The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
C O M
P O S I T I O N )
VOLUME & COMPONENTS OF SAVING
N THE UNITED STATES 1933 - 1940
RESEARCH
TRADING
AND S T A T I S T I C S S U B D I V I S I O N OF
AND
E X C H A N G E
D I V I S I O N
SECURITIES AND EXCHANGE COMMISSION
5 FRASER
Digitized for
%
4P
LIBRARY
RESERVE
S P E C I A L
STUDIES
N
U
M
B
JULY
E
R
11
19 41
Page No.
I.
Mature of Report
t.
II.
iaethods and Limitations of Estimation
HI.
The Total Volute of Saving. 1933-1940
>
.
IV.
l
2
,...
4
a.
Level of Total Gross and Met Saving .......................
4
b,
Comparison of Total Gross and Net Saving .................
$
c
»
Relationships of Total Saving to National Income ..........
5
d.
Individual, Business and Government Saving ..............
7
Individual Saving
9
a.
Level of Individual "ross and Net Saving ..................
9
b,
Relationships of Individual Savin* to Income Payments .....
9
Co
Components of Individual Saving ...........................
10
X»
Currency and bank deposits ...........................
10
2.
Savings and loan associations
11
3.
Insurance and pension reserves
11
4.
Securities
13
5»
Liquid saving
13
6.
Liquidation of debt
14
7»
Net claims of individuals
15
g
8.
Durable consumers' goods
16
M •
9.
Interrelationships of components
18
'
10,
Summary
19
*
^
d.
Absorption of Securities
ACS 23
20
3 7 2
78
M6r
1120
.A4-
ii
Paze No.
V.
VI.
VII.
Business Saving
21
a.
Level of Business Saving
21
b.
Relationships of Business Saving to National Incoipe ........
24
Government Saving
25
a.
Level of Government Saving
25
b.
Relationships of Government Saving to National Income ......
26
c.
Components of Government Saving
26
Estimates of Saving in 1941
27
Volume and Components of Saving in the United States, 1911-1940
I,
Nature of Report
This memorandum presents a brief summary of the results of a continuing
study of the volume, components and determinants of saving in the United
States#
The basic methods used were developed several yeare ago and were set
forth in detail in Special Studies No. 3 of the Research and Statistics
Section 1/ submitted to the Commission in March 1939, as well as in Part Four
of Volume III of the Studies in Income and Wealth, published late in 1939 by
the Conference on Research in National Income and Wealth.
Since that time the
estimates of saving have been continued to cover the years 1936 to 1940 and
»
numerous revisions have been made in the estimates for the earlier years.
%
A
detailed description of the methods and sources employed in deriving the estimates
y
summarized in this report is in preparation and will be submitted to the Commission
7
A
at a later date.
It should be explained at the outset that the estimates do not
lay any claim to decimal point precision and are subject to a fairly considerable
*
margin of error.
This qualification applies with special emphasis to the esti-
mates for 1940 which had to be based at numerous points on preliminary figures.
While the set of estimates contained in this memorandum represents in
many respects a considerable improvement over the figures which could be presented two years ago, there are still many points at which additional informaW
tion or refinement of estimates now used are badly needed.
It is intended
to continue to improve the estimates as additional or better source material
becomes available or as staff members can be spared from other assignments to
1
3
;
work on this study.
The present state of the basic material does not lend
itself well to one grand attack resulting in the development of a set technique
and the derivation of a final set of figures»
1/
Rather, improvement must come
"Volume and Components of Saving in the United States* 1933-1937*"
in steps and roust be achieved in cooperation with numerous agencies from
which the basic figures for our component series are obtained.
II.
Methods and Limitations of Estimation
Net
saving, for the purpose of this study, has been defined as the ex-
cess of current income over current expenses (including dividend payments to
equity owners) of all household, business and government units in the United
States.
This excess is equivalent, in conformity with the principles of
accountancy, to the aggregate change in the earned surplus of all these units.
Grose saving is defined as the sum of net saving and allowances for depreciation and depletion.
Realized capital Rains and losses, wrlteups and writedowns
and all other revaluation items are not regarded as forming part of net or
gross saving and consequently so far as possible have been excluded from the
estimates of saving.
From the point of view of the country as a whole, net saving constitutes
that part of the income of residents of the United States earned during any
period which is not spent in the same period on non-durable consumption goods
and services.
This, of course, is equivalent to (a) the total value of the
production of durable goods for both producer and consumer use 1/
(adjusted
for net export or import balance), less (b) the depreciation and depletion on
|the existing stock of such goods, plus (c) the increase (or less the decrease)
in inventories of non-durable goods, and plus (d) the increase (or less the
decrease) in net foreign assets.
3ross saving, from the same viewpoint, is
the equivalent of the current production of durable goods (adjusted for net
export or import balance) plus items (c) and (d) above.
l/
In this study, investment in houses, automobiles and other durable consumers ' goods is considered as part of saving in this same way as investment
in producers' durable goods.
- 3 ™
The saving of any group of economic units may be measured in two ways.
It may be determined either from the balance sheet as the increase in assets
less the increase in liabilities, or from the income account, where it appears
as the difference between current revenue on the one hand end current expense
plus payments to the equity owners on the other.
Since the two methods, in
principle, yield the same results, estimates of saving of different economic
groups derived by the two methods may safely be combined.
In this study the
estimates of saving by corporations and by the Federal government are derived
by the income account method, while the savings of individuals, fanners and
State and. local governments are obtained by the balance sheet approach, i.e.,
from estimated changes in important asset and liability items.
The estimates are subject to two different types of error.
The first is
due to the impossibility of obtaining figures for a few series which theoretically should be included#
The series which are omitted, however, do not
appear to have been sufficiently large to seriously distort the picture here
presented.
Moreover, the changes in these series seem to have had a tendency
to cancel out, at least in part, for the period 1933-1940 as a whole.
Second,
and probably snore important, are the shortcomings inherent in the material now
available for several important series used, notably those on saving by corporations and governmental units, 2/
1/
The most important series for which no usable estimates could be derived
are (a) changes in the holdings of non-tax-exempt securities of non-financial
corporations; (b) unreported retirements of securities by issuers; and (c)
the changes in certain assets and liabilities of non-farm unincorporated
businesses, viz,, plant and equipment, inventories, and indebtedness to
non-individuals»
: T h e r e is also a fairly large margin of error in several of the component
series of saving by individuals. This will be discussed in the detailed
description of methods and sources employed.
It appears that, as a whole, the estimates ehown in this memorandum
understate the level of net saving to some extent.
There is no evidence,
however, of any sizable distortion of the year to year fluctuations#
III.
The Total Volume of Saving. 1911-1940
a.
Level of Total Gross and Net Saving
Table 1 and Chart I show the total estimated volumes of net saving
and of gross saving for each of the years 1933 to 1940.
Gross saving increased rather steadily from close to $6 billion in 1933
to almost $18 billion in 1937.
After a sharp decline in 1938, gross saving
resumed its rise and in 1940 reached a new high of over $20 billion.
For
the period as a whole gross saving totalled $105 billion.
Net saving likewise showed a steady increase from 1933 through 1937®
During the first three years of the period, net saving was negative, the
deficit being at its highest point in 1933 when it amounted to over $5 billion.
Net saving became positive during the 1936-1937 upswing, but even in
1937 reached only $5 billion.
A second sharp increase in net saving started
in 1939 and carried it to the post-depression high of $7 billion in 1940.
Net saving for the entire eight year period amounted to only $7 billion.
From other data which are available % f
it appears that the annual
volume of saving over the 1933-1940 period was considerably below the level
of the late 20 4 s and approached that level only in 1940.
This conclusion,
which is based on the dollar amounts of saving, is somewhat modified when
2/
One important exception is that data on investment suggest that the figures
for total saving saay be too high in 1933 and 1934 relative to the later years,
2/
Very crude preliminary figures, comparable in scope to those presented for
1933-1940, are available back to 1925 and were used for purposes of rough
comparison. Use was also made of the National Bureau of Economic Research
estimates of capital formation.
T
«" 1
N E T A N D G R O S S S A V I N G IN T H E U N I T E D S T A T E S , 1 8 3 9 - 1 9 4 0
(BILLIONS OF DOLLARS)
1833
1934
1935
1936
1937
1938
1939
1940
1933-1940
+3*6
+13*9
NET SAVING
INDIVIDUAL S A V I N G
1 * C U R R E N C Y & BANK D E P O S I T S
-1.2
+2.4
+2.6
+3.9
+0.3
+0.2
2. SAVINGS &
+2*0
-0.6
-0.3
-0.2
-0.2
+0*1
-
+0*1
+0.1
+2*9
•3.1
-0.2
LOAN A S S O C I A T I O N S
3* INSURANCE &
4 . SECURITIES
PENSION R E S E R V E S 1 /
- U * -*
+ 0 . 5 , , •1*4,
+2.9
+ 0 . 9 T +0.1,
-0.4
-1.9
+0RF*
-0*7'
-0*6
-1*3
6* A U T O M O B I L E S
-0*3
—0*4
-0*2
—0*6
-0.2
+0*2
-0*3
+0*4
7 . O T H E R DURABLE C O N S U M E R S * G O O D S 3 /
•0.5
-0*1
—0.4
-
+0*9
8 . LIQUIDATION OF D E B T , N * E * C * 4 /
-0*9
+0.2
+1*1
+0*3
9.
-0.2
+0*9
-0.3
+0*5
-0.7
-0*4
-2.1
+6*3
+5.2
+0*3
+2*1
10* AGRICULTURAL
11* CORPORATE 5 /
-0*3
-3*1
-1*5
-2.4
-0*6
+0*7
-1.5
12*
-1.3
-3*3
-3*9
—1.5
—1.9
-1.1
-0*4
5* N O N F A R M D W E L L I N G S 2 /
TOTAL
>2.5
— 1*0
+17*2
—0.1
•
1*9
-0*1
+0*3
•
+0*8
•1*4
+ 3.2
-0*3
+4*4
-0*6
•7*6
- 1#9
+24*9
-0*2
+0.4
-2*1
- % 4
-0*1
+0.6
- 1.7
—10.8
+0.4
•0.5
-12.5
- 4*9
0*3
BUSINESS S A V I N G
TOTAL
G O V E R N M E N T S A V I N G FJ/
1 3 * STATE AND L O C A L
+0*8
+1*4
+0.6
44*6
1 4 * FEDERAL
•0*5
+0*8
•0*5
+1.0
•
-0*8
—1*6
—1*5
—2*8
-0*3
-0*7
-2*0
-2.1
-11.8
-0*8
-1*0
-2*1
•0*2
+0*2
-1*5
-1.1
-
5.7
-5*5
-3.3
-2*0
+2.3
+5*0
-0.1
+3*3
+7.0
•
6*8
1 7 * NONFAHH D W E L L I N G S 2 J
18*, A U T O M O B I L E S
1.4
1.4
1.4
1.4
1.4
1.4
1.4
1*4
1.4
1*5
1.5
1 9 . OTHER DURABLE CONSUMERS* G O O D S
20. F * W MACHINERY & BUILDINGS
2*1
4*1
4*2
30*9
0.7
0.8
21* P R O P E R T Y OF C O R P O R A T I O N S J J
0 ^
2*2
4*1
0.9
11*4
14.7
3.6
0.6
2.1
4.0
2*3
3*5
0.7
1.7
3.8
3.7
3.6
3.6
3.7
3.8
2 2 . P R O P E R T Y OF S T A T E & L O C A L G O V T S *
3*8
3*8
0 ^
4*0
6.7
30.0
0.4
0*4
0.4
0.4
0.4
2 3 * P R O P E R T Y OF F E D E R A L G O V E R N M E N T
0.4
0*4
0*4
2*9
0.1
0*1
0.1
0.2
0.2
0*2
0*3
0*3
1.5
11*2
11.3
11.4
11.9
12*8
13*0
13*0
13*5
98.1
5*7
8.0
9.5
14.2
17*7
12*9
11.4
20*5
104*8
15*
TOTAL
1 6 . TOTAL NET SAVING
6,1
GROSS S A V I N G
DEPRECIATION
24*
TOTAL
2 5 * TOTAL G R O S S S A V I N G Y
3.6
INCLUDES SOCIAL SECURITY F U N D S .
