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MONTHLY REVIEW
OF
B U S I N E S S C O N D IT IO N S
ISA A C B. NEW TON, Chairman of the Board and Federal Reserve Agent
Federal Reserve Bank of San Francisco
Vol. XVI
San Francisco, California, June 20,1932
No. 6
T W E L F T H FED ER AL RESERVE DISTRICT CONDITIONS
A further moderate decline was recorded in
Twelfth District business activity during May.
The sale and transportation of commodities
decreased somewhat from the low level of April,
as did industrial production, after allowance
for seasonal influences. Unemployment condi
tions were ameliorated slightly by the need for
additional farm laborers. Prices of leading
Twelfth District products continued to decline.
Contrary to the usual seasonal developments,
country banks’ balances at reserve cities in
creased slightly during recent weeks.
Conditions for the growth of crops remained
satisfactory during May, but agricultural prices
moved slightly lower. Early estimates indicate
that production of several important grain and
deciduous fruit crops will be larger than in
1931. Production estimates for the current
lemon and Valencia orange crops were reduced
on June 1. Livestock were in better condition
than in the preceding month due to the rapid
improvement of range forage.
California crude oil production averaged sub
stantially lower in May than in April and was
further reduced in early June, approaching
closely the new proration schedule in effect
since late May. Refinery operations and gaso
line inventories also declined. Output of lum
ber failed to increase seasonally from April to
May. The reduction of construction activity to
exceptionally low levels was indicated by a
sharp decrease in the value of engineering con
tracts awarded and a decline in the value of
building permits issued. Non-ferrous metal
mining was further restricted. Flour milling
changed little, although there is usually a de
cline during May.
There was some decline in trade activity as
a whole during May, but individual indicators
varied considerably. Both retail and wholesale
sales were lower in value than in April, while
registrations of new automobiles and the vol
ume of intercoastal traffic increased, after al
lowance for seasonal factors. Freight carloadings decreased during May, whereas there is
usually a considerable increase during that
month. All measures of trade were substan
tially lower than a year ago, as were retail and
wholesale commodity price indexes.
Reserve bank credit employed in the Twelfth
District increased moderately during the four
weeks ending June 15, although other phases
of credit conditions appeared to be somewhat
easier. Discounts advanced somewhat, revers
ing the substantial reduction which had been in
progress since early March, while holdings of
locally purchased acceptances remained unusu
ally small. In early June this Bank participated
heavily in the System’s open market opera
tions, and its holdings of United States Gov
ernments increased from 69 million dollars to
107 million dollars. Expenditures of the United
States Treasury in excess of collections within
the District, although smaller than in the pre
ceding four weeks, offset in part an outflow
through the Gold Settlement Fund resulting
from payment of inter-district commercial
transactions. Currency circulation increased
slightly as is usual at this season.
Loans of reporting member banks remained
practically unchanged from May 18 to June 15.
Investments and deposits of these banks de
clined during the first three weeks of this pe
riod, but increased on June 15, as a result of
United States Treasury financing, to approxi
mately the levels of a month earlier.
Agriculture
The growth of crops in the Twelfth District
was further hindered during May by cool
weather and less sunshine than usual at this
time of year. Despite these retarding in
fluences, crop production prospects and the
condition of livestock ranges remained satis
factory. The lateness of the current agricul
tural season makes it more than ordinarily dif
ficult to estimate the volume of crop production
at this time. For the earlier maturing crops,
however, preliminary estimates made by the
United States Department of Agriculture on
June 1 show that wheat, barley, and tame hay
42
MONTHLY REVIEW OF BUSINESS CONDITIONS
production in the District will be somewhat
greater than in 1931, as will the peach, pear,
prune, and plum crops in California.
Production of winter wheat in the District
during 1932 w^as estimated at 72,162,000 bushels
on June 1, about 7 per cent more than the 1931
harvest. This forecasted increase is in contrast
to the expected smaller crop in the United
States, which was estimated on June 1 to be
410,699,000 bushels, compared with 787,465,000 bushels harvested in 1931 and an average
production of 548,032,000 bushels during the
period from 1924 to 1928. While production
estimates for other grain and field crops are
not available, the latest condition figures of
some of them are shown in the accompanying
table.
C O N D IT IO N O F G R A IN S A N D H A Y
(Per cent of normal)
Spring W h eat
Junel
1932 1931
A r i z o n a .......................................
C a l i f o r n i a ..................................
I d a h o ........................ 92
84
N e v a d a ................... 92
84
O r e g o n ...................... 90
78
U t a h .......................... 92
83
W a s h in g t o n .......... 86
68
U n ite d S ta te s . . . . 84.5 67.9
S ou rce:
O ats
Jun el
1932 1931
B arley
Jun el
1932 1931
Tam e H ay
Junel
1932 1931
93
80
93
94
90
93
89
78.9
91
79
92
94
91
94
87
82.3
88
86
89
89
90
86
87
76.9
90
56
86
74
84
84
83
84.7
88
52
87
85
82
86
80
77.2
90
79
80
74
85
70
84
77.4
U n ite d S ta te s D e p a r tm e n t o f A g r ic u ltu r e .
