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MONTHLY REVIEW OF B U S IN E S S C O N D IT IO N S Federal Reserve Agent Federal Reserve Bank of San Francisco Yol. X X San Francisco, California, June 20, 1936 No. 6 T W E L F T H F E D E R A L R E S E R V E D IS T R IC T C O N D IT IO N S Industrial output in the Tw elfth District was somewhat higher during May than in the pre ceding month. Factory employment and pay rolls, except in the highly seasonal fruit and vegetable canning industry, also increased. D is trict measures of the distribution of goods de clined during May, however, after seasonal adjustment. Total value of building permits was about the same as in April, and contracts awarded for engineering construction declined. District lumber production continued to ex pand during May, and operations in the steel and cement industries remained near the high levels which have prevailed in the past few months. Although gasoline production exceeded deliveries, crude oil output showed little change and crude inventories 1 l'kr. Asparagus canning was seasonally active in M&y, but the spinach pack was completed early in that month. Canning of cherries in California com menced about the end of M ay and continued until the middle of June. Operations in the fish canning industry increased with the start of salmon packing and an expansion in schedules at tuna and mackerel canneries. The value of department store sales declined slightly on a seasonally adjusted basis, as did new automobile sales. Intercoastal trade also was lower than in April and daily average freight carloadings remained unchanged whereas there is usually an increase during May. Principally because of the purchase of new Government securities issued on June 15, total loans and investments o f district city banks increased 45 million dollars during the fourweek period ending June 17. Adjusted demand and time deposits declined slightly. Member bank reserve balances decreased 60 million dollars between May 20 and June 17,. Transfer of funds out of the district in connec tion with corporate security redemptions to gether with a net outflow of funds arising from other commercial and financial transactions was the principal factor tending to reduce district banking funds during the first three weeks of the period. During the week ending June 17, large cash payments for new United States Government securities and second quarter in come tax collections as well as an increase in demand for currency contributed to a further decrease in reserve balances. A considerable portion of the reduction may be regarded as temporary in character, since cashing by vet erans of their Adjusted Service Certificate checks will tend to restore to banks the reserve funds which were paid into the Treasury on June 15 for the new Government securities. Agriculture W eather conditions during May generally fa vored the growth of crops, except in certain localities where early maturing fruits were damaged by rains. Current estimates, which are subject to considerable revision, indicate a slightly larger output of deciduous fruit in California this year than in 1935, but point toward lower yields in the Northwest. Prices paid farmers for their products averaged about the same in mid-May as a year ago. The grow ing season has advanced more rapidly this year than last, however, and early fruit and field crops have been marketed in larger volume than a year ago so that the cash income of dis trict farmers in May was estimated to be some what higher than in May 1935. Range forage and the condition of livestock improved during the month and the present outlook for summer grazing is good. The condition of spring sown wheat in the Pacific Northwest was greatly improved by rains in May and June. On June 1 the crop was in better condition than a year ago, although it was below the long time average condition on that date. The production forecast of fall-sown wheat in W ashington, Oregon, and Idaho as of June 1 was 39,542,000 bushels, compared with a harvest of 50,386,000 bushels last year and an annual average crop of 58,901,000 bushels from 1928 through 1932. Some improvement in the condition of the crop has been reported since June 1. Growth of hops, beans, potatoes, and other field crops in the Pacific Northwest was satisfactory during May and early June. 42 MONTHLY REVIEW OF BUSINESS CONDITIONS The apple crop, which is a m ajor source of agricultural income in the Pacific Northwest, was below average condition on June 1. This condition is attributed to low temperatures last winter and to unfavorable weather during the blossom ing period this spring. Although early estimates place pear production in Oregon and W ashington about 3 percent below last year’s record crop, output is expected to be about 25 percent larger than the 1928-1932 average. In California, deciduous fruit and nut crops, except cherries which were damaged by rain, developed satisfactorily during May. Total pro duction of deciduous fruits and nuts in Califor nia will probably