ONE T O FOUR F A M I L Y N O N F A R M H O U S E S .
INCLUDES N E T C O N S T R U C T I O N OF N O N - P R O F I T INSTITUTIONS; DOES N O T R E F U C T C H A N G E S IN N E T DEBT INCURRED FOR
PURCHASE OF O T H E R DURABLE C O N S U M E R S * G O O D S .
INCLUDES LIQUIDATION OF D E B T ATTRIBUTABLE T O PURCHASES OF CONSUMPTION G O O D S A S W E L L AS OTHER DURABLE
CONSUMERS' GOODS.
NOT ADJUSTED FOR
REVALUATION OF INVENTORIES*
CAPITAL O U T L A Y S OF STATE AND LOCAL G O V E R N M E N T S FINANCED BY F E D E R A L F U N D S ARE CONSIDERED A S SAVING OF
FEDERAL G O V E R N M E N T *
INCLUDES D E P L E T I O N *
N E T SAVING PLUS D E P R E C I A T I O N *
415562
CHART I
GROSS
All 1ST S A T 116
I M S - 1946
m
SATIHI
SKOSS SATIRS
5 account is taken of the fact that, in view of the decrease in the general
price level er.d the price level of investment goods in particular, the
same dollar amount of saving in the 30's represented a somewhat larger
quartity
from the technological point of view
than It did in the late 20*8,
Even in real terms, however, the level of saving characterizing the late 20*s
does not appear to have been reached prior to 1940,
b«
Comparison of Total Gross and Met Saving
The relationship between total gross and net saving is, of course,
determined by the fact that the allowances for depreciation and depletion,
the difference between the two measures of saving, are relatively constant
in spite of wide fluctuations in net saving.
In view of the comparatively
low level of total gross saving over the period 1933-1940, by far the
greatest pert of such saving was needed as an offset to the consumption .
of capital equipment.
For 1933-1935* calculated capital consumption actually
exceeded gross capital formation as reflected in gross saving.
Even during
the last five years net saving was a smaller part of gross saving than in
the late 20*s as a result of the considerable decline in the volume of gross
saving and a slight increase In depreciation and depletion allowances#
0.
Relationships of Total Saving to National Income
For the period 1933-1940, the year-to-year fluctuations in total saving
can be explained quite satisfactorily in terms of national income (Chart II).
There is extremely high correlation between the level of total saving and
national income,
so high in fact that there is relatively little point
to a statistical study of the effect on saving of such other economic
1/
The various statistical relationships are suscarized in the Appendix
Table.
CHART II
RELATIONSHIP BETWEEN GROSS SAVING, NET SAVING AND NATIONAL INCOME
1933 - 1940
DOLLARS
BILLIONS
DOLLARS
BILLIONS
© 40
20
O 37
OGROSS SAVI KG
• NET SAVING
6 39
15
O 36
-
O 30
10
OS6
034
• 40
33
O
#
37
• 39
• 36
•
00
to
V•' : :
• 34
-5
• 33
-10
40
50
60
70
00
NATIONAL INCOME (DOLLARS BILLIONS)
DS-18m
variables ae long-term interest rates, population, taxes, or the distribution
of income —
particularly in view of the paucity of the data and the margin
of error involved, l/
Because of the limitations of the data and of the statistical analysis, 2/
the results presented in Chart II, and in the Appendix Table, should be interpreted with caution, particularly for purposes of prediction.
They appear,
however, to indicate that for every billion dollar increase (or decrease)
in national income there was on the average an increase (or decrease) of close
to $450 million in total gross saving and an increase of slightly over $350
million in total net saving.
Conversely, each increment of one billion
dollars in gross saving was accompanied by an increment of somewhat over
$2 billion in national income, while a rise of one billion dollars in net
saving was associated with a rise of slightly more than $2*5 billion in
national income. 3 /
l/
The apparent curvilinearity of the relationship does not seen, to be of
any economic significance and disappears when saving and income are converted into constant dollars. (This is true whether an investment price
index or a cost of living index is used to deflate saving.) The curvilinearity may t® due in part to estimates of total saving which are too high
in 1933 and 1934 relative to the later years (see p. 4, footnote !)«,
2/
The limitations of statistical analysis referred to are those generally
associated with economic time series — serial correlation, high correlation betvveer independent variables, the difficulties of holding economic,
factors constant, etc. It is feasible to adjust for such deficiencies only
qualitatively.
3/
It might be considered preferable to relate gross saving to gross national)
product instead of national income, but this was not done for technical
reasons which need not be discussed here. It niay be noted, however, that
the results would not be appreciably different from those given in the
text.
5
- 7 d.
Individual. Business and government Saving l/
For the period 1933-1940 as a whole, of the three major groups of
economic units individuals alone showed net saving, their saving totalling
about $25 billion for the eight years.
Business and government, on the other
hand, from the accounting point of 1 view, made inroads on their capital, their
net dissaving adding up to about $13 and $6 billion respectively for the
period* 2 /
Even during the last five years, which may be taken to repre-
sent a more nearly normal level of economic activity, only individuals had a
net saving, although the dissaving of government and particularly that of
business was smaller than for the entire period.
considerably from the late 20'e when —
available —
This state of affairs differs
according to the rough estimates
both government and business exhibited considerable net saving.
Even in that period, however, according to the very tentative data available,
between 50% and 60$ of total net saving was contributed by individuals and
close to 7C$ by individuals and entrepreneurs in unincorporated enterprise
combined.
The relation between the saving of these three groups for each of
the years 1933 to 1940 is shown in Chart III,
Individual saving also constituted a predominant portion of gross saving
for the period 1933-1940.
Of total gross saving of $105 billion, individuals
l/
Individual saving covers the saving of individuals, private non-profit
organizations, and the liquid saving of unincorporated enterprise; business
saving covers the saving of corporations and the business saving of farmers,
the latter being relatively unimportantj government saving covers the saving
of the Federal, State and local governments.
%J
This does not ar.ean that business plant and equipment represented a owaller
productive capacity at the end of 1940 than at the end of 1932, The opposite probably is true, reflecting the difference between the accounting
and the technological changes in business plant and equipment.
CHART III
INDIVIDUAL, BUSINESS AND GOVERNMENT SAVING
1933 - 1940
DOLLARS
BILLIONS
10
DOLLARS
BILLIONS
10
NET SAVING
1
Baza
GROSS SAVING
1933
1934
1935
1936
1937
1938
1939
1940
1/Saving by unincorporated business in the form of currency and deposits and equity in securities
Is Included under •Individual*. Other saving by such business does not appear In the estimates
with the exception of business saving of farmers which is included utoder •Business*.
OS-2 865
accounted for close to four-fifths end business for somewhat over one-fifth,
while the gross saving of all government units taken together cancelled out
for the period as a whole.
The proportions are not changed much if only the
years 1936-1940 are considered.
In the late 20's, on the other hand, consi-
derably less than 60% of aggregate gross saving was accounted for by individuals, while lass than "(0% was accounted for by individuals and entrepreneurs
combined; corporations were responsible for somewhat over one-fifth of gross
saving in that period while government was responsible for about one-tenth of
gross saving.
This concentration of total saving in the hands of individuals Is of
considerable significance for economic policy, and reflects, in part, developments in the field of government and business finance.
Thus, the relatively
high level of individual saving is due, to some extent, to the excess of
government expenditure? over income in the 30's, reflecting deficit financing
by the Federal government, contrasted with the
tures of government in the 20*s.
excess
of income over expendi-
The low level of gross saving and the lack
of net saving by business in the 30*8» though due in large part to the relatively low level of national income and consequently of profits, is partly
i
attributable to an increase in the ratio of dividend distributions to
profits, 2 /
0- factor which in turn helps to explain the relatively high
level of individual saving.
This increase in the ratio of dividend distributions to profits (after
taxes) in the 30*s as compared to the 20's does not appear to be explainable in terms of the level of profits alone. The decrease in the ratio
of corporate saving to profits, or the increase in the ratio of dividend
distributions to profits, adght conceivably be explained simply by a
greater understatement of corporate profits in the 30*s than in the 2C's
as shown on income tax returns which are used in estimating corporate
saving; this, however, does not appear to be likely. F o r 1 9 3 6 , 1 9 3 7 and,
to a lesser extent, in 193C, the tax provisions relating t o undistributed
profits were, of course, an important Incentive to Increased dividend
distributions*
IV,
Individual Saving 2/
a. Level of Individual Gross.and Net Saving
The net saving of individuals was positive in every year of the period
1933-1940 with the exception of 1933.
It fluctuated from a dissaving of about
$2 billion in 1933 to a saving of close to $8 billion in 1940 and aggregated
$25 billion for the entire period.
The gross saving of individuals was about
$7 billion higher on the average, ranging from slightly over $4 billion in 1933
to over $15 billion in 1940.
Both sets of figures are illustrated in Chart III*
As would bo expected, there is a high positive correlation between the saving
of individuals and total saving.
In the neighborhood of three-fourths of each
billion dollar increase in total saving represented individual saving.
Individual
saving and corporate saving likewise show a fairly high correlation j /
though it
is less pronounced than the relationship between individual and total saving.
b.
Relationships of Individual Saving to Income Payments 4/
As in the case of total saving, a very large part of the variation in
individual saving over the period 1933-1940 is explainable in terras of ineoae
payments (Chart IV).
The relationship between saving and income, however, is
not quite so close for Individual saving as for total saving.
