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M o n tk iy FEDERAL RESERVE BANK OF SA N F R A N C ISC O JUNE 1943 Monthly Review of Business Conditions— Twelfth District the inauguration of the defense program in mid-1940 the foundation of Twelfth District eco nomic activity consisted of agriculture; of extractive industries including lumbering, mining of nonferrous metals, petroleum production, and fishing ; and of miscel laneous industries largely engaged in producing non-dur able consumer goods, most important of which was the canning of fruits, vegetables, and fish. This pattern has been altered materially by the defense program and the war effort. Expansion in economic activity in the area has forged ahead of that in the country as a whole and much of the increase has taken place in lines of activity which were previously of but minor importance or were vir tually non-existent in the District. Aircraft assembly and shipbuilding have become major industries. The three Pa cific Coast states received 24 and 27 percent of all aircraft and shipbuilding contracts awarded in the country as a whole from June 1940 through February 1943. In dollar amounts, District awards for aircraft and ships totaled 12.4 billion dollars. The vast expansion of these two essentially wartime industries has been accompanied by extensive developments in metals production and related industries in the capital goods category. These develop ments include a substantial expansion of steel producing facilities, the establishment of magnesium and aluminum industries, and marked growth in the metal working and ma chinery industries. The introduction and expansion of these industries have not required any large shift from older, established activities. Although contraction has taken place in some individ ual lines, most sources of pre-war employ ment in the District were of such a nature that the need for their products has been maintained or intensified by the war. This B efore is well illustrated in agriculture, lumbering, mining, and food processing. Farm Crop Acreages and Livestock In agriculture, the problem throughout the country has been to maximize output of essential products. The need for livestock products, fruits and vegetables for process ing, and legumes, has been particularly pressing. These are all items which bulk large in the farm output of the seven western states. Plantings of most important District field crops in 1942 and in the current year were considerably above the aver age for the preceding 10 years, as may be seen from the table on the next page. Among the grains, marked in creases have occurred in acreages of barley, flaxseed, and grain sorghums. On the other hand, plantings of wheat, while showing some increase in the current year over 1942, were considerably lower than in the thirties. In line with increased emphasis upon crops of high protein con tent, acreages of potatoes and dry beans and peas have been expanded sharply. Flax seed acreage is also much larger than in previous years. Sugar beet acreage, how ever, is estimated to be a third lower than in 1942 and below the 1932-41 average. In the cases of relatively non-essential truck crops and those requiring considerable hand labor, such as lettuce, melons, celery, and strawberries, acreages have been con siderably reduced this year, but other truck crop acreages are expected to be about as high or higher than the 1932-41 average. The annual inventory of livestock pre pared by the United States Department of Agriculture indicates that with the excep tion of sheep and draft animals, the number of livestock on District farms on January 1, WAR FINANCE Budget Receipts of the Federal Government, fiscal year 1943 1944 $13 billion $23 billion $33 billion Budget Expenditures of the Federal Government, fiscal year 32 billion 80 billion 104 billion Total Debt, Direct and Guaranteed, as of June 30 77 billion 139 billion 212 billion . . 