The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
TWELFTH FEDERAL RESERVE DISTRICT February 1957 1 9 5 6 . . . Another Boom Year in the Twelfth District 1956 ANOTHER BOOM YEAR IN THE TWELFTH DISTRICT hundred fifty-six was another year of prosperous growth for the Twelfth Dis trict. The gradual rise in general business activ ity that occurred during the year was reflected in the sustained increase in nonagricultural em ployment. W ith the exception of July, when a nation-wide work stoppage in the steel industry reduced operations in District metal and mining industries, the total number of workers in non farm employment rose in every month after sea sonal adjustment. Total nonagricultural employ ment consequently averaged about 5.6 percent higher than in 1955. The gain for the United States was smaller, about 3 percent. The larger growth in Twelfth District industries accounted for about one out of every five workers added to the nation’s nonfarm payrolls from 1955 to 1956. in e t e e n N The growth in employment in the Twelfth Dis trict from 1955 to 1956 was about the same as the 1954-55 gain, but the expansion of productive capacity was greater in the later period than it had been in the preceding year. During the first three quarters of the year the value of permits issued for commercial, public utility, and indus trial buildings increased substantially from the comparable period in 1955. In California alone, the value of new plants and factory expansion projects announced during 1956 showed an in crease of more than 100 percent over the value of such announcements in 1955. Moreover, in the Pacific Coast states, which account for about 88 percent of nonfarm employment in the District, the civilian labor force grew about 4 percent in 1956 compared with a gain of 3.3 percent in 1955. The rush to build new factories and commer cial buildings reflects the favorable business out look enjoyed by a broad range of District indus tries since early in 1955. Not only have many District business firms planned capacity expan sions to meet anticipated increases in demand; but, in addition, the growing western market continued to attract branch manufacturing, re search, and distribution facilities of eastern firms. The resultant rise in industrial and com mercial construction activity, when added to the 14 increased volume of school, highway, and com munity building, provided considerable stim ulus to the economy of the Twelfth District in 1956. Another factor exerting an upward influence on the level of general business activity in the District was the increased demand for aircraft and missiles. Plants manufacturing these prod ucts added to their work force in every month and accounted for one out of every six new em ployees in District industries during 1956. Despite the strong expansion of business gen erally, some District industries fared less well than others. Automobile assembly, lumber and wood products manufacturing, and residential construction — usually credited with having sparked the 1955 recovery and boom in the Dis trict— declined in accordance with the reduc tion in consumer expenditures for automobiles and housing. In brief, the boom in 1956 was fueled by a mixture different from the one that powered the rise in business activity in 1955. The decline in some forms of consumer invest ment was more than offset in the Twelfth Dis trict by significant increases in business and gov ernment outlays. In addition, consumers mod erately increased spending for services, non-durables, and household durables in 1956. Credit Demands R ise with B u sin ess A ctivity Just as employment records indicate that 1956 was a boom year, so do credit and monetary de velopments, for the continued high level of busi ness activity was responsible for a high and rising demand for bank credit. However, the Federal Reserve System, concerned about infla tion and possible boom period excesses, sought to prevent the supply of credit from expanding too rapidly. A s a result, some would-be borrow ers were not accommodated, and interest rates rose sharply. Actually, the volume of bank loans outstand ing expanded rapidly last year, even if not quite so rapidly as the year before, as indicated in Chart 1. F or all commercial banks in the nation, February 1957 M O N T H L Y REVIEW the increase amounted to about $7.8 billion or 9.5 percent, as compared with $11.6 billion or 16.5 percent in 1955. F or the Twelfth District alone, total loans by the Federal Reserve member banks rose in 1956 by 13.4 percent, as compared with 18.1 percent in 1955. Last year’s increase in total bank loans ranks with those of 1955 and the inflation-ridden years of 1946 and 1950 as among the sharpest on record. Business loans accounted for more than half of the total increase in loans in the Twelfth Dis trict and over two-thirds of that in the entire nation. Indeed, last year’s rate of increase was nearly as great in this District as that of 1955, although in other sections of the nation the rise slackened appreciably. This large volume of com mercial and industrial loans reflected not only the use of bank credit for normal working capital and inventory accumulation purposes but also a con siderable amount of interim borrowing for in vestment in plant and equipment. Despite the decline in residential construction last year, real estate loans outstanding continued to increase; and at Twelfth District banks the rate of increase was nearly as great as during 1955. Although new mortgage credit became more difficult to obtain, many loans continued to be made during the year on 1955 commitments. The volume of consumer loans also continued to rise, although much less rapidly than the year before. This slackening of the rate of increase was due partly to the drop in automobile sales and partly to a higher ratio of repayments to new loan extensions. Security loans fell off consider ably last year in the country as a whole, probably reflecting a lessened interest in stock market speculation. The remaining m ajor type of bank loans, those to farmers, dropped off slightly in the country as a whole and more appreciably in the Twelfth District; this decline was largely in loans guaranteed by the Commodity Credit Cor poration and was the result of reduced participa tion in the price support program in 1956. Bank security holdings d eclin e during yea r During the first seven months of 1956 the banks sold off investments, as they had done during 1955, to obtain the funds needed for ex panding loans. Security holdings of all commer Chart 1 PERCENTAGE CHANGES IN SEL ECT ED BA L ANCE SHEET I TEMS OF C O MME RCI A L BANKS TW E L F T H D IS T R IC T AND UNITED S T A T E S , 1955 - 5 6 U 1 United States data are for all com mercial banks; T w elfth District data for Federal Reserve member banks only. Source: Board o f Governors o f the Federal Reserve System. cial banks in the United States were reduced by about $5.8 billion during this period. During the last five months of the year, however, the banks not only increased their loans but also added about $2.3 billion worth of securities to their portfolios, mainly in the form of Treasury bills. This considerable increase during the latter part of the year in the banks’ holdings of liquid assets may have reflected some desire to improve liquid ity positions, as well as the attractiveness of higher yields on securities. The combined total of loans and investments by all commercial banks declined about $2 billion from the beginning of 1956 to July 25 but in creased about $6.3 billion during the next five months. These changes were accompanied by variations in the amount of reserve bank credit made available to the banks. During the first seven months of the year, such credit declined by $1.6 billion, mainly through open market sales 15 FEDERAL RESERVE B A N K of securities by the Federal Reserve Banks. Dur ing the last five months of 1956, it increased by $1.8 billion, again mainly through open market operations. OF S A N FRANCISCO C hart 3 SELECTED 4.0 A A A CORPORA M em ber b an k borro