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Monthly FEDERAL Review' RESERVE BANK OF SEPTEMBER SAN F R A N C ISC O 1948 REVIEW OF BUSINESS CONDITIONS or the most part, industrial production, construction activity, and employment continued at high levels F through the summer in both the Twelfth District and the nation. Employment in the United States reached a high of 61,615,000 persons in July, but dropped seasonally in August by 400,000 as farm activity slackened. Industrial production over the nation rose again in August to about the high June level, after a dip in July. In the District, nonagricultural employment has increased steadily in re cent months. In August, manufacturing employment in California and Washington, the two states for which data are available at this time, rose to the highest point since the war. Gains were widespread; in California, in addition to seasonal gains in canning, new employment peaks were reached in August in apparel, paper products, lumber and timber, stone, clay, and glass, and automobile manufac turing. Employment in iron and steel reached the highest level since April 1945. Agricultural workers were still needed in mid-September in various areas of the District for fall harvesting of fruits, nuts, vegetables, and cotton. Few, if any, significant losses because of lack of labor are expected, however. Petroleum and maritime strikes Crude and refined petroleum production in California continued at record or near-record levels through Au gust, but declined in early September when a wage dis pute led to a strike of refinery workers. In the two weeks ending September 18, crude oil production, on a daily average basis, amounted to 735,000 barrels, a decline of between 20 and 25 percent from previous levels of some 950,000 barrels. No recent data are available on refinery operations, but they are continuing at reduced levels. A maritime strike in Pacific Coast ports also began in early September. Maritime commerce is at a virtual stand still, although efforts are being made to continue military shipments to Pacific areas. A rail embargo has been placed upon all freight destined for export from the West Coast. Construction activity up but residential permits decline Construction activity, as measured by the value of work put in place, reached a new high in August for the nation. Although August data are not yet available, construction activity was, in all probability, at or near record levels in the District also. Some question about residential con struction activity in subsequent months is raised, how ever, by the fact that housing starts dropped sharply in August for the country as a whole. In the District, the number of dwelling units in urban areas for which per mits were obtained declined through July from the March peak by an increasing amount each month. Preliminary indications are that August figures will show a further substantial decline. Department store sales at new high In August, the seasonally adjusted index of Twelfth District department store sales reached a new high of 382 percent of the 1935-39 average. This substantial gain fol lowed a slight decline to 365 in July from the previous record of 372 in June. Member bank reserve requirements raised Under the authority granted by Congress in the recent special session, the Board of Governors of the Federal Reserve System has raised reserve requirements against member bank demand deposits by 2 percentage points and against time deposits by 1.5 percentage points. The new requirements for demand deposits are 26 percent for banks in central reserve cities, 22 percent for banks in re serve cities, and 16 percent for banks in all other loca tions. The new requirement for time deposits is uniform for all banks— 7.5 percent. These higher requirements became effective September 16 for banks not in reserve cities, and September 24 for reserve city and central re serve city banks. Based upon the deposits held by Twelfth District mem ber banks in the second half of August, the new require ments will result in an increase of about $265 million in required reserves in the District, raising total required reserves to about $2,300 million. Since excess reserves were small, District member banks have had to obtain most of the increase in required reserves by the sale or run-off of Government securities. A reduction of approx imately 4 percent in their Government security holdings, which totaled $6,700 million at the end of August, would provide the entire increase in reserves required. For all member banks, required reserves will be raised from about $17.7 billion to $19.7 billion. As in the District, most of this additional $2 billion in reserves is expected to be obtained by member banks by shifting out of Govern ment securities. Reflecting primarily this shift, but also the drain upon bank reserves caused by third-quarter FEDERAL RESERVE B A N K OF SA N FRANCISCO 74 tax payments, Government security holdings of the Federal Reserve System increased nearly $2 billion in the two weeks ending September 29. Bank loans continue to expand These increases in required reserves come at a time when bank loans are undergoing a significant expansion. The pronounced upsurge in total bank loans that oc curred in August and early September, both in the Dis trict and in the United States, was due primarily to the increase in commercial, industrial, and agricultural loans. The percentage increase in these loans at weekly report ing member banks was more than twice as large in Au gust as in any other month this year, in both the District and the country as a whole. Early September saw a con tinuation of this growth. In contrast, the growth in real estate loans of District weekly reporting member banks has slowed up substan tially since the middle of the year, with August experi encing the lowest relative increase for any month so far this year. For the country as a whole, although the rate of growth in real estate loans of these banks fell off in September 1948 July, it picked up again in August and was only slightly below that for earlier months in the year. Consumer loans have shown steady gains each month this year in both the District and the nation. September figures will probably show a considerable expansion in consumer instalment credit, as the result of increased instalment sales, espe cially of used cars, before Regulation W became effective September 20. District time deposits decline Member bank demand deposits have risen moderately since April in both the District and the United States. Time deposits have behaved rather differently, however. In the country as a whole, member bank time deposits have declined only slightly from the June peak. In the District, member bank time deposits reached a peak at the end of February, and have declined in each subsequent month except June. This drop, although considerably larger relatively than for the nation, is not marked, and perhaps it is too soon to say that savings deposits have started their first real postwar decline. A significant de cline would not be surprising, however, under the impact of present price levels. THE AGRICULTURAL SITUATION o n d it io n s so far in 1948 point to a favorable year for C American agriculture. Cash income from the sale of farm products is continuing higher than a year ago and, although production costs are up somewhat, it appears that net income will not be far below the level of last year. The huge expected production of grains and cotton has caused their prices to drop during most of the year; the Federal support program, however, is expected to limit these price declines. On the other hand, supplies of most livestock and livestock products are smaller than last year. Farm prices of these products, consequently, have been averaging higher, especially meat animal prices which have risen to record levels. Livestock prices prob ably will level off or decline slightly in the next few months since meat animal marketings should increase sea sonally, though less than usual. Farm prices for crops, with the large grain crops rapidly filling storage facilities, probably will continue downward, though not as sharply as in recent months. Crop production up in United States Crop prospects for the country as a whole have become increasingly favorable the last few months. The acreage in crops remains at the high level of recent years, and favorable weather has insured good yields. Feed grains as a group are a major factor in the huge aggregate crop production in prospect for this year. These include the largest corn crop in history, estimated at 3.5 billion bush els, near-record crops of oats and sorghum grains, and an above-average production of barley. Feed grain supplies for the 1948-49 season promise to be the most liberal per animal unit on record despite relatively small stocks of old grain. Record production is also in prospect for soy beans, peanuts, and pecans. The wheat crop is expected to be second only to last year’s record ; other near-record