1942 . . E s t im a te s o f th e U n it e d S t a te s T r e a s u r y D e p a r t m e n t ■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■■I ★ fy o à . Q JidoJU f. ★ ß u y fyJaA , a n d S ta m p A ★ FEDERAL RESERVE BANK OF SAN FRANCISCO 40 1 9 4 2 w a s s u b s ta n t ia lly a b o v e th e a v e r a g e f o r th e p r e c e d in g ten y e a rs and had in c r e a s e d fu r th e r by Jan uary 1, 1 9 4 3 . T h e in c r e a s e s in n u m b e r s o f h o g s a n d c h ic k e n s w e r e p a r tic u la r ly la r g e . L i v e s t o c k o n F a r m s , J a n u a r y 1— T w e l f t h D i s t r i c t (in thousands) 1932-41 Average 1942 1943 Cattle ................................................................................ 6,349 7,216 7,325 Milch cow s................................................................. 1,667 1,864 1,908 H o g s .................................................................................. 1,651 2,143 2,548 Horses and m ules.......................................................... 951 831 822 Sheep ................................................................................ 12,491 11,577 10,682 Chickens .........................................................................31,453 33,170 35,324 Turkeys ......................................................................... 1,480 2,175 1,864 June 1943 with 3.0 billion board feet three years earlier. The volume of unfilled orders has exceeded stocks on hand since Janu ary 1943 and amounted to 1.9 billion board feet on May 31 of this year. The principal nonferrous metals mined in the District, other than the precious metals, have also been in active demand and production has been expanded considerably during the past three years. Data recently released by the United States Bureau of Mines and summarized in the accompanying table indicate that District output of cop- Source: United States Department of Agriculture’. C a s h i n c o m e o f f a r m e r s in t h e s e v e n w e s t e r n s t a t e s h a s in c r e a s e d s h a r p ly d u r in g th e p a s t th r e e y e a r s a n d th e in c r e a s e h a s b e e n s lig h t ly g r e a te r th a n in th e c o u n t r y a s a w h o le . I n th e fir st f o u r m o n t h s o f 1 9 4 3 c a s h fa r m in c o m e P l a n t e d A c r e a g e s o f F ie l d C r o p s— T w e l f t h D is t r ic t (thousands of acres) 1932-41 1943 Average 1942 Indicated B a r le y ................................................................................ Beans ( d r y ) .................................................................... Corn .................................................................................. Flaxseed ........................................................................ H a y (ta m e ).................................................................... Oats .................................................................................. Peas ( d r y ) ...................................................................... P o ta t o e s ........................................................................... Potatoes, s w e e t............................................................ Rice .................................................................................. S o r g h u m s ........................................................................ Sugar beets...................................................................... W h e a t ................................................................................ 2,154 462 288 86 5,356 1,513 200 286 11 123 170 258 5,858 3,266 555 284 226 5,346 1,519 404 226 12 207 197 314 4,328 3,168 584 281 325 5,487 1,565 541 528 13 207 232 204 4,498 S ource: United States Department of Agriculture. t o ta le d 4 3 9 m illio n d o lla r s , 1 3 9 p e r c e n t h ig h e r th a n in th e lik e p e r io d of 1940. F or th e U n ite d S t a t e s th e in c r e a s e o v e r th e lik e p e r io d w a s 1 1 8 p e r c e n t . Extractive Industries T h e w a r tim e d e m a n d f o r lu m b e r h a s e x c e e d e d th e c u r »938 1939 1940 1941 1942 1943 L U M B E R M IL L STO C K S A N D U N F IL L E D O R D ER S Twelfth District N ot adjusted for seasonal variation. By months, January 1938 to M ay 1943. per in 1942 substantially exceeded the record production of the preceding year and was 53 percent higher than in 1939. Last year 74 per cent of the national output of cop per was produced in the seven western states compared with an annual average of 66 percent in the years 192940. Zinc production also reached a new high in 1942 and was 68 percent greater than in 1939. Lead