m a tio n is a v a il­

th e a v a ila b le in fo r m a tio n u n d e r sta te s th e a c tu a l

4 ,4 9 7 , u p 1 2 p e r ce n t. O f th e to ta l a r r iv a ls , 2 ,6 6 1 ca rried

ab le o n sh ip m e n ts to o u r a r m e d fo r c e s a b r o a d f o r th e ir

c a r g o e s f r o m fo r e ig n co u n tr ie s o r o ffs h o r e te r r ito r ie s, an

o w n u se . S in c e th e o u tb r e a k o f th e K o r e a n w a r s h ip m e n ts

in cre a se o f 15 p e rce n t. A s in th e ca se o f th e p o r ts o f L o s

o f D e p a r tm e n t o f D e fe n s e c a r g o e s th r o u g h P a c ific C o a s t

A n g e l e s a n d L o n g B e a c h th e n u m b e r o f in te r co a sta l v e s ­

p o r ts h a v e b een su b sta n tia l a n d h a v e p la y e d a m a jo r ro le

se ls e n te r in g S a n F r a n c is c o B a y w a s d o w n s h a r p ly fr o m

in th e in cr e a se d sh ip p in g a c tiv ity in th is a rea.

DISTRICT FARMERS HARVEST RECORD CROP OF GREENBACKS
he

T

n a tio n ’s fa r m e r s re s p o n d e d to th e h ig h e r p rice

le v e l, th e r e m o v a l o f a c re a g e a llo tm e n ts , a n d th e call

a r y o f la st y e a r . T h e r e a fte r , sla c k e n in g d e m a n d , p ric e c o n ­
tr o ls , a n d th e e x p e c te d

in cr e a se in p r o d u c tio n

sta rted

f o r in c r e a se d p r o d u c tio n in 1 9 5 1 b y tu r n in g o u t th e th ird

m o s t fa r m c o m m o d it y p ric e s d o w n w a r d . L iv e s t o c k p ric es

la r g e s t c r o p o n re c o rd . F a r m e r s p la n te d o v e r n in e m illio n

d e c lin e d o n ly m o d e r a te ly a n d sta y e d a t re la tiv e ly h ig h ,

a c re s m o r e th a n th e y d id th e p r e v io u s y e a r , a lm o s t all the

n e a r -r e c o r d lev els m o s t o f th e y e a r . C r o p p r ic e s , o n th e

in cre a se c o m in g in co tto n . A d v e r s e w e a th e r c o n d itio n s,

o th e r h a n d , d ro p p e d s h a r p ly in to S e p te m b e r b u t r o se ju s t

h o w e v e r , r e su lte d in h e a v y a b a n d o n m e n t, a n d th e h a r v e s t­

as s h a r p ly th e r e a fte r as h a r v e sts tu r n e d o u t s m a lle r th a n

ed a c re a g e fo r all c r o p s w a s th e s m a lle s t sin ce 1 9 4 1 . T h e

e x p e c te d . A t y e a r -e n d , th e a v e r a g e o f all c r o p p ric e s w a s

n e a r re c o rd p r o d u c tio n w a s a c h ie v e d b y r e la tiv e ly h ig h

still 9 p e r ce n t a b o v e the 1 9 5 0 y e a r -e n d le v e l a n d a v e r a g e

y ie ld s , the c o m p o s ite y ie ld p e r acre f o r all c r o p s b e in g the

liv e s to c k p ric es w e r e u p 5 p e r c e n t. F o r th e y e a r a s a

se c o n d h ig h e s t in h is to r y .

w h o le , fa r m p ric e s a v e r a g e d 1 8 p e r c e n t a b o v e 1 9 5 0 p ric e s.
w a s th e m o s t

T h o u g h th e p r o d u c tio n o f m a n y im p o r ta n t c r o p s w a s

p r o s p e r o u s y e a r o n r e c o rd f o r th e n a tio n ’ s a g ric u ltu re .

w e ll a b o v e a v e r a g e , o n ly rice, g r a p e s , h o p s , a n d tr u c k

At

in ­

c r o p s f o r p r o c e s s in g se t n e w re c o r d s . S lig h t ly le ss c o rn

c r e a se d to a n e w h ig h . A s a re su lt, n e t in c o m e , th e m o r e

a n d w h e a t w e r e p r o d u c e d , a n d th e in c r e a se in c o tto n

I n te r m s o f g r o s s fa r m

th e

sam e

in c o m e ,

tim e , h o w e v e r ,

1951

p r o d u c tio n

exp en ses

a c c u r a te m e a s u r e o f th e e c o n o m ic w e ll-b e in g o f fa r m e r s ,

a c re a g e cu t g r a in s o r g h u m s o u tp u t b y o n e th ir d . S in c e

w h ile in c r e a s in g fr o m th e 1 9 5 0 le v e l, w a s still less th a n

p ric e s u p p o r t f o r p o ta to e s w a s w ith d r a w n f o r th e first

in e ith e r 1 9 4 7 o r 1 9 4 8 .

