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MONTHLY REVIEW TWELFTH FEDERAL RESERVE DISTRICT Fe d e r a l R e s e r v e B a n k J a n u a r y 1 954 of S a n Fr a n c is c o r e v ie w o f b u s in e s s c o n d it io n s business situation in the Twelfth District at the T start of the new year provided a fairly sharp contrast with conditions in early 1953. A year ago the economy of the District exhibited strong upward tendencies with ex pansion occurring in a wide range of activities. Consumer and business demands for District production were high and rising; business inventories were being accumulated at a fairly rapid pace; Government procurement programs had not quite reached peak levels and additional expan sion in District industries was under way to take care of the demands from the military agencies. At the start of the current year, however, the situation was significantly different. Consumer and business demands had weakened considerably from earlier peak levels; the decline in con sumer demand reflected the drop in consumer incomes as layoffs and reduced weekly hours lowered total pay rolls. Also, consumer stocks of durable goods were high and the desire to acquire additional items of household equipment and automobiles was less intense than in earlier periods. A sharp reduction in demand for inventories and a mod erate tapering off in plant and equipment expenditures have lowered business demands significantly from pre vious peak levels. A run-off of some types of defense contracts and the reduction in general Federal Govern ment activities reduced the demands of the Government for District products and services. By the end of 1953, however, the shifts and changes had not driven the level of District business activity below the corresponding period of 1952, although since mid1953 they had been instrumental in narrowing the margin of gain. In December business activity was still ahead of the same period a year earlier. Nonagricultural employ ment, for example, (the most comprehensive measure of over-all economic activity available for the District) in December was still slightly ahead of December 1952; in the second quarter it had been 5 percent above the second quarter of 1952. Thus, while activity remains high in the District, sufficient elements of weakness have ap peared to reduce the level somewhat and to change sig nificantly the tone of the over-all situation. h e Nonagricultural employment exhibits declining trend Employment levels in nonfarm activities in the District have shown a tendency in recent months to decline con siderably more than the usual seasonal amounts. During most of the period after Korea the general rise in activity minimized the seasonal declines. However, since last sum mer when employment reached a peak, seasonal declines have been accentuated by weakness in a number of nonseasonal industries. Strikes in the aircraft and metal proc essing industries, which affected employment totals in the three closing months of the year, have also contributed to declining employment levels. In December, nonagricultural employment was off nearly 2 percent from the September peak, although the total was still ahead of December 1952 by a small mar gin. The major nonseasonal declines have occurred in durable manufacturing industries and in employment at Federal defense establishments throughout the District. Principal gains over the previous year have taken place in the service industries and in real estate and finance activities. The gains in the service and finance and real estate fields reflect the large increases in population which continue in the District and which require added employ ment in these lines. Mining activity rises but expanding supplies darken outlook The opening of a new major copper mine in Nevada and sustained activity at the Arizona and Utah copper mines raised the level of employment in the District’s nonferrous mining industry in the latter months of the year. Continued high demand for District output of copper has been the major sustaining force in the District’s metal mining industry throughout all of 1953. Lead and zinc Also in This Issue The Situation and Outlook for Important Twelfth District Field C r o p s .............................. 4 Accelerated Amortization in the Twelfth D istric t.......................... 10 Supplement California Agriculture and International Commodity Developments 2 FEDERAL RESERVE B A N K OF S A N FRA N C ISCO mines have faced depressed markets since late in 1952 and cutbacks in output have lowered employment at these operations substantially. For example, in Idaho where lead and zinc production rank ahead of any other state in the District (and nation), mining employment in late 1953 was about 17 percent behind the same period in 1952, while in Utah and Arizona, major copper centers, mining employment was up 1 and 5 percent, respectively. In 1954, however, the copper industry will face a greatly expanded supply situation both as to District pro duction and available world supplies. The new ore body in Nevada which opened last November will add some 2,500 tons monthly to District production, and two addi tional projects in Arizona will add further substantial quantities in 1954. In addition, in December the govern ment of Chile released to the world market its monthly production of some 30,000 tons of copper which had been held off the free market under various restrictions since early 1952. These supply factors combined with a slack ening in demand will undoubtedly have a depressing in fluence on copper prices and on the output of the District industry in the months ahead if the general level of busi ness activity continues to taper off. Manufacturing industries reflect weakening tone of business activity The declining demands noted earlier in this discussion have had their major impact on the District’s manufac turing industries and particularly on the producers of durable goods. The durable goods industries were the principal areas of strength as the defense program ex panded and consumer and business demand reacted to the impetus of greater military outlays. In recent months the easing defense program, the mild slippage in consumer spending, and the reaction of business to declining sales have had a greater effect upon the durable goods indus tries than other sectors of the economy, and they now constitute the primary sources of weakness. Total manu facturing employment in the District in December was less than percent behind December a year earlier, a contrast with the nearly 7 percent gain over year-ago levels recorded in June and July. Nationally, the decline in manufacturing was significantly larger. In July manu facturing employment in the nation was 11 percent above the level of July the year before and in December the number of workers was 3 percent below December 1952. This difference is largely accounted for by the fact that those durable goods industries most severely affected by the recent downturn are more important in the nation than in the District, especially in so far as consumer dur able items of production are concerned. In contrast to the general weakening tone in most dur able product lines has been the continued strength in air craft and parts manufacture and a recent firming tendency in the markets for District forest products. Aircraft and parts production has continued to rise, in part reflecting some shifts in Air Force procurement that have proved favorable to District producers. Improvement in the mar January 1954 kets for District lumber and plywood, while not removing the industry from its position as a major source of weak ness in the late months of the year, has imparted a note of strength in this area of District manufacturing activity. Lumber and plywood close year on brighter note In lumber and wood products, employment continues to reflect the basic market weakness that has confronted the industry over much of the second half of the year. In December, employment in the industry in Washington was more than 8 percent behind December 1952; in Ore gon the decline was not quite 7 percent; in Idaho and Ari zona it was down 17 and 3 percent, respectively; and in California the number of workers was just slightly under the year-ago level. Developments late in the year in the lumber and plywood segments of the industry, however, presented a somewhat different view than that obtained from the employment situation by itself. The pickup in the construction field in the late months of the year has had a definite firming effect on the markets for District lumber products. Production cutbacks since mid-year in the Douglas fir region and the bringing of production of western pine into better balance with orders and ship ments have also contributed greater strength in the mar ket. In addition, Canadian Douglas fir producers have recently shifted more of their output to markets in the United Kingdom with a resultant cutback in their ship ments to eastern United States markets and a firming of prices quoted on eastern shipments by District producers. In the plywood industry the recovery which started in early November has continued into December, with further price advances and a general pickup in the rate of operation of District mills. Industry feeling in both lumber and plywood is one of relative optimism, a sharp contrast with the pessimistic feeling a scant month or two ago. The construction revival and the high level of building permit authorizations in the past several months along with the favorable reaction of buyers to lower price levels have caused the industry to look ahead to 1954 with confidence of maintaining high rates of production and employment. Aircraft shows continued strength District aircraft and parts manufacture represents a major departure from the declining trend exhibited by the durable goods industries generally. Employment in air craft production, after discounting the effects of the strike against a major producer, was up substantially in Novem ber and December from the same period a year earlier, about 8 percent in California and more than 20 percent in Washington. However, in Arizona, the only other area of significant aircraft and parts manufacture in the Dis trict, employment in the industry in December fell to a level 46 percent below December a year before. This latter reflects the completion of a major conversion and modification contract and there are no signs of a resump tion of this activity in the foreseeable future. The over-all industry outlook, however, is for continued expansion at least through the first quarter of the year and existing January 1954 M O N T H L Y R E V IE W backlogs of orders on hand should keep the industry operating at very high levels for an indefinite period. Other durables reflect recent slackening of demand The impact of recent weakening in the business situa tion has been particularly noticeable in several District industries producing durable goods. These industries until quite recently were the major sources of business strength but in the latter months of the past year became the principal area of weakness. In the primary metals industry operating rates fell well below the previous year in the closing months of the year, especially in the steel industry in California and Utah but also to some lesser extent in aluminum in the Pacific Northwest. Steel com panies, particularly smaller mills with a restricted range of output, are finding it difficult to fill order books for the early months of the present year. Metal fabricators and machinery manufacturers were generally cutting back on production as orders slackened off, reflecting reduced Government buying and the heavy inventory position of business firms. Less buying of durable household equip ment by consumers has had a direct impact upon pro ducers of electrical appliances and television receivers and in the furniture field where activity was substantially lower than a year before. Motor vehicle assembly plants, however, where activity fell 3 or 4 percent behind the previous year in November, have experienced a pickup in levels of operation as work on new models has gotten under way. Nondurables generally