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MONTHLY REVIEW TWELFTH FEDERAL RESERVE DISTRICT M a r c h 1949 Fe d e r a l R e s e r v e B a n k of S a n Fr a n c i s c o REVIEW OF BUSINESS CONDITIONS the end of the war there have been periodic warnings of an impending recession in both the Dis trict and the country as a whole. Data for the first two months of 1949 indicate that the decline in activity which first became evident here last October has continued and that its scope has widened. This is the first time since the immediate postwar period that a large number of lines of activity have tended to slacken simultaneously. However, it required a combination of normal seasonal factors, se vere winter weather in this District, and some decline in demand to keep various indicators of District economic activity moving downward. Despite a more than 4 per cent drop in employment since the year end, and almost peak postwar unemployment in the District as well as in the country as a whole, a near-record number of people are still employed and industrial output is still at a high level. Prices, continuing the weakening evident late in 1948, have crept downward since the beginning of the year. Despite spectacular reductions in some retail prices to speed clearances, wholesale prices have declined only 2 percent. Food items, declining 5 percent, have been the leader. Price indexes for metals and metal products and building materials reached an all-time high in February and have declined only slightly in recent weeks. There is evidence to indicate that the current decline in business activity is not gaining momentum. Lay-offs were considerably smaller in February than in January, and early data tend to confirm a general expectation of in creased employment in the next few months. Consumer income remains at a high level. Price reductions, induced by continued consumer resistance and the virtual disap pearance of shortages of goods, are tending to pave the way for continued sales and production rather than seri ous curtailment of output. It is true that increasing compe tition is eliminating many marginal concerns. Increasing competition is also forcing the development of greater efficiency of labor and management to meet the problems which accompany price declines. As a result, profit pros pects, although less exhilerating than in recent years, are still a positive part of the business picture. Bank loans to business are down from their late 1948 peak, but their decline levelled off, at least temporarily, in March. There is no prospect of a stringency of bank reserves that would force the banks actively to restrict their credit outstand ing. Taken as a whole most factors in the current business situation do not point toward further expansion, but S in c e neither do they indicate a necessity for serious declines. However, should widespread attempts be made to main tain prices by reducing output and should business invest ment be curtailed more than now seems probable, a new appraisal of business prospects would be necessary. District employment declines sharply. Employment in the Twelfth District declined sharply during January and February, but lay-offs were on the wane early in March, and the possibilities for re-employ ment of substantial numbers of workers appeared good. Most of the decline in employment came during January. Total nonagricultural employment in six of the District states (data for Idaho are not available) fell 4 percent during January, from a little over 5.2 million to 5 million persons. Manufacturing employment in the six states was off more than 50 thousand from December but over a million people were still engaged in the production of goods. Reductions in lumber, food processing, furniture, ferrous and fabricated metals, and machinery accounted for the major portion of this decline. In non-manufactur ing activities, sharp declines occurred in contract con struction and trade, and minor declines in railroad, public utility, service, and government employment. The number of persons out of work increased sharply during the first two months of this year. The number of insured unemployed totaled well over 550,000 in the Dis trict by the end of February. This represented a 60 per cent increase over the number of insured unemployed at the end of 1948 and at the same time last year. Most of this increase (about 150 thousand out of more than 200 thousand) came during January. The much higher level of unemployment this year than last reflects not only a somewhat lower level of activity in a number of lines but also the larger labor force this year. During the first week in March, new claims received at various unemployment offices throughout the District Also in This Issue Interest Rates on Bank Loans to Business Twelfth District Member Bank Earnings and Expenses 32 FEDERAL RESERVE B A N K OF S A N F R A N C ISC O were reported to be slackening. Even though additional layoffs are in prospect in a few lines, greater employment during March appeared quite likely. Construction, lumber production, railroad maintenance, and retail trade all ap peared to