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MONTHLY REVIEW OF BUSINESS CONDITIONS ISA A C B. NEWTON, Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. X V II San Francisco, California, November 20,1933 No. 11 T W E L F T H F E D E R A L R E S E R V E D IS T R IC T C O N D IT IO N S Twelfth District business activity declined further during October but remained some what above the level of a year earlier and was considerably higher than last spring. Indus trial production continued to decrease as did the volume of trade. After having increased steadily since March, the number of industrial employees as well as the amount of industrial payrolls declined during October, in large part reflecting seasonal reductions in canning activi ties. Commodity prices advanced in late Octo ber and early November. Absence of excessive rainfall was beneficial to the harvesting of late crops during most of October. Early November rains helped to con dition the soil for fall planting, and growth of new grass was started upon livestock ranges. Crop production estimates were enlarged con siderably from October 1 to November 1, but it is apparent that aggregate volume of harvest this year will be smaller than in 1932. Market ings continued in smaller volume than a year earlier. After a further decline early in Octo ber, prices of farm products moved upward and by the middle of November were about 25 per cent higher than a year earlier. Electric power production decreased some what more than is usual for October. Activity at lumber mills declined slightly, whereas some increase is customary in that month. Califor nia crude oil production averaged less in Octo ber than in September but continued to exceed Federal allotments by a considerable margin. Value of contract awards for engineering construction showed more than the usual gain, while permits issued for residential, commer cial, and industrial building, remained small. Slaughter of livestock was smaller in October than in September. Flour milling expanded somewhat, following declines in the two pre ceding months. Value of department store sales declined fur ther during October, after seasonal adjustment, and activity of wholesalers also decreased. Automobile registrations decreased by more than the seasonal amount during the month. Freight carloadings did not expand as much as is usual during October and adjusted figures declined, offsetting an increase in the preceding month. Loans extended by reporting member banks showed practically no change between Octo ber 18 and the middle of November. Interest rates charged by those banks upon commercial loans declined slightly during this period. A continued inflow of funds resulting from United States Treasury expenditures in excess of col lections in the district and a small favorable balance of commercial payments with other districts furnished Twelfth District banks with additional reserves. Member banks continued to add to their reserve deposits, which reached the highest level since August, 1931. Use of Reserve Bank credit continued to be negligible. Continued warm weather and absence of ex cessive rainfall during October facilitated the harvesting of late maturing crops throughout the Twelfth District and the drying of raisin grapes in California. As most crops had been harvested by November, rains early in that month did little harm and were beneficial for fall plowing and for the seeding of winter wheat. Although livestock ranges were improved by recent rainfall, feeding conditions are still poor in most parts of the district. Late crops have not been damaged appreciably by frost thus far this autumn. As in the three preceding months, the volume of most crops marketed during October was smaller than in the same month a year ago. The United States Department of Agriculture’s price index for farm products did not change during October. This index, which stood at 70 per cent of the August 1909-July 1914 average on October 15, was 25 per cent higher than on October 15, 1932, but was 8 per cent lower than on July 15 of this year, the highest level since July, 1931. Rains in late October and early November benefited newly sown winter wheat in the Pa cific Northwest, but growth is still below nor mal because of lack of moisture at the time of plowing and sowing. Rainfall in California caused only a minor suspension of harvesting of beans and rice, picking of cotton, and drying of fruit. Usual fall tillage operations for winter crops were retarded by insufficient moisture. Favorable maturing weather during Septem ber and October increased the estimate of cot ton production in Arizona and California to 281,000 bales on November 1. This compares with an average annual production in those states of 329,000 bales in the preceding five years. Cotton picking has been delayed because of labor strikes this year, but no damage to the crop has ensued. The sugar beet crop in this district, although adversely affected by con tinued dry weather with high temperatures dur ing October, was estimated on November 1 to be 3,266,000 tons, the largest on record. The sugar content is also unusually high. PRODUCTION AND SHIPMENTS OF GRAPES-California Production (tons) 1933 1932 1931 Grapes.................... 1,559,000 1,926,000 1,320,000 Raisin ................ 916,000 1,221,000* 775,000 Table ................ 270,000 317,000* 229,000 373,000 388,000* 316,000* Wine .................. Carlot Shipments 12,102 20,664 17,428 October ................ 7,088 12,861 13,447 September ............ 1,560 2,710 3,267 August .................. Season through October 31........ 21,182 36,954 35,732 Season T o t a l ......................... 