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MONTHLY REVIEW OF BUSINESS CONDITIONS ISA A C B. NEW TON, Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. X V II San Francisco, California, July 20,1933 No. 7 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 Seasonally adjusted measures of Twelfth Dis trict industry and trade increased further dur ing June, and in a number of cases widened their margin over corresponding levels in 1932. The number of industrial workers employed in creased more than seasonally. Payrolls also increased, and by a proportionately larger amount, indicating a reduction in part-time work as well as in unemployment. Wholesale quotations for commodities important in this district shared in the continued advance in prices during June and the first half of July. Condition of crops and livestock did not change appreciably during June, remaining somewhat less favorable than a year earlier. Production estimates as of July 1 indicate that output of many of the district’s crops will be larger this year than last, but since a number of the more important crops showed decreases it is probable that in the aggregate harvests will be somewhat smaller this year. Market pros pects continued to improve as prices for many local products advanced further. Preliminary figures show a greater than sea sonal increase in consumption of electric power in the district during June. California petro leum output was about the same in June as in May, but increased somewhat in the first three weeks of July. Another marked rise in lumber production was recorded during June, accom panied by the largest volume of new orders in more than two years and a reduction in inven tories at mills. Value of building and engineer ing contracts awarded in June approximated the average for earlier months in 1933. Activ ity at meat packing establishments was well sustained during June. Output of flour fell off somewhat from relatively high levels. Movement of freight on district railroads in creased by substantially more than is usual during June. Department store sales declined by about the seasonal amount, but wholesale trade continued to expand. Inventories of both department stores and wholesalers increased considerably during the month. Automobile registrations rose sharply, as in May and April. Intercoastal traffic continued to increase, ap proaching the levels of two years ago. Reserve bank credit extended to the Twelfth District declined in the last few days of June, when most discounts for member banks were liquidated, and changed little during the first three weeks of July. The funds which made possible this reduction in borrowings came from local disbursements by the United States Treasury in excess of collections. Demands for currency over the July 4 holiday were met by withdrawals from member bank reserve bal ances. There was little change in net demand deposits during this period, although time de posits decreased somewhat and large amounts of Government deposits were withdrawn. Agriculture Physical and economic factors influencing the 1933 agricultural season in the Twelfth Dis trict are decidedly in contrast with factors af fecting the agricultural situation at this time a year ago. In 1932, weather conditions were favorable for the growth of crops and forage on livestock ranges, while during the current season sub-normal temperatures and scant rain fall have generally retarded the growth of crops and forage. A year ago, prices for agricultural products were declining rapidly and distress sales of farm products were numerous, while farm products prices have risen sharply during the current season. The advance in prices is indicated by an increase of 33 per cent in the United States Department of Agriculture’s in dex of agricultural prices between February and June. According to July 1 estimates of the United States Department of Agriculture, total vol ume of crop production during 1933 will be smaller than in 1932, declines in the production of deciduous fruits, grain crops, and some field crops offsetting probable production increases in other field crops and in citrus fruits. Cali fornia acreage planted to vegetables is smaller this year than last and growing conditions have been less satisfactory than in 1932, thus indi M O N T H L Y R EVIEW OF BUSINESS CONDITIONS 50 eating a decrease in this year’s production of vegetables. In the Pacific Northwest, a large part of the wheat crop sown in the autumn of 1 9 3 2 was killed during the winter and, although a con siderable acreage of this crop was resown in the spring, the production of winter and spring wheat combined will be smaller than in 1 9 3 2 . Barley production in the district during 1 9 3 3 is also estimated to be less than a year ago, chiefly because of a 4 3 per cent decline in pro duction in California. GRAIN CROPS—PRODUCTION (in thousands of bushels) , ----- All Wheat------ \ Forecast July 1,1933 Arizona ............................ 1,120 California .......................... 11,288 Idaho ................................. 21,331 Nevada .............................. 378 Oregon ............................... 15,474 Utah ................................... 4,560 Washington ....................... 