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X-7211 F E D E R A L R E S E R V E 81 BOARD STATEMENT FOR THE PRESS For r e l e a s e i n M o r n i n g P a p e r s , Monday, J u l y 2 5 , 1 9 3 2 . The f o l l o w i n g summary o f g e n e r a l b u s i n e s s and f i n a n c i a l c o n d i t i o n s i n t h e U n i t e d S t a t e s , based upon s t a t i s t i c s f o r t h e m o n t h s o f J u n e and J u l y , w i l l appear i n the forthcoming i s s u e of the F e d e r a l R e s e r v e B u l l e t i n and i n t h e monthly reviews of t h e Federal r e s e r v e "banks. I n d u s t r i a l a c t i v i t y d e c r e a s e d f u r t h e r f r o m May t o J u n e "by somewhat more t h a n t h e u s u a l s e a s o n a l amount a n d t h e r e was a c o n s i d e r a b l e r e d u c t i o n i n f a c t o r y employment and p a y r o l l s . The g e n e r a l l e v e l o f commodity p r i c e s a d v a n c e d b e t w e e n t h e m i d d l e o f J u n e and t h e m i d d l e o f J u l y , r e f l e c t i n g c h i e f l y a r i s e i n t h e p r i c e s o f l i v e s t o c k and m e a t s . P r o d u c t i o n a n d Employment - Volume o f i n d u s t r i a l p r o d u c t i o n , a s m e a s u r e d by t h e B o a r d ' s s e a s o n a l l y a d j u s t e d i n d e x , d e c l i n e d from 60 per c e n t of the 1 9 2 3 - 1 9 2 5 a v e r a g e i n May t o 59 p e r c e n t i n J u n e . There were l a r g e decreases i n o u t p u t i n t h e s t e e l , c o a l , and m e a t - p a c k i n g i n d u s t r i e s , w h i l e a t a u t o m o b i l e f a c t o r i e s d a i l y a v e r a g e p r o d u c t i o n showed a s m a l l e r d e c l i n e t h a n i s u s u a l a t t h i s s e a s o n , and a t woolen m i l l s a c t i v i t y i n c r e a s e d c o n t r a r y t o seasonal tendency. Consumption of c o t t o n by d o m e s t i c m i l l s showed t h e u s u a l seasonal decline. A t m a n u f a c t u r i n g e s t a b l i s h m e n t s t h e r e was a f u r t h e r r e d u c t i o n o f 3 . 6 p e r c e n t i n number o f e m p l o y e e s and o f 7 . 8 p e r c e n t i n e a r n i n g s b e t w e e n t h e m i d d l e o f May and t h e m i d d l e o f J u n e . D e c r e a s e s i n employment w e r e g e n e r a l , w i t h t h e e x c e p t i o n of t h e a u t o m o b i l e and tobacco i n d u s t r i e s and of s e a s o n a l l y a c t i v e i n d u s t r i e s , s u c h a s v e g e t a b l e and f r u i t c a n n i n g and t h e manufacture of i c e cream. The l a r g e s t d e c r e a s e s w e r e i n t h e s t e e l , t e x t i l e , c h e m i c a l a n d m a c h i n e r y i n d u s t r i e s and a t r a i l w a y r e p a i r s h o p s . X-7211 - 2 - D a i l y a v e r a g e v a l u e o f "building c o n t r a c t s a w a r d e d , a s r e p o r t e d b y t h e F . W. B o d g e C o r p o r a t i o n , d e c l i n e d i n J u n e b u t i n c r e a s e d i n t h e f i r s t h a l f of J u l y . Department of A g r i c u l t u r e e s t i m a t e s a s of J u l y 1 i n d i c a t e a c o r n crop of 3 , 0 0 0 , 0 0 0 , 0 0 0 "bushels, t h e l a r g e s t s i n c e 1923; a w i n t e r wheat crop of 4 3 2 , 0 0 0 , 0 0 0 " b u s h e l s , 4 5 p e r c e n t s m a l l e r t h a n l a s t y e a r and 2 1 p e r c e n t l e s s than t h e f i v e - y e a r a v e r a g e ; a s p r i n g wheat crop of 3 0 5 , 0 0 0 , 0 0 0 "bushels, t h r e e t i m e s a s l a r g e a s l a s t y e a r a n d s l i g h t l y l a r g e r t h a n t h e a v e r a g e ; and a tobacco crop o n e - f i f t h smaller than u s u a l . D i s t r i b u t i o n - Volume of r a i l r o a d f r e i g h t t r a f f i c d e c l i n e d somewhat f u r t h e r i n J u n e and v a l u e o f m e r c h a n