The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
MONTHLY REVIEW OF B U S IN E S S C O N D IT IO N S ISAAC B. NEWTON, Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. X V San Francisco, California, October 20,1931 No. 10 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 Industrial production and factory employ ment, which usually increase at this season, showed little change from August to Septem ber, and, consequently, the Board’s seasonally adjusted indexes declined. The general level of wholesale prices also declined. Gold exports and earmarkings, together with an increase in domestic currency demand between the middle of September and the middle of October, re sulted in a large growth of reserve bank credit in use and a rise in money rates. Production and Em ploym ent. Industrial pro duction, as measured by the Board’s seasonally adjusted index, declined from 79 per cent of the 1923-1925 average in August to 76 per cent in September. A ctivity at steel mills decreased from 31 per cent of capacity to 28 per cent, out put of automobiles was reduced substantially, and lumber production continued to decline. A t cotton mills, production increased seasonally, while activity at woolen mills and shoe fac tories declined, contrary to the usual seasonal tendency. Output of petroleum was smaller in September than in August, but the rate of out put prevailing at the end of September was higher than at the end of August. The number employed at factories showed little change from the middle of August to the middle of September, a period when employ ment usually increases. In iron and steel mills, automobile factories, and lumber mills, em ployment decreased further, contrary to the seasonal tendency. In the clothing and silk in- dustries there were substantial increases in em ployment, partly of a seasonal character. In mills producing cotton goods, employment in creased less than usual, and in woolen mills it declined from recent relatively high levels. Data on value of building contracts awarded for the period between the first of August and the middle of October, as reported by the F. W . Dodge Corporation, show a continuation of the downward movement of recent months for resi dential as well as for other types of construc tion. Estimates by the Department of Agricul ture, based on October 1 conditions, indicated a cotton crop of 16,284,000 bales, the largest crop reported, except that of 1926, a total wheat crop somewhat larger than usual, and a corn crop of 2,700,000,000 bushels, 29 per cent larger than last year, but 2 per cent smaller than the five-year average. Distribution. Freight carloadings of merchan dise and sales by department stores increased in September, but by less than the usual sea sonal amount. W holesale Prices. The level of wholesale prices declined from 70.2 per cent of the 1926 average in August to 69.1 per cent in Septem ber, according to the Bureau of Labor Statis tics. Decreases in the prices of livestock, meats, hides, woolen goods, cotton and cotton goods were offset in part by increases in prices of dairy products, petroleum, and petroleum prod ucts. Further declines in the price of cotton dur- PER CENT INDUSTRIAL PRODUCTION Indexnumbers of industrial productionadjustedforseasonal varia tions (1923-1925average=100). W H O L E SA L E PRICES Index of United States Bureau of Labor Statistics (1926=100). 74 MONTHLY REVIEW OF BUSINESS CONDITIONS ing the first few days of October were followed by substantial increases in subsequent days. Bank Credit. During the four weeks follow ing the suspension of gold payments in Eng land on September 20, $600,000,000 of gold was withdrawn from this country’s monetary stock in the form of exports and earmarkings. D o mestic demand for currency continued to in ending O ctober 17 by $904,000,000, and on October 17 stood at $2,169,000,000, the highest level for ten years. Gold and currency withdrawals resulted in a decrease of deposits at member banks in lead ing cities. Loans and investments of these banks also declined, reflecting reductions in loans to security brokers, as well as sales of M IL L IO N S M O N E Y RATES Monthly rates in the open market in NewYork: commercial paper rate on 4- to 6-month paper and acceptance rate on 90-day bankers* accept ances. Latest figures are averages of first 17 days in October. crease, the growth for the month ending in the middle of O ctober being about $400,000,000. The grow th in the amount of currency out standing, however, slowed down after the first few days in October. The demands for credit arising from gold movements and currency growth were met by member banks through the sale of acceptances to the reserve banks and by rediscounts. Volum e of reserve bank credit outstanding consequently increased between the week ending September 19 and the week October, 1931 OF D O LLA R S F E D E R AL RESERVE BANK CR ED IT A N D PR IN CIPAL FACTO RS IN C H A N G E S Monthly averages of daily figures for 12 Federal Reserve Banks. Latest figures are averages of first 17 days in October. acceptances to the reserve banks, and sales of United States securities. During this period there was a rise in shorttime money rates in the open market and in yields on high-grade bonds. On October 9 the Federal Reserve Bank of New Y ork advanced its discount rate from \y2 to 2y2 per cent and on October 16 to Zy2 per cent. Discount rates were also advanced at the Boston, Philadel phia, Cleveland, Richmond, Chicago, St. Louis, Dallas, and San Francisco reserve banks. 