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M O N T H L Y R E V I E W OF BUSINESS CONDITIONS ISAAC B. NEWTON, Chairman of the Board and Federal Reserve Agent Federal Reserve Bank of San Francisco Vol. XII San Francisco, California, July 20,1928 No. 7 SU M M A R Y OF N A T IO N A L CONDITIONS Prepared by the Federal Reserve Board Industrial production and the distribution of commodities were in smaller volume in June than in May, and the general level of wholesale prices, following a sharp advance in April and May, also declined. Member bank credit was in record volume early in July and indebtedness at the reserve banks was larger than at any time in the past six years. Production. Activity of manufacturing indus tries declined slightly in June, and there was a decrease of about six per cent in output of minerals, owing to declines in production of coal. The manufacture of iron and steel de creased in June by more than the usual seasonal amount, but there are indications that there were no further declines in July. The industry was somewhat more active than a year ago. Production of flour and activity of cotton and wool mills also declined in June. Automobile production showed considerably less than the usual seasonal decline in June, and weekly em ployment figures for Detroit indicate that oper ations of automobile plants were well main tained during the first three weeks of July. The manufacture of agricultural implements and machine tools continued in June at the high level reached last spring. Production of lum ber, copper, and shoes, and activity of silk mills increased in June. Contracts awarded for new building continued large in June and total awards for the first half of the year exceeded those for any previous corresponding period. There were increases over last year in contracts for residential, industrial, public and educa tional building. Awards during the first three PER C E N T weeks in July were in somewhat smaller volume than for the corresponding period of last year. The July estimates of the Department of Agriculture indicate a yield of wheat of 800,000,000 bushels, a decrease of 8 per cent from the harvested yield of 1927, and a yield of corn of 2,736,000,000 bushels, a reduction of 2 per cent. The production of oats, barley, white potatoes, and tobacco is expected to be larger than last year. The acreage of cotton in culti vation on July 1 was estimated at 46,695,000 acres, an increase of 11 per cent as compared with that of a year ago. Trade. Merchandise distribution at retail and wholesale was seasonally smaller in June than in May. Sales of department stores declined by about the usual seasonal amount, and there were smaller declines in sales of chain stores. Sales of wholesale firms in most lines of trade showed more than the usual seasonal decline. Compared with a year ago, sales of department stores and chain stores increased and those of wholesale firms decreased. At the end of June, stocks of wholesale firms were in about the same volume as a year ago, and those of depart ment stores were smaller. Freight carloadings for practically all classes of commodities de clined in June and continued in smaller volume than a year ago. During the first two weeks of July, however, owing to increases in loadings of grains and miscellaneous commodities, total loadings were larger than in the corresponding period of 1927 but continued below the high level of 1926. Prices. The general level of wholesale comPER CEN T 1251 ■ S.F A R M M ANUFACT 100 f— r ’U B E S ^ < A v / 500 v 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 I N E R A L S Index numbers of production of manufactures and minerals, ad* justed for seasonal variations (1923*1925 average =*100). Latest figures, June, manufactures, 109; minerals, 100. r W IO N A G R IC U L t u r a ? V 2 C O M O D IT I E M IN E R \ L S > A A— --.----- PIR O D U C T S 75 1924 1925 1926 1927 V " 1928 W H O L E S A L E P R IC E S Indexes of United States Bureau of Labor Statistics(1926 prices=*100). Latest figures, June, farm products, 106.7; non-agricultural commodities, 95.2. 50 M O N T H L Y REVIEW OF BUSINESS CONDITIONS modity prices declined in June, and the Bureau of Labor Statistics’ index, which had advanced from 96 per cent of the 1926 average in March, the low point for the year, to 98.6 per cent in May, declined to 97.6 per cent. The decline in PER C E N T ______________________________________________________ 1 ,-i h ' i \ t IV, 1 \| • \ porting banks in leading cities were about 160 million dollars smaller than four weeks earlier. The decrease was largely the result of reduc tion by about 125 million dollars in the banks’ investment holdings, but reflected also a decline B IL L IO N S O F DOLLARS * i r - n _____ r x - j rr A f t A L ------ , r V 7 — — w J u ly , 1928 s / i 1 t 1* r * — IaJ 1924 « M " J COM M E R C I A L RESERV ft P A P IE R BANK A C C EP * T A N C E RATE C D IS C O U N T W E RATE 1925 1926 19 27 I 9 2 Ö VW M O N E Y RATES W eekly rates in N ew York money market: commercial paper rate on 4- to 6-months paper, acceptance rate on 90-day paper, and rediscount rate of the Federal Reserve Bank of New Y o rk. the all-commodities index reflected decreases in those groups which had advanced most