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Midyear Economic Report
of the President
TRANSMITTED TO THE CONGRESS




July 1949




THE MIDYEAR ECONOMIC
REPORT OF THE PRESIDENT
To the Congress, July 11, 1949

Together with a report

THE ECONOMIC SITUATION
AT MIDYEAR 1949
by the
COUNCIL OF ECONOMIC ADVISERS

UNITED STATES GOVERNMENT PRINTING OFFICE




WASHINGTON : 1949




LETTER OF TRANSMITTAL
THE WHITE HOUSE,

Washington, D. C, July 11, 1949.
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 7, 1949, 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 1949, prepared for me by the Council of Economic
Advisers in accordance with section 4 (c) (2) of the Employment Act of
1946.
Respectfully,




in




Contents
T H E MIDYEAR ECONOMIC REPORT OF THE PRESIDENT

Summary review of recent economic developments
Policies for economic stability and expansion
Summary of legislative recommendations
1949 (a report to the President by the Council of Economic Advisers).

T H E ECONOMIC SITUATION AT MIDYEAR




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To the Congress of the United States:
The United States economy is the strongest and most productive the
world has ever known—and we have the resources and the skills to make
it still stronger and more productive.
In recent months we have seen the abatement of postwar inflationary
forces. We are now in a transition period, in which we must work toward
conditions that will promote a more stable and enduring growth in production, employment, and purchasing power.
The fundamental task facing us all—businessmen, workers, farmers,
Government—is to apply positive policies with confidence and courage in
order to achieve a sounder price structure and the restoration of maximum
production and employment. In so doing, we need to start with a clear
understanding of the facts concerning our present situation.
Our economy today possesses vitally important elements of strength that
did not exist in earlier periods. Over the course of the last 16 years, many
steps have been taken by the Government to bulwark our economy against
the forces of recession.
Unemployment insurance has helped to alleviate the hardships of unemployment and to sustain consumer incomes and expenditures. The old-age
retirement system and public assistance for needy persons also serve to maintain purchasing power. The housing program recently enacted by the
Congress will furnish positive support for housing construction and slum
clearance.
The Federal Reserve System has been developed into an instrument of
such strength and elastic power that the risk of credit restriction at the very
time when business requires easier credit has been greatly reduced. The
insurance of bank deposits has eliminated the danger of widespread loss
from bank failures. The several credit institutions established within the
Government go far toward preventing waves of bankruptcies and fore*
closures. The farm price-support program affords assurance that our
6,000,000 farmers and the two-fifths of our population in rural communities
will not be forced out of the markets for goods.
These and other Government policies are providing strong supports to
business activity and are enlarging the opportunities of private business.
The fact that public expenditures of Federal, State, and local governments
are running at a rate of close to 60 billion dollars a year is itself an element
of great stability in the present situation.
Our position would be even stronger if we had taken adequate steps to
control the inflation between 1945 and 1949. We were confronted, as an
aftermath of the war, by an inflationary boom that lifted production and
employment to extraordinarily high levels. But underneath the surface
of the inflationary boom, there were serious dangers. Some incomes were
disproportionately high. Most prices were rising at a perilous rate, and
serious price and wage distortions were being developed. The spiraling




cost of living was inflicting hardship on millions of families. These conditions threatened to bring about a serious break in employment and production. Therefore, I recommended repeatedly, for private and public
action, an anti-inflation program to curb these dangers before we suffered
the consequences.
A large part of the necessary anti-inflation program was not adopted and
the inflation went on largely uncontrolled. The dangers that are latent
in inflation, of which I repeatedly warned, are now being revealed.
Employment is still high, but unemployment has been increasing and
veterans and others leaving school are finding it much harder to obtain
work than a year ago. Production is still high, but it is lower, particularly
in some industries, than it was last year. Business investment is at a high
rate, but plans for new investments are being made with caution.
The 1949 decline has been moderate, and the opportunity is now ours
to reverse the trend and achieve maximum production and consumption
of goods and services without the evils of inflation.
The adjustment process has been rendered less difficult by the prudent
actions of many groups and individuals in our business system. We have
had no speculative spree in either securities or commodities. Inventory
buying has been moderate and distress liquidation of inventories, such as
we experienced in 1920, is not to be anticipated. Personal indebtedness,
on the part of farmers, home owners, and consumers generally, has been
held to conservative levels. Many far-seeing businessmen made sincere
efforts to avoid or minimize price increases during inflation, and in recent
months have reduced their prices and have sought valiantly to maintain
production and employment. Many labor unions have used their collective strength with moderation and with consideration for the interests of
the whole economy. All groups in the Nation have gained an improved
understanding of economic problems since the 19205s, and their actions
reflect this fact.
We should not, however, be lulled into a false sense of security by these
favorable aspects of the situation. Many of the price adjustments that
have taken place have been healthy, and afford ground for expectation that
our economy will work its way successfully through a difficult period of
transition. But there is nothing healthy about more unemployment or
less production. Such trends can and must be reversed by positive action,
private and public. The way to check a decline in business investment
or production is to take affirmative action that will lead to more investment and more production. The way to check an increase in unemployment is to take affirmative action that will provide more jobs. The way to
prevent our economy from shrinking is to take affirmative action that will
help it to expand.




These things cannot be done by business, labor, agriculture, or government acting alone. They can only be done by all of us working together
in mutual respect and with common objectives.
It is with these considerations in mind that I transmit to the Congress
a brief summary of the economic situation and recommendations for action
at this time.

Summary Review of Recent Economic
Developments
A moderate downward trend characterized most phases of economic
activity in the first half of 1949.
Civilian employment averaged 58 million. This was slightly below the
level of the first half of 1948, with the greatest decrease in manufacturing
industries. In June of this year, civilian employment was 59.6 million; in
June of last year, 61.3 million. The number of unemployed averaged 3.2
million, the increase of about one million over the first half of 1948 about
equaling the increase in the total labor force. The unemployed were 6
percent of the civilian labor force in June, compared with 3.4 percent
in June of last year. The number of unemployed in June was 3.8 million,
and acute unemployment problems have developed in certain localities.
Production of all goods and services, adjusted for price changes and for
seasonal variation, in the first half of 1949 was about l*/2 percent less than
in the second half of 1948. The decline in industrial production was rapid,
and by June had reached 13 percent below last fall's peak. Other business
activity as a whole changed but little. A moderate decrease in private
construction was partly offset by a rise in public construction. This year's
agricultural production seems likely to approach last year's.
Prices generally decreased, reflecting the shift from a sellers' to a buyers'
market. The decreases were in most instances moderate and orderly, with
no indication of a general spiraling downward. Wholesale prices by midyear had declined 9 percent, consumers' prices 3 percent, from their high
points of last August.
Wages increased in some industries, but, at least in manufacturing, the
increases were more than offset by reduced overtime and shorter workweeks. Since the cost of living decreased by about as much as workers'
average earnings, real earnings generally were maintained.
Profits reflected the decline in prices and production. Corporate profits
before taxes and inventory valuation adjustment in the first half of this year
were about 13 percent below the first half of last year. The corresponding
figure for unincorporated enterprises, however, fell only about 7 percent.
Farm income was about 8 percent below the first half of 1948.




Credit requirements of business decreased as inventories and customer
receivables were reduced. Commercial loans of large city banks shrank 15
percent, but otherwise loans by banks and other investment institutions
remained stable. Total bank deposits and money in circulation decreased
about 2 percent during the past half year. Interest rates continued low.
Business investment decreased in the first half of 1949 from the 1948 level.
Allowing for seasonal variations, in the second quarter it was 26 percent
below the peak rate of the fourth quarter of 1948, chiefly as a result of
reductions in inventories. Plant and equipment outlays were still about as
high as a year ago, but some decrease is anticipated in the last half of 1949.
Corporate finance reflected the reduction of inventories and of customer
credit. Funds thus freed helped corporations to reduce their total indebtedness by about 3.5 billion dollars.
Housing starts were less than in the first half of 1948, but since March
have been moving up toward last year's levels.
Personal income of consumers after taxes decreased only about 1 percent
from the level of the last half of 1948. Since consumers' prices dropped 2
percent, real income did not change significantly. Consumption expenditures in dollar terms decreased nearly 3 percent. Total liquid assets of
individuals and business firms are now about 235 billion dollars. However,
nearly 30 percent of our families have no reserve of liquid assets.
In foreign trade, an increase in exports and a falling off of imports have
continued the rising trend in the export surplus which began last fall. The
surplus was financed almost entirely through Government foreign-aid
programs.
Government fiscal transactions were a source of support against other
factors making for decline in the economy during the past half year. Using
figures on a consolidated cash basis, rather than the conventional budget
basis, to reflect the effective impact of total governmental receipts and
payments upon the economy, cash payments by the Federal Government
ran at a rate more than 20 percent higher than in the first half of 1948, and
State and local payments at a rate about 13 percent higher. Federal cash
receipts were down about 10 percent, State and local receipts were up about
5 percent. All governmental units combined showed a cash deficit in
the first half of 1949 at a seasonally adjusted annual rate of 2.4 billion dollars,
in contrast to a surplus at a rate of 12.1 billion dollars in the corresponding
period in 1948. The Federal cash deficit in the past half year was at an
annual rate of about 1 billion dollars, contrasted with a surplus at an annual
rate of 12.3 billion dollars in the first half of last year.




Policies for Economic Stability and
Expansion
These facts show that our economy is still operating at high levels of
employment and production. The kind of Government action that would
be called for in a serious economic emergency would not be appropriate
now.
However, it would be even less appropriate to rely entirely on "letting
nature take its course" to restore economic stability and maximum production and employment. Within the memory of this generation, we have
experienced both the terrible consequences of inaction and the saving value
of affirmative policy. It is consistent with the whole history of American
progress to recognize that, now as before, action can and should be taken
to make our economy still stronger and to deal with the new problems of
the present.
It is fundamentally important to recognize that we should direct our
policies and actions not merely toward preventing a depression or holding
our ground. Many times I have pointed out that the life and spirit of the
American economy is progress and expansion. We need to use the productive capacity of a growing labor force. We need to translate improved
productivity and managerial skills into constantly increasing output. If
the real needs and aspirations of our people are translated into effective
demand through constantly growing employment and purchasing power,
our markets can absorb a vigorously expanding output. We can achieve
within a few years a national output well above 300 billion dollars, valued
at current prices.
Our goal of growth and expansion determines the kind of policies that
private enterprise and Government should now develop and apply.
To restrict business investment, curtail production, reduce employment,
or slash wages, because our economy has declined somewhat, would only
serve to drag us further downward. But if in every field of action we
do the things that are consistent with a strong and growing economy, we
will have a strong and growing economy.
It is vitally important that Government policy be based upon the determination to achieve a constantly growing economy. While some businessmen
may find it difficult to expand their operations under current circumstances,
the Government can always take conscious and positive action to counteract
recessionary forces.
Yet there are those who assert that the decline in national income requires
that we cut essential national programs. Nothing could represent greater
economic folly than to follow this course of action. It would contribute to
the very recessionary forces that we should be counteracting. It would be a
defeatist admission that we cannot prevent our economy from running




downhill and that those programs which are vital to the international
security and domestic welfare of our people, as well as to the strength of our
economy, must be steered in the same downward direction.
This issue is fundamental. Are we going to admit that the forces of
progress in our economy have become so feeble that we must content ourselves with lower levels of education, health and housing, international
and domestic security, and national development? Or are we going to
move forward toward making our economy as strong and productive as
our resources and skills permit, and adopt the programs which are consistent with that kind of economy and necessary for its attainment?
I propose that we follow the latter course.
Business investment
Initiative, ingenuity, and courage have always been characteristic of
American businessmen. The production goals achieved during the war
were a miracle to the rest of the world. There are now great opportunities for business investment to remove obsolescence, to make use of the
rapid progress of science and invention, to improve transportation facilities, to enlarge the housing supply, to industrialize underdeveloped areas
of our country, to bring conveniences and labor-saving devices to American
homes and farms, and to meet the needs of a population that will continue
to grow. Businessmen should lift their sights to the needs of an economy
that grows and prospers from year to year.
I have previously recommended, and I again recommend, that the Congress provide for a broad study of potential business investment, expansion,
and market opportunities under conditions of maximum use of our productive resources in a growing economy—conditions which the Employment
Act of 1946 contemplates and which can be achieved if we have the confidence and determination to achieve them. This study should be designed
especially to discover inadequacies in capacity in basic industries which
may serve as limiting factors to expansion when the upward movement of
business is resumed.
Price and wage policies
In addition to the need for expanded business investment, positive actions
are required to enlarge consumer purchasing power.
Businessmen have a great opportunity to maintain production and sales
volume by adjusting prices downward, even at the cost of temporarily reduced profits. Maintaining volume in the present situation is far more
important than maintaining profit margins. The only ultimate source of
sustained profits is sustained employment and purchasing power.
The same concept should guide wage policies. Business cannot be prosperous unless the purchasing power of workers is maintained. While price
reductions are desirable, they should not be attained at the expense of wage
cutting. Management and labor, through collective bargaining, should




seek agreements which recognize that the benefits of improved technology
and productivity should be reflected both in the wage structure and in the
price structure.
Fiscal policy
The Government's programs of expenditures and receipts must be carefully planned in the light of economic developments as they occur.
The Federal Budget in recent years has necessarily been large, reflecting
not only the needs of the people for Government services but also the
extraordinary responsibilities of the United States in working toward a
peaceful world.
The sound objective of Government policy is to contribute toward the
maximum use of our resources, not to contribute toward having them lie
idle and unused. When I submitted my budget for the fiscal year 1950 last
January, the programs of expenditure that I then recommended were held to
a minimum consistent with our basic needs in view of the inflationary strain
upon materials and manpower then prevailing. Now that this strain has
been removed, it would be inconsistent with sound fiscal policy and common
sense to make these programs smaller.
Continuing these necessary programs involves the problem of how
and when we should achieve a balance of Federal receipts and expenditures, and a reduction of the national debt. No one has been more concerned with this problem than I, and this concern has not diminished. I
will continue to exert every effort to achieve every economy in the development and execution of programs that is consistent with the national welfare.
Balancing the budget and reducing the national debt are objectives to be
achieved at the earliest feasible time.
But these objectives cannot be achieved without regard to the general
state of the Nation's economy. During the fiscal years 1947 and 1948 we
were able to achieve, although not to the extent desired, the objective of
balancing the budget and reducing the national debt. I urged repeatedly
during this inflationary period that Government revenues be maintained to
provide a surplus for retirement of the national debt. The present deficit
of Federal receipts below expenditures, caused primarily by the untimely
tax reduction of 5 billion dollars during the height of inflation, against which
I so strongly advised, has been aggravated by the loss in revenue resulting
from the decline in production and national income.
As I said in my Economic Report in January of this year:
The national tax policy should beflexibleand should be promptly adjusted to the
changing needs of business and consumers in the course of evolving economic events.
Under present economic conditions, we cannot immediately correct the
tax mistakes of the past or the conditions which led to a lower level of
national income and lower Federal revenues. Any tax increase should




be judged by the effect which it might have upon national income and
purchasing power. Under present conditions, immediate tax increases
should be limited to raising estate and gift tax rates and closing the loopholes in their administration, so as at least to restore the revenue from this
source lost under the Revenue Act of 1948. This will have no significant
adverse effects upon present economic conditions. At the same time, the tax
on transportation of goods, which enters directly into such a large number of
business costs, should be eliminated. Furthermore, the loss carry-over provisions in the corporate income tax laws should be liberalized in order to
give an increased incentive to some business investments which may now
be held back because of uncertain profit expectations. The net effect of these
three changes in our tax structure, taken together, will be favorable to the
expansion of business activity, without causing a significant net loss in
total receipts. No changes in the tax laws which would result in a larger
net loss in revenues would be justified at this time.
In view of our domestic and international obligations, an abundant
economy is the only safe road to a Government surplus. In 1948 the
value of our national output of goods and services was above 250 billion
dollars. A 3- or 4-percent annual growth of our economy, which I set
as a practical objective in my Economic Report in January, would increase
annual national output in real terms by 7 ^ to 10 billion dollars. Higher
national output means more Federal revenues at any given tax rate.
Present levels of expenditures are due in large measure to the extraordinary costs of our national defense and international activities. These
activities are of such paramount importance that it is out of the question
to slash them at this time. But, as our policy for peace takes effect, it
should be possible in future years to reduce these expenditures which now
make such heavy demands upon our Federal budget. As opportunity
offers, I shall make every effort to achieve an excess of Federal income
over outgo, consistent with our major objectives of peace and prosperity.
But if we tried to avoid a budget deficit by cutting essential expenditures,
we would contribute to lower national output and lower employment, Federal receipts would fall further, and the burden upon Federal expenditures
would increase. We cannot expect to achieve a budget surplus in a declining national economy.
There are economic and social deficits that would be far more serious than
a temporary deficit in the Federal budget. Gould we be truly prosperous
if the level of business investment or consumer purchasing power should
become seriously deficient? Could we be truly prosperous with gaping
deficts in our educational system or our housing or our health services or
our programs for resource development? If we should allow these deficits
to multiply, they would drag the whole economy down, and there would
be no hope for balancing the Government budget. But if we prevent these
deficits, if we realize the productive potentials of the American economy,




the whole Nation will prosper, and not only will we balance the Federal
budget, but we can also move forward to improve the tax system and to
resume reduction of the national debt.
Monetary and credit policy
Federal monetary and credit policies should contribute to the needs of
an expanding economy.
Present conditions of ample credit supplies and low interest rates are
favorable to business investment. The policy of the Government will be to
continue to maintain orderly conditions in the Government security markets
and to encourage banks and other institutions to maintain and expand
their productive lending activities.
Over the years, Federal lending has come to exercise an important influence upon business investment by providing funds which would otherwise
not be available, particularly for small and new businesses. In a period of
business contraction, no matter how moderate, deficiencies in capital funds
force many enterprises to the wall. It is no answer to this difficult question
to say that this squeezes out the inefficient, because it also ruins many who
are temporarily in adverse financial circumstances without being inefficient,
and prevents others from getting a start in business.
The Reconstruction Finance Corporation, under its existing authority,
will continue its support of business activity by making loans based upon
reasonable assurance of repayment, not under depression conditions, but
under generally prosperous, long-run conditions. The Corporation is also
very properly focusing its loan activities toward areas where unemployment
has become serious. New legislation is needed, however, to extend the maximum maturity periods for loans, in order to permit financial assistance by
the Corporation to business ventures which are economically sound and
urgently needed in an expanding economy, but which require long periods
of time to develop and produce earnings that will permit orderly amortization of debt.
Agricultural policy
Millions of American consumers derive their livelihood from farming
and buy the products of industry. Experience has taught us that there can
be no lasting general prosperity without farm prosperity.
There is immediate need to overcome a number of shortcomings in existing farm legislation. It is necessary to assure fair and adequate supports
for major farm products, notably livestock products, which have not been
covered in past programs. It is necessary to authorize the use of direct
production payments as an alternative to the pegging of market prices if
an effective support program is to be carried forward without waste of
commodities and without denying to consumers the benefits of agricultural
abundance. It is desirable to recognize clearly that the oBjective farm
support prices is to maintain an adequate level of farm income and promote




shifts in lines of agricultural production which will encourage an increase
in the total domestic consumption of farm products. I urge the Congress
to enact at this session legislation to meet these needs.
Minimum wages
Minimum-wage legislation is essential to maintaining adequate consumer
purchasing power among large groups of our population. The cost of living has been reduced very little, so that low-paid workers are still faced
with a grave problem in meeting living expenses. Higher minimum wages
are an element in the general improvement of American living standards
which we can afford and must achieve. I repeat my request for the immediate raising of the minimum wage under the Fair Labor Standards
Act to at least 75 cents an hour, and the extension of the Act's coverage.
Social security
Although unemployment has not risen to the dangerous levels which
would call for all-out emergency measures, there is an inescapable obligation of Government to take action when large numbers of people are unemployed through no fault of their own. Such action is important not only
to the unemployed but also to business, since unemployment benefits maintain to some extent the purchasing power of those who have lost their jobs.
Because these measures contribute toward isolating the consequences of
unemployment and reducing its duration, it is not economical even by the
measure of dollars alone to leave these protective devices in an inadequate
state. The cost of such measures is determined not only by the extent of
coverage or size of benefits but also by the extent and duration of unemployment.
Under current economic conditions, it is urgent that the unemployment
compensation system be broadened and liberalized. I recommend that the
Congress strengthen our Federal-State unemployment insurance system by
establishing minimum benefit standards for all parts of the country and
by broadening coverage. These minimum standards should provide
benefits for 26 weeks ranging up to $30 a week for single individuals, with
additional amounts for dependents.
Ample funds are available for this purpose in the trust accounts of most
States. However, these increased benefits will require action by the State
legislatures and it will obviously take some time before the laws of all States
can be amended for this purpose. It will be necessary, therefore, to allow
a reasonable period before the requirement for new standards takes effect.
To encourage the States to meet the new standards without waiting
for this period to expire, I recommend that a Federal reinsurance fund be
established for those States which meet the minimum standards to assure
that the increased protection will not threaten the continued solvency of
State unemployment funds. This would represent an extension and
strengthening of the present legislation authorizing Federal loans to States
whose unemployment funds run low, which expires on December 31, 1949.




io

I further recommend that the expiration date for unemployment benefits
for veterans under the Servicemen's Readjustment Act be extended for one
year, to July 25, 1950. Such benefits should not be available to those eligible for unemployment compensation under State laws, except where
necessary to bring State payments up to the Federal level, or when State
benefits are used up.
The improvements in the old-age and survivors' insurance system which
I have recommended to the Congress are also badly needed. The present
schedule for increasing pay roll taxes to \l/i percent each on employers
and employees next January will provide the financial basis for such improvements without unduly reducing consumer purchasing power.
I have already recommended to the Congress that in addition to Federal
aid to the States for the needy aged, for the blind, and for dependent children, such aid should be extended to other needy persons receiving general
assistance. In most States, the programs now in operation are inadequate
and in many localities there is no program at all. Recent economic developments have emphasized the need for aid, and I again urge its favorable
consideration by the Congress.
Public works
Public works programs, Federal, State, and local, assume added significance under present conditions as a means of maintaining consumer purchasing power and stimulating investment opportunities. My January
budget proposals called for Federal expenditures for civil public works in
fiscal year 1950 in the amount of about 3 billion dollars, compared to about
2*4 billion dollars in fiscal 1949. Continuing the programs included in
the present budget, even without any new starts, will require expenditures
of approximately 3 billion dollars in each of the fiscal years 1951 and 1952,
at construction rates now planned.
This is a substantial program, and, coupled with private construction
expenditures at the current rate, and with local and State expenditures
at a rate in excess of 3 billion dollars a year, should maintain the construction industry at a high level of activity and thus strengthen the whole
economy.
The economic situation does not now call for an immediate and sweeping expansion of public works. It would be dangerous, however, to
neglect the precautionary preparation of measures which might be needed
if the business downturn should become more serious. Such preparatory
measures by themselves will serve to inspire confidence that the Government will, if necessary, help further to maintain a high level of demand.
They will thus reduce doubts that businessmen may have about planning
investments for the future. They will also encourage consumers to continue their normal purchasing with more confidence.
I urge, therefore, that the Congress (1) enact legislation to provide for
loans to assist State and local advance planning of public works; (2) pro844384—49




2

II

vide funds for the Public Buildings Administration for advance planning
and site acquisition for Federal construction, under the authority recently
enacted; (3) enable the Bureau of Public Roads to make advances to States
for acquiring and clearing rights-of-way; and (4) provide for the surveys
and planning for school construction which I have previously recommended.
Together with the advance planning already under way by many Federal
agencies, these actions will round out a substantial backlog of planned public
works.
Concentration upon areas of relatively serious unemployment
While unemployment is not now at a very high level for the country
as a whole, there are many localities and even some States where it is
serious. These pools of heavy unemployment need to be treated before
they spread, and the responsibility is in part national.
There are a number of Federal programs of direct action or assistance
to localities which can be timed and channeled so as to concentrate upon
areas where unemployment is heavy without sacrifice of general national
objectives. This principle of wise selectivity is particularly applicable to
procurement and construction activities, but it is also relevant to other grant
or loan programs designed to stimulate private enterprise or to effect
public improvements. Toward this end, I am directing that a continuing
review of such activities be undertaken within the Executive Office, in order
to coordinate planning, to keep the various types of activity and their
geographic distribution in proper balance and readiness, and to focus
emphasis upon alleviating unemployment in particular areas where it
becomes serious before it has a chance to spread. I am also having a study
made of possible changes in the laws governing these activities which may
be needed for these purposes.
Foreign economic policy
The decline in our business activity is reducing our imports, which is an
important factor affecting the ability of foreign countries to earn the dollars
they require to restore their economic health. The decline in imports, if
long continued, could have very serious effects. If a severe shrinkage in the
flow of dollars abroad occurred, it would not only reduce our exports now,
but would also force other countries to try to save dollars by making discriminatory trading arrangements that would adversely affect the long-run
future of our foreign trade. Moreover, it would set back recovery and
reconstruction abroad, and might precipitate developments which would
have serious consequences for world political stability.
For these reasons, it is especially important at this time for us to continue
the efforts we are making to help rebuild a strong and advancing world
economy, based upon an effective network of world trade and the growing
productive strength of free nations. In addition to maintaining our foreignassistance programs, and restoring a full-scale Reciprocal Trade Agreements




12

Act, I urge the Congress to enact the legislation I have recently recommended to expand both technical and capital assistance for the economic
growth of underdeveloped areas.
The expansion of foreign investment, by making more dollars available
directly to the underdeveloped countries and indirectly to the capital-goodsexporting countries of Europe, will improve the rest of the world's ability
to buy from us. The expansion of technical assistance will stimulate foreign
investment by assisting countries that want capital for development to
translate their aspirations into concrete projects, by creating new productive
investment opportunities, and by increasing the private investor's knowledge
of those that already exist. Both under its existing authority and under the
new legislation I have proposed, the Export-Import Bank will be expanding
its operations and substantially contributing to these objectives.
These actions are called for by both our foreign policy and our domestic
economic policy. They will be supplemented by the strong support of the
United States for an expansion in the development activities of the International Bank for Reconstruction and Development.
There is danger that a further reduction of economic activity may give
rise to pressure to restrain imports, in an attempt to divert to United States
markets part of the small fraction of total demand now directed toward
foreign goods. It should be recognized that diversion is a poor substitute
for expansion of total demand. Protectionist measures would not merely
shift the problem of inadequate markets to other countries but would also,
with the present dollar stringency, promptly reduce our own exports. Such
measures would, therefore, not have a stimulating effect on the domestic
economy, even in the short run.

Summary of Legislative
Recommendations
In summary, I recommend that the Congress take the following actions
at this session because of their vital importance in the current economic
situation:
1. Repeal the tax on the transportation of goods, liberalize the provisions for carry-over of losses by corporations, and raise estate and gift
taxes. No major increase in taxes should be undertaken at this time.
2. Extend the maximum time limit now fixed by law on the maturity
of loans to business made by the Reconstruction Finance Corporation.
3. Provide for a broad study of investment and development needs
and market opportunities in an expanding economy.
4. Adopt an improved program of farm income supports.
5. Increase the minimum wage to at least 75 cents an hour and
broaden its coverage.




6. Strengthen the unemployment compensation system by increasing the amount and duration of benefits and extending coverage.
7. Extend to July 25, 1950, the availability of readjustment allowances for veterans not protected by State unemployment compensation
laws.
8. Raise benefits and extend coverage under the old-age and survivors insurance system and improve the public assistance program.
9. Enact legislation to permit Federal agencies, and assist States and
localities, to intensify their advance planning and to acquire sites for
useful projects.
10. Enact legislation to provide technical assistance to underdeveloped areas abroad and to encourage investment in such areas.
11. Restore the Reciprocal Trade Agreements Act.
*
*
*
*
*
*
*
The core of my message to every businessman, worker, and farmer, and
to everyone responsible for the making of national policy is just this: We
cannot have prosperity by getting adjusted to the idea of a depression—
by cutting investment or employment or wages or essential Government
programs. We can be prosperous only by planning and working for prosperity, by increasing private investment, production, employment and purchasing power, and by carrying forward essential Government programs.
The whole world is watching developments in the American economy.
Our own people insist upon the maintenance of prosperity, and will not
tolerate a depression. Our friends abroad know that their well-being
and hopes for world peace are greatly dependent upon the economic
strength of the United States. Those opposed to our system and way of
life are hoping for the vindication of their prophecies that economic collapse
is inevitable in a free society.
Ours is at once a fateful responsibility and an inspiring opportunity to
prove to ourselves and to the world that prosperity and freedom will endure
together.




THE ECONOMIC SITUATION
AT MIDYEAR 1949




A REPORT TO THE PRESIDENT
BY THE

COUNCIL OF ECONOMIC ADVISERS




LETTER OF TRANSMITTAL

COUNCIL OF ECONOMIC ADVISERS.,

Washington, D. C, July 2,1949.
T H E PRESIDENT:

SIR: The Council of Economic Advisers herewith submits a report, The
Economic Situation at Midyear 1949, in accordance with section 4 (c) (2)
of the Employment Act of 1946.
Respectfully,




Chairman.

Vice Chairman.

in




Contents
I. T H E COURSE OF ECONOMIC ADJUSTMENT AND ITS PROBLEMS. . . .

The economy in transition
Factors of underlying strength
Elements of uncertainty
The process of price and income adjustment
The need for maintaining the rate of investment
Public and private responsibilities

Page
1

1
2
3
4
9
10

II. ECONOMIC INDICATORS AND THE NATION'S ECONOMIC BUDGET. .

13

The course of employment and production
Employment
Production
Prices, wages, and profits
Prices
Wages and labor relations
Profits
Money and credit
The flow of goods and purchasing power
Consumer income, spending, and saving
Business investment and finance.
International transactions
Government transactions
Summary: The Nation's Economic Budget

13
13
16
19
19
23
24
26
27
27
31
38
42
46

APPENDIXES
A. T H E NATION'S ECONOMIC BUDGET
B. T H E DISTRIBUTION OF INCOME AND LIQUID ASSETS AND PERSONAL
SAVING
C. SURVEYS OF ACTUAL AND INTENDED BUSINESS INVESTMENT
D. STATISTICAL TABLES RELATING TO EMPLOYMENT, PRODUCTION,
AND PURCHASING POWER

844384—49




3

51
65
73
85




I. The Course of Economic Adjustment
and Its Problems
The United States in 1949 is faced with the problems of a new and strikingly different phase of postwar economic adjustment. We are seeking to
liquidate inflation without being overcome by business depression. Our
problem is to work out a lower level of prices without a further decline of
production and employment, and to effect the transition to more stable
conditions conducive to maximum employment and production. In this
review of the situation at midyear, the Council of Economic Advisers is
undertaking to report on the economic state of the Nation, giving full value
to the elements of basic strength but not failing to recognize the realities of
current recessionary factors. We find the prospect reassuring.
THE ECONOMY IN TRANSITION

During the early postwar years the situation was dominated by shortages
of goods, tremendous* backlogs of deferred consumer demand created by
the war, an acute shortage of productive capacity in many lines, the vast
accumulation of liquid savings, and the high level of expenditures needed
to meet military and foreign requirements. In earlier reports, these various
factors were dealt with extensively. It was pointed out that they represented
the active elements in the inflationary course which the economy took after
wartime controls were removed. So long as these extraordinary factors were
maintained in combination, it was possible to continue very high employment and production even without a balanced adjustment between prevailing prices and current incomes. But it was foreseen that, when temporary
supports slackened, full prosperity could not be preserved without a wide
range of adjustments.
It was not to be expected that all of these adjustments could take place
without any temporary slackening of employment and production; that
would be too much to expect, given the dynamic quality of our free economy.
But there was concern lest these adjustments, if too long delayed, would
culminate in a manner which experience had taught us might carry the
whole economy downhill rapidly and far. How to limit the inflation and
prevent it from running a disastrous course to economic crisis and depression
was the central theme of previous reports.




The public and private actions which were taken were not sufficient to
prevent a very substantial degree of inflation from developing. More extensive measures of public control and more restrained private behavior
would have reduced the difficulties of the inevitable adjustment. But the
actions taken have been effective enough to prevent the kind of exaggerated
speculative spree which could end only in a disastrous slump. The inflationary tendency has eased off gradually at one point after another, so that
we have arrived at the present stage where general inflationary pressures?
have disappeared without being followed by a collapse of the price structure.
In the first quarter of 1949 some reduction in the level of economic activity
was expected on a seasonal basis. But in addition to this seasonal slackening, there was an increase in the number of points at which the catching-up
process caused markets to weaken and some reduction of production and
employment to appear. After relatively moderate developments of this
character in the first quarter, intense interest centered on whether there
would be the normal seasonal improvement in the second quarter. This was
widely regarded as the test of whether or not the economy was slipping
downward.
In the second quarter of the year there was indeed some noticeable improvement in various areas of industry, particularly residential construction,
and a seasonal pick-up in agricultural employment. The level of consumer
income remained high, there was no general withdrawal from markets,
and no contagious development of sharp downward price spirals. On
the other hand, after allowance for seasonal factors, the general drift of
prices, production, and manufacturing employment was still downward.
And, in particular, the market weakness extended to metals and other
products which at the beginning of the year were still in a tight demandsupply situation. It is no longer possible to describe the situation as one
of mixed inflationary and deflationary forces, as at the beginning of the
year. The weakening of markets has become general.
FACTORS OF UNDERLYING STRENGTH

Many factors augur well for the successful culmination of the readjustment process in early stability followed by renewed growth. Among the
most favorable elements is that the readjustment has thus far proceeded
gradually without giving rise to panickp reactions. Neither the sharp reaction in farm commodity prices in early 1948 nor the 6 months' downslide
last fall and winter proved contagious. The management of inventories
has been carried out in a spirit of caution rather than pessimism. Production, which on account of inventory reductions has fallen below the rate
of sales in many lines, should before too long come back at least into line
with current sales if nothing occurs to create more pessimistic anticipations.
Aggressive merchandising efforts have been producing favorable results in
many markets. New investment in plant and equipment was higher in




the first quarter of 1949 than a year earlier and is continuing at a high
level. Investment plans, as reported by recent surveys, indicate no early
let-down of serious proportions, though there is considerable uncertainty
about the situation 6 months hence. Housing starts, after reaching a
low point in the winter, have moved sharply upward, to a level only just
below that of a year ago. Business credit is in general available in ample
amount and on favorable terms, and there is no evidence of serious banking pressure on borrowers to liquidate their loans.
The strength of the economy is further fortified by many governmental
policies and programs. Federal, State, and local governments have now
undertaken many of the urgent public works which were deferred during the war, and expenditures for these purposes will be expanding.
The payment of unemployment insurance and other social-security benefits has helped to sustain buying power and the demand for goods. The
farm-price-support policy, which was so important in the winter of 1948 and
again in early 1949, gives assurance that there will not be a collapse of
rural buying such as that which occurred in 1920. The international situation is responsible for an increase in combined Government expenditures for
foreign aid and military preparedness, which contribute to the domestic
demand for goods and services. Through deposit insurance and other banking and financial measures, the economy is protected to a high degree against
financial crisis.
Both reflecting and reenforcing these elements of strength is the fact that
disposable income has been well maintained. Gross national product,
national income, consumers' disposable income, and consumer expenditures
are at or near the levels of a year ago. Furthermore, consumers and business
firms have large resources of liquid assets, and there has been no threatening
increase of personal and business indebtedness such as that which in earlier
periods has created vulnerability. Private debt is low, and both home and
farm mortgages are to a large extent on an amortized basis.
Evidence of the sort presented provides a basis for belief that we may
have the unique and fortunate experience of liquidating a major inflation
without falling into a severe recession.
ELEMENTS OF UNCERTAINTY

In spite of these elements of strength, the situation is beset with many
uncertainties and problems. The most serious fact confronting us is that
the decline, which has reached serious proportions in some sectors of the
economy, has not yet been reversed.
Nonagricultural employment has declined by nearly 2 million since a
year ago, mainly because of a substantial drop in manufacturing employment. Unemployment now stands at 1.7 million above a year ago.




