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MONTHLY REVIEW OF BUSINESS CONDITIONS ISAAC B. NEWTON, Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. X IV San Francisco, California, M ay 20,1930 No. 5 S U M M A R Y O F N A T IO N A L C O N D IT IO N S Prepared by the Federal Reserve Board Industrial activity increased slightly in April from the rate prevailing in March. Factory employment declined by the usual seasonal amount, while factory payrolls showed a smaller reduction than usual. W holesale prices continued to decline in April and the first half of May. There was a further easing of open market money rates. Production. Production in basic industries was slightly larger in April than in March, and the Board’s index, which makes allowance for the usual seasonal changes, increased about two per cent, offsetting a large part of the decrease in March. Output of automobiles showed the usual seasonal expansion. Steel output de clined seasonally in April and the early part of May. The output of silk textiles was consider ably reduced and woolen mills curtailed opera tions, though less than seasonally. Cotton mills were more active in April, and there was some increase in stocks. In the first half of May, however, a program of curtailment was insti tuted in the industry. In comparison with the first four months of 1929, a year of exception ally active business, production was smaller in almost all major branches of industry, with the exception of tobacco. In comparison with 1928, however, output was larger in the automobile, petroleum, and silk industries, slightly smaller in steel and coal, and considerably smaller in cotton and w ool textiles, flour, meat packing, automobile tires, and lumber. According to the F. W . D odge Corporation building contracts awarded during April were six per cent larger than in March, reflecting further expansion in awards for public works and utilities, and some increase in residential construction, largely seasonal in character. During the first two weeks in May there was a further increase in building activity. In comparison with 1929, awards in the first four months of the year were 17 per cent smaller, reflecting chiefly the con tinued small volume of residential building, which more than offset increases in public works and in utility construction. Employment and Payrolls. Factory employ ment, which had been decreasing since last September, declined by about one per cent in April, which represents the usual development for that month, while the reduction in factory payrolls from March to April was smaller than usual. Distribution. Department store sales in creased during the month by an amount esti mated to be slightly larger than is accounted for by the late Easter holiday. The value of foreign trade decreased further in April, and for the first four months of the year exports were about 20 per cent smaller than a year ago when trade was exceptionally active. This de cline reflected in part the lower level of whole sale prices. PER CENT PE R CEN T r 11 PAYROLLS 1 f /H f y S V A y EMPI-OYMENT ) — ........... . 1926 1927 1928 1929 A * 1930 IN D U S T R IA L P R O D U C T IO N FA C T O R Y E M P L O Y M E N T A N D PAYROLLS Index number of production of manufactures and minerals, combined, adjusted for seasonal variations (1923-1925 average = 100). Latest figure, April, 106. Index numbers of factory employment and payrolls, without adjust ment for seasonal variations (1923-1925 average=100). Latest figures, April, employment 92.1, payrolls 96.7. 34 MONTHLY REVIEW OF BUSINESS CONDITIONS W holesale Prices. An increase in wholesale prices in the first week in April was followed by a substantial decline which continued into May and brought the level of prices to the lowest point in a number of years. Prices of important raw materials, such as wheat, cot ton, and silk declined during most of the period, but steadied somewhat around the middle of May, while prices of silver, hides, and coffee B IL L O N S OF D O LLA RS M ay, 1930 further, while “ all other” loans continued to decline, and on May 16 at 8,560 million dol lars were the smallest in more than tw o years. The volume of Reserve Bank credit declined further by 125 million dollars between the weeks ending April 19 and May 17, largely as a result of the addition of about 65 million dollars to the stock of monetary gold and of a further substantial reduction in the volume of PER CEN T 7 ---- COMMERCIAL PAPER RATE ’ — RESERVE BANK DISCOUNT RATIE J (* —<> - A jh — —J ' \l \\ i' / 1 ; J) r ; ■ 1 1926 were comparatively stable. There were fairly continuous price declines in steel, sugar, raw wool, and the textiles. Copper prices were re duced further early in May, but recovered somewhat follow ing large purchases for do mestic and foreign consumption. Bank Credit. Loans and investments of mem ber banks increased by about 160 million dol lars in the latter half of April, but declined by 140 million dollars in the first two weeks in May, both movements reflecting chiefly fluctuations in loans on securities. Investments increased \ 1 bL - / - M E M B E R B A N K C R E D IT Monthly averages of weekly figures for reporting member banks in leading cities. Latest figures are averages