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MONTHLY REVIEW OF BUSINESS CONDITIONS ISAAC B. NEWTON, Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. XII San Francisco, California, February 20,1928 No. 2 SUMMARY OF NATIO NA L CONDITIONS Prepared by the Federal R eserve Board Industrial production and shipments of com modities by railroads increased considerably in January from the low point reached at the end of 1927. The general level of wholesale com modity prices showed a slight decline. Production. The increase of 6 per cent in industrial production from December to Janu ary reflected a larger output of manufactures, particularly of iron and steel and automobiles. Daily average production of steel ingots in creased by over 25 per cent in January, the largest monthly increase since 1924. Buying of steel products by the railroads and by the auto mobile and construction industries was also active in January, and, notwithstanding the large volume of production and shipments, un filled orders showed an increase during the month. Since the first of February production of steel products has continued active, with new orders and shipments more nearly in balance than in previous months. Automobile produc tion, which in December was in the smallest volume since 1922, increased considerably in January and was only slightly smaller than in the same month of the preceding year. Cotton consumption showed about the usual seasonal increase in January, following substantial cur tailment in December, and the woolen and silk industries were somewhat more active than in December. Production of minerals, after ad justment for customary seasonal changes, was in practically the same volume in January as in December. Building contracts awarded in January exceeded those for the corresponding month of last year and awards during the first half of February were in practically the same volume as a year ago. Trade. Sales of department stores showed more than the usual seasonal decline in Janu ary from the high levels reached in December and averaged slightly smaller than in January of last year. Sales of mail order houses, on the other hand, were about 6 per cent larger than a year ago. Wholesale trade in nine leading lines averaged larger than in January of last year. Stocks of groceries and hardware carried by wholesale firms were smaller than a year ago, but reports in other lines indicated that stocks were somewhat larger. Freight carloadings for all groups of commodities were larger PERCENT PERCENT 150 r 125 r Miscellarleous ■~yC 100 . f .................A A / 100 A 75 w " IN D U S T R IA L P R O D U C T IO N Index number of production of manufactures and minerals combined, adjusted for seasonal variations (1923-1925 average = 100). Latest figure, January, 105. /s j w .... Total r\~ \ V v .V ji r r~ .............. ■... R A IL R O A D F R E IG H T C A R L O A D IN G S Cars of revenue freight loaded as reported by the American Railway Association. Index numbers adjusted for seasonal variations, ( 1923-1925 average = 100). Latest figures, January, total 100, miscellaneous, 106. A substantial, black, cloth-covered, three-ring binder, large enough to contain one year’s (12) issues of this review, will be mailed prepaid to any address on our mailing list upon receipt of one dollar to cover actual costs. 10 F eb ru a ry , 1928 M O N T H L Y R E V IE W OF B U S IN E S S C O N D IT IO N S in January than in December, the increase being particularly large for miscellaneous com modities. Compared with January of last year, however, loadings of all classes of commodi ties, except livestock, were smaller. Prices. The Bureau of Labor Statistics’ in dex number of wholesale commodity prices de clined from 96.8 per cent of the 1926 average in December to 96.3 per cent in January. Prices of farm and hide and leather products in creased, while prices of meats and dairy prod ucts, textiles, fuels, non-ferrous metals, and increase in the first two weeks of February. The decline in the volume of loans since the first of the year has been accompanied by a corresponding decline in net demand deposits, while time deposits have continued to increase. At the reserve banks the total volume of mem ber bank borrowing declined seasonally dur ing the opening weeks of the year and reached a low point on January 25th, but increased by about 70 million dollars between that date and February 21st. This increase in discounts ac companied smaller reductions in the reserve per c e n t BILLIONS OF DOLLARS 6 ■ Total Reserve Bank 1.5 5 to 4 v / / jk U.S-S«curities 3 ! 