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FEDERAL RESERVE B A N K OF S A N
FEBRUARY-MARCH
FR A N C ISC O
1944
Review of Economic Conditions in 1943
Industry and Trade
h a n ges
in Twelfth District economic activity during
C 1943 were less spectacular than in 1942, but produc
tion, employment, and distribution attained new high
levels. During the latter part of the year a levelling off in
many lines of activity became apparent. This reflected
better balance between military needs for supplies and
facilities, and the capacity of available plants and man
power to meet those needs. Few large additional produc
tion facilities were established in 1943, and the large scale
labor recruitment and training programs characteristic of
1942 were supplanted to a considerable degree by efforts
to maintain existing working staffs.
As in the previous year, the District economy during
1943 was dominated by activities in war industries, espe
cially by developments in the aircraft, shipbuilding and
related industries. Demands for labor, materials, and
transport resulting directly or indirectly from the needs
of these major activities were such as to restrict produc
tion in all but a few other industries. Important industries
thus affected include lumbering, nonferrous metals, pulp
and paper, and food processing.
The District labor force was largely absorbed by mid1943. Total factory employment declined somewhat there
after, although employment of housewives and other
women not customarily seeking work continued to expand
moderately. The question of better utilization of labor
was thrown to the fore during 1943. Both war and essen
tial civilian industries became increasingly concerned with
the potentialities of worker productivity. At the same
time the War Manpower Commission undertook to chan
nel available workers where they would best further the
war effort, and placed employment ceilings on establish
ments in the larger war production centers.
As a result of increased efficiency in utilizing labor,
output of aircraft advanced sharply in 1943 despite a
moderate decline in employment. Shipbuilding also in
creased during the year, but less markedly than aircraft
production. Realization of war production goals for 1944
is expected to depend almost entirely upon further ad
vances in efficiency.
As the war production program has matured, the nature
of the needs of the armed forces and lend-lease have
become more clearly defined. Tactical considerations re
quire cutbacks and shifts in emphasis in the production of
war supplies. These may be reflected in outright contract
cancellations, or in the failure to renew completed con
tracts. Stockpiling of critical war materials may progress
to a point where it becomes wasteful of labor and equip
ment to produce further, particularly on a high cost basis.
In the Twelfth District, some cutbacks of those types
occurred during 1943. By and large, however, they were
of minor importance, and displaced workers were readily
absorbed elsewhere.
E s t im a t e d V o l u m e of I n d u s t r ia l O u t p u t — T w e l f t h D i s t r i c t
(expressed as percentages of 1939 output)
1929
, 134
.
121
Refined oils........................
Motion pictures ( c o s t ). . 69
Smelting and refining. . .. 128
.
78
55
Automobile assemblies. ,. 100
100
Rubber tires......................
10
Shipbuilding2 (tonnage
0
del’d., 1941 = 1 0 0 ) ..
Steel ingots........................ , 87
. 97
80
Canned fruit......................
Canned vegetables.......... . 81
96
Canned fish........................
, 84
, 82
.
94
90
61
Ice c r e a m .......................... . 84
47
35
55
Glass containers............... .
W ool consumption . . . .
89
, 129
. 178
103
39
Gold .................................... .
. 94
Petroleum ........................
130
Natural g a s ......................
98
154
1933
57
80
52
40
67
55
48
58
10
1937
102
102
92
115
99
108
135
123
43
1938
81
99
95
81
86
77
79
76
62
1939
100
100
100
100
100
100
100
100
100
1940
110
99
100
125
112
130
136
105
167
1941 1942 1943
r l2 8
127
121
108
110 121
123
123
133
164
rl41
152
116
r l2 7
127
143
97
141
i
i
151
i
i
107
575 1784 3313
0
55
48
77
55
78
93
94
79
101
78
47
55
43
61
97
21
78
58
37
38
77
75
81
0
102
98
108
124
109
98
82
92
97
91
96
97
72
116
102
112
123
119
85
115
106
95
116
0
74
80
74
94
97
98
92
90
101
99
87
94
76
91
89
72
100
99
88
101
111
90
91
0
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
5
118
109
91
131
101
114
100
96
105
103
106
73
61
112
105
117
116
146
105
104
99
101
105
100 1620 3988
134
156 207
144 171
141
88
r ll8
116
192
rl6 5
176
89
93
118
112 120
112
94
86
90
97
97
107
101
89
80
119
128
121
i
121
158
94
65
71
94
53
59
153 202 254
168
114 140
rl3 3
154 157
116
121
110
r l5 9
171
168
103
74
35
102
68
88
103
111
127
107
113
128
118
153
146
r Revised.
1 N ot available.
2 Maritime Commission program only.
The construction industry was less active in 1943 than
in 1942 when large contracts for military installations and
industrial facilities were awarded. Construction awards
in the Twelfth District reported by the W PB averaged
only $42,000,000 per month during 1943, compared with
$168,000,000 per month in 1942, the sharpest decline
occurring in military cantonments, airfields, and other
facilities. The decline in construction released numbers
of building trades workers for employment in other in
★ ^0 4 U
' ic t& u f. ★ ß tu p tyJG S i ß a n d U
★
6
FEDERAL RESERVE BANK OF SAN FRANCISCO
dustries. Federally-financed housing for war workers and
military personnel also declined in 1943. In the larger
metropolitan areas, however, the rate of private resi
dential building was stepped up to alleviate the still acute
housing shortage.
Consumer incomes and expenditures roughly con
formed to the changing pattern of industrial activity
during 1943. Factory payrolls, which have accounted for
the bulk of the wartime increase in consumer incomes,
levelled off after employment attained its peak in July.