tim e sin ce

T h e r e la tiv e ly h ig h e r le v e l o f fa r m p ric e s d u r in g 1 9 5 1

1 9 4 2 , g r o w e r s re d u c e d th e ir a c r e a g e b y 2 0

p e r c e n t a n d p r o d u c tio n w a s a b o u t 2 5 p e r c e n t b e lo w th a t

w a s la r g e ly r e s p o n s ib le fo r th e in c r e a se d g r o s s in c o m e .

o f 1 9 5 0 . T h o u g h th e 1 5 .3 m illio n b a le c o tto n c r o p w a s 5 0

T h e s h a r p p o s t - K o r e a p ric e rise co n tin u e d th r o u g h F e b r u -

p e r c e n t la r g e r th a n th a t o f th e p r e v io u s y e a r , it fe ll s h o r t




M O N T H L Y R E V IE W

February 1952

o f b o th th e r e c o m m e n d e d g o a l a n d th e e a r ly se a so n e sti­
m a te s.

District crop production
S o m e im p o r ta n t s h ifts in D is t r ic t c r o p p la n tin g s re ­
su lte d fr o m

th e G o v e r n m e n t ’s r e q u e st fo r g r e a te r p r o ­

d u c tio n a n d the re m o v a l o f a c re a g e re str ic tio n s. T h e r e
w a s a n o tice a b le sh ift to ca sh c r o p s , a n d fe a r o f a p o ssib le
la b o r s h o r ta g e c a u se d m a n y fa r m e r s to tu r n to c r o p s w ith
lo w la b o r r e q u ir e m e n ts . P la n tin g s o f rice, c o tto n , a n d
w h e a t w e r e in c r e a s e d , c a u s in g re d u c tio n s in th e a c re a g e s
o f s u g a r b e e ts, h a y , a n d fe e d g r a in s . T h e sm a lle r b a rle y
a n d o a t c r o p s b r o u g h t fa r m e r s h ig h e r p ric e s , a n d th e re ­
d u c e d su p p lie s o f h a y a n d g r a in s o r g h u m s p u s h e d p ric e s
u p s h a r p ly in I d a h o , A r iz o n a , a n d C a lifo r n ia .
T h e 1 9 5 1 se a s o n w a s g e n e r a lly fa v o r a b le fo r th e p r o ­
d u ctio n o f th e D is t r ic t ’ s field c r o p s e x c e p t th a t p r o lo n g e d
d r y w e a th e r d u r in g th e s p r in g m o n th s re d u ce d th e p r o ­
d u c tio n o f d r y -la n d g r a in s in C a lifo r n ia . S e a s o n a l ra in fa ll
w a s a g a in b e lo w n o r m a l in s o u th e rn C a lifo r n ia an d p o o r ly
d istr ib u te d in th e n o r th e r n h a lf o f th e sta te . T h e g r o w in g
s e a so n in th e P a c ific N o r t h w e s t w a s o n e o f e x tr e m e s in
w e a th e r re s u ltin g in m o r e th a n th e u su a l v a r ia tio n in
y ie ld s . F r e e z e s e a r ly in th e y e a r c a u s e d c o n s id e r a b le w in ­
te r k illin g o f field c r o p s a n d d r o u g h ts in lo ca l a re a s re ­
d u ce d y ie ld s . A n o t h e r fr e e z e in A p r i l w a s p a r tic u la rly
d a m a g in g

to

s o ft fr u it c r o p s .

Id a h o

fa r m e r s

s u ffe r e d

d a m a g in g fr o s ts in J u n e as w e ll as d r y , h o t w e a th e r in
J u ly a n d A u g u s t r e s u ltin g in re d u ce d y ie ld s f o r p ra c tic a l­
ly all c r o p s . U t a h fa r m e r s e n jo y e d an u n u s u a lly lo n g
g r o w in g s e a s o n th o u g h s o m e c r o p s s u ffe r e d f r o m la ck o f
ra in fa ll.
P r o d u c tio n re c o rd s w e r e se t fo r s e v e ra l D is t r ic t c r o p s,
c o tto n b e in g th e m o s t im p o r ta n t. O n c e a g a in it w a s C a li­
fo r n ia ’ s le a d in g c r o p , c o n s titu tin g a lm o s t h a lf the s ta te ’ s
to ta l