rapidly in previous months— farm products, foods, and hides and leather products. Prices of livestock and meats, which are included in these groups, showed further advances in June, however, and there was also an increase in the prices of building materials. Prices of silk and rayon, fertilizer materials, house furnishings, and automobile tires declined. During the first three weeks in July there were declines in the prices of wheat and cotton, and advances in prices of cattle and hogs. Bank Credit. Member bank credit, after rising to a record volume early in July, declined somewhat during the two following weeks and on July 18 total loans and investments of re R E SE R V E B A N K C R E D IT Monthly averages of daily figures for 12 Federal reserve banks. Latest figures are averages of first 23 days in July. in the volume of loans on securities following a temporary increase over the mid-year. Con trary to the usual seasonal trend, loans largely for commercial purposes were in record volume during the period. Member bank borrowing at the reserve banks showed a decline following the mid-year settle ment period, but the volume on July 25, at slightly more than one billion dollars, was somewhat larger than five weeks earlier. Hold ings of acceptances and United States securi ties declined during the period. In July there were further advances in openmarket rates for commercial paper and bills, and discount rates at seven of the Federal Re serve Banks were raised from 4 y 2 to 5 per cent. T W E L F T H FED ER AL RESERVE DISTRICT CO NDITIONS General business activity in the Twelfth Federal Reserve District was at lower levels during the first half of 1928 than during the first half of 1927. Activity during June, 1928, approximated that of June, a year ago. Crop conditions, on the whole, have been as favorable this year as last, and a large volume of agricultural production is in prospect in the several states of the district. Industry has been less active thus far in 1928 than in the first six months of 1927. Output of basic industries of the district, such as lumber ing, mining, and petroleum production, has been more nearly adjusted to demand than in the recent past, and it is estimated that stocks of goods held by industrial producers have been reduced. Employment and payroll dis bursements were in smaller volume from Janu ary to June, 1928, than during the same period of last year. During June, 1928, industrial ac tivity, in the aggregate, revealed the usual sea sonal changes and was at levels only slightly below those of June, 1927. The volume of trade transacted in the district was also smaller during the first half of this year than during the same period of 1927, al though value of sales at wholesale and at retail was slightly larger than a year ago. Railroad carloadings and sales of new automobiles were in smaller volume than last year. During June, 1928, carloadings, sales of automobiles, and general sales at wholesale increased by more than the usual seasonal amount. Sales at retail, although smaller than in May, 1928, did not reveal the full seasonal decline expected in trade comparisons of these two months. It is estimated that volume of distribution and trade was larger during June, 1928, than during June, 1927. Commodity prices at wholesale were steady during the first quarter of 1928 at slightly higher levels than in the first quarter of 1927. In April and May, 1928, advances in prices of many commodities — especially agricultural products— brought average prices to the high est level since the autumn of 1926. Recessions July, 1928 FEDERAL RESERVE AGENT AT SAN FRANCISCO in prices during June were moderate and tem porary in character, and indexes for the first two weeks of July were higher than were the indexes for any week of June, nearly equaling high points of late April and early May. The banking and credit situation in the dis trict during the first half of 1928 was influenced chiefly by two factors, (1) seasonal changes in commercial demand for accommodation which, reflecting the lower level of business activity, was in smaller volume than in the correspond ing period of 1927, and (2) the relatively un broken increase from late January to early June in member bank loans on stocks and bonds, which loans have been in larger volume than during 1927. Borrowings of member banks (chiefly city member banks) from the Federal Reserve Bank expanded throughout the six-month period and were heavier than during the first six months of 1927. On Febru ary 4, 1928, the discount rate of the Federal Reserve Bank of San Francisco was raised from Z y 2 per cent, the rate in effect at the beginning of the year, to 4 per cent. On June 2 the rate was raised to A y 2 per cent. Agriculture Crops developed satisfactorily in the Twelfth District during June and early July, and early harvest returns generally tended to substan tiate previous forecasts of production made by the United States Department of Agriculture. Present estimates indicate that the district’s 1928 wheat crop will be harvested from 5,421,000 acres, an area slightly less than the 5,495,000 acres from which the 1927 crop was harvested. The July 1 forecast places wheat production at 105,100,000 bushels this year, an amount approximately 