Full text of Economic Review (Federal Reserve Bank of San Francisco) : January 20, 1932

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MONTHLY REVIEW
OF

B U S I N E S S C O N D IT IO N S
ISAAC B. NEWTON, Chairman of the Board and Federal Reserve Agent
Federal Reserve Bank of San Francisco

Vol. X V I

San Francisco, California, January 20,1932

No. 1

T W E L F T H F E D E R A L R E S E R V E D IS T R IC T C O N D IT IO N S
Tw elfth District business activity declined
sharply during 1931, although some stability
was noticeable in the situation during the first
few months of the year. A fter May, expanded
currency circulation contributed to a moderate
tightening of the credit structure which was
reflected in decreased deposits and loans of com ­
mercial banks, higher money rates, and addi­
tional use of Reserve Bank credit. Average
com m odity prices declined during 1931, but
less drastically than in 1930. Both production
and value of 1931 crops were markedly smaller
than in the preceding year. O f chief importance
industrially, output of lumber and petroleum
decreased sharply and was somewhat under ap­
parent consumption throughout most of the
year, production of non-ferrous metals and of
cement was reduced considerably, and there
were increases in the volume of livestock
slaughtered, wool consumed, and gold mined.
A ctivity in the flour milling and paper and
pulp industries changed little during the year,
while large decreases were recorded from 1930
to 1931 in the canning and preserving of fruits
and vegetables. Building permits were greatly
reduced in value, but engineering contracts in­
creased substantially. The value of retail and
wholesale sales and the number of new auto­
mobile registrations was sharply reduced dur­
ing 1931. Intercoastal as well as railroad freight
traffic also suffered marked reductions during
the year, and both imports and exports declined
by large amounts.
During December, physical conditions for
1932 crops were further improved by larger
than seasonal rain and snowfall in most parts
of the Tw elfth District. The business situation
showed no marked change from the November
level, production remaining practically station­
ary, and distributive activity declining some­
what after seasonal adjustment. Lumber mills
reduced operations less than seasonally in D e­
cember. Building permits receded to the lowest
value since February, 1919, but a substantial
increase in the value of engineering contracts
awarded for other than commercial and indus­




trial building was recorded in December, re­
flecting principally large awards for Federal
government projects and streets and roads.
California crude oil production remained un­
changed. Retail sales during December failed
to increase by the full seasonal amount, while
little change occurred in other measures of
trade activity.
Reporting member banks in the Twelfth Dis­
trict, as elsewhere in the United States, sought
to maintain a liquid condition during 1931.
Loans were reduced considerably from 1930
levels. This movement was accompanied by a
decline in deposits and some expansion in hold­
ings of Government and other readily market­
able securities. The decline in deposits began
after May, becom ing more pronounced in the
later months of the year. A n important factor
in bringing about reduced deposits was a de­
mand for currency considerably in excess of
ordinary requirements which resulted, in part
at least, from an increase in the number of
bank suspensions. A reduction in bankers’ bal­
ances in District reserve cities, the demand for
additional currency, and a loss of funds to na­
tional markets, resulted in a steady increase in
member bank borrowings at the Reserve Bank
from May to October, since when there has been
a moderate decline. Federal reserve credit was
further extended in later months of the year by
large purchases of acceptances, principally for
the accommodation of reserve system open
market operations. Since October, total credit
extended by the Federal Reserve Bank of San
Francisco has been considerably greater than
in 1930. A substantial net excess of Treasury
expenditures over receipts during 1931 and
moderate purchases of locally produced gold
by the United States Mint supplied part of the
funds needed by banks.
Record low interest rates during early 1931
were followed by moderately rising rates dur­
ing the remainder of the year. During the four
weeks ending January 20, 1932, however, buy­
ing rates on bankers’ acceptances were reduced
slightly. Member banks reduced their indebt­

MONTHLY REVIEW OF BUSINESS CONDITIONS

2

edness at the Reserve Bank somewhat over the
year-end, but resumed borrowing at early D e­
cember levels during the first half of January.
There was but a small decrease in demand
for currency during the four weeks ended
January 20, whereas the return from circula­
tion during this period usually amounts to
about 25 million dollars.

January, 1932

The number of livestock received at princi­
pal markets in the seven western states was
greater in 1931 than in 1930. This increase in
receipts, however, was accompanied by a de­
cline of approximately 25 per cent in livestock
prices, as well as a reduction in the average
weight per head, and the aggregate value of the
year’s marketings was smaller than in 1930.
A t the beginning of 1932 the seasonal rain
and snowfall was equal to or greater than the

long-time average in most parts of the District.
Estimates of the 1931-1932 Navel orange
and lemon crops in California for January 1,
1932, did not differ materially from those of
the preceding two months. Frost damage to
citrus fruit during Decem ber was slight, ex­
cessive harm having been prevented by the use
of protection devices. During N ovem ber and
December, 8,871 carloads of oranges and 1,345
carloads of lemons were shipped to market as
compared with 8,761 carloads and 1,328 car­
loads, respectively, for the same months in
1930. Prices for oranges, f.o.b. California, were
moderately lower during Decem ber than in the
preceding month or in December, 1930.
Production of butter and eggs in December,
as indicated by receipts of these commodities
at Pacific Coast markets, was more nearly ad­
justed to apparent consumption than was the
case a year ago. Storage holdings of butter and
eggs on January 1, 1932 were 63 per cent and
72 per cent smaller, respectively, than on Janu­
ary 1, 1931. Despite the improvement in the
statistical position of these products, butter
and egg prices declined seasonally during late
Decem ber and early January.
Snowstorms on winter livestock ranges dur­
ing Decem ber made it necessary to supply
additional hay and grain for livestock. In Cali­
fornia, rainfall has already helped the growth
of feed, but warmer weather is needed to stimu­
late a satisfactory growth of range forage. A s
a result of severe weather and the poor condi­
tion of cattle and sheep, losses of livestock dur­
ing the past tw o months have been heavier
than usual, especially in the case of sheep
which were generally in less satisfactory con­
dition than cattle when moved to winter ranges.
A tendency to withhold cattle from market has
been evident during recent weeks in some sec­
tions of the District where shortages of feed
are not serious.