w in g s d eclin e in latter p art o f 1 9 5 6 but interest rates rise The changes during the year in member bank excess reserves and borrowings are shown in Chart 2. Borrowing from the Reserve Banks, which was already relatively high at the begin ning of the year, increased further during March and April when member banks increased their own lending sharply. During the second half of 1956, however, borrowing was somewhat less and excess reserves slightly higher on the aver age than during the first half, mainly because of the easing of reserve positions by the System’s open market purchases. The decline in such bor rowing may also have resulted partly from the rise of the rediscount rate to three percent. This increase of one-half point in the interest rate which member banks pay for borrowings from Federal Reserve Banks occurred in two steps in ten Districts and in one step at the San Francisco and Minneapolis Banks. Over the past year interest rates continued the general rise which had begun about the middle of 1954. (See Chart 3.) The fact that the rates on long-term securities, both corporate and govC hart 2 RESERVE POSITION OF M E M B E R BANKS UNI T ED STATES 1955 AND 1956 M ILLIO N S .INT R A T E , N.Y. TREASURY ILLS (NEW ISSUE) 1955 1956 I I I I I I I I I I I J M M J S N II I I I I I I J M M J S N Source: Board o f Governors o f the Federal Reserve System. ernment, rose somewhat more than they had the previous year was especially noteworthy. This reflected a growth in the demand for funds to finance a record volume of long-term investment which was greater than the increase in the sup ply of savings. Short-term interest rates, already at a high level at the beginning of 1956, rose a little less sharply and regularly than they had done during 1955; nevertheless, by year’s end they were at the highest level since 1932. The new issue rate on 91-day Treasury bills reached a peak of 3.33 percent in December and since the middle of November has been consistently higher than the rediscount rate. M o n e y circulates more sw iftly B O R R O W I N G S AT F . R B A N K S 90 EXCESS RESERVES II 1956 I I II I I I I I M M 1955 J M M J S N J N o te : D ata are m onthly averages o f daily figures. Source: Board o f G overnors o f the Federal Reserve System. (NEW S E RIE S ) OF D O L L A R S 1200 16 I N T E R E S T RATES 1955 AND 1956 PERCENT The money supply increased during 1956 by only about $1.3 billion or one percent. However, its velocity of circulation or rate of use also in creased, as holders of cash were inclined to re duce their idle balances. F or instance, the rate of turnover of demand deposits increased about 8 percent during the year. These two factors— larger money supply and higher velocity of cir cu lation -provid ed the monetary basis for a rise of more than 4 percent in prices (at the general wholesale level), as well as for an increase of from 2 to 3 percent in real output. Throughout 1956 the Federal Reserve System pursued a policy of permitting banks to meet February 1 957 M O N T H L Y REV I E W credit needs arising from normal growth and sea sonal changes, but it did not allow them to lend as much as was demanded. A s a result primarily of the investment boom, the total demand for credit last year greatly exceeded the available supply of savings, despite a considerable increase in the latter as compared with the previous year. The banking system was called upon, therefore, to provide the additional credit desired. Had it been permitted to do so without restraint, the result would have been increased upward pres sure on prices since this would have added greatly to the demand for goods and services at a time when output of the latter was virtually at capacity. A larger volume of credit would have enabled borrowers to bid up the prices of scarce goods and labor without adding to total output. The Federal Reserve System attempted to pre vent such undue extension of credit by holding down the volume of reserves which it provided the banks and by making it more expensive for the banks to borrow. The Private Sector of District Economy Remained Strong The rise in general business activity, which is evident in the discussion of credit and monetary developments above, reflected strength in the three private sectors jointly responsible for the production of goods and services in the economy of the Twelfth District: the nonfarm industries, agriculture, and international trade. In the nonfarm sector, District employers in all major industries added to their payrolls in 1956. Employment in manufacturing; mining; finance, insurance, and real estate; and in serv ice industries averaged 6 or more percent higher than in 1955. Increases registered in other in dustries ranged from 3.7 percent in the transpor tation, communications, and public utilities cate gory to 5.6 percent in construction. In nearly all categories District increases exceeded gains for the whole United States. Furthermore, in five of the eight major industry categories, employ ment expanded more than from 1954 to 1955. As a result of the expansion of employment op portunities, insured unemployment last year av eraged 10.5 percent less than in 1955 in the Dis trict. This decline was smaller than the drop from 1954 to 1955, for the recovery and boom in 1955 had fairly well absorbed the pool of avail able unemployed workers. During most of 1956 job opportunities exceeded the number of appli cants in the largest District labor markets. Construction in District o utpa ces nation Developments in the construction industry similarly reflect strength in the nonfarm sector. T able 1 P ercen ta g e G ro w th T w e lfth in N o n fa rm E m p lo y m e n t D is t r ic t a n d U n it e d S t a t e s 1 9 5 4 -5 5 a n d 1 9 5 5 -5 6 f------------—Percent change—----------- \ T w elfth U nited ,----- D istrict----- N (-------States-------\ 1954-55 1955-56 1954-55 1955-56 T O T A L .................................. . . . . + 5 .5 + 5.6 + 3.1 + 2.9 M a n u fa ctu rin g ................... ____ + 6 .9 + 6.3 + 3.5 + 2.0 . . . . + 5 .1 + 5.5 + 2.7 + 3.1 G o v e r n m e n t ........................... ____ + 3 .6 + 2.4 + 3.7 + 4 .9 + 3.4 . . . . + 6 .6 + 6.3 + 2.2 T ra n sp o rta tio n , com m u n ica tio n s, and p u b lic utilities . . . . + 2 .6 + 3.7 + 1.2 + 2.1 C o n tra ct c o n s tru ctio n . . . . . . . + 8 .7 + 5.6 + 7.2 + 8.1 ------ + 6 .3 + 6.4 + 4.4 + 3.7 ____ + 2 .9 + 6.3 + 2.9 — 0.9 Sources: U nited States Department o f Labor and State em ploym ent agencies. Table 2 shows that for the first nine months of 1956, the most recent period for which figures are available, an increase of 45 percent in the value of permits issued for nonresidential build ing occurred. This increase more than offset the valuation decline in residential permits in the Twelfth District. For the United States, the gain in nonresidential valuations was not sufficient to offset the decline in the value of residential authorizations. As noted earlier, large increases in the value of permits issued for industrial and public utility buildings— 115 and 113 percent respectively— offer striking evidence of capacity expansions currently under way in District states. These increases are much larger than those for the United States. In contrast, the margin of differ 17 FEDERAL RESERVE B A N K OF ence between gains in the District and in the na tion for commercial buildings is smaller. Within the commercial building category, however, siz able increases occurred in the District in the value of permits granted for office buildings and com mercial garages. Authorizations for the construc tion of stores and other mercantile buildings show a value rise of 9 percent for the District in con trast to a slight decline for the United States. Employment and construction data are useful in measuring advances in business activity in large sectors of the economy. The sources of this over-all expansion can only be appreciated, how ever, if we turn to a more detailed examination of those industries that account for significant shares of the District’s