be slightly larger than in 1935, but somewhat below the average of recent years. Present estimates are subject to con siderable change, but the apricot, cherry, peach, pear, and plum crops are now expected to be larger than in 1935, while the grape, prune, apple, and almond crops are expected to be smaller. M ost California field crops benefited from May rains and were generally in good condition at the end of the month. Planting of rice, beans, and cotton was completed early in June. An estimated 127,000 acres has been seeded to rice this year, compared with 98,000 acres harvested last year. Current acreage is the largest since 1928. Reflecting a shortage of 1935 crop pota toes and the poor condition of early potatoes in southern states, growers in the early produc ing sections of California recently have been receiving prices for their product markedly higher than at any time in several years. Carry over stocks o f most field crops produced in California approximate the average June 1 stocks of recent years or are somewhat smaller. The 1935-1936 California navel orange crop, marketing of which was completed last month, is estimated to have totaled 14,559,000 boxes. That estimate is about 20 percent smaller than last year’s large crop and is below average A gricultural M arketing A ctivity— Carlot Shipments Deciduous Fruits. Citrus Fruits . . . . Vegetables .......... Exports Wheat (b u .)........ Barley (b u .)........ Receipts* Cattle .................. Hogs .................... Sheep .................. Eggs ( c a s e s ) ----Butter (lbs.) Wheat (carlots). . Barley (carlots). . Storage Holdings* (end of month) Wheat (bu.) . . . . Beans (bags) Eggs (ca se s)........ Butter (lb s .)........ f--------- May --------1935 1936 881 2,367 9,921 8,751 8,922 11,328 3,349 292,208 70,707 76,672 121,915 119,453 551,320 519,625 202,485 212,918 7,567,566 8,753,905 2,458 3,191 397 725 1M C f L JoO April May 3,224,000 3,805,000 988,000 1,235,000 548,000 352,000 242,000 2,688,000 *At principal district markets. 0 65,500 f— Season to Date— \ 1935 1936 42,531 39,471 49,869 42,059 52,092 47,135 53,510 8,636,945 2,801,193 3,799,327 423,585 378,167 696,884 734,651 1,438,202 1,479,687 920,253 989,531 31,689,496 31,690,994 57,364 47,252 8,652 8,131 to « r April May 1,808,000 2,497,000 849,000 1,111,000 556,000 389,000 451,000 3,995,000 June 1936 annual output of recent years. W hile f. o. b, prices received during the 1935-1936 season were considerably higher than a year earlier gross returns to growers were about 10 percent smaller than in the 1934-1935 shipping season because of the reduced volume of fruit pro duced. The outlook for California Valencia orange growers, whose crop travels to market from May or June to November, is favorable, Output is estimated at 19,754,000 boxes, com pared with last year’s record crop of 27,096,00C boxes and an annual average of 17,422,000 boxes harvested during the period 1928-1932. Compe tition from Florida oranges and early deciduous fruits will not be as great as in the summer oi 1935. Out-of-state shipments of lemons were al most twice as large in May as in April and were larger in volume than in any previous May, Prices averaged 39 percent higher than in April, During the shipping season from N ovem ber 1 through M ay 31, carlot shipments of lemons out of California were exceeded only by las1 year’s record movement, and returns to growers were estimated to be more than 85 percenl above returns during a comparable period las1 year when prices reached the lowest point since before the war. Drying of lower ranges in Utah, Nevada, anc southern Idaho during M ay was follow ed b) rainfall in early June. Higher ranges through out the district are in good condition and sum mer forage and water are expected to be ample in most sections. Cattle were in good to ex cellent condition on June 1. The bulk of the early California lamb croj had been marketed by mid-June. The volume of shipments for the three months ending June 15 (that period covers the marketing season foi E m ploym ent— -Calif ornia-------- \ r " " Oregon No. of No. of No. t— Employees No. *— Employees— > of May May May May of Industries Firms 1936 1935 Firms 1936 1935 All Industries* . . . 1,447 161,147 152,013 107 19,977 18,098 (+6.0) (+10.4) Stone, Clay, and Glass Products. 69 7,541 170 6,320 3 183 (+ 1 9 .3 ) (+ 7 .6 ) Lumber and W ood Manufactures .. 105 14,109 13,413 9,680 11,360 37 ( + 5.2) (+ 1 7 .4 ) 1,952 18 1,808 1,678 2,002 8 (— 9.7) (— 14.0) Clothing, Millinery, and Laundering 160 11,685 11,068 104 4$ 116 (+ 5 .6 ) (+ 1 1 .5 ) Food, Beverages, and Tobacco . .. 300 36,509 36,656 1,494 1,497 31 (— 0.4) (— 0.2) Public Utilities .. 53 46,693 43,824 (+ 6 .5 ) Other Industries!. 744 80,665 75,568 (+ 6 .7 ) 8,830 6,986 24 5,146 4,695 Miscellaneous . . . 