Full text of Economic Review (Federal Reserve Bank of San Francisco) : February 1958

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i
TWELFTH

FEDERAL

FEDERAL RESERVE

RESERVE

BANK

February 1958^

DISTRICT

SAN

FRANCISCO

^ ^ ^
1957— A Record and a Turning Point.

1957 - A

R E C OR D A N D A T U R N I N G P O I N T

Twelfth District economy moved to a new
high in 1957, setting records for the year as a
whole but slowing to a downturn by the fourth
quarter. Economic developments in the District
matched those of the nation fairly closely, with
the first half gain in over-all activity more pro
nounced here than in the nation and the subse
quent decline slightly less in the District than na
tionally.

h e

For the year as a whole, total spending on
goods and services in the nation increased about
5 percent; but price increases limited the gain in
real terms to less than 1 percent. The factors
which led to the slowing of this national boom
and the subsequent downturn were a leveling
and then a decline in business fixed investment in
real terms, a drop in Federal purchases of goods
and services, a reduction in residential construc
tion from the preceding year, and a decline in in
ventory investment. A sharp rise in the United
States export surplus during the first quarter
provided a fair amount of strength early in the
year. Even though the surplus continued to run
above 1956 for the year as a whole, it slipped
from the first quarter peak removing a good part
of the support it had provided early in the year.
The District developments varied from those
nationally only to a moderate degree. Exports
through District ports rose sharply and to a
greater extent than for the nation during the first
quarter, and the subsequent national decline was
smaller than in this District. Residential construc
tion was somewhat weaker here than in the na
tion. Changes in inventory policies and plant and
equipment spending tended to depress some
Twelfth District durable goods industries, but
the effects were less pronounced and appeared
somewhat later here than in the nation. The
sharpest impact on the District resulted from the
downturn in defense procurement which reduced
activity in the District aircraft industry. By the
end of the year, the District decline was fairly
close to that for the nation as a whole.
W hile the nonagricultural segments of the
economy clearly reflected the turnabout in activ
ity, there was little over-all change in farm in
come. Nevertheless, there were many shifts in
18

the fortunes of specific segments of District agri
culture between 1956 and 1957. Production set a
record, and livestock prices rose; but a sharp de
cline in crop prices reduced District farm income
slightly. This drop, however, was smaller than
that in the nation.

Large Demand for Funds
The high level of national economic activity for
the year as a whole was accompanied by a large
demand for loanable funds of various types,
although the composition of the demand was
substantially different from that in the preceding
year. The demand for funds in the securities
markets was much larger than it had been in
1956, whereas the growth in mortgage and con
sumer debt and in bank loans (excluding mort
gage and consumer) was substantially less in
1957 than in 1956. Total credit at commercial
banks, including both loans and investments, in
creased about $5 billion during 1957, a somewhat
greater rise than in 1956. However, the privatelyheld money supply, demand deposits adjusted
and currency outside banks, declined about $800
million during 1957, reflecting, in part, a shift
from demand to time deposits as a consequence
of an increase at many banks in the interest rate
paid on the latter. The decline in the money
supply was more than offset, on the other hand,
by a 7 percent increase in velocity over 1956, so
the effective supply was larger than in the prior
year.
In 1957, $12.4 billion of corporate securities
for new capital were sold, which is a record vol
ume and is approximately $2 billion greater than
in 1956. Sales of municipal securities, totaling
almost $7 billion, were $1.5 billion larger than in
1956 and virtually equalled the preceding peak
year in 1954. The Treasury’s need for funds was
also significantly greater than in 1956, particu
larly in the first half of the year. The large volume
of corporate and municipal securities sold was
directly related to the high level of private and
public expenditures on plant and equipment.
Sales of corporate securities were larger in the
first than in the second half of the year, reflecting
the decline in plant and equipment expenditures

February 1958

M ON THLY REVIEW

which began in the fourth quarter and which is
expected to continue in 1958. In contrast, sales of
municipal securities, stimulated by the drop in
interest rates toward the end of the year, reached
their 1957 peak in the fourth quarter.
The increase in mortgage debt was roughly $3
billion less in 1957 than in the year before. This
was due in part to the fact that the rise in interest
rates generally made federally-backed mort
gages with their fixed contractual interest rates
relatively unattractive to investors. Consumer
credit outstanding also expanded somewhat less
in 1957 than in 1956. This was the result not of a
lower level of credit extension but rather of a
higher rate of repayment.
The much smaller increase in bank loans in
1957 than in 1956 was due to the business situ
ation as well as to the monetary restraint that
prevailed until late in 1957. Since an important
use of business loans is the financing of business
inventories, the small growth in such loans was
directly related to the negligible net investment
in inventories in 1957 compared with a substan
tial growth in 1956.
Lo a n s a n d investments of Twelfth District
b a n k s rise slow ly

In the Twelfth District, as in the country as a
whole, the volume of bank loans outstanding con
tinued to expand in 1957 but at a much slower
rate than in the two preceding years. Chart 1
gives some indication of the relative rates of
growth of various resource and liability items of
District weekly reporting member banks during
the past three years of economic boom. The
growth in total loans at these banks last year was
only about one-fourth as large as in each of the
two preceding years. Partly because of the dimin
ished loan demand and also because the banks
wished to increase their liquidity position, bank
holdings of United States Government securities
increased somewhat during 1957 in contrast to
substantial declines in the preceding two years.
The increase in total loans in the District was
due almost entirely to gains in business loans;
but, like the national increase, it was much less
than in 1956. Real estate loans outstanding at
banks declined throughout 1957, largely because
federally-backed mortgages were not very attrac-

C hart 1

PERCENTAGE

CHANGES

IN S E L E C T E D B A L A N C E S H E E T
OF C O M M E R C I A L B A N K S
TWE L F T H DISTRI CT

ITEMS

I95S- I 957

T O T A L LOANS

C& I LOANS

REAL E S T A T E LOANS

OT HE R LOANS

U.S. S E C U R I T I E S

DEMAND DEPOSI TS

ADJ.

T I ME DEPOSI TS

1 D ata for Federal Reserve reporting member banks only.
Source: Federal Reserve Bank of San Francisco.

tive to lenders in view of the general rise in inter
est rates. Although consumer loans showed a net
gain for the year, they declined in the fourth
quarter partly as a consequence of disappointing
sales of automobiles and household appliances. A
small part of the increase in total loans in the
fourth quarter of 1957 arose from a growth in
brokers’ loans.
Contrary to the usual seasonal pattern, most of
the expansion of business loans at District banks
in 1957 was concentrated in the first half of the
year. Metals and metal products producers, for
example, increased their bank debt by $80.5 m il
lion in the first half of the year but reduced their
indebtedness by $417 million in the second half.
The same debt pattern, an increase in the first
half and a reduction in the second half, was fol
lowed by public utilities and transportation firms
and by sales finance companies. Industries
which typically increase their borrowings after
the middle of the year, such as food, liquor, and
19

FE DE R AL R E S E R V E B A N K O F S A N

tobacco producers and wholesale and retail trad
ers, borrowed less in the second half of the year
than they did in the corresponding period of
1956. D uring the year, the lumber industry de
creased its bank loans because of reduced de
mand for its product.