2 W' 1924- 1925 1926 1927 tsfor iS iX Banks Q5 ' Com m ercial Paper fíate — fíeserve Bank Discount fíate . . . Acceptance fíate 1928 M O N E Y R ATES Weekly rates in N e w Y o rk 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 Y o rk . rubber declined. During the first two weeks of February prices of grains, cotton, silk, and wool advanced, while those of cattle, sugar, and rubber declined. Bank Credit. For the four weeks ending February 15th total loans and investments of member banks in leading cities showed a de cline of more than 200 million dollars, the de cline being almost entirely in loans on securi ties. From the peak at the turn of the year this class of loans decreased by nearly 460 million dollars. Loans for commercial purposes, after a further decline in January showed a seasonal 0 \ ■s Acceptances _V / 1324 1925 1926 1927 1926 R E S ER V E B A N K C R E D IT M onthly averages of daily figures for 12 Federal reserve banks. Latest figures are averages of first 22 days in February. banks’ holdings of United States securities and acceptances, and the total volume of reserve bank credit in use showed an increase for the four weeks. During the four weeks ending February 21st a firmer tendency in the money market was indicated by increased rates on call and time loans and by a further increase from 3 per cent to 2>y2 per cent in the rate on 90-day bank ers’ acceptances. During the period from Janu ary 25th to February 21st, discount rates at eleven Federal reserve banks were advanced from 2>y2 per cent to 4 per cent. TW E L FT H FEDER AL RESERVE DISTRICT CONDITIONS Industrial activity in the Twelfth Federal Reserve District continued during January, 1928, at the relatively low levels of the closing months of 1927. A slight recession in trade was reported during the month, apparently as earlier declines in industrial activity became effective in terms of community purchasing power. Changes in the credit situation were largely seasonal in character. Funds continued in ample supply for business and agriculture, and interest rates at member banks were unchanged. Effec tive February 4,1928, the Federal Reserve Bank of San Francisco raised its rediscount rate from Zy2 per cent to 4 per cent on all classes and ma turities of eligible paper. The 3y2 per cent rate had been in effect since September 10, 1927. Both industry and trade were less active in January, 1928, than in January, 1927. All lines of industry for which data are collected, except lumbering, flour milling, and silver mining, re ported decreases in production this year, and available figures of volume of employment and of wages paid showed smaller totals than a year ago. Sales of retail stores were larger than in January, 1927, but railway freight carloadings, sales at wholesale, and sales of new automo biles were smaller than last year. Growing crops of the district have generally been reported to be in satisfactory condition, although less than the usual seasonal amount of rain has fallen in many sections. F eb ru ary , 1928 Agriculture R ainfall during Ja n u a ry and early F eb ru a ry in th e ag ricu ltu ral areas of th e T w elfth F ederal R eserve D istrict w as below norm al and by F eb ru a ry 16th seasonal to tals at recording sta tions had quite generally fallen below the estab lished averages of th e Ju ly -F e b ru a ry rainfall period. R A IN F A L L (in inches)—Tw elfth D istrict A riz o n a : F la g sta ff ....................... P h o e n ix ......................... C alifo rn ia : E u rek a ........................... F re sn o ........................... L os A ngeles ................ R ed Bluff .................... S acram en to .................. S an D i e g o .................... S an F ran c isco ........... Id a h o : B oise ............................. N e v ad a : R eno ............................... O re g o n : B ak e r ............................. P o rtla n d ....................... U ta h : S a lt L a k e C i t y ........... W a s h in g to n : S e a ttle ........................... S pokane ........................ July 1,1927 July 1,1926 July 1 Feb . 16,1928 (Actual) 16.3 4.4 F eb . 16,1927 (Actual) 11.0 9.3 F eb. 16 (Normal) 16.2 6.6 14.6 5.0 7.1 15.7 7.2 6.9 12.9 34.5 8.0 12.8 21.2 13.3 10.3 18.7 28.6 6.0 9.9 16.0 12.7 6.4 14.9 8.8 8.2 7.6 2.9 5.4 6.7 7.1 26.3 7.7 36.5 7.3 30.8 9.7 10.9 8.5 22.3 15.8 21.3 10.9 24.6 12.2 T he w in ter w h eat crop in the Pacific N o rth w est is reported to be in good condition. A n abundance of soil m oisture during the fall gro w ing period, followed by an am ple snow cover, has favored the developm ent of the 1928 crop. E x p o rt shipm ents of w heat from P u g et Sound and Colum bia R iver p orts totaled ap proxim ately 41,837,000 bushels betw een Ju ly 1, 1927, and F eb ru ary 1, 1928, as com pared w ith 29,728,000 bushels shipped d u ring the sam e period a year ago. T h e bulk of th e 1927 crop has now been m arketed at generally satisfac to ry prices, and shipm ents will probably tend to dim inish until th e beginning of the 1928 h arv est season. E stim ates of th e 1927-1928 N avel orange crop previously placed at 11,650,000 boxes re m ain unchanged and com pare w ith a reported 1926-1927 production of 12,154,000 boxes. T otal shipm ents fo r the cu rren t season to F eb ru ary 1st am ounted to 10,660 carloads as com pared w ith 12,284 carloads shipped in the sam e period last year. M onthly average f. o. b. prices for oranges and lem ons as reported by th e Cali fornia F ru it G row ers E xchange follow : O ranges* .................. L em ons* .................... r~ January^» 1928 1927 3.69 3.49 5.79 2.97 r-D ecem ber-^ 1927 1926 4.33 3.70 5.03 2.67 r-N ovem ber—> 1927 1926 5.05 4.80 6.27 2.60 * In d ollars p e r box. T h e record of carlot shipm ents of apples from th e Pacific N o rth w est, w hich