income and output or are vital in trade with other areas. These include transportation, canning, lumber, metals, petro leum, and ordnance within the manufacturing sector; the agricultural and international trade sectors; and selected mining industries. A ircra ft a n d missile production soars A scarcity of experienced workers and engi neers was a major problem confronting District firms producing aircraft and missiles during 1956. Labor markets in San Diego, Seattle, and SAN FRANCISCO Los Angeles could not supply desired quantities of needed skills. By soliciting in labor markets outside of the District as well, however, 57,000 new employees were recruited during 1956. Transportation equipment, which is dominated by aircraft production, added more workers in 1956 than any other manufacturing industry; and ordnance manufacturing shows the largest percentage growth in employment. (Guided mis siles, and research and development programs related thereto, fall within transportation equip ment manufacturing in some cases and in ord nance manufacturing in others.) The growth in aircraft production resulted from an increase in placements of both military and civilian orders. In the year ending September 1956, the backlog of orders for complete aircraft in the United States rose $2.6 billion. Slightly less than two-thirds of this increase represented placements by non-military customers, although civilian orders amounted to only 22 percent of total orders outstanding in September. W hile District plants account for about 35 percent of total employment in the aircraft industry in the United States, W est Coast producers hold the major share of current orders for commercial transports. T able 2 D o l l a r V a l u e o f B u il d in g P e r m it s T w e l f t h D is t r ic t a n d U n it e d S t a t e s J a n u a r y - S e p t e m b e r , 1955 a n d 1956 f---------------------T w e l f t h D i s t r i c t --------------------- '1 J a n .-S e p t . 1955 3,151.6 2,100.7 785.4 280.4 12.5 4.2 17.3 78.8 167.6 224.3 170.9 21.9 31.5 20.4 127.6 63.0 23.0 31.8 U n i t e d S t a t e s -------------------------- N 1 9 5 5 -5 6 J a n .-S e p t . J a n .-S e p t . 1 9 5 5 -5 6 1956 P e rce n t- 1955 1956 P e rce n t- (in m illion s o f d olla rs ) A ll b u ild in g c o n s tr u c tio n .......................................................... N e w d w e llin g units ...................................................................... N e w n on re sid e n tia l b u i l d i n g ..................................................... C om m e rcia l b u ild in g s ............................................................ A m u se m e n t b u i l d i n g s .......................................................... C om m ercia l g a ra g es ............................................................ G a solin e and serv ice s t a t i o n s ......................................... O ffic e b u i l d i n g s ...................................................................... S tores and o th e r m erca n tile b u i l d i n g s ...................... C om m u n ity b u i l d i n g s ............................................................... E d u ca tion a l b u ild in g s ....................................................... In stitu tion a l bu ild in g s ....................................................... R e lig io u s b u i l d i n g s ............................................................... G arages, p riv a te r e s id e n t ia l................................................... In d u stria l b u ild in g s ................................................................. P u b lic b u ild in g s ........................................................................ P u b lic u tilities b u i l d in g s .......................................................... A ll o th e r n on resid en tial b u i l d i n g s .................................... r J a n .-S e p t . 3,250.1 1,766.6 1,141.1 332.7 20.8 7.4 18.2 103.2 183.2 314 .2 212.5 49.7 52.0 21.9 274.7 73.7 49.1 54.4 a g e c h a n g e (in m illio n s o f d o lla rs ) + 3 — 16 + 45 + 19 + 66 + 76 + 5 + 31 + 9 + 40 + 24 +127 + 65 + 7 +115 + 17 +114 + 71 14,953.7 9,296.7 4,248.1 1,417.9 81.6 51.3 108.3 399.6 777.1 1,493.2 945.9 238.9 308.3 148.8 599.8 240.8 205.2 142.6 age ch a n ge 14,672.4 8,062.3 5,078.3 1,607.4 88.6 45.5 123.5 573.8 776.0 1,692.1 1,061.4 282 .5 348.2 158.1 961 .9 244 .8 241 .0 173.0 — 2 — 13 +20 +13 + 9 — 11 +14 +44 +13 +12 +18 +13 + 6 +60 + 2 +17 +21 ^D ecline o f less than 1 percent. Sources: U nited States D epartm ent o f Labor, Bureau o f Labor Statistics, Building Perm it A c tiv ity b y S tates; U nited States D epartm ent of Labor, United States Department o f Com m erce, Construction Review . 18 February 1 957 M O N T H L Y REVIEW The importance of increased activity in air craft and missile plants to the District economy in 1956 deserves special emphasis. Together these plants accounted for 65 percent of the total number added to manufacturing payrolls during the year. Total wage and salary payments ex ceeded $1.5 billion. Moreover, the increased pro duction of aircraft and missiles added to the de mand for primary and fabricated metals, non electrical machinery, and instruments. And firms producing electronic equipment, largely because of the boom in missiles and aircraft, reported an employment gain of 21 percent from December 1955 to December 1956. Research facilities and new manufacturing plants seemed to mushroom in the Los Angeles and San Francisco Bay areas during the year. duction declined 2 percent from 1955. Even though December’s output of pine products was considerably less than usual, stocks on hand reached an all-time peak, 17 percent above those of December 1955. Prices of both Douglas fir products and western pine boards reached record highs in April. By December, however, market softness had led to an 11 percent drop in the price index for Douglas fir products. The price of No. 3 common western pine boards fell 21 percent in the same period. Markets for redwood lumber were somewhat stronger because it is also used for industrial purposes. In addition, the demand for redwood was buoyed by the trend toward construction of more expensive homes. Redwood, and to a lesser extent western pine also, finds use in doors and Autom obile production slackens District auto assembly plants employed fewer workers on the average during 1956 than in 1955, reflecting the sharp drop in new automobile sales. However, by December employment had nearly regained the peak reached in January 1956. Approximately 700,000 cars were assembled in W est Coast plants in 1956, about 9 percent of the industry total. This share is expected to rise in 1957, for one of the industry’s major firms plans to begin assembly in a new $50 million plant near Los Angeles. Another firm, however, postponed for an indefinite time plans for con struction of new facilities in Sunnyvale, Cali fornia. Lumber m arkets weaken Developments in the Twelfth District’s lumber industry reflect primarily the nation-wide drop in residential construction, since District lumber products are used extensively in the construction of new homes; and for some types and grades this use accounts for nearly all of total demand. Housing starts in the United States were 16 per cent lower in 1956 than in 1955. Hardest hit by the decline in the demand for lumber were the Douglas fir and western pine producers. Output of Douglas fir dropped about 4 percent from 1955, and stocks at the end of the year were 9 percent above those on hand in the previous December. Similarly, western pine pro C hart 4 CH ANGE IN M A N U F A C T U R I N G MAN-HOURS PERCENTAGE CHANGES IN PACIFIC COAST STATES 1954- 55 AND 1 9 5 5 - 5 6 -5 O *5 *10 MACHI NERY _!/ OTHER DURABLES PRINTING FOOD PRODUCTS METALS PAPER PRODUCTS FURNITURE TOTAL MANUE TRANS. EQUIP LUMBER TEXTI LES y 8 PROD. OTHER NONDUR. 1 N ot including electrical machinery. 2 Including apparel. Source: State em ploym ent agencies. 