Full text of Economic Review (Federal Reserve Bank of San Francisco) : May 1950

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MONTHLY REVIEW
T W E I FT H F E D E R A L R E S E R V E D I S T R I C T

MAY 1950

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
h e

first several months of 1950 have reflected an opti­

mism in the Twelfth District which contrasts sharply
T
with the falling level of business and comparative pessi­
mism of early 1949. The pick-up in activity continued
through April. The evidence of improvement includes
better retail sales, rapidly declining unemployment,
greater than usual gains in employment, increasing pro­
duction in most industrial lines, and a very high rate of
construction activity.
The decline in business inventories and manufacturers’
new orders during the first half of 1949 stemmed in part
from uncertainty throughout the nation about the level
of consumer expenditures. The anticipated decline in
consumer buying did not materialize, however, and pro­
duction had to be stepped up in the latter part of the
year in order to keep pace with consumption. Construc­
tion activity, particularly in residential building, fell off
considerably in early 1949. By mid-year, however, a
strong upward movement had begun and the number of
housing units started last year reached an all-time record.
Though this District did not fare so well as the country
as a wrhole in construction, the District lumber industry
made a very strong recovery in late 1949. The crux of
the situation was to be found in the fact that consumer
demand did not weaken significantly either for housing
or for consumption goods in total. Following the clearingout of excess inventories, in fact over-reduction in some
cases, industrial production rose well above the level of
the first half of 1949.
The relative stability of personal income last year and
the higher level early this year, together with increased
consumer borrowing, have resulted in increased con­
sumer buying. Production this year has also been on the
increase, except in February when strikes were a factor.
There is little indication, either nationally or in this Dis­
trict, that increased production has as yet led to any
over-accumulation of inventories.
Retail trade advances though soft goods sales lag

Despite the fact that the dollar volume of retail sales
at department stores, other general merchandise stores,
and food stores has lagged behind 1949, total retail sales
have gained in most areas of the District so far this year.
To some extent the gain in total retail trade reflects the




distribution of National Service Life Insurance divi­
dends. However, personal income, excluding the insur­
ance dividends, has been slightly larger than a year earlier
on a national basis, and the District has probably fared
as well as the country. Consequently it does not neces­
sarily follow that, in the absence of the insurance dividend
payments, retail sales would have been significantly below
a year ago.
Durable goods sales ahead of last year

The gains in retail sales have been concentrated in the
durable goods field. Furniture stores in this District re­
ported sales for the first quarter 8 percent ahead of the
same period last year. The Department of Commerce
reported first quarter automobile sales from 25 to 50 per­
cent higher than a year ago for a number of the metro­
politan areas of the District. Lumber and building mate­
rial sales in these areas increased from 15 to 30 percent
during the same period, with the largest increase reported
in Salt Lake City.
District department stores reported a decline in sales
through mid-May of about 2 percent. Soft goods lines
and basement store items (usually soft goods and small
wares) accounted for most of the decline. Men’s and boys’
clothing was the only soft goods line which gained sig­
nificantly. Sales of hard goods, paced by television sets,
were well ahead of last year.
Employment situation improves

In March, District nonagricultural employment virtu­
ally regained the year-ago level, after averaging about 1
percent below in January and February. Nonagricultural
employment during the first quarter was retarded by
several factors, some of which either have been or may

Also in This Issue

Construction— First Four Months of 1950
The Twelfth District Sheep Industry—
I. Sheep Raising
Ownership of Demand Deposits—
Twelfth District

60

FEDERAL RESERVE B A N K OF SAN FRANCISCO

shortly be corrected. First quarter construction employ­
ment fell short of last year because of poor weather in
some parts of the District early in the year, but more
important was the curtailment of atomic energy plant con­
struction at Hanford, Washington. It now appears likely
that these projects will again be in full swing by July, and
that other private and public projects will provide addi­
tional jobs. Manufacturing employment, particularly in
the lumber industry, fell off early in the year owring to the
weather, but by March manufacturing employment in
most District states surpassed the 1949 level. Trade em­
ployment has been ahead of 1949, and the service and
finance industries have remained fairly stable. Transpor­
tation, government, and mining employment during the
first quarter dropped below a year earlier. Mining em­
ployment was affected by the coal strike and a reduction
in nonferrous metal extraction because of poor market
demand, but the nonferrous metal market has improved
considerably in recent weeks.
Several factors contribute to the brighter outlook for
employment. Counter to seasonal trends, nonagricultural
employment increased between January and February in
five of the seven District states. The exceptions were
Idaho and Utah. The coal strike was the major factor
reducing employment in Utah. Furthermore, the District
increases in employment between February and March,
much greater than seasonal, have spread over a wider
area than usual. A number of industries that were dis­
tinctly weak last year shared in the gain. Of equal im­
portance, almost all the reporting labor market areas
indicate further expansion in employment, and it appears
quite likely that during the next few months nonagricul­
tural employment will be ahead of last year. Insured un­
employment in mid-April numbered 317,000, better than
25 percent below the same time last year.
Production in many lines improves

Industrial production showed considerable strength in
the District during the first quarter. Unusually severe
weather conditions retarded output somewhat during
January and February, but in March many industries
were operating at a level of output at least as great as
last year. All nondurable goods industries other than
petroleum had an output volume as good as or better
than March 1949. In the fruit and vegetable canning
industry, prospects were clearly better than last year.
Demand in recent months has been good, and produc­
tion plans indicate an over-all pack equal to or better
than last year’s.
Output in some durable goods lines fell behind a year
ago. Non-electrical machinery production was down
markedly and shipbuilding and repair continued to
decline. In contrast with last year, however, machinery
production has been increasing during the first several
months of this year and additional gains appear likely.
Lumber production has been pushed to the limit per­
mitted by weather and output is likely to increase further.




May 1950

Other forest industries also display considerable activity.
Plywood and planing-mill products face a strong demand.
Producers of Douglas fir doors are reported as being
booked well into the summer months.
Iron and steel output is staying close to capacity levels
with no evidence of any drop in demand. The California
aircraft industry finds itself a little busier now than last
year, and the Washington plants have been maintaining
a steady pace for several months in contrast with an al­
most continuous decline last year.
Business attitudes and plans favorable
to continuing high activity

District businessmen’s plans for plant and equipment
expenditures during the first quarter did not keep pace
with last year’s level, but the outlook for the rest of the
year appears fairly good. In California, planned expendi­
tures on plant expansion actually topped last year in the
early part of 1950. Plans for spending on new plants, how­
ever, failed to match the year-ago level, and this reduced
total planned expenditures below a year ago. In recent
months, however, requests for plant location information
have come into the state at an encouraging rate, and ex­
penditures on new plants may well increase. Information
from Utah indicates that Utah businessmen planned a
good rate of expenditures through April and that in­
quiries from outside the state regarding plant location are
continuing to mount. Opinion in the Pacific Northwest
tends toward the view that business expenditures on ma­
jor projects in that area are near completion; the situa­
tion, however, is regarded as favorable for further ex­
penditures on improvements and expansions of existing
plants.
Business inventories, on the decline during most of
1949, have steadied for the present. Control over buying
is still very close, but further reductions in stocks appear
unlikely. Some business firms regard stocks as somewhat
low relative to current needs, and may increase goods on
hand somewhat later this year. Inventory rebuilding
could play an increasingly important part in the volume
of production. Nevertheless, a high rate of production
will be necessary in any event to meet the level of demand
which has appeared in recent months.
Prices rise somewhat

Since late January the Bureau of Labor Statistics’
weekly index of wholesale prices has been moving up­
ward. Through mid-May, the increase amounted to
about 2.5 percent. The larger increases have come in
prices for farm products and building materials. The
effect of these changes on cost of living items through
March, however, was negligible. Very minor increases
in food prices have occurred nationally and in those
metropolitan centers in this District for which separate
figures are available. Generally, however, the picture
remains unchanged.
In this District price changes have not been apparent
over any wide range of production. Prices of lumber and

May 1950

MONTHLY REVIEW

other forest products stand out as the major area of
change. The best information available indicates an in­
crease in lumber prices of roughly 25 percent for the
lower grades of lumber from their low point late last
summer. Prices for better grades of lumber have risen
considerably less— in one case only 4 percent. Canned
fruit and vegetable prices have firmed considerably since
the first of the year. In April, peach prices were increased
20 cents per case.
Frost reduces fruit crops

Freezing weather during the last week in April did
considerable damage to many crops in Washington, Ore­
gon, Idaho, and Utah. Though the soft fruits suffered the
most, damage extended to many annual crops in these
states.
While final losses will not be known for several months,
damage is reported as moderate to heavy in parts of
Washington and Oregon. Peaches and apricots seem to
have suffered the most during the recent freeze after sus­
taining moderate damage during January and February.
Losses in southern Idaho and Utah were much heavier.
In Idaho, the peach and apricot crops were the hardest
hit. Losses up to 50 percent have been estimated for the
cherry crop which was in full bloom. Apple and prune
injury appears light. Frost damage to sugar beets, how­
ever, caused considerable reseeding and will result in a
smaller crop.
Damage in Utah was undoubtedly the heaviest of any
of the states. Agricultural observers believe the fruit crop
loss the heaviest from frost damage in two decades or
more. Although exact appraisal is still not possible, it
seems certain that the state’s apple, pear, apricot, and
peach crops were reduced at least 50 percent with damage
reported as near 100 percent in the counties around Salt
Lake City.