has recently been ru n n in g approxim ately 13 per cent below th e seasonal to tals of a year ago, is a cu rren t reflection of th e sh o rt 1927 crop. P rices for fancy g rad e apples, f. o. b. shipping point, have been steady d uring recent w eeks and re tu rn s to 11 FE D ER A L R ESER V E A G E N T A T SA N FR A N C ISC O the grow er have been approxim ately one dol lar per box h ig h er th an a year ago. In th e boxed apple region, w hich com prises the socalled “W e ste rn S ta tes,” th e apple in d u stry has developed rapidly d u rin g th e past 15 years, b u t m ore recently som e stab ility of production has appeared. T he num ber of non-bearing trees in this area w as 13 per cent of the to tal num b er of trees in 1925 as com pared w ith 55 p er cent in 1910. T h e U n ited S tates D ep artm en t of A g ricu l tu re ’s annual estim ates of the num ber of cattle, sheep, and sw ine on farm s and ranges of th e T w elfth D istric t are now available. T h ey indi cate th a t d u rin g the p ast year there has been a decrease of 4.4 p er cent in th e num ber of beef cattle (“o th er c a ttle ” ) in the district, a slig h t increase in th e n um ber of dairy cattle (“m ilch cow s”) and increases of 3.1 per cent and 12.0 per cent, respectively, in the num ber of sheep and hogs (“ sw ine”). H eavy liquidation of cattle holdings during th e recent years of depression in this branch of the livestock in d u stry is still reflected in the reported figures of “o th er ca ttle” (chiefly beef cattle) on farm s and ranges. S im ilar evidence is furnished by th e reduced m arket receipts of cattle d u rin g th e p ast few years. T he increase in num ber of sheep in th e d istrict has follow ed upon a series of profitable years in the sheep raising industry. M ilch O th e r Sheep Sw ine L IV E S T O C K O N F A R M S A N D r— Tw elfth D istrict— \ January 1, 1928 1927f 1926 C o w s ................ 1,405 1,397 1,388 C attle .............. 3,738 3,908 4,158 and L a m b s .. . 13,621 13,217 12,545 ........................... 1,641 1,465 1,235 R A N G E S* t---- U nited States— \ January 1, 1928 1927f 1926 21,948 21,818 22,148 33,748 35,054 37,000 44,545 41,846 39,864 58,969 54,408 52,005 *000 om itted. fR ev ised . S o u r c e : U n ite d S ta te s D e p a rtm e n t of A griculture. Som e seasonal d eterioration in the condition of livestock and of ranges in the d istrict is re ported, excepting in p arts of U tah and N evada w hich have benefited by recent rains. C O N D IT IO N O F L IV E S T O C K A N D R A N G E S* ,------ C a ttle ------ ^ ,------ Sheep------ n ,------ Ranges-----F e b .l, Jan .l, Feb >.1, Jan .l, F e b .l, J a n .l, 1928 1927 1928 1928 1927 1928 1928 1927 1928 . 87 85 93 93 88 95 87 90 85 C alifornia . . . 90 89 91 92 87 91 91 93 89 88 98 . 97 97 90 98 100 77 100 88 93 . 94 94 86 93 87 83 88 91 , 97 99 98 92 99 96 88 99 U ta h ( ............. . 98 89 97 95 98 89 97 95 85 92 95 W ash in g to n . 94 92 97 92 96 87 95 *N ormak=:100. S o u rc e : U n ite d S ta te s D e p artm e n t of A griculture. L ivestock prices on th e Pacific C oast re m ained relatively stable d u rin g Jan u ary . C ur re n t cattle q uotations at Pacific Coast m arkets are now approxim ately equal, on a grade for grade basis, to quotations in some m id -W est ern m arkets, and th e w estw ard m ovem ent of stock from In ter-m o u n tain states has been ac celerated. E arly co n tracts for choice grade Cali fornia sp rin g lam bs, f. o. b. shipping point, are 12 M O N T H L Y R E V IE W OF B U S IN E S S C O N D IT IO N S reported to have been made at prices slightly higher than those prevailing a year ago. The steady rise of wool prices during the past few months is reflected in the increased prices named in recent contracts for the 1928 wool clip. It is estimated that over half of the 1928 clip has already been contracted in the so-called “Western States.” Industry During January, 1928, industrial activity in the district continued at the relatively low levels prevailing during the fourth quarter of 1927, and production generally was in smaller volume than in January, 1927. Increased activ ity in flour milling and lumbering, both as compared with one month ago and one year ago, was reported during January, 1928. Avail able data on production and employment in other fields revealed merely seasonal increases from December to January, or further curtail ment, and indicated that activity was continu ing at levels below those of a year ago. Substantial declines, over the year period, in number of industrial workers employed in Cali fornia and Oregon were reported for nearly all lines of manufacturing, the decreases being par ticularly marked in the metals and metal prod ucts industries (including machinery and con veyances), the chemical products industries (chiefly petroleum refining) and in the food products industries. Decreases were also re ported for the textile and the stone, clay and glass products industries. Published figures of lumber production, contrary to the usual seasonal movement, showed an increase in output during January. As a result, this bank’s seasonally adjusted index of daily average production (preliminary estimate) rose to 112 (1923-1925 daily average = 1 0 0 ), the highest figure recorded since the middle of 1926. These production figures are not supported by available data of employment and wage payments in the lumber industry which showed substantial decreases from both December and January of last year. The major part of the expansion in lumber output, how ever, is reported to have occurred toward the close of January, or subsequent to the period (A ) In d u stry — Indexes of daily average production, adjusted for seasonal variation. (1923-1925 daily average = 100.) 