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MON THLY REVIEW TWELFTH FEDERAL RESERVE DISTRICT Fe d e r a l R e s e r v e Ju n e 1949 ba n k of S a n Fr a n c i s c o BUSINESS CONDITIONS: TWELFTH DISTRICT VS. UNITED STATES M ore than one finger has been pointed at the Twelfth District and at the Pacific Coast in particular as the place in which a decline in business activity would create problems much more severe than in the country gener ally. Business activity, according to the dire predictions for the Twelfth District economy, ought to have declined more in this District than in the country as a whole. These predictions have been based on the assumption that the District was in some way a one-industry economy and on the fact that unemployment as a percentage of the labor force is greater here than nationally. Actually, no greater decline has occurred here. Though late last year and early this year the District experienced a greater drop in business than the country, conditions in March and April were relatively better here. By the end of April, the District position was no farther from the peak level than was the comparable national position. In some fields of activity the District was better off than the nation as a whole, and the more favorable course of eco nomic activity relative to the United States, which was first evident in March and April, continued into May and June. A brief review of the extent of the expansion in the District since 1940 might bring about a better under standing of the meaning of recent adjustments. District grew more rapidly than country as a whole during the 79 4 0 ’s Between 1940 and 1948, population increased about 4 times as rapidly in the District as in the country as a whole. It increased 40 percent in the District during this eight-year period and about 10y> percent nationally. Even in 1948 the rate of increase in District population was i y 2 times that in the nation. Between 1940 and 1948, nonagricultural employment increased more than 60 percent, compared with about 40 percent in the coun try as a whole. Income payments in 1947 (data by states for 1948 are not yet available) were almost 3 times the 1940 level in the District but only 2 y 2 times the 1940 amount in the nation. Demand deposits in 1948 were more than 3 y2 times the 1940 level for the seven states of the Twelfth District, but a little under 2 y 2 times the 1940 volume for the country. Department store sales were more than 2% times as large in 1948 as in 1940 for this part of the country; nationally they were just over 2 y2 times as large as in 1940. The war gave rise to considerable plant expansion in the District. Most of the new facilities added during the war consisted of shipyards, aircraft plants, steel mills, and aluminum plants. Manufacturing employment was concentrated to a major extent in shipbuilding and air craft production. By the end of 1947, the war-born in dustries had either declined to a minor position or had been absorbed into and consolidated with the District economy. By that time the District economy was fairly diversified as opposed to the concentration during the war period. Between the peak of wartime activity and the end of 1947, approximately 600,000 persons had left manufacturing employment. Most of the reduction came in aircraft and shipbuilding, the two largest wartime em ployers. Even though shipyard employment has con tinued to decline since 1947 and has contributed to the increased level of unemployment compared with last year, most of the adjustment had been made in the im mediate postwar period and most of the workers had been absorbed in other lines of activity or had left the labor force. By the end of 1947, the level of nonagricul tural employment was not far off the wartime peak. The increase in steel capacity and aluminum capacity were being fully utilized and further expansion was under way. The machinery and metal working industries were also expanding and in some parts of the District had be come one of the leading employers. Construction was proceeding at a rapid pace and California alone ac counted for almost 20 percent of the housing starts in the nation at the end of 1947. Decline in the District about the same as in the country The record levels of 1947 were followed by additional increases in economic activity in the District as well as the nation. Production, income, and spending were Also in This Issue Census of Manufactures— Twelfth District, 1939-47 Fruit and Vegetable Canning, Twelfth District— Review and Outlook Employment and Unemployment: W hat Are They? 64 FEDERAL RESERVE B A N K OF S A N F R A N C ISC O greater in 1948 than in 1947. At the same time, how ever, evidence began to appear that the expansionary forces were weakening, and during the year activity in one field after another turned downward. Examination of several series relating to business ac tivity in this District and the United States indicates slight differences in the time at which peak levels were attained. Though the District series tend to show an earlier peak, for the most part the variation does not ap pear to be significant. The declines from the peak, how ever, were greater in the District than in the nation dur ing late 1948. Nevertheless, the declines in most series between the peak month and April 1949, were no more severe in the District than nationally. In some lines of activity the declines in the District were actually smaller than in the country as a whole. This occurred despite the severe winter weather which contributed towards a continuation of the greater rate of decline in the District into January and February. The recovery during March and April was sufficient to improve the District’s posi tion relative to the country as a whole. The more favorable relative position of many lines in the District is shown more clearly by comparing the changes over a year. (See accompanying table.) This comparison, however, is less useful than a comparison with the peak month for the respective areas. The ampli tude of changes from April 1948 to the peak month was not always the same in the District as in the nation. P ercent C h an g e s in S elected S e r ie s — U n it e d S t a t e s a n d T w elfth D is t r ic t Peak1 to Department store sales 2 ’Dec. 1948 United States (July 1 9 4 8 ) ................. — 1.6 Twelfth District (April 1 9 4 8 ) . . . . — 1.2 Nonagricultural em ploym ent 2 United States (October 1 9 4 8 ).......... — Twelfth District (September 1948) — Peak 1 to April 1949 — 6.7 — 6.3 April 1948 to April 1949 — 4.2 — 6.3 0.9 1.7 — — 3.6 3.3 — — 1.8 3.2 — — 7.3 6.4 — — Lum ber production 2 United States (January 1 9 4 8 ).......... — 8.4 Twelfth District (Decem ber 1947) . — 13.0 — — 19.6 12.3 — 12.9 + 6.8 Insured unemployment 3 + 56.3 United States (October 1948) Twelfth District (September 1948) + 84.0 + 147.0 + 112.3 + 60.0 + 34.0 Commercial, industrial, and agricultural loans 4 United States (Decem ber 1948) . . . Twelfth District (December 1 9 4 8 ). — — 9.0 9.2 — + — — 6.7 9.7 — 1.3 — 4.4 Manufacturing em ployment 2 United States (September 1 9 4 8 ) . . . — Twelfth District (September 1948) — Demand deposits (except interbank) 5 United States (December 1 9 4 7 ) . . . — Tw elfth District (Decem ber 1947) . — 1 .1 1.9 1.3 0.6 4.4 0.6 3.7 2.6 1 Peak selected from highest month irl 13 month period ending December 1948. Peak month for each series is listed in parenthesis. 2 Adjusted for seasonal variation. 3 Measured from low point. 4 Weekly-reporting member banks. 6 A ll member banks. Most District series do not vary widely from United States pattern 1 Even with the earlier declines in some phases of eco nomic activity in the District, the movements of the series have approximately paralleled national move ments. This characteristic is readily evident from an ex amination of individual measures of business conditions. 1 See charts on insert page. June 1949 Nonagricultural employment gained somewhat more rapidly in the District than in the country as a whole during the first three quarters of 1948. The decline through January of this year was greater than the na tional decline. In contrast to the country as a whole, however, nonagricultural employment did not decline as sharply in February and March, and improved in April and May. Manufacturing employment declined more sharply in the District between November 1948 and Janu ary 1949, but has improved slightly since in contrast to a continued decline nationally. The data for insured un employment tend to reflect these differences, at first de teriorating slightly relative to the national picture and im proving somewhat recently. One point which has been emphasized in illustrating the more severe decline in the Twelfth District is the high rate of unemployment compared with the United States total. The District, and particularly California, had a higher rate of unemployment than the United States even at the peak of wartime production. The pres ent ratio of District insured unemployment to that for the United States, while greater than that in 1943, is not significantly different, however, from that during most of the postwar period. The important point is that despite the continued influx of population since the end of the war and the decline in business activity in recent months, the District has maintained about the same relative posi tion for some time. The earlier and somewhat sharper decline in activity here did cause some increase in the ratio of District insured unemployment to the national total between October and March, but in recent months the ratio has