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CAUTION:

For the convenience of the Press only, release on delivery
probably about 11 A.M., E.S.T., Tuesday May 16, 1939.

SUMMARY OF STATEMENT SUBMITTED TO THE TEMPORARY NATIONAL ECONOMIC
COMMITTEE BY :LAUCHLIN CURRIE, ASSISTANT DIRECTOR DIVISION OF RESEARCH AND STATISTICS, BOARD OF GOVERNORS, FEDERAL RESERVE SYSTEM,
AT THE HEARINGS ON SAVINGS AND INVESTMENT,. May 16, 19^9.
Dr. Currie presented a series of charts and tables which indicated what
our national savings have been in recent years, how they have been invested or
offset, and the relation of such investments to the national income. Among
the conclusions to be drawn from these charts are:
Gross savings amounted to about 19*per cent of the.gross national income
during the 1920*s. In 1937 the same figure had been reached, 19 per cent.
Gross national income may be defined as the sum of the final selling prices of
all goods and services produced in a given year. Net national income is the
same figure less an allowance for depreciation and depletion.
If this ratio of 19 per cent prevails in the future when we push gross
national income up to one hundred billion dollars, which means a net national
income of around 90 billions, we will have to offset some 19 billions of savings by plant expenditures or other outlays if 3 subsequent decline is to be
avoided*
Expenditures which absorbed 01* offset savings remained fairly stable from
1923-1928 despite the steady rise in national income. That rise may be attributable to relatively more consumers1 expenditures nourished by speculation
on the stock market*
During the 20*s expenditures for plant and equipment comprised about half
of the outlet for savings. The same ratio obtained in 1937. But during the
recovery after 1933 expenditures for equipment increased more rapidly than
those for plant structures. By ,1937 equipment expenditures almost levelled
1929. It is perhaps legitimate to infer from these figures that our industrial equipment has been relatively well maintained*
Expenditures for manufacturing"plant and equipment showed a remarkably
close relationship to the volume of industrial production throughout the entire
period studied. They offset 15 per cent of our savings in 1925, 20 per cent in
1929, and ag<iin 20 per cent in 1937.
The borrowings of state and local governments provided an outlet for
nearly one billion of our savings in most years of the 20fs. This outlet
collapsed with the depression. The outlets provided by the Federal Government
increased sharply. Combining both Federal and local government outlets for
savings, the total was about the same in 1925, 1929, and 1937.
When inventories accumulate, they provide an offset to savings just as do
expenditures for plant and equipment. In 1925 this outlet accounted for 9 per
cent of our savings and in 1937. for 28 per cent.


Release No.


S-12 - 5/15/39

- 2 -

Release No. S-12

Another substantial offset to savings is residential housing. Combining
this with expenditures for the plant of non-profit institutions (churches,
country clubs, and so forth), it appears that this outlet accounted for 33 per
cent of our savings in 1925 when the post-War housing boom was going full
blast, but only 11 per cent in 1937.
Expenditures for the plant and equipment of electric utilities appear to
be influenced by the relation of kilowatts produced to generating capacity.
The 1923 relationship was not regained until 1936.
Railroad equipment expenditures in 1937 approximated the 1929 level but
fell considerably* short of the level of the early 20*3. Such expenditures
appear to be predominantly affected by the supply of rolling stock in relation to peak car loadings.
Expenditures for agricultural plant and equipment in 1937 were up to
the level of the late 20*s. Outlets for savings through consumer credit
(instalment buying, and so forth) increased rapidly in the 20's and again
from 1931937. In the latter year the volume of consumer credit outstanding
exceeded the 1929 level.




—-oOo—-

SUPPLEMENTARY TABLE I-a
PLANT AND EQUIPMENT EXPENDITURES BY TYPE OF BUSINESS.
TOTAL
(In millions of dollars)

Total
1918
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1939
1934
1935
1936
1937
1938

6,860
8,034
5,"095
5,666
7,-765
.7,542
8,069
8*934
8,609
8,749
10,045
8,307
5,145
2,834
2,433
3,459
4,390
5,995
7,516
5,462




Railroads
374
630
550
434
1,077
901
728
883
751
673
840
865
360
164
101
218
166
306
525
238

Electrical
Power

Telephones

Transit

Other
Utilities

268
447
288
408
738
844
787
718
738
701
793
855
555
265
120
137
179
269
424
403

132
205
230
266
320
386
387
408
399
460
620
616
411
255
167
180
195
250
349
319

123
162
100
151
180
133
123
116
130
135
135
124
132
61
46
78
117
109
101
83

155
181
137
236
245
355
300
380
427
348
369
298
243
141
72
77
92
120
150
120

Mining
Agriculture
and
Manufact.
2,987
3,412
1,951
2,073
2,581
2,265
2,625
3,045
2,757
2,962
3,490
2,449
1,402
921
993
1,445
1,810
2,483
3,039
2,013