19 FEDERAL RESERVE B A N K cabinets and is used for decorative purposes in higher priced homes and commercial buildings. Production of redwood lumber in 1956 equalled the 1955 total, and the index of prices remained unchanged during the year. However, inven tories in December were 10 percent above those of a year ago as a result of lower shipments. Plyw ood ca p a city e x p a n d s District plywood producers were confronted with market conditions not unlike those facing lumber producers. Industry capacity in 1956 was about 20 percent greater than in 1955. Out put, however, only increased 6 percent over the 1955 total. A fall of 22 percent in prices from January to December led to the closing of a num ber of mills. Price volatility in plywood stems, to a considerable extent, from the fact that pro ducers typically do not carry inventories of suf ficient size to act as a buffer against changes in demand. In addition, industry expansion appears to have increased supply beyond the market’s absorption capacity at prices that prevailed at the beginning of the year. Canning stocks reach new p ea k Canning activity dominates the District’s de centralized food products manufacturing indus try. The main problems of District canners are somewhat similar to those mentioned above in the review of the lumber industry, that is, stocks are large in relation to current demand because an unprecedented volume of fruits and vegetables was canned in 1956. The District fruit pack rose 10 percent above the high established in 1955 and vegetables registered an even larger gain, approximately 18 percent, according to prelim inary estimates. The record fruit and vegetable packs, when added to the moderate quantity of stocks carried over from 1955, resulted in increases in available supplies that range as high as 50 percent for some vegetables and 30 percent for some fruits. Can ners’ per unit costs rose t o o ; higher transporta tion, labor, material, and storage costs appear to have offset cost savings derived from large vol ume operations. Despite the cost increase, prices at the beginning of the 1956-57 marketing season were lower than in July 1955 for cling peaches, 20 OF S A N FRANCISCO fruit cocktail, cherries, asparagus, and tomatoes. Higher quotations prevailed for apricots and tomato juice. By January 1957, further price de clines had been reported for fruit cocktail, aspar agus, tomatoes, and tomato juice. Movement of canners’ stocks appears to have increased about 4 percent during the first half of the 1956-57 marketing season compared with the same period in the previous season. A factor of some importance has been increased government purchases for the school lunch program. Exports of United States canned goods, up 36 percent in the 1955-56 season, are expected to show another gain in the current season. Even so, anticipated increases in total demand for canned goods are not expected to match the increase in supply that resulted from the record-breaking packs in 1956. District production o f ingot steel hits new p e a k The boom in heavy construction noted above and large increases in business outlays for new equipment stimulated a considerable increase in output in nearly all District metal and mine in dustries. Steel ingot production in Pacific Coast states for 1956 ran 9 percent ahead of the 1955 total for an all-time record. In the western steel area, for the most part composed of District states, production averaged 93 percent of capac ity compared with a 90 percent level of operations for the entire United States steel industry. E x clusion of the strike period raises figures for both the United States and the District very close to 100 percent of capacity. Increasing costs and strong demand jointly contributed to a rise in price for most steel prod ucts during 1956. Factors on the supply side in cluded a 7.5 cent an hour wage increase and improved non-wage benefits, a jump in the price of scrap steel sufficient to raise the yearly aver age price about 34 percent above the 1955 level, and a rise in coke and iron ore prices of about 9 percent. On the demand side, increased require ments for steel— particularly for structural, tub ular, and heavy plate— contributed to a rise of almost 10 percent in the wholesale iron and steel subgroup price index. In addition, industry spokesmen have stated that part of the increase in steel prices might be attributed to the fact that the Office of Defense Mobilization has stopped M O N T H L Y REVIEW February 1 957 T able 3 Indexes of I n d u s t r ia l P r o d u c t io n — T w e l f t h D is t r ic t (1947-49=100) Industrial p roduction 1939 1951 1952 1953 C o p p e r ........................ 114 113 111 80 93 77 L ea d ............................. 93 87 Z in c ............................. 47 95 90 78 S ilv er ........................... 167 114 112 105 89 G o ld ............................. 234 98 88 I r o n o r e ................... 9 188 194 209 24 147 139 158 Steel i n g o t s ............... A lu m in u m ................. 126 121 165 109 P e tro le u m ................. 67 106 107 112 R e fin e d o i l s ............... 63 116 122 N atu ral g a s ............... 62 101 92 95 C em en t ...................... 56 128 124 130 L u m b e r ...................... 71 113 116 118 D o u g la s fir p ly w o o d 53 160 170 204 C an n ed f r u i t s ............ 74 119 103 110 C anned v e g e t a b l e s .. 43 162 172 143 M e a t ............................. 63 108 116 119 Su g ar ........................... 97 98 95 107 F l o u r ............................. 91 95 96 96 B u tter ........................ 178 76 82 66 78r 87r 8 8 r 103 C h eese* ...................... I c e cr e a m ................. 46 99 109 109 1954 101 71 64 105 80 140 128 177 106 119 92 133 111 213 107 140 123 116 99 115 108 105 1955 1956p 118 r 128 77 75r 72r 69 104 104 85** 78 178r 213 154 163 196 186 105 106 129 122 98r 99 156 145 121r 116 273 288 130r 143 179 r 226 139 150 109r 113 103 105 103 r 89 96 101r 107 113 *D oes not include cottage cheese. p prelim inary. r revised. N o te : D ata given above supersede all previously published annual indexes. granting accelerated amortization certificates on future additions to capacity, thereby placing greater emphasis upon having current revenue cover a larger fraction of the costs of new plant. During 1956 ingot capacity in the Twelfth District expanded by about 4 percent, a rate about equal to that for the country as a whole. Scheduled for completion in late 1957 are new production facilities which, it is estimated, will increase District output by approximately 650,000 ingot tons. F or most of the year, however, it appears that steel users in the District will con tinue to depend upon producers in other states for 40 or more percent of total finished steel re quirements. Aluminum a n d co p p e r output rises Production of non-ferrous metal and mining industries continued at high— and in some cases record-breaking— levels in 1956 as demand re mained generally strong throughout the year. Output of primary aluminum in the Pacific Northwest rose to another peak, 5 percent above the 1955 level. New capacity added during the year might have led to an even larger gain were it not for a work stoppage that reduced opera tions during August. In contrast to other years, little production was lost because of power short ages. The output gain in 1956 enabled the industry to catch up at least temporarily with demand. Partly because of reduced stockpiling by the General Services Administration, supplies of aluminum for nonintegrated fabricators became more abundant toward the end of the year. Sup ply promises to be even more adequate in 1957 as a result of substantial additions to capacity currently being constructed, for the most part outside of the District. A s in the case of steel, future additions to capacity of both primary and fabricating facilities will no longer benefit from accelerated amortization programs. During the year the price of 99 percent alu minum ingot increased from 24.4 to 27.1 cents per pound. A portion of the increase in price, 1.2 cents, followed the settlement of new