declined. Department store sales in the District and the United States parallel each other except for the difference in timing of the peak and the somewhat greater improve ment since February of this year in the District. Some what similar behavior is apparent in construction au thorized, except that the United States in recent months has reported greater increases than the District in nonresidential construction while the District has gone ahead somewhat more rapidly in the residential field. Lumber, of which this District supplies a major portion of the United States output, has felt the effect of the de clining rate of construction, particularly of homes. Dis trict lumber production has not paralleled national de velopments to the same extent as other series; the shifts in production in the District diverge from the national pattern in several periods. Not unlike other series, how ever, lumber production in the District was more de pressed than in the United States between the peak month and December 1948, but by the end of April the reverse was true. Demand deposits in this District have followed the pattern for the country, except that the rate of decline has been slightly greater here. Loans to business and farmers fell off somewhat more rapidly in the country than in the District during April, May, and June this year, June 1949 65 M O N T H L Y R E V IE W but before April the decline was somewhat more rapid in the District. Even bank debits, which are more likely to vary on a regional basis than other series referred to here, show a substantial degree of correspondence, though the fluctuations in the District series during the past year have tended to be more moderate than those for the United States. Business failures, perhaps to the surprise of some, increased more in the United States from January through April over the same period last year, though the fluctuations here during most of last year were somewhat more erratic than nationally. District farm income, in contrast to most other eco nomic series, has departed so significantly from the United States pattern over the past several years that comparison cannot be confined to recent months. De clining farm prices were experienced earlier in the post war years and somewhat more extensively for farm products in the District than in the nation as a whole. Gross income from farm marketing in this District leveled off during 1947 while farmers elsewhere in the nation continued to receive a greater return for their products. During 1948 there was little difference in be havior. Farmers received slightly more than in 1947, so that their marketing receipts reached the postwar peak both in the country as a whole and in the District, but the District’s share of total farm marketing income was smaller than at any time during the 1940’s. During the first quarter of this year, however, cash receipts in the District increased over the same period in 1948, while marketing income nationally declined somewhat. Where does the District stand? The District does not appear to be any more seriously affected by recent events than the country as a whole. In fact, allowing for differences in timing of the peak reached, several series indicate a stronger position here than nationally. These indications should not be seized upon, however, to predict a less severe adjustment in the District. The District economy is sufficiently diversified to be subject to most of the forces affecting the country as a whole. No attempt is made here to assess the prospects of individual industries or to discuss the local advan tages and disadvantages that do exist. However, the Twelfth District as a whole does not have a one-industry or one-crop economy. It is not likely to lose existing in dustries to other parts of the country on a significant scale, despite the problems created by rising freight rates and the difficulties of the West Coast shipping in dustry. Therefore it would seem that any significant general downward movement would have about the same effect here as in the country as a whole. CENSUS OF MANUFACTURES— TWELFTH DISTRICT, 1939-47 has long been accepted that economic growth during and since the war has been greater in the western states — and particularly those states in the Twelfth District— than in the rest of the nation. Still, one always welcomes the Census accounting of the exact extent and nature of the expansion in the various fields. The Bureau of the Census has recently released preliminary statistics of its first complete survey of manufactures since 1939. The Census of Manufactures is particularly welcome since there is much less adequate intercensal information on regional manufacturing activity than there is on popula tion, employment, income, and trade. The Census covers the year 1947, and confirms, of course, the general con clusions drawn from previously published employment figures and the limited data available on output from other sources. Manufacturing in the Twelfth District has t I indeed expanded since 1939, in terms of number of estab lishments, number of production workers, and value added by manufacture.1 In terms of employment, manu facturing’s position in the Twelfth District economy has not changed since 1939 relative to other nonagricultural industries. Slightly over 23 percent of all nonagricultural employees in the District were working in manufacturing industries in 1948, virtually the same as in 1939.2 The structure of the manufacturing group itself has changed considerably, however, with the heavy industries becom ing more important. Although food processing main tained its position as the leading manufacturing industry, 1 These are the three categories for which the Census Bureau has revised its 1939 figures to make them comparable with the recent ones. Value added by manufacture is computed by subtracting cost of materials and supplies from value of shipments. 2 M o n t h l y R e v i e w , November 1948, p. 104, “ The Structure of Nonagricul tural Employment in the Twelfth D istrict.” T a b l e 1— C e n s u s o f M a n u f a c t u r e s b y S t a t e a n d A r iz o n a ................................................................. California .......................................................... Idaho ................................................................... Nevada ................................................................. O r e g o n ................................................................. Utah ...................................................................... W a s h in g to n ....................................................... Twelfth District .............................................. M o u n t a in .................................................. Pacific ....................................................... United States .................................................. — Number of establishments----- ^ (units) Percent 1939 1947 increase 313 545 74 11,558 17,645 53 498 664 33 94 125 33 1,903 3,075 62 549 773 41 2,858 19 3,407 17,773 1,454 16,319 26,234 2,107 24,127 48 45 48 173,802 240,801 39 A rea— T w e l f t h Average number , ----- of production workers------> (in thousands) Percent 1939 1947 increase 5.9 1 1 .2 90 271.3 529.8 95 9.9 14.6 47 1.0 2.0 100 57.5 11.5 82.3 92.0 60 74 49 439.4 28.3 411.0 7,808 20.0 122 .8 792.4 47.8 744.6 11,918 80 69 81 53 D is t r ic t Value added (-----------by manufacture1 ------------ (in millions) 1947 1939 $ 31.6 $ 104.0 1,122.5 3,996.2 29.8 109.7 11.5 27.6 156.7 673.0 43.3 128.7 267.7 871.8 1,663.1 116.1 1,547.0 24,487 5,911.0 370.0 5,541.0 74,364 Percent increase 229 256 268 140 329 197 226 255 219 258 204 1 Value added by manufacture is computed by subtracting cost of materials and supplies from value of shipments. N o t e : Figures will not necessarily add to totals because of rounding. Source: U . S. Department of Commerce, Bureau of the Census, C e n s u s o f M a n u f a c tu r e s S ta t i s t ic s b y S ta t e s , and Pacific and Mountain Divisions, 1947. 66 June 1949 FEDERAL RESERVE B A N K OF S A N F R A N C ISCO P E R C E N T I N C R E A S E IN V A L U E A D D E D B Y M A J O R I N D U S T R Y G R O U P - T W E L F T H D IS T R I C T , B Y A R E A S , A N D U N I T E D S T A T E S , 1939-47 Percen t Percen t 500r— ----- 1500 Hillfll Californio E 2 400 — Washington and Oregon Ariz., Ida., Nev., Utah CD Twelfth District H United States I 400 300 300 200 20 0 100 1100 1 Food A pparel Paper Lumber P rin M at,c ha innde rPyu2b . T rS at o nn s :e ,e q C ul ai py ., A l l in d u s t r i e s Metals and Glass *N o t reported, or withheld to avoid disclosing figures for individual companies, and not included in District totals. 1Primary and fabricated. 