A gricu ltu ral M arketing A ctiv ity —

Industry

Agriculture
The 1931 agricultural season was one of the
most unfavorable experienced by farmers in
the Tw elfth District during the current cen­
tury. Sub-normal snow and rainfall for tw o or
more successive years in all states of the D is­
trict, except Arizona, combined with economic
factors to reduce the volume and value of crops
and the value of animal products. Estimated
gross value of the District’s crops during 1931
was $509,000,000, which may be compared with
$737,000,000 in 1930 and $985,000,000 in 1929.
Indexes of the volume and value of crop pro­
duction are shown in the follow ing table for
the five latest years and for 1921.
IN D E X E S OF CROP PR ODUCTION A N D V A L U E
Twelfth District
(1925-1927 average=100)
1931*
V alue ...................... 58.4
V olu m e ................... 94.6
•Prelim inary,

1930f
84.4
110.2

1929

1928

1927

1921

112.8
108.7

103.5
109.0

103.4
108.6

79.8
84.9

tR evised.

t ----- December----- %

Carlot Shipments
Apples ....................
O ranges .................
Lem ons .................
V egetables (C a l.) .
E g g s (C a l., O re.,
and W a s h .) . . . .
Exports
W h e a t (b u .)
Barley (b u .)

....
....

1931

1930

4,372
8,871
1,345
7,037

4,701
4,930
668
7,788

27,314
8,761
1,329
20,683

45,111
8,761
1,329
24,150

316

524

4,616

4,628

2,379,483
20,997

1,421,794
777,340

14,861,934
2,668,144

13,045,113
5,613,195

37,462
138,136
154,401
6,262,077
122,841

478,064
2,057,253
1,609,765
79,175,074
1,850,293

468,039
1,695,549
1,406,171
73,276,899
2,021,555

Receipts
37,952
Cattle* ....................
144,640
Sheep* ....................
169,610
H o g s * ......................
B utter ( l b s .) t ------ 6,423,707
126,067
E g g s (cases) t . . .
Storage H oldings
(end of the m onth)
W h ea t (b u .) . . . . 3,614,000
Beans (b ags) . . . . 2,379,252
Apples (C a l.,
18,059
W ash.-carload s)
Butter (lb s .)$ . . . . 1,108,381
27,243
E g g s (cases) t • ••
*S ix markets.




Season to Date —%
1930
1931

t—

fT h ree markets.

6,195,000
2,218,674
19,076
2,997,231
96,774
$ E ight markets.

Industrial production was comparatively
stable during the first five months of 1931.
A ctivity declined rapidly from June to the enck
o f the year, however, and in December, 1931,
this Bank’s index of industrial production was
29 per cent lower than in December, 1930, and
about 50 per cent below the peak in the summer
of 1929. Especially sharp declines were re­
corded in fruit and vegetable canning, mining
of non-ferrous metals, value of building, and
output of lumber. Production of flour and paper
and pulp was approximately the same in 1931
as in the preceding year, while consumption of
w ool in the District’s textile industry, slaughter
of livestock, and output of gold were each in
larger volume than in 1930. Production of
crude and refined oils was at a fairly steady

FEDERAL RESERVE AGENT AT SAN FRANCISCO

January, 1932

3

rate throughout the year, but averaged con­
siderably under the levels of 1930. Engineering
contracts awarded for projects other than in­
dustrial and commercial buildings were larger
in value in 1931 than in 1930. This increase was
accounted for chiefly by expanded activity in
such public works as sewers, bridges, streets
and roads, and the H oover Dam. Privately
initiated construction of all types was at ex­
ceedingly low levels during the year.
The number of industrial employees and the
average weekly wage paid declined substan­
tially during 1931. In California, reporting
firms employed, on the average, 145,155 work­
ers at an average weekly wage of $27.29 in
1931, compared with 180,179 workers employed
by the same firms at an average weekly wage
of $29.87 in 1930. The declines in the number of
employees and in average weekly wages were
19 per cent and 9 per cent, respectively. Yearto-year comparisons of the number of em­
ployees showed somewhat smaller decreases in
December than in most other months of the
year, although the reduction in the average
weekly wage paid during that month was one
of the largest in 1931. In Oregon averages for
1931 indicated 19,015 employees at 134 firms,
drawing an average weekly wage of $22.38,
compared with 22,878 employees working for
the same firms at an average weekly wage of
$24.91 during 1930. Comparable statistics of
employment are not available for other states
of the District, but general reports furnish evi­
dence that material reductions in the number
of employed and in wage rates paid took place
in those states also during the year.

The volume of canned fruits and vegetables
packed in the Twelfth District in 1931 was 37
per cent smaller than in 1930 and 28 per cent
smaller than the 1927-1931 average. Output of
canned vegetables declined 55 per cent in con­
sequence chiefly of shortages of tomatoes and
asparagus for canning purposes. Production
of canned fruits decreased by 26 per cent from
the preceding year, reflecting both marketing
difficulties and some decline in production of
canning fruits. Only apricots, prunes, and a
few berry crops of minor importance were
canned in larger volume than in 1930. The
packs of pears and spinach decreased but
slightly during 1931, while the largest reduc­
tions from the preceding year were shown in
packs of clingstone peaches, tomatoes, and
tomato products. Production of dried fruits
was also much less in 1931 than in 1930, the
decline in dried prunes amounting to 35 per
cent and in raisins to 18 per cent.
Fish canneries on the Pacific Coast and in
Alaska produced smaller packs in 1931 than in
1930. Most varieties of salmon were packed in
smaller quantities, although the catch of Alaska
Reds was considerably larger than in the pre­
ceding year. A decline of 32 per cent was re­
ported in the volume of tuna canned in Cali­
fornia. Voluntary curtailment was the principal
factor bringing about a reduction of 45 per cent
in the California pack of sardines.
Inventories of lumber and petroleum prod­
ucts declined during most of 1931 and were
considerably smaller at the end of the year than
at the end of 1930. Stocks held by flour mills

Industry—

E m ploym ent—
•Californiia----------\ t— ...... - Oregon—---------- s
N o. of
N o. of
N o.
r ~ Employees —%
N o. /—Employees
of
Dec.,
of
D ec.,
D ec.,
D ec.,
1930
1930
Firms 1931
Firms
1931

Indexes of daily average production, adjusted for seasonal variations
(1923-1925 daily a v e r a ? e = 1 0 0 )

General:
C a rlo a d in g s — In d u s tr ia l ..........
E le c t r ic P o w e r P r o d u c t i o n . . .

