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MONTHLY REVIEW OF B U S IN E S S C O N D IT IO N S ISAAC B. N EW TO N , Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco No. 4 San Francisco, California, April 20, 1926 V o l.X S U M M A R Y O F N A T IO N A L C O N D IT IO N S Industrial output increased in March and the distribution of commodities continued in large volume owing to seasonal influences. The level of wholesale prices declined for the fourth con secutive month. Production. The Federal Reserve Board’s index of production in basic industries in creased in March to the highest level for more than a year. Larger output was shown for steel ingots, pig iron, anthracite coal, copper, lumber and newsprint, and there were.also increases in the activity of textile mills. Output of automo biles increased further and was larger than in any previous month, with the exception of last October. Building contracts awarded also in creased in March as is usual at this season and the total was near the high figure of last sum mer. Particularly large increases in building activity, as compared with a year ago, occurred in the New York, Atlanta and Dallas Federal Reserve Districts. Contracts awarded continued larger during the first half of April than in the same period of last year. Condition of the winter wheat crop has improved since the turn PER CENT 150 ^ P W R O L I LS « V 100 \ t i \* V X of the year and on April 1st was estimated by the Department of Agriculture to be 84 per cent of normal, compared with 68.7 per cent last year and an average of 79.2 per cent for the same date in the past ten years. Trade. Wholesale trade showed a seasonal increase in March, and the volume of sales was larger than a year ago in all leading lines ex cept dry goods and hardware. Sales of depart ment stores and mail order houses increased less than is usual in March. Compared with March a year ago sales of department stores were 7 per cent and sales of mail order houses 9 per cent larger. Stocks of principal lines of merchandise carried by wholesale dealers, ex cept groceries and shoes, were larger at the end of March than a month earlier, but for most lines they were smaller than a year ago. Stocks at department stores showed slightly more than the usual increase in March and were about 3 per cent larger than last year. Freight car load ings during March continued at higher levels than in the corresponding periods of previous years. Shipments of miscellaneous commodiPER CENT 200 150 / E: M PLOYMEN'T 100 50 50 1922 1923 1924 1925 1926 FA C T O R Y EM P LO YM E N T A N D PAYROLLS Federal Reserve Board’ s indexes of factory employment and payrolls (1919 = 100). Latest figures, March, employment, 97.2; payrolls, 113.0. 1922 1923 1924 1925 1926 W H O L E S A L E PR ICE S Index of U . S. Bureau of Labor Statistics (1 913= 100, base adopted by Bureau). Latest figure, March, 152. T h o s e d e s ir in g t h i s r e v ie w s e n t t h e m r e g u la r ly w ill r e c e iv e it w it h o u t c h a r g e u p o n a p p lic a tio n . A pril, 1926 M O N T H L Y REVIEW OF BUSINESS CONDITIONS 26 ties and merchandise in less-than-carload-lots were especially large. Loadings of coal, due to heavy production of anthracite, were also large, while shipments of coke decreased considerably from the high levels of preceding months. Prices. Wholesale prices, according to the Bureau of Labor Statistics’ index, declined by more than 2 per cent in March to the lowest level since September, 1924. The decline was tinued liquidation of loans to brokers and deal ers was reflected in a further decline in the total of loans on securities, which on April 14th were more than $500,000,000 below the high point reached at the end of last year. A t the reserve banks an increase in the volume of member bank borrowing during the last two weeks of March was followed by a marked decline in the first three weeks of April, PER CENT BILLIONS OF DOLLARS B U IL D IN G C O N T R A C T S A W A R D E D R ESER VE B A N K C R E D IT Index of value of building contracts awarded as reported by the F . W . Dodge Corporation, (1919=100). Latest figure, March, 231. Monthly averages of daily figures for 12 Federal Reserve Banks. Latest figures are averages of first 22 days in April. general for nearly all groups of commodities and the largest decreases were noted in grains, cotton, wool, silk, coal, and rubber. In the first two weeks of April prices of basic commodities were steadier than in March. Prices of grains, flour, and potatoes increased, while prices of cotton goods, wool, silk, bituminous coal, pig iron, and rubber declined. Bank Credit. Commercial loans of member banks in leading cities were relatively constant between the middle of March and the middle of April, at a level about $200,000,000 higher than at the end of January and approximately equal to the high point reached last autumn. Con which brought the total near the lowest levels of the year. Holdings of United States securi ties increased continuously during the month while holdings of acceptances declined season ally. Total bills and securities were in smaller volume at the end of the period than at any other time during the year and only slightly larger than a year ago. Open market rates on commercial paper declined in April from 4 } i~ Ay2 per cent to 4-4J4 per cent, and rates on ac ceptances and on security loans were also lower in April than in March. On April 23rd the dis count rate at the Federal Reserve Bank of New York was reduced from 4 to 3 y 2 per cent. T W E L F T H F E D E R A L R E S E R V E D IS T R IC T C O N D IT IO N S # # Statistical Summary— compared with ¥ a/*» F„eb*. i9 2 g M1925 ar*. m t ., 1 9 2 6 # 1925 Feb., 192 6M ar., Feb., Bank Debits— 21 cities*................................................. $3,341,153 $2,996,080 $2,826,955 $2,554,320 150 158 134° 138° Bank Debits— Index N um bersf— 20 cities........... Building Permits— 20 cities ........................................ $36,285,512 $26,736,564$40,216,339 $32,649,155 Retail Sales— 32 stores— Index N u m b ersf........... 164 156 147 150 Savings Deposits— 69 ban k s*§.................................... $1,186,917 $1,194,572 $1,102,080° $1,101,976° Lumber Production— 4 associations— board feet* 747,518 557,605 641,971 524,379 Petroleum Production^— California— barrels . . . 607,283 612,999 600,839 602,494 Flour Production— 16 companies— barrels ......... 355,450 325,161 353,703 414,985 Reporting Member Bank Loans and Discounts||* $1,194,461 $1,188,573 $1,100,904 $1,093,957 $1,553,789 $1,525,973 Reporting Member Bank Deposits||*...................... $1,610,625 $1,604,612 Federal Reserve Bank D iscounts^*........................ $41,745 $49,814 $28,762 $23,689 Federal Reserve Bank Reserve Ratiofl ................ 72.0 74.5 77.8 79.4 18.2 11.9 — 9.8 11.6 7.7 16.4 1.1 0.5 8.5 3.7 45.1 — 7.5 11.5 — 5.1 35.7 5.1 0.6 34.1 — 0.9 9.3 0.5 0.4 — 16.2 — 3.4 ^ 1926 1926 *In thousands, tAdjusted for seasonal variations— 1919 monthly average=100. JDaily average production. §Not comparable with figures published in previous reviews. ||April 7 and March 10, 1926; April 8 and March 11, 1925. IfApril 14 and March 17, 1926; April 15 and March 18, 1925. #Percentage increase or decrease (— ). 0Revised. A pril, 1926 FEDERAL RESERVE AG EN T AT SAN FRANCISCO Agricultural Situation During the past mo ith rainfall has been gen eral over the district, excepting parts of Oregon and Washington, and crops and ranges have been materially benefited. Mild temperatures during the winter and early spring have like wise proved favorable to growth of winter sown crops. Lack of moisture during late Feb ruary and in March resulted in some deteriora tion in condition of winter wheat, particularly in California, but improvement was reported following the early April rains. W IN T E R W H E A T Condition 10-Year April 1, Average Dec. 1, 1926 1925 April 1 1925 Arizona ....................................................... California .................................................. Nevada ....................................................... Oregon ....................................................... U tah ............................................................ W ashington .............................................. United States T o ta l.............................. 95 82 97 96 95 92 84.1 87 80 92 55 91 28 68.7 92 86 94 90 93 80 79.2 94 90 97 82 96 68 82.7 The United States Department of Agricul ture’s report of farmers’ intentions to plant states that, in the “ Western” states and in the United States, a smaller acreage will be de voted to grains, other than barley, rice, and sor ghum, in 1926 than in 1925, the decrease being greater in “ Western” states than in the United States. The same report indicates that the acreage of potatoes will be considerably larger in “ W estern” states and slightly larger in the United States than last year. Livestock generally have passed through the winter and early spring months in satisfac tory condition. Herds and flocks are now moving from winter to summer ranges in most sections of the district. Weather conditions have favored spring lambing and calving, and a normal increase has been experienced, except in parts of the Intermountain States still suf fering from the effects of the partial drought of 1925. Shipments of spring lambs from Cali fornia have gone forward in approximately one-third the volume of a year ago, when 78,000 live and dressed lambs were shipped between the beginning of the season and April 18th. Prices for lambs during April, 1926, have been at levels below those of April, 1925. W ool shear (A ) 27 ing is now in progress in most states of the district. The total clip is estimated to be some what larger than in 1925 (88,568,000 lbs.) and quality of fleeces is generally reported to be better than it was last year. Prices offered growers on wool contracts this season have been considerably lower than in 1925, and but little of this year’s wool had been contracted for sale prior to April 15th. Marketing of the remaining supplies of 1925 crops has continued in an orderly manner, as is indicated in Table “A ”. Comparison with figures for the past nine years shows that ship ments of apples for the 1925-1926 season to April 15th have approximated the average pro portion of the annual crop shipped during the same period in previous years. Stocks of apples held in cold storage in this district on March 1st (the latest date for which figures are available) are estimated to have been approximately nor mal in volume. Stocks throughout the United States were slightly above estimated normal. Industrial Activity Seasonal increases in general industrial ac tivity in the Twelfth Federal Reserve District were reported during March and early April. Statistical and non-statistical evidence indi cates that total volume of employment increased during the same period, continuing at approxi mately the levels of a year ago. The value of building permits issued in 20 principal cities of the district was 35.7 per cent larger during March, 1926, than during Febru ary, 1926, a seasonal increase, but was 9.8 per cent less than in March, 1925. During the first quarter of 1926 a total of 30,404 building per mits valued at $92,187,817 was issued in these cities. Estimated expenditures on the building program involved were 11.6 per cent smaller than similar figures for the first quarter of 1925. BU ILD IN G PERMITS IN 20 CITIES Per Cent Increase or Decrease (— ) Months in 1926 compared with same Months in 1925 Monthly Year-to-date No. Value No. Value Month in 1926 compared with preceding Month No. Value M arch . . — 7 .8 % — 9 .8 % — 1 0 .7 % — 11 .6 % 3 7 .1 % 3 5 .7 % February. — 1 1 .2 % — 1 8 .1 % — 1 2 .6 % — 1 2 .8 % — 4 .4 % — 8 .3 % J an u ary .. — 1 3 .8 % — 7 .3 % ........................... 