1927----------- > 1928 , Jan. Dec. N o v. Jan. F lo u r .................................................... 107 S la u g h te r of L iv esto c k ................ 87* L u m b e r ................................................ 112* R efined M in eral O i l s ................................ C em ent ................................................ 95 99 92 109 145 115 90 98 106 150 110 95 94 100 145 101 93 105 109 90 94 106 110 100 99 114 113 97 M anufactures: M inerals: P e tro leu m (C alifo rn ia) ................ C o p p er (U n ite d S t a t e s ) ! .............. L e a d (U n ite d S ta te s ) ! ................ S ilv er (U n ite d S t a t e s ) ! ................ 93 102 104 100 *Prelim inary. f P repared by Federal Reserve Board. F e b ru a ry , 1928 (Ja n u a ry ls t-J a n u a ry 15th) upon w hich m any em ploym ent and payroll rep o rts w ere based. R e p o rted expansion of p roduction d u rin g J a n u ary and early F e b ru a ry m ay, therefore, be reflected in em ploym ent and payroll d ata for* F eb ru ary . O rders received by re p o rtin g m ills d u rin g J a n u a ry exceeded th e ir production, w hich in tu rn exceeded shipm ents, and th ere w as a su b stan tial increase in volum e of unfilled orders d u rin g th e m onth. L u m b er prices ad vanced slig h tly from late D ecem ber to early F eb ru a ry , b u t continued low er th a n a y ea r ago. B uilding in the d istrict continued less active th a n in early 1927. V alue of building p erm its issued in 20 principal cities d u rin g Ja n u a ry , 1928, alth o u g h g re a te r th a n in D ecem ber, 1927, w as approxim ately 14 per cent sm aller th a n in Jan u a ry , 1927. O nly p a rt of th is decrease m ay be a ttrib u te d to low er b u ild in g costs, w hich have follow ed upon declines in b u ild in g m a terials prices. A ccording to th e index of th e U n ited S tates B ureau of L ab o r sta tistic s th e average decline in building m aterials prices am ounted to 7 per cent d u rin g th e y ear period, th e re su lt of low er prices for lum ber, brick, stru c tu ra l steel, paints, cem ent, and o th er • building m aterials. W ag es in th e building trad es have been w ell m aintained. O u tp u t of non-ferrous m etals in th e U n ited S tates (of w hich th is d istric t co n trib u tes a con siderable p a rt) w as slig h tly curtailed d u rin g Ja n u a ry , 1928. P rices of th e principal m etals produced in th e d istric t w ere generally stable d u rin g Ja n u a ry and early F eb ru ary . Distribution and Trade T h ere w as a general slow ing dow n in dis trib u tio n and tra d e d u rin g Ja n u a ry , 1928, a continuation of th e tren d w hich becam e a p p a r en t to w ard th e close of 1927. J a n u a ry tra d e (jB) E m ploym ent— t— . Calif orniia----------- ^ r ' — Oregon- .......— > N o . of N o . of N o . <— Employees —> N o . r - Employees of Jan., Jan., of Jan., Jan., Industries Firm s 1928 1927 Firm s 1928 1927 . 792 131,928 143,121 162 22,874 25,087 (—7.8) ( —8.8) S tone, C lay and 6,924 140 G lass P ro d u c ts . 48 7,296 3 155 ( — 9 .7 ) ( — 5 .1 ) L u m b e r and w ood . 130 2 3 ,708 24,2 1 4 61 13,097 14,624 (— 2 .1 ) ( — 10.4 ) 2,602 . 18 2,6 9 2 11 2,142 2,173 (— 3 .3 ) (— 1.4) y 8 ,0 4 6 8,072 10* r. 63 506 501 (— 0 .3 ) (+ 1 .0 ) F oods, B everages and T o b a c c o .. . 175 22,1 7 4 24 ,5 7 6 43 1,574 1,675 (— 9 .8 ) (— 6 .0 ) W ater, L ig h t and 5 7,918 P o w e r .............. 7,891 (+ 0 .3 ) . 340 59,566 67,1 7 4 ( — 11.3) 990 . 13 1,206 34 5,415 5,959 (— 17.9 (— 9 .1 ) * L a u n d e rin g only, fln c lu d e s th e follow ing in d u s trie s : m etals, m achinery and c o n v ey a n c e s; le a th e r an d ru b b e r g o o d s; chem icals, oils and p a in ts ; p rin tin g a n d p a p e r goods. F ig u res in p aren th eses in d ic a te p e rc e n ta g e c h an g es from J a n u ary , 1927. F eb ru ary , 1928 volume was slightly smaller than a year ago. Railway freight carloadings and value of ales, both at wholesale and at retail, declined >y more than the usual seasonal amount durng January, 1928. The decline in carloadings vas the result chiefly of smaller loadings in .gricultural products and in merchandise and *niscellaneous freight throughout the district. Sales totals were smaller in most parts of the district. Actual deliveries of new automo biles on sales contracts, as revealed by registra tions of new cars, increased only seasonally during the month, although orders placed were reported to be in large volume. As compared with last year, sales at retail showed an in crease during January, 1928, but railway freight carloadings, sales at wholesale and new auto mobile registrations showed a decrease. R E T A IL T R A D E —Twelfth D istrict STOCKS* ,--------N E T SA LES*--------, Jan ., 1928, Jan., 1928, compared compared with ■■ " -n with Jan ., 1927 D e c .,1927 J a n .,1927 D e p artm e n t S t o r e s . .. 