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MONTHLY REVIEW OF B U S I N E S S C O N D IT IO N S ISAAC B. NEWTON, Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. XVI San Francisco, California, May 20,1932 No. 5 T W E L F T H FE D ER AL RESERVE DISTRICT CONDITIONS A moderate increase in Twelfth District in dustrial activity was recorded during April, after allowance for seasonal factors, while dis tribution of commodities decreased somewhat. Prices of many commodities important in the District declined slightly in late April. A sur plus of banking funds brought further ease to the credit situation during the several weeks preceding May 18 and member banks rapidly reduced their discounts at the Federal Reserve Bank of San Francisco. Physical conditions have been fairly satisfac tory for the growth of crops thus far during 1932. Plentiful soil moisture and irrigation wa ter have more than offset the small damage to fruits arising from frosts and the slower growth of crops in general because of somewhat lower temperatures than usual. In April, production estimates of the winter wheat crop were revised upward slightly and California barley crop fore casts now indicate a crop twice as large as the extremely small 1931 harvest. Prospects for the larger than average Valencia orange crop im proved during the month, while estimates of this year’s lemon production were reduced. Dis trict livestock ranges improved seasonally, ex cept in Arizona and California, where forage growth was slow. Controlled production of crude oil in Califor nia averaged higher in April than at any time since last July. Refinery runs to stills were also larger and gasoline inventories increased from levels of other recent months. Output of lum ber showed about the usual seasonal increase. The value of engineering contracts awarded increased from March to April, but building permits decreased in value. Non-ferrous metals mining continued inactive. Activity at flour mills receded considerably. Available data indicate that trade activity de clined somewhat during April. Both retail and wholesale trade were considerably less ac tive in April than in March, after allowance for seasonal factors. Registrations of new automo biles were practically unchanged. Tonnage of intercoastal traffic moving in both directions through the Panama Canal was smaller than in March, but freight carloadings increased by a greater amount than is usual at this time of year. Twelfth District use of Federal reserve credit declined considerably during late April and the first half of May, mainly because of reduced borrowings of member banks. Expenditures of the United States Treasury in excess of collec tions in the District added to banking funds dur ing that period and, as in the preceding four weeks, these funds were employed principally to reduce discounts. During early May, funds were obtained by selling securities received by District banks for Government deposit credit at the time of the April 30 Treasury financing. Practically no change occurred in demand for currency or in member banks’ deposits at the Reserve Bank, but gold reserves of that institu tion expanded somewhat, thereby raising the ratio of reserves to deposit and note liability. Loans and investments of reporting member banks declined slightly between April 20 and May 18, while total deposits increased. Both Government deposits and time deposits in creased, more than offsetting a decline in net de mand deposits. Agriculture Sub-normal temperatures accompanying April rains resulted in a slower development of crops than is ordinarily expected in that month. Frosts caused an undetermined amount of dam age to deciduous fruit in parts of California and the Pacific Northwest. The condition of live stock ranges improved during April throughout the District, except in Arizona and California. Prices for agricultural products did not change greatly during the month. An abundance of ir rigation water, which is an important factor in crop production in this region, is in prospect for 1932. Grain production in the District during 1932 will probably be greater than a year ago, when crops were reduced by drought. As of May 1 the probable production of the forthcoming win- 34 MONTHLY REVIEW OF BUSINESS CONDITIONS ter wheat crop in the principal producing states was estimated at 70,968,000 bushels. This fore cast exceeds the harvest of last year by about 5 per cent, the increase being due almost en tirely to an expected higher yield per acre. In California, the 1932 barley crop is estimated to be 682,000 tons, more than double the unusually light harvest of last year. The condition of hay in California and the Pacific Northwest was slightly better on May 1 than a year earlier. Estimates of the condition of other field crops are not yet available from the United States Department of Agriculture. Trade factors report, however, that the growth of rice, sugar