Attempts to
2/
Saving, or the change in equity of individuals, in government insurance funds
(i.e., social security and pension funds) is considered as individual saving
unless otherwise noted.
7j
The wholo series of annual estimates is given in Table 1. There is some evidence that the estimates for 1935 and 1937 are somewhat too low relative to
the other years while the estimate for 193^r
2J
The correlation becomes quite swell when m i
4/
Individual slaving is more closely related conceptually and empirically to income payments than to national income. However# the actual differences are
rather small.
2/
The apparent curvilinearity of the relationship again disappears when saving
and income are converted into constant dollars. See p. 6, footnote 1#
/
/Off
Jblclx/y
;
;ant.
CHART IV
RELATIONSHIP BETWEEN INDIVIDUAL, BUSINESS AND GOVERNMENT
NET SAVING AND NATIONAL INCOME
1933 - 1940
TOTAL NET SAVING
($ BILL
8
INDIVIDUAL SAVING
($ BILLIONS)
e
e
40
4
.°
36
#
37
37
#
*39
r
• 3P
.
36
•
38
314
e
38
e
36
36
e
33 ,
#
•
-2
5%
e
33
•
-6
-6
BUSINESS (CORPORATE
AND FARM) SAVING
GOVERNMENT SAVING
JLIONS)
2
S^vrv559
V
33
#
37
36
•
40
54
•
50
60
i57
•
I
1
•
36
80
40
50
NATIONAL INCOME ($ BILLIONS)
60
ft
«0
-2
#
70
?
DS-1866
35
•
36
#
38#
-2
33
*
38
•
jl
70
80
• 10 «
explain statistically the residual variation in individual saving, after
eliminating the effect of incou.e, did not prove very fruitful.
Bach increment of one billion dollars in income payments was accompanied
on the average by an increment of somewhat more than $350 million in individual
gross saving and slightly over $300 million in individual net saving*
Conversely,
for each increase of one billion dollars in individual gross saving there w&s
an increase of approximately $2.5 billion in income payments, while an increase
of one billion dollars in individual net saving was associated with an increase
of somewhat less than $3 billion in income payments, j /
'°*
Components of Individual Saving
It is one of the chief advantages of the method of statistical analysis
employed in this study that it shows separately not only the saving of the
three major groups of economic units (i.e., individuals, business and govern-.
ment) but also the forms of saving within these groups, namely, the type of
assets in which the net saving of the various groups is embodied, ;g/
1.
Currency and bank deposits
One of the striking characteristics of the period 1933-1940 is the high
level of individuals' saving in its most liquid form, i.e., in currency and
bank deposits, which amounted to $14 billion for the period (Chart V)7j
This
type of saving averaged nearly $f? billion per year and in two years, 1936 and
1$40, almost reached $4 billion.
Saving in this form rose from -$1.2 billion
1/
The relationships on which these statements are based, as well Jas a summary
of other important results of the statistical analysis, are shown in the
Appendix Table,
/
I f
This has been done in a systematic manner solely for individuals. Only
preliminary estimates of changes in several important types of assets are
available for the other two major groups, whose saving is generally Measured, as previously mentioned, not by the balance sheet but yy the incorte
account method.
tstf
CHART V
MAIN F O R M S OF I N D I V I D U A L NET S A V I N G
1933 - 1940
LLA1
[jLIC
10
::::::: Autoaobiles aid Other
::::::: Durable Conaaaer* • Good
8
Currency and Deposit si-/
6
4
2
0
—2
-4
1033
1934
1936
1936
1937
1938
1939
1940
UIncludes saving In savings and loan associations.
^Includes change In Individuals1 equity In government insurance funds.
^Adjusted for niquldatKm of debt not elsewhere classified*.
W-J
» 11 "
in 1933 to a high of $3.9 billion in 1936 and after a sharp decline in 1937
and 1938 reached a second high of $3*6 billion in 1940.
The annual fluctuations
in the volume of saving in this form bore a slight positive correlation with
income payments (Chart VI) but the correspondence was far from close. 2/2/
It
may be noted that in spite of the higher level of income, the average annual
amount of individuals' saving in currency and deposits in the late 20*s was
much smaller than for the period 1933-1940.
2,
Savings and loan associations
Saving in the form of deposits w i t h e r holdings of shares ofjsavings and
loan associations was negative for the period 1933-1940 as a whole to the extent of about $1 billion.
This was due mainly to net dissaving in this form
in the early years of the period, reflecting a trend which started in 1930#
Even towards the end of the period, however, saving in this form was still
relatively small compared to the 20'a,
3.
Insurance and pension reserves
Over the period as a whole, the largest contribution to net individual
saving was made by the growth in individuals' equity in insurance and pension
reserves.
Net saving in this fora aggregated more than $17 billion for the
eight years 1933-1940; $11 billion represented individuals' saving with life
insurance companies, while $4 billion was accounted for by individuals'
1/
The year 1937 particularly departs from the average pattern, the increase
in individuals' holdings of currency and deposits being considerably lower
than would be expected .fronytha behavior of the entire series.
2/
This^ result J which *1 oes^mft ee«n to w attributable to errors of estimation,
appeared quite strange, and an effort was made to determine whether this
same relationship, or rather absence of relationship, characterized the
years prior to 1933. Using very rough estimates of individuals' saving
in currency and deposits for the years 1925-1932* no definite correlation
between individuals' saving in cash and deposits and the level of income
was found for the period 1925-1940, confirming the result for the shorter
period»
CHART VI
RELATIONSHIP BETWEEN MAIN FORMS OF INDIVIDUAL LIQUID SAVING AND INCOME PAYMENTS
I933 - 1940
CURRENCY AND D E P O S I T S ^
LIQUID SAVING^
($ B I L L I O N S )
($ BIL1
8
8
4 0
3 6
#
3 19
• • 3 7
#
e
3 4
•
4 0
35
3 4
3 8
.
•
2 S9
e
$
e
3 7
•
38
#
3 3
•
*
3 3
#
-2
—2
SECURITIES
BILLIONS)
4
INSURANCE^
($ B I L L I O N S )
4
4 0
# # 3 7 *
3 8
#
• 3 C t
3 4
*
e
3 3
37
•
e
3 3
#
3 4
3 6
•
#
3 8
e
—2
55
9
4 0
•
-2
36
•
-4
40
50
60
70
80
INCOME PAYMENTS
40
50
60
70
80
(DOLLARS B I L L I O N S )
Assaying In currency and deposits, savings and loan associations, Insurance, and securities.
5/includes saving In savings and loan associations.
3/includes change In Individuals' equity In government Insurance funds.
DS-1868
- 12 -
equity in social security funds, which began operation in the second half of
the period.
Saving in insurance and pension reserves showed a. a.arked upward
trend during the period, reaching a high of slightly over $3 billion in 194C.
Segregating saving in the form of private insurance (which consists almost
entirely of equity in contracts with life insurance companies), an upward
trend is again evident but is not nearly so pronounced and appears to tail
off after 1935.
»
Individual saving in insurance, both including and excluding government
funds, though particularly the former, is highly correlated with income.
It
is obvious, however, that though the amount of saving through insurance is
affected by the level of income, it is dependent to as great an extent on
the contractual aspect of this type of saving which is kept up to a certain
extent irrespective of changes in income and on such factors as the long-term
attitude of society regarding the necessity of providing for the future.
The pattern of individuals * saving in the form of life insurance (the
predominant part of private insurance) was also examined for the period prior
to 1933. l/
It was found that there existed a fairly close (linear) correla-
tion between saving in the form of life insurance and national income in the
20*s as well as in the 30* 6 •
However, the relationships in the two periods
were quite different with a considerably higher amount of saving in insurance
associated with a given level of income in the 30's than in the 20*s« % f
1/
These figures, obtained in the sane manner as the later estimates, are
believed to be quite reliable,
2/
The reason for this difference probably lies in the contractual relationship characteristic of insurance, which provided an incentive to continue
paying premiums on insurance contracted in the late 20's even with the
onset of the depression; in the psychological concomitants of the depression with its closed banks and the deterioration in value of securities and
other alternative forms of saving; and in the growing emphasis placed on
the necessity of providing for the future.
In spite of the relatively higher level of saving in life insurance over the
past ten years as compared with the preceding decade, there is some indication
that a point of saturation is being reached in this form of saving*
Thus,
there was little change after 1935 in the amount of annual individual saving
through life insurance# \f while the total amount of life insurance outstanding
increased relatively little after 1929.
4.
Securities
The net dissaving in the form of securities during the period is probably
the outstanding change in the form of individual saving compared to the preceding decade.
For the eight years 1933-1940 a-8 a whole, individuals are
estimated to he.ve reduced their holdings of securities by about $2 billion.
This is in narked contrast to the very substantial absorption of securities
by individuals in the 20's.
The annual movements of individual saving in
securities show little apparent relationship to the level of income, security
prices or similar factors, either over the period 1933-1940, or over the
longer period 1925-1940. %J
Because of the special interest of this series
to the Commission, it will be discussed in a little more detail in oection IVd.
5.
Liquid saving
The four components of individual saving discussed above (i.e., saving
in the form of currency and deposits, building and loan associations, insurance and securities) may be combined into a series for total individual
liquid saving.
Saving in this form aggregated $26 billion for the period
including individuals* equity in government insurance funds, and $22 billion
1/
This reflects the increasing age and more frequent maturity of insurance
policies in force; it may also.be due in part to the social security program which went into effect at that tine.
2/
Estimates of the absorption of securities by individuals for 192;-1932
are extremely crude. For the period 1925-1940 as a whole there is evidence of a slight positive correlation with income, but this is of little
s
significance.
- 14 -
excluding it.
Including government insurance funds, individual licuid
saving varied from a low of close to «40„5 billion in 1933* the only year
in which such saving was negative, to a high of over *$6,5 billion in 1940$
excluding government insurance funds, individual liquid saving fluctuated
between approximately -$0,5 billion in 1933 and nearly + $5»5 billion in 1940.
The annual amount of liquid saving is significantly correlated with incoue
payments, but the correlation is not too high, particularly when government
insurance funds are excluded.
6.
Liquidation of debt
A component of individual saving which has not been shown separately in
Table 1 is the net liquidation of individuals' debt to non-individuals.
In
this analysis, it has generally been attempted to allocate individual indebtedness to the particular type of asset to which it pertains (viz. saving in
building and loan associations, insurance, securities, houses and automobiles), and the resulting net figure taken to represent saving in this type
of asset, 1/
However, there is some point to considering liquidation of
debt separately.
Net liquidation of debt in the aggregate appears to vary inversely
with the level of income but the relationship is only moderately close.