re ce ip ts

fro m

field

crops

d e sp ite

s lig h tly

lo w e r

p ric e s. A r iz o n a a lso b r o u g h t in a re c o rd co tto n c r o p . E v e n
th o u g h C a lifo r n ia ’ s rice g r o w e r s a n d P a c ific N o r t h w e s t
h o p g r o w e r s h a r v e s te d re c o rd c r o p s , s tr o n g d e m a n d h eld
p ric es a b o v e 1 9 5 0 le v e ls.
F r u i t a n d n u t p r o d u c tio n in C a lifo r n ia w a s c o n s id e r ­
a b ly h ig h e r th a n in 1 9 5 0 . T h e im p o r ta n t c lin g p ea ch a n d
g r a p e c r o p s re a ch e d n e w re c o rd h ig h s a n d th e citru s c r o p
w a s th e la r g e s t sin ce 1 9 4 7 . T h o u g h fr u it c r o p s in th e
P a c ific N o r t h w e s t w e r e s lig h tly la r g e r th a n th e sm a ll
1 9 5 0 c r o p s , th e A p r i l fre e z e k e p t p r o d u c tio n w e ll b e lo w
a v e r a g e fig u r e s. T h e im p o r ta n t W a s h i n g t o n a p p le c ro p
w a s re d u ce d o v e r 4 0 p e r c e n t b y th is s a m e fre e z e . P ric e
tr e n d s

d u r in g th e

ye a r sh ow ed

co n s id e r a b le v a ria tio n

a m o n g th e d iffe r e n t c r o p s . T h e sm a lle r c r o p s o f C a li­
fo r n ia a p r ic o ts , P a c ific C o a s t c h e rr ie s , a n d P a c ific N o r t h ­
w e s t a p p le s b r o u g h t g r o w e r s c o n s id e r a b ly h ig h e r p ric es.

31

P roduction a n d V a lu e of P rincipal C rops—
T w e l f t h D istrict , 1951
Gross
t----- farm value---,---------------- Production---------------- N
Percent
f—Percent change—^ 1951
change
(in
1951
19501940-49
1950Field and seed crops
(in thousands)
avg.-1951 millions)
1951
1951
78,074
— 29
Barley (b u .)..............
+
2 $ 110.6 — 14
8,132
Beans, dry (100# bags)
61.5
+ 16
+ 14
+ H
0 + 7
8,055
Corn (bu.) ................
16.7
4- 14
4-226
528.4
Cotton, lint (bales) ..
2,630
4- 74
+ 81
Cottonseed (tons) ..
+ 77
4-223
76.4
1,047
4- 28
— 51
Flaxseed (bu.) ........
1,886 + H
8.9
4- 35
_ 44
3,62 7
— 56
Grain sorghums (bu.)
6.6 — 42
_
9
— 7
364.3
Hay, all (tons) . . . .
12,931
4- 23
63,239
Hops (lbs.) ..............
31.5
4- 34
4- 2
+
»
Oats (bu.) ................
28,982
— 20
— 10
27.6
— 8
Peas, dry (100# bags)
3,581
+ 20
— 32
13.3
4- 37
Potatoes (bu.) .......... 99,012
— 17
145.4
4- 36
+
3
Rice (bu.) ................
1 0 ,3 6 2
+ 25
4- 56
48.0
4- 26
i
i
Sugar beets (tons). . .
4,326
— 28
+ 17
Wheat, all (bu.). . . . 162,015
333.9
+
6 4- 21
+ H
Fruit and nut crops
— 29
Apples (bu.) ............
33,095
— 20
83.5
4- 14
— 18
— 16
181
21.6 4- 5
Apricots (tons) ........
Cherries (tons) ........
20.0 4- 10
69
— 8
— 25
3,131
Grapes (tons) ..........
118.1
+ 27
— 27
4- 19
13,400
Lemons2 (boxes) . . .
37.9
— 9
+ 18
+
3
— 8
Grapefruit2 (boxes)..
0 — 3
5.2
5,880
— 6
Oranges2 (boxes) . . . 46,510
94.4
+
9
+ 25
38,331
Peaches (bu.) ..........
+ 27
71.4
4- 12
4- 45
Pears (bu.) ............ 26,437
64.6
+
3
4- 15
4- 9
97
Plums (tons) ............
13.3
+ 26
2
4- 24
Prunes, dried (tons).
185
+ 23
— 3
30.8
— 16
Prunes, fresh (tons) .
78
+ 77
— 13
5.0
4- 14
Figs, dried (tons) . . .
29
— 12
5.7
+ 21
4- 17
Figs, fresh (tons). . .
14
— 12
+ 36
2.3
+ 53
Olives (tons) ............
67
10.0 4- 3
4- 56
4- 3?
29
+ 32
Avocados (tons) . . . .
9.5
4- 81
4- 13
Almonds (tons) . . . .
43
17.5
— 15
4- 72
+ 13
7
0
0
2.5
4- 19
76
32.2
Walnuts (tons) ........
4- 30
4- 19
+ 12
17
Dates (tons) ............
+ 55
2.8
0
+ 13
Vegetables for market
Artichokes (40# box)
Asparagus (30# cr.).
Beans, snap (30# bu.)
Cabbage (tons) ........
Cantaloups (70# cr.).
Carrots (50# bu.) . . .
Cauliflower (37# cr.).
Celery (65# cr.) . . . .
Honeydew melons
(35# cr.) ................
Lettuce (70# cr.) . . .
Onions (50# sacks)..
Peas, green (30# bu.)
Peppermint (lbs.) . . .
Strawberries (36# cr.)
Tomatoes (53# b u .)..
Watermelons (no.)..

