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69th Congress, 1st Session

NATIONAL
WEALTH AND INCOME
A Report by
The Federal Trade Commission
In final response to Senate Resolution No. 451
Sixty-seventh Congress, Fourth Session
agreed to February 28, 1923

i

J

t

t
{

MAY 25, 1926.—Referred to the. Committee on Finance




WASHINGTON
GOVERNMENT PRINTING OFFICE
1926

SUBMITTED B Y M R . NORRIS
IN THE SENATE OF THE UNITED STATES,

June 16,1926.
Ordered, That the report of the Federal Trade Commission on
National Wealth and Income, transmitted to the Senate on May 25,
1926, in response to Senate ^Resolution 451, Sixty-seventh Congress
fourth session, and referred to the Committee on Finance, be printed
with illustrations, as a Senate document.
Attest:
EDWIN P .
II




ADDITIONAL

COPIES

OF THIS PUBLICATION H A Y B E PROCURED FROM
THE SUPERINTENDENT OF DOCUMENTS
GOVERNMENT FEINTING OFFICE
WASHINGTON, D . C.
AT
50 C E N T S P E R

COPY

THAYER,

Secretary.

CONTENTS
Summary:
National wealth
_
General survey of national wealth
Distribution of -wealth among individuals
Ownership of natural resources
Agricultural wealth
Wealth of corporations
_
Ownership of corporations
Wealth of nonprofit institutions
National income
Personal income-tax data
Geographical distribution
Cash dividends
Wages and salaries
Basis of estimating total income
Estimates of the total national income
The chief sources of national income
Division between labor and capital
Shares of labor and capital in different industries
Proportions paid in taxes
Corporation income
PART
CHAPTER I .

I. N A T I O N A L

Page

*
__

.

WEALTH

ORIGIN, SCOPE, AND

METHOD

Sec. 1. Origin and scope
Importance of information concerning distribution of wealth
Scope of the investigation
Sec. 2. Nature of wealth
_.
______
Intangibles
Property and wealth
Property in obligations
Other intangible values
Sec. 3. Limitations of national wealth estimates
:
Sec. 4. The measurement of wealth
,
The valuation of business assets
The valuation of real estate
'
Valuation by way of an engineering inventory
The dollar unit of measurement
CHAPTER I I .

A

G E N E R A L SURVEY OP W E A L T H IN THE
STATES

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22
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24

UNITED

Sec. 1. A national inventory.—
The determination of fundamental inventories
The pricing of the items
Summary of 1922 census results and of the commission's extensions
l
Sec. 2. Amount of wealth in real estate
Importance of real estate
Amount of real estate in public service properties
The proportion of all real estate in the total
Sec. 3. The land value of real estate
Distinctive character of land value
.
_
Separation of land values
Proportion of land value in all real estate
Variations in the proportion of land values
...
___




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CONTENTS
Page

Sec. 4. Exempt real estate
General considerations
Reasons for exemption
Classification by grounds of exemption
Classification according to ownership!
Real estate owned by the Federal Government
Reconsideration of the total of exempt real estate
See. 5. Public roads and streets
Valuation desirable whether added to the national total or n o t ^ Items omitted in census estimate
^ - — _u
Rural roads
City streets, including sewers and water mains
1
- *- - - — ,
Other highway improvements
:
r
Sec. 6. .Valuation of steam railroads and other public service enterprises—
Book costs
Items for which book-costs data are used by the census
Results from the Interstate Commerce Commission's valuations-^
The importance of price indexes in. this estimate
Revaluations for other public service enterprises
Sec. 7. Other items in the 1922 Census estimate
^—Money
Manufacturing equipment
:
Agricultural movables
f
Automobiles
Products in merchandise
Clothing, furniture, and personal effects
Sec. 8. Ten-year changes for various classes of wealth in quantities and
in dollars
The increase in dollars
Importance of changes in price levels
Significance of increase in land values
Indexes of increase in wealth derived from physical statistics
Conclusion
CHAPTER

III.

DISTRIBUTION

OP W E A L T H

AMONG

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62
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67

RESOURCES

Sec. 1. Methods of valuing natural resources
,.
—
Sec. 2. Water power
Geographical distribution of potential water power
Geographical distribution of developed water power
Utilization of water power
World position of the United States
Control of water power in the United States
,
Increase in concentration of control in recent years
Sec. 3. Coal
Value of coal resources
World position of the United States—
Control of coal reserves in the United S t a t e s - Anthracite distribution
_
Control in different geographical regions
Bituminous distribution
Control in different geographical regions




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49
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55

INDIVIDUALS

Sec. 1. Methods of estimate and source of data
Methods of estimate
_
Source of data
Sec. 2. Distribution of total estates
Distribution by size groups
Distribution in various types of communities
Sec. 3. Relative distribution of realty
-Relative distribution of realty in various types of communities--.
Sec. 4. Distribution of personalty
_
Distribution of items of personalty in different types of communities
Sec. 5. Estates of $1,000,000 and over
Relative realty and personalty
CHAPTER I V . OWNERSHIP OF NATURAL

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CONTENTS

V

Page
Sec. 4. Iron ore_ r _,
__
„ ,
Value of iron ore reserves.
World position of the United States
Control of iron ore reserves _
—
Sec. 5. Copper ore
Value of copper ore .reserves
World position of the United States.
Control of copper ore reserves
Control by regions.
Sec. 6. Timber..
Value of standing timber„I
'
World position of the United States
Control of timber reserves
Sec. 7. Petroleum
----Value of petroleum'reserves-World position of the United States
Control of petroleum reserves
Control of petroleum reserves in different
CHAPTER V .

FARM

—„
.

._

,

—>
-

,

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,,,
I.

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—

,

regions

:

WEALTH

,_ .

i_

,_
>.

_

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129
129
13o

OF CORPORATIONS

Sec. 1. Method of estimating corporate wealth
Sec. 2. Relative wealth of corporations in different industrial groups
Sec. 3. Wealth of manufacturing corporations
Corporate wealth in specific manufacturing industries
Sec. 4. Wealth of transportation and other public utility corporations
Corporate wealth in specific public utilities




'_

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101
101
102

WEALTH

Sec. 1. Utilization of land area and diversity in agriculture
Agricultural utilization of land area
Diversity in agriculture
.
• .
Sec. 2. Amount of farm wealth
!
Total farm wealth 1920 and 1922
Kinds of farm wealth.
Geographical distribution and characteristics
i
General changes in value
..J
iVariations in farm values
...
Bee. 3. Ownership and indebtedness
Ownership
Indebtedness
Sec. 4. Prices of farm land per acre 1912-1922
.......
Sales prices of farm land in Iowa
1
Sales prices of farm land in Minnesota
Sales prices of farm land in North Dakota
Sales prices of farm land in Idaho
Sales prices of farm land in Ohio
Sales prices of farm land in Kentucky
Sales prices of farm land in North Carolina
Sales prices of identical tracts
Sec. 5. Physical indexes of farm values
Farm livestock
•
Farm machinery
Power-developing machinery
1
l
Combined horsepower used on farms
_
Crop acreage and production
....
Production per acre for all crops
• i
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Production per acre by groups of products
Mass production and farm value
Sec. 6. Segregation of land area of the country according to use
National park and monument lands
:
Railway right of way
National forest area
,
_
Privately-owned forest area
Pasture or grazing lands
Cropped lands
*
,_ _J
CHAPTER V I .

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VHI

CONTENTS
Page

Sec. 5. Wealth of mining and quarrying corporations
Corporate wealth in specific mining or quarrying industries
gee. 6. Wealth of financial and other types of corporations
Wealth of financial corporations
•
:—
Wealth of construction corporations
Wealth of corporations engaged in agricultural and related industries
Wealth of service corporations
—
Wealth of trading corporations
Sec. 7. Analysis of comparative wealth of groups and of specified industries
*
Sec. 8. Analysis of investment of wealth owned by corporations
CHAPTER V I I .

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150
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156
157
158
159
161

WEALTH OF NONPROFIT INSTITUTIONS

Sec. 1. Wealth and income of nonprofit institutions
Sec. 2. Sources of information.
Religious organizations. _
Educational institutions
Benevolent institutions
Foundations and trusts
Sec. 3. Wealth of religious organizations
Source of data and method of estimate
Wealth of church property
Geographic distribution of church wealth
Wealth in invested funds.
Distribution of income
Sec. 4. Wealth in foundations, community, and public trusts
Source of data and method of estimate
Nature and amount of investments
Income from investments
Distribution of income
Sec. 5. Wealth of benevolent institutions
Source of data and method of estimate
Wealth of private benevolent institutions
Wealth of public benevolent institutions
Wealth of benevolent institutions by geographical regions
Wealth in physical assets, land, buildings, and equipment
Sec. 6. Wealth of educational institutions
Source of data and method of estimate
Wealth of public schools—
Wealth of public schools by geographical regions
Wealth of other schools and colleges
Wealth of libraries and museums.




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139
140

OWNERSHIP OF CORPORATIONS

Sec, 1. Basis of the commission's estimates
Sec. 2. Average distribution of corporate stock holdings in various industries
Average holdings of different classes of holders
Average holdings of officers and directors of employees
Number of small stockholders
Sec. 3. Relative holdings of various classes of stockholders
Individual stockholders
„
-Broker stockholders
•
-Trustee stockholders
Corporation stockholders
Foreign stockholders
,
Nonprofit institution stockholders
Stockholdings of officers and directors
Stockholdings of employees
—
Sec. 4. Relative par values per share
CHAPTER V I I I .

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139

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CONTENTS
PART

II. N A T I O N A L

CHAPTER I X .

VII
INCOME

METHOD AND SCOPE

Sec. 1. Preliminary survey
Sec. 2. Method of estimating income
Sec. 3. Limitations of estimates

Page

187
189
190

CHAPTER X . PERSONAL AND CORPORATE INCOME REPORTED TO
THE UNITED STATES TREASURY

Sec. 1. Distribution of income among individuals paying Federal income
tax
—
Distribution of income by income groups
_ _.
Distribution of income by territorial sections
Amount and territorial distribution of cash dividends
Sec. 2. Sources of personal income
1
Income derived from specified sources
Percentage derived from specified sources.
Sec. 3. Distribution of total income by sources and size groups
Proportion from specified sources by income groups
Sec. 4. Territorial distribution of personal income
Sec. 5. Income of corporations
Corporations reporting profit or loss
Aggregate amounts of net income and of deficit. 1
Rate of return on stockholders investment by industries^
Rate of return on total investment in corporate business, by
industries.
Gross income and net profits by industries
Territorial division of corporate net income
Sec. 6. Importance of income tax data
CHAPTER X I .

CHAPTER X I I .

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

Sec.
Sec.
Sec.

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AGRICULTURE

1. Estimated value created by agriculture
2. Estimated value of the larger meat animals slaughtered
3. The value of dairy products sold off farms or consumed on farms
as human food__
4. Poultry production
Egg production
5. Miscellaneous agricultural products
Value of wool and mohair produced
Value of honey and wax produced
6. Value of horses and mules sold off farms
7. Variations in the inventories of livestock on farms
8. Gross value of all vegetable crops
9. Survey of estimates of all farm products
10. Payments made by farmers to other industries
Estimated value of saddles and harness purchased
The cost of fertilizer used by farmers
The cost of agricultural implements used up
Interest on bank loans
Cost of operating automobiles and tractors for farm purposes- __
Total expenses paid to other industries
11. Estimate of the total value created by agricultural industry
12. Shares in the value created by agriculture
13. Proportions of the various shares to the total value of product-~
Taxes




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218
219

TOTAL NATIONAL' INCOME

Sec. 1. Estimated total income of the United States
Comparison with estimates of National Bureau of Economic
Research
Changes in total income 1918-1923
Sec. 2. Estimates equalized for changes in purchasing power
;
Sec. 3. Estimates of national income by industries and occupations
Sec. 4. Estimates for different groups of economic enterprise equalized for
changes in purchasing power
Sec. 5. Division of the national income between labor and capital
Sec. 6. Proportions paid in taxes
Sec.
Sec.
Sec.

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212

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VHI

CONTENTS
CHAPTER X I I I .

MINING,

MANUFACTURE

AND

CONSTRUCTION

Fas*

Sec. 1. Value created by the mining and quarrying industry
Taxes
Distribution of wages and salaries by occupational groups in the
mining, quarrying, and oil will industry
Sec. 2. Value created by the manufacturing industry
Taxes
Distribution of wages and salaries by occupational groups in the
manufacturing industry.
Sec. 3. Value created by the construction industry
Estimate of the value product of construction
Taxes
:
-T
CHAPTER X I V .

TRANSPORTATION

AND

MERCANTILE

_--

—

PROFESSIONAL AND PERSONAL SERVICES

BANKING

AND MISCELLANEOUS

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330
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332

ENTERPRISES

Sec. 1. Value created by the banking business.
Taxes
Sec. 2. Value created by miscellaneous other industries and occupations..




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301
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305

ENTERPRISES

Sec. 1. Value created by professional service businesses
Taxes
Sec. 2. Value created by personal service industries
Taxes.
CHAPTER X V I I .

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268

BUSINESS

Sec. 1. Basis of estimating value of product
Estimates of total net sales of retailers and of wholesalers
Sec. 2. Estimates based upon working-family budgets, 1918-19
Sec. 3. Wholesale sales
Sec. 4. Proportions of net sales income tak(5n by salaries, taxes, and return
on employed capital
Taxes..
Sec. 5. Expenses of wholesale merchants
Taxes
Sec. 6. Summary for wholesale and retail business
Taxes
_
CHAPTER X V I .

255
258
262

COMMUNICATION

Sec. 1. Steam railroads
:
'
Estimated value created by steam railroad transportation
Wages paid by Class I steam railroads
Distribution of wages and salaries by classes of employees
Sec. 2. Electric railroads
1
-Estimated value created by the electric railway industry
Method of estimating value product
Estimated value product
Taxes
Wages paid by electric railways
Sec. 3. Railway express industry
:
Value created by the railway express industry. 1
!
Taxes
Sec. 4. Water transportation industry - Value created by the water transportation industry
Taxes
Sec. 5. Telegraph and cable industry
Value created by the telegraph and cable industry
Proportion of the various shares to the total value product
Taxes
_
Wages paid in the telegraph and cable industry
Sec. 6. Telephone industry
_
Value created by the telephone industry
Estimates of operating income in noncensus years
Estimates of other elements
I
Taxes
Wages paid in the telephone industry
Sec. 7. Electric light and power industry
Value created by the electric light and power industry
Taxes
CHAPTER X V .

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255

333
334
335

CONTENTS
LIST OF TABLES
1. Census estimate of national wealth as of December 31, 1922, with
Federal Trade Commission extensions
2. Real-estate values in the wealth of public utilities, 1922
3. Estimated amounts of wealth in land and improvements in the
United States based on data of the census and of the commission,
192 2
4. Division of estimated value of taxed real estate between land and
improvements for the United States and for certain groups of
counties, 1922_
5. Percentages of assessed values of tax-exempt real estate in New York
by use or purpose, 1912, 1922, and 1923
6. Percentages of assessed values of tax-exempt real estate in New York
by ownership, 1912, 1922, and 1923
7. Official values of land and buildings of Federal Government, 1923
8. Increases in national wealth in terms of dollars, 1912 to 1922
9. Indexes of quantities of specified kinds of wealth in 1912 and 1922 and
for other specified periods
10. Distribution of wealth in United States as indicated by estates of
43,512 decedents in selected counties (1912-1923)
11. Relative distribution of wealth in 1912 and 1923 as indicated by
probate data
j
12. Relative distribution of wealth in different types of communities as
indicated by probate data (1912-1923)
13. Relative distribution of realty and personalty as indicated by probate
data (1912-1923)
'_____-__
14. Relative distribution of realty and personalty in different types of
communities as indicated by probate data (1912-1923)
15. Relative distribution of personal property as indicated by probate
data (1912-1923)
16. Relative distribution of personal property in different types of communities as indicated by probate data (1912-1923)
17. Estates of $1,000,000 and over probated in New York, Philadelphia,
and Chicago, 1918-1923, inclusive, grouped on a basis of size
18. Relative distribution of realty and personalty in 540 estates of
$1,000,000 and over, 1918-1923, grouped on a basis of s i z e . . .
19. Relative distribution of personal property in 540 estates of $1,000,000
and over, 1918-1923, grouped on a basis of size
20. Estimated potential water-power resources of the United States in
1924
21. Geographical distribution of water power developed and potential,
and proportion of potential power developed, for specified regions,
1924
J
22. Developed water-power capacity devoted , to public utility uses and
to all other in 1924
23. Estimated water-power resources of the world, 1923
24. Control of developed Water power in the United States by companies
according to specified size groups in 1923
_
25. Control of developed water horsepower in different geographical
regions, by companies, according to specified size groups in 1923__
26. Control of total developed and undeveloped water power in the
United States, by companies, according to specified size groups in
192 3
I--.
27. Percentage of control of 'total potential water power in different
geographical regions, by companies according to specified size
groups, in 1923
28. Developed water power, by companies, according to specified size
groups, in 1918 and 1923
l_r_
29. Percentages of concentration of control of1 developed water power,
by companies, according to specified size group, 1918 and 1923
t
30. Estimated original quantity of coal of different ranks in the United
States
i-31. Estimated value of coal resources of the United States
32. Control of anthracite coal reserves in the United States, by companies, according to specified groups, in 1 9 2 3 - . r
103288—S. Doc. 126, 69-1




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33. Relative exhaustion of anthracite reserves of "railroad" coal companies and all others (January 1, 1923)
34. Relative proportions of present Pennsylvania anthracite supply
operated and held in reserve
35. Control of anthracite deposits in different geographical regions by
specified groups, in 1923
i
36. Control of bituminous coal reserves in the United States, by companies, according to specified size groups, in 1923
___
37. Control of recoverable bituminous deposits in various producing
regions, by companies, according to specified size groups, in 1923. j
38. Iron-ore reserves of the world
39. Control of reported iron-ore reserves in the United States, by companies, according to specified size groups, in 1923
40. Control of estimated copper ore reserves in the United States, by companies, according to specified size groups, in 1923
41. Control of estimated copper ore reserves in principal producing
regions, by companies, according to specified size groups, in 1923—
42. Control of reported timber holdings of 330 companies according to
specified size groups, in 1923
43. Estimated relative petroleum resources of the world
44. Control of reported petroleum reserves in the United States, by companies, according to specified size groups, in 1923
45. Control of reported petroleum reserves in California, by companies,
according to specified size groups, in 1923
46. Geographical distribution of farm wealth, 1920
47. Geographical distribution of farm wealth, 1920, in terms of percentage.
48. Regional distribution of number of farms, average acreage per farm,
and average vafue per acre, by decades, 1890-1920
49. Number of farms in the United States, average acreage, and value
per farm and average value per acre, by decades, 1850-1920
50. Average acreage and average value per farm of land and buildings for
farms owned by operators and farms operated by tenants, 1920
51. Relation of mortgage debt to farm value, by geographic divisions
52. Average selling prices of farm land per acre in certain counties in
Iowa, based upon 1,744 sales, for the period 1912-1924
53. Average selling prices of farm land per acre in certain counties in
Minnesota, based upon 9,061 sales, for the period 1912-13 and
1918-1923
54. Average selling prices of farm land per acre in certain counties in
North Dakota, based upon 157 sales, for the period 1912-1924, . . . .
55. Average selling prices of farm land per acre in certain counties in
Idaho, based upon 607 sales, during the period 1912-1924.
_
56. Average selling prices of farm land per acre in the State of Ohio for
the period 1912-1924
57. Average selling prices of farm land per acre in certain counties in
Kentucky, based upon 917 sales for the period 1912-1924
58. Average selling prices of farm land per acre in certain counties in
North Carolina, based upon 400 sales, during the period 1912-1924.
59. Average prices per acre for identical tracts of farm land for five
periods, 1912-1924..
60. Farm power for seeding, cultivating, harvesting, and marketing,
stated in numbers of horses or estimated equivalent
61. Index numbers of average combined production per acre for the
principal crops, 1912-1923
„
62. Index numbers of average combined production per acre. 19121923.
63. Index numbers of crop acreage used and of mass crop production,
1912-1923
64. Average farm value per acre of 24 crops combined and index numbers of the value per acre and of the total value of the crop, 19121923
65. Average value per acre of three groups of crops, by groups, 19121923
66. Index numbers of value per acre of combined crops of foods, of feeds
. and of cotton, tobacco, and broomcorn, 1912-1923
67. Index numbers of total farm value of combined crops of foods, of
feeds, and of cotton, tobacco, and broomcorn, 1912-1923-




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CONTENTS

XI
Page

68. Segregation of the land area of the United States according to primary use
.
:
69 Approximate crop acreage of the United States used for production
of foods, of feeds, of fiber, and of miscellaneous product and total,
1912-1923—1
70. Corporations reporting to Bureau of Internal Revenue for 1922,
grouped on a basis of the type of industry in which engaged
71. Estimated value of wealth used in corporate business for specified
groups of industries in 1 9 2 2 „
72. Estimated value of wealth used in corporate business for specified
manufacturing industries in 1922_
r^n73. Estimated value of wealth used in corporate business for specified
transportation and other public utility industries in 1922
74. Estimated value of wealth used in corporate business for specified
mining and quarrying industries in 1922__
75. Analysis of estimated wealth used in corporate business for specified
groups of industries in 1922
76. Analysis of investment of wealth owned by 1,660 .corporations in
specified industries in 1922
77. Proportion of total number of corporations and of total capital stock
represented by the companies reporting data on ownership for
1922
r
78. Average distribution of corporate stock holdings in various industries
79. Average holdings of common and preferred stocks by various classes
of stockholders for corporations reporting, 1922
80. Average individual holding of common afid preferred stock and
average holdings of officers and directors and of employees for
corporations reporting, by industries, 1922
81. Proportion of persons holding stock (common and preferred) of
$500 or less to total number of stockholders, 1922
82. Numbers and proportions of various classes of holders of common
and preferred stock, 1922,
83. Individual stockholders proportionate number and holdings of common and preferred stock, by industries, 1922____„
84. Corporate dividends received by individuals of specified income
classes, by years, 1916 to 1922
85. Brokers' proportionate number and holdings of common and preferred stock, by industries, 1922
86. Trustees' proportionate number and holdings of common and preferred stock, by industries, 1922
!
87. Corporations' proportionate number and holdings of common and
preferred stock of other corporations, by industries, 1922
8&. Foreign residents' proportionate number and holdings of common and
preferred stock, by industries, 1922
89. Nonprofit institutions' proportionate number and holdings of common and preferred, stock, by industries, 1922
90. Officers' and directors' proportionate number and holdings of common and preferred stock, by industries, 1922
91. Employees' proportionate number and holdings of common and
preferred stock, by industries, 1922. _ 1
92. Percentages of number of companies with specified par values of
common stock, by industries, 1922
93. Percentages of total reported common stock outstanding with speci, fied par values, by industries, 1922
94. Percentages of number of companies with specified par values of preferred stock, by industries, 1922
95. Percentages of total reported preferred stock outstanding with specified par values, by industries, 1922
96. Indicated distribution of church property (land and buildings) in
1922 and percentage of increase over 1916
97. Estimated membership and property per capita of all churches in
1916 and 1922
98. Indicated distribution of church property by geographical groups,
1916 and 1922
99. Distribution of reported church investments in securities




128
131
133
134
135
137
138
141
142
145
146
147
148
149
150
151
152
153
154
155
156
157
159
160
161
162
163
164
169
170
171
172

VHI

CONTENTS
Page

100. Distribution of reported church income
173
101. Distribution of reported investments of foundations, community
trusts, and public trusts in 1922
175
102. Distribution of reported income of foundations, community trusts,
and public trusts in 1922
177
103. Estimated value of private benevolent institutions, 1910 and 1922,
by classes of institutions
179
104* Estimated value of public benevolent institutions, 1916 and 1922, by
. classes
180
105. Total estimated value of benevolent institutions in each geographical
region of the United States in 1922._ _ 1
j
181
-106. Estimated value of land, buildings, and equipment of private benevolent institutions, by classes, 1910 and 1922
182
107. Total estimated value of public schools in each geographical region
of the United States in 1918 and 1922
185
108. Total personal income reported to Federal Government, percentage of
estimated total income, and estimated population receiving or
enjoying reported income, by years, 1917 to 1923
192
109. Estimated population receiving or e n d i n g the total personal income reported to the Federal Government, by income classes, in
1922 and 1923
1
194
110. Total personal income reported to Federal Government, and estimated population receiving or enjoying it, by geographical divisions, in 1922 and 1923
.
195
111. Aggregate amount of cash dividends reported in personal income
tax returns, by years, 1916-1923
196
112. Percentages of cash dividends reported in income tax returns; by
geographical divisions, by years, 1916-1923
197
113. Personal income reported to Federal Government and number of returns made, by years, 1918 to 1923
198
114. Personal income reported to Federal Government according to
sources of income, by years, 1918-1923
198
115. Percentage distribution of personal income reported to Federal
Government, according to sources of income, by years, 1918 to 1923.
199
116. Percentage distribution of personal income reported to Federal
Government according to sources of income and size groups, by
years, 1918-1923.
J
202
117. Percentage distribution of total income, by sources and by income
classes,, 1918-1923
204
118. Income received from specified sources, bv territorial divisions, 19221923__
;
CC7
r
119. Average income per return according to specified sources, by territorial divisions, 1922-1923
:
2C8
120. Number of corporations reporting net income and number reporting
deficit, by years, 1916 to 1923
—
211
121. Aggregate net income and aggregate deficit of corporations, together
with ratios of deficit to net income, by years, 1916 to 1923
212
122. Net income of corporations and rate of return oh "fair value" of
outstanding capital stock for groups of related industries and for
certain specific industries, 1922
...
213
123. Net profits from investment in corporate business and rates of return
on investment for groups of related industries and for certain specific industries, 1922
215
.124. Gross and net income from operations and ratio of net income to
gross income for groups of related industries and for certain specific
industries, 1922.
217
125. Percentage distribution of the aggregate net income of corporations
as reported in income-tax returns, by territorial divisions, 19161923
.J...J
I
218
126. Estimates of the total annual income of the people of the United
States and the income reported in personal income-tax returns with
index numbers based upon 1918 as 100 for the six-year period, 19181923...
•
.
221
127. Estimated total value created by specified kinds of economic activitv,
in million dollars, 1918-1923-.:™
i
•
_
1.
225
128. Percentages of the contributions of specified kinds of economic activity *
to the total national income, 1918-1923
1
226




CONTENTS

129. Comparison of the commission's original estimates of the natipnal
income with these estimates adjusted for changes in purchasing
power for the principal lines of economic enterprise, 1918-1923
130. Estimates of the total national income and the shares of labor and
capital for the principal kinds of economic enterprise, 191S-1923_.
131. Estimated aggregate farm values of cattle, calves, sheep, lambs, hogs,
goats, and kids slaughtered for food, by years, 1918 to 1923_
132. Estimated value of dairy products sold off farms or consumed by
farm families as human food, by years, 1918 to 1923J
133. Estimated total value of all poultry sold off farms or consumed as
food for farm families, by years, 1918 to 1923
134. Estimated total value of eggs sold off farms or consumed, as human
food by farm families, by years, 1918 to 1 9 2 3 _
135. Estimates of the value of wool and mohair produced, by years, 1918
to 1923_
136. Estimates of the value of honey and wax sold' off farms or consumed
as human food on farms, by years, 1918 to 1923137. Estimates of the value of horses and mules sold off farms, by years,
1918 to 1923
,
138. Estimated variations in the value of livestock inventories on farms
on January 1, by years, 1918 to 1924..
_
139. Estimated value of- crops sold off farms or consumed for human
food on farms, by years, 1918 to 1923
^--t140. Estimated gross value of all farm products sold off farms or consumed as human food on farms, by years, 1918 to 1923
_i
141. Estimated value of harness and saddles used on farms, by years,
1918 to 1923
1
142. Estimated value of fertilizer consumed on farms, by years, 1918 to
1923
i
143. Factory values and tonnage of agricultural equipment sold by manufacturers, by years, 1918 to 1923
'
144. Estimates of the investment in agricultural equipment that was
consumed on farms, by years, 1918 to 1923
'
145. Estimated costs paid by farmers to other industries, by years, 1918
to 1923
1
•-J———*.146. Estimates of the total value created by agriculture, by years, 1918 to
1923
147. Estimates of the aggregate wages paid by farmers to hired farm
workers, by years, 1918 to 1923
148. Estimates of the total value created by agricultural industry and
the shares thereof that went in wages of hired workers,1 rent, bond
interest, profit on farmers' investment and remuneration for labor
of farmers and their families, by years, 1918 to 1923^,;
149. Estimated percentages of the total value created by agriculture, divided between wages of hired labor and in return to all employed
capital and the enterprise and labor of the farmers, 1918 to 1923-150. Estimated total net sales of the mining, quarrying, and oil-well
industry, by years, 1918 to 1923
151. Estimated value created by the mining, quarrying, and oil-well
industry, and estimated division between wages and salaries, and
rents, royalties, interest, and profits, by years, 1918 to 1923
152. Percentage distributions of the estimated total value product of the
mining, quarrying, and oil-well industry between wages and
salaries, and rents, royalties, interest, and profits, by years, 1918
to 1923_
153. Estimated net sales of products of each important branch of mining, quarrying, and oil-well industry, by years, 1918 to 1923
154. Estimated value product of the gold and silver mining industry, and
estimated division among wages and salaries, and rent, interest,
and profit, by years, 1918 to 1923
155. Number of employees and amount of wages and salaries paid by
occupational groups of the principal branches of the mining, quarrying, and oil-well industry,in 1919
156. Per capita wages and salaries paid employees of the mining, quarrying, and oil-well industry during the year 1919, by occupational
groups




XIII

Page
227
228
232
233
234
235
236
237
237
239
240
241
242
243
245
245
247
248
24Q

249
249
251
252

252
253
254
256
257

VHI

CONTENTS
T age

157. Percentage distribution of employees and wages and salaries in the
mining, quarrying, and oil-well industry, by geographical divisions,
for the year 1919
158. Estimated value created by the manufacturing industry and estimated division between salaries and wages, and rent, interest, and
profits, by years, 1918 to 1923
159. Estimated total value created by each of the 14 major groups of the
manufacturing industry, by years, 1918 to 1923
160. Percentage distribution of the total value created by the 14 major
groups of the manufacturing industry divided between salaries and
wages, and rent, interest, and profits, 1918-1923
161. Percentage distribution of the total value created by the manufacturing industry between salaries and wages, and rent, interest,
and profits, by years, 1918 to 1923__1
162. Average annual wages per factory employee, bv major manufacturing
groups, in 1914, 1919, 1921, and 1923
163. Average annual wages per factory employee, expressed in dollars of
the same purchasing power as "in 1919, bv major manufacturing
groups, in 1914, 1919, 1921, and 1923
I
___
164. Average annual wages per factory employee, by principal regions, in
1914, 1919, and 1921
165. Estimates of the gross value of construction, by years, 1918 to 1923_
166. Estimates of the total value created by the construction industry
and of the portions divided between salaries and wages and in
profits, by years, 1918 to 1923
167. Percentages of wages and salaries and of profits to the total value
created by the construction industry, by years, 1918 to 1923
168. Estimated value created by the steam railroad industry and estimated division between wages and salaries, and rent, interest, and
profits, by years, 1918 to 1923
169. Division of the total value created by the steam railroad industry
between wages and salaries,, and rent, interest, and profits, by
years, 1918 to 1923
170. Average number of employees, hours worked, and wages paid by
Class I steam railways, by years, 1916-1923
171 * Total number of persons employed and total wages and salaries
paid on daily and hourly payment basis by Class I steam railroads,
July, 1921, to December, 1923
J
172. Analvsis of number of employees of and total salaries paid by Class I
railroads, July, 1921, to December, 1923
173. Percentage distribution of total number of employees and total
wages paid by method of wage payment Class I steam railroads,
July, 1921, to December, 1923
174. Average total wages per employee on daily and hourly pay basis and
average wages per day or hour paid by Class I steam railroads,
July, 1921, to December, 1923
175* Estimated aggregate railway operating revenues of street and electric
railway industry, by years, 1917 to 1923
176. Estimated total value created by the street and electric railway
industry and estimated distribution between wages and salaries,
and rent, interest, and profits, by years, 1918 to 1923
177. Estimated, percentage distribution of the total value created by the
street and electric railway industry between wages and salaries, and
rent, interest, and dividends, by years, 1918 to 1923
178. Employees and wages and salaries by occupational groups for electric
railways, 1912, 1917, and 1922
179. Average compensation per employee paid by electric railways in
1912,1917, and 1922
__
180* The total value created by the railway express business and the
portions thereof that went in wages and salaries and as return to
employed capital, 1918 to 1 9 2 3 —
_
181. Percentages of the total value Created by the railway, express business
that went to labor and to capital, by years, 1918 to 1923_
182. Estimated value created by the water transportation industry and
estimated distribution between wages and salaries, and rent, interest,
and profits, by years, 1918 to 1923




257
259
259
261
262
262
264
264
265
266
268
269
271
272
273
273
274
275
280
281
282
283
284
286
287
289

CONTENTS

XV

Page
183. Percentage distribution of the value created by the water transportation industry between wages and salaries, and rent, interest,
and profits, by years, 1918 to 1923
184. Estimated value created by the land telegraph and ocean cable
industry and estimated division between wages and salaries, and
rent, interest, and profits, by years, 1918 to 1923
!
185. Estimated percentage distribution between wages and salaries, ancj
rent, interest, and profits of the total value created by the telegraph
and cable industry, by years, 1918 to 1923
186. Employees and wages and salaries, by occupational groups, for the
telegraph and cable industry in 1922
187. Index numbers of the aggregate operating income of the telephone
industry, by years, 1918 to 1923
188. Estimates of the total operating income of the telephone industry
and index numbers based upon 1922 as 100, by years, 1918 to 1923__
189. Estimated value created by the telephone industry, and estimated
division between wages and salaries, and invested capital, by years,
1918 to 1923
190. Percentage division of the total value created by the telephone industry between wages and salaries, rent, interest, and profits, and
uncollectible revenues, by years, 1918 to 1923
191. Number of persons employed and wages and salaries paid by specified
occupational groups in the telephone industry, 1912, 1917, and
192 2
192. Average compensation per employee in the telephone industry, by
occupational groups, 1912, 1917, and" 1922
193. Estimated aggregate gross earnings from operation of the electric
light and power industry, by years, 1917 to 1923
194. Estimated value created by the electric light and power industry
and estimated division between wages and salaries, and rent, interest, profits, and uncollectible revenues, by years, 1917 to 1923
195. Percentage distribution of the value created by the electric light
and power industrv between wages and salaries, and rent, interest,
and profits, by years, 1917 to 1923
196. Estimate of the total sales of retail and of wholesale mercantile
business, based on sales in Pennsylvania, by years, 1920 to 1923-197. Index numbers of retail and wholesale sales, by years, 1919 to 1923-198. Annual expenditures per member of workingmen's families for food,
clothing, housefurnishings, coal and wood, and miscellaneous retail
purchases, by geographical divisions, in 1918-19
199. Estimate of the total retail sales of articles for personal consumption
in 1918, based on an analysis of the purchases made by 12,096,
workingmen's families
200. Index numbers of retail sales and estimates of aggregate retail sales
of articles for personal consumption, by years, 1918 to 1923
201. Estimated total retail sales of all articles, by years, 1918 to 1923
202. Estimate of the total sales by the wholesale trade, by years, 1918 to
192 3
203. Percentages of net sales, of wages and salaries, of rent, of taxes, of interest, profits, and bad debts, and of costs paid away to other
businesses by retail shoe stores, by years, 1919 to 1923
204. Percentages of net sales represented by wages and salaries, rent, and
interest, profits, and bad debts of retail shoe stores, by years, 1919
to 1923
205. Estimated percentages of retail sales divided among wages and
salaries, rent, bond interest, and profits, and in costs paid away to
other industries in 1923.
206. Average expenditures per family made by 12,096 workingmen's
families for various kinds of commodities in 1918-19, and the
kind of store from which the purchases might have been made
207. Percentages of all retail sales divided between wages and salaries,
and in rent, bond interest, and profits, by years, 1919 to 1923
208. Estimates of the total value created by retail mercantile business
and of the portions thereof divided between wagies and salaries
and rent, bond interest, and profits, by years, 1918 to 1923




290
292
293
294
297
297
298
299
300
301
303
303
304
308
309
310
311
313
313
315
315
316
317
318
320
320

PftffC

209. Percentages of the total value created by retail mercantile business
divided between labor and capital and enterprise, by years, 1918
to 1923
i
210. Percentages of net sales of wholesale grocery stores that were represented in various classes of expense, outgo, and profit in 1918, 1919,
1920, 1922, and 1923_
211. Percentages of net sales of wholesale grocers represented by rent,
interest on bonds, mortgages, and long-time notes, and by other
interest, by years, 1919 to 1923
212. Percentages of wages and salaries and of the return on all employed
capital to net sales of wholesale grocers in 1918, 1919, 1920, 1922,
and 1923
—
_
213. Estimated percentages to wholesale net sales of wages and salaries, of
rent, bond interest, and profits, and of costs paid away to other industries, by years, 1918 to 1923
214. Estimates of the total value created by the wholesale mercantile
business and of the portions thereof that went in wages and salaries,
and in rent, bond interest, profits, and taxes, by years, 1918 to 1923215. Percentages of the total value created by wholesale trade that were
received by labor and by capital, by years, 1918-1923
216. Estimates of the total value created by all mercantile business and the
shares thereof that went in wages and salaries, in taxes, rent, bond
interest, and profits, by years, 1918 to 1923
217. Percentages of the total value created by mercantile business,
divided between wages and salaries and rent, bond interest, and
profits, by years, 1918 to 1923
218. Estimated total value created by professional service businesses and
estimated division between salaries and wages, and return to professional enterprise, by years, 1918-1923
219. Percentage division of the total value created by professional service
businesses between salaries and wages and return to professional
enterprise, by years, 1918 to 1923
220. Estimated value created by personal service industries, and estimated division between salaries, wages, and commission, and rents,
interest, and profits, by years, 1918 to 1923
221. Percentages of the total value created by personal service industries,
represented by wages, salaries, and commissions, and by return to
capital and enterprise, by yeais, 1918 to 1923
I
222. Estimated value created by the banking business and the estimated
division between salaries, and rent, interest, and profits, by years,
1918 to 1923
223. Percentage distribution of value product of the banking business
between wages and salaries and the return to capital and enterprise,
by years, 1918 to 1923
224. Estimate of the value created by miscellaneous public utility industries and domestic servants, by years, 1918 to 1923




321
322
322
323
323
324
324
325
326
329
329
331
332
333
334
336

ACKNOWLEDGMENT
For general direction and supervision of this inquiry into national
wealth and income, the commission acknowledges the services of
Mr. Francis Walker, Chief Economist, and Mr. William H. England,
Assistant Chief Economist.
The commission desires to mention as especially contributing to
the preparation of this volume the services of Messrs. G. P. Watkins,
T. W. Mitchell, and J. T. Graves.
Valuable assistance was also rendered by Messrs. T. A. Thibodeau, J. S. Biggs, J. H. Dynes, T. A. Carroll, C. H. Becker, J. B.
Peat, Frank Buckingham, and C. C. Davis.




XVII

LETTER OF TRANSMITTAL

FEDERAL TRADE

COMMISSION,

Washington, May 25, 1926.
SIR: I have the honor to transmit herewith a Report of the Federal
Trade Commission on National Wealth and Income, made pursuant
to Senate Resolution 451, sixty-seventh Congress, fourth session.
This is the second and final report made in response to this resolution, the first being a report on taxation and tax-exempt income, which
was submitted on June 6, 1924.
B y direction of the commission.
(Signed)
J. F . NUGENT,
Chairman.
PRESIDENT OF THE SENATE,

Washington J D. C.

XVIII




SUMMARY

This report on the national wealth and income is submitted in
final response to Senate Resolution 451, Sixty-seventh Congress,
fourth session. The resolution directs the commission to make an
inquiry into and to compile data concerning the total amount of the
chief kinds of wealth in the United States, to ascertain the ownership thereof and the encumbrances thereon, including both public
and private indebtedness, and to secure statistics for recent years
concerning the amount of the annual income or increase in the
national wealth in different lines of economic activity and by different classes of the population; and also to obtain information regarding the amount of income exempt from Federal taxation, and to
report on the various phases of the inquiry as soon as practicable.
An amendment to this resolution instructed the commission to
ascertain the aggregate taxes levied by States, counties, municipalities, and other local taxing bodies for the last completed fiscal
year and for the corresponding fiscal year five years previous.
A report on taxation and tax-exempt income and public debts
was submitted to the Senate on June 6, 1924, in partial response to
the above-mentioned resolution.
It was found impossible to complete certain features of the report
as planned, on account of a new provision in the appropriation act
for the fiscal year 1925-26, which restricted the general purposes
for which the appropriation could be used.
This report deals, first, with national wealth, and, second, with
national income for continental United States, and it contains some
analyses of the various kinds of wealth and income and their distribution among the people.
The total national wealth in 1922 is estimated at about $353,000,000,000, and the total national income for the same year at
about $62,000,000,000, increasing in 1923 to about $70,000,000,000.
A rate of return on capital comparable to that for business undertakings should not be computed from these figures of wealth and
income for 1922, because, first, the income includes wages and
salaries, among other shares, and second, the wealth includes large
amounts of public property and private possessions which are not
lucratively employed. To show the return on business capital
would require the collection of much additional data and even then
would furnish a rate of return for a single year only.
GENERAL SURVEY OF NATIONAL WEALTH

In computing national wealth certain general questions as to the
nature of wealth and the practicability of enumeration are first considered, and particularly the desirability of paying attention to the-




1

2

NATIONAL .WEALTH AND INCOME

material things in which value is embodied rather than to the valuation of property rights.
The estimate of national wealth is shown in general for 1922,
with comparisons for most items with 1912, on the basis of the census
estimates, but with some modifications. The total amount, as
already noted, is about $353,000,000,000 for 1922, which involves an
increase over the census estimate of about $32,000,000,000. This
difference implies no adverse criticism of the census figures, but
depends in part on the addition of values for roads and streets and
in part on a modification of the principle of valuing railroads and
other public utilities by applying the same principle as that used
for real estate. This resulted in increasing such railroad and other
public-utility values by about $10,000,000,000. The whole estimate, like that of the census, is practically linjiited to tangible forms
of wealth and takes no account of intangible property of various
kinds which depends for its value on tangible wealth.
A more important contribution made by the commission is in the
analysis of the total estimate into its chief elements. Thus the
total of $353,000,000,000 is found to consist of about $230,000,000,000
for real estate and about $123,000,000,000 for tangible personalty or
movables. The figure for real estate includes untaxed as well as
taxed realty, and also that belonging to railroads and public utilities.
The real estate values, therefore, are found to be about 65 per cent
of the total wealth of the country. Of this amount about $42,000,000,000 is for tax-exempt real estate owned almost entirely by the
Government (Federal, State, and local). The amount for real
estate is analyzed further into its chief components, which are found
to be about $122,000,000,000 for land value and about $108,000,000,000 for real estate improvements. Thus land, exclusive of
improvements, is estimated at 53 per cent of the total real estate
and at 35 per cent of the total national wealth.
The report also makes an approximate division of the total wealth
among various uses. Thus it is estimated that about 18 per cent of
the total consists of agricultural wealth, about 14 per cent is used in
manufacturing and mining, about 13 per cent is held by railroads
and other public utilities, and about 12 per cent is held by Federal,
State, and local governments. A very large but unascertained portion is employed in wholesale and retail trade, and quite small
shares in other lines of business not mentioned above. Probably
the largest single share, however, is that composed of town and city
dwellings, furniture, and personal effects—wealth possessed and used
for personal necessities and enjoyment—which probably is not less
than one-fourth of the grand total.
A comparison of the census estimates of wealth for 1912 and 1922
indicates an increase measured in dollars of about 72 per cent. If
allowance is made for changes in the purchasing power of the dollar,
as indicated by the change in the level of wholesale prices, the increase was only 13 per cent, or a rate only slightly lower than the
rate of increase in population. Such price ijidexes are not especially
adapted, however, for use in this manner, and probably tend to exaggerate the changes in the dollar. Such data as are available regarding changes in the quantities of the concrete forms of wealth (as
distinguished from the amount in dollar^) suggest the probability
that 13 per cent is an understatement of the real increase.




3 NATIONAL .WEALTH AND INCOME
DISTRIBUTION OF WEALTH AMONG INDIVIDUALS

On the assumption that the relative values of estates of deceased
persons, as recorded in probate courts, constitute an effective sample
or cross section of the distribution of wealth, the probate records of
43,512 estates in 24 counties of 13 States were compiled by agents
of the commission for the years 1912 to 1923, inclusive. The counties were selected with a view not only to their geographical distribution but also to a proportionate distribution as between counties with
city, town, and rural population. For estates which were not probated an estimated average value of $258 was assigned, the average
value of the probated estates under $500.
Tabulations based on the records of these 43,512 estates (and 141,446 estates estimated as not probated) cover a total wealth of about
$708,000,000 for the 24 counties. About 1 per cent of the estimated
number of decedents owned about 59 per cent of the estimated
wealth and more than 90 per cent was owned by about 13 per cent
of the decedents. The average value for all estates was $3,800, but
over 91 per cent of the decedents had estates amounting to less than
this average. About 65 per cent of the total number of probated
estates were between $1,000 and $25,000 in size. Although the tabulations suggest wide variations in the wealth of individuals and a
rather high degree of concentration, a comparison of the estates
probated in 1912 with those probated in 1923 indicates that this
concentration was greater at the beginning of the period covered by
the commission's study than at the end. In 1912 the estates of
over $100,000 each amounted to 52.6 per cent of the total value of
all probated estates examined, while in 1923 they amounted to only
45.9 per cent of the total.
In the counties having cities of over 50,000 population the average
value of the estates probated throughout the whole period was
$16,990, while in counties having towns of between 5,000 and 50,000
population it was $10,070, and in rural counties $13,950. Not only
the average estate but also the concentration of probated wealth was
greatest in the counties with cities. The distribution of wealth was
apparently wider in the " t o w n " counties than in either of the other
two.
Only about a third of the total value of the 43,512 estates examined
represented real estate directly owned. This does not take into
account (1) the deductions for mortgage debts, (2) the indirect owners
ship of realty through ownership of such personalty items as mortgages and stocks and bonds of corporations owning realty, and (3)
publicly owned real estate. Mortgages and real-estate notes are
classed as personalty. The proportionate direct holdings of real
estate were greater for the estates of medium size than for the very
large or the very small estates. In estates ranging in size from $2,500
to $10,000 the average distribution between realty and personalty
was practically even. Analysis of the data for each type of community indicates that, although realty represented only 30.6 per cent
of the total value of estates in " c i t y " counties and 41.9 per cent in
" t o w n " counties, it represented 50.6 per cent in rural counties—
suggesting greater stability and continuity of existence in rural
communities.




4

NATIONAL .WEALTH AND INCOME

Of the personalty included in the total value of the estates more
than one-third consisted of corporate stocks, while 14.7 per cent
represented bonds, 10.6 per cent real-estate notes, 4.7 per cent other
notes, 14.7 per cent cash, and 19.9 per cent miscellaneous. The
proportions represented by bonds and stocks were larger for the estates
of larger size, while the proportions represented by cash were considerably larger for the smaller estates. The proportions also varied
with the type of community, that for bonds averaging less in town and
city districts than in rural ones, while that for stocks was somewhat
smaller for the rural districts than for the others. The proportion of
total personalty represented by cash was largest for the estates in
town districts, averaging 32.9 per cent, as against 12.4 per cent for
city and 21.1 per cent for rural districts.
A separate study of 540 estates of $1,000,000 and over in New York
City, Chicago, and Philadelphia for the years 1918 to 1923, inclusive
showed 86 per cent of the number amounting to less than $5,000,00Q
each, and a total value for the whole 540 of a little over 2 billion
dollars. Of the total value 14.4 per cent was for realty. Of the
personalty 53.9 per cent was in corporate stocks, 23.8 per cent in
bonds, 4.4 per cent in real-estate notes, 3.9 per cent in other notes,
3.6 per cent in cash, and 10.4 per cent in miscellaneous items.
OWNERSHIP OF NATURAL RESOURCES

The money value of the mineral and other natural resources of
the United States is not estimated by the Bureau of the Census,
and the commission, in the present inquiry, has not attempted to
arrive at any definite estimates of its own, although it was possible
to make certain rough computations in the case of a few specific
resources.
For the purposes of a study of the control or ownership of various
natural resources of the United States schedules were addressed
to the principal water-power, coal, iron-ore, copper, timber, and
petroleum companies. Replies were received from companies controlling over 80 per cent of the estimated total developed water
power of the country, while in the case of bituminous coal information was received from companies controlling about 48 per cent of
the total reserves available for mining within 40 years. For the
other resources these returns were meager, but they were supplemented in some instances by data from other public or private^
sources.
Only a small proportion of companies were able to assign a value
to their reserves. From the valuations reported for each resource
(except water power) an average value per unit was computed, which
may be applied against the estimated total quantity oi the reserve
for a rough computation of total value.
For each resource covered the data on quantities owned or controlled, as reported by the companies to the commission or to other
agencies for 1922 indicate a distinct concentration of control in the
hands of a few large companies. Six companies are shown as controlling about a third of the total developed water power, 8 companies as controlling over three-quarters of the anthracite coal
reserves, 30 companies as controlling over a third of the immediate
bituminous coal reserves, 2 companies as controlling well over half




5 NATIONAL .WEALTH AND INCOME

of the iron-ore reserves, 4 companies controlling nearly half of the
copper reserves, and 30 companies controlling over 12 per cent of the
petroleum reserves. It is interesting to note, however, that concentration of ownership in the hands of a few large corporations does
not mean concentration in a few individual hands, in view of the
development, especially in recent years, of a wide distribution of
ownership of corporations through increase in number of stockholders.
AGRICULTURAL WEALTH

The question of agricultural wealth, from a national viewpoint,
involves productive capacity as well as money value, so that the
quantities of farm products and the area of land under cultivation are
of especial significance.
The production of farm animals used for meats and to furnish
dairy products shows an increase from 1912 to 1923 of roughly 5 per
cent. The stock of animals used on the farm for draft purposes
remained practically the same at the end of the 12-year period as at
the beginning. There was considerable increase up to the middle of
the period, but following this the more general use of tractors caused
a falling off again. The combined animal and tractor farm power
used for seeding, cultivating, harvesting, and marketing increased
about 17 per cent during the period.
Acreage used for cultivation shows an apparently permanent increase of about 10 per cent. The area used for grazing increased
about 12 per cent from 1912 to 1919, but fell off again until, at the
end of the period, less than 3 per cent more land was being used for
this purpose than at the beginning. Average combined crop production per acre shows a falling off of about 10 per cent, but, because
of the increased acreage, the total production shows a slight increase.
The total farm wealth, according to the Census Bureau, was
$41,000,000,000 in 1910 and $78,000,000,000 in 1920. For the years
subsequent to 1920 certain estimates have been made by the Department of Agriculture; that for 1922 was $63,000,000,000. The severe
agricultural depression toward the end of 1920 was reflected in heavy
declines in the value of farm lands throughout the country. Extensive price data showing the extent of these declines were gathered
by the commission and are presented in this report. The agricultural depression, like the immediately preceding boom, was a question of prices rather than of marked changes in physical production
of useful commodities. But the fall in prices was none the less
serious for the farmer, and perhaps, on that account, even more so.
WEALTH OF CORPORATIONS

The book value of wealth used in corporate business in 1922 is
estimated by the commission at approximately $102,000,000,000.
This estimate (which does not include such items as good will, patents, trade-marks, etc., or outside investments) was arrived at by
adding to the value of land, buildings, and equipment as compiled
by the Bureau of Internal Revenue from corporation returns for
taxation purposes estimates of the value of inventories, cash, and
other movables used in the corporate business. The following estimates for different industries are book values and are not comparable




6

NATIONAL .WEALTH AND INCOME

with those given above, particularly those for steam railroads and
other public utilities, which are estimated current values.
The greatest aggregate corporate wealth was that indicated for
the group of corporations engaged in manufacturing, amounting to
an estimated 33.7 billions of dollars for the 80,234 such corporations
reporting to the Bureau of Internal Revenue. Transportation and
other public-utility corporations ranked next with an estimated 27.3
billions of dollars for 23,472 corporations. Among manufacturing
corporations the greatest total wealth was that of about $10,000,000,000 for those engaged in the manufacture of metal and metal
products, including iron and steel. Among the transportation and
other public-utility corporations by far the greatest aggregate was
that of 17.3 billions indicated for steam railroads. The latter not
only greatly exceeded any other corporate industry in total wealth
employed but also had easily the greatest estimated wealth per individual corporation, averaging $10,000,000. Electric railroads, which
ranked next, had an average of only about 2.2 millions of dollars per
corporation.
Fixed assets (land, buildings, machinery, and other equipment)
averaged an estimated 66.3 per cent of the total corporate wealth.
The proportion varied for different groups and industries, ranging
from nearly 87 per cent for the public-utility and service corporations
to less than 30 per cent for trading corporations. A comparatively
low percentage of fixed assets to total wealth was indicated also for
manufacturing corporations which, like trading corporations, have a
large part of their investment in stocks of goods or materials.
No general data on the relative wealth invested in corporate business and outside of it (e. g., stocks and securities of other companies)
were available from the Bureau of Internal Revenue records. A
special study of the balance sheets of 1,660 corporations made by the
commission from both public and private sources indicates that, on
an average, less than 10 per cent of corporate wealth is invested outside the corporate business and that less than 1 per cent is attributed
to good will, appreciation, etc. An exceptionally large proportion
of outside investment was an average of 33.9 per cent indicated for
the four largest meat-packing concerns. The smallest was an average of 5.6 per cent for 42 petroleum companies.
OWNERSHIP OF CORPORATIONS

Although the wealth devoted to corporate business in 1922 is
estimated to represent about a third of the total wealth of the country,
it is the relative concentration or dispersion of stock holdings which
determines the actual distribv.licn of corporate wealth. In the
present inquiry schedules requcdii^ data on the number and kinds
of stockholders were addressed to a lisrt of 10,000 corporations selected
by the Bureau of Internal Revenue in such manner as to be representative not only of size but of each of the 43 industrial groups into which
the bureau's returns are divided for tabulation. Returns were
received by the commission from 4,367 corporations with a combined
capital stock amounting to over $9,000,000,000, or about 12 per cent
of the capital stock of all corporations.
For these 4,367 corporations the average holding of common stock
per stockholder was $6,969, while the average of preferred stock was
$5,211. The average holdings of common stock per stockholder




7

NATIONAL .WEALTH AND INCOME

ranged from $3,273 for electric light and power companies to $18,957
for manufacturers of lumber m d wood products, while the average
holdings of preferred stock ranged from $1,486 for service corporations to $9,883 for coal-mining companies. Nearly one-third of all
the stockholders reported were holders of not more than $500 worth
of stock (common and preferred) each. This proportion of small
holders to total holders ranged, however, from 11.7 per cent for
electric railroad companies to 53.8 per cent for petroleum mining
companies.
Of the total of 1,074,851 common stockholders reported, individuals
(not including brokers, trustees, or foreign holders) comprised over
90 per cent. Trustees comprised 3.4 per cent, brokers 1.7 per cent,
other corporations 1.1 per cent, nonprofit institutions 0.2 per cent,
and foreign holders 1.4 per cent. For preferred stock the proportions were very nearly the same. Although the number of individual stockholders was thus far greater than of all other classes of
holders combined, the average holding per individual was lower than
that for other classes of holders in nearly all industries. The proportion of the total par value of common stock represented by holdings of individuals was 64.9 per cent, while that for trustee holdings
was 10.4 per cent, for broker holdings 11.9 per cent, corporation
holdings 10.4 per cent, nonprofit institution holdings 0.9 per cent,
and foreign holdings 1.5 per cent. The proportions for preferred
stock were very similar to those for the common.
For corporations reporting the information, the stockholdings of
officers, directors, and employees were an important part of the
holdings of individuals. In the case of many smaller corporations
all of the stock was held by officers and directors. Of the total
common stockholdings officers and directors held about 10 per cent.
They held about 6 per cent of the total preferred stock. In number,
however, officers and directors constituted only about 2 per cent of
the total common stockholders and only about 1 per cent of the
preferred stockholders. The employee stockholders comprised 7.5
per cent of the common stockholders reported and 3.5 per cent of the
preferred stockholders, but employee holdings represented only 1.5
per cent of the common stock and less than 2 per cent of the preferred.
In spite of a tendency in recent years toward a lower par value for
shares of stock the data reported to the commission indicate that the
great majority of corporations still follow the practice of fixing the
par value of their shares at $100. Eighty per cent of the companies
had par values of $100 for their shares of common stock, while 5.1
per cent had $50, 3 per cent had $25, 4.9 per cent $10, 0.7 per cent
$5, and 1.9 per cent $1. The most radical departure from these
general proportions was in the case of companies engaged in the
manufacture of chemicals and allied substances (principally petroleum
and petroleum products). Over 55 per cent of these companies had
a $25 par value for their common stock.
WEALTH OF NONPROFIT INSTITUTIONS

*

The nonprofit institutions included in the commission's study
were (1) religious organizations (2) benevolent institutions (3) educational institutions, and (4) miscellaneous foundations and community trusts and public trusts. Estimates based on returns from




8

NATIONAL .WEALTH AND INCOME

the commission's schedules, and on earlier studies of the Census
Bureau and other bodies, indicate a total wealth of about 14.5
billion dollars for these institutions in 1922. Of this total, educational
institutions had an estimated 7.6 billions, while religious organizations had 3.3 billions, benevolent institutions 2.4 billions, and foundations and community trusts and public trusts 1.2 billions.
The income from those portions of the wealth of nonprofit institutions which are in invested funds amounted to 160 million dollars
in 1922, or a return of about 1 per cent on the total wealth of these
institutions.
Of the estimated 3.3 billion dollars wealth of religious organizations (all private) about 2.8 billions, or 86 per cent, is in churches,
parsonages, and land, while 12 per cent is in outside income-producing investments, and 2 per cent consists of endowments for specific
purposes. The average wealth per church member is estimated at
$69. The wealthiest single church is the Roman Catholic Church,
with 23 per cent of the estimated total church property. In proportion to communicants, however, the Protestant Episcopal Church
is the wealthiest with an estimated wealth in church property of
$223 per member.
Of the estimated two and a qiiarter billion dollars of wealth in
benevolent institutions for material relief at least one and threefourths billions is in privately-owned institutions. Over half of the
wealth of these private institutions is represented by that of hospitals
and sanitariums and about 23 per cent is represented by that of
homes for adults or adults and children. Analysis of the wealth of
privately-owned benevolent institutions indicates that 61 per cent
was in land, buildings, and equipment, 26 per cent in endowment
funds, 8 per cent in other property, and 5 per cent in land and buildings bequeathed for a specific purpose.
Of the estimated 7.6 billion dollars of wealth in educational institutions about 3.5 billions is in private schools and colleges, 3 billions
in public schools and colleges, 0.8 billion in libraries, and 0.2 billion
in museums and historical societies.
Of the estimated 1.2 billion dollars of wealth of miscellaneous
foundations, community trusts, and public trusts, only $134,381,000
represents that of public trusts. The 1.2 billions is invested as
follows: Bonds, 40.2 per cent; stock, 26.1 per cent; real estate
mortgages, 17.4 per cent; and miscellaneous, 16.3 per cent. Over
half of the bonds and over 85 per cent of the stocks are industrial
issues. The total estimated income from these institutions in 1922
was about $54,000,000, or about 4 p e r cent return on the 1.2
billion dollar investment.
NATIONAL INCOME

The amount of national income is derived largely from basic data
of the Census Bureau, but they are supplemented by other data.
Estimates for noncensus years are based on various indexes of business
changes. Thus estimates are presented of the total national income
for the six. years, 1918 to 1923, together with an analysis of this
income according to its derivation from various sources, such as agriculture, manufactures, transportation, etc.