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 Industry and trade in the Tw elfth Federal Reserve District continued to mark time at low levels during September, while the harvesting of farm products proceeded satisfactorily. The number of employed decreased by at least the full seasonal amount. Average com m odity prices remained about the same during the month. Changes in the banking and credit situation were of considerable significance, cur rency circulation and the volume of Reserve Bank credit in use increasing by m id-October to the highest levels reached since the immed iate post-W ar period. Deposits and loans of re porting member banks continued to decline. H arvesting of most crops was nearing com pletion early in October, having been attended in September as in August by favorable weather conditions. A s in 1930, there is a tendency on the part of farmers to delay ship ments at current low prices in the hope of receiving better crop returns at some future time. Actual harvests of mostvdeciduous fruits have been somewhat below earlier estimates, reflecting the effects of inadequate water and abnormal temperatures during the grow ing season. A s a result of the semi-drought condi tions of the past year, yields of grain and field crops and of deciduous fruits will be moderately less than the average of recent years, and well below the large crops of 1930. September 1 estimates of the 1931-1932 Navel orange crop were somewhat smaller than packed box ship ments of the preceding crop year. Tw elfth District industrial activity declined slightly after allowance for seasonal variations. Crude oil production and refining activity in California were further reduced during Sep tember and substantial decreases were recorded in inventories of petroleum products. Output of lumber was curtailed slightly more than is usual between August and September, while orders and shipments also declined, resulting in little change in lumber stocks. Flour produc tion expanded more than seasonally. N otwith standing a slight decline in production of cop per during September, further additions were October, 1931 made to inventories of copper, which were al ready higher than at any previous time. Con struction activity advanced slightly from the low levels of August. Trade activity was about the same in Sep tember as in August. Neither retail nor whole sale sales increased by the full seasonal amount. Adjusted carloadings remained unchanged. A substantial increase was recorded in the volume of intercoastal traffic during the month, how ever, reflecting principally a rise in general cargo shipped from Pacific to Atlantic Coast ports. Registrations of new automobiles de creased less than seasonally. Between September 16 and October 21, credit extended by the Federal Reserve Bank of San Francisco increased further by nearly $142,000,000 to the highest level in more than ten years. Discounts at the Federal Reserve Bank advanced sharply and the volume of bills bought in the open market, most of which were purchased in New Y ork rather than in local markets, expanded rapidly to the largest figure ($84,000,000) recorded since April, 1920. Loans and deposits of member banks declined during the five weeks ended O ctober 21. The with drawal of deposits from commercial banks was accompanied by a further marked rise in the demand for currency. Interest rates increased in the Twelfth District follow ing their firming in national money centers. A griculture W eather conditions in the Twelfth District continued to be satisfactory for harvesting dur ing September and early October when the seasonal peak of such operations was reached. Actual harvests of deciduous fruits did not measure up to the volume expected earlier in the season, but estimated production of other crops was substantially the same on October 1 as on September 1. Early autumn rains in the Pacific Northwest helped to relieve the short age of water for livestock and to condition the soil for fall planting operations. The District continues to feel the effects of the widespread shortage of rain and snowfall during the past year and of the abnormally high temperatures of the past summer. Marketing of agricultural products produced in the Twelfth District ordinarily reaches its yearly peak in October. The value of products marketed has been substantially smaller so far this year than it was in the corresponding period of 1930. This decline reflects to a con siderable extent a lower level of prices for agri cultural products, although the volume of mar ketings has also been below that of last year. There is little evidence that excessive liquida tion of agricultural products which can be stored or for which useful purposes can be found on the farm has accompanied the recent price declines. 