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MONTHLY REVIEW OF B U S IN E S S C O N D IT IO N S ISAAC B. N EW TO N , Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. X V III San Francisco, California, May 21,1934 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 industrial output increased slightly less than the estimated seasonal amount during April. Industrial employment continued to expand. Failure of the industrial production index to advance the full seasonal amount resulted mainly from a smaller than usual increase in lumber output, although production of flour and cement also declined. There was little change in petroleum production or refining. The value of building permits issued was lower in April than in March. New contracts for engineering projects were lower in April than in any other month this year, although general reports indi cate that construction activity on jobs for which contracts had been let previously con tinued to expand. A substantial increase in elec tric power consumption during April repre sented largely, if not entirely, the increased use of electricity for pumping irrigation water in California necessitated by a shortage of rain fall and stored irrigation water. Reports of trade activity during April show considerable irregularity. Department store sales declined, even after giving consideration to the fact that Easter shopping came in March this year. Intercoastal shipment of goods through the Panama Canal also decreased. On the other hand, freight carloadings, perhaps the most comprehensive single indicator of distri bution, increased by moderately more than the usual amount and check payments by individ uals also expanded. Sales of new automobiles increased seasonally, while wholesale trade de clined moderately as is customary during April. While rainfall was inadequate in most parts of the district during April, the shortage was not generally harmful to the immediate condi tion of crops or livestock ranges, except in cer tain scattered areas where dryness was particu larly acute. Although the continuation of extremely mild weather hastened crop matur ity, it also stimulated infestation by insects in some cases. There was a slight decline in prices of farm products during April, but quotations tended upward in the first two weeks of May. Excess reserves of member banks were at record high levels during the entire four weeks ending May 16. Additions to surplus funds were made possible by the continued excess of the Federal Government’s disbursements over its collections in this district. During the period under review this excess was about 10 million dollars larger than a net outflow resulting from the settlement of commercial and financial bal ances with other districts. Government de posits were reduced, but as the Treasury disbursed the funds they were converted into deposits of individuals and corporations. In vestment holdings of reporting member banks increased, while total loans changed little. Agriculture Weather conditions in the Twelfth District generally continued favorable for the growth of crops and livestock and for farm field work during April. Rainfall was below normal, but not seriously so except in small areas in Utah, central Oregon, southern Idaho, and the San Joaquin Valley in California, where lack of moisture is retarding crops and drying up ranges. Light rains in northern California early in May, while beneficial to range grass and late grain crops, caused considerable damage to strawberries, cherries, and cut hay. Snow surveys in the higher mountains show that, although the moisture content of snow yet remaining on the ground is unusually high, the run-off may be as low as 20 per cent of normal during the remainder of the season in some places. So large a reduction in the flow of streams definitely foreshadows a shortage of irrigation water during the summer months which is likely to offset the beneficial effects of the unusually mild winter and favorable growing weather of the spring. Although condition estimates declined dur ing April, winter wheat is currently in much better condition than a year ago in the impor tant wheat producing states of the district. 34 Considerable damage by aphis and Hessian fly in wheat fields in Oregon is reported, however, as a result of unusually warm weather. Spring wheat made rapid advances during April and is now in good condition except in dry areas. May 1 condition figures indicate a California barley crop of 649,000 tons according to the California Cooperative Crop Reporting Service. This compares with 587,000 tons produced last year, and with the unusually heavy outturn of 942.000 tons in 1932. Average output for the years 1926-1930 was 665,000 tons. Growth of most field crops was aided by warm weather during April. In California, cot ton is well advanced for this time of year in the Imperial Valley and is now being planted in the San Joaquin Valley. Under the recently en acted Bankhead cotton control bill the untaxed marketing of cotton grown in 1934 in California and Arizona is limited to 200,000 