of first two weeks in May. - 1927 1926 1929 1930 M O N E Y RATES Monthly rates in the open market in New Y o rk : commercial paper rate on 4- to 6 -month paper and acceptance rate on 90-day bankers* accept ances. Latest figures are averages of first 20 days in M ay. money in circulation, which reflected chiefly smaller volume of payrolls and declines in re tail prices. The reserve system’s holdings of bills declined, while its holdings of United States securities and discounts for member banks showed little change. M oney rates on all classes of paper declined further in May. The discount rate was reduced from Zy2 to three per cent at the Federal R e serve Bank of New Y ork on May 2, and that at the Federal Reserve Bank of Boston was re duced from four to 2>y2 per cent on M ay 8. T W E L F T H F E D E R A L R E S E R V E D IS T R IC T C O N D IT IO N S Records of business activity in the Twelfth Federal Reserve District showed little funda mental change during April. Industrial pro duction in the aggregate was practically un changed from March, some industries failing to show the expansion customary in April and others im proving more than seasonally. Trade indicators offered a rather mixed picture dur ing April but, on the whole, showed some im provement from the low levels of other recent months. Markets for most farm products were dull and prices were at low levels. Beneficial rains were favorable for grow ing conditions, however, and from a production standpoint the agricultural outlook improved. W holesale com m odity prices averaged slightly lower than in March. There were no important changes in the credit situation. Climatic conditions point toward satisfactory yields of m ost crops in 1930, although light rainfall in recent years has resulted in a notice able lack of sub-soil moisture in some of this District’s important agricultural areas. Condi tion reports indicate that deciduous fruit crops will be larger this year than in 1929 but smaller than in 1928. This year’s moderate-sized crop of citrus fruits is being marketed satisfactorily. Declining prices for lambs and w ool have had an adverse effect on the position of the sheep raising industry, while prices for cattle, although somewhat lower than a year ago, have been maintained at relatively high levels and cattle markets continue stronger than other livestock markets. Industrial output during April remained at the low level of March and was well below the rate of activity in April, 1929. Lumber production increased seasonally and the out put of copper rose slightly from the extremely low rate of production in March. Production of petroleum in California declined by a small amount for the whole of April, but showed a tendency to increase toward the end of the month. The building and construction indus try was slightly less active than in March, whereas it usually expands markedly during April. Largely in response to this year’s late Easter, retail trade showed an increase over April, 1929. Sales of reporting stores during March and April, combined, were one per cent smaller than in March and April last year. W holesale trade improved somewhat as compared with recent months but was still well below the levels of last year. M ost other indicators showed that trade was less active than in April a year ago. Reversing the temporary upward movement o f late March and early April, wholesale com m odity prices moved downward during most of April and for the month as a whole aver aged slightly below the level of March. There were no basic changes in the credit situation between mid-April and mid-May. Borrowings of city member banks at the Fed eral Reserve Bank of San Francisco, already small in volume, declined further during the first half of May, although discounts for coun try member banks continued about the same in volume as during recent months. Reports of small declines in average interest rates charged customers by banks in this District continued the down-trend of interest rates noted since late in 1929. Agriculture W arm weather and frequent rains during April and early May were beneficial to grow ing crops and livestock ranges in the Tw elfth District. Favorable conditions for the growth of crops and forage have improved the 1930 agricultural outlook during recent weeks, but slow marketing of some crops and animal prod ucts has continued largely as a result of further price declines. Estimates of winter wheat production in Pa cific Coast states as of May 1 indicate that this year’s yield will be about 30 per cent smaller than the crop harvested in 1929. Estimates of the production of spring wheat are not yet available, but grain trade factors report that the acreage already sown or to be sown to spring wheat is larger than usual. W IN T E R W H E A T , ------- Acreage*------- \ t------- Production*-------- \ Acreage California .......... Idaho ................... O regon ............... W ashington . . . Total ............... U nited States 35 FEDERAL RESERVE AGENT AT SAN FRANCISCO M ay, 1930 H ar vested 1929 M ay 1 ,1930 695 680 520 448 842 896 782 1,210 3,306 . 2,767 40,162 . 