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MwdkLj, FEDERAL RESERVE BANK MARCH OF SAN F R A N C ISC O 1948 TWELFTH DISTRICT MEMBER BANK EARNINGS AN D EXPENSES— 1947 n d er the impetus of an unparalleled increase in loan Uearnings, net profits after taxes of Twelfth District member banks combined reached a new high in 1947, although they exceeded the previous record figure in 1946 by only a small amount. Major factors which restrained net profits included a reduction in investment income, a general increase in expenses, some increase in charge-offs on loans, and an increase in income tax payments which made the percent gain over 1946 in profits after taxes substantially less than the increases in profits before taxes and in net current earnings. As a percentage of capital accounts, profits after taxes were lowrer in 1947 than in 1946. The combined figures for all banks presented in the accompanying table do not reveal the wide differences among banks. If a few of the larger banks that carried on especially profitable operations in 1947 had been excluded from the figures, total net current earnings would have been about the same in 1947 as in 1946, and profits, both before and after taxes, would have been lower. In contrast to the District, net profits of all member banks in the United States were 14 percent smaller in 1947 than in 1946. Net current earnings and profits before taxes also declined. In terms of return on capital, District member bank operations also were more profitable than those of all member banks. The primary factor in the more favorable experience of District banks was the greater increase in loans in this area than in the country as a whole. items increased in 1947, with service charges on deposit accounts being substantially larger. Expenses rise relatively more than earnings To achieve larger earnings, increased expenses were necessary; in fact, the percentage increase in expenses was larger than the percentage increase in earnings for the first time in several years. Both higher salaries and larger staffs contributed to the increase in total salary and wage payments. The number of persons employed by District member banks was 6 percent higher at the end of 1947 than a year earlier. Similarly, the payment of a larger amount of interest on time deposits reflected both a larger volume of such deposits and higher rates of interest paid on a considerable portion of them. Even though expenses increased more, relatively, than earnings, the additional dollar expenses did not use up the added earnings. Net current earnings in 1947, conse quently, were more than 10 percent above their previous high in 1946. E a r n in g s a n d E x p e n s e s of M e m b e r B a n k s — T w e l f t h D is t r ic t (millions <jf dollars) 1940 Earnings on loans ............... Interest and dividends on securities ...................... . Service charges on deposit accounts ................................. Trust department earnings. Other earnings ...................... . Total earnings Loans again become most important source of earnings Reflecting the widespread and insistent demand for bank loans, earnings on loans were half again as large in 1947 as in 1946. Loan earnings provided over half of all earnings and exceeded investment income for the first time since 1943. The pressure of Treasury debt retirement and expand ing loans shrank United States Government security holdings substantially. Interest and dividends on securi ties were less than in either 1945 or 1946. The rise in interest rates that occurred in the latter part of 1947 helped to keep the decline in investment income from being quite as large as the decline in investments, but the difference between rates of return on securities for the years 1946 and 1947 was not marked. All other earnings 1946 1947 Percent change 1946.47 104.01 99.6 138.6 210*5 ' + 52 44.5 138.4 153.9 129.3 — 16 14.8 10.2 22.7 17.5 12.3 25.7 22.4 12.9 26.2 + 28 + 5 + 2 8.5 6.8 15.8l .................... 179.6 Salaries and wages ............ .. Interest on time deposits. . , Other e x p e n s e s ........................ 1945 54.5 31.4 * 43.42>3 285.7 348.0 401.3 + 15 84.4 39.3 56.6 109.3 44.9 65.2 127.1 54.1 77.4 + 16 + 20 + 19 Total expenses ................... 129.32, 3 180.3 219.4 258.6 + 18 N et current earnings............ 50.32>3 105.4 128.6 142.7 + 11 + 9 .8 6.4 + 0 .1 + 5.1 + 3 .3 13.5 + 6.6 7.0 7.6 — 6.83 + 3.4 5.0 8.0 2 2 108.9 27.9 123.7 32.2 134.7 42.2 N et losses and charge-offs (recoveries and profits-}-) On securities ......................+ 11.1 On lo a n s .................................. 8.5 9.43 Total net charge-offs.. Net profits before income Taxes on net income............ — — + 9 +31 N et profits after taxes.......... 43.5 80.9 91.5 92.5 + Cash dividends ........................ Undistributed profits .......... 24.2 19.3 29.9 51.0 35.1 56.4 37.5 55.0 + 7 — 2 1 1 Service charges and fees on loans included in “ other earnings.” 2 Taxes on net income included in “ other expenses.” 