61

trict, the greatest decrease in that year occurred in Feb­
ruary.
Consumer instalment credit rises more in
District than in nation

The volume of consumer instalment credit outstanding
at commercial banks registered a significant gain during
the first four months of this year in both the District and
the nation as a whole, with the District rate of increase
nearly double the national one. Owing largely to the
slackening in sales of durable goods in the early part of
last year, consumer instalment credit outstanding at com­
mercial banks declined during the corresponding period
of last year in both the District and the country as a
whole.
Real estate loans increase

Nationally, the much larger volume and rate of increase
of construction activity and real estate sales so far this
year have resulted in a substantially greater growth in
real estate loans outstanding at banks through April of
this year than in the corresponding period a year ago.
In the District, on the other hand, the relative gain was
about the same in both periods, despite a somewhat larger
increase in construction activity during the first four
months.
The growth in real estate and consumer loans has
largely offset the decline in business loans, with the result
that the volume of total loans outstanding at weekly re­
porting member banks remained virtually unchanged
through April in both the District and the United States.
Banks throughout the country, as well as in the Dis­
trict, increased their holdings of corporate securities
substantially in the first four months of this year. Their
total loans and investments declined, however, as a con­
sequence of a decrease in the amount of Government
securities held in their portfolios.

Decline in business loans less than last year

The slackening of business activity during the fore part
of last year was accompanied by the first prolonged and
substantial decline in bank loans to business in the post­
war period. The higher and improving level of business
activity in the first four months of this year has also been
accompanied by a decline in such loans, but one of con­
siderably less magnitude than in the corresponding period
a year ago and perhaps less than might be expected on the
basis of purely seasonal factors.
As last year, the decline in the Twelfth District has
been somewhat larger than in the country as a whole. The
outstanding volume of commercial, industrial, and agri­
cultural loans of weekly reporting member banks through­
out the country fell 9 percent in the first four months of
1949, contrasted with only a 3 percent decline in the cor­
responding period this year. In the Twelfth District, the
decrease was 9.5 percent a year ago and 4.6 percent this
year. In both the District and the nation, the sharpest
decline occurred in April. This was also the case last year
for the United States as a whole, but in the Twelfth Dis­




Smaller decline in bank deposits and reserves

Total deposits in member banks declined less in the
first four months of this year than in the corresponding
period a year ago, both in the District and in the country
as a whole. The major factors responsible for this differ­
ence were smaller income tax collections in the first quar­
ter of this year, a virtually unchanged total loan volume
compared with the decline of last year, and the veterans’
insurance refund this year.
Reserves of member banks also declined substantially
less through April this year than last, both nationally and
in the Twelfth District. The major factors affecting bank
reserves in this District are Treasury transactions and
commercial transactions. Net Treasury payments in the
District during the first four months were nearly four
times larger this year than last. Net transfers of funds
out of the District on commercial account were also sub­
stantially greater. The net loss of reserves, however, was
only a third as large as in the corresponding period a
year ago.

62

M a y 1950

FEDERAL RESERVE B A N K OF SAN FRANCISCO

CONSTRUCTION — FIRST FOUR MONTHS OF 1950
the early part of this year business conditions na­
Intionally
and in this District strengthened considerably.
One of the factors underlying the improved business pic­
ture was a record level of construction in this District as
well as in the nation. The upsurge in building was marked
by substantial gains in both private and public building.
Residential building was the dominant factor in the con­
struction picture. A gain of 50 percent in urban residen­
tial building permits in the seven western states and also
in housing construction activity in the nation as a whole
raised the level of total private construction well above
the level of the first four months of 1949. Nationally, but
less so in this District, private nonresidential construction
lagged behind the first four months of 1949. Public con­
struction in both areas continued to grow. Prospects for
the remainder of the year point to a continued high level
o f building, even though some decline may be expected
because of normal seasonal conditions.
A major factor in maintaining the high level of con­
struction, particularly of homes, is the ready availability
of credit. The relative decline in demand for business and
commercial credit since late 1948 has contributed to an
abundant supply of mortgage credit; the conditions
under which it is extended, however, are somewhat more
stringent than in the immediate postwar years. The
Housing Act of 1950, which became law on April 20,
1950, liberalized in some respects the terms for F H A
and V A loans and authorized additional funds for FH A
and F N M A activities.
Nationwide construction volume ahead of last year

During the first four months of this year, a record rate
of construction contributed to the steadily rising level
of economic activity in the United States. Expenditures
'N E W C O N S T R U C T I O N P U T IN P L A C E — U N I T E D S T A T E S , 1948-50
Billions of




for new construction in the first four months of the year
totaled $6.1 billion, 20 percent above the correspond­
ing period last year, and the highest on record for the
four months from January through April. This repre­
sented an annual rate of construction well above $21
billion compared with the total expenditure in 1949 of
$19.3 billion. This record, however, conceals a very sig­
nificant development. Unlike 1949, when construction
also exceeded the previous year, building so far in 1950
reflects a sharply rising volume of private construction as
well as a growing level of public building. In 1949, despite
a record number of housing starts, private construction
expenditures dropped 3 percent behind the previous year,
and in the first four months of last year private building
lagged 4.5 percent.
The 20 percent gain in total construction through April
1950 applies equally to private and public construction.
The gain in private building this year arises almost
entirely from the unprecedented level of spending on
housing. Expenditures on residential building during
the first four months totaled 50 percent more than during
the same period in 1949. Nonresidential construction,
however, declined 8 percent in this period, chiefly because
of a large drop in spending on industrial buildings and
a lesser decline for warehouses, office buildings, and
amusement places. Public construction gained 20 percent
during this period.
District construction industry makes sharp recovery

Comprehensive data on construction expenditures for
the District so far in 1950 are not yet available, but
N ew

C o n s t r u c t io n A c t iv it y , C o n t in e n t a l U n it e d S t a t e s
(in millions)
/—First 4 months-^
1950
1949
$5,102

Type of construction
Total p r i v a t e .........................................................., .

4,616

3,847

Percent
change,
1949-50
+ 20

............................

1,740

+ 20
- f 50

Industrial ..................................................... .
W arehouses, office, and loft b l d g s ....
Stores, restaurants and garages..........
Other nonresidential b u ild in g ..............
Religious .................................................
Educational ............................................
Hospital and institutional ............ .
Social and recreational ....................
Hotels and miscellaneous....................

1,069
399
104
211
355
99
82
44
77
53

—- 8
— 30
—
9
—
3
+ 15
+ 12
—
2
+ 123
— 12
—
6

72

70

949
101
175
673

968
110
200
658
1,255

+
3
—
2
—
8
— 13
+
2
+ 20
+ 133

Residential (excl. farm)

95
205
111
80
98
68
50

Farm construction .......................................
Public u t i l it y ...................................................
Railroad ........................................................
Telephone and te le g ra p h ......................
Other public utility ................................
.,

1,512
93

40

Nonresidential b u ild in g ...................... ..
Educational .................................................
Hospital and in stitu tio n al....................
Other nonresidential building . . . —

310
170
113

474
252
120
102

Military and naval .......................................
H ighw ay ..........................................................
Sewer and water .........................................
M isc. public service enterprises............
Conservation and d evelop m en t...............
A ll other public ............................................

38
310
186
32
203
57

31
288
168
28
180
46

Residential ........................................................

+ 25
- f 23
+ 42
+ H
+ 23
+
8
+ 11
+ H
+ 13
+ 24

S ource: Joint estimates of the Department of Commerce and the Depart*
ment of Labor.

May 1950

63

M O N T H L Y REVIEW

V A L U E O F T O T A L U R B A N C O N S T R U C T IO N A U T H O R IZ E D —
T W E L F T H D IS T R I C T , 1948-50
Millions of

urban construction authorized (covering building per­
mits granted in urban areas of the District) rose almost
25 percent over 1949 during the first four months of this
year and surpassed the record volume of the same period
two years ago. This represents a marked change from
last year. During 1949, construction in the District was
less favorable than in the country as a whole. Total
expenditures on construction activity dropped 10 per­
cent in 1949 from the previous year principally because
of a 23 percent decline in private residential construction.
A slight gain in public construction last year offset a
decline in private nonresidential construction, but failed
to overcome the reduction in residential building as well.
The developments in the District roughly approximate
those in the nation. Residential building permits through
March increased almost 50 percent over last year (the
breakdown by types of construction for April is not yet
available). Nonresidential construction, including private
and public building, led last year’s volume for the same
period by 10 percent.

usually the peak month in terms of the volume of permits
issued, and some decline in future months may be ex­
pected. Nevertheless, the prospects point to a rather mod­
erate seasonal decline in the rest of the year.
The market for houses has been brisk. Many tracts
of lower-priced houses have been sold before construction
was completed. Evidence of any slowness in the market
is confined to houses costing more than $10,000, and even
in these cases the evidence is fragmentary.
The exceedingly good market for houses undoubtedly
stems from a number of factors such as high consumer
income, unsatisfied housing needs, easy credit terms, and
good consumer expectations. Nevertheless, the trend
toward the construction of lower-priced houses since 1948
has probably contributed substantially to the continuation
of a good market. An increasingly large number of houses
built in this District are in the under-$l0,000 class. This
type of house has been selling very rapidly. The lower
price tag on individual houses represents some reduction
in the size of homes and some decline in costs, but at the
same time it appears likely that the features included and
the construction have improved. Recent increases in the
cost of building materials have not yet resulted in any
significant change in selling prices, but some industry
observers are of the opinion that prices may rise.
The trend toward the construction of rental housing
has increased in recent months. This type of housing has
been represented by large apartment houses and in some
cases multiple single and duplex tracts. These rental de­
velopments have been constructed by large investors such
as insurance companies and large residential builders.
The demand for moderately-priced rental units is strong
and further expansion in this line of building is likely if
costs can be held in check. Reports indicate that the
demand for the more expensive rental units recently con­
structed is not very strong, and future construction may
V A L U E O F U R B A N R E S ID E N T IA L C O N S T R U C T IO N
A U T H O R I Z E D —T W E L F T H D IS T R IC T , 1948-50

Residential construction in District leads increase

In contrast with early 1949, District residential con­
struction authorized this year has shown substantial in­
creases over the previous year. The dollar volume through
March gained 60 percent over last year and reached a
level slightly below that of the record-breaking construc­
tion in the same months of 1948. Preliminary data for
April indicate that a high rate of residential building con­
tinued and that the volume for the first four months ex­
ceeded the comparable figure for 1948. The level of con­
struction in itself is encouraging, but other factors lend
considerable reassurance to the basic strength in the out­
look. One significant element in the current situation rests
in the fact that builders are reported as having plans for
a continued high volume of home building. March is




1948

1949

Source: U . S. Department of Labor, Bureau of Labor Statistics.