37,608 Twelfth District .............. 91,759 United States .................. 495,681 Source: t Barley--------- \ Forecast 1932 July 1,1933 1932 609 510 525 10,674 22,416 39,249 30,656 4,480 5,868 461 228 266 20,060 3,108 2,688 5,332 1,440 1,716 44,903 2,368 1,920 112,695 34,550 52,232 726,831 169,951 299,950 United States Department of Agriculture. Current production estimates of the several field crops vary considerably in comparison with harvests during 1 9 3 2 . It is estimated that this year’s harvests of hops and beans will be larger, and the potato, tame hay, sugar beet, and rice crops smaller than a year ago. FIELD CROPS—PRODUCTION (in thousands) Forecast Beans (bags) July 1.1933 California, Idaho ..................... 4,131 United States .......................... 10,154 Tame Hay (tons) Twelfth District...................... 11,356 United States .......................... 66,047 Hops (lb.) California, Oregon, W a sh .... 32,596 Potatoes (bu.) 36,781 Twelfth District...................... United States.......................... 306,423 Rice (bu.) California.................................. 6,042 United States .......................... 33,927 Sugar Beets (tons) 2,791 California, Idaho, Utah.......... United States .......................... 9,682 1932 3,544 10,164 1931 5,550 12,662 12,481 69,794 10,524 65,058 24,120 26,410 40,429 357,679 45,771 375,310 7,040 39,356 8,500 46,012 2,811 8,991 1,866 7,903 Source : United States Department of Agriculture. Aggregate production of deciduous fruits in California and the Pacific Northwest during 1 9 3 3 will be slightly less than in 1 9 3 2 . In the earlier year, however, a large volume of fruit was not harvested because of unfavorable mar keting conditions. In California the grape crop is estimated to be 1 5 per cent smaller than a year ago. Inasmuch as this is the principal fruit crop from the standpoint of tonnage, a de cline in its production has an especially im portant influence upon the deciduous fruit total for the state. The Valencia orange crop in California is es timated to be 1 9 , 0 9 0 , 0 0 0 boxes, compared with a 1 9 3 2 crop of approximately 1 7 , 4 3 4 , 0 0 0 boxes. The current lemon crop in this state is esti July, 1933 mated to be 6,736,000 boxes, compared with a harvest last year of 6,123,000 boxes. Under a program supported jointly by organizations which market approximately 90 per cent of the Valencia orange crop of southern California it is proposed to stabilize market conditions dur ing coming months by regulating shipments to provide orderly marketing. DECIDUOUS FRUITS AND NUTS-PRODUCTION (in thousands) California Unit Apples* ............................ bu. Apricots ............................ tons Cherries ............................ tons Grapes .............................. tons Raisin ............................ tons Table ............................ tons Wine ............................ tons Peaches ............................ tons Clingstone .................... tons Freestone ...................... tons Pears ................................ tons Plums ................................ tons Prunes .............................. tons Almonds .......................... tons Walnuts ............................ tons Oregon Apples* ............................ bu. Cherries ............................ tons Pears ................................ bu. Prunes (dried) ................ tons Prunes (fresh) ................ tons Washington Apples* ............................ bu. Cherries ............................ tons Pears ................................ bu. Peaches ............................ bu. Prunes (fresh) ................ tons Idaho Apples* ............................ bu. Prunes (fresh) ................ tons United States Apples* ............................ bu. Pears ................................ bu. Peaches ............................ bu. Forecast July 1,1933 9,275 251 1932 9,045 270 1931 9,112 257 1,926 172 14 46 1,320 775 229 316 579 397 182 218 65 214 15 29 4,030 4,950 4,150 2,812 2,808 1,995 27 23 1,650 1,013 270 367 563 365 198 241 59 186 19 1,221 317 388 547 340 207 238 68 12 33 12 20 20 12 20 16 8 36 22 30,530 13 4,316 352 30,960 16 3,723 1,320 31,400 5,658 4 4,200 26 5,000 140,775 22,050 42,443 202,415 23,346 76,586 21 149,598 21,805 45,113 22 10 3,650 1,050 11 20 *Total crop. Source: United States Department of Agriculture. Although a decrease is customary between May and June, receipts of butter at district markets increased during the later month and were larger than in June, 1932. Because of this increase, inventories increased sharply and were in excess of those a year earlier. Egg re ceipts decreased seasonally in June and were somewhat smaller than in June, 1932. Cold storage stocks of eggs increased by more than the usual amount, however, and were larger than those of a year earlier. Although there was some improvement in feed conditions on livestock ranges of the dis trict during June, forage remained generally poor, except on ranges in the higher altitudes where moisture has been adequate. Growth of this year’s lambs, calves, and other livestock has been slow and a larger than usual propor tion of animals has not attained desirable slaughter weights. Late