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MONTHLY
OCTOBER 1953
CONTENTS
Input-Output Relations o f Steel-Using
I n d u s t r i e s .............................................
Keview
Vol. 35— No. 10
Farm M anagement fo r Bankers
12
National Business Summary
.
.
.
Glass Processing Forges Ahead
Federal Reserve Bank o f Cleveland
2
. 13
15
Cleveland 1, Ohio
DIRECT A N D INDIRECT REQUIREMENTS OF STEEL
BY THE MOTOR VEHICLE INDUSTRY
(in d o lla r p ro d u c tio n of steel per million d o lla r output of motor v e h icle industry)
DIRECT REQUIREMENTS
INDIRECT REQUIREMENTS
$ 4 4 , 3 8 6 per million $ output
$ 5 8 , 4 6 5 per million $ output
TIRES AND INNER TUBES
$100
Examples of steel
requirements
of supplying
industries:
METAL STAMPINGS
$5,625
ENGINE
ELECTRIC
EQUIP
MENT
$1,153
IRON AND STEEL FORGINGS
$ 5 ,3 4 4
FIRST RO U N D
Examples of steel
requirements
of supplying
industries:
SE C O N D R O U N D
NUTS,
BOLTS,
ETC
$76
BALL &
ROLLER
BEARING!
$53
FABRICATED
WIRE PRODUCTS
METAL
STAMPINGS
$145
MOTORS & GENERATORS $24
(Chart is illustrative of article on “input-output’’; for explanation see page 10.)
Page 2
Monthly Business Review
October 1, 1953
Input-Output Relations of Steel-Using Industries
of current or prospective business
situations frequently calls for information about
the probable impact of changes in a given industry
upon a series of other industries, related to the first
either as suppliers or as customers. Currently, for
example, a good deal of attention is being paid to
the question of the probable effects of changes in
the pace of automobile production upon other spe
cific industries, and upon the business economy
generally. Ordinary business statistics do not give
much help at this point. W hat has come to be
known as “input-output” analysis may, however, be
a useful statistical tool in this connection.
Input-output analysis represents an attempt to
portray in quantitative terms the nature of the inter
industry transactions which are characteristic of the
nation’s business during a period of time.(1) More
specifically, it tells how much in dollar value, or in
what proportions, each named industry sells to, and
buys from, the other named industries as well as the
sum of its transactions with final consumers and
the government. Input-output data of this sort have
for a number of years been intensively used in some
aspects of governmental and military activity, but
only recently have come into notice in business
circles.
Until very recently, most of the published inputoutput tables were limited in scope to broad indus
try groups, such as, for example, 50-sector tables;
that is, tables which show the purchase and sales
transactions of each of 50 industrial groups with
each of the others. During the past summer, how
ever, the Bureau of Labor Statistics of the U. S. De
partment of Labor has published three input-output
tables of a 200 x 200 type, i.e., showing the inter
relations of 200 industrial or business classifications.
This presents the material in a form which is much
closer to the everyday needs of business.
Any given input-output table is, by its nature,
static. It applies to the transactions during a given
period of time, usually a calendar year. The 200 x
200 tables referred to here, and utilized below, apply
to the year 1947, for which data obtained from the
1947 Census of Manufacturers are available. It will
be asked, of what use is a 1947 table for the condi
tions of 1953? The answer given by the framers of
input-output tables is that, in spite of the well
I
n te r p r e ta tio n
(l) Tnput-output analysis was largely pioneered by Professor Wassily
Leontief of Harvard University. T he laborious com putations re
quired are now being carried out by several governmental and pri
vate agencies; the chief source of final data available to the public
is the Division of Interindustry Economics. Bureau of Labor Statis
tics, U. S. Department of Labor
For other footnotes, see page 14.
known fact of technological change, the basic tech
nical relations of one industry to another as shown
in the tables does not change so rapidly from year
to year as to preclude the current usefulness of
tables based on data several years old.
Without attempting to enter the theoretical con
troversies which have developed around this point,
we are nevertheless presenting a sample of the inputoutput type of information on the assumption that
the 1947 data do throw some light on significant
aspects of the 1953 situation. All of the accompany
ing tables and charts should be understood as hav
ing been derived from the 1947 data.
The material below represents a selection from
the 200 x 200 input-output tables just identified.
Attention is pointed mainly to interindustry relations
involving steel-fabricating industries, which are espe
cially important to Ohio and the Fourth Federal
Reserve District. The selection of certain data for
emphasis involves consolidation of other material, —
otherwise the results would be much too bulky for
presentation here. In the explanations which follow,
the nature of the official input-output tables is ex
plained briefly along with the steps taken here to
simplify them and adapt them to the purpose at
hand.
The three 200 x 200 input-output tables recently
published by the Bureau of Labor Statistics may be
distinguished as follows: Table I is a transactions
table, showing inputs and outputs of the various
industries in millions of dollars. Table II is a ratio
table, showing direct purchases or requirements by
each of the stated industries, per million dollars of
its output, from each of the others. Table III shows
the results of adding indirect requirements to direct
requirements. Our selections from, and adaptations
of, these three tables are captioned, respectively,
tables A, B and C. In addition, Table D provides
specific illustrations centering about the motor vehi
cle industry. The two charts are drawn from Table
D or closely related information. Explanations fol
low the order just named, although some departures
from this order occur in the spacing of the tables
and charts.
Input-Output In Dollars I Table AI
Fable A, which appears on pages 8-9, represents
the form of input-output table most familiar to the
general public; it shows transactions between indus
tries in millions of dollars, based on the relations of
the year 1947. This table is a selective condensation
of the official BLS Table I.
Eight steel-using industries, ranging from special
industrial machinery to motor vehicles have been
October 1, 1953
Monthly Business Review
selected for inclusion. These eight lead off on both
the left-hand stub and the top caption of the table;
on the left, they appear in the role of producing
industries, with their outputs read in a horizontal
direction to the right; at the top, they appear in
the role of purchasing industries with their inputs
read vertically below. (Use of red and black type
for industry captions is employed in this as in other
tables to indicate the distinction between purchase
and output meanings; red indicates a purchase role,
and black, an output role.)
Following the eight steel-using industries are listed
the steel industry itself (in two sections) and other
industries providing important industrial materials
(nonferrous metals, glass, lumber, rubber) as well
as electric light and power. From this point on, in
the table, the entries reflect drastic consolidation of
the corresponding entries in the larger BLS table.
Thus, 140 industries as shown in BLS Table I are
consolidated into the item shown on our Table A
as “All Other Industrial Sectors.” (Such consoli
dation has been effected entirely for purposes of
practicability of presentation here.) Likewise, 31
sectors of a service character, separately enumerated
in BLS Table I, are here consolidated under the
title “Transportation, Trade, Services and Construc
tion Sectors.”
The “Final Demand” sector shown near the topright corner of Table A includes more than pur
chases by consumers. It comprises foreign trade (the
net “take” by foreigners of our goods and services)
government purchases, gross private capital forma
tion, and purchases by households, — each of which
is itemized in BLS Table I, but not shown sepa
rately here.(2) The figures of the final column of
Table A, called “Gross Domestic Output,” are seen
to be identical in magnitude with the corresponding
industry figures in the final row called “Gross Do
mestic Outlays.”
