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The Economic Report
of the President
TRANSMITTED TO THE CONGRESS

*o-i*

Januafy

1952

Together With a Report to the President
THE ANNUAL ECONOMIC REVIEW

By the

COUNCIL OF ECONOMIC ADVISERS

The Economic Report
of the President
TRANSMITTED TO THE CONGRESS
January 16, 1952

Together With a Report to the President
THE ANNUAL ECONOMIC REVIEW

By the

COUNCIL OF ECONOMIC ADVISERS

UNITED STATES GOVERNMENT PRINTING OFFICE
WASHINGTON : 1952

Additional copies of this report are for sale by the Superintendent of Documents,
U. S. Government Printing Office, Washington 25, D. G.
Price of single copy, 55 cents

(U)

LETTER OF TRANSMITTAL
THE WHITE HOUSE,
Washington, D. C., January 16, 1952.
The Honorable the PRESIDENT OF THE SENATE,
The Honorable the SPEAKER OF THE HOUSE OF REPRESENTATIVES.
SIRS: I am presenting herewith my Economic Report to the Congress,
as required under the Employment Act of 1946.
In preparing this report, I have had the advice and assistance of the
Council of Economic Advisers, members of the Cabinet, and heads of independent agencies.
Together with this report, I am transmitting a report, the Annual Economic Review, January 1952, prepared for me by the Council of Economic
Advisers in accordance with section 4 (c) (2) of the Employment Act
of 1946.
Respectfully,

(in)

Contents
Page

THE ECONOMIC REPORT OF THE PRESIDENT
The Nation's economy grows stronger
How we use our strength
The harder job ahead
The real meaning of economy
Top issues for policy action .
Reaching our objectives for defense strength
Aiding other free nations
Expanding our productive capacity
Supporting civilian strength
Controlling inflation
Requirements for additional taxation
Saving
Credit control .
Price control
Rent control
Wage stabilization
Equality of sacrifice
Summary of legislative recommendations
Summary of economic developments in 1951

1
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13
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24
24
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25

THE ANNUAL ECONOMIC REVIEW, JANUARY 1952 (a report to the
President by the Council of Economic Advisers)

(V)

To the Congress of the United States:
The past year has been marked by great gains in our basic economic
strength. These gains have enabled us to move forward toward our security
objectives with far less strain upon the economy than would otherwise have
been possible.
It is the tragic necessity of our time that we and other peace-loving peoples
must devote so large a part of our resources to building up our military
strength. But it is because we seek peace—a just and lasting peace—that we
have shouldered this burden. If, despite our best efforts, another world conflict should come, the cost would be beyond description. If we succeed
in the effort for peace, our productive ability will enable us to achieve a
material well-being never before known.
This effort for peace finds the people of the United States substantially in
agreement. We all know that we must stand firm against aggression, build
up our defenses, cooperate with other free peoples, and hold the door open
for the fair settlement of international disputes. Our basic international
policy is backed by national unity.
But our foreign policy cannot succeed, if there is excessive division on
domestic matters. Economic issues and international issues are now inseparably connected. It is a fundamental fact that the defense program
itself, and our aid to friendly nations, must be related to the capacity of our
economy. If we overestimated the strength of our economy, we could
weaken our power to resist aggression. If we underestimated its strength,
we could fall short of doing the things that can and must be done to prevent
aggression.
Without continued economic growth, the defense burden could make
us weaker year by year. Without economic stability and control of inflation, the resulting hardships could disastrously affect millions of our
people. Without agreement on economic fundamentals at home, group
conflicts or political conflicts could weaken our ability to withstand the
communist threat.
It is only natural that the scope and operation of a program of this magnitude should evoke some disagreement and criticism. This can be constructive. But it would be most unfortunate if, in those economic matters
which affect our world security, we were divided by narrow partisanship
rather than united by the desire to find the best possible solution.
To agree upon wise policies, it is essential to know and understand the
facts. These facts are available, and they are compelling. They show

that our basic economic strength is greater than it was a year ago. They
point the way to the necessary policies that we should follow. They reveal
why all of us can and need to stand upon common ground.

The Nation's Economy Grows Stronger
The decision to resist aggression in Korea was not the first postwar evidence of American strength which confounded the communist imperialists.
The first and equally important evidence came earlier, when the American
economy after World War II, instead of slipping into a depression, moved
forward to greater strength.
Comparing the year 1947 with the year 1950, before our economy was
greatly affected by the new defense program, civilian employment rose from
58 million to 60 million. Unemployment during those years averaged
about 2.7 million, which was low by previous peacetime standards. Our
total annual output, measured in uniform (1951) prices, rose from about
270 billion dollars to about 300 billion.
This growth in our economy accelerated rapidly after the Korean outbreak. In the year and a half since then, our annual rate of total output,
in terms of 1951 prices, has risen by about 30 billion dollars, or 10 percent,
to 330 billion dollars. By the end of 1951, civilian employment mounted to
about 61 million, and unemployment was about 1.7 million.
Thus, comparing 1947 with the current situation, the annual output of
the economy, in constant prices, has risen by about 60 billion dollars. Total
civilian employment is now about 3 million higher than 4 years ago.
This expansion of our economy has occurred because the American people
have never lost faith in progress. They have rejected the idea that we
have reached, or will ever reach, the last frontiers of our growth. Businessmen, workers, and farmers have dared to produce more and more,
confident that we had the ingenuity and the imagination to utilize this
increasing abundance. They have not been held back by the fear that
we would get into a depression by not knowing how to make use of the
blessing of full production and full employment.
An expanding economy has paid particularly rich dividends, in helping
us to assume new burdens of world responsibility. In 1947, we justly
regarded ourselves as having reached remarkable levels of production
and productivity, compared with any prewar year. Our total output,
measured in 1951 prices, was more than 90 billion dollars higher than in
1939, and more than 100 billion above 1929. But since 1947, the 60billion-dollar increase in annual output has been greater than the total cost
of the security program in 1951. (See chart 1.) The high level of production helped to hold inflation in check during most of 1951, despite a rapidly
rising security program. The growth of production during the last few years
now enables us to carry the security program without undue impairment of

CHART 1

BUILDING OUR STRENGTH
GROSS NATIONAL PRODUCT IN 1951 PRICES
In 1952, we should be able to increase total production by about
5 percent. This will help to meet the needs of the expanding
security program.
100

BILLIONS OF DOLLARS
200

1929

1939

1947

I960
.NATIONAL SECURITY
BOTHER

1951

FEDERAL.STATE, LOCAL \

1952
OBJECTIVE

-^DEVELOPMENT OF NATURAL AND HUMAN RESOURCES.
NOTE: NET FOREIGN INVESTMENT IN ALL YEARS, AND NATIONAL SECURITY IN 1929, NOT SHOWN SEPARATELY
SINCE AMOUNTS ARE RELATIVELY VERY SMALL.

SOURCES: DEPARTMENT OF COMMERCE AND COUNCIL OF ECONOMIC ADVISERS.

the rest of the economy. Despite the defense burden, the past year witnessed
a production of tools, factories, automobiles, housing, household goods, and
food that was very high—and, in some cases, record-breaking.
In the light of this experience, we should hold fast to the principle of
an expanding economy. During 1952, we can and should lift employment by another l1/^ million. Some further reduction in unemployment
may be possible, despite the fact that additional defense-created unemployment in some local areas appears inevitable. We can and should lift our
total output by at least another 5 percent, or by 15 to 20 billion dollars.
We should adopt policies which pave the way for a continuation or acceleration of these productive gains in the years further ahead.
Such progress will have many advantages. It will give us even greater
strength to meet any aggressor. If the world situation stabilizes, so that

we can after 2 or 3 years taper off the defense program, we will then be
producing enough to remove many unpleasant controls without risking
inflation, and to have a higher standard of living than we had even in 1951.
And if we succeed in attaining a durable peace, our expanding economy can
double our standard of living within a generation.
Viewing the next 2 hard years, the productive capacity of the United
States leaves no room for faintheartedness or defeatism about our ability
to carry whatever necessary burdens the international situation may impose
upon us. But we cannot afford to be complacent. In moving ahead confidently to what must be done, we should not overlook the points of weakness
or vulnerability in our economic system. Our resources are bountiful, but
we must make the most of them by careful use.

How We Use Our Strength
Economic strength, in these times, is not only a matter of size. If we
should devote too much of our productive power to building up our standard of living, while the communists build up their armaments, we could
fall far behind despite our immensely greater economic potential. We
must use our strength in the right way.
In a total war, our course would be plain. We would build up our
striking forces as rapidly as possible, and sacrifice all else to that purpose.
In a fully peaceful situation, our course would also be plain. We would
reduce armaments, and devote our full resources to the pursuit of what we
count as the good things of life. But for the time being, and perhaps for
a long time, we must sail a middle course in an uncertain sea.
The whole mobilization effort is based upon the economic strategy of
following this middle course. This means keeping strong all three components of our total strength—military, industrial, and civilian. We are
making allowance for the possibility that war could come suddenly. But
we are also making allowance for the possibility of a long period of international tension without total war. It is a mistake to oversimplify this
problem by calling it a conflict between guns and butter. We must strive
for the amounts and kinds of "guns," of "tools," and of "butter" which will
do most to advance our security and well-being in the long run.
While too slow a defense build-up would imperil the Nation, too rapid
a build-up also has dangers. It could burden us with a mass of out-ofdate weapons, deplete our economy, and weaken public support for a program which may be needed over a long period.
If the build-up of our industrial capacity were too slow, the very foundation of our economic and military strength would be impaired. But if
our industrial build-up were too fast or were made indiscriminately, it

CHART 2

GROWTH IN BASIC CAPACITY
AND PRODUCTION
STEEL
PRODUCTION
MILLIONS OF NET TONS
0
25
50
75

ELECTRIC POWER
GENERATING CAPACITYU
MILLIONS OF KILOWATTS
0
25
50

100

1939 [
1950 F
1952^/1

ALUMINUM
PRIMARY PRODUCTION
MILLIONS OF SHORT TONS
0
.25
.50
.75

1939

PETROLEUM

1.00

1.25

~T~-|

REFINERY CAPACITY
MILLIONS OF BARRELS (DAILY AVERAGE)
0
5
10

1950

1952-2/f

' EXCLUDES INDUSTRIAL.
•2/PROJECTIONS BY DEFENSE PRODUCTION ADMINISTRATION.

SOURCES: AMERICAN IRON AND STEEL INSTITUTE, FEDERAL POWER COMMISSION, AND
DEPARTMENT OF INTERIOR (EXCEPT AS NOTED).

could feed an inflationary boom by placing too heavy a demand upon scarce
materials.
If we maintained civilian consumption at too lush a level under current
world conditions, we would be deceiving ourselves tragically. But excessive cutbacks of civilian supplies and essential public services would weaken
the ultimate source of our collective strength—155 million Americans.
The defense mobilization effort thus far has been based upon this
rounded concept of total national strength for the long pull. Since the
Korean outbreak, the size of our armed forces has more than doubled.
Deliveries of military goods, including military construction, have totaled
20 billion dollars. Nearly 5J/2 million workers are now engaged directly
or indirectly in defense production. Government outlays for the major
national security programs—the military services, atomic energy, stockpiling, military and economic aid abroad, Defense Production Act programs,

civil defense, and merchant marine activities—have increased from an
annual rate of 17 billion dollars to about 45 billion.
While increasing these major security programs, we have also been rapidly building up our productive economic strength. Since the Korean outbreak, private investment in producers' equipment and nonresidential construction has averaged 37 billion dollars a year, compared with a 32-billiondollar rate from 1947 through the middle of 1950, 14 billion in 1939, and
22 billion in 1929, all measured at the 1951 price level. In 1951, steelmaking capacity increased 4 percent and electric power capacity 10 percent,
and the year's steel output of 105 million tons exceeded the previous record
by 9 percent. Aluminum output at present is running 17 percent higher
than during the middle of 1950. (See chart 2.) Additions to farm equipment and larger use of fertilizers have made it possible to set a realistic 1952
agricultural production goal above any previous year's output, and almost
50 percent higher than the Nation's average farm production in the years
before World War II.
This growth in the productive sector of our economy indicates that
neither the size of the military build-up, nor the high level of taxation
enacted to finance that build-up, has repressed business investment initiative. Instead, the problem has been to hold the expansion down to noninflationary proportions.
Despite the great demand for resources to enlarge the military build-up
and to expand the industrial mobilization base, the year and a half since
Korea has witnessed an extremely high level of general civilian supplies.
While per capita consumption in constant dollars declined about 3 percent
from the pre-Korean level to the final quarter of 1951, this was mainly
because of a fall in demand for durable goods. Considering the increase
in consumers' stocks of durable goods since the end of the war, and the
steady improvement in housing accommodations, it seems clear that living
standards have thus far been rising. Compared with 1939, per capita consumption expenditures, after adjustment for price rises, have'increased about
one-third. (See chart 3.)
There have been some shortcomings to set off against these evidences of
progress. Bottlenecks and shortages, and problems of design, have delayed
production of some important military items. Some of the materials expansion programs have not moved forward as rapidly as we had anticipated.
As was to be expected in the first stages of a mobilization effort, the development of smoothly operating administrative machinery took time to accomplish. In some areas of the country, although not generally, dislocations
have resulted in unemployment and business hardship. Furthermore, particularly during the first months after the Korean aggression, a rapid inflationary upsurge caused undue hardship to many families.
Nonetheless, the facts which have been recited make it clear that the
Nation has been gaining steadily and vigorously in economic strength.

CHART 3

GAINS IN LIVING STANDARDS
By almost any measure, the standard of living has improved-markedly
since the pre-World War II period.

CONSUMPTION EXPENDITURES,
PER CAPITA -V
INDEX, 1939 = 100
0
50
100

150
1

FOOD CONSUMPTION,
PER CAPITA U
INDEX, 1939 = 100
0
50

100

1939

1951

HOMES WITH

FARMS WITH
ELECTRICITY
PERCENT OF TOTAL FARMS

ELECTRIC REFRIGERATORS
PERCENT OF TOTAL HOMES
0

100

1939

1951

PASSENGER CARS,
PER HUNDRED PERSONS
NUMBER
0

SCHOOL CONSTRUCTION EXPENDITURES,
PER STUDENT ENROLLED **
INDEX, 1939 = 100
0
50
100

I
1939

1951

•U INDEXES BASED ON EXPENDITURES IN I9SI PRICES. SCHOOL CONSTRUCTION EXPENDITURES FOR 1939 INCLUDE
WORKS PROGRESS ADMINISTRATION PROJECTS, AND ARE ADJUSTED FOR PROBABLE LOWER PRODUCTIVITY.
& END OF YEAR DATA.

SOURCES: DEPARTMENT OF COMMERCE, MCGRAW - HILL PUBLISHING COMPANY, DEPARTMENT OF
AGRICULTURE, FEDERAL SECURITY AGENCY, AND COUNCIL OF ECONOMIC ADVISERS.

Moreover, the utilization of our resources, under the mobilization program,
has kept the three major components of our strength in reasonably balanced
proportion.
But the defense program is still in the build-up stage; the main effort lies
ahead. This will impose new strains upon the economy. It calls for improvement in existing programs, and new adjustments to meet new events.

The Harder Job Ahead
As 1952 opens, we face a period during which the burden of the defense
program will increase greatly—both in absolute terms, and relative to the
total size and strength of the economy. This increasing burden, while
indispensable to our security, will place an additional strain upon our manpower, our physical plant, our natural resources, and our standards of
living. It will inescapably cause Government expenditures to rise greatly,
and, even with the additional taxes I am recommending, it is estimated that
there will be a large deficit this year and a larger one next year. This
deficit, along with the other strains upon the economy, will increase inflationary dangers. We must analyze these strains carefully, and decide how
best to meet them. With sound policies, there is no doubt that we shall
be able to meet them.
Government outlays for the major security programs are estimated to rise
from a current annual rate of 45 billion dollars to almost 65 billion by the
end of this calendar year. As a proportion of total output, the increase will
be from 14 percent to more than 18 percent. These over-all figures do not
fully portray the impact. In 1952, more than a third of the output of the
construction and metalworking industries will be taken for military purposes. Military production and construction will claim more than a fourth
of our copper supply, and half of our aluminum supply.
Though the major expansion will take place this year, the program which
I am submitting will call for a further increase in the rate of security outlays
during calendar 1953. We cannot hope that security program expenditures
will start declining toward a lower rate until 1954.
But the most difficult problems will be within the next 12 months. After
we cross this hurdle, continued expansion of our raw materials base, and
slackening of military requirements for materials, will considerably ease the
strain. In the meantime, however, it will be necessary to curtail the use
of critical materials for many peacetime products. Serious problems will
be faced by some smaller manufacturing firms, unable to convert their
plants to defense production or to find substitute materials.
I want to direct special attention to that part of our security effort which
is aimed at increasing the strength of other free nations. Most of our aid
is going to Western Europe. During the 2 years of the Marshall Plan

prior to the Korean outbreak, industrial production in Western European
countries rose 30 percent. Nevertheless, their recovery was far from complete when they had to undertake heavy new defense burdens. Since June
1950, they have added substantially to their armed forces and have more
than doubled their defense expenditures. While their industrial production
has risen another 15 percent during this period, it still is far below the level
required for defense and for economic stability.
The Western European countries can shoulder only part of their heavier
defense outlays through increased productivity. In addition, cuts must be
made in their domestic consumption, which only recently has been restored
to the prewar levels, and in capital investment, which is needed to build
long-run economic strength. Exports, which are necessary if self-support
is to be achieved, are also being limited. If these countries tried to produce
or buy abroad, solely with their own resources, all the goods needed for
defense, the probable result would be drastic cuts in living standards, intolerable inflation, and grave danger to political stability.
It is only a matter of intelligent self-interest on our part to add something
to the resources of these countries. And it is essential for us to understand
that, whether we make this addition in the form of "military aid" or
"economic aid," the objective and the function are the same: common
security. When we supply military goods, some of the most dangerous cutbacks in European civilian production can be avoided. When we supply
economic assistance, some European productive facilities and foreign exchange are released for defense. The form of aid that best serves the purpose in a particular case is not something which can be decided in the
abstract. It depends upon the changing circumstances in the individual
European countries.
We are also providing aid to the nations in the Near East and Africa,
in Asia and the Pacific, and to the other American Republics. Much of
it is military aid. A somewhat lesser amount—but one which has been
steadily increasing—is being directed to attacking the more general problems resulting from underdevelopment. Chronic poverty now affects the
ability of some of these countries to maintain independence in the face of
threatened aggression or subversion. This calls for a demonstration—by
positive and sustained action by the free nations as a whole—that the
economic aspirations of underdeveloped countries can best be realized in
association with the rest of the free world.
Our reliance on other nations of the free world is not simply a matter
of combined military strength. Our productive potential is vitally dependent on supplies of critical raw materials—particularly metals—coming
from abroad. We are joining with the other free countries in efforts to
encourage the production and achieve a fair distribution of such materials.
In addition, we must undertake in 1952 some other efforts which will
make us stronger for the long pull, even though they will increase immediate

strains. Steelmaking capacity, already above 108 million tons, is to be expanded to more than 120 million by 1954, with related expansions of iron,
coke, and ore-producing facilities. The aluminum program should double
the mid-1950 rate of output by 1954. Electric power capacity is scheduled
to expand 13 percent this year, and a 40-percent expansion by the end of
1954 is proposed. Petroleum refinery capacity is scheduled to expand about
14 percent between now and the end of 1953. These and the other highpriority Government-assisted industrial expansion programs will absorb this
year about a quarter of the supply of copper available for civilian uses, and
about one-third of the civilian supply of steel.
There are also a few public programs which must be continued at fairly
high levels or expanded, because they are essential to supply our defense
requirements and to expand our mobilization base. Federal expenditures
for long-range conservation and development of natural resources must be
adequate to assure maintenance of the resource base, and to prevent the
gradual deterioration of this fundamental segment of our economy. Programs for conservation and development of minerals are being enlarged.
Public electric power projects, which will make up about a fourth of the
30-million-kilowatt total expansion programmed for completion in the
next 3 years, are going forward. Many of these public developments are
multi-purpose hydroelectric projects, which also yield other important benefits. Initial development of certain hydro projects, which will be required
in 4 or more years, must also go forward now.
These various types of defense-related expansion—both military and
civilian—will absorb scarce resources, such as steel and copper, at a much
faster rate than we can expand the supply during the next 12 months or so.
The meaning of this is simple: In order to accomplish what we cannot
afford to do without, we must give up many of the things that we can afford
to do without. It is even more true of 1952 than of 1951 that we cannot
have business as usual, consumer enjoyments as usual, or Government
programs and services as usual.
The demand for vital business expansion means that many nonessential
forms of private investment must be deferred. The total of private investment in construction and producers' equipment, which was close to 50 billion dollars in 1951, should be held in the neighborhood of 42 to 44 billion
dollars in 1952. This will cause some hardships and dislocations, although
we are doing our best to minimize them. But measured against earlier
years, the general level of private investment, even outside of the industrial mobilization base, will be relatively high and profitable. The holding
back of some less essential investment will be helpful immediately by reducing inflationary pressures; and helpful in the long run by creating backlogs
of opportunity for investment when the security program levels off.
The American consumer—which means all Americans—will also have
to relinquish some of the enjoyments which would be possible if the cost

CHART 4

PRODUCTION OF
CONSUMER DURABLE GOODS
CONTRASTED WITH FIRST HALF OF 1950
Fourth quarter 1951 production of major consumer durable goods
was sharply below the first half of I960. For the first quarter
of 1952, the allocations of steel-are only 50 percent of usage
in the first half of 1950.
17
PERCENT OF FIRST HALF isso-

100

4th QUARTER 1951 PRODUCT ON

WASHING MACHINES

1
VACUUM CLEANERS

1
ELECTRIC RANGES

t..
1
j

TELEVISION SETS

RADIOS

i..... '

ii i

PASSENGER CARS

, ( i,,
ELECTRIC
REFRIGERATORS

•
1

l-r1
1

4th QUARTER 1951
^-^STEEL ALLOTMENT
1st QUARTER 1952
"-- STEEL ALLOTMENT

-' BASE PERIOD FOR CALCULATION OF STEEL ALLOTMENT.
NOTE: PRODUCTION DATA BASED ON DAILY AVERAGES. BASE PERIOD OUTPUT FOR
REPORTED OUTPUT DUE TO ADJUSTMENTS FOR WORK STOPPAGE.

PASSENGER

CARS DIFFERS FROM

SOURCES: VARIOUS TRADE ASSOCIATIONS AND NATIONAL PRODUCTION AUTHORITY.

of security were not so high. The over-all level of consumer supplies,
particularly food and clothing, should remain at least as high as last year.
Such items as food and clothing do not compete sharply with the defense
program or with the industrial build-up. But housing starts, which were
1.4 million in 1950 and about 1.1 million in 1951, will have to be reduced
to 850,000 units or less. And to reach even this number will require substantial economies in the use of scarce materials. Less than 4 million new
passenger cars will be made, compared with 5.3 million last year. Household
appliances, radios, and television sets must also be cut back from recent
levels. (See chart 4.) Current production of most metal-using durables
will be below the level of the 1947-49 period. But, with very high existing
stocks of these durables in the hands of consumers, supplies will be ample to
meet all essential needs.
II
977891—52-

During a national emergency, when business and consumers are being
called upon for larger sacrifices, we cannot expect to have normal peacetime
Government services. This presents a difficult problem, because world
conditions since 1940 have required us to hold many types of outlays below
the needs of an expanding economy and a growing population. For example, measured in uniform prices, construction expenditures for both highways and natural resources, excluding atomic energy, were considerably
larger in 1939 than in any year since. New public construction expenditures
for these and other development programs, including education, health,
and housing, have fallen from about 3 percent of the gross national product
in 1939 to less than 2 percent in 1951. After World War II, the American
people properly looked to their Federal, State, and local governments to
resume certain programs and services devoted to their well-being. We were
able to make substantial progress for some time, but in the present defense
emergency we have necessarily had to cut down again on many government programs.
We must continue to hold back on the construction of hospitals. Total
construction expenditures for schools, although at record levels, must be
held below the real need. New natural resource development projects,
including flood control, navigation, and reclamation projects, are being postponed unless they are essential because of electric power or other urgently
needed features. Low rent public housing starts in 1952, as in 1951, will
be well below the levels contemplated in recent housing legislation.
The postponement of these programs is unfortunate. But like deferred
business investment, it may have some good effects later on. When the
defense program levels off, the resumption of these programs can help to
take up any slack.
The year ahead, and 1953 also, will pose more difficult problems in the
management of the fiscal affairs of the Federal Government than any we
have faced since World War II. Total budget expenditures by the end of
the fiscal year 1953, ending on June 30, 1953, will be running at an annual
rate between 85 and 90 billion dollars. The security effort, together with
veterans' services and benefits, and interest on the national debt—both, in
the main, resulting from World War II—will comprise roughly 85 percent
of total expenditures in the fiscal year 1953. The remainder reflects persistent efforts to bring other outlays to the lowest point consistent with
recognition that a nation of 155 million people cannot survive through
armament alone.
For the fiscal year 1952, the total of Federal expenditures is estimated at
approximately 71 billion dollars, and receipts at about 63 billion. While
the resulting deficit is undesirable, it has not prevented effective economic
stabilization during the past 10 months. But with expenditures for security
programs rising sharply, a dangerously large deficit of close to twice that
size is estimated for the fiscal year 1953, if there is no additional taxation.

Even with the additional taxes that I am recommending, the deficit will
remain large, until the security program has passed its peak and tapers off,
as we hope it can do in about 2 or 3 years. In this period, substantial
problems will also arise in connection with the management of the national
debt, and the financing and refinancing operations of the Treasury.
Rising expenditures and rising deficits add to inflationary pressures.
The expansion of defense production will cause the spendable incomes of
consumers to rise during the year more than civilian supplies. Moreover,
price and wage movements, responsive to the decisions of business and
labor, could add fuel to the inflationary fires. Ample funds will be available to most businessmen to engage in excessive inventory buying, if they
should desire to do so. There are large reserves of liquid savings in the
hands of consumers and business.
Looking at the situation as a whole, however, the essential security program neither imposes excessive strains upon the economy, nor makes it
impossible to contain inflation. If we realize, as fully as possible, our
productive potential, business investment and real consumption, while curtailed, will still be high, except when measured against the last 2 years—
the highest in our history. Certainly these are not large sacrifices, in
view of the dangers against which we must protect ourselves. Further, if
the people as a whole are willing to avoid excesses and extravagances, the
recent containment of inflation can be made more effective during this
year. We contained inflation, under more difficult circumstances, during
World War II, although we did not do a good enough job of forestalling
postwar inflation. We must learn from past mistakes as well as from past
successes.

The Real Meaning of Economy
True economy is desirable at all times. It is imperative during a national
emergency. But, as shown by the foregoing review of events since 1947,
true economy means conserving and expanding the economic strength of
the Nation as a whole. It can, therefore, be achieved only by recognizing
all the basic factors in that strength—and not neglecting any of them.
When we look at the whole picture, we find that true economy embraces
two equally important elements: The first is the avoidance of unnecessary
outlays; but the second, and equally important, is the making of necessary
outlays. A nation which spent its resources foolishly would dissipate its
strength. But a nation which was too timid or miserly in applying its
resources to urgent needs would fail to build up its strength.
We must exert every effort—through business action, consumer action,
and government action—to avoid unnecessary outlays. But we cannot by
this method alone achieve world peace or a highly productive economy.

The main reason for not spending on the things that we do not need, is
to afford the things that we do need.
We must hold defense outlays to the lowest levels consistent with safeguarding our national security. This means constant weeding out of
waste. But it would be false economy to cut the defense program below
the requirements for our safety.
Our economic and military aid to free nations banded with us against
aggression must be kept under vigilant and continuous review. It must
be coupled with assurance that the countries receiving it are doing their
full share. But it would be false economy, after all our efforts since World
War II to help rebuild economic life and maintain political stability in
war-damaged countries, to reverse the process by weakening the aid program. We must recognize that strength or weakness at any point in the
free world adds to strength or weakness at every point. It would not be
true economy to spend a dollar for the common defense on one side of the
Atlantic, when it would contribute more to the common defense if spent
on the other side of the Atlantic.
There has recently been growing appreciation in the United States that
the defense programs of the countries of Western Europe should not move
so fast as to reduce standards of living below a level consistent with political
stability and immunity against internal subversion. Some adjustments
are now being made to take account of this fact. But it would not be true
economy, because some partners in a joint enterprise have not the resources
to do all that would be desirable, for the strongest partner to relax from
doing its best.
If our own security efforts, through their demand upon raw materials
and their effect upon world prices, are imposing an excessive burden upon
other nations, there are right and wrong ways to meet this problem. We
are lessening the pressures upon prices and raw materials, not by relaxing
our security program, but rather by cutting somewhat into nonessential
consumption and investment; by holding down domestic inflation through
an effective anti-inflationary program; and by making cooperative efforts
to share scarce materials and to stabilize international prices. This is the
right approach. The proposal to solve the whole problem by drastically
cutting the security effort everywhere is false economy—because the nub
of the problem is to maintain a mutual security program which in total is
adequate to the danger confronting us. It would be superficially easy—but
disastrous—to reduce the defense strain by torpedoing the defense program.
We must cut nonessential spending, both private and public, so that,
unnecessary shortages and unnecessary inflation do not imperil the defense
effort. But it would be false economy to repress the types of private and
public investment which are building up our essential productive power.
It would be false economy to set revenues at a far lower level than the
Nation can well support under current circumstances, and then to say

that the defense garment must be cut to the revenue cloth. A balanced
budget, achieved the easy way by sacrificing the defense program and
putting the balance of world power in the hands of the Kremlin, would be
false economy. The sound course in these times is to base outlays upon
essential national needs, and then obtain the funds to cover these needs by
current taxation insofar as possible. But if the only choice is either to run a
deficit of limited size and duration in the Federal budget, or to run a deficit
in our national security effort, by far the lesser hazard now is to run a
deficit in the budget.
There is also a superficially easy way, and a genuinely sound way, to
combat inflation. The superficially easy way would be to avoid inflation
by reducing the security program below safe levels. The sound way is to
achieve and maintain a strong and vigorous anti-inflationary program.

Top Issues for Policy Action
Policies to promote the success of the security program, and to ease the
burden upon the economy, were recommended to the Congress in 1950
and 1951, and, with some important omissions, were adopted. We must
apply these policies with maximum effectiveness. To do this, some legislative changes and additions are now desirable.
Reaching our objectives for defense strength
The military program which I am submitting to the Congress calls for
steady increases in military output during the next 18 months, and for continuance at a high level for at least an additional 12 months. Meeting these
production schedules will require for at least two more years the authority
under the Defense Production Act for those controls which promptly channel
scarce materials and tools into defense production. I urge the Congress
to adhere to the sound policy it followed, in the original act, of not encumbering it with detailed prescriptions concerning how materials should be
distributed. The administering agencies need to exercise flexibility and
discretion, based upon up-to-the-minute study, in order to avoid or remedy
hardships upon business and workers whenever this can be done without
hurting the defense program.
Under the present law, we are administering a system of priorities and
allocations to channel scarce materials into the most essential uses. Stockpiles of strategic materials are being built up. While shortages of materials
are bound to cause many inconveniences and some hardships, the Controlled
Materials Plan operates to reduce these, and to promote the more important
types of production while reducing the less important.
The great expansion of productive facilities for defense makes it essential
that there be the widest possible distribution of defense business, with
particular emphasis upon maintenance of free competitive enterprise.

The Government has for a long time, particularly through the leadership
of the Department of Commerce, assisted small business in playing its
significant role in the economy. The Reconstruction Finance Corporation
has also been engaged in this effort. These services have now been adapted
to the defense effort. In addition, the Department of Defense and the
mobilization agencies have in a variety of ways promoted the placement
of contracts wherever feasible with small businesses. This is important not
only to obtain a faster build-up of defense output, but also to avoid unnecessary unemployment and distress, and to help preserve the competitive
vigor of our economy. The Small Defense Plants Administration has recently been established to coordinate Government policies and programs
in behalf of small business, and to expand the role of small plants in defense
and essential civilian production. This part of the Government's economic
program is one of great urgency. It is most important that the Congress
make available the necessary funds for the Small Defense Plants Administration.
Aiding other free nations
We must maintain a realistic attitude toward foreign aid. Mindful of
the limitations of our own economy, we must also be mindful that some
other countries are confronted by economic and political strains far more
serious than ours. In the final analysis, the free world must be made more
secure if we are to be secure.
Our foreign policy objectives require continued provision of both military
and economic aid to free nations. Both types of aid are necessary. Our
North Atlantic Treaty partners, in particular, are undertaking heavier
burdens, whether they rebuild their defenses by buying military equipment
from other countries, or by cutting civilian production to produce military
goods themselves.
These countries are making great efforts to shoulder these burdens
through their own productive efforts. This requires, among other things,
that they have outlets for some of the goods which they can produce and
want to exchange for other goods which they need to import. In this connection, I again recommend the repeal of Section 104 of the Defense Production Act, which restricts our imports of certain goods which the European
and other countries have available for export to us on mutually advantageous
terms.
It is necessary to encourage the efforts which underdeveloped countries
are making to further their own economic development, and to support
these efforts by providing as much technical and economic assistance as
we can afford and as they can effectively use for that purpose.
We shall continue to share scarce capital goods by providing priority and
other supply assistance for the export of such goods for essential purposes
abroad. We shall also continue to participate actively in international ar-

rangements to encourage production and equitable distribution of scarce raw
materials in the free world. Such measures help to expand the supply of
goods and to restrain dangerous inflationary forces.
Expanding our productive capacity
Building up our productive capacity is a many-sided operation. The
mainspring of this expansion is private initiative and investment. But the
Government has had to exercise important responsibilities. It has had to
program and guide expansions in various key industries. This has been
effected by materials allocations, and by selective aids and inducements such
as tax amortization, loans, loan guarantees, and purchase agreements. The
authority provided by the Defense Production Act and related legislation
to use these aids to expand production has been very valuable, and will
continue to be necessary.
A number of public programs play an important role in expanding the
total productive capacity of the economy. Roads, other transport facilities,
public power developments, and pilot plant research in metals and fuels,
are illustrations. The Government is equipping and building certain facilities for the production of war materiel, and is carrying out a large atomic
energy program. To support needed expansion of production, certain
urgently needed development projects, particularly the St. Lawrence seaway and power project, should be started now.
The report of the Materials Policy Commission, which I appointed a
year ago, will be finished shortly, and should provide long-range policy
guides for increasing and improving supplies of raw materials.
In general, the labor force thus far has proved adequate to meet the needs
of increased production and a growing military establishment. But in
certain categories of skill, and in certain industrial and farm areas, shortages
exist. Appropriate measures are being taken to encourage training, recruitment, and the movement of workers when necessary, and to promote efficient use of the labor supply by employers. Manpower problems will probably grow more difficult, as defense production approaches its maximum
level. A serious need has already appeared for additional housing and
community facilities and services in defense areas.
While there are labor shortages in some areas, there are other areas where
localized but serious unemployment exists, particularly in centers of automobile production. Strong efforts are being made to find ways of reducing
this unemployment, including the placing of defense contracts in labor
surplus areas.
Experience has proved that our basic labor-management statute hampers
the maintenance of the sound and healthy labor relations and the uninterrupted production which are so essential to a sustained mobilization effort.
The law should be promptly revised to accord the fair treatment to both
labor and management which is vital to industrial harmony and steady
production.

Farmers are now being asked to produce more than ever before. The
"sliding scale" in existing price support legislation has aroused concern in
the minds of many farmers, who fear that their cooperation in expanding
production to meet the present emergency might later result in serious losses
to them. The Government's price support operations obviously should further attainment of production objectives, and they should not penalize producers for their full and patriotic cooperation with the agricultural program.
I therefore recommend that the sliding scale provisions of the present
agricultural legislation be repealed for this purpose.
We need to strengthen the agricultural program by finding a more effective way of supporting the price of perishable farm commodities. One
method is by direct payments to farmers. This and other methods are now
being studied by the Congress. I hope that the Congress will provide legislation authorizing a sound and workable program for supporting prices
of these perishables.
Price supports in this emergency period must, of course, continue to be
administered in a manner which achieves a proper balance between the
goals of adequate production and of economic stabilization. The Secretary
of Agriculture and the Director of Price Stabilization will continue to work
together toward this end.
In addition, I recommend that the Congress enact legislation to make
clear the Government's policy of encouraging the organization and sound
growth of cooperatives. The tax bill which was passed last year included
a tax on the unallocated reserves of farmer cooperatives. This should be
modified in such a way that newly-organized cooperatives will not be subject to it, until they have had a limited period of years in which to establish
themselves. Farmers are marketing their products and purchasing their
supplies through more than 10,000 cooperatives, with an estimated membership of more than 6*/2 million. Their organization in this form of business
has had a healthy effect on the rural economy, and it is especially important
to encourage this form of self-help when farmers are being asked to do
a record job of production.
Supporting civilian strength
Faced with the necessity of maintaining a large national security program
for an indefinitely long period, we should not lose sight of the importance
of human productiveness and morale. These depend upon adequate supplies of food, shelter, and clothing, and adequate education, health services,
and social security. However, for the next year or so, while the defense
program is placing such heavy demands upon materials and the labor force,
we must recognize that only limited progress can be made in this direction.
Some increase in food and clothing can be achieved without adding to the
demand for scarce materials. On the other hand, many types of civilian
metal-using output will have to be curtailed further, because of competing
higher priority uses for certain metals, notably copper and steel. While

housing also must be curtailed, a sufficient quantity should be built this year
to take care of the most essential needs.
In education, health, and social security programs, we must continue to
be highly selective, deferring improvements and extensions not clearly necessary now in support of the total defense effort. Education of children,
however, cannot be postponed, nor should health standards be allowed to
fall. I recommend a program of general Federal aid to help meet teaching
and other school operating costs, and a more adequate program of Federal
aid for school construction and operation in critical defense areas.
To meet urgent needs in the health field, programs for Federal aid to
medical education and the strengthening of local public health services
should be enacted promptly. I have recently appointed a Commission on
the Health Needs of the Nation, composed of professional and lay persons,
which will make an objective study of vital health problems, including the
provision of adequate health care to all our people at prices they can afford
to pay.
Certain extensions and changes in the old-age and survivors insurance
program, in line with longer-range objectives, would, if undertaken promptly,
yield the additional advantage of helping those groups who have been hit
hardest by past inflation. Raising the level of benefit payments is especially
desirable, and other improvements should include raising the taxable wage
base, extending the coverage to farmers and certain other groups, and
providing for permanent and total disability.
To provide more adequate protection against unemployment, I recommend the enactment of legislation to strengthen the present Federal-State
unemployment insurance system, along the lines suggested in my message
to the Congress on April 6, 1950. Legislation for this purpose is now pending before the Congress, providing specifically for extension of coverage to
additional workers, establishment of nation-wide minimum levels for
amounts and duration of unemployment benefits, establishment of adequate
methods to assure payment of benefits to workers who move from one State
to another, and improvements in administration of the system.
Controlling inflation
In determining the national economic policies necessary to maintain stability in the economy in the coming year, the basic fact to take into consideration is that the progress of the security program will involve a steady
increase in the requirements of the Government for goods and services.
The increase will bring Government demand at the end of the year to a
level 20 billion dollars higher than the current annual rate of Government
purchases for this purpose, and will entail a corresponding increase in the
amount of labor, materials, and other productive resources diverted from
the civilian economy to the security program. At the same time, the security program will place large additional buying power in the hands of
businessmen and consumers.

Consumer spending is the most uncertain factor determining the general
inflationary outlook for 1952. While it is possible to make a reasonably
satisfactory estimate of the volume of new business investment in plant
and equipment this year, since it will be limited by the allocation of scarce
materials, there is no certainty at all in any estimate of consumer spending.
For the last three quarters of 1951, consumers have voluntarily elected to
buy at a level no higher, in total physical units, than in the period before the
initial attack in Korea. Instead, they have added to their personal saving
much of the large increases which have taken place since that time in their
income after taxes.
The exceptionally high rate of personal saving has not been due to any
general lack of goods available to consumers. Even in the case of durable
goods which have been cut back in production by allocation orders, such as
automobiles and major household appliances, no market pressure has been
noticed since the first quarter of 1951. Textiles and some other types of
soft goods have been produced at a rate well below capacity, not on account
of any shortage of labor or materials, but because consumer demand has
fallen off in many lines. Manufacturers and retailers have been struggling
with overlarge inventories, which in many cases have not yet been brought
down to the levels they desire.
It is impossible to foresee how long this extraordinarily high level of
personal saving will continue. It is not even certain that it may not be
raised. But national economic policy may safely be based upon these
assumptions: the progress of the security program will bring an increase in
personal incomes and enlarge the potential market demand of consumers;
the longer consumers elect to save rather than to buy goods, the larger will
become the accumulated fund of liquid assets; and the fund of liquid assets,
when coupled with the higher current income of consumers, will add greatly
to the potential consumer demand, and may increasingly tend to turn
potential demand into abnormally active buying.
This is a precarious situation, and any day some combination of events
could cause consumers to reverse the prudent attitude of recent months.
It is essential that we maintain and perfect the policies which will effectively
curb such an inflationary outburst.
The effective policies open to us for use if private demand begins again
to expand rapidly are those which enlarge output, those which limit the
size of demand itself, and those which prevent surging demand from
causing price increases. Since consumer output cannot be increased very
much because labor and materials must be diverted to defense-related production, primary reliance must be upon those measures which limit demand
or restrain its effect upon prices. Taxation, by a very direct process, reduces disposable income. An increase in voluntary saving reduces spending. Restrictive credit policy limits the expansion of business and consumer

buying. Allocation and limitation orders prevent businessmen from piling
up inventories again, and from stepping up their investment plans in an
effort to exploit the larger markets they envisage when there is a great
market boom. Price and wage controls are directed both to restraining
income increases, and to holding the price line against unavoidable increases
in demand.
Requirements for additional taxation. Adequate taxation is essential,
both to assure a sound fiscal position and to maintain economic stability.
If the added Government spending for the defense program is not to lead
to price inflation, private spending by consumers and business must be held
in check. Taxation pays for the Government spending, and at the same
time reduces funds available for private spending.
Three major tax laws have been enacted during the past 18 months.
They have increased the annual yield of the Federal tax system by about
15 billion dollars, or approximately by one-third. This is a good record.
But it falls short of the amount of additional revenue needed.
Early last year, I asked for a minimum tax program to yield 10 billion
dollars or more. The bill enacted by the Congress came late in the calendar
year, added only about one-half of this amount, and included a number of
provisions which lost the Government revenue and reduced the equity of
the tax system. A budget deficit of about 8 billion dollars is expected for
the current fiscal year ending June 30, 1952. This is expected to be followed by a budget deficit approaching twice this size for the fiscal year 1953,
unless further vigorous action to raise taxes is taken very soon.
In view of this fiscal outlook, I urgently recommend that the Congress,
as a minimum, provide additional revenues in the amount by which last year's
legislation fell short of my recommendations. This can be achieved by eliminating loopholes and special privileges, and by some tax rate increases.
While new tax legislation along these lines could scarcely affect the deficit
for the current fiscal year, and would not restore a balanced budget in the
fiscal year 1953, it would make a major contribution to the Government's
budgetary position and to the stabilization program. The additional tax
revenue will help to minimize borrowing by the Government from the banks.
Borrowing from banks, more than borrowing from any other source, tends
to enlarge the spending stream and thus to increase inflationary pressures.
With the tax system strengthened as I recommend, there should be sufficient revenue, under the security program now planned, to cover fully the
Government's expenditures after the peak of the defense build-up has been
passed, and defense expenditures have been adjusted downward. It is
important that we return, as quickly as possible during the period of defense
mobilization, to a current pay-as-we-go basis for Government financing.
Saving. If we are to hold down private spending to the level of available
supply, while the national security programs are expanding, it is necessary

also to promote a high level of saving. Dollars of income which are not
spent by consumers or businesses do not add to inflationary demand.
During most of 1951, personal saving was at an unusually high rate.
Relatively stable prices encouraged increased saving, and increased saving
helped to stabilize prices. We must continue to maintain conditions which
will favor both saving and stable prices.
Increasing the investment of private savings in Government securities will
reduce the need for the Government to borrow from banks for the purpose
of refunding maturing security issues and financing deficits. Buying United
States savings bonds and other Government securities is a good method of
saving, and it is also a good method of supplying the Government's borrowing requirements in a noninflationary manner. Holders of maturing Series E
savings bonds now have the privilege of maintaining their investment in
these bonds for another 10 years, during which the bonds will continue to
earn interest at the same over-all rate. The efforts of the Treasury and
other Government agencies will continue to be directed toward encouraging
individuals to buy and hold savings bonds and other Government securities.
Credit control. Since private borrowing can augment the spending
power of individuals and businesses, and thus add funds to the aggregate
spending stream, credit control is also being used to help stabilize the
economy. This type of control cannot be used indiscriminately, since credit
plays a vital role in the functioning and growth of the economy, especially
now when rapid expansion in certain vital sectors of the economy is necessary.
Periodic reviews are being made, at my request, of the policies of the
Government lending agencies, to make certain that they promote the
objectives of the defense effort by restraining less essential lending. The
Voluntary Credit Restraint Program, which operates under the sponsorship
of the Board of Governors of the Federal Reserve System, continues to be
helpful in discouraging loans for less essential purposes, although continuous
care needs to be exercised not to discourage activities important for a strong
defense economy.
Selective credit controls are particularly useful under current conditions,
because they reduce borrowing and spending for some of the less necessary
kinds of goods, particularly those which compete for scarce materials. The
Board of Governors of the Federal Reserve System is using its powers under
the Defense Production Act to limit borrowing for the purchase of durable
consumers' goods and new housing. The Congress last year reduced the
authority to control these forms of credit. I recommend restoration of full
administrative discretion in setting these credit terms.
During the months ahead, we may face considerable pressure for excessive expansion of bank credit. I repeat my earlier recommendations that
the powers of the Board of Governors of the Federal Reserve System to
impose reserve requirements be enlarged.
A related problem is control of margins for trading on commodity ex-

changes. The Congress has not acted upon the recommendation that the
Secretary of Agriculture be authorized to regulate margins, in order to
head off excessive speculative trading on the commodity exchanges.
Fortunately, we have had no runaway commodity markets recently, but it is
desirable to grant this authority in advance of any such situation.
Price control. The relative stability of prices during most of 1951 was encouraging. But this does not mean that we can now afford to relax price
controls. In many important areas, prices are straining at the ceilings.
In others, softness exists which cannot be counted on to persist for long.
Greater pressures loom ahead. At this stage of the mobilization program, it
is more prudent to strengthen controls than to weaken them.
We must continue the effort to hold the price line. Prices and profits are,
in general, high enough to provide ample incentives to producers, and to
permit considerable absorption of cost increases. The Office of Price
Stabilization has made great progress during the past year toward a balanced price structure which can be held firmly. It is developing simple,
enforceable regulations to cover individual industries and commodities.
But if we are to hold the price line, adequate legislative authority must
be granted. When the Defense Production Act was renewed last summer,
the power to control prices, instead of being strengthened, was seriously
weakened.
One weakening amendment permits any producer or seller of services,
regardless of his need, to pass on all increases in all costs incurred from the
first half of 1950 to July 26, 1951.
Another weakening amendment requires the maintenance of customary
percentage margins for distributors, thus virtually guaranteeing that every
dollar in cost increase will become much more than a dollar in the price
paid by the consumer.
Still another weakening amendment forbids the establishment of slaughtering quotas. Slaughtering quotas were a strong bulwark of the beef ceilings
by providing a fair distribution of the available supply of cattle among
slaughterers and areas, thus helping to avoid black markets in meat. Last
fall, this amendment upset the distribution pattern, forced very high cattle
prices, and endangered the continuance of the beef ceilings. Temporarily,
the situation has improved, but we cannot afford to take another chance.
To achieve our stabilization objectives, these defects in price control legislation should be corrected and the law should be strengthened when it is
extended. We cannot afford to gamble further with inflation.
Rent control. Although rent controls cover only a part of the total rental
housing in the country, they are of great importance in stabilizing rents in
many major industrial areas, and should be continued. Vigorous use is
being made of the authority provided last July by the Congress to reinstitute
rent controls, where necessary, in critical defense housing areas, including
areas around military posts. Thus far, full rent control has been, or is about

to be, reimposed in 96 of these areas, and will be reimposed in other areas
as needed.
Wage stabilization. Wage stabilization, like price control, cuts the inflationary spiral and limits the rise of prices and costs, and should be continued.
It also helps to prevent buying power from rising too far above the available
supply of civilian goods. The policies of the Wage Stabilization Board are
designed to put a brake upon excessive wage adjustments, while at the same
time recognizing that some adjustments in a free and dynamic economy are
essential from the viewpoint both of equity and of incentives. Adjustments
to take account of increases in the cost of living are a matter of simple
equity, because price inflation is not a fair way to impose the burden of
national defense. The fair way to impose the burden of national defense
is by taxation and other restraints which can be equitably imposed. Wage
adjustments to allow for increases in productivity, if carefully limited
and firmly administered, can provide incentives which outweigh any possible
inflationary effect. There are a few other specialized problems with which
the Wage Stabilization Board must deal.
To avoid inflation, we must maintain a firm price policy and a firm wage
policy throughout the peak of the defense effort, and we must maintain a
fair relationship between the two.
Equality of sacrifice
Where sacrifices are necessary—and many are—they must be equitably
imposed, so as not to inflict public hardship in order to support private
gain. That is a main purpose of a strong anti-inflation program. Special
attention is also being directed toward the problems of small business and
those who are unemployed in local areas, so that a limited segment of the
population shall not be made to bear an excessive part of the burden of
national defense.
The year 1952 is not going to be an easy year for the economy. It is
going to be a year of strain. We must expect this, and prepare to bear
some inconveniences and hardships. For most of us, the hardships will be
minor. There will be plenty of food and other essential commodities, and
the highest civilian employment in our history. As the economy becomes
adjusted to the new conditions and grows in size, and especially when defense
expenditures decline, we may confidently look forward to the relaxation
and removal of many kinds of controls and restrictions. In the meantime,
all of us must join in the vast effort to safeguard our national security.

Summary of Legislative Recommendations
I summarize below the legislative recommendations contained in this
Economic Report, to promote the defense effort, strengthen the economy,
and maintain economic stability.

1. Renew the Defense Production Act for two more years, and strengthen
its provisions, particularly those relating to production expansion and to
the control of prices and credit.
2. Provide continued military and economic aid to free nations; and, as a
step toward removing^ trade barriers, repeal Section 104 of the Defense
Production Act, which restricts our imports of certain goods which European
and other countries could export to us on mutually advantageous terms.
3. Aid small business by providing the necessary funds for the Small
Defense Plants Administration.
4. Provide for certain urgently needed development projects, particularly the St. Lawrence seaway and power project.
5. Provide for the construction of needed housing and community facilities in defense areas.
6. Revise the basic legislation concerning labor-management relations,
so that it will not hamper sound and healthy labor relations and uninterrupted production.
7. Repeal the sliding scale provisions in existing agricultural price support legislation; provide a workable support program for perishable commodities; and modify the tax on unallocated reserves of farmer cooperatives.
8. Provide at least enough additional revenues to reach the revenue goal
proposed last year, by eliminating loopholes and special privileges, and by
tax rate increases.
9. Provide powers to the Board of Governors of the Federal Reserve System to impose additional bank reserve requirements; and provide authority to control margins for trading on commodity exchanges.
10. Raise the level of benefit payments, and make other improvements,
in our system of old-age and survivors insurance; and strengthen the
Federal-State unemployment insurance system.
11. Authorize Federal aid to help meet school operating costs, and
increase aid for school construction and operation in critical defense areas.
12. Authorize Federal aid to assist medical education, and provide for
strengthening local public health services.

Summary of Economic Developments in 1951
Government outlays for national security programs almost doubled during 1951. In the fourth quarter, these outlays were running at an annual
rate of 45 billion dollars, compared* with 24 billion a year earlier. They
represented 14 percent of the total output of goods and services, compared
with 8 percent at the end of 1950. The impact was much greater in some

industries. Currently, more than a quarter of the output of the metalworking and construction industries is being taken for defense.
Production of goods and services (gross national product in 1951 prices)
was about 327 billion dollars in 1951, or 8 percent higher than the 1950
output of about 300 billion dollars. (See chart 5.) In the fourth quarter of
1951, total production reached an annual rate of about 330 billion dollars,
a gain of 5 percent over total output in the fourth quarter of 1950. The
bulk of the increase took place during the first half of 1951; in the second
half, total output was practically stable.
Industrial production fluctuated within a narrow range through most of
1951. In December, it was at the same level as a year earlier, and 22
percent higher than in December 1949. Defense and defense-supporting
activities continued to increase. The output of consumer goods declined,
because of materials cutbacks and sagging demand.
Agricultural production, despite adverse weather developments in the
fall, was near the previous record year. Average civilian food consumption
was slightly above the pre-Korean level, while we met the food requirements
of a,n expanded military force.
Employment of civilians at the end of 1951 was 61 million, the same as
the average level for the year. This was about 1 million higher than in
1950, although the civilian labor force was 200,000 less because of the rapid
increase in the armed forces.
Nonagricultural employment averaged 54 million, and was 1J/2 million
higher than in 1950. The largest increases were in the industries associated
directly or indirectly with defense production, which now engage 5J/2
million persons, compared with 2 million at the outbreak of hostilities in
Korea.
Agricultural employment continued its long-run decline, amounting in
1951 to about 7 million, or 450,000 less than in 1950.
The workweek, which had averaged more than 41 hours in manufacturing industries in the last half of 1950, dropped slightly during the first half
of 1951, and averaged almost 40J/2 hours during the second half. The
workweek expanded in defense industries, while it declined somewhat in
the consumer goods industries.
Unemployment decreased from 2.2 million persons, or 3.6 percent of the
civilian labor force, at the end of 1950, to 1.7 million, or about 2.7 percent,
at the close of 1951. However, the impact of materials shortages and sagging
demand for textiles and other consumer goods has increased unemployment
in a number of areas.
Work stoppages resulted in less loss of man-days of labor than in any comparable postwar period. Less than one-fourth of 1 percent of total working
time was lost by strikes.
Prices were relatively stable during most of 1951, in sharp contrast to the
violent waves of general price increases which marked the second half of

CHART 5

ECONOMIC INDICATORS
CHANGES FROM 1950 TO 1951
PERCE NTAGE CHANGE

+ 10

PERCENTAGE CHANGE

- EMPLOYMENT

P7773

+ 10

WZ\

yy/;

V77*

-10

-40

-50

+ 30

+ 20

+ 30

+ 10

PRODUCTION

888
+ 20

11 1 1

S B -

+ 10

EQUIPMENT
(NONFARM)

-10

RESIDENTIAL
CONSTRUCTION

-20

+ 30

INCOME
+ 20 -

+ 20

+ 10

0
TAX

+20

+ 20

PRICFS
+ 10

..,.„.

1 ! ij n * •
i

ALL
COMMODITIES

FARM
PRODUCTS

SOURCE: APPENDIX B.

977891—52

FOODS

fm,

INDUSTRIAL
ALL
(OTHER THAN FARM
ITEMS
PRODUCTS AND FOODS)

FOOD

|ri

+ 10

1950, and which were quieted after the imposition of the general price and
wage freeze late in January.
Wholesale prices, which had advanced almost 17 percent between the
outbreak of the Korean aggression and the general freeze, then declined
3 percent by the end of the year. The drops took place mainly in some farm
commodities, textiles, hides and leather, and fats and oils.
Consumers' prices, which had risen 8 percent from the Korean aggression to the imposition of general price controls, continued to creep upward,
advancing another 2.6 percent between February and November 1951.
The largest increases have occurred where controls, under the law, could
be imposed only partially or not at all.
Wages rose during 1951, although at a much lower rate than in the second
half of 1950. Wages and salaries were at an annual rate of 174.6 billion
dollars in the fourth quarter of 1951, contrasted with 157.9 billion a year
earlier. The rise was greater in the durable goods industries than in nondurables. Average weekly earnings advanced proportionately less than the
increase in hourly earnings, because of the decline in working hours. In
manufacturing, average weekly earnings rose from $62.23 in November
1950 to $65.25 in November 1951, a rise of 5 percent.
Corporate profits before taxes in 1951 were the highest on record, reaching
an estimated 44.8 billion dollars. The previous peak was 41.4 billion
reached in 1950. However, because of lower sales and prices in many
industries, profits declined substantially after the first quarter.
Corporate profits after taxes were much lower in 1951 than in 1950,
because of the higher tax rates. In 1951, they were an estimated 18.1 billion
dollars, compared with 22.8 billion in the peak year 1950.
Unincorporated business and professional incomes for the year were 23.6
billion dollars, compared with 22.3 billion in 1950. After rising sharply in
the first quarter of the year, they declined substantially until the fourth
quarter, when it is estimated that they again rose.
Farm income in 1951 was 17.0 billion dollars, compared with 13.7 billion
in 1950. It rose slowly throughout the year, reaching a level of 18.0 billion
in the final quarter—2.2 billion higher than the fourth quarter of 1950.
• Personal income in the aggregate kept growing in 1951, although at a
slower rate than in 1950. For the year as a whole, it was 251.3 billion
dollars, compared with 224.7 billion in 1950. In the fourth quarter, personal income was at an annual rate of 258 billion dollars, compared with
238 billion a year earlier. Despite increased personal tax liabilities, spendable personal income was 15 percent above its pre-Korea level in the fourth
quarter of 1951. When the figures are adjusted for price changes, however, total spendable income in 1951 did not regain late 1950 levels until
after midyear.

Personal consumption expenditures were 204.4 billion dollars in 1951,
compared with 193.6 billion in 1950. They dropped sharply after the first
quarter peak, and then rose gradually to an annual rate of 205.0 billion in
the fourth quarter, or 6.6 billion higher than a year earlier. Adjusted for
price changes, however, the volume of consumer purchases in the second
half of 1951 was about 3.5 percent lower than in the second half of 1950.
Consumer supplies, in the main, were extraordinarily abundant. About
1.1 million new houses were built. About 5.3 million automobiles were
assembled, and about 12J/2 million radios and more than 5 million television
sets were produced. Food consumption was above the 1947-50 average.
Clothing supplies exceeded the demand.
Personal saving, the difference between disposable income and expenditures, bounded upward from 4 percent of income in the first quarter of
1951 to a rate above 9 percent for the rest of the year. This high rate of
saving was almost twice the pre-Korean postwar average. In 1951, personal
net saving was 18.5 billion dollars, contrasted with 10.7 billion in 1950. In
the fourth quarter of 1951, the annual rate was 23.0 billion dollars.
Domestic investment was higher in 1951 than in any previous year, the
total being 58.8 billion dollars contrasted with 48.9 billion in 1950. Mainly
because of the bulging of new inventories in the first half of the year, the
rate of growth was uneven. Gross private domestic investment accounted
for 18 percent of total national output, or slightly more than in 1950. Expenditures on nonfarm plant and equipment grew throughout 1951, with
increasing emphasis on programs for urgently needed expansion in key industries. These expenditures totaled 31.6 billion dollars in 1951, compared
with 25.6 billion in 1950.
More new construction was put in place in 1951 than in any previous year.
The total for 1951 was 30 billion dollars, compared with 28 billion for 1950.
But starting in September, the total rate dropped below that of the comparable month in 1950, with the principal reductions occurring in commercial and recreational construction. The volume of public construction
exceeded 1950 by nearly 2 billion dollars, as new defense and defense-related
projects more than offset reductions principally in highways and conservation and development projects..
Inventories were accumulated by manufacturers and distributors in 1951
at the highest rate on record—8 billion dollars. The annual rate reached a
peak of 14.8 billion in the second quarter, as consumer buying dropped
sharply; it dropped to 3 billion in the fourth quarter, with retailers once
again achieving a more comfortable inventories-sales position.
Corporations financed expansion programs during 1951 without great
difficulty. A smaller proportion—about 40 percent—of total funds used
came from internal sources than in recent years, and a larger proportion
came from outside sources. New stock and bond issues totaled almost 60

percent higher than in 1950, with the proportion of bonds relatively high.
Government financial aids stimulated expansion in selected areas, but contributed only a small fraction of total funds used.
Private credit expanded at a much slower rate in 1951 than in 1950.
Nonbusiness loans of commercial banks—including their consumer and
mortgage loans—increased by about 1.5 billion dollars in 1951, compared
with 4.4 billion the year before. Such loans totaled 31.8 billion dollars at
the end of 1951. As a result of the financial needs of defense-supporting
activities, commercial and industrial loans by banks grew almost as rapidly
as in 1950.
The privately-held money supply expanded nearly 9 billion dollars in 1951
as a whole. It declined sharply in the first quarter as heavy tax payments
were made, and then grew steadily in the last three quarters of the year.
International transactions of the United States during 1951 saw the
expansion in exports of goods and services, which reached a peacetime record
of more than 20 billion dollars, exceed the expansion in imports. Imports
also reached a new high, despite a slump in commodity imports in the second
and third quarters. Exports of semi-finished and finished products increased
in quantity as well as price. The export surplus, which had fallen to an
annual rate of 1.5 billion dollars in the second half of 1950, increased to a
rate of about 6.5 billion in the second half of 1951.
Foreign aid extended during 1951 increased by much less than the export
surplus, and the gold and dollar outflow was reversed. Exports of private
capital dropped below their 1950 level. United States private investors
continued to encounter obstacles to investment abroad.
In other free nations, total industrial production, money incomes, and
prices rose in 1951 compared with 1950, but agricultural production showed
little change from the preceding crop year. The balance of payments positions of some countries, notably the United Kingdom and France, became
worse during the year, and the general economic situation deteriorated in a
number of countries. The worldwide rise in prices, set off by the Korean
hostilities, slowed up or was partly reversed in most countries during the
first half of 1951, although in many it was resumed during the second half
of the year.
Government finances involved, for the Federal Government, a shift from
a sizable surplus to a substantial deficit during the course of calendar year
1951. For the year as a whole, Federal expenditures were 56.8 billion dollars, and net budget receipts were 53.5 billion. This left a calendar year
budget deficit of about 3/s billion dollars—3 billion more than in 1950.
Expenditures for the major national security programs totaled 37.3 billion
dollars. On a "cash" basis, which includes the cash receipts of the social
security and other trust funds, a surplus in the first half of 1951 and a
deficit in the second half added up to a cash surplus of 1.2 billion for the
year as a whole.

In its management of the public debt, the Treasury not only did some
new borrowing, but also refinanced a substantial portion of the outstanding
debt during the year. Of importance in keeping the debt outside the banking system, and hence minimizing its inflationary potential, was the exchange
of 13.6 billion dollars worth of marketable long-term bonds for nonmarketables and the legislative extension of the interest-bearing period for Series E
bonds.
State and local governments, with revenues increasing slightly more than
expenditures since 1950, showed a deficit of 400 million dollars in 1951, a
reduction of 500 million from 1950.
HARRY S. TRUMAN.
JANUARY 16, 1952.

The Annual Economic
Review

January 1952

A Report to the President
By the

COUNCIL OF ECONOMIC ADVISERS

LETTER OF TRANSMITTAL
COUNCIL OF ECONOMIC ADVISERS,
Washington, D. C., January 11, 1952.
The PRESIDENT:
SIR: The Council of Economic Advisers herewith submits a report, the
Annual Economic Review: January 1952, in accordance with section
4 (c) (2) of the Employment Act of 1946.
Respectfully,

' ./
Chairman.