,-------------- 1931----------------x ,— 1930— ^
Year’ s
Year’ s
Aver. Dec. N ov. Oct. Dec. Aver.
58
156*

M a n u fa ctu re s :
L u m b e r ..............................................
54
R e fin e d M in e ra l O i l s t .............. ..140*
F lo u r .................................................. ..104
S la u g h te r o f L i v e s t o c k ...............
91
C e m e n t ................................................
70
W o o l C o n s u m p t io n ! ................... .. 87*
M in era ls :
P e tr o le u m ( C a li f o r n ia ) ! . . . ,
C o p p e r (U n ite d S ta te s ) $ . . . .
L e a d (U n it e d S t a t e s ) $
S ilver (U n it e d S ta te s ) $ . . . .

79
670
70
48

B u ild in g and C o n s tr u c tio n §
T o t a l ................................................ . 62
V a lu e o f B u ild in g P e rm its
32
T w e n t y L a r g e r C itie s
S ev e n ty S m a ller C ities
38
V a lu e o f E n g in e e r in g
C o n tr a c ts A w a r d e d
T o t a l ......................................
109
E x c lu d in g B u ild in g s . .., . 186

44
..

48
146

48
149

74
153

85
159

36
..
116
87
56

34
134
115
92
56
132

45
139
117
98
65
115

67
157
103
83
79
57

86
167
112
80
90
71

76

76

76

64
50

58
40

68
40

89
75
92
66

95
87
100
80

45

42

47

55

21
26

24
28

26
29

76
123

69
104

78
121

3

14,287
(- —2 4 .1 )
1,554
14
(-— 16.6)

18,828

49

10,493
(-— 12.9)

12,046

C lo th in g , M illin e ry
a n d L a u n d e r in g . 149
274
39

65

O th e r I n d u s t r ie s !.

463

46
48

49
60

M is c e lla n e o u s

94
96

122
130

. . .

9,992

6,122

142

W h o le s a le and

7,866
( - -2 1 .3 )
9
1,291
(4 .4 )

5,246
(-— 14.3)

58

P u b lic U tilitie s

18,858

Í36

123,019
( - 1 8 .1 )

L u m b e r and W o o d
M a n u fa ctu re s . .

F o o d , B e v e ra g e s ,
and T o b a c c o . . .

15,710
(~- 1 6 .7 )
147
(■- 8 . 1 )

150,258

1,144
S to n e , C la y and
G lass P r o d u c t s .

. .

24,479
(- - 1 1 . 8 )
46,115
(-- 1 5 . 4 )

1,863

27,767

160

1,236

343
(-- 5 . 8 )

364

38

1,484
( - -2 7 .2 )

2,039

29

4,579
(- - 9 . 6 )

5,067

8Î

54,502

61,059
(-- 2 0 . 6 )
5,901
44
(- - 1 3 . 6 )

76,802

3 7,936
( — 3 .6 )

39,347

134

* E le v e n m o n th s’ a v era g e. QNine m o n th s ’ a v era g e. f N o t a d ju sted
f o r season al v a ria tion s. ^ P re p a re d b y F ed era l R e s e rv e B o a rd .
§ In d e x e s are fo r th ree m o n th s e n d in g w ith th e m o n th in ­
d ica te d .




Industries

6,830

* P u b lic u tilities and w h o le sa le and retail figu res n o t in clu d ed in
this to ta l, t ln c l u d e s th e fo llo w in g in d u s tr ie s : m etals, m a ­
c h in e r y and c o n v e y a n c e s ; le a th e r and r u b b e r g o o d s ; o ils and
p a in t s ; p r in tin g and p a p e r g o o d s . ^ L a u n d e r in g on ly.

Figures in parentheses indicate percentage change from De­
cember, 1930.

MONTHLY REVIEW OF BUSINESS CONDITIONS

Y ear’ s
A v era ge

r
C a r lo a d in g s t
T o t a l .......................... . .
M e r c h a n d is e and
M is c e lla n e o u s .,. .

-------19»31-------------------- i t--------1 930---------X
Y ea r’ s
D e c . A v era ge
Oct.
D ec.
N ov.
in u c x i

a

75

63

64

66

89

97

90

82

81

83

102

107

58
53
61

64
58
67

93
97
91

113
107
116

68
65
81

74
70
88

76
71
94

88
84
103

88
81
113

45
42

40
36

45
41

89
83

95
90

73

85

91

148

151

91
87

94
88

98
91

110
99

115
104

F o r e ig n T r a d e 0
78**
69**
8 1 **

T o t a l ! ........................
I m p o r t s ! .............. ..
E x p o rts
.................
I n te r c o a s ta l T r a d e 0
T otal
........................ .
............ .
W estb ou n d
E a s tb o u n d .............. .

73
69
89

D e p a r tm e n t S to r e
S ales$ ................... , 103
S t o c k s § .................
91
C o lle c tio n s #

4

r

R e g u l a r .................
In s ta llm e n t . . , . .

42.7
15.4

41.8
13.5

. ali Figures —
Aa ctu
41.8
45.3
42.3
14.4
15.7
14.4

j

LS A A Ì
W
i -------------

"

w

v

j

/ V

a

. n ——

\ / \t
V *

V

t
i

r

A
;

i

A
i / V

\

v'
IK IV E N T O fR IE S

6 0 1—

...

.
D E P A R T M E N T S T O R E SA L E S A N D IN V E N T O R IE S

In d ex num bers o f daily average sales and inventories at the end o f
m onth o f departm ent stores in the T w elfth D istrict, adjusted
fo r seasonal variations (1923-1925 average= 1 0 0 ).

