Promoting Prosperity With the Los Angeles Chamber of Commerce in “Southern California Business,” January 1926, Part One

by Paul R. Spitzzeri

When it came to the preeminent boosters of greater Los Angeles in the early 20th century, aside, perhaps, from the Los Angeles Times, no entity surpassed the Los Angeles Chamber of Commerce, which employed multiple methods of messaging in its promotion of the region, particularly from a business perspective. One of the many means for its mission making it out to the public was the monthly magazine, Southern California Business.

Prior posts here included a somewhat brief summary of the general contents of the issue, as well emphasizing an article on Hollywood and the film industry in the January 1926 edition of the publication and, now that we are a century removed, we’re returning to the issue to peruse and pore at a deeper level through its pages and share more of its interesting and instructive contents. It is worth observing that there was another in the long series of booms in the area’s history that was especially significant in the earlier part of the decade.

This included a peak in real estate and construction in 1923, which has direct bearing on the Homestead’s history because its owner, Walter P. Temple, was among the many developers seeking to “make hay while the sun shines” as he invested his substantial royalties from oil wells on his Montebello-area ranch in a wide range of projects during that period. This included the founding of his subdivision, the Town of Temple (renamed Temple City in 1928), work on the nearby San Gabriel Valley communities of Alhambra, El Monte and San Gabriel and two office buildings in downtown Los Angeles.

By 1926, however, circumstances changed significantly as a combination of factors, including taking on so much work in a short period of time, challenges with Temple City’s development, and more, led him and his associates, principally business manager Milton Kauffman and lawyer George Woodruff, decided to take out bonds to finance future work, though with risk of having interest added to the principal, payable over many years.

Temple, however, was hardly alone in his grappling with difficulties in real estate, as 1926 was a year of major challenges in the area in other parts of the country, most notably Florida, as part of a “bubble” that rose in 1921 and then deflated, though not burst. There was also the very serious matter of a stock market bubble that came about by 1925 and culminated four years later in a bust of unprecedented proportions in America and which ushered in the Great Depression.

At the dawn of 1926, however, Southern California Business was more concerned about “Facing a New Year With Confidence,” as the title of its opening article informed readers. Leading off the discussion was one of the principal financial figures in the Angel City, Henry M. Robinson, president of First National Bank and also known nationwide for his sagacity, ability and knowledge of economic conditions.

Robinson wrote that “the year 1925 in Los Angeles and vicinity was the best year in the history of the community” when it came to business, though he qualified this a bit in adding,

Certain retail lines have suffered and subdivision sales have been relatively small [such as in Temple City], there has been some over-building in some lines, but on the whole, for soundness and general stability, Southern California was never in as good a position as it now finds itself at the close of 1925.

He asserted that this observation “furnishes a good foundation and background for the expectation that 1926 will have no untoward conditions flowing at any rate from industrial or commercial sources.” A core reason for his assessment was that “our increase in manufacturing has been quite phenomenal in an extremely healthy development and the community as a whole, because of the diversity of its products.”

Robinson also cited “a well balanced production and consumption program” that was accompanied by “income from oil production in the Los Angeles basin that . . . is figured by some to be approximately $12,000,000 a month” and which “promises to continue for years to come,” though maybe more or less than that amount. It was his view that “if adverse conditions should arise, this additional natural source of income will prove a cushion for vacua [a gap] that may occur in other lines.”

More extensive and expressive in his comments was David May, chairman of the May Company department store chain, which acquired the Hamburger family’s long-standing enterprise a couple of years earlier. While Robinson noted issues with “certain retail lines,” May exulted,

As we slam shut the big book 1925, it’s with a sense of satisfaction that it has been a good year—a mighty good year! And the gains we have made—fought for, of course, but made in big measure—are but a forecast of bigger gains to come in 1926.

Having toured other stores in his chain in Akron, Cleveland, Denver and St. Louis as well as visiting the New York City office, May asked “where better can one study [business] conditions than in a department store” and added “there you get the pulse of the public” in a way not found in industry or agriculture.

The merchant, who built his empire from a modest enterprise in the silver mining boom town Leadville, Colorado in the 1870s, asserted that “the store is a barometer of general conditions” because “sales tells you immediately who has money.” Therefore, he continued, “when I speak of conditions in our various stores, I am fairly certain that they are indicative of conditions as a whole.”

While on his tour, he observed that business was booming in his Midwest stores and this was a good herald for Los Angeles because what he witnessed as “a tidal wave of prosperity that is bound westward.” Given this, the veteran merchant prognosticated,

Los Angeles is on the eve of tremendous prosperity—prosperity that is not only heightened by the influx of people, but our own resources, industries and agriculture.