1950

64

FEDERAL RESERVE B A N K OF SA N FRANCISCO

have to be channeled into units renting for less than $100
a month.
Though the construction of public housing nationally
was twice the 1949 rate during the first four months of
this year, the effect of the Housing Act of 1949 has not
been important in this District. A few communities, prin­
cipally San Francisco and San Bernardino, have had
funds reserved for their use. As yet, however, no con­
struction has started under the most recent program.
It is quite likely that very little public residential con­
struction will be started in the District this year.
Nonresidential construction makes good progress

The 10 percent gain in the first quarter for nonresi­
dential construction in the Twelfth District over the same
period in 1949 is somewhat greater than the national
change, if both private and public nonresidential con­
struction are lumped together. In three areas of private
spending on nonresidential construction, however, the
District comes out with a pattern quite different from
the national one. During the first quarter, the dollar
value of permits granted in this District exceeded the
1949 figure for factories and other industrial buildings,
stores and other mercantile structures, and office build­
ings. In each of these cases national spending declined
for both the first quarter and the four-month period
through April. Other private spending on construction
in the District followed a course nearly parallel to the
national pattern. It may be assumed, therefore, that
private nonresidential construction has fared somewhat
better in this District than nationally. At the same time,
no basis exists at present for predicting any marked
decline during the balance of the year in spending on
private nonresidential construction.
Construction of schools remained the most important
nonresidential activity in terms of the dollar value of
permits granted in the District. In the first quarter, how­
ever, March permits failed to show the unusual gain
recorded between February and March 1949. In fact, the
dollar value of permits issued in March for school con­
struction declined from the February level this year.
Expenditures on other public buildings, however, in­
creased over last year.
The outlook for public nonresidential construction in
this District appears good. Available information points
to increasing construction of conservation projects, high­
ways, sewer and water projects, and hospitals. In recent
months construction of atomic energy installations has
expanded and present indications point to further in­
creases. The construction of schools and other public
buildings is expected to continue at a high rate.
Mortgage credit in plentiful supply

Available evidence indicates that the current high level
of construction activity is not likely to suffer in the near
future from lack of sufficient credit. This applies not only
to the supply of credit for mortgages on single houses,
but also to the availability of funds for other types




M a y 1950

of private construction and for public construction of
various sorts.
While in most areas the conditions under which resi­
dential mortgage credit is extended are somewhat more
stringent than they were in the immediate postwar period,
its supply is still plentiful and credit terms are easy. The
pronounced shift toward the construction of less expen­
sive houses coupled with liberal credit terms has made it
possible in many areas of the Twelfth District to buy a
house for a smaller down payment than is required on a
new automobile. The recently-passed Housing Act of
1950 liberalized in some respects the terms for mortgage
loans insured by the Federal Housing Administration or
guaranteed by the Veterans’ Administration.
The volume of residential mortgages outstanding in
the nation has risen markedly and continuously during
the postwar period. Preliminary estimates indicate that
mortgage loans made on 1- to 4-family nonfarm homes
during 1949 equalled the peak of $10.8 billion reached in
1948, thereby raising the total of such mortgages out­
standing to $37.2 billion.
Shifts in interest rates and lending patterns

In the postwar period, lending institutions have been
able to extend credit for the purchase of homes under
three varieties of mortgages: loans guaranteed by the
Veterans’ Administration, loans insured by the Federal
Housing Administration, and conventional loans carry­
ing no Government guarantee or insurance. The last type
has accounted for approximately two-thirds of all home
mortgages recorded during the past three years. Public
attention has been concentrated, however, upon the terms
prescribed by law and administrative regulation for V A
and F H A mortgage loans.
Throughout the postwar period the maximum rate of
interest permitted on loans guaranteed by the V A has
been 4 percent, although since August 1948 the Veterans’
Administrator has had the authority to raise the rate to
4.5 percent. The peak year for the making of V A loans
was 1947, with a sharp drop in volume in 1948 and a still
further decline in 1949. On a monthly basis, however,
February was the low point in 1949, and the volume has
risen almost continuously each month since.
Among the factors producing the sharp drop in V A
loans during 1948 and the subsequent upward movement
since February 1949 has been the trends in yields on
alternative investments, especially on Government securi­
ties. Yields on both short- and long-term Government
securities began to rise in the latter part of 1947, and
throughout 1948 were at a substantially higher level than
in 1947. This rise in yields on Government securities
made 4 percent V A mortgage loans relatively less attrac­
tive as investments, and consequently lending institutions
were less willing to make such loans during 1948. Late
in 1948, however, yields on Government securities began
to decline, and for 1949 as a whole the average was sig­
nificantly lower than in 1948. This had the effect of mak­
ing 4 percent V A loans relatively more attractive as

Ma y 1950

M O N T H L Y RE V IEW

investments and lending institutions started making such
loans in increasing volume.
Government secondary market

Another factor of prime importance in stimulating the
making of V A loans during 1949 was the reestablishment
of a Government secondary market for such loans in
1948. Such a market had existed prior to June 30, 1947.
Congress abolished it for a year, and then reestablished
it in June 1948 by permitting lenders to sell to the Federal
National Mortgage Association 25 percent of their V A
mortgages made after April 30, 1948. The same limita­
tion was also applied to F H A mortgages, for which the
FN M A had maintained a secondary market since 1938.
In August 1948, another law increased the proportion to
50 percent and also made insured mortgages on apart­
ment projects eligible both for sales to the F N M A and
for inclusion in the base on which the 50 percent was to be
figured. A law signed on October 25, 1949 removed all
limitations upon the sale to FN M A by individual lenders
of V A loans not in excess of $10,000 each and written and
guaranteed after that date.
During 1947 and 1948, most of the F H A mortgages
for the purchase of homes were written under Title VI
of the National Housing Act and also carried only 4 per­
cent interest, plus 0.5 percent for mortgage insurance.
Title V I was allowed to expire on April 30, 1948, but a
large volume of commitments was issued under it before
the deadline. Parts of it were revived in August 1948, but
the insurance of mortgages for the purchase of individual
homes was shifted largely to the provisions of Title II of
the National Housing Act. The authorized rate of interest
under this title was 4.5 percent, plus 0.5 percent for
mortgage insurance.
The differential in interest rate of 0.5 percent between
currently-made V A and F H A loans during part of 1948
and all of 1949 resulted in lenders selling primarily V A
loans to the Federal National Mortgage Association.
During 1949, its purchases consisted of two-thirds V A
loans and one-third F H A loans.
In recent months, the Federal National Mortgage A s­
sociation has embarked upon an active program of selling
some of its mortgage holdings. In March, its sales
amounted to one-half of its purchases for the same month.
Virtually all of its sales have consisted of F H A rather
than V A loans, however.
Housing Act of 1950

The Housing Act of 1950, signed by the President on
April 20, 1950, made several significant changes in the
provisions affecting both F H A and V A loans. Upon
signing the bill, President Truman announced that the
Federal Housing Administrator, under authority granted
in the National Housing Act, was reducing the rate of
interest on F H A loans from 4.5 percent to 4.25 percent
effective April 24, 1950. The intent of this action is to
narrow the differential in rates between F H A and V A
loans.




65

The new law also contains a provision designed to
assure the availability of V A guaranteed loans carrying
4 percent interest. This is accomplished by authorizing
the Veterans’ Administration to make direct loans to
veterans at 4 percent in case private funds are not avail­
able in the area for such financing. This provision is to
become effective July 20, 1950, and is scheduled to end
June 30, 1951. Individual loans cannot exceed $10,000
and the aggregate amount is limited to $150 million.
Several other important changes were made in the
provisions relating to loans guaranteed by the VA . Under
the former law, the V A could guarantee up to 50 percent
of a mortgage loan, with the maximum guarantee limited
to $4,000. The new law raises the percentage which may
be guaranteed to 60 and increases the maximum amount
of guarantee to $7,500. Second mortgages guaranteed by
the V A in conjunction with first mortgage F H A loans
will not be granted after December 31, 1950, or sooner if
the Veterans’ Administrator so decides. The maximum
maturity of V A home loans is increased to 30 years,
compared with the former 25 years.
Numerous changes were made in the provisions affect­
ing F H A loans, of which only a few of the more im­
portant ones will be indicated here. Section 2 of Title I
of the National Housing Act, under which property im­
provement loans may be insured by FH A , expired March
1, 1950. This section was revived, made retroactive to
March 1, and extended to July 1, 1955. The aggregate
amount of such loans that may be insured is fixed at $1.25
billion. Changes were also made in Title I affecting rela­
tively small mortgages on new houses.
The provisions of Title II, under which the bulk of
the currently-written F H A loans are now insured, were
changed in numerous ways. In principle, the changes
are designed to authorize somewhat larger mortgages
on the least expensive houses, and slightly smaller mort­
gages on medium-priced homes. Provision is made, how­
ever, for larger mortgages based upon the number of
bedrooms in a home, a type of measure not formerly
used.
Certain changes were also made in the provisions of
Title II and Title V I relating to the insurance of mort­
gages on large-scale rental projects. Section 608 of Title
VI, which provided mortgage insurance for such proj­
ects, lapsed on March 1, 1950. The new law, however,
authorized an additional $500 million of insurance for
any Section 608 applications filed on or before March 1,
1950. New applications for this type of insurance will be
handled under Section 207 of Title II. The provisions of
this section were made somewhat more stringent than
they had been by requiring larger equity outlays by the
owner.
The insurance authorization under Title II is increased
by $1 billion by the new law, with an additional $1.25
billion available if approved by the President. This raises
the authorization from the former $6.75 billion to $9
billion.