38,676 (bushels) H arAban doned! Indicated vested M ay 1,1930 1929 M a y l, 1930 12 10,981 12,240 6 11,440 9,408 15,998 19,712 6 14,076 27,830 40 71,222 50,463 525,070 578,336 ii * In thousands. f A s a per cent of acreage sown in fall of 1929. Sou rce: United States Department of Agriculture. Preliminary reports of production of the 1930 deciduous fruit crops in California, Idaho, Ore gon, and W ashington as published by the United States Department of Agriculture gen erally indicate larger crops than in 1929 (a year of subnormal production in California) but somewhat smaller crops than in 1928. In Ore gon and W ashington, pear and apple trees are expected to produce crops of average volume, while production of cherries and prunes is ex pected to be smaller than usual. Production prospects for pears, apples, prunes, and cherries in Idaho are reported to be excellent. Nearly all deciduous fruit crops in California are in substantially better condition than a year ago. F R U IT S A N D N U T S -C a lifo rn ia (Condition as a per cent of normal) '¡930 83 Apples ............................................................................... A p r i c o t s ...................................................................................... Cherries ............................................................................ 60 Clingstone Peaches ................................................... 83 Freestone Peaches ..................................................... 87 Pears .................................................................................. 87 P l u m s .................................................................................. 80 Prunes ............................................................................... 73 Alm onds ........................................................................... 61 W a l n u t s ............................................................................. 78 Source: M ay 1.1929 1928 88 57 52 36 55 64 50 50 30 87 60 60 87 86 86 82 70 74 73 California Crop Report. The estimated production of the 1930 Valen cia orange crop in California was revised down ward during April from 12,279,000 boxes to 11,803,000 boxes. The 1929 crop of Valencia oranges was estimated to be 17,600,000 boxes. Since November, 1929, orange prices have been consistently higher than in the corresponding months of the previous year. The 1930 lemon crop is now estimated to be 4,868,000 boxes as compared with 5,025,000 boxes harvested in 1929. Production and cold storage stocks of cream ery butter in the District increased seasonally during April. On May 1 storage holdings of butter at Pacific Coast centers and in the United States were still much larger (76 and 290 per cent, respectively) than a year earlier, but the increases over last year were materi ally less than they had been on April 1. Never theless, butter prices declined during the month and on May 17, at the San Francisco market, 92 score butter was quoted at 37 cents per pound as compared with 45 cents per pound a year earlier. Receipts of e g g s at Portland, San Francisco, and Los Angeles during April were 252,798 cases as compared with 228,459 cases received during April, 1929. Storage stocks at Pacific Coast centers increased 18 per cent from April 1 to May 1, and on the later date were 72 per cent larger than a year ago. E gg prices de clined slightly during April and in early May were ten per cent lower than in May, 1929. The effects of favorable weather conditions during April were shown in the generally good condition of livestock and livestock ranges on May 1. Additional rainfall is needed in some areas in order to assure satisfactory feed con ditions on summer ranges. The 1930 calf crop 36 MONTHLY REVIEW OF BUSINESS CONDITIONS is larger than normal and few losses have been reported. The movement of range sheep and cattle to market, which was somewhat delayed during March and April, increased seasonally during May. Prices for “ grass-fat” cattle com pare favorably with prices of a year ago, while sheep are selling at levels approximately 35 per cent lower than last year. C A T T L E — M A R K E T R E C E IP T S Twelfth D istrict*M id-W estf 58,162 626,208 April, 1930 ................................................................. April, 1929 ................................................................. 59,005 653,818 January 1, to M a y 1, 1930.................................. 260,904 2,502,628 January 1, to M a y 1, 1 9 2 9 .................................. 251,297 2,478,867 ^Seattle, Spokane, Tacom a, Salt Lake City, Ogden, Portland, L os Angeles, and San Francisco. fChicago, Kansas City, Om aha, East St. Louis, St. Joseph, Sioux City, and St. Paul. Shipments of California spring lambs to eastern markets during the season to May 1 were less than half as large as they were dur ing the corresponding period last year, but approximated shipments during the same months in 1928. Since May 1, the volume of shipments has increased. Early lambs have not fattened well this year with the result that the proportion of “ feeder” lambs being shipped is greater than usual. C A L I F O R N I A S P R IN G L A M B S — Eastern Shipments Season to M ay 1 1930 1929 1928 LiveDressed .. 103,360 .. 213,370 .. 