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M O N T H L Y R E V I E W 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. XII San Francisco, California, August 20,1928 No. 8 SU M M ARY OF N A T IO N A L CONDITIONS Prepared by the Federal Reserve Board. Industrial and trade activity was in larger volume during July than is usual in mid-sum mer and the general level of commodity prices advanced slightly. Member bank holdings of securities, and loans on securities, declined in July and August, while all other loans increased to the highest level since 1921. Conditions in the money market remained firm. Production. Production of manufactures and minerals showed a smaller decrease than usual in July, and the index of industrial production, which makes allowance for seasonal variations, advanced. Production of steel, bituminous coal, petroleum, automobiles, and footwear was larger in July than in June, while activity in textile mills, meat packing, and anthracite mines declined. Lumber production showed less than the usual seasonal decrease. Steel mill activity, which during July was at an un usually high level for the summer season, was well maintained during August. Weekly reports from Detroit factories show a larger volume of employment in the middle of August than at any previous date, indicating that automo bile production continued large in that month. Building contracts awarded declined by some what more than the usual seasonal amount in July, but were larger than in any previous July, the increase over last year being chiefly in residential building. Contracts awarded in the first two weeks in August were slightly smaller than in the same period of last year. Estimates of the Department of Agriculture, as of August 1, indicate considerable improvement in crop conditions during July. Estimated wheat production was 891,000,000 bushels, larger by 91,000,000 bushels than on July 1, and slightly larger than the yield in 1927. The corn crop is expected to be more than 3,000,000,000 bushels, an increase of 250,000,000 bushels from last year. Forecasts for other grain crops were also larger than the July 1 estimates and in most cases exceeded last year’s yields. The August 1 forecast of cotton production was 14,290.000 bales as compared with yields of 12,955.000 bales in 1927, and nearly 18,000,000 bales in 1926. Trade. Distribution of commodities at whole sale and retail was in large volume in July. Sales of dry goods and shoes at wholesale were larger than in June, and those of other lines were only slightly smaller. Department store sales, after allowance for seasonal changes, in creased in July. Compared with July a year ago, trade of both wholesale and retail firms was larger. Stocks of department stores and of wholesale firms continued smaller than a year ago. Freight carloadings increased by more than the usual seasonal amount in July, and for the first time this year were larger than in the corresponding month of 1927. Increases, com pared with last year, were reported in loadings PER C E N T INDUSTRIAL PRODUCTION Index number of production of manufactures and minerals combined» adjusted for seasonal variations (1923-1925 average = 100). Latest figure, July, 109. Index of United States Bureau of Labor Statistics (1926 prices =*100, base adopted by Bureau). Latest figure, July, 98.3. T h o s e d e s ir in g th is R e v ie w s e n t th e m r e g u la r ly w ill r e c e iv e i t w ith o u t c h a r g e u p o n a p p lic a tio n . 58 A u g u st, 1928 M O N T H L Y REVIEW OF BUSINESS CONDITIONS of miscellaneous commodities and of grain, re flecting the early harvesting of the crop this year. The largest decrease, as compared with a year ago, was in livestock shipments. During the first two weeks in August, total loadings were in about the same volume as in the cor responding weeks of last year. duction in investments, chiefly at banks in New York City, and some further decline in loans on securities. All other loans, which include loans for commercial purposes, showed a small sea sonal increase and at the middle of August were in the largest volume since early in 1921 and nearly $230,000,000 larger than at the autumn PER 61 BILLIO NS O P D O L L A R S CENT ■ 1925 1926 1927 I9 2 8 ~ W M E M B E R B A N K C R E D IT Monthly averages of weekly figures for banks in 101 leading cities. Latest figures are averages for first three weekly report dates in August. Prices. The general level of wholesale com modity prices increased slightly in July, reflect ing chiefly advances in the prices of livestock and meats. Although there were also small price increases in hide and leather products, textiles, petroleum products, and building ma terials, there was a sharp decline in the price of grains, other than corn, and some decrease in chemicals and drugs, silk, rubber, and automo bile tires prices. During the first half of August there were increases in the prices of sugar, hogs and pork products, coke, and lumber, and decreases in the prices of grains, cotton, wool, and hides. Bank Credit. Between July 18 and August 15, total loans and investments of member banks in leading cities decreased by about $130,000,000. This decline reflected a considerable re- W 1924 T ^ L L J ^ — C O M M E R C IA L — R ESER VE — 1924 J PAPER BANK ACCEPTANCE 1925 1926 RATE D IS C O U N T W E RATE 19 27 1926 M O N E Y RATES Weekly rates in New Y ork money market: commercial paper rate on 4- to 6*months