Roughly measured, total production of goods and services in the first
six months of 1949, measured in real terms, appears to have been about V/2
percent below the last half of 1948. (See chart 1.) The drop in industrial
production has been more striking, the index in June of this year being about
13 percent below the peak level of last autumn. The sharpness of the recent
declines in manufacturing is shown by a fall of 10 percent between March
and June of the present year.
It is probable that the growing industry practice of paid vacations will
augment the drop in the production index during the summer months. The
summer unemployment figures will reflect as usual the large number of persons who temporarily enter the labor force.
Total private investment, a key element in the picture, which reached a
seasonally adjusted annual rate of more than 43 billion dollars in the fourth
quarter of 1948, fell by about 25 percent to a 32-billion-dollar rate in the
second quarter of 1949. This represents mainly a change-over from net
accumulation of inventories to net liquidation. There has not been a
similar decline in the level of investment in new construction and equipment.
Since its peak in August 1948, the wholesale price index has declined by
about 9 percent, and since the end of 1948 by about 5 percent. The consumer price index has declined by 3 percent since the same peak month and
by 1.3 percent since the end of last year. The decline in personal incomes
has been more moderate than might have been expected, being in the first
half of 1949 only 2 percent below the second half of 1948.
The uneasiness and business hesitation arising from all these circumstances will not be cleared away until actual developments introduce a new
note into the business outlook. In the meantime, business sentiment might
be so adversely affected that the potential recuperative influences outlined
earlier would not come into play. If uncertainty about the future should
reach the point of distinct pessimism, orders and inventories might be
sharply reduced, production cut back, and investment plans shelved to
an extent that would initiate a further spiral of unemployment, loss of
consumer income, and decline in consumer demand.
The weight of evidence as we see it does not support so gloomy an outlook.
But we may still face an unsatisfactory alternative. While the decline
may be halted or even reversed, a satisfactory expansion might not follow.
Our real need is for industrial production not only to rebound to the level
of present consumption but also for both production and consumption to
continue to rise sufficiently to absorb a labor force which is both growing
in size and increasing in productivity per man.
THE PROCESS OF PRICE AND INCOME ADJUSTMENT

Previous Economic Reports have repeatedly pointed out that price levels
which were geared to war-created temporary factors of demand and
shortages of supply could not be sustained indefinitely. The downward




CHART 1

ECONOMIC INDICATORS
CHANGES FROM 2nd HALF 1948 TO 1st HALF 1949
PERCENTAGE

CHANGE

PERCENTAGE

CHANGE

+ 80

+ 80

EMPLOYMENT
+ 60

+ 60

+ 40

+ 40

+ 20

+ 20

Y//////A
UNEMPLOYMENT

-20

-

NONAGRICULTURAL

TOTAL
CIVILIAN
EMPLOYMENT

AGRICULTURAL
EMPL0YMENT

-20

-40

-40

PRODUCTION
PRODUCT
( 1 9 4 8 PRICES)

GOODS
AND
UTILITIES

-20

ilii!

INDUSTRIAL
PRODUCTION

PRIVATE
CONSTRUCTION*

HI

BUSINESS
::::::::::::!
I;;;;;;;;;:;;:
PUBLIC
„ EXPENDITURES
CONSTRUCTION
FOR NEW
PLANT 8
EQUIPMENT

-40

-20

-40

PURCHASING POWER
NATIONAL
INCOME

IUUIUUUUUI
FARM
INCOME

-20

(MANUFACTURING)

-20
CORPORATE
PROFITS
AFTER TAXES

-40

-40

PRICES *
WHOLESALE

CONSUMERS

Eftfi&Sa
OTHER

-20

* *

ALL

AND FOODS

WITHOUT

ALLOWANCE

FOR INVENTORY

VALUATION

-20

ADJUSTMENT.

SOURCE: BASED ON DATA I APPENDIX D.
N




adjustments now under way are a reflection of the fact that full production
can no longer be absorbed by the market at peak price levels.
In its initial stages, the process of downward price readjustment is almost
certain to be accompanied by some declines in production and employment.
Price declines not only affect the critical relationships among various prices
and the size and the distribution of money incomes. They have, in addition, two other important effects: the favorable effect of increasing the
purchasing power of the dollar and the unfavorable effect of generating
anticipations of further price declines which lead to postponement of buying,
thus depressing the levels of production, employment, and incomes.
Fortunately, the process of price adjustment has been in the main orderly.
Although in individual cases it has been sharp, it has not been widely characterized by dumping at distress prices. Its orderly character is in large
part due to the fact that it has been occurring while consumer demand,
though weakened, is still at very high levels, with residential construction and
investment in plant and equipment still very high and with government
expenditures still rising. In the case of agricultural prices, an additional
factor has been the existence of support prices which, while they have not
prevented sharp fluctuations in prices, have been effective in limiting the
extent of the price fall.
The question arises nonetheless as to the extent to which the price cuts
which have been made thus far have helped to stimulate demand. In
the case of wholesale prices, the reductions appear to have had little
effect in stimulating business demand. For this there are two reasons:
(a) The initial effect of price cuts when a trend is reversed is to create the
expectation of additional price cuts, thus further drying up demand, a
tendency which is reinforced by the fact that so many of the price cuts
have been so slight in amount thus far; and (b) there is the natural desire
on the part of business to reduce inventories in a period of slackening demand
before reordering on a more normal basis even in those areas where the
price declines have been substantial. Though inventories were not out of
line with sales, business has been sensitive to the possibility of inventory
losses due to price declines. The tendency to liquidate inventories, accompanied by cut-backs of new orders, has brought further downward pressure on prices and production.
In the case of consumer prices, the declines, as pointed out earlier,
have been much more limited than in wholesale prices. In individual
cases, where large cuts in prices have been made for sales promotion or
where new lines at much lower prices have been introduced, consumer
response on the whole has been relatively favorable. One of the distinctive
features during the war and the postwar inflation was the reduction in the
volume of and the actual disappearance of many stripped models and lowpriced items of apparel and house furnishings, which had formed so large
a part of the sales during prewar years. With the weakening of consumer




demand, there is a growing trend now for manufacturers to reintroduce and
emphasize such low-priced items to make products available to consumers at
prices which they are able to pay. The relatively favorable showing in these
lines indicates that consumers are actively seeking them. Taking consumer
prices as a whole, however, the declines that have taken place have not been
great enough to encourage consumers to expand their purchases of consumer
goods.
The process of price adjustment to date suggests that further price reductions, made promptly to promote volume and not tardily in response to
falling sales, are essential. Where and how they are made is also important.
While increasingly active competition has already brought about part
of the needed adjustment, there are many fields where the power to "administer" prices is strong and where the practice of price leadership is wellentrenched. It is in these fields that the capacity of businessmen to take
the long view and to adopt policies conducive to fundamental and healthy
economic readjustment will be put to the test. If, while other prices are
falling, they cut production to whatever degree is necessary to maintain
their prices, they will impair the effort to maintain economic activity at the
highest possible level.
Businessmen generally will not believe that any important group of
goods can escape from the forces which are strong enough to compel the
current general reduction in the price level, and they will be unsure about
the situation until price cuts, which they believe are inevitable, have been
made on all important groups of goods, and the results can be observed.
Competition will, sooner or later, force some kind of adjustment in these
areas, but voluntary and well-calculated price reductions now, with a view
to maintaining volume, would be highly preferable to forced and possibly
more drastic reductions later on.
A difficult problem of price adjustment is presented by the public-utility
services, especially transportation, where competition is not directly effective.
Their prices are a substantial element in the cost of production of manufactured goods, and, instead of falling, they are still rising in response to
past advances in the cost of materials and labor. Public utility commissions as well as company executives have the special responsibilities of
adjusting rates in relation to changed cost and demand conditions, with
special emphasis upon the interests of the economy as a whole.
The process of widespread price readjustment is not pleasant nor easy to
effect. Weaker firms are overtaken by financial difficulties. Instances of
inefficiency in management and low productivity of labor, which tend to
be condoned in times of inflation, have to be eliminated. These are necessary conditions for establishing a firm economic base from which a new
expansion can be projected.
What price adjustments will prove feasible and helpful must be considered in close connection with wage and other income adjustments.




Price reductions add to real income only if consumers' money incomes
are not correspondingly reduced. This leads to special concern for
protecting those major sources of income upon which demand so largely
rests. The attempt to secure lower prices through wage cutting would
clearly be damaging at a time like the present when consumption demand is
proving inadequate and business slack is developing. A sound first rule to
apply now is that the general level of wage rates should at least be maintained. Beyond that, there is a strong presumption in favor of having
money wages move upward over the years to participate in the gains of
technological progress and increased productivity. There are difficulties
in applying the general principle to specific situations, but this adaptation
can be worked out through sound collective bargaining. Particular consideration should be given to those in the lower wage brackets.
With wage negotiations now under way in a considerable number of
basic mass-production industries, there is a possibility of an impasse.
While a still very high cost of living encourages a determined attitude on the
part of labor, the uncertain business situation encourages an equally determined attitude on the part of management. Should industry-wide strikes
result, they would not merely reduce the spending ability of the directly
affected workers, but would also spread loss of production and income to
other areas and thus darken the business outlook. At the present time
both employers and workers should strive to work out adjustments which
will help to stimulate activity, bearing in mind the need both for holding
business costs down and for maintaining consumer purchasing power at high
levels.
If wage incomes are maintained, this obviously places a limit upon the
extent to which prices can be adjusted downward. There would be no
purpose, and much potential damage, in an attempt to get back to some
drastically lower price level by wage cutting, since incomes are now geared
to prices substantially higher than before the war or immediately after the
war. Such an effort would involve a deep and vastly unsettling decline
in wages as the accompaniment to a prolonged period of severe depression.
From that, practically no one would gain; the economy would lose tragically.
Another example of the necessity of maintaining adequate buying power
is to be found in the agricultural situation. The decline in the prices of
farm products, which began early last summer, was not arrested until the
prices of wheat, corn, tobacco, cotton, and hogs were close to or even below
Government support levels. Farm income as a whole has been only moderately affected, because lower prices have been in part offset by high yields.
But the prospects of another year of large crop production on top of present
carry-overs indicate that the problems of supporting farm prices will be
increasingly difficult.
The vulnerability of a small-unit industry whose markets are dominated
by exchange and auction methods of sale has led to the development during




the past 20 years of governmental price supports to agriculture. It is now
widely recognized that this institutional development has protected the
economy against a danger of collapse in a major segment which, on past
occasions, has tended to undermine the whole structure. While this institutional development needs still further improvement in the light of experience, there is also need for further reduction of the prices of industrial
products bought by farmers.
THE NEED FOR MAINTAINING THE RATE OF INVESTMENT

The contraction in business investment this year has been due mainly
to inventory liquidation, but the completion of many postwar expansion
and modernization programs adds an element of uncertainty to the future of
investment in plant and equipment. Fortunately, only a moderate curtailment of investment in plant and equipment has occurred, and no severe
curtailment is clearly in sight for the remainder of this year. Whether the
liquidation of inventories during the first half of 1949 is followed by a more
general investment slack next year depends in large degree upon the extent
to which investment incentives continue to appear adequate. This, in
turn, depends upon the speed with which the price and inventory adjustments result in an upturn in production and the extent to which other
recessionary factors are offset by stimulative developments.
The problem of investment is closely connected with the profit question.
The maintenance or advance of consumer incomes during a period when
price reductions are in process requires business to operate on narrower
margins and, for the time being, to take smaller profits. In this connection,
businessmen should realize that it is safer to pursue a course of accepting
minimum profits or even temporary losses than to conduct a rear-guard
action to protect profit per unit. If, in weakening markets, downward
price adjustments are resisted, the effect is to reduce production and employment. A lower use of productive capacity and a more precarious structure
of prices would be a much more serious deterrent to new investment than
a situation in which basic adjustments supported a larger use of capacity.
In at least one respect, moreover, increased pressure on profit margins
provides a stimulus to investment. With capacity in many fields now relatively adequate, future investment will stem in larger degree from the
competitive urge for modernization and improvement. This motive for
investment will be strongest in an atmosphere of active competition, where
the maintenance of profit margins is subordinated to maintenance of competitive position as the primary aim of business pricing and investment
policies.
The problem of adequate investment cannot, however, be solved simply
by making the price adjustments which are appropriate to weakening
markets. These adjustments merely provide a sounder foundation from
which to start. The actual decision to invest depends on business judg-




ment concerning future markets and possibilities of profitable return.
A farseeing realization of the prospects for development is required, and
this is peculiarly needed at the present time. If businessmen act in the
conviction that employment and the use of capital resources can with our
present economic "know-how" be maintained at high levels with only minor
dips of a readjustment character, then they will go ahead with investment
plans which will be adequate for a growing economy.
The investment plans reported recently, while they show some decline, are
still at a high level. They presumably were based upon careful technological and managerial analyses of what is needed for firms to keep abreast of
advancing techniques, of changing consumers' tastes and habits, and of the
predictable growth of population. While those plans represent the companies' present intentions, they could easily be curtailed if the business
outlook should deteriorate, and such curtailment would have the effect of
aggravating the downward movement.
Among the foremost purposes of public economic policy must be that of
keeping private investment incentives active. This it can do by providing
supports which improve the short-run and long-run business outlook and
by encouraging those institutional improvements which facilitate the investment process. When such measures are inadequate, Government must
take some direct responsibility for stimulating and supplementing private
activity.
PUBLIC AND PRIVATE RESPONSIBILITIES

The task now confronting us is made more challenging because the problem is not simply to prevent a further weakening of the economic situation,
but instead to reverse the trend and move toward higher levels of production
and employment. We cannot be satisfied with a static economy even if
that could be achieved. Mere retention of current levels of production
would mean that unemployment would grow from year to year and that
we would fail to use our known capacity to lift the living standards of our
people. With a growing labor force, increased productivity, new tools,
and improved business efficiency, both production and employment must
expand if we are to fulfill the conditions of a healthy economy. While the
goal for 1949 of a million more jobs and a 4-percent increase in production,
set forth as our objective in January, is not now being achieved, the domestic
aspirations of our people and the imperatives of world conditions alike
require that we regain rapidly the full utilization of our material and human
resources.
It is plain from the preceding analysis of current conditions and trends
that the direction of further developments cannot be forecast with any certainty. There is a considerable possibility that present adjustments will
lead, after some further decline this summer, to an increase in production
and employment. But there is still reason for real concern that the present




10

slack may take a more serious recessionary turn, or not be succeeded by an
expansion to satisfactory levels of employment and production. Consequently, it is necessary to approach the situation with positive and constructive measures, rather than to assume that the recuperative factors at
work are adequate in themselves.
The Employment Act of 1946 is designed to encourage an economy of
free competitive enterprise. Our businessmen, workers, farmers, and consumers create the Nation's wealth, and it is their decisions which will primarily determine whether the economy will move up or down and whether
the Government will be required to play a larger or a smaller part. It is
eminently desirable in the current situation that each of these groups base
its action upon confidence in the long-run future of the American economy
and thus contribute to the most favorable outcome. In this Midyear Economic Review, we have sought to highlight those lines of private action
which are most needed in this task.
But while we point out the course of private action that our analysis convinces us would be beneficial to the economy, we are quite aware that many
individuals feel compelled to act in accordance with what they feel is likely
to happen in the short run rather than in accordance with what they would
like to see happen over a more extended period. No one can quarrel
with this natural rule of self-preservation, but it indicates the need for the
cultivation of a general economic environment in which all who participate
in the Nation's economic affairs would be justified in following en masse a
course which few of them could run the risk of following alone.
It was with this dilemma in mind that the framers of the Employment Act
also underscored the role of Government policy to promote through all its
resources the objectives of maximum employment, production, and purchasing power. This involves no departure from our national traditions. It is
important that Government agencies, both executive and legislative, reexamine and reshape policy in the light of the situations which have been
developing during the first half of this year and are in broad outline foreseeable as to the second half. We have learned through bitter experience that
a little recession may lead into a big depression before we find the road to
renewed prosperity, and this experience dictates the timely and preventive
use of public policy to supplement the efforts of private enterprise.
In seeking to define and apply these public policies, we are not writing
on a blank page. The mere fact that the Federal Government is currently withdrawing well over 40 billion dollars a year from private-income
channels and is disbursing a like or even greater amount into the market
and income stream means that the Government is already the most influential single factor in the current operation of the economy. What the
legislative representatives and the executive agents of the people decide to do
by way of enlarging, contracting, or redirecting these money streams and how
they shape by legislative act or administrative policy the institutions through




II

which workers, traders, and investors conduct their private affairs may
sharply affect conditions in the next few months and strongly affect them
for the longer pull.
During the years of inflation, the President rigorously held expenditures
to the lowest levels consistent with meeting the most pressing of our
domestic needs and international requirements. This was for the purpose and had the effect of reducing inflationary pressures. Our analysis
has indicated that, with the abatement of inflationary pressures, such Government outlays have operated in the main as a salutary sustaining force,
and the slashing of such expenditures at this time would aggravate deflationary trends. On the other hand, an attempt to raise taxes at this time
in order to produce a balanced Budget would increase the difficulties of
business management in trying to effect cost and price adjustments to sustain volume operations in a weakening market, or would lessen the disposable incomes of consumers, or would have both of these consequences. In
the presence of these opposing difficulties, the appearance of a Government
deficit will have to be accepted.
In addition to fiscal policy, there is essential need for promotion by Government of conditions under which the generality of businessmen will have
the highest attainable confidence about the future course of economic
development and therefore make those decisions which will contribute most
to a favorable outcome. Similarly, Government policies which support
the maintenance and exercise of consumer purchasing power lend strength
to the business system and to general public confidence. We have also determined that those unemployed in the process of economic transition, whether
they be many or few, are entitled to such protection as our rich economy
can reasonably provide, because too much of the cost of such disturbances
should not be borne by a particular group. And, finally, without a premature commitment of resources, it is wise to prepare and make ready those programs of Government action which should be available to support economic
expansion if the forces of the market alone should fail to provide the needed
uplift. The understanding by the community that a far-sighted program
has been adopted should in itself be a powerful factor in holding business
activity on a high level.
Delay in implementing these principles would prove costly in terms of
economic waste and loss of confidence. Action in time through the cooperative efforts of public and private instrumentalities at all levels will demonstrate that we have learned to pursue the twin objectives of economic stabilization and economic welfare under our free and democratic institutions.




12

II. Economic Indicators and the
Nation's Economic Budget
The adjustment of the economy to a new price level, following the
abatement of postwar inflationary forces, proceeded throughout the first
half of 1949 without developing a sharp recessionary spiral. At midyear
the process of transition is continuing in orderly manner.
T H E COURSE OF EMPLOYMENT AND PRODUCTION

Employment
In June of this year, total civilian employment stood at 59.6 million; in
June of last year, at 61.3 million.
During the first quarter of this year, the monthly average of total civilian
employment was about 57.4 million, compared with 57.2 million during
the first quarter of last year, an increase of about 200,000. But during
the second quarter of this year, the monthly average was 58.7 million,
a drop of approximately 700,000 from the average of 59.4 million for
the second quarter of last year. The pick-up in employment which occurred in the second quarter of last year has not been equaled this year.
Employment, which rose by nearly 4 million from March to June 1948,
rose by slightly less than 2 million from March to June 1949. (See chart
2 and appendix table D-7.)
In January, 1949, the objective of maximum employment for the year
was set at about 1 million more jobs than in 1948. Developments during
the first half of this year have fallen short of this objective, and the trend
of employment has not compared favorably with the first half of 1948.
The most significant employment development of 1949 has been the
substantial decline in employment opportunities in nonagricultural industries, particularly in manufacturing. Nonagricultural employment has
averaged about 600,000 less during the first half of this year than during
the first half of last year and it is currently nearly 2 million below the level
of 12 months ago. Aside from government employment, none of the major
industry divisions during the first half of 1949 registered significant increases
in employment over the first half of 1948. Transportation and service
industries have shown some employment losses, but most significant for
the state of the economy has been the substantial decline in manufacturing
employment which had, by May, fallen by nearly 10 percent from the peak




CHART 2

LABOR FORCE
Increased unemployment and decreased nonagricultural employment (mainly in manufacturing industries) highlighted
labor force developments in the first half of 1949.
MILLIONS OF PERSONS *

MILLIONS OF PERSONS*

80

80
UNEMPLOYMENT
ARMED FORCES

TOTAL LABOR
FORCE

60

40

CIVILIAN
EMPLOYMENT

20

1947

1948

1949
MILLIONS OF PERSONS1*

MILLIONS OF PERSONS.*
4
UNEMPLOYMENT
(magnified scale)

/

3

2

1

-

V

0

* i

t

*

..\.k..%.:.\ \ , i

f * * 1 t i I i \

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

1947

1948

* I 4 YEARS OF AGE AND OVER.

SOURCE ; DEPARTMENT OF COMMERCE.




14

1949

level of last September. The decline in manufacturing was about equally
divided between durable and nondurable goods industries. (See appendix
table D-8.)
This downward trend in nonagricultural employment has been somewhat obscured by increases in the number of persons engaged in agriculture,
which have resulted in the average total volume of civilian employment for
the first half of 1949 being only slightly less than the average for the first
half of 1948. But it must be remembered that agricultural employment
is subject to wide fluctuations because of weather conditions and that
in periods of declining markets some industrial workers who would
otherwise be unemployed support themselves by farm work. Both these
factors appear to have played some part in increasing the level of farm
employment from an average of 7.6 million in the first 6 months of 1948
to an average of 7.9 million in the first half of 1949. (See chart 2.)
The true employment picture is disclosed not only by the numbers employed but also by the hours worked. These have declined significantly in
some industries. In manufacturing as a whole, the average of weekly
hours has declined by more than 1 hour between the first half of
1948 and the first half of 1949. This has resulted both from the elimination of much of the overtime that was still present a year ago and from
the institution of shortened workweeks in industries where output has been
reduced. Bureau of the Census data show that in May of this year about
1.5 million persons were working a shortened workweek by reason of slack
work, material shortages, job turn-over, and similar economic factors, compared with 800,000 last September. In addition, about 900,000 persons
with regular part-time jobs in May wanted and would have accepted fulltime work, compared with about 550,000 last September.
Against the declines in employment and hours in manufacturing, there
has been some increase in Government and agriculture. Partly because
of the long hours worked in agriculture, the total man-hours worked in the
whole economy in the first half of 1949 were practically unchanged from
those of the first half of last year. On a seasonally adjusted basis, they
were perhaps 1 to 2 percent below those of the last half of 1948.
The difference between unemployment this year and last year cannot be
shown solely by the employment figures, because there has been a growth
in the labor force which would require more employment this year than last
year to sustain maximum employment and hold unemployment to minimum
practical levels. The average total labor force during the first half of this
year was about 1 million higher than that for the first half of 1948. Unemployment during the first 6 months of 1949 averaged almost 3.2 million,
compared with 2.2 million during the first 6 months of 1948, a difference
of about 1 million which means that there has been practically no absorption of this labor force increase into employment. Actually, average civilian
employment decreased by about 250,000, balancing an equivalent increase

844384—49




4

15

in the armed forces. While unemployment in 1948 decreased from 2.4 million in March to 1.8 million in May and stood at 2.2 million in June, in 1949
it increased from 3.2 million in March to 3.3 million in May and stood
at 3.8 million in June.
Adult male workers have been at least as severely hit by declines in
employment opportunities as have women and boys. This has been particularly noticeable since last autumn as employment declines have been
registered in the heavy manufacturing industries.
The duration of unemployment is a significant indicator of the extent
to which unemployment is primarily frictional or something more basic.
By June the number of persons unemployed 7 weeks or longer had risen to
1,549,000 compared with 693,000 in June 1948 and 581,000 last October.
Furthermore, 262,000 had been out of work for half a year or longer, about
double the number at the same time last year.
The number of persons unemployed more than a week and claiming
unemployment compensation under State programs throughout the Nation
early in June was 6.2 percent of the total covered, compared with 2.4 percent last October. In most of New England the number amounted to
more than 10 percent in June 1949. Other States where unemployment
is relatively heavy are California, New Jersey, New York, South Carolina,
and Tennessee. The number of areas in which labor supply remains tight
has diminished rapidly. Out of nearly 100 major labor market areas, 33
were in tight supply last fall but by midwinter the number had fallen to
8 and by early summer to 2.
The employment developments of the first 6 months of this year may be
summarized by saying that the weakening in the first quarter was more than
seasonal, and that continued declines in manufacturing in the second quarter outweighed seasonal gains in construction and other outdoor activities.
With unemployment now in excess of 3 % million we have clearly passed
the point where we can consider it primarily a "spot" or local problem.
In fact, unemployment and underemployment have become widespread,
both industrially and geographically, with heavy concentrations in many
industrial centers.
It is estimated that during the past few months one out of four unemployed persons was not eligible for public unemployment benefits. In most
cases ineligible persons were not covered by any plan or had been unemployed so long that their unemployment benefit rights had been exhausted.
Production
The dollar value of all goods and services produced (the gross national
product) during the first half of 1949 was about V/2 percent below the
level of the second half of 1948. (See appendix table D-l.) Part of this
drop was due to a decline in prices. Rough adjustments for price changes
suggest that the actual output of all goods and services together dropped




16

CHART 3

INDUSTRIAL PRODUCTION
Total industrial production has declined
since

reaching

a postwar

occurred in almost

peak last

all major

about

fall.

13

Declines

percent
have

industrial groups.

PERCENT OF 1 9 3 5 - 3 9 AVERAGE

PERCENT OF 1935-39 AVERAGE
1225

225
TOTAL

INDUSTRIAL

PRODUCTION

200

200

175

175

150

I 50

125

125

I
A

100
A

S

O

N

D

I

J

F

M

I
M

I
J

100

1949
DECREASES
0

SINCE

POSTWAR

PERCENTAGE
-20

-30
1

PEAKS *
-10

1

0
°

INDUSTRY GROUPS

1

I99»S55< 55855555*
>rVWWWX>

xxxxxxxxx^

TOTAL DURABLE GOODS
Nonferrous Metals a Products
Machinery

KXXXXXXXX

Iron a Steel

yxxxAX^>
V9WWS.W

KtfXXX

Lumber a Products
Stone,Clay a Glass Products
Transportation Equipment

£1 TOTAL NONDURABLE GOODS
r

Textiles a Products

, , .

Rubber

Products

Alcoholic
Leather

F

Beverages
Products

Paper a Products
Chemicals
f:•:•:•:•:;.:•:•:•:•:

Petroleum a Coal Products
Printing a Publishing
Tobacco Products
Manufactured Food Products

m

TOTAL
Fuels
Metals

I
DECREASES

8ASE0

ON P R E L I M I N A R Y

I

1

JUNE FIGURES. OATES OF POSTWAR

PEAKS VARY.

SOURCE: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.




MINERALS

by something like V/2 percent. This contrasts with the goal of maximum
production of goods and services which we estimated in January 1949 at
from 3 to 4 percent above the output of 1948.
The most .persistent and substantial declines have been in industrial production (manufacturing and mining), which on a seasonally adjusted basis
declined continually after last November and by June was about 13 percent
below the high level attained last fall. This rapid fall in industrial output,
in contrast with the relative stability of the nonindustrial segment of the
economy, has been typical of past recessionary movements. For manufactures, the seasonally adjusted index, which in June 1948 was 198 percent of
the 1935-39 average and reached a peak of 202 in October, declined to
193 by March 1949 and to 174 by June. During the early part of this
period of decline, reductions were greater in the production of nondurable
goods than in the production of durable goods. In May and June, however, output of nondurable goods has shown little further decline while
output of durables has fallen off considerably. For the minerals the seasonally adjusted index, which stood at 161 in November 1948, fell to 146 in
May of this year and, with coal output curtailed, declined further to 134
in June. (See chart 3 and appendix table D-13.)
Situations in the major industry groups have varied. Some of the largest
declines (20 percent or more) from postwar peaks are found in nonferrous
metals and products, textiles and textile products, rubber products, alcoholic
beverages, leather products, machinery, and lumber and products, each of
which has been declining for more than a year. Iron and steel production
is currently also about 20 percent below its first quarter 1949 peak, with
pronounced drops during recent weeks.
On the other hand, automobile production has increased and activity in
the tobacco products, printing and publishing, and most manufactured
food products industries has shown little or no decline.
The volume of private nonresidential construction put in place so far
this year has declined compared with the same period in 1948, but this
decline has been virtually balanced by increases in public construction.
(See appendix table D-14.) New nonfarm housing units started through
June are about 7 percent fewer than the number started in the same period
last year, but starts in June 1949 were about the same as in June 1948.
(See chart 12, p. 38.)
This year's agricultural production for human use is likely to approach
that of 1948 unless weather becomes less favorable. Production of most
livestock products is running slightly ahead of 1948, and an appreciable
increase in hog marketings is in prospect toward the end of the year.
Another large wheat crop is being harvested. Preliminary information
indicates a total crop acreage about the same as last year's, and, except for
continuing drought in the Northeast, weather in the major agricultural
areas so far has been generally favorable for crop development.




18

PRICES., WAGES, AND PROFITS

Prices
Prices during the first half of 1949 declined on a broad front, thus marking the first general reversal in the upward trend of prices which followed
World War II. This decline signalized the end of the inflationary process
that began in 1940, was held under control from 1942 to the middle of
1946, and then rapidly accelerated with the lifting of government price
controls. At their August 1948 peak, wholesale prices had increased about
120 percent above 1939, and about 50 percent above June 1946. Consumers' prices also reached their peak in August 1948, but with less extreme
advances—about 75 percent above 1939 and about 30 percent above June
1946. (See chart 4.)
Wholesale prices. Compared with their previous large rise, the declines
in wholesale prices during the first half of 1949 have in the main been
moderate and orderly, although there have been sharp declines in individual
commodities. Wholesale prices through June have declined about 9 percent from their postwar peak and about 5 percent from December 1948.
They have now returned to the levels prevailing in August 1947, or about
100 percent above the 1939 level and about 36 percent above the June
1946 level. As the following table shows, the price declines from the
peaks have been unevenly distributed, with the largest declines in farm
products and foods, chemicals, and hides and leathers. (See table 1 and
chart 5.)
TABLE 1.—Changes in wholesale prices

Commodity group

Date of postwar
peak

Percentage cha
to postwar p
from—
June
1946

All commodities..
Farm products.
Foods
Other than farm products and foods.
Hides and leather products
Textile products
...
Fuel and lighting materials.
Metals and metal products
Building materials
Chemicals and allied products...
Housefurnishing goods
_
Miscellaneous. _
Special groups:
Raw materials
_
Semimanufactures
Manufactured articles._
_.
1

August 1948
January 1948
August 1948
/September 1948..
\November 1948..
December 1947._
May 1948
November 1948..
January 1949
September 1948..
January 1948.-..
December 1948._
January 1948
July 1948
August 1948..
August 1948..

Preliminary estimates based on weekly indexes for June.
Based on index for May; June not available.
Source: Department of Labor. (See appendix table D-20.)

2




Percentage change
to June 1949 *
from—
Postwar

December 1948

+120.2

+50.4

-9.3

-5.2

+205.1
+169.6
+88.9
+112.8
+118.2
+88.2
+86.0
+125.5
+84.1
' +72.0
+65.2

+42.4
+68.1
+45.5
+66.2
+39.3
+56.7
+56.5
+57.1
+45.1
+34.4
+25.5

-15.4
-14.1
-5.6
-12.2
-8.9
-5.2
-5.2
-6.2
-16.0
-2.3
-11.0

-5.0
-4.2
-5.3
-3.7
-5.6
-4.9
-4.2
-5.3
-10.4
-2.3
-7.2

+162.5
+109.4
+104. 7

+45-9
+52.5
+53.4

2-9.9
a-7.3
2-8.0

»-3.6
«-7.0
2-3.9

CHART 4

PRICE CHANGES
The fall in prices from the postwar peaks has been much greater for
wholesale prices than for consumers' prices. Compared with the previous large increases from 1939 and from June 1 9 4 6 , the declines
have been very moderate. Rents continued to advance.
-100

-50

PERCENTAGE CHANGE
+ 50
+100

+150

+200

\

WHOLESALE PRICES
1939 TO POSTWAR PEAK

ALL COMMODITIES

| | i i | | l l j j | | JUNE 1946 TO POSTWAR PEAK
POSTWAR PEAK TO JUNE 1949

FARM PRODUCTS

FOODS

OTHER THAN
FARM PRODUCTS
AND FOODS

CONSUMERS' PRICES
.939 TO POSTWAR PEAK
ALL

ITEMS

I l l l l l JUNE 1946 TO POSTWAR PEAK
POSTWAR PEAK TO MAY 1949

FOOD

APPAREL

RENT

I

1

SOURCE: DEPARTMENT OF LABOR.




POSTWAR PEAK IS MAY 1949.

20

+250

During the first quarter of 1949, the outstanding development was a sharp
drop in farm and wholesale food prices in late January and early February,
reminiscent of the drop during the same period a year earlier. Some farm
commodities, notably corn, fell substantially below their support prices, but
from mid-February forward there occurred a sizeable recovery in the levels
of farm and food prices. Prices of fuel oils continued weak, and weakness
developed in scrap metals and in lead and zinc. By the middle of the
quarter, the general level of industrial prices had begun a downward drift
as the prices of metals and metal products, building materials, and fuel and
lighting materials turned down. The prices of textiles and other industrial
groups continued the decline which had begun in 1948.
In the second quarter, while farm and food prices fluctuated, most groups
of industrial prices declined fairly continuously. Particularly striking were
the series of declines in lead, zinc, and copper as well as in scrap metals.
Lead and zinc, which had advanced more than 40 percent and 60 percent,
respectively, during 1948, dropped 44 percent and 47 percent between
March and June of 1949. Copper, which had advanced less than 10 percent during 1948, declined 32 percent from April to June 1949. The declines in scrap-metal prices, which began before the break in the primary
CHART 5

WHOLESALE PRICES
Industrial prices declined steadily through the first half of
1949. Farm and food prices, after considerable fluctuations,
ended the period with a moderate net decline.
PERCENT OF 1926 AVERAGE

PERCENT OF 1926 AVERAGE

220

220

200

200

FARM PRODUCTS
\

180

180

160

160

140

140

120

120

OTHER THAN FARM
PRODUCTS AND FOODS

100

100
N D J F M A M J J A S 0 N 0

1946

1947

1948

SOURCE: DEPARTMENT OF LABOR.




21

1949

metals, were somewhat greater, scrap lead, zinc, copper, and steel declining
on the average about 50 percent. By midyear, some firming in the markets
for lead and copper was noticeable. The base prices of steel remained
steady, but some steel producers lowered prices on individual products
where their prices were out of line with the general level. The cost of
steel to consumers declined through the disappearance of gray-market
premiums, some revisions of extras, and the end of high-cost conversion deals.
Consumers3 prices. The general course of consumers' prices during the
first half of 1949 differed considerably from that of wholesale prices, declining only slightly from the levels at the end of 1948 and only moderately
from the August 1948 peak. Consumers' prices declined during the first
two months of 1949, continuing the fall that began in October 1948, then
recovered slightly, and finally dropped again in May. By May 1949, consumers' prices were 1.3 percent below the December level and 3.0 percent below the August 1948 peak. This still left them about 70 percent
above the 1939 level and about 25 percent above the June 1946 level. (See
table 2 and chart 6.)
CHART 6

CONSUMERS' PRICES
Consumers' prices declined only slightly during the first
half of 1 9 4 9 , with food prices varying considerably. Rents
continued to advance while many other retail prices declined
steadily.
PERCENT OF 1935-39 AVERAGE
220

PERCENT OF 1935-39 AVEIRAGE
220

200

200

FOOD — * / • • •
180

180
APPAREL
^

^

••»•

—

160

—

s
140

120

100

160

*v.^/. ITEMS*
140

-

120

i

i i i i 1 i

t i i t

, 11 1.
, 1 .

1946

1947

1.
1

1 1 1 1 1 1 1 1 1 1

1948

1

1 1 1 1

1949

* ALSO INCLUOES HOUSEFURNlSHINGS, FUEL, ELECTRICITY, REFRIGERATION, AND MISCELLANEOUS
GOODS ANO SERVICES NOT SHOWN OftTHIS CHART.
SOURCE: DEPARTMENT OF LABOR.




1

100

There was no uniform pattern in the price changes of the major groups
of consumer items during the first half of 1949. Retail food prices, which
are a dominant factor, first declined, then recovered part of the decline,
then weakened again, following the course of wholesale food prices. Meat
prices in particular were strong in the second quarter. Apparel and house*
furnishings dropped steadily during the first half of 1949, continuing the
downturn that began in late 1948; fuel, electricity, and refrigeration advanced slightly during the first quarter to a new postwar peak and then
began to decline. The miscellaneous category rose during most of the
period, reflecting the increase in the cost of transportation, the rise in gasoline prices, and the continuing upward movement in such items as medical
care and other services. Rents, which had previously increased much less
than other prices, advanced steadily through the period.
The changes in consumers' prices during the first half of 1949 and from
their postwar peaks are shown in the following table:
TABLE 2.—Changes in consumers' prices

Group

Date of postwar
peak

Percentage change Percentage change
to postwar peak _Jto_May 1949 from
from
1939

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

/August 1948
\September 1948.
July 1948
October 1948
Mayl949__
March 1949.
October 1948
April 1949..

June
1946

} +75.6

+30.9

+127.7
+100.5
+15.4
+40.3
+96.2
+53.5

+48.9
+28.2
+11.0
+25.7
+27.4
+20.9

Postwar

December 1948

-3.0

-1.2

-5.1
-2.5
-4.7
— .1

-1.3
-4.5

+ .8
-1.7
-4.6

+ .3

Source: Department of Labor. (See appendix table D-19.)

