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Economic Report
of the President

Transmitted to the Congress
January 1966
TOGETHER WITH

THE ANNUAL REPORT
OF THE

COUNCIL OF ECONOMIC ADVISERS

UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON : 1966

For sale by the Superintendent of Documents U.S. Government Printing Office
Washington, D.C.,20402 Price$1.25 cents







CONTENTS
ECONOMIC REPORT OF THE PRESIDENT
NEW ECONOMIC ENVIRONMENT
VIETNAM AND OUR ECONOMY
THE PRINCIPLES OF ECONOMIC POLICY
OUR ECONOMIC GAINS

Page
3
4
5
6

Jobs, Incomes, and Production
Gains for the Disadvantaged
Strengthened Payments Balance
The Record of Costs and Prices

6
8
9
9

ECONOMIC OUTLOOK FOR 1966

10

Fiscal and Monetary Policy
The Uncertainties

10
11

MAINTAINING COST-PRICE STABILITY IN 1966
INTERNATIONAL ECONOMIC POLICIES FOR 1966

Balance of Payments
Trade
International Monetary Reform
Economic Assistance

12
13

13
14
14
15

URBAN PROBLEMS AND POLICIES

15

TRANSPORTATION
CONTROLLING POLLUTION
LABOR AND MANAGEMENT

16
16
17

Union Security Agreements
Strike Emergencies
Unemployment Insurance
Fair Labor Standards

17
17
17
17

TAX REFORM AND SIMPLIFICATION
FINANCIAL INSTITUTIONS IN OUR CHANGING ECONOMIC ENVIRONMENT .
CONSUMER PROTECTION
CONCLUSION

18
18
19
19

ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS*
CHAPTER 1. APPROACHING FULL EMPLOYMENT

31

CHAPTER 2. PROSPECTS FOR COST-PRICE STABILITY

63

CHAPTER 3. STRENGTHENING HUMAN RESOURCES
CHAPTER 4. AREAS FOR FURTHER LEGISLATIVE PROGRESS IN 1966. .
* For a detailed table of contents of the Council's Report, see page 27.




Ill

94
116

CHAPTER 5. PROGRESS AND PROBLEMS IN AGRICULTURE
CHAPTER 6. THE INTERNATIONAL ECONOMY
CHAPTER 7. THE

Page
131
140

EMPLOYMENT ACT: TWENTY YEARS OF POLICY

EXPERIENCE

170

APPENDIX A. MAJOR LEGISLATION AND ADMINISTRATIVE ACTIONS OF
ECONOMIC SIGNIFICANCE IN 1965

187

APPENDIX B. REPORT TO THE PRESIDENT ON THE ACTIVITIES OF THE
COUNCIL OF ECONOMIC ADVISERS DURING 1965

195

APPENDIX C. STATISTICAL TABLES RELATING TO INCOME, EMPLOYMENT, AND PRODUCTION




203

IV




ECONOMIC REPORT
OF THE PRESIDENT




To the Congress of the United States:
A year ago I reported that we were "in the midst of the greatest upsurge
of economic well-being in the history of any nation." That upsurge,
now about to enter its sixth year, continues without let-up.
• The value of our Nation's annual output of goods and services
rose more than one-third from 1960 to 1965. Last year alone,
our gross national product (GNP) made a record advance of
$47 billion.
• This swelling production has generated an unprecedented rise in
the incomes of the American people. Total personal income
in December was at an annual rate of $550 billion, up 37 percent
in the past 5 years and 7/ 2 percent in the latest 12 months.
• In the past 5 years, the number of Americans at work increased
by nearly 7 million; in 1965 alone, by about 2/2 million. The
rate of unemployment dropped from 6.6 percent in December
1960 (and a high of 7.1 percent in May 1961) to 4.1 percent in
December 1965.
• And American jobs are better than ever before. The weekly
take-home pay of the average manufacturing worker with three
dependents has risen 26 percent in the past 5 years. In the last
12 months alone his gain was 4 percent.
• The profits of our corporations, after taxes, last year were 67 percent ahead of their earnings 5 years earlier—up 20 percent over
1964.
• And average farm income last year rose 23 percent, breaking all
records.
Our Nation's industries, shops, and farms—our workers, owners of
businesses, professional men and women—prosper today far beyond the
dreams of any people, anytime, anywhere.
NEW ECONOMIC ENVIRONMENT
In the light of these unprecedented and continuing gains, some observers are posing questions not heard in almost a decade.
• Will there be enough plant capacity to produce all the goods and
services buyers will seek?
• Can our employers find the labor they will require to man their
production lines?




• Can we avoid bottlenecks in major industries or key skills that
would hamper our expansion?
• Can we keep a destructive price-wage spiral from getting
underway?
• Can we move ahead with the Great Society programs and at the
same time meet our needs for defense?
My confident answer to each of these questions is YES.
But the fact these questions are seriously asked and require serious
answers is proof enough that we are in a new economic environment.
We are approaching full use of our resources, and this brings new
problems.
To those who fear these new problems, I say this:
• These are the problems we have been waiting to encounter for
nearly 10 years.
• These problems are the price of our success.
• These are the welcome problems of prosperity.
Over the past 5 years we have faced very different economic problems.
In meeting these problems we have learned that
—recessions are not inevitable;
—high production does not necessarily mean overproduction;
—expansion need not generate inflation or imbalances that make
further expansion unsustainable;
—affluence has not sapped the inherent strength and dynamism
of the American economy;
—automation need not create mass unemployment;
—millions who were unemployed are not unemployable;
—prudently expansionary fiscal policies can restore high employment; and
—domestic expansion can go hand in hand with strengthened
external payments and a sound dollar.
We have learned how to achieve prosperity. Now we must sustain
it, deal with its problems, and make the most of the opportunities it
presents.

VIETNAM AND OUR ECONOMY
We face the challenges of prosperity while some 200,000 of our
fellow citizens and billions of dollars of our resources are engaged in
a bitter defense of freedom in Vietnam. The true costs of this conflict
are death, pain, and grief; interrupted careers and separation from
loved ones. They are incalculable. But the economic cost of Vietnam
imposes no unbearable burden on our resources.




Vietnam does, however, add to the usual problems of maintaining
balanced prosperity. It imposes special burdens on some industries, and
raises, as well, uncertainties both for the fiscal planning of Government
and the private planning of business. These uncertainties underscore
the need for flexibility in Government policies and responsibility in private decisions.
Production for Vietnam accounts for less than 1 */> percent of our GNP.
These expenditures are a part of the total demand that provides a full
market for our manpower and our production. But the private demands
of consumers and businesses, and high-priority civilian programs of Government, could and would provide a far more welcome market for that
output if there were no war in Vietnam. Our prosperity does not depend
on our military effort.
THE PRINCIPLES OF ECONOMIC POLICY
In a time of high prosperity, economic policy faces new problems. But
it is still guided by the basic principles that have served us so well.
Twenty years ago next month, the Employment Act of 1946—which
prescribes this Report—became law. The principles of our policy emerge
from that Act and from our two decades of experience under it.
The essential and revolutionary declaration of the Employment Act
was that the Federal Government must accept a share of responsibility
for the performance of the American economy. The nature of that share
has been more and more clearly defined over the years, by the recommendations of four Presidents and the enactments of ten Congresses.
I see these as the main tasks of Federal economic policy today:
1. To attain full employment without inflation; to use fiscal and
monetary policies to help to match total demand to our growing productive potential, while helping to speed the growth of that potential through
education, research and development, manpower policies, and enlarged
private and public investment;
2. To help to open the doors of opportunity to all, through developing
human resources and removing barriers of discrimination, ignorance, and
ill-health;
3. To help to solve social and economic problems that neither private
action nor State and local governments can solve alone—an efficient
transportation system, the protection of our environment, the health of
our agriculture, the reconstruction of our cities;
4. To achieve and maintain equilibrium in the Nation's external payments, and to press for improvements in the international economic
order;
5. To maintain and enhance healthy competition;
6. To achieve national purposes as far as possible by enlisting the
voluntary cooperation of business, labor, and other groups.




Recognition of these responsibilities of the Federal Government neither
lessens the responsibilities nor impairs the freedoms of individuals and
private groups; nor does it challenge the authority of State and local
governments.
The tasks involve new and growing problems of an increasingly complex and interdependent economy and society. Only the Federal Government can assume these tasks. But the Federal Government by itself
cannot create prosperity, reduce unemployment, avoid inflation, balance
our external accounts, restore our cities, strengthen agriculture, eliminate
poverty, or make people healthy.
Only through a creative and cooperative partnership of all private
interests and all levels of government—a creative Federalism—can our
economic and social objectives be attained. This partnership has written
the story of American success. And a new vitalization of this partnership and a new confidence in its effectiveness have produced the extraordinary economic and social gains of recent years.
OUR ECONOMIC GAINS
Our economy is so vast, and our progress has been so rapid, that it is
difficult to keep our gains in proper perspective. Here are a few
examples:
• In only seven other countries of the world is total output in a
year as large as the increase in our output last year.
• Our stock of private plant and equipment, valued in constant
prices, increased as much in 1965 alone as it did in the 4 years
1957 through 1960.
• The increase in Federal cash receipts between fiscal years 1961
and 1967—in spite of $20 billion of tax cuts—will exceed the
entire cash receipts of the Federal Government in any peacetime
fiscal year prior to 1951.
JOBS, INCOMES, AND PRODUCTION

The register of our economic gains during 1965 starts with jobs:
—2.4 million more, over-all;
—1.0 million more for teenagers;
—350,000 more for Negroes;
—900,000 more for women;
—1.2 million more for blue-collar workers;
—900,000 more on manufacturing payrolls;
—450,000 more on State and local government payrolls;
—1.0 million more in trade and services.




It continues with pay:
—average hourly earnings up 3 percent in manufacturing, 4 / 2
percent in retail trade;
—average weekly earnings up 3l/2 percent in manufacturing, 3]/$
percent in trade.
Other forms of income rose, too:
—farm proprietors' average income up 22 percent;
—average income of owners of unincorporated businesses and professional workers up 71/2 percent;
—total dividends paid up 12 percent.
And corporations prospered, with
—profits before taxes up 15 percent;
—profits after taxes up 20 percent;
—corporate retained earnings up 29 percent.
With more people earning, and earning more,
—total personal incomes rose $39 billion, or 71/2 percent;
—aggregate consumers' incomes after taxes rose $34 billion, also
71/2 percent.
Governmental units benefited from the surge of incomes.
• Federal cash receipts rose $8^4 billion.
• State and local governments took in $4/3 billion more, reducing
the need for tax rate increases to meet their expanding burdens.
The higher incomes of individuals, businesses, and governments came
from expanding production (year 1965 over year 1964):
Production of goods and services for consumers
up $29/ 2 billion
Production of new plants and machinery, up $9/ 2 billion
Production for use of the Federal Government
up $11/2 billion
Production for use of State and local
governments
up $5 billion
Production for additions to inventories
up §2l/2 billion
Residential construction
no change
Production for export (less imports)
down $11/2 billion
Total production (GNP)
up$47 billion
We could produce $47 billion of additional output last year because:
• We had a large net addition of 1.4 million to our labor force;
• We put to work this entire net increment plus about 400,000 who
were previously unemployed;
• On the average, each employed person worked a few more hours
during the year; and
• Each man-hour worked in the private economy produced on the
average 2.8 percent more output than in 1964.




Increased employment and higher productivity were possible because
business investment had provided a substantial expansion of plant capacity; because the new and the previously existing capacity were used
more fully than in the year before; and because our labor force was better
educated and more skilled than ever before. Our efforts to equip the
unskilled and inexperienced to take advantage of rapidly expanding job
opportunities have been—and will continue to be—an investment in our
productive capacity.
The enlarged market demands which called forth this higher output
came from every sector. The two dominant forces, however, were the
growing boom in business spending for new plant and equipment and
the continued dependability of consumer spending, following close on
consumer income. Excise tax cuts and larger social security benefits in
1965 helped to swell the income and buying of households. The tax
cuts provided by the Revenue Act of 1964 were sustaining private demand all year. By year's end they had added $30 billion to GNP.
GAINS FOR THE DISADVANTAGED

The disadvantaged and less fortunate members of our society also
shared in our 1965 economic gains.
• P'or the poor who were able to earn, there were lower unemployment, fuller work schedules, and higher pay.
• For the poor who were capable of earning more, there were job
training and help in finding jobs, improvements in education,
and the breaking down of barriers of discrimination.
• For the poor who could not earn, there were more adequate social
security benefits, new medical programs, and better social services.
• For the poor too young to earn, there were more effective education, assistance to enable them to stay in school, and better health
services.
Between 1964 and 1965, an estimated 2.2 million persons moved above
the poverty line. Millions of others, mostly children and young people,
will have a better chance to break out of poverty in the years ahead as a
result of the help they will receive from new Federal education, health,
and antipoverty programs enacted in 1964 and 1965.
But 32 million Americans remain in poverty, and millions more are
unable to realize their full economic potential. America's abundance
leaves behind too many who are aged, who are stranded in declining rural
areas, who are in broken families, who are uneducated or handicapped
or victims of discrimination. Unemployment among Negroes remains
twice that of whites. And an unemployment rate of 13 percent among
teenagers means that too many youths find disappointment in moving
from school into jobs.
The war on poverty, ignorance, ill-health, discrimination, and inadequate opportunity must go forward.




8

STRENGTHENED PAYMENTS BALANCE

In 1965 we reduced our balance of payments deficit to less than half
that in 1964 and 1963. We have shown a skeptical world that a voluntary program—relying on the patriotic cooperation of businesses and
banks—could work.
We made substantial progress in 1965
—despite the fact that our new program did not start until late in
thefirstquarter of the year;
—despite increased responsibilities in Vietnam;
—despite a temporary decline in our trade surplus;
—despite conversion by the U.K. Government of more than $/ 2
billion of U.S. securities and other assets.
Last year we moved forward toward payments balance without
sacrificing our vital domestic or international objectives. And we intend to complete the job this year.
T H E RECORD OF COSTS AND PRICES

Until a year ago, American costs and prices had been essentially
unchanged since 1958. Last year, largely through a surge in agricultural
and food prices, the record was blemished. Even so, we have not lost
ground to our major competitors overseas, whose prices and costs have
generally risen more than ours.
Some internationally traded raw materials—particularly metals and
hides—are costing us more. And higher prices for petroleum products
and some machinery have also nudged up our price indexes.
But labor costs—the most basic element in the structure of our costs—
have barely moved, as gains in productivity have largely offset moderate
increases in hourly labor costs.
In many major sectors of our economy, price stability is still the rule,
and some important prices are still going down, in line with lower costs.
In December, some of the wholesale prices that were lower than a year
earlier were:
fresh and dried fruits and vegetables millwork
plant and animal
fibers
building paper and board
coal
motor vehicles
electric power
heating equipment
packaged beverage materials
household appliances
manmade
fibers
televisions, radios, phonographs
inedible fats and oils
floor
coverings
paint materials
flat
glass
crude rubber
gypsum products.




Many industries and markets have demonstrated that the gains of lower
costs and rapidly rising productivity can be shared with consumers.
Wholesale prices of the following categories of products in December
averaged at least 5 percent lower than in 1957-59:
fresh and dried fruits and vegetables tires and tubes
grains
plywood
plant and animal
fibers
building paper and board
packaged beverage materials
heating equipment
manmade
fibers
household appliances
paint materials
televisions, radios, and phonographs
drugs and pharmaceuticals
asphalt roofing
crude rubber.
Those who proclaim inflation is already here have not turned over
all the price tags.
ECONOMIC OUTLOOK FOR 1966
Demand will continue to grow rapidly in 1966 and production will
respond. The vigor of investment spending demonstrates strong business confidence in the growing sales, rising profits, and firm operating
rates which spur expansion and modernization. The rising defense needs
of the Federal Government are an important new force in the economy.
With growing support from Federal grant programs, State and local
purchases will keep moving ahead. Rising consumer incomes from
wages, dividends, interest, professional work, and farming will again
largely be devoted to expenditures for better living.
These forces should add very nearly as much to our GNP in 1966 as
the record gain of $47 billion last year. As the midpoint of a $10 billion
range, $722 billion is the projected level of GNP in 1966. With that
output, we foresee
—an extra $40 billion of spending and production for civilian needs,
both private and public;
—unemployment shrinking below 4 percent, and below any yearly
average rate since 1953;
—great advances in the productive capacity of our industries;
—further good gains in productivity; and
—full use, without overuse or strain, of our productive capacity.
FISCAL AND MONETARY POLICY

The fiscal program I recommend for 1966 aims at full employment
without inflation. It is a responsible program. It recognizes that
vigorous private demand and required defense spending could upset the
balance of supply and demand so diligently pursued by fiscal and monetary policies in recent years, and now so effectively achieved.




10

Until this year, pursuit of this balance has pointed fiscal policies toward
the stimulation of demand. Now a stimulus is no longer appropriate.
I have reviewed every program of Government to make room for the
necessities of defense. I have sharply reduced or eliminated those civilian
programs of lowest priority.
But, as I indicated in my State of the Union Message, I am unwilling
to declare a moratorium on our progress toward the Great Society. My
budget will add $3.2 billion to our war against poverty, ignorance, and
disease. Yet savings elsewhere will hold the rise in the Administrative
Budget—apart from the added costs of Vietnam—to only $600 million.
Moreover, I am asking the Congress to enact promptly a combination
of proposals affecting tax payments in the year ahead:
—a rescheduling of the January 1, 1966 and later excise tax reduction enacted last June for automobiles and telephone service;
—a graduated withholding system that will improve the pay-asyou-go basis of our personal income taxes without increasing tax
rates or tax liabilities;
—a corresponding speed-up in payments of corporate income taxes
this year and next, also without increasing tax rates or tax liabilities; and
—a method of paying self-employment Social Security taxes on a
current basis.
These measures will let us stay close to a high-level balance between
the revenues that the Federal Government draws out of the economy and
the expenditures that it puts back into the spending stream, and to a highlevel balance between total demand and the economy's capacity to produce. It is my judgment that this budget provides the appropriate fiscal
environment for the maintenance of basic price stability with continued
growth.
I will also look to the Federal Reserve System to provide assistance in
promoting the objectives we all share:
—meeting the credit needs of a vigorous and growing economy,
while
—preventing excessive credit flows that could carry the pace of expansion beyond prudent speed limits.
T H E UNCERTAINTIES

We have made the best economic judgments we can. This year, they
were unusually difficult. If the tax measures I am now proposing, in
conjunction with the moderating influence of monetary policy, do not
hold total demand within bounds of the Nation's productive capacity, I
will not hesitate to ask for further fiscal restraints on private spending.
Nor will I hesitate to ask for such further fiscal action if additional defense requirements demand it during the year. And I will welcome




II

the opportunity to alter my budget in the event that a relaxation of
international tensions permits lower defense outlays than are now
foreseen.
Our defense needs are great; but our growth is far greater. The demands on our economy are strong; but its productive capabilities are
enormous. Surprises surely lie ahead; but our ability to cope with
change is strong and improving.
MAINTAINING COST-PRICE STABILITY IN 1966
One of the problems of prosperity we face in 1966 is that of achieving
stability of prices and costs at full employment.
The basic precondition for price stability is a fiscal-monetary policy
that deters total demand for goods and services from outrunning potential
supply. But history proclaims that something more is needed: a sense of
responsibility to the public interest by labor and business in setting wages
and prices.
The vigorous economy we foresee in 1966 will tempt labor unions to
demand wage increases that would raise costs, and businesses to raise
prices when profit margins are already fully adequate. Labor must
remember that growing employment and productivity are the foundation
of higher wages, and business that an expanding economy is the basic
source of profit gains. These foundations must not be jeopardized.
The Federal Government does not have authority to impose ceilings on
wages and prices.
But when 200,000 of our fellow citizens are risking their lives in the
defense of freedom overseas, the Government's duty is to ask those who
enjoy a comfortable prosperity at home to exercise responsibly their freedom to set prices and wages.
Foregoing the freedom to act irresponsibly is no real sacrifice. For
irresponsible action can only bring on an inflation that would damage
all—labor, business, and the national interest.
The attached Report of the Council of Economic Advisers contains a
thorough discussion of its guideposts for noninflationary wage and price
behavior. To maintain price stability in the expanding economy of
1966, it is vitally important that labor and industry follow these guideposts.
The public can expect that the responsible actions of labor and management will be strengthened and supplemented by all the policies of
the Federal Government:
* Manpower, education, and rehabilitation programs will continue to train the unemployed and to prepare our youth, increasing the supply of qualified workers and their productivity.
• Where available, surplus Federal stockpiles will be used to prevent
unnecessary shortages of materials and commodities




12

• Defense procurement, agricultural, and other policies will be adjusted where necessary to avoid contributing to instability of
prices.
• Fair Labor Standards legislation and Government pay increases
should be consistent with the guideposts.
There are no general labor shortages in our economy now, and none
should develop in the year ahead. But in some industries, occupations,
and areas, limited stringencies are appearing.
Prompt and effective action will be taken to meet any problem of specific labor shortage. I have instructed the Secretary of Labor to take all
possible and necessary steps. And I have asked all other Departments
to cooperate in this effort.
It will not be easy to reconcile price stability and full employment.
Some price movements reflect worldwide changes in supply and demand.
But over-all stability of costs and prices will be preserved in the year ahead,
provided that during 1966
—public policies maintain a balance between over-all supply and
demand and address themselves vigorously to any emerging
sectoral imbalances, and
—business and labor accept the principles of the guideposts for
noninflationary behavior.
We will have demonstrated that a free economy can both maintain full
employment and avoid inflation—and do so without arbitrary controls.
INTERNATIONAL ECONOMIC POLICIES FOR 1966
These are the objectives of our international economic policies in
1966:
—to correct our remaining balance of payments deficit, so that the
dollar will remain strong;
—to work toward reduction of trade barriers, so that all nations
may reap the benefits of freer trade;
—to improve the international monetary system, so that it will
continue to facilitate sound and orderly growth of the world
economy;
—to press forward with the other fortunate nations in the great
international task of our age: helping those countries now economically less advanced which are prepared to help themselves
make rapid progress toward a better life in freedom.
BALANCE OF PAYMENTS

Decisive progress was made in 1965 toward reducing our balance of
payments deficit. Though the results for 1965 are gratifying, we cannot
afford to relax. We have not yet balanced our external accounts.

795-983 0—66

2




J

3

For 1966, external balance is our goal. It requires that
• Business continue to cooperate wholeheartedly in following the
strengthened guidelines governing capital flows announced in
December;
• Banks and financial institutions maintain their excellent performance of last year;
• Businesses sell even more abroad this year, in spite of full domestic
order books;
• Business and labor keep costs and prices stable in order to maintain the competitiveness of our goods and services in international
markets;
• Government work vigorously to minimize the dollar drain abroad
of its aid and defense programs as well as all other activities;
• The Congress pass the tax legislation I recommended last year to
enhance opportunities for foreigners to invest in the United States;
• We intensify our efforts to encourage our own citizens and foreigners to travel in the United States. I am directing that high
priority be given to these efforts.
TRADE

The year 1966 is the year when the world can take a giant step forward
in liberalizing international trade by successfully concluding the Kennedy Round of negotiations to reduce trade barriers on all classes of products. The resulting growth of world trade and world income will benefit
all countries, developing as well as industrial. The United States will
bend every effort to get meaningful negotiations back on the track. This
great venture in international cooperation must not fail.
We shall continue our efforts to improve the trade prospects of the
developing countries by helping to stabilize commodity trade, by supporting regional integration among them where practicable, by providing
access to markets, and by giving positive assistance to export promotion.
INTERNATIONAL MONETARY REFORM

As we achieve and maintain balance in our external accounts, dollars
will no longer add to international monetary reserves as they have in
the past. We learned long ago that we cannot rely on gold alone. The
free world must look to new sources of liquidity—rather than to deficits in
the U.S. balance of payments—to support growing international trade
and payments.
We are, therefore, pressing forward with other nations
—to assure the adequate and orderly growth of world monetary
reserves;
—to improve the adjustment of imbalances by both surplus and
deficit countries;
—to strengthen the monetary system that has served the world so
well.




14

I hope that the major industrial nations—and then the entire community of free nations—will reach an agreement that will make creation
of new reserve assets a deliberate decision of the community of nations to
serve the economic welfare of all.
ECONOMIC ASSISTANCE

We have molded our foreign assistance policies into more efficient tools
with which to confront one of history's gravest challenges—the development of the impoverished but awakening and turbulent two-thirds of the
world.
The United States stands ready to continue to assist those countries
which have demonstrated their commitment to the task of moving their
economies forward toward self-sustaining growth under freedom.
In recent years, I have consciously held back further increases in our
foreign assistance request while we designed a lean but effective program
to give maximum impact to each dollar we spend.
Today, we are ready to move forward with special emphasis on three
areas in which the United States is particularly well qualified to help:
—agriculture, to stimulate food production where it fails to keep
pace with spiraling populations;
—health, to strengthen millions who could contribute more fully to
their own economic progress;
—education and training, to provide the modern skills needed for
development.
URBAN PROBLEMS AND POLICIES
We are an urban society. In 1900, America's urban areas contained
30 million people, 40 percent of our population. By the year 2000, 250
million, 80 percent of our population, are likely to be urban. The quality
of American life increasingly depends on the physical, economic, aesthetic,
and social qualities of our urban centers.
American cities possess some of the rarest treasures of art, the finest
music and theater, the greatest universities, the loveliest parks, the most
splendid vistas, the most elegant and luxurious living, in the entire world.
Yet they also contain degrading poverty, revolting slums, incredible
traffic congestion, bitter racial tensions, physical decay and ugliness,
political disorganization, and rising crime and delinquency.
The Congress created last year a Department of Housing and Urban
Development, giving it responsibilities for coordinating Federal programs
affecting housing, urban areas, and urban people, and for administering
many such programs. I have no intention of letting it become merely a
housekeeping agency to supervise miscellaneous programs.
With the help of the finest minds in the Nation, we have been developing a program to rebuild—in cooperation with State and local governments, private agencies, business enterprises, and local citizens—the




15

physical, institutional, and social environment of our urban areas. Each
city should plan on an integrated basis for its own physical, economic,
and social development. And where those plans are imaginative, farsighted, and efficient, the Federal Government should help to make them
realities.
I am asking the Congress to consider proposed legislation to carry out
these objectives. I am also preparing proposals for legislation to bar
discrimination in the sale or rental of housing—a condition which has
contributed to many urban problems.
TRANSPORTATION
The revolutionary changes in transportation technology of the past
half century have not been matched by equal progress in our public
policies or our Federal organization.
I am recommending the creation of a Department of Transportation
—to manage the vast Federal promotional programs in highways,
waterways, air travel, and maritime affairs, and
—to take leadership in the development of new transportation policies in accord with current realities.
I am proposing again this year increased user charges on highways
and aviation and the introduction of nominal user charges on inland
waterways. Such charges will improve efficiency in the use of resources,
and reimburse the Federal Government for a part of its expenditures
which directly benefit the users of these facilities.
We spend billions of dollars in medical research each year to conquer
disease and prolong life. Yet we still put up with the senseless slaughter
of thousands of Americans on our highways.
Fifty thousand Americans met their death in traffic accidents during
1965. About 3 / 2 million were injured. The economic cost of accidents
is estimated at around $8 billion a year.
We can no longer ignore the problem of automobile safety. We can
no longer procrastinate and hope that the situation will improve. I will
propose new programs to protect the safety of our citizens and the
efficient flow of our commerce.
CONTROLLING POLLUTION
Our means for attacking the shameful pollution of our environment
were strengthened in the first session of this Congress by important new
standard-setting authority over water quality and automotive exhausts.
Federal agencies have begun cleaning up the numerous and extensive
sources of water pollution from their own facilities, in response to my
Executive Order. Despite budgetary stringency, expenditures for this
purpose will be given high priority. I shall issue an Executive Order
covering air pollution from Federal installations.




16

I propose that, in cooperation with appropriate State and local authorities and private interests, we carry out projects to clean up several entire
river basins, following the example of our efforts to clean up the Potomac.
Special Federal financial assistance will be necessary; this should be conditioned on new financial and organizational arrangements by State and
local authorities.
LABOR AND MANAGEMENT
UNION SECURITY AGREEMENTS

Strong and responsible collective bargaining is an important instrument
of a free and healthy economy.
To improve its functioning and to make the national labor policy uniform throughout the country, I again urge the Congress to repeal Section
14(b) of theTaft-HartleyAct.
STRIKE EMERGENCIES

The recent transit strike in New York City illustrates our helplessness in
preventing extreme disruption to the lives and livelihoods of a city of 8
million people. I intend to ask the Congress to consider measures that,
without improperly invading State and local authority, will enable us to
deal effectively with strikes that may cause irreparable damage to the
national interest.
UNEMPLOYMENT INSURANCE

Our system of Unemployment Insurance has not kept pace with our
advancing economy. The time to modernize it is now, when unemployment is low and the cost of improved protection can be readily absorbed.
We need a program that will provide more realistic benefits, including
benefits for more workers and for longer periods of joblessness; that will
correct abuses and assure efficient and responsible administration; and
that will broaden the system's tax base and strengthen its financing. I
urge the Congress to enact such a program.
FAIR LABOR STANDARDS

Millions of workers at the bottom of our wage scale still lack the protection of Federal minimum standards. At the same time, we need to
reinforce this protection by raising the minimum wage.
I recommend the extension of the Fair Labor Standards Act to large
numbers of additional workers. In enacting higher minimum wage
levels, the Congress should consider carefully their effects on substandard
incomes, on cost and price stability, and on the availability of job opportunities for marginal workers.




TAX REFORM AND SIMPLIFICATION
Against a background calling for fiscal restraint, I cannot this year
endorse any specific legislative measure, however meritorious, involving
significant net tax reduction. The danger of inflation from increased
demand would be too great, and any special tax reduction now would
postpone the time when we can achieve a meaningful general tax
reduction.
Although tax reduction is not feasible this year, improvement of our
tax system is a continuing need which will concern this Administration
and which deserves the support of all Americans.
One major goal must be simplification of the tax law. Another aim
must be a more equitable distribution of the tax load. The great variation of tax liability among persons with equivalent income or wealth
must be reduced. Further, when tax reduction once again becomes
feasible, particular attention must be given to relief of those at or near
poverty levels of income.
Finally, we must review special tax preferences. In a fully employed
economy, special tax benefits to stimulate some activities or investments
mean that we will have less of other activities. Benefits that the Government extends through direct expenditures are periodically reviewed and
often altered in the budget-appropriation process, but too little attention
is given to reviewing particular tax benefits. These benefits, like all other
activities of Government, must stand up to the tests of efficiency and
fairness.
We must constantly seek improvements in the tax code in the interests
of equity and of sound economic policy.
I welcome the concern over these problems shown by the Chairmen
of the tax committees of the Congress.
As a specific tax reform which can be accomplished this year, I call
upon the Congress to deal with abuses of tax-exempt private foundations.
We must always be prepared to meet quickly any problems that arise
in the path of continued, stable economic growth, whether the problems
call for fiscal stimulus or fiscal restraint. Background tax studies by
both the Congress and Executive Branch should therefore be adequate
to permit quick decisions and prompt action to accommodate short-run
cyclical changes. If quick action is ever needed, we should not have to
begin a long debate on what the changes in taxes should be.
FINANCIAL INSTITUTIONS IN OUR CHANGING
ECONOMIC ENVIRONMENT
The vigor and soundness of our financial institutions are vital to
the vigor and soundness of our economic expansion. Actions to ease
unnecessarily restrictive regulations have been taken in the past; they




18

have borne fruit in stronger competition and a more efficient flow of
funds from savers to borrowers with the most urgent needs.
But appropriate regulations are clearly required to protect the safety of
savings of American families, to assure the most efficient and equitable
regulation of financial institutions, and to create still better channels for
theflowof funds to borrowers.
For these reasons, I recommend Congressional action on financial legislation to
—arm regulatory agencies with a wider range of effective enforcement remedies;
—strengthen statutory provisions dealing with savings and loan
holding companies;
—increase the maximum amount of insurance coverage for bank
deposits and savings and loan accounts; provide safeguards
against conflict of interests in the management of these institutions ; and make regulations applying to various types of institutions as parallel as possible;
—provide for Federal chartering of mutual savings banks.
CONSUMER PROTECTION
I have already asked for the cooperation of business and labor in preserving the stability of costs and prices. But the consumer also has a
responsibility for holding the price line.
To fulfill his responsibility, the consumer must have access to clear,
unambiguous information about products and services available for
sale. This will enable him to reward with his patronage the most efficient
producers and distributors, who offer the best value or the lowest price.
We should wait no longer to eliminate misleading and deceptive packaging and labeling practices which cause consumer confusion. The fair
packaging and labeling bill should be enacted.
While the growth of consumer credit has contributed to our rising
standard of living, confusing practices in disclosing credit rates and the
cost of financing have made it difficult for consumers to shop for the best
buy in credit.
Truth-in-lending legislation would provide consumers the necessary
information, by requiring a clear statement of the cost of credit and the
annual rate of interest.
Our legislation protecting the public from harmful drugs and cosmetics
should be strengthened. I shall propose legislation for this purpose.
CONCLUSION
A few years ago, much was heard of the "European economic miracle."
Today, across the Atlantic and around the world one hears once again of
the "American economic miracle."




19

For the American economy, in the past 5 years, has demonstrated anew
the confident vitality, the internal dynamism, and the enormous productivity which had long been its hallmark. We had settled for a while on
what seemed a plateau of affluence; now, once again, there has been the
strong thrust of progress-—but a newly steady and balanced progress.
We have again shown the world what free men and a free economy
can achieve. The peoples struggling toward economic development see
with renewed interest that free markets and free economic choices can be
a mighty engine of progress.
Moreover, there is new respect in the world for an America concerned with using its abundance to enhance the quality of human life: for
a people
—who undertake a war on poverty along with the defense of freedom;
—who seek to restore their cities to greatness and to conserve the
beauties of their landscape;
—who are determined to break down a centuries-old barrier of
prejudice and injustice;
—who are resolved to lift the quality of education at every level;
—who are determined to promote and reward excellence in every
endeavor;
•—who have provided new health services and better social security
for their older citizens;
—who offer to share their abundance and technical skills with a needy
world.
The new vigor and progress of America can be a source of satisfaction.
Yet we cannot rest on past accomplishments. Continuing problems
challenge our determination and our resourcefulness.
Perhaps our most serious economic challenge in 1966 will be to preserve the essential stability of costs and prices which has contributed so
significantly to our balanced progress.
I do not know what additional burdens of defense the American economy will be asked to assume in 1966. Whatever they are, they will be
met, and they will be small relative to the growth of our abundance.
But in an economy approaching full use of its resources, the new requirements of Vietnam make our task of maintaining price stability more
difficult.
To insure against the risk of inflationary pressures, I have asked Americans to pay their taxes on a more nearly current basis, and to postpone
a scheduled tax cut. If it should turn out that additional insurance is
needed, then I am convinced that we should levy higher taxes rather
than accept inflation—which is the most unjust and capricious form of
taxation.
We know that we do not need to put our growing economy into a
straight jacket, or to throw it into reverse. But the extent of the fiscal
or monetary restraint that will be needed to avoid inflationary pressures




20

will depend directly on the restraint and moderation exercised by those
who have power over wages and prices.
I again ask every leader of labor and every businessman who has
price or wage decisions to make in 1966 to remember that his decisions
affect not alone the wages of his members or the returns of his stockholders. Shortsighted pursuit of short-run interests fails in the longer
run to advance the interests of either labor or management. And it surely
does not advance the interests of the Nation.
I am confident that the overwhelming majority of private decisions
in 1966 will be sound and responsible—just as I am determined that
public decisions will be fully responsible.
If they are, the American economic miracle will remain in 1966 the
single most important force in the economic progress of mankind.

January 27,1966.




21




THE ANNUAL REPORT
OF THE
COUNCIL OF ECONOMIC ADVISERS







LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,

Washington, D.C., January 20,1966.
T H E PRESIDENT:

SIR: The Council of Economic Advisers herewith submits its Annual
Report, January 1966, in accordance with Section 4(c) (2) of the Employment Act of 1946.
Respectfully,




GARDNER ACKLEY,

Chairman.

OTTO ECKSTEIN

ARTHUR M.

OKUN




CONTENTS
Page
CHAPTER 1. APPROACHING FULL EMPLOYMENT

Progress Toward Full Employment
Sources of Strength
The Recent Record
,
The Balance of the Economy Today
Balance of Output and Potential
Balance of Investment and Saving
Financing Balanced Expansion
Pattern of Credit Flows and the Demand for Funds
Position of Financial Institutions
Position of Borrowers
Monetary Policy
The Current Fiscal Program
The Impact of 1965 Budget Actions
Fiscal Plans for 1966-67
The Outlook for Economic Activity
Gains by Sector
Key Role of Business Fixed Investment
The Impact of Defense
The Need for Flexibility
Contingencies in 1966
Longer-Run Outlook
CHAPTER 2. PROSPECTS FOR COST-PRICE STABILITY

Determination of the Price Level
The Price Record
Supply and Demand in the Product Markets
Operating Rates of Industries
Backlog of Orders
Supply and Demand in the Labor Markets
Outlook for Labor Markets in 1966
Employment Goals
Labor Cost Trends
Wages
Productivity and Unit Labor Costs
Costs and Prices in Selected Problem Areas
Food
Nonferrous Metals. . •
Machinery
Construction
.
_
Medical Services
Outlook for Cost-Price Stability in 1966
Guideposts for Noninflationary Price and Wage Behavior. . . .
Increasing Importance of the Guideposts
The Guideposts Restated
Exceptions to the General Guideposts



27

31

32
34
38
39
39
42
44
44
46
47
49
52
52
53
54
55
56
58
60
60
62
63

63
65
67
67
69
71
73
75
76
78
79
80
81
82
83
85
86
87
88
88
89
91

CHAPTER 2.—Continued
Guideposts—Continued
Short-Run and Trend Elements in Productivity.
Guidepost Policy on Prices

Page
91
93

CHAPTER 3. STRENGTHENING HUMAN RESOURCES

94

Education
Building the Ladder of Educational Opportunity
Active Manpower Policies
Training Programs
Improving the Efficiency of the Labor Market
Raising Labor Productivity
Health
Cost of Illness
Public Policy and Legislative Accomplishments
Equality of Opportunity
Prosperity: A Condition for Negro Progress
Civil Rights Laws and Economic Discrimination
Economic Cost of Discrimination
Reduction of Poverty
Changes in Poverty: 1959-64
Income Maintenance
CHAPTER 4. AREAS FOR FURTHER LEGISLATIVE PROGRESS IN 1966.

94
96
99
99
99
100
100
102
103
107
108
109
110
110
Ill
114
.

The Urban Environment
Improving Our Cities
The Abatement of Pollution
Programs for Pollution Abatement
New Federal Leadership in Pollution Abatement
Efficiency in Transportation
Cost-Oriented Rates
Comprehensive Policy Planning
Flexibility in Transport Investment
Speed of Response to Technological Change
Maritime Policy
CHAPTER 5. PROGRESS AND PROBLEMS IN AGRICULTURE

Commercial Agriculture in the 1960's
Structural Changes
Farm Income
Poverty in Agriculture
The Export Market
Farm Commodity Stocks
,
Farm Policy in the 1960's
The Food and Agriculture Act of 1965
National Commission on Food and Fiber
CHAPTER 6. T H E INTERNATIONAL ECONOMY

The Less Developed Countries: Progress, Problems, and Policies.
Foreign Assistance
Improving Trade Prospects



28

116

116
117
119
120
123
124
126
128
128
129
129
131

132
133
134
134
136
137
138
138
139
140

140
141
144

6.—Continued
Recent Change in the Developed Countries
The Growth of International Trade
Problems of Rapid Growth and Integration
Developments in 1965
Improving the International Monetary System
The Adjustment Process
International Liquidity Arrangements
U.S. Balance of Payments
Measures of Deficit or Surplus
Developments and Policies in the 1960's
Growth of Private Capital Outflows
The February 1965 Program
Program for 1966
U.S. Trade Position
Conclusion

CHAPTER

CHAPTER 7. T H E EMPLOYMENT ACT: TWENTY YEARS OF POLICY
EXPERIENCE

The Act and Its Background
Avoiding Depressions and Booms
Combating Recessions
Containing Inflationary Pressures
Evolving Problems and Policies
Inadequate Demand in Expansion
Inflation at Less Than Full Employment
Economic Policy Today
The Nature of Cyclical Instability
Policy for a Growing Economy
Prerequisites of Successful Policy
Information
Professional Knowledge
Public Understanding
Conclusion

145
146
146
148
149
150
155
160
160
163
163
165
167
167
168
170

170
172
172
176
177
177
178
180
180
182
184
184
185
185
186

APPENDIXES:

A. Major Legislation and Administrative Actions of Economic
Significance in 1965
B. Report to the President on the Activities of the Council of
Economic Advisers During 1965
C. Statistical Tables Relating to Income, Employment, and
Production
Tables

195
203

List of Tables and Charts

L Changes in Gross National Product Since Early 1961
2. Changes in Employment and Income Since Early 1961
3. Planned and Actual Expenditures for New Plant and Equipment, 1964-65
4. Net Funds Raised by Private Domestic Nonfinancial Sectors,
1953-65

http://fraser.stlouisfed.org/
795-983 O—66.
3
Federal Reserve Bank of St. Louis

187

35
36
37
45

List of Tables and Charts—Continued
Tables—Continued
5. Relation of Selected Commitments of the Household Sector to
Disposable Personal Income, 1951-65
6. Changes in Commercial Bank Credit, Money Supply, and Time
Deposits, 1963-65
7. Defense Impact in Relation to GNP, Korean War Period and
Current Period
8. Changes in Wholesale Prices, 1961-65
9. Manufacturing Capacity Utilization, 1964-65
10. Capacity Utilization and Change in Output of Selected Industries, 1964-65
11. Changes in Employment, 1961-65
12. Unemployment Rates for Selected Groups, 19oO-65
13. Changes in Consumer Prices for Medical Care, 1947-65
14. Health Indicators, Selected Years, 1940-64
15. Economic Costs of Illness, 1963
16. Selected Measures of Discrimination and Inequality of Opportunity, 1965
17. Number of Poor Persons and Incidence of Poverty, 1959-64.. .
18. Number of Poor Households and Incidence of Poverty, by Race,
1959 and 1964
19. Incidence of Poverty and Distribution of Poor Households, 1964.
20. Volume of Intercity Freight Traffic, Selected Years, 1940-64. .
21. Investment of Commodity Credit Corporation in Commodities,
Fiscal Years 1960-65
22. Net Flow of Long-Term Financial Resources to Less Developed
Countries, 1960-64
23. United States Balance of Payments, 1960-65
Charts
1. Changes in Gross National Product Since 1961
2. Business Inventory-Sales Ratio
3. Gross National Product, Actual and Potential, and Unemployment Rate
4. Investment and High-Employment Saving
5. Free Reserves
6. Selected Interest Rates
7. Consumer Prices
8. Wholesale Prices
9. Backlog of Manufacturers' Unfilled Orders for Durable Goods
in Three Postwar Expansions
10. Changes in Compensation, Prices, and Productivity in the
Private Economy
11. World Trade and Reserves
12. U.S. Balance of International Payments
13. Role of Federal and State and Local Governments in the Economy.




30

48
51
59
66
68
69
72
72
86
101
103
108
Ill
112
113
125
137
141
164
33
37
41
43
50
51
66
67
70
77
157
161
175

Chapter 1

Approaching Full Employment

T

HE AMERICAN ECONOMY took a giant step in 1965 toward the
achievement of the Employment Act's goals of "maximum employment, production, and purchasing power." It was the fifth year of uninterrupted economic expansion, and the second year of declining unemployment as output moved closer to the economy's growing productive potential.
Since the Revenue Act of 1964 became effective, the economy has shown
new vigor. Living standards have risen at an unprecedented rate, and
businessmen have found new and stronger incentives to expand and modernize their productive facilities. Employment has forged ahead dramatically, enlarging job opportunities, particularly for the young and the less
advantaged groups in the labor force. As the year closed, the unemployment rate was 4.1 percent, within inches of the 4 percent interim goal
set by the Kennedy Administration in the 1962 Economic Report and below
any rate achieved since the mid-19505s. Meanwhile, despite some pressures on prices for particular commodities, the over-all price record remained far better than in that earlier period. In addition, last year witnessed significant progress toward equilibrium in the balance of payments.
Today, our vigorous economy is in a strong position to carry the new
burdens imposed by expanded national defense requirements. With another large advance in total production ahead, defense needs will be met
while consumer living standards again improve strongly and the capital
stock is further enlarged. Indeed the increase in output available for
civilian uses this year is expected to be one of the largest in our history.
National security, of course, has first priority on the budget and the first
claim on production. It certainly represents a less welcome use of our
national output than would Federal civilian programs or the private spending that would come from tax reduction. Progress will continue in building the Great Society, but the pace of Federal civilian programs reflects
the current urgency of national defense.
Furthermore, rising defense requirements clearly complicate the task of
economic policy. The stimulative fiscal policies of recent years have
achieved their mission. Consumer spending and investment demand have
both been invigorated. The same logic that called for fiscal stimuli when
demand was weak now argues for a degree of restraint to assure that the




pace of the economy remains within safe speed limits. Measures to moaerate the growth of private purchasing power are needed to offset, in part,
the expansionary influence of rising defense outlays if intensified price and
wage pressures are to be avoided. A combination of such measures—
affecting excise tax rates and the timing of individual and corporate tax
payments—is thus a key proposal in the President's fiscal program.
At the same time, the Administration looks toward further declines in
unemployment during the year ahead—indeed, to the lowest level since
1953. These ambitious targets are a renewed expression of confidence in
the vigor, adaptability, and productivity of our private economic system—
a confidence which has been richly reaffirmed and rewarded in the past
2 years by the Nation's smooth progress and efficient performance in approaching full employment. Nonetheless, this is a year of many uncertainties: the advance into the new territory of still lower unemployment must
be made with care; meanwhile, defense requirements could shift suddenly
in either direction in the months ahead. Fiscal policy stands ready to
meet any changing needs and unanticipated developments, and will look
to assistance from monetary policy in maintaining flexibility.
This chapter reviews the recent record of progress toward full employment, appraises the current state of the economy, evaluates the outlook
for gross national product and employment in 1966 in the light of fiscal and
monetary policies, and explores future contingencies. Chapter 2 examines in detail the outlook for price-cost stability. Problems of the U.S.
balance of payments are reviewed in Chapter 6.
PROGRESS TOWARD FULL EMPLOYMENT
Nearly 5 years of expansion have yielded a gain of $190 billion in gross
national product (GNP). Revised historical estimates of our national
product through 1964 were published last August by the Department of
Commerce, and updated provisional estimates for 1965 were released at the
start of this year; these new estimates give a more accurate picture of
the growth of GNP and the relationship of its components. They show that
total GNP advanced at a 7.0 percent annual rate in the last 4^4 years.
After adjustment for the modest upward drift in prices, the average annual
rate of growth of real output over this period was 5.5 percent.
When measured from the peak year of 1960 to 1965, real growth averaged 4.5 percent, in sharp contrast to the 2.4 percent annual rise from
1953 to 1960. This rapid growth in the United States exceeds the target
rate for the 1960's established collectively by the member countries of the
Organization for Economic Cooperation and Development (OECD). At
mid-decade, the Secretary General of the OECD reported to the Ministers,
"During the period 1960-65, gross national product for OECD countries
taken together has increased at a somewhat higher rate than that needed




to meet the target of 50 percent for the decade 1960-1970 [4.1 percent a
year] set by the Ministers in 1961." The United States accounts for virtually all of the surplus above the target rate. In contrast to the decade of the
1950's, when most OECD countries enjoyed virtually uninterrupted expansion while the United States suffered periodic downturns, it has been the
United States that has experienced continuing strong expansion thus far
in the 1960's.
Sustained and balanced progress is the hallmark of the current expansion. But the pace of the advance has varied over time (Chart 1). In
the initial recovery period from the 1960-61 recession, output rebounded
sharply; the unemployment rate, which had been 7 percent early in 1961,
fell rapidly late in the year, reaching 5j/ 2 percent by mid-1962. The upswing
was spurred by the characteristic shift from liquidation to accumulation of
inventories, and by higher Federal Government spending, partly associated
with the 1961 Berlin crisis. However, the expansion then faltered
when fixed investment outlays failed to take over as the main expansionary
force in the economy. As the growth of total output slowed, unemployment threatened to be stuck on a 5J4 percent plateau. The Kennedy Administration was convinced that adequate total demand could reduce
Chart 1

Changes in Gross National Product Since 1961
CHANGES I N BILLIONS OF DOLLARS

50
OTHERy
BUSINESS
FIXED
INVESTMENT

40

STATE AND LOCAL

30

FEDERAL

GOVERNMENT

J

20
PERSONAL
CONSUMPTION
EXPENDITURES

10

1961-62

1962-63

1963-64

1964-65

-I/RESIDENTIAL STRUCTURES, CHANGE IN BUSINESS INVENTORIES, AND NET EXPORTS OF
GOODS AND SERVICES,
SOURCE: DEPARTMENT OF COMMERCE.




33

unemployment at least to 4 percent without inflation. To accomplish this
objective, it developed a comprehensive program of tax measures, including
lower personal and corporate tax rates, depreciation reform, and an investment tax credit. The personal tax cuts raised after-tax earnings and
spurred more spending by consumers. The corporate measures added
further to private investment incentives and to the volume of investible funds.
The economy responded well to these measures, and especially to the major
tax cut of February 1964. GNP rose by nearly $40 billion in 1964, compared with the gain of almost $30 billion in 1963, and the unemployment
rate fell to 5.0 percent by the end of the year.
Statistical analysis of the impact of the tax reduction suggests that it was
responsible for nearly the entire $10 billion step-up in the annual increase of
GNP. The reduction in tax liabilities in 1964 boosted the after-tax incomes
of households and businesses. Spending by these sectors, particularly consumer outlays, rose in response to these larger after-tax incomes. This
higher spending increased sales, employment, and earnings. Larger earnings, in turn, provided the basis for still more consumption spending.
Investment was also stimulated by gains in business sales and higher capacity
utilization. By early 1965, the contribution of the tax cut in lifting consumption and investment spending was more than $20 billion (annual rate).
Since the effects of the tax cut cumulate through time, its contribution has
grown further, reaching $30 billion by the end of 1965.
As 1965 opened, the remaining lift from the Revenue Act of 1964 was not
in itself sufficient to assure a sustained reduction in unemployment.
Consequently, a good opportunity was presented for a long-awaited reduction in excise taxes and a liberalization of Social Security benefits, both of
which were desirable on equity grounds. These actions were proposed in
the fiscal 1966 budget, presented in January 1965. In combination with
expected modest increases in other expenditures, they more than offset the
normal growth of Federal revenues, and thus provided a net fiscal stimulus
for calendar 1965. The stimulus was planned for the second half of the
year since heavy stocking of steel inventories in anticipation of a strike was
expected to stimulate demand early in the year and subsequently to be
reversed.
The fiscal actions in 1965 were a success. The economy did move further
toward full employment, even more rapidly than anticipated; yet demand
did not outstrip capacity to produce.
SOURCES OF STRENGTH
Personal consumption and business fixed investment, the two types of
spending expected to be most responsive to the major 1964 tax reduction,
surged ahead in 1964 and 1965. Buoyancy in these sectors outweighed
sluggishness in residential construction outlays and moderation in inventory
investment (Table 1).




34

T A B L E 1.—Changes in gross national product since early 1961
Percentage change
per year
Expenditure group

19611

1963 IV

1965 IV1

1961 I
1963 IV
to
to
1965 IV1 1965 IV 1

Billions of dollars 2
Gross national product

503.6

603.6

694.6

7.0

7.3

328.4
46.0
-3.5
21.7
6.6
104.3
55 4
49.0

Personal consumption expenditures -_
Private business fixed investment_.
Change in business inventories
Residential structures
Net exports of goods and services
Government purchases of goods and services
Federal
State and local

379.5
56.5
8.1
27.9
7.3
124.3
64 4
59.9

440.1
73.2
7.0
27.2
7.4
139.6
69 7
69.9

6.4
10.3

7.7
13.8
—1.3

5io
7.8

6.0
4 0
8.0

1 Preliminary.
2 Seasonally adjusted annual rates.
3
Percentage change not computed because of small or negative base.
NOTE.—Detail will not necessarily add to totals because of rounding.
Sources: Department of Commerce and Council of Economic Advisers.

Consumption
The consumer was a bulwark in the strong general economic gains of
1964 and 1965. Except for the fourth quarter of 1964, when strikes curtailed automobile sales, consumption grew by $7 billion or more in every
quarter of this period. Only twice before, once at the start of the Korean
war and again at the beginning of 1959, had quarterly increases of this size
occurred.
A notable feature of the recent sharp advance in consumption expenditures is its pervasiveness. The sharpest relative increases occurred in
purchases of durables, which are generally most sensitive to fluctuations in
the growth of income. From the end of 1963 to the end of 1965, real expenditures on automobiles toppled all previous records, rising on average
by 11 percent a year. Yet this strong rise was closely paralleled by outlays
for other durables. And real outlays on both nondurables and services
rose at an unusually strong 5 l/i percent annual rate.
Consumers were able to take these forward strides because of rapid gains
in their purchasing power. Real disposable income grew at an average
annual rate of 6.3 percent in the 2 years after the 1964 tax cut, in contrast
to the growth rate of 3.9 percent in the preceding 2 years. The consumer
continued to be a dependable performer in the economy. During the past
2 years, the rise of almost $61 billion in consumption amounted to 91 percent
of the $66 billion increase in disposable income. Spending on consumer
goods and services has typically absorbed approximately this proportion of
increases in disposable income, when allowance is made for some lag in
adjustment to unusually large income gains.
The largest beneficiaries of the rapid rise in income were workers rescued
from unemployment. Other consumers also benefited, although less dra-




35

T A B L E 2.—Changes in employment and income since early 1961
[Seasonally adjusted]
Percentage change
per year
Series

Civilian labor force:
Employment
Unemployment.

Unit

_do_do.

1961 I
1963 IV
to
to
1965 IV i 1965 IV »

69.3
4.1

73.0
3.2

2.0
-8.4

2.6
-12.1

406.6
270.9
354.8

475.6
318.8
414.0

546.0
368.1
480.3

6.4
6.7
6.6

7.1
7.5
7.7

45.0
24.4

60.8
33.8

4 74.6
444.5

4 11.9
< 14.3

Millions of persons. 2 66.6
do
2 4.9

Personal income: *
Total (before taxes) r
Billions of dollars
.do
Wage and salary disbursements.
Disposable (after taxes)
.do.
Corporate profits: 3
Before taxes
After taxes

1961 I 1963 IV 1965IV1

U2.4
4 17.0

1 Preliminary.
2 Adjusted for comparability with subsequent data.
• Quarterly data at annual rates.
4 Profits data relate to 1965 III.
Sources: Department of Labor, Department of Commerce, and Council of Economic Advisers.

matically, through lower taxes, higher wages, and fuller work schedules
(Table 2). Thus, expansionary fiscal policies were translated for most
Americans into rising standards of living—more and better provision of the
physical necessities, the social amenities, and the personal conveniences of
civilized life. Real consumption per capita (1958 prices) grew over the
2-year interval by $190—as much as in the preceding 8 years.
Investment
A buoyant economy with rising sales and operating rates, surging profits,
and the incentives of tax reduction gave new stimulus to business to expand
and modernize capacity. The result was an 11 l/i percent jump in outlays
for business fixed investment in 1964 and a 15J^ percent spurt in 1965.
These gains compare with an average annual rate of increase of 7j^ percent
in the preceding 2 years.
Investment plans were repeatedly revised upward in 1964 and 1965 as
business confidence grew. The second time that businessmen reported
spending plans for a given quarter—in the Department of CommerceSecurities and Exchange Commission survey—their plans exceeded the first
anticipations. Their actual outlays invariably topped the second anticipations (Table 3)—a clear indication of the general availability of capital
goods. In sharp contrast, during 1956 and early 1957, businessmen were
not able to invest as much as they had planned because of bottlenecks in
construction and delivery of equipment.
The stepped-up pace of final sales in 1964 and 1965 also required additional inventories. Nevertheless, the $5.4 billion accumulation of nonfarm
stocks in 1964 was unusually small in relation to the advance in final sales
as inventory-sales ratios declined during most of the year. During




T A B L E 3.—Planned and actual expenditures for new plant and equipment, 1964-65
[Billions of dollars, seasonally adjusted annual rates]
Planned expenditures
Quarter

1964: I
II.. _
III___
IV

Middle of
preceding
quarter

Middle of
current
quarter

Actual
expenditures

40.8
42.7
44.3
46.2

1965: I
II
III
IV

41.2
43.4
44.6
46.7

42.6
43.5
45.6
47.8

47.9
49.6
50.8
53.0

.

48.8
49.6
51.2
54.8

49.0
50.4
52.8
0)

1

Not available.
Sources: Department of Commerce and Securities and Exchange Commission.

1965, quarterly rates of inventory investment reflected temporary influences:
the post-strike rebuilding of automobile inventories, the buildup of steel
stocks, and the backlog of exports associated with the dock strike, early in the
year; and, on the other hand, liquidation of steel stocks in the closing months.
For 1965 as a whole, however, nonfarm inventory investment of $7.1 billion
was in line with the growth of final sales. As Chart 2 shows, inventory-sales
ratios remained remarkably stable throughout the past 4 years, in marked
contrast to the cyclical ups and downs in the late 1950's. In recent
Chart 2

Business Inventory-Sales Ratio

I I I I I I I I I I I I I I I ! I I 1 I I I I I I I I I I I I I I I I I

^ RATIO OF MANUFACTURING AND TRADE INVENTORIES TO SALES; BASED ON SEASONALLY ADJUSTED
QUARTERLY AVERAGES OF MONTHLY SALES AND END-OF-MONTH INVENTORIES.
SOURCE: DEPARTMENT OF COMMERCE.




37

years, businessmen's sales expectations were validated or surpassed by performance; moreover, prudent management helped to keep stocks closely
geared to sales.
Residential construction was the only major component of private spending which remained weak in 1964 and 1965. In the 1961-63 period, the
average annual addition of 1.46 million units to the private housing stock
exceeded by an unusually large margin the average annual rate of net
family formation (870,000). Excess supply developed in particular housing markets, especially in the West and in high priced apartments in scattered other locations. Thus, the upswing in residential construction activity
ended early in 1964. The number of private housing starts fell from an
annual rate of 1.7 million units in the first quarter of 1964 to a low of 1.4
million units in the third quarter of 1965. The real value of home construction held up somewhat better—because of a shift toward bigger and
better quality new homes. Nevertheless, residential construction added
practically nothing to the growth of GNP—even in current prices—in 1964,
and was again a conspicuously lagging sector in 1965.
THE RECENT RECORD
The strength of the advance in 1965 was exceptional and surpassed
expectations. The Council's Annual Report of 1965, which contained one
of the more optimistic forecasts current at that time, estimated a gain of
$38 billion in GNP for the year—the midpoint of a $33-43 billion range.
In contrast, the actual gain was a record $47 billion.
The major reason for the unforeseen gain was the unusually large revision
in investment plans. Evidence available at the beginning of 1965 pointed
to a rise in business fixed investment for the year which would be close to,
but not quite match, the increase in 1964. The actual advance, however,
totaled $9/ 2 billion, substantially exceeding the $6 billion rise in the preceding year. Federal purchases of goods and services rose by $15/2 billion for
the year as a whole, compared with the $^4 billion increase that had been
anticipated. Consumption outlays exceeded the Council's original estimate,
but this was primarily because of higher disposable income that, in turn,
reflected the greater strength of other sectors.
The extraordinary strength of demand became more clearly established
as the year 1965 progressed. Much of the unusually large advance in the
opening quarter was attributable to the rebound from the strike in the
automobile industry, which had depressed output in the closing quarter
of 1964. Even though automobile output retreated in the second quarter,
GNP advanced strongly. Sharp increases in fixed investment in the third
and fourth quarters reinforced continued rapid rises in consumption.
Finally, defense outlays added to demand, particularly from the second to the fourth quarter, when they rose by $2.8 billion. About $1 billion
of this rise came from the military pay increase enacted in September.




Moreover, the prospect of further substantial increases in Federal defense
expenditures was a major factor contributing to buoyant expectations and
investment demand in the second half of the year.
Thus, gains in GNP grew to $13 billion each in the third and fourth
quarters of 1965. The advance in the fourth quarter was especially
remarkable in view of the liquidation of steel inventories, at an annual rate
of about $2 billion, following the September labor settlement. Although
the impact of the slowdown in steel production was evident in the industrial
production index in September and October, the index rose strongly thereafter; for the year as a whole, it was 8 percent above the 1964 average.
The strength of spending lifted the economy toward more complete use
of its resources. Under the influence of favorable fiscal and monetary
policies, the economy has achieved the best balance of over-all demand and
productive capacity in nearly a decade.
THE BALANCE OF THE ECONOMY TODAY
The potential output of the American economy has continued to grow
rapidly in the past 5 years. Aggregate demand, however, has advanced even
faster. Output has risen to within 1 / 2 percent of the economy's estimated
potential. Meanwhile, private investment has forged ahead to match highemployment private saving. The good balances of demand with potential
output and of investment with high-employment saving are two related
measures of our progress.
BALANCE OF OUTPUT AND POTENTIAL
In 1965, the American economy achieved fuller utilization of its vast
human and physical resources than at any time since 1957. Jobs were
provided for more persons able and willing to work, thus leading to a more
equitable distribution of the Nation's output and reducing the ranks of
those unfairly condemned to a meager subsistence because they cannot find
work. More and more Americans have had the chance to exercise their
preference for employment rather than doles. Adult males had an unemployment rate of 5.7 percent in 1961. The rate fell to 2.6 percent by the
end of 1965, not because attitudes toward work were uplifted, but because
opportunities for work widened greatly.
A high-employment economy generates benefits for the rest of the Nation
as well as for the previously unemployed. The additional output directly
attributable to the efforts of the reemployed is just one part of the larger
output that accompanies increased employment. In addition, productivity
is higher as a result of improved utilization, primarily reflecting the more
efficient use of overhead labor, such as clerical, professional, maintenance,
and managerial employees.
Improving employment opportunities also attract more persons into the
job market and thus add to the measured labor force. Manpower supplies




39

are further increased in periods of advancing activity by the lengthening of
the work week, as part-time employees are converted to full-time and as
overtime work increases.
In the last four Economic Reports, the Council has discussed the concept
of potential GNP, defined as the volume of goods and services that the
economy would ordinarily produce at the interim target unemployment rate
of 4 percent. The measurement of potential GNP must incorporate the
effects of the higher productivity, the larger labor force, and the fuller work
schedules which accompany reduced unemployment.
Potential GNP does not stand still. Over time, population trends add
to the number of persons in the labor force. Furthermore, increases in the
quantity and quality of capital, advances in technology, and improvements
in the quality of labor raise the potential productivity of the labor force.
The evidence indicates that, from the mid-1950's and into the early 1960's,
the potential labor force grew at the rate of about 1*4 percent a year.
Normal growth of man-hour productivity for the entire work force (including Government as well as private workers) was 2J/2 percent a year. Hours
worked a year trended downward at a rate of nearly one-fourth of 1 percent
annually. Thus, potential GNP grew by 3J4 percent a year.
For recent years, a real growth rate of actual GNP somewhat greater
than 3 / 2 percent has been required to hold the unemployment rate constant.
Hence, the Council last year raised its estimated rate of growth of potential
GNP to 3?4 percent, beginning in 1963. More rapid growth of the labor
force will further increase the growth rate of potential GNP in the years
ahead. During 1966, the Department of Labor will release a study, summarizing the results of extensive research on the prospects and patterns
of growth by 1970.
The disparity or "gap" between potential and actual output (Chart 3)
represents the goods and services foregone because of the underutilization
of resources. The persistent gap since the mid-1950's has meant a total of
$260 billion (in 1958 prices) in lost output. This loss was at a peak annual
rate of $50 billion in the first quarter of 1961. The gap was reduced during
the next few years. It shrank dramatically in 1965, reaching $10 billion,
in the final quarter when the unemployment rate was 4^4 percent.
During the second half of 1965, unemployment fell somewhat more
rapidly than would have been expected from the rate of advance of real
GNP. It now appears likely that the unemployment rate will reach 4.0 percent while the trend calculation still shows a small GNP gap. Recent
experience has been influenced by the expansion of the armed services and
of Government antipoverty programs for training young unskilled workers,
both of which have a stronger effect on unemployment than on output. Despite the discrepancy between the estimate of the gap and the
movement of unemployment that emerged late in 1965, it is clear that the
Council's estimates of the potential GNP associated with 4 percent unemployment have been close to the mark throughout the expansion. Potential




40

Chart 3

Gross National Product, Actual and Potential,
and Unemployment Rate
BILLIONS OF DOLLARS" (ratio scale)

700

GROSS NATIONAL PRODUCT
IN 1958 PRICES

650

-

600

^y

550

-

^

POTENTIAL-!/

V.

500

^

—

GAP
/
^

ACTUAL

450

-

1

400
1955

1

1

1957

1

1

1959

1

1

1961

1

1

1963

1965

PERCENT
[]

PERCENT
GNP GAP AS PERCENT OF POTENTIAL (Left scale)

• - • UNEMPLOYMENT R A T E ^ N g ! " scale)

12

j

6
0
-6
I
1955

I I
1957

I

I
1959

I

I
1961

I

I

1

1963

1965

* SEASONALLY ADJUSTED ANNUAL RATES.
^ T R E N D LINE OF 3HX THROUGH MIDDLE OF 1955 TO 1962 IV; TREND LINE OF 3J*% THEREAFTER.
1/UNEMPLOY.MENT AS PERCENT OF CIVILIAN LABOR FORCE; SEASONALLY ADJUSTED.
SOURCES: DEPARTMENT OF COMMERCE, DEPARTMENT OF LABOR, AND COUNCIL OF ECONOMIC ADVISERS




output has proved to be quantifiable within a sufficiently narrow range
to justify its use as a key concept in the analysis of stabilization problems
and policies.
The 4 percent unemployment rate has been viewed consistently by the
Administration as an interim target obtainable by aggregate demand policies alone without sacrificing essential price stability. But aggregate demand
policies have not been alone. Other public and private policies have improved the functioning of markets and the skills of the labor force, as
Chapters 2 and 3 explain in detail. These policies have now made prudent a
reduction in the unemployment rate to a level below 4 percent.
BALANCE OF INVESTMENT AND SAVING
The resurgence of private demand in 1965 was marked by an improved
balance of investment and private saving.
As statistically measured, total national saving—personal saving, gross
business saving, and the net surplus of Federal, State, and local governments—is always necessarily equal to private investment (except for whatever statistical discrepancy may creep into the measurement of income and
product flows). Total gross national income equals the value of spending
for current production—consumption, government purchases, and investment. Saving is that part of total income which is neither spent for personal consumption nor used for government purchases. Therefore, it must
equal the value of spending for the remaining portion of GNP, i.e., investment.
This equality of saving and investment will hold whether the economy is
depressed or fully employed. But the economy can have high employment
only if actual investment demands of businesses are large enough to match
the amount that consumers, businesses, and governments wish to save at
high-employment incomes. If actual investment falls short of high-employment saving, total spending will fall short of high-employment output.
Because of insufficient demand, production will be held to some lower level
where a smaller volume of saving does match the forthcoming investment.
Actual gross investment did, in fact, fall short of high-employment saving
for nearly 8 years after 1957. Balance between the two was finally restored
during 1965. Much of the discrepancy prior to 1965 is attributable to a
fiscal policy that would have yielded excessively large surpluses at high
income levels. Since investment demand was not strong enough to match
this excessive Federal high-employment surplus, lower incomes resulted.
A comparison between actual private investment and estimated total
high-employment saving from 1956 to 1965 is given in Chart 4. At high
employment, total private saving would be expected to remain a fairly stable
fraction of GNP, between 15^2 and 16 percent. It will, of course, vary from
year to year, reflecting changes in the personal saving rate, changes in tax
rates and transfer payments that would alter the share of disposable income in
GNP, and shifts in corporate dividend policies or in depreciation allowances.




42

Chart 4

Investment and High-Employment Saving
BILLIONS OF DOLLARS*(ratio scale)

140
120
100

_

HIGH-EMPLOYMENT
TOTAL SAVING

* HIGH-EMPLOYMENT
GOVERNMENT^!*

V

80

60

40

-

HIGH-EMPLOYMENT \
PRIVATE SAVING-2/ ^

i

I

INVESTMENT^/

—

/

1 I

ACTUAL GROSS

i

i

1 i

i

1956

I

1 I

/

f 1 I

I t 1

1958

, , , 1 , , , 11
1960

1 1 1 1 1 1 1 1 1 11 I 1 1

1962

1964

* SEASONALLY ADJUSTED ANNUAL RATES.
H FEDERAL HIGH-EMPLOYMENT SURPLUS PLUS STATE AND LOCAL ACTUAL SURPLUS.
2/ 15J/4 PERCENT OF TREND GNP IN CURRENT PRICES.
3/ GROSS PRIVATE DOMESTIC INVESTMENT PLUS NET FOREIGN INVESTMENT.
SOURCES: DEPARTMENT OF COMMERCE AND COUNCIL OF ECONOMIC ADVISERS.

Nevertheless, no great variation would ordinarily be expected; total private
saving is approximated on the chart at 15% percent of potential GNP.
Private saving thus appears as an almost straight line in the chart since
potential GNP (even in current dollars) grows rather smoothly. State and
local governments typically stay very close to balanced budgets on a national
income accounts basis. Their contribution to high-employment saving is
approximated by their actual small surpluses or deficits.
The Federal contribution to total high-employment saving is measured
by its high-employment surplus, a concept that has been explained in
previous Annual Reports. It is the excess of Federal revenues that would
be generated by high-employment incomes over actual Federal expenditures, adjusted for the reduced level of unemployment compensation.
The unevenness of the total high-employment saving line is due almost
entirely to fluctuations in the high-employment Federal surplus. This reflects the major changes in fiscal policy during the post-1957 period. The
dip in 1958 is a result of vigorous fiscal measures to stimulate recovery
from recession; the steep rise in 1959 and 1960 marks an extremely restrictive
fiscal policy. This rise is reversed in 1961 and early 1962, reflecting expenditure measures taken by the Kennedy Administration to stimulate
recovery and strengthen defense, as well as the 1962 depreciation reform




43

and investment tax credit. The line turns up sharply late in 1962 as a
result of leveling expenditures. The Revenue Act of 1964 shows up in a
sharp decline in saving, as do the late 1965 excise tax reduction, social insurance liberalization, and step-up in defense purchases.
These fiscal measures have brought total high-employment saving down
from excessive levels. Equally important, they have had a decisive impact
on the investment side of the balance. Investment demand looked particularly weak in 1962 and 1963, and there were doubts that it could reach the
range of 15*/2 to 16 percent of GNP, even at high employment. In that
event, sizable and persistent Government deficits would have been required
to achieve high employment. But the experience of the past 2 years has
refuted these pessimistic assessments of the strength of private demand.
With stronger consumer markets and higher after-tax profits, business fixed
investment has broken out of its earlier lethargy. Balance was restored in
1965 between private investment and private high-employment saving,
demonstrating that high employment was in fact achievable without substantial, permanent Government deficits.
FINANCING BALANCED EXPANSION
The availability and cost of credit significantly influence spending. Stable
prosperity must have a sound underpinning of credit. And the appropriate
growth of credit is an important element in the over-all balance of
the economy.
The appropriate amount of credit expansion depends on a variety of
factors including (1) the balance between total demand and potential
output in the economy—with proper allowance for the role of fiscal policy;
(2) the structure and position of financial institutions; and (3) the ability of
borrowers to absorb further debt. Only from an over-all view of the
needs of the economy can the appropriate growth of credit and the appropriate role of monetary policy be evaluated.
The Federal Reserve System exerts a major influence on the cost of
credit and the rate of growth of credit from all financial institutions.
The reserve credit it supplies is particularly significant, because it provides
the base for a multiple expansion in commercial bank credit to borrowers,
thereby affecting all credit markets. Reserve credit is the keystone of the
system, although it is only a small portion of total credit. It rose by only
$3.8 billion in 1965, compared with almost $55 billion of funds supplied by
financial institutions as intermediaries and the total of almost $72 billion
raised in all credit markets.

PATTERN OF CREDIT FLOWS AND THE DEMAND FOR FUNDS
The flow of funds through financial markets accelerates when the
pace of economic activity is stepped up. The similarity in the behavior of
credit flows between the current upswing and the two weaker preceding




44

expansions is striking. In 1965, however, total credit flows to private
domestic sectors rose somewhat faster relative to GNP than in earlier periods
of prosperity—primarily in response to the growing external financing needs
of businesses (Table 4).
TABLE 4.—Net funds raised by private domestic nonfinancial sectors, 1953-65
Types of credit as percent of funds raisedl
Period

Net funds
raised a s
percent
of GNP i

Consumer
credit

State
Bank
and local
loans to 2 government
business obligations

Corporate
securities

Home
mortgages3

14.89
18.40

9.27
9.20

13.48
18.10

34.83
33.13

Expansion years:
1955
1956

..

8.94
7.78

17.98
10.74

1959

8.46

15.65

13.45

11.00

12.71

31.78

1962
1963..
1964
1965*

7.89
8.47
8.88
9.61

12.44
13.43
12.37
13.71

10.86
12.02
13.62
19.57

11.31
13.43
10.57
10.02

11.54
7.21
9.68
10.79

29.41
30.46
28.32
23.42

5.84
5.92

18.31
5.09

-3.76
(•)

17.37
20.37

24.41
23.61

35.21
43.06

1957
1958..

6.96
6.39

8.47
.70

5.86
3.15

14.33
18.18

28.66
27.27

28.01
34.27

1960.
1961

6.55
6.52

13.64
5.01

8.79
6.49

10.91
14.45

15.15
20.94

31.82
33.63

Downturn or early recovery
years:
1953
1954

1 Net funds raised by private domestic nonfinancial sectors include, in addition to types of credit
shown here, mortgages on multi-family dwellings and on farm and commercial land and buildings; and
acceptances, commercial and finance company paper, and Commodity Credit Corporation (CCC) loans.
2
Bank loans to nonfinancial business not classified elsewhere.
3 Mortgages on one- to four-family homes.
4
Preliminary estimates.
5 Loans were less than $50 million.
NOTE.—Data are based on flow of funds accounts.
Source: Board of Governors of the Federal Reserve System.

The composition of borrowing during the current expansion has also
been similar to that of other recent expansions, although the sources of funds
have differed. Consumer credit and bank loans to business have risen substantially, relative to other types of borrowing. When employment and
income are high, a larger proportion of households' income typically is spent
for durable goods and housing which are likely to be financed by credit.
The share of GNP going into inventories and plant and equipment also
rises, spurring business borrowing, particularly from banks.
Households
Borrowing by households has been rising significantly since the
end of 1961. As a proportion of disposable personal income, however, it
reached a peak of 6.5 percent in 1963; this figure had been surpassed only
in 1955 and 1959. Since 1963, the proportion has edged down to about 6
percent. Nevertheless, borrowing remains large relative to consumers'
"capital" expenditures. Even though there has been a rapid advance in

45
795^983, (



consumer expenditures on durable goods, total household expenditures for
durable goods plus home construction have been smaller relative to disposable income than in previous expansions since the Korean war.
Households have simultaneously stepped up their borrowing and the
growth of their financial assets. Households' financial assets have grown
annually by 10 to 11 percent of disposable income since 1962, compared with
slightly below 9 percent in 1955-56. Higher incomes have made more
households both creditworthy and able to save. Moreover, the growing
importance of contractual saving, through insurance and pension funds,
has often led even the same households to add both to their financial assets
and to their liabilities.
Business
While borrowing by households and State and local governments maintained a fairly rapid pace in 1965, it was the financial demands of businesses which accounted for the acceleration in credit flows. Last year, business capital expenditures significantly outpaced the strong rise in gross retained earnings, and the ratio of capital outlays to retained earnings rose
abruptly. Indeed, it exceeded the ratio for all years in the post-Korean
period, except 1956. External financing, however, rose even more sharply,
reaching a new high relative to gross retained earnings that surpassed even
the 1956 relationship. This strong rise is partly attributable to the growing
volume of funds committed by corporations to uses other than capital outlays. In the past 2 years, corporations have markedly increased their net
extensions of trade and consumer credit. Meanwhile, corporate holdings of
liquid assets have declined steadily as a proportion of their financial assets.
Consequently, corporations are now less able to economize on liquid assets
in order to provide for other uses of funds.
A number of special factors in 1965 also contributed to the sharp increase
in business borrowing. Inventories were rising rapidly and foreign investment by corporations was unusually high early in the year.
All in all, the volume of borrowing was not significantly out of line with
past experience. Furthermore, the total demand for goods and services—
supported in part by the expansion of credit—was in good balance with the
supply capabilities of the economy in 1965.
POSITION OF FINANCIAL INSTITUTIONS
Sustainable growth of credit depends on the sound operation of financial
institutions. As new types of financial "intermediation" evolve to meet
new needs, more lending and institutional saving will take place. Such
credit growth will occur smoothly if financial institutions adjust to innovations without assuming dangerous risks.
During the current expansion, the most striking institutional change in
the financial area has been the rapidly growing role of commercial banks.




46

Total bank credit has risen at an average rate of 8/2 percent a year since
the end of I960, while total credit to nonfinancial sectors of the economy
has risen by 7 percent a year. Commercial banks have accounted for
over one-third of total funds raised in credit markets during recent years,
in contrast to the one-sixth share in earlier post-Korean periods of prosperity. The larger proportion of credit flowing through the commercial
banking system has resulted from various influences: first, a sequence of
increases in the ceiling rates of interest permissible on time and savings
deposits, which has enabled the commercial banks to compete more aggressively for deposits and thus to expand their lending; second, the greatly
expanding scope of bank lending and investment practices; and third, the
more liberal policy pursued by the Federal Reserve System in supplying
bank reserves.
Much of the recent growth of bank deposits has taken the form of time
certificates of deposit. Another sizable increase in such certificates and
in commercial bank lending can reasonably be expected in the early part of
this year, in response to the increase last December in the maximum permissible interest on time deposits. Nevertheless, banks which have expanded lending greatly on the basis of short-term certificates of deposit
have at times found it costly to raise needed funds when the certificates
mature in quantity. This experience should introduce more caution in the
pursuit of new business.
Savings and loan associations and mutual savings banks have borne the
brunt of competition from commercial banks. Meanwhile, the demand
for mortgages, in which such institutions customarily place most of their
funds, has grown less rapidly than other types of credit, and yields on mortgages showed little change during most of the 1960's. Consequently, some
savings institutions eager for growth, have sought higher yielding and
occasionally more risky outlets for investment while repeatedly raising their
dividend or deposit rates. In order to prevent the assumption of excessive
risk by savings and loan associations, the Federal Home Loan Bank Board
strengthened its surveillance and issued several new selective regulations in
the past year.
The President's current legislative program includes proposals to reform
the structure of financial regulations, to give regulatory agencies a greater
variety of enforcement powers, and to increase deposit insurance coverage.
This important legislation includes proposals that will make regulations
over various types of financial institutions more consistent with each other,
thus fostering competition while providing the authority to curb speculative
excesses. These same objectives have prompted legislative recommendations to allow Federal chartering of mutual savings banks for the first time.
POSITION OF BORROWERS
Rapid growth in borrowing by households and businesses relative to their
incomes raises the question whether still more debt can be readily absorbed




47

without threatening an abrupt cutback in future spending. Danger signals
are commonly sought in three basic types of indicators: growth of the ratio
of debt repayment to income or of total debt to total assets; growth of
"easier" credit terms, such as smaller downpayments, longer maturities, or
higher appraisal values; and growth of certain losses, such as foreclosures
or defaults.
The ratios of household debt repayments or income commitments to
disposable personal income have risen over the past 12 years (Table 5).
TABLE 5.—Relation of selected commitments of the household sector to disposable personal
income, 1951-65
Percent of disposable personal income
Year

1951
1952
1953
1954

1955
1956
1957.—
1958....
1959
1960
1961
1962
1963
1964

Repayments
of instalment and
mortgage
debt

Basic fixed
commitments i

10.2
10 7
11.1
11.8

12.0
12.7
13.2
14.3

16.3
17.0
17.8
19.0

57.7
58.3
57.6
59.1

12.2
12.7
12.9
12.6
12.6

14.7
15.3
15.8
15.7
15.8

19.5
20.1
20.6
20.6
20.7

58.5
58.5
58.9
59.3
59.1

13.1
13.1
13.1
13.6
13.9

16.4
16.4
16.4
17.2
17.3

21.5
21.5
21.6
22.5
22.7

59.7
59.5
59.2
59.7
59.2

..
_ ._

._

_ _

_
_

___

_

_

_ _

1965

Basic fixed
commitments and
essential2
outlays

Repayments
of instalment debt

3

14.2

3

17.8

1
Consists of repayments of instalment and mortgage debt, tenant rent, and property taxes on households.
2 Essential outlays consist of consumer outlays for food, clothing, utilities, and local public transportation.
3
Based on first 2 quarters.
* Not available.
Sources: Board of Governors of the Federal Reserve System, Department of Commerce, National
Industrial Conference Board, and Council of Economic Advisers.

Most of the rise is accounted for, however, by widening use of instalment
credit rather than the rise in the average repayment burden for families
using credit. Almost one-fourth more families, particularly young parents,
are now using instalment credit. Debt repayment, however, is only one type
of commitment undertaken by households. Whether households are overextending themselves must be viewed in terms of a broader concept of commitments including other contractual obligations and essential consumer
outlays. When viewed in this way, the measure of "burden" has been
roughly stable. Certain claims on income substitute for others: mortgage
payments for rent, and automobile payments for some purchased transportation.
Use of aggregate ratios can hide distributional problems. Surveys suggest that families which have a relatively small amount of liquid assets
account for a large proportion of the instalment debt outstanding; their
creditworthiness is established by their earnings rather than their accumu-




lated assets. However, there was a slight decline from 1954 to 1965 in
the proportion of families which have as much as 20 percent of their disposable income committed to instalment debt repayments.
"Easier" terms of credit may be either a warning signal of excessive credit
expansion or a welcome evolution. The widening availability of credit has
been a key feature of American financial development over the long run.
Certain types of lending that were once considered "risky"—such as consumer instalment credit—have proven to be quite sound and profitable.
Other such innovations have come at a rapid pace in recent years.
Delinquency rates on consumer credit have varied in the post-Korean
period—mainly reflecting fluctuations in economic activity—but they have
remained consistently well below their 1950-53 level.
In contrast, the rate of mortgage foreclosures has shown a distinct upward trend during the past 15 years. From World War II through the
Korean war, the inflation of real estate values bailed out poor credit risks
and held down mortgage defaults. Subsequently, foreclosures on conventional mortgages began to rise, but they have increased only slightly since
1961. Much of the uptrend in the over-all foreclosure rate since 1961 has
taken place in Federal Housing Administration (FHA) insured mortgages
which had been written with unusually liberal terms. Thus, FHA procedures and regulations have recently been tightened. By any reasonable
criterion, today's over-all foreclosure rate on home mortgages, about
l
/<z percent a year, is not out of line with the risk premium that such
assets carry.
Nevertheless, a sharp drop in incomes could certainly have unfavorable
financial repercussions. Despite the strong position of financial institutions
and the insurance of various types of deposits and mortgages, the quantity
of outstanding credit is an element increasing the economy's vulnerability
to cumulative declines if aggregate demand is permitted to collapse. Welltimed fiscal and monetary policies to maintain economic stability hence
become even more important.
MONETARY POLICY
The growth of total credit in the current expansion has contributed to
the improved balance between total spending and potential output. Until
mid-1965, the cost and availability of credit remained unusually stable for
a period of strong advance in economic activity. The increase in the discount rate announced last December 5 was the first monetary policy action
aimed specifically at domestic credit flows.
Previous movements toward less ease in monetary policy had been directed primarily toward restraining the flow of funds abroad for balance of
payments reasons. The discount rate increase in November 1964 was aimed
at forestalling outflows of short-term capital threatened by an increase in
the British Bank rate. Reserve availability was again reduced after new
balance of payments measures were announced last February (Chart 5).
Following this move, free reserves remained almost continuously in the




49

Chart 5

Free Reserves
MILLIONS OF D O L L A R S ^

900

600 —

300 —

-300

1960

1961

1962

1963

1964

1965

J/AVERAGE OF DAILY FREE RESERVES OF MEMBER BANKS (EXCESS RESERVES LESS BORROWINGS).
SOURCE: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

negative range (i.e., borrowings from the Federal Reserve System exceeded
member bank holdings of excess reserves).
From October 1964 to the end of 1965, Treasury bill rates rose by nearly
1 percentage point, almost equaling the total rise in the discount rate. Moreover, in 1965, long-term interest rates turned up after a period of remarkable stability (Chart 6). Yields on newly issued corporate and State
and local bonds began to rise in the first quarter of the year as the volume
of new issues expanded rapidly, relative to the supply of funds. Short-term
funds remained readily available during the spring and summer, buttressed
by the exceptionally large cash flow to particular industries (such as automobiles and steel) early in the year, by funds repatriated from abroad in
connection with the new balance of payments measures, and by net repayments of Treasury debt during this period. After mid-summer, however,
these funds had largely been absorbed, and virtually all interest rates began
to rise more substantially. Expectations were buoyant, corpoxate security
flotations began to grow again, and the Treasury became a net borrower.
Furthermore, despite a rapid growth of total bank credit and of deposits at
commercial banks (Table 6), rising interest rates reflected both surging
credit demands and firmer monetary policy. During 1963 and 1964, most
of the reserves needed by the commercial banking system to meet credit
demands were supplied through the open market operations of the Federal




Chart 6

Selected Interest Rates
PERCENT

8

CONVENTIONAL MORTGAGES
ON HOMESy

t
3-MONTH
TREASURY BILLS

I 11 1 1

1954

1

1956

I 1 I 1 I 1 | | | | | | | |

1

1958

1960

1 1 11 11 1 1 1 1 11 1

1962

1964

1/SERIES BEGINS IN 1954, NEW AND EXISTING HOMES THROUGH 1960 I, AND NEW HOMES ONLY THEREAFTER
NOTE: VERTICAL LINES SHOW GNP PEAK QUARTERS: 1957 III AND 1960 I.
SOURCES: FEDERAL HOUSING ADMINISTRATION, BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM, MOODY'S INVESTORS SERVICE AND STANDARD & POOR'S CORPORATION.

TABLE 6.—Changes in commercial bank credit, money supply, and time deposits, 1963-65
[Based on seasonally adjusted data]
Percentage change (annual rate) during
Item

1965
1963

1964
Yeari

Commercial bank loans (excluding interbank) and investments

II

III

IV

8.0

8.4

10.0

12.4

10.6

4.8

10.9

Investments:
U.S. Government securitiesOther securities

-4.8
19.9

-1.1
10.6

-6.2
15.2

-11.7
14.5

-12.8
20.0

-8.3
13.3

7.8
10.1

Loans (excluding interbank). _.

11.6

11.8

14.8

20.8

16.4

7.0

12.0

8.2

7.9

9.8

8.5

7.2

11.0

11.0

3.8
14.7

4.3
12.8

4.8
16.0

1.5
17.4

3.8
11.5

6.2
16.8

7.6
15.0

Money supply and time deposits 2 .
Money supply 3
Time deposits 4
1
2
3

Preliminary.
Changes based on averages of daily figures for last month in period.
Currency outside banks and demand deposits.
* Time deposits at all commercial banks.
Source: Board of Governors of the Federal Reserve System.




Reserve System. During the first three quarters of 1965, however, open
market operations supplied a smaller proportion of the growth in banks'
required reserves—resulting in slower growth of nonborrowed reserves.
More reserve needs were met by borrowing at the discount window.
Reduced availability of reserves tended to moderate the growth of bank
credit.
THE CURRENT FISCAL PROGRAM
The strong advance of the economy over the past 2 years is reflected in
a remarkable rebound of Federal revenues following the 1964 tax reduction. From the close of 1963 to the final quarter of 1965, Federal revenues
advanced by about $9 billion; yet during this period, tax reductions of $16
billion had taken effect through the Revenue Act of 1964 and the Excise Tax
Reduction Act of 1965. As Federal expenditures grew very modestly in 1964
and early 1965, the budget on the national income accounts basis swung
quickly into balance and showed a surplus exceeding $ 3 / 2 billion in the first
half of 1965. Its subsequent retreat to a $2*/2 billion deficit in the second
half of the year resulted from several important deliberate stimulative
measures plus the unforeseen rise in defense spending.
THE IMPACT OF 1965 BUDGET ACTIONS
The President proposed excise tax reduction in last January's budget;
his specific recommendations were submitted to the Congress in May and
the legislation was enacted 1 month later. The final act called for $4.6
billion of reductions in several stages extending to 1969. The first stage
took effect immediately in mid-June and reduced taxes by $ 1 % billion
(annual rate), mostly on consumer durable goods.
In line with recommendations by the President, the Social Security Act
was amended by the Congress last July. In addition to the initiation of
medical insurance for the aged, which will take effect this July, and increased payroll tax rates, effective January 1, 1966, the legislation provides
for increased old-age benefits which were made effective retroactively to
January 1, 1965. The retroactive portion of increased benefits, amounting
to $885 million, was disbursed in September. The liberalization raised
transfer payments thereafter by more than $2 billion annually.
Furthermore, once payments on 1964 tax liabilities were completed last
spring, a final dividend of personal tax reduction provided by the Revenue
Act of 1964 helped to lift disposable income in the second half of 1965.
These measures, together with the unexpectedly strong rise of Federal purchases, provided expansionary actions totaling $10^2 billion (annual rate)
in the second half of 1965. With normal semiannual revenue growth of
a little more than $ 3 ^ billion at high employment, there was a net fiscal
stimulus of about $7 billion in the second half of 1965.




Scheduled tax changes are having a marked restrictive fiscal impact in
the first half of 1966, as the rise in payroll taxes of nearly $6 billion far
outweighs the expansionary influence of the $1^4 billion "second-stage" of
excise cuts that took effect at the start of 1966. On the other hand, further
increases in defense expenditures will be stimulating the economy in this
period, and will continue to do so throughout the next 18 months. The
combined effect of budgeted expenditures, including the benefits that
will begin under hospital insurance in July, and tax laws now in effect would
be more stimulative than now seems appropriate for the period ahead,
FISCAL PLANS FOR 1966-67
The objective of promoting balance between over-all demand and productive capacity pointed to tax cuts in recent years when demand was inadequate. That same criterion now calls for tax action to moderate the growth
of private spending. In line with these principles, the President has
asked the Congress to enact promptly four measures affecting tax payments.
The first of these would reform the withholding system for individual
income taxes and place the income tax more firmly on a "pay-as-you-go"
basis. The present system, with a single 14 percent rate, overwithholds from
some low-income individuals and underwithholds from many other taxpayers, requiring large final settlements the following year. The proposed
graduated rate schedule and other modifications will reduce both underwithholding and overwithholding. Once in effect, the new system will
siphon off $1.2 billion (annual rate) from disposable income for the rest
of 1966.
The second proposal would place corporate tax payments also on a
more nearly current basis. Under present law, corporations with tax liabilities exceeding $100,000 are scheduled to pay only 68 percent of the
estimated tax due on 1966 incomes by the end of the calendar year, with
the remaining 32 percent not paid until the first half of 1967. There is
already a formula under existing law that would move corporations to a
current basis by 1970. It is now proposed to accelerate this step-up to
achieve current payment status within 1967. This action would increase
cash payments to the Treasury by an estimated $1 billion this spring and
$3.2 billion in the spring of 1967, reducing the carry-over of unpaid liabilities into 1967 and 1968 by comparable amounts.
The rescheduling of corporate tax payments will not add to final tax
liabilities nor will it alter after-tax profits in either business or national
income accounting. It will nonetheless reduce the availability of internal
funds for investment and should thus have a moderating influence on
investment demands, particularly in the light of firmer credit conditions.
A third proposal to put tax payments on a more current basis affects the
social security taxes of the self-employed. It calls for quarterly declarations,
paralleling those of the individual income tax, instead of a single large pay-




53

ment at year end. It also more nearly parallels the treatment of wage
earners, whose social security taxes are collected on a current basis through
withholding. The proposal would increase revenues by $100 million in
each of the fiscal years 1966 and 1967. It will reduce disposable income
by $400 million (annual rate) in the second half of this calendar year.
The fourth proposal affects excise taxes. In view of the large revenue
involved in the excise taxes on automobiles and telephone service, they
were scheduled to be cut gradually in the Excise Tax Reduction Act of
1965. The Congress is being asked to reschedule the reduction to meet
current economic needs. Each step in the present timetable, commencing
with the January 1, 1966 instalment, would be shifted forward 2 years.
The reinstatement will restore $0.9 billion of revenues, and the postponement of the scheduled January 1967 cuts will avoid a further revenue drop
of $0.6 billion next year.
With these measures, both the actual and high-employment budgets on
the national income accounts basis are expected to be approximately in balance in fiscal 1967. Over the full budget planning period to the first half
of 1967, Federal expenditures are estimated to rise about $17*4 billion from
their level in the second half of 1965. The increase includes $6 billion
in defense purchases, $6*/i billion in transfers, and $3 billion in grants
to States and localities. Normal revenue growth at high employment will
total about $11^2 billion over this period. Meanwhile, tax measures that
have already been enacted and those now proposed will result in a net
addition of $7 billion to Federal revenues.
The aim of fiscal policies in the next 18 months is to preserve the sound
expansion enjoyed in 1965—to maintain a strong and healthy prosperity; to
promote a cautious movement toward lower unemployment without moving
so far or so fast that bottlenecks and inflationary pressures arise.
THE OUTLOOK FOR ECONOMIC ACTIVITY
In the light of the fiscal program outlined above, GNP for 1966 is expected to be within a $10 billion range centered on $722 billion, given the
$675.6 billion level now estimated for 1965. At the midpoint of this
range, the advance would be $46 5/2 billion, virtually identical with the
gain scored in 1965. No major departure is expected from the 1.8 percent
increase of over-all prices in 1965, as explained in Chapter 2. Thus, total
real output should advance by nearly 5 percent in 1966.
Civilian employment, which rose by 1.8 million persons in 1965, should
register a similar large increase this year. In addition, the armed services
will expand by 300,000. On the other hand, the total labor force will rise
strongly. The unemployment rate, which averaged 4.6 percent in 1965,
should decline this year to about 3% percent, the lowest rate since 1953.




54

GAINS BY SECTOR
While strong demands will be characteristic of most sectors of the economy,
defense spending and business fixed investment will provide the major thrust
to over-all demand. The special implications of these sectors are explored
in more detail below. In brief, the increase in Federal purchases made
necessary by the Vietnam situation will deliver a major stimulus to the
economy, accounting for most of the prospective $7 billion rise in total
Federal purchases. Business expenditures for fixed investment will rise
strongly again in 1966, although the advance is not expected to match the
I55/2 percent increase of last year. According to present indications, capital
outlays are likely to exceed the 1965 total by about $7 billion.
State and Local Government
State and local government purchases, a particularly reliable component
of GNP, are expected to rise by about $5 billion, continuing their recent
trend. They will receive continuing support from growing Federal grants
that meet pressing needs for public services.
Inventories
Last year's inventory investment of $7 billion (1958 prices) was in line
with the real growth of $29 billion in final sales, Still, irregular and special factors in the automobile and steel industries added a little, on balance,
to inventory investment last year. In the absence of such special influences, a fractional decline from last year's rate is probable in 1966.
Homebuilding
The fundamental demographic factors influencing residential construction
will not change significantly in 1966: the increase in the number of households is expected to be about the same as the 1960-65 average. Financing
conditions may be less favorable, since conventional mortgage rates began
to rise last September for the first time in 5 years and some further increases
appear possible. On the other hand, the excess supplies of new housing in
selected areas seem to be dwindling. On balance, the value of residential
construction is likely to change little in 1966.
Consumption
Consumer outlays depend primarily on the growth of disposable income.
Unlike 1964 and 1965, tax reductions and increases in transfer payments
will provide no net stimulus to consumer incomes this year. Between 1963
and 1965, cuts in personal income taxes added about $10 billion directly
to consumer take-home pay, and government transfer payments increased by nearly $4 billion. This year, transfer payments are expected
to rise strongly, paced by the launching of the hospital insurance




55

program. However, social insurance taxes are higher, the new withholding
system will moderate the growth of after-tax income, and the second
stage of excise reduction will be adding very little to household purchasing
power once the President's proposals are enacted. Nevertheless, rapid
gains can be expected in disposable income this year owing to strong increases in wages and salaries, interest, dividends, and self-employment
incomes.
Little change in the personal saving rate is anticipated for 1966. The
saving rate of 5.4 percent in 1965 was close to the average of recent years.
Consumer confidence and spending intentions remain high. Allocation of
income among various types of consumer goods may shift moderately. The
fraction of disposable income spent on automobiles and parts may decline
somewhat from the exceptionally high 6.4 percent in 1965 (which included
purchases deferred by the late-1964 strike). Prospects seem particularly
bright, however, for durable goods other than cars; color television sets are
a notable example. Sales of nondurable goods other than food should also
rise strongly and continue to reflect upgrading of quality.
In sum, consumer expenditures are expected to account for about 60
percent of the rise in GNP this year, compared with their 63 percent share
in the 1965 advance.
KEY ROLE OF BUSINESS FIXED INVESTMENT
This year, business fixed investment is again expected to be one of the two
major expansionary forces in the economy. After 2 years of rapid increases,
it reached 10J/2 percent of GNP late in 1965. This surge followed a period
of weak investment dating from 1958 and extending into the early years of
the current expansion. The proportion of GNP devoted to nonresidential
fixed investment averaged only 9.2 percent from 1961 to 1963, well below
the 9.6 percent average during the preceding decade.
Major Determinants
The revival of fixed investment in the past 2 years can be traced to improvements in three major determinants of investment demand. First, the
economic expansion has raised final demands relative to the stock of productive facilities. In manufacturing, for example, 91 percent of capacity was
utilized in 1965, in contrast to an average of 85 percent in the preceding 10
years. To avoid bottlenecks, delays, and lost sales, businessmen now have the
incentive to build capacity in advance of rising demand. Second, the generation of internal funds through profits and depreciation has facilitated
corporate financing, while monetary policy has enabled external financing
needs to be satisfied readily. Third, the anticipated future returns from
investment have been enhanced by the prospect of continuing economic expansion and by the investment tax credit, the liberalized depreciation rules,
and the lowered corporate income tax rates.




This year, financing conditions may be less favorable, after-tax profits are
unlikely to repeat last year's exceptional 20 percent spurt and available
internal funds will be held down by the new corporate payments schedule.
Nevertheless, the major determinants of investment spending suggest that
capital outlays should rise strongly again in 1966. According to the investment anticipations reported in the Government survey last November, the
annual rate of plant and equipment spending by nonagricultural businesses
in the first half of 1966 will exceed the full-year 1965 level by $6 billion, or
by 11 l/i percent. The rise is expected to continue in the second half of the
year. Nonresidential fixed investment for the entire year will probably be
slightly above 10/ 2 percent of GNP.
Longer-Term Prospects
The current strength of investment demand provides new evidence and,
at the same time, raises new issues concerning the longer-term prospects for
capital outlays. Nagging doubts about a possible secular weakening of
capital spending have now been resolved. Yet, it is obvious that business
fixed investment cannot continuously grow twice as fast as GNP, as it did
in 1964 and 1965, and that it cannot always be a propelling sector of demand.
Nor is it certain that the economy can regularly maintain the current 10J/2
percent investment share at full employment, a share which matches the
postwar peak.
Some of the current strength in investment demand may represent a
catching-up after a period marked by slow growth of plant and equipment
capacity and by aging of the capital stock. From 1957 to 1963, manufacturing capacity grew less than 3J/2 percent a year. This kept pace
with actual manufacturing output but was considerably less than the normal
full-employment growth of manufacturing output. As the economy returns
to full employment, additional capital facilities are needed to complement higher employment and output. The same catching-up process
occurs in the modernization of the capital stock. Prolonged economic slack
leaves the Nation with older productive facilities. Because the Great Depression and World War II reduced investment drastically, the average age
of capital rose from about 16.5 years in the mid-1920's to over 21 years by
the end of 1945. Rapid investment during the first postwar decade reduced
the average age of the capital stock to 17 years by 1957. This trend was
subsequently altered by the sluggish pace of investment. Now, however,
businessmen have stronger incentives to make up for lost time in their
pursuit of modernization programs.
Even after catching-up is finished, several factors are likely to be
working to strengthen investment demand. A higher prospective return
can stimulate "capital deepening", i.e., investment that provides each worker
with more capital. Profitability will be higher owing to the investment tax
credit and lower corporate income tax rates, as well as improved prospects




57

for sustained full utilization. Some cost-cutting investments which would
not have been profitable in the past may now yield an expected after-tax
return high enough to justify the required outlay.
In addition, a more rapidly growing labor force can add to investment
demand, providing full employment is maintained. In that event, unless
capital is expanded more rapidly, each worker would have fewer tools.
Businessmen will find it profitable to equip the additional workers. If
businessmen respond fully, the extra growth of capital stock will match
the additional growth of employment. Over the remaining years of the
1960's, the labor force is expected to grow about one-half of 1 percent faster,
on average, than its yearly growth rate of 1.3 percent in the past decade.
Adding an extra 0.5 percent to employment in any year, and providing the
new workers with the usual amount of equipment and facilities would
require a matching 0.5 percent increment to the capital stock. It would
take an addition of about 5 percent to the current annual total of investment
to provide that extra capital.
To be sure, the possibility cannot be ruled out that a part of the strength
of current investment might be associated with overly optimistic expectations by some businessmen. Errors can be made in investment decisions because such decisions are necessarily forward looking and based on anticipations of future profits and sales. On the other hand, market experience
does provide incentives and information about recent and prospective developments. And businessmen have increasingly used scientific techniques
to rationalize their capital budgets. Business investment programs in the
past 2 years seem to have added to capital in the right places and in appropriate amounts, as discussed in Chapter 2. Programs planned for 1966
should continue these trends.
THE IMPACT OF DEFENSE
National defense outlays will be the other major expansionary force this
year. The upward movement in defense spending alters a pattern of
stability maintained from mid-1962 into 1965. During that period, the
national defense establishment was considerably modernized and better
equipped; yet over-all defense expenditures were stable or declining. Since
the economy was expanding rapidly, the percentage of GNP channeled into
defense purchases declined from 9.2 in 1962 to 7.4 in the first half of 1965.
We are not now engaged in wartime mobilization, nor entering such a
mobilization period. The present defense buildup is vastly different in size
from the mobilizations at the outset of World War II or the Korean conflict. When the United States entered World War II, it had to build a military establishment almost from scratch; and the Korean war followed a
period of rather thorough demobilization and de-emphasis of defense. In
both cases, the outbreak of hostilities required a fundamental reevaluation
of the country's defense posture, leading to vast increases in expenditures.




Ever since the Korean war, the United States has given greater attention to the requirements of military preparedness in an uneasy world. After
Korea, defense expenditures dropped sharply from their peak rate of nearly
$50 billion, but they have never fallen below $38 billion. In contrast, they
had totaled $13 billion in 1949. Since 1953, the country has invested
mightily in defense; it has continually rolled over its stock of defense goods
and equipment to take advantage of new developments in weapons systems and has maintained general purpose defense capabilities. The Vietnam conflict, therefore, finds us well prepared. The procurement and personnel increases are modest by earlier standards and by comparison with
total supply capabilities.
The percentage increase in defense expenditures this year will slightly
exceed that in over-all national output. Defense purchases of goods and
services, which were 7.5 percent of GNP in the fiscal year ended June 1965,
are expected to average 7.6 percent in both fiscal 1966 and fiscal 1967
(Table 7). This contrasts markedly with the buildup after the outbreak of
T A B L E 7.—Defense impact in relation to GNP, Korean war period and current period
Budget expenditures
for
national
defense
(billions of
dollars)

Period and fiscal year

Korean war period:
1950
1951 .
1952
..
1953
Current period:
1965
1966 i
19671

Federal purchases
of goods and services
for national defense
Amount Percent
(billions
of dollars) of GNP

13.0
22.5
44.0
50.4

12.7
21.7
41.8
48.8

4.8
7.0
12.4
13.6

50.2
56.6
60.5

48.8
53.0
56.5

7.5
7.6
7.6

1

Estimates.
Sources: Bureau of the Budget, Department of Commerce, and Council of Economic Advisers.

the Korean war when defense outlays more than tripled in 2 years and
rose from under 5 percent of GNP in fiscal 1950 to over 12 percent in
fiscal 1952.
The increase in purchases for defense of $6 billion this calendar year
represents nearly 13 percent of the increase in GNP. These outlays will exert
a broad fiscal stimulus. Indeed, because they directly and immediately add
to GNP, defense purchases tend to have a somewhat larger and more rapid
economic effect than a tax reduction (or increase in transfers) of the same
size, which must be respent before it can stimulate production. Although
not as general as most tax cuts would be, even the direct impact of defense
is felt throughout the economy. This is evident in the distribution of added
defense expenditures among various types of products. About 35 percent
of the step-up in defense expenditures for 1966 is for direct personnel




59

costs—pay and allowances—of the increased number of military and civilian
personnel. An additional 10 percent of the total increase is for training,
food, lodging, clothing, and transportation costs directly associated with
the increased manpower. Another 22 percent represents gasoline, ammunition, ordnance, and similar mass-produced production-line items. A further 18 percent can be attributed to large, sophisticated weapons systems,
such as aircraft, ships, and missiles.
Defense procurement by itself will not be placing extreme demands on
particular industries, although textiles and selected other industries receiving increased defense orders are already experiencing high operating rates
as a result of buoyant private demand.
The present Defense Materials System, which has been in effect since
the end of the Korean war, will continue to deal with allocation problems.
It gives priority to defense and defense-related orders in the event of any
conflict with civilian orders for the same materials or for use of industrial capacity, and allots certain categories of controlled materials
on the basis of priority. With the economy operating considerably below
capacity, these priorities and allocations have been routinely executed in the
past without bumping private demands to any noticeable extent. With
operating rates now higher than before, there may be some cases where the
execution of civilian orders will be somewhat delayed. However, these will
be exceptional, and will not be such as to require alteration in our present
machinery for materials priorities and allocations.
THE NEED FOR FLEXIBILITY
Economic policy for 1966 is guided by a thorough and realistic assessment of the outlook for the economy and by the objective of maintaining
a well-paced advance. Fiscal policies for 1966 have been fashioned in the
light of an evaluation of both the strength of private demand and the
moderating influence of monetary policy. Clearly, fiscal and monetary
policies must be closely coordinated, and effective coordination has prevailed in the past 5 years. The Administration regretted that the discount
rate increase last December interrupted that pattern. Consultations between the Federal Reserve and the Administration continue, helping to
assure that monetary and fiscal policy together will provide appropriately
for sustained and balanced expansion. Both are keenly aware of uncertainties in the outlook and are prepared to respond to emerging developments.
CONTINGENCIES IN 1966
This year, the economy will be moving into new territory as rates of unemployment reach the lowest levels in more than a decade. While prospects
are excellent that this course can be safely traversed, there can be no certainty. The defense program introduces an especially important set of
uncertainties into the outlook. The budget is based upon a careful judg-




60

ment of the defense requirements imposed by our commitments in Vietnam
and throughout the world. Nevertheless, these requirements could change
in the year ahead—in either direction. Finally, private demand is a constant source of uncertainty. Its particular strength in 1965 was a surprise.
This buoyancy has been recognized in the forecast for 1966, but the accuracy
of such an evaluation cannot be guaranteed.
In considering these uncertainties, it is important to appreciate the internal resistance of the economy to disturbances, as reflected in the record
of recent years. To be sure, the economy can be pushed into boom or
recession by sufficiently potent forces. But it is a mistake to view the
path of economic activity as a tightrope from which one false step would
mean spiralling inflation or cumulative contraction. One important sector
of the economy, residential construction, lagged behind during most of
1964 and again during much of 1965; nevertheless, its sluggishness was
barely noticeable in the aggregate pattern of activity. The strikes in the
automobile industry in the fourth quarter of 1964 left a clear mark on the
output of that quarter, but had no lasting effect on the vigor of expansion.
Nor did the recent strong buildup and subsequent absorption of steel
inventories disturb the over-all pace of economic activity.
Production and employment have shown stability in the face of volatile
movements in financial markets. The sharp plunge of stock prices in the
late spring of 1965 presumably was associated with a marked shift in investors' sentiment; yet spending for goods and services by consumers and
business remained remarkably unaffected by the gyration.
Perhaps the clearest recent example of the economy's inherent stability
was its response to the deliberate stimulus of tax reduction. The 1964
tax cut was indeed massive, but the response was gradual and the effect
in lifting national output was spaced out over many quarters. Meanwhile, labor markets adapted and investment responded to create new
capacity which permitted a remarkably balanced, noninflationary advance.
While the economy's own adaptation is the first line of defense, economic policy has a major role to play in countering disturbances. The
program outlined earlier in this chapter is designed to meet the prospective needs of the Nation. But major changes in the outlook during the
year could require new actions by the Administration, the Congress, and
the Federal Reserve System. If military needs should prove to be larger
than is anticipated in the fiscal 1967 budget—or if private expenditures
should advance sharply so as to endanger price stability—further fiscal or
monetary restraints would be necessary to prevent the rise in total demand
from outpacing the growth in productive capacity. The President has indicated that he will not hesitate to recommend further tax increases in such
circumstances.
On the other hand, a peaceful conclusion of the Vietnam hostilities could
point to a reversal of policy actions premised on rising military spending.
It would offer the welcome opportunity to encourage private expenditures
6i
7»5-983 O—168

5




by reducing taxes once again or to add to high-priority Federal expenditures
for civilian programs now limited by defense requirements. It could also
point toward easing monetary policy.
LONGER-RUN OUTLOOK
In the longer run, defense will not continue to contribute as strongly to
aggregate demand as in 1966. The current defense buildup meets an
exceptional need and will be reversed as soon as reduction of world tension permits. In the years ahead, moreover, investment will certainly not
rise consistently as fast as it will this year. It may even decline as a proportion of GNP. Yet, the factors determining investment do not point to
a slump in capital outlays, provided that alert policies preserve the general
health of the economy.
Shifting patterns of defense and capital outlays need not throw the
economy off its track. The maintenance of steady advance at full employment does not require a growth of demand as strong as that needed to
eliminate slack. The economy would face serious inflation if such strong
expansionary pressures continued for very long. But continual growth
of demand is needed to maintain balance with potential output. Strength
in other types of spending will be required to lead that growth in the future.
New sources of strength may be generated elsewhere within the private
economy. In particular, later in this decade, more vigor can be expected
from residential construction, an important component of private investment
which for demographic and temporary reasons has been conspicuously
lagging. Moreover, if additional demand is needed, fiscal policy can help
through new or expanded productive civilian programs or through tax
reduction to support consumer purchasing power.
The prospects for sustained expansion thus continue to be favorable for
the longer run. Even so, our ability to counter recession can and should
be improved. Long-needed reforms in the unemployment insurance system
are one important step that should be taken this year. There is also a
good opportunity now to intensify discussion and study of the type of tax
action which could best combat the threat of recession. A social consensus
on this issue would help to avoid prolonged debate in a time of urgency.
Both in meeting surprises and in laying systematic plans, the lessons
learned in the last 5 years will remain relevant. The American economy
has demonstrated its capacity for strong growth and its ability to move
steadily ahead, as long as a reasonable balance between total supply and
over-all demand is maintained. The promotion of such a balance will
remain the basic task of domestic fiscal and monetary policies.




