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Monthly FEDERAL RESERVE BANK OF NOVEMBER SAN FRANCISCO 1943 Review of Business Conditions— Twelfth District h e labor supply situation remains critical in most war production centers of the Twelfth District, intensive recruitment efforts notwithstanding. Estimated labor re quirements are not being met, even though anticipated peak employment levels are being reduced by concerns in which output per man-hour has increased substantially. Despite past and current deficits of workers, however, production in the major Twelfth District war industries has continued to expand, although the rate of expansion is slackening. In the older established industries, such as lumbering, production has not shown much change after allowance for seasonal factors, but output in those lines has at least been maintained in recent months. T Expansion of aircraft and shipbuilding output has occurred in the face of employment consistently falling short of hiring schedules, rapid turnover, and, to some extent, interruptions in the flow of materials. This has been made possible by greater efficiency in the utilization of manpower, equipment, and materials on hand. Factory Em ploym ent The number of wage earners employed in District manufacturing establishments (excluding canneries) in creased for 30 successive months through July 1943 when 1,252,000 wage earners were employed. In August, a decline of 2,000 workers occurred in the District as a whole, followed by a decline of 14,000 workers in Sep tember. Complete data for October are not yet available, but in California alone a net additional loss of 3,000 wage earners was reported for the durable goods industries, as shown below: Septem ber /--------A u gust to S eptem ber--------N to O cto b e r T otal M en A ir c r a ft, sh ipbu ildin g, and oth er tra n sp orta tion equ ipm en t . . . . — 14,500 — 11,300 I r o n , steel, and p r o d u c t s ............... — 700 — 700 F u rn itu re and w o o d p r o d u c t s .. . +700 +200 E lectrica l m a c h i n e r y ...................... +600 +200 O th er m a c h i n e r y ............................. +700 +100 A ll oth er du rab le g o o d s ................. — 900 — 800 T o ta l durable g o o d s ...............— 14,100 — 12,300 W om en Total — 3,200 0 +500 +400 +600 — 100 — 4,900 +600 +600 +600 +800 — 100 — 1,800 — 2,400 S o u r c e : C a liforn ia State D iv is io n o f L a b o r S tatistics and L a w E n fo rce m e n t. The important declines shown are attributed primarily to the reopening of schools and colleges. Whatever their cause, they emphasize the difficulties in achieving further expansion of the present labor force. O f the numerous steps taken by the War Manpower Commission to utilize manpower resources in the Twelfth District most efficiently, the most drastic was an order, effective November 15, establishing employment ceilings ★ in 10 San Francisco Bay Area counties. Under the order, no employer of 50 or more persons may hire more total workers than the maximum number on his payroll in October, or more men than 90 per cent of the maximum number of men on his payroll in October. This means that, until the number of men on a payroll drops below 90 per cent of the greatest number employed on any day in October, only women may be hired as replacements. Employers having less than 50 workers are exempted from the 90 per cent limitation on male employees, but the overall employment ceiling, based upon the maximum number employed on any one day in October, applies. The order reaffirms that no worker may transfer employ ment without conforming with present requirements of the W M C stabilization and referral regulations. Temporary increases in employment ceilings were granted twelve types of essential civilian activities, includ ing hospital care, scavenging, trucking and other specified transportation services, warehousing, lumbering, and cer tain food processing. Production a nd Productivity in the M a jo r W a r Industries Production of airplanes attained a new high in the third quarter of 1943, volume of output being more than three times that of a year earlier and probably ten times that of two years earlier. Employment in the Pacific Coast aircraft industry has declined moderately since April. In view of the inability of the aircraft industry to maintain, much less increase, employment, slackening in the rate of expansion in output is not unexpected. Production increases which did occur in the third quarter principally reflected increased effi ciency, mentioned earlier. Available information indicates that output per man-hour during the third quarter of this year was about four times that of two years earlier. Work completed on ships built for the Maritime Com mission likewise attained a new high during the third quarter, the volume of production reaching a level ap proximately 80 per cent above that of a year earlier. The bulk of the increase was largely a result of increased employment rather than, as in the aircraft industry, a result of increased output per man-hour. During 1942, output per man-hour increased at about the same rate in the aircraft and shipbuilding industries. In 1943, ship yard output per man-hour increased moderately, but out put per man-hour at airframe plants has increased sharp ly during this year. V ictcv u f, ★ ß tu f IdJasi ß c u tc ii a n d S t& n tfu l ★ 64 November 1943 FEDERAL RESERVE BANK OF SAN FRANCISCO Production a nd Productivity in the Lum ber a n d Petroleum Industries During the six months ended October 31, District lum ber production showed little change, and was 5 per cent lower than in the corresponding 1942 period. The prin cipal factor limiting production has been labor shortage, largely in the woods, as a result of Selective Service withdrawals and movements into farming and other in dustries. During the last six months, employment in the Pacific Coast lumber industry averaged 94,000, compared with 112,000 in the corresponding 1942 period, and 119,000 two years earlier. Production held up in 1942, despite employment losses, partly through increases in the average work week. The decline in output this year more nearly reflected the loss of workers, although a mod erate increase in output per man-hour is indicated. Since the first of the year, production of crude petrol eum in the Twelfth District has been maintained at an average rate of 776,000 barrels per day, compared with a pre-war level slightly over 600,000 barrels per day. In contrast with the lumber industry, where output