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98 R-703 BO&~D OF GOVERNO~S OF TH.f! FEDF.RAL RESERVE SYSTEM STATEMENT FOR THE PRESS For release in morning papers, Wednesday, September 18, 1940. The following summary of general business and financial conditions in the United States, based upon statistics for August and the first half of September, will appear in the October issue of the Federal Reserve Bulletin and in the monthly reviews of the Federal Reserve Banks. Production and employment in August showed a further rise from the level maintained in June and July and distribution to consumers also increased. Prices of industrial materials were somewhat higher in the middle of September than a month earlier. • Industrial production The Federal Reserve index of industrial production is estimated at 123 in AUE,"USt as compared with 121 in June and July and 111, the lovJ point for the year, in April. This rise has reflected chiefly the direct and indirect effects of the defenGe program on industries producing durable goods and textiles. Steel production rose further in August as new orders for steel continued in large volume, and for the month as a whole mills operated at 90 per cent of capacity. Following a temporary decline over the Labor Day week, tho rate of output advanced to 93 per cent of capacity in the third week of September. In most branches of the muchin- ery industries activity showed a continued expa11sion in August and there were further sharp increases in shipbuilding and the manufacture of 99 R-703 -2aircraft. With the growth in production of finished durable goods, con- swnption of nonferrous metals advanced to the highest levels since last winter. Output of automobiles was in small volume in August owing to the seasonal change-over to 1941 model cars. The low point :in production was reached early in August; there was a gradual rise later in that month followed by a sharp advance in the first two weeks of September as most . C<)mp<mies began volume production on new models. Lumber production, which had declined in July, rose considerably in August. Textile mill activity continued to increase in August and was at the highest level since last January. Cotton consumption advanced considerably further and silk deliveries rose from the small volume of recent months. Activity at wool textile mills increased seasonally·, fol- lowing a sharp rise in July, while at rayon. mills activity sho·;-ved a less than seasonal increase but continued at a high level. Mining of bituminous coal in August was maintained in large ... volume for the se&<son, while production of anthracite declined. Output of crude petrole1.un declined somewhat further. Value of new constructi<m work undertaken in August was at about the same level as in July, according to reports of the F. W. Dodge Corporation and the Feder&l Reserve Bank of San Francisco. The volume of contracts for publJ.c pro,jects continued unusually large and the amount of new private work started vvas larger than in July. Residential building was at the highest level in recent years, on a seasonally adjusted basis, 101 /. ........R-703 -3- -~ • reflecting further increases in both private and public contracts. Distribution Distribution of commodities to consumers increased considerSales at department stores and qy mail order ably from July to August. houses showed a sharp rise and there was a less than seasonal decline in variety store sales. '• In tho early part of September depart.ment store sales continued to increase. Freight-car loadings advanced from July to August when little .. change is usual. Shipments of coal and miscellaneous freight :increased while loadings of grain showed more than a seasonal decline. . Commodity prices Prices of several industrial materials, including c'opper, zinc, . steel scrap, lumber, hides, and print cloth, advanced somewhat from the middle of August to the middle of September and, owing partly to seasonal developments, prices of foodstuffs were also higher. Prices of most other commodities showed little change :in this period, although some paper items were reduced and several new models of automobiles were announced at advanced prices. .. Agriculture Production prospects for most major crops increased during August, according to the Depart~ent of Agriculture. On the basis of September 1 conditions the cotton crop was estimated at 12,772,000 bales, about 1,340,000 bales more than was indicated at the beginning of August. • Preliminar;- esti;:w.tes by the Department indicate that cash fcrm income, R-703 -4including Government payments, will be about ~~i8,900,000,000 for the calendar year 1940 as compar8d with $8,540,000,000 last year. Bank credit Commercial loc:ms increased somewhat at banks in New York City and in 100 other leading cities during the fm.i.!' •weeks ending 11, while their holdings of inv;~strnents s(~ptember showed little change. United States Government sccuri!Qr prices . United States Govm·nment sc>curity prices increased in the last half of August and the first woek in September and were steady in the • second week in September . .. .. 101
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