629
2,059
1,783
150
10,152
16,047
6,408
15,410

— 10
— 17
— 7
+ 21
+
1
+
4
— 8
+ H

—
—
4444—
4-

3,049
30,738
14,811
1,588
997
3,829
9,032
17,030

+
7
__, 4
— 8
— 24
+
4
— 4
+ 13

—
44—
444-1-

Vegetables for processing
Asparagus (tons) . . .
Beans, green lima
(tons) ....................
Beans, snap (tons). . .
Peas, green (tons) ..
Tomatoes (tons) . . . .

34
81
166
2,391

68

18
14

60

34.9
37.1
7.4
28.4

— 7
— 9
4- 14
4-126
4- 4
4- 48
— 3
4- 4

4
19
32
55
94
70
35
50

6.4
97.9
17.3
3.5
6.3
29.2
34.5
6.7

444—
-f
—
44-

2

4- 17

16.2

4- 15

+ 31
— 1
+ io
+ 134

4-240
4- 80
4- 37
4-136

5.3
9.5
14.4
71.9

4- 40
+
8
+ 22
+ 202

0

—

22
1
31

12
2

2.5
8.4
5.0

8.8

18

21
22

45

24
14

22
3

1 Not available.
2Figures are for crop year beginning in

October of the previous year.
Source : United States Department of Agriculture, Bureau of Agricultural
Economics, 1951 annual summaries of production and value of production.

District meat production
increases slightly

T h o u g h o th e r p ea ch p ric e s w e r e lo w e r , s tr o n g p r o c e ssin g

N a tio n a lly , c iv ilia n c o n s u m e r s o f m e a t h a d s o m e w h a t

d e m a n d re su lte d in h ig h e r p ric es f o r th e re c o rd C a lifo r n ia

s m a lle r su p p lie s a v a ila b le in 1 9 5 1 th a n d u r in g th e p r e ­

c lin g sto n e c r o p . I n c o n tr a s t, th e re c o rd o u tp u t o f g r a p e s

v io u s y e a r as a re su lt o f a sm a ll d ec re a se in p ro d u c tio n

in C a lifo r n ia tu m b le d g r a p e p ric e s m o r e th a n 4 0 p erce n t

a n d la r g e r ta k in g s b y th e m ilita r y . I n c o n tr a st, total D i s ­

b e lo w the. 1 9 5 0 le v e l.

t r ic t p r o d u c tio n o f re d m e a t w a s 4 p e r ce n t g r e a te r /th a n




FEDERAL RESERVE B A N K OF SAN FRANCISCO

32

LIVESTOCK ON FARM S-TW ELFTH DISTRICT, 1950-51

February 1952

LIVESTOCK SLAU GHTER-TW ELFTH DISTRICT, 1949-51
Thousands of
pounds

Millions o f h e a d

Cattle

H ogs

S h eep

C alves

and Lambs
Source: United States Department of Agriculture, Bureau of Agricultural
Economics, L iv e s to c k S la u g h ter b y S ta tes.
sp ite o f th e se d e c lin e s, a v e r a g e p ric e s re c e iv e d b y fa r m e r s
d u r in g

1951

w ere

r e c o rd

h ig h

fo r

ca ttle ,

c a lv e s,

and

la m b s , a v e r a g in g a b o u t o n e -fo u r th g r e a te r th a n in 1 9 5 0 .
All Cattle
and Calves

Beef
Cattle

Dairy
Cattle

Sheep and
Lambs

Hogs

Source : United States Department of Agriculture, Bureau of Agricultural
Economics, L iv e s t o c k on F a r m s .
in 1 9 5 0 , th e in c r e a se in h o g a n d ca ttle s la u g h te r m o r e than
o ffs e t tin g th e d e c re a s e in c a lf, sh e e p , a n d la m b sla u g h te r.

H o g p ric es s h o w e d m u c h le ss g a in o v e r 1 9 5 0 b e ca u se o f
th e 1 0 p e rce n t in cre a se in p r o d u c tio n .