Dairy and poultry producers in the District
have been faced by a declining market for
their products since last December. This down
ward tendency continued during May, prices
for butter and eggs reaching the lowest levels
since comparable records first became avail
able in 1910. Although egg receipts at Pacific
Coast markets were lighter in May than in
April, storage holdings increased 144,510 cases
by June 1 and on that date were 6 per cent
larger than on June 1, 1931. Butter receipts
were 12 per cent larger in May than in April,
but were 4 per cent less than receipts during
May, 1931. On June 1, storage holdings of
butter were 2,452,838 pounds, compared with
2,116,822 pounds on June 1, 1931. The statisti
cal position of these commodities is less favor
able in the District than in the United States
as a whole, where storage holdings of eggs and
butter were 32 per cent and 17 per cent less, re
spectively, on June 1, 1932, than on June 1,
193L
Early June estimates of the Valencia orange
crop in California were reduced considerably
from estimates of one month ago. The crop is
now expected to aggregate about 16,553,500
boxes of merchantable fruit, compared with
17,317,150 boxes in 1931. The current estimate
of the 1931-1932 lemon crop is 5,229,400 boxes
as compared with last year’s crop of 5,735,290
boxes. The market for both lemons and oranges
improved from April to May and lemon prices,
for the first time since October, 1931, were
June, 1932
higher than for the corresponding month in the
previous year.
Production of deciduous fruit in California
is expected to be somewhat larger in 1932 than
in 1931, but smaller than in 1930. Estimates of
the size of the apple and grape crops in that
state are not yet available, but condition figures
are approximately the same as a year ago. In
the Pacific Northwest, the development of fruit
crops has been delayed by weather conditions.
Production estimates for apples, the principal
fruit crop of that region, are not yet available.
In Washington, the 1932 pear crop is estimated
to be about the same as in 1931, while the
cherry and peach crops are larger.
D E C I D U O U S F R U I T S A N D N U T S — C a liforn ia
/------C o n d ition------»
(Per cent of normal)
June 1
Jun el
1932
1931
77
............
72
80
............
70
............
56
77
............
78
78
............
80
77
77
78
T a b l e ...................... ............
............
72
83
C lin g s to n e .......... ............
F r e e s to n e ............ ............
............
............
............
............
............
88
84
64
81
61
67
86
86
83
63
80
62
82
71
f ------ P rodu ction*------- %
F orecast
A ctu al
Jun el
1931
1932
9 ,1 1 2 t
245
277
23
16
1,287
729
221
337
667
579
451
397
216
182
231
218
71
65
219
208
15
29
* I n th o u sa n d s o f to n s , t i n t h o u s a n d s o f b o x e s .
N o t e : I n 1931 v a r y in g a m o u n ts o f a p r ic o ts , c h e r r ie s , c lin g s to n e
p e a c h e s , g ra p e s , p lu m s a n d p ears w e re u n h a rv e s te d b e c a u s e
o f m a r k e t c o n d itio n s .
S o u r c e : C a lifo rn ia C r o p R e p o r t .
The growth of forage on livestock ranges in
the District was excellent during May, and the
condition of cattle and sheep improved during
the month, although the effects of scant feed
supplies during the past winter are still ap
parent. Livestock are now on summer ranges
which are furnishing better feed than in any
other recent year. Although cattle have im
proved considerably this spring, exceptionally
poor condition of breeding cows during past
months has resulted in a smaller calf crop than
a year ago. The poorer than usual quality of
grass-fat steers received at District markets
this spring has been reflected in low prices for
these cattle.
Sheepraisers lost a larger proportion of their
herds than did cattlemen during the past win
ter. Despite an improvement during the spring
months, sheep were in a less satisfactory con
dition during May, 1932, than in any other May
of the past ten years. Excessive losses of ewes
and new-born lambs continue to be reported.
The movement of California spring lambs to
eastern markets during the current marketing
season to June 11 totaled 461,340 head, about
6 per cent less than the average shipments up
to that date in the five preceding years. Re
ceipts of cattle and sheep at the eight principal
June, 1932
FEDERAL RESERVE AGENT AT SAN FRANCISCO
markets of the District increased seasonally
from April to May, while swine receipts showed
the usual decline. The volume of cattle, sheep,
and hog receipts during this year to’ the end
of May was larger in each case than during the
corresponding period in 1931.
Industry
Output of Twelfth District industries was
moderately less in May than in April, after al
lowance for seasonal changes. The employ
ment situation improved a little, due princi
pally to seasonal agricultural demands for
labor. Production of lumber did not expand
seasonally, and mining of non-ferrous metals,
building and construction, and petroleum pro
ducing and refining operations were all on a
more restricted basis than during April. Flour
milling activity did not decline during May,
although some reduction of output is normal
during that month.
The demand for additional farm labor in
many agricultural sections of the District of
fered temporary employment for many work
ers. Contracts awarded during recent months
for a considerable amount of street and road
work and increased motion picture activity also
added to the number of employed to some ex
tent. In general, however, there was a con
tinued large surplus of labor throughout the
District, further curtailment in other industries
offsetting most of the improvement just men
tioned. Additional wage reductions were re
ported and were reflected in reduced payrolls.
Output of crude petroleum was reduced sub
stantially during late May and early June
under the most recent voluntary curtailment
program. This was the first significant decrease
in production in almost a year. Production
quotas were allocated to each field on the basis
of its productive capacity, except that wells of
small production were not curtailed to the point
where they would not pay operating expenses.
This arrangement means that in general the
flush wells have been made to bear most of the
reduction in output. Refineries decreased their
production somewhat during the month and
stocks of gasoline were smaller at the end of
May than at the end of April. The decline in
inventories was largely seasonal in character,
since consumption of gasoline almost always
increases during the spring and summer
months.
The production of non-ferrous metals was
further reduced during May because of the con
tinued closing of mines. Silver mining has been
curtailed and practically every major copper
producer of the District has either suspended
operations entirely or is running with only
skeleton crews. There was some increase in
the output of lead, and gold mining and pros
pecting continued active.
The volume of building and construction
continued to decline during May, contrary to
the usual tendency at this time of the year.