has been limited by the manpower shortage, the current rate of petroleum output is apparently at the highest level com mensurate with established conservation practices. In mid-October, the Deputy Petroleum Administrator for War stated that petroleum production is and has been for some time at the maximum efficient rate. The increasing demand for petroleum products has been reflected in shrinking inventories. District stocks of residual fuel oil are less than half as large as in 1939-40, the sharpest decline having taken place this year. Gaso line stocks which reached a peak in April of this year as a result of restrictions on gasoline use have declined sharply since that time, military demand having jumped spectacularly. This was reflected in a cut in western gaso line allotments to A, B, and C coupon holders from four to three gallons per coupon, effective October 12. Production and EmploymentIn dex num bers, 1923-25 a ve ra ge = Í0 0 In d u stria l P r o d u c t io n 1 R efin ed O ils . C em en t .......... W h e a t F lo u r . P e tro le u m . . . W ith ou t Seasonal W ith Seasonal A djustm ent A d justm ent --------N 1942A ---------19431942 -1943Sept. A u g. J u ly Sept. Sept. A u g . July Sept. 159 152 150 p l5 2 137 141 127 p l3 1 ___ —. — 194 192 197 198 150 226 151 157 135 137 214 148 118 121 110 128 99 126 121 108 — — 110 118 118 118 p439 426 422 344 378 329 389 , , p419 P a y ro lls 2 3 4 E m p lo y m e n t 307 364 . . 235 221 242 , 154 312 371 237 220 247 161 314 370 244 230 252 164 257 295 215 199 225 147 311 366 242 230 249 159 315 372 242 226 251 161 315 370 246 232 254 168 262 298 222 206 232 151 636 747 486 417 . , 525 . . 327 618 470 399 511 335 625 717 509 451 543 334 463 524 393 346 420 232 641 749 497 402 552 332 629 730 499 428 540 324 621 716 490 434 537 327 468 527 402 334 441 231 P a y rolls .. 726 1 D a ily average. 2 1935-39 average’ = 100. 3 R ev ised series. B a ck figu res w ill b e su pplied o n request. 4 E x clu d e s fish, fru it, and v e g e ta b le can n in g. p P relim in a ry . Output per man-hour in crude petroleum producing dis played striking gains in 1942, but has since fallen off. The number of barrels of crude petroleum produced per man-hour in the third quarter of 1943 was 8.4, compared with 8.5 a year earlier, and 7.5 in the third quarter of 1941. Net refined production of petroleum products amounted to 10.2 barrels per man-hour in the third quar ter of 1943, compared with 10.9 barrels a year earlier, and 11.7 barrels in the third quarter of 1941. Departm ent Store Trade During the first 9 months of 1943 department store sales in the Twelfth District were fairly stable, after allowance for seasonal influences, and excepting the Feb ruary peak prompted by fears of clothing rationing. In October and in November, however, value of daily aver age sales jumped 11 and 18 percent although on the aver age no month-to-month change has been customary in recent years, and this bank’s seasonally adjusted index advanced 59 points from 189 percent of the 1935-39 aver age in September to 248 percent in November, the highest level yet reached. Some measure of the importance of that rise is indicated by the fact that in November actual dollar sales per day were exceeded in the past only by December sales in 1942. This indicates that a large num ber of people are doing their Christmas shopping earlier and more intensively this year than last year, when pre holiday trade was unusually active. The fact of increasing sales raises the question of supply: have stores been receiving sufficient goods to meet the demand, or are stores being sold out of business ? Preliminary data indicate that on October 31 the value of department store stocks was larger than a year earlier and only 3 percent below the record peak attained in July 1942. Concurrently, inventories offer a less wide selection than in 1942, and the quality of many items has declined. Apparently, however, stores have been able to replenish or find substitutes for their stocks of most goods, the principal exception being major household equipment. Inventories declined by about 33 percent from July 1942 to February 1943. Receipts of merchandise have exceeded sales, however, during each of the past eight months, and, on the basis of preliminary figures adjusted for price changes were considerably larger in October 1943 than Distribution and TradeIn dex num bers, 1935-39 daily a v e r a g e = 100 W ith Seasonal /---------A d ju s tm e n t Sept. R e ta il T ra d e D e p a rtm e n t S tore Sales (v a lu e ) T w e lfth D is t r ic t .......... .p l8 9 S o u th ern C a lifo r n ia .. . p l9 1 N o rth e rn C a lifo r n ia .. .p l7 8 P o rtla n d ....... ................ .p l 7 8 W e s te rn W a s h in g to n . .p 211 E a stern W a s h in g to n and N o rth e rn I d a h o .p l 8 2 P h o e n i x ........................... . p245 C a rloa d in gs ( n u m b e r )1 T o ta l .................................... . 108 M e rch a n d ise and M is c. 113 102 1 1923-25 daily average = 100. pPreliminary. 1943--------\ 1942 A u g. July Sept. W ith out Seasonal A d justm ent --------N -1943--------- V 1942 Sept. A u g . July Sept. 198 192 174 199 240 199 195 186 205 241 176 171 165 180 213 p l9 7 p l9 6 p l7 7 p202 p236 180 179 158 190 226 165 166 152 174 199 184 176 164 204 238 197 283 176 232 171 206 p207 p215 178 197 156 176 193 180 103 114 89 117 117 118 112 118 104 124 132 113 119 127 108 119 125 112 129 140 116 November 1943 65 M O N T H L Y REVIEW in any other month since before February 1940 when the figures were first compiled. Continued large receipts of goods have been one factor in reducing the volume of orders outstanding on October 31 by 28 percent from the wartime peak attained in June 1943. Also, a considerable reduction in new orders placed by department stores with their suppliers occurred during August and September. The Third W a r Loan Drive Total sales of Government securities during the Third War Loan Drive amounted to 18.9 billion dollars, all of which represented purchases by non-bank investors. In S ale s of S e c u r it ie s , T h ir d W a r L o a n D rive U n ite d S ta t e s a n d T w e l f t h D is t r ic t b y S ta t e s (millions of dollars) Total U n ited S t a t e s ............... 18,943 1,373 T w e lfth D is tr ic t2 ....... A r iz o n a 2 ................... 37 867 C a liforn ia ................. Id a h o ........................ 28 11 N evad a ...................... O re g o n ...................... 155 U ta h ........................... 54 221 W a sh in g to n ............ Sales to Individuals, Partnerships t—and Personal Trust Accounts—N ,— Sav. Bonds-y-^ Series Total Series E F & G Other Other1 5,377 587 17 364 16 6 86 17 81 13,566 785 19 503 12 5 69 37 140 2,472 316 10 191 10 3 37 13 52 565 68 2 49 1 1 5 1 9 2,340 201 5 123 5 2 44 3 19 i n c l u d e s corp ora tion s, associa tion s, state and lo ca l G overn m en ts, and F e d eral agen cies and trust funds. 2 I n c lu d in g sales in five’ southeastern co u n tie s o f A r iz o n a , w h ich are in the E leven th F ed era l R eserve D istrict. N o t e : F ig u res do n ot n ecessarily add to totals becau se o f m in or adju stm en ts. comparison, sales to non-bank investors in the April drive amounted to 13.5 billion dollars, and in the December 1942 drive to 7.9 billion. Twelfth District sales in the last drive totaled 1,373 million dollars, about 7 percent of the national total. Comparable sales in the District in the April and Decem ber drives were, respectively, 835 and 288 million dollars. National sales to individuals, partnerships, and per sonal trust accounts amounted to 5.4 billion dollars, com pared with sales of 3.3 billion in the second drive. Similar sales in the Twelfth District increased to 587 million dollars in the recent drive from 333 million in the second. Increased emphasis upon sales to individuals is reflected in the following relative increases in the third drive over the second: for the United States, total sales increased 40 percent, total sales to individuals, partnerships, and trust accounts increased 63 percent, and sales of Series E savings bonds, all made to individuals, increased 68 per cent ; for the Twelfth District, the corresponding increases were 64, 76, and 171 percent. Sales in every state in the District exceeded goals, the largest excess being achieved in Oregon with total sales of 149 percent of the goal. This figure was exceeded by only three states in the nation. Banking and Credit— Averages of Wednesday figures (millions of dollars) 1943 Oct. Condition Items of Weekly Reporting Member Banks T o ta l loans ................................................ C o m ’ l, ind. & a g ric. lo a n s ............... L o a n s to fina nce securities tran saction s .................................... R ea l estate lo a n s .................................. A ll oth er l o a n s ............................. T o ta l i n v e s t m e n t s .................................. U . S. G o v ’t s e c u r it ie s ...................... A ll oth er s e cu ritie s............................. A d ju ste d dem and d e p o s its ................... T im e d e p o s i t s ........................................... U n ite d States G o v ’t d e p o s it s ............ Change From (----- f-------- IWÓ-------- N Sept. 1,075 520 + 105 + 48 + 161 + 71 122 322 111 3,813 3,369 444 2,430 1,279 1,037 + 52 — 3 + 8 + 357 + 344 + 13 — 63 + 14 + 542 + — + + + + — + + — T o ta l (ch a n g e s o n l y ) ............................. F ed . R es. n otes o f F . R . B. o f S. F . 1,750 + 51 + 125 + .... ,\ 1942 Oct. Aug. + + 43 40 + + + + + + + 84 46 35 1,716 1,705 11 • 559 172 910 + 142 + 133 + + 696 629 + + 180 85 7 12 426 282 144 33 47 601 — Coin and Currency in Circulation Member Bank Reserves........................ 1,323 49 97 Revised Indexes of Factory Employment and Payrolls indexes of factory employment and payrolls in the Twelfth District have recently been completed. The indexes show month-to-month changes in the num ber of, and total wages paid to, wage earners in all manu facturing establishments in the District except fruit, vegetables, and fish canneries. Employment and payrolls in canneries are excluded from the series because the large and somewhat erratic fluctuations in canning opera tions tend to obscure more basic changes in industrial employment and also make seasonal adjustment imprac ticable. Figures of establishments owned and operated by the Federal Government, for example, manufacturing arsenals, are also excluded from the series. Employment and payrolls in Federally-owned defense plants, includ ing shipyards, airframe plants, and other munitions factories, operated by private companies, are included. The principal objective of the revision was to incor porate improved data for recent years developed by the California State Division of Labor Statistics and Law Enforcement and the U. S. Bureau of Labor Statistics. Part of the data formerly used was overweighted by the R e v is e d rapidly expanding war industries. This deficiency has been largely removed, although future adjustments in the levels of some of the area indexes may be expected. A second purpose of the revision was to include data of the Intermountain states of Arizona, Idaho, Nevada, and Utah. In addition, seasonal adjustment factors were brought up to date, and the series were placed on a 193539 base. As shown in the accompanying chart, the movements of employment and payrolls in the Twelfth District were closely associated with those for the United States as a whole from 1935 to 1940. In the latter year, however, the series for the two areas began to diverge. By the third quarter of 1943, adjusted Twelfth District employment was 311 percent of the 1935-39 average, compared with national employment of 172 percent. The relative gain in payrolls in the District was even greater. The District index (adjusted) was 626 percent of the 1935-39 average in the third quarter of this year, and the United States index (unadjusted) 343 percent. Both relatively and absolutely, the largest District 66 FEDERAL RESERVE BAN K OF SAN FRANCISCO increases since 1940 have occurred in California. Wash ington, Oregon and the Intermountain states have fol lowed in that order. The relative gains in all four areas in the District, with the exception of the increase in employment in the Intermountain states as a whole, have exceeded those of the United States. Increases in employ ment and payrolls thus far in 1943 have been much less November 1943 substantial than in other recent years. In this respect, however, there is some contrast between California and other District areas. N o t e : T a b u la tio n s o f th e rev ised in dexes w ill b e supplied u p on request. In itia l y ear o f co m p le te m o n th ly d a t a : T w e lft h D istr ic t and In te r m ou n tain states, 1 9 3 5 ; O regon and W a s h in tg o n , 1 9 2 9 ; C aliforn ia, 1925. In c o m p le te m o n th ly data fo r C a liforn ia em p loym en t available fo r 1919-24. F ACTORY EM PLOYM ENT AND PAYROLLS—Twelfth District