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Monihhf, Review FEDERAL RESERVE BANK OF OCTOBER 1943 SAN FRANCISCO Sources of Manpower in the Twelfth District I abor shortage is the principal wartime problem of the Twelfth District, threatened labor surplus the princi pal concern for the postwar future. The labor shortage results from a sharp expansion of industrial production and the concurrent withdrawal into military service of a large number of workers and potential workers. The probability of experiencing substantially full employment after the war depends on how many of the additional jobs, or their equivalent, carry over into the postwar period, and on how many of the additional workers, and of the men already drawn into military service from the area, seek permanent employment in the District. J Little can be said, in specific terms, about the probable or potential number of postwar jobs. The amount of the wartime increase in jobs and the direction in which it has been concentrated are pertinent points of departure for judging the extent to which the increase may persist. Sim ilarly, while it is impossible to foretell how many of the people who have come into the District’s labor force will remain in it, determination of their number and sources should help to define the magnitude of the problem. U nb a la n ced Increase in Em ploym ent Employment in nonagricultural establishments and on farms in the District is estimated to have increased by 1,302 thousand from an average of 3,575 thousand in 1940 to 4,877 thousand in June 1943. E m plo y m e n t F in a r m s N — T o n a g r ic u l t u r a l w e lfth F ederal E R s t a b l is h m e n t s eserve D a n d Total M o n th ly A v e ra g e , 1 9 4 0 -----Ju n e, 1943 .................................. In crea se ....................................... 3,575 4,877 1,302 694 699 5 is t r ic t 686 1,544 858 All Other1 2,195 2,634 439 Increases were limited to the chief urban industrial centers, with the remainders of the various states, for the most part, losing population. An apparent exception is Arizona, where population grew in both the Phoenix area and in the rest of the state. In this instance, however, the “remainder” includes both a second urban industrial area in and around Tucson, and counties in which 28 thousand Japanese have been relocated. 1 M a n u fa ctu rin g activ ities in G ov ern m en t yards and de'pots in clu d ed in A ll O th er. N o t e : F ig u res e'xclude prop rietors o f u n in corp ora ted businesses, the selfem p loy ed , d om estic servants, casual w ork ers, and unp aid fa m ily w ork ers other than farm fam ily w ork ers. A n estim ate o f a b ou t 600 thousand for the ex clu d ed g rou p s, as o f A p ril 1940, can be derive’d b y su b tra ctin g e m ploy m en t in n on a g ricu ltu ra l establishm ents and on farm s fro m the total n u m ber rep ortin g them selves em p loyed in the 1940 ce'nsus. T h e derived figu re is in error b y any discrep an cies betw een the tw o sou rces o f data. S o u r c e : U n ited States Bureau o f L a b o r Statistics, e x cep t for agricu ltu ral em p loym en t, for w h ich it is U n ited States B u reau o f A g ricu ltu ra l E c o nom ics. Two-thirds of this increase has been in manufacturing employment, and over 90 percent of the growth in manu facturing has been in shipbuilding and aircraft. Including Navy yards and repair work in military air depots, these two industries now employ half again as many workers as did all manufactures before the war. The older estab ★ ß a c h U te A tta c k Population Resident civilian population in the seven western states in June 1943 was 789 thousand greater than total popula tion in April 1940, when the most recent decennial census was made. With the exception of Idaho, all of the states experienced some gain, despite heavy withdrawals into the military services. on (in thousands) ManufacAgricultural turing1 lished industries serving civilian markets have grown over a long period much more slowly than the wartime rate of expansion in the production of military goods. It would require many years at the prewar rate of growth for those industries to provide as many jobs as now exist in manufacturing enterprises in the District. But the war also has brought important metal producing and metal working industries, which are capable of supplying raw and semi-finished materials and parts, to manufacturers of civilian as well as of military goods. Even if, as is expected, shipbuilding and aircraft production fall to a fraction of their present levels, the consequent reduction in the number of jobs