(

Contents
Page

I. THE ECONOMIC STRATEGY OF THE DEFENSE PROGRAM
II. DETAILED DEVELOPMENTS DURING 1951
The basic security build-up
Production and employment
Production
Employment
Prices, wages, and profits
Prices
Wages
Profits
Credit and money supply
Credit
Money supply
The flow of goods and purchasing power
Personal income, consumption expenditures, and saving .
Investment and finance
International transactions
Government fiscal operations
III. CENTRAL PROBLEMS FOR 1952
Advancing the security build-up
The proposed build-up
Speed of the build-up.
Allocating scarce materials
The availability of metals
Major required adjustments
Major problems in materials allocation
Increasing production
Production and inflation
Factors limiting increase of total production
Increasing the supply of raw materials.
Enlarging the labor supply
Guiding investment
Increasing agricultural production
Over-all production objective for 1952
Minimizing business dislocation
Minimizing local unemployment and geographical
dislocations
'
Utilization of small business

39
46
47
49
49
52
55
55
61
64
66
66
68
69
69
74
84
88
95
95
95
97
98
98
100
102
103
103
104
105
106
108
112
113
114
114
115

III. CENTRAL PROBLEMS FOR 1952—Continued
Supplying consumer needs
Outlook for consumer goods
Housing
Essential public services
Helping to strengthen other free nations
Western European developments and their appraisal. .
The economically underdeveloped countries
Sharing of scarce commodities
World aspects of inflation and stabilization
Financing the Government program
Savings through budget economies
Tax legislation of 1950 and 1951
Nature of the financing problem aheacl
State and local government fiscal policies
Maintaining economic stability
Outlook for inflationary pressures
.
Relationship among stabilization measures
Credit policy
Separate note by Mr. Clark upon monetary and
credit policy
Price control
Wage stabilization
The problem of longer-range stability.
APPENDIXES
A. Statistical tables relating to the Nation's Economic Budget. .
B. Statistical tables relating to employment, production, and
purchasing power
INDEX

page
117
117
118
120
121
122
126
128
130
131
131
131
132
136
137
137
140
141
142
144
147
148
153
153
165
215

I. The Economic Strategy of the Defense
Program

HE United States has undertaken an economic strategy—and supported it with a program—to achieve national security, and that degree
of general well-being essential to security throughout a dangerous period
of indefinite duration. We must be prepared either for a sudden shift to
total war if others force the issue, or for a gradual transition to the more
peaceful conditions for which we strive. Meanwhile, this generation must
deal with something new in American experience, a prolonged neitherpeace-nor-war existence in which this Nation has a major responsibility for
world leadership.
National economic policies—both private and public—must serve our
ultimate goals of security, peace, and a sound economy. But we need to
view in broad perspective the basic purposes of current economic policy,
before turning to a more detailed review of 1951, the objectives and problems of 1952, and policy issues raised thereby.
The basic purposes of economic policy listed in the next few pages are
not new in January 1952. Our approach to these purposes in the past,
however, too often has been of a piece-meal character, with inadequate
attention to the meaning of the whole pattern of our national effort.
Under current conditions, economic policy must cope with more unpredictable factors than would beset the country in either a total war or a completely peaceful situation. But the unavoidable presence of many uncertainties does not mean that all policy actions should be kept fluid. True,
some policies must be kept more flexible than would be necessary under
other circumstances. Nonetheless, we must seek a course of policy which
is sufficiently far-sighted and firm to elicit general understanding and
support.
The great effort now under way clusters around these central purposes,
toward which the operations of the whole mobilization effort are being
vigorously directed:
(1) A clear definition and prompt execution of the basic defense program
Since the aggregate demand for resources is expected greatly to exceed
their supply, achievement of the goals of national economic policy requires
that resources be allocated and used as efficiently as possible. If this is to
be accomplished, it is of major importance that the definition of the military program—whatever its substance—be as clear and firm as feasible.

Otherwise, with such a considerable portion of the.total economic effort
going to basic defense, it would be virtually impossible to keep the
other components of the effort consistent with the military program and
among themselves. It would be impossible to determine the portion of resources that would be available for the expansion of basic productive facilities, or to design policies needed to restrict private consumption and less
essential private and public investment.
From the viewpoint of general economic policy, the speed of the military build-up is of similar interest. If the rest of the economy is to keep in
step with basic defense and serve it properly, it is necessary both to know
what the schedule of the defense program is and to achieve the goal on
schedule.
In thus stressing the need for clearly defining the military program
and achieving it on schedule, the Council is passing no judgment on the
defense program as such. The Council has the responsibility of seeking to
throw ligh* on the implications for the economy of all Government programs, including the defense program. There is always the necessity of
appraising the economic costs of different programs, and of developing the
information and analysis that will make it possible for the ultimate decisions
to reflect a correct balancing of costs against expected benefits. However,
the Council does not claim any special competence to make recommendations regarding the size, composition, or timing of the basic defense program
that may be required by the international situation—except in the event
that the program became so large that there was real doubt about the
adequacy of the Nation's economic resources to meet it. The program for
this emergency, promising at the most to involve about half the relative
burden shouldered at thfe peak of World War II, has not, in the Council's
judgment, reached that size.
(2) Expansion of output
General economic growth is one of our primary objectives in peacetime.
It has properly been regarded as the main avenue to an increasing abun-^
dance more generally enjoyed throughout the Nation. For this growth, we
have relied mainly upon the enterprise of producers, coupled with the
voluntary expression of popular wants.
In the early stages of a defense emergency, when our resources are clearly
not adequate to support all types of expansion at once, the emphasis upon
economic growth must be selective. Currently, this involves concentration upon munitions production, basic materials-providing and energyproducing industries, such as agriculture, steel, aluminum, electric
power, and oil, and such basic economic services as our transportation
system. To achieve this concentration, and to restrain types of expansion
which would interfere with it, requires public policies for the guidance of
production to which the Nation would not resort in more normal times.

However, the rapid expansion of these vital types of production has
desirable consequences besides serving our immediate defense needs. The
capacity now being built up would go a long way toward meeting the needs
of full mobilization, should events suddenly thrust that upon us. Moreover, productive growth in these fields (except munitions) will provide
a base for further growth in civilian supplies and in civilian-serving industries later on, even if defense outlays remain high. As this process continues, it hastens the time when the relative portions of defense and nondefense output can move closer toward their pre-emergency patterns. Thus
the expansion programs now under way, if skillfully adjusted and timed,
will in the longer run ease the relative burden and the relative inflationary
pressures of the defense program.
Provided that the expansion of output is conducted on this balanced
basis, it can make a highly important contribution toward carrying whatever burdens the Nation may have to bear. Toward this end, we should
draw fully upon our still incompletely utilized resources of technology,
manpower, and managerial skills.
(3) The maintenance of a strong civilian economy
A strong civilian economy is a foundation of military power. We must
maintain civilian strength, first, with respect to private consumption. Much
has been said about "guns and butter." No one in a responsible position has
claimed that we can have as much "butter," while the basic defense program
grows, as we could have if our supply of "guns" were not being increased.
The defense program during the coming year will affect many civilian
durable commodities. The cutbacks will be real. Unless demand in
particular markets behaves in an unexpected fashion, some shortages as
measured by market demand also are to be expected. But there is every reason to believe that Americans will continue to have enough "butter," in terms
of ordinary standards of consumer well-being, if the distribution of goods and
services is not badly distorted by further inflation. There will be adequate
civilian supplies to maintain the indispensable public support upon which
execution of the defense program depends, if stabilization is effective, and
if the people and the Government join in a clear understanding of the
nature of the program and its urgency.
But "guns and butter" is deficient terminology. It is much too categorical in its assumption of a sharp line between the factors that are essential
for security and those that are not. In a race which promises to be more
a marathon than a sprint, good diets, health, shelter, education, recreation, and the good morale that depends upon all of these, are essential for
endurance in our national security effort. Striking a balance between
our needs in these respects and for primary defense is a vital problem.
Striking this balance also requires a judicious comparison of services
rendered through the private economy and those rendered by government. Undoubtedly, at all levels of government, there are peacetime pro-

grams which must be cut. True economy and efficiency in public operations, desirable at all times, is imperative at a time when our resources
face a persisting strain and when public financial burdens are unavoidably heavy. Yet there can be no general presumption that public outlays
are wasteful or nonessential compared with private outlays. The building
of a highway or a school may be far more essential to the conservation and
advancement of our national strength than the building of a motion picture
house or the production of luxuries. In an emergency, a sense of priority
is highly important, and while many desirable public services need to be
restrained until we can afford more of them, it would be false economy to
strip them excessively in order to preserve materials and manpower for
nonessential or wasteful private investment and consumption.
We should also seek to preserve civilian strength by avoiding unnecessary
inequities and dislocations. The very essence of a rapid shift toward defense production is a substantial reallocation of economic resources. Some
consequent dislocations are unavoidable. But it is an important objective
of economic policy to avoid unnecessary dislocations, and to minimize the
inequities among different producer and income groups. The worst potential inequities, of course, are those that would arise from serious inflation.
Beyond this, however, it is highly desirable to minimize the dislocation of
both employment and enterprise resulting from materials curtailment, with
particular attention to the problems of small business.
(4) Maintenance of economic stability
The curbing of inflation is necessary to facilitate the defense production
program, to prevent inequities, to maintain public support for the defense
effort by moderating conflicts among economic groups, to minimize the
financial burden of defense, and to avoid unnecessary burdens upon our
allies. Consequently, the prevention of inflation is a vital element in the
success of all our efforts.
For this very reason, it is important to recognize that the problem of
inflation does not exist in isolation, and that stabilization measures cannot
be effectively administered in a vacuum. Stabilization, in large measure,
is a means to other ends. Stabilization policies are constantly being tested,
not only by their immediate effect in reducing inflationary pressures, but
also by their longer-range effect upon production and the utilization of our
resources. Stabilization policies which are desirable for a presumably long
period of partial mobilization are different from those which would be
necessary in the more acute situation of total war. The programs now
under way are intended to reconcile the application of controls adequate
to the current situation, with allowance of sufficient play in the workings
of our enterprise system for it to function more productively and more efficiently year by year.

(5) Integrating our efforts with those of our allies
In all of its economic endeavors, the United States needs to strive for
a free-world-wide perspective. This is not only a matter of calculated selfinterest, but is dictated by our basic concern for improving the economic
and social underpinnings of democratic institutions throughout the world.
As a logical consequence of processing and consuming a major share of the
free world's resources, the United States must make available to others
some of its resources, including its productive techniques and skills.
(6) Unity of programs and policies
There is no question that this Nation has the over-all resources to do the
job, if it uses them wisely. In governmental operations under emergency
conditions, the basic principles to guide the wise use of resources are similar,
in some respects, to those in a business organization. A business feels that
it is using its resources well when ft appraises accurately the whole situation
with which it has to deal, decides upon its objectives, and determines how
much of its total resources it can afford to allot to various purposes. From
the viewpoint of the economist, the same criteria should be applied to the
immense array of complex undertakings which the Government is now performing in the mobilization effort. It would be no answer to say that the
job is too big and difficult to be brought within any such vigilance. The
very size of the job, and its impact upon the whole Nation, make the cost of
avoidable inconsistencies or mistakes beyond the limit of what we can afford.
There are necessary limitations in this matter, arising from the very nature of our system, and from the fact that we are not now engaged in a
total war. Confidence cannot be placed safely in any overrefined or overdeveloped "master planning" concept which seeks to blueprint every detail
and to cover every contingency. The capacity and desire to think for ourselves is one of our greatest assets. Nonetheless, it is of the essence in defense
mobilization that the decisions made at various points within the Government be interrelated. Thus, if the defense program proper is not reasonably firm and clear, the civilian programs are left in the dark. For example, a specialized agency may best determine how much housing or
schools the localities need. But while supplying these needs in full would
be desirable under other circumstances, the specialized agency needs guidance when a defense program and an industrial expansion program must
be given some priority because of the pressure of large total demands upon
limited total supplies.
The Council has called this necessary process during the current emergency "programming." In our Midyear Economic Review last July, we
broke down this "programming" process into four main parts:
(1) The clear definition of major goals—military, international, industrial, and civilian—and continuous testing of their feasibility one
against the other to keep them in balance. The desired balance, of
course, may change with changes in the international situation.
977891—52

(2) A continuing determination of the relative part to be played, in
achieving these goals, through the expansion of some supplies on the
one hand and the reduction of some demand on the other. This means
an integration of all major economic policies toward a common
purpose.
(3) A continuous scheduling and timing of specific major program
objectives.
(4) A reasonably complete and continuous synthesis or inventory at
one central point of all the vitally important facts about the progress
of the whole effort, so that those concerned with policy may have immediate access to what is happening as a guide to what needs to be
done.
With all the sizable gains which have been made, the Council believes
that for ensuing stages of the mobilization effort the "programming" process should be further advanced. As the impact of the defense effort upon
the economy increases, the importance of over-all policy integration will
increase correspondingly.
(7) The enlistment of public support
In a democratic nation, particularly during a defense emergency, one
cannot draw a sharp line between the exertions of the government and the
exertions of the people whose government it is. What the Federal Government does is only a fractional part of our total national effort; most of
the planning and work are carried forward by industry, agriculture, labor,
and the other major elements in our enterprise system.
The great danger that we face, in the long run, is not an inadequacy
of our combined private and public resources. The great danger is rather
that, faced with problems so different from any confronting us before, we
might get an admixture of private and public action not best suited to our
native genius and not compatible with advancing the strength of our free
institutions. The emergency indeed requires that the Government do more
things than in normal peacetime, and influence the economy in more ways.
But this fact does not diminish the force of the proposition that the Government should do only what is essential and what others cannot do as well.
But whatever may evolve as a proper dividing line between private
action and public action, the scope of public action will remain large
during the emergency. Consequently, the sharing of responsibility for
public action should be upon a broader base than in normal peacetime.
While progress in this direction has been made during the past year, the
Nation has not yet found an adequate formula for welding together the
brains and experience of our enterprise system with that of our public service in dealing with problems at the national level. This is not simply a
matter of recruiting people from private enterprise into government jobs,
although that too is important. The leadership of our great economic

groups, while functioning as such, must be brought into a sympathetic
relationship to some of the great decisions of national economic policy.
It is no answer to this need to recite the old cliche about avoiding conflicts
of interest. The conflicts of interest are there, whether we see them or
not, and the only question is whether they are allowed to mount to the
point where they could imperil our security and impair our whole economy,
or whether some way can be found to reduce these conflicts to manageable
proportions. And the only way to reduce such conflicts, in a democracy,
is for people to find ways of working together.
The active and integral participation by major group leaders in the
shaping of national economic policy, through the channels of their
organizations, carries a keener sense of active responsibility for the
defense effort to great numbers of our people. In addition, there is need
for efforts to increase the effectiveness of broad-scale citizen participation in
the over-all defense program through local and regional activities. The
success of these attempts will depend heavily upon the extent to which those
at the center of the effort are able to convey to the Nation at large a comprehensive picture of national policies and problems.
These problems arise out of the essential nature of our economic system—
a system in which freedom and flexibility are held precious; a system in
which command can never take the place of assent; but a system in which,
nonetheless, group interests have become so strong that their apathy or
defiance could imperil the whole national effort.
Many steps have been taken, during the past year, to face up to this
problem of unity as it arises out of the relationship between a free people, a
free enterprise system, and a free government in a time of emergency.
No one would claim that the solutions thus far attempted have yet been
entirely satisfactory. But in this connection, the National Advisory Board
on Mobilization Policy represents a prime vehicle and a great forward step.
This Board has made a good beginning, and may become even more effective
with further improved staffing and agenda.
But this problem cannot be solved simply by the creation of more
machinery; it requires that the will to solve it exist in the minds and hearts
of men both inside government and outside government. It depends upon
the common consciousness that we are confronted by world dangers which
make the things that can hold us together infinitely more important than
those that might tear us apart.

II. Detailed Developments During 1951
TIKE March in the old adage, the economic year 1951 came in a
•^ lion and went out a lamb. The inflation that raged at the beginning
of 1951 was replaced near the end of the first quarter by stability of such
persistence that the causes and probable duration of "the lull" became a
foremost topic of speculation among economists and businessmen.
Broadly speaking, the dominant trends of the year were the rise in
Government buying for the security program and the change in the pace
of consumer buying, which surged to a crest in the first quarter, then
abated, and remained relatively stable during the rest of the year. In
the first months of 1951, private demand for goods reinforced an ascending
Government demand to bring inflation; later, it counteracted an expanding
Government demand to help bring stability.
The bad news from Korea in the first weeks following the intervention
by China caused consumers to continue buying at a high rate after the
close of the Christmas season. Though retail sales dropped from 14.8
billion dollars in December 1950 to 12.2 billion in January and to 11.2
billion in February, this was less than the usual seasonal decline.
At seasonally adjusted annual rates, retail sales rose 8.5 percent from the
fourth quarter of 1950 to the first quarter of 1951. Manufacturers and
merchants took an exceedingly optimistic view of prospective market
demand, and the former expanded their output while the latter flooded
their suppliers with new orders. The increase in Government purchases
for national security programs combined with the heavier buying in civilian
markets to extend and in some cases to speed the rapid rise in prices that
had begun in 1950.
The situation was reversed in the second quarter. Retail sales were
3 percent greater than in the first quarter, but this was much less than
the normal increase for those months. On a seasonally adjusted basis,
retail sales were 6.5 percent lower in the second quarter than in the first
quarter. The inflow of many kinds of merchandise ordered in the
optimistic mood of the first quarter piled up in the inventories of merchants
and in the warehouses of manufacturers, to hang over the market for the
remainder of the year.
During the second half of 1951, retail sales (seasonally adjusted) were
not much above the second quarter level. National security expenditures
continued to rise, though more slowly than in the first half of the year, but
private investment fell off, principally because of a lower rate of inventory

accumulation. Prices remained fairly stable and total output, after remaining steady in the third quarter, rose moderately in the fourth. The lull that
had begun near the end of the first quarter persisted through the second
half of the year.
The first months of active inflation were marked by some financial
factors which are believed by many people to reduce inflationary pressures,
while the 9 months of relative quiet were characterized by several factors
which similarly are believed to generate inflationary pressures. There was
a record Government cash surplus in the first quarter of 1951 and an accompanying decline in the privately-held money supply. Outstanding consumer credit, after rising rapidly through December, fell to a lesser degree
in the first quarter of 1951. On the other hand, during the months of
stability, there was a Government cash deficit which rose steeply from
quarter to quarter, the money supply climbed more sharply than in the same
period of 1950, and, after midyear, consumer credit and loans of commercial banks resumed their expansion. In the case of these series, the year
1951 demonstrated the hazards of interpreting short-range developments in
the economy as a whole, through the use of a limited number of indicators,
many of which are likely to reflect seasonal movements.
Some important financial factors showed a different pattern. Total
bank loans increased more than twice as much during the 9 months from
July 1, 1950, to March 31, 1951, as during the following 9 months. During
the former period, long-term Government securities found a ready market
without risk of loss in the Federal Reserve banks, which was not true during
the latter period. Heavy tax increases passed in 1950 became fully effective
in 1951, and further increases were hanging over the heads of consumers
and businesses through most of 1951. The Revenue Act of 1951, passed
in October, applied higher rates to 1951 corporate income, and imposed
increased withholding and excise tax rates which became effective November 1, 1951. Moreover, the lags in the impact of the financial factors must
not be overlooked in interpreting their effects on inflationary pressure.
In general, 1951 was a year of some surprises and, in a sense, of some
paradoxes. We shall try in this Part to set down the facts of the year's
economic record. In Part III, we shall consider the principal economic
problems which will confront the Nation in the year ahead as a result
of the combination of these facts and of our broad policy objectives.
THE BASIC SECURITY BuiLD-Up
During the past 12 months, the annual rate of expenditure for the major
national security programs—both domestic and international—increased
by more than 20 billion dollars, reaching a rate of 45 billion dollars in the
fourth quarter. Currently, the national security programs are taking about
14 percent of gross national product, compared with 8 percent a year ago.
(See chart 6.)

CHART 6

NATIONAL SECURITY EXPENDITURES
FOR GOODS AND SERVICES IN 1951 PRICES

During 1951, the annual rate of national security expenditures
increased by about 20 billion dollars. The build-up of our
military establishment and military aid to other countries
accounted for more than 85 percent of total Security expenditures.
BILLIONS OF DOLLARS*

I960
4th Qtr.

1951
2nd Otr.

TOTAL SECURITY .EXPENDITURES

1951
4th Qtr.^

DEFENSE DEPARTMENT
AND MDAP

FOREIGN^ ATOMIC^OTHER
AID
ENERGY

*
SEASONALLY ADJUSTED ANNUAL RATES.
\J PRELIMINARY ESTIMATES BY COUNCIL OF ECONOMIC ADVISERS.
SOURCES: DEPARTMENT OF COMMERCE AND COUNCIL OF ECONOMIC ADVISERS.

The rate of expansion of the security programs slackened toward the end
of 1951. During the last quarter, security expenditures are estimated to
have increased only 3 billion dollars, at an annual rate, compared with an
average increase of 6 billion dollars in each of the previous three quarters.
Since the middle of the year, foreign economic aid expenditures have not
increased, and there has been a considerable reduction in stockpiling expenditures. The decline in stockpiling expenditures reflected not only a general
reduction in purchases for the stockpile, but also an actual suspension of
purchases of some strategic materials, a reduction in the availability of
some that come from foreign areas, and sharply rising domestic requirements for defense production and expansion of industrial capacity.
During the first half of last year, military expenditures, including expenditures for foreign military aid, increased steadily and rapidly, partly
as a result of the large increases in military pay and purchases of soft goods
associated with rapid expansion in the size of the armed forces. In the
second half, as the composition of the program shifted more towards expenditures on hard goods and military construction, expansion in total
spending was necessarily slower. At the present time, about half of total
military outlays are for hard goods and military construction.

While deliveries of military hard goods and military construction put in
place increased by about 250 percent from the fourth quarter of 1950 to the
fourth quarter of 1951, the increase in actual military production during
the period was somewhat greater. It was to be expected that, during the
earlier phase of the program, expansion of military production pipelines
would be larger than the increase in actual deliveries. Deliveries of types
of military equipment which are easier to produce—like ammunition,
weapons, and vehicles—increased enormously over the levels of the autumn
of 1950. On the other hand, the gain in aircraft deliveries, which will
account for about 25 percent of the military production program, was
more moderate.
As will be indicated in Part III, future increases in security expenditures
will be very largely for military hard goods, especially for items which are
more difficult to produce.
PRODUCTION AND EMPLOYMENT
Production
Total output of the economy, measured by gross national product adjusted for changes in prices, rose about 5 percent from the fourth quarter
of 1950 to the fourth quarter of 1951. The bulk of the increase occurred in
the first half of the year; in the second half, aggregate output was nearly
stable. For the year as a whole, total national output was 8 percent above
1950, and the rise in the private sector of the economy was 7 percent. (See
chart 7 and appendix tables B-2 and B-3.)
Industrial production. Industrial production fluctuated within a narrow
range through most of 1951. The index, estimated at 218 in December
1951, was at about the same level as a year earlier. (See chart 7 and
appendix table B-16.) This relative stability of total industrial production
for the past year resulted from differing trends in the defense and consumer
goods sectors of the economy. Defense and munitions output continued to
increase. Aircraft manufacture, railroad equipment production, and shipbuilding activity rose on the average by about 50 percent from January to
November. Machinery output climbed during most of 1951, and by November was 7 percent above the beginning of the year.
Output of both durable and nondurable consumer goods decreased after
the first quarter of the year. Consumer durable goods output dropped by
about one-third from March to November, partly in response to cutbacks in
materials, partly in response to the decline in consumer demand. Passenger
car production fell from an annual rate of 6.4 million units in the first
quarter to a rate of 4.4 million in the last quarter. The rate had been 6.7
million in the fourth quarter of 1950, and 4.6 million in the same quarter of
1949. Output of major appliances, such as washing machines, refrigerators,

CHART 7

PRODUCTION
Total output of goods and services continued to climb in the
first half of 1951, but leveled off in the second half.
Total industrial production was somewhat lower in the second half
as the continued advance of producers 1 durable equipment and
munitions was more than offset by declines in the consumers'
sector of durable and nondurable manufactures.

TOTAL PRODUCTION
2nd Qtr. 1950 =100^

TOTAL PRODUCTION OF
GOODS AND SERVICES^/

2nd Qtr.

3rd Qtr.

4 t h Qtr.

st Qtr.

2nd Qtr.

3rd Qtr.

4 t h Qtr.

1950

INDUSTRIAL PRODUCTION
JUNE 1950

120 —

I 15

110 -

105

100

1950
JL/ INDEXES BASED ON SEASONALLY ADJUSTED DATA.
2/ INDEX BASED ON GROSS NATIONAL PRODUCT IN 1951 PRICES.
3/ PRELIMINARY ESTIMATES.

SOURCES: DEPARTMENT OF COMMERCE, COUNCIL OF ECONOMIC ADVISERS, AND
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

stoves, and vacuum cleaners, suffered particularly sharp declines, and the
production of radios and television sets fell steeply after February.
Total production of nondurable goods industries declined gradually
during most of the year. By November, production was 7 percent below
January. The textile industry, in particular, greatly curtailed output during the second half of the year. Even the production of chemical products,
which had risen continuously since early 1950, reached a plateau toward
the end of 1951.
Minerals output moved irregularly higher during the year to a new record
in October, largely because of the rising production of crude petroleum.
The latter was at an all-time high in October, and then tapered off somewhat as production allowed in the Texas fields was cut. Bituminous coal
output rose substantially in the latter part of the year, as exports to Europe
increased.
Production of electric power, which is not included in the industrial
production index, reached record levels in 1951, and averaged 13 percent
above the previous year.
The year's developments in the construction industry are summarized in
the discussion of investment activity during 1951.
Agricultural production. Despite adverse developments in the fall
months in the outturn of some crops, notably cotton and corn, agricultural
production in 1951 maintained the high level of recent years. (See appendix table B-16.) High-level agricultural output enabled us to meet the
expanded demands for food and fiber of a military force which more than
doubled in the past year, to increase shipments of food to friendly foreign
countries, and to raise average food consumption in this country slightly
above the pre-Korean level.
The 1951 production record is all the more impressive in view of the
handicaps of drought and floods, and a continuation of the long-run decline
in agricultural employment, as some farm workers shifted to defense industries. There were also shortages of some materials, particularly fertilizers.
Current estimates for cotton indicate a crop of 15.3 million bales in 1951,
53 percent larger than in 1950. Expected domestic and foreign demand
for cotton in relation to total available supplies point to little, if any, buildup in the present relatively low cotton stocks. Record supplies of fats and
oils are available. But production of feed grains and concentrates indicates
that supplies for the 1951-52 feeding year will be about 5 percent smaller
than for 1950-51, when carryover stocks were being reduced.
Poultry and egg production in 1951 was nearly 7 percent higher than
in 1950, and hog slaughter was up about 8 percent. Cattle slaughter was
relatively small in 1951, partly because producers expanded their breeding
herds. The number of cattle on farms in early 1952 was at record levels,
several million head above a year earlier. Reduced feed supplies and a

continued high output of livestock and livestock products point to a further
cut in reserve stocks of feed grains during the 1951-52 feeding year.
Services. Personal expenditures for services, in constant prices, rose
about 3 percent above 1950, a smaller increase than that recorded in any
other recent year. (See appendix tables B-2 and B-3.)
Employment
The total labor force, civilian and military, increased from about 64.7
million in December 1950 to more than 66 million in December 1951. But
because of the growth in the armed forces, the civilian labor force increased
only slightly during the same period—from 62.5 million to 62.7 million.
Total civilian employment rose from 60.3 million in December 1950 to 61.0
million in December 1951. Over the year, total civilian employment averaged about 1 million higher in 1951 than in 1950. (See chart 8 and appendix table B-ll.)
While the long-run decline in agricultural employment continued, nonagricultural employment during 1951 averaged about 1.5 million above
1950, with each month of the year outstripping the same month of the previous year; but the margin became generally smaller as the year progressed.
December employment in nonagricultural activities was 54.6 million, compared with 54.1 million a year earlier.
The number of employees in manufacturing in 1951 averaged 15.9
million, the highest since World War II. The shifting pattern toward
increased defense activity was evidenced by the fact that employment in
durable goods industries was 280,000 higher in November 1951 than a year"
earlier, while employment in the nondurable goods field was about 180,000
lower. (See appendix table B-l2.) The increase since Korea of about 3.5
million persons engaged directly or indirectly in defense work was made possible primarily through the shifting of workers from nondefense work, and
also through a considerable absorption of unemployed persons.
About 5.5 million persons are now engaged directly or indirectly in defense production, excluding work on privately-financed facilities construction. Of this total about 750,000 are in aircraft, private shipyards, and
ordnance; the rest are employed in Federal defense agencies, or work
in mining, in the production or transportation of metals, machine tools,
machinery, scientific instruments, chemicals, or rubber products, or in other
activities needed for supplying the armed forces. These adjustments in
employment were made while we continued to maintain our civilian economy at a high level. Material shortages have, in some instances, restricted
the output of certain specific goods, but so far, lack of manpower has not
played a significant part in holding down civilian output. In fact, layoffs
in many consumer goods industries in the latter part of 1951 were the
highest recorded for that time of the year since 1945.
The workweek, which had averaged more than 41 hours for total manufacturing in the last half of 1950, dropped slightly during the first half of

CHART 8

CIVILIAN LABOR FORCE
The civilian labor force in 1951 was almost as large as in I960,
.despite the growth of the armed forces. Total employment averaged
61 million, or an increase of I million compared with the previous
year. Agricultural employment, continuing its long-run decline^ decreased
about ]/2 million, while nonagricultural employment rose by 1^ million.
MILLIONS OF PERSONS^
70

MILLIONS OF PERSONS*
70

J F M A M J J A S O N D

1949

1951

Unemployment for the year averaged about 2 million — a decrease
of about \% million, or 40 percent, from the I960 average.

10
/vs

,«, p

«,

I
N EM PL 0>'M ENT
PE RC EIN T OF c VltJA N LA 30 R FO RC r

J F M A M J J A S O N D

TIT ill

J F M A M J J A S O N D J F M A M J J A S O N D

1949

1950

*I4 YEARS OF AGE AND OVER
SOURCE-' DEPARTMENT OF COMMERCE

1951

1951, and, after the vacation months, leveled off at about 405/2 hours.
For the year as a whole, the workweek averaged slightly higher in 1951
than in 1950. Many plants in the durable goods area, particularly in the
machinery and metalworking groups, were on a 48-hour week. Curtailment in nondurable goods production reduced the workweek in that sector
slightly more than 1 hour from November 1950 to November 1951. (See
appendix table B-13.)
Unemployment. Unemployment decreased from about 2.2 million persons, or 3.6 percent of the civilian labor force, at the end of 1950 to 1.7
million, or about 2.7 percent, at the close of 1951. (See chart 8 and
appendix table B-l 1.)
Important changes have occurred in the duration of unemployment.
Over the year the number who had been seeking work 15 weeks or more
declined more than 40 percent, from 410,000 to 230,000.
The national averages obscure somewhat the unemployment which has
developed in some areas as a result of the shift from civilian to defense
production. In some geographical areas, the increase in defense output
has failed to provide enough employment to offset the declines resulting
from the defense program. In Michigan, for example, the number of
persons drawing unemployment compensation in November 1951 was nearly
2 1 /2 times that in November 1950. In Detroit, the impact of material and
production regulations and a slackening in automobile demand have carried
to the point where, in the Nation's largest durable goods producing center,
somewhat more than 100,000 people are reported out of jobs.
In November 1951, despite the low level of unemployment nationally,
there were 15 major labor market areas, as well as 5 minor ones, which were
characterized as areas of substantial labor surpluses. Some of our larger
metropolitan centers such as New York and Providence are included in
this group. Few, if any, of these 15 areas have been pushed into this
surplus labor category by the controls required by the defense program;
many, in fact, are communities in which unemployment has been a problem
for some time. Defense production in these places is either relatively unimportant or has been insufficient to absorb the labor surpluses which have
developed as a result of long-standing economic problems.
Among the States where unemployment has been growing are Michigan,
Wisconsin, Massachusetts, Tennessee, Georgia, North Carolina, and Rhode
Island. Cutbacks in orders for such consumers' goods as textiles, apparel,
shoes, and jewelry aggravated the persisting unemployment problems in such
local areas as Lawrence, Lowell, Manchester, Providence, and Brockton.
Work stoppages. During 1951, less than one-quarter of one percent of
total estimated working time was lost by strikes. Total man-days of labor
lost through work stoppages during this period were lower than in any other
postwar year.

A work stoppage on major railroads of the country began near the end of
January when several hundred yard workers took "sick leave". Eventually
the stoppage involved about 70,000 workers in the industry. The last
workers returned to work about February 10. Steel production was affected by a work stoppage at various locations of the Tennessee Coal, Iron
and Railroad Company in Alabama, which lasted from February 22 to
March 6, and idled 18,000 workers at its peak.
Another significant labor stoppage in the first part of 1951 was in the textile industry. Between mid-February and late April, 70,000 members
of the Textile Workers Union (CIO) engaged in strikes of varying durations at some 160 woolen and worsted mills, mostly in New England and
the Middle Atlantic states.
On August 27, there was a serious work stoppage curtailing copper production. It involved an estimated 40,000 workers, mostly members of the
Mine, Mill, and Smelter Workers Union. On August 31, about 10,000 of
these workers returned to their jobs after a settlement was reached with the
Kennecott Copper Corporation. Following an injunction issued under
Federal labor laws ordering a return to work and a resumption of collective bargaining, settlements also took place with three other major copper
producers.
PRICES, WAGES, AND PROFITS
Prices
During most of 1951, prices were relatively stable, with wholesale prices
showing a moderate decline, and consumers' prices rising slowly. This
pattern of price movements was in striking contrast to the violent waves of
general price increases which marked the second half of 1950 and early
1951, and which were finally curbed only after the imposition of the general price and wage freeze late in January.
Since the General Ceiling Price Regulation was issued, consumers' prices
have advanced 2.6 percent; wholesale prices have declined 2.9 percent; and
the index of 28 "sensitive" primary market commodities has shown a large
drop of 15.7 percent. But consumers' prices are 10.8 percent higher than
at the Korean outbreak, wholesale prices are 13.4 percent higher, and the
prices of primary commodities, 23.2 percent higher. (See charts 9 and 11,
also appendix tables B-22 and B-23.)
Wholesale prices under controls. Wholesale prices have gone through
three periods since the general freeze. (See table 1.) First, they continued
to rise for a short time after price controls were imposed, but much more
moderately than in the period immediately preceding control. The rise
was primarily concentrated among those agricultural and food prices left
uncontrolled for legal or technical reasons. The rise in these prices virtually ended in February.

CHART 9

WHOLESALE PRICES
Average wholesale prices declined during the spring and
summer of 1951 and at the end of the year were moderately
lower than at the time of the general price freeze.
INDEX. JUNE 1950 «IOO
125

INDEX, JUNE 1950 » 100

125

120 —

— 120

105 —

- 105

100

100
A

J
J
195!

-^PRELIMINARY ESTIMATES BY COUNCIL OF ECONOMIC ADVISERS.

SOURCE: DEPARTMENT OF LABOR (EXCEPT AS NOTED).

In the middle of the second quarter, as excessive inventories developed, a
selective drop began in wholesale prices which continued until autumn.
The markets particularly affected were those closely tied to consumer demand, notably textiles, hides and leathers, and some farm products. Inflationary pressures continued heavy in markets where the expanding security
program exerted a strong pull. (See chart 10 and appendix table B-23.)
By the beginning of the fourth quarter, the period of major price declines
was over, as inventories had been brought more closely in line with sales.
Subsequently, there was only a moderate stiffening in price trends.
In December, wholesale farm prices were 4.1 percent lower than at the
time of the general freeze. The declines began in late spring and continued through the summer. They were caused by the expectations of
very good crops, the sagging demand for such commodities as cotton and
wool, seasonal declines in fresh fruits and vegetables, and the relaxation
of general inflationary pressures. But by early autumn, farm prices began
to strengthen again as crops proved to be smaller than expected. Particularly noteworthy was the recovery of cotton prices, which brought them at
times close to the ceilings. The lagging demand for textiles, however,
prevented a full return to ceiling levels.

TABLE 1. Changes in wholesale prices
I5ercentage chang8
Korean out- General Ceiling
break to
Korean outRegulaGeneral Ceiling Price
break to
tion to
Price
December
1951 >
Regulation » December 1951 1

Commodity group

All commodities
...
Farm products
Grains
Livestock
.
Foods
.
._.
Meats
Other than farm products and foods
Hides and leather products
Textile products
„ _ .
Fuel and lighting materials
Metals and metal products >_
Building materials.
.
Chemicals and allied products
Housefumishmg goods
.
Miscellaneous,., _ .^ .^^«

._
._

.
...
...
....

1
..
.
._
.. _
U ^ _ J ___...

4-16.7
+22.1
+13 4
+20 5
+15 7
+13.8
+15 5
+30 4
+32 4
+4.1
+9 4
+12.9
+28 6
+19.4
+24.4

-2 9
-4.1
+2 9
—11 7
— i
—3.2
—2 6
—18 4
—11 3
+.8
+1 8
—1.4
—6 5
—1 9
+.5

+13 4
+17.1
+16 7
+6 4
+15 7
+10 2
+12 6
+6 5
+17 5
+5 0
+11 4
+11 2
+20 3
+17 1
+25.0

i June 1950 data used for computing changes since the Korean outbreak and February 1951 data for
changes since the Genera) Ceiling Price Regulation. The latter most nearly reflect the level at the time
of the general price freeze injate January.
Source: Department of Labor. (See appendix table B-23.)

Beef cattle prices continued strong through most of the period. The
abolition of slaughtering quotas created considerable difficulty for the
control of beef prices during late summer and early fall when marketings
continued small as farmers further built up their cattle herds. There was
great pressure for the elimination of all controls on beef, which may have
contributed to the unusually small marketings of beef cattle. Prices of
some grades of cattle rose at times to levels considerably above those which
reflected the retail beef ceilings. However, by November the seasonal
increase in marketings became heavier than usual, leading to alleviation
of the supply situation and to a moderate decline in cattle prices.
Hog prices, which were strong during the first half of 1951, became
weaker beginning in late summer as marketings increased seasonally. However, the total decline in the autumn was a little less than usual in percentage terms, and prices at their seasonal low in December were about the same
as a year before.
The parity ratio reached a post-Korean peak of 113 in February, and then
declined to a 1951 low of 103 in September. This drop reflected primarily
changes in prices received by farmers, as prices paid by farmers fluctuated
within a very narrow range after April. The ensuing strengthening of farm
prices resulted in a rise in the parity ratio to 107 in December, which was
slightly lower than a year earlier. In June 1950, the ratio was,97. (See
appendix table B-24.)

CHART 10

WHOLESALE PRICES OF INDUSTRIAL PRODUCTS
Industrial prices showed mixed trends in 1951. Metals and metal
products were strong because of the impact of the growing security
program. Sagging consumer demand and excessive inventories
caused declines, particularly in soft goods.
INDEX, JUNE 1950 = 100

INDEX, JUNE 1950=100

140 I

130

| 140

130

CHEMICALS AND
ALLIED PRODUCTS **V.

120

..**

•*

110

BUILDING
MATERIALS

*•••

•FUEL AND LIGHTING MATERIALS

100
J

I
S

I
O

i l l

1
N

I
M

I
A

I
M

I960

I
J

I
A

-I

I
S

I
N

100
DJ

1951

INDEX, JUNE 1950 = 100

140

130

—

120 —

— 120

110

130

—

100

100
J

I960
*

ALL COMMODITIES OTHER THAN FARM PRODUCTS AND FOODS.

PRELIMINARY ESTIMATES BY COUNCIL OF ECONOMIC ADVISERS.

SOURCE:

DEPARTMENT OF LABOR (EXCEPT AS NOTED).

1951

Unlike farm and industrial prices, wholesale food prices were virtually
unchanged at the end of the year, compared with their level at the time
of the general freeze. After mid-February they fluctuated irregularly
within a narrow range, with compensating price movements, largely seasonal, in different groups of foods. (See chart 9.)
During the same period, industrial prices declined 2.6 percent. (See
chart 10.) The drop was highly selective. Many prices fell below ceilings,
some drastically, while at the same time many other prices strained at the
ceilings. The declines affected large areas where problems of "excessive"
inventories developed in the spring. The sharpest declines were in commodities like cotton, hides, rubber, tin, wool, and tallow, in which there had
been great speculative price increases immediately after Korea. The price
decline in most commodities in this group was concentrated in the spring
and summer. By autumn, the downward movement had more or less spent
itself and some minor upturns in prices took place.
The textile and the hides and leather products groups showed the largest
average declines from the general freeze to the end of 1951, the former
dropping 11.3 percent and the latter, 18.4 percent. Within these subgroups, the declines, like the earlier rises, were greatest at the raw material
levels, and least at the final stages of fabrication. Thus, hides registered the
largest decline and shoes the least; cotton grey goods the most, and cotton
clothing the least.
Other industrial products in which there were substantial price declines
were chemicals, which fell 6.5 percent after the general freeze, mainly
as a result of a sharp drop in the prices of fats and oils following steep rises
prior to the freeze. Prices of industrial chemicals, fertilizer materials, and
drugs and pharmaceuticals were firm, or advanced.
Both metals and metal products, and fuels and lighting, accounting for
more than 40 percent of the industrial products group, advanced after the
general freeze, the former by 1.8 percent and the latter by 0.8 percent. The
metals and metal products group is particularly subject to the impact
of the expanding security program. The large demand for fuel contributed
to strength in the prices of petroleum and other fuels. Since these groups
are subject to price control, little upward movement was recorded, except
to reflect permitted adjustments in ceiling prices, as in the cases of automobiles, and lead and zinc. (See appendix table B-23.)
Consumers3 prices under controls. The trend of consumers' prices following the general freeze was quite unlike that of wholesale prices. After
the general freeze, the consumers' price index continued to rise until
May, then leveled off, and remained virtually unchanged until September,
when it began a new rise.
The greater strength of consumers' prices during this period, compared
with wholesale prices, is accounted for by a number of factors. For many
commodities, winter clothing, for example, it normally takes a considerable

59
977891—52

TABLE 2. Changes in consumers' prices
I3ercentage change
Korean outbreak to General Ceiling
Price Regulation i

Item

+8 0

All items
Food .
Apparel
Rent
Fuel electricity and refrigeration
Housefurnishings
Miscellaneous
-

+11.3

+9.4
+2.4
+3.5
+13.5
+5.6

General Ceiling Price Regulation to November 1951 1

Korean outbreak to November 1951 *

+2 6

+10 8

2+2.4
+2.8
+3.7
+6
+.5
+3.2

2+13. 9
+12 5
+6.1
+4 1
+14.1
+8.9

1 June 1950 data used for computing changes since the Korean outbreak and February 1951 data for changes
since the General Ceiling Price Regulation. The latter most nearly reflect the level at the time of the
general price freeze in late January.
2 A preliminary survey indicates that food prices advanced by 0.2 percent from November 15 to December.15.
Source: Department of Labor. (See appendix table B-22.)

time for price increases at wholesale to show up at retail. Part of the
strength of the index was due to the rise in food prices, as consumers maintained a high demand for what are basically nonpostponable purchases.
The consumers' price index includes many items over which controls are
lacking or are only partial, thus permitting further price increases. In addition, part of the increase in the index was due to the new excise taxes.
All major components in the index have continued to advance since the
inauguration of price controls, with the largest increase, 3.7 percent, occurring in rents, which are subject only to partial control. (See table 2 and
chart 11.) The tempo of increases in rents, which have been rising steadily
during the postwar period, has been sharply stepped up in the last year and
a half, as more and more areas have been exempted from controls, and
more liberal rent adjustments have been required by law. In addition,
the increased demand for housing under the impetus of the defense program has played an important role in many areas. Progress has been made,
however, in returning areas to rent control under the new law.
Prices of the miscellaneous group of goods and services have increased
3.2 percent since the imposition of the General Ceiling Price Regulation.
More than 1 percent of the rise came in November, following the imposition of increased Federal excise taxes which became effective in that month.
The 2.8 percent rise in apparel prices—the major part of which occurred
in September—reflected the accumulated effect of the cost increases since
the year before in the pricing of the new lines of fall merchandise.
Retail food prices have been generally strong throughout the period February to November 1951, with only minor dips. The rise in retail meat
prices has been slightly greater than the average rise in food prices, amount-

CHART 11

CONSUMERS' PRICES
Consumers1 prices were relatively stable for several months after
February 1951, but in September they began a new rise.
INDEX, JUNE (950 = 100
120

115

INDEX, JUNE 1950 = 100
120

- MO

110 —

105

115

105

100

95 I

I
J

I
A

i
S

i
O

I JI

I
N

i
M

I
A

I
M

I
J

l
A

I
S

l
O

I
N

95
D

SOURCE: DEPARTMENT OF LABOR.

ing to 2.7 percent, compared with 2.4 percent for all foods, and 2.6 percent
for the consumers' price index.
Wages
The upward creep in wage rates was one of the most important factors
responsible for the increased total labor income in 1951. In manufacturing
industries, average hourly earnings rose 11 cents, from $1.51 in November
1950 to $1.62 in November 1951. Workers in the durable goods manufacturing industries received average hourly wages of $1.70 in November
1951, an increase of 12 cents, or about 7 percent, from November 1950.
The rise in the nondurable goods sector was smaller, from $1.42 in November 1950 to $1.50 in November 1951. (See chart 12 and appendix table
B-14.)
Hourly earnings in manufacturing exclusive of overtime pay rose 10 cents
or about 7 percent from November 1950 to November 1951, somewhat less
than the rise in gross pay. From February 1951, the first month of operation of the v/age stabilization program, to November, gross hourly earnings
rose 6 cents, or 4 percent. Straight-time hourly rates also increased by
6 cents, or 4 percent.
Average weekly earnings in manufacturing rose by less than hourly
rates, since average hours of work were lower in November 1951 than in the

CHART 12

AVERAGE EARNINGS
IN MANUFACTURING INDUSTRIES
Average' hourly earnings rose slowly throughout 1951, but
when adjusted for price changes were fairly constant. There
was a smaller rise in a v e r a g e w e e k l y earnings, due to a
slight decline during the year in the workweek.

1.70 -

1,50

—

1.30

—

1.70

1.50

— 1.30

AVERAGE WEEKLY EARNINGS

.CURRENT PRICES
70.00

70.00
DURABLE GOODS
CONSTANT PRICES

.CURRENT PRICES

60.00
NONDURABLE GOODS

60.00

50.00

50.00
I

1950

uEARNINGS JN CURRENT PRICES

i
J

1951
DIVIDED BY CONSUMERS' PRICE INDEX ON BASE JUNE 1950-100.

SOURCES: DEPARTMENT OF LABOR AND COUNCIL OF ECONOMIC ADVISERS.

i "T

same month of 1950. In all manufacturing industries, average weekly
wages rose by about $3.02, or 5 percent, to a level of $65.25 in the 12 months
beginning November 1950. In the durable goods sector, weekly earnings
advanced by $4.08, while the rise in nondurable goods industries was
$1.50. (See appendix table B-15.) It has been estimated that average
weekly earnings of clerical and professional workers, as distinct from wage
earners, rose around 6 percent in the 12-month period.
Wage negotiations. During the year, wage negotiations were conditioned by the wage stabilization program, which affected practically every
contract signed in 1951.
As a necessary prelude to the development of a wage stabilization program, the Wage Stabilization Board froze wages on January 26, 1951. Just
prior to this freeze an unusually large number of settlements took place.
Many new contracts were negotiated at that time through mutual consent,
since the terms of existing contracts did not contain wage reopening provisions effective in January. Many deferred increases negotiated in 1950
also became effective in that month. In addition, there were numerous
instances of consent to the immediate payment of increases which were
scheduled to become effective later in 1951.
The freeze was relaxed on January 30, by a regulation which authorized
increases that were to become effective before February 10, when called
for by agreements antedating the freeze. The bituminous coal and anthracite agreements, which raised wages $1.60 a day, fell within this category.
In the 4 or 5 weeks following the freeze order, wage settlements were few.
With the removal of the freeze and the initial development of Board
policy, wage settlements became more numerous. These settlements represented mainly a completion of pre-stabilization wage movements and negotiations interrupted by the freeze. As a result, wage increases were agreed
upon or put into effect for more workers during March than in any of the
preceding 12 months. A wage settlement, which contained a cost-of-living
escalator clause, and which affected about 1 million railroad workers, was
reached on March 1. Announcement of the BLS consumers' price index
for January brought cost-of-living wage increases for more than a million
workers covered by contracts with automatic escalator clauses. Many of
the settlements negotiated during this period, particularly in the textile
industry, provided for general increases and supplementary benefits in excess of the limit allowable without prior approval of the Wage Stabilization
Board. In other instances, employers voluntarily raised wage rates of
large groups of workers to the maximum permitted without specific Government authorization.
In May, the Wage Stabilization Board, in a decision that was the forerunner of the Board policy of gearing wage stabilization to changes in the

cost of living, allowed the meat packing workers, who had received an
increase of 11 cents in 1950, an additional increase of 9 cents. The Board
held that it would not be fair to penalize the parties because, in their previous contract, they had decided to use a reopening clause rather than a
formalized escalator clause as a protection against higher living costs. Later
an additional amount averaging 2 cents an hour was allowed, to increase
the differentials among job classes. In June, a wage increase of 15 cents
was approved for the Atlantic Coast shipbuilding workers, on the ground
that wage rates in shipbuilding were abnormally low in the base period
which WSB had included in its general adjustment formula.
Many settlements later in the year provided for wage increases to offset
the rise in the cost of living, as well as for fringe benefits. Among the more
noteworthy settlements in the second half of the year were those in the paper,
glass, electrical, rubber, nonferrous mining and smelting, and food industries. Contracts also were signed covering many workers in transportation,
communications, and construction. In addition, wage increases were
granted most Federal Government workers and many State and local government employees.
At the year's end, a most significant contract negotiation was taking
place between the steel industry employers and the steel workers union.
The CIO Steelworkers Wage Policy Committee presented a 22-point set
of proposals covering some 1 million workers. Key bargaining points included a "substantial wage increase, a guaranteed annual wage, a union
shop, a 'drastic' revision of the incentive system, time and one-half for
Saturday work and double time for Sunday, as such, 8 paid holidays and a
more liberal vacation program." On December 22, after the parties had
failed to reach an agreement, the case was referred by the President to the
Wage Stabilization Board.
Profits
Corporate book profits before taxes in 1951 were the highest on record,
reaching an estimated total of 44.8 billion dollars. In 1950, the previous
peak year, corporate book profits before taxes amounted to 41.4 billion.
(See chart 13 and appendix table B-32.)
The profits trend, however, changed drastically in the course of 1951.
After reaching a postwar peak of 51.8 billion (annual rate) in the first
quarter of 1951, corporate profits before taxes declined sharply, reaching a
level of 40 billion in the third quarter. Lower levels of sales and prices in
many industries, as well as the upcreep of costs, accounted for the change.
In the fourth quarter, as sales increased somewhat and prices firmed slightly,
corporate profits before taxes, according to preliminary indications, rose
to an annual rate of approximately 42 billion dollars.
Corporate profits after taxes were an estimated 18.1 billion dollars in
1951, compared with 22.8 billion in 1950, most of the reduction being a
result of higher tax rates. In 1951, the combined Federal, State, and local

taxes on profits took about 60 percent of profits before taxes, compared with
about 45 percent in 1950. The level of corporate profits after taxes was
exceeded in only 3 previous years, 1947, 1948, and 1950.
Although corporate profits as a whole were substantially lower at the
end of 1951 than at the beginning, there were significant differences among
industries. (See appendix tables B-33 through B-36.) Petroleum refining, and printing and publishing (except newspapers) showed, before taxes,
a higher rate of return on sales in the third quarter than in the first. Profits
of the following industries dropped moderately during the same period:
food, tobacco, furniture, chemicals, leather and leather products, stone, clay
and glass, nonferrous metals, iron and steel, machinery (except electrical),
transportation equipment, instruments, and motor vehicles and parts.
CHART 13

CORPORATE PROFITS
Profits before tax were in 1951 at an all-time high, but in the latter
part of the year fell substantially. Profits after tax for the year 1951
were reduced below the 1950 level because of higher tax. rates.
BILLIONS OF DOLLARS

B I L L I O N S OF DOLLARS

- 20

1951
SEASONALLY ADJUSTED ANNUAL RATES.
]/ NO ALLOWANCE FOR INVENTORY VALUATION ADJUSTMENT.
2/ PRELIMINARY ESTIMATES BY COUNCIL OF ECONOMIC ADVISERS.
SOURCE: DEPARTMENT OF COMMERCE

(EXCEPT AS NOTED).

Steep declines were reported by corporations producing textiles, apparel,
and lumber and wood products, where inventories were particularly excessive.
The decline in profits during 1951 affected both large and small firms.
However, the largest manufacturing firms, those with assets of 100 million
dollars or more, reported a smaller decline in their profit-sales ratio (before
taxes) than did those with assets of $250,000 or less.
CREDIT AND MONEY SUPPLY
Credit
Most forms of private credit expanded during 1951, though at a lower
rate than in 1950. Total loans of commercial banks, which had jumped
9.2 billion dollars or 21 percent in 1950, rose about 6 billion or 12 percent
during the past 12 months. The difference was largely accounted for by
the behavior of nonbusiness loans. While commercial and industrial loans
of banks rose close to 5 billion dollars during 1951, about the same as in
1950, loans of all other kinds, such as consumer and real estate loans, expanded approximately 1.5 billion in 1951, compared with 4.4 billion the
year before. (See chart 14 and appendix table B-27.) A major factor
that sustained the growth of commercial and industrial loans, while the
expansion of most other classes of bank loans slowed down considerably, was
the rising demand for credit to finance defense-supporting activities. Approximately 40 percent of the increase in outstanding business loans during
the second half of 1951, as reported by banks in leading cities, represented
borrowing by firms engaged in defense or defense-related production. Much
of the rest of the increase in commercial and industrial loans during this
period was seasonal.
Commercial bank holdings of U. S. Government securities showed little
change during 1951, while the drop during 1950 had been 5.0 billion. Investments in other securities rose by nearly 1 billion during 1951, compared
with 2.2 billion in 1950. The combined effect of changes in the three major
components of commercial bank earning assets was to lift total loans and
investments about 7 billion dollars or 6 percent during 1951. The rise in
total earning assets of banks in 1950 had been 6.5 billion or 5.3 percent.
Outstanding consumer instalment credit declined 0.6 billion dollars
during the first 4 months of 1951, and then rose slowly, but at the end of
the year it was still below the December 1950 level. During 1950, consumer
instalment credit had grown by 2.6 billion or 24 percent, with nearly half
of the increase occurring in the third quarter. (See appendix table B-26.)
Farm mortgages held by all groups of investors rose approximately 0.5
billion dollars or 8 percent during 1951, which was about as much as
in 1950, while total nonfarm mortgages of $20,000 or less increased about

CHART 14

BANK LOANS AND INVESTMENTS
The increase in total bank loans was only about two-thirds of the
1950 increase, although commercial and industrial loans
expanded nearly as much in 1951 as in the previous year.
BILLIONS OF DOLLARS

BILLIONS OF DOLLARS
150

150

125

100

J F M A M J J A S O N D

J F M A M J J A S O N D ^

1949

1950
END OF MONTH

1951

COMMERCIAL AND
INDUSTRIAL LOANS (GROSS) -i/

I /i * • i 0

J F M A M J J A S O N D

1949

J F M A M J J A S O N O J F M A M J J A S O N D ^
1950

1951

END OF MONTH
JL/
ZJ

VALUATION RESERVES INCLUDED IN GROSS LOANS; EXCLUDED FROM NET.
PRELIMINARY ESTIMATES BY COUNCIL OF ECONOMIC ADVISERS.

SOURCE: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (EXCEPT AS NOTED).

6.5 billion dollars or 15 percent during 1951, compared with 7.8 billion
or 20 percent in 1950.
Money supply
The privately-held money supply (deposits adjusted and currency) expanded nearly 9 billion dollars or about 5 percent during 1951, compared
with 7.1 billion or 4.2 percent in 1950. (See table 3.) The rise in the last
three quarters of 1951 exceeded substantially that of the comparable period
in the previous year. (See chart 15 and appendix table B-28.)
After declining 4.4 billion dollars in the first quarter of 1951, or more
than half again as much as in the same months of 1950, largely because
CHART 15

MONEY SUPPLY
The privately-held money supply, after a seasonal contraction in
the first quarter of 1951, rose at an accelerating rate during the
next three quarters. The growth for the year was considerably
larger than in I960.
BILLIC)NS OF DOLLARS
200

BILLIONS OFDO LLARS
200

TOTAL DEPOSITS AND CURRENCY
175

**"*

N_ii.i»»" •""•*"'

—

175

TOTAL EX CLUD1NG U. S. GOVERMrtENT DEPOSITS
(PRIVATELY-HELD MONEY SUP PLY)

150

- 125

125 -

100

DEMAND DEPOSITS ADJUSTED

TIME DEPOSITS

- 50
CURRENCY OUTSIDE BANKS
*^k

K-S>_^>-<>-O-O-^^O-X)-^-^-<^ ' 2 5

*—O—O--O- O O —Q--O—O— O-O"-*0—<

U.S. GOVERNMENT IJEPOSITS
0
J F M A M J J A S O N D J F M A M J J A S O N O

1949

J F M A M J J A S O N D -!/

I960
END OF MONTH

LIMINARY ESTIMATES BY COUNCIL OF E CONOMIC ADVISERS.
SOURC E: BOARD OF GOVERNORS OF FHE FEDERAL RESERVE SYSTE M

1951

(EXCEPT AS NOTED).

of the surplus of Treasury cash receipts, the money supply moved upward
in each succeeding month.
TABLE 3.—Factors changing the volume of the privately-held money supply *
[Billions of dollars]
1950

Factors

total

Total

Loans of commercial and mutual savings
banks
-H.4 +10.8
Securities of U.
S. Government held by bank-.1 -3.6
ing system 3
.
Securities of State and local governments held
by commercial and mutual savings banks. . +1.2
+2.1
—.5
Treasury deposits *
+ 4
+.2
Monetary gold stock
_ _ _ _
—1.7
— 9
1.5
Other factors, net
Net change in privately-held
deposits
and currency 8
-

1951

1QXQ

+.7

+7.1

First
half

Second Total 2
half

First
half

Second
half 2

+2.5

+8.4

+7.9

+3 5

+4.4

—1.7

-2.0

+1.8

—2 0

+3 8

+1.0

+1.1
+1 1
—1.5
— l

+1.0
— 2

—.2
—.7

—.1
—1 6

+.4
—3 0
—1 0
— 1

+.6
+2 8
+9
—1 5

+.2

+7 0

+8 8

—2 2

+11 0

i Includes State and local government deposits.
* Estimates based on incomplete data; second half by Council of Economic Advisers.
Includes commercial banks, mutual savings banks, and Federal Reserve banks.
* A decrease in Treasury deposits is denoted by a positive figure, and an increase by a negative figure.
In the case of other specific factors the reverse is true.
8 See appendix table B-29 for aggregate money supply and its components!
NOTE.— Detail will not necessarily add to totals because of rounding. Signs preceding figures in columns
Indicate effect on the money supply.
Source: Board of Governors of the Federal Reserve System (except as noted) :
3

The monetary expansion of more than 13 billion dollars in the past
9 months reflected (1) the growth of the loans and investments of the
banking system, including mutual savings banks, (2) the drawing down of
U. S. Government deposits to meet part of the cash deficit, and (3) to a
lesser extent, the reappearance, beginning in the third quarter, of net gold
imports after more than a year and a half during which the United States
had lost gold to other nations.
THE FLOW OF GOODS AND PURCHASING POWER
Personal income, consumption expenditures, and saving
Personal income. Personal income has gained quarter by quarter since
Korea, but the rate of increase was slower in 1951. (See chart 16 and appendix table B-7.) One important component of consumer income, unincorporated business and professional income, reached a peak in the first
quarter of last year. Labor income advanced less and less rapidly as the
momentum of increases in wage rates slackened, the average factory workweek was reduced, and employment gains were only moderate. Farm
income, which declined sharply from 1948 to 1950, continued upward from
the postwar low reached in the second quarter of 1950. In the fourth
quarter of 1951, personal income attained an annual rate of 258 billion
dollars. This was more than 40 billion above the pre-Korean level; but

CHART 16

PERSONAL INCOME, SPENDING,
AND SAVING
Consumption expenditures in the second half of 1951
remained below the first quarter peak despite the
continued rise in income. Saving rose to 10 percent of
disposable income.
BILLIONS OF DOLLARS*
300

BILLIONS OF DOLLARS*
300

250 -

-250

200 -

— 200

150 -

- 150

100 -?

— 100

NET SAVING
AS PERCENT OF DISPOSABLE INCOME

•SEASONALLY ADJUSTED ANNUAL RATES.
•^PRELIMINARY ESTIMATES BY COUNCIL OF ECONOMIC ADVISERS.
SOURCE: DEPARTMENT OF COMMERCE (EXCEPT AS NOTED).

only 14 billion of the increase took place in the second half of the 18month period.
Tax increases since Korea have slowed down gains in spendable income.
Personal tax liabilities rose from 19.5 billion (annual rate) in the second
quarter of 1950 to about 30 billion in the fourth quarter of 1951. Nevertheless, personal disposal income rose by more than 30 billion dollars
or 15 percent over the period. Total disposable incomes in real terms have
gained by about 5 percent since Korea, but the sharp price rises in December 1950 and January 1951 caused a temporary drop in real income. It
was not until the third quarter of 1951 that total consumer purchasing
power regained the level of the fourth quarter of 1950. On a per capita
basis, real disposable income did not regain the level of the fourth quarter
of 1950. (See chart 17 and appendix table B-10.)
Although, in general, gains in income have more than kept pace with the
cost of living, they have been unevenly distributed throughout the population. Since Korea, farm incomes have risen somewhat more than those
of other groups, compensating for the decline that extended through the
CHART 17

PER CAPITA DISPOSABLE INCOME
Per capita disposable income in constant prices rose
very slightly during 1951, but in the final quarter of the
year was still below the peak reached in the last quarter
of I960.
DOLLARS*

DOLLARS*

1,600

1951 PRICES
CURRENT PRICES

1,200 —

1,600

1,200

800

400

800

400

—

I960

1951

* SEASONALLY ADJUSTED ANNUAL R A T E S .
i/PRELlMINARY ESTIMATES BY COUNCIL OF ECONOMIC ADVISERS.