42,237 39,557 1930 2,181,000 1,307,000* 388,000* 486,000* 36,318 17,929 4,586 59,864 64,888 * Includes some quantities not harvested because of market conditions. Marketing of the 1933 California grape crop extended into November, chiefly because of retarded maturity of the grapes. Carlot ship ments for this season are currently far below those for the same period last year. This reflects in part the efforts of shippers to avoid sending excessive quantities of grapes to eastern mar kets, rather than a shortage of grapes for marketing. Agricultural authorities in Califor nia also report that truck shipments to local Agricultural Marketing Activity— r -------October-------- > (— Season to Date — ^ Carlot Shipments Deciduous Fruits. Citrus F ru its.... Vegetables ........ Exports Wheat (bu.) ___ Barley (bu.) . . . . Receipts Cattle .................. Hogs .................. Sheep .................. Eggs (cases) . . . Butter ( l b .) ........ Wheat (carlots) .. Barley (carlots).. Storage Holdings (end of month) Wheat ( b u .) ......... Beans (bags) Butter (lb.) Eggs (cases) . . . N o v e m b e r, 1933 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS 82 1933 21,058 5,831 7,385 1932 33,682 5,280 7,159 1933 62,797 71,758 54,637 1932 89,185 76,777 59,519 6,733 433,041 40,984 942,700 13,901 2,018,020 1,650,056 2,900,557 97,068 228,049 410,831 110,241 5,627,132 3,269 636 86,633 230,324 427,498 89,466 5,763,653 3,994 672 7,920,000 2,002,641 9,570,607 314,188 3,211,000 2,225,862 3,373,018 300,252 739,121 751,296 2,336,965 2,493,574 4,035,751 4,363,514 1,430,042 1,412,726 69,138,645 72,505,831 20,101 20,432 2,257 2,746 wineries have been unusually heavy and that there is an excellent prospect that all juice grapes not otherwise used this year will be crushed for wine. Reflecting a decrease in ship ments to the East, grape prices at auction mar kets increased during the second half of Octo ber whereas they had been declining for sev eral weeks prior to that time. Throughout this season prices have been considerably higher than a year ago when returns were so meager that in many cases costs of shipping were not covered. APPLE PRODUCTION—Commercial Crop (in thousands of bushels) <------- Forecast------- \ Nov. 1, 1933 California . . . 4,380 4,515 2,118 U t a h .............. 219 Washington .. 21,624 Oct. 1, 1933 5,913 4,752 2,379 246 22,260 Total___ 32,856 United States. 78,837 35,550 82,713 1932 5,211 4,026 3,150 591 23,760 25,893 _ 1926-1930 Average 5,719 4,477 3,999 558 27,307 36,738 85,935 36,798 103,776 42,060 97,870 (.... ..... - Harvest 1931 4,647 3,969 2,079 210 The United States commercial apple crop is estimated to be 8 per cent smaller this year than last. In this district, forecasts of the commer cial apple crop declined 9 per cent during Sep tember and October. On November 1 it was expected that this year’s production would be 32.856.000 bushels, which is 11 per cent smaller than last year and 22 per cent below average production from 1926 through 1930. This winter’s California Navel orange crop, which is maturing later than usual, was esti mated on November 1 to be about 12,096,000 boxes, approximately 15 per cent smaller than the crop in 1932-1933. Present indications are that the crop will be made up chiefly of mediumORANGE SHIPMENTS—California Average F.O.B. F.O.B. Cost Price Per Box Boxes Value of Received Including Shipped* Shipments* Per Box* Selling! 1928 1929 1930 1931 1932 1933 1928-1932 A v e r a g e . O cto b e r A v era g e, 1928-1932 ............ O c t o b e r , 1932 ____ O c t o b e r , 1933 ____ 21,677,964 33,892,782 20,552,994 30,212,028 29,186,850 26,853,288 27,104,524 1,700,345 2,170,938 2,320,626 $10 6,76 1,4 29 95,628,871 101,401,355 69,200,951 53,386,873 46,705,72811 85,275,896 5,570,671 3,972,817 4,757,283 $4,925 2.822 4.9 3 4 2.291 1.829 1.73911 3.146 $2,516 1.911 2.675 1.831 1.548 3.276 1.83 2.05 ____ ____ ____ 2.096 * B a s e d u p o n d a ta c o m p ile d b y C a lifo rn ia F r u it G r o w e r s ’ E x c h a n g e . fC o m p ile d b y C a lifo rn ia C itru s L e a g u e . ^ P r e lim in a r y . sized good quality fruit. Latest available in formation placed the 1934 lemon crop at 6.367.000 boxes, about the same as a year ago. Orange shipments during October, 1933, were greater than during October of any earlier year except 1929. (Shipments during the previous month had been the largest on record for Sep tember.) Prices declined moderately, especially in the lower grades, but were somewhat higher than in October, 1932. N ov em b er, 1933 Butter receipts at Pacific Coast markets in October were 14 per cent smaller than during September and about the same as in October, 1932. Withdrawals from cold storage have not been large during recent months. On Novem ber 1, cold storage holdings were the highest on record for that date, and almost three times as large as on November 1, 1932. Nevertheless, the price of 92 score butter in the San Francisco market increased 2 y2 cents per pound during October and early November, subsequently de clining cent Per pound to 22*4 cents per pound on November 20. The Federal Govern ment, through the Dairy Marketing Corpora tion, made substantial purchases of butter in the San Francisco,Portland, and Seattle markets during November. It is planned to distribute the butterthus purchased through Federal relief agencies. Egg prices in San Francisco for No. 1 Extras advanced in the last week of October from 2%y2 to 29 y 2 cents per dozen, which price was retained during the first half of November. Livestock ranges in all parts of the district, except Arizona and Washington, deteriorated further during October. Estimates of the con dition of cattle and sheep in the Twelfth Dis trict generally remained below those of last year and the ten-year average. Industry Continuation of the decline which commenced in September in this district’s industrial activity was recorded during October. Output in most important industries, however, remained con siderably above levels of a year earlier. After seasonal adjustment, electric power production decreased moderately and was only slightly larger than in October, 1932. Industrial em- Employment --------Californi a------- \ r~ —----- Oregon • No. of No. of No. r-Employees-'* No. «—Employees —\ of Oct., Oct., of Oct.. Oct., Industries Firms 1933 1932 Firms 1933 1932 136,127 117 23,267 16,695 ( +24.6) (+39.4) Stone, Clay, and Glass Products. 