The value of building permits, which decreased
generally throughout the District, was 10 per
cent less in the 90 cities for which data were
reported during May than in April. Engineer
ing contracts awarded were less than half as
large in May as in April. Declines of consider
able magnitude in contracts for streets and
roads, industrial buildings, and unclassified
projects were offset only in part by increases
in contracts for waterworks, bridges, excava
tions, and Federal government projects.
E m p lo y m e n t —
In d u s t r y —
In dexes o f daily average p rod u ction , adjusted fo r seasonal variations
(1923-1925 daily average* 100)
,------------ 1932 ------------s
M a y A p r. M a r. F e b .
G eneral :
37
C a rlo a d in g s — I n d u s t r ia l.. 34
41
36
E le c t r ic P o w e r O u t p u t .. .
145
146
141
M a n u fa c tu r e s :
L u m b e r ................................. 32
35
35
34
133
131
145
R e fin e d M in e ra l O i l s f . . .
F lo u r ....................................... lÒÓ
94
116
110
90
85
90
S la u g h ter o f L i v e s t o c k ..
C e m e n t ....................................' 54
60
43
40
W o o l C o n s u m p t io n f . . . .
67
76
108
M in e r a ls :
P e tr o le u m ( C a lifo rn ia ) f ., 76
L e a d (U n it e d S ta te s ) $. . 49
S ilv e r (U n ite d S t a t e s ) t . .
B u ild in g an d C o n s tr u c tio n §
T o ta l ...................................... , 33
B u ild in g P e r m its — V a lu e
L a r g e r C ities ................. 17
S m aller C ities ............... 15
E n g in e e r in g C o n tr a c ts
A w a r d e d — V a lu e
T o t a l ............................., 53
E x c lu d in g B u ild in g s . 111
-1931
M a y A p r. M ar.
59
61
61
160
153
168
62
145
98
88
72
59
62
150
94
92
83
56
58
138
94
84
81
74
78
45
42
76
55
28
76
54
31
81
78
47
80
71
54
80
79
63
34
31
38
75
77
85
19
16
21
17
19
20
31
43
33
43
36
45
58
114
48
84
69
137
144
273
157
286
158
308
|Not adjusted for seasonal variations. {Prepared by Federal Re
serve Board. §Indexes are for three months ending with the
monthindicated.
43
Industries
■
..... .... -C a lif orniia--------N o . of
N o . r -E m p lo y e e s
of
M ay
M ay
F irm s 1932
1931
A ll Industries* . . . .
160,879
60
L u m b e r an d W o o d
M a n u fa ctu re s . .
149
5,093
( — 2 7 .7 )
7,040
13,158
( — 3 1 .4 )
16
1,627
( — 11.0)
19,183
11,531
( — 16.8)
13,857
29,521
( — 10.9)
33,142
49,210
( — 13.9)
O th e r I n d u s t r ie s .f 489 62.698
( — 19.9)
M is c e lla n e o u s . . . .
55
7,085
( — 6 .1 )
W h o le s a le an d
167 30,894
( — 1 0.3)
57,137
C lo th in g , M illin e ry
and L a u n d e r in g . 164
P u b lic U tilitie s . .
N o . of
N o.
of
Firm s
291
40
1,829
r~ E m p loy ees
M ay
1932
M ay
1931
14,815
( -2 4 .7 )
19,665
8,194
( - -2 8 .7 )
8
758
( - -3 0 .7 )
11,495
131
( - 1 8 .8 )
S to n e , C la y and
G lass P r o d u c t s .
F o o d , B e v e ra g e s
and T o b a c c o . . .
t — ..— - O regon -
48
6$
227
( - - 1 6 .5 )
1,227
36
( - -2 4 .3 )
1,094
272
1,620
78,282
7,546
33
4,409
( - -1 4 .9 )
5,184
34,460
* P u b lic u tilities a n d w h o le s a le and retail fig u re s n o t in c lu d e d in
th is to ta l, t I n c lu d e s th e f o llo w in g in d u s t r ie s : m etals, m a
c h in e r y an d c o n v e y a n c e s ; leather and r u b b e r g o o d s ; oils
a n d p a in t s ; p r in tin g an d p a p e r g o o d s . { L a u n d e r in g on ly.
Figures in parentheses indicate percentage change from May,
1931.
44
MONTHLY REVIEWOF BUSINESS CONDITIONS
The cut of lumber remained about the same
during May as in April, although it usually
reaches the high point for the year during the
later month. For the first time since last Oc
tober orders failed to exceed production, with
the result that there was no change in inven
tories.
PER
C EN T
June, 1932
Daily average sales of department stores de
clined slightly, contrary to the seasonal ten
dency. In comparison with April, sales held up
better in Los Angeles and Oakland than in
other parts of the District, after adjustments
for seasonal variations. The Fairchild index
of retail prices at department stores shows a
decline of 17.7 per cent over the year period,
more than half as large as the decline in the
value of sales.
Sales at wholesale also' declined from April
to May and were 31 per cent less in value than
in May, 1931. As has been the case for several
months, the smallest declines were reported
by drug, grocery, automobile supply and paper
and stationery firms.
W H O L E S A L E T R A D E —T w e lfth D istrict
P ercentage change in value o f sales
M a y , 1932
t ------- com pared w ith -------- ^
C A R L O A D I N G S — T w elfth D istrict
In dexes adjusted for seasonal variation (1923-1925 daily average®» 100).
Flour mills in the District operated at about
the same rate in May as in April, although
there is usually a moderate decline between
those months. Inventories declined, but by
somewhat less than the usual amount. Reports
from individual mills would indicate that most
of the milling was being conducted on a handto-mouth basis to fill a steady but moderate
demand from local buyers. There appears to
be almost a total absence of foreign demand
for flour.