show steadier trend District employment in nondurable goods manufactur ing has generally held substantially more stable than in the durables segment. These industries have reacted less than the durable goods sector to changes in consumer incomes during recent years and the postponement of purchases or consumption is not as important a factor as for items of greater durability. Consequently, the fluctua tions in employment and output have been less severe than those described for the durable goods industries. Employ ment in nondurables in the late months of the year aver aged slightly more than 1 percent above the comparable period a year before. This movement in the aggregate levels of nondurables employment, however, tends to mask some movements of significance within particular industries. Considerable strength late in the year was evident in printing and pub lishing and in the chemical industry. The paper industry continued to show moderate gains over the previous year and in Washington recovered most of the employment losses recorded early in the fourth quarter. In textiles and apparel some modest weakness appeared in November and December when employment fell below the compar able months of 1952. Apparel producers expect no sig nificant change in this situation in the first quarter of the current year, although there appears to be some possibility of moderate improvement. In petroleum a rather sharp rise in stocks brought about by a combination of too much production and fairly heavy importations of foreign 3 crudes earlier in the year has resulted in significant out put cuts in recent months. Demand, however, has re mained high and steady and prices have shown no ten dency to decline, in contrast to the price declines that have occurred in other areas of the United States. Activity in food processing plants, after allowance for the highly seasonal character of the industry, remained relatively stable as some recent weakness shown in California was substantially offset by gains in the Pacific Northwest and Utah. Weekly hours show decline in manufacturing industries Cutbacks in the average length of the work week of production workers in manufacturing industries have been quite general in the District, a further reflection of the declining trend in over-all levels of activity. In No vember the average work week in the District was 39.6 hours compared with an average of 40.0 hours in October and 40.1 hours in November 1952. The number of hours worked per week has fallen consistently below the pre vious year in each month since July both in the District and in the nation. In relative terms, the decline has been considerably larger nationally than in the District— 3.2 percent in November in the nation compared with a Dis trict decline of 1.3 percent from year-ago levels. Declines in hours have been general throughout the District but the largest reductions have taken place in the Pacific Northwest, reflecting to a large extent the weakness in lumber where activity is well below the year before. Unemployment up sharply in District The degree of utilization of the District’s labor force in the face of the general sliding off in economic activity has declined substantially in recent months. Total unem ployment in the District in the late months of the year rose to a level approximately 30 percent above the same period in 1952. It must be recalled, however, that while these increases are substantial on a percentage basis the jobless total is still relatively small on an historical basis. It appears probable on the basis of preliminary data for the late months of 1953 that the ratio of unemployment to total labor force did not exceed 4 percent by very much. This compares with a ratio of 3.9 percent in December 1952. Insured unemployment, a less comprehensive measure than total unemployment, shows the same upward trend but a considerably larger percentage increase over a year ago. This is due largely to the fact that employment de clines have been greatest in those activities covered by the unemployment insurance laws. In December insured un employment in the District was more than 46 percent ahead of December 1952 and reached a total in excess of 234,000 workers. In Utah, Oregon, Nevada, and Arizona the rise from a year ago in insured unemployment ex ceeded 70 percent while in Washington, California, and Idaho the increases were under 50 percent. 4 January 1954 FEDERAL RESERVE B A N K OF S A N FR A N C ISCO THE SITUATION AND OUTLOOK FOR IMPORTANT TWELFTH DISTRICT FIELD CROPS receipts in 1953 from Twelfth District farm mar ketings of field crops may about equal those received in 1952, but the outlook for the year ahead is not so favor able. Present farm prices of major field crops with the exception of cotton are below 1952 levels and are also below parity (Table 1). However, general increases in crop tonnage produced and marketed (Table 2) tended to bolster cash receipts in 1953. During the first half of 1953, cash farm receipts from sale of District crops (in cluding fruits and vegetables) were 10 percent below cash receipts during a like period in 1952, but for the period January through November 1953 cash receipts were only 3 percent below those of a comparable period in 1952. Furthermore, changes in cash receipts from 1952 were not uniform among District states. Utah and Nevada suf fered substantial reductions in cash income due to drought conditions which prevailed throughout 1953, but in Washington and Arizona the value of crop marketings through November 1953 increased 9 and 22 percent, re spectively, over the comparable period in 1952.1 a sh District crop producers’ net realized incomes in 1953— gross income minus production costs— are expected to fall below those received in 1952 by about 7 percent. Some farm production costs such as seed and rent have declined slightly. However, fertilizer costs were about the same as during 1952 and small increases have appeared in maintenance and depreciation charges, operating costs of motor vehicles, property taxes, farm mortgage interest 1 Increases occurred in these states partly as a result of the general and greater than usual movement in wheat and cotton into the price support program during the last quarter of 1953. A s explained later, proceeds of price support loans are included in Government statistics on farm market ings. H ow ever, generally favorable growing conditions and larger crops of wheat and fruit in W ashington contributed to the increase in that state. A larger crop of cotton together with the continued high rate of growth in agricultural resources bolstered crop receipts in Arizona. T able 1 F a r m P r ic e s o f S e l e c t e d F ie l d C r o ps a n d S e e d s w i t h payments, outlays for hired labor, and many of the smaller miscellaneous items. National statistics indicate that in 1953 falling farm prices together with continued high pro duction expenses reduced average net farm income to 36 percent of gross farm income, the smallest proportion in many years. The principal determinants of prices and incomes re ceived by Twelfth District field crop producers are na tional and international in scope rather than strictly local. Although field crops are an important source of District agricultural income, the District accounts for a small pro portion of the total United States production of most field crops. Total United States production of individual field crops, prospective consumption of the individual crops in domestic and foreign markets, potential carry-overs, and total supply as well as the form and level of Government price support operations are among the more important factors affecting the returns to District producers from sale of field crops. An even more fundamental factor is the economic health of the general economy. Any general decline in business activity vitally affects agriculture in every area of the nation (Table 3 ). In the last few years industrial production and dis posable consumer income have been very high, and in the year ahead they are expected to remain at high, although slightly reduced, levels. But the combined effect of (1 ) drastically reduced export demands for American farm products during the last year and a half (Chart 2 ), (2) a sustained high level of production, and (3) price support operations of the Federal Government have resulted in very large storage and carry-over stocks of wheat, corn, cotton, and some other important commodities. The large and increasing excess of supplies over disappearances in domestic and foreign markets, in turn, has had the effect of bringing commodity prices down near or below price support levels. C o m p a r is o n s M o u n ta in 1 a n d P a c ific C oast S ta te s, J a n u a ry 15, 1954 Percent change United States since average price t-------Jan. 15, 1954-------\ t-------Jan. 15, 1953-------as percent of parity Mountain Pacific Mountain Pacific 82 — 2.8 0 $ 2.06 W heat (b u .) . . . . , $ 1.98 99 — 14.8 5.202 Rice (cw t.) ............ 89 .89 — 1*5.2 — 13.6 .78 Oats (bu.) ............... — 18.4 85 — 17.0 1.29 1.12 Barley (bu .) .......... + 1.3 87 .304* .312 + 2.7 Cotton ( lb .) 3 .......... 72 . 52.90 51.00* — 19.0 — 15.0 Cottonseed (ton) . 45 — 42.7® 1.064 — 59.2» .62* Potatoes (bu .) . . . — 4.6 — 8.5 90 7.48 9.10 Beans, dr. ( c w t .) . S eeds: Alfalfa (cw t.) . . . Alsike (cw t.) . . . . Red clover (cw t.) H ay (bale) A ll (ton) ............ Alfalfa (ton) . . . . 21.20 14.50« 28.10 26.50 15.00 28.70 — 28.1 — 42.0 — ’11.4 — 22.3 — 40.0 — 27.9 59 48 67 21.40 21.80 22.80 24.30 — 24.4 <— 23.0 — 25.5 — 23.8 96 .. 1 In addition to Arizona, U tah, Nevada, and Idaho, Mountain states include M ontana, W yom in g, Colorado, and N ew M exico. Since variations of aver age prices among these states are small, they may be considered fairly rep resentative of the District states included. 2 California only. 8 American Upland cotton. 4 December 15, 1953. 5 December 15, 1952. 6 Idaho only. S ource: Agricultural Prices, United States Department of Agriculture. T able 2 P roduction of S elected F ield C rops a n d S eeds w i t h C o m p a r is o n s , T w e l f t h D is t r ic t , 1953 1953 production (in thousands) W heat (b u .) ........................... Barley ( b u . ) ............................. Oats (bu.) ................................ Rice (bag) ............................... Cotton ( b a l e ) ........................... Potatoes (bu.) ...................... Sugar beets (ton) ............... 31,235 11,948 2,756 123,136 6,239 H ay: A ll (ton) ............................. Alfalfa (ton) ...................... Dry edible beans (bag) . . . D ry field peas ( b a g ) ............ 14,648 6,966 f----- Percent change since— 1952 1942-51 + + — 7 2 7 2 2 + + 10 — + 33 +1 +2 +5 + 19 :* Seeds Alfalfa (lb .) ........................ Alsike clover (lb .) .......... Red clover (lb .) ............... , Ladino clover ( l b . ) .......... , 80,005 8,452 10,453 6,913 — 7 — 12 — 3 — 43 + 31 + io — 5 + 55 + 153 + 18 + 37 + + — — 5 10 3 51 + 176 + 30 2 + 126 1 Production and comparisons for W ashington, O regon, Idaho, and Cali fornia. 