paper, acceptance rate on 90-day paper, and rediscount rate of the Federal Reserve Bank of N ew York. peak of last year. There was a further large decline in net demand deposits and practically no change in time deposits. Volume of reserve bank credit outstanding showed little change between July 25 and August 22. Discounts and acceptance holdings increased slightly, while United States security holdings were practi cally unchanged. Increased demand for cur rency, which is usual at this time of the year, has not resulted in an equivalent growth in reserve bank credit, because it was offset in part by a decline in reserves required by mem ber banks, which reflected the decrease in their deposits. There were further increases between the middle of July and the middle of August in open-market rates on collateral loans, commer cial paper, and bankers' acceptances. T W E L F T H FED ER AL RESERVE DISTRICT CONDITIONS Business activity in the Twelfth Federal Re serve District was well maintained during July, which is ordinarily a month of seasonal reces sion. Sustained industrial and trade activity and the advance of the agricultural harvesting and marketing season were reflected in an in creased demand for credit at the member banks of the district. Security loans of these banks declined slightly during the month, but not enough to offset the expansion of loans for commercial, industrial, and agricultural pur poses. Borrowings from the Federal Reserve Bank increased and a firmer tendency in money rates was apparent. In the industrial field, declines and increases in activity were evenly divided during July. On the whole, it appears that output of the dis trict’s principal industries changed little from the moderately high levels of May and June, and continued slightly below the levels of a year ago. Large numbers of workers found employment in agricultural harvesting opera tions and in the fruit and vegetable canning and packing industry during the month and, although a surplus of workers is still reported, the number of unemployed has been reduced. Trade was seasonally less active during July, 1928, than during June, 1928, but showed im provement as compared with July, 1927. The decrease from June to July was less than that which usually occurs at this season of the year, a reflection of sustained purchasing power throughout the district. Improvement over last year was reported in nearly all general lines of trade and was particularly marked in the Pa cific Northwest. A u g u s t, 1928 Agriculture August 1 estimates of the United States De partment of Agriculture indicate that the Dis trict’s aggregate production of principal grain and field crops will be smaller and that yields of orchard fruit crops will be larger in 1928 than in 1927. Weather conditions during July and early August have generally favored harvest opera tions, but winter range forage and dry land crops are reported to be in need of rainfall. Preliminary harvesting returns indicate that the yield of wheat in Oregon and Washington will be larger than was anticipated earlier in the season, and production in the District as a whole is now estimated at 120,339,000 bushels as com pared with a July 1 estimate of 106,369,000 bush els. In 1927, the harvest amounted to 133,754,000 bushels. higher, respectively, during June and July of this year than during the same months a year ago. Recent estimates place the 1928 commercial crop of apples in the important apple produc ing states of the District at 45,864,000 bushels, a figure 28.5 per cent and 13.0 per cent larger, respectively, than the crops of 1927 (35,685,000 bushels) and 1926 (40,599,000 bushels). Com mercial apple production in the United States will probably be about 29 per cent greater this year than it was in 1927, when a crop of 77,700,000 bushels was marketed. District shipments of apples (chiefly California Gravensteins) from June 1 to July 31 totaled 1,455 carloads. During the same two months of 1927, a year in which the harvest season was somewhat later, 730 car loads were shipped. C O M M E R C IA L P R O D U C T IO N O F A P PL ES Twelfth District and United States (in thousands of bushels) W H E A T P R O D U C T IO N —Twelfth District (In thousands of bushels) A rizon a ............................. California ........................ I d a h o ................................. N evada ............................ O regon ............................. U tah ................................. W ashington .................... T w elfth D i s t r i c t ........... U nited States ................ S o u rce: 59 FEDERAL RESERVE AG EN T A T SAN FRANCISCO >----- A ll W heat------ \ Estimated Actual Aug. 1,1928 1927 1,269 1,450 16,716 13,642 27,806 32,374 466 484 22,952 26,782 6,372 5,678 44,758 53,344 120,339 133,754 891,292 872,595 /— Winter W heat— \ Estimated Actual A ug. 1,1928 1927 1,269 1,450 16,716 13,642 10,488 12,274 95 120 19,440 23,400 3,564 2,888 33,369 33,684 84,941 87,458 578,599 552,384 U nited States Departm ent o f A griculture. Deciduous fruit yields in California will prob ably be larger in 1928 than in either 1927 or 1926. The largest increases are reported in pro duction of grapes and peaches. California fruit sold at Eastern auction markets during the cur rent season has generally brought slightly lower prices than one year ago. Estimated Aug. 1,1928 California ............. 