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Monthly
FEDERAL RESERVE
f
a
BANK
i
OF
FEBRUARY- MARCH
Rewieur
SAN
FRANCISCO
1946
Review of Business Conditions— Twelfth District
u s in e s s
conditions in the Twelfth District, parallel
B ing the situation in the nation as a whole, presented a
mixed picture in the first two months of 1946. Following
the general trend since Y-J Day, employment continued
to decline in most areas of the District and industrial pro
duction and payrolls probably reached their low point for
the year. Seasonal influences and unfavorable weather
accounted for part of the reduction, especially in the
extractive industries, but labor disputes extending over
part or all of the period seriously interrupted production
in the steel, metal working and shipbuilding industries
and in mining and lumbering as well. War industries
continued to lay off additional workers as contracts ap
proached completion, and employment opportunities in
other lines were not sufficient to absorb both surplus war
workers and men released from the armed forces. In
many instances District production and distribution ac
tivity was hampered by industrial difficulties in other
parts of the country which delayed the shipment of ma
terials, equipment and finished merchandise.
Definite progress, nevertheless, continued to be made
in the process of reconversion to a more normal pattern
of industrial activity. The construction industry was par
ticularly active and a large volume of new building con
struction was started in the urban centers of the District,
despite widespread shortages of materials and skilled
labor. Among California manufacturing industries, nearly
every industry in the non-durable goods group, except
food processing, scored increases in employment both
in January and February. The number actually employed
in the non-durable goods industries as a whole, averaging
about 180,000 for the two months, was some 5 percent
below the level of a year ago and was about the same as
in the opening months of 1944. Most durable goods in
dustries, except aircraft, shipbuilding and steel, also ex
panded their employment in January and these gains were
fairly well maintained in February. The number actually
employed in all durable goods industries in California in
the latter month was just under 210,000, as compared
with about 560,000 a year earlier, and was about at the
level of February 1941.
In Washington and Oregon the general industrial situ
ation in recent months has roughly paralleled that of Cali
fornia. In both states manufacturing employment during
January and February was about 40 percent below the
levels of a year ago, the durable goods industries having
lost about half of their employees, chiefly as a result of
cutbacks in aircraft and shipbuilding. In the non-durable
goods industries, employment in Oregon in early 1946
expanded nearly 10 percent compared with a year ago;
a loss of some 10 to 12 percent in Washington was occa
sioned chiefly by curtailment of explosives production.
Unemployment
There wras no great change in the unemployment situ
ation in the District during the first quarter of 1946.
Total unemployment in the three Pacific Coast states
was estimated by the United States Employment Service
at around 700,000 during the first week of March. The
total number of claims on file for unemployment com
pensation reached a peak of about 525,000 at the end
of February, 200,000 more than were on file at midDecember. During March a general decrease occurred,
aggregating about 50,000 for the three states. Initial
claims reached their maximum in January at a weekly
level in excess of 40,000; March initial claims were
substantially lower. Veterans’ unemployment claims in
creased by nearly 100,000 between December and March,
and represented nearly 30 percent of the total in the
latter month as against about 15 percent in December*
Much of the recent increase in unemployment in this
area is attributable, directly or indirectly, to military
demobilization; immigration of veterans continues at a
high rate, particularly in parts of southern California,
and employment opportunities have not expanded cor
respondingly.
Fortunately, there has been relatively little outright
distress thus far from unemployment in most parts of
the District. The rate of turnover is fairly rapid among
unemployment insurance claimants and relatively few
have exhausted their benefit rights. The average dura
tion of benefit payments in February was currently
around ten weeks for civilians and about five weeks
for veterans. However, the point has probably been
reached when benefit exhaustion can be expected to rise
and a substantial increase in welfare loads may occur
in some localities.
10
FEDERAL RESERVE BANK
Decline in employment of women in industry
The relaxing of pressure on production following the
end of the war and the consequent release of thousands
of war industry workers have brought about a drastic
change in the proportions of male and female employees
in District aircraft and shipbuilding plants. Women con
stituted over 40 percent of the entire working force in
California aircraft plants in 1943 and 1944, and num
bered over 100,000 at the peak in mid-1943. While
numbers declined gradually until May of last year, as
the industry improved its operating efficiency, the pro
portion of female employees remained fairly stable.
Heavy layoffs of women following V -E Day, however,
and especially since V-J Day, reduced the number of
female employees in California aircraft plants to around
10,000 by the beginning of 1946; the ratio of women to
total employees is currently under 20 percent.
In shipbuilding, the displacement of women has been
almost equally severe. The number of female employees
in California shipyards, including Government navy
yards, reached a peak in 1943 not far short of 50,000.
For the Pacific Coast as a whole, the number of women
employed in shipyards remained well over 100,000, or
roughly 20 percent of the total, throughout 1944. In
1945, the precipitate decline in shipyard employment
fell disproportionately on female employees; at the end
of the year there were less than 6,000 women employed
in California shipyards, including about 4,500 in navy
yards. For the entire Pacific Coast, the number of women
shipyard workers was around 24,000 in January of this
year, or about 12.5 percent of the total.
Similar reductions in the number of women wage earn
ers have occurred in other industries in which the em
ployment of women became important during the war.
The California iron and steel and machinery industries
probably at no time before 1942 had employed much
over 3,000 women wage earners. By the last quarter of
1943 this number had grown to nearly 30,000 and it
remained not far below that level until late in 1944.
Sharp cuts followed V-J Day and by the beginning of
the current year the number of women employed in
California in this group of industries had fallen to less
than 10,000.
Shipbuilding and aircraft
Pacific Coast shipyard activity during the first quarter
of 1946 reached the lowest point in the past five years.
With a single exception, all the yards of the San Fran
cisco Bay area, the largest shipbuilding and repair center
of the District, remained closed until late in March by
the machinists’ strike which had lasted over four months.