summer rains should greatly improve feed conditions on the fall ranges. By July 1 most of the district’s sheep had been sheared. Preliminary indications are that the 1933 wool clip was smaller than that of 1932. July, 1933 FEDERAL RESERVE A G E N T A T SAN FRANCISCO 51 Activity of Twelfth District industries con tinued to increase during June. As in April and May, the rate of increase was less rapid than in the United States as a whole, although fluctuations in production in this territory or dinarily correspond rather closely with national movements in extent and in direction. For ex ample, local activity receded by about the same amount as in the entire United States through out 1930, 1931, and 1932, reaching low levels in the summer of 1932 and again in March of this year. Since that time, however, recovery has been less rapid in this area than in the United States as a whole. Industrial employment in California in creased 4 per cent from May to June, and was larger than in June, 1932. The number of em ployees in the motion picture, textile, leather and rubber goods, and wood manufacturing in dustries increased by large amounts during June and canneries reported seasonal increases in schedules. In Oregon the number employed by reporting industrial firms increased 12 per cent from May to June and was 16 per cent higher than a year ago. Increases over the year period were reported in the number of workers in practically all industries in both California and Oregon. Aggregate wage payments rose further than did the number of employed, re flecting increased wrorking hours per employee and probably some advances in wage scales, as well as increased employment. Available re ports indicate improvement also in other states of the district. California crude oil production remained about the same in June as in May and April, averaging about 478,000 barrels daily. For the first time since December, 1929, output ex ceeded that of the corresponding month in the preceding year. In June, 1932, however, out put was lower than in any other month of that year and below the proration allowable pre vailing at that time. On June 1, 1933, the pro duction allowable was increased from the schedule of 440,000 barrels daily, established on October 1, 1932, to 450,000 barrels daily. Another small increase of 2,500 barrels was allowed commencing July 1. Actual production also increased in the following three weeks, averaging 488,000 barrels daily. The Los A n geles Basin region continued to produce most of the excess of production over allotments. Crude oil run to refinery stills averaged higher in June and the first half of July than in May. Neither crude nor refined oil inventories changed appreciably from May 31 to June 30. Total stocks were somewhat smaller than on June 30, 1932. Lumber mill operations continued to expand sharply during June, although some recession ordinarily is expected in that month. This bank’s seasonally adjusted index rose from 38 to 51 per cent of the 1923-1925 average, the highest level since September, 1931. Despite the extremely low level of activity during the first quarter of this year, lumber output was approximately the same during the first half of 1933 as in the corresponding period of 1932. New orders received increased rapidly during April, May, and June. Shipments also increased, but by a smaller amount than did new business, with the result that there was a substantial rise in unfilled orders on hand. Shipments were in excess of production, however, and mill inven tories were reduced somewhat further. Ade quate statistics on the disposition of the lum- Employment— Industry — Industry t------- Californiaa--------\ /----- ----- Oregon No. of No. of No. (-—Employees No. <— Employees of June, June, of June, June, Industries Firms 1933 1932 Firms 1933 1932 All Industries* .1,182 128,862 124,403 116 16,972 14,596 (+3.6) ( + 16.3) Stone, Clay, and Glass Products.. 57 4,273 3,937 (+ 8 .5 ) Lumber and Wood 40 9,883 7,246 Manufactures .. 120 11,272 11,692 (— 3.6) ( + 36.4) Textiles ................ 14 1,307 1,152 8 1,369 935 (+13.5) (+46.4) Clothing, Millinery, and Laundering. 152 10,090 9,622 144 6$ 137 (+ 4 .9 ) (+ 5 .1 ) Food, Beverages, and Tobacco... 297 34,613 33,702 32 1,136 1,978 (+ 2 .7 ) (— 42.6) Public Utilities. . . 49 42,650 47,264 (— 9.8) Other Industriesf. 492 60,310 58,638 (+ 2 .9 ) 4,440 50 6,997 5,660 30 4,300 Miscellaneous . . . (+23.6) (+ 3 .3 ) Wholesale and Retail .............. 234 29,573 29,674 (— 0.3) * Public utilities and wholesale and retail figures not included in this total, fIncludes the following industries: Metals, ma chinery, and conveyances; leather and rubber goods; oils and paints; printing and paper goods. $Laundering only. Figures in parentheses indicate percentage change from June, 1932. Indexes of daily average production, adjusted for seasonal variations (1923-1925 daily average= 100) /------ -----1933----Six Mos. General Av. June May Carloadings— Industrial. . 36 45 37 Electric Pwr. Production. 13 5 136ÏÏ 133 Manufactures , 35 38 51 127 Refined Mineral Oilsf. .. 122* 100 115 127 Slaughter of Livestock.. . 85 91 91 45 52 47 92 81 93 Wool Consumption! Minerals Petroleum ( California ) t ■, 71 72 72 Lead (United States) $ .. 