7,122 3,930 4,284 579 29,949 45,864 99,831 Actual 1927 Actual 1926 Actual 1925 4,656 5,400 2,925 402 22,302 35,685 77,700 6,144 2,775 5,250 480 25,950 40,599 117,357 3,291 5,250 3,888 900 26,010 39,339 99,738 . , U tah ...................... W ashington ......... ......... Total ...................... United States . . . S ource : U nited States Department of Agriculture. The Department of Agriculture’s crop fore casts as of August 1 indicate that, among the District’s important field crops, output of beans, potatoes, rice, and sugar beets will be smaller and output of cotton and hops will be larger than a year ago. Combined production of alfalfa and tame hay is estimated to be approxi mately 9 per cent smaller than in 1927. F IE L D C R O P S — Twelfth District - Production*----------- ^ Forecast Actual Aug. 1,1928 1927 D E C ID U O U S F R U IT S A N D N U T S — C A L I F O R N I A /----------------Production*—- — Estimated Actual Actual Aug. 1,1928 1927 1926 A p ricots ................................................ 169 208 176 Cherries ............................................... 19 12 20 A ll G r a p e s ............................................ 2,538 2,406 2,114 Raisin G r a p e s ................................. 1,530 1,443 1,317 Table G r a p e s ................................... 505 490** 383f W ine G r a p e s ................................... 503 473 4 l4 f A ll P e a c h e s ......................................... 609 492 541 Clingstone Peaches ...................... 395 322 327 Freestone P e a c h e s ........................ 214 170 214 P e a r s ....................................................... 225 181 207 Plum s .................................................... 77 57 71 Prunes .................................................. 185 203 150 A lm o n d s ................................................ 13 12 16 W alnuts ................................................ 35 42 15 *In thousands of tons. **142,000 tons not harvested, t i t is esti mated that 32,000 tons of table grapes and 20,000 tons of wine grapes were dried and included in the above figures. S o u r c e : California Crop Report. *000 omitted. S o u rce : U nited States Departm ent o f A griculture. The 1928 crop of Valencia oranges in Califor nia is now estimated at approximately 9,500,000 boxes as compared with 11,640,000 boxes pro duced in 1927. Shipments of oranges (Valencia and Navel) from California during the current crop season— November 1,1927, to July 31,1928 — have totaled 38,683 carloads, compared with 47,082 carloads shipped during the same period of the 1926-1927 crop season. Prices for Cali fornia oranges and lemons (f.o.b. shipping point) averaged 50 per cent and 10 per cent In Idaho, Oregon, and Washington, the con dition of cattle and sheep showed general im provement during July, while in the other states of the District the condition of herds was slightly less favorable than in the spring and early summer. Recent estimates of range con ditions reflect the occurrence of high tempera tures during July which retarded growth of forage. The light movement of cattle to the principal markets in the District during June and July (131,102 head as compared with 144,- - Acreage* 1928 1927 Beans 332 California, Idaho.. 1,735 U nited States . . . . C otton 423 A rizona, Calif. . .. United States . . . 46,695 H ops 25 Calif., Ore., W ash. 25 United States . . . Potatoes 327 Twelfth District . . 3,842 U nited States . . . R ice 136 California ............. U nited States . . . 923 Sugar Beets Calif., Idaho, Utah 145 699 U nited States . . . Unit bu. bu. 5,530 16,772 6,531 16,891 bales bales 290 14,291 182 12,955 24 24 lbs. lbs. 33.339 33.339 29.794 29.794 326 3,505 bu. bu. 51,092 459,737 56,076 406,964 160 989 bu. bu. 6,773 36,149 8,960 40,231 152 754 tons tons 1,263 6,690 1,534 7,753 368 1,605 270 41,905 60 M O N T H L Y REVIEW OF BUSINESS CONDITIONS 130 head a year ago) may be contrasted with the heavier receipts of sheep and hogs which totaled 693,408 head and 314,818 head, respec tively, for June and July, 1928, and 594,786 head and 309,279 head, respectively, during June and July, 1927. The United States Department of Agriculture estimates that the 1928 clip of wool in the Dis trict was 102,099,000 pounds, an increase of 8.8 per cent as compared with the 1927 clip of 93.884.000 pounds. Practically all of the in crease in production was reported from Cali fornia, Idaho, and Utah. The lamb crop of the District for 1928 is estimated at 9,127,000 head, compared with 7,948,000 head in 1927, and 8.533.000 head in 1926. Prices paid for livestock at District marketing centers have been well maintained during the past two months, with the exception of lamb prices which have declined. Industry During July, 1928, seasonal declines in activ ity in lumbering, flour milling, cement produc tion, and livestock slaughtering were offset in part by expanding operations of fruit and vege table canneries, a slight increase in copper out put, and increased activity in the petroleum refining industry. It is estimated that, on the whole, industrial activity during July, 1928, was little changed from the moderately active levels of May and June of this year, but continued at slightly lower levels than a year ago. Shipments of commodities to and from industrial plants were seasonally smaller than in June, 1928, but were in larger volume than during July, 1927. This Bank’s seasonally adjusted index of rail way freight carloadings of other than merchan dise and miscellaneous commodities stood at 117 in July, 1928 (1923-1925 daily average = 100), 120 in June, 1928, and 114 in July, 1927. The employment situation improved during July. The number of workers on industrial pay rolls increased during the month, but continued smaller than a year ago. Large numbers of workers found employment in agricultural har vesting operations and in the fruit and vegetable (A) Industry— Indexes of daily average production, adjusted for seasonal variation. (1923-1925 daily average = 100) ,---------------1928JuJy June Flour ..................................................... 