crops are indicated for rice, flaxseed, dry beans, and citrus. Of the major crops, only rye, sweet potatoes, dry peas, apples, and pears are expected to yield below-average production this year. District crop prospects varied; wheat up sharply, fruit down from last year In the Twelfth District, total production of all crops is likely to be about the same as last year. Production pros pects for important District crops are similar to United States prospects with the exception of wheat, rice, and citrus. Expected record crops of wheat in Washington and Oregon may push District wheat production 40 per cent above the 1937-46 average and 20 percent over last year’s total ; this would bring a new District record, due almost entirely to increases in acreage planted to winter wheat. The record United States rice crop will not be matched in California, the District’s only rice-producing state. The California crop, though above average, is ex pected to be 19 percent less this year than in 1947. Un favorable spring weather reduced the acreage planted, and is expected to cause some decrease in yields as well. Citrus production outside the District promises to be the greatest on record. The inclusion of District figures, how ever, brings the United States total down from last year, largely because of California’s extended winter drought. With most of the crop already harvested, total District production appears to be only about average and consid erably less than the 1946-47 crop. The outlook for Twelfth District fruit and nut produc tion is considerably less favorable than in 1947. All crops September 1948 In d ic a te d M O N T H L Y REVIEW 1948 P r o d u c tio n of L e a d in g D is t r i c t a s o f S e p te m b e r Field and Seed Crops Barley (bu.) ........................ Beans, dry (bags) .............. Corn (bu.) ............................. Cotton lint (bales) ............ Flaxseed (bu.) ................... Grain sorghums (bu.) . . . A ll hay (tons) ................... H ops (lbs.) ........................... Oats (bu.) ............................. Peas, dry (bags) ............... Potatoes (bu.) ...................... , Rice (bu.) ............................. Sugar beets (tons) ............ W h eat, all (bu.) .............. Fruits Apples (bu.) ........................ Apricots (tons) ................... Cherries (tons) ................... Grapes (tons) ..................... Grapefruit (boxes) ............ Oranges (boxes) ................. Lemons (boxes) ................. . Peaches (bu.) ..................... Pears (bu.) .......................... Plums (tons) ........................ Prunes, fresh (to n s ).......... Prunes, dried (tons) . . . . N uts Almonds (tons) Filberts (tons) W alnuts (tons) ................. ................. ................. Indicated 1948 production (in thousands) . , 90,457 7,044 6,679 1,250 4,985 6,632 13,863 52,216 30,532 3,155 108,230 14,495 4,690 174,862 41,232 250 78 2,859 5,860! 47,380! 12,700! 36,934 21,104 66 97 187 30 7 72 C rop s— T w e l f t h 1, 1948 Percentage change t— 1948 compared with—N 1947 1937-46 average + + + + + + — + — — + — — + 14.0 2.4 4.7 24.3 49.6 38.4 3.6 4.2 5.0 45.7 20.8 18.8 13.1 20.1 + 37.3 + 6.2 — 17.5 + 99.7 + 7x8 + 8.7 + 0.6 + 1 9 .9 — 1.8 — 30.4 + 29.8 + 22.8 + 37.1 + 39.6 — + — — — — — — — — + — 17.5 26.3 2.2 1.3 18.8 13.4 8.0 3.6 26.4 10.8 2.3 7.0 + + — + + + + + — — — — + 1.4 — 19.3 + 10.7 0.4 4.1 9.4 13.4 3.9 0.3 4.2 19.5 6.7 12.1 24.9 9.2 + 44.5 + 44.9 + 11.5 1 Figures are for crop year beginning in October of the previous year. Source : U . S. Bureau of Agricultural Economics, Crop Production, Septem ber 1, 1948. except apricots and walnuts will yield either the same as or considerably less than last year's production ; and only grapes, peaches, and nuts are expected to yield much above their 1937-46 average production. Truck crops for summer and early fall harvest are, on the whole, expected to show a somewhat lower output this year than in 1947 ; but production will still be con siderably higher than the 1937-46 average. A large de crease in celery production is indicated with smaller decreases in lettuce, onions, tomatoes, cabbage, and watermelons. Carrots, snap beans, green peas, and spin ach show increases. Abnormal weather conditions throughout most of the District have had considerable effect upon crop produc tion. Persistent cool, rainy spring weather in Washing ton, Oregon, and Idaho caused most crops and farm operations to be two to four weeks late. The flood in late May and June further delayed farming activities and de stroyed or damaged many crops. In California, the winter drought and subsequent cool weather delayed crop devel opment and ripening, particularly in fruits. Unseasonable May rains further retarded the already late season so that most crops are about two weeks late at the present time. Livestock and livestock products continue short United States supplies of livestock and livestock prod ucts have been running appreciably less than last year, and are likely to continue to be in short supply the rest of the year. Total cattle numbers have continued the de crease begun in 1945— numbers on January 1, 1948, had decreased 8 percent from January 1, 1945. As a result, meat output has decreased ; commercial production during the first half of 1948 was 7 percent below the 75 same period last year, and in the second half it may be down 10 percent from last year. The small spring pig crop may be supplemented by a fall crop equal to last year’s, but the total crop will still be below 1947 and the smallest since 1940. Hog slaughter in the remain der of 1948 is expected to continue below 1947 since there were fewer hogs on farms June 1 than a year earlier. With a smaller lamb crop than last year, there will be fewer lambs fed this fall and winter than in 1947. United States production of milk and dairy products will decrease seasonally the rest of the year, though not as sharply as last year. Though production per cow is at record levels, the decreasing number of cows has kept milk output so far this year below the 1947 level. Turkey and poultry and egg supplies are also below first-half figures for 1947, so that no relief from red meat short ages can be expected from these items. The livestock and livestock products situation in the Twelfth District, as reflected by numbers on farms, is somewhat more favorable than in the United States as a whole. Though the swine industry is not too important in the District, hog and pig numbers as of January 1 were slightly over those of last year while United States num bers decreased. The same was true for chickens— num bers on farms decreased in the United States but in creased slightly in the District. The number of turkeys raised on District farms as of August 1 was also up some over last year— about 4 percent. However, swine and tur key numbers in the District are still below their 193746 averages. As in the United States, District sheep, lamb, and cattle numbers were down from last year. Cattle numbers continued declining from their 1944 high, and sheep and lamb numbers continued the decrease begun over ten years ago. Actual production of meat and other livestock, poul try, and dairy products in the District reflects, of course, the number of livestock on farms. District Federallyinspected slaughter for January-August this year is down between 9 and 12 percent from the same period last year for cattle, calves, and sheep. Swine slaughter, in line with increased District numbers, is up about 6.5 percent from last year; this increase is not too sig nificant, however, since most of the pork products con sumed in the District are imported. Egg production for the January-August period is also up from the same pe riod last year, reflecting an increase both in the number of layers and in the rate of lay. The number of milk cows on Twelfth District farms in June was down about 2 per cent from a year ago. In most District states, however, milk output per cow wTas higher during June, July, and August than in the corresponding months of 1947. Pro duction, therefore, was only slightly less this summer than last and was somewhat greater than the 1937-46 average. Because of the fewer sheep on hand this year as well as reduced yields, the Twelfth District wool clip is estimated at less than the 1947 clip, and one-third less than the average for the ten years preceding. This decline in District production has been following the na tional pattern. 