SOURCES: DEPARTMENT OF COMMERCE AND COUNCIL OF ECONOMIC ADVISERS.

first half of 1950, while annuitants and other fixed-income recipients have,
of course, become worse off. Average hourly earnings of workers in durable
goods manufacturing industries increased by 18 cents between June 1950
and November 1951, compared with 14 cents in nondurable goods industries.
After adjustment for price increases and trends in average weekly hours
(but not allowing for higher taxes) > real earnings of workers in nondurable
goods manufacturing in November 1951 were slightly below June 1950,
while real earnings of workers in durable goods manufacturing were
moderately above. Average weekly earnings in the construction industry
rose more than those in manufacturing, while those in trade and services
rose much less and fell behind the rise in living costs. The gains in income
of a large proportion of Government workers were commensurate with
those of workers in private industry.
Consumption expenditures. After the December 1950-February 1951
buying wave, total consumption expenditures declined abruptly, falling at
the seasonally adjusted annual rate of 6.5 billion dollars, or 3 percent, from
the first to the second quarter. Since then they have moved up slightly, but
CHART 18

PERSONAL CONSUMPTION EXPENDITURES
FOR DURABLE GOODS
There was a significant decline in demand for most categories
of consumer durable goods from the second half of I960 to the
second half of 1951. Expenditures for passenger cars and major
appliances both dropped almost one-third while all other
durable goods were 10 percent lower.
BILLIONS OF DOLLARS*

BILLIONS OF DOLLARS*

20
ALL OTHER
DURABLE GOODS

MAJOR HOUSEHOLD
APPLIANCES

J
1

I
2

I
3

1949
* SEASONALLY ADJUSTED ANNUAL RATES.
•J-'PRELIMINARY

ESTIMATES.

SOURCE: COUNCIL OF ECONOMIC ADVISERS.

1950

1951

have not regained the first quarter level. The decline in demand was concentrated in durable goods purchases, which fell from the almost unprecedented annual rate of 31.5 billion dollars in the first quarter (compared
with 29 billion dollars in 1950 as a whole) to 26 billion dollars in the second
quarter, and remained somewhat below that level for the rest of the year.
Sales of automobiles and major appliances declined substantially, as is
shown in chart 18. Purchases of nondurable goods, which had moved up
as prices rose in 1950, remained fairly constant in 1951, while expenditures
for services continued to expand slowly. (See appendix table B-4.)
The extent of the decline in consumer demand is indicated by the fact
that the volume of consumer purchases in the second half of 1951, after
adjustment for price changes, was below the level of the second quarter
of 1950, despite an increase of 5 percent in real income. In terms of 1951
prices, expenditures for durable goods were lower by 3.5 billion dollars,
while outlays for services increased by a somewhat smaller amount. Expenditures for nondurable goods remained at about the level of the second
quarter of 1950 despite a population increase of 3 million. (See appendix
table B-3.)
Personal saving. The drop in spending in the second quarter was associated with a rise in the rate of saving from 4 percent of disposable income
in the first quarter—a rate not far below the postwar average—to 9 percent. Later in the year, as incomes continued to increase, saving rose to
an even higher rate. (See chart 16 and appendix table B-9.)
This rate of saving, the highest reached since World War II, undoubtedly
reflected a combination of factors, some temporary and some of a more
permanent character. The rate appears unusually high in contrast with
that of the rest of the postwar period, during which special reasons, ranging from the backlog of demand and purchasing power built up during
the war to scare buying following Korea, tended to raise spending, especially
for durable and semidurable goods.
The increase in the rate of saving in 1951 may have represented primarily
the disappearance of backlog demands, particularly for automobiles, the
temporary saturation of some other markets for durable goods, and the
desire to replenish liquid reserves. Other factors, such as restraints on
consumer credit and resistance to high prices, were also undoubtedly among
those contributing to this development. Moreover, the price calm of the
last three quarters of 1951 probably helped to moderate the previously high
level of spending that had been initiated in part by the anticipation of rising prices.
In recent years, there has been a marked preference for tangible forms of
personal saving, such as investments in homes and in the assets of unincorporated businesses, compared with more liquid types of saving. The buying of durable goods, which has many of the characteristics of saving, has
also been at a high rate. In fact, in the period 1947 through 1950, the in-

crease in mortgage, consumer, and personal business debt, in connection
with investment in tangible forms of saving and consumer durable goods,
was greater than the increase in the ownership of such assets as deposits,
stocks and bonds, and insurance equities. This tendency was reversed in
1951, when total saving expanded. As shown in table 4, the high level of
saving in the second and third quarters of 1951, compared with the corresponding period of 1950, largely reflected a rise in liquid saving. Estimates
of the change in personal business debt are not yet available, but consumer
debt rose much less rapidly than in the previous year, while additions to
currency, deposits, and corporate and other securities were greater.
TABLE 4.—Liquid and total personal saving
[Billions of dollars]
1950

Type of saving

Liquid saving:
Currency, deposits, and savings and loan shares
Private insurance reserves . .
___
Securities:
U S. Government
State and local government .
Corporate and other
Debt liquidation:
Mortgage ..
OonsiiTTier
Total liquid saving

Total personal saving s

1951

Second
quarter

Third
quarter

Second
quarter

+0.7
+.9

+2 3
+1.0

+1 1
+.9

+.5
—.1

—.4
—.2
+5

+.4
+1 1

-1.7

—1,9
—1.7

—1.7
+.2

-f.4

—1.3

Third
quarter »
+4 5
+1 0
—. i
+6
—1.4
— 1

—.5

—.3

+2 0

+4 7

+3.5

+2.0

+6.8

+7.0

i Estimates based on incomplete data.
* Includes liquid saving, and personal tangible investment less depreciation, and the increase in farm
end business debt: not adjusted for seasonal variation and therefore cannot be computed from saving
data in appendix table B-9.
NOTE.—Detail will not necessarily add to totals because of rounding.
Sources: Securities and Exchange Commission, and Department of Commerce.

Investment and finance
There were wide swings in the movement of business investment during
1951, reflecting in more extreme form the same mixture of strength and
weakness which characterized economic events generally. After reaching
a peak annual rate of 65.6 billion dollars, or 20 percent of total output in
the second quarter of 1951, gross private domestic investment declined 18
percent to 54 billion, or 16 percent of total output, in the fourth quarter.
(See chart 19 and appendix table B-5.) Even at this lower level, investment was taking about the same proportion of total output as in such previous peak years as 1948. In spite of the downward trend in the second
half, the 59-billion-dollar level of business investment for 1951 as a whole
was higher than for any previous year, both in real and money terms and as
a proportion of total output.
The peaking of total investment in the second quarter of 1951 reflected
an extremely high rate of inventory accumulation, and a continued rise in
the rate of outlays for producers' equipment and nonresidential construe-

CHART 19

BUSINESS INVESTMENT
Investment in producers'durable equipment continued to rise
rapidly through 1951, but private construction and inventory
accumulation both dropped in the second half of the year.
BILLIONS OF DOLLARS*

BILLIONS OF DOLLARS*

TOTAL GROSS PRIVATE
DOMESTIC INVESTMENT

tofc

- 30

- 20

-10

* SEASONALLY ADJUSTED ANNUAL RATES.
J/ PRELIMINARY ESTIMATES .BY COUNCIL OF ECONOMIC ADVISERS.
SOURCE : DEPARTMENT OF COMMERCE (EXCEPT AS NOTED).

75
977891—52

tion. Residential construction meanwhile was receding from the record
level reached in the latter part of 1950. (See chart 22.)
The decline in total business investment during the second half of 1951
was due primarily to two factors. The more important was the extremely
sharp drop in the rate of inventory accumulation, as many industries took
steps to bring production and inventories in line with the decline in consumer demand which developed early in the spring. The second factor,
which was becoming increasingly significant toward the end of the year, was
cutbacks in commercial and some other categories of construction, effected
primarily by controls over materials.
Plant and equipment. During 1951, business investment in plant and
equipment rose to record levels, placing a major strain on the supply of
scarce materials. (See appendix table B-19.) The expansion in basic
areas was stimulated and encouraged by Government action to ensure a
productive capacity capable of meeting a growing demand for defense and
related output. As the year progressed, it became necessary and possible
to shift the emphasis toward the more urgently needed types of expansion,
and to reach decisions on specific goals for the expansion of key industries.
Through most of 1951, business expenditures for new plant and equipment continued the rapid rise that had begun in the spring of 1950. By
the fourth quarter of 1951, private nonfarm plant and equipment outlays
were running 18 percent higher than in the same quarter of 1950, and
17 percent above the pre-1951 peak reached in the fourth quarter of 1948.
(See appendix table B-19.) In terms of physical volume, the increase
from the fourth quarter of 1948 was probably about half that much.
This unprecedented surge of investment in new productive facilities
reflected in some measure the stimulus of defense buying, and Government
inducements such as accelerated tax amortization. The largest increases
during 1951 were in the industrial and utility fields, and particularly in the
aircraft and primary metals industries. (See charts 20 and 21.)
But it is noteworthy that the investment boom of 1950-51 was too broad,
and began too early, to be explained wholly or even primarily as the direct
result of military procurement or Government aids. The basic factors were
the growth in civilian demand until near the end of the first quarter of 1951,
the general absence of surplus productive capacity even before Korea, ready
availability of funds during most of the period, an outlook for increasing
demands and shortages of materials and equipment, and the encouragement
given by excess profits tax provisions to the debt financing of new investment.
In the latter part of 1951, increasing demands on scarce materials and
equipment for military goods and top-priority industrial expansion programs made it impossible to continue other types of business construction
and equipment investment at the record rates which had been attained. By
the fourth quarter, plant and equipment outlays in the commercial, communications, and miscellaneous field were 13 percent below the level of a year

earlier. The decline was 7 percent in the textile industries, and 14 percent
in the food and beverage industries. (See chart 21 and appendix table
B-19.)
The more urgent types of expansion were given the right of way by
priorities on the necessary materials and equipment; by various forms of
Government financial assistance; by allocations of several critical materials; and in some instances by controlled scheduling of output and distribution of key component items. Financial aids or inducements have
been supplied where necessary, in the form of Government loans, loan
guarantees, purchase contracts, and certificates of rapid amortization of
facilities for tax purposes.
The accomplishments of 1951, in terms of expansion of productive capacity, were impressive by any standard. In a private survey made late
in 1950, manufacturers reported plans for a 9 percent expansion in total
capacity in 1951, and a considerably greater expansion in certain defenserelated lines such as machinery, transport equipment, and chemicals. The
actual plant and equipment outlays of 1951 suggest that these anticipations
were probably not wide of the mark.
The expansion achieved in certain types of basic industrial facilities
related to defense is shown in table 5.
TABLE 5.—Expansion of capacity or output of selected industries

Industry or product
Capacity expansion during 1951:
Electric utilities
Petroleum refining
„..„ _ - , ,
Steel ingots
Pig iron
. .__
Coke (byproduct ovens)
Motor trucks and tractors * 2
Railroad freight cars 28
Railroad locomotives

Percentage
increase
10
4
4
2
2
6
2
2

Industry or product
Capacity expansion during 1951— Con.
Cotton duck
Output expansion,
1950 to 1951:
Aluminum 3
Chlorine
Zinc«_ .
Newsprint 3
IVToIybdp.rmrn

Percentage
increase
45
16
18
g
8
34

* Excludes vehicles for military use.
* Based on increase in number of units; does not take account of increased average ton-mile capability
per8 unit.
Domestic primary production.
* Domestic primary production plus secondary recovery.
Source: Defense Production Administration.

Since a large part of the facilities investment of 1951 went into projects
not completed within the year, value of work put in place is a better criterion of accomplishment during the year. Table 6 measures in those terms
the progress made on the major programs covered by tax amortization.
For projects assisted by tax amortization, which will entail in all about
11.5 billion dollars of investment on the basis of the certificates already
approved, work was about 35 percent in place at the end of September, and
at that time was expected to be about 46 percent in place by the end of

CHART 20

NEW PLANT AND EQUIPMENT OUTLAYS
IN SELECTED DURABLE MANUFACTURING INDUSTRIES
The major durable goods industries invested in plant and
equipment at a rising rate through 1950 and 1951.
BILLIONS OF DOLLARS

RATIO SCALE

BILLIONS OF DOLLARS

10.0
ANNUAL RATES, NOT ADJUSTED FOR SEASONAL VARIATION*

TRANSPORTATION EQUIPMENT.
EXCLUDING AUTOMOBILES^/

SEASONAL INFLUENCES TEND TO RAISE OUTLAYS IN THE FOURTH QUARTER AND LOWER THEM IN THE FIRST.

J/ INCLUDES FABRICATED METALS, STONE,CLAY, AND GLASS, PROFESSIONAL AND SCIENTIFIC INSTRUMENTS-, LUMBER-,
FURNlTUREj ORDNANCEv AND MISCELLANEOUS MANUFACTURESjNOT SHOWN ON CHART.
jy POINTS FOR FIRST THREE QUARTERS OF I960 ARE AS FOLLOWS'. .048, .072, .084.
J/ ANTICIPATED EXPENDITURES REPORTED BY BUSINESS DURING LATE OCTOBER AND NOVEMBER 1951.
SOURCES: DEPARTMENT OF COMMERCE AND SECURITIES AND EXCHANGE COMMISSION.

CHART 21

NEW PLANT AND EQUIPMENT OUTLAYS
IN SELECTED NONDURABLE MANUFACTURING INDUSTRIES
The chemicals and petroleum and coal products industries
continued to invest in plant and equipment at a rising rate
through 1951. In other major nondurable lines, investment
declined in the latter part of the year.
BILLIONS OF DOLLARS

RATIO SCALE

BILLIONS OF DOLLARS

MISCELLANEOUS
.
NONDURABLE GOODS17

1952
* SEASONAL INFLUENCES TEND TO RAISE OUTLAYS IN THE FOURTH QUARTER ANO LOWER THEM IN THE FIRST.
•^INCLUDES PAPER ANO RUBBER.NOT SHOWN ON CHART.
^INCLUDES TOBACCOi APPAREL-, LEATHER; PRINTING AND PUBLISHING.
•^ANTICIPATED EXPENDITURES REPORTED 8V BUSINESS DURING LATE OCTOBER AND NOVEMBER 1951.

SOURCES: DEPARTMENT OF COMMERCE AND SECURITIES AND EXCHANGE COMMISSION.

the year. The actual year-end figure, however, may have been somewhat
lower in view of the severe shortage of structural steel and some other
vital construction materials and equipment items in the fourth quarter.
Work put in place during the third quarter was, for similar reasons, about
17 percent less than had been anticipated at midyear.
In the case of some expansion programs, such as iron and steel and
synthetic fibers, the "proposed investment" shown in table 6 comprises the
bulk of that now planned over the next 2 years. Other important private
investment programs are covered only to a minor extent or not at all by tax
amortization. This applies, for example, to oil and gas wells and pipe lines,
electric power, agricultural equipment, and mining facilities generally.
Moreover, in both electric power and the munitions industries, direct public
investment plays an important part in addition to private investment.
TABLE 6.—Progress on facilities projects aided by tax amortization
Necessity certificates
approved through November 30, 1951

Status of projects (percentage of proposed investment in place at date
shown).*

Industry
Tax amortiProposed
zation
investment 3
(millions Sept. 30, 1951 Dec. 31, 1951 a
(millions
of dollars)
of dollars)
- ---

MO, 768

6,945

Iron and steel
Railroads
_
Chemicals (excluding synthetic fibers)
Petroleum refining
Aircraft, ordnance^ and accessories
Electric light and power _
_ .
Aluminum (primary refining)
Machinery
__
Pulp, paper, and allied products
Welded and heavy riveted pipe
Synthetic
fibers
______
Great Lakes transportation
Coke and byproducts _ _
__
All other
__ _

2,430
1,143
1,098
872
750
693
615
568
514
185
130
108
98
1,564

1,700
810
631
575
514
306
421
371
271
113
66
79
76
1,012

28
67
30
32
34
41
16
37
26
21
11
28
26
41

38
83
41
38
49
50
27
52
34
28
19
40
35
54

All industries

i Status reports cover only projects approved through September 30,1951.
* Figures are in most cases not directly comparable with those shown in table 14, partly on account of
differences in industry classification and partly because (as noted in the text) not all projects are covered by
tax8 amortization certificates.
Advance estimates reported as of September 30.
4
In addition to this total amount, certificates, for which the amount of tax amortization to be allowed was
still undetermined, were issued on projects entailing 715 million dollars of proposed investment, distributed
by major industry groups as follows (in millions of dollars): railroads 196, chemicals (including synthetic
fibers) 126, primary metals 85, mining 81, machinery 67, pulp, paper, etc., 38, and all other 122.
Source: Defense Production Administration.

Construction. A record value of total new construction was put in
place in 1951—29.9 billion dollars. Although this was 7 percent more
than in 1950, the physical volume of construction was about the same in the
2 years. (See chart 22 and appendix table B-18.) Less essential construction, especially recreational, commercial, and private residential, was
cut back, while defense, industrial, and public utility construction increased

CHART 22

CONSTRUCTION
Expenditures for private nonfarm residential construction dropped
sharply in 1951, while private industrial and utility rose. Total
private construction outlays in 1951 were about the same as in
1950, while public construction increased 27 percent.
BILLI DNS OF DOLLARS*

BILLIONS OF DOLL.ARS*

—

TOTAL PRIVATE CONSTRUCTION

^•^*»
r^^

V —l

1
15

PRIVA rs
RESIDENTIAL NONFARM)

—

TOTAL PUBLIC
CONSTRUCTION

^^-

V^,.*-

<•«**"*

^» » """j .

••—\A

0
1

i
2

1
9

1948

1
4

PRIVATE INDUSTRI AL
AND UTILITIES

ALL OTHER PR VATE

1
2

1
3

1949

1
2

1
3

1950

i
2

i
3

0
4

1951

•K SEASONALLY ADJUSTED ANNUAL RATES.
SOURCE:

DEPARTMENT OF COMMERCE.

sharply during the year. Beginning in September, the value of total new
construction on a seasonally adjusted basis has been less than in corresponding months of 1950.
The shift to military, industrial, and defense-related construction in
general continued during 1951. Construction projects of these types
received priority in the allotment of controlled materials under the Controlled Materials Plan. From December 1950 to December 1951, military and naval construction increased by more than six times on a seasonally adjusted basis, while private industrial construction increased 12
percent. For 1951 as a whole, however, private industrial construction was
about 85 percent above 1950.
The largest and most consistently sustained decreases in construction
expenditures, on a seasonally adjusted basis, were for new private residential,
commercial, and recreational building. Partly as a result of credit controls,
private nonfarm residential construction fell after September 1950, with
only two significant interruptions. From a 1951 high in February of 13.0

billion dollars (seasonally adjusted annual rate), residential construction
had declined almost one-quarter by December, to 9.9 billion. The number
of new nonfarm housing units started in 1951, including about 71,000 public
housing units, amounted to about 1.1 million, a drop of about 22 percent
from the all-time high of close to 1.4 million in 1950. Although seasonal
declines followed a temporary upturn in September, a relatively high level
of starts was maintained through the last quarter, caused partly by the easing
of credit regulations. Sustained demand, and a generally adequate supply
of materials, were also factors of importance.
Significant decreases were effected in less essential construction categories such as warehouses, office and loft buildings, stores, restaurants, and
garages, and other nonresidential buildings. This reduction was achieved
by a variety of specific limitation orders and by credit restraints, and, beginning in the fourth quarter of 1951, by drastic cutbacks in allotments of
controlled materials.
Total public construction, seasonally adjusted, though higher for each
month in 1951 compared with the corresponding month of 1950, showed
a slight upward trend during most of the year, with increases in military and
naval, residential, and industrial construction more than offsetting decreases,
principally in highways and conservation and development projects. (See
discussion under Government Fiscal Operations.) In November, the volume of public construction turned up significantly, lifting the year's total to
about 27 percent above 1950.
Nonfarm inventories. The year 1951 was a period of unprecedented
inventory accumulation. (See appendix tables B-3 and B-5.) But even
more noteworthy were the tremendous fluctuations within the year, with an
unusually high rate of accumulation being reached in the first half of 1951.
By the end of the year, the rate of inventory accumulation had dropped
drastically. On the other hand, the needs of the expanding security program led to a continuous build-up of inventories in the industries primarily
concerned with defense activity.
During 1951, the accumulation of nonfarm inventories was about 8 billion dollars, the highest rate on record. This compares with 3.6 billion in
1950 and 6.3 billion in 1946, the previous record. The rate of inventory
accumulation, on a seasonally adjusted annual basis, was 9 billion dollars in
the first quarter of 1951, then soared to the unprecedented level of 14.8
billion in the second quarter, dropped to around 5 billion in the third quarter,
and declined further to 3 billion in the fourth quarter.
The rapid rise of total inventories in the first half of 1951, and the even
more rapid fall in the rate of accumulation in the second half, represented
basically the over-anticipation by manufacturers and sellers of the level
of consumer demand and the subsequent steps taken to adjust to actual
sales levels.
There was, after midyear, a major divergence in trend between retail
inventories and those in manufacturing. (See appendix tables B-20 and

B-21.) Retail inventories, after rising in the first half of 1951, began to
turn down, and by the end of the year were at about the same level as at
the beginning. The problem of "excess" inventories was particularly acute
in the case of retailers' stocks of durable goods and apparel, where very
heavy ordering by retailers had taken place to avoid anticipated shortages
which did not materialize.
Manufacturers' inventories, on the other hand, continued to rise during
the second half of the year, but at a much slower rate than during the first
half. The increase in manufacturers' inventories occurred primarily in
the expanding defense industries. Inventories of nondurable goods remained stable during the second half of the year, while inventories of
durable goods continued to expand.
CHART 23

SOURCES AND USES OF CORPORATE FUNDS
From 1950 to I95l,there was a large increase in corporate
outlays for plant and equipment and inventories. External
financing was more important in the past year than in i960.
0

SOURCES
RETAINED
EARNINGS

BILLIONS OF DOLLARS
10
15

1950.

DEPRECIATION
RESERVES

OTHER SOURCES
(EXTERNAL)

USES
PLANT AND
EQUIPMENT
OUTLAYS

1950

CHANGE IN
INVENTORIES

OTHER USES

J/ PROFITS ESTIMATES FOR THIRD AND FOURTH QUARTERS 1951 BY COUNCIL OF ECONOMIC ADVISERS.
NOTE: EXCLUDES FINANCIAL CORPORATIONS.

SOURCE: DEPARTMENT OF COMMERCE ESTIMATES BASED ON SECURITIES AND EXCHANGE
COMMISSION AND OTHER FINANCIAL DATA (EXCEPT AS NOTED).

At the end of 1951, the inventory-sales ratio was at about the levels
prevailing during 1949, the previous postwar high, but it was below prewar
levels. In manufacturing, the ratio expanded through the first three
quarters and then declined slightly. In retailing, the rise was concentrated
in the first half of the year. The ratio declined in the second half, as
retailers were successful in reducing their inventories.
Corporate finance. The financing of business expansion did not give
rise to major problems during 1951. As already noted, Government inducements through tax amortization, loans, and aids such as loan guarantees, helped to expedite some more urgently needed projects, but covered
in all only a minor fraction of capital investment requirements.
Despite a large decline in their earnings after taxes, nonfinancial corporations' total use of funds in 1951 for fixed and working capital was about
40 billion dollars, as large as during 1950, and 10 billion dollars larger than
in any other postwar year. (See chart 23 and appendix table B-37.) Corporate outlays for plant and equipment were about 6 billion dollars greater
than in 1950. There were sharp declines in the rate of increase in customer
accounts and acquisitions of liquid assets. For the year as a whole, the
book value of corporate inventories showed a slightly greater increase than
during 1950, but by the end of the year inventory accumulation had
become very small.
About 40 percent of total uses of funds was internally financed, a smaller
proportion than in any of the other postwar years. As a result of high
corporate taxes and large dividend disbursements, retained corporate
earnings declined to about two-thirds of the level of 1950. Approximately
60 percent of total corporate profits was accounted for by tax liabilities,
and about 50 percent of profits after taxes was paid out in dividends.
Corporate depreciation allowances expanded about 1.2 billion dollars above
1950, increased somewhat by rapid amortization as an inducement to certain
types of expansion.
A record total of 24 billion dollars was obtained from external sources
of funds, including the corporations' own reserves of about 8.5 billion
for Federal income taxes. Increases in bank loans and mortgage loans
were moderately larger than during 1950; net new issues of stocks and
bonds exceeded the 1950 total by 60 percent. The huge increase in bond
issues, which occurred despite significant increases in interest rates, was
mainly for the financing of capacity expansion in the utilities, and in the
iron and steel, nonferrous metals, machinery, and chemical industries.
International transactions
In 1951, the expansion of defense and private demand in other countries
of the free world, supported by increased military aid from the United
States, brought about an expansion of United States exports of goods and

CHART 24

EXPORTS AND IMPORTS
OF GOODS AND SERVICES
Since early 1951, rising 1 exports and slackening imports
have increased the United States export surplus.
BILLIONS OF DOLLARS*

BILLIONS OF DOLLARS*

20
EXPORTS OF GOODS
AND SERVICES1'

10
^IMPORTS OF GOODS
AND SERVICES-1'

I
I

I
2

I
3

1947

I
2

I
3

1948

I
2

1949

I960

1951

*ANNUAL RATES.
•^INCLUDES INCOME ON INVESTMENTS.
^PRELIMINARY ESTIMATES BY COUNCIL OF ECONOMIC AOVISERSs
SOURCE: DEPARTMENT OF COMMERCE (EXCEPT AS NOTED).

services to a peacetime record of more than 20 billion dollars. Imports of
goods and services reached a new high during the year, despite a large
decline in the quantity of commodity imports during the second and
third quarters which accompanied the lull in private demand. The rise
in exports of goods and services during the year exceeded that in imports,
and the United States export surplus, which had fallen to an annual rate of
1.5 billion dollars in the second half of 1950 under the impact of the sharp
post-Korean rise of merchandise imports, increased to one of approximately
6.5 billion dollars in the second half of 1951. (See chart 24 and table 7.)
United States exports. Total exports of goods and services in 1951 were
about 40 percent above the 1950 level, with commodity and service items
both running higher. (See appendix tables B-38 and B-39.) The large
volume of commodity exports in 1951 reflected the high demand for goods
in virtually all foreign countries resulting from the rearmament programs
abroad, the high incomes of the raw-material-producing countries, and

TABLE 7. United States exports and imports of goods and services
[Billions of dollars]
Exports of
goods and
services *

Period
1950

1951 »

Annual rates:
1950— First half
Second half
1951— First quarter
Second quarter
Third quarter a
Fourth quarter

_ .

Imports of
goods and
services 1

Surplus of
exports

14.4
20.2

12.1
15.2

2.3
5.0

13 6
15.3

10 5
13.8

3.1
1.5

17.5
21.1
20 3
21.9

15.7
15.8
14.3
14.9

1.8
6.4
6.0
7.0

i Includes income on foreign investments.
* Estimates based on incomplete data; fourth quarter by Council of Economic Advisers.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (except as noted).

accelerated programs of economic expansion in underdeveloped areas.
Recorded commodity exports reached a peak value of 14.9 billion dollars,
compared with 10.3 billion dollars in 1950, as a result mainly of increased
quantities of goods shipped and, to a lesser extent, higher prices for exports. (See appendix tables B-41 and B-42.) Exports financed under the
Mutual Defense Assistance Program in 1951 nearly tripled their 1950 level
of 500 million dollars, and exports excluding MDAP shipments rose from
9.7 billion dollars to approximately 13.8 billion dollars.
All economic classes of exports increased above their 1950 levels in dollar
value, with exports of coal and wheat, for example, doubling not only in
value, but in quantity as well. Exports of semi-manufactured goods and
finished manufactures were more than 50 percent above their 1950 dollar
values, judging from data for the first 10 months of 1951. Approximately
three-fourths of the increase in the value of exports of finished manufactures represented larger quantities; the remainder represented higher
prices. Despite domestic scarcities, exports of machinery in 1951 were
more than 30 percent greater in dollar value than in the previous year.
The value of agricultural machinery exports was 29 percent above the
1950 level, construction machinery 40 percent higher, and mining equipment exports were up by more than 38 percent.
United States imports. Purchases of both goods and services abroad increased above their 1950 levels, despite a large decline in commodity imports in the second and third quarters of 1951. (See appendix tables B-38,
B-43, and B-44.) These imports in the year as a whole were 11.2 billion
dollars, compared with 8.9 billion in 1950. There was also an increase in
Government purchases of goods and services abroad in connection with
the defense program and the war in Korea, with Government expenditures for services abroad rising rapidly.
The impact of the Korean outbreak on United States commodity imports
began to weaken after the first quarter of 1951. Total commodity im-

ports, after rising to an all-time high in March, declined steeply from April
through September, and increased somewhat in the final quarter. The
decline was almost entirely due to smaller quantities of goods entering the
country. Average unit values of imports continued to rise through June,
and have since declined only slightly. Although spot prices of worldtraded materials had begun to slip after the first quarter, the decline was
not reflected in unit values until the third quarter because of the lag between
the placing of orders and deliveries. In addition to seasonal movements,
the fall in imports reflected in part the leveling off of general consumer and
business buying which characterized the United States economy, and in
part the availability of ample inventories of imported commodities which
had been accumulated during the second half of 1950 and the first quarter of
1951 in a wave of anticipatory buying. Although the decline in imports
occurred in all commodity categories and from all areas, it was largest
both in dollars and in percentage terms in crude foodstuffs, imports of which
dropped 48 percent. Imports of crude materials declined 24 percent during the same period.
This substantial 6-month decline in total imports illustrates, among other
things, the extreme short-run sensitivity of our imports to domestic business
activity and to the level of inventories of imported commodities.
Imports in 1951 of certain scarce basic materials, including tin, lead,
and zinc, were considerably below their 1950 levels, as table 8 shows.
In the cases of lead and zinc, the decline was due mainly to foreign
prices being higher than the domestic ceilings. The decline in tin imports began in late 1950, but its continuation in 1951 reflected the
decision of the Government early in March, when prices were about
$1.80 a pound, to suspend tin purchases until prices were more reasonable.
After the United States withdrew from the market, tin prices fell; but
since July, when they were as low as $1.00 on the London market, they
have gradually risen. Despite the decline of imports during 1951, tin
consumption in the United States was maintained at about its 1950 level.
As a result, industrial stocks were reduced, and by the end of the year they
were at very low levels.
TABLE 8.—United States imports of selected metals
[Thousands of short tons, annual rates]
Period

1949

Copper

1950— First half
Second half
1951— First half
Second half *

. _
. _

Lead

Tin

Zinc

569

409

110

285

701
510

429
677

342
470

532
582

215
215

113
129
77
59

368
314

i Estimates based on data available through October.
Source: Department of Commerce.

Imports of copper in 1951, although at a lower level than during the
first half of 1950, were fairly well maintained in the face of tremendous
world demand.

Foreign aid and other financing of export surplus. In 1950, the United
States export surplus of goods and services was smaller than foreign aid expenditures, and foreign countries were able to accumulate gold and dollar
reserves. In 1951, aggregate foreign aid rose only slightly above 1950
levels and, at approximately 4.6 billion dollars, was less than the export
surplus. (See appendix table B-40.) Foreign countries as a whole accumulated gold and dollar assets in the first part of the year, but in the second
half, losses by the United Kingdom, France, and a few other countries
outweighed continued accumulation elsewhere.
Although private capital exports declined below their level in 1950, when
they had been inflated by a speculative movement in the third quarter,
reinvestment of undistributed earnings from direct investments abroad,
which are not counted as part of capital outflow, probably increased in
1951. Direct investment of United States capital abroad, which had declined in 1950, dropped further in 1951. Much of the decline in direct
investment is accounted for by reduced investment in foreign petroleum
properties, resulting from the fact that facilities necessary to meet the estimated requirements of the near future have been completed. Despite the
measures to encourage foreign investment noted in Part III of this Review,
there has been little reduction of the basic obstacles to United States investment abroad.
Government fiscal operations
There was a marked shift in the budgetary position of the Federal Government during calendar 1951. Early in the year, at the time of the heavy
income tax payments, a large surplus was accumulated in the conventional
budget accounts. Thereafter, the seasonal decline in receipts and the
steadily rising trend of expenditures for national security programs caused
a sizable budget deficit.
For the year as a whole, Federal expenditures aggregated 56.8 billion
dollars, and net budget receipts 53.5 billion. Both totals represented substantial increases above the preceding year. Only in the wartime years
1942-1945 were expenditures higher than in 1951, while last year's budget
receipts were by far the highest in the Nation's history.
The budget deficit of 3.4 billion dollars in calendar 1951 compares with
the deficit of 400 million dollars in 1950. The increase in the public debt
was from 256.7 billion dollars at the end of 1950 to 259.4 billion at the
close of 1951. A reconciliation of these changes with trust accounts and
other transactions, and with changes in the General Fund balance is shown
in table 9.
The trend of the total Federal debt is illustrated in chart 25. The rise
in budget receipts permitted some debt retirement in late 1950 and early
1951. In fact, not until October 1951 did the total public debt rise significantly above the amount outstanding at the end of June 1950. Exclusive of the amounts held by U. S. Government agencies and trust funds,

TABLE 9.—Summary of Federal fiscal operations
[Billions of dollars]
Calendar year 1951
Calendar
year 1950

Item

Budget accounts:1
Net receipts
E xpenditures

Surplus, or deficit (— )
Trust accounts, clearing account, and other transactions, excess of
receipts, or expenditures ( — )
Investments of Government agencies and trust accounts in public
debt securities (net), excess of investments (—)

Total

First
half

Second
half

37.8
38.3

53.5
56.8

29.7
25.6

23.8
31.3

— 4

-3.4

4.1

2.5

2
(_
)

Total
Net increase, or decrease (— ) in public debt
Net increase (— ) or decrease in General Fund balance

-2.6
-.4
.4

Total..
Public debt 8
General Fund balance 3

-3.4

256.7
4.2

27?"
-.1

-2.0
4.6

-1.5
-3.1

-7.5
1.6

-1.4
-7.3
4.2
3.1

2.6

-4.6

7.3

259.4
4.3

255.2
7.4

259.4
4.3

i Gross receipts less appropriations to Federal Old-Age and Survivors Insurance Trust Fund and refunds
of 8receipts.
Less than 50 million dollars.
»End of period.
Note:—Public debt excludes guaranteed obligations, which total less than 50 million dollars.
Source: Treasury Department.

the debt was lower at the end of 1951 than at.mid-1950. (See appendix
tables B-29 and B-30.)
Public debt operations. In addition to a moderate amount of new borrowing during 1951, the Treasury engaged in a substantial volume of
refinancing, the greater part of both operations falling within the second
half of the calendar year. All new marketable issues were short-term, as
were the marketable issues offered in exchange for maturing or called
marketable obligations. New money was obtained from the public by
increasing the volume of 3-month Treasury bills, by floating two issues
of a new type of Treasury bill, the tax anticipation series, and by issuing
a new series of nonmarketable Treasury savings notes, made more attractive
by interest rates in line with those on other short-term issues.
Public debt transactions of special significance in furthering the policy
of keeping the debt outside the banking system were the offer in March of
long-term nonmarketable convertible bonds in exchange for two series of
long-term marketable bonds, and the optional extension of maturing Series
E savings bonds. Of the 19.7 billion dollars long-term bonds to which
the exchange offer applied, 13.6 billion were turned in for the new nonmarketables. Under legislation approved in March, holders of maturing
Series E bonds were given the privilege of holding the bonds another 10
years, during which they would earn an over-all rate of return equal to
that of the first period of ownership, or of exchanging them for Series G

CHART 25

THE PUBLIC DEBT
At the end of 1951, Government debt held outside Government
investment occounts was unchanged from a year ago. The increase
in the holdings of these accounts equaled the rise in the total debt.
BILLIO NS OF DOLLARS
275

BILLIONS OF 00 LLARS

275
END OF QUARTER

250 -

250

TOTAL PUBLIC DEE

225
TOTAL EXCLUDING ^
DEBT HELD BY
^
U.S. GOVERNMENT
INVESTMENT ACCOUNTS

200 —

0
1

I
2

—~

!r-

200

I
3

225

i
2

i
3

0
4

1951

I960
CALENDA R YEARS
i/ OBLIGATIONS ISSUED OR GUARANTEED BY THE U.S. GOVERNMENT
SOURCE: TREASURY

DEPARTMENT

bonds. These options were made available in order to minimize the volume
of cash redemptions.
Most new Treasury borrowing during 1951 was at rising rates of interest.
For example, the average yield on new issues of 3-month Treasury bills,
which had been 1.22 percent for 1950 as a whole, was 1.40 percent in the
first quarter of 1951 and climbed to 1.65 percent by the fourth quarter. The
approximate yield to maturity on the new Treasury savings notes was raised
to 1.88 percent, compared with 1.40 percent on the previous series. (See
appendix table B-31.)
Consolidated cash accounts. On a consolidated cash basis, there was
a surplus of 1.2 billion dollars in the calendar year 1951. As shown in
chart 26, which is in terms of seasonally adjusted annual rates, the large
excess of cash receipts over cash payments in the first half of the year was
replaced by a cash deficit in the second half.
The difference between the surplus in the consolidated cash accounts
summarized in table 10, and the calendar year deficit in the conventional budget accounts given in table 9, is largely accounted for by
net cash receipts in the Federal Old-Age and Survivors Insurance and

TABLE 10.—Government cash receipts from and payments to the public
[Billions of dollars, seasonally adjusted annual rates]

Federal Government:
Cash receipts
Cash payments.

Calendar year 1951

Calendar
year
1950

Receipt or payment

_ ._.!
.

Total i

First half

Second
hain

42.4
42.0

59.3
58.0

58.6
51.4

60.0
64.7

1.2

7.2

-4.7

State'and local governments:
Cash receipts
.
._.__-_..
Cash payments. _ . .
State and local cash surplus, or deficit (— )

18.4
19.3

20.0
20.4

19.7
20.2

-.9

-.4

-.5

20.2
20.6
-.4

Total government:
Cash receipts
_.
Cash payments

60.8
61.3

79.3
78.4

78.3
71.6

80.2
85.3

-.5

6.7

-5.1

Federal cash surplus, or deficit (— )

Total cash surplus, or deficit (— )

i Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: See appendix table A-5.

other trust funds. Most of the payroll taxes, for example, are appropriated
directly to the OASI Trust Fund and are excluded from net budget receipts.
All of the important sources of receipts shared in the rise from 1950
to 1951. Not only has the tax base grown, as a result of the marked business expansion and the price rise, but substantially higher tax rates have
become effective. Three major revenue bills, estimated to yield a combined
total of about 15 billion dollars in a full year of operation, were enacted
between September 1950 and October 1951. In addition, the tax base for
OASI was broadened as of January 1, 1951.
TABLE 11.—Federal cash payments to the public by function
[Billions of dollars, seasonally adjusted annual rates]

Function

Total cash payments
Military services
. _ __..
International security and foreign relations
Veterans' services and benefits
Social security, welfare, and health - . _
Agriculture and agricultural resources
Interest
Other
Deductions from Federal employees' salaries for retirementClearing account for outstanding checks and telegraphic
reports

Calendar
year
1950

Total i

First
half

Second
half*

42.0

58.0

51.4

64.7

13.5
4.0
8.9
3.3
1.3
4.3
7.1
-.4

30.6
4.8
6.0
4.4
.9
4.2
7.4
-.4

25.4
5.0
5.9
4.3
.7
4.1
6.3
-.4

sTi

-.1

i Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: See appendix table A-7.

977891—52-

Calendar year 1951

4.6
6.1
4.5
1.0
4.3
8.5
-.4

A functional breakdown of Federal cash payments is presented in table
11, in terms of seasonally adjusted annual rates. Apart from the increases
for the military services and the international programs, which are discussed below, the major changes in expenditures from 1950 to 1951 were
the reductions of about one-third in payments for veterans' services and
benefits and of more than one-third in agricultural programs, and the
increase of about one-third in social security and related programs. The
latter increase was associated in large part with the liberalization of benefits
provided by the 1950 amendments to the Social Security Act. The "other"
category in the table includes such programs as atomic energy and Defense
Production Act activities, which expanded in 1951.
In the special classification of Federal cash payments by type of recipient
and transaction, presented in table 12, the major change from 1950 to 1951
TABLE 12.—Federal cash payments to the public by type of recipient and transaction
[Billions of dollars, seasonally adjusted annual rates]

Classification of payment

Direct cash payments for goods and services, excluding military
services:
To individuals for services rendered
_
To business and foreign countries for goods and services
Loans and transfer payments to individuals.
Loans, investments, subsidies, and other transfers to business
and agriculture
Loans and transfer payments to foreign countries and international institutions
._ __
Military services, cash payments for goods and services
__
Clearing account for outstanding checks and telegraphioreports.
Total Federal cash payments to the public

Calendar year 1951

Calendar
year
1950

Total »

3.5
3.3
13.5

3.7
3.4
11.3

3.5
2.8
10.7

3.9
4.0
11.9

4.8

4.6

4.3

4.9

3.8
13.2
-.1

4.6
30.3
.1

4.8
25.2
-.1

4.3
35.4
.3

42.0

58.0

51.4

64.7

First
half

Second
half*

i Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: See appendix table A-8.

is shown to be in payments for goods and services for the military. Loans
and transfer payments to individuals declined, largely because of lower
dividend payments to veterans holding National Service Life Insurance,
while loans and transfers to foreign countries and international institutions
increased.
Further tabulations of Government financial transactions will be found
in appendix A, in connection with the supporting tables for the Nation's
Economic Budget.
Major national security programs. Cash expenditures for the military
services advanced from 13.5 billion dollars in 1950 to 30.6 billion dollars
in 1951. This increase was larger than the rise in total cash payments in
this period. In the second half of 1951, payments for the military services
were about 40 percent larger than in the first half. Outlays for the international programs increased to 4.8 billion dollars in 1951, but they were
somewhat lower in the second half of the year than in the first half.

CHART 26

FEDERAL CASH RECEIPTS FROM
AND PAYMENTS TO THE PUBLIC
Steadily rising cash payments in 1951 turned the surplus
in the f i r s t half of the y e a r into a deficit in the second half.
BILLIONS OF DOLLARS*

BILLIONS OF DOLLARS*

I CASH RECEIPTS
«CASH PAYMENTS

1st HALF

2nd HALF
1950

I st HALF

CALENDAR YEARS

End HALF

1951

•* SEASONALLY ADJUSTED ANNUAL RATES.

SOURCES'- TREASURY DEPARTMENT AND BUREAU OF THE BUDGET.

The category of "major security programs" includes, in addition to the
programs mentioned above, these other programs which are not shown
separately in table 11; atomic energy, maritime, civil defense, economic
stabilization, and Defense Production Act activities. In the aggregate,
these programs came to 1.9 billion dollars in 1951, bringing the total for all
of the major security programs to 37.3 billion dollars.
These expenditure data are somewhat different from the estimates in the
national income and product accounts of the value of current production
being absorbed by the security programs. (See appendix table B-l.) The
difference is explainable partly by the lag of Federal payments behind
deliveries of goods and services, and partly by the fact that Federal expenditures are not always for currently produced goods and services but sometimes instead represent transfer payments or purchases of land or of existing facilities or equipment.
Major nonmilitary construction programs. Movements in total seasonally
adjusted expenditures for public construction (excluding military and naval
construction, but including State and local as well as other Federal con-

struction) showed mixed tendencies during 1951; in contrast, total private construction expenditures fell continuously after the first quarter.
This contrast partly reflected greater inherent difficulties in reversing the
trend of many large-scale public projects, and partly the important role
which some of these public programs must play in sustaining the economy's
strength in the "long pull" defense period. Table 13, which shows specified
types of new public construction expenditures in 1951 prices for selected
years since 1939, sets the 1951 record in better perspective.
During the past 2 years, public construction of the developmental type
has increased, but by less than would have occurred had there been no
mobilization program. The increases from 1950 to 1951 were for school
construction and for housing, much of it in defense areas. Both were
TABLE 13.—New public construction expenditures for major development programs
[Millions of dollars, 1951 prices]
Program

1939

Total
Education
. __ .
..
Health
_._
Development of natural resources
Transportation
_
Housing ._ __
_
_
-

-_
_
_

1943

1948

1950

1951

i 5, 637

2,752

3,773

5,728

5,771

i 1, 184
335
1 1 093
* 2, 871
154

130
90
530
584
1,418

653
240
743
1,964
173

1,205
504
960
2,688
371

1,486
496
884
2,305
600

i Includes Works Progress Administration projects, adjusted for probable lower productivity.
NOTE.—Construction expenditures by Federal, State, and local governments are included.
Source: Department of Labor.

almost entirely State and local programs. Decreases took place in transportation (principally highways) and in natural resources development,
It is significant that for neither of these did the postwar peak of expenditures in 1950 reach the 1939 level in real terms.
State and local finance. Receipts of State and local governments increased by about 1.6 billion dollars, or 9 percent, from 1950 to 1951.
Most of the major sources of revenue shared in the increase which, while
reflecting in some degree recent adoptions of new taxes or higher rates,
was attributable for the most part to the prevailing high level of economic
activity. The increase in the total spending of these governmental units
from 1950 to 1951 was less than the growth in receipts. The combined
State-local deficit was reduced from 900 million dollars to 400 million in
1951. (See table 10.)
Despite record revenues, increases in tax rates were more general than reductions among State and local governments in 1951. Caution was also
shown in undertaking programs which would involve new expenditures,
although the increase of population, creation of new suburban areas, population shifts associated with defense activities, and other factors placed
State and local authorities under strong pressure to extend and improve
governmental services. To some extent, of course, the higher level of
expenditures in 1951 merely reflects increases in prices and wage rates.

III. Central Problems for 1952
ADVANCING THE SECURITY BUILD-UP

<J" over-all measure of progress in the security program is the virtual
doubling, from the end of 1950 to the end of 1951, of total security
expenditures for goods and services, which reached an annual rate of 45
billion dollars in the fourth quarter of 1951. Military expenditures during
the past 6 months have increased by the amount contemplated in the
fiscal 1952 budget. We are still a long way, however, from achieving our
basic security objectives of building up the military and economic strength
of the free world as a whole. Major difficulties have been encountered,
for example, in getting our military production program under way. These
difficulties involve chiefly the machine tool and other bottle-necks, and
design, engineering and production problems associated with the decision
to produce exceedingly complex equipment of the most advanced design,
rather than to concentrate on large-scale production of types already in use.

The proposed build-up
The security program now being submitted by the President calls for a
further increase in total security expenditures for goods and services from
the present annual rate of 45 billion dollars to a rate of almost 65 billion
dollars by the end of 1952. Under present plans, the maximum rate of
expenditures under this program would be slightly higher, and would probably be reached late in 1953. Besides a large further increase in expenditures for the military production programs which will supply United
States forces and meet our North Atlantic Treaty commitments, an increase is planned in the atomic energy and civil defense programs. Economic assistance to other free nations—needed to help some of them carry
out their mobilization programs and to help them strengthen their economies—is expected to be continued at approximately the present reduced
levels of expenditure. More than 85 percent of total security expenditures
in 1952 will be spent on the military establishment of this country and
on military goods for our Allies.
Although the 20-billion-dollar increase in the annual rate of security
expenditures expected during the next 12 months is about equal to the
increase achieved from the fourth quarter of 1950 to the fourth quarter
of 1951, its character will be substantially different. (See chart 27.)
Nearly all of the projected increase is represented by expenditures on
military hard goods and military construction, while about three-fifths

CHART 27

THE SECURITY PROGRAM
EXPENDITURES FOR GOODS AND SERVICES IN 1951 PRICES

During 1952, the annual rate of security expenditures is expected
to increase to a level about 20 billion dollars above the fourth
quarter of 1951. Most of the increase will be for military goods
and construction.
BILLIONS OF DOLLARS*

BILLIONS OF DOLLARS*

TOTAL SECURITY^
EXPENDITURES

25
OTHER SECURITY
PROGRAMS -^

MILITARY GOODS AND.
CONSTRUCTION !/

4th Qtr.

I960

4th Q1r.

4th Qtr.

2nd Qtr.

I95I

I952

I953

* SEASONALLY ADJUSTED ANNUAL RATES.
U INCLUDES MILITARY PERSONNEL COSTS AND OTHER SALARY EXPENDITURES OF THE DEPARTMENT OF DEFENSE,
ATOMIC ENERGY PROGRAM, STOCKPILING, AND FOREIGN ECONOMIC I NONMILITARY) AID.
^IHARO AND SOFT GOODS AND CONSTRUCTION FOR U.S. AND NATO FORCES.
SOURCES: DEPARTMENT OF DEFENSE, BUREAU OF THE BUDGET, AND
COUNCIL OF ECONOMIC ADVISERS.

of the increase during the past 12 months occurred in these categories.
The military production program calls for a doubling of hard goods deliveries and military construction within a year, with an increasing portion
represented by aircraft and other relatively hard-to-produce types of military equipment. Equipping the military forces as now planned will require
some further increase in deliveries of military equipment in 1953, and maintenance of a high rate of deliveries for a year or more. Deliveries of some
items will begin to decline fairly soon, as requirements are met, while deliveries of other items will continue to increase through the period.
Achievement of this expansion would increase the proportion of the
total national output taken for security purposes from nearly 14 percent
in the fourth quarter of 1951 to more than 18 percent in the corresponding
period of this year. For the year 1952 as a whole, between 17 and 18 percent of total output would be devoted to security. Indicative of the concen-

trated impact of the program, more than half of the national security output
of goods and services will come from the metalworking and construction
industries, though they account for only a little more than a quarter of the
national output as a whole.
Plans for the security program in the longer run are necessarily flexible.
The size and composition of forces, the extent of the build-up of war
reserves, and the rates of replacement of materiel all affect the longerrun cost of the program. As a rough guide, however, it has been
assumed that the total maintenance cost of forces now planned, plus the
atomic energy program, would be in the general range of 40 to 50 billion
dollars annually, until a firmer outlook for peace is established. In the
perspective of the probable size of the economy of the middle 1950's, a program of this general magnitude would not place us under an intolerable
economic strain. Such a program would take roughly one-eighth of the
total national output we could expect to have, with reasonably full use of
our resources. With success in meeting current objectives for capacity
expansion, most of the now serious materials problems would become relatively unimportant. The expected steel capacity of over 120 million tons,
and an aluminum supply of over 2 million tons, would take care of sustained
defense requirements and reasonably satisfy other needs associated with a
maximum employment economy. In the case of copper and some alloy
metals, our needs would have to be met in part by further development of
substitutes.
Speed of the build-up
The question has frequently been raised whether economic policy decisions
have interfered with the defense program, by providing too much civilian
production at the expense of munitions and military equipment. Some
confusion has been introduced into this question by the failure to distinguish
between (a) the intended size of the defense program and (b) the
difficulties which arise in trying to carry out a program of given size on
schedule. On the score of intended size, the Council does not believe that
the current defense program has been or should be determined primarily
by consideration of how much is left over for civilian uses, though the
effect of the program on our ability to become economically stronger deserves
important consideration. As we have many times said, a security program
even larger than that now under way—if found to be necessary on other
grounds—would be well within the economic capacity of the country, even
though it would raise economic problems of substantial import.
It does not appear that the security program thus far undertaken has
been slowed down by insufficient cutbacks in civilian use. It seems clear
that, for the most part, materials and manpower have been available
for military production when needed. It also appears that there have
been certain bottlenecks and shortages which could not have been appreciably alleviated by earlier or more drastic civilian cutbacks. The mobiliza-

tion officials have been wise in avoiding unnecessary dislocations by not
reducing civilian utilization of productive resources before the defense
program was ready to take up the slack.
Moreover, it may have been entirely wise not to have carried the military
program forward substantially faster by sacrificing the opportunity of constantly improving the quality of fighting equipment. The Council does
not attempt to evaluate such issues of military strategy. We can only point
out that, if a faster military build-up becomes necessary on security grounds,
its accomplishment would be impossible without more extensive civilian
cutbacks closely synchronized with the defense program.
In any event, strenuous efforts will be required to achieve the objectives
now set for 1952. Hard work is now under way to overcome the shortage
of machine tools, which will affect the aircraft production program for some
time to come, and to relieve the shortage of ferro-alloys, in part through
the development of substitutes. There is urgent need for firming up military production schedules and translating over-all requirements into bills
of particulars for materials, manpower, and tools.
ALLOCATING SCARCE MATERIALS
The availability of metals
To carry out the security program as now planned, while achieving
present objectives for expansion of basic capacity, and maintaining other
activities on a basis consistent with an extended mobilization effort, will
require some major shifts in the utilization of resources. These shifts are
imposed by the shortage of metals, and involve mainly the durable goods
sector of the economy, which accounts for about one-quarter of total national
output. In the nondurable goods and services sector, the mobilization
program will not require major resource adjustments. The impact on that
sector is discussed at a later point in this Review, mainly in terms of labor
availability and inflationary pressures.
Military requirements for the major metals will increase through most
of 1952, and at their peak will absorb roughly one-fifth of the steel supply,
one-third of the copper supply, and about half the supply of aluminum.
It is probable, however, that with large increases in supplies, these proportions will fall substantially in 1953. Thus the main materials impact, and
the main economic impact, of the military production program probably
will come during the next 12 months.
The upper panel of chart 28 indicates historical and prospective changes
in the supplies of copper, steel, and aluminum available, after deducting
military and stockpile requirements, for the output of investment goods,
consumer durable goods, public and private construction, and other nonmilitary uses. Comparison of 1952 with 1951 indicates a moderate reduction in the availability of steel and copper, and very sharp reductions in the
availability of aluminum, owing to rapidly rising military requirements.

CHART

METALS SUPPLY AND REQUIREMENTS
FOR CIVILIAN USE
In 1952, there will be moderately less steel and substantially
less aluminum and copper available for civilian use. This1 will
impose curtailments in nonmilitary construction, producers
durable equipment, and metal-using consumer goods.
INDEX, 1949 = 100
175

INDEX, I949s|00

175

150

125

100

1949

1952

1951

I960

BILLIONS OF DOLLARS
80
NONMILITARY METALS REQUIREMENTS

BILLIONS OF DOLLARS
80
PROJECTED

40
CONSUMER DURABLE GOODS
(METAL-USING)

{

20
PRODUCERS* DURABLE EQUIPMENT |

1949

1950

1951

SOURCES: DEFENSE PRODUCTION ADMINISTRATION AND
COUNCIL OF ECONOMIC ADVISERS.

1952

These reductions would leave the steel supply available for nonmilitary
uses some 15 percent above the 1949 level, and not much under the level of
the last 2 years. However, military requirements will impinge much more
severely on particular types of steel, notably high-alloy steels.
Comparing 1952 with 1951, supplies of copper available for civilian users
will be reduced by about 5 to 10 percent, and of aluminum about 25 percent; the exact reductions depending in part on whether it is decided that
stockpiling can be resumed and, if so, at what rate. Available supplies of
copper will be reduced nearly to the 1949 level, while aluminum supplies
for civilian use will decline about one-third below the 1949 level. Part of
these reductions, however, had already occurred by the fourth quarter of
1951. It must be emphasized that, although these figures are based on
the best current estimates of total supplies and military requirements, any
of a number of factors could alter them appreciably.
Beginning in 1953, continuing large increases in supplies are expected to
result in a moderate increase in the availability of steel for nonmilitary
uses, and a substantial increase in aluminum. Some improvement in the
copper position also appears possible. A major factor in determining how
rapidly consumer durable goods and other types of restricted output can rise
will be the extent to which steel and aluminum are substituted for copper.
For the near term, the very tight aluminum supply will limit the latter type
of substitution.
Major required adjustments
There is no one formula for apportioning limited material supplies.
Even after military production objectives have been determined, there is
wide range for judgment in determining a rational pattern of metals use.
If the maintenance of short-term economic stability were to be given
overriding priority, materials allocations policy would attempt to maximize
the availability of metals for consumer output at the expense of their use
for investment. This policy would probably prolong the period of metals
shortages and comprehensive direct controls. On the other hand, the
attempt to overcome basic shortages of materials, power and transport at
the earliest possible date would require drastic reductions in the use of
metals for consumer output and for the construction of schools, hospitals,
and other types of investment of high utility.
Although it is not possible to present in detail the adjustments which the
reduced availability of materials will impose, their general nature and
implications may be indicated. The lower panel of chart 28 indicates the
changes that have occurred since 1949 and the change in prospect for
1952 in the dollar volume (measured in terms of constant prices) of the
major nonmilitary metal-using activities. Chart 29 compares the estimated
distribution of steel uses in 1952 with the actual distribution in 1950 and
1951. The projected estimates in these charts are consistent with the

100

CHART 29

USES OF STEEL
Less steel will be available for nonmilitary use in 1952. The
reduction will mainly a f f e c t automobiles, household appliances,
and some types of construction,
MILLIONS OF TONS'

MILLIONS OF TONS

90
PROJECTED

TOTAL USES
OF STEEL S

70
MISCELLANEOUS-

—

ADDITIONS TO
INVENTORY
"

EXPORT MILITARY

50
CONSTRUCTION-*-

PRODUCERS*
DURABLE
EQUIPMENT, —
EXCLUDING
AUTOMOBILES

CONSUMER
DURABLE GOODS,
INCLUDING ALL_,
AUTOMOBILES ""

I960
SOURCE:

1951

DEFENSE PRODUCTION ADMINISTRATION.

101

1952

materials supply picture, as described above, and witK present allocation
policies.
These charts indicate that between 1950—the peak year of nonmilitary
uses in metals—and 1951, there was only a moderate reduction in nonmilitary uses of metals, concentrated mainly in consumer durable goods and in
residential construction. The decline in residential construction has saved
copper, but not an important amount of steel. Steel used in consumer
durable goods, including automobiles, declined about 15 percent, while other
major uses were maintained or expanded.. Steel used in producers' durable
equipment increased by about a third. This expanded use and the maintenance of total construction, despite cuts in particular types of construction,
were in part associated with increasing investment in the major industrial
expansion programs.
The much larger decline in the availability of metals in prospect for 1952
will force curtailments in all these metal-using activities. A reduction of
more than 20 percent in total output of consumer supplies—housing, automobiles, and appliances—from the 1951 level is indicated by the materials
allocations for the first quarter of 1952. Some further reduction in these
metal allocations is planned for the second quarter. This makes allowance
for considerable conservation and change in types of goods bought, since
the percentage reduction in the permitted use of copper and aluminum is
greater than the projected cut in consumer outlays. In view of the expected
increase in programmed investment, discussed in the next section, the maximum reduction in expenditures on producers' durable equipment may be
not more than 10 to 15 percent. In addition, it will be necessary to reduce
total private and public nondefense construction (other than residential)
about 15 percent below the 1951 level, and some types by much more, even
if copper is used sparingly. Steel used in nonmilitary construction will not
decline by as much as the over-all dollar volume of such construction, because of the shift toward industrial construction which uses relatively more
steel. Sufficient steel supplies should be available to permit an increase in
steel used for maintenance and repair. The much more restricted availability of copper and aluminum might even operate to prevent a full
utilization of steel capacity in 1952.
Major problems in materials allocation
The allocation process moved ahead on schedule in the second half of
1951, to the stage of comprehensive quarterly allocation of steel, copper,
and aluminum under the Controlled Materials Plan; and additional materials, components, and equipment items were subjected to other forms
of allocation or use restriction. The use of this machinery for the achievement of a highly selective pattern of materials use raises some problems.
The Controlled Materials Plan, as originally instituted, provided no
way to insure that the producers of common-use products and components,
having gotten their allotments of materials^ would supply defense con-

102

tractors and subcontractors in preference to less essential users. Throughout the latter part of 1951, there was increasing difficulty in getting essential
components and equipment for military production and high priority investment projects, despite the fact that components and equipment
manufacturers were producing at record rates. The National Production Authority is now attacking this problem, primarily by spot expediting actions to move urgently needed component and equipment orders to
the front of the producers' production and delivery schedules. For some
types of equipment, where necessary and feasible, this approach will eventually involve complete control over producers' schedules.
This line of action can usefully supplement the basic operation of advance
planning for production of equipment and components to meet the needs
of scheduled military and industrial expansion programs, so that allotments
of materials can be geared to the future rather than the past.
Effective control of inventory accumulation is another problem. There
is evidence that many producers' inventories of scarce materials are substantially in excess of operating needs. The necessary control techniques
for dealing with this problem are available, and the problem is one of
enforcement. The production agencies are taking action to locate and
redistribute excess inventories. Continual screening of military requirements also is necessary to insure that inventories are kept to a minimum.
INCREASING PRODUCTION
Production and inflation
It is often taken for granted that increasing production is the natural
economic remedy for the inflationary pressure which the defense program
produces. The relation between production and inflation is, however, not
a simple one.
The central task in halting inflation is to bring supply and demand into
balance at the prevailing price level. Whether an increase of output actually
will tend to bring demand and supply into balance at the current price level
depends on a number of factors.
An increase of production in the form of highly specialized munitions and
military equipment may widen the gap between the demand and supply of
other goods. The reason for this possible result is that workers and businesses receive increases in income, as a result of expanded munitions production. These increases in income normally result in a rise in consumer
and business demand for civilian goods, the supply of which has not been
increased.
A very different case is one in which the increase reflects increased efficiency in the production of widely used civilian goods, for example agricultural products, which could result in a decline in the price per unit of output.
In this case, the increased production may tend to narrow the gap between
demand and supply, because the supply is increased while private money
incomes may not rise correspondingly.

