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TWELFTH ANNUAL REPORT
TO THE

FEDERAL RESERVE BOARD
BY THE

FEDERAL RESERVE AGENT
FEDERAL RESERVE BANK
SAN FRANCISCO

FOR THE

YEAR ENDED DECEMBER 31, 1926




TWELFTH ANNUAL REPORT
TO THE

FEDERAL RESERVE BOARD
BY THE

FEDERAL RESERVE AGENT
FEDERAL RESERVE BANK
SAN FRANCISCO

FOR THE

YEAR ENDED DECEMBER 31, 1926




DIRECTORS AND OFFICERS
OF THE

FEDERAL RESERVE BANK OF SAN FRANCISCO
January 1, 1927
Term
Expires
DIRECTORS
Dec. 31
Class Group
C. K. MCINTOSH, San Francisco, California
.
_ _
1928
1
A
President, Bank of California, N . A.
A
2
THOMAS H. RAMSAY, Red Bluff, California
1929
President, First National Bank.
A
3
HOWARD W H I P P L E , Turlock, California
1927
President, First National Bank.
B
1
A. B . C. DOHRMANN, San Francisco, California 1929
President, Dohrmann Commercial Company.
B
2
WILLIAM T. SESNON, Soquel, California
1927
Agriculturist.
B
3
E. H . Cox, Madera, California
1928
Vice-President and General Manager, Madera Sugar Pine
Company, Madera, California.
C
ISAAC B. NEWTON, LOS Angeles, California
1929
Chairman of the Board.
C
WALTON N . MOORE, San Francisco, California 1927
Deputy Chairman,
Chairman of the Board, Walton N . Moore Dry Goods Co., Inc.
C
W M . SPROTJLE, San Francisco, California
1928
President, Southern Pacific Company.

MEMBER FEDERAL ADVISORY COUNCIL
HENRY S. MCKEE, representing District No. 12

President, Barker Bros. Inc.,
Los Angeles, California.
OFFICERS
JNO. U. CALKINS,

ISAAC B. NEWTON,

Chairman of the Board and
Federal Reserve Agent
S. G. SARGENT,

Assistant Federal Reserve Agent
and Chief Examiner
ALLAN SPROTJL,

Assistant Federal Reserve Agent
and Secretary

F. H. HOLMAN, General Auditor
J. M. OSMER, Auditor




Governor
WM. A. DAY,

Deputy Governor
IRA CLERK,

Deputy Governor
L. C. PONTIOUS,

Deputy Governor
W. N. AMBROSE, Cashier
W. M. HALE, Assistant Cashier
CHESTER D. PHILLIPS, Assistant Cashier
C. E. EARHART, Assistant Cashier
H. N. MANGELS, Assistant Cashier
E. C. MAILLIARD, Assistant Cashier
F. C. BOLD, Assistant Cashier

A. C. AGNEW, Counsel

DIRECTORS AND OFFICERS OF BRANCHES
January 1, 1927
SPOKANE BRANCH
Term

Directors

Expires

Dec.31

1929
1927
1928
1927
1928
1929
1927

G. I. TOEVS,* Chairman
E. H . VAN OSTRAND*
WILLIAM D U L I N G *
CHAS. L. M A C K E N Z I E I

R. L. RuTTERf
C. E. McBRooMf
D . L. DAVLSI

.

.

.

.
.

.

.
.

CHAS. H . C L A R K E , * Chairman
CHAS. E . GACHES*
.
H E N R Y A. RHODES* .
E . W . P u R D Y f
. . . .
M . F .B A C K u s f
. . . .
M.

A. ARNOLD!

.

.

.

.

C. R .SHAwt

SEA1
1929
1927
1928
1927
1928
1929
1927

Officers
D. L. DAVIS, Managing Director
J. M. LEISNER, Assistant Manager
EVAN BERG, Assistant Cashier

C. R. SHAW, Managing Director
B. A. RUSSELL, Assistant Manager

PORTLAND BRANCH
NATHAN STRAUSS,* Chairman
A. C. DIXON*
. . . .
EDWARD C. PEASE* . . .

1929
1927
1928

WILLIAM POLLMAN! .
.
.
JOHN F. DALY! . . . .

1927
1928

J. C. AlNSWORTHf

.

.

R. B. WEST, Managing Director
S. A. MACEACHRON, Assistant Manager
J. P. BLANCHARD, Assistant Cashier

. 1929

R. B. WEST!

1927

SALT LAKE CITY BRANCH
LAFAYETTE HANCHETT,

Chairman
CHAPIN A. DAY* .
F. J. HAGENBARTH* .

J. S. BuSSELLf

L. H. FARNSWORTHf
CHAS. H. B A R T O N !
W. L. P A R T N E R ! .

•

.
.
.
.
.
.
.

1929
1927
1928
1927
1928
1929
1927

W. L. PARTNER, Managing Director
H. M. CRAFT, Assistant Manager
W. M. Smoot, Assistant Cashier

LOS A]
W. L. VALENTINE,* Chairman
E . M . LYON*
. . . .
.
J. B. ALEXANDER*
.
.
F. J. BELCHER, jR.f .
.
H E N R Y M. R O B I N S O N ! .
.

J. F . SARTORlf

R. B. MOTHERWELLf

1929

1927
1928
1927
1928
. 1929
. 1927

* for FRASER
Digitized Appointed by Federal Reserve Board.


R. B. MOTHERWELL, Managing Director
M. MCRITCHIE, Assistant Manager
A. J. DUMM, Assistant Cashier
L. C. MEYER, Assistant Cashier

fAppointed by Federal Reserve Bank.

LETTER OF TRANSMITTAL
Federal Reserve Bank,
San Francisco, California,
February 25, 1927.
GENTLEMEN :

I have the honor to submit the following report concerning conditions in the Twelfth Federal Reserve District and the operations
of the Federal Reserve Bank of San Francisco, for the year ended
December 31, 1926.
Yours respectfully,

GrtsC
Chairman of the Board
and Federal Reserve Agent.
Federal Reserve Board,
Washington, D. C.




ECONOMIC REVIEW OF THE YEAR 1926 IN THE
TWELFTH FEDERAL RESERVE DISTRICT
In the Twelfth Federal Reserve District, the year 1926 was characterized by sustained general business activity at high levels. A
sound credit situation prevailed throughout the year. Funds were
continuously in adequate supply, demands upon the Federal Reserve
Bank of San Francisco were not unduly heavy, and interest rates
were steady and relatively low.
In the later months of 1926 it became apparent that the year's
aggregate financial returns to agriculture would not equal earlier
expectations, and there were signs of recession in industry and trade.
This recession was not of sufficient magnitude to result in liquidation
of bank credit.
Production, trade, and credit conditions in the district during 1926
are summarized in the following table:
Primary Production
Grains*
" Index number of volume— f
1
Field Crops* } five-year average 1919- \
Fruits*
J
1923=100
Lumber (output of four associations in b. f.)
Copper (pounds)
Petroleum (barrels)

1926
92.71
117.0J
120.9J
9,014,000,000
1,117,931,000
224,117,000

1925
94.5
110.3
109.4
8,752,000,000$
1,092,434,000
230,147,000

Business Activity—Index Numbers
Building Permits—value 20 cities (1919=100)
Bank Debits—20 cities (1919=100)
Eetail Trade—Sales of 32 stores (1919=100).
Wholesale Trade—Sales of 134 stores (1919=
100)

325.2
155.6
158.6

379.4
142.9
150.8

96.3

98.1

151.1

158.5$

136.1

146.6$

84.6

89.0

Credit
Loans—total loans of reporting member banks
at close of year (last Wednesday in December)
$1,308,144,000
Borrowings^ all member banks from Federal
Eeserve Bank of San Francisco at close of
year (last Wednesday in December)
$48,148,000

$1,194,751,000

Prices—Index Numbers
Wholesale—United States Bureau of Labor
Statistics:
All Commodities (monthly average 1913=
100)
Farm—United States Department of Agriculture :
30 Farm Products (monthly average Aug.,
1909-July, 1914=100)
Purchasing Power of Farm Productst
(monthly average)

$29,963,000

*See table on page 7 for list of crops included. t Ratio of farm prices (30 farm
products index) to wholesale prices of non-agricultural products (1910-1914=
100). ISubject to revision. ^Revised.