and United States Indexes of number of wage earners employed and value of weekly wages paid, adjusted (except United States payrolls) for seasonal variation, 1935-39 average=100. Monthly figures, latest shown are for October (California) and September (all other areas). Ownership of Demand Deposits in the Twelfth District deposits of individuals, partnerships, and cor porations are estimated to have been 55.6 billion dol lars in the United States and 5.4 billion in the Twelfth District on July 31, 1943. On June 29, 1940, they were 30 billion dollars in the country as a whole and 2 billion in this District. In the 37 months, the national increase was 85 percent and the District increase 170 percent. By what groups in the economy and in what areas1 are these deposits being held and how are bank balances of various groups and in various areas changing? These are ques tions of major importance to banks, to other business enterprises, and to those charged with the formulation and execution of fiscal and monetary policies ; in short, to all who are interested in economic developments. Answers to these questions would be valuable in formulating and evaluating Government borrowing programs ; in antici pating the nature and extent of business and consumer expenditures; in determining the probable demands of business and consumer borrowers; and, to individual banks, in determining probable shifts in deposits and ef fects of those shifts upon their reserve positions. As little information regarding the distribution of de posits2 among personal and various types of business ac counts was heretofore available, the Federal Reserve Sys tem made a preliminary survey of deposit ownership as of March 31 of this year, in which limited information as D e m a n d of the end of 1941 was also obtained, and made a more comprehensive survey as of July 31, which will be re peated on a semi-annual basis. In the Twelfth District, the July data are not comparable in detail with those of March, so that the following discussion is of necessity confined largely to a description of deposit holdings as of July 31. More detailed and exact information about changes in deposits of the various groups will become available and will increase the value of the survey as it is repeated. Increases in Business a nd Personal Deposits Perhaps the most significant broad conclusion which may be drawn from the two surveys is that deposits of businesses were apparently much larger and personal de posits much smaller than had previously been estimated on the basis of less complete information. The major part of the deposit increase since December 1941, both na tionally and in the District, has apparently gone to busi ness accounts. It is estimated that, nationally, business deposits included about 70 percent of all demand deposits in July and personal deposits 25 percent.3 In the Twelfth 1 T h e distrib u tion o f and increases in d ep osits in 1942 b y cou n ties in the T w e lfth D istrict w ere discussed in the M a y issue o f this R e v ie w . 2 T h e term “ d e p o s its ” refers t h r o u g h o u t to dem and dep osits o f in divid u als, p artnerships, and co rp o ra tio n s. 3 T h e results o f the Ju ly su rvey, on a nation al basis, are d iscu ssed in the O cto b e r issue o f the F ed era l R e s e rv e B u lletin . November 1943 District, the proportion was about the same, although business deposits may have been slightly less important, 65 to 70 percent of the total, and personal deposits slightly more important, 25 to 30 percent of the total. The re mainder, less than 5% in the nation and in the District, were accounts of nonprofit organizations. In the nation, three-fourths of the 18 billion dollar in crease in deposits since the end of 1941 probably occurred in business deposits. In the District the evidence is less complete but at least a proportionate share, 65 to 70 per cent, of the 2.5 billion dollar increase over that period apparently went to business accounts. If it is assumed that all of the increase in coin and currency in circulation occurred in personal rather than business balances, 54 percent of the national increase of 24.9 billion dollars in deposits and currency since December 1941 occurred in cash balances of business and 46 percent in personal bal ances. The increase in deposits and currency in the Dis trict in the same period was 3.5 billion dollars, 45 percent of which was in business balances and 55 percent in per sonal balances. The principal implications of these estimates are two fold. First, the potential pressure of consumer spending, as evidenced by personal deposit and currency holdings, although serious, is perhaps less than had previously been estimated. Second, larger cash holdings of business than had been estimated may mean less reliance of business in general upon bank loans and other borrowing in the post war period than has been anticipated. At the same time it is necessary to distinguish between a cash balance that is larger because of increased current transactions and one that has been accumulated as a result of inability to make expenditures for inventories and equipment, whether for maintenance or expansion. Delays and diffi culties in conversion when war production is halted could reduce current cash receipts of many enterprises to low levels. Even though cash balances of such firms are large at that time, a considerable proportion of those balances may be required to settle current liabilities. A good deal depends upon the methods of settlement of cancelled con tracts adopted by the Government. Size of Sa m ple and A c co u n ts Classified In the survey of deposits as of July 31, reports were obtained from 500 banking offices of 34 banks. Total de posits represented by reporting banks were 77 percent of the estimated District deposit total of 5,380 million dol lars. In the ten cities (San Francisco, Oakland, Los An geles, San Diego, Portland, Seattle, Tacoma, Spokane, Salt Lake City, and Ogden) in which all reporting unit banks and all head offices of reporting branch banks are located, 92 percent of the estimated total of 3,270 million dollars in deposits was represented by reporting banks. Outside of those cities, coverage was less complete and deposits represented by reporting banks, all of which were branches, amounted to 55 percent of the estimated total of 2,110 million dollars. (Total deposits of unit banks outside the 10 cities were 18% of all deposits out side those cities.) At most banks classification according to ownership 67 M O N T H