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MONTHLY REVIEW OF B U S IN E S S C O N D IT IO N S ISAAC B. NEWTON, Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. X II San Francisco, California, April 20,1928 No. 4 S U M M A R Y O F N A T IO N A L C O N D IT IO N S Prepared by the Federal Reserve Board Industrial production during March was in about the same volume as in February and there was a seasonal increase in the distribu tion of commodities. W holesale prices remained practically unchanged. During the past month there have been increases in the volume of bank credit in use and in member bank borrowing at the reserve banks. Open market money rates have advanced further. Production. Production of manufactures was maintained during March at the high level reached in February, and the output of minerals also showed little change. Production of pas senger automobiles and trucks during March totaled 413 thousand units, the largest output recorded for any month since August, 1926. Production schedules in automobile plants con tinued large during April. A ctivity in the iron and steel industry was maintained at a high level during March and April, and lumber pro duction was in larger volume than a year ago. Cotton and w ool consumption declined in March, but silk deliveries were the largest on record. There was some decline in meat pack ing and in the production of sole leather dur ing March, and the output of boots and shoes showed less than the usual seasonal increase during that month. M ining of bituminous coal decreased during March by less than the usual seasonal amount, but as the result of a strike in certain Middle W estern mines, production in the early weeks of April was considerably curtailed. Building contracts awarded were smaller in March than a year ago, while those R CENT I 150 MANUFAC7 roo for the first three weeks in April were in about the same volume as in the corresponding period of 1927. As a result of large contracts during the first two months of this year, total awards for the year to April 20th exceeded those for the same period of 1927. Contracts for residential buildings and for public works have been especially large. Trade. Sales of wholesale firms increased less than is usual iij March and were somewhat smaller than in the same month of last year. Sales of department stores, on the other hand, after allowance is made for customary sea sonal changes and the early date of Easter, were about the same in March as in the pre ceding month and in March, 1927. Stocks of merchandise carried in March by wholesale firms were larger, while those of department stores were smaller than at this time last year. Figures of freight carloadings showed more than the usual seasonal increase in March, but declined in the first two weeks of April. Car loadings continued smaller than a year ago for all classes of commodities except grains and livestock. Prices. The general level of wholesale com modity prices showed little change in March, the index of the Bureau of Labor Statistics de clining slightly from 96.4 to 96.0 per cent of the 1926 average. There were decreases in the prices of livestock, dairy products, meats, coal, and rubber. Prices of grains, cattle, feed, cot ton, and steel, on the other hand, advanced. During the first three weeks in April, there % CJr URES^K^ / f v $ C MINER\LS 50VV 1924 1925 1926 1927 P R O D U C T IO N O F M A N U F A C T U R E S A N D M IN E R A L S Index numbers of production of manufactures and minerals, ad* justed for seasonal variations (1923*1925 average = 100). Latest figures, March, manufactures, 111; minerals, 104. (00 V 90WÎ924 A / " * / \ J ~ 1925 1926 1927 1928 'W W H O L E S A L E P R IC E S Index of United States Bureau of Labor Statistics(1926 prices=*100, base adoptediby Bureau). Latest figure, March, 96.0. April, 1 M O N T H L Y REVIEW OF BUSINESS CONDITIONS 26 were further substantial increases in the prices of grains and more moderate advances in flour, hogs, cotton, and lumber, while prices of cattle and rubber declined. Bank Credit. Between March 21st and April 18th, total loans and investments of member banks in leading cities increased by about 410 million dollars, reaching the highest level on reserve requirements of member banks an< further net outflow of gold amounting to m than 50 million dollars. Federal reserve be holdings of securities were reduced by about million dollars, while discounts for mem banks increased