Wages and labor relations
As 1949 opened, the average real earnings of wage earners were slightly
higher than a year earlier. This improvement had occurred, however, only
in the closing months of 1948, when the modest decline in the cost of living
served to increase slightly the real value of workers' money wages.
Such wage increases as occurred during the first half of 1949 had only
limited effect on the average of wages earned, and were, at least in manufacturing, more than offset by declines in the average length of the workweek. Consequently, average weekly money earnings fell in all manufacturing after reaching a postwar peak of $55.01 in December 1948, and
by May 1949 had declined to $53.08. In some manufacturing and other
industries, the first half of the year registered declines in average hourly
earnings as overtime work and other premium payments were reduced or
eliminated and as some wage rates were reduced. (See appendix tables
D-9,D-10, andD-11.)
The slight declines in the earnings of wage workers were approximately
balanced during the half year by further slight declines in the cost of living,




leaving average real weekly earnings of all wage earners practically unchanged.
The first half of 1949 was marked by delays in settlement of labor contracts in some of the major industries; by a number of important instances,
such as in the textile and apparel industries, where wage increases were
either denied or not sought; by some scattered wage reductions; and by the
settlement of many contracts, particularly in local industries such as local
public utilities, construction, and printing, which provided for wage increases and frequently additional benefits in the form of health or welfare
plans, retirement programs, or additional paid holidays. Such increases
in wage rates as occurred in manufacturing industries were typically between
5 and 10 cents an hour. The most important agreement of the year to date
was that between the railroads and the 16 nonoperating unions which provided a retroactive 7-cent-an-hour wage increase and a reduction to start
in September in the workweek from 48 to 40 hours without a reduction in
pay for approximately 1,000,000 employees.
With major negotiations still unsettled in coal, rubber, and steel, as well as
in automobile, electrical machinery, and most other metal-working industries, the wage developments of the second half of the year will overshadow
those of the first half. In fact, the development of a trend in wage settlements which might have widespread effects necessarily awaits the settlements
in the dominant mass-production industries, which are still engaged in
negotiation.
Labor relations during the first half year were relatively undisturbed
by major work stoppages. Coal miners were out on two occasions—the
"memorial" stoppage in March and the "stabilizing inactivity" stoppage
in June—and the Ford company was struck for 3 weeks in May. Aside
from these disruptions, most work stoppages during the 6 months were
essentially local in nature and generally of limited duration.
For the first 6 months of the year, the number of work stoppages was
about 10 percent greater than in the corresponding period of 1948; idleness resulting from this year's stoppages, however, is estimated to be approximately one-third less than the January to June period of 1948. This
development is at least in part a reflection of the postponement of negotiations in the major mass-production industries to midyear, with the
result that the second half of the year may witness a more crucial testing
of labor relations than the first.
Profits
After attaining record levels in 1948, profits declined during the first
half of 1949, reflecting the reductions in prices and production. Corporate
profits, before taxes (not adjusted for inventory valuation), which were
estimated at 32.8 billion dollars in 1948 and at a peak annual rate of
34.7 billion dollars in the fourth quarter of 1948, declined to an estimated
annual rate of 27.2 billion dollars during the first half of 1949, a fall of 17




percent from the level of 1948, and of 22 percent from the peak rate of
the fourth quarter of 1948. Corporate profits after taxes were at an annual
rate of 16.2 billion dollars in the first half of 1949 compared with 20.1 billion
dollars in 1948 and an annual rate of 21.2 billion dollars in the fourth quarter of that year. (See appendix tables D-27 through D-31 for statistics on
corporate profits.)
Corporate profits after taxes in the first quarter of 1949 represented about
4.8 percent on sales and about 8.5 percent on net worth, compared with
about 5.3 percent on sales and about 10.0 percent on net worth in 1948.
A much more moderate decline was registered for unincorporated business and the professions, net income before taxes (not adjusted for inventory
valuation) declining from an estimated 25.8 billion dollars in 1948 to an
annual rate of 23.9 billion dollars in the first half of 1949, a decline of
somewhat more than 7 percent. Net farm income before taxes declined
from 18.2 billion dollars in 1948 to an annual rate of 16.8 billion dollars,
or about 8 percent. (See appendix table D-2.)
The decline in profits from the fourth quarter levels to the first quarter
of 1949 affected most manufacturing groups. The largest declines were
recorded for most nondurables and for such durable groups as electrical
machinery, fabricated metal products, and motor vehicles. Chemicals, on
the other hand, showed only a slight decline, and apparel and printing
showed increases. Compared with a year ago, the following durable groups
showed increases: nonferrous metals, iron and steel, and motor vehicles.
These differences in profit experiences reflected, of course, the uneven
changes in rates of activity, prices, and costs among various industries.
The estimated annual rate of corporate profits before taxes of 27.2
billion dollars in the first half of 1949 represents a decline of about 5.6
billion dollars from the 1948 levels. This difference is about equal to the
change in the replacements costs of inventories between the two periods,
with the prices of goods in inventories rising in 1948 and falling in 1949.
(This is discussed in more detail in appendix A-3, Business Account.)
Although the two profit rates after the inventory valuation adjustment are
virtually identical for the two periods, there was, however, an important
difference in trend, corporate profits rising quarter by quarter in 1948, but
falling quarter by quarter in the first half of 1949.
Although total profits for the first half of 1949 are considerably below
the levels attained in 1948, this does not preclude the maintenance of
healthy levels of return under conditions of high employment. In the
present period of price-income adjustment the adverse effects of inventories acquired at high prices and of operating costs not yet fully pruned or
shaken down color the picture unduly. Likewise we are now feeling the
effects of reduced operating rates in many companies or industries due
to current factors of uncertainty. As these are removed, we shall have a
better opportunity to ascertain what reductions in unit costs can be achieved




by efficient management at high operating rates and what profit margins
are needed to assure proper maintenance and expansion.
MONEY AND CREDIT

The easy credit conditions which have prevailed since the war and which
contributed to inflationary pressure have continued and are now an important element of strength when the process of readjustment entails difficulties
in other aspects of the economy. Interest rates on business loans made by
banks have risen slightly since the latter part of 1948, but the interest yield on
corporate bonds and on Government securities has fallen. Pursuant to the
policy of the Government to prevent excessive fluctuations in bond prices,
the Federal Reserve banks have sold substantial amounts of Government
bonds in order to moderate the rise in market price. Further easing of
credit conditions has been brought about by a reduction in reserve requirements, and the Board of Governors has recently announced its policy to
permit a decline in interest rates.
The requirements of business firms for working capital, especially to
carry increasing inventories and customer receivables, lessened when acCHART 7

BANK LOANS
The decline of 1.5 billion dollars in commercial bank loans
during the first half of 1 9 4 9 represented a decline in
business loans at leading city banks.
MILLIONS OP DOLLARS
50

MILLIONS OP DOLLARS

50

ALL COMMERCIAL BANKS
40

30

30
WEEKLY REPORTING MEMBER BANKS, LEADING CITIES

20

20

i

I

i

F

M

I

I
A

M

J

I

J

A

I
S

O

N

1948

A

1949
END OF MONTH

^ESTIMATES BY COUNCIL OF ECONOMIC ADVISERS.

SOURCE: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.




M

26

cumulation of inventories was arrested. After the close of the Christmas
shopping season it was possible for business concerns to pay off bank loans,
and this process continued throughout the first half of this year. It affected
the portfolios of the banks in the larger cities, whose commercial loans declined about 2.4 billion dollars, or 15 percent. (See chart 7 and appendix
table D-23.) Other types of loans by banks and total loans and investments
by other financial institutions have been relatively stable.
Instalment buying adds to market demand during an inflationary movement but creates a condition which may aggravate a spiralling deflation.
Consumers who suffer a decline in income must reduce their current buying
in order to meet their outstanding obligations on instalment contracts.
Instalment credit increased steadily after the war as durable goods, especially automobiles, became available, but the total amount at the end of
1948 was not so high, in proportion to consumer income, as in 1940. (See
appendix table D-22.) During the first half of 1949, instalment credit
increased only half as rapidly as in the corresponding period of 1948. In
view of the growing weakness in many consumer durable goods markets,
the regulations covering instalment credit were relaxed early in March
and again in April.
The supply of money—bank deposits and currency in the hands of the
public—declined by 3.2 billion dollars in the first half of 1949 as a result
of the reduction in business loans, the lowering of prices, and the seasonal
accumulation of a Treasury cash surplus. Adjusted bank deposits were
140.8 billion dollars on June 30, 1949, and 140.1 billion dollars a year
earlier, and currency outside banks declined from 25.6 billion dollars to 25.1
billion dollars. (See appendix table D-24.) The amount of bank deposits, adjusted, on December 31, 1948, was 143.0 billion dollars, and currency
outside banks was 26.1 billion dollars.
T H E FLOW OF GOODS AND PURCHASING POWER

Consumer income, spending, and saving
Consumer disposable income was smaller in the first half of 1949 than in
the last half of 1948, but the decline was less than that of the national
income. Increased unemployment compensation payments offset in part
the decline in wages and salaries, and corporate income absorbed a considerable part of the impact of declining prices and sales. Personal taxes also
declined. Consumption expenditures fell off more than disposable income,
so that personal saving was above the level of the first half of 1948 both
absolutely and in relation to income. However, there was a substantial
drop in saving from the first to the second quarter.
Personal income. Personal income ran at the annual rate of about 214
billion dollars during the half year, a drop of about 2 percent from the
second half of 1948. In the second quarter of 1949 it was 4 percent below




CHART 8

CURRENT NET PERSONAL SAVING
Current net personal saving has increased substantially since
1947.

Personal investment

has absorbed a larger share of

the saving increase and currency and bank deposits a
smaller

share.

BILLIONS OP DOLLARS
+ 20

BILLIONS OF DOLLARS
+ 20
CURRENT

+ 15 -

NET PERSONAL SAVING

+ 1 5

Total

+ 10

+ 10

+ 5

+ 5

1946

1947

1948

1949,1st. half ^

+ 25

+ 25

CURRENT NET PERSONAL SAVING
SELECTED COMPONENTS

+ 20

+ 20
CURRENCY AND BANK DEPOSITS"
INVESTMENT (GROSS)

+ 15

+ 10

+ 5

+ 15

i

+1 0

I

+5

1

-5

-5

-I 0

-I 0
LIQUIDATION OF DEBT

-I 5

-15
1946

1947

1948

1949,

1st. half

1/ SEASONALLY ADJUSTED, ANNUAL RATE.
£/ INCLUDES SHARES IN SAVINGS AND LOAN ASSOCIATIONS.
* SAME AS CONSUMER SAVING IN THE NATIONS ECONOMIC BUDGET. * * NO CHANGE. * * * N O T AVAILABLE.

SOURCE: DEPARTMENT OF COMMERCE AND SECURITIES AND EXCHANGE COMMISSION.




28

the fourth quarter of 1948. The sharpest relative cut-back was in proprietors' income—farms and other unincorporated businesses and professions.
In absolute amount, the largest decrease was in wages and salaries, which
account for nearly two-thirds of total personal income. Other income
shares (dividends, rents, and interest) continued to increase although dividends turned down in the second quarter. An increase in government
transfer payments to individuals—mainly unemployment compensation
benefits and payments to veterans for educational purposes—partly offset
the decreases in income from other sources. - (See appendix table D-3.)
The decrease in personal income in the first half of this year was partly
compensated for by the rather sharp drop in income tax payments, so that
disposable personal income fell not much more than one percent from the
level of the last half of 1948. Consumers' prices meanwhile went down 2
percent over the same period, and, with a slight increase in population,
real disposable income per capita remained about constant. (See appendix
tables D-4 and D-5.)
Personal consumption expenditures. Throughout 1948, rising personal
income went increasingly into saving (including personal investment), with
relatively small increases in personal consumption expenditures. (See appendix tables D-4 and D-6.) When income began to fall off in the first
half of 1949, consumption expenditure in dollar terms dropped somewhat
more than income. After the moderate price declines in the first half of
1949, the level of consumption was not changed significantly.
Important changes have been taking place in the structure of consumer
demand during the postwar years. The proportion of disposable income
spent for nondurable goods has been steadily declining since early 1947.
Until 1949, this accounted for most of the increase in consumer saving, since
expenditures for durable goods and services rose nearly in proportion to
income. In the first half of this year, however, expenditures for durable
goods fell off significantly in relation to income. Meanwhile, expenditures
for services continued to go up, and absorbed an increasing proportion of
the declining personal income. This reflected in part continuing increases
in rents and in prices of other services.
The fall in market demand for durable goods in the first half of this
year was an important development in consumer purchasing. For major
durables, except some makes of automobiles, market demand at current
prices no longer exceeds supply.
Personal saving. Net personal saving increased both in absolute terms
and as a ratio to disposable income from mid-1947 through the first quarter
of 1949, but declined substantially in the second quarter. This saving has
taken the form both of direct investment in homes, farms, and businesses,
and also of accumulation of liquid assets such as securities and bank deposits
and the building up of insurance reserves. Increase in personal debt is
offset against the increase in investments and liquid assets in order to arrive




at net personal saving. This offsetting item increased greatly until the
first quarter of 1949.
Although net personal saving was increasing, net liquid saving (additions
to currency and bank deposits, securities and insurance reserves, less the
increase in consumer and mortgage debt) declined from 1946 to 1947, and
from 1947 to 1948. Saving was going increasingly into direct personal
investment in homes and in farm and business inventories and plant and
equipment. A considerable part of the increase in personal investment
between 1947 and 1948, it is true, was due to an increase in farm inventories, which is largely involuntary. (See appendix table B-4.) Nevertheless, the growth in investment, as shown in chart 8, is quite striking.
Since it constitutes a direct demand for goods and services, it has been an
important factor in sustaining the economy.
The trend of liquid saving, on the other hand, has until recently been
downward. Liquid saving shows marked quarterly fluctuations, as is
shown in chart 9. In the first quarter it is low because funds are withdrawn
to pay taxes. In the first quarter of this year it amounted to about 100 million dollars, or less than half a billion at an annual rate. It contrasts
sharply, however, with the 1.2 billion-dollar reduction in liquid assets in
CHART 9

CURRENT NET LIQUID SAVING*
Current net liquid saving in the last quarter of 1948 and in
the first quarter of 1949 was sightly above the level of the
previous year.
BILLIONS OF DOLLARS

BILLIONS OF DOLLARS

+4

+4
CURRENT NET LIQUID SAVING

+3

—

—
/

194

\

+2

— +2
/

+ 1

^

_

— +1

/

1949
^1948
0

- 1

—

-2

- 2

1st. Qtr.

2nd. Qtr.

3rd. Qtr.

EXCLUDES GOVERNMENT INSURANCE ANO ARMED FORCES LEAVE BONOS.

SOURCE: SECURITIES ANO EXCHANGE COMMISSION.




4 th. Qtr.

the same quarter of 1948. The largest difference was in consumer debt,
where repayments exceeded new loans so that, for the first time since the
war, there was a net contraction of consumer credit for the quarter as a
whole. (See appendix table B-5.) Withdrawals of currency and bank
deposits also were less than in the first quarter of last year.
Unlike direct personal investment, liquid saving does not constitute a
direct demand for goods and services. To maintain total demand, the
liquid savings put aside by some groups must be matched by borrowings
on the part of other groups. A rising rate of saving in liquid form would
reinforce the importance, pointed to elsewhere in this report, of maintaining
a high level of business investment.
While as yet we have little evidence whether income has become more
or less concentrated in the last year or 18 months, we do know that holdings
of liquid assets are less evenly distributed throughout the population than
they have been at any time since the end of the war. In early 1947, 24
percent of families had no liquid assets, and the percentage had increased
to 29 by early 1949. The number of families owning United States savings
bonds has been declining ever since the war, and it dropped substantially
in 1947 and in 1948. The volume of deposits in the smaller bank accounts
has likewise gone down over the past year, and has gone down relatively
more than have deposits as a whole.
Business investment and finance
Total business investment in new construction, equipment and inventory
accumulation, at a seasonally adjusted annual rate, reached an all-time peak
of 43.6 billion dollars in the final quarter of 1948. This represented 16.4
percent of the total national product of goods and services. In the first
quarter of 1949, this private investment, again adjusted for seasonal variation, fell to 38.9 billion dollars or 15.1 percent of the gross national product,
and in the second quarter to 32.4 billion dollars or 12.9 percent. Comparing the adjusted annual rates in the fourth quarter of last year and the
second quarter of this year, total private investment declined by 26 percent
while the gross national product declined by only 6 percent. Most of the
decline in investment was due to a shift from net accumulation to net
liquidation of inventories. (For further details, see appendix table C-l.)
This illustrates the greater relative fluctuation in investment outlays as
compared with other expenditures, a characteristic of previous swings in
the business cycle. As earlier reports have stressed, the unusually high
ratio of business investment to consumption in the postwar period is significant because it raises the question whether it can be permanently maintained. As regards investment in expansion of inventories, it is quite clear
that the pace set in the first three postwar years was abnormally fast.
It is desirable to seek a more stable ratio of business investment to consumption. A downward swing in total investment may generate large-scale

844384—49




5

31

unemployment and business uncertainty if it is too abrupt and goes too far.
Too often in the past, declines in investment have aggravated a depression
trend as the reduction of employment and income in producers' goods and
construction industries weakened the consumer markets on which profitable
further investment in facilities depended. The present problem is thus to
see that business investment does not fall to levels below those needed for
the maintenance of technological progress, but provides for a healthy rate
of growth. In this sector of the economy, as elsewhere, it is necessary to
prevent some of the excesses of the boom from leading to excesses in the
opposite direction.
Plant and equipment. The high levels of plant and equipment investment in recent years have been a response to high postwar levels of demand,
straining the capacity of facilities which in all but a few industries at the
end of the war were still geared to prewar markets and production techniques. (See chart 10.) A nongovernmental survey made late in 1948
indicated that the larger manufacturing concerns expanded capacity during
the 3 years 1946-48 at an average rate of about 6 percent a year, which is
much faster than the long-run growth trend of industrial output in the past.
In the second quarter of 1949 the dollar rate of nonfarm plant and equipment outlays was apparently, for the first time in the postwar period, no
higher than that of a year earlier, although still at a very high level. The
quarterly SEG-Gommerce sample survey of investment anticipations made
in May showed that businessmen expected to spend 4 percent less on plant
and equipment in the third quarter of 1949 than in the second quarter of
1949 or the third quarter of 1948. Taking into account the decline in
costs of construction and equipment, this probably represents little change
in volume. Though the plant and equipment investment outlays of gas
and electric utilities are still running well above levels of a year ago, those
of most main fields of nonfarm business are expected to fall below those
levels in the third quarter, according to this survey. (See appendix table
D-15.) Construction contracts and equipment orders indicate that plant
and equipment outlays in the fourth quarter of this year will be below those
of the fourth quarter of 1948.
Projects already scheduled are generally being followed through, but there
appears to be hesitation in scheduling new major investment commitments
in view of uncertainties as to markets, prices, and costs. Investment plans
will, of course, be influenced by the trend of changing economic conditions.
If expenditures for plant and equipment should decline below current
levels, the decline would not reflect a general excess of productive facilities
in relation to the needs of a maximum employment and production economy.
For such an economy, present capacity in general is now no more than adequate and in some industries is distinctly inadequate. Continued long-run
economic growth will call for further expansion of productive capacity,
though quite possibly not at as rapid a pace as in the first postwar years.




CHART 10

NON FARM PLANT & EQUIPMENT OUTLAYS
& INVENTORY ACCUMULATION
Inventory accumulation gave way to liquidation in the second
quarter of 1949. Seasonally adjusted outlays for plant and
equipment turned down but were still close to peak levels.
BILLIONS OF DOLLARS

BILLIONS OF DOLLARS

+ 35

+ 35

+ 30

+ 30

+ 25

+ 25

+ 20

+ 20
+ 15

+ 15
PLANT AND EQUIPMENT O U T L A Y S ^

+ 10

+ 10

+5

INVENTORY ACCUMULATION
(ADJUSTED FOR REVALUATION)*

-10

1939

1940

1941

1942

1943

1944

1945

1946

1947

1948

1949

* S E E APPENDIX TABLE C - l .

SOURCE: DEPARTMENT OF COMMERCE.

Moreover, there is no definite ceiling on the amount that might be spent
continuously, under favorable conditions, for modernization of facilities. It
appears, in fact, that in some important classes of capital goods, including
motor vehicles, tractors, locomotives, railroad cars, and oil refining equipment, there is now a special backlog of deferred replacement needs arising
from the unusually high proportion of over-age units in service.
Nonfarm business inventories. By the spring of 1949, postwar replenishment of stocks was completed in virtually all lines, and the weakening sales
and prices led businessmen in general to buy a little less than they expected
to sell. Even though inventory accumulation had been generally moderate
throughout 1948 and inventories were not out of line with current sales,
book values of inventories were sufficiently high to arouse caution when the
outlook weakened. Business was sensitive to the effect of possible price declines on the value of such inventories, based as they were on high postwar
levels of prices.
The total book value of inventories in manufacturing and trade declined
by 2.1 billion dollars during the half year, from 54.0 billion at the end of




33

1948 to 51.9 billion at the end of June 1949. Changes in book values
reflected in part the price decline and the normal seasonal tendency for
stocks to rise in the first quarter and to decline in the second. The most
significant development was the shift from accumulation of nonfarm inventories at an annual rate of 1.4 billion dollars during the first quarter, after
adjustment for revaluation and seasonal variation, to liquidation at a similarly adjusted annual rate of 4.0 billion dollars in the second quarter.
TABLE 3.—Changes in manufacturing and trade inventories and index
of new orders, 1948-49
[Not adjusted for seasonal variation]
1948
Item

1949

First Second Third Fourth First
quarter quarter quarter quarter quarter April

May'

Change in book value, millions of dollars
Inventories:
Manufacturing and trade
Manufacturing
_
Materials and goods in process.
Finished goods.>_
Wholesale trade
Betail trade

+3,222
+1,044
-32
+1,076
+324
+1,854

+104 +2,331 +318
+663 +983 +1,003
+176
+683 +194
+487
+300
+809
+84
+290
+72
-643 +1,058
-757

+806 -1,010
+80
-527
-537
-590
+617
+63
+130
-293
+596
-190

-1,224
-443
-485
+43
-268
-513

Average quarter or month of 1939=100
New orders received by manufacturers:
All manufacturing
Durable goods
Nondurable goods

253
297
227

254
289
233

254
294
230

246
277
227

222
257
201

195
206
188

202
206
200

1

Preliminary estimates.
NOTE.—Detail will not necessarily add to total because of rounding.
Source : Department of Commerce.

The shift of inventory position, shown in chart 10, has had an important
impact on producers' order books and on the financial requirements of business in general, as discussed elsewhere in this review. During at least the
first 4 or 5 months of the year, manufacturers' stocks of finished goods awaiting sale rose while their stocks of materials and goods in process (related
to actual and prospective production) were falling off. This held good
in both durable and nondurable lines, with the accumulation of finished
stocks predominant in durables and the reduction of materials and process
stocks predominant in nondurables. Attempts to cut inventories of materials were offset by an unwanted piling-up of unsold goods.
The relatively cautious and well-informed inventory policies of business in general in the postwar period, as compared to previous periods of
prosperity, had moderated the potential inflationary effects of inventory
buying and left the ratio of inventories to sales still low, by prewar standards, after 3 years of postwar restocking. Adjustments in individual business, and the broader adjustment to general business slackening in the
first half of 1949, were therefore accomplished more quickly and with less




34

effect upon production rates than had been the case in most comparable
earlier periods. During the second quarter, the stocks of retailers, wholesalers, and manufacturers all declined in both value and physical volume,
reflecting general expectations of falling sales and prices. At the middle
of the year, stocks were still a little below prewar ratios to sales, and even
the proportion of manufacturers' stocks of finished goods to their total
stocks was likewise still conservative by prewar standards. (For further
details see appendix tables D-16, D-17, and D-18.) In a number of
specific lines of business, the liquidation of inventories had proceeded so far
by the middle of 1949 that some recovery of business purchasing and even
a moderate resumption of inventory accumulation in these lines could be
expected later in the year. In other lines, the outlook is for further
liquidation.
Corporate finance. During the first half of 1949 the postwar corporate
financing picture underwent a drastic change. In 1947 and 1948 corporations had used an average of 10.5 billion dollars a year to finance inventory
accumulation and expansion of customer financing, but during the first
six months of this year they needed no new capital for these purposes. On
the contrary, there was a net liquidation of these accounts to the extent
of 4.8 billion dollars. Funds obtained from this liquidation, plus a continued high level of profits, enabled corporations to reduce their existing
indebtedness substantially, principally in the form of bank loans and accounts
payable, and at the same time to finance a continued high level of plant and
equipment expenditures. (See appendix table D-32.)
Though the decline in financial requirements for increase of working
capital was abrupt, it represented a natural adjustment following a postwar
period of restocking, and rapidly rising prices, in which the value of both
inventories and credit to customers increased much more than would be
required for long-run normal business growth. Even in 1948, as chart 11
indicates, there was a marked trend toward smaller new working capital
requirements.
During the first 6 months of 1949, internal sources of funds for new investment fell about 18 percent below last year's level. Because of general maintenance of dividend payments, retained earnings fell by a greater proportion
than total profits during this period. Depreciation reserves continued
to rise moderately; and in general corporations did not reduce their liquid
assets significantly, either to finance expansion or to reduce indebtedness.
Since this decline in internal funds was much less than the decline
in total financial requirements, corporations were able to reduce their
total liabilities by more than 3.5 billion dollars in the first half of 1949. This
is in sharp contrast with the experience of the last several years. Corporations acquired debt capital to the extent of about 12 billion dollars in 1947
and about 9 billion dollars in 1948. The net reduction in total corporate
liabilities was due to a very sharp decline in short-term debt, partially




35

CHART 11

CORPORATE FUNDS

SOURCES A N D USES

The major changes in the corporate financial picture during
the first half of 1949 were a liquidation of nearly 5 billion
dollars in inventories and customer receivables, and a large
repayment of bank and trade debt.
BILLIONS OF DOLLARS

rlO

+5

+10

+15

+20

SOURCES*
RETAINED PROFITS** a
DEPLETION ALLOWANCES

DEPRECIATION

INCREASE IN BANK LOANS
a MORTGAGES

NET NEW ISSUES

CHANGE IN TRADE DEBT

USES

i

1947
PLANT a EQUIPMENT
OUTLAYS

#1949 lltim™W!k

A

INCREASE IN

CHANGE IN CUSTOMER
RECEIVABLES

1
*
**
***

mmmm

wmmm
1

i

FUNDS FOR "OTHER" SOURCES NOT SHOWN HERE.
PROFIT ESTIMATES FOR 1st HALF 1949 B COUNCIL OF ECONOMIC ADVISERS.
Y
ANNUAL RATES, NOT ADJUSTED FOR SEASONAL VARIATION.

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




i

offset by an increase in long-term debt. During the first half of the year,
bank loans fell by about 2 billion dollars, and debts to other firms by 3.5
billion dollars. On the other hand, new bond issues and mortgage loans
together exceeded the 1948 rate during this period. This is in part a reflection of the continued large demand for investment funds in the public utility
field. Also, corporations have used proceeds from long-term loans and bond
issues to retire existing short-term indebtedness. Stock issues continued to
be small in comparison with bond issues though there has been some rise in
common stock financing.
The burden of corporate debt, as measured by its relation to income,
is very much smaller at the present time than in either the 1920's or the
1930's. Moreover, interest rates are significantly lower, particularly in
comparison with the 1920's.
In evaluating the present financial position of business firms, it should be
emphasized that there are wide differences in the financial positions of
individual concerns, and there is some evidence that in the present weakening of business conditions these differences have increased. Smaller corporations have experienced a relatively sharper decline in profits, and their
position with respect to liquid assets is not as favorable as that of the larger
corporations.
Housing. Last year 931,000 new dwelling units for nonfarm families
were started, according to estimates of the Department of Labor. (See
chart 12.) The total number of units added from all sources, including
conversions, remodeling, and shift from farm to nonfarm categories, was
considerably greater. This was a high figure, but certainly inadequate to
meet the needs of a growing population and improved standards of housing.
For example, about the same number of dwelling units were started in 1925,
with a much smaller population and a much smaller accumulated housing
shortage. More important, the distribution of this housing among various
price ranges has been inadequately adjusted to the income structure. This
creates the problem of avoiding a decline in housing construction when the
relatively thin demand for high-priced housing is saturated.
In the first part of 1949 housing starts were less than a year earlier.
There has been a sharp upturn since March, but even if a favorable trend
continues it is certain that the output for 1949 as a whole will be far below
the estimated need of well above 1 million units a year, exclusive of farm
housing. From the viewpoint of investment and employment opportunities, an expanding housing program would be an important stabilizing
factor in an expanding economy. The problem is primarily one of housing
costs in relation to the income structure.
There is evidence that economies are now being made through declines
in cost of materials and narrowing of margins of contractors and subcontractors, and that the efficiency of the new labor force trained since the
war has increased. Partly in consequence of this, the houses started this




37

CHART 12

NEW HOUSING STARTS
In the latter part of 1 9 4 8 , housing starts fell below the
previous year. There has been a more than normal upswing
in 1949 and housing starts in June were about equal to the
number for June 1948.
THOUSANDS OF UNITS

THOUSANDS OF UNITS

125 I

1 125

100

100 —

-

25 -

D

I

J

F

M

A

25

M

SOURCE: DEPARTMENT OF LABOR.

summer should sell for considerably less than the houses started last summer.
Price adjustments this year fall far short of an adequate alignment of housing costs to housing needs and to the incomes of purchasers. The housing
problem is still outstanding, and its solution will require redoubled efforts.
International transactions
In the final quarter of 1948, the surplus of exports over imports of goods
and services had increased for the first time since the inception of the
European Recovery Program, reversing more than a year of continuous
decline. In the first half of 1949, the total export surplus continued
to increase, as is shown in chart 13 and in table 4. From an annual
rate of 6.1 billion dollars in the last quarter of 1948, it rose to an estimated
annual rate of 7.3 billion dollars in the second quarter of 1949, providing
a moderate offset to the domestic forces making for sagging production and
employment. (The relation of the export surplus to the net foreign investment component of the Nation's Economic Budget is explained in appendix A.)




TABLE 4.—United States exports and imports of goods and services
[Billions of dollars]
Exports of
goods and
services 1

Period

1936-38 average. _
1946
1947
_
1948
Annual rates:
1948:
First quarter
Second quarter. _
Third quarter
Fourth quarter...
1949:
First quarter
Second^quarter 2.

Imports of
goods and
services i

Surplus of
exports of
goods and
services *

4.1
15.0
19.8
16.8

3.6
7.2
8.5
10.5

.5
7.8
11.3
6.3

17.7
16.9
15.8
16.8

10.1
10.1
11.0
10.7

7.6
6.8
4.8
6.1

16.5
17.1

10.2
9.8

6.3
7.3

i Includes income on investments.
> Estimates based on incomplete data.
Source:]Department of Commerce.

The increase in the first part of this year took the form of an expansion
in the surplus of exports of goods rather than of services, resulting both from
increased exports and reduced imports. The increase of merchandise exports resulted almost entirely from increased shipments to Asia, chiefly to
Japan, and to western Europe, the areas receiving increased government aid.
In 1948 the European Recovery Program had tended to support rather than
increase our shipments to the participating countries. In the first quarter
of 1949, exports to participating countries for the first time approached the
level that had existed prior to the establishment of the program. Total
exports of goods in the first 4 months were almost as high as in the corresponding period of 1948, with agricultural exports 17 percent higher in
value and nonagricultural exports about 7 percent lower. (Additional
information concerning merchandise exports is provided in appendix tables
D-35, D-36, and D-37.)
As inflationary pressures have eased, government export controls have
been adapted to the changing situation. Until the latter part of 1948, the
major emphasis in the administration of export controls was the protection
of the supply needs of the domestic economy. At the beginning of 1949
there were still 422 commodities on the list of items under export quotas.
Easing of the supply situation has made possible the removal of license
control on exports of many goods and also the removal and liberalization of
quotas on exports of many others that remained under license. Despite
the imposition of license control on some additional items for security reasons, the total number of commodities under license was reduced to 326 by
the end of June.
The dollar value of merchandise imports in the first half of the year fell
almost 10 percent below that of the rate prevailing in the last quarter of
1948, apparently reflecting mainly the movement of domestic business ac-




39

CHART 13

EXPORTS AND IMPORTS
OF GOODS AND SERVICES
The export surplus continued to rise in the first half of
1949, primarily because of declining imports.
BILLIONS OF DOLLARS
ANNUAL RATES

BILLIONS OF DOLLARS
ANNUAL RATES

25

25
EXPORTS OF GOODS
AND

SERVICES*

20

20

15

15
EXPORT SURPLUS :•:•:•:•:•:•:

10

10

IMPORTS OF GOODS AND SERVICES *

1

2

3

4

1

2

3

4

1

2

3

Practically all of the export surplus was financed by ERP
or other Government aid.
15

15
EXPORT SURPLUS

10

*
**

10

INCLUDES INCOME ON INVESTMENTS.
ESTIMATE BASED ON INCOMPLETE DATA.

SOURCE: DEPARTMENT OF COMMERCE.




4O

tivity. The physical quantity of imports, after having moved upward
irregularly but definitely for more than a year, declined, although foreign
ability to supply exports continued to increase. In physical terms, the level
of imports in the first 4 months of 1949 was only 20 percent above prewar
levels, although the increase in domestic production and purchasing power
above prewar was vastly greater and United States tariffs were lower. This
level of imports is considerably lower than interwar relations between imports and domestic production would lead one to expect, the difference
being concentrated in Europe and Asia. (Additional information relating
to merchandise imports is shown in appendix tables D-38, D-39, and D-40.)
Until recently it was possible to regard the relatively low quantity of imports as a temporary result of the war-caused reduction in foreign capacity
to export, which left the United States demand for foreign goods unsatisfied.
If this were still the cause, a fall in domestic business activity might not
reduce imports correspondingly. The decline of imports in the first half
of this year, however, indicates that the United States market demand for
foreign goods was being substantially met at the going prices and exchange
rates. This situation suggests that a continuation of recent declines in
domestic demand and production would, with present relations between
foreign and American prices and present exchange rates, result quite
promptly in a further decline in the dollar value of our imports.
Under prevailing conditions of depleted dollar reserves there is a close
relation between our foreign purchases and sales. A reduction in the dollars
available to foreign countries, therefore, would tend to reduce domestic
economic activity unless it were offset by changes in the amount of our
foreign aid.
Foreign aid is not as great as it had been during the spring of 1947,
when it reached a rate of 8 billion dollars a year and accounted for nearly
two-thirds of the total export surplus of goods and services. But, as table 5
shows, payments made under it are now almost equal to the total export
surplus. (More detailed information relating to the balance of international
payments and foreign aid is shown in appendix tables D-33 and D-34.)
Payments under the European Recovery Program are probably about at
their peak. The effects of the program upon the domestic economy are
felt before payments are made, however. Taking into account the probable
course of procurement to be authorized under the European Recovery
Program, it appears likely that the most intense effect of existing foreign
aid programs upon the domestic economy has already been felt. Proposed
military aid under the North Atlantic Pact is not expected to have any
significant economic impact during 1949.
Government aid and United States imports of goods and services have
recently been virtually the entire source of dollars that foreign countries
have employed currently for purchasing American goods and services. With
foreign aid about at its peak and with imports showing a tendency to slacken,




no further impetus to domestic employment, production, and purchasing
power appears likely to come from exports during the rest of this year.
TABLE 5.—Financing the surplus of goods and services supplied to foreign countries
[Billions of dollars]

Means of financing
Surplus of
exports of
goods and
services»

Period

Government aid
(net) 2

Liquidation
of foreign
gold and
dollar assets
(net) a

Other
means of
financing
(net) *

.8
2.0
4.5

.7
1.1

.5
7.8
11.3
6.3

5.1
3.4
4.1
6.0

1.4
2.2
.6

1.1
1.2
.1

6.3
7.3

Annual rates:
1948:
First quarter
Second quarterThird quarter
Fourth quarter...
1949:
First quarter 8
Second quarter _

5.1
5.7
4.7

7.6
6.8
4.8
6.1

1936-38 average
1946
1947
1948

6.3
7.0

.4

.1
-.1

.9

1
2

Includes income on investments.
Includes grants and loans, but excludes subscriptions to the International Bank and
the International Monetary Fund. For detail, see appendix table D-34.
3
Includes net sales of gold to the United States and net liquidation of foreign dollar
assets, including long-term investments. Excludes liquidation of assets held by the
International Bank and the International Monetary Fund.
4
Includes movement of United States private capital, gifts, net dollar disbursements by
the International Bank and the International Monetary Fund, and allowance for errors and
omissions.
8
Estimates based on incomplete data.
Source : Department of Commerce.

Government transactions
In the main, trends in the receipts and expenditure programs of the
Federal, State, and local governments during the first 6 months of this year
have conformed to the picture set forth in the Council's review in January
1949. In some cases, however, these trends have been sharper than
anticipated.
As has been customary in previous reports, all figures in this section are
on the so-called consolidated cash basis, rather than on the conventional
budget basis. They reflect the volume of current cash transactions between
government and the public, and hence are useful in judging the immediate
economic impacts of government programs. (A detailed description of the
concepts used is given in "The Budget of the United States, 1950," p. 1375.)
Cash payments by the Federal Government. Table 6 shows the volume
of Federal cash payments to the public, classified according to function, for
1948 and the first half of 1949. In terms of seasonally adjusted annual
rates, the total volume of payments increased by 5.6 billion dollars, or 15
percent, over 1948 during the first 6 months of this year.




42

TABLE 6.—Federal cash payments to the public, by function
[Billions of dollars, annual rates, seasonally adjusted]
1948
Function

JanuaryJune

National defense
International affairs and finance _._
__
Veterans' services and benefits
Social welfare, health, and security
_
_.
Agriculture and agricultural resources
Interest on the public debt
_
Other
_
,
Deduction from Federal employees salaries for retirement
Clearing account for outstanding checks and telegraphic
reports

11.1
5.2
7.0
2.2
.4
3.9
5.3
-.2

JulyDecember
11.2
6.1
6.9
2.5
2.3
3.8
6.6
-.3

1949,
January
June i

12.7
7.3
7.4
2.6
2.9
4.0
6.1

+.2

-.5

—2

35.1

Total payments to the public.