42 41 37 Silver (United States) $. Building and Construction§ Total ................................ 49 43 52 Building Permits— Value 11 10 Larger Cities .............. 10 12 13 Smaller Cities.............. 12 Engineering Contracts Awarded— Value Total ........................ 101 108 90 Excluding Buildings.221 214 198 \ ,--------1932- ■ Apr. 35 135 Six Mos. June May Av. 32 34 37 137 139 142 29 133 105 85 42 79 34 144 103 90 45 108 72 45 36 32 137 83 56 55 35 138 105 87 47 91 71 49 41 76 59 49 76 54 38 47 29 33 34 10 13 13 14 17 15 18 17 97 223 49 92 53 58 100 111 110 tN ot adjusted for seasonal variations. ^Prepared by Federal Re serve Board. § Indexes are for three months ending with the month indicated. HPreliminary. *Five months’ average. 52 ber shipped are not available, but from such information as has been obtained it appears that a considerable part of the lumber is mov ing through to consumption, although a large part is serving to build up inventories of lum ber yards, which were extremely low several months ago. The value of engineering contracts awarded in the Twelfth District during June amounted to 22 million dollars, bringing the aggregate for this type of construction during the first half of 1933 to 131 million dollars— more than 80 per cent higher than in the first half of 1932. The June total included about 10 million dol lars of additional contracts for the Metropoli tan W ater District of Southern California, while the bulk of the remainder constituted unclassi fied public and private projects. Federal Gov ernment undertakings, which had been prac tically negligible in April and May, increased somewhat during June, but remained below the average for the first quarter of the year. As in the preceding five months, commercial, indus trial, and residential building during June con tinued relatively stable at low levels. The total for the first half of the year about equalled that of the corresponding six months in 1932. Activity at flour mills decreased during June, but remained higher than in the same month last year. Inventories of flour were reduced considerably in June, in part reflecting a de sire to dispose of existing stocks prior to the levy of Federal processing taxes on July 9. Millers’ stocks of wheat continued to increase and were more than double those of June, 1932. After allowance for seasonal factors, slaughter of livestock was unchanged during June, follow ing substantial increases in the two preceding months. Distribution and Trade— Trade Approximately the customary decline in value of department store sales was recorded during June, following expansion in April and May. Increases in adjusted indexes of sales of reporting stores in Los Angeles, Oakland, and Salt Lake City were nearly offset by reduc tions in the indexes for Seattle and Spokane, while San Francisco sales remained unchanged. RETAIL TRADE-Twelfth District Percentage changes in value of sales and stocks with no adjustment for price changes t------------ 1933 compared with 1932 ------------> ,----------- NET SALES------------ v STOCKS January 1 to end June of June June Department Stores___ — 0.9 ( 6 5 ) — 15.3 ( 65) — 16.2 (48) 2.3 ( 7) — 14.9 ( 7) — 16.7 ( 7) Los Angeles ............ Other Southern Calif. 6.7 ( 7) — 15.4 ( 7) — 14.0 ( 5) — 16.3 ( 4) Oakland .................... — 5.3 ( 4 ) — 18.5 ( 4) 1.0 ( 6) — 12.5 ( 6) — 13.7 ( 6) San Francisco .......... 15) — 14.2 ( 15) — 14.1 (15) Bay Region.............. —• 1.3 ( Central California... —• 2.9 ( 6) — 15.1 ( 6 ) — 3.9 ( 6) Portland! .................. — 4.8 ( 7 ) — 18.2 ( 7) — 21.3 ( 7) 4 ) — 18.6 ( 4 ) — 25.7 ( 4) Seattle ...................... — 8.6 ( Spokane .................... — 18.6 ( 3 ) — 24.0 ( 3 ) — 16.1 ( 3) 0.7 ( 3) Salt Lake City.......... 3.8 ( 4 ) — 11.3 ( 4) Apparel Stores ............ 10.5 ( 24) — 12.6 ( 2 4 ) — 15.4 (14) Furniture Stores ........ — 2.9 ( 3 2 ) — 23.7 ( 31 ) — 23.7 (24) All Stores .................... — 0.4 (1 2 1 ) — 16.1 ( 1 2 0 ) — 17.2 ( 86) tIncludes five apparel stores which are not included in District department store total. Figures in parentheses indicate number of stores reporting. The number of sales transactions was 3 per cent larger than in June, 1932, compared with an increase of 9 per cent in the previous month. Inventories, which had reached an exception ally low point in May, increased slightly dur ing June, although some decline ordinarily takes place during that month. Wholesale trade increased 5 per cent further during June, continuing the expansion begun in March when activity was more than 20 per cent under corresponding levels of the preceding year. Practically all lines participated in the May to June rise, a contrary to seasonal deWHOLESALE TRADE—Twelfth District Percentage changes in value of sales with no adjustment for price changes ,-----------------1933---------------- N ,-----------1932----------- ^ Six Six Mos. Mos. Av. June May Apr. June May Av. Indexes adjusted (or seasonal variations Carloadingst t-------------- (1923-1925 average=100)-------------- N Total ...................... 52 58 53 52 55 55 58 Merchandise .......... 67 70 67 67 75 74 76 Foreign Trade0 Total t .................... 39* .. 38 37 45 46 50 Importst ................ 36* .. 