2.3 ( 48) — 48.1 ( 41) — 0.2 (37) 3.2 ( 4) — 36.9 ( 4) 12.1 ( 3) D ry G oods .................. F u rn itu re ...................... — 5.9 ( 39) — 50.2 ( 37) — 1.1 (24) 3.8 ( 3) M en’s A p p arel .......... — 10.4 ( 4) — 50.6 ( 4) M en ’s an d W o m en ’s — 2.4 ( 3) A p p arel .................... — 0.9 ( 11) — 57.9 ( 11) W o m en ’s A p p arel . . . — 7.7 ( 11) — 37.2 ( 11) 5.5 ( 9) A ll S to res ..................... 0.8 (117) — 47.8 (108) 0.1 (79) * P e rc e n ta g e increase o r decrease (— ). F ig u res in paren th eses in d ic a te n u m b e r of sto res rep o rtin g . Value of department store sales declined by more than the usual seasonal amount, during January, 1928, but the stores report that sub stantial price concessions for “special sales” resulted in the disposal of large stocks of goods. Merchants’ purchases for stocks were smaller than usual during the month, and inventory accounts of department stores were reduced, a movement contrary to that experienced in January of recent years. Retail stock turnover (C) B a n k D ebits*— B akersfield ................................................... B ellingham ................................................... B erkeley ........................................................ B oise ............................................................... E u g en e .......................................................... E v e re tt .......................................................... F resn o .......................................................... L o n g B each ............................................... L os A ngeles ............................................... O ak lan d ....................................................... O gden ............................................................ P a sad e n a ...................................................... P h o en ix ........................................................ P o rtla n d ........................................................ R eno ............................................................... R itzville ......................................................... S acram ento .................................................. S alt L ak e C ity .................. ........................ S an B ern ard in o ......................................... S an D iego .................................................... S an F r a n c i s c o ............................................. San Jo se ...................................................... S a n ta B arb ara ........................................... S eattle ........................................................... Spokane ........................................................ S to ck to n ....................................................... T acom a .......................................................... Y ak im a .......................................................... D is tric t ........................................................ *000 o m itted . 13 FE D E R A L R ESE R V E A G E N T A T SA N FR A N C ISC O January, 1928 $ 14,831 9,550 23,883 15,414 6,534 11,895 33,779 51,703 996,559 250,449 18,570 41,516 35,364 152,810 8,883 1,014 49,046 81,060 10,504 62,511 1,371,227 29,741 14,378 223,067 54,192 33,408 41,690 12,780 January, 1927 $ 14,520 9,812 22,144 14,884 6,491 12,234 41,173 48,004 968,340 213,189 24,209 45,361 30,604 162,397 9,286 891 27,362 77,544 9,764 78,135 1,100,398 29,564 14,750 189,151 60,877 31,096 44,852 12,476 $3,656,358 $3,299,508 was seasonally slower than in December, 1927, but was the same as in January, 1927. Collec tions on retail accounts were relatively larger during January, 1928, than during January a year ago. Smaller inventories among retailers and the more rapid collection of their out standing accounts have been reflected in reports by wholesale dealers of smaller sales and im proved collection conditions. Wholesalers’ in ventories were also reported to be smaller at the close of January, 1928, than at the close of January, 1927. Prices Comparatively little change occurred in the general level of prices during the past month, and but small fluctuations have been noted in the indexes of prices of individual groups of commodities. The composite wholesale price index of the United States Bureau of Labor Statistics stood at 96.3 (1926 monthly average = 100) in January, 1928; 96.8 in December, 1927; and 96.6 in January, 1927. Although the general level of wholesale prices is practically unchanged as compared with a year ago, prices of certain individual groups of commodities changed substantially during 1927. Farm products prices now aver age 10 per cent above the average prices of January, 1927; the index of prices of hides and leather products is 20 per cent higher than a year ago; and the index for textile products is up 2.5 per cent. Declines of 17 per cent and 7 per cent, respectively, have been recorded in the price indexes for fuels and building ma terials. In