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Mid

r Economic Report
of the President

TRANSMITTED TO THE CONGRESS




July 1948




THE MIDYEAR ECONOMIC
REPORT OF THE PRESIDENT
To the Congress, July 30, 1948

Together with a report

THE ECONOMIC SITUATION
AT MIDYEAR 1948
by the
COUNCIL OF ECONOMIC ADVISERS

UNITED STATES GOVERNMENT PRINTING OFFICE




WASHINGTON: 1948




LETTER OF TRANSMITTAL
T H E WHITE HOUSE,

Washington, D. C, July 30, 1948.
The Honorable the PRESIDENT OF THE SENATE,
The Honorable the SPEAKER OF THE HOUSE OF REPRESENTATIVES.

SIRS: I am presenting herewith a Midyear Economic Report to the
Congress. This is supplementary to the Economic Report of the President
of January 14, 1948, and is transmitted in accordance with section 3 (b)
of 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 Economic
Situation at Midyear 1948, prepared for me by the Council of Economic
Advisers in accordance with section 4 (c) (2) of the Employment Act of
1946.
Respectfully,




III




Contents
T H E MIDYEAR ECONOMIC REPORT OF THE PRESIDENT.

A time for action.
The economic situation in summary.
Recommended program.
T H E ECONOMIC SITUATION AT MIDYEAR

by the Council of Economic Advisers).




1948 (a report to the President




To the Congress of the United States:
N January 14, 1948, I transmitted to the Congress my annual Economic Report under the Employment Act of 1946. At the present
stage in economic affairs it is again desirable that the Congress and the
country be presented with an up-to-date survey of the economic situation,
the difficulties it presents, and the solutions called for. This Midyear Economic Report is transmitted to the Congress for that purpose.

O

A Time for Action

I

N the years since the end of hostilities in World War II, the American
economy has offered an impressive display of inherent strength and elasticity. More than 10,000,000 veterans have been smoothly absorbed into
the activities of the business world. Month after month, the labor force
has been employed at a level which but few were willing to forecast. In
spite of high living costs, our people continue to enjoy high standards
of living. The income of American consumers, and the resources of
American business, furnish the basis for sustained markets. Our financial
condition is strong. A national debt of tremendous size has been managed
so skillfully that we are prone to treat too lightly the problems which it
still offers.
But our present prosperity should not blind us to the growing threats
to our well-being. Repeatedly, I have called attention to the developing
inflationary conditions which endanger both our domestic strength and
our place in world affairs. In addition, recent events have forced us into
a preparedness program adding to the strains upon our home economy,
and making it even more imperative that we act with courage and dispatch.
In my recent message to *he Congress upon the opening of the special
session, I again advised the Congress of the dangers that we face, and made
recommendations to meet them.
I must emphasize that the course of inflation does not run according
to any set schedule. Until the very eve of an economic collapse many
people are apt to grow more and more confident about the soundness of the
economy and the indefinite continuance of the boom. It may not be true
that "a boom is always followed by a bust," as many students of business




1

affairs frequently say. But it would be reckless to assume that the bust will
not happen if we neglect action to control the boom.
For 2 years, it has been asserted that if matters were left alone there would
be so great an increase in production that it would take care of prices.
Increasing the supply of goods is, indeed, to be sought through every practicable means. But, historically, no important inflation has been cured in
that manner. Nor has this one, despite the fact that every factor of high
profits, heavy market demand, and large funds available for investment
has been favorable to the expansion of production.
The policy proclaimed in the Employment Act requires us to devise and
adopt positive measures to stop this inflation and secure relative stabilization. It is not too late for preventive measures, and we are not yet'forced
by the tragic consequences of depression to adopt measures which would
interfere with our free economy far more than would any or all of the
measures I have proposed. I realize that the anti-inflationary program I
have offered will impede some business plans, will curb some profit opportunities, and may limit some wage advances. It is of the very essence of
a plan to counteract inflation that this be done. All groups will ultimately
benefit when it is done.

The Economic Situation in
Summary

T

HE recommendations that I have made for dealing with inflation
are based upon a candid look at the whole economic situation as it
has developed over the past 6 months, and upon a careful analysis of where
this situation may lead us if we do not act in time. Below I summarize
what seem to me to be the points of greatest significance in this situation
and this analysis. A more detailed examination of the facts, and a more
extended analysis, is contained in a report on The Economic Situation
at Midyear 1948, prepared for me by the Council of Economic Advisers,
which I am transmitting to the Congress along with this Midyear Economic
Report.
Employment in the first half of this year ran continuously above the
level of a year ago. Some 850,000 workers were added to the labor force,
yet unemployment in June was only 2.2 million—400,000 less than a year
earlier. June civilian employment set a new record of 61.3 million.
Industrial production reached a new postwar peak in February and, after
the work stoppage in coal mining, approached it again in June. Improved




industrial relations and high business confidence reinforced by increased
Government commitments for foreign aid and defense give promise of continuing high-level output for the rest of the year.
Agricultural production ran below the level of the first half of last year
because smaller numbers of livestock and tight feed supplies have reduced
the output of most livestock products. At midyear, our second largest wheat
crop was being harvested, and generally favorable crop reports were highlighted by an indicated production of over 3.3 billion bushels of corn—a
new record. While such a crop could not remedy the meat shortage during
the rest of this year, it would provide the basis for more ample supplies of
livestock products in 1949 and thereafter.
Gross national product reached a new high of 246.5 billion dollars per
year during the first half of 1948, reflecting some increase in production but
mostly the rise in prices.
Consumer income ran at an annual rate of about 208 billion dollars, compared with 195 billion in 1947. Consumer income after taxes increased
from a rate of 174 billion dollars to a rate of 186 billion.
Consumer expenditure, as a result of some buyer hesitation in the first
quarter, increased less than disposable income, leaving a small increase in
net consumer saving.
The distribution of income, according to the most recent data, has changed
but little since 1946. A survey of families, however, showed half the
Nation's consumer spending units falling substantially behind in the race
of incomes with living costs during 1947. One-fourth of the family units
spent more than they earned. Low-income people were spending past
savings predominantly for current expenses, higher-income people more
often spending theirs for durable goods or converting them into residential
or business investments.
Consumer credit continued to expand during the first half of 1948.
Business investment took a larger share of the national output in the
first half of 1948 than during 1947. Equipment outlays have been exceptionally high since the war; plant construction expenditures have increased
less strikingly. Present indications are that such outlays will continue
high throughout the rest of the year. Nonfarm inventories increased markedly during the first quarter of the year, when sales lagged, but leveled
off in the second quarter as sales picked up.
Profits exceeded last year's average, reflecting high prices for a high
volume of output. First quarter data, however, indicated a drop in profits
of small manufacturing firms.
Residential construction is expected to increase the total supply of
dwelling units by more than a million during 1948. This high output has




been accompanied by an increase in costs that is outrunning consumers'
ability to pay for the housing they need.
Net foreign investment, at less than half the rate of the last quarter of
1947, in part reflected decreases in exports and increases in imports in our
trade with all continents. The foreign aid program will increase our surplus
of exports during the rest of the year.
The Federal cash surplus during the first half of 1948 amounted to 7.6
billion dollars. Receipts ran 7 percent higher than last year, payments
9 percent lower. The reduction in income taxes and the increase in expenditures for defense and foreign aid will virtually eliminate the surplus
for the second half year. The Federal debt was reduced about 5 billion
dollars during the first half of the year, bringing it down to 252 billion
dollars.
State and local government expenditures have overtaken revenues, and
deficits are likely to increase.
Prices rose after a decline in February. Many farm prices regained or
surpassed their earlier levels and industrial prices resumed their climb. By
midyear, price increases appeared to be accelerating. The index of consumers' prices has now reached an all-time high.
Wages continued the third round of increases that began last fall though
interrupted by the break in commodity prices. Most of the third round increases have roughly corresponded to the rise in cost of living since the previous contract.
Foreign aid and defense expenditures during the present fiscal year will
increase pressure on the domestic economy. New defense expenditures
will not be great during the next few months, but will rise thereafter. Both
programs have a special impact upon such short-supply items as steel, other
metals, and farm machinery, and will draw increasingly upon our already
fully employed labor force. More adequate allocation authority is needed
if we are to avoid progressively more serious disruptive effects of these
programs upon supplies, prices, and the organization of production.
The reduction in income taxes will reduce Federal revenues by about
5 billion dollars at the same time that expenditures will be substantially
increasing under the new programs. The deflationary influence of recent
Government cash surpluses will thus be replaced by the inflationary influence
of additional expenditures on the part of consumers whose tax burdens are
reduced.
The general outlook as to inflation shows conflicting influences. On
the one side, the supply situation in a number of industries is improved
over a year ago. Bountiful crops are in prospect. Postwar expansion programs are nearing completion in many lines of production, and we should
experience a gradual increase in output from an enlarged and modernized




industrial plant. Commendable caution continues to be shown by business in avoiding speculative overexpansion, and many leaders in both
industry and labor can be applauded for the conscious restraint they have
exhibited in their pricing policies and wage demands.
The immediate situation is dominated, however, by three interacting
processes making for continued inflation. First, consumer demand for
goods and services, business demand for investment goods, and demands
arising from expanding Government defense and foreign aid programs
press strongly upon production. Second, we are currently in the midst
of a round of substantial wage and price increases in major basic industries. These developments foreshadow continuing and ramifying effects
on cost structures and prices in many related lines of production, on the cost
of living, and on further wage demands. Third, credit expansion, partly
a cause and partly a result of inflation, still persists.
The facts add up to a clear and disconcerting conclusion. In spite of
some favorable factors, we are in the very midst of gathering inflationary
forces, which day by day are imposing additional hardships upon countless families, and day by day are undermining the foundations of the remarkably high level of postwar prosperity that we have thus far maintained.
The hard facts of today leave no room for complacency. Though most
people are optimistic about the immediate business outlook, lasting prosperity is not assured. Even in the midst of the present prosperity, the
average American sees that the value of his accumulated savings has
declined, and that many of his neighbors living on pensions or fixed salaries
are actually worse off than they were a year ago. Looking abroad, we
see that, despite great progress, many countries are still far below the living
standards needed for sustained production and are dependent on outside
help for any hope of further advance. We must be on our guard lest our
national prosperity and security be undermined by inflation at home or
by misery abroad.
Our American prosperity depends in part on world events, but far more
on our own action or inaction right here at home. More than 90 percent
of all the goods and services that we produce are for domestic purposes.
But thus far we have shown a blind disregard of the dangers that beset
our path. Despite my repeated warnings and recommendations, we have
not adopted adequate legislation for controlling inflation. The failure to
control inflation effectively in the past makes it increasingly urgent that we
adopt and apply vigorous measures to guide us safely from the uneven postwar boom to an era of sustained and stable prosperity.
We are now challenged to carry out the pledge to the American people
contained in the Employment Act of 1946 that it shall be the policy of our
Government to "utilize all its plans, functions, and resources * * * to




promote maximum employment, production, and purchasing power/5 in
an economy of free competitive enterprise.
It is no less important to take action to forestall a business collapse than
it is to use Government measures to overcome a depression once it has
arrived. Our success in this effort is essential for the reconstruction of a
peaceful world.




Recommended Program
(Excerpt from the President's Message to the Congress, July 27, 1948)

Positive action by this Government is long overdue. It must be taken
now.
I therefore urge the Congress to take strong, positive action to control
inflation. I have reexamined the anti-inflation program I proposed to
the Congress 8 months ago. In its essentials that program is as sound
now as it was then. It has been revised and strengthened in the light of
changing circumstances. The program I now propose is as follows:
First, I recommend that an excess-profits tax be reestablished in order
to provide a Treasury surplus and provide a brake on inflation.
Second, I recommend that consumer credit controls be restored in order
to hold down inflationary credit.
Third, I recommend that the Federal Reserve Board be given greater
authority to regulate inflationary bank credit.
Fourth, I recommend that authority be granted to regulate speculation
on the commodity exchanges.
Fifth, I recommend that authority be granted for allocation and inventory control of scarce commodities which basically affect essential industrial
production or the cost of living.
Sixth, I recommend that rent controls be strengthened, and that adequate
appropriations be provided for enforcement, in order to prevent further
unwarranted rent increases.
Seventh, I recommend that stand-by authority be granted to ration those
few products in short supply which vitally affect the health and welfare
of our people. On the basis of present facts, and unless further shortages
occur, this authority might not have to be used at all.
Eighth, I recommend that price control be authorized for scarce commodities which basically affect essential industrial production or the cost
of living. I have said before, and I repeat, that many profit margins have
been adequate to absorb wage increases without the price increases that
have followed. Rising wages and rising standards of living, based on increasing productivity and a fair distribution of income, is the American
way. Noninflationary wage increases can and should continue to be made




by free collective bargaining. Where the Government imposes a price
ceiling, wage adjustments which can be absorbed within the price ceiling
should not be interfered with by the Government. The Government should
have the authority, however, to limit wage adjustments which would force
a break in a price ceiling, except where wage adjustments are essential to
remedy hardship, to correct inequities, or to prevent an actual lowering
of living standards.
The measures I have recommended make up a balanced program to
attack high prices. They are all necessary to check rising prices and safeguard our economy against the danger of depression. If they are made
the first order of business by the Congress, as they should be, they can be
promptly enacted. Every week of delay will mean additional hardship for
the American people.




THE ECONOMIC SITUATION




AT MIDYEAR 1948

A REPORT TO THE PRESIDENT
BY THE

COUNCIL OF ECONOMIC ADVISERS




Contents
Page
I. EMPLOYMENT, PRODUCTION, AND PURCHASING POWER

The course of employment
The course of production
Production prospects
The flow of goods and purchasing power
Consumer income, expenditure, and saving
Business investment, income, and financing
International transactions
Government transactions
Summary: the Nation's Economic Budget
II. PRICES, WAGES, AND THE IMPACT OF THREE GOVERNMENT ACTIONS

The course of prices
The course of wages
The impact of three Government actions
Foreign aid and domestic supply
Defense demands and civilian supply
The impact of tax reduction
III.

T H E ISSUE BETWEEN INFLATION AND STABILIZATION

1

1
2
3
5
6
10
15
18
22
27

27
31
35
35
38
41
43

APPENDIXES
A. The Nation's Economic Budget
B. The Distribution of Consumer Income and Ownership of Liquid
and Other Assets
C. Statistical Tables Relating to Employment, Production, and
Purchasing Power

793637°—48




2

III

51
65
74




LETTER OF TRANSMITTAL

COUNCIL OF ECONOMIC ADVISERS,

Washington, D. C, July 22, 1948.
T H E PRESIDENT:

SIR: The Council of Economic Advisers herewith submits a report, The
Economic Situation at Midyear 1948, in accordance with section 4 (c) (2)
of the Employment Act of 1946.
Respectfully,




^_/?^l/V^v

Chairman,

Vice Chairman.

/W




I. Employment, Production, and
Purchasing Power
E enter the second half of 1948 with our labor force fully employed,
with total production high, and with inflationary pressures continuing. A review of some major economic events of the first half
of 1948 will indicate where we stand and what trends can be foreseen.

W

THE COURSE OF EMPLOYMENT

The employment situation has continued strong, with the demand for
labor so active that a relatively large inflow of additional workers was
readily absorbed. There were about 850,000 more workers in the labor
force in the first half of 1948 than a year ago, nearly double the rise that
would have been expected on the basis of population changes and prewar
trends. This increase was due mainly to the abundance of job opportunities at good wages, but it also appears that the pressure of living costs
induced many housewives and teen-agers to seek jobs.
Total nonagricultural employment rose to record peacetime levels, while
agricultural employment was somewhat below 1947. In June, civilian
employment stood at 61.3 million, compared with 60.1 million a year earlier.
(See chart 1 and appendix G, table 7.) Thus, "sixty million jobs" becomes
a floor to be protected by every means possible in the future, no longer an
objective that the faint-hearted said our business enterprise could not attain.
With more than 61 million in civilian employment, the unemployment
figures have continued low. There were 2.2 million persons unemployed in
June of this year, compared with 2.6 million in June 1947. While some
workers in certain areas had difficulty in finding suitable work, there has
been no general unemployment problem. In fact, some employers have
continued to have trouble in securing the types of labor they needed.
The broad underlying demand for additional workers has been felt in
almost all major lines. Construction has been setting the pace, but significant gains have occurred also in manufacturing, finance, and services.
Employment in mining, transportation and public utilities, and government
has changed little. (See appendix G, table 8.)




1

On the other hand, the leather industry experienced a greater than usual
seasonal downturn this spring, followed by a substantial recovery in June.
Employment in the rubber industry has been declining steadily, averaging
about 10 percent below the first half of 1947.

CHART 1

LABOR FORCE
Civilian employment in June exceeded 61 million for the first time.
Unemployment continued at a very low level.
MILLIONS OF PERSONS*
80

MILLIONS OF PERSONS*

80

TOTAL
LABOR FORCE
60

40

20

1946

1947

1948

* 14 YEARS OF AGE AND OVER.
SOURCE: DEPARTMENT OF COMMERCE.

THE COURSE OF PRODUCTION

Total production has maintained very high levels. The output of industrial goods (including minerals and manufactured goods) for the 6
months was not quite 3 percent above the 1947 average level. (See chart
2 and appendix C, tables 11 and 12.) As to particular industries, the
volume of construction and the output of electric and gas utilities have
both been running considerably higher than last year. Transportation
just about equaled the levels of a year ago. Basic industries such as steel,
chemicals, and construction have operated close to present capacities. The
petroleum industry has had difficulty keeping up with demand even though




running with wide open throttle. Consumers' goods continued, in general,
at high-level production.
The short corn crop of 1947 resulted in a tight feed situation and, in
combination with declining numbers of livestock, led to reduced marketings of livestock products in the first half of 1948. The total volume
of farm marketings in the first half of this year was about 7 percent below
the level of a year earlier.
The output of goods would have been even higher but for certain specific
shortages—notably of fuel, electric power, freight cars, and steel. These
shortages continue to impede expansion, but there has been some improvement over 1947.
While industrial disputes, particularly in coal mining, reduced output
considerably in March and April, the return of coal mining to normal
operation has resulted in a substantial improvement in industrial output
during May and June. By midyear, industrial production approximately
regained the postwar peak reached in February. The fragmentary evidence available indicates some improvement in labor productivity during
the first half of 1948.
PRODUCTION PROSPECTS

The heavy demands of consumers, business, government, and foreign
buyers for the output of American farms and industries emphasize the
urgent need to expand production. The production outlook for the coming
half year is good, but not significantly better than in the last half of
1947 or the first half of this year.
Since we are currently operating at maximum employment and maximum
capacity in most fields, any further increase in production is dependent
largely upon increased efficiency and improved technology. Such gains
cannot be very great in the short span of a few months or a single year.
Other factors such as weather, industrial relations, and business psychology
are likely to have a far more influential short-run effect.
On these counts, the immediate prospect seems promising. Industrial
relations, while disturbed in some industries, promise to be better than
they were in the first half of the year, particularly since relatively few
major wage contracts come up for negotiation in the late summer and fall.
Forward commitments under the foreign aid and defense programs, added
to the vigor of the domestic market, give confidence to merchants, manufacturers, and bankers.
In June 1948, there were 2.2 million more persons working in nonagricultural employment than a year ago. The flow of materials, while still
not adequate in the durable goods fields, should permit production to proceed with fewer interruptions than we have witnessed during the past




CHART 2

INDUSTRIAL PRODUCTION
Industrial production has remained fairly steady since
last September.
PERCENT OF 1 9 3 5 - 3 9 AVERAGE, SEASONALLY ADJUSTED

TOTAL
INDUSTRIAL PRODUCTION

•00

I

I

I

I

I

I

I I

I

I

I

I

I

I

I

I

I

1946

I

I

I

I

I

t I

I

I

1947

I

I

I I

1948

NONDURABLE MANUFACTURES

100

I

I

I

I

100 I I

I

1 yi

I

I

I

I I I
1946

1 I

I t

I

I

I

I

I

I

I

I

t

I

I

I

I

I

1 I

1 1 1 1 I
1947

I

1 1 I

SOURCE: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.




1 1

I

I

L__L_L_t—

I

I t I
1948

100

1 I i

^

year. There is a likelihood that nonagricultural production in the second
half of the year may be slightly higher than it was in the first half.
In agriculture, the season of damaging floods is past, and present crop
prospects are excellent. If the favorable weather we have enjoyed so far
this season should continue, we may hope for a record-breaking corn crop
and a general level of crop production rivaling 1946, the best previous year.
Animal products present a different picture. The number of cattle
on farms and ranches has been declining since 1945. Dairy-cow numbers
are down to prewar levels. Sheep numbers are the lowest in over 75 years.
There are fewer hogs on farms than last year, and the spring pig crop was
down 3 percent. The numbers both of laying hens and of young chickens
are lower than a year ago. The combination of the reduced livestock
population and the continuing tight feed supply means inevitably that
the output of most livestock products will continue to run less than last
year, until some months after the new corn crop comes in this fall.
Favorable crops may more than offset the unfavorable livestock prospect to make the total output of our farms somewhat higher than last
year. But in the case of crops especially, much of this year's production
does not come to market until next year. A bumper corn crop may even
reduce this year's meat production by encouraging holding animals over
for heavier feeding. Consequently farm marketings, in physical terms,
will continue to run less than a year ago. For 1948 as a whole, they will
probably be down 3 or 4 percent. Domestic consumption of food for
1948 will show about the same decrease, around 3 percent on a per capita
basis. Food exports will be down somewhat, but the reduction will be
chiefly in cereals and, to a smaller degree, in edible fats and oils. Meat
and most other livestock products, the shortage of which will be most keenly
felt in coming months, have been exported in only relatively minor amounts.
Domestic food consumption will continue above prewar levels. But in
relation to postwar levels of demand we must expect, during the remainder
of 1948, a relatively tight supply of food, which is the largest component
in the workers' cost of living.
THE FLOW OF GOODS AND PURCHASING POWER

The gross national product, that is, the total value of goods and services,
which ran at an annual rate of 227.4 billion dollars during the first half
of 1947, and 235.9 billion during the second half, rose to an annual rate
of 246.5 billion during the first half of 1948. (See appendix G, table 1.)
The increasing flow of income and expenditures can best be shown in the
accounts of consumers, domestic business, international transactions, and
government.




Consumer income, expenditure, and saving
Consumer income. Personal income, which expanded at an annual rate
of nearly 10 billion dollars from the first half of 1947 to the second half,
leveled off in 1948 at approximately the December rate of 208 billion
dollars. (See appendix C, table 4.) Employment and wage rates continued to increase, but the upward trend in cash farm income was very slight.
TABLE 1.—Per capita disposable income, current dollars and 1947 dollars
Personal income after taxes
Current
dollars

Period
1939__.
1946
. .
Annual rates, seasonally adjusted:
1947—First half
Second half._ __
_ ______
1948—First half 2
._

1947 dollars»

536
1,127
_

859
1,288

1,179
1,229
1,274

1,208
1,200
1,200

* Deflated by the consumers' price index, which does not fully reflect changes in the cost of living of all
groups of consumers.
1
Estimates based on incomplete data.
NOTE.—The figures in this table are based on revised estimates and are different from those published in
previous Economic Reports of the President.
Sources: Department of Commerce and Department of Labor. (See appendix O, table 6.)

Real per capita purchasing power dropped from 1946 to 1947, as stated
in earlier reports. No measurable change occurred in the first half of this
year, the rise in the overall average of money income per person being*
just about offset by the rise in retail prices.
In a period of rising prices and high living costs, the distribution of
consumer income becomes increasingly important. Of particular significance is the progressive deterioration in the economic position of those
individuals and families whose dollar incomes have fallen far behind in
the race with rising prices. Comprehensive statistics on income distribution for the first half of this year are not available. A survey comparing
1946 and 1947 showed that 30 percent of all families (spending units)
had no appreciable increase in dollar incomes and almost 20 percent suffered a reduction, during a period when consumer prices increased nearly
15 percent.
While the disappearance of large-scale unemployment and the increase
in the number of gainfully employed persons per family tended to narrow
the disparity among incomes during the war period and immediately thereafter, this trend has been arrested more recently. As there are relatively
more people with fixed incomes in the lower income brackets than in the
higher brackets, the favorable effects of full employment upon the distribution of income have been offset by the unfavorable effects of inflation
during the past year. Of the family units whose dollar incomes remained




stationary between 1946 and 1947, according to the same survey, two-thirds
were in income brackets of $3,000 or less. (See appendix B, table 3.) In
addition, old people were found more frequently among those with stable or
declining incomes than among those with increasing incomes.
Consumer expenditures. Consumer expenditures were at an annual rate
of about 174 billion dollars during the half year, compared with about
168 billion during the second half of 1947. The increase was slightly less
than the increase in income after taxes, indicating a small increase in
saving.
The first quarter of 1948 was a period of consumer hesitation, in which
purchasing of both durables and nondurables lagged. In the second quarter, there was a general strengthening of consumer demand. This reaction
was due only in minor degree to price adjustments, and resulted mainly
from a general feeling that prices were again headed upward and that scarcities might develop from the unsettled international situation. Tax reduction exerted some further stimulating effect, although the full effect on consumer disposable income will not be felt until the second half of the year.
The upturn in expenditures was marked in the field of household appliances,
although it applied generally to all types of consumer purchases.
Consumer saving. Previous reports have stressed the decline in the rate
of net consumer saving since the war years. They have pointed out that as
consumers spent an increasing proportion of their incomes, they contributed
to inflationary pressures that pushed up the price level. At the same time,
the process of inflation was itself causing many families to save less in order
to prevent serious impairment of their standard of living.
Estimates for the past 12 months seem to indicate that the postwar downward trend of saving has been interrupted, although the nature of the
statistical methods by which these estimates are derived is such that no great
importance can be attached to small changes in percentages. (See chart 3
and appendix G, table 5.) An appraisal of the significance of this change
requires an analysis of the composition of saving and dissaving. The estimates include in saving such items as the purchase of homes and noncorporate business investment, and it is chiefly into these categories that the increasing volume of saving appears to be flowing. The rate of accumulation
of liquid assets—cash, bank deposits, and Government bonds—may actually
have decreased. (See appendix B, table 4.) It is savings of this latter type
that are most clearly anti-inflationary.
Furthermore, aggregate figures of net consumer saving do not reveal the
numbers of families who spend more than they earn. The rise in the cost
of living is causing this practice among many low-income families, as well
as many large families and families of fixed income in the middle-income
groups. In the immediate postwar period, spending in excess of income was




CONSUMER INCOME, SPENDING,
AND SAVING
Consumer income
half

of

rose

*

more than spending in the first

1948

BILLIONS OF DOCLARS
250
DISPOSABLE

PERSONAL

INCOME

(PERSONAL INCOME LESS TAXES)

200

BILLIONS OF DOLLARS^
250

-

-

200

DISPOSABLE
INCOME >
.
150

B1-

-

-

150

iB^finSBBi
100

50

0

-

§••

1

HHHI
•111 H • i
• I•
1 4
9 1

1942

1943

1944

resulting in an increase in saving.

1945

1946

I 00

-

50

S883S8S t i

1947

1948

PERCENT
30

10

-

~

1941

1942

1943

* ANNUAL RATES, SEASONALLY ADJUSTED
SOURCE: DEPARTMENT OF COMMERCE.




1944

1945

1946

!947

1948

10

concentrated among families with incomes of $3,000 or less. More recently,
as durable goods have become available, an increasing number of families
with incomes up to $5,000 or even $7,500, have become dissavers. In 1947,
more than one-fourth of all families were spending more than they earned.
Closely related to the rate of and distribution of saving out of current
earnings is the ownership of liquid assets. Personal holdings of liquid assets,
including currency and deposits in banks and savings and loan companies,
and Government bonds, were 172 billion at the beginning of this year. This
is nearly three times as high as at the beginning of the war in dollar terms.
Of the total of 172 billion dollars of personal holdings, about 22 billion
were in the control of trust funds, and about 150 billion in the hands of
individuals. The equity of individuals in private insurance is now over 51
billion dollars, compared with 27 billion at the end of 1939, while the equity
in the Government social-security funds has risen from only 6 billion dollars
to over 33 billion now.
Between 1946 and 1947, there was a small increase in the proportion of
the population owning no liquid assets at all. The median size of the holdings of all spending units was $350 in early 1948, compared with $470 in
1947. As shown in appendix B, table 8, less than one-half of persons with
incomes under $1,000 had either liquid assets or life insurance, and 42 percent of the Nation's spending units had no liquid assets or less than $200
worth of liquid assets, early this year.
Declines in liquid asset holdings or increases in debt should not be interpreted as indicating distress in all cases. In fact, the largest reduction
in liquid assets has been made by families in the middle and high-income
brackets. However, available data indicate that families in the lowerincome groups in 70 percent of the cases reduced their liquid assets for the
purchase of nondurable goods and services, while in the upper-income
groups the purchase of houses and other investments were a particularly
important component. Thus to a considerable extent the assets at the
lower end of the income scale are being dissipated by current living expenses,
while those in the upper-income groups are being converted into other
types of property. (See appendix B, table 7.)
In line with recent trends in the distribution of saving and liquid assets,
consumer credit has continued to expand rapidly. At the end of June
1948, the total amount of consumer credit outstanding reached the record
total of 14 billion dollars, almost 3 billion higher than a year ago. (See
appendix C, table 20.) Although the amount of outstanding consumer
credit is not large in comparison with the current level of consumer incomes,
the rapid expansion of consumer credit continues to add to inflationary
pressures.




Business investment, income, and financing
Business investment as a whole absorbed an even greater share of the
total national output of goods and services in the first half of this year than
in 1947. The expansion, improvement, and replacement of productive
facilities and housing, and the enlargement of business working capital to
support record levels of output and sales, continued to swell the demand
for goods and services in competition with the demands of consumers,
Government, and the export market.
While postwar replenishment of depleted inventories is by and large
accomplished, and productive capacity has been adequately expanded in
a large number of industries, there is no general speculative overexpansion
of inventories, plant and equipment, or housing. All indications for the
remainder of this year at least are that the volume of business investment
will continue more than adequate to make the total demand for goods and
services match the supply at current prices. Shortages and inflation will
continue to be the dominant concern. This will be true even if inventory
policies remain cautious and nonspeculative.
Plant and equipment. A decade and a half of subnormal business expansion, resulting in part from depression and war, set the stage for heavy
postwar business investment. The upward trend brought plant and equipment outlays to a peak in the latter part of 1947. In the first 6 months
of 1948, such outlays totaled 8.9 billion dollars. This represented an
annual dollar rate nearly double that of 1929, 25 percent above the first
half of 1947, and 3 percent below the second half. (See appendix C,
table 14.)
The postwar plant and equipment boom has shown significant changes
of pattern. During the first stages of reconversion, the intense pressure to
replace facilities and to restore civilian output took precedence over the
introduction of innovations. More recently, there has been increasing
emphasis upon cost reduction and the substitution of new products and
techniques. As table 2 shows, expenditures for equipment alone have
accounted for an exceptionally high portion of total plant and equipment
outlays and of gross national product in the postwar period. Plant construction expenditures, on the other hand, are now smaller relative to gross
national product than in any year from 1920 through 1931. Some of this increased emphasis on equipment reflects a long-standing trend. Some reflects the fact that plant construction costs have risen much farther above
prewar levels than equipment prices.
At midyear, the short-run outlook is for continued high outlays on plant
and equipment. The foreign aid and defense programs, though slow to
affect requirements for capital goods, have firmed up business confidence
and have extended expansion plans further into the future. Unfilled orders




10

of equipment producers, while substantially lower than in the middle of
last year, are still unusually high in relation to sales and are being whittled
down very slowly. Conditions in individual industries vary, but the overall
rate of investment in plant and equipment seems limited not so much by
demand or funds as by the supply of materials. Surveys of business intentions indicate that the dollar rate of plant and equipment investment in
the second half of 1948 will be about the same as in the second half of 1947
and the first half of 1948.
The longer-range outlook is less clear. Whether or not the present rate
of plant and equipment investment is larger than could or should continue
over the long run is a question to be answered only by a comprehensive
and dettailed analysis of long-term needs. The Council of Economic Advisers is now making such a study.
TABLE 2.—Private outlays for new nonfarm plant and equipment as percent of gross national
product
Percent of gross national product

Total plant
and equipment

1919-29 average-1929.
.,__
1930-39 average-.
1933
1940-45 average._
1946
.
1947
1948: First half i_

Industrial,
commercial,
and public
utility new
construction

7.9
9.2
5.7
3.9
3.8
7.5
8.8
9.0

Period

3.0
3.5
1.5
1.0
.8
2.0
2.0
2.0

Nonfarm
producers'
durable
equipment
4.9
5.7
4.2
2.9
3.0
5.5
6.8
7.0

i Preliminary estimates based on rate of increase from 1947 to the first half of 1948 in the plant and equipment expenditures made jointly by the Securities and Exchange Commission and the Department of
Commerce. (See appendix C, table 14.)
NOTE.—The plant and equipment expenditures on which the percentages in this table are based differ
from the Securities and Exchange Commission-Department of Commerce series primarily because certain
plant and equipment outlays charged to current account are included in the former and excluded from the
latter series.
Source: Department of Commerce (1919-47).