The failure of incomes to increase substantially further,
in conjunction with increased savings and taxes paid, was
reflected in a like flattening out in total retail trade.
According to U. S. Bureau of Labor Statistics data, the
cost of living in four major Pacific Coast cities, San
Francisco, Los Angeles, Portland, and Seattle, advanced
2.4 percent between December 1942 and December 1943.
Production and Employment
Early in 1943, industrial operations in the Twelfth
District had not yet become fixed in the current, compara
tively stable, wartime pattern. As in 1942, there was a
continuous shift in emphasis from widely scattered indus
tries based essentially on the exploitation of natural re
sources to heavier industries concentrated in a few areas.
Population and employment in these areas, fed by a steady
stream of inmigrants, grew continuously and substan
tially. Concurrently, the once dominant extractive indus
tries located in outlying areas suffered losses in production
and employment, while the out-movement of workers
from rural and less highly industrial areas to the armed
forces and the war industries gave rise to localized labor
crises.
These developments are continuing, but on a reduced
scale. Population and employment patterns changed little
during the last half of 1943, and it is unlikely that further
important shifts will occur for the duration of the war.
By the end of the year, five major centers on the Pacific
Coast had received 17 out of 19.5 billion dollars in war
supply contracts awarded to Twelfth District firms. Civil
ian population in the same five centers combined increased
by about 1,200,000 over the 1940 level. In the balance of
the District, civilian population increased only slightly,
net inmigration approximately balancing military with
drawals. According to estimates of the Bureau of Census,
Twelfth District civilian population totaled 12,700,000
on November 1,1943, compared with 11,400,000 on April
1, 1940.
Between December 1940 and December 1943 nonagricultural employment in the Twelfth District increased by
1,100,000 to a total of 4,100,000. As shown in the follow
ing table most of the increase occurred in manufacturing.
During 1943, however, nonagricultural employment dis
played little net change, a small additional increase in
manufacturing, public utility, and government employ
ment approximately offsetting losses in construction,
mining, and in the trades and services.
As would be expected, most of the wartime increase in
manufacturing employment occurred in the wage-earner
February-March 1944
category and in Pacific Coast metropolitan areas in which
most of the war supply contracts were awarded. Wageearner factory employment in the San Diego, Los Angeles,
San Francisco, Portland, Seattle, and Tacoma metropoli
tan areas increased from an average of 323,000 in 1940
to 1,000,000 in December 1943. Over the same period,
employment increased from 150,000 to 230,000 elsewhere
in the District.
N o n a g r ic u l t u r a l E m p l o y m e n t — T w e l f t h D is t r ic t
(in thousand
December
December
December
December
1940 ..................................
1941 ..................................
1942 ..................................
19431..................................
Manufac
turing
732
992
1,450
1,500
Nonmanu
facturing
2,293
2,477
2,669
2,600
Total
3,025
3,469
4,119
4,100
1 1943 figures preliminary.
Source: U . S. Bureau of Labor
The accompanying chart shows monthly changes in
factory employment in the Twelfth District as a whole
and in eight metropolitan areas. The employment patterns
in the Pacific Coast areas are generally similar in that the
substantial increases occurring from 1940 to late 1942 or
THOUSANDS OF WAGE EARNERS
F A C T O R Y E M P L O Y M E N T B Y M E T R O P O L IT A N A R E A S
Twelfth District
Number of wage-earners employed, by months, January 1940 to D ecem
ber 1943. Logarithmic vertical scale; that is, equal vertical distances
measure equal percentage changes rather than absolute amounts.
early 1943 were followed by levellings or declines. The
Salt Lake City pattern indicates the importance in that
area of the Utah ordnance (small arms ammunition)
plant which went into production early in 1942 and which
was closed down in December 1943.
Available data show that the flattening out in wageearner employment during 1943 chiefly reflected a loss of
February-March 1944
male workers in the aircraft, shipbuilding, and other
durable goods industries. Employment of women in those
industries increased during most o f 1943, although little
net change took place in the fourth quarter.
The failure of employment to advance further in late
1943 was attributable to a number of reasons, the most
important of which was the slowing down of migration
to the centers of war production. The unwillingness of
many housewives to enter the labor force was another
factor. Regardless of the basic causes, however, the manW age-E arners in
1942
1
2
3
4
1943
1
2
3
4
C a l if o r n ia M a n u f a c t u r i n g I n d u s t r ie s
(quarterly averages in thousands)
N on/—A ll Industries^
/—Durable Goods -> /—durable Goods—^
M en
Women
M en
W om en
M en
Women
478
60
370
15
107
45
534
73
426
24
108
49
619
128
492
46
127
82
631
162
514
95
117
67
640
649
664
640
7
MONTHLY REVIEW
195
220
257
249
536
547
545
528
139
158
172
179
104
102
119
113
56
62
84
70
N o te : Figures do not necessarily add to totals be’cause of rounding.
Source: California State Division of Labor Statistics and Law Enforcement.
power shortage became a subject of increasing concern
to the War Manpower Commission. On September 4
a plan was announced by War Mobilization Director
Byrnes providing for manpower priorities for essential
work in the principal Pacific Coast centers. Under the
plan two committees were set up in each area. The Pro
duction Urgency Committee, headed by representatives
of the W PB , determines the relative urgency o f the
manufactured products in each area and, if necessary,
revises production schedules. The Manpower Priority
Committee, headed by representatives of the W M C,
establishes hiring priorities and controls the referral oi
labor through the United States Employment Service in
accordance with those priorities.