Trade
In the aggregate, Twelfth District trade was
somewhat less active in May than in April,
although contrasting movements were re
corded for individual factors ordinarily used
to measure the total volume. Both retail and
wholesale sales decreased from April to May,
after allowance for seasonal variations, as did
freight carloadings, which showed a decline
instead of the usual increase. Registrations of
new automobiles increased slightly after allow
ance for seasonal changes and intercoastal
traffic was considerably larger.
R E T A I L T R A D E — T w e lfth D istrict
D e p a r tm e n t S t o r e s . . .
L o s A n g e le s ...............
O th e r S o u th e r n C a lif.
O a k la n d ........................
S a n F r a n c is c o ..........
O th e r N o r t h e r n C alif.
P o r t la n d f
....................
S ea ttle ...........................
S p o k a n e .........................
S a lt L a k e C i t y ..........
A p p a r e l S to r e s ...............
F u rn itu r e S to r e s ..........
A ll S to r e s ........................
— 1932 com pared with 1931* ■ — — >
- N E T S A L E S ----------- *
STOCKS
January 1 to end
M ay
of M ay
M ay
— 19.0 ( 4 9 )
— 30.4 ( 6 7 )
— 23.4 ( 6 5 )
-28.5 (
— 18.6 ( 1 0 )
— 24.0 ( 10)
— 24.2 (
7)
-29.8 (
— 17.4 ( 4 )
— 20.2 (
4)
— 28.8 ( 4 )
— 27.8 (
— 18.0 (
7 ) — 16.1 ( 7 )
— 27.5 (
— 2 8 .4 (
— 21.5 (
7 ) — 20.5 ( 7 )
— 33.1 (
— 32.2 ( 6 )
— 27.6 ( 7 )
— 30.2 ( 5 )
— 38.8 (
— 16.0 ( 5 )
— 31.0 (
— 21.1 (
4)
— 13.2 ( 4 )
— 30.1 (
— 21.8 (
4)
— 26.9 ( 2 7 )
— 22.8 ( 2 5 )
— 18Ì2 ( 1 5 )
— 28.3 ( 3 6 )
— 37.0 ( 37 )
— 20.3 ( 2 8 )
— 30.9 (1 3 1 )
— 23.9 (1 2 6 )
— 19.1 ( 9 2 )
^ P e r c e n ta g e c h a n g e . ^ In c lu d e s fiv e a p p a re l sto re s w h ich are n o t
in c lu d e d in D is t r ic t d e p a rtm e n t s to r e to ta l.
Figures in parentheses indicate number of stores reporting.
A g r ic u ltu r a l I m p le m e n ts
A u to m o b ile S u p p lie s . . . .
D r u g s .........................................
D r y G o o d s ............................. .
E l e c t r ic S u p p l i e s .................
F u r n i t u r e ..................................
G’r o c e rie s ..................................
H a r d w a r e ...............................
S h o e s ...........................................
P a p e r a n d S ta tio n e r y . . . .
A ll L in e s ..................................
A p ril, 1932
. . — 17.1
. . — 1.3
. . —
5.4
. . —
3.8
. . — 21.9
M a y , 1931
— 39.8
— 22.3
— 23.7
— 40.3
— 52.1
— 46.5
— 14.7
— 32.3
— 34.4
— 27.3
— 28.1
1932
com pared
w ith 1931
— 41.7
— 20.3
— 19.0
— 35.8
— 45.3
— 37.2
— 17.8
— 30.9
— 30.1
— 20.1
— 26.7
The number of new automobiles registered
declined less than usual during May and this
Bank’s seasonally adjusted index advanced
slightly. That index has been relatively fixed
at an exceedingly low level for the past four
months. During recent months sales of lowpriced cars have accounted for a larger propor
tion of total sales than heretofore.
Volume of intercoastal traffic through the
Panama Canal increased moderately during
May as compared with April, although there is
D is tr ib u t io n a n d T ra d e
—
e -------------- is >32------
M ay
r
C a r lo a d in g s î
T o t a l ........................... .
55
M e r ch a n d is e .......... .
74
F o r e ig n T rade®
T o t a l f ........................
.................
Im p o rts!
A p r.
M ar.
' ^
F eb.
M ay
60
77
56
74
59
76
78
94
77
91
79
96
50
46
52
54
50
57
55
53
57
78
67
82
82
77
83
86
86
88
1931 -------- 'i
A p r. M ar.
\
I n te r c o a s ta l T r a d e
T o t a l ........................... .
W estb ou n d
............ .
E a s tb o u n d ............... .
54
66
50
47
54
45
61
89
55
55
80
48
76
86
74
71
88
65
76
89
71
R e ta il T r a d e
A u t o m o b ile S a le s i
T o t a l ...................... .
P a s s e n g e r ............ .
C o m m e r c ia l
.
32
30
59
31
29
54
33
30
61
34
31
58
76
71
117
76
71
125
78
73
135
D e p a r tm e n t S to r e
S a le sJ ...................
S t o c k s § .................
72
74
73
80
74
4
85
76
«
102
89
103
88
107
88
42.1
14.6
40.4
14.7
44.1
15.5
43.6
15.3
1 ^
4 3 .4
14.9
f
C o lle c tio n s #
R e g u la r ............ , 40.4
In s ta llm e n t . . . , 13.7
41.3
14.1
•
^ A d ju s te d fo r s e a so n a l v a ria tio n s, 1923-1925 a v e r a g e = 1 0 0 . ° I n d e x e s are f o r th ree m o n th s e n d in g w ith m o n th in d ica te d .
t E x c l u d i n g ra w silk. { D a i l y a v e ra g e . § A t e n d o f m o n th .