beets, and potatoes has been satis factory thus far during the current season. Deciduous fruits in the Pacific Northwest and in California have developed slowly this year, with the result that the market movement is likely to commence somewhat later than in 1931. Some damage was done by frosts during April. While the extent of this damage is not known, it is probable that the volume of decid uous fruit production will be somewhat greater than in 1931, but smaller than 1930, when crops were unusually large. Markets for Twelfth Dis trict fresh deciduous fruit shipments are influ enced by the competition of peach production in southern states. On May 1, the 1932 peach crop in the ten southern states was estimated at 8.587.000 bushels as compared with 22,661,000 bushels produced a year ago, and an average production of approximately 18,000,000 bushels in recent years. The 1932 Valencia orange crop in California was estimated to be 18,046,000 boxes in April, approximately 9 per cent greater than the mar ket shipments of last year’s crop. It is estimated that the lemon crop, on the other hand, will be 5.400.000 boxes or about 10 per cent smaller A g r ic u lt u r a l M a r k e t in g A c t iv ity — t --------- A p r il--------- ^ C a rlo t S h ip m e n ts A p p l e s ...................... O r a n g e s .................. L e m o n s .................... C h erries ................. E g g s .......................... B e a n s ........................ V e g e ta b le s ............ E x p o r ts W h e a t ( b u .) B a r le y ( b u .) *932 2,192 6,402 1,108 10 269 206 4,166 1931 2,198 6,096 1,301 63 440 251 6,379 >— Seas 1932 41,441 21,821 4,189 10 1,063 3,744 25,784 to D a te —n 1931 59,508 22,991 4,305 63 1,837 4,679 29,251 277,311 98 , 7 9 6 133,055 18,125,604 73 0 ,26 2 3 ,1 1 6,6 8 6 15,720,634 8,552,850 R e c e ip ts C a ttle* .................... H o g s * ...................... S h eep * ..................... E g g s (ca se s) t . . . B u tte r ( l b . ) f . . . . W heat (ca rlo ts ). . 70,128 270,945 396,836 200,189 7,712,325 1,833 71,763 172,927 452,312 199,185 7,172,075 3,124 308,692 1,147,060 1,208,060 660,502 25,873,558 45,571 278,355 746,259 1,143,431 718,340 24,132,798 53,441 S to r a g e H o ld in g s (en d o f m on th ) A p p le s ( b u .) . . . . W h e a t ( b u . ) .......... B ea n s ( b a g s ) . . . . B u tte r ( lb . ) .......... E g g s (c a s e s ) . . . . 374,145 1,733,000 1,397,376 965,205 358 ,236 775,550 7,135,000 1,216,914 672,227 355,173 .... .... *Eight markets, fThree markets. ............................................. ............................................. ............................................. ............................................. ............................................. May, 1932 than the market shipments from November, 1930, to October, 1931. Receipts of butter and eggs at the principal markets of the District increased seasonally during April, as did the movement of these products into storage. On May 1, storage stocks of butter at Pacific Coast centers were 43 per cent greater than a year ago, while stocks of eggs were about the same as on May 1, 1931. Market prices for these two products remained unchanged during April at the low levels estab lished in late March. The condition of livestock improved some what less than usual during April and on May 1 was generally poorer than the average of the past five years, a reflection in part of the poor feed conditions of last winter. The early spring lamb crop is turning out to be smaller this year than it was in 1931, and it is anticipated that the calf crop also will be less than in 1931. Continued losses of ewes and late-born lambs in Idaho, Oregon, and Wash ington indicate that the late spring lamb crop will likewise be smaller this year than last. The volume of California spring lambs mov ing to eastern markets during the current sea son to May 11 (263,000 head) was approxi mately 20 per cent less than the movement to that date in 1931. Receipts of lambs and cattle at District markets were less than in April, 1931, while as in other recent months hog receipts continued to be more numerous than a year ago. Wool shearing is now completed in Arizona, California, Nevada, and Utah and is well under way in the Pacific Northwest. Fleece weights are generally lighter than in 1931. Low prices have accompanied the current small demand by manufacturers, with the result that an unusually large proportion of the 1932 clip is being stored for future sale. Present field prices for un scoured wool, ranging from 8 to 16 cents per pound, are approximately 25 per cent below those of May, 1931, and more than 60 per cent lower than in 1928, since when they have de clined continuously. Industry Industrial activity in the Twelfth District has followed the general movements of production in the United States quite closely during most of the past three years. In both 1930 and 1931 