Business inventories. During the first quarter of 1948, the book value
of nonfarm business inventories increased about 3.8 billion dollars, compared with 4.4 billion in the first quarter of 1947. Allowing for seasonal
factors, the increase in physical volume amounted to about 1.7 billion
dollars or an annual rate of nearly 7 billion. Stocks of finished goods increased not only at the retail level, but also in the hands of producers. The
principal cause of these increases was a more than seasonal decline in sales.
(For detail on inventories and sales, see appendix C, tables 15 and 16.)
In the second quarter of 1948, more favorable market conditions and
the restriction of some supplies terminated the rise in the volume of nonfarm inventories, and such stocking-up as had occurred earlier in the




11

year was overtaken by rising sales. The total physical volume of nonfarm
inventories, adjusted for seasonal variation, showed practically no change.
Present business policies and expectations indicate the reestablishment of
a moderately rising trend. But although business sentiment has improved,
caution in forward buying has continued. There is little indication that
inventories generally are either excessive or deficient in relation to current
sales levels, though they would soon become excessive if sales should decline
materially.
Business income. Profits for the first half of 1948 were at levels above
the average of 1947, the previous peak year. Preliminary data for the
first half year indicate that corporate profits before taxes were at a seasonally adjusted annual rate of about 30.5 billion dollars, compared with
29.8 billion in 1947 and a seasonally adjusted annual rate of 32.4 billion in
the fourth quarter of that year. Corporate profits after taxes thus far
in 1948 have been at an annual rate of 18.6 billion dollars, compared
with 18.1 billion in 1947 and 19.7 billion after seasonal adjustment in
the fourth quarter. (See appendix G, table 24.) These profits after
taxes in 1948 represented a return of about 9 percent on net worth and
about 5 percent on sales, compared with about 9.5 percent on net worth
and about 5 percent on sales in 1947.
The net income of unincorporated business and the professions in the
first half of 1948 was at an annual rate of 26.2 billion dollars, compared
with 24.4 billion for 1947 as a whole and an annual rate of 25.9 billion in
the fourth quarter. (See appendix C, table 3.) In addition net farm
income was running at an annual rate of 18.1 billion dollars during the
first half of this year, compared with about 15.6 billion for 1947 as a whole
and an annual rate of 16.5 billion in the fourth quarter. These estimates
of net farm income reflect an unusually large statistical adjustment for
changes in farm inventories on account of the small corn corp and the
reduction in numbers of livestock last year. Net income actually realized
by farm operators during the first half of 1948 (without allowing for changes
in inventories) is estimated to have run slightly below the 18-billion-dollar
record level of 1947.
The sharp price advances during the second half of 1947 and the maintenance this year of high levels of production and sales despite unusually
bad weather conditions and work stoppages in some critical areas have accounted for the high level of profits thus far in 1948. With the outlook
bright for a sustained level of production during the remainder of this year,
aggregate profits are likely to continue at high levels.
A development to be watched is an apparent drop in the profitability of
small manufacturing corporations in the first quarter of this year, while
profit ratios for the largest corporations rose. Average profits after taxes




12

of manufacturing corporations with assets under $250,000 dropped from
3.9 percent on sales in 1947 to 2.0 percent in the first quarter of 1948.
(For further details on corporate profits, see appendix C, tables 24-29.)
Business financing. Chart 4 and appendix C, table 30, show the principal ways in which corporations used their funds during the first half of
1948, and also the principal sources from which these funds were obtained.
Corporate outlays for plant and equipment and for the expansion of inventories and customer financing amounted to about 12 billion dollars
in the first half of this year. This represents outlays at a rate somewhat
CHART 4

SOURCES AND USES OF CORPORATE FUNDS
Internal sources, mainly retained net earnings and depreciation
reserves, continued to supply the major part of corporate
financial requirements during the first half of 1948.
BILLIONS OF DOLLARS
6
8

14

10

USES

SOURCES
RETAINED NET EARNINGS AND:
DEPLETION ALLOWANCES

NET NEW
SECURITY

0THER*

lllllllllllllllllllll

CASH AND U. S. SECURITIES

J
* SEE APPENDIX C,

_J
_

1

TABLE 3O.

SOURCES: DEPARTMENT OF COMMERCE (PRELIMINARY ESTIMATES BASED ON SECURITIES AND
EXCHANGE COMMISSION AND OTHER FINANCIAL DATA).

lower than for the year 1947 as a whole. A small decline in the use of
funds for expanding inventories and a large decline in the rate of expansion
of customer financing more than offset the increase in expenditures on plant
and equipment.
It is significant that the major source of corporate funds has continued
to be those sums retained from current receipts as offsets to depreciation
and depletion charges and as undistributed net earnings. Indications are
that this source will be even more important in 1948 as a whole than
during last year.
Net new security issues during the half year, amounting to 2.6 billion
dollars, have risen in importance compared with the first half of 1947,
when they provided 1.7 billion. The proportion of new issues represented

793637°




13

by common stock has continued at about the same low level that prevailed
last year, reflecting in part the heavy participation of those business groups,
chiefly utilities, which characteristically make greater use of debt financing.
Although the current ratio of common stock to total net new issues is low
by prewar standards, the average ratio for the whole postwar period to
date has not been. Moreover, corporate equity/debt ratios in general still
compare quite favorably with those prevailing in prewar periods.
As a corollary of the high degree of internal financing through retained
earnings and additions to depreciation reserves, and of the volume of security issues, the use of corporate reserves of cash and securities represented
a relatively minor source of financing during 1947 and during the first half
of 1948.
There was no net expansion of bank credit to corporations as a group
in the first half of 1948. The total of such loans outstanding showed a
decrease for the half year, in contrast with a small increase during the
first half of 1947. In appraising this decline in corporate use of bank
credit, however, the high rate of expansion of such credit in the latter
part of 1947 must be borne in mind. (See appendix G, table 21.)
While there are disparities in the ease with which businesses of different
types and sizes can acquire funds, the overall picture does not indicate
a present or impending insufficiency of such funds so long as the fundamental business outlook remains good. If that outlook becomes less favorable, the originating point of the downturn is likely to be found elsewhere
than in the availability of funds.
Residential construction. About 450,000 new residential units in new
buildings were started during the half year. Counting also conversions and
alterations, more than a million units will probably be added to the
residential supply during 1948.
This volume of residential construction is already straining the capacities
of the construction industry in many areas and of producers of some construction materials, and is unquestionably competing with other primary
national needs. (See appendix C, table 13.) This situation highlights
what has become the chronic necessity of developing and applying new
methods and substitute materials to the house-building industry.
On the demand side, a distinction needs to be drawn between essential
need and capacity to pay current costs. The basic housing needs of a
growing population in the face of a serious and cumulative shortage would
be sufficient to sustain the present level or even a higher level of home
building for many years to come. But only a few years at most would be
required to saturate the demand of those who can acquire houses at current costs, and that saturation would portend a serious downswing in
lesidential construction. The unusually high level of current demand




14

for houses has combined with the unique character of the building industry
to push homebuyers' costs far more above those prevailing after World
War I than consumer incomes have risen in the same time span. During
the past year, the average price of new houses has risen about 20 percent,
while average family income after taxes was only about 8 percent higher
during the first half of 1948 than during the same period in 1947.
Another way of looking at the effect of high residential prices on the
economy is to examine the trend in outstanding mortgage debt on one- to
four-family residential properties. This type of mortgage debt has risen
about 65 percent since the end of 1945, while nonfarm family incomes after
taxes have risen only about 25 percent and the number of dwelling units
has increased less than 10 percent. It is highly significant that the volume
of new mortgages of less than $20,000 placed since 1945 amounts to approximately 26 billion dollars, which is about 80 percent of the face value
of all outstanding mortgages on one- to four-family residential properties.
Even after allowance for payments already made on these new mortgages,
this means that a high proportion of indebtedness on residential properties
has been placed on the basis of current prices. Even at the high level of
current incomes, high housing costs have imposed excessive burdens on
many families. These burdens, hard to carry in good times, would impose
a serious strain indeed with any downturn in employment or incomes. The
problem of housing costs is important in the short run, and of central significance to the longer-range aspects of general economic stability.
Farm investment and finance. Production and domestic sales of farm
machinery have continued to expand. Wheel-type tractor production for
1948 as a whole is expected to exceed the record 1947 production by at
least 20 or 30 percent. Demand for most types of farm tractors and
some other machinery and equipment items continues to outrun supply,
but the situation is more spotty than a year ago and for many items production has caught up with demand at present prices. The progress of
construction on farms reflects the higher incomes of farm families.
Preliminary indications are that the boom in farm real estate has tended
to level out in most regions, following the break in commodity prices early
this year. The amount of farm mortgages recorded in the first quarter of
1948 was slightly larger than in the first quarter of 1947, but the number
of new mortgages decreased. Total farm mortgage debt is still much
below prewar levels. Non-real-estate loans to farmers, however, apparently
are continuing to expand in response to the higher level of farm costs.
International transactions
The net foreign investment component of the Nation's Economic Budget
dropped from an annual rate of 8.2 billion dollars in the last quarter of




15

1947 to 3.9 billion in the first half of 1948. This figure represents the
portion of the excess of exports over imports of goods and services that is
financed by loans and investments and by net liquidation of foreign dollar
assets and gold. It does not include the portion financed by gifts and
other unilateral transfers made by the United States Government and the
general public. When these are included, the decline was much less:
from an annual rate of 10.5 billion dollars to about 8 billion, the lowest
level since 1946. The excess of exports over imports of goods and services
reached its low point in the first quarter of the year and rose only slightly
in the second quarter, as shown in table 3.
TABLE 3.—United States exports and imports of goods and services
[Billions of dollars, annual rate]
Exports of Imports of
goods and goods and
services > services 1

Period

1936-38 average
1946
1947—First quarter
Second quarter..
Third quarter,...
Fourth quarter..
1948—First quarter 2
Second quarter _

4.1
15.0
19.3
21.1
19.2
19.4
17.8
17.9

3.6
7.2
8.1
8.6
8.3
8.9
9.9
9.7

Surplus of
exports of
goods and
services
0.5
7.8
11.2
12.5
10.9
10.5
7.9
8.2

1

Includes income on investments.
' Estimates based on incomplete data.
Source: Department of Commerce. (See appendix C, table 31.)

The decline in the export surplus reflected chiefly changes in the exchange
of goods rather than services. Lower exports and higher imports of goods
characterized our trade with every continent. While the value of exports
fell, their average prices continued to rise. The sharp decline in value thus
reflected an even greater decline in the physical quantity of goods shipped
to foreign countries. The physical quantity of goods exported in the first
half of this year was at a rate 11 percent less than in the last quarter of 1947
and 26 percent less than in the second quarter of 1947. (See appendix C,
tables 33-36.)
More than half of the increase in imports reflected a rise in physical quantities. (See appendix C, table 38.) Production of exportable goods has
increased in some of the areas that supply us. There is increased pressure
in many countries, moreover, to divert to the United States goods that
might otherwise be sold in the home market or in foreign countries that
do not pay for them in dollars.
The depletion of foreign gold and dollar assets, which was an important
cause of the decline in our export surplus, was reflected in the reduced role
that liquidation of these reserves played in its financing. As table 4 shows,




16

these resources were being liquidated at a rate of only 2 billion dollars a
year in the first half of 1948, less than half the 1947 rate. (See chart 5.)
Foreign countries' spending of gold and dollar balances was one of the
important factors in the expansion of our domestic money supply and bank
reserves in 1947.
There was an increase in the rate of utilization of Government aid in
the first half of this year compared with the last quarter of 1947, but it was
CHART 5

FINANCING THE EXPORT SURPLUS
A sharp drop in the liquidation of foreign assets was the main
financial factor in reducing the export surplus from the average
level of 1947 to the first half of 1948. U. S. Government aid
dropped slightly.
BILLIONS

OF DOLLARS
6

10

1946

1947
1948
1st half
(Annual rate)
NET FOREIGN INVESTMENT

U. S. GOVERNMENT

AID

EXPORT SURPLUS

* INCLUDES ALSO MOVEMENT OF'U. S. PRIVATE CAPITAL, NET DOLLAR DISBURSEMENTS BY THE
INTERNATIONAL BANK AND THE INTERNATIONAL MONETARY FUND, AND ERRORS AND OMISSIONS.
SOURCE:

DEPARTMENT

OF COMMERCE.

largely aid to Europe and did not ease the dollar position of other areas,
which accounted for the major decline in our export surplus.
Our international transactions in the first half of the year involved less
drain and exerted less inflationary pressure on our economy than they had
in 1947. The undertaking of new foreign aid programs in the past 6
months, however, presages an increase in the export surplus in the second
half of this year.




17

TABLE 4.—Financing the surplus of goods and services supplied to foreign countries
[Billions of dollars, annual rate]

Period

Means of financing
Surplus of
Liquidation
exports
of goods and Government of foreign Other means
gold and
services *
aid (net) * dollar assets of financing
(net) *
(net)»
0.5
7.8
11.2
12.5
10.9
10.5
7.9
8.2

1936-38 average
1946....
1947—First quarter
Second quarter...
Third quarter..._
Fourth quarter...
1948—First quarter
Second quarter K

5.1
5.2
8.0
6.8
2.9
5.8
4.7

0.8
2.0
4.8
4.6
3.4
5.3
1.5
2.6

-0.3
.7
1.2
—.1
.7
2.3

1

Includes income on investments.
a Includes grants and loans, but excludes subscriptions to the International Bank and Monetary Fund.
For detail, see appendix C, table 32.
8 Excludes assets held by the International Bank and the International Monetary Fund.
* Includes private gifts and remittances, movement of United States private capital, net dollar disbursements by the International Bank and the International Monetary Fund, and errors and omissions.
* Estimates based on incomplete data.
Source: Department of Commerce.

Government transactions
During the first half of the calendar year 1948, Federal cash receipts trom
the public, under the impact of rising prices and incomes, continued their
upward trend. Allowing for seasonal influences, receipts during these 6
months were running at an annual rate of 50.2 billion dollars, or 7 percent
above the 1947 figure of 46.9 billion. Thus for this period the cash surplus
was running at a seasonally adjusted annual rate of 12.6 billion dollars,
compared with the 1947 surplus of 5.7 billion.
Actual cash taken in during the first 6 months of 1948, the magnitude
of which partly reflected the heavy concentration of income tax collections in the spring, amounted to 27.2 billion dollars or 7.6 billion greater
than actual cash payments in this period. The surplus during the second
half of this year, however, will be drastically reduced. This change is due
mainly to the reduction in income tax rates and to the increase in payments
on account of the defense and foreign aid programs. Even after seasonal
adjustment to allow for the fact that receipts are normally substantially
greater during the first half of any calendar year than during the second,
it is certain that the cash surplus will drastically decline from the first
half of the year to the second.




18

TABLE 5.—Federal cash receipts from and cash payments to the public
[Billions of dollars]
Cash receipts
other than
borrowing

Calendar years

1946
1947 _
Annual rates, seasonally adjusted:
1948—First half i 2
Second half
Totals for half years, not adjusted for seasonal:
1948— First half K _. .
. . _
Second half a
__

Cash payments

Surplus (+)
or deficit (-)

45.5
46.9

+..

+0.2
+5.7

50.2
44.7
.

45.3
41.1
37.6
40.8

+12.6
+3.9

27. T
20.3

19.6
19.7

+7.6
+.6

i Based on incomplete data.
* Estimates.
Source: Bureau of the Budget.

State and local government spending continued to rise during the first
half of 1948 so that the cash surplus of 1947 has disappeared. This trend
in State and local transactions is likely to continue so that a cash deficit
must probably be expected for the rest of this year.
TABLE 6.—Cash receiptsfromand cash payments to the public by State and local governments
[Billions of dollars]
Cash receipts
other than
borrowing

Calendar year

1946
1947
_
1948—First half (annual rate, seasonally a d j u s t e d ) i . . .

_.

11.0
13.1
13.8

Cash payments*
9.9
12.1
14.4

Surplus (+)
or deficit (-)
+1.1
+1.0
-.6

i Excludes Federal grants-in-aid.
* Estimates based on incomplete data.
Source: Department of Commerce.

In connection with the foregoing discussion, it should be noted that
governmental cash transactions differ considerably from receipts and expenditures as shown in conventional budgetary accounts. While some of
these differences tend to balance out over a period of years, the analysis
of cash transactions presents a more comprehensive and a more accurate
basis for appraising the immediate economic impact of Government operations. The conventional budget accounts, however, are more significantif the long-range financial position of the Government is to be shown.
As an example, transfers from budget accounts to trust accounts are not
shown as payments to the public, while they do reflect an increase in
Government liabilities which will result in payments in later years. (For
further explanation, see appendix A, tables 6 and 7.)
Payments. During the first half of this year, total Federal cash payments
to the public were running at a seasonally adjusted annual rate of about 37.6




19

billion dollars, or some 3.5 billion dollars (8 percent) below the rate for
1947. The decline was chiefly in payments for national defense and international affairs, and represented a shrinkage of certain extraordinary payments rather than a reduction in continuing programs. In national defense,
the decrease was accounted for in part by the tapering off of the cashing in
of terminal leave bonds. The falling off of cash payments in the international field was due to the exhaustion of the British loan, and to the fact
that payments to the Bretton Woods organizations were heavily concentrated
in 1947.
Payments under foreign aid and other international programs are expected
to expand from an annual rate of 5.2 billion dollars in the first half of 1948
to 6.3 billion in the second half. This will still be below the 1947 level.
Payments for defense likewise will rise because of increased procurement
of equipment and some expansion of the armed forces. Thus, after declining for the past 2 years, Federal payments are now expected to rise; during
the second half of 1948, they will probably reach an annual rate of 40.8
billion dollars, which is about 9 percent higher than during the first
half of the year, and slightly less than in 1947. (See appendix A, table 10.)
The major changes in payments by functions, discussed in the preceding
paragraphs, are reflected somewhat differently in payments classified by
type of recipient. (See appendix A, table 11.) Federal purchases of
goods and services from business, for example, were at an annual rate of
10.6 billion dollars during the first half of this year, or 20 percent above
the 1947 level, and they are expected to average during the second half
of this year about 50 percent above last year's rate. The increase during
the second half of the year is accounted for largely by the increasing defense and foreign-aid programs. Some of the increase in 1948 over 1947
is simply a statistical reflection of the shift from loans to outright grants
in support of foreign aid. Federal salaries and wages during the first
half of 1948 were a little below the 1947 level of 7.7 billion dollars, but
are expected under the influence of pay increases and expansion of the
armed forces to return to their 1947 level during the second half of the
year. The aggregate of payments other than purchases from business,
Federal salaries and international loans and other payments changes only
moderately.
Payments of State and local governments have continued to rise steadily,
reflecting increases in costs and also the expansion of activities to make
up for the restrictions of the war period and to meet new needs. The
average rate of cash payments during the first half of 1948 was about 14.4
billion dollars, or 2.3 billion above the 1947 level, and this rising trend
is expected to persist during the second half of the year.




20

State and local construction activity is continuing its rapid expansion
in response to the pressure of urgent needs for new schools, streets and
highways, and water and sewer systems. (See appendix C, table 13.) In
terms of dollar volume, State and local construction during 1948 is expected
to be about 45 percent above the 1947 level, compared with increases of
about 30 percent for private construction and about 10 percent for
Federal construction. In view of rising costs, these dollar figures considerably overstate the expansion in construction. The physical volume
of Federal construction, for example, will probably be little different from
the 1947 level, and the real expansion in the private and State and local
sectors is correspondingly lower than indicated by the dollar figures.
Receipts and debt management. Actual Federal cash receipts during the
first 6 months of 1948 were 27.2 billion dollars, which is equivalent to a
seasonally adjusted annual rate of 50.2 billion. For the second half of
the year, the prospect is for a decline in actual cash receipts substantially
greater than seasonal, from 27.2 billion dollars to 20.3 billion dollars or a
seasonally adjusted annual rate of 44.7 billion. Over a full year's operation
the new tax bill might be expected, provided present income levels were not
pushed upward by the forces of inflation, to reduce revenues by about 5
billion dollars. Assuming some increase in present income levels, the tax
reduction accounts for the largest part in the expected fall in total cash
receipts. Most of this decline is in personal income taxes, only a small
fraction being due to reductions in estate and gift taxes. Receipts from
sales of surplus property are also expected to fall sharply during the second
half of the year, while other receipts will show little change.
The annual rate of cash receipts of State and local governments during
the first half of 1948 was somewhat higher than in 1947. These increased
receipts reflected higher tax rates, introduction of new taxes (especially
sales taxes), and rising incomes, sales, and property valuations. Revenues
from sales taxes during the first quarter of 1948, for example, were 20 percent above the same period of 1947. State and local governments continue
to seek new sources of revenue to meet expenditures which are mounting
faster than receipts.
About 4.6 billion dollars of the Federal budgetary surplus during the
first half of 1948 was used to retire public debt. Furthermore, the net
increase in the public debt holdings of Federal trust funds and the net
increase in the amount of savings bonds and notes outstanding made additional funds available to retire marketable debt held outside of the Government. In consequence, the marketable debt was reduced by about 5.4
billion dollars during the first half of 1948. Debt held by commercial and
Federal Reserve banks was reduced by about 4.9 billion dollars. The
gross public debt, which was just under 257 billion dollars at the end of




21

1947, was thus reduced to about 252 billion at the end of June 1948, while
the Treasury cash balance increased from about 3 billion dollars to nearly
5 billion during that period. (See appendix C, table 23.)
The reduction in bank-held debt was an important factor in the decline
of about 4.5 billion dollars in the money supply which occurred during
the period. (See appendix C, table 22.) Throughout the period, public
debt retirements were concentrated in the first instance on debt held by
the Federal Reserve banks. However, the restrictive effect of debt retirements was offset in considerable measure by the gold inflow, by return
of currency from circulation, and by open-market purchases of Government
securities by the Federal Reserve System. Such purchases were necessary
to support the prices of bonds as banks and others sold securities in order
to maintain reserves and to obtain funds for other purposes. Nevertheless,
the budget surplus and debt retirement placed some pressure on commercial bank reserves and were to some extent a contributory factor to
the slow-down of commercial bank loan expansion which occurred during
the period.
State and local debt continued to expand. It was possible during war
years, with high revenues and severely limited activities, to retire a substantial fraction of outstanding debt; but the pressure of new needs since the
war has brought a return to the prewar picture of steadily growing physical
assets and indebtedness. State and municipal securities issues to secure
new capital were 2.2 billion dollars in 1947, or more than twice as great as
in 1946. A substantial amount of borrowing was for the purpose of
securing funds for payment of veterans' bonuses.
This survey of the transactions of Federal, State, and local governments
indicates that during the first half of 1948 their combined effect continued
to serve as a strong factor of restraint on the force of inflation. During
the second half of the year this restraining influence will be almost wholly
lost. The Federal Government is faced with the prospect of decreased
revenues and increased expenditures. While State and local governments
are raising tax rates and levying new taxes, their expenditures continue to
exuand faster than their revenues.
Summary: The Nation's Economic Budget
The Nation's Economic Budget is a convenient way of summarizing the
main trends in the flow of goods and purchasing power, and of relating
these trends to possible future developments.
The Nation's Economic Budget total, representing gross national income
or expenditure, in dollar terms increased by 7 percent from 1947 to the
first half of 1948 (annual rate). (See chart 6.) This is a rate of increase somewhat below the rise that took place in the preceding year.




22

A large part of the increase in 1948, as in 1947, reflects the rise in prices
and wages; there was, however, also some increase in the real flow of
goods and services. The inflationary tendencies that prevailed particularly
in the second half of 1947 continued in 1948, though at a reduced rate.
TABLE 7.—The Nation's Economic Budget
[Billions of dollars]
Calendar year 1948, first
half, annual rates seasonally adjustedi

Calendar year 1947
Account
Receipts

Consumers:
Disposable income .
Expenditures.
Saving (+)
Business:
Undistributed profits and reserves
Gross private domestic investment
Excess of receipts (+) or investment (—)
International:
Net foreign investment - - Excess of receipts (+) or investment (—)
Government (Federal, State, and local):
Cash receipts from the public
Cash payments to the public
Excess of receipts (+) or payments (—)_
Adjustments.....
Total gross national product

Excess of
receipts
ExRependi- (+)or
ceipts
tures expenditures ( - )

186.0

173.6
164.8

21 4

8.9
59.9
53.2

tures (-)

174.4

+8.8

19 4
30.0

Excess of
receipts
Expendi- (+)or
tures expendi-

-10.6

37.2
3.9

-8.9
64.0

52.0

+11.6
-15.8
-3.9

-21.3

-25.2

+6.7
+3.9

-24.9

-21.1

+12.0
-3.8

231.6

231.6

0

246.5

246.5

0

i Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: See appendix A for sources and explanatory material.

Comparing the composition of the Nation's Economic Budget in the
first half of the current year with the preceding year, the similarities appear
more significant than the changes that have occurred. The largest items
in the Nation's Economic Budget are consumer income and expenditures.
Their share in the Nation's Economic Budget total remains approximately
constant with 75 percent and 71 percent for consumer income and consumer expenditures, respectively. These percentages, large as they are,
are somewhat below those that prevailed in most peacetime years in the
past. Large national and international government programs and large
business investment compete with consumer expenditures for limited national resources. The sum of business, international, and government accounts in the Nation's Economic Budget maintained a relatively large
share in the total; but there were quite substantial changes in the relationship among these accounts.
Gross private domestic investment increased relatively more than any
other major category in the Nation's Economic Budget. This was due to




23

CHART 6

THE NATION'S ECONOMIC BUDGET
Consumer saving and the Government surplus increased between
1947 and first half of 1948, while the excess of business and
foreign investment declined.
1948,

FIRST HALF

(BILLIONS OF DOLLARS) *

CONSUMERS

EXCESS OF
EXPENDITURES (-), RECEIPTS (+)
0

BUSINESS

INTERNATIONAL

I

EXCESS OF
INVESTMENT

GOVERNMENT
CASH
SURPLUS

1947,

QALENDAR YEAR

(BILLIONS OF DOLLARS)

CONSUMERS
CONSUMER
SAVING

, EXCESS OF
INVESTMENT

INTERNATIONAL

i

, EXCESS OF
INVESTMENT

GOVERNMENT
CASH
I SURPLUS

I 59.9

* ANNUAL RATES, SEASONALLY

ADJUSTED.

NOTE: THE COMPONENTS DO NOT ADD TO THE GROSS NATIONAL PRODUCT BECAUSE OF CERTAIN
SEE APPENDIX A.

SOURCE: SEE APPENDIX A.




24

ADJUSTMENTS.

increases in new construction and inventory accumulation. Present indications are that domestic investment will continue on a high level during
the remainder of the year.
Net foreign investment declined by more than half during the first 6
months of 1948. The increase in Government foreign assistance during
the second half of the year will in large part take the form of grants, which
are recorded in government expenditures rather than in net foreign investment. For this reason, the net foreign investment component of the Nation's Economic Budget will probably not rise, even though the total excess
of exports of goods and services increases.
Government payments have been declining since the war peak, and
showed a further slight decline during the last 6 months. Because of the
increase in Federal outlays for defense and foreign aid, and the continuing
increase in State-local payments, this trend is likely to be reversed. An
increase in government payments therefore appears certain for the coming
6-month period.
Thus it seems likely that expenditures for private domestic investment
will continue at a high level, while the decline in government payments
will be reversed. In the present situation of full employment and capacity
production, this makes for a situation of inflationary pressure.
The picture of an unstable economy is presented even more clearly when
attention is focused upon the excess of receipts or expenditures as presented for each year in the third column in table 7.
Both in 1947 and during the first 6 months of 1948, the excess of investments and exports in the business and international accounts was largely
offset by consumer net saving plus the government cash surplus. Between
these two periods, the excess of business investment increased by nearly
5.5 billion dollars, as did the Government surplus. The most important
change in the Nation's Economic Budget that is bound to occur under
present legislation for the coming period is that this Government cash surplus
will be drastically reduced. This means that by necessity other items of
saving or excess of investment must adjust themselves correspondingly.
It should be recognized that the large dollar amounts of individual saving
and Government cash surplus that helped to balance the large excess investments and excess exports during the last 2 years were partly a result
of the inflationary process. When incomes and prices are inflated, the
amounts of saving and taxes tend to increase. Thus we have in our economic structure a kind of automatic emergency brake that helps to slow
down inflation. By reducing tax rates despite inflationary prospects, we
have acted like an engineer who releases his emergency brake—in the face
of an emergency. The question for the coming months is whether once




25

again we will permit a price rise to balance the Nation's economic accounts
in the precarious manner that is characteristic of an inflationary movement.
Looking at the Nation's Economic Budget from the long-range aspect of
economic stability, it appears also that major adjustments still remain to
be made if a peacetime economy of sustained prosperity is to be achieved.
The sum total of business investment, net foreign investment, and government expenditures will probably require a smaller share in the Nation's
Economic Budget total than in recent years. That means that, in a future
expanded economy, consumer income and expenditures will require a larger
share in order to assure markets for everything that can be produced.
Adjustments that must be made eventually in order to assure sustained
prosperity are not appearing in the course of unchecked inflation. By
permitting further inflation, we render the future task of transition to
a condition of sustained prosperity that much more difficult.