by 230 million dollars. Fede reserve acceptance holdings also showed small increase. BILLIONS OF DOLLARS BILLIONS OF DOLLARS TOTAL BFCFBVP R A K IK "wv//i \ J DISCOUNT S FOR aMEMBER. BANKS U.S.SECURITIES V y O l •rs ACCEPTANT:es 1924 M E M B E R B A N K C R E D IT M onthly averages of weekly figures for banks in 101 leading cities. Latest figures are averages for first three weekly report dates in April. record. The advance was largely in loans on securities which showed an increase of nearly 380 million dollars, and which in April were close to the high point of the first of the year. Loans for commercial purposes continued the increase which began in February and notwith standing a small decline during the last week of the period were nearly 350 million dollars larger on April 18th than at the end of January. The volume of reserve bank credit in use in creased by 180 million dollars during the five weeks ending April 25th, reflecting increased 1925 1926 1927 1928 R E SE R V E B A N K C R E D IT Monthly averages of daily figures for 12 Federal reserve bank Latest figures are averages of first 23 days in April. A firmer tendency in the money market v evidenced at the end of March and during ■ first weeks of April by further increases rates on call and time loans on securities, a by increases of from 4-4% per cent to 4y2 \ cent in the rates on commercial paper and fr< 3^2 percent to 3% per cent in the rate on 90-c bankers’ acceptances. Between April 20th a April 25th, discount rates were raised fron to Ay2 per cent at the Boston, Chicago, Louis, Richmond, and Minneapolis Federal 1 serve Banks. 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 M oderately heavy rains during the period March 20th to April 20th have provided partial relief from the shortage of rainfall which had previously threatened agricultural areas of the district, particularly in Arizona, California, and Nevada. Crops and livestock are generally re ported to be in good condition. Data now available for March, 1928, show that a moderate seasonal expansion in industry took place during that month, and that in at least two of the more important lines of activ ity in the district, lumbering and flour milling, operations were at higher levels than a year ago. Similar improvement, as compared with a year ago, was lacking in the building and construction industries. Value of building per mits issued increased by a normal seasonal amount from February to March, but failed both in number and value to equal the figures of March, 1927. Reports from distribution and trade factors reflect some backwardness in that field of com mercial activity during March, although sales at retail were slightly greater in value thai year ago. Seasonal increases in sales were 1 than has been customary at this time of ye and many firms, both wholesale and ret have not been able to equal their last yes sales volume. Exceptions worthy of note the distinctly larger retail sales reported fr Arizona and from Seattle and Salt Lake Ci Aggregate sales of wholesalers during Mar 1928, were but slightly larger than in Februa 1928, or March, 1927. Registrations of new ; tomobiles in the district are increasing, but not yet equal to new car registrations duri early 1927. Commodity prices, in general, remaii steady during March. Practically all indexes com m odity prices are now slightly higher tl they were a year ago, a period in which pri were at the lowest levels since the beginn of 1922. Largely as a result of the seasonal quick ing in general business activity during opening months of 1928, commercial loans A p ril, 1928 reporting member banks expanded to a spring peak in March, since when such loans have de clined slightly. Security loans and investment holdings of these banks have increased sub stantially since March 1st, however, and their total loans and investments averaged higher during April than ever before. Discounts at the Federal Reserve Bank of San Francisco recently have been in the largest volume re ported since early in 1923. Agriculture Moderately heavy rains fell over large areas of the district during late March and early April, and were particularly beneficial in those parts of the district (Arizona, California, and Nevada) where rainfall had previously been considerably below normal. Although lower temperatures and light frosts follow ed these rains, no serious damage to grow ing crops was reported. Condition of winter wheat in this district