88 Slaughter of L ivestock .................. 89 Lum ber ................................................ 105* Refined M ineral O i l s t ............................. Cement ................................................ 105 W o o l C o n s u m p t io n ................................... 85 93 102 156 108 75 M ay 99 98 103 145 110 81 July 105 95 107 147 112 97 97 110 99 94 96 110 100 87 94 101 116 94 120 111 112 M anufactures: M inerals: Petroleum (C a lifo rn ia )t ............... 97 C opper (U nited S ta tes)? ............. 113 Lead (U nited States) $ .................. 97 Silver (U nited States) $ ............... 84 Miscellaneous : Carloadings§ ....................................... 117 *Prelim inary. f N o t adjusted for seasonal variation. ^Prepared by Federal R eserve B oard. §Other than M erchandise and Miscellaneous. A u g u st, 1928 canning and packing industry. Although the number of unemployed has been reduced by these seasonal demands, a surplus of both skilled and unskilled workers is still reported. The sharp increase in value of building per mits issued in 95 cities of the District during June, 1928, wras offset by an equally sharp de crease in July and the value of permits issued during the later month approximated the value issued during May, 1928, according to figures published by S. W . Straus and Company. Value of permits issued in these cities during July, 1928, was 2.4 per cent greater than in July, 1927. During the first seven months of 1928, the value of permits issued was 10 per cent lower than in the same period a year ago. Building construc tion continues to be relatively more active in the Pacific Northwest and in Arizona than in other sections of the District. According to figures reported by Engineering News Record, total value of engineering and heavy construction contracts awarded in the states of the Twelfth District declined from 32 million dollars in June to 20 million dollars in July. In July, 1927, contracts awarded amounted to 33 million dollars. Cumulative value figures for the first seven months of 1928 total 188 mil lion dollars, compared with 213 million dollars in the corresponding period of 1927. Lumber operators on the Pacific Coast con tinue to report improvement in the condition of the industry. Restriction of output to a volume within the limits of effective demand continued during July, and shipments made and volume of new orders received again exceeded production. Mill stocks of lumber were reduced further dur ing the month and prices were higher than in May and June. Prices, however, ranged lower than a year ago. The usual July curtailment of production was not so drastic as in most pre vious years, and this Bank’s seasonally adjusted (B) Employment— ......California--------- t--------------- Oregon------------ ^ N o. of N o. of N o. Employees N o. Employees —% July, July, of of July, July, Industries Firms 1928 1927 Firms 1928 1927 29,775 A ll Industries.......... 764 156,739 162,023 155 29,498 ( 3 .3 ) (0.9) Stone, Clay and 6.957 7,670 262 346 Glass P ro d u cts. 47 5 (— 9.3) ( - -24.3) Lum ber and W o o d 57 18,230 16,829 Manufactures . . 118 26,265 27,241 ( — 3.6) (8.3) 20 2,485 2,774 10 1,976 2,207 ( — 10.4) ( - -1 0.5 ) C lothing, Millinery 6,983 7,056 453 440 and Laundering. 60 8* (3.0) (— 1.0) F oods, Beverages and T o b a cco . . 169 36,408 39,291 42 3,368 3,943 ( — 7.3) ( - -1 4 .6 ) W ater, L ight and 7,697 Pow er ............... 5 7,794 (1.2) Other Industries!. 335 68,220 68,454 ( — 0.3) 1,627 1,840 33 5,486 5,733 M iscellaneous . . . . 10 ( — 11.6) ( — 4.3) *L aundering only, f Includes the follow in g in d u stries: metals, m achinery and co n v e y a n ce s ; leather and rubber g o o d s ; chem icals, oils and p a in ts ; printing and paper goods. Figures in parentheses indicate percentage changes from July, 1927. A u g u st, 1928 61 FEDERAL RESERVE AG EN T A T SAN FRANCISCO index of lumber output advanced to 105 (19231925 average production = 100) compared with 102 in Tune. In Julv, 1927, this index stood at 107. The petroleum industry in California has re cently embarked upon active drilling operations in already developed fields where deeper oilbearing sands than those heretofore reached are being tapped. Drilling operations are also being pursued in other and newer areas in search of the higher gravity oils. Daily production of crude oil, however, was practically unchanged during July, and this Bank’s index remained at 97 (1923-1925 average production = 100) in that month, compared with 93 in January, 1928, and 94 in July, 1927. Both local consumption and shipments of oil from California ports have been well maintained during recent weeks, and there has been little growth in combined stored stocks of heavy and light crude oil. At midAugust, price advances for refinable crude oil were announced by several