26

II. Prices, Wages, and the Impact
of Three Government Actions

T

HE first half of 1948 has shown several important developments—and
at times cross currents—in the process of market competition, collective bargaining, and price making through which our system of free enterprise operates.
THE COURSE OF PRICES

As 1947 closed, both wholesale and consumers' prices were at postwar
peaks, after sharp advances in the second half of 1947 which carried wholesale prices to 47 percent and consumers' prices to 29 percent above the
mid-1946 level. Early this year, this trend was broken by a sharp downturn
in commodity prices, but during the second quarter prices again marched
forward. At midyear of 1948, the level of wholesale prices was 1.8 percent
higher and the level of consumers' prices was 2.8 percent higher than at the
start of the year. As we enter the third quarter of 1948, price rises are
occurring on a broad front, though somewhat more selective in character
than a year ago.
The course of wholesale prices and consumers' prices has varied considerably. During the first quarter, there was a sharp break in farm products and foods, which carried the wholesale price index substantially downward. In the second quarter, farm products almost regained, and foods
more than regained, the ground lost earlier in the year. (See chart 7 and
appendix C, table 18.)
Wholesale prices other than farm products and foods were strong, with
a slight upward movement. Three commodity areas in particular showed
advances in wholesale prices in response to strong pressures of manufacturing and construction demand. (See chart 8.) These were fuel and
lighting materials (notably coal), metals and metal products, and building
materials. The second quarter saw prices increase for such important
nonferrous metals as lead, tin, and aluminum. At the same time, weakness in a number of cotton-textile products reflected a reduction in demand and a much easier supply position. The one major industrial price
index which showed a net decline for the whole period was hides and




27

WHOLESALE PRICES
Wholesale prices showed little net change during the first half of
1948 because of the break in farm prices during February. Prices
during the second quarter moved forward again.
PERCENT OF 1926 AVERAGE
220

PERCENT OF 1926 AVERAGE
220

200

-

-

180

-

160

-

-

160

140

-

-

140

120

-

-

120

180

OTHER THAN FARM
PRODUCTS AND FOODS

100

100

1946

1947

1948

PRECENTAGE INCREASES SINCE JUNE 1946 AND SINCE JUNE 1947
ALL
COMMODITIES

FOODS
OTHER THAN
FARM PRODUCTS
AND FOODS
FARM
PRODUCTS
SOURCE: DEPARTMENT OF LABOR.




200

28

CHART 8

WHOLESALE PRICES
(COMMODITIES OTHER THAN FARM AND FOODS*)

Price advances during the first half of 1948 were marked for basic
metals, fuel, and building materials. Hides and leather products
showed a substantial drop.
PERCENT OF 1926 AVERAGE

PERCENT OF 1926 AVERAGE

I 40

I 40

I 20

I 20
CHEMICALS AND ALLIED
PRODUCTS
FUEL AND
' LIGHTING MATERIAL

I 00

100

80 I 1 I 1 1 I I I 1 1 1 1 I I 1 I M

I

80 I 1 I I 1 I 1 I I I I I I 1 I I I 1

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

1947

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

1948

1947

220

200

1948

220

200

BUILDING MATERIAL
S_

^*—

1 80

180

-

HIDES AND LEATHER
PRODUCTS
1 60

160

i

140

140

•wm^

TEXTILE PRODUCTS

METALS AN 0 METAL ~
PR0DU ITS

1 20 -

120

I 1111 I 1I II 1

I 1M1

1947

100

- *

1948

100

* H0USEFURNISHIN6 GOODS AND MISCELLANEOUS ITEMS NOT SHOWN.
SOURCE: DEPARTMENT OF LABOR.




-

1 111111111 1 1 1 11 1

1947

1948

leather products. This resulted from the better supply position and the
reduction in market demand for shoes.
Consumers' prices advanced somewhat more than wholesale prices during the half year. (See chart 9 and appendix C, table 17.) There was
a temporary dip in food prices which reflected the February break in the
prices of farm products. Thereafter, food prices rebounded and still continued upward, reaching new peaks. The growing effects of the decline
in the supply of meat were reflected in a substantial rise in meat prices.
Even during the dip in food prices, other consumer goods continued to
advance as the increases in wholesale prices in the last quarter of 1947 were
passed through to the retail level. Rents, which rose some 5 percent with
partial decontrol in the fall of 1947, showed a slight continuous advance this
year.
A significant aspect of advancing consumer prices lies in their effect
upon wage demands, while wage increases in turn are reflected in industrial
prices.
The course of prices in 1948 has been highlighted by several spectaculai
eveiits. First came the unusually sharp break in grain prices in early
February, following noticeable weakness in the last half of January. The
decline affected cattle, hog, cotton, and other farm prices, as well as grain.
The readjustment of farm prices was of unusual severity. It raised fears
in some quarters of a widespread break in prices, production, and employment similar to the 1920-21 collapse.
In this instance, however, the break was isolated, and did not have the
feared effect upon industry and commerce. The existence of agricultural
price supports set a limit to the possible extent of the fall and gave reassurance that there would be no agricultural collapse. Grain prices remained
above the support levels for the 1947 crop, but wheat prices fell to about
the level of the prospective supports for the 1948 crop. Furthermore,
owing to the nature of the agricultural industry, the break in farm prices
did not lead to curtailment of production or discharge of workers. A high
level of investment in plant and equipment was being maintained, construction activity was expanding, and there was a large, export movement and
a high level of consumption. All these factors continued to enable the
economy to localize weakness in one sector, and even in that sector prices
soon resumed their rise.
Nevertheless, the recession in grain prices acted as a warning signal to
business generally that price movements are no one-way street. Insofar
as it damped down the spirit of inflation, its effect was salutary. Hope
was generated in some quarters that prices were about to level off and that
necessary price adjustments could be made in an orderly fashion in response
to an improving demand-and-supply situation. There was belief, too, that




30

CONSUMERS' PRICES
After some hesitation in the first quarter of 1948, consumers1
prices resumed their upward climb, with food prices in the lead.
PERCENT OF 1935-39 AVERAGE

PERCENT OF 1935-39 AVERAGE

220

220

200

200
FOOD.

180

180

160

160

ITEMS*

140

140

120

100

120

RENT

1 1 1 1 1 1 1 ) 1 1 1

1

I I I 1 1 I

1946

1947

I

1 I I

I

1 I I I

100

1948

PRECENTAGE INCREASES SINCE JUNE 1946 AND SINCE JUNE 1947
ALL ITEMS*

FOOD

APPAREL

RENT

SOURCE: DEPARTMENT OF LABOR.




* ALSO INCLUDES HOUSEFURNISHINGS, FUEL, ELECTRICITY, ICE, AND
MISCELLANEOUS GOODS AND SERVICES NOT SHOWN ON CHART.

31

such developments on the price front would have a restraining influence
on the forthcoming wage negotiations in major industries.
A second major price development which took place in the first quarter
of the year was the gradual advance in numerous steel prices, culminating
in the mark-up of semifinished steel on February 12. This rise gave notice
that, whatever the readjustments in the farm area, demand pressures were
still very strong in the area of basic industrial materials, and that the boom
in capital goods was continuing unabated.
Late in April, it is true, the leading company in the steel industry announced a series of price cuts and joined with other large employers in
stating that the continuation of the price-wage spiral was harmful both
to management and to labor. But this attempt to hold the price and wage
line was short-lived. It was soon followed by both price and wage increases in many industries. Automobiles, aluminum, rubber products, and
electrical equipment and appliances, and finally coal and steel, were prominent examples. Recently announced price increases for steel average more
than $9 per ton, or about 11 percent.
The price situation at midyear was thus dominated by the emergence of
a new impetus to the wage-price spiral. The substantial increase of coal
and steel prices, in conjunction with recent and prospective increases in
transportation and public utility rates, represents a broad upward movement in the cost structure of industry at large, and forms the potential basis
for a dangerous general spiraling of prices.
THE COURSE OF WAGES

Wage trends during the half year have corresponded fairly closely to the
course of the economy as a whole. As the year opened, the inflationary tide
of the second half of 1947 was running very strong, and this was reflected in
wage settlements. When the break in commodity prices engendered a less
inflationary sentiment, there appeared for a time a strong resistance to wage
increases, revealing in part the feeling that they could not be passed on to
the consumer through higher prices. When the pulse of inflation again
quickened and the cost-of-living trend again became clear, the resistance
to wage increases abated, and an upward spiral of prices and wages again
developed. For the entire first half of the year, this spiral has not been
as extreme as in the second half 3 of 1947, but its momentum increased
rapidly during May and June.
By the beginning of this year, most union workers had received at least
two postwar wage increases, and a sizable fraction had received three or
more. Available information indicates that unorganized workers did not
fare quite so well. The third round of increases was well under way last
fall, and the signing of new and significant wage agreements continued as




32

the new year began. Increases were negotiated in woolen textiles, westcoast lumber, building construction, part of the meat-packing industry, and
other fields. Arbitration awards gave increases to maritime workers on
both coasts and to some ladies' garment workers in New York. Interspersed
with the third-round increases were many minor and some major secondround contracts.
These wage settlements, like those of 1947, were dominated by the rising
cost of living. Higher living costs had by early 1948 largely dissipated the
monetary gains of the second round. Hence, organized labor was seeking
new advances to restore its purchasing power. The third round settlements
averaged somewhat less than those of the second round, and were more
closely adjusted to particular situations, following somewhat less of a
"pattern" than in previous years.
When the price break in the commodity markets induced a widespread
hope that inflation was losing its force and that the cost of living might
be stabilized or reduced, coupled with the belief that the economy might
not stand further advances in industrial prices, it seemed that the third
round of wage increases might not extend to the major industrial concerns
whose contracts were to be negotiated in the spring. The major electrical
companies sought to hold wages and to lower prices. Negotiations in
that industry had been practically deadlocked for weeks when, in April, the
United States Steel Corporation refused the demand of the steel workers for
a substantial increase, and made moderate reductions in prices of finished
steel products. Following this action, major negotiations in other branches
of industry were suspended, and several major companies in the automobile
industry appeared to be standing firm in their opposition to wage demands.
After the commodity price break had been arrested without spreading to
other segments of the economy, and after the defense program was
announced, it appeared to workers that costs of living would not decline and
might advance and to employers that the passing on of wage increases in
higher prices would be possible. Since profit prospects were good, and the
denial of wage increases carried the threat of suspended operations, there
were by May widespread settlements at higher wages, even in the metalr
working field. The General Motors settlements of May 25 cast the die in
favor of wage advances in the mass-production industries. In relatively
short order, settlements were then reached in most of the automobile, electrical, aluminum, rubber, coal, and steel industries.
Automobile contracts generally provided for around 13 cents increase
in hourly wages, rubber 11 cents, and steel an average of 13 cents. In the
major electrical companies, except for General Motors where the automobile
contract applied to the electrical workers, the wage increase was 8 percent,
and in aluminum an average of 10 percent. By June, the average weekly




33

earnings for manufacturing as a whole were nearly $53. (See appendix C,
tables 9 and 10.)
The terms of the General Motors settlement were noteworthy, since
they embodied the principle of adjustment up or down at short intervals
in response to changes in cost of living and also provided for a future rise
in dollar income to reflect technological progress. This formula has been
adopted in very few subsequent contracts.
On March 15, the bituminous coal miners stopped work in a conflict
over the welfare fund. This stoppage resulted in a loss of steel output by
about V/2 million tons. Work was resumed on April 12, but new strike
threats arose in May, when negotiations were opened for the new year's
contract. This was settled on June 25 by the granting of a $1 a day wage
increase and doubling the welfare fund royalty—from 10 cents to 20 cents
per ton. On July 4 the anthracite companies accepted a similar contract.
The steel companies also reached an agreement covering their captive
mines on July 14. As a result of the new contract, bituminous coal miners'
average weekly earnings will rise to approximately $80, assuming a continuation of a full 40-hour workweek.
Earnings in the building construction industry have risen only somewhat
less steeply than in coal mining in recent years. Wage rates for construction
workers have been adjusted upward periodically since VJ-day. Skilled
construction mechanics in metropolitan areas today average nearly $2.25
an hour. Bricklayers are at the peak with an hourly wage running from
$1.75 to $3.20 an hour. Weekly earnings for all construction workers
average slightly more than $68 a week. (See appendix C, table 9.) This
figure reflects the short average workweek in construction and the low
earnings of many unskilled and semiskilled workmen, particularly in nonmetropolitan areas.
The fact that many wages have advanced sharply should not overshadow
the fact that millions of workers, who have not participated in the regular
rounds of postwar increases, have seen their real earnings decrease as the
cost of living has mounted. Such unevenness of wage movements has a
disturbing effect upon the whole wage structure, upon relationships among
the various cost factors in production, and upon interindustry relationships
as well.
Most third round increases have been roughly comparable, percentagewise, to the increase in the Consumers' Price Index since the previous contract. With few exceptions, bargaining has been concentrated this year
on wage changes, rather than on pension and other security benefits.
The limited fringe benefits have consisted largely of additional paid holidays and medical or hospitalization plans. Also, a significant number of




34

contracts have been signed for a 2-year period, thus improving the prospect
for industrial peace.
Despite the substantial wage rate increases in particular industries, neither
average weekly earnings nor total wage and salary incomes have risen significantly. This was partly because of the delay in settlements in the February-May period, and partly because the effects of recent contract adjustments have not yet been reflected in the statistics. It was also partly
because many workers have not had their wages raised, and partly because the hours worked per week have been somewhat reduced. The
workweek in manufacturing industries, which averaged 40.4 hours in the
last half of 1947, fell to an average of about 40.1 in the first half of this
year. Similar decreases occurred in construction, telephones, electric
power, trade and service industries. On balance, weekly earnings have
been relatively stable throughout the early months of 1948, with increases
in hourly earnings about offsetting reduction in hours.
THE IMPACT OF THREE GOVERNMENT ACTIONS

While these price and wage developments were going on, three important
new factors were introduced into the price picture. The seriousness of the
European situation led to an expanded defense program. The Congress
approved an increase of approximately 3.5 billion dollars above the January
budget recommendations of 11 billion dollars in support of national defense.
At about the same time, the Congress authorized a new foreign aid program
and set up an Economic Cooperation Administration to carry the program
into effect. On April 2, Federal taxes were reduced in an estimated amount
of 5 billion dollars a year. The impact of these three actions will be
analyzed before evaluating the whole prospect for inflation.
Foreign aid and domestic supply
Under the Foreign Assistance Act and other aid programs, the Congress
has, over the past 6 months, provided funds for foreign aid in an aggregate
amount of over 7 billion dollars. Over 6 billion is intended for aid to
Europe, primarily through the European recovery program. These funds
are for use not later than the middle of 1949.
The Economic Cooperation Administration was established by the Congress to administer the major new foreign aid programs. The ECA is insisting that the programs of the individual participating countries be
screened by their joint organization before being submitted, so that the ECA
will receive a unified program for all of western Europe. This procedure
should serve to encourage a high degree of cooperation among the participating countries.




35

Programs for the third quarter of 1948, allotting over 1.1 billion dollars
of EGA funds, were recently announced. Programs for later periods have
not yet been finally determined. Procurement of commodities and services
including freight, amounting to over 800 million dollars, had been authorized by the EC A up to July 19, 3 percent of this being for China and
the rest for European countries. In accordance with the Government's
policy of maximizing the use of private channels of trade, three-quarters of
these authorizations were for procurement directly from private industry
and only one-quarter, representing chiefly agricultural commodities, was
for procurement through United States Government agencies. About half
of the total consisted of authorizations to procure goods outside the United
States, primarily in Canada, but including also the participating countries.
Such "offshore procurement" constitutes the bulk of the authorizations in
the cases of such commodities in tight supply in the United States as petroleum, nonferrous metals, meats, inedible oils and fats, fertilizer, and lumber
and newsprint.
The foreign aid program is not designed to put props under our current
business boom. The unfilled demands of the American market, with
its enormous purchasing power, would sustain our prosperity for the
present even if foreign markets were sharply reduced. We are deliberately
subjecting ourselves to inflationary pressures on the domestic economy
in the short-run, in order to contribute to international security and economic stabilization in the long-run.
Stabilizing the world political situation and restoring peaceful world
trade is vital to maintaining our domestic economy on a high level of
production and employment in the years to come. After accumulated
demands at home have been successfully met and supply lines filled up,
the American economy, to continue to operate at high speed, requires that
the world in which we trade shall likewise be active and prosperous. Further recovery in western Europe will progressively remove the need for
further assistance from the United States Government. Moreover, if we
pursue proper policies in international trade, it will promote a beneficial
flow of goods to the United States and support foreign demand for our
products.
These deferred advantages, however, do not eliminate nor even reduce
the present problem resulting from stimulated exports of goods while our
own markets are still not fully supplied. It is true that the total export
surplus in the coming 6 months will probably not attain the average rate
of 1947, even if our aid is utilized at a higher rate than last year. The
reason is that foreign countries will not be able to liquidate gold and dollar
assets in anything like the amounts they did in 1947 because these resources
have been greatly reduced; and the funds made available through private




36

sources, through the International Bank, and through the International
Monetary Fund are not likely to make up the difference. The excess of
exports over imports may, however, be expected to rise from the level
reached during the first half of this year, when operations under the Economic Cooperation Act had hardly begun.
Even more significant than the total is the composition of the bill of
goods required. Earlier reports on the impact of foreign aid upon the
domestic economy have emphasized that the pressure upon a few key
spots is more troublesome than the impact would appear to be when
measured in aggregate dollar terms. This will continue to be the case,
with an important difference between the impact upon agricultural supplies and the impact upon industrial supplies.
In the case of agricultural supplies, exports of wheat from this country
are now expected to be below the 480 million bushels exported during the
past crop year. This reflects the prospects of unusually good cereal crops
in western Europe this year compared with an extremely low yield last
year. This easing of foreign pressure on our grain supplies comes at a
time when our own 1948 wheat crop is estimated at a high figure of 1.2
billion bushels (120 million below last year's record crop). Meanwhile,
the preliminary outlook for corn offers hope of a record crop of 3.3 billion
bushels compared with last year's 2.4 billion. In addition, most of the
agricultural commodities which are expected to be shipped abroad in larger
quantities this year than in 1947, such as cotton, tobacco, and some other
products, are available at home in adequate supply. Thus, the impact of
the aid program in the agricultural area, with its important bearing upon
domestic food prices, is unlikely to be as serious as it has been. Nonetheless,
it will have a substantial continuing effect in view of the extraordinarily
high domestic demand.
In the case of some key industrial products, the foreign aid program will
continue to exert great pressure against tight supply. Although major
decreases are expected in the total export of fats and oils, freight cars,
electrical machinery and apparatus, petroleum products, and coal, the high
domestic demand for these products in relation to supply will require the
most careful screening of exports.
The rate of steel exports during the remainder of this year, while lower
than in 1947, is expected to be higher than in the first part of this year
because exports to western Europe are expected to increase more than
exports to the rest of the world will be reduced even with drastic controls.
Agricultural machinery, in great demand at home, is not expected to be
exported at higher rates in the second half of this year than in the first
half, although it will be exported at a higher rate than in 1947.




37

While increased production will make somewhat larger amounts of
such important commodities as steel, agricultural machinery, and fertilizer
available for domestic use, it may be said in summary that the foreign
aid program as a whole will exert a somewhat greater pressure upon the
domestic economy in the second half of this year than in the first half,
although somewhat less than during 1947.
Defense demands and civilian supply
The original recommendations last January in the Budget Message
called for only a slight expansion of our national defense program. The
total authority to obligate funds for national defense during the fiscal year
1948 was 10.4 billion dollars, and the Budget Message requested a total
authorization for the fiscal year 1949 of 10.9 billion. This increase was
accounted for mainly by the universal training program proposed at that
time and by a larger stockpiling program.
Unhappily, the course of events made it clear that a prudent regard for
maintaining the peace called for expanded programs in all areas of national
defense. Following recommendations for an enlarged program, the Congress approved such expansion during the last session. For the fiscal year
1949, total appropriations and contract authorizations in the amount of
about 14.4 billion dollars have now been approved—about 3.5 billion dollars
above the amount recommended last January. Included in this increased
program is 525 million dollars authorized for the stockpiling of strategic
and critical materials. In addition to the defense program, about 100
million dollars have been authorized for related expansion for the merchant
shipbuilding program, and 84 million not obligated last year has been
extended. The largest increase in defense expenditures is accounted for by
a very rapid stepping-up of the aircraft program. There will also be a substantial increase in the personnel of the Armed Forces and in procurement
for the Army and the Navy.
These increased authorizations, it is true, in the main provide the basis
for future expansion, and will have relatively little effect on cash payments
for defense programs during the last half of this year. During the first half
of the calendar year 1948 cash payments in support of national defense were
running at an annual rate of about 10.9 billion dollars. With the new programs, it is estimated that during the second half of this year the annual
rate of payments will increase by about 800 million dollars. (See appendix A, table 8.) Most of the additional cash payments will be made in
subsequent years. Looking at the matter only for the short run, it might
be thought that such an increase in expenditures for defense does not have
very significant consequences in an economy where the gross national prod-




38

uct is running at almost a 250 billion dollar level. There are, however, two
reasons why the impact on the national economy will be substantial.
The first reason is that the commitments involved in this stepping-up of
the military establishment represent a rising trend. This does not mean
that new defense proposals will be made; whether or not that will be necessary no one can now say. It means simply that the program now under way
will involve an increasing rate of outlays over the next 3 years. The
planning and contracting for these rising expenditures will have economic
impacts in advance of actual expenditures. They support anticipations
of high business volume and high consumer incomes. They equally support anticipations of pressures upon the labor supply and shortages of
raw materials and key industrial products. Some of these effects are already
beginning to appear.
The second reason for the substantial impact of the defense program
upon the domestic economy is that there is now little slack in the use of
our productive capacity. Particular industries of great importance to the
defense program are already severely overburdened, and particular materials
are in short supply.
On the side of materials, the program for the stockpiling of strategic
and critical materials will give rise to important impacts. To carry out this
program, the Congress has to date provided funds and contract authorizations totaling 800 million dollars. Of this amount, 500 million dollars
were in appropriations and 300 million in contract authorizations.
The big impact of stockpile procurement is yet to come; a major fraction
of the funds available will not be spent until later years. Purchases thus far
have been limited, since the needed materials have been in short supply
even for current industrial use. Actual payments for deliveries from new
procurement through June 30, 1948, were less than 100 million dollars.
While there is no absolute certainty about the rate of stockpiling procurement in the future, the funds available are sufficient, if rapidly spent, to
have a sharp impact in the basic materials markets. The rate at which
the balance of about 700 million dollars already authorized will be spent
during the next 12 months is still to be determined, but it will be stepped
up considerably.
The direct requirements of the military, maritime, atomic energy, and
foreign aid programs in the next 12 months will absorb significant percentages of the prospective supply of such materials as copper, zinc, and
lead. Attainment of the stockpile goals deemed necessary to our national
security would require setting aside additional amounts annually for several
years. As it will not be possible to increase supplies of these materials
substantially in the near future, the removal of considerable amounts of
them from the market for stockpiling purposes would encroach upon the




39

level of industrial production at many points. One serious consequence
would be a substantial, and possibly in some instances drastic, rise in
prices. Another would be the impairment of current civilian production.
To hold the economic impact to the minimum consistent with satisfactory
stockpiling progress, it will be necessary to keep the procurement program
flexible, to give careful attention to its impact on other essential programs
and to stimulate new production.
The shortages which the national defense program will in due course accentuate are not limited to materials marked for stockpiling. Aluminum is
a case in point. In view of the increased requirements for aircraft, military requirements for aluminum in the fiscal year 1948-49 amount to
more than 4 percent of the supply. Further expansion of aluminum production draws heavily on the electric-power supply in regions where it
is already short. Although electric-power capacity was greatly expanded
during the war, the peacetime load of a civilian population with steady
work and good incomes promptly took up the whole electric capacity and
as a result an expansion program running several years ahead was launched.
The electric-power shortage cannot easily be relieved by turning to fuel oil
and natural gas, because of shortage of pipe and drilling equipment; nor by
turning to coal, because of shortage of cars and generators.
Steel is another case in point. The principal voluntary allotments
already made or under consideration under Public Law 395 (military,
atomic energy, housing, freight cars, barges, and oil and gas industry equipment), together with EC A and maritime program requirements, would
absorb in this fiscal year nearly a quarter of the total supply of steel mill
products and more than half the supply of some specific products such
as plates and pipes and tubing.
For steel and most of the other strategic materials, the task in hand is
not simply to assure adequate supplies for the defense program and a few
others of top priority. Expanded allocations to specific programs, if effectively accomplished, reduce the remaining supply available for all other
needs. Most consumers of steel outside the present and contemplated
voluntary allocation categories will have less steel in the next 12 months
than they had during the past 12 months. Consumers who have been
able to acquire their own steelmaking facilities will be in a preferred position. Many of the uses of strategic materials not included in the preferred programs are essential directly for the maintenance of civilian output, and indirectly for meeting our military and foreign aid commitments.
These needs cannot be indiscriminately reduced. Nor can the fulfillment
of these needs, without great damage, be left to a scramble for supplies by
unlimited bidding-up of prices, or handled on the basis of historical trade
quotas bearing little relation to essentiality.




40

The instruments now available for the domestic allocation of commodities in short supply do not afford adequate safety in the face of present
and prospective pressures. There are, for example, provisions for the domestic allocation of antimony, tin and tin products, and mandatory power
under the Selective Service Act to allocate steel for military requirements
and to assign priorities for materials and products procured for the military
and atomic energy programs. These mandatory powers, however, apply
to only a small portion of the demand for the materials which they cover.
Thus generally under the legislation now in force, only voluntary allocation procedures are available to distribute the supply of scarce commodities.
This results in two grave difficulties. The first of these difficulties is that
rapid progress toward our stockpiling goals would require curtailment of
domestic civilian consumption to a greater extent than voluntary programs
can accomplish. If either stockpiling or other procurement programs
should be substantially accelerated, there is serious doubt of the ultimate
adequacy of existing measures to meet the problems of inflation, disorganization of production, and harm to small business which would arise from
aggravated specific commodity shortages. The second difficulty is that, with
the weak tools now available, the orderly handling of essential stockpiling
and procurement programs may be jeopardized in an effort to avoid disruption of the general economy.
One further impact of the expanded defense program derives from
its manpower requirements. These will not be very great in 1948, but it is
estimated that new defense needs will, within a year from now, call for the
services of about 1 million persons as additions to the armed forces, civilian
employees of the armed forces, and workers for producing military equipment. These manpower requirements of the defense program can only
in part be drawn from new accessions to the labor force. There will arise
numerous labor shortages in some areas of the country. Some plants undergoing a marked expansion will experience manpower shortages, particularly
of key skilled and professional personnel, such as tool and die makers,
instrument makers, physicists, chemists, and aeronautical engineers. This
will cause disturbances in some spheres of civilian production, and upward
pressures on wages and other costs.
The impact of tax reduction
As shown in the discussion of government transactions on page 18, the
consolidated cash surplus of Federal payments over receipts during the fiscal
year 1948 amounted to 8.9 billion dollars, of which 7.6 billion came in the
first half of the calendar year 1948. Under reduced taxes, it now appears
that in the second half of the calendar year 1948 there will be only a small




41

surplus, if any, although a sharp rise in prices and incomes under the pressure
of inflation might operate to increase Treasury receipts materially.
The drastic reduction in the surplus from the level prevailing during the
first half of the calendar year 1948 is not due solely to tax reduction, but
is due in part to increased expenditures, especially those resulting from the
enlarged defense program. The decline in the surplus attributable to the
adoption by the Congress of the Tax Revenue Act of 1948 would amount,
over a full year's operation at present income levels, to about 5 billion dollars.
This tax reduction will strengthen consumer expenditures. Taxpayers with
net incomes of $5,000 or less will receive a total tax reduction of about
3 billion dollars; a total of 2 billion dollars of tax reduction will accrue to
those in the higher-income brackets. In the light of these figures, it seems
reasonable to estimate that the tax reduction bill will result in an increase
in the annual rate of consumer spending of somewhere between 3 and
4 billion dollars.
The tax reduction occurred at a time when the international situation
impelled us to adopt additional programs for national defense and foreign
aid. It sharply reduces the large surplus at a time when inflationary forces
are still present and thereby removes our principal protection against the
strengthening of these forces.




42

III. The Issue Between Inflation
and Stabilization
N the preceding pages, the problem of inflation has stood at the center
of the picture. The upsurge of various elements in the price and income structure has introduced unsettling factors which are clearly incompatible with stable prosperity and increasing national security. At the
very heart of sound economic policies must be the desire to help achieve
greater stability and more permanently workable relationships as rapidly
as possible.
From time to time since the war, there have been brief periods when
we appeared to be moving toward such stabilizing relationships. But
each time this prospect was soon upset by some new factor of curtailed
supply or expanded market demand which unleashed again the unsettling
forces of inflation. Effective adjustment policies have been hard to devise
and harder to get accepted and applied.
We appear now to be once more at a stage of renewed instability, with
many prices reaching for the easy dollars that a still undersupplied market
is ready to yield; with recent and prospective wage settlements contributing
to the upward process; with market demand again being stimulated by
the accelerating procurement programs of foreign aid and national defense;
and with continuing scarcities of numerous key materials. Tax reduction
has added to consumer and business demand in the market, but it is incapable of stimulating a proportionately larger flow of goods from our already
overloaded plants, fully employed labor force, and still overstrained
supply lines.
The presence of these inflationary factors does not mean that we are on
the threshold of an inflationary orgy of the "run-away" kind. While
alarmists refer to our present currency as "printing press money," sober
students do not see in the present monetary situation any real analogy with
Continental and Confederate currency episodes or the more recent collapse
of the currencies of numerous countries in Europe or elsewhere after both
World Wars.
Of course, the United States dollar has had its real value lowered in the
course of the economic readjustments induced by World War II. And

I




43

there is no likelihood of a near-time restoration of that former value. But
there is nothing sacred about the price marks of 1939 or 1926, and the
attempt to restore them would probably create more hardship than it
would alleviate.
To be sure, we want to achieve reasonable steadiness of the dollar,
although at a price level necessarily higher than in prewar times. But the
process of monetary adjustment is only one ingredient, and in a sense only a
byproduct, of adjusting relationships within the price-income structure so
as to facilitate and maintain maximum production and employment. The
practical question now is how these adjustments may be wrought, primarily
in the context of the bargaining and compromising through which the
parties at interest work out their rival claims in a free economy, but subject
to the guiding influences of appropriate public policies.
In this process as it is now unfolding, there are complex forces somej
working to lessen and others to intensify inflationary pressures. In attempting to judge what balance these competing forces may work out, we begin
by examining some of the factors that reduce the pressure of inflation.
Outstanding among these is the fact that, in many fields of production, the
supply situation is greatly improved.
One such development was dramatized by the Department of Agriculture crop report of July 9. It opened with these profoundly significant
sentences:
Crop production in 1948 promises to surpass that of the outstanding year of
1942, and the record set in 1946. * * * a record [corn] production of 3,329
million bushels is now indicated. The wheat prospect 1,242 million bushels is an
improvement of 4 percent over earlier forecasts and will be the second largest crop
in our history. * * * Cotton acreage is 10 percent larger than in 1947.
* * * All-crop prospects are reported above the average of the past ten years
and as good as in 1946. Current estimates indicate an aggregate production about
128 percent of the 1923-32 average, compared with 123 percent in 1942 and 126
percent in 1946.

