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MONTHLY REVIEW OF B U S IN 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. X V II San Francisco, California, May 20,1933 No. 5 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 Twelfth District business moved upward vigorously during April, accompanying the nation-wide recovery in activity. Increased ac tivity not only made up for the decline of March but carried many seasonally adjusted production and trade indexes to points higher than in February of this year. Many commod ities important in this district benefited from the general rise in prices. There was consid erable improvement in employment conditions and aggregate wage payments also increased substantially. Low temperatures and less than the normal amount of rainfall retarded the progress of the 1933 agricultural season somewhat during April. Forage on lower livestock ranges was inadequate, necessitating more than the usual amount of supplemental feeding. Cattle re mained in fair condition, however, but early lambs matured slowly. Some difficulty in securing credit for fattening these animals in feedlots was reported. Although this bank’s index of the value of agricultural products sold decreased further to a new low level during the first quarter of 1933, there was m o r e than the usual increase in marketing activity in April, accompanied by rising prices for farm products. Daily average output of both crude and re fined oils increased during April, but changed little during the first half of May. Production remained considerably lower than in the cor responding period of 1932. Lumbering ex panded more than seasonally during April, partly as a result of increased demand for building materials in southern California. Awards of contracts totaling 44 million dollars for work on the San Francisco-Oakland Bay Bridge and Metropolitan W ater District of Southern California projects greatly increased the total value of engineering construction. Mining activity was stimulated by higher prices for non-ferrous metals. A sharp increase in the value of department store sales during April more than made up for the decline during March, after allowance for the stimulus given to April sales by the occurrence of Easter in that month and for other seasonal factors. Sales were not far be low those of April, 1932. Wholesale trade, which had increased during March, when most other measures of business were declining, ex panded considerably further during April. Sea sonally adjusted freight carloadings and auto mobile sales moved upward from low levels, while intercoastal traffic remained unchanged. Credit conditions in the Twelfth District improved further during the four weeks ending May 17. Banking reserves were increased by a 10 million dollar favorable balance of pay ments with other parts of the country, and by 13 million dollars of United States Treasury expenditures in this area in excess of collec tions. Not only was the supply of funds thus increased, but the demand was reduced by a further return of currency amounting to 22 million dollars. These changes enabled mem ber banks to pay off 36 million dollars of their borrowings at the reserve bank and, in addi tion, to build up their reserve deposits by 9 million dollars. A large part of the inflow of funds from commercial and financial transac tions with other districts originated when local banks sold for cash in national markets, sub stantial amounts of United States securities which they had received by allotment from the Treasury’s May 2 financing. Since the 86 mil lion dollars of securities received from the Treasury were paid for with 67 million dollars of deposit credit and 6 million dollars in ma turing obligations, only 13 million dollars of cash was required for their purchase. There was little change in time or net demand de posits of reporting member banks during the four weeks reviewed, although loans continued to decline. Agriculture Shortage of rainfall and subnormal tempera tures delayed the growth of crops and range forage during April. A t the close of that month livestock were in relatively better condition 34 M O N T H L Y REVIEW OF BUSINESS CONDITIONS than ranges, although spring lambs and cattle which are usually marketed at this time of year have been slow in attaining satisfactory market weights. During April and the first half of May farm products prices generally advanced. During the first quarter of 1933, however, both volume and prices of Twelfth District agricultural prod ucts marketed decreased with the result that this bank’s index of the value of agricultural marketing declined to a new low figure. This index is shown in the following table. INDEX OF THE VALUE OF AGRICULTURAL MARKETINGS—Twelfth District (Average 1925-1927 = 100) Quarter Ending 1933 1932 1931 1930 1929 1928 1927 1926 52 74 74 79 68 70 31 45 March .......... 