No change in milk and egg supplies,
more white meat
E x c e p t fo r th e c o n tin u in g sh ift in th e p a tte r n o f m ilk

C a lifo r n ia a lo n e a c c o u n te d f o r th e slig h t in cr e a se in D i s ­

u tiliz a tio n , th e D is t r ic t ’ s d a ir y in d u s tr y

tr ict ca ttle s la u g h te r sin ce b e e f o u tp u t in all o th e r D is tr ic t

fa ir ly sta b le y e a r in 1 9 5 1 . T h e n u m b e r o f m ilk c o w s w a s

sta te s w a s re d u c e d . W i t h a n 11 p e r c e n t b o o s t in b e e f p r o ­

the sa m e as in 1 9 5 0 , a n d th e a v e r a g e o u tp u t p e r c o w

e x p e r ie n c e d a

d u c tio n , C a lifo r n ia b e c a m e th e n u m b e r o n e ca ttle s la u g h ­

sh o w e d

te r in g sta te in th e c o u n tr y f o r 1 9 5 1 . T h e s h a r p d r o p in

fr o m th e D is t r ic t ’ s d a ir ie s, th e r e fo r e , w a s a lm o s t th e sa m e

n o ap p re cia b le c h a n g e . T o t a l m ilk

p r o d u c tio n

c a lf sla u g h te r , w h ic h o c c u r r e d in each D is t r ic t s ta te , w a s

as d u r in g th e p r e v io u s y e a r . B a c k e d b y th e c o n tin u in g

m u c h g r e a te r f o r th e D is t r ic t th a n fo r the n a tio n g e n e r ­

h ig h lev el o f c o n s u m e r in c o m e s , d e m a n d f o r d a ir y p r o d ­

a lly . R e b u ild i n g o f h e r d s , fa v o r a b le p ric e s, a n d th e im p o ­

u cts a g a in e x c e e d e d m ilk p r o d u c tio n . A s a re su lt, m o r e

sitio n o f p ric e c o n tr o ls , all co n tr ib u te d to th e w ith h o ld in g

m ilk w a s c o n s u m e d in flu id f o r m , le a v in g c o n s id e r a b ly le ss

o f ca lv e s f r o m m a r k e t. A t y e a r -e n d , ca lf n u m b e r s o n D i s ­

f o r m a n u fa c tu r e d d a ir y p r o d u c ts . P r ic e s fo r d a ir y p r o d ­

trict ra n ch e s h ad in c r e a se d 1 3 p erce n t.

u cts d e c lin e d less th a n s e a s o n a lly e a r ly in 1 9 5 1 a n d ro se

A s m a ll in cr e a se in D is t r ic t sh e ep h e rd s o c c u r re d d u r ­

less th a n se a so n a lly in th e s u m m e r a n d e a r ly fa ll. T h e

in g th e y e a r a s ra n ch e rs c o n tin u e d to w ith h o ld la r g e r

a d v a n c e c o n tin u e d th r o u g h th e e n d o f th e y e a r , a n d th e

q u a n tities o f sh e ep a n d la m b s to b u ild u p d ep leted flo ck s.

a v e r a g e le v e l o f fa r m p ric e s fo r d a ir y p r o d u c ts f o r th e

L a m b a n d m u t to n p r o d u c tio n w a s s lig h tly lo w e r th a n in

y e a r w a s m o d e r a te ly h ig h e r th a n f o r 1 9 5 0 .

1 9 5 0 , w ith U t a h th e o n ly D is t r ic t sta te to r e g is te r in ­

E g g p r o d u c tio n in th e D is t r ic t w a s little c h a n g e d f r o m

c r e a se d sla u g h te r. I m p o r t s o f h o g s in to th e D is t r ic t w e r e

th a t d u r in g 1 9 5 0 . D e c r e a s e d o u tp u t in I d a h o , W a s h i n g ­

m u c h g r e a te r th a n in 1 9 5 0 sin ce b o th n u m b e r s o n fa r m s

to n , a n d O r e g o n w a s o ffs e t b y in c r e a se s in th e o th e r D i s ­

a n d p o r k p r o d u c tio n in c r e a se d .
M e a t a n im a l p ric e s s h o t u p r a p id ly th e first tw o m o n th s

tr ict sta te s, a n d th e ra te s o f la y w e r e a b o u t th e sa m e as
d u r in g the p r e v io u s y e a r . D e m a n d f o r c o m m e r c ia l b r o ile r

o f th e y e a r u n til th e re s tr ic tin g in flu en ce o f p ric e c o n tr o ls

ch ic k s

to o k e ffe c t. T h e r e a fte r , m o s t p ric e s d e c lin e d m o d e r a te ly

h a tch e rie s tu r n e d o u t c o n s id e r a b ly m o r e c h ic k s. D is t r ic t

u n til fa ll, w h e n g e n e r a lly la r g e r s u p p lie s a c ce n tu a te d the

tu r k e y g r o w e r s a lso u p p e d th e ir p r o d u c tio n , r a is in g a b o u t

w as

s tr o n g

th r o u g h o u t

th e

year,

and

D is t r ic t

d r o p . B y y e a r -e n d , fa r m p ric es fo r h o g s w e r e s lig h tly b e ­