Despite our high degree of industrialization, the tremendous importance
of agriculture cannot be overlooked. The world shortage of foods and
other products of agricultural origin, continuing up to this year, has had an
immense inflationary impact upon the whole price structure through the
relations that farm prices have to the cost of living and to industrial wages,
prices, and profits. Although the full effects will not be felt for some
time, greater abundance in basic agricultural crops should be of signal aid
in the checking of inflation and the progressive working out of reasonably
stable relationships.
That end would not be promoted if the enlargement in supply of farm
products were to coincide with some serious curtailment of demand to
produce a collapse of farmers5 incomes. Such a collapse shortly after




44

World War I spread to rural merchants and bankers, to manufacturers
of farm equipment and consumer goods, and to other commodity markets.
But the repetition of such a debacle today is precluded by a policy of farm
income supports, implemented by procedures worked out and tested over
the past twenty years, though not yet perfected.
A second factor which should significantly work against further inflation
is the increase in industrial expansion. We appear to be nearing the end of
the strong impact of war-created shortages of plant and inventory. While
industrial output has increased less rapidly than extremely favorable production conditions had led us to expect, it should progressively show the
effect of nearly 3 years of added capital investment upon a vast scale. As
an enlarged and modernized industrial plant gets shaken down and its crews
trained to maximum efficiency, domestic backlogs of orders will be worked
down, and the increased flow of final products will permit the great demands
upon the productive system to be met more easily and will ease the pressure
on prices.
These favorable factors on the physical side are'reinforced by numerous
indications of improved economic understanding and broader objectives on
the part of those who operate our business system. It cannot fairly be said
that they have rushed blindly ahead in the boom spirit of past expansionary
periods. A sense of caution has been attained by industrialists, merchants,
and bankers with regard to inventories, credit expansion, and construction
plans. Some unions have applied moderation to their wage demands, and
some manufacturers and distributors have sought to hold prices against
further advances or have initiated reductions, as a means of doing something
positive to stem inflation.
If international tension lessens, the lightening of both the physical and
psychological impact on our economy, with its great productive potential,
would sharply reduce inflationary pressure at important points. We might
then rather promptly be put to the test to show whether our producers
and distributors could make price and cost adjustments fast enough to
continue employment and production without serious cutbacks.
In spite of the counterinflationary factors enumerated, it remains true
that inflation is still very much with us. The nature of this continued
inflation has been treated in detail in the preceding sections of this report.
It can be summarized briefly as three interrelated phases of one complex
process.
First, there is the fact that demand in most categories has been expanding and may expand further. Consumer demand is running high, particularly under the impact of tax reduction and wage increases. Rising residential construction and heavy investment, fed by high profits, add to
businesss demand. Government expenditures are rising. Thus the sum

793637°—48




5

45

total of effective demand of all types still continues to press against a supply
that increases only slowly. This excess of demand may not be as general
as it was when postwar shortages were at their peak. The inflationary
pressure is perhaps more selective than it was, but it is still a major factor
in the price situation.
Second, the inflationary effects have been multiplied through the pricewage spiral. Developments of the last few months have had a cumulative
effect of great importance at the very base of our industrial structure. The
recent attempt to hold industrial wages and reduce prices of industrial goods
has evaporated. Substantial wage increases, which often have been made in
order to catch up with previous price increases, have been accompanied in
turn or promptly followed by substantial rises in the prices in industrial
goods. Production costs are still rising, and while many businesses can pass
them along in higher prices, there are others that are obviously squeezed.
Capacity to pay for high-priced materials is not necessarily distributing them
in the way most consonant with economic efficiency. Railroad freight and
passenger rates have been materially increased, and utilities in many instances have been granted advances by public utility commissions while
others have requests for such advances pending. This upward movement
of prices is linked on the one side to the third round of wage increases and
linked on the other to active talk of a fourth round.
The rising cost of living is imposing intense hardship upon millions of
individuals who are not strategically located to participate in the upward
movement. Meat prices continue to rise, while the prospectively large
supply of grain will have little power to enlarge the supply of meat throughout the remainder of this year and indeed may operate somewhat to reduce
it. While improved grain stocks next year will have important effects on
the prices of livestock products, they cannot in the immediate future counteract the strong inflationary forces which control our markets.
Third, credit expansion, partly a cause and partly a result of inflation, still
persists. The spiraling increase in prices and wages can continue only so
long as business can replenish its working capital from bank credit or
through the conversion of liquid assets.
Almost as significant in its disturbing effect as the statistically demonstrable evidences of inflation is the persistent uneasiness which it breeds, an
uneasiness which could expand into a profoundly disruptive force if it is
not removed by dealing with the specific factors which are its causes. The
deep significance and reality of this uneasiness in the presence of inflation
was clearly illustrated by the conditions surrounding the break in commodity prices early in 1948. A tremor of uncertainty, even of fear, ran
through the whole economy, and for a short time there were many who




46

thought that we were close to a serious and general downturn in employment and production.
Fortunately, that particular break turned out to be corrective rather
than disastrous. But this should not blind us to the fact that there were
special circumstances, already referred to, which isolated its significance and
which could not be counted upon to protect us under other circumstances.
Besides the farm price-support program, which gave assurance to the business community at large, the break was shortly followed by other events
in the economy which fortified optimistic business sentiment.
But we cannot ignore the prospect that unworkable relationships in the
price structure, necessarily the outgrowth of unconquered inflation, may
lead to a break in some other sector of the economy where the consequences
would not thus be isolated. If attendant developments which cannot be
foreseen did not serve substantially to counteract it, this break well might
carry our highly sensitive economy into a general recession of serious proportions.
In short, we have this very year had a significant warning while there
has still been opportunity to act in time. Far from being satisfied because
the lack of action thus far taken has not yet reaped the ultimate
consequences of inflation, we should profit by this warning and vigorously
seize the additional grant of time that circumstances have accorded to us.
The most dangerous error that could overtake us as a nation would be to
assume that the problem has disappeared, or that our efforts should be
abated because we have thus far avoided serious reverses or because the
basic conditions for continued prosperity appear to be sound. It is typical
for inflationary and speculative booms to collapse while business sentiment
is still confident.
It is not enough to be satisfied with quick and crude adjustments by
which our economy can "get by" from month to month or year to year,
still under the momentum of forces engendered during the 4-year war
period. No one can foretell precisely when some event or series of events
might touch off a change in the economic situation more rapidly than we
were prepared to deal with it. It is of ever-increasing importance that
the policies and actions of private business, labor, agriculture, and Government should move toward economically sound relationships so that the
postwar boom may be succeeded by a sustained prosperity based on the
maximum reasonable use of our productive resources.
In the Employment Act of 1946 the Congress declared the continuing
policy of the Government to "coordinate and utilize all its plans, functions,
and resources" to bring about and maintain maximum production and
employment and to preserve and strengthen our economy of free competitive
enterprise. This plan of action requires that we shall always look to the




47

independent factors in our business world to adjust their policies so intelligently that the imbalances which are inevitable in our highly dynamic
economy shall be temporary and shall not accumulate until they destroy
business stability.
The role of the Government as contemplated in the Employment Act
ordinarily is to develop its own activities and organize the policies which
affect business in such a way as to facilitate these needed voluntary adjustments. But if economic maladjustments become so serious that the voluntary action is clearly inadequate to halt threatening trends in the economy,
the power of Government must be used where the President and the
Congress deem necessary to forestall serious damage to the public interest.
The comprehensive wartime controls over business were rapidly removed
after the close of hostilities. Voluntary action has been increasingly relied
upon to maintain business activity at a high level without permitting serious
maladjustments to arise. The files of our business journals show that wide
attention has been given to the desirability as well as the need for every
business firm to adjust its own policies so that it may contribute its share
to stabilization. The attitude and effort of thousands of less conspicuous
firms deserve to be recognized along with the better publicized actions
of a few of our most important business corporations which have held
down or actually reduced prices in a boom market for the express purpose
of furnishing leadership in an effort to halt the inflationary movement.
The same attitude has been exhibited by a large number of the most
important leaders of organized labor, who have earnestly and with some
success postponed or moderated the urgent demands of members of their
labor unions for wage increases to meet the rising cost of living. Farmers
have frankly expressed their uneasiness about the situation which was being
created by rising prices even though they have been beneficiaries thereof,
but the nature of this industry gives them little opportunity to take positive measures. Consumers have reserved large amounts of their savings
bonds and, despite the pressure of high prices, have made large annual
additions to current savings.
While this spreading sense of responsibility and of caution promises
much for the success of our economy in meeting problems of adjustment
in the future, the forces with which we now contend have proved to be
too strong for the countervailing efforts of individual factors in the business world. The workers have seen the cost of living continue to mount,
and to them it seems that any restraint they have shown has only brought
them sacrifice without corresponding benefits to the public. The business
firms which have held down their prices can only feel that they have
permitted others to increase their profits, and they have not halted the
inflation.




48

A real difficulty with the wholly voluntary solution is that it requires
simultaneous action by workers, businessmen, and consumers. But no
individual or group can have firm assurance that the inflation will be
stopped. It is therefore necessary that the Government should have and
use powers in the interest of economic stability, to supplement the strength
of individual actions, to give them common direction, and to prevent their
dissipation through mutual conflict of purpose. Only with the support
of wise and vigorous Government action can the effectiveness of voluntary
actions be assured.




49




Appendix A
The Nation's Economic Budget
Tables
Page

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.

The Nation's Economic Budget
Consumer account
Business account
The export surplus and net foreign investment
Government cash receipts and payments to the public
Reconciliation of Budget receipts with cash receipts from the
public, fiscal year 1948
Reconciliation of Budget expenditures with cash payments to the
public, fiscal year 1948
Federal cash surplus, 1947 and 1948
Federal cash receipts from the public other than borrowing, 1947
and 1948
Federal cash payments by function, 1947 and 1948
Federal cash payments by type of recipient, 1947 and 1 9 4 8 . . . .
Reconciliation of cash payments to the public with Government
expenditures for goods and services
Adjustments to receipts (or income) in the Nation's Economic
Budget
Reconciliation of cash receipts with tax series arising from
current production of goods and services




51

52
54
55
56
57
58
58
59
59
60
61
63
63
64

The Nation's Economic Budget
Explanation of the tables
Table 1 presents the Nation's Economic Budget for the calendar year
1947 and the first half of 1948.
TABLE 1.—The Nation's Economic Budget
Calendar year 1947 and January-June 1948
[Billions of dollars, current prices]
January-June 1948 annual
rates, seasonally adjusted i

1947
Economic group

Excess
Expendi- Excess
Receipts Expendi- (+)or
(+)or
tures deficit (-) Receipts
tures deficit ( - )

CONSUMERS
Disposable income _
Expenditures
.
Saving (+)

173.6

186.0
164.8

___ _

174.4
+8.8

+11.6

BUSINESS
Undistributed profits and additions to
reserves
Gross private domestic investment
Excess of receipts (+) or investment

21.4

19.4
30.0

37.2
-10.6

-15.8

INTERNATIONAL
Net foreign investment
Excess of receipts (+) or investment

8.9

3.9
-8.9

-3.9

GOVERNMENT
(Federal, State, and local)
Cash receipts from the public
Cash payments to the public
Excess of receipts (+) or payments

59.9

64.0
53.2

52.0
+6.7

+12.0

A D J U S T M E N T S (To arrive at gross
national product)
For receipts—
For payments
Statistical discrepancy
Total gross national product

—17.9
O

A

231.6

-25.2

-17.9
+25.2
-3.4

231.6

i Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.




52

-21.1
-21.1
-3.8
246.5

246.5

-21.1
+21.1
-3.8

Nature of the accounts and sources
The Nation's Economic Budget is designed to give a general picture of
significant movements or changes in the economy, and their relation to
the economic decisions of consumers, business, and government. The
principal flows of income and expenditures, and the net additions to and
absorption of saving are interrelated in an overall way in the Budget.
The estimates of consumer receipts and expenditure, business receipts
and domestic investment, and net foreign investment are based on the income and product accounts prepared by the Department of Commerce.1
Government receipts and payments are based on cash receipts from and
payments to the public as estimated by the Bureau of the Budget.2 The
cash receipts and payments series is used because it gives a more complete
picture of the immediate economic impact of Government operations than
other available series on Government expenditures.
The adjustments to receipts and expenditures are made to reconcile
the total of the accounts with the gross national product or expenditure.
The latter includes only receipts or expenditures arising from the current
production of goods and services, while the accounts of consumers, business,
and government, include certain other types of transactions. The nature
of these adjustments is discussed more fully in the section, "Adjustments to
receipts and expenditures." A brief description of the accounts with explanatory and supplementary tables follows.
Consumer account
Table 2 below shows the principal sources of personal income, personal
taxes, and a breakdown of expenditures by important classifications. Consumer income includes the net profits of unincorporated business.
Personal saving is a residual derived by deducting expenditures from
disposable income. Because of statistical imperfections, difficulties of adjusting for seasonality, etc., too much significance should not be attached
to small variations in this figure. Expenditures for dwellings are considered as a business investment rather than a consumer expenditure.
1
A number of the principal series comprised in the national income and product estimates
are shown in appendix C, tables 1 through 6 (by calendar years from 1929 through 1946
and by quarters for 1947 and the first half of 1948). Those desiring more detailed information are referred to the National Income Supplement to the Survey of Current Business,
published in July of 1947 and to the Survey of Current Business, July 1948.
2
See p. A121 of the Budget of the United States for fiscal year 1949.




53

T A B L E 2.—Consumer account
Calendar year 1947 and January-June 1948
[Billions of dollars]

Eeceipts or expenditures

Receipts:
Personal income
Salaries, wages, and other labor income 2_.
Proprietors' and rental income
Dividends and personal interest
Transfer payments 3 ...
Veterans <
_
_
Other..
Less: Personal tax and nontax payments
Equals: Disposable income.
Expenditures:
Durable goods
Nondurable goods
Services

_

January-June
1948, annual
rates, seasonally adjusted l

1947

195.2
121.9
46.0
15.6
11.7
7.3
4.4
21.6
173.6
21.0
96.5
47.3

__
__

Total..

208.1
128.7
51.1
16.7
11.6
6.2
5.4
22.1
186.0
22.0
102.4
50.1

164.!

174.4

"+8?!

Saving

+11.6

i Estimates based on incomplete data.
' Includes employer disbursements for wages and salaries, minus employee contributions for social
insurance, plus other labor income.
3 Includes business transfers.
< Includes military pensions, disability and retirement payments, mustering-out pay, unemployment,
self-employment, and subsistence allowances, terminal-leave bonds, and other miscellaneous payments.
NOTE.—Detail will not necessarily add to totals because of rounding.

Business account
The business account is shown in table 3. Business income includes undistributed corporate profits, and the adjustment for corporate inventory
valuation, plus capital consumption allowances for both corporate and noncorporate business. Because there is no information on noncorporate entrepreneurial withdrawals, it is impossible to include an estimate of retained
earnings for unincorporated business in business income. On the other
hand, investment includes not only the investment of all business, but also
the investment of individuals in homes. Business income and expenditures
are therefore not entirely comparable.
The investment items shown in the business account do not show completely the amount of funds required for financing. For example, investment includes only that part of an increase in the value of inventory arising from an increase in physical volume, while the whole amount
of the increase in the book value of inventories must be financed. Needs
for capital also arise in connection with the transfer of fixed assets, though
such transfers are not reflected in the gross national product, and in connection with an expansion of accounts receivable. On the other hand, some
investment in equipment is financed through depreciation allowances and
some is charged to current expense. Agricultural equipment is frequently




54

financed out of farmers' current income and residential construction by the
owner-occupant. Thus these investments do not give rise to financing requirements in the usual sense even though they do absorb saving.
For the corporations alone, financing sources and requirements are shown
in table 30, appendix G.
TABLE 3.—Business account
Calendar year 1947 and January-June 1948
[Billions of dollars]
January-June
1948, annual

Receipts or investment

Receipts:
Corporate profits
_..
Less:
Corporate profits tax liabilities
_
Dividends..
_
Equals: Corporate undivided profits
Plus: Capital consumption allowance
.__
Less: Corporate inventory valuation adjustmenta
Equals: Undistributed profits (excluding inventory valuation adjustment) and additions to reserves
Domestic gross investment:
Construction
__
_.
._
_
Residential, nonfarm
Nonresidential
_
_
Producers' durable equipment
Change in business inventories
Total investment
Excess of receipts (+) or investment (—)

37.2
-15.8

1 Estimates based on incomplete data.
2
The estimate of corporate profits for the second quarter of 1948 is that of the Council
of Economic Advisers.
3
This adjustment is required because corporate income is reckoned inclusive of changes
in the book value of inventories, as is customary in business accounting, whereas only the
value of the real change in inventories is counted as current output in the national product.
NOTE—Detail will not necessarily add to totals because of rounding.

International account
Net foreign investment, as included in the Nation's Economic Budget,
does not reflect the entire export surplus shown in table 3, page 16, of
the text. It consists only of the portion financed by means that add to
this country's net claims abroad during the period under consideration.
Gifts, grants, and other unilateral transfers, therefore, are not included.
Government unilateral transfers, whether in cash or in kind, are included
in the Nation's Economic Budget as a Government payment; private
unilateral transfers are included in consumer expenditures.
In 1946 and 1947 these two types of unilateral transfers had a net value
of nearly 2.9 and 2.4 billion dollars, respectively. In 1948, however, this
total, and consequently the difference between the total export surplus and
net foreign investment, is expected to become considerably greater owing
to the large proportion of Government aid to foreign countries that will
take the form of grants rather than loans. As a result, net foreign invest-




55

merit is expected to remain much lower than in 1947, and the major
portion of the total export surplus will be included in the Government
component of the Nation's Economic Budget.
The composition of the total excess of exports of goods and services and
the means of financing it are shown in appendix C, table 31. The derivation
of net foreign investment from this total is shown in table 4 below.
TABLE 4.—The export surplus and net foreign investment
Calendar year 1947 and January-June, 1948
[Billions of dollars]

Item

January-June
1948, annual
rates l

1947

Surplus of exports of goods and services.—
Less: Net unilateral transfers:
Government
Private
Equals: Net foreign investment.

11.3
.

8.0

1.8
.6
8.9

3.5
.6
3.9

i Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.

Government account
Table 5 provides a breakdown of the cash receipts and payments of
Federal and State and local governments which are combined in the Nation's Economic Budget. Tables 6 through 11 are supplementary tables on
the Federal budget. The first two of these show the derivation of cash
receipts and payments from budgetary receipts and expenditures. Table 8
shows the Federal cash surplus and tables 9, 10, and 11 provide additional
analytical material on cash receipts and payments, including estimates for
the second half of calendar year 1948.
a. Derivation of Cash Receipts and Payments from Budgetary Receipts
and Expenditures. The basic sources of information concerning Federal
Government receipts and disbursements are Government Budget and Trust
accounts. Such accounts present the financial position and operations of
the Government in accordance with conventional governmental accounting
techniques.
From the standpoint of depicting the current flow of funds to and from
the Government, however, and hence the immediate economic impact of
Government operations, Federal receipts and expenditures as stated in conventional Budget and Trust accounts are deficient. In the first place, as
is desirable for purposes of long-range financial control, they show receipts
and expenditures in many fields on an accrual rather than on a current
cash basis. Terminal-leave bonds issued to veterans, for example, are




56

recorded as a budgetary expenditure at the time of issue rather than at
the time they are redeemed although it is probably not until the latter
moment that their direct economic impact is felt. Secondly, conventional
Budget and Trust account data contain, in the aggregate, a considerable
amount of double counting when considered from the standpoint of the
Government as a whole. For example, transfers from the Treasury general fund to trust accounts are, in order to present a complete picture of
Federal financial operations, recorded both as expenditures and receipts.
From the standpoint of the Government as a whole, however, the transaction is purely one of intragovernmental accounting.
5.—Government cash receipts and payments to the public

TABLE

Calendar year 1947 and January-June 1948
[Billions of dollars]

1947

Receipts or payments

Receipts:
Federal
State and local *

46.9
13.1

50.2
13.8

_

59.9

.64.0

_.

41.1
12.1

37.6
14.4

53.2

52.0

+5.7
+1.0

+12.6
—.6

+6 7

12.0

.--...

Total receipts
Payments:
Federal..
State and local »

_
_

_

Total payments
Surplus (+) or deficit (—):
Federal.
_
State and local
Total

JanuaryJune 1948
annual rates,
seasonally
adjusted i

_
_

i Estimate based on incomplete data.
* Excludes Federal grants-in-aid.
NOTE.—Detail will not necessarily add to totals because of rounding.

In order to derive the Government Account in the Nation's Economic
Budget, therefore, it is necessary (i) to place the conventional data on
a current cash basis, and (ii) to eliminate double counting. Tables 5 and
6, on page 19 of the text, show the cash transactions of Federal and of
State and local governments on such a consolidated basis.
Tables 6 and 7 show a reconciliation of Federal Budget receipts and
expenditures with cash receipts from and payments to the public. A detailed reconciliation of Federal Budget and cash transactions appears
monthly in the Treasury Bulletin. A fuller explanation of the differences
between budgetary and cash receipts and expenditures may be found in the
1949 Budget of the United States (p. A121).




57

TABLE 6.—Reconciliation of Budget receipts with cask receipts from the public
Fiscal year 1948
[Billions of dollars]
Fiscal
Year

Receipts

1948 1

Net budget receipts
Trust account receipts

_

___

44.7
9.5

Total recorded receipts

54.3

Less: Intragovernmental transactions:
Payments to U. S. Treasury (miscellaneous receipts) by Government enterprises
Transfers from general fund to trust accounts
Interest received by trust funds on investments in United States securities
Receipts from sale of surplus vessels transferred to U. S. Treasury (miscellaneous receipts) but
also recorded as a trust account receipt and expenditure
Other
Less: Recorded receipts-not paid in cash by the public:
Deduction from Federal employees' salaries for retirement funds
Other...
_
Equals: Cash receipts from the public*

_

* Estimates based on incomplete data.
2 Less than 50 million dollars.
«Excludes borrowing.
NOTE.—Detail will not necessarily add to totals because of rounding.

TABLE 7.—Reconciliation of Budget expenditures with cash payments to the public
Fiscal year 1948
[Billions of dollars]

Expenditure or payment

Fiscal
Year
19481

Budget expenditures.
_
_
Trust account expenditures
i
_
_
Total recorded expenditures
__
_
Clearing account for outstanding checks and telegraphic reports
Adjusted total, recorded expenditures
_
___
Less: Intragovernmental transactions:
Payments to U. S. Treasury (miscellaneous receipts) by Government enterprises.
Transfers from general fund to trust accounts
Interest received by trust funds on investments in United States securities
Investments of trust funds and Government enterprises in United States securities
Receipts from sale of surplus vessels transferred to U. S. Treasury, but also recorded as a trust
account expenditure
„_.
Other
_
_
_.-_
Less: Recorded expenditures not paid out in cash:
Deduction from employees' salaries for retirement funds
Interest on savings bonds (net increase in redemption value of outstanding issues)
Terminal leave bonds issued
_._
Plus: Cash payments not recorded as expenditures:
Redemption of excess profits tax refund bonds and adjusted service certificates
Terminal leave bonds redeemed for cash
__
Redemption of non-interest-bearing notes by the International Bank and Monetary Fund..
Expenditures of Government enterprises from proceeds of sales of obligations in the market.
Equals: Cash payments to the public

46.1
.5
46.6
.7
4.2
.8
3.0
.8
.2
.5
.2
(*)

1.5
.9
.1

38.8

i Estimates based on incomplete data.
* Less than 50 million dollars.
NOTE.—Detail will not necessarily add to totals because of rounding.




39.3

58

b. Supplementary Tables on Federal Cash Transactions. Table 8 shows
the Federal cash surplus for recent and current periods. The major sources
of Federal revenues are shown in table 9. Table 10 analyzes Federal cash
payments according to major governmental function. Table 11 differs
from table 10 by classifying cash payments not according to function but
according to the major groups initially receiving such payments, so far as
can be done on the basis of the available data. Civilian salaries and wages,
for example, are grouped in a single category, although in the functional
table they are distributed among virtually all categories. Similarly, "payments to business for purchases of goods and services" include a large volume of purchases financed by grants from the Federal Government in support of our foreign aid programs, although these would fall under "international affairs and finance" in the functional classification.
T A B L E 8.—Federal cask surplus
Calendar years 1947 and 1948
[Billions of dollars!

1947
actual

Receipts or payments

1948
annual rates, seasonally
adjusted
JanuaryJune
preliminary

JulyDecember
estimate

46.9
41.1

50.2
37.6

44.7
40.8

+5.7

+12.6

+3.9

Receipts...
Payments.
Surplus (+) or deficit ( - ) .

NOTE.—Detail will not necessarily add to totals because of rounding.
T A B L E 9.—Federal cash receipts from the public other than borrowing
Calendar years 1947 and 1948
[Billions of dollars]
1948

1947
actual

Source

Direct taxes on individuals *_
Direct taxes on corporations..
Employment taxes *
Excises and customs
Miscellaneous receipts
Receipts of trust accounts

JanuaryJune
preliminary

JulyDecember
estimate

21.0
9.1
.7
7.7
4.7
3.6

i Includes personal income taxes and estate and gift taxes.
* Excludes amounts transferred directly to trust accounts.
NOTE.—Detail will not necessarily add to totals because of rounding.

59

23.0
11.5
.8
7.9
3.5
3.6

19.0
11.2
.8
8.0
2.1
3.7

46.9

Total cash receipts..




annual rates, seasonally
adjusted

50.2

44.7

TABLE 10.—Federal cash payments by function
Calendar years 1947 and 1948
[Billions of dollars]
1948

1947
actual

Payment

annual'rates, seasonally
adjusted
January-June July-December
preliminary
estimate

Budget accounts:
National defense
.
International affairs and finance
Veterans' services and benefits _ _
. __ _
Interest on the public debt
Refunds of receipts
Other
_
Trust accounts
Exchange Stabilization Fund
_
. . .
Deduction from Federal employees' salaries for retirement
Clearing account for outstanding checks and telegraphic reports.
Adjustment to daily Treasury statement basis

12.9

10.9

11.7
i34
6.6
3.9
2.4
7.6
25 5
.4
-.3
-.6

3.8
2.6
5.3
2.6
1.4
-.2
.2
— 3

3.9
2.4
5.5
3.3
.3
-.2
.1
-.2
37.6

40.8

6.1

4.9

1.4

.3

3.4
2.5
.4

7.5

Total..

i49

41.1

Total payments to the public
Addendum (included in above):
Total payments relating to international affairs and
finance:
Budget accounts
Foreign economic cooperation trust fund
Exchange Stabilization F u n d '

6.1
6.6

5.2

6.3

6.6

1 Excludes payments of foreign economic trust fund, see addendum.
2 Includes payments from foreign economic cooperation trust fund, see addendum.
* Redemption of notes by International Monetary Fund of portion of United States subscription made
rom Exchange Stabilization Fund.
NOTE.—Detail will not necessarily add to totals because of rounding.




60

TABLE 11.—Federal cash payments by type of recipient
Calendar years 1947 and 1948
[Billions of dollars]

Payment

1948
annual rates, seasonally
adjusted

1947

January-June July-December
preliminary
estimate
Individuals:
Salaries and wages of Federal personnel:
Military (excluding terminal-leave pay to enlisted personnel)
Civilian»
Allowances to dependents of military personnel
Readjustment benefits, pensions, and other payments to veterans 2
Social insurance beneficiaries
Loans to home owners 8
Interest on the Federal debt
-Refunds of taxes *
Other*
Total
Business:
Payments for purchases of goods and services
Subsidies and other payments to farmers
Loans and investments *
Interest on the Federal debt
Refunds of taxes 4 ._
_ ._
Subsidy arising from postal deficit •
_
Home mortgage purchases from financial institutions.
War-damage insurance claims and participants'
profit
Total
International:
Loans to foreign governments
_
Subscriptions to the International Monetary F u n d
and Bank
Membership in other international organizations and
unilateral cash transfers
Total
State and local governments and public agencies:
G ran ts-in-aid
Interest on the Federal debt
Loans
Total

3.1
4.6
.3

3.0
4.3
.3

3.3
4.6
.3

7.3
1.8
—.2
.8
1.6
.4
19.7

6.2
1.8
-.1
1.0
1.7
1.1
19.3

5.9
2.0
-.1
.9
1.7
.7
19.1

8.8
.8
.1
2.9
1.0
.2
.1

10.6
.2
2.9
.7
.3
.1

(8)

8 13.3
.7
2.9
.7
.6
.4

(8)
13.9

14.7

18.5

3.6

1.0

.8

1.8

.6

.6

.1
5.5

.1
1.8

.2
1.6

1.7
8

8

1.6
.1

8

2.0
.1

()

()

()
1.8

1.8

2.2

.2

.1

-.6

41.1

37.6

40.8

Clearing account for outstanding checks and telegraphic reports
Total Federal cash payments to the public

(8)

1 Civilian wages and salaries exclude payroll deductions for Federal employees' retirement benefits
and Post Office wages and salaries. Post Office wages and salaries are estimated at 1.2 billion dollars in
calendar year 1947 and at annual rates of 1.2 billion and 1.5 billion in the first and second halves of calendar
year 1948, respectively. The total Federal civilian pay roll, including the Post Office, is estimated to be
6.0, 5.8, and 6.2 billion dollars in the same periods.
2 Also includes cash terminal-leave pay to enlisted personnel, cashing of terminal-leave bonds, mustering-out pay, and payment of Government and national service life insurance benefits to veterans' beneficiaries.
* Repayments exceed loans.
* Refunds to individuals include refunds to unincorporated business.
* Consists of cash trust account payments other than payment of social insurance benefits and Government and national service life insurance. Such items as repayments of personal funds of military and
civilian personnel located overseas which were deposited in trust accounts and payments of earnings to
prisoners of war are included.
fl
Includes payments of foreign economic cooperation trust fund for goods and services of 2.5 billion
dollars.
7 Includes a small amount for subsidies to business.
8
Less than 50 million dollars.
* In cash payments to the public the Post Office is included on a net basis. The whole deficit is shown
here as a subsidy and included in the business category since the deficit arises primarily because of the
subsidy to mail other than first class.
NOTE.—Detail will not necessarily add to totals because of rounding.

793637°—48




6

61

Adjustments to receipts and expenditures
The adjustments to receipts and expenditures shown in table 1 reconcile the sum of the accounts of consumers, business, government, and net
foreign investment with the gross national product. The latter includes
only expenditures for the current production of goods and services. The
Government account, however, includes total Government cash payments,
whether involving purchase of the current output of goods and services,
purchases of existing assets, or merely transfers of purchasing power to certain groups in the economy. Private transfers, such as gifts, have by and
large not been taken into account. Receipts in the various accounts again
include income arising from Government transfers and are not comparable
with income arising from transactions in goods and services.
The adjustments include transfer payments, purchase or sale of existing
assets, and other transactions which must be deducted to arrive at the gross
national product. Details of the adjustments are shown in tables 12 and
13. According to table 12, "Adjustments to expenditures," transfers to
individuals, including social-security benefits, veterans' bonuses, pensions
and allowances, and similar payments account for a large part of the total.
Cash payments of interest on the Federal debt, which are also defined as a
transfer of purchasing power, are a second large item. Loans to foreign
governments or subscriptions to the International Fund or Bank are similar
to domestic transfers since they involve an addition to the purchasing power
or ability of foreign countries to obtain goods from the United States.2 In
addition to transfers of purchasing power, discrepancies in timing between
the time cash payment is made and the time production is directly affected
must be eliminated.
Government transfer payments to individuals and interest payments
must be eliminated from receipts as well as payments. Receipts from the
sale of surplus property must also be deducted since sales of surplus involve
only transfers of existing assets rather than current production. In addition a number of adjustments must be made for the difference between
the time taxes accrue from current production and the time the Government records receipts. A summary of the adjustments to receipts is shown
in table 13. Table 14 details the reconciliation between cash receipts
and the estimates of taxes used by the Department of Commerce in developing estimates of gross national receipts and expenditures.
2
Sales of surplus property are included among the adjustments for a somewhat different
reason. Such sales are included as part of net foreign investment and since they do not
involve current production, an offsetting entry must be made to arrive at the gross national
product.