64 83 81 86 76 81 48 June .............. 66 79 109 136 135 134 126 September .. . 54 71 105 131 138 131 114 December . . . 66 93 105 109 102 98 53 Average . .. 1925 71 77 119 133 100 Satisfactory estimates of production are not yet available for 1933 crops other than winter wheat and citrus fruits. The 1933 crop of win ter wheat in the district was estimated at 36,688,000 bushels on May 1, a 51 per cent de crease from the 74,621,000 bushels harvested in 1932, when the crop was approximately equal to the 1926-1930 average harvest. The 1933 Valencia orange crop in California was estimated in late April to be 19,822,000 boxes as compared with production in 1932 of 17,434,500 boxes. The 1932-1933 lemon crop was estimated to be 6,375,010 boxes, a slight in crease from the forecast issued a month earlier. Although official estimates are not yet avail able, trade factors expect that the volume of deciduous fruit production in California during 1933 will approximate that of 1932. Through out the district warmer weather is needed to stimulate the growth of crops. Receipts of eggs at Pacific Coast markets increased as usual from March to April, but butter receipts, after increasing during Febru ary and March, declined in April, contrary to A g r ic u ltu r a l M a r k e tin g A c tiv ity — r-------- April----------\ /— Season to Date — \ 1932 Carlot Shipments 1933 1932 1933 38,637 41,388 1,765 2,190 Apples .................. 22,157 7,510 6,310 16,330 Citrus F ru it........ 40,738 4,158 32,840 2,733 Vegetables.......... Exports 2,499 410,707 2,809,709 19,014,050 Wheat (bu.) . . . . 3,017,890 Barley (bu.) 782,375 105,940 6,250,630 Receipts 62,697 245,210 267,863 61,506 Cattle* ................ 239,497 1,000,577 Hogs* .................. 191,575 852,448 928,618 Sneefp* ................ 191,565 218,014 746,179 200,189 640,229 660,502 196,978 Eggs (cases) Butter (lb.) ........ 6,269,043 7,712,325 24,627,748 25,873,558 3,817 Wheat (carlots).. 2,141 37,797 43,738 Storage Holdings (end of month) 2,387,000 1,733,000 Wheat (bu.) Beans (bags) .. , . 839,697 1,397,376 Butter (lb.) 559,268 965,205 348,546 358,236 Eggs (cases) .. . . ^Receipts at Ogden not included. May, 1933 the seasonal movement. Storage stocks of these two products were smaller on May 1, 1933, than a year earlier. The demand for poultry and dairy products has improved in recent weeks, and butter prices have increased substantially. Cold weather throughout the district de layed the growth of feed on livestock ranges during April. In Arizona and Utah and in parts of California and Nevada, development of range feed was further retarded by inade quate rainfall. On May 1, ranges were in poorer condition than in any other May in the eleven years that these reports have been issued. Scantiness of range feed was reflected to some extent in the condition of livestock. CONDITION OF LIVESTOCK AND RANGES (Normal = 100) ,— RANGES—^ ,— CATTLE— X ,— SHEEP May May 10 yr. May May 10yr. May May 10 yr. 1933 1932 Av. 1933 1932 Av. 1933 1932 Av. . . 80 87 85 80 87 81 85 91 85 California .. .. 62 82 76 75 83 91 79 87 91 .. 73 85 88 84 78 92 84 79 93 . . 73 84 87 93 80 88 76 76 91 82 79 90 79 91 77 80 93 Utah .......... .. 77 76 84 90 72 88 86 70 90 89 Washington .. 77 88 81 83 88 84 84 92 The early lamb crop in the district was slow in maturing during April and the cold, wet weather was unfavorable for breeding flocks which are now lambing. Up to May 12, this season’s shipments of live and dressed lambs from California totaled 270,000 head, compared with 346,000 head shipped during the same period last year. Because of their slow de velopment, a large number of lambs doubtless will be sent to feedlots in order that they may be properly fattened for the slaughter market. W ool shearing has been completed in the southern parts of the district and is now under way in the Pacific Northwest. An increase of more than 20 per cent in wool prices at Boston during the past six weeks has been reflected in prices paid to growers in this area. Current field prices are about double those of a year ago. The number of grass-fat beef cattle in Cali fornia will be less this spring than a year ago. Considerable supplementary feeding will be necessary to bring about the desired market condition for these animals. Industry Industrial activity advanced during April, reflecting in addition to seasonal influences, recovery from the effects of the bank holidays which occurred in March. There was some evidence also that production was stimulated by rising commodity prices. Mining of nonferrous metals became more active in April than in March. Manufacture of food products increased considerably. A s measured by con sumption of electrical energy, production in a wide variety of industries showed more than May, 1933 FEDERAL RESERVE AG EN T A T SAN FRANCISCO the customary expansion for this time of year. Employment conditions improved in most