3 Recurring depreciation on bank building and furniture and fixtures in eluded in “ other net charge-offs.” 26 March 1948 FEDERAL RESERVE B A N K OF S A N F R A N C ISCO Recoveries exceeded charge-offs on loans in 1946, but in 1947 charge-offs exceeded recoveries. Nevertheless, net charge-offs on all non-current accounts were only moderately higher in 1947, largely because of a substan tial reduction in charge-offs other than those related to loans and securities. Profits before income taxes also rose about 10 percent to a new record. The percentage increase in total tax payments on net income was consid erably larger than the gain in profits before taxes, how ever, and 1947 profits after taxes just exceeded those of a year earlier. About 40 cents out of every dollar of profits was again distributed in dividends, and the dollar addi tion to capital accounts through undistributed profits was about the same in 1947 as in 1946. Earnings and expenses of banks by size group ercent E C xp e n se h a n g e s Ite m s , of 1946-47, T w e lfth b y S iz e Loan earnings of member banks increased substan tially over 1946 in each state, and income from securities declined except in Idaho banks. Total earnings were up over 1946, but the increases in Washington and Oregon ercent E C h an g e s xpen se Ite , 1946-47, m s of S in D G E elected is t r ic t M a r n in g s em ber B , roups Earnings on loans .................................... Total earnings .............................................. .. Salaries and wages ............................................ Total expenses ................................................ N et current earnings ......................................... N et profits before income taxes ................. Income taxes ........................................................ N et profits after t a x e s ....................................... Dividends ................................................................. — 18 55 16 16 18 11 12 37 3 7 4 35 22 20 19 26 8 39 2 16 in S Other banks — 10 40 14 20 16 10 — 1 13 — 6 13 1 15 largest banks, in terms of total deposits. 2 33 banks with total deposits under $1,000,000 in 1943. Profits of most large banks below 1946 Individual bank experience has been examined only among the 15 largest banks, but even here the results of their 1947 operations varied widely. Loan earnings in creased over 1946 by 22 to 67 percent, while investment income was about the same in 1947 as in 1946 in one bank and was 4 to 30 percent lower in the others. Four teen of the 15 banks increased their total earnings, but the increases ranged from 3 to 40 percent, writh the typical increase about 10 percent. Wages and salaries increased at least 10 percent in each of these banks, with 30 percent the largest rise, and total expenses rose over a similar range. Net current earnings elected w e lfth Interest and dividends on securities. Earnings on loans .................................. Total earnings .................................... Salaries and w a g e s .................................. Total expenses .................................... N et current e a r n in g s ............................. N et profits before income taxes Income taxes ........................................... Net profits after t a x e s ........................... Dividends ..................................................... D E is t r ic t a r n in g s M an d em ber Calif. Oreg. and Wash. — 17 54 16 15 18 13 17 44 7 8 — 16 43 8 17 14 — 7 — 17 — 12 — 18 — 5 Ariz., Idaho, Nev. & Utah — 8 54 22 25 22 23 7 18 3 15 banks were small, and those were the only two states in which member banks did not increase their net current earnings. Losses and charge-offs on loans were substan tially larger in 1947 than in 1946 in every state. Net profits after taxes declined in three states, Washington, Oregon, and Utah. S elected O p e r a t in g R a t io s w e lfth D of M em ber B a n k s — is t r ic t a n d a n k s Small2 banks T iAS T Large1 banks Earnings and expenses of banks by state P Considerable differences are found within the District in the profit experience of various groups of member banks. These are accounted for largely by differing changes in earnings items in 1947 as against 1946. In creases in expense items were much more uniform than changes in earnings. Net current earnings of both large and small banks were higher than in 1946. The increase in the small bank group was considerably larger than in all banks or in the large bank group, since income from securities held by the small banks did not decline. The large bank group had both the largest relative decline in securities earnings and the largest relative increase in loan earnings. Net profits after taxes of the 15 largest District banks com bined and of 33 of the smallest banks were slightly above 1946, but net profits of all other District banks were down 6 percent. P were higher than in 1946 in 8 banks and lower in 7. Although net current earnings combined rose 11 percent, 13 of the 15 banks had an increase of less than 10 percent or a decrease. Net profits after taxes behaved similarly. Combined, net profits increased 3 percent, but individ ually, they ranged from an increase of 36 percent to a decrease of 56 percent, with decreases realized by 12 of the 15 banks. Percentages of total capital accounts N et current earnings before income taxes Profits before income taxes . . . .................... N et p r o fit s ............................................................ 1940 1945 1946 1947 i 8.3 14.6 15.7 12.3 18:4 18.6 14.4 19.0 18.0 13.4 3.9 0.9 1.9 0.5 2.1 0.6 2.5 0.6 21.5 6 2 .72 5.6 46.8 36.4 6.1 44.4 40.3 5.8 36.7 48.6 6.2 31.6 16.6 30.5 13.8 30.4 12.5 30.9 11.8 34.1 36.9 36.8 13.2 11.8 4.9 4.7 4.8 4.5 5.3 5.0 — 32.5 28.7 23.7 — Percentages of total assets Percentages of total earnings Interest and dividends on securities.. . . Earnings on lo a n s .............................................. Service charges on deposit accounts. . . . Salaries and w a g e s ............................................ Interest on time d e p o s its ............................. i N et current e a r n in g s ....................................... Capital accounts as percentages of Total d e p o s its ..................................................... Total a s s e t s .......................................................... Total assets, less cash and U . S. Government secu rities............................... Earnings on loans as percentage of total l o a n s ............................................................... 6.52 5.4 5.5 5.6 Interest on U . S. Government securities as percentage of total U . S. Government securities ............................................................... 3 .13 1.3 1.4 1.5 Interest on time deposits as percentage of total time d e p o s its ....................................... 1.7 0.9 0.9 0.9 1 Figure comparable with those for 1945-47 not available. 2 Excluding service charges and other fees on loans. 3 Interest and dividends on total securities. N o te : Figures are arithmetic averages of ratios of individual banks, not ratios of aggregate dollar totals. Thus, the operations of each bank regard less of size have equal weight in the determination of the averages. Balance sheet figures used as a basis for ratios are averages of amounts reported for December 31, 1946, and June 30 and October 6, 1947. More complete tabulations of Twelfth District member bank operating ratios for 1947, including separate tabulations by state, by state or com bination of states and size, by proportion of time to total deposits, and by proportion of loans to total assets, are available upon request. March 1948 M O N T H L Y R E V IE W Operating ratios of Twelfth District banks The average ratio of net profits to capital accounts of Twelfth District member banks declined in 1947. Most banks increased their capital accounts over 1946 through retention of profits but realized either a smaller relative increase or a decline in net profits. The return on capital in 1947 was well above prewar levels however, since it had risen steadily from 1942 through 1946. Net current earnings (before income taxes and charge-offs) as a percentage of capital accounts continued to rise in 1947. Only among Oregon and Washington banks wras this ratio, as well as the ratio of net profits to capital, lower in 1947 than in 1946. The continued expansion in bank loans, while security holdings were declining, brought a further substantial increase both in the importance of loan earnings relative to total earnings and in total earnings as a percentage of total assets. The average rates of return realized on loans and on securities were slightly higher again last year, the low having been reached in 1945. Both salaries and wages and total expenses increased 27 by about the same proportion as total earnings, and ex pense to earnings ratios showed little change. Relative to total assets and deposits, capital accounts had declined sharply over the war years when bank hold ings of Government securities were expanding. Last year, the movement of these capital ratios was reversed, al though they remain less than half the 1940 percentages. An opposite shift has taken place in the ratio of capital accounts to total assets less cash and Government securi ties. In these terms, capital accounts increased during the war because the increase in bank assets occurred primarily in Government securities. The postwar loan expansion reduced this ratio of capital to so-called risk assets in 1946 and again in 1947. (This ratio in the accompanying table is based upon average capital accounts and assets for the year as a whole. Since loans rose rapidly in the latter part of the year, the average ratio of capital ac counts to total assets less Governments and cash was sub stantially lower at the year-end than for the year 1947 as a whole.) The decline in this particular capital ratio is one of the factors in the increasing caution expressed by District banks regarding further loan expansion. COMMODITY PRICE CHANGES SINCE THE BEGINNING OF FEBRUARY u r in g the first half of February a price recession oc curred in most agricultural commodity markets in this country. The break began on February 4, after many of these commodities had shown signs of weakness during the second half of January. Since the middle of February a slow upward movement has been noticeable, but prices of many commodities have moved extremely irregularly. The February recession in the commodity markets was soon felt in spotty lowering of retail prices of various food items. There was also a decline of security prices on leading stock exchanges. Price developments, however, were not uniform. One of the chief exceptions was a rise in the prices of certain steel products. D Background of the present price situation The extent, causes, and the probable meaning of the recent price recession can be properly viewed and appre ciated only against the background of price developments in this country since June 1946. Since the end of price control, prices have been rising almost continuously both because of strong inflationary pressures generated within the country and, to some extent, because of export de mand affecting special classes of commodities. The wholesale price index (1926 = 100) rose, with a short interruption in September 1946, from an average of 113 in June 1946 to 149 at the end of March 1947. For the following three and a half months, wholesale prices remained rather stable at a slightly lower level, around 147 to 148. This slight price recession, which was caused essentially by a drop in prices of agricultural com modities and foods, was in the beginning interpreted by many as the starting point of a general economic reces sion. Beginning in the