58 5,347 4,286 3 180 102 ( + 24.8) (+76.5) Lumber and Wood Manufactures .. 130 16,718 13,508 41 11,452 7,802 (+23.8) (+46.8) 1,320 Textiles................ 14 1,765 6 1,086 970 ( + 33.7) ( + 12.0) Clothing, Millinery, and Laundering 151 10,978 10,958 218 7t: 225 ( + . 2) (— 3.1) Food, Beverages, and Tobacco .. 296 51,968 40,336 32 5,431 3,355 (+28.8) (+61.9) Public Utilities . . 44 42,039 45,149 (— 6.9) Other Industriest. 495 70,086 57,785 (+21.3) 7,934 Miscellaneous . . . 54 12,795 28 4,900 4,241 (+61.3) ( + 15.5) Wholesale and Retail................ 231 32,707 30,052 ( + 8.8) *Public utilities and wholesale and retail figures not included in this total, flncludes the following industries: Metals, ma chinery, and conveyances; leather and rubber goods; oils and paints; printing and paper goods. JLaundering only. Figures in parentheses indicate percentage change from October, 1932. 83 FEDERAL RESERVE A G E N T A T SAN FRANCISCO ployment declined somewhat from the rela tively high point reached in September when canning operations were at peak levels. Number of employed in California industries was reduced 13 per cent during October, or by a somewhat larger amount than in that month of other recent years. Substantial expansion had been reported between March and Septem ber, however, and employment in October was 25 per cent higher than a year earlier. Most of the decrease in employment during the month was the result of delayed seasonal reductions at canneries. A decrease in working forces in the motion picture industry was small compared with the recent substantial additions to the number employed in that industry. There was little net change in employment in other indus trial groups. Aggregate wage payments de creased by the same amount as did employment during October, and there was, therefore, no change in average weekly earnings. Total pay rolls were 15 per cent larger than in October, 1932. In Oregon, there was a decline of slightly more than the seasonal amount in industrial employment and payrolls as a result of cur tailed activity in the lumber and wood prod ucts industries. Both the number of employees and total weekly wages, however, were approxi mately 40 per cent higher than in October, 1932. There was practically no change over the yearperiod in average weekly earnings per employee. Daily average crude oil production in Califor nia decreased from 489,000 barrels in September to 473,000 barrels in October and to 470,000 bar rels during the two weeks ending November 18. In no week during this period, however, did out put come within the Federal quota of 455,000 barrels daily for the State. Some excess was reported in practically all major producing Industry— Indexes of daily average production, adjusted for seasonal variations (1923-1925 daily average** 100) ----- IS>33------------\ Oct. Sept. Aug. July General Carloadings— Industrial. 49 49 48 55 Elect. Pwr. Production 136f 141 146 141 Manufactures 47ÏÏ 54 60 61 Refined Mineral O ilst.. 124 134 137 136 75 80 84 123 Slaughter of Livestock. 108 116 115 113 57 46 54 57 Wool Consumptionf . . 101! 93 103 95 Minerals Petroleum (California)t 7211 74 76 74 57 Lead (United States)t.. 64 36 36 Silver (United States)Î 39 28 34 Building and Construction§ Total .............................. 34 26 33 28 Building Permits— Value Larger Cities .......... 13 14 14 14 Smaller Cities .......... 14 13 13 13 Engineering Contracts Awarded— Value Total ...................... 61 62 46 50 Excluding Buildings 106 78 113 83 ,--------1932-------- N Oct. Sept. Aug. 42 40 31 136 137 136 37 131 75 103 41 139 36 127 93 105 46 144 32 131 109 108 46 128 72 38 36 72 41 36 73 33 41 28 33 32 10 10 10 13 13 13 52 91 122 63 63 123 fN ot adjusted for seasonal variations. JPrepared by Federal Re serve Board. § Indexes are for three months ending with the month indicated. flPreliminary. 84 fields, but the disparity was especially large in the Huntington Beach field where the num ber of producing wells increased, and in the San Joaquin Valley area where wells were being reconditioned. Crude runs to refinery stills decreased sharply in October and the first half of November, but there was no appreciable change in gasoline inventories. Crude and fuel oil stocks were lowered, however, reflecting un usually large withdrawals for shipment to the Atlantic seaboard. Lumber mill operations declined during Octo ber, contrary to seasonal expectations for that month. Although this bank’s adjusted index decreased to the lowest level since May, the volume of lumber cut was more than 25 per cent higher than a year earlier. New orders for lumber, after declining in October, increased to a level in excess of production during the first half of November. Shipments remained below output, however, and there was a slight increase in gross inventories. Contracts awarded for engineering construc tion expanded by more than the customary amount during October, reflecting continued increases in work on streets and roads and on excavations, a large part of which comprised Federal Government lettings under the recently initiated public works program. Residential and private non-residential construction re mained at the low levels of other recent months. Federal Government construction has become a factor of increasing importance in this area during recent years. Government awards have shown an upward tendency since 1926, when construction activity generally commenced to recede. W hile the proportion of total construc tion represented by Federal projects was not so large in 1932 and the first ten months of 1933 as in 1931, in which year contracts for Boulder Dam were awarded, such awards since the be ginning of 1932 have been relatively larger than in any other year since 1918. Actual expenditures of the Federal Govern ment for construction have been larger than the data of contract awards indicate, since some work is performed directly by agencies of the