The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
IDAHO
ALASKA
FEDERAL RESERVE
T
S H IN G T O N
Digitized for CFRASER
A L IF O R N IA
TWELFTH
BANK OF S A N
FEDERAL
RESERVE
FRANCISCO
DISTRICT
W jou^ 1962
6iue
UTAH
Review o! Business Conditions
A R IZ O N A
NEVADA
Review of Business Conditions
assessing economic developments since
March, it is necessary to place the atmos
phere of uncertainty prevailing during this
period in proper perspective, and not allow
it to obscure the favorable trend of business
indicators. The cautious mood of many in
vestors and businessmen, of course, cannot be
entirely ignored; just as the expectations of
consumers regarding the business outlook
have a direct effect upon their expenditures,
the temper of business— and for that matter
of labor and the public— affects the course of
economic activity. Over the last year or so,
the nation has become increasingly aware of
the possible implications of an economic situ
ation in which competition for industrial
products has become more aggressive and
world-wide, at a time when the United States
has had a continuing unfavorable balance of
payments and an outflow of gold, and also
had excess capacity and relatively high unem
ployment in a period of cyclical expansion.
This awareness may well affect business plans
for plant and equipment expenditures, as well
as the course of future labor negotiations, and
has exerted its impact on the stock market as
investors reassess the price-earnings ratios
of corporate stocks.
The mood of the last month and a half con
trasts sharply with favorable business per
formance, as reflected in record levels of in
dustrial production and personal income in
April and a first quarter reduction in our bal
ance of payments deficit. Final figures for
gross national product in the first quarter of
1962 were at an annual rate of $548 billion,
slightly down from the preliminary estimates
but above the rate of $542 billion in the
fourth quarter of 1961. The industrial pro
duction index, which had risen 1 point in
March, increased another point in April to
117 percent of the 1957 average. The April
increase occurred in the face of a 5 percent
decline in steel output, which started early in
the month and continued into May, as cus
n
I
tomers cancelled or deferred orders in order
to work off inventories built up as a hedge
against a possible steel strike. By mid-May,
the industry reported some improvement in
forward orders but, generally, expected pro
duction to remain around the present low
operating rate until sometime in the third
quarter. Output of other durable materials
and goods, however, increased during April.
The gain in production of consumer goods
was again led by automobile assemblies which
rose 8 percent to keep pace with the near
record retail sales volume in M arch and
April. Further slight increases in automo
bile production are scheduled for May. Out
put of other consumer goods also increased
in April, and commercial and industrial m a
chinery production was up from the March
level.
The value of new construction in April
showed little change from the March level
with private construction up 2 percent while
public construction declined. Housing starts
in April, however, were up 8 percent from
March, on a seasonally adjusted basis, and
were 32 percent above April last year. This
increase, together with that in March, should
result in a rise in construction activity in the
coming months. An extension of the break
down in labor negotiations in the West Coast
building industry, however, could adversely
affect May construction figures. The resale
price of FH A insured mortgages continued
to rise in April with the three month upward
trend reflecting the increasing availability of
mortgage funds.
The employment situation in the nation
continued to improve as nonfarm employ
ment in April rose by 240 thousand to 55.1
million workers. Both factory employment
and the average workweek in manufacturing
rose contraseasonally. Employment gains oc
curred in most of the durable goods indus
tries and in apparel, construction, and trade.
On the unfavorable side, the seasonally ad
May 1962
MONTHLY REVIEW
justed unemployment rate of 5.5 percent in
March remained unchanged in April.
Reflecting the increase in factory payrolls,
personal income for April advanced to a sea
sonally adjusted annual rate of $438.7 bil
lion, a gain of $2.8 billion from M arch and
$29 billion above April 1961. Following the
trend which began in March, consumers fur
ther increased their rate of spending, and
April retail sales rose 1 percent on a season
ally adjusted basis. Gains centered in durable
goods, as the fast pace of automobile sales
in March accelerated further in April to a sea
sonally adjusted annual rate of somewhat over
7 million units, including foreign cars. There
was little change in the wholesale commodity
price index but a further slight rise in retail
prices.
The encouraging report that the first quar
ter balance of payments deficit dropped about
a billion dollars from the fourth quarter of
1961 on a seasonally adjusted basis was tem
pered by official announcement cautioning
against expectations that this reduced level
would necessarily be maintained during the
rest of the year.
In the financial sector, total credit extend
ed by commercial banks expanded in April
as loan volume increased and banks added
further to their holdings of state and munic
ipal securities. The rapid rate of increase in
time deposits at banks during the first quar
ter slowed somewhat in April, but gains were
still substantial. The money supply, on a sea
sonally adjusted basis, continued to expand.