December figures indicate a continuance of the
decline in trade during that month, but the rate
of decline, after allowance for seasonal factors,
was somewhat less than in most earlier months
of the year.
Department store sales were about 11 per
cent smaller in value in 1931 than in 1930. D e­
clines over the year period were smaller in
northern California and larger in the Pacific
Northwest than in the District as a whole. The
large declines in W ashington and Oregon were
reported principally in the last half of the year.
R E T A I L T R A D E —T w e lfth D istrict
-1931 com pared with
N E T SALES
D e ce m b e r J a n .l— D e c . 31
-1 7 .0 ( 68)
D e p a r tm e n t S to r e s
— 11.4 ( 6 4 )
............
P h o e n ix
-13.5 (
3)
— 7.6 (
3)
L o s A n g e le s . . .
. . . (N 10)
18.6
O th e r S o u th e r n Cal. — 17.7 (
O a k la n d ..................... — 11.1 ( 4 )
— 6.3 ( 4 )
S a n F r a n c is c o . . . . — 12.6 (
— 9.5 (
7)
O th e r N o rth e r n Cal. — 10.7 (
— 3.4 (
— 21.9 (
— 14.6 (
P o r tla n d ! . . . .
7)
7)
S e a ttle ...............
. . — 26.0 (
— 17.7 (
5)
5)
S p o k a n e ............
. . — 17.6 (
—
7.8
(
5)
3)
Salt L a k e C ity
. . — 13.2 (
4)
4)
A p p a r e l S to r e s . .
. . — 18.6 ( 2 9 )
— 13.3 ( 2 6 )
F u rn itu r e S to re s
. . — 27.8 ( 36)
— 15.0 ( 34)
A
ll S t o r e s ..............
________
. . — 18.2 (1 3 3 )
— 11.9 (1 2 4 )

—10.8 (

1930*STOCKS
D e ce m b e r
-1 3 .3 ( 5 1 )

—
—
—
—
—
—

15.4
15.6
19.2
20.3
10.8
13.5

(
(
(
( 18)
( 28)
( 97)

* P e r c e n t a g e c h a n g e . ^ In clu d e s five a p p a re l s to r e s w h ic h are n o t
in c lu d e d in D is tr ic t d ep a rtm e n t s to r e to ta l.
F ig u r e s in p aren th eses in d ica te n u m b e r o f sto re s r e p o r tin g .

\
43.4
15.4

* A d ju s t e d f o r s e a so n a l v a ria tio n s, 1923-1925 a v e ra g e = 100. " I n ­
d e x e s are f o r three m o n th s e n d in g w ith m o n th in d ica te d ,
t E x c l u d i n g ra w silk. J D a ily a v e ra g e . § A t end o f m on th .
# P e r c e n t o f c o lle c t io n s d u r in g m o n th t o a m o u n t o u ts ta n d ­
in g at first o f m o n th . * * E le v e n m onths* a v e ra g e .




PER CENT
1301
■
,»

—12.2 ( 10) — 13.3 (
' 8) —11.2 ( 8) — 15.6 (
— 17.6 (
6) — 11.4 (
8)
8) —10.0 (
—11.0 (

R eta il T r a d e
A u to m o b ile S ales$
T o t a l ...................... .
65
P a ss e n g e r C ars ., .
60
C o m m e r c ia l
110
V e h ic le s ..........

The volume of trade in the Tw elfth District
declined steadily during 1931 and was smaller
than in any other recent year. The large de­
creases in those measures of trade activity
which are based upon value reflected not only
the smaller physical movement of commodities,
but also the markedly lower prices at which
they were moved. It seems probable, for ex­
ample, that the actual volume of goods sold at
retail was not much below that of a year ago.

/

D istribution and Trade —

Trade

i/

increased sharply during the last six months of
1931 and at the end of December were about
the same as those held a year earlier. Inven­
tories of refined copper increased steadily dur­
ing the first nine months of 1931, and, although
no data were released for the last quarter, it
seems probable that there was little or no re­
duction during that period. Stocks of blister
copper, on the other hand, declined throughout
the year, but in an amount insufficient to offset
the increases in refined stocks.
N o appreciable changes from the conditions
noted during most of the year were evident in
industrial activity during December. Produc­
tion declined seasonally, most adjusted indexes
continuing at the extremely low levels of N o­
vember. Output of lumber approximated 348,000,000 board feet, the smallest m onthly total
of the post-war period with the exception of
January, 1921, when the cut was 320,000,000
board feet. There was little change in the pro­
duction o f either crude or refined oils, but min­
ing of non-ferrous metals apparently continued
to decrease. A further decline was reported in
the value of building permits issued in this
area during December. After seasonal allow­
ance, this Bank’s index was only 21 per cent
of its average during 1923, 1924, and 1925. The
value of engineering contracts awarded in­
creased as a result of substantial advances in
awards for streets and roads, Federal Govern­
ment and public buildings, and unclassified
projects. Production o f flour in December was
approximately the same as in November.

January, 1932

During December, sales of department stores
increased over the previous month by slightly
less than the usual amount, chiefly because of
a smaller than seasonal increase in Los A n ­
geles. Gains in other cities were approximately
in accordance with seasonal expectations. Cash
sales made up a slightly larger proportion of
total sales in 1931 than in 1930. Collections on

accounts receivable were slower in 1931, par­
ticularly in the last few months of the year.
The rate of stock turnover was about the same
in 1931 as in the preceding year.
Sales at wholesale also declined steadily
throughout 1931. Of the lines upon which data
are collected by this Bank, sales of groceries
and paper and stationery held up best over the
year period, while sales of agricultural imple­
ments and electrical equipment made relatively
the poorest showings. December, 1931, sales at
wholesale were about 20 per cent below those
of December, 1930, the same percentage of de­
cline as that recorded for the entire year.
W H O L E S A L E T R A D E — T w elfth D istrict
Percentage change in value o f sales
1931
r -D e c ., 1931 com pared with—' com pared
N o v ., 1931
D e c ., 1930
w ith 1930
A g ric u ltu ra l Im p le m e n ts ..........— 14.3
— 47.8
— 44.8
A u to m o b ile S u p p l i e s ................... — 13.9
— 25.0
— 20.3
D r y G o o d s ....................................... — 23.1
— 26.4
— 22.0
E le c tr ic a l S u p p lies ......................
15.9
— 38.4
— 33.6
F u rn itu re ........................................... — 4.3
— 29.9
— 23.1
— 3.1
— 9.9
G ro ce rie s ........................................... — 4.0
H a r d w a re ......................................... — 4.0
— 30.3
—-25.7
S h o e s .................................................. — 2.4
— 29.9
— -23.5
P a p e r and S t a t io n a r y ................... — 23.6
— 18.4
— 15.5
A ll L i n e s ........................................... — 2.1
— 20.3
— 19.5