21 per cent less than the 1927 crop. The smaller crop this year reflects a deficiency in rainfall during May and June in producing areas of the Pacific Northwest. Stocks of wheat remaining on farms in the United States totaled 23,450,000 bushels on July 1, 1928, as compared with 27,215,000 bushels on the same date in 1927. The 1928 barley crop in the district is approximately 9 per cent larger than a year ago. In California, the principal barley producing state, an in crease of 18 per cent (4,960,000 bushels) is fore cast. P R O D U C T IO N — G R A IN CROPS (000 bushels omitted) California ........................... Idaho .................................... N evada ............................... O regon ............................... U tah .................................... W ashin gton ..................... T otal .................................... U nited States ................. S o u rce : <------A ll W h ea t-------\------/---------- B arley----------\ Forecast Actual Forecast Actual July 1,1928 1927 July 1,1928 1927 15,950 13,642 32,295 27,335 25,215 32,374 4,670 5,676 459 484 483 405 19,361 26,782 3,351 3,185 5,940 5,678 1,470 1,410 38,175 53,344 1,747 2,436 105,100 132,304 44,016 40,447 799,937 872,595 303,110 2 6 4 ,3 9 2 U nited States Department of Agriculture. The acreage devoted to the district’s field crops this year is, in the aggregate, slightly larger than a year ago. An increase of 57 per 51 cent in cotton acreage and a decrease of 15 per cent in rice acreage are outstanding changes among the individual crops. F IE L D C R O P S — Twelfth District (000 omitted) Production Forecast Actual /— Acreage----- \ Unit July 1,1928 1927 1928 1927 Eieans bu. 5,234 6,531 332 368 California, Idah o. 16,891 bu. 16,571 1,605 1,735 United States . . . . Cotton * 187 270 bales 423 Arizona, C a lif.. . . 12,789 bales ... * 41,905 United States . . . . 46,695 H ops 29,794 lbs. 29,517 24 Calif., O re., W ash . 25 29,794 24 lbs. 29,517 25 United States . . . . Potatoes 326 49,583 55,756 bu. 327 Twelfth D istrict. . 443,640 406,964 3,842 3,505 United States . . . . bu. Rice 8,960 California ............... 136 160 bu. 6,691 40,231 35,445 United States . . . . 923 989 bu. SJugar Beets 145 152 1,534 Calif., Idaho, U tah tons 1,268 699 754 United States . . . . tons 6,758 7,753 "Federal legislation does not permit the publishing of this esti mate on July 1. ¡source: United States Department of Agriculture. The official forecast of the 1928 commercial apple crop in the United States indicates a pro duction approximately 28 per cent larger than that of 1927. Forecasts of commercial produc tion in California, Idaho, Oregon, Utah, and Washington total 44,865,000 bushels for 1928, indicating a 26 per cent increase over the 1927 crop of 35,685,000 bushels. During 1926, 40,599,000 bushels were harvested. It is now estimated that aggregate produc tion of the various deciduous fruits and nuts grown in California will be larger this year than last. The apricot, prune, and walnut crops, however, are expected to be smaller this year than in 1927. Seasonal shipments of apricots, cherries, peaches, pears, and plums from that state totaled 3,867 carloads to July 1, 1928, as compared with 2,398 carloads shipped during the same period in 1927. The increased volume of shipments this year has been due quite largely to the fact that the fruit has ripened from ten days to two weeks earlier than in 1927. High quality fruit sold in Eastern markets has, so far this season, brought satisfactory returns to growers. D E C ID U O U S F R U IT S A N D N U T S - C A L I F O R N I A i------Condition-------> /-------- Production ---------- \ (Per cent of normal) (in thousands of tons) July 1,Forecast Actual Actual 1928 1927July 1,1928 1927 1926 A l m o n d s ........................................... . . 13 12 16 Apricots ......................................... .. 174 208 176 C h e r r i e s ......................................................... 19 12 20 A ll G r a p e s .................................................... 2,555 2,406 2,114 Raisin Grapes ............ 101 89 1,540 1,443 1,317 Table G r a p e s ................. 95 83 510 490* 3831 W in e G r a p e s ................ 96 90 505 473 414f Peaches (Clingstone) . . . . . . 395 322 327 Peaches ( F r e e s t o n e ) ................. . . 207 170 214 80 67 226 181 207 P e a r s ...................................... Plums .................................... 84 67 79 57 71 Prunes .................................. 73 79 182 203 150 W alnuts ............................... 65 101 ... 