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R-835 :SOAhD Of l.i-OVEHNORS OF THE FEDERAL RESERVE SYSTEM STATFJi.liiENT FOrt THE PRESS For release in morning papers, Monday, May 19, 1941 The following swnmary of general business and fin:~ncial conditions in the United States, based upon statistics for April and the first half of ;~ay will appec.r in the June issue of the Federal Reserve Bulletin and in the monthly reviews of the Federal Reserve Banks. \Vholesale commodity prices advanced shar0ly in April and the first half of May, with the exception principally of metals for which maximum prices had been established. Industrial projuction declinAd in April, owing to reduced output of coal and automobiles, but increased rapidly in the first half of May c.:.s operations in these industries ··:ere resu.rned. Production In April the Board's seasonally adjusted index of industrial production declined to 139 per 4 points from March. r~ent of the 1935-1939 aver!'tge, a drop of The decline reflected chiefly a sharp reduction in output of bituminous coal, as most mines were closed during the entire month. 'l'he mines were reopened on Ai'ril 30 and in the first half of May coal output increased rapidly. Automobile production also decHned in April, owing to stoppage of vrork at plants of the Ford Motor Company during an industrial dispute. This was settled about the middle of the month and domestic ~1.4 R-835 -2- output has since advanced to a high monthly rate of over 500,000 cars and trucks. Announcement by the Office of Production Management that output in the twelve months ending July 31 would apprnxim.ate 5,290,000 units indicates that a rate ~lose to that now prevailing should be mai.n- tained trrough July, although thera is usually a considerable ~ecline in this period. ;:;ted. production was curtailed somAwhat iu the l:3.tte.-· h<df of Arril b:r .:::hort:.ages of coal and coke and r)utput Lieo::::d.ned from a. J.evel of 100 per cent d' cap,::.city ~.o 9L1. ;Jer ce;:tt at the munth rmd. Sl.lbsequentiy output increrl.sed, reB.ching 99 per ecnt by the mirlEe of ::lay. In most othe:Y> lin(?':l activit;:" c·.)ntinuecJ. to incre<J se during April and the first half of May. Mac;_linery pr;)duct.ion rose furtht::r Rnd acti v- ity in the aircraft and shipbui .Ldinr; inductri es corjtim.J.E:d to E>XlX-tnd rapidly. Consumption of nonferrous met'lls also aciv:lnc,~d, a.nd, as in March, domestic sources of coppe1' wm·e suprlementcd by large supplies from Latin America. in l,ic.rch. 'I'exti le proJnction rose furtLer i'rorn the hi~;:;h rat<J prevafling Consumption of rar-r cotton j_n .:\IJril amount-:Jd to 92C,OOO bales, a new record level, and rayon delivE,ries E'.lsc> rose to a new peak. At wool teY.tile mills act-ivity was maintainea near the hirh Jv!arch rat8. Cont.innE>d advances were reported in the ehelaical, paper, and fnod industries. Anthracite production declined considerably in April, owing to a delay b,v deal•;o;r-s j.n I;lacing usual first half of i.>Acw. S~)ring orders, but increased in the Output c:>f crude pd.roleum showed 1i ttle chn.ng•::: from the March rate, :following some increase from the reduced level of the R-835 -3winter months. Iron ore shipments in April a;nounted to about 7,000,000 tons, an exceptionally large amount for this time of year, and mine output of noni\~rrous metals continued at near capacity rates. Value of c~)nstruction contract avmrds in April declined some- what from the high March total, owing principally to a smaller volume of defense plant contracts, according to F. W. Dodge Corporatio:1 reports. There was an increase ia contracts for publicly financed defense housing, n.nd awards for private residential building rose by about the usual seasonal amount. Di:st..ribution Sales ')l general merchandise at department and variety stores shewed abouf.· ttce usu'cl season''.l rise from lvia.rch to Apri 1., making al'.ow- which had amou:1l-·:;d to 52G,ooo cars and trucks in March, rose further in April <'.nd S'"1le:::: of used cars wer;cJ at peak levels. Frei~;~r:\,-car lo:;dings declined sh,crply in April, reflecting a reduction in shipne;n+,s of cm:d and coke, but increased in the first half of May when co:1l :.liw:s \Jere reopened. By the midcle ·Jf the month total loadings had ri0en to a v;eekl,y rclte one-fourth hi[/her th::m in the corresponJ.~.ng pe:.-iod in th:.. !lUt1.:ua1 of l~c;t, year "nd about the sruue as the seasonal peak reached ::.oJ.~J. Prices of most basic commodities, tK,th domes-Lie and riod of 1i ::-tle c ;~aLge durin~:;: tLe :.Latter part of Aprll. imro~~ted, Pric 2 bcreases R-835 -4- were most pronounced for agricultural commodities reflectin'g in part the prospect of legislation raising Federal loan rates for bas~c farm crops. Prices of a number of semimanufactured industrial products, including petrolewn products, coke, leather, textile yarns and fabrics, and building materials, also advanced. Metal prices, now for the most part sub- ject to Federal control, remained at the maximum levels established earlier. Bank credit Bank loans and investments have shown a marked rise since last summer, the increase at reporting banks in 101 leading cities amounting to $4,000,000,000. In April <:tDci early i'&ay holdings of investments by thase banks increased considerably, mostly at New York City banks, reflecting substantial purchases af newly issued tion notes. Reconstr~1ction Finance Corpora- Increases in Gommercial loans ir1 this period were somewhat smaller than during the preceding two months. Excess reserves of member banks were $5,700,000,000 on May 14. Since January they have declined by about $l,lOO,OOO,OOO, owing largely to increases in Treasury deposits vd th the Reserve Banks and in currency in circulation. The decrease has occurred entirely at New York City banks. United States Goverrunent security Prices Prices of United States Goverrunent securities, which had risen sharply from April 9 to April 2.1, subsequently declined irregularly through May 15. On that date the 1960-65 bonds were 3/4 of a point lower than on April 21 and about l-1/~ points below the nl1-t1me peak reached on December 10, 1940. The yield on this issue is currently about 2..09 per cent, compared with 2.03 per cent on December 10.
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