9 NATIONAL .WEALTH AND INCOME

Extensive use is also made of the income statistics of the Treasury
Department, which furnish extensive data regarding the incomes of
corporations and of such persons as are required to make reports to
the Government. However, these reports after 1917 cover the incomes enjoyed by a very considerable proportion of the total population—a seventh, more or less—and are of especial value in showing
the differences in individual incomes and the sources from which
such incomes are derived.
PERSONAL INCOME-TAX DATA

During the seven-year period 1917-1923 the total income of individuals who received and enjoyed the income reported in the Federal
personal income returns ranged from a little over $12,000,000,000 in
1917 to a maximum of over $31,000,000,000 in 1923. The total income
for 1920 was nearly 27 billions, t&e second highest for the period. The
commission estimates that during this seven-year period the aggregate population receiving and enjoying the total income reported in
Federal income-tax returns ranged from a little over seven million
individuals in 1917 to a maximum of over eighteen and one-half
millions in 1923, or from 6.8 to 16.7 per cent of the total population of
the country. During this same seven-year period the average per
capita income of the estimated population receiving or enjoying
the income covered by Federal income-tax returns averaged $1,634,
and ranged from a minimum of $1,556 in 1920 to a maximum of $1,755
in 1919.
The commission's analysis shows that in 1923 three-fourths of the
total income of over 31 billion dollars for that year was received by
individuals reporting net incomes of under $10,000, and 3.7 per cent
was received by individuals reporting net incomes of $100,000 or
over. According to the commission's estimate, the average per
capita total income for the aggregate population receiving or enjoying
the income in 1923 ranged From $863 for the group reporting a
''net income" (income less interest paid and less certain taxes) of
less than $1,000 to $1,529,526 for the group reporting a net income of
$1,000,000 or over.
GEOGRAPHICAL DISTRIBUTION

In 1923 the New England and Middle Atlantic States (New York,
New Jersey, and Pennsylvania) had 43 per cent of the total income
reported in Federal income-tax returns, but only 23 per cent of the
population of the country. The Mountain States, on the other
hand, had about 2.5 per cent of the total income and about 16.6 of
the population. The great industrial sections of New England, the
Middle Atlantic, and the East North Central States, with 43 per
cent of the total population of the country, had nearly two-thirds
of the total income reported in the Federal income-tax returns in
each year. The New England and Middle Atlantic group of States
was the only section of the country in which the estimated average
per capita income reported exceeded the average for the country,
this average amounting to $1,878 in 1923, as compared with an average of $1,671 for the entire country.




10

NATIONAL .WEALTH AND INCOME
CASH DIVIDENDS

The. total amount of cash dividends reported annually in the
personal income-tax returns ranged from a little more than two billion
to over three and one-eighth billion dollars during the eight-year
period 191,6-1^23. The smallest amount reported was lor 1916 and
the largest for 1923. The amount of cash dividends reported was
nearly 47 per cent larger in 1923, the peak year, than in 1916.
For each of the eight years, 1916-1923, from 37.5 to 43.7 per cent
of the cash dividends reported were received by inhabitants of the
three Middle Atlantic States—New York, New Jersey, and Pennsylvania. Inhabitants of the important industrial States of the
East-North-Oentral division ranked second each year, with from 18.7
to 21.7 per pent. The New England States ranked third, with from
12.5 to 14.4 per cent of the totals* Inhabitants of these three geographical divisions reported from 72*5 to 76.1 per c$nt of the yearly
totals during this period.
WAGES AND SALARIES

Durii}tg the, six-year period 1918-1923 wages and salaries constituted a larger proportion of the total personal income reported to the
Federal Government than did any other source in each year.
In general, wages and salaries constitute the bulk of incomes up ta
$10,000, and a decreasing proportion of incomes in the higher income
groups, becoming a small part of the incomes of $1,000,000 and over.
Business profits, except for the group with incomes of less than
$1,000, constituted the next most important source in groups up to
$10,000 and were about equal to wages and salaries in the $30,000
to $100,000 group. Investment income, or income from property
owned, represented by rents, royalties, interest, and dividends, in
general represented an increasing percentage of the total for the
various income groups, becoming more important than either wages
and salaries or business profits for all groups reporting incomes over
$10,000 each.
In general the data reflect high wages, salaries, and profits during
the war and postwar period, followed by depressed business profits
and other profits, slightly decreased wages, and less full-time employment during the business slump of 1920 and 1921, followed b y a
sharp recovery in business profits and more nearly full-time employment at higher wage levels during the last two years of the six years
covered.
BASIS OF ESTIMATING TOTAL INCOME

The present report also gives information concerning the estimated
total income of the people in the years 1918 to 1923. These estimated amounts are divided between wages and salaries for services
performed and profits, interest, and rent for those who devoted their
time or capital to business enterprise. Estimates of the burden of
taxes paid directly by such business enterprises are also made. These
taxes do not include, for example, amounts paid by the wage and
salary earners, or the income taxes of those who carry on business
enterprises under the partnership or unincorporated single proprietorship form, or taxes paid by bondholders or other investors out of the
interest or rent received on their investments.




11 NATIONAL .WEALTH AND INCOME

The total income of the people of the United States was estimated
by computing the amount of value created by each of the principal
groups of industries or lucrative occupations—agriculture, mining
and quarrying, manufacturing, mercantile, banking, the various
branches of transportation, the telephone, telegraph, and cable
service, professional service, personal service, etc. The value created
by an industry consists of the excess of the total value of the products
or services over all that is paid away to other industries or branches of
business for materials, supplies, and service of every description.
In making these estimates use was made of the census data concerning agriculture, manufactures, mines and quarries, street and
electric railways, electrical industries, the telephone industry, and
the telegraph and ocean-cable industry; of the statistics of the Interstate Commerce Commission concerning steam railroads, water
transportation companies, telephone, telegraph, and cable companies;
of the mass of data published in the Agriculture Yearbook; and of
data from various other sources. It was found necessary, however,
to supplement these data by obtaining reports from thousands of
representative enterprises in the various industries. Excellent
cooperation was received from a large proportion of those addressed,
except in the cases of the professional service and personal service businesses, many of which had rather inadequate records for this purpose.
ESTIMATES OF THE TOTAL NATIONAL INCOME

The total income of the people of the United States in 1918 is
estimated, in round numbers, at $60,000,000,000. This was a war
year. During the two years of rapidly rising prices and wage rates
that immediately followed the close of the war the total money
income of the people rose rapidly. It is estimated at more than
$67,000,000,000 in 1919 and nearly $75,000,000,000 in 1920. When
depression paralyzed a large portion of industry and prices and wage
rates fell the total money income declined also. According to the
commission's estimates, it was less than $53,000,000,000 in 1921,
but increased rapidly as business recovered. It is estimated at nearly
$62,000,000,000 in 1922 and nearly $70,000,000,000 in 1923.
Thus the estimated income of the people increased nearly
$10,000,000,000, or one-sixth, in five years. These estimates do not
furnish an accurate measure of the degree to which needs of the people
were provided as between the several years. The population increased
about 6 per cent during that time. Furthermore, a considerable part
of the differences were merely nominal, e. g., a larger flow of money
spent for commodities and services at higher prices in 1920, as
compared with 1919, and not a corresponding increase in the production of those commodities and services.
It is questionable, however, whether any available index numbers
of general prices could be applied to express these estimates accurately
in dollars of equal purchasing power. To do this successfully might
involve a splitting up of the population for articles for personal consumption on the one side and for articles used in industrial expansion
on the other. In ordinary times this would be difficult enough. In a
period of rapid and extensive change, such as was the half decade
under review, such methods are of uncertain effect. However, taking
the cost-of-living index of the Bureau of Labor Statistics as probably




12

NATIONAL .WEALTH AND INCOME

the most available single index, the estimated income revised to equal
in purchasing power the 1923 dollar was as follows: 1918, $59,000,000,000; 1919, 61.3 billions; 1920, 61.3 billions; 1921, 50.6 billions;
1922, $63,000,000,000; and 1923, 69.8 billions. The effect of this revision is generally to smooth out the more violent fluctuations which
were due in part to rapid price changes. In particular, the specious
character of the rapid increase in income in 1919 and 1920 is made
evidetit; this was a period of extraordinary speculative activity and
of real scarcity in several important lines of trade.
THE CHIEF SOURCES OF NATIONAL INCOME

Of the* total estimated income in 1923, amounting to nearly
$70,000,000,000, manufacturing industries contributed 24.1 billions,
or 34 per cent. Agriculture came second in 1923 with 9.4 billions,
which was 13.5 per cent of the total. Mercantile business made the
third contribution in size, which was 8.6 billions, or about oneeighth of the total. Fourth came the personal-service businesses—
hotels, barber shops, shoe-repair shops, and a host of others—which
furnished 6.3 billions, or 9 per cent of the total income. The professions—law, medicine, engineering, etc.—made the fifth contribution in size, which was 5.2 billions of dollars, or 7.5 per cent of the
total. The share that was sixth in magnitude was that of the steam
railroads, namely, 4.6 billions of dollars, or 6.7 per cent of the total
income in 1923. Mining and quarrying contributed 3.4 billions, or
4*9 per cent of the total in 1923, and ranked seventh. The construction industry's share, 1% billions in 1923, ranked eighth and
constituted 2.5 per cent of the total income. Commercial banking,
so long associated with mercantile trade that the Census of Occupations treats the former as a part of the latter, contributed 1.4 billions
of dollars, or 2 per cent of the total income in 1923.
The foregoing are the only groups of industries that contributed a
billion dollars or more each to the total national income at any time
during this five-year period. There were considerable variations in
the proportions of the total, from year to year, for some of the
smaller groups.
DIVISION BETWEEN LABOR AND CAPITAL

The proportion in which the total product of the joint efforts of
human labor and brains employed at wages or salary, on the one side,
and capital and business enterprise on the other, is a matter of great
economic interest. In the following statements it should be remembered that the shares are the amounts before deduction of any taxes
paid by the recipients of the incomes or by business organizations.
Of the total estimated product of industry, amounting practically
to $70,000,000,000 in 1923, the employed personnel of the industries and occupations received 38.2 billions, or 55 per cent, in salaries,
wages, or other remuneration for their work; capital and enterprise
received the other 45 per cent in profits, rent, and interest. These
proportions were about the same as for the entire six years, 19181923, combined. The proportions varied, however, from year to year
with the changes in general business prosperity. In 1921, a vear of
very severe industrial depression, labor's share, namely, 31.3 billions




13 NATIONAL .WEALTH AND INCOME

of dollars, while lower in total amount than in 1922 and 113^ billions
lower than in 1920, was the greatest in proportion, amounting to 60
per cent of the total. In the war year, 1918, labor's share of the total
net product of industry was 28.2 billions of dollars, or only 47 per
cent of the total; while the share of capital and enterprise was 32.0
billions, or 53 per cent of the total. With the culmination of the
industrial boom in 1920 labor's share increased in aggregate amount
to 42.9 billions and in proportion to 58 per cent; while the share of
capital and enterprise declined in the aggregate to 31.4 billions and
in proportion to 42 per cent.
SHARES OF LABOR AND CAPITAL IN DIFFERENT INDUSTRIES

The proportions in which the net product was divided between labor
and capital varied greatly from industry to industry. While for
industry as a whole labor's share in 1923 was 55 per cent of the total
net product, in agriculture the wages of hired labor claimed only 12
per cent. In agriculture, however, the greater portion of the total
labor is not hired, but is furnished by the farmers and members of
their families and is not compensated by contract money wages.
In the professional service businesses wages and salaries of hired
workers amounted to only 23 per cent of the total value created by
this group of businesses. In this group, however, most of the share
designated as going to capital and enterprise, namely, 77 per cent, is
the value of the service and advice rendered by trained professional
minds. In the banking business, labor's share was 28 per cent. In
this business there is a large amount of invested capital per employee
as compared with most industries.
Labor's portion of the total net product was above the average
of 55 per cent, especially in the mercantile business and in certain
public utilities. In the mercantile business and in the telephone
industry it was 67 per cent in 1923; in the steam railroad industry,
69 per cent; in the telegraph and ocean cable business, 73 per cent;
in water transportation, 77 per cent; and in the construction industry, 90 per cent of the total net product of the industry. Similar
variations occurred in the other years under review.
PROPORTIONS PAID IN TAXES

In the foregoing discussion it has been explained that the total income created by each branch of economic or industrial activity has
been divided between labor on the one side and enterprise and capital
on the other side, without regard to how much either of them might
be obliged to pay out in taxes. In the case of labor it is impossible
to estimate how much of the salaries and wages go to the Federal,
State, and local governments in taxes. The same is true of the taxes
paid by investors upon their investments or upon the interest received
from them; and of the income taxes paid personally by the owners
of unincorporated businesses. However, it was possible to estimate
the amount of taxes paid directly by business enterprises to the
various governments, because of the fact that they owned taxable
real estate or personal property, paid taxes for business privileges,
and the like, and, in the case of corporations, because they paid income taxes. These are the taxes of the burden of which business enter-




14

NATIONAL .WEALTH AND INCOME

prise is most conscious, because they figure as deductions from income in their annual financial statements.
Of the total income estimated at $70,000,000,000 in 1923, the
taxes paid .directly by business enterprises are estimated at 4.4
billions, or 6:3 per cent of the total value of product. Five years
earlier the prbportion was 7.6 per cent. Whatever the ultimate incidence of their' burden through their effect upon prices, the taxes
referred to were paid immediately out of the share designated* as
that going to Enterprise and capital. It is appropriate, therefore,
to compare them with that share. The taxes in 1923 amounted to
13.9 per cent of the gross return to capital and enterprise. In 1918,
the proportion was 14.2 per cent; in 1919, 12.8 per cent; in 1920,
13.6 per cent; in 1921, 17.9 per cent; and in 1922, 12.8 per cent.
Business enterprises, it is estimated, paid directly in taxes in these
six years nearly $25,000,000,000, which was 13.9 per cent of the
estimated gross return to capital and enterprise. However, due to the
fact that the amount of taxes levied is in part independent of the
earning power of the enterprises in the particular year, the tax
proportion varied considerably with changing degrees of prosperity
or depression.
CORPORATION INCOME

Of the total number of corporations in the United States the pro>ortion that reported deficits on their income-tax returns was not
ess than one-third for any year from 1916 to 1923. Even for 1917,
the peak year for high corporate net income, 34 per cent of all corporations reported deficits; and for 1921, a year of very low profits,
the proportion reporting deficits amounted to 52 per cent of the
total, while for the other years the proportions ranged from 34.5 to
44.5 per cent.
The aggregate net income of corporations in 1917 amounted to
over 10 billion dollars before deduction of Federal taxes; in both
1916 and 1918 it amounted to over 8 billion dollars, and in 1919 it
amounted to nearly 9 billions. For no other year did corporate net
income aggregate these high levels. In 1921, a year when the
majority of corporations reported deficits, the aggregate corporate
net income was only 1.1 billion dollars, but in 1922 it aggregated
nearly 6 billion dollars.
The rate of return in 1922 on the aggregate "fair value" of outstanding stock of all corporations as reported by the Bureau of
Internal Revenue was 7.9" per cent. For corporations engaged in
manufacture the rate of return was 10.5 per cent; for finance corporations the net return amounted to 6.4 per cent; for construction
corporations it amounted to 5.6 per cent; while for mining and
quarrying corporations it amounted to less than 1.5 per cent.
The rate of net profit on investment in 1922 earned by wealth
devoted exclusively to corporate business, regardless of whether
contributed by stockholders or borrowed, amounted to 6.4 per cent
for corporations in the aggregate. For mining and quarrying
corporations a net loss of less than one-tenth of 1 per cent was
shown, but for the other groups of related industries the rates of
return ranged from not quite 1 per cent for corporations, engaged
in agriculture and related industries to 13.3 per cent for finance
corporations.

{




15 NATIONAL .WEALTH AND INCOME

The gross income of corporations from business operations in
1922 amounted to about 126 billion dollars, according to the commission's estimate, based for the most part on data reported by the
Bureau of Internal Revenue. The greatest amount of gross income
from business operations, aggregating an estimated total of nearly
46 billion dollars, was for the group of corporations engaged in manufacture, followed by trading corporations with nearly 30 billions,
finance corporations with over 22 billions, and transportation and
other public utility corporations with 15 billions.
For the groups of corporations engaged in mining and quarrying
an aggregate net loss, amounting to one-tenth of 1 per cent of gross
income from operations, is estimated for 1922; but for the other
groups of industries the estimated ratios of net to gross income
from operations ranged from 1 per cent for corporations engaged
in construction to 9 per cent for corporations engaged in transportation and other public utilities. For steam railroads the ratio
amounted to nearly 15 per cent; and for manufacturers of stone,
clay, and glass products it amounted to 10 per cent.
For each of the seven years from 1916 to 1920, 1922 and 1923, from
36.9 to 42.3 per cent of the aggregate annual net income of corporations, after deduction of deficits, was credited to the three Middle
Atlantic States—New York, New Jersey, and Pennsylvania. The
proportion in 1921 was in excess of 101 per cent, due to the fact that
net deficits were reported for several other territorial divisions. The
Middle Atlantic States, together with the East North Central States
of Ohio, Indiana, Illinois, Michigan, and Wisconsin, and the New
England States, are credited with about three-fourths of the aggregate corporate net income for the seven years from 1916 to 1923,
exclusive of the year 1921.
103288—S. Doc. 126, 69-1




8




NATIONAL WEALTH AND INCOME
P A R T I. NATIONAL
CHAPTER

WEALTH

I

ORIGIN, SCOPE, AND METHOD
Section 1. Origin and scope.
T H E S E N A T E RESOLUTION.—This report is presented in response
to Senate Resolution No. 451 of the Sixty-seventh Congress, fourth
session. Part I of this report deals with the wealth of tne people of
the United States. Part II, dealing with income, is also included in
this volume.1
With respect to national wealth, the resolution directed the commission—
to make an inquiry into, and to compile data concerning the total amount of the
chief kinds of wealth in the United States, including land, improvements, m o v ables, and other tangible and intangible goods, and also the ownership thereof and
the various liabilities incumbent thereon, including public and private debts of
various kinds, corporation stocks, and other choses in action.

It was found impossible to complete certain features of the report as
planned, on account of a new provision in the appropriation act for
the fiscal year 1925-26, which restricted the general purposes for
which the appropriation could be used. This fact also made it necessary to limit considerably the collection of data on certain subjects as
well as the analysis of the results obtained.
IMPORTANCE OF INFORMATION CONCERNING THE DISTRIBUTION OF

WEALTH.—The present Secretary of Commerce recently made the
following statement regarding the importance of having adequate
information concerning the distribution of wealth and income, which
is unreservedly indorsed by this commission: 2

I am deeply interested in your discussion tonight because I am convinced that
one of the continuous and underlying problems of sustained democracy is the
constant and wider diffusion of property ownership. Indeed I should become
fatalistic of ultimate destruction of democracy itself if I believed that the result of
all of our invention, all our discovery, all our increasing economic efficiency and
all our growing wealth would be toward the further and further concentration of
ownership. In the large vision we have a wider diffusion of ownership today than
any other nation in the world. I t has been so since the beginning of the Republic.
In our enormous growth in wealth there have been periods when the tendencies
were toward concentration of ownership and other periods when economic forces
(and public action) made toward greater diffusion. Certainly the forces of
diffusion were dominent during the great migration which occupied the W e s t .
1 Another volume, treating of taxation, tax-exempt income, public debts and public expenditure, was
transmitted to the Senate on June 6, 1924.
2 Proceedings of the Academy of Political Science, April, 1925, pp. 137-139.




17

18

NATIONAL .WEALTH AND INCOME

And again I have the impression that one of the byproducts from the economic
shift of the last war has been still another period of increasing diffusion of ownership of property. Our high real wages during the past three years, with consequent general expansion of savings, have, I believe, also marked another period of
wider diffusion of property ownership.
It is appropriate that the evidences and the tendencies in this matter should
be earnestly examined. We are all fundamentally interested that our economic
forces, our public and private policies, should be so directed that with our increasing wealth the tendencies of diffusion of ownership shall be greater than the
tendencies of concentration. And if we would grow in standards of living it is
equally important that we shall maintain this dominant tendency without
destruction of the moral, spiritual and economic impulses of production.
We are woefully lacking in actual facts upon this most important question.
From the vast fund of statistical information in the nation we can only indicate
tendencies, and then only with some uncertainty. Aside from our inability to
determine more than bare tendencies we are unable from the information we
have to make the proper and necessary distinction between distribution of
wealth, diffusion of ownership, and diffusion of control of wealth—all equally
important in any consideration of social as well as economic questions.
In the matter of distribution of wealth as distinguished from diffusion of
ownership we have but little fact basis upon which to proceed outside of the
income tax statistics. While they show superficially that diffusion of wealth is
increasing yet the exemptions are such as to destroy much of their statistical
usefulness. Again we have little information as to the diffusion or concentration of the control of wealth as distinguished from ownership. M y impression
is that the establishment of the Federal Reserve System and the effect of the
Restraint of Trade laws and the inheritance taxes all tend to make for diffusion
in this direction also. But at every turn in study of distribution of wealth and of
ownership or control we are confronted with a woeful lack of accurate data.
One of the first requisites for adequate economic discussion, and thus the
development of any economic or social policy, must be the determination of the
economic fact. We can adduce economic argument, we can point out economic
tendencies, but until we have so searching an examination of these questions
that we can evaluate them in actual quantities, whether it is dollars or goods,
we shall be far afield from the truth. I have seen forty economic arguments
in opposition destroyed by one single affirmative argument .when quantitative
determination was attached to each of them.
•
*
*
*
*
*
*
SCOPE OF THE INVESTIGATION.—The language of the resolution
is very broad. It would be impossible, as wpll as undesirable, for
the commission to deal independently and comprehensively with the
subject of wealth entirely by means of its own resources; this would
involve a considerable degree of duplication of the work of the
Census Bureau, whicH recently published an estimate of the aggregate
national wealth as of 1922. There is occasion, liowever, since the
commission approaches the subject from several different points of
view, for the use of data additional to those published by the Census
Bureau. In compiling data for an inventory of national wealth as
of any recent year no single agency could be expected to do better
than the Census Bureau, which has available the results of censuses
of manufactures, electrical industries, and agriculture, as well as a
permanent organization and staff experienced in such work. Any
survey and inventory of national wealth must be based largely upon
the census enumerations.
The commission has not, therefore, attempted any general original
inventory of the items of national wealth, but, in addition to undertaking some special interpretative studies, has reviewed the categories of the census estimate of 1922, introduced certain additional
items and presents somewhat different results for a few of them.
In certain respects the commission can carry its analysis further,




19 NATIONAL .WEALTH AND INCOME

since it can disregard the rather traditional requirement of distributing results by States. Much of the attempt to distribute
particular categories of wealth among the States is easily misinterpreted, since it is not always easy to distinguish between the ideas
of wealth and property or ownership. The ownership of much of
the physical wealth in some of the newer States rests in the hands
of residents of the large financial centers.
In addition to a general survey of the wealth of the Nation, the
present report undertakes certain special studies supplementary to
the general survey. No suggestion is intended that these special
studies are comprehensive of the topics that might be considered of
most interest. Close limitations of time and means have made it
necessary that such topics be dealt with according to the accessibility
of information as much as according to their intrinsic interest. As
a means of ascertaining the distribution of the total national wealth,
the commission has taken a substantial sample of the estates probated
during the period 1912 to 1924. One of the most important problems of national wealth relates to the so-called natural resources, of
which coal, petroleum, iron and copper ore, timber, and water power
are specifically studied in this report. Agricultural wealth, as the
foundation of the economic organization, is studied not only from
the standpoint of decennial census enumeration of value but also
more especially from the standpoint of annual material output as
the basic fact regarding earning power from which its value is derived.
The wealth of corporations, which now embraces a large proportion
of the total wealth of the country, is studied both with respect to the
amounts in different branches of the industry and to the kinds of
wealth, such as real estate, inventories, cash assets, etc. While the
amount of wealth owned by corporations is large, the ownership of
corporations themselves is shown to be generally distributed among
many stockholders. Finally, the wealth of religious organizations,
educational institutions, and other philanthropic foundations is
estimated, and some details are presented regarding the kinds of
wealth so held and employed.
Section 2. Nature of wealth.
Since, especially as regards the more permanent forms of wealth and
those that yield income, the individual is more interested in property
rights than in the actual wealth, it is natural to inquire why, in an
attempt to inventory national wealth, the property point of view is
generally disregarded and the more materialistic conception adhered
to. One reason for this is the fact that the material wealth can
be traced more fully and comprehensively than the property rights
relating to it. Largely as a consequence of this, if evidences of property rights are included in an enumeration of wealth, the wealth in
the possession of others to which these property rights relate may
also be counted, involving duplication.
Another reason for choosing the wealth basis is the fact that
property rights can not be valued always at their face value and
sometimes can not be assigned any definite value. An even more
important reason why the property point of view is less available is
the fact that some property is a lien, not on material wealth but on
personal services and personal earnings.




20

NATIONAL .WEALTH AND INCOME

INTANGIBLES.—The development of modern methods of doing business through corporate organizations has greatly increased the importance of intangible forms of wealth. But the fact that they have
thus become more important as business assets does not of itself
warrant their inclusion in an inventory of national wealth.
A merchant by reason of his long-continued conduct of a business
on a high plane may establish among his customers a reputation
causing them to deal with him by preference. He thereby adds to
the value of his business an element not represented in the value of
his stocks of goods nor in that of the premises where he conducts
the business, and such good will may be salable at a considerable
price.
PROPERTY AND W E A L T H . — D e f i n i t i o n s of property describe it as
a u right and interest a person has in wealth to the exclusion of
others." Property is a distinctly legal conception. But in ordinary
speech the word is applied to the concrete things to which property
rights relate as well as to the rights themselves. Hence the quite
common notion that property and wealth are synonymous. Wealth
consists especially of material things having economic value that are
transferable from one to another owner. A house and lot are wealth.
The deed to them is not wealth but merely evidence of title and
the means of proving property or ownership. Wealth is the source
of the services of goods and of income. Property is a means of
controlling the receipt of the income and enjoyment that wealth
yields.
PROPERTY IN OBLIGATIONS.—The inclusion of debts as wealth
of the creditor leads naturally to a duplication in an inventory of
wealth. A mortgage is created by a conveyance of property from
the debtor to the creditor with the condition usually that the debtor
shall remain in undisputed possession of the wealth so long as he
lives up to certain contract requirements as regards payments of
interest and principal. Mortgage indebtedness, therefore, evidently
implies concrete wealth against which the debt applies. The term
" l i e n " is somewhat more general, although it includes mortgages.
In the case of a lien there need not be the formal conveyance of the
property, although security for the payment of the obligation is
specified. The lien, thereiore, is more easily extended to cover
services, earnings, expectations, etc. In other words, it may apply
to wealth not yet in existence. This phase of the development of
property in obligations is especially important in connection with
an estimation of a national total on a property basis, because the
tendency is toward an increase in the extent^jbo which credit and
obligationsi are not based on concrete property already in existence.
The foregoing considerations throw some light on the question of
whether the public debt should be included as a part of the peQple's
wealth. So far as such debt may be regarded as a lien on existing
wealth the only objection to its inclusion would be the resulting
duplication. But any consideration of the incidence of taxation will
suggest that the public debt can not be said to be payable entirely,
or even in major part, out of existing wealth. It will be gradually
paid off out of taxes, the incidence of which will be mainly upon
incomes and earnings.




21 NATIONAL .WEALTH AND INCOME
OTHER INTANGIBLE V A L U E S . — I n copyrights and patent rights are
found very different kinds of property in intangibles. Tney are
based on the theory that the grant of patents for inventions encourages their development and in the long run increases the wealth of
the country through increasing productive capacity. That the
patentee has for a limited time a monopoly right to a large share of
the immediate increase in production resulting from his invention
compels the public to share with the inventor the benefits of the
invention.
In the case of copyrights the same principle applies, although the
material wealth of the country may not be increased by the encouragement given to authors and artists who produce largely ideas
rather than material things. But wealth is often given in payment
for services which may or may not be embodied in material goods.
The creation by public grant of exclusive rights that may obstruct
wealth creation rather than contribute to it are comparatively few
at the present day. No attempt is made, however, to estimate the
amount of such intangible property.

Section 3. Limitations of national wealth estimates.
An inventory of national wealth that confines itself to material
categories of things having economic value falls short, by omission,
of intangible values that are of great economic importance. This
shortcoming, nevertheless, is minor in comparison with what may
by some be improperly expected of such an estimate. A favorable
climate, abundant natural resources, physical health and racial
stamina, individual industry and enterprise, honest and efficient
civil government, the diffusion of education and mental and moral
culture, are more important than wealth. Some persons would
include some of these items as national wealth, but their importance
is of an entirely different character. If they contribute to existing
wealth, their contributions, so far as actually realized are included.
Too much should not be expected of an inventory of mere wealth.
The inadequacy of an inventory of national wealth appears in
the consideration of differences between the various kinds of goods
and services. The concrete goods that constitute wealth are themselves valued because of the services they render. They are, of
course, valued more highly if the services continue to be rendered
through a long period. But in some cases the value of the material
goods is exhausted by a single service rendered once for all. The
material embodiment of the value of such goods is transitory and
their share in the total of national wealth is less in proportion to their
importance than is that of durable goods. Still further removed
from the latter are the personal services of which the value is not
embodied in material goods at all. This class of values does not
appear in an inventory of national wealth. The perishable goods do
appear, but the class is not represented in proportion to its importance,
because goods of this nature constitute a stream that is continually
replenished as well as continually used up so that the element of
value actually existing at any moment of time is small in comparison
with the values needed, for example, in the course of a year.
Most of the wealth inventoried, therefore, consists of durable
goods which render services through a long period of time. Because
these bulk largest in the total of wealth, it is easy to get the notion




22

NATIONAL .WEALTH AND INCOME

that they are in some sense more truly wealth than the more evanescent consumable goods. If it is true that the welfare of a nation is
greater in proportion to its possession of large stocks of durable
goods, this is chiefly because it is presumable that such a nation
possesses perishable goods and skilled personal services in due proortion to its stock of permanent forms of wealth, and therefore is
etter off, not merely because it has the durable goods but because
it has, as well, a due proportion of other goods and services.

E

Section 4. The measurement of wealth.
T H E VALUATION OF BUSINESS ASSETS.—In a commercially-minded
age wealth is naturally thought of as salable "assets." The notion
of salability ought not to be carried too far iti its application to the
measurement o f national wealth. In matters of economic valuation,
however, if some substitute for the sales test is applied, it is largely
because in the long-run average the substitute is a better measure of
value than the individual sale, which is practically always affected
b y special conditions.
A suggestion of the necessary requirements for a measure of
national wealth is implied in the way in which the property of governments should be valued. THe valuation of government-owned
wealth is not ordinarily complicated b y questions as to debts, since
usually the public debt is analogous to a general lien on revenues
from taxes instead of a mortgage on specified concrete property or
revenue. The sufficiency of a test b y sale or salability also is generally
recognized to be inadequate. Some kinds of government-owned
wealth could be sold, but the prices obtainable b y their sale would
not be a reliable measure of their value.
The national wealth includes government-owned wealth plus the
concrete wealth of private citizens as measured and totaled according
to some generally applicable standard of value. Obviously, the
measure of value must be related to commercial or exchange value,
and yet the correctness of the amount obtained can not always be
tested b y actual sale. The possible recourse under such circumstances is to value items of wealth that are not readily salable on the
basis of cost of production or construction. An objection to this is
the fact that the construction in many cases occurred some years
ago when unit costs were different from what they are at present;
also that there is a degree of depreciation and obsolescence to be
taken into account wherever the structure has been in use for some
time. The cost, therefore, must be modified so as to represent cost
of reproduction less depreciation in order to be comparable with
values determined by sale. The cost of reproduction thus determined and qualified is more nearly equivalent to salable value than
original cost.
T H E VALUATION OF R E A L ESTATE.—The largest element in the
total wealth of the United States is real estate. The implications of
the methods used to obtain a value for real estate are, therefore,
controlling in relation to what sort of a measure of value should be
adopted in an estimate of national wealth as a whole.
The starting point of the estimate of real estate values is estimates
made by local assessors, under the supervision of municipal and State
tax boards, for purposes of local and State taxation. It is known
that these assessed values not only vary greatly from State to State,




23 NATIONAL .WEALTH AND INCOME

and even from county to county within a State, but also that they
very rarely represent the full true value of the property assessed.
Improved administration of tax laws, however, has promoted the
development of methods of comparing and checking assessments
which make them increasingly better indexes of value. One of the
important problems of State tax administration is equalization of
assessed values as between the different counties or other units of
tax administration in a way to prevent some counties escaping their
fair share of the tax burden through low assessment. From this
point of view it makes no difference whether the assessment is 30
er cent or 60 per cent or 100 per cent of the true value, but it is
ighly important that it be at a constant level throughout the State.
I t is important to note the character of the test adopted to determine what the true value is, both with reference to equalization and
with reference to fuller assessment. This is the comparison of values
on actual sales with the assessed value of the parcels of real estate
thus transferred. In making such comparisons forced sales are in
general disregarded, and some others where the money paid may not
be presumed to represent actual values. The real estate priced by
transfer in any particular year is a small per cent of the total value
of real estatp, but it has been found possible in ordinary years to
obtain figures of the nature described for a very considerable absolute
amount. Wherever such figures are obtainable the Census Bureau
has used them in determining the ratios of assessed to true value for
the individual States. Some county assessors as well as State tax commissions check their results by compiling figures of sales in relation
to assessed values, and at least in one State such sales comparisons
are regularly published by the tax board.
The valuation of real estate is not only of particular importance,
but also of particular interest, because of the inclusion of two very
different elements of value—one, land, and the other, improvements
on the land. The land is not produced by human effort. It can
not, therefore, be valued on the basis of cost of production or cost
of reproduction. In attempting to value on the basis of sales (or
on any other basis), it is impossible, except by estimation, to separate the element in the price paid for the land from that paid for the
improvements on the land. The methods of subdividing the combined value, however, are sufficiently accurate for statistical purposes. It is important to note that their separate valuation by wellconsidered methods contributes much to the correctness of the combined assessment.
VALUATION BY W A Y OF AN ENGINEERING I N V E N T O R Y . — T h e value
of the railroads is an item of great importance in total national wealth
because of the nature of the problems of valuation involved, as well
as because of the size of the item.
There is a large element of land value included in the railroad
item, as indeed might be expected from the fact that the railroads
are a sort of highway. In the case of private enterprises, other than
railroads and other public-service corporations, the element of land
value is included by the Census Bureau under the head of taxed real
estate. The reason for the inclusion of land along with other elements of value in the case of railroads is partly administrative.
Assessments of railroad and public-service-corporation property are

E

103288—S. Doc. 126, 69-1




4

24

NATIONAL .WEALTH AND INCOME

by State
than by local
fofenerallyofmadecomplexitytax agencies rather assessment andassessors,
ecause
the
of the problem of
because
the difficulty of securing uniformity of method throughout a State,

except through centralized assessment; hence, it is as easy to make
the separation between other taxed real estate and quasi-public
corporation real estate as it would be difficult to separate the assessed value of real estate used by manufacturing enterprises from
that of real estate devoted to other purposes. As regards the land
element in railroad property, it is important to note that the criterion
generally adopted is the value of adjacent land used for other than
railroad purposes.
As regards railroad construction costs, much the greater part of
them were incurred years ago under conditions of costs for materials
and labor very different from those prevailing at present. It should
be obvious, therefore, that the book values of the railroads based
upon original entries at dates of construction or acquisition of property are not reliable measures of their present value, atid especially
are not comparable with such elements of value as have been assigned
to the separately assessed real estate by a very different metnod.
As the two enter into a common national total, they should be referred to a common measure. The valuation of railroads on the
basis of cost of reproduction involves the compilation of physical
statistics of plant and the application to the elements of the plant of
unit prices appropriate to present conditions of construction. Fortunately the valuation work of the Interstate Commerce Commission
has proceeded far enough to make it possible to arrive at an estimate
of the total value of railroads on the oasis of the present value of the
land and of cost of reproduction less depreciation for other elements
in railroad property.
The problem of valuing the properties of privately owned public
utility enterprises generally is the same in nature as the problem of
valuing the railroads and should be dealt with by the same methods.
THE DOLLAR UNIT OF MEASUREMENT.—In order to arrive at a
total of national wealth it is necessary to have a common measure
of the elements entering into the total. No such common measure
of elements of wealth is to be found among units of quantity or
physical units. Where, a physical unit can be obtained it is doubtless
much more easily understood than a monetary measure, but the only
available common measure for a miscellaneous total like that of
national wealth is the monetary unit. The employment of the dollar
unit in economic valuation is obvious and unavoidable.
But it is also obvious that the dollar sign can not be simply accepted
at its face. It is not accepted for assessed values. The book values
of a corporation's balance sheet maybe equally unacceptable, although
they do not always err on the same side of the truth as (substantially)
do assessed values. Where the value of an article is in dispute the
standard applied is generally that of impersonal determination by
the market, and the valuation arrived at by other means is subject
to critical qualification in reference to its conformity to such a test.
It is generally recognized that the true test of economic value is what
the tiling to be valued will actually bring when sold for cash under
normal business conditions in an actively competitive market. But
substitutes for such actual sale must usually be found where any
comprehensive appraisal is undertaken.




25 NATIONAL .WEALTH AND INCOME

An embarrassing feature of the use of the money unit of value in
arriving at a total of national wealth is the changing character of the
unit. These changes do not affect the validity of the unit as a measure
of value as of a particular time, though this requirement that all the
elements be valued at one time may itself create some difficulties.
Comparisons for different periods, however, may be misleading
to those who do not take account of changes in the value of the dollar.
It is therefore important to accompany the comparative data by
some numerical corrective for changes in the value of money. This
may be accomplished by the use of price index numbers. For
particular elements entering into the total it may also be even more
effectively accomplished through comparisons made on the basis of
physical statistics, showing, for example, the increase in the number
of buildings of various classes instead of merely the increase in the
value of such structures. Some illustrations are given, in section 8
of the next chapter, of changes between different dates for certain
kinds of wealth on the basis of physical units.




CHAPTER I I

A GENERAL SURVEY OF WEALTH IN THE UNITED STATES
Section 1. A national inventory.
THE DETERMINATION OF FUNDAMENTAL INVENTORIES.—The ta*sk
of estimating national wealth divides itself naturally into two parts,
one of which is the making of a comprehensive physical inventory
of the items of wealth, ana the other the pricing of these items for
their combination into a total amount of wealth in terms of dollars.
The making of a physical inventory supposes an enumeration of
the concrete things comprising the national wealth. This task is
analogous to the, enumeration of the population. But it is obvious
that an actual count of the^things having value in the possession of
the people of the United States as comprehensively as the population
is counted in the decennial enumeration is impossible. A comprehensive enumeration of small articles of value would obviously not
be worth while, even if physically possible. The method of sampling
instead of that of comprehensive enumeration is indicated in such
cases. As regards the more important elements or articles entering
into the total, it is fortunate that there are other reasons for attempting
to ascertain their quantities than merely the desirability of an estimate
of national wealth. It is for these other reasons that the Census
Bureau is given the work of compiling censuses of manufactures,
agriculture, electrical industries, etc., from time to time. The results
of such censuses are, of course, utilized in making the estimate of
national wealth.
An estimate of the national wealth from the viewpoint of a problem
in enumeration raises a question as to the nature of the things that
it is practicable to count. Obviously material things, especially
such as are bulky, durable things, and things that are worth appropriating, will be most easily found and identified in the process of
enumeration. But it happens that these are just the kind of things
that constitute most of the wealth. There are, indeed, some articles
of high value in small bulk which can easily escape enumeration, but
such articles are mainly consumable goods, and are less significant
elements in the total of national wealth than their high unit value
might suggest. Their actual enumeration may be out of the question,
but it is possible that they can be fairly estimated by the sampling
method, which may be applied to the determination of the value of
such personal effects.
THE PRICING OF THE ITEMS.—Pricing the items of the inventory is
a problem separate in principle from the problem of making the
enumeration. In practice, however, the items entering into the total
are often obtained in the first instance in the form of an amount of
26




27 NATIONAL .WEALTH AND INCOME

value. In that case the pricing of the items ceases to be a separate
step, except so far as it may be desirable to check the total value b y
way of a sample enumeration of accessible physical units for which*
prices can be separately determined. The fact that it may be necessary sometimes to resort to the dollar measurement unit in the details
of the inventory should not be permitted to obscure the fact that an
estimate of national wealth implies an inventory and rejects theuncritical acceptance of aggregate money values when determined
by various and frequently inconsistent methods.
The commission does not attempt to pass upon the work of the
Census Bureau, at least in so far as it relates to the inventory phase
of the estimate of national wealth. As regards the pricing of the
elements entering into the total, however, certain departures from
the census method are considered.
The analysis of the task of inventorying national wealth and of
pricing the inventory items throws some light on another problem of
importance for the estimate. Some important items of wealth which
are tangible and easily enumerated are omitted by the census, not
because they are not wealth, but because it is believed that their
value is reflected elsewhere in the total, and, therefore, should not
be taken into account separately for such particular items. This is
the theory applied to public roads and streets and similar facilities
which are made available to the public without charge. Without
attempting to decide whether this theory is entirely correct or not,
it is believed worth while, for the purpose of the present report, to assign a value to public roads and streets. If the value in question is
reflected elsewhere, that is, in the item for real estate, it is clear that
if affects the land values in this item rather than the value of improvements on the land. If the value of public roads and streets
separately inventoried should be deducted from the value of real
estate, then the deduction should be made from the land value
element.
Because of the intrinsic interest of an analysis of real estate values
into land and improvements, an attempt is made in the following
section to arrive at a separate figure for these two elements, based on
the total value estimated by the census. With such a separation
independent judgment may be exercised as regards the inclusion or
exclusion of the value of public highways in the total wealth.
SUMMARY OF 1 9 2 2 CENSUS RESULTS AND OF THE COMMISSION'S

EXTENSIONS.—The following table sets forth the items of the census
estimate of national wealth of continental United States for 1922,
and puts alongside the census's figures certain commission estimates supplementary thereto.




28

NATIONAL .WEALTH AND INCOME

TABLE 1.—Census estimate of national wealth 1 as of December
Federal Trade Commission extensions

81,

1922,

with

[Thousands of dollars]
Item

Census
estimates

Real property and improvements, taxed 3
Real property and improvements, exempt
Land and improvements in streets and public roads:
Rural public roads
Streets, pavements, and public-owned underground structures in city
streets
Other highway structures not in tax-exempt item
Movable equipment of farms and factories:
LivestdckL
:
Farm implements and machinery
Manufacturing machinery, tools and implements
Motor vehicles
Public service enterprises:
• Railroads and their equipment
Street railways
Telegraph systems
Telephone systems
Pullman cars, etc
Electric light and power stations privately owned
Other <
Products, merchandise, etc.:
Agricultural products
Manufactured products
Imported merchandise
Mining products
Furniture and personal effects
Gold and silver coins and bullion

$155,908,625
20,505,819

Total
Census items unmodified

Commission
estimates2

$6,850,000
13,500,000
1,500,000
5,807,104
2,604,638
15,783,260
4,567,407
19,950,800
4,877,636
203,896
1,745,774
545,415
4,229,357
3,812,369

26,000,000
7,000,000
285,000
2,450,000
700,000
5,500,000

5,465,796
28,422,848
1,548,666
730,296
39,816,001
4,278,155
320,803,862

63,785,00 0
289,250,862

320,803,862

353,035,862

Total
For continental United States, excluding Alaska.
2 Net addition to census estimate is $32,232,000.
8 Except real estate of public service enterprises.
* Includes pipe lines, shipping and canals, and privately-owned waterworks.
1

This table contains in the second column the results of estimates
made in succeeding sections of this chapter. For roads and streets
they are entirely additional to the census data. For the other entries
they are alternative to census results. The differences are a matter
of difference of viewpoint and do not imply incorrectness in the
census figures.
The aggregate amount of wealth for 1922, as shown by the census
figures, is $321,000,000,000. If the alternative figures given by the
commission in the foregoing table (which are developed in the following sections of this chapter) are taken, the net addition for 1922
would amount to $32,000,000,000, and would give a total of $353,000,000,000 for the total wealth of continental United States. Based
on the estimated population at the end of 1922, this total was equal
to $3,210 per capita.
It is not practicable to split up these figures of total wealth according to their principal uses in a comprehensive and exact way, but
certain data showing their distribution and rough estimates of the
division of certain totals may throw a little more light on their significance. According to the decennial census of 1920, the value of all
farm property was about 78 billions, but in 1922 it is estimated by
the Department of Agriculture to have shrunk to about 63 billions.
The census of 1920 gives the "capital" employed in manufacturing*
industry at 44 billions and in mining and quarrying at 7 billions.




29 N A T I O N A L . W E A L T H A N D I N C O M E

There was probably comparatively little change for 1922. According to the foregoing estimates of the commission, the value of railroads and other public utilities in 1922 was 46 billions. This gives a
total of 160 billions, which embraces most of the business property,
except wholesale and retail trade, the construction industry, banking,
hotels, office buildings, and similar lines of business. Adding to this
the value of roads and streets, 22 billions, and of tax-exempt real
estate, 21 billions, which are owned almost wholly by the Government (Federal, State, or local) or by philanthropic institutions, gives
a further total of 202 billions. The remainder of 150 billions, it is
estimated, consists of business and residential real estate amounting
to about 72 billions, household furniture and personal effects (census figure) of 40 billions, and a balance of 38 billions, consisting
chiefly of other movable goods such as merchandise in wholesale
and retail trade, vehicles for business and pleasure, etc.1
According to these estimates, agricultural wealth comprises about
18 per cent of the total, manufacturing and mining about 14 per
cent, railroads and other public utilities about 12 per cent, and
Government property (Federal, State, and local) about 11 per cent.
A large but unascertained portion is employed in wholesale and retail
trade, and quite small shares in other lines of business not estimated
above. Doubtless the largest single share, however, is that composed
of town and city dwellings and furniture and personal effects—i. e.,
wealth possessed and used for personal necessities and enjoyment,
which probably is not less than one-fourth of the grand total.
Section 2. Amount of wealth in real estate.
IMPORTANCE OF R E A L ESTATE.—In the census estimates of national wealth for 1922 the specific real-estate items constitute percentages of the total as follows:
Taxed real estate 2
Tax-exempt real estate
Combined

48. 6
6. 4
1

55

The fact that these items account for 55 per cent of the total is
one measure of the importance of this kind of property. It should
be noted that some of the other items in the census list include real
estate, the amounts for which are estimated below.
It is of interest to consider some characteristics of real estate
which contribute to its importance. Real estate is one of the most
permanent forms of wealth. This is true of improvements as well as
of the land itself. Real estate is also one of the oldest forms and was
for long almost the only form of wealth yielding income to the owner
independently of his exertions. It is still of major importance as a
source of income from property, although modern mechanical developments have somewhat modified its extraordinary position in
this respect. Its restricted possession was the main support of all
1 The estimate of 72 billions for real estate is found by deducting from the tbtal estimated real estate of
230 billions (see the following section), 53 billions for agriculture (as estimated for 1922 by the Department
of Agriculture), 32 billions for railroads and public utilities (as explained in section 6), 6 billions for mining
and quarrying, and 24 billions for manufacturing (based on the proportion of real estate to total assets for
corporations in these industries, 84 per cent and 54 per cent, respectively, as indicated in Chapter VI below),
together with the amounts for roads and streets, 22 billions, and tax-exempt real estate, 21 billions, a total
of 158 billions.
2 Except that of public service enterprises. (See Table 1, p. 28.)




30

NATIONAL .WEALTH AND INCOME

aristocratic society and government till within the last two centuries. Ease of acquisition and diffused ownership of farm lands
have been the foundation of republican institutions in the United
States.
AMOUNT

OF

REAL

ESTATE

IN

PUBLIC

SERVICE

PROPERTIES.—

Because of the general practice of the States to assess railroads and
other public-service enterprises separately, this being done without
distinction of real estate from other elements of such property, and
because there are other (and probably much better) methods of valuing such property than State assessments, the Census Bureau treats
the real estate of such corporations differently from other real estate.
Considerations of administrative convenience may properly be decisive where the interest of a statistical compilation is in the total
obtained rather than in the classifications used in the supporting
detail. But it is evidently of much interest to determine comprehensively the share of real estate in the total wealth. This involves
an estimated subdivision of the public utility items.
In the following tabular statement such estimates are presented in
a form to show not only real estate separately, but also the latter as
subdivided into land and improvements. Tne method consists fundamentally in determining the proportionate distribution of fixed
capital investment and applying proportions so obtained to the
value of such classes of wealth (which are for fixed capital) as independently estimated. The same data are used later (p. 34) for the
analysis of total real estate into land and improvements. 3
TABLE 2.—Real estate values in the wealth of public utilities,, 1922
Per cent of fixed
capital in-*

Corresponding amounts of real
estate (millions of dollars)
1922 census

Real estate

Basis of
commission's
estimates

Other
Land

Railroads and their equipmentStreet railways
Telegraph systems
Telephone systems
Pullman cars, etc..,
Electric light and power plants.
Pipe lines
Shipping and canals.
Privately owned water works...
Total.

Improvements

Improvements

Land

52
38
423
25
738
18

12,369
3,219
82
698
44
2,115
450
738
325

3,900
630
9
74
49
550
25
738

4,732

20,040

Land

2,993
439
6

18

Improvements
16,120
4,620
114
980
56
2,750
450
738
325
26,153

3 The ratios were obtained as follows: For the railroads land is shown separately in the basic valuation
data of section 6. The proportions for other items are based on the distribution of similar valuation data
between the various fixed capital accounts according to the experience of the Valuation Division of the
Interstate Commerce Commission. For street railways and central electric light and power stations the
ratios are based upon the detailed fi*ed caRftiti accounts reported to the New York State Public Service
Commission, but with jaore weight attached to upstate than to New York City companies. Installations made prior to the adoption of prescribed uniform accounts are seldom thus distributed. This fact
impairs the quality of the estimate, but any underestimate for land might be more serious if the older
acquisitions were included at cost. All the fixed capital of the American Telephone & Telegraph Co. is
similarly classified, and, as further subdivided for certain items by the use of New York data, the proportions found are applied to the telegraph companies as well as to all telephone companies. These basic
New York data are not small in amount. For the Pullman item Interstate Commerce Commission data
are used, The estimates for the remaining items are based on less definite data.




31 NATIONAL .WEALTH AND INCOME

With the aid of such estimates it is possible to determine approximately the proportion of real estate in the total wealth of the
United States.
THE PROPORTION OF A L L REAL ESTATE IN THE T O T A L . — B y

the

addition of the amounts estimated above for real estate values with
respect to taxed real estate, exempt real estate, roads, streets and
bridges, railways and other public utilities (see Tables 1 and 2) the
total estimated value for all real estate is $230,000,000,000 out of
a total national wealth of $353,000,000,000, as estimated by the
commission, or 65.1 per cent of the total wealth in 1922.
As respects the division of real estate among the different uses
the estimate in the preceding section is the best that can be made
from the available data without further research.
Section 3. The land value in real estate.
DISTINCTIVE CHARACTER OF LAND VALUE.—Real estate consists of
land and improvements. These two elements are fundamentally
different in character. Land value, whether due to advantages of
site or to the extent to which the land is a depositary of natural
resources, is not produced by human effort. Its value depends on
the use which can be made of it, not on production cost in any sense.
While most of the increase in prices paid for land in business
sections of large cities may be attributed to intensiveness of use of the
sites, at least some of the high value results from the necessities of
users rather than the social value of the uses.
The value of real estate is increased by transportation facilities
and improved accessibility. But it is generally the value of the
land, not that of the improvements, which is directly affected.
Improvements on the land are valued on a different basis and are
substantially worth the cost of reproduction less depreciation, including in the latter especially deductions for obsolescence and inadequacy.
A leading expert appraiser of real estate describes his method of
determining the value of a parcel as a matter of deciding what sort
of improvement the site should have in order to be of maximum
suitability, regardless of how the land happens to be improved at the
time. The cost of such improvement of maximum suitability to the
site can be very definitely estimated, and the value of the land is
the difference between the value of the parcel so improved and the
cost of the improvement.
Especially in the United States real estate improvements become
more or less obsolete rather rapidly. These factors in the situation
complicate the problem of valuing improvements where the assessor
is inclined to assume that a thing is worth what was paid for it, even
though a new purchaser would not pay that much. But a proper
checking of assessed values, by way of comparison with sales, should
prevent the overvaluation of improvements.
SEPARATION OF LAND VALUES.—Figures showing the separation of
the value of lands and the value of improvements on the lands for the
United States as a whole do not exist, although there appears to be a
growing tendency to assess the two separately. The best methods
of assessment tend to yield separate values even where the practical
interest is only in the combined value. In other words, the applica-




32

NATIONAL . W E A L T H AND

INCOME

tion of independent methods of appraisal to the two elements and, in
particular for the land by itself, contributes to the accuracy of the
combined figure.
As regards the separation of the value of land and of improvements
outside the cities, it is perhaps not possible to have as much confidence
in the result as it is within the cities. But the lenient assessment of
improvements on agricultural land probably means a more nearly
correct subdivision of the assessment between land and improvements
than might appear. As regards timber and mineral lands, the difficulties of fair assessment are great. But it appears to be the practice
of State tax administrators in States where these elements of land
value are important to supervise closely the methods of assessment in
a way which would indicate that the results are fairly uniform and
fairly good.
The census publishes no figures for the true value of assessed real
estate by counties. It publishes such figures for each State. The
method of arriving at the State figures involves an assumption as to
the ratio of assessed value to true value for the counties, although
not for each specific county.
The census finds that satisfactory ratios of assessed to true value
are obtainable for a certain number of counties in a State. Perhaps
for one-third of the total number it can obtain ratios of assessed to
true value that it is willing to accept as representative of the actual
facts. In general, & weighted average of these ratios for the selected
counties is applied as valid for the State as a whole, and the assessed
value for the State, excluding railroads and other public utility corporations, is raised in this ratio. The commission has used the ratios for
the selected counties as they stand, and has used their general average
ratio for the other counties t6 derive true assessed values for all the
counties of each State from the State reports. In some States, however, the Census Bureau has found that the ratios of assessed to true
value reported by State officers are satisfactory and comprehensive
for the State as a whole. In other States other variations of method
are employed appropriate to the particular circumstances. The
method of arriving at county real-estate values adopted by the commission has correspondingly varied.
The commission found that a satisfactory separation of real estate
assessments into land values and improvement values is to be had
for 23 States by counties from State tax reports.4 -In addition a
similar separation has been obtained for certam large cities in States
where the separation for the State as a whole is not to be had. It
happens that the States where the division of real estate into land
and improvements has been obtained, are not, on the whole, the most
populous States. On the other hand, the great mining States west
of the Mississippi, where a separation by estimation on the basis of
comparison with similar counties in other States would be rather
unreliable, are mainly included in the list of those where the separation is reported. At the other extreme, a reported separation has
been obtained for most of the large cities. Of the total taxed real
estate to be distributed in this way, 55 per cent is distributed on the
basis of reported assessment data, and the division for the rest of the
4

The States for which the separation is based on such reports are shown in Appendix, Table 1.




33 NATIONAL .WEALTH AND INCOME

country is estimated. In a few cases ratios have been used for a
date other than as of the end of 1922.
Where it is necessary to make the separation between land and improvements for the counties of a State according to the analogy of
conditions in other States, ratios have been brought over and used
as estimates on the basis of similarity in respect to three controlling
factors in the situation. These factors are population per square
mile, average annual rainfall, and the presence or absence of mineral
resources as indicated by the production of coal, oil, iron, and other
metals. Other factors affecting the appropriateness of the ratios for
articular counties are, of course, taken into account wherever known,
o far a ^ practicable, among the States for which the division in
s
question is reported one is preferred, for the selection of known
ratios to be applied in States where the division is not reported,
according to the smallness of the extent to which the assessed value
has to be raised in order to arrive at a true value. But not much
weight can be given to this factor in the selection in comparison with
the requirement that each State for which estimated ratios must be
used should, so far as possible, be worked on the basis of ratios obtained for adjacent States or States having similar conditions as
regards agricultural development and the various other factors.
PROPORTION OF LAND VALUE IN A L L R E A L ESTATE.—The interest
of the subject warrants a liberal degree of estimation of the ratio of
land to total real estate for the minor items if necessary in order
to make the estimate of land value comprehensive. The element of
arbitrariness in the segregation of land value for taxed real estate
outside the public utilities is small. There are comparatively satisfactory provisional means for dealing with the public utilities. The
problem of the division of exempt real estate values can not at
present be so well met.
Separation by the method described shows 60.7 per cent of the
value of taxed real estate attributable to land and 39.3 per cent to
improvements. This general result, together with some analysis, is
shown in Table 3.
Even where the assessment of exempt real estate is systematically
done, the State tax authorities do not divide the total between
land and improvements. But exempt real estate is in general improved real estate, except as regards public lands. Tne ratio of
improvements to land is probably higher in the Eastern and Central
States while in the States west of the one hundredth meridian it is
probably much lower. Whether these divergent influences substantially compensate each other is another question. The admittedly
imperfect method here adopted applies the ratios for taxed real
estate for the United States as a whole to the total for exempt real
estate.
For the public utility group, including the steam railroads, the
amounts are shown in Table 2. Other elements are provided for in
the separation of taxed real estate into land and improvements.5
5 The line between land and improvements can not be sharply and logically drawn any more than tha i
between real estate and personalty. The interest of the analysis here is purely economic, and the term s
'' movables'' and'' nonmovables'' would be more descriptive than realty and personalty. Improvements in
land are often so sunk in it as not to be separately measured, but the theoretical distinction between them
is important. It should be remembered also that only the division of a certain amount of fixed capital is in
question here.




84

NATIONAL . W E A L T H AND INCOME

The estimated amounts (in millions of dollars) for land and improvements in the total wealth of the country both for the census
and commission data are given in the following table:
TABLE 3.—Estimated amounts of wealth in land and improvements
States based on data of the census and of the commission,

in the

United

[In millions of dollars]
Per cent
Total real
estate

Real estate, taxed
Exempt real estate
Public utilities (including railroads):
Census
Commission.
Streets and public roads
Total:
Census
Commission

Land

Improvements

Land

Improvements

$155,909
20,^06

$94,624
12,447

161,285
8,059

60.7
60.7

39.3
39.3

24,772
32,146
21, $50

4,732
5,993
9,100

20,040
26,153
12,750

19.1
18.6
41.7

80.9
81.4
58.3

201,187
230,411

111,803
122,164

89,384
108,247

55.6
53

44.4
47

The foregoing statement of the estimates for land and improvement values, whether taken on the basis of the census total or including the additions made by the commission, indicated that the total
land value is a little over half of the value of teal estate. On the
basis of the commission's estimate it comes to about 122 billions in
1922. This is 53 per cent of the total real estate value and about
34.6 per cent of the total estimated wealth.
V A R I A T I O N S IN THE PROPORTION OF L A N D VALUES.—The land value
element appears to be especially high where natural resources, includiiig fertility of the soil, are particularly important. City ground
values do not appear to affect tne ratio decisively, doubtless because
there is a parallel development of the intensiveness with which the
land in cities is improved as the land itself increases in value per
Square foot. With reference to these points of interest, certain data
used in the general estiniate are shown separately for the counties
containing large cities, , for the comities classed as mineral counties
and for certain agricultural regions.
The following table, which is for taxed real estate only, shows results for such special groups of counties as well as for the United States
as a whole, together with such auxiliary data as indicate something
of the character of the estimates underlying the final figures or are
intrinsically interesting.




35 NATIONAL .WEALTH AND INCOME
TABLE 4.—Division of estimated value of taxed real estate between land and improvements for the United States and for certain groups of counties, 1922
(Amounts of value in thousands)
Items
For counties containing cities of over 300,000 population:1
Number of counties
Population 1920.
True value of realty. Per cent distribution.
Per cent land in realty.
For counties containing cities of from 100,000 to 300,000 population:1
Number of counties.
Population 1920True value of realty.
Per cent distribution
Per cent land in realty.
For certain mineral counties:2
Number of counties
Population, 1920
True value of realty.
Per cent distribution
Per cent land in realty
For certain counties in the Corn Belt:3
Number of counties
Population, 1920
True value of realty
Per cent distribution
Per cent land in realty _
For certain counties in the Cotton Belt:4
Number of counties,
Population, 1920
True value of realty
Per cent distribution
Per cent land in realty.
For all counties in the United States:
Number of counties
Population, 1920
True value of realty
Per cent distribution
Per cent land in realty.