51 (+ 2 6 .4 ) ( + 9.6) Wholesale and 420 55,640 52,190 ( + 6.6) r *Public utilities, wholesale and retail figures not included in th total, flncludes the following industries: Metals, machiner: and conveyances; leather and rubber g o od s; oils and paints printing and paper goods. JLaundering only. Figures in parentheses indicate percentage change from May 193, June 1936 FEDERAL RESERVE AGENT AT SAN FRANCISCO early California lambs) was 10 percent smaller than in 1935, but well above the average of recent years. Slaughter of lambs in the eight leading district markets from January 1 to June 1 was 8 percent larger than a year ago. A large part of the spring w ool clip had been completed by June 1. M ost of this year’s clip is reported to have been marketed by June 1 at prices averaging 22-27 cents per pound to the grower. This year’s prices are considerably higher than in 1935 and are approximately the same as the relatively high levels of 1934. 43 and shipments declined during May and for the month as a whole averaged lower than pro duction. Consequently, inventories of finished lumber at mills in this area increased, particu larly in relation to the volume of current ship ments. As will be seen in the accompanying chart, mill inventories of lumber in the Douglas PERCENT Industry Industrial output in the Tw elfth District in creased moderately during May. Excluding the fruit and vegetable canning industry, a small rise in both factory employment and pay rolls accompanied the advance in production. Industrial employment and pay rolls in Cali fornia, excluding the fruit and vegetable canning industry which is subject to erratic fluctuations from month to month, increased somewhat more than seasonally in May. Employment at fruit and vegetable canneries declined sharply during the month. The number of workers engaged in packing and canning fish more than doubled between mid-April and mid-May and considerable increases were reported in lumber ing and in the leather and rubber goods in dustries. Industrial employment in Oregon in creased less than seasonally, principally because of conditions in the important lumber industry, but pay rolls rose by the usual seasonal amount. The spring rise in lumber production this year continued through M ay and total output during the month was 11 percent larger than in April. In the Douglas fir region, output rose 3 percent, notwithstanding the fact that orders Industry — Indexes of daily average production, adjusted for seasonal variation (1923-1925 daily average=100) ,------------1936------------X May Apr. Mar. Feb. General Carloadings— Industrial 55ÏÏ 63 60 63 Electric Pwr. Production 179if 17211 175 179 Manufactures 70 68 691f 65 Refined Mineral O ils f.. . 158ÏÏ 147 153 156 F lo u r ................................ 961f 105 117 101 Cement .......................... 121 115 97 87 W ool Consumption!. . . . 91 100 105r Slaughter of L ivestock .. 106 111 110 105 Minerals 89 Petroleum (California) t 871Î 87 86 62 Lead (United States) $. 75 59 70 Silver (United States) %. 97 90 96 Building and Construction# Total .............................. 52 54 76 88 Building Permits— Value 34 30 29 Larger C itie s ............ 33 54 Smaller C itie s............ 50 53 53 Engineering Contracts Awarded— Value Total ...................... 65 79 127 167 Excluding Buildings 125 144 273 374 ,------- 1935------- X May Apr. Mar. 42 154 55 148 50 152 52 53 37 135 124 125 117 114 107 . 59 64 58 112r 118r 79r 100 94 91 75 63 51 72 58 49 75 55 50 39 38 40 22 28 23 25 20 23 61 116 60 114 61 132 tN ot adjusted for seasonal variation. fPrepared by Board of Governors of the Federal Reserve System. #Indexes are for three months ending with the month indicated. IfPreliminary. rRevised. LUM BER SHIPM ENTS A N D IN VEN TO RIES Douglas fir region Total monthly shipments, adjusted for seasonal variation. Total mill inventory at end of month, without adjust ment for seasonal variation (1929 averages=100). fir region have increased steadily since August 1935, while shipments have tended to decline, bringing about a less satisfactory relationship than had existed in the late summer of 1935. An advance of about 27 percent in lumber out put in the western pine region during May was accompanied by a somewhat smaller rise in shipments, and inventories increased for the second consecutive month. Mill stocks in the western pine region usually increase in May. District production of steel and cement con tinued active during May. Output in the steel industry has remained close to effective ca pacity during the past few months and in May was substantially higher than during the early summer of 1935. Cement production during the month amounted to 1,642 thousand barrels, a total double that of May 1935 and the largest since September 1928. Value of residential building permits issued in 20 large Tw elfth District cities totaled 5.9 million dollars in May, a figure approximating the April total of 6.1 million dollars. A rise in nonresidential permits in the same cities from 3.7 million dollars to 4.4 million dollars reflected largely the issuance of permits in San Fran cisco, Los Angeles, and Spokane for a few large projects. The value of total permits awarded in 67 smaller cities increased from 4.8 million dollars to 5.2 million