FEDERAL RESERVE B A N K OF S A N FRA NC ISCO

66

At the end of March of this year, the Federal National
Mortgage Association held mortgages totalling $1 billion,
and its undisbursed commitments to purchase mortgages
amounted to another $1.5 billion, thereby exhausting its
gross authorization of $2.5 billion. The new law granted
another $250 million in funds to F N M A . It also termi­
nated F N M A ’s authority to make advance commitments
to purchase mortgages.

M ay 1950

The over-all intent of the Housing Act of 1950 is to
make the terms for mortgage credit somewhat easier than
before, especially on lower-priced houses. This comes at
a time when residential construction is already at peak
levels. Since the current high level of activity is straining
productive facilities, the recent liberalization of credit
terms will serve to increase inflationary pressures in that
sector of our economy.

THE TWELFTH DISTRICT SHEEP INDUSTRY—I. SHEEP RAISING1
raising has been an important agricultural pur­
suit for many centuries, and early became an impor­
tant segment of agriculture on the Spanish peninsula. It
was here that the fine-wool Merino breed was evolved.
This breed was eventually to serve as the foundation stock
for the extensive flocks that populated the New World
after 1800. The sheep industry became so important to
Spain that she jealously guarded her breeding stock from
exportation and established liberal laws in favor of flock
owners. Towards the end of the eighteenth century, how­
ever, the Spanish control of its fine-wooled Merinos was
gradually weakened. Some breeding stock found its way
to France. Numerous other lots were smuggled out to
the Americas. These exportations resulted in the develop­
ment of the improved Merino strains. Because of its graz­
ing habits, its strong instinct to flock, and the high quality
of its wool, the breed proved particularly profitable to
exploitation of the natural grass resources of the new
frontiers— western United States, southern Argentina,
Australia, and New Zealand.
heep

S

Beginning nearly a century ago, sheep have played an
important part in the agricultural development of the
western states. The northwest boundary treaty with
Great Britain in 1846 and the treaty with Mexico in 1848
established American ownership of a vast expanse of land
west of the Rocky Mountains. The natural grass re­
sources which were opened to American occupation with
the acquisition of this territory gave impetus to a rapid
expansion in the grazing of livestock.
From the original Spanish flocks introduced via Mex­
ico through the mission program and the “ rancheros”
who followed, the industry had its beginning in California
and Arizona. In Utah and surrounding areas it was estab­
lished with the early Mormon colonies. In the Pacific
Northwest, sheep arrived overland following the Oregon
pioneers in the 1850’s and ’60’s. During the following two
decades, sheep were established on the intermountain
ranges of Nevada and Idaho in the wake of the trail flocks.
In the beginning, the profitableness of western sheep
production was based essentially on the sale of wool.
Wool, as a storable commodity, could be held from sea­
son to season for speculation and could be shipped long
distances via the slow methods of transportation exist­
ing at the time. The Merino was well adapted to the
1A second article on the sheep industry will deal primarily with the market­
ing of Twelfth District lambs. This will be followed by a discussion of the
wool situation.




production of fine wool under range conditions. These
sheep were efficient grazers on the far flung ranges; they
flocked well on the unfenced bedding ground at night ;
and their wool grew rapidly from one shearing to the
next. They also travelled well to and from seasonal pas­
ture areas.
As population continued to expand in the United States
after 1900, the demand for meat steadily increased. The
production of lamb became a more and more important
aspect of the industry, and the sale of lamb and mutton
came to contribute the greater share of the income from
sheep raising. The British or mutton breeds gained in
popularity. Of the medium wool groups, Hampshire
Southdown Suffolk breeds became popular; of the long
wool groups, Cotswold, Lincoln, and Leicester. Cross
breeds were developed— Corriedale, Panama, Columbia,
and a number of others— in an effort to produce a profit­
able meat carcass while sacrificing as little as possible the
desirable wool characteristics of the Merino strains. In
most range areas, a percentage of Merino blood has been
retained to preserve the strong flocking instinct required
in sheep management under range conditions.
Character of District production

Sheep are raised in all Twelfth District states. Within
this area, the structure of the industry is essentially one
of range operations. The regulation of the free range
through the formation of the Forest Service of the De­
partment of Agriculture in 1905 and the establishment
of the Grazing Service of the Department of the Interior
in 1934 required basic adjustments in early production
methods. The creation of these regulatory Government
bureaus resulted in the pattern of operation becoming
more stable through the institution of range control. They
brought an end to the days of the free open range, and
eliminated the competition for favorable grass which had
resulted in overstocking and depletion of the forage. Their
establishment wrote the final chapter to the wars between
sheep and cattle interests. They also brought to an end,
however, the possibility of starting “a sheep spread” with
only a small band of ewes, a camp outfit, and a willingness
to be alone.
Other factors have also influenced District sheep pro­
duction during the last 40 years. When flocks could
be trailed long distances to slaughter centers, they
were marketed as mature sheep. Good slaughter condi-

M ay 1950

M O N T H L Y R E V IE W

67

THE 195 0 S E A S O N TO DATE

Range conditions over the District were generally favorable for
livestock during the winter of 1949-50. Most areas of the inter­
mountain region experienced good wintering conditions as con­
trasted to the severe weather of the previous year. In central and
western Washington and Oregon, range feed was retarded by
cold and heavy snow, but developed favorably over most of A ri­
zona and California. In California valley and foothill areas where
growth of grass was retarded by dry weather, late rains improved
pasture to a marked degree.
Lambs in the Pacific Northwest have made relatively good
growth to date, considering the tardy season, but will probably be
marketed later than usual as a result of unfavorable weather
during March. Marketing from the early lamb producing area
in Arizona progressed at a slower rate during the current season
than a year ago, but May 1 Department of Agriculture reports
indicated that shipments were nearly completed.
Spring lambs in California were reported in good condition as
of May 1, and the percentage of fat lambs is expected to be higher
than a year earlier. Southern San Joaquin Valley lambs started
to slaughter centers in mid-March and the bulk is expected to
have been moved by the end of April, followed by volume ship­
ments out of the Sacramento Valley through mid-May. May and
June shipments from the central coast area will be considerably
reduced from last year. The total lamb crop will probably be
smaller than in 1949 as a result of the smaller number of breeding
ewes on hand.
Federally inspected slaughter of sheep and lambs in the first
quarter of 1950 was down 11 percent from the corresponding
period last year. The reduction resulted primarily from smaller
slaughter during the first two months of the year. Slaughter dur­
ing April and May, however, was above last year. Total slaughter
of sheep and lambs is expected to be somewhat less for 1950 than
for 1949, reflecting the smaller over-all lamb crop. Production of
lamb and mutton during the first two months of 1950, as could be
expected, declined, but March production was estimated to be 7

percent above the corresponding period last year. Average weight
of sheep and lambs slaughtered so far during the current year has
run above 1949 levels. Average yield per carcass was up about 6
percent during the first quarter, indicating higher finish in fed
lambs marketed during the period.

tion was a secondary consideration to wool production.
The offspring not sold one season yielded another wool
clip and could be sold the next. Young ewes were held
for flock expansion or disposed of to other breeders.
Grass was cheap, and capital investment therefore was
essentially limited to livestock. As the west became settled
and the public domain reduced, an increasing investment
in real estate was required, often exceeding the value of
the breeding flock. It was no longer practical to retain
each year’s increase. Sheep-men were able to adjust
successfully to these changing circumstances, however,
because of the extension of rail transportation and the
demand for meat by an expanding population.

area may be distinguished from those in California and
in Arizona. To a lesser but increasing degree, sheep are
raised in farm flocks, notably west of the Cascade range
in Washington and Oregon, in the northeast corner of
California, and in scattered localities in Utah.

Prices on slaughtered lambs moved generally upward in early
May, though at levels approximately 7 percent below a year ago.
Good to choice spring lambs averaged $27.42 cwt. at Chicago
during the first week in May as against $29.42 cwt. at this time
a year ago. Receipts were predominantly spring lambs, though
a few old-crop wooled lambs were still arriving.
Production of shorn wool in 1950 is expected to approximate
that of the previous year. Stock sheep numbers declined 2 percent
in 1949, but fleeces in the current season will attain average
weights as contrasted to last year when severe weather in some
areas caused heavy losses and adversely affected wool growth.
Production of pulled wool will probably be lower in 1950 than
last year as a result of the expected reduction in total slaughter
of sheep and lambs.
Price support for the 1950 clip will be at 90 percent of the parity
price of wool on March 31, 1950, or approximately 45^ per pound
(farm basis) as compared with 42.3^ in 1949. The Agricultural
Act of 1949 requires that wool be supported at a sufficient level
between 60 percent and 90 percent of parity to encourage produc­
tion of 360 million pounds of shorn wool. In 1949 production of
shorn wool was 216 million pounds, grease basis, the record low
since 1879.
Trading in greasy domestic worsted wool has been active and
prices were above support levels. Some large District clips in
Nevada and Utah were recently contracted for at between 62 and
64 cents per pound, grease basis ; other clips ranged lower depend­
ing on the quality and length of staple.1
1 U S D A , Market New s Livestock Branch, M ay 2, 1950.

Intermounfain area

Patterns of Operation

Between the Cascade and Sierra Nevada Mountains
in the west and the Rocky Mountain chain to the east
lies the vast intermountain area. This region offers a
variety of grazing for District flocks, being a sagebrush
— short grass— shrub plateau of relatively high altitude
extending from eastern Washington and Oregon, across
southern Idaho, and over Nevada and Utah to the north­
ern highlands of Arizona. This is principally an area of
range flock operation where a large surplus of market
lambs is produced in conjunction with a valuable wool
clip. These are ranges of the primary producer. The gen­
eral pattern of operation which identifies the industry in
this intermountain region is one of movement of flocks
from winter quarters to Federal or state lands (or some­
times to private leases) in the spring of the year, thence
on to the summer pasture in the national forests, again
a transfer to lower ranges in the fall, and back to home
quarters or desert ranges in the winter.