L Y REVIEW was confined to accounts of $10,000 and over, although outside the ten cities all reporting offices with total de posits of less than 5 million dollars and some offices in the same size group within the ten cities classified deposits down to $3,000. It should be noted, however, that per sonal and trade accounts undoubtedly make up a much greater proportion of the smaller and unclassified ac counts than of the classified accounts. Distribution of Classified Deposits in the District Although accounts of over $10,000 included little more than two percent of the total number of accounts, they covered 60 percent of the total dollar volume of deposits. Half of all deposits were business deposits of more than $10,000; personal deposits above $10,000 were only 8 percent of total deposits. Two-fifths of all larger busi ness deposits were held by manufacturing and mining concerns; trade accounts, the next largest group, included one-fifth. E s t im a t e d D i s t r ib u t io n o f D e p o s it s o f and J uly 31, 1943— $10,000 O ver b y T y pe of O w n e r s h ip T w elfth D is t r ic t a n d U n it e d /— T w elfth D is t.— \ N o . of D ollar A c c o u n ts V olu m e (in thous.) (in mil.) $ 10 ,000 and o v e r B u siness— t o t a l .................................... N o n fm a n cia l— total ...................... M a n u fa ctu rin g and m in in g -.. P u b. util., trans., and c o m m .. R etail and w holesale tra d e . . . . O th er, incl. co n s tru ctio n and s e r v i c e s ...................................... F in a n cia l ............................................ P e r s o n a l ................................................... N o n p r o fit a ssocia tion , e tc ................. F o r e ig n business and in d iv id u a ls. T o t a l ........................................... S tates1 P e rc’ t o f T ot. t—D eposits in -> 12th D . U .S . 40.8 34.6 9.5 2.2 15.6 2,706 2,291 1,085 238 624 50 42 20 4 11 59 49 30 6 9 7.3 6.2 17.5 1.8 344 415 427 99 7 8 8 2 4 10 8 2 2 60.1 3,232 60 69 2,551.4 2,150 40 31 2,611.5 5,383 100. 100 »osits o f $10,000 - $25,000 and over, as ts b e lo w $25,000. The distribution of larger deposits in the District conforms fairly closely to the national distribution, the principal difference appearing in manufacturing accounts which were 34 percent of all deposits of $10,000 and over and 20 percent of total deposits in the District but 43 percent of larger deposits and 30 percent of total de posits in the United States. This difference is not in ac cord with the greater relative expansion of war produc tion in the District, but is explained in part by the fact that many large manufacturing concerns, operating in the District, carry the bulk of their deposits outside this area, either because their head offices are located elsewhere dr for other reasons. Distribution of Cla ssified Deposits by Location of Banking O ffice s Deposits of $10,000 and more included nearly threefourths of all deposits in the ten cities, but only about 40 percent of the total elsewhere. As would be expected, business deposits, especially manufacturing and public utility accounts, were considerably more important in the November 1943 FEDERAL RESERVE BANK OF SAN FRANCISCO 68 ten cities than in the rest of the District. Larger personal deposits were little greater in amount and were much less important in relation to other classes of deposits in those cities than in the remainder of the District. P e rce n ta g e by D is tr ib u tio n L o c a tio n o f B a n k , o f D e p o s its 31, 1943— J u ly o f $10,000 T w e lfth Percent o f T otal -D e p o s it s in— R e m ’ nTen der o f C it ie s 1 D ist. $10 ,000 and ov e r B u sin ess— T o t a l .......................................... N on fin a n cia l— to ta l .............................. M fg . and m in in g — t o t a l.................. M etals and m etal p r o d u c t s . . . O t h e r ................................................ P u b . u til., trans., and com m u n ie . R eta il and w holesale t r a d e ............ O th er, incl. c o n s tr u c tio n and services ............................................ F i n a n c i a l ................................................... In s u r a n c e com pan ies T r u s t fu n d s o f b a n k s ...................... O th er, in cl. in vestm en t, loan and real e s ta te ......................................... P erson al ........................................................ N o n p r o fit a ssocia tion s, e tc ..................... Percentage D istribution ,-----Betw een— \ R em ’ n T en der o f C it ie s 1 D ist. 2 10 7 12 23 24 18 77 76 82 10 12 O ver D is tr ic t 30 26 64 54 28 16 and 7 10 87 65 13 35 71 82 29 18 9 55 73 45 27 73 40 74 26 U n d er $10 ,000 ................................................ 27 60 59 41 T o t a l d e p o s i t s .................................... 100 100 61 39 T ota l 1 .............................................. 1 San F r a n cis c o , O ak lan d , L o s A n g e le s , San D ie g o , P o rtla n d , Seattle, T a c om a , S p ok a n e , Salt L a k e C ity, and O g d e n . Certain features of the deposit distributions within individual cities are noteworthy: the lesser importance of deposits of manufacturing concerns in the two inland city areas, Spokane and Salt Lake City-Ogden; the predomi nance of deposits of metal manufacturing concerns in San Diego, where aircraft production is such a large share of the city's activity; the greater importance of Distribution of Cla ssified Deposits in A gricu ltu ra l a nd other Sm aller Banking O ffice s The form of schedule used by smaller banks classify ing accounts down to $3,000 was such that those banking offices located outside the ten cities could be classified as agricultural and other. Reporting offices were classified, more or less arbitrarily, as agricultural if the number of P e rce n ta g e D is tr ib u tio n S m a lle r B a n k s J u ly O u ts id e o f D e p o s its M a jo r 31, 1943— $3,000 o f an d O ver T w e lfth D is tr ic t A g r ic .2 O ffices N on agric. Ottices $3,000 and o ver . . B u siness— total ............................... .. N o n fin a n cia l— t o t a l .................... .. M a n u fa ctu rin g and m in in g P u b u til., tran sp., and com m u n ic. R etail and w h olesale tr a d e ................................................. O th er, incl. co n stru ctio n and s e r v ic e s ........................... F i n a n c i a l ......................................................................................... P erson al .............................................................................................. F a r m e r s ....................................................................................... O t h e r ............................................................................................ N o n p ro fit associa tion s, e t c ............................................................ T o ta l in C i t i e s 1, b y T y p e o f B a n k , 30 28 5 39 35 11 2 2 15 15 7 4 14 1 13 2 6 2 26 17 9 2 ............................................................................................ 55 58 U n d er $ 3 ,0 0 0 ............................................................................................ 45 42 T o ta l d e p o s i t s ........................................................................... 100 100 1 B a n k in g o ffices w ith d ep osits o f less than 5 m illion d olla rs, loca ted ou tsid e the ten cities. 2 B a n k in g office s h a vin g at least 30 pe’r cen t o f th e total nu m ber o f personal a cco u n ts classified as fa rm ers’ accou n ts. farmers' accounts was 30 percent or more of the total number of classified personal accounts. Comparative dis tributions shown above are quite similar except for the much greater importance of manufacturing accounts and the lesser importance of persoi^tl accounts in non-agricultural banking offices. Distribution of Classified Deposits by Size of Bank P e rce n ta g e D is tr ib u tio n b y T y p e o f O w n e r s h ip o f D e p o s its o f in $10,000 M a jo r C it ie s ,1 J u ly T w e lfth and O ver 31, 1943 D is tr ic t S. F O ak. $ 10 ,0 0 0 and o v e r B u sin ess— to ta l ................................. , 73 59 N on fin a n cia l— total .................... M fg . a n d m in in g— t o t a l ......... . 30 M etals and m etal p rod u ct; i. 13 O t h e r ....................................... . 17 P u b . u til., tran sp., and com t a. 10 R e ta il an d w holesale tra d e . . . 12 O th er, in cl. co n s tr u c tio n and services .................................. . 7 F i n a n c i a l ......................................... . 14 6 In s u ra n ce c o m p a n i e s ............ 2 T r u s t fu n d s o f b a n k s ............ O th er, incl. in v estm en t, loan, 6 and real e’s ta te ............ P erson al .................................... 7 2 N o n p r o fit asso cia tio n s, etc. L os A n g. San D iego P o rt land S ea.T a c. Spo kane 57 48 27 15 12 3 11 64 58 34 31 3 8 11 63 54 25 14 11 5 17 62 54 27 15 12 6 14 59 45 12 2 10 8 13 7 9 2 1 5 6 1 1 7 9 3 2 7 8 2 1 12 14 1 2 6 8 2 4 5 1 4 7 2 5 7 2 11 5 1 65 P e r c e n ta g e D is t r ib u t io n .................................. 82 67 70 72 71 U n d e r $10 ,000 ............................. 18 33 30 28 29 35 T o ta l d e p o s its ................. . , 100 100 100 100 100 100 T ota l The distributions of larger accounts in banks of dif ferent size show considerable variation. Manufacturing and financial accounts tend to increase in importance the S iz e of of D e po sit s B a n k , J u l y 3 1 ,1 9 4 3 — T of $10,000 welfth Deposits of $10,000 and over included some 70 percent of total deposits in each city except San Francisco-Oakland, where they were about 80 percent of the total. O ver , by Banking Offices with Million Million $ 10 ,000 and o ve r B u siness— to ta l ............................................................... N on fin an cial— t o t a l ................................................... M a n u fa ctu rin g and m in in g ................................ M etals and m etal p r o d u c t io n ........................ O t h e r ...................................................................... P u b lic utilities, tran sp., and c o m m u n ic .. . . R e ta il and w h olesale t r a d e .................................. O th er, incl. co n stru ctio n and s e r v ic e s .. . . F in an cial— t o t a l .......................................................... In su ra n ce ................................................................. T ru st funds o f b a n k s .............................................. O th er, incl. in vest., loan, and real estate. . îclu d ed in ten c ity totals in other tables trade deposits in Salt Lake City-Ogden and Portland ; the greater importance of insurance company deposits in San Francisco. and is t r ic t t---------- Deposits of---------- s Under $5 $ 5 -$ 5 0 Over $50 . . . T o ta l d e p o s its .......................................................... 30 27 10 Million ! *8 2 53 45 17 8 9 4 16 8 8 2 1 5 7 2 . 40 62 . 60 38 16 100 100 100 . N o n -p ro fit associa tion s, e tc ......................................... * D ata fo r Salt L a k e City-Og< b u t n ot sh ow n separately. D 1 11 5 3 76 64 36 19 17 9 10 9 12 4 2 6 7 1 84 larger the bank, but trade and personal accounts are of more importance in smaller banks. These differences are somewhat analogous to those that appear among accounts of different sizes, because of the preponderance of larger accounts in larger banks. November 1943 Distribution of Classified Deposits by Size of Account No single comparison for the District by size of ac count can be presented because of the different size classi fications used in reporting. However, the distributions of accounts between $3,000 and $10,000 and of accounts of over $10,000 in the smaller reporting offices which used a $3,000 minimum, and the distributions of accounts be tween $10,000 and $100,000 and of accounts of over $100,000, mainly in larger offices, are shown below. In offices which classified accounts of $10,000 and over, total deposits in each ownership classification except trade and personal accounts were larger in the group of over P ercentage D A ccount, is t r ib u t io n of D e p o sit s J u l y 31, 1943— T w elfth by D O ffices U sing $3,000 .................................. S iz e of is t r ic t O ffices U sing $10,000 (— M in im u m 1—>, r— M in im u m 8— > $3,000- $10,000 $10,000 & M o r e $10,000- $100,000 $100,000 & M o re B u siness— total .............................................. 9 N on fin a n cia l— t o t a l .................................. 8 M a n u fa ctu rin g and m in in g ............... 1 M etals and m etal p r o d u c t io n ............... O t h e r .............................................................. P u b lic u til., transp., and c o m m .. a R eta il and w holesale tr a d e ................. 5 O th er, incl. co n stru ctio n and services ................................................ 