Barring acts of God, and unforeseen conditions, I predict, not only a stabilization of real estate values in 1926, but a healthy, hearty increase in business, due to our natural resources. The slump experienced in real estate, due to the unjustified values; due to the tremendous increase in population, will take care of themselves. These values will become real values.

Those natural resources were largely oil, so May amplified Robinson’s point by remarking that production in greater Los Angeles was up to 600,000 barrels daily valued at some $750,000, so the annual revenue was around $300 million, though he commented “oil is very seldom given credit for being the giant factor it is in the wealth of this section.” In reiterating that 1925 was “splendid” for the Angel City, he added that this meant that “remarkable increase, remarkable progress, a larger clientele, and a good year in every sense of the word.”

After explaining that the new year would involve larger May Company facilities, more investment in merchandise and a growing staff that would mean more business than the prior year, May cited more than 1,600 industries in greater Los Angeles that were “ready and willing to create a larger share of the produce in this section” so that “merchants are seeing fit to shoulder the responsibility in support of local manufactures in order to create, maintain and increase the industrial situation on the Pacific coast.”

A significant element to May’s approach was developing national systems of building contacts in terms of supplying goods that would make “the Pacific coast felt from an industrial standpoint” and he wished the Chamber the best of the New Year and offered his assistance to manufacturers “who are making a splendid effort to back up the commercial growth of this section.” To this end, May, who died in 1927, advised,

Each merchant should make it a point to make known to his buying organization the economic need of getting the right industrial background to this city. This can only be done by co-operation. And the May Company is certainly willing to do its part to help the industrial development of Los Angeles. We have already some 5750 factories of creditable standing, that are willing to compete with Eastern markets as to price and quality.

A peer of Robinson and another major figure in the Angel City’s financial realm was Joseph F. Sartori, president of the Security Trust and Savings Bank, and his brief contribution to the article began with the observation that it had been some years since his institution reported that the concluded year was not more successful than the one prior to it. So, for 1925, he noted that it did not have the speculative issues of 1923 nor the downturns experienced the next year, even as 1923 was considered Security’s apex.

Clearings grew by almost a quarter during that period, while deposits were at a record level, and, more generally in the city, postal receipts were up 20% and retail trade also continued an upward trend. Sartori also mentioned that, even with massive amounts of construction since the start of the decade, building permit valuation was only down by 2% from 1924, while oil production was also slightly lower. Business at the Port of Los Angeles was at record levels, while agricultural production was considered solid. With more importation of eastern investment, Sartori opined that, “altogether, 1925 has been the healthiest year that Los Angeles has had in a long time.”

While he expressed optimism that the new year looked promising locally as “there are many factors favorable to the continuance of brisk business activity, Sartori added,

Viewing the country as a whole, however, it may not be amiss at the time of year when good resolutions are made, to speak a warning against two forms of speculation which are prevalent. One is trading in future values in stock market and real estate speculation; the other is trading in future in future income in the form of installment buying.

This was certainly prescient, looking nearly three years ahead and his contribution concluded that “the less extravagant we are in both during 1926, the longer extended will be our continued enjoyment of real, sound prosperity.”

Barker Brothers was the largest furniture manufacturer and seller in Los Angeles, with some 35 years experience, and its president, Henry S. McKee, commented that 1925 was a good year “so far as I can see,” though he added, “there was nothing sensational about it,” but “started out fairly well, gaining momentum during the months and finishing strong.” Based on his examination of conditions, his prediction was that 1926 would be much the same and so he anticipated “a thoroughly good, successful, satisfactory business year.” He also hoped that what would not happen was a boom, presumably because this would partake of too much of the bubble effect.

The garment manufacturer, Brownstein-Louis Company, was not as well known as the banks, May Company or Barker Brothers, but its secretary-treasurer, Henry W. Louis, mused about the possibilities for the new year and did raise the matter of whether a depression was a possibility. He then remarked that,

I have no hesitancy in stating emphatically that in my own opinion Los Angeles and its metropolitan district . . . is slated for a period of very satisfactory business and for a year that when ended will show that we have made a marked advance in everything that counts in the social order. It is my prediction that Los Angeles will definitely emerge during the coming year from what is known as the “big town” class to a city of recognized metropolitan proportions.

Louis believed that the period of 1924-1925 was one of “marking time,” including liquidations of businesses, while the general business arena “strengthened its foundations and prepared for the expansion that is now at hand.” He cited an unnamed statistician who asserted that the percentage spread in volume from a boom to a depression was 15, which led the commenter to suggest that “very little extra effort is required to change from an unsatisfactory situation to one that brings about the desired results.”

He observed that “Los Angeles, during the past forty years [since the Boom of the 1880s, when William H. Workman was mayor], has proved to the world that she has a genius for growth and development.” In fact, he went on to proclaim that “such a combination of our fertile lands, our hydro-electric power, our sea coast and shipping, our oil fields, our climate and our industrial possibilities cannot be duplicated anywhere in the known world,” though there remained “a vast field of undeveloped possibilities.”