collective bargaining contracts in October. In 1956 mine production of copper in Twelfth District states jumped 8 percent above the 1955 figure. A n absence of work stoppages after Janu ary, gains in output by established producers, and the opening of a m ajor new mine in Arizona account for the rise. Available supplies of re fined copper, including domestic and imported, rose above current demand toward the end of the year. This development was accompanied by a reduction in the wholesale price of refined electrolytic copper from 46 cents per pound in July to 36 cents in December. Production of zinc in District mines during 1956 declined 4 percent below the 1955 total. In spite of a softening in the demand for zinc, its price remained level during the year. Mine out put of lead gained 3 percent in 1956. Prices quoted in N ew Y ork were unchanged over the year. Price stability in lead and zinc is threat ened, however, by the fact that the Office of De fense Mobilization has recently filled stockpiling quotas established in 1954. Petroleum su pp lies in crea se in 1 9 5 6 During 1956 the petroleum industry in Dis trict Five experienced a problem facing pro ducers in some other Twelfth Federal Reserve District industries — for the year supplies ex 21 FEDERAL RESERVE B A N K OF SAN FRANCISCO ceeded demand by almost 2 percent and some inventory accumulation took place.1 Demand in 1956 declined about 1 percent and supply in creased about 7 percent from 1955 levels. District Five production of crude and refined products actually decreased slightly, but receipts from out side District Five, largely of light crudes, in creased substantially. The slight decrease in total demand reflects a sharp drop (29 percent) in foreign and intercoastal shipments, a 2 percent reduction in military buying, and a significant increase of 5 percent in civilian purchases. 1955, reaching a high of 117.8 in November. After some moderate fluctuations, a peak of 119.5 was reached in April 1956, followed by a pre dominantly downward movement until N ovem ber. After the blockage of the Suez Canal the index rose to a high of 127.0 in December. Prices of residual fuel oils on the Pacific Coast moved up from an index of 111.8 in January 1956 to 120.4 in October and reached 143.4 in December. The index for California crude stood at 124.3 in January, 124.3 in October, and 131.5 in December. In April, 1956 petroleum inventories in Dis trict Five reversed the downtrend that had con tinued for all but one of the previous 17 months, and stocks accumulated until November. But the inventory picture brightened in November and December as stocks of crude, stove oil and diesel oil, and fuel oil declined. Total petroleum stocks on hand as of December 31, 1956 were sufficient to meet current demand for approximately 80 days, compared with 76 a year ago, and were considerably less than the 110-day supply on December 31, 1954. Farm Fortunes Improve in 1956 The shortage of petroleum supplies in Europe resulting from the crisis in the Middle East has been a m ajor factor in reducing petroleum stocks in this region as well as in the country as a whole. During the first 10 months of the year supply exceeded demand in District Five by 3 percent, whereas in the final 2 months supply fell 4 per cent short of current demand, which had risen sharply. Consequently, from November 2 to De cember 28, stocks of crude petroleum in District Five were reduced 2.4 million barrels. Inven tories of fuel oil, the m ajor source of this region’s inventory problem in past years and a contributor to the accumulation of inventories in 1956 before Suez, also declined as the market changed from dormancy to active bidding. In spite of the reduc tion in stove oil and diesel oil stocks since O c tober, the industry’s inventory of refined prod ucts at the end of the year was about 9 percent larger than in December 1955. The Bureau of Labor Statistics’ wholesale price index (1 9 4 7 -4 9 = 1 0 0 ) of refined petro leum on the Pacific Coast began to rise in June 1 D istrict F ive includes California, Oregon, W ashington, Arizona, and N evada. 22 District farm income in 1956 was at its high est level since 1952, judging from data for the first 11 months of the year. This increase in total receipts primarily stemmed from the record level of income from crops. Production and market ings of both crops and livestock and livestock products were higher than in 1955, but crop prices showed more strength than other prices. Low er prices for meat animals reduced receipts from livestock and livestock products. Because of the limited participation of District farmers in the Soil Bank Program, income from this source was of minor importance in 1956, totaling about $2.5 million— a small fraction of the more than $4 billion of District cash farm income. The increase in District cash income was not shared by all District states; most of the rise in District income occurred in California. In fact, total receipts were below year-ago levels in N e vada, Utah, and Washington. Low er livestock income accounted for the decline in the first two District states, while the decline in W ashington farm income was largely the result of freeze damage to important crops— primarily deciduous fruit and strawberries. District farm production rises Field crop1 production in the District in creased about 2 percent over 1955 but was 6 per cent below the 1953 record. Cotton production increased 15 percent and wheat production 7 per cent. Despite a decline in rice acreage, the output of this crop also exceeded that of 1955. Produc 1 Field crops include food grains (wheat, rice, and r y e ), feed grains (barley, oats, corn, e t c .) , cotton , and other field crops such as dry edible peas and beans. February 1 957 M O N T H L Y REVIEW tion increases, however, were not confined to these crops but were quite general for all types of crops except deciduous fruit. Although new production records were established for peaches and pears, these increases were more than offset by a smaller output of apples, grapes, apricots, and cherries. The marketing and production of livestock and livestock products also rose in 1956. Red meat production during the first 11 months of the year was up nearly 8 percent from the comparable period in 1955. Cattle and calves, comprising over three-fourths of the weight slaughtered, ac counted for the bulk of the increase although hog slaughter also increased. Output of poultry, eggs, and milk increased, too. Farm costs reach re co rd levels The national index of prices paid by farmers rose from 281 in 1955 to a record level of 286 in 1956. Interest costs, taxes, the price of family liv ing items, and wage rates went up again last year, continuing a general upward trend in farmers’ costs. In addition, the total volume of non-real estate debt held by institutional lenders reached a new high in 1956. Also continuing to climb is the value of farm assets. The major part of this rise results from the steady upward trend of farm real estate values. Long-term forces are partially respon sible for the upward trend— farm real estate is regarded as a favorable investment, in view of long-range needs for greater production to feed a growing population. H owever, short-term forces, such as prospects for farm income, influence yearly rates of growth in real estate values. In addition, urban development exerts upward pressure on farm land values. In the Twelfth District these forces have combined to raise farm land values, particularly in California. A s a result, farm land values in California rose 8 per cent between mid-1955 and mid-1956— consid erably more than real estate values nationally or in other District states. Farm real estate values also rose in all other sections of the District except Utah. Increased real estate values and higher tax rates have increased the outlay of farmers for taxes. Moreover, the outlays for credit to finance purchases of farm real estate have risen substan tially in recent years. From December 1955 to December 1956 the index of interest payable