Example Drawn from Table A. To illustrate the
meaning of Table A, take industry No. 79, Steel
Works and Rolling Mills, and follow through on
the horizontal, and then the vertical. Reading on
the horizontal it appears that in 1947 the distribu
tion of the steel industry’s output included $57.7
million of products to the special industrial ma
chinery industry, $363.1 million to structural metal
products, $64.9 million to iron foundries, etc. The
large figure of $1,641.2 million represents intra
industry sales within the steel industry, itself.(3)
Following further to the right along the steel in
dustry row, it is seen that relatively smaller dollar
totals of steel output go, respectively, to the nonferrous, glass, lumber, and rubber industries. “All
other industrial sectors,” which are not itemized
here but which appear in BLS Table I, account for
a total of $2,813 million, while a consolidation of
Page 3
the transportation, trade, services and construction
sectors accounts for $909.5 million.(4)
The various forms of “Final Demand,” including
net exports of steel and inventory build-up, ac
counted for $818.3 million. Finally, at the extreme
right of the row, appears the grand total of “Gross
Domestic O utput,” amounting to $7,700.3 million,
which remains to be explained in terms of inputs.
Reading now on the vertical in order to see the
input distribution of industry No. 79, Steel Works
and Rolling Mills, the column for that industry
shows, among other entries, that steel works took
$1,535.3 million of products from the blast-furnace
industry, $136.7 million of nonferrous metals and
products, $47.2 million of products of iron foundries,
etc. Intra-industry purchases of steel amounted to
$1,641.2 million, the identical item previously men
tioned in connection with distribution of sales.
Purchases by the steel industry from the consoli
dated group “All other industrial sectors” amounted
to $682.9 million. The latter includes $39.1 million
of purchases from industry No. 16, “Coal Mining,”
and $25.9 million of purchases from industry No. 63,
“Coke and Products,” as would be seen in BLS
Table I which is more extensive than our Table A.
Payments by the steel industry to the entire group
of “transportation, trade, services and construction
sectors” amounted to $1,047.3 million. Included
here are such transactions as $183.4 million paid to
railroads and $25.6 million paid for all banking,
finance and insurance services, combined.
“Charges against Final Demand,” amounting to
$2,486.9 million, and not itemized here, include pay
ments of wages and taxes as well as corporate prof
i t s . T h e importance of such sectors for the input
side of the steel industry, or of any other industry,
is not to be minimized, but an analysis of them is
beyond the scope of this article.
Finally the grand total of the column for the steel
works and rolling mills industry shows “Gross Do
mestic Outlays” of $7,700.3 million, which checks
with the total of the row representing “Gross Do
mestic O utput” as previously noted.
Direct Purchases; Ratios ITable B)
For many purposes, input-output tables are more
useful when the information is expressed in the form
of ratios, rather than dollar amounts. When, for
example, a problem dealing with the year 1953 is
under consideration, the percentage relationships (or
other ratios) obtained from the 1947 input-output
table may be applied to various forms of current
1953 dollar data, providing the assumption men
tioned earlier is maintained, i.e., that the shape of
technical interindustry transactions does not alter
substantially over fairly short periods. (It is certain
in any event that these relationships do not change
nearly as rapidly as the raw dollar totals.)
Monthly Business Review
Page 4
October 1, 1953
(For outputs read down; for inputs read across)
TABLE B.
DIRECT PURCHASES PER MILLION DOLLARS OF OUTPUT
Each entry shows (per million dollars of output by industry named at left) the direct purchases from industry named at top.
Nonferrous
Steel
Iron
Works and
Metals
Nonferrous
Rolling Mills Foundries and Products Foundries
(80)
(79)
(82-85)
(91)
(87-90)
(70)
Lumber
and Wood
Products
(37-40)
Rubber
Products
(65-66)
3,608
7,885
461
958
433
2,395
1.481
633
2,141
1,266
2.195
380
1,740
2,652
50.201
387
11,462
2,561
2.439
52,486
55,984
5,790
1,336
5,427
18,238
5.248
4,374
1.429
2,886
11,062
27,812
20,473
3,001
31,782
3,579
2,694
75,532
74,845
58,014
70,103
26,672
10,897
13,781
15,794
24,392
6,018
13,628
4,311
932
4,886
3,709
11,528
12,321
1,086
2,593
6,308
54.948
18,970
1.465
3,999
101
2,349
15,185
Motors and Generators...............
Ships and Boats.............................
M otor Vehicles..............................
Farm and Industrial Tractors . .
54,476
47,557
44.386
43.309
42,610
825
28,037
72,585
30,088
2,386
8,581
2.305
9.999
2,662
7.094
3.889
48
681
8,539
3,175
10,453
3,421
2.224
3,596
1,421
41,204
31.970
Electrical Appliances....................
Special Industrial M achinery...
Lighting Fixtures...........................
Machine Tools and M etalwork
ing M achinery...........................
39.307
28,616
27,566
12.812
45.091
2.735
16,532
11,085
23,316
36,172
12,174
5.935
562
504
38.544
9,961
9,384
7.964
12,138
15.569
2,091
21.014
50,713
2.406
12,610
152
2,488
10,944
Fabricated Wire Products...........
Tin Cans and other Tin W are. .
Iron and Steel Forgings...............
M etal Barrels, Drums, etc..........
475,207
461,033
395,402
331,155
1,518
3
20,562
5
57,898
11.157
20,481
29.214
2.014
738
108 Steel Springs...................................
99 Structural M etal Products..........
100 Boiler Shop Products and Pipe
Bending.......................................
109 Nuts, Bolts and Screw Machine
Products.......................................
255,479
220.152
1,909
2.488
31
42,820
863
215,686
4.474
6.759
204,944
1.978
101
113
42
95
M etal Stampings...........................
Farm Equipm ent...........................
M etal Furniture.............................
Tools and General H ardw are...
155,709
104,515
90,907
82.747
81
98
125
114
Steel Foundries..............................
Heating Equipm ent......................
Refrigeration Equipm ent............
Construction and M ining M a
chinery .........................................
131
149
145
112
135
118
103
116
104
93
92
105
Glass
1,015
3
1.017
855
SOURCE: Based on “Table II” published by Bureau of Labor Statistics, U. S. Department of Labor, applying to the
1947 Interindustry Relations Study.
Table B is an example of such a ratio table; it
expresses in units per million dollars of output of
the industry named at the left, the latter’s direct
purchases from industries shown at the top.tJ) The
material for Table B is selected from Table II of
the BLS series. Arrangement of Table B differs from
that of the previous Table A, as well as from that
of BLS Table II from which it is abstracted,(C)
insofar as outputs are on the vertical dimension and
inputs on the horizontal. (Such a transposition is
merely for reasons of space, and should not confuse
the reader, especially if the red captions are taken
as the clue to input relationships.)
It will be seen from Table B that, judged by the
interindustry relationships of 1947, the “Fabricated
Wire Products” industry purchases $475,207 per
million dollars of its own output (or 47.5% of the
value of its output) from the steel works and rolling
mills industry. Likewise, the industry producing “Tin
Cans and Other Tin W are” purchases $461,033
Monthly Business Review
October 1, 1953
per million dollars of its own output (or 46.1% of
the value of its output) from the steel industry.