FRANCISCO

C hart 3

R E S E R V E P O S IT IO N OF M E M B E R B A N K S
M I L L I O N S OF D O L L A R S

UNITED

STATES

Interest rates rise sharply,
but fall late in year

The large demands for funds during most of
the year, coupled with a policy of monetary re
straint, forced short-term interest rates to the
highest levels since the late 1920’s and early
1930’s. Long-term rates also rose substantially
but remained below the levels of the early 1930’s.
As a consequence of generally rising interest
rates, (Chart 2) many District banks increased
interest rates paid on their time deposits effective
January 1, 1957. Growth in these deposits that
resulted from the change was both sharp and
substantial. The increased costs involved, how
ever, were also substantial and were largely re
sponsible for limiting the 1956-57 gain in net
profits of District member banks to a relatively
small amount.
Yields on securities of various types reached
their peaks in the August-November period
(Chart 2) but declined sharply toward the end of
the year as business activity dropped off and
monetary policy shifted from restraint to ease.
Federal Reserve Banks reduced their discount
rates from
to 3 percent in the last half of N o
vember, and the reserve position of commercial
C

SELECTED

hart

IN T E R E S T RATES

F.R. O IS C O U N T R A T E . N.Y.

Source: Board of Governors of the Federal Reserve System.

I 1 I I l'9|
57| I I

Source: Board of Governors of the Federal Reserve System.

banks was improved through purchase of Gov
ernment securities by the Federal Reserve Sys
tem during the last few weeks of the year. Chart
3 shows the marked improvement in reserve po
sition of member banks that occurred toward the
end of the year. Monetary policy continued to
shift toward greater ease early in 1958; and in
January, for the first time in a year, the excess
reserves of member banks exceeded their bor
rowings from Federal Reserve Banks (on a
monthly average basis). Furthermore, nine Re
serve Banks reduced their discount rates to 2Y\
percent during January.

Business A ctivity Sets N e w Record
Despite Second H a lf Decline
Although economic activity in the Twelfth
District reached a new peak in 1957, it turned
down after mid-year because of a decline almost
entirely concentrated in nonagricultural com
modity producing industries. A reduced rate of
increase in fixed investment by business, changes
in inventory policies, substantial modifications
in military procurement programs, and a further
drop in the construction of single-family dwell
ing units were the principal forces inducing the
decline. U ntil mid-year, economic activity in the
Twelfth District extended the expansion of the
two preceding years, but the rate of increase was
substantially smaller. In the first six months of
1956, nonagricultural employment increased

M O N TH LY REVIEW

February 1958

more than 2 percent, while the gain between De
cember 1956 and June 1957 was only 1 percent.
Activity in trade, finance, services, transporta
tion, and government continued to expand; but
declines in construction and in mining restrained
the over-all growth. Manufacturing recorded an
increase in employment, but hours of work fell
sufficiently so that probably little change oc
curred in total manufacturing output during the
first half of the year.

C hart 4

M A N H O U R S OF
M A N U F A C T U R IN G PRODUCTIO N W O R K E R S
PACIFIC COAST I N D U S T R I E S
( S E A SO N AL L Y A D J U S T E D MONTHLY DAT A)
-10
IU

-5
°

T
P

ercknt

h a n g e in

w elfth

able

DURABLES

I
F U R N ITU R E

I
METALS

I
M AC HINER Y

I
T R A N S .a EQUIP.

I
OTHER DU R ABLES

DEC.36-JUNES7

■I
J UNE 57 - DE C . 57

[=□

NONDURBLES

I
FOOD PRODUCTS

I
T E X T IL E S

I
PAPER PR O D U C T S

I
PRINTING
OTHER

m ploym ent

U n i t e d S t a t e s , 1957
(Seasonally adjusted)
Percent
T w elfth
D istric t
D ec. ’56- Ju n e ’57Ju n e ’57 D ec. *57
+ 1.1
— 1.4
+ 1.3
— 4.9
— 2.5
— 2.8
— 5.3
— 1.3

+ 1.2

— 2.3

+ 1.2

— 0.7

+ 2.7
+ 2 2
+ 2 .0

+ 0.5
+ 1.3
+ 1.3

v
t

States
:i
Dec. *86* J u n e *57' -Jufie *57 W . f-'i
’

+ 6 ,4

(

+ *>*

ig iill
IS IIlil

NONDUR.

Source: State em ploym ent agencies.

change

Sources: U. S. Departm ent of Labor and State em ploym ent agencies.

LUMBER

o n a g r ic u l t u r a l

is t r ic t a n d

T ota l
M a n u fa c tu r in g
M in in g
C on trac t C on struction
T ran sp ortatio n, C o m
m u n ic a tio n , E lectric,
G as, and S an itary
Services
W hole sale and R e tail
T rade
F ina n ce , In su ra n c e , and
R e a l E state
Services
G o v ern m en t

+5 P E R C E N T
CHANGES

TOTAL MANUE

After June, strikes in construction and metal
fabricating forced a decline in nonagricultural
employment during July and August. (Table 1)
Termination of the strikes failed to offset declin
ing activity induced by other forces, and employ
ment continued to drop slowly until the end of
the year. Despite the decline for six months, the
number of people at work in non-farm jobs at
the close of 1957 was approximately the same as
a year earlier.
Almost all of the weakness which became evi
dent in the second half of the year was associated
with commodity producing industries. M anu
facturing, despite an increase in employment
during the first half of the year, registered a
small decline in man-hours worked between De
cember 1956 and June 1957. W hile employees
were added in a number of lines, overtime was
eliminated or regular work weeks shortened in
canning, aircraft, paper, and metal producing and
fabricating. During the second half of the year,
manufacturing employment declined substantial-

O
U

ilif iiit

+ L2

+ 1.4
+ 3LI

ly ; and man-hours worked fell even more sharp
ly. (Chart 4)
Construction activity slipped slightly in dollar
terms and somewhat more in physical output
during the year. The decline in building, which
has a higher labor intensity than highways and
other heavy construction, resulted in a sharp
drop in employment during the first half of the
year. Reduced demand for metals, cement, gravel,
and other products of mines resulted in lower
output in the extractive industries and a drop in
mining employment. Transportation, which de
21

FEDERAL R E SE RV E B A N K OF S A N

pends to a great extent upon movement of goods,
reacted to the reduced levels in the commodity
producing industries; and employment slipped
there in the second half of the year.
In contrast to the commodity producing in
dustries and closely allied transportation activ
ities, most other major lines of activity continued
to move ahead. Growth of population, suburb
anization of various types of establishments ca
tering to individuals and business, and the need
to provide public services such as education re
sulted in further employment growth in trade,
finance, services, and government. However,
trade employment, on a seasonally adjusted
basis, slipped a minor amount in the second half
of the year but continued to run above the yearago level. Government employment expanded
throughout the year, even though military estab
lishments in the District reduced their staffs.
M a n u fa ctu rin g activity re d u ce d
b y variety of fo rce s

