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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, January 20,1928 No. 1 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 activity continued at a relatively low level, railroad distribution of commodities declined further, and the general level of prices remained unchanged in December. Holiday trade at retail stores was in somewhat larger volume than in the previous year. Production. Production of manufacturers remained in practically the same volume in December as in November, while output of minerals, when allowance is made for usual seasonal changes, showed a slight increase. A ctivity in the textile, shoe, and tobacco in dustries was reduced in December, while the output of steel, non-ferrous metals, and petro leum increased. Production of automobiles continued in small volume during December, but has increased considerably during January. W ithin recent weeks there has also been a fur ther increase in the activity of steel mills. Building contract awards were slightly larger in December, 1927, than in November, 1927, but were smaller than in December of the two preceding years. Total awards for the year 1927 in 37 eastern states, as reported by the F. W . Dodge Corporation, were valued at about $6,300,000,000, which is slightly less than the 1926 total of $6,380,000,000. December awards for residential and commercial build ings were larger than in December, 1926, while those for industrial buildings and public works were smaller. During the first three weeks of January, contract awards were in approxi mately the same volume as during the corre sponding weeks of last year. Trade. Retail sales of department stores and mail order houses increased slightly more than is usual in December and were somewhat larger than a year ago. Inventories of merchan dise carried by department stores were reduced during the month and at the end of 1927 were slightly smaller than at the end of 1926. W h ole sale trade in nine leading lines continued smaller than in the corresponding months of last year. Stocks of groceries, shoes, hardware, and furniture carried by wholesale firms were smaller at the end of December than a year earlier, while stocks of dry goods and drugs were slightly larger. Freight carloadings de clined further in December and were smaller in volume during that month and the early part of January than at any time in four years. The decrease in loadings occurred in practi cally all groups of commodities. Prices. The Bureau of Labor Statistics’ in dex of wholesale com m odity prices remained practically unchanged in December and at the end of the year was about one per cent lower than a year ago. Prices of grains, hide and leather products, non-ferrous metals, and rub ber increased in December, while prices of live- P E R CENT INDUSTRIAL PRODUCTION Index number of production of manufactures and minerals combined, adjusted for seasonal variations (1923-1925 average = 100). Latest figure, December,99. WHOLESALE PRICES Index of United States Bureau of Labor Statistics (1926 prices = 100, base adopted by Bureau). Latest figure, December, 96.8. T h o s e d e s ir in g th is re v ie w s e n t t h e m r e g u la r ly w ill re c e iv e it w ith o u t c h a r g e u p o n a p p lic a tio n . 2 M O N T H L Y REVIEW OF BUSINESS CONDITIONS stock, cotton, and lumber declined. During the first three weeks of January, there were in creases in prices of iron and steel, grains, and wool, while prices of cattle, hogs, and cotton declined. Bank Credit. A t the reserve banks the sea sonal demand for currency, after reaching its peak on Decem ber 24th, was followed by a CURVE 1 M IL L IO N S O F DOLLARS CURVE 2 CURRENCY AND RESERVE BANK CREDIT Money in circulation data are averages of first-of-month figures and reserve bank credit data are monthly averages of daily figures. Latest figures, January, partly estimated. return flow of money from circulation, which amounted to about $440,000,000 between D e cember 24th and January 18th. This decline in the demand for currency, which was approxi mately the same as a year ago, was reflected in a decrease for the same period of about $360,000,000 in bills and securities held by the re serve banks. Loans and investments of mem- January, 1928 ber banks in leading cities declined during the first half of January, but were still at a higher level than at any time last year. The decline of about $200,000,000 between January 4th and January 18th reflected a decrease of about $280,000,000 in the volume of loans on securi ties, offset in part by a considerable increase in the banks’ investment holdings. BILLIONS OF DOLLARS RESERVE BANK CREDIT Monthly averages of daily figures for 12 Federal reserve banks. Latest figures are averages of first 23 days in January. Call loan rates showed the usual seasonal decline at the turn of the year, but other money rates were slightly firmer. The rate on bank ers’ acceptances increased during the second week of January from 3% to 3 }i per cent and at the same time there was also a slight ad vance in rates on time money in the open market. 