Sufficient data have now been accumulated by the Federal Reserve
Bank of San Francisco to permit of more thorough analysis of general business conditions in the district than has heretofore been possible. In many instances the significance of recent developments is
Digitizedemphasized by reviewing these newly available data for past years,
for FRASER


TWELFTH ANNUAL REPORT

and advantage has been taken of this fact in the detailed discussion
of the business situation which follows.
INDEX NUMBERS

160

140

WITH SEASONAL ADJUSTMENT
WITHOUT ADJUSTMENT
I

I

i

192

926

BUSINESS A C T I V I T Y - T W E L F T H DISTRICT
As reflected by daily average bank debits in 20 principal cities (1919 average=100). Dotted line
represents average monthly rate of increase from January, 1919, to December, 1926.

Production
Production, both in the extractive industries which contribute so
heavily to the industrial output of the Twelfth Federal Reserve District, and in the more recently developed fabricating industries, was
large in volume during 1926.
Agricultural yields were, in most cases, greater than or equal to
those of 1925 and the district's total agricultural output was slightly
above the average for the five years 1919-1923. During the period
when the bulk of the year's crop was moving to market, the general
INDEX NUMBERS

INDEX NUMBERS

140

140
\

/
100

* * *\
60

60

GRAINS
- - - - F I E L D CROPS
r
2 0 »^—» FRUITS

1922

1923

1924

1926

s/

•GRAIhIS
FIELD CROPS
FRUIT S

20-

1925

\

/

100

1922

1923

1924

1925

1926

VOLUME
VALUE
Volume and Value of Production of Fifteen Principal Crops in the Twelfth Federal Reserve District.
 See text and tables for sources and explanation.
NOTE:



7

FEDERAL RESERVE BANK OF SAN FRANCISCO

agricultural price level was considerably lower than in the 1925 crop
moving season, however, and despite abundant yields it is estimated
that aggregate financial returns to farmers during 1926 were below
those of 1925. Serious maladjustment between prices of agricultural
and non-agricultural products reappeared during the year. The
United States Department of Agriculture's index of purchasing
power of farm products, which stood at 87 and 88 (pre-war purchasRATIO

INDEX NUMBERS
PRICES
NON-AGRICULTURAL

90

170

ISO

130

I 10

1922

1923

1924

1926

925

PRICE TRENDS
Prices, Non-Agricultural Commodities—Index of United States Bureau of Labor Statistics
(1910-1914 prices=100). Farm Prices—Index of prices of 30 farm products prepared by
United States Department of Agriculture (1909-1914 prices=-100). Ratio—Ratio between the
above two index numbers, indicating general trends in purchasing power of farm products.

ing power=100) during the early months of 1926, declined to 80.7 in
December, 1926. Index numbers prepared by this bank to show the
trend of production and value of the principal crops of the district,
together with the United States Department of Agriculture's index
of purchasing power of farm products, are presented in the following
table:
1926
Volume Value

Grains (wheat, barley, oats)
92.7
74.8t
Field crops (beans, cotton, potatoes, rice, sugar beets)
117.0 132.5
Fruits (apples, peaches, pears,
prunes,raisins, grapes, oranges) 120.9t 84.7
Purchasing power of farm products (United States)*
85

1925
Volume Value

1924
Volume Value

94.5

95.9

59.3

66.0

110.3

129.5t

91.3

86.9t

109.4

108.71

99.2

87.3

89

83

*Eatio of index of prices of 30 farm products (August, 1909-July, 1914=100)
to United States Bureau of Labor Statistics' index of prices of non-agricultural
products (1910-1914 prices=100).
tSubject to revision.

Improvement in the district's important livestock industry has followed upon a period of favorable physical conditions in the range
country, and of general market strength. Sheep raisers have conDigitizedtinued expansion of their flocks, and forced liquidation of breeding
for FRASER


»

TWELFTH ANNUAL REPORT

herds of cattle has been checked. Two tendencies in livestock production and marketing have developed during the past year, both of
which lead toward quicker turnover of product and consequent curtailment of long term credit needs: (1) Production of lambs for
slaughter has assumed increased importance as a part of sheep raising; (2) A well defined demand for lighter weight beef animals has
enabled cattle raisers to bring some of their stock to market maturity
in a shorter time than has heretofore been possible. During a considerable part of the year 1926, prices for livestock, except lambs,
were higher than or equal to prices paid in 1925. Prices for wool
declined, continuing a movement in progress since the post-war peak
of wool prices was reached in January, 1925. The number of livestock on farms and ranges of the district on January 1st of this year
and the four preceding years has been estimated by the United States
Department of Agriculture as follows:
Jan. 1st

Milch Cows

Other Cattle

Sheep

Hogs

1927
1926
1925
1924
1923

1,388,000
1,388,000
1,390,000
1,535,000
1,467,000

3,947,000
4,158,000
4,551,000
4,652,000
4,712,000

13,406,000
12,545,000
12,179,000
12,130,000
11,938,000

1,452,000
1,235,000
1,386,000
1,859,000
1,778,000

The general level of industrial activity in the district during 1926
was above that of 1925 and total industrial output is estimated to
have been in large volume. Practically full employment of labor during the year is confirmatory of data showing a high level of activity
in those industries for which statistics of production are available,
and indicative of similar activity in those industries for which direct
reports of output cannot be obtained.
Building construction again contributed largely to prevailing industrial activity during 1926, although figures of number and value
of building permits issued in twenty principal cities of the district
were smaller than in any year since 1922. Total value of permits
issued in these cities during the year was approximately 60 million
dollars (14 per cent) less than the value of permits issued in 1925, a
record year. A tabular statement of value of building permits issued
in the Twelfth Federal Reserve District and of construction costs in
the United States during recent years follows :
i

1926
1925
1924
1923
1922

Value of Permits Issued* N
Percentage
Change from
Value
Previous Year

$361,387,378
421,594,906
392,182,245
419,726,721
310,676,178

—14.3
7.5
— 6.6
35.1
48.7

r-Construction
Index

194
193
191
194
174

Costsf—-,
Percentage
Change from
Previous Year

0.5
1.0
— 1.5
11.5
— 0.3

*Twenty cities Twelfth Federal Reserve District.
tSource: Federal Reserve Bank of New York. Annual averages of construction costs, including materials and wages, for the United States. 1913=100.

Building costs generally ranged higher during 1926 than during
1925.
A record volume of lumber was produced during the year, although
greater than seasonal curtailment in its later months resulted in a

December, 1926, cut which was less than that of December, 1925.