The pattern of operation in Twelfth District sheep
raising is related to the natural forage characteristic of
the western range. Range operations in the intermountain

Idaho: The Snake River Valley of southern Idaho
from Payette on the western border as far east as Idaho
Falls serves as the winter ground for many flocks. Hay

Meat production is now the more important factor.
Consequently, successful lamb raising and marketing
under present day conditions necessitate close supervision
by competent and technically trained management. The
expanding District population is increasing competition
for the use of the remaining public domain by other than
livestock interests. The use of farm flocks as a means of
agricultural diversification is increasing in some District
areas. Nevertheless, the sheep industry in the Twelfth
District is still essentially pastoral in character.




68

FEDERAL RESERVE B A N K OF S A N F R A N C ISCO

and feeds are raised in the valley bottom. This is the
principal shed-lambing area of the District where the
ewes, which have been bred to lamb in January and
February, are winter fed and lambing is done under sheds.
With the arrival of spring, movement starts over the
Federal grazing lands toward the nearby national forests
where operators have their respective summer grazing
permits— north and east within the state or south to the
Humboldt National Forest in Nevada. Lambs are sold
off the summer pastures, three-quarters of which are
marketed as fat, averaging from 85 to 90 pounds. Those
which fail to fatten are pastured on the valley beet or
stubble fields in the fall or finished in the feed lots. Many
of the flocks are cross-bred ewes which are mated to
black-face mutton breeds.
The southwestern desert plateau of Idaho, most of
which is public domain, provides winter grazing for some
sheep from western Utah, eastern Oregon, and northern
Nevada. Usually an area of moderate winters, supple­
mental feeding of concentrated feed is necessary to aug­
ment the desert forage. Lambing is necessarily later than
in the shed area.
Utah-Nevada: The pattern of land settlement in Utah
introduced the raising of sheep in conjunction with other
operations of farm village communities. Farm flocks are
still prevalent in the state, but Utah is fundamentally a
pasture area of sparse range, the greater portion of which
is within the confines of Federal lands. Sheep arrived in
the area with the early Mormon colonists and proved
adaptable to the forage of the region. The early flocks
of Spanish and French Merino blood established a hardy
foundation stock in the dry climate of the high plateaus.
The English breeds later found considerable favor as
central markets developed for mutton carcasses.

The national forests cross the center of the state of
Utah in a northeast-southwesterly direction. Within their
altitudes exist a number of valleys where production of
feed, in conjunction with other crops, allies crop farming
and livestock production. The national forests also con­
tain extensive areas suitable for summer grazing. On the
desert areas, east and west of the national forests, extend
the lands of the Grazing Service. The importance of range
sheep production in the state rests upon the complemen­
tary nature of these two areas of natural feed. In contrast
with farm flock enterprises, which usually have no allot­
ment on the public range and consequently are required
to maintain their sheep on home-grown feeds through the
winter, range operators winter their bands on Federal
leases. Storm hazards exist, and severe winters peri­
odically cause high death losses. One of the most severe
in the history of western range management was experi­
enced in 1948-49.
There is much overlapping of grazing ranges in the
intermountain states. The desert reaches of southern
Nevada serve as the winter range for flocks from the
forest reserves of the state or for sheep entering from
western Utah. The Arizona strip north of the Grand




May 1950

Canyon receives Utah flocks for the winter. Some Idaho
sheep summer in the Nevada forests. From western
Nevada irrigated areas, where hay is raised for winter
feeding, sheep cross into California forests of the Sierra
Nevadas for summer pasture. Also, out of eastern Wash­
ington flocks are shipped to Idaho and Montana summer
ranges.
Eastern Oregon and Washington: East of the Cas­
cades considerable numbers of sheep are raised, though
they have been much reduced since prewar years. The
Okanogan highlands of Washington produce some of the
best pasture of the state and serve as summer grazing for
the cross-bred ewes from the southern lambing area. Good
quality fat lambs are marketed off grass in late summer,
principally during September. In south central Washing­
ton, the Columbia Basin, with its adequate feed resources
of alfalfa and wheat, serves as winter quarters for flocks
which summer on the highlands, or on the mountain
ranges to the east.

South of the Columbia River in the wheat and semiarid areas, three-fourths of Oregon’s sheep were grazed
prior to 1940. During recent years, however, the industry
has been shifting to the Pacific side of the Cascades, so
that presently the larger share is run west of the moun­
tains. The use of lambing sheds, and the alfalfa, grains,
and wild hay produced in the Blue Mountain area, make
possible the production of early fat lambs in the north­
eastern district. On the high semi-desert ranges to the
south, later lambing takes place in the open, usually in
April and May. Flocks graze over the public ranges and
move on to allotments in the national forests. Lambs are
marketed off the high ranges in September averaging
between 80 and 85 pounds.
O regon farm flock production

On the Pacific side of the Cascade Range in Oregon,
starting from Curry, Coos, and Douglas counties along
the Rogue River, through Lane, Benton, Linn, Polk,
Yamhill, and Marion counties along the Willamette Val­
ley, about 60 percent of the state’s sheep are raised. This
is the farm flock area. Relative to the rest of Oregon, the
percentage of sheep in this section is steadily increasing.
In 1940 over 76 percent of the sheep were run under
range conditions east of the mountains. Presently, Doug­
las County in the southwest has the largest sheep popula­
tion of any county in the state.
Farm flocks in the District are small flocks, often man­
aged in conjunction with other agricultural pursuits such
as dairying, hay, and crops. Small numbers are grazed,
usually not more than a few hundred, within the confines
of pastures and cut-over timber lands which are under
fence or where migration is limited by topographical con­
ditions. In this Oregon coast area there is some grazing
on national forest lands by larger flocks under range
conditions, but these are in the minority. As a result of
smaller flocks, less uniformity of breed is found in this
locality. Coarse-wool breeds— Cotswold, Lincoln, Co­

M ay 1950

M O N T H L Y R E V IE W

lumbia, and Romney— which are more adaptable to the
damp climate, predominate in the south. In the north
Willamette Valley some mutton types of good quality
are raised— Shropshires and Hampshires. Sheep are not
herded in this area, and operators run their flocks on
owned or leased land, much of which is former timber
land which has been burned or logged-over. Because the
climate is mild, ewes are bred to lamb in February and
March, unattended by herders. Fat lambs are sold off
grass in the May-July period to Oregon and California
markets.
Closer surveillance and accessibility to the farm flock
make management practices possible which are more dif­
ficult to apply under open range conditions, such as para­
site and disease control, or breeding and lambing control.
Shearing, however, sometimes poses a difficulty to the
farm flock manager. Operators of large range bands are
able to arrange for contract shearing at a central gather­
ing place by crews of professional shearers, and in such
manner accomplish this important task at the most ad­
vantageous time. Farm flocks, being widely dispersed
and composed of a small number of animals, do not ofier
a continuity of employment to large crews, so that pro­
fessional shearers are more apt to concentrate on areas
of greater sheep population. The manufacture of im­
proved one- and two-man portable shearing machines,
and shearing training programs for students and farm
owners, are helping to overcome this problem.
California

The irrigated valleys and extensive ranges and forests
of California carry more sheep than any other state in the
District. Feed-lots in the state also produce the largest
number of fat slaughter lambs.
The leading sheep producing district in California is
the Sacramento-San Joaquin or Central Valley area. The
greater portion of the state’s early lamb output originates
in this region. Ewes are bred to lamb between November
and February depending upon the weather characteristics
of each locality. The earliest production originates on the
upper reaches of the San Joaquin Valley. The Central
Valley and its foothills are a grass area of high carrying
capacity from the first fall rains until late spring. Sheep
graze throughout the winter and lamb in the open in the
foothill areas or on the native pastures of the Sacramento
Basin or uplands of the San Joaquin Valley floor. In May,
sheep-men in the Sacramento Valley transfer their flocks
to the national forests of the Sierra Nevada Mountains
for summer grazing. Many sheep in the Central Valley
area spend the summer and fall in the valley on irrigated
pastures, stubble fields, and crop-land refuse after the
completion of harvests. Operations in the foothills of the
San Joaquin are similar to those in the Sacramento Val­
ley. Sheep are also wintered and lambed in the alfalfa
fields and native pastures of the valley floor. Some flocks
move out in the spring to the westside plains, and to
sugar beet fields in summer and fall. Other flocks are




69

transferred in the spring to range on the Mojave desert,
in years of favorable feed conditions, and from there to
the summer forest ranges. Range in the valleys is pri­
vately-owned or leased. Flocks can be closely surveyed,
making for a high lambing percentage. Lamb crops aver­
aging 140 percent are not uncommon. This high per­
centage, plus good quality stock and the fast weight gains
made on the excellent natural grasses of the region, is con­
ducive to the production of early maturing milk-fat lambs
which command a premium price at a season of scarcity.
The northern mountains of the state are also an area
of important sheep production. Mendocino and Hum­
boldt are the leading counties in this area. Methods of
operation differ considerably from other areas of the
state. Except for some summer grazing in the national
forests, ranges are mostly large, privately-owned and
fenced pastures within which the sheep are allowed to
roam at will. There is some farm flock operation in this
district. Grass in the area is not so nutritious as that of
the valley sections so that lambs do not attain the fine
finish of the valley product, and many go out as feeders.
Ewes lamb on the range, usually in February and March,
and the lambs are marketed in early fall.
Shasta, Lassen, Modoc, Mono, and Inyo are sheep
producing counties of considerable importance in which
most flocks are grazed on the national forests in summer
and wintered at the home ranches on hay.
Arizona
Sheep ranchers within Arizona follow various methods
of operation, and graze their flocks from the desert low­
lands to altitudes of 10,000 feet on summer pastures. The
basis of most flocks are fine-wooled Rambouillet ewes.
These are usually bred to mutton-type rams for the pro­
duction of early lambs. A large percentage of Arizona
flocks are summer grazed in the high mountain elevations
which cross the center of the state in a northwest-south­
easterly direction. The ewe bands winter to the north
and south of this range. Flocks which come from the
north of these mountains winter in the open on the high
Colorado River plateau.
Because winters in this area are rather severe, the
ewes are bred to lamb late— usually in May— and shear­
ing takes place in June or July. Lambs are marketed in
the fall, principally as feeders, for the late lambing season
is not conducive to fat-lamb production. The number of
sheep in this area has been greatly reduced during the
past decade, sheep having been displaced by expanded
cattle operations during recent years of high beef prices.
The eastern portion of this north district is grazed by
Indian flocks on the extensive reservations. Indian-owned
flocks are estimated roughly to represent one-half of the
state's sheep. These sheep are of more mixed breeding,
producing a coarse, light wool. They yield a wool clip of
about two-thirds the usual weight of other fleeces.1 Some
1 “ Arizona Agriculture 1949” — Agriculture Experiment
sity of Arizona, Tucson.