2Includes electrical machinery. Source: U . S. Department of Commerce, Bureau of the Census, C e n s u s o f M a n u f a c t u r e s S t a t i s t i c s , Pacific and Mountain Divisions, 1947. the large increases in employment and output in the trans portation equipment, metals, and machinery industries brought them close to the top of the list in importance. Forty percent more people were living in the Twelfth District in 1947 than in 1939; 80 percent more people were employed as production workers in manufacturing plants; 48 percent more plants were in operation; and the workers in the plants added 255 percent more value to their products than in 1939. The nation-wide increases were considerably smaller (Table 1). It must be pointed out that a large part of the enormous increases in value added by manufacture is due to the fact that the price level in 1947, as measured by the index of wholesale prices, was nearly double that of 1939. In 1947, 971 thousand people (6.6 percent of all the manufacturing employees in the country) were working in Twelfth District manufacturing plants, and earned nearly $3 billion, 7.5 percent of all manufacturing salaries and wages. The average production worker (about 80 percent of the total number of manufacturing employees T able 2— C e n su s of M anufactures are engaged in actual production work) earned $2,860 in the District, compared with $2,538 in the nation. The Census figures provide us with four different measures for determining the importance of the various manufacturing industries : number of employees, salaries and wages, value added by manufacture, and number of establishments (See Table 2 ). In the Twelfth District, the food and kindred products industry has maintained a consistent lead in each of these categories. In 1947, 19 percent of the District’s manufacturing employees were working in food processing plants, and drawing 17 per cent of the total wages and salaries earned in manufac turing. Lumber was the next most important industry in both years in most categories. Because of the nature of lumber manufacturing, a larger than average proportion (95 percent) of the industry’s employees are engaged in actual production work, and consequently, although the lumber industry paid out less in total salaries and wages in 1947 than the food products industry, it paid more in wages alone. The transportation equipment industry S t a t is t ic s b y M ost T w e l f t h D is t r ic t , ,------------------ 1939------------------ N Food and kindred products...................... Lumber and products except furniture. Transportation equipment ........................ Metals (primary and fabricated)............ Machinery (including electrical)............ Printing and publishing............................. Other .................................................................... Total, all industries....................................... Number of produc Number tion and of estab related lishments workers (units)' (in thous.) 103.5 5,261 1,822 100.5 32.1 286 1,421 40.5 2 0 .0 1,165 2,784 2 2 .2 5,034 119.3 17,773 439.3 1939 and I mportant Industry G roups— 1947 t-----------------------------------------------1947-------------------Production and (-----A ll Employees— n Value added by manufac ture (in millions) $ 417.1 239.3 117.1 156.9 90.6 136.9 493.8 Number of estab lishments (units) 4,832 3,880 712 2,715 2,403 3,264 8,428 $1,663.2 26,234 Number Salaries and wages (average for year) total (in thous.) (in millions) 182.3 $ 516.7 140.6 450 .7 136.4 440.0 351.4 1 1 0 .0 81.9 258.9 57.8 193.9 259.2 770.9 970.6 $2,982.6 t — Related Workers— n Number (average for year) (in thous.) 145.0 133.2 106.3 92.8 63.6 33.1 218.5 792.4 Wages total (in millions) $ 373.3 403 .7 318.8 275.6 187.2 110.3 598.1 $ 2,266.6 Value added by manufac ture (in millions) $1,222.5 925.3 641.3 649.5 449.3 353.7 1,669.7 $5,911.0 N o t e : Figures will not necessarily add to totals because of rounding, and because in some cases figures were withheld to avoid disclosing individual operations. Source: U . S. Department of Commerce, Bureau of the Census, C e n s u s o f M a n u f a c t u r e s S t a t i s t i c s , Pacific and Mountain Divisions, 1947. June 1949 67 M O N T H L Y R E V IE W passed the metals industry to reach third place in terms of number of employees and salaries and wages in 1947, though the metals group was still ahead of it in terms of value added. In the United States, the machinery industry was the most important manufacturing industry in 1947, in terms of employment and value added by manufacture. Metals and food processing were second and third. In 1939, the metals industry had been the most important in these two categories, followed by the food products and machinery industries in terms of value added, and by textile mill products and food products in terms of number of pro duction workers. All District industries expanded between 1939 and 1947. The most spectacular expansion (see accompany ing charts) was in transportation equipment, even though the industry had been cut back sharply by 1947 from the wartime peak. The second and third most important expansions, in terms of both value added and number of production workers, occurred in the machinery and metals industries. In the United States, the greatest over all increase took place in the machinery industries. Lum ber and transportation equipment followed in terms of value added, and instruments and related products and transportation equipment were second and third in terms of the increase in number of production workers. The four Intermountain States experienced a greater increase in manufacturing activity than did the rest of the nation, but the increases in the Pacific Coast States were more striking. California overtook Massachusetts to reach seventh place in the grouping of the ten1 most important manufacturing states in terms of value added. In accomplishing this feat it had grown faster than any P R O D U C T IO N W O R K E R S IN M A J O R T W E L F T H D IS T R IC T M A N U F A C T U R I N G IN D U S T R IE S , 1939 and 1947 ■______ Food ___ ..... Z l . i Z = l 2 .9! 1 1 Lumber Transportation equipment Metals (primary and fabricated) Machinery (includ ing electrical) Apparel Printing and publishing Stone, clay, and glass F ig u r e s w ith in b a r s in d ic a t e p e r c e n t o f U n it e d S t a t e s t o t a l. Paper E6.1 ¿ .6 50 T h o u sa n d s 100 o f p r o d u c tio n w o r k e r s Source: U . S. Department of Commerce, Bureau of the Census, Census of Manufactures Statistics, Pacific and Mountain Divisions, 1947. of the other nine states, in terms of both employment and value added. It employed 4.5 percent of the nation’s pro duction workers in 1947, compared with 3.5 percent in 1939. Its share of the total number of manufacturing plants in the country increased by 9 percent from 1939 to 1947, reaching 5.4 percent. Only New York has more manufacturing plants than California. 1 The ten states are ranked as follow s: New Y ork, Pennsylvania, Illinois, Ohio, Michigan, New Jersey, California, Massachusetts, Indiana, and Wisconsin. The same states lead in terms of number of production workers, though in a somewhat different order. P E R C E N T IN C R E A S E I N N U M B E R O F E S T A B L I S H M E N T S A N D N U M B E R O F P R O D U C T I O N W O R K E R S — T W E L F T H D IS T R IC T A N D U N I T E D S T A T E S , 1939-47 Pe rce n t Percen t 250t“ “ 1150 N u m b e r o t e sta b lish m e n ts Twelfth District 1 2 0 United States 200 200 N u m b e r o f p ro d u c tio n w o rk e rs E D Twelfth District ZZJ United States 250 150 i 100 100 50 50 m Food A pp arel Lumber Paper P rin t , a n d P u b . S to n e , C la y , a n d G la s s M e ta ls ' M a c h in e r y * T ra n s, e q u ip . A l l in d u s t r ie s -25 1 Primary and fabricated. 2 Includes electrical machinery. Source: U . S. Department of Commerce, Bureau of the Census, Census of Manufactures Statistics, Pacific and Mountain Divisions, 1947 . 68 June 1949 FEDERAL RESERVE B A N K OF S A N F R A N C ISCO FRUIT AND VEGETABLE CANNING, TWELFTH DISTRICT—REVIEW AND OUTLOOK h e season which closed June 1 was disappointing to many District fruit and vegetable canners. Substantial T stocks in canners’ and distributors’ hands were brought over from the previous year. Raw material and operating costs increased, freight rates were higher and the new pack was slow to move. Much of the best shipping season was lost because of the waterfront strike last fall. Whole sale distributors have followed a conservative buying policy, while export business has been at an extremely low ebb. Aggressive price competition has weakened the tone of the market and created difficulties for many can ners. Shipments improved in the final months of the season, but stocks of some fruit products remained un wieldy. Larger unsold stocks have been carried into the 1949-50 season than in other postwar years, although the ratio of unshipped merchandise to total packs at the season’s end was not out of line with prewar experience. Banks are reported to be taking a conservative attitude toward financing the new packs. It is probable that gen erally smaller packs will be put up this season and that prices paid to growers will average considerably less than last year and possibly fall below the levels of two years ago. 1948-49 in review The 1948-49 season presented conditions sharply dif ferent from those of two years ago and proved difficult for many District fruit and vegetable canners. In 1946 the problem was to pack enough to supply the markets and refill the channels of distribution. In 1947 some canners overestimated market requirements and put up larger packs than could be sold, especially of tomato products. By 1948-49 the cost of carrying large stocks became a major problem and full fledged price compe tition reappeared for the first time since before the war. Both regional and national fruit and vegetable packs in 1948 were generally somewhat below those of 1947 and considerably under the 1946 packs. Because of large stocks in canners’ and distributors’ hands at the begin ning of the season, however, total annual supplies of major canned fruits were probably as large in 1948-49 as in any previous season, while supplies of the leading vegetable packs were not much below those of 1946 and 1947. District canners generally paid higher prices in 1948 for raw materials, especially fruit, than in previous years, and were faced with higher-priced supplies, in creased wage rates, and a further substantial advance in freight rates. In addition, the heavy packing season for peaches and mixed fruit was later than usual, due to the weather conditions of the preceding spring which delayed the maturity of orchard crops. These conditions caused heavy going for the canning industry almost from the start of the season. The late summer and early fall of 1948 was a time of extremely high prices for many staple foods, especially meat, dairy, and poultry products. Although there is little evidence P r in c ip a l F r u it a n d V e g etab le P a c k s i n C a l if o r n ia , O r e g o n , W a s h in g t o n , a n d U t a h , 1945-48 (thousands of eases) Fruit packs1 Peaches ........................................... Apricots ......................................... Fruit cocktail ............................... Prunes and plums ................. Cherries ......................................... Other fruits and berries . . . . Total fruits and b e r r ie s ..... . Vegetable packs3 Tomatoes ....................................... . . Tomato juice ............................. . Other tomato products Asparagus ...................................... Spinach ......................................... String beans ............................... Other vegetables ...................... Total vegetables .................... . 