62

T A B L E 12.—Reconciliation of cash payments to the public
goods and services

with

Government expenditures for

Calendar year 1947 and January-June 1948
[Billions of dollars]

Description

JanuaryJune 1948
annual
rates,

1947

adjusted i
Cash payments to the public (Federal, State, and local)
Less: Adjustments
Transfers to individuals
Tax refunds
_
Cash interest payments to the public
_
Transfers to business>
_
Loans to foreign governments
Subscriptions to the International Bank and Monetary Fund
Sales of surplus abroad 3
Adjustment for Government enterprises *
_
Miscellaneous trust account payments.
_
Adjustments for time lags 5 .
Noncash expenditures for goods and services 9

63.2

_

Plus: Clearing account for outstanding checks and telegraphic reportsTotal adjustments

_

_

Equals: Government expenditures for goods and services
._
Plus: Expenditures of consumers, business and net foreign investment.
Equals: Gross national product or expenditure
__

52.0

11.1
2.6
4.1
.6
3.6
1.8
1.0
.2
.8
.7
-1.5
-.2

11.0
2.4
4.4
.6
1.0
.2
1.0
-.1
-1.0
-.1

25.2

....

21.0

28.0
203.7
231.6

31.0
215.6
246.5

1 Estimates based on incomplete data.
2
Includes Government subsidies, domestic sales of consumer-type surplus property, and capital transactions. Domestic sales of consumer-type surplus property are deducted because they are included in
consumer expenditures for goods and services.
8
Sales of surplus property abroad are deducted because they are included in net foreign investment.
The figure shown above does not correspond with miscellaneous receipts for sale of surplus abroad since
the figure shown in this table includes sale of goods on credit.
4
Includes net expenditures of Government enterprises which do not represent capital formation.
5
Includes adjustments necessary to bring payments into conformity with the current output of goods
and services. Net receivables and prepayments are deducted, and an adjustment made for military pay
certificates, issue of special currency, etc.
• Includes contributions of Government and Government employees to retirement funds and Government contributions to national service life and Government life insurance.
NOTE.—Detail will not necessarily add to totals because of rounding.
T A B L E 13.—Adjustments to receipts {or income) in the Nation's Economic Budget
Calendar year 1947 and January-June 1948
[Billions of dollars]
January-June,
1948 annual
rates, seasonally
adjusted 1

Description

Total receipts (or income)
__
Less: Adjustments
Receipts of Government transfer payments 3
Receipts of Government interest payments
Subsidies less current surplus of Government enterprises
Adjustments to Government cash receipts s
Total adjustments
Less: Statistical discrepancy
Equals: Gross national receipts

252.9

271A

11.1
4.4
-.1
2.5
17.9
3.4
231.6

11.0
4.6
-.3
5.8
21.1
3.8
246.5

* Estimates based on incomplete data.
* These figures do not a^ree with cash interest payments by Government (table 12) since net interest
payments are included in consumer income.
1
These adjustments, which reconcile cash receipts from the public with the tax series used in estimating
business and personal income, are shown in table 14.
NOTE.—Detail will not necessarily add to totals because of rounding.




63

T A B L E 14.—Reconciliation of cash receipts with tax series arising from
of goods and services

current

production

Calendar year 1947 and January-June 1948

Receipts

January-June
1948, annual
rates seasonally
adjusted»

1Q47

Cash receipts from the public
Less:
Excess of business tax receipts over liabilities
Excess of personal tax receipts over payments
Receipts from sales of domestic surplus property
Receipts from sales of foreign surplus property
Other receipts from abroad 2
Miscellaneous trust 8account receipts
Plus: Noncash receipts
Equals: Tax receipts arising from current production of goods and services

59.9

64.0

-1.4
1.8
2.8
.3
.4
.3
1.5

1.4
3.4
1.5

57.4

58.2

.a

.2
.1
1.0

i Estimates based on incomplete data.
* Primarily reimbursable lend-lease.
* Includes contributions of Government and Government employees to retirement funds, and Government contributions to national service life and Government life insurance funds.
NOTE.—Detail will not necessarily add to totals because of rounding.




64

Appendix B
The Distribution of Consumer Income and
Ownership of Liquid and Other Assets
Tables
Page

1. Share of total money income received by each tenth of the
Nation's spending units when ranked by size of income, 1946
and 1947
2. Distribution of families and spending units by income level,
before and after Federal income tax, 1947
3. Distribution of spending units by income level and type of income change, from 1946 to 1947
4. Selected components of saving, 1946 and 1947
5. Proportion of liquid assets held by spending units and family
units in early 1948, by income level
6. Distribution of spending units by size of liquid asset holdings
in early 1947 and 1948
7. Proportion of spending units reducing liquid assets in 1947, by
purpose of withdrawal and by income level
8. Distribution of spending units holding various types of assets, by
type of asset held in early 1948 and by income level




65

67
68
70
71
71
72
73
73

Distribution of Consumer Income and Ownership of Liquid and Other Assets
The following appendix is intended to supplement the text section,
"Consumer income, expenditure, and saving," page 6, mainly by presenting factual material from which the conclusions of the text are drawn.
Topics relate to changes in the equality of the distribution of income
between 1946 and 1947, the distribution of income before and after income
tax, income increases and decreases between 1946 and 1947, saving and
dissaving, and the distribution of ownership of liquid and other assets by
consumers.
Equality of the distribution of income
The degree of equality in the distribution of money income has remained
substantially unchanged between 1946 and 1947, according to a survey of
consumers made early in 1948.1 This is indicated by the fact that when
the Nation's spending units are ranked according to their incomes, from
lowest incomes to highest, the proportion of the total money income of
the Nation going to each tenth of the spending units has remained almost
constant.2 This is shown in the following table:
The stability of the above distributions between 1946 and 1947 is in
contrast to the significant decrease in income concentration from 1935-36
and 1941 to 1946 described in the Economic Report of January 1948. The
reasons for the increase in the degree of equality over the war period ha^ve
not been completely analyzed but the following factors were probably the
most important: (1) The decrease in unemployment and underemployment, (2) the increase in the number of families with more than one
earner, (3) the rise in farm income relative to the total, and (4) the
narrowing of wage differentials.
1
The 1948 Survey of Consumer Finances conducted for the Board of Governors of the
Federal Reserve System by the Survey Research Center, of Ann Arbor, Mich. This survey
was made for the third consecutive year. Extensive data on distribution of income, liquid
asset holdings, consumer purchases of durable goods, etc., drawn from these surveys have
been published in the Federal Reserve Bulletin during the last 3 years.
2
A spending unit consists of related persons who live together and pool their incomes
for their major items of expense.




66

TABLE 1.—Share of total money income received by each tenth of the Nation's spending units
when ranked by size of income, 1946 and 1947 l
Percent of total money income before taxes
Spending units ranked from lowest to highest income

By tenths
1946

Lowest tenth..
Second tenth
Third tenth 2 _ _
Fourth tenth...
Fifth tenth
Sixth tenth
Seventh tenth
Eighth tenth
Ninth tenth.—
Highest tenth 2..._

1
3
5
6
7
9
10
12
15
32

__

_

194'

_

Cumulative
1

1946
1
3
4

7
q
10
1?
15

33

1
4
9
15
22
31
41
53
68
100

1947
1
4
8
14
?,1
30
40
5?
67
100

1
Income data for 1947 are based on interviews in January-March 1948; for 1946 on interviews in JanuaryMarch 1947. It is possible that the proportion of income received by the highest tenth of income receivers
is underestimated by several percentage points in all years. Samples of approximately 3,000-3,500 spending units have been used in these surveys; owing to the dispersion of higher incomes it cannot be expected
that a completely representative sample of the highest dollar incomes was obtained.
2 The slight change in concentration in these deciles may be due to sampling variations.
Source: Based on data from the 1948 Survey of Consumer Finances, conducted for the Board of Governors
of the Federal Reserve System by the Michigan Survey Research Center. The methods used in the survey
are described in the Federal Reserve Bulletin, June 1948, p. 643.

Between 1946 and 1947, some of the reasons for the previous trend
toward an increased degree of equality continued, such as a continued
rise in farm incomes and a further increase in employment. In the light
of the development during previous years, it might have been expected that
this trend would result in a continued improvement in the income distribution. However, the Survey of Consumer Finances indicates that the distribution of income by deciles has remained the same. An explanation
may be that the favorable effect of employment conditions was offset by
the unfavorable effects of inflation. Inflation per se tends to increase the
inequality of income distribution, since many families, particularly in the
lower brackets, have relatively or entirely fixed incomes.
Distribution of income before and after tax, 1947
The distribution shown above and the distributions shown for 1946 in
the Economic Report of January 1948 relate to money income before tax.
For some purposes, however, it is of more interest to know the distribution
of income after tax. Until the present, data have been inadequate to
present reliable distributions on an "after tax" basis. Through the cooperation of several agencies, distributions of families and of spending
units by income level, before and after Federal income tax, are now presented
for 1947 in table 2.
Families as well as spending units are included in table 2 for the sake of
comparability with distributions for other years and from other sources.
The family consists of related persons living in the same dwelling (persons




67

living alone are considered as separate families), and may comprise more
than one spending unit if some of the members of the family manage their
income separately.
TABLE 2.—Distribution of families and spending units, by income level, before and after Federal
income tax,1 1947
Percent of families Percent of spending
and single indiunits
viduals
Money income class
Before
tax

After
tax

Under $1,000. „
$1,000 to $1,999.
$2,000 to $2,999.
$3,000 to $3,999.
$4,000 to $4,999.
$5,000 to $7,499.
$7,500 and over.

Before
tax

After
tax
15
25
25
17

i Estimated 1947 Federal income tax liability, excluding the tax on capital gains.
Source: See table 1.

Technical notes to Table 2
Preliminary investigations indicate that the survey data as presented in table 2
are sufficiently reliable to show the approximate effect of Federal income-tax liabilities on the distribution of families by income level. In this connection, it should
be mentioned that the tax liability was not based directly on information obtained
in interviews or on tax returns, but on an estimate of the 1947 tax liability made
from comprehensive data concerning family composition and income assembled in
connection with the Survey of Consumer Finances. Further work must be completed to relate the distribution after tax to the adjusted distribution before tax
for 1947 (see Table 2 a below), and to determine more precisely the effect of
—
the tax on the concentration of income.
Study of available prewar data on the distribution of taxes by income level is
also under way with the object of presenting in a future report a comparison of
the effect of the Federal income-tax on the distribution of income between a current
and a prewar year.
The distribution of families before taxes shown above is not comparable with
that presented for 1946 on page 19 of the Economic Report of January 1948. The
1946 distribution was based on survey data which had been adjusted in such a way
as to make it agree with certain independently determined national aggregates
of income and of family numbers. For purposes of comparison, both adjusted and
unadjusted distributions are shown below for 1946 and 1947:




68

TABLE 2—a.—Distribution of families by income level, adjusted and unadjusted basis, in 1946
and 1947
Percent of families
1946

Money income before taxes
Survey
data
Under $1,000...
$1,000 to $1,999.
$2,000 to $2,999.
$3,000 to $3,999.
$4,000 to $4,999.
$5,000 to $7,499.
$7,500 and over.
All units.

100

1947

Adjusted
survey
data*

100

Survey
data

100

Adjusted
survey
data J
11
16
18
17
12
16
10
100

* Revised.
Preliminary.

3

For a description of the methods of adjustment for 1946 and 1947 incomes, see
the January Economics Report, page 102. As stated in that report, the estimated
number of families and single individuals in the civilian noninstitutional population
on December 31, 1946, was 43,330,000. The comparable figure for December 31,
1947, is 44,620,000, according to a preliminary estimate. Total civilian money income was 165.7 billion dollars in 1946 and 185.5 billion dollars in 1947, according
to recently revised data. The percentage expansion of the distributions after adjustment for population coverage was 17 percent in 1946 and 10 percent in 1947.
The adjusted distributions for both 1946 and 1947 are preliminary, since both the
income aggregates and population numbers are subject to further revision.

Table 2 shows that about two-thirds of families (including single individuals) had money incomes under $4,000 before taxes and 31 percent had
money income below $2,000. After payment of taxes, there was an increase in the number of families in all income brackets under $4,000 and a
decrease in all brackets above this. Nearly three-fourths of the families
had incomes of less than $4,000.
Increases and decreases in income, 1946-47
Although there was a general rise in personal incomes between 1946 and
1947, many families did not share in the increase. Of the spending units
having increases in income, only 26 percent were in the under $2,000 group,
which includes 36 percent of total spending units. Only 50 percent were in
the under $3,000 group, which accounted for 59 percent of the spending
units. Thus income increases were somewhat more frequent in the higher
income groups in relation to the number of people in those groups.1
1
In evaluating table 3 it should be remembered that spending units have been grouped
according to income received in 1947. Units with income increases between 1946 and 1947
are now classed according to the higher incomes received in 1947, while units whose income
decreased are'classed according to the lower income to which they moved. Thus the
basis of classification exaggerates somewhat the impression that income increases were
more concentrated at levels above $2,000 or $3,000.




69

Units with relatively fixed incomes are found most frequently in the
lower income brackets. The proportion of persons in the lower brackets
whose income is fixed, such as pensioners and annuitants, widows, etc., has
undoubtedly increased over the war period and during the subsequent
inflation. The income of low-wage earners and marginal farmers has
increased in relation to that of retired persons and those receiving Government stipends or allowances, changing the composition of the lowest income groups.
TABLE 3.—Distribution of spending units by income level and type of income change, from 1946

to 1947 i
Percent of spending units
Change in income, 1946 to 1947

1947 money income before taxes
Total

Increase in
income
Under $1,000
$1,000 to $1,999
$2,000 to $2,999
$3,000 to $3,999
$4,000 to $4,999
$5,000 to $7,499
$7,500jand over

Decrease in
income

.

All units

14
22
23
17
10
9
5

8
18
24
20
12
12
6

20
23
23
16
6
8
4

18
27
22
15
8
6
4

100

-

_

Same
income

100

100

100

i Based on changes in amount of annual income received as reported by spending units in early 1948.
Income which had not changed by more than 5 percent in either direction was considered to "remain the
same."
Source: See table 1.

Saving and dissaving
In 1947, almost three-fourths of all spending units saved, while onefourth spent in excess of income. The proportion of families dissaving was
not very different from that of 1946, but the amounts involved increased
considerably. Since saving on the part of people who saved remained
fairly constant, net saving declined between 1946 and 1947. (See appendix C, table 5.) Saving took the principal forms of an increase in
currency and bank deposits, life insurance, corporate securities, and in
homes and other direct investments. Purchasers of durable goods such
as automobiles are not considered as saving. Dissaving was mainly in the
form of an increase in consumer debt and decreases in holdings of liquid
assets such as Government bonds and bank deposits. The amounts of
selected components of personal saving or dissaving in 1946 and 1947 were
as follows:




70

T A B L E 4.—Selected components of saving) 7946 and 7947
[Billions of dollars]
Amount of
saving

Item of saving

1946

1947

+10.4
-3.2
-.4

+4.4

+.4
+3.4

+1.0
+3.3

-3.3
-1.6
-1.9
+3.9

Currency and bank deposits *
U. S. Government securities l
State and local government securities 2.
Corporate and other securities 2
Private pension and insurance reserves
Liquidation of debt:
Mortgage d e b t 3 4
_
Installment debt
Other consumer debt«
Nonfarm dwellings «

-3.8
-2.2
-l.C

+.2
+.3

+5.8

1
2
3
4
8
8

Excludes holdings by unincorporated business and trusts.
Includes holdings by unincorporated business and trusts.
Debt on 1- to 4-family non-farm-residential structures.
Installment sale credit and installment loans.
Single-payment loans, charge accounts, and sale credit.
Construction of 1- to 4-family nonfarm dwellings, less net acquisition of properties by non-individuals.
Also includes a small amount of construction by nonprofit institutions.
NOTE.—Minus items indicate dissaving.
Sources: Board of Governors of the Federal Reserve System (currency and bank deposits, U. S. Government bonds, installment debt, andfother consumer debt).
Securities and Exchange Commission (insurance, reserves, State and local and corporate securities,
mortgage debt, and nonfarm dwellings).

Ownership of liquid and other assets
The accumulation of liquid assets is only one form of saving, but, as
the text of this report states, it is the form of saving which is most clearly
anti-inflationary. Furthermore, a cushion to future downward fluctuations
in demand is provided by a wide dispersion of liquid-asset holdings among
all groups of the poulation and all income levels. The distribution of liquid
assets by income level is at present very unequal, although substantial
amounts are held by families at every level. As shown in table 5, 31 percent of the families whose incomes were less than $2,000 had only 13 percent
of the liquid assets in 1947.
T A B L E 5.—Proportion of liquid assets held by spending units and
income level *

family units in early 7948, by

Family units
Percent
of families

_

.

_

Percent
of liquid
assets held

Percent of
spending
units

13
18
20
17
11
13
8
100

1947 annual money income before taxes

Under $1,000
$1,000 to $1,999
$2,000 to $2,999
$3,000 to $3,999
$4,000 to $4,999
$5,000 to $7,499
$7,500 and over
All units

Spending units

5
8
9
10
9
19
40
100

14
22
23
17
10
9
5
100

Percent
of liquid
assets held
6
10
12
13
9
16
34
100

* The 1947 income data and early 1948 liquid assets data are based on interviews in January-March 1948.
For comparable spending unit data in early 1947 and 1946, see the Federal Reserve Bulletin, July 1947,
table 14, p. 801. Comparable family unit data are presented in table 18, p. 802.
Source: See table 1.




71

The proportion of spending units with no liquid assets increased from 24
to 27 percent between 1947 and 1948, and the proportion with no assets or
less than $200 worth of assets increased from 38 to 42 percent. In early
1948, 55 percent of spending units had less than $500 in liquid assets, as
show in Table 6.
TABLE

6.—Distribution of spending units by size of liquid asset holdings in early 1947 and 1948
Percent of spending units
Amount of liquid assets i
1947

None.
_. .
$1 to $199._
$200 to $499
$500 to $999
$1,000 to $1,999...
$2,000 to $2,999._.
$3,000 to $4,999...
$5,000 to $9,999...
$10,000 and over.

1948

24
14
12
14
14
7
7
5
3

All units. _

27
15
13
12
12
6
6
5
4

100

100

$470
. $890

Median holdings of all units
Median holdings of units with assets .

$350
$820

i Includes all types of U. S. Government bonds, checking accounts, and savings accounts in banks and
savings and loan associations, postal savings, and shares in credit unions.
Source: See table 1.

Table 7 presents an analysis of decreases in asset holdings over the past
year. The main reasons for decreasing asset holdings are shown for three
income ranges, under $2,000, $2,000 to $5,000, and $5,000 and over. Purchases of nondurable consumer's goods and services (living-expense items)
were given as the sole reason for reducing liquid assets by 70 percent of the
under $2,000 groups, and by 48 percent of the $2,000 to $5,000 income
group. Of those having over $5,000 income, living-expense items were less
important than acquisition of durable goods, homes, and other investments.
Thus, in a large proportion of cases in the upper income groups, liquid
assets were converted into other types of saving.




72

T A B L E 7.—Proportion of spending units reducing liquid assets in 1947, by purpose of
and by income level

withdrawal

Percent of spending units reducing liquid assets
1947 mouey income before taxes

Nondurable
goods and
services l

All purposes

Under $2,000...
$2,000 to $4,999.
$5,000 and over

16
23
32

100
100
100

All units.

Automobiles Houses and
Several
investand other
purposes 8
durable
ments *
goods

100

54

13

13

20

i Includes living expenses, emergencies and sickness, repair of houses, and other nondurable consumption
(repairs of automobiles and other durable goods, purchase of luxury goods, moving, travel, amusement,
education, and taxes).
*Includes purchases of real estate, investment in business or securities, and repayment of debt.
3 The distribution of spending units reducing liquid assets for several purposes is as follows:
Percent
Nondurable consumers goods, etc., and durable goods
8
Nondurable consumers goods, etc., and houses and investments
5
Durable goods and houses and investments
4
Other combinations
3
Total
Source: See table 1.

....

20

Table 8 presents data on ownership of various types of non-liquid assets
in early 1948 by income groups. The ownership of almost all types of
assets increases as income rises, with the exception of homes. The proportion of persons owning homes appears to be larger in the under $1,000
group than in the $1,000 to $2,000 to $3,000 intervals. In the lowest
income group, only 45 percent of spending units have life insurance and
only 44 percent own any kind of liquid assets.
T A B L E 8.—Distribution of spending units holding various types of assets, by type of asset held in
early 7948 and by income level
Percent of spending units holding assets
1947 money income before taxes

Liquid
assets 1

Life insurance

Automobile

Home 2

Under $1,000
$1,000 to $1,999...
$2,000 to $2,999. _.
$3,000 to $3,999...
$4,000 to $4,999...
$5,000 to $7,499...
$7,500 and overAll units...

Unincorporated
business

Stocks
and
bonds 3
3
5
5
8
10
21

73

50

43

i Checking accounts and savings accounts in banks and saving and loan associations, postal savings, and
shares in credit unions, and U. S. Government bonds.
8
Percent of non-farm population occupying their own homes.
* Excluding U. S. Government bonds.
Source: See table 1.




73




Appendix C
Statistical Tables Relating to Employment,
Production, and Purchasing Power
CONTENTS
National Income:
1. Gross national product or expenditure, 1929-48
2. Disposition of gross national product, 1939-48
3. National income by distributive shares, 1929-48
4. Personal income, 1929-48
5. Disposition of personal income, 1929—48
6. Per capita disposable income in current dollars and 1947 dollars, 1929-48.
Employment and Wages:
7. Labor force, 1929-48
8. Number of wage and salary workers in nonagricultural establishments,
1929-48
9. Average gross weekly earnings in selected industries, 1929-48
10. Average hourly earnings in selected industries, 1929-48
Production and Business Activity:
11. Physical production index, 1929-48
12. Industrial production index, 1929-48
13. New construction activity, 1929-48
14. Business expenditures for new plant and equipment, 1929—48
15. Business inventories and sales, 1939-48
16. Sales, stocks, and outstanding orders at 296 department stores, 1939-48..
Prices:
17. Consumers' price index, 1929-48
18. Wholesale price index, 1929-48
19. Index of prices received and of prices paid by farmers and parity ratio,
1929-48
Money, Banking, and Credit:
20. Consumer credit outstanding, 1929-48
21. Loans and investments of all commercial banks, 1929-48
22. Adjusted deposits of all banks and currency outside banks, 1929-48....
23. Estimated ownership of Federal securities, 1939-48
Corporate Profits and Finance:
24. Profits before and after taxes, all private corporations, 1929-48
25. Profits after taxes, 629 large private industrial corporations, by industry
groups, 1939-48




75

Page
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101

Corporate Profits and Finance—Continued
26. Relation of profits before and after taxes to sales, private corporations
excluding finance, insurance, and real estate, 1946—48
27. Relation of profits before and after taxes to investment, private manufacturing corporations, by industry groups, 1947
28. Relation of profits before and after taxes to sales, private manufacturing
corporations, by industry groups, 1947
29. Relation of profits before and after taxes to investment and to sales, all
private manufacturing corporations, by size classes, 1947—48
30. Sources and uses of corporate funds, 1946—48
International Transactions:
31. The international transactions of the United States, 1946-48
32. United States Government aid to foreign countries, 1946-48
33. United States merchandise exports, including reexports, by continents,
1936-38 quarterly average and 1947-48
34. United States general merchandise imports, by continents, 1936-38
quarterly average and 1947-48
35. United States merchandise exports, by economic classes, 1936-38 quarterly average and 1947-48
36. Indexes of quantity and unit value of United States merchandise exports,
by economic classes, 1936-38 quarterly average and 1947-48
37. United States imports for consumption, by economic classes, 1936-38
quarterly average and 1947-48
38. Indexes of quantity and unit value of recorded United States imports for
consumption, by economic classes, 1936-38 quarterly average and
1947-48
Summary:
39. Changes in selected economic series since 1939 and since the first half of
1947




76

Page
102
103
104
105
106
107
108
109
110
Ill
112
113

114

115

Statistical Tables Relating to Employment, Production, and Purchasing Power
TABLE 1.—Gross national product or expenditure, 7929-48x
[Billions of dollars]

Period

Gross
national
product

Personal
consumption expenditures

GovernGross priment purvate do- Net foreign chases of
mestic in- investment goods and
vestment
services

1929.

103.8

78.8

15.8

0.8

8.5

1930
1931.
1932.
1933.
1934.

90.9
75.9
58.3
55.8
64.9

70.8
61.2
49.2
46.3
51.9

10.2

.7
.2
.2
.2
.4

9.2
8.1
8.0

1935.
1936.
1937.
1938.
1939.

72.2
82.5
90.2
84.7
90.4

56.2
62.5
67.1
64.5
67.5

-.1
-.1
.1
1.1
.9

9.9
11.7
11.6
12.8
13.1

1940.
1941.
1942.
1943.
1944.

100.5
125.3
159.6
192.6
212.2

72.1
82.3
90.8
101.6
111.4

1.5
1.1
-.2

13.9
24.7
59.7
88.6
96.5

1945.
1946.
1947.

213.4
209.3
231.6

122.8
147.4
164.8

5.4
.9
1.3
2.8
6.1
8.3

11.4
6.3
9.0

13.0
17.2
9.3
4.6
6.4

-2.2
-2.1

9.2

-1.4

26.5
30.0

4.7
8.9

82.8
30.8
28.0

Annual rates, seasonally adjusted
1947—First half
Second half
1948—First half 2

.

227.4
235.9

161.2
168.4

29.5
30.5

9.5
8.3

27.3
28.7

246.5

174.4

37.2

3.9

31.0

1947—First quarter
Second quarter..
Third quarter.,.
Fourth quarter..

226.4
228.3
227.9
243.8

158.1
164.2
165.6
171.1

32.6
26.4
25.6
35.4

8.8
10.2
8.4
8.2

26.9
27.6
28.3
29.0

1948—First quarter
Second quarter 2 .

246.0
247.0

172.3
176.5

40.4
34.0

3.9
4.0

29.4
32.5

1 The figures for 1944-48 are based on the revised series of national income and product of the Department
of 2Commerce. For detail, see the Survey of Current Business, July 1948.
Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce.

793637°




77

TABLE 2.—Disposition of gross national product, 1939-481
Disposition of gross national product
Export surplus of 3goods and
services

Total
Period

national
product
Total

Government
Product
war or
for
national domestic
Financed Financed defense
civilian
by Govuse
ernment by other expenditures
means
aid
Billions of dollars
(3)

1939

90.4

1.1

1.1

1.2

88.1

1940
1941
1942.
1943.
1944

100.5
125.3
159.6
192.6
212.2

1.7
2.3
6.1
10.7
12.0

0.1
1.3
6.4
12.8
14.0

1.6
1.0
-.3
-2.1
-2.0

2.2
12.8
43.2
67.1
73.7

96.6
110.2
110.3
114.8
12G.5

1945
1946
1917

213.4
209.3
231.6

5.7
7.5
11.3

7.7
5.1
5.7

-2.0
2.5
5.6

67.2
15.9
10.0

140.5
185.9
210.3

Annual rates:
1947—First half
Second half

227.4
235.9

11.8
10.7

6.6
4.8

5.3
5.9

10.2
9.8

205.4
215.4

1948~-First half *

246.5

8.1

5.3

2.8

9.6

228.8

1947—First quarter
Second quarter..
Third q u a r t e r - .
Fourth quarter..

226.4
2?8.3
227.9
243.8

11.2
12.5
10.9
10.5

5.2
8.0
6.8
2.9

6.0
4.5
4.1
7.6

9.4
10.9
9.2
10.3

205.8
204.9
207.8
223.0

1948—First quarter
Second quarter 4.

246.0
247.0

7.9
8.2

5.8
4.7

2.1
3.5

9.3
10.0

228.8
228.8

_

Percentage of total
1939..

100.0

1.2

1.2

1.3

97.5

1940..
1941..
1942..
1943..
1944..

100.0
100.0
100.0
100.0
100.0

1.7
1.8
3.8
5.6
5.7

0.1
1.0
4.0
6.6
6.6

1.6
.8
—.2
-1.1
-.9

2.2
10.2
27.1
34.8
34.7

96.1
87.9
69.1
59.6
59.6

1945..
1946..
1947..

100.0
100.0
100.0

2.7
3.6
4.9

3.6
2.4
2.5

-.9
1.2
2.4

31.5
7.6
4.3

65.8
88.8
90.8

1947—First half....
Second half..

100.0
100.0

5.2
4.5

2.9
2.0

2.3
2.5

4.5
4.2

90.3
91.3

1948—First half «...

100.0

3.3

2.2

1.1

3.9

92.8

1947—First quarter..._
Second quarter.
Third q u a r t e r Fourth quarter-

100.0
100.0
100.0
100.0

4.9
5.5
4.8
4.3

2.3
3.5
3.0
1.2

2.7
2.0
1.8
3.1

4.2
4.8
4.0
4.2

90.9
89.8
91.2
91.5

1948—First quarter
Second quarter *

100.0
100.0

3.2
3.3

2.4
1.9

.9
1.4

3.8
4.0

93.0
92.6

(')

1 The figures for 1944-48 are based on the revised series of national income and product of the Department
of Commerce. For detail, see the Survey of Current Business, July 1948.
2 U. S. Government transfers to foreign countries are included in the export surplus and are excluded
from the Government war or national defense expenditures.
3 Less than $50,000,000.
* Estimates based on incomplete data.
* Percent not shown because dollar figure was less than $50,000,000.
NOTE.—Detail will not necessarily add to totals because of rounding.
Sources: Department of Commerce and Bureau of the Budget.




78

TABLE 3.—National income by distributive shares, 1929-48!
[Billions of dollars]

Proprietors' and rental
income

Corporate profits and inventory valuation adjustment
Corporate profits

Period

111
0.5

6.5

2.5
3.3
-1.3
2.4
1.0
-3.4
- . 4 -2.1
1.0 - . 6

6.2
5.9
5.4
5.0
4.7

1929-

87.4

50.8

19.7

8.3

5.7

5.8

10.3

1.4

1930..
1931..
193219331934-

75.0
58.9
41.7
39.6
48.6

46.5
39.5
30.8
29.
34.1

15.7
11.8
7.4
7.2
8.7

7.0
5.3
3.2
2.9
4.3

3.9
2.9
1.7
2.3
2.3

6.6
3.3
4.8
3.6
1.6 - . 8
2.5 - 2 . 0 - 3 . 0
2.0 - 2 . 0
.2
2.1
1.7
1.1

.8
.5
.4

193519361937.
19381939-

56.8
64.7
73.6
67.4
72.

37.1
42.
47.
44.
47.8

12.1
12.6
15.4
14.0
14.7

5.0
6.1
6.6
6.3
6.8

4.9
3.9
5.6
4.4
4.5

2.3
2.
3.1
3.3
3.5

3.0
4.9
6.2
4.3
5.8

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

19401941..
19421943..
1944-

51.8
81.
103.8 64.3
136.5 84.7
168.3 109.1
182.4 121.1

16.3
20.8
28.1
32.1
34.1

7.7
9.6
12.1
14.1
15.4

4.9
6.9
10.6
11.8
11.9

3.6
4.3
5.4
6.
6.