The decline in District manufacturing activity
reflects response to a variety of forces. Most ob
vious, of course, is the change in the defense pro
gram which led to half the decline recorded in
manufacturing employment. The decline induced
by non-military factors was somewhat milder
here than in the nation; and, if the aircraft and re
lated industries had held their June level, the drop
in manufacturing activity would have been less
sharp in the District than nationally. However,
the effects of reduced plant and equipment
outlays, changes in inventory practices, and the
continuing softness in residential construction
tended to reduce District manufacturing output.
Most prominent in the response to reduced civil
ian demand was the lumber industry, which
showed slight strength early in the year but
slipped markedly after the spring upsurge.
Paper output declined sharply in the first half of
the year and slipped somewhat further in the sec
ond half, principally as a result of inventory re
ductions by wholesalers, converters, and other
large consumers. The change in inventory policy
in the paper market reflected the expanded ca
pacity of paper mills. The increased capability of
mills to produce paper cut the need for building
inventories to protect against supply shortages.
22

FRANCISCO

Expanded capacity in industry, generally, af
fected the demand for many types of District
machinery', primary metals, and fabricated met
als, as spending on producers’ equipment slipped
nationally. Consumer spending on durables as
well as investment in the business and residential
sectors was a depressive force in some segments
of manufacturing. The District furniture indus
try sagged throughout the year, particularly in
the second half of 1957. Though appliance and
television production is less important in the
District than in the nation, trade reports suggest
that local producers cut their output in 1957 at
about the same rate as national manufacturers.
Turnabout in aircraft

Aircraft plants in the Twelfth District account
for approximately 35 percent of national produc
tion of planes and related products. Moreover,
many of the models produced in this District
have in the past been keystones in the defense
program. Thus, in 1953 when military procure
ment was reduced sharply and some aircraft
and parts contracts were cancelled, Twelfth Dis
trict plants escaped reductions and continued to
expand. In 1955 and 1956, the expansion in the
aircraft and related industries was a prominent
factor in the growth of activity in the District. In
the first half of 1957, the industry continued to
add employees; this addition accounted for more
than 70 percent of the rise in manufacturing em
ployment.
Effective in May, the Defense Department,
recognizing that the pace of output in plants pro
ducing aircraft, missiles, and components re
quired payments that would exceed budgeted
outlays, sharply restricted overtime hours in air
craft production. In June, the Navaho missile
program was terminated; but the impact on em
ployment was initially much less than anticipated,
as other plants absorbed many of the released
workers. Subsequent reductions, stretchouts in
other programs, and a temporary cessation of
new contract awards accelerated the decline in
employment. Loss of jobs in the second half of
1957 was almost twice as great as the increase in
the first half of the year, so employment w7as be
low the year-ago level at the end of 1957.

February 1958

M ONTHLY REVIEW

Almost coincident with the cutback in manned
aircraft, there emerged an intensified emphasis
on missiles. W hile missile production increased
nationally in 1957, accounting for 20 percent of
defense output by the aircraft industry, the rate of
increase was insufficient to offset other cuts in
production for the military. It is anticipated that
35 percent of the deliveries to the military by
aircraft firms will be in the form of missiles at
the end of 1958. Unfilled orders for missiles may
comprise at least 50 percent of military backlogs
at aircraft firms. Total dollar deliveries to the
military will probably exceed 1956 but may be
5 to 10 percent below 1957. In terms of number
of workers, missile output is less labor intensive
than airplane production; and the industry ex
pects a smaller work force in aircraft and related
lines during 1958 than in 1957.
Commercial aircraft orders and backlogs have
continued to grow as the imminent advent of
jet transportation has induced airlines to expand
acquisition programs. A t the end of 1957, the na
tional order backlog of airplanes carrying 36 or
more passengers amounted to over 700 units val
ued at $2,250 million. Pacific Coast companies
have orders for 642 of these planes. W hile most
of the airplanes will not be delivered in 1958,
a substantial part of the work will be performed
this year. W ork on civilian projects may account
for a fourth or more of the Twelfth District’s
output of aircraft and missiles in 1958, compared
with about 18 percent in 1957 and 15 percent
in 1956.
Steel industry in readjustm ent

Twelfth District steel production reached a
new high in 1957, approximately 5 percent above
the previous record in 1956. Responding to the
change in tone in the general economy, the Dis
trict steel industry entered a readjustment phase
after mid-year. During the first half, District
steel producers operated at close to capacity
levels. This contrasted sharply with the situation
nationally, since the rate of output in the industry,
generally, started to fall early in the year. The
difference in experience is illustrated in the ac
companying chart for the United States and the
Western steel region, which includes only one
large producer outside this District. (Chart 5)

After June, Western output started to drop and
in the closing months of the year reached a per
cent of capacity close to that of the nation.
Demand for products produced in District steel
mills was quite large in the first half of 1957.
Orders for steel items used in construction were
at a high level, and steel consumers continued
to accumulate inventories. District producers
were not significantly affected by the reduced
demand for automobile steel, which is an im
portant factor in other parts of the nation. In the
second half of the year, many consumers of Dis
trict steel products reduced inventories sharply ;
there was some softening in orders for construc
tion items; activity in machinery and fabricated
metals dipped; and the demand for tin-plate
dropped because of a reduced pack of canned
goods. A t the same time, the price of steel rose
$6 a ton in July as producers reacted to increased
wages and other expenses.
The Twelfth District steel industry continued
to increase its production facilities in 1957, but
only about 200,000 tons of ingot potential were
completed in time to be included in January 1,
1958 capacity figures. A t the beginning of 1958,
facilities with an ingot capacity of more than 1.4
million tons were under construction, but the
outlook for the short run has induced a stretch
out in the major portion of this program.
C

hart

S T E E L O P E R A T I O N S AS
P E R C E N T OF C A P A C I T Y
W E STERN D I S T R I C T E D UNITED STATES

1 Includes eleven western states. O nly one major western producer of
steel is located outside the Twelfth Federal Reserve District.
Source: American Iron and Steel Institute, “ M o nthly Capacity and
Production Reports.”

FE DE R AL R E SE RV E B A N K O F S A N

Lumber output continues decline

Lumber production in the Twelfth District fell
by 8 percent during 1957. A brief upsurge in out
put early in the year gave way to an almost un
broken decline, after allowance for seasonal fac
tors, beginning in April. Housing starts nation
ally, an important determinant of demand for
District lumber, fell below the 1956 volume;
and lumber output exceeded shipments, which
raised inventories in the first quarter. Though
housing starts rose after March, the gain was in
sufficient to generate any important increase in
demand. W ith inventories quite heavy, Douglas
fir mills cut output below shipments for the re
mainder of the year. Even though inventories
were reduced at mills producing Douglas fir,
the ratios of stocks on hand to unfilled orders
and to shipments at the end of the year were
higher than at the close of 1956. In the Western
Pine region, inventories fell through mid-year
and then increased to a level slightly below that
at the end of 1956. A t redwood mills, the decline
in output was exceeded by the drop in shipments,
and inventories rose absolutely as well as in re
lation to orders and sales.
The effect of the weak markets for lumber
was a drop in prices during the year. Douglas
fir prices were off about 6 percent, and ponderosa pine prices slipped somewhat more, but
redwood prices remained fairly steady. A t the
end of the year, the District lumber industry was
still confronted by weak demand. Available evi
dence, however, suggested that no further down
ward pressure on housing starts was developing.
Forecasts by Government agencies indicated a
moderate upturn in residential starts during
1958. Such a development could lead to some
improvement in lumber sales.
Plywood output and sales increase