middle of July 1947 there was again an almost steady upward movement of prices, and in mid-January 1948 the wholesale price index reached its postwar peak of 165.5. This was 17.5 percent higher than a year earlier. From June 1946 to the middle of Janu ary 1948, the general price index rose by 47 percent, farm products by 44 percent, foods by 60 percent, metals and metal products by 37 percent, textiles by 34 percent, building materials by 47 percent, chemicals by 45 per cent, and fuel and lighting materials by 49 percent. For some time prices have been at a level high enough to cause serious apprehension. There is a general feeling, easily understood because of past experience, that the present price level is not only too high, but also that longer-term price relationships among various groups of commodities have been disrupted and that a major adjust ment is inevitable sooner or later. High food prices have caused particular concern because of their contribution to rising living costs. Declines in specific agricultural commodities The accompanying table shows the course of spot prices of some of the more important commodities participating in the price break in February. For a better perspective, the table gives the spot price on June 28, 1946, the last trading day of wartime price control, and the peak price reached since then. Prices of barley, corn, steers, and butter reached their postwar peaks in January 1948, while those of other commodities shown in the table attained their peaks in earlier periods. With the excep tion of butter and hides, all indicated prices weakened during the second half of January. The fall in prices from 28 March 1948 FEDERAL RESERVE B A N K OF S A N FR A N C ISCO S pot P r ic e s o f T e n C o m m o d i t i e s i n P r i m a r y M a r k e t s o n S e le c te d D a y s Wheat bu. Corn bu. Barley bu. Flaxseed bu. Cotton lb. Steers 1001b. Hides lb. Hogs 100 lb. Lard lb. Butter lb. June 28, 1946 .............................................. $1,871 $1,448 $1.44 $3.35 $14.85 $.140 $.560 Peak since then, and d a t e ..................................................... Jan. 16, 1948 ................................................. Feb. 3, 1948 ................................................... Feb. 13, 1948 ................................................ Feb. 27, 1948 .............................................. Mar. 19, 1948 .............................................. 3.115 1 1 /2 8 /4 7 3.065 2.872 2.295 2.352 2.312 2.808 1 /1 5 /4 8 2.78 2.565 2.012 2.228 2.252 .400 1 0 /2 5 /4 6 .288 .252 .212 .212 .214 .885 1 /2 /4 8 Percent change to Mar. 19, 1948 from June 28, 1946 ................................................. Peak since June 28, 1946 ...................... Tan. 16, 1948 ................................................ Feb. 3, 1948 ................................................... + — — — 23.6 25.8 24.6 19.5 + — — — 55.5 19.8 19.0 12.2 $ .31 $17.00 $.155 2.755 1 /1 9 /4 8 2.745 2.585 2.275 2.385 2.490 7.10 1 /1 4 /4 8 7.10 6.90 6.00 6.25 6.15 .394 7 /1 6 /4 7 .352 .344 .314 .328 .340 32.25 1 /7 /4 8 31.00 29.75 26.75 27.25 27.50 .372 1 0 /2 9 /4 7 .312 .322 .270 .250 .240 + 72.9 — 9.6 — 9.3 — 3.7 + 83.6 — 13.4 — 13.4 — 10.9 + 9.7 — 13.7 — 3.4 — 1.2 + 61.8 — 14.7 — 11.3 — 7.6 — 35.5 — 23.1 — 25.5 + 54.8 30.25 9 /1 1 /4 7 28.125 26.875 23.750 23.375 23.250 + — — — 56.6 23.1 17.3 13.5 + — — — 52.9 46.5 25.7 15.1 .858 .872 .770 .770 .790 + 4 1 .1 — 10.7 — 7.9 — 9.4 Source : United States Bureau of Labor Statistics. February 4 until about February 13 reached the maxi mum limit allowed by exchange rules on nearly every trading day, and by the latter date almost all of these prices reached their lows. During the second half of Feb ruary an upward movement was noticeable in all these commodities except hides and hogs, but by the end of the month only a small part of the loss had been regained in most cases. In the first three weeks of March, prices of agricultural commodities moved irregularly and, after various ups and downs, on March 19 were close to Feb ruary month-end levels. Although the recent price break affected a wide range of agricultural commodities, the grains, wheat in particu lar, were the leaders. The reasons for the price break in grains are to be found in a combination of circumstances. (1 ) Grain prices, as well as prices of livestock and live stock products which are sensitive to changes in feed prices, had reached very high levels by the end of 1947. A short corn crop in the United States threatened to di vert an unusually large share of wheat supplies to feed purposes and pushed up the prices of all grains. (2 ) As a result, and despite the record 1947 wheat output, the export goal of 450 million bushels of wheat to feed West ern Europe, which had a poor crop in 1947, exerted a strong influence on prices of grain, particularly wheat. In the late fall, serious apprehension concerning the prospects for the 1948 winter wheat crop in this country added to the pressure on wTheat prices. (3 ) Since late December, however, the appraisal of the wheat situation has been revised materially. United States wheat stocks of 795 million bushels on January 1 have proved to be larger than expected, and considerably larger than the corresponding figure for the previous two years. The ex pected yield of the new winter wheat crop in this country has also been revised upward substantially. Estimates of wheat exports from Australia and Argentina have been raised markedly owing to their large crops. Expectations concerning the 1948 wheat crop in European importing countries have also improved