Merchant ship deliveries for the quarter aggregated 19
vessels of about 85,000 lightweight tons, the smallest
output for any quarter since 1941. Only four shipyards
participated in this business, two in the Portland area
and one each in Richmond and Wilmington. Seven yards
building for the Maritime Commission still had 20 ves
F ebruary-M arch 1946
OF SAN FRANCISCO
sels remaining to be completed at the end of March, but
much of the work on these had been done, and at least
two large yards are expected to complete their deliveries
at an early date. The volume of ship repair work, while
considerably below the levels of last June and July,
promises to continue at a fair level for some time to
come as vessels are converted from war to peacetime use.
New construction, in the absence of additional orders,
is expected to diminish rapidly.
District aircraft activity, as measured by volume of
employment, continued during the first quarter of 1946
at about the same level as during the final quarter of
1945. Although Pacific Coast producers of aircraft ex
perienced more drastic cutbacks in military contracts
than did the shipbuilding industry, they still have very
large backlogs of Government orders, measured by nor
mal prewar standards, and some of the leading concerns
have secured a substantial volume of new commercial
business. While both shipbuilding and aircraft are still
in a transitional stage between war and peacetime opera
tions, the aircraft industry is apparently more nearly
stabilized at about its current volume of production.
Lumber
After experiencing in 1945 the poorest year, from a
production standpoint, since before the war, the District
lumber industry got off to another bad start in 1946.
The wage disputes that affected the major producing
areas in the Northwest during the final quarter of 1945
had for the most part been settled in those areas by the
end of the year, but since the middle of January practi
cally all the larger mills in the California redwood area
have been strikebound. Severe winter wTeather in Janu
ary seriously curtailed logging operations in the Douglas
fir territory and in other mountainous areas. This was
reflected both in the supply of logs and in a greatly
reduced output of lumber. Total District lumber produc
tion in the first two months of the year was less than
1.4 billion board feet, or approximately 25 percent below
the average output of those months during the previous
four years. Mill stocks remain abnormally low, at less
than 50 percent of 1940 levels.
Production and Employment—
Index numbers, 1935-39
average—100
With seasonal
Without seasonal
f-------adjustment-------^
r--------adjustment-------- ^
,— 1946— \ ,— 1945—
Industrial production1
Feb. Jan. Dec. Feb.
L u m b e r ........................ .......... 117
110
93
159
R efin ed o ils 2 ................. ..
—
—
—
—
Cement2 .................................... 154
153
153
138
W h e a t flour2 . ........................ 176 165
157 156
P e tro le u m 2 .............................
—
—
■
—
—
Electric power2 . . . . . . . . . 424 417
407 459
1946— ^ — 1945— s
Feb. Jan. Dec. Feb.
84
79
72
116
203
204 221 239
137
108 113
123
176
165 157
156
128
127
127
136
389 386 385 420
Factory employment and payrolls 3 4
E m p lo y m e n t
T w e lfth D i s t r i c t ...............
C aliforn ia................... .. . 157
164
P a cific N o r t h w e s t :.......
O r e g o n ........................
W ashington . . . . . . .
In term ou ntain...............
Payrolls
California ............................. 285 293
,
158
310
156
161
159
308
288
653
282
288
288
647
1 Daily average.
2 1923-25 a verage= 100
3 Excludes fish, fruit, and vegetable canning-.
4 Indexes in process of revision.
M O N T H L Y R EVIEW
February-M arch 1946
The outlook for the remainder of the year is more
promising. While demand is no longer on the scale of
the war years or marked by the indifference to price
considerations that characterized the war requirements,
housing needs assure a market for maximum lumber
output for some time to come. Action by O.P.A. late
in February to advance lumber price ceilings by an over
all average of about $1.25 per thousand feet, or approxi
mately 3 percent, should effect some improvement in
the profit position of the industry, particularly with
respect to the grades and sizes most useful for home
construction, where demand will be increasingly con
centrated. Lumber producers had complained that failure
by O.P.A. to remove wartime price differentials that
were designed to stimulate the production of grades and
dimensions needed during the war was discouraging the
output of normal peacetime sizes suitable for home con
struction. The recent price adjustment is intended in
part to remove this discrimination. Whether it will also
suffice to offset the wage advances growing out of the
recent strikes, or at least to afford the industry a reason
ably secure basis of operation, remains to be seen. It
appears very unlikely, however, that the District pro
duction levels of 1943 and 1944 of about 14 billion
board feet will be equaled this year.
11
during the war. Some small increases in prices for crude
and fuel oils were authorized by O.P.A. in March. Stocks,
both of crude oil and of refinery products, continue low.
Gasoline stocks at the end of February, while about the
same quantity as in early 1944 and 1945, were roughly
20 percent below the 1943 figure. Crude oil stocks were
little more than half as large as in early 1943, while stocks
of fuel oil were down to nearly one-third of the supply
at the beginning of that year.
The housing program
Petroleum
During the war years, wTith the necessity of diverting
materials and labor to essential war work, new housing
construction declined to a low ebb; a considerable pro
portion of the additional dwelling units actually provided
were of temporary construction, built in connection with
war industry operations or related activities of the Fed
eral Government. The shifting and redistribution of popu
lation incident to the end of the war has emphasized the
increasingly stringent housing situation in many parts
of the country. The difficulty of securing adequate hous
ing, even at abnormally high prices, has led to a nation
wide campaign to stimulate the construction of additional
dwelling units, partly in order to meet the need for
temporary accommodation and in part to provide hous
ing of a more permanent character.
The District oil industry has shifted from war to
peacetime operations promptly and easily. The pressure
on crude oil production in California has been relaxed,
the importation of petroleum from the midwest has
ceased, and refinery output has been reduced and modi
fied to some degree. California crude oil production
reached its all-time high at about 940,000 barrels per
day during the three months May to July of last year.