Station, Univer­

70

of the meat and wool produced on the reservation is con­
sumed by the Indian tribes themselves, though feeder
lambs are exported during the fall and much wool dis­
posed of through traders making yearly pilgrimages to
the area.
The colorful migratory trail movements of the large
sheep bands of the state's southern operators over the
Forest Service driveways have been greatly curtailed in
recent years. Bands from the pastures of the Salt River
Valley and desert foothill winter range areas graze over
the allotted driveways in late spring on their way to the
summer mountain feed and return again to winter feed
in the fall of the year. The long drive south during the hot
autumn season occurs at a time when ewes are on the
way to the lambing ground. Also, on the northern trek,
flocks trailing from the greatest distances are pressed
for time to arrive on the summer breeding grounds, and
the later bands must travel on over-grazed trails. Increas­
ing costs of operations make a high lambing percentage of
great importance, and the difficulties encountered by use
of the stock driveways have encouraged a greater use of
rail and truck facilities.
There are two methods of handling flocks which winter
in the southern half of the state. Bands are taken either
to the alfalfa and irrigated fields of the Salt River Valley
or to the desert foothills between the valley and the
northern mountains. In either case, the climate being
mild, they are wintered in the open. Flocks on the pasture
areas lamb early, usually in November and early De­
cember, and are sheared in February and March. Fat
slaughter lambs are sold in early spring to take advantage
of the usual seasonally high market. Bands from the foot­
hill area lamb somewhat later, usually in February, are
shorn shortly afterwards, and produce a high percentage
of early summer fat lambs sold off the ranges.
Arizona sheep numbers have been gradually reduced
so that by 1950 there were less than a third of the number
of stock sheep that grazed the state's ranges in 1920.

California, Idaho, Utah, and Washington are the chief
lamb feeding states of the Twelfth District. In California
the largest concentration of lamb feeding is centered in
the Los Angeles area where lambs are fattened in com­
mercial feed yards. The same type of operations are car­
ried on in the San Francisco Bay area and extend into
the lower Sacramento Valley. There are two other im­
portant lamb feeding areas in the state : the permanent
irrigated pasture areas of the Imperial Valley and the
Stockton-Oakdale district in the Central Valley. From
northern California and out of the ranges of neighboring
states, large numbers of feeder lambs are imported and
finished in these pastures and on nearby stubble and
sugar beet fields.
Considerable lamb feeding in commercial feed lots is
also practiced in other District states, in the lower Snake
River Valley of Idaho, in the Yakima area of Washing­
ton, and in the small irrigated valley areas of central Utah.
Commercial lamb feeding has been a significant factor
in the marketing of District-grown hay and grains, as well
as of the expanding supplies of agricultural by-products
from cotton, sugar-beets, and other farm products used
as feed.

Dependence on the Public Domain
In all District states, Federal rural lands constitute a
large portion of the grazing area. The degree of depend­
ence on this source of feed, therefore, has had a direct
influence on management practices and methods of opera­
tion. District sheep ranching is directly influenced by
policies of public land administration, by the location,
size, and accessibility of grazing allotments, by climatic
variations, and by the location and productivity of pri­
vately-owned or -leased lands.
Approximately one-fourth of the total land area of
continental United States is Federally-owned, consisting
primarily of the residue from the public domain disRural land
holdings
in Federal
ownership1

District lamb feeding

Depending on the forage characteristics and variations
in seasonal pasture conditions, between a quarter and a
third of all western range lambs each year do not attain
sufficient flesh to be marketed for slaughter without ad­
ditional feeding. On this fact rests the basis of the lamb
feeding industry. Fed lambs constitute the main source
of lamb supply on the nation's markets after the seasonal
inventories of range fat lambs have been exhausted, be­
tween late fall and early spring.
The production ranges of the District supply many
thousands of feeder lambs which are fattened each year
both within the District and east of the continental divide.
Within the District the feeding of lambs is an important
aspect of the sheep industry. California markets are the
chief outlets for District lambs fed through the late fall
and winter seasons, though northwest markets are of
growing importance.




M ay 1950

FEDERAL RESERVE B A N K OF S A N FR A N C ISCO

A r iz o n a ...................................................
California ..............................................
Idaho .....................................................
Nevada ...................................................
Oregon ...................................................
U tah ........................................................
W ashington .........................................

Land area
of state

Percent of
land area
Federally
owned

(acre s)

(acres)

53,391,856
45,515,337
34,608,970
59,865,852
32,603,627
38,386,018
15,127,004

72,691,200
100,353,920
52,997,120
70,273,280
61,664,000
52,701,440
42,865,280

73
45
65
85
53
73
35

435,546,240

64

Twelfth District ................................ 279,498,664

1 United States Department of Agriculture, Bureau of Agricultural Eco­
nomics, “ Federal Rural Lands,” June 1947, table 25.

tributed under the nation's various land laws. These Fed­
eral lands, of multitudinous types, are administered for
the public benefit by a number of governmental agencies.1
The grazing of livestock is recognized as one of the pri­
mary uses of over 300 million acres of public land on
1 Rural land holdings in Federal ownership, by primary administrating agen­
cies in 1948, were administered by the U . S. Forest Service, Bureau of
Land Management, Office of Indian Affairs, National Park Service, B u­
reau of Reclamation, Soil Conservation Service, Fish and Wildlife Service,
Farm Security Administration, W a r and N avy Departments, Tennessee
Valley Authority, and other agencies. In 1946 the functions of the Grazing
Service and the General Land Office were consolidated into the Bureau of
Land Management.

M ay 1950

which approximately 20 million head of livestock (prin­
cipally sheep and cattle) are grazed some part of the year.1
Nature of Federal lands in Twelfth District

Over 61 percent of the rural lands in Federal owner­
ship in the United States are located in the Twelfth Fed­
eral Reserve District and of the total District land area,
64 percent is in Federal rural holdings (see table). Nearly
70 percent of all public land incorporated into grazing
districts is found within the states of the Twelfth District
as are also half of all national forest lands, many of which
are open to grazing some months of each year.2 The
greater portion of these vast Federal tracts are moun­
tainous or arid and therefore not suitable for farming. In
varying degrees, however, they are adaptable to the
growing of natural grasses which serve as the raw mate­
rial for the production of a considerable portion of the
nation’s meat supplies. The forage growth is seasonal
in character and therefore of value to western meat and
wool production essentially when used in conjunction
with the feed resources of privately-held pasture or haygrowing areas.
Pasture lands incorporated into Federal grazing dis­
tricts are generally lands of lower elevations and are often
used in the spring and fall seasons in conjunction with
the summer pasture areas of the higher elevations on the
national forests. Consequently, to many of the Twelfth
District’s sheep operators, the holding of adequate graz­
ing privileges in either or both national forests or Bureau
of Land Management ranges is the determining factor in
the management plan. The possession of such privileges
and their extent and location are closely allied with the
location and type of private holdings or leases where
winter feed reserves are made available to breeding flocks.
In most areas, grazing privileges on the public domain
cannot be acquired by sheep-men without proof that suffi­
cient feed resources are available to insure year-round
operation for the number of animals covered by permit.
Grazing privileges

The holding of grazing privileges places upon oper­
ators the responsibility of adhering to range-management
practices which conform to the beneficial-use standards
established by the administrating agencies. These require­
ments are based upon the concepts of sustained-forage
yield and the multiple-use purpose of public lands. Graz­
ing privileges are granted for a specified number of sheep
and run for either one year or ten years (depending upon
type of privilege) with provision for renewal. Fees are
assessed on a per-head per-month or a per-acre basis.
Grazing privileges are transferable with the sale or dis­
posal of the operating unit. In general, the cost of grazing
livestock on the public domain is considerably less than
the cost of owning comparable range, as is indicated by
the high cash value placed upon grazing privileges when
1 Estimates are for 1945, made by the Bureau of Agricultural Economics,
USDA.
2 Acreage figures taken from the B A E report, “ Federal Rural Lands —
1947,” Table 25.