This result reflects a diversity of types of debt and a variety of reasons
for incurring and paying off debt.
l/
It was possible to allocate the a;ost important part of individual debt in
this manner though there remained a residual amount of debt ("debt not
elsewhere classified") which is due in part to individuals' purchases of
"other durable consumers* goods"; in part to individuals' purchases of
consumption goods$ and in part to direct loans by banks and other financing
agencies for the purchase of automobiles, the net saving in automobiles
having been estimated by subtracting from net purchases only the change
in outstanding instalment credit originating with car dealers.
For the period 1933-1940 as a whole, individuals' indebtedness increased by
about $2 billion.
Over the period, there was a fairly considerable net liqui-
dation of individual debt in the form of insurance policy loans and for the purpose of purchasing and carrying securities, while there was a much more substantial increase in individual indebtedness as a result of increased mortgages on
homes, the purchase of automobiles, and increased installment and open book credit
arising from the purchase of "other durable consumers' goods" and consumption
goods.
The decrease in policy loans is probably attributable to the paying off
of debt of this type incurred during the depression, while the decline in security loans reflects the lessened activity in the security markets and, in particular, the smaller degree of speculation prevalent.
The such more sizable increase
in debt attributable to new construction, the purchase of automobiles, and both
consumers' durable and consumption goods is readily explainable as the combined
result of increased national income, the liberalized installment credit terns
offered by business and the activities of the Federal government in the hon;e
mortgage field.
7.
Net claims of individuals
Combining individuals' net liquidation of debt with their saving in
liquid form, 1/ a series is obtained which reflects changes in individuals' net
claims against non-individuals. 2/
This series is important in that it indi-
cates the extent to which the investment cr dissaving of non-individuals
(corporations and governments 3/) is financed by i-dividual saving.
Including
1/
This is done by adding to individuals' saving in liquid form only that part
of net liquidation of debt not already reflected in liquid saving.
7j
Theoretically, changes in the tax arrears of individuals and in the debt
of unincorporated business to corporations should be reflected in this
series, "hile satisfactory data for this purpose are lacking, it is fairly
certain that inclusion of these figures would not greatly change the broad
results.
3/
Also the business saving of farmers.
- 16 government insurance funds aiuong net claiu.3 of individuals, the eight year
aggregate is $24 billion) excluding such funds it is $16 billion#
The series
including government insurance funds fluctuates from less than $1 billion in
1933 to around $5 billion in 1936 and 1940$ excluding government insurance
funds, the range is from somewhat over $0.5 billion in 1933 *o about $4.5
billion in 1936 and 03.5 billion in 1940.
''/hen government insurance funds are
included, there is a significant positive correlation between change in individuals' net claims and income payments, but when government insurance funds
are excluded, the relationship is no longer statistically significant. JL/
8e
Durable consumers' goods
The remaining component of individual saving, which is quite distinct
from saving in liquid form, covers saving in durable consumers' goods, i.e.,
houses, automobiles, and "other durable consumers' goods". % /
There was a
«i> «i 1 amount of net dissaving in durable consumers * goods over the period
1933-19*0, positive saving in the years 1936-1940 not being quite large
enough to offset the dissaving in 1933-1935 (Chart V).
For the period as a whole, individuals' equity in non-fare: dwellings
declined considerably as new construction was insufficient to make up
\J
2/
,
—
'
(7757
J"
Using the customary level of significance!^see Appendix Table.
"Other durable consumers' goods" include furniture, stoves, refrigerators,
carpets, curtains, mattresses and bed springs, china and household utensils, portable household electric appliances, radios, musical instruments,
jewelry, books, luggage, auto parts and accessories, motorcycles, bicycles,
pleasure boats, ophthalmic products and surgical and orthopedic appliances,
and monuments and tombstones. Net construction of non-profit institutions
is also included though differing from the other items in this category;
it is a small negative quantity in each year of the period 1933-1940,
<
V l
averaging about .$100 million annually. —• »
^
- 17 for accruing depreciation and increase in debt, l/
Net dissaving in this
form was heaviest in the early years of the period, but even near its end
individuals' equity in homes was still slightly decreasing.
Individuals'
equity in automobiles changed relatively little over the period, decreases
in 1933» 1934, 193&, and 1939 being more than offset by increases in the
other years. 2/
Individuals' equity in other durably goods shewed a consid-
erable amount of net savins as new purchases in every year after 1936 exceeded
estimated depreciation accruals and increases in consumers' debt.j/
Individual net saving in durable goods was*generally much u.ora closely
related to the level of incone than saving in liquid form or in the form
l/
This conclusion, of course, is based on the ralhar arbitrary estimates of
depreciation which were made. However, any reasonable figures taken for
depreciation would give similar results. The amount ascribed to depreciation averaged almost $1.5 billion a year, amountinr to more than $11 billion over the period. The two other items which had to be deducted from
gross construction of one to four family non-farm dwellings to obtain
individual saving in this form were the increase in institutional holdings,
largely as a result of foreclosures, amounting to $?00 million over the
period and the increase in net mortgage debt amounting to $900 million.
2/
Depreciation over the period was estimated at close to $15 billion, ranging
from $1.4 billion in 1933 to $2.3 billion in 1940. Installment debt
originating with car dealers increased in every year with the exception
of 1938, the net increase over the period amounting to about $1*4 billion,
(Direct loans by banks and other financing agencies for the purchase of
automobiles are included in debt "not elsewhere classified.")
2J
Depreciation over the period was estimated at close to $31 billion, ranging
from $3.5 billion in 1933 to $4.1 billion in 1940; estimates are even
rougher than for depreciation on homes or automobiles. It is not possible
to estimate adequately the change in indebtedness relating to "other
durable consumers' goods" since such debt cannot be segregated from debt
arising from the purchase of non-durable goods. However, it does not appear that changes in such indebtedness, which are included in Table 1 in
"liquidation of debt not elsewhere classified", are sufficiently large to
necessitate material modification of the statement made in the text.
of financial claims (Charts VI and VII), l/
Not only aggregate individual net
saving in durable roods but also net savin? in each of the three main component s of durable roods —
goods" —
houses, automobiles, and "other durable consumers'
bore a fairly high correlation with income payments.
Gross expendi-
tures on durable %oods and net expenditures (gross expenditures less depreciation) were even more highly correlated with income payiaents than net saving
in durable goods (net expenditures adjusted for change in indebtedness) and
can be explained quite satisfactorily over this period in terms of the level
of income alone.
9»
Interrelationships of components
As might be expected from the relationships of the various main components
of individual saving to the level of incoiv.e, only saving in insurance and in
all durable consumers' goods bore any close correlation with total individual
saving.
Two interrelationships of the components of individual savin? are of
so:.e interest.
First, there is a fairly high positive correlation between
change in net claims of individuals (i.e., individual liquid saving plus
debt liquidation) and gross and net individual expenditures on all durable
goods.
These two forn.s of saving, of course, are complementary in nature and
together icake up the whole of individual saving.
The rather high positive
correlation between these two forms reflects the fact that when income is high
individuals not only increase their direct purchases of durable goods but also
increase their saving in liquid form and finance, either directly or indirectly, % /
the expenditures of non-individuals to a greater extent than usual; the reverse
l/
This may be due in part to deficiencies in the estimates of changes in
financial clains as compared to estimates of changes in investment in
durable goods,
2/
mostly indirectly over the period 1933-1940.
CHART VII
RELATIONSHIP BETWEEN MAIN FORMS OF INDIVIDUAL SAVING IN
DURABLE CONSUMERS' GOODS AND INCOME PAYMENTS
1953 - 1940
DURABLE CONSUMERS1 GOODS^
($ BILI
1
1#
37
HOMES
($ BILLIONS)
1
v
40
36
<
38
#
r
r<J
>
•
o
f
C
559
#
5* S
36
•
38 e
33
e
-1
36
e
36
#
33
•
34
e
-2
34
#
-3
OTHER DURABLE CONSUMERS' GOODS^
($ BILLIONS)
AUTOMOBILES
($ BILL
1
36
•
38
•
37
e
i°
38#
59
•
36
•
33
#
34
•
33
•
-1
40
50
00
70
Let
39
•
36
•
35
•
34
•
1
37 5°
•
80
40
50
60
70
00
INCOME PAYMENTS (DOLLARS BILLIONS)
USaving In homes, automobiles, and other durable-consumers1 goods.
^Adjusted for •liquidation of debt not elsewhere classified".
DS-1869
*» 19 ew
is true when income is low.
Secondly, there is a slight negative correlation
betweer saving in currency and deponits and saving in securities, both for
the period 193?~19*0 and for the longer period 1925-19*0*
This is not an
entirely surprising result since they represent alternative forms of liquid
saving, either of which i;.ay readily be substituted for the other. \ f
10#
Smtstiary
Among individuals, the outstanding characteristic of the structure of
saving during the 30'e is the predominant position of saving in currency,
deposits with financial institutions, and in insurance contracts, all of which
are liquid assets of fixed and relatively assured redemption value.
For the
period 1933-19'<0 as a whole, the positive net saving of individuals was almost
exclusively in such form, as individuals reduced slightly their holdings of
securities and decreased slightly their equity in durable consumers' goods
(including houses).
In the later years of the period, which are more nearly
characteristic of a normal situation, however, there was so&e net saving in the
form of durable consumers' goods, though even in that period individual net
saving in the form of securities was apparently absent.
While no strictly comparable figures are yet available for the 20's, there
is no doubt that saving in monetary form and insurance was much less prominent
then, and that the absorption of securities was the outstanding fori., of
individual liquid saving and one of the most important components of total
individual saving.
l/
On the other hand, it might be expected on a priori grounds that while for
a given level of income saving in currency and deposits and saving in
securities would be inversely correlated, they would both tend in practice,
due to the large fluctuations in income, to be governed by the level of
income, bein% high for high income and lov; for lev/ income. In view of
these considerations, it was attempted through partial correlation analysis
to relate saving in securities both to saving in currency and deposits and
to income payments holding each of these factors constant in turn, but no
^ r e s u l t s were obtained. The partial regression coefficients were
in the expected direction but were not statistically significant.
- 20 d0
Absorption of Securities
Because of its special interest to the Commission, eo&e additional details
I
on individuals' saving in the form of securities are shown in Tables 2 - 4 .
Net issues of securities in the United States (i.e., the excess of gross
proceeds of new issues over the cost of securities repurchased or retired by
their issuers) during the period fron. 1933 through 1940 are estimated to have
amounted to about $29 billion.
Securities of the United States Government
and its agencies accounted for practically the entire amount.
Met issues of
domestic corporations were considerable only in one year (1936), amounting
even then to less than $1 billion, while net issues of foreign securities and
of State and municipal securities were siuall throughout the period.
The average yearly increase in securities outstanding of about $3«> billion a year over the eight-year period was lower than the average yearly increase
in the 20's.
However, a more striking difference between the two periods lies
In the identity of the issuers, particularly in the proportion of government to
corporate issues.