in dustrial regions of the district during April, the number of employed in California being considerably greater than in March and, for the first time since December, 1929, about the same as in the corresponding month of the preceding year. Crude oil production in California averaged higher in April than in March, and was at about the same level as in February, January, and De cember, when it averaged considerably above the proration schedule of 440,000 barrels daily. In the first three weeks of May production re mained about the same as in April, the daily average being 478,000 barrels. Crude runs to refinery stills continued to expand during this period. Crude oil stocks increased somewhat during April, following reductions in the five preceding months, but gasoline inventories continued to be reduced and were considerably smaller on April 30, 1933, than on April 30, 1932. The value of engineering construction in creased markedly during April, principally because of 37 million dollars of contract awards for the San Francisco-Oakland bridge and 7 million dollars of contracts representing additional undertakings of the Metropolitan W ater District of Southern California. While these two contracts were not included in pub lished tabulations for April because they were awarded after the end of the four-week period March 27-April 24, this bank’s index has been adjusted to include them. Lettings of other public works were slightly higher in value in April than in March, although Federal GovE m p lo y m e n t— t------- California-------- f--------------- Oregon----- No. of No. of r-Employees-^ No. <—Employees —% Apr., Apr., of Apr., Apr., Industries 1933 1932 1933 1932 Firms All Industries* 132,412 132,120 123 13,433 14,332 ( .2) (-6.3) Stone, Clay, and Glass Products. 55 3,812 4,197 (— 9.2) Lumber and Wood Manufactures .. 126 10,716 12,671 46 6,844 7,757 (— 15.4) (— 11.8) Textiles ................ 14 1,193 1,395 8 1,133 757 (49.7) (— 14.5) Clothing, Millinery, and Laundering. ’ 157 10,754 11,516 189 203 6$ (— 6.6) (— 6.9) Food, Beverages, and Tobacco... 300 39,709 34,143 34 1,219 1,241 (16.3) (— 1.8) Public Utilities. . . 50 45,818 50,349 (— 9.0) Other Industries!. 501 59,470 61,372 (— 3.1) 53 6,758 29 4,048 4,374 6,826 Miscellaneous (— 7.5) (— 1.0) Wholesale and Retail .............. 224 30,537 31,707 (— 3.7) * Public utilities and wholesale and retail figures not included in this total, f Includes the following industries: Metals, ma chinery, and conveyances; leather and rubber goods; oils and paints; printing and paper goods. $Laundering only. Figures in parentheses indicate percentage change from April, 1932. No. of Firmsi .1,206 35 ernment construction dropped to a negligible amount. Building activity changed little, per mits continuing relatively large in Long Beach and Los Angeles and in smaller cities of south ern California affected by the earthquakes on March 10. During the first four months of 1933, aggregate value of new building and con struction was about 65 per cent larger than in the corresponding months of 1932. Lumber mill operations expanded by more than the customary amount during April, off setting the decline recorded in March. Both shipments of and orders for lumber were larger in April than in March. In the first half of May, the volume of new business increased considerably further without a corresponding expansion in shipments, thereby increasing un filled orders. Flour milling was more active in April than in March, although there usually is a decline in the later month. Inventories of flour held by reporting millers decreased during the month, while inventories of wheat increased. Slaughter of livestock increased more than sea sonally. Canneries also became more active, principally as a result of the packing of spin ach and asparagus. A s of April 1, carry-over stocks of canned fruits were reported to be substantially smaller than a year earlier, a factor doubtless contributing to the advance in price schedules recently announced. The pack of canned spinach was almost double that of last year and slightly larger than in 1931. The carryover of last year’s crop is unusually small, however, and the total sup ply available for distribution during the com ing year will be considerably smaller than actual shipments during most recent years. In d u stry — Indexes of daily average production, adjusted for seasonal variations (1923-1925 daily average=100) /----------- 1!>33— 1 ,--------1932General Apr. Mar. Feb. Jan. Apr. Mar. Feb. 37 Carloadings— Industrial.. 35 30 30 36 41 36 Electric Pwr. Production. 13911 135 135 138 144 144 145 Manufactures 29 28 29 35 32 34 35 Refined Mineral Oilst. . . 113 115 122 145 133 131 Flour ................................ 105 94 81 75 94 116 110 80 Slaughter of Livestock.. 85 80 82 90 85 90 37 52 44 35 42 40 61 Minerals Petroleum ( California) î . 72 66 71 71 78 76 76 55 54 Lead (United States)Í . . 