production in creased more moderately, output in 1942 exceeding that in r e n t c a p a c ity o f th e in d u s tr y , p r im a r ily b e c a u se o f a cu te la b o r s h o r t a g e s , p a r t ic u la r ly o f lo g g e r s . D u r i n g th e fir s t fiv e m o n t h s o f 1 9 4 3 th e D is tr ic t lu m b e r c u t a m o u n te d to a b o u t 5 .0 b illio n b o a r d th e 5 .7 b illio n board fe e t . W h i l e th is w a s d o w n fe e t cu t in th e lik e p e r io d a fro m year e a r lie r , it w a s 6 p e r c e n t la r g e r t h a n in th e fir s t fiv e m o n t h s of 1 9 4 0 . I n v e n t o r ie s h a v e b e e n d r a w n u p o n h e a v ily a n d on M a y 31 a m o u n te d to 1 .4 b illio n b o a r d Retail Trade Carloadings (num ber)1 Total .................................... p l03 Merchandise and Misc. p l l 2 Other ............................. p 93 X1923-25 daily average = 100. p Preliminary. 1937 577 219 126 2,282 49,819 1939 516 178 105 2,691 43,268 1940 611 206 153 2,832 44,920 1941 688 207 168 2,778 44,229 19422 791 213 176 1,993 37,360 *Data cover all of Arizona, the five southeastern counties of which are in the Eleventh Federal Reserve District. 2Preliminary. Without Seasonal With Seasonal Adjustment --------N /---------Adjustment-------- % ,--------19431942 ,----------1943----------\ 1942 Mar. Feb. Apr. Apr. Apr. M ar. Feb. Apr. Department Store Sales (value) Twelfth District . . . . p l9 0 Southern C alifornia.. p l9 1 Northern C alifornia.. p l7 0 Portland ........................ p205 W estern W ashin gton. p223 Eastern W ashington and Northern Idaho p l7 0 Southern Idaho and U tah ........................... p204 Phoenix ........................ p210 (in thousands) 1929 665 Copper ( t o n s )........................ Lead (tons) ........................... 317 Zinc (t o n s ) ............................. 108 Gold (fine ou nces)............... 1,060 Silver (fine ou nces)..........40,728 fe e t co m p a re d Distribution and Trade— Index numbers, 1935-39 daily average=100 M in e P roduction of P r in c i p a l N o n ferro u s M e t a l s T w e l f t h D is t r ic t 1 196 183 174 218 260 238 228 215 251 306 157 158 142 160 192 p l8 8 pl87 p l6 7 p201 p231 171 165 153 195 221 184 194 172 205 193 149 148 133 154 191 203 230 136 p l7 6 160 152 132 216 196 250 257 160 160 p l96 p220 182 195 173 226 152 171 104 111 95 116 132 97 117 124 108 plO l pl05 p 95 97 103 89 96 109 79 114 116 110 1939 by only 20 percent. Gold and silver production in the seven western states, in contrast, declined considerably in 1942, primarily reflecting War Production Board restric tions upon mining of these metals. The need for fuel oil for shipping and other transporta tion, supplemented by increased industrial demand, has resulted in a considerable expansion in California pe troleum production and refining. For several years prior to mid-1942 crude petroleum production was relatively stable but a rather abrupt expansion in output began about that time and production of crude was up about 26 percent during the first five months of 1943 over the same period in 1940. Stocks of fuel oil have been considerably June 1943 41 M O N T H L Y REVIEW reduced, but restrictions upon gasoline consum ption have sent gasoline inventories sharply upward since late 1942. T h e fishing industry on the P acific Coast has been adversely affected by wartime conditions. Governm ent requisitioning o f boats and shortages o f other equipment and o f labor have hampered operation o f the fleet. P r o duction o f canned fish in the three P acific Coast States and A laska in 1942, however, was only 11 percent below that o f 1939 and 1940 although the decline from 1941, when a particularly large catch was canned, was about 25 percent. Expansion in Employment T h e large net expansion in econom ic activity in the T w elfth District, both in absolute terms and relative to the country as a whole, is reflected in the sharp increase in employment. Nonagr¿cultural em ploym ent in the area averaged 4,061,000 in the first three months o f 1943, the latest months fo r which data by states are available. T his was an increase o f 51 percent over the average fo r the like three months in 1940, and exceeds by a wide margin the increase o f 28 percent fo r the country as a