on April 1st, as reported by the United States D e partment of Agriculture, was above the aver age of the past ten years, although below the high levels of 1926 and 1927. In contrast to the situation in this district, the condition of the crop in other producing sections of the United States was well below the average of recent years. C O N D IT IO N O F W IN T E R W H E A T (Per cent of normal) April 1, A r i z o n a ....................... . . . California ................. . . . . . Idaho .......................... Nevada ..................... . . . .. O regon ....................... , U tah ............................. . . . . W ashington ..................... United States ......... ____ 1928 86 88 89 96 93 96 94 68.8 1927 95 95 92 99 95 95 95 84.5 1926 95 82 96 97 96 92 95 84.1 Ten-Year* D e c .l, Average 1927 92 97 99 86 92 93 98 95 98 91 93 96 83 95 86.0 81.9 *1918-1927. Important changes in acreage to be sown to certain crops of the district during 1928 are in dicated in the United States Department of Agriculture’s annual report of “ Intentions to Plant” as fo llo w s : I N T E N T I O N S T O P L A N T -1 9 2 8 (In per cent of 1927 harvested acreage) A ll Spring W heat O ats .............. . Barley ......... . R i c e ................ Grain Sorghums . T am e H a y .,. Potatoes . (W h ite ) 27 FEDERAL RESERVE AG EN T AT SAN FRANCISCO A riz. 100 80 Calif. Idaho 108 106 99 110 115 80 N ev. 104 110 110 Ore. 98 111 102 Utah 111 100 115 W ash. U .S . 98.5 75 102 98.6 123.9 98 88.7 90 100 95 100 99 100 101 98 100 102.3 98.6 125 95 11 2 115 101 95 92 111.9 The 1927-1928 Navel orange shipping season in California may be characterized in general as one of strong markets, an average volume of shipments, and high returns to the grower. A preliminary estimate of the 1928 Valencia or ange crop shows a yield of 10,382,000 boxes compared with 12,700,000 boxes shipped in 1927. Prices for lemons, f. o. b. California, dur ing January, February, and March, 1928, have averaged approximately $2.25 per box higher than a year ago ($4.96 per box in 1928 as com pared with $2.71 per box in 1927). Shipments of lemons for the period November 1, 1927, to April 1, 1928, amounted to 2,988 cars, a total 30.6 per cent less than that for the same period a year ago. Livestock in the Twelfth District are gen erally in good condition. Rainfall during late March and early April has favored growth of range forage in most of the grazing areas where the supply of range feed had previously been short. Cattle prices have declined at Pacific Coast markets during the past three months, as the bulk of receipts has changed from “ feed-lot” to “ grass-fed” cattle. Prices thus far in 1928 have, however, been substantially above those of the first quarter of 1927. Current prices for cattle have induced some marketing of breeding stock and this movement has tended to check expan sion of the district’s herds. L IV E S T O C K — Twelfth District M arch------- \ 1927 1928 Receipts* Cattle .. 68,152 Calves . 14,043 H o g s . . 270,678 Sheep .. 179,271 Pricesf Cattle i H o gs§ Sheep ¡J 12.00 9.10 14.14 - February 1928 1927 — January1928 1927 83,724 20,296 202,573 161,204 65,128 15,215 283,623 177,462 82,761 17,501 188,714 191,514 85,970 19,084 310,242 192,712 97,046 20,396 251,336 221,226 8.95 13.03 13.08 12.27 9.30 13.26 8.74 13.12 11.73 12.16 9.68 12.55 8.73 12.96 11.24 * Eight principal markets of Tw elfth D istrict, tW eigh ted accord ing to receipts at six markets in the district. Quoted in dollars per hundred-weight. $Good grade steers, l i g h t weight hogs. ||Choice lambs. A successful spring lambing season is re ported from most parts of the district. Seasonal shipments of California spring lambs to East ern markets, although temporarily delayed by recent rains, are expected to approximate shipments made a year ago (427,104 head). Contract prices for California lambs, f. o. b. shipping point, remain relatively stable at slightly higher levels than last year. Industry W ith the advance of the spring season, the volume of employment in agriculture, lumber ing, vegetable canning, fishing, and other sea sonal occupations has increased and the general surplus of labor in the district has been reduced materially. There were more men employed in industry in this district during March, 1928, than during March, 1927. During recent weeks, there has been considerable part time employ ment, however, and both aggregate wages paid and average