Proceeding downward in the first column, certain
important customer industries of the steel industry
are listed in order of the importance of steel in their
own purchases, — not in order of their importance
to the steel industry as customers of the latter.<7)
For another illustration from Table B, take the
final industry named on the left, “Machine Tools
and Metalworking Machinery,” and trace its pur
chases from various other industries along a horizon
tal direction. Thus, the machine-tool industry pur
chases, per million dollars of its own output: $21,014
from steel works and rolling mills, $50,713 from iron
foundries, etc. (Purchases by the machine-tool in
dustry from other industries not selected for inclusion
in Table B are also important, and can easily be
ascertained by reference to BLS Table II.)
Page 5
Direct and Indirect Requirements (Table C l
From what has already been shown, it may be
inferred that input-output tables have the potenti
ality of showing the indirect demands on a given
industry, as well as the direct demand. For example,
if the steel industry is called on by the auto industry
to supply directly a certain total of steel, how much
additional steel must be provided indirectly to the
auto industry by way of the various auto-parts in
dustries?
To answer this type of question, a table like Table
B (although presumably more extensive in cover
age) could be examined for a cumulation of suc
cessive demands pointing in the desired direction,
in order to arrive at a total of direct and indirect
requirements impinging on the industry in question.
The Bureau of Labor Statistics has, in fact, con
ducted such an operation, although the method em
(For outputs read down; for inputs read across)
TABLE C.
DIRECT AND INDIRECT REQUIREMENTS
Each entry shows (per million dollars of output by industry named at left) the total dollar production directly and indirectly
required FROM industry named at top.
104
93
92
105
100
98
131
149
145
112
118
116
128
Fabricated Wire Products.................
Tin Cans and Other Tin W are. . . .
Iron and Steel Forgings.....................
M etal Barrels, Drums, etc.................
Boiler Shop Products and Pipe
Bending..............................................
Heating Equipm ent............................
Motors and Generators......................
Ships and Boats....................................
Motor Vehicles.....................................
Farm and Industrial Tractors..........
Special Industrial M achinery..........
Machine Tools and Metalworking
M achinery.........................................
Machine Shops.....................................
119 Pumps and Compressors....................
147 Automobile Trailers............................
I l l Internal Combustion Engines..........
117 Cutting Tools, Jigs and Fixtures----
Steel Works
and
Rolling Mills
(79)
Iron
Foundries
(80)
Machine
Tools and
Metalworking
Machinery
(116)
629,456
610,488
523,351
490,937
7.485
5,726
26,725
5.824
1,573
2.300
2.441
2,830
853
833
808
833
4.018
9,369
683
3,138
5,780
14,912
843
103.064
321,932
146,035
103,521
99,860
102,851
118,682
72,853
13,702
34,736
48,394
8,593
33.970
91,132
55,619
6,987
4,957
2.771
5.771
4,135
7.936
21,519
5,760
2,980
2,455
2,218
2,105
11.807
(a)
42,341
17,123
1,157
42,095
2,506
2,259
2,267
9,167
26,888
11,170
3,573
39,594
21,748
3,981
60,574
72,352
84,907
75,330
80,347
83,348
60,801
78,516
76,163
9,683
105,381
22,647
(a)
9,378
20,904
3,169
8,959
76,398
18,751
43,668
18,838
2,445
14,992
12,747
2,870
1,227
4,107
50,134
1,990
2.401
4,226
1,406
4,262
11,380
8,504
47,127
Special
Industrial
Machinery
(118)
Structural
Metal
Products
(99)
Metal
Stampings
(101)
(a) SI,000,000 by definition.
Source: Based on “Table III” published by Bureau of Labor Statistics, U. S. Department of Labor, applying to the 1947 Interin
dustry Relations Study.
Page 6
Monthly Business Review
ployed was based on a solution of simultaneous
equations in preference to the almost infinite series
of arithmetic additions which would be involved in
tracing items through the various levels of the in
dustrial flow.
The results are contained in BLS Table III en
titled “Direct and Indirect Requirements Per Mil
lion Dollars of Final Demand” . From the latter is
drawn the material for our accompanying Table C,
which differs from BLS Table III in the following
respects: (a) only a few of the items have been se
lected from the BLS table, (b) conversion has been
made from a unit “per million dollars of deliveries
to final demand” to a unit “per million dollars of
o u t p u t Such conversion was effected in order to
make for greater comparability with the preceding
Table B, and also to provide the groundwork for
the charts shown here.(8)
Table C shows, for each million dollars of output
by the industry named on the left, the total dollar
production directly and indirectly required from
the industry named at the top. (As previously, this
means in accordance with the interindustry relations
which prevailed in 1947.) The “Fabricated Wire
Products” industry, for example, requires $629,456
of steel products, both directly and indirectly, for
each million dollars of its own output. (Such a
ratio may be compared with the $475,207 per mil
lion of direct requirements as shown previously in
Table B.) For another example, the item entered
in the first column, sixth row, shows that the “Heat
ing Equipment” industry requires $146,035 of steel
products, both directly and indirectly, for each mil
lion dollars of its own output, or a ratio equal to
nearly 15 percent of the v alue of its output. The
corresponding figure for direct requirements is only
about 7 percent, as seen from Table B, first column,
14th row.
It should be explained that the first 12 of the 17
industries named at the left of Table C have pre
viously been included in the showing of Table B,
while the other five are added in order to bring out
a range of relationship not previously shown. Like
wise, the industries included along the top of Table
G are not the same as those at the top of Table B,
although steel works and iron foundries are com
mon to both tables. The choice of industries to be
included in Table G was guided in part by an aim
to bring out the mutual inter-relationships among
some important steel-using industries.
Motor Vehicle Example ( Table D and Charts I
With the general layout of the input-output tables
before us, it becomes possible to focus on an exam
ple, or set of examples, drawn from one particular
industry in relation to other industries. The motor
vehicle industry has been selected for this purpose,
October 1, 1953
and all the information which follows has been
drawn from Tables A, B, or C, previously discussed,
or from the BLS tables upon which they are based.
Table D throws additional light on the nature
of purchases by the motor vehicle industry, as judged
by the interindustry relations discovered for 1947.
The first column shows the direct purchases by the
motor vehicle industry from a list of 35 supplying
industries, expressed in each case as a percentage
of total outlays by the motor vehicle industry. (Total
outlays include wages, taxes, etc., and are taken
from the final column or row of Table A, or its
source, BLS Table 1.) The first entry shows that
the motor vehicle industry purchases from the steel
works and rolling mills industry the equivalent of
4.4 percent of total motor vehicle outlays, a figure
which is identical with the item of $44,386 per mil
lion dollars already shown in Table B, first column,
19th row. Similarly, the motor vehicle industry’s
direct purchases of metal stampings is listed as 3.6
percent of the motor vehicle industry’s total outlays.
Proceeding down the first column, there is a dimin
ishing of percentages which are small in any event,
for reasons easy to understand when considering the
nature of the total motor-vehicle outlays (or output)
used as the common denominator.<9)
However, what may be a relatively small outlay
to the motor vehicle industry may easily become a
relatively large sale or supply item, when viewed in
the context of the supply industry’s business. This
is shown by the second column of Table D, which
portrays the same purchases as the first column, but
expresses them in each case as a percentage of the
supplying industry’s total output. (Again, total out
puts are derived from the final row or column of
Table A, or BLS Table I.)