38.7

42.5

i Estimates based on incomplete data.
^NOTE.—Detail will not necessarily add to totals because of rounding.
Sources: See appendix A.

Three major areas of increase were already clear by the second half of
1948, namely, purchases for defense, international affairs and finance,
and Federal construction programs for resource conservation and development, highways, and other purposes. In addition, the continuing decline
in farm prices had led to an increase in net outlays for price support operations; and there had been a significant increase in payments from unemployment insurance trust funds and in veterans' benefit payments. Payment of National Service Life Insurance dividends is likely to start around
the beginning of next year.
It was feared at the start of the year that certain of these expanding
programs, especially in the defense and construction fields, might aggravate supply shortages and upward price trends which were then evident.
These difficulties have not developed, and it is clear that Federal programs have provided substantial support to an otherwise weakening market situation. The increases in net outlays for farm price supports, and in
unemployment compensation payments were, of course, an automatic response to farm price declines and rising unemployment. They have partially offset the loss in farm and consumer incomes that would otherwise
have taken place.
Cash payments by State and local governments. As nearly as can be
determined from incomplete information, payments by State and local
governments still are following the upward trend which was described in
the Council's review in January 1949. Total payments for the first 6
months of this year are estimated to have run at an annual rate of about
16.5 billion dollars or about 10 percent above the total for the year 1948,
and about 6 percent above the second half of 1948.
As has been true since the end of the war, public construction continues
to be the most sharply rising component in the activities of State and local




43

governments. State-local construction in 1948 was 46 percent above the
1947 level, and for the first half of this year it was 42 percent above the
same period of 1948. (See appendix table D-14.) While some prog*
ress is thus being made in providing for schools, hospitals, streets and highways and other community facilities, the requirements yet to be met are
still very large. In terms of physical volume, construction activity of
State and local governments is still well below its 1930 level. The disappearance of inflationary pressures has been accompanied by an appreciable
drop in construction costs. State and local governments should make sure
that their planning is sufficiently advanced to allow them to take full
advantage of this situation.
Staffs are still being expanded and salaries increased in line with postwar developments. The total number of employees of State and local
governments was 3,994,000 in January 1949, as compared with 3,859,000
a year before—an increase of 3}4 percent. An additional but temporary
influence which has reenforced the upward trend of government cash
payments has been the granting of veterans' bonuses by a number of
States.
Federal cash receipts from the public: the cash deficit. Federal cash
receipts from the public for the first half of 1949, on a seasonally adjusted
annual rate basis, were about 41.6 billion dollars, only slightly below the
level of the last 6 months of 1948, although about 5.8 billion dollars below
the first part of 1948 and 3.4 billion below the total for 1948 as a whole.
This reflects not only the fact that the drop in business activity during the
first 6 months of this year was moderate, but also the fact that receipts from
a number of taxes during these 6 months reflected the activity levels of the
preceding year. Recent declines in corporate profits, for example, will not
be fully reflected in Federal cash receipts until the first half of 1950.
The increase in expenditures and decline in receipts resulted in a cash
deficit of about 1 billion dollars (annual rate, seasonally adjusted basis) for
the first half of this year as compared with a cash surplus of about 3.9 billion for the last half of 1948, and of 8.1 billion for 1948 as a whole. Under
existing legislation, the continued upward trend in payments will result in
a larger deficit for the year 1949, even with the maintenance of fairly high
levels of business activity.
State and local cash receipts. On the basis of incomplete information,
it is estimated that the cash receipts of State and local governments during
the first half of 1949 were equivalent to an annual rate of about 15.1 billion
dollars, or about 4 percent above the receipts of 14.5 billion for the year
1948. If business activity remains fairly high, the new taxes and increased
rates which have been enacted since the war—including a number of new
municipal nonproperty taxes recently permitted by State enabling legislation—may be expected to produce a continued upward trend in receipts.
The increasing reliance of State and local governments on sales and income




44

taxes, as compared with the relatively inflexible property tax, however, will
tend to mean a greater responsiveness in State and local tax revenues to
changes in general business conditions.
The estimates of the annual rates of cash payments and receipts for the
first half of 1949 indicate a cash deficit of about 1.4 billion dollars, as compared with the figure of nearly 600 million for the year 1948. The considerable increase in borrowing which has been required to meet large capital
outlays and veterans' bonuses has brought the gross debt of State and local
governments close to its all-time peak in 1940. Despite this increase in debt,
however, their fiscal position is considerably stronger than in the prewar
period or in 1929. The total of State and local gross debt in 1948 was about
1.4 times tax collections (excluding unemployment compensation taxes),
whereas the ratio for both 1939 and 1929 was about 2.6. State and local
governments are therefore in a better position to borrow in order to maintain needed programs.
Table 7 summarizes the aggregate cash transactions of all levels of
government—Federal, State, and local combined. Aggregate cash payments during the first half of 1949 are estimated to have been equivalent to
a seasonally adjusted annual rate of about 59.0 billion dollars, or more than
13 percent above the 1948 level of 52.0 billion. The annual rate of cash
receipts by all levels of government during this period is estimated at 56.7
billion dollars, or about 5 percent below the 1948 level. On the basis of seasonally adjusted annual rates, this is equivalent to a deficit in aggregate government transactions of about 2.4 billion dollars, as compared with a
surplus of about 7.5 billion dollars for 1948 as a whole, and of about 3.0
TABLE 7.—Government cash receipts from and payments to the public
(Billions of dollars, annual rates, seasonally adjusted]
1948
Receipt or payment

JanuaryJune

Cash receipts:
Federal...
State and local

42.6
14.7

41.6
15.1

61.7

57.3

56.7

35.1
14.5

38.7
15.6

42.5
16.5

49.6

54.3

59.0

+12.3
-.2

+3.9
-.9

-1.0
-1.4

+12.1

+3.0

-2.4

Total cash receipts

_

__.

Surplus (+) or deficit ( - ) :
Federal
State and local
Total surplus (+) or deficit ( - )

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




1949,
JanuaryJune l

47.4
14.3

Cash payments:
Federal
__ _
State and local
Total cash payments

JulyDecember

45

billion for the second half of 1948. The prospect is that this deficit will
increase substantially in the second half of this year, even if business activity
continues at high levels.
Summary: The Nation's Economic Budget
For the first time since the immediate postwar readjustment period, the
Nation's Economic Budget reflects a decline in business activity extending
over 6 months or more. As shown in the accompanying table, the Budget
total, or gross national product, declined about 9 billion dollars (seasonally
adjusted annual rate) from the second half of 1948 to the first half
of 1949. This is a decline of about 3 / 2 percent in current dollars, or about
V/z percent after allowing for declining prices. (See chart 14.) The percentage drop from the fourth quarter of last year to the second quarter of
this year was about 6 percent in terms of current prices.
The most conspicuous facts reflected in the Nation's Economic Budget
are that business investment shows a sharp reduction from the second half
of 1948 to the first half of 1949 while consumer income and expenditures
dropped only moderately. The decline in business investment represents
CHART 14

THE NATION'S ECONOMIC BUDGET
CHANGES FROM 2nd HALF 1948 TO 1st HALF 1949
Increases in Government cash payments failed to offset
declines in private expenditures, especially investment, in
the first half of this year.
25

PERCENT OF 1948, 2nd half
50
75

100

GROSS NATIONAL PRODUCT ( t o t a l ) *

CONSUMERS

BUSINESS

GOVERNMENT (FEDERAL, STATE, LOCAL)

ALSO INCLUDES INTERNATIONAL ACCOUNT, NOT SHOWN IN CHART.
INCLUDES RETAINED EARNINGS, ADDITIONS TO RESERVES, AND INVENTORY VALUATION ADJUSTMENT.

SOURCE: BASED ON DATA IN APPENDIX A.




125

largely a reversal in the trend of inventory accumulation, which in turn
largely accounts for the present decline in economic activity. This inventory adjustment has resulted from a basic discrepancy between the
trend of increasing production and relatively stable consumer demand over
the last few years. With the progressive fulfillment of extraordinary backlog demands over the past 6 to 12 months a slack developed first in the
demand at prevailing prices for certain luxury items and subsequently for
one category after another of consumers' and producers' goods. With production increasing more than consumption, inventories were built up steadily. As consumers failed to absorb promptly the growing flow of goods,
TABLE 8.—The Nation's economic budget
[Billions of dollars, annual rates, seasonally adjusted]
1948, second half
Economic group

1949, first half 1

Receipts Expendi- Excess or Receipts Expendi- Excess or
deficit
tures
tures
deficit

CONSUMERS

Disposable income relating to current production
Transfers and interest

183.1
14.7

179.6
15.8

197.8

Disposable personal income
Expenditures for goods and services
Personal saving (+)._
_
-._

180.6

195.4
+17.2

175.8

+19.6

BUSINESS

Retained business receipts 3
Gross private domestic investment

._

25.5

26.2

42.8

35.7
-9.5

-17. S

Excess of investment (—).__
INTERNATIONAL

Net cash Government loan transfers abroad
Net foreign investment
_

.9

1.1

.5

.6

+.5

+.4

Excess of receipts (+) or investment (—)
GOVERNMENT (FEDERAL, STATE, AND LOCAL)

Tax payments or liabilities
Adjustment to cash basis

_

Cash receipts from the public
Purchases of goods and services
Oorernment transfers

54.5
2.2

58.9
-1.6
57. S
_

Cash payments to the public
Excess of receipts (+) or payments (—)

66.7

38.8
15.5
54. s

41.8
17.2
59.0

+S.0

-2.4

ADJUSTMENTS

For receipts relating to gross national
product
Other adjustments

—4.6
+1.8

Total: Gross national product

262.7

1

-4.6
+1.8
262.7

0

253.9

-6.5
-1.7

-6.5
-1.7
253.9

0

Estimates based on incomplete data.
Includes adjustment for inventory valuation. See appendix table A-3.
NOTE.—Items relating to current production of goods and services are shown in roman
type. Transfer payments and receipts and subtotals including them are in italics; these
items are not included in the gross national product.
Details will not necessarily add to totals because of rounding.
Source : See appendix A.
2

844384—49-




47

swelling inventories induced business to cut down its orders and to stop and
recently to reverse inventory accumulation.
The sharp cut in industrial production and the inventory decline had
only a moderate effect on consumer income and expenditures for the first
half of 1949 as a whole. A noticeable decline started, however, in the
second quarter. The relatively high level of the first half of the year has
been due to the fact that, while employment in manufacturing and mining
industries was curtailed, employment in most other activities was maintained
or increased (after allowance for seasonal variation). Thus productive
activity, employment, and personal incomes derived from productive employment decreased much less in the aggregate than in manufacturing
industries alone. As a strengthening factor, there was a rise in expenditures by Federal, State, and local governments, as indicated in the Nation's
Economic Budget table. Some of these additional government expenditures
are reflected directly in an increase in transfer incomes derived from rising
unemployment compensation and veterans' allowances, in part offsetting
the decline in incomes derived from current production. For the first half
CHART 15

SAVING & ABSORPTION OF SAVING
Consumer saving remained high in the first half of 1 9 4 9 , but the
excess of business investment declined and the Government
surplus was changed into a deficit.
BILLIONS OF DOLLARS, SEASONALLY ADJUSTED ANNUAL RATES
-10
0
+10

-20

ABSORPTION OF SAVING (-)

SAVING (+)

|

1 9 4 8 , SECOND HALF
CONSUMERS*-*
«-BUSINESS
INTERNATIONAL-*•

)

GOVERNMENT—*
(FEDERAL, STATE.LOCAL)

1949, FIRST HALF
CONSUMERS -BUSINESS
INTERNATIONAL •-GOVERNMENT
(FEDERAL,STATE, LOCAL)
"PERSONAL SAVING .

SOURCE: THE NATION'S ECONOMIC BUDGET (Appendix A ) .




48

+ 20

of the year, government ran a deficit, as compared with a surplus in the
preceding period. (See chart 15.)
Some conditions are now favorable for a reversal of the downward trend
in industrial production and employment. Inventories in several lines of
business already have been brought into a better relationship with sales,
there are indications that prices are being brought into a better relationship
with disposable incomes, and it is probable that orders have in many cases
been cut below the level justified by current markets. The expected further
rise in government expenditures will continue to give support to demand.
There are other factors, however, which could produce a further weakening. For example, present surveys indicate that business expenditures
and investments in plant and equipment in the third and fourth quarter of
1949 may run increasingly below the levels attained in 1948. Thus, if
counteracting forces are not marshalled, it is at least possible that the
inventory and price adjustment may develop into an investment recession
later this year or next year.
Despite the significance of investment, it should be stressed that the
downturn commenced with a failure of consumer markets to expand in line
with total output. The maintenance and stimulation of consumer expenditures are essential both for maintaining total expenditure commensurate
with our increasing productive capacity under maximum employment, and
for providing a substantial basis for a sustainable high level of investment
itself.




49




Appendix A
The Nation's Economic Budget
Tables
Page
The Nation's Economic Budget, 1948-49
54
Consumer account, 1948-49
56
Business account, 1948^9
58
International account, 1948-49
59
Government account (Federal, State and local), 1948-49 . . .
61
Federal cash receipts from the public other than borrowing,
calendar years 1948-49
63
A-7. Federal cash payments to the public by function, calendar
years 1948 and 1949
63
A-8. Federal cash payments to the public by type of recipient,
calendar years 1947 and 1948
64
NOTE.—In these tables, revised estimates for net foreign investment and
construction have been substituted for those included in the national income
and product accounts published by the Department of Commerce in the
Survey of Current Business, February 1949 and May 1949. The revised
construction series and estimates of the international transactions of the
United States have been published separately in recent issues of the Survey.
All components of national income and product are subject to revision
in the forthcoming (July 1949) Survey of Current Business.
A-l.
A-2.
A-3.
A-4.
A-5.
A-6.







The Nation's Economic Budget
The Nation's Economic Budget (table A-l) is designed to show significant changes in the economy as they are indicated by the receipts and expenditures of consumers, business, and government, and by net transactions with
the rest of the world. The net additions to and absorption of saving of
these groups are also shown in the Budget. The total of the Nation's Economic Budget measures the gross national product, i. e., total current production of goods and services. On the receipts side the total consists of
wages and salaries, retained business earnings, and other incomes relating
to current production. On the expenditure side it consists of purchases
of current output.
Besides expenditures for current output and the corresponding receipts
there are transfers of purchasing power, such as government payments to
social security beneficiaries and veterans' pensions. While governmental
transfers do not arise from current production, as a source of purchasing
power they are not different from any of the payments that do. They contribute to spendable income and have an important bearing on production
and prices. Omitting transfers from government accounts would understate the size and impact of government budgets on incomes and expenditures of consumers and business and on foreign transactions. They are
therefore included in the Nation's Economic Budget.
In order to distinguish between expenditure for goods and services and
transfers the former are shown in roman type and the latter in italics in
the Nation's Economic Budget. Only the former are added to arrive at
the total, which equals the gross national product or expenditure.




53

TABLE A-l.—The Nation's economic budget, 7948-49
[Billions of dollars, annual rates, seasonally adjusted]
1948, second half

1948, first half
Economic group
Receipts

1949, first half 1

Excess of
Excess^of
Excess of
Expendi- receipts Receipts Expendi- receipts Receipts Expendi- receipts
(+)or
(+)or
(+)or
tures
tures
tures
deficit
deficit
deficit

(-)

(-)

(-)

CONSUMERS

3
Disposable personal income
4 Expenditures for goods and services
6
Personal savings ( + )

__

187.1

179.6
16.8 \

183.1
14.7

171.8
15. 8

1 Disposable income relating to current production...
2 Government transfers and net interest payments

174.9

197.8

+12.2

195.4
180.6

+17.2

175.8

+19.6

BUSINESS
22.0

6 Retained business receipts from current production
7 Gross private domestic investment
8
Excess of receipts (+) or investment ( )

25.5
38.9

26.2
42.8

35.7

-17.8

-16.9

-9.6

INTERNATIONAL
9 Government loan transfers abroad
_
10 Net foreign investment..
_
11
Excess of rceeipts ( + ) or investment ( )
G O V E R N M E N T (Federal, State, and local)

3.3

12 Tax payments or liabilities
13 Adjustment to cash basis

17
18

66.7

67. S
38.8
15.5

32.2
17.4
49.6

Cash vavments to the vublic
Excess of receivts (+) or Davments (—}

54.5
2.2

58.9
-1.6

61.7

+•*

+•4

-1.6

58.4
8.8

14
Cash receipts from the public
15 Purchases of goods and services
16 Government transfers

1.1

.9

1.7
_

64.3

+12.1

41.8
17.2
69.0

+8.0

-2.4

ADJUSTMENTS

21




Gross national product.

..

. . . .

249.3

-4.6

—S.I
-2.7

—3.1
-2.7

19 For receipts relating to gross national product
20 Other adjustments

249.3

+1.S

0

262.7

262.7

-4.6
+1-8
0

-6.6
-1.7

-6.5
-1.7
253.9

253.9

0

i Estimates based on incomplete data.
NOTE.—Items relating to current production of goods and services are shown in roman type. Transfer payments and receipts and subtotals including them are in italics; these
items are not included in the gross national product.
Detail will not necessarily add to totals because of rounding.
Explanatory notes:
Lines 1-5: See table A-2, Consumer Account.
Lines 6-8: See table A-3, Business Account.
Lines 9-11: See table A-4, International Account.
Lines 12-18: See table A-5, Government Account.
Line 19: Includes the statistical discrepancy and the current surplus of Government enterprises less Government subsidies. The statistical discrepancy represents the difference between two independent estimates of gross national product, one arrived at by estimating the income received from current output and one by estimating expenditures for this
output. The adjustment for statistical discrepancy brings the estimate on the receipts side into agreement with that on the expenditure side of the accounts.
Line 20: An adjustment is necessary to balance the sum of the transfers on the receipts side with that on the payments side because of the fact that somewhat different bases for
measurement have been used in estimating various components of receipts and payments. Most of the discrepancies reduce to a difference in timing between the recording of a receipt
and a payment. A correction must be made for the difference between the time a tax liability is incurred or payments are made and the time a receipt is recorded by the Government. Payment is sometimes made for goods produced in a previous period; interest payments on a cash basis differ from the accrued interest shown under consumer receipts, etc.
Sources: This table is based on the national income and product statistics of the Department of Commerce, with revised figures for net foreign investment and construction,
and on Federal cash receipts from and payments to the public estimated by the Bureau of the Budget.




Since the transfers of the government augment the receipts of consumers,
business, or foreign countries, the transfer payments and receipts of transfers
are conceptually equal. The small discrepancy between the totals is due to
statistical problems of measurement.
Tables A-2 through A-5 contain the accounts of consumers, business,
international transactions, and the government. They indicate how the
receipts and expenditures in each account have been derived, and present
some break-down of the totals where this is feasible.
Consumer account
Table A-2 shows personal income and its principal components, personal
taxes, and a break-down of expenditures by important classifications. Consumer income includes the net profits of unincorporated businesses and
farms (proprietors' income). Expenditures for construction of dwellings
are considered as a business investment and hence are not included in consumption expenditure. Personal saving is a residual figure derived by
deducting consumption expenditures from disposable income.
TABLE A-2.—Consumer account, 1948-49
[Billions of dollars, annual rates, seasonally adjusted]
1948
Receipts or expenditures

Receipts:
Personal income arising from current production of goods and services:
Wage and salary receipts and other labor income
Proprietors' and rental income
Dividends and private interest
_
Business transfer payments
_

1949,
first
half*

First
half

Second
half

130.0
50.8
12.2

138.6
51.0
13.1

135.2
48.8
13.6

Total
_
Plus:
Net interest paid by Government
Other Government transfer payments
Equals: Total personal income
Less: Personal tax and nontax payments

193.6

203.3

198.2

4.5
10.8
208.9
21.8

4.6
10.1
218.0
20.1

4.6
11.2
214.0
18.6

Equals: Disposable personal income

187.1

197.8

195.4

22.0
102.6
50.3

23.3
104.7
52.6

21.8
100.2
53.8

174.9

180.6

175.8

12.2

17.2

19.6

Expenditures:
Durable goods.._
Nondurable goods
Services.

_

._

Total expenditures
Personal saving *
i Estimates based on Incomplete data.
* See also appendix tables B-4, D-4, and D-5.
NOTE.—Detail will not necessarily add to totals because of rounding.




Business account
The business account is shown in table A-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. They
are therefore included in personal 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 inventory valuation adjustment is included as a business receipt in the
Nation's Economic Budget tables to make the profits estimates consistent
with the national income and product basis of accounting. Business income,
both corporate and noncorporate, is reckoned by business inclusive of
changes in the book value of inventory. The gross national output or product for any period includes only the real change in inventories (net change
in physical volume valued at current prices). An adjustment is therefore
made in proprietors' and in corporate net income so that the income basis
of accounting agrees with the product basis. (In table 2, proprietors'
income is included net of the inventory valuation adjustment.) This does
not necessarily imply that business receipts should be valued after inventory
valuation adjustment for purposes other than national income accounting.
The point has been frequently made that the book profits overstate the
real position of business during the period when reported book profits are
rising, since part of the profits have to be devoted to replacing inventories
at higher prices and hence are not available to finance the expansion of
plant and equipment or for other purposes. Thus, during 1948, when reported corporate book profits were estimated at 32.8 billion dollars before
taxes, it was also estimated that the additional costs of replacing inventories
of corporations amounted to 3 billion dollars, thus yielding profits before
taxes, adjusted for the higher cost of replacing inventories, of 29.8 billion
dollars.
With the reversal of the price movement during the first half of 1949,
the replacement costs of inventories have fallen. Since business in the
main calculates the value of its inventories on the basis of cost or market
price, whichever is lower, the effect of declining prices is to cause book
profits to fall as inventories are marked down to the lower prices. In
addition, of course, profits may fall because production or dollar margins
are reduced. During the first half of 1949, corporate book profits are
estimated to have been running at an annual rate of 27.2 billion dollars
before taxes, but this is after an estimated write-down of inventories at an
annual rate of 2.7 billion dollars. If the estimated corporate book profits
of 27.2 billion dollars (annual rate) is adjusted for the write-down in inven-




57

tories, the estimated corporate profits before taxes for the first half of 1949
would then amount to 29.8 billion dollars (annual rate) which is the same
as the level of profits before taxes in 1948, similarly adjusted for the change
in the replacement costs of inventories.
TABLE A-3.—Business account, 1948-49
[Billions of dollars, annual rates, seasonally adjusted]
1948
Receipts or investment
First
half
Receipts:
Corporate profits before tax
Less:
Corporate profits tax liabilities . . . . _ _
. ..
Dividends
Equals: Corporate undivided profits
Plus:
Capital consumption allowances
Corporate inventory valuation adjustment *

31.3

34.4

« 27.2

12.2
7.4
11.8

13.4
8.0
13.0

M0.9
8.2
8.1

14.2
-3.9

14.7
-2.2

15.4
+2.7

22.0

25.5

26.2

--

15.3
7.2
8.1
20.4
3.2
3.0

16.1
7.3
8.9
22.3
4.4
3.1

14.6
6.3
8.2
21.8
-.6
-1.3

38.9

42.8

35.7

-

-16.9

-17.3

-9.5

. .

Equals: Retained earnings and additions to reserves.
Private domestic 4gross investment:
Construction
Residential nonfarm
Nonresidential
Producers' durable equipment
Change in inventories
Nonfarm only._
_

.
__
__ _
_.-

Total gross private domestic investment
Excess of receipts (+) or investment (—)

.

_

__
- -

Second
half

1949,
first
half*

- -

1
8

Estimate based on incomplete data.
Estimates by the Council of Economic Advisers.
3 This adjustment is required because corporate income is reckoned inclusive of changes in the book value
of inventory, as is customary in business accounting, whereas only the value of the real change in inventories
is counted as current output in the gross national product.
* Incorporates new construction series not previously included in the gross national product.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Based on estimates of the Department of Commerce.

International account
The international account is designed to summarize our economic relations with the rest of the world. Net foreign investment shows the increase
or decrease in claims against other countries and international institutions.
The figure is arrived at by taking the surplus of exports over imports of
goods and services, including investment income, and deducting net gifts,
i. e., "unilateral transfers," since such gifts do not increase our claims on the
rest of the world. Errors and omissions in the balance of payments statistics are treated as being entirely in the capital account. Government gifts
or unilateral transfers are now an important magnitude because of the
European Recovery Program. Since Government and private gifts are not
included in net foreign investment, they are included in Government and
personal expenditures for goods and services in arriving at total national
outlays.
Government gifts comprise only part of Government aid to foreign countries. Loans to foreign governments and subscriptions to international




organizations such as the International Bank for Reconstruction and Development and the International Monetary Fund are also important. Loans
and subscriptions constitute a transfer of purchasing power. At the time
they are paid in cash these loans and investments are included in Government transfer payments and as a receipt in the international account of the
Nation's Economic Budget. The difference between these receipts and net
foreign investment, or "excess of investment" represents the portion of the
surplus of exports of goods and services that is financed by other means
than Government cash loans or subscriptions and Government and private
gifts.
From the standpoint of the break-down of the Government cash payments
into expenditures for goods and services and transfers, there is an anomaly
in considering unilateral transfers or gifts as a goods and services expenditure rather than a transfer item. This treatment is necessary, however,
because the national income accounts include net foreign investment (the
surplus of exports less gifts) rather than the total surplus of exports as a
component item. If such gifts were not included in goods and services
expenditures, the national output would be understated.
Differences of concept exist between government grants and loans as
included in the balance of payments accounts and in the goverment cash
accounts (table A-8). Surplus property credits and other aid which does
not involve an outlay of cash by the Federal Government are not included
in cash accounts. Long-term loans and subscriptions to the International
Monetary Fund and the International Bank for Reconstruction and Development are included in the cash accounts when the cash is transferred.
TABLE A-4.—International account, 1948-49
[Billions of dollars, annual rates]
1948
Receipts or investment

First
half

Receipts:
Net long-term loans 8
.
Payments to the International Monetary Fund and International Bank 3___

Equals: Net foreign investment
Excess of receipts (+) or investment (—) _._

-

.
_

_
__ _

1949,
first
halfi

_

1.1
.61

0.8
.1

1.7|

Total Government loan investments abroad
Investment:
Excess of exports of goods and services over imports _
Less:
Net unilateral transfers:
Government 4
Private
__

Second
half

.9

7.2

5.4

6.8

3.2
.7
3.3

4.3
.6

5.5
.6

.5

.6

-1.6

+.4

+.5

1.0
.1
*

1.1

i Estimates based on incomplete data.
a Includes only cash withdrawals under loan agreements. Does not include noncash transactions such as
lend-lease and surplus property credits as shown in appendix table D-34.
3 Cash payments on subscriptions.
* Does not agree with unilateral aid included in table A-8 which is on a Daily Treasury Statement basis.
For a further break-down of Government unilateral transfers, see table D-34.




59

Government account
The government account reconciles cash receipts from and payments to
the public with the government revenue and expenditure estimates which
have been incorporated in the national income and product accounts. It
also provides a break-down of government receipts and expenditures into
Federal and State and local components.1
There are several important differences between the concept of government revenue appropriate to the national income accounts and cash
receipts from the public. In the national income accounts corporation
income taxes are included on a liability basis and personal taxes on a payments basis. In the case of corporations, there is a lag of about a year
between the time a liability is incurred and the time payment is made to
the government. The difference between corporation tax liabilities and
government receipts for the same period may be substantial. Receipts of
income taxes also lag somewhat behind payments under the withholding
system.
In addition, cash receipts include some items of revenue which are not
derived from current production and are consequently not included in the
income and product accounts; for example, receipts from the sale of surplus
property and various items of miscellaneous receipts. (See table A-6.)
Noncash items, such as government contributions to retirement funds for
employees, are excluded. These are intragovernmental transfers rather
than cash payments to the public.
Similarly, cash payments are more inclusive than the concept of government expenditures appropriate to the income and product calculations.
Government loans ordinarily do not appear anywhere in government expenditures in the income and product series. An important exception is
crop-secured loans made by the Commodity Credit Corporation. The commodities which secure these loans are considered as an addition to government inventory or capital formation, and the loan as an expenditure for
goods and services.
1
Cash receipts from the public and payments to the public represent a consolidation of
the United States budget with the Government trust and corporation accounts. All intragovernmental or noncash transactions have been eliminated. A detailed explanation of
this consolidation may be found in the Budget of the United States Government for the
fiscal year 1950, p. 1375. A summary of the derivation of cash receipts and payments from
budgetary receipts and expenditures for calendar year 1948 was presented in the Council's
Annual Review of January 1949, pp. 89 and 90.




6o

TABLE A-5.—Government account {Federal, State, and local), 1948-49
[Billions of dollars, annual rates, seasonally adjusted]
1948
Receipt or expenditure

1949,
first
half*

First
half

Second
half

43.5
14.9

43 6
15.3

38 7
15.8

58.4

58.9

54.5

—1 1
+4.4

—1 1
-.5

+3.4

Cash receipts from the public

61.7

57.3

56.7

Expenditures:
Purchases of goods and services:
Federal*
State and local

17.9
14.3

23.0
15.9

24.8
17.0

32.2

38.8

41.8

10.8
4.4

10 1
4.4

11 2
4.5

1.7
.5

.9
.1

1.1
.4

Tax and nontax payments or liabilities: *
Federal
State and local

_

Total
Adjustment to cash basis:
Noncash receipts s__
__
Excess of cash receipts over tax liabilities or payments •

Total

_

Other Government payments:
Transfers to individuals..
__
Cash interest payments to the public •
_
_.
Loans to foreign governments and subscriptions to the International
Bank and International Monetary Fund 1
_
_
All other s

—1 2

17.4

59.0

+3.0

-2.4

47.4
35.1

42.6
38.7

41.6
42.5

+12.3

+3.9

-1.0

14.3
14.5

14.7
15.6

15.1
16.5

-.2

Cash surplus (+) or deficit (—)

17.2

54.3

+12.1

_

15.5

49.6

Total
Cash payments to the public

— 9

-1.4

ADDENDUM

Federal:
Cash receipts
Cash payments

-

_.

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

* Estimates based on incomplete data.
2 Personal and indirect business tax payments and corporation tax liabilities. Includes contributions for
social insurance.
» Consists of deductions from Government employees' salaries for retirement funds, and Government
contributions to retirement funds, national service life and Government life insurance funds.
* Includes excess of corporation tax receipts over liabilities and excess of personal tax receipts over payments. Cash receipts also include some items of miscellaneous internal revenue not included in tax and
nontax payments, such as receipts from sales of surplus property.
« Sales of surplus property of 1 billion dollars in the first half of 1948, and 200 billion dollars in the other
2 periods have been deducted from gross expenditures.
* Does not agree with net interest paid by government (table A-2) which is on an accrual basis.
7
See table A-4, International Account.
8 Includes all other cash payments less non-cash payments for goods and services. Other cash payments
include net payments by Government corporations (except capital formation), net prepayments, and the
excess of checks paid over checks issued. Non-cash purchases of goods and services include deductions
from Government employees' salaries for retirement funds and the Government contribution to such funds.
NOTE.—Detail will not necessarily add to totals because of rounding.




6i

In the cash payments series, the receipts of the Government corporations
have been offset against the expenditures and only the net expenditure
has been included. The same treatment is accorded the Post Office because
of the quasi-commercial character of its operations.2 Grants-in-aid to State
and local governments are included as a cash payment of the Federal
Government and are not counted as either a cash receipt or payment of the
States and localities.
The major revenue sources of the Federal Government are shown in
table A-6, Cash Receipts from the Public and Federal Gash Surplus. Expenditures according to major governmental function are shown in table
A-7, Gash Payments to the Public. In table A-8, Federal expenditures
have been classified by recipient, whether individuals, businesses, foreign
countries, or States and localities. In most cases the term "recipient"
means the initial recipient. However, this classification has not been followed in the case of a considerable part of the expenditure for international
aid. All such expenditures have here been classed under international aid,
even though some relate to direct purchases by the United States Government from business, in order to show a comprehensive total for the aid
programs. The same procedure has been followed in the case of State and
local aid programs, although the amounts of direct procurement by the
Federal Government are not considerable.
A similar line of reasoning was applied to the postal deficit, the entire
amount of which has been included as a subsidy to business. Wages and
salaries paid to postal employees consequently do not appear under wages
and salaries in table A-8, but have been netted against postal receipts to
arrive at the total deficit.
2
The national income and product accounts include the purchases of Government enterprises (in general the Post Office and Government corporations) on capital account, their
net interest payments and their operating surplus or deficit. See table III, Consolidated
Government Receipts and Expenditures Account, in the Survey of Current Business,
July 1949.




62

TABLE A—6.—Federal cash receipts from the public other than borrowings calendar
years 1948 and 1949
[Billions of dollars, annual rates, seasonally adjusted]
1948
Cash receipts from

Federal cash receipts from the public:
Direct taxes on individuals 2
_~
Direct taxes on corporations
Employment taxes
Excises and customs
_
Surplus property receipts
Deposits by States, unemployment insurance
Veterans' life insurance premiums _
Other
.._
_
Less: refunds of receipts
Total Federal cash receipts from the public.

Second
half

First
half

1949,
first
half *

22.8
11.1
2.4
7.8
1.8
.9
.4
2.4
2.2

19.0
11.1
2.5
8.0
.5
1.1
.4
2.1
2.2

18.2
12.0
2.5
7.9
.7

47.4

42.6

41.6

.9
.4

1.5
2.9

* Estimates based on incomplete data.
Includes personal income taxes and estate and gift taxes.
NOTE.—Detail will not necessarily add to totals because of rounding.

2

TABLE A-7.—Federal cash payments to the public by function, calendar years 1948
and 1949
[Billions of dollars, annual rates, seasonally adjusted]
1948
Function

National defense
International affairs and
finance
__.
Veterans' services and benefits
Social welfare, health, and security
Agriculture and agricultural resources
Interest on the public debt
Other
_
Deduction from Federal employees' salaries for retirement
Clearing account for outstanding checks and telegraphic reports.
Total cash payments to the public.* Estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.

844384—49




7

First
half

Second
half

1949,
first
hain

+.2

11.2
6.1
6.9
2.5
2.3
3.8
6.6
-.3
-.5

12.7
7.3
7.4
2.6
2.9
4.0
6.1
-.3
-.2

35.1

38.7

42.5

11.1
5.2
7.0
2.2
.4
3.9
5.3
-.2

TABLE A-8.—Federal cash payments to the public by type of recipient, calendar years
1947 and 1948
[Billions of dollars]
Cash payments to—
Individuals:
Salaries and wages of Federal personnel:
Military i
Civilian 2
Allowances to dependents of military personnel
_.
Readjustment benefits, pensions, and other payments to veterans 3_.
Social insurance beneficiaries
Loans to home owners *
_.
Interest*
Others

1947

1948

Total-

2.7
4.6
.3
5.8
1.9
—.1
1.1
.7

17.7

TotalBusiness and farmers:
Subsidies and other payments to farmers
Loans and investments. __
Interest 5 ..
Subsidy arising from postal deficit8
Home-mortgage purchases from financial institutions .
Other'

3.0
4.6
.3
7.0
1.8
-.2
.8
.4

17.0

.1
2.9
.2
.1
7.4

1.1
I

2.8
.5
.2
7.7

11.5

12.3

International:
Loans and grants, European Recovery Program 10
Other loans to foreign governments (net withdrawals) 10
Other grants 10
Payments to the International Monetary Fund and International Bank io_.
Other"
Total-

3.6
1.9
1.8
.1

1.8
.5
2.8
.4
.6

7.4

6.0

State and local governments and public agencies:
Grants-in-aid
Interest..
Loans

1.6
.1

1.8
.1

Total

1.8

Total Federal cash payments to the public

1.9

.2

-.2

38.6

Clearing account for outstanding checks and telegraphic reports.

37.0

1 Excluding terminal leave pay.
2 Civilian wages and salaries exclude pay-roll deductions for Federal employees' retirement, and post
office wages and salaries.
3 Also includes cash terminal leave pay to enlisted personnel, cashing of terminal leave bonds, musteringout pay, and payment of Government and national service life insurance benefits to veterans' beneficiaries.
* Repayments exceed loans.
«Includes interest payments on the Federal debt, and a small amount of interest on tax refunds. Interest
figures in this table are not comparable with those in table A-2. Interest in that table includes payments to
unincorporated business as well as to individuals and is adjusted for certain interaccount transfers.
« 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.
7 Less than 50 million dollars.
s 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 is included in the business category because the deficit arises primarily out of the
subsidy to mail other than first class.
» Equals the excess of Federal cash payments to the public over the sum of all other payments shown in
this table. Includes mainly Government purchases of goods and services from business.
1 Estimates are on a Daily Treasury Statement basis, which does not necessarily agree with U. S. Govern0
ment aid to foreign countries as shown in appendix tables D-33 and D-34.
1 Includes other Government expenditures abroad and payments for membership in international organi1
zations other than listed above.