there was some improvement in the spring, fol lowed in both years by sharp declines in subse quent months. During the first four months of 1932, however, output of District industries showed approximately the seasonal increase, while national production declined, after allow ance for seasonal factors. Current estimates of Twelfth District indus try reflect to a considerable extent changes in such industries as lumbering, non-ferrous met- FEDERAL RESERVE AGENT AT SAN FRANCISCO May, 1932 als mining, petroleum producing and refining, and building and construction — industries which are basic to the economic life of this area. Fairly comprehensive data are available for those industries of predominant importance, while, both relatively and actually, informa tion is much less complete for a large group of other industries which, on the basis of annual value of production, are at least as important in the aggregate as those listed. Operations in the industries upon which current District producPER CENT S L A U G H T E R I N G — T w elfth D istrict In dex adjusted for seasonal variations (1923-1925 average= 100). tion estimates are principally based have been reduced by exceptionally large amounts during the past two years. On the other hand, many of the industries for which little statistical infor mation is available might reasonably be ex pected to have maintained operations at rela tively higher levels because their products are nearer to final consumption. Because the pre ponderance of the data consists of information on industries showing sharp declines, it seems probable that aggregate production in the Dis trict has not declined quite so much as available statistics indicate. Some support to this view is furnished by data on consumption industries for which a limited amount of production information is available. Examples of such industries would be flour milling, slaughtering and meat pack ing, and wool consumption, all of which have held up fairly well during the past two years. Further light is thrown upon the subject by an examination of the monthly report on employ ment conditions in California. According to that report, employment in a great many of the industries for which current production data are not available has held up considerably better than in the more basic industries for which rea sonably adequate production measures can be obtained regularly, and upon which estimates of month-to-month changes in output are based almost of necessity. Records for April indicate that industrial ac tivity in the District increased slightly from the levels of other recent months. Mining of non-ferrous metals continued inactive. Petro leum production increased considerably as a re sult of the opening of new wells in the Domin guez Field of southern California, although vol untary curtailment of output remained in effect in the state generally. It is reported that pro duction at the Dominguez Field will be cur tailed to approximately the same “allowable” that existed before the recent expansion of out put. Crude oil run to refineries also increased and was accompanied by somewhat larger in ventories of gasoline. The lumber industry, which is operating at about one-third the 1923-1925 average rate, showed slightly more than the seasonal increase E m p lo y m e n t — t ----------C a liforn ia--------- \ ---------------O reg on-------------- N o. of N o . ^ --E m ployees—s A p ril, of A p ril, In d u s t r y — Indexes o f daily average produ ction , adjusted for seasonal variations (1923-1925 daily average« 100) ,------------ is >32 — A p r. M ar. F e b . Jan. -1 9 3 1 A p r. M ar. F e b . G eneral : C a rlo a d in g s — I n d u s t r ia l.. 41 E le c t r ic P o w e r O u t p u t .. 36 146 37 141 44 141 61 168 61 160 66 152 M a n u fa c tu r e s : L u m b e r .................................. R efin ed M in e ra l O i l s j . . . F lo u r ....................................... S la u g h ter o f L i v e s t o c k .. C em en t .................................. W o o l C o n s u m p t io n ! . . . . 34 133 116 85 43 76 35 131 110 90 40 108 41 138 107 83 37 62 150 94 92 83 56 58 138 94 84 81 74 59 140 101 86 96 77 76 55 28 76 54 31 77 80 71 54 80 79 63 81 82 62 35 94 90 60 M in e ra ls: P e tro le u m ( C a lifo rn ia ) f . 78 L e a d (U n ite d S ta te s) 45 S ilver (U n ite d S t a t e s )$ . . 42 B u ild in g and C o n s tru ctio n § T o ta l ....................................... 34 B u ild in g P erm its— V a lu e L a r g e r C i t i e s ................. 19 S m a ller C ities ............... 16 E n g in e e rin g C o n tr a c ts A w a r d e d — V a lu e T o t a l ............................. 58 E x clu d in g B u ild in g s. 114 96 59 38 31 38 40 77 85 56 21 17 19 20 19 23 33 43 36 45 44 45 48 84 69 137 73 120 157 286 158 308 83 107 Industries S to n e , C la y and G lass P r o d u c t s . F irm s 1931 161,708 129 14,962 ( - 2 3 .2 ) 19,490 1932 A p ril, 1931 18,314 46 8,203 ( — 2 7 .4 ) 11,294 1,783 ( — 7.0 ) 1,918 9 784 ( — 3 7 .1 ) 1,247 12,465 ( — 14.3) 14,550 7$ 290 ( — 15.7) 344 1,233 ( — 11.1) 1,387 4,452 ( — 14.7) 5,218 34,413 ( — 4 .8 ) 36,150 36 •• 40 49,478 ( — 12.6) O th e r I n d u s t r ie s ! . 