by Paul R. Spitzzeri
The Los Angeles Chamber of Commerce’s promotion of prosperity in its Southern California Business magazine’s edition of January 1926 included a feature, “Twelve Months of Prosperity” by John E. Barber, vice-president of the First National Bank of Los Angeles, whose president, Henry M. Robinson, was quoted in another article that included predictions for the economic landscape of the city and region for the new year.
Barber (1886-1973) hailed from Toledo, Ohio, where his father was a lawyer and judge, and he became a bonds broker in New York City before relocating to Pasadena, where he was a long-time trustee of the California Institute of Technology, in 1920. During his tenure at First National and then with Pacific-Southwest Bank after the two institutions merged, he was indicted with other prominent figures (such as Motley Flint and his boss at Pacific, Charles F. Stern) in the Julian Petroleum Company scandal, though the charges against him were dismissed. After some years in the utility industry in the Midwest, Barber returned to Pasadena during World War II and was a steel company official, though, in retirement, he consulted with Walt Disney Enterprises and helped secure funding for Disneyland.
In his piece, the banker began with noting that financial issues in Florida, related to a real estate bubble, were such that some thought “that Los Angeles has passed the zenith of her growth and activity and is more or less acutely suffering the pains of deflation and decline.” Barber, however, asserted that “the facts show indisputably that the situation here has not been sounder in 15 years” and that business, on the whole, was better in 1925 that in 1923, “the previous peak year in Los Angeles.”
He cited up to 40 indices to show that “Los Angeles is steadily forging ahead commercially, financially and industrially.” He acknowledged that “in 1924 the situation became spotty,” though there were areas that did well and which “largely offset declines in other lines.” For 1925, Barber reported “the rate of population growth has steadied; real estate activity is considerably less” but, generally, “a healthy improvement in all lines is indicated.”
With respect to population, he cited utility connections as indicative of a solid upward trend, with a table noting increases of nearly half for gas and telephone service and about a third for water comparing the year to 1922, while street railway service declines were due to traffic congestion, apparently meaning more automobiles, as well as increased bus service. A utility company study stated that there were 56,000 more residents in Los Angeles in 1925 than the prior year, though the increase was 120,000 the prior year and 160,000 in 1923.
Another indicator cited by Barber was telegraph revenue from the Western Union firm, with its Los Angeles branch only behind New York City and Chicago in business volume. Activity in the local office was 15% above 1924 and 21% from 1923, though it was added that the nature of the transaction changed, so that cash transfers were down by up to half, but there was a significant increase “in ordinary business messages emanating from industry and commerce.” As examples, messages from the Vernon and Central Manufacturing districts doubled the previous two years.
Bank clearings were at a record and grew by 10% from 1924, while deposits were said to be along the same lines and receipts at the post office were the highest ever, as well. At retail stores, October 1925 sales were almost 10% higher than any prior record month with the holiday season anticipated to be highly successful. Activity at the Port of Los Angeles was noted to be “reflective of business conditions in the Pacific Southwest territory, as well as in Los Angeles,” even as declines in oil shipments affected overall tonnage shipped out. Values, however, showed “a greater diversification in goods handled.”
Similarly, while fewer animals were slaughtered at the Los Angeles Union Stock Yards, the value of animals purchased there was higher. The County Recorder stated that there was a growth in documents filed there, even as much of these were for “deeds now being issued for real estate contracts of purchase which were entered into two or three years ago.” In any case, increases since 1922 for telegraph revenues, bank clearings and deposits and postal receipts ranged from 41% for the latter to 57% for deposits. Retail store turnover of good was 40% higher, harbor tonnage values jumped 90% and those documents were up 54%.
With real estate building permits, there was a major drop from the peak of 1923 (when Walter P. Temple, owner of the Homestead, established his Town of Temple [renamed Temple City in 1928] and was engaged in other projects in the San Gabriel Valley and downtown Los Angeles), while Barber also discussed vacancies and found that there was some modest improvement by the end of 1925. Subdivision map filings were down north of 40% compared to averages over the years 1922-1924, with a large trust company reporting that only a third of the contracts were submitted in 1925 compared to the year before and that the selling price of these was about half.
There was growth in collections on outstanding contracts, even as assignments were down about a quarter. Barber found it notable that there were significantly more installment contrast purchasers who decided to pay their final installment sooner and cited that “in many instances a desire to build was the purpose of prepayment.” Property transfers, though, also dropped significantly as did documentary stamp disbursements, again signaling lower real estate activity. The accompanying table showed these indicators, including that the property transfer value was down a quarter and stamp disbursements slid 30.
In agriculture, citrus shipping slipped, though values were higher so that “1925 has been an exceptionally profitable year” with products 15% higher, at some $500 million, than in the previous year. Even with lower level of oranges and lemons processed, the value was $122 million, the most in the industry’s history, while walnut values were $15 million, the highest since 1919, and the tonnage was a record. There was $35 million in cotton values and up to $25 million with fish catches, while olives and olive oil generated $3.5 million. For apples, cantaloupes, celery, grapes, lemons, oranges, peaches and tomatoes, Barber observed that “California is now shipping approximately 45% of all perishables shipped in the United States.”
Barber recorded that “California is the leading petroleum-producing state, its output now averaging 31% of the total U.S. production,” while greater Los Angeles yielded 68% of the Golden State’s total. Through November 1925, regional production was more than 413.000 barrels per day, only slightly less than at the same time the previous year, though a quarter down from 1923. This, however, was followed by his remark that “as along as oil continues to pour $12,000,000 a month into this section, a serious depression is not to be contemplated.”