Thus, whereas from
1933 through 1940 government securities ac-
counted for the entirety of net issues, they represented only a small proportion
of the net issues in the 20'g* 1/
Conversely, corporate issues which were vir-
tually absent in the 30*s accounted for nearly all net issues in the 20's.
A significant development of recent years is the extraordinarily large
increase in the holdings of securities by domestic non-individuals, mainly
commercial banks, life insurance companies, and government trust funds.
These
holdings increased by about $31 billion for the entire period 1933-1940 or about
$4 billion annually, thus u,ore than offsetting the $29 billion increase in total
securities outstanding.
Foreigners also increased their holdings soa.ewhatj
their net purchases amounting to slightly over $1 billion, however, sere
1/
Security issues of the Federal ?overmoent were exceeded by retirements in
every year in the 20*s. This decrease was it.ore than offset by net issues
of the State and local governments.
t
^
^
V
^
I
v
^
'3
t
^
JL
*
Table 2
CHANGE IN TOTAL SECURITIES OUTSTANDING
(millions of dollars)
1933
1934
1935
1936
1937
1938
1939
1940
1933-1940
+2,290
+4,030
+1,370
+4,230
+3,230
+2,830
+2,400
+3,180
+23,570
+110
+3,260
+1,130.
+150
-20
+350
+720
+210
+5,930
+90
+490
+40
+10
-90
-30
+20
-20
+520
4. State and local
-350
-460
+40
-20
-90
+270
+180
+200
' -230
5* Corporate and others
-100
-130
-370
+840
-50
+140
-390
—160
-220
6. Foreign
-110
-110
-140
-130
-170
-30
-30
-80
-790
+1,930
+7,100
+2,070
+5,090
+2,820
+3,530
+2,900
+3,330
+28,770
1. U. S. Govt, direct obligations
2. U. S. Govt, guaranteed obligat:
3. Non-guaranteed Federal agency
obligations
7.
Total
http://fraser.stlouisfed.org/
415562
Federal Reserve
Bank of St. Louis
i
TABLE 3
S E C U R I T Y H O L D I N G S OF DOMESTIC H O N - I N D I V I D U A L S
( M I L L I O N # OF DOLLARS)
1932
1933
1934
1935
1936
1937
1938
1939
1940
1 . U . S . T R E A S U R Y INVESTMENT A C C O U N T S
660
810
1,240
1,640
1,800
3,570
4,530
5,700
6,840
2 E U . S . GOVT, CORPORATIONS & CREDIT AGENCIES
130
360
1,300
1,450
1,490
1,580
1,650
1,690
1,610
1,920
2,070
2,250
2,340
2,440
2,540
2,670
2,770
2,830
1,440
1,690
1,900
1,860
1,830
1,910
2,000
2,480
2,180
13,610
13,090
16,940
18,740
21,070
19,630
21,030
21,720
23,520
140
120
80
20
10
4,050
4,160
4,380
4,680
5,020
5,130
5,220
5,230
310
330
350
440
450
360
450
540
530^
90
90
290
240
220
190
170
150
130
640
600
680
720
750
770
810
840
840
7,290
7,440
8,630
10,300
12,060
13,550
14,840
16,020
17,280
S§z 1 ' * S
1,750
1,840
1,980
2,070
2,170
2,150
2,150
0
50
100
100
100
100
100
3# S T A T E & M U N I C I P A L T R U S T &
I N V E S T M E N T FUNDS
4 . FEDERAL RESERVE B A N K S
5 . OPERATING COMMERCIAL BANKS 1 /
6 . CLOSED N A T I O N A L B A N K S
7. MUTUAL SAVINGS BANKS
8 . PRIVATE B A N K S
9 . S A V I N G S & LOAN A S S O C I A T I O N S
1 0 . FRATERNAL ORDERS
1 1 . L E G A L RESERVE LIFE
INSURANCE C O M P A N I E S
1 2 . OTHER INSURANCE C O M P A N I E S
I) B O N D S
II}
STOCKS
1,73
—
—
—
—
5,210
1 3 . INVESTMENT C O M P A N I E S
^
150
150
200
160
40
180
180
130
I/
1 4 . OTHER C O R P O R A T I O N *
2.730
2.840
,2*540
2.130
2,040
1.850
1,750
1.750
1,750
34,730
35,420
42,490
46,640
51,420
53,280
57,550
61,320
65,100
1 6 , D I A O J U S T I O C H A N G E IN M O L D I N G *
+690
+7,070
+4,150
+4,780
+1,860
44,270
+3,770
+3,780
3/
1 7 . N E T PROFIT
-520
-300
+80
+420
-260
+1,220
+7,380
+4,060
+4,360
+2,110
15.
Tom
1 8 . ADJUSTED C H A N G E IN H O L D I N G S ( 1 6 - 1 7 )
—
+4,270
—
+3,770
—
+3,780
1/
FOR THE Y E A R S PRIOR T O 1 9 3 8 , AN E S T I M A T E D $ 5 0 , 0 0 0 , 0 0 0 M A S BEEN D E D U C T E D ANNUALLY TO A D J U S T FOR A M O U N T S PREVIOUSLY
Y
C A R R I E D A S S E C U R I T I E S THOUGH A C T U A L L Y REPRESENTING REAL ESTATE*
INCLUDES, FOR P U R P O S E S OF C O M P A R A B I L I T Y W I T H PRIOR Y E A R S , THE SECURITY H O L D I N G S OF J . P . M O R G A N & C o . , N O W
3/
A R B I T R A R Y BASE F I G U R E .
Y
TAX-EXEMPT SECURITIES ONLY#
5/
PROFITS L E S S L O S S E S ,
DESIGNATED AS A COMMERCIAL BANK.
415562
R E P R E S E N T S REVALUATION ITEMS NOT C O N S I D E R E D A S S A V I N G .
jr
'
^
-
1
•
^
J
^
TV
*
Table 4
CHANGE IN INDIVIDUALS' EQUITY IN SECURITIES
(millions of dollars)
1933
1934
1935
1936
1937
1938
1939
1940
1933-1940
+1,930
+7,100
+2,070
+5,090
+2,820
+3,530
+2,900
+3,330
+28,770
+10
+80
+270
+660
+310
+40
-50
-80
+1,240
1.
Change in securities outstanding
2.
Change in foreign holdings
3.
Change in holdings of domestic
non-individuals
+1,220
+7,380
+4,060
+4,360
+2,110
+4,270
+3,770
+3,780
+30,950
4.
Change in holdings of domestic
individuals (1-2-3)
+700
-360
-2,260
+70
*400
-780
-820
-370
-3,420
5.
Change in borrowings of domestic
individuals on securities
-210
-470
+30
+100
-470
—90
-220
-180
-1,510
6.
Chance in individuals' equity
+9I0
+110 -2,290
-30
+870
-690
-600
-190
-1,910
(4-5)
http://fraser.stlouisfed.org/
415562
Federal Reserve Bank of St. Louis
- 21 concentrated in the middle part of the period,, i.e.g the years 1935-193?»
The holdings of domestic individuals, on the other hand, declined by
almost $3e5 billion over the period.
corporate securities.
The decrease was concentrated in domestic
Individuals' holdings in United States government securi-
ties actually increased somewhat over the period.
This decrease in .individuals'
holdings was offset to aorae extent by the reduction in individuals* 'borrowings
on securities, aggregating about $1.5 billion^ so that net dissaving of individuals in securities actually amounted to close to $2 billion, l/
As previously noted, it was nqt possible to discern any significant relationships between individual saving in the form of securities and the level of income,
security prices, yields of different forms of investment and similar factors over
the period 1933-19^0.
This is true not only of the aggregate of all securities
but also for corporate securities alone; not only for net saving in securities on
the part of individuals but also for the total not absorption of securities by
individuals, corporations and government funds; and not only of the total net absorption of securities but also for the issuance and retirement of securities.
V,
Business Saving 3 /
a*
Level of Business Saving
The net saving of business was negative over most of the period 19331940, fluctuating between a dissaving of about $3*5 billion annually in 1933
j/
Brokers and dealers in securities, being mostly unincorporated, are treated
ae individualse
2/
These results are not believed to be due to errors of estimation (which are
sizable) though they do, of course, reflect such deficiencies. They may be
due, however, at least in part, to the shortness of the period covered, as
it has not proved possible yet to carry the more detailed analysis back to
the 20'8 on any satisfactory basis,
2/
Corporate saving and the business saving of fanners. (Business saving of
farmers includes net expenditure on fare: machinery and permanent farm construction, change in crop and livestock inventories, and net liquidation of debt.)
However, much of the following discussion will be confined to corporate saving
alone since this is, in many respects, more interesting than the total of
business saving as defined.
and 1934 and a se.ving of about $C„5 billion in 1939 and 1940,
The gross
saving of business was about $4.5 billion higher on the average, ranging
froii roughly 0.5 billion and $1.0 billion annually in 1933 and 1934 to over
$5 billion annually in 1939 and 1940.
For the entire eight years, net busi-
ness dissaving totalled $12 billion while gross business saving amounted to
$24 billion,
Tha picture is little changed when by far the most important part of
business saving, viz., corporate saving, is considered separately.
For thy
period 1933-3.9*0 as a whole, net corporate dissaving aggregated $11 billion
while gross corporate saving amounted to $19 billion.
Net corporate saving
was smallest in 3-933» amounting to about -$3.0 billion, and largest in 1940,
when it amounted to about $0,5 billion; the comparable figures for gross
saving ranged from $0.5 billion to $4.5 billion, l/
This situation is quite
different from the 20's when net corporate saving was positive in every year,
ranging from a few hundred million dollars to somewhat over $2 billion, while
groua corporate waving varied from approximately $4 billion to $6 billion, 2/
These estimates of corporate net saving have been obtained by taking
the difference between compiled net profits on the one hand and the total
of taxes, net capital gains, and cash dividends paid, on the other, 3 / the
l/
Corporate saving for 1933-193& based on Statistics of Income, published by
the Bureau of Internal Revenue$ corporate saving for 1939 and 1940 are
estimates of the Department of Commerce based on sac,pie data.
2/
Data from Statistics of Incor.e with rough adjustments for net capital
gains comparable to those published for later years.
3/
Debta written off or written down have been considered as elements of cost
for which no adjustment need be iiiade.
— 23 -
basic figures being taken from income tax returns submitted by corporations
to the Bureau of Internal Revenue.
In view of the shortcomings of such data,
corporate saving as used hare may deviate considerably frou. "true" corporate
saving.
There is some evidence of underreporting of net incote on income tax
returns which would result in an understatement of corporate saving, but it
is not possible to correct for it.
A second deficiency in the use of income tax
data for purposes of measuring corporate saving lies in the fact that such data
reflect changes in the value of inventories and depreciation frou an accounting
viewpoint rather than from an economic viewpoint consonant with the definition
of saving; in the latter, inventory revaluations should be excluded, while depreciation should be measured in current prices rather than in book values.