By November, output had been curtailed by 100,000
barrels per day, and has remained at that rate through
February of this year. Refinery operations, reflecting
decreased requirements since the end of the war for
aviation gasoline and marine fuel oil, have been reduced
about 25 percent from the peak rate of last midsummer
to a level around 270,000 barrels per day in January.
Civilian demand for oil products has been exceptionally
well maintained and at least one District producer has
resumed gasoline shipments to the East Coast, suspended
The premature removal after V-J Day of wartime
restrictions on building operations was followed by a
marked upsurge in commercial and industrial construc
tion which largely stripped the markets of materials
otherwise available for urgently needed housing con
struction. Declining lumber output in the last quarter
of 1945, resulting primarily from wage disputes and
work stoppages and abnormally low production of many
other construction materials, aggravated the condition
of general shortage. In response to this situation, a pro
gram was announced by the Civilian Production A d
ministration, effective January 15, to re-establish a prior
ity system for building materials designed to encourage
the production of low cost houses, with special emphasis
on housing for war veterans and their families. The
President also appointed a special National Housing E x
pediter, charged with the responsibility of administer
ing the low-cost housing program.
Distribution and Trade—
Index numbers, 1935-39
daily average=100
With seasonal
t------- adjustment-------- n
/— 1946— , , -----1945— v
Feb. Jan. Dec. Feb.
Department store sales (value)
Twelfth District ................. 300 269 256 257
Southern California .......... 311 282 270 260
Northern C a lifo r n ia .......... 269 246 230 234
Portland .................................. 283 237 234 256
W estern Washington . . . . 330 302 301
305
Eastern W ashington and
Northern I d a h o ............... 312 264 229 266
Southern Idaho and U ta h . 315 274 241 256
P h o e n ix .................................... 358 319 295 296
Carloadings (num ber)1
Total ......................................... 114
123
97 136
Merchandise and m isc.. 137
143
125
156
O t h e r ....................................
85
99
63
111
1 1923-25 daily average — 100.
Without seasonal
f------- adjustment-------,—
1946— N ,—
Feb.
253
278
225
240
271
194 5 — .
Jan. Dec. Feb.
214
237
198
191
231
407
431
383
347
480
217
232
196
217
251
218
238
325
175
194
274
333
394
487
186
193
269
94
113
70
98
120
71
86
111
55
112
129
91
An emergency veterans' housing program was an
nounced in February by the Housing Expediter, calling
for the construction of 2,700,000 additional dwelling
units, 1,200,000 in 1946 and 1,500,000 in 1947. As a
means of conserving scarce building materials in order
to implement this veterans’ program, drastic restrictions
were announced late in March on most types of nonresidential construction, as well as on construction and
repair of houses for others than veterans. Effective March
26, approval of C.P.A. will be required in each specific
case before any new construction or repairs may be
undertaken costing more than $400 for private homes
or farms, and more than from $1,000 to $15,000 for
specified types of industries. Exemption from these lim
12
itations is provided for public utility projects and gen
eral industrial maintenance and repair work, and also
for construction deemed important in creating perma
nent new employment opportunities. Consideration will
also be given to the importance of any proposed con
struction project in eliminating bottlenecks interfering
with reconversion. Projects actually under construction
at the date of the order were also excepted from its
prohibitions. In general, outright prohibition of new
construction is to be limited, for the duration of material
and manpower shortages, to non-essential as contrasted
with essential businesses.
Administration of the new restrictive regulations will
be handled to as large an extent as possible through local
committees. While the character of administration will
largely determine what projects will actually be under
taken, it is evident that if the avowed purpose of con
serving materials for housing is to be realized there will
be some curtailment of heavy construction activity, with
resulting unemployment among specialized construction
workers who cannot be readily absorbed in home build
ing. It is not entirely clear, however, to what extent
these two branches of the industry compete with each
other for types of materials used and labor employed.
Lighter commercial jobs, such as new store construction
or remodeling, apparently will be more severely re
stricted under these regulations.
The magnitude of the veterans' housing program,
which contemplates the construction of 2,700,000 addi
tional dwelling units in 1946-47, may be indicated by
a comparison with past records of the building industry.
The largest number of new dwelling units put under
construction in the non-farm areas of the United States
in any one year was about 937,000 in 1925. This was at
the peak of a nine-year building cycle extending from
1921 to 1929, during which an average of 754,000 units
per year were started. During the succeeding nine years,
from 1930 to 1938, the average number declined to
246,000, with less than 100,000 in 1933, the low year
of the cycle. The highest subsequent year was 1941,
when 715,000 new units were begun. During the war
years new housing construction again fell off rapidly,
reaching its low point in 1944, with 169,000 units. Re
covery began in 1945, when approximately 250,000 units
were started.
Retail trade and consumer expenditures
After some slackening off in January, District de
partment store sales made another advance in February
to a level nearly 17 percent above February 1945. On
a seasonally adjusted basis, daily average sales in Feb
ruary were about 10 percent above the previous high
record established last November, and were three times
the average dollar volume attained during the five-year
period, 1935-1939. With very few exceptions, gains over
February of last year were made by stores in all parts
of the District, but were most outstanding in the Los
Angeles area and in Utah, Arizona and the Central
F ebruary-M arch 1946
FEDERAL RESERVE BANK OF SAN FRANCISCO
Valley of California. Sales of department stores in
northern California as a whole and in Oregon and
Washington, although well above their performance of
a year ago, were not up to the general District increase.
The Vallejo-Napa area in California reported daily aver
age sales 9 percent below the very high level of February
1945. San Diego stores gained only 2 percent, while
those in San Francisco, Oakland, Portland, Seattle and
Tacoma reported gains below the District average. This
comparison suggests a possible dampening effect of the
relatively depressed condition of the shipbuilding indus
try, particularly in the strikebound San Francisco-Oakland area, and in Vallejo, where retrenchment in navy
yard activities is under way. In the District as a whole,
the departments showing the largest increases in sales
over a year ago include those handling household ap
pliances; furniture; floor coverings; housewares; toys,
games, and sporting goods; and men’s shoes and fur
nishings.