whole. M ost o f the increase took place in m anufacturing employm ent which rose to a monthly average o f 1,483,000 in the first three months o f 1943 from 607,000 three years earlier, a gain o f 144 percent. Estimates o f em ploym ent by broad occupational classifications in A pril 1940 and M arch 1943 have recently been made by the National R esources Plan ning Board fo r the fou r southwestern states o f A rizona, C alifornia, N evada and Utah. Based upon these estimates employm ent during the period in the fou r states increased 152 percent in m anufacturing; 22 percent in transporta tion, comm unications and utilities; and 194 percent in governm ent, including civilian workers in military estab lishments. Em ploym ent in mining is estimated to have decreased 6 percent and in trade and services 10 percent. area from other parts o f the country. T he civilian popula tion o f this area in A pril 1943 has been estimated at 12,397,000 persons, an increase o f 1,041,000 persons, or 9 percent, over that o f A pril 1940. F o r the country as a whole a slight decline occurred in the civilian population C iv ilia n P o p u la t io n — A p r il 1940 a n d T w e lf t h A p r il D is t r ic t 1943 (in thousands) April 19402 . I ................... 6,868 ...................... 525 ................... .... 109 ........................ 1,088 U ta h ........................................... ........................ 550 W a sh in g to n ..................................................... 1,719 T o t a l ........................ ......................11,356 Estimated April 19433 Percentage change 1940-43 563 7,558 473 141 1,171 600* 1,891 -(-13 + 10 -1 0 (-29 - 8 - 9 -1 0 12,397 + 9 * D a ta includ e all o f A r iz o n a , the five southeastern cou n ties o f w h ich are in the E leven th F ed era l R e se rv e D istrict. 2 S o u r c e : B u reau o f the Ce'nsus. 3 S o u rce (e x c e p t o f data fo r U ta h ) : O P A registration s fo r W a r R a tion B o o k I I , w ith adjustm ents fo r ch an ges in M a rch and A p ril. P relim in ary estim ates prepared b y S tatistics D iv is io n , W a r P r o d u ctio n B o a rd , R e g io n 10. 4 N a tio n a l R e s o u rce s P la n n in g B o a rd , R e g io n 8, “ A fte r the W a r — N ew J ob s in the P a cific S o u th w e s t,” p. 83. E stim ate is fo r M a rch 1943. over the same period, reflecting the large increase in num bers in the armed services. In the preceding 10 years, from A p ril 1930 to A p ril 1940, population in the seven western states increased 1,744,000. T he estimated addi tion o f m ore than one million civilians during the past three years is consequently about 60 percent as large as the increase in population during the entire preceding 10 year period. W om en in Industry P ersons previously unem ployed and w om en not n or mally in the labor force have been the other m a jor sources Growth in Population T h e large expansion in em ploym ent opportunities in the T w elfth D istrict during the past three years attracted substantial numbers o f workers and their families to this Production and Employment— Index numbers, 1923-25 average=Î00 Industrial Production1 With Seasonal -Adjustment -1943------- ^ 1942 Apr. Mar. Feb. Apr. L u m b e r 2 ........................... . p l2 8 — R efin ed O il s ...................... Cem ent ............................. . 159 W h e a t F lo u r ................... — P etroleu m ........................ E le c tr ic P o w e r ............... . p381 131 134 137 Without Seasonal -Adjustment <------- -1943------- N 1942 Apr. Mar. Feb. Apr. p l3 3 196 167 — — — 391 392 294 p376 116 186 169 140 118 364 — — — 168 143 180 146 132 121 1i 7 97 187 160 146 117 359 142 160 138 107 96 290 Factory Employment and Payrolls3 E m p lo y m e n t P a cific C o a s t ................. C a liforn ia ............... , O re g o n ................... . W a s h in g to n .......... . P a y rolls P a cific C o a s t ............... . C a liforn ia ............... O re g o n ................... . W a s h in g to n .......... . 338 403 280 240 347 408 297 251 352 406 310 268 240 279 220 173 339 399 286 247 338 398 285 248 332 389 279 246 241 277 224 178 615 702 524 477 615 686 554 497 633 694 573 536 351 404 339 246 622 703 534 496 607 677 532 497 588 659 504 482 355 405 346 256 1D aily average. 