1,128
1,197
488
539
695
665
758
759
818
869
962
765
446
225
289
409
637
786
970
820

Commercial
and
Miscellaneous,
1,693
1,800
1,351
1,559
1,929
1,993
2,361
2,625
2,589
2,601
2,836
2,335
1,596
802
645
915
1,194
1*672
1,958
1,466

SUPPLEMENTARY TABLE I-b
PLANT AND EQUIPMENT EXPENDITURES BY TYPE OF BUSINESS
PLANT
(In millions of dollars)

1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938

Total

Railroads

Electrical
Power

2,982
3,558
2,344
2,536
3,137
3,183
3,456
4,031
3,960
3,942
4,365
3,683
2,166
1,188
874
1,102
1,245
1,628
2,175
1,816

143
243
212
175
361
382
373
492
447
438
503
521
284
126
85
122
83
139
188
117

161
268
170
237
421
473
433
388
391
364
397
419
266
125
55
62
79
116
182
173




Telephones
64
109
90
107
143
177
192
206
196
227
328
310
154
80
41
43
46
63
100
88

Transit
63
82
59
85
74
56
52
51
77
90
82
85
69
29
21
30
40
45
39
41

Other
Utilities
113
122
93
157
166
238
199
239
285
227
256
186
174
100
50
51
63
81
98
78

Mining
Agriculture
and
Manufact.
1,363
1,627
930
880
950
821
935
1,196
1,074
1,137
1,335
945
482
378
374
509
555
708
970
763

490
450
190
250
287
275
282
282
284
278
278
220
155
75
105
120
170
200
230
210

Commercial
and
Miscellaneous
585
657
600
645
735
761
990
1,177
1,206
1,181
1,186
997
582
275
143
165
209
276
368
346

SUPPLEMENTARY TABLE I-c
PLANT AND EQUIPMENT EXPENDITURES BY TYPE OF BUSINESS
EQUIPMENT
(In millions of Dollars)
j
Total
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938

3,878
4,476
2,751
3,130
4,628
4,359
4,613
4,903
4,649
4,807
5,680
4,624
2,979
1,646
1,559
2,357
3,145
4,367
5,341
3,646




Electrical
Railroads | Power
231
387
338
259
716
519
355
391
304
235
337
344
76
38
16
96
83
167
337
121

107
179
118
171
317
371
354
330
347
337
396
436
289
140
65
75
100
153
242
230

Telephones
68
96
140
159
177
209
195
202
203
233
292
306
257
175
126
137
149
187
249
231

Transit

Other
Utilities

60
80
41
66
106
77
71
65
53
45
53
39
63
32
25
48
77
64
62
42

42
59
44
79
79
117
101
141
142
121
113
112
69
41
22
26
29
39
52
42

Itining
Agriculture
and
Manufact.
1,624
1,785
1,021
1,193
1,631
1,444
1,690
1,849
1,683
1,825
2,155
1,504
920
543
619
936
1,255
1,775
2,069
1,250

638
747
298
289
408
390
476
477
534
591
684
545
291
150
184
289
467
586
740
610

Commercial
and
Miscellaneous
1,108
1,143
751
914
1,194
1,232
1,371
1,448
1,383
1,420
1,650
1,338
1,014
527
502
750
985
1,396
1,590
1,120

SPPPLEKEETARY TABLE V
COMPOSITION OF INCOME-PRODUCING EXPENDITURES
THAT OFFSET SAVING, AVERAGE 1923-1929

Government
Plant and Equipment
Mining and Manufacturing
Railroads and Utilities
Other
Housing and Non-profit Institutions
Foreign Bal.
Change in Consumer Credit
•Change in Inventories

Total




Millions of
Dollars

Percent
of Total

506
8,530

3.2
53,3

2,818
2,504
3,208

17,6
15.6

4,780
429
730
1,033

29.9
2.7
4.6
6.5

16,008

100.0

20.0

SUPPLEMENTARY TABLE y-b
COMPOSITION OF INCOME-PRODUCING EXPENDITURES
THAT OFFSET SAVING, 1956
Millions of
Rollars
Government
Plant and equipment
Mining and manufacturing
Railroads and utilities
Other
Housing and non profit institutions
Foreign "balance
Change in consumer credit
Change in inventories
Total




Percent
pf Total

3,939
5,995

26.6
40.6

2,483
1,054
2,458

16 #8
7.1
16.6

1,412
- 153
1,290
2,300

9.6
-1.0
8.7
15.6

14,783

100.0