64

Appendix B
The Distribution of Income and Liquid Assets, and
Personal Saving
Tables
Page
B-l. Share of total money income received by each tenth of the Nation's spending units when ranked by size of income, 1947
and 1948
B-2. Distribution of spending units by income levels, before and after
Federal income tax, 1947 and 1948
B-3. Distribution of spending units, by size of liquid asset holdings,
in early 1947, 1948, and 1949
B-4. Components of net personal saving, 1946, 1947, and 1948 . . .
B-5. Components of net personal liquid saving, 1947, 1948, and
1949




67
69
69
70
71




The Distribution of Income and Liquid Assets, and
Personal Saving
The distribution of income and liquid assets
According to information recently made available in the 1949 Survey
of Consumer Finances,1 there was no increase in the concentration of
income between 1947 and 1948. In fact, the data indicate some decrease
in the degree of concentration, but in view of various considerations mentioned below, this conclusion cannot be accepted unreservedly.
TABLE B-l.—Share of total money income received by each tenth of the Nation's
spending units when ranked by size of income, 1947 and 1948 *
Percent of total money income
before Federal income tax
Spending units ranked from lowest
to highest income

By tenths
1947

Lowest tenth
Second tenth
Third tenth
Fourth tenth
Fifth tenth..
Sixth tenth
Seventh tenth
Eighth tenth
Ninth tenth -..
Highest tenth

__.

_

1
3
4
6
7
9
10
12
15
33

Cumulative

1948

1947

1
3
5
6
7
9
10
12
15
32

1
4
8
14
21
30
40
52
67
100

1948
1
4
9
15
22
31
41
53
68
100

Percent of total money income
after Federal income tax 2
By tenths
1947
1
3
5
6
8
9
10
12
15
31

Cumulative

1948
1
4
5
7
8
9
10
12
15
29

1947
1
4
9
15
23
32
42
54
69
100

1948
1
5
10
17
25
34
44
56
71
100

1
Income data for 1948 are based on interviews in January-March 1949; for 1947 on interviews in JanuaryMarch 1948.
2
Estimated liability on Federal income tax, excluding tax on capital gains. The tax liability was not
obtained directly from interviews or from tax returns, but from comprehensive data on family composition
and income obtained in connection with the Consumer Finances Surveys. Certain improvements in
techniques of estimating the tax liability were made in the 1949 Survey so that the results should be somewhat more reliable than in 1948. (See the Federal Reserve Bulletin, July and August 1949.)
Source: Based on data from the 1948 and 1949 Surveys of Consumer Finances, conducted for the Board
of Governors of the Federal Reserve System by the Survey Research Center of the University of Michigan.
The methods used in the survey are described in the Federal Reserve Bulletin, June 1949, p . 642.

Table B-l shows the percent of total money income received by each
tenth of the Nation's spending units,2 both before and after liabilities on the
Federal income tax have been deducted. In 1947 the poorest three-tenths
of the Nation's spending units received 8 percent of total income, while in
1948 the percentage of income received by these groups increased slightly.
In contrast, the upper two-tenths received 48 and 47 percent in the 2 years,
respectively. Of course, the upper groups do not necessarily consist of the
same families in the 2 years. The effect of the Federal income tax was to
1
This survey is conducted annually for the Board of Governors of the Federal Reserve
System by the Survey Research Center of the University of Michigan. Through the
courtesy of the Federal Reserve and the Survey Research Center these materials were made
available prior to their publication in the Federal Reserve Bulletin. For a more extended
treatment of the results of the survey, see the Federal Reserve Bulletin, June 1949 and
forthcoming issues.
2
A spending unit consists of related persons who live together and pool their incomes
for their major items of expense.




67

make income after tax, or disposable income, somewhat more equally
distributed than income before tax.
The liabilities for Federal income tax by income class were determined by
estimating the liability for the families included in the Survey of Consumer
Finances.3 They were not obtained by direct interview or from tax returns,
but are based on extensive data regarding family composition and income.
Since certain improvements in estimating techniques were made between
1948 and 1949, we are probably not justified in inferring from the statistics
that the effect of the tax in reducing income inequality was greater in 1948
than in 1947.
The Revenue Act of 1948 did make certain changes in the tax structure
which affect the after-tax distribution. The provision that income of married couples may be split for tax purposes operates mainly to the advantage
of those with incomes in the high surtax brackets. Its effect would not be
appreciable for families below the top decile. As shown in table B-2,
only 5 percent of the spending units have incomes before tax of $7,500 or
over, and it is above this level that the split-income provision has a marked
effect in reducing tax liabilities. Thus the provision may not change the
entire after-tax income distribution greatly because of the small proportion
of families affected. The Revenue Act of 1948 also raised exemptions,
thus freeing many families of moderate income from paying taxes at all.
Rate reductions were also somewhat greater in the low tax brackets.
In addition to changes in the revenue structure, the upward movement
in income between 1947 and 1948 must be considered. Other things being
equal, a general increase in incomes increases the effectiveness of a given
progressive tax structure in increasing the equality of income after tax, since
more people become subject to tax and many are taxed at higher rates.
The relation between the distribution of income before and after tax is thus
affected by changes in the tax structure and by changing levels of income.
Too much emphasis should not be given to small year-to-year shifts in the
percent of income received by any decile. More data on the distribution of
income in the postwar period will become available when the Statistics of
Income for 1947 and 1948 are published by the Bureau of Internal Revenue.
Further, the existing body of data provided by the Census Bureau and other
Government agencies,4 as well as the Survey of Consumer Finances, has not
yet been fully analyzed.5
3
Samples of 3,000 to 3,500 spending units have been used in the consumer finance surveys. Owing to the dispersion of higher incomes it cannot be expected that a completely
representative sample of the highest dollar incomes was obtainable, and it is possible that
the amount of income received by the highest tenth is underestimated.
For the sampling and interview methods employed in the Survey, see the Federal Reserve
Bulletin, June 1949, p. 642.
4
See Current Population Reports, Series P-601, No. 1 and No. 5, U. S. Census Bureau.
Also publications by the Bureau of Labor Statistics, Bureau of Agricultural Economics,
and the Bureau of Human Nutrition and Home Economics.
5
For an analysis of trends in income distribution before and after Federal income tax
from the prewar to the postwar period, see the Annual Economic Review by the Council
of Economic Advisers, January 1949, appendix B.




68

TABLE B-2.—Distribution of spending x
units by income levels, before and after
Federal income tax , 1947 and 1948
Percent of spending units
Money income class

1947

1948

Before tax Aftertax Before tax After tax
12
21
25
19
11

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 income levels.

100

100

100

100

1

See table B-l, footnote 2.
Source: See table B-l.

Table B-2 shows the distribution of spending units by income level. As
prices and incomes rose from 1946 to 1947, and from 1947 to 1948, spending
units moved upward along the income scale. However, even in 1948 a
third of the spending units had income after taxes of less than $2,000. It is
to be noted that the distribution contains many single-person spending units
whose income is on the average lower than that of families of two or more,
as well as retired families, and persons whose income is temporarily low for
one reason or another.6 Total income may also be more ample than money
income; for example, farm families receive considerable income in the form
of home-produced fuel and food.
TABLE B-3.—Distribution of spending units, by size of liquid asset holdings, in early
1947, 1948, and 1949
Percent of spending units
Amount of liquid assets l
1947

None
$1 to $499
$500 to $1,999 $2,000 to $4,999
$5,000 and over.
All units

1949

1948

24

27

29

26
28
14
8

27
24
13
9

28
22
12
9

100

100

100

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

A high concentration of saving and of asset holdings is one consequence
of an unequal distribution of income. The proportion of spending units
with no liquid assets has increased from 24 percent in 1947 to 29 percent
6
An investigation of the characteristics of persons and families in the lower income
groups is contemplated by the Joint Committee on the Economic Report. The results of
this survey should aid in appraising the social, economic, and individual causes of lowincome status.




in 1949 as is shown in table B-3. Due to the increase in the number of
spending units over the period, however, the absolute number of spending
units with liquid assets has increased.
TABLE B-4.—Components of net personal saving, 1946, 1947, and 1948
[Billions of dollars]

1946

Components
Liquid saving:
Currency a n d b a n k deposits (net c h a n g e ) 2 .
. _ .
P r i v a t e insurance a n d pension reserves (net change)
Securities (net c h a n g e ) 3

+11.8
+3.4
+.1

+4.1

+1.3

-3.4
-.8

—.8
—.6

-2.6

-4.2

-1.4

+3.5

Total liquidation of business debt
Investment:
Nonfarm residences'
Inventories:
Nonfarm
_
Farm
.
Nonfarm plant and equipment
Farm construction and equipment

+3.5
+4.4

-.2

_ ._

+4.1
+3.7
+3.7

—2.4

_

Liquidation of business debt:
Nonfarm
Farm

+5.4
+.6
-2.1
+4.8
+3.7
+12.4

+7.1
+.7
+.8
+4.5
+4.9
+18.0

-3.2
-3.3

L

__

Total gross investment
Depreciation

+ i
+4.2

+2.6
+11.1

-5.3

+5.8

Total net investment
Statistical discrepancy 8
Total personal saving

19481

+8.8

"Liquidation of mnrtg^gp dp.bt f<
Liquidation of consumer debt i
Total liquid saving« __

1947

-.2

+11.8

_

-4.1
-3.3

-5.9

+6.5
+2.4'
+8.8

0

—4.1
-2.5

-6.9

+11.1
+3.9
+14.9

* Preliminary.
Includes saving and loan shares.
3 Excludes armed forces terminal leave bonds.
< Mortgage debt to institutions on l-to-4 family nonfarm dwellings.
« Largely attributable to purchases of automobiles and other durable consumer goods, although includes
some debt arising from purchases of consumption goods.
fi Differs from the Securities and Exchange Commission's concept of liquid saving in that it excludes
additions to Government life insurance or pension reserves and armed forces leave bonds.
7 Construction of l-to-4 family nonfarm dwellings, less net acquisition of properties by nonindividuals,
plus construction of nonprofit institutions.
* The statistical discrepancy arises out of the attempt to reconcile liquid saving, as estimated by the
Securities and Exchange Commission, with personal saving as estimated by the Department of Commerce.
Statistical errors and omissions may be in liquid saving, personal saving, or in tne other items. However,
the data underlying liquid saving are considered somewhat more satisfactory than the items of reconciliation. Personal saving is a residualfigureobtained by deducting personal consumption expenditures from
disposable personal income.
NOTE.—Data presented here include recently revised series of the Securities and Exchange Commission.
Revisions of the Department of Commerce data will appear in the Survey of Current Business, July 1949.
Source: Securities and Exchange Commission and Department of Commerce.
2

Personal saving
Tables B-4 and B-5 present the data underlying text Charts 8 and 9.
The most conspicuous characteristic of table B-4 is the postwar growth in
gross personal investment, and the decline in current saving in liquid form.
Increases in expenditures for nonfarm residences and for farm construction
and equipment were substantial between 1947 and 1948. The increase in
inventory accumulation is mainly due to farms, where a liquidation of over
2 billion dollars in 1947 was followed by almost a billion of net accumulation
in 1948. The accretion of farm inventories is included in both farm income




70

and saving, although such accumulation may not reflect a voluntary decision
to save so much as a bountiful harvest. The accumulation of nonfarm
inventories may also be involuntary at times and was probably so in some
types of business toward the end of 1948. The increase in real personal
investment in 1948, while striking, is somewhat less so when the inventory
situation is taken into account.
As table B-5 shows, there was a small amount of liquid saving in the first
quarter of 1949. In interpreting the significance of the quarterly changes
in liquid saving it must be kept in mind that the figures are not adjusted for
seasonal variations. Thus, it is comparisons with the same period in the
previous year that are significant. Liquid saving declined steadily throughout 1947 and the first half of 1948. This trend was interrupted in the
middle of 1948, and in the final quarter of 1948 and the first quarter of
1949 net liquid saving rose above the levels of the previous year.
Net liquid saving in the first quarter is always low because currency and
bank deposits are drawn down to pay taxes. The change in net liquid
saving from the first quarter of 1948 to the first quarter of 1949 is due
principally to the fact that in the first quarter of 1949 for the first time repayments on consumer debt exceeded consumer borrowing. This largely
reflects changes in the demand for consumer durables. Withdrawals of
currency and bank deposits were also less than last year, and the rate of
increase in mortgage debt was less.
TABLE B-5.—Components of net personal liquid saving, 1947,1948, and 1949
[Billions of dollars,"not adjusted'for seasonal]variation]
Net change
1947

Component

1949
first
First Second Third Fourth First Second Third Fourth quarquar- quar- quar- quar- quar- quar- quar- quar- ter*
ter
ter
ter
ter
ter
ter
ter
ter

Currency and bank deposits *_
Private insurance and pension reserves...
Securities:
United States savings bonds
Other U. S. Government *__
State and local government
Corporate and other
Liquidation of mortgage d e b t 3a
Liquidation of consumer d e b t
Total liquid saving'

1948

8

-1.6

+.9
+.8
+.7
+.1

±:i
-.2
0

+1.0 +2.6 +2.0
+.9 +.9 +1.0
+.3 +.3 +.3
0
-.3
+.1 $\
(*)
+.1
+.6

-3.9

-.5

-.1
-1.2

-1.1
-.9

+.6

+2.7

—1.1
-1.8

+.8

+.9
+.8

t.l
±:S

+.5 +1.8 +1.6
+.9 +.8 +1.0
+.2
+.3
-.5
+.2
+.6 +.i
-1.2
+.3 - 1 . 0
-.8

—.5
+1.0

—l.i
+1.0

+.1

is

+.1

-1.1
-.5
+1.6

i\

-3.3

+.9
+.7
+.6
+.4
+.4

i Estimates based on incomplete data.
* See footnote on corresponding item in table B-l.
» Excludes armed forces terminal leave bonds.
« Less than 50 million dollars,
«Differs from the Securities and Exchange Commission's concept of liquid saving in that it excludes
additions to Government life insurance or pension reserves and armed forces leave bonds.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Securities and Exchange Commission.







Appendix C
Surveys of Actual and Intended Business Investment
Contents
Business investment as measured in the Nation's Economic Budget .
Nonfarm plant and equipment outlays
Equipment orders and construction contracts and permits as measures
of prospective business investment activity
Business investment surveys by the McGraw-Hill Publishing Co . .
Business surveys by Dun & Bradstreet
Other private investment surveys

Page
75
77
79
80
81
83

Tables
C-l. Gross private domestic investment and its components,
1929-49
G-2. Manufacturers' sales and new and unfilled orders in selected
durable-goods industries, January-May 1948 and 1949 . .
C-3. Outlays for new plant and equipment, 1948-53, as estimated by
McGraw-Hill 1948 survey
C-4. Percentage changes in actual and expected plant and equipment outlays and inventories, 1948—49, as reported in Dun
& Bradstreet May survey




73

76
79
81

82




Appendix C
Surveys of Actual and Intended Business Investment
The crucial importance of business investment outlays in maintaining
economic activity and promoting increased productivity is generally recognized. In recent years private and public statistical agencies have devoted
increasing effort to determining how much business investment is currently
being made and how much is planned.
Several fairly comprehensive reports on investment activity are now
established on a periodic basis, in addition to numerous one-time one-industry and local surveys. A variety of approaches is justifiable in a field where
measurement is at best rough and uncertain and the survey techniques are
still in process of experimental development.
The consensus of recent investment surveys has already been indicated
in those sections of the review referring to business investment. The total
level of such investment in the first half of 1949 showed a considerable
decline from the 1948 levels, primarily on account of a cessation of inventory
growth. Plant and equipment outlays exceeded those of the first half of
1948. Businessmen reported plans for a somewhat lower rate of outlays
in the second half of 1949 than in the second half of 1948, and information
on their advance commitments in the form of plant construction contracts
and equipment orders lends credence to that outlook. The size and duration of the decline, however, are still quite uncertain. There is a substantial
"shelf" of contemplated private investment for the next several years,
though plans so far ahead cannot be regarded as either firm or complete.
In interpreting investment survey results it is important to be aware of
the special features of the various approaches and their relations to one
another. This appendix describes the nature and scope of some of the major
comprehensive periodic surveys.
Business investment as measured in the Nation's Economic Budget
The expenditures side of the business account of the Nation's Economic
Budget (see appendix table A-3) constitutes that part of the gross national product known as gross private domestic investment. Estimates
of this item are prepared quarterly by the Department of Commerce and
are released about 8 weeks after the end of the quarter. Preliminary estimates appear somewhat earlier in the first issue of Economic Indicators
after the end of the quarter.




75

Gross private domestic investment includes not only business outlays
for plant and equipment, but also private nonbusiness construction (residential, institutional, etc.) and additions to the physical volume of business
inventories. The relative magnitudes of these various types of private
investment over the past 20 years are shown in table C-l.
It should be noted that the construction and equipment investment
outlays, in this and all other surveys here discussed, are in gross terms. No
deduction is made for depreciation, retirements, or obsolescence. The net
addition to the Nation's stock of private structures and equipment after
allowance for capital consumption is of course much smaller than the indicated gross investment, and in some prewar years was negative. However,
the gross private domestic figures exclude maintenance and repair work on
structures and equipment, which may in practice involve substantial real
additions to capital.
TABLE G—1.—Gross private domestic investment and its components, 1929-49
[Billions of dollars]
Total
gross
private
domestic
investment

Period

Nonfarm producers' Farm
equipment and con- equip- Other
ment private
struction
and
concon- strucEquip- Construc- struc- tion 4
Total ment 1
tions
tion 2

Increase in business inventories
Nonfarm 8

Farm

1929

15.8

10.0

5.9

4.2

0.8

3.4

1.8

-0.3

1930
1931
1932
1933
1934

10.2
5.4

7.8
4.7

4.4
2.9

3.4
1.8

.7
.4

2.0
1.6

-.2

...

.9

2.6

1.0

.2

.7

.4
.4

„

1.3
2.8
6.1
8.3
11.4
6.3
9.0

2.3
3.2

1.6

0
—1.7
-2.6
-1.3
.2

4.0
5.4
6.7
4.8
5.5

13.0
17.2

7.3
9.2

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

1945
1946
1947
1948

.

.3
0
-.3

.7
.9

.2
.3

3.0
4.1
4.8
3.5
4.1

1.0
1.3
1.9
1.4
1.4

.5
.7
.8
.7
.7

.8
1.3
1.6
1.7
2.3

.4
2.1
1.8
-1.1
.3

-1.1
.5

5.5
6.9

1.8
2.3

.8
1.1

2.6
3.0

2.0
3.4

.2

1.0

1.4

.7
.6

-.7
-.8

1.6
2.3

.1

—1.3
.5

.1

.1
.5
1.3
—.4
—.5

5.5

4.3
6.0

4.0

1.5

4.6
6.4

1.0
1.5

9.2
26.5
30.3
40.8

8.5
16.2
21.3
26.0

3.2
4.5
6.2
11.3
15.6
18.9

2.3
4.9
5.7
7.1

1.3
1.8
2.6
3.0

.8
3.7
5.8
8.1

-1.0
5.0
2.7
3.0

-.4
-.3
-2.1

38.9
32.4

26.2
25.5

19.4
18.9

6.8
6.6

3.0
3.0

7.5
7.4

1.4
-4.0

.8
.5

9.3

_

Annual rates, seasonally
justed, 1949: 6
First quarter 6
Second quarter

-

.8
1.1

.8

ad-

1 Total producers' durable equipment, less "farm machinery and equipment" and "tractors." These
figures thus include all business motor vehicles, some of which were sold for farm use; and exclude all tractors,
some of which were sold for nonfarm use.
2
Industrial, public utilities, gas and oil well drilling, warehouses, office and loft buildings, stores, restaurants, garages, and hotels.
3
Farm construction (residential and nonresidential), plus "farm machinery and equipment" and "tractors." These figures thus include all tractors, some of which were sold for nonfarm use, and exclude all
business motor vehicles, some of which were sold for farm use.
4
Nonfarm residential, religious, educational, social and recreational, hospital and institutional, and
miscellaneous nonresidential.
6
After inventory revaluation adjustment.
«Preliminary estimates based on incomplete data.
N O T E . — D e t a i l will not necessarily add to t o t a l s because of rounding.
S o u r c e : D e p a r t m e n t of Commerce.




The inventory accumulation item, on the other hand, does represent a
net accretion of goods in stock—the excess of additions over withdrawals
for the period. This difference in treatment as between fixed-capital and
inventory outlays calls for caution in interpreting the total private investment figures. Another difference is that the fixed-capital outlays represent
essentially voluntary decisions to invest, whereas inventory accumulation
is frequently (as in the first quarter of 1949) involuntary.
The nonfarm inventory figures included in table C-l and in the Nation's
Economic Budget tabulations are shown after "revaluation adjustment."
That is, they show the physical change in stocks (valued at average prices for
the period) rather than the change in book values, which would reflect also
the change in prices at which stocks were carried on the books. Farm
inventory changes are estimated directly in terms of changes in physical
quantities valued at average current prices, and are thus comparable without revaluation adjustment to the adjusted nonfarm inventory changes.
Nonfarm plant and equipment outlays
The second, third and fourth columns of table C-l show the new construction and equipment outlays (i. e., the gross investment in facilities)
by nonfarm business, as estimated on the basis of construction contract
awards and shipments of equipment and included in the totals of gross
private domestic investment and the gross national product.
Another approach to measurement of nonfarm plant and equipment
outlays uses a quarterly questionnaire survey addressed to a sample of nonagricultural business concerns. This survey is a joint undertaking of two
Federal agencies, the Securities and Exchange Commission canvassing most
of the corporations registered with the Commission while the Office of Business Economics of the Department of Commerce canvasses a sample of
unregistered manufacturing concerns. It is somewhat similar to the official
Government survey made annually in Canada, though coverage is much
more comprehensive in the latter.
The questionnaires are filled out, for the most part, in the middle month
of each quarter; results are jointly released by the two agencies shortly before
the end of that quarter. Questions cover (1) the expected outlays for new
plant and for new equipment during the next quarter; (2) the estimated
outlays during the current quarter, and (3) the actual outlays during the
previous quarter. For each quarter's outlays there are then three successive
reports at 3-month intervals: expected outlays (released a fortnight or so
before the quarter begins), estimated outlays (released a fortnight or so
before the quarter ends), and reported past outlays (released about 2^4
months after the quarter has ended). The latest available results are shown
in appendix table D-15.
Although these surveys cover nearly the same concept of nonfarm plant
and equipment as the corresponding gross national product components in




77

the second column of table C-l, above, the correspondence is not exact.
The three most important conceptual differences are:
1. The SEG-Commerce survey estimates do not allow for the initial
facilities outlays of firms newly established during the period covered,
whereas the GNP items do. This can be a sizable item in periods when
many new firms are being started, particularly in the manufacturing and
trade fields where the turn-over of firms is relatively rapid.1
2. Outlays charged as current expense are omitted in the SEG-Commerce
surveys but covered in the GNP series.
3. The GNP estimates of producers' durable equipment include an allowance for automobiles bought by individuals but used wholly or in part for
business purposes. Such purchases do not appear in the outlays reported
in the SEG-Commerce surveys.
In addition to the regular questions on investment outlays for the previous,
current and next quarters, the SEC-Commerce questionnaire has in recent
years inquired annually as to expected investment and expected sales for a
whole calendar year. These questions, last answered in February 1949,
showed that nonfarm business as a whole expected virtually the same level
of dollar sales in 1949 as in 1948 and about 5 percent less dollar investment.2
Discrepancies between levels of investment outlay reported in advance
as anticipations and those reported later as actually realized may arise
from: (1) changes in business plans as to physical volume of facilities expansion and improvement, (2) errors in businessmen's forecasts of the rate
at which work will proceed on projects already planned, (3) errors in
businessmen's forecasts of the cost of projects under way or planned, as
construction costs and equipment prices change, and (4) the lack of complete accuracy and representativeness with which any sample survey must
reckon. It is not yet possible to evaluate each of these bases of discrepancy
well enough to make definite adjustments for them in interpreting currently
reported anticipations, though analysis of accumulated survey data will
eventually throw much light on this problem. During the postwar period,
actual investment outlays have tended to run moderately higher than anticipated outlays, particularly in the case of the anticipations for a whole year
in advance. This is probably due in part to the rising trend of construction
and equipment costs through 1948, and in part to the fact that some
outlays only tentatively planned or scheduled for a following period are
likely to be omitted from reported anticipations. It remains to be seen
how these survey biases will operate during a phase of constant or declining
levels of cost and total investment.
1
For further details see Capital Requirements of New Trade Firms, Survey of Current
Business, December 1948.
2
For further details of this survey, see Plant and Equipment Programs and Sales Ex-

pectations in 1949, Survey of Current Business, April 1949.




78

Equipment orders and construction contracts and permits as measures of
prospective business investment activity
Equipment orders. Further light on the prospective trend of business
investment expenditures is afforded by sample surveys of new orders for
producers' durable equipment, as reported by makers of various equipment
items. (See table C-2 below.) Such information is collected monthly
by the Department of Commerce and is released about 6 weeks after the
end of the month to which it relates. The latest data available as of midyear 1949 extend through May.
TABLE C-2.—Manufacturers3

sales and new and unfilled orders in selected durable-

goods industries, January—May 1948 and 1949
1948

1949

Jan. Feb. Mar. Apr. May Peak month

Jan. Feb. Mar. Apr. May 1

Item

1939 monthly average dollar volume=100
Sales:2
Durable goods
Electrical machinery and
equipment
Machinery, other than
electrical
_
Iron, steel, and products..

329 360

365 353

353 404 (Sept.)..

383

365

386 446

442 440

431 499 (Dec.)__.

485

460

304
325

363
345

356
338

381 (June) —
393 (Oct.).._

350
372

334
328

356
336

New orders: 2
Durable goods
291 287
Machinery, including
electrical
312 299
Iron, steel, and products.. 325 321

350
325

314 292

267 314 (Mar.)..

329
371

284
282

309
320

330 (June)...
371 (Mar.)..

276

253

243
300
220

206

206

266
166

Percentage change in dollar volume during month
Unfilled orders:8 4
Durable goods
Machinery, including
electrical
_
_
Iron, steel, and products.-

-3

+2
+2
+4

-3
-4

-5
-5

1 Prelimary estimates.
2 Indexes are adjusted for differences in length of months, but not otherwise adjusted for seasonal variation.
3
Percentage changes based on unweighted aggregates of reported data.
4
All durable goods industries reporting unfilled orders.
Source: Department of Commerce.

Construction contracts and permits. These sources of information are
useful for projecting investment because contracts are let and permits
secured considerably in advance of the bulk of actual expenditures. To
use an extreme case, a dam built for a private power company may require
2 or 3 years for completion. Once it is reported that the dam has been
or will be started, it is possible to calculate with a relatively small margin
of error what the rate of expenditure will be throughout the construction
operation.
Contracts are reported by the F. W. Dodge Co. for 37 Eastern States
and on a somewhat less comprehensive basis by the Engineering News
Record for the United States as a whole. Other sources are used by the
Department of Commerce to supplement data from these two major sur-

844384—49




79

veys, and adjustments are made for undercoverage and errors in reporting. The resulting material is then translated into a forecast of nonresidential private construction activity 6 to 12 months in advance. The scope
of these estimates is wider than that of the SEG-Commerce survey discussed in the section on nonfarm plant and equipment in this appendix,
since it includes private institutional building contracts. Equipment outlays, however, are not covered.
The Department of Commerce construction expenditures figures as shown
in appendix table D-14 are not strictly comparable by categories with the
SEG-Gommerce survey figures because of different classification procedure.
One series reports according to function, the other according to ownership.
If a utility company, for example, lets a contract for a residential or commercial structure, the contract series will report that activity as residential
or commercial, while the SEG-Commerce series will report it as utility
investment.
Figures for private nonfarm residential construction are derived by the
Department of Labor principally from reported building permits (adjusted
for lapses, for time lags between permit issuance and start of work, and for
underreporting of permit evaluation), supplemented by sample field
surveys in nonpermit-issuing areas.
Projections of rates of residential activity from these sources are made in a
fashion similar to that for nonresidential construction. These figures are
currently more reliable than the historical series for 1930 through 1944, because of improvements in sources of data and methods of collection. This
should be borne in mind in comparing the current series with the published
data for this 15-year period. The series does not include data for housing
activity in the field of conversions or remodeling. In some periods in the
business cycle, or during wartime, conversion or remodeling may account for
a sizable proportion of the total volume of residential units provided.
The construction forecasts are reliable for one quarter in advance. Their
reliability diminishes beyond that point. The margin of error for the third
quarter ahead has been as much as 20 percent. The magnitude of the error
will vary first with any divergence from the assumptions regarding the business cycle and second with unforeseen changes in the rate of expenditures in
the construction field itself.
Business investment surveys by the McGraw-Hill Publishing Co.
Late in 1948 the economic staff of the McGraw-Hill Publishing Go. conducted a sample interview study of larger concerns in the fields of manufacturing, mining, and transportation. This was combined with similar surveys
in the electric and gas utility fields by the Electrical World magazine and
the American Gas Association to yield a set of estimates of total plant and
equipment investment plans for business in general (exclusive of farming,
trade, and services). The results were released in January 1949.




8o

A similar survey had been undertaken a year previous, and it is understood that another is planned in late 1949.
As to investment levels in 1949, the McGraw-Hill survey gave indications
in close correspondence with the one made by the SEC and the Department
of Commerce during the first quarter of this year. The McGraw-Hill survey
also inquired as to investment plans for future years through 1953, actual
and expected increases in manufacturing capacity, replacement value of
plant and equipment in place, and policies followed in planning modernization of facilities. The significance of findings on this range of questions will
be better subject to evaluation as surveys of this nature are repeated and the
reports given thorough comparative analysis.
Table G-3 summarizes the findings of the McGraw-Hill survey as to
actual plant and equipment outlays in 1948 and contemplated outlays for
the succeeding 5 years.
TABLE G-3.—Outlays for new plant and equipment, 1948-53, as estimated by
McGraw-Hill 1948 survey
[Millions of dollars]
1948

1949

1950

1951

1952

1953

14,850

14,130

11,970

10,460

9,630

18,995

8,160
685
1,400
740
900
_ _ _ _ 310
630
135
595
2,765
__.
765
1,800
880
1.345
1,900

7,200
600
1,220
720
650
220
570
165
525
2,530
760
2,050
820
1,520
1,780

6,120
490
1,310
680
620
160
510
130
535
1,775
740
1,830
665
1,000
1,525

5,395
400
1,210
550
650
150
500
90
515
1,330
590
1,620
580
880
1,395

4,975
345
1,120
520
600
140
500
70
370
1,310
520
1,630
395
900
1,210

4,850
330
1,100
500
580
130
500
60
340
1,310
515
1,560
(*)
890
1,180

Industry group
Total, all industry groups covered
Manufacturing
_
Steel
Chemicals
Petroleum refining
Machinery, other than electrical
Electrical machinery
__
Autos
Transportation equipment
Food
Other manufacturing
Mining
__
Electric utilities 2
Gas utilities 3 . . .
.
. .
Railroads
Other transportation and communications
1
2
3

Exclusive of gas utilities outlays.
Electrical World survey.
American Gas Association survey.
* Not available.
Source: McGraw-Hill Publishing Company.

Business surveys by Dun & Bradstreet
This firm, which had previously made a number of Nation-wide sample
surveys of business expectations, inaugurated recently a frequent periodic
schedule of inquiries. The questionnaires are distributed by Dun & Bradstreet representatives to a sample of the approximately 54,000 major concerns on whom regular calls are made for other purposes. The concerns
are nearly all engaged in manufacturing and trade, with net worth of
$50,000 or more. The questionnaire is designed for speedy response and
tabulation, and results are released within a few weeks after the interviews.
The scope of material covered in these surveys is still subject to change
as further tests are made. The most recent survey, made in May 1949,




8i

included questions on sales, new and unfilled orders, volume of production,
plant and equipment outlays, employment, and inventories. For each item,
respondents were asked to compare (1) the previous 4 months, (2) the
current month, and (3) the next 6 months with the corresponding periods
of last year. In addition to these percentage changes, respondents also
stated their 1948 sales and tangible net worth, and their plant and equipment outlays in 1948 and in the second half of that year.
The latest results relating to investment items (plant and equipment
outlays and inventories) are summarized in table C-4.
TABLE C-4.—Percentage changes in actual and expected plant and equipment outlays and inventories, 1948—49, as reported in Dun & Bradstreet May survey
Inventories'(book value at end of
month)

Plant and equipment outlays
JanuaryApril

July-December

May

April

May

December

Median percentage change from period in 1948 to corresponding period in 1949
All concerns (manufacturing and trade)

+0.1

-0.3

-0.3

-1.4

+.4
+.6
+.1
+.2

Manufacturing
Durable goods
Nondurable goods
Wholesale
Retail....

-.4
-.2
-.8
0
-.3

-.6
-.4
-.9

+.2
+2.8

—.1

+.1
+.1

-2.6
-2.9
-3.5

-1.9

-6.4

-1.1
+1.5
-3.8
-2.3
-4.5

-5.7
-4.9
-6.5
-6.3
-10.5

Range of percentage changes covered by middle 50 percent of replies

All concerns (manufacturing and trade)
Manufacturing
Durable goods
Nondurable goods
Wholesale
Retail...

- 5 to +5

- 5 to +4

- 5 to +4

-5
-5
-5
-4
-5

-5
-5
-5
-4
-4

-6
-5
-6
-4
-4

to
to
to
to
to

+6
+6
+5
+4
+4

to
to
to
to
to

+4
+4
+4
+4
+4

to
to
to
to
to

+5
+5
+4
+4
+4

-13 to +9

-12 to +6

-17 to +2

-12 to +14
- 9 to +7
-16 to +9
-14 to +6
-14 to +6

-13 to +9
- 8 to +15
-16 to +5
-12 to +5
-15 to +4

-17 to +3
-17 to +3
-18 to +2
-16 to +2
-18 to 0

Source: Dun & Bradstreet.

In interpreting these results, two technical features of the survey should
be taken particularly into account, though it is not yet possible to indicate
the amount of error or bias involved:
1. The tabulated results are unweighted medians and quartiles of
reported percentage changes. Although the degree of coverage is
higher for larger concerns, it does not appear to be sufficiently higher to
give their replies a weight corresponding to the relative importance of
such concerns in investment outlays. The result is an emphasis on the
position of concerns at the small end of the range covered. However,
an opposite bias is presumably introduced by the omission of concerns
with net worth less than $50,000.
2. A substantial proportion of concerns presumably reported no
change in plant and equipment outlays because such outlays in both




of the two periods compared were zero or negligible. Inclusion of
these reports inflates the middle group in the distribution and reduces
the median change in either direction.
Other private investment surveys
Interest in current and prospective business investment trends is so
lively that a considerable number of independent surveys have been made
recently, most of them covering only certain lines of business. The greatest
significance attaches to some of those which are made on a regular periodic
basis, with relatively full coverage, and which inquire as to expected future
investment outlays as well as those of the past year. Among those worthy
of mention are the surveys conducted by trade associations in the electric
power, gas, and steel industries. In the industries just named (but in few
others), related capacity estimates are also obtainable.







Appendix D
Statistical Tables Relating to Employment, Production,
and Purchasing Power
Contents

National income or expenditure:
D - 1. Gross national product or expenditure, 1929-49
D - 2. National income by distributive shares, 1929-49
D - 3. Personal income, 1929-49
D - 4. Disposition of personal income, 1929-49
D - 5. Per capita disposable income in current and 1948 dollars,
1929-49
D - 6. Personal consumption expenditures, 1929-49
Employment and wages:
D - 7. Labor force, employment and unemployment, 1929-49.
D - 8. Number of wage and salary workers in nonagricultural
establishments, 1929-49
D - 9. Average gross weekly earnings in selected industries,
1929-49
D-10. Average hourly earnings in selected industries, 1929-49. .
D - l l . Average weekly hours in selected industries, 1929-49. . . .
Production and business activity:
D-12. Physical production index of goods and utilities, 1929-49.
D-13. Industrial production index, 1929-49
D-14. New construction activity, 1929-49
D-15. Business expenditures for new plant and equipment,
1929-49
D-16. Inventories and sales in manufacturing and trade,
1939-49
D-17. Manufacturers' inventories by stage of fabrication and
as ratios to sales, 1939-49
D-18. Sales, stocks, and outstanding orders at 296 department
stores, 1939-49
Prices:
D-19. Consumers' price index, 1929-49
D-20. Wholesale price index, 1929-49
D-21. Indexes of prices received and prices paid by farmers
and parity ratio, 1929-49




Pa

ge
87
88
89
90
91
92
93
94
95
96
97

98
99
100
101
102
103
104
105
106
107

Money, banking, and credit:
D-22. Consumer credit outstanding, 1929-49
D-23. Loans and investments of all commercial banks and
weekly reporting member banks, 1929-49
D-24. Adjusted deposits of all banks and currency outside
banks, 1929-49
D-25. Estimated ownership of Federal securities, 1939-49. . . .
D-26. Bond yields and interest rates, selected years, 1929-49. .
Corporate profits and finance:
D-27. Profits before and after taxes, all private corporations,
1929-49
D-28. Sales and profits of large manufacturing corporations,
1939-49
D-29. Relation of profits before and after taxes to investment,
private manufacturing corporations, by industry
groups, 1947-49
D-30. Relation of profits before and after taxes to sales, private
manufacturing corporations, by industry groups,
1947-49
D-31. Relation of profits before and after taxes to investment
and to sales, all private manufacturing corporations,
by size classes, 1947-49
D-32. Sources and uses of corporate funds, 1947-49
International transactions:
D-33. The international transactions of the United States,
1946-49
D—34. United States Government aid to foreign countries,
1946-49
D-35. United States merchandise exports, including reexports,
by areas, 1936-38 quarterly average, and 1947-49..
D-36. United States domestic merchandise exports, by economic
classes, 1936-38 quarterly average, and 1947-49....
D-37. Indexes of quantity and unit value of United States domestic merchandise exports, by economic classes, 193638 quarterly average, and 1947-49
D-38. United States general merchandise imports, by areas,
1936-38 quarterly average, and 1947-49
D-39. United States merchandise imports for consumption, by
economic classes, 1936-38 quarterly average, and
1*947-49. . . . . . . . . . . ; . . . . . . . . .
D-40. Indexes of quantity and unit value of United States merchandise imports for consumption, by economic classes,
1936-38 quarterly average, and 1947-49
Summary:
D-41. Changes in selected economic series since 1939 and 1948.