FEDERAL RESERVE BANK OF SAN FRANCISCO

9

Total output reported by mills of four associations exceeded that of
1925 (the previous record year) by 262 million board feet or 3 per
cent, and was 1,832 million board feet or 26 per cent larger than the
five-year (1921-1925) average output of these mills. The amount of
lumber sold by mills during 1926, as reflected by volume of shipments reported, was smaller than the amount produced, and stocks
are estimated to have increased slightly. There has been general complaint among lumber producers concerning financial returns from
operations during recent years.
MILLIONS OF DOLLARS

MILLIONS OF BOARD FEET

90 0
8 00
7 00
6 00
5 00

40

rAk

n
Ah
1 V^j \

n

35

AAA

4 00 MA/V

)24

1925

1926

LUMBER

Vv

30

1

VY

25

ww

Production in Twelfth Federal Reserve
District
As reported by 4 Lumber Associations

A fli hi

20

1

w

1924

1925

VM1926

BUILDING PERMITS
Dollar Value in 20 Principal Cities of
Twelfth Federal Reserve District
Reported to Federal Reserve Bank of San Francisco

Figures of production, shipments, and orders as reported by association mills, and an index of softwood lumber prices follow (these
figures are not strictly comparable from year to year) :
52 weeks of

1926
1925
1924
1923
Averages: Five years, 1921-1925
t Monthly, 1926
1925
1924
1923

Production'!
(board feet
in millions)

9,014
8,752(>
8,016
8,672
7,182
751Q
729
668
723

Shipments^!
(board feet
in millions)

8,928
8,605<>
7,738
8,068
6,926
744Q
717
645
672

Orders*
(board feet
in millions)

7,572
7,306^
6,865
7,150
6,516
6310
609
572
596

Prices
Index
Numbers!

30.58
30.73
30.94
33.86
30.74
30.58
30.73
30.94
33.86

TfAs reported b y four associations. *As reported b y three associations. JAnnual averages published by ' ' The Lumber Manufacturer a n d D e a l e r . ' ' I Obtained
by dividing figures for 52 weeks by 12. QBevised.

District production of copper and zinc was larger during 1926 than
during 1925, while output of gold, silver and lead was smaller than
in the earlier year. The trend of metal prices was downward during
1926, and the silver market in particular was unsettled by price deDigitized clines. Figures of district production of principal metals follow
for FRASER


10

TWELFTH ANNUAL REPORT

(figures for all counties of Arizona, five of which are in the Eleventh
Federal Reserve District, are included) :
Gold
(oz.)

1926
1925
1924
1923

Silver*
(oz.)

1,200,484
1,284,331
1,305,273
1,374,201

42,488
46,338
44,914
48,652

Copper*
(lbs.)

Lead*
(lbs.)

1,117,931
1,092,434
1,050,238
942,979

1,194,988
620,586
530,263
492,735

Zinct
(tons)

85,175
48,544
23,643
28,237

*000 omitted. t N o t including Arizona, Oregon and Washington.

Production of petroleum in California during 1926 totaled 224,117,000 barrels. This was 6,030,001 barrels, or 2.6 per cent, less than
1925 output and 39,612,000 barrels, or 15 per cent, below the record
output (263,729,000 barrels) of the year 1923. Total stocks (including
heavy and refinable crude oil, gasoline, naphtha distillates, and all
other) stood at 145,612,176 barrels on December 31, 1926, compared
with 157,316,309 barrels on December 31, 1925. This decline of
11,204,000 barrels included 8,215,000 barrels lost through tank farm
fires during April, 1926. Petroleum statistics for California follow:
t

- ProductionPer Cent
California
to

>

Total
(barrels)

1926
1925
1924
1923
1922
1921
1920
1919
1918

United
States

Daily
Average
(barrels)

Stored Stocks at
End of Year
(barrels)

224,117,000
230,147,000
230,064,000
263,729,000
139,671,000
114,709,000
105,668,000
101,564,000
97,532,000

29.2
30.4
32.1
35.9
24.8
23.8
23.3
26.7
27.4

614,019
630,541
628,590
722,545
382,660
314,271
288,710
278,258
267,211

119,542,556
127,194,894
97,829,374
89,274,244

t
t
t
t
t

Average
Active
Producing
Oil Wells Producin
Wells
Completed

913
948
1,238
980
837
704
572
559
586

11,288
11,393
10,903
8,928
9,410
9,425
9,299

t
t

t Comparable figures not available.
Source: American Petroleum Institute.

Flour mills of the district were more active during 1926 than during
1925 but, excepting 1925, production was smaller in volume than in
any calendar year of this bank's record, which extends back to
August, 1920. Reported 1926 output of 14 large milling factors Avas
14 per cent smaller than the five-year (1921-1925) average volume
of production. Stocks of flour and of unmilled wheat in millers'
hands on January 1, 1927, were smaller than on January 1, 1926, and
were well below the average holdings on that date in recent years.
Figures concerning the milling industry, based upon reports of 14
large milling companies* representing approximately 60 per cent of
total milling capacity in the Twelfth Federal Reserve District, follow :
f

1926
1925
1924
1923
1922
1921
1921-1925 Average

Flour Production
-,
Total
Monthly Average
(barrels)
(barrels)

4,961,319
4,674,316
5,907,329
6,779,155
5,944,977
5,652,981
5,751,752

413,443
389,526
492,277
564,930
495,415
471,082
479,313

,—Stocks at Close of Year—\
Flour
Wheat
(barrels)
(bushels)

396,431
412,192
548,550
569,430
521,501
472,693
504,873

2,955,219
4,022,593
2,927,762
3,901,986
4,337,362
2,129,600
3,463,861

*Consolidations have reduced the number of reporting companies from 16 to
14 during the past year, but have not seriously affected the comparability of the
Digitized for figures.
FRASER


11

FEDERAL RESERVE BANK OF SAN FRANCISCO

The canned fruit and vegetable packs in California during 1926 exceeded the previous record packs of these commodities, reported in
1925, by 34 per cent and 12 per cent, respectively. The increased fruit
pack was the result, chiefly, of a record pack of cling peaches, while
increased output of tomatoes, tomato products, and asparagus was
largely responsible for the heavier vegetable pack. Figures of the
California pack in recent years follow:
Fruits
(cases)
20,974,700
15,631,852
10,362,998
11,351,536
15,477,865
14,759,790

192G
1925
1924
1923
1922
1922-1926 Average

Vegetables
(cases)
9,547,275
8,527,891
7,138,759
7,800,835
6,913,371
7,985,626

Totals
(cases)
30,521,975
24,159,743
17,501,757
19,152,371
22,391,230
22,745,416

Trade
The course of trade in the Twelfth Federal Reserve District during
recent years is revealed in the accompanying chart. It presents in
graphic form this bank's figures of sales and stocks of representative
retail department stores and its figures of sales of a district-wide
group of wholesale dealers merchandising ten lines of goods.*
RETAIL SALES AND STOCKS

WHOLESALE SALES
I 30

RETAIL SALES

1 20

170
160

, — ,

I 1 0

HOLESALE SALES

150
140

1 00

130

9 0
/^RETAIL STOCK s

120

8 0
7 0
1923

1924

1925

1926

110

TRADE ACTIVITY-TWELFTH DISTRICT
Index of Sales and Stocks at Retail and of Sales at Wholesale

It is difficult to correlate sales figures at wholesale and retail except
in the most general way. The available data for the two branches
of trade are variable in character, and even where comparable, their
relationships are not yet thoroughly understood. In the accompanying chart figures of sales of certain department stores have been used
to indicate the general condition of trade at retail. It is probable
that a large proportion of department store buying is done at merchandising centers outside the district. It is reasonable to presume,
however, that, owing to the diversity of merchandise carried by department stores, fluctuations in their sales and stocks tend to reflect
*The index numbers used in the chart have been adjusted for seasonal variation, and in the index of department store sales allowance has been made for
the varying number of business days in each month. In both of the sales indexes
Digitized a three months moving average has been used to eliminate erratic month to
for FRASER
month fluctuations.
http://fraser.stlouisfed.org/