66,600 Total 14,950 118,410 42,000 255,370 39,430 106,030 A month ago the 1930 early spring lamb crop was reported to be somewhat larger than the crop in 1929 and weather conditions since that time have been favorable for development of lambs born in recent weeks. Market conditions for both w ool and lambs continue unsatisfac tory. M ost of the 1930 w ool clip has been shipped on consignment to be sold by the Na tional W o o l Marketing Association or private dealers. A few sales of w ool by producers have been reported at prices ranging from 17 to 23 cents per pound. A year ago w ool prices ranged from 28 to 32 cents per pound. M ay, 1930 index declined during March for the seventh consecutive month. Electric pow er production has been increasing consistently for several years and the decline since last August has been larger in amount and longer in duration than any recorded during the past ten years. Daily average output of petroleum in Cali fornia declined moderately during April. Some difficulty in maintaining the industry’s cur tailment program has been reported recently and there were small increases in output dur ing the first two weeks of May. A substantial increase in the amount of crude oil run to stills during the latter part of April more than offset declines in immediately preceding weeks, and production of refined oils increased somewhat for the month as a whole. Output of refined oils was, however, smaller than in April a year ago. Consumption of gasoline increased dur ing the month, as is usual, and stocks of that com m odity as well as of crude and fuel oils declined. Output of copper on a daily average basis increased slightly during April but was far below that of April, 1929. Stocks of refined copper were 20 per cent larger at the end of April than at the end of March, 1930, and more than five times as large as at the end of April, 1929. Demand for refined copper was inactive during April, but follow ing reductions in the price, which reached 12^4 cents per pound (Connecticut V alley) on M ay 6, sales in creased sharply. Total sales during the week ending M ay 14 were larger in volum e than in any other week of record. In conform ity with the practice follow ed by some copper mining companies of adjusting wages according to changes in the price of copper, important re ductions in copper miners’ wage rates have re cently become effective. These reductions have been offset in some degree by increases in the (A ) Industry— Indexes of daily average production, adjusted for seasonal variations (1923-1925 daily averaze - 100) In d u stry Apr. Manufactures : Industrial activity in the Tw elfth District during April continued at the relatively low levels recorded for February and March. In creases in production are customary in April and in most industries only the usual changes appear to have taken place during that month this year. Declines, or smaller than seasonal increases in output were, however, reported by the canning, flour, petroleum, building, and steel industries, and the number of workers em ployed did not increase as much as usual. Mining of non-ferrous metals was slightly more active than in March and production of lumber and cement increased seasonally. Figures of electric power production during April are not yet available, but this Bank’s Slaughter of Livestock ...................... ... . . 78 114 169 Refined Mineral O ilst ......................... . . , 88 W o o l C o n s u m p tio n f............................. Minerals : Petroleum (California) f ..................... . . . Copper (United S ta te s)$ ................. , . Lead (United S ta te s)$ ...................... Silver (United States) $ .................... General : Carloadings— Industrial ..................... Total Construction§ ............................. Value of B uilding Permits§ Tw enty Larger C it i e s ..................... Seventy Smaller Cities ................. Value of Engineering Contracts Awarded§ T o t a l ..................................................... E xcluding B u ild in g s .................... 95 90 - 1930 M ar. 102 72 112 161 88 63 98 88 108 93 78 98 169 93 80 1929 A p r. 105 85 1170 187 106 76 113 95 106 90 118 141 125 103 Feb? 121 .. . .. 107 59 111 67 97 61 117 99 ... 50 63 54 59 50 58 76 94 98 124 124 120 ... 168 203 115 fNot adjusted for seasonal variations. ^Prepared by Federal Re serve Board. §Indexes are for three months ending with the month indicated. ^Revised. M ay, 1930 number of hours worked per week, a reversal of the tendency to shorten the working week, noted during the past few months. Production of silver also increased in April, but was less than a year ago. The total value of building and construction was somewhat smaller during April than in March. There is ordinarily an increase of nearly 10 per cent in this type of work during April— the largest month to month increase of the year— and the small actual decline in the figures this year brought this Bank’s season ally adjusted quarterly index to the lowest point since August, 1921. The value of building permits issued in ninety cities of the D is trict was smaller-than in either March, 1930, or April, 1929, by 7 and 35 per cent, respec tively. The largest declines as compared with last month were in the central area of the Pa cific Coast, which includes the San Francisco