86

Page
108
109
110
Ill
112

113
114

115

116

117
117

118
119
120
121

122
123

124

125
125

TABLE D—1.—Gross national product or expenditure, 1929—49
[Billions of dollars]

Period

Gross
national
product

GovernGross
Personal
ment purprivate
consumpNet foreign chases of
domestic investment goods and
tion expenditures investment
services

1929.

103.8

78.8

15.8

0.8

8.5

19301931.
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
5.4
.9
1.3
2.8

.7
.2
.2
.2
.4

9.2
9.2
8.1
8.0
9.8

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

6.1
8.3
11.4
6.3
9.0

-.1
-.1
.1
1.1

9.9
11.7
11.6
12.8
13.1

1940.
19411942.
1943.
1944.

100.5
125.3
159.6
192.6
212.2

72.1
82.3
90.8
101.6
111.4

13.0
17.2
9.3
4.6
6.4

1.5
1.1
-.2
-2.2
-2.1

13.9
24.7
59.7
88.6
96.5

1945.
1946.
1947.
1948.

213.4
209.3
231.9
255.9

122.8
147.4
164.8
177.7

9.2
26.5
30.3
40.8

-1.4
4.7
8.9
1.9

82.8
30.8
28.0
35.5

Annual rates, seasonally adjusted
1948—First half.
Second half

249.3
262.7

174.9
180.6

42.8

3.3
.5

1949—First half i

253.9

175.8

35.7

1948—First quarter..
Second quarter
Third quarter.
Fourth quarter

245.2
253.4
259.8
265.6

172.5
177.3
180.1
181.0

38.5
39.3
42.0
43.6

3.7
2.9
-.5
1.5

1949—First quarter
Second quarter

257.3
250.5

176.6
175.0

38.9
32.4

.7

32.2
38.8

41.8
30.5
38.2
39.5
41.2
42.4

i Estimates based on incomplete data; second quarter by Council of Economic Advisers.
NOTE.—Detail will not necessarily add to totals because of rounding.
Published revised estimates for net foreign investment (1948-49) and construction (1946-49) have been
substituted for those included in the national income and product series of the Department of Commerce.
Further revisions of these and other components of national income and product series will be published
in the Survey of Current Business, July 1949.
Source: Department of Commerce (except as noted).




TABLE D-2.—National income by distributive shares, 1929-49
[Billions of dollars]
Proprietors' and rental
income

Corporate profits and inventory
valuation adjustment
Corporate profits

a
Period

1929.

87.4

50.8

19.7

8.3

5.7

5.8

1930.
1931.
1932.
1933.
1934.

75.0
58.9
41.7
39.6
48.6

46.5
39.5
30.8
29.3
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

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

10.3

.5
.4
.5
.7

1935.
1936.
1937.
1938.
1939.

56.8
64.7
73.6
67.4
72.5

37.1
42.7
47.7
44.7
47.8

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
2.7
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

0
4
5
0
5

1940.
1941.
1942.
1943.
1944.

81.3
103.8
136. 5
168.3
182.4

51.8
64.3
84.7
109.1
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
6.2
6.7

9.2
14.6
19.8
23.7
24.0

9.3
17.2
21.1
24.5
24.3

1945.
1946.
1947.
1948.

181.7
179.3
202.5
224.9

122.9
117.3
127.5
139.4

36.0
41.8
46.0
50.9

16.8
20.4
23.2
25.2

12.3
14.6
15.6
18.2

7.0
6.7
7.1
7.4

19.8
16.8
24.7
29.8

20.4
21.8
29.8
32.8

1.4

0.5

6.5

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

8.4

6.2
5.9
5.4
5.0
4.7

-.2
- .5 7
()
1.0
-.7

4.5
4.5
4.4
4.3
4.2

2.9
7.8
11.7
14.2
13.5

6.4 - . 1
9.4 -2.6
9.4 -1.3
10.4 - . 8
10.8 - . 3

4.1
4.1
3.9
3.4
3.1

11.6
9.0
11.7
12.8

8.7
12.8
18.1
20.1

-5.0
-5.1
-3.0

3.0
3.4
4.3
4.9

4.8
5.1

2.3
4.3
4.7
2.3
5.0

Annual rates, seasonally adjusted
218.1
231.9

135.2
143.6

50.8
51.0

25.0
25.4

18.2
18.3

7.4
7.4

27.4
32.2

224.5

140.4

48.8

24.6

16.8

7.4

213.9
1948—First quarter
222.3
Second q u a r t e r . . . 228.2
235.6
Third quarter
Fourth quarter...
L949—First quarter«... 228.0
Second quarter «
_ 221.0

134.0
136.3
142.4
144.7

49.9
51.6
50.6
51.4

24.8
25.3
25.2
25.6

17.6
18.9
18.1
18.4

7.5
7.4
7.4
7.4

141.9
139.0

50.0
47.5

24.9
24.2

17.7
16.0

7.4
7.3

1948—First half
Second half
1949—First half •

31.3
34.4

12.2
13.4

19.2 - 3 . 9
21.0 - 2 . 2

29.8

27.2

10.9

16.2 +2.7

5.4

25.3
29.6
30.2
34.3

30.5
32.1
34.0
34.7

11.8
12.5
13.3
13.5

18.7 —5.3
19.6 - 2 . 5
20.8 - 3 . 9
21.2 - . 4

4.7
4.8
5.0
5.2

30.7
29.0

28.8
25.5

11.6
10.2

17.2 +1.9
15.3 +3.5

5.3
5.4

1 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.
2 Includes wage and salary receipts and other labor income (see appendix table D-3), and employer and
employee contribution for social insurance.
3 Net income after inventory valuation adjustment, which amounted to —600 million dollars in 1948 and
to 4+750 million dollars (annual rate) in the first half of 1949.
Federal and State income and excess-profits taxes.
« Less than $50,000,000.
• Estimates based on incomplete data; profits and total national income for first quarter and all items
for second quarter by Council of Economic Advisers.
NOTE.—Detail will not necessarily add to totals because of rounding.
Revised estimates of the national income and product series will be published in the Survey of Current
Business, July 1949.
Source: Department of Commerce (except as noted).




88

TABLE D-3.—Personal income, 1929-49
[Billions of dollars]

Period

DiviSalaries, ProprieTotal
dends and Transfer Nonagriwages,
cultural
personal and other tors' and personal payments personal
rental
income
labor ! income 2 interest3
income 4
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

46.3
39.2
30.5
29.0
33.8

15.7
11.8

12.6
11.1

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

36.8
42.1
45.9
42.8
45.7

12.1
12.6
15.4
14.0
14.7

8.6

10.1
10.3

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
122.2
149.4
164.5

49.5
61.5
81.2
104.4
116.1

16.3
20.8
28.1
32.1
34.1

10.0
10.6

3.1
3.1
3.2
3.0
3.6

71.5
86.1
108.7
134.3
149.0

1945
1946
1947.
1948.

170.3
178.1
195.2
213.6

116.8
111.4
121.9
134.3

36.0
41.8
46.0
50.9

11.4
13.5
15.6
17.3

6.2
11.4
11.7
11.1

154.3
159.4
174.9
190.6

7.4
7.2
8.7

9.1
8.2
8.6

8.7
9.2

9.4
9.9
9.7

Annual rates, seasonally adjusted
1948—First half
Second half
1949—First half s

208.9
218.0

130.0
138.6

214.0

1948—First quarter
Second quarter
Third quarter..
Fourth quarter

207.0
210.8
216.3
219.6

1949—First quarter
Second quarter

216.6
211.5

136.7
134.0

185.9
195.4

50.8
51.0

16.7
17.7

11.4
10.7

135.4

48.8

18.2

11.8

128.9
131.1
137.4
139.8

49.9
51.5
50.6
51.4

16.6
16.8
17.3
18.1

11.6
11.3
10.9
10.5

184.6
187.2
194.4
196.4

50.1
47.5

18.3
18.1

11.7
11.9

194.0
()

1
Differs from "compensation of employees" in appendix table D-3, in that it excludes employer and
employee contributions to social insurance. Includes wage and salary receipts and other labor incomecompensation for injuries, employer contributions to private pension and welfare funds, pay of military
reservists not on full-time active duty (pay for full-time active duty included in military wages and salaries),
directors' fees, jury and witness fees, compensation of prison inmates, Government payments to enemy
prisoners of war, marriage fees to justices of the peace, and merchant marine war-risk life and injury claims.
2
See appendix table D-3, for major components.
3
See appendix table D-28, for dividend payments.
4
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.
s Estimates based on incomplete data; second quarter by Council of Economic Advisers.
• Not available.
NOTE.—Detail will not necessarily add to totals because of rounding.
Revised estimates of the national income and product series will be published in the Survey of Current
Business, July 1949.
Source: Department of Commerce (except as noted).




TABLE D-4.—Disposition of personal income, 1929-49

Personal
income

Period

Less:
Equals: Personal Equals:
Less:
Personal Dispos- consump- Personal
able
tax and
net
tion I
nontax personal
saving
payments income expenditures

Net
saving as
percent
of disposable
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
19
.
15
.
1.5
1.6

73.7
63.0
47.8
45.2
51.6

70.8
61.2
49.2
46.3
51.9

2.9
1.8
-1.4
-1.2
-.2

3.9

2.9
-2.9
-2.7
-.4

59.9
68.4
74.0
68.3
72.6

19
.
2.3
2.9
2.9
2.4

58.0
66.1
71.1
65.5
70.2

56.2
62.5
67.1
64.5
67.5

1.8
3.6
3.9
1.0
2.7

3.1
5.4
5.5
1.5
3.8

78.3
95.3
122.2
149.4
164.5

2.6
3.3
60
.
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

170.3
178.1
195.2
213.6

20.9
18.9
21.6
21.0

149.4
159.2
173.6
192.6

122.8
147.4
164.8
177.7

26.6
11.8
8.8
14.9

17.8
7.4
5.1
7.7

_

1935
1936
1937
1938
1939

__„.

1940
1941 ._.
1942
1943
1944

1945.
1946
1947
1948

__

Annual rates, seasonally adjusted
1948—First half
Second half

208.9
218.0

21.8
20.1

187.1
197.8

174.9
180.6

12.2
17.2

1949—First half i

214.0

18.6

195.4

175.8

19.6

1948—First quarter
Second quarterThird quarter...
Fourth quarter. .

207.0
210.8
216.3
219.6

23.0
20.6
20.0
20.2

183.9
190.2
196.2
199.4

172.5
177.3
180.1
181.0

11.4
12.9
16.1
18.4

1949—First quarter
Second quarter V

216.6
211.5

18.8
18.5

197.8
193.0

176.6
175.0

21.2
18.0

6.5
8.7
10.1
6.2
6.8
8.2
9.2
10.7
9.3

1
Estimates based on incomplete data; second quarter by Council of Economic Advisers.
NOTE.—Detail will not necessarily add to totals because of rounding.
Revised estimates of the national income and product series will be published in the Survey of Current
Business, July 1949.
Source: Department of Commerce (except as noted).




TABLE D-5.—Per capita disposable income in current and 1948 dollars, 1929-49

Period

Disposable
Population Consumers'
personal
(thouincome
price index,
(billions of
sands) *
1948=100
dollars)

Per capita disposable
personal income
Current
dollars

1948
dollars 2

1929.

82.5

121,770

71.6

678

947

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

69.7
63.5
57.0
54.0
55.9

599
508
383
360

859
800
672
667
730

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

57.3
57.9
60.0
58.9
58.1

456
516
552
505
536

796
891
920
857
923

1940.
1941.
1942.
1943.
1944.

75.7
92.0
116.2
131.6
145.6

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

58.5
61.4
3 68.7
3 73.8
3 75.8

574
691
863
964
1,054

981
1,125
1,256
1,306
1,391

1945.
1946.
1947.
1948.

149.4
159.2
173.6
192.6

139,586
141, 235
144,034
146,571

3 77.9
3 83.4
3 93.1
100.0

1,070
1,127
1,205
1,314

1,374
1,351
1,294
1,314

Not adjusted for
seasonal
variation

Annual
rates,
seasonally
adjusted
1948—First half
Second half

187.1
197.8

1949— First half *
1948—First quarter
Second quarter..
Third quarter. _.
Fourth quarter..
1949—First quarter
Second quarter *.

Annual rates, seasonally adjusted

1,281
1,343

1,297
1,327

99.1

1,316

1,328

98.0
99.6
101.8
100.7

1,262
1,300
1,335
1,351

1,288
1,305
1,311
1,342

99.2

1,334
1,297

1,345
1,311

146,018
147,280

98.8
101.2

195.4

148, 527

183.9
190.2
196.2
199.4

145, 716
146, 298
146,914
147, 631

197.8
193.0

148, 232
148,806

1 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.
2 Current dollars divided by the consumers' price index on the base 1948=100 to give a rough measure of
changes in buying power of disposable income.
3 The consumers' price index has been roughly adjusted to take account of the understatement during the
price control period. This adjustment is in line with the report of the Technical C ommittee (better known
as the Mitchell Committee) on the consumers' price index. The unadjusted index will be found in appendix table D-19.
* Estimates based on incomplete data; second quarter by Council of Economic Advisers.
NOTE.—Revised estimates of the national income and product series will be published in the Survey
of Current Business, July 1949.
Sources: Department of Commerce (disposable income and population) and Department of Labor
consumers' price index).




TABLE D-6.—Personal consumption expenditures, 1929-49
[Billions of dollars]
Nondurable goods
Period

Total Durexpend- able
itures goods

Services

Total

Food i

Clothing

Other

Total

Housing 2

Other

1929.

78.8

9.4

37.7

19.7

9.4

8.6

31.7

11.4

20.3

1930.
1931.
1932.
1933.
1934.

70.8
61.2
49.2
46.3
51.9

7.3
5.6
3.7
3.5
4.3

34.1
29.0
22.7
22.3
26.7

18.1
14.8
11.4
11.5
14.3

8.0
6.9
5.1
4.6
5.7

8.0
7.3
6.2
6.2
6.7

29.5
26.6
22.8
20.6
20.9

11.0
10.2
9.0
7.8
7.5

18.5
16.4
13.8
12.8
13.4

1935.
1936.
1937.
1938.
1939.

56.2
62.5
67.1
64.5
67.5

5.2
6.4
7.0
5.8
6.7

29.4
32.9
35.2
34.0
35.3

16.3
18.5
22.0
19.0
19.3

6.0
6.6
6.8
6.8
7.1

7.1
7.8
6.4
8.2
8.9

21.7
23.3
24.9
24.7
25.5

7.6
7.9
8.4
8.7
8.9

14.1
15.4
16.5
16.0
16.6

1940.
1941.
1942.
1943.
1944.

72.1
82.3
90.8
101.6
111.4

7.9
9.8
6.8
6.5
6.9

37.6
44.0
53.0
61.2
67.5

20.7
24.4
30.5
35.6
39.3

7.5
8.9
11.3
14.1
15.4

9.4
10.7
11.2
11.5
12.8

26.6
28.5
31.0
33.9
37.0

9.2
9.9
10.6
11.1
11.7

17.4
18.6
20.4
22.8
25.3

1945.
1946.
1947.
1948.

122.8
147.4
164.8
177.7

8.3
16.2
21.0
22.7

75.4
87.5
96.5
103.6

43.4
51.6
57.9
61.9

17.2
18.8
19.2
20.3

14.8
17.1
19.4
21.4

39.2
43.6
47.3
51.4

12.2
13.2
14.4
16.0

27.0
30.4
32.9
35.4

34.7
36.3

Annual rates, seasonally adjusted
1948—First half....
Second half .

174.9
180.6

22.0
23.3

102.6
104.7

61.5
62.4

20.0
20.7

21.2
21.7

50.3
52.6

15.7
16.3

1949—First half 3_.

175.8

21.8

100.2

(4)

(4)

(4)

53.8

(4)

1948—First quarter....
Second quarter..
Third quarter. _.
Fourth quarter .

172.5
177.3
180.1
181.0

21.3
22.8
23.7
22.9

101.4
103.7
104.3
105.1

61.3
61.6
62.1
62.6

19.2
20.7
20.5
20.9

20.9
21.4
21.7
21.6

49.8
50.8
52.1
53.0

15.5
15.8
16.2
16.4

34.3
35.0
35.9
36.6

1949—First quarter
Second quarter 3

176.6
175.0

21.5
22.0

101.4
99.0

61.1
(4)

19.1
(4)

21.2
(4)

53.7
54.0

16.6
(4)

37.1
(4)

1
2
3

Includes alcoholic beverages.
Includes imputed rental value of owner-occupied dwellings.
Estimates based on incomplete data; second quarter by Council of Economic Advisers.
* Not available.
NOTE: Detail will not necessarily add to totals because of rounding.
Revised estimates of the national income and product series will be published in the Survey of Current
Business, July 1949.
Source: Department of Commerce (except as noted).




TABLE D—7.—Labor force, employment and unemployment, 1929—49
[Thousands of persons, 14 years of age and over]
Civilian labor force

Total
labor
force
(including
armed
forces) l

Period

Monthly average:
1929

Armed
forces i

Total
civilian
labor
force

Employment 2
Total

Nonagricultural

UnemAgricul- ployment
tural

49,440

260

49,180

47,630

37,180

10,450

1,550

50,080
50, 680
51, 250
51,840
52,49G

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

1935
1936
1937
1938
1939

53,140
53, 740
54,320
54,950
55,600

270
300
320
340
370

52, 870
53,440
54,000
54,610
55, 230

42,260
44,410
46,300
44, 220
45,750

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

65,140
60,820
61.608
62,748

11, 280
3, 300
1,440
1,307

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

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

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

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

1,040
2,270
2,142
2,064

[61,771
63,726

1,240
1,374

60,531
62,352

58,317
60,439

50,754
52,057

7,564
8,382

2,214
1,914

62,732

1,483

61,249

58,060

50,120

7,940

3,189

60,455
61,004
61,005
61,760
61,660
64,740
65,135
64,511
63,578
63,166
63,138
62,828

1,241
1,226
1,236
1,236
1,238
1,261
1,293
1,325
1,366
1,391
1,414
1,453

59,214
59,778
59,769
60,524
60,422
63,479
63,842
63,186
62,212
61, 775
61,724
61,375

57,149
57,139
57,329
58,330
58,660
61,296
61,615
61,245
60,312
60,134
59,893
59,434

50,089
50,368
50,482
50,883
50,800
51,899
52,452
52,801
51,590
51,506
51,932
52,059

7,060
6,771
6,847
7,448
7,861
9,396
9,163
8,444
8,723
8,627
7,961
7,375

2,065
2,639
2,440
2,193
1,761
2,184
2,227
1,941
1,899
1,642
1,831
1,941

61,546
61,896
62,305
62,327
63,452
64,866

1,468
1,508
1,491
1,492
1,469
1,468

60,078
60,388
60,814
60,835
61,983
63,398

57,414
57,168
57,647
57,819
58,694
59,619

50,651
50,174
50,254
49,999
49,720
49,924

6,763
6,993
7,393
7,820
8,974
9,696

2,664
3,221
3,167
3,016
3,289
3,778

1930
1931
1932
1933
1934

...

...

_

1945
1946
1947
1948 .
1948—First half
Second half _
1949—First half
1948—January
February
March. .
April
May
June . _ _ _
July
August
September
October. . . .
November
December
1949—January..
February
March
April

May..
June

..

.

_. .

_.

1
Data for 1940-49 exclude about 150,000 members of the armed forces who were outside the continental
United States in 1940 and who were therefore not enumerated in the 1940 census. This figure is deducted
by the Census Bureau from its current estimates for comparability with 1940 data.
2
Includes part-time workers and those who had jobs but were not at work for such reasons as vacation,
illness, bad weather, temporary lay-off, and industrial disputes.

NOTE.—Detail will not necessarily add to totals because of rounding.
Sources: Department of Labor (1929-39) and Department of Commerce (1940-49).




93

TABLE D—8.—Number of wage and salary workers in nonagricultural establishments,

1929^9

x

[Thousands of employees]

Manufacturing

Period

Total
wage
and
Nonsalary
Dura- durawork- Total ble
ble
ers
goods goods

Mining

GovTransernCon- portament
tract tion
Fi- Service (Fedcon- and Trade nance
eral,
struc- public
State,
tion utili
and
ties
local)

Monthly average:
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
4,999
5,552

1,398
1,333
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
28,802
30, 718
28,902
30, 287

8,907
9,653
10, 606
9,253
10,078

912
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, —
42.042
41,480

10,780
12,974
15,051
17,381
17, 111

4,357
4,975
6,485
8,179
10, 297
10, 200

937
1,006
882
845
916
947
983
917

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

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

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

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

4,192
4,622
5,431
6,049

7,r~

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

1945.
1946.
1947.
1948-

40, 069
41, 494
43,970
45,131

15,302
14,515
15,901
16,277

8,477
7,180
8,055
8,214

6,825
7,335
7,846
8,063

852
911
925

1,132
1,651
1,921
2,060

3,872
4,023
4,060
4,065

7,685
8,820
9,450
9,746

1,394
1,586
1,656
1,719

3,891
4,430
4,622
4,681

5,967
5.607
5,449
5,658

1948—First half- 44, 568 16,113
Second half. 45, 695 16> 442
1949—First half3. - 43, 910 15,424

8,180
8,248

7,933
8,194

910
940

1,928
2,193

4,032
4,G~~

9,601
9,891

1,702
1,735

4,725
4,637

5,557
5,759

7,713

7,704

905

1,.939

3,956

9,584

1,727

4,596

5,779

1,680
L,690
1,697
L, 704
L,716
1,726
,754
1,761
1,732
1,723
1,720
1,722

4,723
4,730
4,729
4,768
4,738
4,663
4,645
4,622
4,647
4,641
4,644
4,624

5,498
S492
5,546
5,577
5,624
5,607
5,604
5,650
5,801
5,789
5,714
5,994

1,716
1,712
1,717
1,728
] ,740

4,549
4,560
4,597
4,628
4,650

5,761
5,759
5,762
5,773
5,820

()

()
5,720
5,805
6,488
6,873
7,084
6,912

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

44,603
44,279
'44,600
44,299
44, 616
45, 009
45, '
45,478
45,889
45,877
45,739

16, 267
16,183
16, 269
15,950
15,892
16,115
16,172
16,441
16,697
16,597
16,461
16, 283

8,256
8,167
8,258
8,164
8,114
8,122
8,165
8,188
8,294
8,318
8,303
8,222

8,011
8,016
8,011
7,786
7,778
7,993
8,007
8,253
8,403
8,279
8,158
8,061

922
914
924
817
935
950
922
952
948
941
938
939

1,871
1,731
1,805
1,933
2,052
2,173
2,219
2,253
2,239
2,206
2,162
2,079

4,020
4,019
4,032
3,974
4,042
4,105
4,136
4,139
4,092
4,091
4,066
4,066

9,622
9,520
9,598
9,576
9,617
9,670
9,646
9,660
9,733
9,889
10,034
10,381

1949—January
February
March 3
Aprils
May 3

44,350
44,019
43,893
43,937
43,655

15,890
15, 777
15,625
15,338
15,017

8,005
7,898
7,807
7,665
7,444

7,885
7,879
7,818
7,673
7,573

925
922
914
919
902

1,906
1,820
1,841
1,937
2,010

3,978
3,956
3,912
3,929
3,959

9,625
9,513
9,525
9,685
9,557

* Includes all full- and part-time wage and salary workers in nonagricultural establishments who worked
or received pay during the pay period ending nearest the 15th of the month. Excludes proprietors, selfemployed persons, domestic servants, and personnel of the armed forces. Not comparable with estimates
of nonagricultural employment of the civilian labor force reported by the Department of Commerce
(appendix table D-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-offs and which are based on an enumeration of population, whereas the estimates in this table are
based on reports from employing establishments.
2 Not available.
3 Preliminary estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Labor.




94

TABLE D-9.—Average gross weekly earnings in selected industries, 1929-49
Manufacturing
Period
Total
Monthly average:
1929

TTT-U - 1 .
Bitumi- Build- Class I
Hotels
nous ing con- steam Tele- w noie- Retail (year
phone
railDura- Noncoal
structrade round) *
sale
roads
ble durable mining tion
trade
goods goods

(2)

(2)

(2)

2

(2)
2

()
$27. 72
26.11
26.37

(2)
(2)
$20.71
19.18
19.86

()
$14. 25
12.79
13.17

$29.81
31.53
31.94

26.93
28.53
29.94
29.48
29.85

19.96
20.68
21.73
21.14
21.17

13.57
13.97
14.78
14.93
15.25

32.44
32.74
33.97
36.30
38.39

30.39
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

44.04
44.96
48.88

(3)

44.07
48.06
52.40
5,6.57

28.31
32.55
36.67
39.98

24.53
26,95
29.65
31.88

58.70

48.06

55.64

39.08

31.31

59.57

49.65

57.42

40.58

32.44

$27. 22

$22.93

$25.72

(2)

$28.49

23.25
20.87
17.05
16.73
18.40

24.77
21.28
16.21
16.43
18.87

21.84
20.50
17.57
16.89
18.05

22.21
17.69
13.91
14.47
18.10

(2)
(2)
(2)
2

()
$22.97

27.76
26.76
23.34
23.09
24.32

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

20.13
21.78
24.05
22.30
23.86

21.52
24.04
26.91
24.01
26.50

19.11
19.94
21.53
21.05
21.78

19.58
22.71
23.84
20.80
23.88

24.51
27.01
30.14
29.19
30.39

26.76
28.01
29.20
30.26
30.99

(2)
(2)

1940
1941
1942
1943
1944

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
35.02
41.62
51.27

31.70
35.14
41.80
48.13
52.18

31.55
34.25
38.65
43.68
46.06

1945
1946
1947
1948

44.39
43.74
49.25
53.15

49.05
46.49
52.45
56.76

38.29
41.02
45.87
49.34

45.69
52.25
53.73
58.03
56.24 < 51. 22
54.17
66. 86 j 5 63.30
59.14
72.57
68.85

1948—First half.
Second
half..-,

52.06

55.23

48.67

70.51

66.82

54.24

58.28

50.01

74.60

70.93

$25.03

1930._._
1931
1932
1933
1934..

_
.._.

1935
1936
1937._
1938
1939____

_.__

_..

1949—First half*.

53.60

57.61

49.42

71.15

70.38

60.62

50.63

57.98

41.66

33.13

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

52.07
51.75
52.07
51.79
51.86
52.85
52.95
54.05
54.19
54.65
54.56
55.01

55.46
54.77
55.25
54.96
54.81
56.13
56.21
58.19
57.95
59.41
58.71
59.23

48.45
48.56
48.66
48.33
48.65
49.37
49.49
49.79
50.37
49.70
50.18
50.52

75.78
70.54
74.84
7 49.53
74.08
73.87
67.62
78.10
75.51
76.40
73.52
75.79

65.51
65.16
65.87
66.45
67.22
69.53
70.47
70.91
71.29
70.59
69.39
72.33

59.60
60.54
58.94
56.86
57.24
59.05
58.22
59.17
59.48
59.92
60.42
60.19

48.20
47.82
47.31
47.56
48.82
48.67
49.19
48.35
49.21
49.81
51.37
49.95

54.36
55.87
55.17
55.84
56.61
56.00
56.54
57.51
57.67
57.54
57.60
57.69

37.62
38.33
38.89
39.27
39.84
40.52
41.19
41.19
40.48
40.32
39.67
40.62

30.55
31.19
30.96
31.59
31.70
31.88
32.04
32.34
32.21
32.45
32.52
33.06

1949—January
February
March 6
April«._
May 8

54.51
54.12
53.59
52.70
53.08

58.69
58.21
57.37
56.86
56.93

50.04
50.01
49.72
48.35
48.98

76.84
74.31
68.41
72.70

70.88
70.53
69.83
70.28

60.21
61.64
60.00
2

49.91
51.02
51.00
50.59

58.41
57.91
57.48
58.12

41.79
41.56
41.48
41.81
2

33.30
33.22
32.88
33.11

(2)

1
2
3

(2)

()
(2)

(2)

(2)

()

Money payments only; additional value of room, board, uniforms, and tips is 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 average includes retroactive pay increases not included in the monthly averages.
5
Not strictly comparable with previous data.
6
Preliminary estimates based on incomplete data.
7 Data reflect work stoppages.
NOTE.—Data are for production workers in manufacturing and mining, hourly-rated employees in railroads, and for all nonsupervisory employees in other industries. Data are for payroll periods ending closest
to the middle of the month except in railroads where monthly payroll and employment figures are used.
Source: Department of Labor.

844384—49




95

TABLE D-10.—Average hourly earnings in selected industries, 1929-49
Manufacturing

Period

Monthly average:
1929.

Bitumi- Buildnous ing conNoncoal strucTotal Durable durable mining tion
goods goods

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

$0,636

$0.566

$0,681

1930
1931
1932
1933
1934...

.552
.515
.446
.442
.532

.684
.647
.520
.501
.673

1935.
1936
1937
1938.
1939

.550
.556
.624
.627
.633

.577
.586
.674

1940
1941-...1942
1943
1944

.661
.729
.853
.961
1.019

.724
.808
.947
1.059
1.117

1945
1946
1947—.
1948

1.023
1.084
1.221
1.327

1.111
1.156
1.292
1.401

1948—First half.
Second
half....

1.295
1.359

1949—First half«.

1.376

1.458

1948—January
February
March
April
May
June
July....
August
September. __
October
November
December

1.285
1.287
1.289
1.292
1.301
1.316
1.332
1.349
1.362
1.366
1.372
1.376

1.355
1.352
1.352
1.357
1.366
1.385
1.407
1.431
1.448
1.452
1.454
1.456

1949—January
February
March 6
April«
May 6

1.380
1.377
1.374
1.376
1.375

1.460
1.459
1.456
1.458
1.456

1

()
$0.497
.472
.556

8
$0,420
.427
.515
.530
.529
.577
.584
.582

()

82)
(

.745
.794
.856
.878

$0.795
.815
.824
.903
.908
.932

.602
.640
.723
.803
.861

.883
.993
1.059
1.139
1.186

.958
1.010
1.148
1.252
1.319

.904
1.012
1.145
1.247

1.240
1.401
1.633
1.899

1.379
1.478
1.681
• 1. 848

1.361

1.223

1.839

1.809

1.441

1.270

<*>
(2)

.644
.651
.600
.595
.602
.651
.659
.676
.712
.714
.717
.751
.824
.897
.942
* 1.116
1.170
1.284

()
2

()

8

()

8)
(2

$0,528

$0,273

)
$0.774
.816
.822

$0,648
.667
.698
.700
.715

.521
.522
.551
.543
.536

.279
.287
.308
.315
.324

.827
.820
.843
.870
.911

.739
.793
.860
.933
.985

.542
.568
.614
.670
.724

.332
.348
.386
.451
.505

()
*
1.124
1.199
1.248

1.029
1.144
1.258
1.360

.773
.878
.991
1.067

.550
.612
.661
.712

1.054

.700

1.272

1.233

1.341

1.295

1.262

1.378

.724

1.938

1.929

1.331

1.320

1.401

1.106

.742

210
217
220
220
230
242
252
262
272
271
282
287

1.847
1.826
1.842
1.821
1.841
1.850
1.936
1.967
1.970
1.959
1.951
1.960

1.766
1.791
1.786
1.804
1.815
1.836
1.862
1.874
1.895
1.892
1.906
1.915

1.279
1.302
1.262
1.258
1.272
1.259
1.263
1.278
1.293
1.297
1.322
1.320

1.241
1.238
1.223
1.225
1.240
1.232
1.237
1.229
1.250
1.263
1.305
1.290

1.309
1.343
1.334
1.346
1.363
1.353
1.365
1.379
1.378
1.381
1.383
1.380

1.044
1.050
1.044
1.055
1.064
1.070
1.077
1.080
1.086
1.080
1.084
1.072

.700
.707
.711
.714
.709
.725
.726
.734
.739

293

1.949
1.943
1.941
1.932

1.918
1.930
1.933
1.933

1.333
1.343
1.318

1.301
1.321
1.328
1.323

1.402
1.397
1.395
1.404

1.110
1.104
1.102
1.106

.748
.746
.739
.739

Money payments only; additional value of room, board, uniforms, and tips is not included.
2 Not available.
3 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.
4
Annual average includes retroactive pay increases not included in the monthly averages.
8 Not strictly comparable with previous data.
• Preliminary estimates based on incomplete data.
NOTE.—Data are for production workers in manufacturing and mining, hourly-rated employees in railroads, and for all nonsupervisory employees in other industries. Data are for pay-roll periods ending closest
to the middle of the month except in railroads where monthly pay roll and employmentfiguresare used.
Source: Department of Labor.




TABLE D—11.—Average weekly hours in selected industries, 1929-49
Manufacturing

Period

Bitumi- Build- Class I
ing
nous
steam TeleconNoncoal
railDurable durable mining struc- roads phone
Total goods
tion i
goods

Monthly average:
1929

44.2

(0

0)

38.4

44.8

C1)

0)

1

33.5
28.3
27.2
29.5
27.0

0)

0)

28.9

43.1
41.1
38.9
38.8
40.4

26.4
28.8
27.9
23.5
27.1

30.1
32.8
33.4
32.1
32.6

41.1
42.5
43.2
42.5
43.4

1930
1931
1932
1933
1934

42.1
40.5
38.3
38.1

1935
1936
1937
1938
1939

36.6
39.2
38.6
35.6
37.7

37.3
41.0
40.0
35.0
38.0

C)
0)
41.9
40.0
35.1
36.1
37.7
37.4
36.1
37.4

1940
1941
1943
1944

38.1
40.6
42.9
44.9
45.2

39.3
42.1
45.1
46.6
46.6

37.0
38.9
40.3
42.5
43.1

28.1
31.1
32.9
36.6
43.4

33.1
34.8
36.4
38.4
39.6

44.0
45.6
46.9
48.7
49.1

38.8
38.9
39.1
39.5
40.1
40.5
41.9
42.3

1945
1946
1947
1948

43.4
40.4
40.3
40.1

44.1
40.2
40.6
40.5

42.3
40.5
40.1
39.6

42.3
41.6
40.6
38.0

39.0
38.1
37.6
«37.3

48.5
45.9
46.3
46.1

()
39.4
37.3
39.2

40.2

40.6

39.8

38.3

36.9

46.2

40.4

39.4

37.7

37.4

46.0

1942..__

1948—First half.

Second
half....

0)
C1)
32.6
34.8
33.9

Whole- Retail
sale
trade
trade

Hotels
(year
round.

0)
0)

0)
0)
0)
0)

8
8

8

41.3
42.6
42.8
42.2
41.7

41.8
43.5
43.3
42.6
43.0

47.8
48.3
47.7
46.
46.

41.2
41.0
41.3
42.2
42.9

42.9
42.5
41.6
40.5
40.3

46.3
45.6
45.3
44.7
44.5

42.7
41.8
41.2
41.1

40.3
40.5
40.2
40.1

44.2
43.9
44.5
44.2

39.0

41.0

39.9

44.2

39.4

41.2

40.2

44.2

8
8
8

0)
41.5

47.2

1949—Firsthalff

38.9

39.5

38.3

36.8

36.5

45.5

38.5

40.9

40.0

43.9

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

40.5
40.2
40.4
40.1
39.9
40.2
39.8
40.1
39.8
40.0
39.8
40.0

40.9
40.5
40.9
40.5
40.1
40.5
40.0
40.7
40.0
40.9
40.4
40.7

40.0
39.9
39.9
39.6
39.6
39.8
39.5
39.5
39.6
39.1
39.1
39.3

40.9

37.1
36.4
36.9
36.7
37.0
37.9
37.8
37.8
37.6
37.3
36.4
37.8

46.6
46.5
46.7
45.2
45.0
46.9
46.1
46.3
46.0
46.2
45.7
45.6

38.9
38.7
38.7
38.8
39.4
39.5
39.8
39.4
39.4
39.5
39.4
38.7

41.0
41.1
40.9
41.0
41.2
41.1
41.2
41.3
41.2
41.0
41.2
41.3

39.8
40.0
39.8
39.8
39.9
40.3
40.8
41.0
40.2
39.7
39.5
40.2

43.9
44.6
44.0
44.2
44.2
44.1
44.0
44.9
43.9
44.2
44.1
44.1

1949—January
February
March*
April *
May *

39.5
39.3
39.0
38.3
38.6

40.2
39.9
39.4
39.0
39.1

38.7
38.8
38.6
37.6
38.0

37.0
36.5
36.1
36.3
(

45.2
45.9
45.5
(

38.4
38.7
38.4
38.3
(

41.1
40.8
40.7
40,9
()

40.0
40.0
39.9
40.1

43.9
43.8
43.9
43.8

5 38.7
40.6
5 27.0
40.3
39.9
5 34.2
39.4
37.9
38.6

37.1
38.5
39.3
38.0
36.3
37.4

1
2

Not available.
Average for the year not available because new series was started in April.
3 Not comparable with previous data.
* Preliminary estimates based on incomplete data.
« Data reflect work stoppages.
NOTE.—Data are for production workers in manufacturing and mining, hourly-rated employees in railroads, and for all nonsupervisory employees in other industries. Data are for pay-roll periods ending
closest to the middle of the month except in railroads where monthly pay-roll and employment figures are
used.
Source: Department of Labor.