76 FEDERAL RESERVE B A N K OF SA N FRAN CISCO Effects upon meat supply of large grain crops will be delayed Bumper feed crops in prospect will not increase United States total meat production for some time to come. In fact, marketings of some livestock are likely to be delayed for extra fattening on the new crops. More cattle prob ably will be grain fed this fall and winter ; the demand for feeding stock should strengthen as a result. Though somewhat heavier weights may be marketed later this year, an increase in cattle numbers could not occur much before 1950. Consequently, any substantial increase in meat production will not be possible until late 1950. The effect of the larger prospective crops upon hog slaughter will be felt somewhat sooner than for cattle. As with cattle, however, there may be some delay in market ings of 1948 spring pigs for feeding out on new crop grains. Hog slaughter weights in the 1948-49 hog mar keting year are expected to be extremely heavy. How ever, slaughter in the remainder of 1948 is expected to continue below 1947 since there were fewer hogs on farms June 1 than a year earlier. Delayed marketing of the 1948 spring pig crop and a fall crop about equal to that in 1947 would increase hogs on farms January 1, 1949, moderately above those on January 1 this year. A sharp increase in next year’s spring pig crop is probable, but that crop will not be ready for market until the fall of 1949. Again, the prospective increase in grain and feed sup plies probably will not have an immediate effect on mar ket supplies of turkeys and chickens. The favorable rela tionships between feed and turkey and chicken prices will provide considerable incentive for farmers to feed tur keys and young chickens to heavier weights than in pre vious years. Poultry numbers, however, will probably not increase appreciably until 1949. Egg production can not be materially affected by the expected large feed sup plies until 1949. The immediate effect will be a retention of a larger than usual proportion of laying stocks for 1949 production. Milk production may experience the most immediate effect from the good harvest prospects of small grains and corn. Farmers have been drawing liberally from available feed supplies to help retard summer declines in production. The rate of feeding the last few months has been unusually high. Dairy farmers may also cull their herds less closely than was done in 1947. The large crops, together with good pasture conditions, are likely to bring further increases in the rate of production per cow. Con sequently, the seasonal decline in milk production will be smaller than last year, and production toward the end of the year may exceed that of the closing months of 1947. Farm prices leveling off The prices received by United States farmers for all farm products have been markedly affected, so far in 1948, by three significant developments: the February price break, the increasing shortage of meat animals, and the expected record or near-record crops of the major food and feed grains. The effects of these developments September 1948 I N D E X O F P R IC E S R E C E IV E D B Y F A R M E R S — U N I T E D S T A T E S , 1946-481 (August 1909-Ju ly 1914 — 100) Source : U . S. Bureau of Agricultural Economics, Agricultural Prices. are evident in the behavior of the index of prices received by farmers for all farm products and its two major com ponents : the index of prices received for all crops and the index of prices received for livestock and livestock prod ucts. The February break dropped the index for all farm products from the January record of 307 to 279. The fall in the commodity prices of the major grains was accom panied by sympathetic price declines in livestock, cotton, and most other food and feed grains; both the all crops and the livestock and livestock products indexes de creased sharply as a result. Partial recoveries were made by all affected crop and livestock items during both March and April. Following the moderate recovery in the index for all farm products, the two component indexes came under the influence of two separate developments: the short supply of meat animals and the large expected production of certain major crops. The increasingly favorable pros pects for the grain crops began depressing prices paid to farmers. The all-crops index began sliding downward and has continued to decrease through August. The decline in food and feed grain prices as well as the seasonal drop in prices received for truck crops was largely responsible1. The opposite trend in the index of prices received for livestock and livestock products has been due to the great increases in the prices received for meat animals. Prices received for poultry and dairy products have increased some in the last three months but not nearly as sharply as meat animal prices. Cattle numbers have decreased steadily since January 1,1945, and slaughter has been de clining correspondingly. As meat supplies have de creased, prices paid farmers have increased. The index of prices received for meat animals has been at record levels the last three months; these high meat prices have been the major factor in the sharp rise of prices received for all livestock and livestock products. 1 September 15 figures were received too late for inclusion in the text. The indexes of prices received for all farm products stood at 290, for all crops at 231, for livestock and products at 343. The index of prices paid was 250 and the parity ratio 116. September 1948 M O N T H L Y REVIEW These trends— down for crops, up for livestock and livestock products— have been operating since May. The continued gains in prices received by farmers for meat animals and dairy and poultry products more than offset declines in prices of grains, soybeans, and cotton, to raise the prices received for all farm products through July. During August, however, the prices of most meat animals declined or remained unchanged while crop prices con tinued downward. This resulted in a drop for the all farm products index from 301 to 293. Index of prices paid unchanged since June Prices paid by farmers for all commodities, interest, and taxes fluctuated little during the first months of 1948. From the high of 251 in January, the index decreased 4 points by March. A gradual rise brought the index back to 251 in June; it has remained at that level through both July and August. This steadiness is the result of compen sating changes in the component subgroups. Production items decreased some with the lowering of feed prices. On the other hand, prices paid by farmers for consump tion items have continued to advance. The parity ratio— the relationship between prices re ceived and prices paid by farmers— has continued to be favorable to farmers. The February break in some com modity prices dropped the ratio 10 points from the Janu ary figure of 122. But with the subsequent recovery of these prices at a faster rate than the increase in prices paid, the ratio gradually increased to 120 in July. The decline in prices received in August, however, dropped the ratio to 117, one point below a year ago. Som e farm prices near support levels During the last few years, Government price support activities have been on a relatively small scale. The prices of the majority of eligible commodities have approached support levels only occasionally. There has been no real test of the ability of the support program to maintain farm prices. This year, however, support operations are likely to be extensive. The average United States prices of most major crops on August 15 were at or below their support levels. So far this year, an estimated 100 million dollars has been spent by the Government for purchases of potatoes and eggs under support programs. New-crop wheat prices fluctuated somewhat below support prices in July and August as storage space rapidly filled; other grains— oats, barley, and sorghums— are also slightly below sup port. With indications that the corn crop may be even bigger than the 3.5 billion bushels currently estimated, corn prices may soon fall close to support levels, espe cially with storage space seriously short. Livestock prices probably will level off or decline slightly the next few months since meat animal market ings should increase seasonally; however, this increase in supply will not be as great as last year's. Livestock prod ucts eligible for support include chickens, turkeys, eggs, hogs, and w ool; all except eggs were well above support in August. Even so, record sums are likely to be expended through the Government support program, almost en 77 tirely for price maintenance of crops. In addition to those prices already at support levels, cotton and corn prices may drop to those levels under the influence of the huge crops of this year. Under the recently announced support program for dried fruits, the Government will purchase surplus tonnages to hold up producer prices. These commitments, coupled with the huge crops ex pected, are causing increasing concern. Lack of sufficient storage space further aggravates the situation. Available storage is largely filled for most grains, and farmers are hurriedly attempting to construct temporary facilities. In Washington and Oregon, the record wheat crop is being stored in sack and in bulk in the open field. If the storage space necessary for Government loan or purchase agree ment programs is not available, farmers will have to sell the unstored portion of their crop soon after harvest. This could force farm prices below support levels for a short time until