refining companies. Copper production expanded during July, contrary to the usual seasonal movement. The increase in output followed some months of cur tailed production and was the result of an active domestic and foreign demand for the metal with concurrent price improvement. The Federal Reserve Board’s index of copper production in the United States (two-thirds of which pro duction is reported from states of the Twelfth District) advanced from 110 (1923-1925 daily average output = 100) in June to 113 in July. This index stood at Î01 in July, 1927. Price quotations for copper, reported by the Engi neering and Mining Journal, averaged 14.523 cents per pound for the week ended August 11, 1928, compared with a July, 1928, average of 14.527 cents per pound, and 12.370 cents per (C) Bank Debits* — July, 1928 July, t— First Seven Months— \ 1928 1927 In the Twelfth Federal Reserve District, trade was less active during July, 1928, than during June, 1928. The decrease wTas not so great as that which usually occurs at this season of the year, however, indicating that the Dis trict’s purchasing power is being well main tained. As compared with a year ago, an increased movement of goods into consumers’ hands was noted. Improvement, although gen eral throughout the District, was particularly marked in the Pacific Northwest where railway freight carioadings and sales, both at wholesale IN D E X $3,272,245 1927 91,603 99,945 $ 68,920 70,445 148,633 152,806 100,990 90,889 51,430 52,138 94,347 89,185 255,466 228,355 382,735 351,376 6,579,352 7,474,486 1,549,583 1,747,363 118,574 117,658 292,946 295,285 242,409 193,183 1,148,719 1,212,114$ 64,064 65,342 5,243 6,373 248,465 339,776 511,754 481,719 75,674 71,472 437,830 448,798 10,991,394 8,391,240 178,161 193,219 96,949 94,561 1,704,421 1,442,822 392,142 379,048 193,328 206,775 315,980 316,117 83,829 88,160 NUMBERS ( . . . __. j A * M — ? i » vlA. RETAIL SALE J / '" v A V \T jn A V VW H O L E S A L E SALES V V CAR l o a d in c A A ;s i I $ $27,705,702 $23,419,889 *000 om itted, fln clu d e s $16,435,000 at four banks not reporting prior to week ended M ay 2, 1928. ^Includes $50,965,000 at: four banks not reporting prior to week ended M ay 2, 1928. Distribution and Trade J 12,864 12,597 $ Bakersfield . . . . $ 9,962 9,306 Bellingham . . . 21,388 22,972 Berkeley ........... 14,829 16,190 B o i s e .................. 7,710 7,524 E ugene ............. 15,776 12,604 Everett ............ 28,493 33,031 Fresno ............... 56,699 47,592 L o n g Beach . . , 875,850 944,388 L os A ngeles . . . 216,787 233,226 Oakland ........... 18,191 15,724 O g d e n ............... 35,697 38,381 Pasadena .......... 33,261 24,661 P h o e n i x .............. 163,776 185,255t P ortland ........... , 10,046 10,313 R eno ................... 987 683 Ritzville ............. 48,575 50,824 Sacram ento 69,559 71,861 Salt Lake C it y . 9,904 San Bernardino, 11,233 62,403 60,236 San D ieg o ......... 1,191,464 San F rancisco . . 1,304,510 27,454 28,938 San Jose ........... 13,795 14,335 Santa B arbara. , 232,613 205,486 Seattle ................. 53,940 56,197 Spokane ........... . 30,851 31,161 S t o c k t o n ........... . 44,739 T a c o m a ............... 43,999 10,700 12,211 Y a k i m a ............... D istrict ...........,$3,551,506 pound in June, 1927, when the recent up ward movement in copper prices began. Lead markets have been moderately active and silver and zinc markets are reported to have been rela tively inactive during recent weeks. Output of flour at reporting Twelfth District mills was in smaller volume during July, 1928, than in any month since mid-summer, 1925. The June-to-July decline in output was relatively not so large this year as is usual, however, and the Reserve Bank’s seasonally adjusted index of Twelfth District flour output advanced to 88 (1923-1925 daily average = 100) in July, com pared with 85 in June. The adjusted index averaged 115 during the first four months of 1928, and stood at 105 in July, 1927. D IS T R IB U T IO N A N D T R A D E - T W E L F T H D IS T R IC T Indexes adjusted for seasonal variation. 1923-1925 average = 100. Daily average figures of department store sales and railway carioadings of merchandise freight. Monthly figures of sales at wholesale. (D ) Distribution and Trade— ,----------------1928---------------„-1927 July June May July Numbers*----------- * ( -----------Index Carioadings, T o ta lf .............................. Carioadings, M erchandise and M iscellaneou s! ................................. Sales at W h o le s a le ! ............................... Sales at R etailf ..................................... Stocks, Retail§ ....................................... Sales o f N ew Automobiles|| Passenger Cars ................................... Com m ercial V ehicles ........................ 120 120 110 114 122 93 120 109 119 99 115 109 109 101 114 109 114 89 116 109 100 95 85 89 103 102 100# 92# <------------ Actual Figures------------- > Stock Turnover, R e ta ilH ...................... C ollections, R eta il0 R e g u l a r .................................................. Installm ent ........................................... .22 45.0 15.3 .23 46.2 16.0 .24 47.4 14.6 .20 43.0 15.3 *A djusted for seasonal variation, 1923-1925 avera ge= 1 0 0 . fD a ily average. JM onthly totals of eleven lines com bined. §At end of month. j|For source o f figures, see June, 1928 R eview . ^Proportion o f average stocks sold during month. °P e r cent of collections during m onth to amount outstanding at first o f m onth. # R e v ise d . 