3 .5 % — 2 1 .3 % A g r ic u lt u r a l M a r k e t in g A c t iv ity — Monthly t-------- Exports--------- \ (------- Carlot Shipments--------* Livestock Receipts Wheat* Barley* Apples* at Eight Markets in 12th District Portland and San 12th Orangest Lemonsf Cattle Puget Sound Francisco Dist. Calif. Calif. and (1000 bu.) (1000 bu.) (cars) (cars) (cars) Calves Hogs Sheep M arch, 1926 ..................................................... February, 1926 .............................................. M arch— 5-year average ............................. (1919-1923) 1,319 1,272 1,085 Cumulative t To M arch 31, 1926......................................... 12,707 (12.7) To M arch 31, 1925......................................... 16,209 (24.2) Five-year average to M arch 3 1 .............. 20,122 _____ 0 9 1 9 -1 9 2 3 ) (17.4) 247 168 571 2,729 3,060 2,012$ 5,059 3,481 5,021 1,158 558 846 19,639 (38.5) 17,977 (37.5) 17,811 (37.6) 3,471 (23.1) 3,362 (29.2) 3,048 (26.9) Crop Year 10,408 (22.7) 6,922 (30.4) 9,951 (24.7) 47,318 (86.9) 36,446 (84.7) 45,134$ (89.0) 107,497 95,348 91,122|| t — 12th District Butter Eggs (1000 (1000 185,429 149,749 184,358|| lbs.) 699 840 282U cases) 140 12 139H ......Calendar Y ear------------- v 324,187 584,416 490,919 337,095 772,584 492,703 279,040|| 607,368|| 545,736|] Figures in parentheses indicate percentage of new crop only. *Season begins July 1st. average (1923-1926). §At end of month. ||1921-1925. 111922-1926. 183,795 175,059 177,814|| ColdStorage Holdings? tSeason begins November 1st. $Four-year April, 1926 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS 28 According to the index of the United States Bureau of Labor Statistics, wholesale prices of building materials stood at 176 in March, 1926, compared with 177 in February, 1926, and 180 in March, 1925 (1913 prices = 100). The Aberthaw index of total cost (labor and materials) of constructing a reinforced concrete factory building, which had stood at 195 since Janu ary 1, 1926, advanced to 199 during March (1914 = 100). The lumber industry of the district cut, sold, and shipped more lumber during March, 1926, than during February, 1926, or March, 1925. Volume of shipments of reporting mills during the month was 1.8 per cent larger and volume of orders booked was 6.0 per cent larger than was their production. LUM BER A C T IV IT Y * Mar., 1926 (board feet) . 747,518 Production 761,183 Shipments . 792,462 Orders Unfilled Orders 511,405 N o . of M ills reporting . . . 183 /— First three Months-^ 1925 1926 Feb., 1926 Mar., 1925 (board feet) 557,605 598,385 614,234 502,278 (board feet) 641,971 639,498 674,211 436,857 177 (board feet) 1,796,748 1,964,492 2,042,38 7 181 (board feet) 1,720,653 1,819,492 1,783,590 1811 180t *A s reported by four associations, 000 omitted except in case of number of mills reporting, f A verage of first three months. Source : National Lum ber Manufacturers Association. Figures of national production of non-ferrous metals, a large proportion of which is pro duced in states of this district, are presented in the following table : N O N -F ER R O U S M E T A L S—National Production Mar., 1926 Copper (short tons) (mine production) ........................... Zinc (short tons) ( s l a b ) . . . Silver (o z.) (commercial bars) ......................................... Feb., 1926 Mar., 1925 75,450 54,411 67,793 75,383 53,237 51,485 5,225,000 4,970,000 5,236,000 (B ) E m p lo y m e n t — Industries /— —California-------- » t— .. — Oregon-----------> No. of No. of No. <— Employees —% No. «—Employees —> Mar., Feb., of Mar., Feb., of 1926 1926 Firms 1926 1926 Firms 710 137,485 (0.7) 136,528 102 18,168 (7.4) 16,912 Stone, Clay and Glass P roducts. 45 7,858 (2 .6 ) 7,657 5 231 (3.1) 224 Lum ber and W o o d Manufactures . . 110 25,699 (3 .5 ) 2,503 17 (— 3.0) 24,827 45 13,713 2,580 4 14,904 (8.7) 1,006 (9.2) 62 8,141 (0 .6 ) 8,093 8 550 (2.4) 537 150 22,651 (— 0.9) 22,862 31 1,007 (— 6.2) 1,074 3,249 (— 3.6) 310 65,299 (0 .1 ) 2,085 12 (10.6) 3,372 Textiles .................... Clothing, M illinery and Laundering. Food, Beverages W ater, Ligh t and Power ............... Miscellaneous 4 921 9 470 (6.1) 443 *Includes the follow ing industries: m etals, machinery and con veyances ; leather and rubber g o o d s ; chemicals, oils and p a in ts; printing and paper goods. Figures in parentheses represent percentage changes from February. PETROLEUM —California Indicated Average Average Daily Daily Consumption Production (Shipments) M ar., Feb., M ar., Sept., 1926. . . 1 9 2 6 ... 1925. . . 