Government without contract. The Federal Government has also participated in projects awarded by other agencies through grants and loans, especially during the past year or more, in which period activity in this respect has been markedly extended. Appropriations total ing $3,300,000,000 were made under the Emer gency Relief and Construction Act of 1932 and National Industrial Recovery Act of 1933 to be allocated throughout the United States by the newly created Public W orks Administration. Estimates of the total amount to be allotted in the Twelfth District are not available, but some expenditures under that program have already been made. In addition to the San Francisco- Novem ber, 1933 M O N T H L Y REVIEW OF BUSINESS CONDITIONS Oakland Bay Bridge and the Colorado River Aqueduct, awards for which were made prior to the formation of the Public W orks Administra tion, Federal Government construction expen ditures allocated to this territory during recent months have amounted to over 200 million dol lars. These have been made up chiefly of 40 million dollars for Federal Aid Highway Sys tems, 72 million dollars for other Federal con struction, and 76 million dollars for state and municipal construction including the 63 million dollar Grand Coulee Dam project in W ash ington. Trade The value of Twelfth District department store sales declined by more than is usual be tween September and October. This bank’s adjusted index, which has decreased steadily PER CEN T /w v / INVENTORIE A ¿ W .« 192 7 1926 1929 1930 1931 1932 1 933 DEPARTMENT STORE SALES AND STOCKS Twelfth District Indexes adjusted for seasonal variations (1923-1925 average=100). since July, declined further from 70 to 67 per cent of the 1923-1925 average, which was not far above the low figures for January, Febru ary, and March of this year. Sales were 9 per Distribution and Trade— Oct. Carloadings$ T o ta l.................. Merchandise . . . Foreign Trade0 T o t a lf................ Imports! .......... Exports ............ Intercoastal Trade T o ta l.................. Westbound........ Eastbound ........ Retail Trade Automobile Sales$ T o ta l.............. Passenger . . . . Commercial .. Department Store Salesî ............ Stocks§ .......... Collections# Regular . . . Installment. 60 69 86 1933-------------- \ f----------1932 Sept. Aug. July Oct. Sept. Aug. Indexes adjusted for seasonal variations /’IQ'?'* nirr-rnrfn-innV average iuu) — 62 59 63 61 59 52 74 72 69 68 68 73 91 81 81 93 76 76 92 73 53 49 85 59 56 87 86 67 70 68 " " r 46.1 17.0 74 61 43.2 16.4 47 38 51 46 40 49 100 55 62 70 58 55 53 54 49 61 47 57 53 98 28 26 50 33 31 47 29 28 48 82 57 75 73 63 73 63 42.9 16.1 43.3 14.5 39.6 13.8 \ 38.2 14.0 63 55 52 66 46 39 50 4 . «u •, 61 Actual rigures 42.5 17.0 JDaily average. “Indexes are for three months ending with month indicated, fExcluding raw silk. §At end of month. #Per cent of collections during month to amount outstanding at first of month. Novem ber, 1933 cent lower in value than in October, 1932, in which month they had been comparatively high. The number of sales transactions was 12 per cent smaller in October than a year earlier. While the Fairchild index of retail prices of de partment store goods did not change appre ciably during the month, it was 19 per cent higher on November 1,1933, than a year earlier. Value of merchandise inventories continued to increase by more than the seasonal amount. RETAIL TRADE—Twelfth District Percentage changes in value of sales and stocks r------------ 1933 compared with 1932 ------------^ ,----------- NET SALES------------ ^ STOCKS January 1 to end October of October October — 9.0 ( 62) Department Stores . . . — 9.4 ( 62) 11.5 (49) — 8.4 ( Los Angeles ............ — 9.2 ( 7) 15.1 ( 7) Other Southern Calif. — 9.1 ( 6) — 9.1 ( 18.4 ( 4) — 12.9 ( Oakland.................... — 12.7 ( 4) 4.9 ( 4) 7.9 ( 11.3 ( 7) San Francisco.......... — 13.2 ( 7) Bay Region ............ — 12.0 ( 15) 9.1 ( 15) 9.7 (15) Central California . . — 8.8 ( 5) — 9.4 ( 5) 18.8 ( 5) — 10.9 ( 8) 12.9 ( 7) Portland! ................ — 4.7 ( 8) — 10.4 ( 4) Seattle ...................... — 11.1 ( 4) 7.4 ( 4) 0.2 ( 4) — 13.2 ( 4) — 8.0 ( 4) Spokane .................... — 4.1 ( 4) . Salt Lake City........ — 0.1 ( 4) 27.0 ( 3) — 4.6 ( 27) 29.0 (20) Apparel Stores ............ — 0.6 ( 31) — 10.8 ( 28) — 3.5 ( 21) Furniture Stores ........ — 7.2 ( 30) — 8.9 (117) All Stores .................... — 8.4 (123) 10.6 (90) tIncludes six apparel stores which are not included in district department store total. Figures in parentheses indicate number of stores reporting. Registrations of new automobiles decreased more than seasonally during October. Sales of both passenger and commercial vehicles re mained nearly twice as large as at this time last year. Value of trade of reporting wholesalers was 6 per cent smaller in October than in September, but was 13 per cent larger than in October last year. Allowing for seasonal tendencies, con traction of business as compared with Septem ber was particularly important among grocery, dry goods, paper and stationery, and shoe houses. Collections on outstanding accounts were at a higher rate in all reporting lines than a year ago, a tendency which has been apparent since last April. WHOLESALE TRADE—Twelfth District Percentage changes in value of sales October, 1933 /----- compared with----- \ Agricultural Implements Automobile Supplies . . . . Drugs ................................ Dry Goods ....................... Electrical Supplies ........ Furniture.......................... Groceries .......................... Hardware ........................ Shoes ............ ................... Paper and Stationery . . . All Lines ........................ Sept., 1933 , — 13.9 — 2.8 0.5 , — 15.7 6.5 1.4 . — 5.7 0.8 — 29.7 — 28.0 — 5.9 Oct., 1932 43.8 2.1 — 1.3 14.0 32.9 82.7 6.6 27.8 3.7 — 3.1 12.7 Cumulative 1933 compared with 1932 — 8.1 — 5.2 — 9.5 16.1 5.6 33.2 — 3.6 5.8 10.6 — 4.7 — 0.2 District freight carloadings did not expand as much as is usual during October. This bank’s adjusted index of total loadings declined from 63 per cent of the 1923-1925 average in Septem ber to 60 in October. In October, 1932, the index was 59. Industrial carloadings were about the same as in the preceding month, while 85 FEDERAL RESERVE AG EN T A T SAN FRANCISCO shipments of merchandise and miscellaneous freight, which customarily account for the greater part of the September-October advance, increased by only part of the seasonal amount this year. Loadings in the Pacific Northwest increased by slightly more than the expected amount, while adjusted figures of carloadings in California declined substantially. CARLOADINGS— Twelfth District Index adjusted for seasonal variations (1923-1925 average= 100). Reflecting the largest petroleum shipments from this district to the Atlantic Coast since July, 1930, intercoastal traffic expanded by more than the seasonal amount during October. Eastbound shipments of lumber through the Panama Canal were only half as large as in September, while general cargo moving to the Atlantic Coast increased somewhat. W est bound tonnage remained steady during Octo ber at approximately the level of the two pre vious months. Bank Debits* — October, October, Cumulative 10 Months, 1932 1933 1933t 1932 17,763 $ 16,552 $ 172,128 $ 201,831 Arizona California Bakersfield . . . . Berkeley............ Long Beach. . . . Los Angeles — Oakland ............ Pasadena .......... Sacramento . . . . San Bernardino. San Diego ........ San Francisco... San J o se............ Santa Barbara . . Stockton ............ Idaho 8,105 13,878 18,554 20,601 506,686 153,783 17,004 26,240 4,492 27,114 677,259 17,690 7,620 12,218 8,034 11,445 18,283 21,950 493,711 158,725 15,949 34,047 4,742 27,956 631,627 15,397 7,993 11,490 67,774 117,474 128,286 220,671 4,989,760 1,573,706 178,181 267,042 45,176 283,648 6,143,335 137,866 70,394 108,011 74,346 139,708 153,971 260,744 5,558,957 1,623,233 212,327 381,521 58,898 336,707 6,564,096 159,468 91,376 128,506 11,016 7,630 88,322 97,260 5,075 6,090 47,909 74,816 Nevada Oregon Portland Utah .......... Salt Lake City.. Washington Bellingham . . . . Spokane ............ Tacoma ............ 3,604 107,505 3,622 94,954 29,894 990,277 38,122 987,589 10,773 43,457 9,609 41,490 91,599 391,078 91,255 419,626 4,241 4,827 126,202 24,171 20,364 10,227 3,804 4,659 117,466 26,012 17,625 8,921 40,240 46,438 1,185,596 208,010 182,588 67,189 45,649 53,593 1,290,325 276,876 208,121 77,931 Total............. $1,900,469 $1,819,783 $17,872,592 $19,606,852 *In thousands of dollars, flncludes banking holiday period. 86 N ovem ber, 1933 M O N T H L Y REVIEW OF b u s i n e s s c o n d i t i o n s Prices The Credit Situation Prices of speculative commodities advanced somewhat following the low point reached in mid-October and at the middle of November were about the same as at the beginning of the preceding month. Other commodities of impor tance in the Twelfth District changed little dur ing the period under review. Am ong agricultural commodities, prices of grains and of cotton showed some increase be tween mid-October and mid-November. The largest advance was in the price of wheat which was quoted at 71 cents per bushel (Western white at Portland) on November 20, compared with 56^2 cents per bushel on October 16. Prices for oats and rice rose slightly, while quotations on barley changed little. Prices paid for beet sugar and beans declined. Potatoes sold at a slightly higher level in mid-November than a month earlier. Quotations on canned fruits re mained stable during October and early No vember, while quotations on most dried fruits decreased slightly. Non-ferrous metals prices generally tended upward during the period under review. Silver prices at 45 cents per ounce on November 16 were the highest since January, 1930. Copper and lead quotations advanced from their midOctober lows. The price of zinc, which had not changed for several weeks, declined in the second week of November. Posted prices for crude petroleum were sta tionary during October and early November. Gasoline prices were reduced by amounts rang ing from two to six cents per gallon in Califor nia during this period. Lumber prices advanced during October but at a less rapid rate than in the preceding four months. The Twelfth District credit situation con tinued about the same during the five weeks ending November 22 as in the preceding month. Changes in the condition of reporting member banks were unimportant except for increases in holdings of United States securities and in Government deposits. Neither loans on securi ties nor those for other purposes showed an ap preciable net change during the period under review. REPORTING MEMBER BANKS—Twelfth District (in millions of dollars) Loans and Investments— Total. Loans— T otal.......................... On Securities...................... All O ther............................ Investments— Total .............. United States Securities . . Other Securities ................ Reserve with Reserve Bank. . . . Net Demand Deposits.............. Time Deposits............................ Due from Banks........................ Due to B anks............................ Borrowings at Reserve Bank... Interest rates charged by city banks aver aged slightly lower at the middle of November than a month earlier. Although month-tomonth changes in interest rates have been ir regular, the general tendency has been toward slight reductions in charges on commercial loans by city banks since last March. Borrowings from the Reserve Bank fluctu ated between 3 and 10 million dollars during late October and early November. Discounts for country banks approximated 3 million dol lars during this period, the remainder of bor rowings resulting from the adjustment of the reserve position of city banks (principally in San Francisco). Only 63 banks borrowed dur Commodity Prices— Unit Wheat.................. Barley ................ Rice...................... . . . . Fancy Japan, San Francisco........................................ Cotton..........................Middling Uplands, spot, New York................................. Beans, Lima. . . . . . . . F.o.b. California................................................................ ........ Good grade steers, San Francisco................................... Lambs..........................Light weight, San Francisco............................................. Wool.................... . . . . Fairchild average, domestic wool, scoured.................. Eggs.................... ........Cash, Extras No. 1, San Francisco................................. Butter.................. . . . . 92 Score, San Francisco.................................................... Oranges.............. ........ Weighed average, f.o.b. California................................ Apples................ ......... California Newtons, San Francisco................................. Prunes................ ........ 40/50’s in 25-lb. box, f.o.b. California........................... Flour.................... ,. . . . Patents, Portland ............................................................ Canned Peaches. ........ Choice, No. 2j4s, f.o.b. California................................... Canned Salmon.., . . . .Alaska Red, No. 1 tall, f.o.b. Pacific Northwest........ Sugar.................. ........ Beet, f.o.b. San Francisco................................................ Copper................ ........ Electrolytic, spot, New York........................................... ........ Spot foreign, New York..................................................... Lead.................... Coffee.................. . . . . Spot, Santos No. 4, New York........................................ Rubber................ . . . ..Smoked ribbed sheets, New York.................................. Lumber.............. ........ Douglas fir, No. 1, common sheathing, mills................. Cement................ ....... Portland, f.o.b. Pacific Coast plants............................ Gasoline.............. ........Refinery, California.......................................................... *November 20 or nearest date available. t--------- -----Con dition — Nov. 22, Nov 15, Oct. 18, Nov. 23, 1933 1933 1933 1932 1,695 1,688 1,673 1,688 891 889 893 935 219 229 218 220 673 670 673 706 804 799 780 752 485 479 459 422 319 320 321 330 101 104 96 86 585 579 548 585 861 862 858 885 139 136 134 175 133 132 135 176 1 1 42 fOctobet average. **N o quotation. cwt. 1000 ft. Nov. 20,* 1933 $ .71 1.16 3.85 .104 5.00 5.13 6.43 .773 .295 .2225 2.05t 1.30 .065 7.025f 1.35 1.70 4.40 .0825 .4425 .043 .091 .089 18.39Î 1.603t .067 July 20, 1933 $ .69 1.05 3.25 .106 6.00 6.00 4.75 .69 .195 .25 1.85 ** .058 7.463 1.20 1.65 4.60 .090 .388 .045 .093 .070 16.20 1.55 .065 Feb., 1933 $ .43 .53 3.30 .060 3.67 4.90 5.60 .394 .15 .18 1.48 1.27 .045 4.279 1.17 1.40 3.80 .050 .261 .030 .095 .030 9.50 1.43 .044 Nov., 1926 $1.35 1.28 6.04 .128 6.42 8.45 12.42 .955 .49 .452 4.80 1.26 .071 7.685 2.05 2.675 5.91 .136 .541 .080 .208 .399 16.23 1.90 .113 N ov em b e r, 1933 ing October, compared with 78 in September, 1933, and 194 in October, 1932. This decrease, which was considerably more than seasonal, brought the number to a new low level for the post-war period. Effective November 3, the discount rate of the Federal Reserve Bank of San Francisco was reduced from 3 per cent to 2 y 2 per cent to bring it in line with the already low open market rates and the small amount of discounting. On Octo ber 24 this bank also lowered its buying rates on bankers’ acceptances. FEDERAL RESERVE BANK OF SAN FRANCISCO (in millions of dollars) ----- Condition------ , ---------- Nov. 22, Nov. 15, Oct. 18, Nov. 23, 1933 1933 1933 1932 172 171 182 166 3 3 57 3 2 1 2 3 162 166 123 166 r Total Bills and Securities.......... Bills Discounted...................... Bills Bought............................ United States Securities........ Total Gold Reserves and Other Cash .......................................... Total Deposits ............................ Federal Reserve Notes in Circulation................................ Federal Reserve Bank Notes in Circulation.......................... Ratio of Total Gold Reserves and Other Cash to Deposit and Federal Reserve Note Liabilities Combined ............ 275 197 212 12 67.2 201 280 265 181 225 151 213 217 230 10 67.7 8 66.7 59.1 Reserve Bank holdings of locally purchased bills, which had been less than a million dollars for two months, increased to $1,344,000 during the second week of November. That amount of purchased bills in the portfolio of this institu tion is still comparatively small. Member bank holdings of acceptances (included in “all other loans” ) also declined during August, Septem ber, and October. The amount of bills accepted by those banks increased sharply in October, however, showing a greater use of this form of credit, notwithstanding large and increasing excess reserves at the disposal of these same banks. An increase in the use of acceptances is a seasonal occurrence during the autumn mar keting season. ACCEPTANCE OPERATIONS OF LEADING BANKS Twelfth District Held at Amount Amount close of Accepted Bought month July, 1932............ $ 6,857,000 $17,272,000 $20,230,000 August, 1932............ 7,725,000 8,170,000 15,931,000 September, 1932............ 7,231,000 4,095,000 8,701,000 8,553,000 8,267,000 6,533,000 October, 1932............ July, 1933............ 9,018,000 10,586,000 18,466,000 August, 1933............ 8,097,000 12,163,000 16,750,000 September, 1933............ 6,339,000 6,764,000 15,673,000 October, 1933............ 