Another area discussed in this piece concerned government spending with a estimate for the 1924-1925 fiscal year that the city and county expended some $65 million, an increase of nearly 40% from the prior year and almost three-quarters more than in 1922-1923 and this represented “all additions of real estate, buildings and equipment, as well as spending for the Los Angeles Bureau of Power, Light and Water (now the Department of Water and Power, or DWP).
That entity and the Port Los Angeles spent some $20 million, the largest municipal expenditures, while the most at the county level were for schools ($18 million) and the new Hall of Justice ($3 million.) Special assessment districts within the city involved an additional total of nearly $20 million and involved lighting, storm drains and sewers, tunnels and other projects. A table at the end provided changes in percentages for three years in the area discussed by Barber and an editor’s note stated that his article was to soon appear in the Wall Street Journal.
In “How Business Reflects Optimism,” John W. O’Leary, president of the United States Chamber of Commerce, which formed in 1912, and who visited Los Angeles one day while attending the Seattle meeting of the Chamber’s Western Division, briefly discussed how current conditions were hopeful. While he noted that agriculture “has been a source of great concern” to farmers and those in related businesses, it was added that “conditions are reaching a more satisfactory state.” This was because production was more balanced, prices and income were better and credit more stable, while cooperatives, like Sunkist in citrus and Diamond were walnuts, were becoming more important. O’Leary acknowledged,
We must continue, however, to study our agricultural problem with a view to bring about further improvement even though the last year has witnessed so great an advance.
Along with issues in real estate, such as the bubble in Florida that burst in 1926, concerns with agriculture were such that they were a major issue in the 1928 presidential campaign, including whether increasing tariffs would help farmers, and are very much so in our current political climate.
O’Leary discussed how rail car loadings, considered “a splendid barometer of general conditions,” were at all-time levels, so that a recent month included nearly 4.5 million units, while since July 1925, more an a million per week was the average, and “for the last ten weeks all previous records have been surpassed.” New highs were also mentioned for building construction, with the first ten months of 1925 involving nearly $5 billion, more than any prior year.
Steel mills were said to be running near capacity and each month involved growth in unfilled orders. Exports were up 15% from the last year, while “our reservoir of investments and savings forms a reserve of astonishing proportions when we consider the vast sums we spend for pleasures and luxuries.” With respect to credit, O’Leary commented that “there is a tendency toward higher rates for money,” but there was plenty of it to borrow. This led him to conclude (and we can be mindful of what was to come at the end of the decade with the Great Depression):
We cannot but marvel at the wealth of the country. And we should congratulate ourselves that the pioneer spirit of our people, which has made this great Western country possible and which has inspired men to hazard new enterprises and to found new wealth-creating industries still exists in the sons of those who first pushed westward.
“The Balancing of Agricultural Crops” opened with the assertion that “Southern California agriculture is clearly demonstrating the soundness of its present trend toward even balancing, crop selection and increased unit production.” In 1925, the piece continued, “the full bounty of the Southland’s many natural blessings was bestowed upon her agriculturalists in the form of a series of profitable harvest straight through the year.” This meant that “some crops brought far higher returns than have ever ruled before,” so that “financial conditions in the farming community are satisfying” with ready money for operations in the new year.
It was added that “a ‘Sunkist’ smile prevails throughout the citrus industry, for the past season’s returns were [the] highest in history” at $93 million, with Los Angeles County’s orchards comprising nearly a quarter of the total. Nothing was said, however, about declining yields. The California Walnut Growers Association valued the region’s 1925 crop at $12 million, as it “was larger than usual, too, but good prices have ruled for quality nuts.” Moreover, marketing was said to be excellent and there was an early yield so that growers could sell “a large part of their stick during the holidays.” At the Homestead, Temple devoted a large portion of its 92 acres to raising walnuts and nearby, in Puente, was the world’s largest packing house for the nut.
For vegetables and cotton, the majority of these were raised in Imperial County in the southeastern corner of California and where irrigation in recent years allowed for massive expansion of farming in this arid section. Dairying, of which there was a substantial portion in southeast Los Angeles County in the areas comprising Artesia, Cerritos, Paramount and others, and livestock were also mentioned as part of a diverse agricultural industry, of which it was stated,
It is expected that the total value of agricultural commodities produced in Southern California will be approximately $245,000,000 for 1925 and as Los Angeles is the financial and marketing center for this great producing district, this city naturally reflects its condition.
A short section on new crops includes mention that “avocados, now bearing on around 900 acres in Southern California, will produce a $200,000 crop this year,” with the core area for this small industry being in the “avocado subdivisions” of North Whittier (Hacienda) Heights and La Habra Heights, adjacent to the Homestead on the south. Along with dates, the fruit was still relatively limited in its commercial importance, though it was observed that “our avocados are known to have a higher oil content and nutritive value than those grown elsewhere in the United States.”
The concluding “Development Work” section commented that “during the past year there has also been much interest shown in farm land development” and involved the “subdivision of larger holdings into smaller places,” which characterized the movement toward intensive farming since the start of the Roaring Twenties. Emphasized were irrigation projects in northern San Diego as well as Kern counties, though it was added that the latter was “largely financed by Los Angeles capital” and both sections considered “directly tributary” to the Angel City.
The article ended by observing that there was a “wide diversity of crops grown and the stability that such a program brings,” while “the inherent soundness of the back country of Los Angeles, because of the balancing of crops” assuaged “any doubts as to its continued prosperity.” Improved unit production and more careful choosing of crops in specialized areas “furnishes a double check in assuring our advance in agriculture.”
We’ll return next with a closing part three looking at other interesting and informative content in this issue of Southern California Business, so check in for that!