1945 1946 1947 1948 4,105 6,035 4,465 1,676 1,477 2,024 19,243 10,595 7,752 5,256 3,548 1,885 3,441 32,979 51,721 18,142 3,259 9,386 5,508 1,919 620 2,717 41,551 17,203 4,766 9,902 3,830 894 884 2,894 40,375 2,813 7,025 13,615 8,052 2,729 2,651 2,626 1,013 4,925 4,805 9,268 20,471 9,701 2,990 3,151 2,757 1,415 5,630 6,772 5,753 20,754 9,087 2,502 1,293 2,976 2,151 2,166 5,344 5,867 14,001 6,955 2,262 1,454 2,971 45,449 60,188 53,453 43,819 2 ,2 11 2,754 1 Basis 24 N o. 2J/j cans (except U tah production, actual cases). 2 Actual cases, all grades and sizes. Source: Canners League of California, Northwest Canners Association, W e s te r n C o n n e r a n d P a c k e r. that any marked slackening occurred in consumer buy ing of canned fruits and vegetables, distributors, both at wholesale and retail, were apprehensive of price risks and reluctant to make substantial commitments. Once estab lished, the pattern of buying only for replacement needs persisted throughout most of the season and created numerous problems for canners having large packs financed by bank loans. At the very peak of what is normally the heaviest shipping season came the disastrous waterfront strike which tied up marine transportation from early Septem ber to early December. The freight differential in favor of water as against rail transport is sufficient to dis courage rail shipment to some consuming markets and relatively few buyers were willing to incur the extra cost of rail shipment at a time when prices were already high. How much business was lost by Pacific Coast canners because of the waterfront tieup is impossible to deter mine. The consensus in the trade is that it was consider able. The combination of shipping difficulties, hesitant buy ing by distributors, and negligible export sales caused canners’ stocks to back up. California canned fruit stocks almost doubled between December 1947 and December 1948; fruit stocks of Pacific Northwest canners were in somewhat better balance and showed an over-all reduc tion during the same period. Stocks of canned vegetables held by California packers were reduced somewhat during the year, chiefly because of smaller packs of tomato products which had been a source of concern during the previous season. Stock data for Northwestern vegetable packs are not available. Inventories and prices Heavy inventories put pressure on prices. Large stocks in canners’ hands tied up working capital and required extra storage facilities and the payment of carrying June 1949 charges in the form of interest on bank loans. The need by some canners to provide working capital or to repay bank loans led early in the season to the shading of prices in an effort to convert stocks into cash. The officers of one large District concern which has grown rapidly in recent years reported to their stockholders the deliberate adop tion of an extremely competitive pricing policy as a means of developing national distribution for its products. A c cording to their report, this policy resulted during the past season in selling at prices not only below those of other nationally advertised lines but even below many un advertised brands. Early in 1949 one of the leading District canners cut its price 10 percent on fruit cocktail, of which very large packs had been put up both in 1947 and 1948 and which had been one of the slowest packs to move. Successive reductions on this product brought its price by May to nearly 25 percent below the opening price for the season and probably below production cost for most canners. Price weakness gradually extended to other products and relatively few items were unaffected by the widespread tendency to make concessions in order to move stocks. There is some evidence that price reductions have been effective in stimulating the movement of the more slug gish packs. Ordinarily by far the greater part of the season’s shipments of California fruits occurs in the first few months of the season. This was particularly the case in 1946 and 1947, when some 75 to 80 percent of the total seasonal shipments of cling peaches, apricots, and fruit cocktail had been made by the end of the calendar year. This past season, however, about 40 percent of the year’s shipments of cling peaches and fruit cocktail, the two largest packs, occurred during the five months from January 1 to June 1. Shipments of canned apricots tell much the same story. It should be remembered, in ap praising these figures, that the waterfront strike cut heavily into last fall’s shipments. In spite of this speeding up in rate of shipment the District canning industry came to the end of the season with the largest inventories since before the war. Total sold and unsold stocks of fruits and vegetables held by California canners at June 1, 1949, amounted to about 17.5 million cases as against slightly over 13 million cases a year earlier. Canned fruit stocks were about 8.3 million cases in June 1949, having increased by 5.3 million during the year; vegetable stocks decreased during the year by 1.3 million cases— chiefly because of reduced holdings of tomato products— to a figure of 9.2 million cases in June 1949. Washington and Oregon stocks of fruit in canners’ hands declined during the year from 1.7 million cases to about one-half that quantity; current data on North western vegetable stocks are not available. While slow moving inventories are unwelcome and present a real problem to the trade, it must be remem bered that the carrying of substantial stocks was a regular feature of the canning industry in prewar days. Over the 5-year period 1937-41, for example, unshipped stocks of fruit and vegetables held by California canners at July 1 69 M O N T H L Y R E V IE W C a n n e r s ’ S e a s o n a l S u p p l ie s a n d S h i p m e n t s of L e a d in g C a l if o r n ia F r u it P a c k s , 1946-47 to 1948-49 (thousands of cases, basis 24 N o. 2J4 cans) Seasonal Cling Peaches supply1 17,502 1946 -47____ 15,765 1 947-48____ 1948-49____ 15,897 ! JuneDee. ShipmentsJan.May Total Stocks at end of season2 Unsold stocks: percent o f total 14,005 11,170 7,905 3,041 3,348 4,931 17,046 14,518 12,836 456 1,247 3,061 57.0 63.4 64.2 Apricots 1946-47____ 1947 -48____ 1948 -49 ____ 10,267 3,342 5,290 9,380 2,058 2,427 608 644 1,355 9,988 2,702 3,782 279 639 1,508 63.8 75.0 79.1 Fruit Cocktail 1946-47____ 1947 -48 ____ 1948 -49 ____ 7,859 9,512 10,139 6,460 7,227 4,121 1,336 1,985 3,001 7,797 9,212 7,122 62 299 3,016 81.0 1,361 1,531 1,318 674 959 691 615 438 392 1,289 1,397 1,084 72 134 234 48.1 64.9 74.7 3 ,7 9 5 761 6 6 .4 Pears 1 9 4 6 - 4 7 .. .. 1 947-48____ 1948-49____ 1 9 4 8 - 4 9 3. . . 4 ,5 5 6 2 ,2 0 4 1 ,5 9 1 18.6 1 1 .1 1 Canners’ stocks at beginning of season, sold and unsold, plus pack. 2 Sold and unsold, June 1. 3 California, Oregon, and W ashington. (Northw est data on stocks not available for 1946-47 or 1947-48.) Source: Canners League of California, Northwest Canners Association. averaged close to 9 million cases, of which fruits accounted for 4.9 million and vegetables for 3.8 million cases. In some respects, therefore, the current inventory position represents a return to a more nearly normal condition in the industry as compared with the situation a year or two ago. Perhaps the most disquieting feature in the current inventory situation is the relatively high proportion of unsold merchandise still in canners’ hands at the year end. Unsold stocks of California canned fruits increased from 556,000 cases at June 1, 1947 to 1,675,000 cases a year later, and to over 6 million cases in June 1949. The proportion of such unsold stocks to canners’ total hold ings was around 57 percent in 1947, about 62 percent in 1948, and 74 percent at the end of the season just closed. In the case of fruit cocktail and apricots, unsold stocks represented about 80 percent of canners’ holdings in each instance at June 1, 1949. According to statements in the trade, poor quality, especially of apricots packed in 1948 by some canners, has made part of these stocks unsalable as standard merchandise. The heavy inventory of tomato products of a year ago had been reduced somewhat at June 1,1949, but the proportion of canners’ unsold stocks of all tomatoes and tomato products was slightly higher than in 1948. Outlook for 1949-50 Current indications point to considerably reduced packs of certain products in 1949, especially of canned fruits. It seems probable that the industry will also be able to achieve a marked improvement in the average quality of its packs. Prospects are excellent for large orchard crops of high quality in California and better than average packs should result. The indicated crop of California cling peaches is comparable to the large crop of 1946 when a record tonnage of 534,000 tons was delivered to processors. The pear crop also promises to be well above average. Good cherry crops are reported in both California and the Pacific Northwest and good packs are anticipated. 