1923*. . (barrels) 607,283 612,999 600,839 858,750 (barrels) 580,740 584,559$ 542,776$ t Stored Stocks at End of Month (barrels) 132,001,846 131,179,009$ 103,715,954$ t New Wells —> Daily Number Produc Opened tion (barrels) 105 98 52 93 23,663 26,969 19,951 139,960 *Peak of production. tCom parable figures not available. $Revised. S o u rc e : American Petroleum Institute. The flour milling industry, as represented by 16 large milling companies in this district, increased its production by approximately 9 per cent during March, and millers held slightly smaller stocks of flour and wheat at the close of the month than at its beginning. Volume of production during March, 1926, was slightly larger than in March, 1925, but was 24 per cent below the five-year (1921-1925) average for March. Reported figures of stocks of flour were smaller by approximately 20 per cent than the figures of one year ago and the five-year average figures. FLOUR M IL LIN G* Mar., 1926 Output ( b b ls .) -----Stockst Flour ( b b l s . ) . . . W h ea t ( b u .) ------ Feb., 1926 Five-Year Average Mar., Mar., 1925 1921-1925 355,450 325,161 353,703 467,745 402,253 2,285,652 417,548 2,295,563 508,815 2,218,532 503,764 2,556,612 * A s reported by 16 companies, low ing month. f A s of the first day of the fol- (C) B u i l d i n g P e r m i t s March, 1926 No. Value L o n g Beach ......... L o s Angeles . . . . . . .. .. 65,251 1,886 During March, 1926, average daily produc tion of petroleum in California continued the decline which has been in progress for the past seven months, but was one per cent greater than in March, 1925. Indicated consumption of petroleum also declined during the month, continuing to be smaller in volume than production, and stored stocks in California in creased to a new high point on March 31, 1926 (132,001,846 barrels). Sacramento .......... Salt Lake C ity. . . San D i e g o ............ San Francisco . . . . . .. D istrict 350 81 117 425 3,849 1,062 47 227 89 1,488 15 348 151 870 1,010 162 1,137 337 112 322 .............. . . 12,199 $ March, 1925 No. Value 915,517 67,211 216,374 1,475,724 13,879,558 2,315,059 178,300 847,408 187,996 3,710,850 33,850 883,083 942,785 2,050,333 3,944,343 399,250 2,880,390 412,971 268,620 675,890 392 96 123 427 4,264 1,332 33 251 103 1,626 31 334 214 690 1,125 115 1,152 389 133 397 $ 1,029,452 70,955 152,199 1,013,671 14,714,002 3,334,110 133,800 820,933 233,789 4,645,140 96,925 853,266 804,740 1,448,899 5,130,965 315,340 3,477,820 647,335 536,107 756,891 $36,285,512 13,227 $40,216,339 A pril, 1926 29 FEDERAL RESERVE AG EN T AT SAN FRANCISCO General Business and Trade Although general business activity contin ued at high levels during March, seasonal in creases, as compared with the previous month, were probably smaller than have been usual in past years. Available evidence indicates that total volume of trade was larger during March, 1926, than during March, 1925. Volume of payment by checks (bank debits) in 20 principal cities of the district increased 11.5 per cent during March as compared with February. The increase was smaller than the estimated normal seasonal increase between the two months, and this bank’s revised index of bank debits, adjusted for seasonal variation, declined from 158 in February, 1926, to 150 in March, 1926 (1919 average = 100). In March, 1925, it stood at 134. Trade at retail, as indicated by reports of 68 retail stores in 21 important cities of the dis trict, increased 34.9 per cent during March, 1926, as compared with February, 1926, and was 12.1 per cent larger than in March, 1925. INDEX NUM BERS INDEX NUMBERS D E P A R T M E N T S T O R E S A L E S - T W E L F T H D IS T R I C T Index of 32 Stores in 7 cities (1919 monthly average=100). Latest figures, March, with adjustment, 164; without adjustment, 160. B A N K D E B I T S - T W E L F T H D IS T R I C T Index for 20 principal cities, Phoenix, Arizona, not included,(daily averages, 1919 average = 1 0 0 ). Latest figures, March, with ______ adjustment, 150; without adjustment, 159. *B ased upon average month to month increase during the years 1919 to 1925 inclusive. (D) Bank Debits *— March, 1925 March, 1926 Berkeley ......... . . . . $ 20,216 11,923 Boise ................ 36,394 Fresno ....................... 56,833 L o n g Beach . ........ 975,120 L os Angeles . , . . . 185,902 Oakland .......... . . . . 19,150 O gden ............... 42,3 37 Pasadena 26,947 Phoenix .......... , ,. 181,645 Portland . 8,413 Reno ................. , 36,949 Sacramento . . Salt Lake C i t y . .. . 72,331 71,379 San D iego . . . ____ San Francisco . . . . 1,199,017 25,027 San Jose ......... 227,651 Seattle ............ . . . . 54,014 Spokane .......... Stockton 27,188 50,126 Tacom a .......... 12,591 Y akima ............ ____ D istrict .... *000 omitted. , $3,341,153 $ 18,049 10,227 28,074 51,274 831,967 134,953 23,559 40,112 23,280 156,550 8,564 36,301 67,383 56,698 980,290 22,930 202,716 49,475 28,011 44,756 11,786 $2,826,955 t— Three M onths— 1925 1926 55,199 $ 59,105 $ 33,392 38,595 85,764 107,147 147,739 163,623 2,702,915 2,395,804 397,105 515,779 74,264 71,627 112,914 120,474 77,282 73,078 507,130 444,419 25,004 22,803 103,396 117,132 212,095 197,945 156,174 196,046 3,414,140 2,837,913 71,252 74,517 570,310 615,659 158,508 146,311 81,328 77,755 136,454 128,141 33,872 36,151 $9,416,975 $8,179,286 This bank’s index of department store sales, adjusted for seasonal variations, advanced from 156 in February, 1926, to 164 in March, 1926 (1919 monthly average = 100). The index stood at 147 in March, 1925. Stocks of goods held by reporting stores increased 7.9 per cent in value during March, 1926, and at the end of that month were 3.9 per cent larger in value than one year ago. The indicated rate of stock turnover of 3.3 times per year in March, 1926, compares with an indicated rate of stock turn over of 2.5 and 3.1 times per year in February, 1926, and March, 1925, respectively. D E P A R T M E N T S T O R E S A L E S — Index Numbers (1919 Monthly Average=100) Without Seasonal Adjustment San Salt Los O ak- Fran Lake Spo Angeles land cisco City Seattle kane March, 1 9 2 6 .. 