It
is possible to tuake very crude adjustments for this deficiency using methods
similar to those developed by the National bureau of Economic Research, l/
On this basis, net corporate saving varied from over -$4.0 billion in 1933 to
zero in 1940, totalling -$l6 billion over the period, while gross corporate
saving varied from -$1.0 billion to more than $4.0 billion, aggregating )15
billion.
The correlation between the unadjusted and. adjusted series is quite
high. 2/
1/
Such adjustments are far from satisfactory which explains why they have
not been incorporated into the estimates given in Table 1. The adjusted
figures for corporate saving which have been computed are somewhat different from the comparable estimates of the National Tureau of Economic
Research since the latter uses data froiii sources other than the Bureau of
Internal Revenue for certain groups of companies.
%f
Only the year 1932 is much out of line. For the period 1933-1940 as a
whole, adjusted corporate net saving was $5 billion lower than unadjusted
net saving while adjusted corporate gross saving was $4 billion lower than
unadjusted gross saving.
- 24 -
b.
Relationships of Business Saying to National Income 1/
The size of corporate saving is closely associated with the level of
national income over the period 1933-1940 though the relationship is not as
close for corporate saving as it is for total saving. ?J
For each increase
of $1 billion in national income* there was an average increase of nearly
$100 million in net corporate saving.
Though it is intended to give?a detailed treatment of the whole subject
of corporate saving over the past 20 years; in a special study to be completed
in the near future, 3 / it seems justified to indicate at this time a few of
the tentative results pertaining to the relationships of corporate saving to
national income.
'Thile there is a high correlation between corporate saving
and national income for the period 1919-1940 as a whole, it appears that a
given level of national income it: associated with a sonewhat smaller amount
of corporate saving in the 30*s than in the 20's.
However, there does not
eeem to be much difference between the two periods in the auount of con,piled
net profits (before income tax) corresponding to a jiven level of national
income.
The higier level of corporate income taxes in the years after 1935,
relative to compiled net profits (before income tax), does explain a small
part of this change in relationships.
Liore important, however, in explaining
the relatively lower corporate saving in the 30's compared to the 20* s is
l/
Only the business saving of corporations is considered in this section. The
business saving of farmers is positively correlated with national income but
the relationship is not a very close one.
2/
™"
The saving of corporations also bear? a fairly high positive correlation
to both total saving and individual saving.
3/
Profits, taxes, depreciation, dividends and similar iteas in the income
account will be analyzed separately. An analysis of changes in assets
and liabilities ©ill also be present act.
- 25 the increase in the ratio of dividend distributions to profits, l/
VI.
Government Saving: 2/
Level of Government Saving
a.
Met government saving varied from close to zero in years like 1933> 1934,
1937 and 1938, when dissaving by the Federal government was approximately
counterbalanced by State and local government saving, to dissaving which was
quite sizable in the other years, reaching a maximum of over $2 billion in
1936.
State and local governments had positive net saving in every year of
the period 1933-1940 ranging from $0.5 billion to almost $1.5 billion, while
the Federal government showed net dissaving in every year, amounting at its
peak in 1936 to nearly $3.0 billion.
Gross government saving averaged some-
what over $0.5 billion more than net saving annually, with well over half the
difference between gross and net saving (i.e., depreciation) j / attributable
to State and local governments.
For the period as a whole, net dissaving of
the Federal government aggregating close to $12 billion was counterbalanced
only in part by the positive net saving of State and local governments of $6
billion.
y
jyj
l/
See p. c, footnote 1. Interestingly enough, though there is not much difJ*?
ference between the two periods in compiled net profits (even after income
j>
tax) corresponding to a given level of national income, a somewhat smaller / V
level of compiled net profits relative to gross receipts is indicated for r vy
the 30's as compared with the 20* s, whereas corporate gross receipts associated with a given level of national incor.e are higher for the 3C!stt
2/
The following qualifications should be noted? (a) current tax revenuesrather
than current tax liabilities are used in estimating government saving| (b)
social security funds are not included as government saving but treated as
part of individual saving in the form of insurancej (c) capital outlays of
State and local governments financed by Federal funds are considered as saving
of the Federal government $ (d) investment in public works constructed by work
relief (excluding 1 maintenance) is evaluated at two-thirds of work relief expenditures (including n.ainten&nce) for construction; (e) two-third? of the
expenditures of the Civilian Conservation Corps is considered as capital outlay; and (f) expenditures on office equipment and ari. laments are treated as
current rather than capital expenditures and thus are not included in the
estimates of government savinge
3/
The estimates? of depreciation ore subjec4 to a ver/ s-ibsfnntinX margin of
http://fraser.stlouisfed.org/ V (> :' o
Federal Reserve Bank of St. Louis
- 26 -
Though strictly comparable figures are not available for the 20's, it
appears that there v/as substantial positive net government saving in every
year of that period, averaging close to $2 billion annually for the late 20*s. 1
The Federal government accounted for over half of this amount9
be
Relationships of Government Saving to National Income
During the period 1933-194C, there was no close relationship between total
government savins; and national income,nor between Federal^or State and local^
government saving and national income. 2/
This is not surprising sines the
amount of government saving or dissaving would be expected to be more dependent
on fiscal policy than on the level of national incou.e„ 3 /
c.
Components of Government Saving
For the Federal government, the rain component of saving, or rather of
dissaving, during 1933-1940 was the extremely large increase in debt, amounting
to about $25 billion over the period.
This was compensated only in part by the
net value of Federal construction (i.e. new construction leus depreciation}
estimated at over $13 billion and the increase in repayable loans and in
proprietary interest in Federal corporations and credit agencies (less writeoffs) of over $2 billion.
For State and local governments, the main item of saving was the net
capital outlay, i.e., net construction, amounting to $4.5 billion over these
l/
Gross saving was not much larger, depreciation being sanller than in the 3 C
2/
This does not imply that government saving or dissaving does not affect the
national income.
2/
Fiscal policy, of course, is not independent of the level of national
income.
- 27 -
eight years.
Saving in the forru of cash holdings totalled a little over
$2 billion while indebtedness increased by about $0.5 billion,
VII.
Estimates of Saving in 1941
On the basis of the relationships between saving and income, discussed
in the preceding sections, it is possible to Lake very rough estimates of
the volume of saving in 1941.
All such estimation is, of course, open to
the very serious limitation of projecting a known past into an unknown future
and is particularly questionable in a period such as 1941 when it is obvious
that zcany fundamental changes will occur in the economic structure under the
impact of the defense effort, changes which may well affect the relationship
between saving and income.
Consequently, the following estimates are presented
simply to give sone indication of the amount of saving to be expected under
certain specified assumptions.
The process of estimating saving from national inco: e obviously requires,
first of all, the estimation or assumption of the level of income.
It has
been assumed for this purpose that the national income in 1{;41 will amount to
about $85 billion in 1940 prices.
Although this is simply an estimated value,
it does not seem likely that it will prove to be much in error, particularly
inasmuch as there is a fairly good basis for estimating the figure
for the
first half year.
Of the three main groups of economic units, viz., individuals, business
and government, it is possible only in the case of individuals to give a
reasonably satisfactory estimate of saving —
and then only under ths assumption
that the aaji.e underlying conditions which prevailed in the past will also
characterize the future.
From the past relationships between individual saving
and income, it appears that a national income of $85 billion (in 1940 dollars)
would be associated in 1941 with individual gross saving of between $18 and
520 billion and with net saving of between )1C and $12 billion, 1/
In view
of the considerably higher level of individual taxes in 1941, 2/ it is probably
true that part of individual income which ordinarily would go into saving will
be spent on taxes instead.
Individual saving, therefore, might be expected to
be somewhat lower than the above values would indicate.
However, the magni-
tude of such diversion of income fron. saving to taxes should not be u.uch over
$1 billion and may well be less.
The saving of individuals i.ay also be consi-
derably affected by such factors as a widespread public campaign to encourage
individual saving, particularly in such forma as defense and saving bends and
tax anticipation certificates; by increased purchases of durable goods as a
result of anticipated price rises$ by decreased purchases of durable goods
as a result of restriction of supply; and by changes in the income and price
structure.
The estimation of corporation saving is subject to even greater error
than individual saving since it is dependent to a large extant on government
action with respect to prices, wages, and taxes. 2J
addition, the problem of
1J
See Appendix Table for the regression equations and the statistical reliability of the results.
2/
In addition to the normal increase in taxes resulting fro:, the higher level
of income, it is at present (as of July 2, 1941) planned to raise somewhat
over $1 billion by the new surtaxes on individual incomes; another $1
billion by increased excise, and estate and ?ift taxes; and somewhat aore
than $1 billion by increased corporate inco&e and excess profits taxes.
The new surtaxes on individual incoL.e will, of course, be the most important
factor in diverting individual incon.e from saving to taxes. However, individual income taxes applicable to 1941 incoue will not be collected until
1942. Furthermore the increased excise and esta'e and ;*ift taxes rill
have only a s all effect on collections in 1941.
3/
The business saving of farmers is oaitted iron, these estimates. Farmers
might be expected on the basis of the data available to account for a
slight positive net saving and over $1 billion in gross saving, but these
figures are quite tenuous.
- 29 ~
arr.ortiaing the very substantial plant expansion of corporations in estimating
their saving in 1941 is a very troublesome one.
In view of the virtual im-
possibility of making suitable adjustments for the above factors, the estimates of corporate saving are not luch better than guesses,
Fro^. the past
relationships between corporate savin# and national income; it appears that
a national income of 585 billion would be associated in 1941 with gross
corporate saving of between $5 and $6 billion and net corporate saving of
between $1 and $2 billion.
However, when an adjustment is a.ade for the con-
siderably higher level of corporation taxes in 1941, it appears that net
corporate saving will be between zero and $1 billion while gross saving will
be reduced correspondingly to between $4 and $5, billion. J\J 2/
The upper range
of this estimate, i.e., $1 billion for net saving, seen.s to be the more
likely value and t.ay be compared with the Department of CoL.i.erce estimate
of $.6 billion for 1940.
Finally, the amount of government saving can only be crudely conjectured.
It depends to a "reat extent on the treatment of armaments expenditures which
in this study have been regarded as current expenditures rather than as saving.
If this treatment were continued, assuming defense expenditures of $12 billion, 3 /
non«»dafense expenditures of somewhat over $6 billion (of which $1.5 billion
1/
This is also the result which is obtained when corporate saving before dividends is estimated froar the assumed national income, dividends estimated from
corporate incon.e and deducted, and finally estimated taxes are subtracted.