per acre on farm real estate debt rose nearly 12 per cent for the United States. This reflects both in creases in interest rates and in size of debt, with the size of debt rising sharply, particularly in Pacific Coast states. Other costs have gone up also. Farm wage rates nationally reached a record high level in 1956, and the prices of items for farm family liv ing rose about 2 percent. A higher volume of farmer indebtedness reflects, in part, this rising level of farm costs. The outstanding volume of non-real estate loans, excluding those guaran teed by the Commodity Credit Corporation, held by commercial banks in the Twelfth District in creased more than 14 percent between mid-1955 and mid-1956, a time of year when these loans are at or near their seasonal peak. Fo reig n Trad e Expands Pacific Coast foreign trade kept pace with the general economic growth of the District in 1956, expanding by 21 percent in value during the first 11 months of 1956 over the same period in 1955. The Pacific Coast’s share of total United States commercial foreign trade rose to an all-time high of 10.1 percent as the value of Pacific Coast trade increased faster than that of the nation. Both export and import value for the first 11 months of the year were about one-fifth greater than the same period a year ago. United States commer cial exports, on the other hand, increased by only 9 percent, while imports were 11 percent higher. The improvement in Pacific Coast trade was evident in the trade of all the customs districts, although the percentage gains failed to equal those of 1955 in some cases. The value of O re gon’s foreign trade (exports and imports com bined) was somewhat more than one-third greater than in 1955 and Washington’s was up more than one-fourth. O n the import side, how ever, the rate of increase in these two districts was smaller than in 1955. Gains for the San Diego customs district were smaller than those in 1955 for both import and export values. 23 FEDERAL RESERVE B A N K OF Cotton a n d w heat exp o rts jump sharply United States Government disposal programs for surplus agricultural products were an im portant element in stimulating both Pacific Coast and United States exports in 1956. The cotton and wheat export programs, for example, were instrumental in promoting a larger volume of cotton and wheat exports from the Pacific Coast. The initiation of a broader export program1 to include all types of raw cotton in the latter half of last year and the existence of an ExportImport Bank loan to Japan for the purchase of cotton were two favorable factors. Cotton ex ports from the Pacific Coast customs districts from August 1, 1956, when the Government program began, to the end of the year were 137 percent above the same year-ago period. On the other hand, rice exports from California, the principal Pacific Coast exporter and sole pro ducer in the District, fell sharply to almost neg ligible quantities. The District’s best customer, Japan, reduced her purchases of rice because of large rice harvests in 1955 and 1956. Rice pro duction in other countries was also higher last year. Exports of rice, however, can be expected to rise in 1957 when shipments under the G ov ernment’s agricultural surplus disposal program 1 Beginning August 1, 1956, exports o f all types o f cotton from C C C stocks were perm itted on a “ com petitive bid basis” so that United States cotton exports were priced com petitively in relation to foreign cotton . SAN FRANCISCO take place. The disposal program should also be helpful in moving cotton and wheat in the cur rent year. Continued high levels of industrial activity abroad also contributed to the expansion of Pacific Coast exports although some exports, including lumber, were down because of curtailed demand from world markets. Exports to Europe and Asia were probably well maintained in 1956 despite the Suez Canal crisis in October. The immediate upsurge in demand for United States products and raw materials that was expected to result from the closing of the Canal did not develop, and there has been some delay in ship ments which had to be rerouted. Im ports rise with business activity The higher level of Pacific Coast imports last year accompanied the rise in income and business activity in the District. Coffee imports increased in volume, with larger imports from Brazil and smaller imports from Colombia. The value of coffee imports, moreover, was generally higher; the price of Santos No. 4 rose about 15 percent from the end of 1955 to 1956, while the price of the mild Colombians rose somewhat more steeply because of a relatively short supply of mild cof fees. Tanker imports (mainly petroleum prod ucts) almost doubled in volume and may remain substantial in 1957. If supplies from the Middle T able 4 V a l u e o f P a c i f i c C o a s t F o r e i g n T r a d e , 1 9 5 0 -5 6 ( in millions dollars) C u sto m s district E x p o rts: 1950 1951 1952 64.7 307.3 400.6 250.6 290.4 1953 68.2 269.7 370.0 173.8 249.7 116.3 60.4 348.7 371.8 237.2 246.4 T o t a l P a cific C o a s t ................. ............ T o t a l U n ite d S t a t e s ................. ............ 753.2 10,275.1 1,264.6 15,032.4 1,313.6 15,191.3 1,131.4 15,773.7 Im p o rts: S an D ie g o ......................................... L o s A n g e le s .................................... ............ San F r a n c i s c o .................................. ............ O r e g o n ................................................ ............... W a s h in g to n ....................................... ............ 214.3 269.5 25.9 185.0 16.9 282.9 345.4 33.9 220.1 31.7 234.3 320 .2 29.4 217.6 17.1 261 .4 361.3 32.7 221.9 T o t a l P a cific C o a s t .................... ............ T o t a l U n ite d S t a t e s ................. ............ 707.7 8,743.1 899.2 10,967.3 833.2 10,747.5 894.4 10,777.4 San D ie g o ......................................... L o s A n g e le s .................................... ............ San F r a n cis c o .................................. ............ O r e g o n ................................................ W a s h in g t o n ....................................... ............ 249.1 271.4 1954 1955 J a n .to N ov. 1956 80.8 370.1 438.7 146.4 260.4 86.8 358.5 449.1 180.9 324.0 82.9 368.3 476.1 234.1 405 .7 1,399.3 1 5,541.0 1,567.1 1 6,904.2 22.4 324.3 371.8 52.5 291.7 22.3 376.1 396.7 60.7 305.7 1,062.7 11,383.4 1,161.5 1 1,538.4 1,296.4 15,106.4*19.4 262.7 340.9 4 0 .0 238.1 901.1 1 0,2 1 5 .4 r TRevised. N o te : D ata for the Pacific Coast districts include trade b y all methods of transportation, excluding m ilitary shipments. U nited States figures include m ilitary shipments. Source: U nited States Department o f Com m erce, Bureau o f the Census, F T 970, Trade b y Custom s D istrict. 24 February 1957 M O N T H L Y REV I E W East are reduced, particularly crude petroleum, imports from other foreign producing areas may increase to offset losses from this source. Ply wood imports, on the other hand, may have been slightly smaller because of a slump in residential construction in the District. Other crude material imports which are important in Pacific Coast trade, such as newsprint, rubber, and copper and lead ores, probably shared in the increase in imports. District Consumers Increased Spending Moderately District consumers, enjoying high and rising incomes and increased employment opportuni ties, contributed to the gain in business activity in 1956 by spending more dollars for nearly all kinds of retail goods. The one major exception was expenditures for new and used automobiles, which declined by about 8 percent. This drop is confirmed by a 17 percent reduction in registra tions of new automobiles in California in 1956 compared with 1955. W hen sales of automotive establishments are excluded, total sales of retail firms operating from 1 to 10 stores in the western region1 of the United States increased about 8 percent for the first 11 months of 1956 compared to the same period a year ago. On the same basis the gain