In the second column, then, it appears that the
direct steel “take” of the motor vehicle industry
accounts for 7.2 percent of the gross domestic out
put of the steel works and rolling mills industry.
Likewise, metal stampings taken directly by the mo
tor vehicle industry account for 32.4 percent of the
metal stampings industry’s output. Some of the per
centages in the second column are seen to be quite
high, as in the case of “Steel Springs” with 71 per
cent.
When indirect requirements are considered along
with direct requirements (utilizing information
drawn from Table C or BLS Table III) the per
centages become even larger. This is shown in the
third column of Table D. For example, the direct
and indirect purchases of the motor vehicle indus
try from the steel works and rolling mills industry
appears to account for 16.7 percent of the total out
put of steel works and rolling mills.(10) In some cases
the contrast between the entries in the second and
third columns is particularly marked. For example,
“Coke and Products” , next to last on the list, car
Monthly Business Review
October 1, 1953
Page 7
TABLE D
THE MOTOR VEHICLE INDUSTRY AND SELECTED SUPPLYING INDUSTRIES
Direct Pur
chases as
Direct Pur
% of total
chases as
output
% of total
of named
outlays by
m.v. industry industry
Direct and
Indirect
Purchases
as % of
total output
of named
industry
4.4%
3.6
3.0
2.8
2.1
7-2%
32.4
22.4
22.9
34.4
16.7%
35.5
24.4
27.8
39.7
137 Engine Electrical Equipm ent.....................................
142 Storage Batteries............................................................
51-66 Synthetic Rubber and Misc. Rubber Products.
92 Iron and Steel Forgings...............................................
96 Hardware (not otherwise classified).........................
2.1
1 .9
1.5
1 .4
1.3
67.4
80.4
11.7
35.8
26.4
71.6
80.6
23.7
39.9
29.6
128 Machine Shops...............................................................
103 Lighting Fixtures...........................................................
104 Fabricated Wire Products
70 Glass...................................................................
82-85 87-90 Nonferrous Metals and Products
1.1
1 .0
.9
9
9
29.4
23.8
13.1
9.2
2.2
33.2
25.5
17.0
1 14
16.4
79
101
65
80
117
Steel Works and Rolling Mills...................................
Metal Stampings............................................................
Tires and Inner Tubes.................................................
Iron Foundries...............................................................
Cutting Tools, Jigs and Fixtures...............................
76
127
35
56
122
Asbestos Products.......................................
Ball and Roller Bearings.............................................
House Furnishings and Other Non-apparel..........
Paints and Allied Products.........................................
Power Transmission Equipm ent................................
.8
.8
.8
.8
.8
26.7
27.1
5.3
6.0
19.8
31.3
33.1
5.8
10.7
23.5
Ill
91
108
30
136
Internal Combustion Engines....................................
Nonferrous Foundries...................................................
Steel Springs...................................................................
Spinning, Weaving and Dyeing.................................
Insulated Wire and Cable...........................................
.7
.7
.7
.7
.6
10.8
14.5
71 .0
1 .1
8.0
13.4
20.4
73.5
3.9
10.6
109 Nuts. Bolts and Screw Machine Products..............
167 Electric Light and Power............................................
46 Converted Paper Products..........................................
17, 62 Petroleum. Petroleum Products and Natural Gas
47 Printing and Publishing...............................................
.5
.3
.2
?
.2
7.7
.8
.8
.2
.3
13.9
3.3
2.7
2.4
22
116
16
49
63
78
.1
.1
.1
.02
1.3
.5
.5
.2
4.6
4.6
6.8
12.7
17.3
Machine Tools and Metalworking Machinery. .
Coal M ining....................................................................
Industrial Organic Chemicals....................................
Coke and Products........................................................
Blast Furnaces................................................................
SOURCE: As explained in text.
ries a figure of 0.2 percent in the second column and
12.7 percent in the third column. This means that
the coke purchased directly by the motor vehicle
industry is a relatively negligible part of the coke
industry’s business, but when added to the coke in
directly required by the motor vehicle industry, ac
counts for an appreciable fraction of the coke indus
try’s output.
Page
3
(For outputs read across
TABLE A.
INPUTS AND OUTPUTS OF
Continental United States,
Each row shows distribution of output of producing industry named at left;
Special Struc
Industrial tural
M achin M etal
ery
Products
(118)
(99)
1
Iron E lectrical! Heating
Foun A ppli Equip
ances
dries
ment
(80)
118 Special Industrial M achinery.
42.7
0.3
7.1
99 Structural M etal Products. . . .
1.4
44.5
6.9
80 Iron Foundries...........................
90.8
4.1
1.0
135 Electrical Appliances...............
9.1
98 Heating Equipm ent..................
0.2
12.2
101 Metal Stampings.......................
2.6
30.6
116 Machine Tools and M etal
working M achinery.............
36.5
2.1
145 Motor Vehicles..........................
7.0
4.9
(135)
9.5
57.7
78 Blast Furnaces............................
9.3
82-85, 87-90 Nonferrous Metals
and Products..........................
22.2
91 Nonferrous Foundries..............
SELECTED INDUSTRIES AND SECTORS
1947, in millions of dollars
each column shows input distribution for purchasing industry named at top.
1
Metal
Stamp
ings
(101)
1
Machine
Motor
Steel
Tools and
Vehicles Works
Metalworking
and Roll
Machinery
ing M ilk
(145)
(79)
(116)
0.5
1.5
17.5
1.0
20.4
28.7
1.5
8.1
1.5
19 5
37.9
3.4
57 5
351.0
47.2
47.1
28.3
14.0
4.1
32.4
41.6
13.2
65.7
29.9
11.9
0.7
452.3
5.1
3.8
5.7
37.3
15.6
9.0
1.1
13.4
3,294.0
2.0
217.2
555.7
1,641.2
1.2
79 Steel Works and Rolling Mills
(98)
for inputs read down)
(78)
(82-85,
87-90)
3.0
(91)
0.6
1.2
17.7
21.1
(65-66)
(167)
2.0
1.0
2.1
1.0
2.014.7
181.6
1,214.7
137.9
1.649.2
627.7
171.8
99.6
1.532.5
91.1
96.9
1,234.3
1,525.4
118.4
658.5
535.7
1.419.2
475.5
57.2
268.3
1.394.7
178.9
11.1
815.7
1.134.6
5.8
9.3
7.5
393.7
1,504.3
7,280.4
12,519.7
10.2
21.5
2.1
13.2
13.6
9.1
2,813.0
909.5
818.3
7,700.3
0.5
2.9
0.5
6.7
60.0
58.9
—2.8
1,881.2
2.9
0.7
1,669.1
452.9
— 102.6
4,796.2
292.1
54.4
47.5
610.7
492.4
188.6
265.0
1,152.4
39.0
25.2
22.4
78.2
2.7
107 4
136.7
2,111.1
154.8
24.5
1.4
7.6
55.2
19.3
1.9
14.3
88.8
0.2
2.1
1.4
70 Glass.............................................
1.0
17
0.9
1.3
1.2
0.2
106.9
37-40 Lumber and Wood Products
18.9
3.4
2.3
15.2
16.4
4.0
2.9
42.8
65-66 Rubber Products.................