other commodity groups, average price changes have been slight. These reported changes in price levels for groups of commodities relate to the whole United States, but they are not without appli cation in the Twelfth Federal Reserve District. Inspection of available evidence indicates that changes in prices within the district have not differed materially from the changes revealed by the national price indexes. The 10 per cent increase, reported for the country as a whole, in prices paid for farm products in January, 1928, as compared with January, 1927, was (D) D istribution a n d T rade— C arloadings, T o t a l * ....................... C arloadings, M erchandise and M iscellaneous* ........................... Sales a t W h olesale*! .................. Sales a t R etail* .............................. Stocks, Retail*If .............................. S tock T u rn o v er, R etail§ ............. C ollections, R etailJ R eg u lar .......................................... In s ta llm e n t .................................. 1928 Jan . 106|| -------------1927-------------- * D ec. Nov. Jan. 111 110 109 109|| 93 117 103 0.22 114 98 118 112 0.42 112 104 118 113 0.24 114 96 114 103 0.22 47.3 16.0 44.2 15.2 45.9 14.0 46.0 16.7 * In d ex n u m b ers ad ju sted for seasonal variation. (1923-1925 avera g e = 1 0 0 .) fE le v en lines. fiAt end of m onth. § P ro p o rtio n of average sto ck s sold d u rin g m onth, t P e rc e n t of collections d u rin g m o n th to to ta l am o u n t o u tsta n d in g a t first of m o n th . || P relim in ary . 14 F e b ru a ry , 1928 M O N T H L Y R E V IE W O F B U S IN E S S C O N D IT IO N S quite largely the result of the advance in cotton prices over the year period, a relatively unim portant item in this district. A substantial part of the increase, however, arose from advances in prices of cattle, wool, apples, and oranges and lemons, commodities that are of leading importance in making up the district’s agricul tural income. Likewise, the 45 per cent increase in average prices of hides and skins is import ant in its effect on the livestock industry of the district. The decline since January, 1927, in the index of prices of building materials re flects, in part, lower prices of lumber, an im portant product of the district. Average prices of petroleum products were 30 per cent below those of a year ago, a re flection of a national condition in the oil in dustry which has reacted adversely upon oil company operations in the Twelfth Federal Re serve District. Prices of copper and silver, prod ucts also of importance in the district, are higher than a year ago, while prices of lead and zinc are lower. These movements have not materially affected operations of the mining industry in this region. mately one-half was in commercial loans. D e mand deposits showed a slight seasonal expan sion during this period while time deposits in creased sharply, continuing their upward trend which was interrupted during the second and third quarters of 1927. In the table below, re porting member bank data for February 15, 1928, are compared with revised data for one month ago and one year ago. Revision of the earlier data has been necessary to eliminate the effect of recent changes in the composition of the list of reporting member banks. At the Federal Reserve Bank of San Fran cisco there was little change in the total volume of credit outstanding during the four weeks ending February 15, 1928. Changes in the MILLIONS OF DOLLARS Banking and Credit Retarded activity in industry and a slowing up in trade have been reflected in a lessened demand for credit in the Twelfth Federal Re serve District during recent months. Member banks have found themselves in possession of a supply of funds in excess of the current needs of commerce and industry and these funds have been employed in security loans and invest ment accounts. During January and early February, however, expansion in certain lines of industry, notably lumber, and seasonal in creases in activity in certain lines of trade re sulted in increased member bank loans for commercial purposes. Of an increase in total loans and investments at reporting member banks amounting to 18 million dollars during the four weeks ending February 15th, approxiR E P O R T I N G M E M B E R B A N K S * — Tw elfth District (In millions of dollars, percentage changes in parentheses) Condition / — —— Changes f r o m -------- * O ne Y ear F e b .15, O ne M onth Ago Ago 1928 ( + = increase. — = decrease. ) + 5 ( 0.4) , 1,273 + 14 (1.1) T o ta l L o a n s ......................... — 13 ( 1.4) 928 + 8 (0.9) C om m ercial L o a n s ............ + 18 ( 5.7) 345 + 5 (1.6) L o a n s on S e c u r i t i e s ......... . . + 141 (29.4) + 4 (0.7) 617 In v e s tm e n ts ......................... ... + 18 (1.0) + 146 ( 8.4) T o ta l L o a n s an d In v e s tm e n ts 1,890 + 50 ( 6.4) + 2 (0.2) 833 N e t D em an d D e p o sits . . . . . + 85 ( 9.6) + 15 (1.7) 972 T im e D e p o sits .................. . . B o rro w in g s fro m F e d e ra l + 22 (90.2) 47 — 1 (2.4) R eserv e B a n k .................. * T o tal re so u rc es of re p o rtin g b a n k s are ap p ro x im ately 50 per c en t of to ta l re so u rc es of all b a n k s an d 70 p er c en t of to ta l re so u rc es of all m em b er b a n k s in th e T w elfth F e d e ra l R e serv e D is tric t. R e p o rtin g b a n k s em b race m em b er b a n k s and b ra n c h es lo c a ted o n ly in L o s A ngeles, S an F ran c isco , O a k lan d , P o rtla n d , T aco m a, S e a ttle , Sp o k an e, S a lt L a k e C ity, an d O g d en . R E S E 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 Figures for Federal Reserve B ank of San Francisco, as of m iddle W ed nesday of each month. L atest figures F ebruary 15th. composition of the bank’s earning assets, how ever, have reflected changes in the credit situa tion in this district and in the United States. Holdings of United States government securi ties by the Federal Reserve Bank of San Fran cisco were reduced 8 million dollars during the four weeks ending February 15th, the reduction representing this bank’s participation in the Federal Reserve System’s open market opera tions in New York City. The seasonal return flow of currency, as in dicated by a decline in the volume of Federal Reserve notes in circulation, and the purchase by the Reserve Bank of acceptances enabled member banks to increase their reserve de posits and at the same time to reduce their discounts at the Reserve Bank. F E D E R A L R E S E R V E B A N K O F SA N F R A N C IS C O (In millions of dollars, percentage changes in parentheses) C ondition F eb. 15, 1928 T o tal B ills and S e c u ritie s. Bills D is c o u n te d .................. U n ite d S ta te s S ecurities . B ills B o u g h t ......................... T o ta l R eserves .................... T o ta l D ep o sits .................... F e d e ra l R eserve N otes in C ircu latio n ........................ .. .. 110 51 33 26 253 195 t—-----Changes from-------O ne M onth O ne Y ear Ago Ago ( + = increase. — — decrease.) — 1 ( 0.8) + 15 (15.4) — 3 ( 6.2) + 18 (55.1) — 8 (19.7) — 6 (14.6) + 11 (69.1) + 2 ( 6.8) — 1 ( 0.5) — 14 ( 5.2) + 6 ( 3.4) + 18 (10.2) .. 153 — 7 ( 4.3) .. .. — 20 (11.4) F eb ru ary , 1928 15 FE D E R A L R ESE R V E A G E N T A T SA N F R A N C ISC O On February 4, 1928, the rediscount rate at the Federal Reserve Bank of San Francisco was raised from 3y2 per cent to 4 per cent for all classes and maturities of eligible paper. The 3% per cent rate had been in effect since Sep tember 10,1927. Since January 25, 1928, eleven of the twelve Federal reserve banks in the United States similarly raised their rediscount rates. A partial explanation of the reduction in socalled commercial loans of member banks in this district during the past year may be found LOANS O U TS TA N D IN G in the increased use being made by farmers of those banking facilities created expressly for agriculturists. Total loans outstanding at Fed eral Land Banks, Joint Stock Land Banks, and Federal Intermediate Credit Banks of the dis trict on December 31, 1927, amounted to 195 million dollars, an increase of nearly 14 million dollars, or 7 per cent, as compared with a year ago. All states, except Oregon and W ashing ton, where slight decreases were reported, showed increased loans extended by these banks. A T CLOSE OF YEAR t------ Federal Land Banks*------<— Joint Stock Land Banksf—% 1927 1926 1927 1926 A rizo n a ............................................................ C alifo rn ia ........................................................ Id a h o ................................................................ N ev ad a ............................................................. O reg o n ............................................................. U ta h ................................................................. W ash in g to n .................................................... $ D istric t $124,412,571 ............................................................ 5,742,245 27,959,106 22,681,877 2,333,008 20,016,352 14,696,584 30,983,399 $ Federal Intermediate f------------------------Credit Banks*---------1927 1926 5,519,592 25,065,750 22,490,662 1,278,453 20,069,397 14,294,794 30,589,731 $ 2,911,383 29,904,997 4,114,600 622,436 9,433,398 782,500 1,023,101 $ 2,465,289 25,043,842 3,548,900 523,629 11,314,679 787,300 2,014,525 $ 2,716,115 14,189,032 1,114,421 135,920 2,872,948 544,962 609,804 $ 1,929,237 11,164,671 775,013 60,850 1,435,366 431,134 755,962 $119,308,379 $48,792,415 $45,698,164 $21,688,128 $16,552,233 ^F ed eral L a n d B anks and F ed eral In te rm ed ia te C redit B anks are located in B erkeley, C alifo rn ia; and Spokane, W ash in g to n , f jo i n t S tock L an d B anks are located in L o s A ngeles and San F rancisco, C alifo rn ia; P o rtla n d , O re g o n ; and S a lt L ak e C ity, U ta h . Indexes o f I n d u s t r y and Trade in the Twelfth Federal Reserve District Beginning with this issue of the Monthly Review of Business Conditions there are pre sented in the section on Industry a series of index numbers of production in the Twelfth Federal Reserve District. Frequent revision of the actual numerical data, previously pre sented in this section, made it practically im possible to publish comparable series over a long period of time. By making proper adjust ments it is usually possible