After a poor start early in 1957, the plywood
industry increased its output and shipments.
Production of Douglas fir plywood on a weekly
average basis increased about 3 percent over
1956. The gain proved surprising to producers
who had anticipated that they might not fare any
better than the lumber industry. Larger demand
from industrial consumers and increased use of
plywood in nonresidential construction more
24

FRANCISCO

than made up for the decline in sales to home
builders. Because of the shift in demand, pro
duction of unsanded grades expanded substan
tially. A t the end of the year, the industry re
garded prospects as fairly good, since the increase
in new orders had out-run the rise in production
during the year.
Price reductions may have been partly re
sponsible for the gain in sales and production.
Through July, prices averaged about 6 percent
above the depressed levels of late 1956 but were
almost 20 percent below the peak in the early
months of 1956. The relatively low level of prices
in the face of expanding demand stems from the
overhang of capacity. In 1957, productive capa
city in the Douglas fir plywood region increased
11 percent extending the growth of preceding
years; and during most of the year the industry
operated from 10 to 15 percent below capacity
levels. A temporary slump in orders in late sum
mer forced plywood prices down 6 percent;
but, in the fourth quarter, prices recovered all of
this loss. In early 1958, prices again fell to the
level of the late summer of 1957.
Petroleum inventories b u lge

Total production and imports of petroleum and
petroleum products in District Five1 exceeded
demand by almost 4 percent during 1957, so in
ventories accumulated steadily. Domestic pro
duction of crude oil was about 3 percent below
1956, but this decrease was more than offset by
imports. The first two months of 1957 were an
exception to the general trend, however. Because
of the petroleum shortage caused by the closing
of the Suez Canal late in 1956, District stocks of
petroleum and peti oleum products were draw^n
down by over 100,000 barrels daily during Jan
uary and February. In March, the situation
changed and inventories began to rise. By De
cember 31, 1957, petroleum stocks were 33 per
cent higher than on the same date in 1956.
Military demand for petroleum products in
District Five was 15 percent lower in 1957 than
in 1956. The curtailments in military orders were
undoubtedly a result, in large part, of the De
fense Department’s economy program. Civilian
1 D istrict Five includes California, Oregon, W ashington, Arizona, and
Nevada.

February 1958

M ON THLY REVIEW

TABLE 2
INDEXES OF INDUSTRIAL PROEUCTICN--TWELFTH
DISTRICT
( 19 1* 7 .J*9 : 10 0 )

In d u s tr ia l
production

1953

195k

1955

C o p p e r........................
80
113
L e a d ............................
93
87
Z i n c ............................
1*7
90
S i l v e r ........................
167
112
C o l d ............................ 23U
88
Iro n o r e ....................
9
194
S te e l i n g o t s ............
2k
139
Aluminum................................ ........ 121

1939

1952

111
~7T~
78
107r
89
209
158
165

101
71
0*
105
80
1W
128
177

118
129r
126
75
~79r~
~77~~
72
72r
7k
105
K5?r“
I 08
"85 ~79r
6?~~
178
220r
221
l$k
~I5T
~
186
197r
187

P e tro le u m ..................
Refined o i l s ............
N atural gas .............. 62

67
63

107
116

109
122
95

106
119
92

106
122
98

Cem ent........................
L im b e r ........................
wood p u l p ..................
Douglas f i r
p ly w oo d ..................

56
71
67

12k
116
1U8

130
118
157

132r
l l 6r
i»

1*5
12Ur
180

155
U S
I$2

171r

213 r

219r

273

295r

301

Canned f r u i t s ..........
Canned vegetables . .
M e a t........................ . .
sugar . . . . . v . . . . . . . . 97
F l o u r .......................... 91
B u tte r ........................ 178
American cheese . . . . 86
Ic e c re a m ..................

7k
It 3
63

103
162
116

110
H3
119
107
96
82
98
109

107
1U0
123
1 16
99
115
10U
105

130
179
139
109
103
103
90
107

1U2
225
lt»9r
1 13
105

129
195
138
120
106

95
96
66
6k
k6
109

1956

195TP

105
129
92r

101
132
87
lS$
155
I 88~~

97
88

86r
85
llU 'r

118

p prelim inary.
r revised.
Note: Data given above supersede a l l previously published annual indexes.

V___________ J
demand in this District was off by about 2 per
cent. H igh demand for gasoline bolstered civilian
demand, but consumption of heating oils and re
sidual fuel oil was down substantially. Several
factors were responsible— mild weather early in
the year, the switch to natural gas in the Pacific
Northwest, and the decline in industrial activity
in late 1957.
Mounting inventories were a nationwide prob
lem for the oil industry last year, partly as a re
sult of the great expansion in crude oil produc
tion. Although imports from abroad were di
verted to Europe in the early part of the year be
cause of the Suez crisis, this shortage was met,
imports began to climb again, and supply quickly
overtook dem and. P roduction was cut back
sharply in most of the major oil producing states,
and the Government set up quotas in late sum
mer under a voluntary program to limit imports
into areas other than District Five. Late in 1957,
import quotas for the West Coast were developed
which became effective January 1, 1958.
Petroleum prices still show the effect of the
Suez situation. Throughout most of 1956 the De

partment of Labor’s wholesale price index for
refined petroleum products on the West Coast
(1947-49=100) had been fluctuating between
114 and 119, but the Suez-induced increase in
demand caused it to jum p to 127 in December
1956. The index reached a high of 135.9 last
July and then dropped to 130.5 in October. It re
mained at that level through December, but
further price weakness may develop.
The import reduction effective January 1 will
tend to limit additions to inventories. Other fac
tors, however, may offset the effect of the import
cut. Increased supplies of natural gas in the Pa
cific Northwest are restricting the market for
fuel and heating oils, and the recent decline in
business activity may prevent the industry from
realizing its projected sales goals in other sectors.
It appears likely, therefore, that for some time
into 1958 petroleum supplies will run ahead of
demand.
Alum inum output d eclines

After four successive years of rise, the output
of aluminum in the Pacific Northwest declined
in 1957. In contrast, production nationally held
steady. The drop in Pacific Northwest produc
tion resulted from the reactions of users of interruptible power to the weather. Because of low
water levels last fall, the Bonneville Power A d
ministration found it necessary to reduce the
availability of interruptible power for aluminum
production. In other years when water levels
were low, aluminum producers accepted blocks
of power on a “provisional” basis. This required
aluminum firms to replace the low-cost hydro
electric energy with steam power, unless precip
itation brought water levels above the critical
point later in the season. Producers, in effect,
accepted a contingent increase in costs if water
levels were not restored. This year, some Pacific
Northwest firms refused to take the risk. The
demand for aluminum had dropped, inventories
were on the increase, and a rise in costs would
have led to the accumulation of expensive sup
plies. Producers in the Northwest, therefore,
chose to cut back production.
Nationally, aluminum inventories of 183,000
tons at the end of October were about three times
as large as a year ago. The three major producers
25