103

Another case is one in which the increase in the production of goods
(other than specialized military goods) is achieved by increased employment. This has the result of increasing both the market supply of goods
available for civilian purchase, and the incomes of consumers and businesses.
If not all of the added income is reflected in increased spending, such an
increase in production may be expected to have a net effect of narrowing
the gap between demand and supply, although by only a fraction of the
amount by which production is increased. If, however, the additional production is achieved only by a substantial increase in unit cost, for example
through the payment of premium compensation to workers for overtime, the
income added in connection with the production might have a net inflationary effect.
One of the chief methods of increasing future production is investment in new productive facilities, and in the modernization of existing
facilities. If such investment is made in those industries where plant
capacity and efficiency limit the increase of production and of productivity,
the effect after the new facilities come into use is to increase supply and
narrow the gap between demand and supply. During the period when the
investment is being made, however, materials and other resources are diverted from producing consumer goods into the production of capital goods,
which of course cannot be consumed, while income payments continue to be
made to workers and other producers. An expansion of production that
takes the form of increased investment thus would increase inflationary
pressure during the period before the new facilities were brought into
productive use.
The fact that some kinds of increases in production create inflationary
pressures should not be interpreted as indicating that such increases must
therefore be postponed or abandoned. Certain types of output must be
expanded despite the fact that they add to inflationary pressures. Thus,
military production is undertaken for imperative reasons which do not
permit its abandonment for the sake of lessening inflationary pressures.
Similarly, the expansion of the industrial mobilization base may be so important that any immediate inflationary pressures which might be produced
may have to be accepted. The inflationary impact of such programs, nonetheless, is a reason for subjecting them to controls which will guide the expansion of production into the most essential lines, and for adopting other
stabilization measures to limit demand. An expanding supply of consumer
goods is likely to improve consumer acceptance of such restrictions as are
needed. Clearly, an expansion of total production, if it is well balanced,
makes a major contribution toward the expansion of our economic strength.
Factors limiting increase of total production
Given adequate demand for goods, the problem of increasing production
is essentially one of overcoming certain physical limiting factors. With
respect to most nondurable goods and services, actual output during the

104

coming year undoubtedly will depend mainly on the intensity of demand.
In several of the soft goods industries, the available labor force, plant capacity, and materials would permit increases of production. With respect to
many consumer and producer durable goods, however, the availability of
raw materials—especially metals—is the limiting factor determining possible
increases in output. Expanding metals output is largely a problem of productive capacity, including electric generating capacity. Limitations on the
supply of manpower, with a few special exceptions, have not interfered
with the growth of production, and the prospect is that the supply of labor
can be increased to meet the expanding need, at least over the next 12
months.
Increasing the supply of raw materials
The most immediate restraint on production, both in the United States
and throughout the free world, continues to be the limited supply of certain
raw materials. Comparing 1951 with 1950, the free world output of many
important raw materials showed large gains. (See appendix table B-17.)
Increasing the free world supply of certain raw materials, however, continues to be a major problem.
Encouragement of private investment in raw materials production abroad
requires reasonable protection of such investment and of fair profits realizable in dollars. Conversely, countries that engage in needed expansion
want assurance that neither shortages nor price inflation in the United
States will undercut their own efforts to expand production. In some
instances, investments are needed in such ancillary facilities as a transportation system. For example, the effective exploitation of Labrador and
Quebec iron ore will depend largely on the early completion of the St.
Lawrence seaway project.
Pricing and related devices for encouraging production of essential metals
and minerals deserve continued judicious use. First, guaranteed floor prices
in long-term procurement contracts are now being used, and can be extended where necessary. Floor price guarantees help to increase domestic
and foreign supplies of raw materials, by eliminating the risk of a postemergency price decline to levels which would make additional production and investment unprofitable. Second, where the costs of domestic or
foreign marginal mines producing essential scarce minerals exceed United
States price ceilings, the use of premium prices or their equivalent would
be desirable in cases where protection from abuses cart be assured. Premiums should be limited in time and amount, and should apply only to the
high-cost portion of output. The same policy is appropriate to encourage
new development projects. Third, a program to increase supplies of certain minerals and metals by adjusting price ceilings is appropriate where
other methods less likely to impair price stabilization objectives are not
effective. Recent ceiling price changes for lead and zinc represented an
increase to domestic producers, and should tend to increase domestic sup-

105

plies. These price changes, however, have not yet resulted in significant
improvements in imports. Fourth, removal of the existing United States
tariff on lead, zinc, and certain other metals would be desirable, where this
action would encourage imports or would ease the pressure on domestic
prices.
Technological research and related efforts to conserve materials in short
supply by simplifying designs, using more plentiful substitutes, or salvaging
and re-using materials, can help in increasing total production, and in easing allocation and production problems. Specific suggestions have already
been worked out in the construction industry for effecting substantial savings in the use of structural steel, through the substitution of reinforced
concrete and masonry or wood construction. Substantial savings of copper
are planned in the electrical, automotive, and other industries by the substitution of aluminum as it becomes more plentiful.
Longer-range requirements for raw materials, and the best methods of
meeting them from sources in the United States and the free world generally, have been under intensive study by the President's Materials Policy
Commission for the past year. The report of this Commission will soon
be completed.
Enlarging the labor supply
Availability of raw materials is the limiting factor in determining the
possible increase of output in the durable goods sector of the economy.
The manpower needs for this sector, involving the defense program, constitute a priority which should be met. Defense and defense-related production will require about 2l/$ million more workers in the fourth quarter of
1952 than in the fourth quarter of 1951.
Some of these essential workers will be provided by cutbacks in the output
of civilian durable goods and nondefense construction. Allowing also for
some lengthening of working hours, and a modest increase in productivity,
it seems that an increase in total civilian employment of about 15/3 million
would be required to service the primary defense effort, and to provide an
adequate labor force for such increases in production in other sectors of
the economy as might be expected in the light of probable increases in
incomes and demand. The small possible addition of workers through
further reducing unemployment is about counterbalanced by the probable
withdrawal of manpower to enlarge the armed forces.
Judging from previous experience, a net increase of about 1J/3 million
in total civilian employment during 1952 is well within our capabilities.
An annual increase in the labor force of about 1 million has been usual
since the war, even without such active recruitment as will occur, at least
in a few industries, during the coming year.
Though there is no general manpower shortage nor any near-term prospect
of one, some localized labor shortages do exist. In November 1951, 6 of the
174 major labor market areas in the United States either had, or were

106

expected shortly to have, labor shortages which threatened to impede essential activities. Another 60 areas were listed as having a "balanced" labor
supply; in some of these, the labor market will tighten as the pace of defense
production is stepped up.
In addition to localized manpower shortages, there are some urgent
problems arising from scarcities of workers with particular skills, such as
those in the fields of engineering, design, and machinery operation, which
require considerable training to develop. The Government is stressing the
importance of more adequate training programs, and is assisting employers,
schools, and labor to improve and expand such programs. When shortages
of highly skilled metal workers threatened seriously to hamper machine
tool production, the industry was given priority in recruitment of labor
through the Employment Service. Special consideration also was given
to machine tool workers who were liable to call by Selective Service or as
reserves by the Department of Defense. The Department of Labor and
the Selective Service System are developing a joint policy which will provide more deferments for apprentices in skilled trades. In addition, every
effort should be made to expand the number of "on-the-job" trainees.
Full use should also be made of vocational education in public schools,
which contributes importantly to the supply of skilled and semi-skilled
workers.
Preventable illnesses and accidents, on and off the job, can be reduced
by strengthening public health, medical care, safety, and "related programs.
Strengthening of the existing Federal-State vocational rehabilitation system
could, over the years, return to the labor force hundreds of thousands of
workers who are already trained and experienced.
In addition to specific labor shortages in industry, there are increasing
evidences of farm labor shortage. The steps being taken to meet this shortage include more extensive use of persons not normally in the labor force,
community participation in emergency situations, fuller exchange of labor
between farmers and between States, better housing facilities, and improved
informational, health, and welfare services for migrant workers.
Part of the solution for manpower problems lies in placing facilities expansions and contracts in areas where there are ample labor supplies, thus
reducing the need for migration. To ensure that manpower considerations
are given adequate attention in placing defense contracts, the Department
of Defense has developed a plan under which no such contract will be
placed in a labor shortage area without prior consultation with the Employment Service.
But not all defense operations can be carried on in areas of adequate labor
supply. The lack of housing and community facilities is the greatest
obstacle to recruiting sufficient workers where it is necessary to bring them
in from other localities. By mid-January 1952, some 140 local areas had
been classified as critical from the point of view of insufficient housing and
community facilities and services to accommodate persons migrating to

107
977891—52

military installations and defense plants. The number of such areas is
expected to increase substantially during 1952. Special assistance provided
by the Defense Housing and Community Facilities and Services Act has been
extended to some 65,000 private housing units in these areas. Although
the bulk of future need will continue to be met by private construction,
larger appropriations for publicly financed defense housing will be required
for those types of housing and in those places where private enterprise cannot be expected to meet the need. Additional aid to critical areas for
essential community facilities and services should also be provided.
Guiding investment
The necessary shifts in resource use outlined above will involve some
further major changes in the pattern of private and public investment.
To meet war preparedness objectives, and to work toward the substantial
elimination of basic shortages by 1954—when, so far as can now be judged,
military production will have passed its peak and be on the way toward a
substantially lower maintenance level—investment in Government-aided
industrial expansion programs will have to increase further. As tentatively
planned, these programs will expand from a level of around 14 billion
dollars in 1951 to about 15 l /z billion a year over the next 2 years. (See table
14.) In addition, essential developmental investment, including that for
schools, hospitals, highways, and natural resources, will probably amount
to roughly 5 billion dollars in each of the next 2 years.
Reduced availability of materials is expected to force a reduction, comparing 1952 with 1951, of at least one-quarter in all other types of public
and private investment. Though part of this decline in the rate of outlays
had occurred by the end of 1951, full adjustment to such a pattern cannot be
accomplished all at once, because of the necessity of completing a substantial volume of construction now under way.
Programmed expansion of productive capacity. The basic expansion programs are an important part of an economic strategy for a long period of partial mobilization. They contemplate, in addition to meeting the top priority
needs of the military, the provision of an enlarged base of additional capacity—not only as a reservoir of quick strength in the event of war, but also
as the long-range solution to the problem of adequate supply in all major
sectors of the economy while maintaining a large security program.
The bulk of the investment in such programs is private, though publiclyowned facilities constitute a major share of the program for expansion of
munitions facilities, and a quarter to a third of the electric power program.
The Federal Government has supported the private programs, however,
with various forms of financial assistance, in addition to giving them preference over other investment in the allocation of scarce materials.
The full industrial build-up program necessary for meeting mobilization objectives extends well beyond 1952. The progress made during 1951,
the availability of materials and equipment, and such advance scheduling

108

of the programs as has been done, indicate for 1952 and 1953 a continuance of very high rates of investment in these priority expansion programs
as a group. The projected rates of outlay, as shown for some major programs in table 14, reflect further work on projects now under way, and
work on new projects for which in most instances fairly firm commitments
have already been made. The actual rate of progress will depend in part
on the availability of structural steel and other bottleneck items for construction and equipment.
These major expansion programs accounted for one-quarter of total
private and public nonmilitary investment in 1951; in 1952 they may
account for nearly one-third of the total. They will require in 1952 nearly
half the copper and steel used in all nonmilitary investment.
TABLE 14.—Estimated plant and equipment expenditures in selected areas of
programmed or Government-aided expansion
[Billions of dollars, 1951 prices]
Program 1

1949

Total
Electric power 3
Petroleum
Farm machinery 4
_
Metalworking machinery 44
_
Trucks and truck trailers
Natural gas
._ _ ._ ._ _ __ __
*Iron and steel (including byproduct coke ovens and iron ore
mining facilities)
Railroad equipment *
Aluminum
_
Synthetic fibers
*Taconite (iron ore) concentrates
*Nitrogen

1950

1951

1952-53 2

10.8

11.1

14.0

15.4

2.6

2.4
2.3
1.6
.4
2.0
1.2

2.9
2.4
1.6
1.2
2.0
1.3

.6
.2
.1
1

1.4
.6
.2
.2

1.2
.7
.3
.2
.2
.1

2 2

1.7
.4
1.6
1.1
.6
5
(5)
1

(5)
(5)

(4)
(5)

(5)

(•)

2.6
1.7
1.7
1.7
1.2

*Indicates programs for which the Defense Production Administrator has announced objectives. Objectives have also been set recently for a number of other programs, not shown in the table and involving for
the most part relatively small investment. These include columbite and tantalite, tungsten ore, chromite, cobalt, molybdenum, nickel, sulfur, lead, magnesium, chlorine, hydrofluoric acid, newsprint, lubricating oil, phenol, phthalic anhydride, metallurgical manganese ore, zinc, aniline, high-purity oxygen,
and
naphthalene.
1
Most of these "programs" are still only tentative proposals. Figures are in most cases not directly
comparable with those in the first column of table 6, partly on account of differences in industry classification
and
partly because not all projects are covered by tax amortization certificates.
2
Estimated average annual rate.
34 Includes both private and public power facilities.
Figures refer to value of proposed output of the type of equipment indicated, and not to expansion of
facilities for producing such equipment.
« Less than 50 million dollars.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Defense Production Administration.

Public investment. Many lines* of public investment outside the direct
military area play an essential role in the defense build-up. These include,
among others, the public electric power program, minerals development,
highways, and land, water, and forest conservation. Others are considered
in the next section.
In view of the increased pressure on scarce materials in 1952, stemming
from the build-up of the security program and defense-related industrial
expansion, many lines of public investment need to be curtailed still further.
But this curtailment will have to be highly selective. This can be achieved

109

by a combination of materials allocation and careful Federal, State, and
local budgeting. Some cut should be feasible in nonmilitary public construction as a whole.
The electric utilities, private and public, are planning to increase capacity
by about 30 million kilowatts, or nearly 40 percent, during the next 3 years.
Even with this program, power availability is likely to remain a critical
problem in certain regions where large load increases will occur, such as the
aluminum-producing Pacific Northwest and the areas where large new
atomic energy plant requirements must be met. Looking farther ahead, the
increasing emphasis on the chemical, electrometallurgical, and other large
power-using industries indicates a continuing rapid growth of power requirements. Power development by public agencies needs to play an important part in meeting them, particularly where Federal multi-purpose river
developments can provide large additions to power capacity along with
other desirable results. Hydroelectric projects already begun should be
completed rapidly. New projects serving defense and other essential requirements which should be undertaken are the St. Lawrence seaway and
power project and the Niagara River redevelopment, to furnish 1/2 to 2
million kilowatts of capacity to users in the northeastern part of the country;
and also several projects in the Pacific Northwest.
Basic resource survey, research, and experimental programs, as well as
some actual land, water, forest, range, and mineral conservation and development projects, need to be strengthened, since these provide the underpinning for long-range production increases. For the immediate period
ahead, those activities less essential for defense will have to be postponed,
but such postponement cannot long be continued without sacrifice to longer
term security and production objectives.
Although the atomic energy program is now directed primarily toward
the production of weapons, the possibilities for future peacetime use of
atomic energy and isotopes have not been forgotten. Several private utilities and other companies, with the cooperation of the United States Atomic
Energy Commission, are investigating the technical and cost characteristics
of the joint production of materials for weapons and electric power for
general use. Fortunately, almost all of the fissionable material being produced, as well as a portion of the investment now being undertaken by the
Atomic Energy Commission, will be useful for peaceful purposes when the
world situation no longer requires that they be kept available for defense.
The rate of maintenance of the highway system has for the past decade
averaged far less than would be required to keep it in even reasonably
adequate condition in the face of the phenomenally rapid growth of traffic.
Although some reduction in highway expenditures has to be made in the
immediate future, higher levels of construction and maintenance activity
should be resumed as quickly as possible. The Federal highway aid program
should be extended promptly, to avoid any lapse when the present program
expires.

Restrictions on nonessential investment. The impact of materials restrictions on business investment has only recently been felt. But late in 1951,
as the supply of metals and equipment tightened and as direct controls over
construction were made effective, the rate of investment in some less essential types of construction and equipment began a sharp decline. (See
charts 21 and 22.)
In 1952, with the national security programs sure to absorb resources at a
greatly increased rate, and the likelihood that the high priority industrial
expansion programs will take at least as much as in 1951, it is evident that
other types of investment must be brought well below 1951 levels.
Private housing construction, for example, will have to be cut, probably
by at least 20 percent. In the commercial and nondefense-related industrial categories, very few new construction starts are currently being approved, and most of the current construction activity of those types represents merely the completion of projects already well under way. A continuance of this rigid restriction on new starts through 1952 would bring the
•volume of commercial construction by the end of the year down to perhaps
half its current level, which is in turn well below that of a year ago. Such a
rigorous policy, however, is not contemplated. As projects under way are
completed in 1952, it will be feasible and desirable to permit new start?
where most needed (e. g., in areas of rapidly increasing employment), while
at the same time keeping the level of construction activity and the use of
scarce materials below present levels in commercial, nonpriority industrial,
and miscellaneous construction.
Business investment in machinery and other producers' durable equipment is currently accounting for a much larger dollar outlay than all private
construction combined, and also absorbs larger amounts of scarce metals.
(See charts 19 and 28.) The rate of output of equipment is controlled by
allotments of controlled materials to equipment producers; but effective
control to assure the direction of equipment to uses of greatest urgency requires further development.
Dispersal. One important problem related to achievement of security
objectives is industrial dispersal. In previous Reviews, the Council has
recommended two general types of dispersal: first, avoidance of overconcentration of industrial facilities within particular industrial and labor
market areas, and, second, within the framework of the whole economy,
a regional decentralization of industry which looks toward further development of cores of economic strength in the less developed large regions of
the country. The President has already directed that applications for aid
for industrial expansion as well as the allocation of critical materials for
construction purposes be reviewed with an eye to dispersing essential defense
activities within given labor market areas. More work needs to be done
toward specifying precise standards for governing this kind of dispersal,
and seeing that it is balanced with an adequate dispersal of housing and

III

community facilities and services. Under this policy, the principal instrument of dispersal must remain the location of new facilities. But over the
course of a decade, assuming a high level of investment in new plants,
possibly one-third of the present total value of industrial plant could be
located according to dispersal standards.
Less headway has been made toward building up diversified and interrelated centers of industrial strength in various larger regions of the country,
such as the Far West and the Southeast. Here again, the need is to establish
workable standards to guide private firms and Government agencies in the
selection of sites for new essential industrial operations.
Increasing agricultural production
Increased agricultural production, up to the limit of available acreage,
and with special increases in feed crops, is contemplated in the Department
of Agriculture's goal for 1952. The recent high level of farm output, about
40 percent above the 1935-39 average, has been a major restraint on inflation. Further gains are necessary to meet domestic consumption, exports,
and storable reserves. Price support programs again will be used for this
purpose.
The existing farm price support legislation for basic commodities, including wheat, corn, and cotton, was written during 1948 and 1949. It was
intended to cushion producers against abnormal drops in prices which might
result from production in excess of market demand. It was feared that large
carry-overs would hang over the market and depress prices; also, that they
would lead to excessive losses from price support operations and alienate
public support for the farm program as a whole. Therefore, the 1949 legislation provided for a reduction in price support levels when stocks were large,
in order to stimulate consumption and to hold down production.
The present situation is quite different from that envisaged in 1948 and
1949. The Secretary of Agriculture has asked farmers for maximum production of several of the basic commodities. Our reserves of wheat, corn,
and cotton are all at lower levels than can be considered safe or desirable.
Yet under existing legislation, if farmers succeed in increasing production
sufficiently to build up reserves to safe or desirable levels, they could be penalized by having their support prices reduced from 90 percent to as low as 75
percent of the effective parity. This possibility may act as a deterrent to
maximum production of basic commodities by raising concern in the minds
of many farmers lest the Government, after enlisting them in an all-out
production drive, might leave them worse off as a result of their patriotism
and hard work. Support prices for corn, wheat, cotton, and dairy products
at 90 percent of parity have already been announced.
In addition, wider and more effective use of fertilizer is necessary.
Expansion programs for nitrogen and other fertilizers should be expedited,
and adequate quantities of farm machinery provided. Newly irrigated

112

land coming into production this year will contribute to the 1952 increase
in output.
Over-all production objective for 1952
In 1952, the primary production objective is to boost the annual rate of
output for defense by about 20 billion dollars—most of it in military hard
goods items and military construction. About half of this should represent
additional production; about half would be diverted from civilian durable
goods production and construction. (See chart 30.)
CHART 30

GROSS NATIONAL PRODUCT
EXPENDITURES IN 1951 PRICES
The increase in security expenditures during 1952 is expected to be
larger than the hoped-for growth in total output.
BILLIONS OF DOLLARS*
400

BILLIONS OF DOLLARS*
400
OBJECTIVE
TOTAL

300

PERSONAL —*•
CONSUMPTION
EXPENDITURES

300

100

GOVERNMENT
PURCHASES GOODS AND
SERVICES

200

100

GROSS
PRIVATE
>
DOMESTIC ^
INVESTMENT
foTHER
—*
J
} NATIONAL . .
INSECURITY """*

4th Qtr.
I960
* SEASONALLY ADJUSTED ANNUAL RATES. FOREIGN INVESTMENT
RELATIVELY VERY SMALL.

4th Qtr.
1951

4th Qtr.
1952

NOT SHOWN ON CHART SINCE AMOUNTS ARE

SOURCE: COUNCIL OF ECONOMIC ADVISERS.

By the methods discussed above, it should be feasible within the year to
lift the annual rate of total output, for defense and civilian purposes combined, by at least 5 percent, or about 15 to 20 billion dollars. About twothirds of this increase, or at least 10 billion dollars, should be a net gain
in the area of durable goods, including construction.

These 1952 production figures, it should be emphasized, are not a forecast. They only set forth desirable and feasible objectives. Enlargement
of defense production and total production in 1952 depends primarily on
the vigor and initiative of producers and workers. It depends upon the
effectiveness and cohesion of the whole economic mobilization effort. It
depends also on the success of the policies designed to remove roadblocks.
MINIMIZING BUSINESS DISLOCATION
Minimizing local unemployment and geographical dislocations
Although the national total of unemployment remained at a low level
throughout 1951, a number of areas have serious unemployment problems.
Many of these areas concentrate on one or two major types of industrial
activity; for example, textiles in Lawrence, Massachusetts, and coal mining
in Scranton and Wilkes-Barre, Pennsylvania. The defense production program has not had much impact on such areas. Without a substantial
increase in demand for the products of these areas, a continuance of the
problems confronting them is likely. While in some instances war contracts can be let in these areas, little surplus labor can be absorbed by this
method. A number of new plants are being located in isolated communities
where a labor force is practically nonexistent, so that we can expect, before
very long, some migration of the unemployed from areas of labor surplus to
these new locations.
Steps are now being taken to compile a directory of existing unused facilities which could be used for defense production. In addition, long-range
estimates of manpower requirements and resources are in process of being
developed. With such information at hand, we can expect greater success
in placing contracts in areas where the labor supply is available, thus reducing unemployment, and at the same time helping to avoid the geographic
dislocation problems discussed above.
A special type of defense unemployment, which has become acute in
some metal-using centers, has resulted from a discrepancy between expanding defense and contracting civilian work. Certain industrial areas, such as
Detroit, have been hard hit by this development. Despite the efforts which
the Government is making, the unemployment problem in some of these
areas will unfortunately continue in 1952.
To alleviate this problem, the Director of Defense Mobilization is
appointing an interdepartmental committee of production, procurement,
and manpower agencies to assist in dovetailing civilian industry cutbacks
with defense expansion on an area and industry basis. In line with
approved military requirements, the Department of Defense has been trying
to place more defense contracts in Detroit, with some success in terms of
the number of contracts, but the dollar value of such contracts has shown
some decline. Every effort should be made by the industries in this area
to do as much of their own work as possible in Detroit. For example, some

114

of the automobile production now being carried on in tight labor areas
might be drawn back into plants in labor surplus areas.
New defense plants, procurement contracts, and military installations
are affecting larger regions of the country, and should be related to the
broader regional economic potentialities and problems if major geographic
dislocations are to be avoided. Several Federal agencies are making good
headway in the programming of natural resources development, which is
basic to economic growth, in a number of larger river basins and other
regions. The Council hopes that it is contributing to this end by sponsoring
a series of regional economic studies which, while not conceived originally as
defense projects nor primarily focused on defense needs, have given a good
deal of attention to them since Korea. With the cooperation of the Joint
Committee on the Economic Report, studies relating to the South and New
England have been completed. Another is now under way in the Southwest. Prepared independently by highly qualified economists and others
who live in those regions, these studies indicate specific ways in which the
present defense program may affect underlying economic problems of the
regions, and look beyond the immediate program to the problems which
will arise during and after the transition to the later maintenance phase of
the defense effort.
Utilization of small business
In view of the large growth in defense output during 1951, some dislocation of business, and particularly of small concerns, might have been
expected. Actually, business viewed as a whole showed little evidence of
distress; and not all of the distress that appeared resulted from the mobilization effort.
In lines of business where the limiting factor was materials supply, the
mildness of the over-all impact of the defense program in 1951 was due
to a combination of factors. Stocks of needed materials and components
were high at the beginning of the year. Many producers showed remarkable ingenuity in stretching their reduced allotments of critical materials
by redesigning their products. Finally, so long as it was feasible, it was
Government policy to allot sufficient materials to each industry, even to
those producing clearly nonessential goods, to keep it going until defense
orders began to take up the slack. Provision was made for exceptional
allotments to individual producers in hardship cases.
But a mobilization effort necessarily creates serious problems for small
business as a class. Small business firms are more vulnerable to material
shortages than larger firms, because their profitability is generally more
severely affected by reductions in their operations, their output more narrowly specialized, and their financial position weaker. The industries in
which a mobilization effort calls for major increases in output and capacity
are, in large part, those in which small-scale production is the exception

rather than the rule; and in general, the facilities of small firms are less
easily adapted to defense production.
The increased stringency of materials supply in 1952 will intensify the
need for many firms, particularly smaller ones, either to get into defense
production or to redesign their products in such a way as to make much
less use of scarce materials. It will no longer be possible on so extensive
a scale to allot such materials to nonessential production in cases where the
only justification is that it permits a firm to continue operations.
Quite aside from the need to alleviate distressed conditions caused by
material cutbacks, it is obviously in the national interest that there be
a greater diffusion of defense production in our industrial structure. It
is advantageous to spread arms production experience. Small plants have
a production potential which should be preserved against the day when
it would be needed to support total mobilization. Production bottlenecks
may be eliminated by a more effective utilization of small manufacturing
facilities. Moreover, the mobilization program should not be permitted to
impair competition.
Government assistance to small business, particularly through the services
of the Department of Commerce, is an activity of long standing which is
now being intensified. In addition, a number of measures have more
recently been taken by the Defense Department and the mobilization
agencies to increase the participation of small business firms in the defense
program, and to lessen the impact of material shortages. Information is
circulated on prime and subcontract opportunities. An industry distress
program has been set up on a regional basis, to identify those firms hardest
hit by allocations, assemble information on their capabilities for producing
defense goods, and bring them together with procurement officials and
prime contractors. Users of controlled materials in very small quantities
are permitted self-certification.
The Small Defense Plants Administration was recently created as an
independent agency, to aid in developing ways of using small business concerns most effectively in national defense and essential civilian production.
It has statutory authority to enter into prime contracts with Government
procurement agencies, and to arrange for the performance of such contracts
by letting subcontracts to small business concerns. It should be noted, however, that no funds have been appropriated to finance this contracting function. SDPA also has the power to recommend to the Reconstruction
Finance Corporation loans to enable small concerns to engage in defense
and essential civilian production. A working arrangement has already been
agreed upon to implement this operation.
Perhaps the most important responsibility of this new agency is that of
determining, jointly with the procurement agencies, that it is in the interest
of the national defense program to let a specific contract to a small business
concern. Once this joint determination is made, the contract must be

116

placed with a small concern. If effective procedures are devised by SDPA
and the procurement agencies, this should be a concrete way of effectuating
the frequently expressed policy of Congress that a fair proportion oi Gov*
ernment procurement be placed with small business concerns.
SUPPLYING CONSUMER NEEDS
Outlook for consumer goods
With the security program now scheduled, and reasonable increases in
total production, consumer supplies will be adequate to meet essential
needs in 1952. Since there will be cutbacks in the output of metal-using
durable goods, any increased demand arising from a higher income total will
be manifested mainly in increased production of nondurable goods and
services.
The output of textiles, food, and many other products can be expanded
without interfering with the defense program. Judging from peak rates
of output in 1950 and 1951, production of textiles, apparel, shoes, and furniture could be raised by over 25 percent from recent levels, and production
of carpets could be doubled. The food outlook also is relatively good and
CHART 31

OUTPUT OF SELECTED CONSUMER
DURABLE GOODS
Metals allocations for the first quarter of 1952 indicate that
production of passenger cars will be reduced 25 to 30 percent
below the 1951 rate.
INDEX, 1947-49 = 100*
300

INDEX, 1947-49 = 100*
300

—

200 -

100

*ADJUSTED FOR SEASONAL VARIATION.
-^ LOWER ESTIMATE OF PASSENGER AUTOMOBILE OUTPUT BASED ON ALLOCATIONS FOR 930,000 UNITS; UPPER
ESTIMATE ON PERMITTED PRODUCTION OF 1,000,000 UNITS.

SOURCES: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, DEFENSE PRODUCTION
ADMINISTRATION, NATIONAL PRODUCTION AUTHORITY, AND COUNCIL OF ECONOMIC
ADVISERS.

200

117

should permit some rise in food consumption, with the largest increases in
the more expensive items such as meats and frozen fruits. The capacity for
synthetic fibers is being increased, which will further supplement the supply
of cotton and wool in 1952 and 1953.
In major metal-using consumer durables, the outlook is quite different.
Production of passenger cars in the first quarter of 1952 will be between
900,000 and 1 million units, or a little more than half the average quarterly
rate in 1950. Allocations for steel and other metals for use in major household appliances, such as ranges, washers, and refrigerators, and for radio
and television sets, are also being reduced to 50 percent or less of the rate
in the base period, which in most instances is the first half of 1950. However, absorption of stocks of materials and substitutions will temporarily
permit somewhat higher rates of production. (See charts 4 and 31.)
The projected production levels for appliances and automobiles are not
so low in relation to recent demand as the size of the cuts from 1950
suggests. Sales of passenger cars and major appliances declined from
1950 to the second half of 1951 by between 20 and 25 percent, as shown in
chart 18. Nevertheless, the supply of passenger cars is likely to be below
the level of demand in 1952, while other durable goods will become more
scarce as the present ample stocks are worked off.
It is not likely that output of automobiles can be increased much in the
second and third quarters. It now appears likely that less than 4 million
cars will be produced in 1952, compared with 5.3 million in 1951, and 6.6
million in 1950. While this is below the number which would be desirable
in order to retire over-age vehicles rapidly, the continuance of even this
rate for the next few years would maintain or somewhat increase the number
of cars in use.
The cutbacks in production of metal-using consumer goods raises problems of maintaining adequate supplies of lower priced lines of merchandise.
Manufacturers at present are free to shift to higher priced lines, so long as
they stay within their metals allocations. As materials become scarcer, a
tendency may develop to concentrate on the high-profit margin items—
whjch in general are also the more costly. A shift in production toward
a higher proportion of expensive goods not only adds to living costs, but
in most cases makes for a less efficient use of materials. Consequently,
the production and stabilization agencies are considering measures to be
applied in the event that low priced goods tend to disappear from the market.
Housing
Although 6 million new houses have been produced since the end of
World War II, demand remains at a high level because of backlog requirements, high living standards, and a high rate of family formation. Credit
restrictions introduced in 1950, which were relaxed by Congressional action
in September 1951, plus a stringency of funds for Government-insured
mortgages in the latter part of 1951, helped to reduce the number of starts

118

CHART 32

NEW HOUSING STARTS
Housing starts in 1951 were about 15 percent below 1950, but
higher than in any other year on record. A cut of about 20
percent is expected for 1952.
MILLIONS OF UNITS

1.0

1.5

1948

1949
I960
I95I17
1952^
u

REQUIREMENT TO
MAINTAIN PRESENT

HOUSING STANDARD

ESTIMATED.

SOURCES: DEPARTMENT OF LABOR AND HOUSING AND HOME FINANCE AGENCY.

of nonfarm housing from 1.4 million in 1950 to about 1.1 million units last
year. (See chart 32.)
In 1952, a large net migration will be needed to meet the labor requirements of areas containing defense establishments or military installations.
New housing accommodations will be required for a large proportion of
these workers, and a Federal program for aiding private construction of
about 200,000 units is in operation. In addition, sufficient defense housing
can be provided only if the Government assists in financing necessary
community facilities and actually builds houses in some areas. Besides
the unusual strains on housing capacity arising from movements of defense
workers, there is a need for new housing to take care of the 600,000 to
700,000 new families which will be formed next year. Although part of
these families can be housed in units vacated by families moving to defense
areas, it is estimated that, for the economy as a whole, 800,000 to 850,000
new nonfarm dwellings would be needed in 1952 merely to maintain
present housing standards.
It is hoped that this number of units can be produced in 1952. The
outlook for materials supplies indicates that substantial further economies
in the use of scarce materials in housing construction will be required if
this goal is to be reached.

Housing construction in 1952 must of necessity fall considerably short
of the annual rate which would meet long-term needs. To replace
structures which are below standards of health and decency, and to house
the growing population, an average of nearly 11/2 million new nonfarm
units a year would be required throughout the 1950's. A large number
of these should be publicly-financed low-rent housing for low income families. In 1952, even with prospective cuts in total housing, at least 75,000
of these units should be built. This would be about the same as in
1951, and much less than the average annual rate contemplated by the
authorizing legislation.
An inadequate supply of new housing is part of the price we must pay
for national defense. But the economic and social costs of the housing
deficit can be aggravated or mitigated, depending upon the policies adopted.
Since addition to the housing supply during the next two years at least
must be held down to between one-half and two-thirds of the actual
need, it is essential that the bulk of the supply be channeled into areas
where it is needed most, and that within these areas and elsewhere there be
concentration upon reasonably priced housing coupled with severe limitation of luxury housing. In all housing construction, there should be
strenuous efforts to limit the utilization of critical materials, such as
copper, in view of the fact that adequate housing can be provided with
available substitutes. The proportion of low-cost housing to the total new
housing supply should be appreciably raised above recent performance.
This is an obviously desirable requirement for a mobile and contented
labor supply in a defense emergency. The World War II experience, with
appropriate adaptations, provides such well tested techniques for bringing
about these necessary adjustments that they should be speedily effectuated
in the year ahead.
Essential public services
Education. To meet the needs of the very large number of children
who will be added to the school population in the next 6 years, some
200,000 additional classrooms with adjunct facilities should be constructed.
In areas where school needs are due to increased Federal activities, Congress has authorized aid to school construction. It is necessary to continue
and extend the present program to cover all critical defense areas. No less
urgent is the need for a large increase in the number of teachers trained
for elementary and secondary schools. In some States, it would be difficult
to improve teaching and operating standards of education without adequate
general Federal aid. At least a start in this direction should now be made.
To promote needed higher education, and to correct the inequality of
opportunity in the present draft procedure, an appropriate Federal scholarship program appears even more urgent now than when it was previously
recommended.
Health. By 1954, the Nation will need an estimated addition of 22,000

120

physicians, 9,000 dentists, and 49,000 nurses beyond those now in sight. A
program of Federal aid to medical education, including nursing, is urgently
required if the increase in health personnel is to keep pace with the growth
in population, instead of continuing to fall behind it. Federal aid is required to help organize local public health services in those communities
which do not have them. Shortages of scarce building materials have
forced a slow-down in the rate of hospital construction despite vigorous
conservation measures, but hospital construction should be stepped up again,
as soon as extreme pressures of defense construction programs begin to
subside.
Social security and welfare. The integrity and economic purposes of
social security and welfare programs should not be cut away by inflationary
rises in the cost of living. Even with an effective anti-inflation program,
some adjustments of social security benefits are necessary to preserve the
intended effects of the programs. Looking further ahead, other improvements are needed to provide protection to meet costs of medical care and
loss of earnings due to illness; these and other health problems will be
studied by the President's Commission on the Health Needs of the Nation.
HELPING TO STRENGTHEN OTHER FREE NATIONS
It is our purpose, in the interest of security, to strengthen the individual
and collective defenses of the nations of the free world, to encourage production and the development of their resources, and to facilitate their effective participation in the United Nations system for collective security.
Although considerable progress was made toward some of these objectives
in 1951, the economic situation has not improved in all areas of the free
world, and in some it has deteriorated.
Under the Mutual Security Act of 1951, Congress appropriated for the
fiscal year 1952 a total of 7.3 billion dollars of new funds, and reappropriated
more than 800 million dollars of unobligated funds remaining from the fiscal
year 1951, for aid to foreign countries. As table 15 shows, over 5.9 billion
TABLE 15.—-Foreign aid appropriated under Mutual Security Act of 1951
[Millions of dollars]
Total
foreign
aid

Area
Total
Europe
Near East and Africa
Asia and Pacific
American Republics

.
...
_ _ _ _

Military
aid*

Economic
aid a

7, 329

5,789

1,440

» 5, 941

4,819
396
535
38

1,022
160
237
21

556
772
59

For purchase of finished military equipment, technical military training, and some items consumed
directly by military forces.
> For purchases of tools, raw materials, equipment, foodstuffs, etc.
»Includes 100 million dollars for Spain not allocated between "military" and "economic" aid.
NOTE.—Excludes reappropriated funds.
Detail will not necessairly add to totals because of rounding.
Source: Public Law 249, 82nd Congress.

121

dollars of the newly appropriated funds were provided for Europe, nearly
5 billion dollars for military aid, and slightly over 1 billion dollars for economic aid. The Mutual Security Act provides for limited transfers of funds
between military and economic aid for Europe, as well as for limited transfers of funds between areas. It requires that a minimum of 10 percent of the
economic aid to all areas administered under the terms of the Economic
Cooperation Act take the form of loans.
The purposes of the aid provided to Europe, as stated in the Act, are to
help carry out the plans for defense of the North Atlantic area, while at the
same time maintaining the economic stability of the area. Despite many
difficulties, there is reason to believe that progress toward both objectives will
be achieved. As a result of the re-examination of military goals for the
defense of Europe, and the screening of military requirements which has
just been completed, considerable progress has been made in reconciling
defense requirements and economic and political capabilities. Beyond this,
attainment of th© objectives in Europe requires the most efficient use of its
production and foreign exchange resources.
Western European developments and their appraisal
In Western Europe, the economic expansion stimulated by the outbreak of
war in Korea continued. Industrial production averaged 10 percent higher
in 1951 than in 1950, according to preliminary estimates, as chart 33
indicates. The increase in output varied considerably among countries,
ranging from 20 percent in Germany and 18 percent in Belgium to 4
percent in the United Kingdom. Agricultural production in the current
crop year appears to be averaging about the same as in the preceding
crop year. The limiting effects of raw material scarcities on industrial
output were not as restrictive as had been anticipated at the beginning
of the year, but all of Western Europe suffered from a shortage of coal,
nonferrous metals, and steel-making materials. Western Europe's coal
production is running about 2 percent less than before the war, while
its industrial production is over 40 percent higher than its prewar level,
thus creating an unusually high demand for coal.
The Western European economy as a whole was operating near its
currently practical capacity in 1951. In some instances where plant appeared available, raw materials or labor were not; and where labor seemed
available, there was a shortage of plant or materials. Strong efforts were
being made to increase output and capacity further. Germany and Italy
were the only countries with substantial pools of unemployed.
High consumer and business purchasing, higher incomes, and high prices
of imported raw materials raised wholesale prices sharply after the Korean
outbreak until the spring of 1951. These prices then fell somewhat as raw
material prices receded, but began to rise again in some countries in the
fourth quarter. (See chart 34.) The cost of living in most countries followed a similar pattern.

122

CHART 33

INDUSTRIAL PRODUCTION IN
WESTERN EUROPE
Production in 1951 surpassed I960 levels, but by a diminishing
margin in recent months.
INDEX, 1938 = 100

INDEX, 1938 = 100

150

140

130

120

I 10

110

100

-^DA-TA FOR 1951 PRELIMINARY.
NOTE: INCLUDES AUSTRIA, BELGIUM, DENMARK, FRANCE, FEDERAL REPUBLIC OF GERMANY, GREECE, IRELAND,
ITALY, NETHERLANDS, NORWAY, SWEDEN, TURKEY, AND UNITED KINGDOM.
SOURCE: ECONOMIC COOPERATION ADMINISTRATION.

The expansion of demand and production, and the rise in prices of raw
materials imported from non-European sources, caused a serious deterioration in the Western European foreign trade position. Despite the improvement in the position of Belgium and Germany by an annual rate of approximately 1 billion dollars, the trade deficit of Western Europe as a
whole rose by an annual rate of approximately 3 billion dollars from the
second half of 1950 to the first half of 1951. In the second half of 1951, it
fell slightly, but the trade position of the United Kingdom and France continued to worsen, as shown in table 16.
From 1947 to the year ending June 30, 1951, Western Europe's total production of goods and services rose by an estimated 28 percent. Although
this rise brought production to a level 19 percent above 1938, it did not
permit a significant rise in per capita consumption above the 1938 level.
The reason is apparent from table 17, which shows rough estimates of the
changes in output and other sources of supply, and the use made of them.
A large part of the rise in production since 1938 has been offset by the loss
of income from foreign investments which had to be liquidated during World
War II, and by the higher prices of imports in relation to exports. The

123
977881—52

TABLE 16.—Foreign trade of Western Europe with rest of world
[Billions of dollars, annual rates]
1950

Trade and country

1949

Imports 2. .
Exports

First
half

1951

Second
half

First
half

Second
half

-22.3
18.8

-20.8
17.7

—22.8
21.8

—29.7
25.7

-30.9

Trade balance *

—3.5

—3.1

—1.0

—3.9

-3.5

Trade balance by country:
Belgium-Luxembourg
France
Western Germany
United Kingdom
Other countries

.2
-.2
-.9
-.8
-1.8

.2
—.1
-.5
—.5
-2.3

-.2
.7
—.5

.2
.3
.1
-2.0
—2.5

.6
— .1
.4
-3.0
-1.5

(3)

-1.1

27.4

i8 Estimates based on incomplete data.
Imports and trade balances based on f. o. b. imports, estimated by deducting 10 percent from c. i. f. imports.
* Less than 50 million dollars.
NOTE.—Minus sign indicates imports or import surplus.
Detail will not necessarily add to totals because of rounding.
Source: Organization for European Economic Cooperation.

remaining increase since 1938 in the goods and services available for domestic use has been devoted to a considerable increase of investment, and to
a rise of consumption approximately proportional to the rise in population.
TABLE 17.—Available resources in Western Europe
[1949 prices and average 1949 exchange rates]
Calendar
year
1938

Item

Calendar
year
1947

Year ended
June 30,
1951 i

Billions of dollars
Total resources:
Available for home use:
Gross national product
Net imports of goods and services financed by:
Income from overseas investments
Grants, borrowing, or liquidation of reserves _.
Adjustment for terms of trade
Total resources available .

_ _

Uses:
Gross private domestic and public investment ._
Government consumption, including defense
Private consumption

Total uses of resources

143

133

170

3
1
+2

1
-3

149

141

168

26
24
99

27
22
92

33
25
110

149

141

168

Dollars
Per capita uses of resources:
Gross private domestic and public investment
Government consumption, including defense
Private consumption
_
Total p e r capita uses

. _

._.«.

105
97
400

103
84
350

121
92
404

603

536

618

i Estimates based on incomplete data.
NOTE.-—Detail will not necessarily add to totals because of rounding.
Source: Organization for European Economic Cooperation and U. S. Economic Cooperation Administration.

124

Some of the new burdens which are causing external financial difficulties in Europe—particularly in Britain and France—must necessarily accompany the pursuit of the basic objectives of the free nations. The past
year saw substantial progress in one of these objectives, the strengthening of
military defenses. In the expansion of Western Europe's own military production, and in our shipments of finished military equipment, however, the
progress made has been less than was hoped for earlier this year, and the
objective of maintaining economic stability has not been achieved.
To some extent, the present economic difficulties of the Western European
countries are temporary. First, they resulted partly from replenishment and
accumulation of inventories, which is not a continuing process. Second,
the decrease of imports by the United States, which contributed to a reduction of the sterling area's earnings, will probably not continue much longer
and now shows signs of being reversed. Third, the terms of trade of the
United Kingdom and several of the other large trading countries have recently begun to improve. Finally, the speculative outflow of capital from
the United Kingdom, which has contributed to a 1.5-billion-dollar drain
of British gold and dollar reserves during the past 6 months, may stop and
perhaps be reversed, as other temporary adverse factors disappear and as
remedial measures become effective.
Fundamental problems nevertheless do exist. The most important are
the substantial increases in Western European defense expenditures which
lie immediately ahead, the great difficulty some of these countries are having in restraining the inflationary pressures which are aggravating their
balance of payments as well as their price problems, and the difficulty in
expanding coal production to adequate levels.
Military versus economic aid. To provide aid in a way which contributes
most to attaining its purposes, it should be recognized that the distinction
between "military" and "economic" aid bears no close relationship to the
distinction between the military and economic objectives of aid. A rigid
distinction between "military" and "economic" aid according to what the
aid funds are spent on or what goods are shipped from the United States
may, in fact, impede the attainment of the objectives. To the extent that
aid must be spent to provide military equipment, and may not be spent on
civilian goods, it limits the choice as to where particular goods may be produced, and thus may decrease efficiency in the use of total aid. The expenditure of aid funds on military goods produced in the United States may serve
an economic purpose, if it relieves the receiving country of some of the need
for increasing its own military production and for curtailing production for
civilian use. Conversely, so-called "economic" aid, which is spent on nonmilitary goods, may serve defense purposes by making possible fuller use
of the receiving country's productive capacity, or a greater diversion of its
production from civilian goods and exports to military goods than would

125

otherwise occur. Whether the result of the aid is to carry out military or
economic objectives depends on the policies followed by the receiving
country in the use of its total resources, which should be based on advance
agreement between ourselves and the receiving country as to specific goals
and methods for achieving them.
United States import barriers. Under the mandatory amendments in
Section 104 of the Defense Production Act passed last summer, imports of
certain specified commodities have been prohibited. Although potential
imports of these commodities are relatively unimportant from the point
of view of the United States market, they are an important potential source
of dollars for many other countries. These restrictions deprive the producing countries of opportunities for more rapid progress toward selfsupport, and the precedent discourages efforts to develop American markets
for other products. At the same time, they run counter to the very principles of liberalizing world trade which we have taken the leadership in
pressing.
The economically underdeveloped countries
In contrast to the more advanced countries of Western Europe, expansion
of military strength is a major problem in only a few of the economically
underdeveloped countries. Our major concern in most of these countries is
to help them overcome chronic poverty by supporting their economic development, which must start from low levels and, in some cases, must reverse
a process of deterioration. In some of them, for example, per capita food
consumption has not regained even the low prewar levels. The United
States has long been interested in the material progress of the peoples of
these areas, both because that progress is an end in itself, and because it is
one of the most essential elements in the development of stability and
democracy. In the present state of world tension, this interest has become
an urgent concern.
The major problems differ greatly from country to country, owing to
differences in their geographical positions and political conditions, which
affect their vulnerability to aggression or subversion, and to differences
in their internal institutions and their basic economic potential. Our
security objectives are served not only by the actual economic progress they
make, which is necessarily small year by year, but also by a sense of current
progress and hope for the future, which our aid, even in its early stages, can
help to generate and fulfill.
Although our military program, including assistance to countries sharing
in the common defense, necessarily entails a heavy burden upon the productive and financial resources of our people, the United States has supported
sound programs for the economic development of underdeveloped countries, and has made significant financial contributions for that purpose.

126

The net new funds made available to underdeveloped countries by the
United States Government and by the International Bank, which the
United States actively supports, have increased from the fiscal years 1949
to 1951, as table 18 shows. The Congress, in the Mutual Security Act,
increased the economic assistance available for these countries, from appropriated funds, to 418 million dollars for the fiscal year 1952. United States
assistance to underdeveloped countries in the form of grants helps bridge the
gap which frequently exists between such a country's borrowing capacity and
the total investment assistance consistent with carrying out our policy
objectives.
TABLE 18.—Net new funds made available to underdeveloped areas for economic
assistance by United States Government and International Bank
[Fiscal years; millions of dollars]
Item

1949

Total
United States grants _. __
United States credits
International Bank credits

_ _ _ _ _ _ _ _._

.__

1950

1951

446

654

809

291
47
109

184
336
134

142
548
119

NOTE.—Includes underdeveloped countries in the Near East and Africa (except Turkey), Asia and the
Far East, and Latin America. Also includes United States contribution to multilateral technical assistance programs and United Nations Belief and Works Agency for Palestine Refugees. Excludes Philippine War Damage Claims of 151 million, 136 million, and 87 million dollars in the fiscal years 1949, 1950,
and 1951, respectively. Figures in table are net of cancellations.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce and International Bank for Reconstruction and Development.

The Government has also encouraged the investment of private capital
abroad, by negotiating treaties relating to double taxation and other provisions affecting foreign investments. Credits for taxes paid abroad have
been liberalized, and the area of the authority to guarantee certain risks
peculiar to foreign investment has been extended geographically. Provision also has been made to assist the export of capital goods needed in essential projects. In contrast to widely held expectations, actual exports of
many capital goods to the underdeveloped countries have increased since
acceleration of the defense program. (See appendix table B-45.)
Although the economic situation in several underdeveloped countries,
particularly in the Near and Middle East, became worse in 1951, many such
countries increased the production of a number of primary products, which
will help t'hem to finance further development, and also increased the production of a number of industrial products and of electricity, as table 19
shows.
Many countries, moreover, made significant progress during the year in
getting economic development plans under way. Substantial progress
was made in both domestic and regional coordination of development plans
by nations of Latin America and South and Southeast Asia. These
nations also showed recognition of what they must do themselves, and took
a realistic view of the pace at which improvement could be expected.

127

TABLE 19.—Output of selected commodities in certain underdeveloped areas
Commodity and area
Cement:
Far East: 4 countries 2
Latin America: 9 countries
Coal:
Far East* 5 countries
Latin America: 3 countriesCotton fabrics, woven:
India *
Latin America: 3 countries
Electricity:
Far East* 6 countries
Latin America: 10 countries.
Rice *:
Asia: total
Rubber:
Far East* 8 countries
Steel, crude:
India
Latin America: 3 countries
Sugar, raw 8:
Far East: 9 countries
Tin (metal content) :
Far East* 3 countries
Bolivia
Africa* 2 countries

Unit

1938

19511

1950

1946

1,954
1 730

2,180
3 172

3,260
5 389

3,754
5,836

33 060
4 040

31 358
4 855

34 992

36, 804

Million metric tons
do

3 940

3 670

3 300

3,720
73

Million kwh
do

2 842

Thousand metric tons.
do

do
do

4,655

Million metric tons

143

Thousand metric tons

893

985
165

7,367

.... do _ ..._

.do
.... do _

89
26
19

4 398

8,025

3,852
77

5,957
11, 599

4,948

6,880
11,916

139

142

812

1,784

1,854

1,320

1,464
1,063

1,511
1,351

5,887

6,349

78
32
23

192
36
20

(4)

616

(4)

16
38
25

1 Estimates based on incomplete data.
2 Includes in 1938 and 1946 the area that now is Pakistan; excludes it in 1950 and 1951.
« Crop years. Data from FAO "State of Food and Agriculture, 1951."
* Not available.
NOTE.—The output shown for each commodity represents the total of the region from all countries shown
in the source.
Source: United Nations Monthly Bulletin of Statistics, December 1951 (except as noted).

Sharing of scarce commodities
Besides extending financial aid to other free nations, the United States
is helping to secure equitable distribution of scarce commodities, both by
active participation in international arrangements and by its own domestic
controls. In early 1951, the United States, the United Kingdom, and
France took the lead in setting up an International Materials Conference to
promote increased production and the conservation of scarce materials, and
to assure equitable distribution of free world supplies. Beginning with the
third quarter, this Conference recommended allocations for sulfur, tungsten, and molybdenum. The record for the third quarter indicates that
United States exports of sulfur and molybdenum were approximately
equal to the Conference's recommendations. In the case of tungsten, our
actual imports considerably exceeded our recommended share, but the excess
will be taken into account in future allocations. Beginning with the fourth
quarter, allocations were also recommended for nickel, cobalt, copper, and
zinc. The Conference has also arranged for emergency allocations of newsprint; a small amount of Canadian output originally scheduled for United
States consumption was diverted to a number of countries faced with critical
shortages. Five of the six remaining commodities covered by IMC were
found to be in sufficiently ample supply to make allocations unnecessary, and
in the case of wool it was not possible to reach agreement between producers
and consumers.

128

CHART 34

WHOLESALE PRICES IN SELECTED COUNTRIES
Wholesale prices have risen more in most foreign countries
than in the United S t a t e s since June 1950, and in many a
1951 lull has ended.
I N D E X , J U N E 1950 « 100

INDEX, J U N E

I960 * 100

160

140-

- 140

120 -

UNITED STATES

100

160

140 -

120 -

— 120

100

160

140 -

- 140

120 -

— 120

100

100
J

I960

1951

SOURCE: INTERNATIONAL MONETARY FUND,

129

This country has also taken unilateral action to facilitate essential exports
of capital goods. In May of 1951, the Director of Defense Mobilization announced a policy of providing adequate exports of scarce supplies by priorities or by directives to producers whenever necessary, and stated the types of
foreign needs which would be given positive export assistance. Since then,
there has been an acceleration of priority assistance and a diversification of
the methods used to help foreign countries meet their essential needs.
Since shortages of raw materials and capital goods are likely to continue
through 1952 and, for most commodities, for several years, our allocation
devices should be maintained and in some cases extended and strengthened.
The United States should continue the provision of priority assistance for
exports of capital goods to friendly countries.
World aspects of inflation and stabilization
The period of price stability which began early in 1951 in the United
States was followed by a slackening of price increases in most other countries, and stability or actual declines of prices in some. Although the situation differs greatly from country to country, there is in general a greater
tendency toward inflation in most other countries than in the United States.
(See appendix table B-25.) While wholesale prices in the United States rose
to a post-Korean peak of 17 percent above June 1950, a rise of 30 percent or
more was experienced in 10 of the European and 10 of the non-European
countries for which statistics are available. Generally speaking, the abatement of pressures since the post-Korean peak in these countries has been far
less than in the United States. In contrast to the United States, where
wholesale prices have risen hardly at all since their April-to-September decline, wholesale prices in many other countries started to move up again after
an earlier lull, or have risen almost continuously since June 1950, as chart 34
illustrates. Prices in some of the Western European countries have already
risen at a pace that endangers support for necessary defense expansion. In
November 1951, the wholesale price level in France, for example, was 46
percent above June 1950. The world's post-Korean price inflation is additional to a large price rise experienced from the end of the war to the Korean
outbreak.
The major burden of restraining inflationary pressures in other countries
must rest upon these countries themselves, but the United States can do
much to help. The most important contribution we can make to a solution of this serious problem, apart from the alleviating effect of our aid,
is to control our own domestic inflationary pressures effectively. In the
context of the world inflationary problem, it is especially important for us
to refrain from action which will have an inflationary effect on prices of
internationally traded commodities—those we export as well as those we
import—for it is chiefly through these commodities that inflationary pressures in the United States are communicated to other countries. In the
case of some of the major raw materials, we are contributing to a multi-

ISO

lateral solution of this problem through international allocations. The
role of the Government in purchasing for the stockpile is also important.
Although the effect of actual stockpiling operations in the post-Korean rise
of raw material prices was much less than was widely believed, it is an
important potential factor in the markets for the stockpiled commodities.
When it is necessary to accelerate purchases, this should be done carefully
to avoid violent alternations of heavy purchasing and complete withdrawal
from the market.
FINANCING THE GOVERNMENT PROGRAM
Savings through budget economies
Intensive efforts have been made by the Congress and the Executive
Branch to effect budget economies, both inside and outside the national security program. Following the President's directive of July 21, 1950, all
departments and agencies conducted a detailed review of Government programs "for the purpose of modifying them wherever practicable to lessen the
demand upon services, commodities, raw materials, manpower, and facilities
which are in competition with those needed for national defense." Such
programs as highway assistance and Federal aids for housing and community development outside critical defense areas have been restricted to
expenditure levels substantially below those authorized in the basic legislation. General flood control projects and rural electrification and telephone
loan authorizations have been similarly curtailed. Regular procurement
of operating supplies and equipment has been held to minimum amounts,
and inventories in excess of the lowest practical working levels have been
made available to the General Services Administration for appropriate
disposition.
Intensive efforts should continue in this direction. However, the nondefense areas do not contain the "fat" often attributed to them. Federal
expenditures for all programs except national security, veterans' benefits,
and interest on the national debt will be about 65 percent higher in the
current fiscal year than in the fiscal year 1940. In comparison, the index
of wholesale commodity prices is nearly 130 percent higher, and the
consumers' price index almost 90 percent higher. Despite a rapidly
expanding population and a great increase in the total product of the
economy, Government programs which are directed toward servicing the
general needs of the people and building up our natural resources have
been held down.
Tax legislation of 1950 and 1951
Three major tax bills have been enacted since the Korean outbreak. The
first was initiated almost immediately after the initial involvement in Korea,
with the agreement by the Administration and the Congress to convert the
pending tax revision bill into a substantial revenue-raising measure. Legislative action was completed in sufficient time for higher income tax with-

holding rates to become effective October 1, 1950. The second revenue
measure, which was the Excess Profits Tax Act of 1950, was passed in the
final week of the Eighty-first Congress, and affected approximately half of
1950 profits. The latest measure was the Revenue Act of 1951, which became
law in October. This Act adopted only about half the aggregate tax increase
recommended by the President in January 1951 for individual income,
corporate profits, and excise taxes.
In a full year of operation, the post-Korean tax measures will yield an
estimated additional 15 billion dollars at 1951 income levels. This represents an increase of almost one-third in the revenue productiveness of the
Federal tax system, and is certainly a notable legislative achievement in view
of the high tax rates already in effect in 1950, and the short time during
which these successive measures were adopted. On the other hand, they
provided substantially less revenue than had been requested, and substantially less than is needed to keep pace with expenditures.
The revenue legislation of 1950 and 1951 was a major part of the stabilization program, operating to bring consumer and business demand into closer
balance with available supplies of goods and services. Largely as a result
of the higher tax rates, the proportion of total personal income absorbed by
Federal individual income taxes rose from 8 percent (seasonally adjusted)
in the second quarter of 1950 to about 11 percent at the end of 1951. The
proportion of total corporate profits absorbed by Federal-corporate income
and profits taxes advanced from 45 percent to almost 60 percent during
the same period.
Nature of the financing problem ahead
Partly as a consequence of the higher tax rates, and partly as a result of
the inflation of prices and growth of incomes following the adoption of the
expanded security program, the fiscal year which ended June 30, 1951, produced a surplus of 3.5 billion dollars in the conventional budget accounts.
The surplus was more than twice this amount on a consolidated cash basis,
due to the excess of cash receipts over payments in the various trust accounts.
For the current fiscal year, which began July 1, 1951, budget expenditures are expected to total approximately 71 billion dollars. The increase
over last year's total is virtually equal to the expansion in the major national
security programs. (See chart 35.) Net budget receipts are estimated at
almost 63 billion dollars. The indicated excess of expenditures over budget
receipt is about 8 billion dollars. A considerable portion of this deficit can
be financed by the excess of cash receipts over expenditures in the trust funds.
On a consolidated cash basis, the estimated fiscal year deficit is about 4 billion
dollars.
As a result of the expected further increase in national security expenditures, the annual rate of total Federal expenditures will rise to between 85
and 90 billion dollars by June 30, 1953. For the fiscal year 1953, under
existing revenue legislation, a budget deficit approaching twice the size of the

132

CHART 35

FEDERAL BUDGET EXPENDITURES
The expansion of expenditures for the major security programs
has approximated the increase in total budget expenditures
since 1950.
BILLIONS OF DOLLARS

BILLIONS OF DOLLARS
40

TOTAL BUDGET
EXPENDITURES

N
20

•<

M AJ 0 *

SEC I R I T Y

PROGRAM 5

OT HE R

PROGRAMS!

•

PERCENT

MAJOR SECURITY EXPENDITURES
AS PERCENT OF TOTAL BUDGET EXPENDITURES

*^
40

mmm

2 nd HALF

1st HALF
I960
I

1st HALF

2nd HALF

1951
CALENDAR YEARS

J/ ESTIMATES BASED ON ANTICIPATED BUDGET EXPENDITURES.

SOURCES . TREASURY DEPARTMENT AND BUREAU OF THE BUDGET.

133

1st HALF
1952^

current year's budget deficit is indicated. To pay for the projected volume
of expenditures without reliance upon new borrowing from the public
would thus require large additional revenue legislation, and a heavier total
tax load than has ever before been imposed in the United States.
A large element of uncertainty exists regarding the future development
of expenditures under the defense program. Our present planning is based
on a program which would build up strength to the required level, and continue the maintenance and modernization of our defensive equipment at that
level. This may require expenditures in the fiscal year 1954 at least as
high as those proposed for fiscal 1953. Thereafter, it is anticipated that
expenditures will gradually decline to a substantially lower "maintenance"
level.
Throughout the defense period, the Council has emphasized that it is
sound economic and fiscal policy to pay for the national security program
through taxation. But in view of the decision of the Congress in 1951 not
to take all of the tax action requested of it by the President, it is virtually
impossible through tax increases to prevent substantial deficits in the calendar year 1952, and in the fiscal year 1953. Thus, the action of last year in
effect constituted an abandonment of the pay-as-we-go policy, at least for
the time being. Lost ground cannot be made up overnight.
Consequently, we must now look ahead to the fiscal year 1954 and following years, as well as to 1953, in considering appropriate tax legislation
for the calendar year 1952. A considerable time span usually is required
to accomplish necessary changes in the tax structure and to collect the taxes
under them. Consideration must be given to the effect of the tax bite
upon consumers and small and large business enterprises, and upon general
popular support. The speed of tax increases must allow for these factors,
without relinquishing the objective of restoring a balanced budget as rapidly
as ^feasible.
Each year the question of legislation must be reappraised with a view to
determining what specific course of action, in the light of current and
prospective conditions, would be most nearly in accord with the longerrun basic policy position. The chief tax policy questions which must be
answered are whether additional taxes should be adopted in 1952 and, if so,
whether the amount should be sufficiently large to achieve a balanced
budget in the fiscal years 1953 and 1954.
The Council continues to attach great importance to the principle of the
balanced budget during periods of heavy expenditure and inflationary
pressure such as characterize defense mobilization. The Council does not
believe, however, that the principle of paying the cost of defense expenditures out of taxes during the mobilization period requires that sufficient taxes
be proposed or adopted to balance the budget in the peak years 1953 and
1954. We believe that it is not imperative to do so, in view of the longerrun budget outlook, and that it would be unwise to attempt to do so, in

view of the size and speed of the tax increases that would now be required—
a result in part of the inadequacy of tax legislation last year.
Considering all factors involved, the Council recommends that the immediate tax legislation be the completion of the program proposed by the
President a year ago, including such technical changes as would improve
the equitableness and yield of the Federal revenue system.
The yield of the Revenue Act of 1951 is estimated at 5.4 billion dollars,
at calendar year 1951 levels of income, or only about half the amount
specifically proposed by the President. In the case of the individual income
and corporate taxes, the increases approximated two-thirds of the amount
proposed. A considerably smaller proportion of the amount proposed for
excises was enacted. There are, furthermore, various revenue-losing features in the Act. As stated by the President on signing the bill, "this legislation does little to close the loopholes in present tax laws, and in some
respects provides additional means by which wealthy individuals can escape
paying their proper share of the national tax load through such devices as
excessively liberal 'capital gains' provisions, family partnerships, and excessive depletion allowances on oil and gas and certain mineral properties."
Misconception arises when there is a failure to distinguish between the
real economic burden of the program, which is measured by the diversion of
resources and supplies from civilian uses, and the financial burden of the
program as indicated by the level of taxes. The method of financing the
security program does not necessarily decrease or increase the real economic
burden, and consequently does not directly determine the size of the program that can be afforded. At any particular time, however, there are
limits beyond which it would be unwise to raise the rates of a specific tax
or of taxes in general.
The limit beyond which tax increases become harmful cannot be determined by any figure or ratio which would be applicable to all situations.
The limit depends not only on the ratio of taxes to incomes at any one
period of time, but also on how rapidly taxes have been increasing in the
recent past. It depends also on whether incomes in general are rising, are
remaining the same, or are declining. Finally, it depends to no small extent
on the recognition by the taxpayer that the money is needed for imperative
national purposes, and that the burden is being distributed in a fair manner.
The Council recognizes that tax rates have risen rapidly during a short
period of time, and are so high that their effect on incentives must be carefully watched. Nevertheless, we do not believe that the economic limit of
taxation has been reached. As we indicated at midyear 1951, we feel that
the tax objectives stated by the President earlier in the year are well within
the ability of the taxpayer and the economy to support.
The alternative to relying upon the conventional tax sources for the
additional revenue requirements would be to introduce a new, broad-base
tax. One new type of taxation, which could raise substantial amounts of
revenue, is a general sales tax. Whether imposed in frank manner upon

135

retail sales or disguised as a general manufacturers' excise tax, resort to it
would be a portentous departure from national tax policy which should not
be considered at this time.
Provided the national security programs follow the pattern now indicated,
rate increases in existing tax sources and the proposed improvement in the
tax structure would be adequate at high levels of employment to yield a
surplus in budgets designed to support the ordinary Government functions,
plus the cost of the expanded military establishment when it reaches maintenance levels.
With the additional revenue which might be obtained from carrying
through the above suggestions, the margin of excess of budget expenditures
over receipts would be reduced to about 10 billion dollars a year during
the period of 1 to 2 years when budget expenditures will be at the peak level
now contemplated. A considerable portion of this deficit, however, would
not result in an addition to the debt held by the public, but would be
absorbed by the excess of some 4 to 5 billion dollars of cash receipts over
disbursements in a number of trust accounts.
The effect of a Government deficit on inflationary pressures is dependent
in large degree on the extent to which spending is restrained by methods
other than taxation. Indirect and direct controls help to limit the rise of
incomes. By giving some assurance of price stability, these controls also
increase the willingness of consumers to hold their spending to levels of
current need. The tendency of business and consumers not to spend is
strengthened also by cutting down the availability of consumers' and producers' durable goods, through direct controls imposed on the use of scarce
materials and on the operating rates of industries that consume such materials. In these various ways, spending may be restrained, savings increased,
and sources of funds developed as outlets for the Government securities
which are issued to finance the deficit. Under conditions expected to prevail over the next year or two, when consumer and business spending will
be restrained by various controls, the situation should be favorable for minimizing the inflationary impact of deficits of moderate size and duration.
State and local government fiscal policies
The present defense economy finds State and local governments with
important responsibilities, not only for direct participation in defense activities but also for supporting the Federal programs and policies made necessary by the defense effort. These governments, for instance, have primary
responsibility for civil defense and the many financial and operational
problems which it entails. They must also provide special services, or
expand their normal governmental services, in areas where there is a large
population influx because of defense activities. The Federal Government,
under the terms of existing or proposed legislation, will help to relieve the
more serious instances of defense-imposed burdens.