31.3
3.6
1.9
18.5
3.7
4.1
12.5
515.8
167 Electric Light and Power ....
8.7
6.7
14.6
4.8
5.8
7.4
6.2
36.4
All other industrial sectors..............
463.5
231.6
149.4
492.2
350.5
273.0
257.5
Transportation,Trade, Services and
Construction Sectors(a)...............
103.9
114.4
215.1
100.5
98.7
75.1
Charges against Final Demand (c). 1,090.4
757.7
829.8
573.1
618.8
■
2.014.7
1,649.2
1,532.5
1,525.4
1,419.2
27.6
1,591.4
1.0
70 6
11.3
13.3
5.0
12.6
1,535.3
299.2
4.0
0.5
4.5
(999)
0.8
181.0
2.8
0.1
76.0
14.2
3.0
8.4
1.6
12.3
986.5
9.4
1.5
1,126.5
2.392.7
393.6
5,066.0
0.7
2.2
1.1
3.0
16.6
275.7
0.5
729.2
355.9
1.022.4
2,998.7
82.5
18.6
49.8
4.4
12.2
20.1
24.7
395.5
851.5
2,618.0
268.6
4,436.5
3,081.0
682.9
1,089.3
881.7
36.8
243.6
815.8
1,197.6
578.9
83,691.6
25,331.6
77,795.8
197,644.3
64.0
600.5
1,047.3
373.4
778.9
60.3
104.6
491.3
175.4
405.7
18,245.5
33,510.3
131,531.3
188,096.2
640.8
627.4
3,262.4
2,486.9
386.9
938.0
305.8
689.1
2,673.1
1,287.9
3,029.4
85,307.4
118,495.6
73.071.3
297,071.8
1.394.7
1,134.6
12,519.7
7,700.3
1,881.2
4,796.2
610.7
1,152.4
5,066.0
2,998.7
4,436.5
197,644.4
188,096.2
297,071.7
734,644.3
SOURCE: Based on “Table I” published by Bureau of Labor Statistics, U. S. Department of Labor.
Numbers identifying industries or sectors are as in BLS tables.
(a) Includes sectors No.: 169-192, 951. 961, 212. 211, 265-26^.
4.0
(37-40)
T r anspor tation
Final
Gross
T rade, Services Dem and(b) Domestic
and Construc
O utput
tion Sectors (a^
4.1
106.2
Gross Domestic Outlays.......
(70)
Lum ber R ubber Electric All other
and
Products L ight and Industrial
Power
Wood
Sectors
Products
0.5
60.0
999
Glass
1.0
64.9
363.1
23.8
Blast Nonferrous Nonferrous
Furnaces M etals and Foundries
Products
(b) Includes demand stemming from foreign trade, federal government purchases, state and local government purchases,
gross private capital formation, inventory change in finished products, and purchases by households.
(c) Includes outlays on same accounts listed in footnote (b) except for net inventory changes, already treated in output rows.
Monthly Business Review
Page 10
Similar examples drawn from Table D are illus
trated in an accompanying chart with reference to
the metal stampings industry and the paint industry,
— both in relation to the motor vehicle industry.
Chart on the Cover. To show more clearly the
nature of the “indirect requirements” discussed
above, a specific illustration may be drawn from the
steel requirements by the motor vehicle industry, as
depicted in the chart on the front cover.
The direct requirements from the steel works and
rolling mills industry made by the motor vehicle
industry amount to $44,386 per million dollars of
motor vehicle output, as has already been shown by
Table B. Similarly, the total of direct and indirect
requirements amounts to $102,851 per million dol
lars of motor vehicle output, as previously shown by
Table C. The difference, or $58,465 per million
dollars of motor vehicle output, represents the indi
rect steel requirements. Such direct and indirect re
quirements of steel are depicted at the top level of
the chart.
The problem now is to break down the indirect
requirements, at least partially, in order to see where
October 1, 1953
they come from. This is done in two steps, i.e., with
reference to two rounds of supply industries, with
the second round even more indirect than the first.
In each case, only the most important supply indus
tries are named, since a complete list of scattered
supplying industries would be impractical. (All in
formation for this illustration is drawn from BLS
Table II.)
Taking the first round of industries which supply
the motor vehicle industry, and which themselves
have important steel requirements, we see at the
middle level of the chart that the steel required by
the “Metal Stampings” industry in order to supply
the motor vehicle industry amounts to $5,625 per
million dollars of motor vehicle output, and that the
steel required by the “Engine Electrical Equipment”
industry in order to supply the motor vehicle indus
try amounts to $1,153 per million dollars of motor
vehicle output, etc. The six industries shown at
the middle level of the chart are, with one exception,
the most important suppliers of the auto industry,
together with the steel industry itself.(11)
Two of the six industries are selected for further
analysis in order to obtain the second round of steel
THE MOTOR VEHICLE INDUSTRY A S DIRECT AND INDIRECT CUSTOMER
OF TWO SELECTED INDUSTRIES
OUT OF *1 OF
THE MOTOR
PURCHASES
VEHICLE
BY
INDUSTRY
BUT...OUT
THE
OF *1 WORTH
METAL
STAMPINGS
OF
OUTPUT
OF
INDUSTRY
3 . 6 $ represents
purchases of
metal stampings
or...
3 2 $ worth is sold
directly to the
motor vehicle industry
OUT OF *1
OF
PURCHASES
THE MOTOR VEHICLE
BY
INDUSTRY
BUT...OUT
PAINTS
AND
3 6 $ worth is sold
directly and indirectly to
the 'motor vehicle industry
OF *1 WORTH
ALLIED
OF
OUTPUT
OF
PRODUCTS
o r . ..
6 $ worth is sold
directly to the
motor vehicle industry
<
11$ worth is sold
directly and indirectly to
the motor vehicle industry
October 1, 1953
Monthly Business Review
requirements by the motor vehicle industry; these
art “Engine Electrical Equipment” and “Cutting
Tools, Jigs and Fixtures” .
Take first the engine electrical equipment industry.
In addition to the steel requirements of this indus
try, directly, in order to supply the motor vehicle
industry (which are shown at the middle level of
the chart to be $1,153 per million dollars output of
the motor vehicle industry) the question arises as to
the steel requirements of the various industries which
in turn supply the engine electrical equipment indus
try. Examples of the latter are shown at the lowest
level of the chart, i.e., the “Nuts, Bolts and Screw
Machine Products” industry, “Ball and Roller Bear
ings”, “Motors and Generators”, and “Fabricated
Wire Products” . The largest of these in terms of steel
requirements is “Fabricated Wire Products”, an in
dustry which requires steel amounting to $134 (per
million dollars output of the motor vehicle industry)
in order to supply the engine electrical equipment in
dustry with the necessary products for the latter to
supply the motor vehicle industry.
Likewise, the “Cutting Tools, Jigs and Fixtures”
industry, an important supplier of the motor vehicle
industry, is analyzed in order to find the steel require
ments of other industries which are suppliers of
products to the cutting-tools industry. These results
are also illustrated at the bottom level of the chart,
including the steel requirements of “Machine Tools
Page 1 1
and Metalworking Machinery” and of “Metal
Stampings.” (The latter is the same industry as
appeared in another context at the middle level of
the chart.)