71

M O N T H L Y R E V IE W

a sheep ranch is sold. Most public ranges are of lowcarrying capacity, frequently badly depleted, and, in many
areas, remote from transportation. From the standpoint
of profitable operation, however, private lands of the
same character usually will not warrant the investment
of the capital necessary to increase their carrying capacity
significantly.
Use of Federal grazing lands

A rough estimate based on the most recent available
annual figures gives some indication of the extent to
which Twelfth District flocks rely upon Federal lands for
their grazing needs. During 1948 approximately 19 per­
cent of the total sheep months (based on the number of
sheep inventoried in the District on January 1) were
spent pasturing on grazing-district lands, and another
6.5 percent were spent in the national forests. In other
words, at least 25 percent of the total sheep months in
1948 were spent utilizing the natural forage of the public
domain.
The public domain is used to a greater extent in
Nevada and Utah than in other District states. In 1948
grazing-district lands were occupied for 46 percent of
the annual sheep months required by Nevada flocks, and
the national forests were used for 8 percent. In Utah the
shares were 54 percent and 7 percent, respectively. Public
lands are also used extensively in Idaho and Arizona, but
are less significant to the sheep industry on the Pacific
Coast.1

Stock Sheep Numbers
Records of the number of stock sheep on United States
farms and ranches are available for as early as 1867.
Since that pioneer date of the American range-sheep
industry, the number of stock sheep has fluctuated, at
approximately 8- to 12-year intervals, between a high of
51 million head in 1884 and a low of 27 million on January
1, 1950. Beginning in 1924, the trend of the stock sheep
population in the United States as a whole was upward,
and numbers were built up to over 49 million head on
January 1, 1942. Following this second record high, in­
ventories declined to a new low on January 1, 1950.
In the Twelfth District, the upward swing in stock
sheep numbers which occurred during the late 1920’s
reached its peak in 1931. A gradual decline during the
next decade or so was succeeded by a more rapid and
continuing decline beginning in 1942. Between 1942 and
1950, the number of stock sheep in the Twelfth District
dropped 46 percent to a low of 5.6 million head.
Reasons for declining numbers

Although an eight-year decline is not inconsistent with
the cyclical fluctuations in stock-sheep numbers over a
long period, it is significant that it took place during a
1 Considerable numbers likewise grazed on Section 13 lands (Bureau of
Land Management lands not incorporated into grazing districts). Figures
for numbers grazed on these lands are not available. Grazing on stock
driveways on Federal lands and grazing on Indian lands and on stateowned lands are also not included in these figures.

72

FEDERAL RESERVE B A N K OF S A N FRA N C ISCO

S

to ck

S

h eep

in

T

w e lfth

Arizona ..........................................................
California .....................................................
I d a h o ...............................................................
Nevada ..........................................................
Oregon ..........................................................
Utah ...............................................................
Washington .................................................
Twelfth District .......................................

D

is t r ic t

S

tates

Numbers on
f-------- January 1-------- Percent
(in thousands)
change
1942
1950
719
382
— 46
2 ,9 7 7
1,602
— 46
1,858
990
— 46
698
435
— 37
1 ,5 7 7
671
— 57
2,137
1,284
— 39
583
298
— 48
10,549

United States ............................................................

5,662

— 46

....

— 45

M ay 1950

S H E E P A N D L A M B S — U N I T E D S T A T E S A N D T W E L F T H D IS T R IC T .
J A N U A R Y 1, 1924-50
Million* of

time of strong demand for meat and record domestic con­
sumption of apparel wool. This was occasioned by a num­
ber of factors, some of which have been more pronounced
in the Twelfth District than in the country as a whole.
Although wool prices were pegged in 1942, as part of
the Federal price control policy at levels higher than the
yearly average which growers had received in over two
decades, prices of competing farm commodities proved
more attractive in many instances. In California and
Arizona, where large numbers of sheep are wintered and
lambed on rented pastures, field crops— cotton, flax, and
sugar beets— offered strong competition for land use.
Planting of marginal land to wheat in some District areas
was also expanded. Sheep-men viewed with uncertainty
the long-term outlook for continued price support on
wool and were apprehensive of the Federal Government’s
interest in a continuing low tariff policy. Production
factors too, were influential in reducing the number of
sheep in the District. As a band of ewes represents an
investment of $30,000 or more at present prices, reliable
and competent labor is essential to flock management
under range conditions. Turned out on the range in the
sole care of one or two herders for long periods, sheep
require the supervision of skilled and experienced labor,
possessed of a high degree of knowledge of the habits,
grazing requirements, and characteristics of the animals
under their care. During and since the war, competent
herders have been scarce. Higher wages have been avail­
able in other fields of employment. The isolation and pri­
vation of a shepherd’s life has not been conducive to
attracting younger hands, and immigration laws have
restricted foreign immigrants who formerly replenished
the supply.

During and since the war, production costs have risen
sharply and relatively more than in some alternative
fields of agriculture. High levels of industrial employ­
ment and high wages were more influential in increasing
the per capita demand for beef, as industrial workers are
beef-eaters rather than consumers of lamb and mutton.
As a result, the farm price of beef in 1947 had increased
293 percent over the 1935-39 average and the farm price
of veal calves 242 percent. During the same period, how­
ever, the price of lamb rose 236 percent, sheep 160
percent, and wool only 106 percent. Consequently,
where grazing conditions were suitable, many sheep-men
switched to cattle raising after liquidating their flocks.
These are the primary factors that have been influen­
tial in reducing the nation’s stock-sheep numbers to the
lowest point in an 83-year period. In the future, agricul­
tural adjustments may possibly reverse the recent down­
ward trend in over-all numbers. However, further re­
strictions on the use of the public domain for livestock,
continuing high operating costs, large capital require­
ments, and skilled labor shortages will probably continue
to encourage a reduction in large-range operations.
Reclamation and irrigation developments may increase
the number of farm flocks within the District. It is not
likely, however, that District ranges will ever again graze
as many stock sheep as in the past.

OWNERSHIP OF DEMAND DEPOSITS—TWELFTH DISTRICT
n

January 31, 1950, total demand deposits of individ­

Ouals, partnerships, and corporations in the Twelfth
District were practically unchanged from the year before,
according to the Federal Reserve System’s recent annual
survey. In the District, the level of total demand deposits
has shown but little change since 1946. This year’s total
is virtually the same as in 1946, and only 2 percent below
the 1948 peak. A decline in personal deposits this year
was offset by gains in holdings of businesses, particularly
financial businesses. In the nation, personal nonfarm de­
posits as well as total demand deposits increased 1 per­
cent.




Financial businesses increase balances by $80 million

Financial businesses, and particularly insurance com­
panies, increased their demand deposits the most. In the
Twelfth District, insurance corporations swelled the size
of their deposits by almost 18 percent, while District
financial businesses as a group increased theirs by 10
percent. For the nation as a whole, demand deposits of
financial business were up 7 percent, also the largest per­
centage increase for any of the groups analyzed.
Non-financial business registered no appreciable net
change in demand deposit holdings in the Twelfth Dis­

M ay 1950

trict during the year, as retail and wholesale merchants’
commercial balances were reduced 2 percent while de­
posits of manufacturing and mining firms and other
non-financial enterprises rose slightly. In the United
States as a whole, retailers’ and wholesalers’ deposits
were drawn down only negligibly and non-financial busi­
nesses increased their total demand deposit holdings by
2 percent.

P e r c e n t C h a n g e s , J a n u a r y 19 4 9 -J a n u a r y 1950,
D e p o sit s

Total domestic business

Large accounts up, others down

In terms of the size of accounts, the changes in owner­
ship of Twelfth District demand deposits tended to offset
one another. Total balances in accounts over $25,000 in­
creased 3 percent, while combined figures for all other
accounts declined 2 percent. These changes closely reflect
the changes in deposits of financial businesses and of
individuals, described above. Deposits of financial busiD

is t r ib u t io n

by

T

O

w n e r s h ip

w e lfth

D

I n d iv id u a l s , P a r t n e r s h ip s ,

of

is t r ic t

D

e m a n d

an d

U

D

D

...

in

D em and

C o r p o r a t io n s —

-------Size of account------Balances Balances
$10,000over
25,000
$25,000
—3
+ 2
—2
— 3
—2
+ 7
—2
+ 2
—9
+ 14
—3
+ 4
0
0
— 3
— 5
—2
+ 3

—2

..
.

and

is t r ic t

Balances
under
$10,000
.. . . — 2

. . .

— 5

Total
+
—

2
2

+

3
0
4-10

+ 2
— 2
— 4
0

1 Non-profit associations, foreign deposits, and trust funds of banks.

nesses are of course predominantly in accounts over
$25,000, and these large financial accounts swelled by 14
percent during the year; in fact, the entire net addition
to financial deposits took place in this size category. Con­
trariwise, the entire net reduction in personal checking
balances took place in accounts under $10,000, which
comprise over two-thirds of total personal demand de­
posits ; combined totals for all larger personal accounts
were unchanged since January 31, 1949.
It is worth noting, however, that in the under-$l 0,000
and $10,000-$25,000 categories, not one of the District
economic groups analyzed registered a net increase in
demand deposits. In the largest deposit size group, $25,000 and over, only merchants and "other” depositors (a
residual classification of bank trust funds, non-profit
organizations, and foreign holders) had net withdrawals
during the year.
Combined demand deposits of Twelfth District bank­
ing offices in each size group changed less than 1 percent,
except the very smallest (banking offices with total de­
posits under $1 million), whose demand deposits of
individuals, partnerships, and corporations exceeded the
year-ago level by 7 percent.

e p o s it s

S

n it e d

w elfth

Type of holder
Manufacturing and mining
Retail and wholesale trade
Other non-financial .................
Total non-financial ...............

Individuals reduced their personal accounts in Twelfth
District banks for the third successive year, by 2 percent
or $60 million. The decline may be attributed to several
factors. Some consumers apparently spent more than they
received during the year, and some individuals apparently
transferred funds from their checking accounts into other
assets such as savings accounts or securities, judging
from the continued growth in time deposits of banks and
in balances at savings and loan associations. Both in the
District and in the nation, farmers’ deposits declined
relative to total personal demand deposits. In the Twelfth
District, the decline in farmers’ deposits accounted for
one-third of the decline in personal deposits; the nation,
personal deposits other than farmers’ actually rose. For
Twelfth District farmers, the drop represents the third
successive year-to-year net reduction in their commercial
balances, and presumably reflects in large part declining
agricultural prices and cash receipts.

s t im a t e d

of

T

Individuals' accounts reduced in District

E

73

M O N T H L Y R E V IE W

of

ta te s

,

on

I

n d iv id u a l s

S

elected

D

,

P

a r t n e r s h ip s

ates

,

a n d

C

o r p o r a t io n s

,

1947-50

(in millions)
-Twelfth District-

'

-United States-

Jan.
1949
$1,160
1,600
1,070

Jan.
1950
$1,180
1,560
1,100

% change
Ja n .1949
to Jan. 1950

Other non-financial ........................................... ........................