136

It is of equal importance that State and local finances be conducted in
such a manner that positive support will be given national policies and objectives. In the interest of reducing inflationary pressures, any surpluses
should, be used to retire debt, or build up reserves to ease future financial
problems. Continued restraint in borrowing is, of course, essential. In
connection with the Voluntary Credit Restraint Program, in which the
State and local governments are cooperating, criteria have been developed
for appraising the essentiality of State and local bond issues.
Cooperation along these general lines was of great value during World
War II. There are many indications that State and local officials are no
less aware of their responsibilities today.
MAINTAINING ECONOMIC STABILITY
Outlook for inflationary pressures
The relative price stability during the last 9 months of 1951 reflected three
conditions: first, a series of direct and indirect controls which limited
prices, wages, credit, and the expansion of incomes; second, a voluntary disposition on the part of consumers to buy more cautiously and to save more;
and third, a reduction in inventory buying by business and inventory liquidation in some lines of civilian goods. These three conditions interacted upon
one another. The controls would not have been as effective in holding the
price line, in the face of rising incomes, without the trend toward increased
voluntary saving; the increased saving would probably not have been so
pronounced if the imposition of controls had not put a brake upon the
inflationary spiral which succeeded the Chinese intervention and which
induced speculative buying; and the controls would not have been so effective, nor consumer and business buying so cautious, if it had not been for
the large inventories accumulated in the previous period. The impact of
rising security expenditures on economic stability in 1952 turns upon these
three interacting conditions.
Within this year, national security expenditures are again scheduled to
rise by an annual rate of about 20 billion dollars. More people will be
drawn into the labor force, some will shift to higher paying defense jobs, and
some will work longer hours at premium pay. In addition, some wage
adjustments will occur. While increased taxes can take a large bite out
of these increases in income, a substantial proportion—perhaps two-thirds—
will be added to spendable funds. If the increase in total output during
the year is at the rate of at least 5 percent, it is estimated that disposable
income within the year would rise by about 15 billion dollars.
The first issue to be considered is how much of this additional income will
be saved and how much spent. If the recent high rate of consumer saving
should continue, the amount of additional buying would only moderately
exceed the amount of additional civilian supplies that can be made available
without hurting defense production. But if consumers or business should

137

again intensify their buying, and if the rate of saving should decline and the
use of credit expand, serious inflationary pressures would result.
The shift in the saving rate, from an average of 5 percent or less to around
10 percent during the last three quarters of 1951, reflected some temporary
factors. These included a reaction to previous buying sprees, to higher
prices, and to credit tightening. But it is not unlikely that many American
families, who during World War II had their first opportunity to build up
some reserves, have become more "saving conscious." Having satisfied
urgent demands for many consumer durables by 1951, they may now be
ready to replenish their liquid asset reserves, and to attain a higher level
of family and personal security. As shown in chart 36, the increase in the
volume of cash, deposits, and Government bonds has been less than the rise
CHART 36

CHANGES IN PERSONAL ASSETS AND PRICES
individual holdings of liquid assets have increased substantially since
the end of World War II but their purchasing power has decreased
because of the large rise in consumers' prices..
I N D E X , END OF 1945 = 100

160

J N D E X , E N D OF 1 9 4 5 « 1 0 0

160

END OF YEAR

150 -

vx-i
O

PRIVATE INSURANCE EQUITIES
140

150

—

CONSUMERS' PRICES

..«

140

130

120

110

100

1946

1947

1948

1949

1950

J/ INCLUDES CURRENCY AND DEPOSITS, SAVINGS AND LOAN SHARES, AND U.S. GOVERNMENT
SECURITIES OTHER THAN TERMINAL LEAVE BONDS.
_2/ PRELIMINARY ESTIMATES BY COUNCIL OF ECONOMIC ADVISERS.
, SOURCE: SECURITIES AND EXCHANGE COMMISSION (EXCEPT AS NOTED).

138

in prices since the end of World War II, while the private insurance equities
have little more than kept pace with prices. Further, the increase in
personal debt has been greater than the increase in financial assets, such as
bonds, stocks, and deposits, during the past several years. A reversal of
this trend at some time was inevitable, and it came last year with a significant increase in more liquid forms of savings and a less rapid rise in debt.
Nevertheless, while there are grounds for anticipating a continued high
saving rate, it would be unwarranted to base economic policy on the expectancy that so high a rate as the recent rate or an even higher rate can be
maintained. Even with the continuance and further improvement of the
anti-inflationary measures which affected income and saving last year, and
with shortages of major durables, there may be some tendency on the part
of consumers to revert to a more normal rate of buying. Also, business
buying may become more active as a lower ratio of inventories to sales is
established. Consumers and businesses are going to have ample funds for
a rapid increase in buying.
The rate of business investment in plant and equipment is also an important factor bearing on the outlook for inflationary pressures. Such
investment was carried on at an unprecedentedly high rate during 1951, and
the plans of businessmen indicate further expansion, at least in the early
part of 1952. It seems probable that the major factor limiting the size of
business investment will not be the desire of business concerns to expand,
but the availability of scarce materials and machine tools. Material shortages may force business investment in plant and equipment to contract
somewhat by the latter part of 1952. Commercial and residential construction also is being reduced.
The outlook now is that there will be some increase in inflationary pressures, but that it may be held to a moderate magnitude, even with rapidly
rising defense spending, if the brakes upon inflation which were applied in
1951 are not relaxed. But any relaxation would increase the possibility
of another inflationary upsurge, which could be even more serious than
that of mid-1950 or of a year ago because it would start from tighter conditions of supply in many sectors of the economy.
The reasonable success during 1951 in maintaining stability cannot be
attributed to any one cause. Tax increases, credit measures, price and
wage controls, and the various allocation policies interacted upon one
another. Each link in the chain was essential.
An outstanding feature of 1951 was that stability was maintained despite
the shift during the course of the year from a Government surplus to a large
deficit. This does not mean that the inflationary pressures would not have
been much greater if the deficit had not been reduced by the large taxi
increases which took effect. But it does mean that, in addition to the
tax measures discussed in the preceding section, a variety of other measures
must be relied upon to continue their contribution toward over-all stability.

977891—52

139

Relationship among stabilization measures
However inflation may be defined, there is no dissent from the view that
the ultimate consequence which gives concern is the increase in prices, and
especially the increase in prices paid by consumers. Economic policy to
forestall price increases must include, first of all, measures to restrain forces
which cause higher prices. These measures, which include tax and general
credit measures, are sometimes referred to as dealing with the fundamental
causes of inflation rather than its symptoms. But as a practical matter,
the economic situation at times does not permit pushing such measures far
enough to do the whole job alone.
In fact, if such measures are pushed too far, they may operate to frustrate
their purpose. Tax policy and general credit policy, as measures to
stabilize prices, illustrate this. Each is aimed at limiting some of the causes
of price increases, rather than at holding the line on prices when other conditions are pushing the market upward. But each has some partially
offsetting effect in adding to the upward pressure. Higher taxes reduce the
buying power of consumers and business. In this way they are deflationary.
But they also may heighten the demand for higher wages and for larger
gross business profits, which is an inflationary aspect. General credit policy,
as distinguished from selective credit controls, is designed to dampen business investment generally, and thereby to stabilize prices. But the increase
in interest rates, which is either the principal tool of general credit policy or
is its normal consequence, is an increase in the cost of capital, and this involves an increase in costs of production and may tend to press prices upward. Moreover, both tax and credit measures, if pushed too far, may so
impede production as to be self-defeating.
Consequently, in the current situation, it is necessary to turn also to
controls which will directly prevent the inflationary forces from producing
their normal effect upon market prices. It is incorrect to say that these
controls treat only the symptoms, and not the fundamental causes, of inflation. In practical effect, they restrain the growth of inflationary forces,
besides helping to hold the price line against such forces. It is seriously
misleading to think in terms of two distinct categories, one of policies which
will restrain forces leading to price increases, and the other of policies which
will hold down price increases despite the upward trend of the market.
Wage control is a good example of a policy which combines these objectives. Wage advances mean higher costs of production, and higher costs
of production are a powerful force in raising prices. Wage increases also
expand consumer buying power, which is equally potent in its effect upon
market prices. But wage control, while directed to restraining these forces
which directly influence prices, is also designed to break an inflationary
spiral already under way, by holding the line on wages which would normally
rise in response to conditions of a tight labor market and a rising cost of
living.

140

Price control policy, although usually thought of as a measure to prevent
price increases which would otherwise be caused by other forces, also has the
purpose of restraining the inflationary spiral itself. The interaction of prices
is obvious. A rise in one price affects many others, and the stabilization of
any one price limits some of the force which is pressing upward the price of
other goods. Price control also has the purpose of limiting the increase in
incomes,, which is the normal result of advancing price levels.
Credit policy
During the first quarter of 1951, several measures to limit the inflationary
expansion of private credit were added to those which had been undertaken
in the second half of 1950. These included increases in the reserves required
of member banks; further steps to check the transfer of Government securities to Federal Reserve banks, and thus to curtail a large source of new
lending power for banks and other financial institutions; the inauguration
of the Voluntary Credit Restraint Program; and the tightening of selective
credit controls requirements.
During the last 9 months of the year, no new measures were initiated to
tighten credit. In fact, as a result of congressional action, down payments were decreased and maximum maturity periods lengthened in connection with loans for consumer durables and for housing. In addition,
beginning at the end of September, the Federal Reserve System added about
900 million dollars to its holdings of Government obligations, to relieve an
acute tightness of credit while the Treasury was engaged in a considerable
volume of new financing and refinancing. During October and November,
the Federal Reserve reduced its portfolio of Government securities to about
the level which it held early in September.
It seems reasonable to conclude that credit policies, both of a general and
selective character, contributed to the relative stability of the last 9 months.
However, credit policy should now be adjusted to differences between the
situation in 1951 and that likely for the period ahead. Private credit expansion is likely to become a less important inflationary factor, and the rising gap
between money income and civilian goods a more important one. Business
demand for loans to finance construction and inventory accumulation will
probably be more greatly curbed by the allocation of materials than earlier in
the defense period. It would be unwise, however, to rely unduly on this
development and to relax present credit restraints. Credit for some nonbusiness purposes, such as instalment and mortgage credit on houses, may
expand to compound the problem presented by rising incomes. The supply of private funds for mortgage loans may also increase, as financing
institutions which invest heavily in mortgages accumulate funds from higher
personal saving and from repayments of existing loans. In this situation,
there may have to be greater reliance on selective credit controls.
In addition, the situation with regard to Treasury financing will change.
The deficit in the fiscal year 1953 will be substantial. It will be sound policy

141

for the Treasury to borrow new funds insofar as possible from nonbank
sources, to minimize the inflationary potential of the deficit. Greater limitations on the opportunities to make private loans because of allocations
of materials, restraints on the demand for credit, and high levels of personal
liquid saving may help to provide investors with funds for investment in
Government securities, to a considerable extent in long-term issues. It
will be an important goal of economic policy to develop and maintain market
conditions favorable to the flotation of the largest feasible quantity of longterm obligations.
Concern for debt management objectives does not require that general
credit policy be withdrawn from the struggle against inflation. The tactics
that are used to curtail the supply of lendable funds may merely have to be
modified to suit new situations; for example, the instrument of reserve requirements may have to be relied upon more heavily than in the past. In
order that credit policy may function more effectively during the next
phase of mobilization, the Council recommends that there should be restored to administrative authority a more flexible discretion in the formulation of selective credit regulations.
It is also suggested that the Board of Governors of the Federal Reserve
System be given additional authority over reserve requirements. In the
opinion of the Council, higher rese'rve requirements may be a suitable
means of curbing bank lending in certain specific situations. Increased
reserve requirements can be used to offset bank lending power arising
from Federal Reserve purchases of Government securities or from gold
imports. One plan for increased authority over reserve requirements,
which has been previously recommended by the Council, would permit
certain Government securities to be carried as reserves. If banks were
permitted to carry Government obligations in reserves, there would be
some inducement to hold these securities rather than to offer them on the
market, with the possible consequence of the creation of new lending power
through Federal Reserve bank purchases.
Separate note by Mr. Clark upon monetary and credit policy
No economic theory relating to the stabilization of the economy is more
important than that of general monetary policy, which many believe can of
itself accomplish the stabilization purposes of the Employment Act of 1946,
but the usefulness whereof in a strong inflationary movement has been challenged in former reports of the Council of Economic Advisers.
Early in 1950, the Douglas committee regretfully commented that "Our
monetary history gives little indication as to how effectively we can expect
appropriate and vigorous monetary policies to promote stability, for we have
never really tried them." This is not quite accurate. Monetary policy was
used vigorously in 1920, and the resulting "stabilization" was a disaster the
farmers have not yet forgotten. It was used again in 1928-29, and of that
episode the British expert, Hawtrey, has said, "The dear money policy ac-

142

complished its purpose in the end. It stopped speculation by stopping
prosperity."
We are now able to study efforts to establish the stabilization value of
monetary policy in our greater economy in which the institution of banking
has been revolutionized by a great national debt which has multiplied the
liquid assets in bank portfolios. The Council of Economic Advisers, which,
unlike other Government agencies, has the responsibility of considering all
national economic policies and their effect upon each other, must give
attention to the collateral consequences when it studies our recent experience. In the light of the problems of a defense program which must be
integrated, the following anomalies created by monetary policy stand out.
It has enabled the banks to increase their earnings more than enough
to match the heavy increase in their taxes in 1951. Nearly every other
business and industry found net profits reduced as result of Government
policies under the defense program.
An increase of one-third in the basic commercial interest rate of larger
banks, leading to general increases in other bank interest rates, was hailed as
a valuable contribution to economic stability. All other business men are
criticized when they exploit a situation by raising their prices by a much
smaller percentage.
When restraint must be imposed elsewhere upon the freedom of decision,
the Nation imposes positive control, as in forcing young men into military
service, in limiting the production of General Motors, and in fixing prices.
To limit the expanding activity of banks, we are offering them larger profits
upon the existing level of loans.
The cost of new private capital has been increased and an effort has
been made to tighten credit for industry. Vital defense-related industries
must expand and the Government will have to finance their expansion to
the extent that private capital is inadequate.
The Government is spending large sums to assemble and distribute
business information in order that businessmen may reduce to the minimum
their uncertainties about the trend of the economy and may plan more
confidently. Monetary policy is being based upon the principle that the
financial world must be kept in great uncertainty about future interest rates
and the availability of credit.
There is general agreement that every effort should be made to place
the Government debt in long-term bonds in nonbank Tiands. The Treasury now finds no market for long-terms and its heavy financing has to be
in the form of short-term securities eligible for bank portfolios.
When the size of Government expenditures is giving us deep concern,
the interest charge on the Government debt is increasing.
If these miscarriages were the unavoidable results of a monetary policy
which is a successful instrument to stabilize the economy, they might be
accepted. I do not believe that monetary policy can be successfully used

143

for that purpose in the kind of economy and institutions which we now
have. In recent action, that policy has had utterly perverse consequences.
The advance in short-term interest rates in August 1950 was followed
by the greatest expansion of business loans in our history.
The increase in long-term rates in March 1951, coming after the price
freeze in January had taken the steam out of boiling markets and when a
seasonal contraction of business borrowing was due, had no effect upon
new business investment.
The more rigorous the use of monetary policy, the more rapid was the increase in new investment in plant and equipment, the very channel through
which monetary policy, if effective, operates on its way to the final objective of dampening inflationary forces.
And to complete the topsy-turvy picture, the more rapid the growth in
money supply, creating "more dollars chasing goods," the quieter became
the consumers' markets. (Conclusion of separate note by Mr. Clark.)
Price control
In the first stages of price control policy after the general freeze in January
1951, which all recognized could be only temporary, it was necessary to concentrate upon a large variety of broad-gauged "interim" adjustments to
remedy inequities and to bring the price structure into balance. This was
because the great upward movement of prices before the freeze had not been
uniform, and had resulted in many advance runners and many laggards.
But this process was only to be the prelude to more enduring, more enforceable "tailored" regulations, i. e., regulations geared to the problems of
individual industries and commodities.
This work was delayed considerably and complicated by the amendments to the Defense Production Act. The amendments weakened the
powers of price control by preventing certain necessary actions and by
requiring a number of adjustments, all of which could only have the effect
of raising ceiling prices. After the adjustments required under the law had
been carried out, the Office of Price Stabilization was able to push ahead
in the autumn with tailored regulations, hinged upon adjustments necessary
to develop a sound and reasonable price structure.
The general policy now should be to hold the price line, while work
proceeds vigorously with the issuance of tailored regulations. However,
since the new amendments seriously interfere with the effective carrying
out of this policy, these amendments should be reviewed and the obstacles
to sound price control eliminated. In addition, the furtherance of this
policy involves the following tasks.
Narrowing the gap between ceiling and market prices. After the general
freeze halted the runaway spiral in prices, price controls and the lull in many
markets resulted in sharp drops in the prices of cotton, wool, fats and oils,
hides, and other commodities. When prices fall below ceilings, there are
three alternatives: (1) exempt commodities on a stand-by basis; (2) con-

144

tinue current ceiling prices; or (3) make the ceilings more realistic by
lowering them toward the market levels.
In general, it is in the most volatile markets that a substantial gap exists
between ceiling and market prices. At the time of the general freeze, these
commodities had advanced excessively, spurred on by a high degree of
speculation. To maintain these ceiling prices would be to permit the return
of excessively high prices if speculative markets develop. Under these circumstances, and because dangers of general inflation are still present, it
would appear desirable to bring ceilings down to levels much closer to existing market prices, insofar as this is feasible while keeping ceiling prices
"generally fair and equitable" as required by law. An effective barrier to
any major advance in these wholesale areas would prevent undue pressure
against retail prices, when markets now weak begin to firm up again. OPS
has already taken action of this sort in the cases of glycerin, hides, wool,
tallow, soap, detergents, and carpets. Further action is under study with
respect to other commodities.
Stabilization of .consumers3 prices. This is the most difficult task confronting the OPS. These prices directly affect the public, and are closely
connected with the effectiveness of wage stabilization. While part of the
recent rise in the consumers' price index reflects seasonal factors, a major
part results from the lack of adequate control over many items making up
the cost of living. Of the items entering into the consumers' price index,
about 17 percent are exempt from price controls by law. These are primarily services. In the case of rents, representing another 11 percent, only
partial controls exist. Only slightly over one-half of the items in the consumers' price index are completely under the control of the OPS.
With respect to food prices, the program for controlling beef prices has
been weakened by the abolition of slaughtering quotas. Progress has been
made in developing dollars-and-cents ceilings for a number of food items.
Thus, in addition to the beef ceilings, there are dollars-and-cents wholesale
ceilings for pork products, lamb, and veal. In the further development
of simple, enforceable regulations, the OPS is now experimenting in three
cities with community dollars-and-cents ceilings covering a wide variety
of grocery items. However, under existing legislation, action to stabilize
retail food prices cannot be completely successful.
Development of pricing standards. With the completion of the
"interim" pricing program, the need for standards to guide price control
operations becomes more acute. The kind of standards chosen determines
the degree to which price control permits escalation of cost increases or
requires absorption. The main formula used to straighten out the distortions
and inequities caused by the general freeze was pre-Korea prices plus specified cost increases up to specified cut-off dates. For the future, to use a
cost-plus standard would mean continuous escalation of higher costs, and
permit a constantly rising price level.

145

In April, the Director of Economic Stabilization took the first major step
toward the development of permanent standards. He directed the OPS,
once the "interim" program was completed, to grant general price increases
to any industry only if its current earnings before taxes fell below 85 percent
of its return on net worth in the 3 best years of the period 1946-49. The
purpose of this directive was to prevent unnecessary price increases by
requiring a reasonable amount of cost absorption and, at the same time,
to assure industry of an adequate earnings base. If an increase became
necessary under this standard, it was not to exceed the amount necessary to
assure this minimum rate of earnings.
As this standard applies only when industries seek price relief, two factors have reduced the need for its application. First, the generally high
level of profits finds most industries earning well above the standard.
Second, the "interim" program provided adjustments for industries which
might otherwise have sought relief under this standard. However, a few
industries have applied for price relief and their cases are being considered
under this standard.
The outcome of the current steel case will be a major factor in determining the future of effective price control. It cannot be stated too strongly
that, while effective price control depends upon effective wage stabilization,
it also depends upon cost absorption where feasible, instead of automatic
escalation of cost increases into price increases.
The problem of standards is not confined to this issue alone. There has
already been issued a relief standard to provide protection for exceptionally
high-cost sellers. There is need for the development of a product standard
to govern cases where relief may be in order for an individual product of an
industry, contrasted with all its products. Considerable preliminary
work has been done in developing this standard.
Price control must also be concerned with preventing price ceilings from
becoming an impediment to production in areas vital to defense or essential
civilian production. In such situations, what is needed is a coordination
of production and price controls. Frequently, the problem is not one of
price, but of materials, or manpower, or proper use of production controls.
But in some cases, price is also a consideration. Price adjustments to
encourage production have already been made in the cases of machine tools
and lead and zinc.
Price control over the longer run. A firm price policy does not mean that
price control should continue indefinitely in every sector of the economy
and for every item. If the international situation does not worsen, a rising
production trend should make it feasible at a later date to reduce substantially and progressively the area of coverage of price control. The Council
has never been impressed with the argument, which seems to prove too
much, that no prices can be controlled unless all prices are controlled. After
we get over the production hump, for the long period ahead we must be

146

prepared and ready to use selective price controls geared to strategic areas.
In that situation, we should rely for general stabilization upon other antiinflation weapons. Except in an emergency period, such as the present,
the benefits of general price controls are outweighed by their drawbacks.
Wage stabilization
Wage policy is even more difficult than price policy, because it involves
the very livelihood of millions of families, who have come to regard periodic
wage increases as an index of their progress in an economic society which
they believe to be strong enough to grant them that progress. Nonetheless,
price stabilization cannot be maintained without wage stabilization.
The sound public appreciation that prices and wages must both be stabilized if either is to be stabilized has been blurred by the incorrect impression that prices and wages are exactly alike and should be treated exactly
the same. Thus, it is sometimes said that any wage increase must necessitate
a price increase; and that where the price line is held absolutely, the wage
line must be held absolutely. This is a superficial view. Under conditions
of expanding markets and rising productivity, which has been the long-range
trend in the American economy, a constant relationship between prices and
wages would cause business profits to rise out of line with wage incomes,
and would not provide consumer purchasing power sufficient to support
expanding markets. In a normal peacetime economy, wages should rise
relative to prices—by lower prices or higher money wages—when the general productivity of the economy enlarges. This is fully recognized by
business.
This principle, however, is not entirely pertinent to a defense emergency,
when a large part of the expanding output is absorbed by the defense program, and is consequently not available for purchase by consumers. If wage
incomes rise as fast or faster than the total of expanding output, while a
large and growing part of this output is bought by the Government, there
will clearly be an inflationary redundancy of consumer buying power, unless
compensated for by sufficiently higher taxation and a higher rate of saving.
Yet entirely to deny productivity increases to wage earners would involve
the greater difficulty of a growing disparity between wages and other forms
of income, which are likely in the long run to reflect the productivity and
production trends of the economy as a whole—and in the long run to move
generally upward in a defense period. In addition, the flat denial of productivity increases would remove an important or potentially valuable incentive factor.
Consequently, the Council has maintained the position since the commencement of the defense emergency that productivity allowances should
be included within the framework of a well-rounded wage stabilization
program. However, we have urged that these increases should be held
to the likely productivity increases for the economy as a whole—that is, in
the neighborhood of 2 to 3 percent—instead of being allowed to reflect in

147

particular cases a higher rate of productivity increase in particular industries.
For the latter course would tend to create a pattern of wage increases under
wage stabilization which would necessitate price increases, except among
those industries or firms where the actual rate of productivity increase is
highest.
Since even the moderate policy of productivity increases here portrayed
would tend to augment the income stream more rapidly than the increase
in civilian supplies, such a policy should be accompanied by certain safeguards. One of these safeguards might be that consideration be given to
regard these productivity increases as incentive payments, and to tie them
in with efforts on the part both of employers and workers to maximize
actual productivity increases. Another safeguard would result if, in accord
with suggestions which the Council has made before, more systematized
efforts were made to divert necessary wage increases into forms of saving
rather than into immediate payments for immediate spending purposes.
This we believe to be one of the most neglected areas in the program thus far.
For practical reasons, the Council has favored cost-of-living adjustments.
These can be consistent with the stabilization program if sufficient efforts
are made to hold the price line. The difficult necessity of a sufficiently
flexible wage program to maintain equity, incentives, and industrial peace
points up the urgency of a sufficiently strong tax, credit, and voluntary savings program to curtail excessive spending.
The Council views with approval the very substantial progress already
made by the Wage Stabilization Board toward firming up elements in its
wage stabilization program, and urges speed in the work now under way to
close the remaining gaps in wage policy. We have repeatedly stressed that
wage stabilization requires a fairly stable and established wage policy,
enunciated generally and adhered to firmly. General policies must of
course be administered, and in applying them to particular cases the Board
must properly be concerned with avoiding hardship and inequities. Yet we
have never believed that a purely pragmatic adjustment of the wage policy
to suit the exigencies of each hard case as it arises could result in effective
wage stabilization. A bad wage policy is not better than no wage policy;
but a moderately good and firm wage policy is better in the long run than
a highly uncertain wage policy would be even if the latter achieved more
perfect results in a few specific cases. This is certainly true from the viewpoint of general public understanding and support, an overwhelmingly
important consideration under current conditions.
The problem of longer-range stability
Increasing interest is being manifested in the outlook for the economy, if
and when international difficulties subside and the defense program is correspondingly reduced. Even when the defense program levels off at a
relatively constant figure, the great build-up now under way in productive

148

facilities will leave us year by year with increasing resources seeking nondefense utilization. While the urgency of dealing with our immediate
defense problems is so great as to demand concentrated attention, it would
be a lack of foresight not to give serious thought and study to more distant
problems also. In some respects, immediate policies can take account
of these more distant problems without sacrificing immediate objectives.
In any event, concern about the more distant future, implanted in the
minds of the producing community, has an important bearing upon the
vigor of their commitment toward the defense effort itself. It is therefore
desirable to discuss certain aspects of this issue now.
In the first place, it should be recognized that we are likely to be confronted with a new set of problems before the defense period is over. For
example, unless the international situation worsens, there should be within
a year or two an ample supply of steel and some other materials now in short
supply. This will permit the modification of some of the materials controls.
But at that time, with purchasing power so ample and a new backlog of
demand for durables built up, there may well develop a new phase of inflationary pressures from private and public spending which will require some
containment. This is one of the reasons why there should be continuously
available an ample and flexible assortment of economic tools to be adjusted
quickly to changing situations. Particularly, as we look forward to the
progressive relaxation of the direct controls, the tax structure and credit
devices should be brought to a better state of readiness for dealing with new
conditions. As restrictions upon materials are released, some credit controls
may be more needed a year hence than they are now.
We should also be prepared for another contingency. If at the time
defense spending declines, business investment and consumer spending
were also to decline, the result would be a period of slackness, which
although perhaps temporary, might require changes in policies regarding
taxation, controls, and long-range public programs.
While it is now desirable to be better prepared to meet changing economic
problems both within and beyond the defense period, the precise unfolding
of economic events cannot be forecast with enough precision to justify now
the making of those blueprints for which some are calling. Instead, we
may draw assurance from the knowledge that the general techniques to be
used when conditions change are fairly well-known and accepted. There
is always a need for continuing and intense study of the specific ways in
which private and public policies can be Applied to cope with changing
economic conditions.
Another point of interest is the convex n of some parts of the business
community that those programs of rapid expansion, which are now needed
to support the defense effort, will result in considerable excess capacity when
the defense effort levels off on a maintenance basis. Those voicing this
concern should be mindful that, if we should falter in the current effort,

149

we could lose all. Adjustments, of course, will have to be made. We
cannot expect all economic activities to continue at all times on an equally
high level. However, recent experience illustrates the capacity of our economic system for flexible adjustment to a decline in defense outlays.
Although World War II was unfortunately succeeded by the cold war,
the annual level of public outlays was reduced by more than 60 billion
dollars between 1944 and 1947, and sustained at this lower level until well
into 1950. With only minor faltering, these years evidenced new high
levels of peacetime production and employment. A rising standard of living
absorbed quite fully our expanded productive facilities in factory and field.
It is sometimes said that this new postwar experience of avoiding major
dislocation for so long a time was due to the great backlog of demand built
up during World War II. Undoubtedly, this was an important factor.
But much of the rise in the standard of living, contrasted with the years
before the war, was, for instance, in many services, where obviously there was
no such thing as a backlog. And it is highly probable, although insufficient
economic analysis has been devoted to this problem, that the high demand
for durables from 1946 until now has been due not mainly to backlogs,
but rather to the fact that people always have a wide range of unfilled
desires—if not pressing needs—which they will try to satisfy as soon as
the incomes and productive capacity of the Nation rise sufficiently. In
addition, a variety of Government programs and private action, as well have
contributed greater stability to incomes, so that it may be easier to maintain relatively full employment. The current defense effort will be building
up new backlogs for housing, for other durables, and for some types of
industrial expansion, which are now being deferred to make way for the
expansion of the industrial mobilization base. There is no reason to accept
the gloomy hypothesis that we would do a worse job of adjustment when
defense spending declines than we did after World War II, particularly
since the reduction of defense outlays in the future would be far smaller in
proportion to the Nation's economy than the reductions which took place
between 1944 and 1947.
This generally favorable outlook does not mean that long-range problems
are being ignored. As a matter of fact, the current defense build-up
represents a blending of factors which include consideration of the longerrange future. The size of the military program itself represents some
calculated risks, which weigh the desirability of maximum military strength
against the desirability of avoiding excessive dislocations in the general
economy. None of the basic expansion programs has gone beyond the
capacity of a reasonably full employment economy to absorb output a few
years hence, even in the event of a much reduced defense program. This
consideration, as well as current shortages of materials, has entered into
the determination of how large these expansion programs should be.

150

One further point should be added. The better the current job is done,
the more assurance the economic community will have about the future.
Insofar as industrial dislocation is held to a minimum under the current
program, industry and labor will share the confidence that greater dislocations can be avoided in later years by the same application of prudent,
consistent, and timely policies as the need arises.

151

Appendix A
Statistical Tables Relating to the Nation's
Economic Budget
CONTENTS
A-l.
A-2.
A-3.
A-4.
A—5.

The Nation's Economic Budget, calendar years 1950 and 1951
Consumer account, calendar years 1950 and 1951
Business account, calendar years 1950 and 1951
International account, calendar years 1950 and 1951
Government account (Federal, State, and local), calendar years 1950 and
1951. .
A-6. Federal cash receipts from the public other than borrowing, calendar years
1950 and 1951
A-7. Federal cash payments to the public by function, calendar years 1950 and
1951
A-8. Federal cash payments to the public by type of recipient and transaction,
calendar years 1950 and 1951

153

Page
157
158
158
159
160
161
161

162

The Nation's Economic Budget
The Nation's Economic Budget provides a comprehensive view of national
economic activity by major economic groups: consumers, business, government, and "international." The receipts and expenditures of these groups
and the net addition to or absorption of saving for the calendar year 1950
and the first and second halves of 1951 are shown in table A-l.
Column 1 indicates the major flow of receipts or income. Receipts are
divided into two categories: income from current production and receipts
of transfers and interest. The total of incomes from current production
(shown in roman type and adjusted for the statistical discrepancy between
total receipts and expenditures) equals current output, or the gross national
product.
Expenditures for current output and government transfer payments are
shown in column 2. The gross national product comprises only the expenditures for current output. Government expenditures for goods and services
(i. e., expenditures for current output) plus government transfer payments
equal government cash payments.
Government cash transfers, on the expenditures side in column 2, are
shown as receipts by consumers and by foreign countries and international
institutions in column 1. The sum of these transfer receipts is approximately equal to government transfer payments in the accompanying table.
Some discrepancy is due to the use of somewhat different bases for measurement of various components of receipts and payments. For example, government interest payments are recorded on a cash basis; interest receipts of
consumers are recorded on a net accrual basis and include interest paid by
government corporations. The difference resulting from the two methods of
estimating is included in the adjustment item (line 20).
Column 3 shows the excess of receipts ( - f ) or expenditures ( — ) for the
various accounts: personal net saving, the government cash surplus or
deficit, the excess of international receipts or investment, and the excess
of gross investment over business receipts. The total excess of receipts in
some accounts must equal the total excess of expenditures in others, since
national income and product are conceptually equal. Personal net saving,
for example, which represents an excess of receipts, must be matched by an
excess of investment by business or by a government deficit, or both. (Also,
the adjustments made in column 1 must be carried over into column 3 in
order to complete the balance between the positive and negative items.)
X
977891—52

While the summary table on the Nation's Economic Budget gives a comprehensive view of recent economic changes, additional detail on receipts
and expenditures is needed for analytical purposes, as is shown in the tables
that follow. More complete statistics for recent years on national income
and product and their components can be found in the National Income
Supplement to the Survey of Current Business, July 1951. Data relating to
the cash budget of the Federal Government are from the Budget of the
United States.

156

TABLE A—1.—The Nation's Economic Budget, calendar years 1950 and

1951

[Billions of dollars, seasonally adjusted annual rates]
1950

1951, first half

1951, second half 1

Excess
Excess
Excess
of reof reof receipts
ceipts
ceipts
ExExEx- (+)
Re- pendi(+) or Re- pendi(+) or Re- pendior
ceipts tures
ex- ceipts tures
ex- ceipts tures
expendipendipenditures
tures
tures

Economic group

CONSUMERS

1. Disposable income arising from
current production
8. Government transfers and net interest payments ..
3 Disposable personal income
4! Personal consumption expenditures
---5
Personal saving (-J-)

185.2

202.8

19.0

16.4

16 6

804.3

819 S

886 4

193.6

209. 6

205.0

~+'ib~7~

203.8

~+~U~s~

"+88'.~6

BUSINESS

6. Retained receipts from current
production
7. Gross private domestic investment
8
Excess of investment ( — )

29 7

27 6

48.9

33 2

62.8
JQ

54.8

-35.8

-81.6

INTERNATIONAL

9 Cash loans abroad
10. Net foreign investment_.
11.
Excess of receipts (+) or investment (— )
_

-.1

-2.3

-1.4

+88

1.6

+1 7

-1.4

GOVERNMENT (FEDERAL, STATE, AND
LOCAL)

12 Tax payments or liabilities
IS. Adjustment to cash basis

69 8

14. Cash receipts from the public... .
15. Purchases of goods and services. _
16 Government transfer payments.
17. Cash payments to the public
18.
Excess of receipts (+)
payments (— )

90 5
—18.8

-9.0

60.8
.......

78.3

42.5
18 8
61.3

87 4
—7.8

80.8

56.9
14.7

70.1
15 8
85.3

71.6

-6.1

+6.7

— 5

ADJUSTMENTS

19. For receipts relating
to gross
national product 2
_^
80. Other adjustments 3

-2.1
+8.9

21.

282.6

Gross national product

—2 1

+2.4
+10.1

+2 4

+8.9 +10.1
282.6

323.4

+5.5

+5.6

330.3

i Estimates based on incomplete data; fourth quarter by Council of Economic Advisers.
« These adjustments bring the estimates on the receipts side into agreement with those on the expenditures side of the accounts. They include the statistical discrepancy less "subsidies less current surplus of
government enterprises." The statistical discrepancy represents the difference between the two independent estimates of gross national product: income received from current output and expenditures for
this output. "Subsidies less current surplus of government enterprises" are included in national income,
but not in the gross national product.
3 "Other adjustments" are net and are the amount necessary for balancing the excess of receipts (+) with
the excess of expenditures (—). They are required because some items of government cash payments are
either not recorded in private receipts at all (such as purchases of existing assets), or they are recorded in
a different time period from that in which payment is made. Government cash receipts also include some
items not deducted from private incomes, or deducted in a different period.
NOTE.—Items relating to current production of goods and services are shown in roman type. Transfer
payments and receipts and other items not included in the gross national product are shown in italics.
Detail will not necessarily add to totals because of rounding.
Sources: Based on the national income and product statistics of the Department of Commerce and on
Federal cash receipts from and payments to the public estimated by the Bureau of the Budget and the
Treasury Department. See also footnote 1.

TABLE A-2.—Consumer account, calendar years 1950 and 1951
[Billions of dollars, seasonally adjusted annual rates]
1951

1950

Receipts or expenditures

Personal income arising from current production of goods and services:
Wage and salary receipts and other labor income
Farm proprietors' income
._
B usiness and professional income 2 _. _.
__
Dividends
Private interest and rental income
Business transfer payments
_ .
Total
—. .
Plus:
Net interest paid by government
Dividend on National Service Life Insurance -_ ._
Other government transfers to individuals

Equals: Total personal income
Less* Personal tax and nontax payments
Equals: Disposable personal income
-.
Less* Personal consumption expenditures 3

Equals* Personal net saving (+)

Total i

First
half

146.4
13.7
22.3
9.2
13.4
.8

169.8
17.0
23.6
9.5
14.1
.8

166.5
16.4
23.8
9.2
13.8
.8

173 0
17 6
23 4
98
14 2
g

205, 7

234.8

230.5

238 8

4.7
2.7
11.6

4.8
.5
11.2

4.8
.3
11.3

48
.8
11 0

224.7
20.5

251.3
28.4

247.0
27.7

255 6
29 2

204.3
193.6

222.8
204.4

219.3
205.0

226 4
203 8

+10.7

+18.5

+14.3

+22 6

205.7
20.5

234.8
28.4

230.5
27.7

238 8
29 2

185. 2

206.4

202.8

209 6

Second
half'

ADDENDUM

Personal income arising from current production
Less: Personal tax and nontax payments _„ _

Equals* Disposable income arising from current production

1 Estimates based on incomplete data; fourth quarter by Council of Economic Advisers.
2 Includes adjustment for inventory valuation.3 For detail, see appendix table B-4.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: See table A-l.
TABLE A-3.—Business account, calendar years 1950 and 1951
[Billions of dollars, seasonally adjusted annual rates]
1951

1950

Receipts or investment

Total »
Corporate profits before tax
Less* Corporate tax liability 3
Dividend payments
Equals* Corporate undistributed profits
Plus* Capital consumption allowances 3
Corporate inventory valuation adjustment 4
Equals: Retained business receipts from current production
Less: Gross private domestic investment: «
New construction
Residential (nonfarm) _-_
Other private construction
Producers' durable equipment
Change in inventories
Total
Equals* Excess of receipts (+) or investment (— ) .

First
half

Second
half i

41.4

18.6
9 2

44 8
26 7
95

48 6
29 o
92

41 0
24 4
98

13 6
21.2
—5.1

86
23 5
—1 7

10 4
22 8
—5 6

68
24 2
22

29.7

30 4

27 g

33 2

22 1
12.6
95
22.5
43

22
10
11
27
9

23 2
11 9
11 3
26 6
13 1

21 2
98
11 4
28 6
50

2
8
4
6
1

48.9

58 8

62 8

54 8

—19 2

—28 4

—35 2

—21 6

1 Estimates based on incomplete data; fourth quarter by Council of Economic Advisers,
2 Federal and State corporate income and excess profits taxes.
3 Includes capital consumption allowances on noncorporate capital, including residences.
* The adjustment measures the excess of the value of the change in the volume of nonfarm business inventories, valued at average prices during the period, over the change in the book value.
* For additional detail, see appendix table B-5.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: See table A-l.

158

TABLE A-4.—International account, calendar years 1950 and 1951
[Billions of dollars, annual rates]
1951

1950

Receipts or investment

Total »
Receipts:
U. S. Government cash long-term loans (net)2
_ _
Plus: Cash payments to International Monetary Fund and International Bank _ „ _,
Equals: U. S. Government cash transfers on loans (foreign receipts).
Investment:
Surplus of exports of goods andfi services
_.
Less: Net unilateral
transfers:
Government 6 _.
. _ _.
Private
Equals: Net foreign investment .

.
.

_. __

Excess of receipts (+) or investment (— )

.. __

0.2
8

-.3
-.1

0.3
(<)

First
half
0.3

Second
half 1
0.2
(4)

(4)

2.3

5.0

3.6

6.5

4.1
5

4.5
4

4.6
4

4.4
.4

-2.3

—1.4

1.6

+2.2

+ 2

+1 7

—1.4

1 Estimates based on incomplete data; fourth quarter by Council of Economic Advisers.
2 Includes only cash withdrawals under loan agreements. Does not include noncash transactions such
as lend-lease and surplus property credits.
3 In 1950, the International Monetary Fund returned 262 million dollars in cash to the U. S. Treasury
in4exchange for United States notes.
Less than 50 million dollars.
6
Net unilateral transfers are included with government or private expenditures for goods and services.
For example, remittances (gifts) made by American citizens to relatives or charitable groups abroad are
included with consumer expenditures. Government aid in the form of grants is included in government
purchases of goods and services. Thus, net unilateral transfers must be deducted from the export surplus
to6avoid double counting.
Unilateral aid included in appendix table A-8 is on a Daily Treasury Statement basis and is gross.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: See table A-l.

159

TABLE A-5.—Government account (Federal, State, and local), calendar years 1950 and 1951 J
[Billions of dollars, seasonally adjusted annual rates]
1951

Eeceipts or expenditures

1950

Total 2
Receipts:
Tax and nontax payments or liabilities: 3
Federal
State and local
_
Total
Adjustment to cash basis *
Cash receipts from the public
Expenditures:
Purchases of goods and services:
Federal
State and local
Total

Other Government payments:
Transfers to individuals
Cash interest payments to public 8
Loans to foreign governments and subscriptions to International Bank and International Monetary Fund (net)6
All other »
Total
Cash payments to the public
Cash surplus (+) or deficit (— )
Federal:
Cash receipts
Cash payments

...

First
half

Second
half 2

50 5
19.3

68 0
21.0

69 6
20.9

66.4
21.0

69.8
-9 0

89.0
—9 7

90.5
— 12 2

87.4
—7.2

60 8

79 3

78 3

80.2

22.8
19 7

41.9
21 6

35.6
21 2

48.2
21.9

42.5

63.5

56.9

70.1

14 3
4.6

11 7
4.5

11 6
4 4

11.8
4.6

—.1

.3
—1.5

.3
-1.6

.2
-1.4

18.8

14.9

14.7

15.2

61.3

78.4

71.6

85.3

-.5

+.8

4-6 7

-5.1

42.4
42 0

59.3
58 0

58.6
51 4

60.0
64.7

+.4

+1.2

+7.2

-4.7

18.4
19.3

20 0
20.4

19 7
20.2

20.2
20.6

— 9

— 4

— 5

— 4

ADDENDUM

Surplus (+) or deficit (— )

State and local:
Cash receipts
Cash payments
Surplus (+) or deficit (— )

1
This table reconciles cash receipts and payments to the public with estimates of government receipts
and expenditures included in the national income and product accounts. Cash receipts or payments
represent the consolidated cash accounts of the Federal Government, including the trust funds, and Statelocal governments. All intragovernmental transactions are excluded. The receipts of government corporations and the Post Office are offset against expenditures and the net expenditure included as a cash
payment. Grants-in-aid to State and local governments are included as a cash payment of the Federal
Government
and not included as either a receipt or payment of the States or localities.
2
Estimates based on incomplete data.
3 Personal and indirect business tax payments, corporation tax liabilities (including excess profits tax
liabilities),
and contributions for social insurance.
4
Consists of deductions from government employees' salaries for retirement funds, government contributions to retirement funds, National Service Life Insurance and U. S. Government Life Insurance
funds, and excess of personal and corporation tax liabilities over receipts. Cash receipts also include some
items of miscellaneous receipts not included in tax and nontax payments, such as receipts from sales of
surplus
property.
5
Does not agree with net interest paid by government (appendix table A-2) which is on a net accrual
basis
and includes interest paid by government corporations.
6
See appendix table A-4, International account.
7
Includes all other cash payments less noncash payments for goods and services. Other cash payments
include net payments by government corporations (except capital formation), net prepayments (deliveries
in advance of payments being subtracted), and the excess of checks paid over checks issued. Noncash
purchases of goods and services include deductions from government employees' salaries for retirement
funds and the government contribution to such funds.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: See table A-l.

160

TABLE A-6.—-Federal cash receiptsfrom the public other than borrowing, calendar years 1'950 and 1951
[Billions of dollars, seasonally adjusted annual rates]
1951

Source

Direct taxes on individuals
. __
Direct taxes on corporations
Employment taxes _ __
Excises and customs
Deposits by States, unemployment insurance
Veterans' life insurance premiums
Other
Less: Refunds of receipts

1950

__ _
__
_

Total Federal cash receipts from the public

Total i

First
half

Second
half»

19.2
9.9
3.4
8.6
1.2
.5
1.7
-2.2

27.2
16.5
4.3
9.2
1.5
.5
2 2
-2.1

26.6
16.5
4.2
9.2
1.4
.6
21
—2. 1

27.8
16.5
4.4
9.2
1.6
.5
2.2
-2.1

42.4

59.3

58.6

60.0

i Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: See table A-l.

TABLE A—7.—Federal cash payments to the public by function., calendar years 1950 and 1951
[Billions of dollars, seasonally adjusted annual rates]
1951

Function

1950

Total i
Military services
International security and foreign relations
Veterans' services and benefits.. ___
______ _
Social security, welfare, and health
Agriculture and agricultural resources
Interest
_
Other
Deduction from Federal employees' salaries for retirement
Clearing account for outstanding checks and telegraphic reports

___

Total Federal cash payments to the public
i Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: See table A-l.

161

First
half

Second
halfi

13.5
4.0
8.9
3.3
1.3
4.3
7.1
-.4

30.6
4 8
6.0
4 4
.9
4.2
7.4
—.4
.1

25.4
5.0
5.9
4 3
.7
4.1
6.3
—.4
—.1

35.8
4.6
6.1
4.5
1.0
4.3
8.5
-.4
.3

42.0

58 0

51.4

64.7

TABLE A~8.—Federal cash payments to the public by type of recipient and transaction, calendar
years 1950 and 1951
[Billions of dollars, seasonally adjusted annual rates]
1951

Cash payments

1950

Total *
Direct cash payments for goods and services, excluding military services:2
Payments to individuals for services rendered:
Civilian wages and salaries (excluding Post Office):
Federal 3
Grants- and loans-in-aid for performance of specified
services, net *
_
_.
Total
Payments to business for goods and services:
Public works:
Federal
Grants-in-aid and loans for public works
Other goods and services 5
:
Payments to foreign countries and international institutions
for goods and services
._ _
_
Total
Loans and transfer payments to individuals:
Social insurance and public assistance:
Federal employees' retirement benefit payments
...
Old-age and disability benefit payments
Unemployment insurance benefit payments
Grants-in-aid for public assistance
Readjustment benefits, pensions, and other payments to veterans 7.
Loans to8 home owners, net
Interest^
_
Other «_ .
Total
Loans, investments, subsidies, and other transfers to business and
agriculture:
Farmers:
Price support, net (including supply program)
International Wheat Agreement
Other loans and direct subsidies to farmers
_.
Business:
Home mortgage purchases fromfinancialinstitutions .
Loans, net
Direct subsidy payments
Subsidy 8arising from the postal deficit
Interest _Total
Loans and transfer payments to foreign countries and international
institutions:
Unilateral transfers:
Military aid
Economic aid
Loans
Subscriptions to the International Bank and Monetary Fund (net
cash withdrawals)
.

First Second
half
halfi

3.5

3.7

3.5

21
.6
1.1

.6
.9

.6
.8

.6
.5

(6)

1.3
.7

1.2
.2

— 2

.3
23
9
1.2
5.3
1
1.3
6

13 5

11 3

10 7

11 9

(6)

—.4
.2
.7

— 7

.3
.8

— l1
6

.6
2.9

5
— 1
(«)
.8
3.0

7.6"
— .2

5.2
.1

5.1
.1

1.5
1.1

.1
.7

(6)

.9
1.2

(6)
(6)

.9
1.2

1.2

(6)

6
3.0

7
3.0

4.8

4.6

4.3

4.9

1.6

1.3
32
.3

1.9
23
.2

(6)
4.6

(6)

3.8

4.8

4.3

Military services — cash payments for goods and services ^

13.2

30.3

25.2

35.4

Clearing account for outstanding checks and telegraphic reports..

-.1

—.1

42.0

58.0

51.4

64.7

Total

Total Federal cash payments to the public
See footnotes on following page.

162

-.3

(6)

1
2

Estimates based on incomplete data.
Differs from the national-income concept of "government purchases of goods and services" by excluding, in addition to military services, farm price-support expenditures, and unilateral aid to foreign countries. Grants to States and localities for public works, here included as a Federal expenditure, would be
included in the national-income accounts as a State and local expenditure. There are other less significant
differences
between the two concepts.
3
Excludes payroll deductions for Federal employees' retirement.
* Includes all grants-in-aid and loans to public bodies for purposes other than public works and public
assistance. Includes, in addition, one-third of Federal expenditures for veterans' tuition, books, and
supplies.
* This figure is obtained as a residual by deducting all other expenditures from total cash payments to the
public. Owing to the fact that data are incomplete for calendar year 1951, the residual is subject to a high
margin
of error.
6
Less than 50 million dollars.
7
Includes cashing of terminal leave bonds, retired pay of military personnel, and National Service and
Government Life Insurance refunds and benefits in addition to veterans' pensions and readjustment benefits.
Includes only one-third of payments for veterans' tuition, books, and supplies.
8
Includes a small amount of interest on tax refunds in addition to interest on the public debt. Interest
paid to business includes over 100 million dollars of interest paid each year by the Federal Government to
State and local governments. Interest in appendix table A-2 is net, and is on an accrual rather than a
cash
basis; it includes interest paid by State and local governments and by government corporations.
9
During the period shown, represents in large part some of the transactions of the Federal Home Loan
Banks.
10
Excludes retired pay and redemption of Armed Forces Leave Bonds which are included above as payments to veterans.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: See table A-l.

163

Appendix B
Statistical Tables Relating to Employment,
Production, and Purchasing Power
CONTENTS
National income or expenditure:
Page
B-l. Gross national product or expenditure, 1929-51
167
B-2. Gross national product or expenditure in 1939 prices, 1929-51
168
B-3. Gross national product or expenditure in 1951 prices, 1929-51
169
B-4. Personal consumption expenditures, 1929-51
170
B-5. Gross private domestic investment, 1929-51
171
B-6. National income by distributive shares, 1929-51
172
B-7. Personal income, 1929-51
173
B-8. Relation of national income and personal income, 1929-51
174
B-9. Disposition of personal income, 1929-51
175
B-10. Total and per capita disposable personal income in current and 1951
prices, 1929-51
176
Employment and wages:
B—11. Labor force, employment, and unemployment, 1929-51
177
B-l 2. Number of wage and salary workers in nonagricultural establishments,
1929-51
178
B-l 3. Average weekly hours in selected industries, 1929-51
179
B-l4. Average hourly earnings in selected industries, 1929-51
180
B-15. Average gross weekly earnings in selected industries, 1929-51
181
Production and business activity:
B-l 6. Indexes of industrial and agricultural production, 1929-51
182
B-l7. Production of selected commodities in the free world, 1950-51
183
B-l8. New construction activity, 1929-51
184
B-l 9. Business expenditures for new plant and equipment, 1929-52
185
B-20. Inventories and sales in manufacturing and trade, 1939-51
186
B-21. Sales, stocks, orders, and receipts at 296 department stores, 1939-51. . 187
Prices:
B-22. Consumers' price index, 1929-51
188
B-23. Wholesale price index, 1929-51
189
B—24. Indexes of prices received and prices paid by farmers, and parity
ratio, 1929-51
190
B-25. Percentage increases in wholesale prices and cost of living in the United
States and foreign countries since June 1950
191
Credit, money supply, and Federal finance:
B-26. Consumer credit outstanding, 1929-51
192
B-27. Loans and investments of all commercial banks, 1929-51
193
B-28. Deposits and currency, 1929-51
194
B-29. Estimated ownership of Federal obligations, 1939-51
195
B-30. U. S. Government debt—volume and kind of obligations, 1929-51
196
B-31. Bond yields and interest rates, selected years, 1929-51
197

165

Corporate profits and
finance:
B-32. Profits before and after tax, all private corporations, 1929-51
B-33. Sales and profits of large manufacturing corporations, 1939-51
B—34. Relation of profits before and after taxes to stockholders' equity, private
manufacturing corporations, by industry group, 1947—49 average
and 1950-51
B—35. Relation of profits before and after taxes to sales, private manufacturing
corporations, by industry group, 1947—49 average and 1950—51....
B—36. Relation of profits before and after taxes to stockholders' equity and to
sales, all private manufacturing corporations, by size class, 1947—49
average and 1950-51
B—37. Sources and uses of corporate funds, 1947—51
International transactions:
B-38. International transactions of the United States, 1948-51
B—39. United States exports and imports of goods and services, by area,
1948-51
B-40. U. S. Government grants, other unilateral transfers, and loans to foreign
countries, 1948-51
B-41. United States merchandise exports, including reexports, by area,
1936-38 quarterly average and 1947-51
B—42. Indexes of quantity and unit value of United States domestic merchandise exports, by economic class, 1936—38 quarterly average and
1947-51
B—43. United States general merchandise imports, by area, 1936—38 quarterly
average and 1947-51
B-44. Indexes of quantity and unit value of United States merchandise imports for consumption, by economic class, 1936—38 quarterly average
and 1947-51
B-45. United States exports of selected capital goods to ERP countries and
underdeveloped areas, 1950-51
Summary:
B-46. Changes in selected economic series since 1939 and 1950 and during
1951

166

page
198
199

200
201

202
203
204
205
206
207

208
209

210
211

212

Statistical Tables Relating to Employment,
Production, and Purchasing Power
TABLE B-l.—Gross national product or expenditure, 1929—51
[Billions of dollars]
Government purchases of goods and services
Gross
Gross Personal , private Net
Federal
national consumpdomesforeign
exState
prod- tion
in- invest- Total
pendi- tic
and
Nauct
vestment
tures 1 ment 2
Total 3 tional 4 Other local
security

Period

1929..._

1946
1947
1948
1949
1950
1951 «

103.8
90.9
75.9
58.3
55.8
64.9
72.2
82.5
90.2
84.7
91.3
101.4
126.4
161.6
194.3
213.7
215.2
211.1
233.3
259.0
257.3
282.6
326.8

78.8
70.8
61.2
49.2
46.3
51.9
56.2
62.5
67.1
64.5
67.5
72.1
82.3
91.2
102.2
111.6
123.1
146.9
165. 6
177.9
180.2
193.6
204.4

15.8
10.2
5.4
.9
1.3
2.8
6.1
8.3
11.4
6.3
9.9
13.9
18.3
10.9
5.7
7.7
10.7
28.7
30.2
42.7
33.0
48.9
58.8

1950: First half
Second half _ _ _ _ _ _ _
1951: First half 6
Second half
1950: First quarter
Second quarter
Third quarter
Fourth quarter
1951: First quarter
Second quarter
Third quarter 6
Fourth quarter ...

269.7
295.6
323.4
330.3
264.4
275.0
287.4
303.7
319.0
327.8
327.6
333.0

186.7
200.4
205.0
203.8
184.7
188.7
202.5
198.4
208.2
201.7
202.5
205.0

44.0
53.8
62.8
54.8
40.1
47.9
47.3
60.2
60.1
65.6
55.7
54.0

1930.
1931
1932
1933
1934
1935
1936
1937.
1938
1939
1940
1941. _
1942
1943

1944....
1945._._

0.8
.7
.2
.2
.2
.4
-.1
-.1
.1
1.1
.9
1.5
1.1
-.2
-2.2
-2.1
-1.4
4.6
8.9
1.9
.5
-2.3
.1

8.5
9.2
9.2
8.1
8.0
9.8
9.9
11.7
11.6
12.8
13.1
13.9
24.7
59.7
88.6
96.5
82.8
30.9
28.6
36.6
43.6
42.5
63.5

1.3
1.4
1.5
1.5
2.0
3.0
2.9
4.5
4.6
5.3
5.2
6.2
16.9
52.0
81.2
89.0
74.8
20.9
15.8
21.0
25.5
22.8
41.9

(5)

7.2

4.0
3.2
2.7
1.5
1.6
1.0
2.5
3.8
5.6
6.6
3.9
4.1

7.8
7.7
6.6
5.9
6.8
7.0
6.9
7.0
7.5
7.9
7.8
7.8
7.7
7.4
7.5
8.0
10.0
12.8
15.6
18.1
19.7
21.6

4.6
3.3
3.6
4.8
5.3
3.8
3.2
3.4
3.6
3.6
4.6
4.9

19.2
20.2
21.2
21.9
19.3
19.2
19.7
20.4
21.1
21.4
21.6
22.2

(5)
(5)
(66)
(5)
()
(6)
(5)
(5a)
(5)
()
1.2

()
(55)
()
(58)
()
3.9

2.2
13.8
49.4
79.7
87.5
73.8
18.5
12.0
15.5
18.9
18.9
37.8

16.9
20.9
32.0
43.4
16.7
17.1
17.9
23.9
28.8
35.3
42.0
44.9

5
8
5)

Seasonally adjusted annual rates
-1.6
-3.0
-1.4
1.6
-1.7
-1.6
-3.2
-2.7
-2.7
O
1.2
2.0

1
See appendix table B-4 for major components.
2
See appendix table B-5 for major components.
3
Net of Government sales, which have been deducted
4

40.7
44.3
56.9
70.1
41.3
40.1
40.8
47.8
53.4
60.4
68.2
72.0

21.4
24.2
35.6
48.2
22.0
20.9
21.2
27.3
32.4
39.0
46.6
49.8

from the national security expenditures.
For 1947-51, "national security" expenditures include the following: military services, international
security and foreign relations, development and control of atomic energy, promotion cf merchant marine,
promotion of defense production and economic stabilization, and civil defense. (See The Budget of the
United States Government for the Fiscal Year Ending June 30, 1953, for items included in each of these
classifications.) Prior to 1947, the expenditures are based on items formerly classified as "war" by the
Bureau of the Budget and Treasury Department. For all years, the expenditures exclude Government
sales
and have been adjusted to the concept of purchases of goods and services.
8
Not available.
6
Estimates
based on incomplete data; fourth quarter by Council of Economic Advisers.
7
Less than 50 million dollars.
NOTE.—The figures beginning with 1948 are based on the revised series of national income and product of
the Department of Commerce. For detail, see the National Income Supplement to the Survey of Current
Business, 1951.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (except as noted).

167

TABLE B-2.—Gross national product or expenditure in 1939 prices, 1929-51
[Billions of dollars, 1939 prices]
Personal consumption
expenditures
Period

Government
purchases of goods
and services

Gross private domestic
investment

Total
gross
Pronational
New ducprodDur- NonServcon- ers'
uct Total able durable ices Total struc- durable
goods goods
tion equipment

Net
Gross
forprieign
Change invate
in
prodvestState uct 2
busi- ment
Total Fedand
eral local
ness
inventories

1929 .

85.9

62.2

8.0

29.1

25.1

14.9

7.4

6.1

1.5

0.8

7.9

1.3

6.6

81.5

1930
1931
1932
1933... .
1934

78.1 58.6
72.3 56.6
61.9 51.8
61.5 51.1
67.9 54.0

6.4
5.3
3.9
3.8
4.4

27.7
27.5
25.2
24.9
27.0

24.5
23.9
22.7
22.4
22.6

10.1
5.9
1.1
1.6
3.5

5.4
3.8
2.1
1.5
1.7

4.8
3.3
1.9
2.0
2.7

-.2
-1.1
-3.0
-1.8
-.8

.6
.3
.2
.1
.3

8.7
9.4
8.9
8.7
10.1

1.5
1.6
1.7
2.3
3.1

7.3
7.8
7.2
6.4
7.0

73.5
67.7
57.4
56.5
62.0

1935. . .
1936
1937
1938.
1939

73.9
83.9
87.9
84.0
91.3

57.2
62.8
65.0
63.9
67.5

5.4
6.6
7.0
5.7
6.7

28.6
31.8
32.9
33.4
35.3

23.2
24.4
25.1
24.8
25.5

6.7
9.3
11.4
6.3
9.9

2.2
3.1
3.8
3.3
4.9

3.6
4.8
5.5
3.9
4.6

.9
1.4
2.1
-1.0
.4

-.1
-.2
.1
1.0
.9

10.1
11.9
11.4
12.7
13.1

3.0
4.9
4.4
5.3
5.2

7.1
7.1
6.9
7.4
7.9

67.6
76.4
80.9
76.4
83.7

1940
100.0
1941
115.5
1942
129.7
1943... . 145.7
1944
156.9

71.3
76.6
75.8
78.0
81.1

7.7
8.9
5.7
5.0
4.6

37.1
40.1
41.3
42.6
44.5

26.5
27.6
28.8
30.4
32.0

13.7
17.1
9.3
5.4
6.6

5.4
6.1
3.3
1.9
2.0

6.0
7.2
4.4
3.6
5.1

2.3 1.2
3.8
.7
1.6 -.4
-.1 -2.1

13.8
21.1
45.0
64.3
71.3

6.1
13.8
38.3
58.2
65.4

7.7
7.3
6.7
6.1
6.0

92.1
106.2
116.5
125.3
133.0

1945
1946
1947
1948
1949

153.4 86.3
138.4 95.7
138.6 98.3
143.5 100.3
143.5 102.9

5.3
10.4
12.3
12.6
12.9

47.9
50.2
49.5
49.7
50.4

33.2
35.2
36.4
38.0
39.6

8.3
20.3
19.3
22.7
17.8

2.6
6.0
6.9
8.0
7.9

6.7
9.9
11.8
12.6
11.6

-1.0 -1.8
4.4 2.7
.6 4.8
2.1 1.4
-1.7
.6

60.6
19.6
16.1
19.2
22.2

54.6
12.8
8.5
10.9
13.0

6.0
6.8
7.6
8.2
9.2

129.7
125.6
128.8
133.7
133.2

1950
19513

154.3 108.7
166.5 107.5

15.5
13.4

51.7 41.6
51.1 43.0

24.8
28.1

9.4
8.9

13.2
15.0

20.8
28.7

11.0
18.7

9.8
10.0

143.8
153.3

-2.2

2.2
4.2

1
See Survey of Current Business, January 1951, and the National Income Supplement to the Survey of
Current
Business, 1951, for explanation of conversion of estimates in current prices to those in 1939 prices.
2
Total gross national product less compensation of general government employees.
3 Estimates based on incomplete data; by Council of Economic Advisers.
NOTE.—Detail will not necessarily^add to totals because of rounding.
Source: Department of Commerce (except as noted).