FE D E RA L R ES E R V E B A N K O F S A N

exercised their rights under contracts negotiated
during the defense-induced expansion of the
early 1950’s and sold substantial amounts of
metal to the Government. The oversupply of
aluminum resulted principally from a decline in
consumption in the residential construction in
dustry and a tendency for inventories in fabri
cators’ hands to be drawn down. Despite lower
demand and growing stocks, the price for ingots
was increased from 27.1 cents to 28.1 cents per
pound in August, reportedly because of higher
wages and other costs.
Capacity increased moderately during the
year, with production facilities outside this D is
trict expanding by 63,000 tons. In the Pacific
Northwest, Harvey Alum inum Company is ex
pected to complete a 54,000-ton plant in 1958.
Substantial capacity increases are also expected
at several points in other parts of the United
States.
Non-ferrous metals under downward pressure

The demand for copper, lead, and zinc dropped
substantially both in this country and abroad
during 1957. United States mine production of
the three metals fell 5, 5, and 6 percent, respec
tively, although production in the Twelfth D is
trict held up much better than in the nation be
cause of special circumstances. Copper dis
played price weakness as early as mid-1956 be
cause of improvement in the world supply. Sub
sequently, declining industrial activity in this
country, a lessening of expansion abroad, a de
cline in United States Government purchases of
metals, and a reduction of inventories in the
hands of users affected all three metals. Copper
prices fell from 46 cents in July 1956 to 25 cents
in late 1957. Lead and zinc prices did not start
falling until M ay 1957. By the end of the year,
zinc had dropped 3.5 cents per pound from a beginning-of-the-year price of 13.5 cents, and lead
had declined 3 cents from 16 cents per pound.
In view of these developments, the output
record in the Twelfth District might be regarded
as unusual. Copper production fell less than 3
percent. A n increase in Arizona, where a new
copper mine went into operation at Pima, offset
about one-third of the decline of other District
states. Even though Arizona recorded an in
26

FRANCISCO

crease in total output, most individual producers
cut their production by means of a shorter work
week. By the end of the year, many copper mines
throughout the District were on sharply reduced
work schedules, and some companies closed for
several days at a time in an attempt to obtain a
better balance between demand and supply.
Lead production also dropped less in the D is
trict than in the nation, but the margin was some
what narrower than for copper. In large part,
the slightly greater production of lead in this
District reflected a recovery of production in
Idaho, where a strike had reduced output in 1956,
and the opening of a new zinc mine in Arizona,
which resulted in some increase in m ining of
lead as a by-product. Zinc production increased
in contrast to the drop nationally. Again, the
recovery of production in Idaho and the new
mine in Arizona were the principal factors lead
ing to a difference in District and national results.
Despite the relatively high level of output for the
year as a whole, mine operators reduced work
schedules or closed mines at various times during
the year because of lower demand.
Changes in composition of construction

Two developments are quite apparent from an
analysis of the construction industry in the
Twelfth District during 1957. Employment in
the industry fell well below the 1956 level during
T

able

C o n s t r u c t io n C o n t r a c t s A
E

leven

w arded by

estern

r o je c t

ype

S tates

1956-1957
V alu atio n
(thousands of dollars)
1956
C o m m e rcia l b u il d i n g s ............
M a n u fa c tu r in g b u ildin g s . . .
E d u c a tio n a l a nd science
A ll o ther non-residential
b u ild in g s * ...........................
One- and two-fam ily houses.
O th e r re siden tial b u ild in g s * *
P u b lic w orks and u t ilitie s ..
T o ta l c o n s t r u c t io n ................

1957

558,965
463,274

579,160
369,302

569,101

575,172

610,779
2,448,259
372,178
1,961,930
6,984,486

580,219
2,282,019
474,012
2,051,856
6,911,732

Percent
change
+ 4
— 20
+

— 5
— 7
+ 27
+ 5
— 1

•In clude s hospital, public, religious, social and recreational, and
other miscellaneous non-residential buildings.
••In c lu d e s apartm ent buildings, hotels, dormitories, and other non
housekeeping residential structures.
Source: F . W . Dodge Corporation, Construction Contracts.

February 1958

MONTHLY REVIEW

C hart 6
most of the year and at
the end of the year was
8 percent helow the 1956
level. Contract awards,
on the other hand, were
off only slightly, about
1 percent, from 1956.
(Table 3) The decline in
1957
the West contrasted with
186,121 Units
a small gain nationally.
Most of the difference re
ONE AND TW O FA M ILY HOUSES
flected a steeper decline
210,927 Unite
in factory building here
than in the nation and a
weaker situation in home
CONSTRUCTION CONTRACTS AWARDED
b u ild in g in the W est
NUMBER OF DWELLING UNITS
than in the country as a
EL E V E N WE S TE R N SPATES 1956 AND 1957
whole. The much sharp
er decline in employment
than in contract awards
in the District primarily
reflects increased build
ing costs and a change in
the composition of the
types of activity. Con
struction costs rose from
3 to 6 percent in the im
portant building centers
of the District, so physi
Source: F. W . Dodge Corporation, Construction Contracts.
cal volume actually fell
Even in the first half of the year, the higher
more than dollar totals for contract awards would
volume of awards was accompanied by declining
indicate. Public works projects, which require
fewer construction workers per dollar of ex
employment of on-the-site labor. As noted ear
lier, heavy engineering, consisting of public
penditure than most other types of buildings,
increased while activity in many more laborworks and public utility structures, accounted for
intensive lines declined.
the increase. Construction of single-family homes
and some types of nonresidential building
In the first half of the year, a 45 percent ex
dropped. A large part of the decrease in dollar
pansion in heavy engineering contracts raised the
volume of single-family units was offset by in
total volume of awards 11 percent above the yearcreased apartment construction. (Chart 6) This
ago level. In the third quarter, the heavy engi
shift is important for a variety of reasons. It sig
neering volume dropped sharply from that in
nals a change in the composition of the demand
1956, and the subsequent recovery in the closing
for housing and also influences the number of peo
months of the year was not sufficient to offset
ple required in the construction trades. Single
continuing declines in awards for buildings.
family dwelling units are relatively large users
Total awards reached a higher monthly peak in
1957 than in 1956, with June 1957 awards of
of on-the-site labor. The industry claims, on the
$683 million well above any month in the prior
other hand, that multi-unit dwellings require
year; but the subsequent decline more than off
fewer workers at the job site. Consequently, em
set the first half gain.
ployment totals slipped; and many contractors