1,010

Jan.
1948
$1,160
1,650
1,100

Total n on-financial......................................... ........................

3,690

3,910

3,830

0

770

4,700

4,600

4,690

+

800
2,820

770
2,740

750
2,700

—
—

Type of holder
Manufacturing and mining

Feb.
1947
...........................

79

Total domestic business ............................. ........................

4,420

Jan.
1950
$17,600
13,300
9,300

#> change
J a n .1949
to Jan. 1950
+ 3
0

+
—

2
2

+

3

Jan.
1949
$17,100
13,400
8,900

3,840

0

39,400

40,200

+ 2

850

4 -1 0

7,200

7,700

4-7

2

46,600

47,900

+ 3

3
1

7,100
22,000

6,800
22,300

— 4

+4

4-1

Total p e rso n a l................................................... ........................

3,690

3,620

3,510

3,450

—

2

29,100

29,100

Other1 ........................................................................ ........................

440

400

450

430

—

4

5,200

5,000

0
__4

T o t a l ................................................................................................

8,550

8,770

8,560

8,570

0

80,800

82,000

4-1

1 Non-profit associations, foreign deposits, and trust funds of banks.
N o te : Figures will not necessarily add to totals because of rounding.




74

FEDERAL

RESERVE

B A N K

OF SA N

May 1950

F R A N C IS C O

B U S I N E S S I N D E X E S — T W E L F T H D IS T R I C T 1
(1935-39 average = 100)
Year
an d
m o n th

In d u stria l p ro d u c tio n (ph ysical v o lu m e )2
Lum ber

1929.................
1 9 3 1 ................
1932.................
1933.................
1934.................
1935.................
1936_________
1937.................
1938.................
1939_...............
1940.................
1941.................
1 9 4 2 ...............
1943............... ..
1944.................
1945.................
1946.................
1947_________
1948_..............
1949_________

Petro e u m 3
C ru d e
R efined C e m e n t

L e ad 8

W heat
C opper8 flour3

C a li­
C a r­
T o ta l
D ep’ t
D ep’ t
m f’g
fo rn ia loadin gs
R eta il
store
store
E le c tr ic e m p lo y ­ fa cto ry
(n u m ­
sales
stock s
food
pow er
m e n t 4 payrolls4 b er )2
(v alu e)2 (valu e)5 prices8

148
77
46
62
67
83
106
113
88
110
120
142
141
137
136
109
130
141
144
136r

129
83
78
76
77
92
94
105
110
99
98
102
110
125
137
144
139
147
149
147

127
90
84
81
81
91
98
105
103
103
103
110
116
135
151
160
148
159
162
167

110
74
48
54
70
68
117
112
92
114
124
164
194
160
128
131
165
193
211
202

171
104
75
75
79
89
100
118
96
97
112
113
118
104
93
81
73
98
107
103

160
75
33
26
36
57
98
135
88
122
144
163
188
192
171
137
109
163
153
140

106
101
89
88
95
94
90
99
96
107
103
103
104
115
119
132
128
133
116
104

83
82
73
73
79
85
96
105
102
112
122
136
167
214
231
219
219
256
2*4
303

1949
February____________
M arch ______________
April________________
M a y _________________
June_________________
J u ly............................. ..
August______________
Septem ber_________
October_____________
November__________
D ecem ber----------------

115
131
141
143
146
136
135
140
139
147
149

152
153
152
149
148
146
144
144
141
140
140

170
176
169
170
174
162
165
166
158
161
156

173
195
212
215
219
217
209
208
200
200
196

107
120
124
126
118
98
93
84
77
89
105

129
169
167
159
138
131
121
136
136
145
140

118
102
82
100
104
108
109
108
104
101
89

1950
January_____________
February____________
M a rc h ______________

121
131
148

140
139
138

161
157
151

178
179
201

123
118
121

168
164
168

104
91
91

“ 88
100
112
96
104
118
155
230
306
295
229
175
184
189
186

111
73
54
53
64
78
96
115
101
110
134
224
460
705
694
497
344
401
430
423r

135
91
70
70
81
88
103
109
96
104
110
128
137
133
141
134
136
142
134
126

112
92
69
66
74
86
99
106
101
109
119
139
171
203
223
247
305
330
353
331r

134
110
86
78
83
88
96
108
101
107
114
137
190
174
179
183
238
300
346
323

13 2 .0
10 4 .0
8 9 .8
8 6 .8
9 3 .2
9 9 .6
1 00.3
1 0 4 .5
9 9 .0
9 6 .9
9 7 .6
1 0 7 .9
1 30.9
1 43.4
142.1
146.3
167.4
2 0 0 .3
216.1
2 0 9 .6

297
295
303
304
315
299
310
308
306
299
306

185
187
189
189
188
186
186
185
185
183
182

423
412
412
415
419
423
429
437
435
421
424

103
118
126
134
139
120
138
138
124
129
128

314
328r
335
340
335
329
333
326
337
319
339

327
342
331
320
313
302
309
333
330
331
315

214.1
2 1 3 .3
2 1 5 .6
2 1 1 .0
2 0 9 .9
2 0 6 .3
2 0 5 .7
2 0 7 .3
2 0 5 .5
2 0 5 .7
2 0 2 .5

322
313
299

179
182
184

417
421
427

96
108
125

316
323
321

323
338r
353

2 0 6 .4
20 4 .1
2 0 3 .4

B A N K I N G A N D C R E D I T S T A T IS T IC S — T W E L F T H D IS T R IC T
(amounts in millions of dollars)
Year
and
month
1929
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

Bank
Condition items of all member banks7
rates on
Loans
Demand
Total short-term
U .S .
business
deposits
and
time
Gov’t
loans9
discounts securities adjusted8 deposits
2,239
1,898
1,570
1,486
1,469
1,537
1,682
1,871
1,869
1,967
2,130
2,451
2,170
2,106
2,254
2,663
4.068
5,358
6.032
5,925

495
547
601
720
1,064
1,275
1,334
1,270
1,323
1,450
1,482
1,738
3,630
6,235
8,263
10,450
8,426
7,247
6,366
7,016

1,234
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
8,922
8.655
8,536

1,790
1,727
1,618
1,609
1,875
2,064
2,101
2,187
2,221
2,267
2,360
2,425
2,609
3.226
4,144
5,211
5,797
6,006
6,087
6,255

1949
March
April
M ay
June
July
August
September
October
November
December

5,899
5,811
5,738
5,762
5,707
5,729
5,853
5,873
5,919
5,925

6,208
6.230
6,357
6,330
6,548
6,846
6,863
6,909
6,944
7,016

8,147
8,157
8,154
8,006
8,139
8,221
8,273
8,317
8,511
8,536

6,102
6,109
6,112
6,179
6,179
6,170
6,186
6,196
6,157
6,255

1950
January
February
March
April

5,901
5,893
5,946
5,937

7,123
6,999
6,923
6,881

8,620
8,311
8,167
8,289

6,244
6,262
6,303
6,285

Member bank reserves and related items10
Reserve
bank
credit11
+
—

—
+
+
—
+

4+
+
+
+
—
+
—

43.20

+

3.27

—

.................

+

‘ *3.24*
.................

3.14

4*
—
+
+

3.16

+
—

+
3.36

—

+

34
21
42
2
7
2
6
1
3
2
2
4
107
214
98
76
9
302
17
13

Coin and
Commercial Treasury currency in
operations12 operations12 circulation11
__

Bank debits
index
31 cities3»18
Reserves

(1935-39=
100)2

0
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
931

b
23
- 154
- 234
- 150
- 257
- 219
h 454
- 157
- 276
- 245
- 420
-1,000
-2,826
-4,486
-4,483
-4,682
h i,329
4- 630
- 482
+ 378

6
48
30
. 18
4
+ '
4- 14
4- 38
3
20
+
31
44- 96
4- 227
4* 643
4* 708
4- 789
4- 545
32Ö
— 206
— 209
65
—

175
147
142
185
242
287
479
549
565
584
754
930
1,232
1,462
1,706
2,033
2,094
2,202
2.420
1,924

146
97
68
63
72
87
102
111
98
102
110
134
165
211
237
260
298
326
355
350

15
6
8
0
20
30
13
2
12
40

+
+
+

34
127
202
53
213
194
41
95
21
32

+

6

+
+
+
4+

109
94
5
130
40
37
92
2
30

—.
4+

31
11
37
0
16
1
9
7
16
8

2,299
2,264
2,128
2,063
1,997
1,832
1,837
1,831
1,854
1,924

364
354
345
351
344
332
336
351
349
376

48
5
2
28

-

92
34
223
126

+

62
10
16
4

1,892
1,848
1,842
1,821

354
360
373
360

+

5
7
4- 204
f- 106

44-

—

444—
—

4—

4-

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.
* Daily average.
* N ot adjusted for seasonal variation.
4 Excludes fish, fruit, and vegetable canning. Factory payrolls index covers wage earners only.
5 A t retail, end of month or year.
6 Los Angeles, San
Francisco, and Seattle indexes combined.
7 Annual figures are as of end of year; monthly figures as of last Wednesday in month or, where applicable,
as of call report date.
8 Demand deposits, excluding interbank and U .S. G ov’t deposits, less cash items in process of collection. Monthly data partly
estimated.
9 New quarterly series beginning June 1948. Average rates on loans made in five major cities during the first 15 days of the month.
10 End of
year and end of month figures.
11 Changes from end of previous month or year.
“ 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.
13 Debits to total deposit accounts, excluding inter­
bank deposits.
p— preliminary.
r— revised.