70 FEDERAL RESERVE B A N K OF S A N F R A N C ISC O One of the leading processor-grower organizations in California is sponsoring proposals to limit deliveries of canning peaches this season to fruit of No. 1 grade only and further to restrict the supply by raising the minimum size of fruit eligible for the top grade. This latter proposal would require the issuance of a specific marketing order by the State Director of Agriculture, after approval by the requisite proportion of growers as well as by handlers and canners. If put into effect, it would require expensive thinning operations by orchardists in order to secure the maximum output of larger sizes and, even so, would probably result in reduced tonnage, although this is far from certain. It would also involve some possible dis crimination as between the smaller early maturing varieties and the later varieties which are larger. For these reasons it is uncertain at this writing what the out come will be. It is likely in any event that prices paid for this year’s crops of peaches and pears will be below the high prices paid last season. Apricot prices will probably also con tinue the downtrend of last year as it is almost certain that the apricot pack will be curtailed. The current weak ness in canned fruit prices reflects in part the standoff attitude of wholesale distributors who are awaiting the impact of the large impending orchard crops on market supplies and prices in the new season. District vegetable packs are also likely to be generally below those of last year and well under 1946 and 1947 packs. An exception is the California asparagus pack, which is probably close to the high output of 1946 and has largely moved into distributors’ hands. The yield of canning peas in the Pacific Northwest was reduced by unfavorable weather; the total pack promises to run con siderably below those of recent years. Crop damage, from insect infestation, also cut down the California spinach pack. It is too early to make predictions as to packs of tomato products. Trade reports indicate that tomato acre age in California is somewhat below that of last year and contracted acreage is still less; prices offered growers are down about 10 percent. Some of the specialized tomato packs, such as catsup and tomato sauce, are in oversup ply ; stocks of tomato juice, on the other hand, are under better control and the market for this product has been helped by the high prices of citrus juices. Canners’ operating costs appear to have become sta bilized at a level somewhat above that of a year ago. Basic wage rates remain unchanged but certain “ fringe” adjustments are estimated to add about 2*4 cents per hour as an over-all average to wage costs. Prices of cans have increased materially over last year and sugar prices are also up. Other supplies are about the same or higher. The new season will see some net reduction in cannery operating capacity in the District. One fair-sized chain store cannery in California has been closed down and several other plants will not operate. Over-rapid expan sion during and since the war, together with losses sus tained on last season’s operations, has depleted working June 1949 capital in some cases. A number of canners have obtained loans from the Reconstruction Finance Corporation in order to continue operations and provide a market for produce and labor in their localities. Some of these loans are on a participating basis, with the banks assuming part of the risk; others are direct. While some investment is being made in facilities to effect operating economies, new construction or expansion is practically at a standstill. Freight rates and market distribution An increasingly serious problem for western canners, especially of vegetable products, is the mounting cost of shipping to distant markets. In spite of rapid and con tinuing population growth in the Pacific region, the prin cipal market outlets for most District cannery products are still to be found in the central and eastern states. Not less than four successive advances in rail freight rates since June 1946 have steadily widened the freight dif ferential to these areas between District canners and their competitors situated closer to the large consuming centers in those regions. For example, the rate on canned goods from Pacific Coast points to New York City on June 30, 1946 was $1.02 per 100 pounds, while the corresponding rate from Green Bay, Wisconsin, in an important pea canning district, was $.51 per 100 pounds. The spread of 51 cents per 100 was equivalent to about 19 cents per case on canned peas. By August 1948 the Pacific Coast rate to New York had been increased to $1.60 and the Green Bay rate to $.79 per 100 pounds, the resulting dif ferential of 81 cents per 100 being equivalent to about 30 cents per case on peas. Similar increases in spread be tween Pacific Coast points and other competitive areas have resulted from the flat percentage method of increas ing freight rates which has been applied in recent years. Proposed further advances in rail charges are currently pending in applications now before the Interstate Com merce Commission and, in fact, interim increases of about 4 or 5 percent have recently been granted. District canners have made vigorous protests against what they characterize as the distortion in competitive relationships resulting from these freight increases. There can be no doubt that many of them have been seriously restricted in their market areas by the resulting higher costs of distribution. This applies more particularly to canners of vegetable products, which are packed in widely different parts of the country; the leading Pacific Coast fruit packs enjoy something approaching a monopoly of their respective fields, though they are not free from the competition of other varieties of fresh and processed fruits. An important consequence of these increased freight charges has been to stimulate the decentralization and scattering of canning operations, especially in the packing of vegetable products. District canners will probably have to relinquish some part of the national market which they formerly enjoyed and look more to local and regional markets to absorb their output. The larger concerns, especially those packing a considerable variety of prod- une 1949 M O N T H L Y R E V IE W icts distributed under their own nationally advertised )rands, are in a position to locate their plants wherever he net advantages are greatest, taking into consideration )oth raw material supply and nearness to consuming renters. Some of them have within the past year or two icquired a considerable number of additional plants, both ay new construction and by purchase of established con:erns, in strategic locations in eastern and central canning districts. A counter-movement— though probably not yet }f equal importance— of eastern concerns acquiring west ern packing plants, is also taking place. 71 The smaller District canners, especially those packing a limited line of products and disposing of them largely under distributors’ private brands, have probably been the hardest hit by increasing freight rates. They do not have the resources either to diversify their packs or to scatter the location of their plants. They are forced to meet the problem of competitive freight handicaps either by freight absorption or other methods of price conces sion. It is probably among this group that major adjust ments in the organization of the District canning industry is to be looked for in the next few years. EMPLOYMENT AN D UNEMPLOYMENT: W HAT ARE THEY? h e recent downturn in business activity has thrown another spotlight on the measurement of employment T and unemployment. W e have heard of full employment, 60,000,000 jobs, and the various other phrases that cause us to think of maintaining employment at a high level. In recent months, however, we have been hearing more and more of a specific number employed or unemployed. Frequently we are told that the number is larger or smaller now than it was a month ago or a year ago. Oc casionally the number we see or hear as being the num ber employed or unemployed appears not to be consistent with that read or heard somewhere else. The uncer tainty which surrounds the figures for employment and unemployment arises out of differences in procedures used by various agencies reporting on these aspects of our economy. In a nontechnical sense, most people would agree that someone working full time for pay is employed, and that anyone willing and able to work who does not have a job, is not working, and who is unable to find work, is unemployed. It is not difficult to find a large number of cases, however, where the answer will vary according to the agency collecting the figures. For example: a worker who is on strike may be treated as employed in one re port, but as unemployed in another; a