Reported

Estimated

Total

39,657,785
$36,835,411
88.3
53.2

2
2,596,676
$4,862,894
11.7
42.7

25
22,254,461
$41,698,305
100
51.9

20
6,602,019
$9,755,675
65.6
38.1

15
3,351,478
$5,121,478
34.4
41.1

35
9,953,497
$14,877,153
300
39.1

53
2,311,213
$3, 444,321
32.4
74.7

84
5,090,213
$7,183,432
67.6
54.4

137
7,401,426
$10,627, 753
100
60.9

39
636,363
$1,596,730
31.5
84.9

76
3,171,751
$3,466, i p
68.5
83.1

135
1,808,134
$5,062,862
100
83.7

51
1,059,852
$615,333
49
79.7

54
1,253,787
$640,198
61
74.3

105
2,313,639
$1, 255, 531
100
77.0

' 1,156
50,929, 000
$85,219,127
54.7
59.6

3,062
1,906
105, 713,000
54,782,000
$70,689,498 s $155,908,625
100
45.3
60.7
62.0

Population at least 50 per cent urban in 1920.
Mineral products estimated at $5,000,000 or more per year.
» Population less than 15 per cent urban in 1920 in Illinois, Iowa, Indiana, Kansas, Missouri, Nebraska,
and Ohio.
4 Population less than 15 per cent urban in 1920 in Alabama, Louisiana, Mississippi, and Texas.
5 Real property and improvements taxed.
1
2

The general result shows three-fifths of the value of locally taxed
real estate to be land value. Although the most populous cities
show a higher ratio of land to improvements than those of medium
size, the ratio for the largest cities is barely over one-half. For cities
from 100,000 to 300,000 it is not quite two-fifths. The presence of
mineral resources contributes to a high ratio of land to improvements.6 But the group of Corn Belt counties shows the highest ratio,
with land accounting for four-fifths of the value of real estate. The
Cotton Belt counties show nearly as high a ratio.
If the ratio of land value to real estate value could be shown by
the various branches of production, such a development of the analysis presented in the above table would be very interesting. The
extreme ratio for the value of land to the total value of real estate
employed in any branch of production would apparently be obtained
for mining industries.
6 The difference between the ratios for mineral counties where the segregation is estimated and where
it is reported may be due to the predominance in the latter of coal counties in States east of the Mississippi.




36

NATIONAL .WEALTH AND INCOME

Section 4. Exempt real estate.
GENERAL CONSIDERATIONS.—The commission has attempted no
general valuation of exempt real estate, and is not prepared to sugest any amendment of the census estimate of $20,500,000,000.
atisfactory figures for the value of government-owned real estate
are not at present easy to obtain, and assessments of such exempt
property are not always very carefully made. Federal Government
records contain elaborate data as to original costs of Government
property, but seldom indicate present value, and the same is presumably true of real estate owned by State and local governments. In
addition there are large amounts of real estate of philanthropic and
various nonprofit institutions exempt from taxation on general
grounds, and sometimes also of business enterprises exempted in
order to induce them to locate in a particular place.
A large part of the area of the United States is still owned by the
National Government. The valuation of land in the public domain
is difficult to determine. Some of it doubtless gets into the census
total of exempt real estate, but the problem of valuing public lands
is exceptionally difficult. A large part of the public domain has no
economic value at all. There are no insuperable difficulties of method
involved in the valuation of the timber on the public domain, but the
valuation of minerals presents all sorts of difficulties. The commercial value and the exploitation of minerals are largely dependent on
market conditions, and these are bound to change greatly with the
progress of time. A computation of a value for mineral lands that
are under present conditions not economically workable is problematic. Practically it is best to assign to such as are not at present
susceptible of profitable exploitation no value at all.
REASONS FOR EXEMPTION.—Thegeneral theory of exemption from
taxation may be briefly stated. Where wealth is used for a public
function of such recognized importance that the State would perform
the function entirely at its own expense rather than let the work go
undone it is regarded as in the public interest that no taxes be levied
on the property so used, because if the exemption be considered a
contribution to the support of the enterprise the State benefits by
having to bear but a small fraction of the expense instead of the entire
burden.
Since the line of distinction between public and private functions
can not be sharply drawn, it is easy to expand the strict principle
above stated so as to exempt almost any meritorious enterprise that
benefits a large element in the population. A criterion b y which
enterprises having a public purpose only ostensibly or in minor degree
can be ruled out is whether their operation is for profit.
Profit-making enterprises, however, are sometimes exempt from
local taxation for a term of years in order to encourage their location
in the town. Such practices tend to develop into the competitive
granting of favors to the disadvantage of the public.
CLASSIFICATION BY GROUNDS OF E X E M P T I O N . — T h e State of New
York publishes very full data for assessed values of exempt real estate
in the reports of the tax commission. The aggregate amount (in
round figures) in 1923 was $3,730,779,000, which may be compared
with $3,430,587,000 in 1922 and with $2,063,585,000 in 1912. The
classification of this exempt real estate according to use or purpose
is shown in the following table:

§




37 N A T I O N A L . W E A L T H A N D

INCOME

TABLE 1 5.—Percentages of assessed values of tax-exempt
real estate in New
by use or purpose, 1912, 1922, and 1923 1
1912

E ducational
Agricultural.
Religious
Fraternal and benevolent
C haritable
Curative
Protective

1922

1923

41.2 37.6
. 1 0.0
13.4 10.7
1.1
1.2
.2
1.4
6.2
4. 1
2.7
2.4

Use or purpose

35.7
0.0
10.2
1.2
1.3
4.1
2.2

Use or purpose
Defensive
Public utilities
Administration buildings
Miscellaneous

1912

1922

1.6
9.7
1.0
22.8

4.3
27.6
5.7
5

100

Total

York,

100

1923
4
26.6
5.3
9.4
100

i Reports of the New York State Tax Commission.

Over one-third of the exemption is for purposes classed as educational; over one-tenth for such as are classed as religious. Curative
uses account for about 4 per cent. Next in rank to the educational
group are public utilities, with a share not much under 30 per cent.
The "new buildings" exemption, appearing in 1922 and 1923 only
and amounting to 7 per cent m the latter year, is designed to foster
building to cure the housing shortage and belongs in the doubtful
zone of exemption policy.
The large item under public utilities is mainly for public works,
but some element relates to property of private corporations. But
the classification by ownership for exempt real estate in New York
is given, not here, but in Table 6.
A similar classification for exempt property in Connecticut is shown
in Appendix Table 2. In this case personalty is included, but according to the general indication for data where the separation can
be made, this element would amount to only about 8 per cent and
probably does not appreciably distort the proportions if taken to
apply to real estate.
In a classification for Rhode Island (Appendix Table 3), likewise
including personalty, ownership and use descriptions are mingled.
Town or city property accounts for one-third of the total. "Exempt
by charter" (over 3 per cent) suggests an antiquated privilege, but
the 4 or 5 per cent exempt by vote of city or town" may mean a
modern one.
C L A S S I F I C A T I O N A C C O R D I N G T O OWNERSHIP.—The
New York
classification by ownership is shown for certain years in the following
table:
TABLE 6 . — P e r c e n t a g e s of assessed
ownership,

Ownership
United States
State
Counties
Cities
Towns..

values of tax-exempt real estate in New
1912, 1922, and 1923 1

1912

—

1922

1923

5.2
4.8
1.4
58
.1

5.6
4
1
63.6
.5

5.2
3.8
1
59.7
.5

Ownership
Villages
School districts
Private ownership
Total

York

by

1912

1922

1923

M
29.2

0.4
1.1
23.8

0.4
1.1
28.3

100

100

100

* Reports of the New York State Tax Commission.

No very remarkable changes occurred in the distribution of ownership of exempt real estate in the 10 years, though there was a considerable increase and then a recession in the share of cities, which have




NATIONAL .WEALTH AND INCOME

38

about one-third of the total. The low point for private ownership
was reached in 1921, at 22 per cent. The recovery of this item since
is evidently due to the exemption of new buildings to meet the housing shortage. The Federal Government has on the whole merely
held its own, at a fraction over 5 per cent of the total, with a tendency
to increase latterly, especially if allowance be made for the "new
buildings " exemption.
The data for ownership of exempt property in Connecticut (Appendix Table 4) shows the Federal Government as owner of only 3 per cent
of the total. Cities (including towns and boroughs) own scarcely
half as large a share of the total as in New York. "Corporations
and associations" account for nearly half.
For a group of 17 cities7 with a population of 3,493,381 exemptions
in 1922 amounted to $906,000,000 of assessed values, distributed as
follows: Governmental, 52.7 per cent; educational, 21.6 per cent;
religious, 10.5 per cent; benevolent and charitable, 5.3 per cent; all
other, 9.9 per cent; total, 100 per cent. In these data, also, it appears
that the cnief reason for exemption is the avoidance by the Government of collecting taxes from itself. Such a statement, however, is
subject to qualification. Some municipal enterprises are not so
strictly of a Governmental character as to be entitled to exemption
under the prevailing theory.
REAL

ESTATE

GOVERNMENT.—Federal

O W N E D B Y THE F E D E R A L

land and buildings, as tabulated by the office of the Chief Coordinator
of the Bureau of the Budget, amount to $1,322,500,000, for property
outside the District of Columbia, as valued on the basis o f cost
(except as regards the Navv Department). The grouping is by Federal departments and establishments, with all Federal property in
the District of Columbia added.
TABLE 7.—Official values of

land and buildings

of

Federal

Land values
In the District of Columbia
Departments, outside the District of Columbia:
Treasury
War..
<Navy
i
Interior
Agriculture
Commerce
Labor
Justice
Shipping Board
r
Veterans' Bureau
Grand total..

Government,

Building values

1923

Total
1 $375,000,000
264,846,000
767,943, ($0

253^000
1,753,000
203,000
167,000
14, 254,000
2,014,000

$214,416,000
715,238,000
m , 739,000
1, 563,000
1,355,000
24,890,000
1, 294,000
3,203,000
60,308,000
16, 761,000

143,757,000

1,178,757,000

1,697,514,000

$50,430,000
52,705,000

16 , 8 00 0
. 12 J , 0
* 1,990,000
1,608,000
26,643,000
1,497,000
3, 370,000
74, 562,000
18, 775,000

1 The District Commissioners estimate this at $400,000,000.

The values for the holdings of the Navy Department are appraisals.
Substantially all others in this list are original costs. Much of the
land included was reserved from the public domain or donated, and in
jsuch cases does not affect the above totals. There are certain items
not included above, such as public lands and locjks and dams or
waterways.
7 Albany, N. Y.; AUentown, Pa.; Binghampton, N. Y.; Cambridge, Mass.; Davenport, Iowa; Des
Moines; Iowa; Easton, Pa.- Jamestown, N. Y.; Johnstown, t*a.; Milwaukee, Wis.; Philadelphia, Pa.;
Heading, Pa.; Syracuse, N. Y.; Utica, N. Y.; Waltham, Mass.; Worcester, Mass.; and Yonkers, N. Y.




39 NATIONAL .WEALTH AND INCOME

An examination of the figures available relating to property
supervised by the Treasury Department indicates that the average
combined cost of land and buildings (excluding cases where the land
is entered at no or nominal cost) per square foot of office space used
(excluding storage and furnace rooms and the like) has increased
from $8.41 for the 10-year period ending in 1899 to $16.40 in 1922.
The average cost per square foot for the 35-year period from 1880
to 1915 was $10.40. Most Government buildings, and perhaps
especially those of less recent date, are of very solid construction and
not subject to much depreciation for wear and tear. Land values
have certainly greatly appreciated. It has been impossible in the
time available to classify the property in detail according to date of
acquisition. Much was acquired recently for war purposes. But a
fair appraisal might easily double the value of all not thus recently
acquired, and some of the latter has appreciated.
The items in New York State included in the above total amount
to $132,000,000. But the assessed value of Federal Government real
estate, according to the New York tax administration, was put at
$193,734,591 in 1922. Raised in the ratio of assessed to true value
used by the census for taxed property in New York (84.8 per cent),
this figure becomes $228,461,000. This is 179 per cent of the New
York State item ($132,000,000) included in the above table. A 79
per cent increase in the total of $1,698,000,000 brings it up to $3,040,000,000.
The public domain amounts to 185,733,242 acres, exclusive of
Alaska, and is estimated by the Interior Department to be worth an
average price of $1.25 per acre. These lands can therefore be entered
at $232,417,000. Government locks and dams are estimated by the
Interior Department to be worth $198,196,000. Appropriations b j
the Federal Government and contributions by States and municipalities for river and harbor works have amounted to $1,133,528,835,
to and including the year 1922. Much of this has been expended for
maintenance, and large sums were used for purposes which have no
present value. There appears, however, to be no means of estimating the value of existing harbor works. All are exempt from taxation.
If the $431,000,000 for public lands and locks and dams should be
raised in a somewhat similar ratio to that of other real estate the
total of Federal Government real estate would amount to over
$3,500,000,000. A moderate estimate of value in the river and
harbor works would easily raise the total to over $4,000,000,000.
RECONSIDERATION

OF THE

TOTAL OF EXEMPT REAL

ESTATE.—

Assessed value of exempt real estate in the States of New York,
Pennsylvania, New Jersey, Rhode Island, Massachusetts, and
Minnesota shows a total of $5,147,000,000 in 1922. Raised in the
proportion of the ratios of assessed to true values for the several
States, the figure becomes $6,967,000,000. The per capita figure is
$232. The predominance of eastern States with large urban populations may suggest that the proportion for the country as a whole is
smaller. On the other hand, not only is the public domain in the
newer States, but some of the most expensive of Federal public works
are not in the more populous States.
The amount above estimated for Federal-owned real estate ($4,000,000,000) accounts for 20 per cent of the $20,506,000,000 for exempt
real estate estimated by the census for 1922. This ratio is much




40

NATIONAL .WEALTH AND INCOME

higher than that for any State where a specific ratio is independently
obtainable, as, for example, New York, 5.65 per cent; Connecticut,
3 per cent; and Rhode Island, 7 per cent.
The foregoing figures suggest that the census estimate for exempt
real estate is an underestimate as regards Federal-owned property.
There may be a general tendency to underassessment where tax
receipts are not involved, and perhaps especially a failure to increase
assessments as the value? of land and of existing improvements
appreciates. But the commission has no data adequate to the revision
oi the exempt real estate total.
Section 5. Public roads and streets.
VALUATION DESIRABLE W H E T H E R ADDED TO THE TOTAL OF
NATIONAL W E A L T H OR NOT.—Public roads and streets are not assessed

, and are, therefore, not included in real estate as valued by the census.
The reasons for the Census Bureau's omission of these elements of
national wealth are stated as follows:8
The values of such public improvements as street pavements and sewer systems
are omitted from the tables for the reason that such properties, as a rule, have
value in use only and not in exchange, and because of the fact that in most cities
a part or all of the cost of such improvements is assessed against property presumably benefited by the improvement, such presumption doubtless being taken
into account by officials in determining assessed valuations for purposes of
taxation.

It is not essential whether the cost of street improvements is
assessed upon abutting real estate or not. It is important in general
that the use of such public facilities should be available on other than
a profit-making basis, and as a result the values of the real estate
served by them are greatly increased. The construction of railways
also creates real estate values, and has been even more conspicuous
for' this effect than the construction of highways. It is not even a
clear difference that the public pays for the railway service and not
for the highway service, since interest on highway bonds and expenditures for maintenance must be met out of taxes. The fact that the
amount oi increase in benefited real estate values has no definite
relation to the expenditure for street improvements might be used as
an argument against the omission of such improvements in their
entirety. In any case it would seem worth while to estimate their
value. The argument with regard to duplication of values is more
effective perhaps against the reckoning of a land value for public
highways than it is against the reckoning of an improvement value.
ITEMS OMITTED IN CENSUS ESTIMATE.—The chief items omitted
in the census estimate are rural public roads, urban streets, and
publicly owned structures in or under the streets, such as pavements,
water mains, and sewers. Other such structures are substantially
owned by private corporations and are included in the census totals
under such heads. In the large cities the underground structures
are probably considerably more costly than the street pavements
together with their foundations.
The Census Bureau includes an item for privately owned waterworks systems, but none for the same facilities where publicly owned,
except so far as they may be included under exempt real estate. The
water mains are doubtless not assessed and are, therefore, not in8 Wealth, Public Debt, and Taxation, 1922, Estimated National Wealth, p. 6.




41 NATIONAL .WEALTH AND INCOME

eluded under exempt real estate; pumping stations and reservoirs, on
the other hand, are evidently included under exempt real estate, if
publicly owned, and probably under public utilities if privately owned.
RURAL ROADS.—The Bureau of Public Roads of the United States
Department of Agriculture has compiled and published a survey of
rural public roads as of January 1, 1922, which gives the total mileage
of rural roads.9 The aggregate length on January 1, 1922, is given
as 2,941,294 miles. From inquiries made of State officials data were
obtained regarding the average width of such rural roads. The estimated total area computed from these data was 19,149,936 acres.
The land values of this area were computed for each State on the
basis of the average value of farm land per acre as derived from the
census of 1920, modified by thex Department of Agriculture data for
the lower land values in 1922. The computation worked out to a
total land value for rural roads of $850,000,000.
The above-mentioned publication of the Bureau of Public Roads
also shows the character of improvements in the form of pavements.
By applying costs per mile to the different types of construction
shown for which the mileage is thus obtainable, it is possible to
estimate the total value of rural-road improvements in 1922. Cost
of construction per mile for recent dates may also be obtained from
annual reports of the Bureau of Public Roads, where total costs for
completed projects, classified in substantially the same way as are
the mileage survey figures, are given.10 The products of mileage
times costs per mile thus obtained yield an estimated value of rural
public road improvements in excess of $6,000,000,000. This computation does not specifically allow for depreciation, but the valuation assigned is conservative enough so that no deduction appears to
be necessary on this account.11 On the whole the $6,000,000,000
appears to be an underestimate of the value of rural public-road
improvements as of December 31, 1922.12
8 United States Department of Agriculture, Departmental Bulletin 1279, Rural Highway Mileage,
Income and Expenditures, 1921 and 1922, Mar. 14, 1925.
10 Averages for the various types of road construction were computed for all Federal-aid projects completed as of June 30, 1922, and similarly for such projects completed during the fiscal year 1923 and during
the fiscal year 1924. The reason for using these several dates is to obtain average costs for recent construction not affected unduly by the high prices prevailing just after the war. Even so, the figures may be
affected too much by such high prices, since the projects completed in 1923, for example, were constructed
under contracts let some time previously. The use of these differing averages, however, does not substantially affect the total value obtained by applying them to the mileage as of Jan. 1,1922. The costs as
computed on the basis of 1923figuresare somewhat greater than those computed on the basis offiguresfor
1922 and prior years, while the costs computed on the basis of 1924figuresare somewhat less. The total
obtained is in all cases in excess of $6,000,000,000, the lowest figure being slightly less than this, if no allowance is made for the value of bridges. But with this item included, on an admittedly inadequate basis,
the total in all three cases exceeds $6,000,000,000.
11 As some of the roads have been constructed for some time, not only is depreciation a factor but the
difference between pre-war costs and more recent costs might be considered to affect the estimate. The
latter factor, however, is not objectionable, since the proper basis of valuation is cost of reproduction
rather than original cost. It is difficult specifically to allow for depreciation, but it should be noted that
the mileage for the different classes of improved roads is as of Jan. 1, 1922, instead of as of the end of the
year, as in the case of other items entering into the total of national wealth. Furthermore, it is questionable whether the method adopted makes sufficient provision for permanent expenditures on country
roads very slightly improved. The total surfaced mileage given in the survey is 388,000, while earth roads
account for 2,554,000 miles. For the latter mileage an element of value is allowed only where the road is
described as earth to definite grade with permanent drainage structures. No allowance is made for the
roads described as "partly graded and drained earth," as well as for "unimproved earth." It is probable
that these roads described as "partly graded and drained" have to a large extent merely been plowed and
scraped. But in the case of these roads, and even of the unimproved earth roads, there may have been
considerable expenditure for permanent improvements in the form of culverts and bridges.
12 In the national parks there are certain forest roads upon which considerable construction expenditures
have been made, but probably not enough to affect appreciably the total valuation of roads for the country as a whole. At any rate no attempt is made to include them in this estimate.




42
CITY

NATIONAL .WEALTH AND INCOME
STREETS,

INCLUDING

SEWERS

AND

WATER

MAINS.—The

Bureau of Public Roads makes a survey of city streets, as well as of
rural roads. These data, together with supplementary figures
furnished by city officials, give the length and average width of
streets for all cities having more than 100,000 population. From
census data of land values by counties the rural land values were
excluded and on the basis of value per acre for city land thus derived
the value of the land included in the streets was computed. A
similar method was used for cities between 10,000 and 100,000 population, taking, however, a sample of about 30 per cent (based on
population). T o r cities and towns less than 10,000 the data were
comparatively slight and the estimate a rough one, but the bulk of
the estimated value is found in the cities having more than 100,000
population (over 60 per cent) and very little in the towns with less
than 10,000 inhabitants (less than 12 per cent). The total length
of streets is taken at 176,000 miles, with an area for right of way
amounting to over 1,318,000 acres.
The total land value for city streets computed in this manner is
in round figures, $8,250,000,000.
The Bureau of Public Roads also furnishes data with regard to
the construction costs of city streets. These figures are not yet
printed, but they have been examined for use in the present inquiry.
They show, among other things, city pavements b y type in terms of
square yards for all the important cities of the United States, and,
in fact, for all from which returns could be obtained. The total
square yards of pavement is 1,173,000,000; and there are in addition
641,000 miles of unsurfaced city streets included in the returns.
The returns may not be quite comprehensive, but presumably the
omissions are unimportant, at least as regards the surfaced streets.
For medium-sized cities $3 per square yard appears to be a conservative figure for the highest type of pavement with good concrete
foundations, including labor. This is a little below contractors7
prices for the District of Columbia in the year 1923 for sheet asphalt.13
There are some more expensive types of pavement, but very little
of such pavement is being laid at the present time. For the various
less expensive types of pavement than sheet asphalt a fraction of $3
per square yard has been used corresponding to the ratio of the cost
of that type of pavement to the cost of sheet asphalt as shown in
Federal-aid projects. The total cost of the pavement on surfaced
streets for the square yards existing January 1, 1921, is thus estimated to be a little over $2,000,000,000.14
In addition to the street pavement the mileage of unsurfaced city
streets should be considered. It is assumed that these city streets
are nearly all graded and drained with installation of water mains
and sewers. On the basis of the cost of grading and draining for
rural roads this expenditure for the unsurfaced city streets can be
18 The report of the engineer department of the District of Columbia for the year ended June 30, 1923,
page 2, gives the following "prices paid under contracts for roadway pavements":

Sheet asphalt with 6-inch concrete base (234-inch asphalt surface, 2-inch binder before compression):
A. Natural pitch lake asphalt
$3.21
B. A reduced oil asphalt
3.11
Vitrified block with 6-inch concrete base
3.21
14 The difference in time between Jan. 1,1921, and Dec. 31,1922, will mean considerable additions to the
paved street surfaces which should more than balance the amount of a specific allowance for depreciation,
which is not made in this computation.




43 NATIONAL .WEALTH AND INCOME

estimated at approximately $ 5 0 0 , 0 0 0 , 0 0 0 . It is probable that the
grading and draining of a city street involves more expenditure than
the work that is similarly described when done on a country road;
hence the figure of half a billion dollars is low, even if it be assumed
that some of these city streets are hardly more than surveyed. The
paved streets also have been graded and with greater expense and care
than rural roads.' On the basis of their indicated mileage, with a
somewhat more liberal allowance for costs per mile than in the case
of the latter, this item amounts to $ 2 5 0 , 0 0 0 , 0 0 0 .
Cost of water mains and sewers can be arrived at by the use of a
ratio to the cost of street pavements. It is assumed that the type of
sewer and water-main construction used will vary in a somewhat
similar way with the permanency and expensiveness of the type of
pavement used and that the cost of these two items combined is about
equal to the cost of pavements. For this item, therefore, $ 2 , 5 0 0 , 000,000 (equal to pavements plus grading and draining for unpaved
streets) is allowed. The total for city-street improvements thus
becomes $ 5 , 2 5 0 , 0 0 0 , 0 0 0 .
OTHER HIGHWAY IMPROVEMENTS.—Bridges have been mentioned
above as an item in part taken into consideration in connection with
rural roads, but probably inadequately covered. The roads that
have been otherwise little improved frequently will be carried over
rivers by comparatively expensive bridges. The estimate for city
streets, furthermore, makes no provision for bridges, and some of the
bridges and viaducts thus disregarded are very expensive structures.
Expenditures for bridges (contracts let) seem to be about parallel
with those for sewers and for water works, and an estimate is therefore
ventured that existing highway bridges, not included in taxed or
exempt real estate and not elsewhere provided for, have a value, as of
t h e e n d o f 1922, o f $ 1 , 5 0 0 , 0 0 0 , 0 0 0 .

Combining the foregoing estimates for roads, streets, and bridges,
the total amount is $ 2 1 , 8 5 0 , 0 0 0 , 0 0 0 , of which $ 9 , 1 0 0 , 0 0 0 , 0 0 0 is for
land and $ 1 2 , 7 5 0 , 0 0 0 , 0 0 0 is for improvements.
Section 6. Valuation of steam railroads and other public-service
enterprises.
BOOK COSTS.—In the 1 9 2 2 census estimate of national wealth
the figures used for the steam railroads and for the property of other
public-service corporations are book costs of plant and equipment
less depreciation reserves. By such a method oi valuation no account
is taken of the change in the purchasing power of the dollar since most
of the expenditures were made, although this is an important factor
in an estimate of values based upon sales, such as those for real estate.
The item used by the census for the railroads is, therefore, not comparable with most other items in its total. This lack of comparability
is particularly important in the 1922 estimate, because of the very
marked change in price levels in the decade preceding 1922. Bookcost figures are not reliable measures of the value of a corporation's
property, as they are often inflated. Neither are they satisfactory for
railroad corporations in particular, partly because their capital
accounts date in large part from a period, many years back, and
partly because they too often in part represent exaggerated values
placed on securities issued in exchange for property instead of actual
expenditures for construction and for the purchase of concrete wealth




44

NATIONAL WEALTH AND INCOME

On the other hand, it is also true that some railroads have made large
improvements out of income, the charges for which do not appear
in the capital accounts.
The alternative to the use of book cost as a measure of value is
reproduction cost. By the reproduction cost method an engineering
inventory of the property is made and appropriate prices, as of present
or recent date, are applied to each category in the inventory. Such
methods of valuation are developed and applied quite generally to
public-service enterprises. This method of computing the value of
the enterprise gives substantially what would have to be paid by
investors at the present time in order to create such a plant. Whether
the result obtained by the cost of reproduction method is entirely
satisfactory for the purpose of a national inventory depends, in the
first place, on whether proper allowance can be made for depreciation
due to elapsed life in service of elements of the plant that are still
comparatively efficient but will not continue to serve the public and
earn a return for s6 long a time as actually new elements. The valuation should also make allowance for any departure from the implied
assumption tHat the plant would be erected in its present form and
at its present location, if it were to be constructed anew. As regards
ordinary depreciation, methods of estimating the importance of this
element are well developed, and the V&tuation figures of the Interstate Commerce Commission take this factor into account.
ITEMS FOR WHICH BOOK-COST DATA ARE USED BY THE CENSUS.—

In addition to the steam railroads and their equipment, the 1922
census valuation includes book-cost figures as estimates of value for
various other items under the general head " Street railways, shipping, waterworks, etc." The subheads for which the book-cost
method of valuation is used are street railways, telegraph systems,
telephone systems, Pullman and other cars not owned by railroads
and privately owned and controlled electric light and power stations.
Certain otlier items in this group are valued by a different method.
The figure for pipe lines was furnished to the census by the Bureau
of Mines. For ships the Census Bureau has applied unit prices to
statistics of shipping tonnage as a means of valuing vessels in the
various class and age groups. This amounts, in effect, to a cost of
reproduction less depreciation method. With regard to canals the
statement is made by the census that " T h e values of canals and investment in canalized rivers were taken from a report of the Bureau
of the Census for 1916." It appears that the values for canals are
practically construction cost data. It appears, also, that the canals
constitute a minor element in the total for shipping and canals.
The real estate element in the value of railroads and other publicservice corporations is included in the totals referred to in this section
and not in the general figures for taxed and exempt real estate.
RESULTS FROM THE INTERSTATE COMMERCE COMMISSION'S V A L U -

ATION.—The valuation work of the Interstate Cpmmerce Commission is now fax enough advanced to make it possible to use the commission^ results to arrive at a total valuation for the railroads of the
United States. The Federal Trade Commission has used as a basis
for its estimate tentative valuations for a little over 97,000 miles of
road and underlying reports for a little over 78,000 miles of road.
The roads for which tentative values &ave been completed are probably largely the smaller roads. In making a selection of roads for




45 n a t i o n a l . w e a l t h a n d i n c o m e

which to obtain data from underlying reports the figures for the larger
systems were used by preference. In this way any peculiarity of the
sum due to the smallness of the roads for which tentative valuations
have been reached tends to be counterbalanced. All prices applied
in the determination of the cost of reproduction by the Valuation
Division of the Interstate Commerce Commission are prices as of
1914, or strictly as of a period of several years prior to 1914. As a
matter of fact, however, price changes during the five-year period
ending with 1914 were negligible as compared with what they have
been since, so that it is fair to use the figures as relating to 1914
prices. The inventories, however, are of various years, from 1914
down to 1919, in all cases as of June 30.
If the inventories were all as of June 30, 1914, the method of arriving at a present valuation would be to apply present unit prices to
the inventories and add to the total thus obtained the expenditures for
additions and betterments to plant and equipment made since 1914.
The fact that some of the inventories are of later date makes it necessary to subtract something from the increases in capital accounts
shown by the reports of the Interstate Commerce Commission in order
to obtain a correct figure to add to the inventory data priced as of 1922.
An examination of the mileage figures indicates a static condition of
railroad development as regards miles of line between 1912 and
1922, so that it may be assumed that additions and betterments as
obtained from figures showing the increase of investment in road and
equipment, less increase in depreciation reserves, do not involve additions of mileage.
The use of such figures of book value, however, to supplement the
reproduction inventories and bring them down to the 1922 date may
appear to be inconsistent with the reproduction theory of valuation.
It does constitute an element of inconsistency, but in proportion as
book cost figures are recent they tend to approximate more nearly
to reproduction cost figures and may, therefore, be used as a substitute for the latter. Unfortunately, the book value figures in question
run back somewhat into a period when prices were quite different
from what they were in 1922. But the element of distortion involved
is small, especially as only a part of the additions and betterments
prior to 1920 need to be used for the purpose of the 1922 estimate.
The total valuation arrived at by the method described is a trifle
over $26,000,000,000. This figure provides for depreciation, because
the reproduction costs taken from the Interstate Commerce Commission's valuation data are for such costs less depreciation and because
the additions to fixed-capital accounts are reduced according to
appropriations made to depreciation reserves. The estimate does not
include anything for working capital, in this respect following the
census rule. Materials and supplies and cash used by the railroads
are covered under other heads m the estimate of national wealth.
This commission's estimate for the railroads does include a small
allowance for going value on the basis of the relative importance of
this element in the 97,000 miles of road for which tentative values have
been arrived at. According to these data, the amount in question
is 3.4 per*cent of the combined value of land and cost of reproduction
of structures and equipment. By the estimate above made the census
1922 figure of $19,951,000,000 for the value of the railroads is increased 30 per cent.




46

national . w e a l t h and

income

T H E IMPORTANCE OF PRICE INDEXES IN THIS E S T I M A T E . — T h e o -

retically the value of inventoried railroad property should be brought
down to date by the use of a price index for railroad materials of
construction ana railroad-construction labor. Instead of using such
a special price index, the wholesale price index of the JJureau of
Labor has been employed. This has not been done unadvisedly,
however. In practice the Interstate Commerce Commission, in
connection with its valuation as of the present date of the various
railroad systems with reference to the application of the recapture
clause of the transportation act of 1920, has found it satisfactory to
use the wholesale price index of the Bureau of Labor, and such procedure has been acceptable to the railroads.
The general wholesale price index number of the Bureau of Labor
for 1922 was 149, as compared with an index for 1914 of 98.15 Certain
groups of commodities that are of particular interest for railroad construction and equipment are metals and metal products and building
materials. For the metals the index number of 1922 was 122 as
compared with 85 in 1914. For building materials the 1922 index
number was 168 as compared with 92 in 1914. As regards construction labor, although no appropriate index of the change in wages is
at hand, it is doubtless true that the change since 1920 has been
favorable to wages as compared with wholesale prices. Such considerations as these suggest that the $26,000,000,000 arrived at
above is to a considerable extent an underestimate of the value of the
railroads, according to the strict principles of cost-of-reproduction
valuation.
The $26,000,000,000 of wealth represented by the railroads is the
amount available and in use for the service of the public. The railroads did not cost the investors anywhere nearly as much as $26,000,000,000. The public is less dependent on railroad service than it was
a generation ago. The development of the automobile has seriously
affected the earning power of the railroads in certain sections, particularly as regards their passenger service. The importance of the
railroads for local freight service, also, has been affected. As a result
of these developments, which have by no means completely worked
themselves out as yet, it may become necessary to regard some railroads as worth considerably less than their fair cost of reproduction,
because of their having become more or less obsolete.
REVALUATIONS

FOR

OTHER

PUBLIC

SERVICE

ENTERPRISES.—

Book cost for street railways, telegraph systems, telephone systems,
Pullman and other cars not owned by railroads, and privately owned
central electric light and power stations and transmission lines should
be similarly increased. The ratio will vary, of course, according
to the character of the property, and possibly according to the way
in which the accounts of the corporations have been kept. But in
general it would mean a considerable increase in the book cost figures
used by the census.
An examination has been made of recent decisions of public utility
commissions in the various States where cases have come up involving
the valuation of such properties. On the basis of such data, all too
meager it must be admitted, ratios have been obtained for each type
15

An index for the period of the calendar year is deemed preferable to one as of Dec. 31,1922.




47 NATIONAL

w e a l t h and

income

of property referred to. The appropriate ratio for street railways
appears to be approximately 45 per cent. That for telephone and
telegraph systems may be taken at 40 per cent. For Pullman and
other cars, not owned by the railroads, a ratio identical with that
for the railroads, that is, 30 per cent, may be used. For privately
owned central electric light and power stations a suitable ratio appears
to be 30 per cent. In all these cases round numbers are employed,
because of the approximate character of the ratio. The basis of
all these ratios is so small and so uncertain that it is open to anyone
to obtain figures which will give a better estimate.
By way of explanation of the variation in the ratios above used,
it is worth noting that in proportion as the existing property has
been recently installed, owing to rapid growth of the plant or to
replacement of obsolete machinery, book value tends to approximate
reproduction value. The class of property above listed that is on
the whole most new, or least old, is doubtless the property of the
central electric light and power stations. The telegraph and street
railway properties are probably the oldest. It is possible, also,
that the ratios are affected by the extent to which franchise values
and other items of property, not properly included in an estimate of
national wealth, have been brought indirectly into the capital
accounts. Such factors tend, however, to reduce instead of increase
the ratio used to raise book values to reproduction values. It may,
therefore, be inferred, either that such factors affected all classes of
mblic-service corporations in nearly the same way, or else that this
actor has been overshadowed by the great changes in price levels
that have occurred in the past decade.
The revised valuations for the public-service enterprises discussed
in this section are shown in Table 1, p. 28.

f

Section 7. Other items in the 1922 census estimate.
There are several forms of movable wealth specified in the census
enumeration which have not been discussed in the previous sections
of this chapter. It is of interest to pass them in review in order to
consider how far the method of estimation is consistent with that
adopted for real estate and with that applied throughout this chapter.
MONEY.—The census estimate of national wealth contains no
figure for the value of money as such. The amount entered is for
gold and silver coin and bullion, Amounting to $4,270,000,000. In
general in the present report the estimates made are of the value of
wealth and not of the value of property rights. This point of view
seems to justify the noninclusion of money in the total except so far
as it is gold or silver coin. Such coin is unquestionably wealth, A
greenback, on the other hand, being a promise to pay, is property
rather than wealth.
MANUFACTURING EQUIPMENT.—One of the large items in the census total is manufacturing machinery, tools, and implements. A c cording to the principles stated in Chapter I, the present value of
the equipment of a manufacturing plant is not its book cost. A
proper criterion of the value of such equipment is what it would cost
to purchase or reproduce, with due allowance for depreciation, pro103288—S. Doc. 126, 69-1




5

48

n a t i o n a l w e a l t h and

income

vided the same sort of equipment would actually be installed under
present conditions. But, in such a reference to "present" value, it
should be noted that it takes time to replace the equipment and the
frice per unit should be an average for some such period of time,
n a general way the census estimate most nearly approximates perhaps a book cost figure, although the description of the way the figure
is arrived at indicates that its relation to book cost is somewhat
indirect.
There is a difference between the book cost of manufacturing
equipment and the book cost, for example, of the railroads as regards
their relation to present value. For movable equipment and implements subject to frequent replacement the average age of an installation, as of any particular date, is likely to be very few years. If it is,
for example, five years, the book cost of the installations will be, on
the average, as of five years previous to the date of valuation. In
the case of certain kinds of implements and equipment there may be
practically no difference between present value and book cost properly depreciated because of the shortness of the period during which
the articles have been in use, especially if no radical changes in price
levels have occurred during the period. The undepreciated book
value of such equipment would tend to exceed its present value by
an amount approximating depreciation, if prices have not changed.
During a period of rising prices the undepreciated book values might
not be too high or might even be too low. Taking such equipment in
1922, the aggregate book values may have been priced low enough
to fully offset any depreciation not allowed for.
It should be noted in this connection that the item for manufacturing equipment is exclusive of all real estate, the real estate used by
manufacturing industries being included in the category of taxed
real estate.
AGRICULTURAL MOVABLES.—With regard to farm implements and
machinery the situation is like that for manufacturing equipment.
As regards livestock, the facility with which sales values can be
determined and applied to an enumerated' number of animals is such
that this item is doubtless on a sales value basis, which is even better
than a cost of reproduction basis.
AUTOMOBILES.—Motor vehicles are given F separate value in the
T
census estimate of 1922. In 1912 they were not separately considered, but instead were included with clothing, furniture, vehicles*
etc. Thev are valued by applying to their number a price that makes
proper allowance for depreciation. This method of valuation is
entirely consistent with the inclusion of such an item in the total
along with the true value of real estate, etc.
PRODUCTS AND MERCHANDISE.—As regards the products of agriculture and of mines, etc., and merchandise, imported and other,
there aire no theoretical difficulties in the way of correct valuation.
Prices for all the more important products are easily obtained. l"he
units to be used in a,proper inventory are not so ^asy to determine.
As a matter of fact, enumeration for these commodities is scarcely
possible, and indirect methods of estimajti^g .<juantities arid values are
naturally adopted. Unfortunately the estimate may too often be
directly an estimate of value instead of ah estimate of the quantities




49 n a t i o n a l w e a l t h

and

income

to which prices can be applied to obtain values. Changes in the
purchasing power of money affect this general group of goods very
promptly, and this situation is one reason why the quantities and
the prices should, if possible, be determined independently.
CLOTHING, FURNITURE, AND PERSONAL EFFECTS.—The large but
miscellaneous item of clothing, personal adornments, furniture,
horse-drawn vehicles, and kindred property is the only one still to
be considered in the census list. The method adopted for determining the value of this group of goods in the census of 1922 was radically changed from that used previously.
The increase, on the face of the census table, in the 10 years was
over 212 per cent. Since motor vehicles were included in this category in 1912, the actual increase between the two estimates is much
greater than 212 per cent. There were nearly a million motor cars
registered in 1912, so the item is by no means inconsiderable. The
comparison suggests that either the 1912 figure is too low or the 1922*
figure too high. It is believed that the error is rather in the 1912
figure, because the method used in 1922 was better than that of 1912„
According to the Bureau of Labor wholesale-price indexes, b o t h
clothes and clothing and house-furnishing goods increased in price
at conspicuously high rates between 1912 and 1922, the indexes
being, respectively, 97 and 181 for the former and 94 and 176 for the
latter. The per capita value of clothing, furniture, etc., according:
to the 1922 estimate as computed, amounts to $362.
The method of valuing such personal effects, by the census in 1922*,,
on the basis of returns from questionnaires, probably means that
values are too close to costs—that is, that depreciation is not duly
allowed for. The 1922 figure is believed to be comparable with and
properly included in the total with the other elements of national
wealth as set forth in this chapter.
Section 8. Ten-year changes for various classes of wealth in quantities and in dollars*
T H E INCREASES IN DOLLARS.—According to the census estimates,
the total wealth of this country in 1922, as shown above, was $321,000,000,000, while in 1912 it was estimated at only $186,000,000,000.
A laige part of this increase was due to the depreciation of the doflai r
but, disregaiding this depieciation, the nominal increase was 72 per
cent during this decade. Incieases of particular items from 1912 to
1922 in both absolute and relative terms, for the census data audi
also for the figures as modified by the commissioi, aie shown foi c o n venience of reference in Table 8.




national w e a l t h and

50

TABLE 8 . — I n c r e a s e s in national

income

wealth in terms of dollars,

1912

to 192%

[Thousands of dollars]
Increase in amount

Per cent increase
in 10 yeafs

Form of wealth
Census
Real property taxed
Real property exempt..,
Rural public roads..
City streets
Bridges, etc
Movable equipment of farms and factories:
Livestock
Farm implements, etc
Manufacturing machinery, etc
Motor vehicles
Public service enterprises:
Railroads
Street railways
Telegraph systems
Telephone system^
Pullman cars, etc
Electric power stations (private)*
Other*
Products, merchandise, etc.:
Agricultural
Manufactured
Imported merchandise
Mining products
Furniture and personal effects
Oold and silver coin and bullion
Total (excluding roads and streets).

$58,985,219
8,192,299

Commission

0)

o . (1)
a $6,850,000
* 13,500,000
>1,500,000

* 481,285
1,236,413
9,691,809
3,802,268
281,073
a 19, S67
664,341
422,052
2,130,744
1,670,387

60.9
66.5

8
*6.9
90.4
159.1

0)
9,851,469
2,403,437
61,747
1,368,567
576,637
3,401,387

(0

225,776
13,728,986
722,034
«86, £66
31,625,183
1,661,512
134,504,198

Census Commission

23.8
6.1
61:4
342.1
101.5
78.0

61.0
52.3
27.7
126.6
467.4
162.1

4.3
93.4
87.3
*10.5
•247.9,
63.5
144,886,321

72.2

77.8

i Where the viewpoint and inquiries of the commission do not suggest afiguredifferent frotn that of the
Census Bureau, the entry is not repeated.
* Not computed for 1912; amounts for this item not included in computing the total increase.
| J) 6Cr6B36
< Value in 1912 not reported. Value for 1922, $4,567,407. (See footnote 6.)
»Includes pipe lines, shipping and canals, privately owned waterworks, and irrigation enterprises.
• Without the increase in the value of motor vehicles included in 1922, the per cent increase amounts to
212.1.

It should be noted that no increase is computed for or including
the value of road and street improvements because the computation
of 1912 data for this form of wealth was not undertaken.
IMPORTANCE OF CHANGES IN PRICE LEVELS.—On the face of the
census estimate for 1912 and 1922 national wealth increased 72 per
cent in the 10-year period. It would be quite erroneous to itifer from
this, however, that the people of the United States were on the average
72 per cent better off than they were 10 vears before, The obvious
reason why the increase is not to be taken at its face is the very
considerable change in the value of the dollar.
According to the wholesale price indexes 16 of the Bureau of Labor,
it appears that prices increased between 1912 and 1922 in the ratio
of 99 to 149, or between 1913 and 1923 in the ratio of 100 to 1S4.
These price indexes are for calendar years, while the estimates* of
wealth are as of the end of the year 1922. Therefore, the compar&ble
18 For purposes of comparing amounts of wealth wholesale price indexes have been used, and for income,
cost-of-living indexes.




51 NATIONAL WEALTH AND INCOME
1

J 1

en to be the mean of the two indicated

If the dollar figures increased 72 per cent, and 52 points of this
increase must be attributed to a change in the value of the dollar,
then the increase in actual wealth as measured in terms of dollars
of 1912, was only in the ratio of 152 to 172 or 13 per cent in the 10
year interval, 1912 to 1922. Such a rate of increase is a little less
than the rate of increase in population.
The amounts added to the national wealth as of 1922 on the basis
of the estimates of the commission are largely for items not valued
in the 1922 estimate, which, therefore, do not contribute to the 10
year increase as such. For the items modified by the commission
in Table 1 for which there is a corresponding figure for 1912 available for a rough comparison, the commission has added $10,382,000,000. Including this as proper increase for the 10-year period, the
per cent increase in terms of dollars is 78, and the per cent increase
after allowing for the indicated change in the value of the dollar is
17. The latter figure is barely in excess of the rate of increase of
population in the same period. 18
No exact significance, however, should be attached to this modification of the rate of increase in national wealth. The index used,
while serviceable to correct extreme dollar changes, and probably
the best one at hand for this purpose, was not devised specifically
for measuring changes in value of fixed forms of wealth. Commodity
price indexes are much more subject to sudden and sharp fluctuations than the value of land, buildings, installations of heavy machinery and most other kinds of durable goods, and, therefore, tend
to misrepresent the changes in the dollar values of such goods.
SIGNIFICANCE OF INCREASE IN LAND VALUES,—The increase of
wealth in land values is always of special interest. So far as the
17 While it is generally recognized that for comparison between different times, wealth in terms of dollars
needs to be qualified with reference to changes in price levels, it is generally assumed that changes in rates
of wages will be correlated with changes in price levels, whether as cause or effect, and will work in the same
direction, though with a lag. The interest rate is another possible factor in the situation, and one that
probably operates independently of the course of commodity prices. As a matter of fact rates of interets
on money, as indicated by terms obtainable for commercial credit, were not any higher in 1922"thaniii 1912.
But values influenced by money rates would doubtless be affected by average conditions for some time back
and, therefoi'e, so far as the rate-of-interest factor is important, values in 1922 might be expected to be considerably affected by the high rates of interest and of earnings on capital generally prevailing for some years
prior to 1921.
{
The general effect of higher interest rates would apparently be to check increases in values and they would,
therefore, operate against the effect of changes in commodity prices and wages from 1912 to 1922. This
would apply- especially to the valuation of real estate. Rents have tended upward along with prices of
commodities. But with interest rates high, as well as rents, the price that a buyer is willing to pay for the
source of the income would not increase in proportion to the rise in net rentals. Buyers of real estate would
not be willing to pay as many "year's purchase" with general interest rates higher.
Such a tendency to Check increases in value applies to various forms of wealth in direct relation to their
durability. An increase in the tendency to value more highly, or increasingly to overvalue, present as
compared with future goods would tend to hold in check the tendency to an increase in pnees of real estate
and thus to cheek the increases in the value of this form of national wealth. It is not possible to determine
how important this effeot upon the 1922 total may be. Among other qualifying considerations is the
possibility that for goods immediately consumable there is an opposite effect of the same factor, though
only in part compensating the checking effect on prices of the more durable goods, this effectflowingfrom
the stimulation of demand for the former, because of indifference even to rather large inducements to save.
If commodity price indexes included real estate and other durable capital goods and assigned them a weight
in the total proportionate to their importance in an estimate of national wealth, there might be no occasion
to consider the change in the rate of interest in this connection, but they do not, nor indeed is it to be
expected of them. 4 The reference to interest rates in the present connection amounts merely to a suggestion
that the qualification of the dollar increase in national wealth by reference to price indexes may itself
need qualification in the reverse direction.
18 The nature of these particular increases appearing on the commission's estimates may be illustrated
by the change made in the 1922figuresfor the railroads. According to the census, the increase for this form
of wealth was 23 per cent, while the Federal Trade Commission's revision of the 1922figurewould result in
an increase of 61 per cent. The latter comparison is made with the two terms on a different basis. But the
book-cost figure for 1912 was as of a date when prices had not been changing so greatly as in the following
decade, and was probably much nearer reproduction cost than that of 1922.




NATIONAL .WEALTH AND INCOME

52

increase is due to the mere bidding-up of ground values (the so-called
unearned increment) it does not mean the possession of more abundant means of livelihood or enjoyment, but rather the opposite.
The census shows for the item of taxed real estate (which in 1922
comprehended about 68 per cent of the total) an increase of 61
per cent in value during the 10 years from 1912 to 1922. Before considering the meaning of this increase, allowance should be made for
the change in the value of the dollar. A reduction of this percentage
increase in real-estate values as indicated by the change in wholesale
prices, noted above, gives an estimated increase in true value of only
per cent. No data are available to show whether the increase for
land alone (i. e., excluding improvements) was greater or less than 6
per cent on this basis, but no probable inference from the data would
give a large increase in land values.
While it would not alter the situation in 1922, it might be argued
that the advance in realty values had lagged behind the general
advance in prices, but all the available data (some of which are presented in Chap. Y) indicate that agricultural real estate reached the
highest dollar values about 1920 and that these values have been
lower ever since. For urban real estate, however, the dollar values
of 1922 may not have been completely adjusted to the 1922 price
level.
INDEXES

OF

INCREASE

IN

WEALTH

DERIVED

FROM

PHYSICAL

STATISTICS.—An increase in the number of dollars an individual or a
nation possesses, or an increase in the number of dollars' worth of
goods, as. already indicated, amounts to something only in so far as
the dollars will bring more in exchange or the dollars' worth of goods
more utilities. So far as physical means of measuring wealth can
be used, the true increase m wealth is better expressed in terms of
physical measurement, or of quantities.
. Satisfactory physical statistics by means of which comparisons can
be made between 1912 and 1922 can be had for only comparatively
few important items. The reasons for this are various. Forms of
wealth serving the same purpose in consumption and enjoyment (or
in production) change considerably in the course of a decade, so that
things labeled with the same name are not entirely amenable to
measurement in terms of the same unit at the different dates. It is
also often not possible to obtain adequate statistical records of the
quantities Of particular forms of wealth in existence in 1912 for comparison with 1922. Even when such figures are obtainable as, on
thedr> face, permit of direct comparison, it is sometimes necessary to
qualify the results with reference to changes in the character of the
article for which statistics are obtained or in the measurement as
above noted. Figures presented in the following table are, of course,
fragmentary, partly because such statistics are not obtainable for
Many forms of wealth and partly because difficulties of definition
make some available figures not worth much. The following table
r^ehts such figures of wealth in terms of physical quantities as
ave been found accessible and otherwise fairly satisfactory.

E




53

n a t i o n a l . w e a l t h and

income

TABLE 9.—Indexes of quantities of specified kinds of wealth in 1912 and 1922, and
for other specified periods 1

Item

Steam railroads:
Miles of first track owned (thousands)2
Miles of all track operated (Interstate Commerce Commission) (thousands)
Capacity of locomotives (millions of pounds)
Capacity of freight cars (millions of tons)
Number of passenger cars (thousands)
Street and electric railways:
Miles of first track (thousands)
Number of electric locomotives
Number of passenger cars (thousands)
Number of cars, freight, baggage, etc. (thousands)
Sailing, steam, and gas vessels (thousands of gross tons)
Central electric light and power stations:
Horsepower of prime movers (thousands)
Kilowatt capacity of dynamos (thousands)
Telephone systems:
Miles of wire (thousands)
Number of telephones (thousands)
Telegraph and cable systems:
Miles of single wire (thousands)5
Nautical miles of ocean cable (thousands)
Number of cotton spindles (millions)
Nuniber of motor Vehicle registrations (thousands)
Farm animals:
Number of cattle (millions)
Number of sheep (millions)
Number of swine (millions)
Number of horses (millions)
Number of mules (millions)
Producing capacity:
Bituminous coal (millions of net tons)'
Pig iron (millions of gross tons)7.
Steel ingots and castings (millions of gross tons)7
.

1912

250

1.5

371
31,747
3 83.0
51.6

409
^ 2,401
< 98.8
56.8

10.3
37.5
19.1
10.2

41.0
277
76.2
17.9
7,714

43.9
404
77.3
22.0
18,463

7.0
45.8
1.5
23.0
139.3

7,530
5,165

20,296
14,313

169.5
177.1

20,248
8,730

37,266
14,347

84.0
64.4

1,814
67.7
31.6
944

1,853
76.7
36.9
12,238

58.0
52.4
65.4
20.5
4.4

66.1
36.3
58.3
19.1
5.5

14.0
-30.6
—10.8
-7.1
25.3

550
39.9
39.8

688
51.1
58.1

25.1
28.1
46.0

1, 778
1909

Power used in manufactures, prime movers (millions of horsepower)10..
Improved acres of farm land (millions) u

18.7
478.5
1914

Rural public roads:18
Miles of surfaced roads (thousands).
Miles of earth roads (thousands)

10-year
per cent
increase

247

1914
Electrolytic copper (millions of pounds)8 .

1922

257
2,188

*

2.2
13.4
17.0
1,196.4

1919
2,780

9 56.9

1919
29.5
503.1

58.0
5.1

1921
388
2,554

1 72.4
3
1 23.9
3

i Statistical abstract, unless otherwise noted.
3 Switching and terminal roads omitted.
« Railroads of Classes I, II, and III.
4 Railroads of Class I.
«Exclusive of railroad company wire, 314,329 and 285,002 miles, respectively.
« Geological Survey, Coal in 1922, p. 485.
7 Compiled from Iron and Steel Directory 1908, 1916, and 1920, taking 1912 as mean of 1908 and 1916.
8 Engineering and Mining Journal.
»Assuming no increase 1912 to 1914 or 1919 to 1922.
10 Census of Manufactures, 1920.
11 Census of Agriculture, 1920.
12 Bureau of Public Roads.
m For 10 years at 7-year rate.

It will be noted from cursory examination of the table that many
of the figures showing the largest rates for increase are for items
comparatively unimportant in 1912, and in some cases not very
important in 1922. This is true, for example, of the number of
electric locomotives of electric railways, which increased 45 per cent.
On the other hand, the increase in the number of motor-vehicle
registrations h j practically 1,200 per cent is not due to the smallness
of the business in 1912, in which year already almost 1,000,000 motor




54

NATIONAL W E A L T H AND INCOME

cars were in use. There was an increase in the facilities offered by
the railroads in excess of the increase of population so far as relates
to transportation of freight. The tractive power of locomotives
increased 37 per cent and the capacity of freight cars 19 per cent,
while the number of passenger cars increased only 10 per cent. It
is possible to explain this as due to a less demand for passenger service because of the use of motor vehicles. It is doubtful whether any
Particular change in the capacity of steam-railroad passenger cars
as occurred, such as might affect the significance of the computed
per cent increase.
As regards the number of passenger cars reported for electric
railways, for which the increase was only 1 p e r cent, a considerable
qualification of this result with regard to a change in the size of
passenger cars is probably necessary.19 If the condition as regards
increased capacity of cars that holds for New York City holds for
the country generally, then the facilities for such service offered by the
street railways increased 10 per cent by reason of the increase in the
capacity of cars, in addition to the 1 per cent increase due to an
increase in the number of cars. It is doubtless true, however, that
the street railway industry is in a comparatively static condition,
and not developing as rapidly as population. The competition of
other means of transportation, specifically the motor vehicle, of
course, is a large factor in this result. The mileage of improved
public roads has evidently increased at a much greater rate than
population. This development has been stimulated by the rapidly
increasing use of automobiles.
The increase in the tonnage of vessels was obviously due largely
to the needs of the war and represents, to a considerable extent,
wealth that will have to be written off from the national assets
sooner or later.
Electric light and power stations are evidently in a highly dynamic
condition as regards their development. The conveniences of electric
light and power in the household are i n c r e a s i n g l y used, but much of
the development of the industry may be attributed to the large
extent to which electric power has displaced other forms of power m
manufactures, together with a large increase in the quantity of power
so used.
The rate of increase in the number of telephones and the miles of
telephone wire is much greater than in population. Telegraph companies are comparatively static as regards their development.
Manufacturing capacity for textiles, as indicated by the increase
in the number of cotton spindles, developed at a rate slightly in
excess of the increase in population. The 58 per cent increase in the
horsepower of prime movers used in manufactures represents not
merely increase in manufacturing industry but the displacement of
hand processes by those using mechanical power and probably, also,
the rapid development of certain lines of manufacture (certain appliM For New York City the change in the capacity of street-railway passenger cars can be definitely deter *
mined. As to the importance of this element in the total it is worth noting that in 1922 the street-railway
companies in New York City alone possessed 13,467 cars, or about 18 per cent of the total shown for the
United States as a whole. For this group of street-railway cars the average capacity increased from 45
seats per car in 1912 to 49 seats in 1922. Data for car-seat-miles of street-railway passefager cars compared
with car-miles show slightly largerfiguresof capacity in both years as a result of'the tendency to use more
intensively and more continuously the cars of larger capacity. On this basis the increase in the weighted
average capacity of cars active is from 45 to 52, or 11 per centf. Thede dafearefrtmr-the1S22 annual report?
of the Transit Commission of the State of New York, pp. 215 and 219.




55 NATIONAL WEALTH AND INCOME

cations of chemistry in particular) requiring an especially large use
of power.
Bituminous-coal producing capacity increased 25 per cent and that
of electrolytic copper 57 per cent, that of pig iron 28 per cent, that
of steel ingots and castings 48 per cent.
In three out of five classes of farm animals covered by the table
there was a decrease. Tha number of mules increased in 10 years
as well as that of neat eattle. How far this result needs to be qualified with reference to changes in the weight of domestic animals in
10 years has not been computed. It should be remembered, also,
that comparisons of individual years for farm animals show changes
that are largely the result of year-to-year fluctuations rather than of
significant general trends. Improved farm lands increased only 5
per cent, but there may have been a greater increase in capital used
per acre.
It is impossible to compute a general index of the increase in
wealth for the 10 years covered by the census figures from such
physical statistics as those presented above. It is possible, however,
to infer that the increase in the quantity of wealth is much exaggerated by the mere dollar figures. On the other hand, this increase as
modified by taking account of changes in the value of the dollar may
possibly understate the real increase due to imperfections in the
index, when used for this purpose. In a general way the indications
of these statistics of increase in quantities of particular forms of
wealth suggest the possibility of a considerably larger rate than that
computed by the use of price indexes.
CONCLUSION.—Consideration of the various data throwing light
upon the accuracy and significance of the 1922 estimates as compared
with those of 1912 shows the limited meaning of the dollar unit in
this application. In terms of the quantity of goods yielding economic satisfactions, the people of the United States did not make
any very remarkable gain as between 1912 and 1922, but wealth
increased, apparently, at a somewhat greater rate than the rate of
increase of population. Doubtless the increase would have been still
reater but for the great waste in wealth caused by the war, but time
as not permitted an estimate of this waste.20

G

80 On the other side of the account are certain property rights resulting from investments and loans
abroad which were doubtless a considerable asset in 1922, whereas they were of little importance in 1912.
They are not considered above because they are property rather than wealth items and because whatever
existing wealth is back of them is located in foreign countries. A recent estimate by T. R. Goldsmith,
of the Bureau of Foreign and Domestic Commerce (Commerce Reports, July 20, 1925), shows a total
(exclusive of amounts owed the United States Government by foreign governments) of $9,500,000,000.

103288—S. Doc. 126, 6 9 - 1




6

Chapter

III

DISTRIBUTION OF WEALTH AMONG INDIVIDUALS
Section 1. Methods of estimate and source of data.

The ultimate interest in a study of wealth lies in its relative distribution among the human beings who create and utilize it. The actual
degree of* the differences in the material possessions of different individuals has, no doubt, been a matter of speculative concern throughout the whole period of history, but the collection of accurate data on
these differences has generally been impeded by the expense, as well
as by the reluctance of many persons to disclose their personal affairs.
It is generally through taxation or the transfer of property and the
right of a taxing or transferring authority to receive information or
to appraise for tax purposes that approximate information of the
wealth of individuals becomes a matter of available record.
M e t h o d s o f Estimate.—From income-tax returns, for example,
it is possible to estimate the relative distribution of wealth through
computing the approximate capital or principal on which each taxed
income was earned. The value of this method is limited by the fact
that many kinds of individual wealth are either nonincome producing
or produce untaxed income not required to be reported. Also a large
proportion of the income reported is from personal service and does
not represent any sort of return on monetary investment. Another
and more direct method of estimate is from property tax returns, but
these involve bases of appraisal and limits of exemption which vary
so widely in different tax jurisdictions as to make cbmparable data
difficult to obtain.
While both of the above-mentioned methods (capitalizing income
and analyzing property tax returns) have been used for estimating
the distribution of wealth,1 a third and more often employed method
has been the compilation of the values of estates of deceased persons
as recorded in county probate courts by administrators or executors.
These are public records. The theory of this method, which is the
Ine employed by the commission in the present study, is that the
probate records, covering the wealth of all classes and conditions of
decedents, constitute an effective sample or cross-section of the
distribution of wealth. Probate records not only cover all classes
of decedents having estates, but also afford perhaps the only complete official statement of the total value of each estate. In both
scope and accessibility, therefore, these records seem to offer the
best available criterion of the personal distribution of wealth. In
the use of this method, however, it is fair to point out that the total
* Property tax returns were utilized by the Massachusetts Labor Bureau in 1873 for a classification of
the property owned by about half the population of the State. A similar inquiry was made in Michigan
in the eighties of the last century. Probate records in New York State were utilized by Charles B. Spahr
In 1892, and the Massachusetts Labor Bureau in 1895 made an e?chau§tiye study of probate records in that
State for three different periods. This latter method was employed m England by Porter m his " Progress
of the Nation" as early as 1838, p. 57.