2C on verted to 1935-39 base. 3E x clu d e s fish, fru it, and vegetable can n in g. pP relim in a ry . 1941 1942 1943 1941 1942 1943 1941 1942 1943 F ACTORY EM PLOYM EN T—C A LIFO R N IA Not adjusted for seasonal variation. By months, January 1941 to April 1943. Source: California Division of Labor Statistics and Law Enforcement. o f labor drawn upon to meet the sharply expanding d e mand fo r industrial w orkers in the District. T he extent to which wom en have entered industry recently is indi cated by data available fo r California. In A pril 1943,217,000 wom en wage-earners were employed in m anufactur ing in that State com pared with 55,000 in A pril 1941. M ore than half the total employed in A pril 1943 were w orking in aircraft plants and shipyards, compared with 2 percent o f the total two years earlier. 42 June 1943 FEDERAL RESERVE BANK OF SAN FRANCISCO Areas of Labor Shortage W ith m ost o f the expansion o f industrial employm ent occu rrin g in centers o f war industries, acute labor short ages have developed in a num ber o f localities. In M ay the W a r M an pow er Com m ission added the San Francisco Bay area and Salt Lake City to the Las V egas, O gden, Portlan d-V an couver, San D iego, and Seattle-Tacom aB rem erton areas which w ere already classified as locali ties o f acute labor shortage. San Jose was recently added to the list o f areas in which labor shortage may be antici pated within six months. T hat list already included Everett, L o s A ngeles, P hoen ix, Pocatello, P ro v o , Sacra m ento, San Bernardino, Spokane, and Stockton. Department Store Sales W ith a larger relative increase in population and nonagricultural employm ent, retail trade, as m ight be e x pected, has increased considerably m ore in the T w e lfth D istrict than in the U nited States as a whole. D irectly com parable data are available fo r sales o f department stores in the tw o areas. T h e dollar volum e o f sales o f these stores in the T w e lfth D istrict was 77 percent higher in the first fou r months o f 1943 than in the like period o f 1940. N ation-w ide sales showed a gain o f 57 percent, ap p rox i m ately three-fourths the increase fo r the District. W ith allowance fo r seasonal factors, department store sales in the D istrict in M a y 1943, according to preliminary estimates, continued at about the level o f the previous tw o months, well below the F ebruary peak. Bank Deposits and Debits A s discussed in the previous issue o f this R eview , the relative increase o f bank deposits in this D istrict has also been m uch larger during the past several years than in the U nited States as a whole. T h e prim ary factor in the na tional increase in bank deposits has been the purchase o f G overnm ent bonds by the banking system. Bank deposits have grow n m ore rapidly in the T w e lfth D istrict than in the country as a whole, however, because o f the shift o f funds to this area resulting from the substantial excess o f T reasury disbursements over collections, including taxes and the proceeds o f security sales. Dem and deposits o f individuals, partnerships, and corporations, which make up m ost o f the actual m oney or purchasing medium o f the com m unity, were reported by T w e lfth D istrict banks to total 4,584 million dollars on D ecem ber 31, 1942. T his was a gain o f 135 percent fro m three years earlier and com pares with an increase o f 69 percent fo r the entire country. Bank debits, which measure the dollar volum e o f pay ments made by check and consequently may be used as roughly indicative o f changes in the dollar amount o f all business transactions, have also increased relatively m ore in the T w elfth District. In the first five m onths o f 1943, debits reported by banks in 30 cities in this area w ere 84 percent greater than in the like period three years earlier as against a gain o f 64 percent fo r 274 reporting centers in the country as a whole. Banking and Credit— A v era ges o f W edn esda y figures (m illions of dollars) (-----------C h ange F r o m ----------1943 M ay ,--------1 9 4 3 -------- N A p ril M ar. 966 430 10 + + — 1942 M ay C o n d itio n Ite m s o f W e e k ly R e p o rtin g M e m b e r B a nks C o m m ’ l, ind. & agrie, lo a n s ............ O p e n m arket p a p e r ............................. L o a n s to fin a n ce securities t r a n s a c t io n s ....................................... R e ’a l estate lo a n s .................................. A ll oth er lo a n s ....................................... T o ta l in v e s t m e n ts .................................... U n ite d States G o v ’ t s e c u r itie s . . . A ll o th er s e c u r itie s ............................. A d ju s te d dem and d e p o s it s .................... T im e d e p o s i t s ............................................ U n ite d States G overn m en t d e p o s its . 70 342 114 3,115 2,807 308 2,245 1,170 560 C o in and C u rre n cy in C ircu la tio n — T o ta l (ch a n g e s o n l y ) ............................. F e d . R es. notes o f F . R . B . o f S. F . 1,443 M e m b e r B a n k R e s e r v e s ............................. 1,240 20 12 1 x — x\ 2 — — — 165 74 7 + 14 — 2 — 3 +329 +320 + 9 — 22 + 12 + -3 5 9 + 27 — 7 — 5 +471 +455 + 16 — 5 + 18 +431 + 26 — 43 — 68 + 1 ,5 7 1 + 1 ,5 6 0 + H + 705 + 63 + 491 + + 46 38 — 60 + 94 + 70 — 57 + -f + 697 644 244 Twelfth District Member Bank Profits in 1942 profits o f T w e lfth District mem ber banks in the first full year o f wartim e operations w ere less fa v o r able than in recent years. R atios o f net profits to total capital accounts averaged 7.4 percent in 1942 com pared with 9.1 percent in 1941 and 8.3 percent in 1940.* In dollar amount, net incom e after taxes totaled 41.6 m il lion dollars in 1942 as against 45.6 million and 43.5 m il lion in the tw o prior years. e t N Sources of Bank Earnings in 1942 A variety o f factors, all m ore or less directly traceable to wartim e developm ents, contributed to the reduction o f *T h e se p ercen ta g es are’ the result o f first c o m p u tin g fo r each ban k the p e r c en ta g e w h ich net profits bear to total capital a c c o u n ts and then a ve ra g in g these figu res fo r all banks. T h e y are n o t derive’d b y a g g r e g a tin g net profits and tota l capital a cco u n ts o f m em ber ban ks as a g r o u p . T h e sam e m eth od, on e a d op ted so that large b an k s w ill b e g iv e n n o m o re w e ig h t than sm aller ban ks in the averages, has been used in d e rivin g all pe rce n ta g e figu res used in this discu ssion . net profits in 1942. A lthough earning assets o f District m em ber banks increased m arkedly during the year, par ticularly during the last quarter, total earnings increased only slightly. T he expansion in earning assets was en tirely a result o f additions to investments in U nited States G overnm ent securities on which rates o f return are rela tively low . Loans, on which rates o f return are consider ably higher, declined during the year. T his shift in the distribution o f assets o f m em ber banks is reflected in a sh ift in the relative im portance o f investments and loans as sources o f earnings. Despite a decrease in the average o f the rates o f return on investments from 3 percent in 1941 to 2.3 percent in 1942, the average o f the ratios o f interest and dividends on securities to total earnings rose from 19.8 percent in the previous year to 23.7 percent in 1942. T h e average o f rates o f return on loans declined to M O N T H L Y REVIEW June 1943 43 6.0 percent from 6.4 percent in 1941 and interest and dis count on loans decreased on the average to 58.8 percent o f total earnings from 64.1 percent in the preceding year. In the search fo r additional earnings to offset m ounting e x penses, service charges on deposit accounts w ere increased, and incom e from this source, as a percentage o f total earn ings, averaged 6.2 percent com pared with 5.8 percent in 1941. prior years. T he average o f ratios o f this item to total earnings rose to 34.3 percent com pared with 31.9 percent a year earlier. Interest on time deposits averaged 15.3 per cent o f total earnings, dow n slightly from 15.7 percent in 1941. W h ile a marked expansion occurred in total depos its o f district mem ber banks in 1942, the increase was largely in demand accounts o f individuals, partnerships, and corporations on which no interest is paid. Expenses of Banks in 1942 N et Profits in 1943 T h e small increase in bank earnings was m ore than o ff set by an increase