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 In the Tw elfth Federal Reserve District the year 1927 witnessed a decline in industrial ac tivity, the maintenance of trade at active levels, improvement in the economic position of agri culture, and a slight downward movement of the general price level. Changes in banking and credit conditions during the year have reflected, with consider able accuracy, seasonal and other changes in the general business situation. The usual spring, autumn, and holiday or year-end peaks of credit demand were experienced, but in the latter half of the year changes in the pace of business served to m odify seasonal movements in demand for funds. Over the year period commercial loans of reporting member banks declined 8 million dollars while loans on securities and other collateral increased by thrice that amount. Both time and demand de posits at these banks increased during 1927, but the increase in time deposits was greater, both actually and relatively, than the increase in demand deposits. Member banks have used these additional funds to liquidate their in debtedness at the Reserve Bank, and to in crease their investment holdings. Condition statements of the Federal Reserve Bank of San Francisco, at the opening of 1928, showed little fundamental change from similar statements issued at the beginning of 1927. Interest rates ranged generally lower during the first weeks of January, 1928, than during January, 1927. Decreased activity in building, lumbering, and food products industries were principally responsible for the lower level of industrial activity prevailing during 1927 as compared with 1926. Industrial production decreased during the last three-quarters of the year and employment in industry declined. An un usually large migration of workers into the district during the last months of the year added to the volume of seasonal mid-winter unemployment. In contrast to the reported decline in indus trial activity, trade was well maintained dur ing 1927, and the volume of goods distributed through retail and wholesale channels was probably greater than in 1926. The trend of distribution and trade was upward during the first eight months of 1927 and, although figures of carloadings afford some evidence of con traction during the fourth quarter of the year, trade generally was more active during that period than it was a year earlier. The general level of wholesale prices in the United States averaged 5 per cent lower during 1927 than in January, 1928 FEDERAL RESERVE AGENT AT SAN FRANCISCO 1926, and there is reason to believe that a simi lar movement of prices occurred in this district. W holesale prices for farm products, hides, and textile products, however, were higher at the close of 1927 than at the end of 1926. Agricultural yields in the district were larger and prices of farm products in general were higher in 1927 than in 1926. Increased pur chasing power per unit of agricultural product accompanied increased gross farm income, so that the farmer’s economic position was some what improved. Physical conditions over the year-end have favored agricultural operations. Agriculture Rainfall and winter temperatures in agricul tural areas of the Twelfth Federal Reserve District were approximately normal during December and early January. In the moun tains the snowfall has been moderately heavy, and the depth and character of the snow-pack give promise of an adequate supply of water for agricultural and other purposes later in the year. RAINFALL (in inches)—Twelfth District July 1,1927 Jan. 1,1926 to to Jan.12,1928 Jan.12,1927 (Actual) (Actual) Arizona : Flagstaff .......... Phoenix ............ California: Eureka ............... Fresno .............. L os Angeles . • Red Bluff ____ Sacramento . . . San D iego . . . . San Francisco San Jose .......... Idaho : Boise ................. N evada: Reno ................. O regon : Baker ................. Portland .......... U ta h : Salt Lake City W ashin gton : Seattle .............. Spokane .......... 14.8 3.8 8.7 7.6 11.3 4.1 5.7 26.7 4.7 5.0 14.3 12.0 4.8 6.2 July 1 to Jan. 12 (Normal) 12.8 5.7 19.4 4.2 6.1 8.2 11.4 8.2 4.8 12.0 9.4 4.1 3.9 9.6 5.6 6.2 8.3 5.7 5.4 2.8 3.7 4.5 6.6 6.5 23.8 5.8 23.5 27.9 9.1 8.3 6.7 20.7 15.2 15.8 20.1 8.2 9.7 The United States Department of A gricul ture reports a 3 per cent increase in the area sown to winter wheat in the district. Part of this increase is the result of a shifting from spring to winter wheat growing. Soil moisture favored fall growth of this grain and the snow cover has been sufficient in the colder regions of the district to protect the forthcom ing crop. W I N T E R W H E A T —Twelfth District ^-——Condition----- * TenAutumn Autumn Dec.l, Dec.l, Yearf 1927 1926 Average 1927 1926 t---- Acreage*-----* California Idaho . . . O regon . . U tah . . . . *000 omitted. 