these unstored stocks have been taken off the market. The storage shortage is reflected in the futures markets. Corn can be bought for December delivery in Chicago at about $1.39 a bushel, about 5 cents below the support level. Because of these conditions, there is considerable question whether or not certain crop prices can actually be kept consistently at or above support levels through the Government purchase and loan pro grams. Farm prices for crops as a whole probably will continue downward through the fall and winter, though not as sharply as in recent months. United States and District cash receipts slightly higher Cash receipts from farm marketings in the United States as a whole will probably be somewhat larger this year than the $30 billion received in 1947. Total cash re ceipts during the first half of 1948 were 6 percent higher than in the same period last year. Though marketings of livestock and livestock products are likely to continue below last year, this reduction in quantity may be more than offset by higher average prices. Continued large re ceipts from the marketings of crops are expected; record volumes are to be sold at prices averaging not far below those of a year ago. Government payments to farmers so far this year have been at about the same rate as in 1947. Though total cash receipts of United States farmers thus far in 1948 are above last year, total production costs for the average farmer probably have risen more. Consequently, farmers' net income for the year may be somewhat lower than last year. Also, it is probable that the increase in costs has been more evenly distributed among individual farmers than the increase in receipts. During the first six months of this year, total Twelfth District receipts from farm marketings increased some what less over the first half of 1947 than did United States receipts. Receipts from livestock and livestock products accounted for practically the entire increase in total receipts; District crop income was virtually un changed from January-June of last year largely because of Washington's decreased crop income. Nevada and Washington were the only District states which failed to show an increase in total cash receipts. 78 September 1948 FEDERAL RESERVE B A N K OF S A N F R A N C ISC O C ash R e c e ip ts F ro m F arm M a r k e tin g s — T w e l f t h D is tr ic t J a n u a r y - J u n e , 1948 (amounts in thousands) Arizona .......... California ____ Idaho ............... Nevada ............ Oregon ............ Utah ................. W ashington . . Twelfth District . . United States . . . Livestock and products $ 39,235 379,859 66,429 11,236 73,883 45,377 98,693 Percentage change ,------------1947 to 1948----------- N Livestock and Crops Total products Crops Total $ 63,027 $ 102,262 + 4.3 4 -1 7 .2 + 1 1 .9 493,977 873,836 + - 2 -6 + 1.7 + 2.1 69,114 135,543 + 9.3 + 9.6 + 9.5 2,108 13,344 — 17.2 + 1 2 . 2 — 13.6 49,993 123,876 + 6.6 + 3.9 + 5.5 15,875 61,252 + 4.9 + 4 8 . 4 + 1 3 .5 93,886 192,579 + 1 3 .3 — 24.2 — 8.7 714,712 8,347,277 787,980 1,502,692 4,404,170 12,751,447 + + 4.8 + 8.8 + 0.1 + 2.3 1.5 + 6.2 Source: U . S. Bureau of Agricultural Economics, Farm Income Situation, June-July, 1948. Nevada’s decrease was due to a drop in receipts from livestock and livestock products. On the other hand, the decline from last year in Washington’s total receipts was caused by a decrease in crop receipts. Extremely cold, wet spring weather in the Northwest retarded crop de velopment and delayed harvesting of many crops, par ticularly vegetables. Consequently, the March, April, and May crop income in Washington was about half the in come in the same months last year. All other District states showed moderate increases in total cash receipts, varying from a 2.1 percent increase in California to a 13.5 percent increase in Utah. With the exception of Nevada, each state’s income from live stock and livestock products marketings was up moder ately over first half of 1947 figures. Though livestock numbers in most states are down, prices have been enough over last year’s to result in some increase in receipts. Crop receipts in individual District states showed a wider range of increase than receipts from livestock, except for Wash ington’s substantial decrease. Receipts from crop market ings during the first half of 1948 varied from an increase of only 1.7 percent in California to 48.4 percent in Utah. During the second half of 1948, total cash receipts in the District should match last half 1947 receipts. Though production of some crops, particularly fruits, is down, many District crops are being marketed later this year than last. As a result, the last-half 1948 volume of marketings should not differ much from the last-half 1947 volume. Though many crop prices have been adjust ing downward to a new-crop basis, average prices should at least equal last year’s. Total cash receipts in the Twelfth District for the year, then, will probably equal or slightly exceed 1947’s total of $3.9 billion. INCOME PAYMENTS TO INDIVIDUALS— TWELFTH DISTRICT, 1939-471 income payments to individuals increased from 1946 to 1947 in the Twelfth District, but not by much as in the nation as a whole. The proportion of total United States income payments received in the District, which was 12.5 percent in 1947, has decreased slightly every year since 1944 when it was 13.5 percent. The 1947 proportion, however, is still 2 percentage points above 1939. The decline from 1944 is a carryover from the tre mendous impact of the war industries in the West. From 1939 to 1944 income payments in the District rose 174 percent, compared with a mere 114 percent in the nation, or 107 percent if District figures are excluded. Then from 1944 to 1947, Twelfth District income payments rose only 17 percent while national income payments rose 25 percent, or 27 percent if District figures are excluded. Per capita income payments are generally higher in the District than in the nation, but they, too, have been rising more slowly since 1944. T o ta l xThe present discussion is based on the data from the annual survey of income payments by states by the Office of Business Economics of the D e partment of Commerce. The article appears in the August 1948 issue of the Survey of Current Business. Postwar shrinking pains not as severe as asmight have been expected The readjustment from abnormal wartime production in the Twelfth District is particularly evident in total manufacturing payrolls. Although they increased sub stantially from 1946 to 1947, they were still nearly onethird below their 1944 level. The 1946 figure had been approximately 60 percent below 1944. The decline from 1944 to 1946 had been exclusively in the “war” manufac turing payrolls. Few, if any, other areas had experienced such declines; in fact, in most of them manufacturing payrolls had increased. All Twelfth District states except Utah and Idaho suffered these declines, with Washing ton and Oregon experiencing the most important of them. Manufacturing payrolls have, however, increased rela tively more in the District since before the war than in the nation as a whole. Another important reason for the smaller increase in total District income payments since 1944 is the smaller increase in District agricultural income— about 12 per T o t a l I n c o m e P a y m e n t s to I n d iv id u a l s — T w e l f t h D is t r ic t , 1939 1940 1941 1942 1943 1944 1945 1946 1947 ............................................ . . ............................................ ............................................ ........................................... ............................................ ............................................ ............................................ ............................................ ............................................ 