477 59,613 ( — 2 1 .6 ) 76,002 57 6,426 ( — 16.2) 7,668 153 25,722 ( — 8 .6 ) 28,149 W h o le s a le and A p ril, 13,178 ( — 2 8 .0 ) 56,609 P u b lic U tilitie s . . r ~ E m ployees —% 7,106 14 291 N o. of N o. of Firm s 5,281 ( — 2 5 .7 ) 65 C lo th in g , M illin ery an d L a u n d e rin g . 164 F o o d , B ev era g es an d T o b a c c o . . . 1932 1,214 133,159 (-1 7 .7 ) L u m b e r an d W o o d M a n u fa ctu res . . 146 M isce lla n e o u s . . . . |Not adjusted for seasonal variations. ^Prepared by Federal Re serve Board. §Indexes are for three months ending with the month indicated. 35 31 * P u b lic u tilities and w h o le sa le and retail figu res n o t in clu d e d in th is tota l, tI n c lu d e s the fo llo w in g in d u s trie s : m etals, m a c h in e ry an d c o n v e y a n c e s ; leath er an d ru b b e r g o o d s ; o ils and p a in t s ; p rin tin g an d p a p er g o o d s , i L a u n d e rin g on ly. Figures in parentheses indicate percentage change from April, 1931. MONTHLY REVIEWOF BUSINESS CONDITIONS 36 in output during April. Vigorous efforts to keep production within the limits of new or ders have been reasonably successful during re cent months, although the current margin of excess orders is very small. Building and construction decreased in value by about the seasonal amount during April. Large declines in the value of building permits in Los Angeles and Portland much more than offset a substantial increase in Sacramento, reducing the total value for the District to the record low levels of January and February. The value of engineering contracts awarded ad vanced after seasonal allowances. Flour milling decreased sharply during April. This industry has been operating at a fairly high level for several months, however, and undue significance should not be attached to the lower level of its operations during a single month, especially in view of the erratic monthto-month movements of flour production. Most of the information available on Twelfth District labor conditions indicates little change during April in the number of workers em ployed. Continued reductions in wage rates were reported. Seasonal requirements of agri culture benefited certain sections. Trade Trade activity continued to decline moder ately during April. Of the several measures commonly used as indicators of Twelfth Dis trict distribution, department store sales, whole sale sales, and intercoastal traffic declined; automobile registrations were unchanged; and carloadings increased. D is tr ib u t io n a n d T ra d e A p r. C a rlo a d in g s^ T o t a l ........................... M e r ch a n d is e .......... — ------- 1<>32-----M ar. F e b . Jan. A p r. 1931 - ■ ^ M ar. F e b . 1 r 60 77 F o r e ig n Trade® T o t a l ! ......................... I m p o r t s ! ................. E x p o r t s ...................... 56 74 59 76 66 81 77 91 79 96 83 94 54 50 57 55 53 57 56 51 59 82 77 83 86 86 88 99 90 94 In t e r c o a s ta l T r a d e T o t a l ........................... . W e s t b o u n d ............ E a s tb o u n d ............... , 47 54 45 61 89 55 55 80 48 51 80 42 71 88 65 76 89 71 79 89 78 R eta il T r a d e A u to m o b ile S ales$ T o t a l ...................... . P a s s e n g e r ............ . C o m m e r c ia l . . . . . 32 30 55 33 30 61 34 31 58 48 45 84 76 71 125 78 73 135 76 70 134 D e p a r tm e n t S t o r e —■— S a le s î .................... , S to c k s § ................. . 74 75 79 78 85 78 84 79 103 89 107 92 103 92 Value of department store sales was sharply lower in April than in March, whereas there is usually little or no change between those PER CENT D E P A R T M E N T S T O R E S A L E S - T w e l f t h D istrict In dex adjusted for seasonal variations (1923-1925 average = 100). months. As compared with April, 1931, a de crease of 28 per cent in the value of sales was recorded. The number of sales transactions de clined 16 per cent over the same period. R E T A I L T R A D E — T w e lfth D istrict t ---------------1932 com pared w ith 1931*--------------- \ ,------------N E T S A L E S -------------x January 1 to end A p ril D e p a rtm e n t S tores . . . — 28.0 L o s A n g e le s .............. — 28.5 ( O th e r S o u th e r n C alif. — 24.3 O a k l a n d ........................ — 30.7 S an F r a n c is c o ..........— 21.8 ( O th e r N o rth e r n C alif. — 28.8 P o r t l a n d ! ......................— 37.1 ( S e a t t l e ............................ — 32.8 S p o k a n e ........................ — 23.8 ( Salt L a k e C i t y ............ — 20.0 A p p a r e l S t o r e s .............. — 28.5 ( F u rn itu r e S to r e s ..........— 28.5 ( A ll S to r e s ........................ — 28.1 STOCKS o f A p ril A p ril ( 66) 9) ( 7) ( 4) 7) ( 8) 6) ( 5) 4) ( 4) 27) 37) — 21.6 — 22.8 — 23.1 — 18.0 — 15.6 — 18.7 — 32.0 — 27.5 — 18.2 — 19.3 — 21.7 — 26.2 ( 65) ( 9) ( 7) ( 4) ( 7) ( 8) ( 5) ( 5) ( 4) ( 4) ( 24) ( 36) (1 3 0 ) — 22.2 ( 1 2 5 ) — — — — — — — — — — — — 16.7 16.5 18.0 26.9 13.0 18.2 23.9 12.9 13.8 7.9 20.2 17.2 (5 0 ) ( 9) ( 4) ( 4) ( 7) ( 8) ( 6) ( 5) ( 4) ( 3) (1 6 ) (2 3 ) — 17.0 ( 8 9 ) * P e r c e n t a g e c h a n g e , f ln c l u d e s fo u r a p p arel stores w h ic h are n ot in c lu d e d in D is t r ic t d e p a rtm e n t s to r e total. F ig u r e s in pa re n th e se s in d ica te n u m b e r o f s to re s r e p o r tin g . The value of wholesale trade, as measured by reports from 220 firms, was 26 per cent smaller in April, 1932, than in April, 1931. That decline approximates the year-to-year declines of Octo ber and January, excepting which it was greater than any year-to-year decrease recorded since the period of rapidly declining prices in 1920 and 1921. Sales of groceries, drugs, and paper and stationery declined less than sales of other commodities by wholesalers. W H O L E S A L E T R A D E — T w elfth D istrict Percentage change in value o f sales A p ril, 1932 t -------- com pared w it h ----------^ r C o lle c tio n s # R e g u la r .......... .. 41.3 In s ta llm e n t . . . . 14.1 A 42.1 14.6 40.4 14.7 M a rch , 1932 > 43.4 14.8 43.6 15.3 43.4 14.9 40.9 14.7 * A d ju s t e d f o r se a s o n a l v a ria tio n s, 1923-1925 a v e r a g e = 1 0 0 . • In d e x e s a re f o r th r e e m o n th s e n d in g w ith m o n th in d ica te d . t E x c l u d i n g r a w silk. J D a ily a v e r a g e . § A t e n d o f m o n th . # P e r c e n t o f c o lle c t io n s d u r in g m o n th t o a m o u n t o u ts ta n d in g at first o f m o n th . May, 1932 A g r ic u ltu r a l Im p le m e n ts ____ — 10.9 A u t o m o b ile S u p p lie s . . . . — 0.1 D r u g s ......................................... . . . . — 6.2 E le c tr ic a l S u p p lies ............ . . . . — 2.6 . . . . — 12.2 P a p e r and S t a t i o n e r y .......... . . . 10.5 A p ril, 1931 — 44.6 — 26.1 — 21.9 — 40.4 — 44.5 — 46.4 — 17.0 — 32.2 — 32.5 — 12.9 — 26.4 1932 com pared w ith 1931 — 42.1 — 20.0 — 18.1 — 34.1 — 42.5 — 44.9 — 16.9 — 30.7 — 27.7 — 18.4 — 25.5 May, 1932 FEDERAL RESERVE AGENT AT SAN FRANCISCO This Bank’s adjusted index of new automo bile registrations was practically the same in April as in March. Actual registrations were less than half as numerous as in April, 1931. Total shipments in the intercoastal traffic through the Panama Canal were markedly lower in April than in the preceding month, both before and after allowance for the cus tomary seasonal changes. The greatest propor tionate decline took place in westbound cargoes, although smaller shipments to the Atlantic Coast contributed to the total decrease. PER CENT F R E I G H T G A R L O A D I N G S — T w elfth D istrict In dex adjusted for seasonal variations (1923-1925 a v erag e= 100 ). Contrary to the tendency in the United States as a whole and the movements of most other measures of distribution, freight carloadings in the Twelfth District were greater in April than in March. Loadings of both merchandise and industrial freight increased more than usual at this season, although the principal expansion was reported in the latter. Actual carloadings were higher than in any month since last No vember. During the first quarter of 1932 the District’s foreign trade continued the sharp decline of the preceding two years. Total value of imports and exports during January, February, and March was about 40 per cent less than in the similar period in 1931 and nearly 60 per cent be low the first quarter of 1930. In recent months the relative declines in exports have been some what greater than in imports, whereas during 1930 percentage decreases in imports were larger. The usual substantial increase in for eign trade during March failed to materialize. 37 Silver, zinc, and copper prices, after remain ing relatively stable during April, declined to the lowest levels of the year early in May. Sales of copper were made at 5j4 cents per pound on May 20, an all-time low price for that metal. The quotation for lead (3 cents per pound) at New York did not change through April and early May. Lumber quotations, while low, have declined less in the past four months than dur ing any similar period in more than a year. Prices for agricultural products were some what more stable during April than in preceding months. At the end of April, however, there were some reductions in quotations for grains and livestock. The May contract price for wheat at Chicago declined throughout March. An advance to 62 cents per bushel in mid-April was followed by a decline during the later part of that month to approximately 54 cents per bushel, at which level it remained during the first half of May. Similar movements were re corded in California barley prices. Most fruits important in the District did not change greatly in price during April. Orange and lemon prices were approximately the same as in March, but were well below a year ago. Dried and canned fruit prices did not change during April. The New Orleans spot quotation for Middling Upland cotton reached 5.59 cents per pound on April 30, the lowest recorded this year, but somewhat above the low of 5.15 cents per pound reached last October. Rice and bean prices were reduced during April and quota tions on the new crop of alfalfa hay declined. B a n k D e b it s * — A r iz o n a P h o e n ix ............ C a lifo rn ia B a k e rsfie ld . . . . B e r k e le y .......... F r e s n o ............... L o n g B e a ch . . L o s A n g e le s . . . O a k la n d ............ P a sa d e n a .......... S a cra m e n to . . . San B e rn a rd in o . S an D ie g o . . . . S an F r a n c i s c o .. S a n J o s e ............ San ta B a rb a r a .. S t o c k t o n .......... $ A p ril 1932 22,840 $ A p ril 1931 33,071 t — First four m onths— \ $ 1932 94,907 $ 1931 131,047 9,411 14,801 16,011 28,456 612,249 168,341 23,587 39,765 7,249 38,258 680,924 17,490 10,491 14,029 12,565 15,750 21,541 43,480 868,364 189,822 33,614 48,057 9,119 52,573 1,009,214 24,020 14,602 18,210 32,758 65,091 67,807 119,516 2,484,609 720,858 104,717 165,574 28,611 153,487 2,838,631 70,111 42,114 55,566 48,373 64,413 91,675 180,620 3,482,404 764,027 134,302 184,554 36,212 207,137 4,174,006 97,429 55,346 71,035 9,094 11,856 41,382 49,666 7,623 10,130 29,957 37,658 4,389 101,618 5,506 144,277 16,576 410,542 21,793 561,564 34,695 188,855 57,033 251,645 Idaho Prices During April, indexes of commodity prices fluctuated only slightly from week to week, but in early May reductions in prices for farm prod ucts, textiles, non-ferrous metals, and hides and leather products resulted in some further de cline in most of these indexes. From January to April of this year the Bureau of Labor Statistics’ monthly index of wholesale prices declined 2.7 per cent, compared with declines of 4.3 and 2.8 per cent during the corresponding periods of 1931 and 1930. N evada O regon P o r t l a n d ............ U ta h 7,914 13,813 43,432 63 ,7 80 4,932 6,119 135,199 29,941 S p o k a n e ............ 21,991 Y a k im a ............ 8,395 T o t a l .......... .$2,0 8 4 ,5 4 9 7,462 10,240 202,853 40,513 34,191 12,438 $2,951,061 S alt L a k e C ity . W a s h in g t o n B e llin g h a m ... * I n th ou san d s. 19,478 28,093 24,196 37,972 546,667 792,113 119,203 171,060 91,981 138,691 31,875 50,723 $8,599,764 $11,920,591 MONTHLY REVIEW OF BUSINESS CONDITIONS 38 Credit Situation Further easing of the banking situation be came apparent between mid-April and midMay. A decrease in reserve bank credit ex tended to the Twelfth District much more than offset increased participation by the Federal Re serve Bank of San Francisco in the Reserve System’s open market operations and total earning assets of that Bank declined. The re duction in the use of reserve bank credit in the District was the result of sharply reduced borrowings, made possible directly or indirectly by United States Treasury operations. As shown in the table below, Government expendiS U P P L Y O F A N D D E M A N D F O R B A N K IN G F U N D S T w elfth D istrict C hanges during the w eeks indicated W eek Ending 1932 A p r il 13 ............... A p r il 20 ............... A p r il 27 ............... M a y 4 ................. M a y 11 ................. M a y 1 8 ................. SU PPLY M on etary T reasu ry G o ld O perations S to ck + 2.0 + 1.6 + 12.1 + 5.9 + 5.6 — 1.2 + .4 + 5.9 + 2.2 + 11.9 + 9.8 — 11.5 W eek Ending 1932 A p r il 13 A p r il 20 A p r il 27 M ay 4 M ay 1 1 M ay 1 8 DEM AND M em ber Bank D em and fo r R eserve D ep osits C u rre n cy — 3.4 + 5.3 + 2.1 — 2.1 — 3.5 — 1.2 + 3.7 + .4 — .8 + -2 — .6 + 3.8 ............... ............... ............... ................. ................. ................. R eserve B ank C red it — 1.7 — 17.4 — 9.2 — 2.2 — 14.5 + 4.9 T otal Supply + 1.9 + .6 — 4.8 + 4 .1 — .4 + 3 .2 U nexpended Capital T otal F u nds, etc. D em and .0 + 1.9 + -6 + -6 — .1 — 4.8 .0 + 4.1 — .4 + .2 .0 + 3.2 tures in excess of collections provided most of the supply of funds used by banks to reduce discounts during the last half of April. In the two weeks following, however, funds were de rived mainly from an inflow of gold through the Gold Settlement Fund from outside the District. This later inflow was an indirect result of the May, 1932 Treasury financing of April 30, at which time District banks were allotted 31 million dollars in securities. As usual, a large part of this allotment, most of which was paid for by credit ing the deposit accounts of the Government in the purchasing banks, was sold outside the Dis trict, thus causing the inflow of funds mentioned above. The addition to District banking funds from this source represented the amount (ap proximately 10 million dollars) by which the sale of these securities exceeded the withdrawal F E D E R A L RE SE R V E B A N K O F SA N F R A N C IS C O (in millions of dollars) t ------------- — C o m lition ------ -------------^ T o t a l B ills an d S e c u r i t i e s .......... B ills d i s c o u n t e d ........................... B ills b o u g h t ................................... U n ite d S tates S e c u r it ie s ............ T o t a l R e s e r v e s .................................. T o ta l D e p o s its .................................. F e d e ra l R e s e rv e N o te C ircu la tio n R a tio T o ta l R e s e rv e s to D e p o s it an d N o te L ia b ilitie s co m b in e d M a y 18 1932 155 80 5 70 242 156 223 63.9 A p r . 20 1932 167 97 8 62 222 151 223 M a y 20 1931 69 6 13 49 308 191 167 66.7 59.4 85.9 of Government deposits. Although banks con tinued to sell Government securities, the inter district flow of funds was reversed during the week ended May 18, when a net outflow of 12 million dollars was recorded in the Gold SettleR E P O R T I N G M E M B E R B A N K S —T w e lfth D istrict (In millions of dollars) - C o n d it io n M a y 18 M a y 11 A p r . 20 1932 1932 1932 1,757 1,748 1,753 L o a n s an d In v e s tm e n ts — T o t a l . . 1,047 L o a n s — T o t a l .................................. 1,036 1,038 282 O n S e c u r i t ie s ............................. 276 274 A ll O th e r .................................... 764 760 765 In v e s tm e n ts — T o t a l .................... 712 715 710 386 U n ite d S ta te s S e c u r itie s . . . 383 380 O th e r S e cu ritie s ...................... 329 329 330 R e s e rv e w ith R e s e rv e B a n k .......... 90 86 84 572 N e t D e m a n d D e p o s i t s ................... 559 557 897 898 872 D u e fr o m B a n k s ............................... 125 119 105 D u e to B a n k s .................................... 167 158 151 B o r r o w in g s at R e s e r v e B a n k . . . 56 63 78 PER CENT M ay 11 1932 142 73 6 63 251 153 223 M a y 20 1931 1,992 1,237 340 897 755 391 364 113 751 1,084 196 257 — 0— PER CENT D I S C O U N T R A T E S A N D A C C E P T A N C E B U Y I N G R A T E S - F e d e r a l R eserve Banks C O M M E R C I A L L O A N R A T E S — Prevailing rates charged custom ers S E C U R I T Y L O A N R A T E S — San F ra n cisco , rates charged custom ers on dem and loans. N e w Y o r k , open m arket rates on tim e loans, m ixed collateral. May, 1932 FEDERAL RESERVE AGENT AT SAN FRANCISCO ment Fund. This loss was largely offset by an excess of Treasury expenditures over collec tions. The net movement of funds into the Twelfth District entailed by these transactions was re flected in an increase in the gold reserves of the Federal Reserve Bank of San Francisco. This increase in gold reserves was the chief factor contributing to an increase in the ratio of the Reserve Bank’s total reserves to its combined deposit and note liabilities. On May 18 that ratio stood at 63.9 per cent, compared with 57.1 per cent on April 13. MILLIONS OF DOLLARS 39 in turn due in no small degree to Federal Treas ury transactions as previously pointed out. De mand for currency showed no appreciable change during the four weeks ended May 18, and, therefore, had little effect on District de posits. The usual small purchases of gold by the San Francisco Mint contributed slightly toward increasing deposits. MILLIONS OF DOLLARS C U R R E N C Y C I R C U L A T I O N — T w elfth D istrict Changes cum ulated from January 2, 1929 Total deposits of reporting member banks increased during the four weeks under review. The increase resulted not only from the build ing up of Government deposits, but also from additions to time deposits which more than offset a small decline in demand deposits. To a large extent this stability of deposits resulted from the maintenance of loans and investments and from the net favorable balance of payments with other parts of the United States, which was Low money rates in New York had not, up to mid-May, been accompanied by the easing of rates in the Twelfth District. When in the past the differential between rates charged in New York and San Francisco has been widened (San Francisco rates are usually the higher) by an easy money situation in New York, there has been a tendency for balances carried in San Francisco banks by District correspondents to increase, since excess funds can then be em ployed more profitably in the latter city. Although the credit situation was generally easier in the Twelfth District during late April and early May, conditions were not entirely uni form. There were a few bank failures, but these were of little relative importance in the District as a whole. Demand for currency showed no net change in most areas. SU M M ARY OF N A T IO N A L CONDITIONS Prepared by the Federal Reserve Board Industrial activity