247 148 146 105 95 93 Feb., 1 9 2 6 .. 180 112 108 82 73 76 Jan., 1 9 2 6 .. 210 124 113 86 75 70 March, 1 9 2 5 .. 215 129 132 98 95 77 With Seasonal Adjustment March, 1 9 2 6 .. 255 158 Feb., 1 9 2 6 .. 223 149 Jan., 1 9 2 6 .. 221 145 March, 1 9 2 5 .. 223 138 147 142 128 133 115 114 104 107 102 113 99 102 110 110 97 91 D is trict 160 119 130 143 164 156 148 147 Value of sales of 167 wholesale firms in eleven lines of business was 21.6 per cent greater during March, 1926, than during Feb ruary, 1926, and 4.3 per cent greater than dur ing March, 1925. Eight of the 11 reporting lines for which segregated data are available showed increases over the year period. The United States Bureau of Labor Statistics’ in dex of wholesale prices (1913 = 100) was 152 during March, 1926, compared with 155 during February, 1926, and 161 during March, 1925, 30 A pril, 1926 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS and allowance should be made for these changes in the general price level when com paring figures of dollar value of sales. W H O L E SA L E T R A DE Percentage increase or decrease (—) t-----------in Value of Sales----------- \ Mar., 1926 M ar.,1926 Feb.,1926 compared compared compared No. of with with with Mar., 1925 Feb., 1926 Feb.. 1925 Firms Agricultural Im plem ents. 15 Autom obile Supplies . . . . 13 Autom obile T i r e s f ................. 18 D rugs ....................................... 7 D ry Goods ............................ .....15 Electrical Supplies ........... 9 Furniture ................................... 16 Groceries .................................... 21 H ardw are ................................... 18 Shoes ........................................ .... 11 Stationery ............................. .... 24 26.6 26.6 7.0 29.7 5.7 6.8 — 3.1 9.5 — 6.6 5.2 — 2.5 6.1 50.1 26.2 53.9 20.6 37.0 11.9 5.2 14.0 17.6 32.1 14.0 38.0 3.9 4.2 5.0 - 4.4 - 4.1 - 6.8 1.3 - 0.1 - 5.2 7.9 tThese figures are probably influenced by the discontinuance by certain rtain of ot the larger large: companies of spring dating” sales, the practice of advancing credit on sales made in autumn m onths until M arch, A p ril, and M ay of the following year. On March 31, 1926, savings deposits at 69 banks in seven cities of the district were 0.6 per cent smaller in amount than on February 28, 1926, but 7.7 per cent larger than on March 31, 1925. Figures for the past seven years have shown a slight increase in the vol ume of savings deposits during March. S A V IN G S DEPOSITS Number of Banks Mar. 31, 1926* Feb. 28, 1926* Mar. 31. 1925* Mar. 31,19261 compared with Mar. Feb. 28, 31, 1925 1926 $412,912 L os An geles . 13 $415,938 $370,916° 11.3 O aklandî . . . . 7 94,440 100,240 101,143 6.1 Portland§ -----7 55,021 54,130 52,606° 4.6 33,541 32,231 30,381 10.4 Salt Lake City 8 462,582° 487,851 493,000 5.5 San Francisco. 14 71,742 78,089 Seattle .............. 14 78,596 8.8 6 19,263 19,534 19,413 — 0.8 Spokane .......... T otal§ .......... 69 $1,186,917 $1,194,572 $1,102,080° 7.7 ■— 0.7 ■— 0.9 1.6 4.1 ■— 1.0 ■— 0.6 ■— 1.4 — 0.6 *000 omitted, fPercentage increase or decrease (— ). ^Includes one bank in Berkeley which was formerly a branch of an Oakland bank. § N o t comparable with figures published in previous Review s. ° Revised. Prices The United States Bureau of Labor Statis tics’ index of wholesale prices stood at 151.5 (1913 prices = 100) in March, 1926, compared with 155.0 in February, 1926, and 161.0 in March, 1925. The decline of 2.2 per cent dur ing March continued a downward movement which has been in progress since August, 1925. An index of prices of non-agricultural commod ities from the same source declined during March, as did the Department of Agriculture’s farm price index. The ratio between these two indexes, an indication of the purchasing power of farm products, continued at 87,* where it has stood for the past six months. In March, 1925, this ratio was 91. W heat prices continued downward during March and weekly average prices for May con tract wheat ranged from $1.55j4 to $1.58 y 2 on April 1, 1926, compared with a range of $1.57 to $1.6 1 ^ on March 5, 1926. On April 3, 1925, the range was from $ 1 .3 6 ^ to $1.45 per bushel. Since the beginning of April some improve ment in price has been noted. Livestock prices at the Chicago market de clined slightly during March. The weekly average of beef cattle was 3.6 per cent lower, of hogs 6.0 per cent lower, of lambs 8.1 per cent lower, on April 3, 1926, than on March 6, 1926. As compared with one year ago, price declines of 9.1 per cent for beef cattle, 10.7 per cent for hogs, and 15.3 per cent for lambs were re ported. Price data are shown in Table “ E .” Prices for spot middling uplands cotton at New Orleans ranged from 17.96 to 18.55 cents per pound during the week ending April 1, 1926, a slight decline from the range of 18.14 to 18.83 cents for the week ending March 5, 1926, and a decrease of 26.4 per cent from the figures reported a year ago. The average of 98 wool quotations on the Boston market stood at 69.93 cents per pound on April 2, 1926, com pared with 76.02 cents per pound on March 5, 1926. On April 3, 1925, the average stood at 90.19 cents per pound. The price of refined beet sugar at San Fran cisco advanced during March, and the first * A ratio of 100 would indicate that a given quantity of farm prod ucts could be exchanged for the same quantity of non-agri cultural products as during the pre-war base period of the two indexes. (E) Commodity Prices— Commodity W holesale Prices (U . S. Bureau of L abor) 1 9 1 3 = 1 0 0 ......................................... Purchasing Power of Farm Products (U . S. Departm ent of Agriculture)* Cattle (N ative B e e f). W eek ly average price at C hicago...................................... H o g s .................................. W eek ly average price at C hicago..................................... L a m b s............................. .W e e k ly average price at C hicago..................................... W h e a t................................ Chicago contract price for M ay w heat.......................... B arley................................, Shipping barley f. o. b. San Francisco........................... C otto n ............................. .M id d lin g Uplands— W eek ly range of spot quota tions at N ew O r le a n s ....................................................... W o o l.................................. A v erage of 98 quotations at B o sto n............................... S u gar................................ .B eet granulated f. o. b. San Francisco.......................... A p p les............................. .., W inesap s— M edium to large extra fancy f. o. b. Pacific Northw est .............................................................. P runes............................. .Size 4 0 /5 0 in 25-lb. boxes f. o. b. California............ R aisins............................. .Thompson seedless bulk in 25-lb. boxes f. o. b. California ................................................................................. Copper............................. .Electrolytic— m onthly average at N ew Y o r k .......... L e a d .................................. .M onthly average at N ew Y o r k ......................................... Silver............................... ..M o n th ly average at N ew Y o r k ......................................... M onth ly average at St. L o u is........................................... Lumber (S o ftw o o d ). ,.W e e k ly Ind ex United S ta te s f........................................... Unit April 2.1926 One Month Ago One Year Ago 151.5 87 $9.50 11.70 12.50 1 . 5 5 ^ - 1 .5 8 ^ 1 .30-1.3 5 155.0 87 $9.85 12.45 13.60 1 .5 7 -1 .6 1 H N o t quoted lb. lb. lb. 1 7.96-18.550 69.930 5.350 18.14-18.830 76.020 5.250 24.50 -2 5 .1 0 0 90.190 6.050 box lb. 1.55-1.6 0 .0 8 ^ 2 -0 9 1.80 .08 ¿ 4 - 0 9 2.75 .09y2- .0 9 U 100 lbs. 100 lbs. 100 lbs. bu. cental lb. lb. lb. oz. lb. •0734 13.8590 8.3860 65.8800 7.3320 31.40 .0 7 3 4 13.9990 9.1540 66.7730 7.7590 31.44 161.0 91 $10.45 13.10 14.75 1 .3 6 ^ -1 .4 5 1 .65-1.7 0 N o t quoted 14.0040 8.9140 67.8080 7.3190 31.60 *Ratio of farm prices (August, 1909-July, 1914=100) to wholesale prices of non-agricultural commodities (1910-1914=100). fA s published by “ The Lumber Manufacturer and Dealer.” April, 1926 FEDERAL RESERVE AG EN T AT SAN FRANCISCO weeks of April, the published quotation on April 16, 1926, being $5.50 per hundred pounds. One month ago it was $5.25 per hundred pounds and one year ago $5.90 per hundred pounds. Monthly average prices of copper and lead were 1.0 per cent and 8.4 per cent lower, respec tively, during March, 1926, than during Febru ary, 1926, and 1.0 per cent and 5.9 per cent lower than during March, 1925. The average price of zinc declined 5.5 per cent during March, 1926, but was 0.2 per cent higher than in March, 1925‘ A national index of lumber prices, published by “The Lumber Manufacturer and Dealer,” remained practically unchanged for March, 1926. 31 Discounts at the Federal Reserve Bank of San Francisco advanced from $50,000,000 as of March 17th, to a 1926 high point of $62,000,000 on March 24th, then declined to $42,000,000 on April 14th. Total earning assets, at $116,000,000 on April 14th, were $11,000,000 (10.1 per cent) larger than on March 17th and $25,000,000 (27.5 per cent) larger than a year ago. In creased borrowing by city member banks and purchases of United States securities have been chiefly responsible for the growth of earning assets. An increase of less than one per cent in Federal reserve note circulation was re corded during the month. MILLIONS OF D OLLARS Banking and Credit Situation Changes in the banking and credit situation in the Twelfth District during the past thirty days have been chiefly a reflection of seasonal influences. Total loans and investments of 66 reporting member banks in 9 cities of the dis trict increased slightly during the four weeks ending April 7, 1926, the increase being largely a result of increases in collateral loans and in investment holdings. The amount of commer cial loans changed little during the period. REPORTING M EM B ER BANK S*— Twelfth District (In millions of dollars, percentage changes in parentheses. ) Condition April 7, 1926 Total Loans ......................... Commercial Loans .......... Loans on Securities.......... Investments ........................ Total Loans and Invest ments .................................. N et Demand D eposits. . . Borrowings from Federal Reserve B a n k ................. /----------- Changes from------------\ One Month One Year Ago Ago . 1,194 . 903 . 291 + — . + 468 . 1,662 . 