56




57 NATIONAL WEALTH AND INCOME

number of individuals in the United States is so great and the variances in their economic conditions are so wide that to secure data
on a sufficient number and variety of probated estates to provide
a completely satisfactory sample of distribution at this time was a,
task beyond the facilities at the commission's immediate command.
It is believed, however, that in the present study the commission
h p assembled a greater and more carefully selected number of individual probate records than have heretofore been used for this
purpose, and that it is a sufficiently good sample to give an approximately correct picture of the facts.
SOURCE OF DATA.—For the present study agents of the commission
secured data for a total of 43,512 estates from county probate court
records in Massachusetts, New Hampshire, Marvland, District of
Columbia, North Carolina, Georgia, Texas, Ofdahoma, Kansas,
Idaho, Iowa, Wisconsin, and North Dakota.2 The counties visited
were selected with a view not only to their geographical distribution
but also in such a way as to be fairly representative of three general
population types, viz, rural, town, and city. In some States work
was discontinued because it was found that the records were comparatively incomplete or so arranged as to make the work of compilation unduly expensive. For each county taken a report on
every estate probated in the 12-year period 1912-1923, inclusive,
was made. In several instances records disclosed only the decedent's
gross estate without deduction of outstanding obligations against
the estate, and it was not possible to arrive at a figure for the net
or actual estate. These instances result in some exaggeration of
the size of estates shown but do not seriously alter the proportionate
distributions shown. In other instances it was possible to secure
only the total estate without division as between realty and various
kinds of personalty. Consequently, the tabulations of total estates
in this chapter include a slightly larger number of estates than do
those of the different kinds of property held. In some of the counties
visited no value at all was recorded for realty, with the result that
no figure for the total estate could be secured. In these cases the
county was omitted.
In these statistics of probated estates the wealth is distinguished
as respects realty and personalty in the legal sense. Personalty
includes both tangible movables and intangible property such as
stocks, bonds, mortgages, notes, etc. This intangible personalty is
not treated as an item of wealth in the census estimates of the national total, nor in the general estimates of this report, because its
value depends almost entirely upon tangible wealth already included
in the estimates. The chief exceptions are foreign securities which
have become important only in the last few years.
In addition to the data on estates in general, special and detailed
information on all reported estates of $1,000,000 and over was secured
for a 6-year period, 1918-1923, inclusive, from probate records
Embracing the cities of New York, Philadelphia, and Chicago. This
information has been incorporated into a special study of " large
fortunes." The information secured was supplemented with data
obtained by the estate tax division of the Bureau of Internal Revenue*
* The counties included are as follows: City—Chatham, Ga.; Shawnee, Kans.; Oklahoma, Okla.; Bristol, Mass.; District of Columbia. Town—Merrimack, N. H.; Bonnerville, Idaho; Burleigh, Ward, N.
Dak.; Pitt, Northampton, Wake, N. C.; Travis, Johnson, Denton,Tex. County—Cecil, Md.; Randall,
Tex.; Iowa, Green, Price, Wis.; Bingham, Idaho; Carroll, Iowa; Stark, Williams, N. Dak.




NatiOnalw e a l t h and income

58

Section 2. Distribution of total estates.

The 43,512 estates for which data were secured embraced all
those probated for the period 1912-1923, inclusive, in 24 counties of
13 States and Represented a combined value of $§71,322,676; o r a
little over one-fifth of 1 per cent of the total wealth of the Uhited
States in 1922, as estimated by the Census Bureau.8
DISTRIBUTION BY S I Z E GROUPS.—Although the total number of
estates probated in the 24 counties wa$ 43,512, the total number
of persons dying in the same counties during the period covered was
about 259,908.3 Of these, 184,9583 were 21 years of age or over and
this number is used as a basis for estimating unprobated estates.
The fact that the estates of only 43,512 were probated indicates that
the remaining 141,446 died, leaving estates so small th&t they wefe
not probated. To these latter, for the purpose of arriving at proportions of distribution, the average value of estates in the lowest
size group (under $500) tabulated was assigned. This average was
$258 per estate.
The number and amount of the reported estates in each of a selected
series of size groups, together with the percentage of estates in each
group both to the total estates probated and to the estimated total
both probated and unprobated, are shown as follows:
TABLE 10.—Distribution of wealth in United States as indicated by estates of 1+8,5
decedents in selected counties
{1912-1928)

Size group

Number
of estates

Value Of

Average
value

Per cent of,
total estates
Number

Not probated i

i 141,446

$36,493,068

1

$258

6,099
4,824
8,766
7,572
6,446
5,518
2,231
1,105
651
179
76
44

1,574,598
3,388,144
14,196,279
26,933,713
45,160,804
85,233,637
77,930,090
76,040,228
97,599,624
60, ,325,, 705
52,026,811
130,913,033

Total probated.

43,512

671,322,676

184,958

707,815,744

3,827

76.5

5.2

3.3

15,428

Total all estates.

Value

Under $500
$500 to $1,000
$1,000 to $2,500
$2,500 to $5,000
$5,900 td> $10,000

$10,boo to $25,000

$35,000 to $5Q,OoO
$50,000 to $100,000
$100,000 to $250,000.—
$250,000 to $500,000
$500,000 to $ls000,000$1/000,000 pfcd over-...

702
1,619
3,557
7,006
15,'446
34,930
68,815
149,922
337,015
684,563
t, 975,296

n Per cent of
total probated

>2.«

4.7
4/1

E

l.Z
.6

.4
.1

.5
2.0
3.8
6.4
12.0

11.0

10.7
13.8
8.5
7.4
18.5

dumber

14.0
1M
20.2
17.4
14.8
12.7
.5,1,
2.5
1.5
.4
.2
.1

100.0
100.0

Value

at

t; &

2.1

4. a
- 6. 7
12.7

III

ML«

•fei

ias

100.0

100.0

1 Estimated from census mortality tables.
2 Decedents who left no estate fpr probate were presumed to have had as much property as the average
orthe lowest group namely, $258 each.
* Less than one-teoth of 1 per cent.

The foregoing table shows that about 1 per cent of the estimated
number of decedents owned about' 59 per cent of the estimated wealth
and that more than 90 per cent was owned by about 13 per cent of this
number. Of course, tne number pf persons who enjoyed the use of
this wealth was larger than the number of decedents taken, as they
* Estim&tedfromcensus mortality reports.




59 NATIONAL WEALTH AND INCOME

probably supported on the average more than one dependent person.
The average value for all estates was $3,800, but more than 91 per
cent of the number had estates amounting to less than this average.
The greatest number of probated estates fell within the $1,000 to
$2,500 group, while the total value was greatest for probated estates
in the $1,000,000 and over group. About 65 per cent of the totaL
number of probated estates were included in the size groups from
$1,000 to $25,000.
Although the table suggests a wide variance in the wealth of
individuals and a rather high degree of concentration, there are
indications that this concentration was greater at the beginning
of the period than at the end. For comparative purposes the relative
distribution of the probated wealth examined for the year 1912 and
that for the year 1923 is shown as follows:
TABLE 11.—Relative distribution of wealth in 1912 and 1928, a$ indicated by probate
data 1

Under $500
$500 to $1,000
$1,000 to $2,500
$2,500 to $5,000
$6,000 to $10,000
$10,000 to $25,000
$25,000 to $50,000
$50,000 to $100,000
$100,000 to $250,000
$250,000 to $500,000
$500,000 to $1,000,000
$1,000,000 and over
Total

Number of
estates

Value of estates

Per cent of
total number

1912

Size group

1912

1923

1912

1923

1923

Per cent of
total value
1912

1923

469
360
599
486
370
316
140
54
42
12
4
2

462
406
817
731
643
m
242
136
62
27
9
2

$119,353
255,070
983,480
1,715,689
2,613,262
4,822,552
4,966,955
3,699,454
6,464,171
4,135,571
2, 521,647
8,165,326

$124,775
287,638
1,334,301
2,607,015
4,585,009
9,411,982
8,464,878
9,064,680
9,824,211
8,718,762
6,198,199
5,599,535

16.4
12.6
21.0
17.0
13.0
11.1
4.9
1.9
1.5
.4
.1
.1

11.1
9.7
19.6
17.6
15.5
15.0
5.8
3.3
1.5
.6
.2
.1

0.3
.6
2.4
4.2
6.5
11.9
12.3
9.2
16.0
10.2
6.2
20.2

0.2
.4
2. a
3.0
6.9
14.2
12.8
13.7
14.8
13.2
9.4
8.5

2,854

4,160

40,461,530

66,220,985

100.0

100.0

100.0

100.0

i This table is based altogether on records of probated estates and includes no estimate for decedents
whose estates were not probated.

This table indicates an apparent trend toward a somewhat wider
distribution. Jn 1912 about 29 per cent of all the probated estates
amounted to less than $1,000 each, while in 1923 only 20.8 per cent
were less than $1,000. Furthermore, in 1912 the estates of over
$1Q0,000 each amounted to, 52.6 per cent of the total value of all
estates probated, while in 1923 they amounted to only 45.9 per cent
of the total.
DISTRIBUTION IN VARIOUS TYPES OF COMMUNITIES.—The extent
or degree of concentration of wealth in different sections of the United
States varies legs with the geographical location of that section than
with the economic type or structure of the communities comprising
it. Based on conditions of population these communities are of three
general types: (1) The rural or agricultural community; (2) the
town or suourban, and (3) the large city. For the present study each
of the 20 counties for which probate data were secured is assigned t o
one of the three types, as follows:
(1) Counties with no town of over 5,000 population.
(2) Counties whose largest town has a population of from 5,000 to50,000.




NATIONAL .WEALTH AND INCOME

60

(3) Counties containing cities of more than 50,000 population.
Of the 24 counties covered 9 belonged to the first or rural type, 10
to the town type, and 5 to the city type. The five counties of the
last-named type were those embracing the cities of Savannah, Ga.,
Topeka, Kans., Washington, D. C., Oklahoma City, Okla., and Fall
River, Mass.
The number and value of the probated estates of each size group
are shown for each of the three types of counties, as follows:
TABLE 12.—Relative distribution of wealth in different types
indicated by probate data
{1912-1928)

Number of estates
Size group

Values of estates

I

a
1

I
I
O

Under $500
$500 to $1,000
$1,000 to $2,500
$2,500 to $5,000
$5,000 to $10,000
$10,000 to $25,000... .
$25,000 to $50,000., . .
$50,000 to $100,000
$100,000 to $250,000....
$250,000 to $500,000..:.
$500,000 to $1,000,000..
$1,000,000 arid over
Total

331
354
716
687
680
807
391
194
45
6
2

1,008
861
1,737
1,503
1,234
992
364
153
76
21
7
1

i

O

4,760
3,609
6,313
5,382
4,532
3,719
1,476
759
529
153
67
43

4,213 7,957 31,342

o

Thou- thousands sands
$91
$265
257
616
1,196
2,852
2,456
5,363
4,847
8,602
12,922 14,939
13,822 12,495
13,296 10,211
6,235 11,233
2,284
7,395
1,373 4,122
2,033
58,779

Per cent of total
number
.i?

6
Thousands
$1,219
2,515
10,148
19,115
31,711
57,372
51,613
52,533
79,699
51,080
46,533
128,880

of communities

i
o
O

7.9
8.4
17.0
16.3
16.1
19.2
9.3
4.6
1.1
.1

a
*
o

12.7
10.8
21.8
18.9
15.5
12.5
4.6
1.9
.9
.3
.1

£

as

Per cent of total
value

f

O

o

1
H

o

15.2
11.5
20.1
17.2
14.5
11.9
4.7
2.4
1.7
.5
.2
.1

0.2
.4
2.1
4.2
8.2
22.0
23.5
22.6
10.6
3.9
2.3

0.3
.8
3.6
6.7
10.7
18.6
15.6
12.7
14.0
912
5.2
2.6

0.2
.5
1.9
3.6
6.0
10.8
9.7
9.9
14.9
9.6
5.7
24.2

80,126 532,418 100.0 100.0 100.0 100.0 100.0 100.0

^Counties with no town of over 5,000 population.
> Counties whose largest town has a population of from 5,000 to 50,000.
» Counties with cities of over 50,000 population.
* Less than one-tenth of 1 per cent.

The average value of the estates probated in city districts was
$16,990, in town districts $10,0702 and in country districts $13,950.
The relatively greater wealth of individuals in the city districts is
also indicated by the fact that only 2.6 per cent of the value of
estates probated in city districts wte in estates of less than $2,500,
while estates of less than this amount represented 4.7 per cent of the
total value of town estates and 2.7 per cent of that of coiintry estate^.
The table indicates that not only the average estates but also the
concentration of probated wealth was greatest in cities. In the
city districts covered eight-tenths of 1 per cent of the probated
estates embraced 42.5 per cent of the total Value and 9.6 per cent
of the estates represented 77 per cent of the total Value. In the
town districts 1.3 per cent of the estates had only 31 per cent pf the
total value and about 8 per cent had 5913 per cent of the value. In
the country districts 1.2 per cent of the estate^ embraced 16.8 per cent
of the value and 15.1 per cent represented 62.9 per cent of the value.
Apparently the distribution of wealth was wider in towns than ih
city or country. The differences^ between citv and country were
more marked with respect to distribution of wealth among the
population than with respect to average amount.




61 NATIONAL WEALTH AND INCOME

Diagram 1 PERCENTAGE OF TOTAL NUMBER AND TOTAL
VALUE O F ESTATES FOR S P E C I F I E D S I Z E GROUPS IN
2 4 S E L E C T E D COUNTIES,1912 - 1 9 2 3 .




NATIONAL WEALTH AND INCOME

62

Section 3. Relative distribution of realty and personalty.
Of the 43,512 probates examined 41,788 reported real property
separately from personal property. The total value of these 41,788
estates was $645,019,000, of which $215,280,900, or only 33.4 per
cent, was in real estate directly owned. The total value of real
estate directly owned would be 33.4 per cent, therefore, of the
$311,000,000,000 of total individual property, as indicated by the
jprobate data. This would amount to about $104,000,000,000. Such
4 method of estimating the total realty is not permissible, however,
lj>eca|Use considerable portions of the realty are represented by propf0rtyl reported as in intangible personalty, e. g., stocks or bonds of
transportation and manufacturing corporations, etc., owning extensive
real estate or in real-estate mortgages. Hence the percentage of the
total estimated as realty is much too low, taken on the basis of
tangible wealth of the whole country. The relative distribution of
realty and personalty within each size grouf* for the probates examined was as follows:
TABLE 13.—Relative distribution of realty and personalty
data (1912—1928,
inclusive)
Size group
Under $500
$500t6 $1,000
$1,000 to $2,500.
$2,500 to $5,000.
$5,000 to $10.000..:
$10,00$ to $25,000
$25,000 to $50,000.
$50,00® to $100,000.
$100,000 to $260,000
$250,000 to $500,000
$500,000 to $1,000,000
$1,000,000 and over
Total

Number
of estates Total value
c
$1,540,259
5,963
3,271,735
4,655
13,669,659
8,428
7,286 . 25,946,825
6,140 ; 43,154,163
81,323,297
5,247
73, 774,697
2,110
72,227,823
1,046
93,294,206
625
57,827,548
172
5a 108,760
73
43 128,880,100
41,788 ( 645,019,072

as indicated by probate

Value of
realty
$269**351
863^366
5,433> 175
12,920,825
20,721,407
36,395^437
31,864,916
28,26$ 023
28, 654t 575
16,477,797
9,008^650
•24,410^ 378
215,281,900

Per cent
Valug of per- of realty
to total
sonalty
estate
$1,270,908
2,408,369
8,236,484
13,026,000
22,432,756
44,927,880
41,909,781
43,965,800
64,639,631
41,340,751
41,100,110
104,460,722
429,737,172

17.4

26. a

39.7
49.8
48.0
44.7
43.2
39.1
30.7
28.5
18.0
18.9
33.4

The table indicates a greater relative direct holding of real estate
by the groups of moderate wealth than by those of great wealth or
by thosie of little or no wealth. In estates ranging in size from
$2,500 to $10,000 the average distribution of property between
realty and personalty was practically even.
For all other estates
the average amoutit of realty was considerably less than the personalty. If the fourth size group ($2,500 to $5,000) be taken as a
center, it will be noted that the proportion of realty to total estate
decreases with each succeeding smaller or larger size group, with the
exception of the very largest size group, whose proportion is fractionally greater than that of the next largest. The fact that the proportionate realty holdings of the wealthier groups are small does not
necessarily mean that these groups control a relatively lesser share
of the total realty because, as already pointed out, their holdings
of stocks and bonds, which are listed as personalty, include the
issues of many corporations owning a great deal of realty, while
land mortages must also be considered.
The -table indicates, also, that in spite of their proportionately
smaller direct holdings of realty, the estates of $10,000 and over,
constituting about 22 per cent of the total number, embraced 80
per cent of the total realty reported.




AMOUNT OF A L L PROBATED ESTATES IN 2 4 SELECTED COUNTIES
O F 13 STATES,BY SIZE GROUPS,DURING TWELVE YEARS, 1 9 1 2 - 1 9 2 3 .

Diagram 2




fi
o
a*

s

6
H
•

%
M
«
Q
O

K

H

O*
00

64

NATIONAL W E A L T H AND INCOME
RELATIVE

REALTY

IN

VARIOUS

TYPES

OF

COMMUNITIES.—

Analysis of the probates examined for each type of community (city,
town, and country) indicates that although realty directly held
represented only 33.4 per cent of the average total estate in all
districts it represented 50.6 per cent of the total in country districts.
The relative realty and personalty reported for each type of community is shown as follows:
TABLE 1 4 . — R e l a t i v e distribution

of realty and personalty

in different

munities as indicated by probate data (1912-1928,

Number
ofestates

of

com-

Per cent
of realty
to total
estate

-ii*

All estates

Value of
realty

Value of
personalty

$532,417,751
54,739,262
57,862,059

$163,157,997
22,850,065
29,273,838

$369,259,754
31,889,197
28,588,221

30.6
41.0
50.6

41,788

.

Value of
estates

31,342
6,346
4,100

Type of community

City
Towa
Country

types

inclusive)

645,019,072

215,281,900

429,737,172

33.4

In the country districts the realty directly held slightly exceeded
the personalty, while in city and town districts the opposite was the
case. The sharp distinction between the relative ownership of realty
in town and city districts and in country districts suggests the
greater stability and continuity of existence in rural communities
compared with that ia the city or town.
Section 4. Distribution of personalty.

More than one-third of the total personalty for which detail could
be secured consisted of corporate stocks. Of the 43,512 probates
examined 18,771 reported separately the several principal forms of
personalty, i. e., stocks, bonas, real-estate notes, other notes, cash,
and miscellaneous items. The total personalty so reported amounted
to $282,795,165, of which corporate stocks represented 35.4 per cent;
bonds, 14.7 per cent; real-estate notes, 10.6 per cent; other notes,
4.7 per cent; cash, 14.7 per cent; and miscellaneous items, 19.9 per
cent. The realty of corporations is doubtless greater than the amount
of corporation bonds,! while real-estate notes represent, of course,
indirect interest in realty. The relative distribution of each of these
items of personalty is shown :ais follows:
TABLE 15.—Relative distribution of personal property as indicated by probate data
(1918-1928)
Percentage distribution of personalty
Size group

Number
Total
of estates 'persdi&lty.

l^ief
8*3912,867
2,770
2,612
1,108
600
402
116
51'
30

V
•i
$662,141
1,220,883
4,137,061
6,504,824
11,434,556
23,872,462
23,798,567
2f7,088,629
43; 218,841
-217,567,200
28,348,435
85,001,366

18,771

282,795,165

> ''

Under $500.
$500 to $1,000
$1,000 to $2,500
$2,500 to $5*000
...
$5,000 to $10,000->
$10,000 to $25,000J....
$25,000ito $50,000$50,000fco$100,000
$100^000 to $250,W-.:
$250^090-to $600,000...
$500,000 to $1,000,000.
$1,000,000 and over
Total




Stock*

BoBds

2.3
3.5
5.3
9.7
12.3
22.8

m
46.449.2
35.1
35.4

17.7
19:7
21.7
13.6

1.1
2.7
4.5
8.1
12.5
14.8
14.1
16.6
12.9
11.3
6.5
7.2

14.7

10.6

2.2
3.1
4.3
6.1
8.5
9.8
13.0
I

Realt
efctatt Other
«ote$ ( i n o t e *

Cash

' 2.2
71.3
3.3
71.2
4.6
63.6
5.2
54.5
5.2 ; 45.6
6.6 : 34.1
4.S ! 21.5
: 4.3 1 16.7
4.3
12.4
5.5
7.6
5.2
2.6
2.5
5.1
4.7

14.7

Miscellaneous Total
20.9
1&2
1?. 7
16:4
15.9
12.9
14.1
12.4
10.8
9.5
14.8
36.5

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

19.9

100.0

65 N A T I O N A L W E A L T H A N D I N C O M E

The table indicates that for each size group, except that embracing
estates of $1,000,000 and over, the proportion of total personaltyrepresented by stocks and bonds varied directly with the average
size of the estate, the larger proportion of stocks and bonds appearing
for the larger size groups. Stocks and bonds, for example, averaged
only a little over 2 per cent each of total personalty in estates of
less than $500, but these percentages increased directly with each next
larger size group until they were 49.2 per cent for stocks and 21.7
per cent for bonds in the group embracing estates of from $500,000
to $1,000,000. By contrast, the proportion of total personalty represented by cash varied inversely with the size of estates. It was
largest for the smallest size group, representing 71.3 per cent of total
personalty, and smallest for the largest size group, representing
only 2.5 per cent.
DISTRIBUTION OF I T E M S OF PERSONALTY IN D I F F E R E N T T Y P E S OF

COMMUNITIES.—Apparently the wealth of those who live in rural
districts is usually invested differently from that of residents of city
or town districts. As already pointed out (see page 64), the average
realty slightly exceeded the personalty in country districts for the
estates examined by the Commission, while in tne city and town
districts the opposite was true, the personalty considerably exceeding
the realty. Analysis of the items of personalty reported in probates
suggests a similar divergence between country districts and other
districts. The relative distribution of items of personalty in each
type of community, as indicated by the probates examined, was as
follows:
TABLE 16.—Relative distribution of personal property in different types of
ties as indicated by probate data
(1912-1928)

communi-

Percentage of distribution of personalty
Number
Type of community of estates

City
Town
Country
Total

Total
personalty

Stock

Bonds

Real
estate
notes

Other
notes

13,053 $248,305,780
4,797
29,041,044
921
5,448,341

35.4
36.8
28.6

15.4
7.7
18.6

11.4
4.1
9.5

4.4
7.6
2.9

12.4
32.9
21.1

21.0
10.9
19.3

100.0
100.0
100.0

18,771

35.4

14.7

10.6

4.7

14.7

19.9

100.0

282,795,165

Cash

Miscellaneous

Total

As the table indicates, the percentages of total personalty represented by bonds averaged less for the estates in town and city districts than for those in country districts, amounting to only 7.7 per
cent for town districts and 15.4 for city districts, as compared with
18.6 per cent in country districts. On the other hand, the proportion of total personalty represented by corporate stocks, which was
greater than that of any other item in the case of all three types of
communities, was somewhat smaller for the country districts than
for the to3®Ti and city ones. Real-estate notes represented 11.4 per
cent of thetdtal personalty reported for cities, 9.5 per cent of the
total for country districts, and only 4.1 per cent of the total for
towns. Conversely, the proportion of total personalty represented
by cash was much larger ior the estates in town districts, averaging
32.9 per cent, as against 12.4 per cent for cities and 21.1 per cent for
country districts.




66

NATIONAL WEALTH AND INCOME

Diagram 3 PERCENTAGES OF REALTY AND SPECIFIED KINDS OF
PERSONALTY FOR 43,512 PROBATED ESTATES IN 24 COUNTIES,
CLASSIFIED AS CITY,TOWN AND COUNTRY COUNTIES,
iaie-1823.




/Vofe. C/Yy Ccxsnf/es=those w/ffr <y ci/y
of over

-5q,ooQpopu/&ft'on

Tow/? Counf/es
&.000 and/ess

^ffjose w/ffr <y town of over

fhan

soJooopopvfofaon

67

N A T I O N A L W E A L T H AND

INCOME

Section 5. Estates of $1,000,000 and over.
In addition to the data on estates in general, as set forth in the
preceding sections, a special analysis was made of all estates of
$1,000,000 and over which were probated in New York City; Philadelphia, and Chicago during the six-year period, 1918 to 1923,
inclusive. A total of 540 estates in this category Were examined,
of which 401 were in New York, 59 in Philadelphia, and 80 in Chicago.
The total probated value of the 540 estates was $2,084,543,474.
The estates, tabulated on a basis of their relative sizes, were as
follows :
TABLE 17.—Estates of $1,000,000
and Chicago, 1918-1928,

Size group

Under $2,500,000
$2,500,000 to $5,000,000
$5,000,000 to $10,000,000
$10,000,000 to $25,000,000
$25,000,000 to $50,000,000
$50,000,000 to $100,000,000
$100,000,000 to $250,000,000
Total
Average...

and over probated in New York, Philadelphia,
inclusive, grouped on a basis of size
Per cent Per cent
Number
of es- Value of estates of total
of total
number
tates
value
347
119
42
23
4
4
1

$521,704,494
415,809,517
283,557,682
321, 744,677
143,527,405
295,615,260
102, 584,439

64.3
22.0
7.8
4.3
.7
.7
.2

25.0
20.0
13.6
15.4
6.9
14.2
4.9

540

2,084,543,474
3,860,266

100.0

100.0

Eighty-six per cent of the estates were less than $5,000,000 in
amount, and these estates represented 45 per cent of the total value
of all the estates of this category examined.
The total value of the 401 estates in New York, City was $1,655,470,376; tkat of the 59 in Philadelphia,,$136,589,551; and of the 80
in Chicago, $292,483,547. The average estate for New York was
$4,128,000, for Philadelphia, $2,315,000, and for Chicago, $3,656,000.
As indicated in Table 10 (see p. 58), estates of $1,000,000 and over
represented 1&<5 per cent of the total value of all estates for ,the
sample taken by the commission. In so far as the relative distribution of wealth indicated by the probate data is representative, the
total wealth in the hands of individuals possessing $1,000,000 pr more
would be 18.5 per cent of $311,000,000,000 or.about $58,000,000,Q00.
Since, the Federal estates tax became a law in 1916 all estates of
$50,000 or over have been reported to the Bureau of Internal Revenue
for taxation. From September 9, 1916, through the year 1923
there were 1,841 estates of $1,000,000 or over reported, with a total
value of 4.6 billions of dollars. Since the estates examined by the
commission in New York, Philadelphia, and Chicago for a somewhat
shorter period numbered 540 ana amounted in value to a little
over $2,000,000,000, it is apparent that a sufficiently large proportion of the total available material was secured to warrant the basing
of conclusions thereon. It was not possible to use the estate tax
returns exclusively for the present study because of the high exemption and because no analysis of these returns for relative realty
and personalty was made by the bureau prior to 1922.
R E L A T I V E R E A L T Y AND PEBSONALTY.—Of the $2,084,543,474 represented b y the 540 estates of $1,000,000 and over which were
examined by the commission, $299,339,496, or 14.4 per cent, represented the valuations assigned to realty. This compares with 33.4




n a t i o n a l . w e a l t h AND i n c o m e

68

per cent represented by realty in the case of estates in general.
(See Table 18.) The lower relative percentage of realty directly
held by the estates of $1,000,000 or over, as already pointed out,
does not necessarily mean a lower actual holding of realty, because a
great number of the stocks, bonds, and mortgages in these large
estates which,are listed as personalty represent either a direct or
indirect participation in realty ownership. The amounts of personalty and realty reported for the 540 estates, grouped on a basis of
size, were as follows:
TABLE 18.—Relative distribution of realty and personalty in 5^0 estates of
and over, 1918-1928,
grouped on a basis of size

Size group

Under $2,500,000
|2,500,000 to $5,000,000.
$5,000,000 to $10,000,000.
$10,000,000 to $25,000,000._
$25,000,000 to $50,000,000
$50,000,000 to $100,000,000
$100,000,000 to $250,000,000.

Number
of estates

Realty

Total value

$1,000,000

Personalty

Per cent
of realty
to total
estate

$521,704,494
415,809,517
283,557,682
321,744,677
143,527,405
295,615,260
102,584,439

$74,897,151
47,619, 576
38,943,517
76,775,078
8,054,681
49,512,943
2,936, 550

$446,807,343
368,189,941
244,614,165
244,969,599
134,872,724
246,102,317
99,647,889

14. 4r
11.5
13.7
23.9
6.0
16,7
2.9

540

Total

347
119
42
23
4
4
1

2,084,543,474

299,339,496

1,785,203,978

14.4

In general the proportion of realty directly held to total estates
was larger for the estates under $25,000,000. Of the 540 estates,|104,
or 20 per cent, included no realty at all.
Although the Federal estates tax returns were not classified separately for realty and personalty by the Bureau of Internal Revejiue
for the whole period 1916 to 1923, such separations were m^de for the
years 1922 and 1923. Of the 661 estates of $1,000,000 and over rereported to the bureau for these two years the total value was
$1,751,715,965 and the value of realty was $246,287,394, or 14.1 per
cent. This compares strikingly with the 14.4 per cent of realty to
total estate shown above for the 540 estates examined by the commission.
The personal property listed in the probates of these estates included both tangibles such as cash and other miscellaneous items and
intangibles such as stocks, bonds, and notes. The great bulk of the
personalty was in stocks and bonds as indicated in the following
analysis by size groups:
TABLE 19.—-R^elaMve distribution of personal property in 540 estates of
and over, 1918-1928,
grouped on a basis of size

Size grou£

$1,000,000 to $2,500^000-r
$2,500,000 fd $5,000,000
$5,000,000 to $10,000,000.
$10,000,000 to $25,000,000.
$25,000,000 to, $56,000,000
$50,000,000 to $100,000,000,
$100,060,000 to $250,000,000. - - Total




Number
of estates

Percentage distribution of personalty
Total
personalty

Total
Real Otf*er
Mis- per '
Stocks Bonds estate nftt&s Cash cella- c^njt
notes
neous

4
4
1

$446,807,343
368,189,941
244,614,165
244,969,599
134,872,724
246,102*317
99,647,' 889

52.4 24.6
6.1
56.6 25.4 4.3
58.1 19.8
2.9
50.4 28/4* 3.1
49.3 26.4 1L8
64,8
9.2 2.1
29.1 45.7
.1

540

t, 785,203,978

53.9

347
119
42

$1,000,000

123.8

2.7 3.9 10.3 100.0
5.1
6.2 100.0
2.4
3.2 13.8 100.0
2.2
3.0 13.8 100.0
1.3
8.6 ' 1.6 \ 7,3 100.0
5. J. 4.0 14.8 100.0
2.4 ioao
22.6
.1

4.4 ' 3.9

3.6

10.4

100.0

69 NATIONAL WEALTH AND INCOME

Of the total personalty listed in the 540 estates, 53.9 per cent was in
stocks and 23.8 per cent in bonds, leaving only 22.3 per cent for all
other items. This compares with an average of 35.4 per cent of
personalty in stocks and 14.7 per cent in bonds for estates in general
as shown in Table 16. (See p. 65). The item of cash, which Table 15
shows as representing 71.3 per cent of personalty for the smallest
estates of less than $500 and 14.7 per cent for estates in general, was
only 3.6 per cent of the personalty of the estates of $1,000,000 and
over.
The Federal estates tax returns for 1922 and 1923 show a total
personalty of $1,505,428,571 for 661 estates. Of this total, 51.9
per cent represented the value of stocks and 22.8 per cent the value
of bonds. This compares very closely with the 53.9 per cent of
stocks and 23.8 per cent of bonds in the personalty of the 540 estates
examined by the commission.4
<In this, as in other branches of this inquiry, the limitations of time restricted the study both
as to size of sample and as to the application of more elaborate methods of analysis. So far as the wide
fluctuation of the dollar value during this period is concerned it may be noted that the average wholesale price index for the period 1912-1923 is about the same as that for the year 1922.




CHAPTER I V

OWNERSHIP OF NATURAL RESOURCES
Section 1. Methods of valuing natural resources.
The value of the mineral and other natural resources of the United
States is not estimated by the Bureau of the Census in its 1922 report on "Wealth, public debt, and taxation,'' and the commission,
in the present inquiry, has not attempted to arrive at an estimate 01
its own (although it was possible to make broad estimates in the
case of a few specific resources).
The conditions under which a natural deposit or product assumes
or changes value are so variable and so problematic as to make almost any measurement of its value unsatisfactory. Factors dependent altogether upon the future and not capable of present determination enter into any attempt at valuation. In the case of
exhaustible resources the value tends to increase (up to a certain
point) as the quantity remaining decreases, presuming a continuous
demand. Changes in future demand, new mining methods or
methods of production, inventions, discoveries of additional quantities of the resource, increases in market price adequate to warrant
the utilization of reserves once commercially unavailable, possible
(and quite probable) inaccuracies in the estimates of the quantities—
all limit almost hopelessly the reliability of valuations placed on a
natural resource.
The corporations or individuals who own portions of these natural
resources are, of course, obliged to assign some value to them for
bookkeeping and tax purposes. The widely varying methods of
valuation employed are eloquent of the unsatisfactory nature of any
valuation at all. Some companies base their estimates on the original
cost of the properties without regard to subsequent depletion or
changes in demand. Others assign what they call a "fair market
value" based on some recent sale of neighboring or similar properties; a great many companies use the values assigned by tax assessors;
others base their valuations on the selling price of the product or on
the profit earned thereon per unit or on the mining royalties paid.
All of these methods are open to. serious limitations. As stated, the
"original cost" method makes no allowance for the increment of
value attaching to the reserves as the result of ever-increasing demand
and scarcity. Assessed valuation varies so widely from section to
section and often differs greatly from sales value, that it does not
serve either as a uniform or an adequate basis. Sales prices, assuming a willing seller and a willing buyer, where obtainable are a fair
valuation for the properties sold but so small a proportion of the total
lands containing the resource changes hands within a reasonably
short period of time, and the content even of contiguous properties
70




71 NATIONAL W E A L T H AND INCOME
varies so widely that it is dangerous to apply sales prices to properties not covered by the specific sales. Royalty values are, themselves,
necessarily based on some other of the various methods of valuation.
Capitalization of earnings from operating properties plays an important part in market price when properties are sold, and has been
advocated and used by certain investigators in making their estimates. But earnings vary widely from year to year, hence, when
used as a basis, the average over a considerable period of time should
be used to eliminate, so far as possible, the influence of temporarily
high or low earnings. For undeveloped properties, the earning capacity of which is unknown, some other basis must, of course, be used.
For the purposes of a study of the control or ownership of various
natural resources of the United States, the commission addressed
schedules to all of the principal listed water-power, coal, iron-ore,
copper, timber, and petroleum companies. These schedules called
for data on the value and quantity of the particular resource owned
or controlled by the company. In the case of water power, replies
were received from companies controlling over 80 per cent of the
estimated total developed horsepower of the country, while in the
case of bituminous coal information was received from companies
controlling about 48 per cent of the total United States reserves
available for mining within 40 years. For anthracite coal the returns were meager, but were supplemented with fairly complete
data secured in 1923 by the United States Coal Commission. Returns were also very poor from copper companies, but satisfactorily
inclusive information was subsequently secured from a tabulation of
data on reserves reported to Weed's " Mines Handbook." In the
case of iron ore, timber, and petroleum, replies received were fragmentary and have been tabulated merely as a matter ol interest on
which no conclusions may be based.
Only a small proportion of the companies replying to the commission's schedule were able to assign a value to their reserves.
A sufficient number of valuations were reported, however, in the
case of each resource (except water power) to indicate an average
value per unit which it was possible to apply against the estimated
total quantity of the reserve tor a very broad estimate of total value.
For each resource covered, the data on the quantities of reserves
owned or controlled, as reported by the companies to the commission or to other agencies, indicate a distinct concentration of control in the hands of a few large companies. Six companies are
shown as controlling about a third of the total developed water
power; 8 companies as controlling over three-quarters of the anthracite coal reserves; 30 companies as controlling over a third of the
immediate bituminous-coal reserves; 2 companies as controlling well
over half of the iron-ore reserves; 4 companies controlling nearly half
of the copper reserves; and 30 companies controlling over 12 per cent
of the petroleum reserves.
In this connection, however, it is interesting to note that concentration of ownership in the hands of a few large corporations does
not necessarily mean concentration in a few individual hands. The
tendency in recent years toward a wider distribution of the ownership ot corporations through increases in number of stockholders is
discussed in Chapter VII. Tables 78 and 81 of the chapter show
that the average number of common stockholders per company for




72

NATIONAL WEALTH AND INCOME

mining and quarrying companies is 1,013 and that 42.9 per cent of
the stockholders own $500 worth or less each. For electric light
and power companies (which are the principal owners of developed
water power) the average number of common stockholders per
company is 1,362 and 38.2 per cent of the stockholders own $500
worth or less each.
Section 2. Water power.
The United States Geological Survey in 1924 estimated the potential water-power resources of the United States at 34,818,000 1 horsepower and the developed water-power capacity at 9,086,958 2 horsepower. Water power, unlike other natural resources, is continuously available and its potential future use is in nowise impaired by
present use. Its availability is, however, not constant but varies
with climatic conditions throughout the year, so that the horsepower
of a stream at one time may greatly exceed that at another time.
The estimated 34,818,000 potential horsepower represents power
available 90 per cent of the time. The survey estimates an additional
20,212,000 horsepower which is available 50 per cent of the time.
This makes a total of 55,030,000 available half of the time.
The 34,818,000 potential water horsepower available 90 per cent
of the time, if fully developed, would have been more than sufficient
to supply the 29,504,792 horsepower used by manufacturing plants
having products valued at $5,000, or more each in 1919.' Assuming
the same rate of increase in horsepower used for manufacturing in the
five years following 1919 that occurred between 1914 and 1919, the
manufacturing requirements in 1924 would amount to about 36,000,000 horsepower. The water power applied directly to manufacturing—that is, by water wheels which transmit motion directly without conversion into electricity—was only a small part of tlie total
water power used. In 1919 it amounted to only 1,765,263 horsepower, or about 6 per cent of the total power required by manufacturing plants and only 19 per cent of the total water power development of tne country. This 1,765,263 horsepower does not include
any hydroelectric power purchased for use in manufacturing. Water
power used thus directly in manufacturing is located principally in
the northeastern and eastern part of the country.4 This direct use
has been decreasing, being replaced by power derived from hydroelectric, carboelectric 5 or internal combustion power plants wherever
power from such sources is cheaper or more reliable. It should be
remembered also that the electric power developed by the use of
fuels is much greater than the hydroelectric power and that such
carboelectric power is not considered in this connection. Most of
the large hydroelectric plants are also equipped to generate electric
power with steam, with the result that their investments in these
respects are not readily separable. For this reason no attempt is
made in this discussion to estimate the value of these water-power
resources.
1 Horsepower available 24 hours per day during 90 per cent of year at 70 per cent efficiency in plant and
equipment.
. 2 This represents the total developed capacity of plants of 100 horsepower or more. Full utilization of
water-powerresourcesgenerally requires the installation of capacity much in excess of the potential capacity of streams, water storage in certain periods being relied upon to make up deficiencies in stream flow.
8 " Census of Manufactures, 1921," p. 11.
4 "Abstract of the Census of Manufactures, 1919."
pip. 460-470.
1 The term,carboelectricity is applied to electric power generated by the use of fuel as distinguished from
electricity piroduced by water pow^r.




73

NATIONAL WEALTH AND INCOME
GEOGRAPHICAL

DISTRIBUTION

OF P O T E N T I A L

WATER

POWER.—

In spite of the fact that the estimated potential water horsepower
of the country is apparently adequate to supply the total present
power demands for manufacturing, the geographical distribution of
this water-power capacity makes its use to this degree unlikely.
The New England, Middle Atlantic, and East North Central States
in which 70 per cent of the country's manufacturing is located have
water-power resources representing only a fraction of their power
needs for this manufacturing, while the Mountain and Pacific States,
with relatively small present requirements for manufacturing, have
nearly 70 per cent of the country's estimated water horsepower
capacity.
Another factor is that even in those sections most richly endowed
with potential water power, the development of many sites can be
accomplished only at a cost per unit of power produced which makes
their competition with power derived from fuels impossible at
present. It is to be expected that water power development will
continue wherever its product can profitably compete in cost and
reliability with power derived from other sources. In the East and
in other regions where coal is abundant, only the most available
water power, such as that at Niagara Falls, can be developed profitably to its fullest extent because of this competition. In the West,
where the bulk of the potential capacity is found, development is
foing on rapidly and will doubtless continue as fast as demand can
e developed to utilize the power produced, but much of the potential
water-power capacity must remain undeveloped for a long time for
want of a market. California may prove somewhat of an exception
for oil, which now generates the greater part of the power oi the
State, has possibly reached the peak of its production, and as oil
production decreases it may reasonably be expected that waterpower development will increase.
The geographical distribution of potential water power in the
United States, as reported by the United States Geological Survey
in 1924, is as follows:
TABLE 20.—Estimated potential water power resources of the United States in 1924

1

Available 90 per cent Available 50 per cent
of the time
of the time

Region 1

Horsepower Per cent Horsepower Per cent.
New England
Middle Atlantic
East North Central
West North Central
South Atlantic
East South Central
West South Central
Mountain
Pacific
Total United States

*

998,000
4,317,000
737,000
871,000
2,476,000
1,011,000
434,000
10,736,000
13,238,000

2.87
12.40
2.12
2.50
7.11
2.90
1.25
30.83
38.02

1,978,000
5,688,000
1,391,000
1,844,000
4,464,000
2,004,000
888,000
15,513,000
21,260,0Q0

3.60
10.35
2.53
3.35
8.11
3.64
1.61
28.19
38.63

34,818,000

100.00

55,030,000

100.00

United States Geological Survey.
* New England region embraces Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and
Connecticut. Middle Atlantic region embraces New York, New Jersey, and Pennsylvania. East
North Central embraces Ohio, Indiana, Illinois, Michigan, and Wisconsin. West North Central embraces
Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska and Kansas. South Atlantic embraces Delaware, Maryland, and District of Columbia, Virginia, West Virginia, North Carolina, South
Carolina, Georgia and Florida. East South Central, embraces Kentucky, Tennessee, Alabama, and
Mississippi. West South Central embraces Aifcansas, Louisiana, Oklahoma, and Texas. Mountain
embraces Montana, Idaho, Wyoming, Colorado, New Mexico, Arizona, Utah, and Nevada. Pacific
embraces Washington, Oregon, and California.
1




74

NATIONAL W E A L T H AND INCOME

As the table indicates, the Mountain and Pacific jStates, ,which
have comparatively small coal reserves and are located farthest
from the rich coal deposits of the country are most richly endowed
with potential water power. The Pacific States alone have nearly
40 per cent of the country's total, and the Mountain and Pacific
States combined more than 65 per cent. Of the great coal-producing
areas, only the Middle Atlantic region is richly endowed by nature
with water power. In this region the major part is along the Niagara
and the St. Lawrence Rivers, which together have water-power
possibilities it is claimed, equaled nowhere else in the world for their
quantity and absence of seasonal fluctuations in stream flow.
Among the individual States (see appendix. Table 5) Washington
ranks first in potential capacity, with 4.9 millions, California second
with 4.6 millions, New York third with 4 millions, Oregon fourth
with 3.6 millions, Arizona fifth with 2.75 millions, Montana sixth
with 2.55 millions, Idaho seventh with 2.1 millions, and Utah eighth
with 1.4 millions of 24-hour power available 90 per cent of the time.
The remaining States have water-power resources estimated at from
765,000 horsepower to 1,000 horsepower each.
GEOGRAPHICAL

DISTRIBUTION

OF D E V E L O P E D

WATER

POWER.—

The 9,086,958 developed water horsepower in the United States is
equal to about one-fourth of the total potential power available 90
per cent of the time and about one-sixth of the potential power
available 50 per cent of the time. The geographical distribution of
developed water power in plants of 100 horsepower and over, as
reported by the United States Geological Survey for 1924, together
with the percentages of total water power developed in each region,
are as follows:
TABLE 21.—Geographical distribution of water power developed and potential,
proporxion of poiential power developed, for specified regionst 1924 1

and

Developed water power

Potential water power

| Ratio to potential
Region 1

Horsepower
available
90 per cent
of the time

Horsepower
available
Avail50 per cent Horsepower able 90
of the time
per cent
of time

Available 50
per cent
of time

_!
i

New England
Middle Atlantic
East North Central..
West North Central.
South Atlantic
East South Central..
West South Central.
Mountain
Pacific
Total United States

998,000
1,978,000
4,317,000
5,688,000
737,000
1,391,000
871,000
1,844,000
2,470,000
4,464,000
1,011,000
2,004,000
434,000
888,000 1
10,736,000 15,513,000 |
13,238,000 21,260,000 !
34,818,000

55,030,000 i 9,086,958 :
1

i United States Geological Survey.

1,387,364 '
1,731,881 !
829,854 i
459,736 :
1,295,978 !
345,584 j
16,727 |
880,783 ;
2,139,051 !

1.390 ;
. 401 ;
1.126 j
. 528 I
.523 !
.342
.039 !
.082 j
.162 ;
.261

!

0.701
.304
.597
.249
.290
.172
.019
.057
.101
.165

i

» For'States in each region, see p. 73.

Two of the regions, the New England and the East North Central,
have developed horsepower capacity in excess of the estimated
otential power available 24 hours a day for 90 per cent of the time.
Tew England, with developments equal to 139 per cent of its poten-

S




75

NATIONAL W E A L T H AND INCOME

tial power available 90 per cent of the time and 70.1 per cent of its
potential power available 50 per cent of the time, is utilizing its water
power more completely than any other division. The water-power
installations of New England are predominately for industrial plants
which use power heavily only during the daytime and build up by
water storage during the night to counterbalance any excess use
over and above normal stream flow during the day. The same is
true of the East North Central region, where the heavy power requirements of the peak-load periods are counterbalanced by off-peak
storage, or by use of water power as secondary to steam-generated
power. In all other regions the capacity developed is much less
than the potential capacity, ranging from about 4 per cent to about
53 per cent of the 24-hour power available 90 per cent of the time.
Among individual States (see appendix, Table 5), New Hampshire,
Vermont, Massachusetts, Rhode Island, Connecticut, Michigan,
Wisconsin, Minnesota, and Iowa all have installed horsepower in
excess of the estimated total power available 24 hours a day for 90
per cent of the time, and Massachusetts, Connecticut, and Michigan
have installed horsepower in excess of the estimated 24-hour capacity
available 50 per cent of the time. Of other important industrial
States, New York, Pennsylvania, Ohio, Indiana, and Illinois have
installed horsepower amounting to from 38.5 to 73 per cent of the
estimated 24-hour power available 90 per cent of the time, and
from 17.9 per cent to 31.1 per cent of that estimated to be available
50 per cent of the time. Many States, some of which have large
potential capacities, show little or no development up to the present
time, due either to absence of markets or to remoteness of power sites
from markets.
UTILIZATION OF W A T E R POWER.—About 81 per cent of the developed water power of the country is devoted to public utility and
municipal uses, and the rest is chiefly used for private manufacturing
plants. The division of the total developed capacity between public
utilities and all other uses in each region in 1924 was reported by the
United States Geological Survey as follows:
TABLE 22.—Developed water-power capacity devoted to public-utility
all other in 1924 1
Public utility and
municipal

uses and to

All other

Region *
Horsepower Per cent Horsepower Per cent
of total
of total
New England
Middle Atlantic
East North Central
West North Central
South Atlantic
East South Central
West South Central,
Mountain
Pacific

644,831
1,408,173
625,826
376,804
1,045,728
323,816
13, $15
860,937
2,0*9,607
7,848,197

^v..'

Total United States
i United States Geological Survey.




3

46.5
81.3 '
75.4
82.0
80.7
93.7
74.8
97.7
95.8
80.9

742,533
323,708
204,028
82,872
250,250
21,768
4,212
10,846
$9,544;

53.5
18.7
24.6
18.0
19.3
6.3
25.2
2.3
4.2

1,788,761

19.1

For States embraced in each region §ed p. 73.

76

NATIONAL W E A L T H AND INCOME

The New England region is the only one with a developed waterpower capacity in industrial plants exceeding that developed for
public utility purposes. This is undoubtedly due in part to the abundance of water-power sites, none of which is of very large capacity,
and to the absence of fuel supplies in the immediate vicinity which early
fostered the appropriation and development of the many sites for
manufacturing purposes in which the power was belted or geared
direct to the machinery to be run. It is perhaps also due in part
to the wider use of electricity for home lighting in other sections of
the country.
In regions of the country where streams are larger and water-power
sites, though fewer in number, have greater potential capacities, the
power is often remote from industrial centers, and development has
awaited the improvement of electrical generating and transmission
systems to make it possible to generate in large units and transmit
power over long distances. Consequently development in such regions t
particularly in the Mountain and Pacific States, has been conducted
by public utility companies either as a supplement to, or as a substitute for, expensive fuel-generated electric power.
WORLD POSITION OF THE UNITED STATES.—Differences in methods
of computing, and in the completeness and accuracy of estimates
make an exact comparison of the water-power resources of various
countries impossible. The potential and developed water power of
the world and of the 13 principal water-power using countries of the
world are computed by the United States Geological Survey, as
follows:
TABLE 2 3 . — E s t i m a t e d water-power

resources

of the world,

Potential capacity

192S

Developed capacity

Country
Horsepower

Horsepower

35,000,000
18,250,000
5,400,000
9,500,000
3,800,000
4,500,000
2,500,000
8,000,000
2,000,000
4,000,000
25,000,000
1,660,000
850,000
332,540,000
Total. _

Per cent

Per cent

7.7
4.0
1.2
2.1
.8
1.0
.6
1.8
.4
.9
5.5
.4
.2
73.4

»10,000,000
3,227,000
2,100,000
1,820,000
1,800,000
1,694,000
1,490,000
1,416,000
1,100,000
1,000,000
450,000
439,000
250,000
2,214,000

34.5
11.1
7.2
6.3.
6.2
5.8
5.1
4.9
3.8
3.5
1.6
1.5

453,000,000

100.0

29,000,000

100. O

7. &

i United States Geological Survey, "Press Memorandum 687," Mar. 31,1925.
8 Includes 9,037,000 known horsepower in plants of 100 horsepower capacity or more and an estimate of
900,000 horsepower in plants of less than 100 horsepower capacity. This accounts for the difference between
the abovefigureand that shown in Table 22.

The United States lea$s all other countries both in potential aijd
in developed water power, having 7.7 per cent of the world's potential
capacity and 34.5 per cent of its total developed horsepower. Brazil
ranks second in potential capacity, but is far down the line in development; Canada is third in potential capacity and secbtid in developed horsepower; Norway is fourth in potential capacity and fourth
in developed horsepower; and France, fifth in capacity, is third in




77 NATIONAL W E A L T H AND INCOME
developed power. The 13 countries listed have but 26.6 per cent of
the world's potential water power, but 92.4 per cent of the world's
developed capacity. All other countries, with 73.4 per cent of the
world's potential supply, have but 7.6 per cent of the developed water
power. For the world, present installed capacity amounts to only
6 per cent of the potential capacity established by minimum stream
flow, or only about 3 per cent of the total that may eventually be
attained under maximum utilization should it ever become economically advantageous to develop it.
CONTROL OF WATER POWER IN THE UNITED S T A T E S . — D a t a

re-

ceived by the commission for the year 1923 from 616 companies
indicate that about 20 companies control a little more than half of
the estimated developed water power of the United States. The
616 companies reporting represent about 20 per cent of the total
number of companies reported by the United States Geological Survey
as having installations of 100 or more water horsepower each. These
616 companies reported a total of 7,305,335 developed, or about 80.4
per cent of the 9,086,958 total developed horsepower in plants of
100 horsepower or more in 1924. For both developed and undeveloped water power these companies reported a total of 16,652,256
horsepower, or 47.8 per cent oi the country's total potential horsepower available 90 per cent of the time.
The data for the 616 companies reporting to the commission were
grouped on a basis of the quantity of their developed water power
and indicate the extent of concentration existing in the control of
the Nation's waterpower resources, as follows:
TABLE 24.—Control of developed water power in the United States by
according to specified size groups, in 1923 1

companies

Per cent of total

Developed horsepower

Number Developed
horseof compower
panies
reported

Companies

Horsepower
reported
to
Federal
Trade
Commission

Estimated
developed
horsepower
in
United
States *

300,000 and over
100,000 to 300,000
25,000 to 100,000
5,000 to 25,000
1,000 to 5,000
Under 1,000

6
14
27
67
145
357

2,228,344
2,723,534
1,194,570
743,688
312,217
102,982

1.0
2.3
4.4
10.9
23.5
57.9

30.5
37.3
16.3
10.2
4.3
1.4

24.5
30.0
13.2
8.2
3.4
1.1

Total

616

7,305,335

100.0

100.0

80.4

1 The companies included in this tabulation represent 80.4 per cent of the estimated total developed
water power of the country.
J Estimated by U. S. Geological Survey at 9,086,958 horsepower.

For the 616 companies reporting to the commission, the bulk of
the developed horsepower is owned by a comparatively small number of large companies. These 616 companies control about 80.4
per cent of the total developed water power of the country. Six




78

NATIONAL W E A L T H AND INCOME

very large companies, or slightly less than 1 per cent ol the total
number reporting, are shown to nave 30.5 per cent of the horsepower
reported and 14 others reported another 37.3 per cent of the total.
The 47 companies in the three largest groups owned about 84 per
cent of the total reported, leaving but 16 per cent owned by the other
569 companies. Similarly, the six largest companies controlled 24.5
per cent of the estimated total United States developed horsepower,
while the 14 next largest companies controlled 30 per cent, making
a total of 54.5 per cent in the hands of 20 companies.
The information supplied by the 616 companies was further analyzed to indicate the degree of concentration of control in different
regions of the United States. Since certain of the companies operate
in more than one territorial region, each such company has been
counted once for each region in which it operates. This results in a
total number of companies for all regions combined larger than the
number actually reporting. The total horsepower, however, is the
same. The distribution of ownership indicated for various geographical regions was as follows:
TABLE 25.—Control of developed water horsepower in different geographical
by companies, according to specified size groups in 1923
Middle Atlantic

New England
Developed horsepower

Percent
Per cent
NumNumber of Developed
ber of Developed
com- horsepower Com- Horse- com- horsepower Com- Horsepanies
panies power
panies power panies

300,000 and over
100,000 to 300,000
25,000 to 100,000
5,000 to 25,000
1,000 to 5,000
Under 1,000

6
17
35
45

273,839
193,602
68,962
13,395

5.8
16.5
34.0
43.7

49.8
35.2
12.6
2.4

Total

103

549,788.

100.0

100.0

0)
0)

12
11
23
51

1,186,148
105,203
48,330
15,623

12.3
11.4
23.7
52.6

87.6
7.8
3.5
1.1

97

1,355,304

100.0

100.0

North Central

South Atlantic
Developed horsepower

300,000 and over
...»
100,000 to 300j(X)0
25,000 to 100,000 r .......
5,000 to 25,000..
....
1,000 to 5,000
Total

Per cent
Per cent
NumNumber of Developed
ber of Developed
com- horsepower Com- Horse- com- horsepower Com- Horsepanies
panies power panies
panies power
l

5
13
15
37

636,615
152, S77
32,050
10,39Q

7.1
18.6
21.4
52.9

76.6
-18.3
3.9
1.2

4
4
16
39
120.

672,367
234,983
142,826
89,225
31,695

2.2
2.2
8.7
21.3
65.6

57.4
20.1
12.2
7.6
2.7

70

831,632

100.0

100. .0

183

1,171,096

ioap

100.0

()

» One company included inr'fto 25.000 to 99,999 group,
i Two companies included in the 25,000 to 99,999 group.




r*qions,

79 N A T I O N A L W E A L T H A N D I N C O M E
TABLE 25.—Control of developed water horsepower in different geographical regions,
by companiesj according to specified size groups in
1923—Continued
South Central
Developed horsepower

300,000 and over
100,000 to 300,000
25,000 to 100,000
5,000 to 25,000
1,000 to 5,000
Under 1,000

Mountain and Pacific
Per cent

Per cent
NumNumber of Developed
ber of Developed
com- horsepower Com- Horse- com- horsepower Com- Horsepanies
panies power panies
panies power

465,390
10,074
5,428

15.4
19.2
65.4

96.8
2.1
1.1

26

Total

4
5
17

3
8
8
10
32
87

480,892

100.0

100.0

148

3

()

1,288,859
1,000,502
384,671
143,750
72,380
26,451

2.0
5.4
5.4
6.8
21.6
58.8

44.2
34.3
13.2
4.9
2.5
0.9

2,916,613

100.0

100.0

3 Two companies included in the 5,000 to 24,999 group.

More than half of the companies reporting from each of the
geographical regions except New England nave less than 1,000 horsepower each, but the total horsepower of these companies represents
only a small*part of the regional total reported, varying from a little
less than 1 per cent to more than
per cent of tfie total installed
horsepower. In each region a few relatively large companies have
from 50 per cent to about 97 per cent of the total. The only companies having 300,000 horsepower or more operate in the Middle
Atlantic States at Niagara Falls, and in the Mountain and Pacific
States, where the large water-power resources of the Western mountain
ranges and the remoteness from industrial centers favor the development of large public utilities transmitting their power long distances
at high voltages. The average horsepower per company was greatest
in this mountain and Pacific region, but was nearly equaled by the
average for the South Central States, where extensive water-power
developments are in progress under conduct of a few large companies.
The companies to whom the commission's schedule was addressed
were asked to report also the quantity of undeveloped or potential
water-power controlled. Data for the 616 companies reporting
indicate an even more marked concentration of control of potential
water power in the hands of relatively large companies, as follows:
TABLE 26.—Control of total developed and undeveloped water power in the United
States, by companies, according to specified size groups, in 1923 1
Per cent of total
Developed
Number and unof com- developed
panies
horsepower

Developed horsepower

Companies

Horsepower
reported
to Federal Trade
Commission

Estimated
potential
horsepower of
United
States 2

9
28
25
89
151
314

500,000 and over
100,000 to 500,000.
25,000 to 100,000
5,000 to 25,000
1,000 to 5,000
Under 1,000
Total

|

8,319,535
5,605,024
1,323,654
961,708
341,082
101,253

1.5
4.5
4.1
14.4
24.5
51.0

50.0
33.7
7.9
5.8
2.0
.6

23.9
16.1
3.8
2.7
1.0
.3

616

16,652,256

100.0

100.0

47.8

* The 616 companies included in the tabulation represent 47.8 per cent of the estimated total potential
water horsepower of the country.
^Estimated by U S. Geological Survey at 34,818,000 horsepower.
103288—S. Doc. 126, 6 9 - 1




7

NATIONAL W E A L T H AND INCOME

80

Nine large companies, as the table indicates, own 50 per cent of the
horsepower reported to the commission and about 24 per cent of the
total estimated for the United States. The small companies, with
less than 1,000 developed horsepower each, representing 51 per cent
of the total number of companies reporting, own but six-tenths of 1
per cent of the horsepower reported and only three-tenths of 1 per
cent of the total estimated ior the United States. Thirty-seven
companies, each having 100,000 or more of developed and undeveloped horsepower, control 83.7 per cent of the developed and undeveloped capacity reported and 40 of the estimated united States
total.
Analysis of the above data for various geographical regions indicates
a similar degree of concentration of control within each region, as
follows:
TABLE 27.—Percentage of control of total potential water power in different geographical regions, by companies, according to specified size groups, in 1923
New England
region

Middle Atlantic
region

"South Atlantic
region

Developed horsepower
Companies
500,000 and over
100,000 to 500,000
25,000 to 100,000
5,000 to 25,000
1,000 to 5,000
Under 1,000
Total

-----

Horsepower

Companies

Horsepower

(2)
9.7
18.4
34.0
37.9

60.1
26.8
11.2
1.9

0)
7.2
6.2
13.4
27.8
45.4.