By means of the above excursion into the steel
requirements of two layers of supplying industries,
at least some idea of the composition of the aggregate
indirect requirements of steel for the motor vehicle
industry may be obtained. Other supply industries
not shown on the chart are numerous, usually involv
ing relatively small requirements of steel. At all points
of the illustration, a common unit of measurement
is necessarily preserved, which in this case is “per
million dollars of output of the motor vehicle indus
try” .(12)
If the indirect character of some of the relation
ships shown above should be thought to resemble
“The House That Jack Built”, it should not on this
account be considered any the less a faithful repre
sentation of the technical inter-relations of American
industry. The latter are known to be complicated.
Many specialized considerations and qualifications
have, in fact, been omitted here.
If the material shown above can be helpful toward
appraising the possible uses of input-output informa
tion for practical business or economic problems, it
will have served its purpose. Translation of the ma
terial into more specific projects or problems would
go beyond the limitations imposed here.
Page 12
Monthly Business Review
October 1, 1953
Farm Management for Bankers
that of obtaining “benchmarks” for management
i t h the huge legitimate credit demands of a
evaluation in the various areas. Neighboring farms
modem heavily capitalized agriculture, bank
ers are finding it increasingly necessary to recognizewhich once were similar may follow widely different
the elements of a soundly managed farm organizapaths in respect to profits, depending upon ade
quacy of capital in the hands of a capable manager.
tion. Farm credit is generally a useful tool and a
profitable one for bankers and farmers alike, when
Heavy applications of lime and fertilizer and
applied in ways which actually boost farm income
proper soil management in sections of eastern Ohio,
to repay the loan. On the other hand, the use of
for example, were observed to have brought about
credit only creates a worrisome burden if used ex
yields of grass and grain which would put the more
cessively for nonproductive purposes or if factors
fertile areas of the nation to test. The point was
other than adequate capital are impeding profits
made that fertile lands often become unprofitable
from a farm operation.
because of poor management, while many farms
•,vith soil structures of inherently low productivity
are thriving under more enterprising husbandry.
Banker
With a view to identifying factors acEvidences of sound management were seen in the
Farm Tours counting for success on individual
awareness and understanding of the findings of
farms, banker-farm tours are gaining
experiment stations and the following of up-to-date
in popularity. By studying relevant facts on past
techniques in conservation, marketing, and selection
operations and by detailed discussion with the farm
of adapted seeds.
operator, bankers are able to see at first hand the
results of past use of credit as well as examples of
Scale of operation likewise came to light as be
how credit can be used profitably in the future.
coming increasingly significant for maximum effi
Bankers’ associations, usually in cooperation with
ciency. Either through greater productivity on
other groups, sponsor meetings of this nature in the
existing land or actual physical expansion of acreage,
Fourth District each year. Eight such meetings have
both cattle numbers and the volume of crops pro
been held in recent weeks, including:
duced were boosted, not only in total but on a per(a) three meetings in eastern Kentucky, spon
unit and per-man basis. Fuller use of machinery
sored jointly by the Kentucky Bankers Association,
and a lower investment per acre were consequent
the College of Agriculture of the University of Ken
advantages.
tucky, and the Federal Reserve Bank of Cleveland,
Development of a balanced long-range farm plan
(b) two meetings in Ohio, one sponsored by the
appeared basic to success on the farms observed by
Ohio Bankers Association, and the other by the
bankers on the tours. A certain degree of flexibility
Northeastern Ohio Bankers Association in coopera
is desirable, but farming is too risky for the
tion with the Agricultural Extension Service, the
“plunger” or “in-and-outer.” Each year, acreages of
Soil Conservation Service, the Production and M ar
the various crops in the rotation should be about
keting Administration of the counties involved, and
the same. M ajor shifts in the livestock operation
the Federal Reserve Bank of Cleveland,
should occur only after careful deliberate study.
Insofar as possible, existing labor supplies should be
(c) two meetings in western Pennsylvania, each
utilized through the entire year with a minimum of
sponsored by bankers of three counties in coopera
peaks and valleys. Types of farming should be
tion with the Agricultural Extension Service of
geared to soil, topography, markets, and the desires
Pennsylvania State College and the Pittsburgh
and capabilities of the operator.
Branch of the Federal Reserve Bank of Cleveland,
A procedure followed in one series of meetings
and
(d) one meeting in northern West Virginia,
(Kentucky) involved the group study of actual loan
sponsored by Group One of the West Virginia Bank
applications and financial statements (of unidenti
ers Association in cooperation with the Agricultural
fied applicants) each of which presented some spe
Extension Service of West Virginia University and
cial problem typical to livestock financing in that
the Pittsburgh Branch of the Federal Reserve Bank
area. They were selected to show difficult but im
of Cleveland.
portant decisions which both bankers and farmers
must make in meeting current and prospective situ
ations.
General
Discussion and observation at these
The use of various credit forms and the develop
Observations various meetings encompassed a wide
variety of factors associated with
ment of permanent credit files were also emphasized
successful use of credit. Perhaps the most valuable
as an important aid in rendering constructive credit
opportunity common to each of these meetings was
decisions.
W
Monthly Business Review
October 1, 1953
Page 13
SUMMARY OF NATIONAL BUSINESS CONDITIONS
Released by the Board of Governors of the Federal Reserve System
Industrial production declined slightly in Sep
tember following substantial recovery in August
from the usual vacation let-down in July. Construc
tion activity declined slightly further from earlier
peaks. Crop prospects declined in August and on
September 1 the crop was forecast somewhat below
last year’s large harvest. Retail sales declined some
what in August and, at departm ent stores, dipped
further in early September but subsequently ad
vanced. Consumer prices rose slightly further in
August, while wholesale prices in August and Sep
tember showed little change.
Industrial Production
Ihe Board's index of industrial production rose
4 points in August to 236 per cent of the 1935-39
average, as activity in nondurable goods and miner
als industries recovered to about June levels after
showing the usual July vacation curtailments. Out
put of durable goods in August rem ained below
earlier high levels and in September is estimated
to have declined moderately. Reflecting mainly an
easing in some durable goods industries, the total
index for September is estimated at 234.
Steel output was reduced in the first three weeks
of September to about 90 per tent of capacity, as
compared with 94 in August, but increased again
in late September. Passenger auto assembly has de
clined moderately in August and September from
earlier exceptionally high rates, while television set
production began a strong seasonal rise. Activity in
producers’ machinery lines has declined somewhat,
owing mainly to curtailm ent of farm machinery
output.
Activity at textile mills showed somewhat less than
the usual seasonal pick-up in August, while output
of paper and paperboard rose substantially and con
rinued at advanced levels in early September.
M inerals production was at a high level in Au
gust and early September. Iron ore m ining con
tinued in exceptionally large volume, and coal out
put increased somewhat. Beginning in September,
crude petroleum output has been curtailed moder
ately from earlier advanced levels.
Construction
Value of construction contract awards declined
substantially in August from the unusually high
July total which had included several large awards.
T he num ber of nonfarm housing units started de
clined further to 94,000, as compared with 96,000 in
July and 99,000 in August 1952. Value of all new
construction work put in place, after allowance for
seasonal changes, declined somewhat further during
August and was about 6 per cent below the early
spring peak.