dollars. Contracts awarded for public works amounted to 13 million dollars during May, a figure somewhat lower than in April and about the same as in May a year ago. Output of gasoline increased 5 percent during May. Demand for gasoline declined 12 percent, however, and inventories rose 504,000 barrels to the highest level since April 1934. Crude oil output showed little change, averaging 576,000 barrels daily in May, compared with 44 573,000 barrels in April. Demand for crude oil exceeded output, reflecting increased refinery activity, and stocks declined 460,000 barrels. Canning of spinach was completed early in May, and asparagus canning was reduced fol lowing high seasonal activity early in the month. Cherry canning in California was started near the end of the month and continued for about tw o weeks. It is estimated by the trade that the 1936 cherry pack in California will approximate the 1935 total of 133,323 cases. Preliminary opening prices, at $2.15 to $2.25 per dozen No. 2 / Y2 cans of choice grade Royal Anne cherries, were somewhat lower than last year. Canners’ stocks of California canned peaches on June 1 were 10 percent higher and supplies of canned apricots were substantially larger than on the same date a year ago. Stocks of canned pears, on the other hand, were reduced more than 50 percent and canned cherry inven tories were about the same as a year ago. (in thousands of cases of 24 No. 2’/a sizecans or their equivalent) (-----June 1,1936---Sold Unsold Total Peaches . 606 1,436 2,042 A pricots. 103 741 844 Pears . . . 45 236 281 Cherries. 4 17 21 t-----June 1,1935---- \ Sold Unsold Total 308 1,548 1,856 227 188 39 651 526 125 22 17 5 -P ack - 1935 11,216 3,164 1,387 133 1934 8,259 1,774 2,663 160 Source : Canners League of California. Operations at fish canneries expanded sub stantially during May. Salmon packing was started during that month in the Columbia River and central Alaska regions. Fishing con ditions were unfavorable, however, and output was much lower than in May 1935. More mack erel was canned in M ay than in April, but output continued low in relation to 1935. Tuna packing in California was maintained at a high rate during May. Production of butter and sugar advanced slightly during M ay while livestock slaughter and flour milling decreased by more than the customary seasonal amount. Distribution and Trade — , ------------- 1936-------------- v t-------- 1935-----------> Carloadingsi T o t a l .................................... Merchandise .................... Intercoastal Trade T o t a l ..................................... W eistbound ........................ Eastbound ........................ Retail Trade Automobile Sales$ Total ............................. P assen ger.................. Commercial ................. Department Store Sales? ............................. Stocks § ........................... Collections# R e g u la r .................... Installm ent ............ May Apr. Mar. Feb. May Apr. Mar. Indexes adjusted for seasonal variation (1923-1925 average=100) 7611 95H 76 110 65 80 95 79 96 79 89 64 84 73 89 68 85 79 115 66 76 118 66 75 96 69 76 93 71 60 81 52 78 105 73 1 32f 1401! 144 95 107 107 1241f 13111 131 117 87 103 102 2 1 6 ! 24411 270 210 184 161 154 85 65 80 62 83 61 79 62 87 65 89 67 85 65 121 f------------------ Actual Figures-----------------49.3 48.8 49.0 48.1 17.3 17.6 18.4 18.0 49.0 18.1 47.7 17.8 Trade The expansion in Twelfth District industrial output in May was not accompanied by a corre sponding rise in the movement of goods through distribution channels. The value of district department store sales R ETAIL T R A D E —Twelfth District Percentage changes in value of sales and stocks t------------- 1936 compared with 1935--------------\ ,---------N E T SALES---------X Jan. 1 to end May* of May Department Stores.. Los A n g d e s ........ Other So. California O a k la n d ................ San Francisco........ Bay R egion............ Central California. P o r tla n d !.............. Spokane ................ Tacomaf .............. Salt Lake City. .. . Apparel Stores ........ Furniture Stores . . . 6.5 6.3 2.4 5.6 4.0 4.0 — 1.3 12.4 13.8 18.3 13.1 11.2 13.2 18.5 8.5 ( 83) ( 6) ( 9) ( 5) ( 8) ( 18) ( 6) ( 9) ( 5) ( 6) ( 7) ( 4) ( 42) ( 33) (158) 8.8 9.9 7.4 9.6 8.6 8.8 4.6 13.7 7.4 6.3 7.0 8.1 16.8 29.1 11.9 STOCKS 7.4 (112) flncludes five apparel stores each in Portland and Tacoma which are not included in district department store total. Figures in parentheses indicate number of stores reporting. *May 1936 had one less trading day than May 1935. CAN N ERS’ STOCKS OF MAJOR CA LIFO R N IA CA N N E D FRUITS 48.1 18.5 JDaily average*. §At end of month. #Percent of collections during month to amount outstanding at first of month. IfPreliminary. June 1936 MONTHLY REVIEW OF BUSINESS CONDITIONS was somewhat lower in M ay than in April, although usually little or no change is reported at this time of year. A fter adjustment for sea sonal influences, sales declined in San Fran cisco, Oakland, and Seattle, while the adjusted indexes for Los Angeles, Spokane, and Salt Lake City advanced. Daily average district sales were 9 percent higher than in May 1935. New m otor vehicle registrations in the Twelfth District were 9 percent smaller in May than in April, a somewhat larger decline than has occurred in most recent years. Sales of both new passenger cars and commercial vehicles W H O L E S A L E T R A D E —Twelfth District Percentage changes in value of sales Cumulative Agricultural Implements . Automobile Supplies . . . . Drugs ................................ Dry G o o d s ........................ Electrical S u p p lies.......... . F u rn itu re.......................... Groceries .......................... H ardw are.......................... Shoes ................................ Paper and Stationery. . . . All L in e s .......................... May 1936 t----- compared with----April 1936 May 1935 — 0.8 28.8 — 2.5 11.2 — 9.6 1.9 — 5.0 — 1.4 27.7 — 4.4 — 8.4 30.3 — 2.8 4.3 14.9 — 2.1 5.2 — 12.8 — 2.4 7.9 — 4.2 9.9 1936 compared with 1935 43.3 11.3 8.0 3.5 36.8 2.4 6.7 21.5 8.7 12.7 14.2 were lower than in April. Total registrations in the district during the first five months of this year were 34 percent higher than in the same period in 1935. Daily average freight carloadings during May remained near the April level, whereas an in crease is customary at this time of year. A small rise in total carloadings in California resulted largely from the customary movement of spring lambs and slightly higher shipments o f miscellaneous freight. In the Pacific North west total carloadings declined, although an le 1936 45 FEDERAL RESERVE AGENT AT SAN FRANCISCO crease has been reported in most recent years. Intercoastal traffic through the Panama mal declined from 711,000 tons in April to 7,000 tons in May. Although eastbound lumr shipments totaled the same in May as in Dril and petroleum cargoes were somewhat rger, a substantial decrease occurred in other issifications. Little change occurred in total istbound cargo shipments, whereas an in ease generally occurs in May. >8t o f Living Consumers paid slightly higher prices for 3d in the principal district cities during early ne than a month earlier. The cost of living for families of wage earners d lower-salaried workers in Los Angeles, >rtland, San Francisco, and Seattle, declined ghtly during the three months ending Dril 15, 1936, the latest date for which this formation is available. Moderate declines in od costs more than offset small advances in nts and house furnishing goods prices. Living sts in these Tw elfth District cities were about percent below the 1923-1925 average. ever, they increased 45 million dollars in the succeeding week. Investments in United States Government guaranteed obligations increased moderately further during the four-week period. As will be seen in the accompanying chart, the sharp rise in holdings of Government secu rities in mid-June brought investments of re porting city banks in Government direct obli gations approximately to the point reached at the time of the regular quarterly financing in March. Fluctuations in Twelfth District bank holdings of Government securities have been MILLIONS OF DOLLARS U, S.GOVT DIRECT OBLIGATIONS OTHER SECURITIES le Credit Situation Total loans and investments of Tw elfth Dis:ct reporting member banks showed no net ange in the three weeks ending June 10. iflecting the purchase of United States Treasy bonds and notes issued on June 15, how- U.S. GOVT FULLY GUARANT EED SECURITIES) 1934 m k D ebits* — zona >hortiix ............ $ lifornia Bakersfield........ Jerkeley............ ‘ resno .............. -ong B e a c h ___ -•Os Angeles . . . )akland ............ »asadena .......... iacramento ----ian Bernardino . lan D i e g o ........ ian Francisco .. lan J o s e ............ ■anta Barbara. . ianta Rosa ___ ito ck to n ............ ho t o is e .................. rada teno .................. :gon iugene .............. •ortland ............ aleni ................ ih )g d e n ................ alt Lake C ity .. shington tellingham ----iverett .............. c a ttle ................ Ipokane ............ 'a c o m a .............. Valla Walla . . . ra k im a .............. May 1936 35,682 $ 12,624 18,441 21,054 31,639 810,611 86,211 22,804 90,431 8,591 43,404 781,737 18,853 10,233 4,090 18,060 10,387 14,905 18,651 27,770 672,908 67,725 20,286 106,489 7,363 41,316 752,545 16,495 8,708 3,667 15,433 65,019 91,008 114,855 163,479 4,017,542 428,047 125,427 488,866 41,804 227,631 4,359,526 103,112 55,992 20,080 85,493 54,539 70,909 97,271 140,687 3,174,627 326,642 104,012 438,349 36,441 191,619 3,674,004 85,485 46,080 17,180 72,644 16,228 14,311 74,934 68,026 8,923 7,921 43,933 37,647 5,692 145,585 11,661 4,805 132,667 11,379 27,551 754,159 63,791 21,392 643,463 53,646 12,239 57,351 12,875 50,063 66,680 292,827 60,338 255,806 6,213 7,243 179,857 39,990 32,957 5,013 11,265 4,758 5,744 168,843 37,045 25,445 4,292 10,625 27,591 33,960 884,356 195,241 149,453 22,511 54,311 23,258 26,973 730,576 