71.0
20.2
5.6
2.5
.7

100.0

100.0

100.0

100.0

North Central
region

South Central
region

Companies
0)

Horsepower

8.6
(3)
20.0
20.0
51.4

81.5

100.0

100.0

16."6
1.7
- .8

Mountain and Pacific region

Developed horsepower
Companies

Horsepower

Companies

Horsepower

Companies

Horsepower

1.5
.1

3.4
8.1
4.0
14.9
22.3
47.3

63.0
28.3
4.0
3.4
1.0
.3

100.0

100.0

100.0

500,000 and over
100,000 to 500,000
26,000 to 100,000
5,000 to 25,000
1,000 to 5,000
Under 1,000

3.2
2.2
12.6
21.3
60.7

71.6
9.5
12.0
5.0
1.9

11.5

98.4

(5)
34.6
53.9

Total

100.0

100.0

100.0

One company included in the 100,000 to 500,000 group.
One company included in the 25,000 to 100,000 group.
® Two companies included in the 5,000 to 25,000 group.
* Two companies included in the 100,000 to 500,000 group.
* Two companies included in the 1,000 to 5,000 group.
1
2

I N C R E A S E IN CONCENTRATION OF CONTROL IN R E C E N T

YEARS.—Of

the 616 companies reporting to the commission, 534 reported their
developed water horsepower for the year 1918 as well as for 1923.
For the five-year period the total developed horsepower of the 534
companies showed an increase of 54.3 per cent, from 4,216,155 horsepower to 6,504,617 in 1923. The total of 7,305,335 horsepower for
1923 reported by 616 companies, on the other hand, represents an
increase of 73.2 per cent over the horsepower reported for 1918 by the
534 companies. That these increases m developed water power dur-




81 NATIONAL W E A L T H AND INCOME
ing the five-year period were greater both in actual amount and irt
rate for the larger companies is indicated by the following comparison:
TABLE 28.—Developed water power, by companies, according to specified size groups,
in 1918 and 1923 1

Developed horse power In 19182

Number
of companies

Developed horsepower
1918

Per cent
of in-

1923

300,000 and over.
100,000 to 300,000.
25,000 to 100,000.
5,000 to 25,000-1,000 to 5,000- —
Under 1,000

3
8
22
52
122
327

1,087,331
1,120,025
1,121,118
527,502
271,367
88,814

1,282,335
2,241,128
1,745,305
765,020
355,244
115,585

17. fr
100.1
55.7
45. a
30.9
30.1

Total

534

4,216,155

6,504,617

54.3

As reported by 534 identical companies.
The grouping of the companies for both years is based on horsepower in 1918, irrespective of changes in
1923.
1
2

Although the smallest percentage of increase was that of 17.9
per cent, shown for the three biggest companies, the large increases
shown by the next two size groups as compared with those for the
smaller company groups indicates an increased concentration of water
power under the control of the larger companies.
The relative concentration of water-power ownership among the
534 companies in 1918 and the 616 companies in 1923 is indicated in
the following tabulation:
TABLE 29.—Percentages of concentration of control of developed water power, by
companies, according to specified size group, 1918 and 1923 1
Per cent of total
Developed horsepower

Number of
companies

1918

1923

Companies

Developed
horsepower

1918

1918

1923

192$

300,000 and over
100,000 to 300,000
25,000 to 100,000
5,000 to 25,000.
1,000 to 5,000Under 1,000-

3
8
22
52
122
327

6
14
27
67
145
357

0.6
1.5
4.1
9.7
22.8
61.3

0.9
2.4
4.4
10.9
23.5
57.9

25.8
26.6
26.5
12.6
6.4
2.1

30.5
37.3

Total

534

616

100.0

100.0

100.0

100.0

16. a

10.2
4.$
1.4

i Based on data reported to the commission by 616 companies for 1923 and 534 companies for 1918.

A little over 2 per cent of the companies reporting in 1918 controlled
52.4 per cent of the total developed horsepower reported. In 1923
a little over 3 per cent of the companies controlled 67.8 per cent o f
the horsepower. In the same interval the proportion of control
exercised 1by the smaller companies with less tnan 5,000 horsepower
decreased. The smallest, 84 per cent of the companies reporting in
1918, had 8.5 per cent of the total horsepower reported, while the
smallest, 81.4 per cent of those reporting in 1923, had only 5.7 per
cent of the total horsepower.




NATIONAL WEALTH AND INCOME

82

A report of the United States Department of Agriculture made in
1916 indicated that 9 large public-utility interests controlled, through
ownership, lease, or management, slightly more than one-third of all
the developed water power used in public-service operations in the
United States; 18 controlled more than half, and 57 controlled over
72 per cent of the total. In 1924, by a consolidation affecting 2 of
the 18 companies mentioned above, and a leasing arrangement affecting 2 others, the original 18 interests were reduced to 16. These 16
companies controlled, in 1924, a total of 4,349,992 installed water
horsepower, representing 59.2 per cent of the total water power used
in public-service operations in the United States. When tiie holdings
of allied interests of 1 of the 16 companies are added, the total
water power owned is increased to 4,787,189 horsepower, or a total
of 65.1 per cent of that used in public-utility operations. Thus,
according to the department's reports, the control by this small group
of large interests has increased markedly during the past eight or
nine years.
Section 3. Coal.
The coal reserves of the United States,8 as estimated in 1922 b y
the United States Geological Survey, amount to about four and a
fifth trillion net tons. Of this supply the estimated quantity within
3,000 feet of the surface (which is the maximum practicable working
depth under present methods of mining) was originally about three
and a half trillion net tons. From this original reserve, as a result
of over 100 years of mining, some sixteen and a quarter billion tons
have been produced. The estimated mining losses and wastes,
amounting to about one-third of a ton for each ton produced, increase
the total exploitation to about twenty-one and one-half billion tons.
This represents only a little more than six-tenths of 1 per cent of
the original supply and suggests that, even though consumption of
coal may continue to increase in giant strides in the future as it has
in the past 100 years, the ultimate exhaustion of this national asset
is remote.
Of more immediate concern is the fact that the coals of highest rank
are being rapidly mined out and will, at the present rate, be exhausted
within a comparatively short period, estimated at about 50 years.
More than 57 per cent of the original estimated national supply
was of the lowest rank (subbituminous and lignite), while only 2 per
cent was of the highest rank (anthracite, semianthracite, and semibituminous) . The estimated original supply of each of the six grades
or ranks of coal in the United States is as follows:
TABLE 30.—Estimated original quantity of coal of different ranks in the
States 1
Rank
Anthracite and semianthracite
Semibituminous
Bituminous
Subbituminous
Lignite
Total, all ranks

Original tonnage

1

United

Per cent
of total

21,960,000,000
50,163,000,000
1,440, 822,000,000
1,002,351,000,000
1,037, 514,000,000

0.6
1.4
40.6
28.2
29.2

3, 552,810,000,000

100.0

i M. R. Campbell, "The Coal Fields of the United States," U. S. Geological Survey, Professional Paper
100-a, 1922.
8 Excluding Alaska.




83

NATIONAL W E A L T H AND INCOME

V A L U E OF COAL RESOURCES.—The lack of data for estimating even
approximately the money value of the Nation's natural resources
has already been pointed out. In the case of coal, two official estimates which are available differ radically. The first estimate, that
of the Census Bureau, is based upon the actual investment in coal
mining as reported to the bureau in 1920. The second estimate,
which was made by the engineers' advisory committee of the United
States Coal Commission, is arrived at by capitalizing the reported
average earnings of the coal-mining industry lor the years 1920 and
1921 as a basis for the valuation of present operating equipment and
of operating reserves sufficient to last not to exceed about 40 years.
The remainder of the tonnage in the ground which will be available
for production 40 years hence is treated by the engineers' committee
as reserves." The value of these reserves is determined by the
application of prices paid in " actual sales of virgin areas where such
sales of recent date are available and sufficient to justify their
general employment in the estimates, or lacking that on the present
value of the reserve coal at the present rates of royalty, but considered as deferred for the life of the operating lands." The total
valuation of the committee is the sum of the valuations placed upon
"operating properties" and "reserves." 9 The two valuations are
as follows:
TABLE 31.—Estimated value of coal resources of the United States
Authority
Bureau of Census
United States Coal Commission:
Present operations
Reserve tonnage
Total

Total

Anthracite

Bituminous

$433,868,039

$1,904,450,123

$2,838,318.162

843,500,000
146,400,000

6,286,214,000
5,156,650,000

7,129,714,000
5,303,050,000

986,900,000

11,442,864,000

12,432,764,000

Notwithstanding the fact that the engineers' committee in its
estimates used less than half of the tonnage estimated by the United
States Geological Survey as remaining in the ground in 1920,10 the
valuation placed upon operating properties and operating reserves is
nearly twice that reported by the Bureau of the Census lor anthracite
and more than three times that of the census for bituminous coal.
These valuations of the engineers' committee are probably excessive
because of the fact that the two-year period, 1920-21, for which
earnings were capitalized in determining the value of operating
properties, occurring at the end of the war-time boom and the beginning of the postwar slump, was too short properly to reflect the enect
of widely fluctuating earnings such as those experienced prior to,
during, and since the war. In addition, the high value placed upon
reserves is undoubtedly due to the application of actual sale values or
of royalties paid during or at the end ol the war-time inflation for a
small portion ol the best reserves, to the total tonnages in the various
fields, much of which is so inaccessible, or otherwise so undesirable, as
to have little or no present market value. This method ignores the
9 "Valuation of coal-mining properties in the United States."
Report of the engineers' advisory
committee of the United States Coal Commission, pp. 1-3.
10«Valuation of coal mining properties in the United States," engineers' advisory committee of the
U. S. Coal Commission, p. 5.




84

N A T I O N A L W E A L T H AND

INCOME

fact that natural resources have money value largely because of their
scarcity or relative accessibility rather than because of their abundance. The true value of present operating equipment and reserves
more or less definitely attached probably lies somewhere between
the census figure and that of the engineers' committee, but nearer
to that of the census than to that of the committee.
Schedules addressed to coal companies by the commission in the
course of the present inquiry elicited little or no information on the
valuations of anthracite reserves. Valuations of their bituminous
reserves, however, were reported by 413 companies controlling about
13,000,000,000 tons of reserves. The bases of these valuations varied
widely, and the average values reported ranged from less than 1
cent per ton in Montana to over 74 cents per ton in Michigan. The
average valuation per ton for the 413 companies was 4.5 cents, and
if this is applied to the estimated 32,000,000,000 tons of bituminous
available for mining within the next 40 years (see p. 88), a total valuation of $1,440,000,000 would be indicated. This compares with the
census estimate of $1,904,450,123 (see Table 31).
W O R L D POSITION OF THE U N I T E D STATES.—In the size and selfsufficiency of its coal resources the United States easily leads the
world. I)ata compiled by the United States Geological Survey in
1922 place the total known coal reserves of the world 11 at some eight
and a fifth trillion net tons.12 The five principal coal owning and producing countries ol the world hold the following percentages of this
total supply: United States, 51.9 per cent; Canada, 16.8 per cent;
China, 13.3 per cent; Germany, 5.7 13 per cent, and Great Britain and
Ireland, 2.6 per cent. With this preponderance of supply the United
States provides not only for its own needs but for substantial proportions of the needs of other nations. Annual exports of bituminous
coal from this country range from 12,000,000 to 39,000,000 net tons,
while shipments of anthracite are normally about 5,000,000 net tons.
Practically all of the anthracite exported and about half of the
bituminous go to Canada. The remainder of the bituminous shipments go principally to England, Italy, France, Netherlands, Argentina, and Cuba. Imports of coal into the United States consist
mainly of about 1,300,000 tons of bituminous shipped from Canada
into Western States. These shipments result merely from the greater
proximity of Vancouver Island and Alberta coal to these States.
CONTROL OF C O A L E E S E R V E S IN THE U N I T E D

STATES.—Although

bituminous coal is produced in 31 States of the United States, anthracite is mined, with unimportant exceptions, in Pennsylvania only.
Over 95 per cent of the original anthracite deposits of the country
was located within an area of about 485 square miles in this State.
The relative geographical distribution of anthracite and bituminous
deposits is naturally reflected in the ownership and operation of these
deposits. In the operation of anthracite coal deposits the United
States Geological Survey reports about 175 companies as against a
total of over 12,000 companies engaged in bituminous production.
Furthermore, the survey shows that 13 large companies produce
11 Including all kinds of "ranks" within 6, OO feet of the surface which is regarded as the maximum pracC
ticable working depth for mining.
12 Based on figures compiled in 1913 for the Twelfth International Geological Congress, reprinted with
revisions by the U. S. Geological Survey, 1922.
13 Includes reserves of the Saar Valley, now controlled by France, and those of Upper Silesia, the major
portion of which are now assigned to Poland.




85 NATIONAL WEALTH AND INCOME

nearly 80 per cent of the anthracite coal, while bituminous production
is more widely distributed.
In the ownership of the coal reserves, data secured by the Federal
Trade Commission and the United States Coal Commission indicate
a somewhat analogous relative concentration of anthracite and
bituminous. Estimates of the Coal Commission attribute control
of about 88 per cent of the total recoverable anthracite tonnage to
15 large companies. Contrasted with this, the data furnished the
Federal Trade Commission by bituminous coal companies in the
course of the present inquiry indicate that about 72 per cent of the
recoverable bituminous tonnage is controlled by about 6 per cent of
the companies. The bases of these estimates and the detailed
analysis of them are recited below.
ANTHRACITE DISTRIBUTION.—As already stated, over 9 5 per cent
of the original supply of American anthracite was located in an
area of about 485 square miles in Pennsylvania. The remaining 4 or
5 per cent is widely scattered in Rhode Island, Virginia, Arkansas,
Colorado, and New Mexico. The Rhode Island beds are too thin
to be commercially valuable at the present time. The deposits of
Virginia, Arkansas, Colorado, and New Mexico are being exploited
to some extent, but their production is almost negligible in comparison
with those of Pennsylvania. The United States Geological Survey
estimates that twenty-one of the twenty-two billions of anthracite
originally in the ground were in the Pennsylvania area.14 Of this
quantity, the United States Coal Commission data indicate that
about 1 6 , 3 4 0 , 0 0 0 , 0 0 0 gross tons ( 2 , 2 4 0 pounds) are still in place in
the Pennsylvania measures, but that only 8 , 9 7 3 , 0 0 0 , 0 0 0 tons can be
recovered under present mining methods, of which only 3 , 9 0 7 , 9 0 0 , 0 0 0
tons are available within the next 4 0 years. On the 3 , 9 0 7 , 9 0 0 , 0 0 0
tons available within the next 40 years the United'States Coal Commission places a valuation of $ 8 4 3 , 5 0 0 , 0 0 0 , while a value of $ 1 4 6 , 4 0 0 , 0 0 0 is assigned to the remaining reserve tonnage. As already
stated (see p. 83) these valuations are probably very high.
Data secured for the United States Coal Commission in 1923 by
D. C. Ashmead, anthracite mining engineer, and made available to
the Federal Trade Commission for the present inquiry, indicate that
about 78 per cent of the total Pennsylvania anthracite in the ground
and an equal amount of the recoverable tonnage is owned or controlled
by eight companies closely affiliated in interest with the railroads
tapping the anthracite region. This control takes the form either of
direct ownership or of control under lease. Thirty years ago, according to an estimate prepared by William Griffith in 1896, which was
regarded as authoritative, the so-called railroad coal companies owned
or controlled under contract 96.3 per cent of the estimated total
anthracite reserves, of which 90.9 per cent was controlled by ownership and 5.4 under contract. Subsequently the Pennsylvania
Railroad Co., which was estimated to control 6.2 per cent of the
country's anthracite coal reserves, disposed of its anthracite interests,
and, in addition, certain contracts (the so-called 65 per cent contracts)
by which the railroad coal companies purchased the production of
independents at the mine mouth, were declared by the courts to be
in restraint of trade and therefore invalid. As a result of these and
other occurrences the proportionate control of the railroads has been
" M. R. Campbell " Coal Fields of the United States," p. 24.




86

n a t i o n a l w e a l t h and

income

reduced. The following table, based on the figures of the United
States Coal Commission, shows the reported degree of control at
present exercised by the eight principal coal companies (known as
the "railroad companies") and large independents over the country's
future supply of Pennsylvania anthracite:
TABLE 32.—Control of anthracite coal reserves in the United States, by
according to specified groups, in 1928 1

Group

Per cent
of total

Acres

Recoverable tonnage 2

Total remaining reserve

Area

Per cent
of total

Tons

companies,

Per cent
of total

Tons

t

Eight "railroad" coal companies
Seven large independents
All other 3

70.4
9.1
20.5

12,746,700,000
1,574,330,000
2,019,117,000

78.0
9.6
12.4

6,971,470,000
883,000.000
1,119,220,000

77.7
9.8
12.5

307,586
1
2
8

216,626
27,965
62,995

100.0

16,340,147,000

100.0

8,973,690,000

100.0

From estimates made by D. C. Ashmead for the United States Coal Commission.
Under present mining conditions.
Approximately 160 companies.

As the table indicates, the eight principal companies and the seven
interests classed as large independents together control 79.5 per cent
of the land area of Pennsylvania anthracite, 87.6 per cent of the total
tonnage remaining in the ground and 87.5 per cent of the tonnage
recoverable therefrom. Notwithstanding the decreased control of
the eight so-called railroad coal companies since 1896, they still control
substantially four-fifths of the supply, and, together with a few large
independents, control exactly seven-eights of the estimated recoverable tonnage. Furthermore, the above table shows only the lands
and tonnage of the eight companies held for their own operation, or
as reserves. In addition they control and lease to others ]L3,793
acres of land, or 4.5 per cent of the total land area, estimated to contain 188,200,000 tons of recoverable coal, or 2.1 per cent of the total
supply, so that their actual ownership and control amounts to 74.9
per cent of the land and 79.8 per cent of the recoverable reserves.
Other things being equal, this proportionate control by the socalled railroad companies will increase as the present reserves near
exhaustion. That their supply is being mined out less rapidly in
proportion to their holdings than those of the smaller companies is
indicated in the following estimate prepared for the United States
Coal Commission:
TABLE 33.—Relative exhaustion of anthracite reserves of railroad coal
and all others (January 1, 1923J1

Item

Railroad coal companies
Quantity

Area of coal-bearing lands (acres)
Original estimated tonnage in ground
(tons)
Produced to end of 1922
Exhausted to end of 1922
Remaining in ground
Recoverable from reserves

Per
cent

216, 626

70.4

15,919,700,000
1,951, 655, 000
3,173,000,000
12,746, 700,000
6,971,470,000

76.5
71.7
71.0
78.0
77.7

All others
Quantity
90,960
4,890, 659,000
770,324,000
1, 297, 212,000
3, 593, 447,000
2,002, 220, 000

i From estimates of Dever C. Ashmead for the United States Coal Commission.




companies

Per
cent

Total

29.6

307, 586

23.5
28.3
29.0
22.0
22.3

20,810, 359, 000
2,721,979,000
4, 470, 212, 000
16, 340,147, 000
8, 973, 690, 000

87 N A T I O N A L W E A L T H AND

INCOME

The eight railroad companies7 holdings, as the table indicates, were
estimated to embrace 76.5 per cent of the tonnage originally in the
ground, but had produced to the end of 1922 only 71.7 per cent of the
total tonnage produced and had borne only 71 per cent of the estimated exhaustion of the region, leaving these companies in possession
of 78 per cent of the tonnage remaining and 77.7 per cent of the estimated recoverable supply. Thus as the region approaches exhaustion the control of these leading companies over the supply remaining will continue to increase unless the holdings of all others cease
to produce more than their proportionate share of future output.
Of interest in this regard is a tabulation prepared for the United
States Coal Commission showing the relative proportions of the present Pennsylvania anthracite supply "Operated 7 ' (i. e., now attached
to mining operations and workable from them) and "Held in reserve"
(i. e., undeveloped), as follows:
TABLE 34.—Relative proportions of present Pennsylvania
and held in reserve

anthracite supply

Recoverable tonnage

Area
Held b y -

Railroad companies
Independent companies
Nonoperating companies
Total

Operated Held in
reserve
Per cent

57.6
20.5

78. 1

operated

Total

Held in
Operated reserve

Per cent

Per cent

Per cent

Per cent

21.9

100.0

73.1

Total

26t9

12.5
1.0
8.4

70.1
21.5
8.4

59.8
13.3

17.9
2.2
6.8

Per cent

77.7
15.5
6.8

100.0

Of the total anthracite area, as the table indicates, 78.1 per cent
is in lands that are definitely attached to present mining properties
and are for convenience referred to as " operated/7 although it may
not in all cases be completely recoverable from present workings.
The remaining 21.9 per cent is held in reserve for future development.
Of the recoverable tonnage 73.1 per cent is recoverable from present
operations and 26.9 per cent is held for future development. The
superior relative position of the eight principal companies as regards
reserves is apparent from the fact that these companies, controlling
70.1 per cent of the total area, are operating 57.6 per cent and holding
12.5 per cent in reserve, while the other operating companies, controlling 21.5 per cent of the total area, are operating 20.5 per cent
and holding but 1 per cent in reserve. Similarly, of the total recoverable tonnage, the eight companies, controlling 77.7 per cent, are
operating 59.8 per cent and holding in reserve 17.9 per cent, while
the other operating companies, controlling 15.5 per cent of the
tonnage, are operating 13.3 per cent and holding only 2.2 per cent
of it in reserve.
CONTROL

IN

DIFFERENT

GEOGRAPHICAL

REGIONS.—Two

of

the

four geographical regions in which Pennsylvania anthracite occurs,
namely, the northern (or Wyoming) and the eastern middle (or
Lehigh) are being rapidly worked out, and it is estimated that within
40 years the burden of absorbing their decreasing production will
fall upon the western middle and southern regions, which contain
103288—S. Doc. 126, 69-1




8

NATIONAL WEALTH AND INCOME

88

74 per cent of the estimated recoverable tonnage. The relative concentration of control within each of these regions is shown in the
following table:
TABLE 3 5 . — C o n t r o l of anthracite deposits in different
specified groups, in 1928

Total recoverable
tonnage

geographical

regions,

Eight railroad companies

All other operators

OperReserve Total
ated

Oper- Reserve Total
ated

Region
Tons

Northern
Eastern middle
Western middle
Southern field
Not included in report to United
States Coal Commission

Percent
of total

23.7
2.0
21.8
50.4

192,100,000

100.0

Nonoperating
companies,
reserve

Per centPer centPer centPer centPer centPer centPer cent
18.2
0.8
1.1
19.3
3.6
3.6
1.4
.5
.2
1.6
.5
3.8
16.4
3.7 " T O T
1.4
17.8
."a
7.6
23.8
5.5
15.2
39.0
2.1

2.1

8,973,690,000

Total

2,124,000,000
181,370,000
1,957,220,000
4,519,000,000

by

3.6
59.8

17.9

77.7

13.3

2.2

15.5

6.8
2.1

i Slightly more thanflve-hundredthsof 1 per cent.

The dominance of the eight so-called railroad coal companies in
all fields, both in tonnage operated and tonnage held in reserve (i. e.,
tonnage not definitely attached to, or subject to exploitation from,
any present mining operation), is strikingly shown by the foregoing
percentages. The table shows that the only field in which any considerable part of the total recoverable tonnage is held in reserve for
future development is the southern field. The total held in reserve
in all fields amounts, as previously stated, to 26.9 per cent of the
total recoverable tonnage. In the southern field aloiie the tonnage
held in reserve represents 20.9 per cent of the total recoverable tonnage, three-fourths of which is controlled by the eight companies.
BITUMINOUS DISTRIBUTION.—Bituminous, subbitummous, or lignite
deposits exist in 31 States of the United States, but occur principally in Pennsylvania, West Virginia, Illinois, Ohio, Kentucky,
Alabama, and Indiana. Although the estimated total original deposits
in the United States are placed at slightly less than three and onehalf trillions of net tons, the United States Coal Commission estimates
the quantity of present value as only one and one-half trillions and
the quantity actually available for mining within 40 years as only
about 32,000,000,000 tons. The latter are distributed geographically
as follows:

Man?.
Alabama:
AJ1 other States




_

Per cent

§1111111

^ IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIZIIZIIIIIIIIIIIIIIIIIIIIIIIII

27.8
17.3
15.4
8. a
7.2
5.1
3.2
15.7

32,000,000,000

100.0

llllllll

^Test
Illinois
Ohio

Tonnage
available for
mining within
40 years
Illlilll

State

89 NATIONAL WEALTH AND INCOME

On the 32,000,000,000 tons the Coal Commission placed a valuation
of a little over $6,000,000,000, while the remaining trillion and a half
tons which will be of value after 40 years are estimated at a little over
$5,000,000,000. As already stated (see page 83), these estimates of
the Coal Commission greatly exceed those of the Bureau of Census
and are probably very high.
Data secured by the Federal Trade Commission from individual
coal companies indicate a concentration of ownership of bituminous
reserves approaching, though not equaling, that of anthracite reserves.
Schedules requesting information on the quantities of recoverable coal
owned were addressed to 1,749 bituminous companies (including a
few who mine lignite). Replies were received from 499 companies, of
which 427 represented a 1923 production of 166,163,362 tons, or about
29.4 per cent of the 564,156,917 tons total United States bituminous
output in that year. In tabulating these replies the reserves reported
by subsidiary or controlled companies were assigned to the parent
company wherever such control could be discovered. It is probable,
however, that some of the companies tabulated as "independent" are
in fact controlled by other companies, and for this reason the concentration of ownership of coal reserves indicated must be taken as a
minimum rather than an actual one.
The data for 499 companies reporting to the commission were
grouped on a basis of the quantity of their recoverable tonnage and
indicate the extent of concentration existing in the control of the
Nation's bituminous reserves, as follows:
TABLE 36.—Control of bituminous coal reserves in the United States by
according to specified size groups, in 1923 1

companies,

Per cent of total

Recoverable tonnage

Over 500,000,000
100,000,000 to 500,000,000.
75,000,000 to 100,000,000..
50,000,000 to 75,000,000...
25,000,000 to 50,000,000...
15,000,000 to 25,000,000...
10,000,000 to 15,000,000...
5,000,000 to 10,000,000....
Under 5,000,000.
Total reported

Number
of companies

Recoverable
tonnage
reported

Thousand
tons

Companies

Tonnage
reported
to Federal
Trade
Commis-

6,295, 233
4, 765,050
627, 821
611,416
981, 694
683,141
380,805
480,050
509, 057

0.8
5.2
1.4
2.0
5.8
7.2
6.6
13.8
57.2

41.0
31.1
4.1
4.0
6.4
4.5
2.5
3.1
3.3

3 499 15,334, 267

100.0

100.0

1 The companies included in this estimate represent 47.9 per cent of the total United States estimated
bituminous tonnage available for mining within 40 years and more than 29 per cent of the total United
States bituminous production in 1923.
2 Tonnage available for mining within 40 years estimated at 32,000,000,000 tons.
3 The total production reported by 427 of these companies for 1923 was 166,163,362 tons. The 72 companies
not reporting production reported a total recoverable tonnage of 1,688,784,000 tons, or about 10.7 per cen,
ol all recoverable tonnage reported.




90

NATIONAL WEALTH AND INCOME

The recoverable tonnage reported by the 499 companies was equal
to 47.9 per cent of the estimated total available for mining within the
next 40 years. If the distribution of reserves among these companies be taken as typical of the distribution for all bituminous
companies, a very high degree of concentration is indicated. Less
than 1 per cent of the reporting companies, as the table shows control 41 per cent of the total tonnage reported, while a bare 6 per
cent of the companies control over 72 per cent. The small companies, with recoverable tonnage less than 5,000,000 tons each, comprise over 57 per cent of the total number of companies reporting but
control only 3.3 per cent of the reported tonnage. Companies with
recoverable tonnage less than 10,000,000 tons each comprise 71 per
cent of the total number of companies but control only 6.4 per cent
of the tonnage.
The holdings of the 499 companies reporting to the commission
are probably more representative for the intermediate size groups
than for the largest and smallest size groups, since a somewhat disproportionate number of the largest companies submitted information and many of the, smallest companies failed to reply to the commission's schedule. But even though the concentration of ownership indicated may be exaggerated at the extremes, the table indicates that 30 large companies actually control some 11,000,000,000
tons, or approximately 35 per cent, of the estimated total United
States tonnage available for mining within the next 40 years. Of
these 30 companies the 4 largest control more than 6,000,000,000
tons, or about 20 per cent of the Nation's total.
CONTROL IN DIFFERENT GEOGRAPHICAL REGIONS.—The estimated
32,000,000,000 of tons of bituminous, subbituminous, and lignite
available for mining within the next 40 years may be divided into
regions as follows:
Recoverable
tonnage

Region
Northeastern (Pennsylvania, West Virginia, Maryland, and Virginia)
Central (Michigan, Ohio, Indiana, Illinois, and Iowa)
Southeastern (Alabama, Tennessee, and Kentucky)
Western1 (Arkansas, Kansas, Missouri, Oklahoma, Texas, Montana, Colorado, Wyoming, New Mexico, Utah, and Washington)
•
1

15, 264,000,000
9, 652,000,000
3, 712,000,000

Per cent
of total
47.7
30.2
11.6

3,372,000,000

10.5

32,000,000,000

100.0

Includes 96,000,000 tons from miscellaneous States.

Of these estimated totals for each region the tonnage reported to
the commission represented the following proportions: Northeastern, 54.1 per cent; central, 31.2per cent; southeastern, 52.4 per cent;
and western, 62.9 per cent. Tne companies reporting to the commission have been assembled for each of these regions and their
relative proportions of tonnage tabulated as follows:




91 NATIONAL WEALTH AND INCOME
TABLE 37.—Control of recoverable bituminous 1 deposits in various
regions by companies according to specified size groups in 1923

producing,

[In thousands of net tons]
Northeastern (Pennsylvania, West
Virginia, Maryland, and Virginia)
Recoverable tonnage

Central (Michigan, Ohio, Indiana,
Illinois, and Iowa)

Per cent of total
Per cent of total
NumNumber of Recoverable
ber of Recoverable
tonnage
tonnage
comcomComCompanies reported
panies reported
panies Tons
panies Tons

Over 500,000
100,000 to 500,000
75,000 to 100,000
50,000 to 75,000
25,000 to 50,000
15,000 to 25,000
10,000 to 15,000
5,000 to 10,000
Under 5,000

4
10
3
3
13
18
18
35
149

4,468,216
1,880,394
280,693
183,847
425,267
343,434
197,616
232,019
245,231

1.6
4.0
1.2
1.2
5.1
7.1
7.1
13.8
58.9

54.1
22.8
3.4
2.2
5.1
4.2
24
2.8
30

9
4
3
9
12
6
11
72

1,654,342
347,128
184,134
308,300
226,821
62,904
77,295
146,762

7.1
3.2
24
7.1
9.5
4.7
8.8
57.2

55.0
11.5
6.1
10.2
7.6
2.1
2.6
4.9>

Total

253

8,256,717

100.0

100.0

126

3,007,686

100.0

100.(*

Western (Arkansas, Kansas, Missouri, Oklahoma, Texas, Montana, Colorado, North Dakota,
Wyoming, New Mexico, Utah,
and Washington)

Southeastern (Alabama, Tennessee,
and Kentucky)
Recoverable tonnage

Per cent of total
Per cent of total
Num- Recoverable
Num- Recoverable
ber of
ber of
tonnage
tonnage
comComcomComreported
panies reported
panies Tons panies
panies Tons
Over 500,000
100,000 to 500,000
50,030 to 75,000
25,000 to 50,000
15,000 to 25,000
10,000 to 15,000
5,000 to 10,000
Under 5,000
Total

2 In, 450,481

5.0
6.5
6.5
11.5
16.4
54.1

10.0

4
7
10
33

Y 2193,938
73,794
82,407
70,831
75,440

61

1,946,891

100.0

100.0

74.5 L
3.8
4.2
3.6
3.9

i

!
5
6
11
33

1,531,182
177,051
119,189
100,719
63,242
82,689
48,901

8.8
4.4
5.9
7.4
8.8
16.2
48.5

72.1
8.3
5.6
4.8
3.C
3.1
2.3

68

2,122,973

100.0

100.0

1 Includes both lignite and subbituminous.
2 Groups combined to avoid possibility of identification of individual companies.

The table indicates that, for the tonnage reported, the greatest
concentration of ownership exists in the northeastern and south-\
eastern regions. In the northeastern region 14 companies, or 5.6per cent of those reporting, control 76.9 per cent of the tonnage
reported, while four companies, or 1.6 per cent of the total reporting,
control 54.1 per cent. The actual tonnage reported by the 14 companies represents 41.6 per cent of the estimated total tonnage of this
region available for mining within the next 40 years, while the
quantity reported by the four largest companies represents 29.3 per
cent of the total available. In tne southeastern region seven companies, or 11.5 per cent of those reporting, control 84.5 per cent of
the tonnage reported, while three companies alone control 74.5 per
cent. The tonnage reported by the seven companies represents 44.5
per cent of the total available tonnage estimated for the region,
while that reported by the three largest companies represents 39 per
cent.




NATIONAL WEALTH AND INCOME

92

Section 4. Iron ore.
Iron is widely distributed in the rocks and soil of the earth's crust,
but, in order that any mineral matter may be called iron ore, it must
contain a substantial percentage of iron. In different parts of the
world the percentage of iron in ores actually being mined ranges
probably from over 70 per cent to less than 25 per cent. The iron
content is only one factor in its availability; other important factors
are the composition of the mineral with respect to other substances
and the costs of mining and of transporting to the place of consumption. The total available reserve of iron ore in the United States
has been estimated recently at about 8,000,000,000 tons.15 Only a
limited amount of this ore is of a high grade, containing 50 per cent
or more of iron.
The present rate of production of iron ore in the United States is
about 75,000,000 tons a year. The rate of world production
is about 170,000,000 annually. At this rate the above-noted
iron-ore reserve in the United States would be mined out in somewhat over 100 years unless other large reserves are discovered.
There has been a continuous increase in geologists' estimates of the
national iron ore reserve. In 1909 the total known reserve was
estimated at around four and one-half billion tons, in 1914 at from
5.2 to 7.55 billion and in 1924 at 8,000,000,000 tons. This increase
is apparently due in part to the inclusion of lower-grade ore deposits
and in part to the discovery of additional ore bodies.
The bulk of the high-grade ores (with 50 per cent or more iron
content) is in the States of Minnesota, Michigan, and Wisconsin,
known as the lake district, and is being mined out very rapidly.
It is estimated that with from fifty to sixty million tons shipped
annually from this district this reserve will be depleted in 20 to 30
years, while the reserve of lower-grade direct smelting ore will last
another 10 or 15 years. The reserves of the still lower-grade ores
are very great, however, and will be utilized as the higher grades are
exhausted. It has been estimated that, although the present known
reserve of comparatively high-grade ore in the lake district is only
about 3,000,000,000 tons, the potential reserve of lower-grade ores
eventually available probably exceeds 70,000,000,000 tons.
The estimated available reserve of 8,000,000,000 tons in the
United States is distributed by districts and in grades, as follows: 16
Available Average
reserve
grade

District

Lake (Minnesota, Michigan, and Wisconsin):
High grade
Other
Eastern (New York):
Magnetite
Clinton
Southern (Alabama and Tennessee):
Clinton
Brown
Others
Western (Utah, Wyoming, California, Texas, and Washington)
n iron Age, November 6,1924, p. 1204.




18

Millions
Per cent
of tons
of iron

2,000
1,000

60
45

1,000
1,000

55-60
35-45

1,000
1,000
500
500

30-40
25-40
40-60
40-55

Iron Age, November 6,1924, p. 1248.

93 NATIONAL WEALTH AND INCOME

Although there is a considerable quantity of high-grade ore in
the eastern district, which includes the Adirondack region of northeastern New York, the principal high-grade deposits are in the lake
district. The southern and western districts are almost entirely
lower grade ores. At present the shipments from regions other than
the lake district are comparatively small. About 84 per cent of the
1922 shipments came from the lake district, 10 per cent from Alabama,
less than 1 per cent from New York State, and 5 per cent from the
balance of the country.
VALUE OF IRON-ORE RESERVES.—The value of iron-ore reserves,
like that of other natural resources, is essentially conjectural and is
limited by the possible future discoveries of ore deposits as well as
by the destiny of ore uses and demands. It is further limited by the
variations in iron content of different ores and the conditions of production and transportation. An ore reserve of low grade, no matter
how abundant, may have comparatively little value; indeed, the fact
of great abundance might tend to reduce the total value.
Of the 27 iron-ore companies reporting to the commission, 19
assigned a value to their ore reserves. The value assigned was in
each case a mere total and there was little uniformity m the bases
of valuation used. Eight companies, representing 88 per cent of the
total tonnage for which valuations were reported, based their valuations on estimates of State tax commissions. The per-ton values of
these companies ranged from 5 to 69 cents and averaged 48.3
cents. The reserves of two companies were estimated by the Bureau
of Internal Revenue at 38 and 42 cents per ton, averaging 39.3 cents.
Other methods of estimate were on a royalty basis, on book value,
land-tax value, " normal value of $50 per acre," on a basis of probable
net profit, and on an " independent engineer's report." The values
given under these different methods varied from $1 on the probable
profit basis to as low as 4 cents on the "$50 per acre" basis. Three
companies did not state the basis of their valuations. The very wide
variations of value per ton &hown, therefore, and the diversity of
method of estimates used make of doubtful merit any estimate of
the total value of the national iron-ore deposits based on the returns
of these 19 companies. The average value per ton assigned to the
reserves of the 19 companies was 47 cents, i f this value be applied
to the 8,000,000,000 tons of estimated known iron-ore reserves in
the United States the resulting total valuation would be $3,760,000,000, but this is apparently much too high.
Of the 19 companies reporting, the larger companies valued their
reserves at a higher average per-ton figure than the smaller ones;
valuations ranged from an average of 48.6 cents per ton for companies
owning over 25,000,000 tons each, to 21.7 cents for companies with
less than 1,000,000 tons in reserve, as the following tabulation
indicates:
Group (known reserves)

Over 25,000,000
5,000,000 to 25,000,000
1,000,000 to 5,000,000.
Under 1,000,000
Total reported.




Reported
reserves
Tons

920,730,545
60,010,219
14,715,747
2,115,389
997, 571,900

Reported value
of reserves

$445,371,253
18,474,768
4,919,942
459,000
469,224,963

NATIONAL WEALTH AND INCOME

94

The 19 companies reported ownership of nearly a billion tons, or
about
per cent of the estimated total reserves. As the table
shows, the valuations were lower for the smallest companies than
for the largest ones.
WORLD POSITION OF UNITED STATES.17—The United States is
estimated to have the largest iron ore reserve in the world; Brazil
and France rank second and third with estimates of seven and onehalf and seven billion tons, respectively. The Brazilian reserve is
high grade hematite and magnetite ore, with an iron content of 58
to 62 per cent. The French ore, however, is of a lower grade, with a
25 to 50 per cent iron content.
Of the estimated total world reserve of 42.8 billion tons, the United
States owns nearly one-fifth, as the following tabulation from the
Iron Age shows:
TABLE 3 8 . — I r o n ore reserves

Country-

Europe:
United Kingdom.
Norway
Sweden
Germany
France..
Spain
Austria
Russia
Rest of Europe
Total Europe...
Asia:
China and Korea..
India
*
Japan and Chosen
Total Asia

Actual Estimated
annual
reserve production
Million
tons

2,250
350
2,000
1,000

7,000
700
250
1,000
700

Tom

15,000,000
1,000,000
6,500,000
7,500,000
35,000,000
10,000,000
10,000,000
1,000,000

15,250

86,000,000

1,000

600
50

2,500,000
600,000
600,000

1,650

3,700,000

Africa:
North Africa
South and West...

250
200

1,500,000

Total Africa

450

1,500,000

of the world

1

Country

Oceanica:
Australia
Borneo
Philippine Islands
Total Oceanica
South America:
Venezuela
Chile
Brazil
Total South America
North America:
Newfoundland - Canada
United States
Mexico
Cqba
Porto Rico

Actual Estimated
annual
reserve production
Million
tons

400
100
400

500,000

900
400
300
7,500

60,000
100,000

8,200

160,00G

4,000
300
8,000
100
3,150
800

Total North America... 16,360
Total reserve

Tons

42/800

1,000,000

200,000
75,000,000
1,000,000
77,200,(KM>
169,060,000

1 The Iron Age, Nov. 13,1924, p. 1266.

In 1922 the United States exported 602,000 long tons of iron ore,
but imported 1,124,000 tons, imports thus exceeding exports by
almost 87 per cent. For the five years 1918-1922, inclusive, however, the exports were 4,440,000 tons, as against imports of 3,977,000
tons.18
CONTROL OF IRON-ORE RESERVES.—The United States Steel Corporation is by far the most important single factor in the ownership
of iron-ore reserves in the United States. Its proportion of the total
reserves has been variously estimated at from about one-half to more
than three-fourths. In 1912 accountants for a Senate committee
(Stanley committee), investigating the organization and the influence of the Steel Corporation, estimated that the total reserves qf
the United States were 4.5 billions of tons, and that of this total the
" Iron Age, Nov. 13, 1924, p. 1286.
18 Mineral Resources of the U. S. in 1922, United States Geological Survey, p. 54A.




95 N A T I O N A L W E A L T H AND

INCOME

corporation owned 56 per cent, or 2.5 billions of tons.19 Olin R.
Kuhn, of the Donner Steel Co., in an article in the Iron Age of November 6, 1924, states that about half of the ore reserve of the Lake
Superior district is to-day owned or leased by the United States
Steel Corporation and its largest competitor, the Bethlehem Steel
Corporation.
Data on ore reserves reported to the commission were fragmentary.
Reports were received from some, but not all, of the ore-owning
subsidiaries of the United States Steel Corporation and of the Bethlehem Steel Corporation. More complete reports were received
from 25 other companies. Of the 1.7 billions recoverable tonnage
reported by the 27 companies, 92.9 per cent was reported by 4 companies, including the 2 principal companies. The relative distribution of reserve tonnage among the reporting companies was as
follows:
TABLE 3 9 . — C o n t r o l of reported iron ore reserves in the United States, by
according to specified size groups, in 1923 1

Recoverable tonnage

Recoverable tonNumber nage reported (in
of companies millions
of long
tons)

Over 25,000,000 each
5,000,000 to 25,000,000
1,000,000 to 5,000,000
Under 1,000,000
Total
1

companies,

Per cent of total

Companies

Recoverable tonnage reported

4
10
10
3

1,538
94
21
2

15.0
37.0
37.0
11.0

92.9
5.7
1.3
0.1

27

1,655

100.0

100.0

Based on data received by the commission from 27 companies.

The total tonnage reported includes about 20 per cent of the
8,000,000,000 tons of total reserves estimated for the United States.
Section 5. Copper ore.
The total known copper ore reserves of the United States are estimated by the commission, on a basis of data secured from various
sources, at over 1,588,000,000 tons. This estimate represents the
reserves of 138 companies either reported to the commission or
listed in Weed's Mines Handbook. So far as it was practicable to
ascertain, these companies have all of the important known reserves
in this country.
Thirty-nine per cent of the reserves reported are in Arizona, 25
per cent in Utah, and 11 per cent in Michigan. These three States
thus have about three-fourths of the estimated United States total.
At the 1923 rate of copper ore production, amounting to about
45,000,000 tons, the 1,588 million odd tons of estimated known
reserve would be entirely depleted in somewhat under 40 years. The
average annual production for 1921, 1922, and 1923, however, was
only about 28,000,000 tons, at which rate the reserve would hot be
exhausted for nearly 60 years. As in the case of other mineral ore
19

Stanley committee accountant's report, Mar. 7,1912, p. 590.




96

N A T I O N A L W E A L T H AND

INCOME

resources, the estimates of reserves are increasing through discoveries
of deposits and through the use of ores with lower metal content
which may be made possible by improved mining and refining processes and by economies in production or by increases in price.
No estimate nas been made as to the potential copper reserves of
the country.
V A L U E OF C O P P E R - O R E RESERVES.—Seventeen companies, owning
about 10 per cent of the estimated total copper reserve, reported to
the commission the valuations which they place on their copper-ore
deposits. These valuations ranged from as low as 5 cents a ton to
as high as 92 cents a ton, indicating not only ore bodies of widely
different character but also widely different opinions as to the basis
for determining copper-ore values. The average value per ton of
reserve reported was about 84 cents. This value applied to the
estimated 1,588,000,000 tons of reserve ore in the United States
would give a total valuation of $1,334,187,000.
W O R L D POSITION OF THE U N I T E D STATES.—No adequate statistics
are available on the copper-ore resources of foreign countries. In
1915 the United States produced about 60 per cent of the world output for that year. Europe produced 13 per cent, Canada and Mexico
8, South America and Cuba 7 per cent, and other countries 12 per
cent. The production of the United States in 1921 was over 13,000,000 tons, in 1922 over 26,000,000, and in 1923 over 45,000,0Q0 tons.
CONTROL OF C O P P E R - O R E RESERVES.—Only a few of the copper
companies to which the commission's schedules were addressed
supplied the requested data on the quantity of ore reserves owned or
leased. In Weed's Mines Handbook, however, estimates are given
for all of the important companies failing to report to the commission.
It is believed that practically all of the known reserve tonnage is
covered in the estimate below. This estimate, as already stated,
amounts to 1,588,000,000 tons owned by 138 companies. Nearly
half of the reserve was controlled by four large companies. The
relative distribution of control among companies of specified sizes was
as follows:
TABLE 40.—Control of estimated copper-ore reserves in the United States, by companies, according to specified size groups, in 1923 1

Recoverable tonnage

Over 100,000,000 each.l
60,000,000 to 100,000,000 each.
25,000,000 to 50,000,000 each..
10,000,000 to 25,000,000 each..
5,000,000 to 10,000,000 each...
Under 5,000,000 each
Total

Number
of corn-

Recoverable
tonnage reported

Per cent of total
Companies

12
6
104

721,391,000
414,000,000
192,000,000
168,421,000
33,611,000
58,894,300

2.9
4.3
4.3
8.7
4.3
75.5

138

1,588,317,300

100.0

* Based jon estimates of 22 companies reporting to the commission and on estimates for 116 other companies
listed in Weed's Mines Handbook.

Four companies holding deposits of over 100,000,000 tons each
are estimated to control over 721,000,000 tons, or 45.4 per cent of
the total. Six companies owning between 50,000,000 and 100,000,000




97 NATIONAL WEALTH AND INCOME

tons each account for an additional 26 per cent, while another 6 own
12 per cent. The 16 companies combined, each with ownership of
over 25,000,000 tons, therefore, control over 83 per cent of the estimated total reserve. The 110 companies owning less than 10,000,000
tons have in the aggregate about 6 per cent of the reserve.
CONTROL BY REGIONS.—The two principal regions in which copper
ore is produced are the Lake region, embracing the State of Michigan,
and mountain and coast region, including the States of Arizona,
Utah, Nevada, New Mexico, Montana, Idaho, California, Washington, and Colorado. The 121 companies in the mountain and coast
region have about 87 per cent of the estimated total reserve, while
the 9 companies in the Lake region control 11.4 per cent. The remaining deposits, amounting to 2 per cent, are scattered throughout
other States and owned by 8 companies.
The control of estimated copper ore reserves in each of these
regions, as indicated by the commission's data, is as follows:
TABLE 4 1 . — C o n t r o l of estimated copper ore reserves in principal
by companies, according to specified size groups in
Mountain and coast region
(Arizona, Utah, Nevada,
New Mexico, Montana,
Idaho, California, Washington, Colorado)
Recoverable tonnage

<
s
ft
a
o
0
•S3
u
©a
rO
1

Recoverable
tonnage
reported

Lake region (Michigan)

Per cent cb
of total ft
1
o
Recover©
able
< 3 ® o © tonnage
8
0 6&
3 0
reported
©3
1
3
ft t> a
5
o
©-M
1 « o
o

§

producing
1923

regions,

All other (Tennessee,
Georgia,
Vermont,
Virginia)

3
Per cent
Per cent c
of total
of total ft
B
8
Recover©
©
able
o©
K
§®
©
5 © u'a tonnage .8
0 a M reported
3 ®
1
ft
a
a || 8
I+
S
3
©
1 « Ia
o
fc
o
Q

Over 100,000,000 .
4 721,391,000 3.3 52.4
50,000,000 to 100,000,000.
5 335,500,000 4.1 24.4
25,000,000 to 50,000,000..
3 125,000,000 2.5 9.1 14 145,500,000 44.4 80.5
5 35,236,000 55.6 19.5
10,000,000 to 25,000,000..
7 112, 585,000 5.8 8.2
23 27,686,000 37.5 92.5
5,000,000 to 10,000,000. _. 5 29,925,000 4.1 2.1
Under 5,000,000
5 2,225,000 62.5 7.5
97 53,269,300 80.2 3.8
Total
1
2

121 1,377,670, 300 100.0| 100.0

9 180, 736,000100.0 100.0

8 29,911,000 100.0 100.0

Includes one company from preceding group.
Includes two companies from preceding group.

In the mountain and coast region four companies control 52.4 per
cent of the estimated reserve and five more control 24.4 per cent, so
that practically 77 per cent of the total is controlled by nine concerns.
The 97 companies holding less than 5,000,000 tons each control less
than 4 per cent. In the Lake region (Michigan) more than 80 per
cent of the estimated reserves is held by lour companies. This
represents a greater concentration than in the mountain and coast
region.
Section 6. Timber.
In 1922 the Department of Agriculture estimated that the standing
timber in the United States amounted to approximately 2,200,000,000,000 board feet.20 Of this total, 1,600,000,000,000 was in virgin
2 U. S, Dept. of Agriculture; Yearbook Separate 886, "Timber, Mine or Crop."
0




98

NATIONAL W E A L T H AND INCOME

forest (which had originally contained an estimated 5,200,000,000,000
board feet) and 600,000,000,000 was in culled and second-growth
stands. In other words, about 30 per cent of the original stand now
remains.
The report states that the present rate of removal of all kinds of
wood from the forests of the United States is about 60,000,000,000
board feet a year or four times the estimated present annual growth.
The 2,200,000,000,000 board feet of standing timber reported by
the Department of Agriculture was distributed geographically as
follows:
M feet

Western States.
Southern States.
Lake States
All other States.

1, 3 6 4 , 0 0 0 ,
501, 000,

000
000

238, 000,

000

110, 000, 000

V A L U E OF STANDING T I M B E R . — I n 1 9 1 0 the Bureau of Corporations, Department of Commerce, estimated the value of the privately owned standing timber in the United States at $6,000,000,000.®
The estimated total stand at that time was 2,800,000,000,000 boardfeet. In the present inquiry the schedules addressed by the commission elicited so little information from timber companies that
only a very small "sample" for the industry could oe secured.
Estimates of the values of their timber stands were reported by 215
companies, owning 9 7 , 0 0 0 , 0 0 0 , 0 0 0 board-feet. The average value
per thousand feet reported was $ 3 . 3 4 . The bases of valuation
varied widely as in the case of other natural resources. The valuations reported by companies in the Western States were lower than
those of other sections, averaging only $ 2 . 3 4 per thousand feet as
compared with an average of $ 7 . 2 4 for the Lake States, $ 5 . 2 7 for
the Southern States, and $3.19 for all other States. If these average
valuations per thousand feet are applied to the estimated total
timber stands in each geographical region, they indicate a total
value of $ 7 , 3 8 7 , 6 5 0 , 0 0 0 for the timber resources of the United States.
W O R L D POSITION OF UNITED S T A T E S . — N o adequate data on the
actual footage of standing timber in foreign countries were available.
The forest lands of the world are estimated at 7.5 billion acres, of
which 1.5 billion acres are in North America.21 The United States
forest lands, according to the authors of this estimate, cover 5 5 0 , 0 0 0 , 000 acres, or about 7.3 per cent of the world total. These acreages,
however, do not necessarily reflect the relative timber resources of
the Uliited States and the world. Canada, for example, is said to
contain nearly 5 9 7 , 0 0 0 , 0 0 0 acres of forest area, 4 7 , 0 0 0 , 0 0 0 more
than the United States, but the estimated total board footage of
standing timber in Canada is only 1 , 4 0 6 , 0 0 0 , 0 0 0 , 0 0 0 . 2 2 as against
2,200,000,000,000 in the United States. Less than half the Canadian
forested area carries timber 6 inches and over and only about onequarter carries saw material (10 inches and up in diameter).
The annual timber consumption of the United States is estimated
at 22.5 billion feet or about two-fifths of the world consumption.
Of saw-log timber the United States uses nearly half the world's
annual consumption of 26,000,000,000 cubic feet and of firewood
nearly one-third of the world's consumption.23
« Land value not included.

11 Forest Resources of the World, Zon and Sparhawk.
12 Commerce Reports—Nov. 3, 1924 (U. S. Department of Commerce).
29 U. S. Department of Agriculture; Yearbook Separate 886, "Timber Mine




or Crop."

99 NATIONAL W E A L T H A N D I N C O M E
CONTROL OF T I M B E R RESERVES.—Data received by the commission from timber companies were not adequate to an analysis of the
degree of concentration of timber control in the United States. A
report of the Bureau of Corporations, Department of Commerce, in
1913 estimated that about 600,000,000,000 board feet of timber were
owned by the Federal, State, and local governments. Since these
public timber reserves are in most instances being maintained intact
it would seem safe to assume that they still amount to 600,000,000,000
feet. This would leave a total of 1,600,000,000 board feet privately
owned in the United States at present.
The 1913 report of the Bureau of Corporations contained important data for the year 1910 on the distribution of private ownership of timberlands. A report of the Department of Agriculture
in 1920 stated that u the situation as to timber ownership has not
changed materially from that reported by the Bureau of Corporations
in 1910." This report of the Bureau of Corporations covered companies owning 1,747,000,000,000 feet of timber on nearly 80 per
cent of the then estimated total United States stand of timber
privately owned. The report showed three large companies owning
13.6 per cent of the timber reported. The holdings of these three
companies, the Southern Pacific Co., the Weyerhaeuser Timber Co.,
and the Northern Pacific Railway Co., were in the Pacific Northwest,
in which region they owned over 23 per cent of the estimated standing timber. The foldings of these companies, however, have decreased considerably through sales and cutting, and through the
reversion to the Government of its land grant of almost 2,500,000
acres to the Southern Pacific Railroad Co.
Companies owning over 1,000,000,000 board feet each, 195 in
number, owned 48 per cent of the 1,747,000,000,000 board feet
reported to the bureau. The balance of the holdings was distributed among a very large number of owners. There were 24,000
holdings of less than a billion feet in the States of Oregon and Washington alone.
The 330 timber companies reporting to the commission in the
present inquiry owned 168.5 billion board feet, or about 7.5 per
cent of the estimated total standing timber in the United States.
This sample is not large enough to be considered truly representative
but may be analyzed as follows:
TABLE 4 2 . — C o n t r o l of reported timber holdings of 880
specified size groups in 1928 1

Board feet

companies

Number
of companies

330

i Includes also estimates of a few companies made in 1918 to the commission.




Thousand
board feet
reported
111,266,000
24,750,000
18,837,000
8,332,000
3,127,000
1, 697,000
349,000
88,000
54,000

1,000,000,000 and over
500,000,000 to 1,000,000,000
200,000,000 to 500,000,000..
100,000,000 to 200,000,000-.
50,000,000 to 100,000,000—.
25,000,000 to 50,000,000....
10,000,000 to 25,000,000
5,000,000 to 10,000,000
Under 5,000,000
Total

according

168,500,000

to

100

NATIONAL W E A L T H AND INCOME

Section 7. Petroleum.
The most recent estimate of the petroleum reserves of the United
States was made in 1921 by a joint committee of the United States
Geological Survey and the American Association of Petroleum
Geologists. This estimate placed the total reserve at 9,150,000,000
barrels, distributed geographically as follows:
Producing field:
Eastern
Midcontinent
Gulf coast
Rocky Mountain
California
Nonproducing regions

Estimated

Total United States.

reserve,

1921
__

.

Barrels
1, 435, 000, 000
2,960,000,000
2, 100, 000, 000
__
675, 000, 000
1,850,000,000
130, 000, 000
9, 150, 000, 000

Since the above estimate was made about 2,000,000,000 barrels of
etroleum or over 20 per cent of the estimated total reserves have
een taken out of the ground. With a 1924 production of 707,000,000
barrels the life of the reserve would seem to be very much limited.
On the other hand, very large quantities of new production from
both old and new fields have been brought in since 1921 (particularly
in California) and it is probable that a more recent estimate of the
total reserve would be much larger than the 1921 one. The constant
new discoveries of petroleum make any estimates of the total reserve
of very little value. And even if the reserve were accurately known
it would not be possible to estimate its life, since new mining methods
promise an increased proportion of oil from each well and the so-called
t{ cracking process" makes possible (if the cost is warranted) a much
greater percentage of gasoline extraction from crude oil than at
present.
In addition enormous quantities of crude oil are available from the
oil-shale deposits which occur in, perhaps, 25 different States of the
United States. Estimates prepared for the American Petroleum Institute indicate that the oil recoverable from western oil-shale deposits amounts to 75,136,000,000 barrels. Up to the present time
the only oil-shale operations on a commercial scale are being conducted in Nevada and California.
V A L U E OF PETROLEUM R E S E R V E S . — A s in the case of other national
resources, data on the value of petroleum reserves in the United
States are difficult to compile because of the lack of uniformity in
methods of valuation of petroleum resources and lands. For the
340 producing companies which reported valuations in response to
the commission's schedule, no less than 26 different bases were used.
About 30 per cent of them employed some form of estimated or
assessed value of producing lands, 27 per cent used cost, 26 per cent
used market price or value of daily production, 6 per cent book
value, while the balance employed various other forms of valuation.
The values reported covered reserves of 1,162,000,000 barrels and
averaged $0.63 per barrel. If this average is applied to the 9,150,000,000 barrels estimated as the total reserve in 1921 a total valuation of 5.8 billions of dollars is indicated. This compares with an
estimate of about 2.4 billions of dollars by the census 24 in 1919. The
2i

Report on Mines and Quarries, 1919, p. 46.




101 N A T I O N A L W E A L T H A N D I N C O M E

census estimate represents the total capital investment in the producing and nonproducing petroleum and natural gas businesses.
If increased by an amount for the cost of new wells drilled in the
period 1920-1923, conservatively estimated at 1.8 billion dollars,25
the census total would amount to 4.2 billion dollars.
W O R L D POSITION OF THE U N I T E D STATES.—The most recent data
on the petroleum resources of the world are apparently those reported
by David White, of the United States Geological Survey, in 1920,26
on the basis of estimates prepared by the foreign mineral section of
the survey. These estimates covered the general distribution of the
principal petroleum reserves of the world, and were computed on a
relative basis with the United States reserve taken as a base of
7,000,000,000 barrels. Inasmuch as the United States reserves, as
indicated above, are estimated at over 9,000,000,000 barrels, the
world estimates based on the lower estimate for the United States
may be considered as low. These estimates are as follows:
TABLE 4 3 . — E s t i m a t e d relative petroleum

resources

of the world

United States and Alaska
Canada
Mexico
Northern South America, including Peru
Southern South America, including Bolivia
Algeria and Egypt
Persia and Mesopotamia
Southeast Russia, southwest Siberia, and region of Caucasus.
Rumania, Galicia, and western Europe
Northern Russia and Saghalen
Japan and Formosa
China
India
East Indies
Total

h

Per cent
16. 3
2. 3
10. 5
13. 3
8. 2
2. 2
13. 6
13.5
2. 6
2. 2
2. 9
3. 1
2. 3
7. 0
100.0

If, as the table indicates, the United States reserves amount to
16.3 per cent of the total world reserves, then the world total would
be over 56,000,000,000 barrels (on a basis of 9.15 billion barrels for
the United States).
That the reserves of the United States are being exhausted far
more rapidly than those of any other country is indicated by the fact
that the 1924 production of this country, amounting to some 707,000,000 barrels, represented 70.3 per cent of the total world production in that year, while, as already shown, the United States
reserves are estimated at only about 16.3 per cent of the world reserve.
CONTROL OF PETROLEUM RESERVES.—Schedules covering the
ownership or control of petroleum reserves were addressed by the
commission to 1,600 companies and individual operators whose
combined production of petroleum in 1924 amounted to more than
90 per cent of the country's total output. Of 625 replies received
2 Oil and Gas Journal, March 20, 1924, p. 84-A.
8
2c Annals of the American Academy of Political and Social Science, Vol. L X X X I X , No. 178.
h Based on estimates of foreign mineral section of the United States Geological Survey in 1920 with a
United States reserve of 7,000,000,000 barrels taken as a base Most recent estimated United States reserve
is over 9,000,000,000 barrels.