A more drastic step was taken by the W M C on Novem
ber 15 when an order establishing employment ceilings in
10 San Francisco Bay Area counties was made effective.
Ceilings were extended, shortly thereafter, to the three
Pacific Coast states.
Total wage-earner employment in manufacturing in
dustries of the Twelfth District increased by 800,000
from 1940 to 1943. Actually, employment in the aircraft
and shipbuilding industries combined increased by more
than total employment gains. The importance of these
two industries is indicated by the fact that in late 1943
District airframe plants and shipyards had nearly twice
as many manufacturing wage-earners on their payrolls as
were employed by all District mills and factories in 1937,
the peak prewar year.
The number of aircraft (excluding spares) produced
by major District plants during 1943 totalled 26,125, a
48 percent increase over 1942 output and 10 times the
output in 1940. In terms of tonnage produced, the 194243 increase was 86 percent, as a result of a shift to heavier
combat types.
It is probable that overall employment in the industry
has passed its peak and that 1944 production goals will be
reached largely through further increases in manufactur
ing efficiency including, if possible, a reduction in labor
turnover.
The number of merchant and special-type ships deliv
ered to the Maritime Commission by Pacific Coast ship
yards during 1943 totalled 938 compared with 368 in
1942. More than half of the increase in numbers repre
sented deliveries of Liberty-type cargo vessels, the con
struction of which tended to level off late in 1943 as
increased emphasis was placed on construction of the
heavier, faster Victory-type ships, and on landing ships
and other special-type vessels for use by the military.
Attempts to increase efficiency at most shipyards have
been hampered by a high rate of labor turnover. A sharp
drop in deliveries during January 1944 was attributed by
the Maritime Commission in part to the shift to new-type
vessels and to preparations for conversion and repair, but
principally to high labor turnover.
Mining and processing of most critical metals reached
new highs in 1943 despite a year-round labor shortage
which grew particularly acute during the summer and
which prevented the attainment of capacity mine operations in some areas. Copper, zinc, and mercury output
increased slightly, however, while lead output declined.
Production of gold and silver fell off markedly. Alumi
num and magnesium output at District plants built during
the past two years jumped sharply in 1943. In 1943 one
additional aluminum plant and one additional magnesium
plant were brought into operation, bringing the total
operating plants to seven and four, respectively.
In an effort to solve the mining labor problems, the
Army furloughed 4,500 experienced miners in October.
O f that number, 1800 were placed in copper mines in
Arizona, 424 in Idaho mines, and 400 in Utah mines.
Early in 1944 the W PB announced that the supply of
and demand for basic metals were in balance for all essen
tial production programs. The use of metals in civilian
goods remains restricted, however, to the most essential
products, although exceptions and concessions are being
Production and Employment—
Index numbers, 1935-39
average=100
Industrial Production1
L u m b e r ...........................
Refined oils2 .................
Cement2 ...........................
W heat flour2.................
Petroleum2 ...................
Electric power2 ............
Factory Employment and
Employment
Twelfth D is t r ic t ...
California ............
Pacific Northwest
Oregon ............
W ashington . .
Intermountain . .
Payrolls
Twelfth D is t r ic t ...
California ............
Pacific Northwest
Oregon ............
W ashington . .
Inte’rmountain . .
With Seasonal
Without Seasonal
t—Adjustment—^
/— Adjustment— N
1944 ,— 1943— N
Jan. Dec. Jan.
121
161
164
382
1944 /----- 1943— N
Jan. Dec. Jan.
84
116 126
180
220 212
171
108 129
152
148 144
120
116
123
448 450 353
295
343
239
217
252
164
303
358
238
212
254
129
310
364
246
222
261
153
7Ì8
718
—
—
—
153
152
174
148
—
476
218
144
—
483
—
Annual
Average
1943 1942
140
133
175
194
189
156
132
120
103
118
407 317
Payrolls34
286
363
246
223
259
140
309
362
247
223
260
149
730
717
556
628
471
382
523
288
1 Daily average.
2 1923-25 average = 100.
3 Revised series. Back figures will be supplied on request.
4 Excludes fish, fruit, and vegetable canning.
288
338
232
204
248
151
543
618
456
370
506
260
306
361
241
221
252
159
70 i
237
270
244
188
207
140
412
460
362
315
389
210
8
FEDERAL RESERVE BANK OF SAN FRANCISCO
reported at an increasing rate. On November 9, the W PB
announced that no applications would be considered after
the end of the year for certain premium prices paid highcost producers of copper, lead, and zinc. Later, Govern
ment buying contracts with small mercury producers were
cancelled and the mining and processing of chromite in
Oregon was halted. These developments have not appre
ciably affected the nonferrous metals industry as a whole
but they are indicative of the easing in the supply situ
ation.
On December 31 the W P B ordered the immediate
closing of four alumina electrometallurgical reduction
plants on the eastern seaboard. Subsequently additional
plants were closed. Although it was announced that alumi
num ingot production had attained ample proportions,
there was no indication given at the time that the shut
downs would extend to Twelfth District aluminum plants,
which operate on power from hydroelectric sources rather
than on electricity generated in coal-fired steam plants.
The stringent coal shortage was given as one reason for
dispensing with the output of the four eastern plants.
Production of steel ingots in California, the only state
for which data are available, increased from 1,006 thou
sand tons in 1942 to 1335 thousand tons in 1943, princi
pally as a result of new capacity brought into operation in
May 1943 at Fontana. Steel production at the new
$180,000,000 steel plant near Provo, Utah, had not started
in 1943, but production of coke was commenced in De
cember and the first blast furnaces were blown in early in
January 1944, with charging of the first open hearth fur
nace reported in February. Construction of the struc
tural steel unit of the plant was ordered stopped by the
W PB in December, but work on the plant was ordered
resumed in March.