F E DE R AL R E SE RV E B A N K OF S A N

outside the heavy engineering field found activ
ity slow even in the first half.
Another important change during the year
was a 20 percent drop in factory building from
1956. It should be recalled, however, that the
1956 volume of industrial building was more
than double that in 1955, and the reduced level
of awards still leaves the District with a very
large volume of factory construction underway.
The dollar volume of contracts for commercial
structures increased somewhat, and gains were
also recorded for hospitals and public buildings.
In the latter part of the year, there were large
month-to-month fluctuations in awards charac
terized by weakness in most building groups and
wide swings in heavy engineering contracts. De
spite the lower volume of awards in the second
half of the year, employment tended to stabilize
starting in September. To some extent, a stead
ier volume of residential awards helped; but the
volume of work created by first half awards also
contributed to a more stable demand for labor.
The sharp swings in contract totals during the
closing months of the year, however, created
uncertainty about the future course of events.
Residential activity, though steadier than in the
early part of the year, continued to be relatively
low. Industry sources welcomed liberalizations
by the Federal Housing Administration of down
payment requirements, income standards for
home buyers, and discounts on mortgages in this
District. A t the same time, some house builders
appeared to hesitate in undertaking large proj
ects for fear demand may have been weakened
by the decline in business activity.
Canning stocks not quite so high

The District canning industry faced roughly
the same problem during most of 1957 as in
1956— supplies on hand were too large to be
absorbed by current demand, even after the stim
ulus of price cuts. Toward the close of the year
conditions improved somewhat. Crop failures in
other parts of the nation stimulated the demand
for canned tomatoes, and lower prices induced
a rise in sales of canned fruits. Generally, how
ever, stocks of most items were still quite large;
and the industry felt that inventories were above
desired levels.
28

FRANCISCO

Total packs of fruits and vegetables were re
duced below 1956 levels, according to incomplete
statistics now available. This resulted from suc
cessful industry efforts, aided by poor weather,
to trim the pack in order to offset a large carry
over from the previous year.1The 1957-58 supply
of nine major fruits was, however, only 1 percent
smaller than last year because heavy carryover
nearly offset a 12 percent cut in output. In Cali
fornia, the major vegetable packs— tomatoes, as
paragus, and spinach— were down 18 percent
from a year ag o; but total supplies, owing to the
large carryover, were lowered by only 2 percent.
Movement increased enough during the first
half of the current marketing year to reduce
January 1, 1958 stocks of California vegetables
by 6 percent and inventories of California fruits
by 1 percent from January 1957 levels. A variety
of factors induced this movement. Domestic de
mand for fruits was stimulated in part by lower
prices of most major fruit items. District canners
of tomatoes and tomato products experienced
increased demand stemming from crop failures
in other regions. Over 41 percent of the total sup
ply of California tomatoes and tomato products,
the major pack in the District, moved from can
ners’ hands during the first half of the year, com
pared with 39 percent a year ago ; this represent
ed an increase of 1.1 million cases.
Canners’ list prices were lower at the begin
ning of the current season than in 1956 for apri
cots, cling peaches, pears, fruit cocktail, and to
matoes. Improved demand for tomatoes brought
prices up by January 1958, lifting them higher
than they have been at any time since 1955.
Prices of apricots and freestone peaches ad
vanced moderately in this period, but those of
cling peaches remained at low levels; and, so far
in the current marketing year, canners have em
phasized promotional allowances more than
usual in an attempt to increase sales.

M a n y Shifts but Little O v e r-a il
C h a n ge in Farm ing
Twelfth District farmers increased their out
put in 1957, but cash receipts from marketings
dipped from the 1956 level. A n increase in Gov1 The canning marketing year for most major products begins and
ends around mid-year. January is about the middle of the year.

February 1958

M ON THLY REVIEW

ernment payments primarily from the Soil Bank
program brought total receipts in 1957 above the
level in the preceding year; but expenses, which
were up about 4 percent, more than offset this
gain in gross receipts. Net income for the year
declined by a minor amount.
Total production of crops rose above the yearago level with field crops recording a substantial
gain. Production of fresh vegetables and decid
uous fruits also increased, but there were deT a ble 4
Cash R
J

e c e ip t s f r o m

arm

a n u a r y -Novem eer

1956

a r k e t in g s ,

and

1957

In thousands
o f dollars
1956
1957
Crops ...............................
L iv e s to c k and products
T o ta l ................................

2.616,596
1,608,413
4,225,009

2,516,234
1,663,602
4,179,836

Percent
change
— 3.8
+ 3.4
— 1.1

Source: United States Departm ent of Agriculture, Farm Incom e Sit
uation (various issues) and Statistical Summ ary, January 21, 1958.

clines in the production of nuts and vegetables
for processing. In contrast to the greater volume
of crops moved to market, livestock slaughter
dropped below the 1956 level. Cattle inventories
were at a reduced level in early 1957, and the
number of animals available for slaughter was
smaller than in 1956.
The small decline in District net farm income
stemmed largely from lower prices for many
District crops. The larger output of crops was
offset by the decline in commodity prices so that
cash receipts from crop marketings fell below
the year-ago level by more than 3 percent.
(Table 4) Prices of livestock increased because
of reduced slaughter nationally as well as in this
District. The gain in prices was sufficient to in
crease the total receipts from livestock market
ings by about the same percentage as the fall in
crop income. Since cash receipts for crop mar
ketings account for about 60 percent of total re
ceipts in the District, the gain in livestock income
did not completely offset the loss in crop re
ceipts.
Despite the small decline in total District cash
receipts from marketings, the majority of states
in the District experienced increases in cash re
ceipts during the first 11 months of the year.

Strengthening livestock prices had a bolstering
effect on farm income in all District states but
were not sufficient to offset declines in crop in
come in California, Idaho, and Arizona. The
strengthening of livestock prices in 1957 in Utah
and Nevada plus the rise in the crop income of
these states boosted total income above 1956
levels. A higher level of wheat prices was im
portant in the increase in cash receipts in W ash
ington and Oregon. Improvement of deciduous
fruit production was also a contributing factor,
particularly in the state of Washington. The drop
in California’s crop income, which accounts for
about one-third of District receipts, more than
offset gains in other segments of District agri
culture.

F o r e i g n T r a d e — Another Record
Pacific Coast foreign trade established a new
record in 1957. Most of the gain came in the first
half of the year when exports through Twelfth
District ports were far in excess of the compa
rable period in 1956. Even though exports
slipped sharply after April, they ran ahead of
comparable months in the prior year through
August. Imports, except for a dip in June, were
consistently above 1956. For the first 11 months
of 1957, exports of $1,871 million were almost
20 percent more than their value in 1956; im
ports of $1,191 million registered a gain of 13
percent for the first ten months of the year.
United States foreign trade value through N o
vember, on the other hand, recorded only a 12
percent increase in exports and a 2 percent rise
in imports. As a consequence, the Pacific Coast’s
share of total United States foreign trade rose
again in 1957 as it did in 1956. A ll of the cus
toms districts in this area shared in the growth,
with Los Angeles, San Francisco, and Oregon
customs districts accounting for most of the gain
in export value. O n the import side, the Los A n
geles district accounted for about two-thirds of
the increase in value.
As in the case of United States trade, exports
through Pacific Coast facilities experienced a
much larger gain during the first six months of
1957 than for the year. Pacific Coast export
value for the January-June period was 43 per
cent above the comparable year-ago period;
29