bales and 73.000 bales, respectively. Last year’s crop amounted to 217,000 bales in California and 96.000 bales in Arizona. Early plantings of sugar beets made good progress throughout the district during April. The seeding of rice in California was completed under favorable con ditions in early May. Hops have shown an irregular growth this season and downy mildew has been reported in some California and Oregon yards. Marketing of California Navel oranges ex tended into May. Quality of the fruit continued good and prices were above those of last year. This year’s California Valencia orange crop is expected to be one of the largest on record. Some early export shipments were reported during April. Lemon shipments were larger than a year ago, and average prices received by growers in April were higher than in the corre sponding month of each of the three preceding years. The condition of maturing truck crops in California improved under favorable weather conditions in the latter part of April and ship ments to market were of fairly good quality. Imperial Valley cantaloupe shipments during April totaled more than 500 cars, the heaviest early season movement in several years. Plant ings of cantaloupes in California are in excellent condition and are unusually advanced in growth. Mild winter weather throughout the district has resulted in an early season for deciduous fruit and nut crops, but a heavy infestation of insect pests and plant diseases has occurred. No reliable estimates of production of decid uous fruits in the Pacific Northwest are yet available, although the set of fruit was fairly heavy. Maturing from two to three weeks earlier than usual, California peaches, plums, and apricots reached the market in fairly large early season volume beginning with the first M a y , 1934 M O N T H L Y REVIEW OF BUSINESS CONDITIONS week of May. The California cherry crop was estimated at 16,000 tons on May 1, compared with production of 25,000 tons last year and an average annual production of 19,000 tons from 1928 through 1932. Shipments of cherries through the last two weeks of April were 78 cars. No cherries were shipped during that period last year. Although the quality of cher ries is only fair this year, prices for canning fruit are reported to average nearly double those of a year ago. The apricot crop, the condi tion of which is reported to be 39 per cent of a full crop, will be the smallest in many years. The present outlook for other California decid uous fruits indicates that production of most crops should approximate that of 1933. The out turn of late maturing fruits will no doubt be adversely affected by lack of irrigation water later in the season. Indicated production of eggs in Pacific Coast states was smaller in April than in March. A t the same time, demand for eggs for storage in creased. Reflecting these factors, egg prices advanced moderately and at present are only slightly below prices in effect a year ago. Butter receipts at Pacific Coast markets were unusually large in April and some addition was made to storage holdings. The price of butter fluctuated irregularly and in mid-May was slightly lower than a month earlier. The condition of ranges declined in most parts of the district during April, reflecting the general lack of moisture and relatively high temperatures. W arm weather favored late lambing and losses were light. Shipments of early spring lambs from the San Joaquin V al ley in California were finished in early May. This season’s movement had amounted to about 369,000 head by May 14, compared with 289,000 head shipped during the corresponding period of 1933 and 346,000 in 1932. Prices for lambs shipped this year averaged about 50 per cent higher than in the spring of 1933. Sheep shear ing is progressing satisfactorily throughout the Agricultural Marketing Activity— Carlot Shipments Apples and pears. Citrus fruits.......... Vegetables ............ Exports W h ea t (bu.) ____ Barley (bu.) . . . . t----------- A p r il-------------\ 1934 1933 1, 535 1.891 6,270 6,310 9,347 8,692 r— Season to D ate— -s 1934 1933 33,676 39,600 30,123 30,608 64,840 55,301 4,148,224 269,750 2,499 259,791 17,867,371 4,985,973 85.636 190,247 347,702 189,414 7,682,287 3,950 518 68,025 218,849 307,249 193,614 5,891,449 3,817 411 2,104,406 6,511,410 Receipts E g gs (cases) . . . . Butter (lb s.) . . . . W heat (carlots) . . Barley (carlots) . . Storage H oldings (end of month) W heat (bu .) . . . . Beans (bags) Butter (lbs.) E g gs (cases) . . . . r in April 4,303.000 1,276,000 1,650,000 459,000 ha ^ M arch 5,964,000 1,441,000 1,298,000 234,000 359,010 271,221 971,398 1,018,862 960,968 924,486 705,229 630,144 25,159,861 23,194,776 50,466 37,804 5,513 5,955 r x' April 2,387,000 840,000 659.000 453,000 March 2,360,000 1,107,000 171,000 238,000 M a y , 1934 FEDERAL RESERVE AG EN T AT SAN FRANCISCO district with a considerable part of the wool be ing- shipped on consignment. Condition of cattle changed little in April except on the drier ranges of the district. Calf crop prospects are generally favorable and early calves are mak ing good gains. Except in the north San Joa quin and Sacramento Valleys where range for age is abundant, supplemental feeding will be necessary to finish grass-fattened beef cattle for market. 