Lumber production declined moderately in 1943 owing
to shortages of skilled loggers and other workers. While
the production goal in the United States of 32 billion
board feet was met, output was more than 4 billion feet
short of estimated consumption for war and essential
civilian uses. A sharp decline in construction and fabri
cating lumber needs was offset in large part by a sub
stantial upturn in military and lend-lease boxing and
crating requirements. Lumber stocks at District mills
averaged 1.5 billion feet during 1943, about one month’s
production, compared with approximately 3.0 billion feet
before the war.
Petroleum exploration was adversely affected by a
shortage of manpower during 1943, but the production
of crude was maintained at maximum efficient levels and
displayed little variation from levels reached late in 1942.
The most important problem currently faced by the
industry is the replenishment, or at least the maintenance,
of seriously depleted fuel oil and gasoline stocks. Inven
tories of fuel oil, used principally by the Navy, the mer
chant marine, and by essential industry, declined from 45
to 28 million barrels in 1943. Consumption exceeded pro
duction by 57 percent during the fourth quarter of that
year. A similar situation prevailed in the case of gasoline
stocks, which were drawn down by military and civilian
February-March 1944
users from a peak of 25 million barrels in April to 18
million on December 31. Further declines in stocks of
fuel oil occurred during January and February 1944, but
gasoline stocks levelled off.
Retail Trade
The value of retail trade in the Twelfth District was
larger in 1943 than in any previous year. Although retail
sales advanced generally throughout both 1942 and 1943,
the rate of increase slowed in the latter year, when prices
failed to advance substantially further and as employment
and payrolls levelled off. As indicated in last month's
Review, the value of department store sales, seasonal
influences considered, was only 2 percent larger during
the last half of 1943 than during the first half, compared
with a 12 percent increase from the last half of 1942 to
the first half of 1943, and previous similar increases since
mid-1940 ranging from 6 to 14 percent.
D e p a r t m e n t S tore I n v e n t o r ie s — T w e l f t h
D is t r ic t
Percent change in months’ supply on December 31 at the
fourth quarter rate of sales— 1943 compared with 1942
Radios, phonographs, records.................................................................................. ....+ 9 8
Handbags and small leather g oo d s...................................................................... ....4-91
Shoes— b a s e m e n t.......................................................................................................... ....-{-71
W o m en ’s and misses’ coats and suits................................................................. ....4"63
W o m en ’s and misses’ dresses.................................................................................. ....+ 5 2
M illin e r y ........................................................................................................................... ....+ 5 0
Juniors’ coats, suits, dresses.........................................................................................+ 4 8
Negligees, robes, lounging apparel.............................................................................+ 3 8
Blouses, skirts, sportswear (including sports dresses, sweaters,
swimming suits, riding h a b its)........................................................................... ....+ 3 3
Aprons, house'dresses, uniform s..................................................................................+ 3 3
W o m en ’s and children’s shoes....................................................................................+ 2 4
M en ’s and boys’ shoes and slippers...................................................................... ....4-21
Luggage ....................................; • • • ;.......................................................................... ....+ 2 0
M ajor household appliances (refrigerators, washers, ironers, stoves,
vacuum cleaners, cabin ets).................................................................................. ....+ 1 9
Furs .................................................................................................................................. ....+ 1 0
Housewares (pots, pans, cutlery, toasters, percolators, e t c .)................. ....4* 8
Stationery, books, magazines.................................................................................. ....+ 6
Beauty shop, barber shop............................................................................................. — 5
Notions ..................................................................................................................................— 5
Girls’ w ear......................................................................................................................... ... — 10
Toilet articles, drugs, sundries................................................................................ ....— 10
M en’s and boys’ clothing and furnishings— basem ent....................................— 12
Toys and games, sporting goods, cameras........................................................ ....— 13
W om en ’s and children’s hosiery..................................................................................— 14
Infants’ wear (including infants’ furniture)..................................................... ....— 16
W oolen dress goo d s..................................................................................................... ....— 17
Furniture, beds, mattresses, springs........................................................................■
— 18
Piece goods (dress and coat yard goods)— basem ent......................................— 19
Art needlework ........................ .................................................................................... ....— 20
Handkerchiefs ............................................................................................................... ... — 24
Domestics, blankets, linens, towels— basem ent.............................................. ....— 24
Housefurnishings— b a s e m e n t.................................................................................. ....— 24
M en ’s furnishings, hats, caps (including hosiery, gloves, underwear,
robes) ........................................................................................................................... ....— 25
Lam ps, s h a d e s ........................ ...................................................................................... ....— 25
Silks, rayons, velvets (including lin ings).......................................................... ....— 26
Knit u n derw ea r............................................................................................................ ....— 26
W om en ’s and children’s gloves............................................................................. ....— 27
Silk and muslin underwear, slips, petticoats, night gow n s........................ ....— 28
M en ’s c lo th in g ............................................................................................................... ....— 28
B oys’ clothing and furnishings....................................................................................— 28
Corsets, brassieres............................................................................................................— 32
Draperies, curtains, upholstery, awnings, window shades........................ ....— 35
Linens (including to w els)......................................................................................... ....— 37
Blankets, comforters, spreads (including auto r o b e s)....................................— -3R
China, glassware................................................................................................................ — 42
Cotton wash goods................. ...................................................................................... ....— 43
Domestic floor covering’s (including pads, linoleum ).................................. .... — $?,
Domestics, muslins, sheetings, etc. (including mattress cov ers)............ ... — 55
The value of total department store stocks was 8 per
cent larger on December 31, 1943 than a year earlier. In
terms of the fourth quarter rate of sales, however, the
comparison was less favorable. The year-end “ months’
supply” , that is, the number of months it would take to
exhaust existing stocks if sales continued at the fourth
quarter rate, was 10 percent lower than on December 31,
1942. Departmental declines in “ months’ supply” were
February-March 1944
9
MONTHLY REVIEW
fairly general. Increases were largely confined to items of
apparel, women’s and misses’ ready-to-wear clothing in
particular.