FE DE R AL R E SE RV E B A N K OF S A N

United States value was 20 percent higher. The
Suez crisis was partly responsible for the sharp
increase in United States exports. Petroleum
shipments, for example, as measured by tanker
shipping weight figures, were almost three times
as large as the shipments in the first half of 1956;
and exports did not begin to taper off until May
and June. For the Pacific Coast, large petroleum
shipments were important only during the first
two months of the year, when the shipping
weight of tanker exports for the Los Angeles and
San Francisco districts was 105 percent above
the same months of 1956. After February, petro
leum shipments fell off steadily and rather
sharply.
The maintenance of a generally high level of
industrial activity abroad, the building up of in
ventories, and poor harvests in certain areas,
however, are of greater significance than the
Suez crisis in explaining the upsurge in both
United States and Pacific Coast exports in the
first half of 1957. In some countries industrial
production continued to rise; in others it re
mained close to the levels prevailing at the end of
1956. January-June 1957 wheat exports from the
Pacific Northwest, destined for Europe, Asia,
and Latin America, rose above the high levels
recorded in the latter half of 1956; for 1957,
wheat exports were 41 percent above 1956. Cot
ton exports were 36 percent above 1956, with
shipments in the first half of the year respon
sible for all of the increase. Rice exports also
revived after a poor showing the previous year;
export volume in 1957 was far in excess of the
negligible shipments of 1956.
After June, the tapering off of some of these
abnormal demands and falling dollar reserves in
some countries combined to reduce foreign de
mand for both United States and Pacific Coast
exports. The effect on Pacific Coast trade has
been severe, with September and October export
value below 1956 totals, while United States ex
port value continued slightly above year-ago fig
ures.
Imports into the Pacific Coast customs dis
tricts depend to a large extent upon the levels of
business activity in the District. Consequently,
the relatively high levels of activity that contin
ued through the summer were sufficient to pro
30

FRANCISCO

duce a fairly steady level of imports throughout
the year. The drop-off in economic activity since
last summer has not been reflected in import
value as yet because of the lag between the plac
ing of orders and actual shipments. The rise in
import value and volume was spread fairly even
ly among the various commodity groups and
among the various Pacific Coast customs dis
tricts. There was, however, a noticeable increase
of 66 percent in petroleum (tanker) imports into
the Los Angeles customs district in the period
January-September 1957.

Retail T r a d e — A S m a l l G a i n
Sales by retail establishments1 in the Twelfth
District started the year on a strong note. Janu
ary 1957 sales were more than 7 percent above
the corresponding month in 1956, and every
major type of retail category recorded a gain.
Some weakening ensued almost immediately, but
the figures reveal that in large measure the slow
ing in the rate of increase was not due to a drop
in direct spending by consumers. A sharp drop in
sales by lumber and building material and hard
ware dealers, stemming from further declines in
residential building, was the major depressive
influence for several months. Even so, retail sales
through the end of A pril were still 4 percent
above the total for the same spending period in
1956.
Cuts in hours worked in a wide range of man
ufacturing industries, slippages in construction
employment, and the very slow rate of rise in
employment generally during the second quarter
appeared to have noticeable effect on consumer
buying. The gains from a year ago became
smaller, and the lead in the cumulative total over
1956 narrowed further. For a brief period, pri
marily in the month of July, sales were quite
strong because of a temporary upsurge in spend
ing on automobiles, apparel, and some miscel
laneous categories. By August, however, the de
clines in some types of employment and further
reductions in hours were accompanied by a re
newed slide in sales. In dollar terms, the volume
was above 1956 by the narrowest margin in Aug1 The data underlying comments in this section cover firms operating
1 to 10 stores. These units account for about 80 percent of retail
sales. Sales data for such stores in the Twelfth D istrict are obtained
from a special tabulation supplied by the United States Bureau of
the Census.

February 1958

M ONTHLY REVIEW

ust and September and then fell behind 1956 in
the closing months of the year.
For 1957 as a whole, retail sales in the District
were 2 percent greater than in 1956. The prin
cipal gains were recorded in the automotive
group, gasoline service stations, and eating and
drinking establishments. The higher level of
prices in 1957 suggests that in physical terms re
tail sales were lower than in 1956, with most
lines experiencing a drop in unit sales. Consumer
prices generally were up 3.5 percent compared to
the increase in retail sales of 2 percent. The 8
percent increase in sales of the automotive group
stemmed largely from a price rise of approxi
mately 5 percent. Sales of new cars in units rose
little more than 1 percent; and a larger volume
of used cars, parts, and accessory sales also con
tributed to the gain for the group. Food sales in
creased at a rate less than half the price rise.
This comparison is based on the record of firms
operating ten or fewer stores; but the typically
greater growth of large chains, for which figures
are not available, may have resulted in about the
same physical volume in 1957 as in 1956.
Substantial dollar as well as physical volume
losses were reported by general merchandise
stores in addition to lumber and building mate
rial dealers. Furniture dealers and apparel stores
experienced minor dollar drops, whereas trade
reports and price changes suggest that physical
volume fell farther than the dollar figures.
The slower pace of retail sales, particularly
late in the year, reflected the decline in employ
ment and the reduction in hours. Increasing wage
rates and expanded unemployment benefits took
up part of the slack, but there seemed to be a
tendency for total income to decline in the clos
ing months of the year. Each of the Pacific
Coast states reported a smaller weekly wage
for manufacturing workers at the end of the

year than at mid-year, and in California and
Washington the figure was little different at
year-end than at the same time in 1956. The
changes in retail sales to consumers appear to
have been fairly closely related to changes in em
ployment and income opportunities.
Some insight into consumer attitudes may be
gained from the data on commercial bank con
sumer credit. Although commercial banks are
not the only lenders to consumers in the District,
they account for a large portion of consumption
loans. In the first 11 months of 1956, instalment
loans at District commercial banks rose $131
million; the increase in the same period in 1957
was only $66 million. About two-thirds of the
difference is accounted for by borrowings on
consumer goods other than autos and for repair
and modernization of homes. Both types of loans
increased in 1956 but actually declined in 1957.
Increases in automobile loans and in personal
loans, $21 million smaller than in 1956, account
ed for the remainder.
Since banks found it necessary to limit lend
ing because of declining liquidity in 1957, there
may be a tendency to attribute the smaller gains
in part to the limited supply of credit. Available
evidence suggests that little of the difference
between 1956 and 1957 can be attributed to
credit stringency either at banks or on the part
of other lenders who had experience roughly
similar to that of the banks. Maturities on auto
mobile loans actually appeared to be somewhat
longer in 1957 than in the preceding year. In this
District, about half the paper purchased by banks
from automobile dealers had a maturity of more
than 30 months in December 1957, but a year
earlier only one-third of the contracts were for
more than 30 months. The smaller increase in
consumer credit appears to be at least as closely
related to the more conservative attitude of con
sumers as to credit stringency.