Carloadings in the Twelfth District during
1931 were substantially below those of 1930,
their trend having been steadily downward ex­
cept for a period of about three months during
the middle of the year when they increased
somewhat. For the year as a whole, loadings
of grain and livestock were about as large as
those in 1930, but loadings of coal, coke, and
ore were considerably lower, and loadings of
forest products declined drastically. Merchan­
dise and miscellaneous carloadings also de­
clined substantially, particularly during the
second half of the year.
p ER C E N T

PER C E N T

200

2oor

\

1929

150

5

FEDERAL RESERVE AGENT AT SAN FRANCISCO

January, 1932

XV

/ ~ \

1930
V— A

/

150

100

I00
N

50

biles and automobile accessories, tin plate, iron
and steel, and tobacco. In the eastbound traffic
reduced shipments of canned goods, copper,
and petroleum products accounted for a con­
siderable part of the decrease. Partially offset­
ting these declines in the Pacific to Atlantic
trade were increases in shipments of beans,
sugar, and fresh and dried fruits.
The District’s foreign trade during the first
eleven months of 1931 was substantially smaller
in value than in the corresponding period of
1930. Total imports declined by a relatively
larger amount than exports. Silk imports fell
off drastically throughout the year, reaching
an exceptionally low figure in November, and
imports of other commodities also declined
sharply, although by a somewhat smaller
amount. Despite a general decline in exports,
shipments of apples from the Pacific North­
west and oranges and dried fruits, particularly
prunes, from California showed substantial in­
creases as compared with a year ago. Princi­
pally because of large sales to China by the
Federal Farm Board, shipments of flour were
at a comparatively high level during the last
few months of the year.

Prices
There were further widespread declines in
com m odity prices during 1931. The Bureau
of Labor Statistics’ index of wholesale com ­
modity prices declined 15 per cent between
December, 1930, and December, 1931, some­

A r iz o n a
P h o e n ix

............

C a lifo rn ia
B a k e rs fie ld
...
B e r k e l e y ............
F r e s n o ..............
L o n g B e a ch . .
L o s A n g e le s . . .
O a k la n d ............
P a sa d e n a ..........
S a cra m e n to . . .
San B e rn a rd in o
S an D ie g o . . . .
S an F r a n c is c o . .
S an J o s e ..........
S a n ta B a r b a r a .
S to ck to n
..........

D ecem ber,, D e ce m b e r, >— T w e lv e M o n t h s — '
1930
1931
1930
1931
36,914 $ 355,888 $ 435,659
$
27,566 $
11,968
17,716
23,742
36,419
711,630
211,686
29,493
46,704
9,558
46,181
831,585
21,850
13,071
17,109

16,664
19,312
30,208
52,022
959,480
222,000
35,306
46,285
11,023
57,399
1,212,779
27,097
15,022
20,791

127,736
200,723
272,070
472,509
9,288,170
2,247,211
354,451
558,291
103,903
558,066
11,178,630
289,670
155,185
205,102

159,756
232,257
395,183
580,361
11,998,756
2,316,683
406,474
581.311
123,066
656,908
15,055,143
332,044
185,305
284,931

12,944

16,701

158,776

175,390

9,043

10,437

118,943

133,303

5,372
140,721

6,723
160,267

65,166
1,711,062

82,155
2,100,003

14,335
64,891

20,797
85,430

167,491
710,693

224,134
884,885

5,794
7,393
168,148
36,583
28,819
9,912

7,749
10,760
232,003
48,867
39,565
15,942

78,614
107,022
2,242,438
484,830
385,027
141,575

108,320
146,656
2,814,322
611,551
526,432
178,472

Idah o

...I . !.. L

. .1 J I I ..I
Passenger

1..

...1

\

.1.1.1 1 1,1.1. 1
C om m ercia l

N E W A U T O M O B I L E R E G I S T R A T I O N S - T w e l f t h D istrict
Indexes adjusted fo r seasonal variations (1923-1925
average = 100).

Intercoastal traffic through the Panama
Canal declined steadily during the first half
of 1931. A moderate improvement during the
early autumn months was more than offset by
renewed declines during the last two months
of the year. Large decreases in westbound
traffic were reported in shipments of automo­




N evada
O reg on
E u g e n e ..............
P o r tla n d
..........
U ta h
S alt L a k e C i t y ..
W a s h in g t o n
B e llin g h a m

Spokane
T a com a
Y a k im a

............
..............
..............

T o t a l ............,$2,560,233
* I n th o u sa n d s o f d o lla rs.

$ 3,417,543 $32,739,242 $41 ,729 ,46 0

6

MONTHLY REVIEW OF BUSINESS CONDITIONS

what less than the 17 per cent decline of the
preceding year. A t 71.2 (1926 — 100) the aver­
age of this index for the year was only 2 per
cent above the 1913 average. Retail prices ap­
pear to have declined somewhat more in 1931
than in 1930. The decrease in farm prices of
agricultural products was 30 per cent during
1931, compared with a decline of 28 per cent
during 1930, according to the United States
Department of Agriculture index. That index
at 66 (August, 1909-July, 1914, average = 100)
for December, 1931, was the lowest since it was
first compiled in 1910. Although many products
included in the indexes discussed above are not
of importance in this District, it is believed that
the changes indicated reflect with a fair degree
of accuracy changes which occurred in Twelfth
District prices.
W ith few exceptions, quotations for grains,
field crops, fruits, vegetables, and livestock de­
clined more in 1931 than in 1930. The lowest
price on record (44% cents per bushel) was
established for both the September and D e­
cember contracts for wheat at Chicago in late
September and early October. A small barley
crop resulted in slightly higher prices for that
grain in the autumn of 1931 than in the autumn
of 1930. Livestock prices at Pacific Coast mar­
kets declined about 25 per cent during 1931 to
the lowest levels in fifteen years or more. Each
of the D istrict’s principal field crops (potatoes,
beans, sugar beets, cotton and hay) brought
lower returns in the last six months of 1931
than in the last six months of 1930, while fruit
and vegetable prices averaged substantially
lower during the 1931 marketing season than
in any other recent year.
Lumber prices declined less sharply during
1931 than during 1930, reflecting more success­
ful efforts in the later year to adjust production
to effective demand. Crude oil prices in Cali­
fornia declined precipitately in the spring of
1931, but subsequently advanced somewhat
and at the year-end the quotation for a repre­
sentative grade, 30° gravity, was 72 to 81 cents
per barrel, compared with $1.23 to $1.42 per
barrel in the autumn of 1930.
W ith the exception of silver, prices for nonferrous metals important in the Twelfth D is­
trict were low er in December, 1931, than in
December, 1930. The price of silver reached a
low of 25^4 cents per ounce in mid-February,
1931, since when it has fluctuated at a m oder­
ately higher level. A t the end of the year the
approximate quotation of 30 cents per ounce
was the same as in January, 1931. Copper
prices, as well as prices for lead and zinc,
reached record low levels in November. The
price of copper advanced somewhat during D e­
cember.
A m ong the miscellaneous commodities of




January, 1932

importance in the trade or industrial activity
of the District, prices of flour, coffee, sugar,
and newsprint decreased relatively less than
quotations on wool, hides, cement, and rubber.
Rubber reached an all time record low price in
December, 1931.