97

TABLE D-12.—Physical production index of goods and utilities, 1929-A9
[1935-39=1001]
Nonagricultural production
AgriTotal culturpro- al production duction Total

Period

Weights: 2
Total
Nonagricultural ...

100.0

Industrial production
ConstrucTotal Manu- Miner- tion
factures
als

19.2

80.8
100.0

55.4
68.5

50.6
62.6

4.8
5.9

7.6
9.4

Transportation

12.9
16.0

Electric
and
gas
utilities
4.9
6.1

1929

112

97

116

110

110

107

180

117

82

1930
1931
1932
1933
1934

97
86
70
73
75

95
104
101
93
79

98
82
63
69
75

91
75
58
69
75

90
74
57
68
74

93
80
67
76
80

153
124
79
53
58

104
89
73
76
83

82
78
71
72
78

87
99
111
94
109

96
85
108
105
106

85
102
111
91
110

87
103
113
89
109

87
104
113
87
109

86
99
112
97
106

69
101
106
101
123

88
101

122
152
185
207
203

110
114
128
125
130

124
162
198
226
220

125
162
199
239
235

126
168
212
258
252

117
125
129
132
140

133
182
202
112
60

95
106
117
146
185
220
230

85
97
106
100
112

183
167
179
187

129
134
129
140

196
174
191
198

203
170
187
192

214
177
194
198

137
134
149
155

68
128
146
174

222
200
212
209

190
192
219
243

198
198

192
192

199
198

243
243

181

187

171
179
171

208
210

189

153
157
144

195

253

--

1935
1936
1937
1938
1939

. _

1940
1941
1942
1943
1944

.

.-

__
-

1945
1946
1947
1948
1948—First half
Second half
1949—First n a if s

00
(3)

eo

(4)

w
(4)

no

123
141
158
184
193

1 All half year data have been seasonally adjusted except the electric and gas utilities for which no satisfactory adjustment factor is available.
2
Computed from the Department of Commerce national income data. The weight factors are percentages of the national income for each industry to the total for the 6 industries. The weight for construction has been adjusted to include force account and other construction done outside of the contract
construction industry, the weights for other industry groups to exclude such construction.
3 Not available. See footnote 5.
* Because of the extreme seasonal nature of agricultural crop production, only an annual index has been
computed.
« Preliminary estimates based on incomplete data.
Sources: Based on the following data:
Agricultural production: Department of Agriculture index of farm output 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 by their index
of construction costs and converted into relatives with 1935-39 as 100.
Transportation: Department of Commerce index of transportation. The figures for 1948 and 1949
are estimated by the Board of Governors of the Federal Reserve System on the basis of transportation data.
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. The two series are converted into relatives with the average for the
period 1935-39 as 100. The relative series 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 of
each of the utilities to the total revenues produced by both in the base period 1935-39.




TABLE D-13.—Industrial production index, 1929-49
[1935-39=100, seasonally adjusted]
Total
industrial
production

Period

Manufacture 3
Minerals

Total

Durable

Nondurable

Monthly average:
1929

110

110

132

93

107

1930
1931
1932
1933
1934

91
75
58
69
75

90
74
57
68
74

98
67
41
54
65

84
79
70
79
81

93
80
67
76
80

87
103
113
89
109

87
104
113
87
109

83
108
122
78
109

90
100
106
95
109

86
99
112
97
106

125
162
199
239
235

126
168
212
258
252

139
201
279
360
353

115
142
158
176
171

117
125
129
132
140

1945
1946
1947
1948

203
170
187
192

214
177
194
198

274
192
220
225

166
165
172
177

137
134
149
155

1948—First half
Second half

192
192

199
198

224
226

178
176

153
157

181

188

214

166

144

193
194
191
188
192
192
186
191
192
195
195
192

201
201
200
195
197
198
192
197
199
202
201
199

229
226
229
217
221
222
219
223
225
231
229
231

178
180
177
177
178
179
169
177
178
179
178
173

154
155
142
147
162
159
153
159
156
158
161
156

191
189
184
179
174
169

198
196
193
185
179
175

227
226
223
213
201
194

175
173
168
162
161
159

149
149
136
148
146
134

_ _

_.

1935
1936
1937
1938
1939

__-

1940
1941
1942
1943.
1944

_

.
.__.

1949— First half *
1948—January. _
February
March
April _
May

_

June

July
August
September _
October
November
December
1949—January.
February
March
April
May

June'

_

_

.

.

1

Preliminary estimates based'on incomplete data.
Source: Board of Governors of the Federal Reserve System.




99

TABLE D-14.—New construction activity, 1929^-9
[Value put in place, millions of dollars]
Private construction

Public construction

Total
Resinew
Non- Pub. con- Total den- resilic
tial
struc- pri- build- den- utilition i vate
tial
ty
ing
(non- build- and
farm) ing 2 farm

Period

By source of
funds

By type of construction

MiliTotal
tary
pubState and fed- High- Other
lic
Feder- and erally fipubal
local nanced ways lic
industrial

9,873

7,476

2,797

2,822

1,857

2,397

237

2,160

19 1,254

934

8,042
5,967
3,290
2,376
2,805

5,265
3,375
1,467
1,012
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 1,505 1,243
40 1, 351 1,201
34
961
828
38
809
517
58
826

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

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

1,326
1,156
1,178
1,484

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
862 6,040
938 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

800
616
420

1,221
1,364
1,336
1,402
623

4,808
10,464
14,324
18, 775

2,716
8,253
11,179
14,563

684
3,183
5,260
7,223

1,014
3,346
3,131
3,578

1,018
1,724
2,- 788
3,762

2,092
2,211
3,145
4,212

1,558
1,096
1,181
1,339

534
1,115
1,964
2,873

1,160
272
778
229 1,300
157 1,585

546
1,161
1,616
2,470

929
930—
931

_ .

932
933

1940
1941
1942.. _
1943
1944

...

1945
1946
1947
1948

1,124

Totals for period, not adjusted for seasonal variation

1948-FirsthalL.
Second half

8,159
10,616

6,519
8,044

3,257
3,966

1,640
1,938

1,622
2,140

1,640
2,572

521
818

1,119
1,754

81

559

76

1,026

1,000
1,470

1949—First half 3

8,453

6,213

2,870

1,596

1,747

2,240

650

1,590

52

648

1,540

1948—January
February
March
April
May
June
July
August
September
October
November
December. __

1,180
1,049
1,226
1,378
1,572
1,754
1,874
1,934
1,901
1,814
1,646
1,447

974
875

500
410
490
550
625
682
707
720
707
670
615
547

270
263
266
263
275
303
321
329
331
327
325
305

204
202
245
286
322
363
395
405
389
358
316
277

206
174
225
279
350
406
451
480
474
459
390
318

67
54
71
87
112
130
143
154
156
146
123
96

139
120
154
192
238
276
308
326
318
313
267
222

14
12
13
15
14
13
13
14
13
13
13
10

54
40
57
89
140
179
206
220
200
186
131
83

138
122
155
175
196
214
232
246
261
260
246
225

1949—January. _
February.
March _._._
April
May a.—
June 3

1,293
1,172
1,267
1,378
1,584
1,759

475
400
420
445
530
600

285
271
262
251
257

242
234
269
301
330

7
7

371

81
72
91
113
139
154

210
195
225
268
328

270

291
267
316
381
467
518

68
52
68
100
160
200

216
208
238
272
297
309

1,001
1,099
1,222
1,348
1,423
1,454
1,427
1.355
1,256
1,129
1,002
905
951
997

1,117
1,241

364

10
9
10
9

1 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.
2
Excludes farm and public utility; for 1929-32 includes negligible amount of public industrial and commercial building not segregable.
3 Preliminary estimates based on incomplete data.
NOTE.—Detail will not necessarily add to totals because of rounding.
Sources: Departments of Commerce and Labor.




xoo

TABLE D-15.—Business expenditures for new plant and equipment, 1929-49
[Millions of dollars]
Manufacturing and mining Transportation
Period

Total
Total

Manufacturing

Mining

Railroad

Hiiectric
and gas
utilities

Other

1929.

9,165

3,596

(3)

(3)

840

(<)

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)

(4)
(4)

1935.
1936.
19371938.
1939.

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

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

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

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

83
((33))
(33)
((3))
()

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

865
360
164
101
218

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

6.630
12,040
16,180
19,230

Commercial
and
miscellaneous 2

(3)

1,930

380

166
306
525
238
280

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

3,650
6,470
8,150
9,140

3,210
5,910
7,460
8,340

440
560
690
800

550
570
910
1,320

(3)
(3)
(3)

4,729

(4)
(4)

(*)

84
(4)
<«))
((4)

(4)
(4
(4
(4
(4

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

280

480

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

390
340
260
190
280

550
710
680
540
490

1,980
2,490
1,470
730
970

320
660
800
700

630
1,040
1,900
2,680

1,480
3,300
4,430
5,390

.

Annual rates, not adjusted for seasonal variation
1948—First half
Second half
1949—First half 8_
1948—First quarter
Second quarter..
Third quarter...
Fourth quarter..
1949—First quarter 8__.
Second quarter J .
Third quarter. 5 ..

17,980
20,480

8,640
9,660

7,880
8,820

760
840

1,160
1,480

740
680

2,280
3,080

5,160
5,600

18,560

8,400

7,620

780

1,540

540

2,980

5,120

16,680
19,280
19,320
21,640

7,920
9,360
9,160
10,160

7,200
8,560
8,360
9,280

720
800
800
880

1,080
1,240
1,320
1,640

720
760
680
680

2,000
2,560
2,760
3,400

4,960
5,360
5,440
5,760

17,840
19,280
18, 520

8,160
8,640
8,120

7,400
7,840
7,360

760
800
760

1,440
1,640
1,240

520
5fi0
680

2,720
3,240
3,320

5,040
5,200
5,120

iExcludes agriculture.
* Commercial and miscellaneous includes trade, service, finance, and communication for all years shown.
Prior to 1939, miscellaneous also included transportation other than railroad, and electric and gas utilities.
which are not available separately for these years.
3
Not available separately for years prior to 1939.
4
Included in commercial and miscellaneous prior to 1939.
J
Estimates for first and second quarter 1949 are preliminary actual expenditures; the third quarter o
1949 is based on 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 chareed 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).




IOI

TABLE D-16.—Inventories and sales in manufacturing and trade, 1939-49
[Not adjusted for seasonal variation]
Wholesale

Manufacturing

Period

Retail trade

Millions of
dollars

Ratio of
Millions of
Ratio of
Millions of
average
average
dollars
dollars
inveninventories to
tories to
Invenmonthly Inven2 monthly Inventories i Sales 2 sales 8 tories i Sales
tories i Sales 2

Ratio of
average
inventories to
monthly
sales 8

1939

11,516

5,112

2.11

3,200

2,505

1.21

5,285

3,504

1.53

1940
1941
1942
1943
1944

12,873 5,859
17,024 8,172
19, 221 10,346
19,897 12,603
19,122 13,402

2.06
1.78
1.78
1.52
1.46

3,357
4,151
3,702
3,577
3,686

2,790
3,650
4,016
4,330
4,505

1.17
1.04
1.01
.82
.83

5,767
7,262
7,307
6,872
6,906

3,866
4,624
4,803
5,310
5,798

1.48
1.48
1.72
1.37
1.29

1945
1946
1947
1948

17,924
23,435
28,020
31,713

12,371
12,020
15,671
17, 587

1.50
1.68
1.67
1.70

4,216
5,823
7,545
8,315

4,777
6,138
7,304
7,867

.79
.78
.95
1.02

7,049
10,591
12,426
13,938

6,387
8,399
9,860
10,829

1.19
1.10
1.22
1.30

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

29, 727 17,128
31,713 18,045
28, 501 16,552
28,768 16,225
29,064 18,117
29,161 17, 229
29,437 16,777
29, 727 17, 871
30,236 16,403
30,429
30, 710 18, 781
30,848 18,807
31,225 17,980
31,713 18,130

1.70
1.71

7,953
8,315

7,558
8,176

1.04
1.01

13,637
13,938

10,288
11,371

.34
.28

1.71
1.76
1.60
1.69
1.75
1.66
1.83
1.67
1.63
1.64
1.73
1.74

7,850
7,885
7,869
7,777
7,801
7,953
7,930
8,100
8,243
8,400
8,517
8,315

7,692
7,121
7,726
7,652
7,389
7,766
7,796
8,161
8,286
8,376
8,242
8,196

1.00
1.10
1.02
1.02
1.05
1.01
1.02
.98
.99
.99
1.03
1.03

12, 779
13,625
14,280
14,164
13,992
13,637
13,498
13,972
14, 695
15,284
15,652
13,938

9,684
8,948
10, 734
10, 705
10,782
10,874
10,738
10,674
11,058
11,542
11,019
13,194

.30
.48
.30
.33
.31
.27
.26
.29
1.30
1.30
1.40
1.12

1949—January
February
March
April4
May,

32,062
32,070
31,793
31, 266
30,823

1.91
1.95
1.76
1.88
1.92

8,527
8,567
8,445
8,152
7,884

7,163
6,802
7,489
6,959
7,094

1.18
1.26
1.14
1.19
1.13

13, 538 9,416
13,855 8,918
14, 534 10, 525
14, 344 11,117
13,831 10,805

1.46
1.54
1.35
1.30
1.30

16,691
16,424
18,107
16,763
16,190

1 Book value end of period.
Monthly average shown for year and half year and total for month.
Book value based on centered averages of month-end figures.
Preliminary estimates based on incomplete data.
NOTE.—The inventory figures in this table do not agree with the estimates of "change in business inventories" included in the gross national product since they cover only manufacturing and trade rather than
all business, and show inventories in terms of current book value without adjustment for revaluation
or seasonal variation.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce.
2
3
4




IO2

TABLE D-17.—Manufacturers'

inventories by stage of fabrication and as ratios to
sales, 1939-49

[Not adjusted for seasonal variation]
Nondurable goods industries

Durable goods industries

Period

Book value of inventories at end
of period (millions of dollars)

Ratio of average
inventories lto
monthly sales

Book value of inventories at end
of period (millions of dollars)

Ratio of average
i n v e n t o r i e s to
monthly sales *

Materials
Materials
Materials
Materials
and goods Finished and goods Finished and goods Finished and goods Finished
in process goods in process goods in process goods in process goods
1939..

3,224

1,948

1.63

1.06

3,725

2,619

1.07

0.83

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

4,073
6,321
8,073
8,787
7,886

2,054
2,031
2,000
1,942
2,021

1.52
1.41
1.46
1.30
1.22

.84
.55
.41
.30
.29

4,034
5,919
6,383
6,705
6,720

2,712
2,753
2,765
2,463
2,495

1.12
1.11
1.13
1.07
1.02

.77
.61
.51
.43
.38

1945..
1946.
1947.
1948.

6,391
8,615
9,794
10,631

1,946
2,518
3,541
4,204

1.24
1.66
1.49
1.44

.34
.49
.49
.55

6,917
8,755
10,261
10,445

2,670
3,547
4,424
6,433

1.03
1.04
1.00

.39
.41
.42
.52

1948—First half-Second half—

9,898
10,631

3,951
4,204

1.44
1.40

.56
.53

10,301
10,445

5,577
6,433

1.00

.49
.56

1948—January
FebruaryMarch
April
May
June
July
August
SeptemberOctober
November. _
December..

9,794
9,777
9,691
9,764
9,846
9,898
10,073
10,212
10,405
10,463
10,511
10,631

3,662
3,748
3,875
3,928
3,934
3,951
3,894
3,820
3,847
3,871
4,069
4,204

1.53
1.51
1.32
1.42
1.48
1.37
1.54
1.42
1.36
1.35
1.40
1.37

.56
.57
.52
.57
.59
.55
.61
.54
.51
.50
.53
.54

10,394
10,148
10,332
10,315
10,277
10,301
10,515
10,576
10,477
10,455
10,470
10,445

4,651
5,095
5,166
5,154
5,380
5,577
5,754
5,821
5,981
6,059
6,175
6,433

1.02
1.05
.95
1.00
1.01

.45
.50
.48
.50
.52
.51
.57
.53
.53
.54
.58

1949—January
February...
March
April.
Maya

10,782
10,785
10,637
10,377
10,142

4,360
4,494
4,643
4,745
4,678

1.54
1.55
1.38
1.47
1.50

.62
.64
.59
.65

10,370
10,210
9,902
9,572
9,322

6,550
6,581
6,611
6,572
6,682

1.07
1.09
.97
1.02
1.01

1
Inventories based on centered averages of month-end figures.
2 Preliminary estimates based on incomplete data.
Source: Department of Commerce.




IO3

.96

1.05
.96
.94
.95
1.00
1.00

.67
.69
.64
.69
.71

TABLE D—18.—Sales, stocks, and outstanding orders at 296 department stores,

1939-49
Millions of dollars i
Period

Ratio of
Outstocks
standing to sales
orders
(end of
month)

Ratio of
orders
to sales

Ratio of
orders
to stocks

(2)

(*)

Sales
(total for
month)

Stocks
(end of
month)

1939

128

344

19401941
1942
1943.
1944

136
156
179
204
227

353
419
599
509
535

108
194
263
530
560

2.60
2.69
3.35
2.50
2.36

0.79
1.24
1.47
2.60
2.47

0.31
.46
.44
1.04
1.05

1945
1946.—
1947
1948

255
318
337
353

563
715
826
916

729
909
552
466

2.21
2.25
2.45
2.59

2.86
2.86
1.64
1.32

1.29
1.27
.67
.51

1948—First half._.
Second half.

317
389

896
937

462
469

2.83
2.41

1.46
1.21

.52
.50

1949—First half»..

Monthly average:

„.

(2)

2.69

303

873

304

2.90

1.04

.35

1948—January
February
March
April
May
June—
July
August-.
September
October
November
December

272
264
356
333
339
338
270
298
360
390
414
599

799
890
954
943
921
866
834
897
948
1,062
1,058
821

629
571
416
357
338
462
551
545
539
507
379
292

2.94
3.37
2.68
2.83
2.72
2.56
3.09
3.01
2.63
2.72
2.56
1.37

2.31
2.16
1.17
1.07
1.00
1.37
2.04
1.83
1.50
1.30

.79
.64
.44
.38
.37
.53
.66
.61
.57
.48
.36
.36

1949—January
February
March
April
May»._

267
255
320
347
328

790
852
918
907
897

388
378
310
236
210

2.96
3.34
2.87
2.61
2.73

1.45
1.48

.49
.44
.34
.26
.23

_.

.92
.49

.97
.68
.64

1
Not adjusted for seasonal variation.
2 Not available.
• Preliminary estimates based on incomplete data.

NOTE.—These figures represent retail sales, stocks, and outstanding orders as reported b y 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.
Detail will not necessarily add to totals because of rounding.
Source: Board of Governors of the Federal Reserve System.




IO4

TABLE D-19.—Consumers' price index, 1929-49
For moderate-income families in large cities
[1935-39=100]

Period

All
items

Food Apparel Rent

Fuel,
elec- House
tricity, furMisceland re- nish- laneous
frigerings
ation

1929

122.5

132.5

115.3

141.4

112.5

111.7

104.6

1930
1931
1932
1933
1934

119.4
108.7
97.6
92.4
95.7

126.0
103.9
86.5
84.1
93.7

112.7
102.6
90.8
87.9
96.1

137.5
130.3
116.9
100.7
94.4

111.4
108.9
103.4
100.0
101.4

108.9
98.0
85.4
84.2
92.8

105.1
104.1
101.7
98.4
97.9

98.1
99.1
102.7
100.8
99.4

100.4
101.3
105.3
97.8
95.2

96.8
97.6
102.8
102.2
100.5

94.2
96.4
100.9
104.1
104.3

100.7
100.2
100.2
99.9
99.0

94.8
96.3
104.3
103.3
101.3

98.1
98.7
101.0
101.5
100.7

1940
1941
1942
1943
1944

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
1948—_

-

128.4
139.3
159.2
171.2

139.1
159.6
193.8
210.2

145.9
160.2
185.8
198.0

108.3
108.6
111.2
117.4

110.3
112.4
121.1
133.9

145.8
159.2
184.4
195.8

124.1
128.8
139.9
149.9

1948—First half—
Second half

169.1
173.3

208.3
212.1

195.7
200.2

116.4
118.4

130.8
137.1

193.9
197.7

147.0
152.9

1935._._
1936
1937
1938
1939

__..

1949—First half K

169.7

202.3

193.9

120.1

137.7

193.4

154.3

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

168.8
167.5
166.9
169.3
170.5
171.7
173.7
174.5
174.5
173.6
172.2
171.4

209.7
204.7
202.3
207.9
210.9
214.1
216.8
216.6
215.2
211.5
207.5
205.0

192.1
195.1
196.3
196.4
197.5
196.9
197.1
199.7
201.0
201.6
201.4
200.4

115.9
116.0
116.3
116.3
116.7
117.0
117.3
117.7
118.5
118.7
118.8
119.5

129.5
130.0
130.3
130.7
131.8
132.6
134.8
136.8
137.3
137.8
137.9
137.8

192.3
193.0
194.9
194.7
193.6
194.8
195.9
196.3
198.1
198.8
198.7
198.6

146.4
146.4
146.2
147.8
147.5
147.5
150.8
152.4
152.7
153.7
153.9
154.0

1949—January
February. _
March
April
May

170.9
169.0
169.5
169.7
169.2

204.8
199.7
201.6
202.8
202.4

196.5
195.1
193.9
192.5
191.3

119.7
119.9
120.1
120.3
120.4

138.2
138.8
138.9
137.4
135.4

196.5
195.6
193.8
191.9
189.5

154.1
154.1
154.4
154.6
154.5

* Average of data for January through May.
Source: Department of Labor.




105

TABLE D-20.—Wholesale price index, 1929-49
[1926=100]

Other than farm products and foods

Period

1
1.1
03

1929..

95.

104.9

99.9

91.6 109.1

90.4

83.0 100.5

95.4

94.0

94.3

82.6

1930
1931
1932
1933
1934...

86.4
73.0
64.8
65.9
74.9

64.8
48.
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.
70.3
66.3
73.3

92.1
84.5
80.2
79.8
86.9

89.9
79.
71.4
77.0

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.
82.1
85.5
73.6
70.4

77.9 89.6
79.6 95.4
85.3 104.
81.7 92.8
81.3 95.6

70.9
71.5
76.3
66.7
69.7

73.
76.2
77.
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
95.5 102.4
94.9 102.7
95.2 104.3

77.3
82.0
89.7
92.2
93.6

-.

1935
1836....
1937...
1938
1939
1940
1941
1942
1943.—
1944....

78.6 67.7 71.3
87.3 82.4 82.7
98.8 105.9 99.6
103.1 122.6 106.6
104.0 123.3 104.9

__

105.8
121.1
152.1
165.1

1945
1946
1947
1948

106.2 99.7 118.1 100.1 84.0 104.7
130.7 109.5 137.2 116.3 90.1 115.5
168.7 135.2 182.4 141.7 108.7 145.0
179.1 151.0 188.8 149.8 134.2 163. 6

Second half

157.3 170.4 163.3 149.3 180.9 142.7 133.3 171.9 197.6 120.6 147.1 114.6

1949—First half»

._

165.9
161.0
161.
163.0
164.2
166.4
168.8
169.8
168.9
165.4
164.0
162.4

199.2
185.3
186.0
186.7
189.1
196.0
195.2
191.5
189.9
183.5
180.8
177.3

179.8
172.4
173.8
176.7
177.4
181.4
188.3
189.8
186.9
178.2
174.3
170.2

148.6
147.9
148.1
149.0
149.5
149.9
151.4
153.3
153.6
153.4
153.6
153.1

200.9
193.3
186.3
187.0
188.4
187.7
189.2
188.4
187.4
185.5
186.2
185.3

149.4
150.0
151.1
151. 7
152.1
151.4
150.8
150.4
149.3
148.3
147.4
146.7

130.0
130.9
130.9
131.5
132.6
133.1
135.9
136.4
136.9
137.3
137.6
137.2

154.3
155.3
155.9
157.2
157.1
158.6
162.2
171.0
172.0
172.4
173.3
173.8

194.1
193.5
193.9
195.7
197.0
197.4
200.0
203.8
204.1
203.7
203.1
202.2

139.9
135.7
137.2
137.5
136.3
137.2
135. 7
133.2
134.5
135.5
134.4
131.1

141.3
141.8
142.0
142.3
142.
143.2
144. 5
145.4
146.6
147.5
148.2
148.4

123.6
120.1
120.8
121.8
121. 5
121.5
120.3
119.7
119.9
119.0
119.2
118.5

160.6
158.1
158.4
156.9
155.7
154.0

172.5
168.3
171.5
170.5
171.2
168.5

165.8
161.5
162.9
162.9
163.9
163.0

152.9
151.
150.7
148.8
146.7
145.0

184.8
182.3
180.4
179.9
179.3
178.5

146.1
145.2
143.8
142.2
140.5
138.5

137.1
135.9
134.3
132.0
130.1
130.5

175.6
175.5
174.4
171.4
168.0
166.5

202.3
201.5
200.0
196.5
194.0
191.5

126.3
122.8
121.1
117.7
118.2
117.5

148.1
148.3
148.0
147.0
146.2
145.0

117.3
115.3
115.7
115.6
113.6
110.0

1 Preliminary estimates based on incomplete data.
Source: Department of Labor.




117.8 95.2 104.5 94.7
132.6 101.4 111.6 100.3
179.7 127.3 131.1 115.5
199.1 135.7 144.5 120.5

163.7 190.4 176.9 148.8 190.1 150.9 131. 5 156.4 195.3 137.3 142.2 121.6
166.6 186.4 181.3 153.1 187.0 148.! 136.9 170.8 202.8 134.1 146.7 119.4

1948—First half

1948—January
February
March
April
May
June
July
August
September
October
November
December
1949—January
February
March
April
May
June1

128.2
148.
181.2
188.3

83.0
89.0
95.5
96.9
98.5

IO6

TABLE D-21.—Indexes of prices received and prices paid by farmers and parity ratio,
1929-49
Prices
received

Period

Prices
paid
(including
interest
and taxes)

Parity
ratio l

August 1909- 1910-1^100
July 19U=100

Monthly average:
1929
.

149

167

89

128
90
68
72
90

160
141
124
120
129

80
64
55
60
70

109
114
122
97
95

130
127
133
126
124

84
90
92
77
77

100
124
159
192
195

125
132
150
162
169

80
94
106
119
116

1945
1946
1947
1948 .

202
233
278
287

172
193
231
249

117
121
120
115

1948—First half
Second half

291
283

250
249

116
114

1949—First half.

1930
1931
1932 .
1933
1934
1935
1936 .
1937
1938
1939
1940
1941 .
1942
1943
1944

.

..

.

.

_

259

246

105

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

307
279
283
291
289
295
301
293
290
277
271
268

251
249
248
249
250
251
251
251
250
249
247
247

122
112
114
117
116
118
120
117
116
111
109
108

1949—January
February
March
April...

268
258
261
260
256
252

248
245
246
246
245
245

108
105
106
106
104
103

May

June

__ __

1

Ratio of prices received to prices paid (including interest and taxes).
Source: Department of Agriculture.




107

TABLE D-22.—Consumer credit outstanding, 1929-49
[Millions of dollars]

End of period

Installment credit

Total
consumer
credit
Total

Automobile
sale credit

Charge
accounts
Other i

Other
consumer
credit 2

1929

7,628

3,158

1,318

1,840

1,749

2,721

1930
1931
1932
1933.
1934

6,821
5,518
4,085
3,912
4,389

2,688
2,204
1,518
1,588
1,860

928
637
322
459
576

1,760
1,567
1,196
1,129
1,284

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

2.522
1,933
1,453
1,243
1,326

5,434
7,480
7,047
7,969

2,622
3,518
3,960
3,595
4,424

940
1,289
1,384
970
1,267

1,682
2,229
2,576
2,625
3,157

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

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

1940
1941
1942
1943
1944

9,115
9,862
6,578
5,378
5,803

5,417
5,887
3,048
2,001
2,061

1,729
1,942
482
175
[200

3,688
3,945
2,566
1,826
1,861

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

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

1945
1946
1947
1948-

6,637
10,191
13, 673
16,319

2,364
4,000
6,434
8,600

227
544
^,151
,961

2,137
3,456
5,283
6,639

1,981
3,054
3,612
3,854

2,292
3,137
3,627
3,865

1948—First half-..
Second half.

14, 669
16,319

7,533
8,600

,602
,961

5.931
6,639

3,352
3,854

3,784
3,865

1935
1936
1937.
1938
1939

...

_..

1949—First half *..

16,150

9,150

2,550

6,600

3,300

3,700

1948—January
February. _.
March
April
May
__.
June
July
August-,...
SeptemberOctober
November,.
December..

13,374
13,302
13, 805
14,059
14,311
14, 669
14,723
14, 916
15, 231

,202
,254
,367
,468
,536
,602
,689
,781

15, 518
15, 739
16,319

6,468
6,548
6,821
7,094
7,318
7,533
7,738
7,972
8,190
8,233
8,322
8,600

,922
,961

5,266
5,294
5,454
5,626
5,782
5,931
6,049
6,191
6,332
6,344
6,400
6,639

3,240
3,061
3,275
3,236
3,245
3,352
3,185
3,130
3,227
3,457
3,557
3,854

3,666
3,693
3,709
3,729
3,748
3,784
3,800
3,814
3,814
3,828
3,860
3,865

1949—January
February...
March
April
May *
June 3

15, 749
15, 332
15,361
15,622
15,847
16,150

8,425
8,339
8,428
8,631
8,884
9,150

,965
,996
2,105
2,241
2,386
2,550

6,460
6,343
6,331
6,392
6,498
6,600

3,457
3,176
3,148
3,258
3,249
3,300

3,867
3,817
3,785
3,733
3,714
3,700

1 Includes other sale credit and repair and modernization loans insured by Federal Housing Administration.
2 Includes single-payment loans of commercial banks, and pawnbrokers and service credit.
3 Preliminary estimates by Council of Economic Advisers.
4 Preliminary 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 (except as noted).




IO8

TABLE D-23.—Loans and investments of all commercial banks and weekly reporting member banks, 1929-49
[Billions of dollars]
Weekly reporting
member banks

All commercial banks

Investments
End of period 1

Total
loans
and
investments

1929—June21930—June 2
1931—June2
1932—June 2
2
1933—June2

obligations

Other
securities

Total

Commercial, industrial, and,
agricultural

_

.
..

-.
_

.

1945
1946
1947
1948

.

1948—January
February
March

July
..
August
September. .
October
November
December.-. . _

_

35.7

13.7

4.9

8.7

16.7

(3)

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

16.9
14.5
11.3
8.9
8.5

(3)
(3)
(8)

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

8.0
9.2
9.4
8.4
8.8

4.6
3.8

43.9
50.7
67.4
85.1
105.5

_
_.

_

1949—January 8
February '
March fi.
Aprilfi5
May .__ .
June 6_

U. S. Government

34.6
39.5
38.3
38.7
40.7

_ .

1935—June 3
1936 . . _
.
1937
1938
1939 .

April .
May._
June

Total

49.4

1934—June

1940
1941
1942
1943
1944

Loans

U )ans

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

9.4
11.4
10.3
10.8
13.0

5.0
6.7
6.1
6.4
6.5

124.0
114.0
116.3
114.3

26 1
31.1
38.1
42.5

97.9
82.9
78.2
71.8

90.6
74.8
69.2
62.6

7.3
8.1
9.0
9.2

15.8
16.7
23.3
25.6

7.3
10.3
14.6
15.6

116.6
115.5
113.6
114.3
114.6
113.9
114.8
115.1
113.6
114.1
114.2
114.3

38.2
38.7
38.9
38 8
39.5
39.9
40.1
40 6
41.7
41.6
42.3
42.5

78.4
76.9
74.7
75.5
75.0
74.0
74.6
74.5
71.9
72.5
71.9
71.8

69.4
67.9
65.5
66.3
65.9
64.8
65.3
65.1
62.5
63.3
62.8
62.6

9.0
9.0
9.3
9.2
9.2
9.2
9.3
94
9.4
9.2

23.4
23.6
23.5
23.2
23.6
23.7
23.9
24.1
24.9
24.6
25.2
25.6

14.7
14.6
14.4
14.2
14.2
* 14.3
14.5
14.8
15.2
15.4
15.5
15.6

114.5
113.4
112.5
112.5
113.4

42.4
42.0
42.4
41.3
40.9
41.0

72.0
71.4
70.1
71.2
72.6

63.0
62.2
60.9
62.0
63.2

9.1
9.1
9.2
9.2

25.3
24.9
25.0
24.0
23.7
23.9

15.4
15.2
14.9
14.2
13.6
13.2

9.1

9.2

9.3

4.4

1
Reporting date nearest end of period.
2
June data are used because complete end-of-year data prior to 1936 are not available for U. S. Government
obligations.
3
Not available prior to May 12, 1937, when the loan classification was revised.
* Beginning June, reported gross, i. e., before deduction of valuation reserves, instead of net as previously
reported.
5
Preliminary estimates based on incomplete data.
6 Preliminary estimates by Council of Economic Advisers.
7
Not available.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Board of Governors of the Federal Reserve System (except as noted).




log

TABLE D-24.—Adjusted deposits of all banks and currency outside banks, 1929-49
[Billions of dollars]

End of period *

1929

Total deposits adjusted
and currency outside
banks

Demand
deposits
adjusted J

Time
deposits *

Currency
outside
banks

_

54.6

22.8

28.2

3.6

193O._._
1931
1932
1933
1934

__.

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

1935.
1936-.._
1937
1938
1939.

._

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

70.0
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
1946
1947
1948

150.8
164.0
170.0
169.1

75.9
83.3
87.1
85.5

48.5
54.0
56.4
57.5

26.5
26.7
26.5
26.1

1948—First half—
Second half.

165.7
169.1

82.7
85.5

57.4
57.5

25.6
26.1

1949—First half *.

165.9

82.5

58.3

25.1

1948—January
February..
March
April
May
June
July
August
September.
October
November.
December.-

168.9
167.1
164.0
165.0
165.1
165.7
166.0
166.7
166.9
168.1
168.1
169.1

86.6
84.6
81.5
82.7
82.8
82.7
83.3
83.8
83.9
85.1
85.2
85.5

56.5
56.8
56.9
56.9
56.9
57.4
57.3
57.3
57.3
57.3
57.0
57.5

25.8
25.7
25.6
25.4
25.4
25.6
25.5
25.6
25.7
25.7
25.9
26.1

1949—January 6 -_
February 5_
March 5
April*
May8
June4

168.2
166.3
164.2
165.5
165.7
165.9

85.4
83.4
81.1
82.4
82.6
82.5

57.6
57.8
58.0
58.1
58.2
58.3

25.2
25.1
25.1
24.9
25.0
25.1

-

i Reporting date nearest end of period.
»Includes demand deposits, other than interbank and 17. S. Government, less cash items in process of
collection.
3 Includes deposits in commercial banks, mutual savings banks, and Postal Savings System.
4
Estimates by Council of Economic Advisers.
5 Preliminary 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 (except as noted).