worker who has been laid off for 30 days may also be treated as em ployed or unemployed; the same may be true for a per son who has lost his regular job but is working a few hours a week on an odd job. The difference in treatment and the meaning of various reports can best be under stood by examining the purposes for and methods by which the reports are assembled. In general, employment statistics are collected either to provide operating information for specific agencies or to provide general information on the status of employ ment or unemployment in the economy. Many agencies collect such data for administrative purposes: the United States Civil Service Commission collects information on Federal workers, the Office of Education on school em ployees, the military establishments on their civilian per sonnel, and several other agencies on the fields which they are required to cover by law. Of particular impor tance in this field are the data on employment collected by the Federal Security Agency in the course of admin istering the unemployment compensation and old age pension systems. Two employment series are collected for purposes of economic analysis and general use. The Department of Commerce series on employment and unemployment en titled the “ Monthly Report on the Labor Force” is col lected by the Bureau of the Census and attempts to meas ure the status of the labor force in the country as a whole. The Bureau of Labor Statistics publishes a monthly series on nonagricultural employment. The Department of Commerce series involves a different set of concepts than either the operating series referred to above or the Bureau of Labor Statistics series. Employment, unemployment, and the labor force The Department of Commerce series represents an attempt to obtain a comprehensive picture of how many people are employed and how many who are able to work and are seeking jobs, are without employment. The report is collected from households in 68 sample areas located in various parts of the country. The sam pling procedures used are designed to obtain compre hensive estimates for the overall employment picture. Because the aim is to determine employment and unem ployment without reference to the status of people on pay roll records, a different set of definitions is used from that common to most other series. The report is confined to persons 14 years of age or over. Counted as employed are those persons who are work ing for pay or are engaged in business, hire themselves out for a fee, or work without pay in a family business or on a family farm for more than 15 hours a week. Also included in the employed group are people with a job or business but not working temporarily because of “ vacation, illness, industrial dispute, bad weather, or layoff with definite instructions to return to work within 30 days of layoff.” 1 Any person with a new job who is to report for work in 30 days is also counted as em ployed. Unemployed persons include those persons able to work but who do not have a job, are not working, but are seeking work. Any person laid off from a job for an 1 T h e M o n t h l y R e p o r t o n t h e L a b o r F o r c e , April 1949, p. 4. 72 E S T IM A T E S O F E M P L O Y M E N T A N D U N E M P L O Y M E N T A P R IL 3-9, 1949 (Persons 14 years of age or over) (in millions) Total noninstitutional population 110 100 June 1949 FEDERAL RESERVE B A N K OF S A N F R A N C ISCO - fication, and also because the size of the sample would have to be increased considerably to maintain any de gree of precision for small industries. Estimates are made, however, of agricultural and of nonagricultural employment. The report contains a table showing the sampling errors applicable to estimates of varying size which the report contains. Even though the errors may be fairly large for small estimates, the fact that the re port permits error prediction increases its value. The Bureau of Labor Statistics series, 90 based on a sample of payrolls 80 70 60 Civilian labor force Unemployed Agricultural 50 Employed persons: Number of hours at work in week SE 15-34 40 30 Nonagricultural 35 or more In both the Commerce and Labor Statistics series, fig ures for nonagricultural employment are published, but the method of collection causes some important differ ences. The Bureau of Labor Statistics, in cooperation with some states, obtains reports from a group of em ployers each month showing the number of people em ployed in the payroll period nearest the 15th of the month. This sample provides the basis for an over-all es timate of nonagricultural employment as well as by in dustry groups. Data available from other agencies are used to supplement or check the estimates and to pro vide bench marks for the sample. N u m ber o f W a g e an d S a la r y W o r k e r s in N o n a g r ic u ltu r a l E s ta b lis h m e n ts by In d u s tr y D iv is io n 1 20 April 1949 10 * Arm ed services. ** W ith a job but not at work. Source: Department of Commerce, Bureau of the Census, M o n t h l y R e p o r t o n t h e L a b o r F o r c e , April 1949. indefinite period is counted as being unemployed. The total of employed and unemployed persons is called the labor force. An examination of the data as presented in a recent report will illustrate how the definitions fit to gether to give an overall picture of employment. There is one characteristic of the labor force, as de fined in this series, which must be kept in mind. The labor force can increase or decrease in accordance with choices made by large groups of persons. For example, each spring many hundreds of thousands of students swell the labor force by seeking work; at the same time increasing agricultural activity makes jobs available, and housewives and others who normally do not work, in the sense used in this series, may take jobs. These conditions cause sharp increases in the labor force; if not all the students are absorbed, unemployment increases, but at the same time the number of employed may also in crease. The reverse behavior may occur in the fall. Fluc tuation in the size of the labor force, therefore, may in fluence changes in the level of unemployment, but in creasing economic activity reflected in more jobs may in turn attract persons into the labor force. The report does not give data by industries because it is collected chiefly from households where information available may not be sufficient to permit accurate classi (in thousands) Manufacturing ..................................................................................................... 15,265 M ining ...................................................................................................................... 915 Contract construction ....................................................................................... 1,965 3,932 Transportation and public utilities .......................................................... Trade ......................................................................................................................... 9,688 Finance .................................................................................................................... 1,726 Service ...................................................................................................................... 4,626 Government .......................................................................................................... 5,773 Total ......................................................................................................................... 43,890» 1 Bureau of Labor Statistics. 2 T h e M o n t h l y R e p o r t o n t h e L a b o r F o r c e , Department of Commerce, reported 49,999,000 persons during the week of April 3-9, 1949 in nonagricultural employment. To be considered as employed in this series, however, one would have to be at work for pay, or on a paid vaca tion. Persons with jobs but temporarily off the payroll are not included. The method of collection also results in the omission of domestic help, people working for them selves, and family workers in a business or farm who do not receive pay. The Bureau of Labor Statistics, how ever, may double count some few people who appear on two payrolls and may include a few workers under 14 years of age. As a result of these differences, the Commerce series for nonagricultural employment includes a larger num ber of people than the Bureau of Labor Statistics series. Usually the two series tend to correspond in the timing of their up-and-down movements. Some minor varia tions are possible because of the different dates covered by the series and because of differences in errors arising out of the differences in sampling procedure. The differ ences in coverage and sampling method may also cause some variation between the two series in the relative sizes of increases or decreases. June 1949 M O N T H L Y R E V IE W Agricultural employment estimates Estimates of agricultural employment are made by the Bureau of Agricultural Economics of the Department of Agriculture as well as by the Census Bureau of the De partment of Commerce. The principal difference be tween the two series lies in the fact that the Bureau of Agricultural Economics counts all farm labor, whereas the Commerce series omits children under 14 years of age. In summer months this could cause a variation of almost 2 million workers. The BAE counts migratory workers who are foreign nationals brought into this country only for the season, whereas the Commerce series does not. The Commerce series, however, includes under agricultural employment