# P e r ce n t o f c o lle c tio n s d u r in g m o n th t o a m o u n t o u ts ta n d in g
at first o f m o n th .
June, 1932
federal reserve agent at san
usually no change at this season of the year.
Westbound traffic increased substantially as
did the tonnage of petroleum going east. Lum
ber shipments, however, declined to about 84,000 tons, a quantity much smaller than any
reported since data for shipments of individual
commodities first became available in Novem
ber, 1925.
Total loadings of freight on District rail
roads decreased somewhat during May, al
though there has usually been an increase dur
ing that month. Each of the two general classi
fications, merchandise and miscellaneous, and
industrial, into which this Bank segregates carloadings data declined, contrary to their sea
sonal tendencies.
Prices
Prices for most commodities which are im
portant in the economic activity of the Twelfth
District declined further during May. It is be
lieved that average changes for these commodi
ties follow fairly closely the movements of
national price indexes, notwithstanding the
inclusion in such indexes of commodities of
little importance in the seven western states.
The Bureau of Labor Statistics’ monthly index
of 784 wholesale commodity price series reached
64.4 (1926=100) in May, the lowest point re
corded for any month since February, 1911,
when it was at the same level. Weekly price
indexes have been declining steadily since early
April. Textiles, hides and leather products,
B a n k D e b it s * —
A r iz o n a
P h o e n ix
M ay
1932
21,490
M ay
1931
33,681
(— F irst five m onths—
1931
1932
$ 116,397 $ 164,728
............ .$
C a liforn ia
B a k ersfield
B e r k e le y ............
F r e s n o ...............
L o n g B ea ch . .
L o s A n g e le s . . .
O a k la n d ............ .
P a sa d en a ............
S a cra m e n to
S an B ern a rd in o.
S a n D ie g o . . . .
S a n F r a n c is c o .. .
S an J o se ............
S an ta B a r b a r a .
S t o c k t o n ............
Id a h o
B o i s e ...................
6,431
12,719
13,633
24,209
511,431
150,323
19,175
36,631
6,094
30,844
566,537
14,134
8,173
11,712
9,402
18,160
18,560
38,602
806,687
196,796
30,112
46,445
8,315
45,342
980,477
21,433
12,322
16,598
39,189
77,810
81,440
143,725
2,996,040
871,181
123,892
202,205
34,705
184,331
3,405,168
84,245
50,287
67,278
57,775
82,573
110,235
219,222
4,289,091
960,823
164,414
230,999
44,527
252,479
5,154,483
118,862
67,668
87,633
9,068
11,568
50,450
61,234
N ev a d a
R e n o ...................
O reg on
E u g e n e ...............
P o rtla n d
.......... .
U ta h
O gden
...............
S alt L a k e C it y .
7,670
10,017
37,627
47,675
4,095
109,865
5,603
167,382
20,671
520,407
27,396
728,946
8,193
37,304
13,541
55,699
42,888
226,159
70,574
307,344
4,591
5,110
129,673
28,061
21,140
7,668
6,358
8,589
194,480
36,815
32,961
11,524
24,069
29,306
676,340
147,264
113,121
39,543
34,451
46,561
986,593
207,875
171,652
62,247
W a s h in g t o n
B e llin g h a m
...
E v e re tt ...............
S ea ttle ............... .
S p o k a n e ............
T a c o m a ............
Y a k im a ..............
T o t a l ................. .$ 1 ,8 0 5 ,9 7 4
*In thousands.
$
$2,837,469 $10 ,405,738 $14,758,060
Francisco
45
and farm products have accounted for a large
part of the declines during recent weeks.
Non-ferrous metals prices were relatively
stable during May at the low levels of late
April. With the exception of silver prices,
current quotations for these metals are below
those of a year ago. In early June, silver quo
tations ranged from 27j^ to 2 8 % cents per
ounce and were approximately one cent per
ounce higher than a year ago.
Prices for the important agricultural prod
ucts of this District have declined almost con
tinuously since August, 1929. According to
the monthly index of agricultural prices com
piled by the United States Department of Agri
culture, the average decline was nearly 60 per
cent between that month and April, 1932. In
the immediate post-War period from May,
1920, to November, 1921, this same index de
clined 56 per cent.
Prices for beef cattle, hogs, and sheep de
clined at Pacific Coast markets during May,
reaching the lowest levels of the current mar
keting season. Similarly, animal products
prices declined. An average of domestic
raw wool prices compiled by the Fairchild
News Service declined to 33 cents per pound
during the first week of June. This composite
averaged 53.7 cents per pound during the cor
responding weeks of 1911, 1912 and 1913. But
ter prices declined from May to June, as is cus
tomary, and in the later month were 28 per cent
below the quotations of June, 1931. Egg prices
also declined slightly.
The course of wheat prices was erratic dur
ing May and early June. From a low of 5 4 ^
cents per bushel in early May, the July con
tract at Chicago rose to’ 60^2 cents per bushel
in the later part of the month, subsequently
declining in early June. On June 20 the lowest
price for this contract was 48^4 cents per
bushel. Current prices for new crop California
feed barley at San Francisco have ranged from
60 to 70 cents per hundredweight, as compared
with a range of $1.00 to $1.15 in June last year.
Alfalfa hay, cotton, and bean prices were all
lower in May and early June than in April.
Cherries and plums from California have
brought higher returns in eastern auction mar
kets this season than a year ago. Heavier ship
ments of California lemons have been co-inci
dent with an increase in average prices from
$2.24 per box in April to $3.39 per box in May.
Valencia orange prices also improved after the
completion during May of last season’s Navel
orange shipments. The average f. o. b. price
during that month was $2.05 per box as com
pared with $1.87 per box in April.