75 FEDERAL RESERVE AGENT AT SAN FRANCISCO The usual mild autumn rains in the Pacific Northwest during September enabled grain growers in all but the areas of lightest rainfall to proceed with their sowing of winter wheat. Early planted stands of this grain have de veloped satisfactorily. Exports of wheat from Puget Sound and Columbia River ports totaled 2,198,570 bushels during September. For the current marketing season to October 1 exports from these ports totaled 5,492,874 bushels as compared with 7,062,110 bushels exported dur ing a similar period in 1930. Barley exports from San Francisco from July 1 to O ctober 1 were 1,637,334 bushels, a decline of 43 per cent as compared with exports during that period in 1930. O ctober 1 production estimates of most grain and field crops were slightly larger than those of a month earlier. The increases were not suf ficient, however, to change previously ex pressed opinions to the effect that this year’s output will be of moderate proportions in the Twelfth District. F IELD C R O P S -P R O D U C T IO N (In th ousands) B e a n s ( b u .) C a lifo rn ia , I d a h o ................. U n ite d States ........................ C o t t o n (b a le s ) A r iz o n a , C a lifo rn ia ............ U n ite d States ........................ H op s (lb .)* C a lifo rn ia , O re ., W a s h . . . . . P o ta to e s ( b u .) T w e lft h D i s t r i c t .................... U n ite d S tates ........................ . R ic e ( b u . ) # C a lifo rn ia ................................ U n ite d S t a t e s ........................ T a m e H a y (t o n s ) T w e lfth D i s t r i c t ................... U n ite d States ........................ S u g a r B eets ( t o n s ) C a lifo rn ia , I d a h o , U t a h . . . U n ite d S tates ........................ B a r le y ( b u .) T w e lfth D i s t r i c t ................... U n ite d S t a t e s ........................ . . O a ts ( b u .) T w e lfth D i s t r i c t ................... W h e a t ( b u .) T w e lfth D i s t r i c t .................... U n ite d S tates ........................ . . F orecast O ct. 1,1931 F orecast Sept. 1,1931 7,767 19,959 7,662 18,725 9,464 21,907 297 16,284 303 15,685 419 13,932 25,280 23,476 23,447 44,479 374,751 43,510 361,036 50,210 343,236 7,375 41,668 7,500 40,450 7,271 41,367 12,815 79,292 11,020 77,859 15,011 77,850 1,630 7,157 1,579 7,130 1,767 9,201 26,046 215,889 25,638 212,391 52,434 334,971 23,783 22,779 1,160,877 28,764 1,358,052 95,267 95,022 885,643 117,272 850,965 884,286 1930 * T h e s e states p r o d u c e the c o m m e r c ia l c r o p o f th e U n ite d States. S o u r c e : U n ite d S tates D e p a r tm e n t o f A g r ic u ltu r e . Harvests of deciduous fruits have been somewhat smaller than those anticipated earlier in the season. The poorer quality of the harvests of certain crops not showing de clines in production estimates from preceding months will result in reduced shipments of those fruits. The season’s shipments of apples from the Pacific Northwest and California totaled 12,249 carloads on O ctober 10 which is 28 per cent less than the shipments up to the same date a year ago. Similarly, shipments of grapes from California during this period were only 24,706 carloads as compared with 38,010 car loads during the corresponding period in 1930. 76 Market prices for these fruits approximate those of last year despite thé smaller crops. The 1931-1932 Navel orange crop in Cali fornia was estimated to be 12,854,000 boxes on September 1. Since this is the first estimate of the season it is subject to greater error than will be those of follow ing months. Shipments of this crop during the crop year ending with May, 1931, amounted to 14,810,800 packed boxes. Reduced shipments of both oranges and lemons during September and a decline in the supply of competitive fruit in eastern markets resulted in a moderate increase in prices dur ing the month. Prices f.o.b. California averaged $2.34 per box for oranges and $6.12 per box for lemons in September, compared with August averages of $2.31 per box for oranges and $5.08 per box for lemons. (I n thousands) U n it A p p le s * ............................... b u . G ra p es ..................................ton P e a ch e s ............................... to n P e a r s .......................................ton P ru n e s .................................. ton O reg on A p p l e s * ..................................bu . P e a r s ....................................... b u . P r u n e s f ................................to n W a s h in g to n A p p le s * ..................................bu . P e a rs .................................... bu . Idaho A p p l e s * ................................. b u . U n ite d S tates A p p le s * ................................. b u . .................................... b u . P ea rs F o re ca st O ct. 1,1931 F orecast July 1,1931 4,374 1,329 587 208 173 5,940 1,522$ 727 227 208 6,522 2,182 796 272 267 3,390 2,065 30 3,627 2,170 25 4,800 3,200 20 25,704 3,650 25,560 3,600 34,065 4,500 4,740 4,440 112,887 24,054 115,089 2 4,406 C o m m e r c ia l crop . t D r ie d p ru n es, O r e g o n and $ E stim a te as o f J u ly 13, 1931. S o u r c e : U n ite d S tates D e p a r tm e n t o f A g r ic u ltu r e . 