The sharp decline in the stock market con
tinued into May, with the Dow-Jones indus
trial average falling below 600 and trading
volume reaching near record levels. Yields on
corporate and state and local government
bonds and on medium- and long-term Treas
ury issues declined between mid-April and
mid-May, and Treasury bill rates were slight
ly lower.
R ate of u n e m p lo y m e n t on W e s t
C o a st in 1962 higher than in nation
Percent o f C iv ilia n L a b o r Force
Source: U nited States Departm ent o f L abor and state depart
m ents of em ploym ent.
Pacific Coast unemployment declined
in April; nonfarm employment up
The seasonally adjusted rate of unemploy
ment in the Pacific Coast States fell to 5.7
percent of the labor force in April from 5.8
percent in March, in contrast to the national
rate of unemployment in April which re
mained unchanged at 5.5 percent.
The decline in the unemployment rate in
the Pacific Coast States reflected a 1.6 per
cent drop in the number of unemployed per
sons; total employment remained virtually
unchanged during the month as the result of
an increase in nonagricultural employment
which just offset a decline in agricultural
employment. According to preliminary data,
nonagricultural wage and salary employment
in the Pacific Coast States rose in April by
3,600 persons, or 0.3 percent on a seasonally
adjusted basis. The increase reflected higher
levels of employment in every major indus
try sector except mining and transportation,
which registered declines of about 0.6 per
cent. Employment in construction registered
the highest rate of increase during the month
with a gain of 1.0 percent, followed by manu
facturing with a gain of 0.6 percent. The in
FEDERAL RESERVE B A N K OF S A N F R A N C I S C O
crease in manufacturing employment largely
reflected gains in electrical equipment, ord
nance, paper and allied products, chemicals,
and transportation equipment, which more
than offset declines in textiles and apparel,
fabricated metals, and the furniture and fix
tures industries. As compared with April
1961, all major industry sectors in the Pacific
Coast States except mining and transportation
reported higher levels of employment, rang
ing from about 2.7 percent in construction,
trade, and finance to 5.5 percent in manufac
turing. Within the manufacturing sector,
very substantial gains on a year-to-year basis
were posted by ordnance (19.6 percent),
electrical equipment (12.9 percent), and ma
chinery (7.0 percent). Services and govern
ment reported gains of about 4.1 percent over
the year.
District employment up
slightly in March
District nonfarm wage and salary employ
ment (not including Alaska and Hawaii) in
creased very slightly during March, by 6,800
or 0.1 percent on a seasonally adjusted basis.
The small increase primarily reflected slight
ly higher employment in mining, transporta
tion, services, and government which more
than offset reduced employment in construc
tion and manufacturing. Notwithstanding the
slight dip (0.3 percent) in March, manufac
turing employment in the District posted a 5
percent gain on a year-to-year basis. Trade,
finance, and construction recorded gains
ranging from 2.6 to 2.8 percent, and services
and government gains of about 4.5 percent.
The smallest rate of increase was reported by
mining, which realized a 0.6 percent increase
in employment over March a year ago.
An important change in the Bureau of Em
ployment Security classification of the fifteen
major labor market areas in the District oc
curred in April with the reclassification of
Tacoma, Washington from an “area of sub
stantial unemployment” (6.0 to 8.9 percent
of the labor force) to an “area of moderate
unemployment” (3.0 to 5.9 percent of the
labor fo rce). Reflecting this change, the num
ber of major labor market areas in the Dis
trict experiencing “moderate unemployment”
has increased to nine from four a year ago.
The number of major areas in the District
still experiencing “substantial unemploy
ment” was reduced to six (San Diego, San
Bernardino - Riverside - Ontario, Fresno,
Stockton, Portland, and Spokane) as com
pared with eleven such areas in April 1961.
District construction aw ards and
building permits up; labor negotia
tion difficulties slow buildng
in northern California
The value of total construction contracts
awarded in the District during March rose by
25 percent over February to $712 million.
The increase, which fell considerably short
of the 45 percent gain registered in the na
tion, encompassed all major categories of con
struction awards. The value of contracts let
for residential construction rose 29 percent
and accounted for 51 percent of the value of
total awards during the month; nonresidential
awards were up 26 percent, and contracts for
public works and utilities registered a 14 per
cent gain. For the entire first quarter, the value
of construction awards in the District ex
ceeded that of a year ago by 4 percent, with
a 23 percent gain in residential awards and a
12 percent increase in nonresidential con
tracts offsetting a sharp decline (31 percent)
in the value of contracts let for public works
and utilities. Within the residential category,
awards for the construction of one- and twofamily houses registered about a 10 percent
gain over the first quarter of 1961 while con
tracts for apartments recorded about a 60 per
cent gain. Notwithstanding these disparate
rates of change, awards for the construction
of one- and two-family residences still ac
May 1962
MONTHLY REVIEW
counted for 70 percent of the value of total
residential contracts let during the first quar
ter, and awards for apartments amounted to
25 percent of the total. In the first three
months of 1961, the relative proportions were
about 78 percent and 19 percent, respectively.