may be balanced in part not only by resumption of activities which have been curtailed be cause of raw material or labor shortages, but by the con version of war industries to the manufacture of new peacetime products on a sizeable scale. From the stand point of the total number of jobs available after the war, the most important question is the extent to which such conversion is physically possible and economically feasi ble. This and other questions concerning availability of jobs represent one side of the problem. The other has to do with the number of people wanting jobs, and it is to this side of the problem that the following discussion is related. ★ The two largest urban areas, centering in Los Angeles and San Francisco, experienced the greatest absolute increases in population. Relative to 1940, however, the greatest gains occurred in the Las Vegas, San Diego, Portland - Vancouver and Seattle - Tacoma - Bremerton areas. Las Vegas, with over two and a half times its pre war population, is an extreme example of the effect of ß iu p rl/c s i ß a n d i ★ FEDERAL RESERVE BANK OF SAN FRANCISCO 60 locating important war production facilities in or near a small community. P o p u l a t io n a n d I n - m ig r a t io n — T w e l f t h F e d e ra l R e se r v e D is t r ic t (April, 1940-June, 1943) T otal C ivilian Popula- P op ula tion tion N et A p r . 1, June 30, Ratio I n -m i1940 1943 1943 to gration (in thou- (in thou1940(in thousands)sands) (in percent) sands) State A r e a A r i z o n a ......................................... P h o e n ix A r e a ........................ R em a in d er o f S t a t e ............ 499 186 313 C a liforn ia ..................................... S an F r a n cis c o B a y A r e a . L o s A n g e le s A r e a ............... San D ie g o A r e a .................... R em a in d er o f S ta te ............ 6,907 1,462 2,786 289 2,370 Id a h o Ratio In -m igration to 1940 P opulation (in percent) 574 208 366 115 112 117 89 29 60 18 16 19 7,453 1,722 2,984 386 2,361 108 118 107 134 100 923 356 352 112 103 13 24 13 39 4 ............................................ 525 465 89 — 40 8 ( lo s s ) N ev a d a ......................................... L a s V e g a s A r e a .................... R em a in d er o f S t a t e ............ O r e g o n ......................................... P o r tla n d -V a u co u v e r A r e a . R em a in d er o f S t a t e ............ 110 16 94 1,090 355 735 136 42 94 1,146 434 712 124 263 100 105 122 97 34 27 7 121 107 14 31 169 7 11 30 2 U ta h .............................................. 550 Salt L a k e -O g d e n A r e a . . . 268 R em a in d er o f S t a t e ............ 282 ............................. 1,736 W a s h in g t o n S e a ttle -T a c o m a -B r e m e r to n A r e a ..................................... 731 P o r tla n d -V a n co u v e r A r e a . 50 R em a in d er o f S t a t e ............ 955 584 307 277 1,848 106 115 98 106 42 44 —2 203 8 16 1 (lo s s ) 12 894 81 873 122 162 91 164 32 7 22 64 1 T w e lfth D is tr ic t T o t a l ..........11,417 A ll U rb a n A re a s C o m b in e d 6,143 A ll R em ain d ers o f S ta te s. 5,274 12,206 7,058 5,148 107 115 98 1,372 1,223 149 12 20 3 515 127 139 34 P o r tla n d -V a n co u v e r A r e a T o t a l .................................... 405 A r e a s : E a ch “ area” is c o m p o s e d o f the co u n ties c o n ta in in g the cities used in id en tify in g the are'a, w ith the e x c e p tio n o f “ San F r a n cis c o B a y A r e a ” w h ich is A la m e d a , C on tra C osta, M a rin , San F r a n cis c o , San M a te o and S ola n o cou n ties. S o u r c e s o f D a t a : B o th the 1943 pop u la tio n figu res and the estim ate o f net in -m ig ra tion are’ based o n registra tion s w ith the O ffic e o f P rice A d m in is tration fo r W a r R a tio n B o o k I I . T h e re gistra tio n figu res p u rp o rt to e x c lu d e all m em bers o f the arm ed fo rce s w h o re ce iv e sustenance in kind or w h o are m essed separately un d er an o ffic e r ’ s com m a n d . F a ilu re to r e g ister, dish o n e st d u p lica te re g istra tio n , o r n e g le ct in retu rn in g b o o k s issu ed person s su b seq u en tly deceased o r b e c o m in g ineligible’, m ay in tro d u ce errors into the b a s ic data. U n ce rta in ty as to a c c u r a c y is greater in a sm all g e o g r a p h ic area than in a state o r in co m b in a tio n s o f states o r areas. E rro rs are n o t believed to be ex ce ssiv e in any case. M igration Net in-migration, which has been much more important than natural increase in this period of rapid growth, added 1,372 thousand persons to the District’s population between April 1940 and June 1943. This is 583 thousand more than the population increase, the difference being the excess of military withdrawals over natural increase. The figure of 1,372 thousand measures only net migra- Distribution and Trade— Index numbers, 1935*39 daily average=100 Retail Trade With Seasonal Adjustment-19431942 Aug. July June Aug. D ep a rtm en t S to re Sales (v a lu e ) T w e lfth D is t r ic t .......... .p l9 8 S ou th ern C a liforn ia . . . p l 9 2 N o rth e r n C a lifo r n ia .. .p l 7 4 P o rtla n d ........................ .p l9 9 W e s te rn W a s h in g t o n . . p2 4 0 E a stern W a s h in g t o n and N o rth e r n I d a h o .p l 9 7 P h o e n i x ........................... . p283 Without Seasonal Adjustment ------- N ,--------- 1943-------- X 1942 Aug. July June Aug. 199 195 186 205 241 200 199 179 203 245 172 166 151 180 217 p l8 0 p l7 9 p l5 8 p l9 0 p226 165 166 152 174 199 184 183 165 194 227 158 155 139 173 204 176 232 183 235 168 228 p l7 8 p l9 7 156 176 173 200 152 159 117 117 118 107 123 85 107 116 95 p ll9 p l2 7 p i 08 119 125 112 115 131 95 123 130 115 Carloadings (n u m b e 'r)1 T o ta l .................................... .p l0 3 M erch a n d ise and M is c. . p l l ¿ O t h e r ................................ .p 89 1 1923-25 daily average = 100. p Preliminary. October 1943 tion to the District; in other words, only the difference between in-coming and out-going population is reflected in the figure. In the more congested centers, transporta tion, housing, and general living conditions are, or have been at one time, so unsatisfactory that some of the in migrant workers leave after a relatively brief experience. Furthermore, some localities have attracted population from other parts of the District and the latter areas, in turn, have offset their losses, at least in part, by drawing on still other regions. The urban communities with the greatest volume of supply contracts have gained popula tion from their own hinterlands, and from other states in the District, as well as from outside the District. With these intra-district movements, the total shifting of pop ulation has been several times the net amount of inmigration. Sources of Increased M a n p o w e r The increase in Twelfth District manpower require ments in nonagricultural establishments and on farms consists of the 1,302 thousand by which employment has increased, plus the replacement of workers withdrawn by military inductions and enlistments. The requirements have been met by in-migration and by increased intensity of employment of the population. Net in-migration has been the most important single source of additional manpower. It has furnished 686 thousand workers. Substantially all of the 488 thousand unemployed and of the 215 thousand on emergency work in 1940 presumably have been absorbed. The age distri bution of the population in 1940 was such that a net increase in the number of persons in the age groups most likely to be in the labor force could have been expected by 1943. This is estimated to have supplied about 70 thou sand workers, without allowance for migration and mili tary withdrawals. The propensity to seek work, under the stimulus of the war effort, has assisted materially in meeting ex- Production and Employment— Index numbers, 1923-25 average=100 With SeasonalWithout Seasonal <Adjustment--------■> ,--------Adjustment--------% ,---------1943--------- x1942 -- --------- 1943--------- n 1942 Industrial Production1 Aug. July June Aug. Aug. July June Aug. L u m b e r 23 ............................. p l2 7 R efin ed O ils ........................... — Cem ent .................................. 135 W h e a t F lo u r ........................ 121 P e t r o l e u m ............................. — E le c tr ic P o w e r ................... p389 141 — 137 126 — 378 138 — 145 130 — 385 134 — 226 117 — 318 p l5 2 198 151 121 118 p426 150 192 150 110 118 422 156 194 165 115 118 413 162 184 203 117 110 349 Factory Employment and Payrolls2 3 4 E m p lo y m e n t T w e lfth D is t r i c t ............ C a liforn ia ................... P a cific N o r t h w e s t .. . O re g o n ................... W a s h in g to n .......... In te rm o u n ta in .......... 309 371 226 220 229 161 310 370 231 230 230 164 306 365 236 230 238 164 252 290 211 197 218 146 311 372 230 226 232 161 311 370 232 232 232 168 306 255 365 291 234 215 232 203 235 222 168 148 P a y ro lls T w e lfth D i s t r i c t ............ C a liforn ia .................... P a cific N o rth w e s t. . . O re g o n ................... W a s h in g to n .......... In te rm o u n ta in .......... 613 726 453 399 484 335 622 717 497 451 523 334 611 708 487 430 520 304 446 502 382 335 410 227 624 730 481 428 511 324 617 716 487 434 518 327 613 712 485 434 514 322 1 D a ily average. 2 1935-39 average = 100. 3 R e v ise d series. B a ck figu res w ill b e supplied o n requ est. 4 E x clu d e s fish, fru it, and ve ge ta b le can n in g. p P relim in ary. 456 506 406 360 433 223 October 1943 MONTHLY REVIEW panded manpower needs. A greater proportion of young people, of housewives, and of men nearing or past re tirement age have taken or retained jobs. Shifting of some of the proprietors of unincorporated businesses, self-employed, domestic servants, casual workers, and family workers other than farm family workers, into employment in non-agricultural establishments and on farms, or into military service, has also counted in meet ing the increase in manpower requirements as defined above. Measurement of the total addition resulting from increased participation of young people, housewives, etc., and of whatever number of proprietors, servants, etc. may have shifted occupations, is not directly available. The difference between this total and military withdraw als can be derived, however, and military withdrawals were larger by about 155 thousand. Perm anence of Increased District Labor Su p p ly A fairly large number of the workers who made it possible for Twelfth District industry and agriculture to expand employment by 1,302 thousand may be unwilling to drop out of the District labor force when the war ends. A substantial part of the housewives will withdraw if their 61 husbands have jobs or reasonable assurance of jobs, how ever, and many of the young people will quit and many of the old ones may retire. Former domestics may be unwill ing to give up factory jobs, at factory wages, for what they formerly earned as servants, but the opportunity in domestic service will exist for them or for others. The same will hold, more or less, for the casual workers, proprietors and self-employed who may have shifted from their earlier occupations. Some of those who have mi grated to centers of war production doubtless will return to their prewar homes. Other in-migrants, however, have brought their families and possessions, with full intention of permanent settlement in the District. The previously unemployed and those on emergency work programs in 1940 can hardly be expected to return voluntarily to their former status. In addition, the demobilized military per sonnel will be seeking employment. Unless the war industries of the District can convert their facilities to the manufacture of peacetime products, the number of jobs in the District will be much smaller than at present. The number wanting work in the District is likely to exceed by a wide margin the number employed in 1940. The threat of a serious labor surplus is real. Government Finance and Bank Credit Bank Deposits and C o in a nd C u rren cy in Circulation the four weeks ending October 6, which in D cluded the period of the Third War Loan Drive, pur chases of Government securities by individuals, corpora tions, and other non-bank buyers temporarily halted the expansion in bank deposits and coin and currency in cir culation which has been evident over the past two years or more. Payment for those purchases by non-bank investors drew heavily upon deposits and to a much smaller extent upon cash holdings of the public. Adjusted demand de posits of Twelfth District member banks declined about 6 percent during the period. This decline was in marked contrast to the persistent increase of other recent months which has averaged about 4 percent monthly since the first of the year. The steady increase in the demand for currency also was interrupted, although not to the same degree. Coin and currency in circulation remained almost unchanged in the two weeks ending September 22. The u r in g A v era ges o f W edn esda y figures (millions of dollars) C o n d itio n Ite m s o f W e e k ly R e p o rtin g M em b er B a n k s T o t a l lo a n s ................................................... C o m ’ l, ind. & a gric. lo a n s ............ L o a n s to finance securities tran saction s .................................... R ea l estate lo a n s .................................. A ll oth er lo a n s ....................................... T o ta l in vestm en ts .................................. U n ited States G o v ’ t s e c u r it ie s .. . . A ll oth er s e c u r itie 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 ited States G o v ’t d e p o s it s ............ 