1939-47 1939-44 1944-47 ......................................... ......................................... ......................................... Arizona $227 237 287 445 598 582 594 631 721 218 156 24 Source : U . S. Department of Commerce. California $5,047 5,606 7,044 9,315 12,302 13,472 13,649 15,164 16,121 219 167 20 Idaho $213 232 278 419 477 587 525 595 677 218 176 15 Nevada $ 84 92 107 207 211 206 210 239 256 Percent increase 205 145 24 Oregon $ 587 633 824 1,193 1,572 1,636 1,631 1,753 1,936 Utah $243 265 329 527 687 635 649 696 773 230 179 18 218 161 22 1939-47 Washington $1,012 1,100 1,501 2,211 2,894 3,203 3,052 3,122 3,289 225 217 3 Twelfth District $ 7,413 8,165 10,370 14,317 18,741 20,321 20,310 22,100 23,773 United States $ 70,601 75,852 92,269 116,433 140,021 151,217 155,201 171,200 189,734 221 174 17 169 114 25 September 1948 79 M O N T H L Y R E V IE W cent, compared with the national increase of 36 percent. The large drop in fruit prices from 1946 to 1947 brought about a substantial decline in agricultural income in the latter year for California and Oregon. Agricultural in come in the District is, however, relatively much further above its prewar level than in the nation. followed by Connecticut with $1,671, and California was fifth, with a per capita income of $1,643. Washington and Oregon show greatest effects of the war Of all the states in the nation, it was Washington whose income payments were affected most by the war and preparation for war. From 1939 to 1944 income payments in Washington rose 217 percent, compared with the na tional increase of 114 percent and the District increase of 174 percent. But with the slackening of demand for aircraft and ships after the end of the war, Washington’s income payments fell markedly— 5 percent in the one year from 1944 to 1945. They recovered some in 1946 and again in 1947, to reach a figure 3 percent higher than in 1944. The effect of the war was somewhat less noticeable in Oregon, where income payments rose 179 percent from 1939 to 1944, fell only fractionally from 1944 to 1945, and were 18 percent higher in 1947 than in 1944. Both Washington and Oregon had experienced large drops in “war” manufacturing payrolls from 1944 to 1946, Wash ington’s payrolls dropping 74 percent and Oregon’s, 80 percent. But in those same two years, Washington’s “non war” manufacturing payrolls rose only 15 percent against Oregon’s 22-percent rise. Adding the over-all increase in 1947, then, shows Washington’s total manufacturing pay rolls down 41 percent from 1944 to 1947, and Oregon’s down only 24 percent. On top of that, Washington has experienced a decline of 4 percent in government pay rolls since 1944, while Oregon’s government income pay ments have risen 27 percent. Again, agricultural income, which accounted in 1947 for about 11 percent of total income in both states, rose only 10 percent in Washing ton from 1944 to 1947, compared with Oregon’s 20 per cent. And this in spite of a 4-percent decline from 1946 to 1947 in Oregon, and a 1 percent gain in Washington. In view of the great impact of the war upon the Dis trict, as shown by the increases in income payments from 1939 to 1944, it is important to note that with the excep tion of a slight decline from 1944 to 1945 income pay ments have continued to grow. An increase in peacetime activities, then, more than made up for the sharp declines in production for war. This was made possible by the expansion of trade and services and “nonwar” manufac turing associated with the continuing increase in popu lation. The three Pacific Coast states have led the nation in population growth since 1939, with an increase of more than 40 percent. From 1944 to 1947 the increase was more than 10 percent. Per capita income payments higher in the District than in the nation, but rising more slowly Between 1939 and 1947 total income payments in the District rose 220 percent, compared with the 40-percent increase in population. Per capita income payments in the District, as shown in the accompanying table, rose more from 1939 to 1944 than in the nation, and less from 1944 to 1947. The over-all per capita income increase from 1939 to 1947 was actually less in the District than in the nation. Ever since 1929, the first year for which the data are available, Twelfth District per capita incomes have been considerably higher than those for the country as a whole. In 1929 they were 20 percent higher, in 1939 they were 22 percent higher, and in the midst of the peak of war time activity, 1943, they were 31 percent higher. Since then the differential has been declining, dropping to 20 percent in 1946 and 15 percent in 1947. The Pacific Coast states have been responsible for the narrowing of this differential. On the Coast, the expansion of income-gen erating activities has not kept pace with population growth. Nevada, with the smallest total income payments, has the highest per capita income in the nation, $1,842, com pared with second-place New York, the state with the largest total income payments, which has a per capita income of $1,781. North Dakota was next, with $1,678, Per capita income payments in Washington were 5 percent above national per capita income payments in 1947, while in Oregon they were 5 percent below. A l though in both states they increased from 1946 to 1947, Washington’s per capita income payments were still 8 percent below their high 1944 level, and Oregon’s in 1947 just matched theirs of 1944. Income payments in California The changes that have occurred in California’s income payments since 1939, although not so great as in the two states to its north, are nevertheless considerable. Total P er C a p it a I n c o m e P a y m e n t s — T w e l f t h D is t r ic t , 1939 1940 1941 1942 1943 1944 1945 1946 1947 .......................... ..................... .......................... ...................... .......................... .................... .......................... ................... .......................... ...................... .......................... ..................... .......................... ................... .......................... ..................... .......................... 1939-47 1939-44 1944-47 ................... .................... ................... ................... .................... Arizona $ 461 473 538 749 895 977 1,046 1,G45 California $ 741 805 955 1,185 1,469 1,558 1,508 1,574 1,643 Idaho $ 411 440 533 801 892 972 1,040 1,133 1,290 +143 + 122 + 110 + 5 +214 + 136 + 33 + 1 5 Nevada $ 767 836 907 1,580 1,486 1,401 1,533 1,770 1,842 Percent change + 140 + 83 + 31 1939-47 Oregon $ 544 579 722 1,028 1,251 1,252 1,235 1,220 1,253 Utah $ 443 480 578 881 1,068 1,057 1,078 1,076 1,208 Washington + 130 + 130 0 + 173 + 139 + 14 + 137 + 159 — 8 $ 588 632 826 1,152 1,422 1,522 1,399 1,326 1,395 Twelfth District 657 711 859 1,120 1,373 1,451 1,414 1,451 1,521 United States $ 539 575 693 870 1,045 1,145 1,177 1,213 1,323 + 132 + 121 + 5 + 145 + 112 + $ 80 September 1948 FEDERAL RESERVE B A N K OF S A N F R A N C ISCO income payments in California have been the second high est in the nation ever since 1942. They rose 6 percent from 1946 to 1947, which is considerably below the na tional increase, but stood at 219 percent above their 1939 level, while in the United States they were 169 percent above 1939. They had risen 167 percent from 1939 through the end of the war years, and continued to rise, gaining 20 percent from 1944 to 1947. The important factor in the smaller increase in California income pay ments than in national income payments from 1946 to 1947 is the sharp drop in fruit prices last year. Agricul tural income in California, which formed 7 percent of total income in the state, dropped 12 percent in 1947. California ranks fifth among all the states in per capita income payments. It had reached first place in 1944, was third in 1945 and again in 1946. Per capita income in California had fallen 3 percent from 1944 to 1945, but rose again the next year, and in 1947 was 5 percent above 1944. In 1947 it stood 22 percent higher than the national per capita income. In 1939 it was 37 percent higher, and the 1944 differential nearly matched that. Since 1944, California’s per capita income has been declining relative to the nation's, as population in California has continued to increase relatively faster than in the nation. Income payments in the intermountain States Total income payments to individuals increased in 1947 in all these states, with Arizona and Idaho experiencing the largest gains— 14 percent over 1946. Arizona, Ne vada, and Utah had the largest gains in the District from 1944 to 1947. Among these states Idaho had experienced the greatest gains during the war, its total income pay ments rising 176 percent from 1939 to 1944, the thirdlargest gain in the District. Its 15 percent gain from 1944 to 1947 is noteworthy in view of the fact that from 1944 to 1945 its total income payments dropped 11 percent. Per capita income payments in each state rose from 1946 to 1947, with Idaho experiencing the greatest gain (14 percent) in the District. Idaho is also the District leader in respect to per capita income increase since 1939, having increased 211 percent compared with the nexthighest increase of 173 percent in Utah. From 1944 to 1947, Idaho had the fifth largest per capita income in crease in the nation. This is a reflection of the increased farm income in the wheat-growing states of the North west. Idaho's population has increased only 1 percent since 1939 while its total income payments have risen 218 percent since then. In 1939 Idaho's per capita income was 24 percent below the nation's, but in 1947 it was only 2 percent below. Arizona's per capita income has re mained in virtually the same relation to the nation’s— 15 percent below. Utah's per capita income is now only 9 percent below the nation's, compared with 18 percent be low in 1939. Per capita income in Nevada, which in 1939 was 42 percent higher than in the nation, was 39 percent higher in 1947. FISHERIES IN THE PACIFIC COAST STATES AN D ALASKA is the first of a series of articles reviewing the developments in the commercial fisheries of Califor nia, Oregon, Washington, and Alaska in recent years. (Hereafter these fisheries, when considered as a unit, are referred to as Pacific area fisheries.) Commercial fish eries within these several areas differ with regard to the volume, value, composition, and utilization of the catch. Fisheries in each state and in Alaska have their special problems and require separate treatment. Some general issues pertain, however, to the industry in the whole area, and are treated in this introductory article. T h is Pacific area’s share in fresh fish production The Pacific area fisheries play a leading part in the gen eral framework of the fishery industry of the United L a n d i n g s o f F i s h a n d S h e l l f i s h a n d V a l u e to t h e F is h e r m e n , 1940-44 A verages Landings Value (in millions of pounds— round weight basis) (in thou sands) California ........................................................................ Oreg-on ............................................................................. Washington .................................................................... Alaska ................................................................................ 1,331 72 151 596 $27,100 6,460 13,952 16,901 States and Alaska. In the period 1940-44, this area landed 50 percent of the total catch of fresh fish and shellfish, representing 40 percent of the total value. The production of shellfish in the area was, however, only 7 percent of the total quantity and value of the catch in the United States and Alaska. What little whaling is carried on in the United States waters is done in this area. The accom panying table shows the position of the three Pacific Coast states and Alaska in relation to each other and to the United States as a whole. Pacific area’s share in canned fish and byproducts output The Pacific Coast states and Alaska supply the bulk of the nation's leading canned fishery products and byproducts, as shown in the accompanying table. Thus during the 1942-46 period, four-fifths of the output of canned fish and shellfish was produced in the Pacific area. V a l u e of C a n n e d F is h e r y P roducts a n d B y pr o d u c t s, 1942-46 A verage (in millions) Canned products California ............................................................ $58.2 O r e g o n ................................................................... 11.2 Washington ........................................................ 8.1 Alaska .................................................................... 52.0 Byproducts $24.9 .4 5.9 3.1 Total $83.1 11.6 Pacific area .................................................................... 2,150 64,413 All other states ............................................................ 2,194 99,680 Total— United States and A lask a...................... 4,344 164,093 Pacific a r e a .......................................................... 129.5 34.3 Pacific area as percent of total........................ 49.5 39.3 All other states ................................................ 34.3 27.3 61.6 Total— United States and A lask a............ 163.8 61.6 225.4 Pacific area as percent of total............... 79,0 55.7 72.7 Source: U . S. Department of the Interior, Fish and Wildlife Service, Fishery Statistics of the United States for 1940, 1941, and 1942, and various mimeographed reports on current fishery statistics. 14.0 55.1 163.8 September 1948 This area produced over one-half of all byproducts of the fishery industry of the United States such as fish oil and meal, livers for vitamin production, and the like. Essen tially the same relationship prevailed during the whole interwar period. Owing to the fall in the sardine catch in California during the past three years, the relative share of the Pacific area in the nation’s production of canned fish and byproducts has presumably been somewhat reduced. The Pacific area is the chief source of fishery products exported from this country. The United States average annual imports and exports of fishery commodities dur ing the period 1942-46 were as follows (in millions) : Imports Exports ................... ................... Edible products Nonedible products Total $58.5 34.7 $24.7 9.9 $83.2 44.6 Exports of canned salmon, coming exclusively from the area under consideration, averaged $14.5 million during this period, and exports of canned sardines, of which the greater part was probably supplied by this area, averaged $13.9 million. These two items accounted for 82 percent of the value of all edible fishery products exported. A large portion of fish oils which form the bulk of non edible products exports comes also from the Pacific area. Most of the imported fishery products, consisting of fresh and frozen fish and shellfish, come from Canada, New foundland, and Iceland, and are marketed in the eastern metropolitan areas of this country. Besides supplying the bulk of canned fish products for export, the Pacific Coast states and Alaska serve as the leading suppliers of these products within the country itself, and thus these prod ucts are an important favorable item in their interre gional trade. Som e characteristics of the industry The fishery industry of the Pacific area displays greatly varied sizes of enterprise. Large units produce the bulk of the pack of canned salmon, sardines, and tuna. Thus, for example, in 1947 about 180 salmon-canning plants were in operation in the Pacific Coast states and Alaska. Four leading packers, out of a total number of 120, oper ated 36 canneries and produced 32 percent of the total United States salmon pack of 5.6 million cases.1 But be cause fishing grounds cover vast areas, and transporta tion costs of fresh fish are high, and capital investment in canneries is not unduly high, there are in the fishery in dustry of the Pacific area many medium and small units. Great demand and high prices for canned fish in recent years have led not only to the enlargement of producing facilities of various established companies, but also to the creation of many new medium- and small-size units. While the overwhelming majority of salmon canneries pack only salmon, most canneries in California are equipped to handle several varieties of fish, primarily sardines, tuna, and mackerel. Moreover, most of them have reduction installations for sardines and offal. In the fishing phase of the industry small and me dium enterprises prevail. In many cases fishing has a 1Pacific Fisherman Yearbook 1948, pp. 97-107. 81 M O N T H L Y R E V IE W purely subsistence character. As a rule, the fishing enter prise is separated from the processing enterprise. Fisher men deliver fish to processors and wholesalers on the basis of a seasonal contract which sets the price of fresh fish in advance. Uneven delivery of fresh fish for their plants is perhaps the chief operational problem for the processors. To secure more regular delivery, to partici pate in the profits of the fishing end of the industry, and to have a stronger position in price bargainings with fish ermen, some processors engage in financing of boat pur chases and outfitting. The prevailing method of remuneration for the crew and the boatowner is the system of shares, namely a pre arranged system of sharing of proceeds of every fishing trip after the operating expenses have been met or of sharing expenses in cases of unsuccessful trips. In times of good catches and good prices for fresh fish this results in quite large income per fisherman, but when the “luck” or the particular species gives out, it may result in pri vation.1 Consumption and prices of fish The domestic per capita consumption of commercial fish, both fresh and processed, between 1930 and 1947 averaged 10.2 pounds, edible weight, ranging between the peak of 12.0 pounds in 1936 and 8.2 pounds in 1943. Of this about 60 percent was fresh and frozen and about 40 percent was canned and cured fish. During the 1930’s consumption of fish showed a rise. After a fall between 1942 and 1944 when the United States Government was a heavy buyer of fishery products, the civilian per capita consumption during the past three years has risen al most to the prewar level.2 The outstanding change in recent years in regard to fish consumption is the greatly increased consumption of frozen or packaged fish fillets. Improved techniques in preparing, preserving, transporting, and storing of frozen fish make it possible to market such fishery products in all inland areas of the country. Wartime scarcities of certain 1 It is interesting to note that various Pacific area fisheries display marked nationality complexions. In the Pacific halibut fishery, which is a bottom line fishery, most fishermen are of Scandinavian, especially Norwegian, origin. Purse seine fishery in salmon, tuna, mackerel, and sardine fisheries is to a considerable extent in the hands of fishermen of Italian and Y u g o slav (Dalmatian) birth or origin. Tuna live bait fishery, on the other hand, is mostly in the hands of fishermen of Portuguese origin. 