Federal Reserve Bank of St. Louis

12

TWELFTH ANNUAL REPORT

similar movements in sales and stocks of other city retail stores which
are served by the wholesale dealers whose figures are included in this
bank's index of sales at wholesale. Purchases of retailers in rural
communities also represent a considerable volume of sales at wholesale in this district, so that changes in the agricultural situation
should be reflected in wholesale trade data. "With these qualifications
in mind, it is possible to acquire some understanding of the state of
trade in this district during recent years by a study of the curves
presented in the accompanying chart.*
Throughout 1923, a year of active business accompanied by full
employment of workers at high wages, sales at retail increased
rapidly. The trend of retail prices was upward and merchants tended
to anticipate future needs for goods, so that inventories grew rapidly
in spite of sharply increased sales. At wholesale, an increased volume
of sales was reported during the first five months of 1923. During the
early summer of that year, there were indications of an approaching
recession in general business activity. The agricultural situation was
particularly disturbed. Financial returns to farmers for their 1922
crops had been unsatisfactory and maladjustment between prices of
those commodities which farmers sell, and prices of those commodities which they buy, had persisted. These portents caused merchants,
particularly in rural districts, to adopt a conservative buying attitude
and sales at wholesale declined during the second half of 1923.
In 1924 the recession in business activity began to affect consumer
purchasing power and sales at retail declined from February to June
of that year. Retail merchants promptly curtailed their purchases
from wholesalers and manufacturers, but delivery of outstanding
orders caused a further increase in stocks which was not checked
until April, after which inventories declined sharply. Sales at retail
again increased slightly during the second half of 1924, but merchants had now definitely adopted a conservative buying policy and
inventories remained small in volume. Trade at wholesale declined
throughout 1924, a reflection partly of changing trade practices! and
partly of a slowing down of trade in rural communities following the
unsatisfactory crop returns of 1923 and 1924.
Trade at retail was moderately active throughout 1925, but inventories during most of the year were kept small in volume. Activity
in trade at wholesale remained at relatively low levels. Retail prices
rose during 1925, continuing an advance which had begun in the preceding year, and toward the latter part of 1925 a tendency of retail
merchants to carry larger stocks became apparent. At the same time
reports of a financially satisfactory year in agriculture began to be
heard, and these two factors stimulated wholesale trade so that during the autumn of 1925 sales rose to the highest levels reached since
1920.
Trade activity both at wholesale and at retail declined during the
winter of 1925-1926 but, as usually happens, inventories in retailers'
hands continued to accumulate for some months (until April, 1926).
During the summer months, sales at retail increased, rising to rela*No attempt has been made in this report to measure the effect of changes in
the general price level upon dollar value figures of sales and stocks.
tNo attempt has been made in this report to evaluate the effect of chain store
growth
 and other changes in merchandising procedure upon the volume or
value of trade
http://fraser.stlouisfed.org/ at wholesale.
Federal Reserve Bank of St. Louis

FEDERAL RESERVE BANK OF SAN FRANCISCO

13

lively high levels in August and September and inventories diminished rapidly. Sales activity declined sharply during October and
November, and stocks on retailers' shelves again increased in volume.
Trade at wholesale expanded during the months from February to
June, 1926. During the next few months there was a decrease in
activity of trade at wholesale, as.the outlook for the remainder of
the year appeared uncertain and retailers were liquidating previously
accumulated stocks. Declines in trade volume were checked, at least
temporarily, by an active holiday season in December, 1926. The year
closed with activity in trade at wholesale at moderately low levels,
but with a record of sales at retail considerably larger than in any
previous December. Retailers' inventories during the last quarter of
1926 were larger than at any time since the spring of 1924.
Index numbers of department store sales and stocks (retail sales
and stocks) and of sales at wholesale, in the Twelfth Federal Reserve
District during 1926 and 1925, follow (1919 monthly average=100) :
i
1926

December
November
October
September
August
July
June
May
April
March
February
January

Department Stores—'
v
Sales*
Stocks!
1925
1926
1925

163.7
161.4
161.4
163.4
163.9
162.5
158.0
156.8
157.4
157.9
157.1
153.4

155.3
155.0
155.6
154.0
153.8
153.1
151.5
152.0
151.9
151.8
149.4
147.1

140
143
140
136
134
135
138
139
140
139
137
137

137
135
136
133
132
135
135
133
135
134
131
134

t

Wholesale 1
Sales!
1925

1926

95.5
93.5
93.5
93.9
96.9
99.6
100.4
100.0
97.5
98.1
94.7
97.0

99.8
106.0
105.0
103.0
102.3
99.6
96.4
92.6
92.1
90.8
90.0
90.6

*Three months moving average of daily average sales adjusted for seasonal
variations. Source: Federal Reserve Bank of San Francisco.
tAs of the end of the month; adjusted for seasonal variations. Source: Federal
Eeserve Board.
X Adjusted for seasonal variations. Includes figures of firms operating throughout the district in the following ten lines of trade: agricultural implements^
automobile supplies, automobile tires, drugs, dry goods, furniture, groceries,
hardware, shoes, paper and stationery. Source: Federal Eeserve Bank of San
Francisco.

Credit Conditions
The banking and credit situation in the Twelfth Federal Reserve
District during the year 1926 can best be reviewed in the light of
credit movements during immediately preceding years.
Following a period of great activity in business during the first
half of the year 1923 came a recession which continued throughout
the year 1924. This downward movement of business activity coincided with a large increase in funds available for credit extension,
and the result was a rising ratio of deposits to loans at member banks,
greatly reduced borrowings at the Federal Reserve Bank, and a low
level of interest rates. The deposit loan ratio advanced to a peak of
144.6 on October 15, 1924; discounts at the Federal Reserve Bank of
San Francisco reached the lowest point since 1917; the rediscount
rate of the Reserve Bank was lowered from 4i/o to 4 per cent on
Digitized June 10, 1924, and from 4 to 3% per cent on August 25, 1924.
for FRASER


14

T WELFT11 A N N U A L REPORT

During 1925, business activity expanded rapidly and total loans
and discounts of reporting member banks increased throughout the
year. Increase in deposits did not keep pace with expansion in loans,
the ratio of total deposits to total loans declined (from 144.0 to 134.0),
and borrowings from the Federal Reserve Bank of San Francisco
increased. On November 23, 1925, the rediscount rate at the Reserve
Bank was raised from 3% to 4 per cent where it stood at the end of
the year 1926.
MILLIONS OF DOLLARS
1500

1000

500

BORROWINGS FROM FEDERAL RESERVE BANK
1923

19 24

1925

1926

REPORTING MEMBER B A N K S - T W E L F T H DISTRICT
Demand Deposits, Time Deposits, Loans and Discounts, Investments, and Borrowings from
Federal Reserve Bank
(as of last statement date of each month)

Business activity was at high levels during the first weeks of 1926,
but a downward movement soon set in which continued into the
second quarter of the year. Commercial loans of the reporting member banks declined during this period, but their total loan account
held steady. A decrease in total deposits accompanied the business
recession and the ratio of deposits to loans declined. There was a
renewal of business activity during the summer of 1926, and while
bank loans increased slightly, deposits increased by larger amounts
so that the ratio of deposits to loans moved upward. Discounts at
the Federal Reserve Bank of San Francisco were reduced. Business
activity attained record proportions during the third quarter of
1926. Loans and discounts at reporting member banks increased
more rapidly than did deposits and the ratio of deposits to total loans
again declined, while discounts at the Federal Reserve Bank of San
Francisco again increased.
There were signs of recession in business activity during the fourth
quarter of 1926, but seasonal influences served to maintain trade
volume. Total loans and discounts at reporting member banks continued to increase, as did total deposits in lesser degree. The ratio
of deposits to total loans continued to decline, and on November 24th,
at 129.6, reached the lowest level since 1921. On December 15, 1926,
it stood at 131.9. Continued expansion in loans during December,
coincident with sharply increased deposits and also with a reduction

in discounts at the Federal Reserve Bank of San Francisco, indi

15

FEDERAL RESERVE BANK OF SAN FRANCISCO

cated that the recession in business noted during the last quarter of
the year Avas not of sufficient magnitude nor was it sufficiently prolonged to result in liquidation of bank credit in this district.
MILLIONS OF DOLLARS