750 36 + 6 2 8 6 ( ( ( ( 0.5) 0.2) 2.8) 1.3) + + + + 94 38 55 20 8.5) 4.4) ( 23.5) ( 4.4) ( ( + 12 ( 0.7) — 2 ( 0.3) + 113 ( — 21 ( + + 6 (18.6) M EM B ER BANK C R E D IT -T W E L F T H D ISTRICT Figures for 66 member banks in leading cities, as of last Wednesday of each month. Latest figures, March 31. FED ER AL RESERVE BANK OF SAN FRA NC ISCO (In millions of dollars, percentage changes in parentheses.) Con dition /•------------ Changes from--------------% April 14, One Month One Year 1926 Ago Ago 7.3) 2.7) 19 (114.8) *Total resources of reporting banks are approximately 50 per cent of total resources of all banks, and 71 per cent of total resources of all m em ber banks in Tw elfth Federal Reserve D istrict. Reporting banks embrace member banks in San Francisco, L os An geles, Oakland, Portland, Seattle, Tacom a, Spokane, Salt Lake City, and Ogden. Total Bills and Securities Bills D iscounted ................ U nited States Securities.. Bills Bought ........................ Total Reserves ................... Total Deposits .................... Federal Reserve N ote Circulation ........................ . 116 42 49 25 259 173 + — + + — + 186 + 11 8 17 2 1 9 (10.1) (16.2) (51.4) ( 9.0) ( 0.5) ( 5.5) 1 ( 0.6) + + + — — + 25 13 14 2 23 7 (27.5) (45.1) (40.4) ( 7.0) ( 8.1) ( 4.1) — 10 ( 4.9) T H E M O N T H L Y R E V IE W Not infrequently readers of the Monthly Review raise questions as to the policy of the Review, the methods used in its preparation, and the date of its distribution. It seems appro priate that a general statement should be made on these and other matters pertaining to the Review. Brevity It is the purpose of the Review to provide a reliable summary of business conditions, par ticularly in the Twelfth Federal Reserve Dis trict, in as condensed form as is consistent with a reasonable degree of comprehensiveness. It is believed that most of those who read the Review can give it only a limited amount of attention, and that brevity of treatment is therefore essential. In pursuance of this policy the Review has been reduced in size by suc cessive steps from a maximum of twenty-four pages to its present size, eight pages. This space limitation involves careful selec tion of subjects, as well as succinct treatment of the matter which is covered. It means that commodity markets cannot be treated in detail, 32 M O N T H L Y REVIEW OF BUSINESS CONDITIONS April, 1926 T H E M O N T H L Y R E V I E W — Continued except as they assume unusual importance. It means a type of presentation which, perhaps, requires closer attention on the part of the reader than a more discursive treatment. It means, in general, the exclusion of large tabu lations. Prophecy Readers of the Review have frequently re quested the publication of forecasts of future business conditions. It is contrary to the policy of the Review and of the Federal Reserve Bank of San Francisco to issue forecasts. Knowledge of the causes of economic and social events is as yet so limited, and the determining factors are so numerous and subject to change, that prophecies of the business future can be no more than estimates, and may be merely guesses. Estimates or guesses coming from a non-competitive institution, such as a Federal Reserve Bank, which carries the majority of the banking reserves of a District, would carry a weight out of proportion to the possible soundness of the judgments expressed. For this reason, opinions and prophecies have been carefully excluded from our published reports. The endeavor has always been to present accu rate and significant facts, and to leave the reader to form his own judgments of the future on the basis of those facts. Interpretation W hile attempts to forecast business condi tions have not been considered wise, it has seemed proper to interpret the meaning of current events as fully as can be done with as surance. To this end, statistical methods are used in an attempt to reduce to comprehensible form the mass of figures concerning business and finance which are currently available. The true meaning and implications of current data reflecting general business conditions become clear only after the data have been considered in conjunction with similar figures of previous years, and under conditions permitting proper allowances for usual seasonal changes and for usual growth that takes place from year to year in keeping with the growth of population. For these reasons, currently published figures of bank debits, for example, may mean but little to many readers who lack the detailed knowl edge essential to proper evaluation of the fig ures as presented. It is possible, however, by recognized statistical processes to make the necessary allowances before figures are pre sented in the Review. The reader is then given a simple comparison between actual conditions and what might reasonably have been ex pected in view of all the contributing circum stances. Because of limitations of space, it is not pos sible to give currently in the Review a full ex planation of the statistical methods by which the results reported are reached. But for any who are interested, it is the policy of the Re view to make available details concerning com putations which are published. National Summary To aid the reader in securing a general view of the business situation, there is included in the Review a brief summary of business con ditions in the United States. This summary is prepared jointly by the Federal Reserve Board and the Federal Reserve Banks. It aims to bring together in one article the out standing events during the month in business and finance. The same summary is published in the Monthly Reviews of each of the twelve Federal Reserve Banks. Special Articles Some readers have urged the