42 15 *142,000 tons not harvested, t i t is estimated that 32,000 tons of table grapes and 20,000 tons of wine grapes were dried and included in above figures. So urce: California Crop Report. The movement of the Valencia orange crop from California to Eastern markets is progress ing satisfactorily. Shipments of oranges and lemons from California during June totaled 52 J u ly , 1928 M O N T H L Y REVIEW OF BUSINESS CONDITIONS 3,365 and 1,917 carloads, respectively, as com pared with 5,647 and 2,184 carloads shipped during June, 1927. California oranges shipped to Eastern markets during recent weeks have met with seasonal competition from deciduous fruits, and prices, f. o. b. California, were lower during June than in the previous month. Quoted prices were approximately 54 per cent higher than a year ago. The condition of livestock on summer ranges in the district is generally satisfactory except in scattered sections of Arizona and Nevada, where ranges are in need of summer rains. Receipts of cattle at eight of the principal markets in the district during 1928 to July 1 totaled 412,511 head, which may be compared with 484,282 head received during the same period a year ago. Sheep receipts at these mar kets for the half-year period totaled 1,731,245 head in 1928 as compared with 1,716,432 head in 1927. Prices for cattle and sheep marketed in the district have been maintained at higher levels than a year ago. Hog prices have risen steadily since March, 1928. earlier in the present year. Employment in the food products group of industries (including fruit and vegetable packing, canning and pre serving) is in larger volume than a year ago, a partial reflection, no doubt, of the earlier agri cultural season this year. Industrial employ ment in June, 1928, was only 1.1 per cent smaller in volume than in June, 1927, whereas the May figures showed a decrease of about 5 per cent, and the decrease in the average num ber employed during the past six months as compared with the first six months of 1927 was 4 per cent. IN D E X N U M B E R S Industry Industry generally operated at lower levels during the first half of 1928 than during the first half of 1927. Output of the district's more important industries for which data are avail able (such as the lumber, petroleum, nonferrous metals mining, and flour milling industries) was, on the whole, fairly well ad justed to demand during the first six months of 1928. It is estimated that the volume of stocks held at producing centers was reduced during this period. Employment and payroll disbursements were also in smaller volume than last year. During June, 1928, industrial activ ity, in the aggregate, revealed the usual sea sonal changes as compared with May, and was at levels only slightly below those of June, i927. Reported figures of industrial employment in this district are now more closely approaching the larger figures of 1927 than was the case (A) Industry— Indexes of daily average production, adjusted for seasonal variation. (1923-1925 daily average = 100) 1927------* -------- \ — 1928 Six Six Months Months June Average Apr. M ay June M anufactures : Average 107 Slaughter of L iv e s to ck . 101 106* L um ber .................... Refined M ineral O ilsf • C e m e n t .............................. 113 W o o l C onsum ption . . . . Minerals : Petroleum (C aliforn ia ) f 94 C opper (U nited S ta tes)? 106 Lead (U n ited States) $. 104 91 Silver (U nited S t a t e s )!. Miscellaneous : 106 99 98 103* 143 110 81 119 105 111 148 112 77 100 98 106 144 112 107 102 98 102 147 112 87 97 110 99 94 96 110 100 87 92 103 100 86 97 105 112 93 97 107 114 92 120 111 104 112 106 84 93 103* 108 Value of building permits issued in 93 cities in the district during the first six months of the year was 11 per cent smaller than in the first half of 1927, according to figures compiled by S. W . Straus and Company. Figures for 20 important cities of the district for which com parable data are available since 1919 indicate that building activity during the past six months approximated that of the first half of 1922 (see accompanying chart), and was below that of the intervening years. The sharpest de clines, as compared with last year, generally (B ) Employment— -Californi[a----------- t-------- — Oregon- --------—^ N o . of N o . of N o. r - Employees —* N o. f— Employees of June. June, of June, June, 1927 Firms Industries Firms 1928 1928 1927 A ll Industries........... 776 152,828 154,494 154 28,221 28,295 ( - 1 .1 ) ( - 0 .3 ) Stone, Clay and 7,141 Glass P rod u cts. 47 (— 9.5) L um ber and W o o d M anufactures . . 120 26,652 (— 4.3) 19 2,501 (— 9.4) Clothing, M illinery 8,035 and Laundering. 63 ( — 0.5) F ood s, Beverages and T o b a cco . . 170 31,153 (13.7) W ater, L igh t and 5 8,140 P ow er ............... 7,894 27,840 2,760 8,072 27,388 5 358 58 247 ( — 31.0) 16,534 (— 3.3) 11 1,933 (— 8.9) 9* 475 (5.1) 41 4,128 (33.7) 17,091 2,123 452 3,087 7,765 (4 .8 ) *Prelim inary. f N o t adjusted for seasonal variation. JPrepared b y Federal R eserve B oard. § Other than M erchandise and M iscellaneous. C A R L O A D IN G S O F “ O T H E R T H A N M E R C H A N D IS E A N D M I S C E L L A N E O U S F R E I G H T ” — T W E L F T H D IS T R I C T Index adjusted for seasonal variation; 1923-1925 daily average = 100. Latest figure, June, 120. 67,047 70,582 ( — 5.0) 2,159 15 30 4,904 M iscellaneous . . . . 5,184 2,193 (— 1.6) (— 5.4) *Laundering only, fln clu d e s the follow in g industries: metals, m achinery and co n v e y a n ce s ; # leather and rubber good s ; chemicals, oils and p a in ts ; printing and paper goods Figures in parentheses indicate percentage changes from June, 1927. O ther Industriesf. 