During May, petroleum prices remained un
changed, while quotations for lumber fluctu
ated less than in any month of 1932. Prices of
46
MONTHLY REVIEWOF BUSINESS CONDITIONS
such miscellaneous commodities as flour, silk,
tin, and rubber declined slightly from early
May to June, while prices for cement, brick,
sugar and newsprint remained unchanged.
Credit Situation
An inflow of bankers’ balances to the reserve
cities, a reduction in the number of member
banks accommodated at the Reserve Bank, and
lower interest rates paid to depositors by re
porting banks, have been important factors
in the credit situation in the Twelfth District
during recent weeks. Both deposits and invest
ments of city banks declined between May 18
and June 8, but the decreases were offset dur
ing the following week, largely as a result of
the Treasury financing of June 15. Loans re
mained practically unchanged during the four
weeks ended June 15. Security trading on the
principal exchanges was at the lowest levels in
June, 1932
strain of the year in May and June and their
ability at this time to add to correspondent ac
counts, as reflected in bankers’ balances at re
serve cities, is encouraging. At the same time
loans of reporting member (city) banks have
changed but little, notwithstanding a continu
ance of the decline in stock and bond quota
tions and in the level of commodity prices.
There appears to be a general willingness and
ability on the part of commercial bankers to
co-operate with the President’s committees to
promote the use and expansion of credit, inso
far as individual situations permit.
D E P O S IT S , L O A N S , A N D I N V E S T M E N T S
R ep orting m em ber banks — T w e lfth D istrict
During March there was a 13 per cent decline
in number of banks discounting (chiefly coun
try banks), whereas there has usually been a
seasonal increase of about 15 per cent in that
month. In April the increase was less than the
seasonal expectation, and there was a small
decrease in May, although on the basis of past
experience an increase of approximately 6 per
cent in the number of members accommodated
might have been expected. Activities of the
Reconstruction Finance Corporation and its
agencies have contributed in no small degree
to these favorable indications and to other cur
rent developments in the credit situation.
Since the establishment of the Federal Re
serve Bank of San Francisco in 1914, deposits
of member banks have customarily been at the
lowest point of the year in either May or June.
In past years this condition has accompanied
an accumulation of the largest seasonal ad
verse balance of trade with other regions due
to heavy expenditures in anticipation of returns
later in the year as agricultural and other sea
sonal products were marketed. For this reason,
country banks have usually felt the greatest
Net demand deposits, as reported weekly by
city member banks, declined 81 million dollars
between December 30 and June 15. Of this
decline, however, 27 million dollars resulted
from a reduction in bankers’ deposits at the
several banks, leaving a decrease of only 57
millions in demand deposits of individuals. Dur
ing this same period time deposits were re
duced by 54 million dollars. Total loans of these
banks declined 88 million dollars between De
cember 30 and June 15 and investments were 14
million dollars lower on the later date.
This Review* has previously shown that a
decline in deposits may be the result of ( 1) a
decline of loans, (2 ) a withdrawal of currency
or gold, (3) an addition to the capital funds
of the banking system, or (4) a transfer of
credits to other districts, either for the account
of the United States Treasurer or others, the
various factors acting singly or jointly. During
the period from December 30, 1931, to June 15,
1932, there was a net reduction of 10 million dol
lars in currency circulation, although fluctua
tions from maximum to minimum were much
larger than that amount. Since this return of
currency from circulation increased deposits, as
did Mint purchases of gold and Treasury ex
penditures in excess of collections, an explana
tion of the reduction in deposits is to be found
among the remaining factors. The decline in
loans was the most important of these, but
*January, 1932, and April, 1932.
FEDERAL RESERVE AGENT AT SAN FRANCISCO
June, 1932
transfers of funds from the District for the
accounts of banks and individuals were also
of considerable weight. Most of the net pay
ments were made to the New York District.
Net changes in banking capital were small.
The creation of acceptances by Twelfth Dis
trict banks has declined to low levels during
the past quarter, current offerings having been
small. Liabilities of banks on bills have been
decreasing steadily from their peak in Novem
ber, 1930. Acceptances based upon goods
stored in or shipped between foreign countries
have been reduced by the greatest amount, re
flecting the drastic decline in foreign trade.
F E D E R A L R E S E R V E B A N K O F S A N F R A N C IS C O
(in millions of dollars)
t ------------------ • C o n d itio n
June 15
1932
T o t a l B ills and S e c u r i t i e s ..........
B ills D is c o u n t e d ........................
B ills B o u g h t ..................................
U n ite d S tates S e c u r it ie s ............
T o t a l R e s e r v e s ..................................
T o t a l D e p o s it s ..................................
F e d e ra l R e s e rv e N o te s in
C ircu la tio n ......................................
R a tio o f T o t a l R e s e rv e s to D e
p o s it and N o te L ia b ilities
C o m b in e d .......................................
203
90
7
107
195
154
228
51.1
1 —\
June 17
1931
June 8
1932
M a y 18
1932
201
90
4
107
190
148
155
80
5
70
242
156
49
289
184
226
223
169
50.9
63.9
79
22
8
82.1
There was the usual increase in currency cir
culation over the May 30 week-end holiday.
Circulation, although declining in the following
week, has tended to increase since mid-May.
This is in conformity with the usual experience,
in which money in circulation increases at this
time of the year, the upswing culminating in
a mid-summer peak during the week of the
July 4 holiday.
The Federal Reserve Bank of San Francisco
participated heavily in System purchases of
Government securities during the week ended
June 8. An amount of securities equal to more
than half of the System’s additional purchases
during that w^eek was placed to the account of
that Bank, with the result that its Government
security portfolio now shows a percentage in
crease since March approximately equal to that
47
of the System as a whole for the same period.