300

200-V»
FEDERAL RESERVE NOTE CIRCULATION

1 00

i. S. SECURITIES AND BILLSBOUGHT

1923

1924

925

1 926

FEDERAL RESERVE BANK OF SAN FRANCISCO
Total Reserves, Federal Reserve Note Circulation, Investments, and Bills Discounted
(as of the last statement of each month)

Despite the increased use of funds during 1926 as compared with
1925, interest rates have, on the whole, been unchanged, a reflection
of an adequate supply of available bank credit.
Interest Rates—Commercial Paper*—Twelfth District
,

Los Angeles . .
San Francisco
Portland
Salt Lake City
Seattle
Spokane

Week Ending
Dec. 12-15,
Dec. 12-15,
1926
1925
6%
6%

5-5 y 2 %
6%
6%
6%
6%

5-5 y>%
6%
6%
6%
5-7%

*30-60-90 day maturity, eligible for rediscount under the Federal Reserve Act.




16

TWELFTH ANNUAL REPORT

OPERATIONS OF FEDERAL RESERVE BANK OF
SAN FRANCISCO DURING 1926
The character and volume of operations of Federal reserve banks
and the cost of the services which they perform are proper fields of
public interest. At the Federal Reserve Bank of San Francisco it has
been possible, during the past five years, to transact a generally increasing volume of business at a steadily declining cost. This has
been a logical result of the development of trained personnel and of
adaptation of operating method to ordinary peace-time conditions,
but it is, nevertheless, indicative of a trend in reserve bank operation.
During 1926 there was a substantial increase in volume of the principal routine operations of the bank, namely, supplying member banks
of the district with coin and currency and collecting checks for banks
in all parts of the country (see table on opposite page). Those operations of the bank having to do with grant of credit, namely, discount
and purchase of bills and securities, showed, in the aggregate, an
increase in volume as compared with 1925, although the number of
bills discounted declined for the third consecutive year. Some detail
of the dollar value of discount operations during the past three years
is given in the following table :
Bills Discounted

Maximum
Minimum
Average

1926

$68,694,000
20,626,000
46,690,000

1925

1924

$69,817,000
7,614,000
39,460,000

$55,210,000
6,652,000
30,060,000

Chiefly as a result of increased earnings from discounted bills, total
earnings of the bank were approximately one-fifth larger in 1926 than
in 1925. Current operating expenses, as well as depreciation allowances, allocations to reserves, and other deductions from earnings
were smaller than in the earlier year. Net earnings, after all deductions had been made, were sufficient to pay the legal dividend of six
per cent on paid-in capital, and to provide for a substantial addition
to the surplus account of the bank, the first such addition to surplus
since 1923.
The staff of the bank, including head office and branches, was reduced from 870 on January 1,1926, to 858«on January 1, 1927, annual
salaries declining from $1,584,980 to $i,538,580.
Statement of Condition
No significant changes in condition of the Federal Reserve Bank
of San Francisco are revealed by comparison of balance sheets dated
December 31, 1926, and December 31, 1925, nor were there any
notable movements of the several items included in the balance sheet
during the intervening year.
Total resources of the bank declined by $18,610,333, or 4.2 per cent,
during 1926. This decrease in assets was the result of a decline in
gold reserves, amounting to $21,254,016, or 7.6 per cent, representing
chiefly a loss, on balance, in transactions between this district and
the rest of the United States. Total discounts of the bank showed a
greater degree of seasonal variation in 1926 than in 1925, when the
trend was quite steadily upward, but averaged higher than in the
earlier year. At the close of 1926 total discounts ($34,199,363) were
$9,715,083, or 39.7 per cent, larger than at its beginning. Investments
bank so complemented discounts as to moderate fluctuations
of the


17

FEDERAL RESERVE BANK OF SAN FRANCISCO

PRINCIPAL OPERATIONS
FEDERAL RESERVE BANK OF SAN FRANCISCO
The following table presents in comparative form for the past three years the
volume of the principal operations of the bank, which are of such character that they
can be expressed in quantitative terms.
1926

1925

1924

Supplying Currency and Coin
Currency Received and Counted:
111,583,000
98,574,000
Individual notes counted
95,857,000
Dollar amount received and
$881,019,000
counted. ..
$782,218,000
$753,896,000
Coin Received and Counted, a service previously performed largely
by the Subtreasury, but now entirely in the hands of the Federal
Reserve Bank:
Number of coins handled in receiving and counting
79,311,000
54,425,000
44,298,000
Dollar amount received and
counted
$42,428,000
$31,063,000
$23,425,000
Making Loans and Investments
Bills DiscountedforMemberBanks,
•
either discounted customers'
paper or advances against the
notes of member banks secured
by collateral in the form of Government securities or commercial
or agricultural paper:
Number of bills discounted
28,264
30,136
37,212
Dollar amount*
$2,418,031,000 $2,152,987,0001
$929,140,000
Bills Purchased for the Account of
this Bank:
Number
31,567
26,983
18,433
$176,933,000
$280,994,000
Dollar amount
$321,122,000
Collecting Checks, Drafts, Notes,
and Coupons
Checks handled for collection for
banks in all parts of the country:
Number of items
74,822,000
73,062,000
74,367,000
Dollar amount
$15,627,527,000 $15,002,811,000 114,645,586,000
Collection Items handled, including
drafts, notes, and coupons:
Number of items
3,002,000
3,350,000
4,027,000
Dollar amount
$344,932,000
$302,151,000
$326,516,000
Supplementary Services
United States Government Securities issued, redeemed, or exchanged, including Government
bonds, notes, and certificates of
indebtedness:
Number of items
345,000
613,000
1,518,000
Dollar amount
$218,985,000
$260,294,000$
$353,309,000
Funds Transferred by Telegraph to
and from all parts of the country
for the Treasury Department and
for member banks:
Number of transfers
140,000
128,000
130,000
Dollar amount
$12,268,428,000 $10,672,119,000 $9,568,293,000
*Includes paper discounted for Federal Intermediate Credit Banks at Berkeley, California, and


Spokane, Washington, amounting to $7,264,000 in 1926, $1,651,000 in 1925, and $850,000 in 1924.
t Revised figure; shown as $2,154,200,000 in Eleventh Annual Report.
http://fraser.stlouisfed.org/
JRevised figure; shown as $260,304,000 in Eleventh Annual Report.
Federal Reserve Bank of St. Louis