weekly wages received have been slightly lower than a year ago. An improved M O N T H L Y REVIEW OF BUSINESS CONDITIONS 28 demand for lumber and lumber manufactures has been reflected during the past month in notable increases in volume of employment and average weekly wages in that industry as contrasted with the spring weeks of 1927. Food canning and preserving plants, particularly vegetable canneries in California, have re ported substantial increases in operating sched ules as compared with a year ago, but average weekly wages in this industry have been lower than in 1927. Thus far in 1928, building has been less active than a year ago, continuing the downward trend first noted in 1926. The value of building permits issued in 20 principal cities of the Twelfth Federal Reserve District during the first three months of 1928 was smaller by 8 per cent than in the first quarter of 1927. A full seasonal expansion of building activity has, however, been experienced this year. For the past ten years the average February-to-March increase in value of building permits granted in these twenty cities has amounted to 33.0 per cent. The February-to-M arch increase this year was 32.4 per cent. The accompanying chart shows the quarterly and annual values of build ing permits granted (exclusive of figures of public works) in 20 principal cities of the dis trict during the period from 1922 to 1928. M IL L IO N S O F D O L L A R S 4 2 0 3 9 0 3 6 0 FO URTH Q U A R T ER ! 3 3 0 3 0 0 270 [t h i r d q u a r t e r ! 240 210 180 ISEC O N D April, 1 A group of 92 Tw elfth District cities, which building permits figures are collected S. W . Straus and Company, reported a 41 cent increase in value of permits granted d ing March, as compared with February, li Value of permits granted in this group of ci was 8.8 per cent lower in the first quarter 1928, than in the first quarter of 1927. Se£ gated by states, these data show that onl} Idaho, Utah, and W ashington were there creases in urban building construction this y as compared with 1927. Engineering projects and heavy construct in general show a relatively larger decre than does urban construction, when figures the first quarter of 1928 are compared v\ those of a year ago. A ccording to data collec by “ Engineering News R e co rd /’ contrc awarded for so-called engineering projects Far W estern States amounted to 78.5 mill dollars during the period January 1 to Ma 31, 1928, a total smaller by 13.4 per cent tJ that for the January-March period in 1927. W holesale prices of building materials ; building labor costs were stable throughout first quarter of 1928 at slightly lower le^ than a year ago. The Bureau of Labor i tistics* index of wholesale prices of build materials averaged 91 (1926 prices=100), c3 ing the first three months of 1928 compa with 96 during the corresponding period 1927. The Aberthaw index of the cost of dustrial building, including both labor and i terials, has changed little since last June, w' it stood at 192 (1914 costs= 1 0 0 ), the pres level. The up-trend in lumber production in Twelfth Federal Reserve District wThich be; late in January, 1928, continued during Mai Daily average cut of mills reporting to four Q U A RT ER ! 150 (B) E m ploym ent— 120 ■— Oregon--------California----- — ■> f ' N o. of N o. of N o. r-Em ployees —ï N o. Employee! of M ar., M ar., of M ar., M Industries Firms 1928 1927 Firms 1928 15 25,521 A ll Industries.......... 784 152,002 149,340 160 26, (1.8) ( - 3 .7 ) Stone, Clay and Glass Products. 47 7,418 4 226 8,075 — 34.3) (— 8.1) ( Lum ber and W o o d 15,701 62 16,1 Manufactures . . 118 24,019 22,982 (— 2.8) (4.5) 2,580 12 2,( 18 2,328 2,188 (7.9) (— 9.8) Clothing, Millinery 8,602 514 and Laundering. 65 10* 8,603 1 (0 .0 ) (3.6) Foods, Beverages 40 1,443 and T o b a c c o ... 176 33,926 22,492 1.Î (50.8) (— 7.9) W ater, Light and 7,788 7,548 5 Power ................. (— 3.1) 74,978 Other Ind u stries!. 342 66,338 (— 11.5) 32 1,822 1,843 5,449 13 Miscellaneous . . . . 5; (— 7,7) (— 1.1) ' 9 0 F R ST Q U A R T E R 1 6 0 3 0 1922 1923 1924 1925 1926 1927 I9 2 Ô V A L U E O F B U I L D I N G P E R M I T S -2 0 C IT IE S Cumulative and quarterly totals, 1922-1928. (A ) Ind u stry— Indexes of daily average production, adjusted for seasonal variation. (1923-1925 daily average = 100) M anufactures: Flour ........................................................ Slaughter of L ive sto ck.................... Lum ber ................................................... Refined Mineral O i l s f .................... Cement ................................................... M inerals: Petroleum (C a liforn ia)t ............... Copper (U nited S ta te s )î ............ Lead (U n ited S ta te s )$ ................. Silver (U n ited States) $ ................. ,----------------1928M ar. Feb. 118 1160 99 106 103* 102 147 146 110 146 93 101 109 92.0 Jan. 107 102 1080 143 95 M ar. 108 97 97 142 112 93 104 104 100 97 115 115 90 94 112 111 83 ■^Preliminary. fN ot adjusted for seasonal variation. by Federal Reserve Board. QRevised. ^Prepared ^Laundering only, fInclud es the follow ing indu stries: m machinery and con veyan ces; leather and rubber g< chemicals, oils and p a in ts; printing and paper goods. Figures in parentheses indicate percentage changes from M 1927. sociations in the district during the latter month was nearly 29 million board feet, a figure 13.7 per cent greater than that for February, 1928, and 11.2 per cent greater than this bank’s estimated figure for March, 1927. As in Febru ary, 1928, shipments kept pace with production, and the volume of orders received by reporting mills again exceeded both current output and shipments made on orders previously obtained. A national index of softw ood lumber prices published by “ The Lumber Manufacturer and Dealer” showed a further slight advance (1 per cent) in March, and stood at 27.57 for the fort night ending April 1st, compared with 30.52 a year ago. For some time past more petroleum (particu larly of the heavier grade having a relatively low gasoline content) has been produced in California oil fields than could be properly stored and marketed. During March, 1928, pro duction was curtailed by shutting in a large number of wells producing the heavier crude oils. Estimates indicate that so-called “ shut-in production” amounted to 122,000 barrels per day early in April. Drilling of new wells is reported to be active in certain fields which produce the lighter grades of crude oil having a relatively high gasoline content. This bank’s index of daily average produc tion of petroleum declined during March to 93 (1923-1925 average output=100). The index stood at 94 in February, 1928, and at 97 in March, 1927. Price quotations of petroleum and of gasoline were stable during the first quarter of 1928. A slight decline in surface holdings of heavy crude oil in California (which ( C) Bank D ebits*— March, 1928 17,737 Bakersfield ......... $ 10,808 Bellingham 23,415 Berkeley ............ 13,742 Boise ................... 6,586 Eugene ................ 13,881 Everett ................ 33,743 Fresno ................. L o n g Beach . . . 57,481 L os Angeles . . . 1,151,389 261,175 17,295 45,261 Pasadena ............ Phoenix ............... 34,881 165,165 Portland ............ 9,332 Reno ..................... 890 Ritzville ............... 48,635 Sacramento Salt Lake C ity. . 74,511 10,956 San Bernardino, 67,023 San D iego ......... San Francisco . 1,684,138 27,535 San Jose ............ 14,459 Santa Barbara . 273,681 Seattle ................. 62,021 Spokane .............. 28,208 Stockton ............ 52,157 Tacom a ............... 14,420 Yakim a ............... District ........... $4,220,525 *000 omitted. 29 FEDERAL RESERVE AG EN T A T SAN FRANCISCO A p ril, 1928 March, 1927 $ 14,382 11,196 22,767 12,877 6,967 13,047 44,165 57,385 1,095,879 239,190 17,928 46,587 28,854 159,920 8,637 779 29,010 68,780 10,476 66,116 1,342,559 25,953 13,379 222,168 56,935 26,849 49,769 13,062 t— First Three M onths— \ 1928 1927 $ 45,901 $ 41,078 29,060 29,339 66,950 64,092 41,231 38,773 19,215 19,628 36,722 35,541 98,796 120,883 160,336 149,338 3,118,977 2,985,123 723,693 663,385 52,9 52 58,575 128,000 130,469 101,995 83,767 464,484 470,905 26,344 25,350 2,746 2,337 143,432 83,253 221,310 202,934 30,767 29,058 202,431 188,138 4,487,737 3,617,890 81,574 78,226 41,883 39,967 696,962 593,006 164,308 163,836 89,232 82,601 134,140 133,246 38,097 36,364 $3,705,616 $11,434,088 $10,182,289 have been increasing during recent years) was reported during March. A greater than normal production of flour was reported by 13 large milling companies (operating 19 mills) in the Twelfth Federal Reserve District during the first quarter of 1928. Total output of these mills increased 108,566 barrels (8.6 per cent) as compared with the corresponding period of 1927. This bank’s seasonally adjusted index of flour pro duction (1923-1925 average=100) rose during March to 118, compared with 116 (revised) for February and 107 for January, 1928. The index stood at 108 in March, 1927. Stocks of flour in millers’ hands at the end of March, 1928, were slightly larger than a year ago, but have been reduced somewhat since January of the present year. Increased demand for flour has been reflected in higher price quotations for representative grades of flour, both as compared with Febru ary, 1928, and March, 1927. F L O U R P R IC E S PER B A R R E L Received by Twelfth District Mills First Grade Family Patent M ar., Feb., M ar., 1928 1928 1927 $8.65 $8.35 $8.10 First Grade Bakers Patent M ar., Feb., M ar., 1928 1928 1927 $8.50 $8.10 $7.70 Straight Grade Export (Soft Wheat) Feb., M ar., 1928 1927 $6.10 $6.15 M ar., 1928 $6.30 Distribution and Trade Considering the Twelfth Federal Reserve District as a whole, distribution and trade ex perienced a smaller than seasonal increase dur ing March, 1928, and generally continued at levels below those of a year ago. Activity at some of the trade centers in those sections of the district whose chief industrial output con sists of raw materials, such as lumber or nonferrous metals, diverged widely from the general trend, however. In the State of A ri zona, and in Seattle and Salt Lake City, trade expanded by more than the expected seasonal amount and was distinctly more active in March, 1928, than in March, 1927. Total freight carloadings on railroads of the district were smaller during March, 1928, than (D) Distribution and Trade— -1 9 2 8 — t— 1927 — M ar. Feb. Jan. M ar. , ------------ -Index Num bers*Carloadings, T o ta lt .................... Carloadings, Merchandise and M iscellaneousf ........................... Sales at W h o lesa le! ................... Sales at R etailf ............................. Stocks, Retail§ ............................... . 110 115 107 111 . . 113 98 114 . 111H 118 95 117 108 110 93 1180 103 115 98 113 108 Stock Turnover, Retailfl ............ Collections, R e ta il# Regular .......................................... In s ta llm e n t .................................... . t— - - - Actual Figures 0.24 0.22 0.23 47.0 15.4 44.3 15.8 47.3 16.0 ï 0.24 46.5 16.8 * Adjusted for seasonal variation. 1923-1925 a v e ra g e= 100. tD a ily average. ^Monthly totals oi eleven lines combined. §A t end of month. ORevised. fi Proportion of average stocks sold during month. # P e r cent of collections during month to amount outstanding at first of month. ||Preliminary. 30 M O N T H L Y REVIEW OF BUSINESS CONDITIONS during the same month a year ago, the decrease being due chiefly to a decline in loadings of ore, coal, fruits, and merchandise and miscellaneous freight. Sales of new automobiles, as evidenced by actual registrations of new passenger cars and new trucks, increased seasonally during March, 1928, but sales totals were still below those of a year ago. D IS T R I B U T I O N A N D T R A D E - T W E L F T H D IS T R IC T Indexes adjusted for seasonal variation. 1923-1925 average = 100. Daily average figures of department store sales and railway carloadings of merchandise freight. Monthly figures of sales at wholesale. Trade at retail during March, 1928, did not hold the active pace of the previous month and showed little gain as compared with a year ago. The effect of the earlier date of Easter this year was at least partially offset by inclement weather late in March. This bank’s index of value of sales of 28 department stores, (index adjusted for seasonal variation, 1923-1925 daily average=100) was 114 in March, 1928, as com pared with 117 in February, 1928, and 113 in March, 1927. Stocks held by reporting stores of the district at the close of March, 1928, were 1.2 per cent larger than at the close of March, 1927. Collections of retail firms during the past month were about on a par with those of a year ago. R E T A I L T R A D E — Twelfth District D e p a r tm e n t S t o r e s . . . A p p a r e l S to r e s ............. F u rn itu r e S to r e s . . . . A ll S t o res ...................... ,--------- N E T S A L E S *--------- s M ar.. 1928, compared - ■■■- - ■-■ with - ... . —s M ar., 1927 Feb., 1928 1.1 ( 60) 19.9 ( 4 9 ) — 2.6 ( 2 7 ) 28.3 ( 2 4 ) 2.2 ( 4 9 ) — 11.6 ( 3 9 ) 0.9 (1 3 6 ) 17.1 (1 1 3 ) * P e r c e n t a g e in c re a s e o r d e c r e a s e ( — ) . in d ica te n u m b e r o f s to r e s r e p o r tin g . S T O C K S* M ar., 1928. compared with M