industrial facilities incurred significant damage. For example,
several buildings of the kind commonly used for light industry or
warehouses suffered from collapsed roofs or walls. Generally, building
codes do not apply to special industrial facilities, and the ability
of these structures to resist earthquake shaking will depend largely
on the foresight of the design engineer. For example, a major
electrical power switching yard and a water filtration plant were
seriously damaged in the 1971 San Fernando earthquake.

About 10 percent of the population and industrial resources of the
Nation are located in California. Over 85 percent of these resources
(or about 8.5 percent of the Nation's total) are located in the 21
California counties that are subject to the possibility of damage from
a major earthquake. Much of the aerospace and electronics industry is
centered in California. For example, about 56 percent of the guided
missiles and space vehicles, 40 percent of the semiconductors, 25
percent of the electronic computer equipment, and approximately 21
percent of the optical instruments and lenses manufactured in the
Nation are manufactured in these 21 counties. The probability that all
these counties would be affected by one earthquake is extremely
remote; yet the significant concentration of key industries remains a
concern. For example, about 25 percent of the Nation's semiconductors
are manufactured in Santa Clara County, an area along the Northern San
Andres fault that suffered very heavy damage in the 1906 San Francisco
earthquake. Estimates of damage to these industrial facilities and the
resulting loss of production have not been made. Similarly, the
resulting impact of possible damage to national production has not
been adequately analyzed.

Federally regulated financial institutions were generically analyzed
to determine their ability to continue to promote essential services
in the event of a major earthquake like those that have been
postulated for this assessment. The conclusion reached thus far is
that large-magnitude earthquakes pose no significant or unanticipated
problems of solvency and liquidity for such institutions. The Federal
Reserve System and other regulatory entities have procedures in place
that are designed--and have been tested--specifically to provide for
the continued operation of financial institutions immediately
following an earthquake or other emergency.

CHAPTER IV

AN ASSE