102

NATIONAL WEALTH AND INCOME

only 264 (excluding subsidiary companies) were complete. The
petroleum reserves of these 264 companies totaled 1,442,026,480
oarrels, or about 16 per cent of the estimated total for the United
States. The distribution of these reserves among the 264 companies,
according to size groups, was as follows:
TABLE 4 4 . — C o n t r o l of reported petroleum reserves in the United States, by
according to specified size groups, in 1923 *

companies,

Per cent of total
Recoverable crude petroleum (barrels)

Over 75,000,000
50,000,000 to 75,000,000
25,000,000 to 50,000,000.,
10.000,000 to 25,000,000
5,000,000 to 10,000,000
Under 5,000,000
Federal naval reserves
Total

Number
of companies

Recoverable
crude
petroleum
reported

Barrels

Companies

5
4
2
10
9
233
1

584,338,133
240,327,258
60,992,820
144,022.046
58,457,456
163,888,767
190,000,000

1.9
1.5
.8
3.8
3.4
88.2
.4

264

1,442,026,480

100.0

Recoverable
reserves
reported
Barrels

40.5
16.7
4.2
10.0
4.0
11.4
13.2

100.0

1 Based on data for 264 companies reporting to the commission. The reserves of these companies represent about 16 per cent of the estimated total for the United States.

Five companies, as the table shows, controlled 40.5 per cent of the
total reserves reported and nine companies had 57.2 per cent of the
total. The 233 smallest companies, representing 88.2 per cent of all
those reporting, had only 11.4 per cent of the total quantity of recoverable petroleum reported. The 30 largest companies controlled
75.4 per cent of the reported reserves. The reserves of these 30
companies were equal to about 12 per cent of the 9,150,000,000 barrels estimated as the total United States reserve.
The production of petroleum, however, is not dominated by large
companies to the same extent as in the refining or marketing of petroleum and petroleum products. The commission's u Report on Gasoline Prices in 1924'' shows that the so-called Standard Oil group of
companies, while controlling in 1923 nearly half the gasoline output
of the country and about two-thirds of the gasoline stocks, produced
only 14.4 per cent of the total crude oil for that year.
CONTROL OF P E T R O L E U M R E S E R V E S IN D I F F E R E N T

REGIONS.—The

data on petroleum reserves received bv the commission were much
more complete for the California field than for others. For this field
reserves of 833,000,000 barrels were reported, representing about 45
per cent of the estimated total reserve of 1,850,000,000 for the field
in 1921. (See p. 100.) The quantity reported for the eastern field,
on the other hand, represented only about 12.5 per cent of the estimated total for the field, while for the Gulf and mid-continent fields
combined about 6.8 per cent was reported and for the Rocky Mountain field about 12.3 per cent. The distribution among the reporting
companies in the California field was as follows:




103 NATIONAL W E A L T H A N D

INCOME

TABLE 4 5 . — C o n t r o l of reported petroleum
reserves in California,
according to specified size groups, in 1928 1

Recoverable crude petroleum (barrels)

Over 75,000,000
50,000,000 to 75,000,000
25,000,000 to 50,000,000
10,000,000 to 25,000,000
5,000,000 to 10,000,000
Under 5,000,000
Total

Number
of companies

by

companies,

Per cent
Barrels

Companies

Barrels

3
2
2
7
6
55

456, 504, 431
113, 566, 354
71, 729, 574
100, 548, 848
37,927, 273
53,407,965

4.0
2.7
2.7
9.3
8.0
73.3

54.8
13.6
8.6
12.1
4.5
6.4

75

833, 684, 445

100.0

100.0

i Based on returns of 75 companies with reserves of 833,000,000 barrels, or about 45 per cent of the estimated
total California reserve.

Three companies controlled 54.8 per cent of the total California
reserves reported to the commission and 20 companies controlled
93.6 per cent. The reserves of these 20 companies totaled over
780,000,000 barrels, or about 42 per cent of the estimated total
California reserve.




CHAPTER

V

FARM WEALTH
Section 1. Utilization of Land Area and Diversity in Agriculture.
Farm wealth is probably the most important of the " chief kinds of
wealth in the United States" concerning which the Senate directed
the Federal Trade Commission to make inquiry.1 An analysis of
farm wealth is, at least, a first step in the " general accounting with
regard to the economic position of this country" held to be "necessary in order to formulate an intelligent policy." 1 Our farms and
forests furnish most of our supply of plant and animal products.
Whether that supply shall be abundant at a relatively low price,
instead of scanty and high in price, depends on the effective utilization of crop, grazing, orchard, and timber land. Almost continuous
increases in the quantity, quality, and variety of our food supply
make it easy to underrate the vital importance of the farm as a
national asset.
AGRICULTURAL U T I L I Z A T I O N OF L A N D AREA.—On farmer and
forester depends the utilization of the 1,903,000,000 acres of land
area in the United States. The entire area devoted to public roads,
railroads, and farm roads requires less than 2 per cent of this
total area. Marshes, unforested mountains, and other waste land
occupy but little more than 2 per cent. The proportional distribution of the 1.9 billion acres according to potential utilization is shown
graphically on the diagram opposite.
It is needless to say that the farmers of the United States are
still leaving in pasture much land that would be cultivated if prices
of farm products should advance sufficiently. The area reported
under crop from time to time has never been large enough (at no
time exceeding 370,000,000 acres) to cover more than one-third of the
potential plow land. But most of the potential plow land and all
the grazing land is being utilized for pasture.
Some recent adverse aspects of agriculture should be noted.
Eecent estimates by the United States Department of Agriculture
show that total farm wealth in the United States decreased 25 per
cent from 1919 to 1924. Estimated cash income of the average farm
family in 1921-22 was only $556.2 The returns show that in 1922 the
local, State, and Federal taxes of the 9,092 corporations engaged in
agriculture and related industries amounted to 86 per cent oi their
income. The corresponding figure for all other corporations was
only 31 per cent.3 Taxes on farm lands increased from an average of
31 cents to 69 cents per acre from the fiscal year 1914 to 1922. For a
1
1
8

Senate Resolution 451, Sixty-seventh Congress, fourth session.
Crops and Markets, August, 1924, p. 286.
United States Department of Agriculture, release of Jan. 30,1925.

104




Diagram 4
PROPORTIONAL DISTRIBUTION OF THE LAND A R E A OF THE UNITED S T A T E S




ACCORDING TO POTENTIAL AGRICULTURAL UTILIZATION.
I, 9 0 3 , 215 , 3 6 0

ACRES

B
3

o

>

tr*
a
&
H

>
o
3
Q
O
K

0
01

106

NATIONAL W E A L T H AND

INCOME

group of Indiana farms, real estate taxes constituted 12 per cent of
the net rent in 1919 and 40 per cent in 1923.4 The percentage of
farm bankruptcies to total bankruptcies increased from 6 per cent
in 1920 to 19 per cent in 1924.
Although there was little if any increase in the number of our
farmers between 1909 and 1924, Department of Agriculture data
show that the exchange value of their products increased between
5 and 10 per cent. . But in order to obtain the increase in return
farm operators increased the quantity of their output between 10
and 15 per cent. In other words, although there was an advance in
the economic position of the farmer from 1909 to 1924, it may have
cost him more effort.
D I V E R S I T Y IN A G R I C U L T U R E . — E v e n about a century ago the
average farm supplied most of the simple wants of its own occupants.
To-day the California farm supplies the eastern farm with dried and
canned fruits, the Florida farm supplies the northern farm with
citrus fruit, the Middle West distributes its animal products over
the entire country, while the East lails to provide the dairy products,
fruits, and vegetables required by-its dense industrial and commercial population. Although production is thus specialized and
localized, the variety of crops increases. About 70 different crops
are already of such importance in the United States that the quantity
produced is officially estimated each year, and of one of these crops,
wheat, 230 different varieties are grown, either because of climatic and
soil differences between localities, or because of the milling demand
for different kinds of wheat. Variety of products is fully matched by
differences in the value of the farms themselves.
Iowa and Illinois usually produce a fourth of the country's corn
crop, and Texas, Oklahoma, and Arkansas are producing more than
half of our cotton crop, while less than 4 per cent of the country's
total area located in the extreme northeast produces 10 per cent of
the total hay crop. 5 Nearly half of the farm wealth of the United
States, concentrated in the upper Mississippi Valley, occupies little,
if any, more than one-sixth of the country's total area. On the other
hand, only 3 per cent of the country's farm wealth is found in the 21
per cent of the area occupied by six grazing States in the West. Evidently, under such conditions, the factors that affect success in farming, and determine the valuations placed on farm land, must vary
from region to region, and the degree to which any particular factor
is responsible for changes, good or bad, can not be determined until
the data have been analyzed.
Section 2. Amount of farm wealth.
T O T A L F A R M W E A L T H , 1 9 2 0 AND 1 9 2 2 . — I n 1 9 2 0 the value of all
farm property, as found by the Bureau of the Census,6 was $ 7 7 , 9 2 4 , 100,338.
It had been $ 4 0 , 9 9 1 , 4 4 9 , 0 9 0 at the time of the previous
census in 1910. No exactly comparable figure is available for intercensus years, but one that will answer reasonably well may be found
by computation. The average value per acre of land and improve* Wallace, Henry C., " Our Debt and Duty to the Farmer," p. 72.
«United States Department of Agriculture, Crops and Markets, December, 1924.
6 Fourteenth Census, Vol. VI, p. 32.




107 N A T I O N A L . W E A L T H A N D

INCOME

ments has been estimated by the Department of Agriculture for a
series of years prior to and including 1922. Assuming that all farm
property will show the same movement in value as land and improvements, which are by far the greater part of it, and applying to the
total for 1920, given above, the rate of decline from 1920 to 1922 for
land and improvements as shown by the estimates of the Department of Agriculture, gives a round figure of $61,600,000,000 as the
total value of all farm property in the latter year.
In the Monthly Supplement for July, 1925, page 236, the Department of Agriculture also has estimated the current value of total
capital invested in agriculture as $79,607,000,000 for 1920 and $62,740,000,000 for 1922, the estimates being as of the 1st of January.
These values cover land, buildings, livestock, implements, machinery,
motor vehicles, and an allowance for cash working capital.
K I N D S O F F A R M WEALTH.—The Bureau of the Census classifies
farm property under the heads: Land, buildings, implements and
machinery, and livestock. Land constitutes more than 70 per cent
of the total of these, and land and buildings together make up a
little over 85 per cent of the total, while livestock and implements
and machinery account for a little over 10 and a little under 5 per cent,
respectively. The corresponding figures for 1910 held substantially
the same relation to the total. In that year buildings constituted a
slightly greater part of the combined figure of land and buildings,
and livestock was nearly 2 per cent more of the grand total. The
relatively greater use of livestock for power purposes doubtless accounts in large part for the latter difference.
The Bureau of the Census does not include in its value of all farm
property the value of unsold crop products on hand, nor the value of
feed, food, fuel, and other supplies on hand. The value of farm crops
raised in 1919 was $14,755,000,000, but just what part of this remained on hand at the time of taking the census is not shown.
GEOGRAPHICAL

DISTRIBUTION

AND

CHARACTERISTICS.—The

fol-

lowing table shows the distribution of rural population and farm
wealth by geographic divisions. It also shows the farm area and farm
wealth per capita of rural population by geographic divisions:
TABLE 4 6 . — G e o g r a p h i c a l distribution

of farm

wealth,

1920

Area and values per capita
Geographic division

United States
New England
Middle Atlantic...
East North Central
West North Central
South Atlantic
East South Central
West South Central
Mountain
Pacific




Rural
population

Land •
m
farms

Thousands
51,406
1, 536
5, 589
8, 426
7, 817
9, 652
6, 899
7, 271
2,121
2,095

Value of
all farm
property

Value of
land
alone

Thousands of
acres
955,884

Millions
$77,924

16,991
40, 573
117, 735
256,973
97, 775
78, 898
173,449
117, 337
56,153

1,173
3,950
17, 245
27,991
6,133
4,420
7,622
4, 083
5,307

Land in
farms

Value of
all farm
property

Millions
$54,830

Acres
18.6

$1,516

488
1, 662
12,046
21, 340
4,001
2,916
5, 408
2,802
4,167

11.1
7.3
14.0
32.9
10.1
11.4
23.9
55.3
26.8

764
707
2,047
3, 581
635 !
641 i
1,048 |
1,925 !
2, 533 i

Value of
land
alone

$1,067
318
297
1, 430
2, 730
415
423
744
1,321
1,989

108

NATIONAL W E A L T H AND

INCOME

The following table shows the distribution of rural population,
land in farms, value of farm property, and value of farm products by
geographic divisions in terms of the relation to the total for the
United States :
TABLE 4 7 . — G e o g r a p h i c distribution

of farm

wealth,

Land in
farms
Geographic division

United States
New England
Middle Atlantic
East North Central
West North Central
South Atlantic
East South Central... T .__
West South Central
Mountain
Pacific

1920,

in terms

of

Value of
products

Value of farm property-

Rural
population

Implements
Im- Total Land Build- and LiveTotal proved
ings
ma- stock
alone
chinery

100.0

100.0

3.0
10.9
16.4
15.2
18.8
13.4
14.1
4.1
4.1

1.8
4.3
12.3
26.9
10.2
8.3
18.1
12.2
5.9

100.0
1.2
5.4
17.5
34.0
9.7
8.7
12.7
6.0
4.8

percentage

Crop

Livestock

100.0

100.0

100.0

100.0

100.0

100.0

100.0

1.5
5.1
22.1
35.9
7.9
5.7
9.8
5.2
6.8

.9
3.1
22.0
38.9
7.3
5.3
9.8
5.1
7.6

3.7
11.7
25.2
27.2
10.5
6.5
7.7
3.1
4.4

2.6
10.0
21.9
32.3
7.9
4.9
8.6
5.3
6.5

2.0
7.3
19.0
29.5
8.1
7.2
12.7
9.1
5.1

1.9
6.2
19.1
24.9
14.1
8.9
14.7
3.8
6.4

5.0
15.4
27.0
20.7
7.7
6.0
6.8
4.5
6.9

The value of all farm property ranges from $635 per capita of rural
population for the South Atlantic group of States to $3,581 per capita
for the west north central group. The value of land constitutes
the larger part of the value of farm property, the proportion varying
somewhat with the area required per capita. The proportion of
improved to total farm land also affects the ratio of land value to
total value of farm property. For New England and the Middle
Atlantic States land is only a little over 40 per cent of the total, but
for the Pacific and West North Central groups it is more than 75 per
cent. For the other groups it is roughly two-thirds of the total.
Under present farming practice the region west of the Mississippi
requires the cultivation of a larger area per capita on the average
than that on the east. The average farm land per capita of rural
population is 55 acres for the Mountain group and 33 acres for the
West North Central group. The average lor each of the other groups
in this region is between 20 and 30 acres, while for most of the groups
in the region east of the river the average is around 10 acres.
For three of the groups of States in the region west" of the Mississippi the value of necessary farm property, including land, is $2,000
per capita of rural population or more, and for the West North Central
amounts to $3,600. This region also requires more machinery per
capita for the operation of the farms than that lying east of the river.
The average requirement in this line for the West North Central group
is $149 and for the Pacific States $110. The East North Central group
requires $93 worth of farm machinery per capita, but for other groups
east of the river the requirement is much less.
The following table shows the distribution of farms, with the average acreage per farm, and the average value per acre, by geographic
divisions:




N A T I O N A L W E A L T H AND I N C O M E
TABLE 4 8 . — R e g i o n a l distribution

of number

of farms,

and average value per acre, by decades,

average

109
acreage

1890-1920

per

farm,

[Compiled from Statistical Abstract of the United States]
District
Number of farms:
New England
Middle Atlantic. East north centralWest north central
South Atlantic
East south centralWest south central
Mountain
Pacific
Acreage per farm:
New England
Middle Atlantic.
East north central
West north central
South Atlantic...
East south centralWest south central
Mountain
Pacific
Value per acre:
New England
Middle Atlantic
East north centralWest north central
South Atlantic
East south central.
West south central
Mountain
Pacific...,

1890

1900

189,961
468,608
1,009,031
914,971
749,600
655,766
431,006
49,398
96,480

191,888
485,618
1,135,823
1,060,744
962,225
903,313
754,853
101,327
141,581

104.0
91.7
104.8
164.8
133.6
120.5
179.7
298.9
337.0

107.1
92.4
102.4
189.5
108.4
89.9
233.8
457.9
334.8

104.4
92.2
105.0
209.6
93.3
78.2
179.3
324.5
270.3

108.5
95.4
108.5
234.3
84.4
75.0
174.1
480.7
239.8

$29.63
55.47
44.91
24. 98
13.31
13.35
10.79
23. 67
31.40

$31.13
51. 51
48.86
28.96
13.94
14. 72
9.18
12. 96
23.49

$43.99
68.52
85. 41
58.18
28.44
26. 78
22.69
29.52
54.17

$69.04
97.35
146.47
108.93
62.72
56.06
43.94
34.80
94. 51

1910

188,802
468,379
1,123,489
1,109,948
1, 111, 881
1,042,480
943,186
183,446
189,891

1920

156,564
425,147
1,084,744
1,096,951
1,158,976
1,051,600
996,088
244,109
234,164

The South Atlantic and the four central geographic divisions constitute the great farming region of the country. In number of farms
the other four regions combined barely equal one of these. The average size of farms for two of these divisions is smaller than for the central farming region, but for the Mountain and Pacific Divisions it is
considerably greater. The West North Central Division shows a remarkable increase in the average size of the farm, 1890 to 1920, while
the South Atlantic and East South Central show marked decreases.
The five divisions referred to above also have the greater interest
from the viewpoint of values per acre. These values are highest for
the East and West North Central Divisions, but ejach of the nve divisions shows a greater increase in value than any one of the less important divisions. For one of these five divisions values per acre trebled
from 1890 to 1920, for three of them the values more than quadrupled
and for the South Atlantic they almost quintupled.
GENERAL CHANGES IN VALUE.—From 1 9 1 0 to 1 9 2 0 there was
roughly 90 per cent increase in total value of farm property. Buildings showed an increase of around 80 per cent, but land and buildings
together showed practically the same increase as the total. In spite
of this marked increase, the valuation of farm land, as measured by
the purchasing power of money, was less in 1920 than in 1910.7 The
value of farm livestock showed an increase of only about 63 per cent,
but the increase in value of machinery and fixtures was over 180 per
cent. The low rate of increase for livestock and the higli rate for
machinery and fixtures were due without doubt to the shifting from
livestock to the tractor for farm power.
' Yearbook of Department of Agriculture, 1923, p. 544.




110

N A T I O N A L W E A L T H A N D I N C O M E 110

Farm products showed a much greater increase in value than farm
property. The increase for crop and livestock products combined
was 171.8 per cent, the increase for crop products being much the
greater. There was considerable variation in the rate of increase for
different sections of the country, especially in value of crop products.
These products in the northern section showed an increase of 157 per
cent, while the increase for the western was over 255 per cent, and for
the southern about midway between these two. Increase in value of
livestock products was 124 per cent for both northern and southern
sections, but was a little over 20 per cent higher for the western.
Index numbers show a considerable increase in mass crop production
for 1919 over 1909 and for 1920 over 1910.8 Figures for 1912 and
1922, however, show almost exactly the same index number. For the
first six years of the 11-year period, 1912 to 1922, the simple average
of the Department of Agriculture index numbers of mass crop production is 106, and for the last six years of the period it is only 108.
Index numbers on page 125 show a little greater difference.
VARIATIONS IN F A R M VALUE.—In 1850 there were in the United
States 1,449,073 farms, of an average size of 203 acres. By 1880 the
number had increased to 4,008,907, but the average size had fallen
continuously and was then 134 acres. From that'time on the average
size increased continuously, with the exception of one decade. In
1920 there were 6,448,343 farms, of an average of 148 acres each. The
total number of acres used for farming operations shows an increase in
every decade and rose from 293,560,614 in the first year under consideration to 955,883,715 in the last.
The following table shows the number of farms, the acreage per
farm, the value per farm, and the value per acre for the country as
a wh6le of all farm property, by decades, 1850 to 1920:
TABLE 4 9 . — N u m b e r of farms

in the United

States,

average

farm ana average value per acre, by decades,

acreage,

1850-1920

and value

per

[Compiled from ^he Statistical Abstract of the United States]

Year

1850
1860
1870
1880

Number of Acreage Value
per
per
farms
farm
farm
1,449,073
2,044,077
2,659,985
4,008,907

202.6
199.2
153.3
133.7

$2,738
3,906
4,142
3,038

Value
per
acre
$13.51
19.60
27.28
22.72

Fear

1890
1900
1910
1920

Numoer of Acreage Value
per
per
farms
farm
farm
4,564,641
5,737,372
6,361,502
6,448,343

136.5
146.2
138.1
148.2

$3, 523
3,563
6,444
12,084

Value
per
acre
$25.81
24.37
46. 64
81. 52

Land and buildings, of course, constitute the greater part of these
values in all periods, and remain nearly a constant proportion at
between 90 and 85 per cent of the total, the last two decades showing
the highest ratio. Figures of value here shown are not strictly comparable one decade with another since changes in the purchasing
power of the dollar have not been taken into account. While there
is no index available that is directly applicable to land values, such
studies of this kind as are available indicate an actual decline in values
>er acre for 1890 and 1900, as compared with those of 1860. The
ast two decades both show higher relative values than 1860, but that
for 1920 is much lower than for the preceding decade.

1

8 Crops and Markets, December, 1924, p. 399. Also see index numbers, p. 125.




NATIONAL W E A L T H AND INCOME

111

Section 3. Ownership and indebtedness.
OWNERSHIP.—The character of farm tenure shows little change in
recent years, taking the country as a whole. The total number of
farms increased from 6,361,502 in 1910 to 6,448,343 in 1920, with an
increase also in the average acreage from 138.1 to 148.2 acres per farm,
and a decrease of 1.2 per cent in the number of farms owned or partly
owned by operators. The proportion of farms thus owned varies
roughly from 47 per cent for the Western South Central group of States
to nearly 90 per cent for New England. The Middle Atlantic, the East
North Central, the Mountain, and the Pacific groups all show proportions of operator-owned farms ranging from 71 to 83 per cent of
total. While the proportion of such farms to the total remains practically the same for the entire United States as at the 1910 census,
some of the groups of States show material changes. The Middle
Atlantic group shows an increase in the number of such farms during
the period of more than 7 per cent, while the Pacific, West North Central, and Mountain groups show decreases of from 3 to 5 per cent.
Other groups show little change in the proportion.
Farms operated by managers show an average acreage of 790.8 per
farm—a considerably smaller acreage than the census of 1910 showed
for such farms. The entire acreage operated by managers—about
5.5 per cent of the total for the country—changed very little during
the period. Farms owned by operators and those operated by tenants
both increased in size from 1910 to 1920 about 11 uteres per farm on
the average.
In this connection it is interesting to make a comparison of average
value per farm of farms owned by operators and those operated by
tenants. This may be done from the following statement which
shows such average values by geographic divisions :
TABLE 5 0 . — A v e r a g e acreage and average value per farm of land and buildings
farms owned by operators and farms operated by tenants,
1920
Average acreage
per farm

Geographic division

for

Average value per
farm of land and
buildings

Owners
162.2

New England
Middle Atlantic
East North Central.
West North Central.
South Atlantic
East South Central.
West South Central.
Mountain
Pacific

Owners

107.9

$10,156

$9,690

104.9
88.7
99.8
237.0
101.8
102.7
225.7
448.8
202.5

United States

Tenants

112.5
109.2
126.0
219.5
58.2
44.7
99.0
359.5
272.7

5,230
6,077
11,148
20,454
5,060
4,296
7,256
11,609
16,645

5,978
8,594
19,607
25,272
3,427
2,508
4,973
15,450
24,406

Tenants

The above statement indicates that, taking into account the smaller
size of tenant farms, such farms show a higher value relatively, not
only for the country as a whole but for every group of States, than
farms owned by their operators. From these facts the conclusion
may be drawn that even in years of exceptional farm prosperity the
operator demands a better farm when he rents than when he pur103288—S. D o c . 126, 6 9 - 1




8

112

NATIONAL W E A L T H AND

INCOME

chases. In the case of purchase there may be other considerations
that offset a poor selling value, but in the case of taking a farm as
a tenant the farm must produce the rental and the cost of operation. In other words, it must be a sure producer, which fact will
give it a good selling value.
INDEBTEDNESS.- -Data on mortgage debt were obtained by the
Bureau of the Census in 1920 for 3,535,631 farms—roughly 55 per
cent of the total number. Of these, 1,461,306 were reported as
mortgaged and 2,074,325 as free from mortgage. Of the mortgaged
farms, 1,193,047 reported the amount of mortgage debt on them.
The value of these 1,193,047 farms is given as $13,775,500,013 and
the mortgage debt as $4,003,767,192, or 29.1 per cent of the value.
Distributing this debt over the entire number of farms from which
definite information on mortgage debt was received gives an average
of $1,132 per farm.
The Bureau of the Census does not secure mortgage data for farms
operated by tenants or managers, and it is therefore not possible to
estimate accurately from census statistics what proportion of such
farms are mortgaged or what the average of such debt is per farm.
If it could be assumed that the average of $1,132 per farm for those
farms from which definite information was obtained would apply to
the entire 6,448,343 farms, it would indicate a farm-mortgage debt of
about $7,300,000,000 for the country as a whole. The Farm Mortgage Bankers7 Association of America have an estimate of $7,857,700,000 as the total farm-mortgage debt for the same year.9
The following tabular statement shows by geographic divisions the
number of farms reporting amount of mortgage debt, ratio of number
of farms reporting to total number, average value per farm for farms
reporting, average mortgage debt per farm, and relation of average
debt to average value in 1920:
TABLE 5 1 . — R e l a t i o n of mortgage

Number
of farms
reporting
amount of
mortgage

Geographic division

New England
Middle Atlantic
East North Central
West North Central
South Atlantic
East South Central
Mountain
Pacific
United States

debt to farm

..
-

value,

by geographic

divisions

Average Average
Percent 1
mortgage Per cent
° ' t o t a l buUdings debt per of value
farm
per farm

49,456
113,441
274,347
266,281
103,039
109,619
131,550
74,118
71,196

31.6
26.7
25.3
24.3
8.9
8.4
13.3
30.4
30.4

$6,100
6,275
10,786
20,333
6,335
5,205
8,627
12,519
15,912

$2,064
2,278
3,362
5,398
1,870
1,606
2,316
3,824
4,736

33.8
36.3
31.2
26.5
20.5
30.9
26.8
30.5
29.8

1,193,047

18.5

11,547

3,356

29.1

The figures on mortgage debt cover only farms owned by the operators. It has been pointed out above that farms operated by tenants show a higher value relatively than those owned by the operators. These figures indicate that for most sections of the country
the average value of mortgaged farms is higher than that of farms
having no mortgage debt. This is not true in the two sections of
« Report of Farm Mortgage Banker's Association of America,-1924, pp. 10,11,




113 N A T I O N A L . W E A L T H AND I N C O M E

very high priced land—the West North Central and the Pacific—nor
is it true of the East North Central.
New England and the Mountain and Pacific groups show the
greatest proportion of farms mortgaged, while the South Atlantic
and East South Central show the least. The relation of debt to value
shows little variation among the groups. If any conclusion may be
drawn from the showing, it probably would be that those sections
which have their production sufficiently diversified to give a nearly
continuous stream of products to market are able to get larger loans
relative to the value of their property than sections producing a
single crop.
Section 4. Prices of farm land per acre, 1912-1922.
Data of actual sales of farm land compiled by the commission from
reports of field agents indicate a marked increase in the average
price for the entire country from 1912 to 1920, with considerable
decline in the next two years and a continued slight decline thereafter.
While the sample used is not large enough to secure accurate averages, it does give averages which probably correctly indicate the
trend. The sample covers sales in 34 counties distributed over 9
States in different sections of the country and a cross section of sales
in the State of Ohio. The result of this study is shown in tabular
form in the following statement:

Period

1912-1914
1915-1917
1918-1920
1921-1922
1923-1924

Number Average
of sales
price

538
677
872
493
406

$58
77
116
93
92

Average
values,
Department of
Agriculture
$61
70
93
92
81

It will be noted from this statement that there was not only a
great increase in the selling price of farm lands from the beginning
to the middle of the period, but also that there was a much more
active market at the middle of the period. The price trend obtained
by this compilation is confirmed by figures compiled by the Department of Agriculture in studies of farm-land values. The simple
averages of their yearly averages for the same periods are shown in
the last column of the statement. These averages differ from those
of the actual selling prices, and the movement from one period to
the next is as great as that of actual prices in only one case, but it is
always in the same direction.
S A L E S P R I C E S O F F A R M L A N D I N IOWA.—For three counties for
which data were obtained for each period the prices of particular
tracts, leaving out of account sales that were believed not to be
representative, ranged in the 12 years covered from $23 to $450 an
acre. The average price of the combined sales of these three counties
shows an increase in each period over the preceding except for the
last, which shows a decrease. Averages for particular counties
show a marked variance from those for the three combined, the
figures for only one county—Polk—agreeing in movement with the




114

NATIONAL . W E A L T H AND INCOME

combined figures. The combined figures also show a lag, which
possibly is normal, behind economic conditions. The following
table shows the figures for the State summarized by counties and
those for these three counties combined:
TABLE 5 2 . — A v e r a g e selling prices of farm land per acre in certain
Iowa, based upon 1,744 sales, for the period
1912-1924
County

counties

in

1912-1914

1915-1917

1918-1920

1921-1922

$125

$178
173
143

$172
209
242
221
240

$192
273
190
306
287

$200
206
125

"223"

217

138

250
207

131
225

"204

Mahaska
Polk
Warren
Guthrie..
Dallas
,
Stone
Green
Jasper
.
Jasper-Adair
Marion
Madison-Boone
Mahaska-Polk-Warren.

126

98
103
123
134

277

131
"109*
"104

1923-1924

171

More detailed information is given in Appendix Table 6. The
above table shows that there was a marked increase in the price of
Iowa farm land from 1915 to 1917, the increase for the three counties,
for which a record of sales was secured being over 64 per cent. During the next three years there was a further increase, the average
being almost double that for the 1912-1914 period. Notwithstanding the unprecedented decline in the prices of agricultural products
which began in the last half of 1920 and continued through 1922,
farm land prices continued high through 1924.
S A L E S P R I C E S OF F A R M L A N D I N M I N N E S O T A . — F o r the purpose of
equalizing assessed values the Minnesota Tax Commission obtains
records of sales of real estate in every county in the State. These
are classified as sales of "platted" and sales of "unplatted" property. The consideration shown is said to be actual value in most
cases. Unplatted property corresponds very closely to farm lands
and platted to city property. From these records the Federal
Trade Commission had abstracts made of the most important items
for four periods for each of 13 counties, selecting counties whose
combined results, it is believed, will average nearly the same as the
entire State. In the following table the number of sales of unplatted
or acreage property, the acreage sold, and the consideration received
are summarized by counties and for the 13 combined.
TABLE 53.-—Average selling prices of farm land per
Minnesota,
based upon 9,061 sales, for the period
County

1912-13 1918-19 1920-21 1922-23

Benton-,
Blue Earth.
Cottonwood
Dakota
Faribault...
Hennepin...
Le Sueur
McLeod




$38
78
64
67
82
126
88
77

$66
127
111

107
128

143
142
133

$119
165
146
135
174
173
197
160

$68
137
110
121
133
205
137
126

acre in certain
1912-13
and

County
Meeker
Mower.
Pope..
Rock
Yellow Medicine
Average...

counties
in
1918-1923

1912-13,1918-19 '1930-21 ]922-23

58

121
63
153
103

$130
149
89
189
132

$91
126
86
140
305

109

138

116

115 NATIONAL . W E A L T H AND INCOME

Appendix Table 7 gives more detailed information. No data
were secured for the years 1914-1917. A marked increase is shown
for each county. In many cases prices in 1920 and 1921 were more
than double those for 1912 and 1913. There was a sharp decrease
in 1922 and 1923 as a result of the depressed conditions in agriculture
which were especially severe in the wheat States.
The area included in these sales totaled 407,000 acres for 1912-13,
258,000 acres for 1918-19, 309,000 acres for 1920-21, and 55,000
acres for 1922-23. The peak price was reached in 1920-21, in which
period the average price was more than double that of 1912-13.
Sales figures for the period 1920-21 were not used by the tax commission in establishing assessed values, as " members of the commission felt that sales recorded during these two years did not, in
many instances, because of inflated and speculative values, typify the
actual value of the property that changed ownership.7'10 In the
period 1922-23 the price fell off about one-sixth, the number of sales
decreased 75 per cent, and the acreage sold more than 80 per cent.
S A L E S P R I C E S OF F A R M L A N D IN N O R T H D A K O T A . — F o r this State
some sales were found for each of five counties. While not very many
were obtained for any one county, the number for the State as a whole
is well distributed over the different periods. The prices for specific
tracts range over the 12-year period from $6 to $135 an acre. The
average price for the five counties combined reaches the peak in the
war period, declining nearly 50 per cent in the next, and then showing
a marked advance again in the last. The figures for Cass County
exercise a preponderating influence on the combined averages, and
it is therefore necessary to examine those for other counties in detail
to get a correct view of the situation. These figures are summarized
by counties in the following table:
TABLE 54.—Average selling prices of farm land per acre in certain counties
North Dakota, based upon 157 sales, for the period
1912-1924

1912-1914 1915-1917 1918-1920 1921-1922 1923-1924

County
Cass
Wells
Trail
Hettinger
Burleigh..

in

_
__

Average

$57
23
50
17
19

$62
37
58
26
17

$90
33
57
22
22

$75
28
60
18
22

$82
38
48
16

36

38

49

25

42

More detailed information is given in Appendix Table 8. The
above table shows considerable fluctuation in prices. There was
little change in Burleigh County, while the average for Hettinger and
Trail Counties was lower in 1923 and 1924 than 10 years earlier.
SALES P R I C E S OF F A R M L A N D I N I D A H O . — F o r Idaho prices for
five counties range for the 12 years from $10 to $500 per acre and the
average price for the five combined shows an increase in the second
and third periods and a decrease in the fourth and fifth. Average
prices for two of the five counties agree with this movement and those
for two of the other three counties are not greatly at variance with it.
Few sales were found for the last two periods and possibly some of
10

Report of the Minnesota Tax Commission, 1924, p. 15.




116

NATIONAL . W E A L T H AND INCOME

those were forfeiture sales, although it was intended to throw such
sales out. The following table shows the figures for the State summarized by counties and those for the first five counties combined:
TABLE 55.—Average selling prices of farm land per acre in certain counties
Idaho, based upon 607 sales, during the period
1912-1924
County

in

1912-1914 1915-1917 1918-1920 1921-1922 1923-1924

Canyon
Twin Falls
Bonneville
Bingham
Gooding
Lincoln and Jerome - - .
Cassia
Minnedoka
Clearwater and Lewis-

$124
204
140
115
126

103

105

$195
305
224
168
187
135
255
219
94

108

140

212

$126
130
139
68
70
68

Average, first five counties-

$155
204
169
196
104
135
213
202

$158
209
159
114
92
150

146

More detailed information is given in Appendix Table 9. In Idaho
there was a steady and rapid increase in the prices of farm lands from
1912 to 1920, followed by a drastic decrease from 1921 to 1924. The
average for the five counties for which there was a record of sales in
each period, was 96 per cent higher for the 1918-1920 period. The
decrease in prices during the severe agricultural depression following
1920 reduced the average to $146, which was only $6 more than the
average for the three years 1915-1918.
S A L E S P R I C E S OF F A R M L A N D I N OHIO.—In this State county
recorders furnish to the secretary of state each year a summary of
the realty transactions brought into their offices for recording.
Among other things this summary shows the number of acres of
agricultural lands in the county sold within the period covered for a
consideration other than $1 and the total amount of such consideration and the average price per acre for the county. The following
statement shows for different years (periods 1918-1920 and 192122) the range of the different average prices and the simple average
of them for the States:
TABLE 56.—Average selling prices of farm land per acre in the State of Ohio for the
period
1912-1924
1912-1914
1915-1917
1918-1920

Per acre
$64
72
85

1921-22
1923-24

Per acre
$85
74

Appendix Table 10 gives some more details concerning the sales
of farm land in Ohio. The above table indicates that there was a
steady increase in prices of farm lands in Ohio from 1912 through
1920; that the average for 1921 and 1922 combined was the same
as for the three-year period 1918-1920, while the depression beginning in 1920 led to a sharp decline which reduced prices almost to the
level of 1915-1917.
S A L E S P R I C E S OF F A R M L A N D IN KENTUCKY.—For this State some
figures were obtained for each period for six counties. Prices found
here range from a dollar an acre to $498 an acre, and the combined
figures show a high average price in the war period with a consider-




117

NATIONAL .WEALTH AND INCOME

able decline and then an advance to the highest point in the last
period. Here again prices for different counties show different
movements, those of only one county agreeing with the combined
movement. The summary of these figures by counties is shown in
the following table:
TABLE 57.—Average selling prices of farm land per acre in certain counties
Kentuckyf based upon 917 sales, for the period
1912-1924
County
Fayette....
Franklin..
Graves
Henderson
Owen
Pike

1912-1914 1915-1917 1918-1920 1921-22
$83
10
41
41
18
10

$94
26
44
64
29
15

$166
71
87
71
46
22

in

1923-24
$148
104
52
96
44
21

$173
36
54
78
54
22

Appendix Table 11 gives more detailed information. For all of the
counties there was a rapid increase in farm-land prices from 19121920, the average for the period 1918-1920 being about double that
for the three years 1912-1914. In some counties there was a sharp
break in prices in 1921 and 1922, while in others the highest average
was not reached until later.
S A L E S P R I C E S OF F A R M L A N D I N N O R T H C A R O L I N A . — A good
series of sales were obtained for the counties of Guilford and Wake
in this State and some figures for Northampton and Pitt. For the
first two counties the samples are well distributed over the five
periods, and in each county the average price shows an advance in
every period over the preceding. For the other counties the data
obtained are not sufficiently numerous to warrant conclusions as to
average price or price movement. For the State as a whole, based
on these four above-named counties prices show a range of from $7
to $278 per acre. The average price is highest in the last period,
being 125 per cent above that of the first. Each period except the
fourth shows an advance over the preceding. The figures for this
State are summarized in the following table:
TABLE 58.—Average selling prices of farm land per acre in certain counties
North Carolina, based upon 400 sales, during the period
1912-1924
County
Guilford
Wake
Northampton.
Pitt

1912-1914 1915-1917 1918-1920

1921-22

$53
45
93
130

$68
55
38
46

$22
25
56
43 <

$36
37
35
50

in

1923-24
$79
59
62
154

Appendix Table 12 gives more detailed information. For three of
the four counties the average for the years 1923 and 1924 was higher
than for any other period.
S A L E S P R I C E S OF I D E N T I C A L TRACTS.—It was thought at the outset
of this study that figures for sales of identical tracts in successive
periods might give a better idea of the trend of value than a large
series of prices selected at random. The attempt was therefore made
to get such information, but it was found almost impossible to do so




136

NATIONAL . W E A L T H AND

INCOME

in a short time. Quite good records of sales were obtained for Idaho
aiid Texas and some for North Carolina. These are summarized in
the following table: •
TABLE 5 9 . — A v e r a g e prices

Stat©

per acre for identical
1912-1924

tracts of farm

land for

Number 1912-1914 1915-1917 1918-1920
of tracts

five

1921-22

periods,

1923-24

i
Texas
Do
Do
Do
Do
Do
Do
Do
Do
Do
Idaho
Do,,.:
Do
Do
DO
Do
Do. r
Do.:
Norfcji Carolina
Do
Do
Do
Do

::_:

3
6
4
12
7
5
14
13
9
5
1
1
7
7
13
38
13
1
1
1
3
2
1

$77
26
36

$106
37
103
46
40

38

48
47

85
148
84

135
170
126
142
123
134

85
30
48

36
39
45
183

$137
40
142
67
46
138
70
42
200
450
184
230
211
241
110
85
126

$111
49
128
55
133
51
133
275'

$115
120
118
118
250

202
187
213

188

58
120
278

More detailed information is shown in Appendix Table 13.
The data summarized in these tables are not sufficiently numerous
to warrant any final conclusion from the showing. In so far as
trends are indicated they agree roughly with those shown by more
numerous figures taken at random, and the base figures are burdened with the same defects as those. As already noted, factors
other than earning power often have the greater weight in finally
determining the selling price of farm land. For particular tracts
the price paid in one of a series of sales of the tract is often far out
of line as compared with the value based on earning power. It may
be much too high or much too low, but in either case it tends to throw
out of line any average price in which it is included, and yet it may
be a bona fide price. An example of this characteristic is found in
the second of the four tracts in Idaho, which was sold in each of
four periods. The price of $450 per acre in the third period seems
too large. If that price is right, tne drop in the next period to $275
seems too great, and yet both prices appear to have been the actual
consideration for the respective sales.
The figures for tracts sold in two periods for Texas and Idaho are
probably sufficiently numerous to give a correct impression of the
movement of prices of identical tracts in those localities between
each of the two periods they cover, although they do not, of course,
give the correct average level of price for the locality. It will be
noted that for Texas for the second, third, and fourth periods these
figure? in each case show an advance over the preceding period, while
those in the fifth period show a decline. The figures for Idaho show
advance to the middle period and a decline in each of the two
following.




119 N A T I O N A L . W E A L T H A N D I N C O M E

Section 5. Physical indexes of farm values.
The changes in farm values during recent years have been markedly
affected b y the radical economic disturbances caused b y the war,
which have manifested themselves particularly in wide fluctuations
in the real value of the dollar. For this reason it is important that
dollar values, even where such values have been corrected b y price
indexes to allow for changes in purchasing power, should be compared with changes in the number of physical units such as livestock,
farm machinery, and acreage of crops. Whether such data measure
stocks of goods on hand or changes in the quantity of output, they
reflect fundamental changes in farm wealth.
F A R M LIVESTOCK.—The Bureau of the Census places farm livestock
in three groups—domestic animals, poultry, and bees. There are
seven classes of domestic animals, but horses, mules, cattle, sheep,
and swine constitute nearly the entire group in point of value. In
fact, in value these five classes of animals make up more than 94.8
per cent of the total value of livestock. Poultry is an important
group, consisting almost entirely of chickens (96.5 per cent), but
detail statistics for this group were not published by Department of
Agriculture until 1920, so it is here omitted from the discussion.
Farm livestock falls naturally into two general classes—animals
that are kept a number of years and used for farming operations, or
in a sense as invested capital, from a which regular return is expected,
and those that are produced for income and constitute the return on
other investment. Horses and mules are used practically entirely
for the first purpose. Dairy cattle and sheep kept for fleece production fall into this class also, but are not nearly so exclusively kept
for this purpose as horses and mules. The principal animals falling
into the other class are hogs and beef cattle. For the first of these
classes the number and character of animals on hand is the index of
agricultural conditions, while for the second class it is the number
and character of animals produced.
The reports of the Department of Agriculture indicate that the
combined number of horses and mules used on the farm has not greatly
changed on the whole in the last 15 years, being a little over 24,000,000
at the beginning of 1910 and a little under that number at the beginning of the past year (1924). During the years of war activity the
number ran somewhat higher, and in 1918 and 1919 reached nearly
26,500,000, but dropped off again immediately after the war. The
net exports of horses and mules combined do not exceed 35,000 in
number in normal years, and as only between one and two thousand
are slaughtered for food, 11 practically the entire production is used to
replenish the stock of work animals. That the number used for
farm power does not show an increase is due probably to the increased
use of gasoline engines in one way and another. The stock of dairy
cattle shows an increase of around 4,000,000, or of nearly 20 per cent,
during the period. The stock of sheep shows a marked decline.
Apparently no very good total of annual production of the meatproducing animals is obtainable. A figure that will be considerably
under the total may be obtained by adding to the net exports the
number slaughtered under Federal inspection and adding or sub" Yearbook of United States Department of Agriculture, 1923, p. 1012.

103288—S. Doc. 126, 69-1




10

120

NATIONAL .WEALTH AND INCOME

tracting the gain or loss in stock on farms. This total of stock on
farms as reported by the Department of Agriculture is not very
satisfactory, but as it is rectified by census count every 10 years, an
average for a number of years will probably be approximately correct. Taken in this way the cattle production for tne years 1914 to
1923, inclusive, shows an increase of about 7 per cent over the increase
for the years 1910 to 1919, inclusive. The average number produced found in this way is a little under 10,100,000 for the period
1910-1919 and a little over 10,800,000 for the period 1914-1923.
As stated above, these figures are too small tor the total production of the country and should be increased by the number
slaughtered on farms and in abattoirs not having Government
inspection.
If calves which are slaughtered immediately after
weaning, as is often the case with dairy herd calves, be left out of
account, the production for 1919 as reported by the Bureau of the
Census was 15,475,929 head. This is 143 per cent of the average
figure for the period 1914-1923. It is probable that nearly the same
ratio would hold for the period 1910-1919 and that the annual production in that period would therefore average around 14,400,000
head.
Working out the production of hogs in the same way gives an
average production of roughly 37,000,000 head for the first 10-year
period and of nearly 40,000,000 for the last period. These figures
again are too small by the number slaughtered on farms and elsewhere, not under Government inspection. Probably around 16,000,000 hogs are required to provide pork products for export, as indicated by the exports statistics of pork products in the Yearbooks
of the Department of Agriculture. This would leave the products
of from 21,000,000 to 24,000,000 of the number stated above for
home consumption. Assuming that the products of all of these
hogs are consumed bv the urban population and that the rural
population will use about the same quantity relatively, it would
require from 20,000,000 to 25,000,000 hogs to supply the rural
population. This would give an average annual total production
of about 57,000,000 hogs for the first 10-year period and about
65,000,000 for the last period. It may be noted that these conclusions are in a reasonable degree of agreement with the estimates
of the Department of Agriculture as given in the Yearbook for 1923.
(See p. 1010.)
Using the same method to determine the annual production of
sheep gives an average annual production of 13,800,000 for the first
period and of 12,700,000 for the last. Assuming that the number
of sheep killed not under Federal inspection may be properly estimated by the same method as in the case of cattle, the figure of production for the first 10-year period would be about 17,600,000 and
for the last about 16,400,000. It may be noted again that this
last figure is in reasonable degree of agreement with the average
of figures given for recent years by the Department of Agriculture
(Yearbook, 1923, p. 1010).
This method of comparing production of livestock in past years
does not give a rate oi increase or decrease per annum nor for the
period, but it does indicate that some change in the quantity produced has taken place that should affect the value of land devoted to
agriculture. It is possible there has been an increase of 10 per cent




121 NATIONAL . W E A L T H AND INCOME

in number of hogs killed from 1912 to 1922 and of about 7 per cent
in number of cattle. Sheep show a decrease of possibly 10 per cent
for this period. Weighting these rates by the relative values of the
different classes of animals gives an average increase for all three
classes of roughly 5 per cent.
F A R M M A C H I N E R Y . — N o very good statement of the quantity of the
different kinds of farm machinery in use has been found, except the
table published by the Department of Agriculture (Yearbook, 1923,
p. 1156), and this covers only three years. The quantity of other
than power producing farm machinery is not of great importance
at this point, however, since, unless there is a great increase in intensive farming, or a great change in the division of farm acreage among
crops, the machinery requirements will tend to vary from time to
time somewhat according to the acreage cultivated. On the other
hand, the changing quantity of power producing machinery is very
important because the power thus developed takes the place of, or
adds to, that produced by farm animals.
POWER-DEVELOPING MACHINERY.—In
Table 6 0 given herein
(p. 122) which was computed indirectly from statistics compiled by the
Department of Agriculture, are the estimated numbers of tractors
in use for farm work on January 1, each year, 1916 to 1923, inclusive,
and their estimated power development stated in equivalent number
of horses.
In computing the number of tractors in use it is assumed that the
average life of a tractor will be five years, or that 20 per cent of the
tractors on hand at the beginning of one year will have to be replaced
by new machines for use the next year. These machines range from
the garden or pony tractor developing about one horsepower to the
traction engine, used for threshing, silage cutting, etc., and developing
in some cases as much as 35 horsepower. In computing the equivalent of work done by tractors in number of horses, it is assumed from
some information of the work done with such machines and of the
character of machines used that, on the average, a tractor will do the
farm work of about 10 horses.12
COMBINED H O R S E P O W E R U S E D ON F A R M S . — I n the following table
this tractor equivalent as of the beginning of each year is combined
with the number of horses and mules on farms January 1 each year as
shown by the reports of the Department of Agriculture. For want of
data colts which are too young to do farm work have not been
deducted from farm animals, and power trucks for marketing cropsj
have not been included with tractors.
" Compare with estimate in Agricultural Engineering News, August, 1924, p. 176.




122

N A T I O N A L . W E A L T H AND

TABLE 6 0 . — F a r m power for

seeding,

cultivating,

INCOME

harvesting,

and marketing,

in numbers of horses or estimated equivalent

stated

Tractors
Year
Nuitiber
l_
1910.. _
1911.
1912..
1913.
1914.
1915.
19161917.
1918.
1919.
1920.
1921.
1922.
1923..

11,128
27,819
71,759
153,877
259,264
370,399
369, 517
396,806

Equivalent
in horses

111,000
278,000
718,000
1,539,000
2,593,000
3,704,000
3,695,000
3,968,000

Horses

19,833,000
20, 277,000
20,509,000
20,567,000
20,962,000
21,195,000
21,159,000
21,210,000
21, 555,000
21,482,000
19,766,000
19,208,000
19,056,000
18,629,000

Mules

4,210,000
4,323,000
4,362,000
4,386,000
4,449,000
4,479,000
4,593,000
4,723,000
4, 873,000
4,954,000
5, 427,000
5,455,000
5,467,000
5,483,000

Total

24,043,000
24,600,000
24,871,000
24,953,000
25,411,000
25, 674,000
25,863,000
26, 211, 000
27,146,000
27,975,000
27,786,000
28,367,000
28, 218,000
28,080,000

Index
number

100.0
102.3
103.4
103.8
105.7
106.8

107.6
109.0
112.9
116.4
115.6
118.0
117.4
116.8

This table shows an increase in farm horsepower for the indicated
purposes of about 17 per cent from 1910 to 1923. The year 1921
shows an increase of 18 per cent and there was a slight falling off in
the following two years due to a decline in purchase of tractors.
These figures will be adverted to again further on.
CROP ACREAGE AND PRODUCTION.—The reports of the Department of Agriculture give figures of production and acreage planted
or harvested for many years for a number of the crops which are
most important in value of product and in acreage used. By interpolating the acreage and production of some of the least important
of these for a few years earlier than shown by the department, it
has been possible to estimate figures of acreage and yield per acre
which are believed to be reasonably accurate for a total of 24 crops
for the 12 years 1912 to 1923. The acreage devoted to these 24
crops, as reported by the Department of Agriculture, ranged from
about 320,000,000 in 1912 to nearly 356,000,000 in 1918.13 In 1919
around 355,000,000 acres were used for these crops. This is more
than 97 per cent of the land in harvested crops, as reported by the
Department of Agriculture for the year 1919,14 and in that year the
combined farm value of these crops was $13,435,392,000, or 95 per
cent of the estimated total value of all crops.15 The census placed a
higher value on farm crops for the year 1919, but the value of the
crops used above is roughly 91 per cent even of the higher census
figure. This relation apparently will hold at least roughly through
the entire period under consideration.
PRODUCTION PER A C R E FOR A L L CROPS.—The following statement
shows index numbers of production per acre for the years 1912 to
1923, inclusive, for 23 crops combined and for 24 crops combined.
In one case the apple crop is excluded and in the other it is included.
The statement is presented in this way partly because the apple
crop, is the only fruit crop included and partly because the 1919
figure of acreage devoted to apple orchards was the only one readily
is See Appendix Table 14.
» Yearbook, 1923, p. 427.
is Department's estimate $14,081,391,000, Yearbook, 1920, p. 804, plus $18,150,000 to cover farm value of
Louisiana sugar cane, and $28,350,000 to cover value of sugar cane raised for sirup.




123 N A T I O N A L . W E A L T H A N D I N C O M E

available. It takes a number of years to develop an apple orchard
to the point of worth-while production, and as the useful life of such
an orchard is at least from 25 to 50 years, the total acreage could
not have changed much during this period. The 1919 figure of
acreage has therefore been interpolated both backward and forward
to fill out the entire period.
TABLE 6 1 . — I n d e x numbers

of average combined production
crops, 1912-1923
i

23 crops

24 crops

112.4
96
105.9
115 3
98.4
102.4

Year

112.4
95.8
106
115.3
98.4
102.2

1912
1913
1914
1915
1916
1917

per acre for the

23 crops

Year

principal!
1

99.1
101. 2
110.2 1
96.8
102.8
103

1918
1919
1920
1921.
1922..
1923

24 crops
99
10T
110.2
96.5
102.8
102.9

1 For all the more Important crops the base of these index numbers is the 1909-1913 average production
per acre as reported by the Department of Agriculture. For four of the less important crops the 1914-1920
average is used; and for the three others an average as near 1914-1920 average as could be obtained is used,
the average for the earlier years not being available in these cases.

These figures were obtained by finding the index numbers of production per acre for each crop included in the group, multiplying
them by the corresponding acreage and dividing the sum of the
products for each year by the total acreage of the group for the year.
If the figures be considered in three four-year periods the second
period shows a marked reduction from the first in average productivity. There was some recovery in the third period, but the average
of the first period was not attained again. The figures shown do not
take account of labor or horsepower used tod deficiency relatively
in one or both of these probably largely accounts for the low productivity of the second period. Taken altogether, the indicated
changes in productivity are not sufficient alone to greatly affect
the value of the land as determined by earning power.
P R O D U C T I O N P E R A C R E B Y G R O U P S O F P R O D U C T S . — i f y splitting
the products up into groups quite a different showing is obtained.
The following table gives the index numbers of combined production
for those products used mostly as food, for those used mostly or
largely as feeds, and for cotton, tobacco, and broomcorn:
TABLE 6 2 . — I n d e x numbers

Year

of average

Foods i

Feeds *

Cotton,
tobacco,
and
broomcorn

110.1
100.6
111.1
113.2
84.3
95.4

114.2
93.7
102.9
119.1
104.3
105.9

105.0
100.4
115.0
94.3
87.1
88.8

combined

1912
1913
1914
1915
1916
1917

production

acre,

Foods i

Year

1918—
1919
1920-.1921
1922
1923

per

-

Feeds 2

102.8
85.7
93.9
86.4
95.9
91.9

99.3
109.3
117.7
103.6
108.9
110.6

1912-1923
Cotton,
tobacco,
and
broomcorn
89.0
89.4
98.4
69.9
78.7
78.2

1 Winter wheat, spring wheat, rye, buckwheat, Irish potatoes, sweet potatoes, rice, beans, peanuts,
sugar beets, sugar cane, sorghum for sirup, sugar cane for sirup, and apples,
2 Corn, oats, barley, tame hay, wild hay, kafirs, and flaxseed.




124

NATIONAL . W E A L T H AND INCOME

Wheat and rye control the first group, the acreage devoted to
these crops being 81 per cent in 1912 and 83.7 per cent in 1923 of
the total for the group. These crops show an expansion in acreage
of nearly 33 per cent during the period, while that used for other
food crops increased only about 11 per cent.16 Corn, oats, and hay
control the second group. But all the products in this group, except
flaxseed, interchange and supplement each other so much as feeds
that changes in production of particular products mean very little.
The figures do indicate that the acreage used for fodder or roughage
products have been increased materially, while that used for the
production of grains has remained about the same throughout the
period. The increase in fodder acreage is doubtless due to the increase
in number of dairy cattle. Cotton controls the third group, the
acreage used for this crop being roughly 95 per cent of the total for
the gro^ip.
The average production per acre for the first group shows a marked
decline in the second period and no recovery in the third, the index
numbers for the three periods being 108.8, 92.1, and 92, respectively.
The second group shows some decline in the second period, but a
more than complete recovery in the third. The third group, with
index numbers of 103.7, 88.6, and 81.3 for the three periods in order,
shows a 15-point decline in the second period and a further loss of
more than 7 points in the third.
Different factors operate in different areas to produce these com^
bined results, but some may be pointed out as being more important
probably than others. The figures in the food group, as already
noted, are controlled by the figures for wheat. At the outbreak of
the World War there was a sudden expansion of roughly 25 per cent
in wheat acreage, and by 1919 this had increased to nearly 50 per
cent of the acreage used before the war. A great part of this increase
was in winter-wheat area and consisted of lands which on a big scale
may be farmed cheaply but which owing to deficiency in rainfall do
not give large yields per acre. In the spring-wheat area, owing to
unfavorable seasons, a good crop was obtained in only one year of
each of the last two periods,
The figures in the third group are controlled by the cotton crop,
and production of this crop has been affected by the increasing inroads of the boll weevil and also by the migration of colored farm
labor after the war. These forces have been partly responsible for a
shifting of the cotton area to the westward.
M A S S PRODUCTION AND F A R M VALUE.—The figures just given show
a decreasing production per acre farmed for some products and but
slight increases for others, giving a slight decrease in combined production per acre of all products considered. This, however, does not
take account of changes in acreage used, which shows a considerable
increase during the period. The following table shows the index
numbers of acreage used and the index numbers of mass production
for the years 1912 to 1923, inclusive. For the index number of acreage the figure for 1912 is used as a base. The index numbers of mass
production are found by multiplying the acreage used each year for
the 24 crops by the corresponding index number of production per
16

See Appendix Table 14.