1930 4,500 101,169 27,577 W a s h in g to n . Both production and storage holdings of eggs and butter have been smaller in recent months than in the corresponding period of last year and a seasonal increase in prices of these commodities has been reported during recent weeks. Receipts of butter at Portland, Los A n geles, and San Francisco were 5,756,392 pounds during September as compared with 7,236,778 pounds in August. E g g receipts at these mar kets were 116,317 cases in September and 137,627 cases in August. E gg prices at San Fran cisco (United States No. 1 Extras) rose from 28^2 cents per dozen in September to 41% cents per dozen in m id-October, while butter prices (92 score) advanced from 29 cents per pound to 32 cents per pound during the same period. District ranges, except those in Arizona, are furnishing a scanty supply of feed, and live stock are generally in poorer condition than either last month or a year ago. Early autumn rains in the Pacific Northwest helped to re plenish water supplies in that area, but there is an urgent need for rains in California, Nevada, and Utah. Stock have been m oved off summer ranges to fall pastures where the supply of feed, although limited, is more plentiful. It has been necessary to use supplemental feeds unusually early this year in some localities and thus an additional burden has been placed upon stockmen who were already receiving low returns. The autumn movement of both lambs and cattle to feedlots in the western states has been hampered both by a shortage of feed and by the difficulty experienced by many of the smaller operators in financing their operations. M ove ment of lambs and cattle to eight principal markets of the District totaled 726,791 head and 89,123 head, respectively, during September as compared with 481,788 head and 75,283 head in September, 1930. Market prices for lambs and steers reached new low levels during Septem ber but recovered somewhat during early October. In d u stry D E C ID U O U S F R U IT S — P R O D U C T IO N C a lifo rn ia October, 1931 MONTHLY REVIEW OF BUSINESS CONDITIONS The decline in Twelfth District industrial output, uninterrupted since last May, continued during September, reducing the rate of activity to a new low level for the year. The value of construction increased slightly, but output of crude and refined oils and lumber declined moderately. Production of cement increased only by the seasonal amount. A ccording to preliminary data the salmon pack in Alaska was larger this year than in 1930. A decrease was reported during September in the number of workers employed in most parts of the District. W hile seasonal declines in agricultural activity and in canning and pre serving of fruits and vegetables were the most important causes of increased unemployment, reduced operations in other fields of industry, E m ploym ent— Industries ■California----------\ t------------- O r e g o n N o. of N o. of E m p lo y ees ~ > N o. N o. E m ploy ees —> S ept., Sept., Sept., of of Sept., 1930 F irm s 1931 1930 Firm s 1931 1 149 S to n e , C la y and G lass P r o d u c t s . 159,267 ( - 2 4 .6 ) 57 5,374 ( — 2 4 .1 ) 17,370 139 (-— 2 1 .8 ) 1,926 16 ( — 10.6) C lo th in g , M illin e ry , and L a u n d e r in g 151 12,708 ( — 7.1 ) F o o d , B e v e ra g e s , and T o b a c c o . . . 270 46,370 ( — 3 4.8) 39 50,248 P u b lic U tilitie s . . ( — 13.2) 67,431 O th e r I n d u s t r i e s !. 461 ( — 2 2 .0 ) 8,088 55 M is c e lla n e o u s . . . ( — 4 .7 ) L u m b e r and W o o d M a n u fa c tu r e s . . W h o le s a le ............ 37 81 3,099 ( — 8 .0 ) 26,419 ( — 5 .1 ) 211,174 7,083 22,201 2,155 13,677 71,089 21,539 (-- 1 8 ,3 ) 171 3 ( - - 1 1 .4 ) 10,234 47 ( - - 2 1 .7 ) 132 26,379 193 13,075 1,392 (8 .6 ) 1,282 322 ( — 9 .6 ) 4,650 36 ( - - 2 3 .7 ) 356 9 7$ 6,092 57,884 86,484 8,485 30 4,770 ( - -1 1 .4 ) 5,381 3,369 27,851 * P u b lic u tilitie s and w h o le s a le and retail fig u re s n o t in c lu d e d in th is to ta l, t ln c l u d e s th e fo llo w in g in d u s t r ie s : m eta ls, m a c h in e r y , and c o n v e y a n c e s ; lea th er an d r u b b e r g o o d s ; oils an d p a i n t s ; p r in tin g an d p a p e r g o o d s . $ L a u n d e r in g o n ly . Figures in parentheses indicate percentage change from Septem ber, 1930. October, 1931 FEDERAL RESERVE AGENT AT SAN FRANCISCO such as lumbering and mining, also contributed. The managements of two important copper mines recently announced their intention to reopen during the winter months to help al leviate the unemployment situation. Reduc tions in wage rates continued, particularly in the lumber and mining industries. In the min ing industry, the latest reduction was slightly more than 9 per cent, which brings the scale to the level which prevailed during 1921. Output of crude oil in California continued to decline in accordance with the voluntary curtailment program, and during the week ended O ctober 3 (there was some increase dur ing the follow ing week) the daily average pro duction was 497,000 barrels. Present curtail ment plans contemplate an output of 487,000 barrels daily. Refining activity, as indicated by the amount of crude oil run to stills, de clined substantially during September. As a result of this reduction and the curtailment in output of crude oil, stocks of both crude and refined oils were lower at the end of September than at the end of August, 1931, or September, 1930. The movement of petroleum through the Panama Canal was somewhat greater in Sep tember than in August, but considerably below the monthly average of recent years. Production of non-ferrous metals was about the same in September as in August, after ad justment for seasonal variations. Output of these metals has been drastically reduced since September, 1930. Total stocks of blister and refined copper continued to increase, however, indicating