879 485 864 165 1,434 837 522 909 157 1,280 3,827 47,897 3,705 43,465 99 93 98 96 2 1 86 96 91 97 85 98 92 88 92 88 84 82 84 fl9 1 7 -1 9 2 6 . The yield of 1927-1928 crop Navel oranges in California is now estimated as 11,650,000 boxes. In 1926 the yield was 12,300,000 boxes. Shipments of oranges from California during November and December, 1927, totaled 7,335 carloads, as compared with 7,927 carloads shipped during the same period in 1926. R e turns to the grower for oranges and lemons marketed during recent weeks have continued higher than a year ago. Carlot apple shipments from the principal producing sections of the district were nearly 20 per cent smaller in volume during the first half of the 1927-1928 season than during the same period of the 1926-1927 season. Cold and common storage holdings of apples in Pacific Northwest centers on January 1, 1928, were about 4 per cent larger than last year. Cold storage holdings in the United States on 'th e same date were approximately 27 per cent smaller than a year ago. Increased capacity of cold storage plants in Idaho, Oregon, and W ashington has provided space for apples which formerly would have been shipped to eastern cold storage centers to be held for final distribution. A review of the growth, harvesting, and mar keting of the 1927 California grape crop, re cently published by the United States Depart ment of Agriculture, summarizes the season as one characterized by favorable grow ing weather, good quality fruit, favorable harvest weather (excepting the first two weeks in November) a short shipping season, and fair markets. PRODUCTION AND VALUE OF GRAPES-California Production* (tons) Raisin G rapesf . . . Grapes (table) Grapes (juice) Farm Value Per Ton Total* 1927 1926 1927 1926 1927 1926 303 348$ 473 229 $23.00 383$ 26.00 414 45.00 $20.00 25.00 45.00 $ 6,969 9,048 21,285 $ 4,580 9,575 18,630 *000 omitted. fM arketed fresh. $In addition it is estimated that 142.000 tons were not harvested in 1927 compared with 15.000 tons not harvested in 1926. The condition of livestock and of livestock ranges of the district is generally better than a year ago. Seasonal snowfall, particularly in the Intermountain and Pacific Northwestern states has caused a decrease in available range forage but supplies of supplementary feed are plenti ful. Livestock and range condition figures as reported by the United States Department of Agriculture follow (norm al=100) : Cattle------N ,------- Sheep------ \ Jan.l, Dec.l, Jan.l, Dec.l, Jan.l, Dec.l. 1928 1927 1927 1928 1927 1927 1928 1927 1927 90 91 93 Arizona .......... 84 93 88 87 95 95 t------- Ranges------ s 89 100 88 99 Utah ................ 95 W ashington . 95 Average 17 W estern States 90 California . .. 80 89 80 86 89 102 88 101 95 100 91 98 93 99 97 95 90 84 83 92 85 91 90 100 92 101 97 97 85 93 91 90 92 93 74 92 98 99 97 97 83 92 83 93 91 100 93 101 97 97 94 92 95 93 90 87 In the United States there were approxi mately 10 per cent more sheep and 5 per cent less cattle being prepared for slaughter by special feeding operations on January 1, 1928, than on January 1, 1927. In the Twelfth D is trict, 150,000 less sheep were on feed than at 4 January, 1928 M O N T H L Y REVIEW OF BUSINESS CONDITIONS this time last year, while figures of cattle show a reduction of about 27 per cent. Considerable activity in contracting for the sale of the dis trict’s forthcom ing spring wool clip was re ported during the closing months of 1927. Dur ing early January, however, there was a marked decline in contracting activity. Reported con tract prices, ranging from 32 to 35 cents per pound for the 1928 clip, are from 2 to 3 cents per pound higher than were those paid for the 1927 clip. made up during recent years, and a surplus of some types of structures is now reported in the larger metropolitan areas of the district. In the fourth quarter of 1927, building oper ations exceeded the usual seasonal expectation despite a sharp decrease in December, and were slightly larger than in the third quarter. A tabular statement of value of building per mits issued in the Twelfth Federal Reserve D is trict and of construction costs in the United States during recent years fo llo w s : r ~Value of Permits Issued*-^ ^—Construction Costsf—n Industry In industry, 1927 was a less active year than 1926. Seasonal expansion in output was re ported during the first quarter of 1927, but operations were curtailed during the second and third quarters, and this curtailment per sisted to the end of the year. Seasonal unem ployment during the closing months of 1927 was aggravated by an unusually large migra tion of workers into the district, and a heavy surplus of labor, both skilled and unskilled, is reported throughout the Pacific Coast states. Both number employed and aggregate earn ings of workers on industrial payrolls were smaller in December, 1927, than in December a year ago. Value of building permits issued in 20 prin cipal cities of the district was smaller in 1927 than in any year since 1922. The decrease was the result, chiefly, of the granting of fewer per mits for construction of large commercial and MILLIONS O F D O LLA R S 420 390 360 330 300 270 240 210 _ 180 _ 150 120 90 60 30 ,______ 1 FOURTH QUARTER| I THIRD Q U A R T ER ] - ! SECOND QUARTER | Value 1927 1926 ........................ 1925 1924 1923 1922 Percentage Change from Previous Year $331,821,393 361 ,387,378 4 21 ,594 ,90 6 392,182,245 419,726,721 310,676,178 — 8.2 — 14.3 7.5 — 6.6 35.1 48.7 Percentage Change from Index PreviousYear 189 194 193 191 194 174 — 2.6 0.5 1.0 — 1.5 11.5 — 0.3 * T w e n t y citie s in T w e lft h F e d e ra l R e s e r v e D is t r ic t . t S o u r c e : F e d e ra l R e s e r v e B a n k o f N e w Y o r k . A n n u a l a v e r a g e s o f c o n s t r u c tio n c o s ts , in c lu d in g m a te ria ls an d w a g e s , fo r the U n ite d States. 