62 M O N T H L Y REVIEW OF BUSINESS CONDITIONS A u g u st, 1928 and at retail, were in substantially greater vol cent larger than during July, 1927. In gauging ume than in July, 1927. Collections in wholesale the importance of this latter increase, it must be and retail trade channels were seasonally slower remembered that in July, 1927, sales of new au during July than during June, but compared tomobiles had begun a rapid decline from the high levels of the previous two and a half years, favorably with July a year ago. Carloadings of merchandise and miscel as a result, in considerable part, of discontinu laneous freight increased during July as com ance of deliveries of Ford automobiles. pared with both June of this year and July of Prices last year. Total carloadings were 5.6 per cent The general level of commodity prices ad larger during July, 1928, than during July, 1927. The increase over a year ago was the result vanced during the first half of July, and declined chiefly of increases of 1.3 and 5.8 per cent, re during the latter half of that month and the spectively, in loadings of forest products and of first weeks of August. Downward movements merchandise and miscellaneous commodities in in prices of certain leading groups of commodi ties, such as grains and other agricultural prod the Pacific Northwest. Value of sales at retail of 147 department, ucts, textiles, and to some extent, of livestock specialty, apparel, and furniture stores was 10.5 and hides, have persisted since mid-July with per cent smaller during July, 1928, than during the rate of decline accelerated in the later weeks June, 1928, a seasonal decrease of less than the of the movement. Monthly average prices for usual proportions. Sales of these stores were July were, however, slightly higher than in June, 4.4 per cent larger than in July, 1927. Value of the wholesale price index of the Bureau of department store sales in Oregon, Washington, Labor Statistics advancing from 97.6 in June to Idaho, and Utah averaged 7.7 per cent above a 98.3 in July. year ago, while in California, Arizona, and Ne These changes in the general price level were, vada they averaged but 3.7 per cent larger than to a considerable extent, reflected in Twelfth last year. This Bank’s seasonally adjusted index District commodity prices. The sharp drop in of department store sales stood at 120 (1923- Chicago wheat quotations (both futures and 1925 daily average = 100) in July, 1928; 115 in cash prices declined) has been accompanied by June, 1928; and 116 in July, 1927. The seasonally substantially lower prices for wheat at Pacific adjusted index of stocks of 27 department stores Northwestern markets. Other grains have been at 109 (1923-1925 monthly average = 100) in affected similarly in District as well as national July was the same as in June, 1928, and July, markets. Cotton prices have declined steadily 1927. The rate of stock turnover at retail stores since late in June and are now approximately 20 was higher during July, 1928, than during the per cent lower than at that time. Such a decline same month last year. is not without importance to cotton growers in this District, although it is difficult to measure R E T A I L T R A D E — Twelfth District ,----------N E T S A L E S *--------- , the extent to which prices paid to cotton grow Jan. 1 to ST O C K S * ers in Arizona and California are determined by July, 1928, July 31,1928, July, 1928, compared compared with compared month-to-month movements of national and with Jan. 1 to with July, 1927 July 31,1927 July, 1927 world prices for that commodity because of the Departm ent S torest. . . 4.7 ( 64) 2.5 ( 61) — 1.3 (50) special grades of cotton grown in these states. A pparel Stores ........... 2.2 ( 32) — 1.0 ( 25) — 0.1 (1 6) Furniture Stores ......... 2.1 ( 49) — 2.4 ( 42) — 5.8 (2 7) Recent minor declines in wool quotations have A ll Stores ...................... 4.4 (147) 1.7 (128) — 1.8 (9 4) not materially altered the excellent position of *P ercentage increase or decrease (— ). Figures in parentheses wool growers in the District, principally be indicate num ber o f stores reporting, tln clu d e s dry good s stores. cause a large portion of the wool clip has been Total value of sales of 240 wholesale firms sold or contracted for at high prices, but also was 4.7 per cent larger during July of this year because current quotations, though slightly be than during July, 1927. This Bank's seasonally low peak prices of a few weeks ago, remain at adjusted index of sales in eleven lines of whole relatively high levels. In the livestock group, quotations for hogs sale trade stood at 93 (1923-1925 monthly aver age = 100) in July, 1928; 99 in June, 1928; and have been steady since the close of June, where 89 in July, 1927. Increased sales over the year as a slight recession in cattle prices and larger period were reported by wholesalers of automo declines in lamb and sheep prices have resulted bile supplies, automobile tires, drugs, dry goods, in lower average prices for livestock than pre electrical supplies, furniture, groceries, and vailed six weeks or two months ago. Price hardware. By territories, the most substantial movements at District markets have been simi increases occurred in the Pacific Northwest. lar to those in national markets. The rather The value of