an extremely low level of consump tion of that metal. Refined copper stocks are 33 per cent greater than a year ago. Operations at lumber camps declined by somewhat more than the seasonal amount dur ing September. Decreases in shipments and Industry— Indexes of daily average p rodu ction , adjusted for seasonal variations (1923-1925 daily average=l00) G e n e r a l: C a rlo a d in g s — In d u s tr ia l _ ............... E le c tr ic P o w e r P r o d u c t io n . . . . M a n u fa c tu r e s : L u m b e r .................................................... R e fin e d M in e ra l O ils t ................... F lo u r ....................................................... S la u g h te r o f L i v e s t o c k ................... C em en t .................................................. W o o l C o n s u m p t io n f ........................ M in e r a ls : P e tr o le u m ( C a lifo rn ia ) C o p p e r ( U n it e d S t a t e s )? .............. L e a d (U n ite d S t a t e s ) $ ................... S ilver (U n it e d S ta te s ) $ ................. t .......... B u ild in g and C o n s tru ctio n § T o t a l ......................................................... V a lu e o f B u ild in g P erm its T w e n ty L a rg e r C ities ................. S ev en ty S m a ller C ities ............... V a lu e o f E n g in e e rin g C o n tra cts A w ard ed T o ta l ................................................ E x c lu d in g B u ild in g s ............... Sept. 55 52 102 56 76 60 67 39 — 1931July A u g. 59 55 157 165 1930 Sept. 74 163 55 140 88 99 57 101 58 137 101 98 71 111 70 204 112 87 83 84 77 59 61 45 79 59 64 43 91 89 101 72 61 72 71 78 30 33 32 36 33 41 51 61 107 189 128 238 123 210 144 183 tNot adjusted for seasonal variations. ^Prepared by Federal Reserve Board. § Indexes are for three months ending with the month indicated. 77 orders were nearly as great as was the decrease in production, with the result that there was little change in lumber inventories during the month. Total value of building and construction in creased slightly during September as compared with August, contrary to the usual movement. The increase resulted entirely from exception ally large contract awards for sewers which amounted to more than $7,700,000, or approxi mately one-third of the total value of construc tion recorded for the District in September. Contract awards for water works and bridges also were somewhat greater in value than in August, but all other classifications showed substantial declines, contracts for industrial buildings at $365,000 reaching the lowest point on record since January, 1922. The value of building permits decreased by a greater than seasonal amount. This decline was recorded in classifications of both large and small cities. Output of flour mills was considerably greater in September than in August after al lowance for seasonal. Because final arrange ments of the Federal Farm Board for supply ing flour to' China were not completed until late in September, business incident to that contract did not contribute appreciably to the increased output of flour mills during the month. Millers reported a fair increase in do mestic sales as compared with those of other recent months, but foreign business declined further during September. A ccording to a preliminary report of the United States Bureau of Fisheries, the pack of salmon in Alaska was about 7 per cent larger in 1931 than in 1930. The increase was due en tirely to a larger pack of Alaska Reds, consid ered to be one of the best grades of salmon. The catch of other grades or varieties of salmon was smaller this year than last, and as a result the average quality of the pack is higher than it was in 1930. Trade Little or no change in Twelfth District trade activity was recorded during September. W ith allowance for seasonal factors, department store sales and wholesale trade declined, freight carloadings remained practically unchanged and intercoastal trade and new automobile registrations increased. Sales of department stores in this District were approximately 13 per cent smaller during September than a year ago, a decrease consid erably greater than the average decrease of 10 per cent for the year-to-date. Department store sales are usually substantially larger in September than in August, but the increase this year materialized only in part, resulting in a decline in this Bank’s seasonally adjusted in dex. As compared with last year, declines in 78 MONTHLY REVIEW OF BUSINESS CONDITIONS sales were shown for all sections of the D is trict. The smallest declines were reported from northern California cities, while sales in Los Angeles and in Seattle decreased by the largest percentages. Inventories of department stores (retail value) increased about 3 per cent as compared with August, but were 9 per cent smaller than at the end of September, 1930. R E T A I L T R A D E — T w e lfth D istrict t------------------1931 com pared with 1930*------------------ * N E T SALES Septem ber Jan. 1— Sept. 30 D e p a r tm e n t S to r e s . . — 13.3 ( 69) — 9.6 ( 64) A .pparel S t o r e s ..........— 11.6 ( 3 0 ) — 11.8 ( 2 8 ) F u rn itu re S to r e s . . . . — 10.8 ( 4 3 ) — 13.5 ( 4 0 ) A ll S t o res ....................