materially. Finally, it ap pears that high prices have dissuaded the domestic live stock industry from using the expected amount of wheat for feeding. Consequently, wheat export goals, even if increased somewhat, probably will be reached without great difficulty. All these factors indicated that prices of wheat and many other agricultural commodities were out of line with market forces in the first half of January, and the ensuing break in prices represented an inevitable adjustment. Repercussion on wholesale prices The price drop in the primary markets of agricultural commodities was reflected in a 2.4 percent net decline in the general weekly index of wholesale prices. The wholesale price index of about 900 commodities (1926 = 100) fell from 165.5 during the week ended January 17 to 159.2 during the week ended February 21, to rise to 161.5 during the week ended March 20. But the be havior of the component price groups was far from uni form. Prices of fuel and lighting materials, building ma terials, house furnishing goods, and metals and metal products have advanced continuously in recent months and showed no recession during February.1 On the con trary, the group indexes of farm products, foods, hides and leather, and chemicals have declined markedly since they reached their peaks, mostly in mid-January. The more important group indexes of wholesale prices for the period since mid-January are given in the accompanying table. W holesale P r ic e s — U n it e d States Percent change from — Week ended— ---------- -\ Jan. 17 to Jan. 17 Jan. 31 Feb. 14 Mar. 20 Mar. 20 (1926=100) Commodity group A ll commodities ........................ . 165.5 163.7 159.7 161.5 — 2.4 Farm p r o d u c ts ............................. . . . Hides and leather products. . . Building m a te ria ls...................... . Fuel and lighting materials. . . Metals and metal pro ducts.. . . 201.5 181.2 140.8 201.4 191.1 145.7 130.0 153.2 195.1 176.5 139.3 201.2 191.3 145.8 131.2 154.1 180.9 173.3 134.0 196.2 192.0 146.7 131.6 154.8 187.6 176.4 135.8 185.9 192.6 145.6 131.7 156.0 — 6.9 — 2.6 — 3.6 — 7.7 + 0 .8 0 + 1.3 + 1.8 A ll commodities other than farm products and foods. . . 147.4 148.0 147.5 147.3 0 Source : United States Bureau of Labor Statistics. These indexes show quite clearly that the net decline in the general price index of 2.4 percent during the nine weeks from January 17 to March 20 was caused primarily by the sizable breaks in prices of agricultural commodi1 According to the Bureau of Labor Statistics’ weekly wholesale price index. Monthly index shows slight decline in building materials prices in Feb ruary. M arch 1948 M O N T H L Y R E V IE W ties and foods. During the same time industrial commodity groups, except chemicals and hides and leather products, showed a slight rise in prices, but the index of all com modities other than farm products and foods was practi cally the same at the end of the period as at the beginning. Conclusion The February price break in agricultural commodities and foods perhaps is largely explained by the specific situation in the markets for these products. Price develop ments in subsequent weeks support the view that it repre sented a selective market adjustment rather than the be ginning of a general downward price spiral. Even farm ers’ expenditures may not, at least for some time, be seriously reduced by these price declines. Farm equip ment and machinery is still relatively scarce. Liquid as 29 set holdings of farmers are still at record levels; profitable operations in 1948 are anticipated; and, with existing price support legislation, there is little fear that the bottom will suddenly drop out of the agricultural price structure. To be sure, the future behavior of prices is extremely uncertain. Much will depend upon the outcome of such developments as the expanded defense program now under consideration, and the third round of wage in creases now under way. Funds available for consumer buying will be increased by the reduction in income taxes. Reports indicate an attitude of increased caution on the part of business following the price break and such a sobering effect may be salutary in view of the poten tial inflationary pressures that may still raise serious problems. REVISION OF DEPARTMENT STORE INDEXES— TWELFTH DISTRICT epartm ent store sales indexes for the Twelfth Fed D eral Reserve District have recently been revised to take account of several factors. During the war sales were affected by seasonal forces in a different manner than in previous years. An increase in the number of reporting stores since 1942, the date of the last major revision, made possible an improved sample for recent years. During 1947, stores reporting to this bank ac counted for almost 80 percent of the estimated total sales in the District. More precise bench mark data for 1939 be came available in the course of comparing this bank’s records with Census tabulations. The new indexes for most cities and areas show no marked differences in the direction of the movements of the unadjusted series from month to month, but they do indicate more precisely the sales levels attained in recent years. Seasonal pattern changed during war period Changes in the seasonal behavior of department store sales during the war and immediate postwar period were due to several conditions. As goods became scarcer dur ing the war, the availability of merchandise became more important at times than the seasons of the year in de termining the distribution of sales over the year. The necessity to shop early in order to meet overseas mailing deadlines for Christmas gifts