1913 c o s t s = 1 0 0 . Estimates made by this bank indicate that output of lumber in the district was smaller during 1927 than during 1926. Efforts to keep production within the limits of profitable de mand met with fair success during the early part of 1927, but during the summer and autumn months output tended to exceed ship ments and orders received. Unfavorable weather conditions in the Pa cific Northwest and general holiday shutdowns caused a suspension of logging and milling operations during the last half of December. Curtailment of operations during that period was more extensive than usual and a greater than seasonal reduction in lumber output re sulted. More flour was produced in this district dur ing 1927 than in any other year since 1923. Out put, as reported by 14 large milling companies producing more than half of the district’s total grindings, was 41 per cent larger than in 1926. The increase probably reflected the larger sup plies of wheat available in the Pacific North west, as well as increased market demand, for millers’ stocks of flour were but 12 per cent larger in volume at the close of the year than - U ) Building P erm its— _ I FIRST 1922 1923 1924 December. 1927 No. Value QUARTER 1 1925 1926 B e r k e le y 1927 VALUE OF BUILDING PERMITS-20 CITIES Cumulative and quarterly totals, 1922-1927. semi-commercial buildings. Low er building materials prices also contributed to the decline, but even though allowance be made for this factor, the figures indicate that building was less active during 1927 than during the pre ceding four years. It is evident that a consid erable part of the building shortage, which accumulated during the war period, has been ................... L o n g B e a ch .......... L o s A n g e le s .......... . O a k la n d ................... P a sa d e n a ................. P h o e n ix ................... P o r tla n d .................. S a c r a m e n to ............ Salt L a k e C ity . . S an D ie g o ............... San F r a n c is c o San J o s e ................. S p o k a n e ................... S t o c k t o n .................. D is t r ic t ................ . 174 33 59 360 2,483 392 18 235 93 655 11 133 32 443 620 72 522 71 69 96 $ 6,571 $20,375,770 645,717 345,500 126,764 2,153,235 6,630,403 756,549 118,000 628,513 701,055 1,120,510 38,950 259,940 112,800 1,434,954 2,582,015 124,480 1,281,220 117,225 253,900 944,040 December. 1926 No. Value 173 34 87 362 2,678 660 24 218 82 744 15 183 36 626 756 72 570 80 45 148 $ 7,593 $30,136,065 314,239 19,636 316,339 1,157,265 10,089,871 1,846,999 130,350 458,194 146,598 1,562,705 674,126 339,131 249,575 2,339,828 5,066,659 131,605 4,065,095 455,015 240,185 532,650 January, 1928 at its beginning. The actual amount of this increase in stocks was less than one per cent of total annual production, indicating that con sumption or disappearance of flour approxi mated production during* the year. Both flour and wheat prices averaged lower during 1927 than in 1926, and the extent of their declines was about equal to the drop of 5 per cent in the general wholesale price level. FLOUR PRODUCTION (14 companies operating 19 mills) * Stocks Monthly >— at Close of Year— \ TotalAverage Flour Wheat Year 1927f ........................ 1926 1925 1924 1923 (barrels) 6,010,249 4,961,319 4,674,316 5,907,329 6,779,155 (barrels) 500,481 413,443 389,526 492,277 564,930 (barrels) 442,236 396,431 412,192 548,550 569,430 (bushels) 3,939,150 2,955,219 4,022,593 2,927,762 3,901,986 C o n s o li d a t i o n s h a ve r e d u c e d the n u m b e r o f r e p o r t in g c o m pan ies b u t h a v e n o t s e r io u s ly a ffe cte d the c o m p a r a b ility o f the fig u res. f F ig u r e s fo r o n e m ill p a rtia lly e stim ated . A marked increase (7 per cent) in flour pro duction was reported during December, 1927, contrary to the usual seasonal expectation. Sales of flour also were larger than in N ovem ber, but the increase was not so great as the increase in production, and inventories of re porting mills at the end of December were 14 per cent larger than at its beginning. During 1927, production of petroleum and output of refined mineral oils in California slightly exceeded production in 1924, 1925, and 1926, and was larger than in any other year, excepting the peak year of 1923. Consumption of crude oil was well maintained, exceeding output, so that stored stocks at the close of 1927 (113,281,630 barrels) were 5.2 per cent smaller than at the beginning of the year. Prices for petroleum and petroleum products were gen erally lower during 1927 than during 1926. Average daily production of petroleum in December, 1927 (610,930 barrels), was less than in November, 1927 (617,216 barrels), or in December, 1926 (654,095 barrels). Consump (B) E m ploym ent— t-------- California-------- \ t-----------Oregon-----------\ No. of No. r~ Employees —^ No. of Dec., of Dec., 1926 Firms Industries Firms 1927 All Industries......... 781 136,342 145,286 166 S to n e , C la y and ^ ^.2) G lass P r o d u c t s . 47 6,905 L u m b e r and W o o d ( ^ .1) M a n u fa c tu r e s . . 124 25,682 (3 .0 ) T e x t i l e s .................... 19 2,679 C lo th in g , M illin e ry ( 2 .6 ) an d L a u n d e r in g . 62 7,808 F o o d s , B e v e ra g e s ( and T o b a c c o . . . 167 22,946 W a t e r , L ig h t and ( ^-8) P o w e r ................. 5 8,060 7,050 4 24,934 62 2,751 12 8,041 10* 23,595 45 No. of Employees — Dec., Dec., 1926 1927 27,060 25,642 (-5.2) 150 ( — 2 0.6) 14,541 ( — 6 .7 ) 2,197 ( — 1.8) 507 ( — 1.0) 2,599 (1 2 .8 ) 189 15,582 2,237 512 2,305 O th e r I n d u s t r i e s !. 