The continuously mounting volume of retail sales in
recent years, a phenomenon not confined to the Twelfth
District, affords a striking indication of the spending
propensity of the general public, and is evidence of
widely diffused consumer purchasing power, whether
derived from current income or from past savings. In
deed, consumer expenditures in the nation as a whole
actually increased during 1945 while income payments
to individuals declined. Estimated disposable incomes
of individuals, after taxes, reached their highest level in
the first quarter of that year, equivalent to an annual
rate of 142 billion dollars, and had declined some 3
percent by the final quarter. Estimated consumer ex
penditures, on the other hand, rose from an annual rate
of 105 billion dollars in the first quarter to nearly 111
billion in the last quarter. Net savings of individuals
reached their maximum in the second quarter at an
annual rate of 42 billion and fell rapidly to a level of 26
billion in the final quarter of the year.
Banking and credit
Although Treasury disbursements in the Twelfth Dis
trict exceeded receipts in the first quarter of 1945, the
net movement of funds out of the District on account of
other than Treasury transactions was larger than net
Banking and Credit—
Averages of Wednesday figures
vm illions of dollars)
Condition items of weekly reporting
member banks
Total loans.......................................................
Com ’l., ind., & agric. loans...................
Loans to finance transactions in :
U . S. Government securities..........
Other securities....................................
Real estate loans.......................................
A ll other loans...........................................
Total investments.........................................
U . S. Government securities...............
All other securities..................................
Adjusted demand deposits........................
Tim e deposits...................................................
U nited States Government d e p osits.. .
Coin and currency in circulation
Total (changes o n ly )..................................
Fed. Res. Notes of F. R . B. of S. F . . .
Member bank reserves............ .......................
,----------- Change from f________ 1945—
Feb. Jan.
Dec.
Feb.
f_____1946_____ ^
13
18
t
271
103
+
128
3
1,301 — 15
618 + 9
—
+
192
52
295
144
6,338
5,904
434
3,477
2,058
1,630
— 28
— 5
+ 3
+ 6
4 -5 8
4 -5 2
4- 6
■— 1
+27
+51
— 35
— 10
43
+ 11
4 -2 7 2
- -2 6 0
— 12
4 -3 2
4* 58
+186
—
3,114
— 53
— 57
—
—
84
88
+
+
400
371
1,968 — 40
—
38
+
288
—
+
+
1
44
,269
1.2
212
Ï 1'257
+
+
+
411
337
693
FEDERAL RESERVE BANK
16.A
February-M arch 1946
OF SAN FRANCISCO
The Check Routing Symbol
ne
of the most progressive steps taken in recent years
Oto streamline check collection operations by all banks
was the adoption by the American Bankers Association
of the check routing symbol plan which was worked out
by them in cooperation with the Federal Reserve System.
The need for such a plan has been growing for a number
of years due to the widespread and increasing use of
checks by American business and the American public.
Use of the check routing symbol will not only reduce
outstanding time on checks in process of collection, but
will also tend to reduce operating costs for all concerned,
by increasing the speed and accuracy of sorting.
Announcement of the adoption of the new routing
symbol system was made early in June 1945, and shortly
thereafter routing symbols were assigned to all banks
whose checks are collectible through the Federal Reserve
System. The cooperation of banks in having the symbols
included on their own and their customers’ checks was
earnestly requested and, because of their generous re
sponse, the volume of checks carrying the symbols is
increasing steadily. However, the benefits of the system
cannot be fully effective until all checks bear the new
routing symbol.
Meaning of symbol
Routing symbol facilitates sorting
In the course of collecting checks, many sorting opera
tions are necessary. It has long been known by bank
operating men that sorting checks by numbers is sim
pler, quicker, and more accurate than sorting by names.
It is faster, for example, to sort checks to the proper col
lection destination by numbers 1, 2, 3, 4, etc., than to
sort them by Merced, San Diego, Boise, and the names
of other cities. Not only can figures be grasped more
quickly, but where a check routing symbol is used it is
not necessary for the sorter to understand the significance
of the information conveyed by the symbols; that is, the
numerical designation indicates the destination without
requiring the sorter to know and remember the loca
tion of approximately 15,000 banks in the United States.
The only skill required of the sorter is the ability to read
numbers and separate the checks bearing the selected
symbols.
Split states present problems
The missort problem is also materially reduced, par
ticularly where checks are drawn on banks in states which
are split between two or more Federal Reserve Districts.
An example is Arizona, part of which is in the Eleventh
District, Dallas, and part in the Twelfth District, San
Francisco.
When a check is deposited in a bank for collection, it
usually is sent to a Federal Reserve Bank or branch, or
to a correspondent bank in a city near the paying point.
Such correspondent banks and the twelve Federal Re
serve Banks and their twenty-four branches are, in gen
eral, in the larger cities. Therefore, the geographic divi
sion of the states by Federal Reserve districts or zones
must, of necessity, be understood by the clerks sorting
the checks to facilitate their routing and presentation.
The inability of transit sorting clerks to determine
quickly, because of split states, the proper routing of
checks in all cases, when sorting by name and location
of the drawee bank, often leads to guessing when time
is not taken to look up the proper routing. With the use
of the routing symbol, however, any clerk can sort checks
quickly and correctly, and at the same time reduce the
number of mis-routed checks to a minimum.
The routing symbol is in the form of a figure of three
or four digits. The first, or the first two combined, digits
designate the Federal Reserve district or zone in which
the drawee bank is situated. If the drawee bank is in
Federal Reserve District 1 to District 9, the complete
symbol would consist of three figures; if in District 10,
11, or 12, the symbol would consist of four figures. The
second digit (or the third if the Federal Reserve District
is 10, 11, or 12) designates the Federal Reserve Bank or
branch serving the territory in which the drawee bank
is located. The last digit designates the state, portion of
a state, or Federal Reserve head office or branch city in
which the drawee bank is located. If a drawee bank is
located in a Federal Reserve head office or branch city, ex
cept the outer zone of Los Angeles, the figure “ 0” is used.