166,683 118,108 20,559 52,570 Total .......... $2,554,682 thousands of dollars. May/— First five months—-\ 1935 1936 1935 31,286 $ 177,022 $ 149,347 $2,306,707 $13,256,201 $10,958,881 1935 1936 REPORTING MEMBER BANKS—Twelfth District Investments classified by types irregular during the past two years. A sharp increase late in 1934, reflecting largely the purchase of new securities issued by the Treas ury in December of that year, was follow ed by a further rise during the first tw o months of 1935. Holdings subsequently declined almost continuously until the beginning of September, partly as a result of the sale or redemption of bonds that had served as collateral for cir culating national bank notes. In September 1935, Twelfth District banks participated heavily in new Treasury financing. Follow ing moderate additional acquisitions o f Governments between September and Decem ber, reporting member banks purchased more than 61 million dollars of the new Government securities issued by the Treasury on Decem ber 15, and on December 18 their holdings of Government direct obligations reached a record peak of 736 million dollars. Between December 1935 and early March 1936, city banks disposed of a somewhat larger volume of Governments than had been acquired in the Decem ber Treasury financing. A similar reduction in Government security holdings fol 46 lowed acquisition o f more than 45 million dollars of Government direct obligations by city member banks in mid-March. The midJune purchase of more than 33 million dollars o f Government securities by district reporting member banks restored total holdings of such securities to the amount reached last March. During the four weeks ending June 17, re porting member banks increased their invest ments in Government fully guaranteed obliga tions to the highest point on record. Invest ments in this class of earning assets have increased almost continuously during the past tw o years, in marked contrast with the irregular fluctuations in holdings of United States Government direct obligations. Investments o f reporting member banks in all securities other than United States Govern ment direct or fully guaranteed obligations have fluctuated within relatively narrow limits since September 1934, and at present total about the same as at the beginning of the period. A lthough the principal changes during the past tw o years in earning assets of Twelfth District city banks have occurred in their investments, some expansion has also taken place in loans. Fluctuations in the volume of loans in each classification for which figures are available have been minor since the begin ning of this year. During 1935, however, loans other than on real estate and securities in creased considerably, follow ing some expansion in the latter part o f 1934. Loans in this category represent largely advances for commercial purposes, but during the past year a consider June 1936 MONTHLY REVIEW OF BUSINESS CONDITIONS SOURCES A N D USES OF B A N K IN G RESERVES Twelfth District Changes in millions of dollars during the weeks indicated Reserve Bank Credit - f 2.2 — .7 — .6 + .8 — 5.3 + 5.3 — .1 + .3 — .2 + 3.5 Commercial Operations — 3.6 — 2.9 — 32.6 — 12.2 — .4 — 19.0 — 14.3 — 31.8 — .5 + 12.0 Treasury Operations + 10.6 + 16.5 + 11.7 + 19.2 + 17.7 + 15.4 + 11.3 + 8.1 + 9.5 — 41.3 Total Supply + 9.2 + 12.9 — 21.5 + 7.8 + 12.0 + 1.7 — 3.1 — 23.4 + 8.8 — 25.8 USES O F FUNDS Week Ending -April 1 5 . . . April 2 2 .. April 2 9 . . . May 6 . . . . May 13___ May 2 0 . . . May 2 7 . . . . Tune 3 ... Tune 1 0 . . . June 1 7 . . . . . . . . • . . . Demand for Currency — 4.1 — .1 — 2.2 + 1 0 .6 — 3.9 + -4 — .1 + 7.0 — .4 + 1 1 .6 Member Bank Reserve Deposits + 13.9 + 14.9 — 18.3 — 2.9 + 17.3 + .3 — 3.3 — 28.8 + 8.6 — 36.2 Other F.R.B. Accounts — .6 — 1.9 — 1.0 + .1 — 1.4 + 1.0 + .3 — 1.6 + .6 — 1.2 MILLIONS OF DOLLARS REPORTING M E M B E R BANKS—Twelfth District Loans classified by types estate, which increased slightly during 1935, have changed little since the beginning of 1936. Adjusted demand deposits of reporting mem ber banks, which fluctuate considerably from week to week, showed a small net decline be tween M ay 20 and June 17. A decline o f 40 million dollars was reported in the week ending June 3. This change was in part the result of substantial withdrawals of deposits and their transfer to eastern money markets to meet C O N D IT IO N OF FE D E R AL RESERVE B A N K O F S A N F R A N C ISC O (Amounts in millions of dollars) SOURCES OF FUNDS Week Ending -April 1 5 . . . . April 2 2 . . . . April 2 9 . . . . May 6 . . . . . May 1 3 . . . . . May 2 0 . . . . . May 2 7 . . . . June 3 ... . June 1 0 ... . June 1 7 . . . . able part of the rise in such loans has reflected advances for the repair and alteration of build ings under Title I of the Federal H ousing A ct and for other types of consumer installment financing. Loans on securities including loans to brokers, have tended to increase since late 1935 but are still considerably low er than at the beginning of that year. Loans on real Total Demand + 9.2 + 12.9 — 21.5 + 7.8 + 12.0 + 1.7 — 3.1 — 23.4 + 8.8 — 25.8 June 17June 10 May 20 June 19 1936 1936 1936 1935 Total Bills and Securities.. . 