2/
It should be noted that, in accordance with the treatment on the corporations'
books, tax liabilities rather than tax payments are considered as current expense in estimating corporate saving. However, such tax liabilities in large
part are not paid off until the following year*
3/
The estimate of defense expenditures in 1941 is subject to a much larger margin of error than the estimates of non-defense expenditures, capital outlay
and current revenue. The estimate of defense expenditures, though regarded
entirely as a current outlay, includes not only airplanes, ships* ordnance,
other durable military equipment and supplies, posts, fortifications, and
housing but also a considerable amount of repayable expenditures under the
Lend-lease program and fairly large expenditures for defense plant facilities*
— 30 -
would probably represent capital outlay) and current revenue o f $ 9 billion, l/
the gross dissaving of the Federal government in 1941 would amount to between
$7 and $8 billion,, and the net dissaving to about $8 billion, 2/
l/
Though current revenue of the Federal government for calendar 1941 is estimated at $9 billion, the tax liabilities of individuals and corporations
to the Federal government for the year will probably be well over $12
billion if the revenue revisions proposed by the House '"ays and leans
Committee (as of July 2, 1941) are enacted into law. Theoretically, the
difference between tax liabilities for 1941 and current revenue in that
year (which reflects liabilities incurred but not paid during 1940) should
be considered as saving of the Federal government in 1941 and as dissaving
of individuals and corporations. This procedure, however, has not been followed in this study (except in so far as tax liabilities rather than tax
payments are reflected in the corporate income tax returns upon which the
estimates of corporate saving are based, but even here no corresponding
adjustments have been made in the estimates of saving of the Federal
government)„ For prior years, of course, the differences between tax
liabilities and collections are very ruch smaller.
2/
State and local governments, it may be roughly estimated, will probably
account for about 51,5 in gross saving and $1*0 in net saving in 1941.
APPENDIX TABLE
CORRELATION A N A L Y S I S OF S A V I N G , 1 9 3 3 - 1 S 4 0
COEFFICIENT
OF C O R R E L A DEPENDENT V A R I A B L E
INDEPENDENT VARIABLE
(v)
RELATIONSHIP 1 /
(x)
(v
NATIONAL
INCOME
Y =-13.9203 +
2. TOTAL GROSS SAVING
NATIONAL
INCOME
Y -
3 . TOTAL NET SAVIPE
NATIONAL IKCOME
V
V A R I A B L E S ARE EXPRESSED
ZJ
ADJUSTED FOR NUMBER OF O B S E R V A T I O N S *
Y
TION 2 /
• A + EX)
1 . TOTAL G R O S S SAVING
.4357X
.3G27XI/
STANDARD
STANDARD
M E A N OF
ERROR OF
ERROR OF
DEPENDENT
SLOPE 4 /
VARIABLE 5 /
CONSTANT 4 /
(SY)
N
«r B )
.983
1.006
2.091
.033
.996
.019
.149
*084
.975
1.039
2.145
*034
(«)
- 2 . 8 3 0 2 + 2.1921 X J J
=-21.6520 +
STANDARD
ERROR OF
ESTIMATE 3 /
IN-
00
62.0
1.7855
62.0
IN B I L L I C N S OF DOLLARS EXCEPT W H E R E OTHERWISE NOTED#
jy ^0T ADJUSTED FOR KUMBER OF OBSERVATIONS* THE MINIMUM VALUES OF R REQUIRED FOR DIFFERENT LEVELS OF SIGNIFICANCE. IN A CORRELATION BETWEEN TWO VARIABLES
WITH 8 OBSERVATIONS, ARE AS FOLLOWS;
FOR F 88 •OS, R — #7067
FOR F = *02, R « *7687
FOR P = *01, R = *8343,
WHERE P IS THE PROBABILITY THAT AN R AS LARGE AS THE OWE OBSERVED WOULD ARISE, BY RANDOM SAM PL I KG, FROM AN UNCORFiELATEO POPULATION* ORDIKARILY, OF
COURSE, IF F IS LOW, R IS REGARDED AS SIGNIFICANT* UNFORTUNATELY, IT IS NOT FEASIBLE IN THIS ANALYSIS TO ADJUST P QUANTITATIVELY FOR THE SERIAL CORRELATION CHARACTERIZING THE SERIES USED, SO THAT THE LEVEL OF SIGNIFICANCE APPARENTLY INDICATED MUST BE INTERPRETED WITH CAUTION*
THIS IS THE STANDARD ERROR OF ESTIMATE OF THE WHOLE
PARTICULAR VALUE OF THE INDEPENDENT VARIABLE CAN BE OBTAIKED FROM THE FORMULA:
°"v -
REGRESSION LIKE*
THE STANDARD ERROR OF ESTIMATE FOR ANY
y&!+q,2(x,_x)2
WHERE X* IS THE PARTICULAR VALUE OF THE INDEPENDENT VARIABLE AND N THE NUMBER OF OBSERVATIONS#
4/
ADJUSTED FOR NUMBER OF O B S E R V A T I O N S *
%J
JY
PRESENTED TO FACILITATE C O M P U T A T I O N OF STANDARD ERROR OF ESTIMATE FOR A SPECIFIC
U . S E DEPARTMENT OF C O M M E R C E *
jJ
LOGARITHMIC EQUATION#
Y
THE ORIGINAL V A R I A B L E S *
8/
INTRODUCING CHANGE
SION C O E F F I C I E N T S .
IS USED TO DESIGNATE LOG Y, AND X TO DESIGNATE LOG X*
IN N A T I O N A L
INCOME AS AN ADDITIONAL
INTRODUCING TIME
415844
*979; THE
THE
INDEPENDENT V A R I A B L E .
STATISTICS GIVEN
INDEPENDENT VARIABLE DOES NOT SIGNIFICANTLY
(T) AS AK ADDITIONAL
COEFFICIENT OF MULTIPLE C O R R E L A T I O N IS
SAVIKG AND TIME IS NOT S I G N I F I C A N T *
VALUE CF THE
INDEPENDENT VARIABLE GIVES THE FOLLOWING
COEFFICIENT OF PARTIAL CORRELATION
SEE FOOTNOTE
3*
FOR THESE EQUATIONS RELATE TO THE L O G A R I T H M S OF
IMPROVE THE
RESULTS:
(TIKE HELD C O N S T A N T ) IS
FIT OR PERCEPTIBLY AFFECT THE
REGRES-
-25*2300 + *4538x - *4600T; THE
*909; THE PARTIAL CORRELATION BETWEEN
Y =
INDEPENDENT V A R I A B L E
DEPENDENT VARIABLE
(Y)
RELATIONSHIP 1 /
(Y = A + BX)
(X)
4 . TOTAL C R O S S SAVING E X C L . SAVING
NATIONAL
COEFFICIENT
STANDARD
STANDARD
STANDARD
M E A N OF
OF C O R R E L A -
ERROR OF
ERROR OF
ERROR OF
DEPENDENT
SLOPE 4 /
V A R I A B L E 5/
TION 2 /
(«)
ESTIMATE 3 /
( V
CONSTANT 4 /
<V
(O-8)
(7)
52.0
IN-
INCOME
IN A U T O M O B I L E S AND "OTHER DURABLE
-11#3770 + #2955x
Y
CONSUMERS' GOODS" 9 /
5. T O T A L G R O S S SAVING E X C L . SAVING
NATIONAL
.971
.909
1.876
.030
.991
.037
.288
.161
INCOME
IN A U T O M O B I L E S AND "OTHER DURABLE
Y
CONSUMERS* GOODS"
6 . TOTAL N E T SAVING E X C L . SAVING IN
A U T O M O B I L E S AND "OTHER
NATIONAL
TOTAL G R O S S SAVING
IN 1929
9.
1.7855
INCOME
NATIONAL
INCOME
IN
1929 PRICES 10/
PRICES 2 5 /
8* TOTAL N E T SAVING
- 4 # 4 5 4 6 + 2 . 9 3 3 3 % 1/
DURABLE
CONSUMERS* GOODS"
7.
s
IN 1929
NATIONAL
INCOME
IN
Y
-16.7740 + ,2724x
.973
.801
1.653
.026
62.0
Y =
-16# 5423 •
.4042X
.981
1.047
2.511
.033
75.5
PRICES
1929 PRICES
Y = -27#4614 +
•3737X
.966
1.294
3.103
.041
75.5
INDIVIDUAL G R O S S SAVING
TOTAL G R O S S SAVING
Y =
#7664 +
.7225*
.964
1.097
1.131
.081
13.11
TOTAL NET SAVING
Y
2*4972 +
.7326*
.953
1.083
.391
.095
0.85
1 0 . INDIVIDUAL N E T SAVING
=
11.
INDIVIDUAL G R O S S SAVING
CORPORATE G R O S S SAVING
Y
4,2363 +
2.49.82X
.866
2.071
1.594
.590
2.40
12.
INDIVIDUAL N E T SAVING
CORPORATE N E T SAVING
Y
6#1738 +
2 . 2606X
.846
1.902
1.035
.582
-1.35
13.
INDIVIDUAL G R O S S SAVING
INCOME PAYMENTS
Y
=
-13,3382 +
.3675X
.960
1.156
2.832
.044
64.1
14.
INDIVIDUAL G R O S S SAVING
INCOME PAYMENTS
Y
=
-3#5385 +
.973
.047
.444
.246
9/
INCLUDES M O U S E S .
OF TOTAL AND
10/
S I N C E SAYING
INDIVIDUAL SAVING
SAVING W A S DEFLATED BY A PRICE
2.5615X1/
1.8021
i s FREQUENTLY DEFIJIEO IN SUCH A MANNER A S TO EXCLUDE A U T O M O B I L E S ABO "OTHER DURABLE C O N S U M E R S * G O O D S " , T H I S V A R I A N T
IS CONSIDERED S E P A R A T E L Y *
INDEX OF
INVESTMENT G O O D S COMPARABLE TO THE SERIES C O M P U T E D BY THE NATIONAL BUREAU OF ECONOMIC
RESEARCH; THE
INCOME
DEFLATOR IS THE SAME AS T H A T USED BY THE NATIONAL BUREAU, WITH COMPARABLE E S T I M A T E S M A D E FOR 1939 AND 1 9 4 0 #
USING OTHER D E F L A T O R S , SUCH AS THE
BUREAU OF LABOR S T A T I S T I C S C O S T OF LIVING INDEX, G I V E S SUBSTANTIALLY THE SAME REGRESSION AND CORRELATION C O E F F I C I E N T S #
INDEPENDENT VARIABLE
D E P E N D E N T VARIABLE
15.
16.
INDIVIDUAL N E T SAVING
INCOME PAYMENTS
INDIVIDUAL C R O S S SAVING E X C L .
INCOME PAYMENTS
SAVING
1 7 . INDIVIDUAL G R O S S SAVING E X C L .
SAVING IN A U T O M O B I L E S AND "OTHER
INDIVIDUAL N E T SAVING E X C L . SAVING
IN A U T O M O B I L E S AND "OTHER
CONSUMERS1
21.