Since credit is immediate for checks drawn on banks
located in those cities, the last digit also indicates whether
credit is immediate or deferred. A last digit other than
“ 0,” which signifies deferred credit, does not indicate the
number of days for which credit may be deferred, how
ever. That is still determined by the time schedules of the
various Federal Reserve Banks and branches.
The routing symbol is combined with the A B A transit
number to form a fraction, of which the routing symbol
is the denominator. Examples are as follows:
9 0 -1 3 2
1222
A B A Transit Number
Routing Symbol
1 1 -2 4
A B A Transit Number
1210
Rowing Symbol
In the first example, “ 12” designates the Twelfth Fed
eral Reserve District, i.e., San Francisco; the third digit
“2” designates the Los Angeles Branch of the Federal
Reserve Bank of San Francisco (branches, if any, in
alphabetical order are indicated by figures 2 to 5) ; and
the last digit “ 2” indicates deferred credit, but not the
length of the deferment, and also indicates that the item
was drawn on a bank in California in the Los Angeles
zone other than in Los Angeles. In the second example,
the first two digits designate the Twelfth Federal Re
serve District; the third digit “ 1” designates the Head
Office of the Federal Reserve Bank of San Francisco,
F ebruary-M arch 1946
and the last digit “ 0” indicates immediate availability, or
that the item was drawn on a bank in San Francisco.
Twelfth District symbols
The routing symbol for use on all such items will be 000,
as follows:
Treasurer of U. S.
The following table lists the routing symbols which,
when combined with the A B A transit numbers (i.e., the
numerical designations of the banks) would be the de
nominators of the fractional symbols to be printed on
checks drawn on banks in the Twelfth Federal Reserve
District:
Zone of Federal Reserve Bank
of San Francisco in which
drawee bank is located
Symbol
For checks drawn
on banks in
Head Office— San Francisco
Immediate c re d it.....................................
1210
-p> __, ___ (1 2 1 1
Deferred credit...........................................{ 1212
San Francisco
California
Nevada
Los Angeles Branch
Immediate c r e d it.....................................
1220
f 1221
Deferred credit........................................... j 1222
[ 1223
Portland Branch
Los Angeles
Arizona
California
Los Angeles— City Zone 2
Immediate c r e d it.....................................
1230
f 1231
Deferred credit...........................................j 1232
[ 1233
Salt Lake City Branch
Portland
Idaho
Oregon
Washington
Immediate c re d it.....................................
1240
f 1241
Deferred credit........................................... \ 1242
[ 1243
Seattle Branch
Salt Lake City
Idaho
Nevada
Utah
Immediate c r e d it.....................................
Deferred credit...........................................
1250
1251
Seattle
W ashington
Reserve Bank and Treasury items
Checks drawn on the Treasurer of the United States,
whether payable at the Treasurer's office in Washington
or through a designated Federal Reserve Bank, officers'
(cashiers') checks of Federal Reserve Banks, and cer
tain drafts drawn on Federal Reserve Banks, known as
Federal Reserve exchange drafts, are acceptable for im
mediate credit at any Federal Reserve Bank or branch.
16B
M O N T H L Y REVIEW
n o
___________ S t a n d a r d
1 5 -5 1
Federal Reserve Bank
1 1 -3 7
000
of San Francisco
000
Benefits to banks and their customers
Banks are not being asked to destroy present stocks
of checks, but it is desirable to have the check rout
ing symbols, combined with the A B A transit numbers,
printed on new supplies of checks, or, if practicable, to
have the symbols overprinted on existing supplies of
checks. Continued progress in putting the plan into opera
tion will make its benefits both to banks and to their de
positors more quickly available. Benefits will accrue to all
banks and to all bank customers, as the new system will
permit more efficient and accurate handling of checks by
bank employees, and will result in fewer sorting errors,
and, therefore, more prompt collection of checks. Its use
generally should be reflected in a reduction of operating
costs, and will provide better service to banks and bank
customers. Consequently, it is urged that every bank, and
every bank customer who prints his own checks, arrange
for the inclusion of the new symbol on all checks printed
in the future.
The placing of the symbol on the check and the
type used are most important. The approved posi
tion for the symbol is in the upper right corner,
above the amount. This is the proper position, even
though the name of the drawee bank appears else
where than in the top center of the check. The type
face should measure at least 8 points vertically or
1/9 inch from top to bottom, as follows:
N a t io n a l
9 0 -1 7 4
1211
B a n k
S O M E W H E R E , C A L I F . , __________________
D ay to the
O R D E R O F _________________________
____________ ______________________ ______________
Specimen
February-M arch 1946
13
M O N T H L Y R EVIEW
Treasury disbursements in the District. The resulting
outflow of funds is in sharp contrast to the situation in
earlier years. The resulting pressure on reserves was les
sened somewhat by a considerable return of currency to
the Reserve Bank and a small increase in Reserve Bank
credit extended in the District.
Government security holdings of District member
banks, after increasing sharply in December during the
Victory Loan, rose somewhat further to a new peak early
in February. By the end of March, however, they had
declined to slightly below the January 1 level. The Treas
ury began to retire debt with a partial redemption of the
certificates of indebtedness that matured March 1, and
two other security issues were retired March 15.
Total loans of District member banks showed little
change during the first quarter. Business and consumer
loans did increase moderately, but loans for purchasing
and carrying securities declined after the Victory Loan.
The continuing wartime growth in bank deposits and
currency in circulation, like that in Government securi
ties, did not continue into the first quarter of 1946. Cur
rency in circulation declined through the entire three
months. Demand deposits of the public increased through
January, but by the end of March were lower than they
had been at the first of the year. Income tax payments
were a significant factor in the March decline.