to servicemen was another development which affected the pattern of sales in the latter part of the year. These circumstances combined to reduce the sharp seasonal differences or to alter previous relationships among months. Two examples will serve to illustrate the effect of wartime conditions. In most cities the difference between March and April attributable to Easter business was greatly reduced. Similarly, Novem DEPARTMENT STORE SALES AND STOCKS-Twelfth District Monthly indexes of value o! sales and stocks, adjusted for seasonal variation (1935-39 average = 100) 30 FEDERAL RESERVE B A N K OF S A N F R A N C ISCO ber sales gained in importance relative to December as shoppers made earlier purchases to take advantage of available goods and to meet the overseas shipping sched ules referred to above. Some changes became apparent very early in the war and continued to be of the same relative importance through the entire period, but others became progressively more pronounced. These changes complicated the problem of eliminating seasonal influ ences and required a changing set of adjustment factors. Other adjustments made in sales indexes Additional stores started reporting to this bank be tween 1942 and 1947. The present revision includes these stores in the sample. Stores which opened for business since the last revision and which report to this bank have also been included in the series. The sales indexes prepared by this bank had been ad justed to Census sales data for 1929 and 1939 and to the data for 1935 wherever complete enumerations were made for the latter year. Some further adjustments to the 1939 Census were found necessary. In a few cities it appeared that stores which met the Census definition of a department store had been omitted from the Census totals for 1939. It also became apparent that leased de partment sales were not included in the Census totals of department store sales. Adjustments for these factors improved the dollar estimates underlying the indexes. The department store sales indexes published by this bank do not purport to reflect sales or excise taxes. Ad justments were made, therefore, to the figures reported A STUDY OF B A N K DEBITS A N D CLEARING STATISTICS N O W AVAILABLE FOR DISTRIBUTION The technical study, D ebits and Clearing Statistics, T heir B ack ground and Interpretation, prepared by George Garvy of the Fed eral Reserve Bank of New York and published by the Board of Governors, is now available for distribution. The purpose of the analysis is to determine how effectively bank clearings and bank debits reflect basic economic processes. The pamphlet may be purchased for 25 cents, or for 15 cents in group purchases of ten or more copies for single shipment. Orders may be addressed to this bank. INCREASE IN LIMIT O N A N N U A L A C Q U ISIT IO N S OF SERIES E S A V IN G S BO N DS On March 18, 1948, Secretary Snyder announced that, effective for the calendar year 1948, the limitation on the amount of Series E savings bonds originally issued during any calendar year to any one person is being raised from $5,000, maturity value, to $10,000, maturity value. W ITH H O LD IN G TAX FUNDS M A Y BE PLACED IN W A R LO AN ACCOUNTS BY BA N K S Effective March 22, 1948, each bank which is qualified as a De positary for Withheld Taxes and for a W ar Loan Deposit ac count may elect, in lieu of remitting withheld taxes deposited with March 1948 to this bank, when correspondence with reporting stores revealed that their figures included sales taxes. No evi dence was found that stores were including excise taxes without reporting a separate figure showing sales exclud ing such taxes. Stocks indexes also revised The revision of the sales indexes made it necessary to revise the stocks indexes because the dollar estimates of stocks are dependent on the dollar estimates of sales. The estimated amount of total Twelfth District department store stocks in any month is obtained by the following procedure: Stocks are divided by sales for a sample group of stores reporting both items. The result, a ratio by which sales must be multiplied to obtain stocks, is ap plied to estimated total dollar sales obtained in construct ing the sales indexes. The revised dollar estimates ob tained from the new sales indexes have been substituted for those previously used. The revised sales indexes appeared for the first time in the Monthly Review for February 1948. The revised stocks indexes are introduced in the present issue. N o te : A technical description of the sales indexes covering their construc tion and adjustment for various factors is in preparation. This descrip tion will be furnished upon request. Tabulations for earlier months of the sales indexes, by city and area, and of the District stocks index are also available upon request. Correction: In the February 1948 Monthly Review, in the article “Agriculture in 1947,” the figure 23 million pounds appears in the second line under the sub-heading Meat on page 20. The correct figure is 23 billion pounds. it directly to the Federal Reserve Bank, to make such remittances by transfers from the “Withheld T ax” account to the “W ar Loan Deposit” account on its books. Previously, a depositary bank had to remit to the Federal Reserve Bank the entire amount in its Withheld Tax account whenever the balance in this account reached $5,000, and also at the close of each calendar month re gardless of the size of the balance. Balances in W a r Loan ac counts, on the other hand, are subject to withdrawal upon call by the Treasury. The new method of handling withheld taxes will permit a more