those persons in non farm occupations— such as office workers— when em ployed by a farm. The BAE series excludes this type of worker. Employment series based on social security laws The Bureau of Employment Security collects employ ment data from employers having workers covered by the unemployment insurance laws. The Federal program requires coverage of manufacturing, trade, construction, service, and financial workers where there are eight or more employees. Excluded are agricultural labor, do mestic servants, family workers, officers or members of a ship’s crew, and employees of nonprofit or government agencies. The coverage of the industries included in the Bureau of Employment Security series is not consistent, however, because of the variations among state laws. Some states have broader coverage than is required by Federal statute. In a number of state laws all employers having workers in activities covered by the law are in cluded, while most states require that an employer have a minimum number of workers varying from 3 to 8. In addition, the employment covered varies from state to state because some states cover some of the workers ex empted by the Federal programs and because the defini tion of employer-employee relationship varies to some extent among states. The data are collected quarterly and because they are used for administrative purposes, a sys tem for rapid publication has not been developed and they are usually released several months after the end of the quarter to which they apply. The old age insurance coverage is not unlike that for unemployment compensation. The difference in occupa tions covered is minor, but the old age insurance provi sions cover all employers having workers in occupations subject to the law. There again, however, administra tive considerations result in collection of figures on a quarterly basis covering the last month in the quarter only. Ordinarily the data are published for only 1 month in each year and appear about twelve months later. The value of this series and of the unemployment compensa tion series in current economic analysis is to provide a bench mark for current estimates of manufacturing and other covered employment. In these series it is apparent 73 that a person must be on a payroll to be considered as employed. Insured unemployment and total unemployment The Federal Security Agency publishes a weekly re port of insured unemployment. This report is based on claims filed for unemployment insurance either under the various state unemployment insurance laws, veterans benefits, or under the Railroad Retirement Act. Since each state has different tests for eligibility and the oc cupations and employers covered differ somewhat, com parisons among states are affected by these factors. States with populations of similar size and age distribu tion may also show variation because in one state em ployment subject to insurance coverage may be more important than in another state. In comparing insured unemployment with the Com merce Department concept of unemployment several important differences arise. The Commerce figures in tend to include all persons who are unemployed, not only those who are entitled to unemployment benefits. Even within the group entitled to compensation there are some interesting differences in interpretation. Under insured unemployment a person in a covered occupation is considered as unemployed when he files an accepted claim that he had been unemployed a full week. He may be treated as ineligible if he is on strike, refuses work defined as suitable, has left his job voluntarily, or has been fired for cause. That same person would be treated as having a job but not at work in the Commerce figures if he had been laid off for less than 30 days or was away from wrork because of a strike. It is possible under some unemployment insurance provisions to consider a per son unemployed if he is receiving substantially less than his usual earnings because of very sharply curtailed hours. Thus a person earning less than his unemploy ment benefits may be considered as unemployed in 35 states, but would be treated as employed by the Depart ment of Commerce. Insured unemployment will not re flect fully, if at all, increases in the labor force when the new entrants fail to find employment. Except for vet erans under the G. I. bill, one cannot be eligible for un employment compensation unless he has a minimum amount of earnings in a covered occupation. New ap plications for benefits under the Servicemen's Readjust ment Act cannot be made by most veterans after July 25. This will tend to reduce the level of insured unemploy ment after that date unless the law is renewed. Another group of jobless persons not reflected in insured figures are those persons who have exhausted their benefits. The several reports can be used to serve different needs For a comprehensive picture of the labor force status, the Department of Commerce report on the labor force presents monthly a breakdown of the working age pop ulation. The concepts on which the report are based per mit a consistent analysis of this population into employed, unemployed, and persons outside the labor force. For measuring overall trends in the labor force, this source 74 FEDERAL RESERVE B A N K OF S A N F R A N C ISCO appears to be the most satisfactory. To obtain a detailed view of the makeup of nonagricultural employment, the Bureau of Labor Statistics monthly estimates are of primary value. In addition, the detail by industry per mits users to follow the trend in particular lines of ac tivity. The fact that the total for this series varies from nonagricultural employment as reported by the Depart ment of Commerce is the result of a difference in tech nique and coverage. Any variation in movement which might occur between the two reports over a short period is not likely to prove significant especially after allow ance is made for sampling errors. June 1949 Employment data in the Twelfth District The reports on insured unemployment, because they furnish figures by state and are quite prompt, are useful because they supply recent information and because the data they contain may not be available in any other form. In using these reports the warnings issued by the Fed eral Security Agency should be kept in mind. Week-toweek changes should be regarded with care, because ad ministrative and operating considerations may affect two succeeding weeks differently. These reports cover only those workers in each state subject to the unem ployment compensation laws and the Servicemen’s Re adjustment Act. Total unemployment is not covered. If, however, a movement in a particular direction persists for several weeks, a basis may exist for making judg ments concerning the course of total unemployment. In the Twelfth District, six states issue monthly statis tical series relating to employment. Utah and California report on the entire labor force and provide separate figures for agricultural employment, nonagricultural em ployment, employment in specific industries, and total unemployment. These reports are based principally on payroll and unemployment compensation reports supple mented by other information from various govern mental agencies, not on sample surveys of the popula tion. Utah includes detail by manufacturing industry in the over-all report, but California publishes a separate report on manufacturing industries. Arizona, Nevada, Oregon, and Washington all publish monthly reports on nonagricultural employment including detail by indus tries. The sources relied on in each case are payroll rec ords with supplementary information from various public agencies. For the most part the major break downs included resemble those used in the employment reports of the Bureau of Labor Statistics with which most of the states cooperate. The data are based on re porting samples of employers in each state. In addition to these reports, the several states publish general labor market information including series on insured unem ployment, placements, and other pertinent labor market characteristics. REGULATION W AND TEMPORARY AUTHORITY FOR INCREASED RESERVES EXPIRE JUNE 30, 1949 result in a reduction of approximately $800,000,000 in required re serves.” ( S ta te m e n t fo r th e p r e s s r e le a se d J u n e 2 9 , 1 9 4 9 b y th e B o a rd o f G o v e rn o rs o f th e F e d e ra l R e s e r v e S y s te m ) [Required reserves of Twelfth District member banks will be reduced by about $140,000,000 as a consequence of this change in reserve requirements.] “The authority under which the Board of Governors of the Fed eral Reserve System issued Regulation W , establishing minimum down payments and maximum maturities for consumer instalment credit, expires June 30, 1949 and the Regulation will not be effec tive after that date. Notice to this effect is being sent to those who, in accordance with the Regulation’s provisions, have filed regis tration statements with a Federal Reserve bank. “The temporary authority granted by Congress for increased reserves likewise expires June 30 and the Board has accordingly revised the supplement to Regulation D, under which the follow^ing reserve requirements will be effective with the beginning of the next reserve period (June 30 for Central Reserve City and Reserve City member banks and July 1 for other member banks) ; against net demand deposits— 24 percent for Central Reserve City member banks, 20 percent for Reserve City member banks, and 14 percent for other member banks ; against time deposits— 6 percent for member banks of all classes. The changed requirements will SUPPORT POLICY FOR GOVERNMENT BONDS MODIFIED ( S t a t e m e n t f o r t h e p r e s s r e le a s e d J u n e 2 8 , 1 9 4 9 b y t h e F e d e r a l O p e n M a r k e t C o m m itte e o f th e F e d e ra l R e s e r v e S y s te m ) “ The Federal Open Market Committee, after consultation with the Treasury, announced today that with a view to increasing the supply of funds available in the market to meet the needs of com merce, business, and agriculture it will be the policy of the Com mittee to direct purchases, sales, and exchanges of Government securities by the Federal Reserve banks with primary regard to the general business and credit situation. The policy of maintain ing orderly conditions in the Government security market and the confidence of investors in Government bonds will be continued. Under present conditions the maintenance of a relatively fixed pattern of rates has the undesirable effect of absorbing reserves from the market at a time when the availability of credit should be increased.” June 1949 74 A M O N T H L Y R E VIEW NONAGRICULTURAL EMPLOYMENT! MANUFACTURING EMPLOYMENT2 INSURED UNEMPLOYMENTS (Millions of employees) (Adjusted index, 1939—100) (Thousands of unemployed) 1 Source: For Tw elfth District, reports from states, not including Idah o; for United States, U . S. Department of Labor, Bureau of Labor Statistics, and Board of Governors of the Federal Reserve System. 