Chapter 2

Prospects for Cost-Price Stability
A S THE ECONOMY enters its sixth year of uninterrupted expansion
*^* and its third successive year of high growth, the gap between potential and actual production is fast disappearing. Unemployment is near
4 percent, and operating rates in many industries are moving close to preferred rates. The past 5 years have demonstrated that the economy can
operate free of recurrent recession. Now the United States is entering a
period that will test whether sustained full utilization of our human and
physical resources is possible without the injustice, dislocation, and decline
in competitive position that accompany inflation.
History alone is not reassuring. Still, there are sound reasons for confidence that a higher degree of cost and price stability can be achieved at
high employment than during previous such periods since World War II.
The pattern of economic activity shows superior balance. Productivity gains
are larger and more extended. Private attitudes in key wage and price decisions are considerably more responsible. New competition from abroad
reinforces keen domestic competition for markets, and new policies of active
manpower development are permitting the fuller use of our human resources.
If both full employment and price stability can be maintained, the United
States will enjoy continuing real growth that will provide abundant resources to meet simultaneously the demands of national security and of
domestic welfare. The last few years have shown what the American
economy can do when its progress is free of interruption. Incomes from
wages and profits have leaped ahead. With over-all unemployment down
sharply, the disadvantaged groups that suffered most during the period
of slower growth are improving their positions. If the economy remains
on its path of balanced growth, it will be an engine of great social progress, and—together with the Great Society programs—will move us steadily
closer to our ideals. But only if inflation can be avoided will prosperity
be sustainable and the economy achieve its full promise.
DETERMINATION OF THE PRICE LEVEL
The relation between the volume of economic activity and the price
level is not simple. As a first approximation, the classical law of supply




and demand leads one to expect that the change in the price level will depend
mainly on the size of the gap between capacity and actual output. The
more production falls short of potential—i.e., the greater is excess productive capacity—the further prices should drop. Conversely, when demand outruns aggregate supply, the imbalance should raise prices. History
shows that things are rather more complicated. For example, the second
half of 1955 was a period when there was no gap between potential production and actual production, yet the GNP deflator—our most comprehensive indicator of the price level—rose little. In 1957 and 1958, when
the gap was beginning to assume considerable size, the GNP deflator rose
substantially. The GNP deflator rose at a fairly steady and modest pace,
both in the years when the gap was large—in 1958-61—and when it narrowed substantially—from 1961 to 1965. Clearly, more detailed analysis
is necessary.
Some important components of the price level have risen continuously
over the years, particularly in construction, services, and Government.
Other components of the price level, especially agricultural and some raw
material prices, are influenced by supply conditions which move relatively
independently of the general economy.
The industrial component of the price level has proved to be most systematically responsive to the general degree of prosperity. But even industrial prices cannot be accurately predicted by reference to levels of
activity alone. For example, industrial prices have been much more stable
for any given degree of utilization of industrial capacity in the last 5 years
than in the preceding decade.
Industrial price movements are mainly determined by four elements:
First, prices move roughly parallel with the basic cost trends. This does
not mean that the causation runs wholly from costs to prices. Both are subject to many common influences; moreover, prices directly influence costs
because wage increases respond in part to price and profit levels. But clearly,
other things equal, higher costs tend to raise prices.
Second, the state of demand affects prices. When markets are weak and
part of capacity is idle, list prices are discounted and may even be lowered.
Delivery periods are shortened, quality may be raised, freight absorbed,
and other terms of the transaction changed. When markets become
stronger, business finds it easier to raise prices. Once shortages develop
and industry is unable to keep shipments in pace with desired purchases,
the likelihood of price rises becomes very much greater.
Third, the nature of the price-setting process of an industry can influence
the price changes associated with any given set of cost and demand conditions. In highly concentrated industries, where a few producers or a single
price leader can determine prices, the response may be quite different from
that in an industry of many small firms, where wholly impersonal market
forces keep supply and demand in balance through price adjustments.
Differences are especially great in bad times. In competitive industries,
prices are likely to fall; in concentrated industries, production is more likely




to be cut back, with only limited price adjustments. When markets are
roughly in balance, the sequence and magnitude of price changes is less
predictable. What happens in the more concentrated industries depends
on the price policies followed by the principal producers. The Government's price guidepost is an attempt to avoid inflation resulting from industry's use of discretionary pricing power.
Expectations and attitudes also affect actual price changes. An economy
accustomed to price stability is less vulnerable to inflation. Price adjustments to changing conditions come more slowly and moderately, and include
both pluses and minuses. It is free of the inventory hoarding that adds to
inflationary demands. And speculation in commodities does not raise raw
material costs. Conversely, when an inflationary psychology takes hold,
inventory hoarding and anticipatory placing of orders accentuate any market
imbalances and further raise costs of production and distribution.
Finally, in a mixed economy such as ours, Government actions have
an important effect on industrial prices. Fiscal policies help determine the
over-all size of markets. The Government is the biggest customer for many
industries and hence the largest single influence on demand. It also affects
competitive conditions through tariff policies, quotas, and other forms of protection, through regulatory policies, stockpile, and commodity stabilization
policies, and in other ways. If the objective of price stability is given recognition in the full range of economic policies, prices will be more stable.
THE PRICE RECORD
Our over-all price record during the present expansion has been remarkable—unmatched by any industrialized nation. But during 1965, the
record developed some blemishes; prices, as measured by any of the major
indicators, advanced more rapidly.
After increasing at an average annual rate of 1.3 percent between 1960
and 1964, the GNP deflator rose by 1.8 percent in 1965. The most prominent elements in this acceleration were more rapid increases in the deflators
for construction, nondurable goods, and the Federal Government (reflecting
the large military pay increase in 1965).
Consumer prices rose at an average annual rate of only 1.2 percent a year
from 1960 to 1964, but by 1.7 percent in 1965 (Chart 7). Substantial advances in the prices of food, apparel, and footwear were mainly responsible
for the faster rise. The reduction of excise taxes mitigated the increase of
the index by 0.2-0.3 percent.
The wholesale price index increased 2.0 percent from 1964 to 1965 after
4 years of stability (Table 8 and Chart 8). Farm and food products accounted for over half of this increase. Industrial prices, which had remained virtually constant from 1960 to 1964, moved up by 1.3 percent last
year. Increases were found particularly in nonferrous metals, nonelectrical
machinery, fabricated structural products, gas fuels and petroleum, lumber,
fertilizer materials, hides and skins, and manufactured animal feeds.




65

Chart 7

Consumer Prices
INDEX, 1957-59 = 100

120

115 _
SERVICES

\

110

ALL ITEMS

105

A.

"*^^^!>*O ^
KX)

• 11111111111.11..
1961

/

^

y

••

/"""\.

<

i .J i l l

^ ^^ VF °° D ....

^—y

W

1 1 1 1 1 1 1 1 1

1962

/

COMMODITIES LESS FOOD

I I i I 1 1 1 1 1 I 11 I I 1 1 1 1 1 1 1 1

•

1963

1964

1965

SOURCE: DEPARTMENT OF LABOR.

In some respects, price behavior in 1965 showed a continuation of the
healthy pattern that has characterized the present expansion. Prices in
such important sectors of manufacturing as automobiles, steel, and electrical
machinery remained essentially stable, and there were still many declines.
TABLE 8.—Changes in wholesale prices, 1961—65
Percentage change i

Commodity group
1961 to
1965

All commodities
Farm products
Processed foods
All other than farm products and processed foods
(industrials)
Textile products and apparel
Hides, skins, leather and leather products
Fuels and related products, and power
Chemicals and allied products
Rubber and rubber products
Lumber and wood products
Pulp, paper, and allied products
Metals and metal products
Machinery and motive products
Furniture and other household durables
Nonmetallic mineral products
Tobacco products and bottled beverages
Miscellaneous products
1

Based on preliminary data for December 1965.
Less than 0.5 percent.
Source: Department of Labor.

2




66

1964 to
1965

Contribution to total
change (percent) l
1964 to
1965

1961 to
1965

2.2

2.0

100

100

2.5
4.4

4.3
4.1

12
29

23
30

1.7

1.3

59

47

2.1
2.8
-1.8
-1.7
-3.3
5.4
1.1
5.0
1.4
-1.5
-.1
4.4
6.8

.6
4.4
1.9
.7
.4
.5
.9
2.8
.8
-.5
.2
.3
1.6

7
2

3
3
7
2

-7
-5
-2
7
2
31
12

Q

(

2

( 2)
( )

2
19
7
-1

( 2)

)

5
10

3

Chart 8

Wholesale Prices
INDEX, 1957-59= 100

10
1
PROCESSED FOODS
COMMODITIES OTHER THAN FARM PRODUCTS

A
FARM PRODUCTS

90
I I I I I 1 I I I I 11 I

1961

1962

i l

i i i i i I i i

1963

I I I i I I I I I I

1964

1 I i i i I i I I

1965

SOURCE: DEPARTMENT OF LABOR

Some of the increases reflected nonrecurring factors. The rise in prices
of nonferrous metals reflected increases of world prices which do not influence adversely our competitive position. And the sharp rise in food prices
in large part reflected production cycles in agricultural products.
SUPPLY AND DEMAND IN THE PRODUCT MARKETS
The fiscal and monetary policies outlined in Chapter 1 are intended to
assure that total civilian and military purchases of goods and services do not
exceed the economy's ability to produce. But price pressures can also
develop from imbalances within specific sectors. If prices do not fall in
sectors where potential supply exceeds demand as readily as they increase
where demand outruns supply, imbalances in the composition of demand
will raise the price level.
In recent years, measures have been developed which can serve as rough
indicators of the supply-demand relationships of specific industries.
OPERATING RATES OF INDUSTRIES
Operating rates of industries are a direct measure of the relation between production based on current demand and the capacity to produce.
Although the concept of capacity is an elusive one, most producers seem




67

able to give it quantitative meaning, and also to identify a rate of utilization of that capacity which is "preferred"—presumably a level of operation
which management feels can be sustained efficiently for an extended period.
Starting from a low of 77 percent at the beginning of the expansion (compared with an average preferred rate of 92 percent), the seasonally adjusted
average rate of utilization of manufacturing capacity as measured by McGraw-Hill rose by 6 points, to 83 percent at the end of 1961. During the
following year, a parallel growth of output and capacity kept utilization
rates rather steady. In 1963, output began to rise faster, raising average
utilization to 88 percent by the end of 1964.
The strength of industrial investment in 1965 enabled capacity in manufacturing to increase by an estimated 5^4 percent. Manufacturers increased output dramatically without running into significant bottlenecks.
The average operating rate climbed to 89 percent by the end of the year as
the gain in the rate of output accelerated under the impetus of investment
and military demand.
The pattern of investment last year contributed to the general balance
between output and capacity. Of the four industries which were operating at or above their preferred rates in December 1964, two subsequently succeeded in building up their productive capacity by more than
the growth of output (Table 9). Others, which were operating below
preferred rates at the end of 1964, added more slowly to capacity in 1965,
so that they, too, came closer into balance.
In four industries, high demand has raised production beyond preferred
utilization rates. In three of these industries, particularly large increases
of investment are planned for the first quarter of 1966.
TABLE 9.—Manufacturing capacity utilization, 1964-65

j

Output as percent of
capacity *

Industry

December
1964

Total manufacturing»
Iron and steel
Nonferrous metals
Machinery
Electrical machinery
Autos, trucks, and parts
Other transportation equipment
Fabricated metals and instrumentsStone, clay, and glass
Chemicals
Paper and pulp
Rubber
Petroleum and coal products
Food and beverages
Textiles
Miscellaneous manufacturing

December
1965

Preferred
rate
(percent)2

88

89

92

88
98
87
84
95
80
87
80
85
94
96
91
86

75
103
91
91
93
93
94
85
85
93
94
91

Qfi
VO

»o
89

91
95
91
93
96
88
92
88
90
97
94
95
86
96
94

88

84
Qfi

1 Data for 1964 except iron and steel from McGraw-Hill; estimates for iron aud steel for 1964 and all industries for 1965 by Council of Economic Advisers after consultation with McGraw-Hill.
2
From McGraw-Hill survey of business plans for new plant and equipment, April 1963.
3
Not comparable with data in Table C-34 because of differences in methods of computation.
Sources: McGraw-Hill Publishing Company, Board of Governors of the Federal Reserve System, and
Council of Economic Advisers.




68

When the operating rate for all manufacturing averages (say) 2 points
below the preferred rate, there will be less price pressure if each individual
industry shows a similar 2-point gap between its actual and its preferred
rates than if some are above preferred rates and some far below. While
there are always some differences among industries, the balance was unusually favorable in 1965. Sectoral balance can be measured by the weighted
average of the absolute amounts by which the gap between each industry's
own operating rate and its own preferred rate exceeds the gap between the
operating rate for all manufacturing and the preferred operating rate for
all manufacturing. This average "excess gap" was 1.7 percentage points in
1965, down from 2.9 in 1964. In contrast, the average "excess gap" was
6.6 in 1955, reflecting the severe sectoral imbalance of that high employment year. Investment expected in 1966 will raise manufacturing capacity
by about 7 percent. This should keep the average operating rate essentially unchanged from 1965. The sectoral composition of rates should also
continue in general balance.
For the nonmanufacturing sectors of the economy, less information is
available on capacity utilization. Indexes prepared at the University of
Pennsylvania show that operating rates outside of manufacturing rose by
1 to 4 points in the last year, as output rose substantially (Table 10). Output is expected to rise again considerably in 1966, but the anticipated high
rates of investment should generate rapid growth of capacity as well.
TABLE 10.—Capacity utilization and change in output of selected industries, 1964-65

Industry

Capacity utilization
(percent) »
1965 2

1964
Coal mining
Metal mining
Stone and earth minerals
Electric utilities
Gas utilities
Services *

Percentage
increase
in output,
1964 to 1965 3

64
78
94
90
94
95

68
81
97
91
96
96

1
2
3

Output as percent of the trend line through peaks in output, except for services.
Average of first 3 quarters.
Average of available months in 1965 over average of equivalent period in 1964. Based on seasonally
adjusted data.
4
Includes air and rail transport, office space rental, and residential housing. For method of computation, see R. Summers, "An Index of Capacity Utilization in Service Industries," Wharton School of
Finance.
* Not available.
Sources: Wharton School of Finance and Board of Governors of the Federal Reserve System.

BACKLOG OF ORDERS

In those industries where production is based significantly on orders
(mainly durable goods industries), the relation of orders to shipments provides further indication of the state of demand relative to supply in the
market. Since producers wish to translate an irregular flow of orders into
a smooth production schedule, some backlog of orders is normal and desir-




able. But when the ratio of unfilled orders to shipments increases rapidly,
it may indicate that demands are exceeding producers' present supply capabilities, or that buyers are placing orders for future delivery farther ahead.
During recent years, the ratio of unfilled orders to shipments in the durable
goods industries as a group has been roughly constant, equal to a backlog of
about 3 months. In the two previous expansions, the orders backlog
was both substantially higher relative to sales and considerably less stable
(Chart 9). The average backlog reached 5 months in 1956, indicating
the clear presence of excessive demand in some sectors.
Today, there is only isolated evidence of undue buildups of orders. The
absolute volume of unfilled orders has increased in almost every industry.
But the over-all increase in the backlog relative to shipments over the last
12 months was moderate. Increases of up to 0.3 month occurred last
year in all durable goods industries except primary metals, where the backlog declined by 0.2 month, reflecting the steel adjustment. In the 195457 expansion, the backlog for the entire group of durable goods industries
rose by as much as 0.9 month in a 12-month period.
Chart 9

Backlog of Manufacturers' Unfilled Orders
for Durable Goods in Three Postwar Expansions
MONTHS OF BACKLOG

6

5

-

3

-

I

I

I

I

!

I

I
6

t

I

I

1

9

I

I

I

12

t

I
15

QUARTERS AFTER TROUGH &
J / R A T I O OF UNFILLED ORDERS (END OF QUARTER) TO SHIPMENTS (QUARTERLY AVERAGE);
EXCLUDES INDUSTRIES WITH NO ORDERS. BASED ON SEASONALLY ADJUSTED DATA.
^ T R O U G H QUARTERS FOR GNP WERE 1954 I I , 1958 I, AND 1961 I.
SOURCES: DEPARTMENT OF COMMERCE AND COUNCIL OF ECONOMIC ADVISERS.




70

I

I

I
18

In 1966, order backlogs are likely to increase somewhat further under the
impetus of rising demand. But the rapid rise of capacity should generally
permit shipments to respond to rising orders, preventing the emergence of
major price pressures from this source. However, this indicator of demand
pressures will need to be followed closely. Should order books lengthen
substantially, the efficient and moderate inventory policies that have kept
orders at reasonable levels could be altered, leading to imbalances in industrial markets.

SUPPLY AND DEMAND IN THE LABOR MARKETS
Cost-price stability cannot be achieved if the supply of labor is inadequate
to allow production to respond freely to demand. When workers having
the needed skills are readily available for employment, industry is able to
utilize its physical capacity fully and efficiently. When major labor shortages develop, they may be translated into production bottlenecks that limit
the supply of finished products and thereby result in demand pressure on
prices. Alternatively, or in addition, tight labor markets put upward pressures on labor costs, as unions press for excessive wage increases and employers bid against each other for the skills in short supply, and as employers
are forced to hire less qualified workers with resulting lower productivity.
The growth of the U.S. labor force has accelerated since 1962. From
1955 to 1962, the average annual increase was 825,000. During the last 3
years, it averaged 1.2 million, and in 1965 the increase was 1.4 million. This
acceleration resulted mainly from the high birth rates following World
War II and the increased participation of women in the labor force, partly
in response to more favorable job opportunities.
The employment gains of recent years have been large and widely distributed. Every labor force group has benefited from the sustained economic growth which has created an average of more than 1.3 million additional jobs a year since 1961. During the past 2 years, especially large gains
have been made by teenagers, adult nonwhites, the long-term unemployed,
and the unskilled. This pattern gives testimony not only to the power of
high economic growth to bring benefits to inexperienced and disadvantaged
workers, but also to the ability of employers effectively to absorb such
workers into productive employment. If this pattern can continue, the
supply of labor will be sufficient to meet manpower needs without serious
bottlenecks.
The capacity of labor markets to adjust can be seen from a study of employment gains by occupation. In 1965, for example, employment in professional and technical occupations rose by 333,000; but in 1964 there had
been only 150,000 unemployed workers whose last employment was in these
occupations. Since there was a reduction of unemployment of such workers
of only 17,000 between 1964 and 1965, a minimum of 316,000 new professional and technical employees must have come from among new entrants
into the labor force, from upgrading, or through hiring of unemployed whose




last employment was in some other type of occupation. Similar comparisons
can be made for other occupations.
Negroes and teenagers found better job opportunities as the labor market
tightened (Table 11). When the job market was slack and output grew
TABLE 11.—Changes in employment, 1961-65
Type of change and period

Total *

Teenagers

Nonwhites

Adult whites

Change in employment (thousands of persons):
1961-62 2
1962-63
1963-64
1964-65

1,203
963
1,548
1,822

237
-38
268
558

159
137
246
267

813
847
1,075
1,038

1.8
1.4
2.2
2.6

4.6
-.7
5.1
10.0

2.3
1.9
3.4
3.6

1.5
1.5
1.9
1.8

100.0
100.0
100.0
100.0

19.7
-3.9
17.3
30.6

13.2
14.2
15.9
14.7

67.6
88.0
69.4
57.0

Percentage change in employment:
1961-62
1962-63
1963-64
1964-65
Percent of total employment change:
1961-62
1962-63
1963-64
1964-65

1 Detail shown will not add to totals because of duplication (nonwhites include some teenagers).
2 Data for 1962 are adjusted for comparability with data for 1961.
NOTE.—Teenagers include those 14-19 years of age; nonwhites, 14 years of age and over; and white adults,
20 years and over.
Sources: Department of Labor and Council of Economic Advisers.

only enough to create jobs for the normal increase in the labor force, adult
whites secured the largest share of new jobs. But in 1965, when over-all
employment increased by a very large 2.6 percent, nonwhite employment
rose by 3.6 percent, and teenage employment increased by 10.0 percent,
representing nearly one-third of the total additional employment.
These employment gains, combined with the changes in the labor force,
resulted in an improvement in the pattern of unemployment. Unemployment rates for white teenagers fell despite the great influx of this group
into the labor force, and rates for nonwhite adults fell to 5.8 percent by the
end of 1965. Nonwhite teenagers were an exception; their rates remained
very high (Table 12).
TABLE 12.—Unemployment rates for selected groups, 1960-65
[Percent]

Period

Teenagers
White

Adults

Nonwhite

Women

Men

White

Nonwhite

Annual average:
1960
1961
1962
1963
1964
1965

12.4
13.8
12.0
14.0
13.3
12.2

22.1
25.4
23.7
28.4
26.2
25.3

4.7
5.7
4.6
4.5
3.9
3.2

5.1
6.3
5.4
5.4
5.2
4.5

4.3
5.3
4.2
4.2
3.8
3.3

9.1
11.2
9.8
9.3
8.2
6.6

1965: IV i

11.1

27.1

2.8

4.2

2.9

5.8

1
Based on seasonally adjusted data.
Sources: Department of Labor and Council of Economic Advisers.




OUTLOOK FOR LABOR MARKETS IN 1966
So far, the ability of both workers and employers to adjust rapidly to
changing economic conditions has permitted the economy to move toward
full employment without experiencing significant labor shortages which
could retard growth or endanger price stability.
As production has expanded and the hiring of certain skills has become
more difficult, managements have resorted to the normal procedures used in
prosperity to economize on skilled labor: redesigning and subdividing of
specific jobs; upgrading of experienced employees to more skilled classifications; intensifying on-the-job training for younger workers; stepping
up investment to modernize facilities; wherever possible, concentrating
the increase of production in plants in areas of labor surplus; hiring women
for jobs usually filled by men; recruiting workers abroad; hiring students on
a part-time basis; and raising starting salaries.
According to data recently gathered by the Department of Labor, noticeable shortages were reported only among engineers, teachers, technicians,
skilled metal workers, and certain kinds of repairmen. Shortages of some
of these types of workers have been common for some years, but they have
not interfered with rapid gains in production.
Some difficulties in recruiting labor have been reported by employers in
medical services, restaurants, and laundries. Employment in household
services actually declined between 1964 and 1965. These are generally the
low-wage sectors of the economy. Hourly earnings in laundries, for instance, are more than 40 percent lower than those in manufacturing and
30 percent below the earnings in wholesale and retail trade. When unemployment was high, these low-wage employers could count on an ample
supply of labor. But it is inevitable that as unemployment is reduced they
will encounter stronger competition for labor from higher paying employers.
If the past is any guide, the low-paying establishments will solve their labor
problems by more extensive hiring among the groups with relatively high
unemployment rates—nonwhites and youths—by raising their wages more
rapidly than other firms, and by mechanization and more efficient use of
their employees.
Job openings in interstate recruitment with the U.S. Employment Service
rose sharply at the end of 1965 and were about 65 percent higher than
in the same period of 1964, but there were still 224 active job applicants
registered with public employment offices for every 100 registered job
openings. Pilot surveys of job vacancies in 1965 indicate that, on an
over-all basis, available opportunities were still lagging behind the number
unemployed. However, the index of help-wanted advertising in 52
cities compiled by the National Industrial Conference Board reached
a record high at the end of last year. Our present information system on
job vacancies is little more than fragmentary. A comprehensive set of
vacancy statistics, comparable to those collected in other countries, would
be a most useful tool of analysis.




73

The further reduction in unemployment expected this year seems likely
to follow the 1965 pattern, with perhaps even greater relative gains made
by the long-term unemployed, older workers, unskilled workers, and nonwhites. Employment of teenagers can be expected to increase sharply.
Additional women may be drawn into the labor force. And migration from
agriculture and from depressed areas may accelerate. These are the principal remaining sources of labor for industrial expansion.
The enlistment or conscription of young men into the armed services reduces the supply of civilian labor. By the end of 1966, about 20 percent
of the male labor force in the 20-24 year old category will be in the armed
services. This represents only a small increase from the 17 percent prevailing figure in 1964, before the current buildup. A relatively large part
of the increase in the armed services in 1966 will be in the 16-19 year age
group. But with the substantial labor force growth, the percentage of this
age group in the armed services by December 1966 should be little different
from the 14 percent figure in 1964. The increase in military personnel is
expected to total about 300,000 in 1966. This is modest, compared with
the Korean war period, when over a million men joined the armed services
in 9 months, about 2 million in 2 years.
The current military increases are coming in sectors of the labor force
where unemployment rates are high. In December 1965, unemployment
among males 20-24 years old was 5.3 percent (unadjusted for seasonality),
1.5 percentage points above the national average for the entire labor force,
and unemployment of males in the 16-19 year group was 12.4 percent. In
short, men removed from the civilian labor force to go into the armed
services are coming from parts of the labor force where they should be more
readily replaceable.
Our labor markets will be able to support a large further expansion of
the economy. But as production rises and unemployment falls, it will become more difficult for employers to find exactly the right man for each
new job. The need for upgrading, for on-the-job training, and other
changes in employment practices will become greater. Public and private
manpower policies will face their greatest challenge.
As shortages of some skills have begun to develop, programs to train
highly skilled people have been intensified under the Manpower Development and Training Act. For example, current activities include an on-thejob training contract with the Chrysler Corporation to train automobile
mechanics, and a contract with the National Tool, Die, and Precision Machine Association to double the number of tool and die trainees. Many
contracts are presently under negotiation to provide skilled workers for
such defense industries as aircraft, ordnance, and electronics. Also, improvement in the Employment Service will help to fill job vacancies.
Active manpower policies are discussed in detail in Chapter 3. They have
already contributed importantly to making the labor force better suited for




74

present job requirements.
1966.

Their importance will become even greater in

EMPLOYMENT GOALS
The 1962 Annual Report of the Council specified an interim unemployment target. It was stated that "in the existing economic circumstances, an
unemployment rate of about 4 percent is a reasonable and prudent full employment target for stabilization policy. If we move firmly to reduce the
impact of structural unemployment, we will be able to move the unemployment target steadily from 4 percent to successively lower rates . . . circumstances may alter the responsiveness of the unemployment rate and the
price level to the volume of aggregate demand. Current experience must
therefore be the guide." It was made clear that this goal "should be
achievable by stabilization policy alone. Other policy measures . . . will
help to reduce the goal attainable in the future below the 4-percent figure."
The unemployment rate has now virtually reached the interim target and
is projected to fall below 4 percent in 1966. There is strong evidence that
the conditions originally set for lowering the target are in fact being met,
and that the economy can operate efficiently at lower unemployment rates.
The quality of the American labor force has been improving steadily. In
1957, the last year in which unemployment was 4 percent, workers had an
average of 11.6 years of schooling; by 1965 they had 12.2 years. Whereas
33 percent of all workers had no more than 8 years of education in 1957,
the figure had fallen to 23 percent by 1965. The ease of attaining a given
over-all unemployment rate is increased by this higher educational achievement. To be sure, jobs may now require, on the average, more education than they did in 1957. Nevertheless, it is highly significant that,
if the unemployment rate for every education group were the same now
as it had been in March 1957, the over-all unemployment rate would be 0.4
percentage point lower than it was in 1957.
Partly offsetting the better educational preparation of today's workers
is the increasing number of young and relatively inexperienced men and
women who now constitute a larger proportion of the labor force than they
did in 1957. These workers normally have higher unemployment rates
than older, experienced workers. As a result, if every age and sex group in
1965 had the same unemployment rate as in March 1957, the over-all unemployment rate would now be 0.1 percentage point higher than it was in 1957.
The training and manpower policies instituted since 1961 are beginning
to reduce the attainable level of unemployment both by raising the cmployability of workers and by directly altering their labor force status. During 1966, an average of about 300,000 youths will be engaged in special
work and training programs. If most of these youths would otherwise have
been unemployed, the programs would be reducing the national unemployment rate by about 0.1 to 0.2 percentage point. The absorption of these




75

workers does not appreciably reduce the supply of labor available for other
jobs while they are in training; it does increase their suitability for other
employment when their training is completed.
The substantial increase in the number of young men entering military
service will have a direct impact on the attainable unemployment rate of
civilians. On the assumption that most of the added young men in the
armed services in 1966 would otherwise have been in the civilian labor force,
but that most of the jobs they would have filled can readily be filled from
among the unemployed, the attainable unemployment rate would be lowered by about 0.2 percentage point.
The improved ability of the economy to sustain lower unemployment
without inflation arises not only from developments in the labor market.
Other factors, which could not be taken into account when the interim
target was first set, are equally relevant: the fact that so fine a balance could
be maintained between production and capacity—both over-all and by sectors—as the economy moved toward full employment; the higher productivity gains; the increasing keenness of international competition in our
markets; the more responsible attitudes displayed by business and labor in
wage and price decisions; and the dependability and prudence of consumer
and business decisions.
Thus the economic circumstances which accompanied a 4 percent unemployment rate in 1957, or which it was assumed in 1962 would accompany
such a rate, now correspond to a lower national unemployment rate. While
we will find satisfaction in reaching the interim target, it would be incorrect
to identify this accomplishment with full attainment of the goal of
an employment opportunity for every American willing and able to work.
Our target should be steady progress, at a pace which permits the economy to adapt to decreasing unemployment rates and growing demand in
the product markets. Private and public policies should be able to preserve
the reasonable cost and price stability which is necessary for sustainable
progress.
LABOR COST TRENDS
Labor costs per unit of output are an important determinant of over-all
cost and price changes. In the postwar period, their widely varying
movements have frequently been associated with similar changes in the
price level (Chart 10).
Labor costs per unit of output reflect both hourly compensation and
output per man-hour or productivity. Increases in compensation raise unit
labor costs; increases in productivity lower it. Whether labor costs per
unit of output rise during the particular period depends on the relative
balance between increase of compensation and of productivity.




Chart 10

Changes in Compensation, Prices, and Productivity
in the Private Economy
PERCENTAGE CHANGE FROM PRECEDING YEAR

15

1948

1950

1952

1954

1956

1958

1960

1962

1964

10
OUTPUT PER MAN-HOUR-2/

nnn

n 11 n 11 1948

1950

1952

1954

1956

1958

1960

1962

1964

1948

1950

1952

1954

1956

1958

1960

1962

1964

1960

1962

1964

-5
10
PRIVATE GNP DEFLATOR

n

HI
WflT

1948

1950

1952

1954

1956

1958

1 TOTAL COMPENSATION DIVIDED BY ALL PERSONS MAN-HOURS WORKED.
i / P R I V A T E GNP DIVIDED BY ALL PERSONS MAN-HOURS WORKED.
3/COMPENSATION PER MAN-HOUR DIVIDED BY OUTPUT PER MAN-HOUR.
SOURCES: DEPARTMENT OF LABOR, DEPARTMENT OF COMMERCE, AND COUNCIL OF ECONOMIC ADVISERS.

795-983 O—6'6



6

77

WAGES

Wage movements of recent years must clearly be characterized as moderate.
During the first 4 years of the expansion, gross hourly earnings of manufacturing workers rose at an average annual rate of 3.2 percent; corrected
for overtime, the annual increase averaged 2.7 percent. Outside of manufacturing, the record is more varied. In mining, gross hourly earnings
increased at an average annual rate of only 2.4 percent, and in wholesale
trade at a rate of 3.3 percent; but in construction the average yearly increase
was 3.8 percent and in retail trade 3.9 percent. When account is taken of
increases in fringe benefits, the corresponding figures for total compensation
per man-hour would in most cases undoubtedly be somewhat higher.
Nevertheless, when combined with the strong yearly gains in productivity,
the average increase in total hourly compensation was consistent with relative stability of average unit labor costs throughout the economy.
During the past 12 months, wages have been rising at a pace little different from that of earlier years. Gross hourly earnings of manufacturing
workers rose in 1965 by 3.1 percent, and the yearly increase of straight-time
earnings was 2.8 percent. In the nonmanufacturing sector, most industries
had somewhat larger increases than in the earlier expansion years. Between
November 1964 and November 1965, hourly earnings increased by 3.1 percent in mining and in wholesale trade, 4.5 percent in construction, and 5.3
percent in retailing.
The many collective bargaining contracts signed during 1965 were characterized, by and large, by a relative moderation of gains in wages and
fringe benefits. In some industries—aerospace, for example—the negotiated increases exceeded somewhat the Council's guideposts for noninflationary wage behavior. But in other industries—steel, rubber, maritime
trades, New York newspapers, aluminum—the results of the contracts either
fell within or were close to the guidepost standards. The settlement in
rubber provided an increase of 3.2 percent, that in aluminum 3.5 percent,
and the important steel settlement also 3.2 percent. The pay increase for
Federal workers likewise fell within the guideposts. A special Labor Department analysis of the major contracts (those covering 10,000 workers or
more) that were concluded during the first 9 months of 1965 indicates that
the average yearly wage adjustment resulting from these contracts was 3.3
percent; for contracts covering a period longer than a year, the adjustment
was smaller—only 2.7 percent. This analysis considered only wage changes;
inclusion of fringe benefits might raise these figures by three-fourths of a
percentage point.
In construction, the 1965 contracts—as in previous years—generally
resulted in higher wage advances than elsewhere. Between October 1964
and October 1965, union wage scales increased, on the average, by 4.1 percent. Construction is clearly an industry that raises serious problems for
wage-price stability.




The generally satisfactory record of 1965 wage contracts has important
implications for wage trends in 1966. Many industries have negotiated
long-term agreements. The only major industries which will negotiate new
contracts in 1966 will be electrical machinery, telephone, and construction;
major reopenings could take place in railroads and coal mining. Because
of the relatively light calendar of expiring contracts, the basic pattern of
wages for most key industries has already been set for 1966.
It is likely, however, that compensation will rise more rapidly in the lowwage and largely nonunionized sectors of the trade and service industries.
Many workers at the bottom of the economy's wage structure now face
opportunities of moving into more advantageous jobs. Accordingly, wage
increases in the low-paid sectors are likely to exceed the average wage rise
in the economy as a whole. As indicated by the 5.3 percent increase of
hourly earnings in retail trade between late 1964 and late 1965, this has
already been occurring.
PRODUCTIVITY AND UNIT LABOR COSTS
A key element in the impressive U.S. record of price stability has been
the high rate of productivity advance. Based on tentative figures for 1965,
productivity in the private economy (real total private GNP divided by
total private man-hours worked) has grown at an average rate of 3.6 percent a year since 1960. Because of these large productivity gains, average
annual increases of 4.2 percent in compensation per man-hour have raised
average unit labor costs in the private economy by only 0.6 percent a year.
This record contrasts sharply with the experience in the short expansions of the mid-1950's. In the period between the business cycle peaks of
1953 and 1957, unit labor costs increased by 2.1 percent a year; compensation per man-hour rose by 4.6 percent a year while output per man-hour
advanced only 2.4 percent a year. In 1956 and 1957, an average annual
increase of 4.5 percent in unit labor costs exerted a strong upward push on
prices. Between the 1957 and 1960 cyclical peaks, average hourly compensation gains were more moderate—4.2 percent a year—but since productivity was rising at a rate of only 2.7 percent, labor costs were pushed
up by 1.4 percent a year.
Manufacturing productivity figures based upon the index of industrial
production of the Federal Reserve Board show output per employee manhour rising by 4.0 percent a year since 1960. Comparing this figure with
the 3.6 percent average advance in hourly manufacturing compensation implies that unit labor costs in manufacturing were lower in 1965 than in 1960.
According to preliminary figures for 1965, productivity in the entire private economy increased by about 2.8 percent—below the average for the
whole expansion and slightly below the historical average for the entire postwar period. Compensation per man-hour in the private sector rose by 3.7
percent, resulting in an increase of 0.9 percent in unit labor costs. Productivity in manufacturing, based upon the industrial production index,




79

rose by 3.8 percent and hourly compensation increased by only 3.0 percent.
Thus, unit labor costs in manufacturing decreased by 0.8 percent last year.
The good record of productivity during the past 5 years was aided by
the sustained expansion of output that has boosted operating rates. As
operating rates improve, capital and overhead labor are more effectively
utilized. These oversized gains in productivity cannot be expected to continue indefinitely. As preferred operating rates are reached and surpassed,
older, less efficient standby equipment must be used, and less-skilled labor
must be hired and trained. Partly offsetting this, new and more efficient
plant and equipment will be continually coming into use. On balance,
therefore, the rate of increase of productivity can be expected to gravitate
toward its long-run trend, and the more modest gain in 1965 undoubtedly
reflects this.
The exact value of the trend rate of productivity growth—that rate which
technological advance, the constantly improving quality of the labor force,
and the growing capital stock can sustain—is difficult to ascertain. To
isolate the "underlying" trend, adjustments for all short-run factors would be
required. But these adjustments cannot be made perfectly. Nor is it
likely that the "true" trend would remain precisely constant over time.
The factors determining productivity growth have not been and will not
be historical constants.
A long-run historical average provides one estimate of the trend rate of
productivity growth. The postwar average, from 1947 to 1965, is 3.3 percent. But this may reflect especially favorable factors in the immediate
postwar years. On the other hand, the much lower average of 2^2 percent
for the longer period from 1919 to 1965 is subject to the suspicion that it
seriously understates the higher trend in the depression-free postwar period.
The productivity trend can also be estimated from data for the shorter
postwar period, using sophisticated statistical techniques to adjust for the
short-run factors. Several such techniques have been employed by the
Council to obtain the best possible estimate of the postwar trend rate of
growth of productivity. While these different methods do not yield identical estimates, for the private sector they fall within the range of 3.0 to 3.3
percent a year.
In 1966, the increase of productivity is expected to continue close to its
trend value, though not likely to exceed it. The increase in employer
payroll taxes which occurred on January 1 will raise average employment
costs this year by about two-thirds of 1 percent. The expected rise in productivity, however, should hold the average increase in unit labor costs to
about l / 2 percent for the entire private economy. These costs should be
approximately stable in manufacturing.
COSTS AND PRICES IN SELECTED PROBLEM AREAS
Some sectors in the economy pose particular problems for the achievement of cost-price stability, either because of especially unfavorable long-




80

term cost trends or because of potential market imbalances. Five of these
areas are examined here: agricultural and food products; nonferrous metals;
machinery; construction; and medical services.
FOOD
From 1961 to 1964, consumer food prices rose by only 1.0 percent a year
while all other consumer prices were rising by 1.3 percent. But from
December 1964 to December 1965, prices of food increased by 3.5 percent
while other consumer prices rose by 1.6 percent. The same pattern is even
more evident at the wholesale level. Between December 1964 and December 1965, prices of processed food rose by 8.5 percent and of farm
products by 11.1 percent. These increases accounted for two-thirds of the
total rise in the wholesale price index over this period.
About three-fourths of the rise in retail food prices in 1965 can be attributed to a 13.5 percent advance in meat. There were smaller price
increases in poultry, fish, dairy products, and bakery products. On the
other hand, prices of fruits and vegetables declined by 3.1 percent during
the year, after reaching a peak in the spring.
At the wholesale level, meat prices rose by 29 percent in 1965, in response
to a 34 percent rise in livestock prices. Particularly large increases were registered in hog prices, but cattle prices were also up substantially.
These sharp increases were the result of a combination of rapidly growing
demand for meat and an unfavorable supply situation. Rising personal incomes and a growing population increase the demand for meat. Supplies,
on the other hand, are relatively inelastic in the short run because of the
long time period required to expand livestock breeding stocks.
Hog production was reduced during the second half of 1964 and in 1965
as a result of depressed prices received by hog producers in 1963 and 1964.
The resultant high pork prices led consumers to switch to poultry and other
meats; although beef production increased, supplies were not sufficiently responsive to keep beef prices from rising. Because of the much shorter period
required to produce poultry, the supply of broilers responded rapidly to
satisfy part of the substantial increases in demand. Thus, poultry prices rose
much less than beef or pork prices in 1965—by 7.2 percent in 1965 at the
wholesale level and 9.3 percent at the farm.
In the past, hog production has expanded when hog prices were favorable
in relation to feed (mostly corn) costs. The hog-corn price ratio has been
extremely favorable to producers in recent months. But the increasing
importance of nonfeed costs (labor, overhead, etc.) in hog production has
made the hog-corn ratio a less reliable indicator of future production.
Nevertheless, the evidence indicates that hog producers are now responding
to favorable prices; farmers intend to raise 7 percent more pigs during
December 1965-May 1966 than they did one year earlier. Thus, while
hog prices will probably continue strong throughout the first half of this
year, they should begin to decline in the second half when the expanded




8l

spring crop is marketed. Beef production will increase slightly in 1966, but
beef prices will probably continue at their high levels through most of the
year.
General prosperity was a contributing factor to the rise in food prices
in 1965, but supply conditions certainly were the major element. This
year should witness a less rapid increase in food prices than was experienced during 1965. Meat prices may rise further in the first half of the
year, but some relief is expected in the second half when expanded supplies reach the market. Citrus fruits and fresh vegetables should have
lower average prices in 1966 than in 1965 if normal weather prevails.
Poultry is also expected to be cheaper.
The rise in farm and food prices has had some limited spillover into
the industrial sector. Although the extent of automatic wage escalation
with consumer prices is very much reduced from prior years, the wages of
about 2 million workers have been raised by the faster rise of consumer
prices in 1965.
NONFERROUS METALS
In the last 2 years, consumption of nonferrous metals by U.S. industry
has risen substantially. The prices of these primary metals have advanced
rapidly, with aluminum ingot up 6.5 percent from December 1963 to
December 1965, copper ingot 16.1 percent, pig lead 28.1 percent, pig tin
33.3 percent, and slab zinc 11.1 percent. These increases produced higher
prices for fabricated products and were an important factor in the over-all
increase of industrial prices.
Earlier in the postwar period, the Government accumulated large stockpiles of a wide variety of materials, including many of the nonferrous metals.
Consistent with long-range security objectives, substantial supplies of materials can be made available to help to meet the requirements of the increased military effort and an expanding civilian economy. In the coming
year, the availability of the stockpiles should help to prevent a repetition of
the imbalances in the markets of certain of these materials that occurred
during the last 2 years.
Copper was particularly affected when expanding world demand, coupled with production setbacks resulting from strikes and political troubles
in the Republic of the Congo, Zambia, and Chile, caused wide price swings
in the secondary markets.
The Government has repeatedly eased pressures by releasing surplus copper from its stockpile. In January 1965, 20,000 tons, and in April 100,000
tons, were released for sale to commercial users. The Mint obtained 30,000
tons in December 1964 and 110,000 tons last October from the stockpile for
its coinage needs. After price increases in October by major foreign producers, the President announced a 4-point program, including the release
of an additional 200,000 tons of copper from the stockpile; controls on the




export of copper scrap; removal of the 1.7 cent tariff on imported copper;
and a request to the Commodity Exchange of New York to raise margin
requirements to curb speculative trading in copper futures. In January
of this year, export controls were extended to virtually all copper and
copper products.
The outlook for copper remains highly uncertain because of political
factors abroad. Government policy will continue to strive to maintain supplies adequate for rising military and civilian demands.
Domestic production of lead and zinc has recently been insufficient to
satisfy high demands, and surplus metal was released from the stockpile at
the request of the industry. Further, the President, on the recommendation
of the Tariff Commission, revoked the import quotas which had been instituted during a period of excess supply in 1958. No imbalances are
expected in 1966.
The demand for aluminum rose rapidly in 1964 and 1965. Defense requirements will continue to increase in 1966, to between 300,000 and
400,000 tons a year—double the requirements before the increased military
activities in Vietnam. The industry has been operating close to capacity
but supplies have been augmented by a rising flow of imports. Ingot
prices began to rise in late 1963. Announcements of further price increases
were made by producers in October 1965.
To help to restore balance in the market for primary aluminum, the
Federal Government intensified negotiations for the orderly release of the
1.4 million ton stockpile of aluminum in excess of emergency needs. Agreement was reached with the industry, calling for sale to the industry of a
minimum of 100,000 tons of aluminum a year for 10 to 12 years; in the
event that added defense requirements exceed this level, additional releases
can be made up to a maximum of 200,000 tons a year. This release will
assure continued availability of sufficient amounts of aluminum and should
preserve balance between production and demand in the market at stable
prices.
MACHINERY
In the inflation of the mid-1950's, higher machinery prices played an
important part in raising the wholesale price index. The index for electrical machinery increased by 16.2 percent between 1955 and 1957, construction machinery by 16.6 percent. This year will again see heavy
investment spending, and the possibility of similar machinery price increases
must be examined.
In December 1965, the wholesale price index of nonelectrical machinery
was 11.9 percent above the 1957-59 average. In the last year, prices rose
by 1.8 percent, compared with an average annual increase of V/2 percent in
the preceding 6 years. Some of these increases probably reflect an improved
product, not fully adjusted for in the index. But prices have also reflected
sharply rising demands, expanding profit margins, and some increases in costs.




83

Trends of wage rates and material costs for the industry have been moderate in the past few years. Gross average hourly earnings advanced at an
average rate of 3.0 percent a year from 1960 to 1964. In 1965 they were up
2.8 percent, partly reflecting the greater use of overtime. The Federal Reserve Board's index of industrial materials prices rose by more than 1.0 percent in 1965, after 4 years of relative stability. The price of steel, a major
input, rose little, in sharp contrast to the 1950's.
Profits in 1965 were appreciably above 1964. Industry profits in nonelectrical machinery in the first 3 quarters were 23 percent higher than a
year earlier, to yield a 14 percent after tax return on equity.
Avoiding bottlenecks in the machinery industry depends on the expansion
of capacity to meet rising demands and on the availability of skilled labor.
The last 5 years have seen a steady rise in the output of machinery. In
1960, production of nonelectrical machinery was at a rate equal to 70
percent of industry capacity. Modest output increases in the next 2 years
raised operating rates to 79 percent of capacity by the end of 1962. Output
spurted by 12 percent in 1964, reflecting the large rise in investment expenditures, bringing the industry's operating rate to 87 percent by the end of the
year. Another 12 percent gain in output occurred in 1965, as business investment rose once more, higher farm income raised sales of agricultural
machinery, and defense needs called for increasing amounts of construction
machinery. During the year, the nonelectrical machinery industry operated at about 88 percent of capacity, still 3 percentage points below the
preferred rate. The industry's own anticipated spending on plant and
equipment promises to raise its capacity about 8 percent in 1966. Thus,
while utilization rates may rise, no general pressure on productive capacity
is currently foreseen. Some limited segments of the industry will be straining
capacity, however.
The backlog of unfilled orders for nonelectrical machinery has been relatively steady during the expansion, rising gradually from 2.6 months of shipments in 1963 to 2.8 months in 1964 and 3.2 months in November 1965.
In the sensitive machine tools sector of metalworking machinery, the backlog
of unfilled orders was 7.7 months in October for metal cutting tools, up from
6.8 months a year earlier. For metal forming tools, however, the backlog
fell to 10.2 months, from 11.1a year earlier. Given current operating rates,
these backlogs are not unduly large.
In 1965, the industry expanded its employment by 7.0 percent, training
many new workers to fill its enlarged requirements. This year, another large
employment increase will be necessary, and even more new workers will
have to be trained through private and public efforts.
In summary, increased nonelectrical machinery production should be able
to provide the equipment needed by an expanding economy. The industry
may have some difficulty finding enough skilled labor. But given the expected trends in costs, and the apparent availability of adequate physical




capacity, the large price increases which disturbed investment in the mid1950's are not likely to recur this year.
The electrical segment of the machinery industry maintained stable prices
in 1965. Prices were no higher than in 1964, and indeed were 3.2 percent
below the 1957-59 average. Capacity in this industry has been ample, costs
have been stable, and competition, including that from abroad, has been
keen. These factors will continue to support price stability in 1966. The
wage negotiations this October will affect cost trends in the future.
CONSTRUCTION
Construction is one of our largest industries. In 1965, it employed more
than 4 million workers. Construction prices and wages have been rising
more rapidly than in most other sectors of the economy. Between 1960
and 1965, price indexes of finished construction rose by 2.2 percent a year
on the average. Over the same period, both average hourly earnings and
union wage rates of construction workers were rising at an annual rate of
3.8 percent. Larger fringe benefits probably bring the increase in total
hourly compensation a fraction of a percentage point higher.
Higher prices have reflected both substantial increases in employment
costs and some possible widening of profit margins. Wholesale prices of
construction materials have been relatively stable during most of the expansion. While estimates of labor productivity in construction are highly
imperfect, they nevertheless suggest that the annual increase in output per
man-hour is below the economy-wide average, and substantially below the
annual increase in employee compensation.
During the past year, the rise in construction prices has accelerated. The
increase in the GNP deflator in 1965 was 2.9 percent for total construction,
2.7 percent for nonresidential construction, and 3.3 percent for private
residential construction. The rise for residential building is particularly
disturbing in view of the fact that there has been no increase of activity in
this sector for several years.
The rate of wage increase in construction has also accelerated. Between
October 1964 and October 1965, the average increase in union rates of construction workers was 4.1 percent; and average hourly earnings increased
during the year by 4.5 percent. Moreover, many of the construction contracts signed last year provided relatively large deferred compensation increases in 1966 and 1967. Again this year, construction costs and prices are
expected to rise more rapidly than the over-all GNP deflator.
The inflationary cost and price situations in the industry reflect to some
extent its prosperity, especially in its industrial and commercial sectors.
They also suggest the existence of more permanent structural problems
which should be of vital concern for both the industry and the community




at large. There have been many important technological changes in various
sectors of the industry, but the total technical progress is clearly insufficient.
Ways must also be found to expand more quickly the supply of skilled
construction labor. Restrictions on entry not only retard the growth of the
industry but also have adverse social effects, since they tend to keep Negro
youths out of attractive types of employment. To meet the needs of rapid
growth and equality, vocational programs for skilled craftsmen must be
stepped up.
There is need for institutional arrangements that will increase the geographical mobility of skilled workers. Labor mobility in construction has
been reduced by the spread of locally instituted welfare and pension plans
whose benefits are not "portable" from one,area to another. Development
of national pension and health and welfare programs as well as broader
vesting and interarea portability of rights and benefits will contribute to
greater mobility and more efficient utilization of the present supply of construction workers.
MEDICAL SERVICES
Persistently and strongly rising fees and charges for medical services have
exerted an upward influence on the consumer price index throughout the
postwar period. As shown in Table 13, medical care prices, which account
TABLE 13.—Changes in consumer prices for medical care, 1947-65
Annual percentage change in consumer prices
Medical care

Period

Medical
services

Total
1947 to 1953 _
1953 to 1960
1960 to 1965
1960 to 1961 .
1961 to 1962
1962 to 1963
1963 to 1964
1964 to 1965

Prescriptions
and drugs

All other
items

4.2
3.7
2.5

2.1
1.7
-.8

3.0
1.3
1.2

3.0
2.6
2.5
2.1
2.4

_-

4.6
4.0
3.1
3.7
3.3
3.0
2.4
3.2

-1.2
-1.5
-.9
-.3
-.3

.9
1.1
1.1
1.4
1.5

Source: Department of Labor.

for about 6 percent of consumer expenditures, have risen twice as rapidly
as the average of all other consumer prices for most of the postwar period,
and have contributed one-tenth to two-tenths of 1 percent to the rise of the
index in most years.
In the most recent 5 years, medical costs have risen less rapidly than during the 1950's. This has been due primarily to the fact that prices of prescriptions and drugs have been declining. Also, the increase in charges for
medical services— including doctors' and dentists' fees, eye examinations and




86

eyeglasses, and hospital rates—has slowed down in comparison with the earlier period.
The higher hospital and doctor charges reflected in the consumer price
index may overstate the true increase in the cost of medical care when
account is taken of the rising effectiveness of the care received. With the
dramatic improvements in medical technology that have taken place over
the postwar period, many patients get more real "services" from each day's
stay in the hospital, or each visit to the doctor, than before.
The basic sources of rising medical costs are the inadequate supply of
personnel and facilities, the sharply rising cost of hospital construction and
of continually more complex medical equipment, the rapid increase in salaries of medical personnel relative to productivity gains as presently measured, and the expanding demand for medical services. Although some of
these conditions may be relieved in the longer run, they will not be in the
immediate future. The advent of Medicare will add to the expanding
demand for medical services and facilities. Thus, the urgency of public
policies to augment medical care resources and to improve their organization
for efficient use will be even greater.
OUTLOOK FOR COST-PRICE STABILITY IN 1966
The above review shows that the economy is making a good adjustment to
the altered economic environment. With the unemployment rate at 4.1
percent and clearly moving downward, there is strong evidence that the
substantial inflation of industrial prices experienced in the mid-1950's is not
recurring.
The outlook for unit labor costs is good. Although a few individual
settlements may be out of line, the general advance of wages should not
accelerate this year, and productivity can be expected to remain close to the
trend rate. So long as costs do not move up substantially, price changes will
remain limited.
Producers are generally able to meet rising orders out of growing capacity
and to find the labor needed for expanding production. Competition remains keen, and imports are limiting price advances in several key sectors.
There are occasional examples of shortsighted pricing policies on the part
of a few firms, and there will probably be more. But most industries have
learned to fear the fool's paradise of rising prices that produce unsustainable
profits, shrinking markets, and permanently higher labor costs.
With the economy now approaching full utilization of its resources, the
risk of price increases becomes greater. Occasional disturbances to the
supply of some key commodities are likely to occur, although their specific
form cannot be foreseen. The ability of employers to redesign jobs and
train additional skilled workers may not fully match the rising demands for
skilled labor in all industries.




87

But so long as labor costs remain generally stable, difficulties in obtaining
materials remain isolated, consumers and businesses retain moderate expectations, and key decisionmakers continue to respect the public interest
in setting wages and prices, the prospects are excellent that the recent
generally good record of costs and prices will continue.
GUIDEPOSTS FOR NONINFLATIONARY
PRICE AND WAGE BEHAVIOR
Most earlier periods of high employment since World War II have been
accompanied by inflation. In some of those years, the cause clearly was
excessive demand. In other years, no general excess of demand was evident, yet prices continued to creep upward. The movement continued
even during some periods in which—on any reasonable criterion—over-all
demand was quite inadequate. The exact diagnosis remains a matter of
some disagreement among economists. But almost all agree that an important part of the explanation lies in the fact that, in many industries,
unions or managements or both possess considerable discretionary power
to set wages and prices, and that in too many instances they have used that
power to raise wages and prices in ways not consistent with basic supply
and demand forces in the market.
The apparent "inflationary bias" in our wage-making and price-making
institutions has been of almost continuous concern for the Council of
Economic Advisers for many years. Appeals for responsibility and moderation—for taking the public interest into account in wage and price decisions—have had a perennial place in successive Economic Reports. In its
Annual Report of January 1962, the Council for the first time attempted to
provide private decisionmakers with rather more specific standards for
judging whether their decisions were responsible and took adequate account
of the public interest. These standards or "guideposts" were also designed
to permit the public to reach its own conclusions concerning the degree
of responsibility exercised by leaders of business and labor.
INCREASING IMPORTANCE OF THE GUIDEPOSTS
In the years since 1962, the guideposts have gained increasing significance. The slow and difficult progress in restoring equilibrium in our
international balance of payments has underlined the necessity that American goods retain or improve their competitive position in export markets
and in our own market. Our goal of balance of payments equilibrium in
1966 and thereafter will permit no retreat from cost-price stability.
During the recent years of still excessive unemployment and idle capacity,
strong competition for jobs and markets reinforced a growing sense of
responsibility on the part of labor and management. The fuller use of
resources achieved last year and be excellent prospects for 1966 may reduce




that reinforcement. We now confront the task of reconciling full employment with stable prices.
The record reviewed in previous sections of this chapter makes it clear
that the overwhelming majority of private wage and price decisions in recent
years has been consistent with the guideposts, whatever the extent to which
the guideposts may have consciously entered into the decisions reached. It
is clear, however, that in many instances the guideposts have consciously
affected these decisions. On numerous occasions, Government officials have
specifically reminded unions or managements of the guidepost standards—
either publicly or privately, either generally or with reference to specific situations. Several of the more important of these situations have attracted
considerable public attention.
In January 1965, the President requested the Council of Economic Advisers to prepare an analysis of steel prices, following certain increases in
such prices and at a time when important wage negotiations were pending.
The Report, made public in early May, analyzed the position of the industry
and the factors affecting it. It showed that wage and price decisions consistent with the guideposts would be in the interest of both labor and management and of the Nation. Later, the Government helped the two parties
to reach a peaceful settlement in the steel wage negotiations. A damaging
strike was avoided, and a settlement was achieved within the wage guideposts. According to the best estimates of its cost available to the Government, the settlement averaged 3.2 percent a year, computed over the full
39-month period.
Following the labor settlement, prices on tin plate were raised in October;
this was accompanied by a price reduction on a new black plate, which is
expected to substitute increasingly for tin plate in many uses. At the
year's end, the Bethlehem Steel Company announced a $5 a ton increase on
structural steel and pilings. The Council pointed out that such an increase
was not justified under the guideposts. In January, the U.S. Steel Corporation announced a smaller increase, accompanying it with price reductions on
other steel products.
In October, the Council prepared a guidepost analysis of price increases
initiated by producers of primary aluminum; the companies later rescinded
these increases.
Also in October, the President, by threatening a veto, persuaded the Congress to enact a pay increase for civil service and postal employees of the
Federal Government which was within the guideposts.
These actions and many others clearly reaffirmed the Administration's
strong commitment to the guideposts as an essential pillar for price stability.
THE GUIDEPOSTS RESTATED
1. The general guidepost for wages is that the annual rate of increase of
total employee compensation {wages and fringe benefits) per man-hour
worked should equal the national trend rate of increase in output per manhour.




2. The general guidepost for prices is that prices should remain stable in
those industries where the increase of productivity equals the national trend;
that prices can appropriately rise in those industries where the increase of
productivity is smaller than the national trend; and that prices should
fall in those industries where the increase of productivity exceeds the national trend.
Within a given industry, the guideposts allow for individual wage and
price adjustments that do not affect the over-all wage or price level of the
industry. Increases for some groups of workers or products can be balanced by reductions for others.
Observance of the guideposts would mean that unit labor costs would
decline in the industries where productivity gains are above average, and
rise in industries where such gains are below the national average. Average unit labor cost in the economy would remain constant. Similarly, the
decrease of prices in industries with above-average increases in productivity
would offset the price rises in industries with below-average productivity
gains. The average level of prices would remain stable.
Adherence to the standards would mean that all the participants
in the productive processes—employees and owners of invested capital—
would share in the over-all gains in productivity created by the growth
of capital equipment, improved technology, and a better educated, healthier,
and more skilled labor force. This can readily be seen from a simple example. Suppose output in an industry is 1 million units, each selling at
$1, for total sales of $1 million. Suppose labor compensation is $600,000.
If productivity and wages both rise 3 percent, and employment remains
unchanged, production will expand to 1,030,000 units, which, at $1 a unit
would raise revenues to $1,030,000. Labor compensation would rise to
$618,000. Labor would thus receive 60 percent of the added value, keeping unchanged the share of labor costs in total revenues. If prices of
materials and other purchased inputs were unchanged, and the quantities
used were expanded in proportion to output, then gross income of owners
would rise in the same proportion as wage income. Thus, the division of
income between labor and capital would remain unchanged. And with
capital requirements per unit of output unchanged (as has been approximately true), the return per unit of capital would remain unchanged as
well.
The actual sharing of gross corporate income between labor and capital
has remained virtually unchanged since World War II. There have been
repeated short-run swings, with labor's share rising in recession and falling
during expansion. Thus, for example, the share of nonwage income rose
from 27.2 percent in 1961 to 29.2 percent in 1965. This recent figure is
virtually identical with the division of income in 1955 and 1948. The
inflationary wage-price spirals of the 1940's and 1950's did not, in fact,
change the distribution of income.




Public policy is and should remain neutral with respect to wage and price
decisions that attempt to change the distribution of industry's income between labor and capital. But when such decisions lead to inflationary
pressure, they properly become a subject of public concern.
EXCEPTIONS TO THE GENERAL GUIDEPOSTS
Some exceptions to the general guideposts are necessary to promote economic objectives. Wage increases above the general guideposts may be
desirable
—where wage rates are inadequate for an industry to attract its share
of the labor force necessary to meet the demands for its products;
—where wages are particularly low—that is, near the bottom of the
economy's wage scales; or
—where changes in work rules create large gains in productivity and
substantial human costs requiring special adjustment of compensation.
Because the industries in which unions possess strong market power are
largely high-wage industries in which job opportunities are relatively very
attractive, the first two of these exceptions are rarely applicable.
On the price side, increases in price above the general guidepost standard
may occasionally be appropriate
—to reflect increases in unit material costs, to the extent that such
increases are not offset by decreases in other costs and significantly
impair gross profit margins on the relevant range of products, or
—to correct an inability to attract needed capital.
The large firms to which guideposts are primarily addressed typically
have ready access to sources of capital; moreover, the profits of virtually
every industry have risen sharply and are at record levels as a byproduct
of the general prosperity in the economy. The second exception is thus
not widely applicable in the present environment.
SHORT-RUN AND TREND ELEMENTS IN PRODUCTIVITY
AND THE GENERAL WAGE GUIDEPOSTS
In the original discussion of the guideposts in the Council's Annual Report
of 1962, it was pointed out that, "it is desirable to segregate the trend movements in productivity from those that reflect business-cycle forces." During
the last 5 years, the economy has been closing a substantial gap between
actual and potential production. This has augmented the yearly productivity gain beyond the long-term sustainable trend. Now that the economy
has little gap remaining to close, the trend of productivity gains will be
determined only by capital investment, an improving labor force, and
technological progress. The temporarily high productivity gains that come
from utilizing equipment and manpower more efficiently through higher
operating rates are largely behind us.




To assure future stability of unit labor costs, wages should increase no
faster than the sustainable trend of productivity.
The original formulation of the guideposts did not specify any particular
trend productivity figure, but rather listed various historical averages, covering different time spans and various segments of the economy. Since the
economy was just recovering from the second of two recessions in a very
short interval, it was difficult to identify the trend productivity rate from
the immediately preceding experience. This difficulty was compounded
by speculation that the trend rate might be accelerating as a result of
faster technological change, particularly the spread of automation.
In the Report of 1964, no single figure for trend productivity was specified, but in a related table the now well-known 3.2 percent appeared as the
latest figure in a column labelled "Trend productivity." The figures in that
column were described as the "annual average percentage change in output
per man-hour during the latest 5 years." A 5-year period was chosen because, at that time, it was sufficiently long to include both the extraordinarily
high productivity gains of a year of recovery (1962) and the extraordinarily
low productivity gains of a year of recession (1960). Under the conditions
of 1964, a 5-year average gave a good approximation of the trend productivity, because, in effect, it averaged out the ups and downs of cyclical productivity swings. These same conditions prevailed in 1964, and the 3.2
percent figure appeared for that year in a similar table in the 1965 Report.
Subsequent revisions of GNP data would have made the 5-year average 3.4
percent in both 1964 and 1965.
Now that the economy is at the end of its fifth year of uninterrupted expansion, a 5-year average no longer gives a reasonable approximation of the
true productivity trend. The last recession year drops out of the average,
yet the unsustainable productivity gains of a year of recovery and 4 years of
improving utilization are retained. If use of the 5-year average were continued this year and in coming years, the figure yielded by the 5-year moving
average would rise at this time to 3.6 percent and would undoubtedly fall
substantially thereafter.
An analysis of recent productivity movements was presented earlier in
this chapter. It is clear from this analysis that 3.6 percent would not be
an accurate measure of the true trend of productivity. Rather, it appears
that the long-term trend, independent of cyclical swings, is slightly over 3
percent.
For 1966, the Council specifically recommends that the general guidepost
for wages of 3.2 percent a year be continued. We make this recommendation in the light of the following additional considerations:
(1) With the economy approaching full employment and the crucial test
of our ability to reconcile our employment and our cost-price goals at
hand, it would be inappropriate to raise the guidepost.
(2) The actual productivity gain that can be expected over the next few
years is not likely to be above the trend value.




9

2

(3) The 3.2 percent rate has been consistent with the approximate stability
of industrial wholesale prices which has strengthened our competitive
position in the world. Now is not the time to abandon that standard.
(4) On January 1, employer payroll taxes to finance social security and
Medicare rose substantially, raising labor costs per hour by an average
of two-thirds of a percent. These taxes are not included in the definition of employee compensation for purposes of the guideposts, since
the rates and the benefits are determined by law rather than by collective bargaining. Nonetheless, recognition has to be taken of the
extraordinary increase in these taxes at this time, which will both raise
unit labor costs and yield future benefits to employees.
GUIDEPOST POLICY ON PRICES
The guideposts must continue to aim at complete stability of average
domestic prices. While individual prices will rise from time to time,
others must fall if upward pressure on the general price level is to be
avoided. To achieve that goal in a fully employed economy will require
that unions refrain from insistence on irresponsible wage settlements, and
an even greater willingness by management to take the public interest
fully into account in its pricing decisions. Every management with some
market power must ask itself: Is a price increase justified by increases in
costs? Or is it an attempt to take advantage of prosperity to widen profit
margins? Those companies that incur rising costs for materials or purchased services must see if these cannot be absorbed from lowered costs
elsewhere in their operations. And those companies with exceptionally
favorable productivity gains must consider whether this is the time to seek
to keep the gains in the form of still higher profits, or whether to share them
with consumers through lower prices. Unions which are in a favorable
bargaining situation must remember that wage increases that force employers to raise prices will be paid for by the workers in other industries.
Both unions and managements should reflect on the fact that if their
actions create an inflationary spiral, the most likely outcome will be restrictive fiscal and monetary policies which will aim to stop further price increases but will in the process also reduce output, cut back profits, and
reduce employment.

795-983 O—66

7




93

Chapter 3

Strengthening Human Resources

T

HE 89TH CONGRESS, in its first session, enacted a body of domestic
legislation unparalleled in 3 decades. The content and purpose of the
Great Society programs are not purely economic. Yet, their consequences
for the economy are so profound that they must be viewed as an integral
part of economic policy. Only a few of the new programs are discussed in
this chapter; Appendix A contains a more complete list of legislation of
economic significance enacted last year.
The common goal of the programs discussed here is to strengthen our
human resources: to improve the education, health, and productivity of our
working force, and to break down barriers which have prevented some
citizens from the full development and use of their abilities and training.
Since these programs were undertaken, the burdens on our national
resources have expanded. Even our wealthy Nation cannot realize all its
goals at once. The programs begun in 1965 have already invested an additional $1.5 billion in our human resources. The investment will rise further
in 1966, but at a slower rate than initially planned. Over time, economic
growth and lessened defense demands should again permit resumption of
a more rapid investment in human resources. The objectives and the
instruments for such investment were importantly expanded in 1965; the
foundation has been laid for great progress in the years ahead.
EDUCATION
"Education will not cure all the problems of society, but witho t it no
cure for any problem is possible. It is high among my own c ncerns,
central to the purposes of this Administration, and at the core of our hopes
for a Great Society." With these remarks to the White House Conference
on Education last July, President Johnson again affirmed education's high
priority.
Even when viewed in the narrow perspective of economic benefit alone,
the direct returns to individuals and society from investment in education
have been shown by recent studies to be high, and to compare favorably
with the returns available from other forms of investment. Although much
of the economic return from education accrues to individuals in the form of




94

higher productivity and earnings, education also enhances the well-being
and supports the economic growth of the community that provides it.
Recognition of the economic and social benefits of a literate and efficient
population and an informed electorate was responsible for the adoption
many years ago, and the subsequent extension and improvement, of free,
compulsory education by State and local governments.
More recently, the Federal Government's interest and responsibility in
the field of education have greatly expanded. In the late 1950's, a keener
awareness of the critical role of science and technology in determining the
Nation's economic and military strength as well as its esteem in the world
prompted the Federal Government to undertake massive new support for
scientific and technical education.
In the last two years, Federal support for primary and secondary education has also greatly expanded. Two closely related premises underlie the
decision that exclusive reliance on State and local support for primary and
secondary education is no longer adequate from the standpoint of the national interest. The first is the recognition that every community suffers
from inadequate education in other parts of the country. The second is
the recognition that education must be a key element in the attack on
poverty to which the Nation is now committed.
The resources devoted to schooling and the resultant quality of education vary widely among areas of the United States. In 1964-65, the
mean current expenditure per pupil in average daily attendance in public
elementary and secondary schools was $484; it ranged from $273 in Mississippi to $790 in New York. Even the high average expenditure in New
York did not provide a satisfactory education for many young people in that
State.
States with low personal incomes often spend relatively more on education than their wealthier neighbors. Mississippi, with the lowest absolute
expenditure per pupil in average daily attendance, devoted 4.4 percent of
personal income to education last year, compared with the national average of 3.8 percent. New Mexico spent 5.8 percent—the highest proportion
of any State—yet its per pupil expenditure still fell short of the national
average.
When nearly 6.5 million people move across State lines every year and far
larger numbers move within States, it is obvious that no community is
immune to the effects of substandard education in other localities. Studies
have shown that areas that are losing population—particularly their young
people—spend less per student on education than those which are growing.
The communities gaining population—typically our larger cities—are
crowded with migrants who are often inadequately prepared to assume
their social responsibilities or to qualify for urban jobs.
Moreover, the Nation has accepted the fundamental objective of eradicating poverty wherever it is found. Whether or not they migrate elsewhere,
inadequately educated children of poor parents are handicapped in escaping




95

the poverty in which they were reared. Education is the most powerful tool
we have for raising the productivity and motivation of the children of poor
families, and for breaking the cycle of poverty and dependency.
The tax base in communities with many poor families is often too weak
to finance good schools. Even communities with more ample resources have
frequently not provided schools which would encourage and assist children
of the poor to make their own way out of poverty. Federal assistance clearly
is required if every school district is to provide an education that is adequate
for an economy of growing interdependence and for a society that is determined to eradicate poverty.
BUILDING THE LADDER OF EDUCATIONAL OPPORTUNITY
Programs adopted in 1965 will open new educational opportunities for
millions of children and youths. These new programs will aid many disadvantaged children to get off to an equal start with others; assure them
school facilities comparable with those of others; and remove some of
the financial blocks which might prematurely halt their progress toward
higher education. For persons no longer in school, the new measures will
provide useful skills and training, or help to update skills outmoded by rapid
technological change, thus making them more productive and preparing
them for better jobs.
Much of the direct return from these new measures will accrue to the
disadvantaged in the form of increased incomes which will help to lift
them—and their children—out of poverty. Indirectly, all Americans will
benefit through greater economic growth and reduced social tensions.
Project Head Start
Each year close to a million children from poor families begin their formal
schooling. Most of these children suffer from extreme cultural and social
deprivation. They have lacked the chance to build a vocabulary and to
develop the other tools of learning. When they begin school, they are in a
world that they do not understand.
In the summer of 1965, project Head Start—under the auspices of the
Community Action Program of the Office of Economic Opportunity—was
inaugurated to help these youngsters. To encourage widespread community involvement, parents and volunteers also participated in the program,
which reached 560,000 preschool children at 13,400 Head Start Centers in
2,500 urban and rural communities. The summer program will be continued, and plans are being developed to extend Head Start on a yearround basis for 100,000 children in 1966.
Last summer, thousands of children had books for their own use for the
first time; children whose diets typically consist of starches received fresh
fruits and vegetables; many whose world had been confined to crowded
slums began to explore their communities and visited zoos or museums.




Project Head Start is also concerned with a child's health. In examinations conducted as part of the program in Boston, volunteer doctors discovered that 71 percent of the children had one or more problems—pediatric,
dental, or emotional—which required referral for further diagnosis and
treatment. Without the Head Start program, many serious defects would
have remained undetected and uncorrected for many years—perhaps to become uncorrectable.
This program will give millions of children a better chance to succeed
in school. Unfortunately, however, many of these deprived youngsters will
enter schools which—rather than being the best—are among the weakest in
the country.
Elementary and Secondary Education
After years of controversy over Federal aid to education, the Elementary
and Secondary Education Act of 1965 brought the Federal Government
into a creative partnership with States and communities to improve the
quality of all schools, and particularly those serving disadvantaged children.
The Act authorizes more than $1 billion annually in grants to school districts
with heavy concentrations of children from low-income families. Each
district is eligible for a Federal payment of up to one-half the average State
expenditure per child multiplied by the number of its poor school-age
children. These grants will finance special programs to meet the needs of
5 million educationally deprived children from low-income families—10
percent of the 50 million school-age children.
The Act also provides funds for books, maps, and other educational materials which many schools currently lack. More than two-thirds of public
elementary schools, serving almost 10 million children, have no library.
Supplementary educational centers will be established throughout the
country to bring more of the cultural resources of an area into the educational process. Regional laboratories connected with major universities
will seek better ways of teaching, and will seek to promote the transfer of
new knowledge to the classroom. Funds are also provided to improve the
operations of State educational agencies, thus strengthening their capacity
for planning and decision-making.
Higher Education
Although setbacks to the educational progress of the disadvantaged occur
most frequently prior to the completion of high school, many talented
students from poor families are unable to attend college for financial reasons. The Higher Education Act of 1965 established a broad program to
make higher education available to all who may benefit from it. Its most
important innovation is a program of educational opportunity grants
of up to $1,000 for 115,000 high school graduates from low-income families.




97

In addition, a guaranteed-loan program and an expanded Work-Study
program will aid more than 700,000 students.
The Act will also help institutions of higher education to become more
responsive to the current problems. It will encourage them to undertake
community service programs, including extension, continuing education,
and research programs designed to assist in the solution of community
problems. It also sets up a new grant program to upgrade the academic
quality of small developing colleges and establishes fellowships to encourage
qualified persons to teach at these institutions.
The legislation authorizes the creation of a National Teachers Corps
to augment the supply of qualified instructors in poor areas. Although the
Congress did not appropriate funds to establish the Teacher Corps in 1965,
the Administration continues to give this program high priority.
Most programs of direct financial aid to students have been directed
toward the college-bound graduate and have failed to provide for many
youths who wish to obtain training in business, trade, and technical schools.
This omission will be corrected by the establishment of a vocational student
loan insurance program which, when fully funded, will help as many as
100,000 students a year.
Out-of-School Programs
The 1965 legislation also strengthened several programs which provide
job training and work experience as well as basic education. These programs are designed to equip workers with the skills and productivity required
to raise their potential earnings.
The Neighborhood Youth Corps program encourages persons aged 16-21
to stay in or return to school by providing full-time and part-time work
experience and training. It provides counseling and basic literacy training,
and it places young men and women in newly created positions to do work
that would normally not be done in hospitals, settlement houses, schools,
libraries, and other community agencies. Almost 1,500 projects have been
approved in communities throughout the Nation for the employment of
350,000 young men and women in 1966.
The Job Corps provides education and work experience in rural conservation centers and in urban training centers where enrollees live, work,
and learn. About 300,000 young people have expressed interest in joining
this program. It is expected that about 30,000 will be enrolled by June 1966.
The Work Experience Program is designed to demonstrate the benefits
of helping heads of families with dependent children to prepare for productive employment by providing them with work experience and job
training along with basic literacy instruction. In 1965, the program aided
66,000 participants with 198,000 dependents.
The Adult Basic Education program is aimed at the 7.3 million
Americans age 25 and over who have less than 5 years of education.
It provides basic education when a lack of schooling stands in the way of




successful training or employment. In fiscal 1965, about 38,000 adults
in 15 States were enrolled. By June 1966, the program is expected to reach
229,000 adults in all the States and the territories.
ACTIVE MANPOWER POLICIES
Manpower policies have three principal objectives: to fit the unskilled for
better jobs, to augment the supply of scarce skills, and to improve the efficiency of labor markets. These policies not only help individuals to
achieve their full capabilities, but also add to the national productive potential. They are a continuation of the educational opportunity programs and
should serve to keep the quality of the labor force advancing in pace with
the demands created by technological progress.
TRAINING PROGRAMS
The Manpower Development and Training Act (MDTA) programs provide training and basic literacy instruction for unemployed (and some underemployed) persons who have had previous work experience, in order to
up-grade their job skills. Between passage of the law in 1962 and the end
of 1965, enrollment had reached a cumulative total of 370,000, with
315,000 in institutional training and 55,000 in on-the-job training. About
30 percent have been trained for skilled occupations and another 30 percent
for clerical, sales, and service jobs.
Amendments to the MDTA in 1965 have made it possible to extend the
scope and to increase the effectiveness of these training projects. The
maximum period during which training allowances can be paid has been
extended from 72 to 104 weeks, making it possible to train persons for more
highly skilled work. Eligibility for training allowances has been broadened;
and the previous limitation on the number of youths who can benefit has
been liberalized.
It is appropriate that MDTA training programs have been strengthened
during a period of rapidly rising employment and increasing demand for
labor. Workers who are now being trained can count on finding jobs
quickly and benefiting immediately from the training they receive. And
the upgrading of skills for thousands of the unemployed will help to provide a more flexible and mobile labor force, thus contributing to the stability of costs and prices in our expanding economy.
IMPROVING THE EFFICIENCY OF THE LABOR MARKET
Expansion of the economy is facilitated when labor markets operate
efficiently. The Federal-State Employment Service is the principal agency
of our manpower policy designed to help to match people with available
jobs.
Most jobs are filled by direct hiring "at the gate" and through informal
contacts with relatives and friends; many others are filled with the assist-




99

ance of advertisements, unions, private agencies, college placement officers,
and other means. But through its more than 2,000 local offices, the
Employment Service maintains an active placement service for all workers
desiring assistance.
A major task of the Employment Service has been to provide job counseling and placement service to those in the labor force (including new
workers, the handicapped, and nonwhites) who require special assistance
to enable them to compete in the job market. The Service also provides
a flow of information about changing manpower requirements in local
labor markets. This information is useful in planning occupational training under the MDTA; in reorientation of our vocational education programs; and in helping individuals to make rational vocational choices, and
guiding them to areas of favorable employment opportunities.
A Special Task Force appointed by the Secretary of Labor has studied
the operation of the Employment Service and recommended ways to make
it achieve its goals more effectively.
RAISING LABOR PRODUCTIVITY
By 1985, the labor force will total about 110 million workers. On the
assumption that present programs will be continued on the scale now
projected, about one-tenth of these workers will be more productive because
they have benefited from an MDTA or other out-of-school training program.
Nearly one-half will be better educated as a result of one or more of the newly
enacted programs. And these benefits will be concentrated among those
individuals now least likely to climb the ladder of educational opportunity.
America has always invested heavily in education and training, and our
economic achievements show that it has paid off handsomely. But the
investment was not made sufficiently in all Americans, and perhaps as many
as a third enter the work force ill-equipped to assume a fully productive role.
The programs that have been begun will extend a more adequate investment
in education and training to that third of our people.
HEALTH
America is a healthy nation, and Americans take justifiable pride in the
quantity and quality of available medical services. Yet, such significant
indicators of U.S. health as life expectancy, infant mortality, and the
incidence of heart disease must cause concern when compared with rates
prevailing abroad or when our recent progress is measured against that of
other nations.
After declining steadily and dramatically throughout the first half of
this century, the U.S. death rate has remained close to 9.4 per 1,000 of the
population since 1955. By contrast, in a number of other industrial coun-




IOO

tries, death rates have fallen sharply during the past decade, and life expectancy at birth exceeds that in the United States by a significant margin—
as much as 5 years among males. Infant mortality has declined little
since 1955 and remains close to 25 per 1,000 live births, whereas it is
substantially lower and falling more rapidly in many other developed
countries. Changes since 1940 in selected health indicators are shown
in Table 14.
TABLE 14.—Health indicators, selected years 1940-64
'Indicator

1940

1950

1960

1964

Years
Life expectancy *
At birth
_
White
Nonwhite.
Atage45
White
Nonwhite..

63.6
64.9
2 53.9

68.1
69.0
60.7

69.7
70.6
63.6

70.2
71.0
64.1

26.9
27.3
2 22.8

28.5
28.9
24.8

29.4
29.7
26.2

29.7
30.1
26.6

Deaths per 1,000 live births
Infant mortality rate
Total
White
Nonwhite..

47.0
43.2
73.8

29.2
26.8
44.5

26.0
22.9
43.2

24.8
21.6
41.1

Deaths per 10,000 live births
Maternal mortality rate
Total
White
Nonwhite..

37.6
32.0
77.4

8.3
6.1

22.2

3.7
2.6
9.8

3.3
2.2
9.0

Deaths per 1,000 population
Death rates
All causes.
Diseases of cardiovascular system.
Cancer
__'
Influenza and pneumonia
Accidents
Allother

10.8
4.1
1.2
.7
.7
4.1

9.6
4.9
1.4
.3
.6
2.4

9.5
5.2
1.5
.4
.5
1.9

9.4
5.1
1.5
.3
.5
2.0

1
Life expectancyfiguresin first two columns are for 1939-41 and 1949-51, respectively.
2 Negroes only.
Source: Department of Health, Education, and Welfare.

Between 1910 and 1940, the death rate from influenza and pneumonia
was reduced by 55 percent, and since 1940 it has been halved again. Maternal mortality has been cut by nearly 95 percent over the past half century
and by 60 percent during the last 15 years. Since 1940, however, death
rates from heart disease and cancer have each increased by one-fourth;
the U.S. rate for heart disease is among the highest in the world. Mortality
rates among males in the productive age bracket of 40 to 54 years are
substantially and consistently higher in the United States than in other
industrial countries and almost twice the rate in Sweden.




IOI

Foodborne diseases are being increasingly recognized as a leading cause of
acute sickness in this country and probably account for more illness than all
other environmental elements combined. Salmonellosis—the most serious
such disease—now is much more widespread than it was 15 years ago because of inadequate controls in new methods of food production and processing. Further, almost one-third of the U.S. population is drinking water
which is not assured of meeting minimal standards.
COST OF ILLNESS
The total cost to society of illness and premature death cannot be accurately measured, if for no other reason than our inability to quantify the
value of human life or the cost of suffering, pain, and grief. It is impossible
to say, on the basis of economic criteria alone, how much should be spent
on health care, research, and facilities. Nevertheless, at close to full employment of our resources—particularly of scientific and technical manpower—
a decision to spend more for health implies spending less elsewhere. The
issue facing the Nation is not whether better health is desirable, but how
best to allocate resources within the health area and between health and
all other competing uses.
Outlays for health are important in building and maintaining a productive labor force as well as in improving the lives of people and the quality
of our society. The productivity of American workers could not have
reached its present height if, in the past, there had not been investment in
medical knowledge, in disease prevention, and in treatment and rehabilitation. Yet the potential return from further health investment remains
large.
The annual expenditure on all health and medical care services in this
country increased from $13 billion in 1950 and $27 billion in 1960 to approximately $40 billion last year. Such expenditures now amount to 5.9
percent of the gross national product (GNP). Private spending for personal health care—more than $26 billion last year—accounts for about 6.1
percent of personal consumption expenditures.
In 1963, disease and mortality during the year cost society the potential
product of 4.6 million man-years of work. Direct public and private expenditures for personal health care associated with illnesses in that year
amounted to about $22.5 billion, whereas the indirect costs from output
lost totaled almost $24 billion. These figures make no allowance for the
much larger losses in that year that were due to deaths occurring in earlier
years or the present value of economic losses in future years resulting from
current illness or death. Recent estimates of the direct and indirect costs
associated with certain specific illnesses in 1963 are summarized in Table 15.




102

TABLE 15.—Economic costs oj illness, 1963
[Millions of dollars]

Diagnostic category

Economic cost of illness: Total
Mental, psychoneurotic, and personality
disorders
Diseases of circulatory system
___
Diseases of digestive system
Diseases of respiratory system
Injuries
._ _
Diseases of nervous system and sense organs.
Neoplasms
Other

Total costs

Direct expenditures l

Indirect costs 2
Mortality 3

Morbidity

46,303

22,530

2,731

21,042

7,036
6,413
5,502
4,887
3,755
3,242
2,614
12,855

2,402
2,267
4,158
1,581
1,703
1,416
1,279
7,723

10
1,226
123
139
242
300
484
207

4,624
2,920
1,220
3,166
1,811
1,526
851
4,925

1
Includes only hospital and nursing home care and services of physicians, dentists, nurses, and other
health professionals associated with 19 major diagnostic categories; excludes drugs, medical research and
facilities construction, training expenditures, and other nonpersonal health services.
2
Equivalent to the value of lost output.
3 Losses in 1963 due to deaths throughout that year; no allowance made for present discounted value
of future losses.
Source: Department of Health, Education, and Welfare.

PUBLIC POLICY AND LEGISLATIVE ACCOMPLISHMENTS
The rapid growth of demand for medical services is a consequence of a
multitude of factors, some of which are strongly influenced by public
policy. Rising incomes, better education, urbanization, expanding insurance
coverage, the changing age structure of the population, and the increased
availability and effectiveness of health services are all raising demand.
Supply has not kept pace with the expansion of demand, and at present the
supply of most health services falls short of the Nation's needs as determined by reference to medical standards of adequacy. Deliberate public and
private action—including new and more efficient forms of organization—
are required to increase the supply and accessibility of these services. But
to improve the health of our population, it is not enough to graduate more
doctors or build more clinics. Programs are also required to translate
medical needs into effective demand for health services. At the same time,
there must be greater coordination between demand-creating policy measures and those aimed at improving the supply and distribution of medical
services and facilities.
Average figures conceal large differences in the incidence of illness
and the availability of medical services within the United States. The
distribution of doctors, for example, continues to vary widely from region
to region and between urban and rural communities. Some differences in
the distribution of facilities and the utilization of health services are consistent with an efficient allocation of resources and varying personal consumption patterns. However, existing disparities in both the supply and
effective demand seriously affect the relative availability and accessibility
of health care throughout the country and among different income groups.
Thus, high morbidity and mortality rates resulting from causes that have




103

been successfully controlled in other groups still exist for nonwhites and the
poor. Mortality rates among nonwhite infants more than 1 month old
are almost three times as high as those for white infants. Poverty and its
attendant circumstances are a major source of increased health hazards
and, despite a popular desire to believe otherwise, low income is often a
serious barrier to obtaining medical care. The 1960-62 National Health
Survey found that the number of physician visits a year for children from
families with annual incomes below $2,000 was only 40 percent of the
number for children from high-income families.
The Administration's basic health goal, as stated by the President, is "to
assure the availability of and accessibility to the best health care for all
Americans, regardless of age or geography or economic status." To meet
this goal, four types of effort are necessary: (1) expanding medical knowledge through increased basic research in the life sciences; (2) faster dissemination of new information and techniques to health practitioners, health
policymakers, and the public; (3) more and better organized health facilities and manpower, including research laboratories and medical schools,
general hospitals and nursing homes, highly trained specialists and nursing
aides; and (4) improved financing of medical services.
The first session of the 89th Congress passed a dozen major bills in the
health field, designed to strengthen and improve health services in all four
ways.
Medical Research
Total medical and health-related research expenditures in 1965 amounted
to almost $1.9 billion—nearly 9 percent of the Nation's outlay for all research and development. Expenditure on medical research was more than
ten times that in 1950, representing an annual increase of almost 18 percent.
Federal support rose from 45 percent to 64 percent of the total, but the
Government's role in the direct conduct of such research declined slightly—
from 22 percent to 17 percent. Public investment in health research is
channeled mainly through the National Institutes of Health (NIH) whose
budget for research, research facilities, and training has grown from less than
$100 million 10 years ago to over $1 billion today. NIH support now
accounts for two-fifths of all medical research expenditures in the United
States.
Dissemination of Medical Knowledge
Our knowledge of life processes and of new methods of preventing and
treating disease has rapidly moved ahead of our ability to apply this knowledge widely to the health needs of the Nation. Shortening the interval
between the discovery and general application of medical advances is perhaps the single most important way to improve the productivity of the
medical care industry.




104

Today, one cancer patient in three is being saved, but wider use of
existing knowledge and techniques could save half the victims of this disease.
More extensive use of new detection and diagnostic procedures and improved means of reaching and treating patients could reduce deaths from
cervical cancer by 25 percent by 1970 and by 80 percent a decade from
now. Instrumentation now in existence or being perfected could forestall
many of the 400,000 strokes which occur each year.
To help close such gaps between knowledge and application, the Congress
took a number of important steps in 1965. The Heart Disease, Cancer, and
Stroke Amendments authorize support for a network of regional medical
complexes. (The three diseases noted in the title of the Amendments
account for 70 percent of all deaths in the United States.) The grants will
assist hospitals, universities, and other institutions to establish cooperative
programs for research, training, and demonstration. Such programs will
bring new scientific advances more quickly to America's practicing physicians and their patients.
Medical Facilities and Manpower
A country's health standards change as income grows, knowledge accumulates, and concepts of adequacy evolve. Our current requirements for
medical facilities and manpower reflect not only changes in the size and
composition of the population and shifting patterns of disease and disability,
but also a growing consensus that access to high-quality services is a right of
all citizens.
Since passage of the Hill-Burton legislation in 1946, more than $7.7 billion, including a Federal share of $2.4 billion, has been invested through
this program to provide additional hospital and nursing-home capacity of
more than 340,000 beds. New general-hospital capacity is now being
made available nationally at the rate of about 30,000 beds a year. Nevertheless, it is estimated that about one-third of the general-hospital capacity
in the country is obsolete; a majority of the obsolete facilities are in metropolitan areas where two-thirds of the Nation's population live. Facilities
containing 260,000 beds are in need of immediate modernization or replacement and those containing another 130,000 beds will require modernization
before 1975. In dollar terms, current modernization needs of general
hospitals have been estimated at more than $6 billion, compared with new
general-hospital requirements of less than $1 billion. New financing techniques must be found to facilitate the modernization of hospitals, particularly in the large urban areas where deficiencies are now largest and
where existing Federal programs have their smallest impact.
There are also large and rising needs for medical manpower. Part of
this need is being met through organizational changes that raise the productivity of doctors, dentists, and nurses. For example, the development of
group practice arrangements, the use of more elaborate (and more expensive) hospital and office equipment, reductions in travel time, and the




105

employment of paramedical personnel to perform routine or less complicated procedures have made it possible for doctors to render more and
better service to larger numbers of patients than ever before.
The ratio of physicians to the population of the United States has been
approximately constant since before World War II. The proportion actually engaged in clinical practice—as opposed to teaching and research—
has declined markedly, however. Despite measures to economize on the
use of physicians' time, a substantial decline in their availability would impose strains on the cost and quality of medical services. To maintain the
existing ratio of doctors to population, it would be necessary for admissions
to medical schools to increase approximately 50 percent during the next
decade. The Health Professions Educational Assistance Act of 1963 authorized a program of grants and loans in support of medical schools and
students. In 1965, for the first time, Congress established a scholarship
program for needy students in the health field, and added a four-year grant
program for the improvement of teaching programs in the health
professions.
Too frequently, today, the administration and organization of public
health services are badly fragmented. Measures to stimulate better coordination of Federal, State, and local efforts in planning for and providing
these services and the gradual replacement of prevailing categorical programs with comprehensive community health services would be desirable.
Financing Medical Care
Private health insurance has made a major contribution to the better
financing of health costs. The proportion of Americans with some form of
private health insurance has risen from 9 percent in 1940 to 80 percent
today. But gross benefits from such insurance covered only 25 percent of
total expenditures for personal health needs in 1965. Furthermore, those
most in need of assistance in meeting medical payments are frequently
unable to buy insurance. Only about one-third of persons in families with
annual incomes under $2,000, and about one-half of all elderly persons,
were covered by any type of private hospital insurance in 1963. Yet these
groups spend a particularly large fraction of their low incomes for health.
In 1961, average medical expenses amounted to 10 percent for families with
annual incomes between $1,000 and $2,000, compared with 4 percent for
families with incomes between $10,000 and $15,000.
Among the most important actions of the 89th Congress was the provision of health insurance for the aged under Social Security. Medicare will
protect families against the economic risk of major medical expenses in old
age. Benefits for 17 million Social Security beneficiaries, plus benefits
from general revenues for almost 2 million additional elderly persons not
covered by Social Security, will amount to about $3.5 billion in 1967
and will cover at least 40 percent of the total medical costs of the aged. The
basic program consists of hospital insurance, extended care, and home health




106

services for the aged, financed through a separate trust fund supported by
employee and employer payroll taxes. A voluntary, supplementary program covers physicians' fees and other services and is financed through
monthly premiums (currently $3) by individuals over 65, which are matched
equally by a general revenue contribution.
The legislation also greatly improved the quality and expanded the coverage of State medical assistance programs. The Kerr-Mills program for the
aged was expanded to cover a total of about 8 million needy persons, including, for the first time, the blind, the disabled, and dependent children.
The 1965 Child Health amendments will make more health services available to expectant mothers, infants, and children, including crippled and
retarded children. The progressive extension of crippled children's and
child health services to youngsters throughout each State is required by
1975. Previously, these programs were aimed primarily at rural areas, but
in the future they will provide equal assistance for low-income families in
urban centers. Family planning services will also be strengthened.

EQUALITY OF OPPORTUNITY
Not all groups of Americans share equally in their country's prosperity.
In 1964, the average income of nonwhite families was only 56 percent of the
average income of white families. This and similar figures provide telling
indicators of the task that the Nation still faces in assuring equality of opportunity and achievement for all its citizens (Table 16). They also indicate an incredible waste of our human resources.
Three important and distinct types of discrimination help to explain the
difference between white and nonwhite incomes.
Discrimination results in lower wages for Negroes (who comprise 90 percent of the nonwhite group) even when they are doing the same kind of
work as whites. Available data show that Negroes receive less income in
every industry, in every occupation, and at every level of education.
Discrimination also excludes many Negroes from higher-paying jobs that
would fully utilize their talents or training. Negroes are frequently forced
to hold jobs that whites with the same experience and training would
not ordinarily hold; and Negroes suffer from higher unemployment rates
within all skill categories.
Finally, part of the income difference is explained by past discrimination
which has lowered the potential productivity of Negroes by providing less
investment in human resources for them than for their white contemporaries.
This type of discrimination is manifested by lower expenditures for schools
and health facilities in Negro neighborhoods.
Low family incomes are a product of these factors; but low incomes would
tend to perpetuate these factors even if discrimination were eliminated.
Low incomes for poor whites also result in lesser educational achievement,




107

poorer health, fewer skills, and consequently higher unemployment. To
promote real equality, Negroes must break through the barrier of discrimination; but this will not be sufficient. They must also break out of the
cycle of poverty.
T A B L E 16.—Selected measures of discrimination and inequality of opportunity, 1965
Selected measure

Nonwhite

Income'
Median income of families
Percent of households in poverty *
Percent of families with incomes of $10,000 or more

$3,839
43.1
8.3

Education
Median years of school completed, males 25 years of age and over.
Percent completed high school, persons 20-24 years of age
Male
Female
.
Percent college graduates, persons 25 years of age and over

9.0
50.2
51.3
49.4
5.5

Labor force participation rate (percent of noninstitutional population)"
76.0
46.1

Male.-.
Female..
Employment (percent of total civilian employment)3
White-collar occupations
Craftsmen-foremen occupations..
Unemployment rate (percent of civilian labor force)'

19.5
6.7

6.0
7.4
25.3

Adult males.—
Adult females.
Teenagers

i Data relate to 1964.
Households are denned here as the total of families and unrelated individuals.
* Relates to persons 14 years of age and over.
Sources: Department of Commerce, Department of Health, Education, and Welfare, and Department
of Labor.
3

PROSPERITY: A CONDITION FOR NEGRO PROGRESS
A combination of social and economic change is necessary to correct the
disparities between Negroes and whites. But prosperity is also an essential
requirement because it creates and opens up jobs for the disadvantaged.
This has been effectively demonstrated by postwar experience.
During the period of slow economic growth in the middle and late 1950's,
the absolute gap between Negro and white incomes and employment
widened. In 1952, the median income of nonwhite families was 57 percent
of the median income of white families, and the unemployment rate for
nonwhites was 4.6 percent, compared with a rate of 2.4 percent for whites.
By 1958, the median income of nonwhite families had fallen to 51 percent
of that of white families, and the unemployment rate of nonwhites had
risen to 12.6 percent, compared with 6.0 percent for whites.
In 1964, a high-growth year, the median income of white families
increased 4.7 percent over 1963, and that of nonwhites, 10.8 percent; the
income gap narrowed in both percentage and absolute terms as income of




108

nonwhites rose by $374 and that of whites by $310. As a result, the
median income of nonwhites rose from 53 percent of the median income of
whites in 1963 to 56 percent in 1964. The gains in median incomes were
representative of increases throughout the income scale. In 1964, the proportion of nonwhite families with incomes of more than $10,000 rose from
5.7 percent to 8.3 percent, but it was still far below the figure of 24.1 percent
for white families. The proportion with less than $3,000 dropped from 43.1
percent to 37.3 percent. Final data for 1965 wTill not be available for
several months, but preliminary indications suggest that incomes of Negroes
again rose substantially.
The progress of the last two years confirms a crucial lesson. A prosperous
economy and the labor demand that it generates are potent forces for
eliminating discrimination and income differentials even though they cannot
create equality. Improved Negro purchasing power will not fully overcome
the effects of discrimination, but it will have a beneficial influence.
CIVIL RIGHTS LAWS AND ECONOMIC DISCRIMINATION
The 1964 Civil Rights Act contains several important provisions that alter
those conditions which make discrimination possible. Its Title VII directly
outlaws discrimination in hiring, firing, conditions of work, apprenticeship,
or training. The Equal Employment Opportunity Commission was established to carry out these provisions. The Commission began operation in
July 1965 and in its first 100 days processed more than 1,300 complaints.
Hiring attitudes will not change abruptly, but the Civil Rights Act makes
an important, direct attack on this basic barrier to full equality.
Negroes are also at a disadvantage in the housing market. Many
Negroes live in substandard housing because their incomes are low; but
others are forced to do so by direct discrimination. While 57 percent of
nonwhite households with annual incomes of less than $4,000 live in substandard housing, only 27 percent of whites at these same income levels live
in such housing. Among households with more than $4,000 a year, 6 percent of the white families live in substandard housing, compared with 20
percent for nonwhite families. Discrimination in housing forces Negroes
to pay higher rents and in many places to attend inferior schools. The
President has announced that he will ask for legislation to prevent discrimination in private sales or rental of housing.
To help Negroes achieve equality of educational opportunity, the Civil
Rights Act authorizes the Attorney General to file suit for the desegregation of public schools and colleges upon receipt of written complaints from
parents unable to bring their own actions. After 10 years of slow progress
following the Supreme Court decision outlawing segregated schools, the pace
of integration has now accelerated; but segregated housing continues to retard this process. In addition to eliminating segregation, the Government
is trying to improve the quality of Negro education by its new programs

795-983 O— 6$—-8



I0

9

for primary and secondary education. Project Head Start, and other antipoverty programs. Also, Title VI of the Civil Rights Act assures that access
to schools, hospitals, and other federally aided facilities will not be denied
to anyone on the basis of his race.
ECONOMIC COST OF DISCRIMINATION
Although economic losses are not the major reason for eliminating discrimination, they serve to emphasize its economic cost to all Americans.
When there is a surplus of labor of all types and skills, eliminating discrimination results mainly in a redistribution of income. The economic cost of
discrimination becomes most evident when there is near full employment of
the white labor force.
If economic and social policies could be specifically designed to lower
Negro unemployment to the current unemployment level of whites, the
resulting gain in GNP would be $5 billion. Part of this gain would be in
wages of the new Negro employees, and part would accrue as other forms
of income. A further gain would result if all Negroes were able to obtain
jobs which would better utilize their abilities and training.
National output can be further expanded by improving the average level
of productivity of each individual. Education and training are two of the
most important means to this end. If the average productivity of the Negro
and white labor force were equalized at the white level, total production
would expand by $22 billion. If both unemployment rates and productivity
levels were equalized, the total output of the economy would rise by about
$27 billion—4 percent of GNP. This is a measure of the annual economic
loss as a result of discrimination. Of course, to achieve this increase in
output, some resources would have to be devoted to investment in the
human capital of America's Negro citizens. But this would be an investment yielding important economic as well as social returns for the entire
Nation.
REDUCTION OF POVERTY
Investment in human resources is a means to an end, not an end in
itself. It is a means to rising living standards, to greater opportunity for
individual achievement, and to the abolition of poverty. Thus, the pursuit
of an effective program of human resource development and the pursuit
of successful antipoverty measures are closely related processes.
Five years of prosperity and continued economic expansion have contributed significantly to reducing the number of people who live in poverty.
Between 1959 and 1964, the number of persons defined as poor decreased
from 38.9 million to 34.1 mililon (Table 17). As a result both of further
economic growth and of the new antipoverty programs, the data for 1965
will undoubtedly show a further drop in the number of poor.
A fully employed economy is—and will continue to be—a powerful weapon in the war against poverty. However, full employment alone is not suf-




110

TABLE 17.—Number of poor persons and incidence of poverty, 1959-64
Poor persons
Total
persons *

Year

Number»

Incidence of
poverty
(percent) a

Millions of persons
176.5
179.5
181.4
184.4
187.2
189.7

1959
1960
1961
1962
1963
1964

38.9
40.1
38.1
37.0
35.3
34.1

22.1
22.3
21.1
20.1
18.9
18.0

1
Data relate to March of following year. Excludes inmates of institutions and a small number of children
under 14 years of age who live with families to whom they are not related. (There were about 200,000 such
children in March 1965.) Includes members of the armed forces in the United States living off post or with
their families on post.
2 Incidence of poverty is measured by the percent that poor persons are of the total.
NOTE.—Poverty is defined by the Social Security Administration poverty-income standard; it takes into
account family size, composition, and place of residence. Poverty-income lines are adjusted to take account
of price changes during the period.
Sources: Department of Commerce and Department of Health, Education, and Welfare.

ficient. The purpose of the Economic Opportunity Act of 1964 is to promote investment in the health, education, training, and work experience of
the poor which will enable them to contribute more effectively, and thereby
to earn incomes more comparable to those in the rest of society.
Many public and private programs exist to help to eradicate poverty
and to aid the needy. The Office of Economic Opportunity (OEO) was
established by the 1964 Act to coordinate these efforts, and to develop
new approaches to combat the multiple causes of poverty. Several of the
Administration's antipoverty programs are discussed in the section on education. In addition, OEO's Community Action Programs—discussed in
the Council's 1965 Report—are mobilizing local and Federal resources to
aid the poor. This year, important new data on the incidence of poverty
are presented which illustrate the progress of the past 5 years.
CHANGES IN POVERTY: 1959-64
In order to assess progress and to evaluate alternative approaches effectively, it is necessary to have a clear-cut quantitative definition of poverty.
Last year, the Social Security Administration developed the present definition, which takes account of differing family size and composition and
differences between living conditions in urban areas and on farms. This
new poverty-income definition is based on a minimum, nutritionally sound
food plan designed by the Department of Agriculture for "temporary or
emergency use when funds are low." The food costs in this subsistence plan
are used to determine the minimum total income requirements for different-sized families. Budget levels for farm families are reduced by 30 percent
to allow for lower cash expenditures required where home-grown food is
available and to recognize the lower cost of farm housing. Computed in




III

this way, the 1964 poverty-income line for nonfarm individuals was $1,540;
for farm individuals, $1,080. Four-person nonfarm families were defined
as poor if their money income was below $3,130; for farm families of this
size, the poverty-income line was $2,190. Income standards for past years
were adjusted to take account of price changes during the 1959-64 period.
Although no statistical definition of poverty is available which fully recognizes such factors as regional differences in the cost of living and which
allows for differences in asset-holdings of families, there can be little dispute
that almost all people with incomes at or below these minima are indeed
poor.
The new figures on the number of poor show clearly the relationship between over-all economic conditions and the incidence of poverty. In 1959,
poor persons represented 22.1 percent of the total noninstitutional population. By 1964, the number had dropped by 4.8 million, to 18.0 percent of
the population. For the 1959-64 period as a whole, the incidence of poverty declined by 0.6 of a percentage point a year. From 1959 to 1962, a
period which included a recession, the number of poor declined by an average of 633,000 persons a year. During the subsequent two years of expansion, the average decrease was 1,450,000 a year.
TABLE 18.—Number of poor households and incidence of povetty, by race, 1959 and 1964
All
•Ids

Item
1959

1964

White
1959

1964

Nonwhite
1959

1964

Millions

Number
13.4

11.9

10.3

9.1

3,0

2.8

Unrelated individuals
Under 65 years of age
65 years of age and over

5 1
2.6
2.5

4.1
1.9
2.2.

4.2
1.8
2.4

.9
.7
.2

9
.5
.4

Families of 2 or more
With no children under 18 years of age..
With children under 18 years of age

8.3
3.0
5.3

5.1
2.3
2.8
6.8
2.3
4.5

6.2
2.4
3.7

4.9
1.9
3.0

2.1
.5
1.6

1.9
.3
1.5

Total households i.

Percent
Incidence of poverty 2
24.0

19.8

20.7

17.1

52.2

43.1

Unrelated individuals
Under 65 years of age
65 years of age and over

47.4
36.8
68.1

42.0
31.2
59.3

45.4
32.9
67.2

40.2
28.5
57.2

59.3
54.8
78.5

53.0
44.0
79.3

Families of 2 or more
With no children under 18 years of age..
With children under 18 years of age

18.4
16.4
19.7

14.2
11.7
16.0

15.1
14.6
15.5

11.5
10.8
12.0

49.6
37.8
55.3

39.1
22.5
47.7

Total households i-

1
Households are denned here as the total of families and unrelated individuals.
2 Incidence of poverty is measured by the percent that poor households are of the total number of households in the category.
NOTE.—Poverty is denned by the Social Security Administration poverty-income standard; it takes into
account family size, composition, and place of residence. Poverty-income lines are adjusted to take account
of price changes during the period.
Detail will not necessarily add to totals because of rounding.
Sources: Department of Commerce and Department of Health, Education, and Welfare.




112

T A B L E 19.—Incidence of poverty and distribution

of poor households,

1964

Incidence of
poverty
(percent) 2

Type of household»

Percentage
distribution
of poor
households

19.8

9.1

38.0

Farm households

100.0

30.0

All households

34.7

8.1
31.3

23.7
16.0

28.2
60.2

8.9
7.6

Nonfarm households:
Head 65 years of age and over
Head under 65 years of age:
White:
Male head
Female head
Nonwhite:
Male head
Female head-

.

__

1 Households are denned here as the total of families and unrelated individuals.
2 Incidence of poverty is measured by the percent that poor households are of the total number of households in the category.
NOTE.—Poverty is denned by the Social Security Administration poverty-income standard; it takes into
account family size, composition, and place of residence.
Sources: Department of Commerce, Department of Health, Education, and Welfare, and Council of
Economic Advisers.

A similar improvement can be seen in the number of poor households
(including unrelated individuals as one-person households). Their number
fell from 13.4 million in 1959 to 11.9 million in 1964. This represented
a drop in the incidence of family poverty from 24.0 percent to 19.8 percent
(Table 18).
The encouraging record of progress is marred, however, by the figures
for particular groups. The total number of poor, unrelated individuals
over 65 years of age increased by 300,000 during the 1959-64 period. This
increase is explained by the fact that the total number of unrelated individuals over 65 years of age increased by 1 million during this period. The
incidence of poverty among such individuals actually declined, however.
The number of large families with 5 or more children living in poverty
also showed no decline, remaining constant at about 1.1 million. The total
number of poor children in such families, however, decreased slightly during
the 5-year period.
Progress in alleviating poverty has also been slow among families headed
by females (including women living alone). In 1959, there were 5.4 million such poor households; in 1964,5.5 million.
The total number of poor, nonwhite households declined by 200,000
between 1959 and 1964. The largest declines were among childless, nonwhite families and single persons under 65. However, in 1964 almost 48
percent of all nonwhite families with children were still living in poverty.
Although the incidence of poverty is far higher among nonwhites, the
aged, and white families headed by females than for the population generally; however, families headed by white males below age 65 accounted for
nearly one-fourth of all poor households in 1964 (Table 19).




Encouraging progress has been made during the last 5 years, but the
dimensions of poverty in America are still disturbing. Expanded investment
in human resources and the eradication of racial discrimination are vital
parts of the total antipoverty program. However, for the aged and for
families headed by females, continued improvement of income-maintenance
programs remains the major route out of poverty, since most of them are
not—and cannot be—active members of the labor force.
INCOME MAINTENANCE
Over the last 30 years, the United States has developed a set of public
income maintenance programs for many families who need assistance in
order to maintain adequate standards of living. In fiscal year 1965, an
estimated $20 billion of the $40 billion total spent on these public transfer
payment programs went to persons who were, or would otherwise have
been below the poverty-income line; these payments helped to raise some
3 million households out of poverty, but about 12 million units still received
insufficient income to meet the minimal living levels now used to define
poverty. People who remained poor received about $10 billion of all
public transfer payments. To eliminate completely the poverty-income
gap—the amount by which total money income falls short of meeting the
poverty-income standard—would require that almost $12 billion be added
to the income of the poor.
In 1964, of the 34.1 million persons who failed to meet the Social Security
Administration poverty-income standard, 14.8 million (43 percent) were
children under 18 years of age, 5.4 million (16 percent) were 65 years old
or over, and 13.9 million (41 percent) were neither aged nor children under
18. Public assistance payments (including those under State-local general
assistance programs) went to only 7.3 million of these people, just over onefifth of the noninstitutionalized needy. (Some aid was also provided to
500,000 additional persons in institutions and to almost 270,000 aged persons
who received help only in meeting their medical bills.)
About 26 million poor persons were not receiving aid under public assistance programs in June 1965: 11.5 million poor children, their 7 million
parents, and about 3.5 million aged. The remainder of the unaided poor
were adults aged 18-64 without dependent children.
Eight million poor persons were aided by other Federal income maintenance programs, including an estimated 6.7 million of the 19.8 million
beneficiaries under Social Security (OASDI). The remainder received
payments under such programs as unemployment insurance, veterans' pensions and compensation, Railroad Retirement, and workmen's compensation.
The highest proportion of needy persons aided by income-maintenance
programs is found among those aged 65 or over and those under 18. While
there are a large number of programs that help the poor in the 18-64 age
range, large gaps in coverage exist under present arrangements. About
half of the poor now receive no public transfer income.




114

In addition to the large gaps in coverage under existing public assistance
programs, the benefits paid to the eligible poor are often extremely low.
Most persons now receiving assistance do not receive enough to enable
them to live at even a minimum subsistence level. For example, the
average annual total income of aged public assistance recipients is $970 a
person; of blind recipients, $1,110 a person; of disabled recipients, $910 a
person; and for families with dependent children, $1,680 a family (four
persons). For a mother and three children, this amounts to only $1.15
a day for each person, to cover the costs of food, shelter, clothing, and all
the other necessities of life.
Increasing concern about these problems is producing a variety of new
income-maintenance proposals. One approach would make public assistance coverage more comprehensive and assure all recipients more adequate
benefit levels. Another approach is the institution of uniformly determined
payments to families based only on the amount by which their incomes fall
short of minimum subsistence levels. Such a system could be integrated
with the existing income tax system. This plan is now receiving intensive
study by many scholars. It could be administered on a universal basis for
all the poor and would be the most direct approach to reducing poverty.
In future years, these and other proposals deserve further exploration.