168

TABLE B-3.—Gross national product or expenditure in 1951 prices, 1929-51l
[Billions of dollars, 1951 prices]
Personal consumption expenditures

Period

Total
gross
national
product

3
£
r2

§>
bo
0)

3o 1
EH
ft

r2
3

1
fc

'>
1

Government purchases of goods
and services

Gross private domestic investment

"wft

fc
o>

i
P
o>-3 £

•l

1 0®B
0<
8 rs ® <u_g
T3
0
1-i

Federal

Net
foreign
S| ino vestS ment

•a

r-J'd

a i
EHo

a
O

II
•P X
g.

§
3$

1929

167.2 118.1 16.3 62.8 39.0 32.7 18.4 11.1

1930
1931
1932
1933
1934

151.4 111.0 13.0 59.9 38.1 22.1 13.7
139.7 107.1 10.8 59.4 36.9 13.5 9.7
118.4 97.6 8.0 54.4 35.2 2.7 5.4
117.0 96.5 7.7 54.1 34.7 3.5 3.6
130.8 102.4 9.0 58.3 35.1 7.2 4.1

1935
1936
1937 .
1938
1939

142.5 108.8
163.2 120.1
170.8 124.2
163.9 122.3
179.3 129.4

13.4
14.2
11.7
13.5

61.8
68.8
71.1
72.2
76.4

36.0
37.9
38.9
38.4
39.5

14.0 5.5 6.6 1.9 -2.5 22.2 6.7
19.7 7.9 8.8 3.0 -2.7 26.1 10.9
23.9 9.5 10.0 4.4 -2.3 25.0 10.0
13.5 8.3 7.3 -2.1
28.1 11.9
21.6 12.3 8.5
.8 -.5 28.8 11.7

1940
1941
1942
1943
1944

197.3 137.0
229.6 147.6
262.4 145.5
296.6 149.3
320.0 155.3

15.6
18.1
11.5
10.1
9.3

80.3
86.8
89.4
92.1
96.3

41.1
42.7
44.6
47.1
49.7

.2 30.5 13.8 4.9
29.6 13.7 11.0 4.9
36.6 15.4 13.2 8.0 -1.3 46.7 30.9 25.2
19.9 8.3 8.2 3.4 -3.3 100.3 85.8 81.5
11.2 4.7 6.7 -.2 -7.6 143.7 130.5 128.1
13.3 5.0 9.4 -1.1 -8.1 159.5 146.6 144.2

16.7
15.8
14.5
13.2
12.9

1945 .
1946
1947
1948 . .
1949

309.4 165.6
272.9 184.1
271.5 188.6
280.4 191.9
280.1 196.6

10.7 103.5
21.0 108.5
24.9 107.1
25.4 107.6
26.1 109.1

51.4
54.6
56.6
58.9
61.4

16.6
42.6
40.2
47.6
37.4

12.2 -2.1 -8.0 135.2 122.2 120.6
18.1 9.3 2.8 43.4 28.6 25.3
7.2 35.5 19.1 14.5
21.7 1.3
23.2 4.4 -1.5 42.4 24.5 18.1
21.3 -3.6 -3.0 49.1 29.1 21.6

13.0
14.8
16.4
17.9
20.0

1950...
1951* ..

301.2 207.5 31.2 111.7 64.6 52.5 23.7 24.1
326. 8 204.4 27.1 110.6 66.6 58.8 22.2 27.6

n.o

6.5
15.2
17.2
20.0
19.7

3.2 -0.8 17.2

2.9

8.8 -.4 -.9 19.2
6.1 -2.3 -1.4 20.5
3.6 -6.3 -1.3 19.4
3.7 -3.8 -1.8 18.8
4.8 -1.7 -.9 22.1

3.3
3.5
3.8
5.1
6.9

(3)
3

( )
(3)
(3)
(3)
(3)

14.3
15.9
17.0
15.6
13.7
15.2

15.5
15.2
15.0
( )
16.2
( )
2.7 17.1
(3)

(3)
3

4.7 -4.6 45.8 24.6 20.4 21.2
.1 63.5 41.9 37.8 21.6
9.1

Seasonally adjusted annual rates
1950: First half
Second half

294.2 204.4 29.0 111.4 64.0 49.2 23.0 22.5
307.9 210.6 33.4 112.0 65.3 55.6 24.4 25.7

1951: First half
Second half*

323.8 205.5 28.8 110.4 66.2 63.0 23.2 26.6 13.2 -1.6 56.9 35.4 32.0 21.4
1.8 70.0 48.4 43.6 21.7
329.8 203.2 25.3 110.9 67.0 54.6 21.2 28.6 4.8

1950: First quarter
Second quarter. _.
Third quarter
Fourth quarter. . .

289.8 203.5
298.6 205.2
301.5 214.4
314.3 206.9

28.9 111.3
29.0 111.6
36.4 113.0
30.4 110.9

63.3
64.6
65.0
65.6

45.1
53.2
49.2
61.9

22.7
23.4
24.6
24.1

21.1 1.3
23.9 5.9
25.9 -1.3
25.5 12.3

45.9
44.6
43.1
49.4

24.6
23.5
22.1
28.2

18.7
19.3
18.7
24.7

21.3
21.1
21.0
21.2

1951: First quarter
Second quarter. __
Third quarter
Fourth quarter*..

319.5 209.4
328.2 201.6
328.4 203.1
331.1 203.4

31.7 111.7
26.0 109.1
25.5 110.7
25.1 111.1

66.0
66.5
66 9
67.2

60.4
65.7
55.7
53.5

24.0
22.5
21.6
20.8

26.0 10.4 -3.2 52.9
60.9
27.1 16.1
28.2 5.9 ~"I.~4 68.2
2.3 71.9
28.9 3.8

31.7
39.2
46.7
50.0

28.5
35.5
42.1
45.1

21.2
21.7
21.5
21.9

3.6 -4.6 45.2 24.0 19.0 21.2
5.5 -4.6 46.2 25.2 21.7 21.1

-4.7
-4.4
-5.2
-3.9

1
These estimates represent a rough conversion of the Department of Commerce series in 1939 prices.
(See appendix table B-2.) This was done by major components, using the implicit price indexes for the
year 1951 as a base. Although it would have been preferable to redeflate the series by minor components,
this would not substantially change the results except possibly for the period of World War II, and for the
series
on change in business inventories.
2
See appendix table B-l, footnotes 3 and 4.
3
Not available.
* Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Council of Economic Advisers.

169

TABLE B-4.—Personal consumption expenditures 9 1929-51
[Billions of dollars]
Durable goods
Period

Nondurable goods

Services

Total
exAutopendimoHoustures Total biles Other Total Foodi Clothing 2 Other Total ings Other
and
parts

1929..

78.8

9.4

3.2

6.1

37.7

19.7

9.2

8.9

31.7

11.4

20.2

1930
1931
1932
1933
1934.

70.8
61.2
49.2
46.3
51.9

7.3
5.6
3.7
3.5
4.3

2.2
1.6
.9
1.0
1.4

5.1
4.0
2.8
2.5
2.9

34.1
29.0
22.7
22.3
26.7

18.1
14.8
11.4
11.5
14.3

7.9
6.8
5.0
4.6
5.6

8.1
7.4
6.4
6.2
6.9

29.5
26.6
22.8
20.6
20.9

11.0
10.2
9.0
7.8
7.5

18.5
16.4
13.8
12.7
13.4

56.2
62.5
67.1
64.5
67.5

5.2
6.4
7.0
5.8
6.7

1.9
2.3
2.4
1.6
2.1

3.3
4.1
4.6
4.1
4.6

29.4
32.9
35.2
34.0
35.3

16.3
18.5
20.0
19.0
19.3

5.9
6.5
6.7
6.6
7.0

7.2
7.9
8.6
8.4
8.9

21.7
23.3
24.9
24.7
25.5

7.6
7.9
8.4
8.7
8.9

14.1
15.4
16.5
16.0
16.5

72.1
82.3
91.2
102.2
111.6

7.9
9.8
7.1
6.8
7.1

2.7
3.3
.7
.8
.9

5.1
6.4
6.4
6.0
6.2

37.6
44.0
52.9
61.0
67.1

20.7
24.4
30.5
35.3
38.9

7.4
8.8
11.0
13.7
15.3

9.5
10.8
11.4
11.9
12.9

26.6
28.5
31.2
34.4
37.4

9.2
9.9
10.6
11.1
11.7

17.4
18.7
20.6
23.3
25.7

1945
1946
1947
1948
1949

123.1
146.9
165.6
177.9
180.2

8.5
16.6
21.4
22.9
23.9

1.1
4.2
6.6
7.5
9.4

7.4
12.4
14.8
15.4
14.5

74.9
85.8
95.1
100.9
98.7

43.0
50.3
56.6
59.7
58.6

17.1
18.6
19.1
20.1
18.9

14.8
16.9
19.4
21.1
21.3

39.7
44.5
49.1
54.1
57.6

12.2
13.0
14.6
16.5
18.1

27.5
31.4
34.5
37.7
39.4

1950
1951*

193.6
204.4

29.2
27.1

12.3
10.5

16.9
16.5

102.3
110.6

60.9
67.3

18.8
19.8

22.6
23.6

62.1
66.7

19.9
21.4

42.2
45.2

1935
1936.
1937
1938
1939
1940
1941
1942..
1943
1944

.
_.

Seasonally adjusted annual rates
1950: First half
Second half

186.7
200.4

26.5
31.9

10.9
13.6

15.6
18.2

99.4
105.2

59.2
62.7

18.2
19.4

22.0
23.1

60.8
63.4

19.5
20.3

41.4
43.1

1951: First half _
Second half*

205. 0
203.8

28.7
25.4

11.6
9.5

17.1
15.9

110.5
110.7

67.0
67.6

19.9
19.6

23.6
23.6

«5.7
67.6

21.1
21.8

44.7
45.8

1950: First quarter
Second quarter.. .
Third quarter
Fourth quarter .

184.7
188.7
202.5
198.4

26.3
26.6
34.3
29.4

10.4
11.4
14.3
12.9

15.9
15.2
20.0
16.5

98.4
100.4
105.5
104.9

58.7
59.7
62.6
62.7

17.9
18.5
19.6
19.2

21.8
22.2
23.3
23.0

60.1
61.6
62.7
64.0

19.3
19.7
20.1
20.5

40.8
41.9
42.6
43.5

- 208.2
201.7
202.5
205.0

31.5
25.9
25.3
25.5

12.5
10.8
9.6
9.3

19.0
15.2
15.7
16.2

111.5
109.5
110.0
111.5

67.0
66.9
67.3
67.9

20.4
19.5
19.4
19.7

24.1
23.1
23.2
23.9

65.2
66.2
67.2
68.0

20.9
21.3
21.6
22.0

44.3
45.0
45.6
46.0

1951: First quarter.
Second quarter
Third quarter
Fourth quarter *

1
Includes alcoholic beverages.
2 Includes shoes and standard clothing issued to military personnel.
3 Includes imputed rental value of owner-occupied dwellings.
* Estimates based on incomplete data; fourth quarter by Council of Economic'Advisers.
NOTE.—The figures beginning with 1948 are based on the revised series of national income and product of
the Department of Commerce. For detail, see the National Income Supplement to the Survey of Current
Business, 1951.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (except as noted).

170

TABLE B-5.—Gross private domestic investment, 1929-51
[Billions of dollars]
Net change in
Nonfarm producers' Farm equipment and
construction
business inventories
Total plant and equipment
Rasigross
dential Other
pripriconNonvate
struc- vate
farm
condomestion
Conafter
Contic Total i Equip-2 struc- Total < Equip- struc- (non- struc- Total revaluFarm
investment tion i s
ment tion farm)1 5 tions
ation
ment
adjustment

Period

1.8

-0.3

-.3
-1.4
-1.7
-2.6 -2.6
-1.3
-1.6
.2
-1.1

-.2
.3

1929

15.8

9.8

5.6

4.2

1.1

0.8

0.3

2.8

0.5

1930
1931
1932

10.2
5.4
.9
1.3
2.8

7.6
4.6
2.5
2.3
3.1

4.3
2.8
1.6
1.6
2.2

3.4
1.8
1.0
.7
.9

.9
.5
.3
.3
.4

.7
.4
.3
.3
.3

.2
.1

1.4
1.2
.5
.3
.4

.5
.4
.2
.1
.1

6.1
8.3
11.4
6.3
9.9

3.8
5.2
6.6
4.7
5.7

2.9
3.9
4.7
3.4
4.0

.0
.3
.9
.4
.7

.6
.8
1.0
.8
.8

.5
.6
.8
.6
.6

.1
.2
.2
.2
.2

.7
1.1
1.4
1.5
2.7

.1
.9
.1 1.0
.2 2.3
.2 -1.0
.2
.4

13.9
18.3
10.9
5.7
7.7

7.4
9.3
5.8
4.6
6.3

5.3
6.6
4.1
3.5
4.7

2.1
2.7
1.7
1.1
1.6

1.0
1.3
1.0
.9
1.2

.8
1.0
.7
.6
.9

.2
.3
.3
.3
.3

3.0
3.4
1.8
1.0
.8

.2
.3
.1

10.7
28.7
30.2
42.7
33.0

8.7
15.5
20.3
23.4
22.0

6.3
10.7
14.6
16.7
15.6

2.4
4.8
5.7
6.7
6.4

1.4
2.4
3.8
4.6
4.7

1.1
1.6
2.5
3.2
3.4

.3
.9
1.3
1.4
1.3

1.1
4.0
6.3
8.6
8.3

48.9
58.8

25.6
31.6

18.8
23.2

6.8
8.4

4.8
5.6

3.6
4.3

1.2
1.3

12.6
10.8

— ...

1933
1934

1935
1936
1937
1938
1939
1940
1941
1942
1943
1944

1945
1946
1947
1948
1949
1950
1951

1.6

5.,

-1.3

.4
2.1
1.8
-1.1
.3

.5
-1.1
.5
.1
.1

2.3
3.9
2.1
-.9
-.8

2.0
3.4
.8
-.5
-.3

.2
.5
1.3
-.4
-.5

.2 — 7
.6
.7 -'.8
1.0 5.0
1.3 -3.2

-.6
6.3
1.4
3.7
-2.5

-.1
-.2
-2.2
1.3
-.7

1.5
1.7

4.3
9.1

3.6
8.0

.8
1.1

Seasonally adjusted annual rates
1950: 1st half
2dhalf__-._-

44.0
53.8

23.0
28.2

16.8
20.9

6.2
7.2

4.6
5.0

3.4
3.8

1.2
1.2

11.8
13.4

1.5
1.6

3.1
5.6

2.8
4.4

.4
1.2

1951: 1st half.

62.8
54.8

30.3
33.0

21.9
24.5

8.3
8.5

5.8
5.3

4.6
4.0

1.2
1.3

11.9
9.8

1.8
1.6

13.1
5.0

12.0
4.0

1.2
1.0

1950: 1st quarter...
2d quarter..
3d quarter..
4th quarter.

40.1
47.9
47.3
60.2

22.0
24.0
27.5
28.9

15.8
17.8
20.5
21.3

6.2
6.2
7.0
7.5

4.3
4.8
5.2
4.8

3.1
3.6
4.0
3.7

1.2
1.2
1.2
1.1

11.2
12.4
13.7
13.1

1.5
1.5
1.5
1.6

1.1
5.2
-.7
11.8

1.1
4.4
-1.8
10.6

1951: 1st quarter...
2d quarter. .
3d quater..4th quarter 8.

60.1
65.6
55.7
54.0

29.5
31.1
32.7
33.3

21.4
22.5
24.0
25.0

8.1
8.6
8.7
8.3

5.7
5.9
5.4
5.3

4.5
4.7
4.1
4.0

1.2
1.2
1.3
1.3

12.9
10.8
9.7
10.0

1.7
1.9
1.8
1.4

10.3
15.9
6.1
4.0

9.1
14.8
5.1
3.0

0
l!2
1.2
1.1
1.0
1.0

1 Items for 1945 and earlier years are not comparable with those for later years, nor with figures shown in
appendix table B-18. Items for all years are not comparable with those shown in appendix table B-19,
principally because the latter exclude certain equipment and construction outlays charged to current
expense.
2 Total producers' durable equipment less "farm machinery and equipment" and farmers' purchases of
"tractors" and "business motor vehicles." These figures assume that farmers purchase 85 and 15 percent,
respectively, of all tractors and motor vehicles used for productive purposes.
3 Industrial buildings, public utilities, gas- and oil-well drilling, warehouses, office and loft buildings, stores,
restaurants, and garages. Includes hotel construction prior to 1946 only.
* Farm construction (residential and nonresidential) plus "farm machinery and equipment" and farmers'
purchases of "tractors" and "business motor vehicles." (See footnote 2.)
8 Includes construction of hotels, tourist cabins, motor courts, and dormitories since 1946 only.
• Includes religious, educational, social and recreational, hospital and institutional, miscellaneous nonresidential,
and all other private.
7
Less than 50 million dollars.
8
Estimates based on incomplete data; fourth quarter by Council of Economic Advisers.
NOTE.—The figures beginning with 1948 are based on the revised series of national income and product of
the Department of Commerce. For detail, see the National Income Supplement tojfche" Survey of Current
Business, 1951.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (except as noted).

171
977891—52

TABLE B-6.—National income by distributive shares, 1929-51
[Billions of dollars]

Period

Business and proCorporate profits
fessional income
and inventory
and inventory
valuation
valuation
adjustment
adjustment
InTotal Comcome RentpenNet
of al inna- sation
InInInfarm come
intional of
emof
ven- terest
come ven- pro- perin- 1 ployCortory
2
tory
come ees
of
prieporate valuunin- valu- tors sons Total profits
Total corpoation
ation
before
adrated adtax
3
justenter- justment
prises ment

1929 .

87.4

50.8

8.3

8.1

0.1

5.7

5.8

1930
1931 .
1932
1933
1934

75.0
58.9
41.7
39.6
48.6

46.5
39.5
30.8
29 3

sili

7.0
5.3
3.2
2.9
4.3

6. 3
4.7
2.9
3.4
4.3

.8
.6
.3
-.5
-.1

3.9
2.9
1.7
2.3
2.3

4.8
6.6
3.6
1.6
2.5 -2.0
2.0 -2.0
2.1
1.1

1935
1936
1937.
1938
1939

56.8
64.7
73.6
67.4
72.5

37.1
42.7
47.7
44.7
47.8

5.0
6.1
6.6
6.3
6.8

5.0
6.2
6.7
6.1
6.9

-.1
. i

4.9
3.9
5.6
4.4
4.5

2.3
2.7
3.1
3.3
3.5

3.0
4.9
6.2
4.3
5.8

81.3
103.8
137. 1
169.7
183.8

51.8
64.3
S4.9
109.2
121.2

7.7
9.6
12.6
15.0
17.2

7.8
10.2
12.9
15.1
17.2

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

4.9
6.9
10.5
11.8
11.8

3.6
4.3
5.4
6.1
6.5

182.7
180.3
198.7
223.5
216.7

123.0
117.1
128.0
140.2
139.9

18.7
20.6
19.8
22.1
20.9

18.8 -.1
22.4 -1.8
21.3 -1.5
22.5 -.4
20.3
.6

12.5
14.8
15.6
17.7
13.0

239.0
276.0

153.3
178.1

22.3
23.6

23.8 -1.6
24.4 -.7

13.7
17.0

.. .

1940
1941.
1942
1943
1944
1945
1946
1947
1948
1949

1950..
1951 •

ll
.2o

0..5

6.5

3.3
3.3
-.8 2.4
-3.0
1.0
.2 -2.1
1.7 -.6

6.2
5.9
5.4
5.0
4.8

— 2
-'.7
(<)
1.0
-.7

4.5
4.5
4.4
4.3
4.2

9.2
14.6
19.9
24.3
24.0

9.3 -.1
17.2 -2.6
21.1 -1.2
25.1 -.8
24.3 — 3

4.1
4.1
3.9
3.4
3.1

6.3
6.6
7.1
7.5
7.5

19.2
18.3
24.7
31.7
30.5

19.7 -.6
23.5 -5.2
30.5 -5.8
33.8 -2.1
2.1
28.3

3.0
2.9
3.5
4.3
4.9

8.0
8.4

36.2
43.1

41.4 -5.1
44.8 -1.7

5.4
5.7

10.3

9.8

3.2
5.7
6.2
3.3
6.5

Seasonally adjusted annual rates
1950: First half
Second half

225.0
253.0

145.4
161.2

21.5
23.1

22.0 -.6
25.6 -2.5

12.4
15.0

7.8
8.2

32.6
39.8

34.7 -2.0
48.0 -8.2

5.2
5.6

1951: First half
Second half «

271.8
280.0

174.8
181.4

23.8
23.4

16.4
17.6

8.2
8.4

43.0
43.2

48.6 -5.6
2.2
41.0

5.6
5.8

1950: First quarter .
Second quarter
Third quarter . _
Fourth quarter

219.3
230.6
245.8
260.1

142.2
148.6
157.3
165.2

21.1
21.9
23.2
23.0

25.7 -1.8
23.0
.4
2
21.3
22.8 -ilo
26.3 -3.2
24.9 -1.8

12.5
12.2
14.3
15.8

7.8
7.8
8.1
8.4

30.5
34.8
37.4
42.2

31.9
37.5
45.7
50.3

-1.4
-2.7
-8.3
-8.2

5.2
5.3
5.5
5.6

1951: First quarter
Second quarter
Third quarter • 5
Fourth quarter

269.4
274.3
278.1
282.0

172. 1
177.4
180.4
182.5

24.1
23.6
23.4
23.5

27.2 -3.1
24.2 -.5
22.8
.6
23.3
.2

16.4
16.3
17.3
18.0

8.3
8.2
8.4
8.5

42.9
43.0
42.8
43.7

51.8 -8.9
45.4 -2.3
2.8
40.0
42.0
1.7

5.6
5.7
5.8
5.8

1
National income is the total net income earned in production by individuals and businesses. The concept
of national income currently used differs from the concept of gross national product in that it excludes depreciation charges and other allowances for business and institutional consumption of durable capital goods,
and
indirect business taxes.
2
Includes wage and salary receipts and other labor income (see appendix table B-7), and employer and
employee
contributions for social insurance (see appendix table B-8).
3
See appendix table B-32 for corporate tax liability (Federal and State income and excess profits taxes)
and
corporate
profits after tax.
4
Less than 50 million dollars.
5
Estimates based on incomplete data; corporate profits and total national income for third quarter and all
items for fourth quarter by Council of Economic Advisers.
NOTE.—The figures beginning with 1948 are based on the revised series of national income and product
of the Department of Commerce. For detail, see the National Income Supplement to the Survey of Current Business, 1951.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (except as noted).

172

TABLE B-7.—Personal income, 1929-51
[Billions of dollars)
Total
personal
income

Period

Salaries,
wages,
and other
labor
income 1

Proprietors'
and
rental 2
income

Dividends
and
Transfer
personal payments
interest3
income

Nonagricultural
personal4
income

Agricultural
income

1929

85.1

50.5

19.7

13.3

1.5

76.8

8.3

1930
1931 . .
1932
1933
1934 .

76.2
64.8
49.3
46.6
53.2

46.3
39.2
30.5
29.0
33.8

15.7
11.8
7.4
7.2
8.7

12.6
11.1
9.1
8.2
8.6

1.5
2.7
2.2
2.1
2.2

70.0
60.1
46.2
43.0
49.5

6.2
4.7
3.1
3.6
3.7

1935
1936
1937.
1938
1939 -. _

59.9
68.4
74.0
68.3
72.6

36.8
42.1
45.9
42.8
45.7

12.1
12.6
15.4
14.0
14.7

8.6
10.1
10.3
8.7
9.2

2.4
3.5
2.4
2.8
3.0

53.4
62.8
66.5
62.1
66.3

6.5
5.6
7.5
6.2
6.3

1940 ..
1941
1942
1943
1944

78.3
95.3
122.7
150.3
165.9

49.5
61.5
81.4
104.5
116.2

16.3
20.8
28.4
32.8
35.5

9.4
9.9
9.7
10.0
10.6

3.1
3.1
3.2
3.0
3.6

71.5
86.1
109.4
135.2
150.5

6.8
9.2
13.3
15.1
15.4

1945 .. _
1946
1947
1948 . _
1949

171.9
177.7
191.0
209.5
205.1

116.9
111.1
122.3
134.9
134.2

37.5
42.0
42.4
47.3
41.4

11.4
13.2
14.5
16.0
17.1

6.2
11.4
11.8
11.3
12.4

155.7
158.8
170.8
187.1
187.6

16.2
18.9
20.2
22.4
17.5

224.7
251.3

146.4
169.8

44.0
49.0

19.3
20.1

15.1
12.5

206.6
229.6

18.1
21.7

1950 _ . ._
1951 «

...

Seasonally adjusted annual rates
1950: First half
Second half

216.7
232.8

138.7
154.1

41.6
46.4

18.0
20.5

18.4
11.8

200.0
213.1

16.6
19.8

1951: First half
Second half 5

247.0
255.6

166.5
173.0

48.4
49.6

19.6
20.5

12.4
12.6

226.1
233.2

21.0
22.4

1950: First quarter
Second quarter
Third quarter
Fourth quarter. . _

216.3
217.1
227.3
238.3

135.6
141.8
150.3
157.9

41.4
41.8
45.6
47.2

17.6
18.4
19.6
21.4

21.7
15.0
11.8
11.9

199.5
200.6
208.5
217.7

16.8
16.5
18.8
20.6

1951: First quarter
Second quarter. _.
Third quarter. _ 1 _
Fourth quarter <L_

244.1
163.8
169.2
249.9
253.2
171. 4
258. 0 * U 174.6

48.8
48.1
49.1
50.0

19.2
20.1
20.2
20.8

12.3
12.5
12.6
12.6

223.2
229.0
231.2
235.2

20.9
21.0
22.1
22.8

1 Differs from "compensation of employees" in appendix table B-6, in that it excludes employer and
employee contributions to social insurance. Includes wage and salary receipts and other labor incomecompensation for injuries, employer contributions to private pension and welfare funds, pay of military
reservists not on full-time active duty (pay for full-time active duty included in military wages and salaries),
directors' fees, jury and witness fees, compensation of prison inmates, Government payments to enemy
prisoners
of war, marriage fees to justices of the peace, and merchant marine war-risk life and injury claims.
2
See appendix table B-6 for major components.
3
See appendix table B-32 for dividend payments.
* Nonagricultural income is personal income exclusive of net income of unincorporated farm enterprises,
farm wages, agricultural net rents, agricultural net interest, and net dividends paid by agricultural corporations.
5 Estimates'based on incomplete data; fourth quarter by Council of Economic Advisers.
NOTE.—The figures beginning with 1948 are based on the revised series of national income and product
of the (Department of Commerce. For detail, see the National Income Supplement to the Survey of
Current Business, 1951.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (except as noted).

TABLE B—8.—Relation of national income and personal income, 1929-51
[Billions of dollars]
Less:

Plus:

Corporate
National profits Contriincome and in- butions
to
ventory
social
valu- insuration
ance
adjustment

Period

Excess
of
wage
accruals
over
disbursements

Government
transfer
payments

Net
interest
paid
by
government

Dividends

Busi- Equals:
Perness
sonal
trans- income
fer
payments

1929

87.4

10.3

0.2

0.9

1.0

5.8

0.6

85.1

1930
1931.
1932
1933
1934

75.0
58.9
41.7
39.6
48.6

6.6
1.6
-2.0
-2.0
1.1

.3
.3
.3
.3
.3

1.0
2.0
1.4
1.5
1.6

1.0
1.1
1.1
1.2
1.2

5.5
4.1
2.6
2.1
2.6

.5
.6

.7
' .7
.6

76.2
64.8
49.3
46.6
53.2

56.8
64.7
73 6
67.4
72.5

3.0
4.9
6.2
4.3
5.8

.3
.6
1.8
2.0
2.1

1.8
2.9
1.9
2.4
2.5

1.1
1.1
1.2
1.2
1.2

2.9
4.6
4.7
3.2
3.8

.6
.6
.6
.4
.5

59.9
68.4
74.0
68.3
72.6

81.3
103.8
137.1
169.7
183.8

9.2
14.6
19.9
24.3
24.0

2.3
2.8
3.5
4.5
5.2

2.7
2.6
2.7
2.5
3.1

1.3
1.3
1.5
2.1
2.8

4.0
4.5
4.3
4.5
4.7

.4
.5
.5
.5
.5

78.3
95.3
122.7
150.3
165.9

182.7
180.3
198.7
223. 5
216.7

19.2
18.3
24.7
31.7
30.5

6.1
6.0
5.7
5.2
5.7

0)
0)
0)
0)

5.6
10.9
11.1
10.5
11.6

3.7
4.4
4.4
4.5
4.6

4.7
5.8
6.6
7.2
7.6

.5
.6
.7
.7
.7

171.9
177.7
191.0
209.5
205.1

239.0
276.0

36.2
43.1

7.0
8.4

0)
0)

14.3
11.7

4.7
4.8

9.2
9.5

.8
.8

224.7
251.3

...

1935. ...
1936—
1937
1938 _._
1939...

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
19512

_ _

•
0.2
-.2

Seasonally adjusted annual rates
1950: First half
Second half

225.0
253.0

32.6
39.8

6.7
7.2

1951: First half
Second half 2

271.8
280.0

43.0
43.2

8.4
8.5

1950: First quarter
Second quarter
Third quarter
Fourth quarter

219.3
230.6
245.8
260.1

30.5
34.8
37.4
42.2

6.6
6.8
7.0
7.4

1951: First quarter
Second quarter
Third quarter *____
Fourth quarter2...

269.4
274.3
278.1
282.0

42.9
43.0
42.8
43.7

8.3
8.4
8.4
8.6

0)
0)
(0
(')
0)
0)
0)
0)
0)
0)

.7
—.7

17.6
11.0

4,7
4.7

8.1
10.2

.7
.8

216.7
232.8

11.6
11.8

4.8
4.8

9.2
9.8

.8
.8

247.0
255.6

21.0
14.2
11.0
11.1

4.7
4.7
4.7
4.7

7.8
8.4
9.4
11.1

.7
.7
.8
.8

216.3
217.1
227.3
238.3

11.5
11.8
11.8
11.8

4.8
4.8
4.8
4.9

8.8
9.6
9.6
10.1

.8
.8
.8
.8

244.1
249.9
253.2
258.0

12 Less than 50 million dollars.
Estimates based on incomplete data; corporate profits and total national income for third quarter and
all items for fourth quarter by Council of Economic Advisers.
NOTE.—The figures beginning with 1948 are based on the revised series of national income and product
of the Department of Commerce. For detail, see the National Income Supplement to the Survey of
Current Business, 1951.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (except as noted).

174

TABLE B-9.—Disposition of personal income, 1929—51
[Billions of dollars]
Less:
Personal Personal
tax
and
income
nontax
payments

Period

1929

1930
1931
1932
1933
1934

1935
1936
1937
1938
1939

_ _
_ _

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

1950
1951 *

Less:
Equals: Personal
Equals:
DisposconPersonal
able
sumption
net
personal expendi- saving
income
tures

Net
saving as
percent
of disposable
personal
income

85.1

2.6

82.5

78.8

3.7

4.5

76.2
64.8
49.3
46.6
53.2

2.5
1.9
1.5
1.5
1.6

73.7
63.0
47.8
45.2
51.6

70.8
61.2
49.2
46.3
51.9

2.9
1.8
-1.4
-1.2
— 2

3.9
2.9
-2.9
-2.7
-.4

59.9
68.4
74.0
68.3
72.6

1.9
2.3
2.9
2.9
2.4

58.0
66.1
71.1
65.5
70.2

56.2
62.5
67.1
64.5
67.5

1.8
3.6
3.9
1.0
2.7

3.1
5.4
5.5
1.5
3.8

78.3
95.3
122.7
150.3
165.9

2.6
3.3
6.0
17.8
18.9

75.7
92.0
116.7
132.4
147.0

72.1
82.3
91.2
102.2
111.6

3.7
9.8
25.6
30.2
35.4

4.9
10.7
21.9
22.8
24.1

171.9
177.7
191.0
209.5
205.1

20.9
18.8
21.5
21.1
18.6

151.1
158.9
169.5
188.4
186.4

123.1
146. 9
165.6
177.9
180.2

28.0
12.0
3.9
10.5
6.3

18.5
7.6
2.3
5.6
3.4

224.7
251.3

20.5
28.4

204.3
222.8?

193.6
204.4

10.7
18.5

5.2
8.3

\ "I

Seasonafly adjusted annual rates

1950: First half
Second half

216.7
232.8

19.2
21.6

197.4
211.2

186.7
200.4

10.7
10.7

5.4
5.1

1951: First half
Second half 1

247.0
255.6

27.7
29.2

219.3
226.4

205.0
203.8

14.3
22.6

6.5
10.0

216.3
217.1
227.3
238.3

19.0
19.5
20.2
23.1

197.3
197.5
207.1
215.2

184.7
188.7
202.5
198.4

12.5
8.9
4.6
16.8

6.3
4.5
2.2
7.8

244.1
249.9
253.2
258.0

27.4
28.0
28.4
30.0

216.8
221.8
224.7
228.0

208.2
201.7
202.5
205.0

8.5
20.1
22.2
23.0

3.9
9.1
9.9
10.1

1950: First quarter
Second quarter
Third quarter
Fourth quarter..
1951: First quarter
Second quarter
Third quarter _ .l_
Fourth quarter
1

._
...

Estimates based on incomplete data; fourth quarter by Council of Economic Advisers.
NOTE.—-The figures beginning with 1948 are based on the revised series of national income and product
of the Department of Commerce. For detail, see the National Income Supplement to the Survey of
Current Business, 1951.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (except as noted).

TABLE B-10.— Total and per capita disposable personal income in current and 1951 prices, 1929-51
Total disposable personal
income (billions of dollars)

Per capita disposable personal income (dollars)

Period

1951
prices l

Current
prices

1951
prices *

Population
(thousands) 3

1929

82.5

123.7

678

1,016

121,770

1930
1931
1932
1933
1934

73.7
63.0
47.8
45.2
51.6

115.5
110.3
94.8
94.2
101.8

599
508
383
360
408

939
890
760
750
805

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

68.0
66.1
71.1
65.5
70.2

112.2
127.1
131.4
124.3
134.5

456
516
552
505
536

882
992
1,020
958
1,027

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

75.7
92.0
116.7
132.4
147.0

143.9
164.9
186.1
193.3
204.5

573
690
866
968
1,062

1,089
1,237
1,381
1,413
1,477

132, 114
133, 377
134,831
136,719
138, 390

151.1
158.9
169.5
188.4
186.4

203.4
199.1
193.1
203.2
203.3

1,080
1,124
1,176
1,285
1,250

1,454
1,409
1,339
1,386
1,363

139, 934
141,398
144, 129
146, 621
149, 149

204.3
222.8

219.0
222.8

1,347
1,443

1,444
1,443

151, 689
154,353

1935
1936
1937
1938
1939
1940
1941
1942
1943
1944

___

_ _
_

. _.

1945
1946
1947
1948
1949
1950
1951 »

Seasonally adjusted annual rates
1950: First half- . -.Second, half
1951- First half 3
Second half _-

1950: First quarter.
Second quarter
Third quarter
Fourth quarter
1951: First quarter
Second quarter
Third quarter 3
Fourth quarter .

197.4
211.2

216.0
221.9

1,306
1,385

1,430
1,456

151, 132
152, 438

219.3
226.4

220.0
225.8

1,427
1,460

1,431
1,456

153,699
155, 107

197.3
197.5
207.1
215.2

217.3
214.7
219.4
224.4

1,308
1,305
1,362
1,409

1,441
1,418
1,443
1,469

150, 847
151, 390
152, 068
152, 774

216.8
221.8
224.7
228.0

218.1
221.8
225.4
226.2

1,413
1,440
1,452
1,467

1,422
1,440
1,456
1,455

153,396
154, Oil
154, 724
155, 469

1
Dollar estimates in current prices divided by an over-all price index for personal consumption expenditures. This price index was based on Department of Commerce data shifted from a 1939 base.
2 Provisional intercensal estimates of the population of continental United States including armed forces
overseas, taking into account the final 1950 census total population count. Annual data are as of July 1;
quarterly and semi-annual data as of middle of period.
3 Estimates based on incomplete data; fourth quarter by Council of Economic Advisers.
NOTE.—The figures beginning with 1948 are based on the revised series of national income and product of
the Department of Commerce. For detail, see the National Income Supplement to the Survey of Current
Business, 1951.
Detail will not necessarily add to totals because of rounding.
Sources: Department of Commerce and Council of Economic Advisers.

176

TABLE B—11.—Labor force, employment, and unemployment, 1929-51

Total
labor
force
(including
armed
forces) *

Period

Civilian labor force
Armed
forces i

Total
civilian
labor
force

Employment 2

Total

Agri- Nonagricultural cultural

Unemployment

Unemployment
as percent of
total
civilian
labor
force

Thousands of persons, 14 years of age and over
Monthly average:
1929

49, 440

260

49, 180

47, 630

10, 450

37, 180

1,550

3.2

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

1935
1936
1937
1938
1939

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

1940
1941
1942
1943
1944

56,030
57,380
60,230
64,410
65, 890

390
1,470
3,820
8,870
11, 260

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

14.6
9.9
4.7
1.9
1.2

65,140
60,820
6 ,608
6 ,748
6 ,571

11, 280
3,300
1,440
1,306
1,466

53, 860
57, 520
60,168
61, 442
62, 105

52,820
55,250
58, 027
59,378
58, 710

8,580
8,320
8,266
7,973
8,026

44, 240
46, 930
49, 761
51, 405
50, 684

1,040
2,270
2,142
2,064
3,395

1.9
3.9
3.6
3.4
5.5

64 599
(' .

1,500
(3)

63,099
62,884

59, 957
61,005

7*, 507
7,054

52, 450
53, 951

3,142
1,879

5.0
3.0

63,776
65,422

1,347
1,653

62, 429
63, 769

58, 555
61, 358

7,233
7,781

51, 322
53, 578

3,874
2,411

6.2
3.8

(33)
()

62, 254
63, 513

60,189
61,820

6,744
7,365

53, 446
54,455

2,065
1,693

3.3
2.7

1,408
1,366
1,346
1,330
1,320
1,311
1,315
1,337
1,453
1,734
1,941
2, 136

61,427
61,637
61, 675
62,183
62, 788
64,866
64,427
64,867
63, 567
63, 704
63,512
62, 538

56, 947
56, 953
57, 551
58,668
59, 731
61,482
61,214
62.367
61, 226
61, 764
61, 271
60,308

6,198
6,223
6,675
7,195
8,062
9,046
8,440
8,160
7,811
8,491
7,551
6,234

50, 749
50, 730
50, 877
51,473
51, 669
52, 436
52, 774
54, 207
53, 415
53, 273
53,721
54, 075

4,480
4,684
4,123
3,515
3,057
3,384
3,213
2,500
2,341
1,940
2,240
2,229

7.3
7.6
6.7
5.7
4.9
5.2
5.0
3.9
3.7
3.0
3.5
3.6

61, 514
61,313
62, 325
61, 789
62,803
63,783
64,382
64,208
63,186
63, 452
63,164
62, 688

59, 010
58, 905
60,179
60,044
61, 193
61, 803
62, 526
62, 630
61, 580
61,836
61, 336
61, 014

6,018
5,930
6,393
6,645
7,440
8,035
7,908
7,688
7,526
7,668
7,022
6,378

52, 993
52, 976
53, 785
53,400
53, 753
53, 768
54, 618
54,942
54, 054
54, 168
54,314
54,636

2,503
2,407
2,147
1,744
1,609
1,980
1,856
1,578
1,606
1,616
1,828
1,674

4.1
3.9
3.4
2.8
2.6
3.1
2.9
2.5
2.5
2.5
2.9
2.7

1930
1931
1932
1933
1934

- -

_ _

1945 .
1946
1947
1948
1949
1950
1951

__ _

1950* First half .
Second half

__ _.

(33)

1951* First half
Second half __

()

1950* January
February
March
- _April
May
June
July
August
.
September
_ _ __
O ctober
November
._
December
1951* January
February
March
April
May
June
July
August
September
October
November
December

,__
________

_ _

62, 835
63,003
63,021
63,513
64,108
66, 177
65, 742
66,204
65, 020
65, 438
65, 453
64,674
(8)

(3)

i( )

(3)
(3)
(3)

i
3

(3)

i Data for 1940-50 exclude about 150,000 members of the armed forces who were outside the continental
United States in 1940 and who were therefore not enumerated in the 1940 census. This figure is deducted
by the Census Bureau from its current estimates for comparability with 1940 data.
* Includes part-time workers and those who had jobs but were not at work for such reasons as vacation,
illness, bad weather, temporary lay-off, and industrial disputes.
»Not available.
NOTE.—Labor force data are based on a survey made during the week which includes the 8th of the month
Detail will not necessarily add to totals because of rounding.
Sources: Department of Labor (1929-39) and Department of Commerce (1940-51).

177

TABLE B—12.—Number of wage and salary workers in nonagricultural establishments, 1929-51 *
[Thousands of employees]
Total
wage

Manufacturing

and

Period

salary
work-

Total

ers

Monthly average:
1929. .
1930
1931
1932
1933. .
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946.
1947
1948
1949. .
1950 .
1951 *

31,041
29, 143
26, 383

23,377

23, 466
25, 699
26, 792
28, 802
30, 718
28, 902
30, 287
32, 031

36,164

_ 39, 697
42, 042

41,480
40, 069

41,412
._

43, 371
44, 201
43, 006

44,124

46, 266
1950: First half
42, 710
Second half. -. 45, 538
1951: First half..
45, 880
Second half *__ 46, 731
42, 125
1950: January
41, 661
February
42, 295
March
April . .
42, 926
43, 311
May
43, 945
June
44, 096
July
45, 080
August
September
45, 684
October
45, 898
November
45, 873
December
46, 595
1951: January
45, 246
February
45, 390
March
45, 850

April
May

..._ 45,998

46, 226

46, 567
June
July
46, 432
46, 724
August
September *... 46, 921
October*
46, 841
November f.__ 46, 736

Government,
tion
tract
(FedServFiand Trades nance ice 2 eral,
construc- public
State,
tion utili
and
ties
local)

Trans-

Con- porta-

10, 534
9,401
8,021

6,797
7,258
8,346
8,907
9,653

10, 606

9,253

10, 078

10,780
12, 974

15,051
17, 381

Non- MinDur- duraing
able
ble
goods goods

(3)
(33)
(3)
(3)
(3)
()
(33)
(3)
(3)
()
4,683
5,337
6,945
8,804
11,077

17,111 10, 858
15,302 9,079
14, 461 7,739
15,247 8,373
15, 286
14, 146
14, 884

8,315

7,465
8,008

15,926

8,914

14, 220

7,568
8,449
8,927
8,897
7,342
7,324

15,549
15,925
15, 928
13, 980
13, 997
14, 103
14, 162
14, 413
14, 666
14, 777
15, 450

15,685

15, 827
15, 765
15, 789
15, 784
15, 978
16, 022
15, 955
15, 853
15, 956
15, 813

16,008
16,020

15, 940
15, 861

7.418
7, 548

(3)
(33)
(3)
(3)
(3)
()
(33)
(3)
()
(«)

5,394
5,443
6,028
6,247
6,304
6,253
6,222
6,722
6,874
6,970
6,681

6,876
7,013

6,653
7,100

6,997

7,031

6,638
6,673
6,685
6,604
6,702
6,799

8,664

7,101

8,717

8,742
8,877
8,969
9,003
8,975
8,998
8,839
8,878
8,902
8,922
8,944

«595

6,614

7,809
7,964
7,978
8,294
8,423
8,618

1,078
1,000
864
722
735
874
888
937
1,006
882
845
916
947
983
917
883
826
852
943
981
932
904
919
870
939
923
914
«861

7,156

7,262
7,209

7,072
7,042
7,101

7,053
6,952
6,878
6,958
6,974
7,130
7,118
7,018
6,917

938
939
940
946
922
950
946
939
938
937
932
930
924
911
915
927
906
922
916
911
916

1,497
1,372
1,214
970
809
862
912
1,145
1,112
1,055
1,150
1,294
1,790
2,170
,567
,094
,132
,661
,982
2,165
2,156
2,318

2,573
2,070
2,565
2,432
2,742
1,919
1,861
1,907

2,076
2,245
2,414

2,532
2,629
2,626

2,631
2,571

2,403
2,281

2,228
2,326

2,471

2,598
2,686
2,754
2,809

2,761

2,750
2,637

3,907
3,675
3,243
2,804
2,659
2,736
2,771
2,956
3,114
2,840
2,912
3,013
3,248
3,433
3, 619
3,798
3,872
4,023
4,122
4,151
3,979
4,010
4,143
3,903
4,117
4,116
4,176
3,869
3,841
3,873
3,928
3,885
4,023
4,062
4,120
4,139
4,132
4,123
4, 125
4,072
4,082
4,112
4,132
4,137
4,161
4,176
4,190
4,178
4,167
4,167

6,401
6,064
5,531
4,907
4,999
5,552
5,692
6,076
6,543
6,453
6,612
6,940
7,416
7,333
7,189
7,260
7,522
8,602
9,196
9,491
9,438
9,524
9,716
9,281
9,766
9,650
9,795
9,246
9,152
9,206
9, 346
9,326
9, 411
9.390
9,474
9,641
9,752
9,896
10,443
9,592
9,554
9,713
9,627
9,683
9,732
9,667
9,641
9,774
9,871
10,024

1,431
1,398
1,333
1,270
1,225
1,247
1,262
1,313
1,355
1,347
1,382
1,419
1,462
1,440
1,401
1,374
1,394
1,586
1,641
1,716
1,763
1,812
1,879
1,797
1,827
1,859
1,903
1, 772
1,777
1,791
1,803
1,812
1, 827
1,831
1,837
1,827
1,821
1,820
1,828
1,831
1,839
1,854
1,865
1,874
1,893
1,908
1,914
1,894
1,898
1,901

3,127
3,084
2,913
2,682
2,614
2,784
2,883
3,060
3,233
3,196
3,321
3,477
3,705
3,857
3,919
3,934
4,055
4,621
4,786
4,799
4,782
4,761
4,764
4,746
4,776
4,729
4,806
4,701
4,696
4,708
4, 757
4,790
4,826
4,841
4,827
4,816
4,757
4,723
4,694
4,666
4,657
4,682
4, 745
4,789
4,835
4,852
4,839
4,834
4,772
4,733

3,066
3,149
3,264
3,225
3,167
3,298
3,477
3,662
3, 749
3,876
3,987
4,192
4,622
5,431
6,049
6,026
5,967
5,607
5,454
5,613
5,811
5,910
6,346
5,822
5,998
6,246
6,466
5,777
5,742
5,769
5,915
5,900
5,832
5,741
5,793
6,004
6,039
6,037
6,376
6,088
6,122
6,217
6,292
6,377
6,377
6, 356
6,401
6,544
6,532
6,497

1 Includes all full- and part-time wage and salary workers in nonagricultural establishments who worked
or received pay during the pay period ending nearest the 15th of the month. Excludes proprietors, selfemployed persons, domestic servants, and personnel of the armed forces. Not comparable with estimates of
nonagricultural employment of the civilian labor force reported by the Department of Commerce (appendix
table B-ll) which include proprietors, self-employed persons, and domestic servants, which count persons
as employed when they are not at work because of industrial disputes, bad weather, or temporary lay-offs,
and which are based on an enumeration of population, whereas the estimates in this table are based on reports
from employing establishments.
2 Data for the trade and service divisions, beginning with 1939, are not comparable with data shown for
earlier years because of the shift of the autom otive repair service industry from the trade to the service
division.
s Not available.
4
Estimates based on incomplete data.
6
Data reflect work stoppages in bituminous coal mining.
NOTE.—Detail will not necessarily add to totals because of rounding.
Adjustments have been made to levels indicated by data of unemployment insurance agencies and the
Bureau of Old-Age and Survivors Insurance through 1947, and have been carried forward from 1947 benchmark levels, thereby providing consistent series.
Source: Department of Labor.

178

TABLE B-13.—Average weekly hours in selected industries, 1929-51
Retail
trade
(except
Bitumi BuildClass
I
Hotels
Wholeing
eating
Telenous
(yearsale
con- steam
and round)
Noncoal
rail- phone trade
Durable
strucdrinkroads
Total goods durabl mining tion
ing
goods
places)
Manufacturing

Period

Monthly average:
1929

44.2

38.4

1930
1931
1932
1933
1934

42.1
40.5
38.3
38.1
34.6

0)
0)
32.6
34.8
33.9

0)
0)
41.9
40.0
35.1

33.5
28.3
27.2
29.5
27.0

0)
(>)
0)
0)
0)
28.9

43.1
41.1
38.9
38.8
40.4

1935
1936 . .
1937
1938
1939 . .

36.6
39.2
38.6
35.6
37.7

37.3
41.0
40.0
35.0
38.0

36.1
37.7
37.4
36.1
37.4

26.4
28.8
27.9
23.5
27.1

30.1
32.8
33.4
32.1
32.6

41.1
42.5
43.2
42.5
43.4

38.8
38.9
39.1

1940
1941
1942
1943
1944.

38.1
40.6
42.9
44.9
45.2

39.3
42.1
45.1
46.6
46.6

37.0
38.9
40.3
42.5
43.1

28.1
31.1
32.9
36.6
43.4

33.1
34.8
36.4
38.4
39.6

44.0
45.6
46.9
48.7
49.1

39.5
40.1
40.5
41.9
42.3

1945
1946
1947
1948
1949

43.4
40.4
40.4
40.1
39.2

44.1
40.2
40.6
40.5
39.5

42.3
40.5
40.1
39.6
38.8

42.3
41.6
40.7
38.0
32.6

39.0
38.1
37.6
»37.3
36.7

48.5
45.9
46.3
46.1
43.5

(2)
39.4
37.4
39.2
38.5

1950 4
1951

40.5
40.7

41.2
41.6

39.7
39.5

35.0
35.0

36.3
37.4

40.8
C1)

1950: First half
Second half...

39.9
41.1

40.5
41.8

39.1
40.2

32.3
36.1

35.4
37.1

1951: First half
Second half *_.

40.9
40.4

41.8
41.3

39.8
39.1

34.6
35.5

1950: January
February
March. __ _.
April
May _ _ _ _ _
June
July
August
September
October
November
December

39.7
39.7
39.7
39.7
39.9
40.5
40.5
41.2
41.0
41.3
41.1
41.4

40.0
40.1
40.2
40.7
40.8
41.3
41.1
41.8
41.7
42.1
41.8
42.2

39.4
39.3
39.2
38.5
38.9
39.5
39.8
40.5
40.1
40.3
40.3
40.5

1951: January
February
March
April..
May
June
Julv
August
September * _ _
October*
November 4 ..

41.0
40.9
41.1
41.0
40.7
40.7
40.2
40.3
40.6
40.4
40.3

41.5
41.6
41.9
42.0
41.8
41.8
40.9
41.3
41.5
41.6
41.3

40.2
40.0
40.0
39.7
39.3
39.4
39.3
39.1
39.3
38.9
39.1

44.8

0)
0)
C1)
(0
(0
0)
0)
0)

(')

8 ' 8(')
8( 0 - iO0)
80) 0)0)0)
(0
0)

0)
0)
0)

(0
0)
0)
0)
0)

8 8
S41.0 0)0)40.3

0)
0)
0)
0)
0)
0)
0)
0)
0)
«
0)
0)
0)
0)
0)
0)
0)
0)

40.9
40.7

40.3
40.4

45.2
44.3
44.2

38.9
39.2

40.7
40.7

40.5
40.1

43.9
43.3

40.5
41.0

38.7
39.1

40.4
40.9

40.4
40.6

43.9
43.9

36.6
38.3

41.4
(l)

39.0
39.3

40.6
40.9

40.0
40.2

43.3
43.2

824.5
«25.4
39.2
36.0
34.1
34.7
34.6
35.5
35.5
36.1
36.4
38.5

34.8
33.7
34.5
35.6
36.5
37.0
36.9
37.6
36.7
37.4
37.3
36.7

39.8
39.8
41.6
39.9
40.2
41.9
39.4
42.7
40.5
41.8
41.4
40.0

38.5
38.6
38.5
38.7
38.9
39.1
39.4
39.3
39.6
39.4
38.0
39.1

40.6
40.3
40.3
40.1
40.4
40.6
40.9
40.9
40.7
40.9
40.8
41.2

40.4
40.4
40.3
40.2
40.4
40.9
41.2
41.1
40.4
40.3
40.0
40.7

43.9
43.8
43.8
44.0
44.1
43.8
43.8
44.0
43.8
44.0
43.7
43.9

37.6
34.1
33.6
33.9
33.3
34.8
32.7
34.9
36. 7
36.4

36.7
35.3
35.8
36.8
37.5
37.7
38.1
38.2
38 2
38.' 6

42.2
41.2
42.0
40.8
41.1
41.2
40.3
42.3
39.2

40.8
40.6
40.6
40.6
40.6
40.7
40.7
40.7
41.0
41.0
C1)

40.3
40.1
39.7
39.9
39.8
40.4
40.8
40.8
40.1
39.8

43.4
43.2
43.3
43.3
43.4
43.4
43.4
43.3
43.2
43.2

38.9
39.2
38.9
38.7
39.0
39.4
39.8
39.2
39.4
39.1
(0

Not available.
2 Average for year not available because new series was started in April 1945. Beginning with June 1949
data
relate to nonsupervisory employees only.
3
Not strictly comparable with previous data.
* Estimates based on incomplete data.
* Data reflect work stoppages, or 3-day workweek.
NOTE.—Data are for production workers in manufacturing and mining, hourly-rated employees in railroads, and for nonsupervisory employees in other industries. Data are for payroll periods ending closest
to the middle of the month except in railroads where monthly data are used.
Adjustments have been made to levels indicated by data of unemployment insurance agencies and the
Bureau of Old-Age and Survivors Insurance through 1947, and have been carried forward from 1947 benchmark levels, thereby providing consistent series.
The half-year data are straight arithmetic averages of the monthly figures and not strictly comparable
with the annual average for 1950 which has been weighted by data on man-hours.
Source: Department of Labor.

179

TABLE B-14.—Average hourly earnings in selected industries, 1929-51
Retail
trade
(except
Bitumi- Build- Class I
Hotels
eating
nous ing con- steam Tele- Wholesale
(yearrailstruccoal
phone trade
and round)
i
Dura- Non- mining
roads
tion
drinkble durable
ing
goods goods
places)

Manufacturing
Period
Total

Monthly average:
1929 ...
$0. 566
.552
1930 .
1931
.515
1932
.446
1933
.442
1934
.532
1935
.550
1936
.556
1937
.624
1938 ..
.627
1939...
.633
1940
.661
1941
.729
1942 ...
.853
1943
.961
1944
1.019
1945 .
1.023
1946
1.086
1947
1.237
1948 _.
1.350
1949
1. 401
1950....
1.465
1951 «
1. 590
1950: First half
1. 432
Second half... 1.494
1951: First half
1.575
Second half «.. 1.608
1950: January _
1.418
February
.420
March
.424
April
.434
May
.442
June
.453
July
.462
August
.464
September. ...
.479
October
.501
November
.514
December
.543
1951: January
.555
February
.561
March
.571
April
.578
May
.586
June.
1.599
July..
1.598
August
1.596
September «... 1.612
October e
1.614
November «... 1.619

(2)
(2)
(2)
$0.497
.472
.556
.577
.586
.674
.686
.698
.724
.808
.947
1.059
1.117
1.111
1.156
1.292
1.410
1.469
1.537
1.673
1.497
1. 570
1.655
1.695
1.485
1.483
1.486
1.499
1.509
1.522
1.533
1.539
1.562
1.577
1.587
1.619
1.630
1.639
1.654
1.659
1.665
1.681
1.682
1.684
1.703
1.703
1.705

$0. 681
(2)
.684
(22)
.647
()
.520
$0. 420
.501
.427
.673
.515
.530
.745
.794
.529
.856
.577
.584
.878
.582
.886
.602
.883
.640
.993
1.059
.723
1.139
.803
.861
1.186
1.240
.904
1.401
1.015
1.636
1.171
1.898
1.278
1.941
1.325
2.010
1.378
2.208
1.477
1.354
1.991
1.399
2.016
2.193
1.466
1.490
2.225
1.343 U.933
.350 7 1. 962
.353
2.009
2.022
.355
2.005
.358
.365
2.015
2.014
.375
.374
2.001
2.026
.379
.404
2.022
.419
2.013
.443
2.020
.456
2.038
.458
2.219
2.222
.460
2.231
.465
.474
2.218
2.232
.484
2.254
.488
2.213
.481
2.234
.490
2.216
1.491
1.501
(2)

(2)
(2)
(2)
(2)
(2)

$0. 795
.815
.824
.903
.908
.932
.958
1.010
1.148
1.252
1.319
1.379
1.478
1.681
4
1. 848
1.935
2. 031
2.192
1.990
2.065
2.166
2.223
1.976
.988
.995
.986
.998
.995
2.006
2.021
2.067
2.082
2.093
2.120
2.135
2.157
2.163
2.167
2.182
2.194
2.195
2.207
2.233
2.235
(2)

$0. 636
.644
.651
.600
.595
.602
.651
.659
.676
.712
.714
.717
.751
.824
.897
.938
.942
1.116
1.170
1.309
1.419
1.549
(2)

1.544
1.554
« 1.710

(2)
1.550
1.567
1.532
1.546
1.536
1.532
1.553
1.533
1.560
1. 544
1.561
1.575
1.608
1.687
1.702
1.740
1.747
1.773
1.790
1.765
1.818
(22)
()

(2)

(2)
(2)
(2)
(2)
(2)

(22)
(2 )
()

(2)
(2)

$0. 774
.816
.822
.827
.820
.843
.870
.911
(3)
1.124
1.197
1.248
1.345
1.398
1.484
1.382
1.414
1.458
1.514
1.380
1.391
1.376
1.381
1.381
1.386
1.395
1.392
1.409
1.426
1.422
1.440
1.450
1.469
1.453
1.450
1.451
1.475
1.490
1.501
1.521
1.532
(2)

(2)
(2)

(2)
(2)
(22)

8
'»
•8
8( )

(2)
(2)
(2)
(2)
(2)

8
(2)
(2)

(2)
(2)
(2)
(2)

(2)
(2)
(2)
(2)
(2)

(2)
(2)

(2)
(2)
(2)

C22)

( )
(2)
(2)
(2)

$1.268
1.359
1.414
1.483
1.582
1.456
1.508
1.569
1.598
1.432
1.446
1.453
1.466
1.463
1.476
1.494
1.489
1.497
1.508
1.519
1.541
1. 555
1.567
1.567
1.575
1.571
1.581
1.586
1.585
1.601
1.602
(2)

C2)

$1.009
1.088
1.137
1.176
1.253
1.156
1.194
1.244
1.264
1.153
1.145
1.148
1.156
1.162
.175
.189
.192
.200
.199
.198
.187
.237
.236
.233
.249
.252
.256
.262
.259
1.269
1.266
(2) .

( )
(2)
(2)

$0.650
.709
.743
.771
.816
.758
.784
.807
.827
.753
.765
.755
.756
.756
.761
.765
.771
.783
.788
.795
.801
.804
.811
.801
.806
.807
.812
.817
.815
.831
.833
(2)

1
Money payments only; additional value of room, board, uniforms, and tips not included.
2 Not available.
a Not available. Series beginning April 1945 includes only employees subject to provisions of the Fair
Labor Standards Act and is not comparable with preceding series which includes all employees. Beginning
June 1949, data relate to nonsupervisory employees.
< Not strictly comparable with previous data.
« Preliminary average; does not include any retroactive wage payments.
8
Estimates based on in complete data.
f Data reflect work stoppages or 3-day workweek.
NOTE.—Data are for production workers in manufacturing and mining, hourly rated employees in railroads, and for all nonsupervisory employees in other industries. Data are for payroll periods ending closest
to the middle of the month except in railroads where monthly data are used.
Adjustments have been made to levels indicated by data of unemployment insurance agencies and the
Bureau of Old-Age and Survivors Insurance through 1947, and have been carried forward from 1947 benchmark levels, thereby providing consistent series.
The half-year data are straight arithmetic averages of the monthly figures and not strictly comparable
with the annual average for 1950 which has been weighted by data on man-hours.
Source: Department of Labor.