125

N A T I O N A L . W E A L T H AND

INCOME

acre and dividing the products thus obtained by the 1910-1914
average of these products.
TABLE 6 3 . — I n d e x numbers

of crop

acreage
1912-1923

Crop
acreage
used

1912
1913
1914
1915
1916
1917

110.0
95.2
105.6
118.4
101.2
108.5

and

of mass

crop

production,

Crop
acreage
used

Year

1918
1919
1920
1921
1922
1923

Mass
crop production

111.1
110.9
109.0
109.2
109.7
110.0

Mass
crop production

100.0
101.6
101.8
104.9
105.1
108.5

Year

used

107.6
109.6
117.6
103.1
110.3
110.8

These figures show the changes in acreage used stated in terms of
percentage and the changes in quantity of total production stated in
the same way. If the figures be considered in four-year periods the
first and second show practically the same average of mass production, while the third shows some increase. In these figures the element of value is entirely eliminated, and while they do not cover all
crop products of agriculture, they embrace so large a part of the total
that they may be considered thoroughly representative of that total.
It is pertinent now to consider the changes that have taken place
in the farm value per acre of these products. It is not possible,
readily at least, to get figures of net return to the farmer, but the
figures of farm value per acre of products, as reported by the Department of Agriculture, may be studied and may be combined and presented in such a way as to show the trend.
The following table shows the average farm value per acre for the
24 crops combined, the index numbers of this value per acre, and the
index numbers of values of the mass crop. The average value per
acre in this table is obtained by dividing the estimated gross farm
value of the 24 crops for each year as shown in Appendix Table 15,
page 345, by the corresponding acreage as shown in Appendix Table 14.
TABLE 6 4 . — A v e r a g e farm value per acre of 24 crops combined
of the value per acre and of the total value of the crop,

Year

1912
1913
1914.
1915.
1916
1917

Index
Index
Average numbers numbers
of value
value
of
per acre of value
per acre totalthe
crop
$16.44
16.83
16.81
17. 67
23. 44
' 33.84

100.0
102.4
102.3
107.5
142.6
205.8

100.0
104.0
104.2
112.8
149.9
223.5

Year

1918
1919
1920
1921
1922.
1923

and index
1912-1923

numbers

Index
Index
Average numbers numbers
of value
value
of the
per acre of value
per acre total crop
$34.55
37.85
24.93
15. 56
20. 52
22.93

210.2
230.2
151.6
94.6
124.8
139.5

233.6
255.3
165.4
103.4
137.0
153.5

When it is considered that farming does not.generally give a very
large return on investment, these figures indicate the probability of
some loss on the average in farming operations in 1920 and a heavy
loss in 1921. The indicated average return per acre is lower for
1921 than for any other year in the period, and the index numbers




126

NATIONAL .WEALTH AND INCOME

of vakie of the mass show a lower value for the crop as a whole for
this year than for any other except the first.
The figures as presented above cover all crops combined. Again,
if they be broken up into groups a somewhat different showing is
made. The following table shows the average combined value per
acre of the crops used principally for food, of those used principally
for feed for stock, and of cotton, tobacco, and broom corn:
TABLE 6 5 . — A v e r a g e value per acre of three groups

Year

Foods

Feeds

*

1912
1913
1914
1915
1&16
1917

$17.46
17.34
20.38
19.66
27.90
39.29

$13.99
14.42
14.99
15. 51
18.80
28.16

Cotton,
tobacco,
and
broom
corn
$28.57
28. 59
19.80
26.45
43.32
62.47

of crops,

by groups,

i
Year

Feeds

Foods

1918
1919
1920
1921
1922
1923

$39.27
35.38
29.51
19.30
18.90
20.06

1912-1923
Cotton,
tobacco,
and
broom
corn

$28.03
31.26
20.98
12.01
16.71
18.58

$63.81
82. 64
37.02
29. 98
47.24
52.24

The third group shows a much higher average value per acre. It
should be remembered, however, that cotton is the principal product
in this group and that more labor is required in caring for and harvesting a crop of cotton, as cultivated in most sections, than in caring
for and harvesting wheat or corn, which are the controlling products
in the other groups. One man and his family can hardly take care
of more than 40 acres of cotton, while one man and his family can
easily take care of 80 acres of corn, and, with a little help, of double
as much wheat.
The following table shows the index numbers of value per acre
of these same groups:
TABLE 6 6 . — I n d e x numbers

of value per acre of combined

and of cotton, tobacco, and broomcorn,

Year

Foods

1912
1913
1914.,
1915
1916
1917

100.0
99.3
116.7
112.6
159.8
225.0

Feeds

100.0
103.1
107.1
110.9
134.4
201.3

Cotton,
tobacco,
and
broomcorn
100.0
99.4
66.1
85.8
142.4
211.8

Year

1918
1919
1920
1921
1922
1923

crops

of foods,

1912-1923

Foods

224.9
202.6
169.0
110.5
108.2
114.9

Fee^s

200.4
223.4
150.0
85.8
119.4
132.8

of

feeds,

Cotton,
tobacco,
and
broomcorn
216.9
293.8
134.3
107.3
172.4
189.3

For the first two groups the movements were similar, although
the peak was reached in a later year for the second. Considering the
figures in three four-year periods, the averages for the two groups are
close together for these* periods. The values for the second group
show a much more abrupt decline and a considerably greater drop in
total from the p&ak than those for the first group. This appears to
have been fully reflected in the slump in land values in those sections
that depend entirely or practically on the corn crop. The third
group snows an average for the first period that was 12 per cent




127

NATIONAL . W E A L T H AND INCOME

under normal, with 1914 showing only two-thirds of normal. The
other two periods show the same movement as the second group but
with values reaching a much higher peak and showing a much greater
total drop. This movement was reflected in the very depressed
condition of cotton farming in 1920 and 1921.
The next table gives the index numbers of total farm value of these
same groups of crops. The showing in this table is not different from
that in the preceding except for the first group. For this group the
acreage cultivated increased somewhat steadily and with a larger
production the peak of total value falls in 1919, as it does in value
per acre for the other groups.
TABLE 6 7 . — I n d e x numbers of total farm value of combined crops of foods,
and of cotton, tobacco, and broomcorn,
1912-1928

Year

Foods

1912
1913
1914
1915
1916
1917

100.0
108.0
133.5
144.6
183.4
244.8

Feeds

100.0
101.9
104.9
112.0
138.6
221.3

Cotton,
tobacco,
and
broomcorn
100.0
107.1
70.8
79.3
146.0
211.8

Year

1918
1919
1920
1921
1922
1923

Foods

308.7
323.2
226.2
152.9
152.0
148.8

Feeds

211.3
222.9
154.7
90.2
124.1
139.4

of

feeds,

Cotton,
tobacco,
and
broomcorn
233.7
295.0
143.2
96.6
169.0
210.7

Section 6. Segregation of land area of the country according to use.
In round numbers the land area of the United States, exclusive of
Alaska and insular possessions, is 1,903,000,000 acres.17 By far the
greater part of this area is or can be made productive. Probably not
to exceed 50,000,000 acres, or about 3 per cent of the total, is unproductive, and even much of this will yield mineral products. The
greatest single use to which the land area of the country is put is for
pasturage or grazing purposes, which require around 50 per cent of it.
Timbered area takes up from 25 to 30 per cent or more of the total,
and land used for cultivated crops between 15 and 20 per cent.
There is a considerably duplication between timbered and pastured
area, but even after eliminating this duplication pasturage, timber
and cultivated land will account for between 80 and 90 per cent of
the total. Other important uses are for farmsteads and lanes, public
roads, and cities and villages. The following table shows the segregation of the land area of the country according to primary use for
the years 1912 to 1923:
tf For 1920 it is reported as 1,903,215,360. Fourteenth Census, vol. 6, pt. 2, p. 17.




128

NATIONAL . W E A L T H AND

INCOME

TABLE 6 8 . — S e g r e g a t i o n of the land area of the United States according

to primary

use

[Millions of acres]
1912 1913
Areas that change from
year to year:
Cropped lands
Privately owned forest
area—68 per cent saw
timber
National forest area, 60
per cent saw timber.Pasture or grazing lands
National park and
monument lands
Railway right of way — Total
Duplication area
Net total

1914

1915

1916

1917

1918

1919

1920

1921

1922

330

335

336

346

346

358

366

365

359

360

361

362

407

401

396

390

385

380

377

372

368

364

361

356

138
844

139
823

137
813

137
834

135
868

134
891

134
930

133
944

135
872

136
846

136
845

137
863

6
4

6
4

6
4

6
4

6
4

6
4

6
4

6
4

6
4

6
4

6
4

6
4

1,729 1,708 1,692 1,717 1,744 1,773 1,817 1,824 1,744 1,716 1, 713 1,728
148 148 148
148 148 148 148 148
148
148 148 h 148
1,581 1,560 1,544 1,569 1,596 1,625 1,669 1,676 1,596 1,568 1,565

Areas that remain nearly
constant throughout the
period:
Farmsteads and lanes..
Public roads
Lands in cities and villages
Rocky peaks and rock
outcrops
Arid and marsh lands, _

1923

27
20

27
20

27
20

27
20

27
20

27
20

27
20

27
20

27
20

27
20

27
20

1,580

27
20

10

10

10

10

10

10

10

10

10

10

10

20
77

20
77

20
77

20
77

20
77

20
77

20
77

20
77

20
77

20
77

20
77

154

Total

10
20
77

154

154

154

154

154

154

154

154

154

154

154

Grand total utilized.. 1,735 1,714 1,698 1,723 1,750 1,779 1,822 1,830 1,750 1,721 1,718
Waste, idle, and fallow
168 189 205 180 153 124
81
73
153 182 185

1,734
169

Total land area of
country
1,903 1,903 1,903 1,903 1,903 1,903 1,903 1,903 1,903 1,903 1,903

1,903

NOTE.—See Appendk Table 16 for further detail and notes.

The areas shown in the second group in this table, except arid and
marsh lands, are not important in the matter of extent as compared
with the larger areas shown in the first group. Arid and marsh lands
apparently are not productive at present, but 30,000,000 acres of the
arid lands are said to have a possible use as grazing lands when wells
and tanks have .been established within the area.18 The figures used
in this group are those established as of 1919 b y the Department of
Agriculture. There would of course be some change in extent from
year to year, but such changes would probably not be great enough
to effect the figures shown.
N A T I O N A L P A R K A N D M O N U M E N T LANDS.—Certain areas of the
country, because of the grandeur or unusual character of their natural
features or because of historic interest attaching to the locality, have
been set aside as permanent national parks and monuments. These
areas change slightly from time to time but amount in total for each
year to the round figure shown in the table.19
R A I L W A Y R I G H T O F WAY.—The figure of land used for this purpose
was found for each year by assuming an average width of right of way
of 120 feet and applying this to the total mileage reported by the Interstate Commerce Commission for main and branch lines. Stated in
round numbers, the figure remains constant.
" Yearbook, 1923, p. 369.




19

For detail see Appendix Table 17.

129 N A T I O N A L . W E A L T H A N D I N C O M E
N A T I O N A L F O R E S T AREA.—Lands set aside under act of Congress
to insure a future supply of timber range from a total of 133,000,000
acres in 1919 to 139,000,000 acres in 1913. Changes take place in
this area from time to time due to the elimination of lands that are not
forested or suitable for forest at ion and the addition of cut-over lands
for reforestation.20 The changes, however, are not on the whole very
great, and in this study the principal interest in this area is in its use
for grazing purposes to which reference will be made again.
P R I V A T E L Y O W N E D F O R E S T A R E A . — A large part of the forest
area of the country is in private lands. The acreage used in this
report was found by taking the figure of privately owned forest
area as shown in the special report o f the Forest Service as of June 1,
1920.21 and adding to it the national forest area shown for that year.
This method of finding total forest area leaves out of account about
7,000,000 acres of State and municipal forest lands, but still gives a
total of over 20,000,000 acres more than indicated by the Department of Agriculture.22 The estimate of timber stand for other
years is then obtained by assuming that each year's cut ot lumber
will be at the average stand for the region in which cut. This was
reported b y the Bureau of Corporations as 32,000 board, feet per
acre for the Pacific Northwest; 6,100 board feet per acre for the
Southern Pine region; and 5,600 board feet per acre for the Lake
States.2 5 Dividing the figures of lumber cut for each of these regions
for each year in the period by the corresponding figure of average
stand a figure of estimated acreage cut is obtained for each year.24
By taking the total of 503,000,000 acres obtained for 1920 and adding
back the estimated area cut in each preceding year, the estimated
stand for these is found, and by subtraction the estimated stand for
each year since 1920 is found.25 Then, by taking the national forest
area out for each year, the approximate privately owned area is determined. In this connection the interest in privately owned timber
area is in the use that is made of such area for grazing purposes and
in the extent of area released for other purposes each year by the
removal of the timber. The area cut shows a gradual, but not regular, decrease through the period, the low figure being about
3,500,000 acres in 1921, as compared with a high figure of 5,500,000
acres in 1912. This decrease in area cut is due partly to a decrease in
quantity of lumber cut, but partly also to a shifting of the lumber
industry from the Southern Pine region to the Pacific Northwest,
where the stand is much heavier.
P A S T U R E OR G R A Z I N G LANDS.—This use requires a greater extent
of territory than any other to which land is put in this country. In
order to determine what the requirements for this purpose were from
year to year a preliminary computation was made as of the year
1919, in order to compare with similar estimates made by others, by
taking the reported or estimated requirements per head of stock, or
similar figures, for the several regions, roughly averaging them for
each region, and then applying to each such average the number of
For detail see Appendix Table 18.
Timber depletion, etc., report of the Forest Service in response to Senate Resolution 311, p. 33.
2 Agriculture Yearbook, 1923, p. 416.
2
2 The Lumber Industry—Standing Timber, p. 168,
3
24 It is assumed that the stand for the Lake States will apply to all regions other than the Southern Pine
and the Pacific Northwest.
25 For detail see Appendix Table 19.
20
21




130

NATIONAL . W E A L T H AND

INCOME

stock to be pastured or grazed in the region. The sum of the areas
obtained in this way was 1,120,000,000 acres. It was then found
that according to the Department of Agriculture "the area of land
in the United States usea for grazing, excluding crop land pastured
part of the year, is about 1,055,000,000 acres.26 This has been accepted as the correct figure of grazing acreage for the year 1919, and
using it as a base, the requirements for other years have been computed by assuming that the requirement for this purpose would vary
practically directly with the number of cattle ana sheep to be grazed
or pastured. Mules and horses are pastured also, but as they work a
considerable part of the time the unit of area per animal actually
used for them would be much smaller proportionately than for cattle
and sheep. Hogs require some pasturage, but very little compared
with the other animals mentioned, probably not exceeding 10,000,000
acres in total. It is believed, therefore, that cattle and sheep taken
together furnish the best index of the requirements. The figures
used for this purpose were the numbers on hand January 1 of each
year, and sheep were assumed to graze one-half as much per unit as
cattle, which is somewhat higher than the results shown in studies
made by the Department of Agriculture.27 Since any error in method
is carried through the period in parallel, the results obtained are
believed to be fairly accurate approximations of the area used for
this purpose. In Table 68 (p. 128) 111,000,000 acres of this area is
included each year in that under the head of national forest/ that
being the primary use of the area, and 148,000,000 more is shown as
pasture lands and also included under other heads, largely under
that of privately owned forest area. It was impossible accurately
to locate the lands used in this way in different years, so t^he duplication was allowed to go in and has been deducted at the foot of the
table.
C R O P P E D LANDS.—There are three of the classes of lands shown in
Table 68 that are used entirely for agricultural purposes. Of these,
crop lands are the most important from the standpoint of earning
power. The area used for farmsteads is so small that even if the
earning power be considerably larger per acre the result will be smaller
in total, and the earning power per acre is so much smaller per acre
for grazing land that the total falls short of that for cropped lands.
The area devoted to this purpose is found by taking that shown in
reports of the Department of Agriculture as used for each of 24
important crops and adding to the total of these for each year a
round figure of 10,000,000 acres to cover other crops. For the year
1919 it was possible to find reports for other crops (in some cases
estimates) totaling 6,706,000 acres. It was assumed that 3,300,000
acres, or roughly 50 per cent more, would cover cropped area that
had not been found. The attempt was made to get only harvested
areas where possible and to count only one use of the land during
the year. This method gives almost exactly the same figure in total
for the year 1919 as that given for harvested crops by the Department
of Agriculture.28
This cultivated area has been divided roughly into that used for
the growing of food crops, that used for the growing of feed crops,
2« Agricultural Yearbook, 1923, p. 365.
*7 Agricultural Yearbook, 1923, p. 419.




2 Agricultural Yearbook, 1923, p. 416.
8

131 NATIONAL . W E A L T H AND I N C O M E

and that used for growing fiber and other crops.29 In cases where
the products of a crop would fall in two of the groups the area has
been placed with the areas of that group in which it was believed it
would fall based on the value of its principal product. The area
used for feed crops is much greater in extent than that used for either
of the other groups of crops. In fact, it ranges from about two and
one-half to nearly four times as great as that used for foods and in
most years is more than two times as great as that used for both
other classes of products.
The following table shows the extent of three areas and the total
in hundreds of thousands of acres:
TABLE 6 9 . — A p p r o x i m a t e crop acreage of the United States used for
foods, of feeds, of fiber, and of miscellaneous
product and total,

production
1912-1928

of

[In hundreds of thousands of acres]

Year

1912
1913
1914.
1915
1916-1917
1918
1919
1920
1921.
1922
1923.

Foods

591
641
673
752
675
640
802
943
783
808
821
759

Feeds

2,254
2,227
2,206
2, 278
2, 324
2,479
2,375
2,249
2, 326
2,367
2, 341
2,367

Fibers

357
385
382
330
366
356
380
360
382
321
350
397

Crops for
which
acreage
is not
reported1
100
100
100
100
100
100
100
100
100
100
100
100

Total

3,302
3,353
3,361
3,460
3,465
3,575
3,657
3,652
3,591
3,596
3,612
3, 623

* For the year 1919 acreage figures for enough of the smaller crops were found to total 6,706,000,000 acres.
It was then assumed that 50 per cent added to this would cover crops for which acreage was not found.
The figure was then taken as a round 10,000,000 and added in each year to the sum of thefiguresfor the different groups. Most of this miscellaneous cropped land is used for food production.

As shown in the above table, the areas devoted to different uses
remain fairly constant throughout the period, except for that used
for foods, which shows a marked increase in the period of the war,
and while there was some decrease in the years following, it remained
greater than at the beginning of the period. The year 1917 shows a
considerably greater area used for feeds than other years. This was
due to the very large corn acreage of that year; the great extent of
acreage used for pasturage in this and the three following years was
noted above. It is probably impossible to say just what proportion
of cultivated lands should be permitted to lie entirely idle and rest
or whether crop rotation will entirely take care of this need. It
seems probable, however, that in the years 1918 and 1919 the
country was closely approximating complete utilization of its land
area. The most efficient use was not necessarily being made of the
different areas, but, according to existing customs, use was being
made of practically all the land in the country in those years. This
fact may have had a bearing on what appeared to be inflated prices of
farm lands in certain sections in the years immediately following.
. 9 See Appendix Table 14.
2




CHAPTER
WEALTH

OF

YI

CORPORATIONS

Section 1. Method of estimating corporate wealth.
The book value of wealth used in corporate business in 1922 is
estimated by the commission at approximately $102,000,000,000.
This estimate was arrived at by adding to the value of land, buildings, and equipment, as compiled b y the Bureau of Internal Revenue
from corporation returns for taxation purposes,1 estimates of the value
of inventories, cash, and other movables used in the corporate business (except good will, patents, etc.). For 54,862 corporations,
owning nearly one-fifth of the total fixed assets of all corporations,
the Bureau of Internal Revenue furnished the commission data showing separately and by industries the value of inventories and the
value of land, buildings, and equipment. The ratios between these
two classes of investment, thus indicated for the different industries,
were applied to the total value of land, buildings, and equipment
owned by all corporations within the various classes reported, to
arrive at estimated inventory values for all corporations comprising
each class. The total amount of cash and other movables included
in the estimate was taken at 8 per cent of the combined value of fixed
assets and inventories. This estimate of 8 per cent was based on
data secured from State tax records and other sources 2 for 1,660
corporations of various sizes and activities. The aggregate value of
net current assets (exclusive of inventories) at the end of 1922 for
these corporations equalled about 8 per cent of the aggregate value
of their plants and inventories combined.
In thus estimating the wealth employed in corporate businesses at
$102,000,000,000, no account has been taken of such items as good will,
patents, trade-marks, etc. While these items may in some instances
represent large capital expenditure, yet as already stated, they are of
value only to the extent that they may be the means of ultimately
diverting to, or creating for, their owners tangible wealth or services.
The commission's estimate also excludes investments outside the
business of the corporations. It seems a safe assumption that such
investments are for the most part in the stocks and bonds of other
corporations, and that their inclusion would generally result in duplication.
Another, but less convenient, measure of the wealth of corporations
is the aggregate market value of capital stock, and bond and mortgage
debts. This, however, does not exclude outside investments. For
the year 1922 the Bureau of Internal Revenue reported $71,000,000,000 as the par value of stock of corporations reporting par value
of shares, and $5,000,000,000 as the so-called "fair value of stock
of corporations reporting no par value of shares and no stock value.
The bureau reported $75,800,000,000 as the aggregate "fair value"
Reported by the Bureau of Internal Revenue in " Statistics of Income," 1922, pp. 40-41.
2 See p. 134.

1

132




133

NATIONAL . W E A L T H AND INCOME

of all corporate stock.
is—

This "fair value" as defined b y the bureau,3

the value of the entire outstanding stock of the corporation considered as a
going concern, giving due consideration to the present worth of the assets, tangible and intangible, the earning capacity, dividends disbursed, the market value
of shares, and other factors that affect values generally.

The bureau also shows that other contributions to corporate capital
represented by bonds and mortgages amounted to $22,700,000,000 in
1922, making a total of $98,500,000,000 for fair value of capital stock
outstanding and the capital represented by bond and mortgage debts.
This total may be compared with the $102,000,000,000 estimated by
the commission as representing the wealth in corporate use. The
former figure should be the higher, as it includes outside investments. The small discrepancy may indicate somewhat exaggerated
book values.
The bulk of the wealth employed in certain lines of business activity is owned by corporations, while in others partnerships or individual ownership predominate. For example, most of the wealth
employed in manufacturing and transportation is owned by corporations, while much of the wealth devoted to trade is owned by
partnerships and individuals, and almost all of the wealth employed
in farming is owned by individuals.
Section 2. Relative wealth of corporations in different industrial
groups.
Returns filed with the Treasury Department for the capital stock
tax in 1922 indicate a total of 366,690 business corporations in the
United States. In reporting the fair value of the stock of these corporations the Bureau of Internal Revenue groups the corporations
on a basis of the type of industry in which they were engaged, as
follows:
TABLE 70.—Corporations reporting to Bureau of Internal Revenue for 1922,
on a basis of the type of industry in which engaged 1
Groups
Agriculture and related industries
Mining and quarrying
Manufacturing
Construction
Transportation and other public utilities
Trade
Public service
Finance
Inactive concerns
All other
Total

Number

grouped

Percent

8,796
18,884
80,234
9,888
23,472
86, 530
21, 533
85,413
21,581
10,359
366, (

i Compiled from Statistics of Income, 1922, pp. 40, 41.

In point of number, trading corporations, it will be noted, rank
first, with 23.6 per cent of the total, closely followed by finance cor>orations (i. e., banks, trust, and insurance companies, stock, bond,
oan, and realty-holding companies, etc.) with 23.3 per cent, and
manufacturing companies with 21.9 per cent. These three lines of

{

«"Statistics of income," 1922, p. 37.




134

NATIONAL .WEALTH AND

INCOME

corporate activity thus account for nearly 69 per cent of the total
number of corporations in the country.
In the special compilation of the value, of the assets for 54,862
corporations which the Bureau of Internal Revenue prepared for the
commission during the course of the present inquiry, data were presented separately for each of the above-mentioned groups and for the
more important of the specific industries embraced in certain groups.
On this basis it was possible for the commission to arrive at estimates
of the tangible wealth of corporations in each group, as follows:
TABLE 7 1 . — E s t i m a t e d

value

of

wealth

used

in

groups of industries in

corporate

Land, buildings,
and equipment 1

business

Inventories and
other current
assets, net 2

for

specified

Total

Groups
Amount

Manufacturing
Transportation and other public utilities
Finance s
Trade
Mining and quarrying
Construction
Agriculture and related industries *
Service 5
Inactive
All other
Total

Millions
$18,265
23,632
8,908
3,409
8,462
1,580
1,167
1,266
8
1,201
67,898

Per
cent

Amount

Per
cent

44.6
10.7
8.6
23.3
4.7
3.8
2.2
.6

1.8

Millions
$15,386
3,697
2,984
8,056
1,613
1,295
770
193
14
493

100.0

34,501

26.9
34.8
13. r
5.0
12.5
2.3
1.7
1.9

Amount

Per
cent

32.9
26.7
11.6
11.2
9.8
2.8
1.9
1.4

1.5

Millions
$33,651
27,329
11,892
11,465
10,075
2,875
1,937
1,459
22
1,694

100.0

102,399

100.0

1.7

Reported by the U. S. Bureau of Internal Revenue, Statistics of Income, 1922, pp. 40, 41.
Estimated by the Federal Trade Commission. See page 132 for method.
Includes banks and trust companies, stocks and bonds, loan, realty-holding, etc., insurance and all
other finance.
4 Includes farming, logging, fishing, ice harvesting, etc.
• Includes domestic service (hotels, etc.), amusements, business service, educational, curative, legal,
engineering, etc.
1
2
8

Practically one-third of all the wealth used in corporate businesses
is employed in manufacturing operations, according to the table.
Second in importance come the transportation and other publicutility corporations with 26.7 per cent of the total corporate wealth
Trading corporations and financial corporations, both of which exceed
in number those engaged in manufacturing and transportation, rank
considerably below them in the amount of wealth employed. The
wealth used in trading corporations represented an estimated 11.2
per cent of the total corporate wealth, while that of financial corporations represented 11.6 per cent. This reversal of rank is expressive of the greater relative concentration of operations in the
manufacturing and transportation industries. The estimated total
wealth employed in manufacturing corporations is about $33,651,000000, while that in transportation and other public-utility corporations
is estimated at about $27,329,000,000. However, the value 6f fixed
assets (land, buildings, and equipment) attached to transportation
and other public-utility corporations, considerably exceeds that for
manufacturing corporations, amounting to an estimated $23,632,000,000 as against $18,265,000,000 for the manufacturing corporations.




135 N A T I O N A L . W E A L T H AND I N C O M E

It is of interest to note that the $102,000,000,000 estimated as
employed in corporate business represents nearly one-third of the
total wealth of the United States as estimated by the Census Bureau.
This wealth of corporations embraces, no doubt, the principal portion
of the value of the Nation's exhaustible natural resources, together
with a large part of the value of land aifd buildings used for commercial and industrial purposes.
Section 3. Wealth of manufacturing corporations.
The estimated wealth in manufacturing corporations is $33,651,000,000. Since the total number of such corporations reporting
to the Bureau of Internal Revenue in 1922 was 80,234, the average
wealth per corporation was about $419,000. Although the value of
fixed assets greatly exceeds the value of net current assets (inventories, cash, etc.), in most types of corporations, the two values are
very nearly equal in the case of manufacturing corporations, amounting to an estimated $18,265,000,000 for fixed assets and $15,386,000,000 for inventories, cash, etc. This unusually large investment
in movables is indicated further by the fact that, although the total
wealth of manufacturing corporations is 32.9 per cent of the wealth
of all corporations, the wealth of manufacturing corporations invested in movables represents 44.6 per cent of the wealtn so invested
for all corporations.
C O R P O R A T E W E A L T H IN S P E C I F I C M A N U F A C T U R I N G

INDUSTRIES.—

The compilations prepared for the commission by the Bureau of
Internal Revenue, covering 54,862 corporations, included separate data
for the more important specific industries in the manufacturing group.
On this basis, and after the method employed in estimating the
wealth of all corporations (see p. 132), it was possible to estimate the
wealth employed in each of these specific manufacturing industries
as follows:
TABLE 7 2 . — E s t i m a t e d

value of wealth used in corporate
manufacturing
industries in 1922

Land, buildings,
and equipment1
Industry
Amount

Metal and metal products
Food products
Textile products
Chemicals and allied substances
Lumber and wood products
Paper, pulp, and products.
Stone, clay, and glass
Leather products
Printing and publishing
Rubber products
All other manufactures
Total

Per
cent

business

Inventories and
other current
assets, net 2
Amount

Per
cent

for

specified

Total

Amount

Per
cent

Millions
$5, 846
2,683
1,991
1,963
1,293
814
802
276
466
348
1,783

32.0
14.7
10.9
10.7
7.1
4.5
4.4
1.5
2.5
1.9
9.8

Millions
$4,129
2,361
2,407
1,249
1, 211
396
376
602
247
262
2,146

26.8
15.3
15.6
8.1
7.9
2.6
2.5
3.9
1.6
1.7
14.0

Millions
$9,975
5,044
4,398
3,212
2,504
1, 210
1,178
878
713
610
3,929

29.6
15.0
13.1
9.5
7.5
3.6
3.5
2.6
2.1
1.8
11.7

18, 265

100.0

15,386

100.0

33,651

100.0

1 Computed from values reported by the Bureau of Internal Revenue.
2 Computed from values estimated by the Federal Trade Commission. (For explanation of method
of estimating, see p. 132.)




136

NATIONAL . W E A L T H AND

INCOME

Nearly 30 per cent of all corporate wealth devoted to manufacturing in 1922 was used in the manufacture of metal and metal products,
according to the table. Of the approximate $ 10,000,000,000 so engaged,
it is estimated b y the commission that considerably over $4,000,000,000, were employed in the vast steel business 4 of the country.
Next in rank to the corporate wealth in metal manufactures comes
that in the manufacture of food products, estimated at more than
$5,000,000,000, or 15 per cent of the total. This estimate includes
the wealth employed m the great meat-packing industry, estimated
at a minimum of $858,000,000.5
The corporate wealth employed in the textile industry is estimated
at close to four and one-halt billions, or 13.1 per cent of the total in all
manufactures. This compares with an estimated $669,000,000 of
corporate wealth engaged m cotton and wool textile manufacture in
Massachusetts alone according to data prepared for the commission
b y the Massachusetts State Bureau of Labor and Statistics.
After metals, foods, and textiles, the most important manufacturing investment is in chemicals and allied substances (including
petroleum refining corporations 6) employing an estimated three and
one-fourth billions, and in lumber and wood products employing an
estimated two and a half billions. The estimated corporate wealth
employed in these five industries (metals, food, textiles, chemicals,
ana lumber) thus represents three-quarters of the estimated total for
all manufacturing corporations and almost one-quarter of the total
for all corporate enterprises in 1922. The five industries also employ
an estimated three-quarters of all the wealth represented by fixed
assets (land, buildings, and equipment) of all manufacturing corporations and nearly one-fifth of that represented b y fixed assets of all
corporate enterprises. Their proportion of tne total wealth in
movables (inventories, cash, etc.) is even greater, amounting to an
estimated one-third of that for all corporate enterprises.
Section 4. Wealth of transportation and othfcr public utility corporations.
Wealth employed in transportation and other public utility corporations is estimated at $27,000,000,000, or more than one-fourth of
the total for all corporate enterprises. This is second only to the
wealth in manufacturing corporations. The total number of these
corporations reporting to the Bureau of Internal Revenue in 1922
was 23,472, which means an average wealth per corporation of
$1,163,000. This compares with an average of $419,000 for manufacturing corporations. In the ownership of land, buildings, and
equipment these public-utility corporations rank ahead of the
manufacturing corporations, with a total of over twenty-three and
one-half billions of dollars, or nearly 35 per cent of the total for all
corporations. In the value of its inventories, cash, and other m o v ables, however, estimated at about 3.7 billions, the public-utility
* See Table 76, p. 142. Includes United States Steel Corporation, Bethlehem Steel Corporation, and
102 other companies.
« See Appendix Table 20.
• It is not possible to identify all the wealth employed in the petroleum industry with that of any single
industrial group, because a large proportion of the petroleum corporations are integrated, i. e., engaged in
producing, transporting, refining, and marketing. Data prepared by the American Petroleum Institute
in 1924 indicate a total of at least four billions of corporate wealth engaged in the production, refining, and
marketing of crude petroleum. (See Appendix Table 20.) In addition, the wealth employed by pipeline transportation corporations in 1922 was $429,000,000, according to data prepared from Interstate Commerce Commission records.




137 N A T I O N A L . W E A L T H A N D

INCOME

corporations rank below both manufacturing and trading corporations.
This difference results from the fact that the indicated proportion of
movable to fixed assets for public-utility corporations is smaller
(with one exception) than that for any other group.
CORPORATE

WEALTH

IN

SPECIFIC

PUBLIC

UTILITIES.—Nearly

75

per cent of the estimated total wealth employed in public-utility
corporations represents the wealth used by railroads. The estimated
corporate wealth in railroads and other specific public utility industries is estimated by the commission as follows:
TABLE

7 3 . — E s t i m a t e d value of wealth
used in
transportation
and other public-utility

corporate
industries

Land, buildings,
and equipment 1

business
for
in 1922

Inventories and
other current
assets, net 2

specified

Total

Industry
Amount

Steam railroads.
Electric railroads
All other railroads and combinations
Telegraph, telephone, and radio companies.
Electric light and power companies
Gas companies-.
All other transportation and public-utility companies
Total
1
2

Millions
$14,634
2,014
365
1,225
1,154
1,096

Per
cent

61.9
8.5
1.6
5.2
4.9
4.6

Amount
Millions
$2, 751
187
30
125
125
134

Per
cent

74.4
5.1
.8
3.4
3.4
3.6

Amount
Millions
$17,385
2,201
395
1,350
1,279
1,230

Per
cent

63.6
8.1
1.4
4.9
4.7
4.5

3,144

13.3

345

9.3

3,489

12.8

23, 632

100.0

3,697

100.0

27,329

100.0

Reported by the Bureau of Internal Revenue.
Estimated b y the Federal Trade Commission. (For explanation of method of estimating, see p. 132.)

The total estimated corporate wealth employed in railroads was
$20,000,000,000, according to the above table. Of this amount the
wealth used in steam railroads represented an estimated 17.4 billions,
while that in electric railroads represented 2.2 billions. Of the total
value of land, buildings, and equipment owned by public Utilities,
railroads owtied an estimated 72 per cent. They owned 80 per cent
of the estimated value of the movable assets. While railroads are
credited with one-fourth of the total amount of wealth in land,
buildings and equipment reported for corporations of all classes, they
are credited with less than one-eleventh of the estimated total wealth
in inventories, cash, and other net current assets of corporations of
all classes.
Telegraph, telephone, and radio companies, electric light and power
companies, and gas companies together owned about one-seventh of
the estimated wealth of public-utility corporations in 1922.
Under " A l l other transportation and public-utility companies" in
the above table, are included water transportation companies,
cartage and storage companies, waterworks, etc.
There are wide discrepancies between the values of public utilities
estimated on this basis and those shown in Table 1, but the commission did not have time to investigate and to fully determine the reasons for these differences.
Section 5. Wealth of mining and quarrying corporations.
The wealth of mining and quarrying corporations is estimated at
about 10.1 billions of dollars, or nearly 10 per cent of the total esti-




138

NATIONAL .WEALTH AND

INCOME

mated for all corporations. Since the total number of mining and
quarrying corporations reported was 18,884, the average wealth per
corporation may be estimated at $535,000. The estimated value of
land, buildings, and equipment for these corporations is about 8.5
billions, or 12.5 per cent of the total for all corporations. The
value 6f inventories, cash, etc., is estimated at 1.6 billions, which is
only 4.7 per cent of the total for all Corporations. The proportion of
fixed assets to total wealth, thus, is considerably above the average.
CORPORATE

W E A L T H IN SPECIFIC

MINING

OR QUARRYING

INDUS-

TRIES.—Metal mining and oil and gas mining are the two most important of the mining and quarrying industries and together employ
an estimated 62 per cent of the total wealth in the group. The corporate wealth in these two and other specified mining and quarrying
industries is estimated as follows:
TABLE 7 4 . — E s t i m a t e d value of wealth
used in corporate
business
mining
and quarrying
industries
in
1922

Land, buildings,
and equipment 1

Inventories and
other current
assets, net 2

for

specified

Total

Industry
Amount

Metal mining
Oil and gas mining
Coal mining
All other mining arid quarrying
Total

Per
cent

Amount

Per
cent

Amount

Per
cent

Millions
$2,409
2,718
2,136
1,199

28.5
32.1
25.2
14.2

Millions
$743
340
284
246

46.0
21.1
17.6
15.3

MiUions
$3,152
3,058
2,420
1,445

31.3
30.4
24.0
14.3

8,462

100.0

1,613

100.0

10,075

100.0

i Values reported by the Bureau of Internal Revenue.
3 Values estimated by the Federal Trade Commission.
p. 132.)

(For explanation of method of estimating, see

The estimated corporate wealth devoted to metal mining and that
devoted to the mining of oil and gas were nearly equal in 1922, according to the above table. The estimated value shown for each is in
excess of $3,000,000,000, or nearly one-third of the total estimated
corporate wealth in mining and quarrying. The corporate wealth devoted to coal mining amounted to an estimated 2.5 billions of dollars
in 1922, or close to one-quarter of the total. Thus metal mining, the
mining of oil and gas, and coal mining accounted for about 85 per
cent of the estimated corporate value of all wealth in mining and
quarrying. The estimate for oil and gas mining does not include
corporations in petroleum refining, as these are classed as manufacturing corporations.
The estimated net value of inventories, cash, and other current assets
amounted to 16 per cent of the estimated total wealth devoted to the
industry. In the case of the oil and gas mining corporations and the
coal-mining corporations, however, it amounted to Only about 11 per
cent of the respective totals for those particular industries, while for
metal mining corporations it amounted to 23.5 per cent of the total.
Of the total value of land, buildings, and equipment owned by all
mining and quarrying corporations, 32 per cent is credited to oil and
gas mining companies, 28.5 per cent to metal mining companies, and
25 per cent to coal-mining companies.




139 NATIONAL .WEALTH AND INCOME

Section 6. Wealth of financial and other types of corporations.
W E A L T H OF FINANCIAL CORPORATIONS.—Under "Financial corporations" are included banks and trust companies, companies
engaged in selling stocks and bonds, loan companies, realty-holding
companies, insurance companies, etc. The wealth devoted to the
business of corporations of this kind in 1922 is estimated at about
11.9 billions of dollars, or over 11.5 per cent of the estimated total
wealth devoted to all corporate business. Of this amount about
1.7 billions are devoted to trust companies alone, according to a
compilation prepared by the United States Mortgage & Trust Co.7
Since the number of finance corporations reporting to the Bureau of
Internal Revenue in 1922 was 85,413, the average wealth per corporation must have been about $139,000, or considerably less than the
average for corporations of all classes. If, however, the deposits
held by these finance corporations were included as a part of their
wealth employed, the average would be very materially increased.
The wealth of trust companies, for example, would be 12.2 billions
instead of 2.2 billions. In the ownership of land, buildings, and
equipment, finance corporations rank third among the groups shown
in Table 71, with 13.1 per cent of the total. The estimated net
value of inventories, cash, and other current assets credited to the
group, however, amounts to only 8.6 per cent of the total estimated
for corporations of all classes.
W E A L T H OF CONSTRUCTION CORPORATIONS.—The corporate wealth
devoted to construction in 1922 is estimated at about $3,000,000,000,
or 2.8 per cent of the estimated wealth devoted to all corporate
business. The total number of construction corporations reporting
was 9,888, which indicates an average wealth per corporation of
about $293,000. Of the estimated wealth of these corporations, a
little over half is represented by land, buildings, and equipment,
which comprise about 2.3 per cent of the total value of land, buildings, and equipment for all corporations. Of the total estimated
net value of inventories, cash, and other current assets for all corporations, that of construction corporations comprised an estimated
3.8 per cent.
W E A L T H OF CORPORATIONS ENGAGED IN AGRICULTURE AND
RELATED INDUSTRIES.—The corporate wealth devoted to agricultural

and related industries in 1922 is estimated at about $2,000,000,000,
or nearly 2 per cent of the estimated wealth devoted to all corporate
business. -The "related industries/ 7 which include logging, ice
harvesting, fishing, etc., account for close to one-half billion of the
estimated $2,000,000,000, while the remaining 1.5 billions were
devoted to the business of corporations engaged in farming. The
number of corporations engaged in agriculture and related industries,
as reported to the Bureau of Internal Revenue, was 8,796, indicating
an average wealth per corporation of about $216,000.
W E A L T H OF SERVICE CORPORATIONS.—Service corporations include
hotel companies, amusement companies, companies engaged in the
sale of educational service, business service, engineering service,
etc. The corporate wealth devoted to this group in 1922 is estimated
at about 1.5 billions of dollars. This group employs an estimated
1.4 per cent of the wealth devoted to all corporate business. It
' See Appendix Table 20.




140

NATIONAL .WEALTH AND INCOME

includes 21,533 corporations with an average wealth of about $70,000
per corporation. This average is lower than that of any other
corporate group.
Of the 1.5 billion dollars of wealth credited to service corporations,
the value of land, buildings, and equipment comprised 87 per cent.
W E A L T H OF TRADING C O R P O R A T I O N S . — T h e corporate wealth devoted to the business of trading in 1922 is estimated at about 11.5
billion dollars. This is 11.2 per cent of the total estimated wealth
used in all corporate business. Trading corporations embrace the
whole body of distributors, including wholesalers, jobbers, retailers,
brokers, etc. The importance of this group is greater than its indicated proportion of total corporate wealth, the nature of the business obviating the necessity of a large fixed investment. For example, in this group alone do the estimated net current assets (inventories, cash, etc.) exceed the fixed assets (land, buildings, and
equipment). The estimated total fixed assets for the group amount
to only 3.4 billions of dollars as against a total of 8.1 billions for the
urrent assets. As a result the group ranks fifth in the ownership
of land, buildings, and equipment, with only 5 per cent of the total
for all corporations, but ranks second, according to the commission's
estimates, in the wealth represented by the net value of inventories,
cash, and other current assets, with 23.3 per cent of the total.
Section 7. Analysis of comparative wealth of groups and of specified
industries.
A comparative analysis of the data presented in the preceding
sections indicates that steam railroads outrank any other specific
industry in the estimated amount of wealth employed, having about
17.4 billions of dollars or 17 per cent of the $102,000,000,000 total
for all corporations in 1922. Next in rank come manufacturers of
metal and metal products with close to 10 per cent of the total, followed b y manufacturers of food products with 5 per cent of the
total, and manufacturers of textile products with nearly 4.5 per cent
of the total. Estimates for each of the specified industries compare
as follows:




141 N A T I O N A L . W E A L T H A N D
TABLE 7 5 . — A n a l y s i s of

estimated

wealth

used

in

INCOME

corporate

groups of industries in 1922
Estimated
total
wealth

business

for

Average
wealth
per corporation

specified

Per cent
of fixed
assets i
to total
wealth

Per cent
of group
total

Per cent
of grand
total

Billion
dollars
33.6

100.0

32.9

Metal and metal products
Food products
Textile products
Chemicals and allied substances
Lumber and wood products
Paper, pulp, and products
Stone, clay, and glass
Leather products
Printing and publishing
Rubber products
All other manufactures

10.0
5.0
4.4
3.2
2.5
1.2
1.2
.9
.7
.6
3.9

29.6
15.0
13.1
9.5
7.5
3.6
3.5
2.6
2.1
1.8
11.7

9.8
4.9
4.3
3.1
2.4
1.2
1.2
.9
.7
.6
3.8

Transportation and other public utilities

27.3

100.0

26.7

1,163.1

86.4

17.4
2.2
.4
1.3
1.3
1.2

63.6
8.1
1.4
4.9
4.7
4.5

17.0
2.1
.4
1.3
1.3
1.2

10,017.3
2,182. 5
1,173.0
293.3
509.0
1,474. 2

83.9
90.9
90.8
92.3
92.3
91.7

3.5

12.8

3.4

278.1

89.6

11.2
11.6

132.9
139.2

29.6
74.9

Industry-

Manufacturing

Steam railroads
Electric railroads
All other railroads and combinations
Telegraph, telephone, and radio companies
Electric light and power companies
Gas companies
All other transportation and public utility companies

Thousand
dollars
418.8
618.5
358.7
431.4
508.0
359.7
690.8
304.1
418.4
85.3
913.2
390.5

54.5
58.0
54.0
45.5
62.5
52.0
66.7
66.7
33.3
71.4
50.0
46.1

Trade
Finance

11.5
11.9

Mining and quarrying

10.1

100.0

9.8

534.8

84.2

3.2
3.1
2.4
1.4

31.3
30.4
24.0
14.3

3.1
3.0
2.3
1.4

1,244. 6
514.0
494.3
258.0

75.0
87.1
87.5
85.7
55.2
68.2
86.7
36.4
70.6
66.3

Metal mining
Oil and gas mining
Coal mining
All other mining and quarrying
Construction
Agriculture and related industries
Service
Inactive
All other
Grand total
i Land, buildings, and equipment.

2.9
1.9
1.5
2.0
1.7

2.8
1.9
1.4
1.7

293.2
216.0
69.6
1.0
164.1

102.4

100.0

279.3

2

.

$22,000,000 represented.

The table indicates that the highest proportions of fixed assets
(land, buildings, and equipment) to total wealth exist in the transportation and public utility group, amounting to 92.3 per cent for electric
light and power companies and to an exactly equal per cent for telegraph, telephone, and radio companies, as against an average of 66.3
for all corporations. The lowest percentage for fixed assets was one
of 29.6 per cent for trading corporations. Next lowest was the manufacturing group, with an average of 54.5. Within this group the lowest ratio was that of 33.3 per cent for the corporations manufacturing
leather products.
The steam railroad corporations not only greatly exceed any other
corporate industry in total wealth employed, amounting to 17.4 billions of dollars, but also they have by far the greatest estimated
wealth per individual corporation, averaging $10,017,300. Next in
rank to steam railroads come electric railroads, with an average of
$2,182,500 per corporation. The lowest averages appear for service




142

NATIONAL .WEALTH AND

INCOME

corporations, with $69,600, and printing and publishing corporations,
with $85,300.
Section 8. Analysis of investment of wealth owned by corporations.
Neither the data prepared for the commission b y the Bureau of
Internal Revenue nor that published in the bureau's "Statistics of
I n c o m e " indicated the relative amounts of corporate wealth invested
outside the corporate business or the valuation of such assets as
good will, appreciation, trade-marks, etc. The analysis in the preceding sections is based on wealth actually employed in the corporate
business and does not include wealth invested in other enterprises.
Neither does it include good will, appreciation, trade-marks, etc.
From balance sheets for some 1,660 corporations of various sizes
and activities secured by the commission either from published sources
or from the tax returns made to State governments, it has been possible to analyze the relative investment of over $15,000,000,000 of
corporate wealth. From the data for these 1,660 corporations also
was computed the ratio between fixed and movable assets which
was applied in making the estimates of total wealth in corporate use
presented in the preceding sections of this chapter.
The relative wealth invested in the corporate business and invested
outside, together with the wealth in good will, appreciation, etc.,
and the total corporate wealth owned are shown for the 1,660 corporations as follows:
T A B L E 7 6 . — A n a l y s i s of investment

of wealth

owned

industries, 1922 *

Invested in corporate business

by 1,660

Outside investment

corporations

in

Good will, appreciation, etc.
Total 2

Industry
Amount

104 steel companies
i
42 petroleum companies
215 oil and natural gas companies
(Pennsylvania)
33 natural gas companies (Texas)
58 pipe-line companies
864 bituminous coal companies (Pennsylvania)
122 anthracite coal companies (Pennsylvania).
L
26 telephone and telegraph companies.
180 lumber companies (Louisiana)....
4 largest tobacco companies
4 largest rubber and tire companies.
4 largest 5 and 10 cent stores
4 largest meat packers
Total

specified

Per
cent

Amount

Per
cent

Million
dollars
3,884.1
4,165.1

91.2
94.4

Million
dollars
366.9
249.3

8.6
5.6

172.7
32.7
429.2

79.9
91.3
76.3

43.4
2.5
62.9

20.1
7.0
11.2

Amount :

Per
cent

Million
dollars
6.7

0.2

Million
dollars
4,257.7
4,414.4

.6
3 70.5

1.7
12.5

216.1
35.8
562.6
901.4

753.6

83.6

147.8

16.4

403.5
1,918.4
150.2
313.3
495.8
100.1
770.9

79.6
92.9
91.9
67.9
89.6
65.1
91.3

103.1
146.8
13.1
117.3
44.8
52.1
62.0

20.4
7.1
8.0
25.4
8.1
33.9
7.4

.2
30.9
12.5
1.6
11.2

.1
6.7
2.3
1.0
1.3

06.6
2,0 5.2
163.5
461.5
553.1
153.8
844.1

13,589.6

89.8

1,412.0

9.3

134.2

.9

15,135.8

For sources from which figures were obtained, see Appendix Table 20.
Total of capital stock, long-time debts, reserves, and surplus.
* Appreciation.

1
3

A more detailed analysis of the balance sheets of these 1,660 corporations, together with a statement of the sources of information
in each case, is shown in Appendix Table 20. The table above indicates about 90 per cent of the tiotal corporate wealth as actually
employed in the corporate business. Of the wealth of steel companies,




143 NATIONAL .WEALTH AND INCOME

large meat packers, natural gas companies in Texas, lumber companies in Louisiana, telephone and telegraph companies, and petroleum companies, over 90 per cent was invested in the business, while
outside investments ranged from 5.6 per cent to 8.6 per cent. Of the
total wealth of large rubber and tire companies, nearly 90 per cent
was invested in the business and slightly over 8 per cent was in outside investments. Nearly 80 per cent of the wealth of anthracite coal
and of oil and natural gas companies in Pennsylvania, and over
83.5 per cent of the wealth of bituminous coal companies in Pennsylvania, was invested iij the business. For pipe-line companies about
76 per cent of the total wealth is shown as invested in the business,
while 12.5 per cent was made up of appreciated values. The lowest
proportion of total wealth devoted to the business was that of 65.1 per
cent shown for the four large 5 and 10 cent stores. For the four large
tobacco companies nearly 68 per cent is shown as invested in the
business and over-25 per cent was in outside investments.
103288—S. Doc. 126, 69-1




11

CHAPTER
OWNERSHIP

OF

VII

CORPORATIONS

Section 1. Basis of commission's estimates.
The wealth devoted to corporate business in'1922, as estimated in
the preceding chapter, amounted to nearly one-third of the estimated
total wealth of the United States. Since corporations themselves are,
of course, owned by their stockholders, the relative concentration or
distribution of stock holdings for various classes of corporations
determine, strictly speaking, the real concentration or distribution of
corporate wealth.1 That the ownership of stock in corporations
has become much more widely distributed in recent years and that
large proportions of the stock of a great many large corporations are
now held by employees and customers are apparent from data received by the commission. Robert S. Binkerd, vice chairman of the
committee on public relations of the eastern railroads, stated at the
annual meeting of the Academy of Political Science on March 9,
1925, that the number of stockholders in certain selected major
corporations 2 had increased 99 per cent in the last seven years from
2,537,105 in 1918 to 5,051,499 in 1925. Of this increase 52 per cent
was in stock purchased by the general public, 34 per cent m stock
purchased by customers, and over 13 per cent in stock purchased b y
employees.3
In his book on Industrial Ownership, Robert S. Brookings, founder
of the Institute of Economics, says: 4
The change taking place within the last 40 years in the organization of business
and modifying the essential character of the corporation as a business unit b y
the wide distribution of the ownership of its capital among the public promises
to be one of the most important within modern history.

For the purposes of the present inquiry, schedules requesting data
on the number and kinds of stockholders were addressed b y the commission to a list of 10,000 corporations which was furnished b y the
Bureau of Internal Revenue. These 10,000 corporations were
selected in such manner as to be representative of each of the 43
industrial groups into which the returns received by the bureau were
divided in 1921 for the purposes of its "Statistics of Income." T o
this end the average investment of all corporations in each industrial
group was ascertained and the proportion of the number of companies in each group to the total number in all groups. The list of
1 The wealth of corporations as indicated by their assets represents the investment not only in capital
stock but also the investment of capital obtained by the issuance of bonds and other long-time obligations.
The corporate assets are subject to such liens as may have been imposed by the issuance of bonds, mortgages, and the like, and to the extent of the value of such liens and of other debts the value of the stockholders' interest falls short of the total value of the corporate assets. In its study of the distribution of
ownership of corporations, however, the commission has regarded such ownership as resting solely in the
stockholders.
2 Viz, railroads, express and Pullman service, street railways, gas, electric light, and power companies,
packers, 10 oil companies, 5 iron and steel companies, and 10 high-grade miscellaneous manufacturing and
distributing companies.
3 Commercial and Financial Chronicle, Apr. 4,1925, pp. 1672-1673.
4 Industrial Ownership: Its Economic and Social Significance, p. 1.

144




145 N A T I O N A L . W E A L T H AND

INCOME

10,000 corporations was then selected in these proportions from the
43 groups. Care was exercised so to select companies in each group
that the variations in investments of the companies chosen should
reflect as nearly as possible the variations in the investments of all
companies in the group. The list included a proper representation
of banks and insurance companies as well as of other business corporations.
Returns received from 4,367 of the 10,000 corporations to whom
schedules were addressed form the basis of the tabulations and comparisons in the present chapter. While the number of corporations
is small in comparison with the total number of corporations in the
United States, the method employed in their selection makes them,
it is believed, fairly representative. The capital stock of the 4,367
corporations comprised 12 per cent of the capital stock of all corporations. For some of the industries covered in the commission's
analyses, the percentages of total capital stock represented by the
corporations making returns were considerably under this average
and in other cases they were considerably above the average. The
proportions for the different industries were as follows:
TABLE 7 7 . — P r o p o r t i o n of total number of corporations
and of total capital
represented by the companies
reporting data on ownership for 1922

Industries

stock

Proportion of
total
number
of
corporations

Agriculture and related industries
Mining and quarrying
Coal mining..
Petroleum mining
Other mining and quarrying
Manufacturing
Food products
Textile products
Leather products
Rubber, rubber goods, etc
Lumber and wood products
Chemicals and allied substances 1
Metal and metal products
Other manufacturingConstruction
Transportation and other public utilities.
Steam railroads
Electric railroads
Electric light and power
Gas
Telegraph and telephone
Other public utilities
Trade
Service
Finance
All industries
1

Mostly petroleum refining.

The total par value of the common stock reported by the 4,367
companies was $7,490,907,000, while that of the preferred stock
was $1,574,726,000, a great number of the smaller companies reporting no preferred stock. The common stock reported was held b y
1,074,851 stockholders, the average holding per stockholder amounting to $6,969. The preferred stock was held by 302,171 stockholders,
with average holdings of $5,211. The average value of outstanding




146

NATIONAL .WEALTH AND

INCOME

common stock per corporation was $1,715,000, while the average
preferred stock outstanding was $361,000. Since the returns. of
these 4,367 corporations represent merely a " s a m p l e " and the actual
number and amounts reported by them are of interest chiefly in
respect to their relative values, the discussion in the succeding
sections of this chapter is based upon percentages.
The size of the commission's " sample," it will be noted, ranges
for different industries from less than 1 per cent to more than 43
per cent of the total capital stock. The sample is largest, and, b y
that token, probably most representative, in the case of manufacturing corporations and public utilities. It amounts to over 43 per
cent of the capital stock for manufacturers of chemicals and allied
substances, comprised largely of petroleum-refining companies, to
nearly 35 per cent for steam railroads, almost 30 per cent for gas
-companies, close to 20 per cent for electric light and power companies,
:.and 12.5 per cent each for companies engaged in coal mining and for
companies engaged in the manufacture of food products.
Section 2. Average distribution of corporate stock holdings in various
industries.
Data on outstanding capital stock and on number of stockholders,
as reported to the commission for the year 1922 by 4,367 representative corporations, indicate, as already stated, that the par value of
the average common-stock holding is $6,969, while that of the average preferred-stock holding is $5,211. The average amount of stock
per stockholder, together with the average number of stockholders
per corporation and the average value of outstanding stock per
corporation, are shown for various industries, as follows:
T a ^ l e 78.—Average distribution of corporate stock holdings in various industries

Industries

Average par value
per stockholder

Average number of
stockholders per
corporation

Common Preferred Common Preferred
Agriculture and related industries.__
Mining and quarrying
Coal mining
Petroleum mining
All other mining and quarrying.
Manufacturing
Food products
Textile products
Leather products
Rubber, rubber goods, etc
Lumber and wood products
Chemicals and allied substances2
Metal and metal products
All other manufacturing
Construction
Transportation and other public
utilities
Steam railroads
Electric railroads
Electric light and power
Gas
Telegraph and telephone
Other public utilities
Trade
Service
Finance
All industries
.
1

Average par value of total
outstanding stock per
corporation
Common

Preferred

$9,450
4,422
9,142
3,464
4,241
9,331
4,101
12,416
5,101
3,857
18,957
11,842
11,810
10,663
9,526

$1,813
4,966
9,883
3,271
1,943
5,391
7,113
7,967
3,662
2,834
3,700
3,691
6,058
5,192
8,186

15
1,013
327
1,064
1,834
254
339
29
126
206
13
11,700
3,025
132
11

2
137
11
237
9
101
62
11
106
602
5
783
2,490
97
2

$146,000
4,479,000
2,989,000
3,686,000
7,777,000
2,367,000
1,392,000
363,000
645,000
794,000
250,000
138,546,000
35, 729,000
1,408,000
107,000

$3,000
681,000
1,064,000
775,000
17,000
547,000
443,000
89,000
387,000
1,705,000
18,000
2,889,000
15,084,000
506,000
14,000

6,799
8,647
3,808
3,273
4,614
3,857
5,103
10,467
5,286
3.654
'6, 969

5,484
8,870
4,045
2,283
2,909
2,271
2,999
2,626
1,486
2,430
5,211

1,153
6,060
890
• 1,362
1,748
374
69
21
20
118
246

339
1,330
99
734
1,402
20
8
10
9
8
69

7,839,000
52,402,000
3,390,000
4,457,000
8,063,000
1,441,000
354,000
224,000
106,000
433,000
1,715,000

1,858,000
11,799,000
399,000
1,675,000
4,079,000
46,000
23,000
25,000
14,000
18,000
361,000

Based on data received from 4,367 representative corporations.




1

* Mostly petroleum refining.

147 N A T I O N A L . W E A L T H AND

INCOME

The average holding of common stock ranged from $3,273 per
stockholder for electric light and power companies to $18,957 for
manufacturers of lumber and wood products, while the average holding of preferred stock ranged from $1,486 for service corporations to
$9,883 for coal-mining corporations. As a group, the trading corporations exceeded all others in the average holding of common
stock, while the construction group ranked first for holdings of preferred stock. The lowest average holding for common stock was
$3,654 for financial corporations, while that for preferred stock was
the $1,486 for service corporations already mentioned.
The only industries in which the average holding of common stock
did not exceed the average holding of preferred stock were coal
mining, food manufacture, steam railroads, and electric railroads.
In almost every industry the average amount of common stock outstanding per corporation was much larger than that of preferred,
and, in spite of a much larger average number of holders of common
stock per corporation, the average size of holding for common stock
was generally larger than for preferred. The concentration of ownership, however, was less on the average with respect to common stock
than for preferred.
A V E R A G E H O L D I N G S OF D I F F E R E N T

C L A S S E S OF

HOLDERS.—Since

the stock of corporations is usually held by different classes of individuals or organizations and for different purposes, the corporations
reporting to the commission were requested so to classify their returns as to indicate the stock held by (1) individuals living in the
United States other than trustees or brokers, (2) trustees, (3) brokers,
(4) corporations, (5) nonprofit institutions, and (6) foreign holders.
In each instance the number of stockholders, as well as the amount
of stock held, was requested. The average par value of stock holdings in 1922 in each of the foregoing classes, as indicated by the returns of the 4,367 corporations reporting, was as follows:
TABLE 7 9 . — A v e r a g e holdings of common and preferred stocks by various
stockholders, for corporations
reporting, 1922 1

classes

of

Average par value
per stockholder
Class of holder

Individuals 2
Trustees
Brokers
Corporations
Nonprofit institutions.
Foreign holders

$4,955
21, 698
48, 529
62,445
25,641
7,530

All classes

6,969

1 Based on returns of 4,367 representative corporations.
2 Exclusive of brokers, trustees, and foreign holders.

The average holding of common stock was largest in the case of
corporations and smallest in the case of individuals. The average
for preferred stock was greatest in the case of brokers and smallest
in the case of individuals. The only class whose average holding of
preferred stock exceeded its average of common stock was the foreign




148

NATIONAL . W E A L T H AND

INCOME

holder. The excess of average holdings of common stock over preferred stock was greatest in the case o f corporation holders.
AVERAGE

HOLDINGS

OF O F F I C E R S

AND

DIRECTORS

AND

OF

EM-

PLOYEES.—In addition to the foregoing data on classes of stockholders the corporations to whom schedules were addressed were
requested to report the amount of stock held by officers and directors and by employees. Not all of the 4,367 corporations reporting
gave this information, and for this reason the averages computed ares
not as representative as in other cases. For the corporations reporting adequate information the average holding per person of officers
and directors amounted to $34,843 for common and $34,264 for
preferred stock. The average holding per person for employees
amounted to $1,419 for common and $2,803 for preferred stock. The
average holding for officers and directors was thus considerably above
that for other individual holders while the average for employees was
well below that for other individuals. The average reported holdings for officers and directors and for employees, by the various
industrial groups, were as follows :
TABLE 8 0 . — A v e r a g e individual}
holdings of common
average holdings of officers and directors and of employees
by industries,
1922

and preferred
for corporations

Common stock
Industries

Agriculture and related industries
Mining and quarrying
Manufacturing..
Construction..
Transportation and other public utilities
Trade
Service
Finance
All industries-

stock
and
reporting,

Preferred stock

Officers
Officers
EmIndiEmIndiand
' and
1
1
directors ployees viduals directors ployees viduals
$22,877 $2,670
38,138
1,430
77,462
1,472
20,016
2,772
25,616
712
29, 111 5,100
16, 252
961
12, 739 1,240
34,843
1,419

$10,049
2,886
7,021
9, 568
4,188
9, 557
4, 775
3,113
4,955

$11,177
63, 646 $1, 747
48,342 3, 472
19,060 2, 223
904
13,949
2,332
11,836
1,157
8,447
1,456
19,651
2,803
34,264

$2,229
3,767
4,525
7, 853
3,493
2,352
1,364
2,128
3; 879

i Includes officers, directors, ai;d employees, but excludes brokers, trustees, and foreign holders.