d i s e s o l d b y d e p a r t m e n t s t o r e s d e c r e a s e d b y more t h a n t h e u s u a l s e a s o n a l amount. W h o l e s a l e P r i c e s - The l e v e l o f p r i c e s i n w h o l e s a l e m a r k e t s , a f t e r d e c l i n i n g s t e a d i l y d u r i n g May, was r e l a t i v e l y s t a b l e e a r l y i n J u n e , and a f t e r t h e m i d d l e o f t h e m o n t h t h e r e was a n a d v a n c e v.hi c h c o n t i n u e d t h r o u g h t h e second week i n J u l y . P r i c e s of s e v e r a l leading commodities, i n c l u d i n g l i v e - s t o c k a n d m e a t s , c o t t o n , and s u g a r , i n c r e a s e d c o n s i d e r a b l y d u r i n g J u n e and t h e f i r s t h a l f o f J u l y , b u t l a t e r showed some r e c e s s i o n . P r i c e s of wheat d e c l i n e d t o u n u s u a l l y low l e v e l s and markets f o r copper and l e a d c o n t i n u e d weak. Bank C r e d i t - Volume o f r e s e r v e b a n k c r e d i t c o n t i n u e d t o i n c r e a s e b e t w e e n t h e m i d d l e of J u n e and t h e m i d d l e o f J u l y , r e f l e c t i n g p r i n c i p a l l y f u r t h e r p u r c h a s e s o f U n i t e d S t a t e s Government s e c u r i t i e s b y t h e r e s e r v e banks. I n a d d i t i o n , member b a n k s o b t a i n e d r e s e r v e b a n k f u n d s t h r o u g h a n i n c r e a s e i n the monetary s t o c k of g o l d and a d e c l i n e i n d e p o s i t s h e l d w i t h the r e s e r v e banks by f o r e i g n c e n t r a l banks. Funds r e l e a s e d from t h e s e X-7211 8 3 - 3 s o u r c e s w e r e absorbed, b y an i n c r e a s e i n t h e demand f o r c u r r e n c y w h i c h a l s o c a u s e d t h e member b a n k s t o draw on t h e i r b a l a n c e s w i t h t h e r e s e r v e b a n k s and t o i n c r e a s e t h e i r d i s c o u n t s somewhat. The demand f o r c u r r e n c y w h i c h f o r t h e p e r i o d a m o u n t e d t o $ 2 7 0 , 0 0 0 , 0 0 0 , was c a u s e d b y b a n k i n g d i s t u r b a n c e s , l a r g e l y i n - t h e Chicago d i s t r i c t , by s e a s o n a l requirements a t t h e t u r n of t h e month and t h e F o u r t h of J u l y h o l i d a y , and b y i n c r e a s e d u s e o f c a s h t o a v o i d t h e t a x on c h e c k s . Loans and i n v e s t m e n t s o f r e p o r t i n g member b a n k s , a f t e r f l u c t u a t i n g w i d e l y d u r i n g J u n e , d e c l i n e d i n t h e f i r s t two w e e k s o f J u l y , a n d on J u l y 13 t o t a l e d $ 1 8 , 4 7 5 , 0 0 0 , 0 0 0 , a b o u t $ 5 4 0 , 0 0 0 , 0 0 0 l e s s t h a n on J u n e 1 . T h e r e was a further decline i n loans, while the banks' investments i n United States Government s e c u r i t i e s , a f t e r i n c r e a s i n g s u b s t a n t i a l l y d u r i n g t h e p e r i o d o f Treasury f i n a n c i n g i n mid-June, d e c l i n e d g r a d u a l l y , but on J u l y 13 were s t i l l $ 9 0 , 0 0 0 , 0 0 0 l a r g e r t h a n s i x weeks e a r l i e r . Money r a t e s i n t h e o p e n - m a r k e t d e c l i n e d f u r t h e r d u r i n g J u n e and t h e f i r s t h a l f of J u l y . A t t h e F e d e r a l R e s e r v e Bank of Mew York b u y i n g r a t e s f o r b a n k e r s ' a c c e p t a n c e s m a t u r i n g w i t h i n 90 d a y s w e r e r e d u c e d f r o m 2 l / 2 t o 1 p e r c e n t on J u n e 2 4 . On t h e same day t h e bank l o w e r e d i t s d i s c o u n t r a t e f r o m 3 p e r c e n t t o 2 l / 2 p e r c e n t , a n d on t h e f o l l o w i n g d a y t h e r a t e a t t h e Chicago bank was r e d u c e d from 3 l / 2 p e r c e n t t o 2 l / 2 p e r c e n t .
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