40 45 45 45 28 Silver (United States) $. 36 44 30 36 42 31 Building and Construction§ Total ................................ 47 40 47 64 34 31 38 Building Permits— Value Larger Cities.............. 10 10 10 10 19 21 19 Smaller Cities.............. 13 11 12 12 16 17 20 Engineering Contracts Awarded— V alue Total ........................ 97 69 73 93 145 58 48 Excluding Buildings. 223 178 230 281 114 84 137 fN ot adjusted for seasonal variations. JPrepared by Federal Re serve Board. § Indexes are for three months ending with the month indicated. ^Preliminary. 36 T rad e Pronounced upturns in department store sales were reported in all parts of the district during April. The large increases resulted in part from restricted trading in March and also reflected Easter buying in April. After adjust ment for seasonal factors, including the shift in the date of Easter, this bank’s index of the value of sales advanced to 69 per cent of the 1923-1925 average, as compared with 57 in March, 65 in February, and 60 in January of this year. In April, 1932, the index stood at 74. RETAIL TRADE—Twelfth District Percentage changes in value of sales and stocks with no adjustment for price changes the past three years. The index remained about 11 per cent under last year’s level. Sales at wholesale increased considerably further during April and were but 13 per cent lower in value than in April, 1932, the smallest year-period reduction since September, 1930. Increases from March to April were recorded in each of the ten lines of trade for which data are received. The only line which failed to expand after allowance for ordinary seasonal movements was groceries, which increased 1 per cent as compared with a customary sea sonal increase of 3 per cent. For all reporting lines combined, the March-April increase was nearly 7 per cent. WHOLESALE TRADE—Twelfth District Percentage changes in value of sales with no adjustment for price changes t------------ 1933 compared with 1932 ----------- % ,----------- NET SALES------------N STOCKS January 1 to end April of April April Department S tores.... — 8.0 ( 68) — 22,8 ( 68) — 24.3 (52) Los Angeles ............ — 7.2 ( 9) — 23.0 ( 9) — 26.6 ( 9) Other Southern Calif. — 10.7 ( 7) — 24.S ( 7) — 13.5 ( 5) Oakland .................. — 2.4 ( 4) — 25.8 ( 4) — 27.7 ( 4) San Francisco.......... — 6.6 ( 7) — 20.3 ( 7) — 19.0 ( 7) Bay Region.............. — 5.6 ( 15) — 21.8 ( 15) — 21.2 (15) Central California . . . — 2.4 ( 6) — 21.3 ( 6) — 14.7 ( 6) Portland!.................. — 7.6 ( 7) — 22.9 ( 7) — 23.3 ( 7) Seattle ...................... — 16.6 ( 4) — 24.9 ( 4) — 31.6 ( 4) Spokane.................... — 21.0 ( 4) — 29.4 ( 4) — 19.8 ( 4) Salt Lake City.......... — 9.7 ( 4) — 19.0 ( 4) — 14.7 ( 3) Apparel Stores............ — 4.1 ( 25) — 20.0 ( 24) — 23.8 (15) Furniture Stores.......... — 23.9 ( 34) — 33.3 ( 32) — 26.6 ( 22) All Stores .................... — 9.2 (127) — 23.8 (124) — 24.5 (89) tlncludes five apparel stores which are not included in district department store total. Figures in parentheses indicate number of stores reporting. The year-to-year decrease of 8 per cent in the value of total monthly sales was smaller than the decline in any similar comparison since July, 1931. The number of net sales trans actions showed an increase of about 3 per cent over the year period. The Fairchild index of retail prices of department store goods de creased further from April 1 to May 1, but by a smaller amount than in most months during D istr ib u tio n a n d T r a d e — ,-------------- 1933---------------- ,---------- 1932---------s Apr. Mar. Feb. Jan. Apr. Mar. Feb. Indexes adjusted for seasonal variations -------------- (1923-1925 average=100)-------------- \ Carloadingsi ✓ T otal........................ 52 48 50 54 60 56 59 Merchandise.......... 67 65 64 67 77 74 76 Foreign Trade® Total t .............................. 40 43 43 50 54 55 Imports!.......................... 38 42 42 46 50 53 Exports .................. 38 41 44 44 52 57 57 Intercoa&tal Trade T o ta l........................ 60 59 58 51 47 61 55 Westbound ............ 60 57 58 56 54 89 80 Eastbound.............. 60 63 59 48 45 55 48 Retail Trade Automobile Sales? T o ta l.................... 37 27 33 39 31 33 34 Passenger .......... 36 27 32 37 29 30 31 Commercial........ 48 33 40 61 54 61 58 Department Store S a le s i.................. 69 57 65 60 74 80 85 Stocks? .............. 54 56 58 61 73 74 76 Collections# ,-------------------- Actual Figures-------------------- ^ Regular .......... 41.4 39.4 41.1 42.6 41.0 41.9 40.4 Installment . . . 13.9 13.4 13.7 14.1 13.7 14.6 14.6 JDaily average. 0Indexes are for three months ending with month indicated. fExcluding raw silk. §At end of month. #Per cent of collections during month to amount outstanding at first of month. May, 1933 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS April, 1933 f-----compared with----- \ Agricultural Implements Automobile Supplies . . . Drugs ................................ Dry Goods........................ Electrical Supplies ........ Furniture ........................ Groceries .......................... Hardware ........................ Shoes ................................ Paper and Stationery . . . All L in e s.......................... Mar., 1933 21.5 23.8 1.0 12.2 10.6 36.2 1.1 15.7 21.6 0.9 6.8 Apr., 1932 — 26.4 — 11.2 — 22.4 — 6.2 — 6.6 — 5.0 — 10.0 — 11.3 5.2 — 24.7 — 12.6 Cumulative 1933 compared with 1932 — 41.1 — 18.2 — 21.3 — 18.0 — 20.1 — 28.0 — 15.1 — 20.3 — 17.2 — 24.0 — 18.8 Carloadings on district railroads increased by considerably more than the seasonal amount between March and April. The adjusted index was also higher than in February, but it re mained below the January level. March-April advances were recorded in industrial ship ments, as well as in merchandise and miscel laneous loadings. The increase was confined to the southern part of the district, however, Pacific Northwest railroads having reported only seasonal changes. Intercoastal traffic changed little during April, following increases in the three pre ceding months. Cargo transported from the Atlantic to the Pacific Coast expanded more than seasonally, but eastbound tonnage, which had held up relatively well during recent months, receded somewhat, reflecting smaller shipments of lumber and petroleum. April registrations of new automobiles ad vanced over March by more than the seasonal expectation. Sales of passenger cars increased from 7,683 in March to 10,465 in April. In April, 1932, there were 8,941 such registrations. The number of new trucks registered was also greater than in the preceding month, but con tinued smaller than a year ago. Prices Commodity prices changed little during the first half of April. Following the President’s decree restricting the export of gold as of April 20, prices rose sharply and have since con- 37 FEDERAL RESERVE A G E N T A T SAN FRANCISCO May, 1933 tinued to advance. As is usual in periods of rapid price changes, raw materials prices have shown greater movements than have prices for manufactured products. Advances have been especially rapid in prices of agricultural prod ucts, of non-ferrous metals, and of several other commodities produced or processed in large quantities in the Twelfth Federal Reserve District. Recent changes in prices of several such commodities are shown in the following chart. PERCENT IN C RE A SE 30 rieties of California beans, large limas and small whites, increased 53 per cent and 58 per cent, respectively. Potato prices increased slightly and hay prices, which usually show a seasonal decline at this time of year, were un changed. Cotton, at 8 % cents per pound for middling uplands sold about 20 per cent higher on May 20 than on April 18. California citrus fruits were the only major agricultural product to show net declines dur ing April. Substantial advances were recorded during the first three weeks of May, however, restoring quotations to the early April level. Few deciduous fruits are now being marketed. Such quotations as are available for those fruits have increased relatively less than have quotations for grains and field crops. Dried and canned fruit prices have advanced during the past six weeks. Butter and eggs sold at Pacific Coast mar kets at higher levels in May than in April, the increase in butter prices approximating 25 per cent. Cattle, lamb, and hog prices, which had declined in the first half of April, ad vanced over the April-May month-end and by May 20 quotations for cattle and hogs were the highest for the year while lamb prices ap proximated those of last February. Non-ferrous metals quotations at Eastern markets attained new high levels since the be ginning of 1932 during the first half of May. On May 20, New York quotations for copper, B a n k D e b its * — “ 20 30 PERCENTINCREASE WHOLESALE PRICES Increases between March 17 and May 19, 1933, in prices of commodities important in the Twelfth District. Among agricultural products, prices of field and grain crops advanced relatively more than did prices of fruits, vegetables, or animal prod ucts. W heat prices increased 28 per cent between the beginning of April and May 20. Quotations for barley and oats also moved higher, although these increases were less than the increase in prices for wheat. Rice sold in San Francisco for $3.00 per hundred pounds during the second week of May as compared with $2.35 per hundred pounds in early April. Following the recent Federal legislation permitting the manufacture of beer, prices for Oregon and California hops rose approximately 50 per cent and in May sales were being made at from 40 to 45 cents per pound. Quotations for the most important va Arizona Phoenix .......... .