D ata relating to the value of residential
permits issued in thirteen reporting areas of
the District during March revealed mixed
movements but, on balance, point to a pros
pective increase in the level of District con
struction activity in the months ahead. April
data received from nine of the thirteen report
ing centers indicated a continuation of this
increase as six of the nine offices showed an
increase in value of permits issued over March
and five offices an increase above the level of
April a year ago. The deadlock in negotia
tions between the Northern California Con
struction Employers Association and four
construction unions could result, however, in
a sharp decline in District construction in the
immediate future as projects totaling some
$3.5 billion in 46 counties are involved in the
dispute.
Savings increase creates
competition for mortgage loans
District mortgage markets continue to ex
hibit the characteristics in evidence during
the last few months: vigorous competition by
lending institutions in the solicitation of sav
ings funds and the placement of mortgage
loans. Rates on conventional loans do not ap
pear to have changed perceptibly in recent
weeks, but the vigor of competition in mort
gage lending is increasingly evident in adver
tising media. Evidence of some tendency to
wards additional ease in District mortgage
markets is reflected in a steady rise in the
prices paid for Federally insured mortgages
sold in the secondary market. In the West,
the average net price paid for FH A 5 lA per
cent 25-year mortgages rose from $96.3 per
$100 of outstanding loan amount on March 1
to $96.7 on April 1, with some bids ranging as
high as $98.00. In addition, mortgage hold
ings of the District office of the Federal Na
tional Mortgage Association in March regis
tered the smallest monthly increase since last
September, indicating a decline in purchases
(including acquisitions under previous com
mitments) and a rise in sales.
During March the net flow of funds into
District savings and loan associations substan
tially exceeded the growth normally associ
ated with first quarter interest accruals and
increased by 66 percent over February. At
this level, net savings were 46 percent greater
than in March of 1961 and raised the cumu
lative increase during the first quarter of 1962
to 19 percent above that in the correspond
ing period last year. The net rise in savings
accounts outpaced mortgage lending, even
though the net increase in loans was substan
tially greater than during the same period of
1961. Loan commitments, however, rose by
9 percent in March, representing an increase
of 40 percent over M arch 1961. District mem
ber banks also recorded a large increase of
$312 million in savings deposits in the first
quarter. During this period, District banks’
total holdings of real estate loans increased
by $82 million, in contrast to declines in the
first quarter of the two preceding years, but
the gain did not extend to residential real es
tate loans, which registered a decline of $13
million. This would appear to be further evi
dence of the relative scarcity of residential
mortgages compared with available lendable
funds.
Lumber output, orders, and prices
showed mixed trends in March
and April
Douglas fir production rose substantially
in March after a slow start but, while top
ping February’s output, still fell a fraction
below the level of production in March 1961.
For the entire first quarter, output exceeded
that of the corresponding period a year ago
by about 2 percent. New orders also rose in
FEDERAL RESERVE B A N K OF S A N F R A N C I S C O
M arch over February, but fell short of out
put, and were substantially below the level of
new business a year ago. On a cumulative ba
sis, new orders during the first quarter were
a fraction under the level of orders placed
during the same period of 1961. At the end of
March, unfilled orders were equal to 46 per
cent of inventories as compared with 51 per
cent a year previous; the level of inventories
itself registered virtually no net change dur
ing the interim. On the basis of preliminary
data, average weekly fir production during
April was running slightly below March out
put, but new orders were running ahead of
production and were above the weekly aver
age of new business received during the pre
vious month.
Following an increase in February, pine
production registered a moderate gain in
March, to a level 6 percent above output in
March 1961. New orders received during
the month were down slightly from February
and were 11 percent below the level of new
business received in M arch a year ago, but
still exceeded production. On a cumulative
basis, production during the entire first quar
ter topped that of the same period a year ago
by 8 percent, while new orders registered a
gain of 12 percent. At the end of March un
filled orders were equal to 26 percent of stocks
on hand, about the same ratio as in M arch a
year ago. Although a complete set of data for
April is not yet available, a sampling of re
porting mills indicates that weekly average
output and new orders were running about
even with the levels attained during March.
Production of California redwood during the
first quarter of 1962 exceeded output during
the first three months of 1961 by 15 percent.
New orders during the quarter, however, fell
short of output and were also 4 percent be
low the level of new business received a year
ago.