stocks reported by 93 wholesalers abrupt drop in lamb prices is of only moderate at the end of July, 1928, was 2.1 per cent smaller importance at this time, inasmuch as a large portion of this District’s spring lamb crop had than at the end of July, 1927. Registrations of new automobiles during been marketed before the decline commenced. Opening prices for canned fruits, announced July, 1928, showed a smaller than seasonal de crease throughout the District and were 20 per early in August, are approximately the same as A u gu st, 1928 a year ago. Current spot quotations for dried fruits are, on the whole, higher than in August, 1927, a notable exception being raisin prices, which have declined sharply during recent months. Advances in prices of crude petroleum in Eastern, Mid-continent, Gulf, and California fields have been announced during recent weeks. Prices are now at the highest levels since March, 1927, during which month sharp price reductions were made as a result of over production which, by that time, had become a serious problem among crude oil producers. Practically no change has occurred in nonferrous metals prices for several weeks, and cur rent quotations are at or near the highest levels of the year. Softwood lumber is selling at the highest prices of the year which, however, are approxi mately 6 per cent lower than were prices in August, 1927. Banking and Credit Sustained industrial and trade activity and the advance of the agricultural harvesting and marketing season were reflected in condition statements of reporting member banks and of the Federal Reserve Bank of San Francisco during July and the first weeks of August. A firmer tendency in money rates was observed. Commercial loans of reporting city member banks increased in volume throughout June, July, and August. Ordinarily, changes in the volume of commercial loans are small during the summer months, and the prevailing trend at that season during past years has been down ward. The last previous exception to this gen eral tendency occurred in the summer of 1922, when business activity was recovering rapidly from previous low levels. Reporting member bank loans on securities, although changing lit tle during July and August, tended downward and, despite some expansion during the week ending August 15, were, on that date, below the average for May and June, months of pro nounced activity in securities markets. Chiefly as a result of this decline in loans on securities, total loans of city member banks were smaller in August than in June. When compared with July, however, the August total showed an in crease, a reflection of the expanding volume of commercial loans during the later month. Both demand and time deposits at reporting member banks averaged lower during August than in the two preceding months. There was, thus, a divergence between the movements of loans and deposits at these banks and a conse quent decline in the ratio of total deposits to total loans. On August 15, this ratio, at 137.3, stood at the lowest point since early in March, when commercial loans were at their spring peak, but remained higher than a year ago (134.6). Investment holdings of member banks 63 FEDERAL RESERVE A G E N T A T SAN FRANCISCO changed little during July and August, and the heavier demand for funds represented by in creased commercial loans was met by increased borrowings at the Reserve Bank. R E P O R T IN G M E M B E R BAN KS* — Twelfth District (In m illion s of dollars) Average Condition During Month Aug., Aug., July, 1928 1927 1928t 1,980 1,979 1,762 T otal Loans and Investm ents............... 1,269 T otal Loans ................................................ 1,330 1,328 945 968 966 C om m ercial L o a n s ..................................... 324 362 363 L oans on Securities ................................ 650 650 493 Investm ents ................................................ 814 821 783 Net Dem and Deposits ...................... 1,010 1,021 913 Tim e Deposits ............................................ B orrow ings from Federal Reserve 64 52 33 *Total resources of reporting banks are approxim ately 46 per cent of total resources of all banks and 62 per cent of total resources of all m ember banks in the Twelfth Federal R e serve District. R eporting banks embrace m ember banks and branches located only in L os A ngeles, San Francisco, O ak land, Portland, T acom a, Seattle, Spokane, Salt Lake City, and Ogden. tPrelim inary— includes first three reports of August only. The increase in borrowings of city member banks accounted entirely for the increase in earning assets of the Federal Reserve Bank of San Francisco during July and August. Bor rowings by country member banks changed little, as did holdings of United States securi ties and of bills bought in the open market. MILLIONS OF DOLLARS 300 200 100 0 1924 1925 (@26 1927 1928 R E SE R V E B A N K C R E D IT —T W E L F T H D IS T R IC T Monthly average of daily figures. Latest figures are averages for first fifteen days in August. Total discounts, on August 15, stood at 75 mil lion dollars, of which amount 69 million dollars was for the account of city member banks. A large part of this increase in borrowings during the month took the form of transfers of funds to other districts by the banks involved. There is also some evidence that the currency needs of the District increased during late July and early August, although average figures of Federal reserve note circulation declined by 8 million dollars. F E D E R A L R ESE RV E BAN K O F SAN F R A N C IS C O (In m illions of dollars) Average Condition During Month Aug., Aug., July, 1928* 1927 1928 110 94 103 Total Bills and Securities...................... 