Chapter 4

Areas for Further Legislative Progress in 1966

I

AST YEAR'S legislative achievements mark a major milestone in the
•J social and economic progress of the American people. The President's program for 1966 contains fewer items of economic legislation; yet
it includes major proposals relating to several key areas of the economy.
This chapter presents three areas of importance for the domestic economy
in which there are new proposals, and provides some of the relevant economic background. The economic background for other new proposals is
developed in Chapters 1, 3, and 6.
THE URBAN ENVIRONMENT
Every large metropolitan area is a cluster of communities, usually consisting of a central core city plus surrounding suburbs. Almost without
exception, the central core cities, which are the heart of the metropolitan
area, have experienced a gradual process of physical and economic deterioration. Partly as a result of people's desire for more space and homeownership, and made possible by the development of the automobile, central cities
have been losing middle- and upper-income families to the suburbs. This
movement accelerated when cities became caught in a vicious spiral of
spreading slums, rising crime, and worsening congestion. Once a neighborhood began to deteriorate, it did not pay any individual landlord to attempt
to stem the decline; the private return on new investment fell, since little
extra rent could be charged for better apartments in slum areas. This
deterioration was accentuated by housing shortages after World War II and
by the artificial shortages created by racial discrimination in housing which
preserves a captive market for dilapidated slum buildings in large cities all
over the United States. As a result, primarily two groups of people have
tended to remain in core cities—the very rich, who can afford to live in
luxury apartments, and the poor, especially minorities who have no choice
but to live in the limited housing available to them.
This process has created an almost impossible financial situation for
many cities. They have had to bear public assistance payments and other
welfare costs for the low-income groups in the slums, as well as to continue




n6

to provide mass transportation, fire and police protection, and education;
but their tax base has failed to expand correspondingly as the highand middle-income groups and some industry and commerce have fled
the city—a departure speeded by rising tax rates.
Although housing deterioration is perhaps the most important single
factor contributing to the decline of central cities, it is but one of many
handicaps facing downtown areas. Many families have moved to the
suburbs, but their jobs have not moved to the same extent. This means
that an increasing number of individuals must commute to work in the central city. Compounding this problem has been the increase in urban land
values which encourages taller buildings with dense occupancy. As the
buildings become larger, the number of people who have to be transported
to a particular point expands, putting an additional strain on the transportation system. Congestion, with all of its ramifications, is the result.
Since builders do not have to bear the costs of bringing workers from low
density suburban areas to very high density central cities in rush hour peak
periods, these costs fall upon local governments which must make large
investments in transportation facilities. From the point of view of efficiency, these investments often should have been in facilities for mass
transit. Instead, for many reasons, they have been primarily in automobile
expressways, which only increase the congestion in the center.
Many of the problems of central cities, such as air pollution, can be traced
to the increasing size and density of America's urban population. In small
cities or rural areas, automobile fumes are not a serious problem, since the
natural cleaning capacities of the air are enough to eliminate noxious
fumes. As the number of automobiles increases, the natural capacities of
the air to purify itself are reached and surpassed. Similar factors are evident in water supplies. As population densities rise, local wells and streams
become inadequate. Water has to be brought from increasingly distant
areas at rising cost.
In small cities, extensive city parks and open areas are less necessary, since
individuals can easily reach natural recreation areas; but in major metropolitan centers, natural recreation areas may be many miles away. As a city
grows, parks, playgrounds, and other recreational resources become more
necessary, but they also become much more expensive because of high land
values in the core. Although recreational areas and open spaces can be
supplied privately, the importance of outdoor areas for calm, healthy living
means that these goods should not be confined strictly to those able to pay
the price.
These formidable problems have made it necessary for the Federal Government to attempt to stimulate the search for new and creative solutions.
IMPROVING OUR CITIES
The Housing and Urban Development Act of 1965, the Cabinet Department created last year, and 1964 legislation in the areas of mass




117

transportation, civil rights, and economic opportunity constitute a major
Federal effort to aid urban development.
The strategy for improving our urban environment embodied in this
legislation has a double emphasis. First, it focuses on the quality of residential neighborhoods, including both the adequacy of housing and the
suitability of the related community facilities. Second, while retaining
flexibility to meet the separate needs of central cities and suburbs, it views
them as an interrelated area and insists that public and private efforts follow
consistent and coordinated plans comprehending the entire urban complex,
if they are to receive Federal support.
Federal mortgage insurance, public and low-rent housing programs, and
urban renewal have long had influence upon the pattern of metropolitan
development. The Housing and Urban Development Act contains additional tools for dealing with these problems. It provides assistance for
community facilities ranging from neighborhood centers to city parks and
playgrounds. The open space program will be expanded by grants for urban
beautification. Grants to cover interest charges on loans for the acquisition of land for public facilities in advance of its development—before
speculative influences inflate prices—should reduce future problems in this
area as well as encourage long-range plans for efficient land use.
The Act also continues the urban renewal program and authorizes an
additional $2.9 billion in grants. It strengthens requirements for workable
programs and emphasizes the importance of building codes, zoning ordinances, local tax policies, and development standards. It provides grants
to municipalities to help to defray the costs of enforcing codes and, where
necessary, demolishing unsound structures.
A major innovation in the Act is the program for rent supplements.
Under this program, more than 250,000 units of new or rehabilitated housing are scheduled to be approved over the next 4 years. The Federal Government will pay nonprofit, cooperative, and limited-dividend
owners of private property the difference between fair market rents for their
units and one-fourth of an occupant's income. Like interest subsidy programs, rent supplements can help to encourage construction and rehabilitation of adequate housing for low-income families.
The destruction of old neighborhoods as a result of urban renewal frequently involves high human costs. New public housing and rent supplement programs facilitate the purchase or rehabilitation of older housing and
thus help to maintain and restore existing neighborhoods. Moreover, newly
authorized grants for projects of code enforcement in deteriorating areas
may conserve older residential neighborhoods and prevent or retard the
development of slums. Joint administrative action by the Urban Renewal
Administration and the Federal Housing Administration since early 1964
has resulted in the rehabilitation of over 48,000 units; another 90,000 are
currently undergoing rehabilitation.




n8

Where substandard housing has blighted a whole area, however, the most
economic approach often is to clear the entire area, to provide space for
new housing or other uses consistent with an over-all urban plan. Relocation payments to ease the hardships incurred by such clearing were liberalized in 1964, and the 1965 Act extended such payments to families displaced
by the construction of mass transportation systems, by community and
neighborhood facilities programs or advance land acquisition, as well as by
urban renewal or public housing programs.
The President's new proposals for 1966 legislation contemplate the
planned rebuilding, on a demonstration basis, of large areas of a number
of cities of all sizes, enlisting local and private resources along with new
measures of Federal assistance. The details of the program will be presented in a separate message.
The establishment last year of the Department of Housing and Urban
Development did not itself add to the list of Federal policy instruments
available to our cities. But it will make all these instruments and the new
ones to be proposed more effective by providing an organizational focus
for a unified Federal approach to metropolitan redevelopment, change, and
growth. It will assure that all Federal programs that affect the city and its
people will be brought to bear effectively to solve the city's problems.
THE ABATEMENT OF POLLUTION
Contamination of the environment is a problem of major national proportions. Polluted streams are found in all sections of the country. They
increase the cost of obtaining fresh water supplies for municipalities and
industry; they impair the recreational and aesthetic values of our areas of
greatest natural beauty; and they destroy useful aquatic life. Air pollution
is found in every major metropolitan area. Buildings and vegetation are
damaged; transportation and communication are delayed; the attractiveness of our cities is reduced; and chronic health damage may result.
Obsolete methods of solid waste disposal create problems in both urban and
rural areas. The approaches to major cities are marred by unsightly accumulations of automobiles. The burning of rubbish in open dumps causes air
pollution, and the careless use of refuse for land fill causes extensive stream
pollution. Pesticides in water and soil have been found harmful to all
forms of life.
It is not difficult to understand why an industrial society produces excessive
amounts of pollution. For most resources, users are charged amounts which
represent the value of these resources to others; indeed, this is a basic reason
for the efficiency of a market economy. In the case of pollution, however,
those who contaminate the environment are not charged in accordance
with the damage they do. Thus, the cost of a municipality's discharge
ot raw sewage into a stream is borne not by the local residents but by




119

potential downstream users. And the cost of discharge of sulfurous fumes
into the air by a thermal electric plant is not borne by the users of electricity
but by the citizens who breathe the polluted air. Public policies must be
designed to reduce the discharge of wastes in ways and amounts that more
nearly reflect the full cost of environmental contamination.
Water pollution is primarily a product of organic wastes in the process of
decomposing and of the phosphates, nitrates, and other minerals contained
in discharges. The decomposition of organic wastes removes oxygen from
the water, limiting its capacity to support fish and wildlife and its desirability
for recreation. The inorganic substances cause water hardness, stream
discoloration and odor, and the growth of algae. Damage from pollution is suffered by municipalities, industries, agriculture, and fisheries that
cannot use contaminated water, and by individuals as a result of the
aesthetic and recreational losses. Costs of treatment by municipalities and
industries are a measure of the first type of damage; lower property values
in the vicinity of polluted waters indicate aesthetic losses. An exact value
cannot yet be placed on these losses. The capital cost of additional plants
for municipal sewage treatment to the extent necessary to allow the use
of streams for other than disposal of wastes is estimated at $20 billion over
the next 10 years; recreational losses alone are estimated to be in excess
of $6 billion a year.
Air pollution also has considerable impact on the health and welfare of
the Nation. More than half is from automobiles, and most of the remainder from industry, electric power generation, and refuse burning. The
costs of property damage alone have been estimated as exceeding $11 billion
a year; aesthetic and health damages substantially increase this cost.
Improper disposal of garbage, rubbish, and junk automobiles has imposed
costs on neighboring residences and industries. Installed incinerator capacity would have to be increased 50 percent, at an estimated cost of $280
million, to bring disposal in all cities to the minimum Public Health Service
standards for air pollution. Since the Korean war, a stock of more than
2^2 million junk automobiles has been accumulated in farmers' fields,
garage lots, junkyards, or along highways. These junk piles have become
so offensive that a number of cities, such as St. Paul and Oklahoma City,
have removed them to isolated locations.
PROGRAMS FOR POLLUTION ABATEMENT
Governments have recognized the damages from pollution and have acted
in several ways to prohibit or limit the dumping of untreated wastes. First,
both State and Federal statutes authorize the regulation of waste disposal
to improve the quality of the environment. Second, most municipalities
provide public facilities for the collection and treatment of waterborne
wastes; in addition, the Federal Government provides financial assistance
to municipalities for the construction of such facilities, and for devices to
measure air pollution. It would be desirable, wherever feasible, to add




120

as a third method a system of economic incentives to abate waste discharges.
Incentives might include fees or charges levied against a pollutor in accordance with the damages caused by his pollutants.
The existing programs have been partially successful. In many areas,
raw sewage and industrial wastes are no longer freely dumped into streams,
often as a direct result of Federal proceedings. Half of the total population
now lives in cities and towns where municipal sewage at least receives treatment to remove solid matter. Reports on air quality, based on new monitoring systems, have increased community awareness of the pollution
problem, and have led to some programs of abatement. The extent—and
results—of Federal concern, however, have been limited.
Enforcement of Water Quality Standards
Federal agencies have been concerned with water pollution since passage
of the Rivers and Harbors Act of 1899 prohibiting discharges that impeded
navigation. This and succeeding legislation of the same kind had little
effect on dumping of municipal and industrial wastes, however. Not
until the Federal Water Pollution Control Act of 1948 provided Federal
authority to require the elimination of waste discharges in interstate waters
were effective abatement policies inaugurated at the Federal level. The
1957 and 1961 Amendments strengthened and broadened the enforcement
powers to deal with pollution problems within the confines of one State
(upon the invitation of the State government). "Enforcement" begins
with collecting evidence that the pollution endangers the health or welfare
of specific persons, continues with a conference of control agencies leading
to a schedule of remedial measures, and, if necessary, culminates in public
hearings and court action to effect the remedial measures.
As a result of 37 actions taken under this procedure, there have been
significant improvements in water quality. Between 1957 and 1965, completed Federal enforcement actions at 10 specific locations resulted in the
reduction of pollution to an acceptable level. For example, in the Corney
Creek drainage basin of Arkansas-Louisiana, oil field brines were brought
under control so as to reduce significantly chloride pollution destructive to
agriculture and fishing. In the Animas River in Colorado and New Mexico,
radioactive uranium milling wastes that contaminated water supplies were
brought under control. In the lower Columbia River, significant progress
has been made in cleaning up parts of the river fouled by pulp and paper
wastes and municipal discharges.
The conference procedure, however, is cumbersome and time consuming.
Abatement has seldom taken place within 3 years of public notice of Federal
surveys, and half of the actions begun as long ago as 1957 have not yet
been completed.
The long delays in some cases result from the technological problems
involved in achieving adequate treatment of particular wastes. But most of




121

the delays follow from difficulties with organizational and financial arrangements among Federal, State, and local governments. Municipalities frequently refuse to band together to construct area-wide treatment systems,
so as to take advantage of economies in larger pipeline and plant operations.
Communities operating independently have experienced delays in getting
voter authorizations for financing, or have not constructed adequate plants
because of local limitations on borrowing. Enforcement schedules have had
to be set to take account of such local problems.
The enforcement action to curtail pollution in the Potomac River illustrates these problems of finance and organization. The first session of the
conference of control agencies was held in 1957. Water quality has improved somewhat since then. But raw sewage continues to be dumped into
the river because certain local treatment facilities were not constructed and
arrangements for combining the facilities of a number of Virginia communities were not worked out. Not until the construction last year of the
large Dulles Airport sewer were several Virginia communities finally integrated into the District of Columbia system.
More rapid progress is possible. The 1965 Water Quality Act established
a program and a new agency—the Water Pollution Control Administration in the Department of Health, Education, and Welfare (HEW)—to
consolidate and expand enforcement activities. States are required to set
water quality standards on their portions of interstate waters, and to establish enforcement procedures by July 1, 1967, or else the new agency must do
so. Water quality below these standards is subject to the Federal abatement
proceedings without detailed proof of specific damages. As a consequence,
enforcement procedures can take place concurrently on all interstate waters
and an accelerated approach to acceptable water quality can result.
Enforcement of Air Quality Standards
The Clean Air Act of 1963 provides for cooperation between State and
Federal agencies in dealing with air pollution and establishes an enforcement
procedure similar in the first stages to that for water pollution. The program has not been in operation long enough to have had substantial effects
on air quality. In 1965, the Act was amended to require that national
standards be set for automobile exhaust emissions on 1968 model cars.
Federal Financial Assistance for Pollution Abatement
Enforcement actions have been combined with financial incentives. The
Water Pollution Control Act provides for technical assistance, matching
grants for the construction of waste treatment facilities, and assistance on
comprehensive or area-wide planning of treatment facilities. The extent
of financial assistance is limited, however. Because of restrictions on the
dollar amount provided to any one city, on average only 20 percent, of
State and local authorities' total expenditures on treatment, and only about
5 percent of large cities' expenditures, have been covered.




122

The combination of clumsy enforcement procedures and limited incentive
grants has so far been insufficient to give promise of cleaning up water pollution within a reasonable period. Adequate treatment is now provided for
the wastes in areas containing only 38 percent of the population; at the
present rate of construction, new facilities will little more than keep pace
with the growth of population.
An extended program was authorized by the last session of Congress. Legislation increased the total authorization of Federal grants for treatment
facilities and relaxed somewhat the dollar limits on individual grants. Additional Federal assistance was included in the Economic Development Act of
1965 and as part of the programs of the Department of Agriculture and of
the Department of Housing and Urban Development. Federal help is also
available for monitoring and controlling air pollution, for research activities
on water and air pollution, and for demonstration projects for the control of
wastes from storm sewers. But grant limits are still restrictive, and the
research cannot be expected to produce immediate results.
Rubbishy Garbage, and Junk Automobiles
Solid waste disposal has long been a service of local government; recently,
some Federal aid has been provided for extending this service. The Department of Housing and Urban Development will help communities plan for
solid waste disposal programs and for the construction of facilities. Research and equipment demonstrations have been organized in HEW and the
Department of the Interior following last year's Solid Waste Disposal Act.
Last year's Highway Beautification Act calls for the screening or removal
of junk yards from areas adjacent to federally assisted highways. This is
essential as a beginning attack on the problem, but much more can be done
in the reuse of waste materials. The emphasis in this legislation is on screening the junk from view, rather than moving it through the scrap utilization
process. Unless it is moved more rapidly, the increasing number of automobiles to be junked will engulf more and more of our countryside in the
next few years. Research on new methods of melting and shredding junk
automobiles for economical use by the steel industry shows long-term
promise for keeping the junk automobile problem within manageable
dimensions.
NEW FEDERAL LEADERSHIP IN POLLUTION ABATEMENT
Leadership begins with setting the example: Federal facilities should demonstrate the nature and extent of practical pollution abatement. In an
Executive Order of November 17, 1965, the President required that water
pollution from all Federal facilities be controlled. Despite budgetary stringency, expenditures for waste treatment at Federal installations are being
stepped up in the year ahead. A similar order on air pollution from Federal
installations is forthcoming.




123

Federal leadership could be more effective if the recently required water
quality standards for interstate waters could be extended to cover waters
entirely within one State, and if the existing enforcement procedures could
be accelerated. If information on waste discharge could be obtained from
all pollutors when necessary, stream deterioration could more effectively
be predicted and prevented.
Pollution control can be truly effective only if it covers all sources in a
river basin, and only if it is based on the relationships between stream quality
at any one location and the discharges at all upstream locations. Methods
must be devised to assure that upstream treatment is coordinated with
downstream water use. The Government is taking the lead in experiments
to achieve such coordination. For the Potomac River—hopefully, pollutionfree by 1975—the Government has proposed that the enforcement action
be accelerated by bringing together the localities in four States to begin
treating the pollution problem as a river basin problem. The President has
announced that he will propose to extend the example of the Potomac, in
order to demonstrate how entire river basins can become scenic and recreational assets.
Although it must assist in eliminating the large backlog of capital requirements, the Federal Government cannot and should not finance local waste
treatment indefinitely. In the long run, localities should collect revenues
from the pollutors, adequate to sustain the system and to expand it in line
with normal growth. Charges based on use of treatment facilities provide
long-run incentives for the abatement of pollution. Effluent charges on
pollutors in sections of the river where there is no municipal treatment could
have a similar effect: when waste discharges cost the industrial firm a
certain amount for every pound discharged, the volume of wastes will be
reduced and the revenue collected will help to pay for collective treatment.
Existing Federal programs for pollution abatement, even when strengthened by the new measures to be proposed, cannot be expected by themselves
to eliminate the pollution problem in this country. If—unlike our fathers—
we are to leave a cleaner America to those who follow, then pollution abatement has to become not only a more pressing concern of localities, States, and
the Federal Government, but also an urgent concern of corporate and
individual policy.
EFFICIENCY IN TRANSPORTATION
The national transportation system is a crucial element in our economy.
Personal mobility of Americans is unparalleled, because of both public transportation and the private automobile. Freight transportation, with which
this discussion is primarily concerned, created the first and biggest of the
common markets, thus permitting other industries to capitalize upon the
economies of specialization and large-scale production.




124

Since World War II, the productivity of our transportation industries has
increased—with Government support—through an impressive number of
innovations. The postwar development of long-haul trucking has added
new flexibility in service, time-in-transit, and origins and destinations served.
The emergence of air travel has not only vastly increased the mobility of
millions of Americans but also has permitted overnight coast-to-coast movement of mail and high-value freight. New high-pressure, large-diameter
pipelines have lowered the cost of moving oil and provided the benefits of
natural gas to cities many hundreds of miles away from the gas fields. Improved barge equipment has substantially increased productivity of carriers
on the inland waterways.
As a result of these innovations, the different forms of transportation have
experienced varying growth rates, high for motor carriers and oil pipelines
and low for railroads. As shown in Table 20, railroad freight traffic did
not participate at all in the growth of the total transportation market between 1950 and 1960. The railroad share of total ton-miles declined at
an average rate of nearly 1 percentage point a year from 1940 to 1960.
Meanwhile, the share of motor carriers rose steadily. Since 1960, however,
the market share of the railroads has been stabilized. This has followed
in part from imaginative new services—such as truck trailers on flat cars
and three-decker automobile carriers—and from concurrent reductions in
rail rates.
TABLE 20.—Volume of intercity freight traffic, selected years, 1940-64
Transport agency

1940

1950

1960

1961

1962

1963

1964

Billions of ton miles
Number of ton miles

l

Total 2
Railways
Motor vehicles
Inland waterways..
Oil pipelines

619
379
62
118
59

1,063

1,314

1,310

1,371

1,450

597
173
163
129

579
285
220
229

570
296
210
233

600
309
223
238

629
332
234
253

100.0
43.7
22.6
16.3
17.3

100.0
43.4
22.9
16.1
17.5

1,531
666
3 347
250

Percent
Percentage distribution *
Total2
Railways
Motor vehicles
Inland waterways..
Oil pipelines

100.0
61.3
10.0
19.1

96
.

100.0
56.2
16.3
15.4
12.2

100.0
44.1
21.7
16.8
17.4

100.0
43.5
22.6
16.0
17.8

100.0
43.5
322.7
16.3
17.4

1

Estimates.
2 Total includes airways freight, not shown separately in this table.
3
Preliminary.
* Percentage distribution based on unrounded data.
Source: Interstate Commerce Commission.

The emergence of new forms of transportation and the resulting changes
in traffic patterns are only the more dramatic manifestations of technical
change. Truck trailers have steadily increased in size; freight cars have
become bigger, lighter, and smoother riding; and jets have replaced piston

795-9831 O—66

9




125

aircraft. All of these innovations have provided more ton-miles of transport
per unit of capital and labor.
Private initiative has been facilitated by public investment in transportation facilities, such as in the Interstate Highway System and the Federal
Airways System. Recently, public investment has taken the form of direct
aid to innovation; for example, for the development and demonstration of
high-speed rail passenger trains in the Northeast corridor between Boston
and Washington. The extent of Federal involvement is reflected in the
more than $5 billion expended during 1965 on domestic transportation programs, such as highway construction, river and harbors navigation aid, and
airways operations and construction.
While these dramatic changes have been taking place. Federal policy has
also been evolving. Although the formal philosophy of regulatory policy
has not been reshaped since 1920, many changes have been taking place
through decisions in individual cases and legislative amendments. Four
main directions of Federal policy appear to be emerging: (1) the development of a rate structure more oriented toward costs; (2) the planning of
transportation to provide comprehensive services; (3) promoting the adjustment of transport investment to meet changing demand requirements;
and (4) speeding the response to new technical opportunities.
COST-ORIENTED RATES
Rates charged by carriers are the signals that guide shippers to select
that form of transportation which minimizes transportation costs for a particular shipment. Intelligent shippers always balance carrier rates against
service advantages in terms of time-in-transit, warehousing, shipment size,
and possible freight damage. Shippers can be counted upon to make the
most economical choices, from their own standpoint. But these choices will
not necessarily be the most economical from the standpoint of the national
economy unless carrier rates truly reflect the cost to the economy of the service, including provision for adequate carrier profits. Hence, one condition
for transportation efficiency is a cost-oriented rate structure.
Yet transportation rates still depend in part on so-called "value of service." This is usually defined in terms of value of shipment—rates are higher
for diamonds than for coal shipments of the same size. Rates are also set
sometimes by carriers and approved by the regulatory commissions to preserve historical divisions of traffic among modes of transport. Reductions in
rates made possible by reductions in costs are often opposed and may be
disallowed, because they are not in line with value of service or because
they are destructive of existing traffic shares.
In recent years, competing carriers have increasingly sought to prevent
rate reductions based on costs. For example, in 1964 the Interstate Commerce Commission (ICC) handled 4,959 protests on rate adjustments.
About 90 percent (4,415 protests) involved rate reductions and three-fourths




126

(3,654) were from competing carriers rather than customers. Such a distribution of protests reflects an attempt to orient regulation to the settlement of disputes between competitors on tonnage shares. Although protests
before the ICC Board of Suspension were involved in only about 2 l/i percent of the 203,721 rates filed with the ICC in 1964, the controversial rate
reductions have been the important cases.
A major example of the attachment to rates based on existing divisions
of tonnage, rather than to rate reductions permitting the introduction of
cost saving innovations, is illustrated by the ICC case, Coal to New York
Harbor. Multiple carload service, which allowed considerable cost savings, was one alternative means of shipment for more than 20 million tons
of coal annually to East Coast electric generating stations. The alternative—proposed by the railroads—was to reduce rates on higher-cost single
carload service, but only on the 10 million tons competitive with oil. The
Commission approved the selective rate reductions on the carload service,
since multiple carload rates "would have application to all coal received
by utilities, only a part of which is vulnerable to displacement by oil," and
thus would include more extensive rate reductions than necessitated by
demand conditions. The historical pattern of rates was protected until
competitive forces finally brought about across-the-board reductions and
the lower-cost multiple carload service in 1963.
For maximum economic efficiency, rates should be related to costs, but
not to an arbitrary allocation of costs. Railroads and pipelines require
large, indivisible capital inputs such as rights-of-way and terminals. These
indivisibilities result in relatively high fixed costs, which, if allocated over
each traffic unit on an arbitrary basis, result in average costs unrelated to
the variable expenses of additional traffic. These average costs do not and
cannot serve as a rigid basis for rate making.
"Cost-oriented rates" in the true economic sense are related to the economist's concept of marginal cost—the increase in total expenses as a result of
carrying additional ton-miles of traffic. In order to ensure efficiency,
marginal, rather than average, cost should be the principal regulatory
criterion in applications for rate reductions. Some traffic, on which rate
reductions are not proposed, will pay more than marginal cost and in this
fashion fixed costs will be met. But where competition and new technology
dictate rate reductions, competitive rates could be lowered to the level of
marginal cost. The gains for users from allowing rates to be appropriately
geared to costs include lower rates on a larger volume of shipments. On
railroad transportation alone, according to an independent estimate, savings from possible rate reductions would come to more than $400 million
a year.
At the same time, costs should reflect the value of all resources required
to provide the service. Federally provided transportation facilities have continually expanded. Users should pay their fair share of the cost and maintenance of the highways, waterways, and airways facilities. As it is, there




127

are uneven payments from different classes of users—some making substantial payments and others none at all. Adequate user charges should be
instituted in the interest of both equity and over-all transportation efficiency.
The President's Budget Message again proposes new or increased transportation user charges.
COMPREHENSIVE POLICY PLANNING
Because there is competition among types of carriers for substantial portions of the freight tonnage, policies affecting one segment of the industry
impinge upon other segments. A comprehensive approach to transportation recognizes the costs and services of each component part, and develops
rate and service policies that provide transportation at minimum costs to
the Nation. This approach is now followed, to some extent, by the independent regulatory commissions and the Executive Branch of the Federal
Government, and is effected through considerable informal policy coordination. But it must be extended by organizational reform.
Each one of a number of executive agencies is now responsible for an
aspect of transportation policy. An effective means for promoting transport
development will be to combine all the major programs now within the
Executive Branch in a single Department of Transportation—as the President has proposed. This will include the transportation activities now under
the Department of Commerce, as well as the promotional and safety functions in aviation, urban mass transit, and maritime shipping. The new
Department will be an effective instrument for the coordinated development
of a national transportation system.
FLEXIBILITY IN TRANSPORT INVESTMENT
Traditionally, common carriers have a duty to serve. Regulation has
institutionalized that obligation with controls over entry and abandonments. The rationale for such controls has been partially undermined,
however, by technological changes, particularly in intercity trucking. Trucks
now can quickly bring service to shippers without the large fixed investment
required in railroading or pipelines. Regulatory policy has not yet fully
capitalized upon this flexibility of truck capital and operations.
While controls over entry and abandonment are surely desirable, considerably more flexibility would seem to be appropriate in this period of
promising technical developments—particularly in railroads and trucks—
in order to free private initiative to perform its traditional function of
economizing. More liberal standards for the modification of the scope of
service offered by a carrier, and particularly for the abandonment of unneeded railroad service, could allow a competing service—if available and
more efficient—to handle the traffic. Investment capital is scarce; if capital
can be withdrawn from little used service, capacity can be expanded in
the areas of profitable growth.




128

SPEED OF RESPONSE TO TECHNOLOGICAL CHANGE
Growing efficiency in transportation requires that new technological
opportunities be seized promptly. With a constantly changing technology,
the lag between average practice and the best possible practice is critical,
and reducing this lag will increase productivity gains. Prompt adoption
of new technical opportunities enhances the returns to the public and to
the carrier from private initiative in innovation.
The nature of the problem is illustrated by the case of the "Big John"
freight car service. The Southern Railway announced in June 1961
that shipments of grain would be made in new, four-compartment
aluminum cars, each able to transport 90 tons. The service was to consist
of 450-ton shipments in groups of five "Big John" cars, at rates approximately 60 percent below the prevailing carload rates. This service was
suspended and appealed through the courts to the Supreme Court twice,
once on the matter of continuing suspension beyond the maximum 7month period, the second time on the reasonableness of rates. Rate reductions were permitted in 1963 on a provisional basis pending final action.
Only after the final court review—in September 1965—were the rates
found to be "just and reasonable."
Difficulties of this type will be mitigated as cost-oriented rates and flexibility in investment become more integral parts of regulatory policy. The
benefits of the "Big John," for example, extend beyond the carrier and the
shipper to the economy of the region served. Consumer savings, estimated
at $30-$40 million annually, on meat, bread, butter, and milk have occurred
in the Southern Railway region from the expansion of the livestock and
grain industries. No economy can be fully efficient if it takes 4 years to
determine pricing for such new innovations.
Other innovations cut across carrier types, as in the trailer-on-flat-car
service. New technological opportunities could be fully exploited by removing obstacles to combinations of modes of transport and by more ready
acceptance of shipper and carrier-owned equipment by railroads and motor
carriers.
MARITIME POLICY
A special relationship has long existed between the Government and the
maritime industry. For reasons of defense, the Federal Government provides extensive assistance to our merchant marine. In the past year, an
Interagency Task Force completed a comprehensive study of U.S. maritime policy. Its many recommendations were designed in part to improve
the competitive position of the industry. Bulk ships of a new and specialized construction would be built and subsidized, enabling their operators to
compete for commercial bulk cargoes. In addition, cargo preference
would be modified and ultimately eliminated.
Operating subsidies would be restructured by adding incentives to reward
efficiency. Operators of unprofitable, subsidized passenger operations would




129

be encouraged to phase out their operations. Greater operating freedom in
route selection would be granted to U.S. operators, and a reduction of
detailed Government supervision would be instituted.
The subsidy for U.S. shipyard support would be related to national emergency need for shipyard capability. Beyond that need, ships could be built
either in the United States or abroad, whichever was more economical for
the ship operator.
In view of the major restructuring of maritime policy recommended in
the report, the maritime industry and maritime specialists both within and
outside Government have been asked to study the proposals. Their reactions and suggestions will serve as a constructive basis for implementing new
directions in this portion of transportation.




130

Chapter 5

Progress and Problems in Agriculture
AGRICULTURE is one of the most progressive segments of the
±~\ American economy. Productivity has grown faster there than in any
other major economic sector. U.S. agricultural abundance is the envy of
the world. Yet incomes of most farm families continue to fall short of
those earned in other occupations. And agricultural employment is steadily
declining. This paradox is a perennial source of confusion and protest.
For many years our commercial farms have had a total capacity to produce far in excess of the ability of our markets to absorb at reasonable prices.
The causes of this are not hard to understand. As incomes have expanded, an ever smaller fraction of them has been used to buy the products
of our farms. Over the past 50 years, disposable real income per capita in
the American economy has nearly doubled; per capita consumption of farm
products has risen by only 17 percent. As we become more affluent, we eat
better and dress better. But most of our additional income goes for other
goods and services that require little or no input from farms. Because the
"income elasticity" of demand for farm products is low, the fraction of the
labor force engaged in agriculture would be expected to decline as total
incomes rise.
This relative decline in the need for farmers' services has been greatly
intensified by another essential fact: the productivity of farm workers has
been increasing much more rapidly than productivity in the economy generally. Because of the slow growth of demand and the rapid increase in
productivity, there has been a persistent tendency for farm products to be
overproduced, depressing farm prices. But the "price elasticity" of demand
is likewise low: lower market prices do not result in greatly increased consumption of most farm products in the U.S. market.
Exactly 50 years ago, the American farm population reached its peak—
32.5 million people—32 percent of the total population. One American
farm worker produced sufficient food and fiber to supply himself and 7
other people. Today, farm people total less than 13 million and make
up 6.4 percent of the population. Each farm worker produces enough
food and fiber to meet the needs of more than 33 persons.
The steady and rapid decline in the demand for farm labor and the
natural increase of the farm population have meant that agriculture is
rapidly expelling a sizable fraction of its actual and potential workers.




Since 1940, 25 million people—on the average, 1 million a year—have
left the farm. Although the vast migration from farm to nonfarm occupations and from rural to urban areas proves that mobility is high, the
outward movement has never been fast enough to improve significantly
the economic position of farm labor relative to labor in the nonfarm
economy. Despite programs designed to minimize the income gap, farm
incomes historically have been depressed relative to incomes elsewhere.
Today, incomes of many farm families are low, particularly incomes of
those who live on small inefficient farms and who have been unable to
adapt to modern agricultural technology. However, a substantial number
of farmers who have successfully adapted and who produce the bulk of
our food and fiber are realizing incomes nearly equal to what their resources
could earn off the farm.
For many low-income persons, a move to nonfarm occupations is not
possible. Some farm residents are too old, do not have or cannot acquire the
necessary skills, or simply lack the resources needed to finance a change.
Consequently, the least mobile portion of the farm labor force remains
stranded in eddies of rural unemployment or underemployment—on small
farms, or in barely remunerative rural nonfarm occupations. Poverty
is one of rural life's most urgent yet neglected problems. And some of
those who do move to cities in hope for a better life often find themselves ill
equipped for the jobs that are available and socially unable to adjust to the
ways of urban life.
Farm people who are able to migrate successfully usually earn more than
they could in farming. Those who remain are helped as well, since the
transfer of labor out of agriculture reduces the excess resources which hold
down average farm incomes.
These few basic considerations oversimplify the complex factors at work
in U.S. agriculture and the difficult issues involved in framing agricultural
policy. Some of these issues and complexities are discussed in the sections
which follow: the changing importance of labor, land, and purchased inputs
in farming; the potentially vast but uncertain world market for our farm
products; the increasingly separate problems of commercial agriculture and
of rural poverty; and the various public policy approaches for dealing with
these problems
COMMERCIAL AGRICULTURE IN THE 1960'S
Midway through the 1960's commercial agriculture is a highly efficient,
competitive industry adjusting to market forces and a rapidly changing technology. Labor and, to a lesser extent, land are being replaced by such other
inputs as fertilizers, insecticides, machinery, and equipment. Bigger and
faster machines enable the individual farmer to operate on a larger scale.
Thus commercial farms are becoming fewer in number and larger in size.




132

Between 1950 and 1965, farm output increased by 35 percent while the
quantity of total inputs rose by only 3 percent. Output would have risen
more if there had not been production control programs. The production
gains were achieved with 11 percent less cropland and 45 percent fewer
man-hours than in 1950. But the use of fertilizer more than doubled, and
somewhat more mechanical power was employed. Today, 56 million acres
of cropland are withheld from production through Government programs—
about one-sixth of the crop acreage in the United States.
Productivity per acre has grown rapidly. Crop production per acre in
1965 was 18 percent greater than the 1959-61 average. Wheat yields rose
by 12 percent, cotton 19 percent, and corn 29 percent. Increases in yields
will continue as farmers adopt the new technology constantly being devised
by university and Department of Agriculture scientists, agricultural chemical
companies, and machinery manufacturers.
STRUCTURAL CHANGES
The economic development of U.S. agriculture is producing two distinct
sectors—one expanding and one contracting—within the farm economy.
The contracting sector, presently comprised of about 2 million farms with
gross annual sales of less than $10,000, is characterized by a rapidly declining
number of farms. It has been the source of much of the labor flow from
agriculture. The decrease in the total number of farms between 1960 and
1965 is estimated at 573,000—with most of this decline resulting from a
decrease in the number of full-time farms with annual sales of less than
$5,000. Many of these small units disappeared through consolidation with
other farms; some grew in size and entered agriculture's expanding sector.
This tx'end of declining numbers of small farms is expected to continue.
The expanding sector, made up of farms with annual gross sales in excess
of $10,000, is growing rapidly. Many of the farmers in this sector are
realizing returns nearly comparable with what their resources could earn in
nonfarm occupations. During 1960-65, the number of farms in this sector
increased by one-fifth, to slightly more than 1 million, or 31 percent of
all farms; the share of farm marketings provided by these farms rose from
73 percent of the total to an estimated 83 percent. Yet the farms in the
expanding sector typically remain family enterprises: the percentage of
family farms (farms with families as risk-taking managers and using less
than 1.5 man-years of hired labor) has not changed since 1960.
Adjustments in agriculture's expanding sector have required greatly increased amounts of financial capital. Total farm indebtedness has increased
more than 50 percent since 1960, largely in the form of higher farm real
estate debt. Rapid farm consolidation has required additional real estate
credit as well as shorter term credit for equipment and working capital.
Active bidding for available farm land has helped to raise agricultural land
values by 6 percent during the past year. The average value of real estate
per farm now exceeds $50,000. Increased land values permitted farm pro-




133

prietors' equities to grow to record levels in 1965. Although the increasing
ratio of farm debt to total farm assets and incomes is evoking some concern,
foreclosure rates remain very low.
FARM INCOME
Gross farm income, including marketing receipts, Government payments,
and nonmoney income from farms, has risen steadily since 1960. Gross
income in 1965 totaled $44.4 billion, an increase of more than 5 percent
from 1964 and 17 percent from 1960. Total marketing receipts in 1965
rose sharply above those in 1964, largely as a result of higher prices for meat
animals. Receipts from crops increased moderately, reflecting higher prices
and larger marketings of vegetables and oil crops. Direct Government payments to farmers are estimated to have been $250 million more than the
$2.2 billion paid in 1964.
Realized net farm income (excluding net inventory change) in 1965 is
estimated at $14.1 billion, nearly 9 percent above 1964 and the highest since
1952. On a per farm basis, operators' realized net income in 1965 reached a
record $4,175, a 12 percent increase over 1964 and 41 percent higher than
in 1960.
The 1966 prospect for commercial agriculture appears favorable, owing in
large part to continued prosperity in the nonfarm sector. Rising levels of
income at home and abroad will strengthen the demand for many farm
products. The Food and Agriculture Act of 1965 will provide some income
gains to farmers. Net farm income is expected to rise moderately. Much
of this gain will accrue to the 1 million farms in agriculture's expanding
sector.
POVERTY IN AGRICULTURE
Even in a prosperous economy, many rural people are unable to earn a
satisfactory living in agriculture. Estimates based on the 1960 Population
Census indicate that 4.9 million farm people in 1959 were living in poverty,
as defined by the Social Security Administration's poverty-income standard.
Many of these were families living on low-production farms, seriously undercapitalized in equipment and livestock. Today, nearly all families operating
full-time farms with gross sales of less than $2,500 a year fall into this classification ; many of those with annual sales of between $2,500 and $5,000 are
also poor. Families on most of these farms derive relatively little benefit
from Government price and income support programs.
Underemployment is the common malady of the farm poor. Their hope
for a more adequate income lies in their ability to obtain work off the farm.
For some, this requires migration to localities where nonfarm jobs are
available. For many, it means occupational migration—remaining on
the land but earning a livelihood from some occupation other than farming.




134

But others, for health, age, or financial reasons, may find neither type of
migration possible. These persons constitute the "hard core" of rural
poverty. Their problems are the most intractable of all.
Both occupational and geographic migration have been occurring at a
rapid pace in recent years. Net migration from farms during the early
1960's is estimated at 816,000 people annually. Preliminary data from the
1964 Census of Agriculture indicate that much of this movement occurred
in the Mississippi Delta and other areas of the South.
Included in this migration have been large numbers of Negro farm
families—a group with a particularly high incidence of poverty. Between
1960 and 1964, the numbers of nonwhites on farms decreased by 35 percent
whereas the white farm population fell by 14 percent. Nonwhites account
for one-third of the total decline in the farm population since 1960.
Although the number of farm people in poverty has declined substantially
in recent years, this has resulted more from outmigration than from an
improvement in the earnings of low-income farmers. Some of those who
give up farming earn more adequate incomes in their new jobs and thus
escape poverty. Those less fortunate in their search for other employment may drop out of farm poverty only to find themselves among the
nonfarm poor.
Prosperous conditions in the nonfarm economy have aided many of the
farm poor by facilitating their transfer to higher paying jobs outside of
agriculture. Government programs emphasizing education and regional
economic growth will also assist rural low-income people. The Manpower
Development and Training programs are providing some persons with the
skills necessary to compete effectively for nonfarm jobs. During the summer
of 1965, 156,000 rural children participated in Project Head Start. The
Economic Opportunity Act of 1964 provides health facilities, day camps,
and special education programs for children of migrant workers. Education in rural areas will be improved through the Elementary and Secondary Education Act of 1965 which allocates Federal funds to school districts
with heavy concentrations of children from low-income families. The Public Works and Economic Development Act of 1965 authorizes funds for
regional economic development programs in low-income areas. The Department of Agriculture's newly established Rural Community Development Service will facilitate the extension to rural areas of services provided
by Government programs.
But the remaining tasks are great. In 1964, the incidence of poverty
among farm households was 30 percent, compared with 19 percent for nonfarm families. Money income that year for poor farm households averaged
$954; income for other farm households averaged $5,671.
Farm poverty exists in many rural areas of the United States but is particularly prevalent in the South and in Appalachia. Scattered but significant farm poverty persists in the Ozark region and some areas of the
Southwest and Northwest. Migrant and other hired farm workers continue




135

to be among the most disadvantaged people in America.
perity scarcely touches the lives of these individuals.

National pros-

THE EXPORT MARKET
The export market for U.S. farm products has grown rapidly in recent
years. Strong foreign demand and measures to assist some exports have
raised the value of total farm exports by more than 35 percent since fiscal
1960. In fiscal 1965, agricultural exports accounted for 17 percent of
the cash receipts from farm marketings; in recent years, the foreign market
has taken two-thirds of our total annual wheat production, nearly twro-thirds
of rice, almost one-half of soybeans, one-third of cotton, and nearly onefourth of tobacco.
Between 1959-61 and 1965, feed grain exports rose by 56 percent; soybean exports increased by 66 percent. Today, the United States provides
nearly half of all feed grains moving in world trade. In 1965, shipments
of soybean meal, a component in animal feeds, were more than three times
those in 1959-61. The large gains in these exports reflect the growing
affluence of the developed world and the increased preference by consumers
for the better foods derived from these products—cooking and table fats,
poultry, eggs, dairy products, and meats. If access to the markets of the
developed countries can be maintained, the United States will continue to
be an important supplier of these products.
Exports of wheat and tobacco have grown much less rapidly than shipments of feed grains and soybeans; and cotton exports have fluctuated
sharply in recent years. Export competition in these products is likely to
increase in the future. Greater competition in the world wheat market
may come from traditional wheat exporters; and larger supplies may be
expected from Western Europe. Several developing countries view cotton
and tobacco exports as important sources of foreign exchange, and they
may provide larger supplies to the world market. Increased competition
from foreign producers of synthetic fibers may also restrict the growth of
U.S. commercial cotton exports.
Most U.S. farm exports are sold commercially for dollars, although sales
through special export programs at noncommercial terms are also very
large. Concessional exports in 1964 through the Food for Peace program
accounted for two-thirds of wheat exports, two-fifths of milled rice shipments, and about one-fifth of cotton and edible vegetable oil exports. In
fiscal 1965, the total value of farm exports was $6.1 billion, of which approximately 73 percent constituted dollar sales. Since 1959-61, dollar sales have
risen by 47 percent and shipments through Food for Peace by 21 percent.
The dollar excess of agricultural exports over imports contributed $439
million to the U.S. trade balance in fiscal 1965. The local currencies generated by Food for Peace sales conserve dollars through their use in payment




136

of some U.S. Government expenses abroad. Long-term dollar credit sales
of Food for Peace shipments will generate exchange earnings in future years.
FARM COMMODITY STOCKS
Because of large export demands and recent modifications of domestic
commodity programs, the size and composition of U.S. Government controlled stocks of farm products have undergone substantial change in recent
years. The repository of these products accumulated under price support programs is the Commodity Credit Corporation (CCC). This
agency acquires products during periods of excess supplies and adds to
market supplies when demand warrants, thereby contributing to price stability at the farm and retail levels. Reserves held by the CCC have proven
valuable in times of national and international emergency. But excessive
stocks are burdensome to taxpayers and cause concern among our international trading partners.
Between June 30, 1960 and mid-1965, total CCC investment in farm
products declined by approximately 13 percent (Table 21). Total investment in wheat and wheat products, rice, feed grains (corn, barley, grain
sorghums, and oats), and peanuts declined by 41 percent. By mid-1965,
carryover stocks of wheat were the smallest since 1953. Strong foreign
demand, particularly from developing countries with food shortages, should
lead to further reductions in grain inventories.
TABLE 21.—Investment of Commodity Credit Corporation in commodities, fiscal years 1960-65
[Millions of dollars]
Fiscal year
i960
1961—
1962

Total

-.

1963
1964
1965. .

Feed
grains i

Wheat and
products

Cotton 2

Tobacco Other commodities

7,323
7,039
6,657

3,122
3,360
2,594

2,615
2,707
2,292

889
352
840

418
388
305

280
232
626

7,257
7,098
6,387

2,450
2,489
1,968

2,329
1,798
1,433

1,470
1,750
1,898

437
667
826

570
394
261

1 Includes corn, barley, grain sorghums, and oats.
2 Includes upland and long staple.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Agriculture.

Stocks of cotton and tobacco have continued to grow. By mid-1965,
Government held stocks of upland cotton totaled 11.9 million bales, valued
at $1.86 billion—a supply adequate to meet domestic mill requirements for
more than 15 months at 1964 consumption rates. A further increase of 2
million bales is expected by August 1966. Government held stocks of tobacco have more than doubled since 1962. Clearly, stocks of these commodities are excessive. The prospect for reducing them rests on the 1965
cotton and tobacco legislation which is designed to lower production and
raise total consumption.




137

FARM POLICY IN THE 1960'S
The dominant problem in agriculture, as manifested by a long history of
farm legislation, is that average farm income is low relative to incomes in the
rest of the economy. The income problem exists primarily because the
capacity to produce has grown more rapidly than consumption. Under
present demand conditions, too many resources are committed to farm production in the United States.
One set of policies has approached this problem from the supply side—
by attempting to reduce the resources used in production through various
controls and land retirement programs. Other measures have been designed
to expand domestic and foreign demand for American farm products. Few
of the programs of the past three decades have been unqualified successes.
Many have produced income benefits; all have provided experience useful
in improving old policy tools and forging new ones.
THE FOOD AND AGRICULTURE ACT OF 1965
The Food and Agriculture Act of 1965 is based upon experience gained
from these policies of the past. It recognizes the national goals of a
prosperous, efficient agriculture and of abundant, moderately priced food
for consumers. It reflects the fact that agriculture must export to remain
prosperous and therefore that American farm products must remain competitive on world markets. It recognizes the increasing productivity of
American agriculture and the need to withdraw excess resources from production in order to balance supply and demand at reasonable prices. Yet it
provides flexibility to meet present and future needs for food and fiber.
The legislation deals with the problem of excess supplies in agriculture
and the need to divert some farmland from crop production. Through the
Cropland Adjustment Program, up to 40 million acres of farmland can be
shifted from crop production to other uses. The land adjustment contracts, running for a period of up to 10 years, promise to move land out of
production at less Government cost than would be required under annual
diversion programs. The Program will also help to meet the rapidly growing demand for land for recreational and conservation uses.
The 1965 agricultural legislation continues the trend of American farm
policy toward lower price supports and a modified system of direct payments
to producers. Direct payments, for several years a part of domestic wool
and sugar programs, have only recently been applied to major farm commodities. In 1961, a modified version of this principle, together with low
price supports and land diversion payments, was implemented for feed
grains. Later, it was applied to wheat; the 1965 legislation applies it to
cotton.
This approach separates to a substantial degree the price mechanism from
the income support operation. Price supports are set at low levels, and pro-




138

ducers5 incomes from the market are supplemented by direct Government
payments. Consumers enjoy favorable food and fiber prices, producers
realize adequate incomes, and exporters can compete more effectively in
the world market.
The principle of direct payments is illustrated by the cotton provisions of
the Food and Agriculture Act. For the 1966 crop, the average cotton
support price to producers will be set at 21 cents a pound, compared with
29 cents in 1965. Producers who participate in the program and divert some
land from cotton production to soil conserving uses will receive a direct
payment of approximately 9J/2 cents a pound on that part of their production
used domestically. This lower support rate will permit cotton to move
abroad without the export subsidy required in previous years—equal to 5.75
cents a pound for the 1965 crop. Domestic mills will also be able to purchase cotton at lower prices. Larger total consumption of American cotton
should result.
The Act gives the Secretary of Agriculture important new flexibility in
the administration of commodity programs. This will assure that the programs can be adapted to changing production and market conditions.
NATIONAL COMMISSION ON FOOD AND FIBER
Existing agricultural programs do not end the search for sound farm
policy, but provide a good base upon which to build. This search will be
carried on aggressively within the Government and by the President's newly
established 30-member National Advisory Commission on Food and Fiber.
The Commission is to make a penetrating and comprehensive study of agricultural and related foreign trade policies of the United States. This
review will consider consumer interests, the welfare of agricultural suppliers,
producers and processors, and the national interest. It is expected that the
recommendations of this group will move American agricultural policy
further toward the objectives of abundant farm products at reasonable
prices, parity of opportunity for farm people, and efficient use of our agricultural resources.




139

Chapter 6

The International Economy

T

HE WORLD ECONOMY has shown remarkable progress during the
two decades since the end of World War II. In the developed countries,
economic expansion has been far more rapid and steady than ever before.
The less developed countries have also experienced unprecedented growth.
Yet in this latter group, absolute levels of income remain disturbingly low,
and few countries show clear promise of attaining adequate, self-sustaining economic growth in the near future. The world's single most important—•
and most intractable—economic problem lies in the less developed countries
of Africa, Asia, and Latin America.
In the period between the two World Wars, the recognized common economic problems of the industrial countries were economic stagnation, largescale unemployment, and wide fluctuations in output and prices. Today,
these problems have essentially been mastered. But these countries are now
confronted with the problems of determining how their economies can successfully adjust to the requirements of an increasingly integrated world
economic system and how international monetary arrangements can best
serve to assist and facilitate this adjustment.
The first major section of this chapter briefly considers some of the problems of the less developed countries and ways the industrial countries
can help to solve them. Next, the evolving integration of the world
economy and the new problems associated with it are sketched. The chapter
then discusses the changes in economic and financial policies needed to ease
the mutual adjustment of countries to balance of payments disturbances and
to provide for the adequate and dependable growth of international liquidity.
Finally, it treats the U.S. balance of payments and the policies adopted to
restore the international equilibrium of the U.S. economy.
THE LESS DEVELOPED COUNTRIES: PROGRESS,
PROBLEMS, AND POLICIES
Since 1950 the less developed countries of Africa, Asia, and Latin America as a group have increased their real production at an estimated average
rate of 4/2 percent a year. However, population growth in these countries
has also been rapid—between 2 and 3 percent a year. As a result, the annual




140

rise in real output per person has averaged roughly 2 percent—well below
the rate in the developed countries. Moreover, very few of the less developed countries could maintain even this pace of economic expansion without
considerable assistance from abroad; despite this aid, there appears to have
been some slowdown in their growth in recent years.
Aggregate figures conceal significant differences among the less developed
countries. In a number of them—for example, Israel, Jordan, Taiwan,
and Thailand—real output from 1957 to 1964 increased by 7 percent a
year or more. In others—Indonesia, Lebanon, Morocco, Paraguay—output
failed to keep pace with population increases.
FOREIGN ASSISTANCE
Capital
To achieve an adequate pace of economic growth, most developing areas
of the world require more capital than they can accumulate from domestic
savings or can raise externally on commercial terms. Foreign aid can
therefore contribute to economic development. But the way the recipient
countries use their resources is much more important. Consequently, as a
condition for its bilateral development assistance, the United States stipulates that the recipient country adopt policies which effectively utilize local
resources.
The less developed countries are themselves financing the major part
of their development needs. In recent years, three-fourths of their gross
investment has come from domestic savings. Table 22 shows their sources
TABLE 22.—Net flow of long-term financial resources to less developed countries, 1960-64
[Billions of dollars]
Source

1960

Net flow to less developed countries *
Bilateral flow from countries:
From DAC countries: 4
Official- Total
United States
Private: Total
United States.

1962

1961

1964

1963

7.2

8.6

8.2

8.9

4.2
2.5
2.3
1.0

5.2
3.2
2.6
1.1

5.4
3.4
1.9
.8

5.7
3.6
2.0
.7

.1
.2

.2
.3

.2
.4

.2
.4

.3

.3

.4

.7

2

9. 7

3

_

._

From other countries:
Other industrial countries 5
Communist countries
_
Flow from multilateral organizations

7

1

5.6
3.3
2.6
1.3

(6)
.8

Excludes loans and credits of 5 years maturity or less. Loans are net of repayments.
2 Estimate.
3
Bilateral grants and loans.
4
Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) consists of Austria, Belgium, Canada, Denmark, France, Federal Republic of Germany,
Norway, Portugal, United Kingdom, and United States. (Sweden joined DAC in July 1965.)
5
Australia, Finland, New Zealand, South Africa, Sweden, and Switzerland.
e Not available.
? Disbursements by multilateral organizations to less developed countries.
NOTE.—In addition to receipts shown in this table, the less developed countries receive contributions from
nonindustrial countries, notably Kuwait.
The table does not net out private capital flow from less developed countries to developed countries.
Detail will not necessarily add to totals because of rounding.
Source: Organization for Economic Cooperation and Development.

7'95-983 O—66




141

of foreign capital. Although the total has increased somewhat, official
bilateral aid has been stable in recent years.
Estimates of the foreign exchange requirements of the less developed
countries vary widely, but they all indicate the need for a substantially increased inflow of foreign capital. The World Bank staff recently estimated
that over the next five years the less developed countries could effectively use
$3-4 billion a year more than is currently available to them.
The need to finance existing foreign indebtedness is an important and
growing claim on the foreign exchange resources of the less developed
countries. About half of their gross capital inflow is offset by $6 billion
of payments for amortization and interest on loans and dividends on
investments. In July 1965, the major countries extending aid agreed in
principle that more grants and softer loans are required.
The International Development Association (IDA), an affiliate of the
World Bank, is one of the international organizations which meets the
needs of developing countries for capital on soft terms—interest-free loans,
a modest service charge, and a repayment period of 50 years. The IDA's
resources are derived from contributions by the economically advanced
member countries and from the earnings of the World Bank. The Association must have additional funds from its members if it is to continue even
its current level of operations.
In 1965, President Johnson announced U.S. support for an intensified
program of economic and social development in Southeast Asia. The
United States pledged $200 million to the $1 billion capital of a new multilateral lending institution, the Asian Development Bank, designed to foster
the economic development of the region. In addition, the United States
has indicated its willingness to provide $100 million for a special fund for
soft loans and grants for Southeast Asian development, if other countries
will join in such a venture.
Private foreign investment also makes a crucial contribution to the less
developed countries. It provides not only capital but associated technical and managerial skills. As economic growth begins, private investors—where they are welcome—will respond to opportunities for investment. For example, in three countries with successful growth records—
Greece, Israel, and Taiwan—the inflow of private foreign capital rose
from 1.8 percent of gross national product (GNP) in 1957 to 3.1 percent
in 1963.
Agricultural Production and Food Aid
The recent slowdown in economic growth in some less developed countries
can be ascribed to the failure of their agriculture to expand sufficiently.
Indeed, in Latin America and in the Far East, per capita food production
is below levels reached prior to World War II.
America's agricultural abundance has long been used to help to meet the
food needs of the less developed world. Our food aid program, Food for




142

Peace, is also important in the promotion of economic growth and has
helped by freeing resources for industrial development. But food aid must
not be allowed to impede the development of agriculture, since, in many
countries, agriculture may be the most rapid route to general economic
growth. Moreover, such progress in agriculture is essential to the long-run
solution of foreign food shortages. If the gap between food needs and
production in the less developed countries continues to widen at the rate
of the past few years, even the United States with its vast food-producing
capacity will not be able to fill it.
This year, in addition to the Food for Peace program, the United States
will institute a special assistance program to help foreign lands expand
their agricultural output.
Human Resources
The less developed countries are seriously handicapped by shortages of
trained manpower—indeed, illiteracy is a major problem. Since 1957,
the less developed countries have increased their investment in education
by an average of 15 percent a year. The United States is assisting educational development through some 350 educational projects in 65 developing
countries and in the past 3 years has financed the construction of approximately 210,000 classrooms to accommodate 6.7 million students. Substantial assistance has been given to develop teacher training colleges, to
modernize educational systems and curricula, and to link educational programs to the manpower requirements of these countries.
The U.S. Government is now joining a new worldwide endeavor of
educational cooperation and assistance, emphasizing the educational needs
of school-age children and encouraging more of our teachers and school
administrators to serve abroad.
The United States has long been deeply committed to improving health
conditions in the less developed countries. Major support is provided to
the health programs of the United Nations, its specialized agencies, and five
multilateral regional organizations. Total international health obligations
of the U.S. Government will amount to approximately $270 million in the
current fiscal year and are scheduled to rise substantially next year. However, our potential for technical assistance in this field is only now being
fully mobilized by the Federal Government. New programs will give
priority to the development of a cadre of U.S. international health workers
and to helping the less developed countries train more health workers
themselves. The United States will also increase substantially its support
for the eradication of communicable diseases and for the provision of
potable water supplies in many regions of the world.
Child malnutrition increases susceptibility to infectious diseases. In
many countries^ this combination kills half of all children before the age of
five. Physical and mental retardation of the surviving malnourished
youngsters frequently is permanent. To assist developing nations in their




143

efforts to meet the nutritional needs of many additional millions of children,
U.S. programs will be substantially expanded this year.
Rapid population growth compounds economic and social problems in the
less developed countries. As a result of deliberate efforts to limit the size of
families, population growth rates have leveled off or are falling in Hong
Kong, Singapore, and Taiwan. Korea, Pakistan, Tunisia, and Turkey also
have initiated programs. But in the less developed world as a whole, population growth is continuing at an increasing rate.
In the short run, population control can limit the number of dependent
children supported by each member of the labor force. But it will be some
time before it can have an appreciable impact on total numbers. Over the
longer run, it can ease problems of unemployment and underemployment
and raise individual productivity.
To help countries which request U.S. assistance with their population
problems, the United States will mobilize and make available technical and
financial resources, including the support of training programs for foreign
personnel who can in turn train the thousands of individuals required to
carry forward family planning programs.
IMPROVING TRADE PROSPECTS
Both the advanced and the emerging nations must give greater attention
to policies to accelerate the growth of the export earnings of the less developed countries. For these countries as a group, export earnings yield four
times as much foreign exchange as do all loans, grants, and direct investments from abroad. Yet these nations are not fully sharing in the tremendous growth of world trade. The reasons for this are to be found largely in
the sluggish secular growth of demand for their traditional primary products.
Although exports of manufactured products from less developed countries
doubled between 1953 and 1964, foodstuffs, raw materials, and petroleum
nevertheless accounted for 85 percent of their total shipments in 1964. Rising domestic demand, inflation, and overvalued exchange rates in some
countries have also adversely affected sales abroad.
Most less developed countries are vulnerable to short-term export instability. For individual primary commodities and primary exporters, a major
source of instability has been the wide and erratic movement of prices. The
less developed countries need greater assurance that development programs
will not be vitiated by unpredictable declines in export earnings which are
beyond their control. International agreements for some commodities,
such as coffee, represent one technique for dealing with this problem.
Financial arrangements to help to offset shortfalls are another technique.
Three years ago, the International Monetary Fund (IMF) established a
special drawing arrangement for compensatory financing of short-term fluctuations in members' export earnings. Only three countries have thus far
used the facility, since price trends of primary commodities were generally
favorable to producers throughout 1963 and much of 1964. In view of




144

recent price declines, more applications may be expected. The United
States and other governments are now considering new ways to provide additional short- and long-term financing to offset export shortfalls.
Liberal commercial policies by the developed countries will contribute
to world economic development. A successful Kennedy Round will benefit
the less developed as well as the developed countries. However, there
will remain room for further tariff reductions and import liberalization of
special significance for development. Many advanced countries could
abolish or relax a number of import restrictions without causing economic
dislocation. Recent studies indicate that general tariff reductions, even on
those manufactures which are protected by low duties, might ultimately
yield a significant increase in exports of less developed countries. The
developed countries could also contribute to their own growth and that ot
the less developed countries by reducing agricultural protectionism. Moreover, nontariff barriers to imports, such as quantitative restrictions and the
high consumption taxes which some countries impose on tropical products
(coffee, cocoa, and bananas) for purely fiscal reasons, frequently place a
serious burden on the less developed countries.
RECENT CHANGE IN THE DEVELOPED COUNTRIES
The main problem of the developed countries in the 1960's is not how
to promote growth but how to avoid stunting growth in dealing with the
balance of payments and domestic price stability.
The rapid postwar economic growth of the developed countries may be
due to basic structural and technological changes which only future economic historians will be able to distinguish clearly. But there can be no
question that growth has been spurred by two highly visible developments.
First, and more important, the governments of most countries have assumed
an active responsibility to promote expansion and growth, guided by a new
understanding of how government policy affects economic activity. Second,
in many countries of Europe and in Japan, a dynamic source of expansion
and modernization has been the growth of export markets, stimulated by the
dramatic postwar movement toward economic integration. Rapid growth
in each country has provided expanding export markets for the products of
others, in a chain of mutually supporting expansion.
A number of postwar institutions have contributed to integration: the
General Agreement on Tariffs and Trade (GATT), the International
Monetary Fund (IMF), and the Organization for Economic Cooperation
and Development (OECD). Through their efforts, import quotas on
trade in manufactured products have been largely abandoned; tariffs have
been greatly reduced; the principal currencies have become convertible.
Moreover, great new free trade areas have been created, especially the
European Economic Community (EEC) and the European Free Trade
Association (EFTA). By the beginning of 1966, internal tariffs within
the EEC and EFTA had been reduced by 80 percent.




145

THE GROWTH OF INTERNATIONAL TRADE
As a result of all of these developments, international commerce has flourished. In the decade from 1954 to 1964, exports of the advanced industrial
economies grew by an extraordinary 117 percent, and exports of the less
developed areas rose by 59 percent.
To be sure, uncertainties within Europe are now having their impact both
on further integration within the EEC and on the external relations of the
EEC, including the current Kennedy Round of trade negotiations. The
pace of integration and especially the movement toward more liberal world
trade have been slowed. The Kennedy Round is at a virtual standstill.
The American commitment to the Kennedy Round—the boldest and most
significant effort to liberalize the world trading structure yet undertaken—
is as firm as ever. But the protracted internal crisis of the EEC has prevented any significant negotiations with that group of states since last
summer. The longer this paralysis continues, the more uncertain are the
prospects. The negotiating authority provided by the Trade Expansion
Act expires in less than 18 months. If these important negotiations are to
yield their full potential benefits, meaningful deliberations must resume, at
the latest, early this spring. Were the Kennedy Round to fail, the world
would have missed a unique opportunity for further reduction of trade barriers against both industrial and agricultural products and for a further
widening of world markets to the benefit of both the developed and developing nations.
The United States is also giving increased attention to the lowering of
barriers to trade with the countries of the Soviet bloc. For both political
and economic reasons, this country has not fully participated in the steady
expansion of East-West trade during the past decade. U.S. trade with the
Soviet bloc amounted to barely 1 percent of total U.S. foreign commerce in
1964. Last year, the President's Special Committee on U.S. Trade
Relations with East European Countries and the Soviet Union recommended an expansion of peaceful trade with the European Communist
countries and urged that the President be given discretionary authority to
remove trade restrictions against those countries.
The President has indicated that he will ask Congress for selective authority to grant most-favored-nation treatment to imports from the countries of
Eastern Europe, including the U.S.S.R. While no sudden expansion of
trade is likely, the opportunities for increased trade may prove significant
for individual firms and products.
PROBLEMS OF RAPID GROWTH AND INTEGRATION
The new economic dynamism of the developed countries of the free world
has brought great gains—but also problems. These problems have both
domestic and international dimensions, closely interrelated.




146

The main domestic problem in most countries today is that of reconciling
prosperity with stability of costs and prices. This has been a problem for all
the countries of Western Europe at one time or another in the past 2 decades.
But even though wage rates and other money incomes rose at a rapid pace,
increases in labor costs were often restrained by extremely rapid improvements in productivity. In fact, in Germany and Italy, as well as in Japan,
they held stable or fell in the early 1950's as a result of the rapid gains in
productivity that went with the development of new industries and processes, the modernization of obsolete equipment, and the great expansion
of the size of domestic and international markets. Moreover, there were
labor resources to be drawn from domestic sectors of low productivity—
and often from such sectors in other countries—which restrained upward
pressures on wages. But now productivity gains are slowing down from
phenomenal to merely exceptional; sources of low-cost labor are harder to
come by; and the income demands of labor and other groups continue to
increase. Rapid growth and full employment are more generally accompanied by upward pressure on costs and prices.
Internationally, the problem of adjusting to rapid growth has taken complex forms. The closer integration of international markets and increased
freedom of payments have been among the main sources of domestic growth
in many countries. But they also have contributed to strains in the balance
of international payments.
Growth rates, while generally high, have not been the same in all countries, and internal price levels have not changed equally. Large structural
changes accompanying and responsible for growth in some of the countries
have altered their international competitive position. Tax systems have
been adjusted, with resulting effects on prices of imports and exports. The
formation of EEC and EFTA has affected members and nonmembers differently. Profound changes associated with the termination of colonial status
have affected the markets and obligations of several European nations.
The costs of defense and aid commitments vary significantly among
countries.
All of these factors have considerably affected the external transactions of
each of the industrial countries, at times creating large surpluses or deficits in
trade or government payments.
Reduction of government restrictions, the convertibility of currencies,
increasing knowledge of opportunities abroad, growing confidence in existing governments, larger supplies of investible funds, and rapid growth of
markets have brought a spectacular expansion of international capital
movements. The flow of capital has also been affected by national policies
to restrain inflationary pressures, by the differences in the development of
national capital markets, by country-to-country differences in profits and
interest rates, and, on occasion, by hopes or fears of currency revaluations.
Although international flows of capital have contributed to world economic




147

growth, they have at times created problems for both the importing and the
exporting country.
Thus for the capital account as well as the current account, the closer
economic integration of the newly dynamic Western economies has been
a source of severe balance of payments strains. And measures taken by
Western European Governments to deal with deficits have been a major
factor behind the occasional slowdowns in the pace of economic expansion.
In the past 15 years, many potential strains have been effectively masked
by large U.S. deficits. They have allowed most other countries to maintain
rapid expansion while still gaining reserves. Even so, there have been
serious deficits at various times in France, Canada, Italy, Japan, and the
United Kingdom. Had the U.S. international payments been in equilibrium
during this period, many more potential strains would have become visible.
Once the umbrella of the U.S. deficit is removed, the problems of adjusting
to rapid growth and change in a world of relatively free trade and payments
may become more evident and more difficult to resolve.
DEVELOPMENTS IN 1965
Many of the problems of mutual adjustment were brought into sharp
focus during 1965, as payments positions of major countries underwent
particularly large and rapid changes. For the United States, there had
been a sudden increase in the deficit in late 1964 and early 1965. Following President Johnson's program of corrective measures in February 1965,
however, the balance of payments showed a major improvement.
The payments position of the United Kingdom remained precarious
from the autumn of 1964 until the late summer of 1965, causing heavy speculative attacks on the pound. However, as a result of forceful measures
taken by the British Government to defend the value of its currency—aided
by large-scale financial assistance from the IMF and, on a cooperative
basis, from major nations—pressures on the pound subsided significantly
by the autumn, and the United Kingdom has continued to regain reserves.
The British Government, moreover, has given convincing evidence that it
will take all steps needed to bring its payments position into balance by
late 1966. Meanwhile, the German surplus, which had been of serious concern for several years, was eliminated in 1965.
However, at the very time that the large deficits of the two major reserve
currency countries were being reduced and the troublesome German surplus
corrected, new problems of payments imbalance emerged elsewhere. Italy,
in particular, developed very sizable surpluses. A surplus also appeared
in Japan. At the same time, France had a surplus even larger than that
of 1964.
These divergent developments were in many cases closely related to the
policies adopted by the various countries to affect domestic demand. In the
United States, to be sure, the payments imbalance was reduced substantially




148

without impeding domestic expansion. For the United Kingdom, however,
restrictive domestic measures were part of its program to bring the payments
deficit under control, as well as to counter inflationary pressures at home. In
Italy and Japan, the brakes previously applied to their expanding economies,
to help counter payments deficits and domestic inflation, had proved in
some respects too effective. Such policy measures as were taken in 1965 to
revive demand brought only relatively slow progress. In France, also, the
larger surplus position was clearly associated with a low rate of economic
expansion, reflecting the Government's hesitation to take more active stimulative measures because of the fear of possible inflation. On the other hand,
burgeoning domestic demands clearly contributed to the elimination of
Germany's surplus.
The policies adopted by various countries to deal with domestic and
balance of payments problems had, in turn, significant implications for the
growth prospects of other countries, both developed and less developed. To
the extent that such policies depressed export markets, there was danger
that world economic growth would be impeded.
The challenge to the developed nations as a group is to find mutual
arrangements and institutions that can support healthy economic growth and
at the same time maintain reasonable external equilibrium in a world community of increasing interdependence.
IMPROVING THE INTERNATIONAL MONETARY SYSTEM
Soundly functioning international financial arrangements should permit
countries to make necessary adjustments to changes in their external payments positions with minimum impairment of the broader objectives shared
by all nations: relatively full employment, a satisfactory rate of economic
growth, an efficient allocation of international resources, and reasonable
price stability. These arrangements should provide for a satisfactory expansion of total international reserves and liquidity as an underpinning for a
growing volume of trade and payments. And they should command such
widespread confidence that international transactions will not be disrupted
by excessive speculation, or by sudden and unpredictable shifts from one
form of international reserve asset into another.
Balance of payments adjustment, reserve creation, and maintenance of
confidence are, of course, closely interrelated. Under the prevailing system of fixed exchange rates, it usually requires time to correct payments
imbalances in a way that is consistent with the achievement of basic objectives. This means that countries need sufficient reserves or credit to provide a reasonable margin of safety for dealing with actual or potential
deficits. If reserves or credit facilities are inadequate, even surplus countries may feel impelled to follow unduly restrictive policies. Moreover,
too small a margin of safety may encourage undesirable speculative flows,




149

adding further to the need for liquidity. Too large a volume of liquidity, on
the other hand, could be inflationary. Improvements in the adjustment
process which would reduce imbalances—without sacrifice of broader objectives—would cut back liquidity needs and strengthen confidence.
During the past year, these closely related matters have received intensive
consideration in discussions concerned with ways of improving the international monetary system—by the IMF, the OECD, the leading industrial
countries known as the Group of Ten, and various bodies associated with the
UN and the EEC.
The discussions within the Group of Ten and in Working Party 3 of
OECD have been of particular importance. A report examining the issues
raised by various proposals to create new reserve assets was submitted to
the Group of Ten last summer by a working group under the chairmanship of Rinaldo Ossola of Italy. With this study completed, the Finance
Ministers and Central Bank Governors of the Group of Ten, at the time
of the Annual Meeting of the IMF Governors last September, requested
their deputies to "determine and report to Ministers what basis of agreement
can be reached on improvements needed in the international monetary
system, including arrangements for the future creation of reserve assets, as
and when needed. . . ." The deputies are to report on their progress this
spring. Meanwhile Working Party 3 is to accelerate its study of ways to
improve the adjustment process.
As soon as a basis for agreement has been reached among the Ten,
negotiations on means to improve the international monetary system would
then proceed to a second stage in which all members of the IMF would have
a more direct opportunity to voice their views. The following two sections
present some of the issues involved in the study of the adjustment process
and in the negotiations to improve international liquidity arrangements.
THE ADJUSTMENT PROCESS
The Council's Annual Report for 1964 described at some length the balance of payments adjustment process which operated—or was supposed to
have operated—in a relatively automatic fashion under the 19th century
gold standard. It pointed out that this method of adjustment relied on the
maintenance of a rigid link between changes in countries' gold holdings
and internal monetary conditions, in nations without active fiscal policies,
and could only work by subordinating domestic welfare to the requirements
of external balance.
Such a system is neither possible nor acceptable in the modern world.
All nations today follow discretionary policies directed toward multiple objectives, internal as well as external. Quite appropriately, they are reluctant to resolve payments problems at the expense of economic growth,
high employment, and price stability. But in today's interdependent world,
the independent pursuit of individual countries' objectives can often bring




150

their policies into conflict and produce results against the interests of all.
A satisfactory balance of payments adjustment process requires a high degree
of international cooperation.
At any given time, some countries will be in deficit while others will be
in surplus. For the world as a whole, deficits and surpluses will be roughly
equal. Under existing international liquidity arrangements, the main exception reflects additions to the stock of monetary gold, which allow some
surpluses not offset by deficits elsewhere.
Some swings in country payments positions are bound to occur. And
when the imbalance represents only a temporary departure from equilibrium, or when appropriate corrective measures take time to become fully
effective, forcing an immediate restoration of balance may involve excessive
economic and social costs. Moreover, where the level of a country's reserves
is chronically excessive (or deficient) in relation to its needs, that country
may appropriately run a deficit (or surplus) over a longer period. Thus,
persistent U.S. deficits during the early 1950's were clearly in the interests
of all countries.
Nevertheless, if a deficit continues too long or becomes too large, the
strength of the country's currency can be impaired. There is, in fact, an
absolute limit of any country's ability to continue in deficit; eventually, it
must run out of reserves as well as borrowing capacity.
Built-in pressures to correct surpluses are less powerful. A country that
continually runs a surplus deprives itself of the real resources that would
have accrued to it had it exported less or imported more. As the surplus
persists, this cost becomes increasingly burdensome relative to the benefits
derived from additional accumulations of reserves.
However strongly they may wish to, all or most countries cannot run surpluses simultaneously. If they try, some are bound to find their actual
balance of payments positions falling short of what they had desired.
Unrealistic payments targets can thus lead to destructive policy competition among countries. Countries must determine their adjustment
policies in the light of balance of payments targets that are mutually compatible.
Alternative Means for Dealing with Imbalances
What are the broad strategies a country can adopt when confronted with
an imbalance in its international payments?
First, it may simply let the imbalance persist, at least for some time, and
rely on financing. For a deficit country, this entails either a drawing down
of reserves or borrowing; for a surplus country, a rise in reserves or deliberate
lending.
Second, a country can seek to correct the payments imbalance by fiscal
and monetary measures that affect the total level of internal demand. For
countries in deficit, a restriction of demand would be designed to reduce




imports and increase exports. If monetary policy is used to achieve restraint,
higher interest rates may-also deter monetary outflows or even induce net
capital inflows.
Third, countries can make varying use of selective measures specifically
directed at external transactions—for example, import surcharges or quotas, direct restrictions on capital movements, or disincentive devices like
the U.S. Interest Equalization Tax. On the other hand, surplus countries
may remove existing restrictions or use special incentives to induce net capital
outflows.
Fourth, a variety of other internal measures can be used. These include
selective internal policies to improve a country's productivity, efficiency, or
financial structure; changes in the "mix" of different kinds of policy instruments, notably as between fiscal and monetary policy; and wage-price
policies.
Fifth, countries can, under the IMF Articles of Agreement, resort in some
instances to adjustments of their exchange rates.
None of these options represents an ideal or fully feasible solution under
all circumstances. Reliance on financing may merely postpone needed
corrective action. Measures to affect total internal demand may conflict
with domestic objectives. Direct restrictions on international trade and payments may interfere with efficient resource allocation. Other selective
measures may not be available in time or not be sufficiently powerful to bring
about the desired correction. Finally, various disadvantages are inherent
in exchange rate adjustments, and governments are properly reluctant to
resort to them—particularly reserve currency countries.
Criteria for Selection
Despite these drawbacks, any one of these options may prove the most
desirable—or least undesirable—under particular circumstances; and in
many cases, a combination of strategies may be called for. What, then, determines which policies are appropriate for a country in a given situation?
Major relevant considerations include the following:
First, the nature of the underlying ailment is important. If either deficient or excessive internal demand is a major cause of the imbalance,
then measures to affect such demand may provide the best solution. If part
of the underlying difficulty is connected with a deterioration in a country's
competitive position, various selective measures to improve productivity and
resource mobility may be called for. If the difficulty stems from speculative or other unusual capital flows, use of selective instruments might be
far more efficient than resort to general measures. And to the extent that
the payments imbalance stems from broad structural differences in capital
markets—such as those that exist between the United States and continental Europe—the longer-term solution lies in improving the efficiency of
the less fully developed capital markets.




152

Second, any given strategy for achieving balance of payments equilibrium
should as far as possible be consistent with the attainment of broader objectives. Often, this presents no problem. For example, if a country suffers
from both internal inflation and a payments deficit, policies to restrict overall demand may achieve internal and external objectives simultaneously.
Similarly, a country seeking to reduce an external surplus and to expand
internal demand can usually use general fiscal and monetary measures to
meet both objectives.
Even in these cases, however, difficulties in the choice of instruments
can sometimes arise. For example, the United Kingdom in 1965 had both
an external deficit and excess domestic demand. Nevertheless, there were
also indications that the country's competitive performance was suffering
from low productivity. The U.K. authorities therefore combined measures
to restrain domestic demand with more specific steps to improve the country's
competitive position, including measures to encourage productive investment
over the long run. Or a surplus country with lagging internal demand
may be suffering from upward cost and price pressures. In this case, resort
to incomes (price-cost) policies, reductions in tariff barriers, and other special devices may be required to avoid price increases that might inhibit
vigorous use of expansionary monetary and fiscal policies.
More difficult situations arise where deficits are accompanied by domestic
underemployment, or surpluses by inflation. In recent years, the first of
these situations has been characteristic of the United States, the second of
Germany. The United States has leaned more heavily on fiscal policy to
stimulate demand, making it appropriate to use a somewhat less expansionary
monetary policy than would otherwise have been desirable. This, together
with the Interest Equalization Tax and voluntary restraint on foreign lending
and investment, has helped to dampen capital outflows. Germany, on the
other hand, has been advised by the OECD to combat its domestic inflation
more actively through tighter fiscal policies and to pursue a relatively easier
monetary policy in order not to attract funds from abroad.
Third, there are differences in the effectiveness of given policy instruments
in various countries. For example, where international transactions constitute a relatively high proportion of total transactions, and where both
exports and imports tend to be highly responsive to variations in domestic
incomes, even relatively mild measures to influence total demand may
rather quickly bring about the desired adjustment in the balance of payments. Thus, in a country like the Netherlands, where imports equal about
40 percent of GNP, primary reliance on instruments to affect over-all
demand may frequently be entirely appropriate for payments adjustment
and entail a relatively small economic cost. But in many other countries,
the foreign sector accounts for a much smaller proportion of total national
transactions; in the United States, for example, imports are only 3 percent
of GNP. If this country were to place sole reliance on general demand




153

measures to achieve a given balance of payments result, a relatively large
change in total demand would be necessary, exposing the economy to severe
inflation or unemployment. Even where both domestic and external payments conditions call for either restrictive or expansionary measures, the
"dose" appropriate for the domestic economy may not be strong enough to
correct the payments imbalance—or it might be too strong.
Fourth, the effects on other countries must be considered. For example,
the industrial countries as a group should clearly be concerned with the
impact that their measures will have on the less developed countries. Moreover, the effect of particular corrective measures taken by one industrial
country could be cancelled if similar measures were taken by others, or could
be sharply reduced by other "rebound" effects.
The Division of Responsibilities for Adjustment
Surplus countries tend to argue that the primary task of bringing about
adjustment must necessarily lie with deficit countries, since it would be
unreasonable to expect the surplus countries to suffer such inflation as
might be induced by expansionary actions on their part. Deficit countries,
on the other hand, argue that if they bear a greater share of the responsibility
for adjustment, this imparts a deflationary bias to the world economy.
There is no a priori case for assigning a greater share of the responsibility
to either deficit or surplus countries. Countries in either situation should be
willing to use the instruments at their disposal in the most effective way.
There could be specific situations where a larger share of the responsibility
should be assumed by either deficit or surplus countries, but this should be
subject to careful international consideration.
Possibilities for Improving the Adjustment Process
The past few years have seen significant gains in international consultation and cooperation in balance of payments adjustments. Nevertheless,
the fact remains that balance of payments surpluses and deficits in recent
years have often been very large and that the adjustment techniques currently used are far from perfect. There is need, and wide scope, for further
improvement.
One obvious area of improvement involves the development of additional
policy instruments as well as more efficient use of existing instruments. In
particular, there is a major need in many countries for making fiscal policy
a more flexible tool of economic policy. Much more imaginative use could
also be made of different techniques of monetary management. Furthermore, surplus countries have considerably more scope for reducing trade
barriers and broadening capital markets.
It may be possible to develop some general guidelines regarding appropriate balance of payments adjustment that could prove helpful in the
context of international discussions. Such guidelines should be flexible and




154

informal, and sufficiently comprehensive to permit effective selection of
policy tools in the light of all the considerations set forth above: the nature
of imbalances; the full range of economic objectives; differences among
countries; and effects of each country's policies on other nations.
In any case, much can be done to improve further the existing mechanisms
of international consultation and cooperation to help to assure that the
measures used by individual countries are best suited to the interests of the
international community as a whole.
INTERNATIONAL LIQUIDITY ARRANGEMENTS
Improvements in the adjustment process alone cannot assure that the
international monetary system will work smoothly. In the words of Secretary of the Treasury Henry Fowler ". . . a new and crucial challenge is
presenting itself with growing urgency before the nations of the free world—
the challenge of assuring ample liquidity to support expanding world trade
in the years ahead." He stated that ". . . there will be . . . bilateral and
multilateral talks at all levels as we move ahead toward exploring this most
complex problem and toward reaching some kind of workable consensus.
There is . . . no fixed timetable. But we are moving ahead—and we will
spare no effort to speed our progress toward a sensible and workable
solution."
The Need for Adequate Growth in International Liquidity
How large is the volume and growth of monetary reserves and other forms
of liquidity needed to support a smoothly functioning system of international
transactions? There is no simple answer to this question. In approaching
it, however, several key distinctions need to be kept in mind.
The great bulk of international transactions takes place among private
traders, bankers, or other intermediaries. Predominantly, these transactions
involve the major trading or "vehicle" currencies—the dollar and the pound
sterling. Over the years, the volume of private working balances in these currencies has tended to grow along with the volume of international transactions. A continuing net flow of dollars into foreign private hands sufficient
to satisfy such legitimate private business needs is thus likely to be desirable.
A second need for international liquidity arises from the desire of monetary
authorities to hold reserves and other forms of liquidity to enable them to
settle payments deficits that might develop. Of course, monetary authorities normally have the option of obtaining credit on conditional terms when
the need arises. In recent years, credit facilities have been greatly expanded, notably through improvements in the medium-term lending operations of the International Monetary Fund and through cooperative arrangements among central banks; and further improvements should prove possible
in the future. But countries also want "unconditional liquidity," either in
the form of gold or reserve currencies or of assured lines of credit (such as
the fully automatic drawing rights on the Fund).




155

Moreover, as the absolute volume of international transactions rises, the
size of potential deficits also increases. This is why most countries seek
to enlarge their reserve positions over the years, at least modestly.
There are now three principal ways in which net additions to international
reserves occur: (1) through the flow of newly available gold into official
national reserves; (2) through enlargement of countries' automatic drawing
rights at the Fund; and (3) through increases in the holdings of U.S. dollars
by the monetary authorities of other countries.
Increases in the aggregate gold holdings of monetary authorities are the
oldest way of creating reserves. And they are the only way that does not
usually depend on the emergence of a balance of payments deficit for one or
more countries. From 1960 through 1964, gold contributed about $700
million annually to over-all reserve growth of the free world. Recognition
that Fund automatic drawing rights constitute international reserves is very
recent; net additions in them averaged about $150 million a year during
1960-64. The other major contribution to over-all reserve growth—increases in foreign official claims on the United States—averaged about $1
billion a year over this period. There has been virtually no net expansion
since the early 1950's in official holdings of sterling, the second major reserve
currency.
Expansion of world reserves through a growth of dollar holdings worked
well in the earlier postwar years, when official reserves outside the United
States were low. However, the United States can now no longer continue
to run large-scale balance of payments deficits without endangering confidence in its own currency. Thus dollars cannot contribute to growth of
world reserves as they have in the past. Moreover, to the extent that foreign
monetary authorities convert existing dollar holdings into gold, the net volume of international liquidity actually declines.
It was against this background that the United States acted with new determination last year to bring its payments into equilibrium. As it succeeds
in this effort, however, the international monetary system is faced with a
dilemma. Gold alone will not add sufficiently to official reserves to insure
a smoothly functioning payments system. Prudent planning, therefore,
calls for the development of additional kinds of reserve assets that could
add to international liquidity independently of the balance of payments
deficits of particular countries.
According to preliminary indications, growth in the world's total reserve
assets slowed markedly in 1965 (Chart 11). There is little to suggest that
the annual growth of about $2 billion in the years prior to 1965 had been
excessive. Moreover, there is a strong presumption that, over time, the
growth of international trade and the world economy will be hampered
unless there is a continuing expansion in the total volume of reserve assets.
Hence, the United States took the initiative in the summer of 1965 in urging
an intensified exploration of the possibilities for agreement on the development of a new reserve asset.




Chart 11

World Trade and Reserves
BILLIONS OF DOLLARS (ratio scale)

200

150
WORLD IMPORTS

100
90
80
70

WORLD RESERVES

60

\
•••
WORLD RESERVES EXCLUDING
OFFICIAL DOLLAR HOLDINGS

50

40

1

I

i

i

1950

i

I

i

i

1955

1

1960

1

1

1

1965

^/ESTIMATES BASED ON DATA FOR FIRST 3 QUARTERS.
NOTE: WORLD EXCLUDES SINO-SOVIET BLOC.
SOURCE: INTERNATIONAL MONETARY FUND.

Ways of Creating Additional Reserve Assets
At least two major, and potentially complementary, approaches to the
creation of additional reserve assets are likely to receive serious attention in
current world discussions. The first calls for the creation of a completely
new reserve unit. Each participating country would be issued given amounts
of the new units from time to time, and rules would be set for their use.
The unit could be backed by a guarantee against depreciation in terms of
gold and would be counted in "owned" reserves. Creation of the new unit
would require formal international agreement and would thus offer clear
evidence that the participating countries were joined in a major and deliberate effort to provide for an appropriate growth in international liquidity.
A second method would build on the procedures for reserve creation already available in the Fund. It would expand automatic drawing rights on
the Fund. The additional drawing rights would be immediately usable
as new reserve assets by member countries. This approach would not
necessarily require revision of the Fund's Articles of Agreement.
Under reserve unit schemes, participating countries provide backing for
the unit in terms of their national currencies and undertake to accept the
units from one another. In the case of new Fund automatic drawing
rights, member countries might be asked to provide lines of credit to the
795-983<



Fund to assure that the Fund itself could readily supply the amounts and
types of currencies required by members exercising their drawing rights.
In either case, however, one basic principle holds: the acceptability of the
new reserve asset will fundamentally depend on the willingness of participating countries to view it as a form of international money.
Each approach—"reserve unit" and "drawing rights"—has distinctive
characteristics that can make it particularly useful for certain purposes. In
many respects, the two approaches need not differ greatly in effect. What
is important in assessing the numerous specific versions and combinations
of these two approaches that have been proposed is to see how they deal
with certain key questions. These include the following:
(1) By whom and in what manner shall decisions regarding the new
reserve assets be made?
As Secretary Fowler stated before the Annual Meeting of the Governors
of the International Monetary Fund,
It is true that only a limited number of countries hold the bulk of the official
reserves of the world. No doubt these countries, including my own, have deep
interests and responsibilities of a unique kind in the system by which reserves are
generated and regulated. But other countries, which are not large reserve holders,
also have legitimate and vital interests in these matters. This is why all the countries
of the free world have a fair and reasonable claim that their views must be heard
and considered at an appropriate stage in the process of international monetary
improvement.

There are various types of decisions regarding international monetary
arrangements that need to be made. A basic "constitutional" decision has
to be taken regarding the nature of the new arrangements. Thereafter,
decisions will be required from time to time on various operational matters, such as the amounts of new assets to be created. The procedures for
settling these various questions might differ.
Whatever the precise arrangement, it seems highly desirable that the
Fund play a central role in the decision-making process. As has been well
stated in the Ossola Report, "The Fund's prestige and experience as a
monetary institution make it the natural center for new functions involving
deliberate creation of reserve assets and provide assurance of its capacity
to conduct, and keep distinct, conditional lending and deliberate reserve
creation."
(2) To whom shall the reserve assets be distributed?
The distribution of new reserve assets poses difficult problems which will
require further discussion and study. While there is no simple answer,
certain principles are clear. All countries need reserves, and an effective
system of reserve creation should give all an opportunity to add to their
holdings. At the same time, the large industrial countries, other developed
nations, and the less developed countries have special needs and characteristics that must be reflected in any over-all arrangements. Furthermore,
such arrangements should be sufficiently flexible to permit an increasing
degree of participation by countries as they meet certain relevant standards.




158

IMF quotas provide one benchmark which might be considered in the
initial distribution of new reserve assets.
While no distribution can be set forth as ideal, the nations of the world
can be expected to develop an equitable plan which will meet the recognized
need for growth of reserves. Every nation has a clear interest in its own
share of new reserve assets, but it has an even greater stake in the development of an effective system for reserve creation that will encourage the
pursuit of economic growth and liberal trade policies.
(3) What should be the relationship between new reserve assets and
existing types of reserve assets, and what techniques are required to achieve
an appropriate relationship?
Any new type of reserve asset that might be created should clearly be
attractive enough so that countries will wish to hold it. But it must not be
so attractive as to displace existing forms of reserve holdings, for it would
then fail in its primary purpose of adding to over-all liquidity.
One proposal to enhance acceptability has been to link the creation of a
new reserve unit in a rigid proportion to each country's gold holdings. Such
a rigid link to gold in the creation of the unit is clearly undesirable, however.
It would be inequitable, penalizing countries that now hold a low proportion
of their total international reserves in gold. It would, moreover, provide
incentives for all countries to increase the ratio of gold to total reserves. By
thus affecting the willingness of countries to hold existing reserve currencies,
it could lead to an undesirable shrinkage in world liquidity.
Alternatively or additionally, it has been suggested that the use of the
new reserve unit in settlements should only be permitted in association with
a specified quantity of gold. The same considerations that apply to a gold
link in creation also raise doubts about the proposal for a link in use.
Moreover, any rigid link with gold would tend to enhance the importance
of gold in the monetary system, and thereby to assign a new reserve unit
second-class citizenship.
If there is no close link to gold, what is required to make a new reserve
unit readily acceptable? One possibility might be an agreement that countries would accept such units as full legal tender, to be considered "as good
as gold." Or, an agreement might provide for specific limits on the obligation of creditor countries to accept the reserve units in settlement. Special
procedures might also be adopted to prevent countries from using the new
units to change the composition of existing reserves in a way that might lead
to a reduction in total liquidity.
Creditor limits are automatically incorporated in the procedures for expansion of automatic drawing rights at the Fund. Moreover, their relationship with gold and reserve currencies poses no problems.
(4) Does the method used in creating a new reserve asset allow for the
proper expansion in liquidity, and for a flexible response to changing needs?
Both proposals cited would permit substantial additions to liquidity.
However, a separate new reserve unit may be essential as part of a program to




159

assure adequate increases in liquidity. Such a unit might also be more
easily recognized as constituting "owned" reserves, and might therefore
make countries feel more "liquid" than would corresponding command
over automatic drawing rights.
Expansion of drawing rights, on the other hand, might be arrangeable
on a more flexible basis. Moreover, to the extent that countries may be
reluctant to allow their holdings of reserve units to decline but are willing
to make active use of automatic drawing rights, the latter might at times
actually prove to be more "liquid," in the sense of providing resources when
needed.
Concluding Comments
While reserves in the form of units and drawing rights have much in
common, the characteristics that give each of the approaches special usefulness in particular situations suggest that both have a constructive role to
play in reserve creation.
In any event, it is essential that the negotiations provide for (1) efficient
as well as equitable rules for the creation, distribution, and use of new assets;
(2) smooth integration of new assets within the existing framework; and
(3) the appropriate degree of expansion in the over-all volume of international liquidity which will foster sound world economic growth.
U.S. BALANCE OF PAYMENTS
The U.S. balance of payments moved significantly closer to equilibrium
in 1965. In considerable part, this reflected the effects of the President's
program announced in February. The improvement was primarily manifested in a substantially reduced outflow of private capital, which more than
offset a drop in the trade surplus (Chart 12).
MEASURES OF DEFICIT OR SURPLUS
In a fundamental sense, a country's external payments cannot be in satisfactory equilibrium unless the domestic economy is in reasonable balance and
its basic national and international economic objectives are being met. In a
more immediate sense, however, equilibrium in external payments relates to
a country's international reserve position and to its ability to maintain the
value of its currency in international transactions. Statistics on a country's
international transactions, summarized in its balance of payments accounts,
bear only on the more immediate concept of equilibrium.
Balance of payments accounts summarize a system of double-entry bookkeeping. The total of debits equals the total of credits; the net difference is
zero. Thus any positive or negative balance—a surplus or deficit—includes
only selected payments and receipts. A variety of such measures has been
used in recent years, including among others the "basic balance," the
"balance on regular transactions," the "liquidity balance," and the "balance
on official reserve transactions" ("official settlements"). No single concept




160

Chart 12

U.S. Balance of International Payments
BILLIONS OF DOLLARS*
EXPORTS AND IMPORTS OF GOODS AND SERVICES

40
EXPORTS

30

IMPORTS

20
0

I

1

I

1

PRIVATE CAPITAL,

I

I

NET

0

-*—-v^
10

>

i

i

1

I

.

l

l

l

l

l

l

l

l

l

.

i

l

10
BALANCE

OFFICIAL RESERVE TRANSACTIONS BASIS V

LIQUIDITY BASIS-?/

-10 1

*

I

I
I
1961

I
1962

1963

1964

I
I
1965

SEASONALLY ADJUSTED ANNUAL RATES.

•1/EQUALS CHANGES IN LIQUID AND NONLIQUID LIABILITIES TO FOREIGN OFFICIAL HOLDERS AND CHANGES
IN OFFICIAL RESERVE ASSETS CONSISTING OF GOLO, CONVERTIBLE CURRENCIES, AND THE U.S. GOLD
TRANCHE POSITION IN THE IMF.
2

-/EQUALS CHANGES IN LIQUID LIABILITIES TO FOREIGN OFFICIAL HOLDERS, OTHER FOREIGN HOLDERS,
AND CHANGES IN OFFICIAL RESERVE ASSETS CONSISTING OF GOLD, CONVERTIBLE CURRENCIES, AND
THE U.S. GOLD TRANCHE POSITION IN THE IMF.

SOURCE: DEPARTMENT OF COMMERCE.




161

is best for all analyses. The measure that is most appropriate for one
country at one time may be less appropriate under other circumstances.
All definitions of the balance of payments surplus or deficit relate to
changes in a country's reserve assets. By any definition, a contribution
to surplus is recorded whenever the reserve holdings of our monetary authorities are increased by gains in gold, claims on the IMF, or liquid assets
in convertible currencies. But the measures of balance also take into
account changes in certain claims that could be exercised against our
reserves.
Various types of assets differ in the extent and directness of their claim on
U.S. reserves. Liquid claims on the United States held by foreign monetary authorities may at any time be presented for gold, and thus directly
expose us to the possibility of reserve losses. Privately held liquid U.S.
assets of foreigners can readily be turned into official claims. And nonliquid
dollar assets held by foreigners can be sold and thus converted into liquid
holdings. Indeed, in a world of convertible currencies, any marketable
claim held abroad is to some degree a potential claim on our reserves.
Dollar holdings of Americans could even flow abroad in a crisis and flow
back as a demand for gold. It is difficult to select the group of assets that
should count as claims on our reserves (with an increase contributing to a
U.S. deficit). It is mainly on this point that the alternative measures of the
deficit or surplus divide.
In 1965, after a careful review of its present and foreseeable situation, the
U.S. Government decided to place primary stress on two measures of its
general balance of payments performance—the "liquidity balance" and the
"balance on official reserve transactions" ("official settlements").
The liquidity balance spotlights the liquid claims of foreigners, both private and official, against the United States. The potential exposure of the
United States is measured by the volume of such liquid claims, and any
increase in them (not offset by a growth of reserve assets) is recorded as
a U.S. deficit. Thus, the line is drawn between liquid and nonliquid
foreign dollar holdings.
The official settlements balance, however, draws the line between the
dollar holdings of foreign monetary authorities (whether liquid or nonliquid) and those of private foreign holders. If privately held foreign
liquid claims on the United States increase (and there are no other offsetting transactions), this is treated as an inflow of private capital, rather
than as an addition to the deficit, which it is under the liquidity definition.
The official settlements concept, in other words, concentrates on the dollar
claims that foreign monetary authorities have acquired (or relinquished) —
usually in the process of maintaining the parity of their currencies.
After years of sizable deficits on liquidity balance, averaging $3 billion
between 1958 and 1964, the U.S. deficit appears to have been reduced to
about $1^4 billion in 1965. The deficit as measured by official settlements
moved from an average of about $2 billion in the early 1960's to $1.2 billion in 1964 and remained at approximately that level in 1965.




162

Gold purchases from the United States in 1965 bore little direct relationship to the U.S. deficit in that year. Net sales of U.S. gold jumped from
$0.1 billion in 1964 to nearly $1.7 billion in 1965. About $260 million
represented a transfer to the IMF in connection with the enlargement of
our quota. Primarily, however, these sales resulted from decisions on the
part of a few countries to convert dollars accumulated in earlier years
and a concentration of payments surpluses in countries that do not wish
to increase their dollar holdings. More than half of the total could be
attributed to the purchases of one country—France—although Spain and
Austria also completed sizable purchase programs.
During 1958-64, the official settlements deficit was, on the average, nearly
$1 billion lower than the liquidity measure, reflecting the growth in private
foreign liquid claims on the United States. The two measures were very
close in 1965 when private dollar holdings did not advance as rapidly. The
behavior of private demands for dollars in the years ahead will provide
additional evidence as to the relative significance that should be attached
to the liquidity and official settlements measures in guiding the United
States to a sustained external payments equilibrium.
DEVELOPMENTS AND POLICIES IN THE 1960'S
When the Kennedy Administration took office in 1961, the United States
had just recorded the largest payments deficit of any year in the postwar
period. The country was losing gold rapidly and incurring a large buildup
of liquid claims abroad that threatened further losses. Action was imperative. The result has been a series of measures of increasing severity
and scope, to meet a problem that proved more intractable than was believed earlier. The measures taken through 1964 were fully reviewed in
earlier Reports of the Council. Further significant measures—discussed
below—were taken in February and December of 1965.
As a result of these measures, and of other developments, the U.S. payments position strengthened. The basic trading position and earnings on
investments improved especially. Over this period, the surplus on nonmilitary goods and services increased from $6.8 billion in 1960 to $9.1
billion in 1965 (Table 23). Despite rising prices and wages abroad, drastic
economies were achieved in military expenditures abroad, and offsetting
sales of military equipment were increased sharply; these improvements
were sufficient to offset the net increase in Government grants and capital
outflows. Moreover, such grants and capital outflows are now almost completely tied to the export of U.S. goods and services.
GROWTH OF PRIVATE CAPITAL OUTFLOWS
The outflow of U.S. private capital rose from $3.9 billion in 1960 to $6.5
billion in 1964. Through this outflow, the United States was acquiring a
large volume of foreign assets and adding rapidly to its net international own-




163

TABLE 23.—United States balance of payments> 1960-65
[Billions of dollars]
Type of transaction

Balance on goods and services

1960

4.1

1961

1962

1963

1964

1965: First
3 quarters *

Seasonally
adjusted
annual rates
7.1
8.6

5.6

5.1

5.9

8.2

7.6

8.2

10.6

9.1

4.8
2.0

5.4
2.8

4.4
3.1

5.1
3.1

6.7
4.0

4.6
4.5

-1.3
2.4

-1.2
2.8
1.2

-1.5
3.1
1.5

-1.7
3.1
1.7

-1.6
3.7
1.9

2-1.8
4.3
2.0

-2.7

-2.6

-2.4

-2.3

-2.1

-2.0

-.7

-.7

-.7

-.8

-1.0

Government grants and capital, n e t .

-2.8

-2.8

-3.0

-3.6

-3.6

Government grants and capital._

-3.4

-4.1

-4.3

-4.6

-4.3

-4.4

-2.3

-2.9

-3.2

-3.7

-3.6

-3.6

-1.1

-1.1

-1.1

-.7

-.8

.6

.6

.6

Balance on nonmilitary goods and services
Balance on t r a d e . . .
Balance on services.
Net travel
Income on direct investments..
Other
Military expenditures, net
Remittances and pensions

Transactions involving no direct dollar
outflows from the U.S
Dollar payments to foreign countries and
international institutions
Scheduled repayments on Government loans.
Nonscheduled repayments on Government
loans.
Other capital, net

.1

.7

.7

.3

.1

.3

-3.5

-3.5

-2.4

-3.8

-5.8

-3.6

U.S. private capital, n e t .

-3.9

-4.2

-3.4

-4.5

-6.5

Long-term, net..
Short-term, n e t .

-2.5
-1.3

-2.6
-1.6

-2.9
-.5

-3.7

-4.4
-2.1

Foreign nonliquid capital, net-

.4

.7

1.0

Errors and omissions

-1.0

-1.0

-1.2

L I Q U I D I T Y BALANCE

-3.9

-2.4

-2.2

Plus: Increase of liquid dollar claims of nonofficial foreigners
Less: Increase in nonliquid liabilities to foreign
official monetary institutions *

1.1

Net purchases of nonmarketable convertible bonds and notes (increase + )
Other liquid claims (increase + )
Net purchase of nonmarketable nonconvertible bonds and notes (increase + ) 4 . .

4.7
1.0

.7

.7

-2.7

.2

-.5

-2.8

-1.3

1.6

-.4

-1.2

1.0

.3

OFFICIAL SETTLEMENTS B A L A N C E . . .

Gold (decrease + )
C onvertible currencies (decrease + )
I M F gold tranche position (decrease + )
Foreign monetary official claims (increase + ) .

-.8

-1.3

1.7
.4
1.4

1.4

.9
-.1
-.1
.7

-.1

(3)

-2.2

-2.0

-1.2

-.2

.1
-.2

Unadjusted
totals
1.5
-.5
-.1
-.7

.5
-.1
()
1.6
.7
1.0

1.1

.2

1
Preliminary indications for some components available for the fourth quarter suggest that most of the
figures shown in this column are a reasonable approximation to the annual total. Significant exceptions are
foreign monetary official claims, which rose substantially, and liquid dollar claims of nonofficial foreigners,
which declined late in the year. Consequently, the official settlements deficit for 1965 is estimated to be
approximately the same as for 1964.
2Estimate.
3 Less than $50 million.
* Provisional.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce.




164

ership position as well as to its future receipts of interest, dividends, and remitted profits. But the assets acquired through this investment were largely
illiquid, and were obtained by parting with liquid assets that added to
both private and official claims against us. The U.S. reserve position declined continually.
The growth of U.S. private capital outflow is not difficult to explain. As
market integration has progressed and as individuals and businesses have
become increasingly familiar with international financial operations, there
has been a natural tendency for capital to become more mobile, and more
responsive to market forces.
U.S. corporations have shown an increasing interest in business operations overseas and have been sending a rising flow of funds abroad to build
and equip new plants and distribution facilities. The extremely rapid
growth of incomes, particularly in Europe, Canada, and Japan, has greatly
expanded consumer demand, especially for manufactured goods. Wage
rates generally are lower abroad, and when American management and
technology are exported the productivity of foreign labor is frequently
brought close to the U.S. level, making American enterprises in other countries often extremely profitable. The virtual disappearance of internal
tariffs in the EEC and EFTA, while external tariffs are retained, has created
a large and expanding market which can be readily served by large-scale
production in Europe. Of course, direct investment abroad is also made
for the purpose of developing or expanding sources of raw materials, often
for use in the firm's operations in the United States or elsewhere.
With few exceptions, U.S. money and capital markets are much better
developed and freer from restrictions than those abroad, and this attracts
foreign borrowers. In part because of this better organization, interest rates
and flotation costs are considerably lower in this country. Consequently,
there is a tendency for foreigners seeking capital to look to U.S. markets and
for interest-sensitive funds to move abroad in search of higher returns.
Long-standing interest rate differentials, and the growing mobility of
capital, were important factors in the spurt of long-term portfolio lending
that occurred in 1962 and 1963. New foreign security issues in the U.S.
market doubled from 1961 to 1962, and the acceleration continued in early
1963. This growth was arrested by the introduction in mid-1963 of the
Interest Equalization Tax (IET), which raised the effective interest rate
for most foreign borrowing here. Meanwhile, other capital flows began to
accelerate, offsetting much or all of the gains from the IET. Bank loans
rose sharply, from $1.5 billion in 1963 to $2.5 billion in 1964. Direct U.S.
investment abroad also accelerated in 1963 and 1964.
THE FEBRUARY 1965 PROGRAM
At the beginning of 1965, it was evident that the rapid rise in capital outflows was creating growing problems for the U.S. balance of payments. Accordingly, the program announced by the President on February 10 applied
the IET to most bank loans with a duration of a year or more to borrowers




in developed countries, asked for a 2-year extension of the IET, and attempted in other ways to stem the outflow of private capital through the
voluntary cooperation of American business.
U.S. banks and other financial institutions were asked to observe appropriate "guidelines" with respect to their foreign operations in 1965. Banks
were asked by the Federal Reserve System to limit the increase in their
claims on foreigners in 1965 to 5 percent of the value of their outstanding
foreign credits as of December 31, 1964. Top priority was to be assigned
to bona fide export credits, and second priority to credits to less developed
countries. A related program was applied to credits and investments
abroad by nonbank financial institutions.
Under the part of the program administered by the Department of
Commerce, about 500 large nonfinancial corporations were asked to make a
maximum effort to expand the net balance of (a) their exports of goods and
services plus (b) their repatriation of earnings from the developed countries
less (c) their capital outflows to such countries. They were also asked to
bring liquid funds back to the United States.
Although considerable skepticism was initially expressed—particularly
abroad—regarding the effectiveness of a voluntary program, it is now
clear that the response was excellent. The net outflow of U.S. private capital
declined from $6.5 billion in 1964 (and an annual rate of $8.9 billion in the
fourth quarter) to an annual rate of $3.6 billion in the first three quarters
of 1965. Short-term capital—both bank and nonbank—accounted for a
great part of this dramatic shift: the movement of such funds changed from
a net outflow of $2.1 billion in 1964 to a net inflow at an annual rate of
$1.0 billion in the first three quarters of 1965. The success of the voluntary
program in shifting the movement of short-term funds was reinforced by the
intensified demand for funds in the domestic market, as a result both of
sharply rising activity and some tightening of monetary policy.
The U.S. payments deficit in 1965 was adversely affected by certain unusual transactions of the United Kingdom. As a part of the U.K. program to protect the pound, the British authorities converted certain holdings
of U.S. securities. Together with the deferment of payments on intergovernmental debts, these transactions reduced U.S. net receipts by well over
$J/2 billion, on both the official settlements and the liquidity basis.
Despite good over-all results of the payments program, the volume of U.S.
direct investment outflows were at a record high in 1965. In the first three
quarters, they reached an annual rate of $3.4 billion, compared with a 1964
total of $2.4 billion. However, they declined substantially during the course
of 1965. Since such outflows are usually planned long in advance, and
businesses were not asked to interrupt projects already underway, a lag
in the response to the February program was expected. Nevertheless, there
was disquieting evidence that plans for direct investment in 1966 remained
at a high level. With the sharp reversal in the trend of bank lending abroad,
direct investment became the primary area of concern.




166

PROGRAM FOR 1966
By the autumn of 1965, it was clear that the February program had
been successful and that a substantial improvement in the balance of payments had been achieved. Nevertheless, even further improvement was
necessary if payments equilibrium was to be attained. Consequently, decisions were announced in December to reinforce and renew the existing programs for 1966. Further attention was placed on encouraging U.S. exports,
on promoting foreign tourism and foreign investment in the United States,
and on minimizing the effect on the balance of payments of Government
transactions. But the principal focus of the supplementary steps had to be
on the further containment of direct investment outflows.
Consequently, new guidelines for direct investment were developed for
nonfinancial corporations. Each of about 900 individual corporations was
asked to hold its combined 1965 and 1966 direct investment outflows (plus
earnings retained abroad) in specified advanced countries and mineral
exporting nations to no more than 90 percent of the total of these items in
the years 1962-64. This will permit an increase of about 35 percent in the
average annual outflow of direct investments in 1965-66 over the average
annual rate in the 1962-64 base period. A joint target was set for the years
1965 and 1966 in order not to penalize firms which had cut back in 1965,
and in order to seek greater restraint by those which had invested more
heavily last year. Direct investment in 1966 under the program would be
lower than in 1965, though it would remain high relative to outflows of
earlier years.
Financial institutions were given guidelines for 1966 that permitted about
the same outflow as had been suggested for 1965. The guidelines provided
for nonbank institutions were somewhat more detailed than those for 1965.
New arrangements with the Canadian authorities were announced on the
understanding that continued exemption from the IET would not threaten
the goals of the U.S. program.
Efforts to reduce even further the impact of Government activities on the
balance of payments will continue in 1966. Net overseas defense expenditures have been quite successfully reduced since 1960. Unfortunately, expanding defense needs will prevent further reduction in 1966. The bulk of
Government aid will continue either to be given "in kind," with no dollar
flows, or tied to procurement in the United States.
U.S. TRADE POSITION
The outstanding performance of U.S. trade in the 1960's has been
strongly supported by our excellent price record, as well as by the rapid expansion of output and incomes abroad. However, the slowdown of economic
expansion in Europe and Japan contributed to a reduced trade surplus in
1965. The January-March dock strike not only redistributed the time
pattern of sales (somewhat inflating the 1964 level), but also caused a
sizable loss of export sales.




Imports showed an unusually large gain in 1965; both manufacturing
goods and raw materials rose substantially. Only agricultural imports declined, primarily because of lower prices for such commodities as coffee,
sugar, and cocoa. Many U.S. firms, fearing a possible steel strike, turned
in part to foreign suppliers in 1965, raising steel imports to about $1.2
billion—an all-time high. In addition, the rapid expansion of the U.S.
economy in 1965 brought a larger rise in our imports than in previous years.
The boom in the home market may also in some cases have reduced the
interest of American producers in finding or serving markets overseas, particularly where their production made full use of existing capacity or labor.
The 1965 decline in the trade surplus was not the result of any basic
deterioration in our competitive position. Our price performance in 1965
continued to match that of our major trading partners, so that we retained
the relative advantage achieved in earlier years.
CONCLUSION
Over the longer run, the policies required to assure equilibrium in the
U.S. balance of payments will be influenced by many factors, including—
among others—the growth rates of our major trading partners throughout
the world, the extent to which European nations learn to rely actively on
fiscal as well as monetary policy as a means of adjusting over-all demand,
the development of capital markets in Europe, changes in the indispensable
foreign exchange costs of national security, our rate of technological innovation, our record of productivity growth and price stability, and the progress
of improvements in international financial machinery.
If our current account surplus continues to expand, a renewed growth of
capital outflows could be compatible with over-all payments equilibrium.
For the present, however, the volume of capital outflows likely to occur in
the absence of any measures to moderate them would clearly be inconsistent
with equilibrium in our external payments. Given that private capital
outflows must be contained, the selective measures currently in use seem, for
the present, an essential component of our policy. Compared with reliance
solely on restrictive general monetary measures that might conceivably hold
down capital flows to the same extent, the selective credit techniques have
the obvious advantage of allowing monetary policy to respond to the' needs
for domestic credit, as well as to affect the 5-10 percent of total credit that
flows abroad.
The selective approach is consistent with an appropriate composition of
the private capital outflow. The exemptions in the IET and the priorities
established in the voluntary programs protect the access of less developed
countries to U.S. capital. The Federal Reserve program, moreover, gives
priority to export financing, which could be squeezed under a highly restrictive monetary policy. By increasing the cost of borrowing in the
United States, the IET contains its own escape valve: countries in urgent
need of new U.S. capital issues are still free to enter our markets; the less




168

urgent needs are screened out. The guideline approach of the voluntary
programs tends to permit the business firms and banks themselves to select
the most attractive investment opportunities; the investments foregone
would yield a smaller return than the average for all new U.S. foreign
investments.
The voluntary program continues to permit growth in both the ownership
of U.S. productive facilities abroad and of the U.S. loans outstanding abroad.
But it keeps that growth within the bounds permitted by the U.S. current
surplus and the cost of essential defense and aid. The voluntary program
remains the foundation of improvement in the U.S. balance of payments this
year.
Our efforts to achieve full equilibrium in 1966 should also benefit from
the improved situation for sterling; in 1965, special transactions by the
United Kingdom accounted for roughly half of our deficit. Prospects are
also strengthened by recent understandings established with Canada on the
handling of its capital needs from the United States. Strong domestic expansion will continue to increase imports this year, and defense expenditures
abroad will have to rise in 1966. Nevertheless, the United States has the
determination and the means to continue the sharp improvement effected
last year in bringing its balance of payments into equilibrium.




169

Chapter 7

The Employment Act: Twenty Years of
Policy Experience
n p ' H E R E WERE great expectations and not a few qualms when the
JL Employment Act was signed into law on February 20, 1946, following
enactment by heavy bipartisan majorities in both houses of Congress.
This year, which marks the 20th anniversary of that enactment, is a suitable
occasion to review our experience under the Act, to take stock of where
we stand today, and to consider the challenges ahead.
THE ACT AND ITS BACKGROUND
The legislation of 1946 set forth the following declaration of policy:
The Congress declares that it is the continuing policy and responsibility of the
Federal Government to use all practicable means consistent with its needs and
obligations and other essential considerations of national policy, with the assistance
and cooperation of industry, agriculture, labor, and State and local governments,
to coordinate and utilize all its plans, functions, and resources for the purpose of
creating and maintaining, in a manner calculated to foster and promote free competitive enterprise and the general welfare, conditions under which there will be
afforded useful employment opportunities, including self-employment, for those able,
willing, and seeking to work, and to promote maximum employment, production,
and purchasing power.

In making this declaration, the Congress recognized that the billions of
independent spending and saving decisions of a free economy could well
result in levels of total demand either short of full employment or in excess
of productive capacity. Furthermore, it took the view that Government
policies could play a constructive role in improving the stability and balance of the economy.
The Act was a product of the experiences of the Great Depression and
World War II. The Depression shook but did not destroy the faith in an
automatic tendency of the economy to find its proper level of operation. In
the early 1930Js, public works and other antidepression programs were
justified as temporary "pump priming," to help the private economy get
back on its track after an unusual and catastrophic derailment. And the
departure from orthodox fiscal principles was made with regret and without
complete consistency. The Government expenditures explicitly designed to




170

combat depression necessarily increased budget deficits; but this implication
was veiled by financing these outlays through an "extraordinary" budget.
Meanwhile, taxes were raised, and salaries and housekeeping expenditures
cut in the regular budget, thereby reducing the over-all stimulation of Government measures.
The relapse of the economy in 1937 into a sharp decline from a level still
far below full employment gave rise to conflicting interpretations. To some,
it proved that pump priming and Government deficits had undermined the
confidence of the business community and thereby only worsened the situation. Others, however, concluded that it pointed to the need for larger
and more sustained fiscal and monetary actions to revive the economy.
In drawing this conclusion, economists were buttressed by the writings
of J. M. Keynes, who offered a theoretical explanation of the disastrous
depression. The Keynesian conclusions received additional support during World War II because they offered a satisfactory explanation of why
the high deficit-financed defense expenditures of that period not only wiped
out unemployment but went beyond to create inflationary pressures.
Memories of the disastrous 1930's were very much in the public mind
as World War II was drawing to an end. Many active proponents of
"full employment" legislation in 1945 and 1946 feared a relapse into depressed levels of economic activity like those of the 1930's, once military
spending ended. They looked toward Federal public works spending as a
peacetime replacement—at least, in part—for the wartime defense outlays.
The opponents of "full employment" legislation had several reservations
and objections. Some feared that it would mean a statutory blessing for
perpetual budgetary deficits, soaring public expenditures, and massive redistribution of income from upper to lower income groups. There were
doubts that Government actions could and would on balance raise employment; and there were fears that these actions would lead to regimentation
and would jeopardize the free enterprise system. The proponents of legislation, on the other hand, argued that the Act would merely provide a
setting essential to the proper functioning of the free enterprise system
because a depressed economy heightened social tensions, discouraged innovation and initiative, dulled competition, and undermined confidence.
The legislation which finally emerged from this discussion wisely abstained
from diagnosing depression as the disease and public works as the cure,
but instead concentrated on establishing the principle of continuing Government responsibility to review and appraise economic developments, diagnose
problems, and prescribe appropriate remedies. And it placed major responsibility squarely upon the President, who was asked to discuss his execution
of that responsibility in an Economic Report to be transmitted to the Congress at the start of each year.
The Act also established two agencies—the Council of Economic Advisers
in the Executive Branch and the Joint Committee on the Economic Report
(later named the Joint Economic Committee) of the Congress—with inter-




171

related but separate responsibilities. These institutions have each filled
a vital and previously missing role in their respective branches of Government—they have provided a coordinated overview of the economic impact
of the entire spectrum of Government tax, expenditure, monetary, and other
activities. To maintain the emphasis on advice and coordination, the
Joint Economic Committee was not given any substantive legislative responsibility nor the Council any policy-executing duties. Both agencies have
participated actively in the counsels of Government; both have conscientiously striven for a thoroughly professional economic competence and
approach in their respective reports and recommendations; and both have
contributed to the public understanding of economic issues.
Today's economic policies reflect the continuing impact of the Employment Act in all the years since its inception. And our accumulating
experience is certain to be reflected in the policies of the future. This
chapter reviews the development of policy in the past 20 years and outlines
the present relationship between economic analysis and economic policy.
AVOIDING DEPRESSIONS AND BOOMS
The Congress proved wise in its decisions to state goals broadly and to
concentrate on continuing review, analysis, and proposals, since the specific
problems that actually arose were somewhat different from those which
many supporters of the Employment Act had anticipated.
Although an important part of the impetus for the Employment Act
derived from the prolonged depression of the 1930's and the resulting fear
of stagnation in the American economy, this problem did not prove to be
the primary challenge to economic policymaking under the Act. Indeed,
immediately after World War II, excess-demand inflation proved to be the
key problem. Subsequently, policy was focused on the age-old problem
of limiting the size and duration of cyclical swings. Only much later and
in a much different and milder form did stagnation arise as a live issue.
Thus, much of our experience under the Act consisted of policy actions to
combat recession—lest it turn into depression—and to contain excess
demand pressure—lest it generate inflationary boom.
COMBATING RECESSIONS
A series of relatively short and mild recessions required Government
attention* in the postwar period. The problem of cyclical declines was not
unexpected by the framers of the Employment Act, nor was it new to the
American economy. In the period between 1854 (the beginning of the
business cycle annals of the National Bureau of Economic Research) and
World War II, we had experienced 21 periods of recession or depression.
Our postwar record is blemished by 4 additional periods of contracting
economic activity—1948-49, 1953-54, 1957-58, and 1960-61.