2U . S. Department of Agriculture, Bureau of Agricultural Economics, “ Supply and distribution of fishery products in the Continental United States, 1930-47,” The National Food Situation, Tuly-September 1948, pp. 19-40. In d e x N u m b e r s o f A v e r a g e M o n t h l y R e t a i l P r ic e s o f S p e c ifie d F o o d s i n L e a d in g C i t i e s 1 i n t h e U n i t e d S ta te s, 1935-48 (1935-39 averag;e = 100) Year 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948— Jan.-July Fresh and frozen fish 99.8 106.7 119.2 160.0 209.0 209.6 220.4 240.6 243.4 ............... 307.5 Meats 96.6 94.4 106.5 122.5 124.2 117.9 118.0 150.8 214.7 237.0 Dairy products 95.5 101.4 112.0 125.4 134.6 133.6 133.9 165.1 186.2 205.2 *51 cities covered prior to February 1943, 56 cities thereafter. Source: U . S. Department of Labor, Bureau of Labor Statistics. Eggs 91.0 93.8 112.2 136.5 161.9 153.0 164.4 168.8 200.8 194.0 82 September 1948 FEDERAL RESERVE B A N K OF S A N F R A N C ISCO foods and high meat prices during the past three years were important factors contributing to a wider spread of consumption of seafood. It is interesting to note that prices of fresh and frozen fish, as shown in the table on page 81, have increased more in recent years than prices of meat, dairy products, or eggs, foods with which fishery products most directly compete. Fish prices rose much more during 1942 and 1943 than prices of these other commodities. Already in 1943 fish prices were more than 100 percent above the 1935-39 level, while in the same year meat prices were 24, dairy prices 35, and egg prices 62 percent above the same period. The causes for this course of fish prices are to be found in several factors. Price control for most fresh and frozen fish products fixed only margins that could be added to the net cost of fish, and most cost elements were on the increase. Available fish supplies were re duced and demand for fish products increased. After the abolition of price control in 1946 and during 1947 retail prices of fresh and frozen fish rose little while the prices of meat, dairy products, and eggs rose very sharply. But any rise in prices of these products, espe cially meat, has a tendency to increase the demand and thereby also the prices of fish. Thus, prices of fresh fish during the first seven months of this year rose sharply and were more than 200 percent above those of 1935-39. The seasonal effect of lower fish supply during the first half of the year should, however, not be forgotten (the seasonal factor operates in the opposite direction in the case of eggs and dairy products). The rise in prices of canned fish, especially salmon, tuna, and sardines was very pronounced during 1941 and 1942. Through price control their prices were kept stable during the following three years, but after the lifting of price control they rose very sharply in 1946 and 1947 and the rise is continuing in 1948. The initial prices1 of Alaska red salmon, the most important component of the annual salmon pack, were as follows (per case of 48 tall 1-pound cans) : 1939 1940 1941 1942 1943-45 1946 1947 $ 8.60 - $ 9.00 9.60 13.40 - 13.60 15.00 15.00 2 0 .0 0 - 22.00 22.65 - 24.50 Intensity of fishing effort The total catch in a fishery depends on two factors, if continuous demand at satisfactory prices is assumed: namely, on the relative abundance of the respective spe cies of fish, and on the fishing effort, that is to say on the amount of manpower, gear, and time employed. Be cause of the differences and changes in the types and size of fishing craft, in types and efficiency of gear, in dis tances of various fishing grounds from the landing ports, in refrigeration and transportation installations on fishing craft, in weather conditions prevailing during the fishing operations, and in many other factors, exact measure ment of the fishing effort is extremely difficult if not im 1 Pacific Fisherman Yearbook 1948, p. 133. The initial price is defined as the “ earliest price in each season at which a large percentage of the pack has been sold.” possible, save in a few cases such as halibut fishery. The tonnage of fishing vessels, the number of fishing boats, and the number of fishermen employed give, however, a rather close approximation to the degree of the intensity of fishing effort. All these factors increased rather steadily from 1928 to 1940 in all sections of the area under con sideration, although there was a reduction during the early 1930’s. As we have up-to-date information for California, its data are used for illustration. The number of licensed fishermen in the state rose from 6,844 in 1928 to 9,255 in 1940. The total tonnage of fishing vessels increased during the same period from 10,281 to 29,295 tons, and the number of boats of all types from 2,087 to 2,566.1 During the war there was a temporary reduction in the number of fishing craft and the number of fishermen, but, as in agriculture, reduced facilities and manpower were more intensively employed. High prices of fishery products during recent years have led to a large expan sion in the number of fishing craft and the number of licensed fishermen, and along with this, in the amount of gear. The table shows the development of the first two factors from the 1939-40 season (April 1 to March 31 of the following year), to the season of 1946-47. The considerable reduction of larger vessels from 1940-41 to 1942-43 was due to the fact that many of these vessels were taken over by the Navy for patrol work. C o m m e r c ia l F is h in g F leet a n d C o m m e r c ia l F is h e r m e n in C a l if o r n ia , 1939-40 to 1946-1947 t----- Commercial fishing fleet----- N Season 1939-40 1940-41 1941-42 1942-43 1943-44 1944-45 1945-46 1946-47 Percent increase, 1939-40 to 1946-47 ............................. Under 40 feet 2,253 2,510 2,331 2,264 2,929 2,852 3,103 3,558 58 Total number of craft 3,110 3,454 3,202 2,965 3,726 3,782 4,145 4,857 40 feet and over 857 944 871 701 797 930 1,042 1,299 52 56 C om ’ l fishing licenses 8,724 9,047 9,344 9,043 11,804 10,871 11,747 12,312 41 Source: State of California, Department of Natural Resources, Division of Fish and Game, Bureau of Marine Fisheries, Fish Bulletin N o . 67, The Commercial Fish Catch of California for the Years 1945 and 1946, 1947, pp. 32, 36. It can be safely assumed that a considerable increase in the efficiency of boats and gear has also taken place dur ing these years. The increase in the fishing effort is there fore presumably somewhat greater than shown by the relative increase in the number of fishermen and in the size of the fishing fleet. At the same time, according to a widespread view, the abundance of many species has been reduced, so that the same fishing effort has tended to yield smaller catches. Recent changes in the industry Changing conditions both in the productivity of vari ous fisheries and in the demand for and marketing of fish products have produced considerable changes in recent years. Thus, for example, the demand for vitamins led to the utilization of livers and viscera of such fish as halibut ---------------*D ata from U . S. Department of the Interior, Fish and W ildlife Service, Fishery Statistics of the United States, annually. September 1948 M O N T H L Y R E V IE W and sablefish and improved the situation in this fishery. It also led to the development of a large shark fishery. The development of a large market for fish fillets led to a great increase in the catch of various types of rockfishes. The California fishing fleet which used to fish for cod in the Alaska waters has dropped this venture. On the other hand, the size of tuna operations off Latin America has been greatly expanded and explorations for the expan sion of fishing operations over other areas of the Pacific Ocean are under way. The drastic fall in the sardine catch in California, and persistent high demand for canned fish products has apparently induced sardine fishermen to increase their catch of squid and anchovies, and sardine canners to can much more squid, anchovies, and also some herring. There has also been a great increase in the catch and canning of jack mackerel (until recently packed and marketed under the name of horse mackerel), which is a lower-grade substitute for Pacific mackerel. Albacore tuna which made a surprise appearance off the Oregon and Washington coasts in the late 1930’s has developed in recent years into one of the most important fisheries in both states. This year albacore appeared in the waters of Southeast Alaska. The Pacific oyster which was exten sively planted in Washington in the early 1930’s has de veloped into an important fishery of that state. These remarks indicate quite clearly that the fishery industry of the Pacific area has remained a highly dy namic and, one could almost say, an exciting industry. The issue of conservation Conservation is an issue of basic importance confront ing the whole fishery industry of the Pacific area, as signs of depletion are evident in many fisheries. Deple tion is