be headed for higher levels of activity as weather improves. In addition, apparel employment which increased in February might be expected to gain again in March. Mining operations should be at a higher level than for some months, since the extended strike at a large copper mine in Utah was settled early in Febru ary, and full scale operations were resumed early in March. Twelfth District industries experiencing readjustment A large number of manufacturing lines, particularly those producing durable goods, have reported declining activity. The lumber industry felt the effect of declining demand for lower grades of lumber which forced the closing of many marginal mills, as well as the brunt of heavy storms which forced many continuing operations to curtail production more sharply than usual. Even in the steel industry, more normal demand-supply relation ships have become evident. Ingot production was cut slightly by District producers since the demand for steel ingots for conversion has virtually disappeared. Several District producers had been selling ingots, which they could not process into finished steel, in the export market or to domestic users who then had them converted at mills having the necessary finishing facilities. Not only have gray market premiums declined, but one large Dis trict producer charging premium prices cut prices sub stantially on a number of items late in March. Shipyard activity has continued to decline and there was a slight decrease in employment during the first two months of the year. Declining activity was also reported by metal fabricators and machinery manufacturers. The furniture industry, after several years of peak production, contin ued to cut back its output, and employment continued the decline which started late in 1948. Production of rub ber was also down, employment early this year being about 10 percent below a year ago. Although activity held up fairly well in non-ferrous metals, lead prices were reduced three times during March for a total decline of A y2 cents a pound1. The price reductions were attributed to a reduced output of auto mobile batteries. Zinc prices also fell in March, dropping 1y 2 cents. The decline in food processing during January and February appeared to be mainly seasonal. Apparel production, despite sharper competition and greater con sumer selectivity, was equal to last year's levels. Many construction projects were postponed or inter rupted because of severe weather conditions early this year. The decline in residential construction, however, was considerably more than could be attributed to the weather. The immediate outlook for the construction in dustry looks good because of the large number of projects to be completed as the weather improves. Total dollar 1 They fell another two cents early in April to reach 15 cents a pound. M arch 1949 volume of all urban building permits during January and February, however, was about 25 percent behind last year. The number of dwellings authorized in urban areas in January was 40 percent below last year, and February figures undoubtedly were also well below a year ago. The weather took its toll in the railroad industry, too. Severe losses in traffic resulted from interrupted train schedules which on several occasions delayed train move ments for days. As a consequence employment was cut back in January, and it was early March before many of these employees were recalled. Department store sales drop sharply More conservative consumer spending, which became evident late last year, continued into 1949. In the first two weeks of this year dollar sales in Twelfth District de partment stores ran ahead of 1948, but then fell behind. February sales (after allowing for seasonal differences) were about 12 percent below January and 10 percent be low February 1948. Sales in early March rose slightly over the February volume but were still about 9 percent below 1948. Again the weather played a significant role. In those areas particularly affected by bad weather— the Pacific Northwest and Utah— sales declines were from two to three times the District average during January. They continued to trail the District during most of Feb ruary, but reported better results than other areas late in that month and early March. Despite the decline in dollar sales during February and March, retailers reported that most marked-down items moved very rapidly. The widespread clearance sales dur ing early January probably account for the gain in sales during the first two weeks of the year over the same period in 1948. Credit restrictions on instalment sales relaxed Effective March 7 the down payment and maturity terms on instalment sales covered by Regulation W were relaxed. Minimum down payments on items other than automobiles, including the major household appliances, radios and television sets, and furniture, were reduced from 20 to 15 percent. Minimum down payments on automobiles were continued at 3 3 ^ percent. Maximum maturities on all balances subject to the regulation were extended to 21 months from the former maturities of 15 and 18 months. Listed articles under Regulation