337 July, 1928 FEDERAL RESERVE AG EN T AT SAN FRANCISCO were reported from the larger cities, building activity in the smaller cities being fairly well maintained. The value of permits issued during June, 1928, was approximately 20 per cent greater than during May, 1928, and 12 per cent greater than in June, 1927. The principal in creases over last year were reported in Phoenix, Arizona; Berkeley, Oakland, and San Diego, California; and Tacoma, Seattle, and Spokane, Washington. M IL L IO N S OF DOLLARS 420F 390 360 330 300 270 T H IR D 240 Q UARTER] 210 180 SECOND QUARTER) 150 120 90 I F IR S T Q U A R T E R 60 30 1922 1923 1924 1925 1926 1927 1928 VALUE OF BUILDING PERMITS-20 CITIES Cumulative and quarterly totals, 1922-1928. Value of contracts awarded for engineering projects and heavy construction in the states of this district as reported by the Engineering News Record was 7 per cent less during the first half of 1928 than in the corresponding period of 1927. During June, 1928, value of such awards was more than 20 per cent larger than in June, 1927. The lumber industry was more active during the first six months of 1928 than in the corre sponding period of 1927. Production expanded during the first five months of the year. The IN O E X NUM BERS LUMBER PRODUCTION-TWELFTH DISTRICT. 1923-1925 daily average = 100. Latest figures, June, adjusted, 103 (preliminary), unadjusted, 107 (preliminary). increase was largely seasonal in extent, how ever, and output was kept well within the limits of demand during the first half of the year. Shipments exceeded production, with a 53 consequent reduction in mill stocks of lumber. During the first five months of 1928 orders ex ceeded shipments and unfilled orders increased in volume. During June, there was some falling off in volume of new orders received, and the volume of unfilled orders declined. This bank’s seasonally adjusted index of lumber production for June remained unchanged from the May figure of 103 (1923-1925 daily average production=100). Production during May and June of this year was smaller than in the same two months of 1927, a decrease due to the sharp in creases in production recorded in those two months of the earlier year. During the first half of 1928, the petroleum industry witnessed the shutting-in of a large number of wells producing heavy oil and the bringing into production of new wells pro ducing lighter, higher grade crude oil. Produc tion was curtailed slightly during the first four months of the year, but increased during May and June. Total output during the full halfyear period was slightly below that of the first six months of 1927, however. Shipments of petroleum to Atlantic Coast and Gulf ports and local consumption have been well maintained, and stored stocks were reduced. Refinery output of petroleum products was in smaller volume during the first half of 1928 than in the corresponding period of 1927. Dur ing the first four months of the year production expanded, but curtailment was reported in May and June. The decline during the past six months was the result almost entirely of smaller output of gas and fuel oils, reflecting, in part, the use of higher grade oil at refining plants with a consequent decrease in residual products. Output of gasoline, kerosene, and lubricating oils was in larger volume than a year ago. The first half of 1928 witnessed a noteworthy improvement in the non-ferrous metal mining industry. Output of copper— most important of the district's base metals— expanded in re sponse to active foreign and domestic demand. Allocation of production among lower cost pro ducers (as noted in the June Review) has re sulted in reduction of stocks, and higher prices. Zinc markets are reported as being steady and lead markets more active than in several months. Silver price quotations rose during the past half-year to the highest levels since Febru ary, 1927, but are now slightly lower than in May. Adjusted indexes of production of copper, lead, and silver for the United States are shown in Table “A .” Of these three metals the Twelfth District in 1927 produced the following per centages of the national output: silver, 69.7; copper, 66.1; lead, 49.0. The flour milling industry in the Twelfth District was more active during the year ending June 30, 1928, than in the corresponding period 54 of 1926-1927. The movement of wheat and flour prices was favorable to the industry, and out put for the milling year was slightly greater than in recent previous years. Domestic de mand during the year just closed tended to keep prices of locally milled flour above an export ing basis, so that less flour was exported than in other recent years. In June, as in May, millers reported a sharp reduction in flour out put and this bank’s seasonally adjusted index of flour production declined to 84 (1923-1925 daily average production=100), compared with 99 in May, and an average of 115 for the first four months of 1928. This index averaged 102 during the past season (July 1, 1927, to June 30, 1928), compared with an average of 100 for the 1926-1927 season. Distribution and Trade During the first half of 1928 activity in trade in the Twelfth Federal Reserve District was at lower levels than in the first six months of 1927. Railroad carloadings, sales of new automobiles, and merchandise sales at wholesale were in IN D E X J u ly , 1928 M O N T H L Y REVIEW OF BUSINESS CONDITIONS NUMBERS 1924 1925 1926 19 27 1928 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 I C 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. smaller volume this year than last, while retail trade was generally maintained at higher levels than a year ago. Sales at wholesale during the first four months of 1928 were smaller in value ( C ) Distribution and Trade1927--------- s 1928 Six Six Months Months Apr. June Average Average June M ay . .. . ------ Index Numbers* 112 110 108 114 Carloadings, Total f . . I l l 120 Carloadings, M erchan dise and M iscel112 115 laneousf ...................... 