Consequently, Louis advised that, if business figures, “put their shoulders to the wheel” in hard work and faith in their likelihood for growth, they “will find 1926 a good year, a prosperous year and a happy one.” He specified that building, roads and streets, sewers and storm drains, harbor improvements, flood control projects, and the continued growth of industry were key to prosperity, with “the sum total of all of these assuring continuous employment for the workers of this community” which translated into “an increased spending power of our people” and, in return, meant “beneficial returns to our merchants and our banks, the development of our real estate projects and our manufacturing institutions.”

William Lacy had a half-century of experience in Los Angeles, in hardware, banking and, with ex-Sheriff William R. Rowland, developer of the major oil field on Rowland’s inherited portion of Rancho La Puente, where Harbor Boulevard becomes Fullerton Road at the apex of the Puente Hills. He adjudged 1925 to be ‘a very prosperous year” and which involved a balancing of conditions followed the boom year of 1923. The previous five years included a significant influx of population following an abatement of migration during the First World War, but, with that peak, came the “stabilization” that marked 1924 as the building fever broke.

Still, Lacy, wrote, financiers in the Angel City “realized that the basic conditions that have always caused Los Angeles to grow still existed and will always exist but that speculation must be stayed.” He allowed that there was some anxiety felt by those “who could not understand why we should take in sail” and this was fed by “malicious tales told in some of the eastern papers about our ‘busted boom.'” He countered that “because Los Angeles was fundamentally sound in every respect,” 1924 turned out to be a good year overall for business “and prepared the way for the splendid conservative progress made during 1925, which has proved to be a banner year in many respects.”

As examples, Lacy cited post-office business being the best in its existence, that high employment at good wages meant “great purchasing power of our people” so that $25 million was spent during the Christmas holidays, while Los Angeles was said to have a total property valuation of $3 billion. Though harbor business was not considered superior, overall growth was consistent with “the law of supply and demand and is sound in every way.”

Industrial development was “steady and secure” and it was unrealistic to think that new businesses would “spring up like mushrooms” and, in real estate, he was pleased to see that “a large number of fly-by-night” operators “that afflicted us for a while have left us and gone to Florida and we are thankful for that.” Conservatism was the order of the day in development and construction supply what was demanded. Lacy predicted “a continuance of prosperity during 1926” and remarked, with a notable final sentence,

Our country as a whole is enjoying great prosperity and as our growth here is always a reflection of the prosperity throughout the rest of our country, we have every reason to believe that nothing will stop the westward flow of population. Humanity has always sought the most genial climes and great population will always flow to those parts of this earth where living conditions are the easiest. We can rest assured that our own city and Southern California in general will continue to increase in population just so long as we can provide the necessary water supply.

J.S. Kling, head of the Furniture Manufacturers’ Association, noted that the Chamber’s recent industrial report demonstrated that “Los Angeles has perhaps developed industrially more rapidly than any other important American city” and with the conditions such that manufacturers “are rendering as satisfactory financial returns as are those of the older centers of commerce” eastward.

Kling reported that some 110 furniture factories produced $33 million in product and he commented that “there is probably no other furniture manufacturing center which produces such a diversity of commodities or the variety of grades as does the Los Angeles furniture factories.” He observed that most areas of the United States that had furniture manufacturing centers were not as diversified, outside of Chicago, and cheap power, plenty of fuel and water, abundant raw materials, excellent modes of transportation and “greater efficiency of labor” were critical to the region’s success.

The general conditions cited by others in the article were pointed to, including retail trade, bank business, building permits, activity at the harbor and “the fact that labor is more generally and profitably employed,” as indicators of much success for the new year. Agriculture was expected to do well thanks to “excellent prospects of a normal rain fall this season,” so, Kling concluded, “we of the Southland may anticipate with confidence that 1926 will prove to be the greatest forward year in its history.”

All in all, the optimism of these Angel City business leaders was generally uniform with respect to expectations of a successful 1926, though Sartori’s identification of some looming issues was definitely spot-on. It is highly unlikely, however, that he or any of the others could have imagined, in their wildest speculations, what was to come with the Great Depression and those vaunted fundamentals could not prevent what remains the worst financial collapse in our history.

As we embark on our new year, a century later, it is interesting to ponder what the possible futures are for greater Los Angeles and the country, especially in an age that is far removed from the industrial focus of the 1920s and is driving deeper into new realms of technology, so that, as a prominent example, employment and purchasing power are real concerns given the AI “revolution” amid what many warn is also an AI investment bubble as the Dow Jones Industrial Average charges toward 50,000 points.