W move slowly Sales so far this year of many articles subject to Regu lation W were behind last year. January furniture store sales in the District were 17 percent below the same month of 1948, and February sales were down 14 per cent. During January, department stores reported a slight year-period increase in the dollar sales of furni ture and bedding, a fair increase in the sales of radios and television sets, but a 50 percent decline for major household appliances. In February and also in March, ac cording to preliminary indications, sales of all these con sumer durable goods were below last year, with major M arch 1949 M O N T H L Y R E V IE W household appliances showing the greatest decline. Re ports indicated that inventories of most items subject to the regulation were growing, though furniture stores re ported a slight year-period reduction in stocks during February. It was also noted that an increasing number of price concessions were being made either through direct price reductions or better trade-in allowances. The increased sales of furniture and radios at department stores during January were no doubt a result of the sharp markdowns during that month. Used car prices have been dropping steadily and their price relationship to new cars is more reasonable than last year. Inventories of used cars have grown considerably in the past several months. Use of instalment credit slackens During the first nine months of last year consumer instalment credit outstanding at commercial banks in the Twelfth District increased at a rate of almost 3 percent a month. With the reimposition of Regulation W the rate of increase slackened. In October, consumer instalment credit outstanding declined slightly, and then increased about 1 percent in November and December. In January, however, commercial banks reported the first Decemberto-January declines since 1944. Loans outstanding on paper purchased from automobile dealers, which increased at the rate of more than $5 million a month during the first nine months of 1948, have been increasing at the rate of only $2.5 million a month since September. Direct au tomobile loans have remained almost constant since Sep tember, and loans outstanding to finance other retail pur chases, repair and modernization loans, and personal in stalment loans outstanding have declined slightly. Bank debits down A smaller volume of bank debits in the first two months of this year than in the corresponding period a year ago is another indication of the falling-off in business activity. This is the first such decline in many years. In only three of the major cities in the District— Sacramento, Reno, and Salt Lake City— did debits move contrary to the general trend. In each of these three cities, total bank debits for January and February combined ranged from 5 to 25 percent above the volume for the corresponding period a year ago, compared with a 3 percent decline for the combined debits of the 33 District cities included in the bank debit series. Bank loans decline until mid-March The general slowing down in business activity during the first quarter of this year has been reflected in a decline in total bank loans in both the District and the country as a whole. Loans of District weekly-reporting member banks declined steadily for 11 consecutive weeks follow ing Christmas. This was by far the longest and most pro nounced decline in many years. All major categories of loans except real estate shared in the general decline, with commercial, industrial, and agricultural loans accounting 33 for the greater part of the decrease in terms of dollar amount. Real estate loans continued to grow at a rate slightly above that for November and December, but only about one-third as fast as in the first quarter of 1948. The decline in District loans was at least temporarily reversed, however, in mid-March, when business as well as real estate loans registered small gains in the two weeks ending March 23. Reserves and deposits decline District member bank reserves experienced their usual seasonal decline in the first quarter of this year. The ex tent of the decline by late March was not so large as that of a year ago, however, and the factors contributing to it were quite different. In the corresponding period a year ago, substantial net Treasury receipts in the District were the principal factor which reduced reserves. This year, by contrast, Treasury disbursements in the District about equalled receipts through the third week of March. This resulted, at least in part, from the fact that most tax payers this year are entitled to a refund on their 1948 in come tax payments. Tax payments over and above pre viously withheld taxes are lower this year. Also, some re funds have already been made, which served to increase Treasury disbursements in the District. District banks met part of the drain upon their reserves created by the substantial net Treasury receipts in the first quarter of last year by selling Government securities outside the District. This contributed to a substantial de cline in bank investments during that period and to a net transfer