even flow of funds into the Treasurer’s account at Federal Reserve Banks and consequently there will be less periodic disturbance of member bank reserves. SECURITY LO A N DRIVE— APRIL 15 TO JUNE 30, 1948 The Security Loan Drive will start April 15 and continue through June 30. The United States Savings Bonds Division of the Treasury will be in charge and will use the services of a large group of volunteer salesmen, in the same manner that the war time bond-selling campaigns were organized. The drive will em phasize sales of Series E Savings Bonds, which will be termed “ Security Bonds” during the campaign. The dual purpose of the drive is to promote savings for individual security and to fight inflation. The money received from the public will be withdrawn from the consumer markets, and the Treasury will use it insofar as possible to pay off bank-held public debt. M arch 1948 31 M O N T H L Y REVIEW BUSINESS INDEXES—TWELFTH DISTRICT (1935-39 average-1001) I n d u s tr ia l p r o d u c tio n ( p h y s ic a l v o lu m e )* Y ear and m o n th P etro l e u m 3 L um ber Ad ju ste d 1929_____________ 1930_____ ________________ 1931__________________________ 1932 _________ __ 1933_________ ________ 1934 _________ . . . 1935 _________ . . . . . . 1936 _________________ 1937 ______________ ________ 1938 _______________________ 1939 _________ _______ __ 1940 .......................... _ 1 9 4 1 ...................... 1942________________________ 1943___________________ ______ 1944__________________ __ . 1945 ________ ________ __ . 1946_________________________ 1947 .......................... U nad ju s te d C rude R e fin e d U nad ju ste d U nad ju ste d 148 112 77 46 62 67 83 106 113 88 110 120 140 140 133 138 108 118 139 121 95 78 74 72 73 86 89 99 104 93 93 96 103 118 129 135 131 138 193 168 140 134 127 123 140 154 163 159 160 158 172 175 194 226 243 219 239 W h eat flo u r C em ent Ad ju ste d U nad ju s te d U nad ju ste d 110 96 74 48 54 70 68 117 112 92 114 124 164 194 160 128 131 165 193 106 100 101 89 88 95 94 96 99 96 107 103 103 104 115 119 132 128 133 F a cto ry p a y r o lls 4 T o ta l m a n u f a c t u r in g e m p lo y m e n t4 E le c t r ic p o w e r Ad ju ste d U nad ju ste d C a lifo r n ia Ad ju ste d 83 84 82 73 73 79 85 96 105 102 112 122 136 167 214 231 219 219 256 U nad ju ste d Ad ju ste d U nad ju ste d 111 93 73 54 53 64 78 96 115 101 110 134 224 460 705 694 497 339 401 88 100 112 96 104 118 155 230 306 295 229 175 184 1947 January _______________________ February ______________________ M arch__________________________ A p r il___________________________ M a y ___________________________ J u n e ___________________________ July_______________ ____________ A u g u s t________________________ Septem ber_____________________ October________________________ November______________________ December____________________ _ 154 172 142 132 129 131 125 130 130 139 153 178 106 120 123 134 150 150 139 157 153 151 146 133 134 136 137 137 138 139 139 139 139 140 141 140 219 227 231 234 243 240 236 254 254 247 246 241 191 182 207 193 193 186 184 185 193 187 205 215 164 166 190 196 195 202 195 201 207 203 199 200 152 147 141 133 129 138 126 125 123 133 133 116 250 249 252 254 251 251 252 252 259 260 263 275 246 244 248 252 253 257 262 263 259 253 258 271 183r 183 183 184 183 182 181 183 184 187 189 188 183r 182 182 184 183 182 181 183 185 187 188 188 386 387 390 392 392 394 392 408 411 418 419 423 379 384 389 392 394 396 392 410 412 423 420 423 1948 January________________________ 174 116 141 248 218 188 114 278 275 186p 186p 420 413 C a r lo a d in g s (n u m b e r)* Y ear and m o n th Ad ju ste d 1948 January____ U nad ju s te d Ad ju ste d 112 192 9 193 0 193 1 — 193 2 193 3 193 4 193 5 1936........... 193 7 193 8 193 9 194 0 194 1 194 2 194 3 194 4 194 5 . 194 6 ... 194 7 1947 January February M arch _____ A p r il______ M a y ______ J u n e ______ Ju ly_______ A u g u s t ____ September . October____ N ovem ber.. December _. M e r c h a n d is e and m is c e lla n e o u s T o ta l 66 72 85 90 79 85 90 105 113 109 115 120 112 115 122 108r 108 109 113r 120 108 121 119 130 131 132 132 112 124 124 125 124 128 114 106 107 122 120 122 124 113 103 108 129 134 123 142 142 145 142 147 129 119 91 107 82 91 92 94 103 148 125 117 146 150 129 130 131 134 133 129 121 122 125 D is tr ic t U nad ju ste d Ad ju ste d 88 U nad ju ste d 112 109 84 57 37 43 48 56 70 75 65 72 79 91 103 97 97 83 90 96 99 116 117 109 117 A d ju ste d 102 110 111 111 O th e r 114 105 89 74 70 81 85 97 96 75 57 58 136 134 117 U nad ju s te d D e p a r tm e n t s to r e s a le s (v a lu e )* » 7 U ta h & So. Id aho Ad ju ste d Ad ju ste d Ad ju ste d 106 98 105 86 140 123 101 72 68 77 86 100 105 100 R e ta il fo o d p r ic e s * D is tr ic t Ad ju ste d 97 89 83 61 64 77 89 U nad ju ste d 134 127 110 86 78 83 88 100 96 108 U nad ju ste d 13 2 .0 1 2 4 .8 1 0 4 .0 8 9 .8 86.8 9 3 .2 9 9 .6 1 0 0 .3 1 0 4 .5 9 9 .0 9 6 .9 9 7 .6 10 7 .9 1 3 0 .9 1 43.4 142.1 146.3 16 7 .4 2 0 0 .3 225 307 329 109 118 147 189 219 232 252 312 836 106 99 106 115 135 177 232 250 280 348 351 253 281 300 302 302 299 278 308 336 343 410 554 310 308 316 320 325 332 328 355 338 331 339 357 320 320 325 321 332 333 332 345 340 348 344 353 343 325 286 366 355 340 343 350 361 341 343 360 358 331 307 285 282 270 248 257 287 319 342 308 304 296 287 286 273 290 318 338 280 1 9 5 .7 1 9 3 .5 1 9 6 .6 1 9 7 .8 19 7 .3 19 4 .8 1 9 6 .5 19 7 .9 2 0 6 .6 2 0 4 .8 2 0 9 .4 2 1 3 .0 275 337 350 380 352 310 2 1 5 .4 101 103 95 90 313 311 319 320 325 330 327 348 336 333 339 352 84 340 111 98 101 102 100 101 P a c if ic N o r th w est 74 66 109 119 139 171 203 223 247 305 330 89 93 96 C a li fo r n ia 104 99 91 70 67 73 104 92 69 D e p t, sto r e s t o c k s ( v a l u e ) 6»7 101 110 120 138 164 196 221 356 101 107 114 137 190 174 178 182 235 295 316 278 1 The terms “ adjusted” and “ unadjusted” refer to adjustment of monthly figures for seasonal variation. Excepting department store statistics, all indexes are based upon data from outside sources, as follows: Lumber, various lumber trade associations; Petroleum and Cement, U.S. Bureau of Mines; Wheat flour, U.S. Bureau of the Census; Electric power, Federal Power Commission; Manufacturing employment, Factory payrolls, and Retail food prices, U.S. Bureau of Labor Statistics and cooperating state agencies; and Carloadings, various railroads and railroad associations. 