Fir and pine prices during April generally
bear out the indications of some firming of
orders. Increases in the prices of green fir,
dry fir, and pine boosted Crow’s average lum
ber price per thousand board feet by 23 cents
over the end of M arch to $76.11 as of April
26. On a year-to-year basis, however, the
aggregate price represents a decline of 51
cents, due to lower prices for dry fir and green
fir which more than offset a higher price for
pine species. On the first of May some of the
major fir plywood producers reportedly un
officially cut prices on quarter-inch sanded
panels from $64 to $62 a thousand square
feet and the following week dropped the price
to $60; this was far below the price of $72
prevailing in May last year. The high level
of inventories at the wholesale level was held
responsible for the price decline which the
industry viewed as temporary.
A potentially significant development dur
ing April was the establishment of a new par
value for the Canadian dollar at the rate of
92.5 United States cents per Canadian dollar.
The reduced price of Canadian currency in
terms of the United States dollar will of it
self improve the competitive position of Ca
nadian exports, including lumber, in United
States markets.
Decline in steel production milder
in District thon in nation
The reaction of Western steel production
to the new labor agreement reached between
major steel producers and the United Steel
workers of America at the end of M arch was
considerably milder than in the rest of the
nation. Reflecting order cancellations and de
ferments, national steel production registered
6 successive weekly declines from the last
week in March through the second week in
May, dropping approximately 27 percent
over-all. The Western index, on the other
hand, dropped only about 10 percent over
the six-week period as reductions in the first
three weeks of April and the second week in
May were partially offset by advances in the
other two weeks.
May 1962
MONTHLY REVIEW
Some of the decline in steel demand ex
pected nationally in the remainder of the sec
ond quarter and early in the third quarter is
for fiatrolled steel by automobile and appli
ance makers; since this is an insignificant
source of demand in the District, further de
clines in Western production may be some
what more moderate relative to the rest of
the nation. One of the major W estern produc
ers in announcing permanent closing of its
open-hearth furnaces in the San Francisco
Bay area stated that the operations would be
performed at its more modem plant facility
at another location within the District; over
all District steel production, therefore, should
not be affected by the closure.
Copper industry faces
labor negotiations
Although a number of nonferrous metal
companies signed labor agreements prior to
the June 30 contract expiration date, one ma
jor producer only started negotiations in May,
and negotiations with another major producer
were delayed pending National Labor Rela
tions Board elections to determine the bar
gaining agent. The labor agreements already
signed by the industry generally included an
immediate 8 V2 cent an hour wage increase in
addition to fringe benefits provisions.
Copper producers and smelters have indi
cated that their May supply is sold or cov
ered by orders, but a few producers report
some slackening in domestic demand. In
M areh, deliveries to domestic customers were
at their highest level since June 1959 and de
liveries to foreign users also gained sharply.
In spite of the strike by African workers which
closed copper mines in Northern Rhodesia
that supply I 6 V2 percent of free world copper
output, there was little or no price fluctuation
in the London and New York copper markets
in the first two weeks in May.
Some softness in District
gasoline prices
During April, West Coast refinery crude
runs averaged 1,188,000 barrels daily, only
slightly higher than the 1,181,000 barrels
daily during April 1961. Nationally, gasoline
stocks at the end of the first quarter were at
their best level relative to demand in several
years. Retail gasoline prices tended to firm
nationally in April following the JanuaryMarch period which one of the trade journals
characterized as the worst for gasoline prices
in a decade. In the District, however, no such
firming tendency is evident, as retail gas prices
in Salt Lake City, Seattle, and Los Angeles
trended downward slightly during the first two
weeks of April with little change during the
remainder of the month. Oil spokesmen have
blamed increased competition, including new
entrants into the Western markets, for rela
tively soft gasoline prices in recent months.
On the basis of earnings reports for major
regional companies, however, profit experi
ence was more satisfactory during the first
quarter than for the industry nationally.
District farmers had record
March receipts
March was a good month for District farm
ers as returns from farm marketings reached
a record level of $319 million for the month.
Receipts from both crops and livestock and
livestock products contributed to the rise.
Cash receipts were boosted by the sharply
higher prices received by farmers on a wide
range of products.
Supplementing the heavy flow of cash to
District farmers from marketings were the
substantial payments received for participa
tion in the Feed Grain and Wheat Programs.
Under these programs District farmers are
eligible for advance payments of about $30
million1 and through mid-April had already
1 These advance paym ents constitute o n ly about half o f the
total payments farmers w ill receive under these program s;
the balance will be paid after harvest.