for the entire nation amounted to a little more than 5 percent. Although some types of retail establishments recorded large gains, particularly drug and pro prietary stores, increases for stores selling such durable goods as furniture, lumber, building materials, and hardware w^ere relatively small. W hen these sales are added to automobile sales it is found that consumers in the W est reduced total spending on durables in 1956. However, expenditures for goods and services sold by most other retail establishments increased by about 10 percent. Expenditures for some consumer services, for example, medical care, rent, and services of public utilities, are not covered by retail trade statistics available for western states. However, for the entire United States, spending for such services rose significantly in 1956. Paralleling the reduction in expenditures for automobiles, and together with the relatively *The western region includes all T w elfth D istrict states and M on tana, W yom ing, Colorado, and N ew M exico. small growth of furniture and appliance sales, consumer investment in new homes was sharply reduced in 1956. A n estimation of the drop can be obtained from the value of building permits issued in the first nine months of 1956. (See Table 2.) During this period permit valuations in the Twelfth District were 16 percent below the figure for the comparable period in 1955. F or the United States as a whole the drop was somewhat smaller. In both the District and the nation de clines in the number of residential permits issued were more sizable than the drop in valuations. The difference can be attributed to a rise in build ing costs and to the continuation of a trend toward the construction of larger and more elab orate homes. Although consumers increased over-all spend ing, the physical quantity of goods and services purchased did not increase by an equivalent amount, because of increases in prices. The con sumer price index rose nearly 3 percent from De cember 1955 to the end of 1956. Most major components of the index showed gradual in creases during the year, although particularly sharp jumps occurred in the food index between April and July and in the transportation index from September to October. Income paym ents rise in 1 95 6 Although complete data on personal income payments in 1956 for individual states will not be available until later in 1957, several factors suggest that Twelfth District gains will be sub stantial. A s discussed above, District farm in come in 1956 will show a gain from 1955. W age income received by workers in the District, which usually accounts for about 70 percent of total income payments, certainly rose during 1956. 25 FEDERAL RESERVE B A N K Not only were employment gains sizable but, in addition, nearly all new collective bargaining contracts during the year provided for wage in creases. O f some importance, also, is the fact that work weeks in the majority of industries averaged longer during 1956 than in 1955. T o gether these factors raised average weekly wages earned during 1956 in manufacturing, trade, con struction, and other nonmanufacturing industries above 1955 levels in all District states. The effect of some of these gains on income was offset by strikes ; but, in general, fewer man-days were lost from this cause in District industries in 1956 than in 1955. OF SAN FRANCISCO In California, which accounted for 70 percent of income received in the Twelfth District in 1955, personal income payments in the first two quarters of 1956 were at a rate 10 percent above the first half of 1955, according to the State D e partment of Finance. In the third quarter the margin w7as slightly lower, 8.5 percent. F or the year the gain is expected to be a little less than 10 percent. This is larger than the 8 percent gain from 1954 to 1955. It is not certain, however, that other District states, particularly those where lumber manufacturing or livestock farming are important sources of income, will also show gains greater than those recorded from 1954-55. increased Government Outlays Contributed to the Rise in Business Activity in 1956 The exact amount of total spending in the Twelfth District by Federal, state, and local gov ernments for goods and services in 1956 is not available. H owever, there is no question that District business activity benefited from an in crease in defense expenditures here by the Fed eral government and also from increased spend ing by state and local governments. O f particular significance to the Twelfth Dis trict is the fact that there has been an increase in Federal outlays for aircraft and missiles in recent years. Contracts awrarded for military procure ment and construction in District states in the year ending September 1955 amounted to about $3 billion. In the succeeding 12-month period the value of such contracts awarded jumped to $4.8 billion, an increase of 56 percent. California con sistently received a larger share of military con tract awards than any other state, approximately 18 percent of the national total. The District’s share of the total increased from 21 to 23 percent from the year ending September 1955 to the year ending September 1956. Although military con struction in the United States increased from 1955 to 1956, the large employment increases in aircraft and ordnance noted above indicate that aircraft and missiles probably account for a m ajor portion of the gain in total military con tract awards from 1955 to 1956. 26 Increased employment in Federal, state, and local governments also contributed to the rise in business activity during 1956. The number of government employees in the District in 1956 rose 5 percent above the 1955 level. This gain was larger than the increase of slightly more than 3 percent from 1954 to 1955. State and local units accounted for about 85 percent of the 1955-56 gain, reflecting the rapid expansion of the Dis trict’s teaching force. O f all m ajor nonfarm in dustries in the Twelfth District, only manufac turing and trade added more workers than did the government sector in 1956. In addition to contributing to the rise in em ployment, state and local governments increased capital outlays for highways, educational facili ties, sewer and water projects, and other types of public construction in 1956. Nationally, the value of state and local construction put in place through November 1956 was 11 percent greater than in the same period in 1955. In particular, highway and sewer and water projects showed large percentage increases of 13 and 18 percent, respectively. Public construction requiring permits, which generally includes only buildings in metropolitan areas, showed gains in dollar value for educa tional buildings and public buildings of 24 and 17 percent respectively in District states (see February 1957 M O N T H L Y REV I E W C hart 5 RELATIVE S H A R E OF I N C R E A S E IN T W E L F T H D I S T R I C T NONFARM EMPLOYMENT BY MAJOR I NDUS T RY GROUPS, 1 9 55- 5 6 Table 2 ) in the first nine months of 1956 com pared with the corresponding period of 1955. Additional evidence suggests that publicly fi nanced construction will continue to expand in the Twelfth District in 1957. New security offer ings of $1 million or more by state and municipal governments in the District in 1956 were about 17 percent greater than in 1955. In California alone, spending by the state government for high ways, buildings, water development projects, and schools is expected to rise in the 1956-57 fiscal year by more than 40 percent above capital out lays in the 1955-56 fiscal year. W hile the value of school construction is expected to continue rising, the largest increases are anticipated in connection with the national highway construc tion program. State and Federal spending under the program in the Twelfth District is expected to total about $1.2 billion from July 1956 through June 1959. Together, Federal, state, and local govern ments account for a significant share of total per sonal income payments in the District economy. In 1955 about 20 percent of such