15 p e r ce n t m o r e b ir d s th a n d u r in g th e p r e v io u s y e a r . A s

lo w 1 9 5 0 y e a r -e n d le v e ls ; a n d b e e f, sh e e p , a n d la m b p rices

a re su lt, w h ite m e a t su p p lie s w e r e c o n s id e r a b ly la r g e r

w e r e c lo s e to y e a r -a g o fig u r e s . O n l y v e a l c a lf p ric e s re ­

th a n in 1 9 5 0 . I n sp ite o f m o r e p le n tifu l p o u ltr y s u p p lie s,

m a in e d m o d e r a te ly a b o v e th e p r e v io u s y e a r ’s le v e l. I n

ch ic k e n




and

tu r k e y

p ric es

th r o u g h o u t

th e

year

w 'ere

February 1952

M O N T H L Y REVIEW

33

INDEXES OF PRICES RECEIVED BY FARMERS- UNITED STATES. 1948-51
(1910-14=100)
percent

h ig h e r th a n

1 9 5 0 p ric e s, a n d e g g p ric e s sta y e d a b o v e

tir e ly re sp o n sib le f o r th e re c o rd in c o m e . S in c e th e in ­

1 9 5 0 le v e ls u n til D e c e m b e r .

crea se in liv e s to c k p ric e s w a s m u c h g r e a te r th a n th a t fo r

District cash receipts reach
record high

2 1 p e r ce n t, w h ile re ce ip ts f r o m c r o p m a r k e tin g s in cre ase d

m o s t c r o p s , D is t r ic t re ce ip ts f r o m liv e s to c k w e r e u p b y

o n ly 5 p erce n t. T h e s e p e r c e n ta g e in cre a se s w e r e id en tica l
A lt h o u g h to ta l D is t r ic t p r o d u c tio n o f fo o d a n d fiber

w ith th o se fo r th e U n it e d S ta te s as a w h o le .

w a s n o t m u c h ch a n g e d f r o m th a t in 1 9 5 0 , ca sh receip ts
re c e iv e d

by

D is t r ic t fa r m e r s f r o m

crop

and

liv e sto c k

m a r k e tin g s e sta b lish e d a n e w re c o rd o f $ 4 .5 b illio n , 11
p e r ce n t a b o v e 1 9 5 0 . T h e c o n s id e r a b ly h ig h e r p ric e s f a r m ­
e rs w e r e a b le to g e t f o r th e ir p r o d u c ts w e r e a lm o s t e n -

F a r m e r s in m o s t D is t r ic t sta tes fa re d e q u a lly w e ll in
th e la r g e r re tu rn s.

E ven

th o u g h

liv e sto c k m a r k e tin g s

w e r e th e sa m e o r less in all sta tes e x c e p t C a lifo r n ia , h ig h ­
e r p ric e s p u sh e d re tu rn s u p at le a st o n e -fifth in each o f
th e se v e n w e s te r n sta te s. U t a h , w ith little c h a n g e in th e

Ca s h R eceipts from F arm M arketings—
T welfth D istrict, 1951

v o lu m e o f m a r k e t in g s , s h o w e d th e la r g e s t in cre a se in
liv e sto c k re tu rn s, 2 7 p e r c e n t a b o v e 1 9 5 0 .

(in thousands)

Arizona....................................
California ..............................
Idaho ......................................
Nevada ....................................
Oregon ....................................
Utah ........................................
Washington............................

Crops
$ 245,473
1,551,574
202,395
6,710
195,729
50,714
335,869

Livestock
and
products
$ 107,239
1,009,327
177,062
52,936
211,198
142.248
228,274

A lt h o u g h to ta l D is t r ic t c r o p
Total
$ 352,712
2,560,901
379,457
•59,646
406,927
192,962
564,143

Twelfth District................

$ 2,588,464

$ 1,928,284

$ 4,516,748

United States ....................

$13,181,686

$19,609,443

$32,791,129

Source : United States Department of Agriculture, Bureau of Agricultural
Economics, F a rm I n c o m e S itu a tio n .

m o d e r a te ly

over

1950,

se v e ra l

re tu rn s in cre a se d o n ly
sta te s

e sta b lish e d

new

re c o rd s. C a lifo r n ia ’ s re c o rd c o tto n c r o p w a s la r g e ly re ­
sp o n sib le fo r the n e w a ll-t im e h ig h in field c ro p receip ts
r e c o rd e d in 1 9 5 1 . S im ila r ly , th e re c o rd c o tto n c r o p in
A r i z o n a b o o ste d to ta l c r o p re ce ip ts in th a t sta te 3 2 p e r ­
c e n t a b o v e 1 9 5 0 , a n e w h ig h . H i g h e r c r o p p ric es m o r e
th a n o ffs e t a slig h tly sm a lle r v o lu m e o f c r o p p ro d u c tio n
in U t a h , a n d c r o p fa r m e r s in th a t sta te a lso re ce iv ed
re c o rd re tu rn s.