The trend toward cash payments for merchandise
apparent in 1941 and 1942 was continued in 1943. In the
fourth quarter of 1943, 65 percent of District department
store sales was on a cash basis, compared with 59 per
cent a year earlier, and 48 percent two years earlier. The
proportions of charge and instalment sales were corre
spondingly reduced. Because of the increase in the pro
portion of cash sales, increased payments on indebtedness,
and the increasing scarcity of consumer durable goods,
accounts receivable of department, furniture, household
appliance, jewelry, and some other types of stores de
clined substantially throughout 1942 and 1943.
Agriculture
Agricultural production in the Twelfth District in 1943
was maintained well above prewar levels and at about the
high level of 1942. Limits set by available labor, equip
ment, and feed prevented further expansion. Farm prices
continued to rise, and cash receipts of District farmers
from marketings were 32 percent above 1942. As their
prices reached levels subject to control, ceilings were
placed upon an additional number of important farm
products, and nearly all are now under controls.
occurred entirely in acreage of truck crops for processing,
however, as acreage of crops grown for the fresh market
has declined in recent years.
Complete data on District production of livestock prod
ucts are not yet available, but milk and egg production
P r o d u c tio n a n d F a r m V a l u e o f M a jo r F r u i t a n d N u t C r o p s
T w e lf t h D is tr ic t
(all figures in thousands)
, ----------- Production----------- ^
1932-41
,------- Value-------N
Crop
UnitAverage
1942
1943
1942 1943
Apples ............................... bushel
42,733
36,474
35,863 $63,215 $82,388
Apricots .................................... ton
236
223
107
16,228 13,867
Avocados ..................................ton
9
16
17
3,707 3,910
Cherries .................................... ton
68
79
81
10,504 17,301
Figs— dried ............................. ton
26
28
35
4,822 9,870
11
17
18
1,348 2,574
Figs— not dried ................... ton
Grapes ...................................... ton
2,132
1,417
1,525
72,948 160,625
4,612
5,672
6,969
8,288 10,740
Grapefruit .............................box
Lemons .................................... box
14,940
14,943
14,270
36,005 35,685
O r a n g e s .................................... box
45,026
44,339
50,230
125,674 152,931
O li v e s .........................................ton
34
59
53
7,198 8,692
P e a c h e s............................... bushel
25,311
31,383 28,369
42,914 54,801
P e a r s .................................... bushel
19,447
20,763
20,757
37,512 47,473
Plums ..................................bushel
64
66
76
6,194 12,844
Prunes .................................... ton1
635
543
611
2
2
A lm o n d s .................................... ton
W a l n u t s .................................... ton
13
53
22
55
16
57
9,724 11,600
16,971 27,246
1 O n fresh basis.
2 Not available.
Source : United States Department of Agriculture.
were maintained at the level of a year earlier. Nationally,
meat production in 1943 is estimated at 23.2 billion pounds
compared with 21.5 billion in 1942. The increase resulted
primarily from a larger output of pork.
District Farm Production
Farm Prices and Income
Production and value of major District crops are indi
cated in the accompanying tables. With some important
exceptions, output was about the same as in 1942 and
substantially above the 1932-41 average. As compared
with 1942, production of barley and sugar beets declined
Under the pressure of civilian and military demand,
farm prices rose considerably during 1943, and ceilings at
the grower level were placed on many important agri
cultural products. Federal support prices, loan programs,
and subsidies, where conflicts developed with ceiling
prices, were employed as additional monetary incentives.
The accompanying table presents the agricultural price
situation in broad outline.
During 1943 farm prices reached levels at which it
became legally possible to establish price ceilings for
nearly all farm products, and ceilings have now been set
up for most. Only by subsidy payments on a considerable
number of commodities, however, was it possible to con
tinue the programs of farm production incentives based
upon higher prices to the farmer and at the same time to
maintain stabilized food costs. Retail price ceilings on
P r o d u c t i o n a n d F a r m V a l u e o f M a j o r G r a i n a n d F ie l d C r o p s
Crop
Grains
T w e l f t h D is t r ic t
(all figures in thousands)
r----------- Production----------- ^
1932-41
, Value-------x
Unit Average
1942
1943
1942
1943
B a r l e y ............................. bushel
Corn ................................bushel
H a y .................................. bushel
Oats ............................... bushel
Rye ..................................bushel
Sorghum (g r a in ). . . .bushel
W h e a t .............................bushel
48,110
8,431
12,750
27,579
874
5,093
111,452
92,265
79,486
9,421
8,922
13,624
14,366
36,428
35,936
1,250
1,226
6,518
5,430
112,158 108,744
$61,309 $82,215
10,305 12,350
183,522 256,160
19,005 27,203
916
1,254
6,081
8,009
117,447 138,444
Field Crops
Beans (dry edible)____cwt.
H ops ............................... pound
Peas ( d r y ) ........................ cwt.