of funds into the District, other than on Treasury account. Since the reverse flow of Treasury funds this year added to District member bank reserves, fewer secu rities were sold outside the District to acquire reserves, and this helped to reestablish the outflow of funds other than on Treasury account which tends to be typical for the District. Demand deposits experienced their usual seasonal de cline in the first quarter of this year. By mid-March the decline was not so large, however, as in the corresponding period a year ago, after allowance had been made for the effect upon deposits of the difference in the behavior of loans in the two periods. Demand deposits of District weekly-reporting member banks declined by $264 million between the end of 1947 and mid-March 1948. Since loans increased by $106 million in the same period, there by operating to increase deposits, the decline in deposits would have been about $370 million had there been no in crease in loans. In the corresponding period this year, deposits declined $440 million. A decline of $153 million in loans contributed, however, to this reduction in de posits. If loans had remained unchanged, the deposit decline would have been approximately $287 million, or nearly $100 million less than the adjusted decline in the corresponding period of 1948. Time deposits increased at about the same rate as they did in the first quarter of last year, but not in sufficient amount to offset the decline in demand deposits. 34 M arch 1949 FEDERAL RESERVE B A N K OF S A N F R A N C ISC O INTEREST RATES O N BAN K LOANS TO BUSINESS n t e r e st rates charged by commercial banks in prin I cipal cities on short-term business loans moved upward during 1948 in both the United States and the Twelfth District. Interest rates by size of loan for the District are not available prior to June 1948, but in the last half of the year, the most pronounced rise occurred in rates charged on large loans amounting to $100,000 or more. The change in rates for loans of less than that amount was negligible, as the accompanying table indicates. This information is based upon a revised series show ing average interest rates charged by member banks in leading cities throughout the country.1 The series covers rates charged by these banks on short-term business loans made during the first two weeks of March, June, Sep tember, and December of each year. The revised series was started in June 1948, and District figures are not comparable with those compiled previously. The figures in the revised series indicate that the in crease that occurred in the last half of 1948 in the aver age rates charged by banks on short-term business loans came primarily in the third quarter of the year. In the fourth quarter, the upward trend in rates levelled off in the country as a whole, while in the Twelfth District average rates declined slightly, except on loans ranging from $100,000 to $199,000 in size. Although comparable figures are not available for the first two quarters of 1948, the available evidence indicates that commercial loan rates rose significantly during that period. In December 1948, interest rates on bank loans of simi lar size were roughly one-fourth of 1 percent higher in major cities in the Twelfth District than in the country as a whole. Former comparisons based upon average rates for all loans, without regard to size, indicated a larger spread than this. It is true that the average rate on loans actually made was considerably more than 0.25 percent higher in major District cities than at large-city banks over the country as a whole, but this is primarily because larger loans, bearing lower rates, are relatively more im portant in some of the major cities outside the District than within it. Rise not confined to rates on bank loans The increase in rates charged by large-city banks on business loans is one phase of the general rise in interest rates that occurred during the year. This increase was the result of a continuing large demand for funds on the part of businesses, consumers, and State and local gov ernments on the one hand, and of national monetary and fiscal policies on the other. As in the previous two years, short-term rates were raised considerably more than long-term rates. Begin ning in October 1947, the coupon rate on new issues of certificates of indebtedness was raised from % of 1 per cent to 1 percent, and in January 1948, the coupon rate iThis series is discussed in the article, “ N ew Statistics o f Interest Rates on Business L o a n s ," which appears in the March 1949 issue o f the F e d e r a l R e s e r v e B u lle tin . A verage I nterest R ates O e a r or ne Y L ess M of B u s in e s s L o a n s M ade b y a t u r in g R e p o r t in g B a n k s D S elected P eriods in in u r in g 1948 (percent per annum) Loans 5 leading cities1 *■— Twelfth District— \ June Sept. Dec. 1-15 1-15 1-15 19 leading cities States----Sept. Dec. 1-15 1-15 t----- United June 1-15 A ll s i z e s ...................................... 3.00 3.20 3.16 2.47 2.60 2.64 Under $10,000 ........................ 4.79 $10,000-$99,000 ................... .... 