9.2
14.6
19.8
23.7
24.0

9.3
17.2
21.1
24.5
24.3

2.9
7.8
11.7
14.2
13.5

6.4
9.4
9.4
10.4
10.8

194519461947..

181. 122.9
179.3 117.3
202.5 127.5

36.0
41.8
46.0

16.8
20.4
23.2

12.3
14.6
15.6

7.0
6.
7.1

19.8
16.8
24.

20.4
21.8
29.8

11.6
9.0
11.7

8.7
12.8 - 5 . 0
18.1 - 5 . 1

3.0
3.4
4.3

8.4

-.2
-.7

1.0
-.7
-.1
-2.6
-1.3
-.8
-.3

4.5
4.5
4.4
4.3
4.2
4.1
4.1
3.9
3.4
3.1

Annual rates, seasonally adjusted
1947—First half...
Second half _

198.3 125.2
206.7 129.9

45.5
46.5

22.6
23.9

15.9
15.4

7.0
7.3

23.5
25.9

28.9
30.8

11.4
12.1

17.5 - 5 . 4
18.7 - 4 . 9

4.2
4.5

1948—First half '

216.3 134.0

51.1

25.5

18.1

7.5

26.6

30.5

11.9

18.6 - 3 . 9

4.6

1947—First quarter
Second quarter
Third quarter
Fourth quarter

197.3
199.3
200.6
212.8

125.0
125.3
127.6
132.2

46.4
44.6
44.4
48.6

22.5
22.7
23.0
24.7

16.9
14.9
14.3
16.5

7.0
7.0
7.1
7.4

21.8
25.2
24.3
27.5

28.9
28.8
29.1
32.4

11.4
11.3
11.4
12.7

17.5
17.5
17.7
19.7

-7.1
-3.6
-4.8
-4.9

4.1
4.2
4.4
4.5

1948—First quarter
Second q u a r t e r ' . . .

215.5 134.0
217.1 134.0

50.6
51.6

25.0
26.0

18.0
18.1

7.5
7.5

26.3
26.9

31.4
29.5

12.2
11.5

19.2 - 5 . 1
18.0 - 2 . 6

4.6
4.6

1 The figures for 1944-48 are based on the revised series of national income and product of the Department
of 2Commerce. For detail, see the Survey of Current Business, July 1948.
National income is the total net income earned in production by individuals or 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.
3 Includes wage and salary receipts and other labor income (see appendix C, table 4), and employer and
employee contributions for social insurance.
* Net income after inventory valuation adjustment. This adjustment was —1.2 billion dollars in 1947,
—1.2 billion (annual rate) in fourth quarter of 1947, and —0.7 billion (annual rate) in the first half of 1948.
8 Federal and State income and excess-profits taxes.
6 Less than $50,000,000.
» Estimates based on incomplete data; profits by Council of Economic Advisers and all others by Department of Commerce.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (except as noted).




79

TABLE At.—Personal income, 1929-48 *
[Billions of dollars]

Period

Salaries, Proprie- Dividends
Nonagriwages,
Total
and
Transfer
cultural
personal and other tors' and personal payments personal
rental 3 interest
labor
income
income 4
income 2 income
income

1929.

85.1

50.5

19.7

13.3

1.5

76.8

1930.
1931.
1932.
1933.
1934.

76.2
64.8
49.3
46.6
53.2

46.2
39.2
30.5
29.1
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

1935.
1936.
1937.
1938.
1939.

59.9
68.4
74.0
68.3
72.6

36.7
42.1
45.9
42.8
45.6

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

1940.
1941.
1942.
1943
1944.

78.3
95.3
22.2
149.4
164.5

49.5
61.5
81.2
104.4
116.1

16.3
20.8
28.1
32.1
34.1

9.4
9.9
9.7
10.0
10.6

3.1
3.1
3.2
3.0

71.5
86.1
108.7
134.3
149.0

1945
1946
1947.

170.3
178.1
195.2

116.7
111.4
121.9

36.0
41.8
46.0

11.4
13.5
15.6

6.2
11.4
11.7

154.3
159.4
174.9

Annual rates, seasonally adjusted
1947—First half
Second half
1948-Firsthalf*
1947—First quarter
Second quarter
Third quarter..
Fourth quarter
1948—First quarter
Second quarter

190.3
199.9

119.1
124.7

45.5
46.5

15.1
16.0

10.6
12.8

208.1
190.9
189.6
196.7
203.1

128.7

51.1

16.7

11.6

184.8

119.0
119.2
122.3
127.1

46.4
44.6
44.4
48.6

14.9
15.3
15.8
16.1

10.7
10.5
14.3
11.2

169.4
170.2
177.8
181.8

207.3
208.8

128.6
128.7

50.6
51.6

16.6
16.8

11.5
11.7

184.4
185.2

169.8
179.8

1 T h e figures for 1944-48 are based on the revised series of national income and product of the Department
of Commerce. For detail, see the Survey of Current Business, July 1948.
2 Differs from "compensation of employees" in appendix C, table 3, in that it excludes employer and
employee contributions to social insurance. Includes wage and salary receipts and other labor i n c o m e compensation 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.
a See appendix C, table 3, for major components.
* Equals 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.
« Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce.




80

TABLE 5.—Disposition of personal income, 1929—48l

Period

Less: PerPersonal sonal tax
income and nontax payments

Equals: Less: Per- Equals:
Dispos- sonal con- Personal Net saving as
able
sumption
net
personal expendsaving percent of
disposincome
itures
able
income
Billions of dollars

1929.

85.1

2.6

82.5

78.8

3.7

4.5

1930.
1931.
1932.
1933.
1934.

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

1935.
1936.
1937.
1938.
1939.

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

1940.
1941.
1942.
1943.
1944.

78.3
95.3
122.2
149.4
164.5

2.6
3.3
6.0

17.8
18.9

75.7
92.0
116.2
131.6
145.6

72.1
82.3
90.8
101.6
111.4

3.7
9.8
25.4
30.0
34.2

4.9
10.7
21.9
22.8
23.5

1945.
1946.
1947.

170.3
178.1
195.2

20.9
18.9
21.6

149.4
159.2
173.6

122. 8
147.4
164.8

26.6
11.8
8.8

17.8
7.4
5.1

Annual rates, seasonally adjusted
7.9
9.6

4.7
5.4

1947—First half.-.
Second half _

190.3
199.9

21.3
22.0

169.0
178.0

161.2
168.4

1948—First half K

208.1

22.1

186.0

174.4

11.6

6.2

1947—First quarter
Second quarterThird quarter—.
Fourth quarter..

190.9
189.6
196.7
203.1

21.2
21.4
21.7
22.2

169.7
168.2
175.0
180.9

158.1
164.2
165.6
171.1

11.6
4.1
9.4
9.7

6.8
2.4
5.4
5.4

1948—First quarter
Second quarter ?

207.3
208.8

23.2
21.0

1«4.1
187.8

172.3
176.5

11.8
11.3

6.4
6.0

1 The figures for 1944-48 are based on the revised series of national income and product of the Department of Commerce. For detail, see the Survey of Current Business, July 1948.
2 Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce.




81

TABLE 6.—Per capita disposable income in current dollars and 1947 dollars, 1929-48
Per capita disposable
Disposable
personal income
Population Consumers'
personal
(thouincome
price index,
sands) *
(billions
1947*100
Current
1947
of dollars)i
dollars *
dollars

Period

82.5

121,770

76.9

678

882

1930
1931
1932
1933 _.
1934

73.7
63.0
47.8
45.2
51.6

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

75.0
68.3
61.3
58.0
60.1

599
508
383
360
408

799
744
625
621
679

1935.
1936
1937 _1938
1939

58.0
66.1
71.1
65.5
70.2

127, 250
128,053
128.825
129, 825
130, 880

61.6
62.2
64.5
63.3
62.4

456
516
552
505
536

740
830
856
798
859

75.7
92.0
116.2
131.6
145.6

131, 970
133. 203
134, 665
136, 497
138,083

62.9
66.1
73.2
77.6
78.8

574
691
863
964
1,054

913
1,045
1,179
1,242
1,338

149.4
159.2
173.6

139, 586
141. 235
144,034

80.7
87.5
100.0

1,070
1,127
1,205

1,326
1,288
1,205

1929

_

. _

1940
1941 _.
1942
1943
1944
1945
1946
1947

_

_ __ ._ _.

_

Annual
rates,
seasonally
adjusted

Not adjusted for Annual rates, seasonally
adjusted
seasonal
variation •

1947—First half
Second half

169.0
178.0

143,385
144,807

97.6
102.4

1,179
1,229

1948—First half •

186.0

146,035

106.2

1,274

1,200

1947—First quarter
Second quarter
Third quarter
Fourth quarter

169.7
168.2
175.0
180.9

143, 049
143,702
144, 411
145,150

96.9
98.2
101.0
103.8

1,186
1,170
1,212
1,246

1,224
1,191
1,200
1,200

184.1
187.8

145, 733
146,325

105.3
107.1

1,263
1,283

1,199
1,198

1948—First quarter
Second quarter'

_ _

_____

1,208
1,200

1 The figures for 1944-48 are based on the revised series of national income and product of the Department of Commerce. For detail, see the Survey of Currerif Business, July 1948.
2 Estimated population of continental United States, including armed forces overseas; annual data as of
July 1 and quarterly and semiannual data as of middle of period, interpolated from published monthly
estimates.
3 Current dollars divided by the consumers' price index on the base 1947=100 to give a rough measure of
changes in buying power of disposable income.
* A small part of the increase may be seasonal.
* Estimates based on incomplete data.
Sources: Department of Commerce (disposable income and population) and Department of Labor (consumers' price index.)




82

TABLE 7.—Laborforce, 7929-48
[Thousands of persons, 14 years of age and over]
Civilian labor force
Total
labor force
(including Armed

Period

armed
forces)

Monthly average:

forces

Employment

Total
civilian
labor
force

Total

Unem-

Nonagri- Agriculcultural
tural

ployment

1929

49,440

260

49,180

47,630

37,180

10,450

1,550

1930
1931
1932
1933
1934-

50,080
50,680
51,250
51,840
52,490

260
260
250
250
260

49,820
50,420
51,000
51, 590
52,230

45,480
42,400
38, 940
38,760
40,890

35,140
32,110
28, 770
28, 670
30, 990

10,340
10,290
10,170
10, 090
9,900

4,340
8,020
12, 060
12,830
11,340

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

32,150
34, 410
36,480
34, 530
36, 140

10,110
10, 000
9,820
9,690
9,610

10,610
9,030
7,700
10, 390
9,480

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

37, 980
41. 250
44,500
45,390
45,010

9,540
9,100
9,250
9,080
8,950

8.120
5,560
2,660
1,070
670

1945
1946
1947.

65,140
60,820
61,608

11, 280
3,300
1,440

53,860
57,520
60,168

52, 820
55, 250
58,027

44, 240
46, 930
49,761

8, .580
8,320
8,266

1,040
2,270
2,141

1947—First half
Second half

60,920
62, 297

1,551
1,328

59,368
60,969

57,009
59,044

49,033
50,488

7,976
8,556

2,359
1,924

1935
1936
1937
1938
1939

_-

61,770

April
May
June

_

July

August
September
October
November
1948—January
February
March
April .
May

June

_

_

1,240

60, 531

58,317

50,753

7,564

2,214

59,510
59,630
59,960
60,650
61,760
64,007
64,035
63,017
62,130
62,219
61,510
60,870

1948—First half
1947—January
February
March

1,720
1,620
1,570
1,530
1,470
1,398
1,371
1,352
1,346
1,327
1,294
1,280

57,790
58,010
58,390
59,120
60,290
62,609
62,664
61,665
60,784
60,892
60, 216
59,590

55,390
55,520
56,060
56,700
58,330
60,055
60,079
59,569
58,872
59,204
58,595
57,947

48,890
48,600
48,820
48,840
49,370
49,678
50,013
50, 594
50,145
50,583
50,609
50,985

6,500
6,920
7,240
7,860
8,960
10,377
10,066
8,975
8,727
8,622
7,985
6,962

2,400
2,490
2,330
2,420
1,960
2,555
2,584
2,096
1,912
1,687
1,621
1,643

60. 455
61,004
61,005
61.760
61,660
64, 740

1,242
1,226
1,236
1,237
1,238
1,260

59,214
59, 778
59,769
60,524
60, 422
63,480

57,149
57,139
57,329
58,330
58,661
61,296

50,089
50,368
50, 482
50,883
50,800
51,899

7,060
6,771
6,847
7,448
7,861
9,396

2,065
2,639
2,440
2,193
1,761
2,184

NOTE.—Detail will not necessarily add to totals because of rounding.
Sources: Department of Labor (1929-39) and Department of Commerce (1940-48).




83

TABLE 8.—Number of wage and salary workers in nonagricultural establishments, 7929—48 *
[Thousands of employees]

Period

Monthly average:

FedManufacturing
Transeral,
Total
Con- portaState,
wage
Fi- Serv- and
Min- tract tion
and
con- and
salary
Dur- Non- ing struc- public Trade nance ice local
govwork- Total able durable
tion utilerners
goods goods
ities
ment

1929.

31,041 10,534

1,078

1,497

3,907

6,401 1,431 3,127

3,066

1930..
1931.
1932.
1933.
1934.

29,143
26,383
23,377
23.466
25,699

9,401
8,021
6,797
7,258
8,346

1,000
864
722
735
874

1,372
1,214
970
809
862

3,675
3,243
2,804
2,659
2,736

6,064
5,531
4,907
4, "
5,552

1,3
1,3
1,270
1, 225
1,247

3,084
2,913
2,682
2,614
2,784

3,149
3,264
3,225
3,167
3,298

1935.
1936.
1937.
1938.
1939.

26.792

8,907
9,653

888
937

91:
1,145
1,112
1,055
1,150

2,771
2,956
3,114
2,840
2,912

5,692
6,076
6,543
6,453
6,705

1,262
1,313
1,355
1,347
1,382

2,883
3,060
3,233
3,196
3, 228

3,477
3,662
3,749
3,876
3,987

1940.
1941.
1942.
1943..
1944.

32,031
36,164
39,697
42,042
41,480

5,805
6,488
6,873
7,084
6,91f

916
94'

1,294
1,790
2,170
1,567
1,094

3,013
3,248
3,433
3,619
3,798

7,055
7,567
7,481
7,322
7,399

1,419
1,462
1,440
1,401
1,374

3,362
3, 554
3,708
3,786
3,795

4,192
4,622
5,431
6,G49
6,026

1945.
1946.
1947_

40,069 15, 302 8,477 6,825
41,494 14,515 7,180 7,335
43, 970 15,901 8,055 7,846

826
852
911

1,132
1,661
1,921

3,872
4,023
4,059

7,685 1,394 3,891
8.820 1,586 4,430
9,450 1,656 4,622

5,967
5,607
5,450

43,337 15, 713 8,022
44,603 16,089 8,088 8,002

906
91

1,781
2,06r

4,003
4,116

9,233 1,637 4,584
9,667 1,675 4,660

5,483
5,417

44,550 16,103 8,176 7,927

908

1,929

4,030

9,596 1,702 4,725

5,557

910
90:
906
881
910
919
890
923
921
922
923
925
922
91922
820
933
936

1,
1,668
1,709
1,798
1,865
1,957
2,043
2,096
2,107
2,099
2,046
1,978

4,018 9,160
4,016 9,143
4,027 9,236
3,845 9,255
3,981 9,277
4,129 9,324
4,155 9,316
4J63 9,356
4,134 9,471
4,097 9,684
4,077 9,886
4,071 10,288

1,626
1,628
1,638
1,636
1,643
1,650
1,675
1,688
1,668
1,671
1,673
1,676

4,527
4,561
4,565
4,552
4,590
4,711
4,686
4,619
4,634
4,662
4,670
4,688

5,455
5,463
5,503
5,504
5,510
5,454
5,341
5,318
5,403
5,414
5,387
5,638

1,871
1,731
1,805
1,933
2,049
2,182

4,020
4,019
4,032
3,977
4,041
4,092

1,6
1,6
1,697
1,704
1,716
1,727

4,723
4,730
4,729
4,768
4,738
4,663

5,498
5,492
5,546
5,577
5,624
5,607

1947—First half..
Second half
1948: First half *..
1947—January
FebruaryMarch
April.
May.
June
July
August
September..
October
November..
December..
1948—January. _.
FebruaryMarch
April
May
June 3

1,006
1,718 10,606
882
28,902 9,253
()
845
30,287 10,078 4,357 5,720
10,780 4,975
12,974 6,485
15,051 8,179
17, 381 10,297
17, 111 10,200

43,063
43,169
43,410
43, 221
43,345
43,816
43, 686
44,125
44, 513
44, 758
44,918
45,618

15, 67"
15,783
15, 826
15, 750
15, 569
15, 672
15, 580
15, 962
16,175
16,209
16, 256
16,354

7,949
8,030
8,071
8,068
7,962
8,050
7,874
7,987
8,070
8,126
8,194
8,274

7,728
7,753
7,755
7, 682
7,607
7,622
7,706
7,975
8,105
8,083
8,062
8,080

44,603
44, 279
44, 599
44,298
44,609
44, 913

16,267
16,183
16,269
15,945
15,893
16,058

8,256
8,167
8,258
8,159
8,113
8,102

8,011
8,016
8,011
7,786
7,780
7,956

9,622
9,520
9,599
9,574
9,615
9,648

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 C, table 7) 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-off; and which are based on an enumeration of population, whereas the estimates in this table are based
on reports from employing establishments.
»Not available.
* Preliminary.
NOTE. Detail will not necessarily add to totals because of rounding.
Source: Department of Labor.




84

TABLE 9.—Average gross weekly earnings in selected industries, 1929—48
Manufacturing
Bituminous
Dur- Non- coal
durable able mining
Total
goods goods

Period

Monthly average:
1929
1930.
1931
1932
1933._1934

—-

1935
1936
1937
1938
1939

19401941
1942
1943
1944
1945.
1946
1947

$25.03
—-

— .

—

—

1947—First half
Second half
1948—First half.

Private
building construction

$28.49

$25.72

23.25
20.87
()
17.05 $16.21
16.73 16.43
18.40 18.87
20.13 21.52
21.78 24.04
24.05 26.91
22.30 24.01
23.86 26.50

()

A
16.89
18.05
19.11
19.94
21.53
21.05
21.78

22.21
17.69
13.91
14.47
18.10

Class I
steam Tele- Whole- Retail Hotels
sale
(year
rail- phone trade trade round) *
roads

()

I

19.58
22.71
23.84
20.80
23.88

$22.97
24.51
27.01
30.14
29.19
30.39

27.76
26.76
23.34
23.09
24.32

()

26.76
28.01
()
29.20 $29.81
30.26 31.58
30.99 31.94

8

$27.72 $20.71
26.11 19.18
26.37 19.86
26.93 19.96
28.53 20.68
29.94 21.73
29.48 21.14
29.85 21.17

$14.25
12.79
13.17
13.57
13.97
14.78
14.93
15.25

25.20
29.58
36.65
43.14
46.08

28.44
34.04
42.73
49.30
52.07

22.27
24.92
29.13
34.12
37.12

24.71
30.86
41.62
41.68
51.27

31.70
35.14
41.80
48.13
52.18

32.44
32.74
33.97
36.30
38.39

32.32
35.56
39.40
42.29

21.17
21.94
23.24
24.88
26.58

15.52
16.09
17.62
20.21
22.65

44.39
43.74
49.25

49.05
46.49
52.45

38.29
41.02
45.87

52.25
58.03
66.86

45.69
53.73
()
56.24 < 51.22 44.04
54.17 44.96

44.07
48.06
52.40

28.31
32.55
36.67

24.53
26.95
29.65

47.89
50.61

50.78
54.12

44.77
46.96

64.41
69.20

60.95
65.58

52.38
56.03

51.22
53.55

35.98
37.43

29.19
30.10

8 48.26 « 55. 46 »38.79

•31.20

52.02

55.19

48.64 5 68.92

s 66.99

1947—January
February...
March
April
May
June.
_
July
__August
September.
October
Nobember.
December..

47.10
47.29
47.69
47.50
48.44
49.33
48.98
49.17
50.47
51.05
51.29
52.69

49.60
49.74
50.30
50.34
51.72
52.99
52.19
52.46
54.06
54.69
54.86
56.48

44.47
44.67
44.89
44.40
44.88
45.31
45.61
45.78
46.80
47.29
47.56
48.72

69.54
65.30
64.90
54.14
65.51
67.09
54.87
70.23
71.19
71.91
71.77
75.22

59.97
58.92
61.23
60.53
62.38

1948—January—_
February.
March
April
May 7
June 7

52.07
51.75
52.07
51.71
51.76
52.81

55.46
54.77
55.25
54.87
54.65
56.14

48.45
75.78
48.56
70.54
48.66
74.84
48.26 «49.33
48.61
74.09
49.29

66.28
66.31
66.89
67.31
68.15

31.55
34.25
38.65
43.68
46.06

63.30
66.97
65.22
66.14
64.55
67.31

40.86
47.92

52.70 43.37
54.10 43.31
52.43 42.51
52.03 0 32.26
51.30 8 38.13
51.72 45.58
51.16 46.51
51.68 46.92
57.47 48.02
58.44 48. 77
58.38 49.44
59.02 47.83

50.05
50.87
50.80
51.13
51.57
52.88
52.22
52.05
53.65
53.68
54.70
54.97

35.02
35.27
35.31
35.93
36.50
37.82
37.99
38.14
37.06
36.74
37.14
37.51

28.62
28.91
29.09
29.41
29.23
29.85
29.36
29.50
29.86
30.45
30.54
30.89

48.20
47.82
47.31
48.39
49.59

54.36
55.87
55.17
55.76
56.13

37.62
38.33
38.89
39.27
39.84

30.55
31.19
30.96
31.59
31.70
(*)

60.54
58.94

i Money payments only; additional value of room, board, uniforms, and tips are not included,
a Not available.
s
Not available. New 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.
* Annual average includes retroactive pay increases not included in the monthly averages.
8 Average for 5 months.
« Data for these months reflect work stoppages.
' Preliminary.
NOTE.—Data are for production workers in manufacturing and mining and for all employees in other
industries.
Source: Department of Labor




85

TABLE 10.—Average hourly earnings in selected industries, 1929-48
Manufacturing

Private
Bitu- building
Non- minous conDura- dura- coal strucTotal ble
ble mining tion
goods goods

Period

Monthly average:

$0.566

Class I
steam Tele- Whole- Retail Hotels
sale
(year
rail- phone trade trade round)1
roads

$0,681

$0.636

1930..
1931..
1932..
1933..
1934..

.552
.515
()
()
.446 $0.497 $0. 420
.472
.442
.427
.532
.556
.515

.684
.647
.520
.501
.673

.644
.651
.600
.595
.602

1935..
1936..
1937..
1938..
1939..

.550
.556
.624
.627
.633

.577
.586
.674

.530
.529
.577
.584
.582

.745
.794
.856
.878

.815
.824
.903
.908
.932

1940..
1941..
1942..
1943..
1944.

.661
.729
.853
.961
1.019

.724
.808
.947
1.059
1.117

.602
.640
.723
.803
.861

.993
1.059
1.139
1.186

.958
1.010
1.148
1.252
1.319

1945.
1946.
1947.

1.023
1.084
1.221

1.111
1.156
1.292

.904
1.012
1.145

1.240
1.401
1.633

1.379
1.478
1.681

1947—First half
Second half

1.188
1.253

1.252
1.331

1.119
1.172

1.485
1.804

1.626
1.726

1948—First half

1.296

1.362

1.223

81. 836

1947—January
February. _.
March
April
__.
May
June
July
August
September.
October
NovemberDecember. _

1.161
1.170
1.180
1.183
1.207
1.226
1.230
1.236
1.249
1.258
1.268
1.278

1.224
1.229
1. 236
1.243
1.278
1.303
1.305
1.312
1.331
1.337
1.346
1.354

1.094
1.107
1.119
1.122
1.130
1. 140
1.150
1.158
1.165
1.175
1.185
1.196

1.491
1.491
1.484
1.483
1.470
1.489
1.740
1.787
1.819
1.798
1. 8*1
1.826

1948—January
February
March
April6
May
June 8 .

1.285
1.287
1.289
1.292
1.301
1.319

1.355
1. 352
1.352
1. 357
1.365
1.390

1.210
1.217
1.220
1.219
1.231
1.242

1.847
1.826
1.842
1.823
1.841

1929..

._

1
3

()

$0. 795

5

8
8
(2)
(

()

()

$0. 528

$0. 273

.651
.659
.676
.712
.714 $0. 774
.816
.717
.822
.751
.827
.824
.820
.897
.843
.870
.911
.942
< 1.116 1.124
1.170 1.199

$0.648
.667
.698
.700
.715

.521
.522
.551
.543
.536

.279
.287
.308
.315
.324

.739
.793
.860
.933

.542
.568
.614
.670
.724

.332
.348
.386
.451
.505

1.029
1.144
1.258

.773
.878
.991

.550
.612
.661

1.129
1.212

1.163
1.230

1.232
1.283

.971
1.012

.647
.675

1.594
1.598
1.610
1.634
1.656
1.661
1. 6C9
1.689
1.718
1.738
1.765
1.774

1.131
1. 151
1.130
1.119
1.120
1.122
1.117
1.121
1.244
1. 233
1.283
1.272

1.132
1.141
1.124
1.174
1.189
1.218
1.211
1.215
1.230
1.241
1.254
1.229

1.197
1. 230
1.231
1.229
1.241
1.262
1.257
1.258
1. 281
1.289
1.314
1.300

.953
.957
.960
.974
.985
.996
1.003
1.003
1.012
1.013
1.025
1.016

.654
.642
.642
.643
.650
.652
.660
.672
.684
.687
.693

1.781
1.806
1.805
1.818
1.833

1.279
1.302
1.262
(2)

1.241
1. 238
1.223
1.242
1.255

1.309
1.343
1.334
1.346
1.363

1.044
1.050
1.044
1.055
1.064

.695
.695
.695
.699
.710

1.240

1.809

8

«1.339 5 1.051

Money payments only; additional value of room, board, uniforms, arid tips are not included.
Not available.
' Not available. New 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.
* Annual avorai^ includes retroactive pay increases not included in the monthly averages.
8
Average for 5 months.
• Preliminary.
NOTE.—Data are for production workers in manufacturing and mining and for all employees in other
industries.
Source: Department of Labor.




86

TABLE 11.—Physical production index, 1929-48
[1935-39=100, seasonally adjusted]
Nonagricultural production
Total
production

Period

Weights i
Total
Nonagricultural.

Agricultural production

Minerals

Total

TransConManufactures struction portation

100.0

20.6

79.4
100.0

4.9
6.2

50.8
64.0

7.6
9.6

Electric
and gas ,
utilities

12.9
16.2

3.2
4.0

1929

113

97

117

107

110

180

117

82

1930
1931
1932
1933
1934

98
86
71
74
75

95
104
101
93
79

99
82
63
69
75

93
80
67
76
80

90
74
57
68
74

153
124
79
53
58

104
89
73
76
83

82
78
71
72
78

1935
1936
1937
1938
1939

88
99
111
94
109

96
85
108
105
106

85
103
111
91
110

86
99
112
97
106

87
104
113
87
109

69
101
106
101
123

88
101
110
95
106

85
97
106
100
112

121
152
184
205
201

110
114
128
125
130

124
161
199
226
220

117
125
129
132
140

126
168
212
258
252

133
182
202
112
60

116
142
180
214
224

123
141
159
184
193

181
165
177

129
134
129

195
174
190

137
134
149

214
177
194

68
127
143

217
198
209

190
192
219

1940
1941
1942
1943
1944

-_

1945
1946
1947
1947—First half
Second half

(2)
(2)

(3)
(3)

188
191

147
152

193
195

134
153

208
208

218
221

1948—First half *

(2)

(3)

195

153

199

160

206

247

1 Computed from the D e p a r t m e n t of Commerce data of national income. T h e weight factors are percentages of the national income for each industry to the t o t a l for the 6 industries. T h e weight for construetion has been adjusted to include force account a n d other construction done outside of the contract construction industry, the weights for other industry groups to exclude such construction.
2
Not available. See footnote 3.
3
Because of the extreme seasonal nature of agricultural crop production, only an annual index has been
computed.
* Estimates based on incomplete d a t a .
Sources: Based on the following data:
Agricultural production.—Department
of Agriculture index of farm outfjut which measures the physical volume of farm production for human use.
Minerals.— Federal Reserve index of mineral production.
Manufactures.—Federal
Reserve index of manufacturing production.
Construction.— Department of Commerce value of new construction activity deflated b y their index
of construction costs and converted into relatives with 1935-39 as 100.
Transportation.—Department
of Commerce index of transportation. T h e figures for 1947 and first
half of 1948 are estimated by the Board of Governors of the Federal Reserve System on the basis of
transportation d a t a .
Electric and gas utilities.—Based on the following series- Electric power generated for public use as
reported by the Federal Power Commission, and sales of gas to consumers as reported by the American
Gas Association. T h e two series are converted into relatives with the average for the period 1935-39
as 100. T h e relative scries are combined into an index of public utility production with electric power
given a weight of 73 and gas 27, the respective percentages of the revenues by each of the utilities to the
total revenues produced by both in the base period 1935-39.




87

TABLE 12.—Industrial production index, 1929-48
[1935-39=100, seasonally adjusted]
Total
industrial
production

Period

Monthly average:
1929

Minerals
Durable

Total

Nondurable

110

1940
1941
1942
1943
1944

_

_

1945
1946
1947

_

1947—First half
Second half

1948—January
February
March
April . .
May 1
June

107

84
79
70
79
81

93
80
67
76
80

87
104
113
87
109

83
108
122
78
109

90
100
106
95
109

86
99
112
97
106

126
168
212
258
252

139
201
279
360
353

115
142
158
176
171

117
125
129
132
140

203
170
187
187
187

214
177
194

274
192
220

166
165
172

137
134
149

195
193

221
218

173
172

147
152

192

.

.

198

224

178

153

189
189
190
187
185
184
176
182
187
190
192
192

1948—First half* . .
1947—January
February
March
April
May
.
June
July
August
September
October
November _
December

93

98
67
41
54
65

125
162
199
239
235

_

132

90
74
57
68
74

87
103
113
89
109

-

110

91
75
58
69
75

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

Manufactures

196
197
198
194
191
191
183
188
192
197
199
198

221
222
225
222
218
219
207
210
217
223
224
229

176
176
175
172
170
168
163
169
172
176
179
173

146
146
148
143
151
148
140
150
153
155
155
156

193
194
191
188
191
192

200
201
200
195
197
198

229
226
229
217
220
222

178
180
177
177
178
178

154
155
142
147
162
158

i Estimates based on incomplete data.
Source: Board of Governors of the Federal Reserve System.




88

TABLE 13.—New construction activity, 1929-48
[Millions of dollars]
Private construction

Public construction
By source of
funds

Period

Total
new
ResiPubcondential Nonlic
resistruc- Total build- dential utilprition i
ing buildvate (nonand
ings
farm)
farm

Total
public

Federal

By type of
construction

Military
and
fedOther
State
erally High- puband
ways
local
lic
financed
industrial

1929.