At the same time 42 million dollars of Govern
ment securities were deposited with the Fed
eral reserve agent as collateral for Federal re
serve notes, as authorized by the Glass-Steagall
Act. This was the first time that the Federal
Reserve Bank of San Francisco made use of
such authorization.
R E P O R T I N G M E M B E R B A N K S —T w elfth D istrict
(in millions of dollars)
r - .. • -— C o m
June 15 June 8 M a y 18 June 17
1932
1931
1932
1932
1,986
1,734
1,748
L o a n s and In v e s tm e n ts — T o t a l . . . 1,743
1,036
1,223
L o a n s — T o ta l ............................. ..
1,027
1,033
333
276
O n S e c u r itie s ..........................
272
273
760
890
A ll O th e r ....................................
755
760
712
763
In v e s tm e n ts — T o t a l ...................
701
716
401
U n ite d S tates S e c u r it ie s ____
388
373
383
329
362
O th e r S e cu ritie s ......................
328
328
90
89
105
84
R eserv e w ith R e s e r v e B a n k ..........
559
545
559
733
N e t D e m a n d D e p o s i t s ...................
887
897
1,057
879
137
126
125
186
160
167
244
D u e to B a n k s ....................................
168
15
B o r r o w in g s at R e s e rv e B a n k . . .
72
72
63
On June 15 the United States Treasury al
lotted 27 million dollars of 3 per cent Treas
ury notes maturing in 1935, and 24 million
dollars of Treasury Certificates of Indebtedness
maturing in 1933 to banks in this District.
These securities were paid for almost entirely
by exchange of maturing certificates (21 per
cent) and by deposit credit to the Government
(73 per cent). This financing followed that
of April 30 which was actively supported by
Twelfth District banks. Government disburse
ments in excess of collections have largely con
verted the Government deposits built up at that
time into individual deposits and this process has
moderated reductions in deposits occasioned by
the continued, if less rapid, declines of loans.
Available data indicate that interest rates
charged customers have tended downward
slightly at some banks during recent weeks.
Volume of trading on Twelfth District stock
exchanges continued to decrease during May,
the number of shares traded being the smallest
since 1926. Prices of all types of corporate se
curities declined substantially.
C u rre n t M ovem ents o f B a n k e r s ’ B a la n c e s — Twelfth D istrict
During the past several weeks bankers’ bal
ances have been moving from country banks to
reserve city banks, whereas for several previ
ous months country banks had been withdraw
ing balances from their city correspondents.
This withdrawal had been continuous from
July, 1931, through March, 1932, and had re
sulted in a substantial redistribution of funds
throughout the seven western states, with
signs of strain at certain points.
Country banks generally had a surplus of
funds during the easy money period from June,
1930, to June, 1931. As a result of this sur
plus, they increased their deposits with city
correspondents to unusually high levels. The
bulk of these funds was placed with banks in
cities of the Twelfth District other than San
Francisco, which banks in turn sent them on
to San Francisco and New York.
Beginning with July, 1931, however, country
banks began to withdraw their funds as credit
conditions became firmer. Between July, 1931,
and March, 1932, amounts due to other banks
reported by the leading reserve city banks out
side of San Francisco declined about 60 million
dollars, while the amount owed by San Fran
cisco banks to correspondents decreased about
95 million dollars.
48
MONTHLY REVIEWOF BUSINESS CONDITIONS
Banks in outside reserve cities have usuallybeen unable to employ country bank funds in
their local markets and therefore have cus
tomarily passed them on to San Francisco and
to New York, where they usually command
some rate of interest. Experience of past years
has shown that reserve city banks pass on to
the more important financial centers consider
ably larger amounts than they receive as bank
ers’ deposits from country banks, because the
same forces which give rise to a surplus of
funds in the country areas also contribute to
a surplus in the regional reserve cities. Like
wise, conditions which make necessary the
withdrawal of country bank funds create a
credit stringency in the reserve cities by a
greater amount than the reduction in country
bank balances.
San Francisco, as the principal money mar
ket of the Twelfth District and as an important
secondary financial center of the United States,
has a fairly elastic demand for money and is
able to utilize excess funds from other areas.
In fact, the banking structure of that city as it
has been built up over a period of years has
been based upon the availability of these out
side funds. In recent years about 40 per cent
of the bankers’ balances received by San Fran
cisco banks has been employed in their local
market, the remainder being sent on to New
York, the primary financial center.
June, 1932
that regional reserve cities were also facing
withdrawals of deposits by customers and other
conditions making for a tighter credit situation.
San Francisco banks paid out 55 million dol
lars of bankers’ deposits and they in turn re
duced their own balances elsewhere (princi
pally in New York) by 33 million dollars. In
summary, reserve city banks outside of San
Francisco gained a net of 20 million dollars in
funds by recalling 80 million dollars from banks
in San Francisco and New York, while their
loss to country banks was only 60 million dol
lars. Of the 80 million dollars recalled, San
Francisco banks supplied 22 million dollars and
banks in New York and other cities furnished
the remainder or 58 million dollars.
The change in direction of movement of
bankers’ balances has been well marked since
late March, but the amount of change has been
substantial only during the past six weeks.
Country banks have now replaced a moderate
amount of funds with their city correspondents
in regional reserve cities and these banks in
turn have placed them in San Francisco and
New York. San Francisco banks, not being
able to employ the usual proportion of short
term demand deposits, have to some extent
passed them on to New York and other cities.