Bay region, while the largest declines as com pared with last year were in the Pacific North west. There was but little change in the value of building during April as compared with March in the Pacific Northwest or in southern California. Engineering contracts awarded, exclusive of awards for large commercial and industrial buildings, decreased slightly in value during April, but were larger than in April, 1929. Increases in contracts for waterworks, bridges, and excavation and drainage projects accounted for the small aggregate increase over the year period. Lum ber production of the District increased slightly more than seasonally during April, follow ing a greater than seasonal increase in March, but did not quite equal the cut of a year ago. Shipments did not show the usual in crease, however, and as a result the ratio of (JB) Employment— Caliform a--------- > r~ " 1 — Oregon—...... N o. of N o. of r— Employees N o. N o. /—Employees —> A pr., Apr., Apr., of A pr., of 1929 1929 Firms 1930 Firms, 1930 Industries 156,361 177,306 144 23,772 25,204 751 All Industries* . . . . 1 ( - 1 1 .8 ) (—5.7) Stone, Clay and 159 6,249 7,119 4 218 48 Glass Products. (37.1) (-— 12.2) Lum ber and W ood 51 14,132 15,523 Manufactures . . 119 20,052 24,420 (— 9.0) (-- 1 7 . 9 ) 2,039 2,088 1,627 1,857 10 16 Textiles ................... ( — 20.2) (-- 1 1 . 1 ) Clothing, Millinery 462 7,501 7,898 461 9§ and Laundering. 55 (— 0.2) (— 5.0) Food, Beverages 37,637 42 1,757 1,573 and T o b a c c o .. . 153 33,835 (11.7) (-— 10.1) 32,386 (10.8) Other Industries!!. 337 81,205 — (- 12.4) 5,662 23 Miscellaneous? . . (3 .9 ) Public U tilitie s f .. 37 f e d e r a l r e se r v e a g e n t a t s a n f r a n c is c o 27 29,230 92,696 5,448 28 5,577 (2 .4 ) 5,448 * Public utilities not included in this total. fE lectric railway and bus operations added. JM otion picture^ producing- and de veloping added to this group. §Laundering only. ^Includes the following industries : metals, machinery and conveyances ; leather and rubber g o o d s ; chemicals, oils and pain ts; print ing and paper goods. Figures in parentheses indicate percentage changes from April, 1929. shipments to production declined. New orders fell off during the month and producers’ stocks, as reported on May 3, 1930, were almost 16 per cent larger than those reported on May 4, 1929. A ctivity in the food producing industries was at lower levels during the first quarter of this year than it was during the first three months of 1929. Production of flour in the District de creased further during April. Fewer cattle, calves, and hogs were slaughtered than in the earlier months, but slaughter of sheep showed a large increase during the month. The 1930 pack of canned spinach in California was com pleted during April. A ccording to the Canners’ League of California, it amounted to 1,565,496 cases, as compared with the unusually large pack of 4,193,742 cases in 1929 and a fiveyear average pack of 2,443,769 cases. Trade Varied reports of trade during April have been received, but on the whole there appears to have been some improvement during the month. W holesale sales, after due seasonal allowance, expanded; merchandise freight carloadings increased more than is customary in A p ril; and the number of new automobiles registered in the District was larger in April than in March. On the other hand, retail sales increased less than seasonally, not withstand ing the lateness of Easter trading; intercoastal traffic and carloadings of industrial freight de clined ; and the latest available figures (M arch) of foreign trade of Pacific Coast ports showed a further decrease. Retail trade as indicated by department store (C) Distribution and Trade— 1930 — 1929 Apr. A p r. M ar. Feb. Foreign Trade® r — 1......Index Numbers*137 135 T o ta lt ............................................ ...................................... Im p ortsf ...................................... 120 117 132 Exports ........................................ 147 144 Intercoastal Trade0 ............ W e s t b o u n d ................................. ............ 84 115 91 110 86 95 128 89 90 127 80 Carloadingsf 111 108 114 108 112 116 118 ............ 101 94 99 108 Retail Trade Autom obile Sales$ Total ......................................... ............ Passenger Cars ................... ............ Commercial Vehicles ............ 108 103 167 1O10 96 1580 M erchandise and M is c e lla n e o u s ... W holesale Trade § Departm ent Store Sales$ ....................................... ............ Stocks!! .................................... ............ Stock Turnover|[................. C ollection s# Regular ............................... ............ Installment ........................ ............ 115 114 124 1310 1270 1750 118 121 120 115 104 109 108 101 -------- Actual Figures .24 .25 .20 .24 ----1 f 43.6 15.1 45.3 14.9 42.9 14.7 46.2 15.7 * Adjusted for seasonal variations, 1923-1925 a v e ra g e= 100. 0 I n dexes are for three months ending with month indicated. t E x cluding raw silk. $D aily average. § M onthly totals of ten lines combined. HAt end of month. ||Proportion of average stocks sold during month. # P e r cent of collections during month to amount outstanding at first of month. ^Revised. 