2 Less than 1 percent. Source : Crop Production, 1953 Annual Summary, United States Department of Agriculture. January 1954 5 M O N T H L Y R E V IE W C hart 1 C hart 2 INDEXES OF PRICES RECEIVED BY FA R M E R SUNITED STATES, 1949-1953 AGRICULTURAL EXPORTS, UNITED STATES-1915-19531 (1910-1914 =*100) 1 Years begin with July. Source: United States Department of Agriculture, Foreign Agricultural Service, Foreign Agricultural Trade. Source : United States Department of Agriculture, Bureau of Agricultural Economics, Agriculture Prices. Price support operations for field crops In the past year Government policy toward agriculture and price support operations of the Commodity Credit Corporation have had a profound effect upon the situation and outlook for field crops. This condition appears likely to continue in the year ahead. Supplies of most of the crops eligible for price support have been accumulating under the price support program (Table 4 ). On Novem ber 30,1953, loans and inventories of the CCC amounted to $5.2 billion compared with $2.2 billion a year earlier. President Eisenhower found it necessary in January this year to ask Congress to increase the statutory debt limit of the CCC above the present $6.75 billion. Within the period of a crop season the greater the vol ume of a commodity impounded by the CCC, the smaller is the quantity of the commodity held in private hands or in “free” supply. Crops which appear short or near a shortage of free supplies, relative to the market for them, tend to approach or exceed the effective support price. As indicated in Table 4, the free supply of several crops is relatively small when compared with anticipated utiliza tion. Free supplies of wheat appear particularly short. Some tightness already has occurred in the free supply of cotton and, as a result, spot prices of cotton have recently moved up from a low reached about mid-December to slightly above the effective loan level. However, there are several ways in which these free supplies could be either increased or decreased during the remainder of the mar keting season. They could be decreased by continued net movement of free stocks into the price support program or by a greater than expected demand in domestic or for eign outlets. Further build up in CCC inventories of 1953 crops is limited by the fact that for most crops other than cotton January 31, 1954 was the last date for securing CCC loans on the 1953 crop. On the other hand, free sup plies in relation to utilization could be increased by use of CCC supplies for export or domestic markets instead of free supplies or by repayment and redemption of price support loans. 7.8 7.4 The comparatively rapid movement of eligible crops under price supports during the latter part of 1953 may have bolstered District cash farm receipts in 1953 at the expense of such receipts during the beginning months of 1954. This possibility arises from the inclusion in De partment of Agriculture statistics on cash receipts from farm marketings of the proceeds from Government price support loans. Although most crops are harvested in the latter half of the calendar year, products of the harvest usually are available for sale and distribution until the succeeding harvest. Hence, farm receipts from the sale of crops are distributed between two calendar years. Cash returns from District farm marketings during the first half of 1953 were 10 percent below the same period in 1952. However, by November 30 such receipts for the year were only 2.7 percent below the same period a year before. Since a larger than usual proportion of the 1953 crop apparently was disposed of by farmers in the year in which it was harvested either through actual sales or entry into the loan program, a smaller than usual pro portion of the crop may be available for sale by farmers in the first part of 1954. 1 Cash receipts from marketings of crops include receipts from fruits and vegetables and, therefore, is not strictly representative of gross income from field crops. Source : Farm Income Situation, United States Department of Agriculture. The large private and public stocks have made manda tory the declaration of marketing quotas on cotton and wheat. Marketing quotas on these crops were overwhelm- T able 3 C a s h R eceipts fro m F a r m M a r k e t in g s of C rops w i t h C o m p a r is o n s — T w e l f t h D is t r ic t a n d U n ite d S ta t e s January through N ovem ber, 1953 Cash receipts1 Jan.*Nov. 1953 (in million» o f dollars) Arizona ........................................... California ......................................... Idaho ................................................ Nevada .............................................. Oregon .............................................. Utah .................................................. Washington .................................... 288.8 1,460.4 184.8 4.9 214.9 34.6 385.7 Twelfth D is t r ic t ........................... 2,574.1 United States ............................... 12,543.6 Percent change Jan.-Nov. 1953 from /--------Jan.-Nov. of-------> 1952 1951 + 2 1 .9 — 6.3 — 3.3 — 30.1 — 14.9 — 21.4 + 9.0 + 6 0 .7 + 1.0 + 1 1 .7 — 6.8 + 1.0 — 17.1 + 1 9 .1 — — + + 2.7 2.8 6 January 1954 FEDERAL RESERVE B A N K OF S A N FR A N C ISCO ingly approved by producers of these two commodities, which means that acreage planted to these crops will be reduced in 1954 and Government loans on 1954 wheat and cotton will be forthcoming at 90 percent of parity. Marketing quotas on rice were considered during the final quarter of 1953, but late in December 1953 the United States Department of Agriculture announced that there would be no marketing quotas and no acreage allotments on the 1954 rice crop. At the same time, however, the Department warned against undue expansion of rice acreage. Rice, a basic commodity, will continue to be supported at 90 percent of parity. Although price supports on feed grains other than corn are not mandatory, they have been extended at 85 percent of parity for the 1954 crops of oats, barley, rye, and grain sorghums. National average support prices for current and prospective crops of a number of commodities are indicated in Table 5. The remainder of this article will be devoted to a discussion and analysis of the situation and outlook for individual field crops. Another large wheat crop in 1953 accompanied by an exceptionally large carry-over has provided the United States with a record supply of 1.7 billion bushels of wheat.1 This is 8 percent above the previous record set in 1942. A number of problems are presented by this situation. Among them, adequate storage is of increasing concern. Although the storage situation was not considered acute in the Pacific Northwest, some of the wheat produced in that area was piled on the ground. Despite enactmen, of marketing quota», a continued need in 1954 for additional grain storage facilities in the Pacific Northwest is expected The United States Maritime Commission recently authorized the use of 135 ships of the Pacific Northwest mothba fleet for grain storage. This action will aid greatly in alleviating the storage problem which is expected with the harvest of the 1954 gram crops in that area The 1953 storage problem was more severe in several other producing areas and is expected to continue m 1954. Officials of the Department of Agriculture have attempted to alleviate the storage situation 1The supply of 1.7 billion bushels consists of a carry-over at the start of the current crop year (July 1, 1953) of 562 million bushels, the 1953 crop of 1,168 million bushels, and imports of possibly 5 million bushels. by indicating a willingness to guarantee occupancy and returns on new storage facilities in the hope of encouraging construction. As of January 14, the Department of Agriculture had accepted applications under this program for a total of 274 million bushels of additional storage capacity. The construction of additional facilities is also encouraged by Federal legislation which permits amortization deductions over a period of 60 months for grain storage facilities completed after December 31, 1952. Another and perhaps more important problem involves the necessity of finding or developing new outlets for wheat if the size of carry-over stocks is to be reduced, The large inventories which accumulated soon after the beginning of World War II were reduced principally by subsidizing the use of wheat for feed. The possibility of expanding the consumption of wheat for feed purposes at the present time, however, does not appear nearly as feasible as during the 1942-45 period because of the large supply of feed grains. Furthermore, the outlook for wheat exports from the United States is for continued readjustment from a record volume of world trade in wheat to lower levels, partly as a result of very large world production and supplies of wheat, ^ large proportion of United States wheat exports has been made to International Wheat Agreement countries. 'phe current export quota for the United States under the new international Wheat Agreement is 209.6 million bushels. The volume of exports under the Agreement so far indicates that the United States may be experiencing difficulty in finding “wheat dollars” available in Agreempr,t imnnrtino- rnnntnV<; In ^ ,„ e ected wheat ^ JW A ^ Commodit Credit Corporation has instituted a designed to increase the movement of wheat intQ t How the intent of the Government in initiati the new m is t0 suppIement rather than substitute for scheduled exports under the IW A . In line whh ^ H tfae c c c js itted t0 sell in rt at a ¡ce bdow the United Stateg market ice but has been directed nQt tQ seU at kes legs than the ice of wheat ^ under ^ I W A _ There ¡g SQme f howeVer, ^ ^ program may weaken ^ IW A as there appar_ ently exists Very little price advantage for nations which « , t ta h ta import Wheat Under tile I W A . T a b le 4 S upply and E xpected D is a p p e a r a n c e of S elec ted C rops w i t h D ata on P r ic e S u p p o r t A c t iv it i e s U n i t e d S t a t e s , 1953-54 C r o p Y e a r (in millions) Total supply1 W h ea t ( b u ) ......................................................................................... Corn (bu .) ......................................................................................... Oats (bu.) ........................................................................................... Barley (bu.) ......................................................................................... Grain sorghums (bu.) ...................................................................... Cotton (bale) ....................................................................................... 1,735.0 3,977.0 1,512.0 317.0 115.0 22.1 CCC stocks2 901.0 670.0 48.0 32.0 26.0 7.7 Free supply3 834.0 3,307.0 1,464.0 285.0 89.0 14.4 Expected utilization4 950.0 3,072.0 1,301.0 263.0 111.0 12.6 Free supply minus expected utilization Last date 1953 crop can be placed under supports — 116.0 + 2 3 5 .0 -j-163.0 + 22.0 22.0 + 1.8 January 31, 1954 M ay 31, 1954 January 31, 1954 January 31, 1954 January 31, 1954 April 30, 1954 1 Stocks on hand at the beginning of the crop year in addition to 1953 production. 2 Stocks of the Commodity Credit Corporation at the beginning of the crop year plus 1953 crop entries under the price support program through D ecem ber 15 except cotton which includes entries through January 8. 8 Difference between total supply and C CC stocks. 4 Official U S D A estimates which include expected disappearance in domestic and export outlets during the 1953-54 crop year. Source: Various publications, United States Department of Agriculture. January 1954 M O N T H L Y R E VIE W T able 5 A verage P ric e S u ppo rt L evel for S elected C rops U n ite d S t a t e s — 1953 a n d 1954 United States average support price 1953 crop W heat ( b u . ) .......................... . , . Upland cotton (lb.) .......... Cottonseed ( t o n ) ................. . . . Rice ( c w t . ) ............................. , , Grain sorghums (cw t.) . . Oats (bu.) ............................. Rye (bu.) ............................... Flaxseed ( b u . ) ...................... Beans, dry edible (c w t .). Corn (bu.) ............................. $ 2.21 .308 54.50 4.84 1.24 2.43 .80 1.43 3.79 7.79 1.58 Latest date United States for securing minimum Government average support price loan 1954 crop 1953 crop $2.20 January 31, 1954 ... 1 April 30, 1954 September 15, 1954 . . . .1 . .. 