FEDERAL R E SE RV E B A N K OF S A N

FRANCISCO

BUSINESS IN D EXES — TWELFTH DISTRICT*
( 1947-44 averace =

100)

Total
nonagri
cultural
employ
ment

Industrial production (physical volume)*
Year
and
month

Lumber

1929
1933
1939
1949
1950
1951
1952
1953
1954
1955
1956
1957

95
40
71
100
113
113
116
118
116
124
116'
106

Petroleum3
Crude
Refined

Cement

Lead*

Copper*

Electric
power

87
52
67
99
98
106
107
109
106
106
105
101

78
50
63
103
103
112
116
122
119
122
129
132

54
27
56
100
112
128
124
130
132
145
156
149

165
72
93
101
109
89
87
77
71
75
7 9r
77

105
17
80
93
113
115
113r
111
101
118r
129/
126

29
26
40
108
119
136
144
161
172
192
210
224

1950
December

103

132

139

123

210

1957
Jan u a ry
February
M a rc h
A pril
M ay
Ju n e
J u ly
A ugu st
Septem ber
October
N ovem ber
D ecem ber

102
102
101
101
101
101
101
101
102
101
101
101

131
130
132
132
138
131
133
137
135
132
131
124

120
127
140
154
157
152
162
160
169
lf il
146
139

79
88
88
78
82
75
68
74
74
75

125
137r
133
135
126
130
1 13r
116/
127r
126r
125
123

220
211
221
228
229
239
238
233
217
223
221
211

Total
mf'g
employ
ment

Car
loadings
(num
ber)*

Dep’t
store
sales
(value)*

Waterborne
foreign
trade8* *

Retail
food
prices

Exports

1 4

Imports

' 55
97
105
120
130
137
134
143
152
157

102
52
77
94
98/
100
100/
100
96
101
lo t
96

30
18
31
98
107
112
120
122
122
132
141
141

64
42
47
100
100
113
115
113
113
112
114
118

190
110
163
85
91
186
171
140
131
164
195

124
72
95
121
137
157
200
308
260
308
443

137r

159

106

144

116

234

436

138r
138
138
138
138
139
138
138
138
138
137
137

160
159
159
159
159
160
159
156
155
153
152
152

105
96
100
103
99
100
94
97
93
84r
95
93

137
141
146
137
141
148
141
144
141
134
139
139

116
117
116
117
117
118
118
119r
119
119
118r
119

237
269
267
298
283
252
188
210
173

421
417
489
534
698
511
770
572r
607

’ 99
103
112
118
121
120
127
134
138

BANKING AND CREDIT STATISTICS — TWELFTH DISTRICT
( a m o u n t * in m ill io n s o f H o lla r * )

Condition items of all member banks®
Year
and
month

Loans
and
discounts

U.S.
Gov’t
securities

Demand
deposits
adjusted7

2,239
1,486
1,967
7,093
7,866
8,839
9,220
9,418
11,124
12.613
13,178/

495
720
1,450
6,415
6,463
6.619
6,639
7,942
7,239
6.452
6,619/

1,234
951
1,983
9,254
9,937
10,520
10,515
11,196
11,864
12,169
11,870r

1,790
1,609
2,267
6.302
6,777
7,502
7,997
8.699
9,120
9.424
10,679r

1957
Ja n u a ry
February
M a rc h
A p ril
M ay
Ju n e
J u ly
A ugu st
Septem ber
October
N ovem ber
D ecem ber

12,488
12,556
12,576
12,649
12,694
12,911
12,912
12,945
13,178
13,064
13,185
13,178/

6.505
6,356
6.177
6,520
6,315
6,249
6,319
6,313
6,293
6,433
6.357
6,619r

11,812
11,279
11,129
11,622
11,210
11,310
11,407
11,329
11,561
11,570
11,770
l l f870r

9,587
9,690
9,794
9,839
9,995
10,155
10,188
10.220
10.301
10.417
10,304
10,679r

1958
Ja n u a ry

13,106

6.573

11,601

10,761

1929
1933
1939
1950
1951
1952
1953
1954
1955
1956
1957

Total
time
deposits

Member bank reserves and related items
Bank
rates on
short-term
business
loans8

3.35
3.66
3.95
4 14
4.09
4.10
4.50
4.97

4.74

Factors affecting reserves:
Reserve
bank
credit9
_
—
+
+
+
+
+
—
+
+
+
—
—

4.81
5.21
.................

5.13

+
—
—
+
+
+

Money in
circu
lation*

Commer
cial10

Treasury10

0
- 110
- 192
-1,141
-1,582
-1,912
-3,073
-2,4 48
-2.6 85
-3,259
-4,1 64

+
23
+ 150
+ 245
+1,198
+ 1,983
+2.265
+3,158
+2,328
+2,757
+3,274
+3,903

_
—
+

33
41
37
35
56
29
49
50
109
76
14
18

—

558
816
170
445
261
374
426
145
434
322/
298
454

+
+
+
+
+
+
+
+
+
+
+
+

249
494
170
430
209
402
320
292
480
159/
447
480

—

258

180

34
2
2
39
21
7
14
2
38
52
31

+
+
+
+
—

—
—

—
+
+
+
+
—
+

Reserves11

Bank
debits
Index
31 cities*-1*
(1947-49 =
100)»

6
18
31
14
189
132
39
30
100
96
83

175
185
584
2,026
2,269
2,514
2,551
2,505
2,530
2,654
2,686

42
18
30
115
132
140
150
154
172
189
203

144
139
9
31
54
20
6
39
30
8
37
23

2,548
2,517
2,495
2,560
2,526
2,483
2,457
2,592
2,581
2,517
2,652
2,686

206
200
200/
202
200
203
205
197
204
200
202
217

137

2,662

211

1A d ju ste d for seasonal va riation , except where indicated. Except for d e partm e n t store statistics, a ll indexes are based upon d a ta from outside sources, as
follows: lum ber, C a lifo rn ia R edw ood Association and U.S. B ureau of the Census; petroleum , cement, copper, a n d lead. U.S. B ureau of M in es; electric
power, Federal Powrer C om m ission; n on agricultural and m a nu fac turin g em ploym en t. U .S. B ureau of L a bo r S tatistics a n d cooperating state agencies;
re tail food prices, U.S. B ureau of L abor Statistics; carloadings, various railroads and railroad associations; a n d foreign trade, U .S. B urea u of the Census.
* D a ily average.
5 N o t a djusted for seasonal v ariation .
4 Los Angeles, S an Francisco, a n d S eattle indexes com bined.
5 C om m ercial
cargo only, in physical volum e, for Los Angeles, S an Francisco, S an D iego, Oregon, and W a shing to n customs districts; s tartin g w ith J u ly 1950, “ spe
cial category” exports are excluded because of security reasons.
6 A n n u a l figures are as of end of year, m o n th ly figures as of last W ednesday
in m o n th .
rD e m a n d deposits, excluding in terbank a n d U .S. G o v ’t deposits, less cash item s in process of collection. M o n th ly d a ta p a rtly esti
m ated.
8 Average rates on loans m ade in five m a jo r cities.
• Changes from end of previous m o n th or year.
10 M in u s sign
indicates flow of funds o u t of the D is tric t in the case of com m ercial operations, and excess of receipts over disbursem ents in the case of Treasury
operations.
11 E n d of year a n d end of m o n th figures.
12 D e b its to total deposits except in te rh a n k prior to 1942. D e b its to dem and
deposits except U .S. G o v e rn m e n t a n d in terba n k deposits from 19-12.
p— P relim in a ry .
r— Revised.

Full text of Economic Review (Federal Reserve Bank of San Francisco) : February 1958

FRASER