38 MONTHLY REVIEW OF BUSINESS CONDITIONS sales was larger in April, 1930, than in April, 1929, in southern California cities outside of Los Angeles, in the San Francisco Bay region, in the Pacific Northwest excluding Spokane, and in the Salt Lake City area. Declines over the year period were recorded for cities in Arizona, for Los Angeles, for cities in the cen tral valleys of California, and for Spokane. Year to year comparisons based on April figures only are not entirely satisfactory, how ever, because of the shift in Easter Sunday. Combined sales during both April and March furnish a more reliable indication of changes in consumer buying in relation to last year. Comparisons based upon those figures show a slight year to year decline in Tw elfth District department store sales, rather evenly distrib uted in nearly all parts of the District. R E T A I L T R A D E — Twelfth District ,------------ N E T S A L E S *------------ >-----S T O C K * Jan. 1 to A p r., 1930 Apr. 30.1930 A p r., 1930 compared compared with compared with Jan. 1 to with Ap r., 1929 Apr. 30,1929 A p r.. 1929 2.4 ( 69) — 1.4 ( 66) 0.5 ( 51) 2.0 ( 32) — 7.3 ( 32) — 1.6 ( 20) — 6.9 ( 43) — 8.7 ( 42) — 7.5 ( 29) 1.1 (144) — 2.9 (140) — 0.7 (100) Departm ent Storesf . . Apparel Stores ............ Furniture Stores .......... A ll Stores ...................... *Percentage increase or decrease (— ) . Figures in parentheses in dicate number of stores reporting, fln clu d es dry goods stores. The value of sales reported by wholesalers in ten lines of trade showed a contrary to sea sonal increase over sales during March, although the total sales figure for April re mained well under that for the same month a year ago. Groceries and agricultural imple- (D) Bank Debits*— Arizona Phoenix ...............,$ April, 1930 39,986 California 13,025 Bakersfield ......... 19,565 B e r k e l e y ............... 37,427 F r e s n o ................. 49,583 L o n g Beach . . . L os Angeles . ... 1,079,862 190,414 O akland .............. 37,480 Pasadena ............ 48,571 Sacramento 11,580 San Bernardino, San D iego 61,166 San F r a n c is c o .. . 1,300,659 San J o s e ............... 26,574 Santa Barbara ., 15,834 25,802 S t o c k t o n ............... Idaho Boise ................... Nevada Reno .................... O regon Eugene ................. Portland ............ U tah O gden ................ Salt Lake C ity. W ashin gton Bellingham . . Everett ............... Ritzville ............ Seattle ................. Spokane ............ T a c o m a ............... Yakim a ............ $ Fir st F oar Month s 1929 1930 164,417 $ 178,157 13,031 20,148 29,843 63,764 1,205,373 231,081 40,572 47,037 11,422 64,776 1,245,802 27,224 16,792 26,239 55,222 81,146 169,429 198,880 4,245,618 784,036 150,272 191,544 44,181 237,724 5,267,848 111,297 62,156 101,128 59,307 85,864 125,649 266,181 5,006,406 970,944 182,283 193,635 46,308 270,174 5,591,156 111,964 68,049 107,445 12,957 15,346 54,389 58,452 11,358 14,651 44,171 46,651 7,236 177,970 7,690 178,394 26,565 684,288 28,784 737,130 16,895 76,263 16,968 87,494 68,135 305,667 71,853 318,997 10,283 14,183 670 253,589 51,171 46,336 15,229 11,134 15,334 754 265,140 60,138 49,177 14,422 37,216 53,804 2,397 983,778 211,601 181,312 56,248 41,281 54,801 3,410 1,059,861 237,483 197,264 54,027 T o ta l............ .$3,6 51,668 *In thousands of dollars. $ April, 1929 41,133 $3,820,879 $14,574,469 $16,173,516 M ay, 1930 ments were the only lines to show increases when compared with April, 1929. M ost other lines— automobile supplies, drugs, dry goods, electrical supplies, hardware, shoes, and paper and stationery— exhibited decreases of smaller magnitude than in March. Large declines in sales as compared with last year were reported by most furniture houses. Similar declines have been reported for every month since Septem ber, 1929. Collections on outstanding accounts in nearly all lines were below those of April, 1929. Total rail shipments of goods increased slightly in April, and this Bank’s index of total carloadings advanced to the highest point since November, 1929. This was entirely the result of larger loadings of merchandise and miscellaneous freight, representing mainly shipments of finished goods, most of which are likely to find their way into wholesale and re tail distribution channels. Industrial carload ings declined and remained below the April average of the past tw o years. The outstanding feature in foreign trade during March, 1930, was the sharp decrease in exports from the preceding month. The dollar value of exports was substantially below the high figure recorded for March, 1929, and was the smallest since July, 1928. Imports of rubber at the Port of Los Angeles during February were almost equal in volume to the large receipts during February, 1929, but because of price de clines during the year were about 40 per cent less in value. Arrivals of silk at District ports during February were smaller both in volume and in value than in any other month in the past eight years. Silk imports, although representing a large portion of the value of the import cargo entering Pacific Coast ports, have little direct influence on business conditions in the