1 January 31, 1954 January 31, 1954 1.15 January 31, 1954 2.28 January 31, 1954 .75 1.43 January 31, 1954 January 31, 1954 3.14 1 January 31, 1954 . .. M ay 31, 1954 ] Not yet announced. Source: Active and announced Price Support Programs approved by Board of Directors, United States Department of Agriculture. Acreage allotments and marketing quotas are expected to result in reduced wheat production in 1954. It is pos sible, however, that this anticipated decrease in produc tion will not be sufficient to halt the accumulation of wheat stocks. Based on 1943-52 average yields, 950 mil lion bushels of wheat would be produced on the national allotment of 62 million acres.1 A crop of 950 million bushels would result in little if any reduction in carry over stocks, as the total disappearance during the crop year ending June 30, 1953 is estimated to have been slightly above 1 billion bushels. Wheat prices are expected to remain at or below the effective loan rate, and returns during 1954 from diverted wheat acreage planted to substitute crops probably will be less than was obtained from the production of wheat on the same acreage in 1953. Consequently, land devoted to production of wheat in 1953 is likely to yield a smaller net income this year. Cotton Marketing quotas on cotton were made necessary by loss of some foreign markets for cotton,2 loss of some po tential domestic cotton markets to synthetic fibers,3 and a series of large crops. The result has been the accumula tion of cotton supplies which exceed the “normal” supply4 by 4 million bales (500 pounds each) or nearly half the annual domestic market requirements. The United States has produced large crops of cotton in every year since 1950, the last year in which marketing quotas were in effect. For the last three years, production has averaged considerably above the average level during the period 1942-51. The largest crop in fifteen years— 16.5 million bales— was produced in 1953 despite a reduc1 Based on conditions as of December 1, 1953 a yield of 16.1 bushels per acre is indicated for the 1954 winter wheat crop compared with an average yield of 17.7 bushels for the period 1943-52. 2 United States exports of cotton declined 45 percent in the year ending August 1, 1953. 3 In the United States cotton consumption per person is about the same now as it was in 1916, but in the same period per capita consumption of all fibers has increased nearly 13 percent. Cotton has been losing some of its most important domestic outlets such as the tire cord market which for 30 years was the largest single use outlet for cotton. Now about threequarters of that market has been taken over by rayon and synthetic fibers. 4 “ Normal” supply is defined as total domestic and foreign sales plus 30 per cent of total sales to provide for reserves. 7 tion in acreage from 1952. An increase in yields more than offset the acreage decline. As originally announced, the marketing quota on cotton was designed to reduce cotton production in 1954 by about one-third or to about 10 million bales. In order to accomplish such a decrease it was necessary to cut total acreage about 27 percent. However, under the legislation in effect when the quota was first announced, cotton pro ducers of the Twelfth District were more seriously affect ed than cotton producers of other areas. Allocation of the national cotton quota to individual states was based on average production in the years 1947-48 and 195053. Since cotton production in western areas has increased rapidly in this period, required 1954 acreage reductions in California and Arizona would have averaged about 50 percent of acreage in 1953 compared with 27 percent in the nation as a whole. In January this year Congress passed an amendment to the law affecting cotton marketing quotas which in creases the total cotton quota allotment from 17.5 million to 21.4 million acres. As a result, acreage reductions for 1954 in California and Arizona are expected to approxi mate 34 percent. However, liberalizing present cotton quota provisions for 1954 may mean ensuring the imposi tion of acreage restrictions in succeeding years in order to reduce the size of the Government-held surplus. Even under the original provisions of the marketing quota law the carry-over of cotton on July 31,1955 is expected to be only 5 percent lower than on the same date a year earlier. Approval of a cotton marketing quota by cotton pro ducers of the United States means that most of them will receive less income from cotton in 1954 than in 1953 be cause of the lower acreage they will be permitted to plant. On the other hand, disapproval of a marketing quota also would have meant less income from the 1954 crop. Had the cotton quota been rejected, mandatory acreage limita tions would have been avoided. In this case, however, the guaranteed Government price would have dropped from the present minimum level of 90 percent of parity, or about 30 cents per pound, to 50 percent of parity, or about 18 cents per pound. Even under the liberalized provisions of the cotton marketing quota law District cotton producers will be faced with loss of income and some serious adjustment problems, as there appear to be few satisfactory alterna tive crops for acreage removed from cotton production in California and Arizona. Choice of alternatives in western cotton areas is seriously limited by the available water supply, by the high level of fixed costs on cotton-produc ing land, and by other factors. Some possible alternatives, such as castor beans, would require additional investment in specialized machinery while others require consider able production experience. Other possible alternatives lack established marketing outlets from District cotton farming areas. Agricultural economists of the University of California have shown that in California net income per acre for land shifted to production of grain sorghums, 8 January 1954 FEDERAL RESERVE B A N K OF S A N F R A N C ISC O irrigated barley, and oilseed crops may be $15 to than could be expected from 1954 crop cotton. sugar beets, corn, or dry farm barley, according analysts, can be expected to return from $50 to acres less net income than cotton.1 $50 less Alfalfa, to these $90 per Rice Rice production continues to increase in the United States. The 1953 crop of 52.5 million bags was a record. A new record apparently was set not only for the country as a whole but also for each of the rice-producing states. Nationally, both acreage and average yields were greater than for the previous year. The 1953 rice crop was preceded by a record volume of United States exports during the 1952 crop year— 17.4 million bags. This volume of exports was over one-third the 1952 United States production and approximated 15 percent of the world exports of rice. Japan, Korea, and Cuba imported three-fourths of last year's exports from the United States. However, during the period Septem ber 1952 to November 1953 export supplies of United States rice were not adequate to meet requirements of both the United States military and importing countries. Consequently, the Federal Government found it neces sary during this period to allocate the rice supply avail able for export to the various outlets. These export re strictions by the Department of Agriculture remained in effect past the original expiration date— June 1953— but greater than expected increases in production of rice in Southeast Asia and South Korea prompted the final re lease of these export controls. The growing season for the 1953 Japanese crop of rice was particularly unfavorable. As a result, United States rice exports to Japan for 1953-54 are expected to exceed annual exports of the two previous years. However, United States foreign agricultural representatives indi cate that maintenance of a reasonably competitive price for United States rice in the Japanese market is necessary to maintain Japan as an important outlet. Increased South Korean rice production has reduced rice import require ments of that country. Since little change is expected in domestic civilian con sumption of rice, continued high exports will be necessary to maintain farm prices of rice above the support level. Prices received by rice growers have advanced from early season levels in September. However, on January 15 California growers were receiving $5.20 per 100 pounds compared with $6.10 on the same date a year ago. sugar beet production in recent years have resulted from general increases in production in each major District sugar beet producing state. With increases for the United States in both acreage and yields of sugar beets, total na tional 1953 production of this crop is estimated to be about 18 percent greater than output last year. Despite increased production the average price per ton received by farmers for sugar beets in 1953 is expected to average slightly above comparable 1952 prices.1 Final reports are not available, but with District increases in both prices and average yields, gross returns per acre from sugar beets probably will average higher for the 1953 crop than for the crop of a year earlier. However, the outlook for sugar beet prices and gross returns in 1954 is somewhat more pessimistic. In the year ahead decreases in acreage devoted to cotton and falling prices of some other commodities may result in another increase in sugar beet production. However, establishment for 1954 of a market quota on domestic sugar at 1.8 million short tons may tend to suppress a great expansion in domestic sugar beet acreage. Allotment of the quota to each individual processor of sugar beets was necessary to provide each of them an equitable opportunity to market sugar in 1954 within the established quota. In turn, each processor must restrict his purchases of beets to quantities consistent with his market allocation of sugar. The limited capacity of sugar beet processing establishments also may tend to discourage general expansion of sugar beet production. However, a more complete utilization of existing proces sing capacity is being accomplished in California by plant ing part of the crop in the fall for spring harvesting. 1 Sugar Report, Production and M arketing Administration, United States D e partment of Agriculture, October 1953. C hart 3 T W E L F T H D ISTRICT PR ODUCTION AS A PERCENT OF U. S. P R O D U C T IO N -S E L E C T E D FIELD CROPS, 1941-1953 Percent D riod fie ld p eas ____ - - -^vSug a r beets ' Sugar beefs The District production of sugar beets in 1953 was 6.2 million tons, constituting more than 50 percent of the na tion’s 1953 sugar beet crop. This is an increase of 32 per cent over last year and is 37 percent above average pro duction in the years 1942-51. Large increases in District 1 C. O . M cCorkle and T . R . H edges, “ Cotton Quotas and Allotm ents,” California Agriculture, College of Agriculture, Extension Department, U n i versity of California, Vol. 7, N os. 9-13 (September-December 1953). V B a r le y / / ✓ . R ic e / W heat ____ • Cotton ____ 1— ____ L _ » ____ l____ p Preliminary. Source: United States Department of Agriculture, Production, Farm D is positionand Value of Principal Field Crops. January 1954 M O N T H L Y R E V IE W Feed and forage Another large supply of feed grains and by-product feeds is available for the current feeding season.1 A l though United States supplies of oats and barley are be low the 1952-53 level, the supply of corn, the principal feed grain, is at near record levels. In the District, the supply of feed grains is about the same this year as last. A smaller oat crop was balanced by larger crops of barley and grain sorghums. Cash receipts from District farm marketings of feed grains may be less for the 1953 crop than for the 1952 crop. With a large national supply of corn the prices received by District feed grain producers have been aver aging less this fall and winter than last. An expected re duction of barley exports in the year beginning last July 1 also will tend to hold District prices down, as this outlet was of considerable importance to District barley pro ducers in the preceding crop year. However, with much of the diverted 1954 wheat acreage suitable for the produc tion of either oats, barley, or grain sorghums, the produc tion of these feed grains under normal growing conditions will probably increase in 1954. Consequently, cash re ceipts from the 1954 crop of feed grains and forage may increase, but this increase is expected to be more than offset by reductions in returns from cotton and wheat. Although the national hay supply is larger now than in 1952-53, drought conditions in Missouri and Kansas and in several southern states seriously cut hay and pasture production in these areas. For the District as a whole hay production was slightly larger in 1953 than in 1952, but during the last year hay and pasture conditions have varied considerably among District states. Localized drought areas in Utah, Nevada, and Arizona reduced hay production in these areas and contributed to relatively poor pasture conditions. In Washington, Oregon, and parts of Idaho and California, fall pasture conditions were considerably improved over a year ago. District increases in hay production were confined largely to the Northwest. District hay prices are down considerably from year-ago levels and are below United States average prices for hay. Potatoes The current potato situation illustrates the extreme sensitivity of potato prices to changes in output.2 The na tion’s 1953 crop of late potatoes is only 3 percent larger than production last year, and for the eleven western states the 1953 output was slightly below that of a year earlier. Nevertheless, potato prices since early spring of 1953 have been considerably below those received in 1952. Prices received by District producers, as of January 15, ranged from 52 cents per bushel in Idaho to $1.20 per bushel in northern California. At these levels they were about $1 lower than a year ago. 1 The feeding season is October 1 through September 30. 