18

TWELFTH ANNUAL REPORT

in total earning assets, and the total of loans and investments on
December 31, 1926, was practically unchanged from the total on
December 31,1925.
In the schedule of liabilities, the aggregate decrease of $18,610,333
was chiefly the result of a decline of $21,016,355, or 10.1 per cent, in
Federal reserve note circulation. At the beginning of 1926, subsidence of Federal reserve note circulation, following the usual year-end
peak, reduced the volume of notes outstanding to what later proved
to be a permanently lower level than in the preceding year. This
downward movement of Federal reserve note circulation had been
duplicated in each of the preceding four years, the aggregate decline
since December 31, 1921, amounting to $53,302,000. That this decline
lias been offset, at least in part, by increased circulation of other
forms of money seems probable, although no figures of such circulation within the district are available. Certain it is that industrial
output and volume of trade have increased markedly during the fiveyear period and, in view of the comparatively stable price level, increased business activity might reasonably have been expected to
involve an increase in the amount of money in circulation.
Other changes in liability items during 1926 were small in amount.
Figures as of the date of the annual statements show a decrease in
reserve deposits of member banks, but these figures reflect a temporary situation, such deposits generally having been slightly larger
in 1926 than in 1925. The increase in reserve deposits during the year
accompanied a proportionately larger increase in deposits held by
member banks. The latter increase, however, was wholly the result
of growth in time deposits, against which a reserve of but 3 per cent
is required, and it masked a decrease in net demand deposits of
reserve city member banks, against which a reserve of 10 per cent
is required.
A comparative statement of condition of the Federal Reserve Bank
of San Francisco as of December 31, 1926, and December 31, 1925, is
presented below:
KESOUKCES
Cash Reserves held by this bank against its
deposits and note circulation
Dec. 31,1926
Gold and Gold Certificates in vault
$ 39,942,315.21
Gold in the Gold Settlement Fund lodged with
the Treasurer of the United States for the
purpose of settling current transactions
between Federal Eeserve Districts
29,760,448.59
Gold Held by the Federal Reserve Agent as
part of the collateral deposited by the
bank when it obtains Federal Eeserve
notes. This gold is lodged in his name
partly in the vaults of the bank and partly
with the Treasurer of the United States/. 185,587,365.00
Gold Redemption Fund in the hands of the
Treasurer of the United States to be used
to redeem such Federal Reserve notes as
are presented to the Treasurer for redemption
2,959,626.62
Legal Tender Notes, Silver, and Silver Certificates in vaults of the bank (available
as reserve against deposits only)
6,620,311.00
Total Cash Beserves
$264,870,066.42
Non-Reserve Cash, consisting largely of Na
tional Bank notes and minor coin


$ 3,760,840.65

Dec. 31,1925
$ 34,825,013.86

33,169,699.23

207,691,665.00

3,817,392.93
6,315,531.00
$285,819,302.02
$ 3,990,819.57

1(J

FEDERAL RESERVE BANK OF SAN FRANCISCO
RESOUECES (Continued)
Loans and Investments

Dec. 31,1926

Loans to Member Banks:
Secured by obligations of the United States $ 7,032,100.00
By the discount of commercial or agricult u r a l paper or acceptances
26,567,262.97
Acceptances bought in the open market
31,374,221.26
United States Government bonds, notes, etc. 40,667,200.00
Foreign Loans on Gold
—0—
Total Loans and Investments
Assets)

Dec. 31,1925
$ 5,719,980.00
18,764,300.39
31,770,870.04
49,938,000.00
546,000.00

(or Earning
$106,240,784.23

TOTAL KESOURCES

3,217,273.92
40,540,885.90
3,530,298.93
$ 47,288,458.75

$425,227,397.83

Total Miscellaneous Resources

3,397,325.49
45,766,738.37
1,191,642.67
$ 50,355,706.53

Miscellaneous Resources
Bank Premises
Checks and Other Items Not Yet Collected..
All Other Miscellaneous Resources

$106,739,150.43

$443,837,730.77

LIABILITIES
Currency in Circulation
Dec. 31,1926
Federal Reserve Notes in actual circulation,
payable on demand. These notes are
secured in full by gold and discounted and
purchased paper
$187,109,150.00
Deposits
Reserve Deposits maintained by member
banks as legal reserves against the deposits of their customers
$163,332,389.62
United States Government Deposits
532,150.54
Other Deposits, including foreign deposits,
deposits of non-member clearing banks, etc.
7,797,104.69
Total Deposits

$171,661,644.85

Miscellaneous Liabilities
Deferred Items, composed mostly of uncollected checks on banks in all parts of the
country
$ 41,511,112.79
Reserves and All Other Miscellaneous
Liabilities
168,615.77
Total Miscellaneous Liabilities

$ 41,679,728.56

Capital and Surplus
Capital Paid In, equal to 3 per cent of the
capital and surplus of member banks
$ 8,655,950.00
Surplus as permitted by law
•
16,120,924.42
Total Capital and Surplus

TOTAL LIABILITIES


Dec. 31,1925

$208,125,505.00

$164,910,363.80
2,062,465.30
6,554,407.25
$173,527,236.35

$ 37,401,286.01
1,474,910.30
$ 38,876,196.31

$

8,237,800.00
15,070,993.11

$ 24,776,874.42
,

$ 23,308,793.11

$425,227,397.83

$443,837,730.77

20

TWELFTH ANNUAL REPORT

Earnings and Expenses
Gross earnings of the Federal Reserve Bank of San Francisco
totaled $4,544,860 in 1926, the largest annual earnings since 1923.
Increases as compared with 1925 were reported in all items of the
earnings statement, but the principal gain was in earnings from discounted bills. The average amount of bills discounted during 1926
was 18.3 per cent larger than in 1925, and the discount rate was 4
per cent throughout 1926, whereas it stood at 3y> per cent during
most of 1925.
Current expenses of the bank at $2,405,244 in 1926 were smaller
than in any year since 1920, and current'net earnings, at $2,149,616,
were larger than in any year since 1921. Net deductions from current
net earnings in 1926 totaled $593,617, of which the principal items
were a further depreciation allowance on bank premises amounting
to $125,754 and the addition of $354,292 to reserve for probable losses,
the total of such reserve on December 31, 1926, being $1,525,000.

US

TREASURY

SURPLUS
DIVIDENDS

9.2

CHARGE-OFFS*
EXPENSES
TRANSFERRED
FROM SURPLUS
4.5

1921

1922

1923

1924

1925

1926

EARNINGS A N D EXPENSES
Amount and Distribution of Earnings of the Federal Reserve Bank of San Francisco
(in millions of dollars)
'Chiefly depreciation allowances on bank premises, reserve for probable losses, and cost of furniture and equipment
purchased.

After making the above deductions, there remained available for
dividends, surplus, and franchise tax, net earnings of $1,555,999. Of
this amount, $506,068 was paid as a dividend to member banks at
the rate of 6 per cent on paid-in capital stock, and $1,049,931 was
transferred to surplus account. Surplus on December 31, 1926, was
but slightly less than 100 per cent of authorized capital stock and
nearly 200 per cent of paid-in capital stock.
The principal sources of earnings of the Federal Reserve Bank of

San Francisco during 1926 and 1925, with an enumeration of the


21

FEDERAL RESERVE BANK OP SAN FRANCISCO

major classifications of operating expenses and a statement of distribution of net income, are presented in the following table :
Earnings

1926

On Loans to Member Banks and Paper Discounted for Them
$1,807,134.26
On Acceptances Purchased
On United
Owned

States

Government

1925
$1,408,353.50

896,498.22

895,702.89

1,586,101.39

1,446,767.24

205,126.16

98,066.47

$4,544,860.03

$3,848,890.10

$2,218,783.86

$2,409,459.43^

Obligations

Other Earnings
Total Earnings
Deductions from Earnings
For Current Bank Operation
For Assessments for Federal Reserve Board
Expenses
For Federal Reserve Currency, mainly the cost
of printing new notes to replace worn notes
in circulation, and to replenish the stock unissued and on hand
For Furniture and Equipment

49,630.19

49,083.70

130,829.77
99,429.80

221,965.19^
61,571.04

For Reserves for Depreciation

125,753.78

138,390.22

For Reserves for Probable Losses on advances
to member banks
Other Deductions—Net

354,291.53
14,141.85

452,800.00
24,572.73$

Total Deductions from Earnings

$2,998,860.78

$3,358,443.57

NET INCOME available for dividends, additions to surplus, and payment to the
United States Government
$1,555,999.25

$ 490,440.53

Distribution of Net Income
In Dividends Paid to Member Banks, at the
rate of 6 per cent on paid-in capital
$ 500,007.94