172

Compared with the previous cyclical record, the postwar recessions have
been far shorter, considerably milder, and substantially less frequent. Postwar recessions ranged in duration from 8 to 13 months; the average duration
of previous declines had been 21 months, and only 3 had been shorter than
13 months in length Measured by the decline in industrial production from
peak to trough, postwar recessions ranged in magnitude from 8 percent to
14 percent. By comparison, in the interwar period, the declines ranged
from 6 to 52 percent; three of the five contractions exceeded 30 percent
and only one was less than the 14 percent maximum of the postwar period.
During the past 20 years, the economy has spent a total of 42 months, or
18 percent of the time, in periods of recessions, far less than the 43 percent
applicable to the 1854-1939 era.
Discretionary Policies
This improvement in the postwar record of the economy was aided by
the deliberate discretionary steps taken by the Government to modify
the impact of business downturns and thereby to prevent cumulating declines
into depression. The speed and force of these actions—in both the
fiscal and monetary areas—varied among the recessions. Thus, in 1949
little new fiscal action was taken, partly because inflation was viewed as a
key problem even during the decline, and partly because Government
measures taken the previous year were expected to have a considerable
impact on the economy: the tax reductions of 1948 were supplying large
refunds, and large expenditure increases were forthcoming under the recently enacted Marshall Plan. The Federal Reserve did act to reduce
reserve requirements in a series of steps during the spring and summer of
1949, reversing a two-year rise in short-term interest rates.
In 1953-54, as military outlays declined and aggregate activity retreated,
the principal expansionary influence came from previously scheduled reductions of corporate and personal income taxes. But some new action was
taken to reduce excise taxes and to speed up expenditures. All three major
instruments of monetary policy—reserve requirements, the discount rate, and
open market operations—were used to encourage the expansion of creditfinanced expenditures. Meanwhile, the Administration planned larger
fiscal steps that might be taken if the recession seemed likely to be prolonged. Significantly, in 1954, the bipartisan character of expansionary
fiscal policies was established for the first time, as the Republican Administration of President Eisenhower adopted measures that had previously
been linked to the New Deal and Keynesian economics.
In 1958, the recession was considerably deeper than its two postwar predecessors and both the Eisenhower Administration and the Congress were
more vigorous in taking action. An important concern of earlier years—
that business confidence might be disturbed by Government recognition of
a recession—seemed insignificant since the sharp recession was obvious to all.

173
795-983 <



Several important measures were taken. The benefit period for unemployment compensation was temporarily extended. Grants to States under
the Federal highway program were enlarged and accelerated, and other programs in the budget also were expanded or rescheduled to provide an earlier
stimulative effect. The Government also acted to spur housing activity by
financial operations in the mortgage market and by altering terms on Government-guaranteed home mortgages. The important measures were launched
near, or after, the trough of the recession. Thus, in retrospect, policy helped
most to strengthen the early recovery rather than to contain or shorten the
recession. Nevertheless, in view of the general recognition that the Government would be running a substantial deficit in any case, these additions to
Federal outlays were a significant reflection of changed attitudes toward the
role of fiscal policy.
Monetary policy also played a constructive role in the 1957-58 recession,
once the monetary authorities moved to ease credit 3 months after the peak
in economic activity. Thereafter, Federal Reserve actions contributed to a
revival in housing and other investment by promoting a sharp reduction in
interest rates, both short- and long-term.
The first fiscal measures to deal with the 1960-61 recession were taken
with the inauguration of President Kennedy in January 1961, when the recession had just about run its course. Nevertheless, improvements in the
social insurance system, rescheduling of Federal expenditures, and expanded
programs (including defense and space) were an important stimulus to the
recovery during 1961. In contrast to the delay in taking fiscal measures,
the Federal Reserve reversed a tight money policy early in 1960, prior to
the downturn.
Not all discretionary changes in taxes or expenditures have contributed to
economic stability. Indeed, some steps taken to pursue national security or
social goals had destabilizing economic impacts, which were not always
appropriately offset. Previously scheduled payroll tax increases took effect
in 1954, 1959, and 1962, and drained off purchasing power in recession or
in initial recovery. In 1953, defense outlays declined and triggered a recession before offsetting expansionary policies were adopted.
Structural Changes for Stability
On the whole, discretionary fiscal and monetary actions made a distinct
positive contribution in limiting declines. Even more important in this
respect was the strengthened inherent stability of the postwar economy.
In large measure, this can be traced simply to the greater size of the Government relative to the total economy: that is, the increased importance of
Government expenditures—both purchases of goods and services and transfer payments. Government outlays do not participate in the downward
spiral of recession; because of its borrowing capacity, the Federal Government—unlike businesses and households—can maintain its spending in the
face of declining income receipts. Although State and local governments do




174

not have equal immunity from the need to tighten their belts, they have been
able to maintain their growing spending programs relatively unaffected
during the mild postwar recessions.
The increased relative importance of Government outlays is shown in
Chart 13. Social insurance and national defense have added especially
to the postwar totals of Federal outlays.
State and local outlays have
been rising rapidly in an effort to catch up with neglected needs and to
keep up with the desires of a wealthier society for improved public services.
The contribution to the stability of the economy resulting from a high level
of Government expenditures, insulated from revenue declines, has been augmented by the cushions to private purchasing power provided by the built-in
fiscal stabilizers.
When private incomes and employment decline, purchasing power is
automatically supported by both a decline of Federal revenues and an increase in unemployment compensation payments. Transmission of the virus
of deflation is thus impeded. During postwar recessions, the progressive
Federal personal income tax has not had to demonstrate its full stabilizing
effectiveness because of the mildness of dips in personal earnings. There
have, however, been sharp declines in corporate incomes; the Federal TreasChort 13

Role of Federal and State and Local Governments
in the Economy
PERCENT OF G N P

28

GOVERNMENT EXPENDITURES - V
TRANSFERS-?/

24

PURCHASES
OF GOODS
AND
SERVICES

STATE & LOCAL
"GOVERNMENT

20
16
TRANSFERS-^/

12
GOVERNMENT

8
PURCHASES
OF GOODS
AND
SERVICES

4
0
1929

1946-50

1954-60

1961-65

AVERAGE

AVERAGE

AVERAGE

J / N A T I O N A L INCOME ACCOUNTS BASIS.
-^TRANSFER PAYMENTS, NET INTEREST, AND SUBSIDIES LESS CURRENT SURPLUS
OF GOVERNMENT ENTERPRISES.
SOURCE: DEPARTMENT OF COMMERCE.




ury has shared about half of the drop in profits, thereby helping to bolster
dividends and to cushion cash flow, and hence investment outlays.
A number of improvements in our financial structure were developed in
the 1930's to assure that financial collapse and declines in economic activity
would not generate a vicious downward spiral as they did after 1929. These
important financial mechanisms include Federal insurance of private deposits; the separation of commercial and investment banking functions; the
Federal Reserve's increased ability to provide banks with reserves in time
of crisis; and the joint work of the Federal Reserve and the Securities and
Exchange Commission to reduce harmful speculation in the stock market.
The very existence of these structural changes has contributed to stability
by improving confidence.
With the help of the more stable structure of the economy, recessions in
the postwar era have been limited to declines in investment spending (and,
in 1953-54, Federal outlays). Consumer incomes have not declined significantly, and hence households have maintained their spending in recession. With the nearly two-thirds of GNP represented by consumer
expenditures insulated from decline and with a solid foundation of public
outlays, declines in private investment have not cumulated. In contrast,
the Great Depression generated a decline of consumer outlays of 40 percent
from 1929 to 1933, and the shrinkage of consumer markets aggravated and
reinforced the collapse in investment spending.
CONTAINING INFLATIONARY PRESSURES
The desirability of price stability was clearly recognized in the legislative
discussion of the Employment Act. But few considered the danger of postwar inflation nearly as great as the opposite danger of relapse into depression.
The legislation itself emphasized the objectives of using resources fully and
attaining high employment. It did not explicitly label price stability an
objective of policy, although this was implicit in the Act and fully reflected
in the policies of every Administration. Nevertheless, concern has been expressed at times that policies for "maximum employment" might allow demand to press too hard on available resources, thus biasing the American
economy toward inflation.
In the wartime environment, inflationary pressures of excess demand had
been suppressed by direct controls on prices and by rationing. It turned
out, however, during the years immediately following World War II that
these measures had served partly to postpone—rather than to eliminate—
significant demand pressures. Substantial backlogs of demand emerged in
the 1946-48 period. Consumers and businesses possessed large accumulations of liquid assets to finance the rebuilding of their depleted stocks of
household appliances, machinery, and equipment, and their houses and
plants.
Thus, contrary to expectations, the initial years of the postwar era were
marked by excessive rather than inadequate demand. In this environment,
living standards of consumers, the productivity of labor, and the capacity




176

of businesses rose rapidly. But so did the price level, with a jump of 31 percent in consumer prices from June 1946 to August 1948. Automatic fiscal
stabilizers helped to contain the growth of private after-tax incomes, and
were reflected in budgetary surpluses during the period. The economic
policymaking machinery set up under the Employment Act may have
moderated pressures to cut taxes drastically. Meanwhile, monetary policy
was tied to a policy of supporting Government bond prices and was not free
to combat inflation.
During the Korean war, however, the Government acted vigorously to
counter inflationary tendencies close to their source. The March 1951
Federal Reserve-Treasury "accord" unleashed monetary policy. Selective
controls on consumer instalment credit and on home mortgages were instituted. The enactment of three large increases in income and profits tax
rates in 1950 and 1951 is one of the better examples of timely fiscal policy.
These actions reflected, in part, recommendations by the Council of Economic Advisers and hearings and reports of the Joint Economic Committee.
Right after jthe outbreak of hostilities, prices had risen sharply in a flurry
of consumer and business buying and, as a result, prices and wage ceilings
had been imposed early in 1951. Once the restraining influence of over-all
fiscal and monetary policies was fully felt, there was little pressure on the
ceilings, and the economy was able to meet the peak defense demands of
the emergency without inflationary strain.
The immediate postwar period and the early months of the Korean
war are the two blemishes of clearly excessive demand on our postwar
record. Apart from these two intervals, wholesale prices have shown a net
increase of only 2 percent in the postwar era. In 1956 and 1957, the only
other periods of marked price increases, over-all demand was not generally
excessive. That inflation raised new issues, which are discussed below.
In view of the whole postwar record, it can hardly be said that the Employment Act has biased policy toward inflation.
EVOLVING PROBLEMS AND POLICIES
During the postwar era, the American economy has remained free of the
malignant diseases of depression and run-away inflation. And the rate of
economic growth has considerably exceeded its long-term average. The
objectives of the Employment Act, however, have not always been fully
met. In particular, experience has demonstrated that the avoidance of
depression did not guarantee the achievement of "maximum employment"
and the avoidance of excess-demand booms did not assure the maintenance
of price stability.
INADEQUATE DEMAND IN EXPANSION
The strength of private demand in the early postwar years and then again
immediately after the Korean war led to a reassessment of the tasks of




177

stabilization policy. After a decade of postwar experience, suspicions arose
that the typical problem would be to contain rather than to stimulate
private demand.
Any such conclusion was soundly refuted by the facts of the ensuing years.
With the backlogs met, and with a marked decline in the rate of family
formation, private demand weakened in the late 1950's. The economy's
performance weakened correspondingly because Government did not act
to compensate. Thus, while unemployment had averaged 4.2 percent of the
civilian labor force in the first postwar decade, it remained above that level
every month between late 1957 and October 1965, averaging 5.7 percent.
The problem of inadequate demand in expansion, which became the
primary focus of fiscal action in the 1960's, was a new challenge to policymaking under the Employment Act. In the first postwar decade, each
time the economy advanced or rebounded from a recession, it reached the
neighborhood of full employment. The policymakers had been ready in
the early postwar years to deal with noncyclical problems of submerged
prosperity or stagnating production. They had seen maximum employment as a moving target which could be maintained only through a substantial growth of output. Both the Council of Economic Advisers and the Joint
Economic Committee had given these issues repeated attention in the late
1940's and early 1950's. But until the late 1950's, no experience had been
encountered to distinguish the problem of full employment from that of
cyclical prosperity.
Then came a sequence of disturbing events: the 1957-58 recession
followed a year of slow advance; the 1960-61 recession began from a peak
far below full employment; and the expansion that began in 1961 seemed
to be running out of steam after little more than a year.
During the initial years of this period, Government policy maintained
vigilance against excessive buoyancy of demand when that was no longer
the problem. Restrictive fiscal and monetary actions choked off the recovery of 1958-60. The shift to an expansionary fiscal policy by the
Kennedy Administration early in 1961 was designed primarily to initiate
a thriving recovery. A determined policy strategy to assure complete recovery was first formulated when the economy faltered in 1962.
The combination of fiscal stimuli to consumer demand and direct tax
incentives to investment, together with monetary actions permitting an
ample rise in credit, promoted a vigorous and sustained expansion after
1963. The inherent strength of both consumption and investment demand
appeared in a new light, once the Revenue Act of 1964 exerted its invigorating influence.
INFLATION AT LESS THAN FULL EMPLOYMENT
Another problem encountered at times during the postwar era has been
the tendency of prices to rise even in the absence of over-all excess demand
pressures. This tendency reflects structural characteristics of the Ameri-




can economy. The economy is not made up of fully competitive labor and
product markets in which large numbers of buyers and sellers interact and
respond passively to prices. On the contrary, in many industries both
unions and businesses exercise a considerable degree of market power. As
a first result, wages and prices are both somewhat rigid in a downward
direction. To the extent that prices rise more readily in response to excess
demand than they decline in the face of excess supply, the price level is
given an upward bias, which can become particularly acute if there are
sharp shifts in demand among various sectors of the economy. Secondly,
because of market power, some firms augment increases in costs originating
elsewhere and unions can escalate their wage demands if prices begin to
rise. Third, firms can use a strong market position to widen margins in
a period of prosperity even if there are no upward pressures on their costs.
Fourth, in the nature of the collective bargaining process, key wage bargains in some industries may tend to establish a pattern applied elsewhere.
In particular^ if the industries with key wage bargains happen to have
excess demands and very strong profits, the pattern will tend to pull wages
upward more rapidly throughout the economy.
An important, broadly oriented study by the Joint Economic Committee
analyzed the workings of these important influences in the 1956-57 inflation. In that period, excess demands that were present in machinery and
equipment, automobile, and metals industries led to price increases that
were not offset elsewhere. Large wage settlements in these industries with
high demand and high profits had pattern-setting effects on many other
contracts, thus adding to costs on a broad front.
Rising prices that originate from such a process can affect expectations,
jeopardize the stability and balance of an expansion, and create inequities
and distortions just as readily as demand inflation. But measures to restrain
these price increases by reducing over-all demand will enlarge unemployment and impair the productivity record so important to cost-price stability
over the longer run. Policies to improve the operations of markets, increase resource mobility and accelerate technical change can help to increase the economy's resistance to rising prices. But in a world where large
firms and large unions play an essential role, the cost-price record will
depend heavily upon the responsibility with which they exercise the market power that society entrusts to them.
The need for responsible private action was brought to public attention
in the Economic Reports of President Eisenhower's second Administration.
Through the major innovation of the guideposts in the Kennedy and Johnson
Administrations, this need has since been focused and developed into a national policy to enlist the force of public opinion to maintain cost-price stability. The emergence of such a policy has been all the more important
in recent years because of the balance of payments problem that has persisted
alongside the domestic need for more expansion.




179

ECONOMIC POLICY TODAY
Two decades of economic analysis and policy experience have shaped
the development of a revised economic policy. By some, current policy has
been labeled the "new economics." It draws heavily on the experience and
lessons of the past, and it combines both new and old elements. Current
policy represents a coordinated and consistent effort to promote balance of
over-all supply and aggregate demand—to sustain steady balanced growth
at high employment levels with essential price stability.
This approach to policy has several key aspects, not entirely novel by
any means. First, it emphasizes a continuous, rather than a cyclical, framework for analyzing economic developments and formulating policies.
Stimulus to demand is not confined to avoiding or correcting recession, but
rather is applied whenever needed for the promotion of full-utilization and
prosperity. Second, in this way, it emphasizes a preventive strategy against
the onset of recession. Third, in focusing on balance of the economy, this
policy strategy cannot give top priority to balance in the budget. When
private investment threatens to outrun saving at full employment, a Government surplus is needed to increase total saving in the economy while
restrictive monetary policy may also be called for to restrain investment
outlays. When, as in recent years, private saving at full employment tends
to outrun actual private investment, the balance should be corrected by
budget deficits and expansionary monetary policy. Fourth, it considers the
budget and monetary conditions in the framework of a growing economy,
recognizing that revenues expand and thereby exert a fiscal drag on demand unless expansionary actions are taken; similarly, it recognizes that
money and credit must expand just to keep interest rates from rising.
Fifth, this strategy emphasizes the use of a variety of tools to support expansion while simultaneously pursuing other objectives. Manpower policies,
selective approaches to control capital outflows, as well as general fiscal
and monetary measures, are all part of the arsenal. Sixth, it calls for
responsible price-wage actions by labor and management to prevent costinflation from impeding the pursuit of full employment. Finally, it makes
greater demands on economic forecasting and analysis. The job of the
economist is not merely to predict the upturn or the downturn but to judge
continuously the prospects for demand in relation to a growing productive
capacity.
THE NATURE OF CYCLICAL INSTABILITY
An industrial economy is vulnerable to cumulative upward and downward movements in activity, so evident in our long-term record. While
they can have diverse specific causes, these cyclical fluctuations can be explained as the result of imbalances between the rate of growth of productive
capacity and the rate of growth of final demands that make use of productive capacity.




180

During periods of prosperity, a considerable part of the Nation's output
is used to increase productive capacity through investment in plant and
equipment and business inventories. If demand keeps pace, sales expand
and the new capacity turns out to be profitable. Businessmen find that their
decisions to increase capacity have been validated and they continue to pursue
expansionary investment policies. If, on the other hand, inventory stocks
are built up far in advance of need—on the basis of overly optimistic sales
forecasts or as an inflation-hedge—businessmen will subsequently wish to
cut back their rate of accumulation. Similarly, if outlays for business fixed
investment add to productive capacity faster than demand expands, overheads on new capital cut into profits, inducing business firms to trim their
capital outlays. Even if businessmen continue to add somewhat to their
productive capacity, the mere decline in the rate of expansion can mean an
absolute reduction in the demand for capital goods and for output to go into
inventories. Payrolls and purchasing power are thereby curtailed and a
decline in total demand can result. Thus a slowdown in economic activity is
converted into a definite downturn—a recession or depression.
Imbalance can arise because businessmen in the aggregate invest too much
and overbuild, creating more capacity than the economy can—even at best—
put to productive use. Or alternatively it can stem from "underbuying," a
growth of final demand too slow to make use of even moderate additions to
capacity. In principle, cyclical movements can also be triggered by overbuilding of new homes and consumer durables.
Overbuilding of inventories—partly encouraged by expectations of rising
prices—was probably the key factor in the first postwar downturn, which
occurred in 1948. That experience demonstrated that a situation of
high total demand could deteriorate rapidly into recession without any
change in the basic underlying factors in the private economy or any restraining shift in public policy. In 1953, the sharp decline in defense outlays
reduced final demands and precipitated recession; productive capacity became temporarily excessive and investment spending declined. In 1956-57,
rapid growth of productive capacity was associated with an investment boom;
meanwhile, final demands grew very slowly. It is not possible to deliver a
clear verdict on whether more vigorous growth of final demand would have
justified the high investment levels then obtaining. But with the slow growth
of demand that actually occurred, there was an abrupt decline in plant and
equipment spending as well as inventory investment in 1957. In 1959-60,
the rate of expansion of capacity (including inventories) was not excessive
measured against the capabilities of the economy; the failure of the economy
to support that growth of capacity must be attributed to "underbuying," the
inadequate expansion of final demand, in an environment of restrictive
fiscal and monetary policies.
In the future as in the past, policies to avert recession cannot wait until
imbalances develop and the signs of a downturn are clear. The fact that
economic activity is rising cannot be an assurance of continued growth if




181

the expansion is too slow to match the growth of productive capacity. Nor
can a strong level of investment be relied on to sustain expansion if it
threatens an excessive growth of productive capacity. Recognizing these
tasks, Government must apply its fiscal and monetary policies continuously
to sustain and support a balanced expansion, sometimes by moderating the
strength of an excessive investment boom, sometimes by adding to the
strength of lagging final demand. The best defense against recession is a
policy to sustain continued expansion. In a free economy, fluctuations in
private demand will inevitably occur, and the Government will not always
have the wisdom or the ability to counteract them. Continued expansion
cannot be guaranteed, but recurrent recession need not be accepted as a
necessary fact of economic life.
POLICY FOR A GROWING ECONOMY
In order to achieve the goal of maximum employment, the Government
must coordinate all its policies to take account of the persistent growth of
the economy's potential output.
The Problem of Fiscal Drag
One consequence of economic growth is that budgetary policies become more restrictive if they stand still. If tax rates are unchanged, Federal revenues will grow continuously as the economy expands, Meanwhile,
if Federal expenditures are held constant in the face of growing revenues,
the Federal budget will exert a continuing "fiscal drag" on private demand.
Either increased expenditures or reduced tax rates can offset this influence. A total of these two types of stimulative actions which exactly
matched the dollar amount of normal revenue growth would provide a
precise offset to fiscal drag (and would leave unchanged the high-employment surplus, discussed in Chapter 1).
A simple mechanical offset to fiscal drag is not, however, a satisfactory
rule for fiscal policy. When aggregate demand threatens to exceed the
supply capacity of the economy, some fiscal drag should be allowed to
operate. On the other hand, waning strength in private demand points
to fiscal action that would more than offset the drag, effecting a desirable
decline in the high-employment surplus.
Furthermore, tightness or ease of monetary policy is important in determining appropriate fiscal actions. There is an analog to drag in the
monetary area: A growing economy generates rising demands for liquid
assets and increasing needs for borrowing. If monetary policies stand still
in the sense of holding supplies unchanged, continually tighter credit conditions and higher interest rates will be the result.
Accelerating Growth
The growth of the economy is a major influence on policy; the opposite
side of the coin is the major role of policy in influencing potential economic




182

growth. The larger the amount of current output invested in physical
and human resources, the more rapidly productivity and the productive
capacity of the economy will increase.
A number of policy choices can speed growth by shifting resources into
various types of investment. Public investment in human and physical
resources can yield rich returns in more rapid economic growth. Some
public investments, such as those on research and development, encourage
complementary private investment. Outlays for manpower training improve labor skills and productivity. Throughout our history, investment
in education has been one of the key contributors to growth. Private
investment in plant and equipment is a key determinant of our industrial
capacity. It can be stimulated by easing monetary policies. It can also
be encouraged by selective tax reductions, such as the investment credit
and depreciation reform of 1962 and the reductions in corporate tax rates
in 1964 and 1965.
When the economy is below full employment, any stimulative measure
is likely to add to private investment, thereby contributing to the growth of
potential, as well as to actual, output. But, at full employment, more
resources can be devoted to capital formation only if current consumption
is restrained. A policy strategy to accelerate growth may therefore point
to higher personal income taxes or similar measures to hold consumption
below what would otherwise be appropriate.
Choices of Tools
Economic policy has many tools available in pursuing the goals of full
employment, rapid growth, price stability, and balance of international
payments. The full range of economic objectives must be reflected in the
selection of policies to meet particular circumstances.
Policy instruments differ in their impact. Sometimes policy tools can
advance the economy toward more than one goal. For example, manpower
policies help to maintain price stability at high employment and to promote
economic growth. Conflicts may occur, however. For example, high
interest rates impinge particularly on investment both at home and abroad,
hence somewhat reducing foreign capital outflows but also reducing aggregate demand and slowing economic growth. In the case of potential conflicts, instruments must be used more selectively; for example, moderate
changes in interest rates can be supplemented by taxes on foreign investment,
like the Interest Equalization Tax.
The potential for timely results differs for various policy instruments.
Monetary policy can be altered readily, although its full economic impact
will not be immediate. While some restraint or speedup in Federal outlays can be applied by Executive authority alone, tax rate changes must,
of course, be approved by the Congress. The speed of congressional action
on tax changes has varied. It acted rapidly to increase taxes in 1950, and
to reduce excise taxes both in 1954 and 1965. On the other hand, it took




183

13 months to enact the comprehensive Revenue Act of 1964. Tax revision
can help to avoid the necessity for abrupt changes in Federal expenditures,
which could require stopping a project before its conclusion or starting a
new one with inadequate planning.
Given the possibility for achieving needed short-run stimulus or restraint
through changes in taxes, transfer payments, or monetary policy, decisions
on expenditures for public services can rest on basic judgments of costs and
benefits of public and private spending. The availability of this choice
permits resources to be devoted to the highest priority uses.
PREREQUISITES OF SUCCESSFUL POLICY
Choice of the right policy action demands full information about the
state of the economy and understanding of its workings. And execution
of stabilizing policy requires public understanding and acceptance.
INFORMATION
An important requirement of economic policymaking is a firm and timely
knowledge of where the economy stands. Spurred by the need for prompt
and enlightened decisions, the Federal statistics program has made rapid
forward strides in the postwar period, and now provides a much better gauge
of current economic developments. Of the 369 monthly series now carried
in Economic Indicators, the statistical summary prepared by the Council
and issued by the Joint Economic Committee, only 60 percent would have
been available by the monthly publication date at the time Economic
Indicators was launched in the late 1940's.
In addition to the information on current developments, a number of
anticipatory surveys have been instituted which provide important information on the probable future course of the economy. Outstanding among
these is the Commerce-Securities and Exchange Commission survey on plant
and equipment; additional important clues to future developments come
from the Commerce inventory survey and the Census quarterly survey of
consumer buying intentions. Important information also is obtained from
private sources including the University of Michigan's Survey Research
Center, the National Industrial Conference Board, and McGraw-Hill, Inc.
Yet, our data are not completely satisfactory. The revisions of the national accounts last summer gave evidence of how much we learn later that
could have been helpful on a current basis. There are any number of
areas—capital stock and capacity, productivity, employee fringe benefits,
job vacancies, among them—where there are important gaps and weaknesses
in our quantitative information which can be remedied only by expansion of
our statistical programs.
Not all the information useful to the Council comes from published
sources or takes the form of numbers. The Council, as enjoined by the Act,
finds it most useful to consult regularly with business and labor. These




184

consultations provide valuable information and opinions, and also allow
the Council to explain and clarify Administration views.
PROFESSIONAL KNOWLEDGE
Facts are the essential raw materials for analysis, but they require intelligent processing to be useful in guiding policy. The ability of economists to
diagnose and forecast on the basis of current facts and to evaluate the impact
of alternative policy measures is a key determinant of what policy can do to
maintain stable balanced growth.
Our economic knowledge has made great advances in the past generation,
but many important questions remain, answers to which should be and
can be improved through further research.
There are many quantitative uncertainties in forecasting the strength of
private demands. Some of these were illustrated in 1965 when the improvement in profits and sales—coupled with the shifting defense picture—
generated a more rapid and greater surge in investment demand than was
foreseen initially. Furthermore, the linkage between monetary policy actions and changes in ultimate spending also require more exploration. And
even in areas that are more readily quantified, such as the impact on GNP of
changes in Government purchases and personal tax reductions, there remains
a considerable range of doubt about the timing of the impacts and the
specific influences on consumption and investment.
Departing from the domain of aggregative output effects, we need a better
understanding of many more specialized problems, such as the functioning
of labor markets—how job vacancies are filled, how skill shortages are met,
and how excess supplies in one area are ultimately absorbed elsewhere.
Such knowledge can be a useful guide to the possibilities for expanding output and employment while avoiding bottlenecks.
But while much remains to be learned about our economy, it would be a
disservice to understate the power of economic analysis, and to underrate
the substantial contribution of the profession to the successful course of our
economy in the postwar period. The Employment Act provided the framework in which this professional contribution could be rendered and be given
its proper place in the framing of public policy.
PUBLIC UNDERSTANDING
Not all of the needed improvements in knowledge and understanding
are of a technical character. Even though viewed as correct by the professional analyst, policies cannot be applied effectively unless the Congress
and the public at large understand how the proposed measures intend to
further desirable objectives.
If policy proposals of the Administration are to be converted into legislation, they must be convincing to the Congress. Twenty Annual Economic Reports have explained the rationale for the programs of four Presidents. And the Joint Economic Committee has rendered invaluable service




185

in contributing to an understanding of general economic policy and specific
proposals. The principles of fiscal policy and their implications for tax and
expenditure legislation have been central to the Nation's economic education in the past 20 years. The great increase in understanding is best seen
in the sophisticated current level of public discussion.
Proper understanding of policies by the public, moreover, contributes
to the very success of the policy measures. In the absence of public understanding, there can be perverse reactions. If people read policies to maintain price stability as an announcement that inflation has arrived, rather
than an exercise of determination to avoid it, destabilized prices may be the
result. If people see steps to combat recession as a sign of panic rather than
a support to the economy, this too can have adverse psychological effects.
In particular, a firm appreciation by the American people of the rationale
of wage-price guideposts is essential to make them effective and to limit the
need for active participation by Government. It is the public that gets hurt
by irresponsible wage-price decisions, and public reaction can be the best
reminder to those with market power of their social responsibility.
CONCLUSION
As the primary objective set by the Employment Act is being reached,
new problems move to the fore and are receiving increasing attention in
public policy. These include the efficient use of the Nation's human and
natural resources, the conquest of poverty and suffering, the reconstruction
of our cities, and the many other tasks set forth in the preceding pages
of this Report. And undoubtedly in the pursuit of the goals of the
Employment Act during the next 20 years, policymakers will encounter a
new range of problems,, no more completely foreseeable now than were
the issues of today in 1946.
While important problems remain, we are nonetheless at an historic point
of accomplishment and promise. Twenty years of experience have demonstrated our ability to avoid ruinous inflations and severe depressions. It
is now within our capabilities to set more ambitious goals. We strive to
avoid recurrent recessions, to keep unemployment far below rates of the
past decade, to maintain essential price stability at full employment, to
move toward the Great Society, and, indeed, to make full prosperity the
normal state of the American economy. It is a tribute to our success under
the Employment Act that we now have not only the economic understanding but also the will and determination to use economic policy as an
effective tool for progress.




186

Appendix A
MAJOR LEGISLATION AND ADMINISTRATIVE
ACTIONS OF ECONOMIC SIGNIFICANCE IN 1965




187




Major Legislation and Administrative Actions
of Economic Significance in 1965
February
VOLUNTARY RESTRAINT PROGRAM FOR BALANCE OF PAYMENTS

In a special message to the Congress, the President asked bankers and
businessmen to "exercise voluntary restraint in lending money or making
investment in developed nations." The President said that restraint should
particularly apply to short-term loans and direct investment. This led to
the issuance by the Federal Reserve Board of guidelines to be followed by
banks and by nonbank financial institutions in their foreign lending and
investment activities, and to requests by the Department of Commerce for
similar restraint by the business community.
March
GOLD COVER—P.L. 89-3

Eliminates the requirement that each Federal Reserve Bank maintain
gold certificate reserves valued at not less than 25 percent of the amount
of commercial bank deposits it holds.
APPALACHIAN PROGRAM—P.L.

89-4

Authorized Federal aid for the development of the economically depressed
11-state Appalachian region. Established an Appalachian Regional Commission to coordinate the many projects—road building, construction of
health facilities and vocational schools, land improvement, reclamation of
mining areas, and development of timber and water resources.
April
ELEMENTARY AND SECONDARY EDUCATION—P.L.

89-10

Authorized a 3-year program of Federal grants to school districts with
large numbers of children from low-income families. Authorized a 5-year
program of grants for the purchase of library books, other library materials,
and textbooks. Also authorized programs to establish supplementary community education centers, expand educational research, and strengthen
State departments of education.

795-983 O—'66
1&



MANPOWER PROGRAMS—P.L.

89-15

Extended and expanded the Manpower Development and Training Act
(MDTA). Permitted 100 percent Federal financing to continue through
June 30, 1966. Increased the maximum training period from 72 weeks to
2 years and provided additional training allowances and benefits. Brought
the Area Redevelopment Act training program under MDTA.
FINANCIAL AND CREDIT REGULATIONS

The Federal Home Loan Bank Board issued several new regulations aimed
at protecting depositors and shareholders at savings institutions from the
possibility that competitive forces would encourage these institutions to
extend excessively risky credit. The Federal Housing Administration also
tightened regulations pertaining to its mortgage insurance program.
May
INTERNATIONAL COFFEE AGREEMENT—P.L.

89-23

Enabled the United States to carry out its obligations under the International Coffee Agreement of 1962. The Agreement was designed to bring
more stability to coffee prices.
June
INTERNATIONAL MONETARY FUND CONTRIBUTION—P.L.

89-31

Authorized a 25-percent increase in the U.S. contribution to the IMF.
EXCISE TAX REDUCTION—P.L.

89-44

Provided excise tax reductions totaling $4.7 billion between 1965 and
1969. Provided for the elimination of all Federal excises by 1969 except
user, regulatory, and sumptuary levies and a 1-percent manufacturer's tax
on passenger automobiles.
REDUCTION OF DUTY-FREE TOURIST EXEMPTION—P.L.

89-62

Made permanent the existing temporary $100 exemption and provided
for its calculation on the retail value of goods rather than the lower wholesale value. Reduced from one gallon to one quart the amount of duty-free
foreign alcoholic beverages that could be brought into the country, and
changed the valuation under the existing $10 exemption for mailed packages
from wholesale to retail.
July
RIVER BASIN PLANNING—P.L. 89-80

Provided for Federal and regional coordination of plans for water resource development.




190

SILVER COINAGE—P.L. 89-81

Revised the Nation's coinage by authorizing coinage of half dollars with
less silver content and quarters and dimes without silver content.
HEALTH CARE AND SOCIAL SECURITY—P.L. 89-97

Provided a health care insurance program for persons 65 and older,
expanded to other needy individuals the Kerr-Mills program of medical
care payments to the indigent aged, strengthened child health care programs
and other Federal-State public assistance programs. Increased Social Security benefits by 7 percent, retroactive to January 1965, and raised Social
Security taxes and covered wages, effective January 1966.
August
STAFFING SUPPORT FOR COMMUNITY MENTAL HEALTH CENTERS—P.L.

89-105
Authorized a new 7-year program of grants to pay the initial costs of
professional and technical personnel at community health centers; expanded
teacher training and research and demonstration projects for education of
handicapped children.
COMMUNITY HEALTH SERVICE EXTENSION—P.L. 89-109

Expanded and extended for an additional year the general public health
grants to States and the authority for project grants to support community
health services; extended for 3 years the mass immunization program;
expanded and extended for 3 years the migratory workers' health program.
HEALTH RESEARCH FACILITIES—P.L. 89-115

Extended for 3 years and expanded the existing program of grants for
construction of health research facilities.
OMNIBUS HOUSING ACT—P.L. 89-117

Established a program of rent supplements for low-income families;
extended and amended laws relating to public housing, urban renewal,
relocation grants, open space land, and metropolitan organization and
planning; provided a new grant program for the construction of essential
water and sewer facilities.
ECONOMIC DEVELOPMENT—P.L. 89-136

Authorized up to $3.25 billion in grants and loans for public works,
development facilities, and other projects intended to aid economically
depressed areas and to aid planning for economic development.
September
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT—P.L. 89-174

Created a cabinet level Department of Housing and Urban Development.
Transferred to the new Department all of the functions of the Housing and
Home Finance Agency and its components.




ANTITRUST EXEMPTIONS—P.L. 89-175

Provided exemptions from the antitrust laws to strengthen the U.S. balance of payments. Established procedures for voluntary agreements
among banks, trusts, penion funds, etc., to curtail the outflow of dollars and
credit.
STATE TECHNICAL SERVICES—P.L. 89-182

Provided matching grants to States which establish technical information
programs to apprise local businesses and industries of the opportunities for
using scientific information and techniques.
HIGH-SPEED GROUND TRANSPORT—P.L. 89-220

Authorized the Secretary of Commerce to conduct a 3-year $90 million research, development, and demonstration project in high-speed ground
transportation.
October
WATER POLLUTION CONTROL—P.L. 89-234

Provided for the establishment and enforcement of water quality standards for interstate streams. Increased Federal financial aid for construction
of community waste treatment projects and created a new Water Pollution
Control Administration within the Department of HEW.
IMMIGRATION—P.L. 89-236

Revised the Nation's immigration system to eliminate national origins
quotas and to set general priorities for admission to the United States.
REGIONAL MEDICAL PROGRAMS—P.L. 89-239

Authorized a 3-year program of grants to support the establishment of a
network of regional medical complexes in the fields of heart disease, cancer,
stroke, and related diseases.
INTEREST EQUALIZATION TAX—P.L. 89-243

Extended through July 1967 the tax on the purchase by Americans of certain foreign securities.
AIR POLLUTION CONTROL—P.L. 89-272

Provides for control of air pollution from automotive exhaust emissions
and authorizes a national research program for disposal of solid wastes.
CANADIAN AUTO AGREEMENT—P.L. 89-283

Authorized the President to remove tariff duties on Canadian automobiles
and parts for original equipment, and eased the eligibility criteria for granting assistance to injured workers and firms.




192

HIGHWAY BEAUTIFICATION—P.L.

89-285

Provided for the removal of billboards and junkyards from primary and
interstate highway systems. Authorized grants to the States for landscaping
and roadside development.
VOCATIONAL SCHOOL LOANS—P.L. 89-287

Provided insured loans and interest subsidies for students engaged in
post-high school business, trade, technical, and other vocational education.
HEALTH PROFESSIONAL EDUCATION—P.L. 89-290

Extended for 3 years and expanded the existing programs of Federal
grants for construction of teaching facilities to train health personnel and
of loans for students in health fields; initiated a new program of scholarships
and institutional grants for financial support and curriculum improvement.
MEDICAL LIBRARIES—P.L.

89-291

Authorized a 4-year program of Federal grants-in-aid to build medical
library facilities and a 5-year program of other assistance.
November
FARM PROGRAM—P.L. 89-321

Extended with some modifications existing programs for wheat, wool, and
feed grains; provided authority for new programs for dairy products and
cotton; authorized a cropland adjustment program; and provided for rice
acreage diversion payments, if the national rice acreage allotment is reduced.
HIGHER EDUCATION—P.L. 89-329

Established Federal scholarships for financially needy undergraduate students. Authorized a National Teacher Corps to improve education in slums
and other impoverished areas. Authorized guaranteed loans for college students, graduate fellowships for elementary and high school teachers, and
Federal aid to improve college libraries, college instructional equipment, and
community service programs.
SUGAR QUOTAS—P.L. 89-331

Revised and extended through 1971 quotas on domestic and imported
sugar. Increased mainland domestic quotas by 580,000 tons a year and
granted quotas for U.S. imports to 31 nations.
WATER POLLUTION

The President issued an Executive Order aimed at prevention, control,
and abatement of water pollution by Federal activities.




193

December
DISCOUNT RATE AND REGULATION Q ACTION

Federal Reserve Bank discount rates were raised from 4 to 4J/2 percent.
At the same time, maximum rates that member banks can pay on time
deposits and certificates of deposit maturing in 30 days or more were raised
to 5 / 2 percent from 4 percent on such deposits maturing in 30 to 90 days,
and 45/2 percent on those maturing in 90 days or more; no change was made
in the 4 percent rate payable on savings deposits. The Federal Deposit
Insurance Corporation also increased the maximum interest rate which can
be paid on time deposits by insured nonmember banks.
REVISION OF GUIDELINES FOR FINANCIAL INSTITUTIONS AND CORPORATIONS

The Federal Reserve Board and the Department of Commerce issued
revised guidelines for foreign credits and investment by financial institutions
and businesses in 1966.




194

Appendix B
REPORT TO THE PRESIDENT ON THE ACTIVITIES OF
THE COUNCIL OF ECONOMIC ADVISERS DURING 1965







LETTER OF TRANSMITTAL
DECEMBER 31,

1965.

The PRESIDENT.

SIR: The Council of Economic Advisers submits this report on its activities during the calendar year 1965 in accordance with the requirements of
Congress, as set forth in section 4(d) of the Employment Act of 1946.
Respectfully,




GARDNER AGKLEY, Chairman
OTTO ECKSTEIN
ARTHUR M.

197

OKUN




Report to the President on the Activities of the
Council of Economic Advisers During 1965
The Council of Economic Advisers was established as an agency in the
Executive Office of the President by the Employment Act of 1946. Under
the Act, the Council is charged with the responsibility of analyzing and interpreting economic developments and trends and formulating and recommending economic policies that will promote the goals of "maximum employment, production, and purchasing power."
The Council endeavors to keep the President and his immediate staff
fully informed concerning economic developments and prospects, and
emerging problems that may affect the Nation's economy. At the request
of the President, and members of his staff, or on its own initiative, the
Council studies particular areas or problems, and makes recommendations
concerning Government programs and policies. Continuous contact is maintained with all major Government agencies having responsibilities in the
economic field, and the Council participates frequently in interagency discussions of problems of economic policy. In addition, it participates in, and
sometimes chairs, a number of more formal interagency committees.
The Council undertakes the responsibility of explaining and clarifying
the Administration's economic policies both within Government and to
the public at large. This is carried out through speeches, articles, statements, special studies (including, this year, the Report to the President on
Steel Prices), Congressional testimony, and the Annual Report of the Council of Economic Advisers.
An important phase of the Council's work involves its participation in the
activities of international organizations of which the United States is a
member. Council members and staff have been particularly active in the
various committees and working groups of the Organization for Economic
Cooperation and Development.
Gardner Ackley, Otto Eckstein, and Arthur M. Okun continued to serve
as Council members in 1965, with Mr. Ackley as Chairman. Messrs.
Ackley, Eckstein, and Okun are on leave from the University of Michigan,
Harvard University, and Yale University, respectively.
On December 27, the President announced that James S. Duesenberry,
Professor of Economics, Harvard University, will succeed Mr. Eckstein,
who is returning to the Harvard University faculty about February 1, 1966,




199

Following is a list of all past Council members and their dates of service:
Name
Edwin G. Nourse
Leon H. Keyserling..
John D. Clark
Roy Blough
Robert C. Turner
Arthur F. Burns
N e i l H . Jacoby
Walter W. Stewart..
Joseph S. Davis
Raymond J. Saulnier.
Paul W. McCracken.
Karl Brandt
Henry C. Wallich___
James Tobin
Kermit Gordon
Walter W. Heller
John P. Lewis

Position
Chairman...
Vice C hairman
Acting Chairman
Chairman
_ _
Member
Vice Chairman
Member
Member
Chairman
Member
Member
. _
Member
Member
Chairman
Member
Member
Member
Member
Member
_ .
Chairman
..
Member

Oath of office date
August 9,1946
August 9, 1946
__
November 2, 1949
May 10,1950
August 9, 1946
May 10, 1950
June 29, 1950. _ __ _
September8. 1952.....
March 19,1953
September 15, 1953
December 2,1953
May 2,1955
April 4,1955
December 3,1956
._
December 3,1956
November 1,1958
May 7,1959
January 29, 1961
._
January 29, 1961
January 29, 1961
May 17,1963

Separation date
November 1,1949.
January 20,1953.
February 11,1953.
August 20, 1952.
January 20,1953.
December 1,1956.
February 9,1955.
April 29, 1955.
October 31,1958.
January 20, 1961.
January 31, 1959.
January 20, 1961.
January 20, 1961.
July 31,1962.
December 27, 1962.
November 15,1964.
August 31,1964.

At the end of 1965, members of the Council's professional staff were
John J. Arena, Guy Black, Stanley W. Black, John W. Dorsey, Jr., Theodore
J. Goering, Frances M. James, Susan J. Lepper, Wilfred Lewis, Jr., David W.
Lusher, Paul W. Mac Avoy, Benjamin A. Okner, Theodore K. Osgood,
Alfred Reifman, R. Robert Russell, Frank W. Schiff, Martin Segal, Lewis
J. Spellman, and Paul J. Taubman.
Each year a number of staff members who have joined the Council on
a temporary basis return to posts in private life or in government. Those
leaving the Council in 1965 were Jarvis M. Babcock, James T. Bonnen, W.
Lee Hansen, Edwin S. Mills, Theodore Morgan, Frederic Q. Raines, Melvin
Rothbaum, Lester D. Taylor, Lester C. Thurow, Joseph J. Walka, and
Ramsay Wood.
The Council consults frequently with leading members of the economics
profession. The following served the Council as consultants during 1965:
W. H. Locke Anderson, William J. Baumol, Barbara Berman Bergmann, William G. Bowen, Harvey E. Brazer, E. Cary Brown, Richard E. Caves, Richard N. Cooper, James S. Duesenberry, John Dunlop, Kermit Gordon, Walter
W. Heller, Maynard M. Hufschmidt, Myron L. Joseph, Carl Kaysen,
Charles P. Kindleberger, Mark W. Leiserson, Harold M. Levinson, John V.
Lintner, Jr., Richard A. Musgrave, Joseph A. Pechman, Merton J. Peck,
George L. Perry, Frank C. Pierson, Albert E. Rees, Walter Salant, Paul A.
Samuelson, Warren L. Smith, Robert M. Solow, Charles A. Taff, James
Tobin, and Lloyd Ulman.
The Council also consults from time to time with various groups from
industry and labor, including its Liaison Committee of the Business Council,
the AFL-CIO economists and research directors, and the Conference of
Business Economists.
The Council continued its summer student intern program begun in 1961.
Those participating in the program this past summer were William H.




200

Branson, Faith G. Half ter, Allen H. Lerman, Heather L. Ross, and David A.
Starrett. In addition, David J. Ott joined the Council staff for the summer.
In 1965, as in most of the preceding 10 years, the Council relied upon
the editorial skills of Miss Dorothy Wescott in preparing its Annual Report.
PUBLICATIONS

The January 1965 Economic Report of the President, together with The
Annual Report of the Council of Economic Advisers, was distributed to members of the Congress, Government officials, the press, and depository libraries. The Superintendent of Documents sold more than 50,000 copies to
the public.
The monthly Economic Indicators, an important compilation of current
economic statistics, has been prepared since 1948 at the Council under the
direction of Miss Frances M. James, and is published by the Joint Economic
Committee of the Congress. Under authority of a Joint Resolution of
the Congress, copies are furnished to members of the Congress and to
depository libraries. The Superintendent of Documents sells more than
8,000 copies a month to the public.




201




Appendix C
STATISTICAL TABLES RELATING TO INCOME,
EMPLOYMENT, AND PRODUCTION




203




CONTENTS
income or expenditure:
Page
Gross national product or expenditure, 1929-65
209
Gross national product or expenditure, in 1958 prices, 1929-65
210
Gross national product by major type of product, 1929-65
212
Gross national product by major type of product, in 1958 prices,
1929-65
213
C-5. Implicit price deflators for gross national product, 1929—65
214
C-6. Gross national product: Receipts and expenditures by major economic
groups, 1929-65
216
C-7. Gross private and government product, in current and 1958 prices,
1929-65
218
G-8. Personal consumption expenditures, 1929-65
219
C-9. Gross private domestic investment, 1929-65
220
C-10. National income by type of income, 1929-65
221
C-ll. Relation of gross national product and national income, 1929-65 . . . .
222
C-l 2. Relation of national income and personal income, 1929-65
223
C-13. Sources of personal income, 1929-65
224
C-l 4. Disposition of personal income, 1929-65
226
C-l 5. Total and per capita disposable personal income and personal consumption expenditures, in current and 1958 prices, 1929-65
227
C-l 6. Number and money income of families and unrelated individuals,
1947-64
228
C-l 7. Financial saving by individuals, 1939-65
229
C-l8. Sources and uses of gross saving, 1929-65
230

National
C-l.
C-2.
C-3.
C-4.

Population, employment, wages, and productivity:
C-l9. Population by age groups: Estimates, 1929-65, and projections,
1970-85
C-20. Noninstitutional population and the labor force, 1929-65
C-21. Civilian employment and unemployment, by sex and age, 1947—65. .
C-22. Selected unemployment rates, 1948-65
C-23. Unemployment by duration, 1947-65
C—24. Unemployment insurance programs, selected data, 1940-65
C-25. Number of wage and salary workers in nonagricultural establishments,
1929-65
C-26. Average weekly hours of work in selected industries, 1929—65
C-27. Average gross hourly earnings in selected industries, 1929-65
C-28. Average gross weekly earnings in selected industries, 1929-65
C-29. Average weekly hours and hourly earnings, gross and excluding overtime, in manufacturing industries, 1939—65
C-30. Average weekly earnings, gross and spendable, in manufacturing
industries, in current and 1957-59 prices, 1939-65
C-31. Indexes of output per man-hour and related data, 1947-65
Production and business activity:
C-32. Industrial production indexes, industry groupings, 1947-65
C-33. Industrial production indexes, market groupings, 1947-65
C-34. Manufacturing capacity, output, and utilization rate, 1948-65
C-35. New construction activity, 1929-65
C-36. Business expenditures for new plant and equipment, 1939 and 194566

205
7195-983 O—618——14




231
232
234
235
236
237
238
240
241
242
243
244
245
246
248
249
250
251

Production and business activity—Continued
C—37. New housing starts and applications for financing, 1929-65
C—38. Sales and inventories in manufacturing and trade, 1947-65
C-39. Manufacturers' shipments and inventories, 1947-65
C-40. Manufacturers' new and unfilled orders, 1947-65

P age
252
254
255
256

Prices:
G-41.
C-42.
G-43.
C-44.

Wholesale
Wholesale
Consumer
Consumer

price
price
price
price

indexes,
indexes,
indexes,
indexes,

by
by
by
by

major commodity groups, 1929-65
stage of processing, 1947-65
major groups, 1929-65
special groups, 1935-65

.

257
259
261
262

Money supply, credit, and finance:
C-45.
C-46.
C-47.
C-48.
C-49.
C-50.
C-51.
C-52.

Money supply, 1947-65
Selected liquid assets held by the public, 1946-65
Bank loans and investments, 1929-65
Bond yields and interest rates, 1929-65
Federal Reserve Bank credit and member bank reserves, 1929-65. . .
Short- and intermediate-term consumer credit outstanding, 1929-65. .
Instalment credit extended and repaid, 1946-65
Mortgage debt outstanding, by type of property and of financing,
1939-65
C-53. Net public and private debt, 1929-65

263
264
265
266
268
269
270
271
272

Government finance:
C-54. U.S. Government debt, by kind of obligation, 1929-65
G-55. Estimated ownership of U.S. Government obligations, 1939-65
C-56. Average length and maturity distribution of marketable interest-bearing public debt, 1946-65
C-57. Federal administrative budget receipts by source and expenditures by
function, fiscal years 1939-67
C 58. Federal administrative budget receipts and expenditures and the
—
public debt, 1929-67
C-59. Government cash receipts from and payments to the public, 1946-67 .
C—60. Government receipts and expenditures in the national income accounts, 1929-65
C-61. Federal Government receipts and expenditures in the national income
accounts, 1946-67
C—62. Reconciliation of Federal Government receipts and expenditures in
the administrative budget and the consolidated cash statement with
receipts and expenditures in the national income accounts, fiscal
years 1963-67
G-63. State and local government revenues and expenditures, selected fiscal
years, 1927-64

273
274
275
276
278
279
280
281

282
283

Corporate profits and finance:
C-64. Profits before and after taxes, all private corporations, 1929-65
C—65. Relation of profits after taxes to stockholders' equity and to sales,
private manufacturing corporations, by industry group, 1958-65. . .
C-66. Sources and uses of funds, nonfarm nonfinancial corporate business,
1954-65
C-67. Current assets and liabilities of United States corporations, 1939-65. .
C-68. State and municipal and corporate securities offered, 1934-65
C-69. Common stock prices, earnings, and yields, and stock market credit,
1939-65
C-70. Business population and business failures, 1929-65




206

284
285
287
288
289
290
291

Agriculture:
C-71. Income from agriculture, 1929-65
G-72. Farm production indexes, 1929-65
G—73. Indexes of prices received and prices paid by farmers, and parity ratio,
1929-65
C-74. Selected measures of farm resources and inputs, 1929-65
C-75. Farm population, employment, and productivity, 1929-65
G-76. Comparative balance sheet of agriculture, 1929-66
I nternational statistics:
G-77. United States merchandise exports and imports, by commodity groups,
1957-65
C-78. United States balance of payments, 1947-65
G-79. United States merchandise exports and imports, by area, 1957-65 . . .
C-80. United States foreign assistance, by type and area, fiscal years 1946-65 .
G-81. International reserves, 1949, 1953, and 1960-65
G-82. United States gold stock and holdings of convertible foreign currencies
by U. S. monetary authorities, 1949-65
C-83. Price changes in international trade, 1957-65

Note.—Detail in these tables will not necessarily add to totals because of
rounding.
Data for Alaska and Hawaii are not included unless specifically noted.
Unless otherwise noted, all dollar figures are in current prices.




207

Page
292
293
294
296
297
298

299
300
302
303
304
305
306




NATIONAL INCOME OR EXPENDITURE
TABLE G-l.—Gross national product or expenditure, 1929-65
[BiUions of dollars]
rernment
Government purchase of
shases
goods and services

Gross private domestic investment *

Year or
quarter

PerFixed investment
Total sonal
gross conna- sumpNonresidential
ional tion
rod- exuct pendi- Total
tures
Total

Net
exports
of
goods
and
serv- Total

1929-.

103.1

14.5

10.6

5.0

5.6

4.0

1930..
1931..
1932..
1933..
1934..
1935..
1936..
1937..
1938..
1939-.
1940..
1941..
1942..
1943..
1944..
1945..
1946..
1947..
1948..
1949.
1950-.
1951..
1952..
1953.
1954.
1955.
1956.
1957.
1958.
1959.
1960.
1961.
1962,
1963.
1964.
1965 8

90.4
60.5
75.8
48.6
58.0
45.8
55.6
51.3
65.1
55.7
72.2
61.9
82.
66.5
90.4
63.9
84.7
66.8
90.5
99.7
70.8
124.5
80.6
157.9
88.5
191.6
99.
210.1 108.
212.0 119.
208.5 143.4
231.3 160.
257.6 173.6
256.5 176.8
284.8 191.0
328.4 206.3
345.5 216.7
364.6 230.0
364.8 236.5
398.0 254.4
419.2 266.7
441.1 281.
447.3 290.
483.6 311.
503.8 325.
520.1 335.
560.3 355.1
589.2 373.8
628.7 398.9
675.6 428.5

10.3 10.6
6.8
5.6
3.4
1.0
3.0
1.4
4.1
3.3
5.3
6.4
7.2
8.5
9.2
11.8
7.4
6.5
8.9
9.3
13.1 11.0
17.9 13.4
8.1
9.8
6.4
5.7
8.1
7.1
10.6 11.7
30.6 24.2
34.0 34.4
46.0 41.3
35.7 38.8
54.1 47.3
59.3 49.0
51.9 48.8
52.6 52.1
51.7 53.3
67.4 61.4
70.0 65.3
67.8 66.5
60.9 62.4
70.5
75.
74.8 71.3
71.
69.
83.0 77.0
86.9 81.2
92.9 88.1
104.9 97.

8.3
5.0
2.7
2.4
3.2
4.1
5.6
7.3
5.4
5.9
7.5
9.5
6.0
5.0
6.8
10.2
17.0
23.4
26.9
25.1
27.9
31.8
31.6
34.2
33.6
38.1
43.7
46.4
41.6
45.1
48.4
47.0
51.
54.3
60.5
69.8

4.0
2.3
1.2
.9
1.0
1.2
1.6
2.4
1.9
2.0
2.3
2.9
1.9
1.3
1.8
2.9
6.8
7.5

4.3
2.7
1.5
1.
2.2
2.9
4.0
4.9
3.5
4.0
5.3
6.6
4.1
3.
5.0
7.3
10.
15.9
18.1
16.6
18.
20.
20.2
21.5
20.6
23.8
26.5
28.4
25.0
28.4
30.3
28.6
32.5
34.6
39.4
45.5

2.3
1.7
.7
.6
.9
1.2
1.6
1.9
2.0
2.9
3.4
3.9
2.1
1.4
1.3
1.5
7.2
11.1
14.4
13.
19.4
17.
17.
18.0
19.7
23.3
21.6
20.2
20.8
25.5
22.8
22.6
25.
26.9
27.5
27.6

1963: I
II...
III..
IV...
1964: I . . . .
II...
III..
IV...
1965: I_...
II...
III..
IV 6.

577.0
583.1
593.1
603.6
614.0
624.2
634.8
641.1
657.6
668.8
681.5
694.6

368.0
371.1
376.6
379.5
389.1
396.0
404.6
405.9
416.9
424.5
432.5
440.1

82.6 78.1
84.8 80.1
87.9 82.1
92.4 84.3
89.7 86.5
90.9 86.8
92.6 88.8
97.7 90.2
103.4 94.6
102.8 96.4
106.2 98.6
107.5 100.5

52.1
53.4
55.1
56.5
58.1
58.9
61.6
63.5
66.9
68.4
70.9
73.2

77.2

16.2

11.2
11.4
12.7
13.1
14.3
17.
18.0
16.6
16.
18.1
18.4
19.2
19.
21.1
24.3

1.7

1.1

8.5

Federa

State
and
local

1.3

1.3

7.2

-.4
1.4
1.0
9.2 1.4
-1.1
1.5
.5 9.2 1.5
-2.5
1.5
.4 8.1 1.5
-1.
2.0
.4 8.0 2.0
3.0
.6 9.8 3.0
-.7
2.9
.1 10.0 2.9
1.1
4.9
.1 12.0 4.9
1.3
4.7
.3 11.9 4.7
2.5
5.4
1
13.0 5.4
-.9
3.9
.4
1.1 13.3 5.1 1.2
2.2
1.7 14.0 6.0 2.2
3.1
4.5
1.3 24.8 16.913.8
2.5
59.6 51.9 49. 4
1.8
1.4
- . 6 -2.0 88.6 81.1 79. 7
1.6
96.5 89. 0 87. 4
- 1 . 0 -1.
.7
- 1 . 0 -.6 82.3 74. 2 73. 5
2.5
T.I 27.0 17. 2 14. 7
6.4
3.5
25.1 12.5
- . 5 11.
5.8
6.4 31.6 16. 510. 7
4.7
6.8
6.1 37.8 20.113. 3
-3.1
6.8
4.3
1.8 37.9 18. 4 14.1
10.3
4.1
3.7 59.1 37. 7 33.6
5.9
2.
74.7 51. 8 45. 9
3.1
.4 81.6 57.0 48. 7
8.4
.4
1.8 74.8 47.4 41.2
6.2
-1.5
2.0 74.2 44.1 38. 6
5.5
6.0
4.0 78.6 45. 6 40.3
5.3
4.
5.
86.1 49. 5 44. 2
5.3
1.3
2.2 94.2 53.6 45.9
7.7
-1.5
7.6
4.8
.1 97.0 53.7 46.0
8.6
4.1 99.6 53.5 44.9
3.6
9.6
2.0
5.6 107.6 57. 4 47.8
6.0
5.1 117.1 63.4 51. 6 11.8
5.
5.9 122.6 64. 4 50. 8 13.6
4.8
8.6 128.41 65. 3 49. 9 15.4
7.4
7. 135.0l 66. 7 49.9 16.8

7.8
7.7
6.6
6.0
6.8
7.1
7.0
7.2
7.6
8.2
8.0
7.9
7.7
7.4
7.5
8.1
9.8
12.6
15.0
17.7
19.5
21.5
22.9
24.6
27.4
30.1
33.0
36.6
40.6
43.3
46.1
50.2
53.7
58.3
63,1
68.2

Seasonally adjusted annual rates
19.0
19.2
20.0
20.5
20.7
21.1
21.1
21.5
23.2
24.5
24.2
25.4

33.1
34.2
35.1
36.0
37.5
37.9
40.5
42.0
43.7
43.9
46.7
47.8

26.0
26.7
26.9
27.9
28.4
27.9
27.2
26.7
27.7
28.0
27.7
27.2

4.5
4.7
5.8
8.1
3.3
4.1
3.8
7.5

4.5
6.2
5.7
7.3
8.8
7.7
8.8
8.9

8.8
6.4
7.6
7.0

6.0
8.0
7.4
7.4

121.9
120.9
123.0
124.3
126.3
129.7
128.7
128.6
131.3
133.5
135.4
139.6

65.4 51.5
63.6 50.5
64.2 51.0
64.4 50.3
65.0 49.8
67.0 51.7
64.9 49.5
64.3 48.8
64.9 48.8
65.7 49.2
66.5 49.8
69.7 52.0

13.9
13.1
13.2
14.1
15.2
15.3
15.4
15.5
16.1
16.5
16.7
17.7

56.5
57.4
58.8
59.9
61.3
62.7
63.8
64.3
66.4
67.8
68.9

1 See Table C-8 for major components.
See Table C-9 for further detail and explanation of components.
See Table C-6 for exports and imports separately.
This category corresponds closely to the national defense classification in the Budget of the United States
Government for the Fiscal Year ending June SO, 1967.
6
Less than $50 million.
6
Preliminary estimates.
2
3
4

NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




209

T A B L E G-2.—Gross national product or expenditure, in 1958 prices,

1929-65

[Billions of doliars, 1958 prices]
Personal consumption
expenditures
Year or
quarter

Gross private domestic investment

Total
gross
national
Dura- Nonpro- Total ble dura- Serv- Total
ble
duct
goods goods ices
Total

Fixed investment
Nonresidential

Change
Resi- in busiPro- dential ness
ducers'
invenTotal Struc- durable struc- tories
tures equip- tures
ment

1929

203.6

139.6

16.3

69.3

54.0

40.4

36.8

26.5

13.9

12.6

10.4

3.5

1930
1931
1932
1933
1934
1935
1936
1937
1938
1939

183.3
169.2
144,1
_. 141.5
154.3
169.8
193.0
203.3
- 193.0
209.4

130.4
126.1
114.8
112.8
118.1
125.5
138.4
143.1
140.2
148.2

12.9
11.2
8.4
8.3
9.4
11.7
14.5
15.1
12.2
14.5

65.9
65.6
60.4
58.6
62.5
65.9
73.4
76.0
77.1
81.2

51.5
49.4
45.9
46.0
46.1
47.9
50.5
52.0
50.9
52.5

27.3
16.6
4.6
5.3
9.4
18.0
24.1
30.0
17.0
24.7

27.9
19.1
10.8
9.6
12.0
15.6
20.9
24.5
19.4
23.5

21.6
13.9
8.1
7.6
9.2
11.6
15.8
18.9
13.7
15.3

11.7
7.4
4.3
3.3
3.6
4.1
5,5
7.1
5.6
5.9

6.6
3.8
4.3
5.6
7.5
10.3
11.8
8.1
9.4

6.3
5.1
2.7
2.1
2.9
4.0
5.1
5.6
5.7
8.2

-.6
-2.4
-6.2
-4.3
-2.7
2.4
3.1
5.5
-2.4
1.2

1940
1941
1942
1943

227.2
263.7
297.8
337.2
361.3
355.4
312.6
309.9
323.7
324.1

155.7
165.4
161.4
165.8
171.4
183.0
203.5
206.3
210.8
216.5

16.7
19.1
11.7
10.2
9.4
10.6
20.5
24.7
26.3
28.4

84.6
89.9
91.3
93.7
97.3
104.7
110.8
108.3
108.7
110.5

54.4
56.3
58.5
61.8
64.7
67.7
72.1
73.4
75.8
77.6

33.0
41.6
21.4
12.8
14.0
19.8
52.3
51.5
60.4
48.0

28.1
32.0
17.3
13.0
15.9
22.7
42.3
51.7
55.9
51.9

18.8
22.2
12.5
10.1
13.5
19.9
30.2
36.2
38.0
34.5

6.7
8.1
4.6
2.9
3.8
5.9
12.5
11.6
12.3
11.9

12.1
14.2
7.9
7.2
9.6
14.1
17.7
24.6
25.7
22.6

9.2
9.8
4.9
2.9
2.5
2.8
12.1
15.4
17.9
17.4

4.9
9.6
4.0
2
-1.9
-2.9
10.0
-.2
4.6

355.3
383.4
395.1
412.8
407.0
438.0
_. 446.1
452.5
___ 447.3
475.9

230.5
232.8
239.4
250.8
255 7
274.2
281.4
288.2
290.1
307.3

34.7
31.5
30.8
35.3
35.4
43.2
41.0
41.5
37.9
43.7

114.0
116.5
120.8
124.4
125.5
131.7
136.2
138.7
140.2
146.9

81.8
84.8
87.8
91.1
94.8
99.3
104.1
108.0
112.0
116.8

69.3
70.0
60.5
61.2
59.4
75.4
74.3
68.8
60.9
73.6

61.0
59.0
57.2
60.2
61.4
69.0
69.5
67.6
62.4

37.5
39.6
38.3
40.7
39.6
43.9
47.3
47.4
41.6
44.1

12.7
14.1
13.7
14.9
15.2
16.2
18.5
18.2
16.6
16.2

24.8
25.5
24.6
25.8
24.5
27.7
28.8
29.1
25.0
27.9

23.5
19.5
18.9
19.6
21.7
25.1
22.2
20!2
20.8
24.7

8.3
10.9
3.3
-2.0
6.4
4.8
1.2
-1.5
4.8

487.8
497.3
530.0
550.0
577.6
609.0

316.2
322.6
338.6
352.4
372.1
394.1

44.9
43.9
49.2
53.2
58.5
65.4

149.7
153.1
158.4
161.8
169.4
177.0

121.6
125.6
131.1
137.3
144.2
151.6

72.4
69.0
79.4
82.3
86.3
96.1

68.9
67.0
73.4
76.6
81.7

47.1
45.5
49.7
51.9
57.1
65.0

17.4
17.4
17.9
18.0
18.9
21.2

29.6
28.1
31.7
33.8
38.3
43.8

21.9
21.6
23.8
24.7
24.6
23.9

3.5
2.0
6.0
5.7
4.6
7.2

24.2 1

_
_

1944

1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958_
1959
I960.
1961
1962
1963
1964
1965 3

.9

Seasonally adjusted annual rates
541.2
I I . . . . 544.9
III... 553.7
IV. _. 560.0

348.3
350.0
355.1
356.4

52.0
52.3
54.1
54.7

161.0
161.2
163.0
162.1

135.3
136.5
138.0
139.6

78.7
80.5
83.0
86.9

74.2
75.8
77.2
79.0

50.0
51.2
52.6
53.7

17.6
17.6
18.3
18.6

32.4
33.5
34.3
35.1

24.6
24.6
25.3

4.4
4.6
5.8
7.9

1964: I
II—
III—
IV...

567.1
575.9
582.6
584.7

364.5
369.8
377.3
376.8

57.0
58.7
60.2
57.9

166.4
167.8
171.6
171.8

141.1
143.3
145.5
147.1

83.8
85.2
86.0
90.2

80.7
80.7
82.2
83.1

55.1
55.7
58.1
59.6

18.7
18.9
18.8
19.0

36.4
36.8
39.3
40.6

25.7
25.0
24.1
23.6

3.0
4.5
3.8
7.1

1965: I
II-..
III.__
IV 3__

597.7
603.5
613.0
621.7

386.1
390.5
396.9
402.8

64.5
63.4
66.4
67.4

173.2
176.4
177.8
180.8

148.4
150.7
152.7
154.7

95,4
94.2
96.9
97.8

86.8
88.1
89.7
91.0

62.5
63.7
66.0
67.9

20.3
21.4
21.0
22.0

42.2
42.3
45.0
45.9

24.3
24.4
23.7
23.1

8.6
6.2
7.2

1963: I

See footnotes at end of table.




210

T A B I E C-2.—Gross national product or expenditure, in 1958 prices, 1929-65—Continued
[Billions of dollars, 1958 prices]
Net exports of goods and services
Year or quarter
Net
exports

Exports

Imports

Government purchases of goods and
services
Total

Federal *

State and
local

1929.

1.5

11.8

10.3

22.0

3.5

18.5

1930.
1931.
1932.
1933.
1934.
19351936.
1937.
1938.
1939.

1.4

.3
-1.0
-1.2
-.7
1.9
1.3

10.4
8.9
7.1
7.1
7.3
7.7
8.2
9.8
9.9
10.0

9.0
7.9
6.6
7.1
7.1
8.7
9.3
10.5
8.0
8.7

24.3
25.4
24.2
23.3
26.6
27.0
31.8
30.8
33.9
35.2

4.0
4.3
4.6
6.0
8.0
7.9
12.2
11.5
13.3
12.5

20.2
21.1
19.6
17.3
18.6
19.2
19.6
19.4
20.6
22.7

1940.
1941.
1942_
1943.
1944.
1945.
1946.
19471948.
1949.

2.1
.4
-2.1
-5.9
-5.8
-3.8
8.4
12.3
6.1
6.4

11.0
11.2
7.8
6.8
7.6
10.2
19.6
22.6
18.1
18.1

10.8
9.9
12.6
13.4
13.9
11.2
10.3
12.0
11.7

36.4
56.3
117.1
164.4
181.7
156.4
48.4
39.9
46.3
53.3

15.0
36.2
98.9
147.8
165.4
139.7
30.1
19.1
23.7
27.6

21.4
20.1
18.3
16.6
16.3
16.7
18.4
20.8
22.7
25.7

1950.
1951.
1952.
1953.
1954.
1955.
1956.
1957 _
1958.
1959.

2.7
5.3
3.0
1.1
3.0
3.2
5.0
6.2
2.2
.3

16.3
19.3
18.2
17.8
18.8
20.9
24.2
26.2
23.1
23.8

13.6
14.1
15.2
16.7
15.8
17.7
19.1
19.9
20.9
23.5

52.8
75.4
92.1
99.8
88.9
85.2
85.3
89.3
94.2
94.7

25.3
47.4
63.8
70.0
56.8
50.7
49.7
51.7
53.6
52.5

27.5
27.9
28.4
29.7
32.1
34.4
35.6
37.6
40.6
42.2

I960.
1961.
1962.
1963.
1964.
1965 3

4.3
5.1
4.5
5.6
8.5
6.0

27.3
28.0
30.0
32.2
36.5
37.3

23.0
22.9
25.5
26.5
27.9
31.3

94.9
100.5
107.5
109.8
110.7
112.8

51.4
54.6
60.0
59.7
57.8
57,2

43.5
45.9
47.5
50.0
52.8
55.6

()

I
Seasonally adjusted annual rates
4.0
5.8
5.5
7.1

29.6
32.2
32.5
34.3

25.7
26.4
27.0
27.2

110.3
108.7
110.0
109.6

61.3
59.2
59.7
58.7

49.1
49.5
50.3
50.8

1964: I—
II.
III
IV

9.0
8.1
8.7
8.3

36.0
35.7
36.8
37.3

27.0
27.6
28.1
29.0

109.9
112.8
110.5
109.4

58.2
59.9
57.1
56.1

51.7
52.9
53.4
53.3

1965: I—
II.
III
IV

5.1
6.6
6.2
6.1

32.9
38.5
38.3
39.5

27.8
31.9
32.1
33.4

111.2
112.1
113.0
114.9

56.4
56.8
57.0
58.6

54.8
55.3
56.0
56.3

1963: I —

II.
III
IV

1 Net of Government sales.
Less than $50 million.
3 Preliminary estimates.
2

NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




211

TABLE C—3.—Gross national product by major type of product, 1929—65
[Billions of dollars]
Goods output
Total
gross
Durable goods Nondurable goods Serv- StrucTotal
Year or na- Final [nventory
quarter tional sales change
ices tures
prodInvenInvenuct
Total Final Inventory Total Final tory Total Final tory
oods sales change
sales change
sales change
1929..._

1.7

56.1

54.3

1.7

17.5

16.1

1.4

38.5

38.2

0.3

35.6

A

46.9
37.4
26.7
27.0
34.4
39.9
45.8
51.5
45.3
49.0

47.3
38.6
29.2
28.6
35.1
38.8
44.5
48.9
46.2
48.6

-.4
—1.1
-2.5
-1.6
-.7
1.1
1.3
2.5
-.9
.4

11.4
7.7
3.6
4.9
7.4
9.3
12.2
13.9
9.9
12.7

12.5
9.0
5.7
5.4
7.3
8.9
11.2
13.1
10.8
12.4

-1.0
-1.2
-2.0
-.5
.1
.3
.9
.8
-.9
.3

35.5
29.7
23.1
22.1
27.0
30.6
33.6
37.6
35.4
36.3

34.8
29.6
23.6
23.2
27.8
29.9
33.3
35.8
35.4
36 2

.7
.1
-.4
-1.1
-.9
.7
.3
1.8

0)

34.2
31.7
27.5
25.7
27.1
28.3
31.0
32.3
33.2
34.0

56.0
72.5
93.6
120.4
132.3
128.9
124.9
139.7
4! 7 154.2
- 3 . 1 147.5

53.8
68.0
91.9
121.0
133.3
129.9
118.5
140.1
149.4
150.5

2.2
4.5
1.8
-.6
-1.0
-1.0
6.4

15.4
23.8
34.5
54.2
58.5
50.2
31.6
44.3
48.0
49.9

1.2
3.0
1.0

4^7
-3.1

16.6
26.8
35.5
54.2
57.9
48.9
36.9
46.0
48.7
47.8

39.3 38.4
45.6 44.2
58.1 57.4
66.2 66.8
74.4 74.8
80.0 79.7
88.0 86.9
93.7 95.9
105.5 101.5
99.7 100.6

1.0
1.4
.7
-.6
-.3
.2
1.1
-2.2
4.0
-1.0

35.4
40.3
50.3
62.5
71.8
76.5
68.0
70.2
75.
80.8

6.8
10,3
3.1
.4
-1.5
6.0
4
1.3
-1.5
4.8

162.4
189.
195.6
204.1
197.1
216.4
225.4
234.6
230.8
249.1

155.6
179.4
192.5
203.7
198.6
210.4
220.
233.3
232.
244.4

6.8
10.3
3.1
.4
-1.5
6.0
4.
1.3
-1.5
4.8

60.4
73.7
74.6
79.4
72.1
85.7
90.
94.4
83.6
95.6

56.3
66.8
73.5
78.5
74.6
82.7
87.5
93.1
86.4

500.2
518.1
554.3
583.5
623.9

3.6
2.0
6.0
5.7
4.8

259.6
262.3
284.5
296.8
316.1

256.0
260.2
278.5
291.1
311.3

97.4
3.6
2.0 96.5 96.6
6.0 109.0 106.2
5.7 115.9 113.1
122.8
4.8

675.6 668.1

7.4

340. 8 333.3

139.3 133.4

103.1 101.4

1930....
1931.-1932....
1933--1934.-.1935.-1936..1937-.1938.-1939--.-

90.4
75.8
58.0
55.6
65.1
72.2
82.5
90.4
84.7
90.5

90.7
77.0
60.5
57.2
65.8
71.2
81.2
87.9
85.6
90.1

1940
1941
1942.___
1943 . . .
1944....
1945
1946
1947
1948 . . _
1949

99.7
124.5
157.
191.6
210.1
212.0
208.5
231.3
257.6
256.5

97.5
120.1
156.2
192.2
211.1
213.0
202.1
231.8
252.9
259.6

2.2
4.5
1.8
-.6
-1.0
—1.0
6.4

1950.--1951
1952
1953
1954....
1955 ___
1956
1957..-1958
1959

284.8
328.4
345.5
364.6
364.8
398.0
419.2
441.1
447.3
483.6

278.0
318.1
342.4
364.1
366.4
392.0
414.
439.8
448.8
478.9

1960
1961
1962
1963
1964

503.8
520.1
560.3
589.2
628.

1965 2

-LI
-2.5
-1.6
ill
>j

1.3
2.5
-.9
.4

(0

— 1.3
5.3
1.7
.7
-2.1

4.1 102.
116.
121.
124.
- 2 . 5 125.
3.0 130.
2.8 135.1
1.3 140.2
- 2 . 8 147.2
2.3 153.6

99.3
112.6
119.1
125.2
124.1
127.7
133.
140.2
145.'
151.1

160.1
165.8
175.5
181.0
190.0

158.6
163.7
172.2
178.1

2.1
-.1
2.8
2.8
3.3

2.7 87.0
3.4 101.2
2.0 110.8
118.8
1.0 123.5
2.9 132.6
1.9 142. 3
0) 154.
1.3 163.4
2.4 176.2
1.5
2.1
3.2
2.9
1

5.9 201.5 200.0

187.3
199.5
213.3
226.9
244.0
261.1

Seasonally adjusted annual rates
1963: I
II—.
Ill
IV —

577.0
583.1
593.1
603.6

572.5
578.4
587.3
595.5

4.5
4. 7
5.8
8.1

287.2
289.2
292.9
295.3

4.5
4.7
5.8
8.1

111.8
115.4
116.6
120.0

109.8
112.0
114.3
116.2

2.0
3.4
2.3
3.8

179.9
178.5
182.2
183.4

177.4
177.2
178.6
179.1

2.5
1.4
3.5
4.3

222.1
225.1
228.2
232.1

1964: I
II-..
IIIIV...

614.0
624.2
634.8
641.1

610.7
620.1
631.0
633.6

3.3 308.2 304.9
4.1 312.4 308.3
3.8 319.8 316.0
7.5 323.3 315.8

3.3
4.1
3.8
7.5

122.3
125.0
128.1
128.8

120.1
121.6
125.4
124.3

2.2
3.5
2.7
4.4

185.9
187.4
191.7
194.6

184.9
186.8
190.6
191.5

1.1
.6
1.1
3.1

237.3
242.8
246.4
249.7

1965: I
II—
IIIIV 2.

657.6
668.
681.5
694.6

648.8
662.4
673.9
687.5

8.8 331. 6 322.8
6.4 335.5 329.1
7.6 344.6 337.1
7.0 351.4 344.4

8.8
6.4
7.6
7.0

137.2
136.6
141.9
141.5

130.1
130.3
135.4
137.7

7.1
6.2
6.5
3.8

194.4
198.9
202.7
210.0

192.8
198.7
201.7
206.7

1.6
.2
1.0
3.2

253.8
259.0
263.0
268.6

291.7
293.9
298.7
303.4

1 Less than $50 million.
2 Preliminary estimates.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




212

T A B L E G-4.—Gross national product by major type of product, in 1958 prices,

1929-65

[Billions of dollars, 1958 prices]

Year or
quarter

Goods output
'otal
gross
Durable goods
Nondurable goods Serv- StrucTotal
na- Final Inventory
ional
ices tures
:hange
irodInvenuct
Total Final Inven- Total Final tory
Final Inventory
tory
sales change Total
goods sales change
change

1929..

203.6 200.0

3.5 103.9 100.4

3.5

33.6

30.9

2.7

1930
1931
1932
1933
1934
1935
1936
1937
1938
1939

183.3
169.2
144.1
141.5
154.3
169.6
193.0
203.3
193.0
209.4

183.9
171.6
150.
145.9
156. 9
167.1
189.9
197.8
195.3
208.2

-.6
90.5 91.1
- 2 . 4 82.2 84.7
-6.
68.7 74.9
- 4 . 3 68.8 73.2
-2.7
77.9 80.5
2.4 88.6 86.2
3.1 102.2 99.1
5.5 110.2 104.8
- 2 . 4 103.0 105.3
1.2 110.7 109.

-.6
-2.4
-6.2
-4.3
-2.7
2.4
3.1
5.5
-2.4
1.2

22.4
16.1
8.3
11.7
16.9
21.5
28.7
31.0
21.8
27.6

24.5
19.0
13.4
13.4
16.7
20.6
26.3
29.1
24.1
27.0

-2.1
-3.0
-5.1
-1.7

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

227.2
263.7
297.8
337.2
361.3
355.
312.6
309.9
323.
324,

222.3
254.1
293.8
337.4
363.2
358.3
302.6
310.1
319.1
328.1

4.9
9.6
4.0
2
-L9
-2.9
10.0

4.9
9.6
4.0

35.6
50.0
57.2
85.6
95.9
84.3
54.7
60.1
61.3
58.0

32.8
43.
54.4
85.

1950
1951
1952.
1953
1954
1955
1956
1957
1958
1959

355.
383.
395.
412.
407.
438.
446.
452.
447.
475.

347.
372.5
391.
411.*
409.
431.6
441.2
451.2
448.8
471.

73.4
84.1
84.6
91.0
81.9

487.
497.
530.
550.
577.
609.

484.
495.
524.
544.
573.
601.

__

1960
1961
1962
1963
1964
1965 2

124.0
143.4
158.1
187.4
204.8
198.0
172.1
172.2
4*. 6 178.4
- 3 . 9 174.2

119.0
133.8
154.1
187.6
206.7
201.0
162.1
172.4
173.8
178.1

192.6
208.4
214.0
225.4
215.1
236.1
239.0
239.8
230.8
247.8

184.
197.
210.
224.
217.
229.
234.
238.
232.3
242.9

-2^0
6.
4.8
1.2
-1.5
4.

3.5 256.1 252.
2.0 257. 255.4
6.
277.5 271.5
5.7 288.3 282.6
4.
304.6 300.0
7.2 324.6 317.4

3.5
2.
6.
5.
4.6
7.2

10.9
3.3
.9
-2.0
6.
4.8
1.2
-1
4.S

-1.9
-2.9
10.0
-3.9
8.3
10.9
3.3

70.4

69.5

0.8

69.3

30.3

2.4
1.9
-2.3
.6

68.0
66.2
60.4
57.1
61.0
67.1
73.5
79.2
81.2
83.0

66.5
65.
61.5
59.8
63.8
65.6
72.8
75.7
81.3
82.5

1.5
.5
-1.1
-2.7
-2.8
1.5
.7
3.6
-.1
.6

67.7
66.8
61.9
63.0
65.3
68.1
73.3
73.9
72.3
76.9

25.2
20.1
13.6
9.7
11.1
12.8
17.5
19.1
17.7
21.8

87.4
46.1
58.6
60.0
61.0

2.7
6.6
2.9
.4
-1.5
-3.1
8.6
1.5
1.2
-3.0

88.4
93.4
100.9
101.7
108.8
113.7
117.4
112.2
117.1
U6.2

86.
90.3
99.7
102.4
109.3
113. 6
116.0
113.8
113.8
117.1

2.2
3.1
1.
&
-A
.2
1.4
-1.
3.3
-.9

80.0
89.8
107.7
131.8
144.0
144.
113.
106.
109.
112.

23.2
30.5
31.9
18.0
12.5
13.1
27.2
31.2
36.1
37.5

5.
8.0
1.5
1.2
-3.0
3.4
3.0
1.2
-2.8
2.4

119.1
124.3
129.4
134.4
133.2
139.7
142.5
143.6
147.
153.

116.0
121.4
127.6
134.6
132.3
136.
140.
143.6
145.9
151.3

3.1
2.9
1.8
—. 2
.9
3.0
1.8

117.
130.
136.
140.3
141.

83.6
94.0

68.3
76.1
83.2
89.9
84.8
93.0
93.5
95.0
86.4
91.6

153.
160.
1.3 163.
2.5 171.

45.2
44.4
44.7
47.0
50.2
54.3
54.0
52.6
53.1
57.0

97.8
94.9
107.0
114.0
123.1
135.9

95.9
94.9
104.1
111.2
120.0
130.2

156.8
160.5
167.4
171.4
180.0
187.2

1.5
2.0
3.1
2.9
1.5
1.5

176.
184.
193.
201.
211.
220.

55.0
55.8
58.8
60.2
61.4
64.0

96.5

96.5
96.

97.4

2.0 158.
162.
2.8 170.
2.8 174.
3.1 181.
5.7, 188.

0)

147.

0)

Seasonally adjusted annual rates
1963: I . . . .

II...
III.
IV..
1964: I . . . .
II....
III...
IV. _.
1965: I
II....
III...
IV2._

541.2
544.9
553.7
560.0

536.8
540.3
547.8
552.1

4.4
4.6
5.8
7.9

283.5
285.1
290.6
294.2

279.1
280.4
284.7
286.3

4.4
4.6
5.8
7.9

109.9
113.3
114.9
117.9

108.0
110.0
112.7
114.2

1.9
3.2
2.3
3.7

173.6
171.8
175.7
176.2

171.1
170.4
172.1
172.1

2.5
1.4
3.6
4.2

198.8
200.6
202.6
204.0

58.9
59.3
60.5
61.8

567.1
575. 9
582.6
584.7

564.1
571.4
578.8
577.7

3.0
4.5
3.8
7.1

297.6
302.2
308.4
310.2

294.6
297.7
304.7
303.1

3.0
4.5
3.8
7.1

119.4
122.3
125.2
125.5

117.3
119.0
122.5
121.2

2.0
3.4
2.7
4.3

178.3
179.9
183.2
184.7

177.2
178.8
182.1
181.9

1.0
1.1
1.1
2.8

207.4
211.5
213.0
214.3

62.0
62.2
61.1
60.3

597.7
603.5
613.0
621.7

589.2
597.3
605.8
614.9

8.6
6.2
7.2
6.8

317.9
319.1
327.9
333.6

309.3
313.0
320.7
326.8

8.6
6.2
7.2
6.8

133.7
132.5
138.8
138.7

126.7
126.5
132.6
135.1

7.0
6.0
6.2
3.6

184.3
186.6
189.1
194.9

182.7
186.5
188.1
191.7

1.6
.2
1.0
3.2

216.4
219.5
221.3
224.1

63.9
64.7
63.0
64.5

1 Less than $50 million.
2
Preliminary estimates.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




213

TABLE C—5.—Implicit price deflators for gross national product, 1929-65
I Index numbers, 1958=100]

Personal consumption
expenditures
Gross
national
product 1 Total

Year or quarter

Dur- Non- Servable durable ices
goods

goods

Gross private domestic investmentl
Fixed investment
Nonresidential
ResiProTotal
ducers' dential
Total Struc- durable structures equip- tures
ment

1929

50.6

55.3

56.4

54.5

56.1

39.4

39.9

35.7

44.6

38.1

1930.
1931
1932
1933
1934
1935
1936
1937
1938
1939

49.3
44.8
40.3
39.3
42.2
42.6
42.7
44.5
43.9
43.2

53.6
47.9
42 3
40.6
43.5
44.4
44.7
46.5
45.6
45.1

55.3
49.1
43.2
41.9
44.7
43.7
43.6
45.8
46.7
46.0

51.6
44.1
37.7
38.0
42.7
44.5
44.8
46.4
44.0
43.2

55.7
52.7
48.3
43.6
44.3
44.4
45.0
46.8
47.7
47.7

38.1
35.5
31.8
30.7
33.8
34.2
34.5
37.7
38.1
37.6

38.3
36.1
33.3
31.7
35.0
35.8
35.6
38.7
39.2
38.7

34.4
31.7
28.2
28.1
29.1
30.4
30.1
34.3
33.8
33.1

43,0
41.1
39.. 1
34.5
38.8
38.7
38.5
41.4
43.0
42.2

37.1
33.6
27 3
27.1
30.1
29.8
31.3
34.3
35.5
35.7

43.9
47.2
53.0
56.8
58.2
59.7
66.7
74.6
79.6
79.1

45.5
48.7
54.8
59.9
63.2
65.4
70.5
77.9
82.3
81.7

46.5
50.4
59.3
64.2
71.5
75.9
76.8
82.7
86.3
86.8

43.8
47.7
55.6
62.5
66.2
68.7
74.3
83.6
88.5
85.6

47.9
49.8
52.7
55.3
57.5
58.7
62.7
67.9
72.1
74.3

39.0
42.0
46.5
49.0
51.0
51.4
58.5
66.7
73.9
74.7

40.1
42.7
47.8
49.5
50.8
50.9
56.3
64.5
70.7
72.8

34.1
36.4
41.3
45.5
48.1
49.0
54.4
64.4
71.5
71.2

43.4
46.3
51.5
51.1
51.9
51.7
57.5
64.6
70.3
73.6

36.9
40.3
43.3
47.0
51.6
54.9
59.7
71.7
80.8
78.5

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

80.2
85.6
87.5
88.3
89.6
90.9
94.0
97.5
100.0
101.6

82.9
88.6
90.5
91.7
92.5
92.8
94.8
97.7
100.0
101.3

87.8
94.2
95.4
94.3
92.9
91.9
94.9
98.4
100.0
101.4

86 0
93.3
94.3
93.9
94.2
93.6
94.9
97 7
100.0
99.8

76.3
80.0
83.6
87.7
90.0
92.0
94.6
97.3
100.0
103.0

77.5
83.1
85.3
86.6
86.8
89.0
94.0
98.5
100.0
102.6

74.4
80.4
82.6
84.0
84.8
86.7
92.4
97.9
100.0
102.2

72.9
79.3
83.2
84.9
86.0
88.1
93.4
98.6
100.0
102.7

75 2
80.9
82.2
83.5
84.0
85.9
91.8
97 5
100.0
102.0

82.5
88.6
90.8
91.9
90.4
92.9
97.4
99.8
100.0
103.1

I960
1961
1962
1963
1964
1965 3

103.3
104.6
105.7
107.1
108.9
110.9

102.9
103.9
104.8
106.1
107.2
108.7

100.9
100.6
100.7
100.4
100.5
99.1

101.1
101.8
102.6
103.8
104.8
106.7

105.8
107.6
109.0
110.9
112.7
115.2

103.4
103.9
104.9
106.0
107.8
109.7

102.9
103.4
104.1
104.6
106.0
107.4

104.0
105.6
107.1
109.2
111.8
114.8

102.2
102.1
102.3
102.2
103.1
103.8

104.5
105.0
106.7
108.9
112.0
115.9

106.6
107.0
107.1
107.8

105.7
106.0
106.1
106.5

100.4
100.7
100.0
100.5

103.5
103.8
103.8
104.2

110.2
110.7
111.1
111.6

105.2
105.7
106.3
106.7

104.2
104.4
104.8
105.1

108.2
108.8
109.6
110.2

102.0
102.1
102.2
102.4

107. 5
108.3
109.6
110.2

108.3
108.4
109.0
109.6

106.8
107.1
107.2
107.7

100.7
100.6
100.5
100.1

104.4
104.7
104.8
105.3

112.0
112.5
112 9
113.6

107.1
107.5
108.0
108.5

105.5
105.7
106.0
106.6

110.5
111.4
112.3
113.0

103.0
102.8
103.0
103.5

110.5
111.6
112.8
113.4

110.0
110.8
111.2
111.7

108.0
108.7
109.0
109.3

100.2
100.1
98.4
97.6

105.5
106.5
107.2
107.7

114.2
114.9
115.7
116.1

108.9
109,4
109.9
110.4

107.0
107.3
107.4
107.9

114.1
114.0
115.2
115.7

103. 5
103. 8
103.7
104.2

114.0
114.9
116.9
117.8

1940
1941 .
1942
1943
1944.
1945
1946—
1947
1948
1949—

. .

_

_

1963: I .
II
III...

rv .
1964: I . _

II
IV...

III

_

1965: I .
II. . .
Ill
IV 3

See footnotes at end of table.




214

TABLE G—5.—Implicit price deflators for gross national product, 7929-65—Continued
[Index numbers, 1958=100]
Exports and imports of
goods and services i

Government purchases of goods
and services

Year or quarter
Exports

Imports

Total

Federal

State and
local

Gross
private
product 2

1929.

59.5

57.3

38.6

36.0

39.1

51.7

1930
1931.
1932
1933
1934_
1935
1936
1937
1938
1939

52.3
41.0
34.7
33.7
40.6
42.3
43.4
46.5
43.8
44.1

49.0
39.3
31.5
28.8
33.6
36.0
36.7
40.7
37.9
38.6

37.9
36.3
33.4
34.5
36.8
37.0
37.6
38.4
38.3
37.9

34.1
34.5
31.9
33.1
37.4
37.0
40.5
40.7
40.5
40.8

38.7
36.6
33.8
35.0
36.6
37.0
35.9
37.1
36.8
36.3

50.5
45.7
40.9
39.9
43.0
43.5
43.4
45.3
44.6
43.9

1940_
1941
1942
1943
1944
1945_
1946
1947
1948
1949.

48.6
53.0
61.5
65.2
69.9
71.3
75.4
87.3
92.7
87.0

40.8
43.0
48.3
51.2
53.2
56.4
64.9
79.4
86.4
82.2

38.5
44.0
50.9
53.9
53.1
52.6
55.8
62.9
68.1
71.0

40.2
46.6
52.5
54.9
53.8
53.1
57.3
65.6
69.8
73.0

37.3
39.2
42.3
44.6
46.1
48.6
53.2
60.4
66.4
68.9

44.7
48.7
55.5
60.8
62.0
62.6
68.2
76.3
81.4
80.6

1950
1951
1952
1953
1954.
1955
1956
1957
1958
1959

84.9
97.0
98.8
95.2
94.3
94.9
97.5
101.3
100.0
98.8

88.7
107.2
103.6
99.1
100.8
100.6
102.5
104.0
100.0
99.3

71.8
78.5
81.0
81.8
84.1
87.1
92.1
96.4
100.0
102.4

72.9
79.4
81.2
81.4
83.5
86.9
91.7
95.8
100.0
102.2

70.8
76.9
80.6
82.8
85.3
87.5
92.7
97.3
100.0
102.6

81.4
87.4
89.0
89.6
90.8
91.6
94.5
97.9
100.0
101.4

1960
1961
1962
1963
1964
1965 3

101.9
100.8
100.6
101. 5
104.9

101.0
100.1
98.5
99.6
101.8
102.1

105.0
107.1
109.0
111.7
116.0
119.6

104.2
105.2
105.6
107.8
112.9
116.6

105.9
109.4
113.2
116.5
119.3
122.8

102.7
103.7
104.7
105.7
107.1
108, 9

1963: I . . .

II..
III.
IV..

101.2
100.7
100.2
100.3

99.5
99.3

110.5
111.2
111.7
113.5

106.7
107.3
107.5
109.6

115.1
116.0
116.8
117.9

105.3
105.7
105.8
106.2

1964: I . - .
II..
III.
IV..

101.0
100.7
101.3
102.9

101.9
102.2
101.6
101.7

114.9
115.0
116.5
117.5

111.7
111.9
113.7
114.6

118.6
118.5
119.5
120.6

106.6
106.7
107.1
107.8

1965: I . . .
II_.
III.
IV 3

105.2
104.9
104.8
104.8

102.9
101.5
102.0
102.0

118.1
119.1
119.8
121.5

115.1
115.7
116.6
118.9

121.2
122.5
123.1
124.2

108.1
108.9
109.2
109.5

1
Separate deflators are not available for total gross private domestic investment, change in business
inventories, and net exports of goods and services.
2
Gross national product less compensation of general government employees. See also Table C-7.
3
Preliminary estimates.

NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




215

T A B L E G—6.—Gross national product: Receipts and expenditures by major economic groups*
1929-65
[Billions of dollars]
Persons

Government

Disposable personal
income
Year
or
quarter

Total
excluding interest Total
and
transfers

Interest
paid
and
transfer
payments
to foreigners

Expenditures

Net receipts

PerPerTax Trans- Pursonal sonal
Transand
con- saving
fers,
fers,
non- interTotal intersump- (+)or Net
of
tax
tion
exest, goods pendi- est,
redisreexand
and
and
pendi- saving ceipts ceipts sub- serv- tures sub()
or ac- sidies 2 ices
tures
sidies 2
cruals

1929..

81.4

83.3

1.9

77.2

4.2

9.5

11.3

1.8

8.5

10.3

1.8

1930..
1931..
1932..
1933..
1934..
1935..
1936..
1937-.
1938..
1939..

73.3
63.1
48.0
44.9
51.7
57.8
65.5
70.3
64.6
69.4

74.5
64.0
48.7
45.5
52.4
58.5
66.3
71.2
65.5
70.3

1.2
.9
.7
.7

69.9
60.5
48.6
45.8
51.3
55.7
61.9
66.5
63.9
66.8

3.4
2.6
.4
2.1
3.6
3.8
.7
2.6

8.9
6.3
6.3
6.7
7.4
8.0
8.8
12.2
11.2
11.2

10.8
9.5
8.9
9.3
10.5
11.4
12.9
15.4
15.0
15.4

1.9
3.1
2.6
2.7
3.1
3.4
4.1
3.2
3.8
4.2

9.2
9.2
8.1
8.0
9.8
10.0
12.0
11.9
13.0
13.3

11.1
12.4
10.6
10.7
12.9
13.4
16.1
15.0
16.8
17.6

1.9
3.1
2.6
2.7
3.1
3.4
4.1
3.2
3.8
4.2

1940..
1941..
1942..
1943..
1944..
1945..
1946..
1947..
1948..
1949..

74.7
91.6
116.1
132.7
145.5
149.3
158.6
168.0
186.9
186.2

75.7
92.7
116.9
133.5
146.3
150.2
160.0
169.8
189.1
188.6

1.0
1.1
.8
1.0
1.4
1.8
2.2
2.4

70.8
80.6
88.5
99.3
108.3
119.7
143.4
160.7
173.6
176.8

3.8
11.0
27.6
33.4
37.3
29.6
15.2
7.3
13.4
9.4

13.3
21.0
28.2
44.4
44.7
42.8
32.4
39.5
40.1
34.7

17.7
25.0
32.6
49.2
51.2
53.2
50.9
56.8
58.9
56.0

4.4
4.0
4.4
4.7
6.5
10.4
18.5
17.3
18.8
21.3

14.0
24.8
59.6
88.6
96.5
82.3
27.0
25.1
31.6
37.8

18.4
28.8
64.0
93.3
103.0
92.7
45.5
42.4
50.3
59.1

4.4
4.0
4.4
4.7
6.5
10.4
18.5
17.3
18.8
21.3

1950.
1951.
1952.
1953.
1954.
1955.
1956.
1957.
1958.
1959 _

204.1
223.5
234.9
248.3
252. 9
270.2
287.3
302.2
312.4
330.3

206.9
226.6
238.3
252.6
257.4
275.3
293.2
308.5
318.8
337.3

2.8
3.0
3.5
4.3
4.5
5.1
5.9
6.3
6.5
7.0

191.0
206.3
216.7
230.0
236.5
254.4
266.7
281.4
290.1
311.2

13.1
17.3
18.2
18.3
16.4
15.8
20.6
20.8
22.3
19.1

45.8
64.9
70.8
74.8
67.8
76.9
83.5
86.8
81.6
95.0

68.7
84.8
89.8
94.3
89.7
100.4
109.0
115.6
114.7
128.9

22.9
19.9
19.0
19.5
21.9
23.4
25.5
28.7
33.0
34.0

37.9
59.1
74.7
81.6
74.8
74.2
78.6
86.1
94.2
97.0

60.8
79.0
93.7
101.2
96.7
97.6
104.1
114.9
127.2
131.0

22.9
19.9
19.0
19.5
21.9
23.4
25.5
28.7
33.0
34.0

1960.
1961.
1962.
1963.
1964.
1965 7

342.3
356.3
376.7
394.3
425.2
453.6

350.0
364.4
385.3
403.8
435.8
465.3

7.8
8.1
8.6
9.6
10.5
11.7

325.2
335.2
355.1
373.8

17.0
21.2
21.6
20.4
26.3
25.1

103.3
103.3
114.2
123.8
125.9
137.2

139.8
144.6
157.0
168.3
172.7
186.9

36.5
41.3
42.8
44.5
46.8
49.7

107.6
117.1
122.6
128.4
135.0

136.1
149.0
159.9
167.1
175.1
184.7

36 5
4l!3
42.8
44.5
46.8
49.7

44.9
43.8
44.2
44.8

.9

428.5

Seasonally adjusted annual rates
II
III
IV

386.5
390.0
396.3
404.0

395.7
399.4
406.1
414.0

1964: I
II
III
IV

412. 5
423.3
429.6
435.4

422.6
433.6
440.3
446.4

1965: I
II
III
IV 7

440.2
446.9
459.3
468.1

451.4
458.5
471.2
480.3

1963: I

10.0

368.0
371.1
376.6
379.5

18.5
18.9
19.8
24.4

120.4
123.6
124.6
126.7

165.3
167.4
168.9
171.5

44.9
43.8
44.2
44.8

121.9
120.9
123.0
124.3

166.8
164.7
167.2
169.1

10.1
10.4
10.7
11.0

389.1
396.0
404.6
405.9

23.3
27.3
25.0
29.5

124.6
123.2
126.7
129.4

171.4
169.6
173.5
176.5

46.7
46.4
46.8
47.1

126.3
129.7
128.7
128.6

173.0
176.1
175.5
175.7

11.2
11.6
11.9
12.2

416.9
424.5
432 5
440.1

23.3
22.4
26.8
28.0

136.0
138.4
134.7

184.8
186.6
186.4

48.8
48.2
51.7
50.1

131.3 180.1
133. 5 181.7
135.4 187.1
139.6 189.7

9.2
9.4
9.7

See footnotes at end of table.




2l6

(9)

(9)

46.7
464

46.8
47.1
48.8
48.2
51.7
50.1

TABLE C-6.—Gross national product: Receipts and expenditures by major economic groups,

7929-65—Continued
[Billions of dollars]

International
Trans- Net exports of goods Excess
of
and services
Gross
fers to
Dri- Excess fortransV11
fers
of in- eigners
vate
domes- vest- by per(+) or
Im- of net
Extic in- ment sons Net
and
exvest-4 ( - )
ports ports exGov- ports
ports
ment
(-)•
ment

]BusineSv5

Year
or
quarter

Gross
retained
earn3
ings

1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945.
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
_
1959
1960
1961
1962
1963
1964
1965 7

11.2
8.6
5.3
3.2
3.2
5.2
6.4
6.7
7.7
8.0
8.4

16.2
10.3

-5.1
-1.6

5.6
1.0
1.4
3.3
6.4
8.5

-.3
2.2
1.8
1.9
(6)

11.8
6.5
9.3

13.1
10.5
17.9
11.4
9.8
14.5
5.7
16.3
7.1
17.1
10.6
15.1
30.6
14.5
34.0
20.3
46.0
28.1
35.7
29.7
29.4
54.1
33.1
59.3
35.1
51.9
36.1
52.6
39.0
51.7
46.3
67.4
47.3
70.0
49.8
67.8
49.4
60.9
56.8
75.3
56.8
74.8
58.7
71.7
66.3
83.0
69.1
86.9
75.4
92.9
8 82.8 104.9

-1.8
-4.0
1.6
-.9

-2.7
-6.5

4.6

10.6
10.0
4.5

-16.1
-13.7
-18.0
-6.0
-24.7
-26.2
-16.8
-16.5
-12.7
-21.1
-22.8
-18.1
-11.5
-18.5
-18.0
-13.0
-16.8
-17.8
-17.5
*-22.1

0.4

1.1

.3
.3
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.3
.8
2.9
2.6
4.5
5.6

1.0
.5
.4
.4
.6
.1
.1
.3
1.3
1.1
1.7
1.3
(8)

-2.0
-1.8

-.6
7.5

11.5
6.4
6.1

4.0
3.5
2.5
2.5
2.3
2.5
2.4
2.3
2.3
2.4

1.8
3.7
2.2
.4
1.8
2.0
4.0
5.7
2.2
.1

2.3
2.6
2.7
2.8
2.7
2.8

4.1
5.6
5.1
5.9
8.6
7.2

7.0
5.4
3.6
2.5
2.4
3.0
3.3
3.5
4.6
4.3
4.4
5.4
5.9
4.8
4.4
5.3
7.2

14.7
19.7
16.8
15.8
13.8
18.7
18.0
16.9
17.8
19.8
23.6
26.5
23.1
23.5
27.2
28.6
30.3
32.4
37.0
39.2

5.9

-0.8

4.4
3.1
2.1
2.0
2.4
3.1
3.4
4.3
3.0
3.4

-.7
-.2
-.2
-.2
-.4
.1
.1
-.1

3.6
4.6
4.8
6.5
7.1
7.9
7.2
8.2

10.3
9.6

12.0
15.1
15.8
16.6
15.9
17.8
19.6
20.8
20.9
23.3
23.2
22.9
25.1
26.4
28.5
32.0

-1.1
-.9

-1.5
-1.1

.2
2.2
2.1
1.4

-4.6
-8.9
-1.9
-.5

2.2
-.2
.3
2.1
.4
.5

-1.6
-3.4

.1
2.3

-1.7
-3.1
-2.5
-3.2
-5.8
-4.4

Total tical
income disor re- crepceipts ancy

Gross
national
product
or expenditure

102.4
0.7
91.2
-.8
.7
75.1
.3
57.7
.6
55.0
.5
64.5
-.2
72.5
1.2
81.3
(8)
90.5
.6
84.1
1.3
89.2
98.7
1.0
.4
124.1
159.0 - 1 . 1
193.6 - 2 . 0
2.5
207.6
4.0
208.0
.1
208.4
.9
230.4
259.6 - 2 . 0
.3
256.2
283.3
1.5
3.3
325.1
2.2
343.3
3.0
361.6
2.9
362.0
2.1
395.9
420.4 —1.1
441.1
(6)
1.6
445.8
-.8
484.5
504.8 - 1 . 0
-.7
520.8
.5
559.8
-.7
589.9
-.5
629.2
8 676.4 8 - . 8

103.1
90.4
75.8
58.0
55.6
65.1
72.2
82.5
90.4
84.7
90.5
99.7
124.5
157.9
191.6
210.1
212.0
208.5
231.3
257.6
256.5
284.8
328.4
345. 5
364.6
364.8
398.0
419.2
441.1
447.3
483.6
503.8
520.1
560.3
589.2
628.7
675.6

Statis-

Seasonally adjusted annual rates
1963: I...
II..
III.
IV_
1964: I...
II..
III.
IV.
1965: I.._
II._
III.
IV 7

67.3
68.4
70.3
70.4
74.2
75.2
76.5
75.8
82.0
82.0
83.2
(

82.6
84.8
87.9
92.4
89.7
90.9
92.6
97.7
103.4
102.8
106.2
107.5

-15.4
-16.4
-17.6
-22.0
-15.5
-15.7
-16.1
-21.9
-21.4
-20.8
-23.0
(8)

2.6
2.8
2.8
2.8
2.7
2.9
2.7
2.7

4.5
6.2
5.7
7.3
8.8
7.7
8.8
8.9

2.6
3.0
2.7
2.8

6.0
8.0
7.4
7.4

30.0
32.4
32.6
34.4
36.3
36.0
37.3
38.4
34.7
40.4
40.1
41.4

1
2

25.6
26.2
26.9
27.1
27.5
28.2
28.5
29.5
28.6
32.4
32.7
34.1

-1.8
-3.5
-2.9
-4.5
-6.1
-4.8
-6.1
-6.2
-3.4
-5.0
-4.7
-4.6

576.8
584.7
594.1
603.9
614.0
624.5
635.4
643.3
660.7
670.2
680.1
9
()

0.2

-1.6
-1.0
-.3

(6)
-.3
-.7

-2.2
-3.1
-1.4

1.4
(9)

577.0
583.1
593.1
603.6
614.0
624.2
634.8
641.1
657.6
668.8
681.5

Personal income less personal tax and nontax payments (fines, penalties, etc.).
Government transfer payments to persons, foreign net transfers by Government, net interest paid by
government, and subsidies less current surplus of government enterprises.
3
Undistributed corporate profits, corporate inventory valuation adjustment, capital consumption allowances, and wage accruals less disbursements.
4
Private business investment, purchases of capital goods by private nonprofit institutions, and residential
housing. See Table C-9.
5
Net foreign investment with sign changed.
8
Less than $50 million.
7
Preliminary estimates.
8
Data for corporate profits are approximations for the year as a whole; data for fourth quarter are not
available. All other data incorporating or derived from these figures are correspondingly approximate.
9
Not available.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




217

TABLE C-7.—Gross private and government product, in current and 1958 prices, 7929-65
[Billions of dollars]
1958 prices

Current prices

Year or quarter

Total
gross
national
product

government
product 2

Total
gross
national
product

Gross private product i Gross
Total

Farm

Nonfarm

Gross private product i Gross
government
NonFarm farm prodTotal
uct a

1929

103.1

9.7

89.1

4.3

203.6

190.9

17.0

173.9

12.7

1930
1931
1932
1933
1934
1935
1936
1937
1938
1939

90.4
75.8
58.0
55.6
65.1
72.2
82.5
90.4
84.7
90.5

85.8
71.2
53.6
50.9
59.5
66.3
75.2
83.5
77.0
82.9

7.7
6.3
4.5
4.6
4.7
7.0
6.4
8.3
6.6
6.3

78.2
64.9
49.1
46.3
54.8
59.3
68.8
75.3
70.5
76.6

4.5
4.7
4.4
4.7
5.6
5.9
7.3
6.9
7.6
7.6

183.3
169.2
144.1
141.5
154.3
169.6
193.0
203.3
193.0
209.4

170.0
155.7
130.9
127.5
138.3
152.5
173.1
184.4
172.6
188.8

16.1
18.5
18.0
17.5
14.6
16.5
14.9
17,9
17.8
18.2

153.9
137.2
112.9
110.0
123.7
136.0
158.2
166. 5
154.8
170.6

13.3
13.5
13.2
14.0
16.0
17.1
19.9
18.9
20.4
20.6

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

99.7
124.5
157.9
191.6
210.1
212.0
208.5
231.3
257.6
256.5

91.9
115.1
142.8
166.0
177.9
176.9
187. 7
214.6
240.2
237.1

6.5
8.9
13.0
15.3
15.3
15.9
18.8
20.2
23.3
18.8

85.4
106.2
129.8
150.8
162.7
160.9
169.0
194.4
216.9
218.3

7.8
9.4
15.1
25.6
32.2
35.2
20.8
16.7
17.4
19.4

227.2
263.7
297.8
337.2
361.3
355.4
312. 6
309.9
323.7
324.1

205.6
236.5
257.3
272. 9
286.9
282.6
275.1
281.3
295.0
294.0

17.5
18.8
20.6
19.6
19.4
18.1
18.5
17.0
19.0
18.4

188.1
217.7
236.7
253.3
267.5
264. 5
256.6
264.3
276.0
275.6

21.6
27.2
40.5
64.3
74.4
72.8
37.5
28.6
28.7
30.1

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

284.8
328.4
345.5
364.6
364.8
398.0
419.2
441.1
447.3
483.6

263.9
301.0
314.3
332.7
332.3
363.8
382.6
402.0
405.2
439.4

20.0
22.9
22.2
20.3
19.6
18.8
18.6
18.4
20.8
19.6

243.9
278.1
292.1
312.4
312.7
345.0
364.0
383.6
384.4
419.8

20.9
27.4
31.2
31.9
32.5
34.2
36.6
39.1
42.1
44.3

355.3
383.4
395.1
412.8
407.0
438.0
446.1
452.5
447.3
475.9

324.2
344.6
353.3
371.1
366.1
397.3
404.8
410.6
405.2
433.4

19.4
18.4
19.0
20.0
20.4
20.9
20.8
20.3
20.8
21.1

304.8
326.2
334.3
351.1
345.7
376. 4
384.0
390.3
384.4
412.3

31.1
38.8
41.8
41.7
40.9
40.7
41.3
41.9
42.1
42.5

1960
1961
1962
1963
1964
1965

503.8
520.1
560.3
589.2
628.7
675.6

456.3
469.2
505.6
531.0
565.8
608.4

20.5
20.9
21.2
21.6
20.4
22.9

435.8
448.3
484.4
509.4
545.4
585.5

47.5
50.9
54.7
58.2
62.9
67.2

487.8
497.3
530.0
550.0
577.6
609.0

444.1
452.5
483.1
502.2
528.5
558.4

21.9
22.2
22.1
22.9
22.3
23.3

422.2
430.3
461.0
479.3
506.2
535.1

43.7
44.8
46.9
47.8
49.1
50 6

Seasonally adjusted annual rates
1963: I...
II..
III..
IV..

577.0
583.1
593.1
603.6

520.2
525.5
534.7
543.6

(4)
(4)
(4)
(4)

(4)
(4)
(4)
(4)

56.8
57.6
58.4
60.0

541.2
544.9
553.7
560.0

493.9
497.2
505.6
511.8

(4)
(4)
(4)
(4)

(4)
(4)
(4)
(4)

47.3
47.7
48.1
48.2

1964: I...
II..
III.
IV..