73 57 47 Bills D is c o u n t e d ...................................... 21 13 20 Bills B o u g h t .............................................. 44 17 17 U nited States S e c u r it ie s .................. 257 265 287 T otal R e s e r v e s ............................ ............. 177 189 188 Total D e p o s i t s ............. -.■•••........... 166 174 169 Federal Reserve N otes in Circulation * Prelim inary— average for first fifteen days of the month, 64 A u g u st, 1928 M O N T H L Y REVIEW OF BUSINESS CONDITIONS A n a l y s i s o f M e m b e r B a n k Cos t s D e c e m b e r a n d E a r n i n g s 3 1 , 1 9 2 7 a n d f o r Y e a r s E n d i n g 1 9 2 6 (Statem ent of amounts per $100 of earning assets in even dollars and cents results in som e instances in slight discrepancies between com ponent figures and the related totals.) Twelfth Federal Reserve District United States - 1927-------------- , ,--------------- 1 9 2 6 Amount per Amount per $100 of earn- Amount $100 of earn Amount (000omitted) ing assets* (000 omitted) ing assets* -1927 Amount per $100 of earn Amount (000 omitted) ing assets* 1926 Amount per Amount $100 of earn (000 omitted) ing assets* Interest Earned ................... Other Earnings ................... $165,606 .32,867 $5.57 1.11 $164,760 24,126 $6.04 .88 $1,749,008 371,269 $5.30 1.12 $ 1 ,7 1 3 ,1 0 7 3 1 6 ,7 5 6 $5.46 1.01 Gross Earnings.................. $198,473 $6.68 $188,886 $6.92 $2,120,277 $6.42 $ 2 ,0 2 9 ,8 6 3 $6.47 Interest on Deposits ............. Interest on Borrowed Money.. Salaries and Wages ............. Taxes .................................. All Other Expenses............... $67,965 1,995 45,892 8,108 28,070 $2.29 .07 1.54 .27 .94 $65,256 2,328 43,065 8,121 23,070 $2.39 .09 1.58 .30 .85 $713,038 24,514 420,128 109,778 248,246 $2.16 .07 1.27 .33 .75 $ 6 7 5 ,0 3 8 2 3 4 ,7 8 7 $2.15 .10 1.26 .34 .75 Total Expenses ................ $152,030 $5.11 $141,840 $5.20 $1,515,704 $4.59 $ 1 ,4 4 3 ,8 5 6 $4.60 Net Earnings ................... $46,443 $1.56 $47,046 $1.72 $604,573 $1.83 $ 5 8 6 ,0 0 7 $1.87 Losses on Loans................... Losses on Investments .......... All Other Losses .................. $12,718 2,770 8,844 $0.43 .09 .30 $14,275 2,166 5,945 $0.52 .08 .22 $123,745 37,284 47,664 $0.38 .11 .14 $ 1 2 4 ,8 8 5 $0.40 .11 .15 Total Losses ..................... Recoveries ........................... $24,332 5,434 $0.82 .18 $22,386 4,026 $0.82 .15 $208,693 51,129 $0.63 .15 $ 2 0 7 ,5 3 0 5 3,0 06 $0.66 .17 Net Lossesf....................... $18,898 $0.64 $18,360 $0.67 $157,564 $0.48 $ 1 5 4 ,5 2 4 $0.49 Net Addition to Profits.......... Dividends Declared ............... $27,545 30,038 $0.93 1.02 $28,686 21,119 $1.05 .77 $447,009 312,680 $1.35 .95 $ 4 3 1 ,4 8 3 $1.37 .91 $71.58 $1,981,187 28.42 746,582 $72.63 27.37 $23,279,515 9,749,932 $70.46 29.54 $ 2 2 ,3 6 3 ,9 0 6 9 ,0 2 5,25 1 $71.25 28.75 $33,029,447 $100.00 $ 3 1 ,3 8 9 ,1 5 7 $100.00 $35,133,000 5,162,702 $ 3 3 ,8 3 2 ,0 0 0 Loans} ................................ $2,127,749 845,838 Investments} ........................ Total Earning Assets}...... $2,973,587 $100.00 $2,727,769 $100.00 Total Deposits} ................ $3,261,000 355,311 Capital Funds§ ..................... $3,024,000 325,677 O t h e r O p e r a t i n g R a 3 1 ,3 5 0 3 9 6 ,7 9 6 105 ,88 5 35 ,9 0 9 4 6 ,7 3 6 2 8 4 ,8 0 9 4 ,8 2 0 ,1 2 9 t i o s f—‘T welfth Federal Reserve District-^ 1926 1927 Earning Assets per $1 of Capital Funds.......... Net Profits per $100 of Capital Funds............. Losses on Loans per $100 of Loans.................. Losses on Investments per $100 of Investments. M i s c e l l a n e o u s C o m p a r a t i v e I t e m $8.38 8.81 .72 .29 $6.40 8.66 .53 .38 $6.51 8.95 .56 .40 s Per Cent of Twelfth Federal Reserve District to United States - r 1927. 1926. $8.37 7.75 .60 .33 -U nited States1927 1926 Total deposits Gross earnings Total expenses Net earnings Net losses Net addition to profits Earning assets Capital funds 9.3 8.9 9.4 9.3 10.0 9.8 7.7 8.0 12.0 11.9 6.2 6.7 9.0 8.7 6.9 6.8 *These ratios are based upon data taken from the custom ary abstracts o f reports o f con dition and o f earnings, expenses, and divi dends. It should be borne in mind in using them that the statistics em ployed represent aggregates for all m em ber banks report ing on the various dates, and such ratios as are shown in this table are therefore ratios of aggregates in which figures for large banks have a statistical influence somewhat disproportionate to their number in com parison with the figures fo r small banks. N o adjustm ents have been made in the underlying data for changes during a given year in the num ber of banks w hose reports underlie the statistics, since the figures presented are for sufficiently large groups that the results appear not to be appreciably affected by these changes. fT o ta l losses charged off less recoveries on assets previously charged off. JAverages of amounts from reports o f con dition for four call dates (D e c. 31, 1925, to D ec. 31, 1926), and for five call dates (D e c . 31, 1926, to D ec. 31, 1927). § Capital surplus and undivided profits less reserves for taxes, interest, etc., accrued.
@FedFRASER