payments stemmed from governmental sources. This in cluded wages and salaries paid (less social se curity taxes), benefits received by individuals under various welfare programs, and interest payments on government securities. W hen gov ernment purchases of goods and services from business firms are also taken into account, it is clear that a sizable fraction of total District in come stems ultimately from government spend ing. Information on the total amount of Federal, state, and local taxes withdrawn from income in the Twelfth District is not available on a current basis. However, state and local governments in the District, by increasing bonded indebtedness, have been able to increase expenditures by an amount greater than the increase in tax revenues. Moreover, the District’s share of Federal ex penditures, particularly large in the case of na tional defense, exceeds Federal taxes collected in the Twelfth District. It is expected that state, local, and Federal government expenditures will continue to pro vide stimulation to the economy of the Twelfth District in 1957. Further increases in public out lays are anticipated in connection with the evermounting need for schools, highways, and other types of publicly financed construction. M ore over, the proposed Federal budget for fiscal 1958 calls for an increase in national defense expendi tures of $2 billion, including a $50 million reduc tion in expenditures for aircraft but a $500 mil lion increase in outlays for missiles. W hen the expected increases in outlays by various levels of government are added to the moderate increases that seem in prospect for business spending on new commercial and industrial facilities and for consumer spending, it appears that the Twelfth District will continue to grow in 1957. 27 FEDERAL RESERVE B A N K OF SAN FRANCISCO BUSINESS IN DEXES — TW E LFTH DISTRICT* (1947-49 a v e r a g e s 100) 1 o ta l n o n a g r i- T o t a l C a r c u ltu r a l m f 'g lo a d in g s E l e c t r i c e m p lo y e m p lo y ( n u m C o p p e r3 p o w e r m ent b e r)2 m ent I n d u s t r i a l p r o d u c t i o n ( p h y s ic a l v o lu m e ) * Year and m o n th P e t r o le u m 3 Lum ber C ru d e R e f in e d C e m e n t Lead* 95 40 71 104 100 113 113 110 118 111 121 116 87 52 67 101 99 98 106 107 109 100 106 105 78 50 63 100 103 103 112 116 122 119 122 129 54 27 56 104 100 112 128 124 130 133 145 156 165 72 93 105 101 109 89 87r 77 r 71 r 75r 77 105 17 80 101 93 113 115 112 111 101 118r 128 29 26 40 101 108 119 136 144 161 172 192 210 1955 D ecem ber 116 106 120 130 63 119 1950 January Febru ary M arch A pril M ay June July A u gu st S eptem ber O ctob er N ovem ber D ecem b er 118 113 112 116 122 129 121 118 113 109 113 112 106 106 105 105 105 105 105 105 104 104 104 103 130 128 128 122 129 125 132 128 136 128 135 132 135 145 149 160 173 161 160 171 168 163 146 139 71r 79/76 r 82 74 82r 75 84 r 78 81 79 72 134 129 131 140 135 135 110 123 122 127 123 123 1929 1933 1939 1948 1949 1950 1951 1952 1953 1954 1955 1956 R e t a il D e p’t s to re fo o d s a le s p r ic e s 3. 4 ( v a lu e ) 2 W a te rb o rn e f o r e ig n t r a d e 3* 6 E x p o rts Im p o rts ‘ i0 2 99 103 112 118 121 120 127 134 ' *55 102 97 105 120 130 137 134 143 152 102 52 77 100 94 97 100 101 100 96 104 104 30 18 31 104 98 105 109 114 115 114r 122 129 64 42 47 103 100 100 113 115 113 113 112 114 190 110 163 86 85 91 186 171 140 131 164 124 72 95 98 121 137 157 200 308 260 307 198 130 149 98 123 112 164 328 199 204 219 203 211 215 212 212 209 217 216 210 131 132 132 133 133r 134 134 135 135 136 137 138 149 150 150 150 152 153 152 153 153 154 156 159 107 99 103 105 107 105 102 101 107 102 100 106 130 124 128 131 122 126 132 131 131 130 132 131 112 111 112 113 113 114 115 114 114 115 116 116 136 126 150 175 183 204 215 207 212 253 354 323 395 397 519 427 559 500 459 563 B AN K ING AN D CREDIT STA T ISTIC S— TW ELFTH DISTRICT (a m o u n ts in m illio n s o f d o lla rs ) M e m b e r b a n k re s e rv e s a n d r e la t e d it e m s is o n a it io n it e m s o r a il m e m o e r b a n k s 0 Year and m o n th Loans U .S . and G o v ’t d is c o u n ts s e c u r itie s Dem and T o ta l d e p o s its tim e a d ju s t e d 7 d e p o s its 2,239 1,486 1,967 5,925 7,093 7,866 8,839 9,220 9,418 11,124 12,613 495 720 1,450 7,010 6,415 6,463 6,619 6,639 7,942 7,239 6,452 1,234 951 1,983 8,536 9,254 9,937 10,520 10,515 11,196 11,864 12,169 1,790 1,609 2,267 6,255 6,302 6,777 7,502 7,997 8,699 9,120 9,424 1956 January F eb ru ary M a rch A p ril M ay June July A u gu st S eptem ber O ctob er N ov em b er D e ce m b e r 11,193 11,323 11,476 11,669 11,837 12,030 12,157 12,173 12,423 12,384 12,504 12,804 7,143 6,819 6,731 6,730 6,566 6,482 6,396 6,439 6,491 6,468 6,431 6,383 11,794 11,233 11,112 11,530 11,144 11,262 11,392 11,356 11,581 11,747 11,867 12,078 9,070 9,095 9,103 9,099 9,139 9,294 9,233 9,286 9,305 9,326 9,235 9,356 1957 January 12,488 6,505 11,812 9,587 1929 1933 1939 1949 1950 1951 1952 1953 1954 1955 1956 Bank r a te s o n s h o rt-te rm b u s in e s s lo a n s 8 F a c to r s a f f e c t in g re s e rv e s : R e s e rv e bank c r e d it9 _ 0 110 192 930 - 1 ,1 4 1 — 1,582 - 1 ,9 1 2 - 3 ,0 7 3 - 2 ,4 4 8 - 2 ,6 8 5 - 3 ,2 5 9 + 23 + 150 + 245 + 378 + 1 ,1 9 8 + 1 ,9 8 3 + 2 ,2 6 5 + 3 ,1 5 8 + 2 ,3 2 8 + 2 ,7 5 7 + 3 ,2 7 4 — 84 87 71 82 22 5 6 4 3 5 0 17 - 322 76 178 270 233 405 143 315 454 417 143 303 + + + + + + + + + + + + 136 95 188 371 217 341 240 247 466 312 209 451 + 33 - 558 + 249 + + + + — + + + 4.34 + + 4.44 + 4.57 + + — 4.65 T re a s u ry 34 2 2 13 39 21 7 14 2 38 52 — 3.20 3.35 3.66 3.95 4.14 4.09 4.10 4.50 C o m m e r c ia l 10 M o n e y in c ir c u la t i o n 9 _ — + — + + + + — — + + + — — — + + Bank d e b it s 1n d e x 31 c it ie s 3' i* R e s e rv e s 11 (1 9 4 7 -4 9 = 100)* 6 18 31 65 14 189 132 39 30 100 96 175 185 584 1,924 2,026 2,269 2,514 2,551 2,505 2,530 2,654 42 18 30 102 115 132 140 150 168 172 191 99 7 35 7 47 32 8 103 59 2 38 38 2,554 2,488 2,516 2,578 2,498 2,404 2,519 2,565 2,640 2,542 2,579 2,654 188 179 183 190 182 186 197 201 184 197 197 202 144 2,548 208 1 A d ju s te d fo r seasonal variation , e x ce p t where in d ica ted . E x ce p t fo r dep a rtm en t store statistics, all indexes are based u p o n data fro m o u tsid e sources, as fo llo w s : lum ber, C a liforn ia R e d w o o d A ssociation and U .S. B u reau o f the Cen sus; petroleu m , cem ent, cop p er, and lead, U .S. B u rea u o f M in e s ; electric pow er, F ederal P ow er C om m ission ; nonagricultural and m an u factu rin g em p loy m en t, U .S. B u reau o f L a b o r S tatistics an d co o p e ra tin g state agencies; retail fo o d prices, U .S. B u rea u o f L a b o r S tatistics; carloadings, variou s railroads and railroad associa tion s; and foreign trade, U .S. B u rea u o f the Census. 1 D a ily average. * N o t ad ju ste d fo r seasonal variation . * L os Angeles, San F ran cisco, an d S eattle indexes co m b in e d . 5 C om m ercia l ca rg o on ly, in ph ysical volu m e, fo r L os A ngeles, San F ran cisco, San D iego, O regon , and W a sh in gton custom s d istricts; startin g w ith Ju ly 1950, “ spe cial c a te g o r y ” e xp orts are exclu d ed because o f secu rity reasons. 6 A n n u al figures are as o f end o f year, m o n th ly figures as o f la st W ed n esd a y in m on th . 7 D e m a n d deposits, e xclu din g interbank and U.S. G o v ’ t deposits, less cash item s in p rocess o f co lle ctio n . M o n th ly data p a rtly esti m ated. 8 A v era g e rates on loans m ade in five m a jo r cities. • C h anges fro m end o f p rev iou s m o n th o r y ear. 10 M in u s sign in d ica tes flow o f fu n ds o u t o f the D istrict in the case o f com m ercial operations, and excess o f receipts o v e r disbursem ents in the case o f T reasu ry operation s. u E n d o f year and end o f m on th figures. 12 D e b its t o to ta l deposits e x ce p t in terb an k p rior t o 1942. D e b its t o d em a n d dep osits e x ce p t U .S. G o v e rn m e n t an d interbank deposits fro m 1942. £— P relim inary. r— R ev ised. 28
@FedFRASER