35 month, but 6 per cent higher than a year earlier. A s indicated by the accompanying chart, steady expansion has taken place since March, 1933, in employment in iron and steel indus tries of California, where the bulk of this type of manufacturing in the Twelfth District is located. Increases in the number employed in the fabrication and assembling of structural iron and steel have been especially sharp, re- Industry After expanding gradually since last October, Twelfth District industrial activity changed little during April. Industrial employment con tinued to increase. This bank’s seasonally adjusted index of em ployment in California (which excludes can ning activity) advanced from 81 (1926 = 100) in March to 83 in April, the highest for any month in three years.* Including workers at canneries, the number of which had increased substantially in March as a result of an early season for canning spinach and asparagus, total number of employed in California showed a rise of but 3 per cent instead of the usual seasonal 1928 1929 ¡9 3 3 1934 E M P L O Y M E N T IN T H E M E T A L S P R O D U C T S IN D U S T R IE S —California Index of the California State Division of Labor Statistics and Law Enforcement, converted to a 1923-1925 base=100. Not adjusted for seasonal variation. fleeting principally increased requirements for construction of several large engineering proj ects, although the manufacture of other finished products of rolling mills and forging presses has required substantial additions to working forces. The number engaged in manufacturing and assembling automobiles and parts de clined in the latter part of 1933, but has ad vanced sharply since that time. Employment at foundries also increased more than the average of total employment. Aggregate employment I N D U S T R I A L E M P L O Y M E N T —California* Employment- increase of about 6 per cent during April. In practically all other major industries, the num ber of wage earners increased moderately fur ther during April. Motion picture producers added substantially to their forces, offsetting a decline in the previous month. Manufacture of aircraft and aircraft parts also required a much larger number of employees in April than in March, reflecting a continuation of the improve ment in this industry during recent months. Employment in a representative group of iron and steel industries remained unchanged during the month at levels approximating those of late 1931. Industrial payrolls in California changed little during April, following increases in the four preceding months. Average weekly earn ings were slightly lower than in the preceding *In the industrial employment chart on page 26 of the M onthly Review for April 20, 1934, the index number for September, 1933, was shown as 88. I t should have been 77. OregonNo. of -California— Index adjusted for seasonal variation. Excludes canning and preserving industry. (1923-1925 average— 100). Industries All Industries* Stone, Clay and Glass Products. of April, Firms 1934 .1,146 160,964 (+24.6) 59 Lum ber and W ood Manufactures . . 122 April, 1933 129,236 of Firms 116 April, 1934 18,131 (+ 3 6 .4 ) April, 1933 13,288 6,049 ( + 36.2) 4,441 3 69 ( + 200.0) 23 15,090 ( + 43.0) 1,556 ( + 48.5) 10,552 41 7 9.865 ( + 44.1) 1,793 ( + 59.8) 6,844 1,048 11 Clothing, Millinery, and Laundering. ' 139 1,122 144 10,121 6$ 142 10,435 (— 1.4) ( + 3.1) Food, Beverages, 30 1,354 and Tobacco . . 284 40,612 38,345 1,027 ( + 5.9) ( + 31.8) Public U tilitie s ... 47 44,343 44,606 (— .6) Other Ind ustries!. 478 71,848 58,045 ( + 23.8) 53 15,374 6,684 Miscellaneous 29 4,908 4,128 ( + 130.0) ( + 18.9) W holesale and 228 32,270 28,780 ( + 1 2 .1 ) *Public utilities and wholesale and retail figure's not included in this total, fIncludes the following industries: Metals, m a chinery, and conveyances ; leather and rubber goods, oils and pa in ts; printing and paper goods. JLaundering only. Figures in parentheses indicate percentage change from April, 1933. M O N T H L Y REVIEW OF BUSINESS CONDITIONS 36 in this group of industries was 30 per cent larger in April, 1934, than in April, 1933. Crude oil production increased slightly to a daily average rate of 482,000 barrels during April. Although output continued to exceed proration allotments, the margin of excess was smaller than in March, allowables having been increased 9,000 barrels daily to 462,500 barrels in April. Quotas for May were set at 466,000 barrels daily, while actual production during the first three weeks of that month averaged 487,000 barrels daily. Oil refining, as indicated by the amount of crude oil run to stills, was more active in April than in March. Despite increased production, some withdrawals of gasoline from storage were necessary. Prices of gasoline fluctuated in some parts of the district, but showed little net change between mid-April and mid-May, re