2 F in a n cia l— t o t a l ......................................... 1 In su ra n ce c o m p a n ie s .................................... T ru st funds o f b a n k s .................................... O th er, incl. inve’stm ent, loan and real e s t a t e ..................................................... P erson al ............................................................ 12 N o n p ro fit associa tion s, e t c .......................... 1 T o ta l— classified 69 MONTHLY REVIEW 25 23 7 .. •. 1 10 22 T o ta l u nd er $ 3 ,0 0 0 ......................................... T o ta l und er $ 1 0 ,0 0 0 ...................................... 43 T o t a l d e p o s i t s ......................................... 100 19 16 5 2 3 1 7 42 36 21 12 9 5 6 5 2 .. .. 3 3 1 a 4 6 2 1 .. 9 1 2 6 1 3 1 1 35 26 44 30 100 1 A ll re p o rtin g b a n k in g office s w ith total d ep osits o f less than 5 m illion d o l lars ou tsid e the ten m a jo r cities and a few o ffice s in the sam e size g ro u p in those cities. 2 A ll rep ortin g b an k in g o ffices w ith total d ep osits o f m ore than 5 m illion d o l lars in the D istrict and m ost smalle'r rep ortin g o ffice s in the ten cities. aL e ss than 0.5 percent. $100,000 than in the $10,000 to $100,000 group. Manu facturing and mining accounts were particularly concen trated above $100,000. Much the same situation is found in a comparison of deposits from $3,000 to $10,000 with those above $10,000 in other offices. C h a n g es in Deposits M a rch-July 1943 Differences in the schedules used in the preliminary sur vey as of March 31, 1943 and in the July survey prevent a detailed presentation of changes in classes of deposits between those dates. It appears, however, that total de posits in the District increased by about 9 percent over the four months and that deposits of $10,000 and over in July were also about 9 percent larger than in March. The estimated increases in deposits of $10,000 and over were very uneven. Business deposits increased 8 percent, per sonal deposits 26 percent, and those of nonprofit organ izations 5 percent. Two-thirds of the dollar increase, how ever, went to business accounts and about 30 percent to personal accounts. Limited information obtained in the March survey re garding deposits as of December 31, 1941 indicates that between that date and March 1943 the share of the total increase in deposits above $10,000 going to business ac counts was larger than their share in the March-July 1943 increase. Also, the rate of increase was apparently more rapid in business accounts than in personal accounts during the earlier period. The incomplete data for De cember 1941, differences in classification, and the rela tively brief period from March to July of this year, how ever, prevent these comparisons from being conclusive. The differences do suggest that larger business accounts were more affected than larger personal accounts by the Second War Loan Drive. Cash may have been accumu lated by business to a greater extent than by individuals in anticipation of the April drive, and consequently drawn upon more heavily during the drive, although both per sonal and business deposits had surpassed the pre-April level by July. The same developments may have occurred prior to the September drive, but no definite statement can be made because a month or more intervened between the July 31 survey and that drive, while the second drive opened about a week after the March 31 survey. E s t im a t e d C h a n g e s i n D e p o s it s , M a r c h - J u l y T w e l f t h D is t r ic t T w e lfth D is trict T o ta l d e p o s i t s ...................................... D e p o sits under $ 1 0 ,0 0 0 .............. D e p o sits o f $ 1 0 ,0 0 0 and o v e r . . , B u siness ...................................... P e rson al .................................... . N o n p r o fit associa tion s, e tc.. T e n cities T o ta l d e p o s its ...................................... D e p o sits under $ 1 0 ,0 0 0 .............. D e p o sits o f $10 ,000 and o v e r . . B u siness ...................................... P erson al ...................................... N o n p r o fit a ssocia tion s, e t c .. . R em ain d er o f D istrict T o t a l deposits .................................... D e p o sits under $ 1 0 ,0 0 0 ............... D e p o sits o f $10,000 and o v e r . . B u siness ....................................... P e rso n a l ....................................... P ercent of Percentage Total Increase Increase 9 100 39 9 61 41 8 26 19 5 1 . . s1 . B u siness P erson al N o n p r o fit T o ta l deposits ........................................................................ ........................................................................ associa tion s, e t c .................................... in sm aller n o n a g ricu ltu ra l b a n k in g , 9 12 8 6 33 5 100 34 66 43 22 1 10 7 14 13 19 6 19 18 19 100 45 55 38 16 1 100 65 35 16 20 — 1 34 — 10 12 23 P erson al ................................................................... N o n p ro fit a ssocia tion s, e t c ................................ 1943 . 24 1092 100 52 48 34 6 82 1 B a n k in g o ffic e s w ith d ep osits o f less than 5 m illion dollars, h avin g at least 30 p ercen t o f the total n u m ber o f person al accou n ts classified as fa rm ers’ a cco u n ts. 2 A p p e a rs to b e ov erstated, p ro b a b ly becau se o f inadequ ate sam ple o r in c o n sisten cy in cla ssification o f a cco u n ts. A comparison of intra-District deposit increases is pre sented above. Data upon which these comparisons are based are not as complete as the data for July 31, espe cially for those offices classified as agricultural and non agricultural, and errors arising out of inadequacies of the samples may be present to some degree. Nevertheless, it is significant to note the greater relative increase in de posits in smaller banking offices outside major cities. The relative increases in total deposits within and outside the ten cities were about the same. In the ten cities, however, deposits of under $10,000 increased considerably more, relatively, than those of over $10,000; but in the rest of the District, greater gains occurred in the larger group. 