342 .... 60,085 ( — 11.9) 15 2,177 ( — 16.7) 68,183 .. 2,613 33 ... 5,648 ( — 9 .4 ) ••• 6,235 * L a u n d e r in g o n ly , f I n c lu d e s the fo llo w in g in d u s t r ie s : m etals, m a c h in e r y and c o n v e y a n c e s ; le a th e r an d r u b b e r g o o d s ; c h e m ica ls , o ils and pain ts, p r in tin g an d p a p e r g o o d s . F ig u r e s in p a ren th eses in d ica te p e r c e n ta g e c h a n g e s fr o m D e c e m b e r , 1926. tion of crude oil, contrary to the usual seasonal movement, increased during December as com pared with the three preceding months. PETROLEUM—California Stored Stocks Daily at End of Total Average Year Year 1927 1926 1925 1924 1923 ---------- (barrels) 230,751,000 224,117,000 (barrels) 632,196 614,019 230,147,000 630,541 230 ,064,000 263,72 9,000 628,590 722,545 (barrels) 113,281,630 119,542,556 127,194,894 97,829,374 89,274,244 Producing Average Oil Wells Active Com- Producpleted ingWells 901 913 948 1,238 980 11,278 11,288 11,393 10,903 8,928 S o u r c e : A m e r ic a n P e tr o le u m In s titu te . Of the principal non-ferrous metals, lead was the only one to show increased production during 1927 as compared with 1926. Non-fer rous metals have on the average been lower in price during 1927 than in 1926. In the fourth quarter of 1927, the market for silver and copper improved, however, and in December prices of both these metals were higher than in the same month of 1926. NON-FERROUS METALS—PRODUCTION* ✓—TwelfthDistrict!-^ /----- United States— Unit 1927§ 19260 1927§ 19260 Commodity C o p p e r ......................lb. L e a d ......................... lb. Z in c .......................... lb. S ilv e r ........................o z . S ilv e r ...............d o lla rs G o ld ................. d o lla rs 1,102,766 631,892 165,292 41,402 23,475 23,865 1,119,041 1,696,000 626,528 1,352,000 193,037 1,150,000 43,039 59,145 26,856 33,253 24,914 45,027 1,740,000 1,344,000 1,210,000 62,719 39,136 48,270 000 o m itte d , f I n c l u d i n g all o f A r iz o n a , the five s o u th e a ste rn c o u n tie s o f w h ic h are in the E le v e n th F e d e ra l R e s e r v e D is trict. § P r e lim in a r y . O R evised. S o u r c e : B u re a u o f M in e s , U n ite d States D e p a r tm e n t o f C o m m e rce . Distribution and Trade Total dollar value of sales of reporting retail and wholesale firms, in the Twelfth Federal Reserve District was slightly larger in 1927 than in 1926. In view of the substantially lower level of prices prevailing in the later year, it is probable that the volume of goods moved through both retail and wholesale chan nels was appreciably larger in 1927 than in 1926. Increases in the district’s total of mer chandise and miscellaneous railway freight carloadings support this assumption. RETAIL TRADE—Twelfth District ,-------------- NET SALES*---------------->STOCKS* January 1 to Dec., 1927, Dec.31,1927, Dec.,1927, compared compared with compared <------------- with— ———» same period with Dec., 1926 Nov., 1927 in 1926 Dec.,1926 D e p a r tm e n t S to r e s 0.7 8.4 D r y G o o d s ............ F u rn itu re .............. 2.0 M e n ’ s A p p a r e l . . — 2.1 M e n ’ s and W o m e n ’ s A p p a r e l ............... 2.1 W o m e n ’ s A p p a re l. 10.6 A ll R e p o rtin g S to r e s ................. 0.5 ( 45) ( 5) ( 47) ( 4) 60.7 14.8 66.4 70.3 ( 45) 2.5 (3 7 ) — 5.1 (3 6 ) ( 5) 11.2 ( 4 ) 4.4 ( 3) ( 4 0 ) — 0.3 (2 8 ) — 0.2 (2 4 ) ( 4) ... — 2.1 ( 3) ( 11) ( 9) 51.2 ( 11) 2.2 (1 0 ) 30.0 ( 8 ) — 0.5 ( 9 ) (1 2 1 ) 58.9 (1 1 3 ) 2.7 ( 3 ) 1.3 ( 8 ) 2.1 (8 9 ) — 4.1 (7 7 ) * P e r c e n ta g e in cre a s e o r d e c r e a s e ( — ) . F ig u re s in pa re n th e se s in d ica te n u m b e r o f sto re s r e p o r tin g . 8,119 V---- v . / j M is c e lla n e o u s ________ 5 FEDERAL R E S E R V E AG EN T A T SAN FRANCISCO The general trend of distribution and trade was moderately upward during the first eight months of 1927, and, although figures of car loadings afford some evidence of contraction during the fourth quarter of the year, the volume of distribution of goods through retail and wholesale channels was well maintained. January, 1928 M O N T H L Y REVIEW OF BUSINESS CONDITIONS 6 In December, 1927, this bank’s seasonally adjusted index of the daily average sales of 32 department stores stood at 118 (1923-1925 daily average= 100), compared with 116 in N ovem ber, 1927, 113 in October, 1927, and 117 in De- INDEX NUMBER (30 120 110 100 90 60 70 DEPARTMENT STORE SALES 60 V S A 1923 SALES AT WHOLESALE 1924 1926 1925 1927 TRADE A C T IV IT Y-T W E L F TH DISTRICT Seasonally adjusted index numbers of sales of 28 department stores and about 170 wholesale firms, (1923-1925 average = 100). Latest figures, December, department stores, 118; wholesale firms,98. cember, 1926. The seasonally adjusted index of sales in eleven lines of trade at wholesale stood at 98 in December, 1927 (1923-1925 monthly average= 100), 104 in November, 1927, 96 in October, 1927, and 104 in December, 1926. Railroad carloadings declined during the last three months of 1927. In December, 1927, there were 3 per cent less cars loaded than in D e cember, 1926. WHOLESALE TRADE—Twelfth District Index Numbers of Sales* - 1927 1926 No. of Oct. Dec. Firms Dec. Nov. A g r ic u ltu r a l Im p le m e n ts A u to m o b ile S u p p lies . . A u t o m o b ile T ir e s ............ D r u g s ....................................... D r y G o o d s ........................... E le c t r ic a l S u p p lie s .......... F u rn itu r e ............................. G ro c e r ie s ............................. H a r d w a re ............................. S h o e s ....................................... A ll L in e s 11 13 14 4 15 6 11 14 20 5 20 133 133 *1923-1925 m o n th ly a v e r a g e = 1 0 0 . 102 96 126 103 72 152 97 83 90 78 105 93 98 91 102 141 112 87 137 107 105 90 126 99 101 104 116 103 134 129 96 131 117 90 97 129 104 104 96 99 94 174 108 70 160 108 81 92 88 119 98 104 DEPARTMENT STORE SALES—Index Numbers (1923-1925 daily avera£c=100) Los Angeles (5) t Oakland (4)t Without Seasonal Adjustment D e c ., N o v ., O c t .. D e c ., 1 9 2 7 .. . 1 9 2 7 .. . 1 9 2 7 .. . 1 9 2 6 .. . 197 131 113 195 207 122 134 207 San Fran cisco Salt Lake City 187 128 118 188 110 111 119 111 (5)f (5)f Spo kane (3)t 185 106 118 184 164 115 111 181 156 103 126 166 192 124 117 190 109 97 105 108 114 107 105 106 90 94 99 98 118 116 113 117 (5)f Seattle Dis trict! (28) With Seasonal Adjustment D e c ., N o v ., O c t ., D e c ., 1 9 2 7 .. 1927. . 1 9 2 7 .. 1 9 2 6 .. . . . . 128 127 115 127 118 120 113 118 fF i g u r e s in p a re n th e se s in d ica te n u m b e r o f s to re s. O n e sto re in c lu d e d in d is t r ic t fig u re s n o t: in c lu d e d in c itie s sh o w n above. Prices The general wholesale price level averaged approximately 5 per cent lower during 1927 than in 1926, according to the United States Bureau of Labor Statistics’ revised index of prices of 550 commodities. This differential in prices has not, however, been equally distrib uted throughout the year. During the first four months of 1927, the index declined steadily as it had throughout 1926, so that for the first half of 1927, the index was more than 5 per cent below the figures recorded in the first half of 1926. In August and September, 1927, advances in prices of certain important com modities helped bring the index to a point which, in the latter month, was but 3 per cent below the figure for September, 1926. In the last quarter of 1927, this differential was fur ther reduced, for, whereas in October, N ovem ber, and December, 1927, the index remained practically unchanged, it was declining during these months in 1926. INDEX NUMBERS OF WHOLESALE COMMODITY PRICES United States Bureau of Labor Statistics (1926 monthly average= 100J Average Year Dec. Nov. Oct. Sept. for Year 1927 1 926 1925 ...................................... ...................................... ...................................... 97 98 103 97 98 105 97 99 104 97 100 104 95 100 104 O f the group indexes included in the general index, those for farm products, hides, and tex tile products were higher at the close of 1927 than at the close of 1926, while those for fuels, metals, building materials, chemicals, and mis cellaneous commodities were lower. The D e cember, 1927, index numbers for foods and house furnishings were practically the same as those recorded for December, 1926. The trend of the United States Department of Agriculture’s index of farm products prices t F o r s e a so n a l v a r ia tio n . Sales of new automobiles during 1927 were below those of 1926, the declines being par ticularly marked during the last half of the year. Preliminary estimates indicate that De(C) cember, 1927, registration of new cars, an in dication of cars sold and actually delivered, was smaller than in any month since Febru ary, 1922. (D ) Bank D ebits* — Dec., 1927 Berkeley ......... $ 2 5,795 Boise .............. 16,431 Fresno ............ 4 5 ,5 6 0 Long Beach . . 5 3,4 28 Los Angeles . . 1 ,0 3 5,88 4 Oakland .......... 2 74 ,80 3 Ogden ............ 2 2,3 49 Pasadena ........ 4 2,351 Phoenix ......... 3 5,185 Portland ......... 1 71,483 Reno ............... 10,427 Sacramento . . . 52,991 Salt Lake City 9 5,803 San Diego ____ 68,365 San Franciscof. 1,498,791 San Jose ......... 30,211 Seattle ............ 2 41 ,46 0 Spokane .......... 5 7,6 96 Stockton ........ 3 4,3 56 Tacoma .......... 4 5 ,5 7 4 Yakima .......... 15,929 District ....... $ 3 ,8 74 ,8 7 2 *0 0 0 Dec., 1926 $ 22,025 15,272 5 1,7 90 5 0,7 04 948 ,33 3 2 34 ,16 3 2 5,9 76 4 0,6 34 2 9,2 60 184,945 10,242 39,135 8 6,5 20 69,521 1,102,8150 2 8,2 67 2 1 1 ,64 9 57,249 3 0,8 07 4 7,5 83 1 3,4 84 (------Twelve Months------\ 1927 1926 $ 2 6 3 ,7 3 2 1 69,194 4 95,141 5 80 ,18 8 11,1 98 ,6 1 8 2 ,6 9 7 ,2 4 4 2 2 6 ,0 8 7 4 8 1 ,0 6 8 3 34 ,49 3 2 ,0 4 6 ,2 4 7 1 13,839 4 7 9 ,75 3 8 6 1 ,8 6 6 7 43,279 1 5,051,180 3 2 0 ,1 8 4 2 ,6 1 5,82 7 6 68 ,48 5 3 4 2 ,61 2 5 3 8 ,5 6 0 1 59 ,76 7 $ 3 ,3 0 0 ,3 7 4 0 $ 4 0 ,3 8 7 ,3 6 4 $ 2 33 ,39 8 162,573 4 84,921 590,911 1 0 ,4 75 ,4 9 6 2 ,0 6 5 ,2 5 6 2 4 9 ,24 9 444 ,50 1 3 0 9 ,5 8 4 2 ,1 9 4,62 8 111 ,07 4 3 94,125 8 6 5 ,0 1 6 7 70,819 12,598,4760 3 23,187 2 ,5 5 0 ,9 8 6 670 ,00 3 3 24 ,93 3 5 47 ,65 8 162,072 $ 3 6 ,5 2 8 ,8 6 6 0 omitted. ORevised. fThe November, 1927, bank debit figure for San Francisco has been revised from $ 1,3 24 ,3 9 1 to $ 1,323,671. January, 1928 7 FEDERAL RESERVE AGENT AT SAN FRANCISCO Prices for cotton have been steady since during 1926 and 1927 has been similar to that of the United States Bureau of Labor Statis December 20th. On January 20th, spot mid tics’ composite index of the general level of dling uplands at New Orleans sold for 18.88 wholesale prices, although during the last half cents per pound; on December 20, 1927, at of 1927 farm prices have shown a relatively 19.33, and on January 21, 1927, at 13.40 cents greater advance than has the general price per pound. Continued advances in prices paid for w ool level. In November and December, 1927, the farm products price index stood at 137 (August, have been recorded during the past month. 