3.88 $100,000-$199,000 ....................3.02 $200,000 and over................... 2.46 4.76 4.01 3.07 2.74 4.75 3.87 3.21 2.70 4.49 3.47 2.70 2.16 4.53 3.58 2.89 2.29 4.50 3.58 2.97 2.34 1 San Francisco, Los Angeles, Portland, Seattle, Salt Lake City. N o te : The difference between the average rates for all loans in the District and in the United States is due in part to the difference between the two sets of weights used in computing the average rates for all loans. Since large loans, bearing lower interest rates, are relatively less important in the District, the average rate for loans made in major cities in the D is trict is higher than that for major cities in the United States. More de tailed information regarding the weights used in the District series will be supplied upon request. The construction of the United States series is described in the interest rate article in the M arch 1949 F e d e r a l R e s e r v e B u lle tin . was increased to 1 percent. Yields on certificates of indebtedness remained virtually unchanged after that until August 1948, when it was announced that their cou pon rate would be raised to 1 percent in October. These various changes were accompanied by an increase in the rediscount rate of Federal Reserve banks from 1 to 1J4 percent in January 1948, and from 1% to l */2 percent in August. Yields on Treasury bills rose significantly in August, after remaining virtually unchanged during the first 7 months of the year. Yields on long-term Govern ment bonds were not allowed to rise above 2.5 percent, however, following the upward adjustment in yields that resulted from the lowering of the support prices for these bonds late in 1947. As in the case of rates on bank loans, most of the in crease in other rates occurred in the first nine months of the year. Some rates declined in the last quarter, and for certain rates, notably the yields on municipal and on highgrade corporate bonds, this year-end decline resulted in lower average rates for December 1948 than for Decem ber 1947. The yearly averages for all classes of interest rates were higher in 1948 than in 1947, however. The rise in short-term interest rates for Government securities increased the cost of acquisition of bank re serves through sale to the Federal Reserve System of Treasury bills and certificates of indebtedness. It also made these securities relatively more attractive as invest ments for banks. As a consequence, banks increased their rates for loans. Reasons for the revision The revised interest rate series, started in June 1948, provides a more accurate index to changes in rates charged by large-city banks on short-term business loans than had previously been available. The former interest rate series indicated quarter-to-quarter changes in the average interest rate on loans actually made. Those changes, however, do not necessarily correspond to quar ter-to-quarter changes in the interest rates that would be charged on loans with identical characteristics. Interest rates vary considerably by size of loan, as well as by such M arch 1949 35 M O N T H L Y R E V IE W other factors as business and size of borrower, type of security, and maturity of loan. The average size of loans made may shift considerably from one two-week survey period to the next, three months later, and influence the average interest rate. For example, if the size of the loans made by reporting banks happened to be significantly larger in September, say, than in June, the average inter est rate on loans made in September would tend to be lower than in loans made in June, even though the inter est rates charged by banks on various kinds and sizes of loans had not changed at all. In the revised series, differences in average interest rates caused by differences in the size distribution of loans made during the two-week periods included in the quar terly survey are eliminated. This has been achieved by weighting the loans in terms of size groups. The weights used are the same from one period to the next. They were derived from the data obtained in the Reserve System survey of commercial and industrial loans outstanding at member banks as of November 20, 1946. This weighting process leaves intact, however, the influence upon inter est rate comparisons of differences in the other loan char acteristics mentioned above, such as business and size of borrower, and type of security. It is much easier to obtain satisfactory data for some interest rates than for others. Rates that are determined in highly organized markets, such as securities markets, are readily available. But average rates on business loans from banks are more difficult to obtain because such loans lack the standardization characteristic of securities and are more dependent upon individual bargaining between the lender and the buyer. Average rates on bank loans can be obtained only from some form of special report such as that employed in the revised series. While this series does not provide all the information that might be desired about average interest rates charged by banks on busi ness loans, it furnishes the best data