$ California Bakersfield .. , Berkeley .......... Long Beach .. Los Angeles .. . Oakland .......... . Pasadena ........ Sacramento .. . San Bernardino. San Diego . . . . San Francisco. . San Jose .......... Santa Barbara. Stockton.......... Idaho April 1933 17,818 $ April 1932 22,840 r~ First Four Months —» $ 1933f 63,705 $ 1932 94,907 7,002 11,393 10,940 21,171 463,775 174,781 16,912 21,498 3,748 29,121 537,300 12,881 6,494 10,131 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 2,234,470 49,086 26,984 37,503 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 7,205 25,031 44,754 44,613 82,610 1,874,808 642,974 71,037 118,565 18,501 112,021 9,094 30,774 41,382 3,988 7,623 15,531 29,957 2,717 91,169 4,389 101,618 9,850 326,983 16,576 410,542 8,361 35,937 7,914 43,432 27,841 145,326 34,695 188,855 3,423 3,831 102,542 16,980 16,044 5,586 4,932 6,119 135,199 29,941 21,991 8,395 13,700 14,939 397,371 70,251 61,947 22,183 19,478 24,196 546,667 119,203 91,981 31,875 ,$1,642,748 $2,084,549 $6,583,358 $8,599,764 Nevada Oregon Portland .......... Utah Salt Lake City. Washington Bellingham . . . Spokane .......... Tacoma .......... *In thousands of dollars, flncludes banking holiday period. 38 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS lead, and silver were, respectively, 7 and 3.65 cents per pound and 3 3 ^ cents per ounce, compared with depression lows of 5, 3, and 24*4 cents. During April, lumber prices continued the improvement which has been evident since the first of the year. Crude oil prices in Cali fornia remained unchanged from the price es tablished on March 5. Accompanying increased wool prices at Boston, prices paid growers in the Western states improved from week to week during April and the first half of May and are now about 37 per cent higher than a year ago. Hide prices have nearly doubled since the beginning of April. Rubber and sugar prices have also risen in recent weeks. The Credit Situation Improvement in the Twelfth District credit structure, which had been evident immediately following the reopening of banks in mid-March, continued during the four weeks ending May 17 and by that date the major disturbances that occurred immediately prior to the banking holiday had for the most part disappeared. SUPPLY OF AND DEMAND FOR FUNDS USED AS BANKING RESERVES-Twelfth District Ghanges in millions of dollars during the weeks indicated SOURCES OF FUNDS Week Reserve Commercial Ending Bank and Financial Treasury Total 1933 Credit Transactions Operations Supply April 5 .......................... 1.0 — 14.2 10.2 — 3.0 — 10.5 10.8 — 5.1 April 12.......................... — 5.4 April 19.......................... 2.9 — 13.2 4.6 — 5.7 — 2.7 7.8 — 5.2 April 26.......................... — 10.3 May 3 .......................... 7.3 .2 — 14.6 — 7.1 May 10.......................... — 35.1 24.5 12.0 1.4 May 17.......................... 1.7 — 12.2 7.8 — 2.7 USES OF FUNDS Member Week Demand Bank Ending for Reserve 1933 Currency Deposits April 5 .......................... — 2.2 1.4 April 12.......................... — 9.6 — 4.3 April 19.......................... — 4.8 — 2.2 April 26.......................... — 10.2 6.3 — 4.9 May 3 .......................... — 3.2 May 10.......................... — 5.2 6.5 May 17.......................... — 3.2 1.2 Unexp’d Capital Total Funds, etc. Dem'd — 2.2 — 3.0 .2 — 5.1 1.3 — 5.7 — 1.3 — 5.2 1.0 — 7.1 .1 1.4 — .7 — 2.7 About 150 million dollars of hoarded currency was returned to banks between March 13 and May 17, an amount considerably in excess of that withdrawn during January, February, and the first few days of March. Borrowings from the reserve bank had been reduced to the low levels of early February, and member bank re serve deposits had been built up to the highest level since the latter part of 1931. Banks had also restored a considerable part of their de posits with eastern correspondents, which had been drawn upon heavily during February. On the other hand, several banks which had failed to reopen following the banking holiday were in the process of liquidation on May 17, and quite a number, mostly in country areas, May, 1933 were still in the hands of conservators or were carrying on limited operations only. Also of importance was the fact that in reporting member banks which had been licensed to re open without restrictions, deposits had not re turned to the levels of January, notwithstand ing the fact that more currency had been de posited in banks by the public since March 13 than had been withdrawn previously this year. This failure of deposits to increase to January levels reflected chiefly two influences, one of which— gradual shrinkage of commercial and FEDERAL RESERVE BANK OF SAN FRANCISCO (in millions of dollars) r--------—------Gone lition----May 17, May 10, Apr. 19, May 18, 1933 1933 1933 1932 155 176 Total Bills and Securities........ 179 219 80 39 Bills Discounted .................... 