9,873

7,476

2,797

2,822

1,857

2,397

237

2,160

19

1,254

1,124

1930.
1931.
1932.
1933.
1934.

8,042 5,265
5,967 3,375
3,290 1,467
2,376 1,012
2,805 1,235

1,446
1,228
462
278
361

2,099
1,104
499
404
455

1,720
1,043
506
330
419

2,777
2,592
1,823
1,364
1,570

338
451
510
552
720

2,439
2,141
1,313
812
850

29
40
34
38
58

1,505
1,351
961
809

1,243
1,201
828
517
686

1935.
1936.
1937.
1938.
1939.

3,230
4,836
5,487
5,186
6,307

1,676
2,550
3,390
3,076
3,808

665
1,131
1,372
1,511
2,114

472
712
1,088
764
785

539
707
930
801
909

1,554
2,286
2,097
2,110
2,499

1,262
1,154
989
1,257

726
1,024
943
1,121
1,242

39
33
39
74
148

709
927
902
858
867

,156
1,178
,484

1940.
1941
1942.
1943.
1944.

7,042
10,490
13,412
7,784
4,136

4,390
5,426
3,007
1,744
1,823

2,355
2,765
1,315
650
535

1,028
1,486
635
232
350

1,007 2,652
1,175 5,064
1,057 10, 405
6,040
2,313

1,397
3,853
9,544
5,614
1,912

1,255
1,211
861
426
401

549
2,900
8,453
4,218
1,344

882
800
616
420
346

,221
,364
,336
1,402
623

1945.
1946.
1947.

4,808 2,716
10,458 8,253
13, 977 10,893

3,183
5,260

1,014
3,346
3,131

1,018
1,724
2,502

2,092
2,205
3,084

1,558
1,074
1,175

534
1,131
1,909

1,160
272
229

772
1,233

546
1,161
1,622

Totals for period, not adjusted for seasonal
1947—First half....
Second half

5,677 4,432
8,300 6,461

1,935
3,325

1,504
1,627

993 1,245
1,509 1,839

518
727
657 1,182

102
127

426
807

717
905

1948—First half....

7,684 6,064

3,100

1,651

1,313

1,620

533 1,087

87

558

975

1947—January
February
March..
April
May
June
July
August
September
October
November
December

873
823
859
928
1,032
1,162
1,264
1,364
1,423
1,497
1,432
1,320

703
662
679
713
790
885
966
1,042
1,086
1,129
1,141
1,097

300
280
285
310
355
405
455
500
540
590
630
610

275
258
241
238
242
250
254
260
267
275
287
284

128
124
153
165
193
230
257
282
279
264
224
203

170
161
180
215
242
277
298
322
337
368
291
223

83
81
76
84
90
104
112
120
121
128
99
77

87
80
104
131
152
173
186
202
216
240
192
146

18
15
15
19
18
17
21
23
23
24
19
17

39
36
50
76
100
125
137
149
159
178
119
65

113
110
115
120
124
135
140
150
155
166
153
141

1948—January
February
March
April
May
June.

1,157
948
837
1,009
940
1,166
1,302 1,015
1,445 1,106
1,605 1,218

500
400
475
525
575
625

273
265
266
263
278
306

175
172
199
227
253
287

209
172
226
287
339
387

71
55
71
94
111
131

138
117
155
193
228
256

15
12
13
15
15

56
41
57
98
136

17

10
7

119
156
174
188
200

i Excludes construction expenditures for crude petroleum and natural gas drilling, and, therefore does not
agree with the new-construction expenditures in the gross national product.
a Excludes farm and public utility; for 1929-32 includes negligible amount of public industrial and commercial building not segregable.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Departments of Commerce and Labor.




89

TABLE 14.—Business expenditures for new plant and equipment, 1929-48
[Millions of dollars]

Manufacturing and mining
Period

Total i

Total

Manufacturing

Mining

Transportation
Railroad

Other

Electric
and gas
utilities

Commercial
and
miscellaneous 2

1929

9,165

3,596

(3)

(3)

840

(4)

(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

(3)
(3)
(3)

(3)

(4)
(•)

(4)

(3)

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

S65
360
164
101
218

(4)
(4)

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

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

3,738
5,077
6,730
4,520
5,200

1,790
2,450
3,330
1,830
2,310

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

(4)

380

166
306
525
238
280

(4)

1,930

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

(4)
(4)
(4)

(4)
(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

6,630
12,040
16, 200

3,650
6,470
8,150

3,210
5,910
7,460

440
560
690

550
570
910

320
660
800

630

1,040
1,900

1,480
3,300
4,430

_

1935
1936
1937
1938
1939

.

1940
1941
1942
1943
1944

_

.

1945
1946
1947

(3)

280

Annual rates, not adjusted for seasonal
1947—First half
Second half
1948—First half«
1947—First quarter
___
Second quarter
T h i r d quarter
Fourth quarter
1948—First quarter
Second quarter f i
T h i r d quarter 8

620
780

760
1,060

820
780

1,560
2,240

3,860
5,000

7,620

720

1,240

780

2,220

5,140

640
880
920
1,200

720
920
800
760

1,320
1,800
2,000
2,480

3,600
4,120
4,640
5,360

1,080
1,400
1,520

720
840
680

2,000
2,440
2,600

4,960
5,320
5,360

14, 200
18,180

7,220
9,100

6,600
8,320

17, 720

8,340

12, 640
15, 760
16,560
19,800

6.400
8,040
8,200
10,000

5,800
7,400
7,480
9,160

600
640
720
840

16,680
18, 760
18, 280

7,920
8, 760
8,120

7,200
8,040
7,400

720
720
720

1
Excludes agriculture.
2
Includes trade, service, finance, and communication for all years shown. Also includes prior to 1939,
transportation other than railroad, and electric and gas utilities not available separately for those years.
3
Not available separately for years prior to 1939.
* Included in commercial and miscellaneous prior to 1939.
6
Estimates for second and third quarters of 1948 were based upon anticipated capital expenditures of
business.

NOTE.—These figures do not agree with the totals included in the gross national product estimates of the
Department of Commerce, principally because the latter cover agricultural investment and also certain
equipment and construction outlays charged to current expense. Figures for 1929-44 are Federal Reserve
Board estimates based on Securities and Exchange Commission and other data. Detail will not necessarily add to totals because figures are rounded to the nearest 10,000,000.
Sources: Securities and Exchange Commission and Department of Commerce (except as noted).




90

TABLE 15.—Business inventories and sales, 1939-48
Manufacturing i

Period

Wholesale 2

Retail 2

Millions of dollars Ratio of Millions of dollars
Ratio of Millions of dollars Ratio of
Inventories 3

Sales *

inventories
to sales

Inventories 3

Sales *

inventories
to sales

Inventories 3

Sales *

inventories
to sales

1939

11, 516

5,112

2.25

3,609

4,606

0.78

5,502

3,504

1.57

1940
1941
1942
1943
1944

12, 873
17, 024
19, 221
19, 897
19,122

5,859
8,172
10, 346
12, 603
13, 402

2.20
2.08
1.86
1.58
1.43

3, 793
4.729
4,013
3,986
4,024

5,147
6,964
7,769
8,274
8,617

.74
.68
.52
.48
.47

6,011
7,620
7,874
7, 350
7,396

3,866
4,624
4,796
5,307
5,790

1.55
1.65
1.64
1.38
1.28

1945
1946
1947

17, 924
23. 435
28, 020

12, 371
12, 020
15, 671

1.45
1.95
1.79

4.308
5,994
7,577

8,782
10, 958
12, 915

.49
.55
.59

7,502
11, 049
12, 953

6,381
8, 355
9,810

1.18
1.32
1.32

1947—First half
Second half...

26, 479
28, 020

14, 948
16, 396

1.77
1.71

6,864
7,577

12, 572
13, 306

.55
.57

11, 948
12, 953

9,469
10,152

1.26
1.28

1948—First half«._._

29, 438

16, 923

1.74

8,071

13, 809

.58

13, 753

10, 566

1.30

1947—January
February
March
April
May
June
July
August
September
October
November
December

24, 213
24, 831
25, 398
25, 853
26, 440
26, 4/9
26, 846
27, 051
27,055
27, 397
27, 627
28,020

14, 453
14,175
15, 546
15, 398
15, 049
15, 065
14, 362
15, 258
16, 597
18, 081
16, 556
17, 524

1.68
1.75
1.63
1.68
1.76
1.76
1.87
1.77
1.63
1.52
1.67
1.60

6,248
6,444
6,611
6,778
6,737
6,864
6,726
6,886
6,997
6,943
7,349
7,577

12, 683
12,996
12, 627
12, 218
12, 369
12, 541
12, 403
12, 523
13, 263
13, 615
14, 333
13, 697

.49
.50
.52
.55
.54
.55
.54
.55
.53
.51
.51
.55

11, 427
11, 653
11, 832
11,974
11, 772
11,948
11, 9^5
11,944
12,073
12, 435
12, 621
12, 953

9,097
9,285
9,399
9,610
9,681
9,743
9,730
9,621
10,162
10, 258
10. 485
10, 653

1.26
1.26
1.26
1.25
1.22
1.23
1.23
1.24
1.19
1.21
1.20
1.22

1948—January
February
March
April e
May •

28, 491
28, 757
29, 053
29,149
29, 438

16, 549
16, 208
18,100
17, 212
16, 547

1.72
1.77
1.61
1.69
1.78

7,618
7,754
8,054
8,049
8,071

14, 096
13, 993
13, 426
13, 684
13, 847

.54
.55
.60
.59
.58

13,384
13, 751
14, 040
13, 907
13, 753

10, 445
10, 381
10, 565
10, 841
10, 599

1.28
1.32
1.33
1.28
1.30

1 Not adjusted for seasonal variation.
2
Adjusted for seasonal variation,
s Book value, end of period.
4
Monthly average shown for year and half year and total for month.
8 Average of 5 months.
6 Preliminary.
NOTE.—Manufacturing inventories and sales, and retail inventories are recently revised series; revisions
for wholesale are to be completed in the near future. 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.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (Office of Business Economics).




91

TABLE 16.—Sales3 stocks, and outstanding orders at 296 department stores, 1939-48
Millions of dollars *
Period

Sales
(total for
month)

Monthly average:
1939

Stocks
(end of
month)

Outstanding orders
(end of
month)

Ratio of
stocks
to sales

Ratio of
orders
to sales

Ratio of
orders
to stocks

128

344

1940
1941
1942
1943
1944

136
156
179
204
227

353
419
599
508
534

108
194
263
530
560

2.60
2.69
3.35
2.49
2.35

0.79
1.24
1.47
2.60
2.47

0.31
.46
.44
1.04
1.05

1945
1946
1947

255
318
336

563
714
823

729
909
553

2.21
2.25
2.45

2.86
2.86
1.65

1.29
1.27
.67

1947—First half
Second half

300
373

817
828

488
619

2.72
2.22

1.63
1.66

.60
.75

1948—First half

316

887

466

2.81

1.47

.53

256
250
331
321
336
304
253
274
341
367
416
584

770
835
866
849
816
768
732
789
823
912
942
770

620
606
489
388
353
470
603
622
676
663
605
544

3.01
3.34
2.62
2.64
2.43
2.53
2.89
2.88
2.41
2.49
2.26
1.32

2.42
2.42
1.48
1.21
1.05
1.55
2.38
2.27
1.98
1.81
1.45
.93

.81
.73
.56
.46
.43
.61
.82
.79
.82
.73
.64
.71

271
263
355
331
339
337

789
878
941
938
919
857

633
575
420
356
339
471

2.91
3.34
2.65
2.83
2.71
2.54

2.34
2.19
1.18
1.08
1.00
1.40

.80
.65
.45
.38
.37
.55

1947—January
February
March _ _
April _
May
June _July
August
September
October
November
December
1943—January
February
March
April May
June 3

_

2.69

1
Not adjusted for seasonal.
»Not available.
8
Estimates based on incomplete data.
NOTE.—These figures represent retail sales, stocks, and outstanding orders as reported fcy a sample of
296 of the larger department stores located in various cities throughout the country and are not estimates
of total sales, stocks, and outstanding orders for all department stores in the United States. Data are not
available prior to 1939.
| i Detail will not necessarily add to totals because of rounding.
ffSource: Board of Governors of the Federal Reserve System.




92

TABLE 17.—Consumers' price index, 1929-48
For moderate-income families in large cities
[1935-39=100]

Period

All items

Food

Apparel

Rent

Fuel, elec- House
tricity, furnishand ice

Miscellaneous

Monthly averager
1929

122.5

132.5

115.3

141.4

112.5

Ill. 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

1935
1936-.
1937
1938
1939

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
116.5
123.6
125.5

96.6
105.5
123.9
138.0
136.1

101.7
106.3
124.2
129.7
138.8

104.6
106.2
108.5
108.0
108.2

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

1945
1946
1947

128.4
139.3
159.2

139.1
159.6
193.8

145.9
160.2
185.8

108.3
108.6
111.2

110.3
112.4
121.1

145.8
159.2
184.4

124.1
128.8
139.9

1947—First half—
Second half.

155.4
163.0

187.0
200.7

183.4

109.0
113.4

117.7
124.6

181.5
187.4

138.3
141.6

1948—First half—

116.4

130.8

193.9

147.0

108.5

110.5

156.1

127.9

-

1940
1941
1942
1943
1944

188.1

169.1

208.3

1946—June

133.3

145.6

1947—January
February.
March
April
May
June
July
August
September
October
November
December

153.3
153.2
156.3
156.2
156.0
157.1
158.4
160.3
163.8
163.8
164.9
167.0

183.8
182.3
189.5
188.0
187.6
190.5
193.1
196.5
203.5
201.6
202.7
206.9

157.2
179.0
181.5
184.3
184. 9
185.0
185.7
184.7
185.9
187.6
189.0
190.2
191.2

108.8
108.9
109.0
109.0
109.2
109.2
110.0
111.2
113.6
114.9
115.2
115.4

117.3
117.5
117.6
118.4
117.7
117.7
119.5
123.8
124.6
125.2
126.9
127.8

179.1
180.8
182.3
182.5
181.9
182.6
184.3
184.2
187.5
187.8
188.9
191.4

137.1
137.4
138.2
139.2
139.0
139.1
139.5
139.8
140.8
141.8
143.0
144.4

1948—January
February
March..
__
April..
..__
May
June

168.8
167.5
166.9
169.3
170.5
171.7

209.7
204.7
202.3
207.9
210.9
214.1

192.1
195.1
196.3
196.4
197.5
196.9

115.9
116.0
116.3
116.3
116.7
117.0

129.5
130.0
130.3
130.7
131.8
132.6

192.3
193.0
194.9
194.7
193.6
194.8

146.4
146.4
146.2
147.8
147.5
147.5

Source: Department of Labor.

793637°




93

195.7

TABLE 18.— Wholesale price index, 1929-48
[1926=100]

<x>
e^
^ w

a fl

0CST3

4
a
B
tea

„
S3 +2
o3 a

.9

if

!§>

T3

H

|

I
1

.

- ,

-

_

1940
1941
1942
1943
1944
1945
1946
1947

s

99.9

91.6 109.1

90.4

83.0 100.5

95.4

94.0

94.3

82.6

86.4
73.0
64.8
65.9
74.9

1929

1935
1936
1937
1938
1939

a
«S

3

95.3 104.9

Average:
1930
1931
1932
1933
1934

1 ! f'l
If I •oS
Foods

Period

Farm products

All commodities

Other than farm products and foods

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

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
86.7
95.2
90.3
90.5

79.0
78.7
82.6
77.0
76.0

80.6
81.7
89.7
86.8
86.3

68.3
70.5
77.8
73.3
74.8

100.8
108.3
117.7
117.5
116.7

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
H5.5 102. 4
94.9 102.7
95.2 104.3

77.3
82.0
89.7
92 2
93.6

78.6 67.7 71.3
87.3 82.4 82.7
98.8 105. 9 99.6
103.1 122 6 106.6
104.0 123.3 104.9

-

-

1947—First half
Second half

-a

S

83.0
89.0
95.5
96.9
98.5

I

c

la

1

ffl

•—i bl.

W

99.7 118.1 100.1 84.0 104.7 117.8 95.2 104.5 94.7
121.1 148.9 130.7 109.5 137.2 116.3 90.1 115.5 132.6 101.4 111.6 100.3
152.1 181.2 168.7 135.2 182.4 141.7 108.7 145.0 179.7 127.3 131.1 115.5

- 105.8 128.2 106.2

146.7 174.7 161.8 131.0 173 8 139.7 101.2 140.8 175.2 128.5 128.7 114.1
157.2 187.3 175.4 139.3 191.1 143.6 115.8 149.1 183.8 126.3 133.4 116.6

1948—First half. _ __ 163.5 190.4 176.9 148.5 189.8 149.5 131.5 156.4 194.6 136.0 142.2 121.5
1946—June

_. 112.9 140.1 112.9 105.6 122.4 109.2

87.8 112.2 129.9

96.4 110.4

98.5

1947—January - - 142.0
145.2
February
March _ _ _ _ _ 150.0
148.0
April
147.3
May
147.7
June
- 150.6
July
153.7
August _.
157.4
September
158.5
October
159.6
November
_
163.2
December

165.0
170.4
182.6
176.9
175. 4
177.8
181.4
181.6
186.4
189.7
187.9
196.7

156.6
162.3
167.9
162 4
159.6
161.8
167.1
172.3
179.2
177.7
177.9
178.4

128.4
129.4
131.7
132.4
132.3
131.6
133.5
136.2
138.3
140.1
142.1
145.5

176.2
174.1
175.1
172.1
171.5
173.8
179.1
182.8
185.6
193.1
202.5
203.4

138.2
139.5
140.5
140 3
139.9
139 9
140.5
141.8
142.4
143.4
145.2
148.0

97.7
98.2
100.7
103.2
103.4
104.0
109.0
112.6
114 2
116.1
118.2
124.6

139.0
139.6
141.1
141.3
141.9
142.0
143.1
148.5
150.1
150.5
150.8
151.5

170.2
174.8
177.5
178 1
176.2
174. 1
175.5
179.6
183.4
185.8
187.7
191.0

128.3
129.3
132.2
133.5
127.1
120.8
118.8
117.5
122.3
128.6
135.8
135.0

126.5
128.3
129.0
129. 1
129.5
129.7
129.8
129.9
131.3
132.4
137. 5
139.4

110.9
111.7
115.6
116.1
116.9
113 5
113.2
113.1
115.9
117.1
118.8
121.5

165.7
160.9
161.4
162.8
163.9
166.2

199.2
185.3
186.0
186.7
189.1
196.0

179.9
172.4
173.8
176.7
177.4
181.4

148.3
147.6
147.7
148.7
149.0
149.5

200.3
192.8
185.4
186.1
187.5
186.8

148.4
148.9
149.8
150.3
150.2
149.6

130.0
130.8
130.9
131.6
132.6
133.1

154.3
155.3
155.9
157.2
157.1
158.7

193.3
192.7
193.1
195.0
196.4
196.8

138.8
134.6
136.1
136.2
134.7
135.7

141.3
141.8
142.0
142.3
142.6
143. 4

123.6
120.1
120 8
121.8
121.5
121.4

1948—January
February
March
April
May.
June

Source: Department of Labor.




94

TABLE 19.—Index of prices received and of prices paid by farmers and parity ratio, 7929-48
[1910-14 = 100]

Prices
received i

Period

Monthly average:
1929.

Prices paid
(including
interest and
taxes)

Parity
ratio a

149

167

89

1930.—
1931
1932.
1933
1934

128
90
68
72
90

160
141
124
120
129

80
64
55
60
70

1935
1936.
1937
1938
1939

109
114
122
97
95

130
127
133
126
124

84
90
92
77
7
7

1940
1941
1942
1943
1944

100
124
159
192
195

125
132
150
162
169

80
94
106
119
115

1945
1946
1947

202
233
278

172
193
231

117
121
120

1947—First half..
Second half.

270
286

225
238

120
120

291

249

117

1947—January
February.
March
April
May
June
July
August
September
October
.__.
November
December

260
262
280
276
272
271
276
276
286
289
287
301

215
221
226
229
228
230
230
234
238
239
241
245

121
119
124
121
119
118
120
118
120
121
119
123

1948—January
February
March
April
May
June

307
279
283
291
289
295

251
248
247
249
250
251

122
112
115
117
116
118

1948—First half...

1 August 1909 to July 1914=100.
2 Ratio of prices received to prices paid (including interest and taxes).
Source: Department of Agriculture.




95

TABLE 20.—Consumer credit outstanding, 1929-48
[Millions of dollars]

End of period

Total
consumer
credit

Instalment
credit i

Charge
accounts

Other
consumer
credit 2

1929

7,637

3,167

1,749

2,721

1930
1931_
1932
1933.
1934

6,829
5,526
4,093
3,919
4,396

2,696
2,212
1,526
1,595
1,867

1,611
1,381
1,114
1,081
1,203

2,522
1,933
1,453
1,243
1,326

1935
1936..._
1937
1938.
1939

5,439
6,796
7,491
7,064
7,994

2,627
3,526
3,971
3,612
4,449

1,292
1,419
1,459
1,487
1,544

1,520
1,851
2,061
1,965
2,001

1940
1941
1942
1943
1944

9,146
9,895
6,478
5,334
5,776

5,448
5,920
2,948
1,957
2,034

1,650
1,764
1,513
1,498
1,758

2,048
2,211
2,017
1,879
1,984

_.

6,638
10,166
13,385

2,365
3,976
6,156

1,981
3,054
3,612

2,292
3,136
3,617

1947—January...
February..
March
April
May
June
July
August
September
October...
November.
December.

10,024
10, 019
10,379
10, 631
10, 934
11,230
11,302
11,433
11, 682
12, 055
12,636
13,385

4,048
4,156
4,329
4,536
4,739
4,919
5,045
5,179
5,290
5,463
5, 733
6,156

2,764
2,602
2,768
2,782
2,835
2,887
2,786
2,755
2,864
3,029
3,309
3,612

3,212
3,261
3,282
3,313
3.360
3,424
3,471
3,499
3,528
3,563
3,594
3,617

1948—January.. _
February..
March
April
May
June ?

13, 058
12, 945
13,391
13, 599
13,804
14,100

6,186
6,249
6,498
6,737
6,957
7,200

3,240
3,067
3,281
3,265
3,255
3,300

3,632
3,629
3,612
3,597
3,592
3,600

1945
1946
1947

_
_

__

1
Includes automobile and other sale credit and repair and modernization loans insured by Federal House
ing Administration.
2
Includes single-payment loans of commercial banks and pawnbrokers and service credit.
3 Estimates based on incomplete data.

NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Board of Governors of the Federal Reserve System.




96

TABLE 21.—Loans and investments of all commercial banks, 1929-48
[Billions of dollars]

Total
loans
and investments

End of month

Investments
Loans
Total

U. S. Government
obligations

Other
securities

1929—Junel

49.4

35.7

13.7

4.9

8.7

1930—-June l
1931—June»
1932—June1
1933—June 1
*
1934—June

48.9
44.9
36.1
30.4
32.7

34.5
29.2
21.8
16.3
15.7

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

1935—June1
1936—December
1937—December ._
1938—December
1939—December.

34.6
39.5
38.3
38.7
40.7

14.9
16.4
17.1
16.4
17.2

19.7
23.1
21.2
22.3
23.4

12.7
15.3
14.2
15.1
16.3

7.0
7.8
7.1
7.2
7.1

1940—December
1941—December
1942—December
1943—D ecember
1944—December _.

43.9
50.7
67.4
85.1
105.5

18.8
21.7
19.2
19.1
21.6

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

26.1

97.9

90.6

7.3

119.4
114.0

27.1
31.1

92.3
82.9

84.5
74.8

7.8
8.1

112.8
116.3

33.7
38.1

70.5
69.2

8.5
9.0

114.1

39.7

79.1
78.2
74.4

65.0

9.4

.-

-

-_

1945—December

.,

1946—June

Dpinpmbfir

1947—June
December
1948—June*

_

_. _

1

Complete end-of-year figures are not available for years prior to 1936.
Estimates 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).
2




97

TABLE 22.—Adjusted deposits of all banks and currency outside banks, 1929-48
[Billions of dollars]

End of period

Total
deposits
U.S.
adjusted Governand
ment
currency depositsl
outside
banks

Other deposits and currency outside
banks

Total

Demand
Time 3 Currency
deposits
outside
adjusted 2 deposits
banks

1929

54.7

0.2

54.5

22.8

28.2

3.6

1930
1931
1932 —
1933
1934 —

63.6
48.3
45.4
42.5
48.0

.3
.5
.5
1.0
1.7

53.2
47.9
44.9
41.5
46.3

21.0
17.4
15.7
15.0
18.5

28.7
26.0
24.5
21.7
23.2

3.6
4.5
4.7
4.8
4.7

52.2
57.4
56.6
59.0
64.1

.9
1.0
.8
.9
.8

51.3
56.4
55.8
58.1
63.3

22.1
25.5
24.0
26.0
29.8

24.2
25.4
26.2
26.3
27.1

4.9
5.5
5.6
5.8
6.4

1940
1941
1942
1943
1944

70.8
78.2
99.7
122.8
151.0

.8
1.9
8.4
10.4
20.8

70.0
76.3
91.3
112.4
130.2

34.9
39.0
48.9
60.8
66.9

27.7
27.7
28.4
32.7
39.8

7.3
9.6
13.9
18.8
23.5

1945

175.4

24.6

150.8

75.9

48.5

26.5

1946—June
December

171.2
167.1

13.4
3.1

157.8
164.0

79.5
83.3

51.8
54.0

26.5
26.7

165.5
171.4

1.4
1.5

164.1
170.0

82.1
87.1

55.7
56.4

26.3
26.5

167.5

2.2

165.3

82.6

57.1

25.6

1935 . .
1936
1937 -_
1938
1939 —

y

1947—June
December..

__

4

1948—June

i Beginning with December 1938, includes U. S. Treasurer's time deposits, open account.
* Includes demand deposits, other than interbank and U. S. Government, less cash items in process of
collection.
' Include? deposits in commercial banks, mutual savings banks, and postal savings system.
< Estimates 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).




98

TABLE 23.—Estimated ownership of Federal securities, 1939-48
[Billions of dollars—par values 1 ]
Gross debt and guaranteed obligations outstanding
Held by public
End of period
Total

1939—December
1940—December
1941—December
1942— December
1943—December
1944— December
1945—December
1946—December..
1947— necember
1948—June9

_

_ _

47.6
50.9
64.3
112 5
170.1
232.1
278.7
259.5
257 0
252.4

Held by
U. S. Government
agencies
and trust
funds

6.5
7.6
9.5
12 2
16.9
21.7
27.0
30.9
34.4
35.8

Nonbank
private
State
Com- Federal financial
and
Total
local mercial Reserve corporagovern- banks 3 banks tions and
associaments 2
tions *
41.1
43.3
54.8
100.3
153. 2
210.4
251 7
228.6
222.6
216.6

1
3

0.4
.5
.7
10
2.1
4.3
6.5
6.3
7.3
7.2

15.9
17.3
21.4
41 1
59.9
77.7
90.8
74.5
68 7
65.0

2.5
2.2
2.3
62
11.5
18.8
24.3
23.3
22.6
21.4

12.0
12.5
16.3
27 4
41.2
56.0
65.3
59.5
57.5
56.3

Individuals*

10.4
10.9
14.1
24 5
38.4
53.5
64.8
64.9
66.6
66.8

United States sayings bonds, series A-D, E, and F, are included at current redemption values.
Includes trust, sinking, and investment funds of State and local governments and their agencies, and
Territories and insular possessions.
3
Includes commercial banks, trust companies, and stock savings banks in the United States and in Territories and insular possessions. Figures exclude securities held in trust departments.
* Includes insurance companies, mutual savings banks, savings and loan associations, dealers and brokers
and investments of foreign balances and international accounts in this country. Beginning with December
1946, includes investments by the International Bank for Reconstruction and Development and 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.
4
Includes partnerships and personal trust accounts.
* Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding
Source: Treasury Department.




99

TABLE 24.—Profits before and after taxes, all private corporations, 1929—48
[Billions of dollars]

Period

1929.

Corporate profits after taxes

Corporate
profits
before
taxes

Corporate
tax
liability 1

9.8

Total

Dividend
payments

Undistributed
profits

1.4

8.4

5.8

2.6

1930.
1931.
1932
1933
1934

3.3
-.8
-3.0
.2
1.7

.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

1935.
1936.
1937.
1938.
1939.

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

-.6
-.3

1940.
1941.
1942.
1943.
1944.

9.3
17.2
21.1
24.5
24.3

2.9
7.8
11.7
14.2
13.5

6.4
9.4
9.4
10.4
10.8

4.0
4.5
4.3
4.5
4.7

2.4
4.9
5.1
5.9
6.1

1945.
1946.
1947.

20.4
21.8
29.8

11.6
9.0
11.7

8.7
12.8
18.1

4.7
5.6

4.0
7.2
11.2

Annual rates, seasonally adjusted
1947—First half
Second half
1948—First half 3

28.9
30.8

11.4
12.1

17.5
18.7

30.5

11.9

28.9

1947—First quarter...
Second quarter.
Third quarter..
Fourth quarter.

29.1
32.4

11.4
11.3
11.4
12.7

1948—First quarter...
Second quarter

31.4
29.5

12.2
11.5

7.0

10.9
11.7

18.6

7.4

11.2

17.5
17.5
17.7
19.7

6.4
6.7
7.1

11.1
10.8
10.8
12.6

19.2
18.0

7.3
7.5

11.9
10.5

i Federal and State corporate income and excess profits taxes.
a Minus 8 million dollars.
» Estimates based on incomplete data; second quarter by Council of Economic Advisers.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce (except as noted).




100

TABLE 25.—Profits after taxes, 629 large private industrial corporations, by industry groups,
1939-48+
[Millions of dollars]
Manufacturing and mining

Period

629

47

77

49

1939

1,465

146

115

223

102

119

1940-..
1941
1942
_
1943....
1944..

1,818
2,163
1, 769
1,800
1,896

278
325
226
204
194

158
193
159
165
174

242
274
209
201
222

173
227
182
180
190

133
153
138
128
115

148
159
151
162
175

1,925
2, 545
3,670

188
283
437

163
171
334

243
130
417

169
127
205

108
136
198

199
356
354

80

74

186

134

122

112
174
152
186
220

194
207
164
170
187

160
187
136
149
147

132
152
161
171

223
281

187
273
345

154
302
370

203
321

151

Number of companies

1945
1946
1947

_
_

_
,

-

15

45

184

Totals for period, not adjusted for seasonal
1947—First half
Second half
1947—First quarter.
Second quarter
Third quarter
Fourth quarter

1,738
1,933

226
212

153
182

199
218

102
103

93
104

109
130

162
193

199
281

175
169

188
183

134
160

871
1,033

126
100
100
112

70
83
77
105

94
105
103
115

49
53
57
46

47
46
45
59

51
58
59
71

98
64
85
108

89
110
121
160

88
87
81
88

96
92
93
90

63
71
80

1948—First quarter....

1,030

121

87

130

61

49

62

83

196

90

93

57

1 Profits after Federal and State income and excess-profits taxes.
2 Includes 29 companies engaged in wholesale and retail trade (largely department stores), 13 in the amusement industry, 21 in shipping and transportation other than railroads (largely air lines), and 11 companies
furnishing scattered types of service.
Source: Compiled by the Board of Governors of the Federal Reserve System and based on published reports of various industrial corporations.