to maintain com parability in index number series. The newly published index numbers will ordinarily be used in future issues of the Monthly Review. In Table “A ” of this Review (page 12) are presented index numbers covering most of the different lines of industry in the Twelfth Fed eral Reserve District for which it is possible to obtain reasonably reliable monthly data. Coincident with this change in method of presenting industrial data, the make-up of that section of the Monthly Review devoted to Dis tribution and Trade has been slightly altered. Index numbers of department store sales, by cities, and of sales at wholesale, by lines, are now to be omitted and more general indexes of trade substituted for them. (See Table “D,” page 13.) The more detailed indexes here tofore published will, in the future, be distrib uted only to those who make special request for these data. All of the indexes of Industry and of Distri bution and Trade used in the Review are pre sented as percentages of their 1923-1925 aver age. In other words, the 1923-1925 monthly (or daily) average of each index equals 100.1 Where necessary or desirable, in order that changes in the state of industry or of trade may be more easily detected, adjustment has been made for variations in the number of days in different months and for normal seasonal variation.2 In the table on page 16 are summarized briefly the series included in the indexes presented in this Review together with the sources from which the data were obtained. Index number series for individual lines included in the gen eral indexes, but not presented in the Review, will be made available to those requesting them. 1 R easons fo r th e choice of th e y ears 1923-1925, inclusive, for th e base period w ere given in an article e n title d “ R evised In d ex es of T ra d e A c tiv ity ” ap p earin g in th e Ju n e, 1927, M on th ly R eview of B usiness C onditions. See also th e F e d eral R eserve B u lletin for M arch, 1927, pages 172 an d 173. 2 T h e significance of seasonal v a ria tio n was explained in an a rticle en titled “ Seasonal V a ria tio n in B usiness A c tiv ity ’* a p p earin g in th e D ecem ber, 1926, M onthly R eview of B u si ness C onditions. R ep rin ts of th is article m ay be had upo n request. 16 F e b ru a ry , 1928 M O N T H L Y R E V IE W OF B U S IN E S S C O N D IT IO N S In d e x e s o f I n d u s tr y a n d T r a d e — T w e lfth D is tr ic t Index Industry Manufactures Flour ......... Slaughter of L ivestock Lumber Refined Mineral Oils Series Output of w heat flour at mills lo cated in California, Oregon, W ash ington, Idaho, and Utah. R eceipts for slaughter at L os A n geles, San Francisco, California; Portland, Oregon; Seattle, Spokane, Tacoma, W ashington; O gden, Salt Lake City, Utah, of the follow ing: Cattle H ogs Calves Sheep Production of mills reporting to W est Coast Lumbermen’s A ssocia tion, W estern Pine Manufacturers A ssociation, California R edwood A s sociation, California W hite and Sugar Pine Manufacturers A ssocia tion. Source Compiled by Federal R eserve Bank of San Fran cisco from original sources. Compiled by Federal R eserve Bank of San Fran cisco from original sources. N ational Lumber Trade Barom eter and Survey of Current B usiness of the U nited States D epartm ent of Commerce. Refinery output in California of Gasoline Gas and Fuel O ils Kerosene Lubricating Oils Production of cement in California, Oregon, and W ashington. U nited States Bureau of Mines. Petroleum California pipe line runs of petro leum, minus decrease in field stocks, plus petroleum used in the field. American Petroleum Institute. Copper Lead .. Silver . Mine production, U nited States. M ine production, U nited States. M ine production, U nited States. Indexes computed by Federal R e serve Board and published m onthly in the Federal Reserve Bulletin. See Federal R eserve Bulletin for Febru ary, 1927, page 102, and March, 1927, page 177. Adjusted m onthly carloadings for California, Nevada, Arizona, part of N ew M exico, Oregon, W ashington, part of Idaho. Sales of approxim ately 150 w hole sale dealers located throughout the district and dealing in— Agricultural Im plem ents Furniture Autom obile Supplies Groceries Autom obile Tires Hardware D rugs Shoes D ry Goods ^ Stationery Electrical Supplies Car Service D ivision, American Railw ay A ssociation, Pacific Coast and Pacific N orthw est R egional Offices. Federal Reserve Bank of San Fran cisco. Sales of 28 department stores located in Los A ngeles, Oakland, San Francisco, Sacramento, Seattle, Spo kane, Salt Lake City. End-of-m onth inventories of 27 de partment stores located in L os A n geles, Oakland, San Francisco, Sacramento, Seattle, Spokane, Salt Lake City. Federal Reserve Bank of San Fran cisco. Cement .. U nited States Bureau of Mines. Minerals Distribution and Trade Carloadings, T o t a l ................. Carloadings, M erchandise and M iscellaneous ............. W holesale Trade ................... Retail Trade Retail Stocks Federal R eserve Bank of San Fran cisco. Those desiring this Review sent them regularly will receive it without charge upon application.
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