PU B LIC A T IO N O F TECHN ICAL S TU D Y
T h e D e v e lo p m e n t o f B a n k D e b its a n d C le a r in g s a n d T h e ir U s e

by George Garvy of the Federal Reserve
Bank of N ew Y ork, is now ready for distribution at the offices of
the Board of Governors. The study combines a statistical review
of debits and clearings statistics in the United States with a criti­
cal review of their use by economists and monetary analysts to
interpret and project economic developments. The purpose of the
in E c o n o m i c A n a l y s i s ,




study is to provide the basis for better understanding of debits
and the velocity of deposits and hence of the appropriateness of
these series for different types of economic analysis.
The pamphlet may be purchased for 25 cents or 15 cents in
group purchases of 10 or more for single shipment. Orders should
be sent to the Division of Administrative Services, Board of Gov­
ernors of the Federal Reserve System, W ashington 25, D . C.

34

FEDERAL RESERVE B A N K OF S A N FRA NC ISCO

February 1952

B U S IN E S S IN D E X E S — T W E L F T H D IS T R IC T 1
(1947-49 average = 100)
Waterborne
Total
Car­
Dep’t
foreign
m f’g loadings store
Retail
trade*’1
Wheat Electric employ­ (num­
sales
food
Copper* flour*
power
ment4
ber)2 (value)2 prices*»8 Exports Imports

Industrial production (physical volume)*

Year
and
month

Petroleum9
Lumber Crude Refined Cement
1929
87
97
78
54
51
57
55
36
1933___ _
41
52
27
50
1931..............
44
52
35
50
1935 _
54
62
56
33
1936
64
70
61
58
1937 _
74
71
65
56
1938_............
75
64
45
58
1939 _ _
67
72
63
56
1910
79
67
63
61
1941 _ _
93
69
68
81
1942
93
74
71
96
1943
90
85
83
79
1944
93
90
93
63
1945
97
72
65
98
1946___
94
85
91
81
1947._
97
100
98
96
1948
104
101
100
104
1949
99
99
103
100
1950
112
98
103
112
1951
114
112
128
106

Lead8
165
100
72
76
86
96
114
92
93
108
109
114
100
90
78
70
94
105
101
109
89

105
49
17
21
37
64
88
58
80
94
107
123
125
112
90
71
106
101
93
115
115

90
86
75
81
87
81
84
81
91
87
87
88
98
101
112
108
113
98
88
86
95

29
29
26
28
30
34
38
36
40
43
49
60
76
82
78
78
90
101
108
119
136

' ’47
54
60
51
55
63
83
121
164
158
122
104
100
102
98
105
119

102
68
52
60
66
77
81
72
77
82
95
102
99
105
100
101
106
100
94
97
100

30
25
18
21
24
28
30
28
31
33
40
49
59
65
72
91
99
104
98
105
108

64
50
42
45
48
48
50
48
47
47
52
63
69
68
70
80
96
103
100
100
113

190
138
110
132
135
131
170
164
163
132

124
80
72
78
109
116
119
87
95
101

*89
129
86
85
91

57
81
98
121
137

1950
December_____

110

104

106

113

114

127

102

123

111

113

108

107

107

175

1951
January_________ _
February________
March......................
April__________
May................ .........
June______________
July.____ ________
August_____ ______
September_________
October___________
November_________
December__ ____ __

123
112
110
124
131
124
101
114
105
118
109r
99

104
105
105
105
105
106
107
107
107
107
107
106

108
115
110
111
110
110
112
115
116
114
116
109

118
126
122
122
138
132
142r
138r
127r
130r
124r
119

97
103r
lOlr
102r
95r
91r
84r
67r
74r
80
86
89

118
116
118
127
119
114
112
98
108
116
114
118

113
102
94
93
90
81
83
90
96
96
99
101

129
129
135
135
135
135
140
141
135
141
140
136

114
117
118
118
120
120
120
120
118
120
121
120

97
92
99
113
106
107
92
94
104
101
101
100

125
112
102
102
104
103
108
106
108
106
114
110

111
110
112
112
113
112
113
112
112
113
114
117

115
150
168
187
192
196
201

153
167
178
183
140
166
147
142
155r
172
144

210

215
187

B A N K I N G A N D C R E D IT S T A T IS T IC S — T W E L F T H D IS T R I C T
(amounts in millions of dollars)
Year
and
month

Condition items of all member banks7

Bank
rates on
Loans
U.S.
Demand
short-term
Total
and
Gov't
deposits
business
time
discounts securities adjusted8 deposits
loans9

1929
1931
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951

2,239
1,898
1,486
1,469
1,537
1,682
1,871
1,869
1,967
2,130
2,451
2,170
2,106
2,254
2,663
4,068
5,358
6,032
5,925
7,105
7,907