IIO

TABLE D-25.—Estimated ownership of Federal securities, 1939-49
[Billions of dollars—par values *]
Gross debt and guaranteed obligations outstanding
Held bjr public
End of period
Total

Held by
U. S.
Government
agencies
and trust
funds

Total

Nonbank
private
State
Federal corpoIndiand local Com- Reserve rations
viduals •
govern- mercial banks
and
ments * banks 3
associations *

47.6
50.9
64.3
112.5
170.1
232.1
278.7
259 5
257.0
252.9

6.5
7.6
95
12.2
16.9
21.7
27.0
30 9
34.4
37.3

41.1
43.3
54.7
100.2
153.2
210.5
251.6
228 6
222.6
215.5

0.4
.5
.7
1.0
2.1
4.3
6.5
6.3
7.3
7.9

15.9
17.3
21.4
41.1
59.9
77.7
90.8
74.5
68.7
62.5

2.5
2.2
2.3
6.2
11.5
18.8
24.3
23.3
22.6
23.3

12.0
12.5
16.3
27.4
41.2
56.0
65.3
59.5
57.5
54.3

10.4
10.9
14.1
24.5
38.4
53.5
64.8
64.9
66.6
67.6

1948—First half _
Second half

252.4
252.9

35.7
37.3

216.6
215.5

7.8
7.9

64.6
62.5

21.4
23.3

55.9
54.3

67.0
67.6

1949—First half •

252.8

38.3

214.5

8.1

63.5

19.3

54.9

68.7

1948—January
February.. _
March
April __
May_
June
July _
August
__ _ .
September
OctoberNovember
_ _.
December

256 7
254.7
253.1
252.3
252.3
252 4
253.4
253.1
252.7
252.5
252.6
252.9

34 6
34.9
35.0
34.8
34.9
35 7
36.4
36.5
36.8
36.8
37.0
37.3

222.1
219.8
218.1
217.5
217.4
216 6
217.1
216.6
215.9
215.7
215.5
215.5

73
7.4
7.8
7.8
7.7
7.8
7.9
8.0
7.8
7.8
7.9
7.9

69.0
67.4
65.1
66.1
65.6
64.6
65.1
64.8
62.4
63.0
62.4
62.5

21.9
21.0
20.9
20.3
20.7
21.4
21.3
21.6
23.4
23.0
23.2
23.3

57.3
57.2
57.5
56.4
56.6
55.9
55.4
55.0
54.8
54.4
54.6
54.3

66.6
66.7
66.8
66.8
66.9
67.0
67.3
67.4
67.4
67.5
67.5
67.6

1949—January
February. _ __
March
April6_.
May
June 6

252.7
252.7
251 7
251.6
251.9
252.8

37.4
37.5
37.7
37.5
37.5
38.3

215.3
215.2
214.0
214.0
214.4
214.5

7.9
7.9
8.0
8.1
8.1
8.1

62.7
62.2
60.6
61.9
63.2
63.5

22.1
22.3
21.7
21.1
19.7
19.3

54.7
54.6
55.2
54.6
54.8
54.9

67.9
68.2
68.6
68.4
68.6
68.7

1939
1940
1941
1942.-.
1943.
1944-.
1945
1946
1947
1948-

__
_.
__

_.

1
United States savings bonds, series A-D, E, and F, are included at current redemption values.
2
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.
4
Includes insurance companies, mutual savings banks, savings and loan associations, dealers and brokers
and foreign accounts in this country. Beginning with December 1946, the foreign accounts include investments by the International Bank for Reconstruction and Development and the International Monetary
Fund in special noninterest bearing notes issued by the U. S. Government. Beginning with June 30,
1947, includes holdings of Federal land banks.
8
Includes partnerships and personal trust accounts.
• Preliminary estimates by Council of Economic Advisers.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Treasury Department (except as noted).

844384—49




III

TABLE D-26.—Bond yields and interest rates} selected years, 1929-49
[Percent per annum]
U. S. Government security
yields
Period

1945 average.
1946 average.
1947 average .

Bank
rates on
shortterm
business
loans

Bankers
acceptances 90
daysNew
York

Federal
Reserve
Bank
discount
rateNew
York

Bonds
9-12
month
Aaa
certifiLongcates of term par-I 15 years bonds
indebted- tially tax- and over,
ness 1
exempt 2 taxable

Baa
bonds

4.73
4.49
3.60
3.26
3.01

5.90
7.76
5.75
5.03
4.96

(3)
(3)
(3)
(3)
2.1

5.03
.63
.13
.43
.44

5.16
2.56
1.50
1.29
1.00

2.47
2.37
2.19
2.25

2.77
2.73
2.62
2.53
2.61

4.33
3.91
3.29
3.05
3.24

2.0
2.6
2.2
2.1
2.1

.44
.44
.44
.61
.87

1.00
* 1.00
<1.00
U.00
1.00

1929 average.
1933 average .
1935 average .
1937 average .
1939 average.
1941 average .
1943 average.

High grade corporate bond
yields
(Moody's)

3.60

3.31
2.79
2.74
2.41
0.75
.81
.82

2.05
1.98
1.66

8

1948 average .

1.14

2.44

2.82

3.47

2.5

1.11

1.34

1948—First quarter
Second quarter.
Third quarter
Fourth quarter.

1.09
1.09
1.14
1.22

2.45
2.42
2.45
2.44

2.85
2.77
2.83
2.82

3.53
3.40
3.42
3.52

2.4
2.47
2.60
2.64

1.06
1.06
1.13
1.19

.22
.25
.38
.50

1949—First quarter....
Second quarter e

1.22
1.22

2.40
2.38

2.71
2.70

3.46
3.45

2.70
(3)

1.19
1.19

.50
..50

1
Tax exempt prior to March 1,1941; taxable thereafter.
2
Average of yields on all outstanding partially tax-exempt Government bonds due or callable after 8 years,
from 1919 to 1925; after 12 years, from 1926 to 1934; and after 15 years, from 1935.
3
Not available.
* From October 30,1942 to April 24, 1946, a preferential rate of 0.50 percent was in effect for advances secured by Government securities maturing in 1 year or less.
* No partially tax-exempt bonds due or callable in 15 years.
* Average of April and May data.
Sources: Treasury Department, Moody's Investors Service, and Board of Governors of the Federal
Reserve System.




112

TABLE D-27.—Profits before and after taxes, all private corporations, 1929-49
[Billions of dollars]

Period

Corporate
profits
before
taxes

Corporate profits after taxes
Corporate
tax
liability l

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
3.8

-.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
1948

20.4
21.8
29.8
32.8

11.6
9.0
11.7
12.8

8.7
12.8
18.1
20.1

4.7
5.6
6.9
7.8

4.0
7.2
11.2
12.3

1929.

1.2

Annual rates, seasonally adjusted
1948—First half.
Second half
1949—First half 3

31.3
34.4

12.2
13.4

19.2
21.0

7.4
8.0

27.2

10.9

16.2

8.2

8.1

1948—F irst quarter. _.
Second quarter.
Third quarter..
Fourth quarter.

30.5
32.1
34.0
34.7

11.8
12.5
13.3
13.5

18.7
19.6
20.8
21.2

7.4
7.4
7.7
8.3

11.3
12.2
13.1
12.9

1949—First quarter *_.
Second quarter

28.8
25.5

11.6
10.2

17.2
15.3

8.3
8.0

8.9
7.3

3

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

2

3




11.8
13.0

TABLE D-28.—Sales and profits of large manufacturing corporations3 1939-49
[Millions of dollars]
Nondurable goods industries
(94 corporations) *

Durable goods industries
(106 corporations) i
Period

Profits

Profits
Sales

Sales

Before taxes After taxes

Before taxes After taxes
1939

_.

1940
1941
1942
1943
1944 .
1945 .
1946
1947
1948

_

_

734

597

3,843

476

400

1,226
2,175
2,326
2,389
2,192

830
982
782
755
726

4,257
5,485
6,408
7,607
8,263

617
980
1,069
1,293
1,339

443
538
438
506
529

18,161
12,623
19, 836
23,818

_.

6,748
8,750
12,806
15,362
20,633
22,085

.-

1,288
607
2,312
3,107

574
295
1,355
1,836

8,371
8,940
11,313
13,364

1,133
1,426
1,788
2,208

555
908
1,167
1,474

Totals for period, not adjusted for seasonal variation
11,154
12,664

1948—First half
Second half
1948—First quarter
Second quarter
Third quarter.
Fourth quarter
1949—First quarter

___

1,360
1,746

803
1,034

6,508
6,856

1,099
1,108

718
756

5,440
5,714
5,991
6,673

672
688
788
958

395
408
470
564

3,219
3,289
3,322
3,534

546
553
543
565

356
362
362
394

6,160

841

498

3,221

502

327

1
Revised series: See Federal Reserve Bulletin, June 1949, for similar data for the following industry groups;
primary metals and products, machinery, automobiles and equipment, foods and kindred products, chemicals and allied products, and petroleum refining.
Source: Compiled by the Board of Governors of the Federal Reserve System and based on published reports of various industrial corporations.




"4

TABLE D-29.—Relation of profits before and after taxes to investment, private
manufacturing corporations, by industry groups, 1947—49
Ratio of profits (annual rate) to stockholders'
equity
Selected quarters

Total
Industry groups

1948
1947

1948

First
quarter

Fourth
quarter

1949,
first
quarter

Before Federal taxes
All private manufacturing corporations

24.7

24.7

26.8

25.2

20.4

29.5
16.2
30.6
31.4
34.9

20.9
21.7
30.0
20.5
29.3

18.4
16.0
39.2
31.6
38.8

20.8
25.6
23.6
19.2

16.8
18.4
16.8
17.6
14.8

28.9
33.8
28.8
25.1
18.8

27.3
26.4
23.6
25.2
24.9

32.8
31.2
25.6
27.6
32.8

22.4
22.8
18.0
24.4
22.4

16.0
19.6
23.2
22.8
18.0

Rubber products..Leather and leather products..
Stone, clay, and glass products
Primary nonferrous metal industries
Primary iron and steel industries

24.2
23.8
22.7
19.3
19.2

21.0
17.5
23.7
20.8
22.7

20.0
20.0
18.4
21.6
20.8

21.6
14.0
25.2
24.8
30.0

13.6
11.6
18.8
21.6
25.6

Fabricated metal products
Machinery (except electrical and transportation) __
Electrical machinery
Transportation equipment (except motor vehicles)
Motor vehicles and parts

28.0
25.8
30.5

28.0
28.8
28.8
12.0
30.8

28.0
27.6
32.0
18.8
42.0

20.0
23.6
22.0
15.2

28.2

26.8
26.3
26.8
14.4
33.3

22.6
24.3

22.5
20.1

19.6
21.2

26.8
19. 6

20.8
16.0

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
-

-

Instruments; photographic and optical goods; watches
and clocks
Miscellaneous manufacturing (including ordnance)

4.8

9.2

After Federal taxes
15.1

15.5

16.8

15.6

12.8

17.4
18.4
18.5
22.0

12.5
13.4
18.4
12.1
18.7

10.8
10.0
24.0
18.8
24.8

12.4
15.6
14.4
12.4

9.6
11.6
10.0
10.4
8.8

Furniture and fixtures
Paper and allied products
Printing and publishing (except newspapers)
Chemicals and allied products..
Products of petroleum and coal

17.3
20.8
17.4
15.5
14.0

16.2
16.2
14.4
15.9
18.4

19.6
19.2
15.6
17.2
23.2

13.2
14.0
10.0
16.0
18.0

9.2
12.0
14.4
14.0
13.2

Rubber products
Leather and leather products
Stone, clay, and glass products
Primary nonferrous metal industries.
Primary iron and steel industries

12.2
13.8
13.7
11.6

12.0
10.3
14.6
13.2
13.9

11.2
12.0
11.2
14.0
12.8

12.8
15.2
15.2
18.4

8.0
6.4
11.2
13.6
14.8
12.0
14.0
12.4
9.6
19.6
12.4
10.0

All private manufacturing corporations...
Food
Tobacco manufactures, _
Textile mill products
_
Apparel and finished textiles
Lumber and wood products

_

_

-

_

9.8

11.7

5.2

7.6

Fabricated metal products
_
Machinery (except electrical and transportation)
Electrical machinery
Transportation equipment (except motor vehicles)
Motor vehicles and parts

17.0
15.4
18.4
.4
15.8

16.6
15.9
15.6

17.2
17.6
16.8

19.0

17.6

17.2
16.8
18.0
10.8
22.8

Instruments; photographic and optical goods; watches
and clocks
Miscellaneous manufacturing (including ordnance)

14.1
14.0

13.9
11.8

12.4
12.4

16.8
11.2

8.4

6.8

Sources: Federal Trade Commission and Securities and Exchange Commission.




TABLE D-30.—Relation of profits before and after taxes to sales, private manufacturing corporations, by industry groups, 1947-49
Profits in cents per dollar of sales
Selected quarters

Total
Industry groups

1948
1947

1948

First
quarter

Fourth
quarter

1949,
first
quarter

Before Federal taxes
All private manufacturing corporations

11.0

11.1

11.5

10.8

9.9

Food
Tobacco manufactures.
Textile mill products
Apparel and finished textiles
Lumber and wood products

7.1
6.7
13.7
7.8
18.1

5.6
8.3
13.5
5.2
15.5

5.0
6.6
15.1
7.6
19.4

5.5
10.1
11.3
2.3
11.0

4.6
7.7
8.9
4.8
10.4

Furniture and fixtures...
Paper and allied products
Printing and publishing (except newspapers)
Chemicals and allied products...
Products of petroleum and coal

10.1
17.4
10.1
14.2
14.6

9.2
13.8
8.5
13.9
17.4

11.2
15.9
9.1
15.1
19.1

7.5
12.0
6.2
13.3
15.2

6.5
11.5
9.1
13.2
13.8

Rubber products.
Leather and leather products
Stone, clay, and glass products
Primary nonferrous metal industries
Primary iron and steel industries

8.7
7.4
13.1
14.6
10.9

8.2
5.6
14.0
14.2
12.4

7.7
5.9
11.0
14.6
11.3

8.4
4.5
14.1
16.2
14.2

6.2
4.1
12.3
15.2
13.4

Fabricated metal products.
Machinery (except electrical and transportation)
Electrical machinery
Transportation equipment (except motor vehicles)
Motor vehicles and parts

12.1
12.1
10.4
2.8
10.7

11.5
12.0
10.1
7.0
12.1

12.0
12.6
10.4
6.9
11.1

11.2
12.0
10.7
8.6
13.7

9.8
11.8
9.0
7.2
12.0

Instruments; photographic and optical goods; watches
and clocks
Miscellaneous manufacturing (including ordnance)

12.5
10.8

12.5
9.5

12.1
9.5

13.0
8.7

12.0
8.4

After Federal taxes
All private manufacturing corporations..

6.7

7.0

7.2

6.8

6.1

4.2
4.1
8.2
4.6

3.3
5.2
8.3
3.1
9.9

2.9
4.1
9.2
4.5

12.3

3.3
6.1
6.9
1.3
7.2

2.7
4.8
5.3
2.9
6.4

10.7
6.1
8.7

Food
Tobacco manufacturesTextile mill products
._
Apparel and finished textiles..
Lumber and wood products..

5.5
8.5
5.2
8.8

6.7
9.7
5.6
9.4

4.4
7.4
3.4
8.7

3.7
7.0
5.7
8.1
10.3

11.4

Furniture and fixtures
Paper and allied products
Printing and publishing (except newspapers).
Chemicals and allied products
Products of petroleum and coal
__

6.0

10.9

12.8

13.5

12.2

Rubber products
_
Leather and leather products.
Stone, clay, and glass products
Primary nonferrous metal industries
Primary iron and steel industries. _

4.4
4.3
7.9
8.8
6.6

4.7
3.3
8.6
9.0

4.9
2.5

7.6

4.3
3.5
6.6
9.4
6.9

8.7

3.7
2.2
7.2
9.5
7.9

Fabricated metal products
Machinery (except electrical and transportation)...
Electrical machinery
Transportation equipment (except motor vehicles).
Motor vehicles and parts

7.4
7.2
6.3
.3
6.0

7.1
7.3
5.9
4.1
6.9

7.3
7.7
6.1
3.8
6.4

7.0
7.2
6.0
4.9
7.4

5.8
7.1
5.1
4.5
7.1

Instruments; photographic and optical goods; watches and
clocks
Miscellaneous manufacturing (including ordnance).

7.8
6.2

7.8
5.6

7.5

8.2
5.0

7.2
5.2

Sources: Federal Trade Commission and Securities and Exchange Commission.




n6

5.5

8.7
10.0

TABLE D—31.—Relation of profits before and after taxes to investment and to sales,
all private manufacturing corporations, by size classes, 1947—49
Before Federal taxes

Assets class
(thousands of
dollars)

Total

Selected quarters
1948

1947

After Federal taxes

1948

First
quarter

Fourth
quarter

Total

1949,
first
quarter

Selected quarters
1948

1947

1948
First
quarter

Fourth
quarter

1949,
first
quarter

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

24.7

24.7

26.8

25.2

20.4

15.1

15.5

16.8

15.6

12.8

1 to 249
250 to 999
1,000 to 4,999
5,000 to 9P,999
100,000 and over.-

24.4
29.2
30.6
27.3
20.3

16.1
23.5
24.5
25.7
24.7

14.4
28 0
28.0
27.2
26.8

2.8
16.4
19.6
26.0
27.6

14.4
17.2
17.2
20.0
22.4

14.8
16.9
18.2
16.5
12.9

9.2
14.0
14.7
15.8
16.0

7.2
16.4
16.4
16.4
17.2

-.8
9.2
11.6
16.0
18.0

8.4
9.6
10.0
12.0
14.4

7.2

6.8

6.1

2.0
4.9
6.0
7.1
8.7

-.2
3.0
4.2
6.8
9.2

2.4
3.5
4.0
5.9
7.8

Profits in cents per dollar of sales
All sizes
1 to 249
250 to 999
1,000 to 4.999
5,000 to 99,999
100,000 and over..

11.0

11.1

11.5

6.5
8.8
10.7
11.9
11.4

4.1
7.4
9.0
11.3
13.2

4.0
8.4
10.0
11.6
13.5

10.9

9.9

6.7

.7
5.2
7.1
11.1
14.1

4.0
6.2
7.0
9.7
12.2

3.9
5.1
6.3
7.2
7.2

7.0

2.3
4.4
5.4
7.0
8.6

Sources: Federal Trade Commission and Securities and Exchange Commission.
TABLE D-32.—Sources and uses of corporate funds, 1947-49

1

[Billions of dollars]
1947

Use or source of funds

1949, first
half 2

1948

Uses
Plant and equipment outlays
Inventories (change in book value)
Changes in customer receivables
Other current assets

28.0
15.0

Sources
Internal
Retained profits and depletion allowances
Depreciation allowances
Reduction in cash and U. S. Government securities
External
Change in trade debt
Change in Federal income tax liability..
Other current liabilities
Change in bank loans
Change in mortgages
Net new issues
_
Bonds
Stocks

28.9
15.4
10.6

o

Q

4.4
3.1
1.3

5.9
4.7
1.2

4.0
6.8
<4.2
2.6
00
-2.9
-3.5
-.8
-.2
-2.1
.4
3.3
2.6
.7

Discrepancy (uses less sources)

-.9

-1.3

-.2

7.2
5.9
-.1

_.

1
2
3
4

4.5
.3

13.5
2.6
2.4
.7

2.6

25.1
17.2
(3)

5.4
2.5

26.4
16.5
11.6

4.9
-.1
9.9
1.0
1.1
(3)

1.1

3.8
8.4
-1.7
-3.1
.2

Excludes banks and insurance companies.
Preliminary estimates based on incomplete data. Not adjusted for seasonal variation.
Less than 50 million dollars.
Preliminary estimates by Council of Economic Advisers.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce estimates based on Securities and Exchange Commission and other
financial data.




117

TABLE D-33.—The international transactions of the United States, 1946-49
[Millions of dollars]
1948
1946

Exports of goods and services:
Recorded coods'
Other goods3
Total goods
Services
-Income on investments
Total exports.
Imports of goods and services:
Recorded goods
Other goods3
Total goods
Services
Income on investments
Total imports.—
Surplus of exports of goods and services:
Recorded goods
Other goods
Total goods
Services
_
Income on investments
Total surplus of exports
Means offinancingsurplus of exports
of goods and services:5
Liquidation of gold and dollar
assets by foreign countries
Dollar disbursements by:
International Monetary Fund.
International Bank
United States Government sources:«
Grants .._ _.
Long and short term loans
United States private sources:
Remittances
Long and short term capital._
Total means of financing
Errors and omissions

1947

total

total

1949

SecFirst Second Third Fourth First ond
Total quar- quar- quar- quar- quar- quarter
ter
ter
ter
ter
ter i

10,187 15,340 12,615
716
1,687
830

3,317
326

3,237
154

2,935
170

3,126
180

3,268 3,350
153

11,874 16,056 13,445
2,272 2,611 2,083
820 1,074
1,263

3,643
540
230

3,391
537
303

3,105
526
315

3,306
480
415

3,421
475
236

14,966 19,741 16,791

4,413

4,231

3,946

4,201

4,132 4,270

1

4,933
235

5,755
316

7,124
573

1,810
118

1,710
149

1,729
153

1,875
153

1,789 1,650
137

5,168
1,783
216

6,071
2,165
227

7,697
2,493
291

1,928
532
63

1,859
616
59

1,882
775
84

2,028
570
85

1,926
558
70

7,167

8,463 10,481

2,523

2,534

2,741

2,683

2,554 2,460

5,254
1,452

9,585
400

5,491
257

1,507
208

1,527
5

1,206
17

1,251
27

1,479 1,700
16

6,706
489
604

9,985
446
847

5,748
-410
972

1,715
8
167

1,532
-79
244

1,223
-249
231

1,278
-90
330

1,495
-83
166

I

7,799 11,278

6,310

1,890

1,697

1,205

1,518

1,578

1,810

4,513

857

353

538

158

-192

-27

100

464
297

196
176

132
101

22
56

6
20

36
—1

32
8

2,279
2,774

1,812
3,901

3,761
897

786
490

810
44

1,190
—160

975
523

1,289 1,485
279
265

598
335

568
727

648
1,017

176
253

159
346

139
273

174
145

151
145 } 300

7,954 12, 282 7,552
-155 -1,004 -1,242

2,291
-401

1,975
-278

1,626
-421

1.660
-142

1,968

1,877
-299

8

2,185
-375

» Preliminary 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 withfiguresfor 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.
»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.
4
Not available.
• Allfiguresfor means offinancingare on a net basis.
• For detail see table D-34.
NOTE.—Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce.




118

TABLE D-34.—United States Government aid to foreign countries, 1946-49
[Millions of dollars]
1948

Type of aid

A. Unilateral payments:
Lend-lease
UNRRA and post-UNRRA...
Civilian supplies distributed
by the armed forces
Transfers to Philippines
Chinese aid
Greek-Turkish aid
International Refugee Organizations
Interim aid- _ _
European Recovery Program..
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 loans
United Kingdom loan
Subscription t o International Bank
International Monetary
Fund
European Recovery Program
Other
—

1946
total

1947

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

total

209
1,524
539
60
15

1949
Second
quarter i

761

85

57

21

6

1

980
96

1,280
130
168
349

346
11

312
23
1
95

420
45
78
88

202
51
89
75

250
60
51
50

(2)

33
301

12
47
567
18

23
3
617
27

18

(2)

35

21
195
204
35

927
27

74

91

170

332

89
546
1,388
115

2,517
238

2,272
460

4,150
389

874
88

907
97

1,281
91

1,088
113

2,279

1,812

3,761

786

810

1,190

975

1,289

17
12

1,166

1,383 1,575
94
90

600

2

2

1

1

841
945
600

274
796
2,850

210
454
300

156
170
300

40
145

11
70

3
69

1,485

4
50

317

318

5

2,745
80

486
22

5

4

1
6

485
7

280
10

200

12

Total.
Less repayments

3,320
90

7,065
174

1,474
332

632
52

190
28

88
210

564
42

344
65

275
35

Equals net long-term loans
and investments, including
International Bank and International Monetary Fund.
Less subscriptions to International Bank and International Monetary Fund

3,230

6,891

1,142

580

162

-122

522

279

240

322

3,063

2,908

3,828

1,142

580

162

-122

522

279

240

-134

73

-245

-90

-118

-38

1

5,053

5,713

4,658

1,276

854

1,030

1,498

Equals net long-term loans
and investments, excluding
International Bank and International Monetary Fund.
0. Short-term loans (net)
Total net unilateral payments, loans, and investments, excluding International Bank and International Monetary Fund
(A+B+C)

1 Preliminary estimates based on incomplete data.
2 Not available.
Source: Department of Commerce.




25

1,568

1,750

TABLE D—35.—United States merchandise exports, including reexports, by areas,
1936-38 quarterly average, and 1947-49

Period

Other
Total
ERP
Other
exports, Canada Western
Hemi- countries 1 Europe
including
sphere
reexports

Asia*

Australia
and
Africa
Oceania

Millions of dollars
Quarterly average:

742
3,835
3,154

113
519
476

138
1,027
848

282
1,324
1,046

31
118
49

122
562
498

23
80
38

32
205
196

1948—First quarter.. _
Second quarter.
Third quarter..
Fourth quarter.

3,317
3,237
2,935
3,126

425
493
485
511

914
901
738
839

1,141
1,061
964
1,017

84
33
38
40

513
507
486
486

42
34
30
47

197
207
195
186

1949—First quarter.._
Second quarter 2

3,268
3,350

463
(8)

840
(3)

1.120
(3>

41

588
(3)

54

163

1936-38
1947
1948

(3)

(3)

Percentage of total
Quarterly average:
100
100
100

15.2
13.5
15.2

18.6
26.8
26.9

38.0
34.5
33.2

4.2
3.1
1.6

16.4
14.7
15.8

3.1
2.1
1.2

4.3
5.3
6.2

1948—First quarter...
Second quarter.
Third quarter..
Fourth quarter.

100
100
100
100

12.8
15.2
16.5
16.3

27.6
27.8
25.1
26.8

34.4
32.8
32.9
32.5

2.5
1.0
1.3
1.3

15.5
15.7
16.6
15.6

1.3
1.1
1.0
1.5

5.9
6.4
6.6
6.0

1949—First quarter...

100

14.2

25.7

34.3

1.3

18.0

1.7

5.0

1936-38
1947
1948

1 Turkey is included with E R P countries and excluded from Asia. Exports to Germany in the postwar
period relate almost wholly to exports to the three western zones.
2 Preliminary estimate based on incomplete data.
8
Not available.
NOTE.—Data in this table cover all merchandise, including reexports, shipped from the United States
customs area to foreign countries including, in 1947 to 1949, 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.




I2O

TABLE D-36.—United States domestic merchandise exports, by economic classes,
1936-38 quarterly average, and 1947-49
Total
domestic
exports

Period

Crude
materials

Crude
foodstuffs

Manufactured
foodstuffs

Semimanufactures

Finished
manufactures

Millions of dollars
Quarterly average:
1936-38
1947
1948

731
3,791
3,124

167
400
372

34
337
316

42
439
329

130
446
342

358
2,168
1,764

1948—First quarter
Second quarter
Third quarter
Fourth quarter

3,285
3,205
2,907
3,097

329
327
373
458

322
245
357
340

341
371
309
296

381
357
314
316

1,912
1,905
1,553
1,687

1949—First quarter

3,232

466

396

251

385

1,735

Percentage of total
Quarterly average:
1936-38
1947
1948

100
100
100

22.8
10.6
11.9

4.7
8.9
10.1

5.7
11.6
10.5

17.8
11.8
10.9

49.0
57.2
56.5

1948—First quarter
Second quarter
Third quarter
Fourth quarter

_

100
100
100
100

10.0
10.2
12.8
14.8

9.8
7.6
12.3
11.0

10.4
11.6
10.6
9.6

11.6
11.1
10.8
10.2

58.2
59.4
53.4
54.5

1949—First quarter....

_.

100

14.4

12.3

7.8

11.9

53.7

NOTE.—Data in this table cover all domestic merchandise shipped from the United States customs area
to foreign countries including, in 1947 to 1949, 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.




121

TABLE D-37.—Indexes of quantity and unit value of United States domestic merchandise exports, by economic classes, 1936-38 quarterly average, and 1947-49
[1936-38=100]
Total
domestic
exports

Period

Crude
materials

Crude
foodstuffs

Manufactured
foodstuffs

Semimanufactures

Finished
manufactures

Quantity indexes

Quarterly average:
1936-38
1947...
1948

100
275
213

100
123
100

100
397
362

100
478
351

100
203
143

100
332
256

1948—First quarter..
Second quarter.
Third quarter..
Fourth quarter

220
217
197
216

87
86
100
124

323
265
407
429

353
390
319
335

160
149
130
131

275
275
225
246

1949—First quarter..

229

129

494

314

161

254

Unit value indexes
Quarterly average:
-

100
188
200

100
195
223

100
248
255

100
218
223

100
169
184

100
182
193

1948—First quarter. _.
Second quarter.
Third quarter..
Fourth quarter

204
202
201
196

227
229
223
220

290
269
256
231

230
226
230
209

184
185
186
186

194
194
193
191

1949—First quarter. _

193

216

234

190

184

191

1936-38
1947
1948

NOTE.—The indexes of quantity are a measure of the volume of trade after the influence on value of changes
in average prices has been eliminated. The indexes of unit value provide a measure of change in the average
prices at which trade transactions are reported in official foreign trade statistics, including change in average
prices that result from changes in the commodity composition of trade. The indexes for 1947 to 1949 are
based on data which include goods destined to the United States armed forces abroad for distribution to
civilians in occupied areas.
Source: Department of Commerce.




122

TABLE D-38.—United States general merchandise imports, by areas,1936-38 quarterly
average, and 1947-49
Period

Other
Total
general Canada Western
Hemiimports
sphere

ERP
countries l

Other
Europe

Asia 1

Australia
and
Africa
Oceania

Millions of dollars
Quarterly average:

622
1,439
1,781

86
274
388

145
576
637

152
174
244

30
45
48

183
249
324

10
39
41

17
82

1948—First quarter.._
Second quarterThird quarter. _
Fourth quarter.

1,810
1,710
1,729
1,875

328
355
410
461

705
630
586
625

232
233
234
280

53
48
49
43

328
321
301
346

48
34
48
34

116
90
102
85

1949—First quarter - _2_
Second quarter

1,789
1,650

366
(3)

674
(3)

250
(3)

34

328
(3)

34

102

1936-38
1947
1948

00

(3)

Percentage of total
Quarterly average:

100
100
100

13.8
19.0
21.8

23.3
40.0
35.8

24.4
12.1
13.6

4.8
3.1
2.7

29.4
17.3
18.2

1.6
2.7
2.3

2.7
5.7
5.5

1948—First quarter...
Second quarter.
Third quarter..
Fourth quarter.

100
100
100
100

18.1
20.8
23.7
24.6

39.0
36.8
33.9
33.4

12.8
13.6
13.5
14.9

2.9
2.8
2.8
2.3

18.1
18.8
17.4
18.5

2.7
2.0
2.8
1.8

6.4
5.3
5.9
4.5

1949: First quarter....

100

20.5

37.7

14.0

1.9

18.3

1.9

5.7

1936-38
1947
1948

1 Turkey is included with E R P countries and excluded from Asia. Imports from Germany in the postwar period relate almost wholly to imports from the three Western zones.
2 Preliminary estimate based on incomplete data.
3 Not available.
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 entries into bonded customs warehouses.
Detail will not necessarily add to totals because of rounding.
Source: Department of Commerce.




123

TABLE D-39.—United States merchandise imports for consumption, by economic
classes, 1936-38 quarterly average, and 1947-49

Period

Total
imports for
consumption

Crude
materials

Crude
foodstuffs

Manufactured
foodstuffs

Finished
Semimanu- manufacfactures
tures

Millions of dollars
Quarterly average:
1936-38
1947
1948

615
1,416
1,770

190
441
537

85
254
318

95
164
183

126
311
408

120
246
324

1948—First quarter. _
Second quarter.
Third quarter-.
Fourth quarter.

1,776
1,678
1,754
1,870

578
506
543
520

346
287
271
367

161
180
199
190

396
385
419
433

295
319
322
360

1949—First quarter. _

1,756

502

340

181

397

336

Percentage of total

Quarterly average:
1936-38
1947
1948

100
100
100

30.9
31.1
30.3

13.8
17.9
18.1

15.4
11.6
10.3

20.5
22.0
23.1

19.5
17.4
18.3

1948—First quarter. _
Second quarter
Third quarter .
Fourth quarter

100
100
100
100

32.5
30.2
31.0
27.8

19.5
17.1
15.5
19.6

9.1
10.7
11.3
10.2

22.3
22.9
23.9
23.2

16.6
19.0
18.4
19.3

1949—First quarter. _

100

28.6

19.4

10.3

22.6

19.1

NOTE.—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.




124

TABLE D-40.—Indexes of quantity and unit value of United States merchandise
imports for consumption, by economic classes, 1936-38 quarterly average, and
1947-49
[1936-38=100]

Total
imports for
consumption

Period

Crude
materials

Crude
foodstuffs

Manufactured
foodstuffs

Finished
Semimanu- manufacfactures
tures

Quantity indexes

Quarterly average:
100
108
123

1948—First quarter
Second quarter
Third quarter
Fourth quarter

_.

1949—First quarter

100
129
139

100
96
109

100
83
91

100
130
149

100
84
103

126
117
119
128

154
132
136
132

117
100
91
127

81
89
99
95

153
142
151
152

96
101
102
113

121

1936-38
1947
1948

128

121

93

139

105

Unit value indexes
Quarterly average:
100
213
235

100
180
203

100
311
343

100
208
212

100
191
217

100
245
266

1948—First quarter
Second quarter. _
Third quarter
Fourth quarter.

230
234
239
238

197
202
210
206

347
338
349
338

210
214
212
212

206
215
221
227

266
268
265
267

1949—First quarter

236

206

330

206

227

267

1936-38
1947
1948

—

NOTE.—The indexes of quantity are a measure of the volume of trade after the influence on value of changes
in average prices has been eliminated. The indexes of unit value provide a measure of change in the average
prices at which trade transactions are reported in official foreign trade statistics, including changes in average prices that result from changes in the commodity composition of trade.
Source: Department of Commerce.
TABLE D-41.—Changes in selected economic series since 1939 and 1948
1939=100

Source:
Appendix
table No.

1948

Economic series
Year

D-2..
D-3-.

D-5-.

First
half

Second
half

1949,
first
half

Percentage
changes,
1948 second
half to 1949
first half 1

Gross national product
Personal consumption expenditures...
Gross private domestic investment
Net foreign investment
Government purchases of goods and
services.
National income
___
Compensation of employees

283
263
453
211
271

276
259
432
367

291
268
476
56
296

281
260
397
67
319

-3.4
-2.7
-16.6
+20.0
+7.7

310
292

301

320
300

310
294

-3.2
-2.2

Personal income
Disposable personal incomePersonal net saving

294
274
552

267
452

300
282
637

295
278
726

+14.0

245
142

239
141

251
144

246
144

-2.0

113
111
130
142
83
22

111
110
127
140
79
23

115
113
132
144
87
20

113
111
127
139
83
34

-1.6
-1.8
-3.9
-3.7
-5.3
+66.6

Per capita disposable personal income:
Current dollars
1948 dollars

Labor force, including armed forces..
Civilian labor force
Employment
Nbnagricultural
Agricultural
Unemployment
See footnotes at end of table, p. 126.

D-7..




125

-1.8
-1.2

+.1

TABLE D-41.—Changes in selected economic series since 1939 and 1948—Continued
1939=100

Source:
Appendix
table No.

1948

Economic series

Year
D-9.

D-12

D-l?

Average gross weekly earnings:
Manufacturing...
Bituminous coal mining
Building construction.
Retail trade

223
304
227
189

Physical production index of goods and
utilities: total
Agriculture
Nonagriculture-.

172
132
180

First
half

218
295
220
185

()

Second
half

1949,
first
half

227
312
233
192

Percentage
changes,
1948 second
half to 1949
first half

225
306
232
197

()

172

-1.2
-2.0
-.8

+2.9

)

180

176
206
162
146

1 pr<
Durable manufactures
Nondurable manufactures..
Minerals.

180
176
206
163
144

176
207
161
148

166
196
152
136

-4.6
-5.7
-5.3
-5.7
-8.3

D-14

New construction: total
Private
Residential—
Nonresidential
Public utility and farm.
Public

382
342
456
414
169

259
342
308
418
357
131

337
422
375
494
471
206

268
326
272
407
384
179

-20.4
-22.8
-27.6
-17.7
-18.4
-12.9

D-15-.

Business expenditures for new plant and
equipment

370

346

394

357

-9.4

D-16.

Inventories:
Manufacturing..
Wholesale
Retail
Sales:
Manufacturing..
Wholesale
Retail

276
260
263

258
249
258

275
260
264

i.

344
314
309

335
302
294

353
326
325

D-19

Consumers' price index: All items.
Food
Apparel
Rent

172
221
197
113

170
219
195
112

174
223
199
114

D-20-.

Wholesale price index: All commodities. __
Farm products
Foods
Other than farm products and foods...

214
288
254
186

212
292
251
183

216
285
258

D-21

Prices received by farmers
Prices paid by farmers (including interest
and taxes).
Parity ratio.

302

306

201
149

202
151

201
148

D-22..

Consumer credit outstanding, end of
period.

205

184

D-27.

Corporate profits:
Profits before taxesProfits after taxes
Dividend payments.._
Undistributed profits .

505
402
205
1,025
425

482
384
195
983
(*•"
442

286

283

D-35..
D-38-

Merchandise exports, including reexports]3
General merchandise imports

3

()

8

-2.1
-4.6
-3.2

171
212
193
115

+1.4

204
261
232
184

-5.6
-8.6
-9.9
-2.5

273

-8.5

136

-1.2
-7.9

205

203

-1.0

529
420
211

418
324
216
675

-20.9
-22.9
+2.5
-37. 7

446

+9.2

277

-4.6

1,083
408
290

1
Changes are computed from data as reported and therefore may aiffer slightly from changes computed
from the indexes shown here.
2
Not available.
31936-38 average=100.

For sale by the Superintendent of Documents, U. S. Government Printing OflQce
Washington 25, D . C. • Price 50 cents




126







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