P o ta to e s ............................... ton
Rice ............................... bushel
Sugar b e e t s ........................ ton
2,091
37,992
1,317
62,525
14,030
3,328
7,309
35,153
6,534
71,702
12,627
3,955
7,885
42,297
9,776
100,185
14,030
2,214
38,718
15,894
27,241
88,507
19,824
1
45,764
25,948
45,722
128,335
24,272
1
Seed and Fiber
Alfalfa seed................... bushel
Cotton lin t.......................... bale
Cottonseed ........................ ton
Flaxseed ......................bushel
351
554
217
1,428
288
595
188
4,026
272
499
168
5,269
4,568
63,267
1
10,906
5,523
55,216
1
17,019
1 N ot available.
Source : United States Department of Agriculture.
sharply, while wheat and cotton output decreased some
what; production of dry peas and potatoes increased.
Except for citrus fruits, major fruit crops were somewhat
smaller than in 1942. District commercial truck crop
acreage was slightly smaller in 1943 than in 1942, but also
substantially above the prewar average. The increase
Distribution and Trade—
Index numbers, 1935-39
daily average—100
Retail Trade
Department Store Sales
Twelfth D is tr ic t.. .
Southern California
Northern California
Portland ...................
W estern W ashington
Eastern W ashington
and Northern Idaho
P h o e n ix ......................
With Seasonal
Without Seasonal
r— Adjustment—^
1944 /■— 1943— A
f— Adjustment—\
Annual
Average
1943 1942
Jan. Dec.
(value)
215
190
221
191
191
167
196
198
260 228
Jan.
1944 ,----- 1943— N
Jan. Dec. Jan.
195
194
175
186
229
166
179
149
161
195
324
329
300
303
395
150
159
136
152
169
200
201
180
207
242
169
167
152
178
214
208
248
179
205
193
221
132
202
274
363
123
180
184
223
153
179
127
119
109
100
105
86
109
113
135
117
129
107
120
95
114
84
115
93
101
68
119
97
121
103
Carloadings (num ber)1
Merchandise and
misc...........................
O t h e r ..........................
1 1923-25 daily average =
100.
10
FEDERAL RESERVE BANK OF SAN FRANCISCO
meat and butter, rather than being held, were rolled back
to September 1942 levels in 1943. It should be noted that
retail food prices were up about 3 percent in December
S e l e c t e d A g r i c u l t u r a l P r ic e a n d R e l a t e d I n d e x e s
U n it e d S t a t e s
1910-14=100
Prices received by farm ers..............................................
Food grains......................................................................
Feed grains and hay.....................................................
Fruits ................................................................................
Truck crops......................................................................
Meat animals....................................................................
Dairy p ro d u c ts...............................................................
Poultry and e g g s............................................................
W o o l ..................................................................................
Prices paid by farmers, inte'rest and taxes............
Ratio of prices received to prices paid......................
Farm wage rates.................................................................
Farm land values...............................................................
1940
100
84
82
73
I ll
Ill
119
96
155
122
79
126
84
1942
159
120
111
114
163
188
162
151
216
152
105
201
91
1943
192
148
147
179
245
209
193
190
223
167
118
264
99
Source: United States Department of Agriculture.
1943 over a year earlier, but this was a much smaller
increase than occurred in 1941 and 1942.
Higher prices substantially increased the cash income
of District farmers in 1943. Increases by states over 1942
ranged from 24 percent in Oregon to 36 percent in Ne
vada, and for the District the gain amounted to 32 perC a s h F a r m I n c o m e F r o m M a r k e t i n g of C rops a n d L iv e s t o c k
and
L iv e s t o c k P r o d u c t s * — T w e l f t h D is t r ic t
(in thousands of dollars)
1937-41 Average
Arizona ................................................
62,827
California ..............................................
671,870
Idaho .....................................................
99,858
Nevada ...................................................
13,826
Oregon ...................................................
117,466
Utah ........................................................
48,767
W a s h in g t o n .........................................
160,506
Twelfth D istrict..................................
1,175,120
1942
102,660
1,138,740
169,730
21,479
196,780
81,340
289,368
2,000,097
1943
131,480
1,530,601
213,672
29,232
244,738
107,556
380,349
2,637,628
* Does not include Government payments.
Source: United States Department of Agriculture.
cent. The comparable national increase was 24 percent.
The increase in income from crops in the District wa?
more than 40 percent and in livestock income about 20
percent, in contrast to the country as a w4iole, for which
the corresponding gains were 22 and 25 percent.
Growing concern was manifested during 1943 over
rising farm land values. Although still markedly below
the levels which prevailed in the boom of 1919-20, land
values have increased considerably since 1941. Total farm
mortgage indebtedness has been declining, unlike its be
havior in the earlier period, but the average amount of
debt on new mortgages is apparently rising.
Farm Labor
The farm labor situation in the District was extremely
stringent throughout the year, although crops were har
vested without serious loss. Three factors were of major
importance in the farm labor situation: first, the defer
ment of farm workers who account for a minimum num
ber of “ war units” of production; second, the intensive
recruitment of volunteers from nearby cities during peak
periods; and third, the use of workers recruited in
Mexico.
More than 30,000 workers from Mexico were employed
in Twelfth District agriculture last year, 26,000 of whom
February-March 1944
worked in California. Altogether, there were about 50,000
agricultural workers from Mexico, Jamaica, and the
Bahamas employed in the United States during the year.
The contract with Mexican authorities provided for re
cruitment of farm laborers, under the direction of the
War Food Administration, for employment at prevailing
wages with guarantees of a minimum wage of 30 cents
per hour and employment for at least 75 percent of the
contract period, and transportation to and from the
United States.