— 12.8 (1 4 2 ) — 10.2 (1 3 2 ) STOCKS Septem ber — 9.2 ( 51) — 19.5 ( 19) — 11.7 ( 32) — 10.4 (1 0 2 ) * P e r c e n t a g e ch a n g e . F ig u r e s in p a re n th e se s in d ica te n u m b e r o f sto re s re p o r tin g . Like department store trade, sales at whole sale increased by only part of the usual Sep tember gain. A s compared with September, 1930, aggregate sales in nine lines for which data are received decreased 22 per cent. Sales of groceries continued to make the least un favorable showing (they were 8 per cent smaller in value than in September, 1930) thus tending to reduce the average decline for sales in all lines. Of the other lines, only sales of paper and stationery and automobile supplies decreased by less than 22 per cent. During the first nine months of the year total reported sales were 19 per cent smaller than in the cor responding period of last year. Although sales of both passenger and com mercial automobiles have declined considerably from the high levels of 1929, registrations of new automobiles declined by less than the sea sonal amount from August to September. After allowance for seasonal variations, however, D istribution and Trade — 1930 Sept. A u g. July C a rlo a d itig s î t-------- Index N um bers* 91 83 74 74 T o t a l ....................................................... . . 105 103 . . 89 89 M e r ch a n d is e and M is c e lla n e o u s . t— ■” — 1931 Sept. F o r e ig n T r a d e 0 T o t a l f ..................................................... I m p o r t s f .............................................. 83 78 64 83 106 98 108 70 92 64 67 90 61 68 87 62 85 109 78 .. 61 .. 56 , . 114 59 55 102 73 68 118 97 89 182 .. .. 105 91 105 92 115 103 I n te r co a s ta l Trade® T o ta l ........................................................ E a s tb o u n d ........................................... . . R e ta il T r a d e A u to m o b ile S a le s? T o t a l ................................................... P a ss e n g e r C a r s ............................. C o m m e r c ia l V e h ic le s ............... D e p a r tm e n t S t o r e S a le s ? ................................................ S t o c k s § .............................................. 99 94 r C o lle c tio n s # R e g u la r ....................................... . . In sta llm e n t ............................... . . 39.6 16.8 41.0 16.1 42.7 15.5 41.5 15.8 * A d ju s t e d fo r s e a so n a l v a ria tio n s, 1923-1925 a v e r a g e = 1 0 0 . ° I n d e x e s are fo r th ree m o n th s e n d in g w ith m o n th in d ica te d , t E x c l u d i n g ra w silk. J D a ily av e ra g e . § A t en d o f m o n th . # P e r ce n t o f c o lle c t io n s d u r in g m o n th t o a m o u n t o u ts ta n d in g at first o f m o n th . October, 1931 new passenger car registrations were lower in August and September than in any other month since April, 1922. Sales of new trucks, which have declined relatively less than have sales of pleasure cars, averaged higher during the first nine months of 1931 than in any other year, except 1929 and 1930. On a daily average basis total freight carloadings declined seasonally (3 per cent) from August to September but were 30 per cent less than in September, 1930. Loadings of merchan dise and miscellaneous freight increased as compared with August, but not by the full sea sonal amount. Shipments of livestock were larger than in the preceding month or in the same month a year ago. Tonnage of goods shipped through the Pan ama Canal in the intercoastal trade increased considerably during September. There was some decline in eastbound shipments of lum ber, but transits of that com m odity still com pare favorably with the monthly average for the last two years. More than offsetting this decrease was an increase in shipments of both petroleum products and general cargo. The movement of petroleum, although at levels considerably below those of previous years, was 34 per cent larger than in August. W est bound traffic, which usually constitutes about one-fourth of total intercoastal traffic, also in creased by a substantial amount during the month. Prices Most weekly indexes of wholesale prices de clined moderately during September and the monthly index of the United States Bureau of Labor Statistics declined from 70.2 (1926=, 100) in August to 69.1 in September. The prin cipal decline of this period came in the week during which England suspended gold pay ments. Since that time, however, prices have changed little. During the past two years, as in practically all other periods of violent price changes, agri cultural prices have fluctuated more sharply than have prices of non-agricultural com m odi ties. These declines as measured by the Bureau of Labor indexes for September, 1929, and Sep tember, 1931, were 43 per cent for agricultural products and 25 per cent for non-agricultural commodities. On September 30 the September wheat con tract at Chicago declined to 44% cents per bushel and on October 5 the December contract also reached this same price. This was the lowest quotation ever recorded for either of these options on the Chicago Board of Trade. By O ctober 14, however, wheat prices had risen to the levels of late August— around 50 cents per bushel. Other grains have varied less in price than has wheat during recent weeks. October, 1931 Cattle prices remained unchanged during Sep tember and early October, while hog and lamb prices declined. H og prices at Pacific