970 472 70 325 103 3,456 3,025 431 2,493 1,265 495 C oin and C u rren cy in C ircu lation — T o ta l (ch a n g es o n l y ) ............................. F ed . R es. notes o f F . R . B . o f S. F . 1,625 M em b er B a n k R e s e rv e s ........................ 1,372 ■Change F r o m — f 1943 Sept. f-------- Ly'tô-------- \ A ug. + + 56 23 July + + 55 31 — — ... > 1942 Sept. 72 5 + 33 — 4 + 4 + 69 — 62 + 131 + 30 + 33 + 59 + 27 — 4 + 1 + 173 + 41 +132 + 76 + 47 + 69 31 + 46 — 52 + 1,532 + 1 ,5 3 0 2 + 690 + 168 + 426 + + 91 + + 8 48 +153 + 62 + + + 68 714 573 133 upward movement was resumed before the end of Sep tember, but the increase of 34 million dollars over the four weeks ending October 6 was substantially smaller than increases in other recent months. The decline in demand deposits was not accompanied by any similar reduction in time accounts, although the moderate but persistent increase in time accounts, which has been evident over the preceding six months, was inter rupted. The total of these accounts on October 6 was virtually unchanged from the level of four weeks earlier. Funds held in time accounts apparently were not used on any large scale for the purchase of Government securities. Loans and Investments of M e m b e r Banks Loans of weekly reporting member banks increased by 180 million dollars or 20 percent to a total of 1,103 million during the period, September 8 to October 6. Loans for purchasing or carrying securities increased 63 million dollars during the four weeks to total 93 million on October 6. A considerable portion of these loans was probably made for the purchase of Government securities. The only other increase of some magnitude occurred in commercial, industrial, and agricultural loans, which in creased by 60 million dollars to total 520 million. During the same period, investments of reporting member banks rose by 244 million dollars or 7 percent to 3,635 million. Increased holdings of Treasury bills and certificates of indebtedness accounted for two-thirds of the increase. In the subsequent two weeks, loans declined slightly, but investments of reporting member banks increased further by 315 million dollars. This increase was largely the result of allotments of the issues of % percent certifi cates of indebtedness and 2 percent bonds offered by the Treasury for cash subscription to commercial banks only. FEDERAL RESERVE BANK OF SAN FRANCISCO 62 October 1943 S u m m a ry o f N a tio n a l B u sin ess C o n d itio n s Released Septem ber 22, 1943— B oard o f G o v e rn o rs o f the F ed era l R eserve System n d u s tr ia l activity and war expenditures were maintained in August at a high level. I Commodity prices showed little change. Retail trade continued in large volume. I n d u s t r ia l P r o d u c t io n IN D U S T R IA L P R O D U C T IO N F ederal R eserve m onthly index o f physical volum e o f produ ction , adjusted fo r seasonal variation, 1935-39 average = 100 fo r total. G ro u p s are ex pressed in terms o f points in the total index. M on th ly figures, latest show n are fo r A u gust. D E P A R T M E N T ST O R E SA LE S A N D STO CK S Federal 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 shown are fo r A u gust. Output of manufactures and minerals showed little change in August and the Board’s seasonally adjusted total index of industrial production remained at the July level. Production of durable manufactures increased. Output of iron and steel continued to advance and reached the peak levels achieved earlier this year. There were further slight increases in activity at war plants in the transportation equipment industries. Output of other durable products showed little change. Production of nondurable goods declined in August, reflecting further decreases in output of textile, leather, and food products. Cotton consumption in August was about 15 percent lower than the same period a year ago and was at the lowest level since the beginning of 1941. Leather output has also declined in recent months and is currently close to prewar levels. Activity at meat-packing plants showed the usual seasonal de cline in August but preliminary figures indicate that output was about one-fifth larger than a year ago. Output of most other manufactured foods declined somewhat further. Production of petroleum, coke, and rubber products continued to advance in August while chemical production showed little change. Production of crude petroleum con tinued to rise and in August was in the largest volume on record. Lake shipments of iron ore likewise reached a record