in expenses and taxes, particularly in com e taxes. O n the average, incom e taxes absorbed 4.5 percent o f earnings in 1942. W h ile this was an increase from the preceding year, lack o f data fo r 1941 prevents an accurate measure o f the extent o f the increase. Salaries and wages took a larger proportion o f earnings than in T he decrease in net profits o f District member banks during 1942 does not necessarily mean that banks are faced with further decreases in net earnings in the cu r rent year. It is true that loans o f member banks in the D istrict have continued to shrink since the end o f 1942 and that they will probably decrease further. O n the other hand, banks have added substantially to their investments in G overnm ent securities. Last year additions to invest ment p ortfolios were made principally in the final quarter and particularly in D ecem ber during the First W a r L oan Drive. These securities w ere not held by the banks in 1942 fo r a lon g enough period to permit realization from them o f any substantial incom e. A full year’s incom e from se curities acquired in late 1942 will be reflected in 1943 earnings, and incom e will also be obtained fo r shorter pe riods from the substantial additions to investment ac counts made during the course o f the year, including the purchases made during the A pril W a r L oan Drive. O p e r a t in g R a t io s o f M e m b e r B a n k s — T w e l f t h D is t r ic t (A r ith m e t ic a l avera ges of in d iv id u a l b a n k ratios, rath e r than ratios based u p o n agg re gate d o lla r a m o u n ts ) 1940 1941 1942 9.9 8.3 10.4 9.1 9.2 7.4 19.8 64.1 5.8 10.3 100.0 Salaries and w a g e s . . ....................................... In terest on tim e d e p o s its ............................... T a x e s and other e x p e n s e s ............................... T o ta l e'xpenses and t a x e s ................. 21.5 62.7 5.6 10.2 100.0 31.6 16.6 24.1 72.3 31.9 15.7 24.7 72.3 23.7 58.8 6.2 11.3 100.0 34.3 15.3 29.3 78.9 N et ch a rg e-offs ( r e c o v e r ie s ) ........................ N e t p r o fit s .............................................. 27.7 3.8 , 23.9 27.7 1.7 25.4 21.1 +•4 21.5 P ercen ta ges o f T o ta l C apital A c c o u n ts ,.. N e t p r o f i t s ............................................................ P ercen ta ges o f T o ta l C u rrent E a rn in g s In terest and dividends o n secu rities. . . . Inte'rest and d iscou n t o n lo a n s ................... S ervice c h a r g e s .................................................. A ll oth er e a rn in g s.............................................. T o ta l e a r n in g s ....................................... N o t e : M o r e co m p le te tabu lation s o f T w e lfth D is tr ic t m e'm ber ban k o p e r a tin g ratios fo r 1942, in clu d in g se'parate tabu lation s fo r ban ks classified b y size, b y p ro p o rtio n o f tim e t o to ta l d ep osits, and b y p r o p o r tio n o f loans to to ta l assets, have been pub lish ed and are available u p o n request. 44 June 1943 FEDERAL RESERVE BANK OF SAN FRANCISCO S u m m a r y o f N a t io n a l B u s in e s s C o n d it io n s R eleased M ay 22, 1943— Board o f G o v e rn o rs o f the F ederal R e se rve System d u s t r i a l activity in April and the early part of May increased somewhat further, I nand retail trade was maintained in large volume. I n d u s t r ia l IN D U S T R IA L P R O D U C T IO N F ed era l R eserve in dex. M o n th ly figures, latest show n is fo r A p ril. D E P A R T M E N T S T O R E SA LE S A N D STOCKS F ederal R eserve indexes. M on th ly figures, latest show n are fo r A p ril. P r o d u c t io n The Board’s index of total industrial output rose slightly in April, reflecting further increases in activity in war industries, while output in most other lines showed little change. Production of armaments in the machinery and transportation equipment industries rose to new high levels. Activity at steel mills increased somewhat further. Lumber pro duction showed the usual seasonal rise in April and was at a level about 10 percent less than a year ago, when problems of maintaining an adequate labor supply in the industry began to develop. In the cement industry, where production usually advances sharply during