FEDERAL RESERVE B A N K OF S A N F R A N C I S C O
received payments totaling in excess of $14
million. Participation in these programs has
reduced District acreage of the four crops
involved (wheat, grain sorghum, com, and
barley) by a total of more than 2 million acres
from that which could have been planted to
these crops in the absence of special farm pro
grams for 1962. Washington farmers, in par
ticular, have signed up considerable acreage
(647 thousand acres) and are eligible to re
ceive more than $9 million in advance pay
ments.
District department store and
auto sales at high levels
Spurred on by active Easter buying and by
a general rise in consumer spending asso
ciated with a rising level of spendable income,
department store sales in the Twelfth Dis
trict have attained record levels. During
April, department store sales were 12 per
cent above the corresponding period a year
ago, with all major metropolitan areas in the
District reporting gains. On a cumulative ba
sis, District department store sales since the
beginning of the year registered a gain of 7
percent over the first four months of 1961,
topping the 5 percent gain registered in the
nation. The momentum of sales continued
during the first two weeks of May, as District
department stores reported gains above yearago levels.
A rising level of consumer spending for
durable goods is reflected in the increase in
new car registrations in California. During
March, registrations totaled 63,828 or a daily
average rate of 2,364, the highest since M arch
1959. During the first three weeks of April
the daily average rate of new car registrations
in California increased slightly to 2,375.
District banks account for a large
share of the loan expansion
in the nation
After a moderate increase in M arch, loans
rose sharply in April as District weekly re
porting member banks had a monthly gain
o f $223 million in total loans (excluding loans
to domestic commercial banks). This com
pares with a $45 million increase in April
last year and is only slightly under the gain
in April of 1960. District banks accounted
for one-half of the m onthly loan increase for
all weekly reporting banks in the country.
Business loans, however, still lagged, contrib
uting little more than one-tenth of the net loan
increase, in contrast to nearly one-half in
1960 and three-fourths in 1961. Reflecting
F IE LD GRAIN AND W H E A T PROGRAM S P R O V ID E CA$H
FOR D IS T R IC T FARM ERS
(in thousands)
Field grain and
wheat acreage on
farms
Arizona
California
Idaho
Nevada
235
7,377
1,192
2
Acreage signed
up for diversion
99
514
Value of total
advance payments
$
1,717
6,390
Value of sight
drafts already
issued1
$
1,400
380
1
314
4,837
3,468
2,148
9
4,463
2,463
83
—
Oregon
Utah
1,070
219
Washington
2,264
647
849
10,497
452
4,094
6,359
2,038
28,762
14,025
119,562
47,750
614,637
376,778
Twelfth District
United States
1 Week ending A p ril 16, 1962.
Source: U nited States Departm ent o f Agriculture.
MONTHLY REVIEW
May 1962
C H A N G ES IN S E L E C TE D BA LA N C E S H E E T ITE M S O F
WEEKLY R EP O R TIN G M EM BER BA N K S IN LEAD IN G C IT IE S
{dollar amounts In millions)
ASSETS:
Total loans and investments
Loans adjusted and invest
ments1
Loans adjusted1
Commercial and industrial
loans
Real estate loans
Agricultural loans
Loans for purchasing and
carrying securities
Loans to nonbank financial
institutions
Loans to domestic commer
cial banks
Loans to foreign banks
Other loans
U. S. Government securities
Other securities
LIABILITIES:
Demand deposits adjusted
Time deposits
Savings accounts
Twelfth Dl!>trict
From Mar. 28 ,1 962
From May 10,1961
to May 9 ,19 62
to May 9, 1962
Dollars Percent
Dollars Percent
United States
From Mar. 28, 1962
From May 10,1961
to May 9, 1962
to May 9, 1962
Dollars Percent
Dollars Percent
+ 209
+
0.80
+ 2,283
+
9.43
+
689
+ 0.57
+ 9,3 4 0
+
9.43
+ 363
+ 428
+
+
1.41
2.62
+ 2,285
+ 1,309
+
+
9.57
8.46
+ 841
+ 1,043
+ 0.70
+ 1.41
+ 9,107
+ 4,9 64
+
+
9.57
8.46
+ 93
+ 115
+ 51
+ 1.64
+ 2.07
+ 6.44
+
+
+
351
394
173
+ 6.47
+ 7.45
+ 25.82
_
+
+
116
303
55
— 0.35
+ 2.22
+ 4.16
+ 1,095
+ 1,120
+ 192
+ 6.47
+ 7.45
+ 25.82
+
+
9.89
+
87
+ 43.07
+
291
+ 6.44
+
887
+ 43.07
1 —
0.12
+
106
+ 14.58
76
— 1.35
+
653
+ 14.58
154 — 34 .00
4 — 1.66
149 + 4.55
197 — 2.94
132 + 4.78
+
+
+
+
25
206
266
710
— 0.67
+ 11.79
+ 6.40
+ 4.26
+ 3 2 .4 8
+
152 — 8 .3 9
9 + 1.30
581 + 3.43
547 — 1.70
345 + 2.60
+ 233
+ 125
+ 1,058
+ 1,377
+ 2,7 66
— 0.67
+ 11.79
+ 6.40
+ 4.26
+ 32 .4 8
+ 209
+ 1.797
+ 1,171
+ 1.83
+ 14.26
+ 11.69
+
+
387
845
250
— 40 4
+ 7,132
+ 3,8 6 4
+ 1.83
+ 14.26
+ 11.69
—
—
—
+
—
+
26
+ 53
+ 230
+ 21
+
+
+
0.46
1.62
0.19
+
+
.—
— 0.62
+ 1.88
+ 0.79
1 E xclusive o f loans to dom estic com m ercial b a n ts and after deduction o f valuation reserves; individual loan item s are shown gross.