10,649,000 5,687,000 14,818,000 The flow of commercial payments between the Twelfth District and other areas had little net effect upon reserves of local banks between October 18 and November 22, the net inflow of funds from this source aggregating only one million dollars. During this same period the United States Treasury disbursed 14 million dollars more than it collected in the Twelfth District, thus furnishing a net addition to Twelfth District banking reserves. The bulk 87 f e d e r a l r e s e r v e a g e n t a t s a n F r a n c isc o of the Federal Government disbursements was made for Army and Navy functions and for such agencies as the Reconstruction Finance Corporation, the Farm Credit Administration, and for other recovery agencies. Most of the disbursements were made in California, espe cially those of a general nature, although agri cultural loans and other payments were substan tial in amount in the Spokane area. Government expenditures in this district, which have been greater than local collections almost continu ally since 1930, may be affected considerably by the recent order transferring most naval vessels to the Atlantic Coast. SOURCES AND USES OF BANKING RESERVES Twelfth District Changes in millions of dollars during the weeks indicated Week Ending 1933 September 13. September 20. September 27. October 4 . . October 11 October 18 . . October 25 .. November 1 November 8 November 15 November 22 SOURCES OF FUNDS Reserve Bank Commercial Treasury Credit Operations Operations — 6.0 + 3.1 + 3.7 — 2.4 — 1.6 + *1 — 1.7 + 2.8 — .9 + 1.0 — 1.3 + *4 — 1.6 + 4.0 + 11.0 — 1.6 — 5.4 + 7.1 — .5 — 3.4 + 6.0 + 6.3 — 8.1 + *8 — 5.2 + 9.3 + 6.1 — 2.5 + 2.9 + 3.8 — 8.1 + 5.5 + .7 Week Demand Ending for 1933 Currency September 13 — 4.1 * September 20 September 27 — 3.3 October 4 .. + 5.7 October 11 . . +3.2 October 18.. + -4 October 25.. — 3.6 November 1 + 1.5 November 8 +4.5 November 15 — 1.9 November 22 + .6 USES OF FUNDS Member Non Bank member Reserve Deposits Deposits — 2.6 + 7.4 — 3.3 — .6 + 3.3 + *1 — 6.7 + 1.1 — 1.5 + 11.6 — .9 + .6 + 4.8 + -8 — 2.3 — .1 + 4.2 + .4 + 6.2 + 1.1 — 2.8 + «3 Unexp’d Capital Funds + .1 * .1* .1* + .1 — .1 + 1.1 — 1.2 + + Total Supply + *8 — 3.9 + .2 + *1 + 13.4 + .1 + 2.1 — 1.0 + 10.2 + 4.2 — 1.9 Total Dem'd + -8 — 3.9 + .2 + *1 + 13.4 + *1 + 2.1 — 1.0 + 10.2 + 4.2 — 1.9 *Change smaller than $50,000. A small increase in demand for currency oc curred between October 18 and November 22. Notwithstanding these increased payments of currency to the public, banks were enabled (through the funds supplied by inter-district commercial transactions and by United States Treasury operations) not only to reduce bor rowings but also to build up reserve deposits to a point higher than their average in 1929. Total member bank time and net demand deposits, against which the reserve deposits must be maintained, approximated 3 billion dollars dur ing 1929, whereas similar deposits of those banks now approximate only 2 y 2 billion dollars. Receivers for four Twelfth District banks were appointed during the first 20 days of November. Three of those banks were located in Washington and one in California. In Idaho, the conversion of a chain into a branch banking institution under national charter with 7 branches early in November brought further expansion of branch banking in this district. 88 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS N o v e m b e r, 1933 D e p o s it s o f T w e lf t h D is t r ic t M e m b e r B a n k s The temporary Federal Deposit Insurance Fund of the Federal Deposit Insurance Cor poration provided for in the Banking Act of 1933 becomes operative on January 1, 1934. This Fund will function for a period of six months and insures deposits in banks which are members of the Fund to the amount of $2,500 for each depositor. On July 1, 1934, the perma nent provisions for insurance of deposits by the Federal Deposit Insurance Corporation will be come effective. Under that plan, all deposits of $10,000 or less will be insured 100 per cent; deposits of $10,001 to $50,000 will be insured for $10,000 plus 75 per cent of the amount in excess of $10,000; deposits of more than $50,000 will be insured for $40,000 plus 50 per cent of the amount in excess of $50,000. Some indica tion of the number of depositors and the amount of deposits in Twelfth District banks to be covered by the insurance is presented in the accompanying table and chart. The pro portion of depositors in this area having ac counts of $2,500 or less is approximately the same as in the United States as a whole, but the aggregate amount of deposits included in that size-group constitutes a much larger proportion of total deposits in the Twelfth District than in the entire country. A t Twelfth District member banks, 96.6 per cent of all deposit accounts did not exceed $2,500 on May 13, 1933. Nearly 99.4 per cent of the depositors carried balances smaller than $10,000, leaving only six accounts in every thou sand (0.6 per cent) with deposits of $10,001 or over. On the other hand, the 0— $2,500 group of accounts included only 33.3 per cent of the amount of deposits, while but 55.4 per cent of deposits came within the $10,000 or smaller class of accounts. NUMBER AN D AMOUNT OF DEPOSIT ACCOUNTS BY SIZE OF ACCOUNT (Licensed member banks, May 13, 1933) -United States----- \ Per cent Amount of Deposits of total (thousands) $ 2,500 or less.. . .$ 5,580,327 23.7 $ 2,501— $ 5,000 . . 1,912,132 8.1 $ 5,001— $10,000 . . 1,840,791 7.8 $10,001— $50,000 . . 3,720,403 15.8 Over $50,000 . . . . . 10,488,654 44.6 Total................ .$23,542,307 Number of Accounts Total .................... . 30,556,105 $ 2,500 or less . . . . 29,482,384 $ 10,000 or less . 30,322,120 $ 10,001 or more .. 