495
547
720
1,064
1,275
1,334
1,270
1,323
1,450
1,482
1,738
3,630
6,235
8,263
10,450
8,426
7,247
6,366
7,016
6,392
6,533

1,234
984
951
1,201
1,389
1,791
1,740
1,781
1,983
2,390
2,893
4,356
5,998
6,950
8,203
8,821
8,922
8,655
8,536
9,244
9,940

1,790
1,727
1,609
1,875
2,064
2,101
2,187
2,221
2,267
2,360
2,425
2,609
3,226
4,144
5,211
5,797
6,006
6,087
6,255
6,256
6,720

1951
January
February
March
April
May
June
July
August
September
October
November
December

7,152
7,184
7,293
7,367
7,422
7,509
7,473
7,630
7,704
7,791
7,885
7,907

6,071
5,811
5,734
5,696
5,685
5,708
6,005
6,000
5,998
6,204
6,356
6,533

9,180
8,824
8,809
8,818
8,834
8,862
9,052
9,058
9,235
9,485
9,584
9,940

6,337
6,352
6,338
6,332
6,357
6,448
6,510
6,547
6,576
6,642
6,625
6,720

1952
January

7,806

6,543

9,951

6,806

Member bank reserves and related Items10
Reserve
bank
credit11
_
+

3.20
3.35
3.66

34
21
2
—
7
2
+
6
+
1
—
3
2
+
2
+
4
+
+ 107
+ 214
98
+
76
9
+
302
17
+
13
+
39
+
21
30
32
3
45
13
73
14
+ 159
43
— 121
+ 236
276

+
-

59
38
124
200
162
113
342
80
18
143
239
102

84

-

228

+
3.48
3.67
3.65
3.82

Coin and
Commercial Treasury currency in
operations12 operations12 circulation11
_
0
23
6
+
- 154
48
+ 154
+
- 110
150
18
■4“
- 198
4
+
+ 257
- 163
14
+ 219
+
- 227
+
38
+ 454
90
3
+ 157
- 240
20
+ 276
+
- 192
+
31
+ 245
- 148
96
4" 420
- 596
+1 ,000
+ 227
-1,980
+2 ,826
+ 643
-3,751
+4,486
+ 708
-3,534
+4 ,483
+ 789
-3,743
+4,682
+ 545
-1,607
326
+1 ,329
_ 206
- 510
+ 698
_ 209
+ 472
482
_
- 930
378
65
-1,141
14
+1 ,198
-1,582
189
+1 ,983

—
—
+
+

+

__
+

+
+
+
+
+
+
+

168
6
130
226
150
199
298
86
42
283
118
279

+
+
+
+
+
+
+
+

68
21
8
26
36
39
19
41
32
17
18
14

+

194

—

86

+
+

Reserves

Bank debits
Index
31 cities** «
(1947-49 »
100)2

175
147
185
242
287
479
549
565
584
754
930
1,232
1,462
1,706
2,033
2,094
2,202
2,420
1,924
2,026
2,269

42
28
18
21
25
30
32
29
30
32
39
48
61
69
76
87
95
103
102
115
132

2,284
2,206
2,186
2,180
2,149
2,217
2,186
2,312
2,293
2,291
2,392
2,269

132
129
134
125
131
134
125
129
129
134
137
141

2,416

134

1 Adjusted for seasonal variation, except where indicated. Except for department store statistics, all indexes are based upon data from outside sources, as
follows: lumber, various lumber trade associations; petroleum, cement, copper, and lead, U.S. Bureau of Mines; wheat flour, U.S. Bureau of the Census;
electric power, Federal Power Commission; manufacturing employment, U.S. Bureau of Labor Statistics and cooperating state agencies; retail food prices,
U.S. Bureau of Labor Statistics; carloadings, various railroads and railroad associations; and foreign trade, U.S. Bureau of the Census.
2 Daily average.
* Not adjusted for seasonal variation.
4 Excludes fish, fruit, and vegetable canning.
6 Los Angeles, San Francisco, and Seattle indexes combined.
«,Commercial cargo only, in physical volume, for Los Angeles, San Francisco, San Diego, Oregon, and Washington customs districts; starting with July 1950,
special category” exports are excluded because of security reasons.
7 Annual figures are as of end of year, monthly figures as of last Wednesday in
month or, where applicable, as of call report date.
* Demand deposits, excluding interbank and U.S. Gov’t deposits, less cash items in process of col­
lection. Monthly data partly estimated.
* Average rates on loans made in five major cities during the first 15 days of the month.
10 End of year
and end of month figures.
11 Changes from end of previous month or year.
12 Minus sign indicates flow of funds out of the District in the case of
commercial operations, and excess of receipts over disbursements in the case of Treasury operations.
x* Debits to total deposit accounts, excluding inter­
bank deposits.
r—revised.