publication of special articles, dealing with various phases of the operations of the Federal Reserve System and with particular economic problems of the District. Such studies are published from time to time, as seems appropriate. Time of Publication The date of publication and speed of distri bution of the Review are matters of general interest. The Review goes to the printer to be set up on or about the twenty-fifth of each month. Part of the data necessary for prepara tion of the Review in final form does not be come available until after the twentieth of the month following that to which it refers, and further time is necessarily consumed in com piling the report. Data concerning production, transportation, employment, trade, prices, etc., are received from thousands o'f business houses, either directly or in summary form from Gov ernment bureaus and trade associations. This mass of data can only be assembled as the indi vidual business houses are able to complete their own statistics for the month. Complete ness of presentation, therefore, entails some sacrifice of timeliness. Speed has always been a major aim in the publication of the Review, but it is regarded as being less important than accuracy. F in a n c ia l T w e l f t h C o n d it io n s F e d e r a l i n R e s e r v e t h e D is t r ic t by ISAAC B. NEW TO N , Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco San Francisco, California, April 20,1926 S U R V E Y of financial conditions in the Twelfth Federal Reserve District based upon reports of condition of all banks (State and National) as of December 31, 1925, is presented herewith in comparison with a similar survey made a year ago on December 31, 1924. In view of the generally sound bank ing situation revealed by the figures of the 1924 survey, the moderate improvement recorded during 1925 is noteworthy. Some shifting of comparative banking strength within the dis trict occurred during the year. The chief losses were experienced in southwestern Utah, where drought conditions interfered with agricultural development. The gains were wide spread, al though generally small in amount. As in previous surveys, the ratio of total loans and discounts to total deposits of all banks, State and National, in a given area was used in estimating the financial condition of that area. Where the total of loans and dis counts was less than 80 per cent of total depos its, financial conditions were characterized as “good” (colored blue on accompanying maps) ; where the ratio was between 80 per cent and 100 per cent, financial conditions were charac terized as “fair” (colored yellow on maps) ; and. where the ratio was over 100 per cent, finan cial conditions were characterized as “ poor” (colored green on maps). This study relates primarily to conditions in the agricultural regions of the district, as have previous studies. The following summary, A which excludes figures for the cities of Berke ley, Los Angeles, Oakland, Portland, Salt Lake City, San Francisco, Seattle, and Spokane, shows the improvement in conditions since the end of 1921 : PROPORTION OF TOTAL DEPOSITS OF BANKS IN COLORED AREAS TO TOTAL DEPOSITS OF ALL COUNTRY BANKS “ Good” Areas “ Fair” Areas “ Poor” Areas Dec. 31, 1925 Dec. 31, 1924 Dec. 31, 1923 Dec.29, 1922 Dec. 31, 1921 94.1% 5.6% 0.3% 88.6% 8.7% 2.7% 87.9% 10.0% 2.1 % 89.0% 7.4% 3.6% 80.3% 12.7% 7.0% Total deposits of all banks included in the above summary— the so-called country banks— were, on December 31, 1925, 40 per cent of all bank deposits in the Twelfth Federal Reserve District. The ratio of total loans and discounts to total deposits of these country banks was, on December 31, 1925, 74.1 per cent compared with 68.6 per cent on December 31, 1924. Total deposits in banks in the eight cities mentioned above were 60 per cent of total bank deposits in the district. The ratio of combined loans to deposits of these city banks was 64.1 per cent on December 31, 1925, compared with 63.7 per cent on December 31, 1924. The above figures indicate that financial con ditions generally are “good” in the principal cities of the district and in those agricultural areas in which more than 94 per cent of the banking resources of the agricultural sections are to be found. R T e d is c o u n t w e l f t h F O p e r a t io n s e d e r a l R in e s e r v e D t h e is t r ic t COMPARATIVE REDISCOUNT OPERATIONS, 1921-1926 (Borrowings of City and Country Member Banks) (As of the end of each month) NOTE: City banks include all member banks in Berkeley, Los Angeles, Oakland, Portland, Salt Lake City, San Francisco, Seattle, and Spokane. Country banks include all other member banks. BORROW INGS FROM THE FEDERAL RESERVE BAN K AND W HOLESALE PRICES City Bank Borrowings Date $ 62,088,000 1920-1921 1922-1923 Low Point. 1923 P e a k .................... 1924 Low P oint........... 1925 H igh P oint......... Country Bank Borrowings $21,978,000 A ll Member Bank Borrowings United States Bureau of Labor Wholesale Price Index (1913 = 100) $ 84,066,000 233 Oct. 5,1920 Aug. 23,1921 Oct. 5.1920 M ay, 1920 $116,286,000 $68,985,000 $174,699,000 247 D ec. 11,1923 Jan. 16,1923 Jan., 1922 $18,430,000 $ 35,576,000 138 Aug. 8,1922 $ 8,264,000 Oct. 2,1923 A u g. 28.1923 O ct. 2.1923 M ar.-A pril $ 64,269,000 $32,698,000 $ 92,092,000 159 D ec. 9,1924 N ov. 18,1924 June $ 8,615,000 $ 11,256,000 145 Sept. 9,1924 $ 2,076,000 Aug. 4,1925 N ov. 3,1925 March $ 65,113,000 N ov. 3,1925 $19,638,000 $ 75,010,000 161 $ 42,286,000 $11,606,000 $ 53,892,000 M arch 152
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