614.0
624.2
634.8
641.1

552.7
562.0
571.2
576.6

(4)
(4)
(4)
(4)

(4)
(4)
(4)
(4)

61.3
62.2
63.6
64.5

567.1
575.9
582.6
584. 7

518.7
527.0
533.2
535.0

(4)
(4)
(4)
(4)

(4)
(4)
(4)
(4)

48.4
48.9
49.4
49.7

1965: I...
II..
III.
IV 3

657.6
668.8
681.5
694.6

592.4
602.6
614.1
624.4

(4)
(4)
(4)
(4)

(4)
(4>
(4)
<*)

65.2
66.2
67.4
70.2

597.7
603.5
613.0
621.7

547.9
553.3
562.3
570.2

(4)
(4)
(4)
(4)

(4)
(4)
(4)
(4)

49.8
50.2
50.7
51.5

1
Gross national product less compensation of general government employees; i.e., gross product accruing
from domestic business, households, and institutions, and from the rest of the world.
2
Includes compensation of general government employees and excludes compensation of employees in
government enterprises. Government enterprises are those agencies of government whose operating costs
are at least to a substantial extent covered by the sale of goods and services, in contrast to the general activities of government which arefinancedmainly by tax revenues and debt creation. Government enterprises, in other words, conduct operations essentially commercial in character, even though they perform
them under governmental auspices. The Post Office and public power systems are typical examples of
government enterprises. On the other hand, State universities and public parks, where the fees and admissions cover only a nominal part of operating costs, are part of general government activities.
3
4 Preliminary estimates.
Not available.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




218

TABLE C—8.—Personal consumption expenditures, 1929-65

>eration

9

o
Other

ft

Trans

Housi

d

Househol

T3

bo

Other

and
d

Clothi

Other

bjo

oil

a£

Gasoli

ing alcoages l

1

9-g
£*

Services>

77.2

9.2

3.2

4.8

1 ?, 37.7

19.5

9.4

1.8

7.0

30.3

11.5

4.0

2.6

12.2

69.9
60.5
48.6
45.8
51.3
55.7
61.9
66.5
63.9
66.8

7.2
5.5
3.6
3.5
4.2
5.1
6.3
6.9
5.7

2.2
1.6
.9
1.1
1.4
1.9
2.3
2.4
1.6
2.2

3.9
3.1
2.1
1.9
2.2
2.6
3.2
3.6
3.1
3.5

1.1
9
.6
.5
.6
.7
.8

34.0
29.0
22.7
22.3
26.7
29.3
32.9
1 0 35.2
. 9 34.0
1.0 35.1

18.0
14.7
11.4
10.9
12.2
13.6
15.3
16.5
15.6
15.7

8.0
6.9
5.1
4.6
5.7
6.0
6.6
6.8
6.8
7.1

1.7
1.5
1.5
1.5
1.6
1.7
1.9
2.1
2.1
2.2

6.3
5.7
4.8
5.3
7.2
7.9
9.1
9.8
9.5

11.0
10.3

3.9
3.5
3.0
2.8
3.0
3.2
3.4
3.7
3.6
3.8

2.2
1.9
1.6
1.5
1.6
1.7
1.9
2.0
1.9
2.0

11.5
10.3

10.1

28.7
26.0
22.2
20.1
20.4
21.3
22.8
24.4
24.3
25.0

70.8
80.6
88.5
99.3
108.3
119.7
143.4
160.7
173.6
176.8

7.8

3.9
4.9
4.7
3.9
3.8
4.6
8.6

10.9
11.9
11.6

37.0
42.9
1 6 50.8
1.9 58.6
2.2 64.3
?, 5 71.9
3.2 82.4
3 3 90.5
3.4 96.2
3.2 94.5

16.6
19.2
23.3
27.4
29.9
33.2
39.0
43.7
46.3
44.8

7.4
8.8

15.8
20.4
22.7
24.6

2.7
3.4
.7
.8
.8
1.0
4.0
6.2
7.5
9.9

11.0
13.4
14.6
16.5
18.2
18.8
20.1
19.3

2.3
2.6
2.1
1.3
1.4
1.8
3.0
3.6
4.4
5.0

10.7
12.2
14.4
16.5
18.4
20.5
22.1
24.4
25 4
25.4

26.0
28.1
30.8
34.2
37.2
39.8
45.3
49.8
54.7
57.6

10.2
11.0
11.5
12.0
12.5
13.9
15.7
17.5
19.3

4.0
4.3
4.8
5.2
5.9
6.4
6.8
7.5
8.1
8.5

2.1
2.4
2.7
3.4
3.7
4.0
5.0
5.3
5.8
5.9

10.4
11.2
12.3
14.0
15.6
16 8
19.7
?,1 4
23.3
23.9

30.5
29.6
29.3
33.2
32.8
39.6
38.9
40.8
37.9
44.3

13.1
11.6
11.1
14.2
13.6
18.4
16.4
18.3
15.4
19.5

14.1
14.4
14.3
14.9
15.0
16.6
17.5
17.3
17.1
18.9

3 3

98.1
108.8
114.0
116.8
118 3
123.3
129.3
135.6
140.2
146.6

46.0
52.1
54.7
55.5
56.5
58.1
60.4
63.9
66.6
68.4

19.6
21 2
21.9
22.1
22 1
23.1
24.1
24.3
24.7
26.4

5.4

21.3
23 9
26.5
29.3
31 7
33.7
36.0
38.5
41.1
43.7

6.2

10.6
11.0
11.6

27.1 62.4
29.3 67 9
30.5 73.4
31.6 79.9
31.5 85 4
33.1 91.4
34.9 98.5
36.7 105 0
37.9 112.0
40.2 120.3

9.5

1959.__

191.0
206.3
216.7
230.0
236.5
254.4
266.7
281.4
290.1
311.2

10 4 6.7
7.1
11.1
12.0
7.8
12 6 7.9
14.0
8.2
15.2
8.6
16.2
9.0
17.3
9.3
18.5 10.1

?5 4
26.9
28.7
30.8
33.2
35.5
38.6
41.3
44.3
48.0

1960 _
1961
1962
1963. _
1964
1965*

325.2
335.2
355.1
373.8
398.9
428.5

45.3
44.2
49.5
53.4
58.7
64.8

20.1
18.4
22.0
24.3
25.8
29.9

18.9
19.3
20.5
21.9
24.7
25.9

6.3 151.3

70.1
72.1
74.4
76.5
79.9
84.9

27.3
27.9
29.6
30.5
33.3
35.1

12.3
12.4
12.9
13.5
14.0
14.7

41.6
43.5
45.7
47.6
50.3
54.3

128.7
135.1
143 0
152.3
162.6
174.7

46.3
48.7
52.0
55.5
59.5
64.7

20.0
20.8
22.0
23.1
24.4
25.8

10.8
10.6
11.0
11.4
11.7
12.2

51.6
54 9
58.0
62.3
67.0
72.0

.

1940
1941
1942
1943
1944

.
.

1945...

„

1946 .
1947 . .
1948
1949
1950-—
1951
1952
1953 —
1954
1955
1956._.

1957
1958

.

6.7
9.6
6.9
6.6
6.7
8.0

1.1
1.4

3.6
3.9
4.1
4.2
4.6
5.0
5.2
5.4
5.9

6 5 155.9
6.9 162.6
7 3 168.0
8.2 177.5
9.0 189.0

6 1
6.8
7.7

8 2
9.0
9.8

Total

1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939

Total

<

Total

Total

Oi

d house>ment

il

&

Furni
hoi

and parts

Year
or
quarter

Nondurable goods

Durable goods

Food,
holi

il consumption
ditures

[Billions of dollars]

9.0
7.9
7.6
7.7
8.0
8.5
8.9
9.1
9.4

8.6
7.9
8.2

8 7
9.5

10.2
99
10.1

Seasonally adjusted annual rates
368.0
1963:1
1 1 . . . 371.1
379.5

52.2
52.6
54.1
54.9

23.6
23.9
24.6
24.9

21.4
21.4
22.1
22.7

7.2
7.3
7.4
7.3

166.6
167.4
169.2
168.9

76.0
76.3
76.7
76.8

30.3
30.2
31.1
30.6

13.3
13.4
13.5
13.7

47.1
47.6
47.8
47.8

149.2
151.1
153.3
155.7

54.5
55.3
55.7
56.5

22.8
22.8
23.5
23.3

11.3
11.4
11.4
11.5

60.5
61.6
62.8
64.4

389.1

57.4

25.5

23.9

8.0
8.2
8.4
8.3

173.7
175.7
179.8
180.9

78.4
79.0
80.8
81.4

32.3
33.2
33.8
34.0

14.0
13.9
14.0
14.2

49.0
49.6
51.1
51.3

158.0
161.2
164.3
167.1

57.5
58.8
60.1
61.4

23.6
24.4
24.8
24.8

11.7
11.7
11.8
11.9

65.1
66.3
67.6
69.1

8.8
8.9
9.1
9.2

182.8
187.9
190.5
194.8

81.9
84.1
85.9
87.8

34.3 14.2
35.0 14.7
35. 2 14.8
36.0 14.9

52.4
54.0
54.5
56.1

169.5
173.1
176.7
179.6

62.7
64.0
65.3
66.7

24.9
25.5
26.3
26.6

11.9
12.1
12.3
12.5

70.0
71.4
72.7
73.8

III.. 376.6
1964: I

I I . . . 396.0 59.1 25.7 25.1
404.6 60.5 27.1 25.0
IV._. 405.9 57.9 24.8 24.8
1965: I

416.9

64.6

30.3

25.5

I I . - . 424.5 63.5 29.3 25.4
III. . 432.5 65.4 30.3 26.0
IV<_. 440.1 65.7 29.6 26.9

* Quarterly data are estimates by Council of Economic Advisers.
Includes standard clothing issued to military personnel.
Includes imputed rental value of owner-occupied dwellings.
Preliminary estimates.

2
3
4

NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics (except as noted).




219

TABLE C—9.—Gross private domestic investment, 1929—65
[Billions of dollars]
Change in
business
inventories

Fixed investment
Total
Year or private
quarter domestic
investment Total

Nonresidential
Producers'
durable
Structures
equipment
Total
Total Non- Total Nonfarm
farm

Residential structures
NonTotal farm

Total
Farm

1929..

16.2

14.5

10.6

5.0

4.8

5.6

4.9

4.0

3.8

0.2

1.7

19301931..
1932..
1933..
19341935..
1936..
193719381939..

10.3
5.6
1.0
1.4
3.3
6.4
8.5
11.8
6.5
9.3

10.6
6.8
3.4
3.0
4.1
5.3
7.2
9.2
7.4
8.9

8.3
5.0
2.7
2.4
3.2
4.1
5.6
7.3
5.4
5.9

4.0
2.3
1.2
.9
1.0
1.2
1.6
2.4
1.9
2.0

2.3
1.2
.9
1.0
1.2
1.6
2.4
1.8
1.9

4.3
2.7
1.5
1.5
2.2
2.9
4.0
4.9
3.5
4.0

3.7
2.4
1.3
1.3
1.8
2.4
3.3
4.1
2.9
3.4

2.3
1.7
.7
.6
.9
1.2
1.6
1.9
2.0
2.9

2.2
1.6
.7
.5
.8
1.1
1.5
1.8
1.9
2.8

.1
.1

-.4
-1.1
-2.5
-1.6
-.7
1.1
1.3
2.5
-.9
.4

1940..
19411942.1943194419451946194719481949..

13.1
17.9
9.8
5.7
7.1
10.6
30.6
34.0
46.0
35.7

11.0
13.4
8.1
6.4
8.1
11.7
24.2
34.4
41.3
38.8

7.5
9.5
6.0
5.0
6.8
10.2
17.0
23.4
26.9
25.1

2.3
2.9
1.9
1.3
1.8
2.9
6.8
7.5
8.8
8.5

2.2
2.8
1.8
1.2
1.7
2.7
6.1
6.7
8.0
7.7

5.3
6.6
4.1
3.7
5.0
7.3
10.2
15.9
18.1
16.6

4.6
5.6
3.5
3.2
4.2
6.3
9.2
14.0
15.5
13.7

3.4
3.9
2.1
1.4
1.3
1.5
7.2
11.1
14.4
13.7

3.2
3.7
1.9
1.2
1.1
1.4
6.7
10.4
13.6
12.8

2.2
4.5
1.8
-.6
-1.0
-1.0
6.4
-.5
4.7
-3.1

19501951..
19521953..
1954..
1955..
19561957..
19581959..

54.1
59.3
51.9
52.6
51.7
67.4
70.0
67.8
60.9
75.3

47.3
49.0
48.8
52.1
53.3
61.4
65.3
66.5
62.4
70.5

27.9
31.8
31,6
34.2
33.6
38.1
43.7
46.4
41.6
45.1

9.2
11.2
11.4
12.7
13.1
14.3
17.2
18.0
16.6
16.7

8.5
10.4
10.5
11.9
12.3
13.6
16.5
17.2
15.8
15.9

18.7
20.7
20.2
21.5
20.6
23.8
26.5
28.4
25.0
28.4

15.7
17.7
17.6
18.6
18.0
21.2
24.2
25.9
22,0
25.4

19.4
17.2
17.2
18.0
19.7
23.3
21.6
20.2
20.8
25.5

18.6
16.4
16.4
17.2
19.0
22.7
20.9
19.5
20.1
24.8

10.3
3.1
.4
-1.5
6.0
4.7
1.3
-1.5
4.8

196019611962..
196319641965 2.

74.8
71.7
83.0
86.9
92.9
104.9

71.3
69.7
77.0
81.2
88.1
97.5

48.4
47.0
51.7
54.3
60.5
69.8

18.1
18.4
19.2
19.7
21.1

17,4
17.7
18.5
19.0
20.4
23.7

30.3
28.6
32.5
34.6
39.4
45.5

27.7
25.8
29.4
31.2
35.8
41.3

22.8
22.6
25.3
26.9
27.5
27.6

22.2
22.0
24.8
26.3
27.0
27.1

3.6
2.0
6.0
5.7
4.8
7.4

24:3

0)
0)

Seasonally adjusted annual rates

II—
III—
IV...

82.6
84.8
87.9
92.4

78.1
80.1
82.1
84.3

52.1
53.4
55.1
56.5

19.0
19.2
20.0
20.5

18.4
18.5
19.4
19.8

33.1
34.2
35.1
36.0

30.0
30.9
31.8
32.3

26.0
26.7
26.9
27.9

25.4
26.1
26.4
27.3

0.6
.6
.6
.6

4.5
4.7
5.8
8.1

1964: I
II.
III...
IV...

89.7
90.9
92.6
97.7

86.5
86.8
88.8
90.2

58.1
58.9
61.6
63.5

20.7
21.1
21.1
21.5

20.0
20.4
20.5
20.8

37.5
37.9
40.5
42.0

33.9
34.4
36.8
38.3

28.4
27.9
27.2
26.7

27.8
27.3
26.6
26.2

.6
.6
.6
.6

3.3
4.1
3.8
7.5

1965: I
IIIII..
IV2._

103.4
102.8
106.2
107.5

94.6
96.4
98.6
100.5

66.9
68.4
70.9
73.2

23.2
24.5
24.2
25.4

22.5
23.8
23.6
24.8

43.7
43.9
46.7
47.8

40.1
40.2
42.2
42.9

27.7
28.0
27.7
27.2

27.1
27.5
27.1
26.7

.6
.6
.6
.5

8.8
6.4
7.6
7.0

1963: I

1 Less than $50 million.
2 Preliminary estimates.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




220

TABLE C-10.—National income by type of income, 1929-65
[Billions of dollars]
Compensation of
employees
Total
national
income1

Year or
quarter

1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957_
1958
1959
1960
1961
1962
1963
1964.
1965 «

Total

Corporate profits
and inventory
valuation
adjustment

Income Rental
inof
Income
Supof
come Inven- farm
pleproof
tory prie- perments
and
to Total unin- valu- tors 3 sons Total
salacorpo- ation
rated adjustries
and
enter- ment
salaprises
ries 2

86.8
75.4
59.7
42.8
40.3
49.5
57.
65.0
73.6
67.4
72.6

51.1
46.8
39.8
31.1
29.5
34.3
37.3
42.9
47.9
45.0
48.1

50.4
46.2
39.1
30.5
29.0
33.7
36.7
41.9
46.1
43.0
45.9

81.1
104.
137.1
170.3
182.6
181.5
181.9
199.0
224.2
217.5
241.1
278.0
291.4
304.7
303.1
331.0
350.8
366.1
367.8
400.0

52.1
64.8
85.3
109.5
121.2
123.1
117.9
128.9
141.1
141.0

49.8
62.1
82.1
105.8
116.7
117.5
112.0
123.0
135.4
134.5

414.5
427.3
. . . . 457.7
481.1
514.4
7554.6

1516
180.
195.3
209.1
208.0
224.5
243.1
256.0
257.8
279.1
294.
302.6
323.6
341.0
365.3
391.9

146.8
171.1
185.1
198.3
196.5
211.3
227.8
238.
239.9
258.2
270.8
278.1
296.1
311.2
333.5
357. 4

470.4
476.7
484.6
492.6
501.6
510.5
519.5
526.3
540.6
549.5
557.9
(8)

333.6
338.0
343.0
349.5
355.1
361.9
369.0
375.4
382.4
387.9
393. 7,
403.6

304.5
308.4
312.9
318.8
324.2
330.4
336.8
342.6
348.9
353.6
359.0
368.1

.._

Business and professional income
and inventory
valuation
adjustment

0.7
.7
.6
.5
.6
.6
1.0
1.
2.0
2.2
2.3
2.7
3.2
3.8
4.5
5.6
5.9
5.
5.8
6.5
7.8
9.6
10.
10.9
11.5
13.2
15.2
17.3
17.9
20.9
23.4
24.6
27.5
29.8
31.8
34.5

9.0
7.6
5.8
3.6
3.3
4.7
5.5
6.7
7.2
6.9
7.4
8.6
11.1
14.0
17.0
18.2
19.2
21.6
20.3
22.7
22.6

8.8
6.8
5.1
3.3
3.9
4.8
5.5
6.8
7.2
6.7
7.6
8.6
11.7
14.4
17.1
18.3
19.3
23.3
21.8
23.1
22.2

24.0
26.1
27.1
27.5
27.6
30.3
31.3
32.8
33.2
35.1

25.1
26.5
26.9
27.6
27.6
30.5
31.8
33.1
33.2
35.3

34.2
35.6
37.1
37.8
39.1
40.3

0.1

34.3
35.6
37.1
37.8
39.1
40.6

.3
-.5
-.1

-.2

-.4
-.2
-.1
-.1
-1.7
-1.5
-.4
.5
-1.1
-.3
.2
-.2
2
-.3
-. 1
-.1

6.2
4.3
3.4
2.1
2.6
3.0
5.3
4.3
6.0
4.4
4.4
4.5
6.4
9.
11.7
11.6
12.2
14.9
15.2
17.5
12.7
13.5
15.8
15.0
13.0
12.4
11.4
11.4
11.3
13.4
11.4
12.0
12.8
13.0
13.0
12.0
14.3

5.4
4.8
3.8
2.7
2.0
1.7
1.7
1.8
2.1
2.6
2.7
2.9
3.5
4.5
5.1
5.4
5.6
6.6
7.1
8.0
8.4
9.4
10.3
11.5
12.7
13.6
13.9
14.3
14.8
15.4
15.6
15.8
16.0
16.7
17.6
18.2
18.6

Corporate
profits
before
taxes4

'0.5

10.5

10.0
17.7
21.5
25.1
24.1
19.7
24.6
31.5
35.2
28.

-.3

56.1
58.5
58.9
60.8
64.0
64.5
65.3
65.9
73.1
73.9
74.6
(8)

0.2
-.9
.2
-1.2
-.4
(5)
.2
-1.0
-1.4
-1.8
-1.2
-1.6

Seasonally adjusted annua] rates

1963: I
II
III....
IV
1964: I
II
III....
IV
1965: I
II
III....
IV6...

29.0
29.6
30.1
30.7
30.8
31.5
32.2
32.7
33.5
34.3
34.7
35.5

37.5
37.6
37.9
38.0
38.5
39.0
39.4
39.6
39.9
40.1
40.4
40.7

37.4
37.7
38.0
38.0
38.5
39.1
39.5
39.5
40.0
40.6
40.7
40.9

0.1
-.1
-.1
(5)
(5)

-.1
-.1
.1
-. 1
-.5
-.3
-.2

13.2
12.9
13.0
13.0
11.9
12.0
12.0
12.2
12.0
14.5
15.0
15.5

17.1
17.4
17.7
18.0
17.9
18.1
18.3
18.5
18.5
18.6
18.6
18.7

56.3
57.6
59.1
59.6
63.6
64.5
65.5
64.9
71.7
72.0
73.5
(8)

12.7
13.2
13.9
14.5
14.5
15.0
15.4
15.7
16.1
16.4
16.7
17.1

1
National income is the total net income earned in production. It differs from gross national product
mainly in that it excludes depreciation charges and other allowances for business and institutional consumption of durable capital goods, and indirect business taxes. See Table C-ll.
2
Employer contributions for social insurance and to private pension, health, and welfare funds; compensation for injuries; directors' fees; pay of the military reserve; and a few other minor items.
3 Excludes income resulting from net reductions of farm inventories and gives credit in computing income to net additions to farm inventories during the period.
4
See Table C-64 for corporate tax liability and profits after taxes.
« Less than $50 million.
6
Preliminary estimates.
7
Data for corporate profits are approximations for the year as a whole; data for fourth quarter are not
available. All other data incorporating or derived from these figures are correspondingly approximate.
8
Not available.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.

795-983 O—06

15




221

TABLE C-l 1.—Relation of gross national product and national income, 7929-65
[Billions of dollars]

Year or quarter

Plus:
Less:
SubLess: Equals: sidies
Indirect business taxes
Gross Capital Net
less
Equals:
naconcurrent
NaBusi- Stational sump- na- surplus
ness tistical tional
prod- tion prod- of govincome
disernallowState transfer crepuct
payFedand
ances
ment Total
eral
local ments ancy
enterprises

1929..

103.1

7.9

95.2

-0.1

7.0

1.2

5.8

0.6

0.7

86.8

1930..
1931_.
1932..
1933..
1934..
1935..
1936..
1937..
1938..
1939..

90.4
75.8
58.0
55.6
65.1
72.2
82.5
90.4
84.7
90.5

8.C
7.9
7.4
7.0
6.8
6.9
7.0
7.2
7.3

82.4
68.0
50.7
48.6
58.2
65.4
75.4
83.3
77 A
83.2

-.1

1.0
.9
.9
1.6
2.2
2.2
2.3
2.4
2.2
2.3

6.1
6.0
5.8
5.4
5.6
6.0
6.4
6.8
6.9
7.0

.5
.6
.7
.7
.6
.6
.6
.6
.4
.5

-.8
.7
.3
.6
.5
-.2
1.2

.2
.5

7.2
6.9
6.8
7.1
7.8
8.2
8.7
9.2
9.2
9.4

75.4
59.7
42.8
40.3
49.5
57.2
65.0
73.6
67.4
72.6

1940..
1941..
1942..
1943..
1944..
1945..
1946..
1947..
19481949..

99.7
124.5
157.9
191.6
210.1
212.0
208.5
231.3
257.6
256.5

7.5
8.2
9.8

.4
.1
.2
.2
.7
.8
.9
-.2
-.1
-.1

10.0
11.3
11.8
12.7
14.1
15.5
17.1
18.4
20.1
21.3

2.6
3.6
4.0
4.9
6.2
7.1
7.8
7.8
8.0
8.0

7.4
7.7
7.7
7.8
8.0
8.4
9.3

12.3
14.5
16.6

92.2
116.3
148.1
181.3
199.1
200.7
198.6
219.1
243.0
239.9

10.6
12.1
13.3

.4
.5
.5
.5
.5
.5
.5
.6
.7
.8

1950..
1951..
1952..
1953..
1954..
1955..
1956..
1957..
19581959-

284.8
328.4
345.5
364.6
364.8
398.0
419.2
441.1
447.3
483.6

18.3
21.2
23.2
25.7
28.1
31.5
34.1
37.1
38.9
41.4

266.4
307.2
322.3
338.9
336.8
366.5
385.2
404.0
408.4
442.3

.2
.2
-.1

23.3
25.2
27.6
29.6
29.4
32.1
34.9
37.3
38.5
41.5

8.9
9.4

10.7
11.2
11.8
11.5
12.5

14.5
15.8
17.3
18.7
19.7
21.4
23.6
25.5
27.0
28.9

.8
.9
1.0
L.2
L.I
L.2
L.4
L. 5
L.6
L.7

196019611962..
1963_.
1964..
1965 2.

503.8
520.1
560.3
589.2
628.7
675.6

43.4
45.2
50.0
52.8
55.7
58.7

460.3
474.9
510.4
536.5
573.0
616.8

13.5
13.6
14.6
15.3
16.1
16.8

31.7
34.1
36.9
39.2
41.9
45.2

1.9
2.0
2.1
2.2
2.3
2.3

7.3

10.2
11.0
11.3
9.9

0)
0)
0)
0)

.3
.4

— 4

-.2
-.1
.8
.9
.9
.1
.2
1.4
1.4

.7
1.2
1.2

45.2
47.7
51.5
54.6
58.0
62.0

10.3
10.9
9.7

0)

.6
1.3
1.0
.4

-1.1
-2.0
2.5
4.0
.1
.9

-2.0

.3

1.5
3.3
2.2
3.0
2.9
2.1

-1.1

0)

1.6

-.8

-1.0

3

-.7
.5
-.7
-.5

-.8

81.1
104.2
137.1
170.3
182.6
181.5
181.9
199.0
224.2
217.5
241.1
278.0
291.4
304.7
303.1
331.0
350.8
366.1
367.8
400.0
414.5
427.3
457.7
481.1
514.4
3 554.6

Seasonally adjusted annual rates
1963: I___

IIIII.
IV..

1964: I....
lira..
IV..
1965: I___.
II—
III.
IV 2

577.0
583.1
593.1
603.6

51.5
52.5
53.2
54.0

525.5
530.6
540.0
549.6

1.0
.8
.6
.6

53.7
54.1
54.7
55.6

15.2
15.2
15.3
15.5

38.5
38.9
39.5
40.1

2.1
2.2
2.3
2.3

614.0
624.2
634.8
641.1

54.6
55.2
56.1
56.9

559.4
569.0
578.6
584.3

.9
1.2
1.3
1.5

56.4
57.6
58.8
59.3

15.6
16.0
16.4
16.4

40.8
41.6
42.4
42.9

2.3
2.3
2.3
2.4

657.6
668.8
681.5
694.6

57.7
58.3
59.1
59.8

599.9
610.5
622.4
634.7

1.4
1.3
1.2
1.1

61.5
61.4
62.0
62.9

17.7
16.7
16.1
16.5

43.8
44.7
45.9
46.4

2.3
2.3
2.3
2.3

0.2

-1.6
-1.0
-.3

0)

-.3
—.7

-2.2
-3.1
-1.4
1.4
(«)

470.4
476.7
484.6
492.6
501.6
510.5
519.5
526.3
540.6
549.5
557.9

1
2 Less than $50 million.
Preliminary estimates.
3 Data for corporate profits are approximations for the year as a whole; data for fourth quarter are not
available. All other data incorporating or derived from these figures are correspondingly approximate.
* Not available.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




222

TABLE C—12.—Relation of national income and personal income, 1929-65
[Billions of dollars]
Equals:

Plus:

Year or quarter

Corporate
profits Contri- Wage
and in- butions
acNational vencruals
income
for
tory
less
social
valu- insurdisation
burseance
adments
justment

Interest
Govpaid
ernby
ment
govtransernfer pay- ment
ments
(net)
to per- and by
sons
consumers

Dividends

Business
transfer
payments

Personal
income

86.8

10.5

0.2

0.9

2.5

5.8

0.6

85.9

1931 _
1932.
1933 _
1934.
1935.
1936.
1937.
1938.
1939.

75.4
59.7
42.8
40.3
49.5
57.2
65.0
73.6
67.4
72.6

7.0
2.0
-1.3
-1.2
1.7
3.4
5.6
6.8
4.9
6.3

.3
.3
.3
.3
.3
.3
.6
1.8
2.0
2.1

1.0
2.1
1.4
1.5
1.6
1.8
2.9
1.9
2.4
2.5

1.8
1.8
1.7
1.6
..7
.7
,7
.9
.9
1.9

5.5
4.1
2.5
2.0
2.6
2.8
4.5
4.7
3.2

.5
.6
.7
.7
.6

77.0
65.9
50.2
47.0
54.0
60.4
68.6
74.1
68.3
72.8

1940.
1941.
1942.
1943.
1944.
1945.
1946.
1947.
1948.
1949.

81.1
104.2
137.1
170.3
182.6
181.5
181.9
199.0
224.2
217.5

15.2
20.3
24.4
23.8
19.2
19.3
25.6
33.0
30.8

2.3
2.8
3.5
4.5
5.2
6.1
6.0
5.7
5.2
5.7

2.7
2.6
2.6
2.5
3.1
5.6
10.8
11.1
10.5
11.6

2.1
2.2
2.2
2.6
3.3
4.2
5.2
5.5
6.1
6.5

4.0
4.4
4.3
4.4
4.6
4.6
5.6
6.3
7.0
7.2

1950.
1951.
1952.
1953.
1954.
1955.
1956.
1957..
1958..
1959.

241.1
278.0
291.4
304.7
303.1
331.0
350.8
366.1
367.8
400.0

37.7
42.7
39.9
39.6
38.0
46.9
46.1
45.6
41.1
51.7

6.9
8.2
8.7
8.8
9.8
11.1
12.6
14.5
14.8
17.6

14.3
11.5
12.0
12.8
14.9
16.1
17.1
19.9
24.1
24.9

7.2
7.6
8.1
9.0
9.5
10.1
11.2
12.0
12.1
13.6

8.8
8.6
8.6
8.9
9.3
10.5
11.3
11.7
11.6
12.6

1.0
1.2
1.1
1.2
1.4
1.5
1.6
1.7

227.6
255.6
272.5
288.2
290.1
310.9
333.0
351.1
361.2
383.5

I960..
1961..
1962..
1963..
1964..
1965 V

414.5
427.3
457.7
481.1
514.4
2 554.6

49.9
50.3
55.7
58.1
64.5
273.1

20.7
21.4
24.0
26.8
27.8
29.5

26.6
30.4
31.2
33.0
34.2
36.8

15.1
15.0
16.1
17.5
19.1
20.6

13.4
13.8
15.2
15.8
17.2
18.9

1.9
2.0
2.1
2.2
2.3
2.3

40L0
416.8
442.6
464.8
495.0
530.7

1930 _

0.2
-.2

78.3
96.0
122.9
151.3
165.3
171.1
178. 7
191.3
210.2
207.2

Seasonally adjusted annual rates
33.5
32.5
32.7
33.3

1963: I —
IIIII
IV.

470.4
476.7
484.6
492.6

56.3
57.6
59.1
59.6

26.2
26.6
27.0
27.4

1964: I___
II..
III
IV.

501.6
510.5
519.5
526.3

63.6
64.5
65.5
64.9

27.3
27.6
28.0
28.4

1965: I___
II..
III
IV i

540.6
549.5
557.9

71.7
72.0
73.5

28.9
29.2
29.6
30.2

0.1
-.1

17.0
17.2
17.8
18.2

15.6
15.7
15.8
16.1

2.1
2.2
2.3
2.3

456.1
460.1
467.1
475.6

34.6
33.9
34.1
34.4

18.7
18.8
19.4
19.5

16.7
17.1
17.4
17.7

2.3
2.3
2.3
2.4

483.0
490.6
499.1
507.1

36.0
35.1
38.9
37.3

19.9
20.4
20.8
21.1

18.0
18.6
19.2
19.9

2.3
2.3
2.3
2.3

516.2
524.7
536.0
546.0

1 Preliminary estimates.
2 Data for corporate profits are approximations for the year as a whole; data for fourth quarter are not
available. All other data incorporating or derived from these figures are correspondingly approximate.
* Not available.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




223

TABLE C-13.—Sources of personal income, 1929-65
[Billions of dollars]

Year or quarter

Wage and salary disbursements i
CommodityTotal
producing
Distrib Service Govperindustries
utive indus- ernsonal
income Total
Manu- indus- tries ment
tries
Total facturing

1929-.

85.9

50.4

21.5

16.1

15.6

8.4

4.9

1930..
1931 _.
1932_.
1933_.
1934..
1935_.
1936..
1937..
1938..
1939..

77.0
65.9
50.2
47.0
54.0
60.4
68.6
74.1
68.3
72.8

46.2
39.1
30.5
29.0
33.7
36.7
41.9
46.1
43.0
45.9

18,5
14.3
9.9
9.8
12.1
13.5
15.8
18.4
15.3
17.4

13.8
10.8
7.7
7.8
9.6
10.8
12.4
14.6
11.8
13.6

14.5
12.5
9.8
8.8
9.9
10.7
11.8
13.2
12.6
13.3

8.0
7.1
5.8
5.2
5.7
5.9
6.5
7.1
6.8
7.1

78.3
96.0
122.9
151.3
165.3
171.1
178.7
191.3
210.2
207.2

49.8
62.1
82.1
105.6
116.9
117.5
112.0
123.0
135.3
134.6

19.7
27.5
39.1
48.9
50.3
45.8
46.0
54.3
61.0
57.7

15.6
21.7
30.9
40.9
42.9
38.2
36.5
42.5
47.2
44.7

14.2
16.3
18.0
20.1
22.7
24.8
31.0
35.2
37.6
37.7

7.5
8.1
9.0
9.9
10.9
12.0
14.4
16.1
17.9
18.6

8.4
10.2
16.0
26.6
33.0
319
20.7
17.4
18.9
20.6

1950..
195119521953195419551956195719581959-

227.6
255.6
272.5
288.2
290.1
310.9
333.0
351.1
361.2
383.5

146.7
171.0
185.1
198.3
196.5
211.3
227.8
238.7
239.9
258.2

64.6
76.1
81.8
89.4
85.4
92.8
100.2
103.8
99.7
109.1

50.3
59.4
64.2
71.2
67.6
73.9
79.5
82.5
78.7
86.9

39.9
44.3
46.9
49.8
50.2
53.4
57.7
60.5
60.8
64.8

19.9
21.7
23.3
25.1
26.4
28.9
31.6
33.9
35.9
38.7

196019611962196319641965 6

401.0
416.8
442.6
464.8
495.0
530.7

270.8
278.1
296.1
311.2
333.5
357.4

112.5
112.8
120.8
125.7
133.9
143.9

89.7
89.8
96.7
100.6
107.2
115.5

68.1
69.1
72.5
76.0
81.1
86.5

41.5
44.0
46.8
49.9
54.1
58.1

Other
labor
income l

5.2
5.3
5.0
5.1
6.1
6.5
7.9
7.5
8.2
8.2

1940..
1941..
1942..
1943..
1944..
1945..
1946..
1947..
1948..
1949..

Proprietors'
income

0.6

Business
and Farm
professional
9.0

6.2

7.6
5.8
3.6
3.3
4.7
5.5
6.7
7.2
6.9
7.4

4.3
3.4
2.1
2.6
3.0
5.3
4.3
6.0
4.4
4.4

.7
.7
.9
1.1
1.5
1.8
1.9
2.3
2.7
3.0

8.6
11.1
14.0
17.0
18.2
19.2
21.6
20.3
22.7
22.6

4.5
6.4
9.8
11.7
11.6
12.2
14.9
15.2
17.5
12.7

22.4
28.9
33.1
34.1
34.6
36.2
38.3
40.4
43.5
45.6

3.8
4.8
5.3
6.0
6.3
7.3
8.4
9.5
9.9
11.3

24.0
26.1
27.1
27.5
27.6
30.3
31.3
32.8
33.2
35.1

13.5
15.8
15.0
13.0
12.4
11.4
11.4
11.3
13.4
11.4

48.7
52.2
56.0
59.6
64.3
68.9

12.0
12.7
13.9
14.8
16.5
18.2

34.2
35.6
37.1
37.8
39.1
40.3

12.0
12.8
13.0
13.0
12.0
14.3

Seasonally adjusted annual rates
1963: I . .
II.
III
IV.

456.1
460.1
467.1
475.6

304.5
308.4
312.9
318.8

123.0
124.7
126.6
128.6

98.6
99.7
101.0
103.0

74.5
75.3
76.4
77.7

48.8
49.4
50.2
51.1

58.2
59.0
59.7
61.5

14.4
14.6
14.9
15.4

37.5
37.6
37.9
38.0

13.2
12.9
13.0
13.0

1964: I - .
II.
III
IV.

483.0
490.6
499.1
507.1

324.2
330.4
336.7
342.7

130.2
132.9
135.2
137.4

104.1
106.2
108.4
110.0

79.0
80.4
81.9
83.2

52.4
53.5
54.6
55.9

62.6
63.5
65.0
66.2

15.8
16.3
16.7
17.1

38.5
39.0
39.4
39.6

11.9
12.0
12.0
12.2

1965: I - .
II.
III
IV

516.2
524.7
536.0
546.0

348.9
353.6
359.0
368.1

140.8
142.3
144.4
148.0

113.0
114.2
116.0
118.9

84.7
86.1
87.0
88.2

56.5
57.5
58.5
59.9

66.8
67.7
69.0
72.0

17.5
18.1
18.4
18.9

39.9
40.1
40.4
40.7

12.0
14.5
15.0
15.5

See footnotes at end of table.




224

TABLE C—13.—Sources of personal income•, 1929-65—Continued
[Billions of dollars]
Transfer payments
Year or
quarter

Rental
income
of per-

Personal
interest
dends income Total
JLJIVI-

Old-age
State
and sur- unemployvivors
ment ininsursurance
ance
benefits benefits

Veterans'
benefits

Less:
Personal
contributions
Other for social
insurance

Nonagricultural
personal
income 3

1929

5.4

5.8

7.2

1.5

0.6

0.9

0.1

77.6

1930
1931
1932
1933
1934
1935
1936
1937
1938
1939

4.8
3.8
2.7
2.0
1.7
1.7
1.8
2.1
2.6
2.7

5.5
4.1
2.5
2.0
2.6
2.8
4.5
4.7
3.2
3.8

6.8
6.7
6.3
5.7
5.8
5.7
5.5
5.6
5.5
5.5

1.5
2.7
2.2
2.1
2.2
2.4
3.5
2.4
2.8
3.0

0.4
.4

.6
1.6
.8
.5
.4
.5
1.9
.6
.5
.5

.9
l.l
L.4
1.6
1.8
L.9
L.6
L8
1.9
2.0

.1
.2
.2
.2
.2
.2
.2
.6
.6
.6

70.8
60.8
46.7
43.2
49.8
53.9
63.0
66.7
62.6
66.9

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

2.9
3.5
4.5
5.1
5.4
5.6
6.6
7.1
8.0
8.4

4.3
4.4
4.6
4.6
5.6
6.3
7.0
7.2

4.0
4.4

5.4
5.5
5.3
5.3
5.6
6.3
6.8
7.5
7.9
8.5

3.1
3.1
3.1
3.0
3.6
6.2

.5
.3
.3
.1
.1
.4
1.1
.8
.8
1.7

.5
.5
.5
.5
.9
2.8
6.7
6.7
5.8
5.1

2.0
2.2
2.2
2.2
2.4
2.7
3.1
3.7
4.1
4.9

.7
.8
1.2
1.8
2.2
2.3
2.0
2.1
2.2
2.2

72.3
87.8
111.0
137.3
151.2
156.4
161.0
173.0
189.4
191.3

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

9.4
10.3
11.5
12.7
13.6
13.9
14.3
14.8
15.4
15.6

4.9
3.9
3.9
3.7
3.9
4.3
4.3
4.4
4.6
4.6

7.9
5.9
6.0
6.3
6.5
6.8
7.2
7.9
8.7
9.4

2.9
3.4
3.8
4.0
4.6
5.2
5.8
6.7
6.9
7.9

210.9
236.4
254.1
271.9
274.7
296.4
318.5
336.6
344.3
368.5

1960
1961
1962
1963
1964
1965 «

15.8
16.0
16.7
17.6
18.2
18.6

4.6
4.8
4.8
5.0
5.3
5.6

10.0
10.9
11.2
12.1
12.7
13.4

9.3
9.6

10.3
11.8
12.4
13.2

385.2
400.0
425.5
447.4
478.7
512.1

11.3
11.7
11.2
12.4

(4)

(*)
(*)
(4)
(*)
0.1
.1
.2
.2
.3
.4
.5
.6
.7

10.5
11.3
11.7
11.6
12.6

10.6
11.8
13.1
14.2
15.7
17.6
18.9
20.7

15.1
12.5
13.0
14.0
16.0
17.3
18.5
21.4
25.7
26.6

10.2

1.4
.8
1.0
1.0
2.0
1.4
1.4
1.8
3.9
2.5

13.4
13.8
15.2
15.8
17.2
18.9

23.4
25.0
27.7
31.1
34.3
37.1

28.5
32.4
33.3
35.2
36.6
39.2

11.1
12.6
14.3
15.2
16.0
18.0

2.8
4.0
2.9
2.8
2.6
2.2

8.8
8.6
8.6
8.9
9.3

9.2
9.9

1.0
1.9
2.2
3.0
3.6
4.9
5.7
7.3
8.5

Seasonally adjusted annual rates
1963: I - - - .
II.. .
III

17.1
17.4
17.7
18.0

15.6
15.7
15.8
16.1

29.7
30.4
31.7
32.7

35.6
34.7
35.0
35.6

15.0
15.1
15.4
15.5

3.0
2.8
2.7
2.7

4,9
5.0
5.0
5.1

12.7
11.8
11.8
12.2

11.6
11.7
11.9
12.0

438.6
442.9
449.7
458.3

1964: I
II.
III

17.9
18.1
18.3
18.5

16.7
17.1
17.4
17.7

33.2
33.8
34.8
35.3

36.9
36.2
36.4
36.7

15.8
15.9
16.1
16.3

2.7
2.6
2.5
2.4

5.2
5.3
5.3
5.3

13.1
12.5
12.5
12.7

12.2
12.3
12.5
12.7

466.8
474.1
482.8
490.7

1965: I

18.5
18.6
18.6
18.7

18.0
18.6
19.2
19.9

36.0
36. 7
37.5
38.2

38.4
37.5
41.2
39.7

16.6
16.6
20.4
18.6

2.4
2.2
2.2
2.0

5.5
5.6
5.6
5.7

13.9
13.1
13.1
13.4

12.9
13.0
13.3
13.6

500.0
505.7
516.6
526.1

III
IV s.

1 The total of wage and salary disbursements and other labor income differs from compensation of employees in Table C-10 in that it excludes employer contributions for social insurance and excludes the excess
of 2wage accruals over wage disbursements.
Excludes income resulting from net reductions of inventories and gives credit in computing income to
net additions to inventories during the period.
3 Nonagricultural income is personal income exclusive of net income of unincorporated farm enterprises,
farm wages, agricultural net interest, and net dividends paid by agricultural corporations.
4
Less than $50 million.
5
Preliminary estimates.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




225

TABLE G-14.—Disposition of personal income, 1929-65
Percent of disposable
personal income

Less: Personal outlays

Year or
quarter

Less:
Per- Equals:
sonal DisposPertax
able
sonal
and
perTotal
ncome nontax sonal
pay- income outlays
ments

Personal
con- Interest
sump- paid by
contion
sumers
expenditures

Per- Equals:
Personal
transfer sonal
saving
payments
to foreigners

Personal
outlays

Consumption
Total
expend
itures

Billions of dollars

Percent

1929 _

85.9

2.6

83.3

79.1

77.2

1.5

0.3

4.2

95.0

92. 7

1930...
1931 ___
1932
1933._ .
1934.__
1935..1936.--.
1937._ .
1938._.
1939._ .

77.0
65.9
50.2
47.0
54.0
60.4
68.6
74.1
68.3
72.8

2.5
1.9
1.5
1.5
1.6
1.9
2.3
2.9
2.9
2. 4

74.5
64.0
48.7
45.5
52.4
58.5
66.3
71.2
65.5
70.3

71.1
61.4
49.3
46.5
52.0
56.4
62.7
67.4
64.8
67.7

69.9
60.5
48.6
45.8
51.3
55.7
61.9
66.5
63.9
66.8

.9
.7
.5
.5
.5
.5
.6
.7
.7
.7

.3
.3
.2
.2
.2
.2
.2
.2
.2
.2

3.4
2.6

95.4
95.9
101.3
102.0
99.3
96.3
94.6
94.7
98.9
96.3

93. 8
94. 4
99. 8
100. 6
98. 0
95. 2
93. 3
93. 4
97. 6
95. 0

1940..
1941..
1942..
19431944..
1945..
1946..
1947..
19481949..

78.3
96.0
122.9
151.3
165.3
171.1
178.7
191.3
210.2
207.2

2.6
3.3
6.0
17.8
18.9
20.9
18.7
21.4
21.1
18.6

75.7
92.7
116.9
133.5
146.3
150.2
160.0
169.8
189.1
188.6

71.8
81.7
89.3
100.1
109.1
120.7
144.8
162.5
175.8
179.2

70.8
80.6
88.5
99.3
108.3
119.7
143.4
160.7
173.6
176.8

.8
.9
.7
.5
.5
.5
.8
1.1
1.5
1.9

.2
.2
.1
.2
.4
.5
.6
.7
.7
.5

3.8
11.0
27.6
33.4
37.3
29.6
15.2
7.3
13.4

94.9
88.2
76.4
75.0
74.5
80.3
90.5
95.7
92.9
95.0

93. 6
86.9
75. 7
74. 4
74. 0
79. 7
89.6
94. 6
91. 8
93. 8

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

227.6
255.6
272.5
288.2
290.1
310.9
333.0
351.1
361.2
383.5

20.7
29.0
34.1
35.6
32.7
35.5
39.8
42.6
42.3
46.2

206.9
226.6
238.3
252.6
257.4
275.3
293.2
308.5
318.8
337.3

193.9
209.3
220.1
234.2
241.0
259.5
272.6
287.8
296.5
318.2

191.0
206.3
216.7
230.0
236.5
254.4
266.7
281.4
290.1
311.2

2.4
2.7
3.0
3.8
4.0
4.7
5.4
5.8
5.9
6.5

.4
.4
.4
.5
.5
.4
.5
.5
.5
.6

13.1
17.3
18.2
18.3
16.4
15.8
20.6
20.8
22.3
19.1

93.7
92.4
92.4
92.7
93.6
94.3
93.0
93.3
93.0
94.3

92.3
91. 0
90.9
91. 1
91. 9
92. 4
91. 0
91. 2
91. 0
92 3

1960
1961
1962
1963
1964
1965 1

401.0
416.8
442.6
464.8
495.0
530.7

50.9
52.4
57.4
60.9
59.2
65.4

350.0
364.4
385.3
403.8
435.8
465.3

333.0
343.2
363.7
383.4
409.5
440.2

325.2
335.2
355.1
373.8
398.9
428.5

7.3
7.6
8.1
9.0
10.0
11.1

.5
.5
.5
.6
.6
.6

17.0
21.2
21.6
20.4
26.3
25.1

95.1
94.2
94.4
94.9
94.0
94.6

92.9
92.0
92.2
92 6
91 5
92 1

.4
2.1
3.6
3.8
.7
2.6

Seasonally adjusted annual rates
1963: I--II-.
IIIIV _

456.1
460.1
467.1
475.6

60.4
60.6
61.0
61.6

395.7
399.4
406.1
414.0

377.1
380.5
386.3
389.5

368.0
371.1
376.6
379.5

8.6
8.8
9.2
9.4

0.6
.6
.6
.6

18.5
18.9
19.8
24.4

95.3
95.3
95.1
94.1

93
92
92
91

1964: I...
II-.
IIIIV.

483.0
490.6
499.1
507.1

60.4
56.9
58.8
60.7

422.6
433.6
440.3
446.4

399.3
406.3
415.3
416.9

389.1
396.0
404.6
405.9

9.6
9.8
10.2
10.4

.6
.5
.5
.6

23.3
27.3
25.0
29.5

94.5
93.7
94.3
93.4

92 1
91 3
91 9
90.9

1965: I...
II_.
IIIIV i

516.2
524.7
536.0
546.0

64.8
66.2
64.8
65.7

451.4
458.5
471.2
480.3

428.1
436.1
444.4
452.3

416.9
424.5
432.5
440.1

10.6
11.0
11.3
11.6

.6
.6
.6
.6

23.3
22.4
26.8
28.0

94.8
95.1
94.3
94.2

92.4
92 6
91 8
91 6

1
i Preliminary estimates.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




226

0
9
7
7

Personal
saving

TABLE C-15.— Total and per capita disposable personal income and personal consumption
expenditures, in current and 1958 prices, 1929-65
Disposable personal income

Year or quarter

Total (billions
of dollars)

Per capita
(dollars)

Current
prices

1958
prices

1929..

83.3

150.6

1930..
1931..
1932..
19331934..
1935..
1936..
19371938..
1939..

74.5
64.0
48.7
45.5
52.4
58.5
66.3
71.2
65.5
70.3

139.0
133.7
115.1
112.2
120.4
131.8
148.4
153.1
143.6
155.9

605
516
390
362
414
459
518
552
504
537

1,128
1,077
921
893
952
1,035
1,158
1,187
1,105
1,190

1940..
1941..
1942..
1943..
1944..
1945..
1946..
1947..
1948..
1949..

75.7
92.7
116.9
133.5
146.3
150.2
160.0
169.8
189.1
188.6

166.3
190.3
213.4
222.8
231.6
229.7
227.0
218.0
229.8
230.8

573
695
867
976
,057
,074
,132
,178
,290
,264

1950..
1951..
1952_.
1953 _.
1954..
1955 _.
1956..
1957..
1958-.
1959..

206.9
226.6
238.3
252.6
257.4
275.3
293.2
308.5
318.8
337.3

249.6
255.7
263.3
275.4
278.3
296.7
309.3
315.8
318.8
333.0

I960. .
1961-.
1962. .
1963._
1964 __
1965 2.

350.0
364.4
385.3
403.8
435.8
465.3

340.2
350.7
367.6
380.6
406.5
428.1

Personal consumption expenditures
Total (billions
of dollars)

Per capita
(dollars)

Population
(thousands) 1

prices

Current
prices

1958
prices

Current
prices

1958
prices

1,236

77.2

139.6

634

1,145

121,875

60.5
48.6
45.8
51.3
55.7
61.9
66.5
63.9

130.4
126.1
114.8
112.8
118.1
125.5
138.4
143.1
140.2
148.2

567
487
389
364
406
437
483
516
492
510

1,059
1,016
919
897
934
985
1,080
1,110
1,079
1,131

123,188
124,149
124,949
125, 690
126,485
127,362
128,181
128,961
129,969
131,028

1,259
1,427
1,582
1,629
1,673
1,642
1,605
1,513
1, 567
1,547

70.8
80.6
88.5
99.3
108.3
119.7
143.4
160.7
173.6
176.8

155.7
165.4
161.4
165.8
171.4
183.0
203.5
206.3
210.8
216.5

536
604
656
726
782
855
1,014
1.115
,184
,185

1,178
1,240
1,197
1,213
1,238
1,308
1,439
1,431
1,438
1,451

132,122
133,402
134, 860
136, 739
138,397
139,928
141,389
144,126
146, 631
149,188

,364
,469
1,518
1,583
1,585
1,666
1,743
1,801
1,831
1,905

1,646
1,657
1,678
1,726
1,714
1,795
1,839
1,844
1,831
1,881

191.0
206.3
216.7
230.0
236.5
254.4
266.7
281.4
290.1
311.2

230.5
232.8
239.4
250.8
255.7
274.2
281.4
288.2
290.1
307.3

,259
,337
,381
,441
,456
,539
,585
,643
1,666
1,758

1,520
1,509
1,525
1,572
1,575
1,659
1,673
1,683
1,666
1,735

151,684
154,287
156,954
159.565
162,391
165,275
168,221
171,274
174,141
177,073

1,937
1,983
2,064
2,132
2,268
2,391

1,883
1,909
1,969
2,009
2,116
2,200

325.2
335.2
355.1
373.8
398.9
428.5

316.2
322.6
338.6
352.4
372.1
394.1

1,800
1,824
1,902
1,973
2,076
2,202

1,750
1,756
1,814
1,861
1,937
2,025

180,684
183,756
186,656
189,417
192,119
194,583

Current
prices

Seasonally adjusted annual rates
1963: I —
II-III.
IV.

395.7
399.4
406.1
414.0

374.3
376.8
382.7
388.7

2,100
2,112
2,140
2,173

1,986
1,993
2,016
2,040

368.0
371.1
376.6
379.5

348.3
350.0
355.1
356.4

1,953
1,963
1,984
1,991

1,848
1,851
1,871
1,870

188,454
189, 072
189,809
190, 560

1964:

422.6
433.6
440.3
446.4

395.7
404.9
410.7
414.5

2,211
2,261
2,288
2,311

2,070
2,111
2,134
2,146

389.1
396.0
404.6
405.9

364.5
369.8
377.3
376.8

2,035
2,065
2,102
2,101

1,907
1,928
1,960
1,950

191,161
191,780
192,478
193,182

451.4
458.5
471.2
480.3

417.9
421.7
432.3
439.4

2,330
2,360
2,418
2,456

2,157
2,170
2,218
2,247

416.9
424.5
432.5
440.1

386.1
390.5
396.9
402.8

2,152
2,185
2,219
2,251

1,993
2,010
2,036
2,060

193, 762
194,298
194,910
195,536

II.-

rv.
1965: I . . .
IIIIV 2.

1
Population of the United States including armed forces abroad. Annual data are for July 1; quarterly
data are for middle of period.
2 Preliminary estimates.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Sources: Department of Commerce (Office of Business Economics and Bureau of the Census) and Council
of Economic Advisers.




227

T A B L E G—16.—Number and money income of families

and unrelated individuals, 1947—64

All families
Year

Number
(millions)

Poor families i

Median
income (1964
prices)

Number
(millions)

Incidence

Families
37.2
38.6
39.3

1955
1956
1957
1958
1959
1960
1961
1962
1963
1964

-

- .

.

31
32
33

4,293
4,439
4,557
4,928
4,819

12.1
11.5
11.0
10.3
11.2

30
28
27
25
27

5,143
5,478
5,466
5,457
5,773

10.3
9.5
9.6
9.8
9.4

24
22
22
22
21

45.5
46.3
47.0
47.4
47.8

1950
1951
1952
1953
1954

11.5
12.2
13.0

42.9
43.5
43.7
44.2
45.1

_ _

$4,214
4,119
4,049

39.9
40.6
40.8
41.2
42.0

1947
1948
1949

5,904
5,970
6,135
6,358
6,569

9.3
9.5
9.0
8.7
8.4

20
20
19
18
18

Poor individuals 2

All individuals
Number
(millions)

Median
income (1964
prices)

Number
(millions)

Incidence

Individuals
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964

8.2
8.4
9.0

. .

53
54
52

1,410
1,458
1,671
1,642
1,442

4.9
4.7
4.6
4.6
5.0

52
51
47
48
51

1,540
1,650
1,699
1,652
1,699

4.8
4.7
4.8
5.1
5.0

49
48
46
47
46

11.1
11.2
11.0
11.2
12.1

. ..

4.3
4.5
4.7

9.9
9.8
10.4
10.9
10.9

_
- .

$1,392
1,353
1,418

9.4
9.1
9.7
9.5
9.7

- _

1,836
1,842
1,820
1,842
1,983

5.0
4.9
4.7
4.8
5.1

45
44
43
43
42

1 Poverty is denned to include all families with total money income of less than $3,000 in 1964 prices;
these are also referred to as poor families. Incidence of poverty is measured by the percent that poor families
are of all families.
2
Poverty is denned to include all unrelated individuals with total money income of less than $1,500 in
1964 prices. Incidence of poverty is measured by the percent that poor unrelated individuals are of all
unrelated individuals.
NOTE.—The number of poor and incidence of poverty shown in this table differ from data shown in
Chapter 3, Tables 17,18 and 19. In Chapter 3, poverty is defined by the new Social Security Administration
poverty-income standard; it takes into account family size, composition, and place of residence (as well
as the amount of money income).
Data for Alaska and Hawaii included beginning 1959.
Source: Department of Commerce, Bureau of the Census.




228

TABLE C-17.—Financial saving by individuals, 1939-65 l
[Billions of dollars]

Securities
Currency Savand
ings
Total bank shares
U.S.
deTotal savposits
ings
bonds

Year or quarter

- .

.

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957 _
1958
1959 .
1960
1961
1962
1963 . .
1964
1965 io

.

_

4.2

3.0

0.1 - 0 . 8

_ _

1939

4.2
10.5
29.3
38.7
41.4
37.3
14.5
6.7
2.7
2.1

2.9
4.8
10.9
16.2
17.5
19.0
10.6
2.0
-1.8
—1.4

.3 - . 4
2.6
.4
.3 10.3
.6 14.1
q 15.7
.1
9.9
.2 - 1 . 4
3
2.2
.3
3.0
2.3
,6

1.3
11.1
13.1
10.9
9.6
6.8
14.2
16.4
16.9
13.2

3.5
5.9
7.0
4.7
5.4
3.3

2.3
3.3
4.0
4.7
5.2

.9
.7
3.4
3.4
.2
6.2

4.7

5.4

5.2
6.4
7.2

5.1

4.9
10.2
4.4

8.0
15.9
21.2
22.3
31.8
34.3

2.7
8.7
18.0
17.5
19.8
23.6

8.3
9.4
10.0
11.8
11.3
9.5

-.5
.9
-.9

6.6
3.4
6.8
55

3.2
2.3
5.5

3.2
3.3
1.7

6.5

7.2
7.7
8.5
85

.

.

. .

1963: I

II. ._
III
IV

1964: I
II.—
III
IV

1965: I

II

III

_

6.7

8.3
10.7
8.6

Other
government 3

0.7 - 0 . 9

Pri- Nonininsur- sured
Cor- ance penreporate serves sion
and
funds
other

Government
insurance
and
pension
reserves8

-0.6

1.7

0.1

1.3

1.8
2.1
2.5
2.8
3.2
3.5
3.4
3.6
3.7
3.7

.1
.1
.1
.2
.6
.9
.3
.3
.4
.6

1.3
1.9
2.6
3.9
50
5.1
3.5
3.5
3.6
2.3

.9
1.0 - . 2
.8
.7 - . 1
.1 - 3 . 0
.3
- . 4 -1.0
.6
—. 1
.1
14
.2
1.5
.5
3.2
2.3 - 2 . 3
4.2
2.8 —.8
4.7
2.4
.4
4.0
.3
2.6

.7
1.6
2.1
1.2
.6
2.2

3.9
4.1
4.8
5.0
5.2
5.5

1.1
4.2
4.4
3.2
2.6
3.1

6.8
6.9
6.4
7.3
8.8
12.1
10.5
7.9
9.3
13.2

3.7
1.0
4.4
3.7
1.0
6.1
2.4
.2
6.1

-.1
.4

3.4
1.1
3.0
4.4
5.4

10.9
11.9
13.4
15.9
15.6
15.6

4.2
1.5
5.0
6.3
6.5
8.8

.3
1.0
1.1

.3 - . 1
-.5 -.4
1.2
.1
2.0
.2
.6 - 1 . 1
3.7
.3
3.2
-. 1
-1.9
4.4
- . 5 -1.0
- 1 . 8 10.8

1.9

5.5

2.8
2.6
.6

5.1
5.3
5.5

.6
.5
-2.2
-2.8
-.6

6.2

-.9
-.4
.9
2.0
4.1
5.7

5.5
5.8
6.4
6.6
7.6
8.1

4.1
4.4
4.4
4.7
5.4
5.9

—. 7
.2
2.0
6

-.6

1.4
1.5
1.7

12
LI
1

3.7

-.9
-.3
1.5
1

2.3
3.6
5.7
82

2.5
3.3
2.1
35

1.6
1.3
1.4
I

-.2

3

1.6
.9
1.5
I

1.9

2.1

.1
.1
.1

1.3
1.3
1.5
1.6

5.0
7.9
8.8

2.5
1.4
3.6

5.2
1.1
9.7

-.2
.8
.4

4.4

1.5

2.0
1.3
1.4

Mort- Con- Secugage sumer rities
debt 6 debt 7 loans8

.9 - . 8
-.4
2.8
-.5
.4
8.0
2.3
11.1
-.3
3.3
11.8
4.6
-.7
4.2 - 1 . 2
6.9
.2
1.0 - 2 . 6
2.0 - . 2
.4
.5
.9
1.6
.1
1.5
.7

.9
1.5
1.7
2.0
2.2
2.4
2.8
3.1
3.3
3.8

1.7

Less: Increase in
debt

g

W

6

3.7

3.2
.6
2.3

5.1

0.5

0.8 - 0 . 2

3.2

.2
-.3
.6
.4
.9
.6
-.8

2

.9
.1

-.4

2.8
1.5

3.5
3.8
4.0
46

- . 7 -1.3
.9
2.5
1.5
.8

1

3.0

.5

1.9
1.8
1.8
2.0

.2
.4
.. 2

.3
3.2
1.9

3.8
3.8
3.8
4.2

-.7
2.6
1.6
3.0

-.6

2.1
1.7
2.1
2.2

5
L.4
L.4

.6
3.6
1.0
-.1

3.4
3.8
4.1
4.3

-.4 -.1
.7
3.4
2.3 - 2 . 0
1.0
3.5

1.9

.6
.3
-.3

* Individuals' saving, in addition to personal holdings, covers saving of unincorporated business, trust
funds, and nonprofit institutions in the forms specified.
2 Includes shares in savings and loan associations and shares and deposits in credit unions.
3
"Other government" includes U.S. Government issues (except savings bonds), State and local government securities, and beginning 1951, nonguaranteed Federal agency issues, which are included in "corporate
and other" for years prior to 1951.
* Includes insured pension reserves.
• Includes Social Security funds, State and local retirement systems, etc.
8
Mortgage debt to institutions on one- to four-family nonfarm dwellings.
7
Consumer debt owed to corporations, largely attributable to purchases of automobiles and other durable consumer goods, although including some debt arising from purchases of consumption goods. Policy
loans on Government and private life insurance have been deducted from those items of saving.
8
Change in bank loans to brokers, dealers, and others for the purpose of purchasing or carrying securities.
• Less than $50 million.
10
Preliminary estimates.
NOTE.—In addition to the concept of saving shown above, there are other concepts of individuals' saving,
with varying degrees of coverage, currently in use. The personal saving estimates of the Department of
Commerce are derived as the difference between personal income (after taxes) and personal outlays. A
comparison of the two series is being prepared.
The flow-of-funds system of accounts of the Board of Governors of the Federal Reserve System includes
estimates of gross saving and net financial investment of households.
Data for Alaska and Hawaii included for all periods.
Source: Securities and Exchange Commission.




229

TABLE C-18.—Sources and uses of gross saving, 1929-65
[Billions of dollars]
Gross private saving and government surplus or
deficit on income and product transactions
Government surplus
or deficit (-)

Private saving

Year or quarter
Total

Total

Personal
saving

Gross
business Total
saving

Federal

State
and
local

1929_.

16.3

15.3

4.2

11.2

1.0

1.2

1930..
1931..
1932..
1933..
1934..
1935..
1936..
1937..
1938..
1939..

11.8
5.1

12.1
8.0
2.5
2.3
5.6
8.6
10.3
11.5
8.7
11.0

3.4
2.6
-.6
-.9
.4
2.1
3.6
3.8
.7
2.6

5.3
3.2
3.2
5.2
6.4
6.7
7.7
8.0
8.4

-.3
-2.9
-1.8
-1.4
-2.4
-2.0
-3.1
.3
-1.8
-2.2

.3
-2.1
-1.5
-1.3
-2.9
-2.6
-3.6
-.4
-2.1
-2.2

1940..
1941..
1942..
1943..
1944..
1945..
1946..
1947..
1948..
1949..

13.6
18.6
10.7
5.5
2.5
5.2
35.1
42.0
50.0
35.9

14.3
22.4
42.0
49.7
54.3
44.7
29.7
27.6
41.4
39.1

3.8
11.0
27.6
33.4
37.3
29.6
15.2
7.3
13.4
9.4

10.5
11.4
14.5
16.3
17.1
15.1
14.5
20.3
28.1
29.7

-.7
-3.8
-31.4
-44.1
-51.8
-39. 5
5.4
14.4
8.5
-3.2

-1.3
-5.1
-33.1
-46.6
-54.5
-42.1
3.5
13.4
8.4
-2.4

1950..
1951-.
1952._
1953..
1964..
1955..
1956..
1957.1958-1959-.

50.4
56.2
49.5
47.5
48.4
64,8
72.7
71.3
59.2
73.8

42.5
50.4
53.3
54.4
55.4
62.1
67.8
70.5
71.7
75.9

13.1
17.3
18.2
18.3
16.4
15.8
20.8
20.8
22.3
19.1

29.4
7.8
33.1
5.8
35.1 - 3 . 8
36.1 - 6 . 9
39.0 - 7 . 0
46.3
2.7
47.3
4.9
49.8
.7
49.4 -12.5
56.8 - 2 . 1

9.1
6.2
-3.8
-7.0
-5.9
4.0
5.7
2.1
-io!2
-1.2

-1.2
-.4

I960..
1961..
1962-.
1963-.
1964._
1965 3.

77.6
75.5
85.0
90.7
99.3

73.9
79.8
87.9
89.5
101.7
* 107.9

17.0
21.2
21.6
20.4
26.3
25.1

3.7
56.8
58.7 - 4 . 3
66.3 - 2 . 9
1.2
69.1
75.4 - 2 . 4
4 82.8 42.3

3.5
-3.8
-3.8
.3
-3.8

.2
-.5

3.2
6.6
7.2
11.9
7.0

Gross investment

Gross
private Net
domes- foreign
Total tic in- investvest- ment i
ment

Statistical
discrepancy

0.7

17.0

16.2

0.8

-.3
-.1
.5
.6
.5
.7
.4

11.0
5.8
1.1
1.6
3.8
6.4
8.4
11.8
7.6
10.2

10.3
5.6
1.0
1.4
3.3
6.4
8.5
11.8
6.5
9.3

.7
.2
.2
.2
.4
-.1
-.1
.1
1.1

1.3
1.8
2.5
2.7
2.6
1.9
1.0
.1
-.7

14.6
19.0
9.6
3.5
5.0
9.2
35.2
42.9
47.9
36.2

13.1
17.9
9.8
5.7
7.1
10.6
30.6
34.0
46.0
35.7

1.5
1.1
-.2
-2.2
-2.1
-1.4
4.6
8.9
1.9
.5

1.0
.4
-1.1
-2.0
2.5
4.0
.1
.9
-2.0
.3

51.9
59.5
51.7
50.5
51.3
66.9
71.6
71.3
60.8
73.0

54.1
59.3
51.9
52.6
51.7
67.4
70.0
67.8
60.9
75.3

-2.2
.2
-.3
-2.1
-.4
-.5
1.6
3.4
-.1
-2.3

1.5
3.3
2.2
3.0
2.9
2.1
-1.1
(2)
1.6

76.6
74.8
85.5
90.0
98.7
109.3

74.8
71.7
83.0
86.9
92.9
104.9

1.7
3.1
2.5
3.2
5.8
4.4

-1.0
-.7
.5
-.7
-.5
4-.8

-0.2

-1.3
-L4
-2.3

1.4
4 1.7

.7

.5
-.2
1.2
(2)
.6
1.3

Seasonally adjusted annual rates
1963: I—II...
III.
IV..

84.3
89.9
91.7
97.2

85.8
87.3
90.0
94.8

18.5
18.9
19.8
24.4

67.3
68.4
70.3
70.4

-1.6

-2.5

2.6
1.7
2.4

1.8
.6
1.2

0.9
.9
1.0
1.3

84.5
88.3
90.8
96.9

82.6
84.8
87.9
92.4

1.8
3.5
2.9
4.5

0.2
-1.6
-1.0

1964: I—.
II._.
III.
IV..

95.9
96.0
99.4
106.1

97.5
102.4
101.5
105.3

23.3
27.3
25.0
29.5

74.2
75.2
76.5
75.8

-1.6
-6.4
-2.1

-2.6
-7.6
-3.6
-1.1

1.0
1.2
1.5
1.9

95.9
95.7
98.7
103.9

89.7
90.9
92.6
97.7

6.1
4.8
6.1
6.2

()
-.3
-.7
-2.2

1965: I....
II...
III..
IV 3

110.0
109.3
109.3

105.3
104.4
110.0

23.3
22.4
26.8
28.0

82.0
82.0
83.2

4.7
4.9
-.7
(5)

3.6
3.8

1.1
1.1
2.2
(5)

106.8
107.8
110.9
112.1

103.4
102.8
106.2
107.5

3.4
5.0
4.7
4.6

-3.1
-1.4
1.4

(5)

(5)

(5)

.8

-2.9
0)

1
2
3

Net exports of goods and services less net transfers to foreigners.
Less than $50 million.
Preliminary estimates.
4 Data for corporate profits are approximations for the year as a whole; data for fourth quarter are not
available. All other data incorporating or derived from these figures are correspondingly approximate.
s Not available.
NOTE.—Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




23O

POPULATION, EMPLOYMENT, WAGES, AND PRODUCTIVITY
TABLE C-19.—Population by age groups: Estimates, 1929-65, and projections, 1970-85
[Thousands of persons]
A g e (years)
July 1

Total

Under 5
Estimates:
1929

5 to 13

14 to 19

20 to 24

25 to 44

45 to 64

65 and
over

121,767

11,734

22,131

13,796

10,694

35,862

21,076

6,474

1930
1931
1932
1933
1934

123,077
124, 040
124,840
125, 579
126,374

11,372
11,179
10,903
10, 612
10,331

22. 266
22; 263
22, 238
22,129
21,964

10,915
11.003
11, 077
11,152
11,238

36,309
36, 654
36,988
37,319
37,662

21, 573
22,031
22, 473
22, 933
23,435

6,705

1935
1936
1937
1938
1939

127, 250
128, 053
128,825
129, 825
130,880

10,170
10,044
10,009
10,176
10,418

21, 730
21, 434
21,082
20, 668
20, 253

13,937
13, 980
14, 015
14, 070
14,163
14, 296
14,442
14, 558
14,680
14, 748

11,317
11,375
11,411
11, 453
11, 519

37, 987
38,288
38,954
39, 354

23, 947
24, 444
24, 917
25, 387
25,823

7,804
8,027
8,258
8,508
8,764

1940
1941
1942
1943
1944

132,122
133,402
134, 860
136, 739
138, 397

10, 579
10,850
11,301
12,016
12, 524

19, 936
19,674
19,427
19,319
19, 246

14, 770
14,682
14, 534
14,381
14, 264

11,690
11,807
11, 955
12,064
12, 062

39,868
40,383
40,861
41,420
42, 016

26, 249
26, 718
27,196
27, 671
28,138

9,031
9,288
9,584
9,867
10,147

1945
1946
1947
1948
1949

139, 928
141,389
144,126
146, 631
149,188

12, 979
13, 244
14,406
14, 919
15, 607

19,326
19, 625
20,118
20,990
21,634

13, 942
13, 597
13,447

12, 036
12.004
11,814
11, 794
11, 700

42, 521
43, 027
43, 657
44,288
44,916

28,630
29, 064
29, 498
29,931
30, 405

10,494
10,828
11,185
11, 538
11, 921

1950
1951
1952
1953
1954

152, 271
154, 878
157, 553
160,184
163, 026

16,410
17, 333
17,312
17. 638
18, 057

22, 424
22, 998
24, 501
25, 701
26, 887

11, 680
11, 552
11, 350
11,062
10,832

12,397
12, 803
13, 203
13, 617
14, 076

165, 931
168, 903
171,984
174,882
177, 830

18, 566
19, 003
19,494
19,887
20,175

27, 925
28, 929
29, 672
30, 651
31, 767

10, 714
10, 616
10,603
10, 756
10,969

45, 673
46,103
46,494
46, 786
47, 002
47,195
47,380
47,441
47, 336
4T, 192

30, 849
31, 362
31,884
32, 393
32, 941

1955
1956
1957
1958
1959

12,839
12, 727
12.807
12, 986
13, 230
13, 501
13, 981
14,795
15, 337
15,816

33, 507
34, 058
34,591
35,109
35,663

14, 527
14, 937
15,387
15,805
16, 248

1960
1961
1962
1963
1964

180, 684
183, 756
186, 656
189, 417
192,119

20, 364
20. 657
20, 746
20, 750
20, 691

32,985
33, 296
33.943
34,606
35, 298

16, 217
17, 566
18, 483
19, 075
19, 813

11,116
11,408
11, 889
12, 620
13,152

47,134
47, 061
46,969
46, 933
46,874

36,208
36, 756
37, 316
37, 868
38,434

16, 659
17, 013
17, 311
17, 565
17,856

1965

13,171

13, 006

7,147
7,363
7,582

194, 583

20, 434

35,888

20,639

13, 667

46, 789

39, 011

18,156

Projections:»
1970: Series A .
Series D_.

211, 430
205,886

23, 991
19, 444

37,748 } 22,940
36, 751

17,104

48, 216

41,860

19, 571

1975: Series A..
Series D_.

230, 415
218,855

27,312
21, 276

41, 057 } 24,801
35,533

19, 057

53, 597

43, 419

21,172

1980: Series A .
Series D .

252, 056
233,140

30, 557
23,164

46, 826
36, 984

25,930 } 20,624
24, 247

61, 784

43, 250

23, 086

1985: Series A .
Series D .

275, 622
247,953

33,048
24,235

52, 719
40,447

29,301
23,704

21, 472 } 71,094
20,485

42,984

25,007

1
Two of four series projected by the cohort method and based on different assumptions with regard to
completed fertility, which moves gradually toward a level of 3,350 children per 1,000 women for Series A
and 2,450 children per 1,000 women for Series D. For further explanation of method of projection and for
additional data, see Population Estimates, Current Population Reports, Series P-25, No. 286, July 196£.

NOTE.—Data for armed forces overseas included beginning 1940 and Alaska and Hawaii beginning 1950.
Source: Department of Commerce, Bureau of the Census.




231

TABLE C-20.—Noninstitutional population and the labor force, 1929-65
Civilian labor force
Total
Total
labor
2
labor
force as
Employment
force Armed
percent
(includ- forces1
of nonUnem- instituing
ployTotal
armed1
Agri- Non- ment 2 tional
agriforces)
Total culcultural tural
Lation

Noninstitutional

Year or month

population i

Thousands of persons 14 years of age and over

Unemployment
as percent of
civilian
labor
force

Percent

Old definitions 2
1929..

49,440

260 49,180 47, 630 10,450 37,180

1,550

3.2

1930
1931
1932
1933
1934.

50,080
50,680
51,250
51,840
52,490

260
260
250
250
260

49,820
50,420
51,000
51,590
52,230

45,480
42,400
38,940
38, 760
40,890

10,340
10,290
10,170
10,090
9,900

35,140
32,110
28, 770
28,670
30,990

4,340
8,020
12,060
12,830
11, 340

8.7
15.9
23.6
24.9
21.7

53,140
53,740
54,320
54,950
55,600

270
300
320
340
370

52,870
53,440
54,000
54,610
55,230

42,260
44,410
46,300
44, 220
45, 750

10,110
10,000
9,820
9,690
9,610

32,150
34,410
36, 480
34, 530
36,140

10,610
9,030
7,700
10,390
9,480

20.1
16.9
14.3
19.0
17.2

56,180
57, 530
60,380
64,560
66,040

540
1,620
3,970
9,020
11,410

55,640
55,910
56,410
55, 540
54,630

47, 520
50,350
53,750
54,470
53,960

9,540
9,100
9,250
9,080
8,950

37,980
41,250
44,500
45,390
45,010

8,120
5,560
2,660
1,070
670

56.0
5G.7
58.8
62.3
63.1

14.6
9.9
4.7
1.9
1.2

1935_
1936
1937
1938
1939.

,
_.
_
.

1940
1941...
1942..
1943
1944

100,380
101, 520
102,610
103,660
104,630

1945
1946
1947

105, 530 65,300 11,440 53,860 52,820
106, 520 60,970 3,450 57, 520 55,250
107,608 61,758 1,590 60,168 58,027

8,580 44,240
8,320 46,930
8,266 49,761

1,040
2,270
2,142

61.9
57.2
57.4

1.9
3.9
3.6

8,256 49,557
7,960 51,156
8,017 50,406

2,356
2,325
3,682

57.4
57.9
58.0

3.9
3.8
5.9

New definitions 2
1947
1948
1949

107,608
108,632
109,773

61,758
62,898
63,721

1,590 60,168 57,812
1,456 61, 442 59,117
1,616 62,105 58,423

1950
1951.
1952
1953
1954

110,929
112,075
113,270
115, 094
116,219

64,749
65,983
66,560
67,362
67,818

1,650
3,099
3,594
3,547
3,350

63,099
62,884
62,966
63,815
64,468

59, 748.
60,784
61,035
61,945
60,890

7,497
7,048
6,792
6,555
6,495

52,251
53,736
54,243
55,390
54,395

3,351
2,099
1,932
1,870
3,578

58.4
58.9
58.8
58.5
58.4

5.3
3.3
3.1
2.9
5.6

1955
1956
1957
1958
1959

117,388 68,896
118, 734 70,387
120,445 70, 744
121,950 71,284
123,366 71,946

3,048
2,857
2,798
2,637
2,552

65,848
67, 530
67,946
68,647
69,394

62,944
64,708
65, Oil
63,966
65,581

6,718
6,572
6,222
5,844
5,836

56,225
58,135
58,789
58,122
59,745

2,904
2,822
2,936
4,681
3,813

58.7
59.3
58.7
58.5
58.3

4.4
4.2
4.3
6.8
5.5

I960.—

124,878

72,820

2,514 70,306 66,392

5,696 60,697

Including Alaska and
Hawaii
1960.
1961
1962 *
1962
1963
1964
1965

3,913

58.3

5.6

125,368
127,852
130,117
130,081
132,124
134,143
136,241

73,126
74,175
74,839
74,681
75, 712
76,971
78,357

2,514
2,572
2,828
2,827
2,737
2,738
2S722

70,612
71,603
72, Oil
71,854
72,975
74,233
75,635

66,681
66,796
67,999
67,846
68,809
70,357
72,179

5,723
5,463
5,255
5,190
4,946
4,761
4,585

60,958
61,333
62, 744
62, 657
63,863
65, 596
67,594

3,931
4,806
4,012
4,007
4,166
3,876
3,456

58.3
58.0
57.5
57.4
57.3
57.4
57.5

5.6
6.7
5.6
5.6
5.7
5.2
4.6

1964: Jan
Feb
Mar...
Apr
May
June

133,200
133,358
133, 519
133,678
133,866
134,041

74, 514
75,259
75,553
76,544
77,490
79,389

2,721
2,732
2,743
2,745
2,748
2,744

71, 793
72, 527
72,810
73,799
74,742
76,645

67,228
68,002
68,517
69,877

3,993
3,931
4,017
4,429
5,007
5,853

63,234 4,565
64, 071 4,524
64,500 4,293
65,448 3,921
66,094 3,640
66,100 4,692

55.9
56.4
56.6
57.3
57.9
59.2

6.4
6.2
5.9
5.3
4.9
6.1

134,216
134, 400
134, 586
134,772
134,952
135,135

78,958
78,509
76,865
77,112
76,897
76, 567

2,740
2,751
2,743
2,737
2,731
2,726

76,218
75,758
74,122
74,375
74,166
73,841

72,405
72,104
70,805
71.123

66,586
66,704
65,575
65,997
66,248
66, 590

58.8
58.4
57.1
57.2
57.0
56.7

5.0
4.8
4.5
4.4
4.5
4.7

.
.

July
Aug
Sept
Oct
Nov
Dec

See footnotes at end of table.




232

71,101
71,953

5,819
5,400
5,230
5,126
70, 793 4,545
70,375 3,785

3,813
3,654
3,317
3,252
3,373
3,466

TABLE C-20.—Noninstitutional population and the labor force,

1929-65—Continued

Civilian labor force

Year or month

Total
Nonin- labor
force
stitutional (includ- Armed
forces1
ing
popuTotal
lation i armed
forces)'

Total
labor
force as
percent
of nonUnem- instituNon- ploytional
agri- ment 2 popucullation
tural

Employment 2

Total

Agricultural

Thousands of persons 14 years of age and over

Unemployment
as percent of
civilian
labor
force

Percent

1965: J a n . .
Feb.
Mar.
Apr..
May.
June.

135,302
135,469
135, 651
135, 812
135, 982
136,160

75. 699
76, 418
76, 612
77, 307
78, 425
80,683

2,707
2,704
2,703
2,686
2,684
2,680

72, 992
73, 714
73,909
74, 621
75, 741
78,003

68,996
69,496
70,169
71, 070
72,407
73, 716

3,739
3,803
3.989
4,473
5,128
5,622

65, 257
65, 694
66,180
66, 597
67, 278
68,094

3,996
4,218
3,740
3,552
3,335
4,287

55.9
56.4
56.5
56.9
57.7
59.3

5.5
5.7
5.1
4.8
4.4
5.5

July.
AugSept.
Oct..
Nov.
Dec.

136, 252
136, 473
136, 670
136, 862
137,043
137,226

81,150
80,163
78,044
78, 713
78, 598
78, 477

2,693
2,693
2,723
2, 760
2,795
2,841

78,457
77, 470
75,321
75,953
75,803
75,636

74,854
74,212
72,446
73,196
72,837
72, 749

5,626
5,136
4,778
4,954
4,128
3,645

69, 228
69, 077
67,668
68,242
68,709
69,103

3,602
3,258
2,875
2,757
2,966
2,888

59.6
58.7
57.1
57.5
57.4
57.2

4.6
4.2
3.8
3.6
3.9
3.8

Seasonally adjusted«
1964: J a n . .
Feb..
Mar..
Apr..
May..
June..

76,355
76, 585
76,617
77, 236
77,146
77,001

73,634
73,853
73,874
74,491
74,398
74,257

69,538

July..
Aug..
Sept..
Oct._.
Nov_.
Dec.

76,859
77,033
77,095
77,053
77,205
77, 473

74,119
74,282
74,352
74,316
74,474
74, 747

1965: Jan
Feb
Mar
Apr
May
June

77,590
77, 767
77, 723
77,988
77, 990
78,331

July
Aug
Sept
Oct
Nov
Dec

78, 747
78,465
78, 334
78,606
78, 907
79,408

4,920
4,802
4,656
4,735
4,792

64,618 4,096
65,084 3,967
65,208 4,010
65, 765 3,991
65, 774 3,832
65,474 3,974

4,!
4,800
4,831
4,720
4,699
4,611

65,581
65,682
65,697
65,730
66,133
66,426

3,699
3,800
3,824
3,866
3,642
3,710

5.0
5.1
5.1
5.2]
4.9 I
5.0J

74,883
75,063
75,020
75,302
75,306
75, 651

70,420
70.482
70, 528
70,450
70,832
71,037
71,252
71,326
71.483
71, 688
71,816
72, 085

4,533
4,1""
4,588
4,769
4,869
4,651

66, 719
66, 718
66,895
66, 919
66,947
67, 434

3,631
3,737
3,537
3,614
3,490
3,566

4.8
5.0
4.7
4.8
4.6
4.7

76,054
75, 772
75, 611
75, 846
76,112
76, 567

72, 618
72,387
72, 297
72, 561
72,914
73,441

4,639
4,572
4,418
4,551
4,273
4,486

67, 979
67,815
67, 879
68,010
68,641
68,955

3,436
3,385
3,314
3,285
3,198
3,126

4.5
4.5
4.4

69,864
70,500
70,566
70,283

5.6
5.4
5.4
5.4
5.2
5.4

1
Data for 1940-52 revised to include about 150,000 members of the armed forces who were outside the
United States in 1940 and who were, therefore, not enumerated in the 1940 Census and were excluded from
the 1940-52 estimates.
2 See Note.
3
Not available.
4
Averages adjusted by Council of Economic Advisers for comparison with previous data. See Note.
5
Based on revised seasonal factors; see footnote 4, Table C-21.
NOTE.—Civilian labor force data beginning with January 1963 are based on a 357-area sample. For
January 1960-December 1962 on a 333-area sample; for May 1956-December 1959 on a 330-area sample; for
January 1954-April 1956 on a 230-area sample; for 1946-53 on a 68-area sample; for 1940-45 on a smaller sample;
and for 1929-39 on sources other than direct enumeration.
Effective January 1957, persons on layoff with definite instructions to return to work within 30 days of
layoff and persons waiting to start new wage and salary jobs within the following 30 days are classified
as unemployed. Such persons had previously been classified as employed (with a job but not at work).
The combined total of the groups changing classification has averaged about 200,000 to 300,000 a month in
recent years. The small number of persons in school during the survey week and waiting to start new
jobs are classified as not in the labor force instead of employed, as formerly. Persons waiting to open new
businesses or start new farms within 30 days continue to be classified as employed.
Beginning July 1955, monthly data are for the calendar week ending nearest the 15th of the month; previously, for week containing the 8th. Annual data are averages of monthly figures.
Beginning April 1962, estimating procedures make use of 1960 Census data; January 1953-March 1962,
1950 Census data were used, and 1940-52, 1940 Census data. For the effects of this change on the
historical comparability of the data, see Employment and Earnings, May 1962, p. xiv.

Source: Department of Labor, Bureau of Labor Statistics (except as noted).




233

TABLE C—21.—Civilian employment and unemployment, by sex and age, 7947-65
[Thousands of persons 14 years of age and over]
Employment
Males

Unemployment
Females

Females

Males

Year or month
otal

20
20 Total
20
20
L4-19 years
14-19 y e a r s
.4-19 years
14-19 years
Total rears and Total
Total
and
and Total years and
over
over
over

New definitionsl
57,812 41,552 2,776 38,776 .6,259 1,905 14,354 2,356 1,720
1947.
59,117 42,268 2,887 39,381 .6,848 1,913 14,935 2,325 1,590
1948 _
58,423 U, 473 2,672 38,803 .6,947 1,812 15,137 3,682 2,602
1949.

298 1,422
637
286 1,304
735
382 2,219 1,083

162
170
241

475
565
841

220
162
157
133
210

854
689
559
510
997

1950
1951
1952
1953
1954

59,748 42,162 2,769 39,395 17,584 1,761 15,824 3,351
,421 1,851 16,570 2,099
60,784 42,362 2,738 39,626 18,
61,035 42,237 2,659 39, 578 18,798 1,840 16,958 1,932
'
61,945 42,966 2,671 40,295 18,979 :, 813 17,164 1,870
'
39,634 18,724 I , 724 17,000 3,578
60,890 42,165

2,280
1,250
1,217
1,228
2,372

1,922 1,073
220 1,029
851
980
237
715
209 1,019
642
338 2,035 1,207

1955.
1956.
1957.
1958.
1959.

62,944 43,152 2,626 40,527 19,790 1,788 18,002
,
64,708 43,999 2,783 41,216 20,707 1,940 18,767
65,01143,990 2,750 41', 239 21,0211,970 19,050
19,043
" '")
63,966 43,042 63140,410 20,924 i; 881
""
65,58!
144,089 2,82141,268 21,492 1,968 19,523

2,904
2,822
2,936
4,681
3,813

1,889
1,757
1,893
3,155
2,473

308
315
351
473
451

1,580
1,442
1,541
2,680
2,022

1,016
1,067
1,043
1,526
1,340

823
194
832
236
820
222
284 1,242
276 1,064

1960 2.
1961..
1962 3_
1963..
1964..
1965...

66,68144,485 2,94141,54: 22,196 2,091 20,104
66,796 44,318 2,976 41,34: 22,478 2,181 20,5
20,295
67,846 44,892 3; 077 4i; 815 22', 954 2,262 20,693
".
68,809 45,330 3,079 42,252 23,479 2,223 21,257
3
3,
70,357 46,139 3,253 42,886 24,218 2,316 21,903
72,179 47,034 3,612 43,422 25,145 515 22,63:

3,931
4,806
4,007
4,166
3,876
3,456

2,541
3,060
2,488
2,537
2,271
1,8""

542
472
566
553
545

2,058
2,518
2,016
1,971
1,718
1,436

V
1,747
1,519
1,629
1,605
1,476

310
379
344
413
409
420

1,078
1,366
1,176
1,216
1,195
1,057

1,268
1,269
1,274
1,255
1,193
1,192

Seasonally adjusted 4
538 45,686 3,140 42,546 23,852 2,321 21,530 4,096
69',— " 850 3,177 42,673673 24; 036 2,360 21,676
886 45; 850 3', 177 42', 24,036 2,
3,967
873
864 45,873 3,220 42,653 23,991 330 21,661 4,010
42,653 23,991
70; 500 46; 135 3,217 42,918 24,365 2, 294 22| 071 3,991
46,135
70, 566 46,277 3,315 42,962 24,289 2,276 21,950 3,832
566 46,277 3,315 42,962 24,289
22,013
3,974
70; 283 46,004 3, 253 42, 751 24,279 329

2,425
2,312
2,357
2,322
2,208
2,353

551
528
586
600
565
565

1,874
1,784
1,771
1,722
1,643
1,788

1,671
1,655
1,653
1^624
1,621

403
386
379
414
431
429

July
Aug
Sept
Oct
Nov
Dec

21,829
70,420 46,301 3,300 43,001 24,119 2,290 21,973 3,699
__. 2 307
70; 482 46,202 3,197
3,800
,938 3,824
70, 528 46 218 3 285
3,866
70;
'
70 450 46; 168 3 , 280 42', 888 24', 282 2,307 21,975
70,832 46,373 3,273 43,100 24,459 2,422 22,, 037 3,642
71, 037 -~ — ~ *"" 43,170 24,566 2,307 22,259 3,710
46,4713,301

2,184
2,248
2,267
2,275
2,106
2,115

501
589
555
497
551
543

1,683
1,659
1,712
1,778
1,555
1,572

1,515
1,552
1,557
1,591
1,536
1,595

361
410
397
441
382
483

1,154
1,142
1,160
1,150
1,154
1,112

1965: Jan
Feb
Mar
Apr
May
June

71,252 46,585 3,274 43,311 24,667 2,280 22,387 3,631
71,326 46,714 3,334 43,380 24,612 2,300 22,312 3,737
"
71,483 46,823 3,400 43; 423 24; 660 2,324 22,3363,537
71,688 46,968 3, 529 43,439 24, 720 2,360 22,360 3,614
71,816 47,054 3,551 43,503 24,762 2,412 22,350 3,490
72,085 46,962 3,484 43,478 25,123 2,409 22. 714 3,566

2,106
2,099
2,012
2,070
2,063
2,009

528
504
497
539
570
554

1,578
1,595
1,515
1,531
1,493
1,455

1,525
1,638
1,525
1,544
1,427
1,557

466
454
442
475
401
406

1,059
1,184
1,083
1,069
1,026
1,151

July
Aug
Sept
Oct
Nov
Dec

72,618 47,228 3, 736 43,492 25,390 2, 567 22,823 3,436
72,387 47,130 3,677 43,453 25,257 2,531 22, 726 3,385
72, 297 46,917 3,632 43,285 25,380 2,609 22, 771 3,314
72, 561 47, 051 3,817 43,234 25, 510 2,720 22,7903,285
72,914 47,185 3,855 43,330 25,729 2, 792 22,937 3,198
73,441 47, 500 3,921 43,579 25,941 2, 784 23,157 3,126

2,013
1,952
1,889
1,899
1,737
1,729

540
528
594
502
557

1,423
1,412
1,361
1.305
i;235
1,172

1,423
1,433
1,425
1,386
1,461
1,397

385
380
422
397
430

1,038
1,053
1,003
989
1,031
964

1964: Jan___.
Feb_._
Mar...
Apr
May
June__.

1 See Note, Table C-20, for explanation of differences between the old and new definitions.
Beginning 1960, data for Alaska and Hawaii included.
3 Beginning April 1962, not comparable with prior data; see Note, Table C-20.
* Based on revised seasonal factors incorporating data through December 1965. See Employment and
Earnings and Monthly Report on the Labor Force, February 1966.
Note.—See Note, Table C-20, for information on area sample used and reporting periods.
2

Source: Department of Labor, Bureau of Labor Statistics.




234

TABLE C-22.—Selected unemployment rates, 1948-65
[Percent]
By sex and age

Year or month

By race

By selected groups

Labor
force
time lost
through
All
Expeunemrienced
Full- Bluework- Both Men, Womploy20
sexes, years en, 20 White Non- wage Mar- time collar
ment
ers
ried
14-19 and years
white
and
and
2
men » work- work- and part3
years over over
ers
salary
time
ers
workers
employment *

New definitions
1948
1949

3.8
5.9

12.2

5.4

5.3

4.2
6.7

3.4

5.4

1950
1951
1952
1953
1954

5.3
3.3
3.1
2.9
5.6

11.3
7.7
8.0
7.1
11.4

4.7
2.5
2.4
2.5
4.9

5.1
4.0
3.2
2.9
5.5

9.8

4.6
1.5
1.4
1.7
4.0

5.0
2.6
2.5

5.0

6.0
3.7
3.3
3.2
6.0

1955
1956
1957
1958
1959

4.4
4.2
4.3
6.8
5.5

10.2
10.4
10.8
14.4
13.2

3.8
3.4
3.6
6.2
4.7

4.4
4.2
4.1
6.1
5.2

3.7
3.9
6.1
4.9

8.7
8.4
8.0
12.6
10.7

4.8
4.4
4.5
7.2
5.6

2.8
2.6
2.8
5.1
3.6

3.8
3.7
4.0
7.2

1960 5
1961
1962 «
1963
1964

5.6
6.7
5.6
5.7
5.2

13.6
15.2
13.3
15.6
14.7

4.7
5.7
4.6
4.5
3.9

5.1
6.3
5.4
5.4
5.2

5.0
6.0
4.9
5.1
4.6

10.2
12.5
11.0
10.9
9.8

5.7
6.8
5.5
5.5
5.0

3.7
4.6
3.6
3.4
2.8

1965

4.6

13.6

3.2

4.5

4.1

8.3

4.2

5.2

4.2
8.0
7.2
3.9
3.6
3.4
7.2
5.8
5.1
6.2
10.1
7.6

5.1
5.3
8,1
6.6

5.5
4.9

7.8
9.2
7.4
7.3
6.3

6.7
8.0
6.7
•6.4
5.8

2.4

4.3

5.3

5.0

5.3
5.2
5.2
5.1
4.9
5.2

3.1
2.9
2.9
2.8
2.6
2.8

25.3
5.2
5.2
5.1
5.0
5.1

7.0
6.7
6.6
6.4
6.0
6.3

6.2
6.0
5.9
5.9
5.8
6.0

6.7

Seasonally adjusted7
1964: Jan._.
Feb..
Mar_.
Apr_.
May..
June..

5.6
5.4
5.4
5.4
5.2
5.4

14.9
14.2
14.8
15.5
15.1
15.1

4.2
4.0
4.0
3.9
3.7
4.0

5.6
5.5
5.6
5.4
5.1
5.2

4.9
4.9
4.9
4.8
4.6
4.8

10.3

July..
Aug..
Sept..
Oct...
Nov..
Dec

5.0
5.1
5.1
5.2
4.9
5.0

13.4
15.4
14.4
14.4
14.1
15.5

3.8
3.7
3.8

5.0
4.9
5.0

4.3
4.5
4.6

10.3
9.9
9.7

4.9
4.8
4.9

2.7
2.6
2.8

4.7
4.9
4.8

6.2
6.2
6.3

3.5
3.5

5.0
4.8

5.0

4.6

9.7

4.9

3.0

4.7

6.3
5.9
5.7

5.7
5.7
5.7
5.7
5.2
5.4

1965: Jan...
Feb..
Mar..
Apr_.
May..
JuneJuly..
Aug..
Sept.
Oct_Nov_.
Dec.

4.8
5.0
4.7
4.8
4.6
4.7

15.2
14.5
14.1
14.7
14.0
14.0

3.5
3.5
3.4
3.4
3.3
3.2

4.5
5.0
4.6
4.6
4.4
4.8

4.3
4.5
4.2
4.4
4.2
4.3

9.0
9.2
8.6
8.2
7.8
8.3

4.5
4.6
4.3
4.5
4.3
4.6

2.7
2.6
2.5
2.5
2.5
2.4

4.5
4.7
4.4
4.5
4.4
4.6

5.6
5.6
5.3
5.7
5.4
5.6

5.3
5.4
5.2
5.3
5.2
5.3

4.5
4.5
4.4
4.3
4.2
4.1

13.4
12.9
13.2
13.2
12.3
12.9

3.2
3.1
3.0
2.9
2.8
2.6

4.4
4.4
4.2
4.2
4.3
4.0

4.0
4.1
3.9
3.9
3.7
3.7

8.9
7.7
8.1
7.9
8.1
7.5

4.2
4.2
4.0
3.9
4.0
3.6

2.3
2.6
2.2
2.1
2.0
1.8

4.4
4.2
4.1
3.8
3.7
3.5

5.5
5.0
5.1
4.8
4.6
4.4

5.2
5.1
4.7
4.6
4.5
4.4

4.0

4.3
4.5

9.5
9.6
9.8
9.9
9.9

9.2
9.0

4.7
4.5

2.4
2.6

4.5
4.4

1 Married men living with their wives. Data for 1949 and 1951-54 are for April; 1950, for March.
Data prior to 1955 have not been adjusted to reflect the change in the definition of employment and unemployment adopted in January 1957. See Note, Table C-20.
2
Data for 1949-61 are for May. Seasonally adjusted data not yet available on revised basis.
3
Includes craftsmen, operatives, and nonfarm laborers. Data for 1948-57 are based on months, January,
April, July, and October.
4
Beginning in 1963, this series not strictly comparable with preceding data. Under the current concept, the percent of labor force time lost assumes that unemployed persons looking for full-time work lost
37.5 hours, unemployed persons looking for part-time work lost the average hours worked by voluntary
part-time employees, and those on part-time for economic reasons lost difference between 37.5 hours and
actual number of hours worked.
8 Beginning 1960, data for Alaska and Hawaii included.
• Not comparable with prior data. See Note, Table C-20.
7
See footnote 3, Table C-23.
Source: Department of Labor, Bureau of Labor Statistics.




235

TABLE C-23.—Unemployment by duration, 1947-65

Year or month

Total unemployment

Duration of unemployment
4 weeks
and under

5-14
weeks

15-26

weeks

Over
26 weeks

Thousands of persons 14 years of age and over
New definitions
1947
1948
1949

2,356
2,325
3,682

1,255
1,349
1,804

704
669
1,195

234
193
427

164
116
256

1950
1951
1952
1953
1954

3,351
2,099
1,932
1,870
3,578

1,515
1,223
1,183
1,178
1,651

1,055
574
517
482
1,115

425
166
148
132
495

357
137
84
79
317

1955
1956
1957
1958
1959

2,904
2,822
2,936
4,681
3,813

1,387
1,485
1,485
1,833
1,658

815
805
890
1,397
1,113

367
301
321
785

336
232
239
667
571

3,931
4,806
4,007
4,166
3,876
3,456

1,798
1,897
1,754
1,847
1,787
1,718

1,176
1,375
1,134
1,231
1,116

502
728
534
535
491
404

454
804
585
553
482
351

—

1960 1
1961
1962 2
1963
1964
1965

Seasonally adjusted 3
1964: J a n . .
Feb.
Mar.
Apr.
May
June

4,096
3,967
4,010
3,991
3,832
3,974

1,869
1,768
1,854
1,876
1,828
1,844

1,119
1,173
1,103
1,197
1,095
1,110

568
502
534
474
459
535

518
489
510
476
494
502

July.
Aug.
Sept.
Oct..
Nov.
Dec.

3,800
3,824
3,866
3,642
3,710

1,586
1,816
1,806
1,801
1,656
1,732

1,130
, 118
,095
1,104
, 059
,062

466
431
482
479
483
437

526
487
436
445
438
445

1965: J a n . .
Feb.
Mar.
Apr.
May.
June.

3,631
3,737
3,537
3,614
3,490
3,566

1,695
1,776
1,741
1,818
1,829
1,788

,044
,030
,003
,029
,046
,015

417
476
436
440
373
415

407
411
364
373
341
364

July.
Aug.
Sept.
Oct..
Nov.
Dec.

3,436
3,385
3,314
3,285
3,198
3,126

1,791
1, 722
1,703
1,562
1,618
1,532

858
992

354
403
399
352
334
354

332
314
329
345
310
306

1 Beginning January 1960, data for Alaska and Hawaii included.
2 Beginning April 1962, not comparable with prior data; see Note, Table C-20.
8
Based on seasonal factors incorporating data through December 1965. Series based on revised factors
incorporating data through December 1965 will appear in Employment and Earnings and Monthly Report
on the Labor Force, February 1966.

NOTE.—See Note, Table C-20, for information on area sample used and reporting periods.
Source: Department of Labor, Bureau of Labor Statistics.




236

TABLE C-24.—Unemployment insurance programs, selected data, 7940-65
All programs

Year or month

State programs

Insured Total
Cov- unem- benefits Insured
ployered
paid
ment
em(mil- unem- Initial
ployploy-1 (weekly lions ment 3 claims
aver- of dolment
lars) 2 4

Weekly average,
thousands

Thousands
19401941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962—
1963
1964
19658
1964: Jan...
Feb..
MarApr..
May_
June..
JulyAug_.
Sept..
Oct...
Nov..
Dec.
1965: Jan...
Feb_.
Mar_.

24,291
28,136
30,819
32, 419
31, 714
30,087
31,856
33,876
34,646
33,098

1,331
842
661
149
111
720
2,804
1,805
1,468
2,479
1,605
1.000
1,069
1,065
2,048
1,395
1,318
1,567
3,269
2,099

1,450

534.7
358.8
350.4
80.5
67.2
574.9
2,878. 5
1,785.0
1, 328. 7
2, 269.8
1, 467. 6
862.9
1, 043. 5
1, 050. 6
2, 291.8
1, 560. 2
1, 540. 6
1,913.0
4, 209. 2
2,803. 0
3, 022. 7
4, 358. 2
3,160. 0
3, 025.9
2, 749. 2
2,260.0

2,563
2,410
2,201
1,918
1,605
1,448

345.6
307.9
315.6
281.0
218.3
199.3

1,491
1,396
1,256
1,264
1,417
1,801
2,135
2,066
1,863
1,622
1,316
1,182

195.6
180.2
163.7
157.8
162.0
230.4
273.0
265.8
294.9
242.7
179.2
169.3
160.6
160.7
150.3
128.2
143.0
188.0

34,308
36, 334
37, 006
38, 072
36, 622
40, 018
42, 633
43, 436
44, 412
45,728
46, 334 2,067
46, 264 2,994
47, 776 1,946
48,434 71,973
1,753
49,637
47, 688
47, 764
48,168
48,862
49, 412
50,161
50, 347
50, 675
50, 767
50, 412
50, 485
9
50,897

May".]
June..
July..
Aug..
Sept..
Oct..
Nov..
Dec 8.

1,255
1,218
1,068
1,013
1,123
1,394

Insured unem- Benefits paid
ployment as percent of covered
Exemployment
Total Average
haus-5
(mil- weekly
tions
Season- lions of check
Unaddollars) (doljusted ally ad(4)
justed
lars) 6

1,282
814
649
147
105
589
1,295
1,009
1,002
1,979
1,503
969
1,024
995
1,865
1,254
1,212
1,450
2,509
1,682
1,906
2,290
1,783
'1,806
1,605
1,328
2,395
2,243
2,050
1,755
1,447
1,297
1,343
1,261
1,125
1,138
1,293
1,675
1,996
1,932
1,718
1,470
1,179
1,059
1,132
1,102
959
916
1,033
1,307

214
164
122
36
29
116
189
187
210
322
236
208
215
218
303
226
226
268
370
281
331
350
302
7 298
268
232
412
291
259
246
218
218
282
212
194
225
276
348
355
269
222
220
186
191
252
215
173
189
225
290

Percent
5.6
3.0
2.2
.5
.4
2.1
4.3
3.1
3.0
6.2
4.6
2.8
2.9
2.8
5.2
3.5
3.2
3.6
6.4
4.4
4.8
5.6
4.4
4.3
3.8
3.0
5.7
5.3
4.9
4.2
3.4
3.1
3.1
2.9
2.5
2.6
3.0
3.9
4.6
4.5
4.0
3.4
2.7
2.4
2.6
2.5
2.2
2.0
2.3
3.0

518.7
344.3
344.1
79.6
62.4
445.9
1, 094. 9
775.1
789.9
1, 736. 0
1, 373.1
840.4
998.2
962.2
026.9
1, 350. 3
1, 380. 7
1,733.9
3, 512. 7
2, 279. 0
2, 726. 7
3, 422. 7
2, 675. 4
2, 774. 7
2, 522.1
2,070.0

10.56
11.06
12.66
13.84
15.90
18.77
18.50
17.83
19.03
20.48

36.07
36.24
36.26
36.02
35.50
35.27

3.4
3.3
3.2
3.2
3.0
3.0

319.3
283.8
292.6
258.0
201.5
183.1
180.5
164.5
148.4
143 2
147.0
211.4
252.1
245.7
273.4
224.9
165.7
156.3

3.0
3.1
2.9
2.7
2.7
2.7

149.5
148.0
138.6
117.8
132.2
175.0

4.1
3.9
3.9
3.9
3.8
3.7
3.7
3.6
3.5
3.5
3.4
3.6

20.76
21.09
22.79
23.58
24.93
25.04
27.02
28.17
30.58
30.41
32.87
33.80
34.56
35.28
35.96
37.00

35.35
35.60
35.42
35.92
36.38
36.81
37.18
37.39
37. 41
37.16
36.40
36.07
36.40
36.58
37.23
37.32
38.08
38.10

1 Includes persons under the State, UCFE (Federal employee, effective January 1955), and R R B (Railroad Retirement Board) programs. Beginning October 1958, also includes the UCX program (unemployment compensation for ex-servicemen).
2 Includes State, UCFE, RR, UCX, UCV (unemployment compensation for veterans, October 1952January 1960), and SRA (Servicemen's Readjustment Act, September 1944-September 1951) programs.
Also includes Federal and State programs for temporary extension of benefits from June 1958 through
June 1962, expiration date of program.
3
Covered workers who have completed at least 1 week of unemployment.
4
Includes benefits paid under extended duration provisions of State laws, beginning June 1958. Annual
data are net amounts and monthly data are gross amounts.
5
Individuals receiving final payments in benefit year.
6
For total unemployment only.
7 Programs include Puerto Rican sugarcane workers for initial claims and insured unemployment beginning July 1963.
s Preliminary.
» December 1964 is latest month for which data are available for all programs combined. Workers
covered by State programs account for about 87 percent of the total.
NOTE.—Data for Alaska and Hawaii included for all periods and for Puerto Rico since January 1961.
Source: Department of Labor, Bureau of Employment Security.

795-983 O — 6 6 -

-16




237

TABLE C-25.—Number of wage and salary workers in nonagricultural establishments, 1929-65x
[Thousands of employees]
Manufacturing
Year or
month

Total
wage
and
salary
workers

Total

Dura- Nondurable
ble
goods goods

TransFiServCon- porta- Whole- nance, ice
tion
sale I insur- and
tract
and
and ance, misconstruc- pub- retail ! and
cellic
trade
tion
real
laneutiliestate
ous
ties

Mining

Government

Federal

State
and
local

1929 __

31,339 10,702

1,087

1,497

3,916

6,123

1,509

3,440

533

2,532

1930_ _
1931 _.
1932..
1933..
1934_.

29,424
26,649
23, 628
23, 711
25,953

9,562
8,170
6,931
7,397
8,501

1,009
873
731
744

1,372
1,214
970
809
862

3,685
3,254
2,816
2,672
2,750

5,797
5,284
4,683
4,755
5,281

1,475
1,407
1,341
1,295
1,319

3,376
3,183
2,931
2,873
3,058

526
560
559
565
652

2,622
2,704
2,666
2,601
2,647

1935..
1936..
1937..
1938..

27,053 9,069
29,082 9,827
31,026 10,794
29,209 9,440
30,618 10,278

912
1,145
1,112
1,055
1,150

2,786
2,973
3,134
2,863
2,'""

5,431
5,809
6,265
6,179
6,426

1,335
1,388
1,432
1,425
1,462

3,142
3,326
3,518
3,473
3,517

753
826
833
829
905

2,728
2,842
2,923
3,054
3,090

1940.
1941.
1942.
1943.
1944.

8)
(2
4,711

5,564

897
946
1,015
891
854

32,376
36,554
40,125
42,452
41,883

10,985 5,363
13,192 6,968
15,280 8,823
17,602 11,084
17,328 10,856

5,622
6,225
6,458
6,518
6,472

925
957
992
92;
892

1,294
1,790
2,170
1,567
1,094

3,038
3,274
3,460
3,647
3,829

6,750
7,210
7,118
6,982
7,058

1,502
1,549
1,538
1,502
1,476

3,681
3,921
4,084
4,148
4,163

996
1,340
2,213
2,905
2,928

3,206
3,320
3,270
3,174
3,116

1945._
1946..
1947..
1948..
1949..

40,394
41.674
43,881
44, 891
1,778

15, 524
14, 703
15, 545
15, 582
14,441

9,074
7,742
8,385
8,326
7,489

6,450
6,962
7,159
7,256
6,953

836
862
955

1,132
1,661
1,982
2,169
2,165

3,906
4,061
4,166
4,189
4,001

7,314
8,376
8,955
9,272
9,264

1,497
1,697
1,754
1,829
1,85^

4,241
4,719
5,050
5,206
5,264

2,808
2,254
1,892
1,863
1, '

3,137
3,341
3,582
3,787
3,948

1950..
1951..
1952..
1953..
1954..

45,222
47,849
48,825
50,232
49,022

15,241 8,094
16,393 9,089
16,632 9,349
17,549 10,110
16,31
9,129

7,147
7,304
7,284
7,438
7,185

901
929
898
866
791

2,333
2,603
2,634
2,623
2,612

4,034 9,386
4,226 9,742
4,248 10,004
4,290 10,247
4,084 10,235

1,919
1,991
2,069
2,146
2,23'

5,382
5,576
5,730
5,867
6,002

1,928
2,302
2,420
2,305
2,188

4,098
4,087
4,188
4,340
4,563

1955..
1956..
1957..
1958..
1959..

50.675
52,408
52,894
51,368
53,297

16,882
17,243
17,174
15,945
16,67,"

7,340
7,409

9; 856 7,319
8,830 7,116
9,373 7,303

792
822
828
751
732

2,802
2,999
2,923
2,778
2,960

4,141
4,244
4,241
3,976
4,011

10,535
10,858
10,886
10,750
11,127

2,335
2,429
2,477
2,519
2,594

6,274
6,536
6,749
6,811
7,115

2,187
2,209
2,217
2,191
2,233

4,727
5,069
5,399
5,648
5,850

1960
1961
1962
1963
1964
1965 3

54,203
53, 989
55,515
56, 602
58,156
60,432

16,796 9,45?
16, 326 9,07(
16,853 9,48
16, 99£ 9,616
17, 25< 9,813
17,98- 10,37S

7,336
7,256
7,373
7,38C
7,446
7,604

712
672
650
635
633
628

2,885
2,816
2,902

4,004
3,903
3,906
3,903
3.94"
4,031

11,391
11,337
11, 566
11, 778
12,132
12,585

2,669
2,731
2,800
2,877
2,96'
3,043

7,392
7,610
7,947
8,226
8,569
8,903

2,270
2,279
2,340
2,358
2,348
2,379

6,083
6,315
6,550
6,868
7,248
7,667

2,346
2,351
2,350
2,351
2,349
2,346

6,724
6,751
6,765
6,786
6,816
6,834

2,345
2,339
2,342
2,345
2,341
2,344

6,927
6,988
7,016
7,058

(2)

9,54:
9,834

3,056
3,211

Seasonally adjusted
1963: Jan
Feb___.
Mar.-.
Apr_--_
May_—
June.._

55,897
56,027
56,142
56,353
56,488
56, 562

16,900
16, 885
16,921
16,984
17,025
17,009

9,548 7,352
9,540 7,345
9,559 7,362
9,601 7,383
9,628 7,397
9,625 7,384

631
629
631
636
638
638

2,911 3,818 11, 648 2,840 8,079
2,890 3,907 11, 670 2,846 8,098
2,888 3,898 11, 698 2,855 8,136
2,960 3,900 11, 722 2,861 8,153
2,968 3,907 11, 740 2,870 8,175
2,970 3,919 11, 762 2,874 8,210

July....
Aug
Sept...
Oct_.-_
Nov
Dec

56, 670
56, 727
56,856
57,008
57,038
57,205

17,030
17,001
17,028
17,060
17,037
17, 083

9,636 7,394
9,611 7,390
9,645 7,383
9,657 7,403
9,656 7,381
9,691 7,392

639
637
636
633
634
636

2,986
2,996
2,998
2,988
2,974
2,989

See footnotes at end of table.