basically caused by overfishing, although, in the case of salmon in the Pacific Coast states, the contraction of suitable spawning grounds (due to pollution of water, sliming of river beds, building of power dams, etc.) con tributed materially to the depletion. In order to compen sate for lower yields as a result of progressive depletion of fish resources, the fisheries industry has expanded the 83 area of fishing grounds effectively exploited and tapped less valuable fish species. However, to catch the same amount of fish it has become necessary to expand the fishing effort, namely, to use more gear, more time, and/ or more manpower. This has resulted in increased costs per unit of product. The latest case of depletion of a large and exceedingly important Pacific fishery which attracted widespread attention is that of the California pilchard or sardine. Be tween the seasons of 1941-42 and 1944-45 the sardine catch averaged 526,685 tons. In the 1945-46 season the catch fell to 396,090, in 1946-47 to 227,716, and in 194748 season to 110,237 tons. The reasons for the “disap pearance” of the sardine are not yet established. Most probably a series of factors was responsible for this de velopment, but two of these are prominently mentioned by experts: great intensity in the sardine fishery during the past 10 to 15 years and changed hydrographic condi tions unfavorable to sardine propagation. More will be said about the sardines in the article on California fisheries. Depletion of various species has already led to the adoption of rather strict conservation policies in cer tain fisheries, e.g., Pacific halibut, Frazer River sockeye salmon, Alaska salmon fisheries, in which the total catch and often even the fishing operations of individual boats throughout the season are strictly regulated. Regu lated exploitation which takes from the sea only the net annual increment of the individual fishery seems to be the only feasible policy of exploitation of these exhaustible, but renewable, natural resources. The important point is, however, to inaugurate such a policy before the depletion of a fishery has gone too far, as the process of building up a badly depleted fishery is long and tedious and causes great hardship to the fishing industry. Correction : On page 64 of the August 1948 Monthly R eview, the figure 14 percent appears on the sixth line of the section entitled Increases in maximum reserve re quirements. The correct figure is 18 percent. 84 September 1948 FEDERAL RESERVE B A N K OF S A N F R A N C ISC O BUSINESS INDEXES— TW ELFTH DISTRICT1 (1935-39 average = 100.) In d u str ia l p ro d u ction (ph ysical v o lu m e )2 Year and M onth P e tr o le u m 3»4 Lum ber 1929 1930 1931 1932 1933 1934. 1935 1936 1937 1938 1939 1940 1941 1942. 1943 1944. 1945. 1946. 1947. 148 101 77 46 62 67 83 106 113 83 78 76 77 92 94 105 88 1948 January-----February. M a rch _____ A pril_______ M a y ________ June_______ J u ly ------------ 129 112 110 Refined C e m e n t 110 127 107 90 84 81 81 91 98 105 103 103 103 Lead4 96 74 48 54 70 171 146 104 75 75 79 89 117 100 112 118 96 97 68 142 141 137 136 109 130 141 102 110 125 137 144 139 147 116 135 151 160 148 159 92 114 124 164 194 160 128 131 165 193 134 140 142 143 148 154 162 147 148 148 147 148 150 149 156 156 166 162 166 163 160 186 184 185 193 187 205 215 105 90 144 152 148 124 150 150 151 152 152 153 152 166 166 164 166 172 168 167 218 207 216 216 106 110 120 1947 June_______ J u ly _______ A u g u s t ____ September . October___ Novem ber. December _ C rude 122 128 138 110 112 113 118 104 93 81 73 98 96 107 98 112 109 202 110 102 196 106 W heat C opper4 flo u r 4 160 106 75 33 26 36 57 98 135 C arT o ta l C a li D ep’t D ep’ t m f’g forn ia loadin gs store store R eta il Electric e m p lo y fa cto ry (n u m sales s t o c k s 3»6 food power m e n t 5 payrolls5 ber) 2 (valu e)5 (v a lu e ) p rice s4»7 106 111 135 116 91 70 70 81 112 101 110 103 109 96 104 99 106 134 224 460 705 694 497 344 401 182 181 183 184 187 188 188 187 187 187 184 180 185p 190i> 100 112 93 73 54 53 64 78 96 115 144 163 188 192 171 137 109 163 95 94 96 99 96 107 103 103 104 115 119 132 128 133 83 84 82 73 73 79 85 96 105 136 167 214 231 219 219 256 96 104 118 155 230 306 295 229 175 184 166 168 164 168 141 151 161 138 126 125 123 133 133 116 251 252 252 259 260 263 275 163 166 157 165 165 165 114 104 278 283 274 275r 263r 266 284 100 101 88 122 102 112 122 101 116 108 115 123 202 104 92 69 66 74 86 134 127 1 3 2 .0 1 2 4 .8 1 0 4 .0 8 9 .8 78 83 86.8 110 86 127 137 133 140 134 135 142 109 119 139 171 203 223 247 305 330 107 114 137 190 174 179 183 238 300 9 3 .2 9 9 .6 1 00.3 1 0 4 .5 9 9 .0 9 6 .9 9 7 .6 10 7 .9 1 3 0 .9 1 43.4 142.1 1 46.3 1 67.4 2 0 0 .3 394 397 407 413 419 421 423 141 141 141 139 141 143 144 334 331 352 345 340 348 361 285 273 251 264 293 327 353 1 9 4 .8 19 6 .5 19 7 .9 2 0 6 .6 2 0 4 .8 2 0 9 .4 2 1 3 .0 418 417 406 396 406 424 439 141 130 131 130 123 134 137 348 327 339 362 364 372 365 360 377 388 386 347 335 328 2 1 5 .4 2 1 3 .0 88 110 101 88 96 108 101 211.6 2 1 6 .0 2 1 7 .6 2 1 6 .6 2 1 8 .1 BANKING AND CREDIT STATISTICS— TW ELFTH DISTRICT (amounts in millions of dollars) M e m b e r b a n k reserves an d related it e m s 9 C o n d itio n ite m s o f all m e m b e r b a n k s 8 Year an d m o n th T o ta l tim e d eposits C oin an d C o m m e rcia l T reasu ry R eserve cu rren cy in b a n k c re d it11 o p e ra tio n s11 o p era tio n s11 c ir c u la tio n 11 U .S . G o v ’ t secu rities D em and d ep osits a d ju s te d 10 2,239 2,218 ] ,898 1,570 1,486 1,469 1,537 1,682 1,871 1,869 1,967 2,130 2,451 2,170 2,106 2,254 2,663 4,068 5,363 495 467 547 601 720 1,064 1,275 1,334 1,270 1,323 1,450 1,482 1,738 3,630 6,235 8,263 10,450 8,426 7,243 1,234 1,158 984 840 951 1,201 1,389 1,791 1,740 1,781 1,983 2,390 2,893 4,356 5,998 6,950 8,203 8,821 8,928 1,790 1,933 1,727 1,618 1,609 1,875 2,064 2,101 2,187 2,221 2,267 2,360 2,425 2,609 3,226 4,144 5,211 5,797 6,006 + — 1947 July August September October November December 4,755 4,879 4,997 5,158 5,240 5,363 7,375 7,353 7,364 7,361 7,361 7,243 8,366 8,462 8,600 8,722 8,797 8,928 5,904 5,903 5,924 5,964 5,922 6,006 — 234 — 48 — 87 23 + 4 25 — 1948 January February M arch April M ay June July August 5,413 5,467 5,510 5,509 5,569 5,598 5,640 5,743 7,264 7,021 6,945 6,943 6,883 6,859 6,816 6,712 8,854 8,495 8,452 8,461 8,445 8,464 8,556 8,555 6,021 6,063 6,044 6,019 6,008 6,057 6,010 6,005 + + 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 Loans and d isco u n ts _ — + — — + + — — + + + + + + — + + — + " 34 16 21 42 2 7 2 6 1 3 2 2 4 107 214 98 76 9 302 14 20 49 9 30 14 15 23 — — — — — — — — — — — — -1 -3 -3 -3 -1 - 0 53 154 175 110 198 163 227 90 240 192 148 596 ,980 ,751 ,534 ,743 ,607 443 — 213 78 + — 85 — 39 0 5 — + + + — — — + 48 153 29 75 14 50 38 1 _ R eserves B a n k de b its index 31 citie s4»12 (1935-39 = 100)2 + + +1 +2 +4 +4 +4 +1 + 23 89 154 234 150 257 219 454 157 276 245 420 ,000 ,826 ,486 ,483 ,682 ,329 630 + + + 4* + + 381 124 172 35 33 49 — — — — + — 23 23 10 16 3 18 1,963 2,078 2,095 2,137 2,130 2,202 305 323r 325 346 344 365 — — — 253 244 19 29 45 28 43 12 — 113 2 37 17 26 13 11 17 2,113 2,045 2,066 2,048 2,068 2,061 2,075 2,065 352 354 347 353 342 348 354 356 + + + + + + + + + + + + + + 6 16 + 48 + 30 + 18 4 + 14 + 38 + — 3 20 + 31 + 96 + + 227 643 + + 708 + 789 + 545 — 326 — 206 175 183 147 142 185 242 287 479 549 565 584 754 930 1,232 1,462 1,706 2,033 2,094 2,202 146 126 97 68 63 72 87 102 111 98 102 110 134 165 211 237 260 298 326 — — — + — — + 1 All monthly indexes but wheat flour, petroleum, copper, lead, and retail food prices are adjusted for seasonal variation. Excepting for department store sta tistics, all indexes are based upon data from outside sources, as follows: Lumber, various lumber trade associations; Petroleum, Cement, Copper, and Lead, U .S. Bureau of Mines; W heat flour, U.S. Bureau of the Census; Electric power, Federal Power Commission; Manufacturing employment, U.S. Bureau of Labor Statistics and cooperating state agencies; Factory payrolls, California State Division of Labor Statistics and Research; Retail food prices, U .S. Bureau of Labor Statistics; and Carloadings, various railroads and railroad associations. 2 Daily average. 3 Revised series. Data for earlier periods, by months, available on request. 4 N ot adjusted for seasonal variation. 6 Excludes fish, fruit, and vegetable canning. Factory payrolls index covers wage earners only. 6 A t retail, end of month or year. 7 Los Angeles, San Francisco, and Seattle indexes combined. 8 Annual figures are as of end of year; monthly figures as of last Wednesday in month or, where applicable, as of call report date. 8 End of year and end of month figures. 10 Demand deposits, ex cluding interbank and U.S. G ov’t deposits, less cash items in process of collection. M onthly data partly estimated. 11 Changes from previous month or year. 12 Debits to total deposit accounts, excluding interbank deposits. p — preliminary. r— revised.
@FedFRASER