maining at the lower levels established in March. Lumber mill operations usually expand dur ing April, but no change was recorded in that month this year, and this bank’s seasonally adjusted index decreased from 55 per cent of the 1923-1925 average in March to 51 per cent. Shipments, although larger in April than in March, remained below production, resulting in further additions to inventories at the mill. Late in the month, however, the amount of new orders received increased substantially. The value of new construction undertaken declined during April to the smallest monthly total this year. Most of this decline was the result of a reduction in the amount of contracts awarded for public works. During recent months public works have been comprised al most entirely of projects made possible by loans and grants from Federal Government Industry — Indexes of daily average production, adjusted ( daily averagre= li>34----Apr. M ar. Feb. General 49 49 47 Carloadings— Industrial. 145 Elee. Power Production 15011 147 1923-1925 Manufactures 55 51 Lum ber ................................ 128 Refined Mineral O i l s t . . Flour .................................... lÔiïï 106 Slaughter of Livestock. 104 103 73 76 C e m e n t .................................. 71 W o o l C on su m p tion !. . . . Minerals 72 73 Petroleum (C a liforn ia)! Lead (U nited S t a t e s ) !. Silver (United State's) Building and Construction§ 34 29 Total .................................... Building Permits— Value 10 11 Larger Cities ............... 18 19 Smaller Cities ............ Engineering Contracts Aw arded— Value 61 66 Total ........................... 136 Excluding Buildings 114 for seasonal variation 100) A Jan. 48 144 -1 9 3 3 Apr. Mar. Feb. 30 30 35 136 136 136 107 42 79 28 113 92 103 52 80 64 37 69 64 37 72 45 36 45 44 71 40 30 33 33 47 40 47 10 13 10 11 10 12 97 223 73 178 93 230 111 75 107 68 10 9 14 11 69 145 73 127 29 133 29 115 80 103 40 53 107 99 113 85 94 52 107 95 102 66 122 !N o t adjusted for seasonal variation. ^Prepared by Federal Reserve Board. § Indexes are for three months ending with the month indicated. Preliminary. M a y , 1934 agencies. A survey shows that, while allot ments under the Federal public works program now approximate the total amount thus far authorized to be expended in the Twelfth Dis trict, many contracts, especially for nonFederal work, have not yet been awarded. Much of the work for which contracts have already been awarded, however, is now well under way or about to be started. Only a small proportion of the projects for which allotments have been made was reported to have been completed. Commercial and industrial building awards also were smaller in April than in March, while residential construction showed slight further improvement. Flour production during April was the lowest since last September. Domestic shipments con tinued to increase, however, necessitating sub stantial withdrawals from inventories. Millers reported a reduction in their stocks of wheat. After declining in April, Pacific Coast prices of flour advanced in May, stimulated to some ex tent by increased buying from Atlantic sea board markets. Trade Daily average sales of department stores were smaller in April than in March. This de crease, which is contrary to the usual move ment between those months, resulted in part from the early occurrence of Easter this year. Although the seasonally adjusted index of de partment store sales allows for changes in the date of Easter, it declined from 78 in March to 71 in April, offsetting the advance in the pre ceding month. Year-period comparisons for March and April are likely to be misleading un less evaluated in the light of special develop ments. Thus, sales during March, 1933, were especially low, showing some influence of the banking holiday in that month. In the follow ing month, sales increased markedly, even after allowance for the late Easter in 1933. The situa- Distribution and Trade— t----------------- 1934-----------------x ,------------1933------------ \ Apr. M ar. Feb. Jan. Apr. M ar. Feb. Indexes adjusted for seasonal variation Carloadings^ (1923-1925 average=100) 67 52 65 64 66 48 50 Merchandise . . . 79 79 80 67 78 65 64 Intercoastal Trade 86 91 72 Total ...................... 60 95 59 58 W estbound . . . . 88 81 71 73 60 57 58 86 105 Eastbound .......... 69 60 99 63 59 Retail Trade Automobile? Sales$ 60 60 52 T o t a l ................. 36 37 27 33 Passenger . . . 55 55 48 31 36 27 32 Commercial . . 112 112 99 87 48 33 40 Departm ent Store 71 Sales$ ............... 78 72 69 68 57 64 Stocks§ ............ 64 62 64 65 54 56 58 4 1 C ollection s# Actual .Figures r Regular . . . 