37 73 12 21 5 17 Bills Bought .......................... 125 70 United States Securities.......... 125 125 Total Gold Reserves and Other 257 248 261 225 Total Deposits ............................ 166 169 160 156 Federal Reserve Notes in Circulation .............................. 223 241 261 245 Ratio of total Gold Reserves and Other Cash to Deposit and Federal Reserve Note Liabilities Combined ...................... 63.2 62.9 53.4 65.6 security loans— has been almost continuously in evidence since the end of 1929. For the banking structure as a whole, the repayment of a loan entails a corresponding reduction in deposits. The other important factor which has retarded the increase in bank deposits since the banking holiday has been the drain on local accounts for payments outside the district. This factor is represented by commercial and financial transfers of funds from the district for individuals and business houses in settlement of purchases of goods and securities or in pay ment for other services. W hen deposit accounts are checked against for payment of local obli gations, the check is deposited in some local REPORTING MEMBER BANKS-Twelfth District (in millions of dollars) Con<lition----- ...... .—^ r---------May 17, May 10, Apr. 19, May 18, 1933 1933 1933 1932 Loans and Investments— Total. ,. 1,690 1,693 1,663 1,708 1,009 Loans— Total ........................... 901 906 904 216 267 On Securities ...................... 213 213 All Other ............................. 688 691 690 742 Investments— Total ............... 789 699 789 757 United States Securities... 462 427 378 460 Other Securities .................. 327 329 330 321 Reserve with Reserve Bank. . . . 90 88 88 83 536 523 539 Net Demand Deposits .............. 523 Time Deposits ............................ 890 875 893 883 Due from Banks........................ 149 129 133 122 145 Due to B anks............................. 154 160 143 Borrowings at Reserve Bank. . . 32 30 60 64 bank, thereby having no net effect on aggregate district deposits. W hen a check is drawn to meet some obligation in other parts of the country, however, it results, when presented for payment, in the actual transfer out of the district of funds represented by the check, thus reducing local bank deposits. It is evi dent from this discussion that the failure of bank deposits in this district to recover to May, 1933 FEDERAL RESERVE AG EN T A T SAN FRANCISCO January levels by May 17 was not due to the retention by the public of currency withdrawn at the time of the banking disturbances of Feb ruary and March, but resulted instead from the continued liquidation of loans and the move ments of funds for ordinary commercial and financial transactions. On May 2, Twelfth District banks were allotted 86 million dollars of the Treasury’s 572 million dollar issue of 2 % per cent notes maturing in 1936. This purchase required only a small outlay of cash, since 6 million dollars of maturing securities and 67 million dollars of deposit credit were tendered the Government in payment. During the week ending May 3, city banks reported an increase of 50 million dollars in Government deposits and an in crease of 33 million dollars in investments in Government securities. The fact that the in creases in these two items were not greater indicated that the Government had drawn heavily upon the newly created deposits and that member banks had sold considerably more than half of the securities allotted to them. Most of these sales were made in New York. 39 Since the amount of Government securities sold outside the district exceeded the reduc tion in Government deposits, banks were pro vided with funds which were used for reduc ing borrowings from the reserve bank. In ad dition to the gain from other districts through private banking and commercial transactions, which amounted to 10 million dollars between April 19 and May 17, United States Treasury expenditures in excess of collections totaled 13 million dollars. Funds from these two sources together with a 22 million dollar re duction in the demand for currency, permitted banks not only to reduce their use of reserve bank credit by 36 million dollars, but also to build up their reserve deposits by 9 million dol lars. Reserve bank credit is currently only slightly higher than in the early weeks of 1933 and considerably lower than during most of the past two years. The number and value of shares traded upon the stock exchanges of the Pacific Coast were double those of any other month thus far in 1933 and were exceeded in 1932 only in the month of August. Prices continued to advance. S U M M A R Y O F N A T I O N A L C O N D IT IO N S Prepared by the Federal Reserve Board Industrial activity increased considerably during April and the first three weeks of May and wholesale prices of many leading com modities advanced, particularly in the latter part of April and the early part of