Coast markets in late September reached the lowest levels recorded in eight years. Prices of dairy and poultry products increased seasonally dur ing September, and quotations for eggs approx imated those of a year ago. Prices for dried fruits in California have declined in recent weeks, partly because foreign markets are less satisfactory than in former years. Canned fruit prices have been maintained at the levels es tablished when opening quotations were an nounced in late July. Non-ferrous metals prices, with the excep tion of the quotation on silver, did not recover during September from the low levels reached in the middle of that month. The spot price of copper at New York remained at 7 cents per pound during the last half of September and the first half of October. The price of silver, which fluctuated from 27% 6 cents per ounce to 31 cents per ounce during this same period, was quoted at 29% cents per ounce on October 14. Petroleum prices in California showed no change, while prices for lumber, as measured by an average based upon quotations of many grades and sizes, increased during September for the first time in 19 months. Credit Situation Important changes in the credit situation have been recorded during recent weeks. For the most part these changes have been inB ank D ebits* fluenced by national and international circum stances. Outward evidence of acute and com plicated international economic conditions, which have in no small measure exerted an influence upon the course of econom ic events in the United States and in the Twelfth Dis trict during the past several weeks, is to be found in the sharp reduction of 679 million dollars in monetary gold stock of the United States during the five weeks ended October 21. The large loss of gold was accompanied by in creased holdings of acceptances by the Federal Reserve System with the active participation of this Bank in the purchases. A t the same time local banks have borrowed heavily from the Federal Reserve Bank of San Francisco and its holdings of locally purchased acceptances have increased m oderately; consequently the volume of credit extended by that Bank in creased sharply to 246 million dollars on O cto ber 21, of which amount 42 per cent represented discounts. This figure is larger than any pre viously reported since the record total earn ing assets of 249 million dollars on October 1, 1920, of which 70 per cent was discounted paper. A period of increasing demand for credit is ordinarily one of strengthening interest rates. Such rates advance more readily when member bank indebtedness at the Reserve Bank is large and increasing rapidly. The open market oper ations of the Federal Reserve System during recent weeks have served to reduce the poten tial volume of discounts, however, and, although interest rates have moved upward, the rapidity of the advance has been retarded. Cum ulative Septem ber, Septem ber, f-------- N in e M o n th s --------^ 1931 1930 1931 1930 ...............$ 25,207 $ 2 9,274 $ 274,371 $ 330,801 A r iz o n a P h o e n ix C a liforn ia B a k e r s f i e l d .......... B e r k e le y .............. F r e s n o ................. L o n g B e a ch . . . . L o s A n g e le s ____ O a k la n d ............... P a sa d en a ............ S a cra m e n to ____ San B e r n a r d in o .. San D ie g o .......... San F r a n c is c o . . . San J o s e ............ San ta B a r b a r a ... S t o c k t o n .............. Idaho B o is e ...................... N ev a d a R e n o ...................... O re g o n E u g e n e ................. P o r tla n d ............... U ta h O g d e n ................... Salt L a k e C i t y . . W a s h in g t o n B e l l i n g h a m ......... E v e re tt ................. S e a t t l e ................... S p o k a n e ............... T a c o m a ................. Y a k i m a ................. 9,585 15,456 23,616 35,455 701,530 173,986 26,177 42,302 7,846 42,856 909,040 24,207 12,190 15,388 11,153 18,170 27,313 46,302 904 ,564 174,461 27,964 46,947 9,013 47,374 1,149,730 28,181 14,688 20,055 94,889 149,106 195,548 369,159 7,228,943 1,683,100 272,947 419,893 78,366 431,376 8,821,870 220,401 117,028 155,544 14,153 14,055 118,279 127,162 10,219 11,898 91,480 101,766 5,053 133,348 6,510 181,182 49,014 1,287,118 12,595 53,373 21,394 66,219 125,486 531,371 6,322 8,633 171,283 38,342 31,043 11,957 9,005 11,568 227,318 51,026 42,351 15,447 60,703 83,166 1,753,613 371,012 300,889 106,827 T o t a l .................$2,561,162 *In thousands of dollars. 79 FEDERAL r e s e r v e AGENT AT SAN FRANCISCO 115,169 177,746 298,546 439,537 9,214,721 1,711,907 310,372 439,014 93,925 503,618 11,468,918 246,948 140,142 223,789 62,159 1,583,175 158,523 653,817 84,131 115,009 2,134,544 470,977 406,143 126,129 $3,213,162 $25,391,499 $31,738,688 I N T E R E S T R A T E S - T w e l f t h D istrict (P e r cent) t— Federal R eserv e B a n k — ^ t— San F ra n cisco Banks— >\ 1931 In Effect June A c c e p ta n c e Buying Rates* 90 days 120 days 180days . .. 1 154 lVs 1. . . . . 1 154 15* ... 154 154 IH • O ct. O ct. O ct. 1 3 .. . . . 16. . . . . 21. . . . . 