113 109 116 119 97 99 101 92 98 96 Sales at W h olesa led . . 107 117 115 114 123 114 108 109 104 109 Stocks, Retail§ ............ 107 106 Sales of N ew A u to m o b ile s# 100 87 92 94 P assenger Cars . . . . 102 86 89 86 96 102 Commercial Vehicles 82 95 ■Actual FiguresStock Turnover, R e 0.24 0.24 tail || ................................ 0.23 0.23 0.22 0.22 Collections, RetailH R egular ........................ 46.3 46.2 47.4 45.5 45.2 45.2 Installm ent ............... 15.6 16.0 14.6 15.7 16.1 15.8 * Adjusted for seasonal variation, 1923-1925 av e ra g e = 1 0 0 . fD a ily average. ^M onthly totals of eleven lines combined. § A t end of month. ||Proportion of average stocks sold during month. fiPer cent of collections during month to amount outstand ing at first of month. # F o r source of figures, see June, 1928, Review. than in the same months in 1927, but wholesale trade generally was more active during May and June, 1928, than in May and June of the previous year. Trade activity in Seattle, Salt Lake City and the State of Arizona has been consistently above the average for the district as a whole, throughout the first half of this year. The total volume of distribution and trade increased by more than the usual seasonal amount during June, 1928, and was larger than in June, 1927. Railway freight carloadings of merchandise and miscellaneous commodities were smaller in number during the first half of 1928 than during the first half of 1927. During June, 1928, how ever, they increased by more than the usual sea sonal amount and were larger in number than in June of last year. The increase was general throughout the entire district. Sales of new automobiles in the district were in smaller volume at the beginning of 1928 than at any time in the past six years. Market re covery during the present year has been rapid, however, and although the number of sales during June, 1928, was still well below the high levels of 1925 and 1926, it was about 9 per cent larger than during June, 1927. The total of deliveries during the first six months of 1928 was considerably smaller than in the same period of last year. Sales of 130 reporting retail stores were 1.3 per cent larger during the first six months of 1928 than during the first six months of 1927. This bank’s seasonally adjusted index of sales of 28 department stores (1923-1925 daily aver age sales — 100) averaged 117 for the first six months of 1928, as compared with 114 for the first six months of 1927. There was some con traction in sales during June, 1928. The decline (D) Bank Debits* — June, June, 1927 1928 $ 12,427 13,943 B a k e r s fie ld ..........! ; 10,160 10,734 Bellingham . . . . 20,640 20,682 Berkeley .............. 16,154 13,078 Boise ................... 8,244 8,503 Eugene ................ 13,829 15,214 Everett ................. 28,660 31,810 Fresno ................... 49,355 L o n g Beach . . . 53,531 881,759 L o s Angeles . . . 1,153,229 255,614 227,251 Oakland ............... 16,534 14,455 Ogden ................... 40,270 40,831 Pasadena ............ Phoenix ............... 27,471 33,613 198,766t 162,863 Portland ............... 11,118 10,624 Reno ...................... 721 763 Ritzville ............... 44,707 50,186 Sacramento . . . . 71,889 76,086 Salt Lake C it y .. 10,697 11,651 San Bernardino. 68,050 55,999 San Diego .......... 1,200,298 San Francisco . . 1,899,374 29,258 23,159 San Jose ............ 13,207 Santa B a rb a ra .. 13,683 258,614 219,041 Seattle ................. 57,584 54,795 Spokane ............... Stockton ............ 31,432 29,562 T a c o m a ................. 47,130 47,864 13,287 Y a k i m a ................. 11,792 D istrict.............. :$ 4 , 4 3 6 , 3 3 7 $3,305,854 t— $ First Six Months — \ 1927 1928 87,348 $ 78,739 60,483 59,614 129,834 127,245 84,800 76,060 43,906 44,428 76,581 78,571 199,862 222,435 326,036 303,784 6,530,098 5,703,502 1,514,137 1,332,796 100,383 101,934 257,249 256,904 209,148 168,522 1,026,859$ 984,943 55,029 54,018 5,386 4,560 288,952 199,890 439,893 412,160 64,441 61,568 386,395 377,594 9,686,884 7,199,776 164,281 150,707 82,614 80,766 1,471,808 1,237,336 335,945 325,108 175,924 162,167 271,981 271,378 75,949 73,129 $ 2 4 ,1 5 4 ,1 9 6 $20,147,644 *000 omitted, tln clu d es $16,628,000 at four banks not reporting prior to week ended M ay 2, 1928. $Includes $34,530,000 at four banks not reporting prior to week ended M ay 2, 1928. July, 1928 FEDERAL RESERVE AG EN T A T SAN FRANCISCO was less than that which usually occurs at this season of the year, however, and the seasonally adjusted index advanced from 114 in May, 1928, to 115 in June. A year ago, the index stood at 114. The seasonally adjusted index of stocks of 27 department stores (1923-1925 daily aver age stocks = 100) was 108 in June, 1928, 109 in May, 1928, and 109 in June, 1927. The rate of stock turnover for June this year was more rapid than in June a year ago. R E T A I L T R A D E — Twelfth District ,--------- N E T S A L E S *----------> Jan. 1 to June, 1928, June 30,1928, compared compared with with Jan. 1 to June, 1927 June 30,1927 D epartm ent S t o r e s f ... 