Employment
Seasonally adjusted employment in nonagricultural establishments at 49.3 million in August was
moderately belowr the record m idyear level, as
employment in a num ber of durable and nondura
ble m anufacturing industries showed somewhat less
than the usual seasonal increases. Ihe average
workweek at factories of 40.5 hours was little
changed from July and below levels reached earlier
this year. Average hourly earnings continued at
SI.77. Unemployment at 1.2 million in early August
was as low as at any time in the postwar period,
but in early September, initial claims for unemploy
ment compensation were rising and were well above
vear-ago leyels.
Agriculture
Hot, dry weather in im portant growing areas in
August reduced somewhat over all crop prospects
lor the year. As of September 1 they were fore
cast at 1.5 per cent below the large crop last year,
owing prim arily to reductions in wheat, corn and
tobacco harvests. O utput of livestock and products
this year, however, is expected to exceed last year’s
volume. Meat production through September has
increased about 9 per cent from the corresponding
period in 1952. with an increase of close to onethird in beef production more than offsetting a
decline of about one-eighth in pork output.
Distribution
Seasonally adjusted retail sales declined some
what in August and sales for the m onth at most
retail outlets other than auto dealers were at about
their year-ago levels. In September, sales at depart
ment stores continued to lag early in the month
but subsequently advanced and in the third week
exceeded year-ago levels by 6 per cent. Seasonally
adjusted stocks at departm ent stores are estimated
to have changed little in August following a sub
stantial rise from April through July.
Commodity Prices
Wholesale prices have generally continued to
change little from mid-August through September.
Steel scrap prices have dropped sharply and some
declines have occurred in nonferrous metals and tex
tiles. Prices of a few m anufactured products such as
paper products and television, have been advanced.
Dairy products and eggs have risen, while prices of
most other farm products and foods have shown lit
tle net change.
Consumer prices advanced again in August as
foods increased further, average rents rose by 1.1
per cent, and services continued to advance.
Bank C red it and Reserves
T otal loans and investments at banks in leading
cities changed little from mid-August to mid-Sep
tember. Banks continued to sell U. S. Government
securities. Business loans increased but the increase
was considerably less than in the same period last
year, reflecting in part a smaller volume of seasonal
borrowing by commodity dealers and food process
ors. Real estate loans also continued to increase
moderately but “other loans”, largely consumer,
showed little change in contrast to substantial in
creases prior to mid-summer.
Member bank reserve positions eased considerably
in the first three weeks of September. Reductions in
Treasury deposits at the Reserve Banks and Federal
Reserve purchases of I 1. S. Government securities
provided reserves to banks. Part of these funds were
Monthly Business Review
Page 14
drained oft through a currency outflow. During most
of the period member bank excess reserves exceeded
member bank borrowing at the Federal Reserve.
Security Markets
Yields on Government securities held steady dur
ing the first half of September and declined sharply
in the following week. Yields on other high-grade
bonds increased somewhat during the first three
weeks on the month. Common stock prices declined
October 1, 1953
sharply in mid-September and then recovered some
what.
The Treasury ottered 1-year 25/$ per cent certifi
cates of indebtedness or 3 Vs year 2% per cent notes
in exchange for 8 billion dollars of bonds m aturing
on September 15. Subscriptions totaled nearly 5 bil
lion dollars for the certificates and 3 billion for the
notes. On September 25 the Treasury discontinued
sales of Series B savings notes and announced that a
new savings note would be offered on October 1.
FOOTNOTES FOR INPUT-OUTPUT RELATIONS
(Continued from page 2)
1 2)
I he “household" sector especially requires further explanation.
As part of “Final D em and” (upper right caption of T able A) it
refers to purchases by households, including personal consumption
expenditures and direct personal taxes, and also expenditures bv
farm households for personal living requirements.
As part of “Charges against Final Dem and” (lower left caption),
the “ household” item (not shown separately here) includes outlavs
in the form of wages, corporate profits after taxes, and certain ad
ditional items which the listed industry “pavs out” in a form other
than a payment to a supplying industry. In a sense, “household''
plays the role of a balancing item in the totaling of inputs on the
vertical scale to match outputs on the horizontal scale.
For further details on these points, as well as additional explanations
of the BLS input-output tables, see “General Explanations of the
200 Sector Tables; T he 1947 Interindustry Relations Study” , BLS R e
port No. 33, Bureau of Labor Statistics, U. S. Department of Labor.
(3) Corresponding items of intra-industry sales for other industries
(located in a diagonal position on input-output tables) are also rela
tively large, although not always as large as in the steel industry. Such
intra-industry items can be elim inated from input-output tables, but
to do so in this case would not have been consistent with some of
the purposes at hand.
(4) It may be noted that in all input-output tables, wholesale and
retail trade components represent the proceeds of the trade margins
earned by the distributors, not the value of goods passing through
the distributors’ hands. Thus, in the case of the steel industry, onlv
a part of the value of steel handled through the steel-warehouse dis
tributors finds its way into this item.
So far as construction is concerned, it is considered probable that
the input-output tables tend to understate the values which flow
through the construction industry in all its ramifications, mainly,
or perhaps entirely, due to deficiencies in the quality of the under
lying raw data. (For further details on this important point, see
‘New and Maintenance Construction; Construction in the 1947 In
terindustry Study”, BLS Report No. 2, Bureau of Labor Statistics.
U. S. Departm ent of Labor.
(5) T he choice of "per m illion” instead of percent units by the
framers of BLS T able II appears to be simply in order to handle
some of the smaller figures which would have required fractions
when dealing on a percentage basis. This practice is carried over
into our T able B, even though the items selected for the latter
tend to be the larger ones. T he basic unit in either case is similar
to a percentage, and can readily be converted to the latter by the
appropriate shift of a decimal point.
(6) T he underlying link which connects Table B with Table A is
one of sim ple division. T hat is, the ratios or “ technical coefficients”
of BLS Table II (on which Table B is based) were obtained bv
dividing the appropriate items w ithin the table by the “gross do
mestic output” items of the final column of T able I (or our Table
A) in order to obtain a "per m illion” relationship. (Certain minor
technical adjustments, involving byproducts, were also made bv
the BLS.)
T o take an exam ple, our 1 able A shows that the "Structural
Metal Products” industry took $363.1 million of products from steel
works and rolling m ills, as shown by the item in the second col
umn, ninth row. T able A shows also that the gross dom estic output
of structural metal products was $1,649.2 m illion,—final colum n of
second rowr. T he first sum divided by the second yields 0.220167, or
S220.167 per m illion dollars. T his may be compared with the figure
of $220,152 which appears in the first column, sixth row of our
Table B. (The slight difference represents a small technical ad
justment made by the BLS.)
(7) It may be noted that a number of the steel-using industries
near the top of the list are so close to the steel industry itself
that plants or subsidiaries of integrated steel companies are engaged
significantly in the named industries alongside the more specialized
producers. Examples are wire products, tin cans, structural metal
products. The test of classification of manufactures in input-output
tables, as in the Census of Manufacturers, is the productive nature
of the “establishm ent” rather than company affiliation or ownership.
(8) T he method of conversion from units of “per m illion dollars of
deliveries to final dem and” to units of “ per m illion dollars of ou t
put” was in accordance with the instructions given in the BLS pub
lication, “General Explanations of the 200 Sector T ables”, op. cit.,
p. 15.