ar., 1927 1.4 (4 6 ) — 4.6 (1 6 ) — 3.2 (3 2 ) 0.2 (9 4 ) F ig u r e s in p a ren th eses Value of sales at wholesale during March of this year were larger than a year ago, sales of 234 reporting firms in eleven lines of trade showing an increase of 3.7 per cent over the year period. A m on g the reporting firms, six lines showed increases and five lines showed decreases, as compared with March, 1927. This bank’s seasonally adjusted index of wholesale sales, based on reports of 153 firms stood at 98 (1923-1925 monthly average = 1 0 0 ) in March, 1928, 95 in February, 1928, and 98 in A p ril, 1 March, 1927. W holesalers’ stocks were s stantially smaller in value (2.0 per cent) at end of March, 1928, than at the end of Mai 1927. Collections were slightly better than ] year in most of the eleven lines of trade which data were available. Prices The com m odity price index of the Uni States Bureau of Labor Statistics declii fractionally during March, but at 96 ( I 1 prices=100) the index, in terms of whole nt bers, was unchanged from February. Seve other indexes of wholesale prices in the Uni States advanced during March, the increa varying from one-tenth to nine-tenths of < per cent. M ost of the monthly indexes indie that stability in the general price level c tinued throughout March, although cert weekly indexes advanced slightly toward close of that month. Stability in indexes of the general level commodity prices during March was duplica in the indexes of individual groups of cc modities. None of the ten group indexes of Bureau of Labor Statistics changed by m than one per cent, and only three (those farm products, foods, and miscellaneous cc modities) moved as much as one-half of < per cent. Such movements as did occur in group indexes of the Bureau of Labor Statist were downward, with the exception of the inc of metals prices which advanced one-tenth one per cent. A t their present level, prices are higher tl they were a year ago, when the Bureau Labor Statistics’ index stood at 94.5. By Ap 1927, the decline in com m odity prices, wh had been in progress since the beginning 1926, had reached its low point, a fact wh should not be overlooked in comparing pr indexes of current months with those of tl period (March, April, May, or June, 1927). In the Twelfth Federal Reserve District, 1 commodity price situation during recent we< has been similar to that in the United States a whole, relative stability prevailing in co modity markets. Banking and Credit During the latter part of 1927 and the fi quarter of 1928 the commercial banking siti tion was influenced by certain general busim trends, a partial summary of which may aid arriving at an understanding of present c< dition s: 1. Declining activity in trade and indus during the last half of 1927 resulted in a < creased demand for commercial credit, wh persisted until the spring of 1928, wher seasonal revival in business occurred. A p ril, 1928 FEDERAL RESERVE AG EN T AT SAN FRANCISCO 2. Many large corporations have accumu lated heavy cash reserves during recent years and, because of these reserves, they have been able to satisfy their financial needs, in part, without recourse to banks. Some of these concerns, taking advantage of prevailing low interest rates, have also resorted to the open market for funds. 3. Conjunction of the two trends noted above resulted in a relative decrease in com mercial demand for bank funds at a time when the supply of such funds was increas ing. In order to keep their funds employed, banks have found it necessary to increase their own investment holdings, and to accom modate a grow ing demand for loans on se curities, the proceeds of which no doubt have in some instances been used for commercial rather than purely speculative operations. During the first quarter of 1928, there was a revival in business activity of at least seasonal proportions. Mirroring this recovery, commer cial loans of reporting member banks expanded from 947 million dollars on January 4th to a spring peak of 975 million dollars in March. The spring peak was not so high as in 1927 when the record figure, 989 million dollars, was reported. Increases in loans on securities and in invest ment holdings of reporting member banks con tinued throughout the first quarter of 1928. Since the beginning of April, commercial loans of these banks have declined slightly but loans on securities and investments have advanced further, so that their loans and investments combined have averaged higher during the first three weeks of April than ever before. 