B A N K E R S ’ B A L A N C E S — T w e lfth D istrict R e se rv e C ities
O utside San F ra n cisco , including L o s A n ge le s, O akland, Portland,
Salt L ake C ity, Seattle, and Spok ane.
B A N K E R S ’ B A L A N C E S — San F ra n cisco
“ D u e to ban ks” represents p rin cipa lly balances carried in San F ra n
c is c o by country banks and other reserve city banks in the T w elfth
D istrict.
“ D u e from ban k s” represents principally balances carried b y San F ra n
c is c o banks in N e w Y o r k and other cities n o tin the T w e lfth D istrict.
The movements of funds between July, 1931,
and March, 1932, conformed to past experience.
Bankers’ balances held by Twelfth District re
serve city banks outside of San Francisco were
reduced 60 million dollars, and banks in those
cities met the demands of their country corre
spondents by recalling their own deposits with
banks in San Francisco and New York. These
balances declined 80 million dollars, indicating
“ D u e to ban ks” represents principa lly balances carried in these “ ou t
sid e ” reserve cities by T w elfth D istrict country banks.
“ D u e from b an ks” represents p rincipally balances carried b y “ ou tsid e”
reserve city banks in San F ra n cis co and N e w Y o r k and other cities
not in the T w elth D istrict.
This reversal of trend in bankers’ deposits
probably represents a partial redistribution of
bank reserves from those cities having an ex
cess to those districts having a deficiency, and
reflects in some degree a feeling of greater con
fidence in the credit situation. This change be
came noticeable soon after the Federal Reserve
System, with the participation of this Bank,
commenced to make large purchases of Gov
ernment securities on the open market in
March.
MONTHLY REVIEW
B U S IN E S S
C O N D IT IO N S
IS A A C B . N E W T O N , C h a irm a n o f th e B o a r d an d F e d e ra l R e s e r v e A g e n t
F e d e r a l R e se r v e B a n k o f S a n F ra n cisco
Supplement
San Francisco, California, June 20, 1932
Vol. X V I No. 6
SU M M ARY OF N A T IO N A L CONDITIONS
Prepared by the Federal Reserve Board
Volume of production in basic industries and
employment at factories decreased further in
May, and wholesale prices declined. Foreign
withdrawals of gold, which had been in large
volume in May and the first half of June, prac
tically stopped after the middle of the month.
Production and Employment. Production at
mines and factories declined further in May,
and the Board’s seasonally adjusted index of
industrial production showed a reduction from
64 per cent of the 1923-1925 average in April
to 61 per cent in May. Output of coal was sub
stantially reduced, particularly in the anthra
cite fields, shipments of iron ore showed less
than the usual seasonal increase, production of
iron and steel declined, and activity at textile
mills and shoe factories wTas further curtailed.
In the automobile industry, output increased
considerably.
In the first part of June activity in the steel
and cotton industries was reported to have de
clined further, while output of automobiles con
tinued at about the same rate as in the latter
part of May.
Further reductions in employment and earn
ings of factory workers accompanied the
smaller volume of manufacturing output in
May, particularly in the steel and machinery
PER
CENT
Index numbers of industrial production adjusted for seasonal variations (1923-1925 average=100).
industries, and in the textile and clothing
trades. Employment at automobile plants and
in the seasonally active food industries showed
an increase.
Value of building contracts awarded, ac
cording to reports to the F. W . Dodge Cor
poration, after increasing somewhat in April
and May, declined slightly in the first half of
June, reflecting chiefly smaller awards for pub
lic works and other non-residential building.
Distribution. Railroad freight traffic de
creased further in May, the largest reduction
being in shipments of coal and miscellaneous
freight. Sales of department stores in leading
cities, which had increased substantially during
April, were smaller in May.
Wholesale Prices. Prices of commodities at
wholesale were 1.7 per cent lower in May than
in April, according to the Bureau of Labor Sta
tistics. There were large decreases in prices of
many domestic agricultural products and of
hides and textiles. Prices of petroleum prod
ucts advanced.
During the first three weeks of June, market
quotations for a number of non-agricultural
commodities were relatively steady, and prices
of sugar, meats, and livestock increased. Prices
of wheat, after considerable fluctuation, were at
PER
CEN T
F ederal R eserve B oa rd ’ s in dex o f factory em ploym ent, w ith adjust
m ent for seasonal variations (1923-1925 average = 100).
unusually low levels at the beginning of the
third week in June.
Bank Credit. Withdrawals of gold from the
United States continued through May and the
first half of June, and the country’s stock of
monetary gold declined by $435,000,000 be
tween May 4 and June 15. After that date there
was no further decline in the total stock of
W H O L E S A L E P R IC E S
R E SE R V E B A N K C R E D IT
In d e x o f U n ited States Bureau o f L a b or Statistics
(1 9 2 6 * 1 0 0 ).
M o n th ly averages o f daily figures fo r 12 F ed era l reserve ban ks. Latest
figures are averages o f first 20 days in June.
monetary gold, continued gold exports repre
senting gold previously earmarked by foreign
central banks. During the first part of May
continued purchases of United States Govern
ment securities by the reserve banks enabled
member banks further to reduce their dis
counts. In later weeks, however, funds re
leased through these purchases were absorbed
by the export demand for gold, and there
was also a decrease in member bank reserve
balances.
Loans and investments of reporting member
banks in leading cities, which had declined
sharply earlier in the year, showed wide fluctu
ations after the middle of May. In the middle
of June, total loans and investments were larger
than a month earlier, the increase in holdings
of United States securities being more than
sufficient to offset declines in other investments
and in loans.
Money rates in the open market remained at
low levels. Rates on prime commercial paper
were reduced to a range of
Per cen* 1X1
the second week of June.
@FedFRASER