that are currently available. TWELFTH DISTRICT MEMBER BANK EARNINGS AND EXPENSES— 1948 current earnings of Twelfth District member banks combined reached a new high in 1948, 17 percent above the 1947 level. Substantially higher loan earnings more than offset a decline in investment income and in creased expenses. Larger net losses and charge-offs— re flecting primarily transfers to build up loan reserves, as authorized by the Commissioner of Internal Revenue in December 1947— absorbed much of the increase in net current earnings and resulted in an understatement of 1948 profits as compared with 1947. Even so, net profits after taxes increased 4 percent over 1947. Net current earnings approached 20 percent of capital accounts, as against a return of 18.2 percent in 1947. Net profits after taxes were 11 percent of capital accounts, compared with almost 12 percent a year earlier, but this comparison is affected by the new provision for loan reserves. Member banks in the country as a whole reported net current earnings 11 percent above, and net profits 4 per cent below, 1947 figures. Returns on capital were also considerably smaller than for District banks. Nationally, net current earnings and net profits were 12 and 7 per cent, respectively, of capital accounts. N et Loan and investment income Earnings on loans, which exceeded investment income in 1947 for the first time in several years, provided a still larger share of all earnings in 1948. Both the amount of loans outstanding and the rate of return increased over S O U R C E S A N D U SE S O F T W E L F T H D IS T R IC T M E M B E R B A N K E A R N I N G S -1 9 4 8 Earnings Earnings Largest banks had more favorable experience The increase in earnings of District banks reflects the experience of the largest banks only, however. Totals for all member banks except the 15 largest reveal quite a different picture: an increase of only 5 percent in net cur rent earnings, and an 18 percent decline in net profits, with a correspondingly smaller rate of return on capital. The largest banks realized a greater percentage increase in loan earnings than did other District banks, and also made considerably smaller charge-offs, relatively, against net current earnings. off* N o te : Because of rounding, “ uses” add to $1.01. Service charge» on 36 M arch 1949 FEDERAL RESERVE B A N K OF S A N F R A N C ISCO P ercent C h a n g e s , 1947-48, in Net losses and charge-offs higher because of establishment of loan reserves S elected E a r n in g s a n d E x p e n s e I t e m s of T w e l f t h D is t r ic t M e m b e r B a n k s , by Earnings on loans. . . Interest and dividends on sec u ritie s........... Total earnings . . . . Salaries and w ages. . . Total expenses . . . N et current earnings. N et profits before income taxes .......... N et profits after taxes S iz e G roup a n d b y A rea A ll 15 largest banks banks + 25 + 27 — 5 + 14 +11 +12 + 17 Other banks +18 — 5 + 15 — + 13 — 14 — 18 + 10 + 12 +21 +10 5 + 9 + 14 +12 + 5 -B an ks in— A riz. Ida. Oreg. & Nev. & Calif. W ash. Utah + 29 + 26 +21 — 4 + 15 — 7 + 10 +12 +20 +10 + 14 +10 +10 — + + + + + 10 — — + — 2 4 7 5 15 16 14 17 2 — 9 1947, but the percentage increase in loan earnings from 1947 to 1948, 25 percent, was only half as large as from 1946 to 1947. Security holdings continued to decline, but the effect upon total investment income was partially offset by a slightly higher rate of return. The drop in investment in come of member banks from 1947 to 1948 was substan tially smaller than from 1946 to 1947. Expenses increased less than earnings Expenses were higher but did not keep pace with earn ings. Higher salaries and somewhat larger staffs resulted in a 10 percent increase in salary and wage payments. Member banks in the District employed not quite 4 per cent more persons at the end of 1948 than a year earlier. Interest paid on time deposits increased, as a result of both a larger volume of deposits and higher rates paid by some banks. R a t io s t o C a p it a l A c c o u n t s a n d R a t e s of R e t u r n o n Net losses and charge-offs were almost three times as large as in 1947. Net recoveries and profits on securities declined, but the principal cause of the larger total net losses and charge-offs was the substantial increase in charge-offs on loans, resulting from the establishment or increase of bad debt reserves by many banks. Net losses and charge-offs absorbed little more than 10 percent of the net current earnings of the 15 largest District banks, but took one dollar out of every four earned on current account by the rest of the banks. Pre sumably the larger banks had made considerably more use of loan reserves in earlier years and needed to make relatively smaller transfers to build them up to allowed levels. Because of the substantial increase in charge-offs on loans and higher taxes on net income, total net profits of District member banks were little higher than in 1947. Banks continued their conservative dividend policies. Dividends were increased, in the aggregate, by about the amount of increase in net profits, but well over half of all profits were not distributed. 