201 201 201 201 Bills D iscou nted........................... ... ... ... Bills B o u g h t.................................. ... ... ... United States Securities . . 199 199 199 199 Total R eserves........................ 517 507 520 315 Total Deposits ...................... 395 393 412 283 Reserve Note Circulation . . 308 298 291 218 Ratio— Reserves to Deposit and Note Liabilities......... 73.6% 73.4% 7 4 .0% 62.9% C O N D IT IO N O F REPORTING M E M B ER BANKS Twelfth District (Amounts in millions of dollars) Loans and Investments— T otal. . Loans to Brokers and Dealers__ Loans on Securities to Others (except Banks) ........................... Acceptances and Com’l P aper.. . Loans on Real E s ta t e .................. Loans to B a n k s............................... Other Loans ................................... U . S. Gov. Direct O bligations.. Obligations Guaranteed by U . S. Other Securities............................... Reserve with F. R; B a n k ............ Due from Domestic B a n k s ........ Demand Deposits— Adjusted . . . Time Deposits ............................... U . S. Gov. D e p osits...................... Deposits of Other B a n k s............ Borrowings........................................ 1936 2,179 22 1936 2,134 17 1936 2,134 16 1935 1,984 12 169 22 368 1 367 707 157 366 199 227 800 1,037 120 261 170 22 368 1 363 675 154 364 221 242 787 1,041 113 264 169 22 367 1 366 678 149 366 246 250 811 1,050 114 262 166 19 362 1 324 647 96 357 154 199 706 987 58 241 June 1936 FEDERAL RESERVE AGENT AT SAN FRANCISCO redemptions o f recently refunded securities of a Pacific Coast corporation. The funds thus withdrawn had com e into the district last March when the refunding securities were sold. District member bank reserve balances de clined by 60 million dollars in the four weeks ending June 17. T w enty-four million dollars of that decline came between M ay 20 and June 10. D uring those weeks the United States Treasury disbursed 29 million dollars more than it collected in the Tw elfth District, but that addition to funds was more than offset by a net outflow o f 36 million dollars to other dis tricts, partly as a result o f the transfer of deposits in connection with refunding of secu rities mentioned in the foregoing paragraph. In addition, demand for currency increased, and member banks reduced their reserve balances in order to obtain the additional currency. In the week ending June 17, member bank reserve balances were reduced 36 million dollars, the large decrease in this district corre sponding with a general decline throughout the United States totaling 939 million dollars. United States Treasury collections in the Tw elfth District were unusually large during the week, and exceeded local Treasury dis bursements b y 31 million dollars. The un usually large collections resulted partly from second quarter income tax receipts but prin cipally from receipts from the sale of Treasury bonds and notes on June 10. The allotment of new Government securities to Tw elfth District banks and other investors on June 15 totaled 53 million dollars, exclusive of allotments in exchange for maturing securities. O f this total, 42 million dollars was paid for in cash, the pay ment resulting in an immediate reduction in member bank reserve balances. Demand for currency during the week increased 12 million dollars. This was the result largely of antici pation on the part o f banks o f an increase in requirements for currency to meet the cashing 47 of veterans’ Adjusted Service Certificate checks. There will be a definite tendency for district member bank reserve balances to increase dur ing the next several weeks. Adjusted Service Certificates held by veterans in the Tw elfth Federal Reserve District and presented for exchange up to June 15 aggregated slightly less than 150 million dollars. Odd amount checks of less than $50 distributed along with the $50 bonds totaled approximately 8 million dollars, almost all of which will prom ptly return to member bank reserve balances. In addition, many veterans are electing to exchange their bonds for cash immediately. Payment for these bonds is effected by means of checks drawn upon the Treasurer’s account at the Federal Reserve Bank of San Francisco. The checks are deposited in banks or are cashed and the proceeds spent, deposits o f banks increasing correspondingly. A s the checks are cleared through the Federal Reserve Bank, they are charged to the account of the Treasurer, and credited to the accounts of the banks present ing them. This process increases member bank reserve balances in exactly the same manner as any other Treasury disbursement. The first odd amount check was cleared through the Federal Reserve Bank of San Francisco on June 16. Securities Markets Share trading on Pacific Coast stock ex changes continued relatively light from M ay 20 to