34 36 42 41 46 41* .. 39 38 47 49 52 Exports .................. Intercoastal Trade Total ...................... 61 72 68 60 51 54 53 Westbound ............ 62 79 61 60 57 66 71 Eastbound .............. 61 69 70 60 50 50 48 Retail Trade Automobile Salest Total .................. 41 64 48 37 47 32 37 Passenger .......... 40 59 46 36 45 30 35 Commercial ........ 60 110 70 48 71 59 64 Department Store Salesi ................. 66 72 72 69 74 70 78 Stocks § .............. 57 58 54 54 70 72 74 r -------------------Actual Figures-------------------- ^ Collections# Regular .......... 42.1 43.5 44.7 41.4 39.841.3 41.2 ______ Installment . . . 14.2 14.9 15.3 13.9 13.413.7 14.1 $Daily average. ° Indexes are for three months ending with month indicated. tExcluding raw silk. §At end of month. #Per cent of collections during month to amount outstanding at first of month. *Five months' average. July, 1933 M O N T H L Y REVIEW OF BUSINESS CONDITIONS June, 1933 ,----- compared with----- n May, 1933 28.3 Agricultural Implements Automobile Supplies Drugs ................................ Dry Goods ...................... Electrical Supplies .......... Furniture .......................... Groceries .......................... Hardware.......................... Shoes .............. .................. Paper^ and Stationery All Lines .......................... 11.2 5.3 15.3 6.4 1.0 — 7.0 18.7 — 0.2 23.1 4.7 June, 1932 5.1 — 7.5 — 9.1 61.5 10.1 71.1 — 3.8 23.2 24.1 4.9 6.8 Cumulative 1933 compared with 1932 — 27.6 — 13.6 — 17.4 0.6 — 10.4 — 5.4 — 9.2 — 10.0 — 10.5 — 16.5 — 11.1 cline in sales of wholesale groceries being the important exception. Sales in most of the in dividual lines were considerably higher in June, 1933, than in June, 1932, and the combined average showed a year-period increase of 7 per cent. Wholesalers’ stocks increased substan tially during June, but remained lower in value than a year ago. The m ovem ent of fr e ig h t over d is tr ic t r a il- Ju ly, 1933 FEDERAL RESERVE A G E N T A T SA N FRANCISCO roads continued to increase by more than the seasonal amount during June. This bank’s ad justed index advanced from 53 per cent of the 1923-1925 average in May to 58 per cent in June, at which point it exceeded the index of a year earlier for the first time since February, 1930. The rise was general in all classes of freight, although merchandise loadings in creased less sharply than did industrial ship ments, which have been at a relatively low level during the past year or so. Carloadings in the Pacific Northwest increased 20 per cent from May to June, whereas there is usually little change between those months. In the southern part of the district, principally Cali fornia, there was an increase of 13 per cent as compared with a seasonally expected upturn of only 5 per cent. P ER C E N T 53 The September contract for wheat at the Chi cago market rose from 77^4 cents per bushel on June 20 to $1.16j4 per bushel on July 18, following which the price decreased sharply to 90 cents on July 20. On July 20, 1932, this same contract was quoted at 47 cents per bushel. The increase in wheat prices at Pacific North west markets during the month ending with mid-July approximated 40 per cent. Rice prices at San Francisco were unchanged during June and the first three weeks in July. Hay prices remained at May levels, although a decline is usual at this time of year. The price of cotton continued to advance and on July 20 was about double the price on that date last year. Bean prices, after rising rapidly during April and May, remained relatively stationary during June and early July. A further increase in the refinery price of sugar to $4.60 per hundred weight in early July carries with it a probable increase in returns to beet growers, since their returns depend partly upon the price of sugar. WHOLESALE PRICES—REPRESENTATIVE QUOTATIONS OF COMMODITIES IMPORTANT IN THE TWELFTH DISTRICT r Commodity Unit ............ lb. Beans, Lima ............ CARLOADINGS-Twelfth District Index adjusted for seasonal variations (1923-1925 average=100). Sales of new passenger and commercial auto mobiles continued to increase during June, al though the seasonal movement in past years has been downward during both May and June. As a result, there was an increase in this bank’s adjusted index from 48 (1923-1925=100) in May to 64 in June. A low point of 27 was reached in March of this year. The total num ber of registrations during the second quarter of 1933 was approximately 44,700, compared with registrations of 33,400 cars during the cor responding period of 1932. The volume of intercoastal traffic increased further in June to levels about the same as in June, 1931. The rise was due entirely to in creased cargo transported from Atlantic to Pa cific Coast ports. Eastbound traffic through the Panama Canal declined somewhat more than seasonally from May to June, despite larger lumber and petroleum shipments. Prices Price increases during recent weeks have brought quotations for many products of im portance in the Twelfth District to a level higher than a year ago. During late June and early July most agri cultural products continued to advance more sharply in price than did other commodities. Wool 1933 $ .89 1.05 3.25 .1055 5.50 6.00 ........................ ............ lb. ............ lb. ............ lb. bbl. Canned Peaches Canned Salmon Sugar, Beet .............. ............ lb. Silver .......................... ............ lb. Coffee........................ ............ lb. ............ lb. .......... gal. 6.50 .69 .195 .25 2.70 1.10 .0575 8.40 1.20 1.65 4.60 .09 .3875 .045 .0925 .07 .125 — July 20---- ------------- \ 1932 1926 $1.42 $ .50 1.30 .63 6.95 2.25 .058 .187 7.80 3.80 5.60 7.85 13.40 4.75 .94 .308 .30 .185 .41 .20 5.00 4.65 1.65 1.10 .085 .035 3.90 9.00 1.10 1.80 4.05 .0525 .2675 .0265 .092 .029 .11 2.10 3.60 5.70 .1425 .6425 .085 .228 .413 .16 Prices for California deciduous fruits sold in eastern auction markets during June were gen erally higher than a year ago. Fruit growers will also receive higher prices for canning fruits than they did a year ago. In contrast with the upward tendency in prices of deciduous fruits, however, California orange prices remained low during June, principally because of a large sup ply of Florida oranges in eastern auction mar kets. Lemon prices advanced with the advent of mid-summer heat in most parts of the United States. Butter and egg prices have advanced less rapidly in recent weeks than have prices of most other agricultural products, this season of the year being the period of heaviest produc tion of these products. Prices in July, how ever, were well above those at this time last year. H o g p r ic e s d e c lin e d a t S a n F r a n c is c o d u r in g 54 June and early July, while cattle prices were relatively stable, and lamb prices increased about 12 per cent. Canned fruit prices in California were un changed during June and the first half of July, and were approximately the same as a year earlier. On July 20, opening prices on this year’s pack of canned pineapple were an nounced, with No. 2 3/2 cans of fancy sliced pine apple quoted at $1.80 per dozen, as compared with an opening price of $1.50 per dozen for that grade a year ago. Prices for dried fruits other than raisins, continued to advance dur ing June and in mid-July were well above prices paid a year ago. Prices for non-ferrous metals and lumber in creased considerably further in June and the first half of July, as did quotations on rubber, hides and wool. California crude oil prices were increased in June, and service station prices for gasoline in the Pacific Coast states were ad vanced by amounts aggregating two cents per gallon, of which one-half cent was an increase in the Federal tax on that fuel. Pacific Coast flour quotations, which had risen slightly during June, were advanced $1.40 per barrel on July 10 when the processing tax of 30 cents per bushel became effective upon wheat used in flour milled for domestic consumption. This brought the price of patent flour at San Francisco to $8.40 per barrel, compared with $3.90 per barrel a year ago. In 1928 the price averaged $8.40 per barrel. B July, 1933 M O N T H L Y REVIEW OF BUSINESS CONDITIONS a n k D e b i t s *— Arizona Phoenix ............ $ California Bakersfield . . . . Berkeley .......... Fresno .............. Long Beach . . . Los Angeles . .. Oakland ............ Pasadena .......... Sacramento . . . . San Bernardino. San Diego ........ San Francisco.. San Jose .......... Santa Barbara. . Stockton .......... Idaho Boise ................ Nevada Reno .................. Oregon Eugene .......... Portland .......... Utah Ogden .............. Salt Lake City. Washington Bellingham . . . . Everett ............ Seattle .............. Spokane .......... Tacoma ............ Y akima ............ Total June, 1933 20,164 June, 1932 19,878 t---- First 6Months----- \ 1933t 1932 $ 104,635 $ 136,275 7,578 12,489 12,464 25,860 529,767 155,775 20,475 24,949 4,966 30,074 654,134 13,670 7,555 11,610 6,970 13,954 14,255 26,181 530,931 152,369 18,707 37,209 5,475 32,773 628,545 14,622 8,827 12,960 39,843 67,980 68,731 130,931 2,886,816 962,002 107,439 165,667 27,329 168,753 3,470,798 75,053 40,906 59,615 46,159 91,764 95.695 169,906 3,526,971 1,023,550 142,599 239,414 40,180 217,104 4,033,713 98,867 59.114 80,238 9,626 11,246 47,631 61,696 5,037 8,078 24,863 45,705 3,256 110,682 4,045 97,349 16,266 551,636 24,716 617,756 10,482 42,480 9,287 40,062 47,176 224,444 52,175 266,221 4,364 6,154 133,106 22,360 21,326 7,226 4,643 5,165 130,863 27,269 22,395 7,799 22,026 25,336 650,607 112,999 101,209 35,597 28,712 34,471 807,203 174,533 135.516 47,342 ........ $1,907,629 *In thousands of dollars, $ $1,891,857 $10,236,288 $12,297,595 tlncludes banking holiday period. The Credit Situation Twelfth District banking records for the four weeks ending July 19 disclosed substantial changes in the condition of both the Federal Reserve Bank of San Francisco and weekly re porting member banks. Most striking was the sharp reduction in member bank borrowings at the Federal Reserve Bank which was made possible by the extension of additional United States Treasury credit. SOURCES AND USES OF BANKING RESERVES Twelfth District Changes in millions of dollars during the weeks indicated Week Ending 1933 , June .. 21.......... ........ July 5.................. July 12........ ........ July 19.......... ........ Week Ending 1933 June 7. June 14. June 21. June 28. July 5. July 12. July 19. SOURCES OF FUNDS Reserve Bank Commercial Treasury Operations Operations Credit + 6.4 — 4.6 + -3 — .8 — 1.4 — 1.2 + 5.8r — 2.7 + 1.9 — 2.9 + 26.9 — 20.7 — 9.0 — 4.2 + 10.6 — .2 — 10.7 + 9.0 — 18.4 + 9.1 + .9 USES OF FUNDS Member Bank Non Demand member for Reserve Currency Deposits Deposits — 1.0 + 4.6 — 1.5 * — 2.8 — .5 — .lr — .8 + 5.8 — .9 + 4.4 — .1 * — 12.1 + 9.7 — 10.8 + 8.7 + *1 + 1.2 — 3.8 — 5.8 Total Supply + 2.1 — 3.4 + 5.Or + 3.3 — 2.6 — 1.9 — 8.4 Unexp’d Capital Funds * * + — — .1 .1 * * .3 Total Dem’d + 2.1 — 3.3 + 5.Or + 3.3 — 2.7 — 2.0 — 8.4 rRevised. *Change smaller than $50,000. Total deposits of weekly reporting member banks decreased considerably between June 21 and July 19. Most of the decline took place in United States Government deposits, although time deposits were reduced somewhat during this period. Bankers’ deposits carried by dis trict banks in eastern centers changed little, after having decreased considerably when the new banking legislation became effective m REPORTING MEMBER BANKS—Twelfth District (in millions of dollars) -----Com lition----- ---------- "\ July 19, July 12, June 21, July 20* 1933 1933 1932 1933 Loans and Investments— Total.. 1,670 1,665 1,704 1,682 Loans— Total .......................... 875 880 898 987 On Securities ...................... 219 221 214 243 All Other .............................. 656 659 684 744 795 Investments— T otal.................. 785 806 695 476 United States Securities.. . . 471 479 372 Other Securities .................. 319 314 327 323 Reserve with Reserve Bank........ 87 91 92 80 554 552 Net Demand Deposits................ 555 531 Time Deposits .............................. 871 865 873 868 Due from Banks ........................ 133 134 137 117 Due to Banks .............................. 143 149 153 149 Borrowings at Reserve Bank.. .. 4 2 22 72 mid-June. Apparently for the present at least the existence of excess reserves and the need for commercial balances are fully as impor tant as interest rates in determining the amount which local banks hold on deposit in eastern institutions. The provisions in the Banking Act of 1933 prohibiting payment of interest on demand deposits of bankers or individuals, ex July, 1933 55 FEDERAL RESERVE AG EN T A T SAN FRANCISCO cepting only contracts existing and in force prior to June 16, 1933, have so far influenced the existing banking situation in the Twelfth District less markedly than might have been the case during most periods in the past. As shown on the accompanying chart, these rates have tended downward during most of the past two years and the movement has been accel erated since the banking holiday. W hen the recent legislation became effective they were so low as to be little more than nominal. The usual rise in currency circulation took place prior to the July 4 holiday. This increase was more than offset, however, by the return of currency during the following two weeks. There was a sharp decrease in the volume of acceptances outstanding in the Twelfth Dis trict during June, and at the end of that month the amount held by district banks was about half as large as the amount held at the end of May, 1933, or June, 1932. A decline in ac ceptance holdings of district banks is custom ary during June, but the decrease this year was larger than usual. FEDERAL RESERVE BANK OF SAN FRANCISCO (in millions of dollars) f--------------- Condition------------------ \ July 19, July 12, June 21, July 20, 1933 1933 1933 1932j RATES OF INTEREST PAID BY SAN FRANCISCO BANKS Weighted averages of mid-month figures. Despite the elimination of interest on de mand deposits there has not yet been a notice able shift from demand deposits to time de posits in Twelfth District banks. This develop ment is unlike that in several eastern districts in which time deposits gained considerably at the expense of demand deposits during the lat ter part of June. T o ta l B ills and S e c u r itie s .......... B ills D is co u n te d ........................ B ills B o u g h t .................................. U n ited States S e cu ritie s .......... T o ta l G o ld R eserves and O th er Cash ................................................... T o ta l D e p o sits .................................. F ed era l R eserve N o te s in C ircu la tion .................................... F ed era l R e se rv e B a n k N o te s in C ircu la tio n .................................... R a tio o f T o ta l G o ld R e se rve s and O th er C ash t o D e p o s it and F ed eral R e se rv e N o te L ia bilities C om b in ed ...................... 148 10 1 137 146 8 2 136 163 29 2 132 225 97 6 122 270 167 287 177 267 171 191 140 222 226 229 251 4 4 4 6 9 .5 7 1 .3 6 6 .8 4 8 .7 There was only one bank failure during June, but several banks were closed during early July. During the month ending June 30 the number of licensed banks in operation in the district increased from 740 to 753, while the number of unlicensed banks decreased from 137 to 122. 