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 of dollars) 1946 1947 1948p Percent change 1947-48 Earnings on l o a n s ....................................... Interest and dividends on securities. . Service charges on deposit accounts. Trust department earnings...................... Other earnings ........................................... 138.6 153.9 17.5 12.3 25.7 210.5 129.5 22.4 12.9 26.2 263.8 123.1 27.5 13.6 29.0 +25 — 5 + 23 + 5 + 11 E a r n i n g A s s e t s — T w e l f t h D is t r ic t M e m b e r B a n k s (in percent) Ratios to capital accounts N et current earnings A ll banks ............................................................................. 15 l a r g e s t ............................................................................. Other .................................................................................... Net profits after taxes A ll banks ............................................................................. 15 largest ............................................................................. Other .................................................................................... 1947 1948 18.2 18.0 19.1 19.7 20.4 17.5 1 1.8 11.3 11.7 1 2 .1 1 2 .1 8.7 Rates of return on Loans A ll banks ............................................................................. 15 la r g e s t ............................................................................. O t h e r ................................................................. ..................... 4.5 4.4 4.9 4.7 4.6 5.0 Securities A ll banks ............................................................................. 15 l a r g e s t ............................................................................. Other .................................................................................... 1.5 1.5 1.5 1.6 1.6 348.0 401.5 457.0 + 14 109.3 44.9 65.2 127.1 54.1 77.4 140.9 62.1 86.3 + 1J + 15 Total expenses ......................................... 219.4 258.6 289.3 + 12 N et current earnings ............................... 128.6 142.9 167.7 + 17 N et recoveries and profits (losses — ) On securities ........................................... 5.1 3.3 On loans ................................................... Other ............................................................ — 13.5 6.6 — 13.9 — 0.9 0.5 — 22.4 — 0.3 — + 12 8.2 — 23.2 N et profits before income taxes............ Taxes on net income................................. 123.7 32.2 134.7 42.2 144.5 48.4 N et profits after taxes ............................. 91.5 92.5 96.1 + Cash dividends ........................................... Undistributed profits ............................... 35.1 56.4 37.5 55.0 41.3 54.8 + 10 Total net recoveries and profits. — 5.0 — 1.5 N o t e : Ratios computed from dollar totals, not by averaging individual bank ratios. Balance sheet items used are averages of amounts reported as of beginning, middle, and end of year. Total earnings ......................................... Salaries and wages .................................... Interest on time deposits........................ Other expenses ........................................... p— Preliminary. — + 7 + 15 4 M arch 1949 M O N T H L Y R E V IE W 37 BUSINESS INDEXES— TW ELFTH DISTRICT1 (1935-39 average = 1003 In d u stria l p ro d u ction (ph ysical v o lu m e ) 2 Year and M o n th L um ber 1929_________ 1930_________ 1931_.......... .. 1932_________ 1933_________ 1934_________ 1935_________ 1936_________ 1937_________ 1 9 3 8 ........... __ 1939_________ 1940_________ 1941_________ 1942_________ 1943_________ 1 9 4 4 ............. 1945................. 1946_________ 1947_________ 1948_________ P etroleum * Refined C e m e n t C rude 148 129 112 10 1 77 46 62 67 83 106 113 83 78 76 77 92 94 105 88 110 120 110 99 98 11 0 127 107 90 84 81 81 91 98 105 103 103 103 68 171 146 104 75 75 79 89 117 100 112 118 96 97 96 74 48 54 70 92 114 124 164 194 160 128 131 165 193 112 160 106 75 33 26 36 57 98 135 T o ta l C a li C a r D ep ’ t D ep ’ t m f’g fornia loadin gs store store R etail E lectric e m p lo y fa c to ry (n u m sales s t o c k s 6 food power m e n t 4 payrolls* ber)* (value ) 2 (v a lu e ) prices **1 106 89 88 144 163 188 192 171 137 109 163 153 95 94 96 99 96 107 103 103 104 115 119 132 128 133 116 88 122 111 83 84 82 73 73 79 85 96 105 100 10 1 93 73 54 53 64 78 96 115 "88 100 112 10 2 112 122 10 1 110 96 104 118 155 230 306 295 229 175 184 189 134 224 460 705 694 497 344 401 430 135 116 91 70 70 81 112 74 78 83 88 86 103 109 96 104 88 99 106 96 108 110 104 92 69 66 10 1 109 119 139 171 203 223 247 305 330 354 134 127 110 86 10 1 107 114 137 190 174 179 183 238 300 348 13 2 .0 1 24.8 10 4 .0 8 9 .8 8 6 .8 93 2 9 9 .6 1 00.3 10 4 .5 9 9 .0 9 6 .9 9 7 .6 1 0 7 .9 1 30.9 14 3 .4 142.1 1 46.3 1 67.4 2 0 0 .3 2 1 6 .1 142 141 137 136 109 130 141 144 10 2 110 125 137 144 139 147 149 116 135 151 160 148 159 162 162 149 160 215 98 161 116 275 188 423 144 363 353 2 1 3 .0 144 152 148 133 166 166 164 166 172 168 167 171 218 207 216 216 105 202 10 2 196 110 155 173 171 215 