31 loans and investments. Borrowing of reporting member banks at the Federal Reserve Bank has been heavier this year than a year ago. Total earning assets (bills and securities) of the Federal Reserve Bank of San Francisco were not so large during most of the first quar ter of 1928 as during the corresponding period of 1927. The volume of bills discounted was consistently larger than in the earlier year, but purchases of acceptances did not approach the 1927 figures until late February and holdings of government securities declined in January and again in April. These latter movements repre sent, largely, the participation of this bank in the operations of the Federal Reserve System Open Market Investment Committee in New York City. F E D E R A L R E S E R V E B A N K O F S A N F R A N C IS C O (in millions of dollars) Average Condition During Month April, March, April, 1928* 1928 1927 T o t a l B ills and S e c u r it ie s ...................... I ll 121 116 B ills D is c o u n te d ....................................... 58 61 53 B ills B o u g h t ................................................ 23 27 24 U n ite d S ta tes S e c u r i t i e s ........................ 30 32 39 T o t a l R e s e r v e s ........................................... 249 229 251 T o t a l D e p o s its ........................................... 186 180 178 F e d e ra l R e s e r v e N o te s in C ir c u la tio n 155 150 171 * P r e lim in a r y . R E P O R T IN G M E M B E R B A N K S * — Twelfth District (In millions of dollars) Average Condition During Month April, March, April, 19281 1928 1927 1,963 1,948 1,802 T o t a l L o a n s a n d I n v e s t m e n t s ................. T o t a l L o a n s ..................................................... 1,333 1,323 1,297 C o m m e r c ia l L o a n s ....................................... 963 967 965 L o a n s o n S e c u r itie s .................................... 369 356 332 In v e s tm e n ts ..................................................... 631 625 505 N e t D e m a n d D e p o s it s ................................ 827 803 773 T im e D e p o s it s ................................................ 1,001 1,009 943 B o r r o w in g s fr o m F e d e ra l R e s e rv e B a n k ............................................................... 54 58 42 * T o ta l re s o u rce s o f r e p o r tin g b a n k s are a p p ro x im a te ly 50 p er cen t o f to ta l r e so u rce s o f all b a n k s an d 70 p e r ce n t o f total re s o u r c e s o f all m e m b e r b a n k s in the T w e lfth F e d e ra l R e se rv e D is tr ic t. R e p o r tin g b a n k s em b ra ce m e m b e r b a n k s and b ra n ch e s lo ca te d o n ly in L o s A n g e le s , San F r a n c is c o , O a k la n d , P o r tla n d , T a c o m a , S ea ttle, S p o k a n e , Salt L a k e C ity, a n d O g d e n . fP r e lim in a r y . Demand deposits of reporting member banks declined seasonally during the first quarter of 1928, but turned upward during April. Time deposits have tended upward during the pres ent year, and by April 18th a net increase of 27 million dollars in total deposits had been recorded. This increase was smaller by 41 mil lion dollars than the reported increase in total R E S E R V E B A N K C R E D I T -T W E L F T H D IS T R I C T Monthly,average of daily figures. Latest figures are averages for first three weeks in April, Rediscounts at the San Francisco Reserve Bank showed a full seasonal expansion in March, 1928, and have since been maintained at the highest levels since the first quarter of 1923, a year of active business. Circulation of Federal reserve notes declined from 175 mil lion dollars on January 4, 1928, to 148 million dollars on March 21, 1928, and, although some increase in circulation has taken place during April, the volume of outstanding notes is still smaller than at any other time since 1917. During March and early April, the prevailing rate on the bulk of prime commercial paper in leading Pacific Coast money centers was un changed at 4}4 to 6 per cent, the rates quoted one month ago and one year ago. Rates on banker’s acceptances advanced during the month and were higher than a year ago. TW ELFTH L0S ANWk|Sj FED ERAL RESERVE D IS T R IC T Includes the states of Arizona, except the five Southeastern Counties, California, Idaho, Nevada, Oregon, Utah and Washington.
@FedFRASER