1909-July, 1914=100), or 10 points higher than For the week ending January 20, 1928, the in December, 1926. Notable exceptions to the average of 98 quotations at Boston was 72.32 general increase in the level of prices for farm cents per pound. A month earlier the average products were the declines in prices for wheat, of these quotations was 68.27 cents per pound, hay, potatoes, and hogs. The 1927 cotton crop and a year ago, 65.42 cents per pound. has been selling at prices approximately 50 per cent higher than were received for the large Banking and Credit 1926 crop. Until November, 1927, quotations Changes in banking and credit conditions in for w ool were lower than in corresponding the district during the year 1927 have fairly periods of 1926, but prices during November accurately mirrored seasonal and other changes and December have been higher than at any in the general business situation. During the time since April, 1926. Cattle prices advanced first half of the year fluctuations in demand for during 1927 to the highest levels since 1920. credit accommodation at member banks and at During December, 1927, livestock prices at the Reserve bank were largely seasonal in Chicago, excepting sheep prices, were slightly character. During the second half of the year lower than in November, 1927. Quotations the changing credit situation reflected a m od were well above December, 1926, prices, how erate recession in industry and in some lines of ever, save for hogs, which averaged 28 per trade, as well as the usual seasonal influences. cent lower in price than a year ago. A t live On September 10, 1927, the rediscount rate of stock markets in the Tw elfth Federal Reserve the Federal Reserve Bank of San Francisco, on District, cattle and lamb prices advanced all classes and maturities of eligible paper, slightly during December, while other prices MILLIO NS OF DOLLARS moved as in the Chicago market. i--------------LIVESTOCK PRICES AT CHICAGO Cattle Hogs Lambs Sheep ............ .......... ............ .......... .......... .......... ............ .......... Percentage changes* -------Cents per pound------ << from Dec., Nov., Dec., One Month OneYear 1927 1927 1926 Ago Ago 13.49 14.00 10.38 — 3.6 30.0 8.40 9.03 11.65 — 7.0 - -27.9 13.34 13.78 12.34 — 3.2 8.1 6.01 5.90 5.88 2.2 1.9 *(— ) decrease. W heat prices were lower during the second half of 1927 than in the same period of 1926. The price range during the past month (D e cember 20th-January 20th) has been rela tively small. On January 20, 1928, the May contract price at Chicago ranged from $1.30^ to $1.32^$ per bushel as compared with a range of from $1.29^ to $1.31^ on December 20, 1927. This contract sold at prices varying from $1.39^ to $1.40^ per bushel on Janu ary 20, 1927. ) LOAN!S AND DISC:ounts/ ........ "■^ f } DEMAND DEPOSITS , .. A. I r X /V TIME DEPOS;its iS — ---- ■^iNVESTMi•NTS |»•unir.-- ------- MEMBER BANK CREDIT—TWELFTH DISTRICT Figures for about 65 member banks in leading cities, as of middle Wednesday of each month. Latest figures, January 18th. (E) Com m odity P rices— Unit Commodity Wholesale Prices (U. S. Bureau of Labor Statistics— 1926 j)rices=10 ) . Purchasing Power of Farm Products (U. S. Dept, of Agriculture)* lb. W ool............................ Average of 98 quotations at Boston..................... Wheat.......................... Chicago contract price for May wheat............... 3t. box . . box Oranges........................ Navels, Fancy, wholesale at San Francisco... Prunes.......................... Size 40/50 in 25-lb. boxes, f. o. b. California. .. lb. Raisins..........................Seedless, bulk, in 25-lb. boxes, f. o. b. Californ .. . lb. Canned Peaches.......... Choice Cling, sliced, 2*/>s, f. o. b. California. Butter.......................... 92 score at San Francisco................................... . . lb. lb. Lead.............................. Monthly average at New York.................... lb. Silver. ...........................Monthly average at New York..................... Jan. 6,1928 96.8 90.8 71.330 $1.30^-1.31*6 2.50-2.65 5.25-5.50 .06 1.70-1.85 A7V* 13.7740 6.5040 57.9570 One Month Ago 96.7 91.6 68.290 $1.3454-1.35 2.40-2.50 6.50-7.00 .06-. 06^ .06 1.75-1.85 .49 13.3190 6.2590 57.4740 One Year Ago 97.9 80.2 65.340 $1.37^-1.3954 1.45-1.75 3.25-5.00 .07-.07^ .07 y2 1.95-2.100 .46 13.3020 7.8550 53.4660 *Ratio of farm prices (August, 1909-July, 1914 prices=100) to wholesale prices of non-agricultural commodities (1910-1914 p rices= 100). fA s published by “ The Lumber Manufacturer and Dealer.’> ORevised. 