the spring months, production has shown little change this year, reflecting chiefly the restricted volume of current construction activity. Total output of manufactured foods in April continued below the seasonally adjusted peak level reached at the end of last year. Meatpacking and flour production showed decreases in April, while output of dairy products and other manufactured food products was maintained. Volume of output in chemical plants continued to gain. Production of other non-durable manufactures showed little change. There was a decline in bituminous coal production in the last week of April, following the breaking-off of negotiations for a new wage contract, but output increased in the early part of May. Production of coal in March had been at an exceptionally high level. Stocks on May 1 were considerably higher than a year ago and for bituminous coal were estimated to be equivalent to 55 days’ supply for industrial purposes. In May the Govern ment took over the bituminous coal mines. Value of construction contracts awarded declined in April, reflecting reductions in contracts for Federal work, according to the F. W. Dodge Corporation. Total residential awards in March and April were at the lowest levels for these months in a number of years. D is t r ib u t io n Sales at department and variety stores increased in April, but the rise was less than usually occurs when Easter falls late in the month. Mail-order sales, principally to per sons in small towns and rural areas, showed about the usual seasonal rise. Value of sales in April continued at a level substantially higher than a year ago but, with prices higher, the physical volume of goods sold was probably about the same as in the corresponding period last year. Carloadings of revenue freight were maintained in large volume in April and the first week of May. Ore shipments showed a seasonal rise beginning in the last half of April, a month later than in 1942 when the movement was unusually early. C o m m o d it y C O S T O F L IV IN G Bureau o f L a b o r Statistics’ indexes. L ast m onth in each calendar quarter through Septem ber 1940, m onthly thereafter. M id -m o n th figures, latest show n are estim ates by F ed eral R eserv e fo r A p ril. M E M B E R BA N K RESERVES B reak dow n betw een required and excess reserves partly estim ated. W e d n e sd a y figures, latest show n are fo r M a y 12. P r ic e s Wholesale prices of most commodities showed little change from the middle of April to the middle of Aiay. Retail food prices continued to advance sharply in the latter part of March and the early part of April and the indexes showed increases of 6 percent as compared with January. Retail prices of most other items in the cost of living showed smaller increases in that period. Plans for more effective enforcement of price ceilings have been announced. B a n k C r e d it During May, as the Treasury made disbursements out of war loan accounts, which had been built up during the recent drive, there was a growth of bank deposits subject to reserve requirements and a decrease in member bank excess reserves. Continued with drawals of currency also reduced bank reserves. Nevertheless, the reserves of member banks were sufficient to enable them to make substantial repurchases of bills which had been sold to the Reserve Banks under option. In addition, the Federal Reserve System sold some bonds in response to a market demand. Government security holdings at reporting member banks in 101 leading cities in creased by 4.3 billion dollars in the four weeks ending May 12. These increases reflected purchases of new issues during the War Loan drive, as well as substantial market purchases. In New York City, loans to brokers and dealers for purchasing or carrying securities increased by 860 million dollars during the three weeks of the War Loan drive, and sub sequently declined in the first three weeks of May ; these changes reflected almost entirely activity in loans for purchasing or carrying Government securities, which on May 19 amounted to 580 million dollars of the total 1,020 million dollars outstanding; other loans to brokers and dealers by New York City banks rose by 90 million dollars from the end of March to May 19.
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