217 232 205 105 99 108 106 107 115 111 12 2 278 283 274 275 263 266 284 289 295 291 295 309 187 187 187 184 180 185 190 194 197 196 194 191 418 417 406 396 406 424 440 455 454 452 449 444 141 130 131 130 123 134 137 141 146 132 134 131r 347r 327 339 362 364 372 365 383 355 336 323 368 360 377 388 386 347 335 328 302 311 333 356 356 2 1 5 .4 2 1 3 .0 108 163 166 158 165 165 165 159 166 161 152 109 104 114 104 128 153 159 155 149 145 141 150 150 151 152 152 153 152 153 123 151 153 153 2 1 6 .0 2 1 7 .6 2 1 6 .6 21 8 .1 2 1 8 .0 2 1 7 .6 2 17.1 2 1 5 .6 2 1 6 .5 104 151 174 184 117 108 128 308 183p 430 106 334 332 2 1 7 .9 1947 Decem ber__________ 1948 January_____________ February-----------------M arch ---------------------April________________ M a y ------------------ ------June_________________ J u ly-------------------------A u g u s t _____________ Septem ber__________ October_____________ November__________ Decem ber___________ 1949 January_____ ____ 12 2 110 Lead* W heat C opper* flour* 2 11 20 2 20 2 113 118 104 93 81 73 98 107 112 11 0 136 167 214 231 219 219 256 284 10 1 116 108 115 123 124 123 114 126 127 137 133 140 134 135 142 136 2 11.6 BANKING AND CREDIT STATISTICS— TW ELFTH DISTRICT (amounts in millions of dollars) C o n d itio n it e m s o f all m e m b e r b a n k s 7 Year an d m o n th 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 L o an s an d d isco u n ts 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 6,056r U .S . G o v ’ t secu rities D em and d e posits a d ju s t e d ' 1,234 1,158 984 840 951 495 467 547 601 720 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 6,368 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 8,736 1,2 0 1 T o ta l tim e dep osits 1,790 1,933 1,727 1,618 1,609 1,875 2,064 2 ,1 0 1 M e m b e r b an k reserves an d related item s* C oin an d Reserve C o m m e rcia l Treasury cu rren cy in b a n k c re d it 10 op era tio n s 11 o p era tio n s 11 c irc u la tio n 10 _ — + 2,267 2,360 2,425 2,609 3,226 4,144 5,211 5,797 6,006 6,062 1948 January February March April M ay June July August September October November December 5,413 5,467 5,510 5,509 5,569 5,598 5,640 5,743 5,848 5,910 5,984 6,056 7,264 7,021 6,945 6,943 6,883 6,859 6,816 6,712 6,394 6,440 6,358 6,368 8,854 8,495 8,452 8,461 8,445 8,464 8,556 8,555 8,661 8,647 8,658 8,736 6,005 6,003 6,018 5,998 6,062 1949 January February 6,009 5,910 6,382 6,306 8,664 8,330 6,082 6,097 6,021 6,063 6,044 6,019 6,008 6,057 6,010 — 21 — 42 — — — — — 2 + + 2 6 1 2,187 2 ,2 2 1 34 16 7 — 3 2 + 2 + 4 + 107 + + 214 98 + 76 9 + — 302 17 + + + — + + — + — + + 14 20 49 9 30 14 15 23 17 12 25 + + 11 2 4 " 0 53 154 175 110 198 — 163 — 227 — 90 — 240 — 192 — 148 — 596 - 1 ,9 8 0 - 3 ,7 5 1 - 3 ,5 3 4 -3 ,7 4 3 - 1 ,6 0 7 — 443 + 472 + + + 48 153 29 75 14 — — 10 — 38 1 + + 427 — 8 — 40 2 — 10 1 7 b 23 89 - 154 - 234 b 150 - 257 b 219 - 454 - 157 - 276 - 245 - 420 bi.ooo -2,826 -4,486 -4,483 -4,682 bl,329 - 630 - 482 + -f + + + + 253 244 19 29 45 - 58 19 12 43 12 98 35 7 45 _ + + + + + + + + + + + + + + 6 16 48 30 18 4 14 38 3 20 31 96 227 643 708 789 545 326 — 206 — 209 _ — — — + 113 — + + + 11 Reserves 175 183 147 142 185 242 287 479 549 565 584 754 930 1,232 1,462 1,706 2,033 2,094 98 10 2 110 134 165 211 356r 344 — 54 4 2,329 2,308 — 10 2 111 353r 354 347 353 342 348 354 356 359 363 355 376 61 2 8 8 68 63 72 87 2,420r 2,20 2 - 17 146 126 97 237 260 298 326 355 2,113 2,045 2,066 2,048 2,068 2,061 2,075 2,065 2,409 2,351 2,323 2,420 2 37 17 26 13 B ank debita index 31 c itie s *»12 (1935-39 100 )* 1 All monthly indexes but wheat flour, petroleum, copper, lead, and retail food prices are adjusted for seasonal variation. Excepting for department store sta tistics, all indexes are based upon data from outside sources, as follows: Lumber, various lumber trade associations; Petroleum, Cement, Copper, and Lead, U.S. Bureau of Mines; W heat flour, U .S. Bureau of the Census; Electric power, Federal Power Commission; Manufacturing employment, U .S. Bureau of Labor Statistics and cooperating state agencies; Factory payrolls, California State Division of Labor Statistics and Research; Retail food prices, U.S. Bureau of Labor Statistics; and Carloadings, various railroads and railroad associations. 2 Daily average. * N ot adjusted for seasonal variation. 4 Excludes fish, fruit, and vegetable canning. Factory payrolls index covers wage earners only. 6 A t retail, end of month or year. • Los Angeles, San Francisco, and Seattle indexes combined. 7 Annual figures are as of end of year; monthly figures as of last Wednesday in month or, where applicable, as of call report date. * End of year and end of month figures. • Demand deposits, excluding interbank and U.S. G ov’t deposits, less cash items in process of collection. M onthly data partly estimated. 10 Changes from end of previous month or year. 11 Minus sign indicates flow of funds out of the District in the case of commercial operations, and excess of receipts over disbursements in the case of Treasury operations. 12 Debits to total deposit accounts, excluding inter-bank deposits. p — preliminary. r — revised.
@FedFRASER