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 In June, as in the two preceding months, in dustrial activity increased rapidly and in the first half of July there was some further advance. Factory employment and payrolls showed a considerable increase. Wholesale commodity prices rose rapidly until the third week of July, when prices of leading raw mate rials showed a sharp decline. Production and Employment. Volume of in dustrial production, as measured by the Board’s seasonally adjusted index, advanced from 77 per cent of the 1923-1925 average in May to 89 per cent in June, as compared with 60 per cent in March. Activity in the steel industry continued to increase during June and, accord ing to trade reports, during the first two weeks of July; in the third week of the month it showed little change. Demand for steel from the railroads and the construction industry con tinued at a low level. Output of automobiles, which usually declines at this season, increased in June and showed little change in July. Con sumption of cotton by domestic mills was larger in June than in any previous month, and continued at a high rate during the first half of July. A t woolen mills and shoe factories, activity increased further in June to unusually high levels. Working forces at factories increased sub stantially between May and June and the Board’s seasonally adjusted index of factory employment advanced from 61 per cent of the 1923-1925 average to 65 per cent. Factory pay rolls also increased by a reasonable amount to 46 per cent of the 1923-1925 average. Value of construction contracts awarded, as reported by the F. W . Dodge Corporation, showed an increase in May and June, contrary to the usual seasonal movement. Department of Agriculture estimates as of July 1 indicate a wheat crop of about 500,000,000 bushels, 350,000,000 bushels below the average of 1926-1930, reflecting chiefly adverse weather conditions. Feed crops have also been seriously damaged. Cotton acreage on July 1 was esti mated at about 41,000,000 acres, an increase of 4,000,000 acres over last year, but it is pro posed as a part of the program of the Agricul tural Adjustment Administration to reduce the area by about 10,000,000 acres. 56 M O N T H L Y REVIEW OF BUSINESS CONDITIONS Distribution. Freight traffic continued to in crease during June, reflecting in large part heav ier shipments of coal, miscellaneous freight, and lumber products. Distribution of commodities through department stores showed about the usual seasonal decline in June. Wholesale Prices. Wholesale prices of com modities advanced from 64 per cent of the 1926 July, 1933 Act of 1933, which prohibits the payment of interest on demand deposits, net demand de posits of weekly reporting member banks in 90 cities declined by $500,000,000, reflecting the withdrawal of $300,000,000 in bankers’ bal ances from banks in New York City and else where, and the transfer of funds from demand to time accounts. Time deposits increased by PER CENT PER CENT INDUSTRIAL PRODUCTION FACTORY EMPLOYMENT AND PAYROLLS Index numbers of industrial production, adjusted for seasonal varia tions (1923-1925 average=100). Indexes of factory employment and payrolls, without adjustment for seasonal variations (1923-1925 average=100). average in the first week of June to 69 per cent in the middle of July, according to the index of the Bureau of Labor Statistics. This marked upward movement reflected large increases in the prices of most basic raw materials, includ ing grains, cotton, hides, non-ferrous metals, steel scrap, petroleum, and rubber. Most of these commodities are traded in on organized exchanges and enter into world trade. The prices of many manufactured products, par ticularly textiles, leather, and gasoline, also $260,000,000. The banks’ holdings of United States Government securities increased during the four weeks ending July 12, and there was a further rapid growth in open market brokers’ loans, while loans to customers declined. Return flow of currency amounted to $90,000,000 during the five weeks ending July 19. During the same period the Federal reserve banks purchased $85,000,000 of United States Government obligations and member banks re duced their indebtedness to the reserve banks PERCENT PER CEN T VALUE OF BUILDING CONTRACTS AWARDED Indexes based on three-month moving averages of F. W. Dodge data for 37 Eastern states, adjusted for seasonal variations (1923-1925 average = 100). advanced substantially. On July 19, 20, and 21, following rapid advances in the preceding period, prices of leading raw materials de clined sharply. Foreign Exchanges. In the exchange market, the value of the dollar in terms of the French franc declined to 69 per cent of its gold parity on July 18 and then advanced to 72 per cent on July 21. Bank Credit. During the four weeks follow ing the enactment on June 16 of the Banking WHOLESALE PRICES Indexes of the United States Bureau of Labor Statistics (1926=100). by $90,000,000. The withdrawal of bankers’ balances from New York City reduced excess reserves of member banks in that city, while surplus reserves of member banks outside New York increased substantially. Money rates in the open market generally continued at low levels, although recently slight increases have occurred in acceptance rates, time money against stock exchange collateral, and yields on short-term United States Gov ernment securities.
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