GOODS*
INDIVIDUAL NET SAVING E X C L . SAVING
INDIVIDUAL G R O S S SAVING IN 1929
INCOME PAYMENTS IN
1929 PRICES 1 0 /
DEPENDENT
SLOPE 4 /
VARIABLE 5/
TION 2 /
(")
ESTIMATE 3 /
CONSTANT 4 /
(SY)
(°»)
(X)
-16.5594 +
.3068%
.930
1.313
3.214
.050
64.1
T
-9.1068 +
.2056X
.906
1.037
2.539
.039
64.1
Y 8
- 7 . 3 2 5 1 • 4 . 3 5 2 9 % l!
.916
.149
1.405
.779
V
IN-
1.8021
Y a -10.5504 +
.2018*
.904
1.034
2.531
.039
64.1
Y
-14.2271 +
.2589X
.887
1.453
3.558
.055
64.1
Y
-16.9674 +
.3572X
.945
1.328
3.953
.050
78.1
INDIVIDUAL N E T SAVING IN 1929
INCOME PAYMENTS IN
PRICES
1929 PRICES
Y = -21.8570 +
.3215X
.913
1.549
4.609
.059
78.1
IN INSURANCE
INCOME PAYMENTS
Y =
-3.5175 +
.0884x
.989
.144
.353
.005
64.1
IN INSURANCE
INCOME PAYMENTS
Y =
-1.2031
+
.0409X
.870
.251
.614
.009
64.1
Y =
-8.2725 +
.1840X
.800
1.492
3.654
.056
64.1
INDIVIDUAL
SAVING
E X C L . SAVING
24.
M E A N OF
ERROR OF
INCOME PAYMENTS
PRICES 1 0 /
2 2 . INDIVIDUAL SAVING
23.
STANDARD
ERROR OF
INCOME PAYMENTS
DURABLE
IM G O V E R N M E N T FUNDS 1 ] /
20.
STANDARD
ERROR OF
INCOME PAYMENTS
DURABLE C O N S U M E R S 1 G O O D S *
19.
=
STANDARD
OF C O R R E L A -
IN A U T O M O B I L E S AND *OTHER
DURABLE C O N S U M E R S ' G O O D S *
13.
RELATIONSHIP 1 /
(Y = A + B X )
(x)
(Y)
COEFFICIENT
INDIVIDUAL
FORM 1 G /
IN G O V E R N M E N T F U N D S
SAVING
IN LIQUID
INCOME PAYMENTS
11/
THIS IS A V A R I A N T Of INDIVIDUAL SAVING
\2J
S A V I N G IN THE
IN WHICH THERE
IS A CONSIDERABLE A M O U N T OF
INTEREST AND
IT IS C O N S E Q U E N T L Y
SHOWN S E P A R A T E L Y .
FORM OF CURRENCY AND BANK D E P O S I T S , EQUITY IN S A V I N G S AND LOAN A S S O C I A T I O N S , I N S U R A N C E , AND S E C U R I T I E S .
http://fraser.stlouisfed.org/
415844
Federal Reserve Bank of St. Louis
r
«
. -1
• jk
^
v
1
M k
\
j
t
r
»
v
>
, •
a
- 4 -
INDEPENDENT VARIABLE
DEPENDENT VARIABLE
25.
IN
Y E
INCOME PAYMENTS
INDIVIDUAL DEBT
IN G O V E R N M E N T F U N D S
3 0 . G R O S S E X P E N D I T U R E S OF INDIVIDUALS
OH All DURABLE C O N S U M E R S ' G O O D S
INCOME PAYMENTS
3 1 . N E T E X P E N D I T U R E S OF INDIVIDUALS ON
ALL DURABLE C O N S U M E R S ' G O O D S 1 5 /
INCOME PAYMENTS
3 2 . INDIVIDUAL NET SAVING IN ALL
DURABLE C O N S U M E R S ' G O O D S ,
INCOME PAYMENTS
1_^/
VARIABLE 5 /
(»)
ESTIMATE 3 /
CONSTANT 4 /
(SY)
(<r»)
\%f
1.653
4.047
.062
64.1
Y
3.6878 -
.0614x
-.702
.674
1.650
.025
64.1
Y
-4.7990 +
.1215X
.770
1.086
2.660
.041
64.1
Y
-2.4560 + .0734x
.543
1.228
3.008
.046
64.1
Y
-8.5380 +
.987
.427
1.045
.016
64.1
Y
- 3 . 4 0 5 1 • 2 . 3 5 1 9 % jJ
.996
.017
.160
.089
.2461X
-11.7580 +
.1852x
.972
.488
1.196
.018
64.1
Y a
-9.2161 +
.1410X
.933
.589
1.443
.022
64.1
Y
-8.2846 +
,1227x
.910
.603
1.478
.023
64.1
S A V I N G IN LIQUID FORM PLUS THE RESIDUAL W E T LIQUIDATION OF DEBT NOT INCLUDED IN LIQUID SAVING*
IN INSTITUTIONAL H O L D I N G S OF HOMES#
R = . 9 9 0 ; SY = .348* <TK - . 8 5 2 ;
15/
GROSS E X P E N D I T U R E S (LINE 2 9 )
FOLLOWS:
Y -
T H E O R E T I C A L L Y , C H A N G E S IN THE TAX ARREARS OF
INDIVID-
DATA ARE NOT A V A I L A B L E *
WHEN GROSS EXPENDITURES ARE NOT SO ADJUSTED, THE STATISTICS ARE A S FOLLOWS:
Y - -6.9925 + .2233%;
= .013; X - 64.1.
LESS DEPRECIATION.
-10.2252 + .1627x;
R -
WHEN NET EXPENDITURES ARE HOT ADJUSTED FOR
.961; Sy = .505; (TA = 1.237;
= .019; x = 64.1.
16/
NET E X P E N D I T U R E S (LINE 31) L E S S CHANGE IN DEBT ON HOMES AND A U T O M O B I L E S .
1IJ
NET SAVING, V A R I A N T I (LINE 3 2 ) LESS CHANGE
http://fraser.stlouisfed.org/
415844
Federal Reserve Bank of St. Louis
1.8021
INCOME PAYMENTS
XlJ
L E S S CHANGE
(5)
.665
U A L S AND IN THE DEBT OF U N I N C O R P O R A T E D BUSINESS TO CORPORATIONS SHOULD BE REFLECTED IN THIS S E R I E S , B U T SATISFACTORY
14/
(cr,)
.1363X
Y
3 3 . INDIVIDUAL N E T SAVING IN ALL
OUHABLE CONSUMERS' GOODS,
VARIANT 2
SLOPE V
TION 2 /
IN-
INCOME PAYMENTS
INDIVIDUALS
ON ALL DURADLE C O N S U M E R S ' G O O D S 1 4 /
VARIANT 1
DEPENDENT
• M E A N OF
INCOME PAYMENTS
IN INDIVIDUAL NET CLAIMS
G R O S S E X P E N D I T U R E S OF
ERROR OF
-5.9519 +
ON N O N - I N D I V I D U A L S EXCL. SAVING
29.
STANDARD
ERROR OF
INCOME PAYMENTS
INDIVIDUAL N E T C L A I M S
ON UON-IKOtVIQUALS 13/
28. CHANGE
STANDARD
ERROR OF
INCOME PAYMENTS
INDIVIDUAL SAVING IN L I Q U I D FORI
27. CHANGE
STANDARD
OF C O R R E L A (V * A + B X )
E X C L . SAVING IN G O V E R N M E N T F U N D S
2 6 . NET LIQUIDATION OF
RELATIONSHIP 1 /
(x)
(Y)
COEFFICIENT
IN C O N S U M E R S ' DEBT NOT ELSEWHERE C L A S S I F I E D .
INSTITUTIONAL H O L D I N G S OF H O M E S , THE STATISTICS ARE A S
DEPENDENT V A R I A B L E
INDEPENDENT VARIABLE
(r)
3 4 . CHANGE
RELATIONSHIP 1 /
(Y - A • BX)
(*)
IN INDIVIDUAL N E T C L A I M S
ON N O N - H D I V I D U A L S 1 3 /
COEFFICIENT
STANDARD
STANDARD
STANDARD
M E A N OF
OF C O R R E L A -
ERROR OF
ERROR OF
ERROR OF
SLOPE 4 /
DEPENDENT
TION 2 /
(«)
ESTIMATE 3/
CONSTANT 4 /
(SY)
«r,)
«rBr
IN-
V A R I A B L E 5/
00
G R O S S EXPENDITURES OF
INDIVIDUALS ON ALL
DURABLE C O N S U M E R S '
GOODS 1 Y
3 5 . CHANGE IN
INDIVIDUAL NET C L A I M S
INDIVIDUALS ON ALL
IK G O V E R N M E N T F U N D S
DURABLE C O N S U M E R S '
GOODS 1§/
ON NON-INDIVIDUALS
.5400X
.773
1.082
1.382
.181
7.33
Y
-.1582 +
•3290X
.549
1.222
1.562
.205
7.33
y
2.8340 +
•7502X
.806
1.010
.360
.225
0,21
.1022X
.888
.659
1,359
.022
.807
.452
S
GROSS EXPENDITURES OF
ON NOII-I INDIVIDUALS E X C L . SAVING
3 6 . C H A N G E IN INDIVIDUAL RET C L A I M S
—#9658 +
V
N E T EXPENDITURES OF
INDIVIDUALS ON ALL
DURABLE CONSUMERS'
G O O D S XTJ
3 7 . CORPORATE G R O S S SAVING
NATIONAL
INCOME
Y
-3^366 +
3 8 . C O R P O R A T E GROSS SAVING
NATIONAL INCOME
Y
- 5 . 0 8 3 4 + 3.0214% I Z
.939
.103
3 9 . CORPORATE NET SAVING
NATIONAL INCOME
Y
-7.2000 +
.0943X
.880
•633.
1.305
.021
62.0
4 0 . CORPORATE G R O S S SAVING IN 1 9 2 9
NATIONAL INCOME IN
1929 PRICES 1 £ /
Y =
-5.1173 •
•1016X
.914
.586
1.404
.018
75.5
4 1 . C O R P O R A T E NET SAVING IN 1 9 2 9
PRICES
NATIONAL INCOME IN
1 9 2 9 PRICES
Y =
—9.6178 •
.1075X
.927
•565
1.355
.018
75.5
4 2 . CORPORATE G R O S S SAVING
TOTAL GROSS SAVING
Y =
-.6880 +
•2357X
.908
• 601
.620
.044
13.11
4 3 . CORPORATE NET SAVING
TOTAL BET SAVING
Y =
-1.5711 +
.2587X
.899
•584
.211
.051
0.85
PRICES 2 2 /
\%/
N O T A D J U S T E D FOR CHARGE
http://fraser.stlouisfed.org/
415aa
Federal Reserve Bank of St. Louis
IN INSTITUTIONAL HOLDINGS OF H O M E S .
62.0
1.7855
@FedFRASER