180

TABLE B-15.—Average gross weekly earnings in selected industries) 1929—51
Retail
trade
(except
Bitumi Build- Class I
eating Hotels
nous ing con- steam Tele- Whole
(year-1
sale
Dura- Nonrailand
strucphone trade
coal
roads
ble durable mining tion
drink- round)
goods goods
ing
places)

Manufacturing
Period
Total

Monthly average:
$25. 03
1929
23.25
1930
20.87
1931
1932
17.05
1933
16.73
1934
18.40
1935
20.13
1936
21.78
24.05
1937
1938
22.30
1939
23.86
25.20
1940
1941
29.58
36.65
1942
43.14
1943
1944
_ .
46.08
44.39
1945
43.82
1946 ' _ .
1947
49.97
54. 14
1948
1949
54.92
59.33
1950.6 .
64.63
1951
1950: First half
57.08
Second halL.. 61.38
1951: First half. .._. 64.42
Second half «. 64.89
1950: January - _. 56.29
February
56.37
March
56.53
56. 93
April
May
_ _ 57. 54
58.85
June
59.21
July
August __
60.32
60.64
September
61.99
October
November
62.23
63. 88
December
1951' January . __ 63.76
63.84
February
March. .__ . 64. 57
April _
64.70
May
. 64. 55
65. 08
June
64.24
July
64.32
August
6
September
_ _ 65. 45
65.21
October 6 6
November _ _ 65.25

$27. 22
24.77
21.28
16.21
16.43
18.87
21.52
24.04
26.91
24.01
26.50
28.44
34.04
42.73
49.30
52.07
49.05
46.49
52.46
57.11
58.03
63.32
69.54
60.68
65.59
69.11
70.05
59.40
59.47
59.74
61. 01
61.57
62.86
63.01
64.33
65.14
66.39
66.34
68.32
67.65
68.18
69.30
69.68
69.60
70.27
68.79
69. 55
70.67
70.84
70.42

$22. 93 $25. 72
(2)
21.84
22.21
(2)
17.69
20.50
(2)
17.57
13. 91
(2)
16.89
14.47
(2)
18.05
18.10 $22. 97
19.11
19.58
24.51
19.94
22.71
27.01
21.53
23.84
30.14
21.05
20.80
29.19
21. 78
23.88 30.39
22.27
24.71
31.70
24.92
30.86
35.14
29.13
35.02 41.80
34.12
41.62
48. 13
37.12
51.27
52.18
38.29
52.25
53.73
41.14
58.03
56.24
46.96
66.59
63. 30
50.61
72.12 * 68. 85
51.41
63.28
70.95
54.71
70. 35
73.73
58.31
77.13
82.02
52.99
70.34
64.50
56.32
72.78
76.60
58.30
75.69
79.37
58.33
78.87
85.20
52.91 7? 47. 36
68.76
53.06
49. 83
67.00
53.04
78.75 68.83
72.79
52.17
70.70
52. 83
72.93
68.37
53.92
69.92
73.82
54.73 69.68
74.02
55.65 71.04
75.99
71.92
55.30
75.86
56.58
72.99
77.87
57.19
73.27 78.07
58.44
77.77
77.80
58.53
76.63 78.35
58.32
76.14
75.67
58.40 74.66
77.44
58.16
75.63
79.75
57.93 73. 86 81.83
58.47
77.67 82.71
58.48
73.71 83.63
57.91
77.23 84.31
58. 56
81.99
85.30
58.00 80.66 86.27
58.69
(2)
(2)

$28. 49
27.76
26. 76
23.34
23.09
24.32
26.76
28.01
29.20
30.26
30.99
31.55
34.25
38.65
43.68
46.06
45. 69
51.22
54.17
60.34
61.73
63.20
(2)
62.57
63.67
570.78
(2)
61.69
62.37
63.73
61.69
61.75
64.19
61.19
65.46
63.18
64.54
64.63
63.00
67.86
69.50
71.48
70.99
71.80
73.05
72.14
74.66
71.27
(2)
(2)

(2)
(2)
(22)
()
(22)
()
(2)
(2)
$29. 81
31.53
31.94
32.44
32.74
33.97
36.30
38.39

(2)
(22)
(2)
()
(22)
()
(22)
(2)
()
(22)
()
(22)
(2)
()
(22)
()

(3)
44.04
44.77
48.92
51.78
54.38
58.08
53.52
55. 33
56.89
59.51
53. 13
53. 69
52.98
53.44
53.72
54.19
54.96
54.71
55.80
56.18
54.04
56.30
56.41
57. 58
56.52
56.12
56.59
58.12
59.30
58.84
59.93
59.90
(2)

(22)
()
$51.99
55.58
57.55
60.36
64.47
58.80
61.68
63.79
65.28
58. 14
58.27
58.56
58.79
59.11
59.93
61.10
60.90
60.93
61.68
61.98
63.49
63.44
63.62
63.62
63.95
63.78
64.35
64.55
64. 51
65.64
65.68
(2)

(2)
(2)
(2)
(22)
()
(2)

(2)2
( 2)
()
(2)
(22)
()
(2)2
(2 )
(2)
()
<22)
()
$40. 66

43.85
45.93
47.63
50.26
46. 76
48.50
49.80
50.82
46.58
46.26
46.26
46.47
46.94
48.06
48.99
48.99
48.48
48.32
47. 92
48.31
49.85
49.56
48.95
49.84
49.83
50.74
51.49
51.37
50.89
50. 39
(2)

(2)
(22)
(2)
()
(22)
()
(22)
( 2)
()
(22)
()
(22)
(2)
()
(22)
()
(2)
(2)
$29. 36
31.41
32.84
33.85
35.31
33.26
34.38
34.96
35.74
33. 06
33.51
33.07
33.26
33. 34
33.33
33. 51
33.92
34.30
34.67
34.74
35.16
34.89
35.04
34.68
34.90
35.02
35.24
35. 46
35.29
35.90
35.99
(2)

1 Money payments only; additional value of room, board, uniforms, and tips not included.
Not available.
3 Not available. Series beginning April 1945 includes only employees subject to provisions of the Fair
Labor Standards Act and is not comparable with preceding series which includes all employees. Beginning
June 1949, data relate to nonsupervisory employees.
* Not strictly comparable with previous data.
5 Preliminary average; does not include any retroactive wage payments.
67 Estimates based on incomplete data.
Data reflect work stoppages, or 3-day workweek.
NOTE.—Data are for production workers in manufacturing and mining, hourly rated employees in railroads, and for all nonsupervisory employees in other industries. Data are for payroll periods ending closest
to the middle of the month except in railroads where monthly data are used.
Adjustments have been made to levels indicated by data of unemployment insurance agencies and the
Bureau of Old-Age and Survivors Insurance through 1947, and have been carried forward from 1947 bench
mark levels, thereby providing consistent series.
The half-year data are straight arithmetic averages of the monthly figures and not strictly comparable with
the annual average for 1950 which has been weighted by datajon man-hours.
Source: Department of Labor.
2

181

TABLE B-16.—Indexes of industrial and agricultural production, 1929-51
f 1935-39 =100]
Industrial production
Manufactures

Period 1

Total

Minerals
Total

Durable

Agricultural production 2

Nondurable

110

132

107

91
75
58
69
75

90
74
57
68
74

98
67
41
54
65

84
79
70
79
81

93
80
67
76
80

95
104
101
93
79

1935
1936
1937
1938
1939

87
103
113
89
109

87
104
113
87
109

83
108
122
78
109

90
100
106
95
109

86
99
112
97
106

96
85
108
105
106

1940
1941
1942
1943
1944

125
162
199
239
235

126
168
212
258
252

139
201
279
360
353

115
142
158
176
171

117
125
129
132
140

110
114
128
125
130

203
170
187
192
176

214
177
194
198
183

274
192
220
225
202

166
165
172
177
168

137
134
149
155
135

129
134
129
141
140

200
219

209
229

237
273

187
194

148
165

138
139

1929
1930
1931
1932
1933
1934

1945
1946
1947
1948
1949

_
_

.-_

1950
19513

Adjusted for seasonal variation

1950' First half
Second half

_ _. .

1951: First half 8
Second half
1950: January
February
March
April
May
June
July
August
September
October
November
December
1951* January
February
March
April
May
June
July
August
September
October...
November 8*
December -

_ -

._.

_.
_-_
- ..

189
211

198
220

220
254

181
193

138
158

(4)
(4)

222
217

233
226

274
272

199
189

162
167

(«)
(4)

183
180
187
190
195
199
196
209
211
216
215
218

192
192
194
199
204
208
206
218
220
225
224
229

209
207
211
222
231
237
235
247
251
261
260
268

179
180
181
180
181
184
181
195
194
196
195
197

130
118
144
140
145
151
144
159
163
166
160
157

(*)
(44)
(4)
()
(44)
()
(44)
( 4)
()
(4)
(*)
(4)

221
221
222
223
222
221
212
217
219
218
218
218

231
232
234
234
233
231
222
226
228'
226
227
227

268
271
277
279
276
274
265
267
272
274
275
276

201
201
199
198
198
197
187
193
193
188
188
187

164
158
158
164
165
165
156
165
167
174
171
168

(44)
()
(44)
(4 )
( 4)
()
(44)
()
( 44)
(4)
()
(4)

1 For industrial production, axerage of monthly indexes is used for year or half year.
Index of volume of farm production for human use.
»4 Estimates based on incomplete data.
, Because of the extreme seasonal nature of agricultural crop production, only an annual index has been
computed.
Sources: Board of Governors of the Federal Reserve System and Department of Agriculture.
2

182

TABLE B—17.—Production oj selected commodities in the free world, 1950-51

1950

Commodity
Unit

Aluminum
Bread grains
Coarse 5grains ^
Cobalt 5
Copper
Cotton
Fats and oils

Free
Rest
Rest Free
world United
of free world United of free
total States world total States world

Thous. metric tons.. 1,295
_ __ _ Million bushels
3 4, 350
Million bushels
3 9, 104
Thous. pounds
15, 855
Thous. metric6 tons.. 2,281
Thous bales
321,922
Thous. short tonsoil content
17, 350
Fertilizer (nitroge- Thous. metric tonsnitrogen content. . 3 3, 682
nous)
Iron ore
Million metric tons.
198
Lead 5
Thous. metric tons.. 1,459
Lumber
.
Million board feet
57, 400
Manganese ore
Thous. metric tons._ 3,200
Million poundsMeat
carcass weight
61,200
Thous. metric tons.. 8,160
Newsprint
Nickel «
_ - . . Thous. metric tons..
120
Petroleum (crude)
Million barrels
3,477
Rubber (natural and
synthetic)
Thous. long tons
2,385
Thous. long tons
5,564
Sulfur— native
Tin 6
.
Thous.
metric
tons..
170
Tungsten8
Metric tons
9,000
Wood pulp (mechanical and chemical)
Thous. metric tons.. 29,300
Million poundsWool
greasy basis
3,519
Zinc»
Thous. metric tons.. 1,737

652
823
643 1,583
760
3 1, 050 3 3, 300 4 4, 426 4 1, 024 4 3, 402
3 4, 897 3 4, 207 4 9, 408 4 4, 738 4 4, 670
660 15, 195 18, 000
950 17, 050
823 1.458 2,362
862 1,500
3 9, 877 312,045 4 27, 635 4 15, 800 4 11, 835

6,154 11, 196 17,600

JL
•<x>££
^
«

-f22 +17 +28
-2 +3
-3 +11
+14 +44 +12
+4 +5 +3
+26 +60 -2

6,375 11, 225 +1 +4 Q

3996 3 2, 686 4 3, 815 4 1,046 4 2, 769 +4 +5 +3
100
98
245
130
115 +24 +30 +17
2
390 1,069 1,579
381 1,198 +8
2 +1 +12
39, 400 18, 000 56, 500 39, 900 17,000
-6
126 3,074 3,400
107 3,293 +6 -15 +7
22, 109 39,091 61, 800 22, 365 39, 435
900 7,260 8,500
990 7,510
120
128
128
1,972 1,505 3,950 2,240 1,710

«476
5,192
2,020

1,909 2,859
372 5,646
165
170
6,980 11,400

8900
5,223
2,570

1,959
423
165
8,830

+1 +1 +1
+4 +10 +3
+7
+14 +14

+20 +89 +3
+1 +1 +143
-3
+27 +27 +27

13,400 15, 900 32,200 15,000 17, 200 +10 +12 +8

1
2

253
561

Estimates based on incomplete data.
Barley, oats, and corn.
3 Data are for crop year 1950-51.
Data are for crop year 1951-52.
« Production represents metal content of mine production.
6
Bales of 478 pounds net.
* Less than 0.5 percent.
8
Synthetic rubber.
4

Source: Department of State.

19511

United States

Percentage
change,
1950 to 1951 *

Quantity

183

3,266
1,176

3,609
1,941

260
635

3,349 +3 +3 +3
1,306 +12 +13 +11

TABLE B-18.—New construction activity, 1929-51
[Value put in place, millions of dollars]
Private construction

Total
new
construction

Period

1935
1936
193 /
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
194g
1949

Total
public

Military
and
naval

Nonresidential
building

High- Other
ways public 3

3,625

2,694

1,988

2,486

659

1,266

542

2,075
1,565
630
470
625

2,003
1,099
502
406
456

1,805
1,104
544
355
428

2,858
2,659
1,862
1,648
2,211

29
40
34
30
47

660
612
415
230
363

1,516
1, 355
958
847
1,000

653
652
455
535
801

4,232
6,497
6,999
6,980
8,198

1,999
2,981
3,903
3,560
4,389

1,010
1,565
1,875
1,990
2,680

472
713
1,085
764
786

517
703
943
806
923

2,233
3, 516
3,096
3,420
3,809

37
29
37
62
125

328
701
550
672
970

845
1, 362
1,226
1,421
1,381

1,023
1,424
1,283
1,265
1,333

8,682
11,957
14, 075
. 8,301
5,259

5,054
6,206
3,415
1,979
2,186

2,985
3,510
1,715
885
815

1,025
1,482
635
233
351

1,044
1,214
1,065
861
1,020

3,628
5,751
10,660
6, 322
3,073

385
1,620
5, 016
2, 550
837

615
1,646
3, 685
2,010
1,361

1,302
1,066
734
446
362

1,326
1,419
1,225
1,316
513

5,633
12, 000
16, 627
21, 572
22, 584

3,235
9,638
13, 131
16, 665
16, 181

1,100
4,015
6,310
8, 580
8,267

1, 020
3,341
3,142
3,621
3,228

1,115
2,282
3,679
4, 464
4,686

2, 398
2,362
3,496
4,907
6,403

690
188
204
158
137

937
354
599
1,301
2,068

398
895
1,514
1, 856
2,129

373
925
1,179
1,592
2,069

27,902
_ 29,863

20, 789
20, 823

12, 600
10,915

3,777
4,907

4,412
5,001

7,113
9,040

177
1, 045

2,402
3,318

2,350
2,225

2,184
2, 452

-- _

1950
1951

Other
private 2

5,883
3,768
"1,676
1,231
1,509

- -

Nonresidential
building
(nonfarm)

8,307

...

Total
private 1

Residential
building
(nonfarm)

10, 793
8,741
6,427
3,538
2,879
3,720

1929
1930
1931
1932
1933
1934

Public construction

Seasonally adjusted annual rates
26, 542
1950: First half
Second half... 29, 262

19, 576
22,002

11, 794
13, 406

3,366
4,188

4,416
4,408

6,966
7,260

124
230

2,222
2,582

2,410
2,290

2,210
2,158

1951: First half
Second half...
1950* January
February
March
April
May
June
July
August
September —
October
November
December

30, 718
29,008

21, 902
19, 744

11, 884
9,946

5,206
4,608

4,812
6,190

8,816
9,264

690
1,400

3,290
3,346

2,388
2,062

2,448
2,456

25, 140
25, 764
26, 640
27,000
26, 916
27, 792
28,164
28,884
29, 532
29, 748
29, 976
29, 268

18, 144
19,188
19, 320
19, 716
20, 244
20,844
21, 612
22,080
22,320
22, 320
21, 996
21,684

10,488
11,544
11, 556
12,000
12, 312
12, 864
13, 488
13, 812
13, 932
13, 608
12, 936
12, 660

3,252
3,324
3,288
3,324
3,480
3,528
3,672
3,804
3,996
4,320
4,644
4,692

4,404
4,320
4,476
4,392
4,452
4,452
4,452
4,464
4,392
4,392
4,416
4,332

6,996
6,576
7,320
7,284
6,672
6,948
6,552
6,804
7,212
7,428
7,980
7,584

156
132
120
120
108
108
108
168
216
276
288
324

2,100
2,196
2,184
2,196
2,364
2,292
2,160
2,256
2,508
2,772
2,880
2,916

2,460
2,076
2,820
2,736
2,004
2,364
2,256
2,304
2,376
2,172
2,520
2,112

2,280
2,172
2,196
2,232
2,196
2,184
2,028
2,076
2,112
2,208
2,292
2,232

1951* January
February
March
April
May
June
July
August
September
October
November
December

30, 072
30, 528
32, 004
31, 524
30, 384
29, 796
29, 316
29, 076
29, 136
28, 704
28,872
28,944

21, 984
22,632
22, 896
22, 140
21, 156
20,604
20, 496
20, 124
20,052
19, 608
19, 296
18, 888

12, 708
12, 996
12, 864
11, 892
10, 656
10, 188
10, 032
9,696
9,780
10, 044
10,188
9,936

4,680
4,980
5,220
5,388
5,568
5,400
5,352
5,268
5,076
4,380
3,876
3,696

4,596
4,656
4,812
4,860
4,932
5,016
5,112
5,160
5,196
5,184
5,232
5,256

8,088
7,896
9,108
9,384
9,228
9,192
8,820
8,952
9,084
9,096
9,576
10, 056

372
480
624
780
912
972
996
1,128
1,212
1,356
1,668
2,040

3,072
3,036
3,264
3,396
3,480
3,492
3,300
3,312
3,300
3,240
3,408
3,516

2, 292
2,136
2,760
2,664
2,280
2, 196
2,136
2,172
2,172
2,028
1,932
1,932

2,352
2,244
2,460
2,544
2,556
2,532
2,388
2,340
2,400
2,472
2,568
2,568

1 Excludes construction expenditures for crude petroleum and natural-gas drilling, and therefore does
not agree with the new construction expenditures included in the gross national product.
2 Includes public utility, farm, and other private construction not separately shown.
»Includes residential, sewer and water, miscellaneous public service enterprises, conservation and
development, and all other public construction not separately shown.
Sources: Department of Commerce and Department of Labor.

TABLE B-19.—Business expenditures for new plant and equipment, 1929-52
[Millions of dollars]
Manufacturing and mining Transportation
Total i

Period

Manufactur- Mining Railroad
ing

Total

Other

Electric
and gas
utilities

Commercial
and
miscellaneous a

1929

9,165

3,596

(3)

840

(4)

4,729

1930
1931
1932
1933
1934

7,610
4,712
2,608
2,137
3,080

2,541
1,435
930
992
1,460

(33)
()
(33)
(3)

(44)
()
(44)
(4)

()

865
360
164
101
218

8( )
(4)

4,204
2,917
1,514
1, 044
1,402

3,738
5,077
6,730
4,520
5,213

1,790
2,450
3,330
1,830
2,323

(33)
(3)
()
(3)
1,943

(3)
(33)
()
(3)
380

166
306
525
238
280

(44)
()
(44)
()
280

(44)
(4)
(4)
()
480

1,782
2,321
2,875
2,452
1,850

6,490
8,190
6,110
4,530
5,210

3,140
4,080
3,170
2,610
2,890

2,580
3,400
2,760
2,250
2,390

560
680
410
360
500

440
560
540
460
580

390
340
260
190
280

550
710
680
540
490

1,980
2,490
1,470
730
970

7,406
12, 922
17,426
20, 032
18, 021

4,426
7,347
9,396
9, 936
7,887

3,983
6,790
8,703
9,134
7,149

443
557
693
802
738

552
573
906
1,319
1,350

321
659
798
700
525

630
1,045
1,897
2,683
3, 140

1,477
3,298
4,429
5,394
5,119

17, 832
23, 125

8,175
11, 947

7,491
11,141

684
806

1,136
1,564

437
517

3,167
3,654

4,917
5,443

1035
1936
1937.
1938
1939

_._

._-

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951«

...

,
_ .
_

()

Annual rates, not adjusted for seasonal variation
1950: First half.
Second half

15, 604
20, 058

6,928
9,422

6, 316
8,666

612
756

1,060
1,210

338
536

2,822
3,512

4,456
5,378

1951: First half
Second half *

21, 552
24, 700

10,684
13, 212

9,912
12, 372

772
840

1,430
1,698

522
512

3,292
4,016

5,624
5,262

1950: First quarter
Second quarter
Third quarter
Fourth quarter

14, 476
16, 732
18, 048
22, 068

6,360
7,496
8,156
10, 688

5,776
6,856
7, 436
9,896

584
640
720
792

928
1,192
1,140
1,280

316
360
492
580

2,612
3,032
3,284
3,740

4,260
4,652
4,976
5,780

19, 452
23, 652
23, 376
. 26,024

9,348
12, 020
12, 160
14, 264

8,616
11, 208
11, 364
13, 380

732
812
796
884

1,212
1,648
1,508
1,888

500
544
480
544

3,012
3,572
3,732
4,300

5,380
5,868
5,496
5, 028

22,916

12,872

12, 040

832

1,596

552

3,536

4,360

1951: First quarter _._
Second quarter
Third quarter
Fourth quarter
1952: First quarter 8

* Excludes agriculture and outlays charged to current account.
2 Commercial and miscellaneous include trade, service, finance, and communication for all years shown.
Prior to 1939, miscellaneous also included transportation other than railroad, and electric and gas utilities
which
are not available separately for these years.
8
Not available separately for years prior to 1939.
4
Included in commercial and miscellaneous prior to 1939.
• Estimates for fourth quarter of 1951 and first quarter of 1952 are based on anticipated capital expenditures
reported in late October and November.
NOTE.—These figures do not agree with those shown in column 2 of appendix table B-5 and included in the
gross national product estimates of the Department of Commerce, principally because the latter cover certain
equipment and construction outlays charged to current expense. Figures for 1929-44 (except manufacturing for 1939) are Federal Reserve Board estimates based on Securities and Exchange Commission and
other data.
Detail will not necessarily add to totals because of rounding.
Sources: Securities and Exchange Commission and Department of Commerce (except as noted).

185

TABLE B—20.—Inventories and sales in manufacturing and trade, 1939—51
[Adjusted for seasonal variation]

1939

20,051 10, 802

1940
1941
1942
1943
1944

22, 176
28, 780
31,091
31,343
31,059

12, 134
15,811
18,624
21, 920
23, 985

1945
1946
1947
1948
1949

30,893
42, 942
50, 605
_ 55, 647
50,921

23. 852
27, 151
33, 156
36, 438
34, 467

1
02

Millions of
dollars

."3
GO

Ratio of inventories
to sales 3

Retail trade

Inventories *

Millions of
dollars

Ratio of inventories
^to sales *

. J8

Wholesale trade

Inventories l

Millions of
dollars

Ratio of inventories
to sales 3

Inventories

Period

Manufacturing

Inventories *

Millions of
dollars

Ratio of inventories
to sales 3

Total manufacturing and trade

2.12

3,052

2,187

1.35

5,534

3,504

1.53

1.73
1.60
1.66
1.40
1.33

12,819 6,859
16,960 8,172
19, 287 10,430
20,098 12, 820
19, 507 13, 782

2.07
1.80
1.78
1.52
1.45

3, 238
4,044
3, 78
3,684
3,912

2,410
3,033
3,426
3,830
4,152

1.30
1.2:
1. 19
.97
.94

6.119
7,776
8,023
7,561
7,640

3,865
4,606
4,768
5,270
5,851

1.49
1.49
1.76
1.42
1.32

1.30
1.35
1.44
1.47
1.55

18,390
24,498
28,920
31, 734
28,690

1.48
1.68
1.73
1.73
1.85

4,555
6,592
7,625
8,085
7,729

4,476
5,993
7,272
7,931
7,235

.91
.92
1.02
.99
1.07

7,949 6,503
11, 852 8,541
14, 060 9,967
15, 828 10, 877
14, 502 10, 893

1.21
1.15
1.28
1.41
1.40

1.77 11,465

5,112

12, 873
12, 617
15, 918
17, 630
16,339

60,434 39, 051
69,880 43, 707

1.38 33, 253 19, 064
1.55 41, 462 22, 219

1.56 9,388
1.73 10, 010

8,012
8,903

1.03 17, 793 11, 974
1.13 18,408 12,586

1.33
1.54

1950: First half... . 52, 828 36, 480
Second half . 60, 434 41, 621

1.42 29, 123 17, 540
1.35 33, 253 20,589

1.64
1.50

8,131
9,388

7,452
8,572

1.06 15, 574 11,489
1.01 17, 793 12, 459

1.31
1.35

1951: First half—. 69, 442 44, 382
Second half*. 69, 880 42,898

1.49 39, 009 22, 579
1.63 41, 462 21, 787

1.61 10, 151
1.88 10, 010

9,036
8,744

1.10 20, 282 12,768
1.16 18,408 12, 367

1.55
1.54

1950: January
February. _ .
March
April
May
June
July
August
September..
October
November..
December—

51, 201
50, 872
51, 126
51, 465
52, 271
52, 828
52, 304
53, 619
55, 146
57, 112
58, 954
60, 434

34, 104
35,182
36, 107
35, 920
38, 331
39, 239
41, 387
43, 444
40,819
41, 208
40,612
42, 254

1.50
1.45
1.42
1.43
1.36
1.35
1.26
1.23
1.35
1.39
1.45
1.43

28, 707
28, 472
28,432
28, 599
28, 830
29,123
29, 104
29, 253
30, 123
30,947
32, 245
33, 253

15, 915
16, 579
17,230
17, 255
18, 988
19, 271
19, 766
21, 413
20, 101
20, 684
20, 524
21, 048

1.80
1.72
1.65
1.66
1.52
1.51
1.47
1.37
1.50
1.50
1.57
1.58

7,679
7,705
7,785
7,952
8,092
8,131
8,025
8,236
8,424
8,775
9,005
9,388

7,114
7,294
7,482
7,233
7,687
7,899
8,636
9,066
8,337
8,481
8,320
8,595

1.08
1.06
1.04
1.10
1.05
1.03
.93
.91
1.01
1.03
1.08
1.09

14, 815
14, 695
14, 909
14, 914
15, 349
15, 574
15, 175
16, 130
16, 599
17, 390
17, 704
17, 793

11,075
11, 309
11, 395
11, 432
11, 656
12, 069
12, 985
12, 965
12, 381
12, 043
11, 768
12, 611

1.34
1.30
1.31
1.30
1.32
1.29
1.17
1.24
1.34
1.44
1.50
1.41

1951: January
February...
March
April
May
June
July
August
September 4.
October *
November 4.

62, 050
63,416
65,240
67,361
68, 981
69, 442
70, 268
70, 083
69, 922
70,008
69, 880

45, 933
44, 826
44, 242
43,470
44, 748
43, 072
41,729
43,048
41, 348
44, 319
44,044

1.35
1.41
1.47
1.55
1.54
1.61
1.68
1.63
1.69
1.58
1.59

34, 120
34, 657
35, 557
36, 908
38, 068
39, 009
39, 908
40, 580
41, 089
41, 354
41,462

22, 560
22, 261
22, 605
22, 479
23,434
22, 133
21, 268
21, 776
20, 706
22, 592
22, 592

1.51
1.56
1.57
1.64
1.62
1.76
1.88
1.86
1.98
1.83
1.84

9,475
9,715
9,940
10, 107
10, 270
10, 151
10,315
10, 074
10, 072
10, 109
10,010

9,761
9,222
8,984
8,684
8,883
8,679
8,384
8,824
8,366
9,161
8,983

.97
1.05
1.11
1.16
1.16
1.17
1.23
1.14
1.20
1.10
1.11

18,455
19,044
19, 743
20, 346
20, 643
20,282
20, 045
19, 429
18, 761
18,545
18,408

13, 612
13, 343
12, 653
12, 307
12, 431
12, 260
12, 077
12, 448
12, 276
12, 566
12,469

1.36
1.43
1.56
1.65
1.66
1.65
1.66
1.56
1.53
1.48
1.48

1950
19514

1 Book value, end of period.
2 Monthly average shown for year and half-year and total for month.
For annual and semiannual periods, ratio of average end-of-month inventories to average monthly
sales; for monthly data, ratio of end-of-month inventories to sales for month.
* Estimates based on incomplete data.
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 they cover only manufacturing and trade rather
than all business, and show inventories in terms of current book value without adjustment for revaluation.
Source: Department of Commerce.
3

186

TABLE B—21.—Sales, stocks, orders, and receipts at 296 department stores, 1939—51
Reported data
(millions of dollars) 1
Period
Sales
(total for
month)

Monthly average:
1939

128

Stocks
(end of
month)

344

Derived data
(millions of dollars) 1

Outstanding
orders
(end of
month)

Receipts
(total
for
month)

(2)

New
orders
(total for
month)

Ratio

Stocks
to sales

130

(2)

2.69

Outstanding
orders
to sales

Outstanding
orders
to^stocks

(3)

(2)

136
156
179
204
227

353
419
599
509
535

108
194
263
530
560

137
165
182
203
226

()
170
192
223
236

2.60
2.69
3.35
2.50
2.36

0.79
1.24
1.47
2.60
2.47

0.31
.46
.44
1.04
1.05

255
318
337
352
333

563
715
826
912
862

729
909
552
465
350

256
344
338
356
331

269
327
336
335
331

2.21
2.25
2.45
2.59
2.59

2.86
2.86
1.64
1.32
1.05

1.29
1.27
.67
.51
.41

347
335

942
1,131

466
437

361
353

370
349

2.71
3.38

1.34
1.30

.49
.39

1950: First half

Second half

298
396

873
1, 012

333
598

306
416

318
423

2.93
2.56

1.12
1.51

.38
.59

1951: First half 3
Second half .- .

324
348

1,140
1,119

466
403

350
356

346
353

3.52
2.93

1.44
1.16

.41
.40

1950: January
February
Afarch
April
May
June
July
August
September
October
November
December - _

256
247
320
318
330
318
292
332
369
360
405
615

789
853
920
930
906
837
791
919
1,026
1,169
1,210
956

390
393
326
271
249
370
694
754
700
582
444
412

256
311
387
328
306
249
246
460
476
503
448
362

349
314
320
273
284
370
570
520
422
385
308
330

3.08
3.45
2.88
2.92
2.75
2.63
2.71
2.77
2.78
3.25
2.98
1.55

1.52
1.59
1.02
.85
.75
1.16
2.38
2.27
1.90
1.62
1.09
.67

.49
.46
.35
.29
.27
.44
.88
.82
.68
.50
.37
.43

1951: January _
February
March
April
May
June

337
284
347
312
339
326
257
309
343
388
442

992
1,089
1,217
,240
,193
,112
,069
,106
,117
,152
1,149

657
652
467
338
295
386
434
395
404
408
374

373
381
475
335
292
245
214
346
354
423
439

618
376
290
206
249
336
262
307
363
427
405

2.94
3.83
3.51
3.97
3.52
3.41
4.16
3.58
3.26
2.97
2.60

1.95
2.30
1.35
1.08
.87
1.18
1.69
1.28
1.18
1.05
.85

.66
.60
.38
.27
.25
.35
.41
.36
.36
.35
.32

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

1950
19513

July
August
September
October... _ _ _
November

1
2

Not adjusted for seasonal variation.
Not available.

Averages based on data through November.
NOTE.—These figures are not estimates for all department stores in the United States. Figures for sales,
stocks, and outstanding orders are based on actual reports from the 296 stores. Receipts of goods are derived from the reported figures on sales and stocks. New orders are derived from estimates of receipts and
reported figures on outstanding orders.
Semiannual and annual data on receipts and new orders cannot be derived directly from the monthly
averages of sales, stocks, and outstanding orders.
Source: Board of Governors of the Federal Reserve System.

977891—52-

-13

187

TABLE B-22.—Consumers' price index, 1929-51
For moderate-income families in large cities
[1935-39-100]

All
items

Period

Monthly average:

Food Apparel Rent

Fuel,
elecHousetricity, furnishand reings
frigeration

Miscellaneous

1929

122.5

132.5

115.3

141.4

112.5

111.7

104.6

1930
1931
1932
1933
1934

119.4
108.7
97.6
92.4
95.7

126.0
103.9
86.5
84.1
93.7

112.7
102.6
90.8
87.9
96.1

137.5
130.3
116.9
100.7
94.4

111.4
108.9
103.4
100.0
101.4

108.9
98.0
85.4
84.2
92.8

105.1
104.1
101.7
98.4
97.9

98.1
99.1
102.7
100.8
99.4

100.4
101.3
105.3
97.8
95.2

96.8
97.6
102.8
102.2
100.5

94.2
96.4
100.9
104.1
104.3

100.7
100.2
100.2
99.9
99.0

94.8
96.3
104.3
103.3
101.3

98.1
98.7
101.0
101.5
100.7

100.2
105.2
116.6
123.7
125.7

96.6
105.5
123.9
138.0
136.1

101.7
106.3
124.2
129.7
138.8

104.6
106.4
108.8
108.7
109.1

99.7
102.2
105.4
107.7
109.8

100.5
107.3
122.2
125.6
136.4

101. 1
104.0
110.9
115.8
121.3

128.6
139.5
159.6
171.9
170.2

139.1
159.6
193.8
210.2
201.9

145.9
160.2
185.8
198.0
190.1

109.5
110.1
113.6
121.2
126.4

110.3
112.4
121.1
133.9
137.5

145. 8
159.2
184.4
195. 8
189.0

124.1
128.8
139. 9
149.9
154.6

171.9
185.3

204.5
227.4

187.7
204.3

131.0
136.0

140.6
144.1

190.2
210.9

156.5
165.0

168. 8
175.1

198.0
211.0

184.9
190.5

130.1
132.0

139.8
141.4

185.1
195.4

154.9
158.0

1951: First half
Second half *

184.2
186 7

225.7
229 1

202.5
206.5

134.7
137. 5

143.8
144 4

210.8
211. 1

164.0
166.3

1950: January 15
February 15
March 15
April 15
May 15
June 15
July 15
August 15
September 15
October 15
November 15
December 15

168.2
167.9
168.4
168.5
169.3
170.2
172.0
173.4
174.6
175.6
176.4
178.8

196.0
194.9
196. 6
197.3
199.8
203.1
208.2
209.9
210.0
210.6
210.8
216.3

185.0
184.9
185.1
184.9
184.7
184.6
184.5
185.7
189.8
193. 0
194.3
195.5

129.4
129.7
129.8
130.1
130.6
130.9
131. 3
131.6
131.8
132.0
132.5
132.9

140.0
140.1
140.3
140.3
138.8
139.1
139.4
140.2
141.2
142.0
142.5
142.8

184.7
185.2
185.3
185.4
185.0
184.8
186. 1
189.1
194.2
198.7
201.1
203. 2

155.1
155.1
155.0
154.7
155.1
154.6
155.2
156.8
157.8
158.3
159. 2
160.6

181.5
183.8
184.5
184.6
185.4
185. 2
185.5
185.5
186.6
187.4
188.6
(2)

221.9
226. 0
226.2
225.7
227.4
226.9
227.7
227.0
227. 3
229.2
231.4
231. 9

198.5
202.0
203. 1
203 6
204.0
204.0
203.3
203 6
209 0
208.9
207.6
(3)

133.2
134.0
134.7
135.1
135.4
135.7
136.2
136 8
137.5
138.2
138.9
(2)

143.3
143.9
144.2
144.0
143.6
143. 6
144.0
144 2
144.4
144.6
144.8
(2)

207.4
209.7
210.7
211.8
212.6
212.5
212.4
210 8
211.1
210.4
210 8

162.1
163. 2
164.3
164. 6
165.0
164.8
165.0
1^5.4
166.0
166.6
168.4
(2)

_
._

1935
1936
1937
1938
1939

1940
1941
1942
1943
1944

1945
1946
1947
1948
1949

_
_

. . __

1950
19511

1950' First half
Second half

1951: January 15
February 15
March 15
April 15
May 15
June 15
July 15
August 15
September 15
October 15
November 15
December 15

- - -

. . . .
.-_
_ .

_._

i8 Averages based on data through November, except for food.
Not available.
Source: Department of Labor.

188

(2)

TABLE B-23— Wholesale price index, 1929-51
[1926«=100]
Other than farm products and foods
£

Farm products

All commodities

•d

g w

.2
,£3

t)o
&

§•!
3«
a ~f
is I i!
2ft
I
S'g •s*
3* rS *3§s |«> a
p
1
s Ho £ s 1
«
EH
w

95.3 104.9

99.9

91.6 109.1

90.4

83.0 100.5

95.4

94.0

94.3

82.6

1930
1931..—1932
1933
1934

86.4
73.0
64.8
65.9
74.9

88.3
64.8
48.2
51.4
65.3

90.5
74.6
61.0
60.5
70.5

85.2 100.0
75.0 86.1
70.2 72.9
71.2 80.9
78.4 86.6

80.3
66.3
54.9
64.8
72.9

78.5
67.5
70.3
66.3
73.3

92.1
84.5
80.2
79.8
86.9

89.9
79.2
71.4
77.0
86.2

88.7
79.3
73.9
72.1
75.3

92.7
84.9
75.1
75.8
81.5

77.7
69.8
64.4
62.5
69.7

1935
1933
1937
1938
1939

80.0
80.8
86.3
78.6
77.1

78.8
80.9
86.4
68.5
65.3

83.7
82.1
85.5
73.6
70.4

77.9 89.6
79.6 95.4
85.3 104.6
81.7 92.8
81.3 95.6

70.9
71.5
76.3
66.7
69.7

73.5
76.2
77.6
76.5
73.1

86. 4
87.0
95.7
95.7
94.4

85.3
85.7
95.2
90.3
90.5

79.0
78.7
82.6
77.0
76.0

80.6
81.7
89.7
86.8
85.3

68.3
70.5
77.8
73.3
74.8

73.8
84.8
96.9
97.4
98.4

71.7 95.8 94.8
76.2 99.4 103.2
78.5 103.8 110.2
80.8 103.8 111.4
83.0 103.8 115.5

77.0 88.5
84.4 94.3
95.5 102.4
94.9 102.7
95.2 104.3

77.3
82.0
89.7
92.2
93.6

Period

Monthly average:
1929

OS
A OS
O

1940
1941
1942
1943
1944

78.6 67.7 71.3
87.3 82.4 82,7
98.8 105.9 99.6
103.1 122.6 108.6
104.0 123.3 104.9

83.0
89.0
95.5
96.9
98.5

100.8
108.3
117.7
117.5
116.7

1945
1946
1947
1948
1949

105.8
121.1
152.1
165.1
155.0

128.2
148.9
181.2
188.3
165.5

99.7
109.5
135.2
151.0
147.3

118.1
137.2
182.4
188.8
180.4

1950
1951 i

161 5 170.4 166. 2 153.2 191.9 148.0 133.2 173.6 206. 0 122.7 153.2 120.9
180.5 196.4 186.9 169.4 221.1 172.2 138.2 189.1 225.6 142.7 175.9 141.1

105.2
130.7
168. 7
179.1
161.4

100.1 84.0 104.7 117.8 95.2
116.3 90.1 115.5 132.6 101.4
141.7 108.7 145. 0 179.7 127.3
149.8 134. 2 163.6 199.1 135.7
140.4 131.7 170.2 193.4 118.6

104,5
111.6
131.1
144.5
145.3

94.7
100.3
115.5
120. 5
112.3

153.8 160.5 157.4 146.8 180.2 137.2 131.6 169.4 195.6 115.7 145, 8 112.1
_ 169.2 180.5 175.0 159.7 204.1 158.6 134.9 177.9 216.5 129.5 160.4 130.0

1950- First half
Second half

1951- First half 1 .. „ 182.6 200.2 186.0 171.5 234.3 180.8 137.8 188.4 227.4 145.7 178.1 142.3
Second half
178.3 192.6 187.8 167.3 207.9 163.6 138.7 189.9 223.7 139.6 173.7 139.9
1950* January
February
Tvlarch
April
Mav
July
August
September
October
November
December

154.7
159. 1
159.4
159.3
164. 7
165.9
176.0
177.6
180.4
177.8
183. 7
187.4

154.8
156.7
155.5
155.3
159.9
162. 1
171.4
174.6
177.2
172.5
175. 2
179.0

145.8
146.0
146.1
146.3
147.6
148.7
151.6
155.5
159.2
161.5
163. 7
166.7

179.3
179.0
179.6
179.4
181.0
182.6
187.2
195.6
203.0
208.6
211.5
218.7

138.5
138.2
137.3
136.4
136.1
136.8
142.6
149.5
158.3
163.1
166.8
171.4

131.0
131.5
131.5
130.9
131.9
132.6
133.5
134.2
134.9
135.3
135, 7
135.7

168.5
168.7
168.6
168.8
169.9
171.9
172.4
174.4
176.7
178.6
180.4
184.9

191.6
192.8
194.2
194.8
198.1
202.1
207.2
213.9
219.7
218.9
217.8
221.4

115.3
115.0
116.2
117.0
116.4
114.5
118.1
122.5
128.7
132.2
135.7
139.6

144.9
145.2
145. 5
145. 8
146.6
146.9
148.7
153. 9
159. 2
163.8
166.9
170.2

110.0
110.0
110.7
112.6
114.7
114.7
119.0
124.3
127.4
131.3
137.6
140.5

180,1 194.2
183. 6 202.6
184.0 203.8
183.6 202.5
182.9 199.6
181.7 198.6
- 179.4 194. 0
178. 0 190. 6
177.6 189.2
178. 1 192.3
178. 3 195. 2
.. JLZ&-8- • 194. 2

182.2
187.6
186. 6
185.8
187.3
186.3
186.0
187.3
188.0
189.4
188.8
187.5

170.3
171.8
172.4
172.3
171.6
170.5
168.6
167.2
167.0
166.7
166.9
167.4

234. 8
238.2
236.2
233. 3
232.6
230.6
221.9
213.7
212.1
208.3
196. 8
194.4

178.2
181.1
183. 2
182.8
182. 1
177.7
173.2
167.5
163.2
157. 7
159. 5
160.7

136.4
138.1
138.6
138.1
137. 5
137.8
137.9
138.1
138.8
138.9
139,1
139.2

187. 5
188.1
188.8
189.0
188.8
188.2
187.9
188.1
189.1
191.2
191.5
191.5

226.1
228.1
228.5
228.5
227. 8
225.6
223. 7
222.5
223.0
223. 6
224.6
224.8

144.5
147.3
146.4
147.9
145. 7
142.3
139. 4
140.1
140.8
141 1
138.7
137.8

174.7
175. 4
178.8
180.1
180.0
179.5
178.8
175. 3
172.4
171.7
172.0
172.0

142.4
142.7
142.5
142.7
141.7
141.7
138.8
138.2
138.5
139.3
141.4
143.4

151.4
152.8
152.7
152. 8
- - - - 155.9
157 3
_ 162.9
166.4
169. 5
169.1
171.7
175.3

1951' January
February _ _
March
April
_ _
May
June
July
..
August
September
October..
November
December *

/ 77 **?

* Estimates based on incomplete data; by Council of Economic Advisers.
Source: Department of Labor (except as noted).

189

TABLE B—24.—Indexes of prices received and prices paid by farmers^ and parity ratio ^ 1929—51
[1910-14=100]

Prices
received

Period

Monthly average:
1929

Prices paid
(including interest, taxes,
and wage
rates)

Parity
ratio *

148

160

1930
1931
1932
1933
1934

125
87
65
70
90

151
130
112
109
120

64
75

1935
1936...
1937
1938
1939.

109
114
122
97
95

124
124
131
124
122

92
93
78
78

1940
1941
1942..
1943
1944

100
123
158
2192
2196

124
132
151
170
182

81
93
105
113
108

1945...
1946
1947.
1948
1949...

2206
2234
275
285
249

189
207
239
259
250

109
113
115
110
100

1950...1951

256
302

255
281

100
107

1950: First half.
Second half

241
272

250
260

105

1951: First half
Second half

306
296

279
283

110
105

1950: January 15
February 15.March 15
April 15
May 15..
June 15
July 15
August 15
September 15.
October 15
November 15..
December 15..

235
237
237
241
247
247
263
267
272
268
276

248
248
250
250
253
254
256
257
260
261
263
265

95
96
95
96
98
97
103
104
105
103
105
108

1951: January 15
February 15. March 15
April 15
May 15
June 15
July 15
August 15
September 15.
October 15- —
November 15..
December 15..

313
311
309
305
301
294
292
291
296
301
305

272
276
280
283
283
282
282
282
282
283
284
284

110
113
111
109
108
107
104
104
103
105
106
107

1 Ratio of prices received to prices paid (including interest, taxes, and wage rates).
Includes subsidy payments between October 1943 and June 1946.
Source: Department of Agriculture.

190

TABLE B-25.—Percentage increases in wholesale prices and cost of living in the United States and
foreign countries since June 1950
Cost of living

Wholesale prices
Percentage
increase,
June 1950
to latest
date

Country

United States

_
..

Western European
countries;
Austria 2
Belgium
Denmark
Franco
Germany (Federal Republic) _ _
Greece
Ireland
Italy
.
Netherlands
Norway
Portugal
Spain
Sweden
_ .
Switzerland
_
._
Turkey
United Kingdom .
Latin America:
Argentina
Brazil
Chile.. .
Costa Rica
Cuba _
Dominican Republic
El Salvador
Guatemala
Mexico
Nicaragua
Paraguay
Peru
Venezuela
__

0)
. ,
i.

Percentage
increase,
June 1950
to latest
date

Latest date 1951

December

11 November

15 August
12 September
17 October
5 September
14 September
34 October
32 August
17 August
16 October

11 July
11 September
7 October
8 September
11 August
13 October

Africa and Near East:
Algeria
Egypt _
Iran
Iraq
Israel _
Lebanon
Morocco
Tunisia
Union of South Africa

Latest date 1951

52
30
33
46
29
30
19
17
24
31
10
38
37
16
9
28

October
October
November
November
October
September
September
November
September
November
September
September
September
October
October
October

27
43
-6

October
September
October

14 November
0 August
3 November
32 November
36 August
61 June
25 June
7 September

20
7

September
October

49 October
14 October
15 October
27 October
11 October
19 October
39 June-Aug. quarter
12 October
12 September
20 October
3 October
11 September
19 August
8 October
4 September
13 September
22 April
12 October
39 September
8 September
10 June
15 October
12 December
2 October
16 August
*37 August
28 June
11 June
4 September

Pacific and Far East:
Australia
India
Indochina
. __
Japan •
New Zealand
Philippines _ _
Thailand

31
10
35
56
17
17
14

August
November
September
October
September
October
September

27
4
16
27
15
12
JO

Third quarter
September
August
September
Third quarter
September
August

Other:
Canada
Finland

15
53

October
October

15
18

October
September

1
2

Not available.
Covers basic materials only.
3 May 1950 to latest quarter.
Retail food prices only.
NOTE.—-The components of the indexes are not always the same for each country.
Source: International Monetary Fund.

191
977891—52-

-14

TABLE B-26.—Consumer credit outstanding, 1929-51
[Millions of dollars]
Instalment credit
Total
consumer
credit

End of period

Total

Automobile
sale credit

Other i

Charge
accounts

Other
consumer
credit 2

1929

6,252

3,158

1,318

1,840

1,749

1,345

1930
1931
1932 —
1933
1934

5,570
4,636
3,493
3, 439
3,846

2, 688
2,204
1, 518
1,588
1,860

928
637
322
459
576

1,760
1,567
1,196
1,129
1,284

1,611
1, 381
1,114
1,081
1,203

1,271
1,051
861
770
783

4,773
5,933
6, 513
6,128
7,031

2,622
3,518
3,960
3,595
4,424

940
1,289
1,384
970
1,267

1,682
2,229
2,576
2,625
3,157

1,292
1,419
1,459
1,487
1,544

859
99&
1,094
1,046
1,063

8, 163
8-826
5,692
4,600
4,976

5,417
5 887
3,048
2,001
2,061

1,729
1,942
482
175
200

3,688
3,945
2,566
1,826
1,861

1,650
1,764
1, 513
1,498
1,758

1,096
1,175
1,131
1,101
1,157

5. 627
8,677
11, 862
14,366
16, 809

2,364
4,000
6,434
8,600
10, 890

227
544
1,151
1,961
3,144

2,137
3,456
5,283
6,639
7,746

1,981
3,054
3,612
3,854
3,909

1,282
1,623
1, 816
1, 912
2,010

1950
1951 3

20, 097
20, 400

13, 459
13, 300

4,126
4,000

9,333
9,300

4,239
4,500

2,399
2,600

1950' January
February _
March
April.

16, 368
16, 159
16, 338
16, 639
17,077
17,651
18, 295
18, 842
19,329
19,398
19, 405
20, 097

10, 836
10, 884
11,077
11,322
11,667
12, 105
12, 598
13, 009
13, 344
13, 389
13, 306
13, 459

3,179
3,256
3,355
3,470
3,600
3,790
3,994
4,107
4,213
4,227
4,175
4,126

7,657
7,628
7,722
7,852
8,067
8,315
8,604
8,902
9,131
9,162
9, 131
9,333

3,506
3,233
3,211
3,241
3,290
3,392
3,527
3,636
3,741
3,703
3,739
4,239

2, 026
2,042
2,050
2,076
2,120
2,154
2,170
2,197
2,244
2,306
2,360
2,399

19, 937
19, 533
19, 379
19, 126
19, 207
19, 256
19, 132
19, 262
19,362
19, 586
19,996
20, 400

13, 252
13,073
12, 976
12, 904
12, 920
12, 955
12, 903
13, 045
13, 167
13, 199
13, 259
13, 300

4,056
3,990
3,946
3,934
3,980
4,041
4,061
4,138
4,175
4,134
4,100
4,000

9,196
9,083
9,030
8,970
8,940
8,914
8,842
8,907
8,992
9,065
9,159
9,300

4,248
4,010
3,938
3,744
3, 793
3,804
3, 743
3,724
3,696
3,868
4,206
4,500

2,437
2,450
2,465
2,478
2,494
2,497
2,486
2,493
2,499
2,519
2,531
2,600

1935
1936
1937 .
1938
1939

- - ._- -

1940
1941
1942
1943
1944

1945
1946
1947
1948
1949

. -.

May

June _
July
August
_
September
October
November
December
1951: January
February
March
April

May

June
JulyAugust
September
October
November 33
December .

._ _.
.__
__

1
Includes other sale credit and loans, including repair and modernization loans insured by Federal
Housing
Administration.
2
Includes loans by pawnbrokers, service credit, and single-payment loans under $3,000 made by commercial banks. The single-payment loan item was revised in November 1950 to exclude loans over $3,000.
See Federal Reserve Bulletin for November 1950, pp. 1465-1466.
3 Estimates based on incomplete data; December by Council of Economic Advisers.

NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Board of Governors of the Federal Reserve System (except as noted);

192

TABLE B-27.—Loans and investments of all commercial banks, 1929-51]
[Billions of dollars]
Total
loans
and
investments

End of period »

1929— June 6
5

1930—June — _
1931—June 55
1932— June 5
1933— June 5
1934— June

1935
1936
1937
1938 1939

1940
1941
1942
1943
1944
1945
1946 .
1947
1948 .
1949
1950 19517

...

1950: January
February
March
April
May
June..
July
August
September
October
November
December

.
_
...
_ _ _

1951: January
February
March
. _
April..
May
June
_ _ _ _ _ _
July
August
_
September _ _ _ _ _
October
November 7
_.
December

Loans
Total s

Investments

Commercial
and industrial loans 4

Total

U. S. Government
obligations

Other
securities

49.4

35.7

(6)

13.7

4.9

8.7

48.9
44.9
36.1
30.4
32.7

34.5
29.2
21.8
16.3
15.7

(66)
()
(69)
()
(6)

14.4
15.7
14.3
14.0
17.0

5.0
6.0
6.2
7.5
10.3

9.4
9.7
8.1
6.5
6.7

36.1
39.6
38.4
38.7
40.7

15.2
16.4
17.2
16.4
17.2

(66)
(6)
()

5.7
6.4

20.9
23.1
21.2
22.3
23.4

13.8
15.3
14.2
15.1
16.3

7.1
7.9
7.0
7.2
7.1

43.9
50.7
67.4
85.1
105.5

18.8
21.7
19.2
19.1
21.6

7.3
9.3
7.9
7.9
8.0

25.1
29.0
48.2
66.0
83.9

17.8
21.8
41.4
59.8
77.6

7.4
7.2
6.8
6.1
6.3

124.0
114. 0
116.3
114.3
120.2

26.1
31.1
38.1
42.5
43.0

9.6
14.2
18.2
18.9
17.1

97.9
82.9
78.2
71.8
77.2

90.6
74.8
69.2
62.6
67.0

7.3
8.1
9.0
9.2
10.2

126.7
133.8

52.2
58.4

21.9
26.6

74.4
75.4

62.0
62.2

12.4
13.2

121.2
120.6
120.3
120.3
121.2
121.8
122.3
123.3
123.6
124.5
125.4
126.7

42.9
43.1
43.7
43.8
44.1
44.8
46.0
47.3
48.9
49.9
51.5
52.2

17.2
17.2
17.1
16.8
16.7
16.9
17.3
18.3
19.4
20.0
21.1
21.9

78.3
77.5
76.6
76.5
77.1
77.0
76.3
76.0
74.6
74.6
73.9
74.4

68.0
67.1
65.8
65.5
66.1
65.8
65.0
64.2
62.5
62.5
61.7
62.0

10.3
10.4
10.8
11.0
11.0
11.2
11.4
11.8
12.1
12.1
12.1
12.4

125. 1
125.0
125.7
125.4
125.1
126.0
126.1
127.0
128.6
130.5
131.9
133.8

52.7
53.5
54.4
54.4
54.5
54.8
54.6
55.2
56.0
56.8
57.3
58.4

22.3
23.1
23.8
23.7
23.6
23.7
23.5
24.1
24.8
25.4
25.9
26.6

72.3
71.5
71.3
71.0
70.6
71.2
71.5
71.9
72.6
73.7
74.6
75.4

60.0
59.1
58.8
58.5
58.1
58.5
58.7
59.1
59.7
60.9
61.6
62.2

12.4
12.4
12.6
12.6
12.5
12.7
12.8
12.7
12.9
12.9
13.0
13.2

1
2

Excludes mutual savings banks.
June and December figures are for call dates. Other monthly data are for the last Wednesday of the
month.
3
Data are shown net. Includes commercial and industrial loans, agricultural loans, loans on securities,
real
estate loans, loans to banks, and "other loans," some of which represent consumer credit.
4
Beginning with 1948, data are shown gross, i. e., before deduction of valuation reserves, instead of net
as for previous years. Prior to June 1947 and for months other than June and December, data are estimated on the basis of reported data for all insured commercial banks and for weekly reporting member
banks.
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.
6
Not available.
7
Estimates based on incomplete data; by Council of Economic Advisers.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Board of Governors of the Federal Reserve System (except as noted).

193

TABLE B-28.—Deposits and currency, 1929-51
[Millions of dollars]

Total
deposits
and
currency

End of period *

U.S.
Government 2
deposits

Total excluding U. S. Government deposits
fprivately-held money supply) *
Total

Currency
outside
banks

Demand
deposits
adjusted «

Time
deposits •

1929

54,742

187

54, 555

3,557

22,809

28,189

1930

53, 572
48, 379
45, 370
42, 551
48, 106

324
518
516
1,019
1,836

53, 248
47,861
44, 854
41, 532
46, 270

3,605
4,470
4,669
4,782
4,655

20, 967
17, 412
15, 728
15, 035
18,459

28, 676
25, 979
24, 457
21, 715
23,156

52, 726
57, 595
56, 781
59, 878
64, 733

1,453
1,235
966
1,812
1,480

51, 273
56, 360
55,815
58,066
63,253

4,917
5,516
5,638
5,775
6,401

22, 115
25, 483
23, 959
25, 986
29, 793

24,241
25, 361
26, 218
26, 305
27, 059

71, 129
79, 098
100, 500
123, 391
151, 428

1,121
2,762
9,201
11, 003
21, 203

70, 008
76, 336
91, 299
112, 388
130, 225

7,325
9,615
13, 946
18, 837
23, 505

34, 945
38, 992
48, 922
60, 803
66, 930

27, 738
27, 729
28,431
32, 748
39, 790

176, 378
167,500
172, 330
172, 693
173, 851

25, 585
3,496
2,322
3, 574
4,070

150, 793
164, 004
170, 008
169, 119
169, 781

26, 490
26, 730
26, 476
26, 079
25, 415

75, 851
83, 314
87, 121
85, 520
85, 750

48, 452
53, 960
56,411
57, 520
58,616

1950 fl
1951

180, 574
189,500

3,657
3,800

176, 917
185, 700

25, 398
26, 500

92, 272
98, 200

59,247
61,000

1950: January
February
March
April

173, 600
172, 800
172, 400
172, 500
173, 000
174, 715
174, 400
175, 500
176, 400
176, 300
177, 400
180, 574

3,900
4,600
5,300
4,100
3,800
4,751
4,100
4,500
4,800
3,500
3,500
3,657

169, 700
168, 200
167, 100
168, 400
169, 200
169, 964
170, 200
171, 000
171, 600
172, 800
173, 900
176, 917

24, 500
24, 700
24, 600
24, 600
24. 700
25, 185
24, 400
24, 500
24, 500
24, 600
24, 900
25,398

86,400
84, 500
83, 200
84, 300
85, 000
85, 040
86, 500
87, 400
88, 000
89, 200
90, 300
92, 272

58, 700
59, 000
59, 300
59, 500
59, 500
59, 739
59, 400
59, 100
59, 000
59, 000
58, 700
59, 247

178, 800
178, 900
179, 900
179, 800
179, 100
181,333
180, 800
181, 600
183, 800
185, 800
187, 100
189, 500

3,600
4,700
7,400
6,500
5,400
6,649
5,000
4,600
5,900
4,200
4,400
3,800

175, 200
174, 200
172, 500
173, 300
173, 700
174, 684
175, 800
177, 000
177, 900
181, 600
182, 700
185, 700

24, 600
24, 600
24, 400
24, 600
24, 900
25, 776
25, 100
25, 300
25, 400
25, 700
25, 800
26, 500

91, 600
90, 600
89, 000
89, 500
89, 500
88, 960
90, 700
91, 400
92, 000
95, 000
96, 300
98, 200

59, 000
59, 000
59, 100
59, 200
59, 300
59, 948
60, 100
60, 400
60, 500
60, 900
60, 600
61,000

1931
1932
1933
1934

1935
1936
1937
1938
1939

1940
1941
1942
1943
1944
1945
1946
1947
1948
1949

- —

—

May

June
July
August
September
October
November
December

1951* January
February
March
. ..
__
April
May.
June
July
__.August
September
October
_
_
November
December '

* June and December figures are for call dates. Other monthly data are for the last Wednesday of the
month.
i Includes U. 8. Government deposits at Federal Reserve banks and commercial and savings banks, and,
beginning with 193S, includes U. S. Treasurer's time deposits, open account.
8 Includes deposits and currency held by State and local governments.
< Includes demand deposits, other than interbank and U. S. Government, less cash items in process of
collection.
* Includes deposits in commercial banks, mutual savings banks, and Postal Savings System, but excludes
interbank deposits.
« Estimates based on incomplete data; by Council of Economic Advisers.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Board of Governors of the Federal Reserve System (except as noted).

194

TABLE B-29.—Estimated ownership of Federal obligations, 1939-51
l

[Billions of dollars—par values ]

Gross public debt and guaranteed issues *

End of period
Total

Held by
U.S.
Government
investment
accounts

Held by others
State
Total
local
held by and
governothers
ments 3

Commercial4
banks

Nonbank
private
Federal corporaIndiReserve tions
and viduals 6
banks
associa4
tions

1939

47.6

6.5

41.1

0.4

15.9

2.5

12.2

10.1

1940
1941
1942
1943
1944

50.9
64.3
112.5
170.1
232. 1

7.6
9.5
12.2
16.9
21.7

43.3
54.7
100.2
153. 2
210.5

.5
.7
1.0
2.1
4.3

17.3
21.4
41.1
59.9
77.7

2.2
2.3
6.2
11.5
18.8

12.8
16.8
28.2
42.0
56.8

10.6
13.6
23.7
37.6
52.9

1945
1946
1947
1948
1949

278.7
259.5
257.0
252.9
257.2

27.0
30.9
34.4
37.3
39.4

251.6
228.6
222.6
215.5
217.8

6.5
6.3
7.3
7.9
8.0

90.8
74.5
68.7
62.5
66.8

24.3
23.3
22.6
23.3
18.9

66.2
60.3
58.6
56.2
57.7

63.9
64.1
65.5
65.6
66.5

1950
1951 7

256.7
259.5

39.2
42.3

217.5
217.2

7.8
8.0

61.8
61.5

20.8
23.8

60.1
57.9

67.0
66.0

1950* 'January
February
March
April
May
June - July
AugustSeptember
October
November
December

256.9
256.4
255.7
255.7
256.4
257.4
257.6
257.9
257.2
257.0
257.1
256.7

39.0
38.4
37.6
37.3
37.4
37.8
38.0
38.1
38.9
39.0
39.2
39.2

217.9
218.0
218.1
218.4
219.0
219.5
219.6
219.8
218.3
217.9
217.9
217.5

8.0
8.0
8.4
8.4
8.3
8.2
8.3
8.3
8.2
8.1
8.1
7.8

67.4
66.4
64.9
65.2
65.8
65.6
64.6
64.1
62.2
62.2
61.5
61.8

17.8
17.7
17.6
17.8
17.4
18.3
18.0
18.4
19.6
19.3
19.7
20.8

58.0
58.9
60.3
59.9
60.2
59.9
60.9
61.3
60.8
60.9
61.1
60.1

66.7
67.0
66.9
67.1
67.3
67.5
67.8
67.8
67.6
67.5
67.6
67.0

1951: January
February
March ._
April
_-.
May
June
July
August
September
October
__
November77
December

256. 1
256.0
255.0
254. 7
255.1
255.3
255.7
256.7
257.4
258.3
259.6
259.5

39.6
39.7
39.8
39.9
40.3
41.0
41.0
41.5
42.0
42.0
42.2
42.3

216.6
216.2
215.2
214.9
214.8
214.3
214.6
215.2
215.4
216.4
217.4
217.2

7.8
7.9
7.9
7.9
8.0
8.0
8.0
8.0
8.0
8.1
8.1
8.0

59.9
58.9
57.8
58.4
57.8
58.4
58.7
58.8
59.4
60.6
61.2
61.5

21.6
21.9
22.9
22.7
22.5
23.0
23.1
23.1
23.7
23.6
23.2
23.8

60.7
61.0
60.4
59.4
59.9
58.5
58.6
59.0
58.1
58.0
58.7
57.9

66.8
66.6
66.2
66.3
66.5
66.4
66.3
66.3
66.2
66.2
66.2
66.0

1 United States savings bonds, series A-D, E, and F. are included at current redemption values.
2 Excludes guaranteed securities held by the Treasury.
Includes trust, sinking, and investment funds of State and local governments and their agencies, and
Territories and possessions.
< Includes commercial banks, trust cpmpanies, and stock savings banks in the United States and in Territories and possessions; excludes securities held in trust departments.
s Includes insurance companies, mutual savings banks, savings and loan associations, nonprofit institutions, corporate pension trust funds, dealers and brokers and foreign accounts in this country. Beginning with December 1946, the foreign accounts include investments by the International Bank for Reconstruction and Development and the International Monetary Fund in special non-interest-bearing
notes issued by the U. S. Government. Beginning with June 30, 1947, includes holdings of Federal land
banks.
6 Includes partnerships and personal trust accounts.
^Estimates based on incomplete data; by Council of Economic Advisers.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Treasury Department (except as noted).
3

195

TABLE B-30.-—U. S. Government debt—volume and kind of obligations, 7929-57
[Billions of dollars]
i

Interest-bearing public debt

Gross Marketable public
public
issues
debt and
guaranteed
issues i Short- Treasury
term
issues 2 bonds

End of period

Nonmarketable
public issues
United
States
savings
bonds

Nonnterestbearing
3
debt
Treas- Special
ury issues
;ax and
savings
notes

Fully
guaranteed
securities

1929

16.3

3.3

11 3

0.6

0.3

1930
1931
1932
1933
1934

16.0
17.8
20.8
24.0
31.5

2.9
2.8
5.9
7.5
11.1

11.3
13.5
13.4
14.7
15.4

.8
.4
.4
.4
.6

.3
.3
.4
.4
.5

0.2
3.1

1935
1936
1937
1938 _ _ _ _ _ _ _ _
1939

35.1
39.1
41.9
44.4
47.6

14.2
12.5
12.5
9.8
7.7

14.3
19.5
20.5
24.0
26.9

0.2
.5
1.0
1.4
2.2

.7
.6
2.2
3.2
4.2

1.0
.7
.6
.5
.6

4.5
4.7
4.6
5.0
5.7

50.9
64.3
112.5
170.1
232.1

7.5
8.0
27.0
47.1
69.9

28.0
33.4
49.3
67.9
91.6

3.2
6.1
15.0
27.4
40.4

2.5
6.4
8.6
9.8

5.4
7.0
9.0
12.7
16.3

.6
.5
.9
1.4
1.8

5.9
6.3
4.3
4.2
1.5

278.7
259.5
257.0
252.9
257.2

78.2
57.1
'47.7
45.9
50.2

120.4
119.3
117.9
111.4
104.8

48.2
49.8
52.1
55.1
56.7

8.2
5.7
5.4
4.6
7.6

20.0
24.6
29.0
31.7
33.9

2.4
1.5
2.7
2.2
2.1

(4)

.6
.3
.1
.1

256.7
259.5

58.3
65.6

94.0
76.9

58.0
57.6

8.6
7.5

33.7
35.9

2.4
2.4

(4)
(*)

_ __

256.9
256.4
255.7
255.7
256.4
257.4
257.6
257.9
257. 2
257.0
257.1
256.7

49.9
49.8
51.5
51.6
52.0
52.4
52.2
52.2
56.9
56.0
55.9
58.3

104.8
104.8
102.8
102.8
102.8
102.8
102.8
102.8
96.7
96.7
96.7
94.0

57.0
57.2
57.3
57.4
57.5
57.5
57.6
57.5
57.4
58.0
58.0
58.0

7.9
8.0
8.0
8.1
8.3
8.5
8.6
8.9
8.9
9.0
8.9
8.6

33.5
32.9
32.1
31.8
31.9
32.4
32.5
32.7
33.4
33.5
33.7
33.7

2.0
2.0
2.2
2.2
2.2
2.2
2.1
2.1
2.2
2.2
2.2
2.4

(44)
(4 )
()
(44)
(4)
(4 )
(4)
( 4)
()
(44)
()
(4)

256.1
256.0
255.0
254.7
255.1
255.3
255.7
256.7
257.4
258.3
259.6
259.5

57.4
57.4
57.4
57.4
57.4
58.9
60.3
60.8
61.9
63.5
64.5
65.6

94.0
94.0
94.0
80.5
80.5
78.8
78.8
78.8
78.1
78.1
78.1
76.9

58.0
57.8
57.8
57.7
57.6
57.6
57.5
57.5
57.5
57.5
57.6
57.6

8.7
8.7
8.3
8.1
8.2
7.8
7.9
8.0
7.8
7.7
7.7
7.5

34.0
33.9
33.5
33.6
34.0
34.7
34.7
35.1
35.6
35.6
35.9
35.9

2.4
2.6
2.4
2.4
2.4
2.4
2.3
2.3
2.4
2.4
2.4
2.4

(44)
()
(44)
(4)
( 4)
()
(44)
( 4)
( 4)
( 4)
(4)
()

1940.
1941
1942
1943__
1944

1945
1946
1947
1948
1949

_
__ _
_

1950
1951

1950: January
February
March.
April
May
June
July
August
September
October ..
November
December.