2 Source: For Twelfth District, Federal Reserve Bank of San Francisco; for United States, Board of Governors of the Federal Reserve System. 3 S ource: Federal Security Agency. TOTAL CONSTRUCTION AUTHORIZED! LUMBER PRODUCTION 2 (in Urban Areas) (Adjusted index, 1935-39=100) 1 Source: U . S. Department of Labor, Bureau of Labor Statistics. NUMBER OF COMMERCIAL FAILURES 3 2 Source: Index for Twelfth District, Federal Reserve Bank of San Francisco; for United States, Board of Governors of the Federal Reserve System. 3 Source: Dun and Bradstreet. N o t e : These charts are plotted on a logarithmic scale on which equal vertical distances represent equal percent changes rather than equal absolute amounts. 74B FEDERAL RESERVE BANK OF SAN FRANCISCO June 1949 BUSINESS INDEXES— TW ELFTH DISTRICT* (1935-39 average = 100) In d u str ia l p ro d u c tio n (ph ysical volu m e)* Year an d M on th L u m ber 1929_________ 1930_________ 1931................. 1932_________ 1933_________ 1934_________ 1935_________ 1936_________ 1937_________ 1938_________ 1939_________ 1940_.......... .. 1941_________ 1942................. 1943_________ 1944_________ 1945_________ 1946............... 1947_............... 1948................. 1948 M arch........................... April________________ M a y _________________ June_________________ Ju ly_________________ August______________ September__________ October_____________ November___________ December___________ P e trole u m * * R efined C e m e n t C rude 129 112 10 1 77 46 62 67 83 106 113 83 78 76 77 92 94 105 88 110 12 0 110 142 141 137 136 109 130 141 144 10 2 110 148 133 151 152 152 153 152 153 123 151 153 153 164 166 172 168 167 171 151 152 153 152 174 170 176 169 122 128 153 159 155 149 145 141 1949 January......................... February------------------M arch______________ April-------------------------- 127 107 90 84 81 81 91 98 105 103 103 103 148 104 111 131 142 99 98 110 116 135 151 160 148 159 162 125 137 144 139 147 149 11 0 155 173 171 110 Lead* 68 171 146 104 75 75 79 89 117 100 96 74 48 54 70 112 92 114 124 164 194 160 128 131 165 193 2 11 20 1 2 12 205 207 211 214 219 229 217 196 176 173 195 2 12 118 96 97 112 113 118 104 93 81 73 98 107 110 108 10 2 105 99 108 106 107 115 111 112 r 107r 12 0 r 125 W heat Copper* flour 8 160 106 75 33 26 36 57 98 135 T o ta l C a r C a li D e p 't D ep’ t m f’g fo rn ia loadin gs store store sto ck s E le c tr ic e m p lo y fa cto ry (n u m sales pow er m e n t 4 payrolls« ber )2 (valuó)2»* (value)5»* 106 83 84 82 73 73 79 85 96 105 100 10 1 89 88 95 94 96 99 96 107 103 103 104 115 119 132 128 133 116 88 122 144 163 188 192 171 137 109 163 153 111 100 112 93 73 54 53 64 78 96 115 136 167 214 231 219 219 256 284 96 104 118 155 230 306 295 229 175 184 189 134 224 460 705 694 497 344 401 430 274 275 263 266 284 289 295 291 295 309 187 184 180 185 190 194 197 196 194 190 308 305 294 299 184r 183r 184 183 ’ 88 10 2 112 12 2 158 165 165 165 159 166 161 152 109 104 10 1 108 129r 169 168 128 118 116 108 115 123 124 123 114 126 122 10 2 82 135 116 91 70 70 81 10 1 110 112 104 92 69 66 134 127 110 86 74 78 83 88 86 88 103 109 96 104 99 106 96 108 R eta il fo o d prices 3*8 1 3 2 .0 1 2 4 .8 1 0 4 .0 8 9 .8 8 6 .8 9 3 .2 9 9 .6 1 0 0 .3 1 0 4 .5 9 9 .0 9 6 .9 9 7 .6 1 0 7 .9 1 3 0 .9 1 4 3 .4 1 42.1 14 6 .3 1 6 7 .4 2 0 0 .3 2 1 6 .1 10 1 10 1 128r 137 133 141r 134 136r 142 134r 109 119 139 171 203 223 247 305 330 354 107 114 137 190 174 179 183 238 300 348 406 396 406 424 440 455 454 452 449 444 132 130 125 135 137 141 146 131 132 131 342 362 356 362 359 361 350 345 343 358 368 374 348 339 337 333 351 346 340 320 2 1 6 .0 2 1 7 .6 2 1 6 .6 2 1 8 .1 2 1 8 .0 2 1 7 .6 2 1 7 .1 2 1 5 .6 2 1 6 .5 430 423 412 412 105 103 118 126 343 308 324 338 321 327 344 332 2 1 7 .9 2 1 4 .1 2 1 3 .3 2 1 5 .6 110 2 11.6 BANKING AND CREDIT STATISTICS— TW ELFTH DISTRICT (amounts in millions of dollars) Year an d m o n th 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 C o n d itio n it e m s o f all m e m b e r b a n k s 7 Loans an d d isco u n ts U .S . D em and G ov’t dep osits secu rities a d ju s te d 8 2,239 2,218 1,898 1,570 1,486 1,469 1,537 1,682 1,871 1,869 1,967 2,130 2,451 2,170 2,106 2,254 2,663 4,068 5,358 6,032 495 467 547 601 720 1,064 1,275 1,334 1,270 1,323 1,450 1,482 1,738 3,630 6,235 8,263 10,450 8,426 7,247 6,366 1,234 1,158 984 840 951 1,389 1,791 1,740 1,781 1,983 2,390 2,893 4,356 5,998 6,950 8,203 8,821 8,922 8,655 1948 April M ay June July August September October November December 5,509 5,569 5,591 5,640 5,743 5,848 5,910 5,984 6,032 6,943 6,883 6,841 6,816 6,712 6,394 6,440 6,358 6,366 8,461 8,445 8,455 8,556 8,555 8,661 8,647 8,658 8,655 1949 January February M arch April M ay 6,009 5,910 5,899 5,811 5,738 6,382 6,306 6,208 6,230 6,357 8,664 8,330 8,147 8,157 8,154 1,2 0 1 T o ta l t im e dep osits B an k rates on bu sin ess lo a n s 9 1,790 1,933 1,727 1,618 1,609 1,875 2,064 M e m b e r b a n k reserves a n d related i t e m s 10 R eserve b an k cre d it 11 — + — 34 16 21 42 2 — 7 + + 2 ,2 2 1 2 6 1 — 3 2,267 2,360 2,425 2,609 3,226 4,144 5,211 5,797 6,006 6,087 + + + + + + 2 2 2 ,10 1 2,187 6,019 6,008 6,058 + + 3.00 + + 6,010 + 6,005 6,003 6,018 5,998 6,087 — 3.20 6,109 6 ,1 1 2 9 30 14 15 23 17 12 25 3.16 6,082 6,097 6 ,10 2 + + 4 107 214 98 76 9 302 17 3.27 + C o in an d C o m m e rc ia l T r easu ry cu rren cy in o p e ra tio n s 12 op e ra tio n s 12 c ir c u la tio n 11 0 — 53 — 154 — 175 _ 110 — 198 — 163 — 227 — 90 — 240 — 192 — 148 — 596 - 1 ,9 8 0 -3 ,7 5 1 - 3 ,5 3 4 - 3 ,7 4 3 - 1 ,6 0 7 — 443 + 472 — — — — 75 14 10 38 1 + + 427 — 40 11 8 2 + 2 — 10 1 — 4 15 — — _ 7 34 127 — + 6 8 202 + 23 b 89 - 154 - 234 - 150 - 257 - 219 - 454 b 157 - 276 b 245 b 420 + 1,000 + 2 ,8 2 6 + 4 ,4 8 6 + 4 ,4 8 3 + 4 ,6 8 2 + 1 ,3 2 9 + 630 - 482 + + + + + + 29 45 + b + 58 19 12 _ + + + + + + + + + + + + + + _ — + 6 16 48 30 18 4 14 38 3 20 31 96 227 643 708 789 545 326 206 209 17 26 13 43 _ 11 12 + + + 17 - 61 6 _ _ — 54 4 31 109 94 + + 37 98 35 7 45 2 8 8 11 Reserves 175 183 147 142 185 242 287 479 549 565 584 754 930 1,232 1,462 1,706 2,033 2,094 B a n k d e b its index 31 citie s’ ’ ** (1935-39 10 0 )* 146 126 97 68 63 72 87 10 2 111 98 10 2 110 134 165 211 2,420 237 260 298 326 355 2,048 2,068 2,061 2,075 2,065 2,409 2,351 2,323 2,420 354r 342 348 354 356 359 363 355 376 2,329 2,308 2,299 2,264 2,128 356 344 345 354 345 2,20 2 1 All monthly indexes but wheat flour, petroleum, copper, lead, and retail food prices are adjusted for seasonal variation. Excepting for department store sta tistics, all indexes are based upon data from outside sources, as follows: Lumber, various lumber trade associations; Petroleum, Cement, Copper, and Lead, U .S. Bureau of Mines; W heat flour, U .S. Bureau of the Census; Electric power, Federal Power Commission; Manufacturing employment, U.S. Bureau of Labor Statistics and cooperating state agencies; Factory payrolls, California State Division of Labor Statistics and Research; Retail food prices, U.S. Bureau of Labor Statistics; and Carloadings, various railroads and railroad associations. 2 D aily average. * N ot adjusted for seasonal variation. * Excludes fish, fruit, and vegetable canning. Factory payrolls index covers wage earners only. 6 A t retail, end of month or year. • Los Angeles, San Francisco, and Seattle indexes combined. 7 Annual figures are as of end of year; monthly figures as of last Wednesday in month or, where applicable, as of call report date. 8 Demand deposits, excluding interbank and U .S. G ov’t deposits, less cash items in process of collection. M onthly data partly estimated. 9 New quarterly series beginning June 1948. Average rates on loans made in five cities during the first 15 days of the month. 10 End of year and end of month figures. 11 Changes from end of previous month or year. 12 Minus sign indicates flow of funds out of the District in the case of com mercial operations, and excess of receipts over disbursements in the case of Treasury operations. 13 Debits to total deposit accounts, excluding inter-bank deposits. * Seasonal factors revised. p — preliminary. r— revised
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