238

3,921
3,919
3,925
3,916
3,912
3,902

11, 767
11, 792
11, 824
11,841
11, 869
11,901

2,880
2,885
2,888
2,903
2,908
2,918

8,236
8,272
8,288
8,334
8,347
8,374

TABLE

C—25.—Number of wage and salary workers in nonagricultural establishments,
1929-651—Continued
[Thousands of employees]

Year or
month

Manufacturing
Total
wage
and
Nonsalary
Dura- durawork- Total
ble
ble
ers
goods goods

Mining

TransCon- porta- Wholetion
tract
sale
and
conand
pub- retail
struclic
tion
trade
utilities

Finance, Service
insur- and
ance, misand
celreal
estate laneous

Government

Federal

State
and
local

Seasonally adjusted
1964: Jan
Feb
Mar....
Apr
May
June..—

57,252
57,606
57,694
57,781
57,864
58,033

17,089
17,131
17,156
17,176
17,180
17,222

9,694
9,711
9,749
9,762
9,748
9,776

7,395
7,420
7,407
7,414
7,432
7,446

632
632
632
633
629
635

2,882
3,065
3,060
3,031
3,033
3,054

3,916
3,924
3,920
3,937
3,936
3,933

11,958
12,006
12,016
12,035
12,069
12,116

2,924
2,933
2,943
2,949
2,953
2,963

8,421
8,460
8,477
8,490
8,522
8,549

2,342
2,340
2,339
2,341
2,339
2,325

7,088
7,115
7,151
7,189
7,203
7,236

July....
Aug
Sept
Oct
Nov....
Dec

58,190
58,301
58,499
58,370
58,879
59,163

17,260
17,299
17,413
17,146
17,477
17, 565

9,821
9,855
9,954
9,679
9,966
10,044

7,439
7,444
7,459
7,467
7,511
7,521

637
631
631
633
636
635

3,053
3,056
3,046
3,074
3,124
3,179

3,943
3,958
3,965
3,965
3,972
3,994

12,164
12,180
12,198
12,225
12,250
12,303

2,971
2,971
2,982
2,987
2,994
2,999

8,603
8,615
8,643
8,656
8,674
8,705

2,325
2,328
2,322
2,331
2,350
2,348

7,234
7,263
7,299
7,353
7,402
7,435

1965: Jan
Feb
Mar
Apr
May..June

59,295
59, 581
59,814
59,846
60,032
60,290

17,638
17, 703
17,762
17,803
17,835
17,943

10,098
10,150
10,194
10,241
10,266
10,345

7,540
7,553
7,568
7,562
7,569
7,598

634
634
632
629
627
626

3,185
3,211
3,238
3,145
3,188
3,195

3,926
3,985
4,017
4,013
4,020
4,034

12,374
12,423
12,460
12,494
12,532
12,580

3,003
3,013
3,023
3,024
3,032
3,041

8,732
8,771
8,794
8,814
8,843
8,857

2,342
2,338
2,342
2,344
2,345
2,355

7,461
7,503
7,546
7,580
7,610
7,659

July--.
Aug
Sept
Oct
Nov»...
Dec 8....

60, 501
60,621
60,756
61,001
61,430
61,797

18,032
18,072
18,098
18,163
18,323
18,428

10,424
10,476
10,494
10,523
10,621
10,699

7,608
7,596
7,604
7,640
7,702
7,729

633
627
617
622
627
633

3,154
3,189
3,186
3,202
3,271
3,383

4,031
4,049
4,067
4,071
4,081
4,078

12,619
12,600
12,641
12,684
12,744
12,807

3,049
3,053
3,061
3,069
3,073
3,076

8,929
8,946
8,967
9,019
9,060
9,095

2,376
2,379
2,379
2,386
2,400
2,410

7,678
7,706
7,740
7,785
7,851
7,887

1
Includes all full- and part-time wage and salary workers in nonagricultural establishments who worked
during, or received pay for, any part of the pay period which includes the 12th of the month. Excludes
proprietors, self-employed persons, domestic servants, and unpaid family workers. Not comparable with
estimates of nonagricultural employment of the civilian labor force (Table C-20) which include proprietors,
self-employed persons, domestic servants, and unpaid family workers; which count persons as employed
when they are not at work because of industrial disputes, bad weather, etc.; and which are based on a
sample survey of households, whereas the estimates in this table are based on reports from employing
establishments.
2 Not available.
3 Preliminary.
NOTE.—Data are based on the 1957 Standard Industrial Classification and March 1964 benchmark data.
Data for Alaska and Hawaii included beginning 1959.

Source: Department of Labor, Bureau of Labor Statistics.




239

TABLE C-26.—Average weekly hours of work in selected industries, 1929-65
Manufacturing
Year or month
1929. .
1930—
1931. .
1932_ .
1933_ .
1934_ .
1935__
1936 __
1937-.
1938..
1939 __
1940. .
1941._
1942. .
1943..
1944._
1945..
1946..
1947 __
1948-.
1949._
1950. .
1951-.
1952 _ .
1953..
1954-.
1955._
1956._
1957. .
1958.1959_I960..
1961._
1962_.
1963..
1964_.
1965 7_

Contract

NonconTotal Durable durable strucgoods goods
tion
44.2
42.1
40.5
38.3
38.1
34.6
36.6
39.2
38.6
35.6
37.7
38.1
40.6
43.1
45.0
45.2
43.5
40.3
40.4
40.0
39.1
40.5
40.6
40.7
40.5
39.6
40.7
40.4
39.8
39.2
40.3
39.7
39.8
40.4
40.5
40.7
41.1

(3)
(3)
(3)

(3)
(3)
(3)

32.5
34.7
33.8
37.2
40.9
39.9
34.9
37.9
39.2
42.0
45.0
46.5
46.5
44.0
40.4
40.5
40.4
39.4
41.1
41.5
41.5
41.2
40.1
41.3
41.0
40.3
39.5
40.7
40.1
40.3
40.9
41.1
41.4
42.0

41.9
40.0
35.1
36.1
37.7
37.4
36.1
37.4
37.0
38.9
40.3
42.5
43.1
42.3
40.5
40.2
39.6
38.9
39.7
39.5
39.7
39.6
39.0
39.9
39.6
39.2
38.8
39.7
39.2
39.3
39.6
39.6
39.7
40.1

(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
38.2
38.1
37.7
37.4
38.1
38.9
37.9
37.2
37.1
37.5
37.0
36.8
37.0
36.7
36.9
37.0
37.3
37.2
37.4

TeleBitumiRetail Whole- nous Class I phone
sale
rail- 1 comcoal
trade trade
munimining roads cation 2
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
43.4
43.2
42.8
41.8
40.9
41.0
40.9
41.3
41.0
40.9
41.0
41.1
40.9
40.5
39.8
39.7
39.6
39.1
38.7
38.7
38.7
38.5
38.1
37.9
37.8
6 37.0
36.6

(3)
(3)
(3)
(3)
(3)
(3)
41.6
42.9
43.1
42.3
41.8
41.3
41.1
41.4
42.3
43.0
42.8
41.6
41.1
41.0
40.8
40.7
40.8
40.7
40.6
40.5
40.7
40.5
40.3
40.2
40.6
40.5
40.5
40.6
40.6
40.7
40.8

37.0
37.1
37.0
36.9
37.1
37.0
37.2
37.1
36.9
37.0
36.8
36.9
36.8
36.8
36.8
36.9
36.8
36.6
36.8
36.7
36.5
36.4
36.4
(

40.4
40.6
40.7
40.7
40.7
40.7
40.7
40.7
40.5
40.7
40.8
40.8
40.8
40.8
40.9
40.7
40.9
40.8
40.7
41.0
40.8
40.9
40.8

Seasonally adjusted
1964: J a n . .
Feb—
Mar..
May—
June.
July—
Aug..
Sept.
Oct__
Nov
Dec—
1965: Jan__
FebMar..
Apr._
May_
June.
July..
Aug..
Sept_
Oct._
Nov ?_

40.1
40.6
40.6
40.8
40.6
40.7
40.7
40.8
40.6
40.7
40.9
41.2
41.2
41.2
41.3
41.0
41.1
41.0
41.0
41.0
40.9
41.2
41.4
41.4

40.9
41.3
41.3
41.6
41.4
41.4
41.4
41.6
41.5
41.2
41.7
42.0
42.1
42.1
42.2
41.9
42.0
41.8
41.7
41.7
41.6
42.0
42.2
42.2

39.2
39.8
39.7
39.9
39.7
39.6
39.7
39.8
39.5
39.9
39.9
40.1
40.1
40.2
40.2
39.9
40.0
39.9
40.0
40.0
40.1
40.1
40.3
40.3

35.0
37.6
37.3
37.3
37.2
37.3
36.9
37.0
35.8
37.2
37.6
39.0
37.6
37.5
37.5
37.0
37.5
37.1
37.4
37.3
36.2
37.0
37.0
39.4

38.1
33.3
28.1
27.0
29.3
26.8
26.2
28.5
27.7
23.3
26.8
27.8
30.7
32.4
36.3
43.0
42.0
41.3
40.3
37.7
32.3
34.7
34.9
33.8
34.1
32.3
37.3
37.5
36.3
33.3
35.8
35.8
35.9
«37.0
5 38.9
«39.2
40.1

(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
(3)
43.7
44.3
45.8
47.0
48.7
48.9
48.5
46.0
46.4
46.2
43.7
40.8
41.0
40.6
40.6
40.8
41.9
41.7
41.7
41.6
41.9
41.7
42.3
42.6
42.9
43.5
(3)

38.8
38.9
39.1
39.5
40.1
40.5
41.9
42.3
* 41.7
39.4
37.4
39.2
38.5
38.9
39.1
38.5
38.7
38.9
39.6
39.5
39.0
38.4
39.2
39.6
39.4
39.9
40.0
40.2
40.4

Unadjusted
38.6
36.8
37.6
39.0
40.4
(3)
39.8
37.7
40.7
40.3
41.0
40.0
39.8
39.7
39.5
40.4
41.5
(3)
41.1
39.4
41.8
37.7
(

43.5
43.1
42.8
43.4
42.4
44.3
44.3
42.3
43.8
43.3
42.7
44.3
42.4
44.1
43.8
43.6
43.0
44.2
43.7
43.4

39.3
39.6
39.5
39.3
39.8
40.0
40.2
40.2
41.8
40.8
41.3
40.4
39.9
40.1
39.8
39.8
40.1
39.9
40.6
40.4
41.3
40.9
42.0

1 Data relate to all employees who received pay during the month, except executives, officials, and staff
assistants.
2 Prior to April 1945, data relate to all employees except executives. See footnote 2, Table C-28.
* Not available.
* Nine-month average, April through December, because of new series started in April 1945.
« Eleven-month average; excludes data for July.
« Beginning 1964, data include eating and drinking places. Comparable data excluding eating and
drinking places are 37.4 hours for 1964.
7 Preliminary.
NOTE.—See Note, Table C-25.
Data are for production workers in manufacturing and mining, for construction workers in contract
construction, and for nonsupervisory employees in other industries (except as noted). Data are for pay
period which includes the 12th of the month.
The annual figures for 1965 are arithmetic averages of the monthly figures shown and are not strictly
comparable with the averages for earlier years, which are weighted by data on employment.
See Table C-29 for unadjusted average weekly hours in manufacturing.
Data for Alaska and Hawaii included beginning 1959.
Source: Department of Labor, Bureau of Labor Statistics.




24O

TABLE C-27.--Average gross hourly earnings in selected industries,
Manufacturing

Year or month
1929
1930
1931
1932
1933
1934
1935
.
1936
1937
1938
1939-1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
-.
1952
1953
1954
1955
1956
1957
1958
1959
-.
I960
.
1961
1962
1963
1964
1965 8 . 1964: J a n

. .

--

--

Feb
Mar
Apr

May
June
July
Aug
Sept .
Oct
Nov-_

Dec.

1965: Jan
Feb

Mar
Apr
May

June

July
Aug

Sept
Oct
Nov88 .
Dec

.- _

Total
$0,560
.546
.509
.441
.437
.526
.544
.550
.617
.620
.627
.655
.726
.851
.957
1.011
1.016
1.075
1.217
1.328
1.378
1.440
1.56
1.65
1.74
1.78
1.86
1.95
2.05
2.11
2.19
2.26
2.32
2.39
2.46
2.53
2.61
2.51
2.50
2.51
2.52
2.53
2.53
2.53
2.52
2.56
2.52
2.55
2.58
2.58
2.59
2.59
2.60
2.61
2.61
2.61
2.59
2.63
2.63
2.65
2.66

Contract
conDura- Nonble
durable struction
goods goods

$0,492
.467
.550
.571
.580
.667
.679
.691
.716
.799
.937
L.048
L. 105
L.099
L. 144
L.278
1.395
L.453
L.519
L. 65
L. 75
L. 86
1.90
.99
2.08
2.19
2.26
2.36
2.43
2 49
2.56
2.63
2.71
2.79
2.68
2 68
2.68
2.70
2 70
2.71
2.70
2.70
2.74
2.69
2.72
2.76
2.76
2.77
2.78
2.78
2.79
2.79
2.79
2.77
2.81
2.82
2.83
2.84

$0,412
.419
.505
.520
.519
.566
.572
.571
.590
.627
.709
.787
.844
.886
.995
1.145
1.250
1.295
1.347
1.44
1.51
1.58
1.62
1.67
1.77
1.85
1.91
1.98
2.05
2.11
2.17
2.22
2.29
2.36
2.28
2.27
2.27
2.28
2.28
2.28
2.29
2.28
2.32
2.30
2.31
2.32
2.33
2.33
2.33
2.34
2.35
2.35
2.36
2.36
2.38
2.38
2.39
2.40

1929-65

TeleBituRetail Whole- minous Class I phone Agricomculsale
railtrade
coal roads 1 munica- ture 3
trade mining
tion 2

i 1 11
$

8

II

w

$1.541
1.713
1.792
1.863
2.02
2.13
2.28
2.39
2.45
2.57
2.71
2.82
2.93
3.08
3.20
3.31
3.41
3.55
3.68
3.57
3.53
3.51
3.53
3.50
3.49
3.52
3.54
3.58
3.61
3.57
3.63
3.62
3.68
3.65
3.61
3.65
3.66
3.64
3.68
3.74
3.76
3.73

$0,484
.494
.518
.559
.606
.653
.699
.797
.901
.972
1.015
1.050
1.13
1.18
1.25
1.29
1.34
1.40
1.47
1.52
1.57
1.62
1.68
1.74
1.80
7
1.75
1.82
1.73
1.73
1.73
1.74
1.75
1.75
1.75
1.75
1.77
1.77
1.78
1.77
1.79
1.79
1.79
1.80
1.82
1.82
1.82
1.82
1.85
1.86
1.86

1
2

$0,659
.662
.626
.503
.485
.651
.720
.768
.828
.849
.858
.854
.960
1.030

$0,610
.628
.658
.674
$0,730
.688
.733
.711
.743
.763
.837
.828
L. 101
.898
.852
.948
L.147
.948
.955
.990
1.199
1.107
1.087
L.357
L.582
1.186
1.220
L. 835
1.308
1.301
1.877
1.360
1.427
1.944
1.427
1.572
1.52
2.14
1.73
1.61
2.22
1.83
1.70
2.40
1.88
1.76
2.40
1.93
1.83
2.47
1.96
1.94
2.12
2.72
2.02
2.26
2.92
2.09
2.44
2.93
2.18
3.11
2.54
3.14
2.24
2.61
3.12
2.31
2.67
2.37 6 3.12
2.72
2.45 8 3.15
2.76
2.52
6 3.30
2.80
2.60
3.49
2.48
3.21
2.76
2.50
3.20
2.80
2.51
3.20
2.76
2.51
3.28
2.76
3.30
2.53
2.78
2.51
3.32
2.77
2.52
2.77
2.52
3.34
2.81
2.54
3.35
2.81
2.54
3.34
2.80
2.56
3.38
2.85
2.55
3.37
2.89
2.56
3.47
2.99
2.58
3.48
3.03
3.46
2.58
2.97
3.47
2.59
2.98
3.50
2.61
3.01
3.51
2.59
2.99
2.60
3.00
2.60
2.99
3.52
2.62
3.50
3.50
2.63
2.64
3.51

ii

$0,774
.816
.822
.827
.820
.843
.870
.911
5.962
1.124
1.197
1.248
1.345
1.398
1.49
1.59
1.68
1.76
1.82
1.86
1.95
2.05
2.18
2.26
2.37
2.48
2.56
2.62
2.69
2.60
2.59
2.60
2.59
2.62
2.61
2.60
2.60
2.61
2.65
2.66
2.69
2.67
2.67
2.67
2.68
2.69
2.69
2.67
2.68
2.73
2.73
2.76

$0.241
.226
.172
.129
.115
.129
.142
.152
.172
.166
.166
.169
.206
.268
.353
.423
.472
.515
.547
.580
.559
.561
.625
.661
.672
.661
.675
.705
.728
.757
.798
.818
.834
.856
.880
.904
.951
.962

.827
.897
.915
1.010

.860
.929
.984

For coverage of series, see footnote 1, Table C-26.
Prior to April 1945, data relate to all employees except executives; for April 1945-May 1949, mainly to employees subject to the Fair Labor Standards Act; and beginning June 1949, to nonsupervisory employees only.
3 Weighted average of all farm wage rates on a per hour basis.
* Not available.
8
Nine-month average, April through December, because of new series started in April 1945.
s Eleven-month average; excludes data for July.
7
Beginning 1964, data include eating and drinking places. Comparable data excluding eating and
drinking places are $1.87 for 1964.
8
Preliminary.
NOTE.—See Note, Table C-25.
Data are for production workers in manufacturing and mining, for construction workers in contract construction, and for all nonsupervisory employees in other industries (except as noted). Data are for pay
period which includes the 12th of the month.
The annual figures for 1965 are arithmetic averages of the monthly figures shown and are not strictly
comparable with the averages for earlier years, which are weighted by data on man-hours.
Data for Alaska and Hawaii included beginning 1959.
Sources: Department of Labor, Bureau of Labor Statistics, and Department of Agriculture.




241

TABLE C-28.—Average gross weekly earnings in selected industries, 1929-65
Manufacturing
Year or month
Total
1929.
1930..
1931.
1932..
1933..
1934..
1935.
1936..
1937..
1938..
1939..
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965 6
1964: Jan...
Feb.Mar__
Apr_._
MayJune - July__
Aug._Sept._
Oct...
Nov__
Dec...
1965:: Jan__.
Feb..Mar._
Apr..May._
June.July..
Aug...
Sept..
Oct...
Nov«_
Dec«-

$24.76
23.00
20.64
16.89
16.65
18.20
19.91
21.56
23.82
22.07
23.64
24.96
29.48
36.68
43.07
45.70
44.20
43.32
49.17
53.12
53.88
58.32
63.34
67.16
70.47
70.49
75.70
78.78
81.59
82.71
88.26
89.72
92.34
96.56
99.63
102.97
107. 27
99.90
100.75
101.40
102.06
102. 97
103. 73
102.97
103.07
104.19
102. 82
104.30
107. 07
105.52
105.93
106. 71
105.82
107.53
107.79
107.01
106.45
107.83
108.62
109.71
110.92

Contract
conDura- Non- strucble
durable tion
goods goods

$26.84
24.42
20.98
15.99
16.20
18.59
21.24
23.72
26.61
23.70
26.19
28.07
33.56
42.17
48.73
51.38
48.36
46.22
51.76
56.36
57.25
62.43
68.48
72.63
76.63
76.19
82.19
85.28
88.26
89.27
96.05
97.44
100.35
104. 70
108.09
112.19
117.18
108.81
109.88
110.15
111.78
112. 05

113. 28
111.51
112.32
113.98
111.10
113.42
117. 02
115.37
115.79
117.04
115.93
117.46
117. 74
116.06
115. 51
117.18
118. 72
119. 43
120.98

$22.47
21.40
20.09
17.26
16.76
17.73
18.77
19.57
21.17
20.65
21.36
21.83
24.39
28.57
33.45
36.38
37.48
40.30
46.03
49.50
50.38
53.48
56.88
59.95
62.57
63.18
66.63
70.09
72.52
74.11
78.61
82.92
85.93
87.91
90.91
94.64
88.46
89.44
89.67
90.06
90.52
90.97
91.37
91.43
91.87
92.00
92.17
93.50
92.50
92.73
93.20
92.20
94.00
94.47
94.87
95.11
95.68
95.68
96.32
97.20

Retail
trade

TeleWhole- Bitumi- Class I phone
nous
comsale
railmucoal
trade mining roads i nication2

()

()
$58.87
65.27
67.56
69.68
76.96
82.86
86.41
88.91
90.90
96.38
100.27
103. 78
108.41
113.04
118.08
122.47
127.19
132.06
137. 63
121.38
126.37
128.12
130. 61
133. 00
133.32
134.11
136. 64
131.39
138.99
131. 73
133.95
131.41
131. 38
133.96
132.49
140.16
139.08
140.50
143.15
138.75
144.01
135.40

$26. 75
25.19
25.44
25.38
26.96
28.36
28.51
28.76
29.36
31.36
34.28
37.99
40.76
42.37
46.05
50.14
53.63
55.49
58.08
62.02
65.53
69.02
71.28
74.48
78.57
81.41
84.02
88.51
90.72
93.56
96.22
99.47
102. 56
106.08
99.70

100. 75
101. 66
101.91
102.97
102.41
103.32
102. 56
102.87
103.38
104.45
104. 81
103.94
104. 49
105.01
105.15
106. 75
105.93
106.60
106.60
106.90
107. 57
107. 71

$25.11
22.04
17.59
13.58
14.21
17.45
18.86
21.89
22.94
19.78
22.99
23.74
29.47
33.37
39.97
49.32
50.36
56.04
63.75
69.18
60.63
67.46
74.69
75.04
81.84
77.52
92.13
102.00
106.00
97.57
111.34
112.41
112.01
114.46
121. 43
128.91
139. 71
127.12
123. 52
117. 76
123.33
128. 70
134.13
122.84
132. 93
126.30
135.94
136. 21
138.17
138.80
138.50
137.36
137.07
141. 40
145.67
137.11
144.67
137.90
146. 30
132.33

()
$31.90
32.47
34.03
39.34
41.49
46.36
46.32
50.00
55.03
60.11
62.36
64.14
70.93
74.30
76.33
78.74
82.12
88.40
94.24
101.50
106.43
108.84
112.94
115.87
118.40
121.80
(3)
120. 06
120. 68
118.13
119. 78
117.87
122. 71
122.71
118. 86
123. 08
121.24
121. 70
128. 03
126. 78
133. 62
130.09
129.93
129.43
132.16
131.10
129. 77

()
$30.03
31.74
32.14
32.67
32.88
34.14
36.45
38.54
* 40.12
44.29
44.77
48.92
51.78
54.38
58.26
61.22
65.02
68.46
72.07
73.47
76.05
78.72
85.46
89.50
93.38
98.95
192. 40
105.32
108. 68
102.18
102. 56
102. 70
101. 79
104. 28
104.40
104.52
104. 52
109.10
108.12
109.86
108.68
106. 53
107.07
106.27
106.66
107.87
107.33
108. 40
108.27
112.75
111.66
115. 92
)

1
For coverage of series, see footnote 1, Table C-26.
2 Prior to April 1945, data relate to all employees except executives; for April 1945-May 1949, mainly to
employees subject to the Fair Labor Standards Act; and beginning June 1949, to nonsupervisory employees
only.
3
Not available.
4
Nine-month average, April through December, because of new series started in April 1945.
6
Beginning 1964, data include eating and drinking places. Comparable data excluding eating an d drinking places are $69.94 for 1964.
6 Preliminary.
NOTE.—See Note, Table C-25.
Data are for production workers in manufacturing and mining, for construction workers in contract construction, and for nonsupervisory employees in other industries (except as noted). Data are for pay
period which includes the 12th of the month.
The annuai figures for 1965 are the product of unweighted arithmetic averages of average weekly hours
and average hourly earnings for the months shown and are not strictly comparable with the averages
for earlier years.
Data for Alaska and Hawaii included beginning 1959.
Source: Department of Labor, Bureau of Labor Statistics.




242

TABLE C-29.—Average weekly hours and hourly earnings, gross and excluding overtime, in
manufacturing industries, 1939-65
Durable goods manufac- Nondurable goods manuturing industries
facturing industries

All manufacturing industries
Average
weekly
hours

Average hourly
earnings

Year or month
ExExcludcludGross ing Gross ing
overovertime
time

1939
1940
1941
1942
1943.
1944
1945
1946
1947
1948
1949
1950
1951
1952 . .
1953
1954
1955
1956
1957
1958
1959
._
1960
1961
1962
1963
-1964
1965*
1964: Jan
Feb

Mar
Apr
May
.June.. - . July
Aug

Sept
Oct
Nov
Dec

1965- Jan
Feb
Mar
Apr

37.7 0) $0.627 0)
.655 0)
38.1 0)
.726 $0.691
40.6 0)
.851 .793
43.1 (i)
.957 .881
45.0 (i)
1.011 .933
45.2 0)
1.016 3 .949
43.5 (i)
1.075 1.035
40.3 0)
40.4 0)
1.217 1.18
40.0 (1)
1.328 1.29
1.378 1.34
39.1 0)
1.440 1.39
40.5 0)
1.56 1.51
40.6 (1)
1.65 1.59
40.7 0)
1.74 1.68
40.5 0)
39 6
1.78 1.73
1.86 1.79
40.7 0)
40.4 37.6 1.95 1.89
39 8 37.5 2.05 1.99
39.2 37.2 2.11 2.05
40.3 37.6 2.19 2.12
39 7 37.3 2 26 2.20
39.8 37.4 2.32 2.25
40.4 37.6 2.39 2.31
40.5 37.7 2.46 2.37
40.7 37.6 2.53 2.44
41.1 37.5 2.61 2.50
39.8 37.1 2.51 2.43
40 3 37.6 2 50 2.42
40.4 37.6 2.51 2.43
40.5 37.6 2.52 2.43
40.7 37.7 2.53 2.44
41.0 37.8 2.53 2.43
40.7 37.7 2.53 2.43
40.9 37.6 2.52 2.42
40.7 37.2 2.56 2.46
40.8 37.5 2.52 2.42
40.9 37.6 2.55 2.45
41.5 37.9 2.58 2.47
40.9 37.6 2.58 2.48
40.9 37.6 2.59 2.48
41.2 37.7 2.59 2.49
40.7 37.6 2 60 2.50
41.2 37.7 2.61 2.50
41.3 37.7 2.61 2.50
41.0 37.6 2.61 2.50
41.1 37.6 2.59 2.49
41.0 37.2 2.63 2.51
41.3 37.4 2.63 2.52
41.4 37.5 2.65 2.53
41.7 37.7 2.66 2.54

Average
weekly
hours

Average
hourly
earnings

Average
weekly
hours

Average
hourly
earnings

Excluding
overExtime
ExExExcludand
cludcludcludinter- Gross ing Gross ing Gross ing Gross ing
overindusoveroverovertime
try shift
time
time
time
(195759=100)
32.2

0)

2 33.4
2 37.5
2 40.8
2 43.7
2 45.5
2 50.4
57.8
63.2
66.1
68.2
73.6
77.4
81.6
84.3
86.9
91.5
96.2
100.2
103.5
106.6
109.6
112.3
115.2
118 0 1
120.8
117.2
117 3
117.4
117.7
117.8
117.8
117.9
117.9
118.7
118.1
118 7
119.2
119.7
120.0
120.1
120 4
120.6
120.8
120.9
120.7
121.7
121.8
122.2

37.9
39.2
42.0
45 0
46.5
46.5
44 0
40.4
40.5
40 4
39.4
41.1
41.5
41.5
41.2
40.1
41.3
41.0
40 3
39.5
40.7
40 1
40.3
40.9
41.1
41 4
42.0
40.6
41 0
41.1
41.4
41.5
41.8
41.3
41.6
41.6
41.3
41.7
42.4
41.8
41.8
42.1
41.7
42.1
42.2
41.6
41.7
41.7
42.1
42.2
42.6

(0
0)
0)

$0.691 0)
.716
.799 0)
.937 $0.762
872
(1)
1.048 .966
1.105 1.019
0)
1.099 1 031
1.144 1.111
(0
0) 1.278 1.24
(1)
1.395 1 35
0) 1.453 1.42
0) 1.519 1.46
(1)
1.65 1.59
1.75 1.68
0)
0) 1.86 1.79
1.90 1.84
(1)
0) 1.99 1.91
38.0 2=08 2.01
37.9 2.19 2.12
37.6 2.26 2.21
38.0 2.36 2.28
37.7 2.43 2.36
38.0 2.49 2.42
38.1 2.56 2.48
38.2 2.63 2.54
38.1 2.71 2.60
38.1 2.79 2.67
37.7 2.68 2.59
38.2 2.68 2.59
38.2 2.68 2.59
38.3 2.70 2.60
38,3 2.70 2.60
38.4 2.71 2.60
38.1 2.70 2.60
38.1 2.70 2.59
37.9 2.74 2.62
37.9 2.69 2.58
38.2 2.72 2.61
38.4 2.76 2.64
38.2 2.76 2.65
38.1 2.77 2.65
38.3 2.78 2.66
38.2 2.78 2.67
38.2 2.79 2.66
38.2 2.79 2.67
37.9 2.79 2.67
37.9 2.77 2.65
37.7 2.81 2.68
37.9 2.82 2.68
37.9 2.83 2.69
38.2 2.84 2.70

37.4
37.0
38.9
40.3
42.5
43.1
42.3
40.5
40.2
39.6
38.9
39.7
39.5
39.7
39.6
39.0
39.9
39.6
39.2
38.8
39.7
39.2
39.3
39.6
39.6
39.7
40.1
38.8
39.4
39.5
39.5
39.7
39.9
39.9
40.1
39.6
40.0
39.9
40.3
39.7
39.8
40.0
39.4
40.0
40.2
40.2
40,3
40.2
40.2
40.3
40.5

$0.571 0)
.590 0)
.627 $0.613
.709 .684
(i)
.787 .748
0)
.844 .798
0)
(1)
.886 3 .841
.995 .962
C1)
0) 1.145 1.11
1.250 1.21
0)
0) 1.295 1.26
0) 1.347 1.31
(1)
1.44 1.40
1.51 1.46
OS
0) 1.58 1.53
1.62 1.58
1.67 1.62
0)
37.2 1.77 1.72
37.0 1.85 1.80
36.6 1.91 1.86
37.0 1.98 1.92
36.7 2.05 1.99
36.8 2.11 2.05
36.9 2.17 2.09
36.9 2.22 2.15
36.8 2.29 2.21
37.0 2.36 2.26
36.3 2.28 2.20
36.8 2.27 2.19
36.9 2.27 2.20
36.8 2.28 2.21
36.9 2.28 2.21
37.0 2.28 2.20
37.0 2.29 2.21
37.0 2.28 2.20
36.4 2.32 2.23
36.9 2.30 2.21
36.9 2.31 2.23
37.2 2.32 2.24
36.9 2.33 2.25
36.9 2.33 2.25
37.0 2.33 2.25
36.7 2.34 2.26
36.9 2.35 2.26
37.1 2.35 2.26
37.1 2.36 2.27
37.1 2.36 2.26
36.7 2.38 2.28
36.8 2.38 2.28
36.9 2.39 2.29
37.2 2.40 2.30

0)
0)
0)

May
June
July
Aug
-_
Sept
Oct
Nov*
0)
Dec*
._
1
Not available.
2 Annual average not available; April used.
» Eleven-month average; August 1945 excluded because of VJ Day holiday period.
* Preliminary.
NOTE.—See Note, Table C-25.
Data relate to production workers and are for pay period which includes the 12th of the month.
The annual figures for 1965 are arithmetic averages of the monthly figures shown and are not strictly
comparable with the averages for earlier years, which are weighted by data on employment (in the case of
hours) and man-hours (in the case of earnings).
See Table C-26 for seasonally adjusted average gross weekly hours.
Data for Alaska and Hawaii included beginning 1959.
Source: Department of Labor, Bureau of Labor Statistics.




243

TABLE C—30.—Average weekly earnings, gross and spendable, in manufacturing industries,
in current and 1957-59 prices, 1939-65
Average spendable weekly earnings l
Average gross weekly
earnings
Year or month
Current
prices

1957-59
prices 2

Worker with no
dependents
Current
prices

1957-59
prices 2

Worker with three
dependents
Current
prices

1957-59
prices 2

1939

$23.64

$48.84

$23.37

$48.29

$23.40

$48.35

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

24.96
29.48
36.68
43.07
45.70
44.20
43.32
49.17
53.12
53.88

51.15
57.47
64.58
71.43
74.55
70.49
63.71
63.20
63.39
64.92

24.46
27.96
31.80
35.95
37.99
36.82
37.31
42.10
46.57
47.21

50.12
54.50
55.99
59.62
61.97
58.72
54.87
54.11
55.57
56.88

24.71
29.19
36.31
41.33
43.76
42.59
42.79
47.58
52.31
52.95

50.64
56.90
63.93
68.54
71.39
67.93
62.93
61.16
62.42
63.80

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

58.32
63.34
67.16
70.47
70.49
75.70
78.78
81.59
82.71
88.26

69.59
69.99
72.61
75.61
75.31
81.14
83.19
83.26
82.14
86.96

50.26
52.97
55.04
57.59
58.45
62.51
64.92
66.93
67.82
71.89

59.98
58.53
59. 50
61.79
62.45
67.00
68.55
68.30
67.35
70.83

56.36
60.18
62.98
65.60
65.65
69.79
72.25
74.31
75.23
79.40

67.26
66.50
68.09
70.39
70.14
74.80
76.29
75.83
74.71
78.23

1960
1961
1962
1963
1964
1965 3

89.72
92.34
96.56
99.63
102. 97
107.27

87.02
88.62
91.61
93.37
95.25
97.61

72.57
74. 60
77.86
79.82
84.40
88.87

70.39
71.59
73.87
74.81
78.08
80.86

80.11
82.18
85.53
87.58
92.18
96.56

77.70
78.87
81.15
82.08
85.27
87.86

1964: J a n . . .
Feb...
Mar...
Apr...
May_.
June..

99.90
100.75
101. 40
102.06
102.97
103. 73

92.76
93.63
94.15
94.68
95.52
96.05

81.98
82.65
83.16
83.68
84.40
85.00

76.12
76.81
77.21
77.63
78.29
78.70

89.65
90.35
90.89
91.43
92.18
92.81

83.24
83.97
84.39
84.81
85.51
85.94

July..
Aug...
Sept..
Oct_Nov_.
Dec.

102.97
103.07
104.19
102.82
104.30
107. 07

95.08
95.26
96.12
94.76
95.95
98.41

84.40
84.48
85.36
84.28
85.45
87.63

77.93
78.08
78.75
77.68
78.61
80.54

92.18
92.26
93.19
92.06
93.28
95.56

85.12
85.27
85.97
84.85
85.81
87.83

1965: Jan...
Feb..
Mar__
Apr_.
May.
June..

105.52
105.93
106.71
105.82
107.53
107. 79

96.90
97.27
97.90
96.82
98.11
97.90

87.47
87.80
88.42
87.71
89.08
89.29

80.32
80.62
81.12
80.25
81.28
81.10

95.09
95.43

87.32
87.63
88.16
87.23
88.30
88.09

July..
Aug..
Sep_.
Oct..
Nov3.
Dec 3.

107.01
106.45
107.83
108.62
109. 71
110.92

97.11
96.77
97.85
98.39
99.20
99.93

88.21
89.32
89.95
90.83
91.80

80.45
80.19
81.05
81.48
82.12
82.70

96.34
95.87
97.03
97.69
98.61

1
2
3

95.34
96.78
96.99

87.42
87.15
88.05
88.49
89.16
89.75

Average gross weekly earnings less social security and income taxes.
Earnings in current prices divided by the consumer price index on a 1957-59 base.
Preliminary.
NOTE.—See Note, Table C-25.
Data relate to production workers and are for pay period which includes the 12th of the month.
The annual figures in current prices for 1965 are the product of unweighted arithmetic averages of
average weekly hours and average hourly earnings for the 12 months and are not strictly comparable
with the averages for earlier years.1
Data for Alaska and Hawaii included beginning January 1959.
Source: Department of Labor, Bureau of Labor Statistics.




244

TABLE G-31.—Indexes of output per man-hour and related data, 1947—65
[1957-59=100]

Output per man-hour
Year

Output i

Man-hours

NonNonNonagriagriagriTotal Agri- cultural Total Agri- cultural Total Agri- cultural
private culture indus- private culture indus- private culture industries
tries
tries
Establishment basis 2

1947..
19481949..

69.2
72.1
74.4

50.7
58.9
57.4

74.3
76.5
79.5

67.6
70.8
70.6

82.1
91.8
88.9

66.8
69.7
69.6

97.7
98.2
94.9

161.8
155.8
154.8

89.9
91.1
87.6

1950..
1951..
1952..
1953..
1954..

80.6
82.9
84.5
88.0
90.0

65.3
65.4
70.9
80.2
84.3

84.6
86.3
87.2
89.7
91.7

77.9
82.8
84.8
89.1
87.9

93.7
88.9
91.8
96.6
98.6

77.0
82.4
84.5
88.7
87.4

96.7
99.9
100.4
101.3
97.7

143.4
136.0
129.4
120.5
117.0

91.0
95.5
96.9
98.9
95.3

1955..
1956..
1957..
19581959..

94.0
94.1
96.9
99.7
103.4

84.8
88.3
93.3
103.0
104.7

95.7
95.1
97.2
99.6
103.1

95.4
97.2
98.6
97.3
104.1

101.0
100.5
98.1
100.5
101.9

95.1
97.0
98.6
97.1
104.2

101.5
103.3
101.8
97.6
100.7

119.1
113.8
105.1
97.6
97.3

99.4
102.0
101.4
97.5
101.1

I960..
1961..
1962..
1963..
1964..

105.1
108.7
113.7
117.7
121.9

110.3
119.0
121.4
132.6
133.8

104.4
107.4
112.3
115.4
119.5

106.7
108.7
116.0
120.6
126.9

105.8
107.2
106.8
110.6
107.7

106.7
108.7
116.5
121.1
127.9

101.5
100.0
102.0
102.5
104.1

95.9
90.1
88.0
83.4
80.5

102.2
101.2
103.7
104.9
107.0

1965 3

125.3

143.6

122.4

134.1

112.6

135.2

107.0

78.4

110.5

Labor force basis

4

1947.
1948.
1949.

67.9
70.2
71.9

50.7
59.0
57.0

72.9
74.4
76.7

67.6
70.8
70.6

82.1
91.8
88.9

66.8
69.7
69.6

99.6
100.8
98.2

161.8
155.6
156.1

91.6
93.7
90.8

1950.
1951.
1952.
1953.
1954.

78.5
82.1
84.5
88.4
90.8

65.1
65.0
70.5
79.7
83.8

82.4
85.6
87.6
90.3
92.8

77.9
82.8
84.8
89.1
87.9

93.7
88.9
91.8
96.6
98.6

77.0
82.4
84.5
88.7
87.4

99.2
100.9
100.4
100.8
96.8

143.9
136.8
130.2
121.2
117.6

93.5
96.3
96.5
98.2
94.2

1955.
1956.
1957
1958.
1959

94.7
94.6
97.2
99.4
103.4

84.3
87.8
93.3
103.1
104.6

96.7
95.8
97.7
99.1
103.1

95.4
97.2
98.6
97.3
104.1

101.0
100.5
98.1
100.5
101.9

95.1
97.0
98.6
97.1
104.2

100.7
102.7
101.4
97.9
100.7

119.8
114.5
105.1
97.5
97.4

98.3
101.2
100.9
98.0
101.1

1960
1961
1962
1963
1964

104.6
107.4
113.0
116.5
120.2

110.3
119.5
121.6
132.9
134.3

103.8
105.8
111.4
114.1
117.6

106.7
108.7
116.0
120.6
126.9

105.8
107.2
106.8
110.6
107.7

106.7
108.7
116.5
121.1
127.9

102.0
101.2
102.7
103.5
105.6

95.9
89.7
87.8
83.2
80.2

102.8
102.7
104.6
106.1
108.8

1965

123.1

144.0

119.9

134.1

112.6

135.2

108.9

78.2

112.8

1
2 Output refers to gross national product in 1958 prices.
Man-hour estimates based primarily on establishment data.
3 Preliminary.
4
Man-hour estimates based primarily on labor force data.
NOTE.—For information on sources and methodology, see Bureau of Labor Statistics (Department of

Labor) Bulletin No. 1249, Trends in Output per Man-hour in the Private Economy, 1909-58.

Data for Alaska and Hawaii included beginning 1960.
Source: Department of Labor, Bureau of Labor Statistics.




245

PRODUCTION AND BUSINESS ACTIVITY
TABLE C-32.—Industrial production indexes, industry groupings, 1947-65
[1957-59=100]

Manufacturing

Year or month

Durable manufactures

Total
industrial
production i Total

FabriTransPricated
Ma- portamary metal chinery tion
Total
metals prodequipucts
ment

Instruments Clay, Furniand re- glass, ture
and
lated
and
prod- lumber miscellaneous
ucts

1947..
1948..
1949-.

65.7
68.4
64.7

66.4
68.9
65.1

64.3
67.0
60.9

90.7
94.3
79.4

75.9
77.2
69.8

65.3
66.5
59.0

42.9
46.9
47.1

53.7
55.2
49.2

75.8
79.7
72.3

73.5
77.4
71.6

1950..
1951_.
1952-.
19531954-.

74.9
81.3
84.3
91.3
85.8

75.8
81.9
85.2
92.7
86.3

74.1
83.5
88.5
99.9
88.4

99.9
108.7
99.3
112. 5
91.3

85.4
91.2
89.0
100.3
90.2

72.7
83.0
92.1
100.5
87.7

56.4
62.9
73.1
91.7
83.8

57.3
65.7
78.1
85.3
82.9

87.7
92.0
89.3
92.7
89.6

80.2
82.4
89.7

1955_.
1956-.
1957-.
19581959-

100.7
93.7
105.6

97.3
100.2
100.8
93.2
106.0

101.9
104.0
104.0
90.3
105.6

118.4
116.4
112.2
87.5
100.4

98.3
98.8
101.5
92.9
105.5

96.5
107.1
104.2
88.8
107.1

102.0
97.4
106.4
89.5
104.0

88.7
95.4
98.0
92.1
109.9

100.7
102.0
97.5
94.1
108.5

97.9
101.0
97.6
93.3
109.0

1960-.
19611962-_
1963_.
1964-.

108.7
109.7
118.3
124.3
132.3

108.9
109.6
118.7
124.9
133.1

108.5
107.0
117.9
124.5
133.5

101.3
98.9
104.6
113.3
129.1

107. 6
106.5
117.1
123.4
132.7

110.8
110.4
123.5
129.2
141.4

108.2
103.6
118.3
127. 0
130.7

116.5
115.8
123.0
130.2
136.4

105.7
104.5
109.3
114.4
121.1

113.3
114.1
124.5
129.1
138.4

143.3

144.9

148.3

137.8

148.2

160.3

148.9

151.4

127.4

151.7

1965

2

Seasonally adjusted
1964: J a n . . .
Feb
Mar
Apr
May
June

128.3
129.1
! 130.3
! 131.8
I 133.1
I 133.6

113.7
118.7
122.1
123.4
129.0
126.3

128.3
129.1
129.4
131.0
131. 3
132.0

135.0
133.7
136.2
137.8
138.7
140.5

130.8
131.1
130.1
133.0
134.3
135.5

132.2
133.6
134.2
134.7
134.6
134.8

117.9
121.6
121.9
121.6
120.9
120.1

133.0
133.9
134.7
135.6
136.2
138.0

134.2
134.9
134.8
132.0
136.4
139.4

135.4
136.2
135. 3
129.9
137.0
140.9

131.8
134.4
132.9
133. 6
136.1
138.6

133.4
134.9
134.3
130.7
136.9
139.7

142.2
143.2
144.4
145. 2
147.7
150.1

135.3
135.9
131.3
105. 3
129. 2
140.3

136.4
137.4
138.6
137.6
140.2
142.0

122.6
121.4
120.7
121.0
120.9
121.1

138.5
139.0
138.4
141.7
143.4
145.4

138. 6
139.2
140.7
140.9
141.6
142.7

140.2
140.8
142.3
142.4
143.1
144.1

142.0
142.7
144.8
145.5
146.4
148.1

139.6
136.9
140.4
141.4
140.2
143.0

140.6
145.0
145.2
147.4
146.0
146.4

150.7
152. 5
153.9
155. 4
156.9
159.0

141.4
139.7
144.4
144.6
147.3
149.5

142.7
145.3
146.9
145. 5
147.0
149.8

124.9
125.9
126.0
124.1
125.5
124.7

145.2
147.6
148.4
149.5
150.1
150.3

144.2
144. 5
143.5
144.8
146.3
148.3

145.7
146.0
145.2
146.3
147.9
150.1

150.0
150.5
148.2 !
149.7 I
151.3 !
154.7 j

148.7
146. 5
131.2
123. 3
121.1
128

148.0
147.5
147.0
149.5
154.2
157

160.6
161.4
162.3
165.6
167.3

149.8
151.5
149.4
153.6
156.0

152.1
152.6
155.7
158.0
159.2

126.3
127.5
127.3
128.5
129.1

149.7
151.5
152.0
155.1
158.0
160

127.9
128.4
129.3
130.8
131.8
132.0

128.6
129.2
130.1
131.7
132.6
132.7

July
Aug
Sept
Oct
Nov
Dec

133.3
134.0
134.0
131.6
135.4
138.1

1965: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec-'

i

See footnotes at end of table.




246

170

159

161

135

TABLE C-32.—Industrial production indexes, industry groupings, 1947—65—Continued
[1957-59=100]

Manufacturing
Nondurable manufactures
Year or month

Total

Textile,
apparel, Paper
and
and
leather printing
products

Chemical,
Foods,
petrobeverleum,
ages,
and
and
rubber tobacco
products

Mining

Utilities

1947
1948
1949

67.2
69.5
68.3

81.0
84.5
80.6

66.7
69.4
69.3

47.5
50.8
49.4

80.7
80.0

79.9
84.0
74.5

36.5
40.8
43.4

1950
1951
1952
1953
1954

76.0
78.5
80.0
83.6
83.6

89.1
87.4
89.5
90.7

76.7
79.4
77.7
82.6
85.0

60.7
67.4
69.9
75.2
74.7

83.6
85.4
87.3
88.2
89.8

83.2
91.3
90.5
92.9
90.2

49.5
56.4
61.2
66.8
71.8

1955
1956
1957
1958
1959

91.6
95.4
96.7
96.8
106. 5

95.5
98.0
96.9
95.0
108.1

92.5
97.1
97.8
97.0
105.2

86.8
91.4
95.6
95.5
108.9

93.1
96.6
96.7
99.4
103.9

99.2
104.8
104.6
95.6
99.7

80.2
87.9
93.9
98.1
108.0

1960
1961
1962
1963
1964

109.5
112.9
119.8
125.3
132.6

107.5
108.4
115.1
118.5
125.2

109.0
112.4
116.7
120.1
127.5

113.9
118.9
131.2
141.8
152.5

106. 6
110.2
113.3
116.8
120. 8

101.6
102.6
105.0
107.9
111.3

115.6
122.3
131.4
140.0
151.3

1965 2

140.6

135.8

135.1

164.7

123.0

114.5

161.4

Seasonally adjusted
1964: J a n . . .

Feb.Mar_.
Apr..
May_
June_

128.9
129.3
129.9
131.5
131.9
131.5

121.1
121.5
121.3
122.4
123.8
123.2

123.5
124.5
125.4
127.5
128.2
126.6

146.3
147.1
148.0
150.3
150.6
152.1

120.3
119.6
120.2
121.0
120.7
119.5

109.4
109.6
109.4
110.3
111.7
111.9

145.6
145.1
146.6
148.5
150.3
151.8

July.
AugSept.
Oct.-.
Nov_

132.8
133.2
134.2
134.6
135.6
137.6

125.5
126.4
127.0
128.9
130.2
131.5

128.0
127.9
127.4
128.8
128.2
132.1

152.8
154. 0
157.1
156.2
156.2
158.5

120.5
120.2
120.4
120.5
123.3
123.9

111.7
112.1
112.2
112.0
112.8
112.5

152.7
153.9
155.0
154.9
155.4
157.1

1965: J a n . . .
Feb..
Mar_.
Apr-May..
June..

137.9
138.4
139.1
138.5
138.8
139.0

133.3
133.8
133.7
133.9
135.0
134.5

132.0
131.8
132.9
133.2
134.2
134.0

158.2
160.4
162.0
160.8
161.2
161.6

124.2
123.4
123.7
122.4
121.5
122.3

111.8
111.8
112.5
113.0
114.0
115.3

154.9
156.1
158.5
159.9
160.4
162.5

July..
Aug-Sept...
Oct..Nov_Dec2.

140.4
140.4
141.3
142.0
143.6
144.4

134.7
134.1
135.5
137.0
138.8
141

135.9
136.4
135.4
135.8
137.9
139

164.1
164.9
166.9
167.8
169.3
170

122.9
122.3
123.1
123.0
124.2
125

116.0
117.0
112.6
115.9
116. 5
118

161.6
161.9
165.3
165.7
166.5
167

Dec.

I
1 Annual indexes for 1929-46 are, respectively: 38.4, 32.0, 26.5, 20.7, 24.4, 26.6, 30.7, 36.3, 39.7, 31.4, 38.3,
43.9, 56.4, 69.3, 82.9, 81.7, 70.5, and 59.5.
2
Preliminary.
Source: Board of Governors of the Federal Reserve System.




247

TABLE C-33.—Industrial production indexes, market groupings, 1947-65
[1957-59 = 100]

Final products

Year or month

Total
industrial
producTotal
tion

Consumer goods

1

Materials
Equipment

AutoTotal,
motive Home includ- BusiTotal prod- goods
ing
ness
defense
ucts

Total

Durable
goods

Nondurable
goods

1947
1948
1949

65.7
68.4
64.7

64.2
66.6
64.5

67.1
69.2
68.8

69.4
72.6
72.0

68.8
71.7
66.3

55.4
58.3
52.0

72.6
63.5

67.0
70.2
64.8

68.2
71.0
64.2

64.9
68.2
64.2

1950
1951
1952
1953
1954

74.9
81.3
84.3
91.3
85.8

72.8
78.6
84.3
89.9
85.7

78.6
77.8
79.5
85.0
84.3

90.6
80.1
72.1
91.3
85.0

91.4
78.7
78.8
90.2
86.0

56.4
78.4
94.1
100.5
88.9

68.0
83.1
94.1
96.6
85.1

76.9
83.8
84.3
92.6
85.9

79.5
87.8
88.9
100.7
88.4

73.3
78.8
79.0
84.1
83.3

1955
1956
1957
1958
1959

96.6
99.9
100.7
93.7
105.6

98.1
99.4
94.8
105.7

93.3
95.5
97.0
96.4
106.6

118.3
97.8
105.2
86.7
108.1

97.3
100.9
96.6
92.8
110.7

95.0
103.7
104.6
91.3
104.1

91.9
104.7
105.3
89.8
104.9

99.0
101.6
101.9
92.7
105.4

104.7
105.3
104.8
90.0
105.1

93.0
97.7
98.9
95.4
105.7

1960
1961
1962
1963
1964

108.7
109.7
118.3
124.3
132.3

109.9
111.2
119.7
124.9
131.8

111.0
112.6
119.7
125.2
131.7

123.2
111.8
131.1
141.2
145.1

110.8
112.2
122.2
129.6
141.1

107.6
108.3
119.6
124.2
132.0

110.2
110.1
122.1
128.3
139.1

107.6
108.4
117.0
123.7
132.8

106.6
104.8
114.1
121.2
131.2

108.7
112.2
120. 0
126.3
134.3

1965 2

143.3

142.4

140.3

167.1

154.8

146.8

156.5

144.2

144.3

144.1

Seasonally adjusted
1964: Jan
Feb
Mar
Apr
May..
June

127.9
128.4
129. 3
130.8
131.8
132.0

128.9
128.5
128.6
131.0
131.4
131.9

129.4
129.1
128.5
131.1
131.4
131. 7

146.6
145.5
144.3
149.3
151. 2
151.8

135.6
137.6
137.2
138.7
137.7
138.8

127.8
127.2
128.9
130.8
131.4
132.1

132.8
132.0
134.3
136.6
138.1
139.1

126.7
128.4
129.5
131.1
132.2
132.4

123.0
126.1
127.8
129.5
131.1
131.7

130.6
130.8
131.2
132.7
133.3
133.2

July
Aug..
Sept
Oct
Nov

133.3
134.0
134.0
131.6
135.4
138.1

132.3
133.1
132.8
130.5
135.2
138.1

132.2
133.1
132.5
129.5
134.5
138.0

152.6
155.8
144.7
105.9
143.0
166.2

140.9
141.7
140.6
144.0
147.7
150.5

132. 5
133.2
133.5
132.5
136.7
138.4

140.0
141.1
141.4
140.6
146.1
148.5

134.5
135. 3
135.6
132.6
135. 9
138.0

133.8
135.2
135. 3
128.6
134.9
136.8

135.2
135.3
135.8
136.7
137.0

138.6
139.2
140.7
140.9
141.6
142.7

138.4
138.5
140.1
139.4
140. 2
140.7

138.4
138.0
140.0
138.5
138.6
138.7

165.7
163. 8
173.1
166.9
168.1
168.1

151.7
152.7
154.0
152.1
151.8
151.3

138.2
139.4
140.4
141.2
143.7
144.9

147.7
149.2
150.1
150.9
153.5
154.6

138.8
139.7
141.7
142.6
142.6
144.5

138.0
139.0
142.6
142.9
143.4
146.1

139.5
140.5
140.6
142.4
141.8
143.4

144.2
144.5
143.5
144.8
146.3
148.3

141.7
142.3
143.3
145.3
147.3
148.1

139.3
139.5
140.7
141.3
143.0
143.9

167.8
169.8
166.5
168.4
169.2
169

151.2
149.8
153. 0
156.0
159.2

147.0
148.4
149.0
153.9
156.5
157.3

156.4
157.8
159.0
163.8
166.7
167

146.4
146.1
143.7
144.3
145.8
148.6

148.4
147.3
142.8
142.1
143.8
147

145.0
144.8
144.5
147.2
147.9
150

Dec.
1965: Jan
Feb
Mar
Apr
May
June
July.
Aug
Sept
Oct
Nov
Dec 2
1

Also includes apparel and consumer staples, not shown separately.
Preliminary.
Source: Board of Governors of the Federal Reserve System.

2




248

TABLE C—34.—Manufacturing capacity, output, and utilization rate, 7948-65

Capacity *

Period

Output
(1957-59=
100)

Utilization
rate
(percent) 2

1948
1949

80
84

69
65

86
78

1950
1951
1952
1953
1954

87
90
94
100
104

1955
1956
1957
1958
1959

108
113
119
122
126

76
82
85
93
86
97
100
101
93
106

88
91
90
93
83
90
88
85
76
84

1960
1961
1962
1963
1964

131
134
139
145
151

109
110
119
125
133

83

19653

160

145

91

86
86
88

Seasonally adjusted
1961* I

133
134
135
136

103
108
112
115

1962- I

137
138
139
141

117
119
120
120

78
81
83
85
85
86
86
85

1963- I

142
144
145
147

121
125
126
127

85
87
87
87

148
150
152
154

129
132
135
136

156
159
161
163

141
143
146
148

87
88
89
88
90
90
9
1
9
1

II
III
IV

II
III
IV
II
III
IV

1964- I

II
III
IV
1965- I

II
III
IV 3

1 For description and source of data see Frank de Leeuw "The Concept of Capacity," Journal of the American Statistical Association, December 1962, vol. 57, pp. 826-84, and Peter Gajewski "Manufacturing Capacity
Measures and Current Economic Analysis," a paper presented at the 1964 American Statistical Association
Meetings. See also McGraw-Hill surveys on "Business Plans for New Plants and Equipment" for data
on2 capacity and operating rates.
Output as percent of capacity; based on unrounded data,
s Preliminary.
Source: Board of Governors of the Federal Reserve System (output) and sources in footnote 1 (capacity
and utilization rate).




249

TABLE C-35.—New construction activity, 1929-65
[Value put In place, millions of dollars]

Year or month

2,879
3,720
4,232
6,497
6,999
6,980
8,198
8,682
11,957
14,075
8,301
5,259
5,809
12, 627
14,308
20,041
26,078
26, 722
33, 575
35,435
36,828
39,136
41, 380
46, 519
47, 601
49,139
50,153
55,305
53,941
55, 447
59, 576
62, 755
65,817
68,112

3,628
5,751
10,660
6,322
3,073
2,398
2,231
2,231
3,319
4,704
6,269
6,866
9,255
10, 779
11,242
11, 712
11, 715
12, 732
14,059
15,457
16,070
15,863
17,148
17,869
18,896
19,926
20,234

65, 024
66, 011
66,235
66,850
65,549
66,361
66,384
65,480
65,968
64,861
65,153
66,178
66,168
66,947
67,646
67,606
67,572
68,950

45,778
46,422
46, 803
46,547
46,087
46,168
46,088
45,508
45,571
45,294
45,368
45,684
46, 446
46,912
47,219
47,560
47,982
48,616

67,953
69,311
67,616
69,349
69,330

48,194
48,068
47, 844
48,045
48,394

Seasonally adjusted
21,085 18, 785 5,566
21,569 18,979 5,657
21,931 19,000 5,708
21,505 19,141 5,694
20,834 19,328 5,746
20,658 19, 582 5,742
20,617 19, 537 5,642
20,314 19,256 5,493
20,003 19,637 5,587
19,801 19,609 5,653
19,812 19,730 5,709
20,161 19, 731 5,641
20,845 19, 770 5,662
20,866 20,199 5,701
20,735 20,617 5,903
20,762 20,885 6,089
21, 077 20,912 6,254
21,203 21,392 6,574
20,990 21,620 6,826
20,657 21,573 6,815
20,491 21,655 6,754
20,416 21,501 6,529
20,292 21,850 6,675
20.329 22,155 7,029

19,246
19.589
19,432
20,303
19,462
20,193
20,296
19,972
20,397
19,567
19,785
20,494
19,722
20,035
20,427
20,046
19.590
20,334
19,996
19,759
21,243
19,772
21,304
20,936

10, 793
8,741
6,427

1929.
1930.
1931.
1932.
1933.
1934.
1935.
1936.
1937.
1939
...
1940
1941
1942
1943
1944
1945
1946
1946 new series *.
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
I960...1961
1962
1963
1964
1965*
1964: J a n . . . .
Feb...
Mar..
Apr._.
May...
June...
July..
Aug__.
Sept...
Oct..-.
Nov_..
Dec
1965: Jan.._.
Feb...
Mar_..
May..
June.-.
July...
Aug...
Sept...
Oct—.
Nov «..
Dec«..

Public construction

Private construction
Residential
Nonresidential building and
building
other construction
(nonfarm)
Total
New
Com- Inhous- Total mer- dus- Other«
Total
ing
cial2 trial
units
3,040 4,682 1,135
8,307 3,625
2,598
949
1,570 3,808
893
532
2,383
5,883 2,075
2,203
1,320
454
221
1,528
3,768 1,565
74
485 1,046
223
749
1,676
630
761
176
290
130
455
1,231
470
884
191
380
173
520
1,509
625
989
710
211
158
620
1,999 1,010
1,210 1,416
290
266
860
2,981 1,565
492
1,149
1,475 2,028
387
3,903 1,875
232
1,053
1,620 1,570
285
3,560 1,990
2,270 1,709
292
254
1,163
4,389 2,680
2,069
2,560
442
1,279
5, 054 2,985
348
801
1,486
3,040 2,696
409
6,206 3,510
1,440 1,700
155
346
1,199
3,415 1,715
710 1,094
33
156
905
1,979
885
570 1,371
56
1,107
2,186
208
815
720 2,135
203
1,290
3,411 1,276
642
,153 1,689
2,802
10,396 4, 752 3,300 5,644
,153 1,689
2,988
12, 077 6,247 4,795 5,830
957 1,702
4,213
16, 722 9,850
7,765 6,872
5,452
21, 374 13,128 10,506 8,246
,397 1,397
20, 453 12, 428 10,043 8,025
,182
972
5,871
8,583 1,415 1,062
6,106
26, 709 18,126 15, 551
6,684
, 498 2,117
26,180 15, 881 13, 207 10, 299
6,789
26, 049 15,803 12, 851 10, 246 [,137 2,320
7,280
1,791 2,229
27, 894 16, 594 13,411 11,300
7,239
29, 668 18,187 14, 931 11, 481 2,212 2,030
7,310
2,399
34,804 21,877 18, 242 12, 927 3,218
7,976
34, 869 20; 178 16,143 14, 691 3,631 3,084
8,953
35, 080 19,006 14, 736 16,074 3,564 3, 557
8,936
34,696 19, 789 15,445 14,907 3,589 2,382
8,948
39,235 24,251 19, 233 14, 984 3,930 2,106
38,078 21, 706 16,410 16,372 4,180 2,851
9.341
38,299 21,680 16,189 16, 619 4,674 2,780
9,165
41, 707 24, 292 18, 638 17,415 4,955 2,949
9,511
43,859 25,843 20,064 18,016 5,200 2,962
9,854
45,891 26, 507 20,612 19,384 5,656 3,303 10,425
47,878 26, 647 20, 723 21,231 6,434 4,010 10,787

Total
new
construction

26,993
27,443
27,803
27,406
26,759
26,586
26, 551
26,252
25,934
25,685
25,638
25,953
26,676
26, 713
26,602
26,675
27, 070
27,224
26,983
26,621
26,413
26,343
26,195

1
2

annual rates
3.103 10,116
3,122 10,200
3,146 10,146
3,146 10,301
3,199 10,383
3,218 10,622
3,280 10,615
3,361 10,402
3,400 10,650
3,445 10,511
3,521 10,500
3,610 10,480
3,792 10,316
3,871 10,627
3,934 10,780
3,997 10, 799
4,012 10,646
4,040 10, 778
4,073 10,721
4,096 10,662
4,114 10,787
4,099 10,873
4,050 11,125
11,128

Total

2,486
2,858
2,659
1,862
1,648
2,211
2,233
3,516
3,096
3,420

Federal

State
and
local

235
313
506
444
802
1,347
1,381
2,363
1,893
2,037
2,136
2,128
4,448
9,788
5,877
2,631
1,836
1,109
1,109
1,249
1,594
1,949
2,078
3,445
4,735
4.839
4,103
3,508
3,583
4,243
5,493
6,435
5,889
6,305
6,469
7,120
7,311
7,068

2,251
2,545
2,153
1,418
846
864
852
1,153
1,203
1,383
1,673
1,500
1,303
872
445
442
562
1,122
1,122
2,070
3,110
4,320
4,788
5,810
6,044
6,403
7,609
8,207
9,149
9,816
9,964
9,635
9,974
10,843
11,400
11,776
12, 615
13,166

Total includes additions and alterations and nonhousekeeping units not shown separately.
Office buildings, warehouses, stores, restaurants, and garages.
3 Farm, institutional, public utilities, and all other private.
4
New series differs from old in that it reflects differences in 1946 due to the new higher level series of housing starts and farm construction expenditures and the new reduced level value in place series for public
utility construction. See Construction Report C8O-61 (Supplement) for a description of the differences.
« Preliminary.
8
Not available on a seasonally adjusted basis.
NOTE.—Data for Alaska and Hawaii included beginning 1959.
Source: Department of Commerce, Bureau of the Census.




250

TABLE C-36.—Business expenditures for new plant and equipment, 7939 and 7945-66
[Billions of dollars]
Manufacturing
Year or quarter

Total i
Total

Transportation

Dura- Non- Mining Railble durable
goods

road

goods

Com-

Public mercial
utiliand
ties
Other
other»

1939

5.51

1.94

0.76

1.19

0.33

0.28

0.36

0.52

2.08

1945
1946
1947
1948
1949

8.69
14.85
20.61
22.06
19.28

3.98
6.79
8.70
9.13
7.15

1.59
3.11
3.41
3.48
2.59

2.39
3.68
5.30
5.65
4.56

.38
.43
.69
.88
.79

.55
.58
.89
1.32
1.35

.57
.92
1.30
1.28
.89

.50
.79
1.54
2.54
3.12

2.70
5.33
7.49
6.90
5.98

20.60
25.64
26.49
28.32
26.83

7.49
10.85
11.63
11.91
11.04

3,14
5.17
5.61
5.65
5.09

4.36
5.68
6.02
6.26
5.95

.71
.93
.98
.99
.98

1.11
1.47
1.40
1.31
.85

1.21
1.49
1.50
1.56
1.51

3.31
3.66
3.89
4.55
4.22

6.78
7.24
7.09
8.00
8.23

1955
1956
1957
1958
1959

28.70
35.08
36.96
30.53
32.54

11.44
14.95
15.96
11.43
12.07

5.44
7.62
8.02
5.47
5.77

6.00
7.33
7.94
5.96
6.29

.96
1.24
1.24
.94
.99

.92
1.23
1.40
.75
.92

1.60
1.71
1.77
1.50
2.02

4.31
4.90
6.20
6.09
5.67

9.47
11.05
10.40
9.81
10.88

1960
1961
1962
1963
1964

35.68
34.37
37.31
39.22
44.90

14.48
13.68
14.68
15.69
18.58

7.18
6.27
7.03
7.85
9.43

7.30
7.40
7.65
7.84
9.16

.99
.98
1.08
1.04
1.19

1.03
.67
.85
1.10
1.41

1.94
1.85
2.07
1.92
2.38

5.68
5.52
5.48
5.65
6.22

11.57
11.68
13.15
13.82
15.13

51.83

22.51

11.34

11.18

1.30

1.68

2.83

6.84

16.66

-.

1950
1951
1952
1953
1954

. .

-.
_ _

. .

19653

Seasonally adjusted annual rates
36.95
38.05
40.00
41.20

14.85
15.30
15.95
16.45

7.35
7.65
8.00
8.30

7.50
7.65
8.00
8.15

1.05
1.00
1.05
1.05

0.90
1.00
1.20
1.35

1.70
2.05
1.85
2.10

5.20
5.45
5.90
5.80

13.25
13.30
14.05
14.50

42.55
43.50
45.65
47.75

17.40
17.80
18.85
20.15

8.85
9.00
9.60
10.15

8.55
8.80
9.20
10.00

1.15
1.15
1.20
1.30

1.40
L.25
50
1.55

2.30
2.25
2.40
2.60

5.95
6.30
6.30
6.35

14.35
14.75
15.40
15.80

1965: I
II
III
IV 3

49.00
50.35
52.75
54.85

20.75
21.55
23.00
24.35

10.40
10.80
11.75
12.20

10.40
10.70
11.25
12.15

1.25
1.30
1.25
1.40

.75
1.55
L.70
I 70

2.55
2.70
3.00
3.10

6.80
6.85
6.75
6.95

15.85
16.40
17.00
17.30

1966: 13
113

56.70
58.85

24.70
25.85

12.40
13.25

12.25
12.60

1.35

1.80

3.90

7.65

17.30

1963: I

II

III
IV
1964: I .
II

_ .
-

III
IV

33.00

1 Excludes agriculture.
2
Commercial and other includes trade, service, finance, communications, and construction.
3 Estimates based on anticipated capital expenditures reported by business in late October and November 1965. The quarterly anticipations include adjustments, when necessary, for systematic tendencies in
anticipatory data.
NOTE.—Annual total is the sum of unadjusted expenditures; it does not necessarily coincide with the
average of seasonally adjusted figures.
These figures do not agree precisely with the plant and equipment expenditures included in the gross
national product estimates of the Department of Commerce. The main difference lies in the inclusion
in the gross national product of investment by farmers, professionals, institutions, real estate firms, and of
certain outlays charged to current account.
These series are not available for years prior to 1939 and for 1940 to 1944.
Sources: Department of Commerce (Office of Business Economics) and Securities and Exchange
Commission.




251

T A B L E C-37.—New housing starts and applications for financing, 1929-65
[Thousands of units]
Proposed
home construction >

Housing starts

Year or
month

Total
private
and
public
(including
farm) *

Private nonfarm
Private nonfarm
New
private
PriTotal
Total
housing
Governprivate
private vate
units
ment home
(in(inand
Two
authorcludprograms
clud- public
or
ized 2
ing
ing
nonTotal
One- more
farm) farm Total i family fami- farm)
lies
FHA VA

1929

509.0

509.0

316.0 193.0

509.0

1930
1931
1932
1933
1934

330 0
254.0
134 0
93.0
126.0

330 0
254.0
134 0
93.0
126.0

227 0 103 0
187.0 67.0
118 0 16 0
76.0 17.0
109.0 17.0

330.0
254.0
134.0
93.0
126.0

1935
1936
1937
1938
1939

221.0
319.0
336 0
406.0
515.0

215.7
304.2
332 4
399.3
458.4

182.2
238.5
265 8
316.4
373.0

33.5
65.7
66 6
82.9
85.4

215.7 13.2
304.2 48.8
332 4 57 0
399.3 106.8
458.4 144.7

1940
1941
1942
1943
1944

602.6
706.1
356.0
191.0
141.8

529.6 447.6
619.5 533.2
301.2 252.3
183 7 136.3
138.7 114.6

82.0
86.3
48.9
47.4
24.1

529.6
619.5
301.2
183.7
138.7

ApReplica- quests
tions for
for
VA
FHA apcom- praismitals
ments

-------

—

-

«20 6
47.8
49 8
131.1
- 179.8
231.2
288.5
238.5
144.4
62 9

176.6
217.1
160.2
126.1
83.6

New Series
1945
1946
1947
1948
1949

326.1 324 9
1,023.2 1,015.2
1,268.5 1,265.1
1,362.1 1,344 0
1,466.1 1,429.8

324.9 38.9 «8.8
1,015.2 67.1 91.8
1,265.1 178.3 160.3
1, 344. 0 216.4 71.1
1,429.8 252.6 90.8

1950 .
1951.
1952
1953
1954

1,951.9 1,908.1
1,491.0 1,419.8
1,503.9 1,445 4
1,437.6 1,402 1
1, 550. 5 1, 531.8

1,908.1
1,419.8
1,445.4
1,402.1
1,531.8

328.2
186.9
229.1
216.5
250.9

191.2
148.6
141.3
156.5
307.0

397.7
192.8
267.9
253.7
338.6

164.4
226.3
251.4
535.4

1,626.6
1,646.0 1,626 6
1,324.9
1,349.1 1,324.9
1,174.8
1,223.9 1,174 8
1,382.0 1,314.2
1,314.2
1, 553.5 1, 516. 8 1, 531.3 1, 494. 6 1,211.9 282.7 1, 516.8 1,494. 6

268.7
183.4
150.1
270.3
307.0

392.9
270.7
128.3
102.1
109.3

306.2
197.7
198.8
341.7
1,208.3 369.7

620.8
401.5
159.4
234.2
234.0

74.6
998.0 242.4
83.3 1,064.2 243.8
77.8 1,186.6 221.1
71.0 21,334.7 190.2
59.2 1,285.8 182.1

142.9
177.8
171.2
139.3
113.6

1955
1956
1957
1958
1959
1960
1961
1962.
1963
1964
1965 8

1,296.0 1,252.1
1,365.0 1,313.0
. _ 1,492.4 1, 462.8
1,640.9 1,609.2
1, 590.8 1, 557.4

1,274.0 1,230.1
1,336.8 1,284.8
1,468. 7 1,439.1
1,613. 5 1, 581. 7
1, 563.8 I, 530.4

1,540.7 1,503.0 1,518.3 1,480.6

972.9
946.4
967.8
993.2
944.5

257.2
338.6
471.1
588.5
585.9

1,230.1
1,284.8
1,439.1
1, 581.7
1, 530.4

225.7
198.8
197.3
166.2
154.0

942.1 538.5 1,503.0 1,480.6 159.9

See footnotes at end of table.




1,252.1
1,313.0
1,462.8
1,609.2
1, 557.4

252

52.6

56.6
121.7
286.4
293.2
327.0

1,240.1 188.9 102.1

TABLE C--37.-—New housing starts and applications for financing, 1929-65—Continued
[Thousands of units]
Housing starts

Private nonfarm

Private nonfarm
Year or

month

Total
private Total Priand private vate
and
public (in(in- clud- public
Oneing
cludnon- Total i family
ing farm) farm
farm) i

Total
Governprivate
ment home
(inTwo
programs
cludor
ing
more
Total
fami- farm)
lies
VA
FHA

New
private

Proposed
home construction *

housing
Apu n i t s plica- Reautions quests
for
thorfor
ized 2 FHA VA

ap-

mit- praisments als

Seasonally adjusted annual rates
101.7
102.2
133.5
152.0
158.3
164.9

100.3
101.3
130.3
148.2
155.4
159.4

100.4
99.7
131.8
149.3
156.0
162.2

99.0
98.7
128.6
145.5
153.0
156.7

53.9
61.1
80.3
86.3
96.3
99.3

45.1
37.6
48.3
69.2
56.7
57.4

1,776
1,750
1,593
L, 532
1,518
L, 621

1,753
1, 706
1,571
1,506
1,496
1,593

158
192
165
146
174
152

75
83
68
60
61
60

1,324
1,412
1,379
1,288
1,280
1,305

178
193
190
190
173
177

138
135
124
111
99
103

146.0
145.7
127.4
146.1
114.6
98.3

143.5
142.3
124.0
144.0
112.0
96.7

143.8
143.2
125.3
143.5
112.4
96.4

141.2
139.7
121.9
141.4
109.9
94.8

89.6
87.5
77.0
89.3
67.3
56.7

51.6
52.2
44.9
52.1
42.6
38.1

L, 500
L, 513
1,445
1,522
1,505
1,610

1,475
1,489
1,422
1,495
1,480
1,575

145
142
136
146
152
151

56
52
52
50
57
53

1,264
1,285
1,243
1,236
1,256
1,195

162
176
174
183
194
193

109
88
121
112
118
118

June...

85.6
87.9
124.9
154.9
162.1
162.3

81.5
85.4
120.7
152.2
157.5
155.5

84.2
87.1
123.0
152.8
159.8
159.6

80.1
84.7
118.8
150.1
155.2
152.8

50.4
50.7
74.8
97.7
99.9
97.0

29.7
34.0
44.0
52.4
55.3
55.8

1,442
1,482
1,489
1,552
1,516
1,566

1,417
1,468
1,465
1,532
1,501
1,539

168
171
166
147
160
154

69
69
69
51
56
54

1,280
1,224
1,269
1,187
1,240
1,254

202
203
184
190
183
155

113
124
110
95
109
93

July__.
Aug..-_
Sept...
Oct
Nov 6 _
Dec e...

143.9
138.0
125.9
135.7
117.6
101.9

141.3
134.6
124.3
133.6
115.4
101.0

141.6
136.2
124.3
133.0
116.3
100.3

139.0
132.8
122.7
130.9
114.1
99.4

91.8
86.5
78.4
84.4
69.9
60.6

47.2
46.3
44.3
46.5
44.2
38.8

1,473
1,427
1,453
1,411
1,537
1,746

1,447
1,409
1,436
1,380
1,521
1,712

151
146
154
164
171
186

51
46
44
46
53
49

1,243
1,217
1,180
1,259
1,282
1,319

168
184
187
192
229
229

92
89
98
97
105
117

1964: Jan

Feb—.
Mar__.

Apr
May...
June...
July.-.
Aug
Sept-_.
Oct
Nov__.
Dec
1965: Jan

Feb.—
Mar__.
Apr
May_-

1
Military housing starts, including those financed with mortgages insured by FHA under Section 803
of the National Housing Act, are included in publicly financed starts but excluded from total private starts
and from FHA starts.
2
Data beginning 1963 cover approximately 12,000 permit-issuing places. Data for 1959-62 are based on
reports from approximately 10,000 places. In 1963, the additional 2,000 permit-issuing places accounted
for almost 50,000 new privately owned housing unit authorizations.
3
Units in mortgage applications or appraisal requests for new home construction.
< FHA program approved in June 1934; all 1934 activity included in 1935.
5
Monthly estimates for September 1945-May 1950 were prepared by Housing and Home Finance Agency.
« Preliminary; data for 1965 partly estimated by Council of Economic Advisers.
NOTE.—Census series beginning 1945 include Alaska and Hawaii. FHA and VA series include Alaska,
Hawaii, and Puerto Rico for all periods.
Seasonally adjusted Census data, and some of the unadjusted data, have been revised beginning April
1960. See Housing Starts C20-65-5, May 1965 for the seasonally adjusted data.

Sources: Department of Commerce (Bureau of the Census), Federal Housing Administration (FHA),
and Veterans Administration (VA), except as noted.


795-983 O—66- -17


253

TABLE C-38.—Sales and inventories in manufacturing and trade, 1947-65
[Amounts in millions of dollars]
Total manufacturing and trade

Manufacturing

Merchant
wholesalers

Retail trade

Year or month
Sales i Inven- Ratio 3 Sales i Inven- Ratio 3 Sales 1 Inven- Ratio 3 Sales i Inven- Ratio 3
tories 2
tories2
tories2
tories2
1947..
19481949..

35,260 52, 507
33, 788 49,497

15,513 25,897
1.42 17,316 28,543
1.53 16,126 26,321

1.58
1.5"
1.75

1950..
1951..
1952..
1953..
1954..

38, 596
43,356
44,840
47,987
46, 443

59, 822
70,242
72,377
76,122
73,175

1.36
1.55
1.58
1.58
1.60

18,634
21, 714
22,529
24,843
23,355

31, 078
39,306
41,136
43,948
41,612

1955..
19561957..
19581959-

51,694
54,063
55,879
54,233
59, 583

79,516
87,304
89,052
86,922
91,964

1.47
1.55
1.59
1.60
1.51

26,480
27,740
28,736
27,280
30, 219

19601961196219631964-

69,530 94,610
60,748 95,576
00,
65,078 100,271
,127
68,002 105,
72,647 110,535

1.56
1.55
1.51
1.50
1.48

30,796
30,884
33,308
34,774
37,129

1965 « s

78,648 118, 296

1.46 40,300 67,100

10,200 14,241
1.13 11,135 16,007
1.19 11,149 15,470

1.26
1.39
1.41

6,514

7,957
7,706

1.48
1.66
1.78
1.76
1.81

7,695
8, 597
8,782
9,052

9,284
9,886
10, 210
10,686
10, 637

1.07
.16
.12
.17
.18

12,;
13,046
13, 529
14,091
14, 095

19,460
21, 050
21, 031
21,488
20,926

1.38
1.64
1.52
1.53
1.51

45.069
50,842
51,871
50.070
52,707

1.62
1.73
1.80
1.84
1.70

9,893
10,513
10,475
10, 257
11,413

11,678
13, 260
12, 730
12,739
13,952

.13
.19
.23
.24

15,321
15,811
16,667
16, 696
17,951

22,769
23,402
24,451
24,113
25,305

1.43
1.47
1.44
1.43
1.40

53,814
55,087
57,753
60,147
62,944

1.7
1.74
1.70
1.
1.64

11,440
11,629
12,158
12,692
13,715

13,983
14, 251
14,580
15,597
16,461

.23
.21
.19
.18
.1

18,294
18, 234
19,613
20,536
21,802

26,813
26, 238
27,938
29,383
31,130

1.45
1.43
1.38
1.39
1.40

1.17 23, 559 33,533

1.39

1.61 14,789 17,684

Seasonally adjusted
1964: Jan
Feb....
Mar....
Apr
May.._
June

70,992 105, 551
71, 013 105, 746
70,649 106, 056
71,787 106,"""
i, 722
72,660 107',083
107,270
72,187

1.49
1.49
1.50
1.49
1.47
1.49

36,677
36,235
36,222
37.167
37,186
36, 791

60, 006
60,123
60,326
60, 531
60, 528
60,398

1.
1.
1.67
1.63
1.
1.64

13,315
13,245
13,204
13, 228
13,697
13, 623

15,818
15, 719
15, 734
15,879
16,053
16, 043

1.19
1.19
1.19
1.20
1.17
1.18

21, 000
21, 533
21,223
21,392
21,777
21, 773

29,727
29,904
29,996
30,312
30,502
30,829

1.42
1.39
1.41
1.42
1.40
1.42

July-..
Aug-_Sept...
Oct
Nov-_ _
Dec...-

73,693 107,372
73, 204 107, 613
73, 358 198, 504
198;
72,131 108, 539
73, 371 109, 320
76, 277 110, 535

1.46
1.47
1.48
1.50
1.49
1.45

60,488
60, 763
61,019
61, 777
62,377
62, 944

1.59
1.63
1.64
1.
1.66
1.60

13, 795
13, 770
13,792
13,937
14,196
14,178

16,017
15, 986
16,222
16,276
16, 384
16, 461

1.16
1.16
1.18
1.17
1.15
1.16

21,935
22, 266
22, 254
21,383
21, 661
22, 7S1

30,867
30,864
31, 263
30, 486
30, 559
31,130

1.41
1.39
1.40
1.43
1.41
1.37

1965: J a n . . . .
Feb....
Mar....
Apr
May...
June- - -

75,913 111,465
75,956 111, 884
032
77,815 113,032
77,529 113,
!,761
77,884 114,542
78,010 115,049

1.47
1.47
1.45
1.47
1.47
1.47

37,963
37.168
37, 312
36,811
37, 514
39,318
38, 885
38,693
40,285
40,044
39,814
39,943

63,213
63,382
63,708
63,999
64,269
64,625

1.63
1.64
1.58
1.60
1.61
1.62

14,128
13,946
14,725
14,620
14,718
14,736

16, 774
16,867
17,064
17,216
17,450
17,410

1.19
1.21
1.16
1.18
1.19
1.18

22,900
23,317
22,805
22,865
23,352
23,331

31, 478
31,635
32,260
32,546
32,823
33,014

1.37
1.36
1.41
1.42
1.41
1.42

July...
Aug—
Sept...
Oct
Nov.5_.
Dec.s_.

80, 023 116, 012
78,891 116, 683
78,883 116,967
79,502 117,653
80,963 118, 296

1.45
1.48
1.48
1.48
1.46

41,452
40, 518
40,173
40, 548
41, 447

65,394
65, 788
66, 267
66,642
67, 079

1.58
1.62
1.65
1.64
1.62

14.828
14.829
14,936
14,995
15, 503

17, 530
17, 535
17,655
17, 715
17,684

1.18
1.18
1.18
1.18
1.14

23, 743
23, 544
23, 774
23,959
24,013
24,303

33,360
33,045
33, 296
33, 533

1.39
1.42
1.39
1.39
1.40

1
2
3

Monthly average shown for year and total for month.
Seasonally adjusted, end of period.
Inventory/sales ratio. For annual periods, ratio of weighted average inventories to average monthly
sales; for monthly data, ratio of inventories at end of month to sales for month.
* Where December data not available, data for year calculated on basis of no change from November.
s Preliminary.
NOTE.—The inventory figures in this table do not agree with the estimates of change in business inventories included in the gross national product since these figures cover only manufacturing and trade rather
than all business, and show i ventories in terms of current book value without adjustment for revaluation.
Data for Alaska and Hawaii included beginning 1958 for manufacturing, beginning 1960 for retail trade,
and beginning 1961 for merchant wholesalers.
Source: Department of Commerce (Office of Business Economics and Bureau of the Census).




254

T A B L E G—39.—Manufacturers'

shipments and inventories,

1947-65

[Millions of dollars]
Shipments

Year or month

Inventories 2

l

Durable goods
Nondurable goods
DurNonMateable durable
Materials
FinWork
rials
Work
Total goods goods Total
Fini n d u s - indusished Total and
Total and
ished
suptries
tries
supgoods
goods
plies
plies
12,836

8,819 25,897 13,061
9, 738 28,54314,662
8,935 26,321 13,060

1947
1948
1949

15,513
17,316
16,126

6,694
7,579
7,191

1950
1951
1952
1953
1954

18,634
21,714
22, 529
24,843
23,355

789 31,078 15,539
221 39,306 20,991
11,216 41, 23, 731
11,494 43, 25, 878 8,966 10,720
11. 52741,612 23,710 7,894 9, 721

1955
1956
1957
1958
1959

26,480
27,740
28,736
27,280
30, 219

8,845
10,493
11,313
13, 349
11,828
14,071
14, 715
15,237
13, 572
15,544

1960
1961
1962
1963
1964

30,796
30,884
33,308
34,774
37,129

15,817
15,532
17,184
18,071
19,231

14,979 53,814 32,360
15, 352 55,087132,646
16,124 57, 753;34,326
16,704160,
36,028
17,898 62,944 38,412

1965 3

40,300 21,100

,

12,409 45,069 26,405 9,194 10,756
13. 025 50, 642 30,
1,447 10,417 12,317
13,499 51,871 31, 728 10,608 12,837
13, 708 50,070 30,
1,095 9,84' 12,294
14,675 52, 707 31
,839 10,585 12,952
10,286
10,234
10,571
10, 879
11,688

12,780
13, 225
14,129
14,857
15, 933

13,881
13,261
15,539
18,315
17,405
206 18,070
040 17,902
6,348 18, 664

565 20,195
125 20,143
749 19,975
143 20,868
9,
1,454
9,088 22,
2,441
9, 593 23,427
3427
10, 292 24,119
10, 791 24,532

19, 200 67,100 41, 800 12, 900 17,700 11,200 25,300

8,317
8,167

2,472
2,440

7,409
7,415

8,556
8,971
8,775
8,671
9,089

2,571
2, 721
2,864
2,800
2,928

8, 622
8,624
8,498
8,857

9,113
9,511
9, 770
9,769
9,619

2,935
3,120
3,304
3,479
3, 522

9,353
9, 707
10,246
10.871
11,391

9,800

3,800 11,700

7,666

Seasonally adjusted
10.827
10,792
10,817
10, 830
10.828
io, r •

14,833
14,880
15,001
15,112
15,127
15,211

10,310 24,036
10, 28824,163
10,261 24,247
10,335 " :, 254
24;
10,345 24,228
10,415 23;
1,906

9,666
9,661
9,632
9,534
9,528
9,432

3,452
3,403
3,446
3,459
3,452
3,422

10,918
11,099
11,169
11,261
11,248
11,052

37,963
37.168
37,312
36,811
37,514
39, 318

17, 533 60,006 35,970
208 60,123 35,960
335 60,326 36,079
17, 808 60, 53136,277
17,048 60, 528 36,300
398 36,492
18,
17, 768 W,
19,861 18,102 60, 488 36, 597
i
,
19,164 18,004 60, 763 36,
i,790
19,284 18,028 61,019 3'
17,037
18,633 18,178 61. 777
37,517
"
19,291 18,223 :,37 38,040
7
20, 559 18,7." 62,
759 12,944 38,412

10, 870
10,917
11,072
11,277
11,500
11, 688

15,325
15,442
15,497
15, 622
15,799
15,933

t,
10,402 23, 891
10,431 23,973
10,468 23,982
10,618 24,260
10,741 24,337
10, 791 24, 532

9,293
9,351
9,412
9,565
9,637
9,619

3,406
3,426
3,457
3,508
3,497
3,522

11,192
11,196
11,113
11,187
11,203
11,391

38, 885
38, 693
40, 285
40,044
39, 814
39,943

20, 415
20,374
21, 284
20,915
20, 513
20,652

18, 470 63, 213 38,
1,495
18,319 63,382 38,692
63,
19, 001 63, 708 38, 972
19,129 63,999 ' 1,233
39,
19,301 64, 269 39,475
1,951
19, 291 64; 625 39,

11,802
11,876
12,068
12,406
12,512
12, 537

15. 934
16,008
16,041
16,114
16,162
16,533

10, 759 24,718
\,
10,808 24i 690
t
,
10, 863 24, 736
1,766
10, 713 24
10, 801 24, 794
10,881 24,674

9,585 3,532 11, 601
9,541 3,531 11,618
9,557 3,533 11,646
9,660 3,533 11,573
9,675 3,558 11,561
9,608 3,611 11,455

41, 452
40, 518
40,173
40, 548
41,447

21,820
21,191
20,924
21,146
21,610
21, 884

19, 632 65,394 40,600
>
,
19, 327 65,788 40,
1,814
19, 249 66, 267 41
,300
19,402 66,642 41,523
19,837 67,079 41,807

12,664
12,672
12,812
12, 886
12,880

17,053
17, 283
17,380
17, 502
17,730

10, 883 24, 794
1,974
10,859 24, "•
1,967
11,108 24,
25,119
ll
11,197 25,272

9.537
9,645
9,766
9,769
9,799

1964: Jan,_
Feb.Mar..
Apr..
May.
June.

36,677
36,235
36,222
37.167
37,186
36,791

July_.
Aug..
Sept_
Oct..
Nov.
Dec_1965: J a n _ .
Feb..
Mar..
Apr._
May.
June.
July
Aug
Sept
Oct

Nov 4
Dec*....

19,144
19,027
18,887
19,359
19,138
19,023

r

1 Monthly average for year and total for month.
Book value, seasonally adjusted, end of period.
Preliminary estimates.
4
Preliminary.

2
3

NOTE.—Data for Alaska and Hawaii included beginning 1958.
Source: Department of Commerce, Bureau of the Census.




255

3,591
3,662
3,702
3,825
3,834

11,666
11, 667
11,499
11,525
11,639

TABLE C-40.—Manufacturers'

new and unfilled orders, 1947-65

[Amounts in millions of dollars]
New orders

l

Unfilled orders 2

Unfilled orders-shipments ratio 3

Durable goods
Year or month
Total
Total

NonMachin- durable
ery and goods
equipment

Total

Durable
goods

Nondurable
goods

1947-1948-1949-.

15,256
17,692
15,614

6,388
8,126
6,633

9,566
8,981

34,266
30,552
23,877

28,379
26,459
19,504

20,110
23,907
23,203
23,533
22,313

10,165
12,841
12,061
12,105
10, 743

2,084
1,770

9,945
11,066
11,142
11,428
11,570

41,166
66,862
75,478
60,346
48,195

35,222
63,077
72,317
57,854
45,233

5,944
3,785
3,161
2,492
2,962

1955-.
1956-1957-.
1958-.
1959-.

27,423
28,383
27, 514
26,901
30,679

14,954
15,381
14,073
13,170
15,951

2,499
2,870
2,566
2,354
2,878

12,469
13,002
13,441
13,731
14, 728

60, 044
67,4 73
53, 251
48,785
54,101

56,369
64,067
50,464
45,709
50,428

3,675
3,406
2,787
3,076
3,673

I960-,
1961-.
1962-.
1963-1964_-

30,115
31,061
33,167
35, 036
37, 697

15,223
15, 664
17,085
18,300
19,803

2,791
2,854
3,090
3,326
3,706

14, 892
15,397
16, 082
16, 736
17, 895

45, 820
47, 868
46, 242
49,149
55,962

43,187
44,818
43,666
46,193
53, 042

1965 *.

41,100

21,800

4,100

19,300

64,100

60,800

Durable
goods

Nondurable
goods

5,887
4,093
4,373

1950..
1951..
1952-.
19531954-.

Total

3.42

4.12

0.96

3.63
3.87
3.35

4.27
4.55
4.00

1.12
1.04
.85

2,633
3,050
2,576
2,956
2,920

2.52
2.44
2.36
2.45

3.01
2.94
2.85
2.96

.76
.65
.66
.61

3,300

2.66

3.23

.62

Seasonally adjusted
1964: J a n . . .
Feb..

Mar..
Apr..
May_
June..

37,148
36,657
36,547
38,184
37,893
37,782

19,740
19,499
19,262
20,461
19,945
20,016

3,617
3,413
3,455
3,610
3,929
3,916

17,408
17,158
17,285
17, 723
17,948
17,766

50,083
50, 586
50,697
51,679
52, 004
52,833

47,072
47,644
47,805
48,840
49,225
50,037

3,011
2,942
2,892
2,839
2,779
2,796

2.33
2.39
2.39
2.38
2.39
2.46

2.80
2.86
2.88
2.88
2.91
2.98

0.65
.65
.63
.60
.57
.60

July..
Aug..
Sept..
Oct...
Nov_.
Dec.

39,315
37,509
38,018
37,846
37, 720
39,590

21,254
19,342
19,907
19, 623
19,454
20, 720

3,774
3,772
3,686
3,786
3,882
3,917

18,061
18,167
18,111
18,223
18,266
18,870

54,075
54,216
55,042
56,067
56,363
57,044

51,302
51,366
52,135
53,137
53,406
53,958

2,773
2,850
2,907
2.930
2,957
3,086

2.40
2.51
2.50
2.54
2.53
2.45

2.92
3.04
3.02
3.08
3.08
2.96

.56
.60
.61
.60
.60
.61

1965: Jan...
Feb..
Mar..
Apr..
May..
June..

39,704
39, 469
40, 712
41,120
40,181
40, 689

21,271
21,130
21, 714
22,043
20,992
21,310

3,958
3,799
4,024
4,078
4,069
4,091

18,433
18, 339
18, 998
19,077
19,189
19, 379

57, 317
58,160
58, 595
59,463
59,897
60, 588

54,280
55,092
55, 531
56,374
56,875
57, 454

3,037
3,068
3,064
3,089
3,022
3,134

2.48
2.53
2.46
2.51
2.56
2.58

3.01
3.07
2.98
3.04
3.13
3.15

.60
.61
.59
.60
.57
.60

July..
Aug_.
Sept..
Oct..

41, 846
40, 926
41, 483
41,843
42,266

22,195
21, 509
22,163
22,425
22,406
22, 501

4,348
4,159
4,153
4,249
4,298
4,281

19, 651
19, 417
19, 320
19,418
19,860

60, 981
61,391
62, 699
63,993
64,810

57,830
58,148
59, 385
60,664
61,458
62,075

3,151
3,243
3,314
3,329
3,352

2.48
2.57
2.66
2.69
2.66

3.02
3.12
3.23
3.28
3.23

.58
.62
.64
.63
.62

Decs.

1 Monthly average for year and total for month.
2 End of period.
Ratio of shipments for period to unfilled orders at end of period.
adjusted data for December.
4
Preliminary estimates.
5
Preliminary.
NOTE.—Data for Alaska and Hawaii included beginning 1958.
3

Source: Department of Commerce, Bureau of the Census.




256

Annual figures relate to seasonally

PRICES
TABLE C - 4 1 . — Wholesale price indexes, by major commodity groups, 1929-65
[1957-59=100]

All commodities other than farm products
and foods (industrials) *
Year or month

All
commodities

Farm
products

Processed
foods

Total

Textile Chemi- Rubber Lumber
cals
prodand
and
and
ucts
wood
allied rubber prodand
products
apparel products
ucts

1929.
1930.
1931.
1932_
1933.
1934.
1935_
19361937.
1938.
1939.

52.1
47.3
39.9
35.6
36.1
41.0
43.8
44.2
47.2
43.0
42.2

63.9
54.0
39.6
29.4
31.3
39.9
48.0
49.4
52.7
41.9
39.9

54.3
49.5
41.6
33.9
33.7
39.6
48.3
46.4
48.6
42.3
40.2

51.7
48.1
42.4
39.7
40.2
44.2
44.0
44.9
48.1
46.1
46.0

67.8
60.3
49.8
41.2
48.6
54.7
53.3
53.7
57.3
50.1
52.3

1940.
1941 _
1942.
1943.
1944_
1945.
1946.
1947.
1948.
1949.

43.0
47.8
54.0
56.5
56.9
57.9
66.1
81.2
87.9
83.5

41.3
50.1
64.6
74.8
75.3
78.3
90.6
109.1
117.1
101.3

40.4
46.7
54.8
57.2
56.0
56.4
71.7
91.1
98.4
88.8

46.8
50.3
53.9
54.7
55.6
56.3
61.7
75.3
81.7
80.0

55.4
63.7
72.8
73.1
73.9
75.1
87.3
105.7
110.3
100.9

46.6
48.8
50.9
51.2
53.6
51.0
50.7
51.6
56.1
62.3
63.1
63.8
64.2
69.4
92.2
94.4
86.2

1950.
1951_
1952.
1953.
1954_
1955.
1956.
1957.
1958.
1959.

86.8
96.7
94.0
92.7
92.9
93.2
96.2
99.0
100.4
100.6

106.4
123.8
116.8
105.9
104.4
97.9
96.6
99.2
103.6
97.2

92.6
103.3
100.9
97.0
97.6
94.3
94.3
97.9
102.9
99.2

82.9
91.5
89.4
90.1
90.4
92.4
96.5
99.2
99.5
101.3

104.8
116.9
105.5
102.8
100.6
100.7
100.7
100.8
98.9
100.4

87.5
100.1
95.0
96.1
97.3
96.9
97.5
99.6
100.4
100.0

83.2
102.1
92.5
86.3
87.6
99.2
100.6
100.2
100.1
99.7

1960.
1961.
1962,
1963.
1964.
1965 2

100.7
100.3
100.6
100.3
100.5
102.5
101.0
100.5
100.4
100.3
100.1
100.0

96.9
96.0
97.7
95.7
94.3
98.4
96.3
94.5
95.2
94.4
93.7
93.2

100.0
100.7
101.2
101.1
101.0
105.1

101.3
100.8
100.8
100.7
101.2
102.5
101.3
101.2
101.1
101.1
101.1
100.9

101.5
99.7
100.6
100.5
101.2
101.8
101.2
101.2
101.2
101.1
101.2
101.0

100.2
99.1
97.5
96.3
96.7
97.4
96.3
96.4
96.5
96.6
96.7
96.5

99.9
96.1
93.3
93.8
92.5
92.9
93.7
93.6
93.9
93.1
92.6
91.6

100.4
100.3
100.7
100.8
100.7
100.7

94.1
93.6
95.7
93.8
94.0
92.7

101.1
101.2
101.2
101.4
101.4
101.5

101.0
101.
101.3
101.7
102.1
102.8
102.9
102.9
103.0
103.1
103.5
104.1

93.0
94.5
95.4
97.6
98.4"
100.3

101.1
101.1
101.1
101.5
101.6
101.8
101.9
101.9
102.0
102.1
102.3
102.5

101.5
101.5
101.5
101.5
101.6
101.9

96.9
97.1
97.2
97.3
97.5
97.5
97.6
97.6
97.4

102.5
102.7
102. 7
102.8
103.2
103.2

101.9
101.9
102.1
102.0
101.9
102.0

97.4
97.1
97.2
97.6
97.5
97.6

1964: J a n . .
Feb..

Mar..
Apr..
May..
JuneJuly..
Aug..
Sept.
Oct-Nov_.
Dec_.
1965: Jan..
Feb..
Mar_.
Apr..
May..
JuneJuly. .
Aug..
Sept.Oct —
Nov..
Dec2_

100.0
99.1
99.5
99.4
100.3
103.0

102.5
100.9
100.5
100.4
99.4
100.2
101.2
101.0
102. 2
101.7
100.9
100.8
102.2
102.1
101.8
102.3
103.3
106.1
106.6
106.7
106.7
106.9
107.6
109.4

* See following page for other items.
See footnotes at end of table.




257

0)

0)
0)
0)

57.6
50.4
42,8
37.1
39.0
45.5
45.8
49.4
58.1
57.1
59.3
55.3
59.6
69.4
71.3
70.4
68.3
68.6
68.3
70.5
68.3

26.4
24.1
19.6
16,9
20.0
23.5
22.6
23.6
27.9
25.4
26.1
34.5
37.5
39.7
42.8
43.4
49.7
77.4
88.5
81.9
94.1
102. 5
99.5
99.4
97.6
102.3
103.8
98.5
97.4
104.1

92.3
92.2
92.2
92.3
92.9
93.1

100.4
95.9
96.5
98.6
100.6
101.1
99.0
99.9
101. 0
101.8
101.8
101.4
101.2
100. 9
100. 6
100.3
99.6
99.4
100. 8
100.8
100.7
100.5
100. 4
100.3

93.0
93.2
93.3
93.4
93.5
93.5

100. 5
101.8
102. 0
101.6
101.6
101.9

91.8
91.8
91.9
92.1
92.2
92.2

TABLE G-41.—Wholesale price indexes, by major commodity groups, 1929—65—Continued
[1957-59=100]

All commodities other than farm products and foods (industrials)—Continued
Furniture
and
other
household
durables

Hides,
skins,
leather,
and
leather
products

Fuels
and
related
products,
and
power

1929

56.6

61.5

0)

44.1

0)

56.4

53.4

67.4

1930
1931
1932
1933
1934
1935
1936
1937
1938
1939

52.0
44.7
38.0
42.0
44.9
46.5
49.5
54.3
48.2
49.6

58.2
50.0
52.1
49.3
54.3
54.5
56.5
57.5
56.6
54.2

(0
0)
C1)
0)
0)
0)
0)
0)
0)
0)

39.7
35.7
32.8
33.6
37.1
37.0
37.8
43.2
41.6
41.2

0)

43.7

55.5
51.1
45.0
45.1
49.0
48.6
49.3
54.7
53.4
53.2

53.2
49.7
46.5
49.2
52.6
52.6
52.7
53.9
52.2
51.2

67.8
67.2
63.3
56.6
59.2
59.1
59.0
59.5
59.4
59.4

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

52.3
56.1
61.1
61.0
60.5
61.3
70.7
96.5
97.5
92.5

53.2
56.6
58 2
59^9
61.6
62.3
66.7
79.7
93.8
89.3

0)
0)
1

41.4
42.2
42.8
42.7
42.7
43.4
48.5
60.2
68.5
69.0

44.2
45.8
47.7
47.4
47.4
47.8
53.6
61.8
67.5
71.2

54.4
57.8
62.5
62.1
63.8
63.9
67.8
77.8
82.5
83.8

51.2
52.4
54.5
54.7
55.8
58.1
61.8
69.1
74.7
76.7

60.1
60.8
61.5
64.6
64.9
66.7
69.8
75.6
78.2
79.6

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

99.9
114.8
92.8
94.1
89.9
89.5
94.8
94.9
96.0
109.1

90.2
93.5
93.3
95.9
94.6
94.5
97.4
102.7
98.7
98.7

72.7
80.9
81.0
83.6
84.3
90.0
97.8
99.7
99.1
101.2

72.6
79.5
81.2
82.2
83.2
85.8
92.1
97.7
100.1
102.2

85.6
92.8
91.1
92.9
93.9
94.3
96.9
99.4
100.2
100.4

78.6
83.5
83.5
86.9
88.8
91.3
95.2
98.9
99.9
101.2

80.5
85.1
87.0
94.6
95.1
98.0
99.7
102.2

104.1
113.1
116.7
105.4
110.5
99.1
98.1
96.6
101.5
101.9

1960
1961
1962
1963
1964
1965 «

105.2
106.2
107.4
104.2
104.6
109.2

99.6
100.7
100.2

101.3
100.7
100.0
100.1
102.8
105.7

102.4
102.3
102.3
102.2
102.9
103.7

100.1
99.5
98.8
98.1
98.5
98.0

101.4
101.8
101.8
101.3
101.5
93.3

102.5
103.2
104.1
106.1
107.4
107.7

103.9
107.3
110.4
109.2
111.0

1964: Jan
Feb
Mar
Apr
May
June

102.7
102.5
102.5
104.5
104.7
104.8

99.5
99.0
97.0
96.1
96.4
96.3

99.9
99.3
99.1
98.7
98.7

101.7
101.8
102.0
102.2
102.1
102.3

102.5
102.5
102.7
102.9
103.3
103.0

98.4
98.5
98.5
98.5

101.1
101.2
101.1
101.3
101.3
101.4

107.6
107.1
107.1
107.1
107.3
107.4

112.6
110.9
109.8
109.5
107.2
106.7

July
Aug
Sept
Oct
Nov
Dec

105.4
105.6
105.4
106.0
105.5
105.4

96.7
96.4
95.2
96.7
97.6
98.1

98.7
98.7
98.7
99.1
98.9
98.9

102.5
103.0
103.0
103.8
104.3
104.7

103.1
102.9
102.9
103.0
103.2
103.1

98.6
98.6
98.6
98.5
98.5
98.4

101.5
101.7
101.8
101.8
101.8
101.6

107.3
107.5
107.5
1C7.6
107.5
107.5

107.5
107.3
109.2
110.1
108.5
110.7

1965: Jan
Feb
Mar
Apr
May
June

104.9
105.1
105.7
106.3
107.4
107.7

98.5
97.9
97.9
97.6
98.4
98.7

99.0
99.0
99.5
99.8
100.0
100.0

104. 5
104.6
104.8
105.2
105.7
105.9

103.3
103.5
103.5
103.7
103.7
103.8

98.3
98.2
98.3
98.0
98.0
98.0

101.7
101.8
101.9
101.9
101.9
102. G

107.5
107.6
107.5
107.8
108.1
107.6

110.0
1C9.6
109.5
110.3
108.9
,111.0

108.8
112.2
111.3
113.3
113.6
114.3

98.7
99.0
99.2
99.4
100.3
100.6

99.9
99.9
100.0
100.5
100.8
100.9

105.8
106.2
106.2
106.3
106.7
106.6

103.7
103.8
103.8
103.9
104.1
104.1

97.8
97.7
97.7
97.8
98.0
98.1

101.7
101. 6
101.6
101.6
101.6
101.6

107.6
107.6
107.7
107.7
107.7
107.9

112.6
111.5
111.5
111.2
113.2
112.5

Year or month

July
Aug
Sept
Oct
Nov
Dec2

Pulp,
paper,
and
allied
products

C)

0)
i})

0)
0)
75.3
78.6
75.2
77.1
91.3
89.0
88.7
88.8
91.1
97.2
99.0
100.1
101.0
101.8
98.8
100.0
99.2
99.0

Metals
and
metal
products

Machinery and
motive
products

1 Not available.
Preliminary.
Source: Department of Labor, Bureau of Labor Statistics.

2




258

0
0)
0)
0)
0)

Tobacco
Nonme- products Misceltallic
and
mineral bottled laneous
prodproducts
beveructs
ages

0)
0)
0)
(0
0)
0)
0)
(0
0)
0)
0)
(0
0)
(0
0)
0)
0)
0)
108.7
111.2
103.5

TABLE C-42.— Wholesale price indexes•, by stage of processing, 1947-65
[1957-59=100]
Intermediate materials, supplies, and components* l
Crude materials

Year or
month

All
commodities

Materials and components for
manufacturing

NonFood- food
stuffs
maFuel
Total and
feed- terials.
stuffs except

Total

iuei
fn*»l

Materials
for
Total food
manufacturing

Materials
for
nondurable
manufacturing

Materials
for
durable
manufactur-

Components
for
manufactur-

ing

ing

Materials
and
components
for
construction

81.2
87.9
83.5

100.8
110.5
95.6

113.0
122.2
101.5

86.5
96.2
87.5

73.6
87.0
86.5

76.5
82.7
79.4

75.5
81.5
78.0

102.6
105.8
91.0

94.0
99.5
90.7

58 8
66.4
68.2

63.0
68.0
69.3

69.6
77.0
77. 2

86, 8
96.7
94.0
92 7
92.9

104.2
119.6
109.9
101.5
100.6

108.9 100.0
126.0 115.3
118.6
99.9
106 2 95.6
106.2
93.8

86.1
87.7
88.3
91.4
87.3

83.0
93.0
90.3
90.8
91.3

81.8
92.7
88.8
90 2
90.4

94.7
105.5
101.4
101.6
100.7

95.2
110.3
99.3
98 5
96.9

72.1
80.1
80.3
83 9
85.7

71.9
81.6
81.8
83 3
83.7

81.2
88.8
88.2
89.7
90.1

93.2
96.2
99.0
100.4
100.6

96.7
97.2
99.4
101.6
99.0

96.2
94.2
98.4
104.2
97.4

99.1
102.8
101.4
97.6
101.0

87.1
93.3
98.6
99.8
101.6

93.0
97.1
99.4
99.6
101.0

92.6
96.9
99.3
99.7
101.0

97.5
97.9
99.7
102.0
98.3

97.3
98.8
100.1
99.1
100.8

90.0
95.7
98.8
99.5
101.8

87.4
95.4
99.1
99.9
101.1

93.7
98.5
99.1
99.1
101.8

100.7
100.3
100.6
100.3
100.5

96.6
96.1
97.1
95.0
94.1

96.2
94.9
96.8
94 0
91.9

96.8
97.9
97.4
96 2
97.8

102.5
102.3
101.8
103.0
102.5

101.0
100.3
100.2
100.5
100.9

101.0
99.8
99.2
99.4
100.4

99.5
102.6
100.5
105.5
104.0

100.8
98.6
98.0
97.1
97.8

101.9
100.5
100.4
100.5
102.5

100.6
99.6
98.8
98.8
99.7

101.1
99.7
99.3
99.6
100.6

1965 4

102.5

98.9

98.3

99.8

103.2

102.2

102.0

106.6

98.7

104.6

101.3

101.4

1964: J a n
Feb

Mar
Apr
May
June

101.0
100.5
100.4
100.3
100.1
100.0

95.1
94.0
94.3
94.2
93.5
92.4

94.0
92.2
92.5
92.1
91.3
89.6

96.6
96.6
97.1
97.9
97.3
97.5

104.5
105.1
103.2
101.0
99.9
99.8

101.3
101.2
100.9
100.9
100.6
100.3

100.6
100.4
100.4
100.4
100.2
100.0

109.1
106.2
104.4
104.2
102.5
101.7

97.6
97.6
97.8
97.8
97.8
97.6

101.8
101.9
102.3
102.4
102.3
102.3

99.5
99.6
99.7
99.9
99.9
99.4

100.1
100.3
100.4
100.7
100.7
100.6

July
Aug _
Sept....
Oct
Nov
Dec

100.4
100.3
100.7
100.8
100.7
100.7

93.8
94.1
95.7
94.3
94.0
94.0

91.5
91.7
94.4
91 8
91.0
90.6

97.5
97.9
97.7
98 5
99.1
99.6

101.7
102.3
101.9
102 7
103.8
104.2

100.5
100.4
100.6
101 1
101.1
101.4

100.0 102.1
100.1 102.1
100.2 102.8
100 8 103 8
101.0 104.3
101.0 105.0

97.6
97.5
97.6
98. 0
98.2
98.3

102.4
99.3
102.5
99.3
102.5
99.4
103 2 100 0
103.3 100.3
103.4 100.3

100.6
100.6
100.6
100 7
100.7
100.7

101 0 94.2
101.2
95.5
101.3
95.8
101.7
96.9
102.1
98.3
102.8 100.6

91.8
93.5
93.9
95.4
97.3
101.0

98.3
98.7
99.0
99.7
100.2
99.8

103.5
104.3
103.6
101.5
101.5
101.7

101.6
101.6
101.6
101.8
101.9
102.2

101.5
101.4
101.5
101.6
101.7
101.9

106.3
106.3
105.6
105.8
104.9
105.9

98.5
98.5
98.5
98.6
98.7
98.7

103. 7
103.9
104.0
104.2
104.6
104.8

100.4
100.5
100.5
100.7
101.2
101.4

100.9
100.9
100.9
101.0
101.2
101.2

102.9
102.9
103.0
103.1
103.5
104.1

100.9
101.1
100.0
100.1
100.7
104.1

99.6
100.0
99.9
100.1
100.7
101.3

101.9
102.7
103.7
104.3
104.8
105.4

102.3
102.4
102.5
102.6
103.0
103.0

102.0
102.1
102.2
102.4
102.5
102.6

106.2
106.5
106.9
107.5
108.1
108.8

98.7
98.7
98.7
98.9
98.8
98.9

104.8
105.0
105.1
105.1
105.3
105.2

101.4
101.6
101.6
101.9
102.2
102.3

101.3
101.7
101.7
101.7
101.8
101.9

1947
1948
1949
1950
1951
1952
1953
1954

. .

_

1955
1956
1957
1958
1959

- -

1960
1961
1962
1963
1964

1965: Jan. .
Feb
Mar
Apr
May
June
July.....
Aug
Sept
Oct
Nov 4
Dec ...

100.5
100.8
100.0
100.1
100.8
103.1

*See following page for other items.
See footnotes at end of table.




259

TABLE C-42.— Wholesale price indexes, by stage of processing, 1947—65—Continued
[1957-59=100]
Special groups of industrial
products

Finished goods
Consumer finished goods
Year or month
Total
Total

Other
DunonFoods durable rable
goods
goods

InterConPromediate
sumer
ducer Crude materials, finished
finished mate- supplies, goods ex2
goods rials
and com- cluding
foods
ponents 3

1947--.
1948
1949

80.1
86.4
84.0

86.1
92.6
88.3

90.7
99.0
91.0

86.5
92.0
88.2

75.9
81.1
83.2

61.8
67.4
70.7

79.2
92.5
84.0

73.4
79.8
77.8

83.1
88.4
86.5

1950
1951
1952
1953
1954

85.5
93.6
93.0
92.1
92.3

89.8
98.2
97.0
95.4
95.3

92.8
104.2
103.3
97.9
97.1

89.6
96.5
94.1
95.0
95.3

84.1
89.7
90.4
91.1
91.8

72.4
79.5
80.8
82.1
83.1

93.6
102.9
93.1
92.4
88.0

81.4
91.2
88.3
89.4
89.8

87.8
94.2
92.9
93.7
94.1

1955
1956
1957
1958
1959

92.5
95.1
98.6
100.8
100.6

94.7
96.1
98.9
101.0
100.1

94.7
94.5
97.8
103.5
98.7

95.8
97.7
99.9
99.3
100.8

92.8
95.9
98.7
100.1
101.3

85.6
92.0
97.7
100.2
102.1

96.6
102.3
100.9
96.9
102.3

92.5
97.0
99.6
99.4
101.0

94.8
97.1
99.5
99.6
100.9

I960..
1961
1962
1963
1964

101.4
101.4
101.7
101.4
101.8

101.1
100.9
101.2
100.7
100.9

100.8
100.4
101.3
100.1
100.6

101.5
101.5
101.6
101.9
101.6

100.9
100.5
100.0
99.5
99.9

102.3
102.5
102.9
103.1
104.1

98.3
97.2
95.6
94.3
97.1

101.4
100.1
99.9
99.6
100.2

101.3
101.2
101.0
101.0
100.9

1965 4

103.6

102.8

104.5

102.8

99.6

105.4

100.9

101.5

101.7

1964: Jan...
Feb..
Mar..
Apr..
May.
June.

102.1
101.6
101.5
101.3
101.3
101.7

101.5
100.8
100.7
100.3
100.2
100.8

101.4
99.9
100.2
99.7
98.9
100.7

102.4
102.1
101.5
101.1
101.3
101.2

99.5
99.6
99.6
99.7
100.1
100.0

103.5
103.7
103.8
103.9
104.3
104.1

94.9
94.9
95.2
96.2
95.6
95.9

100.1
100.2
100.2
100.2
100.1
99.9

101.4
101.2
100.8
100.6
100.8
100.7

July.
Aug..
Sept.
Oct..
Nov..
Dec.