Source: Board o f Governors of the Federal Reserve System and Federal Reserve Bank of San Francisco.
a marked upturn in consumer expenditures in
April, and possibly some borrowing to meet
personal income tax payments, the “other
loan” category (which is mainly consumer
loans) registered the largest monthly gain
since the cyclical peak in April I9601. Bank
investment in real estate loans, which had in
creased gradually throughout the first quar
ter of 1962, turned sharply upward in April,
and the net change of $72 million exceeded
that in any month since April 1959 and con
stituted one-third of the national increase for
the month. Heavier than normal borrowing
by farmers was reflected in a rise in agricul
tural production loans which more than offset
the usual seasonal reduction at this time of
year in bank holdings of Commodity Credit
Corporation loans.
During the first two weeks of May, District
weekly reporting banks extended loans at a
greatly accelerated pace. The increase of
$205 million in loans adjusted2 was almost
equal to the gain for the entire month of April
and accounted for more than one-third of the
loan increase for all weekly reporting banks
in the country. Business loans rose $69 mil
lion and real estate loans $43 million; in both
categories, the District’s share of the national
increase was slightly more than 50 percent.
District bank purchases of Participation Cer-
1 E xcluding February 1961 when sizable loans to a national re
tailer were included in the “ other loan” category.
'T o t a l loans less loans to dom estic comm ercial banks and after
deduction o f valuation reserves.
FEDERAL RESERVE B A N K OF S A N F R A N C I S C O
tificates in the Export-Import Bank’s Port
folio Fund offering of May 1 was responsible
for about half of the gain in the “other loan”
category during this two-week period.
There was practically no net change in total
holdings of United States Government securi
ties by District weekly reporting member
banks in April, but there was a lengthening
in maturities held. In the week ended April
18, these banks acquired about $100 million
of the new 3% percent bonds of 1968— onefourth of the total amount for all weekly re
porting member banks in the nation. Treas
ury bill holdings declined $100 million in the
same week indicating that the banks may have
used some of these funds to pay for the new
bonds. In the first two weeks of May these
District banks reduced their bill holdings by
another $200 million.
Demand deposits at District weekly report
ing banks fluctuated widely during April as
checking accounts were built up prior to
April 15 and then drawn down to meet per
sonal income tax payments. As of April 25,
demand deposits adjusted were up from the
end of March, but all tax checks had not yet
cleared. In the first two weeks of May there
was a decline of $300 million. In April bank
debits to demand deposit accounts of indi
viduals, partnerships and corporations, and
of state and political subdivisions in the Dis
trict were up 23 percent from April 1961,
raising the total increase for the first four
months of 1962 to 17 percent above the cor
responding period in 1961.
For the first time this year there was a de
cline in savings deposits at weekly reporting
District banks as individuals dipped into their
savings accounts in the amount of $76 mil
lion in the two weeks prior to April 15. It ap
pears that a large part of these withdrawals
were made to meet personal income tax pay
ments as savings rose again in the following
weeks. This decline in savings was the larg
G row th in tim e de posits a t District
b a n k s slo w e d somewhat in
April and early M ay
B il li s n a of D o lla r*
N o te : D ata are for T w elfth D istrict w eekly reporting member
banks. T im e deposit data from February 1961 through Septem
ber 1961 have been adjusted to exclude loan funds of a na
tional retailer tem porarily held as time certificates o f deposit.
Dem and deposits adjusted are total dem and deposits other than
dom estic com m ercial interbank and U nited States Governm ent,
less cash items in process o f collection.
est since the week of July 6, I9 6 0 1 when mid
year interest withdrawals were particularly
large. It was also large compared with a de
cline of only $48 million for all weekly report
ing banks in the country during this two-week
period. This may indicate the extent to which
savings deposits in the District are considered
substitutes for demand deposits.