Credit Situation
The easy money conditions which prevailed
in the Twelfth District during 1930 continued
during the first five months of 1931. During
that period money rates declined further,
reaching the lowest levels on record in M ay;
total deposits in reporting member banks
tended to increase, reflecting principally larger
time deposits ; extensive liquidation of loans on
securities continued ; and credit extended
locally by the Federal Reserve Bank of San
Francisco remained small. In mid-year, how ­
ever, demand for currency started to increase ;
both time and demand deposits began to de­
cline rapidly ; commercial loans as well as
security loans were reduced ; interest rates

L O A N S , IN V E S T M E N T S , A N D D E P O S IT S
R eporting m em ber b an k s— T w elfth D istrict

commenced to advance; and borrowings at the
Reserve Bank increased. Although investments
of reporting member banks, representing prin­
cipally the extension of credit outside the
Tw elfth District, remained at high levels, their
total loans and investments declined during the
second half of the year. A t the end of the third
quarter, follow ing England’s abandonment of
the gold standard, the demands upon the Fed­
eral Reserve Bank of San Francisco increased
rapidly. This increase was about equally di­
vided between additional borrow ing by Tw elfth
District banks and participation by this Bank
in the System’s purchases of acceptances in the
N ew Y ork market. Earning assets rose to
within three million dollars of the peak in
1920. A t the high point in October, 1920, how ­
ever, total credit extended by the Reserve Bank
was 97 per cent larger than its combined capi­
tal, surplus, and reserve deposits, while at the
high point in October, 1931, the same compari­
son showed credit extended to be only 16 per
cent larger.
A ccording to available figures, which are

January, 1932

subject to minor revisions, 76 banks in the
Twelfth District with deposits of 49 million
dollars (1.2 per cent of 1931 average total de­
posits of all District banks) were closed and 1
reopened during 1931. In the United States as
a whole, 2,290 banks having deposits of 1746
million dollars (3.4 per cent of 1931 average
total deposits of all banks) were suspended,
and there were 271 reopenings. Twelfth D is­
trict failures were more numerous toward the
end of the year, 28 of the 76 being reported in
September, O ctober and November, while 19
were reported in December alone. (Tw enty-tw o
more banks were closed during the first twenty
days of January.) Bank suspensions during the
latter part of the year tended to accelerate the
withdrawal of deposits, which in turn increased
the demand for currency from the Federal R e­
serve Bank of San Francisco. The customary
return of money from circulation has been
almost negligible since Christmas. During the
first three weeks of January the demand for
currency decreased only 1 million dollars, al­
though in past years there has been a reduc­
tion of about 25 million dollars during this
period. A t the end of 1931 currency circulation
in the District was 47 million dollars greater
than at the end of 1930 and 62 million dollars
greater than at the close of 1929.
The rapid increase in demand for currency
during the second half of 1931, accompanied as
it was by a continued drain on deposits, caused
banks rigorously to seek to place themselves in
a position to meet any possible demands of
creditors. Larger holdings of Government
securities became particularly evident, since
these instruments are considered to be highly
liquid and are eligible as collateral for discount
at the Reserve Bank. In effect, the banks paid
for a large part of these heavy purchases of
Government securities in installments, for they
represented participations in the several United
States Treasury financing plans which called
for immediate deposits to the credit of the Fed­
eral Government to be drawn down later. Banks
were able to secure cash immediately by selling
the Government securities which they did not
wish to retain. This practice was especially
manifest at the end of Decem ber when banks
prefer to reduce their borrowings as much as
possible while issuing year-end condition state­
ments.
The decline in deposits of reporting member
banks, discussed above, amounted to 205 mil­
lion dollars during 1931, while deposits of all
member banks decreased 412 million dollars.
The largest factors connected with this decline
were reductions in local loans and payments to
other Reserve Districts, although withdrawals
of cash were also important. Partly offsetting
the factors making for decreased deposits were




7

FEDERAL RESERVE AGENT AT SAN FRANCISCO

Treasury expenditures in excess of collections
and, to a lesser extent, United States Mint pur­
chases of locally produced gold. These changes,
affecting almost exclusively as they do the
figures of member banks in the Twelfth D is­
trict, are shown for the year period balanced
against the decline in deposits in the following
table:
( I n m illio n s o f d o lla rs )

F a c t o r s T e n d in g t o R e d u c e D e p o s it s
I n c r e a s e in c u r r e n c y in han ds o f p u b li c ...................
N e t p a y m e n ts to o th e r d istricts f o r a c c o u n t o f
in d iv id u a ls ..........................................................................
D e cre a se s in L o a n s ....................... . ...................................
D e cr e a s e s in loan s o n se cu ritie s ................. 1 5 9 f
D e cr e a s e s in lo a n s o n fa rm lands and real
estate ........................................................................
10
D e cr e a s e s in all o th e r l o a n s ............................. I l 5 t
T o ta l

...........................................................................................

F a c t o r s T e n d in g to I n c r e a s e D e p o s it s
M in t p u rch a se s o f lo c a lly p r o d u c e d g o l d .................
U . S. T r e a s u r y e x p e n d itu r e s in e x c e s s o f c o lle c ­
tio n s .........................................................................................
In c r e a s e in loan s t o b a n k s ................................................
T ota l

51*
261
284f

596

44
144
6

...........................................................................................