101

TABLE 26.—Relation of profits before and after taxes to sales, private corporations excluding
finance, insurance, and real estate, 7946-48
Profits before taxes as percent
of sales

Profits after taxes as percent
of sales

Industry group
1946

1947

All industries, excluding finance
insurance, and real estate

7.9

8.6

Mining.._
Manufacturing
Metal industries
_
Other manufacturing
_.
Wholesale and retail trade
Transportation
Communications and public utilities
All other industries 2
_.

11.5
8.7
5.8
10.0
5.6
5.0
18.5
9.0

14.9
10.3
11.1
9.9
4.8
7.2
15.7
8.3

1948, first
quarter i




102

1947

1948, first
quarter l

4.6

16.0
10.2
11.0
9.8
5.0
4.7
16.7
7.5

1 Estimates based on incomplete data.
Includes agriculture, forestry and fisheries, and contract construction.
Source: Department of Commerce.

2

1946

5.2

5.2

8.2
5.1
2.9
6.0
3.3
2.5
11.2
5.3

10.5
6.2
6.6
6.1
2.8
4.2
9.6
4.9

11.3
6.2
6.5
6.1
2.9
2.8
10.2
4.4

T A B L E 27.—Relation of profits before and after taxes to investment, private
corporations, by industry groups, 7947

manufacturing

Ratio of profits (annual rate) to stockholders'
equity
Industry group
1947
total

First
quarter

Second
quarter

Third
quarter

Fourth
quarter

Before Federal taxes
All private manufacturing corporations

24.7

Food
..__
Tobacco manufactures
Textile mill products
Apparel and finished textiles
Lumber and wood products
Furniture and fixtures
Paper and allied products
Printing and publishing (except newspapers)
Chemicals and allied products.
_
Products of petroleum and coal
Rubber products
Leather and leather products
'
Stone, clay, and glass products
Piimary n on ferrous metal industries
Primary iron and steel industries
Fabricated metal products
Machinery (except electrical and transportation)
Electrical machinery..
Transportation equipment (except motor vehicles).
Motor vehicles and parts
Instruments; photographic and optical goods;
watches and clocks
__
Miscellaneous manufacturing (including ordnance).

28.0

25.2

24.0

24.8

29.5
16.2
30.6
31.4
34.9
28.9
33.8
28.8
25.1
18.8
24.2
23.8
22.7
19.3
19.2
28.0
25.8
30.5
4.8
28.2

32.4
14.8
40.0
36.0
36.4
32.8
41.6
35.2
31.6
16.8
28.4
34.4
24.4
24.4
23.6
32.0
27.6
32.4
7.2
29.2

28.0
15.2
31.2
28.4
35.6
32.8
38.4
30.8
24.8
19.2
24.4
21.6
25.2
21.6
18.4
28.4
29.2
32.0
6.0
28.4

30.8
17.2
26.4
34.0
34.8
28.8
32.8
30.0
22.4
21.2
18.8
20.8
21.6
15.2
18.0
27.2
24.0
28 0
3.6
27.2

28. 0
18.8
32.8
29.2
38.0
27.6
30.4
18.0
24.4
21.6
26.8
20.8
21.6
20.8
19.2
28.0
24.8
33.2
2.0
32.0

22.6
24.3

24.0
26.8

23.2
24.4

20.8
26.4

25.6
19.6

After Federal taxes
15.1

All private manufacturing corporations
Food
Tobacco manufactures
__
Textile mill products
Apparel and finished textiles
Lumber and wood products
Furniture and fixtures
Paper and allied products
Printing and publishing (except newspapers)
Chemicals and allied products.
____
Products of petroleum and coal
Rubber products
Leather and leather products
_
_._
Stone, clay, and glass products
Primary nonferrous metal industries
Primary iron and steel industries
Fabricated metal products
Machinery (except electrical and transportation)...
Electrical machinery
Transportation equipment (except motor vehicles).
Motor vehicles and parts
Instruments; photographic and optical goods;
watches and clocks
Miscellaneous manufacturing (including ordnance) _

16.8

15.6

14.8

15.2

17.4
9.8
18.4
18.5
22.0
17.3
20.8
17.4
15.5
14.0
12.2
13.8
13.7
11.6
11.7
17.0
15.4
18.4
.4
15.8

18.8
8.8
24.0
21.2
22.4
20.0
25.6
21.6
19.2
12.4
16.4
20.4
14.4
14.8
14.4
19.6
16.4
20.0
3.2
16.8

16.4
9.2
18.8
16.0
22.4
20.0
23.6
18.8
15.2
14.4
8.4
12.8
15.6
13.2
11.2
17.2
17.6
19.2
2.0
16.8

18.4
10.8
15.6
20.8
21.6
17.6
20.4
18 8
14.0
15.6
8.8
12.0
13.2
8.8
10.8
16.4
14.4
16.8
15.6

16.8
11.2
19.6
17.2
24.8
15.6
18.8
9.6
15.2
16.4
16.0
11.6
12.8
10.4
12.0
17.2
14.4
20.0
-3.6
16.4

14.1
14.0

14.8
15.2

14.4
14.8

12. 8
16.0

15.6
10.0

Sources: Federal Trade Commission and Securities and Exchange Commission.




103

TABLE 28.—Relation of profits before and after taxes to sales, private manufacturing corporations,
by industry groups, 1947-48
Profits in cents per dollar of sales
Industry group

1947
total

First
quarter

Second
quarter

Third
quarter

Fourth
quarter

Before Federal taxes
All private manufacturing corporations

11.0

12.4

11.1

10.6

10.1

Food
Tobacco manufactures.Textile mill products
_
Apparel and finished textiles
Lumber and wood products
Furniture and fixtures
Paper and allied products
Printing and publishing (except newspapers)._
Chemicals and allied products
Products of petroleum and coal
Rubber products
Leather and leather products..
Stone, clay, and glass products
Primary nonferrous metal industries
Primary iron and steel industries
Fabricated metal products
__
_
Machinery (except electrical and transportation)
Electrical machinery
Transportation equipment (except motor vehicles).
Motor vehicles and parts
Instruments; photographic and optical goods;
watches and clocks
_._
__
Miscellaneous manufacturing (including ordnance).

7.1
6.7
13.7
7.8
18.1
10.1
17.4
10.1
14.2
14.6
8.7
7.4
13.1
14.6
10.9
12.1
12.1
10.4
2.8
10.7

8.1
6.8
15.8
8.8
19.5
11.2
19.6
12.6
16.9
13.8
10.8
10.1
13.9
16.2
13.6
14.1
13.2
11.0
5.0
11.2

7.0
6.1
13.7
7.6
18.3
11.1
18.1
11.3
14.2
14.4
8.7
7.2
13.9
14.8
10.1
12.1
12.8
10.3
3.6
10.4

7.3
6.8
12.0
7.9
16.8
10.1
16.8
10.7
13.4
15.5
6.8
6.7
12.4
11.6
10.1
11.5
11.5
9.9
2.4
10.3

6.3
7.3
13.1
6.9
17.9
8.3
15.1
5.9
12.4
14.6
8.8
5.9
12.4
15.6
9.8
11.1
11.1
10.4
.9
10.7

12.5
10.8

13.5
12.2

12.0
10.8

12.0
12.1

12.7
8.4

After Federal taxes
All private manufacturing corporations

6.7

7.5

6.8

6.5

6.2

Food
Tobacco manufactures
Textile mill products. _
Apparel and finished textiles
Lumber and wood products
Furniture and fixtures.
Paper and allied products
Printing and publishing (except newspapers)
Chemicals and allied products
Products of petroleum and coal
Rubber products
.
Leather and leather products
Stone, clay, and glass products
Primary nonferrous metal industries
Primary iron and steel industries. _
Fabricated metal products
Machinery (except electrical and transportation)...
Electrical machinery
Transportation equipment (except motor vehicles) .
Motor vehicles and parts
Instruments; photographic and optical goods:
watches and clocks
Miscellaneous manufacturing (including ordnance).

4.2
4.1
8.2
4.6

4.7
4.1
9.5
5.2

4.1
3.7
8.2
4.3

4.3
4.2
7.2
48

11.4

12.1

11.4

10.5

10.7

12.0

11.2

10.3

10.9

10.4
10.1

10.8

11.4
3.2
3.9
7.6
6.8
6.1
6.9
6.9
6.0
.1
5.9

3.7
4.3
7.9
4.1
11.7
4.7
9.3
3.1
7.8
11.3
5.2
3.3
7.4
9.7
6.1
6.8
6.5
6.3
-1.6
5.6

7.8
6.2

8.3
7.0

7.5
6.5

7.5
7.3

7.8
4.3

6.0

6.1
8.7

4.4
4.3
7.9
8.8
6.6
7.4
7.2
6.3
.3
6.0

6.8

7.8

6.2
5.9
8.2
9.7
8.2
8.6
7.9
6.8
2.2
6.4

6.8

6.9
8.7

3.0
4.2
8.5
9.0
6.2
7.4
7.8
6.1
1.1
6.1

Sources: Federal Trade Commission and Securities and Exchange Commission.




104

6.1

6.7
8.2

TABLE 29.—Relation of profits before and after taxes to investment and to sales, all private
manufacturing corporations, by size classes, 1947—48
Before Federal taxes

After Federal taxes

1947

1947

Assets class
(thousands of
dollars)
Total

First Second Third Fourth
quar- quar- quar- quar- Total
ter
ter
ter
ter

First Second Third Fourth
quar- quar- quar- quarter
ter
ter
ter

1948,
first
quarter i

Ratio of profits (annual rate) to stockholders' equity
All sizes

24.7

28.0

25.2

24.0

24.8

15.1

16.8

15.6

14.8

15.2

(2)

Ito249
250 to 9991,000 to 4,999
5,000 to 99,999
100,000 and over.__

24.4
29.2
30.6
27.3
20.3

26.8
35.2
38.8
31.2
20.8

28.4
30.8
32.4
28.4
19.6

30.0
30.0
28.4
26.0
19.6

10.0
22.4
25.2
27.6
24.0

14.8
16.9
18.2
16.5
12.9

16.4
20.4
23.2
18.8
13.2

18.0
18.0
19.6
17.2
12.4

19.2
17.6
17.2
15.6
12.4

3.6
12.0
14.0
16.8
15.6

(2)

Profits in cents per dollar of sales
All sizes

11.0

12.4

11.1

10.6

10.1

6.7

7.5

6.8

6.5

6.2

7.2

1 to 249.
250 to 999
1,000 to 4,999
5,000 to 99,999.
100,000 and over...

6.5
8.8
10.7
11.9
11.4

7.6
10.5
13.0
13.3
12.2

8.0
9.3
11.2
11.9
11.0

7.8
9.1
10.3
11.3
10.8

2.6
6.5
8.3
11.1
11.7

3.9
5.1
6.3
7.2
7.2

4.7
6.1
7.9
8.0
7.8

5.1
5.4
6.7
7.2
6.9

5.0
5.4
6.2
6.8
6.8

1.0
3.5
4.7
6.7
7.6

2.0
4.9
6.0
7.1
8.7

1 Estimates based on incomplete data.
Not available.
Sources: Federal Trade Commission and Securities and Exchange Commission.
2




105

TABLE 30.—Sources and uses of corporate funds, 7946—48
[Billions of dollars]
Use or source of funds

1946

Plant and equipment outlays
Inventories (increase in book value)
Increase in customer financing
__
Net repayment of trade debt
Net repayment of short-term bank loans
Net repayment of RFC loans
Reduction in liability for Federal income tax

1948, first
halfi

1947

11.6
7.5
5.4

Total sources of funds
Discrepancy (uses less sources)

.1
0

27.2

27.9

12.7

4.1
6.3
6.4
.7

4.5
10.6
.3
.1

2.4
4 6.0
.2
.2

1.9
1.4
.6

1.6
1.3
.6

1.0
1.3
3.0
0

3.1
1.3
2.4
2.2
.5
28.5

12.6

.5

_...

.1

26.7

Total uses of funds..

8.4
2.8
.8

.2
2.5

Sources:
Internal sources:
Funds retained from operations:
Depreciation reserves..
Retained net earnings and depletion allowances.
Reduction in cash and U . S . Government securities.
Reduction in other current assets
External sources:
Increase in bank loans:
Short-term
Long-term
__
__.
Increase in mortgage loans
Net new security issues:
Bonds
Stocks..
Increase in liability for Federal income tax
Increase in trade debt
Other net sources.

15.0
7.2
5.6

-.6

.1

c>

0
.4
2.1
.5
.5
.3

1 Estimates of total for half year based on incomplete data; not adjusted for seasonal variation.
2 Net increase of such debt; see sources.
3 Net increase of such liability: see sources.
* Estimate based on preliminary first quarter data.
5 Net repayment of such debt; see uses.
« Net reduction of such liability; see uses.
Sources' Department of Commerce estimates based on Securities and Exchange Commission and other
financial data.




106

TABLE 3 1 . — The international transactions of the United States, 1946—48
[Millions of dollars]
1947

Item

1946

Total
Exports of goods and services:
Recorded goods 2
Other goods 5

1948

First Second T h i r d Fourth First
quarter quarter quarter quarter quarter

Second
quarteri

10,188
1,686

15,338
718

3,775
179

4,185
123

3,716
159

3,662
257

3,318
368

3,328
332

11,874
2,272
820

16,056
2,611
1,074

3,954
650
212

4,308
726
243

3,875
675
251

3,919
560
368

3,686
547
217

3,660
560
260

14, 966

19, 741

4,816

5, 277

4,801

4,847

4,450

4,480

4,908
260

5,733
338

1,412
95

1,449
113

1,323
30

1,549
100

1,794
141

1,625
165

5,168
1,783
216

6,071
2,165
227

1,507
464
51

1,562
532
55

1,353
674
47

1,649
495
74

1,935
494
56

1,790
565
70

7,167

8,463

2,022

2,149

2,074

2,218

2,485

2,425

5,280
1,426

9,605
380

2,363
84

2,736
10

2,393
129

2,113
157

1,524
227

1,703
167

Total goods
Services
Income on investments. .

6,706
489
604

9,985
446
847

2,447
186
161

2,746
194
188

2,522
1
204

2,270
65
294

1 751
53
161

1,870

Total surplus of exports..

7,799

11, 278

2,794

3,128

2,727

2,629

1,965

2,055

1,968

4,514

1,197

Total goods
Services
Income on investments..
Total exports
Imports of goods and services:
Recorded goods
Other goods
Total goods
_
Services
Income on investments..
Total imports
Surplus of exports of goods
and services:
Recorded goods
Other goods..
_

Means of financing:
Net liquidation of gold
and dollar assets by:
Foreign countries
International Monetary F u n d . .
Loan disbursements by
International Bank
Net United States private capital outflow to
foreign countries
Net U. S. Government
loans
Net U. S. Government
unilateral transfers
Net private unilateral
transfers. .
Total means of financing . . .
Errors and omissions

e

190

1,144

856

1,317

368

640

464

56

148

260

132

20

297

92

142

63

103

50

335

727

301

207

98

121

230

185

2,774

3,900

854

1,538

1,201

307

606

230

2,279

1,812

444

457

492

419

842

945

598

568

145

119

138

166

159

145

7,954
-155

12, 282
-1,004

2,941
-147

3,613
-485

3,075
-348

2,653
-24

2,440
-475

2,215
-160

1 Estimates based on incomplete data.
2 Figures for recorded exports of goods in 1946 and 1947 have been adjusted to include goods shipped to
United States armed forces abroad for distribution to civilians in occupied areas in order to make them
comparable with figures for 1948. Such shipments are included in exports as recorded by the Bureau of
the Census in 1948 but were not so included in prior years.
3
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.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce.




107

TABLE 32.—United States Government aid to foreign countries, 1946—48
[Millions of dollars]
1947

A. Unilateral payments:
Straight lend-lease
_
UNRRA
Post-UNRRA
Civilian supplies for occupied
areas
...
European recovery program.
Greek-Turkish aid._._
Chinese aid
International Refugee Organizations
Transfers to Philippines
._
Interim aid
Other
Total unilateral payments...
Less: Unilateral receipts..
Equals: Net unilateral payments.
B. Long-term loans and investments:
Lend-lease credits _
.
Surplus property, including
ship sales
Export-Import Bank
United Kingdom loan
Investment in International
Bank
.. ..
Investment in International
Monetary Fund
Other
Total, long-term loans and investments
Less: Repayments—
Equals: Net long term loans
and investments, including International Bank
and International Fund...
Less: Investments in International Bank and International Fund
Equals: Net long term loans
and investments, excluding International Bank
and International Fund_._

1946

209
1,524
539

1948

T h i r d Fourth First Second
First
Total quarter Second quarter quarter quarter quarter^
quarter

543
245

285

209
2

49
98

145

45

980

219

240

306

215

340

38

36

85

74
15

8
(2)

33

2
20
12
58

33
13
342
29

584
127

577
85

488
69

887
45

1,020
75

457

492

419

842

945

1

1

53
61
1,300

65
206
100

234
170
300

1

2

2

(2)

18

20

15
38

170

17
96
12
305

101

113

2,517
238

2,272
460

623
179

2,279

1,812

444

60

(2)

! 33

Type of aid

600

2

841
945
600

274
796
2,850

96
280
500

60
249
950

2}

*)
2
)

317

318

159

159

5
12

2,745
80

2,745
28

49

3,320
90

7,065
174

3,808
51

1,467,
34

1,416
40

374
49

706
46

255
25

3,230

6,891

3,757

1,433

1,376

325

660

230

322

3,063

2,904

159

230

2,908

3,828

853

1,274

1,376

325

660

0. Short-term loans (net):

-134

72

1

264

-175

-18

—54

Net unilateral payments and loans
and investments, excluding International Bank and International
Fund

5,053

5,712

1,298

1,995

1,693

726

1,448

i Estimates based on incomplete data,
a Not available.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce.




108

1,175

T A B L E 33.—United States

Period

merchandise exports, including reexports,
quarterly average and 1947—48
Total merchandise
North
exports,
including America
reexports

South
America

Europe

by continents,

Asia

Australia
and
Oceania

1936-38

Africa

Millions of dollars
1936-38 Quarterly average

742

183

69

311

125

23

32

1947 Quarterly average. - .
First quarter. _
Second quarter
Third quarter
Fourth quarter

3,836
3,775
4,185
3,716
3,662

957
906
1,013
900
1,010

588
571
648
560
574

1,421
1,484
1,571
1,392
1,235

582
567
649
564
550

80
64
74
97
86

205
183
230
202
206

1948—First quarter
Second quarter i . . .

3,318
3,328

789
921

549
534

1,209
1,080

532
552

42
35

197
206

4.3

HI

Percentage of total
1936-88 Quarterly average,

100.0

24.7

9.3

41.9

16.8

3.1

1947 Quarterly average...
First quarter
Second quarter
Third quarter
Fourth quarter

100.0
100.0
100.0
100.0
100.0

25.0
24.0
24.2
24.2
27.6

15.3
15.1
15.5
15.1
15.7

37.1
39.3
37.5
37.5
33.7

15.2
15.0
15.5
15.2
15.0

2.1
1.7
1.8
2.6
2.3

1948—First quarter
Second quarter i . . .

100.0
100.0

23.8
27.7

16.5
16-0

36.4
32.5

16.0
16.6

1.3
1.1

m
5.3
4.8
5.5
5.4
5.6
5.9
6.2

1
Based on actual figures for April and May and estimates for June.
NOTE.—Data in this table cover all merchandise shipped from the United States customs area to foreign
countries including, in 1947 and 1948, 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.

Source: Department of Commerce.

793637°— 4 8 -




109

TABLE

34.— United Slates general merchandise imports, by continents, 1936-38 quarterly
average and 7947-48

Period

Total
general
imports

North
America

South
America

Europe

Asia

Australia
and
Oceania

Africa

Millions of dollars
622

150

81

177

187

10

17

1947—Quarterly average
First quarter
Second quarter..
Third quarter.
Fourth quarter

1,433
1,412
1,449
1,323
1,549

536
495
568
521
560

309
309
291
276
360

204
187
195
213
225

262
303
269
205
273

39
47
54
25
30

82
69
74
83
100

1948—First quarter
Second quarter *

1,794
1,625

605
613

423
328

264
247

337
312

48
25

116
100

1936-38—Quarterly average.

Percentage of total
1936-38—Quarterly average

100.0

24.1

13.0

28.5

30.1

1.6

2.7

1947—Quarterly average
First quarter
Second quarter
Third quarter
Fourth quarter

100.0
100.0
100.0
100.0
100.0

37.4
35.1
39.2
39.4
36.2

21.6
21.9
20.1
20.9
23.2

14.2
13.2
13.5
16.1
14.5

18.3
21.5
18.6
15.5
17.6

2.7
3.3
3.7
1.9
1.9

5.7
4.9
5.1
6.3
6.5

1948—First quarter
Second quarter x

100.0
100.0

33.7
37.7

23.6
20.2

14.7
15.2

18.8
19.2

2.7
1.5

6.5
6.2

* Based on actualfiguresfor April and May and estimates for June.
NOTE.—Data in this table cover all merchandise received in the United States customs area from foreign
countries. General imports include merchandise entered immediately upon arrival into merchandising
channels, plus entires into bonded customs warehouses. Detail will not necessarily add to totals because
of rounding.
Source: Department of Commerce.




no

TABLE 35.—United States merchandise exports, by economic classes, 1936-38 quarterly average and
1947-48
Total merchandise
exports

Period

Crude
materials

Crude
foodstuffs

Manufactured
foodstuffs

Semi
manufactures

Finished
manufactures

Millions of dollars
1936-38—Quarterly average

731

167

34

42

130

358

1947— Quarterlv average
First quarter
Second quarter
Third quarter
Fourth quarter

3,790
3.713
4,140
3,683
3,624

400
430
431
352
389

332
322
333
347
324

444
452
490
457
376

446
384
485
478
438

2,168
2,124
2,401
2,049
2,098

1948— First quarter.
Second quarter i

3.287
3,295

329
338

315
241

352
388

381
365

1,910
1,964

17.8

49.0

11.8
10.3
11.7
13.0
12.1

57.2
57.2
58.0
55.6
57.9

11.6
11.1

58.1
59.6

Percentage of total
1936-38—Quarterly average.—

100.0

22.8

4.7

1947—Quarterly average
First quarter
Second quarter.
Third quarter
Fourth quarter

100.0
100.0
100.0
100.0
100.0

10.6
11.6
10.4
9.6
10.7

8.8
8.7
8.0
9.4
8.9

100.0
100.0

10.0
10.3

9.6
7.3

1948—First quarter.
Second quarter *

_.

_..

5.7

1£2
11.8
12.4
10.4
10.7
11.8

i Based on actual figures for April and May and estimates for June.
NOTE.—Data in this table cover all merchandise shipped from the United States customs area to foreign
countries, including in 1947 and 1948, 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.
Source: Department of Commerce.




Ill

TABLE 36.—Indexes of quantity and unit value of United States merchandise exports, by economic
classes, 1936-38 quarterly average and 1947-48
[1936-38=100]
Total merchandise
exports

Period

Crude
materials

Crude
foodstuffs

Manufactured
foodstuffs

Semimanufactures

Finished
manufactures

Quantity indexes
1936-38—Quarterly average

100

100

100

100

100

100

1947—Quarterly average
First quarter
Second quarter
Third quarter
Fourth quarter

275
281
299
260
249

123
130
127
101

391
425
414
401
336

482
494
523
504
389

203
189
221
213
191

332
341
367
303
307

1948—First quarter
Second quarter *

220
222

87
88

318
255

364
410

160
153

275
283

no

Unit value indexes
1936--38— Quarterly average.

100

100

100

100

100

100

1947—Quarterly average
First quarter
Second quarter
Third quarter.. _
Fourth quarter

1S8
181
189
194
199

195
197
203
208
210

247
221
235
252
281

218
217
222
215
229

169
157
169
173
177

182
174
183
189
191

204
203

227
229

289
275

229
224

184
183

194
194

1948—First quarter
Second quarter i

_
_

i Based on calculated indexes for April and M a y and estimates for June.
N O T E . The indexes of quantity are a measure of changes in the total volume of trade after the influence on
values of changes in average prices has been eliminated. The indexes of unit value provide a measure of
changes 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. The
indexes for 1947 and 1948 are based on data which include goods destined to the United States armed forces
abroad for distribution to civilians in occupied areas.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce.




112

TABLE 37.—United States imports for consumption, by economic classes, 1936-38 quarterly
average and 1947—48
Total imCrude
ports for
sonsumption materials

Period

Crude food- Manufactured
stuffs
foodstuffs

Semimanufactures

Finished
manufactures

Millions of dollars
615

190

85

95

126

120

1947—Quarterly average
First quarter
Second quarter
Third quarter
Fourth quarter

1,410
1,395
1,409
1,322
1,516

436
460
453
389
440

254
288
227
201
300

164
134
182
169
171

311
281
312
310
343

246
231
236
254
262

1948—First quarter l
Second quarter

1,769
1,612

571
459

346
275

161
183

396
382

295
313

1936-38—Quarterly average.

Percentage of total
1936-38—Quarterly average.

100.0

30.9

13.8

15.4

20.5

19.5

1947—Quarterly average
First quarter
Second quarter
Third quarter
Fourth quarter

-

100.0
100.0
100.0
100.0
100.0

30.9
33.0
32.2
29.4
29.0

18.0
20.6
16.1
15.2
19.8

11.6
9.6
12.9
12.8
11.3

22.0
20.1
22.1
23.4
22.6

17.4
16.6
16.7
19.2
17.3

1948—First quarter l
Second quarter

-

100.0
100.0

32.3
28.5

19.6
17.1

9.1
11.4

22.4
23.7

16.7
19.4

1
Based on actual figures for April and May and estimates for June.
NOTE.—Data in this table cover all merchandise received in the United States customs area from foreign
countries. Imports for consumption include merchandise entered immediately upon arrival into merchandising or consumption channels, plus withdrawals from bonded customs warehouses for consumption.
Detail will not necessarily add to totals because of rounding.

Source: Department of Commerce.




113

TABLE 38.—Indexes of quantity and unit value of recorded United Slates importsfor consumption, by
economic classes, 1936-38 quarterly average and 1947—48
[1936-38=100]
Total imports for
onsumption

Period

Crude
materials

Crude food- Manufactured
stuffs
foodstuffs

Semimanufactures

Finished
manufactures

Quantity indexes
1936-38—Quarterly average....

100

100

100

100

100

100

1947—Quarterly average
First quarter.
Second quarter.
Third q u a r t e r . .
Fourth quarter

109
113
107
102
115

130
138
133
120
134

96
116
85
78
107

83
73
87
86
87

130
126
129
126
140

84
86
80
83
86

126
113

157
125

119
94

81
88

154
142

93
97

1948—First quarter
Second quarter*

~

Unit value indexes
1936-38—Quarterly average

100

100

100

100

100

100

1947—Quarterly average
First quarter
Second quarter
Third quarter
Fourth quarter

211
201
214
211
215

176
175
179
170
172

311
293
314
302
330

208
195
220
208
206

191
177
193
196
194

245
226
245
256
255

1948—First quarter
Second quarter i

227
232

191
194

342
344

210
218

205
214

266
269

i Based on calculated indexes for April and May and estimates for June.
NOTE.—The indexes of quantity are a measure of changes in the total volume of trade after the influence
on values of changes in average prices has been eliminated. The indexes of unit value provide a measure
of changes 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.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce.




114

T A B L E 39.—Changes in selected economic series since 1939 and since the first half of 1947
1939=100
Source:
Appendix C
table
number

1947

Economic series
1946
Total

11..
12..

13.

14.
15.
15.
17.
18.
19..

20.
24.

Gross national product
Personal consumption expenditures
Gross private domestic investment
Net foreign investment
..Government purchases of goods and
services.
National income.._
_
Compensation of employees
Personal income
Disposable personal income
Personal net saving
_
Per capita disposable personal income:
Current dollars
1947 dollars
Labor force, including armed forces
Civilian labor force
Employment
_
Nonagricultural
Agricultural
Unemployment
_
Average gross weekly earnings:
Manufacturing
_
Bituminous coal mining
Private building construction
Retail trade
Physical production: total
_
Agriculture
Nonagriculture
Industrial production index: total
Durable manufactures.
Nondurable manufactures
Minerals
New construction: total
Private
Residential
Nonresidential
Public utility and farm
Public
Business expenditures for new plant and
equipment.
Inventories, end of period:
Manufacturing
_.
Wholesale
Retail
ss:
Manufacturing
_
Wholesale
Retail
_.
Consumers' price index: all items
Food
Apparel
Rent
Wholesale price index, all commodities
Farm products
Foods
Other than farm products and foods
Prices received by farmers - . .
Prices paid by farmers (including interest
and taxes).
Parity ratio
Consumer credit outstanding .end of period.
Corporate profits before taxes
Corporate profits after taxes
Dividend payments
Undistributed profits

First Second
half
half

1948,
first
half

Percent
change,
1947,
first
half, to
1948,
first
half

232
218
294
522
235

252
256
244
239
333
328
989 1,056
214
208

261
250
339
922
219

273
258
413
433
237

+8.3
+7.9
+25.9
-59.0
+13.9

247
245
245
227
437

279
267
269
247
326

274
262
262
241
293

285
272
275
254
356

298
280
287
265
430

+8.8
+6.9
+9.5
+11.0
+46.8

210
150
109
104
121
130
87
24

225
140
111
109
127
138
86
23

220
141
110
108
125
136
83
25

229
140
112
110
129
140
89
20

238
140
111
110
128
140
79
23

+8.2

183
243
185
154
151
126
158
156
176
151
126
166
217
151
426
190
88
232

206
280
208
173
162
122
173
172
202
158
141
222
286
249
399
275
123
312

201
270
201
170

212
290
216
177

218
289
220
183

+8.5
+7.0
+9.5
+7.6

203
166
201

(i)
(i)

(i)
(i)

171
172
203
159
139
180
233
183
383
218
100
273

174
172
200
158
143
263
339
315
415
332
147
350

243
210
235

230
190
217

235
238
238
140
168
159
104
157
228
186
135
245
156

307
280
280
160
204
185
107
197
277
240
166
293
186

157
127
335
256
147
600

156
167
458
362
182
933

—.7

+.9

+1.9
+2.4
+2.9
-4.8
-8.0

(i)

0)

177
176
206
163
144
244
318
293
421
289
130
341

+3.5
+2.3
+1.5
+2.5
+3.6
+35.6
+36.5
+60.1
+9.9
+32.6
+30.0
+25.0

243
210
235

256
224
250

+11.3
+17.9
+15.2

292
273
270
156
196
183
105
190
268
230
161
284
181

321
289
290
164
211
187
109
204
287
249
171
301
192

331
300
302
170
219
195
112
212
292
251
183
30fi
201

+13.4
+9.9
+11.9
+9.0
+11.7
+6.6
+6.7
+11.6

156
141
445
350
174
908

156
167
474
374
184
975

152
176
469
372
1?5
933

-2.6
+24.8
+5.4
+6.3
+ 12.1
+ 2 . 8

+9.0
+9.1
+14.4
+7.7
+11.0

i Bfcau& of the extreme seasonal nature of agricultural crop production, oniy an annual index has been
computed.
Sources: Appendix C, tables as indicated above. Data have been converted to the base 1939=100.
For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C.
Price 30 cents




115











Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102