$ 490,446.53

In Additions to Surplus—The bank is permitted
by law to accumulate out of net earnings,
after payment of dividends, a surplus amounting to 100 per cent of the subscribed capital;
and after such surplus has been accumulated
to pay into surplus each year 10 per cent of
the net income remaining after paying dividends. No balance remained for such payments in 1925

1,049,931.31

—0—

In Payment to the United States Government,
as a franchise tax representing the entire net
income of the bank after paying dividends
and making additions to surplus (as above).
No balance remained for such payments in
1925 and 1926

—0—

—0—

TOTAL NET INCOME DISTRIBUTED

Digitized for ^Revised figures.
FRASER


$1,555,999.25

$

490,446.53

22

TWELFTH ANNUAL REPORT

Federal Reserve Note Issues
District requirements for Federal reserve note currency were
smaller in 1926 than in 1925. The following table shows the aggregate movement of such notes into and out of the custody of the
Federal Reserve Agent at San Francisco during 1926 and 1925, together with the amounts of collateral pledged with the Agent to
secure outstanding Federal reserve notes :
1926

192S

Federal reserve notes received from Comptroller of
the Currency—Net
$284,891,305
Federal reserve notes on hand—December 31
53,300,000

$304,295,065
50,100,000

Federal reserve notes issued and outstanding—
December 31
$231,591,365

$254,195,665

Collateral pledged by Federal Keserve Bank against
outstanding Federal reserve notes—December 31:
Gold and gold certificates
$185,587,365

$207,691,665

Eligible paper
Total collateral

65,445,264

56,149,859

$251,032,629

$263,841,524

All of the eligible paper and a small part of the gold pledged as
collateral security against outstanding Federal reserve notes is held
in safekeeping at the offices of the Federal Reserve Bank of San
Francisco. The larger part of the gold is kept with the United States
Treasury at Washington, D. C, a minor amount being maintained in
the gold redemption fund, as required by law, and the remainder
being held subject to transfer check of the Federal Reserve Board.
By ledger transfer of funds between this account of the Federal Reserve Agent and the gold settlement fund account of the Federal
Reserve Bank of San Francisco, also maintained in Washington, the
necessity for physical transfer of gold pledged as collateral against
outstanding Federal reserve notes is reduced to a minimum.
Member Bank and Public Relations
The number of banks of the district holding membership in the
Federal Reserve System continued to decline during 1926, the total
membership affiliated with the Federal Reserve Bank of San Francisco being reduced from 740 to 721. An apparent tendency toward
decrease in numerical strength of the System has persisted in this
district for the past five years. It has been largely the result of consolidations of various banks, as the number of new members admitted
to the Federal Reserve System has tended to exceed the number of
members lost through direct withdrawal, suspension or insolvency.
Total resources of member banks of the district have steadily increased, and the relation of member bank resources to total resources
of all banks in the district has generally been maintained or bettered
from year to year. During 1926 there were 17 additions to district
membership in the Federal Reserve System, chiefly as a result of the
organization of 15 new national banks. Losses to membership during
 totaled 36, but 14 of this number were lost to membership
the year


23

FEDERAL RESERVE BANK OF SAN FRANCISCO

through consolidations of member banks and 6 more through absorption of member by non-member banks. Total resources of active
member banks on December 31, 1926, were $3,664,339,000, a figure
$215,806,000 or 6.2 per cent in excess of that reported on December
31, 1925. Details of changes in bank membership in the Twelfth Federal Reserve District during 1926 are presented in the following table :
Changes in Bank Membership During the Year 1926
By Class of Bank
i
,
National

Active member banks, December 31, 1925.

Member Banks
N
Number
,
Resources
State
Total
(in thousands)

575

165

740

$3,448,533

15

...

15

12,594

1

...

1

80,719

1

1

576

Resumption following suspension

...

...

...

Conversion within the System

...

...

16

1

17

S

...

8

Absorption of National by State member banks

2

...

2

Merger between State member banks.

...

3

3

1

1

114

1

6

6,269
1,435

Additions to Membership:
Organizations of National banks
Conversion of non-member banks to National banks
Admission of State banks

TOTAL ADDITIONS

(

)

$93,887

Losses to Membership:
Merger of member banks:
Merger between National banks

Absorptions of State member by National banks
Absorption of member by non-member
banks
•

5

* ($148,019)
3,625
*( 10,584)

Conversions of member to non-member
banks

2

Suspension or insolvency

6

Withdrawal of State banks

3
...

2

8

5

23

...

13

36

4,937

5

...

Conversion within the System
TOTAL LOSSES

1
...

Voluntary liquidation (terminal)

Net change

—7

—12

—19

Active member banks—December 31, 1926

568

153

721

1,864
(

)

$18,244

+$75,643
$3,664,339*

"Changes not affecting total resources of member banks.
tShows a gain of $140,163,000 during 1926, due to increases in resources of
member banks in system throughout year, in addition to the gain of $75,643,000
shown in table
 of changes in bank membership.


24

TWELFTH ANNUAL REPORT

There was a lull in the expansion of branch banking in California
in 1926. The total number of branches of state banks was unchanged
during the year, and the number of those restricted classes of
branches allowed national banks increased but slightly. Total resources of the branch bank systems continued to increase, and on
December 31,1926, were approximately 65 per cent of total resources
of all banks in the state. The number and resources of California
banks having branches, and the number of their branches, are shown
in the following table:
Branch Banks in California
Number
of
Banks

Number
of
Branches

Total
Resources

18
62

338
247

$1,454,187,367
772,146,196

80

585

$2,226,333,563

16

42

380,609,117

96

627

$2,606,942,680

16
58

355
230

$1,551,747,457
755,959,950

74

585

$2,307,707,407

16

85

449,361,819

90

670

$2,757,069,226

Dee. 31,1925—State Banks:
Member
Non-member
Total number of state banks
having branches
t Total number of national banks
having branches
Total
Dec. 31,1926—State Banks:
Member
Non-member
Total number of state banks
having branches
tTotal number of national banks
having branches
Total

tlncludes Bank of California, N. A., San Francisco, with branches at Portland,
Seattle, and Tacoma.

Only four independent and complete examinations of member
banks were made by examiners for the Federal Eeserve Bank during
1926. Following the practice established in 1924, examination work
was confined largely to credit investigations made, in most instances,
concurrently with examinations conducted by the various state banking departments in the case of state member banks and by the Comptroller of the Currency's office in the case of national banks.
Relations with supervisory authorities of both state and national
banks in the seven states comprising the Twelfth Federal Reserve
District have continued pleasant and satisfactory. As in the past this
bank, even though not participating in examinations, has received
copies of all examination reports prepared by supervisory authorities.
On several occasions Federal reserve bank examiners and employees
have been loaned to the California State Banking Department, at the
State's expense, to assist in examinations of large State member
branch
 banking systems.