Twelfth District because practically all of them are immediately trans-shipped to eastern markets. Prices Follow ing a pause during late March, the downward trend of wholesale com m odity prices was definitely resumed in mid-April, indicating a continued lack of adjustment between the supply of and demand for many basic com m od ities. The later declines were largely offset by the slight rise in prices early in the month and the April index of the Bureau of Labor Statis tics at 90.7 (1926=100) showed almost no change from the index for March (90.8). This index stood at 96.8 in April, 1929. Declines in prices of such commodities as coffee, cocoa, rubber, sugar, and silk were of significance to this District, not only because of their importance as basic materials but also because they make up a substantial proportion of the value of the trade passing through Pacific Coast ports. M ay, 1930 Lack of increased demand for copper fol low ing the reduction in the price to 14 cents per pound (Connecticut V alley) on April 15, resulted in further reductions to \2 y2 cents per pound on May 6. There was a substantial in crease in sales during the succeeding week, however, and the quotation for copper was ad vanced to 13 cents per pound on May 12. The price for lead, production of which is also im portant in this District, advanced slightly on May 13. Prices for agricultural products of the D is trict declined slightly during April and the first half of May. Average quotations for wheat were higher in April than in March. During the first week of May, however, wheat prices declined sharply, approaching the lowest levels of recent years, and have not since recovered substantially. The May contract sold for $1.03-$1.03% per bushel at the Chicago market on May 20. Quotations for w ool declined less rapidly during April than for several months, and during the week ending May 2 the Fairchild average of domestic w ool prices ad vanced fractionally, the first week since N o vember 29, 1929, in which that average has not declined. Citrus fruit prices continued to ad vance during April. Further declines in lamb quotations were recorded during April, while current prices for cattle and hogs are but slightly lower than those of recent months. Prices for canned fruits, of which fairly large unsold stocks are reported, were substantially reduced at the close of April. Increasing inventories of lumber were ac companied by further unseasonable declines in lumber prices during April. Credit Situation The four-week period from April 23 to May 21 was notable chiefly for lack of change in the underlying credit structure. A further decline in the volume of Reserve Bank credit employed in the Tw elfth District was recorded, not withstanding a reduction in the Federal R e serve Bank of San Francisco’s buying rate on 60-day acceptances to 2y2 per cent on May 8. (Tw elve days later the buying rate on 90-day acceptances was reduced to the same level.) There was little change in either total loans or investments of reporting member banks dur ing the period. The amount of money in circulation in the District remained unchanged during the month and there was no net gain or loss of funds through commercial transactions with other sections of the country. There was, however, a small inflow of funds due to a withdrawal of loans placed in the New York call money mar ket by District banks. Mint purchases of gold between mid-April and mid-M ay approximated 25 million dollars, but inasmuch as they were 39 FEDERAL RESERVE AGENT AT SAN FRANCISCO chiefly for the account of eastern institutions those purchases had little effect upon the local credit situation. Borrowings of city member banks have been at low levels almost continuously since the be ginning of this year and on May 21 those banks were practically out of debt at the Reserve Bank. Discounts for country member banks showed no material change between April 23 and May 21. Reserve Bank holdings of locally purchased acceptances declined from 19 mil lion dollars to 15 million dollars during the same period, thus further contracting the amount of credit extended by this Bank to the Twelfth District. Holdings of locally pur chased acceptances, however, are still well above the volume of discounts. R E P O R T IN G M E M B E R B A N K S -T w e lf t h District (In millions of dollars) r - 1""" •11 Condition M ay 21,M ay 14, A pr. 16, 1930 Total Loans and In v e s tm e n ts .. . Total L o a n s ........................................... Commercial L o a n s ............................. Loans on Securities .......................... Investm ents ............................................ N et Dem and Deposits .................... Tim e D e p o s i t s ....................................... Borrowings from Federal R e serve B a n k ........................................ ^ M ay 22, 1930 1930 1929 1,967 1,352 901 451 615 726 1,032 1,965 1,350 906 444 615 751 1,024 1,973 1,360 910 450 613 742 1,025 1,964 1,321 897 424 643 751 1,004 0 0 1 47 This contraction of the amount of credit ex tended to the Twelfth District by the Federal Reserve Bank of San Francisco and by mem ber banks contrasts with a rapid increase in the volume of credit in use during the last half of 1929 and it has been accompanied by impor tant changes in the composition of outstanding credit instruments. Between June 26 and D e cember 31, 1929, commercial loans of reporting member banks increased 92 million dollars, bankers’ acceptances outstanding increased 30 million dollars, and discounts at the Reserve Bank decreased 17 million dollars. Since the end of the year commercial loans have declined and are now 10 million dollars less than on June 30 of last year. Discounts at the Reserve Bank declined to low levels in January and have remained small in volume since that time. Outstanding acceptances, however, have re mained virtually at unchanged levels, although there is normally a rapid seasonal decline dur ing February, March, April, and May. F E D E R A L R E SE R V E B A N K O F S A N F R A N C IS C O (In thousands of dollars) t ---------------------- C ondition---------------------- *■> M ay 21, 1930 Total Bills and Se cu ritie s.. . 70,713 Bills D is c o u n t e d ..................... 8,751 Bills Bought ............................. 25,267 United States S e c u r it ie s .... 36,695 Total Reserves ........................ 284,960 Total D e p o s i t s .......................... 182,826 Federal Reserve N otes in Circulation ............................. 152,657 M ay 14, 1930 Apr. 16, 1930 M ay 22, 1929 68,429 8,449 23,285 36,695 290,970 186,551 78,306 10,583 31,028 36,695 280,259 182,593 86,225 60,299 13,472 11,704 270,341 180,069 152,927 157,186 154,485 Bankers’ acceptances have assumed an in creasingly important position in the financing 40 M ON TH LY REVIEW OF BUSINESS CONDITIONS of business activity during the past five years. In the Tw elfth District their growth has been particularly rapid during the past year in the financing of certain classes of domestic and for eign trade. The accompanying chart reveals a regular and uniform increase in the volume of acceptances outstanding in this District from 1925 (the first year shown on the chart) to the middle of 1929. In all of that period each year showed a marked increase in the volume of ac ceptances outstanding during the autumn to a peak near the turn of the year, and a sharp de cline to a low point in April or May. This sea sonal movement coincides with the marketing of some of the District’s principal food prod ucts which come under the legal definition of non-perishable, staple commodities, against which banks may issue acceptances. The greater part of the output of these commodities is sold to markets outside of this District, and the volum e of acceptances based upon them has expanded rapidly during recent months. A n analysis of the transactions underlying these documents indicates that during the past ten months there has been no material change in the volume of paper based upon imports, ex ports, domestic shipments, or dollar exchange. The unseasonal movement in the total volume of bankers’ acceptances outstanding is the re sult of increased bills on (1) non-perishable, staple commodities warehoused in the United States and (2) commodities stored in or being shipped between foreign countries. In the first group, acceptances outstanding increased from three million dollars at the end of July, 1929, to 19 million dollars at the end of March, 1930, while the increase in the second group was 11 million dollars (from 17 to 28 millions) during May, 1930 the same period. The first group includes ac ceptances based on commodities produced and warehoused in the Tw elfth District. The most important of these commodities are wheat, canned fruits and vegetables, and dried fruits, principally raisins. Large inventories of each of these items have been in storage in the D is trict this spring. The second group consists principally of acceptances based on the trans actions of foreign business organizations (largely German at the present time) which have world-wide contacts and which deal in the market having the lowest rates, whether that market be in the United States, England, or elsewhere. A partial explanation of the failure of the volume of acceptances outstanding to decline during recent months, as it has ordinarily done at this season, is to be found in the prevailing rate differentials which favor the use of accep tances and in the existence of relatively large unsold stocks of the commodities against which the acceptances were issued. The acceptance buying rate plus the cost of executing accep tances has been lower by more than \y2 per cent than have over-the-counter rates for com mercial paper and for com m odity loans at San Francisco banks during the past few months. A t the present time the acceptance buying rate of the Reserve Bank is \y2 per cent lower than its discount rate and this differential compares with an average difference of .35 per cent in favor of acceptance rates during the past nine years. These conditions have combined to en courage the use of acceptances, and, together with other factors involved in declining busi ness activity, have tended to restrict the v ol ume of commercial loans during recent months. Acceptance liability of banks as reported by the American Acceptance Council. Commercial loans of reporting member banks.
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