Under the wage stabilization program, control of farm
wage rates was placed in the hands of the War Food
Administrator in November 1942. Wages could be in
creased up to $2,400 per year by employers without
approval, unless the War Food Administrator took spe
cific action to the contrary. At the time this procedure was
established, it was stated that it was done because (1)
agricultural wages were, in general, substandard, (2)
there wras a wide disparity between agricultural wages
and those in essential industries, and (3 ) the retention
and recruitment of agricultural labor was of prime ne
cessity.
Farm wages continued to rise in 1943, the increase
being larger than in any other year. Although farm wages
on the whole are still low relative to those in industry, in
some instances, especially in certain seasonal operations
on the West Coast, wage increases were so marked that
stabilization programs were established. The first step was
taken in April in connection with California asparagus
picking, and later in the year maximum rates were estab
lished for tomato, raisin grape, and cotton picking in
certain California counties.
Wage stabilization in agriculture is a difficult problem
because of the varied nature of jobs and methods of pay
ment and the seasonal character of many operations. A
state wage board has been established in California under
the War Food Administrator which, working with county
war boards, will make recommendations to the Adminis
trator, and will administer and enforce wage stabilization
orders. Wage boards will probably be established in other
states as well.
A review of farm deferments was announced in Feb
ruary 1944. Heretofore, 8 “ war units” have been consid
ered in many cases the minimum for deferment, but
Selective Service has recommended to local boards the
adoption of a minimum of 16 units.
Government- Finance and Bank Credit
Federal financial needs continued to be the dominant
factor in monetary and banking developments in 1943.
During the year, the interest-bearing Federal debt rose
from 112 billion dollars to 169 billion. Emphasis was
placed upon the sale of securities to non-bank purchasers
in both the April and September loan drives and through
the continuing sale of Series E, F, and G savings bonds.
Such investors increased their holdings of Government
securities by about 32.5 billion dollars. The remaining
24.6 billion dollars was absorbed by the banking system,
including commercial banks, which added some 19.2 bil
February-March 1944
11
MONTHLY REVIEW
lion dollars to their holdings, and the Federal Reserve
Banks. The banking system accounted for about 43 per
cent of the increase in the Government debt, compared
with 49 percent in 1943.
By the end of the year, war expenditures were being
made at the rate of 90 billion dollars a year, close to the
maximum envisaged for the next year and a half in the
President’s budget message. Although the rate of expend
itures will probably not increase significantly, Treasury
borrowing at the rate of 55 to 60 billion dollars a year
remains necessary.
Banks continued to increase their holdings of Govern
ment securities, and the decline in bank loans which had
occurred during the previous year and a half was checked
in mid-1943. Both deposits and coin and currency in cir
culation rose to new high levels. The increase in currency
in circulation and in deposits required the Federal Re
serve System to furnish additional reserves to member
banks. These were provided mainly through the purchase
by the System of Treasury bills under repurchase agree
ment.
The shift of funds to the Twelfth District which has
been associated w^ith the war effort continued, although the
relative increase in District deposits and currency in 1943
over 1942 was somewhat smaller than in the previous
year. The proportion of the national member bank total
represented by District member bank deposits, loans, in
vestments, and reserves is shown below.
the end of 1942. Government securities held increased by
2,692 million from 3,630 to 6,322 million. Although loans
declined slightly over the year as a whole, the decline
which began in early 1942 was checked in mid-1943, and
total loans of member banks on December 31 were 48
million dollars higher than on June 30.
According to the condition statements of weekly report
ing member banks, the year-period decline in loans was
centered in real estate and in so-called other, including
consumer, loans. Commercial, industrial, and agricultural
loans of those banks were up some 8 percent over the year
and 20 percent over June 30.
Bank Deposits and Currency
The increase in bank holdings of Government securi
ties has been the primary factor, nationally, in the expan
sion of the money supply, including both bank deposits
and currency. In the Twelfth District, however, not only
have funds newly created by District bank purchases of
Government securities swelled the money supply, but
there has also been a marked shift of funds to the Dis
trict because of Treasury disbursement of funds obtained
elsewhere.
As a result, the increase in deposits has been consider
ably greater in the Twelfth District than in most other
parts of the country. Adjusted demand and time deposits
of member banks in 1942 and 1943 are shown in the ac
companying table, with comparative increases for the
District and the United States.
D e p o s it s , E a r n in g A s s e t s a n d R e se r v e s of M e m b e r B a n k s
T w e l f t h D is t r ic t a s P e r c e n t of U n it e d S t a t e s
1940
Demand deposits— adjusted1 .......................................
Loans ....................................................................................
Investments ........................................................................
Reserves ...............................................................................
D e m a n d a n d T i m e , D e p o s it s of M e m b e r B a n k s
1942
7.9
13.9
9.5
5.4
1943
10.2
13.5
9.7
9.3
11.42
12.9
11.7
10.0
1 Other than interbank and United States Gove'rnment deposits, less cash
items reported in process of collection.
2 Estimated.
Loans and Investments of District Banks
The increase in bank holdings of Government securi
ties is reflected in the earning assets of Twelfth District
banks. On December 31, District member banks held
8,894 million dollars in loans and investments, an increase
of 2,556 million over their holdings of 6,338 million at
Banking and Credit—
(millions of dollars)
1944
Feb.
Condition Items of W eekly Reporting
Member Banks
Total loans ...................................................
Com ’ l, ind., & agric. loans...............
Loans to finance securities
transactions .......................................
Real estate loans....................................
All other loans.......................................