Time deposits, in contrast to demand deposits and cur
rency, continued to increase in the first quarter of this
year, although the amount of gain was only about half as
large as in the same period in 1945. War loan deposit
accounts of District banks declined in February and
March as calls were made by the Treasury. Interbank
deposits also fell, the January-March decline amounting
to about 20 percent.
Results of the Victory Loon
of Government securities in the Victory Loan
Drive totaled 21.1 billion dollars, almost double the
goal of 11 billion. The relative oversubscription exceeded
that of any other loan drive, although dollar sales were
5 billion less than the Seventh Drive total. Sales to indi
viduals amounted to 6.8 billion dollars, as compared with
a goal of 4 billion. Sales to other non-bank investors of
14.4 billion dollars were more than double the 7 billion
goal. Subscriptions outside of the drive by commercial
banks and Treasury investment accounts of 2.4 billion
dollars brought total sales made during the period of the
drive to 23.6 billion.
S
ale s
S a l e s of S e c u r i t i e s , V ic t o r y L o a n D r iv e
t ---------- Sales to individuals---------- \
Total
6,776
689
16
418
14
12
91
24
114
Series E
2,204
264
8
162
9
3
27
13
42
Series
F & G
503
55
1
38
1
1
5
1
8
Other
4,069
371
7
218
4
9
59
10
64
Other
sales1
14,368
1,085
19
691
15
5
96
43
216
1 Excluding sales to commercial banks and Treasury investment accounts,
which were outside the drive.
N o te : Figures do not necessarily add to totals because of rounding.
All issues offered in the drive, except the % percent
certificates of indebtedness, were restricted as to bank
ownership. Subscriptions by insurance companies and
savings banks were limited in amount for the first time.
The two long term issues, the 2*4 ami 2^4 percent
bonds, accounted for over 60 percent of total sales in the
drive. Sales of 2 ^ percent bonds were larger than in any
previous drive. Larger purchases, including those on a
deferred payment basis, were the result, in part, of at
tempts to anticipate future investment needs, based upon
a realization that a similar issue probably would not be
T h e W a r L o a n D r iv e s — G o a l s a n d S a l e s
(millions of dollars)
Loan
First2
Goals
Sales
Second2
Goals
Sales
Third
Goals
Sales
Fourth
Goals
Sales
Fifth
U n it e d S t a t e s a n d T w e l f t h D is t r ic t b y S t a t e s
(millions of dollars)
Total
United States................... 21,144
Twelfth District ............
1,773
35
Arizona ..........................
California ......................
1,109
Idaho .............................
29
Nevada ...........................
17
O r e g o n ...........................
187
Utah ...............................
67
W ashington .................
329
offered again for some time. Subscribers also appeared
to be willing to lengthen maturities in order to obtain a
higher yield.
Goals
Sales
Sixth
Goals
Sales
Seventh
Goals
Sales
Victory
Goals
Sales
All
Indi
non-bank vid
investors uals
Others
All
Indi
non-bank vid
investors uals
Sales period
for marketable
Others
issues1
1 1 /3 0 — 1 2 /2 3 /4 2
4,000
7,860
3
3
3
3
3
1,593
6,267
309
130
179
8,000
13,476
2,500
3,290
5,500
10,186
675
865
275
351
400
514
15,000
18,944
5,000
5,377
10,000
13,567
1,251
1,372
595
586
656
786
14,000
16,730
5,500
5,309
8,500
11,421
1,230
1,398
629
625
601
773
16,000
20,639
6,000
6,351
10,000
14,288
1,437
1,684
704
698
733
986
14,000
21,621
5,000
5,882
9,000
15,739
1,213
1,715
578
639
635
1,076
14,000
26,313
7,000
8,681
7,000
1 7,632
1,275
2,191
826
910
449
1,281
11,000
21,144
4,000
6,776
7,000
14,368
885
1,773
435
689
450
1,085
4 /1 2 —
5 / 1 /43
9 / 9— 1 0 / 2 /4 3
1 /1 8 —
2 /1 5 /4 4
6 /1 2 —
7 / 8 /4 4
1 1 /2 0 — 1 2 /1 6 /4 4
5 /1 4 —
6 /3 0 /4 5 4
1 0 /2 9 — 1 2 / 8 /4 5 5
1 Formal opening and closing of the drives. Sales periods for non-marketable
issues began up to three weeks before and extended up to three weeks
after the formal drive periods.
2 Figures for commercial banks, which participated directly in the first two
drives with 5 billion dollar quotas, are not included. Subscriptions filled
amounted to 5,087 million dollars in the first drive and to 5,079 million in
the second.
3 N o goals established for individuals or districts.
4 Represents sales period for individuals o n ly ; for corporations and other
investors, sales period was June 18 through June 30, 1945.
5 Represents sales period for individuals o n ly ; for corporations and other
investors, sales period was December 3 through December 8, 1945.
Bank credit again expanded substantially during the
drive. Loans and investments of reporting member banks
in leading cities throughout the country increased by 7.2
billion dollars, compared with a 7.3 billion increase in the
14
FEDERAL RESERVE BANK
February-March 1946
OF SAN FRANCISCO
states in the District, Nevada, Oregon, Utah, and Wash
ington, more than doubled their quotas. From 7 to 9 per
cent of total sales were made in the Twelfth District in
every loan drive except the first two. Sales to individuals
in the District were from 10 to 12 percent of the national
total in all but the first drive.
Seventh Drive. Funds for non-bank purchases were ob
tained both by bank borrowing and by the sale of out
standing securities to commercial banks.