233,985 ■Twelfth District—\ Per cent of total $ 768,220 33.3 262,239 11.4 245,660 10.7 381,289 16.5 646,810 28.1 100.0 $2,304,218 100.0 100.0 4,019,267 3,882,396 3,995,355 23,912 100.0 96.5 99.3 0.7 96.6 99.4 0.6 On December 31, 1932, member banks held 75 per cent of the total bank deposits in the Twelfth District. In individual states the ratios of member bank to total deposits were: Ari zona, 56 per cent; California, 76 per cent; Ore gon, 82 per cent; Washington, 68 per cent; Idaho, 57 per cent; Utah, 69 per cent; Nevada, 76 per cent. Preliminary figures indicate that licensed member banks held 80 per cent of total district bank deposits on June 30, 1933. Since most of the larger city banks, which carry the bulk of large size deposits, are members of the Federal Reserve System, the proportion of fully insured deposits will be higher in non-member than in member banks. [This article is based largely upon statistics as of May 13, 1933, given in the Federal Reserve Bulletin for July, 1933, pages 454-456.] PERCENTAGE DISTRIBUTION OF AMOUNT OF DEPOSITS CLASSIFIED BY SIZE OF ACCOUNTS (Licensed member banks, May 13, 1933). M O N T H L Y R E V IE W OF B U S IN E S S C O N D IT IO N S I S A A C B . N E W T O N , C h airm an o f th e B o ard an d F e d eral R e se rv e A g e n t F e d eral R eserve B a n k o f San F rancisco Supplement San Francisco, California, November 20, 1933 Vol. X V II No. 11 S U M M A R Y O F N A T IO N A L C O N D IT IO N S Prepared by the Federal Reserve Board Volume of industrial output continued to decline in October. Factory employment and payrolls, after increasing continuously for six months up to the middle of September, showed little change from then to the middle of Octo ber. There was an increase in the volume of construction undertaken, reflecting the expan sion of public works. Production and Employment. Volume of out put in basic industries decreased in October as compared with September, contrary to seasonal tendency, and the Board’s seasonally adjusted index declined from 84 per cent of the 1923-1925 average to 77 per cent. This compared with an index of 67 in October of last year and of 60 at the low point in March of this year. A t steel mills, activity declined sharply between the middle of October and the first week in Novem ber, but in the following three weeks showed little change. In the automobile industry, out put has been curtailed in recent weeks in prep aration for new models. For the first ten months of the year the number of cars produced was 50 per cent larger than in the corresponding months of 1932. Output at shoe factories showed a seasonal decline in October as compared with September, and there was some decrease in activity at cotton and wool textile mills, con trary to seasonal tendency. A t meat packing establishments, activity declined sharply from the unusually high rate prevailing in Septem ber, which was due to the fact that in that month a large number of pigs purchased by the Federal Government were handled. Total number of employees at factories, ex cluding canning establishments, showed little change from the middle of September to the middle of October. A t canning establishments there was a decline of a seasonal character and the Board's index, which includes this industry, showed a slight decrease. Value of construction contracts awarded dur ing October and the first half of November, as reported by the F. W . Dodge Corporation, showed a considerable advance over the preced ing six-week period, reflecting a growing vol ume of public works. Distribution. Shipments of commodities by rail showed a somewhat larger decline between the middle of October and the middle of No vember than is usual at this season. Depart ment store sales increased in October as com pared with September by slightly less than the usual seasonal amount. PER CENT P E R CENT INDUSTRIAL PRODUCTION Index numbers of industrial production, adjusted for seasonal varia tions (1923-1925 average =100). FACTORY EMPLOYMENT AND PAYROLLS Indexes of factory employment and payrolls, without adjustment for seasonal variations (1923-1925 average=100). Prices. Wholesale prices, as measured by the weekly index of the Bureau of Labor Statistics, declined from 71.3 per cent of the 1926 average in the first week of October to 70.4 per cent in the third week, and then advanced to 71.7 per cent in the third week of November, a level 20 per cent above the low point of last March. Following de clines early in October, prices of cotton, grains, lard, rubber, tin, and silver increased consider ably, while cattle prices continued to decline and prices of hogs showed little change. the week ending November 15. For the fourweek period as a whole the banks’ holdings of United States Government securities showed an increase of $57,000,000 while holdings of acceptances and discounts for member banks showed little change. Total loans and investments of member banks increased by $90,000,000 during the period, reflecting a growth of $150,000,000 in holdings of United States Government securi ties, of $25,000,000 in holdings of other se- PERCENT VALUE OF BUILDING CONTRACTS AWARDED Indexes based upon three-month moving averages of F. W. Dodge data for 37 Eastern states, adjusted for seasonal variations (1923-1925 average=100). Foreign Exchange. The value of the dollar in the foreign exchange market fluctuated around 67 per cent of its gold parity during the latter part of October, declined during the first part of November to 59 per cent on Novem ber 16, and on November 22 was 61 per cent. Bank Credit. Between October 18 and No vember 15 there was little change in the re serves of member banks, which continued to be more than $800,000,000 in excess of legal requirements. Purchases of United States Gov ernment securities by the reserve banks de clined gradually from $25,000,000 during the week ending October 25 to $2,000,000 during RESERVE BANK CREDIT Wednesday figures. Latest figures are for November 15. curities, and of $30,000,000 in “all other” loans, while loans on securities declined. Net demand deposits declined by $70,000,000 during the period, while Government deposits increased by $180,000,000. Rates on acceptances and yields on short term United States Treasury bills and certifi cates rose slightly from mid-October to November 20, and yields on Government and high grade corporate bonds advanced some what. Discount rates of the Federal Reserve Banks of Boston, San Francisco, and Phila delphia were reduced from 3 per cent to 2 per cent on November 2, 3, and 16, respectively.
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