254$ 2 2 y2 3H 3V& 354 354 IX 2 '/2 3 354 354 C o m m e rcial B ankers’ B a la n ce s! L oans 4.6 54 1 1 1 1 1 4.7 ljá 1 * F o r in d ica te d m a tu rities. f R a t e e sta b lish e d b y S an F r a n c is c o C le a rin g H o u s e A s s o c ia t io n . J T h e rate o n m atu rities o f 75 d a y s o r less w as 2 % p e r c e n t fr o m O c t o b e r 13 to O c t o b e r 15. Rates charged by commercial banks in the Twelfth District continued their moderate ad vance of the past five months. Securities deal ers advanced rates charged customers on debit balances of certain classes of margin accounts one-fourth per cent early in October, thereby cancelling the reduction of these rates which was announced last month. Accom panying these movements of money rates, both this and other reserve banks have raised their discount rates. Effective October 21, the discount rate of the Federal Reserve Bank of San Francisco was established at Z]/2 per cent for all classes and maturities of paper, replacing the previous 80 October, 1931 MONTHLY REVIEW OF BUSINESS CONDITIONS rate of 2y2 per cent which had been in effect since May 22, 1931. Advances in the accept ance buying rate were also announced during the period under review. Increases in currency circulation continued, and during the five weeks ended O ctober 21, amounted to 14 million dollars. As in recent months, this increase in circulation reflects, in addition to normal seasonal expansion, sub stantial reductions of deposits in commercial banks. The sharply increased demand for cur rency during recent weeks has been met almost entirely with increases in the circulation of Federal reserve notes of the Federal Reserve Bank of San Francisco. This increase in note liability was offset by decreases in reserve deposits. A t the same time, however, it was necessary for this Bank to transfer out of the District through the Gold Settlement Fund ap proximately 177 million dollars in excess of incom ing transfers; consequently there was a substantial decrease in its reserves and the re serve ratio (total reserves to combined note and deposit liabilities) declined sharply. These outgoing transfers were for the account of member banks and in payment of this Bank’s participation in the Reserve System’s large purchases of acceptances and United States securities in the New York market. R E P O R T I N G M E M B E R B A N K S — T w elfth D istrict (I n m illion s o f dollars) O ct.21, 1931 1,871 L o a n s an d In v e s tm e n ts — T o t a l . . 1,142 302 O n S e c u r itie s ........................... 840 A ll O t h e r ..................................... 729 I n v e s tm e n ts — T o t a l ................... 373 U n ite d S tates S e c u r itie s . . . 356 O th e r S e c u r itie s ...................... 92 R e s e r v e w ith R e s e r v e B a n k . . . . 662 N e t D e m a n d D e p o s i t s ................... 950 130 D u e fro m B a n k s ............................... 183 D u e to B a n k s .................................... 94 B o r r o w in g s at R e s e r v e B a n k . . . - C o n d itio n O ct. 14, Sept. 16, O c t .22, 1931 1930 1931 1,984 1,869 1,911 1,179 1,339 1,148 448 304 306 891 844 873 645 732 721 37 6 338 365 356 307 356 102 106 96 739 710 682 1,016 988 948 142 173 218 200 212 291 67 22 2 The factors making for an increase in de mand for Reserve Bank credit, as discussed in the preceding paragraph, were partially offset by purchases of gold bullion and coin by the San Francisco Mint and deposits of gold coin with the Federal Reserve Bank of San Fran cisco. During the five weeks ended O ctober 21, these amounted to 24 million dollars, only a small part of which was for local account, the remainder being transferred immediately to other districts and having no effect upon the volume of Twelfth District banking funds. An additional offset of about 9 million dollars was due to Federal Government disbursements in excess of collections in the Twelfth District during the same period. F E D E R A L R E SE R V E B A N K O F SA N F R A N C IS C O ( i n m illion s of dollars) T o t a l B ills and S e cu ritie s .......... B ills D is c o u n t e d ........................ B ills B o u g h t .................................. U n ite d S ta te s S e cu ritie s . . . . T o t a l R e s e r v e s .................................. T o t a l D e p o s it s .................................. F e d e ra l R e s e r v e N o te C ircu la tio n R a tio T o t a l R e s e r v e s to D e p o s it and N o te L ia b ilitie s C o m b in e d f------------------ C om d itio n ------ — -------- N O ct.21, O ct. 14, Sept. 16, O c t .22, 1931 1931 1931 1930 245 202 72 103 104 74 28 7 84 72 21 26 55 54 53 39 175 233 320 285 173 191 185 187 228 229 214 152 43.7 56.0 78.9 84.7 Reserve deposits maintained by member banks with the Federal Reserve Bank of San Francisco have continued to be substantially in excess of legal requirements during Septem ber. This excess, which has been maintained during a period of increased borrowing at the Reserve Bank, has been due more to a desire to maintain the highest possible degree of liquid ity than to a lack of opportunity to employ the funds profitably. Such excess reserves can be converted into cash immediately and without interference with regular bank activities, while any reduction of reserve deposits below the legally required amount tends to restrict those activities. P R IN C IP A L IT E M S O F C O N D IT IO N — F E D E R A L R E S E R V E B A N K O F S A N F R A N C IS C O M o n th ly averages o f daily figures. Latest figures are averages o f first 23 days in O cto b e r.
@FedFRASER