and factory employment declined substantially from March to April, although usually little change occurs at this season. Purchases of Government securities by the Federal reserve banks have continued dur ing April and the first three weeks of May and there has been a considerable growth in the reserves of member banks. Production and Employment. Volume of in dustrial production, as measured by the Board’s seasonally adjusted index, decreased from 67 per cent of the 1923-1925 average in March to 64 per cent in April. Reductions in activity were reported for many leading industries, with sharp declines at cotton and woolen mills and at bituminous coal mines. In the automobile industry output increased from the low level of March by more than the seasonal percentage and in the steel industry, where activity had declined from early February to the middle of April, production increased somewhat between the middle of April and the third week of May. The number of wage earners employed at manufacturing establishments declined further between the middle of March and the middle of April and there was a substantial reduction in factory payrolls. Large decreases in employ ment were reported for the iron and steel, ma chinery, and textile industries, while the volume of employment in the food and leather indus tries showed the usual seasonal changes. Daily average value of building contracts awarded during April and the first half of May, as reported by the F. W . Dodge Corporation, MONTHLY REVIEW OF BUSINESS CONDITIONS 40 showed a seasonal increase over the first quar ter. A substantial increase was reported for public works and public utilities, while resi dential building continued at the low level of the first quarter, showing none of the usual seasonal expansion. Distribution. Freight carloadings of mer chandise showed little change in volume from March to April, continuing at the level prevail ing since January, although increases are usual during this period. Sales by department stores increased considerably in April. PER in the market through these purchases between April 6 and May 18 were used to the extent of $170,000,000 in a further reduction of member bank indebtedness to the reserve banks and to the extent of $122,000,000 in meeting a demand for gold from abroad. At the same time mem ber banks accumulated reserve balances consid erably in excess of legal requirements. During early May the demand for currency, which had declined in April, increased somewhat, contrary to the usual seasonal movement. Loans and investments of reporting member BILLIONS or DOLLARS CENT IN D U S T R IA L P R O D U C T IO N In dex num bers o f industrial produ ction adjusted for seasonal varia tions (1923-1925 average= 100). Wholesale Prices. Wholesale prices of com modities declined from 66 per cent of the 1926 average in March to 65.5 per cent in April, ac cording to the Bureau of Labor Statistics, and in the first three weeks of May further decreases in the prices of many leading commodities were reported. Downward movements in prices of textiles, non-ferrous metals, and imported raw materials, as well as most domestic agricultural PER May, 1932 M E M B E R B A N K C R E D IT M on th ly averages of w eek ly figures for reporting m em ber banks in leading cities. Latest figures are averages of first three w eeks in M ay. banks in leading cities, which had declined con tinuously until the middle of April, showed little net change between April 13 and May 18. Investments of these banks increased by nearly $300,000,000, chiefly in New York City, while loans declined by about an equal amount. There was also a growth in net demand deposits which reflected in part an increase in bankers’ balances deposited in New York City banks. MILLIONS OF DOLLARS CENT ^ ^ T O I rAL * s \ R E S ID E N T IA L 1927 1928 * * \ ______ L _ J _______ ] 1929 1930 1931 »932 V A L U E O F B U IL D IN G C O N T R A C T S A W A R D E D Indexes based on th ree-m onth m oving averages of F . W . D o d g e data for 37 Eastern states, adjusted for seasonal variations. (1923-1925 average = 100). products except wheat, were offset in part by increases in the prices of coffee, petroleum, and petroleum products. Bank Credit. Further purchases of United States Government securities by the Federal reserve banks were made during April and the first three weeks in May, and on May 18 total holdings were $1,466,000,000. The funds placed R E SE R V E B A N K C R E D IT M on th ly averages of daily figures for 12 Federal reserve banks. Latest figures are averages o f first 23 days in M a y . Money rates in the open market continued easy. Rates on commercial paper were reduced about /J2 per cent to a range of 2J4-3 per cent for prime names, and the offering rate on 90day bankers' acceptances, which had advanced to iy% per cent in the first week of May, de clined on May 11 to the previously prevailing rate of y% per cent.
@FedFRASER