102.1
101.9
102.1
102.1
102.1
101.9

101.2
100.9
101.3
101.2
101.1
100.8

101.4
100.9
102.2
101.4
100.9
99.9

101.5
101.4
101.0
101.6
101.9
102.1

100.1
99.9
99.9
100.0
99.9
99.9

104.3
104.3
104.2
104.3
104.6
104.5

96.6
98.3
98.1
99.1
99.8
100.6

100.0
100.0
99.9
100.4
100.5
100.6

100.9
100.8
100.6
101.0
101.1
101.3

1965: Jan..
Feb..
Mar.
Apr..
MayJune.

102.3
102.3
102.4
102.8
103.2
103.9

101.2
101.2
101.4
101.9
102.3
103.2

100.8
100.9
101.3
102.6
103.5
105.6

102.3
102.2
102.2
102.2
102.5
102.6

99.8
99.7
99.7
99.7
99.6
99.7

104.9
105.0
105.1
105.3
105.3
105.4

99.0
99.4
99.7
100.1
101.0
100.5

100.8
100.8
100.9
101.1
101.4
101.5

101.4
101.3
101.3
101.3
101.5
101.6

July.
Aug.
Sept.
Oct..
Nov.
Dec 4

104.0
103.8
104.1
104.3
104.7
105.3

103.4
103.1
103.5
103.7
104.2
104.9

106.0
105.3
106.1
106.3
107.2
108.9

102.7
102.8
103.0
103.3
103.6
103.7

99.6
99.5
99.5
99.5
99.5
99.6

105.4
105.5
105.5
105.6
105.9
106.0

100.4
101.7
101.3
102.0
102.7
102.6

101.5
101.7
101.8
101.9
102.1
102.2

101.6
101.6
101.8
102.0
102.2
102.3

1
2

Includes, in addition to subgroups shown, processed fuels and lubricants, containers, and supplies.
Excludes crude foodstuffs and feedstuffs, plant and animal fibers, oilseeds, and leaf tobacco.
3 Excludes intermediate materials for food manufacturing and manufactured animal feeds.
4
Preliminary.
NOTE.—For a listing of the commodities included in each sector, see Table 2B, Wholesale Prices and Price
Indexes, 1962 (BLS Bulletin 1411).
Source: Department of Labor, Bureau of Labor Statistics.




260

TABLE G-43.—Consumer price indexes, by major groups, 1929-65
For city wage earners and clerical workers
[1957-59= 100]

Year or month

1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964 3
1965
1964: Jan 3
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1965: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec

All

ApReadparel Trans- Medi- Per- ing an d Other
and porta- cal
sonal recrea- goods
and
tion care care
uption services
Total Rent keep J

Housing

items

Food

59.7
58.2
53.0
47.6
45.1
46.6
47.8
48.3
50.0
49.1
48.4
48.8
. 51.3
56.8
60.3
61.3
62.7
68.0
77.8
83.8
83.0
83.8
90.5
92.5
93.2
93.6
93.3
94.7
98.0
100.7
101.5
103.1
104.2
105.4
106.7
108.1
109.9
107.7
107.6
107.7
107.8
107.8
108.0
108.3
108.2
108.4
108.5
108.7
108.8
108.9
108.9
109.0
109.3
109.6
110.1
110.2
110.0
110.2
110.4
110.6
111.0

55.6
52. 9
43.6
36.3
35.3
39.3
42.1
42.5
44.2
41.0
39.9
40.5
44.2
51.9
57.9
57.1
58.4
66.9
81.3
88.2
84.7
85.8
95.4
97.1
95.6
95.4
94.0
94.7
97.8
101.9
100.3
101.4
102.6
103.6
105.1
106.4
108.8
105.8
106.0
105.7
105.7
105.5
106.2
107.2
106.9
107.2
106.9
106.8
106.9
106.6
106.6
106.9
107.3
107.9
110.1
110.9
110.1
109.7
109.7
109.7
110.6

(2)
(2)
(2)
(2)
(2)
(2)

56.3
57.1
59.1
60.1
59.7
59.9
61.4
64.2
64.9
66.4
67.5
69.3
74.5
79.8
81.0
83.2
88.2
89.9
92.3
93.4
94.1
95.5
98.5
100. 2
101.3
103.1
103.9
104.8
106.0
107.2
108.5
106.9
106.9
107.1
107.0
106.9
107.1
107.1
107.2
107.4
107.6
107.7
107.8
108.1
108.2
108.2
108.2
108.2
108.2
108.3
108.2
108.6
109.0
109.2
109.4

85.4
83.1
78.7
70.6
60.8
57.0
56.9
58.3
60.9
62.9
63.0
63.2
64.3
65.7
65.7
65.9
66.1
66.5
68.7
73.2
76.4
79.1
82.3
85.7
90.3
93.5
94.8
96.5
98.3
100.1
101.6
103.1
104.4
105.7
106.8
107.8
108.9
107.3
107.5
107.5
107.7
107.7
107.8
107.8
107.9
107.9
108.2
108.3
108.4
108.4
108.5
108.7
108.8
108.8
108.8
108.9
109.0
109.1
109.2
109.3
109.5

55.3
54.1
49.2
43.6
42.1
46.1
46.5
46.9
49.3
49.0
48.3
48.8
51.1
59.6
62.2
66.7
70.1
76.9
89.2
95.0
91.3
90.1
98.2
97.2
96.5
96.3
95.9
97.8
99.5
99.8
100.6
102.2
103.0
103.6
104.8
105.7
106.8
105.0
105.1
105.3
105.6
105.7
105.7
105.5
105.3
105.9
106.2
106.4
106.6
105.6
105.8
106.0
106.3
106.8
106.9
106.1
106.4
107.2
107.8
108.1
108.1

(2)
(2)
(2)
(2)
(2)
(2)
49.4
49.8
50.6
51.0
49.8
49.5
51.2
55.7
55.5
55.5
55.4
58.3
64.3
71.6
77.0
79.0
84.0
89.6
92.1
90.8
89.7
91.3
96.5
99.7
103.8
103.8
105.0
107.2
107.8
109.3
111.1
109.4
108.6
108.9
109.0
109.1
109.2
109.4
109.3
108.9
109.4
110.0
110.5
111.1
110.6
110.6
111.0
111.4
111.2
111.5
111.0
111.0
111.2
111.5
111.6

(2)
(2)
(2)
(2)
(2)
(2)
49.4
49.6
50.0
50.2
50.2
50.3
50.6
52.0
54.5
56.2
57.5
60.7
65.7
69.8
72.0
73.4
76.9
81.1
83.9
86.6
88.6
91.8
95.5
100.1
104.4
108.1
111.3
114.2
117.0
119. 4
122.3
118.2
118.5
118.7
119.0
119.1
119.3
119.5
119.8
119.7
119.9
120.2
120.3
120.6
121.0
121.4
121.6
121.8
122.2
122.7
122.8
122.8
123.0
123.4
123.7

(2)
(2)
(2)
(2)
(2)
(2)
42.6
43.2
45.7
46.7
46.5
46.4
47.6
52. 2
57.6
61.7
63.6
68.2
76.2
79.1
78.9
78.9
86.3
87.3
88.1
88.5
90.0
93.7
97.1
100.4
102.4
104.1
104.6
106.5
107.9
109.2
109.9
108.5
108.4
108.7
108.7
108.9
109.1
109.3
109.4
109.5
109.7
109.7
110.0
110.0
110.1
110.4
110.7
111.0
111.0
108.7
109.0
109.2
109.2
109.6
110.0

(2)
(2)
(2)
(2)
(2)
(2)
50.2
51.0
52.5
54.3
54.4
55.4
57.3
60.0
65.0
72.0
75.0
77.5
82.5
86.7
89.9
89.3
92.0
92.4
93.3
92.4
92.1
93.4
96.9
100.8
102.4
104.9
107.2
109.6
111.5
114.1
115.2
113.1
113.3
113.6
114.0
114.1
114.0
114.1
114.2
114.3
114.5
114.9
114.9
115.0
115.2
115.4
115.9
115.9
115.7
114.6
114.3
114.8
115.2
115.4
115.4

(
52.7
52.6
54.0
54.5
55.4
57.1
58.2
59.9
63.0
64.7
67.3
69.5
75.4
78.9
81.2
82.6
86.1
90.6
92.8
94.3
94.3
95.8
98.5
99.8
101. 8
103.8
104.6
105.3
107.1
108.8
111.4
108.3
108.4
108.5
108.6
108.7
108.7
108.9
108.9
109.0
109.1
109.1
109.2
109.3
109.4
109.5
110.3
110.6
111.0
111.5
112.6
112.7
113.3
113.3
113.4

1
Not comparable to previous "apparel" series; index revised to include laundry and drycleaning;
formerly included in housing group; indexes prior to 1953 estimated.
2
Not available.
3
New series, beginning January 1964. For details, see Department of Labor release, Major Changes in

the Consumer Price Index, March 3,1964.

Source: Department of Labor, Bureau of Labor Statistics.




261

TABLE C—44.—Consumer price indexes, by special groups, 1935-65
For city wage earners and clerical workers
[1957-59=100]
Services

Commodities
Year or month

All
All items
terns less
food

All
items
Commodities less food
less
All
All
shel- com- Food
ter
Non- servmodi1
Dura- dura- ices l
Alii
ties
ble i
ble

All

Rent

services
less
rent1

1935
1936
1937
1938
1939

47.8
48.3
50.0
49.1
48.4

52.5
53.0
54.9
55.5
55.1

46.1
46.7
48.2
46.8
46.0

45.0
45.6
47.4
45.6
44.7

42.1
42.5
44.2
41.0
39.9

50.2
50.8
53.0
53.0
52.1

47.1
47.8
50.8
51.7
50.6

48.8
49.2
51.2
50.9
50.1

52.2
52.8
54.4
55.4
55.5

56.9
58.3
60.9
62.9
63.0

49.3
49.0
49.5
49.9
49.9

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

48.8
51.3
56.8
60.3
61.3
62.7
68.0
77.8
83.8
83.0

55.3
56.9
60.9
62.6
65.0
66.5
69.4
75.8
81.3
82.1

46.3
49.1
55.3
59.5
60.5
62.1
68.4
79.4
85.6
84.1

45.1
48.2
55.2
60.1
60.8
62.6
69.4
83.4
89.4
87.1

40.5
44.2
51.9
57.9
57.1
58.4
66.9
81.3
88.2
84.7

52.4
55.0
61.2
63.8
67.3
70.0
74.4
83.9
90.3
89.0

50.2
53.7
60.9
63.0
68.7
73.9
77.4
83.8
90.0
91.3

50.6
52.8
58.4
60.9
64.0
66.3
71.1
81.7
88.0
86.3

55.7
56.4
58.2
59.3
60.7
61.5
62.7
65.3
69.4
72.6

63.2
64.3
65.7
65.7
65.9
66.1
66.5
68.7
73.2
76.4

50.0
50.6
52.8
55.2
57.9
59.1
61.2
64.3
68.0
71.4

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

83.8
90.5
92.5
93.2
93.6
93.3
94.7
98.0
100.7
101.5

83.1
88.4
90.5
92.3
92.8
93.1
94.7
97.9
100.1
102.0

84.7
91.8
93.6
93.9
93.9
93.4
94.7
97.8
100.7
101.5

87.6
95.5
96.7
96.4
95.5
94.6
95.5
98.5
100.8
100.9

85.8
95.4
97.1
95.6
95.4
94.0
94.7
97.8
101.9
100.3

88.9
95.6
96.4
96.6
95.6
94.9
95.9
98.8
99.9
101.2

92.3
99.3
100.1
99.5
97.1
95.3
95.4
98.5
100.0
101.5

86.2
92.7
93.2
94.0
94.4
94.4
96.5
99.1
99.8
101.0

75.0
78.9
82.4
86.0
88.7
90.5
92.8
96.6
100.3
103.2

79.1
82.3
85.7
90.3
93.5
94.8
96.5
98.3
100.1
101.6

73.4
77.8
81.5
84.9
87.4
89.4
91.9
96.1
100.2
103.6

1960
1961
1962
1963
19642
1965
1964: Jan «.
Feb.
Mar..
Apr..
May.
June.

103.1
104.2
105.4
106.7
108.1
109.9

103.7
104.8
106.1
107.4
108.9
110.4

103.0
104.2
105.4
106.7
108.0
109.6

101. 7
102.3
103.2
104.1
105.2
106.4

101.4
102.6
103.6
105.1
106.4
108.8

101.7
102.0
102.8
103.5
104.4
105.1

100.9
100.8
101.8
102.1
103.0
102.6

102.6
103.2
103.8
104.8
105.7
107.2

106.6
108.8
110.9
113.0
115.2
117.8

103.1
104.4
105.7
106.8
107.8
108.9

107.4
110.0
112.1
114.5
117.0
120.0

107.7
107.6
107.7
107.8
107.8
108.0

108.4
108.4
108.6
108.6
108.7
108.8

107.6
107.5
107.5
107.7
107.7
107.9

104.9
104.8
104.8
104.9
104.8
105.0

105.8
106.0
105.7
105.7
105.5
106.2

104.3
104.1
104.3
104.3
104.3
104.3

102.9
102.9
102.9
102.9
102.8
102.9

105.6
105.3
105.6
105.6
105.7
105.6

114.2
114.3
114.5
114.8
114.9
115.1

107.3
107.5
107.5
107.7
107.7
107.8

116.0
116.0
116.3
116.5
116.6
116.8

July.
Aug.
Sept.
Oct..
Nov.
Dec.

108.3
108.2
108.4
108.5
108.7
108.8

108.8
108.9
109.0
109.2
109.5
109.6

108.2
108.1
108.2
108.3
108.5
108.6

105.3
105.2
105.4
105.5
105.6
105.7

107.2
106.9
107.2
106.9
106.8
106.9

104.3
104.2
104.3
104.6
104.8
104.9

102.9
102.8
102.8
103.1
103.5
103.4

105.6
105.6
105.8
106.0
106.1
106.3

115.3
115.4
115.5
115.7
116.0
116.2

107.8
107.9
107.9
108.2
108.3
108.4

117.0
117.2
117.4
117.6
117.9
118.2

1965: Jan..
Feb.
Mar.
Apr.
May.

June.

108.9
108.9
109.0
109.3
109.6
110.1

109.8
109.8
109.9
110.1
110.3
110.3

108.6
108.6
108.7
109.1
109.4
110.0

105.6
105.5
105.6
105.9
106.2
106.9

106.6
106.6
106.9
107.3
107.9
110.1

104.9
104.7
104.8
105.0
105.2
105.1

103.6
103.3
103.2
103.0
102.9
102.6

106.1
106.1
106.2
106.8
107.2
107.3

116.6
116.9
117.0
117.3
117.5
117.6

108.4
108.5
108.7
108.8
108.8
108.8

118.6
118.9
119.1
119.3
119.5
119.7

July.
Aug.
Sept.
Oct..
Nov.
Dec.

110.2
110.0
110.2
110.4
110.6
111.0

110.2
110.2
110.6
110.9
111.2
111.3

110.1
109.8
110.0
110.2
110.4
110.8

106.9
106.6
106.6
106.9
107.1
107.4

110.9
110.1
109.7
109.7
109.7
110.6

104.7
104.7
104.9
105.3
105.6
105.7

102.3
101.8
101.7
102.1
102.4
102.4

106.9
107.1
107.7
108.0
108.3
108.4

117.8
117.9
118.5
118.7
119.0
119.3

108.9
109.0
109.1
109.2
109.3
109.5

120.0
120.0
120.7
121.0
121.3
121.6

i Indexes have been revised to reflect transfer of home purchase from services to durable commodities;
indexes prior to 1956 estimated. For details, see Department of Labor release, Major Changes in the Consumer Price Index, March 8,1964.
8

New series beginning January 1964.
Source: Department of Labor, Bureau of Labor Statistics.




262

MONEY SUPPLY, CREDIT, AND FINANCE
TABLE C-45.—Money supply, 1947-65
[Averages of daily figures, billions of dollars]

Year and month

Total
money
supply
and
time
deposits
adjusted

Money supply i

Total
money
Time supply
deand
CurDe- posits time
adrencv mand
deposTotal com- deposit justits
pocom- ed 2
adnent ponent
justed

Money supply l
Time
de-

CurDe- posits
rency mand adTotal com- deposit justpocom- ed 2
nent ponent

Seasonally adjusted

Unadjusted

1947: Dec_
1948: Dec_
1949: Dec.

148.5
147.5
147.6

113.1
111.5
111.2

26.4

86. 7

25. 8
25. 1

85.8
86.0

35.4
36.0
36.4

151.0
150.0
150.0

115.9
114.3
113.9

26.8
26.2
25.5

89.1
88.1
88.4

35.1
35.7
36.1

1.0
1.8
2.8

1950:
1951:
1952:
1953:
1954:

Dec.
Dec.
Dec.
Dec.
Dec.

152.9
160.9
168.5
173.3
180.6

116.2
122.7
127.4
128.8
132.3

25. 0
26. 1
27. 3
27. 7
27. 4

91. 2
96. 5
100. 1
101. 1
104. 9

36.7
38.2
41.1
44.5
48.3

155.6
163.8
171.7
176.3
183.6

119.2
125.8
130.8
132.1
135.6

25.4
26.6
27.8
28.2
27.9

93.8
99.2
103.0
103.9
107.7

36.4
38.0
40.9
44.2
48.0

2.4
2.7
4.9
3.8
5.0

1955:
1956:
1957:
1958:
1959:
1960:
1961:
1962:
1963:
1964:
1965:

Dec...
Dec...
Dec...
Dec...
Dec...
Dec...
Dec...
Dec...
Dec...
Dec...
Dec<_.

185.2
188.8
193.3
206.5
209.3
214.0
228.2
245.3
265.3
286.3
314.3

135.2
136.9
135.9
141.1
141.9
141.1
145.5
147.5
153.1
159.7
167.4

27. 8
28. 2

34. 2
36. 3

107. 4 50.0
108. 7 51.9
107. 6 57.4
112. 6 65.4
113. 1 67.4
112. 1 72.9
116. 0 82.7
116. 9 97.8
120. 6 112.2
125.4 126.6
131. 2 146.9

188.2
191.7
196.0
209.3
212.2
216.8
231.2
248.3
268.3
289.2
317.3

138.6
140.3
139.3
144.7
145.6
144.7
149.4
151.6
157.3
164.0
172.0

28.4
28.8
28.9
29.2
29.5
29.6
30.2
31.2
33.1
35.0
37.0

110.2 49.6
111.5 51.4
110.4 56.7
115.5 64.6
116.1 66.6
115.2 72.1
119.2 81.8
120.3 96.7
124.1 111.0
129.1 125.2
135.0 145.3

3.4
3.4
3.5
3.9
4.9
4.7
4.9
5.6
5.1
5.5
4.5

1964: Jan...
Feb..
Mar..
Apr..
May.
June..

267.1
268.4
269.4
270.7
271.8
274.0

153.6
153.8
154.1
154.5
154.5
155.5

32. 6
32. 8
32. 9
33. 0
33. 3
33. 4

121.0
121. 1
121. 2
121. 4
121. 2
122. 1

113.5
114.6
115.3
116.2
117.3
118.5

270.7
268.2
268.6
271.6
270.2
272.5

157.7
153.7
152.9
154.9
152.2
153.4

32.4
32.3
32.6
32.8
33.1
33.4

125.2
121.3
120.2
122.2
119.2
120.0

113.0
114.5
115.7
116.7
118.0
119.1

4.1
4.8
6.0
4.2
6.8
7.6

July..
Aug. .
Sept..
Oct...
Nov_Dec.

276.0
278.1
280.3
282.3
284.2
286.3

156.6
157.1
158.2
158.8
159.1
159.7

33. 6
33. 8
33. 9
34. 0
34. 2
34. 2

123. 0
123. 3
124 3
124. 8
124 8
125 4

119.4
121.0
122.1
123.5
125.1
126.6

275.0
276.1
279.1
282.4
284.7
289.2

155.0
155.0
157.1
159.0
160.6
164.0

33.7
33.9
33.9
34.1
34.6
35.0

121.3
121.1
123.2
124.9
126.1
129.1

120.0
121.1
122.0
123.4
124.1
125.2

6.9
6.3
6.5
5.5
5.8
5.5

1965: Jan...
Feb..
Mar..
Apr..
May.
June..

288.8
290.7
292.4
294.6
294.6
297.7

160.0
159.7
160.3
161.1
160.0
161.8

34. 5
34. 7
34. 7
34. 7
34. 9
35. 0

125. 5
125 1
125 6
126 4
125 1
126 8

128.8
131.0
132.1
133.5
134.6
135.9

292.7
290.3
291.7
295.6
293.0
296.2

164.4
159.5
159.0
161.6
157.6
159.6

34.4
34.2
34.3
34.5
34.6
34.9

130.1
125.3
124.6
127.1
123.0
124.6

128.3
130.8
132.7
134.0
135.4
136.6

4.2
5.7
6.7
5.6
9.7
9.3

July..
Aug-.
SeptOct...
Nov..
Dec 4 .

300.1
302.8
305.9
309.2
311. 2
314.3

162.5
162.7
164.3
165.6
165.7
167.4

35. 2
35. 4
35. 6
35. 9
36. 1
36. 3

127
127
128
129
129
131

137.6
140.1
141.6
143.6
145.5
146.9

299.2
300.7
304.6
309.3
311.8
317.3

160.9
160.5
163.2
165.8
167.4
172.0

35.4
35.5
35.6
36.0
36.5
37.0

125.6
125.0
127.5
129.8
130.9
135.0

138.3
140.2
141.4
143.5
144.4
145.3

9.1
7.4
5.6
5.0
4.0
4.5

28.3
28. 6
28. 9

28.9
29.6
30.6
32.5

3
3
7
7
6
2

1
Money supply consists of (1) currency outside the Treasury, the Federal Reserve, and vaults of all
commercial banks; (2) demand deposits at all commercial banks, other than those due to domestic commercial banks and the U.S. Government, less cash items in process of collection and Federal Reserve float;
and (3) foreign demand balances at Federal Reserve Banks.
2 Time deposits adjusted are time deposits at all commercial banks other than those due to domestic
commercial banks and the U.S. Government.
s Deposits at all commercial banks.
4
Preliminary.

NOTE.—Between January and August 1959, the series were expanded to include data for all banks in
Alaska and Hawaii.
Source: Board of Governors of the Federal Reserve System.




263

TABLE C-46.—Selected liquid assets held by the public, 7946-65
[Billions of dollars, seasonally adjusted]
Time deposits
End of year or month

1946
1947
1948
1949.

Total

Demand
deposits
and
currency l

Commercial
banks

Mutual
savings
banks

Postal
savings
system

Savings
and
loan
shares

U.S.
GovernU.S.
ment
Governsecurities
ment
savings maturing
within
bonds 2
one year 2

239.1
246.2
254.1
262.1

108.5
112.4
110.5
110.4

33.9
35.3
35.9
36.3

16.9
17.8
18.4
19.3

3.3
3.4
3.3
3.2

11.0
12.5

48.6
50.9
53.4
55.0

19.4
16.6
21.6
25.5

1950___
1951
1952
1953
1954
1955
1956
1957
1958
1959

271.4
281.0
296.0
311.5
320.3
332.5
343.2
356.0
373.1
393.9

115.5
120.9
125.5
127.3
130.2
133.3
134.6
133.5
138.8
139.7

36.6
38.2
41.2
44.6
48.2
49.7
52.0
57.5
65.4
67.4

20.1
20.9
22.6
24.4
26.3
28.1
30.0
31.6
33.9
34.9

2.9
2.7
2.5
2.4
2.1
1.9
1.6
1.3
1.1
.9

14.0
16.1
19.2
22.8
27.2
32.0
37.0
41.7
47.7
54.3

55.8
55.4
55.7
55.6
55.6
55.9
54.8
51.6
50.5
47.9

26.4
26.8
29.3
34.4
30.6
31.6
33.2
38.8
35.6
48.8

1960
1961
1962
1963
1964
1965 3

399.2
424.6
459.0
495.4
530.4
572.5

138.4
142.6
144.8
149.6
156.7
163.7

73.1
82.5
98.1
112.9
127.1
146.8

36.2
38.3
41.4
49.0
52.5

.8
.6
.5
.5
.4
.3

61.8
70.5
79.8
90.9
101.3
109.7

47.0
47,4
47.6
49.0
49.9
50.5

41.9
42.6
46.8
48.1
46.1
49.0

1964: J a n . . .
Feb...
Mar..
Apr...
May..
June.-

498.9
499.6
504.0
506.1
507.7
511.4

149.5
148.4
150.2
149.9
149.7
151.2

114.8
115.5
115.9
117.0
117.9
118.6

45.0
45.4
45.6
46.0
46.3
46.8

.5
.4
.4
.4
.4
.4

91.4
92.4
93.5
94.1
94.9
95.8

49.1
49.0
49.0
49.1
49.1
49.2

48.6
48.4
49.3
49.5
49.4
49.4

July..
AugSept..
Oct-_.
Nov..
Dec.

511.8
514.9
521.0
523.4
526.9
530.4

151.8
152,2
155.0
155.0
155.0
156.7

119.8
120.6
121.9
123.8
125.9
127.1

47.1
47.5
47.9
48.3
48.6
49.0

.4

96.6
97.8
99.1
99.8
100.8
101.3

49.3
49.3
49.4
49.4
49.5
49.9

46.7
47.1
47.4
46.8
46.7
46.1

1965: Jan...
Feb.Mar..
May..
June.

534.9
536.4
542.8
543.3
543.0
550.2

156.1
154.8
158.6
156.3
155.4
159.6

130.6
131.9
133.0
134.1
134.9
136.3

49.4
49.6
49.8
50.1
50.4
50.8

101.7
102.6
103.6
103.9
104.4
105.1

50.0
49.9
49.9
49.9
49.9
50.0

46.8
47.3
47.6
48.6
47.6
48.0

JulyAug—
SeptOcta.
Nova.
Dec 3

550.9
555.6
560.6
565.0
568.2
572.5

157.7
157.8
160.6
161.1
160.3
163.7

138.3
139.8
141.6
144.0
146.5
146.8

51.1
51.3
51.6
52.0
52.3
52.5

105.5
106.5
107.7
108.3
109.2
109.7

50.1
50.1
50.1
50.1
50.1
50.5

47.9
49.8
48.7
49.1
49.4
49.0

_.

44. e

.4
.3
.3
.3
.3
•

8.5
9.7

1 Agrees in concept with money supply, Table C-45, except for deduction of demand deposits held by
mutual savings banks and savings and loan associations. Data for last Wednesday of month.
2 Excludes holdings of Government agencies and trust funds, domestic commercial and mutual savings
banks, Federal Reserve Banks, and beginning February 1960, savings and loan associations.
3 Preliminary.
NOTE.—Between January and August 1959, series for all commercial banks expanded to include data for
all banks in Alaska and Hawaii. Data for all member banks include one national bank in Alaska beginning 1954.
Source: Board of Governors of the Federal Reserve System.




264

TABLE C-47.—Bank loans and investments, 1929-65
[Billions of dollars]
All commercial banks i

Weekly reporting memTotal
Investments
ber banks 3
loans
End of year or month
and
U.S. GovLoans 2
Other
Business
investernment
securities
loans 4
2
ments
securities
19295
49.4
35.7
4.9
8.7
48.9
34.5
1930 8
.
.. ..
. ..
5.0
9.4
19315
6.0
44.9
29.2
9.7
6.2
36.1
21.8
8.1
1933 5
30.4
16.3
6.5
7.5
1934 5
32.7
15.7
10.3
6.7
1935
15.2
13.8
36.1
71
1936
... _
39.6
16.4
15.3
7.9
1937
38.4
17.2
5.1
14.2
7.0
1938
38.7
16.4
4.2
15.1
7.2
1939
40.7
17.2
7.1
4.7
16.3
43.9
18.8
7.4
5.3
17.8
1940
50.7
21.7
7 2
1941
21.8
71
19.2
41.4
1942
67.4
6.8
6.3
1943
19.1
59.8
85.1
6.1
6.4
1944
21.6
77.6
6.3
6.5
105.5
1945
7.3
7.3
26.1
90.6
124.0
1946
8.1
11.3
31.1
74.8
114.0
1947
9.0
14.7
38.1
69.2
116.3
19481
19.2
15.6
141.5
162.3
i 113.0
1949-. .
_
.
10.3
13.9
42.0
66.4
118.7
12.4
17.9
51.1
61.2
124.7
1950
13.4
21.6
56.5
60.3
130.2
1951
14.2
23.4
62.8
62.1
139.1
1952
.
14.7
23.4
66.1
62.3
143.1
1953
16.4
22.4
69.0
67.7
1954
153.1
60.3
26.7
157.6
1955
80.5
16.8
57.3
16.3
1956
161.6
88.0
30.8
57.1
1957
166.4
91.4
17.9
31.8
1958.
.
65.1
181.2
95.6
20.5
31.7
1959
57.8
20.5
30.7
185.9
107.6
59.9
20.8
32.2
194.5
113.8
1960
65.4
23.9
32.9
209.8
120.5
1961 _
.
65.2
29.2
35.2
1962 •
228.3
133.9
62.1
149.4
35.0
38.8
246.5
1963 8
167.1
61.4
38.7
1964
_
267.2
42.1
50.6
1965 7
294.0
57.6
44.6
191.8
37.2
246.7
60.8
1964: J a n
151.0
34.9
37.6
61.2
35.4
248.4
151.8
Feb.
62.1
35.4
Mar
251.4
153.9
38.2
38.1
155.4
35.6
Apr
.
251.8
60.8
38.3
60.3
253.5
157.3
35.9
May
256.3
60.0
36.3
38.7
160.0
June
36.4
38.5
58.4
159.7
254.5
July
60.2
38.9
258.7
161.5
37.0
Aug
61.2
163.0
37.5
261.7
40.0
Sept
163.2
60.0
37.9
Oct
261.1
39.9
165.4
38.5
61.6
40.5
265.5
Nov
38.7
167.1
61.4
267.2
42.1
Dec
39.5
59.9
269.6
170.2
41.8
1965: Jan
. . ._
40.0
60.2
272.1
171.9
Feb
43.0
40.1
59.6
275.5
44.6
Mar
175.8
Apr
277.3
177.1
59.1
41.1
44.6
58.6
279.4
41.3
45.2
May... .
179.5
June
46.8
57.7
42.1
282.8
183.0
7
42.4
56.4
46.3
182.7
281.5
July 7
43.3
46.9
57.0
Aug 7
286.1
185.8
43.5
286.2
186.2
56.5
48.1
Sept7
43.9
48.2
57.0
Oct 7
-_ 188.0
288.9
44.1
57.6
291.5
49.0
Nov 7
189.8
50.6
294.0
57.6
44.6
Dec«
191.8
1
Data are for last Wednesday of month (except June 30 and December 31 call dates) for all commercial
banks. Seasonally adjusted data beginning 1948.
2
Adjusted to exclude interbank loans beginning 1948.
3
Member banks are all national banks and those State banks which have taken membership in the
Federal Reserve System. Weekly reporting member banks comprise about 350 large banks in over 100
leading cities. Data are for last Wednesday of month.
4
Commercial and industrial loans and prior to 1956, agricultural loans. Beginning July 1959, loans to
financial institutions excluded. Series revised beginning July 1946, October 1955, July 1958, and July 1959.
Prior to 1943 published data adjusted to include open market paper.
5
June data are used because complete end-of-year data are not available prior to 1935 for U.S. Government
obligations and other securities.
e Commercial bank data are estimates for December 31.
7
Preliminary.
NOTE.—National bank data in Alaska and Hawaii included beginning April 1954 and 1959, respectively.
All other bank data in Alaska and Hawaii included beginning January 1959 and August 1959, respectively.
Source: Board of Governors of the Federal Reserve System.




265

TABLE C-48.—Bond yields and interest rates, 1929-65
[Percent per annum]

XJ.S. Government securities
Year or month

Corporate
bonds
(Moody's)

3-month 9-12
3-5
Treas- month
year Taxable Aaa
ury
2
bonds
bills i issues issues 3

1929

Highgrade
municipal
bonds
(StandBaa ard &
Poor's)

Average
rate on Prime Fedshorteral
comterm
Remerbank
serve
cial
loans paper, Bank
to busi- 4-6
disnesscount
selected months rate
cities

4.73

1930
1931
1932
1933
1934

5.90

4.27

5.85

5.16

2.66
2.12

4.55
4.58
5.01
4.49
4.00

5.90
7.62
9.30
7.76
6.32

4.07
4.01
4.65
4.71
4.03

3.59
2.64
2.73
1.73
1.02

3.04
2.11
2 82
2.56
1.54

1.29
1.11
1.40
.83
.59

3.60
3.24
3.26
3.19
3.01

5.75
4.77
5.03
5.80
4.96

3.40
3.07
3.10
2.91
2.76

.75
.75
.94
.81
.59

1.50
1.50
1.33
1.00
1.00

1935
1936
1937
1938
1939

()
1.402
.879
.515
.256
.137
.143
.447
.053
.023

1940
1941
1942
1943
1944

.014
.103
.326
.373
.375

()
0.75
.79

.50
.73
.46
.34
.33

2.46
2.47
2.48

2.84
2.77
2.83
2.73
2.72

4.75
4.33
4.28
3.91
3.61

2.50
2.10
2.36
2.06
1.86

2.0
2.2
2.6
2.4

.56
.53
.66
.69
.73

1.00
1.00
8 1.00
8 1.00
8
1.00

1945
1946
1947
1948
1949

.375
.375
.594
1.040
1.102

.81
.82
.88
1.14
1.14

.18
.16
.32
.62
.43

2.37
2.19
2.25
2.44
2.31

2.62
2.53
2.61
2.82
2.66

3.29
3.05
3.24
3.47
3.42

1.67
1.64
2.01
2.40
2.21

2.2
2.1
2.1
2.5
2.7

.75
.81
1.03
1.44
1.49

8 1.00
8 1.00
1.00
1.34
1.50

1950
1951
1952
1953
1954

1.218
1.552
1.766
1.931
.953

1.26
1.73
1.81
2.07
.92

.50
.93
2.13
2.56
1.82

2.32
2.57
2.68
2.94
2.55

2.62
2.86
2.96
3.20
2.90

3.24
3.41
3.52
3.74
3.51

1.98
2.00
2.19
2.72
2.37

2.7
3.1
3.5
3.7
3.6

1.45
2.16
2.33
2.52
1.58

1.59
1.75
1.75
1.99
1.60

1955
1956
1957
1958
1959

1.753
2.658
3.267
1.839
3.405

1.89
2.83
3.53
2.09
4.11

2.50
3.12
3.62
2.90
4.33

2.84
3.08
3.47
3.43
4.08

3.06
3.36
3.89
3.79
4.38

3.53
3.88
4.71
4.73
5.05

2.53
2.93
3.60
3.56
3.95

3.7
4.2
4.6
4.3
9
5.0

2.18
3.31
3.81
2.46
3.97

1.89
2.77
3.12
2.16
3.36

1960
1961
1962
1963
1964

2.928
2.378
2.778
3.157
3.549

3.55
2.91
3.02
3.28
3.76

3.99
3.60
3.57
3.72
4.06

4.02
3.90
3.95
4.00
4.15

4.41
4.35
4.33
4.26
4.40

5.19
5.08
5.02
4.86
4.83

3.73
3.46
3.18
3.23
3.22

5.2
5.0
5.0
5.0
5.0

3.85
2.97
3.26
3.55
3.97

3.53
3.00
3.00
3.23
3.55

1965

3.954

4.09

4.22

4.21

4.49

4.87

3.27

5.0

4.38

4.04

1963: Jan..
Feb.
Mar.
Apr.
May
June.

2.914
2.916
2.897
2.909
2.920
2.995

2.97
2.89
2.99
3.02
3.06
3.17

3.47
3.48
3.50
3.56
3.57
3.67

3.89
3.92
3.93
3.97
3.97
4.00

4.21
4.19
4.19
4.21
4.22
4.23

4.91
4.89
4.88
4.87
4.85
4.84

3.12
3.18
3.11
3.11
3.15
3.27

5.00

3.34
3.25
3.34
3.32
3.25
3.38

3.00
3.00
3.00
3.00
3.00
3.00

July.
Aug.
Sept.
Oct..
Nov.
Dec.

3.143
3.320
3.379
3.453
3.522
3.523

3.33
3.41
3.54
3.59
3.70
3.77

3.78
3.81
3.88
3.91
3.97
4.04

4.01
3.99
4.04
4.07
4.11
4.14

4.26
4.29
4.31
4.32
4.33
4.35

4.84
4.83
4.84
4.83
4.84
4.85

3.29
3.22
3.27
3.32
3.41
3.34

3.49
3.72

3.24
3.50
3.50
3.50
3.50
3.50

()
(8)

See footnotes at end of table.




266

5.61
5.01
5.66

3.88
3.88
3.88
3.96

TABLE C-48.—Bond yields and interest rates, 1929-65—Continued
[Percent per annum]

U.S. Government securities
Year or month

Corporate
bonds
(Moody's)

3-month 9-12
3-5
Treas- month
4
year Taxable A a a
ury
issues 2 issues 3 bonds
bills 1

Baa

Highgrade
municipal
bonds
(Standard &
Poor's)

1964: Jan .
Feb.
Mar.
Apr.
May
June.

3.529
3.532
3.553
3.484
3.482
3.478

3.66
3.63
3.67
3.63
3.67
3.83

4.06
4.02
4.15
4.18
4.07
4.03

4.15
4.14
4.18
4.20
4.16
4.13

4.37
4.36
4.38
4.40
4.41
4.41

4.83
4.83
4.83
4.85
4.85
4.85

3.23
3.17
3.32
3.29
3.21
3.20

July.
Aug.
Sept.
Oct..
Nov.
Dec.

3.479
3.506
3.527
3.575
3.624
3.856

3.68
3.73
3.82
3.83
3.88
3.96

3.99
3.99
4.03
4.04
4.04
4.07

4.13
4.14
4.16
4.16
4.12
4.14

4.40
4.41
4.42
4.42
4.43
4.44

4.83
4.82
4.82
4.81
4.81
4.81

3.18
3.20
3.25
3.26
3.18
3.15

1965: Jan..
Feb.
Mar.
Apr.
May
June

3.828
3.929
3.942
3.932
3.895
3.810

3.87
3.97
4.03
4.00
3.99
3.98

4.06
4.08
4.12
4.12
4.11
4.09

4.14
4.16
4.15
4.15
4.14
4.14

4.43
4.41
4.42
4.43
4.44
4.46

4.80
4.78
4.78
4.80
4.81
4.85

3.06
3.10
3.18
3.17
3.19
3.26

July.
Aug.
Sept.
Oct..
Nov.
Dec.

3.831
3.836
3.912
4.032
4.082
4.362

3.96
4.00
4.11
4.18
4.29
4.66

4.10
4.19
4.24
4.33
4.46
4.77

4.15
4.19
4.25
4.28
4.34
4.43

4.48
4.49
4.52
4.56
4.60
4.68

4.88
4.88
4.91
4.93
4.95
5.02

3.26
3.25
3.36
3.42
3.47
3.56

Average
rate on Prime
Fedshorteral
comterm
Remerbank
serve
cial
loans
paper, Bank
to busidis4-6
nesscount
selected months rate
cities
3.97
3.88
4.00
3.91
3.89
4.00

3.50
3.50
3.50
3.50
3.50
3.50

3.96
3.88
3.89
4.00
4.02
4.17

3.50
3.50
3.50
3.50
3.62
4.00

4.97

4.25
4.27
4.38
4.38
4.38
4.38

4.00
4.00
4.00
4.00
4.00
4.00

5.00

4.38
4.38
4.38
4.38
4.38
4.65

4.00
4.00
4.00
4.00
4.00
4.42

4.99

4.98

5.00

5.27

1
Rate on new issues within period. Issues were tax exempt prior to March 1, 1941, and fully taxable
thereafter. For the period 1934-37, series includes issues with maturities of more than 3 months.
2 Includes certificates of indebtedness and selected note and bond issues (fully taxable).
3
Selected note and bond issues. Issues were partially tax exempt prior to 1941, and fully taxable thereafter.
4
First issued in 1941. Series includes bonds which are neither due nor callable before a given number of
years as follows: April 1953 to date, 10 years; April 1952-March 1953, 12 years; October 1941-March 1952,
155 years.
Treasury bills were first issued in December 1929 and were issued irregularly in 1930.
• Not available before August 1942.
i Not available on same basis as for 1939 and subsequent years.
8
From October 30,1942, to April 24,1946, a preferential rate of 0.50 percent was in effect for advances secured
by0 Government securities maturing or callable in 1 year or less.
Series revised to exclude loans to nonbank financial institutions.
NOTE.—Yields and rates computed for New York City except for short-term bank loans.
Sources: Treasury Department, Board of Governors of the Federal Reserve System, Moody's [Investors
Service, and Standard & Poor's Corporation.




267

T A B L E C—49.—Federal Reserve Bank credit and member bank reserves,

1929-65

[Averages of daily figures, millions of dollars]
Reserve Bank credit outstanding
Year and month
Total

Member
U.S.
bank
Government se- borrowings
curities

Member bank reserves

All
other,
mainly
float

Total

Required

Excess

Member
bank free
reserves
(excess
reserves
less borrowings)

1929: Dec

1,643

446

801

396

2,395

2,347

48

-753

1930:
1931:
1932:
1933:
1934:
1935:
1936:
1937:
1938:
1939:

Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec

1,273
1,950
2,192
2,669
2,472
2,494
2,498
2,628
2,618
2,612

644
777
1,854
2,432
2,430
2,430
2,434
2,565
2,564
2,510

337
763
281
95
10
6
7
16
7
3

292
410
57
142
32
58
57
47
47
99

2,415
2,069
2,435
2,588
4,037
5,716
6,665
6,879
8,745
11,473

2,342
2,010
1,909
i 1, 822
2,290
2,733
4.619
5,808
5,520
6,462

73
60
526
1766
1,748
2,983
2,046
1,071
3,226
5,011

-264
-703
245
671
1 738
2,977
2 039
1,055
3,219
5.008

1940:
1941:
1942:
1943:
1944:
1945:
1946:
1947:
1948:
1949:

Dec
Dec
Dec
_ _ .__
Dec.
Dec
Dec
Dec
Dec
_ . _.
Dec
Dec

2,305
2,404
6,035
11,914
19. 612
24, 744
24, 746
22,858
23,978
19,012

2,188
2,219
5,549
11,166
18, 693
23,708
23, 767
21, 905
23,002
18, 287

3

114

5
4
90
265
334
157
224
134
118

180
483
659
654
702
821
729
842
607

14,049
12,812
13.152
12, 749
14,168
16, 027
16, 517
17, 261
19,990
16,291

7,403
9,422
10, 776
11. 701
12. 884
14, 536
15, 617
16, 275
19,193
15,488

6,646
3,390
2,376
1,048
1,284
1,491

6,643
3,385
2,372

900
986
797
803

743
762
663
685

1950:
1951:
1952:
19531954:
1955:
1956*
1957:
19581959:

Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec

21,606
25, 446
27,299
27,107
26,317
26,853
27,156
26,186
28,412
29,435

20,345
23,409
24,400
25,639
24, 917
24,602
24, 765
23,982
26,312
27,036

142
657

1,119
1,380
1,306
1,027
1,154
1,412
1,703
1,494
1,543
1,493

17,391
20,310
21,180
19, 920
19.279
19, 240
19, 535
19,420
18,899
218,932

16.364
19.484
20, 457
19,227
18,576
18,646
18,883
18,843
18,383
18,450

1,027

482

-424

I960*
1961*
1962:
1963:
1964*
1965:

Dec
Dec
Dec
Dec
Dec
Dec3

29,060
31,217
33, 218
36,610
39,873
43,853

27, 248
29,098
30, 546
33,729
37,126
40,885

1,725
1,970
2,368
2,554
2,504
2,514

19,283
20,118
20,040
20,746
21,609
22,715

18,527
19, 550
19,468
20,210
21,198
22,272

756

149
304
327
243
454

568
572
536
411
443

669
419
268
209
168
-11

May.
June

35,770
35,028
35,454
35,602
35,981
36,760

33,200
33,009
33,389
33, 498
33,907
34,631

256
304
259
213
255
270

2,314
1,715
1,806
1,891
1,819
1,859

20,673
20,146
20,213
20,277
20,220
20,558

20,242
19,753
19,855
19,897
19,883
20,168

431
393
358
380
337
390

175
89
99
167
82
120

July
Aug
Sept
Oct
Nov
Dec

37,077
37,170
37, 578
37,747
38,421
39,873

34,898
35,118
35,273
35,334
36,036
37,126

265
334
331
309
430

1,914
1,718
1,974
2,104
1,955
2,504

20,665
20,566
20,928
21,033
21,159
21,609

20,265
20,149
20,508
20,618
20,763
21,198

400
417
420
415
396

135
83
89
106
-34
168

39,245
39,244
39,535
39,882
40,340
41,153

36,684
37, 052
37,315
37,637
38,111
38,840

299
405
416
471
505
528

2,262
1,787
1,804
1,774
1,724
1,785

21,620
21,231
21,246
21,511
21, 472
21,709

21,215
20, 790
20,905
21,145
21,147
21,363

441
341
366
325
346

41,651
41,504
41,610
42, 048
42,649
43,853

39,249
39,318
39,108
39,601
40,128
40,885

524
564
528
490
452
454

1,878
1,622
1,974
1,957
2,069
2,514

21,863
21,617
21, 729
21,959
21,958
22,715

21,513
21,187
21,356
21,618
21, 588
22,272

350
430
373
341
370
443

__

__

_

1964: Jan
Feb
Mar
Apr

1965* Jan
Feb
Mar
Apr
May
June

_

.

July
Aug
Sept
Oct 3
Nov
Dec 3

1,593
441
246
839
688
710
557

906
87

243

826
723
693
703
594
652
577
516

411
405

958

1,019
1,157

885
169

-870
252
457

-245
-36

-133
-41

106
36
-75

-105
-180
-182
-174
-134
-155
-149
-82
-11

1 Data from March 1933 through April 1934 are for licensed banks only.
2
Beginning December 1959, total reserves held include vault cash allowed.
3 Preliminary.
NOTE.—Data for member banks in Alaska and Hawaii included beginning 1954 and 1959, respectively.
Source: Board of Governors of the Federal Reserve System.




268

TABLE C-50.—Short- and intermediate-term consumer credit outstanding, 7929-65
[Millions of dollars]

Noninstalment credit

Instalment credit
End of year or month

Total
Total

Automobile
paper i

Other Repair
and
consumer moderngoods ization
paper * loans 2

Personal
loans

Total

harge
accounts

3,592

1,996

1,596

3,329
2,852
2,354
2,162
2,219
2, 373
2,628
2,830
2,684
2,719

1,833
1,635
1,374
1,286
1,306
1,354
1,428
1,504
1,403
1,414

1,496
1,217
980
876
913
1,019
1,200
1, 326
1,281
1,305

Other 3

1929

7,116

3, 524

1,384

1,544

1930
1931
1932
1933
1934
1935
1936
1937
1938
1939

6,351
5, 315
4,026
3,885
4,218
5,190
6,375
6,948
6,370
7,222

3,022
2,463
1,672
1,723
1,999
2,817
3,747
4,118
3,686
4,503

986
684
356
493
614
992
1,372
1,494
1,099
1,497

1,432
1,214
834
799
889
1,000
1,290
1,505
1,442
1,620

18
15
37
253
364
219
218
298

569
579
543
464
416
459
572
721
900
927
1,088

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

8,338
9,172
5,983
4,901
5,111
5,665
8,384
11, 598
14,447
17,364

5,514
6,085
3,166
2,136
2,176
2,462
4,172
6,695
8,996
11,590

2,071
2,458
742
355
397
455
981
1,924
3,018
4,555

1,827
1,929
1,195
819
791
816
1,290
2,143
2,901
3,706

371
376
255
130
119
182
405
718
853
898

1,245
1,322
974
832
869
1,009
1,496
1,910
2,224
2,431

2,824
3,087
2,817
2,765
2,935
3,203
4,212
4,903
5,451
5,774

1,471
1,645
1,444
1,440
1,517
1,612
2,076
2,381
2, 722
2,854

1,353
1,442
1,373
1, 325
1,418
1,591
2,136
2, 522
• 729
>
2, 920

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

21,471
22,712
27, 520
31,393
32, 464
38,830
42.334
44,970
45,129
51,542

14, 703
15,294
19, 403
23,005
23, 568
28,906
31,720
33,867
33,642
39,245

6,074
5,972
7,733
9,835
9,809
13,460
14,420
15,340
14,152
16,420

4,799
4,880
6,174
6,779
6,751
7,641
8,606
8,844
9,028
10,630

1,016
1,085
1,385
1,610
1,616
1,693
1,905
2,101
2,346
2,809

2,814
3,357
4,111
4,781
5,392
6,112
6,789
7,582
8,116
9,386

6, 768
7,418
8,117
9,924
10,614
11,103
11,487
12,297

3,367
3,700
4,130
4,274
4,485
4,795
4,995
5,146
5,060
5,104

3,401
3,718
3,987
4,114
4.411
5,129
5,619
5,957
6,427
7,193

1960
1961
1962
1963
19641965 «

56,028
57,678
63,164
69,890
76,810
86,100

42,832
43,527
48,034
53,745
59,397
67,500

17,688
17,223
19,540
22,199
24,521
28,200

11,525
11,857
12,605
13,766
15,303
17,500

3,139
3,191
3,246
3,389
3,502
3,600

10,480
11,256
12,643
14,391
16,071
18, 200

13,196
14,151
15,130
16,145
17,413
18, 600

5,329
5,324
5,684
5,871
6,300
6,800

7,867
8,827
9,446
10,274
11,113
11,800

1964: Jan__
Feb..
Mar.
Apr
May.
June.

69,203
68,786
68,913
69,816
70,945
71,907

53,597
53,552
53,795
54,382
55,120
55,914

22,189
22, 271
22,471
22,830
23, 255
23,702

13,638
13,467
13,451
13,476
13,599
13,730

3,354
3,335
3,321
3,328
3,364
3,395

14,416
14,479
14,552
14,748
14,902
15,087

15,606
15, 234
15,118
15,434
15,825
15,993

5,339
4,805
4,634
4,833
5, 099
5,238

10, 267
10,429
10,484
10,601
10,726
10,755

July.
Aug
Sept_
Oct..
Nov
Dec
1965: Jan
Feb..
Mar.
Apr.
MayJune.

72,456
73,069
73,495
73,928
74,371
76,810

56,496
57,055
57,446
57, 826
58,085
59,397

3,426
3,466
3,493
3,509
3,516
3,502
3,473
3,446
3,440
3,439
3,484
3,524

15, 233 15,960
15,415 16,014
15,612 16,049
15,672 16,102
15,771 16,286
16, 071 17,413
16,091 16,803
16,190 16,378
16,341 16,297
16, 693 16, 680
16,917 16, 948
17,159 17,097

10,720
10,783
10,826
10,750
10,892
11,113

59,342
59,363
59, 788
60,803
61,739
62, 790

13,813
13,923
14,046
14, 222
14,431
15,303
15,204
14,984
14,944
15,056
15,229
15,422

5,240
5,231
5,223
5,352
5,394
6,300

76,145
75, 741
76,085
77,483
78,687
79,887

24,024
24,251
24,295
24,423
24,367
24, 521
24, 574
24, 743
25,063
25, 615
26,109
26,685

5,724
5,154
4,977
5,210
5,453
5,528

11,079
11,224
11,320
11,470
11,495
11,569

July..
Aug..
Sept_
Oct-Nov

80,686
81,454
81,924

63,609
64,393
64,846
65,368
66,012
67, 500

27,171
27,493
27,555
27, 766
27,976
28,200

15,573
15, 738
15,954
16,214
16,515
17,500

3,553
3,597
3,613
3,625
3,638
3,600

17,312
17, 565
17, 724
17, 763
17,883
18,200

17,077
17,061
17,078
17,201
17,378
18,600

5,534
5,498
5,496
5,645
5,740
6,800

11,543
11,563
11,582
11,556
11,638
11.800

83,390
86,100

1
Includes all consumer credit extended for the purpose of purchasing automobiles and other consumer
goods.
2
Includes only such loans held by financial institutions; those held by retail outlets are included in "other
consumer goods paper."
3 Single-payment loans and service credit.
4
Preliminary; December by Council of Economic Advisers.

N O T E . — D a t a for Alaska and Hawaii included beginning January and August 1959, respectively.
Source: Board of Governors of the Federal Reserve System (except as noted).

795-983 O—66



269

TABLE C-51.—Instalment credit extended and repaid, 1946-65
[Millions of dollars]
Automobile
paper

Total

Repair and
modernization
loans

Other consumer
goods paper

Personal
loans

Year or month
Extended

paid

1946—
1947._.
1948--1949--.

8,495
6,785
12,713 10,190
15, 585 13,284
18,108 15, 514

1950--1951--.
1952-1953-1954.-

21,558
23, 576
29, 514
31, 558
31, 051

1955.-1956-1957-1958-1959--.

38,972
39,868
42, 016
40,119
48, 052

18,445
22,985
25,405
27,956
30,488

1962—
1963—
1964...

33,634
37, 054
39, 868
40, 344
42, 603
49, 560 45,972
48,396 47, 700
55,126 50, 620
60, 822 55, 111
66, 070 60,418

1965i_

74,700

I960—
1961 - .

66,600

Extended

Repaid

Extended

Repaid

1,969
3,692
5,217
6,967

1,443
2,749
4,123
5,430

3,077
4,498
5,383
5,865

2,603
3,645
4,625
5,060

423
704
714
734

200
391
579

3,026
3,819
4,271
4,542

2,539
3,405
3,957
4,335

8,530
7,011
8,956
9,058
11,764 10,003
12,981 10,879
11, 807 11, 833

7,150
7,485
9,186
9,227
9,117

6,057
7,404
7,892
8,622
9,145

835
841
1,217
1,344
1,261

717
772
917
1,119
1,255

5,043
6,294
7,347
8,006

4,660
5,751
6,593
7,336
8,255

Extended

Repaid

Extended

Repaid

16, 734
15,515
16,465
14,226
17, 779

13,082
14, 555
15, 545
15,415
15, 579

10,642
11, 721
11,807
11, 747
13,982

9, 752
10, 756
11, 569
11, 563
12,402

1,393
1,582
1,674
1,871
2,222

1,316
1,370
1,477
1,626
1,765

10,203
11, 051
12,069
12,275
14, 070

9,484
10, 373
11, 276
11, 741
12,857

17,654
16, 007
19, 796
22, 013
23,565

16,384
16,472
17, 478
19, 354
21,243

14,470
14, 578
15, 685
17, 007
19,162

13, 574
14,246
14,939
15, 846
17,625

2,213
2,068
2,051
2,178
2,182

1,883
2,015
1,996
2,035
2,069

15,223
15,744
17,594
19,624
21,161

14,130
14,967
16,206
17,876
19,481

21, 400 19,200

2,200

2,100

23,700

21,600

27, 400 23, 700

Seasonally adjusted
1964: Jan...
Feb..
Mar..
Apr..
May...
JuneJuly..
Aug..
Sept..
Oct..
Nov..
Dec.

5,276
5,421
5,480
5,371
5,552
5,399

4,848
4,842
4,956
4,959
5,059
5,029

1,888
1,953
1,942
1,961
2,023
1,962

1,684
1,716
1,735
1,759
1,776
1,768

1,493
1,578
1,665
1,544
] ,589
1,537

1,441
1,395
1,468
1,453
1,483
1,486

185
186
179
174
187
183

176
171
174
172
175
170

1,710
1,704
1,694
1,692
1,753
1,717

1,547
1,560
1,579
1,575
1,625
1,605

5,541
5,529
5,617
5,507
5,456
5,816

5,058
5,094
5,104
5,097
5,155
5,256

1,996
2, 017
2,024
1,924
1,858
2,043

1,781
1,789
1,802
1,788
1,818
1,864

: ,546
,570
,588
,582
L, 631
L, 719

1,448
1,496
1,491
1,456
1,509
1,505

189
186
186
180
175
180

171
172
172
167
174
177

1,810
1,756
1,819
1,821
1,792
1,874

1,658
1,637
1,639
1,686
1,654
1,710

1965: Jan..
Feb..
Mar..
Apr..
May_
June.

5,883
6,022
6,030
6,189
6,105
6,139

5,213
5,381
5,393
5,445
5,435
5,537

2,120
2,228
2,229
2,272
2,215
2,250

1,830
1,897
1,924
1,936
1,940
1,960

L,729
L, 760
L, 698
L, 645
L, 728
L, 717

1,526
1,632
1,567
1,487
1,564
1,587

181
175
186
189
190
199

171
172
171
190
172
179

1,853
1,859
1,917
2,083
1,972
1,973

1,686
1,680
1,731
1,832
1,759
1,811

July.
Aug.
Sept.
Oct..
Nov.
Deci

6,278
6,288
6,331
6,306
6,405
6,700

5,612
5,679
5,648
5,717
5,748
6,000

2,301
2,313
2,324
2,266
2,408
2,500

1,972
2,030
1,996
2,028
2,112
2,200

1,792
1,794
1,834
1,883
1,852
1,900

1,612
1,658
1,629
1,648
1,666
1,700

179
194
172
177
182
200

169
180
168
170
173
200

2,006
1,987
2,001
1,980
1,963
2,100

1,859
1,811
1,855
1,871
1,797
1,900

i Preliminary; December by Council of Economic Advisers.
NOTE.—Data for Alaska and Hawaii included beginning January and August 1959, respectively. Therefore, the difference between extensions and repayments for January and August 1959 and for the year 1959
does not equal the net change in credit outstanding.
Source: Board of Governors of the Federal Reserve System (except as noted).




270

TABLE C-52.—Mortgage debt outstanding, by type of property and of financing, 1939-65
[Billions of dollars!
Nonfarm properties
1- to 4-family houses
End of year or quarter

All
properties

Government underwritten

Total
Total

Total

VA
FHA
inguarsured anteed

Multifamily
and
comCon- mercial
venproptional i erties 2

Farm
properties

1939

35.5

28.9

16.3

1.8

1.8

14.5

12.5

1940
1941
1942
1943
1944

36.5
37.6
36.7
35.3
34.7

30.0
31.2
30.8
29.9
29.7

17.4
18.4
18.2
17.8
17.9

2.3
3.0
3.7
4.1
4.2

2.3
3.0
3.7
4.1
4.2

15.1
15.4
14.5
13.7
13.7

12.6
12.9
12.5
12.1
11.8

6.5
6.4
6.0
5.4
4.9

1945
1946
1947
1948
1949

35.5
41.8
48.9
56.2
62.7

30.8
36.9
43.9
50.9
57.1

18.6
23.0
28.2
33.3
37.6

4.3
6.1
9.3
12.5
15.0

4.1
3.7
3.8
5.3
6.9

0.2
2.4
5.5
7.2
8.1

14.3
16.9
18.9
20.8
22.6

12.2
13.8
15.7
17.6
19.5

4.8
4.9
5.1
5.3
5.6

1950
1951
1952
1953
1954

72.8
82.3
91.4
101.3
113.7

66.7
75.6
84.2
93.6
105.4

45.2
51.7
58.5
66.1
75.7

18.9
22.9
25.4
28.1
32.1

8.6
9.7
10.8
12.0
12.8

10.3
13.2
14.6
16.1
19.3

26.3
28.8
33.1
38.0
43.6

21.6
23.9
25.7
27.5
29.7

6.1
6.7
7.2
7.7
8.2

1955
1956
1957
1958
1959

129.9
144.5
156.5
171.8
190.8

120.9
134.6
146.1
160.7
178.7

88.2
99.0
107.6
117.7
130.9

38.9
43.9
47.2
50.1
53.8

14.3
15.5
16.5
19.7
23.8

24.6
28.4
30.7
30.4
30.0

49.3
55.1
60.4
67.6
77.0

32.6
35.6
38.5
43.0
47.9

9.0
9.8
10.4
11.1
12.1

1960
1961
1962
1963
1964
1965 3

206.8
226.3
251.6
281. 2
311.6
341.9

194.0
212.4
236.4
264.4
292.7
320.7

141.3
153.1
166.5
182.2
197.6
212.9

56.4
59.1
62.2
65.9
69.2
(*)

26.7
29.5
32.3
35.0
38.3

29.7
29.6
29.9
30.9
30.9
(*)

84.8
93.9
104.3
116.3
128.4

52.7
59.3
69.9
82.2
95.1
107.8

12.8
13.9
15.2
16.8
18.9
21.2

1962: I____
II—

III..
IV..

231.1
237.8
244.5
251.6

216.8
223.1
229. 6
236.4

155.3
159.1
162.9
166.5

59.9
60.5
61.2
62.2

30.3
30.9
31.5
32.3

29.6
29.6
29.6
29.9

95.4
98.7
101.7
104.3

61.5
64.0
66.7
69.9

14.2
14.7
14.9
15.2

1963: I - _ .
II—
III..
IV..

257.1
265.3
273.4
281.2

241.6
249.2
256.8
264.4

169.2
173.7
178.2
182. 2

63.0
63.8
64.6
65.9

33.0
33.5
34.3
35.0

30.0
30.3
30.4
30.9

106.2
109.9
113.6
116.3

72.4
75.5
78.6
82.2

15.6
16.2
16.6
16.8

1964: I ....
II...
III...
IV...

287.4
295.5
303.6
311.6

270.0
277.5
285.1
292.7

185.4
189.8
193.9
197.6

66.6
67.3
68.4
69.2

35.7
36.3
37.4
38.3

31.0
30.9
31.1
30.9

118.8
122.5
125. 4
128.3

84.6
87.7
91.2
95.1

17.3
18.1
18.5
18.9

1965: I«...
113.
III 3
IV 3.

317.7
326.0
334.0
341.9

298.3
305.8
313.3
320.7

200.5
204.8
209.0
212.9

70.1
70.7
72.0

39.0
39.7
40.9

31.0
31.0
31.1

130.5
134.1
136.9
(*)

97.7
101.0
104.3
107.8

19.5
20.2
20.7
21.2

_.

1 Derived figures.
2 Includes negligible amount of farm loans held by savings and loan associations.
Preliminary.
* Not available.
Source: Board of Governors of the Federal Reserve System, estimated and compiled from data supplied
by various Government and private organizations.
3




271

TABLE C-53.—Net public and private debt, 1929-65

l

[Billions of dollars]
Private

End of
year 2

1929—-

Federal
GovernTotal
ment
and
agency

16.5

190.9

(Corporate
Individual and noncorporate
State
and
Nonfarm
local
gov- Total
ernCommerment 2
Total Long- Short- Total Farm 3
term term
ConMort- cial
Total
and sumer
gage
finanrial *

13.2 161.2

88.9

41.6

47.3

72.3

12.2

60.1

31.2

22.4

6.4

32.0
30.9
29.0
26.3
25.5

21.6
17.6
14.0
11.7
11.2

5.8
4.8
3.6
3.5
3.9
4.9
6.1
6.7
6.3
7.2

1930-___
1931-..1932—_
1933-...
1934....

191.0
181.9
174.6
168.5
171.4

16.5
18.5
21.3
24.3
30.4

14.1
15.5
16.6
16.7
15.9

160.4
147.9
136.7
127.5
125.1

89.3
83.5
80.0
76.9
75.5

51.1
50.3
49.2
47.9
44.6

38.2
33.2
30.8
29.1
30.9

71.1
64.4
56.7
50.6
49.6

11.8
11.1
10.1
9.1
8.9

59.3
53.3
46.6
41.5
40.6

1935....
1936..-.
1937—1938..-1939..-.

174.7
180.3
182.0
179.6
183.2

34.4
37.7
39.2
40.5
42.6

16.0
16.2
16.1
16.0
16.3

124.2
126.4
126.7
123.1
124.3

74.8
76.1
75.8
73.3
73.5

43.6
42.5
43.5
44.8
44.4

31.2
33.5
32.3
28.4
29.2

49.4
50.3
50.9
49.8
50.8

9.1
8.6
8.6
9.0
8.8

40.5
41.7
42.3
40.9
42.0

24.8
24.4
24.3
24.5
25.0

10.8
11.2
11.3
10.1

1940—_
1941....
1942—
1943—.
1944-.._

189.9
211.6
259.0
313.6
370.8

44.8
56.3
101.7
154.4
211.9

16.5
16.3
15.8
14.9
14.1

128.6
139.0
141.5
144.3
144.8

75.6
83.4
91.6
95.5
94.1

43.7
43.6
42.7
41.0
39.8

31.9
39.8
49.0
54.5
54.3

53.0
55.6
49.9
48.8
50.7

9.1

26.1
27.1
26.8
26.1
26.0

9.5

9.3
9.0
8.2
7.7

43.9
46.3
40.9
40.5
42.9

11.8

8.3
9.2
6.0
4.9
5.1

1945—1946-...
1947—.
1948....
1949-...

406.3
397.4
417.4
433.6
448.4

252.7
229.7
223.3
216.5
218.6

13.7
13.6
14.4
16.2
18.1

139.9 85.3
154.1 93.5
179.7 108.9
200.9 117.8
211.7 118.0

38.3
41.3
46.1
52.5
56.5

47.0
52.2
62.8
65.3
61.5

54.6
60.6
70.8
83.1
93.7

7.3
7.6
8.6
10.8
12.0

47.4
53.0
62.3
72.4
81.8

27.0
32.5
38.8
45.1
50.6

14.7
12.1
11.9
12.9
13.9

11.6
14.4
17.3

1950-..1951
1952
1953
1954

490.3
524.0
555.2
586.5
612.0

218.7
218.5
222.9
228.1
230.2

20.7
23.3
25.8
28.6
33.4

250.9
282.2
306.5
329.8
348.4

142.1
162.5
171.0
179.5
182.8

60.1
66.6
73.3
78.3
82.9

81.9
95.9
97.7
101.2
100.0

108.8
119.7
135.5
150.3
165.6

12.3
13.6
15.2
16.9
17.6

96.6
106.2
120.4
133.6
147.9

59.4
67.4
75.2
83.8
94.6

15.8
16.2
17.8
18.4
20.8

21.4
22.6
27.4
31.4
32.5

1955—.
1956—.
1957—_
1958
1959—-

672.3
707.5
738.9
782.6
846.2

231.5
225.4
224.4
232.7
243.2

38.4
42.7
46.7
50.9
55.6

402.5
439.4
467.8
499.1
547.4

212.1
231.7
246.7
259.5
283.3

90.0
100.1
112.1
121.2
129.3

122.2
131.7
134.6
138.4
154.0

190.4
207.7
221.1
239.5
264.1

18.8
19.5
20.3
23.3
23.0

171.6
188.2
200.8
216.2
241.1

108.7
121.3
131.6
144.6
160.8

24.0
24.4
24.3
26.5
28.7

38.9
42.5
44.8
45.1
51.5

I960—.
1961-.-1962
1963—1964—1965 5 . .

890.2
947.8
1,019. 5
1,095. 7
1,171.7
1,260.0

241.0
248.1
255.8
261.0
267.2
270.0

60.0
65.0
73.7
79.5
85.2
92.8

589.2
634.7
690.0
755.2
819.4
897.2

302.8
324.4
348.4
376.2
401.7
439.5

139.1
149.5
161.4
174.5
188.0
206.0

163.6
175.0
187.0
201.7
213.7
233.5

286.4
310.3
341.6
379.0
417.6
457.7

25.1
27.5
30.2
33.2
35.7
41.1

261.4
282.8
311.4
345.8
382.0
416.6

174.5
190.4
210.6
234.0
259.3
283.5

30.8
34.8
37.6
42.0
45.8
47.0

56.0
57.7
63.2
69.9
76.8
86.1

9.8

10.0
8.1
9.5

5.7
8.4

1
Net public and private debt outstanding is a comprehensive aggregate of the indebtedness of borrowers
after elimination of certain types of duplicating governmental and corporate debt. For a further explanation of the concept, see Survey of Current Business, October 1950.
2
Data for State and local government debt are for June 30.
3
Farm mortgages and farm production loans. Farmers' financial and consumer debt is included in the
nonfarm categories.
4
Financial debt is debt owed to banks for purchasing or carrying securities, customers' debt to brokers,
and debt owed to life insurance companies by policy holders.
5
Preliminary estimates by Council of Economic Advisers.
NOTE.—Revisions for 1929-39 and 1955-57 in the consumer credit data of the Board of Governors of the
Federal Reserve System have not yet been fully incorporated into this series.
Sources: Department of Commerce (Office of Business Economics), Treasury Department, Board of
Governors of the Federal Reserve System, and Federal Home Loan Bank Board (except as noted).




272

GOVERNMENT FINANCE
TABLE C-54.—U.S. Government debt, by kind of obligation, 1929-65
[Billions of dollars]
Interest-bearing public debt
Gross
public
debt and
guaranteed
issues i

End of year or month

1929
_
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
195O._
1951
1952 _
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1964- J a n

_

_
_

_

.
.

..

_

_ _
_

Feb
Mar
Apr
May

June
July
Aug
Sept
Oct
Nov
Dec
1965: Jan
Feb .
Mar
Apr
May
June
July

__ _
_ _
__

___ _
_
--

Aug

Sept . . .
Oct
Nov
Dec-_.

16 3
16 0
17.8
20.8
24 0
31.5
35.1
39.1
41.9
44 4
47.6
50.9
64.3
112.5
170.1
232.1
278.7
259.5
257.0
252.9
257.2
256.7
259.5
267.4
275.2
278.8
280.8
276.7
275.0
283.0
290.9
290.4
296.5
304.0
310.1
318.7
321.4
309.3
311.1
310.4
308.4
312.3
312.5
312.0
314.9
316.5
316.5
319.3
318.7
318.6
320.6
318.4
317.2
319.8
317.9
317.1
318.7
317.3
319.4
322.2
321.4

Marketable public
issues

Nonmarketable public issues

Shortterm
issues 2

United
States
savings
bonds

Treasury
bonds

3 3
29
28
5.9

7 5
11 1
14.2
12.5
12 5
9 8
7.7
7 5
8.0
27.0
47 1
69.9
78.2
57 1
47.7
45.9
50.2
58.3
65.6
68.7
77.3
76.0
81.3
79.5
82 1
92.2
103.5
109.2
120.5
124.6
121 2
115.5
110.4
119 9
122 2
121 2
120.4
119 5
118.0
109.7
110.6
111 9
113.1
115.4
115.5
111.6
114.3
112 0
112.0
108.5
106.2
106.2
104.1
104.1
107.8
110.4
110.4

1

11 3
11 3
13 5
13.4
14 7
15.4
14.3
19.5
20.5
24 0
26.9
28 0
33.4
49.3
67.9
91.6
120.4
119.3
117.9
111.4
104.8
94.0
76.9
79.8
77.2
81.8
81.9
80.8
82 1
83.4
84.8
79.8
75.5
78.4
86 4
97.0
104.2
88 7
87.0
87.0
87.0
88.5
88.5
97.1
97.1
97.1
97.0
97.0
97.0
102.8
100.6
100. 5
100.5
102.5
102.5
102.5
104.3
104.3
104.3
104.2
104.2

Treasury
tax and
savings
notes

Investment
bonds 3

Special
issues 4

06
.8
.4
.4
.4
.6

0.2
.5
1.0
1 4
2.2
32
6.1
15.0
27 4
40.4
48.2
49 8
52.1
55.1
56.7
58.0
57.6
57.9
57.7
57.7
57.9
56.3
52 5
51.2
48.2
47.2
47.5
47.5
48 8
49.7
50.3
48 9
49 0
49 1
49.1
49 2
49.3
49 4
49.4
49 5
49.6
49 7
49.7
49.8
49.9
49 9
50.0
50.0
50.0
50.1
50.2
50.2
50.3
50.3
50.3

.7
.6
2.2

2.5
6.4
8 6
9.8
8.2
5 7
5.4
4.6
7.6
8.6
7.5
5.8
6.0
4.5

0)
(8)

(6)
(6)
(6)

•)
(6)
(6)
(6)

81

1.0
1.0
1.0
1.0
13.0
13.4
12.9
12.7
12.3
11.6
10 3
9.0
7.6
6.2
5.1
4.4
3.7
3.4
2.8
36
3.6
3.6

3.6
3.6
3.5
3.5
3.5
3.5
3.4
3.4
3.4
3.4
3.3
3.3
3.3

1

3.3
3.3
3.3
3.3
3.2
2.8
2.8
2.8

32
4.2
5.4
7.0
9.0
12.7
16.3
20.0
24.6
29.0
31.7
33.9
33.7
35.9
39.2
41 2
42.6
43.9
45.6
45.8
44.8
43.5
44.3
43.5
43.4
43.7
46.1
46.3
41.9
42.9
43.2
42.0
45.0
46.6
45.7
47.4
47.4
46.3
46.7
46.1
44.2
45.6
45.7
44.4
47.8
48.6
47.8
49.8
48.1
47.0
47,1
46.2

Total includes non-interest-bearing debt, fully guaranteed securities (except those held by the Treasury), Postal Savings bonds, prewar bonds, adjusted service bonds, depositary bonds, armed forces leave
bonds, Rural Electrification Administration series bonds, foreign series certificates and notes, foreign currency certificates and bonds, Treasury certificates, and U.S. retirement plan bonds, not shown separately.
Not all of total shown is subject to statutory debt limitation.
2
Bills, certificates of indebtedness, and notes.
3
4 Series A bonds through September 1965 and, beginning April 1951, series B convertible bonds.
Issued to U.S. Government investment accounts. These accounts also held $15.6 billion of public
marketable and nonmarketable issues on December 31, 1965.
5
Less than $50 million.
• The last series of Treasury savings notes matured in April 1956.
Source: Treasury Department.




273

TABLE G-55.—Estimated ownership of U.S. Government obligations, 1939—65
[Par values,1 billions of dollars]
Gross public debt and guaranteed issues 2
Held by "the public"
Held
by U.S.
Gov- Held
Mutual
ernsavings
by
State
Com- banks Other and
Total ment Federal
invest- Reserve Total mercial and in- corpora- local Individment banks
banks surance tions * govern- uals e
accomments 5
counts
panies

End of year or
month

1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965*
1964: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
1965: Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec 8

47.6

_

50.9
64.3
112.5
170.1
232.1
278.7
259.5
257.0
252.9
257.2
256.7
259.5
267.4
275.2
278.8
280.8
276.7
275.0
283.0
290.9
290.4
296.5
304.0
310.1
318.7
321.4
309.3
311.1
310.4
308.4
312.3
312.5
312. 0
314.9
316.5
316.5
319.3
318.7
318.6
320.6
318.4
317.2
319.8
317.9
317.1
318.7
317.3
319.4
322.2
321.4

6.5
7.6
9.5
12.2
16.9
21.7
27.0
30.9
34.4
37.3
39.4
39.2
42.3
45.9
48.3
49.6
51.7
54.0
55.2
54.4
53.7
55.1
54.5
55.6
58.0
60.6
61.9
56.5
57.5
57.6
56.1
59.4
61.1
59.9
61.8
61.8
60.5
61.2
60.6
59.1
60.4
60.7
59.2
62.7
63.4
62.3
64.8
63.6
62.3
62.8
61.9

2.5
2.2
2.3
6.2
11.5
18.8
24.3
23.3
22.6
23.3
18.9
20.8
23.8
24.7
25.9
24.9
24.8
24.9
24.2
26.3
26.6
27.4
28.9
30.8
33.6
37.0
40.8
32.8
33.2
33.8
33.2
34.2
34.8
35.1
35.2
35.4
35.7
36.8
37.0
36.7
36.9
37.6
37.8
38.7
39.1
39.2
39.0
39.8
39.7
40.6
40.8

38.6
41.1
52.5
94.0
141.6
191.6
227.4
205.2
200.1
192.2
198.9
196.8
193.4
196.9
201.0
204.2
204.3
197.8
195.5
202.3
210.6
207.9
213.1
217.6
218.5
221.1
218.7
220.0
220.5
219.0
219.1
218.8
216.6
217.0
218.0
219.3
220.2
221.4
221.1
222.8
223.3
220. 2
220.3
218.5
215.4
215.6
214. 9
213. 9
217.5
218.8
218.7

1
2

15.9
17.3
21.4
41.1
59.9
77.7
90.8
74.5
68.7
62.5
66.8
61.8
61.6
63.4
63.7
69.2
62.0
59.5
59.5
67.5
60.3
62.1
67.2
67.2
64.3
64.0
60.3
62.9
62.2
61.6
61.1
60.0
60.2
59.3
60.1
61.9
62.2
63.6
64.0
62.9
61.7
60.4
59.7
58.4
58.3
57.3
56.5
57.5
59.7
60.0
60.3

9.4
10.1
11.9
15.8
21.2
28.0
34.7
36.7
35.9
32.7
31.5
29.6
26.3
25.5
25.1
24.1
23.1
21.3
20.2
19.9
19.5
18.1
17.5
17.6
17.1
16.8
15.8
17.2
17.2
17.2
17.1
17.0
16.9
16.9
17.1
17.2
17.0
16.9
16.8
17.1
17.2
17.0
16.8
16.6
16.3
16.3
16.3
16.3
16.0
15.8
15.8

2.2
2.0
4.0
10.1
16.4
21.4
22.2
15.3
14.1
14.8
16.8
19.7
20.7
19.9
21.5
19.1
23.2
18.7
17.7
18.1
21.4
18.7
18.5
18.6
18.7
17.9
16.0
20.0
21.0
19.8
20.2
20.8
18.5
19.0
19.0
17.7
18.7
18.5
17.9
18.6
19.0
17.2
17.0
17.6
15.1
15.9
16.1
14.7
15.6
16.7
16.0

0.4
.5
.7
1.0
2.1
4.3
6.5
6.3
7.3
7.9
8.1
8.8
9.6
11.1
12.7
14.4
15.4
16.3
16.6
16.5
18.0
18.7
19.0
20.1
21.1
21.2
22.9
21.2
21.4
21.7
22.6
22.6
22.5
22.2
22.6
22.1
21.9
21.6
21.2
22.2
23.0
23.2
24.3
24.4
24.1
24.1
23.8
23.1
23.4
22.9
22.9

10.1
10.6
13.6
23.7
37.6
53.3
64.1
64.2
65.7
65.5
66.3
66.3
64.6
65.2
64.8
63.5
65.0
65.9
64.9
63.7
69.4
66.1
65.9
66.0
68.2
70.0
72.3
68.7
69.0
69.5
68.7
69.1
69.2
69.5
69.0
69.7
70.0
70.6
71.0
71.5
71.2
71.2
71.1
71.7
71.7
72.0
72.1
72.2
72.3

Miscellaneous
investors 7
0.7
.7
.9
2.3
4.4
7.0
9.1
8.1
8.4
8.9
9.4
10.5
•10.6
11.7
13.2
13.9
15.6
16.1
16.6
16.6
22.1
24.2
25.0
28.0
29.2
31.2
31.4
30.1
29.6
29.1
29.6
29.2
29.3
30.2
30.2
30.9
30.6
31.2
31.2
31.5
31.4
30.8
31.3
30.2
30.5
30.3
30.5
30.2
30.8
31.3
31.4

United States savings bonds, series A-F and J, are included at current redemption value.
Excludes guaranteed securities held by the Treasury. Not all of total shown is subject to statutory debt
limitation.
3
Includes commercial banks, trust companies, and stock savings banks in the United States and Territories and island possessions; figures exclude securities held in trust departments. Since the estimates in
this table are on the basis of par values and include holdings of banks in United States Territories and possessions, they do not agree with the estimates in Table C-47, which are based on book values and relate only
to4banks within the United States.
5 Exclusive of banks and insurance companies.
Includes trust, sinking, and investment funds of State and local governments and their agencies, and of
Territories and possessions.
6
Includes partnerships and personal trust accounts.
7
Includes savings and loan associations, nonprofit institutions, corporate pension trust funds, dealers and
brokers, and investments of foreign balances and international accounts in this country. Beginning with
December 1946, the international accounts include investments by the International Bank for Reconstruction and Development, the International Monetary Fund, the International Development Association, the
Inter-American Development Bank, and various U.N. funds, in special non-interest-bearing notes and
bonds issued by the U.S. Government. Beginning with June 30, 1947, includes holdings of Federal land
banks.
8
Preliminary estimates by Council of Economic Advisers.
Source: Treasury Department (except as noted).




274

T A B L E C-56.—Average length and maturity distribution of marketable interest-bearing
public debt, 1946-65
Maturity class
End of year or month

Amount
outstanding Within
1 year

Ito5
years

years
5 to 10 10 to 20 20and
years
years
over

Millions of dollars

Average length

Years Months

Fiscal year:
1946
1947
1948
1949

189,606
168, 702
160,346
155.147

61,974
51, 211
48, 742
48,130

24, 763
21,851
21, 630
32, 562

41,807 17, 461 43, 599
35, 562 18, 597 41, 481
32, 264 16, 229 41,481
16, 746 22,821 34,888

1950..
1951 .
1952..
1953..
1954..

155,310
137,917
140, 407
147, 335
150, 354

42, 338
43, 908
46,367
65, 270
62, 734

7,792
8,707
13, 933
15, 651
27, 515

28, 035 25, 853
29,979
8,797
25,700
6,594
28,662
1,592
28, 634 1,606

1955..
1956..
1957 .
1958..
1959..

155, 206
154, 953
155, 705
166. 675
178, 027

49, 703
58, 714
71,952
67, 782
72, 958

51, 292
46, 526
47, 814
36,161
29,866
39,107
34, 401
40, 669
42, 557
58, 304

34, 253
28,908
12,328
21, 476
17, 052

I960..
1961
1962..
1963..
1964_.
1965.

183,845
187.148
196, 072
203, 508
206, 489
208, 695

70, 467
81,120
88, 442
85, 294
81, 424
87, 637

72,844
58, 400
57, 041
58, 026
65, 453
56,198

20, 246
26, 435
26,049
37, 385
34, 929
39,169

28, 613
28, 578
26, 407
27, 652
21, 625
12, 630
10, 233
9,319
8,360
8,355
8,449

7,658
10, 960
15, 221
14,444
16, 328
17, 241

11
1
0
4

Jan..
Feb__
Mar._
Apr__
MayJune,

208,589
209,218
208, 223
207,356
208, 009
206,489

88,445
85,046
84,044
82,554
82,930
81,424

57, 509
63,392
63,413
64, 057
62,825
65,453

37,900
36,053
36,047
36,041
37, 561
34,929

8,357
8,357
8,356
8,355
8,355
8,355

16,378
16,372
16,363
16,350
16,339
16,328

1
1
1
0
1
0

July..
Aug..
Sept.
Oct-.
Nov_.
Dec._

206,776
207,692
208,981
210,118
212,414
212,454

77, 231
81,389
82, 689
84,135
88.443
88,451

60,672
57, 443
57,452
63,422
61, 427
64,007

43,010
43, 002
42, 995
36, 725
38,963
36,421

8,354
8,354
8,353
8,353
6,108
6,108

17, 508
17, 505
17,491
17, 483
17,473
17, 467

4
4
3
2
1
0

1965: Jan__
Feb_.
Mar_.
Apr._
MayJune .

214,411
214,863
212,507
212,451
210,954
208,695

86,798
89,829
87, 517
88,126
89,901
87, 637

57,886
59, 703
62,135
61,487
56,178
56,198

43,902
39,532
37,120
37,116
39,172
39,169

6,107
6,106
6,106
6,106
8,450
8,449

19,718
19,693
19, 630
19,616
17, 253
17, 241

5
4
4
3
4
4

July_.
AugSept_
Oct_.
Nov_.

208, 664
208,402
208,381
212, 097
214,619
214,604

87,635
92,446
92.444
96,491
93,392
93,396

56,192
55, 266
55,264
54,952
60,593
60,602

39,166
35,032
35,027
35, 024
35,021
35,013

8,448
8,448
8,447
8,446
8,446
8,445

17, 222
17, 210
17,199
17,184
17,167
17,148

3
3
3
1
0
0

1964:

Dec.

3,530
4,351
4,349
7,208

10
4
9
3
7

NOTE.—All issues classified to final maturity except partially tax-exempt bonds, which are classified to
earliest call date.
Source: Treasury Department.




275

TABLE C-57.—Federal administrative budget receipts by source and expenditures by function
fiscal years 1939-67 *
[Millions of dollars]
Net receipts
Fiscal
year

Total

Individual
income
taxes

Expenditures

MisCorpo- Excise Em- Estate
cella- Interrate taxes ploy- and Cus- neous fund
income (net) ment gift toms re- transtaxes taxes
taxes
ceipts actions

Total

InternaNa- tional
tional affairs
defense and
finance

4,979

1,022

1,138

1,861

127

357

302

188

-17

8,841

1,075

20

1940__-_ 5,137
1941
7,096
1942.___ 12, 547
1943-___ 21,947
1944
43, 563

959
1,400
3,205
6,490
19, 701

1,123
2,029
4,727
9, 570
14, 737

1,973
2, 555
3,393
4,093
4,761

165
117
154
160
200

357
403
421
442
507

331
365
369
308
417

237
235
286
924
3,313

—7
—7
—9
-39
-73

9,055
13,255
34,037
79, 368
94, 986

1,498
6,054
23,970
63,216
76, 757

51
145
1,839
3,299
3,642

1945
1946____
1947
1948—
1949.-.

44,362
39,650
39, 677
41,375
37, 663

18, 415
16,157
17, 835
19,305
15, 548

15,146
11.833
8,569
9,678
11,195

6,267
6,999
7,207
7,356
7,502

189
213
314
50
235

638
669
770
890
780

341
424
477
403
367

3,480
3,476
4,614
3,807
2,069

-113
— 122
-109
-113
-33

98,303
60,326
38,923
32,955
39,474

81,277
43, 226
14,398
11,779
12,926

3,312
3,107
6,536
4, 566
6,052

1950-,-.
1951
1952-__.
1953—
1954

36,422
47, 480
61,287
64,671
64,420

15,745
21,643
27,913
30,108
29, 542

10,448
14,106
21,225
21,238
21,101

7,549
8,648
8,851
9,868
9,945

225
234
256
274
283

698
708
818
881
934

407
609
533
596
542

1, 422
1,620
1,794
1,859
2,309

-73
-88
-104
-154
-235

39,544
43,970
65,303
74,120
67, 537

13,018
22,471
44,037
50,442
46,986

4,674
3,736
2, 826
2, 216
1, 732

1955
1956—
1957
1958—
1959

60,209
67,850
70,562
68, 550
67,915

28. 747
32,188
35, 620
34, 724
36, 719

17, 861
20,880
21,167
20,074
17,309

9,131
9,929
9,055
8,612
8,504

579
322
328
333
321

924
1,161
1,365
1,393
1,333

585
682
735
782
925

2, 562
3,003
2, 760
3,200
3,160

-181
-315
-467
-567
-355

64,389
66, 224
68,966
71, 369
80,342

40, 695
40,723
43,368
44,234
46, 483

2, 310
2,467
3,311
3,305
4,802

1960
1961 —
1962 —
1963—.
1964

77, 763
77, 659
81,409
86,376
89,459

40,715
41,338
45, 571
47, 588
48, 697

21,494 9,137
20,954 9,063
20,523 9,585
21, 579 9,915
23,493 10,211

339
(4)

1, 606
1,896
2,016
2,167
2,394

1,105
982
1,142
1,205
1, 252

4,062
4,080
3, 206
4,435
4,076

-694
-654
-633
-513
-664

76, 539
81, 515
87, 787
92, 642
97,684

45, 691
47, 494
51,103
52,755
54,181

3,064
3, 954
4,301
4,151
3,687

1 9 6 5 — 93,072
1966 s... 100,000
1967 5__. 111,000

48, 792
51, 400
56, 240

25,461 10,911
29, 700 9,169
34,400 8,879

2, 716
2, 932
3,301

1,442
1, 655
1,845

4,619
5, 791
7,047

-870
-647
-712

96, 507
106,428
112,847

50,163
56, 560
60, 541

4,304
3,932
4,177

1939.__.

See footnotes at end of table.




276

TABLE G—57.—Federal administrative budget receipts by source and expenditures by function,
fiscal years 1939-67—Continued *
[Millions of dollars]
Expenditures—Continued

Fiscal
year

AgriSpace
Comculture Natural merce
reand
search
and
reagriand
transtech- cultural sources porta2
nology
tion
resources

Housing
a n d Health
com- labor,
and
munity welfare
development

Education

VeterAllowans
Gen- ance InterbeneIneral
fund
for
fits
terest govcon- transand
erntin- actions
services
ment
gencies

1939

1,199

360

662

-148

3,866

560

950

335

-80

1940
1941
1942
1943
1944

12
23
30

1,538
1,314
1,482
610
1,215

471
452
533
501
402

454
577
2,600
7,211
7,725

35
129
215
309
316

3,000
2,536
1,926
1,132
881

41
43
47
47
94

552
566
558
606
745

1,056
1,123
1,272
1,825
2,623

370
409
515
825
989

-14
-101
-933
-236
-433

1945
1946
1947
1948
1949

38
32
35
38
49

1,607
747
1,243
575
2,512

319
342
548
743
1,057

4,143
886
655
1,218
1,618

-185
-193
356
94
295

864
865
1,148
1,213
1,433

154
79
62
68
67

2,095
4,415
7,381
6,653
6,725

3,662
4,816
5,012
5,248
5,445

880
1,047
1,353
1,263
1,054

139
955
196
-501
239

1950
1951
1952
1953
1954

54
62
67
79
90

2,795
676
1,060
2,949
2,564

1,206
L, 275
L; 375
,484
L,326

1,759
1,625
1,888
1,926
1,219

268
531
593
396
-628

1,790
1,863
1,916
2,052
2,122

78
103
191
320
326

5,400
4,933
4,368
4,341

5,817
5,714
5,934
6,583
6,470

1,170
1,307
1,445
1,461
1,226

267
-793
-961
-154
-235

1955
1956
1957
1958
1959

74
71
76
89
145

4,246
4,234
3,186
3,320
5,533

1,216
1,125
1,320
1,570
1,705

1,225
1,892
1,305
1,632
2,025

136
-10
-118
30
970

2,165
2,462
2,632
3,059
3,877

377
343
437
541
732

4,522
4,810
4,870
5,184
5,287

6,438
6,846
7,307
7,689
7,671

1,166
1,576
1,738
1,284
1,466

-181
-315
-467
-567
-355

1960
1961
1962
1963
1964

401
744
1,257
2,552
4,171

3,606
3,667
4,338
5,311
5,475

1,757
2,056
2,206
2,431
2,563

1,963
2,573
2,774
2,843
3,002

122
320
349
-67
-80

3,690
4,244
4,538
4,789
5,475

943
1,076
1,244
1,339

5,266
5,414 9,050
5,403 9,198
5,186 9,980
5,492 10,765

1,542
1,709
1,875
1,979
2,280

-694
-654
-633
-513
-664

1965
5,093
19665___ 5,600
1967 5__. 5,300

4,898
4,313
3, 372

2,750
2,920
5,062

3,499
3,202
2,672

-104
77
123

5,898
8,377
9,962

1,544
2,318
2,834

5,495 11, 435
5,122 12,104
5,721 12,854

2,402
2,476
2,591

75
350

-870
-647
-712

1 For administrative budget surplus or deficit, see Table C-58.
2
Beginning with 1952, includes watershed projects of the Soil Conservation Service; these are classified
under "Agriculture and agricultural resources" in the earlier years.
3
Includes adjustment to Daily Treasury Statement prior to 1953.
* Less than $500,000.
5 Estimate.
Sources: Treasury Department and Bureau of the Budget.




277

TABLE C-58.—Federal administrative budget receipts and expenditures and the public debt, 1929-67
[Millions of dollars]
Surplus

Public
debt at end
of year 2

Net
receipts i

Expenditures

or
deficit (-)

1929

3,861

3,127

734

16,931

1930
1931
1932
1933
1934
1935
1936.
1937
1938
1939

4,058
3,116
1,924
1,997
3,015
3,706
3,997
4,956
5, 588
4,979

3,320
3,577
4,659
4,598
6,645
6,497
8,422
7,733
6,765
8,841

738
-462
-2,735
-2,602
-3,630
-2,791
-4,425
-2,777
-1,177
-3,862

16,185
16,801
19,487
22, 539
27,734
32,824
38,497
41,089
42,018
45,890

5,137
7,096
12,547
21,947
43,563
44,362
39,650
39,677
41,375
37,663

9,055
13,255
34, 037
79,368
94 986
98,303
60,326
38,923
32,955
39,474

- 3 , 918
-6,159
-21,490
-57,420
—51,423
-53,941
-20,676
754
8,419
-1,811

48,497
55,332
76,991
140,796
202 626
259,115
269,898
258,376
252,366
252,798

36,422
47,480
61,287
64, 671
64,420
60, 209
67,850
70, 562
68,550
67,915

39,544
43,970
65,303
74,120
67,537
64,389
66,224
68,966
71,369
80,342

-3,122
3,510
-4,017
-9,449
-3,117
-4,180
1,626
1,596
-2,819
-12,427

257,377
255, 251
259,151
266,123
271,341
274,418
272,825
270, 634
276,444
284,817

77,763
77,659
81,409
86,376
89,459
93,072
100,000
111,000

76,539
81,515
87,787
92,642
97,684
96,507
106,428
112,847

1,224
-3,856
-6,378
- 6 , 266
- 8 , 226
-3,435
-6,428
-1,847

286,471
289, 211
298,645
306,466
312, 526
.317,864
320,000
321,680

40,800
37,464

35,559
41, 056

5,241
-3,592

252,854
257,160

37, 235
52,877
64,705
63,654
60,938

37,657
56,236
70,547
72,811
64,622

-422
-3,358
-5,842
-9,157
-3,683

256,731
259,461
267,445
275, 244
278, 784

63,119
70,616
71,749
68,262
72,738

65,891
66,838
71 157
75,349
79,778

-2,771
3,779
592
- 7 , 088
- 7 , 040

280,822
276,731
275, 002
283,031
290, 925

79, 518
78,157
84, 709
87, 516
88,696
96, 679

77,565
84,463
91,907
94,188
96,945
101,378

1,953
-6,306
-7,199
- 6 , 672
- 8 , 248
- 4 , 699

290,373
296,499
303,988
310, 089
318,750
321,359

Fiscal or calendar year
Fiscal year:

_

1940
1941
1942
1943
1944
1945...
1946
1947
1948
1949

-

_

1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

_

- -

1960
1961
1962
1963
1964
1965
1966 3
1967 3
- -

- _

1950
1951
1952 . .
1953
1954

1960
1961
1962
1963
1964
1965 4

- --

_

Calendar year:
1948 .
_
1949

1955
1956
1957
1958
1959

-

-

_ _
---

-

- - - -

-

_ _
- -

1 Gross receipts less refunds of receipts and transfers of tax receipts to the old-age and survivors insurance
trust fund, the disability insurance trust fund, the railroad retirement account, the unemployment trust
fund, and the highway trust fund.
2 Includes guaranteed issues. The change in the public debt from year to year reflects not only the budget
surplus or deficit but also changes in the Government's cash on hand, and the use of corporate debt and
investment transactions by certain Government enterprises.
3 Estimate.
4
Preliminary.
Sources: Treasury Department and Bureau of the Budget.




278

TABLE G-59.—Government cash receipts from and payments to the public, 7946-67
[Billions of dollars]

Total

Federal i
Excess
of re-

Fiscal or calendar year

Cash Cash ceipts
or of
repayceipts ments pay-

ments

Fiscal year:

State and loc

Cash
receipts

Cash
payments

Excess
of receipts
or of
payments

Cash
receipts

Cash
payments

Excess
of receipts
or of
payments

54.2
55.6
59.4
57.2

70.2
47.5
50.0
56.3

-16.0
8.1
9.4
.8

43.5
43.5
45.4
41.6

61.7
36.9
36.5
40.6

-18.2
6.6
8.9
1.0

10.7
12.0
14.0
15.6

8.5
10.6
13.5
15.8

2.2
1.5
.5
-.2

57.9
72.1
88.4
93.6
95.2

61.4
65.2
88.7
98.6
95.6

-3.5
6.9
-.3
-5.0
-.5

40.9
53.4
68.0
71.5
71.6

43.1
45.8
68.0
76.8
71.9

-2.2
7.6
-5.3
-.2

16.9
18.7
20.4
22.1
23.6

18.2
19.4
20.8
21.8
23.8

-1.3
-.7
-.4
.3
-.2

92.9
105.0
112.7
114.4
116.3

97.2
101.3
111.5
118.0
131.8

-4.3
3.7
1.2
-3.5
-15.6

67.8
77.1
82.1
81.9
81.7

70.5
72.5
80.0
83.5
94.8

-2.7
4.5
2.1
-1.6
-13.1

25.1
27.9
30.6
32.5
34.6

26.7
28.8
31.5
34.5
37.1

-1.6
—.9
q
—2.0
-2.5

1960
1961
1962
1963
1964

133.8
138.8
146.4
158.3
167.4

132.5
141.2
152.7
161.5
171.3

1.3
-2.5
-6.3
-3.2
-3.9

95.1
97.2
101.9
109.7
115.5

94.3
99.5
107.7
113.8
120.3

.8
-2.3
-5.8
-4.0
-4.8

38.7
41.5
44.6
48.5
51.8

38.2
41.7
45.0
47.7
51.0

.6
-.2
—.5

1965
1966 4
1967 4

175.6

176.8

-1.2

119.7
128.2
145.5

122.4
135.0
145.0

-2.7
-6.9
.5

55.9

54.4

1.5

1947
1948
1949

52.7
57.2
59.8
57,7

50.8
50.6
51.6
59.7

1.9
6.6
8.1
-2.0

41.4
44.3
44.9
4,1.3

41.4
38.6
36.9
42.6

.1
5.7
8.0
-1.3

11.3
12.9
14.8
16.3

9.4
12.0
14.7
17.0

1.9
.9
.1
-.7

1950
1951
1952
1953
1954

60.2
78.8
92.6
93.1
92.8

61.0
78.1
93.3
100.1
95.0

-.8
.7
-.7

42.0
58.0
72.0
77.4
69.7

.5
1.2
-.6

-7.2
-1.1

17.8
19.5
21.3
22.9
24.2

19.0
20.0
21.3
22.7
25.3

-1.3

-7.0
-2.2

42.4.
59.3
71.3
70.2
68.6

1955
1956.. .
1957
1958
1959
-

97.8
109.6
116.2
115.3
123.9

99.9
105.0
116.4
124.8
132.8

—2.1
4.7
-.2
-9.5
-8.9

71.4
80.3
84.5
81.7
87.6

72.2
74.7
83.4
89 0
95.6

— .7
5.6
1.1
-7.2
-8.0

26.4
29.3
31.7
33.5
36.4

27.7
30.2
33.0
35.9.
37.3

—1.4

1960
1961
1962
1963
1964
1965 6

138.6
141.0
153.3
162.8
169.1
181.8

134.8
148.4
158.0
166.5
173.0
184.8

3.7
-7.4
-4.8
-3.8
-3.9
-3.0

98.3
97.9
106.2
112.6
115.0
123.4

94.7
104.7
111.9
117.2
120.3
127.9

3.6
-6.8
—5.7
-4.6
-5.2
-4.5

40.3
43.1
47.1
50.2
54.1
58.4

40.1
43.7
46.2
49.3
52.7
56.9

1946
1947
1948
1949
1950
1951
1952
1953
1954

.

--

--_
-_

1955
1956
1957
1958
1959

.

.-_

.

Calendar year:
1946..
...

_-

--

.8
.9

-.5
2

-1.1
-.9

-1.3
-2.3
-.9
.2

-.5
.9
.9

1.3
1.5

1
For derivation of Federal cash receipts and payments, see Budget of the United States Government for the
Fiscal Year ending June 30, 1967, and Table C-62.
2
Estimated by Council of Economic Advisers from receipts and expenditures in the national income
accounts. Cash receipts consist of personal tax and nontax receipts, indirect business tax and nontax
accruals, and corporate tax accruals adjusted to a collection basis. Cash payments are total expendituresless Federal grants-in-aid and less contributions for social insurance. (Federal grants-in-aid are therefore
excluded from State and local receipts and payments and included only in Federal payments.) See Table
C-60.
3
Surplus of $49 million.
* Estimate.
s Deficit of $13 million.
6
Preliminary.

Sources: Treasury Department, Bureau of the Budget, Department of Commerce (Office of Business
Economics), and Council of Economic Advisers.




279

T A B L E G—60.—Government receipts and expenditures in the national income accounts, 1929—65
[Billions of dollars]

Calendar year or quarter

Receipts

State and local
government

Federal Government i

Total government

Surplus or
deficit
Ex- (-)on Rependb income ceipts
and
tures
product account

Surplus or
deficit
Ex- (-)on
Rependi- ncome ceipts
and
tures
product account

Surplus or

deficit
Ex- (-) on
pendi- income
and
tures
product account

1929—

11.3

10.3

1.0

3.8

2.6

1.2

7.6

7.8

-0.2

1930—
1931—
1932...
1933—
1934...
1935—
1936...
1937...
1938...
1939—

10.8
9.5
10.5
11.4
12.9
15.4
15.0
15.4.

11.1
12.4
10.6
10.7
12.9
13.4
16.1
15.0
16.8
17.6

-2.9
-1.8
-1.4
-2.4
-2.0
-3.1
.3
-1.8
-2.2

3.0
2.0
1.7
2.7
3.5
4.0
5.0
7.0
6.5
6.7

2.8
4.2
3.2
4.0
6.4
6.5
8.7
7.4
8.6
8.9

.3
-2.1
-1.5
-1.3
-2.9
-2.6
-3.6
-.4
-2.1
-2.2

7.8
7.7
7.3
7.2
8.6
9.1
8.6
9.1

8.4
8.5
7.6
7.2
8.1
8.6
8.1
8.4
9.0

-.8
-.3
-.1
.5
.6
.5
.7
.4

1940...
1941...
1942...
1943—
1944...
1945—
1946. _
.
1947...
1948—
1949...

17.7
25.0
32.6
49.2
51.2
53.2
50.9
56.8
58.9
56.0

18.4
28.8
64.0
93.3
103.0
92.7
45.5
42.4
50.3
59.1

-3.8
-31.4
-44.1
-51.8
-39.5
5.4
14.4
8.5
-3.2

8.6
15.4
22.9
39.3
41.0
42.5
39.1
43.2
43.3

10.0
20.5
56.1
85.8
95.5
84.6
35.6
29.8
34.9
41.3

-1.3
-5.1
-33.1
-46.6
-54.5
-42.1
3.5
13.4
8.4
-2.4

10.0
10.4
10.6
10.9
11.1
11.6
12.9
15.3
17.6
19.3

9.3
9.1
8.8
8.4
8.5
9.0
11.0
14.3
17.4
20.0

1.3
1.8
2.5
2.7
2.6
1.9
1.0
.1
-.7

1950..
1951..
1952..
1953..
1954..
1955..
1956..
1957..
1958..
1959..

68.7
84.8
89.8
94.3
89.7
100.4
109.0
115.6
114.7
128.9

60.8
79.0
93.7
101.2
96.7
97.6
104.1
114.9
127.2
131.0

40.8
57.8
71.0
77.0
69.7
68.1
71.9
79.6
88.9
91.0

9.1
6.2
-3.8
-7.0
-5.9
4.0
5.7
2.1
-10.2
-1.2

21.1
23.3
25.2
27.2
28.8
31.4
34.7
38.2
41.6
46.0

22.3
23.7
25.3
27.0
29.9
32.7
35.6
39.5
44.0
46.8

-1.2
-.4
(3)

-7.0
2.7
4.9
.7
-12.5
-2.1

49.9
64.0
67.2
70.0
63.8
72.1
77.6
81.6
78.7
89.7

1960. .
1961..
1962._
1963..
1964._
1965 <_

139.8
144.6
157.0
168.3
172.7
186.9

136.1
149.0
159.9
167.1
175.1
184.7

3.7
-4.3
-2.9
1.2
-2.4
2.3

96.5
98.3
106.4
114.3
114.5
124.1

93.0
102.1
110.3
114.0
118.3
123.5

3.5
-3.8
-3.8
.3
-3.8

49.9
53.6
58.6
63.1
68.6
74.2

49.6
54.1
57.6
62.2
67.2
72.6

.2
-.5

7.8
5.8

-ill

-1.3
-.9
-1.4
-2.3
-.8

1.4
1.7

Seasonally adjusted annual rates

: I...
II. _
III.
IV.
1964:

II..
III_
IV.

1965: I

II—
III...
IV*.

112.4
113.9
114.5
116.2

114.9
112.1
113.9
115.1

-2.5
1.8
.6
1.2

61.4
62.2
63.8
65.2

60.5
61.3
62.7
63.9

0.9
.9
.0
.3

-1.6
-6.4
-2.1

114.8
112.0
114.6
116.8

117.5
119.6
118.2
117.9

-2.6
-7.6
-3.6
-1.1

66.4
68.0
69.5
70.5

65.4
66.8
67.9
68.6

.0
.2
.5

4.7
4.9
-.7
5
()

123.7
124.4
122.7

120.1
120.6
125.6
127.6

3.6
3.8

71.8
73.2
75.4

70.8
72.1
73.2
74.2

1.1
1.1
2.2

165.3
167.4
168.9
171.5

166.8
164.7
167.2
169.1

-1.6

171.4
169.6
173.5
176.5

173.0
176.1
175.5
175.7

184.8
186.6
186.4

180.1
181.7
187.1
189.7

(5)

2.6
1.7
2.4

.8

(')

-2.9
(5)

(5)

* Preliminary estimates.
1 See Note, Table C-61.
2
Surplus of $32 million.
«Not available.
3 Deficit of $41 million.
NOTE.—Federal grants-in-aid to State and local governments are reflected in Federal expenditures and
State and local receipts and expenditures. Total government receipts and expenditures have been adjusted
to eliminate this duplication.
Data for Alaska and Hawaii included beginning 1960.
Source: Department of Commerce, Office of Business Economics.




280

TABLE C-61.—Federal Government receipts and expenditures in the national income accounts,
1946-67
[Billions of dollars]

Expenditures

Receipts

Transfer
payments

Indirect
Per- Cor- busi- ConPurjrrantssonal potribuchases
in-aid
tax rate
tions
;o State
of
Year or quarter
and
for Total goods
To
and
Total non- profits and
To
forlocal
tax
social
and
tax
nsuracserv- per- eign- governre- cruals
ices sons ers ments
ceipts
(net)
cruals
Fiscal year:
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966 2
1967 2
Calendar year:
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965 3

38.4
42.7
43.6
40.0
42.0
60.8
65.1
69.3
65.8
67.2
75.8
80.7
77.9
85.4
94.8
95.3
104.2
110.2
115.1
119.6
128.8
142.2

16.9
18.8
20.0
16.3
16.5
23.2
28.8
31.4
30.3
29.7
33.6
36.7
36.3
38.2
42.5
43.6
47.3
49.6
50.7
51.2
54.8
60.5

8.3
7.4
5.8
10.6
7.9
5.5
11.2
7.9
4.6
11.0
8.0
4.8
11.9
8.2
5.5
21.5
9.5
6.6
19.3
9.7
7.3
19.7 10.7
7.5
17.3 10.4
7.8
18.7 10.0 8.7
21.1 10.8 10.2
20.6 11.7 11.7
17.8 11.6 12.2
21.5 11.9 13.8
22.3 13.2 16.7
20.3 13.3 18.1
22.9 14.2 19.9
23.6 15.0 22.1
25.3 15.6 23.6
27.0 16.8 24.6
29.3 15.9 28.8
31.1 16.5 34.1

55.5
29.5
30.9
39.6
42.4
44.6
66.0
75.8
74.2
67.3
69.8
76.0
83.1
90.9
91.3
98.0
106.4
111.4
117.1
118.3
131.0
142.7

39.1
43.2
43.3
38.9
49.9
64.0
67.2
70.0
63.8
72.1
77.6
81.6
78.7
89.7
96.5
98.3
106.4
114.3
114.5
124.1

17.2
19.6
19.0
16.1
18.1
26.1
31.0
32.2
29.0
31.4
35.2
37.4
36.8
39.9
43.6
44.7
48.6
51.5
48.6
53.9

8.6
10.7
11.8
9.8
17.0
21.5
18.5
19.5
17.0
20.6
20.6
20.2
18.0
22.5
21.7
21.8
22.7
24.5
26.0
28.3

5.5
5.1
4.5
4.9
5.9
7.1
7.4
7.4
8.1
93
10.6
12.2
12.4
14.8
17.7
18.2
20.5
23.0
23.7
25.2

35.6
29.8
34.9
41.3
40.8
57.8
71.0
77.0
69.7
68.1
71.9
79.6
88.9
91.0
93.0
102.1
110.3
114.0
118.3
123.5

7.8
7.8
8.0
8.0
8.9
9.4
10.3
10.9
9.7
10.7
11.2
11.8
11.5
12.5
13.5
13.6
14.6
15.3
16.1
16.8

40.1
13.0
13.2
19.3
19.0
25.1
46.6
56.1
53.2
43.9
45.2
47.7
50.7
54.7
52.7
55.5
60.9
63.4
65.8
64.5
70.7
74.4
17.2
12.5
16.5
20.1
18.4
37.7
51.8
57.0
47.4
44.1
45.6
49.5
53.6
53.7
53.5
57.4
63.4
64.4
65.3
66.7

0)

8.3
8.7
8.1
11.3
8.1
8.5
9.3
10.5
12.1
12.8
14.4
17.8
19.8
20.6
23.6
25.1
26.4
27.3
28.2
32.0
37.0

9.2
8.8
7.6
8.7
10.8
8.5
8.8
9.5
11.5
12.4
13.4
15.7
19.5
20.1
21.5
24.9
25.5
27.0
27.8
29.9
Seasonally adjusted annual

0)

0.9
1.5
1.8
2.1
2.4
2.4
2.5
2.8
2.9
3.0
3.2
3.7
4.7
6.2

Net
interest
paid

3.7
4.2
4.2
4.3
4.4
4.6
4.8
4.8
5.0
4.9
5.1
5.5
5.7
5.9
7.0

1.8
2.6
5.0
4.3
3.1
2.6
2.1
1.7
2.1
1.8
1.9
1.7
1.8
1.8
2.1
2.1
2.1
2.2
2.1
2.2
2.2

7.6
8.4
9.8
10.9
12.8
14.7

7.5
8.1
8.6
9.0
9.7

2.2
1.9
3.8
5.1
3.6
3.1
2.1
2.0
1.8
2.0
1.9
1.8
1.8
1.8
1.9
2.1
2.2
2.2
2.2
2.2

1.1
1.7
2.0
2.2
2.3
2.5
2.6
2.8
2.9
3.1
3.3
4.2
5.6
6.8
6.5
7.2
8.0
9.1
10.4
11.4

4.2
4.2
4.3
4.4
4.5
4.7
4.7
4.9
5.0
4.9
5.3
5.7
5.6
6.4
7.1
6.6
7.2
7.8
8.4

SurSubsi- plus
or
dies defiless
cit
current (-)
on
surinplus come
of
and
gov- prodern- uct
ment acenter- count
prises
2.1 -17.1
13.2
.7
12.7
.5
.4
.8
1.0
-.5
1.3
16.2
1.1 - 1 . 0
.9 - 6 . 5
1.0 - 8 . 5
1.3
-.1
1.7
6.0
2.8
4.7
2.5 - 5 . 1
2.4 - 5 . 5
2.3
3.5
3.2 - 2 . 7
3.8 - 2 . 1
3.6 - 1 . 2
3.8 - 1 . 9
4.1
1.2
4.3 - 2 . 2
4.7
-.5
1.6
3.5
.6
13.4
.7
8.4
.8 -2.4
1.2
9.1
1.3
6.2
1.0 - 3 . 8
.8 - 7 . 0
1.1 - 5 . 9
1.5
4.0
2.4
5.7
2.6
2.1
2.7 -10.2
2.1 - 1 . 2
2.5
3.5
3.8 - 3 . 8
4.0 - 3 . 8
3.6
.3
4.3 - 3 . 8
4.5
.6

rates

Calendar
quarter:

112.4
113.9
114.5
116.2
114.8
112.0
114.6
116.8
123.7
124.4
122.7

114.9 65.4 27.6 2.0
8 6 7.6 3.7 - 2 . 5
.
1.8
112.1 63.6 26.5 2.2
8.7 7.6 3. 6
.6
113.9 64.2 26.7 2.3
9 4 7.9 3 5
.
.
1.2
115.1
64.4 27.1
2.2
9 9 8.0 3.5
.
IV
9 9 8.3 3.9 - 2 . 6
.
1964: I
117.5 65.0 28.2 2.1
II
119.6 67.0 27.5 2.3
10.3 8.2 4.2 - 7 . 6
III
118.2 64.9 27.6 2.
10.6 8.5 4.4 - 3 . 6
IV
117.9
64.3 27 7 2.1
10.8 8.4 4 7 - 1 . 1
.
120.1
.
64.9 29 2 2.0
10.8 8 6 4.6
3.6
1965: III3.8
120. 6 65.7 28 2 2 4
11.0 8 7 4 5
.
.
III
125.6 66.5 32 0 2.1
11.7 8.8 4 5 - 2 . 9
.
IV 3
(0
127.6 69.7 30.3 2.1
12.0 8.9 4.4 0)
0)
2
3
i Not available.
Estimate.
Preliminary estimates.
NOTE.—These accounts, like the cash budget, include the transactions of the trust accounts. Unlike
both the administrative budget and the cash statement, they exclude certain financial transactions. In
general, they do not use the cash basis for transactions with business. Instead, corporate profits taxes
are included in receipts on an accrual instead of a cash basis; expenditures are timed with the delivery instead of the payment for goods and services; and CCC guaranteed price-support crop loans financed
by banks are counted as expenditures when the loans are made, not when CCC redeems them.
Data for Alaska and Hawaii included beginning 1960.
Sources: Department of Commerce (Office of Business Economics) and Bureau of the Budget.
1963: I

II.—
III.