During April District banks were, on bal
ance, net sellers of Federal funds with most
of the transactions made at the discount rate
or slightly lower. This relatively high rate level
for Federal funds indicates that banks gener
ally were in a less easy reserve position. The
fact that District banks were net sellers of
Federal funds during this period is an indica
tion that they were in a comparatively easier
reserve position than banks in the rest of the
nation.
1 On the basis of the new definition o f savings deposits w hich ex
cludes m ost Christmas C lub accounts.
May 1962
MONTHLY REVIEW
Bank earnings declined
in first quarter
On the basis of published first quarter earn
ings reports for a number of major Califor
nia banks, increased interest expense on sav
ings deposits resulted in generally lower earn
ings compared with the first three months of
1961. Since most California banks did not
begin to compute interest on a daily average
basis until the second quarter of 1961, in
creased costs compared with the first quar
ter of 1961 reflect the effect of this change in
computation as well as the absolute increase
in rate.
M a y calendar for District bonds
unusually large
In May the calendar for state and local
government bond issues in the District was
unusually large, but except for a $100 million
Veterans’ bond issue by the State of Califor
nia, the forward calendar so far appears to
be very light for June, a month in which the
volume of new issues is normally high. Staat’s
index of yields on 20 California bonds declined
to 3.04 in the first week of May from 3.20
at the beginning of April and 3.39 at the be
ginning of the year.
Member banks in the District were par
ticularly heavy investors in securities of state
and political subdivisions in the first quarter
of 1962, increasing their holdings by $223
million. On the basis of data for weekly re
porting banks, this trend appears to have con
tinued at an accelerated pace in April as these
banks added $100 million to their “other”
securities portfolios.
99
FEDERAL RESERVE B A N K OF S A N
FRANCISCO
BANKING AND CREDIT STATISTICS AND BUSINESS INDEXES— TWELFTH DISTRICT'
(I n d e x e s : 1947-1949 m 100. D o lla r a m o u n ts in m illio n s o f d o lla rs)
Condition items of all member banks2’ 7
Year
and
Month
Loans
and
discounts
1929
1933
1939
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
2,239
1,486
1,967
8,839
9,220
9,118
11,124
12,613
13,178
13,812
16,537
17,139
18.499
U.S.
Gov't
securities
Bank debits
index
31 cities1* *
Demand
deposits
adjusted3
Total
time
deposits
495
720
1,450
6,619
6,639
7,942
7,239
6,452
6,619
8,003
6,673
6,964
8,278
1,234
951
1,983
10,520
10,515
11,196
11,864
12,169
11,870
12,729
13,375
13,060
14,163
1,790
1,609
2,267
7,502
7,997
8,699
9,120
9,424
10,679
12,077
12,452
13,034
15,116
42
18
30
140
150
153
173
190
204
209
237
253
270
17,637
17,632
17,578
17,504
17,779
18,028
17,901
18,212
18,499
7,436
7,393
7,571
7,935
7,863
7,955
8,190
8,182
8,278
13,222
12,865
12,935
13,206
13,212
13,317
13,901
13,944
14,163
13,909
14,289
14,371
14,492
14,656
14,786
14,867
14,874
15,116
266
265
268
267
262
277
291
265
293
18,646
18,622
18,906
19,070
8,082
7,820
7,776
7,811
13,671
13,163
13,235
13,706
15,448
15,647
15,939
16,091
294
289
301
312
Bank rates
on
short-term
business
loans5- 7
Total
nonagricultural
employ
ment
3.95
4.14
4.09
4.10
4.50
4.97
4.88
5.36
5.62
5.46
Total
mf'g
employ
ment
Carloadings
(number)8
Dep't
store
sales
(value)1
Retail
food
prices
'6 0
118
121
121
127
134
139
138
146
150
152
'5 7
130
137
134
144
154
161
153
165
165
163
102
52
77
100
100
96
104
104
96
89
94
88
87
30
18
31
120
122
122
132
141
140
143
157
156
175
64
42
47
115
113
113
112
114
118
123
123
125
127
150
151
152
152
152
153
153
154
154
160
162
163
162
164
165
166
167
167
88
81
85
86
84
87
99
100
92
164
153
162
167
157
170
164
165
175
127
127
126
126
125
126
127
126
127
155
156
156
156p
169
169
169
170j>
100