_ _

_ __

1951: January
February ._
March
April
_May
_
_ _
June_
July
August
-__ _ -__ .
September
October _
November. __ _..
December

Total includes Postal Savings bonds, prewar bonds, adjusted service bonds, depositary bonds, Armed
Forces leave bonds, and Treasury investment bonds, not shown separately. Excludes guaranteed
securities held by the Treasury.
2 Includes Treasury bills, certificates of indebtedness, and Treasury notes.
3 Issued to U. S. Government investment accounts; these accounts also held 6.4 billion dollars of public
marketable and nonmarketable issues on December 31,1951.
* Less than 50 million dollars.
Source: Treasury Department.

196

TABLE B-31.—Bond yields and interest rates, selected years, 1929-51
[Percent per annum]
Average
of rates
Prime Bankers' Federal
charged commerCorporate by
accept- Reserve
banks
Aaa
cial
on
shortbank
ances,
Taxable bonds
paper,
term
90
discount
4-6
bonds (Moody's) loans —
rate
days
15 years
selected months
and over
cities

U. S. Government security
yields
Period

3-month
Treasury
bills i

Average:
1929
1933
1935
1937.
1939

(3)
0.515
.137
.447
.023

9-12
month
issues 2

(44)
(4 )
(4)
()
(4)

(55)
()
(55)
()
(5)

4.73
4.49
3.60
3.26
3.01

(6)
(66)
(6)
()
2.1

5.85
1.73
.76
.94
.59

5.03
.63
.13
.43
.44

.103
373

(4)
0.75

(5)
2.47

2.77
2.73

2.0
2.6

.54
.69

.44
.44

.375
.375
.594
1.040
1.102

.81
.82
.88
1.14
1.14

2.37
2.19
2.25
2.44
2.31

2.62
2.53
2.61
2.82
2.66

2.2
2.1
2.1
2.5
2.7

.75
.81
1.03
1.44
1.48

.44
.61
.87
1.11
1.12

7 1.00

1.218
1.552

1.26
1.72

2.32
2.57

2.62
2.86

2.7
3.1

1.45
2.17

1.15
1.60

1.59
1.75

1950: First quarter
Second quarter
Third quarter
Fourth quarter

1.118
1.166
1.233
1.353

1.14
1.19
L27
1.44

2.24
2.31
2.34
2.38

2.58
2.61
2.63
2.67

2.60
2.68
2.63
2.84

1.31
1.31
1.47
1.71

1.06
1.06
1.18
1.31

1.50
1.50
1.62
1.75

1951: First quarter
Second quarter
Third quarter
Fourth quarter

1.400
1.532
1.628
1.649

1.62
1.84
1.72
1.73

2.42
2.61
2.59
2.66

2.70
2.90
2.89
2.95

3.02
3.07
3.06
3.27

1.96
2.20
2.25
2.26

1.51
1.63
1.63
1.65

1.75
1.75
1.75
1.75

1941
1943
1945
1946,
1947
1948.
1949.

. _

1950
1951

5.16
2.56
1.50
1.33
1.00
7

1.00
1.00

? 1.00
1.00
1.34
1.50

1 Rate on new issues within period.
23 Includes certificates of indebtedness and selected note and bond issues.
Treasury bills were first issued in December 1929.
*< Not available before August 1942.
s6 Bonds-in this classification were first issued in March 1941.
Not available on same basis.
f From October 30, 1942, to April 24, 1946, a preferential rate of 0.50 percent was in effect for advances
secured by Government securities maturing or callable in 1 year or less.
NOTE.—Yields and rates computed for New York City, except for average of rates charged on short-term
oans.
Sources: Treasury Department, Moody's Investors Service, and Board of Governors of the Federal
Reserve System.

197

TABLE B—32.—Profits before and after tax, all private corporations, 1929—51
[Billions of dollars]

Period

1929
1930
1931
1932
1933
1934

—

1935
1936
1937
1938
1939

—

1940
1941
1942
1943
1944

_ —

1945
1946
1947
1948
1949

1950
1951«

Corporate profits after tax

Corporate
profits
before
tax

Corporate
tax
liability 1

9.8

1.4

8.4

5.8

2.6

3.3
-.8
-3.0
.2
1.7

.8
.5
.4
.5
.7

2.5
-1.3
-3.4
-.4
1.0

5.5
4.1
2.6
2.1
2.6

-3.0
-5.4
-6.0
-2.4
-1.6

3.2
5.7
6.2
3.3
6.5

1.0
1.4
1.5
1.0
1.5

2.3
4.3
4.7
2.3
5.0

2.9
4.6
4.7
3.2
3.8

-.6
-.3

9.3
17.2
21.1
25.1
24.3

2.9
7.8
11.7
14.4
13.5

6.4
9.4
9.4
10.6
10.8

4.0
4.5
4.3
4.5
4.7

19.7
23.5
30.5
33.8
28.3

11.2
9.6
11.9
13.0
11.0

8.5
13.9
18.5
20.7
17.3

4.7
6.8
6.6
7.2
7.6

[3.8
Ff8.1
12.0
13.5
9.8

41.4
44.8

18.6
26.7

22.8
18.1

9.2
9.5

13.6
8.6

Total

Dividend
payments

Undistributed
profits

-.9
1.2
m
T2.4
[4.9
'6.1
[6.2

L6'1

Seasonally adjusted annual rates
1950: First half
Second half

1951: First half
Second half 3
1950: First quarter
Second quarter
Third quarter
Fourth quarter
1951: First quarter
Second quarter
Third quarter 33
Fourth quarter

34.7
48.0

15.6
21.5

19.0
26.5

8.1
10.2

11.0
16.2

48.6
41.0

29.0
24.4

19.6
16.6

9.2
9.8

10.4
6.8

31.9
37.5
45.7
50.3

14.4
16.9
20.5
22.5

17.5
20.6
25.2
27.8

7.8
8.4
9.4
11.1

9.7
12.2
15.8
16.7

51.8
45.4
40.0
42.0

31.1
27.0
23.8
25.0

20.7
18.4
16.2
17.0

8.8
9.6
9.6
10.1

11.9
8.8
6.6
6.9

i Federal and State corporate income and excess profits taxes.
a Minus 8 million dollars.
» Estimates based on incomplete data; by Council of Economic Advisers.
NOTE.—No allowance has been made for inventory valuation adjustment. See appendix Table B-6 for
profits before tax and inventory valuation adjustment. The figures beginning with 1948 are based on the
revised series of national income and product of the Department of Commerce. For detail, see the
National Income Supplement to the Survey of Current Business, 1951.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (except as noted).

TABLE B-33.—Sales and profits of large manufacturing corporations, 1939-51
[Millions of dollars]
Nondurable goods industries
(94 corporations) 1

Durable goods industries
(106 corporations) l
Period
Sales

Profits

Sales

Before taxes After taxes

1939

...

1940
194]
1942
1943
1944
1945
1946
J947
1948
1949

—
_

—

1950

Profits

6,748

734

597

3,843

476

400

8,750
12,806
15,362
20, 633
22, 085

1,226
2.175
2,326
2,389
2,192

830
982
782
755
726

4,257
5,485
6,408
7,607
8,263

617
980
1,069
1,293
1,339

443
538
438
506
529

18,161
12,376
19, 484
23,567
23,886

1,288
608
2,312
3,105
3,191

574
295
1,354
1,835
1,887

8,371
8,940
11,313
13, 364
12,790

1,133
1,425
1,787
2,208
1,843

555
908
1,167
1,474
1,211

29, 346

5,190

2,549

14,710

2,701

1,510

Totals for period, not adjusted for seasonal variation
I960- First half
Second half

13,229
16,117

2,135
3,055

1,197
1,352

6,705
8,005

1,086
1,615

1951- First half

1,007

8,583

1,659

662
850

17, 121

2,787

1950' First quarter 3 2
Second quarter2
Third quarter
Fourth quarter 2

6,004
7,225
7,891
8,. 226

896
1,240
1,403
1,652

503
694
776
576

3,251
3,453
3,939
4,066

504
581
782
833

307
353
468
382

1951: First quarter * 5
Second quarter
Third quarter 3

8,362
8,759
8,003

1,382
1,405
1,193

510
497
429

4,323
4,260
4,279

850
809
769

367
340
332

706

i See Federal Reserve Bulletin, June 1949, and subsequent issues, for similar data for the following industry
groups: primary metals and products, machinery, automobiles and equipment, foods and kindred products,
chemicals and allied products, and petroleum refining.
* Certain Federal income tax accruals for the first 6 months of 1950 and 1951, required by subsequent increases in Federal income tax rates and charged by many companies against third quarter profits, have
been redistributed to the first and second quarters. Available information does not permit a similar redistribution of accruals charged against fourth quarter 1950 profits to cover 1950 liability for excess profits
taxes. Estimates for third quarter 1951 based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Compiled by the Board of Governors of the Federal Reserve System and based on published
reports of various industrial corporations.

199

TABLE B-34.—Relation of profits before and ajter taxes to stockholders' equity, private manufacturing corporations•, by industry group, 7947-49 average and 1950—51
Percentage ratio of profits (annual rate) to stockholders' equity
Industry group

1947-49
average
Total

1950

1951

First Second Third First Second Third
quarter quarter quarter quarter quarter quarter
Before Federal taxes

All private manufacturing corporations

23.2

28.0

19.6

24.8

31.2

32.8

30.4

25.5

Food
- -. .
Tobacco manufactures
Textile mill products
Apparel and finished textiles
__
Lumber and wood products

23.6
19.6
24.8
21.6
26.0

22.4
21.2
22.8
18.0
29.6

15.6
16.4
18.0
11.6
16.8

20.4
19.2
17.2
10.4
28.4

28.8
25.2
26.0
26.4
38.0

20.8
20.4
29.6
22.0
34.0

18.4
20.4
23.2
11.2
31.6

18.9
22.5
11.8
11.5
20.6

Furniture and fixtures. _ _
Paper and allied products
Printing and publishing (except
newspapers)
Chemicals and allied products
Products of petroleum and coal

23.6
26.0

27.2
28.4

15.6
20.8

23.6
23.2

29.2
28.8

34.4
44.0

28.8
42.8

22.2
32.6

23.6
24.0
20.4

20.0
32.4
19.2

20.4
25.2
12.8

16.8
28.4
16.8

24.0
36.4
20.4

21.6
40.8
23.2

26.8
32.4
23.2

25.4
31.2
22.9

Rubber products
Leather and leather products
Stone, clay, and glass products.
Primary nonferrous metal industries.
Primary iron and steel industries

19.6
17.6
22.8
18.4
20.0

30.8
19.2
33.2
25.6
28.4

14.8
10.8
20.4
16.0
20.0

21.2
12.8
32.4
22.0
26.8

38.0
25.2
39.2
26.8
29.2

43.2
22.4
36.4
32.0
34.8

41.2
17.6
39.2
32.8
35.6

31.3
16.9
33.2
24.2
29.7

Fabricated metal products
Machinery (except electrical and
transportation)
Electrical machinery
Transportation equipment (except
motor vehicles)
Motor vehicles and parts

24.4

29.2

18.4

24.8

34.0

37.6

33.6

27.2

24.0
26.8

26.0
41.6

18.4
29.2

24.4
31.2

26.8
41.2

30.8
47.2

34.8
34.4

28.1
28.6

10.4
34.4

18.8
53.2

12.0
39.2

17.6
55.2

19.2
58.8

19.6
46.0

25.2
44.0

18.3
34.0

Instruments; photographic and optical goods; watches and clocks
Miscellaneous manufacturing (including ordnance)

22.0

30.8

20.8

26.0

33.2

33.6

30.0

19.2

22.8

10.0

14.8

29.6

34.8

26.0

17.3

After Federal taxes
All private manufacturing corporations

14.4

15.6

12.0

15.6

17.6

14.8

13.6

10.4

Food
.Tobacco manufactures
Textile mill products
Apparel andfinishedtextiles .
Lumber and wood products

14.0
12.0
14.8
12.4
16.8

12.4
11.6
12.8
10.0
17.6

9.2
10.0
10.8
6.4
10.4

12.4
12.0
10.4
5.2
18.0

16.4
13.2
14.4
16.4
22.8

10.0
9.6
14.4
11.6
17.2

9.2
10.0
10.8
4.4
16.0

8.8
9.2
4.8
4.8
10.6

Furniture and fixtures
Paper and allied products
Printing and publishing (except
newspapers)
Chemicals and allied products . .
Products of petroleum and coal

14.0
16.0

15.2
16.4

8.4
12.8

15.2
14.4

16.0
16.4

16.0
18.4

11.6
17.6

9.8
12.4

14.4
14.8
15.2

11.6
18.0
14.0

12.8
15.6
10.0

9.6
17.6
13.2

14.4
20.8
14.0

10.0
17.2
14.4

13.6
14.0
15.2

12.4
10.7
14.5

Rubber products
_ . _.
Leather and leather products
Stone, clay, and glass products
Primary nonferrous metal industries .
Primary iron and steel industries

11.2
10.4
14.0
11.6
12.0

16.8
10.8
17.6
15.2
14.4

9.6
6.4
12.4
10.4
11.6

13.6
7.2
20.0
14.8
16.0

22.4
14.8
22.0
16.0
15.2

18.8
10.8
16.0
16.0
13.6

15.6
7.2
16.8
14.8
13.6

12.2
6.5
12.0
10.4
8.5

Fabricated metal products
Machinery (except electrical and
transportation)
__ __
Electrical machinery
Transportation equipment (except
motor vehicles)
-..
Motor vehicles and parts

14.8

16.0

11.2

15.6

19.2

17.6

14.4

11.2

14.4
16.0

14.0
20.8

10.8
17.2

14.8
18.4

14.8
22.0

15.2
18.4

14.8
14.0

10.4
8.6

6.0
19.6

10.0
25.2

7.2
22.8

10.4
32.4

10.0
28.8

9.2
17.2

11.6
17.2

8.0
10.6

13.6

16.8

12.8

16.0

18.8

14.4

14.0

10.4

11.2

12.4

5.2

8.4

16.8

16.4

10.0

6.7

Instruments; photographic and optical goods; watches and clocks
Miscellaneous manufacturing (including ordnance)

Sources: Federal Trade Commission and Securities and Exchange Commission.

200

TABLE B—35.—Relation of profits before and after taxes to sales, private manufacturing corporations, by industry group, 1947-49 average and 1950—51
Profits in cents per dollar of sales
1951

1950

Industry group

1947-49
average

Total

First Second Third First Second Third
quarter quarter quarter quarter quarter quarter
Before Federal taxes

All private manufacturing
corporations _

10.5

12.8

10.1

11.8

13.5

12.9

11.5

6.1
7.8
11.6
5.6
14.4

6.1
9.0
10.5
5.0
15.9

4.8
7.4
9.0
3.5
11.2

5.6
8.1
8.9
3.3
15.2

7.5
10.1
11.4
6.3
18.5

5.4
9.1
11.9
5.4
17.7

4.9
8.3
10.2
3.2
16.1

4.9
8.9
6.1
3.1
11.5

Furniture and fixtures
Paper and allied products
Printing and publishing (except
newspapers)
Chemicals and allied products _
Products of petroleum and coal

8.4
14.0

9.0
15.4

5.9
12.3

8.4
13.6

9.5
15.6

10.5
19.8

9.4
19.6

8.9
16.8

8.6
13.8
14.7

7.9
18.8
14.9

8.5
15.6
10.7

6.8
17.1
13.5

9.4
20.5
15.2

8.3
20.9
16.5

9.9
18.6
17.0

9.6
18.0
16.8

Rubber products
Leather and leather products
Stone, clay, and glass products _ _
Primary nonferrous metal industries.
Primary iron and steel industries

7.7
5.7
13.7
13.4
11.5

10.6
6.5
18.8
17.3
15.5

6.6
4.2
14.1
13.5
12.7

7.8
4.9
18.9
15.9
15.1

11.4
7.4
20.5
17.1
15.7

13.0
6.9
19.7
18.2
16.5

12.2
5.9
20.1
19.3
16.6

10.0
5.7
18.6
14.9
16.2

Fabricated metal products __
.
Machinery (except electrical and
transportation) _
.
Electrical machinery
_
Transportation equipment (except
motor vehicles)
Motor vehicles and parts

10.8

12.4

9.7

11.4

13.0

14.5

13.1

11.6

6.5
9.9

13.3
14.3

10.7
11.3

12.6
11.7

13.6
14.0

15.0
15.1

14.5
12.2

13.1
11.1

5.5
12.2

8.9
17.5

6.2
15.3

8.6
17.8

9.3
18.0

7.9
14.0

8.2
13.8

6.7
12.4

12.2

15.9

12.6

14.3

16.8

16.0

15.6

14.8

8.9

10.4

5.5

7.7

12.5

13.8

11.3

8.7

Food
Tobacco manufacturers
Textile mill products
Apparel and finished textiles
Lumber and wood products

__ _.

Instruments; photographic and optical goods; watches and clocks
Miscellaneous manufacturing (including ordnance) ..

After Federal taxes
All private manufacturing
corporations
Food
Tobacco manufactures-.- ._
Textile mill products
Apparel andfinishedtextiles
Lumber and wood products

6.5

7.1

6.2

7.4

7.6

6.1

5.8

4.7

3.6
4.8
6.9
3.3
9.2

3.4
4.9
5.8
2.8
9.4

2.8
4.6
5.4
1.9
7.1

3.4
5.0
5.2
1.6
9.7

4.3
5.4
6.5
3.9
11.1

2.6
4.3
5.7
2.8
9.1

2.5
4.1
4.7
1.3
8.2

2.3
3. 6
2.4
1.3
5.9

Furniture and fixtures
Paper and allied products
-- _ .
Printing and publishing (except
newspapers).-. _ _ _ - _ _ _ _
Chemicals and allied products
Products of petroleum and coal.

4.9
8.6

5.1
8.8

3.2
7.5

5.4
8.4

5.3
9.0

4.9
8.3

3.8
7.9

3.9
6.4

5.2
8.6
11.1

4.5
10.3
10.7

5.4
9.6
8.2

3.8
10.6
10.7

5.6
11.7
10.5

3.9
8.8
10.2

5.0
7.9
11.0

4.7
6.2
10.6

Rubber products
Leather and leather products
Stone, clay, and glass products
Primary nonferrous metal industries Primary iron and steel industries

4.3
3.3
8.4
8.3
6.9

5.8
3.7
10.1
10.2
7.9

4.2
2.5
8.6
8.5
7.5

5.0
2.7
11.7
10.5
9.0

6.6
4.3
11.6
10.2
8.2

5.7
3.3
8.5
9.0
6.4

4.7
2.4
8.5
8.7
6.4

3.9
2.2
6.8
4.3
7.0

Fabricated metal products Machinery (except electrical and
transportation)
Electrical machinery
Transportation equipment (except
motor vehicles)
Motor vehicles and parts

6.6

6.8

5.9

7.1

7.3

6.7

5.6

4.8

39
6.0

7.3
7.2

6.4
6.7

7.7
7.0

7.6
7.5

6.6
5.9

6.2
5.0

4.9
3.3

32
7.0

4.7
8.3

3.7
8.9

5.1
10.5

4.8
8.8

3.7
5.2

3.75.4

2.9
3.9

Instruments; photographic and optical goods; watches and clocks
Miscellaneous manufacturing (including ordnance) _ _
_-_ .

7.5

8.6

7.7

8.9

9.4

6.9

6.4

6.2

5.2

5.6

2.9

4.5

7.0

6.6

4.9

3.3

Source: Federal Trade Commission and Securities and Exchange Commission.

201

TABLE B—36.—Relation of profits before and after taxes to stockholders' equity and to sales, all
private manufacturing corporations, by size class, 1947-49 average and 1950-51
1950

Assets class (thousands of dollars)

1947-49
average

1951

First Second Third First Second Third
Total quarter
quarter quarter quarter quarter quarter

Ratio of profits before Federal taxes (annual rate) to stockholders'
equity
All sizes

1 to 249

250 to 999..
_
1 000 to 4,999
5 000 to 99,999 _
100 000 and over

23.2

28.0

19.6

24.8

31.2

32.8

30.4

25.5

16.8
22.4
23.6
24.0
22.4

17.2
23.6
25.2
27.6
29.6

8.8
13.2
17.2
18.4
21.6

15.2
21.2
21.6
23.6
27.2

26.4
30.4
28.8
31.2
32.0

23.6
28.8
33.2
34.4
32.0

22.4
28.0
30.4
32.0
30.0

17.4
21.3
22.6
25.4
26.8

Profits before Federal taxes in cents per dollar of sales
All sizes

1 to 249

250 to 999
1 000 to 4,999
5,000 to 99,999 —
100 000 and over

10.5

12.8

10.1

11.8

13.5

12.9

11.5

4.5
7.2
8.8
10.8
12.2

4.3
7.9
9.5
12.5
15.5

2.5
5.1
7.3
9.5
12.8

4.2
7.4
8.5
11.3
14.4

6.2
9.8
10.3
13.3
16.0

5.4
8.8
10.9
13.8
15.4

5.2
8.5
10.1
12.9
14.9

4.2
7.0
8.2
11.0
14.0

Ratio of profits after Federal taxes (annual rate) to stockholders'
equity
All sizes
1 to 249
250 to 999
1,000 to 4,999
5,000 to 99,999 __
100 000 and over

14.4 .

15.6

12.0

15.6

17.6

14.8

13.6

10.4

9.6
12.8
14.0
14.8
14.4

10.4
13.2
14.0
15.2
16.4

4.0
7.2
10.0
11.2
13.6

9.6
12.8
13.2
14.8
17.2

19.2
18.8
16.4
17.2
17.6

14.4
14.8
15.6
15.2
14.4

13.6
13.2
13.2
14.0
14.0

9.1
9.7
8.8
10.0
11.0

Profits after Federal taxes in cents per dollar of sales
All sizes
1 to 249
250 to 999
1,000 to 4,999 — _ .
5 000 to 99,999
100,000 and over_.

6.5

7.1

6.2

7.4

7.6

6.1

5.8

4.7

2.6
4.2
5.2
6.6
7.8

2.6
4.4
5.2
6.9
8.6

1.1
2.7
4.2
5.8
8.1

2.7
4.4
5.2
7.0
. 9.2

4.5
6.0
5.9
7.4
8.9

3.3
4.5
5.2
6.0
7.0

3.2
4.0
4.4
5.6
6.9

2.2
3.2
3.2
4.3
5.8

Sources: Federal Trade Commission and Securities and Exchange Commission.

202

TABLE B-37.—Sources and uses of corporate funds, 1947-51
[Billions of dollars]
1947

Source or use of funds
Uses:
Plant an d equipment outlays —
Inventories (change in book value)
Change in customer receivables.
Cash and U. S. Government securities
Other current assets
.-

1048

16.2
7.1
7,6
1.2
-.1

18.0

32.0

Sources:
Internal:
Retained profits and depletion allowances _._
Depreciation allowances
,_ ..

Total uses

Total internal sources
External:
Change in trade debt
-_ Change in Federal income tax liability
Other current liabilities. _
Change in bank loans
Change in mortgages
Net new issues

_._

Total external sources
Total sources
Discrepancy (sources less uses) _ .

. _ _

4.2
4.0
1.9
.1

1949

1950

16.1
-4.3

16.6

7.5

1951»

21.7

10.0

—.2

5.0
.3

8.6
5.0
3.0
.5

28.2

14.1

39.4

38.8

11.6
5.2

12.8
6.2

9.1
70

12.9
7.5

8.0
85

16 8

19 0

16 1

20 4

16 5

4.6
2.3
1.0
2.6
.6
4.4

1.2
.8
(8)
1.1
.7

—2.9
-2.1
_ -i
-1.9

3.5
8.5
1.0

7.1
.3
2.5
.9

4 9

15 5

9 7

—1 4

20 4

32.3

28.7

14.7

40.8

39.8

—.3

—.5

— 6

—1.4

—1.0

—.5

1.0

58
23 3

* Excludes banks and insurance companies.
» Estimates based on incomplete data; by Council of Economic Advisers.
* Less than 50 million dollars.
Source: Department of Commerce estimates based on Securities and Exchange Commission and other
financial data (except as noted).

203

TABLE B-38.—International transactions of the United States, 1948-51
[Millions of dollars]
1951

Type of transaction

1948

1949

1950
First Second Third
Fourth
Total i quarter
quarter quarter quarter 1

Exports of goods and services:
Recorded goods
Other goods 2 __ __ __ -.
Total goods .
Services _ _
__
Income on investments
Total exports

_ _

12, 651
695

12, 052
285

10, 275
383

14, 888
573

3,334
80

4 018
73

3 686
135

3 850
285

13, 346
2,246
1 375

12, 337
2,232
1,405

10, 658
2,024
1 743

15, 461
2,750
2,003

3,414
565
396

4 091
721
471

3 821
744
511

4 135
720
625

16, 967

15, 974

14, 425

20, 214

4,375

5,283

5,076

5 480

Imports of goods and_ser vices:
Recorded goods
Other goods 2

7 124
698

6 622
444

8 852
463

11 204
649

3 032
185

2 980
153

2 492
139

2 700
' 172

Total goods
Services
Income on investments

7 822
2 162
284

7 066
2,184
353

9 315
2,376
437

11 853
2,893
417

3 217
612
86

3 133
706
99

2 631
856
93

2 872
719
139

_. ..

10 268

9,603

12, 128

15, 163

3 915

3 938

3 580

3 730

Surplus of exports of goods_and
services:
Recorded goods
Other goods 2

Total imports

5 527
—3

5 430
—159

1 423
—80

3 684
-76

302
—105

1 038
—80

1 194
—4

1 150
'l!3

Total goods
Services .
Income on investments _

5 524
84
1 091

5,271
48
1 052

1, 343
-352
1 306

3,608
—143
1 586

197
—47
310

958
15
372

1 190
—112
418

1 263
1
486

6 699

6 371

2 297

5 051

460

1 345

1 496

1 750

—855

—159

269

—10
16

—11
10

C3)
23

1,279
83

1, 102
27

1,092
-18

Total surplus of exports
Means of financing surplus of exports of goods and services:
Liquidation of gold and
dollar assets by foreign countries
Dollar disbursements (net) by:
International Monetary
Fund
International Bank
U. S. Government sources
(net):"
Grants and other unilateral transfers _
Long- and short-term loans _
U. S. private sources (net):
Remittances. -Long- and
short-term
capital 8

780

—60 —3, 645

-122

595

203
176

99
38

—20
37

4,157
886

5,321
647

4,120
164

4,508
151

1,035
59

678

522

481

412

112

110

856

589

1,316

750

249

284

215

Total means of financing
7,736
—1 037
Errors and omissions

7,156
—785

2,453
—156

5,699
-648

606
—146

1,582
—237

1,517
—21

1,994
—244

1
Estimates based on incomplete data; fourth quarter by Council of Economic Advisers.
2 Includes goods sold to or bought from other countries that have not been shipped from or into the United
States customs area, and other adjustments.
34 Less than $500,000.
For detail, see appendix table B-40.
s Excludes purchases or sales of obligations issued by the International Bank for Reconstruction and
Development.
Source: Department of Commerce (except as noted).

204

TABLE B--39.—United States exports and imports of goods and services, by area, 1948—51
[Billions of dollars, annual rates]
1951

Area

Exports of goods and services: 2
ERP countries
. _ _ _
ERP dependencies
Europe, except ERP countriesCanada and Newfoundland
Latin-4American republics
Other
Total exports
Imports of goods and services: 2
ERP countries
ERP dependencies
Europe, except ERP countriesCanada and Newfoundland- __
Latin-American
republics
Other 4

1948

1949

1950

First Second Third Fourth
Total i quarter
quarter quarter quarter *

5.89

5.39

.27
2.48
4.22
3.26

.21
2.59
3.66
3.21

.18
2.73
3.92
2.59

(3)
()
(3)

16 97

15 97

14 42

20 21

2.20

2.22

2.69

.85

.74

4.43

.90

.58

.71

.89

(3)
3

(3)
(3)

.24
2.04
3 08
1.98

.18
2.01
2 94
1.54

.23
2.44
3 56
2.32

()
(3)
(3)

10 27

9 60

12 13

15 16

3 69

3 17

.03
.45
1.14
1.28

.03
.58
.72
1.67

1 73
—.31
-.04
.29
.36

6.70

6.37

Exports of goods
and services to
sterling area 8
Imports of goods and services from
sterling area

2 67
1 93

Export5 surplus with sterling
area

.74

Total imports
Export surplus of goods and services: 2
ERP countries
ERP dependencies
Europe, except ERP countriesCanada and Newfoundland
Latin-American republics
Other*.
.__
Total export surplus

.11

.19

.27

(3)

(3)
(3)

(3)
(3)
(3)
(3)

5.48
.52
.29
3.18
4.57
3.46

7.16
.68
.38
3.92
5.12
3 87

6 45
.74
.32
3.44
5.34
4 02

17 50

21 13

20 30

3.38
1.30
.26
2.47
4 90
3.35

3.64
1.21
.26
2.80
4 18
3 66

3 48
1.13
.18
3.04
3 51
2 98

15 66

15 75

14 32

2.10
—.78
.03
.71
-.33
.11

3 52
- 53
.12
1.12
.94
.21

2 97
—.39
.14
.40
1.83
1.04

1.84

5.38

5.98

(3)
(3)

(3)
((3)3)
(3)

21 92
(3)
(3)

(3)
(3)
(3)
(3)

14 92

(3)
(3)

(3)
(3)
(3)
(3)

7.00

2.30

5.05

2.52

1 95

(3)

2 31

2 86

3 19

(3)

1.73

2.27

(3)

3.00

3 42

2.84

(3)

.79

-.32

(3)

-.69

-.56

.35

(3)

ADDENDUM

12 Estimates based on incomplete data; fourth quarter by Council of Economic Advisers.
Includes income on investments.
34 Not available.
6 Includes international institutions.
In 1950 and 195], includes "special category" exports sold for cash, but excludes all transactions under
the Mutual Defense Assistance Program.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (except as noted).

205

TABLE B-40.—U. S. Government grants, other unilateral transfers, and loans to foreign countries,
1948-51
[Millions of dollars]
1951

Type of aid

Unilateral payments:
Military-aid programs:
Mutual Defense Assistance Program
Greek-Turkish aid
Chinese aid
EGA programs:
European Recovery Program
Other
Army Civilian Supply Program *.
Technical Cooperation Administration
Philippine Rehabilitation Act.
Interim aid and Post-UNRRA
International Refugee Organization and other United Nations relief organizations
Other
--

1948

1949

1950

First Second Third Fourth
Total i quarter
quarter quarter quarter 1

349
71

171
44

516
62
5

1 397
96

3 730
' 92
1,082

2 719
114
500

1,468

(2)

322
3

(2)
(2)

454

(3)

(2)
(2)

435
1

(22)
()
(2)

(3)

595
26
81

651
21
127

539
40
70

(2)
(2)

3
4

5
4

(2)

7
166

(2)
(2)

1
4

(2)

130
627

203
2

117
107

104
157

84
122

(2)
(2)

14
41

7
47

6
32

(2)
(2)

Total unilateral payments. .. 4,362
Less: Unilateral receipts
205

5,585
264

4,295
175

(2)
(2)

1,087
52

1,319
40

1,132
30

(2)
(2)

4,157

5,321

4,120

4, 508

1,035

1,279

1,102

300
476
454

428
163

163
193

(2)
(2)

39
83

25
81

70
30

168

(2)

6
3
9

26
20
12

28
22
6

(2)

(2)
(2)

4
1

4
2

(22)
(2)
()

1,416
443

679
205

414
287

(2)
(2)

127
60

112
46

106
87

(22)
()

Equals: Net unilateral jpayments
1
Long-term loans and investments:
United Kingdom loan
European Recovery Program..
Export-Import Bank loans
Surplus property credits, including ship sales ._
Raw-material credits to occupied areas
United Nations building loan.
Other
Total long-term loans and
Investments
Less: Repayments
Equals: Net long-term loans
and investments
Short-term loans (net)
Total net unilateral payments, loans and investments

(2)

1,092
(22)
()
(2)

973

474

127

134

-18

-87

173

-8

5,043

5,968

4,284

4,659

1,094

1 362

1 129

1,074

1
2

Estimates based on incomplete data; fourth quarter by Council of Economic Advisers.
Not available.
*4 Less than $500,000.
Includes disbursements in Germany administered by EGA from funds appropriated under the Army
Civilian Supply Program.
Source: Department of Commerce (except as noted).

206

TABLE B-41.—United States merchandise exports, including reexports, by area, 1936-38 quarterly
average and 1947—51

Period

Other
Total exports in- Canada J Western
Hemicluding
reexports
sphere

ERP
countries 2

Other
Europe

Asia*

Australia
and
Africa
Oceania

Millions of dollars
Quarterly average:
1936-38
1947
1948
1949
1950'
1951 3

742
3,835
3,163
3,013
2,569
4
3, 722

(5)

115
528
486
490
504

136
1,017
841
725
703

282
1,324
1,046
1,019
720

(5)

31
118
49
41
35
(5)

122
562
507
534
369

(5)

23
80
38
49
36

(5)

(fi)

32
205
196
155
91

1950: First quarter
Second quarter _ _
Third quarter ».3 .
Fourth quarter _

2,365
2,510
2,451
2,949

397
530
505
583

640
668
706
798

776
762
587
756

33
35
37
34

399
381
334
364

37
38
30
38

84
96
79
103

1951: First quarter «...
Second quarter 3.
Third quarter 3. _
Fourth quarter 3_

3,334
4,018
3,686
<3,850

623
756
606
(•)

867
960
979
(5)

814
1,028
871
«

62
82
62

470
549
516
(')

44
45
66

120
156
173
(5)

(8)

(•)

Percentage of total
Quarterly average:
1936-38
1947
1948
1949
I9608

100
100
100
100
100

15.5
13.8
15.4
16.3
19.6

18.3
26.5
26.6
24.1
27.4

38.0
34.5
33.1
33.8
28.0

4.2
3.1
1.5
1.4
1.4

16.4
14.7
16.0
17.7
14.4

3.1
2.1
1.2
1.6
1.4

4.3
5.3
6.2
5.1
3.5

1950: First quarter
Second quarter. _
Third quarter ».3 _
Fourth quarter .

100
100
100
100

16.8
21.1
20.6
19.8

27.1
26.6
28.8
27.1

32.8
30.4
23.9
25.6

1.4
1.4
1.5
1.2

16.9
15.2
13.6
12.3

.6
.5
.2
.3

3.8
3.2
3.5

1951: First quarter ».„
Second quarter 3 _
Third quarter 3 _ .

100
100
100

18.7
18.8
16.4

26.0
23.9
26.6

24.4
25.6
23.6

1.9
2.0
1.7

14.1
13.7
14.0

.3
.1
.8

3.6
3.9
4.7

3. 6

1 Includes Newfoundland and Labrador.
2 Turkey is included with countries participating in the European Recovery Program and excluded from
Asia. Exports to Germany are included with those of ERP countries and, in the postwar period, relate
almost
wholly to exports to the 3 western zones.
3
Data by area exclude, while total exports include, "special category" exports. For this reason, exports
by area will not add to total exports in these periods.
* Estimates based upon incomplete data; fourth quarter by Council of Economic Advisers,
s Not available.
NOTE.—Data in this table cover all merchandise, including reexports, shipped from the United States
customs area to foreign countries, including, in 1947 to 1951, goods destined to United States Armed Forces
abroad for distribution in occupied areas as civilian supplies.
Detail will not necessarily add to totals because of rounding. See also footnote 3.
Source: Department of Commerce (except as noted).

207
977891—52

TABLE B-42.—Indexes of quantity and unit value of United States domestic merchandise exports,
by economic class,, 1936—38 quarterly average and 1947—51
[1936-38=100]
Total
domestic
exports

Period

Crude
materials

ManuCrude
factured
foodstuffs ! foodstuffs
*

Semimanufactures

Finished
manufactures

Quantity indexes
Quarterly average:
1936-38
1947.
1948
1949
„
1950 2
1951
_ 1950' First quarter
Second quarter
Third quarter
Fourth quarter

1951: First quarter ._
Second quarter
Third quarter 2
Fourth quarter ._

100
275
214
219
193
246

100
123
100
126
128
(3)

100
397
362
435
287
(3)

100
478
350
297
237
(3)

100
203
144
150
127
(3)

100
332
257
250
225
(3)

181
194
184
209

125
143
112
128

284
270
264
325

213
250
224
230

121
126
125
135

207
220
220
251

223
258
243
258

112
126
116

456
583
434

247
280
267

131
157
165

278
317
304

(3)

(»)

(3)

Unit value indexes
Quarterly average:
1936-38
1947
1948
1949
1950
19512

100
188
200
186
180
205

1950: First quarter __ .
Second quarter
. _
Third quarter
Fourth quarter

177
175
180
191

206
212
226
215

196
190
192
196

151
142
162
169

164
166
168
183

179
175
177
187

1951: First quarter
Second quarter
Third quarter
Fourth quarter

202
210
206
202

263
275
249
(3) .

203
219
221

185
203
192

203
212
211

195
201
200

._.
2

(3)

100
195
223
212
220

(3)

100
248
255
225
193

(3)

100
218
223
177
151

(3)

100
169
184
174
170

(3)

100
182
193
184
179

1 Export indexes of crude and manufactured foodstuffs, particularly those of unit value in 1950, are influenced by sales of large quantities of food products at prices considerably below market quotations. Such
exports include sales from Government-owned surplus and shipments on which subsidies were paid by the
Department
of Agriculture.
2
Estimates based on incomplete data; fourth quarter by Council of Economic Advisers.
3
Not available.
NOTE.—The indexes of quantity are a measure of the volume of trade after the influence on value of changes
in average prices has been eliminated. The indexes of unit value provide a measure of change in the average
prices at which trade transactions are reported in official foreign trade statistics, including change in average prices that result from changes in the commodity composition of trade. The indexes for 1947 to 1950
are based on data which include goods destined to the United States Armed Forces abroad for distribution
to civilians in occupied areas.
Source: Department of Commerce (except as noted).

208

TABLE B-43.—United States general merchandise imports, by area, 7936-38 quarterly average and
1947-51
Total
general
imports

Period

Other
Canada 1 Western
Hemisphere

ERP
coun-2
tries

Other Asia 2
Europe

Australia
and
Africa
Oceania

Millions of dollars
Quarterly average:
1936-38
1947 .
1948
1949 .. ..
1950
19513
.
.

622
1,439
1,781
1,656
2,213
2,801

88
282
398
388
490
(4)

143
568
627
611
776
(4)

152
174
244
211
315
(4)

30
45
49
35
47
(4)

183
249
324
296
409
(4)

1950: First quarter
Second quarter
Third quarter
Fourth quarter

1, 889
1, 931
2,388
2,644

404
478
504
575

727
645
913
818

240
243
323
455

45
45
49
50

302
363
417
555

49
52
47
60

1951: First quarter
Second quarter
Third quarter
Fourth quarter s

3,032
2,980
2, 492
2,700

529
585
552
I4)

1,084
894
739
<.4)

513
514
457

63
57
39
0)

592
545
480
(4)

S3
184
119

(4>

(4)

10
39
41
31
52

17
82
98
84
123

122
103
136
132

•

(4)

169
201
106

Percentage of total
Quarterly average:
1936-38
1947
1948 1949
1950 _

1950: First quarter. _
Second quarter
Third quarter
Fourth quarter
1951: First quarter
Second quarter
Third quarter

100
100
100
100
100

14.1
19.6
22.3
23.4
22.1

23.0
39.5
35.2
36.9
35.1

24.4
12.1
13.7
12.7
14.2

4.8
3.1
2.8
2.1
2.1

29.4
17.3
18.2
17.9
18.5

1.6
2.7
2.3
1.9
2.3

2.7
5.7
5.5
5.1
5.6

100
100
100
100

21.4
24.8
21.1
21.7

38.5
33.4
38.2
30.9

12.7
12.6
13.5
17.2

2.4
2.3
2.1
1.9

16.0
18.8
17.5
21.0

2.6
2.7
2.0
2.3

6.5
5.3
5.7
5.0

100
100
100

17.4
19.6
22.2

35.8
30.0
29.7

16.9
17.2
18.3

2.1
1.9
1.6

19.5
18.3
19.3

2.7
6.2
4.8

5.6
6.7
4.3

1 Includes Newfoundland and Labrador.
2 Turkey is included with countries participating in the European Recovery Program and excluded from
Asia. Imports from Germany are included with those of ERP countries and, in the postwar period, relate
almost
wholly to imports from the three western zones.
3
Estimates based on incomplete data; fourth quarter by Council of Economic Advisers.
4
Not available.
NOTE.—Data in this table cover all merchandise received in theTUmted States customs area from foreign
countries. General imports include merchandise entered immediately upon arrival into merchandising
channels, plus entries into bonded customs warehouses.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (except as noted).

209

TABLE B—44.—Indexes of quantity and unit value of United States merchandise imports foi
sumption, by economic class, 1936—38 quarterly average and 1947—51
[1936-38=100]
Total
imports for
consumption

Period

Crude
materials

Crude
foodstuffs

ManufacFinished
tured food- Semimanumanufacfactures
stuffs
tures

Quantity indexes
Quarterly average:
1936-38
1947
1948
- . --1949
1950
19511

100
108
123
120
146
148

1950: First quarter
Second quarter
Third quarter __ _
Fourth quarter

137
136
154
158

152
140
155
161

121
94
125
111

98
113
143
113

189
213
220
247

107
107
119
125
147

1951: First quarter
Second quarter
Third quarter
Fourth quarter *

163
147
131
151

161
144
136

149
108
92

126
129
120

227
215
182

141
141
126

100
129
139
125
152
0)

(2)

- (2)

(2)

100
96
109
119
113

(2)

100
83
91
97
117

(2)

100
130
149
143
219

(2)

100
84
103
101
125

(*)

Unit value indexes
Quarterly average:
1936-38
1947
1948
1949
1950
1951 i

. .

-_
_

_ _

100
213
235
224
243
304

(2)

100
180
203
195
214

1950: First quarter
Second quarter
Third quarter
Fourth quarter

223
229
248
270

185
194
215
255

1951: First quarter
Second quarter
Third quarter
Fourth quarter *

295
313
312
297

302
340
316
(*)

(2)

100
311
343
330
454

(2)

410
433
485
491

()

508
521
516

100
208
212
202
203

(2)

199
199
203
210

()

214
224
224

100
191
217
198
193

(2)

245
248
253
262

176
179
197
220

()

234
242
250

100
245
266
258
252

278
288
313

()

* Estimates based on incomplete data; fourth quarter by Council of Economic Advise rs.
2 Not available.
NOTE.—The indexes of quantity are a measure of the volume of trade after the influence on value of changes
in average prices has been eliminated. The indexes of unit value provide a measure of change in the average
prices at which trade transactions are reported in official foreign trade statistics, including changes in average prices that result from changes in the commodity composition of trade.
Source: Department of Commerce (except as noted).

210

TABLE B-45.—United States exports of selected capital goods to ERP countries and underdeveloped
areas, 1950-51
[Millions of dollars]
1951

1950

Goods and area

First
half

Steel mill products:
ERP countries 2
Latin American republics
Asia 3
_
Africa
_

_
_

Electrical machinery
and apparatus:3
ERP countries 2 —_
Latin3 American republics
Asia
_
_
_
Africa
_

Second
half

Second
halfi

First
half

52
75
42
10

40
104
35

42
106
36
11

34
78
26

33
115
24

45
124
34
11

Engine, turbines, and parts, including locomotives:
ERP countries*-Latin American republics
Asia 2.
Africa
_
_

8
32
20
4

17
48
9
6

Construction, excavating, and conveying machinery:
ERP countries 2
.
Latin American republics
...•
Asia 2.
___
_
_
Africa..
_

18
30
10

18
44
15
11

Mining, well, and pumping machinery:
ERP countries 2__
Latin American republics
Asia 2...
_
Africa..
_
_
Machine tools:3
ERP countries 2
_
Latin American republics
Asia 2
Africa,
_

___.

(*)

Other metal working
machinery:
ERP countries 2
Latin American republics
Asia 2
Africa...
Agricultural machinery
and implements:
ERP countries a
Latin American republics
Asia 2
Africa

15
27
7
5

10
45
10
7

26
3
2

21
3
1
C4)

40
2
5

7
15
3
5

__._

17
29
7
14

„

15
8

Miscellaneous machinery, excluding aircraft and transportation equipment:
ERP countries 2
_
Latin2 American republics
Asia
...
..
Africa

87
78
25

Tractors, parts, and accessories: *
ERP countries 2
Latin American republics
Asia 2
Africa.
Trucks, busses, and2 chasses (new): *
ERP countries
Latin American republics
Asia 2 _ _ . _
Africa

25
4
7
11
45
11
18

80
102
24

14
116
22
16

13
127

124
29
13

129
31
14

* Estimates based on data through September.
Turkey is included in ERP countries and excluded from Asia.
3 Includes "special category" commodities in first half of 1950, but excludes them thereafter.
< Less than $500,000.
Source: Department of Commerce.
2

211

34
9
4
1

TABLE B-46.—Changes in selected economic series since 1939 and 1950 and during 1951
Percentage
change '

1939=100

Source:
Appendix
table
No.

Second
half 2

1950
to
19512

1951, first
half to
1951,
second
half 2

1951

Economic series
1950

Total 2 First
half

B-l... Gross national product
Personal consumption expenditures
Gross private domestic investment
Government purchases of goods and
services

310
287
494

358
303
594

354
304
634

362
302
554

15.6
5.6
20.2

2.1
-.6
-12.7

324

485

434

535

49.4

23.2

B-3... Gross national product in 1951 prices
Personal consumption expenditures
Gross private domestic investment
Government purchases of goods and
services
_

168
160
243

182
158
272

181
159
292

184
157
253

8.5
-1.5
1-2.0

1.9
-1.1
-13.3

159

220

198

243

38.6

23.0

386
379

15. 5
16.2

3.0
3.8

B-6... National income
Compensation of employees

330
321

381
373

375
366

B-9___ Personal income
Disposable personal income. _Personal net saving

310
291
396

346
317
685

340
312
530

352
323
837

11.8
9.1
72.9

3.5
3.2
58.0

251
141

269
141

266
139

272
142

7.1
-.1

2.3
1.7

116
114
131
78
145
33

(3)
114
133
73
149
20

(3)
113
132
70
148
22

(3)
115
135
77
151
18

(3)
-.3
1.7
-6.0
2.9
-40.2

._. _ _

249
239
251
243

271
262
268
270

270
261
268
261

272
264
268
280

8.9
9.8
6.6
11.2

.7
1.4
.1
7.3

. _
_.
B-16.. Industrial production
Durable manufactures .
Nondurable manufactures - - _ . _ . _ Minerals
Agricultural production

183
217
172
140
130

201
250
178
156
131

204
251
183
153
(3)

199'
250
173
158
(3)

9.5
15.2
3.7
11.5
.7

-2.3
-.7
-5.0
3.1
C3)

B-18-. New construction
Private
- _ __ .
Residential (nonfarm)
Nonresidential _ _
Other private
Public

.__ . .

340
474
470
481
478
187

364
474
407
624
542
237

375
499
443
662
521
231

354
450
371
586
562
243

7.0
.2
-13.4
29.9
13.3
27.1

-5.6
-9.9
-16.3
-11.5
7.9
5.1

B-19-. Business expenditures for plant and equipment-- _ _ Manufacturing

342
386

444
573

413
510

474
637

29.7
48.7

14.6
24.8

B-20.. Inventories, end of period
Manufacturing
___ .
Wholesale trade
Retail trade

301
290
308
322

349
362
328
333

346
340
333
366

349
3C2
328
333

15.6
24.7
6.6
3.5

.6
6.3
-1.4
-9.2

362
373
366
342

405
435
407
359

411
442
413
364

397
426
400
353

11.9
16.5
11.1
5.1

-3.3
-3.5
-3.2
-3.1

173
215
187
126
188

186
239
203
130
208

185
237
201
129
208

188
241
205
132
208

7.8
11.2
8.8
3.8
10.9

1.4
1.5
2.0
2.1
.1

209
261
236
188

234
301
265
208

237
307
264
211

231
295
267
206

11.8
15.3
12.5
10.6

-2.4
-3.8
1.0
-2.5

B-10-. Per capita disposable personal income:
Current prices
1951 prices
B-ll.. Labor force, including armed forces
Civilian labor force
Employment
Agricultural
_
Nonagricultural
Unemployment
B-15.. Average gross weekly earnings:
M anuf actur ing
Durable goods . . Nondurable goods. . _
Building construction

Sales
Manufacturing
Wholesale trade
Retail trade

- _ ._ ._
_ ._
._ _

_ _ ..

B-22.. Consumers' price index: All items
Food
Apparel
_ _ _
Rent
Housefurnishings
_ ._ _ _

__.
___

B-23.. Wholesale price index: All commodities
Farm products
Foods
Other than farm products and foods
See footnotes at end of table.

212

(3)

2.0
2.7
9.2
1.9
-18.0

TABLE B-46.—Changes in selected economic series since 1939 and 1950 and during 1951—Continued

Source:
Appendix
table
No.

Percentage
change l

1939=100

1951

Economic series

1950

Total 2

First
half

Second
half 2

1950
to
19512

1951, first
half to
1951,
second
half 2
-3. a

B-24_. Prices received by farmers
Prices paid by farmers (including interest,
taxes, and wage rates)

269

318

322

312

11.8

209

230

229

232

10.2

1.4

B-26-. Consumer credit outstanding, end of periodInstalment credit

286
304

290
301

274
293

290
301

1.5
- 1.2

5.92.7

B-27.. Loans and investments of all commercial
banks, end of period
Loans _ _
Investments in U. S. Government
securities

311
303

329
340

310
319

329
340

5.6
11.9

6.2
6.6

265

266

250

266

6.3

B-30.. Gross public debt and guaranteed issues,
end of period
__ _. . .

539

545

536

545

1.0

1.6-

B-32.. Corporate profits:
Profits before tax
Profits after tax
Dividend payments
Undistributed profits

637
1520
242
1133

689
1207
250
717

748
1307
242
867

631
1107
258
567

8.2
-20.6
3.3
-36.8

-15.6
-15. a
6.5
-34.6

B-41.. Merchandise exports, including reexports ..

<346

<502

M95

4508

44.9

2.5-

B-43-. General merchandise imports

*356

4450

4483

4417

26.6

-13. 6

1
Changes are computed from data as reported and therefore may differ slightly from changes computed
from the indexes shown here.
23 Estimates based on incomplete data.
Not available.
4
1936-38 average =100.

213

Index to the Annual Economic Review
Including references to charts and text tables in the Annual Economic
Review and the Economic Report of the President
(For additional tabular material, see Appendixes A and B)

Agriculture:
Pagt
Production
51,112
Labor
52, 107
Chart 8.—Civilian labor force
53
Prices
56,144
Price supports
112
Allocations of scarce materials (see also Materials):
Policy and procedures
100, 102,115
International
128
Aluminum. (See Materials.)
Atomic energy
110
Automobile production and employment (see also Durable goods)
54,114,118
Banks. (See Credit.)
Capacity expansion:
Chart 20.—New plant and equipment outlays in selected durable manufacturing industries
78
Chart 27.—New plant and equipment outlays in selected nondurable manufacturing industries
79
Programs
77,108
Chart 2.—Growth in basic capacity and production
5
Table 5.—Expansion of capacity or output of selected industries
77
Table 6.—Progress on facilities projects aided by tax amortization
80
Table 14.—Estimated plant and equipment expenditures in selected
areas of programmed or Government-aided expansion
109
Longer-run problem
149
Civilian economic strength, maintenance
41
Chart 1.—Building our strength: gross national product in 1951 prices
3
Components, control of distribution
102
Conservation. (See Natural resource development; Materials.)
Construction (see also Capacity expansion; Housing):
Developments in 1951
80
Chart 5.—Economic indicators: changes from 1950 to 1951
27
Chart 19.—Business investment
75
Chart 22.—Construction
81
Curtailment
80, 98,102, 111
Chart 28.—Metals supply and requirements for civilian use
99
Public
93,109
Table 13.—New public construction expenditures for major development programs
94
Consumption expenditures
72
Chart 3.—Gains in living standards
7
Chart 16.—Personal income, spending, and saving
70
Chart 18.—Personal consumption expenditures for durable goods
72

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Consumer goods, outlook
117
Chart 31.—Output of selected consumer durable goods
117
Consumers' prices
59, 145
Table 2.—Changes in consumers'] prices
60
Chart 77.—Consumers' prices
61
Chart 36.—Changes in personal assets and prices
138
Controlled Materials Plan
102
Copper. (See Materials.)
Corporate
finance
84
Chart 23.—Sources and uses of corporate funds
83
Corporate profits
64, 84
Chart 5.—Economic indicators: changes from 1950 to 1951
27
Chart 13.—Corporate profits
65
Credit:
Developments in 1951
66
Chart 14.—Bank loans and investments
67
Chart 15.—Money supply
68
Table 3.—Factors changing the volume of the privately-held money
supply
69
Policy
141-144
Debt, public. (See Government finance.)
Defense. (See Security.)
Defense Housing and Community Facilities and Services Act
108
Defense Production Act, amendments
144
Deficits. (See Government finance.)
Dislocations of business
54, 114
Dispersal, local and regional
Ill
Durable goods:
Production in 1951
49
Chart 7.—Production
50
Consumers'
72,117
Chart 3.—Gains in living standards
7
Chart 4.—Production of consumer durable goods contrasted with first half
of 1950
11
Chart 18.—Personal consumption expenditures for durable goods
72
Chart 31.—Output of selected consumer durable goods
117
Producers'
75, 111
Chart 19.—Business investment
75
Capacity expansion
76
Chart 20.—New plant and equipment outlays in selected durable manufacturing industries
78
Major required adjustments
.
100
Economy, Government. (See Government finance.)
Education
94, 120
Electric power
51, 77, 80, 108-110
Chart 2.—Growth in basic capacity and production
5
Employment (see also Manpower; Unemployment)
52
Europe, Western
122
Chart 33.—Industrial production in Western Europe
123
Table 16.—Foreign trade of Western Europe with rest of world
124
Table 17.—Available resources in Western Europe
124
Expansion, programmed. (See Capacity expansion.)

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Exports, U. S., in 1951
85
Chart 24.—Exports and imports of goods and services
85
Table 7.—United States exports and imports of goods and services
86
Export surplus, financing in 1951
88
Farm. (See Agriculture.)
Federal Reserve policy
141-144
Finance. (See Corporate finance; Government finance.)
Fiscal policy. (See Government finance.)
Foreign aid
88, 121, 125
Table 15.—Foreign aid appropriated under Mutual Security Act of 1951
121
Table 78.—Net new funds made available to underdeveloped areas for economic assistance by United States Government and International Bank. 127
Foreign investment, private
88, 105, 126
Government finance:
Federal, developments in 1951
88
Table 9.—Summary of Federal fiscal operations
89
National security programs (see also Security)
47, 92
Public debt operations
89
Chart 25.—The public debt. ,
90
Consolidated cash accounts
90
Table 10.—Government cash receipts from and payments to the
public
91
Table 77.—Federal cash payments to the public by function
91
Table 72.—Federal cash payments to the public by type of recipient
and transaction
92
Chart 26.—Federal cash receipts from and payments to the public. . .
93
Nonmilitary construction programs
93
Table 73.—New public construction expenditures for major development programs
94
Federal programs,
financing
131
Budget economies
131
Recent tax legislation
131
Nature of financing problem ahead
132
Chart 35.—Federal budget expenditures
133
Longer-run budget outlook
134
Pay-as-we-go tax policy
134
Sources of additional revenues
135
Effects of temporary deficits
». . . .
136
State and local government
finance
94, 136
Hard goods. (See Durable goods.)
Health
94, 120
Highways
94, 110
Hours, working
52, 106
Housing
Ill, 118
Chart 28.—Metals supply and requirements for civilan use
99
Chart 32.—New housing starts
,
119
Defense housing
107, 119
Import barriers, U. S
106, 126
Imports, U. S
86, 105
Chart 24.—Exports and imports of goods and services
85
Table 7.—United States exports and imports of goods and services
86
Table 8.—United States imports of selected metals
87

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Income, personal
69
Chart 3.—Gains in living standards
7
Chart 5.—Economic indicators: changes from 1950 to 1951
27
Chart 16.—Personal income, spending, and saving
70
Chart 17.—Per capita disposable income
71
Distribution
71
Outlook
137
Industrial production, developments in 1951
49
Chart 7.—Production
50
Inflationary pressures (see also Stabilization):
and production
103
The problem abroad
130
Chart 34.—Wholesale prices in selected countries
129
Outlook
137
International allocation of materials
128
International economic purposes of the United States
43, 121
International transactions of the United States (see also Exports; Imports; Foreign
aid)
84
Inventories:
Developments in 1951
82
Chart 19.—Business investment
75
Chart 23.—Sources and uses of corporate funds
83
Scarce materials
103
and stabilization
137, 139
Investment (see also Capacity expansion; Construction; Inventories):
Developments in 1951
74
Chart 19.—Business investment
75
Chart 20.—New plant and equipment outlays in selected durable manufacturing industries
78
Chart 21.—New plant and equipment outlays in selected nondurable
manufacturing industries
79
Chart 22.—Construction
81
Chart 23.—Sources and uses of corporate funds
83
Investment abroad, private
88, 105, 127
Public investment
93, 109
Table 13.—New public construction expenditures for major development programs
94
Government policies
108
Restrictions on nonessential investment
Ill
Labor force, shortages, supply. (See Manpower; Unemployment.)
Lower priced lines of merchandise
118
Manpower (see also Dislocations of business; Unemployment):
Labor force developments in 1951
52
Chart 5.—Economic indicators: changes from 1950 to 1951
, 27
Chart 8.—Civilian labor force
53
Manpower problems, outlook, policies
106
Materials, scarce (see also Allocations; Capacity expansion)
97-102, 105-106
Table 8.—United States imports of selected metals
87
Chart 28.—Metals supply and requirements for civilian use
99
Chart 29.—Uses of steel
101
Metals. (See Materials.)
Migrant labor
107
Minerals (see also Materials):
Production in 1951
51

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Money supply
68
Chart 15.—Money supply
68
Table 3.—Factors changing the volume of the privately-held money supply. .
69
Mutual Security Act of 1951..
121
Table 15.—Foreign aid appropriated under Mutual Security Act of 1951.... 121
Natural resource development
105,109,115
Nondurable goods:
Production in 1951
49
Chart 3.—Gains in living standards
7
Chart 7.—Production
50
Capacity expansion
76
Chart 21.—New plant and equipment outlays in selected nondurable
manufacturing industries. . . _ _
79
Output. (See Production).
Planning. (See Programming).
Plant and equipment. (See Capacity expansion; Investment.)
President's Materials Policy Commission
106
Price controls
144
Price incentives for minerals production
105
Price supports, farm
112
Prices, developments in 1951
55
Chart 5.—Economic indicators: changes from 1950 to 1951
27
Wholesale
55
Chart 9.—Wholesale prices
56
Table 1.—Changes in wholesale prices
57
Chart 10.—Wholesale prices of industrial products
58
Consumers'
59, 145
Table 2.—Changes in consumers' prices
60
Chart 11.—Consumers' prices
61
Chart 36.—Changes in personal assets and prices
138
Prices in other countries
130
Chart 34.—Wholesale prices in selected countries
129
Pricing standards
145
Procurement, and small business
116
Production (see also Agriculture):
Developments in 1951
49
Chart 5.—Economic indicators: changes from 1950 to 1951
27
Chart 7.—Production
50
Problems and policy of increasing production
40, 103
and inflation
103
Factors limiting increase
104
Objective for 1952
113
Chart 1.—Building our strength: gross national product in 1951 prices. .
3
Chart 2.—Growth in basic capacity and production
5
Chart 30.—Gross national product; expenditures in 1951 prices.
Productivity:
and inflation
103
and expansion of production
106
and wage stabilization
147
Profits. (See Corporate profits.)
Programming
43
Public investment
93, 109
Table 13.—New public construction expenditures for major development
programs
94

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Public participation in security program
44
Regional considerations and problems
111,114
Research, surveys, and development projects related to resources
110
Saving, personal:
Developments in 1951
73
Chart 76.—Personal income, spending, and saving
70
Table 4.—Liquid and total personal saving
74
Outlook
137
Chart 36.—Changes in personal assets and prices
t$$
Security, national, programs:
Statement of economic purpose related thereto
39
Developments in 1951
47
Program now proposed
95
Chart 6.—National security expenditures for goods and services in 1951
prices
48
Chart 27.—The security program: expenditures for goods and services in
1951 prices
96
Chart 35.—Federal budget expenditures
133
Speed of the build-up
97
Services, output in 1951
52
Small business
115
Social security and welfare programs
121
Soft goods. (See Nondurable goods.)
Stabilization (see also Inflationary pressures)
137
World aspects
130
Relation of various stabilization policies
140
Longer-range problem
148
State and local government finance
94,136
Steel. (See Materials.)
Steel prices and wages
146
Stockpiling
48, 100
Strikes
54
Tariffs, U. S
106
Tax amortization
76
'Table 6.—Progress on facilities projects aided by tax amortization
80
Taxation. (See Government finance.)
Technological research on conservation of scarce materials
106
Underdeveloped countries (see also Foreign aid; Foreign investment)
126
Table 18.—Net new funds made available to underdeveloped areas for
economic assistance by United States Government and International Bank. 127
Table 19.—Output of selected commodities in certain underdeveloped areas. . 128
Unemployment:
Developments in 1951
54
Chart 8.—Civilian labor force
53
Defense unemployment
54,114
Vocational programs
107
Voluntary Credit Restraint Program
137, 141
Wage negotiations in 1951
63
Wage stabilization
147
Wages, developments in 1951
61
Chart 12.—Average earnings in manufacturing industries
62
Work stoppages
54

U. S. GOVERNMENT PRINTING OFFICE: 19S2

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Full text of Economic Report of the President : January 1952

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