194

D iffe r e n c e be tw e e n a b o v e t o t a l s .......................................................
D e p o s its a ctu a lly d e cre a se d ..............................................................
Ite m s n o t a c c o u n te d f o r ............................................................ ..

402
412
10

* I n c lu d e s a 4 m illio n d o lla r r e d u c t io n in v au lt ca sh o f w eek ly
r e p o r tin g m e m b e r ba n k s, b u t m akes n o a llo w a n c e f o r ch a n g e s
in v a u lt cash o f o th e r ba n k s. f A d ju s t e d t o e x c lu d e o p e n
m a rk e t lo a n s o u ts id e th e T w e lft h D is tr ic t.

Total loans of reporting member banks de­
creased steadily from 1,320 million dollars on
December 31, 1930, to 1,115 million dollars on
December 31, 1931. During the same period
their investments increased from 634 million
dollars to 729 million dollars, the total of loans
and investments thus declining 110 million dol­
lars to 1,844 million dollars. Reductions of
loans on securities contributed 120 million dol­
lars to the total loans decline of 205 million
dollars.
F E D E R A L R E SE R V E B A N K O F SA N F R A N C IS C O
( i n m illion s of dollars)

/------------------ C o n d it io n ------------------- \
J a n . 20,

T o t a l B ills and S e cu ritie s ..........
B ills D is c o u n te d ........................
B ills B o u g h t ..................................
U n ite d S tates S e cu ritie s . . . .
T o t a l R e s e rv e s ...............................
T o t a l D e p o s it s ..................................
F e d e ra l R e s e rv e N o te C ir c u la tio n
R a tio T o t a l R e s e r v e s to D e p o s it
a n d N o te L ia b ilitie s C o m b in e d

1932
177
101
25
48
218
147
233
57.4

J a n . 13,

D e c . 1 6,

J a n .2 1 ,

1932
151
75
26
48
248
151
234

1931
149
56
36
54
249
160
222

1931
72
19
14
39
300
189
165

64.4

65.1

84.8

Borrowings of member banks at the Reserve
Bank remained relatively low during the first
five months of 1931, although they were some­
what higher than during most of 1930, partly
because the available supply of Federal funds
(excess reserve balances) of eastern institu­
tions was smaller than in the earlier year. F ol­
lowing reductions in rates paid on bankers’
balances by District banks early in the year,
however, approximately 20 million dollars of
those balances were withdrawn. In conse­
quence, there was an increased demand for Fed­
eral Reserve credit after late May and this de­
mand was further accentuated by the increases

MONTHLY REVIEW OF BUSINESS CONDITIONS

R E P O R T I N G M E M B E R B A N K S — T w e lfth D istrict
(I n m illion s o f dollars)

t----- ---

L o a n s and In v e s tm e n ts — T o t a l. .
L o a n s — T o t a l .............................
O n S e c u r i t i e s ..........................
A ll O th e r ..................................
I n v e s tm e n ts — T o t a l .................
U n ite d S ta te s S e c u r itie s . .
O th e r S e c u r itie s ...................
R e s e r v e w ith R e s e r v e B a n k .. . .
N e t D e m a n d D e p o s i t s .................
D u e fr o m B a n k s .............................
D u e t o B a n k s ..................................
B o r r o w in g s at R e s e r v e B a n k . .

Jan. 20,
1932
1,826
1,098
299
799
728
391
337
83
614
907
107
160
86

“ ----- C on d itio n ------- — -------- ^
Jan. 13, D e c. 16, Jan. 21
1931
1931
1932
1,930
1,877
1,827
1,299
1,116
1,103
404
290
296
826
895
807
761
724
631
386
414
319
347
312
338
87
88
106
654
621
738
914
930
1,013
104
121
224
165
174
275
62
47
14

A bout 44 million dollars of locally produced
gold was sold to the San Francisco Mint during
the year. In addition 141 million dollars of
imported gold was deposited with the Mint and
92 million dollars of imported United States
gold coin was deposited at the Federal Reserve
Bank. Only a negligible part of these gold im­
ports was for the account of Tw elfth District
institutions, however, and the remainder was
transferred to New York, either for the account
of eastern banking and business firms or for the
account of the Japanese Government. .Such
transfers had no effect upon the District’s sup­
ply of banking funds.
A lthough the United States Treasury col­
lected in the Tw elfth District 187 million dol­
lars more than it spent on the public debt
account during 1931, its expenditures for ordi­
nary account were 331 million dollars in excess
of its collections for the same account during
the year. Net disbursements in excess of col­
lections for both ordinary and public debt ac­
counts amounting to 144 million dollars were
thus added to the banking funds of this District
during 1931. The loss on Government debt
transactions was to be expected, since a large
part of the new issues of Government securities
sold to local banks is paid for by crediting the
Treasurer’s deposit account on the books of the
purchasing bank, and then sold for cash to
banks or investors in New Y ork where redemp­
tion takes place at maturity.
Interest rates, which were unusually low at
the end of 1930, declined further until the mid­




January, 1932

dle of May, 1931. Advances were recorded in
most of the remaining months of the year, and
by December rates were not much below those
of December, 1930. Considering the year as a
whole, interest charges were lower on all
classes of loans than at any time since data
were first collected in 1921. Rates paid upon
active checking accounts of bankers were re­
duced from 2 per cent to 1 per cent in San
Francisco and from 2y2 per cent to 1 per cent
in Los Angeles. Similar reductions were made
by banks in other Twelfth District reserve
cities. In 1931, the rediscount rate of this Bank
was reduced from Zy2 per cent to 3 per cent on
January 9 and from 3 per cent to 2y2 per cent
on May 22, but was advanced to 3y2 per cent
on October 21. The buying rate of the Federal
Reserve Bank of San Francisco on 90-day bills,
which followed closely the buying rate of the
Federal Reserve Bank of New Y ork during
1931, was gradually lowered from 1^4 per cent
in January to 1 per cent in May. During the
last quarter of the year this rate was increased
to 3% per cent. On January 19, 1932, a reduc­
tion of J4 Per cent became effective.
--------- ... .
DEMA ND SECUF?ITY
LO A N RATE
1
—*

g

„ DISCOUNT RATElr

/

-

^

s

—I COMME
1 LO AN R A TE

l -J

A
\
ACCE: p t a n c e

e UYING

L

R/

S

l\>

in currency circulation which occurred during
the remainder of the year. In addition to meet­
ing these local demands, the Federal Reserve
Bank of San Francisco participated fully in the
national features of the reserve system’s opera­
tions. These included relatively large advances
to foreign banks, a considerable increase in
Government security holdings, and the pur­
chase of large amounts of acceptances, particu­
larly in September and October during a period
of unprecedented exports of gold from the
United States. It was during this period that
this Bank’s earning assets approached the rec­
ord levels of 1920.