Total investments ....................................
U. S. G ov’t securities........................
A ll other securities.............................
Adjusted demand deposits...................
Tim e deposits ...........................................
United States G ov’t deposits............
Coin and Currency in Circulation
Total (changes o n ly ) .............................
Fed. Res. notes of F. R. B. of S. F .
79
300
95
4,081
3,773
308
2,582
Member Bank Reserves...............................
1,399
996
522
1,369
941
—
1,992
1944
Jan.
+
+
29
6
•v^nange rrora
,-----------1943
Dec.
Feb.
+
—
2
3
+I
T
29
70
- f 31
—
4
—
4
+237
+231
+
6
+395
+ 14
+357
+ 28
— 12
— 11
+215
+212
43
— 107
+ 46
+265
40
54
—
27
+ 1,489
+ 1,595
■
— 106
395
+
238
+
+
769
+
+
—
+
+
—
+
+
+
50
52
51
66
75
42
+
712
657
125
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
(amounts in millions of dollars)
1941
1942
1H3
2,893
4,356
6,0002
—
51
2,398
2,587
—
8
23
United States
Demand deposits— adjusted1
Amount ................................................... 33,754
Percentage increase over previous
year .....................................................
—
42,570
52.642
26
24
12,347
12,753
15.268
—
3
20
Twelfth District
Demand deposits— adjusted1
Amount ...................................................
Percentage increase over previous
year .....................................................
Time deposits3
Amount ...................................................
Percentage increase over previous
y e a r .......................................................
Time deposits3
Amount ...................................................
Percentage increase over previous
year .....................................................
38
3,1802
1 Other than interbank and United States Government deposits, le’ss cash
items reported as in process of collection.
2 Estimated.
3 Other than interbank deposits.
Coin and currency in circulation also continued to rise.
In the District, the increase in 1943 amounted to more
than 700 million dollars, greater than in any other year.
This increase was about 14 percent of the national in
crease of 5 billion dollars, compared with a District gain
in adjusted demand deposits which was 16 percent of the
national increase during the year.
FEDERAL RESERVE BANK OF SAN FRANCISCO
12
M em ber Bank Reserves
Reserves as well as deposits are added to by net Treasury
disbursements, since they represent funds transferred to
this District. Federal payments, largely associated with
war contract and army and navy expenditures, exceeded
tax collections and District sales of securities by 4.4 bil
lion dollars. A much smaller source of reserves, but one
showing a much greater relative increase over earlier
F a c t o r s A f f e c t in g T w e l f t h D is t r ic t M e m b e r B a n k
R ese r v e B a l a n c e s
(millions of dollars)
1941
1942
1943
1,000
2,820
4,475
4
107
224
Total of factors increasing member
bank reserves......................................... 1,004
2,927
4,699
596
2,008
3,744
227
609
714
8
11
828
2,625
4,469
176
302
230
FACTORS W H IC H INCREASED RESERVES
United States Treasury Operations...............
The amount by which Federal Government dis
bursements in the district exceeded collections.
Reserve Bank Credit.............................................
The amount of increase in credit extended di
rectly in the’ Twelfth District.
FACTORS W H IC H REDUCED RESERVES
Interdistrict Payments and Transfers of Funds
The net amount paid to other districts in settle
ment of commercial and financial transactions
(exclusive of Treasury operations).
Demand for Currency...........................................
The amount by which holdings of cash by banks
and the public increased.
Other Federal Reserve Accounts.....................
The amount of the increase in nonmember bank
accounts and other miscellaneous accounts at
the Reserve bank.
Total of factors decreasing member
bank reserves.........................................
Member bank reserve balances at the Federal
Reserve Bank of San Francisco increased..
years, was the direct extension of credit in the District
by the Federal Reserve Bank of San Francisco. This was
largely the result of sales of Treasury bills to the Reserve
bank by commercial banks with option to repurchase.
February-March 1944
Treasury bills held by this bank under repurchase agree
ment amounted to 249 million dollars on December 31,
1943 compared with 35 million a }^ear earlier.
Interdistrict transfers of funds other than those aris
ing out of Treasury operations customarily result in a net
outflow of funds. This outflow, in payment for materials
and equipment by war industries, consumer goods, insur
ance and other services, and the like, correspondingly re
duces deposits and reserves. This figure increased sub
stantially in 1943 over previous years. The demand for
currency also reduced District reserves and deposits but
did not reduce the District money supply, in that deposits
are exchanged for coin and currency.
On balance, member bank reserves in the District in
creased by 230 million dollars in 1943. For the country
as a whole, reserve balances of member banks declined
by about the same amount, largely because of the increase
in coin and currency in circulation, and in spite of an in
crease in Reserve bank credit of almost 5 billion dollars.
Excess reserves of District member banks are at a low
level, having averaged 103 million dollars during Decem
ber, down 159 million from a year earlier. Nationally,
excess reserves amounted to 1,048 million dollars, having
declined by 1,328 million dollars from December 1942.
The situation varies among individual banks but, in gen
eral, excess reserves have declined to the lowest levels in
several years. To a considerable extent, banks are adjust
ing their reserve positions through sale and repurchase
of Treasury bills for which a fixed rate is maintained by
the Reserve System. Total Reserve System credit out
standing increased by 4.7 billion dollars in 1943, but
Treasury bill holdings increased by 5.8 billion, so that
other Government securities, industrial advances, and
bills discounted declined by 1.1 billion. O f this 5.8 billion
dollar increase in Treasury bill holdings, 3.3 billion oc
curred in bills held under repurchase agreement.
@FedFRASER