51.2
51.3
51.5
51.9
50.2
46.5
48.1
49.8
53.5
54.8
53.2
54.0




23.4
24.4
24.6
25.4
25.7
25.9
26.2
26.5
27.7
28.0
28.3

15.2
15.2
15.3
15.5
15.6
16.0
16.4
16.4
17.7
16.7
16.1
16.5

22.6
22.9
23.2
23.5
23.3
23.5
23.9
24 2
24.7
24.9
25 2
25.8

281

TABLE C-62.—Reconciliation of Federal Government receipts and expenditures in the administrative budget and the consolidated cash statement with receipts and expenditures in the national income accounts,fiscalyears 1963-67
[Billions of dollars]
Fiscal years

Receipts or expenditures
1963

1964

1965

1966 1

86.4
27.7
4.3
(2)
109.7

89.5
30.3
4.2
.1
115. 5

93.1
31.0
4.3
.1
119.7

100.0
33.5
4.5
.9
128.2

1967

RECEIPTS
Administrative budget receipts
Plus: Trust fund receipts
Less: Intragovernmental transactions
Receipts from exercise of monetary authority
Equals: Federal receipts from the public
Less:
Coverage differences:
District of Columbia
Other
Financial transactions
Miscellaneous
Plus:
Netting differences:
Contributions to Government employees retirement funds
Other
Timing differences
Miscellaneous
Equals: Federal receipts in the national income and product
accounts

111.0
41.6
5.5
1.6
145.5

.1
.2
.1

1.9
-1.9
1.7
.1

110.2

2.2
-1.5
.2

2.2
-2.1
1.0
.1

2.2
-2.3
-2.6
.1

119.6

2.0
-1.9
.4

128.8

142.2

EXPENDITURES
Administrative budget expenditures
Plus: Trust fund expenditures (including Governmentsponsored enterprises, n e t ) . .
Less: Intragovernmental transactions
Debt issuance in lieu of checks and other adjustments
Equals: Federal payments to the public
Less:
Coverage differences:
District of Columbia
Federal home loan banks and Federal land banks.
Other
Financial transactions:
Net lending
Net purchase of foreign currency
Timing differences:
Checks outstanding and certain other accounts
Miscellaneous
Plus:
Netting differences:
Contributions to Government employees retirement funds
Other.
Timing differences
Miscellaneous
Equals: Federal expenditures in the national income and
product accounts

92.6

97.7

16.5

106.4

112.8

26.5
4.3

28.9
4.2

29.6
4.3

33.8
4.5

37.9
5.5

1.2
113.8

2.0
120.3

122.4

.7
135.0

.2
145.0

.3
.5
.2

.3
1.8
.2

.4
1.2
.2

.4
.4
.3

.5
.5

.7
1.2

1.8
.9

1.5
1.0

-1.4
1.0

-.1
.4

.1
.3

1.9
-1.9
.4

2.0
-1.9

2.2
-1.5
1.5
.4

2.2
-2.1

111.4

117.1

118.3

131.0

.4

1 Data for 1966 and 1967 are estimates.
2 Less than $50 million.
NOTE.—Data for Alaska and Hawaii included.
Sources: Bureau of the Budget and Department of Commerce (Office of Business Economics).




282

2.2
-2.3

142.7

TABLE C-63.—State and local government revenues and expenditures, selectedfiscalyears, 1927-64
[Millions of dollars]
General revenues by source 5

Fiscal year J

Total

General expenditures by function '<

ReveSales
nue
All
Indi- Corpo- from
and
Prop- gross vidual ration Fed- other
erty
net
revere- income income eral
taxes ceipts taxes
nue 3
taxes Govtaxes
ernment

EduTotal cation

High- Public All
wel- other *
ways
fare

1927

7,271

4,730

470

70

92

116

1,793

7,210

2,235

151

3,015

1932
1934.
1936...
1938

7,267
7,678
8,395
9,228

4,487
4,076
4, f
4,440

752
1,008
1,484
1,794

74
80
153
218

79
49
113
165

232
1,016
948
800

1,643
1,449
1,604
1,811

7,765
7,181
7,644
8,757

2,311
1,831
2,177
2,491

1,741
1,509
1,425
1,650

444
889
827
1,069

3,269
2,952
3,215
3,547

10, 418
10,908
12, 356
17, 250

4,430
4,537
4,604
4,986
6,126

1,982
2,351
2,986
4,442

224
276
342
422
543

156
272
451
447
592

945
858
954
855
1,861

1,872 9,229
2,123 9,190
2,269 8.863
2,661 11, 028
3,685 17, 684

2,638
2,586
2,793
3,356
5,379

1,573
1,490
1,200
1,672
3,036

1,156
1,225
1,133
1,409
2,099

3,862
3,889
3,737
4,591
7,170

20, 911
25,181
27, 307
29, 012

7,349
8,652
9,375
9,967

5,154
6,357
6,927
7,276

788
998
1,065
1,127

2,486
2,566
2,870
2,966

31, 073
34,667
38,164
41, 219
45,306

10, 735
11, 749
12, 864
14,047
14, 983
16, 405
18,002
19, 054
20, 089
19, 833
21, 241

7,643
8,691
9,467
9,829
10, 437

2,940 8,867
2,788 10, 342
2,914 10, 619
3,060 11, 557
3,168 12,197
3,139 13, 399
3,485 14, 940
3,818 16,547
4,136 17, 876

11, 849
12, 463
13, 494
14, 456

1940
1942
1944.
1946
1948
1950
1952
1953
1954
1955
1956
1957
1958
1959

....
_„.

1960
1961
1962
1963

50,
54,
58,
62,

1962-63 5
1963-64 5

62, 269
68, 443

505
037
252
890

4,541
5,763
6,252
6,897

22, 787
26,098
27, 910
30, 701

7,177
8,318
9,390
10, 557

3,803
4,650
4,987
5,527

1,237
1,538
1,754
1,759
1,994

817
778
744
890
984
1,018
1,001

3,131 7,584
3,335 8,465
3,843 9,252
4,865 9,699
6,377 10, 516

33, 724
36, 711
40, 375
44, 851
48, 887

11, 907
13, 220
14,134
15, 919
17, 283

6,452
6,953
7,816
8,567
9,592

2,463
2,613
3,037
3,269

1,180
1,266
1,308
1,505

6,954
7,131
7,871
8,722

51, 876
56, 201
60,206
64, 816

18, 719
20, 574
22, 216
24, 012

9,428
9,844
10, 357
11,136

14, 446 3,267
15, 762 3,791

1,505

11, 634
12, 563
13,489
14,850

8,663 14, 555 63, 977 23, 965 11,150
10,002 15, 952 69, 302 26, 533 11, 664

1
2

4,404
4,720
5,084
5,481

19, 324
21,063
22, 549
24,187

5,420 23,442
5,766 25, 339

Fiscal years not the same for all governments. See footnote 5.
Excludes revenues or expenditures of publicly owned utilities and liquor stores, and of insurance-trust
activities. Intergovernmental receipts and payments between State and local governments are also
excluded.
3
Includes licenses and other taxes and charges and miscellaneous revenues.
4
Includes expenditures for health, hospitals, police, local fire protection, natural resources, sanitation,
housing and urban renewal, local parks and recreation, general control, financial administration, interest
on5 general debt, and other unallocable expenditures.
Data for fiscal year ending in the 12-month period through June 30. Data for 1963 and earlier years
include local government amounts grouped in terms of fiscal years ended during ..the particular calendar
year.
NOTE.—Data are not available for intervening years.
Data for Alaska and Hawaii included beginning 1959 and 1960, respectively.
See Table C-54 for net debt of State and local governments.
Source: Department of Commerce, Bureau of the Census.




283

CORPORATE PROFITS AND FINANGE
TABLE C-64.—Profits before and after taxes, all private corporations, 1929-65
[Billions of dollars]
Corporate profits (before taxes) and
inventory valuation adjustment
Manufacturing
Year or
quarter

19291930.
193119321933193419351936193719381940
1941
194219431944
1945
1946
1947
1948
1949
1950
1951
19521953
1954.
1955
1956
1957
1958
1959
I960
1961
1962
1963
1964
1965«

Dur- NonAll
able durindus- Total goods able
in- goods
tries
dus- intries dustries
2.6
5.2
10.5
2.6
2.4
3.9
7.0
1.5
1.3
1.3
2.0
-1.3 - . 5 -1.0
.5
- 1 . 2 - . 4 - . 4 (4)
.3
1.1
1.7
.8
.9
2.1
3.4
1.1
1.7
3.2
5.6
1.5
1.7
3.8
6.8
2.1
.8
2.3
4.9
1.6
1.7
6.3
1.7
3.1
2.4
5.5
9.8
6.4
3.1
9.5
15.2
7.2
4.6
20.3 11.8
8.1
5.7
24.4 13.8
7.4
5.9
23.8 13.2
4.5
5.2
9.7
19.2
2.4
6.6
9.0
19.3
5.8
7.8
25.6 13.6
7.5 10.0
33.0 17.6
8.1
8.1
30.8 16.2
8.9
37.7 20.9 12.0
42.7 24.6 13.2 11.4
39.9 21.6 11.7
9.9
39.6 22.0 11.9 10.1
38.0 19.9 10.5
9.4
46.9 26.0 14.3 11.8
12.8 11.9
46.1 24.
45.6 24.0 13.3 10.7
9.3 10.0
41.1 19.3
51.7 26.3 13.6 12.
49.9 24.4 12.0 12.4
50.3 23.3 11.4 11.9
26.6 14.1 12.5
55.
15.4 13.
58.1 28.
64.5 32.1 17.2 14.9
16.
73.1 37.3 20.

Transportation,
communication,
and
public
utilities

Cor- Corpoporate rate
All prof- tax
Diviits
other
liadend
beinbil- Total pay1
dus- fore
ments
tries taxes ity

1.8
1.2
.5
.2

3.4
1.9
.2

.4
.4
.7
.8
.5
1.0
1.3
2.0
3.4
4.4
3.9
2.7
1.8
2.2
3.0
3.0
4.0
4.6
4.9
5.0
4.7
5.6
5.9
5.8
5.9
7.0
7.5
7.9
8.5
9.2
10.0
10.8

.9
1.7
2.2
2.1
2.0
3.0
3.7
5.1
6.2
6.7
6.7
8.5
9.9
12.5
11.6
12.7
13.5
13.3
12.6
13.4
15.2
15.6
15.8
15.9
18.4
17.9
19.1
20.5
20.2
22.4
24.9

I

Corporate profits
after taxes

10.0
3.7
-.4
-2.3
1.0
2.3
3.6
6.3
6.8
4.0
7.0
10.0
17.7
21.5
25.1
24.1
19.7
24.6
31.5
35.2
28.9
42.6
43.9
38.9
40.6
38.3
48.6
48.8
47.2
41.4
52.1
49.7
50.3
55.4
58.6
64.8
74.6

8.6
1.4
2.9
.8
.5 - . 9
.4 - 2 . 7
.4
.5
1.6
.7
2.6
1.0
4.9
1.4
5.3
1.5
2.9
1.0
5.6
1.4
7.2
2.8
7.6 10.1
11.4 10.1
14.1 11.1
12.9 11.2
10.7
9.0
9.1 15.5
11.3 20.2
12.5 22.7
10.4 18.5
17.8 24.9
22.3 21.6
19.4 19.6
20.3 20.4
17.7 20.6
21.6 27.0
21.7 27.2
21.2 26.0
19.0 22.3
23.7 28.5
23.0 26.7
23.1 27.
24.2 31.
26.0 32.6
27.6 37.
30.1 44.5

5.8
5.5
4.1
2.5
2.0
2.6
2.8
4.5
4.7
3.2
3.8
4.0
4.4
4.3
4.4
4.6
4.6
5.6
6.3
7.0
7.2
8.8
8.6
8.6
8.9
9.3
10.5
11.3
11.7
11.6
12.6
13.4
13.8
15.2
15.8
17.2
18.9

Corpo- Profits
rate
plus
Un- capital capital
concondistrib- sump- sumption
tion
uted allow- allowprof- ances 2 ances 3
its

2.8
-2.6
-4.9
-5.2

10.8
15.9
13.2
13.5
16.0
16.8
19.9
25.6

4.2
4.3
4.3
4.0
3.8
3.6
3.6
3.6
3.6
3.7
3.7
3.8
4.2
5.0
5.4
6.1
6.4
4.7
5.8
7.0
7.9
8.8
10.3
11.5
13.2
15.0
17.4
18.9
20.8
22.0
23.5
24.9
26.2
30.1
32.0
34.0
36.1

12.8
7.2
3.5
1.3
4.2
5.2
6.3
8.5
8.9
6.6
9.3
11.0
14.4
15.2
16.4
17.2
15.4
20.2
26.0
29.7
26.5
33.7
31.8
31.0
33.5
35.5
44.4
46.1
46.8
44.3
52.0
51.6
53.5
61.3
64.5
71.2
80.5

15.6
16.8
17.0
17.7
20.0
19.9
20.1
20.0
25.7
25.5
25.3
(7)

31.0
31.8
32.2
32.8
33.2
33.6
34.3
34.8
35.4
35.8
36.3
36.8

62.2
64.3
65.0
66.6
69.9
70.7
71.8
72.6
79.1
79.8
80.8

-L0
—. 2
'.4
.6
o

L8
3.2
5.7
5.9
6.6
6.5
4.4
9.9
13.9
15.6
11.3
16.0
13.0
11.0
11.5
11.3
16.5

Seasonally adjusted annual rates
1963: I.

II

III
IV
1964: I
II....,
III...
IV
_
1965: I
II
Ill
IV s

56.3
57.6
59.1
59.6
63.6
64.5
65.5
64.9
71.7
72.0
73.5

26.8
28.7
29.5
29.7
31.9
32.1
32.5
32.3
37.3
36.7
37.3

14.2
15.4
16.1
16.1
17.5
17.1
17.5
17.1
20.8
20.1
20.7

12.6
13.4
13.4
13.5
14.4
15.0
15.0
15.3
16.6
16.6
16.6

9.1
9.5
9.4
9.9
10.1
10.2
10.1
10.5
10.5
11.0

20.6
19.7
20.1
20.4
21.9
22.3
22.8
22.5
23.8
24.9
25.2

(0

1

56.1
58.5
58.9
60.8
64.0
64.5
65.3
65.9
73.1
73.9
74.6

24.9
26.0
26.1
27.0
27.3
27.5
27.8
28.1
29.5
29.8
30.1
(7

31.2
32.6
32.8
33.8
36.7
37.0
37.5
37.8
43.6
44.1
44.5

15.6
15.7
15.8
16.1
16.7
17.1
17.4
17.7
18.0
18.6
19.2
19.9

(

Federal and State corporate income and excess profits taxes.
2 Includes depreciation and accidental damages.
8
Corporate profits after taxes plus corporate capital consumption allowances.
4
Less than $50 million.
8
Preliminary estimates.
« Data for corporate profits are approximations for the year as a whole; data for fourth quarter are not
available. All other data incorporating or derived from these figures are correspondingly approximate.
f Not available.
NOTE.—Beginning 1962 data reflect the new depreciation guidelines issued by the Treasury Department
July 11,1962, and the investment tax credit provided in the Revenue Act of 1962.
Source: Department of Commerce, Office of Business Economics.




284

T A B L E C-65.—Relation of profits after taxes to stockholders' equity, and to sales, private manufacturing corporations, by industry group, 1958—65 1
Durable goods industries *
All
Lumpriber
vate
and
manwood Furufactur- Total prod- liture
ing dur- ucts and
cor- able (ex- fixcept tures
porafurnitions
ture)

Year or
quarter

Stone,
clay,
and
glass
products

Primary
iron
and
steel
industries

ElecPritrical
mary Fab- Ma- ma- Monon- ri- chin- chin- tor
fer- cated ery ery, vehirous metal (ex- equip- cles
metal prod- cept ment, and
in- ucts elec- and equipdustrical) sup- ment
tries
plies

Aircraft
and
parts

Instruments
and
related
products

Miscellaneous

ing
(m/'in
mg
ordnance)

Ratio of profits after Federal taxes {annual rate) to stockholders' equity—percent
1958
1959

8.4
10.2

7.8
10.1

5.6
9.2

6.2
8.5

10.0
12.4

7.1
8.0

5.9
7.8

1960
1961
1962
1963
1964

9.1
8.7
9.6
10.1
11.4

8.4
8.0
9.5
10.0
11.5

3.7
3.9
5.7
8.1
9.4

6.4
4.8
7.7
8.2
9.8

9.6
8.7
8.7
8.6
9.3

7.3
6.1
5.4
6.9
8.7

7.2
7.0
7.4
7.6
9.6

9.0
10.3
9.3
10.5

8.9
10.8
8.5
10.2

1.4
7.6
8.4
4.9

4.6
7.2
10.6
9.1

3.7

11.8
11.9

7.6
5.8
3.4
5.0

8.6
11.0
10.0
11.4

8.2
11.7
9.3
11.3

3.7
9.1
12.6
7.3

3.5
7.9
12.0
9.6

10.5
- 12.3
11.2
12.4

10.6
13.4
10.8
12.2

8.1
12.1
11.7
7.9

7.0
9.0
11.5
12.8

12.4
12.5

12.1
13.8
12.3

12.9
15.3
12.3

6.7
10.7
12.7

9.8
13.0
14.5

—

1962-1
II
III
IV
1963: I
II
III
IV

~

1964: I
II III
IV
1965- I - _
II
III

6.8
9.6

9.9
11.9
9.2
8.8
9.7

10.0

7.5
7.7
8.9
9.6
12.1

8.2
8.8
5.8
7.3

6.3
9.8
8.6
6.9

8.1
10.8
9.2
8.2

5.1
9.6
5.5
7.8

6.9
8.1
6.9
8.6

5.9
8.9

7.9
11.1
9.7
9.7

9.2

7.6
9.4
8.0
10.1

9.2
10.4
8.4
11.2

4.6
12.1
13.5

11.0
11.5
8.6

11.8
13.3
10.4

8.0
1.5

12.9
11.8
8.4
4.1

7.3
7.8
5.5
6.0
7.8
8.1

10.0
8.3

9.9

11.0

12.7
8.0

13.3
11.3
15.9
16,4
16.8

10.3
12.6

8.0
9.1

12.2
11.1
11.9

11.1
10.2
11.9
11.9
13.8

8.9
9.7
9.3
8.7
9.3

12.3
12.7
11.8
13.9

12.6
12.0
13.5

10.3
12.9
11.5
10.6

11.5
12.8
15.0

11.0
10.9

15.5

10.4
12.8
12.9
12.6

11.5
13.9
15.6
16.3

10.3
13.9

22.9
23.5
10.3

12.2
14.7
16.4

14.5
15.4
17.3

10.5

10.4

16.8
18.3

9.2

9.3

9.2

11.0

20.6

9.2

10.2

17.3
19.6

9.6

9.4

11.2

20.6

9.7

20.3
22.5

11.0
11.4
10.7

10.7
13.9
12.9
12.3

10.8
11.0
13.3

11.3
15.0
14.1

12.0
15.8
14.4

11.7
13.1
13.2

7.4

8.1

14.1

9.2

7.2
9.2

9.8

8.8

6.8
7.1

12.1
11,3
4.6
8.6

6.0
7.7

8.7

9.4

Profits after taxes per dollar of sales—cents
4.2
4.8

3.9
4.8

2.8
4.2

2.0
2.7

6.8
7.9

5.4
5.4

4.7
5.8

3.1
3.2

3.7
4.8

3.8
4.4

4.0
6.3

2.4
1.6

5.4
6.5

3.0
3.5

1960
1961
1962
1963
1964

4.4
4.3
4.5
4.7
5.2

4.0
3.9
4.4
4.5
5.1

1.7
1.9
2.5
3.3
3.9

2.1
1.6

2 S
2.4
2.9

6.6
5.8
5.6
5.3
5.6

5.1
4.6
3.9
4.8
5.6

5.4
5.3
5.5
5.3
6.5

2.4
2.5
3.1
3.2
3.7

3.9
4.1
4.5
4.7
5.8

3.5
3.5
3.7
3.8
4.2

5.9
5.5
6.9
6.9
7.0

1.4
1.8
2.4
2.3
2.6

5.9
5.4
5.9
6.0
7.2

3.5
3.6
3.4
3.3
3.6

1962: I
„
II
III
IV.. _

4.3
4.7
4.4
4.8

4.2
4.8
4.0
4.5

.7
3.2
3.4
2.1

1.5
2.1
3.1
2.6

2.8
6.9
6.8
4.9

4.9
4.0
2.6
3.8

5.8
6.2
4.5
5.4

2.7
3.8
3.3
2.7

4.3
5.1
4.6
4.1

3.5
3.8
3.6
4.0

7.1
7.4
4.9

7.8

2.3
2.3
2.2
2.6

5.1
6.1
6.0
6.3

2.7
2.8
4.3
3.8

1963: I
II
III_-.__
IV

4.2
5.0
4.6
5.1

3.9
5.0
4.3

1.1
2.3
3.3
2.6

1.2
7.2
6.5
5.0

3.7
5.8
4.0
5.6

5.0
5.6
5.0
5.7

2.5
3.4

3.7
3.1

4.1
5.1
4.8
4.7

3.5
3.8
3.7

4.8

1.7
3.5
4.6
2.8

4.1

7.0
7.6
4.9
7.5

2.1
2.6
2.3
2.1

4.6
5.8
6.5
6.9

1.9
3.3
4.1
3.8

1964: I
II
III
IV

4.9
5.5
5.1
5.4

4.8
5.6
4.9
5.2

3.4
4.5
4.4
3.2

2.1
2.6
3.2
3.5

2.8
6.8
6.8
5.5

5.2
5.9
5.1
6.0

6.3
6.7
5.7
7.3

3.0
4.0
4.1
3.7

5.2
6.1
6.0
5.7

3.8
4.0
4.2
4.7

7.9
8.4
4.7
6.4

2.1
2.6
2.9
2.7

6.2

2.5
2.9
3.8
4.7

1965: I
II
III

5.4
5.8
5.4

5.5
6.0
5.3

2.9
4.2
4.7

2.9
3.7
4.0

3.1
6.7
7.2

6.2
6.2
5.2

7.6
7.7
6.7

4.2
5.1
4.8

5.7
6.6
6.3

4.3
4.6
4.7

8.1
8.2
4.8

2.7
3.1
3.6

7.5
7.5
8.6

1958
1959

--_-.--

* See next page for nondurable goods industries.
See footnotes at end of table.




285

7.0
7.8
7.4

3.6
3.9

3.4

TABLE G—65.—Relation of profits after taxes to stockholders' equity and to sales, private manufacturing corporations, by industry group, 1958—65 1—Continued
Nondurable goods industries

Year or quarter

Printing
Ruband
ber
Food To- Tex- Ap- Paper pub- Chemand
Total and bacco tile parel and lish- icals Petro- mis- Leather
and
leum cella- and
non- kin- man- mill and allied ing
dur- dred ufac- prod- related prod- (ex- allied refin- neous leather
able prod- tures ucts prod- ucts cept prod- ing plastic products
ucts
ucts
news- ucts
prodpaucts
pers)
Ratio of profits after Federal taxes {annual rate) to stockholders* equity—percent
8.6
9.1

13.1
13.1

3.5
7.4

4.9
8.6

8.0
9.3

8.6
8.7
8.7
8.9
9.8

13.1
13.4
12.9
13.0
13.1

5.8
4.9
6.1
6.1
8.4

7.6
6.9
9.1
7.5

8.4
7.7
8.1
8.0
9.1

10.4

10.3
11.3

1958
1959
1960
1961
1962
1963
1964

9.1
9.8

7.1
8.9

10.2

5.3
6.3
6.0
7.3

11.3
11.4

7.4
8.7
8.0
8.3

7.7

10.0
10.8

11.7
12.9
13.7
14.0

9.1

7.1
8.9

11.1
13.6
14.4
14.3

4.4
6.2
6.6
7.0

6.4
6.7
8.7
8.9

6.3
8.4
7.9
9.8

10.6
14.3
14.0
14.6

5.8
7.2

8.6
8.5

10.2
10.6

17.2
12.4

8.2
9.7
8.8

9.9

9.5

8.8

10.5
10.9

10.8
15.3

10.1

9.0

10.2
9.7
9.4
9.8

1962: I....
II...
III..
IV..
1963: I....
II...
III..
IV..

10.4
10.7
11.4

1964: I....
II...
III.
IV..

10.4
11.3
11.7
12.5

1965: I....
II...
III.

11.4
12.3
12.4

9.1

10.2
9.7

8.2
9.6

11.5
10.8
9.5

10.4
11.6

11.5
14.3
14.6

11.2
6.7
7.9

10.5

9.9

9.0

11.0
8.3

10.1
9.2

12.2

11.1
13.4
12.1
11.6
12.3
12.9
14.3

9.7
9.6
9.9

10.0
9.9

11.1
11.2

8.8

10.8
8.9
9.0
9.3
9.1

10.4

5.5
8.2
6.2
4.4
6.9
6.8
10.4

11.5
13.5
12.2
12.5

10.0

9.1

8.8
9.7

10.9

5.2
6.4
0.6

8.2

7.5

11.0
10.3
11.0
12.9

10.2

12.7

11.1
14.3
12.7
13.5

5.8
4.4
8.0
9.3

10.3
13.7
14.5
11.8

13.1
15.5
14.0
15.1

11.6
10.8
10.5
12.8

11.3
10.7
11.4

8.4.
9.1
12.0
12.6

13.8
12.4
15.6

14.5
16.4
15.0

11.6
11.8
11.5

10.2
11.7
11.1

10.9
10.5
11.2

11.1
11.6
10.6
6.3
9.9

11.8

8.5
9.8

8.8
9.7
9.1

Profits after taxes per dollar of sales—cents
1958.
1959.

4.4
4.9

2.2
2.4

5.4
5.4

1.6
3.0

1.0
1.5

4.7
5.2

3.1
4.0

7.0
7.9

9.5
9.5

3.5
4.0

1.7
2.2

1960.
1961.
1962.
1963 _
1964.

4.8
4.7
4.7
4.9
5.4

2.3
2.3
2.3
2.4
2.7

5.5
5.7
5.7
5.9
5.9

2.5
2.1
2.4
2.3
3.1

1.4
1.3
1.6
1.4
2.1

5.0
4.7
4.6
4.5
5.1

3.6
2.8
3.4
3.2
4.3

7.5
7.3
7.4
7.5
7.9

10.3
9.7
10.8
10.9

3.6
3.8
3.7
3.6
4.1

1.6
1.1
1.8
1.8
2.6

1962: I .
II
III.
IV..

4.4
4.6
4.8
5.0

1.9
2.3
2.7
2.3

5.4
5.5
5.8
6.1

2.2
2.5
2.4
2.8

1.3
1.4
1.9
1.9

4.4
4.9
4.5
4.5

2.6
3.6
3.9
3.4

7.2
7.6
7.3
7.5

9.5
8.8
9.5
11.0

3.7
4.1
3.4
3.7

1.6
1.4
1.6
2.4

1963: I

4.4
4.9
5.0
5.3

1.9
2.3
2.7
2.5

5.3
5.8
6.1
6.3

1.8
2.4
2.5
2.5

1.2
1.2
1.5
1.6

3.7
4.7
4.4
5.3

2.2
3.4
4.5
2.5

6.8
8.0
7.4
7.7

10.2
10.0
10.6
12.1

3.4
3.9
3.5
3.6

1.5
1.2
2.1
2.3

1964: I . . .
II..
III.
IV..

5.0
5.4
5.4
5.6

2.2
2.6
3.0
2.7

5.3
6.1
6.0
6.2

2.3
2.7
3.7
3.7

1.7
1.6
2.9
2.1

4.7
5.3
4.9
5.5

3.6
4.8
5.0
3.9

7.5
8.2
7.7
8.0

10.8
10.5
10.3
12.1

3.7
4.3
4.2
4.2

2.1
2.4
2.9
3.0

1965: I . . .
II..
III.

5.4
5.6
5.6

2.5
2.7
3.0

5.5
6.0
6.1

3.7
3.8
3.8

1.9
2.0
2.7

4.9
5.4
5.3

4.9
4.3
5.3

7.7
8.2
7.9

10.9
11.0
10.9

3.9
4.1
4.1

2.7
2.7
2.7

II...
III..
IV...

1

Based on 1957 Standard Industrial Classification.

NOTE.-Data on a comparable basis are not available for earlier periods.

For explanatory notes con-

Data for Alaska and Hawaii included for all periods.
Sources: Federal Trade Commission and Securities and Exchange Commission.




286

TABLE G—66.—Sources and uses of funds, nonfarm nonfinancial corporate business, 1954-65
[Billions of dollars]

Sources or use of funds

1954

1955

1956

1957

1958

1959

29.1

53.6

47.2

42.0

42.1

55.5

23.3 29.2 28.9 30.6
Internal sources *
Undistributed profits K 9.0 13.9 13.2 11.8
Corporate inventory
valuation
adjustment
-.3 -1.7 -2.7 -1.5
Capital consumption
allowances l
14.6 17.0 18.4 20.3

29.5
8.3

35.0
12.6

Sources, total

External sources
5.8
Stocks
1.6
Bonds
3.5
.7
Mortgages
-1.0
Bank loans, n.e.c
-.2
Other loans
2.3
Trade debt
Profits tax liability... -3.0
1.8
Other liabilities
Uses, total

26.9

Purchases of physical
20.5
assets
Nonresidential fixed
21.4
investment
Residential structures- 1.1
Change in business
-1.9
inventories
Increase in financial
6.3
assets 3
-.2
Liquid assets
Demand deposits
and currency. __ 2.1
.2
Time deposits
U.S. Government
-2.3
securities
Finance company
-.2
paper
.3
Consumer credit
4.7
Trade credit
Other financial assets_ 1.4
Discrepancy
sources)

(uses

1961

1962

1963

1964

1965

47.3

54.5

61.0

63.6

68.0

86.7

34.4
10.0

35.6
10.2

41.8
12.4

44.3
13.8

49.4
16.7

55.4
22.0

1960

-.3

-.5

.2

-.1

.3

-.4

-.3

-1.5

21.4

22.9

24.2

25.4

29.2

31.0

32.9

34.9

20.6 12.9
2.2
1.6
3.0
3.5
1.2
.7
3.1
1.3
.4
1.0
4.6
3.2
2,2 -2.2
3.8
3.9

18.9
2.5
4.6
1.7
(2)
.3
6.7
1.7
1.4

19.2
.6
4.6
2.9
2.4
.7
3.8
.4
3.8

19.3
-.3
3.9
3.4
2.8
.5
5.3
1.8
1.9

18.6
1.4
4.0
3.4
3.4
1.3
2.4
.2
2.5

31.2
.2
6.3
3.6
8.6
1.5
5.7
1.6
3.7

56.0

60.5

64.5

81.7

24.5 18.3 11.4 12.6
2.1
1.9
2.3
2.4
5.7
2.8
3.6
6.3
1.2
.7
.4
.3
3.4
4.8
1.2 -.7
.2
(2)
(2)
.7
4.4
8.5
5.3
.4
4.2 -2.0 -2.3 -2.3
2.1
3.0
3.9
2.4
50.7

44.9

40.7

40.9

52.8

42.5

52.1

29.7

35.0

33.8

26.5

35.1

36.7

34.9

42.0

43.6

49.6

58.7

24.0
.7

29.7
.4

32.6
.7

27.5
1.5

29.2
1.7

32.5
1.2

31.1
2.3

34.3
3.0

35.7
3.7

41.3
3.7

49.1
3.6

4.9

4.9

.6 -2.5

4.1

3.0

1.5

4.7

4.2

4.6

6.0

17.7
5.8
5.6 -4.1

17.2
3.3

14.0
2.4

16.9
3.0

14.9
.5

23.0

1.6 -2.3 -1.9 -2.6
3.9
3.2
1.9
3.7

-3.6
5.0

21.0
9.9
5.2 -4.2
1.0
-.1

6.8
-.2

.2
(2)

14.4
2.4

1.5 -1.0
.9 -.4

-.5
1.3

-.4

(2)

6 6 -5.4
.

.3
.2
3.0
3.7

(2)
.5
7.5
3.6

.5
.8
6.9
3.7

.7

.4 -1.5

-1.5

1.4
1.0
8.9
4.5

.8
1.0
11.3
10.0

-2.2 -2.9 -2.3 -1.3 -1.2 -2.8 -4.8 -2.4 -5.0 -3.1 -3.5

-5.0

4.2 -4.5
.1
.7
10.9
4.0

.1
.4
7.6
6.0

.6
.2
6.3
3.5

-.3

.2

.1
.1
9.4
4.4

.8
.9
7.8
2.9

.7
.7
8.0
5.2

less

1
The figures shown here for "internal sources," "undistributed profits," and "capital consumption allowances" differ from those shown for "cash flow, net of dividends," "undistributed profits" and "capital
consumption allowances" in the corporate gross product table for the following reasons: (1) these figures
include, and the statistics in the corporate gross product table exclude, branch profits remitted from
foreigners net of corresponding U.S. remittances to foreigners; and (2) these figures exclude, and the
corporate gross product figures include, the internal funds of corporations whose major activity is farming.
2
Less than $50 million.
3
Includes some categories not shown separately.
NOTE.—Includes data for Alaska and Hawaii.
Source: Board of Governors of the Federal Reserve System.




287

TABLE C-67.—Current assets and liabilities of United States corporations, 1939-65

l

[Billions of dollars]
Current liabilities

Current assets

a.

End of year or
quarter

ik
2$

§§

V4 O O

o

1939..

54.5

10.8

2.2

22.1

18.0

1.4

30.0

1940..
1941..
1942..
19431944_.

60.3
72.9
83.6
93.8
97.2

13.1
13.9
17.6
21.6
21.6

2.0
4.0
10.1
16.4
20.9

0.1
.6
4.0
5.0
4.7

23.9
27.4
23.3
21.9
21.8

19.8
25.6
27.3
27.6
26.8

1.5
1.4
1.3
1.3
1.4

32.8
40.7
47.3
51.6
51.7

1945..
1946 .
.

97.4
108.1

21.7
22.8

21.1
15.3

2.7
.7

23.2
30.0

26.3
37.6

2.4
1.7

45.8
51.9

1947..
19481949-.

123.6
133.0
133.1

25.0
25.3
26.5

14.1
14,8
16.8

44.6
48.9
45.3

1.6
1.6
1.4

61.5
64.4
60.7

1950_.
19511952..
1953..
1954-

161.5
179.1
186.2
190.6
194.6

28.1
30.0
30.8
31.1
33.4

19.7
20.7
19.9
21.5
19.2

1.1
2.7
2.8
2.6
2.4

55.7
58.8
64.6
65.9
71.2

55.1
64.9
65.8
67.2
65.3

1.7
2.1
2.4
2.4
3.1

79.8
92.6
96.1
98.9
99.7

.4
1.3
2.3
2.2
2.4

1955-.
1956-.
1957..
19581959-

224.0
237.9
244.7
255.3
277.3

34.6
34.8
34.9
37.4
36.3

23.5
19.1
18.6
18.8
22.8

2.3
2.6 95.1
2.8 99.4
2.8 106.9
2.9 117.7

72.8
80.4
82.2
81.9
88.4

4.2
5.9
6.7
7.5
9.1

121.0
130.5
il
.
136.6
153.1

1960..
1961.
1962..
1963.
1964-.

289.0
306.8
326.7
349.9
371.0

37.2
41.1
42.9
44.5
45.0

20.1
20.0
20.2
20.6
19.1

3.1
3.4
3.7
3.6
3.4

126.1 91.8
135.8 95.2
146.7 100.9
159.7 107.3
173.8 114.3

10.6
11.4
12.4
14.3
15.5

IIIII.
IV.

328.6
335.8
342.9
349.9

39.1
40.3
40.8
44.5

20.8
20.3
19.7
20.6

3.5
3.3
3.4
3.6

148.9
153.3
158.1
159.7

102.6
104.0
105.8
107.3

1964:

I—
IIIII.
IV.

350.6
356.7
364.3
371.0

40.6
42.5
43.1
45.0

21.4
20.2
19.1
19.1

3.3
3.0
3.2
3.4

161.3
165.6
171.6
173.8

108.6
109.6
111.2
114.3

1965;

I.IIIII-

376.4
384.3
1.5

42.5
43.7
43.6

18.5
16.3
16.0

3.3 177.5 117.3
3.2 182.8 119.7
3.6 188.3 123.4

I—

Net
working
capital

ll

38.3
42.4
43.0

21.9

1.2

22.6
25.6
24.0
24.1
25.0

2.5
7.1
12.6
16.6
15.5

7.1
7.2
8.7
8.7
9.4

27.5
32.3
36.3
42.1
45.6

24.8
31.5

10.4
8.5

9.7
11.8

51.6
56.2

10.7
11.5
9.3

13.2
13.5
14.0

62.1
68.6
72.4

47.9
53.6
57.0
57.3
59.3

16.7
21.3
18.1
18.7
15.5

14.9
16.5
18.7
20.7
22.5

81.6
86.5
90.1
91.8
94.9

2.3
2.4
2.3
1.7
1.7

73.8
81.5
84.3
88.7

19.3
17.6
15.4
12.9
15.0

25.7
29.0
31.1
33.3
37.0

103.0
107.4
111.6
118.7
124.2

160.4
171.2
184.0
198.8
209.9

1.8
1.8
2.0
2.5
2.7

105.0
112.8
121.2
131.8
140.0

13.5
14.1
15.0
16.3
17.0

40.1
42.5
45.7
48.2
50.2

128.6
135.6
142.8
151.2
161.1

13.6
14.6
15.2
14.3

184.9
189.8
194.1
198.8

2.3
2.5
2.5
2.5

121.7
125.3
128.1
131.8

14.2
14.3
15.3
16.3

46.7
47.7
48.3
48.2

143.7
146.0
148.8
151.2

15.5
15.9
16.1
15.5

195.9
199.6
204.9
209.9

2.6
2.6
2.7
2.7

128.9
131.7
135.0
140.0

15.6
15.2
16.0
17.0

48.8
50.1
51.2
50.2

154.7
157.1
159.4
161.1

2.8 141.4
2.9 145.9
3.1 150.2

16.6
15.9
17.0

52.1
53.2
54.1

163.5
166.2
169.1

17.2 212.9
18.4 218.0
18.6 224.4

0.6
.8
2.0
2.2
1.8

37.6
39.3
37.5

24.5

1
All United States corporations, excluding banks, savings and loan associations, and insurance companies.
Year-end data through 1961 are based on Statistics of Income (Treasury Department), covering virtually all
corporations in the United States. Statistics of Income data may not be strictly comparable from year to
year because of changes in the tax laws, basis for filing returns, and processing of data for compilation purposes. All otherfiguresshown are estimates based on data compiled from many different sources, including
data on corporations registered with the Securities and Exchange Commission. As more complete information becomes available, estimates are revised.
2
Receivables from and payables to U.S. Government do not include amounts offset against each other
on the corporation's books or amounts arising from subcontracting which are not directly due from or to
the U.S. Government. Wherever possible, adjustments have been made to include U.S. Government
advances offset against inventories on the corporation's books.
8
Includes marketable securities other than U.S. Government.
Source: Securities and Exchange Commission.




288

TABLE C-68.—State and municipal and corporate securities offered, 1934-65 l
[Millions of dollars]

Year or quarter

Corporate securities offered for cash 2
State
and
Gross proceeds 3
Proposed uses of net proceeds 4
municipal securities
offered
New money
Retirefor cash
Com- Pre- Bonds
ment Other
(prinTotal mon ferred and
Total
Plant Work- of se- purcipal
stock stock notes
ing
and
curities
amounts)
Total equip- capiment
tal

1934

397

19

372

384

57

32

26

231

95

1935
1936
1937
.1938
1939

1,232
1,121
908
1,108
1,128

2,332
4,572
2,310
2,155
2,164

22
272
285
25
87

86
271
406
86
98

2,224
4,028
1,618
2,044
1,980

2,266
4,431
2,239
2,110
2,115

208
858
991
681

111
380
574
504
170

96
478
417
177
155

1,865
3,368
1,100
1.206
1,695

193
204
148
222
95

1940
1941
1942
1943
1944

1,238
956
524
435
661

2,677
2,667
1,062
1,170
3,202

108
110
34
56
163

183
167
112
124
369

2,386
2,390
917
990
2,670

2,615
2,623
1,043
1,147
3,142

569
868
474
308
657

424
661
287
141
252

145
207
187
167
405

1,854
1,583
396
739
2,389

192
172
173
100

1945
1946
1947
1948
1949

795
1,157
2,324
2,690
2,907

6,011
6,900
6,577
7,078
6,052

397
758
891 1,127
779
762
614
492
736
425

4,855
4,882
5,973
4,890

5,902
6,757
6,466
6,959
5,959

1,080
3,279
4,591
5,929
4,606

2,115
3,409
4,221
3,724

442
1,164
1,182
1,708
882

4,555
2,868
1,352
307
401

267
610
524
722
952

1950
1951
1952
1953
1954

3,532
3,189
4,401
5,558
6,969

811
6,361
7,741 1,212
9,534 1,369
1,326
9,516 1,213

631
838
564
489
816

4,920
5,691
7,601
7,083
7,488

6,261
7,607
9,380
8,755
9,365

4,006
6,531
8,180
7,960
6,780

2,966
5,110
6,312
5,647
5,110

1,041
1,421
1,868
2,313
1,670

1,271
486
664
260
1,875

984
589
537
535
709

1955
1956
1957
1958
1959

5,977
5,446
6,958
7,449
7,681

10,240
10,939
12,884
11, 558
9,748

2,185
2,301
2,516
1,334
2,027

635
636
411
571
531

7,420
8,002
9,957
9,653
7,190

10,049 7,957
10,749 9,663
12,661 11, 784
11,372 9,907
9,527 8,578

6,709
9,040
7,792
6,084

2,624
2,954
2,744
2,115
2,494

1,227
364
214
549
135

864
721
663
915
814

1960
1961
1962
1963
1964......

7,230
8,360
8,558
10,107
10,544

10,154
13,165
10,705
12,237
13,957

1,664
3,294
1,314
1,022
2,679

409
450
422
342
412

8,081
9,420
8,969
10,872
10,865

9,924 8,758
12,885 10, 715
10,501 8,240
12,081 8,993
13,792 11,233

5,662
7,413
5,652
5,405
7,003

3,097
3,303
2,588
3,588
4,230

271
868
754
1,528
754

895
1,302
1,507
1,561
1,805

1965 5

11,055 15,821 1,535

724

13, 561 15,610 12,897

7,637

5,261

943

1,770

1963: I . . .
II—
III.
IV.

2,798
2,889
1,967
2,453

2,700
3,634
2,436
3,466

222
344
208
249

65
81
79
117

2,414
3,209
2,149
3,100

2,665
3,587
2,404
3,425

2,067
2,425
1,884
2,617

1,453
1,538
1,016
1,397

614
887
868
1,220

314
740
295
179

285
422
225
629

1964: I . . .
II...
III.
IV.

2,661
2,764
2,642
2,478

262
2,548
4,965 1,735
2,876
357
3,568
324

38
154
137
83

2,248
3,076
2,382
3,160

2,518
4,911
2,837
3,526

2,086
4,441
2,077
2,629

1,149
3,230
1,219
1,405

937
1,211
858
1,224

103
173
216
262

330
297
544
635

1965: I . . .
II__
III.
IV6

2,746
2,991
2,694
2,623

3,007
5,043
3,912
3,859

132
255
151
186

2,578
4,123
3,529
3,331

2,972
4,977
3,869
3,792

2,427
4,164
3,177
3,129

1,520
2,324
2,104
1,689

907
1,840
1,073
1,441

234
188
336
185

311
625
356
478

297
665
231
342

1 These data cover substantially all new issues of State, municipal, and corporate securities offered for
cash sale in the United States in amounts over $100,000 and with terms to maturity of more than 1 year.
2
Excludes notes issued exclusively to commercial banks, intercorporate transactions, sales of investment
company issues, and issues to be sold over an extended period, such as offerings under employee-purchase
plans.
3
Number of units multiplied by offering price.
* Net proceeds represents the amount received by the issuer after payment of compensation to distributors and other costs of flotation.
5
Preliminary.
NOTE.—Data for Alaska and Hawaii included for all periods.
Sources: Securities and Exchange Commission, The Commercial and Financial Chronicle, and The Bond
Buyer.




289

TABLE C—69.—Common stock prices, earnings, and yields, and stock market credit, 1939-65
Stock market credit

Standard & Poor's common stock data
Price index»

Dividend
yield 2
(percent)

Year or month
Public RailTotal Indus- utilities roads
trial

Customer credit (excluding
U.S. Government
Bank
securities)
Price/
loans to
earnbrokers
ings
Net
Bank
and
ratio 3 Total debit
loans dealers«
to 5
balances * "others"
Millions of dollars

1941-43=10
12.06
11.02
9.82
8.67
11.50
12.47
15.16
17.08
15.17
15.53
15.23
18.40
22.34
24.50
24.73
40.49
46.62
44.38
46.24
57.38
55.85
66.27
62.38
69.87
81.37
88.17
76.45
77.39
78.80
79.94
80.72
80.24
83.22
82.00
83.41
84.85
85.44
83.96
86.12
86.75
86.83
87.97
89.28
85.04
84.91
86.49
89.38
91.39
92.15
91.73

11.77
10.69
9.72
8.78
11.49
12.34
14.72
16.48
14.85
15.34
15.00
18.33
22.68
24.78
24.84
30.25
42.40
49.80
47.63
49.36
61.45
59.43
69.99
65.54
73.39
86.19
93.48
80.85
81.96
83.64
84.92
85.79
85.13
88.19
86.70
88.27
89.75
90.36
88.71
91.04
91.64
91.75
93.08
94.69
90.19
89.92
91.68
94.93
97.20
98.02
97.66

16.34
15.05
10.93
7.74
11.34
12.81
16.84
20.76
18.01
16.77
17.87
19.96
20.59
22.86
24.03
27.57
31.37
32.25
32.19
37.22
44.15
46.86
60.20
59.16
64.99
69.91
76.08
67.26
67.20
66.78
67.30
67.29
67.46
70.35
71.17
72.07
73.37
74.39
74.24
75.87
77.04
76.92
77.24
77.50
74.19
74.63
74.71
76.10
76.69
76.72
75.39

9.82
9.41
9.39
8.81
11.81
13.47
18.21
19.09
14.02
15.27
12.83
15.53
19.91
22.49
22.60
23.96
32.94
33.65
28.11
27.05
35.09
30.31
32.83
30.56
37.58
45.46
46.78
41.00
41.54
42.88
43.27
44.86
46.29
48.93
47.17
47.14
48.69
48.01
45.75
46.79
46.76
46.63
45.53
42.52
43.31
46.13
46.96
48.46
50.23
51.03

4.05
5.59
6.82
7.24
4.93
4.86
4.17
3.85
4.93
5.54
6.59
6.57
6.13
5.80
5.80
4.95
4.08
4.09
4.35
3.97
3.23
3.47
2.98
3.37
3.17
3.01
3.00
3.06
3.05
3.03
3.00
3.01
3.05
2.96
3.03
3.00
2.95
2.96
3.05
2.99
2.99
2.99
2.95
2.92
3.07
3.09
3.06
2.98
2.91
2.96
3.06

13.80
10.24
8.26
8.80
12.84
13.66
16.33
17.69
9.36
6.90
6.64
6.63
9.27
10.47
9.69
11.25
11.50
14.05
12.89
16.64
17.05
17.09
21.06
16.68
17.62
18.08

18.16
17.61
17.87
18.67
17.69
15.93
17.16

o
7

()

8)
(7
1,374
976
1,032
968
1,249
1,798
1,826
1,980
2,445
4,030
3,984
3,576
4,537
4,461
4,415
5,602
5,494
7,242
7,053
(7)
7,250
7,120
7,141
7,314
7,277
7,229
7,160
7,096
7,142
7,101
7,108
7,053
6,940
6,872
6,941
7,001
7,085
7,084
6,833
6,874
7,036
7,117
7,304
)

0)

333>

1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1964: Jan_._
Feb..
Mar._
Apr..
May.
June..
July..
Aug..
Sept..
Oct...
Nov_.
Dec.
1965: Jan...
Feb..
Mar..
Apr..
May.
June..
July..
Aug-.
Sept..
Oct...
Nov..
Dec.

942
473
517
499
821

1,237
1,253
1,332
1,665
2,388
2,791
2,823
2,482
3,285
3,280
3,222
4,259
4,125
5,515
5,079
(7)

5,524
5,384
5,366
5,510
5,439
5,370
5,289
5,187
5,221
5,185
5,160
5,079
4,986
5,007
5,055
5,066
5,129
5,114
4,863
4,886
4,994
5,073
5,209
7
()

353
432
503
515
469
428
561
573
648
780

1,048
1,239
1,161
1,094
1,252
1,181
1,193
1,343
1,369
1,727
1,974
2,184
1,726
1,736
1,775
1,804
1,838
1.859
1,871
1,909
1,921
1,916
1,948
1,974
1,954
1,865
1,886
1,935
1,956
1,970
1,970
1,988
2,042
2,044
2,095
2,184

715
584
535
850
1,328
2,137
2,782
1,471
784
1,331
1,608
1,742
1,419
2,002
2,248
2,688
2,852
2,214
2,190
2,569
2,584
2,614
3,398
4,352
4,754
4,631
4,137
4,095
3,862
4.042
4,047
4,317
4,654
4,443
3,989
4,794
3,878
4,133
4,631
4,011
3,851
4,434
4,571
4,495
5,325
3,673
3,710
3,323
3,734
4,137

1 Includes 500 common stocks, 425 are industrials; 50 are public utilities; and 25 are railroads. Annual
data are averages of monthly figures and monthly data are averages of daily figures.
2
Aggregate cash dividends (based on latest known annual rate) divided by the aggregate monthly market
value of the stocks in the group. Annual yields are averages of monthly data.
3 Ratio of quarterly earnings (seasonally adjusted annual rate) to price index for last day in quarter.
Annual ratios are averages of quarterly data.
4
As reported by member firms of the New York Stock Exchange carrying margin accounts. Includes
net debit balances of all customers (other than general partners in the reporting firm and member firms of
national exchanges) whose combined accounts net to a debit. Balances secured by U.S. Government
obligations are excluded. Data are for end of period.
5
Loans by weekly reporting member banks to others than brokers and dealers for purchasing or carrying
securities except U.S. Government obligations. From 1953 through June 1959, loans for purchasing or
carrying U.S. Government securities were reported separately only by New York and Chicago banks.
Accordingly, for that period any loans for purchasing or carrying such securities at other reporting banks
are included. Series also revised beginning July 1946, March 1953, July 1958, and April 1961. Data are for
last Wednesday of period. For details, see Federal Reserve Bulletin, June 1961.
8 Loans by weekly reporting member banks for purchasing or carrying securities, including U.S. Government obligations. Series revised beginning July 1946, January 1952, July 1958, July 1959, and April 1961.
Data are for last Wednesday of period. For details, see Federal Reserve Bulletin, June 1961.
7 Not available.
Sources: Board of Governors of the Federal Reserve System, Standard & Poor's Corporation, and New
York Stock Exchange.




290

T A B L E C-70.—Business population and business failures,

Year or month

Index of
net business
formation
(1957-59=
100) i

New
business
incorporations
(number) a

Busifailure
rate*

$100,000

1929..
1930..
193119321933193419351937—
1938...
19391940..
1941194219431944194519461947194819491950..
19511952..
1953195419551956..
1957..
195819591960
1961
1962
1963 8
1964
1965
1964: Jan__
Feb._
Mar..
May~
June.
July..
Aug..
Sept..
Oct_.
NovDec._
1965: J a n . .
Feb__
Mar._
Apr..
May.
June.
July.
Aug..
Sept.
Oct__
Nov.
Dec.

123.1
96.7
102.3
102.8
108.0
103.5
99.8
107.6
103.2
98.3
97.1
104.6
99.8
95.4
98.0
100.6
104.4
« 106.1
108.1
102.8
102.9
103.7
105.3
103.9
104.0
103.6
104.8
106.6
105.8
106.8
107.5
107.6
106.1
105.8
105.0
106.8
106.4
106.4
105.3
105.1
105.9

132,916
112,638
96,101
85,491
92,925
83,649
92,819
102,545
117,164
139,651
140,775
136,697
M50,280
193,067
182,713
181,535
182,057
186,404
197,724
16,250
16,018
15,992
16,180
15,917
15,919
15,979
16,074
16,605
16,498
17,103
17,154
17,275
17,367
17,112
16,504
16,043
16,671
16,369
16,957
17,188
16,744
17,418

103.9
121.6
133.4
154.1
« 100.3
61.1
61.7
47.8
45.9
61.1
•69.6
63.0
54.5
44.6
16.4
6.5
4.2
5.2
14.3
20.4
34.4
34.3
30.7
28.7
33.2
42.0
41.6
48.0
51.7
55.9
51.8
57.0
64.4
60.8
56.3
53.2
53.3
63.9
65.3
66.6
61.8

49.4
63.2
64.9
59.1
66.3
50.7
60.3
48.2
62.8
61.7
54.8
60.8
54.1
60.1
52.8
56.9
69.7
51.5
51.4
512

1929-65

Business failures»*
Amount of current
liabilities (millions of
Number of failures
dollars)
Liability size
Liability size
class
Total
Total
Under $100,000
Under $100,000
and
and
22,909
26,355
28,285
31.822
19,859
12,091
12,244
9,607
9,490
12,836
14,768
13,619
11,848
9,405
3,221
1,222
809
1,129
3,474
5,250
9,246
9,162
8,058
7,611
11,086
10,969
12,686
13,739
14,964
14,053
15,445
17,075
15,782
14,374
13,501
13,514
1,217
1,241
1,320
1,197
1,075
1,157
1,096
1,169
1,034
1,060
967
968
1,137
1,114
1,332
1,179
1,183
1,094
1,074
1,131
1,100
1,047
1,033
1,090

22,165
25,408
27,230
30,197
18,880
11,421
11,691
9,285
9,203
12,553
14,541
13,400
11,685
9,282
3,155
1,176
759
1,002
3,103
4,853
8,746
7,626
7,081
8,075
10,226
10,113
11,615
12,547
13,499
12,707
13,650
15,006
13,772
12,192
11,346
11,340
992
1,050
1,139
969
914
1,003
908
1,018
837
893
810
813
950
930
1,097
1,030
1,001
881
906
965
893
912

UOO.OOO

over
744
947

1,055
1,625
•979
670
553
322
287
283
•227
219
163
123
66
46
50
127
371
397
538
416
432
530
787
860
856
1,071
1,192
1,465
1,346
1,795
2,069
2,010
2,182
2,155
2,174
225
191
181
228
161
154
188
151
197
167
157
155
187
184
235
149
182
213
168
166
207
135
140
208

483.3 261.5
668.3 303.5
736.3 354.2
928.3 432.6
457.5 • 215.5
334.0 138.5
310.6
135.5
203.2 102.8
101.9
183.3
140.1
246.5
« 182. 5 « 132.9
166.7
119.9
136.1
100.7
100.8
80.3
45.3
30.2
31.7
14.5
11.4
30.2
15.7
67.3
63.7
204.6
93.9
234.6
161.4
308.1
248.3
151.2
259.5
131.6
283.3
131.9
394.2
167.5
462.6 211.4
449.4 206.4
662.7 239.8
267.1
615.3
728.3 297.6
692.8 278.9
1,090.1
1,213.6
1,352.6
1,329.2
1,321.7
96.7
123.9
111.0
112.9
93.4
144.5
125.6
95.2
114.6
93.8
119.3
98.2
89.3
112.0
146.6
83.2
133.1
144.6
121.5
135.0
105.0
82.1
71.7
97.6

327.2
370.1
346.5
321.0
313.6
321.7
27.9
29.2
30.4
26.2
25.1
27.6
24.5
28.9
22.3
25.4
22.4
23.7
26.7
25.6
31.1
28.9
28.2
25.0
25.8
28.0
25.5
24.9
25.5
26.3

over
221.8
364.8
382.2
495.7
• 242.0
195.4
175.1
100.4
81.4
106.4
•49.7
46.8
35.4
20.5
15.1
17.1
18.8
51.6
140.9
140.7
146.7
97.1
128.0
151.4
226.6
251.2
243.0
322.9
348.2
430.7
413.6
611.4
720.0
867.1
1,031.6
1,015.6
1,000.0
68.9
94.7
80.6
86.6
68.3
116.9
101.1
66.3
92.3
68.3
97.0
74.5
62.5
86.3
115.4
54.3
104.9
119.6
95.7
107.0
79.4
57.2
46.2
71.3

1 Monthly data are seasonally adjusted.
2 Total for period. Monthly data are seasonally adjusted.
* Total for period.
* Commercial and industrial failures only. Excludes failures of banks and railroads and, beginning 1933,
of real estate, insurance, holding, and financial companies, steamship lines, travel agencies, etc.
« Failure rate per 10,000 listed enterprises. Monthly data are seasonally adjusted.
« Series revised; not strictly comparable with earlier data.
7 Includes data for Hawaii beginning 1959 and Alaska beginning 1960. (Data for 1958 comparable to 1959
are 150,781; data for 1960 comparable to 1959 are 182,374.)
s Includes data for District of Columbia beginning 1963.
»Preliminary.
Sources: Department of Commerce (Bureau of the Census) and Dun & Bradstreet, Inc.




29I

AGRICULTURE
TABLE G-71.—Income from agriculture, 1929-65
Income received from fanning

Personal income
received by total
farm population
Year or
quarter

Net to farm
operators

Realized gross
Produc-

Cash tion exFrom From From
non- Total 2 receipts penses
all
from
farm
farm
sources sources sources 1
marketings

Net income per
farm, including
net inventory
change

Exclud- Including net ing net
inven- inven- Current
tory
tory
change change3 prices

Billions of dollars

1965
prices 4

Dollars

1929

13.9

11.3

7.7

6.3

6.2

945

i son

1930
1931
1932
1933
1934
1935
1936
1937
1938
1939

9.1
6.4
4.7
5.3
6.4
7.1
8.4
8.9
7.7
7.9

6.9
5.5
4.5
4.4
4.7
5.1
5.6
6.2
5.9
6.3

4.5
2.9
1.9
2.7
3.9
4.6
5.1
5.2
4.2
4.3

4.3
3.3
2.0
2.6
2.9
5.3
4.3
6.0
4.4
4.4

651
506
304
379
431
775
639
905
668
685

1,385
1,265
869
1,053
1,078
1,938
1,598
2,155
1,670
7*>fi

5.4
7.7
7.2
9.0
7.2
7.4

3.2
5.4
4.6
6.2
4.7
4.8

2.2
2.3
2.6
2.7
2.5
2.6

11.5
8.4
6.4
7.1
8.6
9.7
10.8
11.4
10.1
10.6

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

7.6
10.1
14.1
16.5
16.6
17.2
20.0
21.1
23.8
19.5

4.8
6.8
10.1
12.1
12.2
12.8
15.5
15.8
18.0
13.3

2.8
3.3
3.9
4.4
4.4
4.4
4.6
5.3
5.8
6.2

11.1
13.9
18.8
23.4
24.4
25.8
29.5
34.1
34.7
31.6

8.4
11.1
15.6
19.6
20.5
21.7
24.8
29.6
30.2
27.8

6.9
7.8
10.0
11.6
12.3
13.1
14.5
17.0
18.8
18.0

4.2
6.1
8.8
11.8
12.1
12.8
15.0
17.1
15.9
13.6

4.5
6.5
9.9
11.7
11.7
12.3
15.1
15.4
17.7
12.8

706
1,031
1,588
1,927
1,950
2,063
2,543
2,615
3,044
2,233

1,810
2,455
3,243
3,569
3,421
3,438
3,853
3,353
3,712
2,827

1950
1951
1952
1953
1954
1955
1956
1957
1958,
1959

20.4
22.7
22.1
19.8
18.4
17.6
17.8
17.7
19.5
18.1

14.1
16.2
15.4
13.4
12.5
11.4
11.2
11.0
12.8
11.0

6.3
6.5
6.7
6.4
5.9
6.2
6.6
6.6
6.7
7.0

32.3
37.1
36.8
35.0
33.6
33.1
34.3
34.0
37.9
37.5

28.5
32.9
32.5
31.0
29.8
29.5
30.4
29.7
33.5
33.5

19.4
22.3
22.6
21.3
21.6
21.9
22.4
23.3
25.2
26.1

12.9
14.8
14.1
13.7
12.0
11.2
11.9
10.7
12.7
11.4

13.7
16.0
15.1
13.1
12.5
11.5
11.4
11.3
13.5
11.5

2,421
2,946
2,896
2,626
2,606
2,463
2,535
2,590
3,189
2,795

3,026
3,348
3,254
2,984
2,961
2.767
2,817
2,786
3,429
2,973

1960
1961
19621963
1964
1965 8

18.7
19.0
19.2
18.7
17.9
20.0

11.4
12.1
12.2
12.0
11.1
13.2

7.2
6.9
7.0
6.7
6.8
6.8

37.9
39.6
41.1
42.1
42.2
44.4

34.0
34.9
36.2
37.3
36.9
38.9

26.2
27.0
28.5
29.6
29.2
30.3

11.7
12.6
12.5
12.5
12.9
14.1

12.0
12.9
13.1
13.1
12.1
14.4

3,043
3,389
3,562
3,671
3,486
4,280

3,203
3,567
3,710
3,785
3,558
4,280

-

-

Seasonally adjusted annual rates
1964" I

42.1
42.3
42.3
42.1

36.9
37.0
37.0
36.7

29.5
29.3
29.2
29.0

12.6
13.0
13.1
13.1

12.0
12.1
12.1
12.3

3,460
3,480
3,480
3,540

3,530
3,550
3,550
3,610

1965: I

42.2
45.0
44.8
45.5

36.7
39.5
39.3
40.0

29.7
30.2
30.3
31.1

12.5
14.8
14.5
14.4

12.1
14.6
15.1
15.6

3,590
4,330
4,480
4,620

3,630
4.330
4,480
4,620

II
III
IV
II
III s

IV
1

Includes all income received by farm residents from nonfarm sources such as wages and salaries from
nonfarm employment, nonfarm business and professional income, rents from nonfarm real estate, dividends,
interest, royalties, unemployment compensation and social security payments.
2
3 Cash receipts from marketings, Government payments, and nonmoney income furnished by farms.
Includes net change in inventory of crops and livestock valued at the average price for the year.
* Income in current prices divided by the index of prices paid by farmers for family living items on a
1965 base.
* Preliminary.
Source: Department of Agriculture.




292

TABLE C-72.—Farm production indexes, 1929-65
[1957-59=100]
Crops
Year

Livestock and products

Farm
outMeat Dairy Poulput i Total 2 Feed H a y Food Vege- Fruits Cot- ToOil
try
and
and
ani*
grains orage grains tables nuts ton bacco crops Total» mals prod- and
ucts
eggs

1929-..

62

73

62

79

68

73

75

120

88

13

63

62

75

44

1930.-.
1931.-1932.. .
1933.-1934...

61
66
64
59
51

69
77
73
65
54

56
63
73
56
33

66
72
74
69
64

74
79
63
47
45

74
75
76
73
80

73
92
75
76
71

113
138
105
105
78

95
89
58
80
63

14
14
13
11
13

64
65
66
67
61

63
66
67
70
59

76
78
79
79
78

45
44
44
44
41

1935-.1936...
1937..1938--.
1939...

61
55
69
67
68

70
59
81
76
75

60
38
67
65
65

82
66
75
81
75

55
54
74
77
63

81
75
82
81
81

90
70
93
84
96

86
101
154
97
96

76
68
91
80
110

21
16
18
22
29

59
63
62
65
70

53
60
58
63
71

78
79
79
81
82

41
44
44
45
48

1940--.
1941.-1942...
1943...
1944...

70
73
82
80
83

78
79
89
83
88

66
71
81
74
78

86
86
93
91
90

69
79
83
72
88

83
84
89
97
92

93
99
98
84
98

102
88
105
93
100

84
73
81
81
113

34
37
56
60
50

71
75
84
91
86

72
76
87
97
88

84
89
92
91
92

49
54
62
71
71

1945...
1946...
1947...
1948...
1949...

81
84
81
88
87

85
89
85
97
92

75
82
63
91
80

93
87
84
84
83

92
95
111
107
92

94
105
91
97
94

89
106
101
92
98

74
71
97
122
131

114
134
122
115
114

54
52
55
67
61

86
83
82
80
85

84
82
81
79
83

95
94
93
90
93

74
69
68
67
74

1950 _ 1951_1952.1953_1954_-

86
89
92
93
93

89
91
95
94
93

81
75
79
77
81

89
92
90
92
92

86
85
109
100
88

96
89
90
95
93

98
100
97
98
99

82
124
124
134
111

117
135
130
119
130

71
65
63
63
71

88
92
92
93
96

89
95
95
94
98

93
92
92
97
98

78
81
82
84
87

1955.1956.1957...
1958.1959.-

96
97
95
102
103

96
95
93
104
103

86
85
93
101
106

98
94
101
102
97

83
87
82
121
97

96
102
98
102
100

99
103
94
102
104

120
108
89
93
118

127
126
96
100
104

78
92
91
111
98

99
99
97
99
104

103
100
96
98
106

99
101
101
100
99

86
94
95
101
104

1960.1961...
1962...
1963.1964,__

106
107
108
112
112

108
107
107
112
110

109
99
100
110
97

103
102
105
105
105

115
106
98
102
114

103
110
108
108
106

98
109
98
102
113

116
116
121
125
123

112
119
134
135
129

105
122
123
128
129

102
106
107
111
113

103
106
108
114
116

101
103
104
103
104

104
112
111
115
118

1965 *
_

116

117

113

111

117

112

115

122

110

155

112

112

104

122

1
Farm output measures the annual volume of farm production available for eventual human use through
sales from farms or consumption in farm households. Total excludes production of feed for horses and
mules.
2 Includes production of feed for horses and mules and certain items not shown separately.
3
Includes certain items not shown separately.
4
Preliminary.
Source: Department of Agriculture.




293

TABLE C—73.—Indexes of prices received and prices paid by farmers, and parity ratio, 1929-65
[1957-59=100]
Prices received by farmers
Crops
Year or month

All
farm
prod- All Food
ucts * crops1 grains

Feed grains
and hay
Feed
Total grains

Livestock and products

OilCot- To- bearton bacco ing
crops

All
livestock
and
products 1

Meat Dairy Poulani- prod- and
mals ucts eggs

1929

61

61

55

74

77

57

35

62

62

50

65

102

1930
1931
1932 .
19331934__
1935
1936 .
1937
1938
_
1939 ..

52
36
27
29
37
45
47
51
40
39

52
34
26
32
44
46
49
53
36
37

44
27
21
31
43
46
51
57
35
34

67
46
31
36
60
68
65
79
45
46

68
44
28
36
60
70
68
84
45
44

40
24
19
26
39
38
38
36
27
28

29
20
18
22
32
35
33
41
36
31

48
32
19
25
45
55
52
56
42
42

52
38
28
27
32
44
46
49
43
41

43
30
20
19
22
38
38
42
37
36

55
43
33
34
40
45
49
51
45
43

81
62
51
47
56
74
73
70
69
61

42
51
66
«80
•82
«86
«98
114
119
103

41
48
65
84
89
91
102
118
114
100

40
46
57
70
78
81
95
128
118
103

54
58
72
96
108
106
127
161
162
112

54
58
73
97
109
104
131
171
170
109

32
43
60
64
66
69
91
105
104
94

28
32
51
66
72
74
78
77
78
82

45
60
80
88
97
100
114
158
153
106

42
53
66
77
76
82
94
111
122
106

35
46
60
66
62
•67

47
55
63

86
8 89
«104
107
106
117
117
101
98

62
77
96
121
112
126
127
141
153
140

—

107
125
119
105
102
96
95
97
104
99

104
119
120
108
108
104
105
101
100
99

106
115
116
111
110
107
106
106
98
96

122
143
147
130
128
116
115
105
97
98

123
147
150
132
130
116
116
105
97
98

108
129
119
102
105
104
103
101
97
102

83
90
89
89
91
90
93
96
100
104

120
148
129
122
133
109
111
106
98
96

108
130
119
104
97
90
88
94
106
100

110
133
115
94
92
80
76
89
109
102

97
112
118
104
96
96
99
101
99
100

118
144
130
140
113
121
112
102
108
90

I960
1961
1962
1963
1964
1965 7
1964- Jan
Feb
Mar
Apr .
Mav
June
July ... —
Aug
Sept
Oct
Nov
Dec
1965* Jan
Feb
Mar . _
Apr
May
June
July
Aug
Sept
Oct . .
Nov _ .
Dec

99
99
101
100
98
102
101
100
99
98
98
96
96
96
98
98
97
97
98
98
99
101
104
106
105
103
103
103
103
107

99
102
104
107
106
104
109
109
108
110
111
108
104
101
103
104
105
105
105
105
106
109
111
109
106
100
100
99
98
100

96
99
107
106
90
77
109
108
102
106
103
80
77
76
77
78
79
79
79
79
78
77
76
75
76
76
76
77
79
80

95
95
97
103
105
109
105
103
105
106
106
106
103
103
107
104
101
108
110
111
112
113
115
113
112
108
108
101
98
105

93
94
95
101
102
106
101
99
101
103
104
105
102
101
105
101
98
105
106
107
108
110
112
113
111
107
106
99
94
101

97
100
104
104
100
94
98
98
101
102
104
106
105
99
99
100
97
95
89
89
93
95
96
98
97
93
95
95
94
90

103
109
109
102
101
105
101
101
101
101
101
101
100
101
100
103
102
102
101
103
103
103
103
103
103
105
110
109
109
113

93
112
108
113
112
116
117
115
114
110
107
107
108
106
111
114
115
119
120
123
123
123
119
120
118
113
107
107
107
111

98
98
99
95
91
101
94
93
92
89
87
87
91
92
95
93
91
91
92
93
93
95
99
103
104
105
105
106
106
112

96
97
101
94
88
104
89
88
90
87
86
86
89
89
91
87
84
85
88
91
92
95
104
112
112
112
108
108
108
116

101
101
99
99
100
101
103
101
99
95
92
92
95
98
103
107
107
106
104
102
100
97
94
93
96
100
104
108
109
109

101
92
92
92
90
92
99
94
91
86
84
85
88
92
93
91
91
88
86
87
88
91
86
87
90
92
95
95
97
104

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959

.

_
_

„ .
_

- .
_
„_-_ .

.

See footnotes at end of table.




294

8

TABLE G-73.—Indexes of prices received and prices paid by farmers, and parity ratio, 1929-65—

Continued
[1957-59 = LOO]
Prices paid by farmers

Year or month

Commodities and services
All
items,
interest,
Production items
taxes,
Famand
All
ily
wage
Motor Farm
terns iving All
marates
veterns produc- Feed
tion
(parity
hicles chinery
items *
index)
56
52
43
38
38
44

47
46

42

45

42

47

45
52
58
62
65
71
82
89
86
87
96
98
95
95
94
95
98
100
102

48
55
61
64
66
72
85
92
88
90
100
100
96
96
95
96
98
101
101

45
52
58
61
64
71
83
88
85
86
94
95
94
94
95
96
99
100
101

50
57
63
66
67
73
85
95
91
94
104
104
97
97
96
95
98
100
102

102

101

102

101

103
105
107
107
110
107

101
103
104
104
106
104

102
103
104
105
107
104

101
103
104
103
105
104

Feb

107

104

105

103

Mar

107
107
107
107
107

105
105
105
105
105

104
104
103
103
103

Apr

May
June
July
Aug
Sept
Oct

.„
- _

Nov
Dec
1965: Jan...

Feb
Mar
Apr
May
June
July
Aug
Sept

Oct
Nov . __.
Dec

107

104

105

103

107
107

104
104

105
105

107

104

103
103

105

103

107
108
109
109
109
110
110
110
110
110
110
110
111

104
105
105
105
106
107
107
107
106
106
106
106
107

105
106
106
106
106
108
107
107
107
107
107
107
108

103
104
104
104
105
106
106
106
106
106
105
105
106

68
61
43
32
37
52
53
55
62
47
47
50
54
66
78
87
86
100
118
125
103
105
118
126
114
113
106
103
101
99
100
98
98
100
104
103
104
106
105
104
104
103
102
101
101
103
103
102
104
104
104
104
105
105
105
104
104
104
103
102
103

36
35
35
34
34
36
37
38
39
42
40
40
42
45
47
51
53
55
63
71
78
78
83
87
86
86
87
89
96
100
104
102
102
105
109
111
113

Fertilizer

43
43
42
40
39
40
41
42
43
44
43

85
83
75
66
61
69
68
64
67
67
66

116
113
108
101
90
80
74
68
64
60
58

43

64

56

38

22

81

43
46
48
49
49
51
58
67
76
78
83
86
87
87
87
92
96
100
104

64
71
76
77
79
79
88
96
98
94
100
102
103
102
101
100
100
100
100

54
51
46
43
41
40
42
43
45
49
54
59
63
68
74
83
91
100
109

38
38
37
37
39
43
48
56
60
65
68
71
74
77

100
107

26
34
45
54
62
66
72
76
74
73
81
87
88
88
89
92
96
99
105

93
105
113
108
109
113
115
110
100
101
107
100
92
89
84
83
82
85
82

107

100

120

117

109

80

110
111
113
116

100
100
100
100

119

100

131
145
162
181
204
182

125
132
139
147
155
146

110
114
116
119
125
116

79
80
78
76
77
78

182

146

116

77

111

115

100
99

111
111

116"

99

182
182
182
182
182

146
146
146
146
146

116
121
121
121
121

77
75
75
74
74

182

146

121

74

110
110
111
112

118

100

182
182

146
146

121
119

76
76

182

146

119

75

118

100

113

118

100
100

115
114

119

100

121

100

181
204
204
204
204
204
204
204
204
204
204
204
204

147
155
155
155
155
155
155
155
155
155
155
155
155

119
122
122
122
126
126
126
125
125
125
128
128
128

75
74
75
75
76
78
79
78
78
78
77

111
111
113

56
57
56
51
44
38
36
36
36
38
37

o3$o§

54
50
43
37
38
43
43
43
45
43
42

CDCOC

55
51
44
38
38
43
45
45
48
45
44

.

2222 2

55
52
44
38
37
41
42
42
45
42
42

1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943 _
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
I960
1961
1962
1963
1964
1965 7
1964: Jan

Parity
Inter- Taxes 3 W a g e ratios
4
rates
ests

32
30
24
18
15
17
18
20
22
22
22

1
2 Includes items not shown separately.
Interest payable per acre on farm real estate debt.
a Farm real estate taxes payable per acre (levied in preceding year).
< Monthly data are seasonally adjusted.
s Percentage ratio of prices received for all farm products to parity index, on a 1910-14 = 100 base.
6 Includes wartime subsidy payments.
7 Preliminary.
Source: Department of Agriculture.




295

92
83
67
58
64
75
88
92
93
78
77

77
80

T A B L E C—74.—Selected measures of farm resources and inputs,
Crops
harvested
(millionsl
of acres)
Year
Total

1929-65

Index numbers of inputs (1957-59=100)

Livestock
breeding
Exclu- units
sive of (1957use for 59=
feed for 100)2
horses
and
mules

Manhours
of
farm
work
(billions)

Total

Farm
labor

Mechani- FertiFarm
cal
lizer
real
power
and
estate 3 and
lime
machinery

Feed,
seed,
and
livestock
pur-

Miscellaneous

1929.

365

298

23.2

218

76

1930.
1931.
1932.
1933.
1934.

369
365
371
340
304

304
303
311
281
247

22.9
23.4
22.6
22.6
20.2

216
220
213
212
190

76
78
79
76

1935.
1936.
1937.
1938.

345
323
347
349
331

269
295
301
286

86
90
87
87
93

21.1
20.4
22.1
20.6
20.7

94
91
94

198
192
208
193
194

66
68
68
70
72

1940..
1941..
1942..
1943..
1944..

341
344
348
357
362

298
304
309
320
326

95
94
104
117
114

20.5
20.0
20.6
20.3
20.2

97
97
100
101
101

192
188
194
191
190

73
74
75
76
76

1945..
1946..
1947..
1948..
1949.

354
352
355
356
360

322
323
329
332
338

109
107
104

18.8
18.1
17.2
16.8
16.2

100
101

177
170
162
158
152

76
77
78
74
82

1950..
1951..
1952..
1953.
1954.

345
344
349
348
346

326
326
334
335
335

102
103
103
100
104

15.1
15.2
14.5
14.0
13.3

101
104
103
103
102

142
143
136
131
125

100

92
96
97
98

1955.
1956.
1957.
1958.
1959.

340
324
324
324
324

330
315
316
317
318

106
104
101
99
100

12.8
12.0
11.1
10.5
10.3

102
101
99
99
102

120
113
104
99
97

100
99
100
100
100

99
99
100
99
101

90
91
94
97
109

91
93
101
106

94
98
95
100
105

1960.
19611962..
19631964.

324
303
295
300
301

319
299
291
296
297

100
101

9.5
9.1
8.8
8.4

101
101
101
102
103

92
89
85
83
79

100
100
101
101
102

100
97
97
99
101

110
116
124
141
155

109
123
121
124
123

106
109
113
115
120

1965 8

302

298

101

8.2

104

77

100

101

166

124

124

85
91
91

* Acreage harvested (excluding duplication) plus acreages in fruits, tree nuts, and farm gardens.
2 Animal units of breeding livestock, excluding horses and mules.
Includes buildings and improvements on land.
« Nonfarm inputs associated with farmers' purchases.
s Preliminary.
Source: Department of Agriculture.

3




296

TABLE C-75.—Farm population, employment, and productivity, 7929-65

Farm population
(April 1) i

Year

Number
(thousands)

As percent of
total
population 2

Farm employment
(thousands) a

LiveCrop stock
proproduc- duction
Per
tion
per
Per man-hour
per breedFamily Hired unit
ing
acre4
Total workers workers of
unit
total
Liveinput Total Crops stock
Farm output

Index, 1957-59=100
1929..

30,580

25.2

12,763

9,360

3,403

63

28

28

48

69

1930..
1931..
1932..
1933..
1934..

30,529
30,845
31,388
32,393
32,305

24.9
24.9
25.2
25.8
25.5

12,497
12,745
12,816
12,739
12,627

9,307
9,642
9,922
9,874
5,765

3,190
3,103
2,894
2,865
2,862

63
69
69
65
59

28
30
30
28
27

27
30
30
27
27

47
47
47
46
43

64
72
68
61
51

70
70
69
68
62

1935..
1936..
1937..
1938..
1939_.

32,161
31,737
31,266
30,840

25.3
24.8
24.2
23.8
23.5

12,733
12,331
11.978
11,622
11,338

9,855
9,350
9,054
8,815
8,611

2,878
2,981
2,924
2,807
2,727

69
62
73
74
72

31
29
33
35
35

31
28
33
35
34

44
46
46
48
50

66
56
76
73
74

70
71
75
75

1940..
1941..
1942.
1943..
1944.

30, 547
30,118
28,914
26,186
24,815

23.1
22.6
21.4
19.2
17.9

10.979
10,669
10,504
10,446
10,219

8,300
8,017
7,949
8,010
7,988

2,679
2,652
2,555
2,436
2,231

72
75
82
79
82

36
39
42
42
44

37
39
43
41
44

50
51
56
58
56

76
77
86
78
83

75
80
81
78
75

1945..
1946.
1947.
1948.
1949.

24,420
25,403
25,829
24,383
24,194

17.5
18.0
17.9
16.6
16.2

10,000
10,295
10,382
10,363
9,964

7,881
8,106
8,115
8,026
7.712

2,119
2,189
2,267
2,337
2,252

82
85
82
88
86

46
49
50
56
57

46
50
50
57
57

58
59
61
62
66

82
86
82
92
85

79
78
79
82

1950..
1951..
1952..
1953..
1954..

23,048
21,890
21,748
19,874
19,019

15.2
14.2
13.9
12.5
11.7

9,546
9,149
8,864
8,651

7,597
7,310
7,005
6,775
6,570

2,329
2,236
2,144
2,089
2,081

85
86
89
90
91

61
62
68
71
74

63
61
67
69
73

68
72
74
76
80

84
85
90
89
88

86
89
89
93
92

1955..
1956..
1957.,
1958.
1959.

19,078
18,712
17,656
17,128
16,592

11.5
11.1
10.3

8,381
7,852
7,600
7,503
7,342

6,345
5,900
5,660
5,521
5,390

2,036
1,952
1,940
1,982
1,952

94
96
96
103
101

80
86
91
103
106

77
83
90
105
105

85
89
92
100
108

91
92
93
105
102

93
95
96
100
104

1960.
1961.
1962.
1963.
1964.
1965 5

15,635
14,803
14,313
13,367
12,954
12,400

8.7
8.1
7.7
7.1
6.8
6.4

7,057
6,919
6,700
6,518
6,110
5,609

5,172
5,029
4,873
4,738
4,506
4,125

1,885
1,890
1,827
1,780
1,604
1,484

105
106
107
110
109
112

115
120
127
135
141
151

114
119
124
132
133
148

113
120
127
137
147
149

109
113
116
119
117
124

105
108
108
111
112
111

1 Farm population as denned by Department of Agriculture and Department of Commerce, i.e., civilian
population living on farms, regardless of occupation.
2
Total population of United States as of July 1 includes armed forces abroad and Alaska and Hawaii
beginning January and August 1959, respectively.
3 Includes persons doing farm work on all farms. These data, published by the Department of Agriculture, Statistical Reporting Service, differ from those on agricultural employment by the Department
of Labor (see Table C-21) because of differences in the method of approach, in concepts of employment,
and in time of month for which the data are collected. For further explanation, see monthly report on
Farm Labor, September 10, 1958.
* Computed from variable weights for individual crops produced each year.
5
Preliminary.
Sources: Department of Agriculture and Department of Commerce (Bureau of the Census).




297

TABLE C-76.—Comparative balance sheet of agriculture, 7929-66
[Billions of dollars]
Assets

Claims

Other physical assets
Beginning
of year

Financial assets

HouseMahold DeposInvestReal
Real
chinfurment Total estate Other
Total estate
its
ery
U.S.
Live- and Crops2 nish- and savings in codebt debt
ings cur- bonds operastock motor
and
tives
vehiequip- rency
cles
ment

1929-

9.8

48.0

6.6

3.2

47.9
43.7
37.2
30.8
32.2

6.5
4.9
3.6
3.0
3.2

3.4
3.3
3.0
2.5
2.2

1939..

33.3
34.3
35.2
35.2
34.1

3.5
5.2
5.1
5.0
5.1

2.2
2.4
2.6
3.0
3.2

1940
1941
1942
1943
1944

33.6
34.4
37.5
41.6
48.2

5.1
5.3
7.1
9.6
9.7

3.1
3.3
4.0
4.9
5.4

19451946.
1947.
1948.
1949.

53.9
61.0
68.5
73.7
76.6

9.0
9.7
11.9
13.3
14.4

6.5
5.4
5.3
7.4
10.1

6.7
6.3
7.1
9.0
8.6

1950.
1951.
1952.
1953.
1954.

75.3
86.6
95.1
96.5
95.0

12.9
17.1
19.5
14.8
11.7

12.2
14.1
16.7
17.4
18.4

7.6
7.9
8.8
9.0
9.2

1955
1956
1957
1958
1959

98.2
102.9
178.0 110.4
186.0 115.9
202.8 124.4

11.2
10.6
11.0
13.9
17.7

18.6
19.3
20.2
20.2
22.1

9.6
8.3
8.3
7.6
9.3

4.2
4.2
4.9
5.0
5.3
5.6
6.1
7.7
8.5
9.1
8.6
9.7
10.3
9.9
9.9
10.0
10.5
10.0
9.9
9.8

1960.
1961-.
1962_.
1963.
1964_

203.9
204.3
213.0
221.0
229.1

129.9
131.4
137.4
142.8
150. 7

15.6
15.5
16.4
17.2
15.7

22.3
22.0
22.5
23.3
24.1

7.8
8.0
8.7
9.2
9.8

9.6
8.9
9.1
8.7
8.8

1965..

237.8 159.4

14.4

25.2

8.9

1966*

253.2 170.0

68.5
1931-.
1932...
19331934-.
19351936-.
1937.-

61.4

Proprietors'
equities

2.5

4.0
(3)

8
8 8
(33)
()
8
2.7
3.0
3.8
5.1
6.1

9.6
9.4
9.1
8.5
7.7

0.6

5.0
)

53.9

7.6
7.4
7.2
7.0
3.2
3.5
4.2
5.4
6.6

0.2
.4
.5
1.1
2.2

.9
.9
1.0
1.1

6.6
6.5
6.4
6.0
5.4

3.4
3.9
4.1
4.0
3.5

42.9
44.6
52.4
63.7
75.7

7.9
9.4
10.2
9.9
9.6

3.4
4.2
4.2
4.4
4.6

1.2
1.4
1.5
1.7
1.9

4.9
4.8
4.9
5.1
5.3

3.4
3.2
3.6
4.2
6.1

85.9
95.5
107.9
118.6
123.5

9.1
9.1
9.4
9.4
9.4

4.7
4.7
4.7
4.6
4.7

2.1
2.3
2.5
2.7
2.9

132.5
151.5
167.0
164.3

5.6
6.1
6.7
7.2
7.7

6.8
7.0
8.0
8.9
9.2

120.1
138.4
152.3
148.2
144.3

9.4
9.5
9.4
9.5
10.0

5.0
5.2
5.1
5.1
5.2

3.1
3.4
3.6
3.9
4.3

165.1
169.7
178.0
186.0
202.8

8.2
9.0
9.8
10.4
11.1

9.4
9.8
9.6
10.0
12.6

147.5
150.9
158.6
165.6
179.1

9.2
8.7
8.8
9.2
9.2

4.7
4.6
4.5
4.4
4.2

4.8
5.2
5.6
6.2
6.6

204.3
213.0
221.0
229.1

12.1
12.8
13.9
15.2
16.8

12.8
13.4
14.8
16.6
18.1

179.0
178.1
184.3
189.2
194.2

4.2

7.3 237.8

18.9

18.6

200.3

253.2

21.1

20. 0 212.1

9.6

21.8

1
2 Beginning with 1961, horses and mules are excluded.
Includes all crops held on farms and crops held off farms by farmers as security for Commodity Credit
Corporation loans. The latter on January 1,1965, totaled $606 million.
3 Not available.
4
Preliminary.
Source: Department of Agriculture.




INTERNATIONAL STATISTICS
TABLE C-77.—United States merchandise exports and imports, by commodity groups, 1957-65
[Millions of dollars]
Merchandise exports
Total,
including
reexports J

Period

Merchandise imports
General
imports 2

Domestic exports

Season- Unally ad- Toadtal i«
justed justed

Food, Crude
bever- maages, teand rials
toand
bacco fuels

Manufactured
goods
(•)

Seasonally

Food,
Un- To- beverad- tal* ages,
adand
justed justed
tobacco

Monthly average:
1957
1958
19fi9—

1,626 1,611
1,364 1,351
1,367 1,352

- —

1965: Jan...
Feb..
Mar..
Apr..
May..
JuneJuly..
Aug..
Sept..
Oct..
Nov..

254
250

1,058
962
931

1,105 1,102
1,105 1,101
1,302 1,285

280
296
296

342
382

423
433
575

521
259
65

1,617
1,659
1,723
1,846
2,106

263
286
307
342
387

324
318
277
311

1,072
1,083
1,157
.,218
,360

1,251 1,251
1,226 ., 221
1,366 ,354
1,429 ,417
1,557 ,550

283
286
306
320
332

379
361
381
386
413

556
539
630
666
756

383
453
379
440
578

2,183 2,155

371

351

,422

1,747

742

326

441

914

436

2,043 2,035 2,008
2,046 2,006 1,977

353
343
342
339
345

,277
,285
,372
,388
,429
,334

1,445
1,337
1,590
1,561
1,456
1,594

463
321
565
554
432
,575

306
276
364
354
309
315

428
374
404
400
384
408

631
740
754
695
800

554
520
523
516

1965 L.

July_.
Aug-Sept..
Oct...
Nov..
Dec.

236
224
238

1,634
1,679
1,745
1,869
2,135

1960.
1961.
1962.
1963.
1964.

1964: Jan—
Feb_.
Mar_.
Apr..
May.
June..

Merchandise
trade
surplus,
seaCrude Man- sonma- ufac- ally
te- tured adrials goods justed
and 8 (•)
fuels

Imports for
consumption a

2,07b
2,061
2,062
2,034

2,140
2,138
2,221
2,047

2,112
2,102
2,190
2,016

385
375
387
389
404
34:

2,123
2,109
2,235
2,155
2,197

2,046
1,900
2,085
2,259
2,183
2,561

2,020
1,871
2,058
2,230
2,158
2,526

318
327
405
414
440
45!

391 ,314 1,578 1,611
325 ,237 1,576 1,491
320 1,331 1,546 1,562
399 ,403 1,648 1,613
382 ,342 1,698 1,672
463 , 6 0 5 1,642 1,755

,613
490
568
,644
655
720

304
292
333
363
392
376

449
427
411
413
399
454

810
725
776
810
813
842

646
534
689
607
499
788

1,217
1,693
2,753
2,380
2,278
2,185

1,188
1,514
2,892
2,529
2,381
2,219

1,171
1,491
2,860
2,502
2,351
2,191

137
225
484
389
392
382

209
826 1,206 1,113
246 ,052 1,601 1,464
461 ,888 1,869 2,040
410 ,708 1,835 1,855
1,799 1,724
378
382 ,'455 1,835 1,907

138
489
999
821
720
878

173
264
386
331
332
349

535
386
759
416
508 1,041
963
484
913
409
474

884
645
479
350

2,263
2,346
2,298
2,349
2,406

2,172
2,124
2,141
2,420
2,440

2,140
2,096
2,111
2,387
2,407

401
431
459

321
303
383
402

1,633
1,718 ,729
1,798 ,795
1,997 2,004
1,967 1,953

261
315
353
409
417

902
410
449
909
431
946
462 1,061
424 1,034

593
621
511
347
603

,343
,393
,371
,530
,525

1,460
1,520
1,541
1,539
1,518

1,670
1,725
1,787
2,002
1,903

1
Total excludes Department of Defense shipments of grant-aid military supplies and equipment under
the Military Assistance Program.
2 Total arrivals of imported goods other than intransit shipments.
3 Imported merchandise released from Customs custody for entry into U.S. consumption channels,
entries into bonded manufacturing warehouses, and ores and crude metals after smelting and refining in
bonded warehouses.
4
Total includes commodities and transactions not classified according to kind.
5
Includes fats and oils.
8
Includes chemicals, metals, machinery, transportation equipment, and other manufactures. Military
grant-aid shipments are included in these commodity data.
7
January-November average.

NOTE.—Data include trade of Alaska, Hawaii, and Puerto Rico.
Source: Department of Commerce, Bureau of International Commerce.




299

TABLE C-7S—United

States balance of payments, 1947-65

[Millions of dollars]
Imports of goods and

Exports of goods and services

Year or quarter
Total

Mer- Milichan- tary
dise i

Income on
investments
Pri- Governvate ment

Other
serv- Total
ices

66 2,620 8,208
102 2,256 10,349
98 2,226 9,621

1,036
1,238
1,297

Balance Remiton
tances
Miligoods and
Mer- tary Other and
penchan- ex- serv- serv- sions
dise i pendices
itures

455 1,774 11,529
799 1,987 6,440
621 2,121 6,149

1947...
1948...
1949__.

19,737 16,015
16,789 13,193
15,770 12,149

1950...
1951...
1952...
1953...
1954_-.

13,807
18,744
17,992
16,947
17, 759

10,117
14,123
13,319
12,281
12,799

1,484
1,684
() 1,624
192 1,658
182 1,955

109
198
204
252
272

2,097
2,739
2,845
2,564
2,551

12,028
15,073
15,766
16,561
15,931

9,108
11,202
10,838
10,990
10,354

576
1,270
2,054
2,615
2,642

2,344
2,601
2,874
2,956
2,935

1,779
3,671
2,226
386
1,828

-523
-457
-545
-617
-615

1955...
1956...
1957...
1958...
1959...

19,804
23,595
26,481
23,067
23,476

14,280
17,379
19,390
16,264
16,282

200
161
375
300
302

2,170
2,468
2,612
2,538
2,694

274
194
205
307
349

2,880
3,393
3,899
3,658
3,849

17,795
19,628
20.752
20, 861
23,342

11,527
12,804
13,291
12,952
15,310

2,901
2,949
3,216
3,435
3,107

3,367
3,875
4,245
4,474
4,925

2,009
3,967
5,729
2,206
134

-585
-665
-702
-722
-791

1960...
1961...
1962...
1963—
1964...

27,244
28,557
30,278
32,353
37,017

19,489
19,936
20,604
22,069
25,288

335
402
656
659
762

3,001
3,561
3,954
4,156
5,003

349
380
471
498
454

4,070
4,278
4,593
4,971
5,510

1,177
22,924
25,129
26,436
28,457

14,732
14,507
16,173
16,992
18,619

3,048
2,954
3,078
2,929

5,397
5,463
5,878
6,515
7,014

4,067
5,633
5,149
5,917
8,560

-672
-705
-738
-837
-839

1965 io.

38,377 25,520

555 5,744 31,240 20,871 2,799 7,571

7,137

817 5,741

5,979
7,563
6,879

-715
-617

Seasonally adjusted annual rates
1963:

1964:

II-.
III.
IV-

30,012
32,436
32,552
34,412

19,972
21,976
22,488
23,840

656
976
412
592

4,196
4,068
4,116
4,244

492
496
500
504

4,696
4,920
5,036
5,232

25, 556
26,204
26, 868
27,116

16,232
16,876
17,372
17,488

3,020
2,952
2,884
2,860

6,304 4,456
6,376 6,232
6,612 5,684
6,768 7,296

-864
-848
-804

II-III.
IV.

36,336
35,964
37,340
38,428

24,596
24,268
25,528
26, 760

776
764
672
836

5,064
5,052
5,040
4,856

520
528
528
240

5,380
5,352
5,572
5,736

27,512
28 244
28,544
29, 528

17,640
18,396
18,836
19,604

2,928
2,880
2,764
2,724

6,944 8,824
6,968 7,720
6,944 8,796
7,200 8,900

-812
-828
-880

556 5,424 28,628 18,652 2 648 7,328 6,032
584 5,876 32 388 21,876 2 808 7,704 7,980
524 5,932 32 704 22,084 2 940 7,680 7,400

-1,160
-940

1965: I
II.—
III 1 2 -

34,660 22,344
40,368 26,992
40,104 27,224

696 5,640
916 6,000
840 5,584

See footnotes at end of table.




3OO

TABLE C-78.—United States balance of payments,

1947-65—Continued

[Millions of dollars]

Period

U.S. private capital,
Balance
net
U.S.
GovErrors
ernForand
ment
eign
Offigrants
capi- unrecorded Liqcial
tal
and Direct Other
transcapi- invest- long- Short- n e t 2 actions uidity reserve
term
transtal,
basis 3
ment term
actions
net 2
basis <

1947
-6,121
1948...---. -4,918
1 9 4 9 . . . . — -5,649

-749
-721
-660

-49
-69
-80

-189
-116
187

-75
-173
83

936
1,179
775

1950
-3,640
1951
-3,191
1952
-2,380
1953. — — - 2 , 055
1954
- 1 , 554

-621
-508
-852
-735
-667

-495
-437
-214
185
-320

-149
-103
-94
167
-635

90
243
212
178
240

-21
477
601
339
173

-191
-517
-276
-311
-77

394
653
487
22
863

1955....-1956
1957..
1958
1959.

- 2 , 211
-2,362
- 2 , 574
- 2 , 587
- 1 , 986

-823
-241
-1,951
-603
-2,442
-859
- 1 , 1 8 1 - 1 , 444
- 1 , 372
-926

1960
1961
1962
1963
1964

- 2 , 769
- 2 , 780
- 3 , 013
- 3 , 581
- 3 , 563

- 1 , 674
-1,599
-1,654
-1,976
-2,376

1965 1
0

-3,327 - 3 , 4 2 0 - 1 , 2 4 7

-863 -1,348
- 1 , 025 - 1 , 5 5 6
-544
-1,227
- 1 , 695 - 7 8 5
- 1 , 9 7 5 - 2 , 111
1,027

268
843
224
48
27

1,758
-33
-415
1,256
480

-741
503 - 1 . 1 4 5
-261
543 - 9 3 5
1,157
520 1,145
488 - 3 , 529 - 3 , 027
412 - 3 , 743 - 2 , 283

559
1,130
20
735
1,248

404
674
625
502
1,460

182
-869
-1,165
2,292
1,035

-3,881
-2,370
-2,203
-2,670
-2,798

-3,592
-1,287
-2,241
-1,977
-1,224

1,449
681
457
1,673
1,073

289
1,083
213
619
1,554

2,143
606
1,533
378
171

-485 -1,269

-236

251
-74
-20
(u>

(")

(»)

Quarterly totals unadjusted
276
926
320
151

5
-29
-50

397
141
49
32

32
124
227
-5

-544
-1,028
-2,328 -1,404
184
-2,372
-5,464 -3,132

-400
215
389
869

-50

227
114
562
651

-51
303
70
-151

- 1 2 -2,836 -2,568
1,188 1,392
-308
968
820
1,696 - 2 4 0
1,040
196 - 1 , 0 2 0 -1,136 - 1 , 9 4 0

-861
-107
252

199
-161
683

842
68
40

-3,684
-4,400
-2,460
-3,780

-2,504 -2,248
376
-1,864 -2,344 -1,944
-1,064 - 1 , 2 7 6
-388
-2,472
-912 -1,184

312 - 6 4 0 - 4 , 7 9 6 - 3 , 8 9 6
1,040 - 3 0 4 - 4 , 4 3 2 - 3 , 3 7 2
540 -1,072
-840
—72
860
412 - 6 1 2
-568

1964:
I
II
III
IV

-3,012
-3,560
-3,580
-4,100

-1,856
-2,160
-2,204
-3,284

456 - 1 , 1 5 2
308 - 6 0 8
680 -1,164
1,224 -1,720

1965:
I
— - 3 , 1 8 8 - 4 , 6 3 6 - 2 , 716
II
-3,836 -3,564
400
III 12... - 2 , 9 5 6 - 2 , 0 6 0 - 1 , 4 2 4

-3,315
-1,736
-266

1,252
731
91
1,554
-505
1,237
848
1,043

II
III
IV

-1,096
-1,024
-2,448
-3,332

To
IMF
other
gold
foreign tranche
holdNon8
position
liquid 7 ers
Liquid
(increase
(-))

<")
(")
(»)

Seasonally adjusted annual rates
1963:
I -

convertible currencies,
and

T o foreign
official holders«

- 3 , 580 - 3 , 3 1 2
538
-305
-822
-1,046
-2,152 -2,104
- 1 , 550 - 1 , 523

366 - 9 8 8
707 - 1 , 0 4 5
1,021 -1,197
688 - 4 0 1
667 - 1 , 1 6 1
44

4,567
1,005
175

Changes in selected lia- Changes
bilities (decrease ( - ) ) « in gold,

-2,356
-2,192
-1,624
-2,272

30

1 Adjusted from customs data for differences in timing and coverage.
2
Includes certain special Government transactions.
3 Equals changes in liquid liabilities to foreign official holders, other foreign holders, and changes in official
reserve assets consisting of gold, convertible currencies, and the U.S. gold tranche position in the I M F .
4
Equals changes in liquid and nonliquid liabilities to foreign official holders and changes in official reserve
assets consisting of gold, convertible currencies, and the U.S. gold tranche position in the I M F .
5
Includes short-term official and banking liabilities and foreign holdings of U.S. Government bonds and
notes.
6
Central banks, governments, and U.S. liabilities to the I M F arising from reversible gold sales to, a n d
gold deposits with the U.S. D a t a for years before 1960 include estimates of official transactions in marketable
U.S. Government bonds and notes.
7
Provisional.
* Private holders; includes banks and international and regional organizations, excludes I M F .
9
Not reported separately.
10
Average of the seasonally adjusted annual rates for the first three quarters.
11 Not available.
12
Preliminary.
N O T E . — D a t a exclude military grant-aid and U.S. subscriptions to International Monetary F u n d .
Source: D e p a r t m e n t of Commerce, Office of Business Economics.

301
7S5--&83 O -




TABLE C-79.—United States merchandise exports and imports, by area, 1957-65
[Millions of dollars}

Period

Total

Exports (including reexports) 1
1957
1958
1959

Canada

Twenty
Latin
American
Republics

Western
Europe

All
other
areas

20,862
17,916
17,633

4,045
3,540
3,829

4,687
4,208
3,613

6,753
5,447
5,456

5,377
4,721
4,735

20,558
20,962
21,672
23,351
26,442

3,810
3,825
4,045
4,251
4,898

3,575
3,529
3,333
3,300
3,816

7,175
7,197
7,597
8,161
9,075

5,998
6,411
6,697
7,639
8,6.53

January-November:
1964
1965

23,829
24,742

4,444
5,120

3,430
3,395

8,192
8,282

7,763
7,945

General imports
1957
1958
1959

13,255
13,255
15,627

3,042
2,965
3,352

3,769
3,589
3,602

3,078
3,297
4,523

3,366
3,404
4,150

15,018
14,713
16,389
17,142
18,685

3,153
3,270
3,660
3,829
4,241

3,528
3,213
3,387
3,451
3,524

4,185
4,058
4,539
4,729
5,206

4,152
4,172
4,803
5,133
5,714

16,930
19,215

3,859
4,363

3,172
3,295

4,699
5,520

5,200
6,037

I960
1961
1962
1963
1964

1960
1961
1962
1963
1964

-

.-

-__

January-November:
1964
1965

...

i Includes "special category" shipments.
NOTE.-—Data include trade of Alaska, Hawaii, and Puerto Rico.
Source: Department of Commerce, Bureau of International Commerce.




302

T A B L E G—80.—United States foreign assistance, by type and area, fiscal years 1946—65
[Millions of dollars]
Net obligations and loan authorizations
Type and fiscal period
Total

Foreign assistance:
Total postwar...
1962-64 average

Near
East
and
South
Asia

Latin
America

Far
East

Africa

Europe

Other
and nonregional

115,875
6,505
5,958

23,600
2,120
2,045

10,343
1,210
1,346

25,842
1,359
1,390

3,237
480
347

44,676
554
511

8,178
782
320

Economic aid:
Total postwar
Loans
Grants
1962-64 average
Loans
Grants
1965
Loans
Grants

81,197
32,008
49,189
4,861
2,682
2,179
4,645
2,643
2,002

17,324
9,366
7,958
1,792
1,234
558
1,680
1,336
344

9,430
6,720
2,710
1,114
767
347
1,282
778
504

16,191
2,925
13,267
764
220
545
726
190
535

3,051
1,285
1,766
454
170
285
329
157
172

30,292
11,494
18,797
335
266
69
204
182
22

4,910
218
4,692
402
25
376
424

AID and predecessor agencies:
Total postwar
1962-64 average
1965

40,030
2,314
2,026

9,103
922

3,010
548
532

8,525
356
408

248
150

15,230
4
-1

2,479
236
267

Food for Peace:
Total postwar
1962-64 average
1965

13,225
1,671
1,527

6,311
798
922

1,390
225
107

1,980
283
210

852
161
117

2,334
154
118

358
50
52

8,770
461
522

987
67
78

3,573
115
258

2,909
165
65

25

Other economic aid: 2
Total postwar
1962-64 average
1965

19,172
416
571

922
5
11

1,456
226
385

4,791
42
22

136
16
27

9,819
11
22

2,048
115
105

Military assistance: a
Total postwar
Loans
Grants
1962-64 average
Loans
Grants
1965
Loans
Grants

34,678
586
34,092
1,644
50
1,594
1,313
71
1,242

6,276
150
6,126
328
2
326
365
25
340

913
132
781
96
6
90
64
8
55

* 9,651
<35
< 9,616
4 595
4 12

186
11
175
26

4 664

17

14,384
126
14,259
219
19
200
307
19
288

134
3,134
380
11
369
-104
19
-123

Addendum—Repayments and
interest: 8
Economic assistance:
Total post war
1965
Military assistance:
Total postwar
1965

12,156
1,012

1,312
275

2,474
324

830
156

298

7,129
211

115
10

302
42

57
4

101
11

67

1965

Export-Import Bank longterm loans:
Total postwar
1962-64 average
1965

26
18

0)

424

1 Less than $500,000.
2
Includes capital subscriptions to Inter-American Development Bank, International Bank for Reconstruction and Development, International Development Association, and International Finance Corporation (1946-65, $1,541 million; 1962-64 average, $135 million; 1965, $312 million) and Peace Corps (1946-65,
$246 million; 1962-64 average, $54 million; 1965, $85 million).
3
Includes grant-aid and credit assistance under the Foreign Assistance Act (FAA) plus military assistance grants under other acts. Regional totals for the former include country aid programs only; all other
programs are shown in "other and nonregional." FAA military data are from the Department of Defense.
Annual data are for deliveries. "Total postwar" entries are program totals.
4
Excludes Australia and New Zealand, shown in "other and nonregional."
5
Data for certain programs from Department of Commerce, Office of Business Economics, and Department of Defense. Calculations for 1962-64 period not available at time of publication.
Source: Agency for International Development (except as noted).




303

TABLE C-81.—International reserves, 1949, 7953, and 7960-65

l

[Millions of dollars; end of period]
1965
Area and country

1949

1953

1960 2

1961

1962

1963

1964
SepDetember cember

All countries

45, 515

51, 780 60, 665 62, 695 63, 070 66, 510 68,905 368,865

Developed areas...

37, 240

41,390

50, 940 53, 705 54,275

United States..

26, 024

23,458

19, 359 18,753

United Kingdom

1,752

2,670

Other Western Europe..
Austria
Belgium
France.
Germany
Italy
Netherlands
Scandinavian countries (Denmark,
Finland, Norway,
and Sweden)

6,455
92
978
580
196
(5)
434

3,719

3,318

56. 715 59, 015 58,205

17, 220 16,843
3,308

3,147

10. 515 22, 555 25, 820 26, 975 29,280
325
716
845
1,081
1,229
1,144
1,506
1,813
1,753
1,940
829
2,272 3,365
4,049 4,908
7,032 7,163
6,956
7,650
1,773
3,251
3,799
3,818
3,406
768
1,863
1.958
1,946
2,102
1,232

16,672 «15, 721 * 15, 447
2,755

3,004

32, 315 32,490
1,317
1,339
2,192
2,327
5,724
6,248
7,364
7,882
4,156
3,824
2,423
2,349

1,311
2,304
6,343
7,428
4,414
2,416

2,316

1,026

1,402

1,607

1,610

1,875

2,380

2,219

2,328

150
1,768
1,500

547
2,324
1,643

894
2,759
1,615

1,055
2,872
1,836

1,152
3,078
1,940

1,518
3,123
2,004

1,523
2,876
2,013

1,409
3,247

1,197

1,902

1,989

2,276

2,547

2,603

2,881

3,025

3,027

892

Canada..

537
()
1,692
1,343

Spain
Switzerland.
Other*

1,949

1,666

2,022

2,058

2,019

2,014

2,152

2,197

Japan...
Australia, New Zeal a n d , and South
Africa..

1,582

1,952

1,369

1,875

2,203

2,786

2,814

Less developed areas _.

8,280

10,390

9,725

8,985

8,795

9,790

9,885 310,665

Latin America..
Middle East.—
Other Asia
Other Africa-..

2,775
1,475
3,395
«290

3,400
1,200
3,840
1,800

2,920
1,410
3,395
1,865

2,665
1,470
3,215
1,505

2,290
1,735
3,160
1,500

2,790
2,205
3,415
1,290

2,930
2,260
3,295
1,255

7

3,180
1,380

1 Includes gold holdings, reserve position in the International Monetary Fund, and foreign exchange of
all2 countries except U.S.S.R., other Eastern European countries, and Communist China.
Beginning 1959, when most of the major currencies of the world became convertible, data exclude known
holdings of inconvertible currencies, balances under payments agreements, and the bilateral claims arising
from liquidation of the European Payments Union.
3 Estimate.
* Includes U.S. gold subscription payments made in anticipation of increases in Fund quotas.
5
Not available separately.
«In addition to other Western European countries, includes unpublished gold reserves of Greece and an
estimate of gold to be distributed by the Tripartite Commission for the Restitution of Monetary Gold.
7 Includes unpublished gold holdings not allocable by area.
Source: International Monetary Fund, International Financial Statistics.




3°4

TABLE C-82.—United States gold stock and holdings of convertible foreign currencies by U.S.
monetary authorities, 1949-65
[Millions of dollars]

End of year or month

Total

Gold stock i
Total 2

Treasury

Foreign
currency
holdings

1949

24, 563

24, 563

24, 427

1950
1951
1952
1953
1954

22,820
22,873
23,252
22,091
21, 793

22,820
22, 873
23, 252
22, 091
21, 793

22, 706
22, 695
23,187
22, 030
21, 713

1955
1956
1957
1958
1959

21, 753
22,058
22, 857
20,582
19, 507

21, 753
22, 058
22, 857
20, 582
19, 507

1960
1961
1962
1963
1964
1965 3

17, 804
17,063
16,156
15,808
15, 903
14,584

17,804
16, 947
16,057
15, 596
15,471
«13,807

21, 690
21, 949
22, 781
20, 534
19, 456
17, 767
16,889
15, 978
15, 513
15,388
<13.733

116
99
212
432
777

1964: Jan...
Feb..
Mar..
Apr..
May.
JuneJuly.
Aug.
Sept.
OctNov.

15,847
15, 865
15,990
15,991
15,946
15,805

15, 540
15, 518
15, 550
15, 727
15, 693
15,623

15, 512
15, 462
15.461
15.462
15, 463
15, 461

307
347
440
264
253
182

Dec.

15,840
15,890
15, 870
15,702
16,324
15,903

15, 629
15, 657
15,643
15,606
15, 566
15, 471

15.462
15.460
15.463
15.461
15,386
15,388

211
233
227
96
758
432

1965: Jan..
Feb..
Mar.
Apr.
MayJune.

15,572
15,220
15,129
14,884
14, 511
14,595

15,208
14,993
14,639
14,480
14,362
14,049

15,185
14,937
14,563
14,410
14,290
13,934

364
227
490
404
149
546

July..
Aug..
Sept.
Oct...
Nov..
Dec 3.

14,697
14,953
14,884
14,795
14,686
14,584

13,969
13,916
* 13,925
4
13,937
< 13,879
<13,807

13,857
13,857
13,858
* 13,857
* 13,805
«13,733

4

728
1,037
959
858
807
777

1 Includes gold sold to the United States by the International Monetary Fund with the right of repurchase,
which amounted to $800 million on December 31,1965. Also includes gold deposit of IMF; see footnote 4.
2 Includes gold in Exchange Stabilization Fund.
* Preliminary.
* Includes gold deposited by the IMF ($8 million as of September 30, $9 million as of October 31 and $34
million as of Novem ber 30 and December 31,1965) to mitigate the impact on the U.S. gold stock of purchases by foreign countries for gold subscriptions on increased IMF quotas. The United States has a corresponding gold liability to the IMF.
NOTE.—Gold held under earmark at Federal Reserve Banks for foreign and international accounts is not
included in the gold stock of the United States.
Sources: Treasury Department and Board of Governors of the Federal Reserve System.




305

TABLE C-83.—Price changes in international trade, 1957-65
[1958=100]

Area or commodity class

1957

1958

1959

1960

1961

1962

1963

1964

1965
Third
quarter

Unit value indexes by area
Developed areas
Exports
Terms of traded
United States *

103
96

100
100

99
102

100
103

101
104

101
105

102
104

103
104

105
105

Exports
Terms of traded.
Less developed areas

101
96

100
100

100
102

101
101

103
105

102
107

102
105

103
103

106
106

Exports
Terms of trade i
Latin America

104
100

100
100

97
99

98
99

95
97

93
95

95
97

97
97

98
97

Exports
Terms of trade *
Latin America excluding petroleum
Exports
Terms of trade !_

107
105

100
100

95
95

95
96

93
95

91
93

94
97

101
103

3 100
8102

111
109

100
100

94
94

95
96

93
95

91
92

95
97

104
105

3 104
3 106

World export price indexes 4
Primary commodities, total..
Foodstuffs
Coffee, tea, and cocoa..
Cereals
Other agricultural commodities &
Fats, oils, and oilseeds.
Textile fibers
Wool
Minerals
Metal ores.
Nonferrous base metals.
Manufactured goods *.__

106

100

97

97

95

94

100

103

100

103

100

93

91

90

90

103

106

99

103
100

100
100

83
97

77
96

72
98

70
103

73
102

87
105

80
100

113

100

105

107

103

99

103

105

103

105
126
144

100
100
100

100
98
106

94
104
108

97
105
107

89
101
106

95
112
127

98
116
131

105
104
109

103
107

100
100

94
97

93
98

92
100

92
99

92
96

94
104

96
110

111
101

100
100

111
99

114
101

110
102

109
102

110
103

135
104

153
106

* Terms of trade indexes are unit value indexes of exports divided by unit value indexes of imports.
2
Includes foreign trade of Alaska, Hawaii, and Puerto Rico.
3 Data are for second quarter 1965.
4
Data for manufactured goods are unit value indexes.
• Includes nonfood fish and forest products.
NOTE.—Data exclude trade of Eastern Europe and Communist China.
Sources: United Nations and Department of Commerce (Bureau of International Commerce).




306
U.S. GOVERNMENT PRINTING OFFICE: 1966

O—795-983














Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102