Twelfth District sales totaled 1.8 billion dollars, or 8.4
percent of the national total. This was about the same
proportion as was achieved in the previous drive. Four
Production Goals for Agriculture— 1946
the fifth consecutive year, production goals have
been established for major crops, livestock, and live
stock products. In order to meet the demand induced by
high civilian consumption at home and the export re
quirements necessary to alleviate famine conditions in
the world, goals in general continue as high as during
any of the war years. These goals are established by the
United States Department of Agriculture, and generally
reflect the recommendations of the State Agricultural
Conservation Committees. They are guides to help farm
or
F
1946
C om pared w i t h
F arm
A creage
P r o d u c tio n
G o a ls — T w e lf t h
P la n t e d , L iv e s to c k
D is tr ic t
P o p u la tio n , o r P r o d u c tio n ,
1945
/----- Twelfth District----- n
Field crops
(thousands of acres)
Barley
Corn
.....................................................
........................................................
H ay, tame
............................................
O a t s .........................................................
Rye
..........................................................
Sorghums, grain
W heat
...............................
.....................................................
Beans, dry
............................................
Peas, d r y ................................................
Potatoes, I r i s h ....................................
Rice ..........................................................
Sugar b e e t s ............................................
Cotton ................... .................................
Flaxseed
................................................
Alfalfa s e e d ............................................
Other legume and cover crop seeds
1946 goal as
% of 1945
actual
A riz.
Calif.
Idaho
N ev.
Ore.
Utah
W ash.
155
149
40
40
359
333
32
30
1,020
993
214
196
7
7
—
—
28
27
4
3
190
185
12
12
__
—
—
—
225
160
30
29
1,010
1,010
300
184
20
21
—
—
2,600
2,515
4
3
239
256
48
52
__
—
18
14
_
—
—
•—
260
242
50
40
SSO
845
450
408
35
33
_
—
970
970
1
1
25
39
46
55
—
—
17
17
__
—
1
1
10
7
297
285
160
160
30
26
520
507
52
60
15
10
•—
160
153
16
16
50
44
—
—
1,800
1,816
70
64
1.930
1,911
535
518
10
10
130
98
600
614
350
318
—
—
94
121
235
249
155
102
300
319
130
118
25
22
23
19
__
—
50
35
—
—
1
1
__
-—
12
11
235
249
325
227
460
472
148
136
165
130
385
358
1946
1945
890
892
2.380
2,430
880
961
420
443
1,150
1,182
520
541
950
998
7,190
7,447
97
1946
1945
47
46
795
800
240
237
19
18
260
254
119
117
360
353
1,840
1,825
101
610
645
4
4
757
788
99
107
462
531
531
2,425
2,578
600
630
3
3
394
480
51
51
220
253
288
1,020
1,082
20
20
4,251
4,642
2,221
2,605
2,859
3,206
3,466
2,250
2,289
10
11
2,409
3,144
1,857
1,952
1,931
2,219
2,522
435
435
24
24
8,113
9,980
1,479
1,637
8,813
9,132
149
153
39,780
48,604
10,539
11,634
19,771
20,786
24,168
97
4,542
4,942
12,438
12,438
14,930
1,473
1,473
33
36
3,878
4,397
290
340
1,861
2,139
2,431
1946
1945
1946
1945
1946
194 51
1946
1945
1946
194 51
1946
19451
19462
1945
1946
1945
19462
1945
1946
1945
19462
1945
1946
1945
1946
1945
1946
1945
1946
19451
1946
19451
310
300
30
25
__
-—
60
53
27
27
15
15
—
—
5
7
—
1,100
1,088
125
121
150
155
161
207
—
—
85
58
__
—
__
—
30
22
53
43
18
__
—
—
—
3
4
—
—
_
—
__
—
__
—
—
—
—
300
306
5
5
—
17
19
_
—•
50
36
__
—
Total
2,987
2,887
256
232
5,860
5,751
1,593
1,403
87
81
190
151
5,617
5,538
500
463
414
450
374
465
103
110
102
114
107
126
101
108
92
80
94
143
97
109
127
108
Livestock
(in thousands)
Cattle and calves on farms, Dec. 31
M ilk cows, average number
on farms ............................................
Sheep and lambs on farms,
Dec. 31 ..............................................
Sows to farrow, spring .................
Chickens raised ..................................
Turkeys r a i s e d ....................................
H ens on farms, M ar. 1 ...................
J a n .1 ...................
J a n .1 ....................
1946
1945
1946
1945
1946
1945
19462
1945
19463
19463
1945
55
55
19,978
25,173
4
4
97
82
91
86
Livestock products
E g g production on farms
(thousand d o z e n s ) ........................
M ilk production
(million pounds)
...........................
1946
1945
5,150
4,917
164,962
170,500
19,852
23,000
2,729
3,417
37,640
39,417
26,160
71,342
73,917
327,835
345,918
95
30,750
1946
1945
251
252
5,684
5,720
1,372
1,349
108
103
1,445
1,420
720
710
2,214
2,213
11,794
11,767
100
1 Harvested acreage.
2 N ot adjusted to reflect later changes suggested by Department of Agriculture.
3 Goals.
4 N ot reported.
February-M arch 1946
M O N T H L Y REVIEW
ers balance national requirements with the production
capacity of their farms, rather than specific forecasts.
A continued high production of the principal field crops
in the Twelfth District is called for. Increased planting
of feed crops is needed in 1946 to meet the demand of
the present expanded livestock, dairy, and poultry in
dustries, and, if possible, to rebuild feed stocks depleted
during the war years. The greatest percentage increase
over last year’s planting was asked of sugar beet growers.
Sugar beet acreage goals recommended in previous re
cent years have not been reached because growers have
found it more profitable to use the land for other crops.
The Government-guaranteed return to beet growers has
been raised from an average of $12.50 per ton in 1945
to $13.50 this year, however, and it is expected that the
1946 goal will be more nearly approached. The greatest
percentage reduction from last year’s plantings is asked
of potato growers. It is expected, nevertheless, that goals
will be exceeded this year as they were last, because sup
port prices again assure a comparatively favorable rate
of return. Early potato plantings in California are already
in excess of last year’s harvested acreage by approxi
mately 10,000 acres.
vSlight decreases in numbers of all meat animals on
farms and larger decreases in poultry are requested. A
15
decrease in livestock population will help to relieve pres
sure on feed supplies, and, with more red meat available
to civilians, the demand for chicken and turkey meat is
expected to be smaller than last year. Total meat pro
duction in 1946 is expected to equal that in 1945.