(9) Another important reason why the percentages shown in the
first column of T able D are so small lies in the fact that important
parts of the output of many industries are assigned in the BLS tables
to “ private capital form ation” w ithin the general heading of “final
dem and,” as distinct from allocation to other industrial sectors. In
the case of the “ Machine T ool and Metalworking Industry," for e x
ample, about half of its gross output is assigned to private capital
formation. For the reasons for this treatment, see BLS "General
Explanations,” etc., op. cit., p. 28.
i 10) Any divergences between these figures and widely published
figures of the steel industry, showing breakdowns of steel distribu
tion by industry classifications, would be due either to: (a) differ
ences in the scope of the classifications involved, (b) the fact that
in 1947, the year to which the detailed input-output analysis ap
plies, the motor vehicle industry had not entirely com pleted its
transition from wartime to peacetim e types of operations. T he lat
ter fact m ight affect the relative importance of the motor vehicle
industry as customer of the steel industry, but it would not be
likely to affect all of the im portant technical inter-relations be
tween the motor vehicle industry and other industries.
(11) T he six industries, together with the steel industry, account
in the aggregate for approxim ately 20 percent of total outlays of
the motor vehicle industry,—using “outlays” in the broad sense
identified earlier. T his figure is not depicted on the chart, which
is confined exclusively to purchases of steel, either directly or
indirectly.
(12) Conversion into dollars could be accomplished bv using as a
m ultiplier the figure of $12,519.7, which represents the gross dom es
tic output of the motor vehicle industry in m illions of dollars.
(See T able A.) From this point on, conversion could be made into
a ratio to output of any desired industry.
Monthly Business Review
October 1, 1953
Page 15
Glass Processing Forges Ahead
B\ CLYDE W ILLIAM S. President and Director, Battelle Memorial Institute. Colum bus, Ohio
The making of ordinary glass—
the type used for window and plate
glass, bottle containers, and light
bulbs—is based on the same funda
mental p ro c e s s h a n d e d down
through the centuries. “Batch” in
gredients, usually sand, soda, and
lime, are mixed with small amounts
of other earthy materials and
melted by heat until they fuse and
flow. T he molten material is drawn,
molded or otherwise fabricated,
and cooled to a rigid condition.
During the past fifty years, the
fundam ental process lor making glass and the techniques
for fabricating glass products have been- studied in micro
scopic detail. A better understanding of the physical and
mechanical properties of glass and ol the chemistry ol
glass making has been achieved. T he application of this
knowledge has brought outstanding growth in the variety
of glass products made, in the development of mass pro
duction methods, and hence, in glass usage. A quick review
of highlights of the growth will help us to see why execu
tives are convinced that the full potentialities of this
interesting material are far from reached.
From the almost exclusive domain of the skilled crafts
man, glassmaking has been built into one of our most
important, most highly mechanized industries. Production
in a recent year was valued at around $1.5 billion, or about
one-third of the value of the nation’s total output of
<eramic products. In spite of increasing competition with
other materials, the num ber of glass containers made each
year is now about two-and-onc-half times the prewar annual
average. From 1930 to 1950, plate glass showed a tenfold
increase in annual volume, and the production of sheet or
window glass tripled. Glass-fiber output, expanding rapidly
in recent years, has risen to 75 thousand tons annually.
Perhaps the most basic factor contributing to continued
growth in glass usage is the ever-expanding versatility of
the material itself. One leading glass m anufacturer is said
to have developed 50,000 formulas for the making of glass,
which comprise combinations of practically all of the earth’s
99 elements. From these formulas, it is possible to make
glass products that are “lighter than cork or almost as
heavy as iron, as strong as steel or as fragile as an eggshell,
as soft as cotton, or hard as precious stones”. Glass products
can also be made to resist corrosive acids, exceptional heat,
and violent, sudden changes in tem perature; to transmit or
absorb infrared, ultraviolet or X-ray bands of the spectrum,
and to conduct or stop electricity.
Thus, in addition to the ordinary or lime-soda-silica
glasses that make up the bulk of glass tonnage, we now
have: (1) borosilicate glasses for ovenware, insulating mate
rial, chemical laboratory glassware, and hundreds of other
uses including pipelines for hot corrosive liquids, boiler
Editor’s N ote—W hile the views expressed on this page are not nec
essarily those of this bank, the M onthly Business R eview is pleased
to make this space available for the discussion of significant develop
ments in industrial research.
gage glasses, and centrifugal pumps; (2) lead glasses for
neon tubing, electronic tubes, crystal glassware, and some
optical prisms and lenses; (3) opal glasses for lighting
globes, tableware, and decorative building panels; (4)
optical glasses for most lenses and prisms used in micro
scopes, cameras, binoculars, rangefinders, and giant tele
scopes; (5) colored glasses used in signalware, light filters,
and for colored incandescent lamps, tableware, and drink
ing glasses; and (6) ninety-six per cent silica glasses for
chemical-laboratory ware, thermocouple sheaths, high-fre
quency furnace linings, and glass burner plates.
T he development of glass fiber has brought revolutionary
applications for glass. Glass fiber, in various forms of glass
wool, is now used prim arily for thermal insulation, sound
control, air filters, and pipe wrap. However, glass fiber,
further processed into filament fiber to form the base of a
product, or to reinforce other materials such as textiles and
plastics, has many growing or potential markets. Among
these markets may be included, for example, draperies and
curtains, window screens, boat and auto bodies, fishing
rods, cable covers, twine, washing machine baskets, and
upholstery cushions.
Among the highlights in the development of mass-production techniques during the past half-century, one might
point to the adoption of continuous processing in prac
tically all phases of glass m anufacturing. Strides have been
made in improving methods for the purification and hand
ling of raw materials. T he engineering of instrum ents and
equipm ent to control various aspects of melting operations
and to perm it use of the most efficient fuels has been a
key factor in progress.
One might also point to great improvements in fabrica
tion and finishing equipm ent. Light bulbs, once blown
by hand, are being produced at rates of around 60,000
per hour. Glass can be fabricated into fibers thinner than
human hair and into 1600-pound windows for supersonic
wind tunnels. Plate-glass rolling speeds of 80 to 90 inches
per m inute, in common practice ten years ago, are climb
ing toward 300 inches per m inute, and the limit is not
yet in sight. Strips of glass eight feet wide and up to 900
feet long can be ground and polished simultaneously on
both surfaces. T he developm ent of techniques for coloring
glass in thousands of different color tones, sealing metals
to glass, and for metallizing glassware has been indispens
able to expanded glass usage for certain applications.
According to a prediction of the President’s Materials
Policy Commission, the country’s total consumption of
glass by 1975 is expected to be double that of 1950. As in
the past, a large part of the growth will result naturally
from expansion of the nation’s economy. Upward trends
in the am ount of glass used for a given application, as,
for example, automobile windows, will continue to be an
im portant factor. Increasing usage of relatively new products
such as glass fiber and foam glass is seen in spite of their
entrance into “unconventional” fields of application where
competition with other m aterials is keen. Perhaps most
im portant, however, will be the genius of the glass industry
itself, whose unquenchable thirst for more knowledge
about the properties of glass and the techniques of glassmaking continues to extend the range of applications for
glass in industry, science, and the home.
CLEVELAND
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