May. Fol lowing the imposition of an embargo on gold on April 20 the exchange value of the dollar declined and on May 20 was 87 per cent of its gold parity. Production and Employment. Volume of industrial production, as measured by the Board's seasonally adjusted index, increased from 60 per cent of the 1923-1925 average in March to 67 per cent in April, as compared with 63 per cent a year ago and a low of 58 per cent last July. Activity at steel mills in creased from 15 per cent of capacity in March to 25 per cent in April and there was a fur ther increase in the first three weeks of May. Increased activity in the steel industry re flected chiefly increased demand from auto mobile producers and from miscellaneous sources, while demand from the railroad and construction industries continued at low levels. A t textile mills and shoe factories, production increased considerably during this period. Out put of petroleum fluctuated widely, declining in the middle of April and subsequently in creasing to a high level. Volume of factory employment and payrolls increased between the middle of March and the middle of April by an amount somewhat smaller than the decrease in the preceding month. Value of construction contracts, as reported by the F. W . Dodge Corporation continued at previous low levels in April, but showed a considerable increase in the first half of May. Total value of awards in these six weeks was considerably smaller than in the correspond ing period a year ago. Distribution. Freight traffic, which was at a low level in March, increased during April and the first two weeks of May by more than the usual seasonal amount, reflecting chiefly large increases in shipments of miscellaneous products, grains, and livestock. Department store sales increased sharply from March to April and the total for these two months showed slightly more than the usual seasonal increase over the volume of sales in January and February. Wholesale Prices. During April, particu larly in the latter part of the month, there were M O N T H L Y R EVIEW OF BUSINESS CONDITIONS 40 substantial increases in the wholesale prices of grains, flour, sugar, textile raw materials and finished products, hides, pig iron, nonferrous metals, and rubber. Prices of most of these commodities continued to advance rapidly in the first two weeks of May and showed little change in the third week of the month. Prices PERCENT May, 1933 used to reduce reserve bank holdings of ac ceptances by an additional $130,000,000 and to liquidate $85,000,000 of member bank indebted ness at the reserve banks. A s the result of an addition of about $100,000,000 to the reserve banks' holdings of gold, and a further reduc tion of Federal reserve notes in circulation, the reserve ratio of the reserve banks rose consid erably between April 19 and May 17. The decline in Federal reserve notes reflected in part an increase of $50,000,000 in Federal re serve bank notes in circulation. Loans and investments of reporting mem- INDUSTRIAL PRODUCTION Index numbers of industrial production, adjusted for seasonal varia tions (1923-1925 average = 100). of livestock, which did not advance in April, increased considerably in the first three weeks of May. Silver prices, after advancing by a substantial amount in the latter part of April, subsequently showed a decline, and petroleum prices also were reduced. Foreign Exchange. During the four weeks following the imposition of the embargo on VALUE OF BUILDING CONTRACTS AWARDED Indexes based on three-month moving averages of F. W. Dodge data for 37 Eastern states, adjusted for seasonal variations (1923-1925 average=100). gold the exchange value of the dollar declined to 83 per cent of its gold parity on May 5, but subsequently rose to 87 per cent on May 20. The noon buying rate of cable transfers on the French franc rose from 3.98 cents on April 18 to 4.50 cents on May 20, and the rate on the English pound rose from $3.49 to $3.87. Bank Credit. During the four weeks ending May 17, about $215,000,000 of additional cur rency was returned to the reserve banks, and on that date all but $200,000,000 of the $1,930,000,000 withdrawn by banks and individuals between February 1 and March 13 had been returned. Funds arising from the return of currency during the four week period were RESERVE BANK CREDIT AND PRINCIPAL FACTORS IN CHANGES Wednesday figures. Latest figures are for May 17. ber banks in New York City increased by about $400,000,000 between the middle of April and the middle of May, reflecting chiefly a growth of $200,000,000 in loans on securities, and of $140,000,000 in investments in United States Government securities. Net demand deposits also increased by about $400,000,000, of which about one-third represented a further growth of bankers’ balances. Money rates in the open market continued at low levels.
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