99
97
166
177
177
173
127
128
128
128
7, B
1961
A p ril
M ay
Ju ne
J u ly
A u g u st
S ep tem ber
O c to b e r
N ovem ber
D ecem ber
1962
Ja n u a ry
F e b r u a jy
M a rch
A p ril
5!5d
5/45
5/42
Industrial production (physical volume)4
Waterborne Foreign Trade Index7’ ’> 10
Year
and
month
Lumber
Crude
Refined
Cement
Steel1
Copper7
1929
1933
1939
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
95
40
71
113
115
116
115
122
120
106
107
116
110
109
87
52
67
106
107
109
106
106
105
101
94
92
91
92
78
50
63
112
116
122
119
124
129
132
124
130
134
140
55
27
56
128
124
131
133
145
156
149
158
174
161
169
24
146
139
158
128
154
163
172
142
138
154
171
103
114
111
111
110
111
111
110
113
106
92
92
92
91
91
91
92
92
92
92
131
135
143
143
143
140
142
144
144
141
178
168
169
188
157
160
163
171
182
152
105
112
90
92
90
139
140
142
165
153
175
1961
M a r ch
A p ril
M ay
Ju ne
Ju ly
A u g u st
S ep tem b e r
O c to b e r
N ovem ber
D ecem ber
Petroleum7
Exports
Electric
power
Total
Dry Cargo
103
17
80
116
115
113
103
120
131
130
116
99
129
136
29
26
40
136
145
162
172
192
209
224
229
252
271
190
110
163
186
171
141
133
166
201
231
176
188
241
162
172
191
187
183
180
174
181
167
167
137
133
143
143
124
107
138
149
147
145
285
283
285
289
293
300
295
310
305
294
184
187
142r
158
Imports
Tanker
Total
Dry Cargo
150
247
7
243
175
130
145
123
149
117
123
123
138
149
124
72
95
162
204
314
268
314
459
582
564
686
80S
128
107
194
201
138
141
178
261
308
212
223
305
97
140
141
163
166
187
201
216
221
263
269
‘57
733
1,836
4,239
2,912
3,614
7,180
10,109
9,504
11,699
14,209
264
261
265
224
271
247
217
209
256
363
331
331
290
365
322
317
310
331
124
163
171
128
138
140
76
67
148
952
759
865
767
1,026
805
841
872
756
252
286
292
289
297
277
277
307
264
19,268
13,139
15,856
13,223
20,025
14,586
15,542
15,613
13,573
...
...
Tanker
1962
Ja n u a ry
F eb r u a r y
M a r ch
...
1 A d ju s ted fo r seasonal v ariation , e x ce p t w here in d icated. E x ce p t fo r ba n kin g and cred it an d d ep a rtm en t store statistics, all in d ex es are ba sed u p o n
d a ta fro m outsid e sources, as fo llo w s: lu m ber, N ation al L u m ber M a n u fa ctu rers’ A ssocia tion , W est C oa st L u m b erm a n ’s A sso cia tio n , a n d W e stern
P in e A ssocia tio n ; p etroleu m , cem en t, an d cop p er, U .S. B ureau o f M in es; steel, U.S. D e p a rtm e n t o f C om m erce and A m erica n Iron an d S teel In s titu te ;
ele ctric p ow er, F ederal P ow er C o m m issio n ; non agricu ltu ral an d m an u factu rin g e m p loy m en t, U .S. B u rea u o f L a b o r S ta tistics an d co o p e r a tin g s ta te
ag en cies; retail fo o d prices, U .S. B u reau o f L a b o r S ta tistics; carloading3, various railroad s an d railroad associa tion s; an d foreign tra de, U .S . D e p a r tm e n t
o f C om m e rce .
2 A nn ual figures are as o f end o f year, m on th ly figures as o f last W ed n esd a y in m on th .
3 D e m a n d d ep osits, e x c lu d in g
in terban k an d U .S. G o v e rn m e n t d eposits, less cash item s in process o f collection . M o n th ly d a ta p a r tly estim a ted .
* D e b its t o to ta l d e p o sits
ex ce p t interban k p rior t o 1942. D e b its t o d em a n d d e p osits e x cep t U .S. G ov ern m en t an d in terb a n k d ep osits fro m 1942.
6 D a ily a v e r a g e .
8 A v era g e rates on loan s m ade in five m a jo r cities, w eighted b y loan size ca teg ory .
7 N o t a d ju sted for seasonal v a ria tion .
8 L o s A n g eles,
S an F ra n cisco, an d S eattle indexes com b in ed .
9 C om m ercia l ca rg o o n ly , in p hysical v olu m e, fo r th e P acific C o a st cu stom s d istricts p lus A la sk a
an d H a w aii; startin g w ith Ju ly 1950, “ sp ecia l c a te g o r y ’ ' e x p orts are exclu d ed because o f se cu rity reasons.
10 A laska an d H a w a ii are in c lu d e d
in indexes begin n in g in 1950.
p— P relim inary.
r— R evised.
TOO
@FedFRASER