FEDERAL RESERVE BANK OF SAN FRANCISCO

25

A tabular summary of examinations, credit investigations, and
economic surveys made by the Federal Reserve Bank of San Francisco during the year 1926 follows:
Member Bank Examinations
Independent examinations
Examinations made concurrently with national and state banking departments
Independent credit investigations
Credit investigations made concurrently with state banking department..
Economic surveys
Other investigations
TOTAL EXAMINATIONS AND INVESTIGATIONS MADE

4
0
3
87
1
7
102

As the year ended plans for a moderate expansion of member bank
examination work were in progress.
During the year 1926 the officers of the Federal Reserve Bank of
San Francisco and its branches have, as in the past, visited most of
the member banks and many of the non-member banks of the district.
Representatives of the bank have also held themselves in readiness at
all times to respond to public and private requests for speakers on
topics relating to the Federal Reserve System, and have explained
and interpreted the System's operations to many audiences.
The Monthly Review of Business Conditions, prepared by the
Chairman of the Board and Federal Reserve Agent at San Francisco,
was published throughout the year and distributed without charge
to approximately 9,000 banks and interested individuals. The Division of Analysis and Research of the Federal Reserve Agent's office,
which is currently engaged in the study of business and credit conditions, has distributed such of its findings as are of a public nature,
both through the medium of the Monthly Review and by means of
special reports and correspondence. In addition it has maintained
files of statistical material, relating to the Twelfth Federal Reserve
District and to the United States, which are becoming an increasingly
important source of public information.
Bank Organization and Personnel
On March 1,1926, Isaac B. Newton, by appointment of the Federal
Reserve Board, became a Class C director of the Federal Reserve
Bank of San Francisco, and assumed the office of Chairman of the
Board and Federal Reserve Agent at that bank. He succeeded John
Perrin, whose resignation presented to the Federal Reserve Board in
November, 1925, was accepted effective February 28, 1926. Mr.
Newton had previously served as a member of the Board of Directors
of the Los Angeles branch of this bank since its opening in 1920, and
was Chairman of that Board during the year 1925.
On December 31, 1926, the terms of three directors, J. S. Macdonnell of Class A, A. B. C. Dohrmann of Class B, and Isaac B. Newton
of Class C, expired. Mr. Macdonnell was ineligible for renomination
as a representative of member banks in Group Two (those having a
combined capital and surplus of not less than $125,000 nor more than
$599,999) because he had become an officer and director of a Group
One bank (those having a combined capital and surplus of $600,000
Digitized or more). Thomas H. Ramsay, President of the First National Bank,
for FRASER


26

TWELFTH ANNUAL REPORT

Red Bluff, California, was elected as Class A director to represent
Group Two banks for a term of three years ending December 31,
1929. Mr. Dohrmann, President of the Dohrmann Commercial Company of San Francisco, was re-elected by the banks of Group One
for a similar three-year term, as director of Class B. The Federal
Reserve Board reappointed Isaac B. Newton of Los Angeles a Class C
director for a term of three years ending December 31, 1929, and
redesignated him Chairman of the Board and Federal Reserve Agent
for the year 1927. Walton N. Moore, a Class C director whose term
expires December 31, 1927, was similarly redesignated Deputy Chairman of the Board for the year 1927.
To represent the Twelfth Federal Reserve District on the Federal
Advisory Council during the year 1926, the Board of Directors chose
Henry S. McKee, President of Barker Bros., Inc., Los Angeles. Mr.
McKee represented this District on the Council during the year 1925.*
All of the directors of branches of the Federal Reserve Bank of San
Francisco, whose terms of office expired December 31, 1926, were reappointed by the Federal Reserve Board and the Federal Reserve
Bank for terms of three years each, beginning January 1,1927. To fill
the unexpired term of George B. Harrison, who resigned as a director
of the Los Angeles Branch during the latter part of 1926, the Federal
Reserve Board appointed J. B. Alexander, of Los Angeles, who will
serve until December 31, 1928. At the close of 1926 the Federal Reserve Board suspended, for the year 1927 only, its requirement that
the chairmen of Boards of Directors of branches of Federal reserve
banks must be those directors, appointed by the Federal Reserve
Board, whose terms of office expire with the current year. Under this
suspension of regulations the following branch directors, who had
served as chairmen of their respective Boards during 1926, were
re-elected to serve during 1927 :
Spokane Branch
G. I. Toevs
Seattle Branch
Charles H. Clarke
Portland Branch
Nathan Strauss
Salt Lake City Branch
Lafayette Hanchett
Los Angeles Branch
W. L. Valentine
The following changes in the official staff of the bank took place
during 1926:
Resignations:
May 31—George H. Schmidt, Assistant Manager, Los Angeles
Branch, resigned to accept a position as Cashier of the First
National Bank of San Diego, San Diego, California.
October 31—E. W. Morton, Auditor, Head Office, resigned to accept
a position as Vice President of the Farmers and Mechanics Bank,
Spokane, Washington.
Appointments:
July 1—M. McRitchie, Assistant Cashier at Head Office, was transferred to the Los Angeles Branch as Assistant Manager of the
branch.
j
July 1—F. C. Bold, formerly Chief Clerk, Head Office, was appointed Assistant Cashier at Head Office.
*On January 6, 1927, Mr. McKee was re-elected to serve as the representative

Digitized for of the Twelfth Federal Eeserve District on the Federal Advisory Council during
FRASER
the year 1927.


FEDERAL RESERVE BANK OP SAN FRANCISCO

27

Following is a comparative summary of the number of officers and
employees in the principal departments of the bank, with corresponding aggregate annual salaries paid on January 1, 1926 and 1927.
(Figures are for Head Office and branches combined.)
Officers and Employees
Number
Annual Salaries
Jan. 1, Jan. 1,
Jan. 1,
Jan. 1,
1927
1926
1927
1926

OFFICERS

32

33

$ 243,600

$ 243,400

747
25
8
21

758
23
9
23

1,150,385
60,180
17,340
37,260

1,192,932
58,480
19,140
43,800

833

846

$1,508,765

$1,557,752

2

3

4,080

4,680

23

21

25,735

22,548

EMPLOYEES BY DEPARTMENTS :

Banking Department
Federal Reserve Agent's Department
Auditing Department
Fiscal Agency Department
TOTALS
FISCAL AGENCY DEPARTMENT EMPLOYEES

whose salaries are reimbursed by
the Treasury Department
OTHER EMPLOYEES whose salaries

are

reimbursed to bank, including
building employees in space rented
to tenants
GRAND TOTALS
TEMPORARY EMPLOYEES (not

858

870

$1,538,580

$1,584,980

8

8

$9,660

$9,840

included

above)

Salt Lake City Branch Building
On January 25, 1926, ground was broken for a new building to
house the Salt Lake City Branch of the Federal Reserve Bank of San
Francisco. This branch was established April 1, 1918, to serve member banks in Utah, Southern Idaho, and Eastern Nevada. Since establishment it has occupied rented quarters which, of recent years, have
become increasingly inadequate.
The new building, which was practically completed during 1926,*
is located on a plot of land 165 feet square at the corner of South
Temple and State Streets, Salt Lake City, Utah. It is of reinforced
concrete construction, contains two stories and basement, and provides approximately 30,000 square feet of working space. All of the
activities of the branch can be comfortably housed in the new building, and adequate quarters are provided for the staff of 110 persons.
*The building was occupied February 21, 1927, and formally opened for business on March 5, 1927.




28

TWELFTH ANNUAL REPORT

NOTE
Detailed statistical tables formerly published as an appendix to
the Annual Report of the Federal Reserve Agent now appear only
in the Annual Report of the Federal Reserve Board, which will include the following exhibits pertaining to the Twelfth Federal Reserve District and the Federal Reserve Bank of San Francisco:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Comparative Statement of Condition.
Movement of Principal Assets and Liabilities.
Volume of Discount and Open Market Operations.
Volume of Bills Discounted for Member Banks in Each State.
Earnings and Expenses.
Volume of Operations in Principal Departments.
Operations of Federal Reserve Clearing System.
Clearings and Transfers Through Gold Settlement Fund.
Principal Assets and Liabilities of Reporting Member Banks in
Leading Cities of District.
10. Debits to Individual Accounts at Banks in Principal Clearing
House Centers.
Copies of the Board's report may be obtained, when published,
from the Federal Reserve Board at Washington, D. C.




TWELFTH FEDERAL RESERVE DISTRICT
Includes the states of Arizona, except the five Southeastern Counties,
California, Idaho, Nevada, Oregon, Utah and Washington

SAN FRANCIS

Map showing territory of Head Ofl&ce and Branches
of the Federal Reserve Bank of San Francisco