June 9, but during the next ten days daily average share turnover doubled. Price averages were steady, showing almost no movement except during the last few days when they rose slightly. The advance was somewhat greater in utility shares than for the general market. Prices of Pacific Coast corporation bonds advanced fractionally from M ay 20 to June 20, reaching new high levels. Municipal bonds also increased. Marketing of new securities, mostly for refunding purposes, was heavy. S U M M A R Y O F N A T IO N A L C O N D IT IO N S Prepared by the Board of Governors of the Federal Reserve System Volum e of industrial production, which had increased sharply in April, was maintained in May, and there was an increase in distribution of com m odities to consumers. Production and Employment. The Board’s seasonally adjusted index of industrial produc tion in M ay was 101 percent of the 1923-1925 average, as compared with 100 percent in April. Production of durable manufactures increased further, reflecting larger output o f steel and lumber, partly offset in the total by a reduction in the output of automobiles from the high level of April. A t steel mills the rate o f activity in May was higher than at any other time since the spring of 1930. This level has been maintained in June, reflecting in part some accumulation of steel by fabricators in advance of the effective date o f recently announced price increases. Declines in production were reported for many nondurable manufactures; at w oolen mills, however, activity increased. Output of bitu minous coal declined from April to M ay, while output of crude petroleum continued in large volume. Factory employment increased slightly be tween the middle of April and the middle of 48 June 1936 MONTHLY REVIEW OF BUSINESS CONDITIONS May, contrary to the usual seasonal tendency. Increases were reported at plants producing iron and steel products, machinery, and most other durable manufactures. Changes in em ployment in industries producing nondurable manufactures were largely of a seasonal nature. Factory pay rolls were somewhat larger in the middle of May than a month earlier. Total value of construction contracts awarded, according to figures o f the F. W . D odge Cor poration, declined slightly from April to May. average, according to the index of the Bureau of Labor Statistics. In recent weeks prices of livestock and livestock products, grains and flour, and textile raw materials and finished products have advanced. For many steel prod ucts price increases have been announced to take effect early in the third quarter. Bank Credit. Excess reserves of member banks, after a slow increase in May and the early part of June, declined by $900,000,000 in the week ending June 17. The reduction in excess 1929 IN D U ST R IA L PR ODU CTIO N Index of physical volume of production, adjusted for seasonal variation, 1923-1925 average=100. By months, January 1929 to May 1936. Awards for residential building continued to increase and in May, as in other months this year, were substantially larger than a year ago when residential building was first beginning to increase from the extreme low level of the depression. Distribution. Department store sales, which usually decline at this season, increased from 1930 1931 1932 1933 1934 1935 1936 F A C T O R Y E M P LO Y M E N T A N D PA Y ROLLS Indexes of number employed and pay rolls, without adjustment for seasonal variation, 1923-1925 average=100. By months, January 1929 to May 1936. Indexes compiled by the United States Bureau of Labor Statistics. reserves was due principally to an increase in the deposits maintained at the reserve banks by the Treasury, which received large payments for new securities issued, as well as quarterly income tax installments. A t that time the Treasury began to distribute checks and A d justed Service Bonds to veterans and there was an increase in the demand for currency in conBILLIONS OF DOLLARS BILLIONS OF DOLLARS W H O L E SA L E PRICES M EM B ER BAN K RESERVES A N D RELATED ITEM S Indexes compiled by the United States Bureau of Labor Statistics, (1926=100.) By months 1929 to 1931; by weeks 1932 to date. Latest figure is for week ending June 20, 1936. Wednesday figures. January 31, 1934 to June 17, 1936. April to May and there was also a rise in sales at variety stores and mail order houses. Freight carloadings increased by slightly more than the usual seasonal amount. Com m odity Prices. W holesale prices of com modities, which had declined from the middle of April to the middle of May, have advanced somewhat since that time and in the week end ing June 20 were at 78.7 percent of the 1926 nection with the cashing of these bonds and checks. United States Government obligations held by reporting member banks in leading cities, which had increased somewhat in May and early June, showed a further sharp increase in the week ending June 17 in connection with the new issue of Government securities. Bank loans also increased.
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