45.1 43.6 46.9 46.7 41.0 38.6 39.0 Installm ent. 17.6 16.9 18.1 17.5 14.0 13.4 13.4 JDaily average. § A t end of m onth. # P e r cent of collections dur ing month to amount outstanding at first of month. M a y , 1934 tion was reversed in practically every respect in 1934; sales during March were at compara tively high levels, partly because of Easter shopping, while April sales were comparatively low. The 40 per cent year-period gain in March is not therefore directly comparable with the 2 per cent gain in April. W hen sales for March and April are combined, they show an increase in value of 19 per cent in 1934 over these two months in 1933. Inventories of department store goods expanded by more than the seasonal amount during April, and were 19 per cent larger than a year earlier. R E T A I L T R A D E —Twelfth District Percentage changes in value of sales and stocks t-------------- 1934 compared with 1933-------------- > ,--------- N E T S A L E S ---------- N STOCKS March Jan. 1 to and end of April April April April Department Store's . . 1.6 ( 67) 19.3 17.7 18.5 (49) L os Angeles ..........— 2.8 ( 7) 15.0 15.0 24.7 ( 7) Other So. California 3.5 ( 7) 28.8 18.4 7.2 ( 4) Oakland ................... — 7.1 ( 4) 12.4 10.1 14.4 ( 4) 3.2 ( 8) 19.8 17.6 17.1 ( 7) San F r a n c i s c o ____ Bay R e g i o n ............ 0.8 ( 16) 18.2 15.9 16.1 ( 15) Central C aliforn ia .. — 4.1 ( 6) 17.4 18.1 14.3 ( 6) P ortland! ................. 5.0 ( 7) 20.3 19.1 5.8 ( 6) Seattle ........................ 11.5 ( 4) 26.7 21.7 15.8 ( 4) S p o k a n e ...................... 16.3 ( 4) 39.6 38.9 7.3 ( 4) Salt Lake C i t y ____ 1.0 ( 4) 16.8 20.5 39.9 ( 3) Apparel S t o r e s ............ 2.2 ( 33) 22.0 24.6 37.3 (20) Furniture Stores . . . . 21.1 ( 34) 31.8 30.1 15.3 (26) A ll S t o r e s ...................... 3.4 (134) 20.7 19.5 19.6 (95) flnclud es five apparel stores which are not included in district department store total. Figures in parentheses indicate number of stores reporting. After a large expansion in March, wholesale sales receded moderately during April, but the decline in that month was no larger than is or dinarily expected for April. In general, sales in those lines which had shown the most pro nounced increases in the preceding month de creased by the largest amount. Sales of elec trical supplies, however, expanded sharply fur ther, and the more moderate rise in automobile supplies and hardware also continued. The year-period increase in aggregate wholesale trade wras 30 per cent. The Bureau of Labor W H O L E S A L E T R A D E —Twelfth District Percentage changes in value of sales April, 1934 ?— compared with — \ Mar., 1934 Apr., 1933 Agricultural Implements . . . . — 30.6 71.4 Autom obile Supplies ............ 10.9 21.6 D rugs .............................................. — 15.9 28.0 D ry Goods .................................... — 10.0 29.3 Electrical S u p p lie s ...................... 19.3 73.5 Furniture ....................................... — 10.6 19.6 Groceries ......................................... — 13.5 6.8 Hardware ...................................... 3.6 50.3 Shoes ................................................ — 28.8 16.7 Paper and Stationery ...............— 25.0 20.3 A ll Lines ......................................... — 8.3 29.8 Cumulative 1934 compared with 1933 146.4 22.8 38.0 42.2 60.0 62.3 21.5 58.0 51.2 42.0 40.3 Statistics’ index of wholesale prices of finished products stood at 77 per cent of the 1926 aver age during April, the same as in March. This compared with an index of 66 in April, 1933. The number of new automobiles sold during April was 8 per cent larger than in March, which is about the customary amount of in crease between totals for those two months. 37 FEDERAL RESERVE AG EN T AT SAN FRANCISCO April sales were larger than in any other month since July, 1931. Registrations of passenger cars were SO per cent larger than in April, 1933, while sales of commercial vehicles were more than double those of a year earlier. Freight moved on district railways increased by slightly more than the usual seasonal amount during April. Since the sharp advance last November, this bank’s adjusted index of carloadings has shown very little change. Both industrial loadings and merchandise and mis cellaneous shipments have been relatively stable during this period. Carloadings originat ing in California have tended upward slightly during the past four months, offsetting a de cline of about the same amount in Pacific Northwest loadings. Cargo moving through the Panama Canal between Atlantic and Pacific Coasts of the United States was smaller in tonnage during April than in March, but remained above Janu ary and February levels. The decline for the month was entirely the result of a decrease in eastbound tonnage, which had risen sharply in the three preceding months. Westbound traffic expanded considerably further during April. Prices Prices of Twelfth District agricultural prod ucts showed little net change during the six weeks ending in mid-May, gains in the first half of May offsetting losses in the last half of Bank Debits*— Arizona Phoenix ............ ,$ California Bakersfield . . . . B e r k e le y ............ Fresno .............. L ong Beach . . . L os Angeles . . . Oakland ............ Pasadena ............ Sacramento . . . San Bernardino San Diego . . . . San Francisco. . San Jose ............ Santa Barbara . Stockton ............ Idaho April 1934 23,448 $ April 1933 17,818 $ First four months 1934 1933f $ 63,705 93,643 25,031 44,754 44,613 82,610 1,874,808 642,974 71,037 118,565 18,501 8,680 18,807 16,252 23,880 545,071 162,848 19,595 52,971 5,677 32,541 714,405 15,965 8,179 12,930 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 33,890 88,740 66,493 90,275 2,177,827 618,064 76,820 184,587 22,814 122,559 2,774,940 60,831 31,608 51,684 2,234,470 49,086 26,984 37,503 11,119 7,205 42,386 30,774 6,753 3,988 25,157 15,531 4,144 121,044 2,717 91,169 14,407 474,905 9,850 326,983 17,324 43,972 8,361 35,937 45,830 173,699 27,841 145,326 4,829 5,607 133,747 26,692 22,819 3,642 8,435 3,423 3,831 102,542 16,980 16,044 2,599 5,586 17,507 20,123 517,191 102,348 85,772 15,317 36,158 13,700 14,939 397,371 70,251 61,947 9,922 22,183 Total ............ $2,071,376 $1,645,347 $8,065,575 $6,593,280 112,021 Nevada O regon Eugene ................ Portland .............. Utah Salt Lake City. . W ashington Bellingham Spokane .............. Tacom a .............. W alla W alla . . . Y a k i m a ................. *In thousands of dollars, tMarch, 1933, figures were incomplete for some cities during the banking holiday period. 38 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS April. Contract prices for wheat at Chicago advanced, and on May 21 were the highest since February. In the Pacific Northwest, the Emer gency Export Corporation cash wheat price reached 80 cents per bushel in the third week of May, the highest price paid since that organi zation commenced operations last autumn. Cash prices for barley and oats changed little, and quotations on rice, hops, hay, potatoes, and beans were relatively stable. Cotton quotations rose moderately in May, but were lower in the middle of that month than a month earlier. Except for a slight increase in canned pear quotations, canned fruit prices remained un changed during April and the first half of May. Dried apple prices declined during this period while dried apricot prices continued to advance. Dried prune and raisin prices changed little. Quotations on copper produced in accordance with the provisions of the new code for that metal remained at 8^2 cents per pound in New York. Spot prices for silver fluctuated consid erably, but showed little net change between mid-April and mid-May. Lead prices were steady, while zinc prices declined slightly. Lumber quotations remained about the same in April as in March while Pacific Coast prices for cement declined slightly. The Credit Situation Deposits and investments of city member banks increased during the four weeks ending May 16. Excess reserves expanded further as net Government disbursements continued to bring funds into the district. Numerous small imports of gold from the Orient were deposited with the San Francisco' Mint. These imports, plus sales of locally produced gold, were valued at 5 million dollars. The balance of payments with other districts was unfavorable to the Twelfth District during late April and the first half of May, the bulk of the outward movement going to New York. Funds moved into this area from most other Federal reserve districts. The net outflow was more than offset by United States Treasury dis bursements in excess of local collections. The Government, having offered no large issues of securities to banks during the four weeks, drew upon its deposits with commercial banks, reduc ing them from 95 million dollars on April 18 to 79 millions on Ma}^ 16. This spending reduced Government deposits and increased individual deposits, both time and net demand deposits showing some rise. The amount of bankers’ balances held by city banks, especially in San Francisco, was larger than a month earlier. Investments of city member banks increased 18 million dollars during the four weeks ending May 16. Total loans remained unchanged, a slight increase in open market loans in New M a y , 1934 York being offset by decreases in commercial and real estate loans. Excess reserves of member banks increased further to an average of about 75 million dol lars during the entire period under review. This excess, which is 50 per cent of required reserves of 150 million dollars, was divided between city and country banks approximately in proportion to the reserve requirements of each group. M IL L IO N S O F D O L L A R S M E M B E R B A N K R E S E R V E S —Twelfth District (Monthly averages of daily amounts. M ay figures preliminary.) Banks in the Twelfth District have not, in the past, carried large amounts of excess re serves. As in the United States as a whole, Twelfth District banks formerly used prac tically all of the surplus funds available and, consequently, the average of reserves carried was usually only moderately higher than re quirements. In late 1931 an outflow of funds to other districts necessitated increased borrow ings from the Reserve Bank, and from that time until the banking crisis of March, 1933, Twelfth District banks carried smaller excess reserves than at any time in several years. Gains of funds by banks as a result of United States Treasury disbursements in excess of collections were substantial