2 The reason for this is that little variation in consumption of potatoes occurs in the United States from one year to another or in response to changes in prices of potatoes. Therefore, a small increase in production of potatoes often results in oversupply as in 1953-54 while a small decrease often causes a shortage as in 1952-53. 9 The increase of late potato production in the eastern states and decreased production in most western states compared with 1952 is reflected in a reversal of last year’s price differentials between the two areas. Last year, on January 15, Maine farm prices of potatoes exceeded prices received by Idaho farmers by 40 cents per bushel. This year the situation is reversed, with Idaho farmers receiv ing 12 cents more per bushel than Maine farmers. Ordinarily, low prices for late potatoes one year are followed the next year by reductions in potato acreage and, according to an early survey by the Department of Agriculture on potato growers’ planting intentions, potato acreage decreases are indicated for all late potato produc ing regions in 1954. Plantings are expected to be down 10 percent in eastern late states but only 2 percent lower in western late states. However, prices received later this winter for late potatoes and those received for early pota toes in 1954 can be expected to influence farmers’ final decisions with regard to 1954 late potato acreage. Also, acreage restrictions on other farm commodities and the prospects of relatively unattractive prices for many alter native crops may tend to prevent large potato acreage reductions next year. Dry edible beans and peas About 11 percent more dry edible beans were produced in the nation in 1953 than in 1952. The Twelfth District accounted for 42 percent of national production. The price outlook for dry edible beans, although good, is not so favorable as anticipated earlier. It had been thought that smaller carry-over stocks together with continued strong demand would offset the increased production. Dry bean prices were expected to average as high or higher than for the previous year. However, United States bean prices received by growers during December and January have averaged 3 to 4 percent below com parable prices of a year ago. In 1953 the United States crop of dry field peas was about 25 percent larger than the small 1952 crop but much smaller than average production over the period 1942-51. Approximately 90 percent of the dry field peas produced in the United States are grown in this District. Although dry field peas are not a major source of District farm in come, this crop will undoubtedly gain in relative impor tance if plantings are increased by using acres diverted from production of wheat. The effect upon producer in comes in 1954 from substituting peas for wheat in the wheat-pea producing area of the District will depend largely on the export market. Domestic consumption per capita has remained fairly constant at 0.7 pounds per year while exports have varied considerably and have been an important outlet for dry field peas since the end of World War II. A large share of the peas which were moved into export outlets were shipped under Government aid programs, and exports of this crop in the year ending July 31, 1953 were considerably smaller than those for any other recent year. 10 FEDERAL RESERVE B A N K OF S A N FRA NC ISCO Seed crop s The supply of alfalfa seed from the 1953 crop and from carry-over stocks is a little larger than for the preceding year. Although 1953 production of alfalfa seed was less than during the previous year, the carry-over at the be ginning of the 1953 crop season was considerably larger. District output of alfalfa seed in 1953 was about 7 percent smaller than production the previous year. Even so, Dis trict states produced more than times as much alfalfa seed in 1953 as they did annually during the period 1942-51. Farm prices of alfalfa seed remained low in 1953 and in December 1953 were about 24 percent under compar able 1952 prices. Little improvement in these prices is expected unless the search for crops to plant on diverted wheat and cotton acreage greatly stimulates the demand for alfalfa seed. Furthermore, with both prices and pro duction of alfalfa seed down from levels of last year, total cash receipts of District alfalfa seed producers during the current marketing season are expected to be considerably less than during the 1952-53 marketing period, but they may exceed farm returns from this source during earlier years. January 1954 The national production of both ladino and red clover seed for 1953 was down considerably from 1952— red clover 16 percent and ladino clover 44 percent. Nearly all of the ladino clover seed and about 12 percent of the red clover seed produced nationally was produced in Dis trict states in 1953. Within the District, however, red clover is as important as ladino as a source of income. The large reduction in ladino clover seed production is attributed chiefly to the absence of price supports on the 1953 crop. Prices of ladino seed have dropped about 60 cents per pound in the last year and the available supply is very large. At the 1952 rate of disappearance it would take ten years to dispose of the 1953 production and carry over of ladino seed. Consequently, the United States De partment of Agriculture has been attempting to stimulate exports of ladino and other seeds. Despite unfavorable seed producing conditions in some states, which accounted for much of the reduction in red clover seed production, prices in the last year have de clined about 4 cents per pound. The principal reason for this development appears to be the large over-all supply of seeds. The 1954 price outlook is considerably better for red clover seed, however, than for ladino, as the carry over of red clover is expected to be smaller at the end of the current marketing season than in 1953. ACCELERATED AMORTIZATION IN THE TWELFTH DISTRICT after the outbreak of hostilities in Korea Con gress authorized the Executive Department of the Government to issue certificates of necessity for privately built defense or defense-related plant and equipment. These certificates offered accelerated amortization of the capital facilities they authorized, substituting a depreci ation period of five years for a period normally much longer. The accelerated amortization program thus acted as a tax stimulus to investment expenditures necessary to the national defense program; $27 billion worth of in vestment was authorized1 under the program through June 1953.2 S h o r tly In the Twelfth District the dollar volume of awards as a proportion of the national total appeared low when com pared to the District’s share of national population, pro duction, or income. One cause of this seemingly low pro portion is statistical. Certificates granted to transporta tion firms were not allocated by states in many cases be cause the scope of operations extended over several states. Another cause was the low rate of awards to public utili ties in some parts of this District resulting from the con centration of generating facilities in the hands of Federal agencies. In manufacturing the District received a some what greater share of awards than its proportion of na tional industrial output. 1 The figures used throughout this article represent the certified value of the projects awarded certificates of necessity rather than the total proposed cost of the projects. 2 June 30, 1953 is the latest date for which the detailed figures discussed in this article have been compiled since the primary source data are not readily available. The volume of certificates authorized in the District may be taken as a measure of the District’s defense-related investment outlays, but for several reasons the measure is only a rough one. The problem of allocation has already been mentioned. In addition, the amortization program does not reflect reactivation of idle facilities or more in tense use of previous capacity. Furthermore, a number of certificates were granted in the expectation that the projected programs would be undertaken at a later date and some of these programs, such as a $136 million steel plant in Sacramento County, California and a $17 million petroleum refinery at Florence, Arizona, have not yet been started. Finally, some plans for which certificates had been granted were later curtailed or dropped. The volume of certificates authorized does not, of course, reflect investment for which certificates were not granted. Because of the upward shift in demand follow ing the Korean outbreak, the District experienced an in flux of industries which sought to meet added demand by expanding in market areas distant from the then current sources of supply, and a fair number of these expansions did not qualify for accelerated amortization since they were not directly related to national defense. Even with these limitations the volume of certificates in this District reveals some interesting effects of the de fense program. The District, as mentioned above, re ceived a slightly larger share of awards for manufacturing than its proportion of national industrial output. More over, the certificates tended to be concentrated in a few January 1954 11 M O N T H L Y R E V IE W manufacturing industries. The pattern of awards among the several District states, however, tended to follow that of previous output. The effects of the program were most pronounced in stimulating the expansion of durable goods industries and in enlarging the industrial base of the Dis trict. Awards to manufacturing industries play dominant role in Twelfth District The receipt by District manufacturing firms of a greater proportion of certificates than might have been expected and the heavy concentration within manufactur ing compared with the national experience reflect a va riety of forces. Several District manufacturing industries, such as food, lumber, aluminum, paper, and petroleum, account for a substantial proportion of national output, and factors favorable to their further expansion were still pronounced in this District. As a result these industries received a larger share of the awards than their propor tion of national output in previous years. Also, because of the Twelfth District’s proximity to the Orient, the petroleum industry received a somewhat greater impact in the District than nationally. The increase in demand for some strategic minerals and metals located in the Dis trict resulted in the establishment of a number of new processing plants. Detailed data are presented in Table 1. Though the lumber industry received a small propor tion of the awards in the District, it received a much larger share of the national awards to the industry than its share of 1951 output. This reflects greater mechaniza tion of the District lumber industry and the very large share of virgin timber stands located in the western states. The District food industry, too, was granted a much larger share of certificates than its share of national output. The concentration of aluminum facilities in the Pacific North west along with rapid growth in the District steel indus try led to a share of certificates for the primary metals group more than twice as large as the proportion the District contributed to the national value added by manu facture for that group in 1951. Despite the continued growth of the aluminum industry in the District, on a national basis the industry became more diversified geo graphically. Large blocks of power have been increasingly difficult to obtain in the Pacific Northwest and will prob ably continue so until new generating facilities are com pleted. In the meantime, aluminum plants have been established in the South and Southwest to take advantage of natural gas and lignite as fuels for the generation of electricity. Awards of certificates of necessity introduced a new line of production— ordnance— to the District and also stimulated growth of instrument output. Awards in the transportation equipment industry, which includes aircraft, automobile, and shipbuilding, T able 1 C e r t ifie d V a l u e o f P r o je c t s C overed b y C e r t if i c a t e s o f N e c e s s i t y U n ite d S ta te s and T w e lfth D i s t r i c t , O c t o b e r 1950-J u n e 30, 1953 (in thousands of dollars) Industry groups ............ Manufacturing ............................................... .......... Durable goods industries Electrical m a ch in ery ........................ Fabricated metals ............................. ............ F u rn itu re................................................ ............ ... Lumber ................................................... ............ Machinery (nonelectrical) .............. Primary metals .................................. ............ Stone, clay, and g l a s s ........................ .......... Transportation e q u ip m e n t............ ............ Nondurable goods industries Apparel .................................................. ............ Chemicals ............................................... ............ Food ....................................................... ............ L e a t h e r ................................................................ Paper ....................................................... Petroleum products ........................ Printing and publishing ............... ............ Rubber ................................................... ............ M iscella n eou s........................................... ............ ,-----------United States----------- N Certified Percent value distribution 27,101,408 100.0 f-------- Twelfth District-------- N Certified Percent value distribution 100.0 1,799,741 Twelfth District percentage of United States certificates 6.6 14,872,000 54.9 1,433,815 79.7 9.6 8.8 484,170 226,873 1,935 129,649 49,472 761,463 296,615 5,346,151 340,947 1,091,642 1.8 0.8 * 17,182 19,763 192 16,593 31,715 38,378 23,926 627,769 39,782 138,030 1.0 1.1 # 0.9 1.8 2.1 1.3 34.9 2.2 7.7 3.5 8.7 9.9 12.8 64.1 5.0 8.1 11.7 11.7 12.6 3.4 7.1 7.5 3.6 39.0 4.6 129,409 3,919 7.2 0.2 4.4 35.7 92,382 244,871 291 9,181 194 238 5.1 13.6 * 12.1 12.0 3.6 8.2 * 365,926 19,824 20.3 1.1 3.0 92.4 64,849 9,242 21,686 54,973 195,352 3.6 0.5 1.2 3.1 10.9 3.6 31.3 9.1 1.0 4.4 386 2,912,425 10,981 84 774,113 2,046,812 8,165 111,622 146,074 132,421 Nonmanufacturing ...................................... , . . , Agricultural services ............................. C onstruction................................................ M in in g .......................................................... ............ 12,229,408 21,455 T r a d e ............................................................ ............ T ransportation ........................................... ............ U ti li t i e s ....................................................... . 238,440 5,687,912 1,815,219 0.5 0.2 2.8 1.1 19.7 1.3 4.0 * 10.7 * * 2.9 7.6 # 0.4 0.5 0.5 45.1 0.1 * 6.7 0.1 0.9 21.0 16.3 0.5 * * 0.2 *Less than one-tenth of 1 percent. Source: United States Department of Commerce, Certificate of Necessity Code Sheets and Annual Survey of Manufactures, 1951 Twelfth District percentage of United States value added by manufacture in 1951 5.4 7.7 12.7 6.2 6.5 12.9 10.1 10.8 7.8 0.7 12 FEDERAL RESERVE B A N K OF S A N FRA NC ISCO account for a significant proportion of certificates received in this District. As a share of the national total, however, the awards were less impressive than those in the indus tries previously mentioned. District aircraft firms were the principal recipients of these awards. These firms had considerable excess capacity at the start of the Korean conflict and expanded their plant facilities and equipment only to the extent required by new models. In addition, expansion of automotive facilities outside this District tended to balance the aircraft expansion here. The low proportion of certificates in nonmanufacturing reflected a small volume of awards to transportation and utility firms. Utility firms in California received a fairly sizable volume of certificates of necessity. In other parts of the District— particularly the Pacific Northwest— the primary generating facilities are held to a large extent by Federal agencies. Much of the expansion of power facili ties has been undertaken by these agencies, which do not pay taxes and consequently were not issued tax amortiza tion certicates. A w a rd s of certificates to m anufacturing important in each District state In each of the Twelfth District states manufacturing industries accounted for a proportionately greater amount of total certified facilities than did manufacturing indus tries in the United States. Table 2 illustrates the impor tance of awards by industry to District states. In Cali fornia, the major industries responsible for this greater concentration of certificates in manufacturing were pri mary metals, petroleum refining, aircraft, and chemicals. Expansion of steel facilities in the Los Angeles, San Bernardino, and San Francisco metropolitan areas ac counted for almost all of California’s actual primary metal expansion. The aircraft industry made a sizable contri bution to California’s total certified facilities. More than 80 percent of certified expenditures proposed by the air craft industry were proposed by aircraft frame and air craft parts producers, with producers of aircraft engines and engine parts and propellors accounting for the re maining portion. Many other industries in California which individually account for only a small portion of total awards expanded facilities with the aid of certificates of necessity and experienced rapid growth. Among these industries are electrical machinery, nonelectrical machin ery, ordnance, and fabricated metals. Within the non manufacturing sector, the electric light and power indus try proposed a large share of certified facilities for the expansion of generating and transmitting facilities. In Washington an exceedingly high portion— some 97 percent— of certified facilities fell among manufacturing industries. The explanation of this concentration lies in the importance of the aluminum, paper, petroleum refin ing, and aircraft industries to Washington’s defense ex pansion. Aluminum producers proposed the major por tion— 35 percent— of certified facilities, as new smelting, refining, and rolling facilities were added to existing plant capacity. The large sum of proposed expenditures for January 1954 petroleum refining facilities reflects the availability of the new supply of crude oil being piped into northwestern Washington from the Alberta oil fields in Canada. Two major refineries are being built at Ferndale and Anacortes and other refining facilities are being expanded to receive this supply of crude oil. Certificates of necessity have also assisted the expansion of aircraft production facilities at aircraft plants in Renton and Seattle, Washington. In Oregon, as in Washington, the manufacturing sector of the economy received the largest share of certified facil ities as a result of the expansion of a few major industries, in this case primary metals and lumber. The primary metals industries accounted for 60 percent of total certi fied facilities. However, prior to the issuance of two cer tificates to Oregon firms for a $22 million ferro-nickel smelting and refining plant and for a $45 million alumi num reduction plant at The Dalles, proposed expendi tures by primary metal firms accounted for less than 10 percent of the total. The other major industry in Oregon receiving certificates of necessity was lumber. For the most part, certified expansion in this industry occurred in plywood plants and sawmill and planing mills. In Idaho, as in Washington, an exceedingly high por tion of certified expenditures was proposed by manufac turing firms. The major industry to expand defense re lated facilities was chemicals, which contributed more than 70 percent of certified expenditures. Certificates issued to Idaho chemical firms covered the production of phosphatic fertilizers. Easy accessibility of phosphate rock, potash, and nitrates has encouraged the develop ment of the fertilizer industry in the Intermountain area, particularly in Idaho. In the three other Intermountain states— Utah, Ari zona, and Nevada— manufacturing industries did not receive such a large portion of certificates of necessity as did those in the District as a whole. However, the manu facturing sector in these three states did propose a larger portion of certified expenditures than did manufacturing industries in the nation. Largely explaining the lesser degree of concentration of certified facilities in manufac turing in Utah, Arizona, and Nevada than in the rest of the District is the greater prominence of metal mining within these three states. In Utah, facilities expansion by metal mining firms accounted for 18 percent of total cer tified expenditures. The major portion (85 percent) of metal mining expansion was proposed by a major cop per mining company working the Bingham Canyon cop per deposits. Firms mining iron and tungsten ores re ceived the remaining certificates. Other industries which contributed substantially to Utah’s defense certified ex pansion were steel and chemicals. Further expansion of steel facilities at the Geneva plant accounted for some what less than 20 percent of Utah’s total certified facili ties. Chemical firms producing alkylate for aviation gaso line, sulphuric acid, phosphates, and petrochemicals also proposed a large share of certified facilities. The somewhat smaller concentration of certified facili ties in the manufacturing sector of Arizona’s economy January 1954 13 M O N T H L Y R E V IE W than in the District generally is also explained by the very significant contribution made in the nonmanufacturing sector by Arizona’s metal mining industry. Copper min ing firms alone proposed a $26 million metal mining ex pansion program. Approximately 50 percent of the certi fied projects were proposed by the primary metals indus try. The major portion of this expansion was undertaken by copper refining firms, the remainder being accounted for by the expansion of an aluminum plant in Phoenix and of scrap metal processing facilities. Certified expansion of metal mining facilities also as sumed considerable importance in Nevada. Metal mining firms proposed 35 percent of total certified facilities ex pansion. Firms mining copper, tungsten, and manganese T abl e 2 C er t if ic a t e s of N e c e s s it y b y I n d u s t r y — T w e l f t h D is t r ic t O ctober 1950-J u n e 30, 1953 (in thousands o f dollars) Industry group Manufacturing .................................................................................... Primary metals1 ........................ ................................................... Blast furnaces, steel works and rolling mills, electrometallurgical ............................. ............................... Primary smelting and refining of nonferrous metals Copper ...................................................................................... Aluminum ................................................ ........................... . Rolling, drawing, and alloying of nonferrous metals Copper .................................................. .................................... A lu m in u m .................................................................................. Z i n c ............................................................................... ............. Petroleum r e fin in g ........................................................................ Aircraft and parts ........................................................................ C h em ica ls........................................................................................... Paper and allied p r o d u c ts .................................................... Machinery (n on electrical)..................................................... Stone, clay, and g l a s s ..................................................... L u m b e r ................................................................................................ Ordnance .................................... . . . . ...................................... Fabricated metal products ....................................................... Electrical machinery ............ . . . ............................................... Other manufacturing indu stries.............................................. Nonmanufacturing ............ ................................... ............................ Transportation, communication, and public utilities Electric light and p o w e r ................. ................ ..................... Metal mining .................................................................................. Copper o r e s ................................................................................. . Tungsten o r e s ............................................................................. Manganese o r e s ............................................................ .............. Agricultural services ............................................................ Other nonmanufacturing indu strie s...................................... Twelfth ,------------Dist net----------- N Dollar Percent amount of total . . 1,433,815 79.7 627,769 34.9 Nonmanufacturing ............ ................................................................. Transportation, communication, and public u t ilit ie s ..., Electric light and p o w e r ....................................................... M etal mining .................................................................................. Copper o r e s ........................................................................ : . . . , Tungsten o r e s ................................................................... .... . . Manganese o r e s .......................................................................... Agricultural services ......... .......................................................... Other nonmanufacturing indu strie s............................. .. T o t a l ......................................................................................................... ,---------- Oregon----------- N Dollar Percent amount of total 131,338 87.8 91,285 61.0 16.3 74,701 155,115 4.2 8.6 2,185 33,825 5,225 242,835 133,695 129,409 92,382 38,378 39,782 31,715 23,926 19,763 17,182 36,979 0.1 1.9 0.3 13.5 7.4 7.2 5.1 2.1 2.2 1.8 1.3 1.1 1.0 2.1 1,347 25,949 3,032 175,803 110,432 65,247 8,699 33,367 28,985 10,290 14,985 14,945 16,616 33,322 0.1 2.3 0.3 15.8 9.9 5.9 0.8 3.0 2.6 0.9 1.3 1.3 1.5 3.0 365,926 250,325 190,572 •57,466 38,022 4,992 2,750 19,824 38,311 20.3 13.9 10.6 3.2 2.1 0.3 0.2 1.1 2.1 268,704 221,770 182,165 5,903 24.2 20.0 16.4 0.5 ’ 998 o .i 11*,920 29,111 *1*1 2.6 4*459 Ï .6 l ’,Ì4Ò *0*8 1,799,741 100.0 1,110,613 100.0 271,044 100.0 149,619 100.0 Dollar amount 36,051 i;213 Percent of total 93.0 3.1 257,316 23.2 TT*^U Dollar Percent amount of total 27,391 59.4 10,417 22.6 9,314 838 1.8 1,207 *2.6 27,904 1,007 175 40 13.7 72. Ò 2.6 12,568 ’ *92 0.5 ,0.1 66,Ì63 44.2 7,555 2.8 42,959 18,922 18,193 71,810 1,055 3,549 2,025 749 2,383 103 804 15.8 7.0 6.7 26.5 0.4 1.3 0.7 0.3 0.9 * 8,912 2,835 3.3 1.0 1*6 Í 8 0.6 A 0.3 . Dollar amount 115,682 78,335 mu. ^ Percent of total 75.7 51.2 74,494 48.7 *228 *0*2 2,427 10,866 1,434 3,307 19,360 903 359 308 861 Ï .6 7.3 1.0 2.2 12.9 0.6 0.2 0.2 0.6 18,281 13,575 7,040 3,566 12.2 9.1 4.7 2.4 TVT . _ 1_ Dollar amount 19,312 17,721 Percent of total 62.9 57.72 1,365 4.4 0.2 2,Í93 7*.i 2*7.2 ” Í7 1,384 o .i 4.5 0.2 2*522 3,484 1.6 2.3 "Í9Ó 0.6 7,2*89 4.8 ’ 133 569 o’.i 0.4 37,201 2,248 329 26,450 26,450 24.3 1.5 0.2 17.3 17.3 11,377 59 37.1 0.2 10*696 3,988 3,797 2,750 3*4*. 9 13.0 12.4 9.0 7*904 599 *5.2 0.4 *622 152,883 100.0 30,689 7.0 2.9 2.7 1.9 18,753 8,724 40.6 18.9 8*494 7,584 197 1*8.4 16.4 0.4 845 2.2 1*535 38,749 100.0 46,144 2,698 1,114 1,034 739 15.1 1Ï. 3 2.8 1.1 4.5 * 2.2 V .i 22,605 0.1 32.8 *321 2,076 22 1,009 414 0.9 207 88,952 17,3403 4,324 1,686 • ,. 5,298 2,384 20.2 .... 1 Selected primary metal industries do not add to total as some details have been omitted. 2 Titantium processing accounts for the major portion of these certificates. 3 N o action has been taken on this award. *Less than one-tenth of 1 percent. N o t e : Percentages may not add to totals because of rounding. Source: United States Department of Commerce, Certificate of Necessity Code Sheets. f-------Washiington-----Dollar Percent amount of total 262,132 96.7 99,580 36.7 292,984 T Manufacturing ....................................................... ............................ Primary metals1 ......................................................................— Blast furnaces, steel works and rolling mills, electrometallurgical ................................................ ............ Primary smelting and refining of nonferrous metals Copper ...................................................................................... Aluminum ............................................................................. .. Rolling, drawing, and alloying of nonferrous metals Copper ...................................................................................... A lu m in u m .................................................................................. Z i n c ......................................................... ................................... Petroleum r e fin in g ............................................................ .. Aircraft and parts ............................................................ C h em ica ls........................................................................................... Paper and allied p r o d u c ts ........................ ................................. Machinery (n o n electrical).......................................................... Stone, clay, and glass ..................................................... .. ♦. . . L u m b e r ................................................................................................ Ordnance ........................................................................................... Fabricated metal products ....................................................... Electrical machinery ..................................................... ............. Other manufacturing in d u stries.............................................. (-------- C alif ornia-------- ^ Dollar Percent amount of total 841,909 75.8 329,218 29.6 *3*.3 . 100.0 *2*. Ó 100.0 14 January 1954 FEDERAL RESERVE B A N K OF S A N FR A N C ISCO received the major share of certificates issued to mining firms and a very small portion of certificates were issued to firms mining titanium. In manufacturing, one industry — primary metals— received a large portion of certificates. The expansion of zinc, manganese, tungsten, and titanium processing facilities accounted for more than 50 percent of total certified value. Distribution of certificates am ong District states tends to follow previous pattern of industrial activity The percentage distribution of defense-related manu facturing facilities among the three major areas of the Twelfth District— California, the Pacific Northwest, and the Intermountain states — has generally been propor tionate to each area’s contribution to manufacturing plant and equipment expenditures in 1951. Table 3 illustrates this pattern. California, with the largest industrial capac ity, supplied 59 percent of certified expenditures for manufacting facilities whereas the Pacific Northwest and the Intermountain area contributed 27 and 14 percent, re spectively. Even though the Pacific Northwest contrib uted the same relative portion of District certified expen ditures as of plant and equipment expenditures (1951), a shift within the area was evident. In comparison with 1951 plant and equipment expenditures, Washington con tributed a larger share, and Oregon a smaller share, of certified defense expenditures. The importance of Wash ington’s aircraft, aluminum, and petroleum refining in dustries to the defense effort accounts for its larger than expected share of the Pacific Northwest certified expendi tures. On the other hand, Oregon’s major industry— lumber— though faring better than the industry national ly, received a relatively small amount of certificates. This accounts for Oregon’s lesser role in the certificate of nec essity program. While the Intermountain states contributed the small est portion of certified facilities, these states (with the exception of Utah) contributed somewhat more to Dis Industry group Total Certified F a c ilitie s ................................................................... Manufacturing1 .................................................................................. Primary m e t a ls ............................................................................. Petroleum r e fin in g ...................................................................... Aircraft ........................................................................................... Chemicals ....................................................................................... Paper ................................................................................................ Machinery (nonelectrical) ..................................................... Stone, clay, and g l a s s ............................................................... Lumber ........................................................................................... Ordnance ......................................................................................... Fabricated m e t a ls ........................................................................ Electrical machinery ................................................................. Other ................................................................................................ N onm an ufacturin g..................................................... Transportation, communications, and public utilities. M etal mining ............................................................................... Agricultural services ................................................................. Other ................................................................................................ Percent distribution of value added by manufacture, 1951 Percent distribution of plant and equipment expenditures, 1951 ........................................................................... trict defense facilities than they have to District plant and equipment expenditures and value added in previous years. Responsible for this larger contribution were Ari zona and Nevada, in which the availability of strategic metals allowed considerable expansion of mining and processing operations. In addition, the defense-stimulated development of Arizona’s aircraft and ordnance indus tries is reflected in this state’s greater than normal contri bution to District defense-certified expenditures. As is shown in Table 3, California contributed more than 50 percent of total certified expenditures to most District industries whose expansion was aided by certifi cates of necessity. In such industries as nonelectrical and electrical machinery and aircraft more than 80 percent of District certified expenditures were made by California firms. However, there were several industries, namely paper, lumber, and metal mining, to which California made only a relatively small contribution. Of the total District certified expenditures applied to these three in dustries, Washington, Oregon, and the Intermountain region, respectively, accounted for the major portion. Wore certified facilities in metropolitan areas in California than in the Pacific Northwest In California more than 90 percent of proposed plant and equipment certified expansion was located in eight major metropolitan areas— Los Angeles, San Diego, San Bernardino, San Francisco, San Jose, Stockton, Sacra mento, and Fresno. Table 4 highlights the type of indus trial facilities proposed in these areas. Washington and Oregon present a different distribu tion pattern of certified production facilities. Less than one-third of certified investment projects in each state was located in the metropolitan areas— Seattle, Spokane, Tacoma, and Portland. Largely explaining the greater degree of geographic dispersion of certified facilities in the Pacific Northwest than in California is the location of Table 3 rY, T welfth District—Percent Distribution by State Twelfth District California Washington Oregon Arizona Idaho 100.0 61.7 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 58.7 52.4 72.4 82.6 50.4 9.4 86.9 72.9 32.4 62.6 75.6 96.7 90.0 73.4 88.6 10.3 60.1 76.0 68.3 15.0 100.0 65.0 13.3 8.3 9.2 14.5 15.1 18.3 15.9 17.7 14.2 14.1 77.7 2.7 8.9 6.4 3.1 12.1 0.6 2.2 1*9 11.8 3.7 8.3 61.0 3.8 1.8 1.8 2.3 2.4 1.1 2.8 5.0 5.4 6.2 1*1*6 0.1 Nevada 2.2 2.6 1.7 8.1 12.5 7.1 3.2 1.3 2.5 0.2 2.2 1.9 1.7 0.5 1.3 2.8 21.6 1.1 9.7 1.1 0.4 0.1 0*2 0*5 6.6 8.8 * 30*5 10.5 0.1 0*8 2.7 5.1 3.5 14.8 18.6 1.6 4*6 2.5 0.3 2.2 3.3 0.2 l*.i 1.5 10.2 0.9 46.0 39.9 1.6 2*2 10.5 1.7 14.7 1.2 V.Ò Utah 8.5 0.7 0.4 1.3 3.1 * 1*6 1 Some selected industries are broad industry groupings usually referred to by the Census as two-digit industries; others are specific industries referred to as three-digit industries. The selection of the type of industry has been made to highlight the impact of awards in particular industries. *Less than one-tenth of 1 percent. N o te : Percentages may not add to totals because of rounding. Source: United States Department of Com m erce: Certificate of Necessity Code Sheets and Annual Survey of Manufactures, 1951. January 1954 15 M O N T H L Y REVIEW ber firms, which received more certificates of necessity than lumber firms in California, are dispersed throughout western Oregon, particularly in Coos, Curry, Douglas, and Lane counties. However, it must be emphasized that a large number of certificates were awarded to a variety of industrial concerns, many of them small, in the metro politan areas. Even though many of the large and high cost facilities were geographically dispersed, industry within the metropolitan areas also expanded under the stimulus of the tax amortization program. aluminum plants along the Columbia River or its tribu taries. Unlike many industries which are attracted to metropolitan areas to obtain an adequate supply of labor, the aluminum industry which is dependent upon low cost power has located close to the source of power. A second factor is the development of petroleum refineries in the northwestern part of Washington close to the new supply of crude oil. Moreover, in Oregon two primary metal plants, accounting for 60 percent of the value of certified facilities, are located outside of Portland. Oregon’s lum Certificates T abl e 4 of Necessity by Industry—California October 1950-June 30, 1953 Metropolitan A reas (in thousands o f dollars) Chemicals ................................. Machinery (nonelectrical) Stone, clay, and g l a s s .......... Electrical machinery . . . . Ordnance ................................ Fabricated metal products Lumber .................................... P a p e r ......................................... O t h e r ......................................... California 841,909 329,218 176,853 113,819 65,247 33,367 28,985 16,616 14,985 14,945 10,290 8,699 28,885 Los Angeles1 416,852 71,273 143,681 90,189 20,966 29,522 5,383 10,753 10,813 9,443 1,188 904 22,737 Transportation by a i r .......... Wholesale trade .................... Agricultural services .......... W ater transportation .......... Trucking and warehousing Metal mining ........................... Other ........................................... 268,704 184,032 15,889 15,041 11,920 11,560 8,487 5,903 15,872 83,447 50,135 15,889 5,102 386 100 1,086 230 10,519 1,110,613 500,299 12,132 Industry group Total ................................................................... San Diego 10,951 10,054 San Bernardino 82,705 73,673 ’ *22 6,191 '¿ 5 5 *644 * ’ 69 ” 56 San Jose 17,512 553 Sacramento 136,142 136,1423 3,059 1,318 745 5,088 649 384 2,550 Stockton Fresno 522 1,034 471 144 581 58 2,Ì75 1,439 4,573 2,625 541 *5Ì 25 i 1,181 35,436 35,182 99,932 76,729 1,496 454 599 259 3,442 7,127 494 *751 *220 7,123 *168 *235 234 223 5,619 874 *105 3,208 791 **34 11,460 988 3,159 473 118,141 234,333 19,008 136,741 3,964 8,161 .... 517 *430 1 Includes Orange and Los Angeles counties. 2 Includes six counties : San Francisco, Alameda, Contra Costa, Marin, San Mateo, and Solano. 8 N o action has been taken on this award to date. Source : United States Department of Commerce, Certificate of Necessity Code Sheets. San Francisco* 134,401 47,437 31,046 8,282 25,413 2,706 4,292 4,605 3,707 901 16 January 1954 FEDERAL RESERVE B A N K OF S A N FRA NC ISCO BUSINESS INDEXES— TW ELFTH DISTRICT1 (1947-49 average=:100) Year and month Total Waterborne Industrial production (physical volume)3 Car nonagri Total Retail Dep't foreign cultural mf’g loadings store food trade3» 6 Petroleum3 Wheat Electric employ employ (num sales prices Lumber Crude Refined Cement Lead3 Copper3 flour1 power ment ment4 ber)2 (value)2 9, « Exports Imports 97 51 41 54 70 74 58 72 79 93 93 90 90 72 85 97 104 99 112 114 107 87 57 52 62 64 71 75 67 67 69 74 85 93 97 94 100 101 99 98 106 107 78 55 50 56 61 65 64 63 63 68 71 83 93 98 91 98 100 103 103 112 116 54 36 27 33 58 56 45 56 61 81 96 79 63 65 81 96 104 100 112 128 124 165 100 72 86 96 114 92 93 108 109 114 100 90 78 70 94 105 101 109 89 86 105 49 17 37 64 88 58 80 94 107 123 125 112 90 71 106 101 93 115 115 112 90 86 75 87 81 84 81 91 87 87 88 98 101 112 108 113 98 88 86 95 96 29 29 26 30 34 38 36 40 43 49 60 76 82 78 78 90 101 108 119 136 144 ioo 101 96 95 99 102 99 103 llla r 118ar ’ ‘ 47 54 60 51 55 63 83 121 164 158 122 97 100 102 97 105 122 132ar 1952 November December 109 109 107 108 118 114 133 126 85 78 116 111 97 96 141 138 120a r 121ar 1953 January February March April M ay June July August September October November 118 117 121 119 112 110 112 108 100 106 105 107 108 109 108 109 110 110 109 109 109 110 115 117 123 122 127 121 125 124 126 125 121 105 131 126 132 142 134 140 134 133 137 128 77 85 85 82r 75 77 r 64 69 73 69r 69 109 113 116 114 115 105 106 110 111 112r 112p 99 92 96 96 91 99 96 92 101 99 98 141 154 142 165 167 179 172 168 166 163 157 121ar 121a 122a 121a 122ar 122a 121ar 122a 124a 123ar 121a 1929 1931 1933 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 i 102 68 52 66 77 81 72 77 82 95 102 99 105 100 101 106 100 94 97 100 101 30 25 18 24 28 30 28 31 33 40 49 59 65 72 91 99 104 98 105 109 114 64 50 42 48 48 50 48 47 47 52 63 69 68 70 80 96 103 100 100 113 115 190 138 110 135 131 170 164 163 132 124 80 72 109 116 119 87 95 101 ‘ *89 129 86 85 91 186 171 *57 81 98 121 137 157 200 137a r 138a r 100a 102a 117 116r 114 115 135 148 194 232 138 a 138 a 139ar 139 a 140a 141ar 142ar 139a 140a 141ar 137 a 100a 103a 103a 102a 102a 103a 98a 99a 98a 95a 97a 116 117r 120r 116 124 121r 117 1 MillO 111 112 114 112 113 113 113 113 113 113 114 114 113 151 158 179 164 118 114 123 127 129 195 187 336 336 384 372 356 337 368 316 BANKING AN D CREDIT STATISTICS— TW ELFTH DISTRICT (amounts in millions of dollars) Year and month 1929 1931 1933 1935 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 Bank rates on short-term U .S . Demand ; Total Loans business deposits j time and Gov’t loans9 discounts securities adjusted8 deposits Condition items of all member banks7 2,239 1,898 1,486 1,537 1,871 1,869 1,967 2,130 2,451 2,170 2,106 2,254 2,663 4,068 5,358 6,032 5,925 7,093 7,866 8,839 495 547 720 1,275 1,270 1,323 1,450 1,482 1,738 3,630 6,235 8,263 10,450 8,426 7,247 6,366 7,016 6,415 6,463 6,619 1,234 984 951 1,389 1,740 1,781 1,983 2,390 2,893 4,356 5,998 6,950 8,203 8,821 8,922 8,655 8,536 9,254 9,937 10,520 1,790 1,727 1,609 2,064 2,187 2,221 2,267 2,360 2,425 2,609 3,226 4,144 5,211 5,797 6,006 6,087 6,255 6,302 6,777 7,502 1952 December 8,844 6,627 10,504 7,498 1953 January February March April M ay June July August September October November December 8,816 8,838 8,983 9,054 9,092 9,156 9,167 9.229 9,241 9,2.55 9,248 9,235 6,633 6,474 6,299 6,173 6,020 5,997 6,675 6,589 6,481 6,556 6,693 6,721 10,390 9,911 9,937 10,011 9,843 9,899 10,005 9,950 10,018 10,248 10,255 10,575 7,490 7,551 7,560 7,597 7,627 7,703 7,729 7,749 7,794 7,854 7,815 7,978 Member bank réserves and related items1«) Reserve bank credit11 — + 6 48 18 14 + 3 20 + 31 + 96 + + 227 + 643 + 708 + 789 + 545 326 — 206 — 209 — 65 — 14 + 189 + 132 39 + 175 147 185 287 549 565 584 754 930 1,232 1,462 1,706 2,033 2,094 2,202 2,420 1,924 2,026 2,269 2.514 2,551 42 28 18 25 32 29 30 32 39 48 60 66 72 86 95 103 102 115 132 140 150 — 299 - 240 + 422 - 12 2,514 157 138 83 220 16 + 12 — 39 75 + 100 113 + 19 + 137 50 + - 263 119 147 277 174 531 184 98 308 391 149 432 + + + + + + + + + + + 136 13 240 239 293 435 275 176 217 394 330 438 — + 77 22 18 11 22 39 3 36 4 7 23 26 2,565 2,491 2,394 2,378 2,463 2,274 2,452 2,397 2,425 2,449 2,476 2,551 146 150 164 153 150 155 148 142 149 142 149 158 — — + + + + + + — + — 4.01 4.18 4.17 4.19 Reserves + 23 + 154 + 150 4- 219 + 157 + 276 + 245 + 420 + 1,000 + 2 ,8 2 6 + 4 ,4 8 6 + 4 ,4 8 3 + 4 ,6 8 2 + 1,329 + 698 482 + 378 + 1 ,1 9 8 + 1 ,9 8 3 + 2 .2 6 5 + 3 ,1 5 8 + 3.95 _ + Bank debits Index 31 cities3» 13 (1947-49 = 100)2 0 154 110 163 90 210 192 148 596 - 1 ,9 8 0 -3 ,7 5 1 - 3 ,5 3 4 -3 ,7 4 3 -1 ,6 0 7 510 + 472 930 -1 ,1 4 1 - 1 ,5 8 2 - 1 ,9 1 2 - 3 ,0 7 3 — 3.20 3.35 3.66 3.95 34 21 2 2 1 3 2 2 4 107 214 98 76 9 302 17 13 39 21 Coin and Commercial Treasury currency in operations12 operations12 circulation11 + + + — + + + 7 4 + + + + + + + ! 1 Adjusted for seasonal variation, except where indicated. Except for department store statistics, all indexes are based upon data from outside sources, as follows: lumber, various lumber trade associations; petroleum, cement, copper, and lead, U.S. Bureau of Mines; wheat flour, U .S. Bureau of the Census; electric power, Federal Power Commission; nonagricultural and manufacturing employment, U.S. Bureau of Labor Statistics and cooperating state agencies; retail food prices, U.S. Bureau of Labor Statistics; carloadings, various railroads and railroad associations; and foreign trade, U .S. Bureau of the Census. * Daily average. 8 N ot adjusted for seasonal variation. 4 Excludes fish, fruit, and vegetable canning. 8 Los Angeles, San Francisco, and Seattle indexes combined. * Commercial cargo only, in physical volume, for Los Angeles, San Francisco, San Diego, Oregon, and Washington customs districts; starting with July 1950, “ special category” exports are excluded because of security reasons. 7 Annual figures are as of end of year, monthly figures as of last Wednesday in month or, where applicable, as of call report date. 8 Demand deposits, excluding interbank and U .S. G ov’t deposits, less cash items in process of collection. Monthly data partly estimated. 9 Average rates on loans made in five major cities during the first 15 days of the month. 10 End of year and end of month figures. 11 Changes from end of previous month or year. 12 Minus sign indicates flow of funds out of the District'in the case of commercial operations, and excess of receipts over disbursements in the case of Treasury operations. 18 Debits to total deposits except interbank prior to 1942. Debits to demand deposits except Federal Government and interbank deposits from 1942. a— New revised series, p— Preliminary, r— Revised.
@FedFRASER