8 January, 1928 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS was reduced from 4 to 3)4 per cent. The 4 per cent rate had been in effect since November 23, 1925. Follow ing a seasonal decline at the turn of the year, total loans of reporting member banks and total discounts at the Federal Re serve Bank of San Francisco increased during late February and in March, 1927. The sub sequent decline from the spring peak was not unusual, but at the close of the second quarter the downward movement was accelerated as curtailment of industrial activity and delay in harvesting the district’s crops reduced the ordi- MILLIONS OF DOLLARS The holiday demand for additional hand-tohand currency was met, as usual, by a tem porary increase in the amount of Federal re serve notes in circulation. From 169 million dollars on November 30, 1927, Federal reserve note circulation rose to 177 million dollars on December 28, 1927, and subsequently declined until it stood at 159 million dollars on Janu ary 18, 1928. On the whole there has been little change in the general condition of the Federal Reserve Bank of San Francisco as a result of the past year’s banking operations. The primary reserve ratio stood at 73.0 on January 18, 1928, com pared writh 75.7 on January 19, 1927. FEDERAL RESERVE BANK OF SAN FRANCISCO (In millions of dollars, percentage changes in parentheses) Condition /-------- Changes from-------- N Jan.18, One Month One Year 1927 Ago Ago ( + = increase. “ decrease.) + 17 (17.4) hlO (10.1) Total Bills and Securities. .. I ll -22 (67.0) Bills Discounted .............. 54 + 15 (40.0) United States Securities . 41 — 5 (10.2) b 2 ( 6.4) + 6 (59.7) -14 (47.7) Bills Bought ...................... 15 - 8 ( 3.0) Total Reserves .................. — 24 ( 8.5) 254 + 18 (10.3) Total Deposits .................. . , 188 + 4 ( 2.1) Federal Reserve Notes in -16 ( 8.9) Circulation ...................... . . 159 — 17 ( 9.5) Figures for Federal Reserve Bank of San Francisco, as of middle Wed nesday of each month. Latest figures, January 18th. nary demands for funds. During late Septem ber and in October, while the bulk of the dis trict’s crops was being marketed, total loans of reporting member banks expanded, reaching a seasonal peak of one billion 291 million dollars on October 12, which was, however, below the figure of one billion 317 million dollars re ported on March 9, 1927. This is contrary to the experience of most previous years, when the high point of autumn borrow ing has ex ceeded that of the spring peak. Discounts at the Federal Reserve Bank of San Francisco increased from 30 million dollars to 59 million dollars (the high point of the year) during the crop m oving period. The latter figure, reached on O ctober 12, 1927, was 9 million dollars (13.6 per cent) smaller and came two weeks later than the 1926 autumn peak (69 million dollars on September 29, 1926). W ith the passing of the peak of the agricul tural marketing season, reporting member bank loans declined and discounts at the Fed eral Reserve Bank of San Francisco were re duced. Beginning in mid-Novem ber the trend was reversed and loans at reporting member banks increased to a seasonal holiday peak of one billion 306 million dollars on December 21, 1927. Discounts at the Reserve Bank also in creased during the last weeks of the year as Christmas trade requirements augmented member bank needs for credit and currency. Loans of reporting member banks declined slightly over the year-end, as did discounts at the Federal Reserve Bank. Statements of reporting member banks show some interesting developments over the year period. Their total loans and investments showed a net increase of 159 million dollars from January 19, 1927, to January 18, 1928, chiefly as the result of an increase of 142 mil lion dollars in their investment holdings. The so-called commercial loans of these banks actually declined 8 million dollars during the year, while their loans on securities increased by thrice that amount. A partial explanation of these movements is found in the deposit figures of the reporting banks. Both demand and time deposits increased during the year, but the increase in time deposits was greater both actually and relatively than the increase in demand deposits. As a result of these changes reporting member bank investments represented 31.6 per cent of the total loans and investments at the beginning of 1928 as com pared with 27.1 per cent at the beginning of 1927. The proportion of security loans to total loans increased from 25.7 per cent to 27.2 per cent and the proportion of “ all other loans— largely commercial” to total loans declined from 74.3 to 72.7 per cent. Tim e deposits are now 53.4 per cent of total deposits at reporting member banks compared with 52.9 per cent a year ago. REPORTING MEMBER BANKS— Twelfth District (In millions of dollars, percentage changes in parentheses) Condition /—....... Changes from------ -s Jan. 18, One Month One Year 1928 Ago Ago ( + = increase. Total Loans ......................... 1,299 Commercial Loans . . . . . . . . 951 Loans on Securities............ 348 Investments .......................... 625 Total Loans and Investments 1,924 Net Demand Deposits........ 845 Time Deposits ...................... 989 Borrowings from Federal Reserve B a n k .................... 49 — 7 0 — 7 + 23 +17 + 5 +50 ( ( ( ( ( ( ( 0.5) 0.0) 1.8) 3.9) 0.9) 0.6) 5.3) + 1 6 (48.1) — = decrease.) + 17 — 8 + 25 -f-142 +159 + 45 + 73 + ( 1.3) ( 0.9) ( 7.8) ( 29.4) ( 9.0) ( 5.6) ( 7.9) 25 (103.6)
@FedFRASER