during this period, but the continued outflow of commercial funds and reductions in borrowings from other institu tions resulted in the use by banks of nearly all such funds at their disposal. After March, 1933, however, the return of currency from circula tion and the additions to banking funds due to net United States Treasury expenditures en abled banks to reduce their indebtedness to the lowest levels since the first year or two of operation of the Federal Reserve System. The reduction of indebtedness had largely elimi nated discounts at the Reserve Bank by the autumn of 1933, and was accompanied by the accumulation of substantial amounts of ex cess reserves. This tendency has continued steadily to the present time. M a y , 1934 FEDERAL RESERVE AG EN T A T SAN FRANCISCO 39 S U M M A R Y OF N ATIO N A L CONDITIONS Prepared by the Federal Reserve Board Volume of manufacturing production in creased during April, while the output of mines declined. Employment and payrolls continued to increase. The general level of commodity prices remained substantially unchanged dur ing April and the first three weeks in May, al though prices of individual commodities showed considerable change. Production and Employment. Production of manufactures which had increased continuously since last November, showed a further advance in April, according to the Board’s seasonally adjusted index, while output of mines was smaller in April than in March. The Board’s combined index of industrial production re mained practically unchanged at 85 per cent of the 1923-1925 average. The growth in manu facturing reflected increases in iron and steel, automobiles, and meat packing. Lumber pro duction declined in April, and activity at wool and silk mills was considerably reduced, while cotton consumption by mills showed little change. Crude petroleum output continued to increase, but there was a more than seasonal decline at the beginning of April in the mining of both anthracite and bituminous coal. During the first two weeks of May steel operations in creased further, but declined somewhat in the third week. Output of automobiles decreased considerably in May. Volume of employment and wage payments continued to increase in April and employment in factories, according to the new index of the Bureau of Labor Statistics, was larger than at any time since the end of 1930. There was a substantial seasonal increase in the number of workers employed in private construction as well as in those engaged in projects financed by the Public W orks Administration. Employ ment on railroads, in metal mining and quarry ing, and in various service activities also in creased further, while in coal mining there was a considerable decrease. Construction contracts awarded during April, F E D E R A L R ESE R VE B A N K O F S A N F R A N C IS C O (in millions of dollars) -------------N Condition f-------------M ay 16, M ay 9, Apr. 18, M ay 17, 1933 1934 1934 1934 168 168 176 167 Total Bills and Securities............ 1 39 1 1 Bills D is c o u n te d .......................... 12 1 1 Bills Bought ................................. 125 166 166 166 United States Securities . . . . 299 296 257 296 Total Reserves .................................. 248 166 248 250 Total Deposits ................................. Federal Reserve N otes in 201 200 241 200 Circulation .................................... Federal Reserve Bank Notes in 4 C irc u la tio n ...................................... Ratio of Total Reserves to D e posit and Federal Reserve 63.2 66.1 Note Liabilities C o m b in e d ... 66.2 66.3 R E P O R T IN G M E M B E R B A N K S —Twelfth District (in millions of dollars) f--------------------Condition------- Loans and Investm ents— To ta l. Loans— Total ............................... On S e c u r itie s............................. All Other .................................... Investments— Total ................... United States Securities. . . . Other Securities ...................... Reserve with Reserve B ank. . . . N et Demand Deposits ................. Tim e Deposits .................................. Due from B a n k s ............................... Due to Banks .................................... Borrowings at Reserve B ank. . . . M ay 16, M ay 9, Apr. 18, M ay 17, 1934 1934 1934 1933 1,777 1,774 1,762 1,690 874 877 876 901 225 223 219 213 651 652 657 688 903 897 886 789 572 565 557 462 331 332 329 327 140 132 135 90 623 603 621 536 927 929 904 890 171 164 182 149 183 181 184 154 32 SO U R C E S A N D U SES O F B A N K I N G R E SE R V E S IN T H E 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 Changes in millions of dollars during the weeks indicated SO U R C E S O F F U N D S Reserve W eek Bank Ending Credit 1934 February 7. . . — .5 * February 14. , — 1.2 February 2 1 . . . February 28. . . — 1.2 M arch 7 .......... — .8 M arch 1 4 .......... — 1.2 M arch 2 1 .......... — .1 M arch 2 8 .......... __ 2 April 4 ............ April 1 1 ............ — .7 April 1 8 ............ . . . + 4 .1 --2 .9 April 2 5 ............ M ay 2 ............... + -2 — .2 M ay 9 .............. — .4 M ay 1 6 .............. Commercial Operations + 26.3 — 3.2 — 13.3 — 16.2 — • 2.2 — 6.8 — 15.8 + 12.7 b 3.2 + 9.5 — 13.1 + 1.4 — 3.6 — 2.7 — 4.1 Treasury Operations — 10.8 + 9.5 + 7.8 + 6.0 -1-15.2 - M 3 .6 + 2.4 + 3.2 — 4.4 + 14.6 + 1-2 + 3.0 + 6.7 + 3.1 + 6.3 r Total Supply + 15.0 + 6.3 — 6.7 — 10.1 + 11.8 + 6.0 — 14.6 + 15.8 — 1.4 + 23.4 — 7.8 + 1.5 + 3.3 + .2 + 1.8 W eek Ending 1934 February 7, February 14. . February 21. February 28. . April April April April M ay Demand for Currency . + 4.8 . — .4 . — 1.2 . ... + 1 .6 .. . + 2 .5 . . . — 4.3 — 2.2 , . . — .1 4 ............ . . . + 5 .4 11 ............ — 1.1 18............ — .7 2 5 ............ . . . — 3.9 2 .............. . . . + 1 .8 ... + 2 .5 . . — .7 Member Bank Reserve Deposits + 9.9 + 8.0 — 6.7 — 12.2 + 8.2 + 10.4 — 9.5 + 14.5 — 6.0 + 24.7 — 1.2 + 2.5 — 2.8 -r 3.2 + 2.0 Other F .R .B . Accounts + .3 — 1.3 + 1.2 + .5 + 1.1 — .1 — 2.9 + 1.4 — .8 — .2 — 5.9 + 2.9 + 4.3 — 5.5 + .5 Total Demand + 15.0 + 6.3 — 6.7 — 10.1 + 11.8 + 6.0 — 14.6 + 15.8 — 1.4 + 23.4 — 7.8 + 1.5 + 3.3 + .2 + 1.8 *Change less than $50,000. N ote— Beginning’ this month the demand factor “ Treasury cash and deposits at the Federal Reserve Bank of San Francisco’ 5 has been combined with the supply factor “ Treasury and National bank currency” to make the supply factor “ Treasury Operations.” Under this arrangement decreases in the item formerly shown as “ Treasury cash and deposits at the Federal Reserve Bank of San Francisco” which decrease the demand for banking reserves, will appear as increases in the supply of banking funds and increases in that item will have the opposite effect. This will be the same tabular arrangement as was used prior to dollar devaluation on February 1, 1934. 40 M O N T H L Y REVIEW OF BUSINESS CONDITIONS as reported by the F. W . Dodge Corporation, were smaller in value than during March. There was a substantial decline in public works con tracts, while contracts for privately financed projects showed a slight increase in April. Following extended drought in important grain areas, the Department of Agriculture forecast of the winter wheat crop wTas reduced from 492,000,000 bushels on April 1 to 461,000,000 bushels on May 1. This compares with 1933 M a y , 1934 silver, which declined sharply in April, rose during the first three weeks of May. Rubber prices advanced sharply until early in May but subsequently declined somewhat, and prices of textile products declined during recent weeks. Steel scrap has declined since March, while fin ished steel products, automobiles, non-ferrous metals, and building materials advanced. Cattle and beef prices rose during April and the early part of May while prices of hogs declined. 1934 I N D U S T R I A L P R O D U C T IO N Index numbers of industrial production, adjusted for seasonal varia tion (1923-1925 average = 100). a five-year average for 1927-1931 of 632,000,000 bushels. The condition of rye, hay, and pastures has also been adversely affected by the drought. Distribution. Railroad freight carloadings de clined in April as compared with March, and in the first half of May there was a smaller than seasonal increase in total loadings. The April decline was largely the result of a substantial decrease in coal shipments from the relatively large volume of March. Department store sales W H O L E S A L E P R IC E S Indexes of the United States Bureau of Labor Statistics. By months 1929 to 1931; by weeks 1932 to date. (1926=100). Bank Credit. Excess reserves of member banks remained at a level of about $1,600,000,000 between the middle of April and the middle of May. There were no considerable changes in monetary gold stock or in money in circulation. The total volume of reserve bank credit also showed little change. A t reporting member banks in leading cities in the five weeks ending May 16 there were decreases of about $240,000,000 in loans and of D E P A R T M E N T STOR E SALES M E M B E R B A N K C R E D IT Indexes of daily average value of sales. (1923-1925=100). Wednesday figures for reporting member banks in 90 leading cities. Latest figures are for M ay 16. showed little change from March to April, after allowance is made for differences in the number of business days, for usual seasonal changes, and for changes in the date of Easter. Sales continued larger than a year ago. Commodity Prices. The general level of wholesale commodity prices, as measured by the Bureau of Labor Statistics’ index, has shown little change during the past three months. Prices of grains, cotton, silk, and $80,000,000 in investments, the latter reflecting a decrease in holdings of securities other than those of the United States Government. Net demand and time deposits increased by nearly $200,000,000, while United States Government deposits were reduced by about $300,000,000. Short term money rates in the open market continued at low levels during May and yields on United States Treasury bonds declined fur ther to the lowest levels of the post-war period.
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