The goals as shown in the table were officially ap
proved on January 15. In February, however, in recog
nition of the growing seriousness of the world food
shortage, the Secretary of Agriculture asked for goals
higher than those previously recommended. To fulfill
these new requirements, increased production of grains
and dry peas is needed. The increased need for wheat
for world relief feeding aggravates the shortage of stock
feed, and, to help meet this situation, even more feed
and less poultry production are recommended. The fol
lowing specific modifications of the 1946 goals are re
quested : a 5 percent increase in spring wheat acreage
goals; a 25 percent increase in dry pea acreage goals
in Idaho, Oregon, and Washington ; maximum rice acre
age ; and a reduction of 4 percent in turkey production.
Farmers are asked to meet the new acreage requirements
without reducing flaxseed, sugar beet, and dry bean
plantings. In the interests of feed conservation, they are
urged not to exceed chicken production goals and to
maintain the slaughter goals for beef cattle and hogs.
16
FEDERAL RESERVE BANK
OF SAN FRANCISCO
February-M arch 1946
INDUSTRIAL PRODUCTION
National Summary of Business Conditions
Released March 23, 1946— Board of Governors of the Federal Reserve System
and employment at factories declined in February but advanced in the
first three weeks of March, reflecting mainly the influence of the steel strike. The
value of retail trade reached new record levels. Wholesale prices of a number of com
modities increased.
ro d u c tio n
P
I n d u s t r i a l P r o d u c t io n
Federal Reserve indexes. Groups are expressed
in terms o f points in the total index. Monthly fig
ures, latest shown are for February.
DEPARTMENT STORE SALES AND STOCKS
Federal Reserve indexes. Monthly figures, latest
shown are for February.
WHOLESALE PRICES
Output of durable goods declined considerably further in February, while production
of nondurable goods and minerals continued to increase. Production of steel, automobiles,
and machinery has advanced sharply since the settlement of wage disputes in these indus
tries, and the Board’s index of industrial production which declined from 160 in Janu
ary to 154 percent of the 1935-39 average in February, will show a considerable rise in
March.
Steel mill operations in February were at an average rate of 19 percent of capacity as
compared with 50 percent in January. Output at steel mills has increased rapidly since
the middle of February, and during the week ending March 23 is scheduled at 89 percent
of capacity— the highest rate since V-J Day. In February production of nonferrous
metals, machinery, and transportation equipment also declined, reflecting chiefly the
direct or indirect effects of work stoppages. Lumber production, after advancing in Janu
ary, showed little change in February. Plate glass production increased sharply to the
highest level since November 1941.
Production of most nondurable goods continued to advance in February, partly re
flecting increases in working forces. Output at textile mills rose further and was at a
rate slightly above the level of a year ago. Activity in the meat packing industry in
creased sharply in February following settlement of the wage dispute at major plants
and was 20 percent higher than that a year ago. Flour production likewise showed a
substantial gain for the month. In March a Federal program was instituted to reduce
domestic consumption of wheat in order to increase exports for relief purposes. Output
of automobile tires in February rose to the highest rate on record.
Output of coal was maintained at exceptionally high levels in February and early
March. Crude petroleum production showed a gain in February, but declined in March.
E m ploym ent
Employment continued to advance from the middle of January to the middle of Feb
ruary in most lines of activity except at manufacturing plants closed by industrial dis
putes. After February 15, with the settlement of the steel strike, there were large in
creases in employment in the durable goods industries and by the middle of March em
ployment in private non-agricultural establishments is estimated to be about 2^4 million
larger than last September, after allowing for seasonal changes. Unemployment in
creased from January to February by about 400,000 to a level of 2,700,000 persons.
D is t r ib u t io n
Department store sales in February, after allowance for seasonal changes, were the
largest on record by a considerable margin, and in the first half of March sales con
tinued to show marked increases over a year ago. Total retail trade in February was
probably close to one-fourth higher than in the same month last year.
Shipments of most classes of railroad freight increased from the middle of February
to the middle of March and almost the same number of cars were being loaded in the
first two weeks of March as during the same period last year, when shipments of war
products were at peak level.
C o m m o d i t y P r ic e s
Bureau of Labor Statistics indexes. W eekly figures,
latest shown are for week ending March 16.
MEMBER BANK RESERVES AND RELATED ITEMS
The general level of wholesale commodity prices advanced one percent from the
middle of February to the middle of March, reflecting increases in most groups of agri
cultural and industrial products. Since last September wholesale prices have advanced
3.3 percent, according to the Bureau of Labor Statistics’ index. Price control regulations
permit manufacturers and distributors to pass on to consumers only part of the recent
advances granted in maximum wholesale prices.
B a n k C r e d it
Wednesday figures, latest shown are for
March 20.
Retirement of 2.8 billion dollars of United States Government obligations during
March was reflected in a decline of about the same amount in Treasury balances during
the four weeks ending March 20. Holdings of Government securities by both Federal
Reserve Banks and member banks declined, accompanying reductions in Treasury de
posits at these banks. Deposits, other than those of the Treasury, at member banks
showed little change. Member banks required and excess reserves also changed little
during the period. Member banks increased their borrowings at the Reserve Banks to
over 700 million dollars on March 13, but reduced them somewhat in the following week.
Commercial and industrial loans at member banks in leading cities continued to in
crease between the middle of February and the middle of March. Loans on Government
securities to brokers and dealers fluctuated considerably in connection with the Treasury
retirement and refunding operations, while those to others continued to show a slow
decline.
@FedFRASER