1.7 ( 63) 2.1 ( 61) Apparel Stores ............ — 0.7 ( 32) — 0.8 ( 27) Furniture Stores .......... 1.0 ( 48) — 3.2 ( 42) A ll S tores ........................ 1.3 (143) 1.3 (130) S T O C K S* June. 1928, compared with June, 1927 — 1.9 (48) — 0.2 (17) — 5.1 (29) — 2.2 (94) *Percentage increase or decrease (— ) . Figures in parentheses indicate number of stores reporting, fln clu d es dry goods stores. Total sales of 198 wholesale dealers in eleven lines of trade were 1.1 per cent larger in value during the first half of 1928 than during the first half of 1927. Sales of a similar number of firms during June were 2.2 per cent larger, however, than during June, 1927. Part of this increase may be accounted for by the fact that prices of non-agricultural commodities aver aged 2 per cent higher in June of this year than in June of the previous year. A smaller than seasonal increase was reported in sales during June as compared with May, 1928, and this bank's seasonally adjusted index of wholesale sales of 140 firms (1923-1925 monthly average sales = 100) declined 2 points to 99. It stood at 98 in June, 1927. Stocks on hand as reported by 98 wholesalers were 1.1 per cent smaller at the close of June of this year than on June 30, 1927. Prices During the first five months of 1928 com modity prices advanced, reaching the highest levels since October, 1926. Declines occurred during the first half of June, but during the lat ter half of that month and the early part of July advances were again reported. Monthly averages of prices were lower in June than in May, as indicated by such inclusive indexes as that of wholesale prices compiled by the United States Bureau of Labor Statistics, which de clined from 98.6 (1926 monthly average = 100) in May to 97.6 in June. Lower prices for farm products, hides and leather products, and mis cellaneous commodities were largely respon sible for the lower average in June as compared with May, but indexes for several other groups, namely food products, textiles, chemicals and drugs, and housefurnishing goods, also declined. Quotations for wheat dropped sharply in early June, remained relatively stable during the latter part of that month, and then resumed their downward trend. Prices for cattle and hogs at Chicago advanced throughout June, 55 while sheep quotations declined. Lamb prices rose sharply during the first ten days of June, but almost immediately dropped back to late May levels, where they remained until the be ginning of July. Pacific Coast market prices for livestock, excepting hogs, declined during June. Hog prices continued to advance. Several of the commodities for which im provement in prices has been most evident this year are of leading importance in the Twelfth Federal Reserve District. Quotations for cattle, sheep, lambs, wool, hides, barley, and cotton— all valuable products of this district— have been consistently higher than during the first half of 1927. Prices for wheat, a crop of primary importance in the Twelfth District, have fluctu ated rather widely since mid-March, and during April and May averaged considerably higher than during the same months of 1927. More recently, quotations have declined to levels ap proximately the same as, or below, those of a year ago. Citrus fruits have been selling at higher prices but deciduous fruits, on the whole, have been selling at slightly lower prices than last year. Prices received by producers for potatoes have been approximately 50 per cent below those paid a year ago. Copper is by far the most important of the non-ferrous metals produced in the Twelfth District, and prices for that metal have been materially higher during the first half of 1928 than they were in the first half of 1927. Silver prices have also been higher than last year. Quotations for lead and zinc have been below those of a year ago, but have advanced steadily during the past four months. Softwood lumber prices have been consider ably lower than in the first half of 1927, but their trend has been upward since March. Banking and Credit Improvement in the business situation and expansion in trade and industry were reflected in changes in condition of reporting city mem ber banks of the Twelfth Federal Reserve Dis trict during late June. During the first three weeks of July, there was a small seasonal de cline in demand for credit at these banks. Changes in the statement of the Federal Re serve Bank of San Francisco were largely sea sonal during this period and were influenced, to a considerable extent, by special factors arising out of member banks’ anticipation of the mid year call of the Comptroller of Currency for reports of condition. Commercial loans of reporting city member banks expanded during June, 1928. Concurrent increases in industrial and trade activity and in demands for funds for fiscal year-end dis bursements influenced this