70 FEDERAL RESERVE BANK OF SAN FRANCISCO Novem ber 1943 S u m m a ry o f N a tio n a l B u sin e ss C o n d itio n s Released O cto b e r 26, 1943— Board o f G o v e rn o rs o f the F ed eral R eserve System NDUSTRiAL activity showed little change in September and in the first half of October. I Distribution of commodities continued in large volume and prices remained steady. I n d u s t r ia l P rodu ction 1939 1941 1943 1939 1941 1943 IN D U S T R IA L P R O D U C T IO N Federal R eserve m onthly index o f physical volum e o f p roduction, adjusted fo r seasonal variations, 1935-39 average = 100 fo r total. G ro u p s are e x pressed in terms o f points in the total index. M on th ly figures, latest show n are fo r Septem ber. 1937 1938 1939 1940 1941 1942 1943 D E P A R T M E N T ST O R E SA LE S A N D STOCKS F ederal R eserve m onthly indexes o f value o f sales and stock s, adjusted for seasonal variation, 1923-25 average=100. M on th ly figures, latest show n are fo r Septem ber. Physical volume of industrial production as measured by the Board’s seasonally ad, justed index, as recently revised, was 243 percent of the 1935-39 average in September, compared with 242 in August and 239 in July. There were increases in output in the iron and steel and transportation equipment in dustries while activity in other durable goods industries showed little change or declined slightly. Open hearth and Bessemer steel production exceeded its previous peak level, reached in March of this year, and the output of pig iron likewise established a new record. In the machinery industry as a whole activity was maintained at the level of recent months, although there was some further curtailment of output of machine tools and machine tool accessories. Total output of nondurable manufactures continued at the August level. Cotton con sumption, which had been declining since May, rose 6 percent from August to September, but was 9 percent below the high level of a year ago. Shoe production was maintained at the level of recent months and was slightly larger than a year ago. The output of manu factured food products rose seasonally. Petroleum refining continued to rise in September and was at a rate about double the 1935-39 average. The Board’s index of this industry is substantially higher than the old index because greater weight is given to aviation gasoline and other special war products. Output in the chemical industry as a whole declined in August, as some further expansion in industrial chemicals was more than offset in the total by reductions elsewhere, reflect ing readjustment of the war program. Newsprint consumption rose less than is usual at this season, in the face of increasing supply difficulties, and a further 5 percent cut in per mitted consumption of newsprint was ordered, beginning October 1. Crude petroleum production continued to rise in September, reflecting further improve ment of transportation facilities for petroleum products. Output of crude petroleum in August and September exceeded the earlier peak levels reached in December 1941 and January 1942. Coal production continued at a high level. In September the value of construction contracts awarded in 37 Eastern states was about the same low level as in July, according to reports of the F. W. Dodge Corporation, and was considerably smaller than in August when there was a temporary increase be cause of one exceptionally large contract placed in that month. D is t r ib u t io n r t »s - r C s* DEMAND DEPOSITS r j ri r U S GOV T SECURITIES — 0EP0S1TS r 19 39 19 4 0 1941 1942 O '" " / I ^/ 1943 M E M B E R B A N K S IN L E A D IN G C IT IE S D em and deposits (a d ju ste d ) exclu de U . S. G o v ernm ent and interbank deposits and co llection item s. G overn m e n t securities in clu d e direct and guaranteed issu es. W e d n e sd a y figures, latest show n are for O cto b e r 13. Department store sales increased less than seasonally in September, following an un usually large volume of sales in July and August, and the Board’s seasonally adjusted index declined from 142 to 131. During the first half of October sales showed a gain over September although usually there is some decline at this season. Railroad freight traffic in September and the first part of October was maintained at the high level of previous months. Coal shipments exceeded the record movement of last July and loadings of grain and livestock were 10 percent higher than a year ago. C o m m o d it y P rices Prices of grains advanced from the middle of September to the middle of October. Livestock prices were slightly lower, reflecting partly the establishment of Federal maxi mum prices for live hogs and sharply increased marketings of cattle. Wholesale prices of most other commodities continued to show little change. A g r ic u l tu r e Crop prospects showed little change during September, according to official reports. There was a further small improvement in prospects for the corn and potato crops, while the previous forecast for cotton production was lowered slightly. Aggregate crop pro duction is expected to be 7 percent below the peak volume of last season but higher than in any other previous year. B a n k C redit 1939 1940 1941 1942 1943 G O V E R N M E N T S E C U R IT Y H O L D IN G S O F B A N K S IN L E A D IN G C IT IE S E xclu des guaranteed securities. D ata not available p rior to F eb ru ary 8,1939; certificates first reported •n A p ril 15, 1942. W edn esda y figures, latest show n are fo r O cto b e r 13. During the five weeks ending October 13, Government security holdings at reporting banks in 101 leading cities increased by about 2.5 billion dollars, reflecting substantial open-market purchases during the drive, and also, some purchases of bills on subscription from the Treasury. Loans showed a net increase of 2.2 billion dollars over the same period. Over two-thirds of the total amount represented loans to brokers, dealers, and customers for purchasing or carrying securities; in the last week of the period there were some declines, however, as repayments were made on the liquidation of the securi ties. Commercial loans, which have been increasing steadily since June, rose further by 540 million over the five weeks. Holdings of Government securities by the Federal Reserve System showed little change from the end of September to th,e third statement date of October, but there were some shifts among the kinds of securities held. Treasury bills held under option declined by 200 million dollars between September 30 and October 20, while holdings of certificates of indebtedness and of Treasury bills outside of the option accounts increased by about 200 million. Total holdings of United-States Government securities by the Reserve Sys tem on October 20 were 8.9 billion dollars.
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