level. Production of coal and metals was maintained in large volume. D i s t r ib u t i o n Department store sales continued large in August and the first half of September. Increases during this period were less than seasonal, however, following maintenance of sales at a comparatively high level during July. For the year to date value of sales at department stores has been about 13 percent greater than in the corresponding period last year, reflecting in part price increases. Inventories at department stores have in creased in recent months and are now somewhat higher than at the beginning of this year, indicating that receipts of new merchandise have been in excess of the value of goods sold. Total carloadings were maintained in large volume during August and the first half of September. Shipments of grain showed a less than seasonal decline from the peak reached in July and were one-fifth larger than August a year ago. C o m m o d it y P rices The general level of wholesale commodity prices continued to show little change in August and the early part of September. Prices of lumber and newsprint were in creased, while prices of fruits and vegetables showed further seasonal declines. In retail food markets prices of apples and fresh vegetables decreased further from mid-July to mid-August. The Bureau of Labor Statistics cost of living index declined one-half of one percent as decreases in foods were partly offset by small increases in retail prices of other goods and services. A g r ic u l tu r e General crop prospects declined slightly in August according to official reports. The forecast for corn production was raised by 3 percent to almost 3 billion bushels, while prospects for other feed crops declined. Production of cotton indicated on September 1 was 11.7 million bales as compared with a crop of 12.8 million last season. Milk produc tion in August was estimated to be 2 percent smaller than output a year ago, while marketing of most other livestock products continued in larger volume than last year. B a n k C redit M E M B E R BAN K RESERVES A N D R E L A T E D IT E M S W edn esda y figures, latest show n are fo r Septem ber 15. O FD O LLAR S i j-J * < 1 I U S G,0VT SECURITIES \ -V , DEMAND DEPOSITS ___ 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 ) e x clu d e U . S. G o v ernm ent and interbank deposits and co llection item s. G overn m en t securities in clu d e d irect and guaranteed issu es. W ed n esd a y figures, latest show n are for Septem ber 15. In mid-September excess reserves of member banks rose sharply to about 2 billion dollars from the average level of about 1.1 billion which had prevailed in the latter part of August and early in September. This increase was due in part to the fact that the Treasury was making disbursements out of temporary borrowing from Reserve banks on special certificates in anticipation of tax collections and receipts from the Third War Loan Drive. It also reflected in part a substantial decrease in required reserves at the middle of the month when funds from individual and corporate deposits were transferred to Gov ernment loan accounts which are not subject to reserve requirements. During the four weeks ended September 15 the Reserve System holdings in Government securities in creased by about 1 billion dollars in addition to the special certificates taken directly from the Treasury. Most of the increase was in the form of Treasury bills sold to the Reserve banks with sellers retaining the option to repurchase. Over this four-week period currency in circulation increased by about 560 million dollars to a total of 18.8 billion outstanding. In the last two weeks of August and the first week of September, reporting member banks in 101 leading cities showed a net decline in security holdings as a result of the sale of bills to the Reserve System. In the week ending September 15, however, some non-banking holders sold securities to the banks in anticipation of purchases during the Drive, and bank holdings also increased through repurchase of bills from the Reserve System. Commercial loans which had expanded by 100 million dollars in July and in August, increased by 250 million during the week ending September 15. This increase in commercial loans was shared by both New York and other reporting member banks. In the week ending the 15th, loans to brokers and dealers in New York City increased 370 million dollars, most of which was for purchasing and carrying Government securi ties, and there was also an increase in loans on securities to others.
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