O

8

J

i

—i

r
*:
1
•». - - J~"

_1

Ì ..-L .

1 1

t

.... L-J— 1

1

1 . .L . - .., 1, 1

—

IN T E R E S T R A T E S
D isco u n t and acceptan ce buying rates — Federal R e se rv e B a n k o f
San F ra n cisco .
C om m ercia l and security loan rates — San F ra n cis c o .

A ctivity at Twelfth District security markets
was virtually at a standstill during 1931, as
compared with 1928 and 1929, and prices of
securities declined almost continuously during
the year. Security loans to local brokers at the
end of the year were only 25 per cent of their
total at the beginning of the year, and reduc­
tions in loans on securities to customers other
than brokers and dealers were large. N ew se­
curity issues of Twelfth District corporations
were negligible during the year. Corporations
were hard pressed to pay interest on their al­
ready outstanding indebtedness and dividend
reductions and omissions were numerous. A
considerable number of corporation and irri­
gation district bond defaults were recorded
during 1931. Municipalities borrowed exten­
sively for public works and other purposes.

M O N T H L Y

R E V IE W

OF

BUSINESS CONDITIONS
ISAAC B. NEWTON, Chairman of the Board and Federal Reserve Agent
Federal Reserve Bank of San Francisco

Supplement

San Francisco, California, January 20, 1932

Vol. XVI No. 1

S U M M A R Y O F N A T IO N A L C O N D IT IO N S
Prepared by the Federal Reserve Board
Industrial activity declined from November
to December by slightly more than the usual
seasonal amount, while the volume of factory
employment showed about the usual decrease.
W holesale prices declined further.
Production and Em ploym ent. Volum e of in­
dustrial output decreased somewhat more than
is usual in Decem ber and the Board’s season­
ally adjusted index declined from 72 per cent
of the 1923-1925 average in November to 71
per cent in December. A ctivity in the steel in­
dustry decreased from 30 to 24 per cent of ca­
pacity for the month, partly as a result of sea­
sonal influences— in the first three weeks of
January it showed a seasonal increase. A utom o­
bile output increased considerably in December
from the extreme low level of the preceding
month, and daily average output at shoe fac­
tories, which ordinarily declines at this season,
showed little change. A t textile mills produc­
tion was curtailed by more than the usual sea­
sonal amount. The number employed at fac­
tories decreased seasonally from the middle of
November to the middle of December. In the
automobile and shoe industries there were large
increases in employment, while in the clothing
industries employment declined. In most lines,
however, changes were of a seasonal character.
For the year 1931 as a whole the average

volume of industrial production was about 16
per cent smaller than in 1930, reflecting large
decreases in output of steel, automobiles, and
building materials, offset in part by slight in­
creases in production of textiles and shoes.
Value of building contracts awarded, as re­
ported by the F. W . D odge Corporation, de­
clined considerably more than is usual from
the third to the fourth quarter and for the year
as a whole was 32 per cent smaller than in 1930,
reflecting reduced physical volume of construc­
tion, as well as lower building costs.
Distribution. Distribution of commodities by
rail declined by the usual seasonal amount in
December, and department store sales increased
by approximately the usual amount.
Foreign Trade. Value of foreign trade con­
tinued at low levels in December and for the
year as a whole exports showed a decline of 37
per cent from 1930 and imports a decline of 32
per cent, reflecting in part reduced prices.
W holesale Prices. W holesale prices of com ­
modities declined from 68 per cent of the 1926
average in November to 66 per cent in D ecem ­
ber, according to the Bureau of Labor Statis­
tics, reflecting decreases in the prices of many
domestic agricultural products, sugar, silk, iron
and steel, and petroleum products. During the
first half of January, prices of hogs, lard, and

PER CENT

INDUSTRIAL PRODUCTION
Indexnumbers of industrial productionadjustedfor seasonal varia*
tions (1923-1925average»100).




FACTORY

EM PLOYM ENT

Federal R eserve B oa rd 's index o f factory em ploym ent, with adjust­
m ent for seasonal variations (1923-1925 a v e ra g e = 1 0 0 ).

butter declined further, while prices of cotton,
silk, coffee, and copper increased.
Bank Credit. Reserve bank credit, which had
declined from the middle of O ctober to the mid­
dle of Decem ber and had increased in the lat­
ter part of that month, declined again during
the first three weeks in January. The growth in
the latter part of December reflected a some­
what more than seasonal increase in the de­

time, and on January 20 totaled $190,000,000.
The banks’ portfolio of United States govern­
ment securities showed some increase over the
level of the early part of Decem ber and dis­
counts for member banks increased substan­
tially.
Loans and investments of member banks in
leading cities declined further during D ecem ­
ber and the first two weeks of January, reflect-

M O N E Y RATES
M on th ly rates in the open m arket in N e w Y o r k : C om m ercia l paper rate
on 4- to 6-m onth paper. A c c e p ta n c e rate on 90-day ban k ers’ a cce p t­
ances. Latest figures are averages o f first 20 days in January.

M on th ly averages o f daily figures for 12 F ed eral reserve ban ks. Latest
figures are averages o f first 20 days in January.

mand for currency, partly offset by reductions
in member bank reserve balances and in de­
posits of foreign central banks. In January the
return flow of currency was considerably
smaller than in other recent years, while mem­
ber bank reserve balances continued to decline.
Acceptance holdings of the reserve banks,
which had reached a total of $780,000,000 in
October, have declined through maturing of
bills held almost uninterruptedly since that

ing reductions in loans on securities, as well as
in other loans, and in investments.
In the middle of January buying rates for
bankers’ acceptances at the Federal reserve
banks were reduced and open market rates on
90 day bills declined, first from 3 to 2% per cent
and later to 2% per cent. Yields of high grade
bonds, after advancing for a period of about
four months, declined after the turn of the year,
reflecting a rise in bond prices.




R E SE R V E B A N K C R E D IT