2 Daily average. * 1923-25 daily average = 100. 4 Excludes fish, fruit and vegetable canning. Factory payrolls index covers wage earners only. • A t retail, end of month or end of year. 6 Los Angeles, San Francisco, and Seattle indexes combined. p — preliminary. r— revised. 7 Revised Series. D ata for earlier periods, by months, available on request. Explanation of revisions appears in this issue. 32 March 1948 FEDERAL RESERVE B A N K OF S A N F R A N C ISCO BANKING AND CREDIT STATISTICS—TWELFTH DISTRICT (amounts in millions of dollars) C o n d it io n it e m s o f a ll m e m b e r b a n k s 1 Year and m onth L o a n s a n d d is c o u n ts C o m l., in d . a g r ie . & T o ta l 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 4,254 4,364 4,479 4,558 4,658 4,755 4,879 4,997 5,158 5,240 5,363 1948 January February 5,413 5,467 In v e stm e n ts2 A ll o t h e r R eal esta te U .S . G o v ’t s e c u r it ie s 647 721 711 635 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 5,363 1947 February March April M ay June July August September October November December F o r p u r c h ., c a r r y ’g s e c s . 668 670 662 686 730 798 864 931 82 76 65 59 51 62 184 343 195 663 664 735 933 870 934 956 1,103 1,882 2,338 327 362 399 460 275 1,000 974 899 885 908 1,431 2,153 121 211 228 309 560 750 2,047 134 1,828 649 2,338 121 2,153 750 A ll o t h e r s e c u r it ie s 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 7,243 458 561 560 528 510 575 587 614 498 486 524 590 541 538 557 698 795 908 872 8,058 7,909 7,677 7,662 7,370 7,375 7,353 7,364 7.361 7.361 7,243 893 894 876 862 871 874 871 7,264 7,021 D em and d e p o s it s a d j u s t e d * ’4 1,234 1,158 984 840 951 1,201 1.389 1,791 1,740 1,781 1,983 2.390 2,893 4,356 5,998 6,950 8,203 8,821 8,928 T im e d e p o s it s (e x c e p t U .S . G o v ’t) 4 1,776 1,915 1,667 1,515 1,453 1,759 2,006 2,078 2,164 2,212 U .S . G o v ’t d e p o s it s 4 36 49 99 148 233 228 167 96 90 127 118 2,263 2,351 2,417 2,603 3,197 4,127 5,194 5,781 5,988 144 307 842 1,442 2,050 303 148 884 872 8,367 8,327 8,334 8,260 8,297 8,366 8,462 8,600 8,722 8,797 8,928r 5,804 5,820 5,837 5,851 5.908 5,888 5,887 5.909 5,949 5,907 5,988 370 396 286 235 103 148 208 216 192 205 148 848 833 8,854 8,495 6,006 6,048 210 68 159 M e m b e r b a n k r e se r v e s a n d r e la te d it e m s 6 Y ear and m o n th R eserv e b a n k c r e d it* C o m m e r c ia l o p e r a t io n s * T reasu ry o p e r a t io n s * C o in a n d c u r r e n c y in c ir c u la t io n 1947 February March April M ay June July August September October November December 1948 January February _ — + — — + + — + + + + + + + + — — + — — — + — + + 34 16 21 42 2 7 2 6 1 3 2 2 4 107 214 98 76 9 302 14 62 2 34 21 234 48 87 23 4 25 14 20 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 — + _ — — + — — + + 23 + 89 + + 154 + 234 + 150 + 257 + 219 + 454 + 157 + 276 + 245 + 420 + 1 ,0 0 0 + 2 ,8 2 6 + 4 ,4 8 6 + 4 ,4 8 3 + 4 ,6 8 2 + 1 ,3 2 9 + 630 25 3 69 14 41 213 78 85 39 0 5 + + + + + + 48 153 ~ — + + + — 133 50 47 49 7 381 124 172 35 33 49 253 244 _ + + + + + + + + + + + + + + — — — + — — — — + — R eserves7 F .R . n o t e s o f F .R .B . o f S .F . T o ta l 6 16 48 30 18 4 14 38 3 20 31 96 227 643 708 789 545 326 206 189 186 231 227 213 211 280 335 343 361 388 493 700 1,279 1,937 2,699 3,219 2,871 2,639 175 183 147 142 185 242 287 479 549 565 584 754 930 1,232 1,462 1,706 2,033 2,094 2,202 171 180 154 135 142 172 201 351 470 418 459 515 720 1,025 1,343 1,598 1,878 2,051 2,085 4 5 4 8 37 84 100 119 70 142 138 257 245 262 103 104 136 59 70 146 126 97 68 63 72 87 102 111 98 102 110 134 165 211 237 260 298 326 32 30 18 10 13 23 23 10 16 3 18 2,765 2,735 2,716 2,714 2,695 2,669 2,685 2,675 2,656 2,653 2,639 1,981 2,003 1,997 1,993 1,992 1,963 2,078 2,095 2,137 2,130 2,202 1,982 1,940 1,934 1,934 1,944 1,956 1,985 2,028 2,046 2,059 2,085 51 61 63 59 51 60 62 80 77 65 70 325 332 309 297 322 305 322 325 346 344 365 113 2 2,541 2,532 2,113 2,045 2,086 2,037 83 57 352 354 T o ta l* 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 B a n k d e b it s in d e x 31 c itie s * R e q u ir e d E xcess U n a d ju sted 1 Annual figures are as of end of year; monthly figures are as of last Wednesday in month or, where applicable, as of call report date. 3 Monthly data for 1947 partly estimated. * Demand deposits, excluding interbank and U.S. G ov’t deposits, less cash items in process of collection. 4 M onthly data partly estimated. 6 End of year and end of month figures. 8 Changes only. 7 Total reserves are as of end of year or month. Required and excess: monthly figures are daily averages, annual figures are December daily averages. • Debits to total deposit accounts, excluding interbank deposits. 1935-39 daily average = 1 0 0 . p— preliminary. r— revised.
@FedFRASER