expansion, which was largely seasonal in character. During the first three weeks of July the volume of commer cial loans decreased slightly, but contrary to 56 July, 1928 M O N T H L Y R EVIEW OF BUSINESS CONDITIONS the usual seasonal movement, such loans aver aged higher during the first three weeks of July than in June. Commercial loans of these banks during June, 1928, were slightly lower than in June, 1927. Loans on securities at reporting city member banks were reduced during June and early July, 1928. The reduction exceeded the increase in commercial loans during this period and total loans of the banks averaged lower during the first three weeks of July than in any other month since March. Demand deposits averaged MILLIONS OF DOLLARS Changes in condition of the Federal Reserve Bank of San Francisco during late June and the first three weeks of July were largely those changes which ordinarily accompany the June 30 call for statements of condition of member banks. The usual mid-year reduction in dis counts amounted to 57 million dollars, or 78 per cent, and was the result almost wholly of re duced borrowing on the part of city member banks, discounts for country member banks ranging from 5 to 6 y2 million dollars during this period. The funds placed at the disposal of MILLIONS OF DOLLARS 300 TOTAL RE2SERVES 'N _________ __ v FEDERA L RESERVE V NOTE C RCULATION 200 / *-------- 100 . . / ✓ a INVESTMENTS \ y ^ 1924 .... 1925 BILLS DISCOUNTE ...............1. ....... .... _ J 1927 1926 R E SE R V E BA N K C R E D IT -T W E L F T H 192 3 D IS T R IC T M o n th l y a v e ra g e o f d a ily fig u re s . L a t e s t fig u re s a r e a v e r a g e s fo r f ir s t t h r e e w e e k s in J u ly . M E M B E R BA N K C R E D IT -T W E L F T H D IS T R IC T M o n th l y a v e r a g e s o f w e e k ly fig u re s . L a t e s t f ig u r e s a r e a v e ra g e s f o r fir s t t h r e e w e e k s in J u ly . slightly higher during June than during May, but declined during the first three weeks of July and also averaged lower than in any month since March. The rate of turnover of these deposits, as indicated by a computation for San Francisco, was considerably slower during June than in May. The slower turnover of deposits, accompanying as it did a reduction in loans on securities, probably reflected the decreased ac tivity in securities markets and the reduction in securities prices which took place during the month. During the first half of 1928 the aver age rate of turnover of deposits in San Fran cisco was more rapid than in any other sixmonth period of record. R E P O R T I N G M E M B E R B A N K S * — T w e l f th D i s t r i c t (In millions of dollars) Commercial Loans . . . . Loans on Securities . . Investm ents .................... N et D em and D eposits Borrow ings from Federal Reserve Bank ........................................................ A v e r a g e C o n d i ti o n D u r i n g M o n th J u ly , Ju n e, J u ly , 1927 1928 19281 1,984 1,778 1,978 1,276 1,335 1,328 947 964 966 329 371 362 503 650 650 776 836 824 1,021 1,013 932 49 43 32 *T o ta l resources of reporting hanks are approxim ately 46 per cent of total resources o f all banks and 62 per cent of total resources of all m em ber banks in the Tw elfth Federal R e serve D istrict. R eporting banks embrace m em ber banks and branches located only in L os Angeles, San Francisco, O ak land, Portland, T acom a, Seattle, Spokane, Salt Lake City, and O gden, tPrelim inary— includes first three reports of July only. member banks through decreased loans on se curities during June and the release of reserves accompanying a decline in demand deposits, were used to effect this reduction in borrowings at the Reserve Bank. Total deposits at that bank declined slightly at the end of June. Liqui dation of member bank borrowings from the Reserve Bank was also facilitated by the use of funds obtained by the withdrawal of bankers' balances deposited with correspondent banks. As a result of this liquidation, there was an in flow of cash into the Reserve Bank which in creased its cash reserves to the record figure of 333 million dollars on June 30. During the first three weeks of July, Reserve Bank discounts again increased, expanding to approximately three times the volume held on June 30, but re maining smaller than in early June. At the same time, member banks increased their balances with correspondents in other financial centers and cash reserves at the Reserve Bank declined. 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) A v e r a g e C o n d i ti o n D u r i n g M o n th J u ly , June, J u ly , 1928 1927 1928* 90 87 101 Total B ills and Securities......................... 50 41 55 Bills D is c o u n t e d .......................................... 21 20 17 Bills B o u g h t ................................................... 42 17 18 U nited States S e c u r it ie s ......................... 294 299 262 Total Reserves ............................................ 190 189 176 Total D eposits .................................... .. 180 172 Federal Reserve N otes in Circulation 175 *Prelim inary— average of first three reports of July. Interest rates, although tending to harden, changed little during June and early July.
@FedFRASER