The average individual holding of common stock by officers and
directors, as shown by the above table, was highest in manufacturing
corporations, amounting to over $77,000. In the other industrial
roups the averages ranged from nearly $13,000 to $38,000. The
ighest average holding for officers and directors of preferred stock,
amounting to nearly $64,000, is shown in mining and quarrying cor>orations; the averages in the remaining industrial groups ranged
rom about $8,500 to over $48,000.
The average holding of common stock by employees varied widely,
ranging from $700 in companies engaged in transportation and other
mblic utilities to $5,000 in trading companies. The average holdings
or preferred stock ranged from $900 in companies engaged in transportation and other public utilities to $3,500 in manufacturing companies.
N U M B E R OF S M A L L STOCKHOLDERS.—While the average holding
for all industries amounted to $6,969 for common stock and $5,211
for preferred, the data for the 4,367 representative corporations reporting to the commission show that nearly one-third of all corporate

g

S

{




N A T I O N A L W E A L T H AND

INCOME

149

stockholders in 1922 held not more than $500 worth of stock each.
In some industries the proportion was in excess of one-third, while
in others it was less, as indicated in the following tabulation :
TABLE $ 1 . — P r o p o r t i o n of persons holding stock (common
less to total number of stockholders,

Industries

Agriculture and related industries
Mining and quarrying
Coal mining
Petroleum mi ni ng
Other mining and quarrying
Manufacturing
Food products
Textile products.
Leather products
Rubber, rubber goods, etc
Lumber and wood products
Chemicals and allied substances 1
Metal and metal products
Other manufacturing
Construction
Transportation and other public utilities
Steam railroads
Electric railroads
Electric light and power
Gas.
Telegraph and telephone
Other public utilities
Trade
Service
Finance
All industries

and preferred)
1922

of $500

or

Per cent
of total
stockholders

23.
20.
11.

38.
19.
23.
30.
31.
42.
39.
30.

i Mostly petroleum refining.

The proportion of persons holding $500 or less of preferred and
common stock to the total number of stockholders averaged 30.4
per cent and ranged from 11.7 per cent for electric railroads to 53.8
per cent for petroleum-mining companies. In general, it was
greatest for the mining and the service groups of corporations and
lowest for the construction and public utility groups. The low per
cent of small stock holdings in certain groups does not necessarily
mean a relatively heavier degree of concentration of stock ownership
in those groups as compared with other groups. It may result
merely from a relatively greater investment per stockholder.
Section 3. Relative holdings of various classes of stockholders.
Analysis of the data of the 4,367 representative corporations
reporting to the commission indicates that individuals as a class far
exceeded all other classes of corporate stockholders both in number
and in value of stock holdings. Of the total number
of
stockholders reported, individuals (not including brokers, trustees,
or foreign holders) comprised over 90 per cent and held about 65 per
cent of the total par value of common stock and nearly 68 per cent
of the preferred.




150

N A T I O N A L .WEALTH A N D

INCOME

The relative holdings of the various classes of stockholders were
as follows:
TABLE 8 2 . — N u m b e r s and proportions
preferred

of various
stock,

classes

of holders of common

1922

Common stock

Class

Number of stockholders

Total

Preferred stock

Value of stock
holdings

Number of
stockholders

Value of stock
holdings

Per
cent

Amount

Per
cent

Number

Per
cent

Amount

990,634
36,069
18,370
12,444
2,749
14,585

92.2
3.4
1.7
1.1
.2
1.4

$4,859,439
782,612
891,474
777,070
70,486
109,826

64.9
10.4
11.9
10.4
.9
1.5

275,073
10, 518
4,360
6,810
934
4,476

91.0
3.5
1.4
2.3
.3
1.5

$1,067,024
155,359
137,7^8
159,957
14,975
39,703

67.8
9.9
8.7
10.2
.9
2.5

1,074,851

100.0

7,490,907

100.0

302,171

100.0

1,574,746

100.0

Number
Individuals1
Trustees
Brokers
Corporations
Nonprofit institutions
Foreign holders

and

.

Per
cent

i Exclusive of brokers, trustees, and foreign holders.

The table indicates very similar class distributions for common
stock and for preferred stock. In each instance the preponderance
of individual holdings is apparent. The proportion of total stockholders represented b y individuals is considerably greater than the
proportion of total value of stockholdings so represented, indicating
a relatively lower average holding by individuals than by other classes.
In all other classes the proportion of total stockholders was less than
the proportion of total stock value.
I N D I V I D U A L S T O C K H O L D E R S . — T h e average par value per stockholder of corporate stock held by individuals was lower than that
for other classes of holders in nearly all industries. The proportion
of the total reported stock and of the total number of stockholders,
however, was far larger for individuals than for any other class, as
Table 82 indicates. The proportionate number and holdings of individual stockholders to total stockholders are shown for the various
industries as follows:




151 N A T I O N A L . W E A L T H A N D I N C O M E
TABLE 8 3 . — I n d i v i d u a l stockholders' 1 proportionate
number and holdings
and preferred stock, by industries,
19222

Industries

Total par value of
stock

of

common

Total number of
stockholders

Common Preferred Common Preferred

Agriculture and related industries
Mining and quarrying
Coal mining
Petroleum mining
Other mining and quarrying
Manufacturing
:
Pood products
Textile products
Leather products
Rubber, rubber goods, etc
Lumber and wood products
Chemicals and allied substances3
Metal and metal products
Other manufacturing
Construction
Transportation and other public utilities..
Steam railroads
Electric railroads
Electric light and power
Gas
Telegraph and telephone
Other public utilities
Trade
Service
Finance
All industries

Per cent Per cent Per cent Per cent
88.8
92.9
83.5
75.6
91.9
69.4
91.5
60.0
71.9
68.7
87.5
91.8
49.4
66.4
94.2
91.3
99.5
90.7
64.0
99.6
69.9
76.9
93.0
91.6
78.7
92.5
80.6
95.6
93.2
89.9
88.6
77.0
80.8
71.3
95.4
94.0
85.5
78.1
97.2
95.6
96.7
92.5
94.3
97.3
66.9
58.1
94.1
91.8
69.7
78.8
85.4
92.6
76.0
88.9
68.0
93.2
97.1
91.5
97.5
95.3
57.2
56.3
91.3
89.8
51.3
48.3
89.9
83.5
69.7
96.9
66.8
88.2
83.5
96.8
77.3
95.9
70.2
84.3
89.4
94.6
63.9
76.0
91.0
96.5
71.4
88.9
97.2
90.0
85.4
83.5
93.5
93.3
85.9
95.2
87.4
95.2
79.2
92.9
85.0
97.0
64.9
92.2
67.8
91.0

1 Includes officers, directors, and employees, but does not include brokers, trustees, or foreign
J Based on data furnished the commission by 4,367 representative corporations.
(See p. 146.)
3 Mostly petroleum refining.

holders.

The table indicates that the proportion of the total par value of
common stock held by individuals in the aggregate ranged from about
50 per cent for petroleum-producing corporations to 97.5 per cent
for construction corporations. The proportion of the par value of
preferred stock held oy individuals in the aggregate ranged from 48.3
per cent for steam railroads to nearly 94.3 per cent for manufacturers
of lumber and wood products.
Individuals comprised over 90 per cent of the total number of
holders of common stock in the case of all industries listed in the
above table, with the exception of steam railroads, gas, agricultural,
and coal-mining companies. The proportions for steam railroads
and gas companies were slightly below 90 per cent, that for agriculture was 83.5 per cent, and that for coal mining was 87.5 per cent.
Individuals also comprised over 90 per cent of the holders of preferred stock in case of all industries, with the exception of textiles
and textile products, agricultural, electric railroads, metal products,
and steam railroads. For textiles and textile products the proportion
was slightly under 90 per cent, and for the other named industries
the proportions ranged from 75.6 per cent to over 88 per cent.
While the foregoing data indicate a very wide distribution of
corporate stock among individuals, it was not possible, from the information supplied by the corporations, to analyze the proportions
owned by different individual stockholders or the extent to which
control of the stock was held by a few individuals. (See, however,
Table 78, p. 146.)
103288—S. Doc. 126,




69-1—12

152

NATIONAL .WEALTH AND

INCOME

A striking illustration of increases in recent years in the ownership
of corporate stocks by the smaller-income classes is contained in
reports of the Bureau of Internal Revenue, which indicate for the
years 1916 to 1922, inclusive, the proportions of total corporate
dividends received by individuals of various income classes, as foil ows:
TABLE 8 4 . — C o r p o r a t e dividends received by individuals
by years, 1916 to 1922 i
Income class

Under $5,000
$5,000 to $25,000
$25,000 to $100,000
$100,000 to $500,000
$500,000 to $1,000,000...;
$1,000,000 and over
Total

of specified

income

classes,

1916

1917

1918

1919

1920

1921

1922

Per
cent
1.8
23.6
30.4
24.8
6.4
13.0

Per
cent
7.0
28.2
30.3
21.0
5.1
8.4

Per
cent
13.6
33.8
29.4
15.4
3.2
4.6

Per
cent
13.3
34.6
29.7
15.5
3.1
3.8

Per
cent
13.6
37.7
31.7
12.2
2.1
2.7

Per
cent
22.7
35.9
27.9
10.2
1.3
2.0

Per
cent
18.4
34.5
29.7
12.2
2.2
3.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

i Computed by the Federal Trade Commission from figures compiled from Statistics of Income, United
States Bureau of Internal Revenue.

From 1916 to 1921, according to the. returns, dividends received by
individuals with incomes of less than $5,000 a year increased from
1.8 per cent of the total to 22.7 per cent, falling off to 18.4 per cent
in^ 1922. The proportion of total dividends received by individuals
with incomes of from $5,000 to $25,000 also increased from about
23.6 per cent in 1916 to 37.7 per cent in 1920, falling off to 35.9 per
cent in 1921 and 34.5 per cent in 1922. For the higher income
classes, constant decreases, with but few exceptions, are shown in
the proportions of total dividends received for each of the years from
1916 to 1921. Increasing completeness of returns in the low-income
class and a tendency to adjust investments in the higher brackets
are probably important factors in this result.
B R O K E R S T O C K H O L D E R S . — A b o u t 12 per cent of the total amount
of common stock reported to the commission was held by brokers.
Next to individuals, brokers led all other classes of stockholders in
this respect, although in number they were exceeded by trustees-.
They were also exceeded by trustees and by, corporations in the value
of preferred stock held and in number of holders for this class of
stock. Broker ownership of stock is, of course, generally transitory
and often nominal for the convenience of clients. It is transferred
eventually, in most cases, to one of the other classes of holders. In
the case, of the large corporations whose stocks are listed on stock
exchanges and traded in extensively, broker ownership represents a
much more important proportion of the total than is here indicated
for all corporations.
The proportionate number and holdings of broker stockholders to
total stockholders are shown for the various industries as follows:




153 NATIONAL .WEALTH AND INCOME
TABLE 8 5 . — B r o k e r s 1 proportionate number and holdings
stock, by i7idustries} 1922 1

of common

and

preferred

Total number of
stockholders

Total par value of
stock
Industries

Common Preferred Common Preferred

Agriculture and related industries
Mining and quarrying
_ _.
Coal mining.
Petroleum mining
Other mining and quarrying
Manufacturing
Food products..
Textile products
Leather products
Rubber, rubber goods, etc
Lumber and wood products
Chemicals and allied substances 3
Metal and metal products
Other manufacturing
Construction
Transportation and other public utilities
Steam railroads
Electric railroads
Electric light and power
Gas
Telegraph and telephone
Other public utilities
Trade
Service
Finance
All industries
1
2
3
4

Per cent
(?)

...

19.2
10.1
19.1
24.0
10.5
12.2
3.6
15.7
.1
.4
5.9
17.8
13.4
.7
14.5
17.2
6.9
6.3
3.2
3.6
5.4
4.5
0)
1.5
11.9

Per cent

Per cent

8.5
6.3
10.9

2.7
2.7
2.1
3.1
2.5
1.1
2.5
4.4
.9
.2
1.9
4.2
4.0
.4
1.3
1.8
.5
.5
.8
.6
1.4
1.7

(2)

4.6
5.2
2.5
14.6
1.0
.2
1.8
5.6
2 4.0

()

13.4
17.3
2.9
2.4
2.2
.2
.1
4.6
2

()

.3
8.7

Based on data furnished the commission by 4,367 representatives corporations.
No appreciable amount held.
Mostly petroleum refining.
Less than one-tenth of 1 per cent.

(2)

(2)

.3
1.7

Per 2cent

()

1.3
1.4
1.3

1.4
2.0
2.1
1.4
.4
.2
1.4
1.9
2 1.2

()

(0

(2)
(*)

1.6
3.1
1.1
.2
.5
.2
.5
1.4

(See p. 146.)

The table indicates that broker holdings are more important for
mining and quarrying corporations and for public utilities than
for other corporate industries. Brokers held over 19 per cent of the
par value of the common stock and 8.5 per cent of the par value of the
preferred stock of corporations engaged in mining and quarrying.
Their holdings were heaviest in petroleum-producing corporations,
amounting to about 19 per cent of the common and nearly 11 per cent
of the preferred stock. Of the stock of transportation and public
utility corporations, brokers held 14.5 per cent of the common and
nearly 13.4 per cent of the preferred. Their holdings in manufacturing corporations were largest in the case of manufacturers of metal and
metal products, amounting to nearly 18 per cent of the common stock,
although only slightly over 5.5 per cent of the preferred. Brokers
held over 17 per cent of the par value of both tne common and the
preferred stocks of steam railroads.
In number, broker stockholders did not exceed 4.5 per cent of the
total holders of common stock or 3.5 per cent of the total holders of
preferred stock in any of the industries covered by the table.
TRUSTEE STOCKHOLDERS.—Nearly 10.5 per cent of the total par
value of the common stock of corporations was held by trustees.
Of the preferred stock, trustees held 9.9 per cent. Trustee stockholders represented 3.4 per cent of the common stockholders and 3.5
per cent of the preferred.




154

NATIONAL . W E A L T H AND

INCOME

The proportionate number and holdings of trustee stockholders
to total stockholders in various industries were as follows:
TABLE 8 6 . — T r u s t e e s ' proportionate
number and holdings
stock, by industries,
1922 i

of common

Total par value of
stock

Industries

and

preferred

Total number of
stockholders

Common Preferred Common Preferred

Agriculture and related industries
Mining and quarrying
Coal mining
Petroleum mining
Other mining and quarrying
Manufacturing
Food products
Textile products
Leather products
Rubber, rubber goods, etc
Lumber and wood products
Chemicals and allied substances 2
Metal and metal products
Other manufacturing
Construction
Transportation and othei public utilities
Steam railroads
Electric railroads
Electric light and power
Gas
Telegraph and telephone
Other public utilities
Trade
Service
Finance
All industries

„

Per cent
3.5
4.9
8.7
1.9
5.4
7.2
4.3
4.9
1.8
13.8
2.7
9.0
8.0
6.0
.7
15.4
16.3
17.4
7.3
17.4
1-1.9
8.0
1
3.8
5.1
10.4
10.4

Per cent
5.1
13.9
19.3
8.2
.5
9.9
7.4
11.2
4.6
8.9
.2
5.3
12.0
10.4
.3
9.7
11.6
20.0
3.3
2.9
11.3
5.8
6.3
6.5
3.2
9.9

i Based on data furnished the commission by 4,367 representative corporations.
* Mostly petroleum refining.

Per cent
2.2
3.9
6.8
1.8
5.3
1.6
.5
2.6
.6
2.3
1.5
2.1
1.3
2.1
1.3
4.5
4.6
1.9
1.6
7.5
6.2
5.8
1.1
1.9
4.0
3.4

Per cent
0.7
4.5
5.3
4.3
.4
2.9
3.6
5.1
2.2
1.1
.3
4.3
2.1
3.3
2.9
4.2
6.4
8.6
2.5
1.8
2.8
1.9
1.5
3.0
.9
3.5

(See p. 146.)

The heaviest proportionate holdings of trustees were in transportation and other public-utility corporations. Trustee stockholders
held nearly 17.5 per cent of the common stock of electric railroads
and of gas companies, close to 16.5 per cent of the common stock of
steam railroads, and nearly 12 per cent of that of telegraph and
telephone companies. Of the preferred stock trustees held 20 per
cept in the case of electric railroads, nearly 19.5 per cent in coalmining companies, over 11.5 per cent in steam railroads, and nearly
11.5 per cent in telegraph and telephone companies. For the remaining industries the proportions of stock held by trustees ranged
from less than 1 per cent to about 12 per cent for common stock and
for preferred stock.
In number trustees comprised 7.5 per cent, of the total holders of
common stock of gas companies, nearly 7 per cent of the total holders
of common stock of coal-mining companies, and a little over 6 per
cent of the total holders of common stock of telegraph and telephone
companies. For the remaining industries the proportions of trustee
holders ranged from one-half of 1 per cent to slightly over 4.5 per
cent. Trustees represented over 8.5 per cent of the total holders of
preferred stock of electric railroads and nearly 6.5 per cent of the
total holders of preferred stock of steam railroads. For the remaining industries the proportions ranged from less than one-half of 1
per cent to nearly 5.5 per cent.




155 NATIONAL . W E A L T H AND I N C O M E
C O R P O R A T I O N S T O C K H O L D E R S . — A little over 10 per cent of the
stock (common and preferred) of corporations reporting to the commission was owned by other corporations/ In arriving at this
proportion none of the stock of corporations was considered where 50
per cent or over of such stock was owned by another corporation,
since^ in such cases, the ultimate ownership or majority ownership is
in the stockholders of the holding company. The proportionate
number and holdings of corporation stockholders to total stockholders are shown for the various industries as follows:
TABLE 8 7 . — C o r p o r a t i o n s 1 proportionate
number and holdings
ferred stock of other corporations,
by industries,

of common
1922 1

Total par value of
stock

Industries

and

pre-

Total number of
stockholders

Common Preferred Common Preferred

Agriculture and related industries
Mining and quarrying.
Coal mining
Petroleum mining
Other mining and quarrying
Manufacturing
Food products
Textile products
Leather products
Rubber, rubber goods, etc
Lumber and wood products
Chemicals and allied substances 3
Metal and metal products
Other manufacturing
Construction
Transportation and other public utilities
Steam railroads
Electric railroads
Electric light and power
Gas
Telegraph and telephone
Other public utilities
Trade.
Service..
Finance
_
All industries

_

Per cent
5.2
13.9
5.8
28.6
6.4
10.5
3.6
2.4
1.3
.4
3.9
16.0
2.7
10.6
.6
10.5
11.6
5.9
6.7
6.4
6.0
13.2
5.8
8.9
7.3
10.4

Per 2cent Per cent Per cent
1.5
()
0.7
6.3
.6
2.2
2.0
.8
10.8
.6
.6
.4
.9
6.7
3.1
6.0
.7
1.4
1.0
.9
5.3
8.4
.6
.6
.4
11.5
.8
5.1
1.1
1.7
.8
1.2
15.3
1.1
10.0
3.1
7.8
1.2
1.0
8.2
.8
1.8
14.4
1.2
1.6
16.7
1.5
2.6
8.2
.5
1.1
9.5
.5
.6
.8
.9
5.5
.8
.7
24.6
4.7
1.6
.6
4.
5.4
3.3
5.9
2.7
1.7
9.0
1.6
.5
10.2
1.1
2.3

1 Based on data furnished the commission by 4,367 representative corporations.
include subsidiary corporations.
2 No appreciable amount of stock held.
3 Mostly petroleum refining.

(See p. 146.) Does not

A larger proportion of the common stock of companies engaged in
petroleum production and of companies engaged in the manufacture
of chemicals and allied substances (principally petroleum products)
was owned by other corporations than was true in the case of any of
the other industries covered. Of the par value of common stock of
companies engaged in petroleum production corporations owned
about 28.5 per cent, and of the par value of the common stock of
manufacturers of chemicals and allied substances they owned 16
per cent. Tliey also owned nearly 11 per cent of the par value of
preferred stock of petroleum-producing corporations and over 15
per cent of the preferred stock of petroleum-refining companies.
The proportion of the total number of stockholders represented by
corporation holders was slightly over 1 per cent in the case of preferred stock of petroleum-refining companies and less than 1 per
cent for the common stock of both these industries and for the preferred stock of petroleum-production companies.




156

NATIONAL .WEALTH AND INCOME

Corporations also held over 11.5 per cent of the common and
nearly 17 per cent of the preferred stock of steam railroads. While
holding close to 25 per cent of the preferred stock of telegraph and
telephone companies, they held only 6 per cent of the common
stock of these companies. They owned 1.1.5 per cent of the preferred
stock of companies engaged in the manufacture of rubber, rubber
goods, etc., but less than one-half of 1 per cent of the common stock
of these companies. The proportion held of the common stock of the
other industries ranged from less than 1 per cent to about 9 per cent,
while the proportions of preferred stock ranged from slightly over 2
per cent to 9.5 per cent.
The proportion of the total number of stockholders represented
b y corporation holders was greatest in the case of the preferred
stock of companies engaged in the manufacture of metal and metal
products, amounting to 10 per cent. In no other industry or group
of industries did it exceed 4.5 pef cent for either common or preferred holders.
FOREIGN S T O C K H O L D E R S . — T h e proportionate stock holdings of
foreign residents were very small, averaging only 1.5 per cent for
common stock and only 2.5 per cent for preferred. Similarly, foreign
stockholders represented only 1.4 per cent of the total common
stockholders ana only 1.5 per cent of the preferred. Many foreigners,
of course, were obliged to sell their stocks during the war.
The proportionate number and holdings of foreign residents to
total stockholders are shown for the various industries as follows:
T A B L E 8 8 . — F o r e i g n residentsf

proportionate

number

preferred stock, by industries,

Industries

and

1922

holdings

of common

and

1

Total par value of
stock

Total number of
stockholders

Common Preferred Common Preferred
Agriculture and related industries
Mining and quarrying
Coal mining
Petroleum mining
Other mining and quarrying
Manufacturing
Food products
Textile products
Leather products
Rubber, rubber goods, etc
Lumber and wood products
Chemicals and allied substances 2
. Metal and metal products
Other manufacturing
Construction
Transportation and other public utilities
Steam railroads
Electric railroads
Electric light and power
Gas
Telegraph and telephone
Other public utilities
Trade
Service
Finance
All industries
1
J

Per cent
2.5
.4
,3
.6
.2
.9
1.1
.3
.2
.2
.3
.4
.6
1.6
.5
2.5
2.9
.1
1.0
1.5
1.3
1.5
.4
.1
.6
1.5

Per cent
2.0
1.7
.2
3.4
.8
.6
3.8
.1
.2
.2
.3
.3
3 1.1

()

4.4
2 5.0

()

1.0
3 4.8

()

3 .1

()

2.4
2.5

Per cent
12.8
.8
.3
1.2
.5
1.9
2.0
.6
.3
.7
.3
.9
.7
3.6
.4
1.4
1.9
.1
.5
1.0
.9
.6
.3
.2
.6
1.4

Per cent
23.7
1.8
.5
2.3
.7
.4
1.6
.2
.3
.2
•7
.5
3 .9

()

2.4
3.8
.1
.6
2.0
3

()
(3)

.2
1.5
1.5

Based on data furnished the commission b y 4,367 representative corporations. (See p. 146.)
Mostly petroleum refining.
3 N o appreciable amount of stock held.

Foreign residents held about 3 per cent of common and 5 per cent
of the preferred stock of steam railroads. They also held 2.5 per cent
of the par value of common and 2 per cent of the par value of preferred stock of corporations engaged in agriculture and related




157

NATIONAL . W E A L T H A N D I N C O M E

industries. Their holdings of common stock of electric light and
power companies, manufacturers of food products, telegraph and
telephone companies, and of gas companies ranged from 1 per cent
to 1.5 per cent of the total; and their holdings of th6 preferred stock
of electric light and power companies, petroleum production companies, companies engaged in the manufacture of textiles and textile
products, finance, and gas companies ranged from 1 per cent to about
5 per cent. For no other industry did the proportions of either common or preferred stock held by foreigners exceed six-tenths of 1 per
cent of the total.
With the exception of agriculture and related industries, the proportion of total stockholders represented by foreign holders did not
exceed 2 per cent for common stockholders or 4 per cent for preferred
stockholders in the case of any of the industries or industrial groups
covered by the table. In the case of agriculture and related industries
nearly 13 per cent of the holders of common stock and nearly 24
per cent of the holders of preferred stock were foreigners. The
proportions were less than 1 per cent for all but four of the industries
in the case of common stockholders and all but five in the case of
preferred stockholders.
N O N P R O F I T I N S T I T U T I O N STOCKHOLDERS.—Although nonprofit institutions are estimated to own 4.6 per cent of the total wealth of the
United States (see Chapter V I I I ) , they held less than 1 per cent of
the value of corporate stock reported to the commission. As has
been pointed out in Chapter V I I I , institutions of this nature apparently have their funds principally invested in bonds and mortgages
rather than in stocks.
The proportionate number and holdings of nonprofit institutions
as compared with total corporate stockholders are shown for various
industries as follows:
TABLE 8 9 . — N o n p r o f i t institutions'
proportionate
number and holdings
and preferred stock, by industries,
1922 1
Total par value of
stock

Industries

of

common

Total number of
stockholders

Common Preferred Common Preferred
Agriculture and related industries.
Mining and quarrying
Coal mining
Petroleum mining
Other mining and quarrying
Manufacturing
Food products
Textile products
Leather products
Rubber, rubber goods, etc
Lumber and wood products
Chemicals and allied substances4
Metal and metal products
Other manufacturing
Construction
Transportation and other public utilities
Steam railroads
Electric railroads
Electric light and power
Gas
Telegraph and telephone
Other public utilities
Trade
Service
Finance
_
__
All industries

Per 2cent

Per 2cent

1.6
6.4
3 .4

.1
.3

()

()

1.0
.1
.2
.2
3

()
-

.2
1.8
1.2
2 .4

-

()

.8

3 .7

()

1.4
1.3
1.2
.5
.1

(3)

-

1.0
.9

( )0.2

l.i
.2
.2
1.0
3 .3

()

19.2
.2
2 .7

()

.9
1.1
2.1
.3
3 .3

()

.5
.1
.2
.1
.9

Per2cent Per 2cent
()
()
0.2
0.1
.7
.2
.2
3 .1

()

.1
.1
.1
.1
.1
.2
.2
.1
.2
(2)
.3
.3
.1
.1
.5
.5
.6
3 .1

()

.3
.1
.4
.2
.2
.3
.6
.1
.4
(2)
.4
.6
.9
.2
3 .2

()
(3)

.6
.2

Based on data furnished the commission by 4,367 representative corporations. (See p. 146.)
3 Less than one-tenth of 1 per cent.
2 No appreciable amount of stock held.
* Mostly petroleum refining.

1




.1
.1
.1
.3

176

NATIONAL .WEALTH AND INCOME

Nonprofit institutions held nearly 6.5 per cent of the common stock
of coal-mining companies and over 19 per cent of the preferred stock of
companies engaged in the manufacture of chemicals and allied substances. With these exceptions, however, their holdings ranged from
less than 1 per cent to slightly over 2 per cent. The comparatively
large percentages held of the preferred stock of corporations manufacturing chemicals and allied substances represent the various
Rockefeller foundations and institutions whose endowments are
principally in Standard Oil stocks.
The number of nonprofit-institution stockholders did not comprise
as Jiigh as 1 per cent of the total number of stockholders, either common or preferred, in the case of any of the industries covered by the
table.
STOCK HOLDINGS OF OFFICERS AND D I R E C T O R S . — T h e proportions of
corporate stock held by individuals included stock held by officers and
directors of the company and by employees. The holdings of officers
and directors were reported by most of the 4,367 corporations furnishing the data for the commission's estimates. The data received
indicate that holdings of officers and directors were an important
part of the holdings of individuals. In the case of a great many of
the smaller corporations all or most of the capital stock was held by
officers and directors. , Of the total common stock holdings of individuals, amounting, as already shown, to 65 per cent of sdl common
stock reported, officers and directors held about one-sixth, or 10 per
cent, of the grand total. Of the total preferred stock holdings of
individuals, amounting to 68 per cent of the total, nearly one-twelfth,
or close to 6 per cent of the grand total, was held by officers and
directors. On the other ,hand, while individuals as a class comprised
abotyt 92 per cent of the total number of common stockholders, only
about 2 per cent of the grand total were officers and directors. Similarly, individuals comprised 91 per cent of the holders of preferred
stock, but only about 1 p^r ctot of the grand total were officers and
directors.
,The proportionate stock holdings of officers and directors to total
stock holdings are shown for the various industries as follows:




159 NATIONAL . W E A L T H AND

INCOME

TABLE 90.—Officers 1 and directors' proportionate
number and holdings
and preferred stock, by industries,
1922 1
Total par value of
stock

Industries

of

common

Total number of
stockholders

Common Preferred Common Preferred

Agriculture and related industries
Mining and quarrying
Coal mining
Petroleum mining
Other mining and quarrying
Manufacturing
Food products
Textile products
Leather products
Rubber,rubber goods, etc.
Lumber and wood products.
Chemical and allied substances 2
Metal and metal products
0 ther manufacturing
Construction. _
Transportation and other public utilities
Steam railroads
Electric railroads
Electric light and power
Gas
Telegraph and telephone.
Other public utilities.
Trade
Service
Finance
All industries

-

Per cent
55.9
4.5
8.4
5.3
1.8
15.0
17.5
42.9
44.7
39.0
56.9
6.3
_
'11.4
22.7
67.6
2.1
1.2
5.4
4.2
1.4
5.3
23.4
48.4
49.7
22.0
10.7

Per cent Per cent
61.2
23.1
6.2
.5
9.4
2.0
.5
2.7
8.2
2.2
9.6
1.8
5.3
1.2
17.2
14.0
3.5
6.1
2.1
2.1
37.3
28.4
.3
.1
12.0
.4
10.6
3.6
46.3
32.2
.7
.6
.1
.2
8.4
.6
1.8
.4
.3
.4
13.4
.2
24.7
7.1
19.7
17.4
16.2
21.6
6.3
23.1
2.1
5.8

1 Based on data furnished the commission by a large number of representative corporations.
2 Mostly petroleum refining.

Per cent
10.0
.5
1.2
.2
2.9
1.1
1.7
5.3
.9
.7
6.8
.3
.2
1.3
19.9
.3
.1
1.5
.1
.1
4.6
4.2
4.4
3.8
3.1
.9

(See p. 146.)

The proportions of total capital stock represented by the holdings
of officers and directors ranged from one-tenth of 1 per cent of the
preferred stock of steam railroad companies to 67.6 per cent of the
common stock of construction companies. The proportion for companies manufacturing lumber and wood products was 56.9 per cent
of the common stock and 37.3 per cent of the preferred; the proportion for agricultural companies was 55.9 per cent of the common
stock and 61.2 per cent of the preferred. The relatively large proportions of stock held by officers and directors in the above-named
industries and also in service and trade corporations result from the
fact that corporate stock in these industries or groups is more closely
held than in the remaining industries or groups. As indicated in
Table 78 (p. 146), the average number of common-stock holders in the
construction, lumber, agricultural, service, and trade groups of corporations was much smaller than the average for other corporations.
Of the total common-stock holders of construction companies 32.2
per cent were officers or directors; of the common-stock holders of
lumber and wood companies 28.4 per cent were officers or directors;
for agricultural companies the proportion was 23.1 per cent; for
service companies, 16.2 per cent; for trade companies, 17.4 per cent;
and for textile manufacturing companies, 14 per cent.
S T O C K H O L D I N G S OF EMPLOYEES.—Ownership of stock by employees is urged by many as a solution of the often sharp antithesis of
interest between so-called capital and so-called labor. The buying
of corporation stocks by employees is undoubtedly increasing and is
encouraged in many large corporations by installment purchase




160

NATIONAL . W E A L T H AND

INCOME

arrangements and other devices to bring the employee into a partici
pation in the corporation ownership. Not all of the corporations
reporting to the commission were able to give information regarding
stock holdings of employees, but the data on this subject which were
received indicate that employees comprised 7.5 per cent of the common-stock holders reported and 3.5 per cent of the preferred-stock
holders, but had only 1.5 per cent of the common stock and less than
2 per cent of the preferred. The average stock holdings per employee stockholder were relatively small, as Table 80 (p. 148) shows.
The proportionate number and holdings of employee stockholders
to total stockholders in various industries were as follows:
TABLE 9 1 . — E m p l o y e e s ' proportionate

number

and holdings

ferred stock, by industries, 1922

Industries

of common

and

pre-

1

Total par value of
stock

Total number of
stockholders

Common Preferred Common

Agriculture and related industries
Mining and quarrying
Coal minings
Petroleum mining.,
Other mining and quarrying
Manufacturing
Food products
Textile products
Leather products
Rubber, rubber goods, etc
Lumber and wood products
Chemicals and allied substances *
Metal and metal products
Other manufacturing
Construction
Transportation and other public utilities.
Steam railroads
Electric railroads
Electric light and power
Gas
Telegraph and telephone
Other public utilities
Trade
Service
Finance
All industries

Per cent Per cent
0.6
(2)
.3
1.0
1.0
3 2.0

()

6.5
1.7
3.3
4.0
2.2
1.8
2.6
2.9
2.3
.3
.1
4.3
.8
.4
.3
.8
4.6
.4
.7
1.5

1.2
3.5
.6
1.5
4.6
.6
2.6
1.6
1.6
5.9
3.2
3 .3
()
.1
3 2.2
()
.3

.1

4.9
1.8

Per cent
2.2
.8
6.6
1.0
.1
17.9
21.2
4.8
31.6
25.6
9.1
23.7
2.7
13.9
7.9
3.2
.8
10.5
2.6
(3)
1.1
1.6
9.4
2.4
2.1
7.5

Based on data furnished the commission by representative corporations. (See p. 146.)
* No appreciable amount of stock held.
Less than one-tenth of 1 per cent.
* Mostly petroleum refining.
1

3

Employees' proportionate holdings of stock ranged from 6.5 per
cent of the common stock of companies manufacturing food products
to less than one-tenth of 1 per cent of the preferred stock of steam
railroad companies, gas companies, and petroleum-production companies. Of the total value of stock of all companies reporting,
employees had 1.5 per cent of the common and 1.9 per cent of the
preferred. Employees, as the table shows, represented a much larger
proportion of the total number of stockholders than they did of the
total value of stock, or, in other words, the average holding per
employee stockholder was comparatively small. This contrasts
with tne average holdings of officers and directors, which were relatively very large. The proportion of employee stockholders to total
stockholders ranged from 31.6 per cent of the common-stockholders
of companies manufacturing leather products to less than one-tenth




161 N A T I O N A L . W E A L T H AND

INCOME

of 1 per cent of the common-stock holders of gas companies. The
proportionate number of employee holders of common stock was
greater for the manufacturing group of industries than for any other
group, but the proportionate holdings of employees was greatest in
the trade group in the case of both common and preferred stock.
Section 4. Relative par values per share.
The apparent increase in distribution of stock ownership in recent
years has been accompanied, and perhaps furthered, by a tendency
toward a smaller par value per share of stock. Although a great
majority of stocks still have a par of $100, there is an increasing
number of issues with pars of $50, $25, $10, $5, or $1. Also stock of
no par value is often issued in States where such practice is allowed.
The Bureau of Internal Revenue reported for the year 1922 over
$71,000,000,000 as the par value of common and preferred stock of
companies reporting par value of shares and about $5,000,000,000
as the fair value of the capital stock of companies reporting no par
value of shares and no capital stock value.
The advantage in a small par value per share is principally psychological. Prospective purchasers of stock are found often to prefer
100 shares of stock of a par value per share of $10 rather than 10
shares of stock of a par value per share of $100. Many companies,
in order to induce the purchase of their stock by the public or by
customers or employees, find it to their advantage to have a low par
value per share.
Data received by the commission from the 4,367 corporations
described heretofore indicate that the great majority of corporations
still follow the practice of fixing the par value of their shares at $100.
The proportionate number of companies in various industries with
par values of $100, $50, $25, $10, $5, and $1, respectively, for their
common stock was as follows:
TABLE 9 2 . — P e r c e n t a g e s of number of companies
stock, by industries,

with specified
1922 1

par values of

common

Par values per share
Industries
Agriculture and related industries
Mining and quarrying.
Coal mining
Petroleum mining
Other mining and quarrying
Manufacturing
Food products
Textile products
Leather products
Rubber, rubber goods, etc
Lumber and wood products
Chemicals and allied substances 2
Metal and metal products
Other manufacturing
Construction
Transportation and other public utilities.
Steam railroads
Electric railroads
Electric light and power
Gas
Telegraph and telephone.
Other public utilities
Trade
—
Service
Finance
All industries

$100
76.1
50.0
78.1
23.0
58.1
79.6
81.8
81.6
85.4
75.1
76.9
44.4
58.4
77.4
82.8
70.0
88.9
77.3
73.9
59.1
64.4
67.4
84.6
77.4
83.3
80.0

$50

$25

$10

$5

4.2
6.5
12.2
5.8

2.8
2.4

7.0
4.8

1.4
3.2

5.8

""5.1"
5.7
5.4
7.4
8.3
9.1

" 2. 8"
2.7
3.8
2.4
8.3
1.7
55.6
8.3
2.2
4.0

7.7
6.5
4.8
3.4
3.3
2.4
8.3
7.4

5.8
3.2

5.2
1.0
9.1
8.9
9.1
10.9
13.6
9.6
7.6
3.4
2.8
5.2
5.1

9.1
2.2
18.42
12.5
9.7
1.9
4.0
2.2
3.0

5.9
2.0
6.8

10.6
8.3
4.8
9.0
4.1
4.9

24.2
2.4
46.1

All
other
8.5
8.9
7.3
5.8

16.1

16.1

1.2
5.1
2.3

25.0
7.4
5.1
2.1
2.2

.7
.4

6.0
4.9
5.9
2.4
4.1

.7

4.5
4.3

1 Based onfiguresfurnished the Federal Trade Commission by 4,367 corporations.
2 Mostly petroleum refining.




.6

1.1

$1

1.0
1.4
.4
.7

8.7
4.5
2.8
1.4
3.4
1.0
1.9

4.6
1.9
2.8
3.5
3.4
3.4
4.4

162

NATIONAL . W E A L T H AND

INCOME

Eighty per cent of all the companies reporting had common stock
with a par value of $100 a share. The most conspicuous departure
from this general practice of valuing shares at $100 was shown for
companies engaged in production of petroleum and petroleum products. Forty-six per cent of the petroleum mining companies had
common stock with a $1 par value per share, and another 31 per
cent had shares of par values other than $100. Of the companies
engaged in the manufacture of chemicals and allied substances
(mostly petroleum products) 56 per cent had common stock with a
$25 par. These relatively lower par values per share for petroleum
companies have no doubt been a factor in the large distribution of
petroleum stock issues in recent years. The low par value per share
is more popular among the companies with large stock issues than
among the smaller ones which are often closely held by a few individuals. This is indicated by the fact that, although 80 per cent of
the number of corporations reporting had a par value of $100 a
share for their common stock, only 66.7 per cent of the total share
value reported by all corporations was represented by shares with a
$100 par value. The proportionate stock values represented by
shares of various par values are shown for each industry as follows :
TABLE 9 3 . — P e r c e n t a g e s of total reported common
par values, by industries,

stock outstanding
1922 *

with

specified

Par values per share
Industries
$100
Agriculture and related industries
Mining and quarrying
• Coal mining.
Petroleum mining
Other mining and quarrying
Manufacturing
Food products
Textile products
Leather products
Rubber, rubber goods, etc
Lumber and wood products
Chemicals and allied substances 3
Metal and metal products
Other manufacturing
Construction
Transportation and other public utilities.
Steam railroads
Electric railroads
Electric light and power
Gas
Telegraph and telephone
Other public utilities
Trade
Service
Finance
All industries

$50

70.7
32.4
.65.2
24.1
22.2
49.5
83.3
84.3
31.4
50.0
80.7
23.7
56.7
63.8
81.0
85.2
90.1
88.5
65.4
37.4
95.6
67.6
84.5
83.7
93.4
66.7

4.8
10.9
34.2
9.7
"3.2
.6
3.6
64.5
19.3
5.7
5.8
' 5.4
1.4
8.9
7.1
5.0
11.7
35.2
1.9
12.0
1.3
2.6
2.1
5.9

$25

$10

0.8
3.6

6.5
.4

10.5

1.1
.1
1.0
2.6
1.6
.8
28.2
5.6

33.6
4.3
2.6
.9
2.5
.7
76.3
4.2
7.0
2.1
3.3
4.7
21.7
25.8
1.4
9.3
.6

3.2
.7
15.9

1.5
1.3

.1

$5
1.9
4.2
12.1
2

(2 )
()

.1

3.7
.1
7.8
2.3
2

.1

()

All
other
6.3
44.8
.5
34.7
75.4
12.6
9.1
7.9
2.4

.7
(2)
-(Y)-

1.8
.3
1.0
3.0
2.3
5.8

$1

(2)
1.3

.1

6.6

.3
5.4
.1

33. a
22.0
8.8
2.4
2.8

.1

1.5

2.1
.5
3.3
.3
.4

4.7
10.7
1.4
1.4
10.1

.1

Based onfiguresfurnished the Federal Trade Commission by 4,367 representative corporations.
2 Less than one-tenth of 1 per cent.
3 Mostly petroleum refining.
1

Over 76 per cent of the common stock of companies manufacturing
chemicals and allied substances (petroleum products) was comprised
of shares valued at $25 par each. Of the common stock of the
petroleum-mining companies over 12 per cent was comprised of
shares with a par value of $5 each, 10.5 per cent of shares with a par
value of $25 each, nearly 35 per cent of shares with par values not




163 NATIONAL .WEALTH AND INCOME

specifically covered by the table, and only about 24 per cent of shares
with a $100 par value. For manufacturers of leather and leather
products 64.5 per cent of the reported share value was comprised of
shares of $50 par value. For gas companies over 35 per cent was
comprised of shares of $50 par value, and nearly 26 per cent of shares
of $25 par value each. The smallest departure from the ordinary
par value of $100 is shown for the stock of finance, telephone and
telegraph, and transportation companies.
For preferred stocks the departure from the $100 par value per
share was somewhat less pronounced. This fact corresponds with
the fact that common stocks are generally more widely distributed
than are preferred. The data received by the commission indicate
that about 86 per cent of the companies had a par value of $100 a
share for their preferred stock, as compared with 80 per cent for
common stock. Of the total preferred stock value represented by
the returns over 90 per cent was in stock with a $100 par, as compared
with about 67 per cent of the total common stock value.
The relative numbers of companies reporting various par values
per share of preferred stock are shown for each industry, as follows:
TABLE 9 4 . — P e r c e n t a g e s of number

of companies

with specified

ferred stock, by industries, 1922

par values

of

pre-

1

Par values per share
Industries
$100
Agriculture and related industries
Mining and quarrying
Coal mining
Petroleum mining
Other mining and quarrying
Manufacturing
Food products
Textile products..
Leather products
Rubber, rubber goods, etc..
Lumber and wood products
Chemicals and allied substances 2
Metal and metal products
Other manufacturing
Construction
Transportation and other public utilities
Steam railroads..
Electric railroads
Electric light and power.
Gas.'.
*
Telegraph and telephone..
Other public utilities
Trade
Service
Finance
All industries..
1
2

$50

$25

$10

25.
63.
80.
33.
66.
91.
90.
95.
100.
100.
90.
100.
100.
90.
84.
77.

25.0
21.0
20.0
33.3

25.0

25.0
5.3

2.6
5.0
2.5

.5

82.

71.
94.
70.
71.
71.

2.5

33.3
3.9
3.8

$5

$1

5.3

5.3

16.7

All
other

16.7

.3 i

1.3
1.2

10.0
2.3
7.7
8.5
17.6
10.0
15.6
2.9
3.3
8.8
4.8

.5

4.7

.5

6.7

2.8

.9

5.3
10.0
6.3
14.2
1.2
6.7
5.5
2.3

7.7
.9

1.9
2.8
14.3

14.3
10.0

3.1
4.8
5.2

4.8

7.7
4.4

1.1
.5

1.2
2.2
.8

3.1
4.8
.6
3.3
2.2
1.5

Based on figures furnished the Federal Trade Commission by 4,367 representative corporations.
Mostly petroleum refining.

The proportionate number of companies with preferred stock of
$100 par value per share averaged 91 per cent for the manufacturing
group and averaged over 75 per cent in the case of each of the other
groups except agriculture, mining and quarrying, and finance. Of
the agricultural companies, 25 per cent had preferred stock of $50
par value per share, 25 per cent had preferred stock of $25 par value
per share, and another 25 per cent had preferred stock of $10 par
value per share. The most conspicuous departure, however, from




164

NATIONAL . W E A L T H AND

INCOME

the practice of valuing shares at $100 was shown for companies
engaged in petroleum mining, over 33 per cent of which had preferred stock valued at $50 par per share, nearly 17 per cent had preferred stock valued at $5 par per share, and nearly 17 per cent nad
preferred stock at $1 par per share.
The proportions of total reported preferred stock value comprised by shares with par values of $100, $50, etc., are shown for
various industries, as follows:
TABLE 9 5 . — P e r c e n t a g e s of total reported preferred stock outstanding
par values, by industries,
1922 1

with

specified

Par values per share
Industries
$100
Agriculture and related industries
Mining and quarrying
Coal mining
Petroleum mining
Other mining and quarrying
Manufacturing
Food products
Textile products
Leather products
Rubber, rubber goods, etc.
Lumber and wood products.
Chemicals and allied substances 3
Metal and metal products.
Other manufacturing
Construction
Transportation and other public utilities.
Steam railroads
Electric railroads
Electric light and power
Gas
Telegraph and telephone.
Other public utilities
Trade--Service
;
Finance
All industries.
1
2
3

$50

10.0
59.4
84.9
31.8
62.3
99.0
99.0
99.3
100.0
100.0
87.9
100.0
100.0
97.8
93.3
86.6
85.8
65.8
89.4
92.2
73.3
58.2
90.1
90.3
87.1
90.2

54.8
36.7
15.1
60.5
.2

28.6

2

()
.1

All
other

$5

$10

3.6

0.1

7.4

37.7
.5
.5

2

0.3

()

.2

12.1
.4
1.4
11.4
14.2
6.8
12.6
6.8
2.4
4.5
8.1

.1

(2)

~~
i4

~(2)~

5.3 ...
(2) !
33.-4

10.6

.9
5.4
32.7
.2
3.3
2.2
.7

.1 L

8.2 i
.5
2.1 .

!

7.7
.6

1.5:
•2

2

()

4.0
.5
.4

Based on figures furnished the Federal Trade Commission by 4,367 representative corporations.
Less than one-tenth of 1 per cent.
Mostly petroleum refining.

The proportion of total reported preferred stock value comprised
by shares valued at $100 par ranged from 100 per cent for four manufacturing industries covered by the table to 10 per cent for corporations engaged in agriculture and related industries. Of the preferred stock of the latter corporations nearly 55 per cent was comprised
of shares valued at $50 par each and over 28 per cent of shares valued
at $25 par each. Of companies engaged in petroleum production
over 60 per cent of the preferred stock was comprised of shares
valued at $50 par each.




CHAPTER

VIII

WEALTH OF NONPROFIT INSTITUTIONS
Section 1. Wealth and income of nonprofit institutions.
Nonprofit institutions, as discussed in this chapter, embrace
organizations or institutions existing for some public purpose other
than the earning of a money income on investment. These include
principally religious organizations, benevolent and educational institutions, foundations and community trusts, and public trusts.
Information secured by the commission through schedules or from
published reports indicates that the total wealth of these nonprofit
institutions m 1922 may be estimated at about fourteen and a half
billion dollars, or slightly more than 4
per cent of the estimated
total wealth of the United States. Estimates for the four principal
kinds of institutions in 1922 are as follows:
Class of institution
Religious organizations
Educational institutions
Benevolent institutions
Foundations and community trusts and public trusts
Total

Estimated
wealth
$3, 272, 000,000
7, 647,000, 000
2, 423, 000,000
1, 207,000,000
14, 549, 000,000

The income from those portions of the wealth of nonprofit institutions which are in invested funds amounted to about $160,000,000
in 1922. This represents a return of only about 1 per cent of the
estimated total wealth of these institutions.
In most instances neither the income nor the property of nonprofit institutions is subject to taxation. The total of all the taxes,
national, State, and local, collected in the United States in 1922
amounted to nearly $8,000,000,000, or nearly 2 p e r cent of the
total wealth of the country. If nonprofit institutions were required
to pay taxes at this rate
per cent of their total wealth) these
taxes would amount to over $350,000,000, or more than twice the
amount of the estimated income from their invested funds. This
income itself, if taxed at corporation rates, would yield the Federal
Government about $19,000,000. A substantial part of the productive investments of these institutions, however, is in tax-free
Government bonds and would not be taxable in any case.
Section 2. Sources of information.
In so far as it was possible to do so without conducting an actual
census, data for the purposes of the study in this chapter were secured
directly from the institutions themselves through schedules or letters
requesting financial information. In numerous instances, however,
owning to the lack of adequate records or the failure of institutions
to respond to the commission's requests, statistics gathered b y
other governmental agencies or b y private organizations were used




165

166

NATIONAL .WEALTH AND INCOME

to supplement the original data at hand. It is believed that the
estimates arrived at are fairly accurate, although they are in every
instance only approximations. Since the [method of estimate used
in arriving at all totals is stated in the text below, the relative authority and value of each estimate can easily be judged.
RELIGIOUS ORGANIZATIONS.—A census of religious organizations
is taken b y the Bureau of Census each 10 years,. There have been
six of these in all, of which the most recent was taken for the year
1916.1 The census includes only " organizations of religious worship," omitting such institutions as the Y. M . C. A., American
Bible Society, etc., which are largely conducted b y church interests
but have no direct financial dependence upon any church. The
many parochial schools of the churches, of which thos& of the Catholic
Church are doubtless the most important, are also omitted. In
estimating the wealth of churches in 1922 (see p. 168), the Bureau of
Census data for 1916 were used to supplement incomplete data for
1922 secured b y the commission. Neither the Bureau of Census
nor the commission, however, was able to secure any adequate
information for the Christian Science Church, and it was necessary
to omit this very large church from the total estimates. In 1906,
the most recent year for which data were accessible, the value of the
church buildings of the Christian Science Church was about eight
and one-half millions of dollars.
EDUCATIONAL I N S T I T U T I O N S . — T h e Bureau of Education of the
Department of the Interior publishes a biennial statistical and financial survey of educational institutions. The bureau's most recent
report, at the inception of the present inquiry, was for the year 1920,
and this report was used to supplement data for 1922 secured b y the
commission through schedules and letters to public and private
educational institutions. The institutions covered include not only
schools and colleges but museums, historical societies, and libraries
as well. Neither the commission nor the Bureau ot Education
secured any data on the parochial schools of various religious denominations, and it was necessary to assign an estimated value to these
based on their number and on the average value of other schools.
(See p. 183.)
BENEVOLENT I N S T I T U T I O N S . — T h e Bureau of Census' survey of
benevolent institutions for the year 1910 was the most recent available data on this subject at the inception of the present study. Information for the year 1922 was requested b y the commission of all
of the institutions embraced in the census report and b y application
of the returns received against the 1910 data estimates for 1922 were
reached. (See p. 178.) In the case of private benevolent institutions
these estimates do not, however, provide for the probable increases
in the number of institutions, as no data of this sort were available.
FOUNDATIONS AND TRUSTS.—Apparently no census or survey of
the wealth of foundations, community trusts, or public trusts has
been made heretofore. The commission's estimates, therefore, are
based wholly upon returns from its own schedules which were addressed to all cities with a population of more than 30,000 and to
124 ^listed foundations or community trusts. Data were received
from most of the larger foundations and from more than half of the
cities addressed. (See p.174.)
i "Religious Bodies, 1916," U. S. Census Bureau.




167 NATIONAL .WEALTH AND INCOME

Section 3. Wealth of religious organizations.
W E A L T H OF RELIGIOUS ORGANIZATIONS.—The total wealth of all
religious organizations in the United States in 1922 is estimated at
$3,271,558,000 on a basis of returns received by the commission.2
This is slightly more than 1 per cent 3 of the total estimated wealth
of the country.
About $2,820,222,000, or 86 per cent; of church wealth is invested
in church property, i. e., churches, parsonages, etc., and the land upon
which they are built. Of the remainder, $387,084,000, or 12 per cent,
consists of funds invested by the various churches in outside income-producing enterprises. The remaining $64,252,000, or 2 per
cent, consists of endowments and other funds or property given or
bequeathed with the condition that the income therefrom be used for
specific purposes.
The total church membership in the United States in 1922, as
reported in the Year Book of Churches, was 47,407,000. On this
basis the wealth of religious organizations amounted to $69 for each
church member, of which $59 represented church property, $8 outside investment, and less than $2 endowments or special bequests.
During the six-year period 1916 to 1922, while the population of the
United States was increasing 7 per cent, the total membership in
religious organizations increased 13 per cent and the wealth of
churches, according to the commission's estimate, increased 48.8
per cent. This would seem to indicate that, in proportion to population, church membership is on the increase, but that the wealth
of churches is increasing at a much greater rate than is church membership. The increase indicated in church wealth, however, results
in considerable part from the decrease in the value of the dollar.
The largest single religious denomination, both in property and
in membership, is the Roman Catholic Church.4 Its membership
embraced over 38 per cent of the estimated entire church membership of the country in 1922 and the estimated value of its church
property represented 23 per cent of the total church property. In
proportion to its size, however, the Protestant Episcopal Church is
the wealthiest of all, its church property alone being estimated at a
value of $223 per member.5
SOURCE OF D A T A AND M E T H O D OF ESTIMATE.—The data upon
which the commission's estimates of the wealth of religious organizations in 1922 are based were secured principally from reports
See footnote 2, Table 96, p. 169, for method of estimates.
This percentage may be compared with the "tithe" or tenth of every man's income to which
the Scriptures refer.
* According to the Year Book of Churches, 1923, the membership reported for the Roman Catholic,
Eastern Orthodox, and Latter Day Saints represents the total constituency and includes all those who
by birthright, affiliation, or sympathetic interest as well as actual enrolled membership hold some form
of the denominational religious faith. Protestant denominations, as a rule, report only communicant
membership. No regular plan of enrollment appears to be followed by Jewish synagogues, some counting
only heads of families and others only heads of families who are pew holders. An estimate of the " 1922
population of the United States as members and adherents of some form of religious faith" is contained
in the yearbook as follows:
2
3

Protestant
Eastern Orthodox..
Latter Day Saints
Jewish
Roman Catholic

77,958,470
456,054
604,082
1,600,000
18,104,804

98,723,410
No data were available for 1916 nor 1922 on the Christian Science Church. The latest available statistics are for the years 1890 and 1906 and show a very rapid increase in membership, property, and value
per member between these years.
8




168

NATIONAL .WEALTH AND INCOME

supplied by a number of the* larger denominations of the country.
Requests for financial data were sent to 219 religious organizations.
Many of these were able to furnish the desired information for th<dir
complete organization throughout the United States while others
kept no central records. In the case of the latter class it was necessary subsequently to send requests to each financially autonomous
subdivision, and over 500 returns, were received eventually from
various dioceses, conferences, classes, individual congregations, etc.
For the year 1916 Bureau of Census data covering the wealth of all
religious bodies were available. The data received by the commission for 1922 did not cover all religious bodies nor the total wealth of
each religious body, the proportion of the total covered varying with
each denomination. The method used in estimating the total church
property (churches, parsonages, etc., and lands pertaining to them),
in 1922 was to establish for each of the churches or subdivisions
reporting to the commission ratios of increase or decrease between
the 1922 wealth reported and the 1916 wealth reported. These ratios
of increase or decrease, applied to the total wealth of each church and
of all churches as reported to the census, made possible an estimate
of totals for 1922 for all churches and for all of each church. The
reliability of these estimates varies with the proportion of 1916 total
church property owned by those portions of the churches which re-;
ported to the commission for 1922. These proportions for the various
reporting churches were as follows: Presbyterian, 4.60 per cent^
Methodist, Baptist,. Lutheran, and Congregational, each 100 per
cent; Protestant Episcopal, 29.53 per cent. Owing to the fact that
only 1.14 per cent of the Roman Catholic Church reported, the average percentage of increase of all other churches was applied to the
1916 census figures for this church. This estimate for the Roman
Catholic Church is apparently very conservative, as the portion of
its wealth which was actually reported indicated an increase of over
80 per cent, whereas the average for all other churches was only 48.8
per cent. The total church property reported to the commission
which was available for establishing the ratios of increase or decrease
in all church property represented over 42 per cent of the census total
for 1916.
The method employed in estimating the total value of church property for each State was to apply to the census total for the State in
1916 the uniform ratio of increase (48.8 per cent) indicated for the
total of all churches or subdivisions reporting to the commission.
The method used in estimating the total amount of funds invested
in outside enterprises by the various denominations was on a membership basis as there were no comparable data on value. Organizations
representing about 45 per cent of the total church membership of the
country reported to the commission on funds invested, and these
reports were considered as amounting to 45 per cent of the total of
such outside investments for all churches and were increased accordingly. In the various classifications of investments the percentages
of actual reported figures were used to arrive at a distribution of the
estimated totals.
W E A L T H o r CHURCH P R O P E R T Y . — T h e total investment of all
churches in the United States in church property (churches, parsonages, etc., and the land upon which they are built) increased in
value from $1,895,447,000 in 1916 to $2,820,222,000 in 1922, or 48.8




169 n a t i o n a l . w e a l t h a n d

income

per cent, according to estimates based on data received by the commission. During the same period the total church membership increased 13.1 per cent from 41,927,000 in 1916 to 47,407,000 in 1922.
That the former increased in greater proportion than the latter is
expressed also in the fact that the investment per member in 1922
was $59.49 as against $45.21 in 1916, a difference of $14.28, or 31.6
per cent. The value of church property owned in 1916 by seven of
the larger denominations which reported to the commission and the
commission's estimate of this value in 1922, as well as the percentage
of increase, are stated in the following table:
TABLE 9 6 . — I n d i c a t e d distribution of church property (land and buildings)
and percentage of increase over 1916

Churches

Roman Catholic
Methodist
Presbyterian
Baptist
Protestant Episcopal
Lutheran
Congregational
All other
Total

Value of
church property in 1916 1

$648,091,000
535,924,000
336,762,000
326,264,000
249,422,000
189,965,000
147,736,000
386,058,000

1, 895,447,000

1922,

Estimated
value of church
property in
1922 2

$435, 545,000
370, 420,000
215, 998,000
212, 384,000
183, 385,000
128, 104,000
90, 138,000
259, 473,000

in

2,820,222,000

Bureau of Census Report—Religious Bodies—1916, Part 1, p. 19.
The commission requested information in questionnaire form from 219 religious organizations in the
United States. Reports were received from most of the larger denominations and over 500 from dioceses,
conferences, classes, individual congregations, etc., whose central organizations did not have available the
desired information. As explained on p. 168, the increases in value of church property reported were applied
to the total 1916 Bureau of Census figures for the various denominations. The proportion of the total
denominational figures reported by the various organizations and upon which the precentages of increase
were figured are shown on p. 168. In the case of the Roman Catholic Church only 1.14 per cent reported.
This small proportion showed an increase of 81.6 per cent, but was not considered representative, and for
this reason the average increase for the other denominations was applied in the case of this church.
1
2

The Roman Catholic Church, as indicated in this table and Table
97, held 23 per cent of the total church property in 1916 and in 1922.
The value of property of this church increased during the period from
$435,545,000 to an estimated $648,091,000. The church embraced
37.5 per cent of the total membership of all churches in 1916 and increased this proportion to 38.2 per cent in 1922. The indicated investment per member in church property in 1916 amounted to
$27.70 and in 1922 to $35.80, an increase of $8.10, or 29.2 per cent.
The Methodist Church ranked seeond to the Catholic in investment in church property in both 1916 and 1922, although its percentage of the total membership in 1916 was but 17.1 and in 1922, 17.4.
Thus, its investment per member was $51.69 in 1916 and $64.87 in
1922, an increase of 25.5 per cent. The total investment of this
church increased from $370,420,000 in 1916 to an estimated $535,924,000 in 1922, or 44.7 per cent. This percentage, however, is
smaller than the average increase of 48.8 per cent for all churches.
The Presbyterian Church, with only about 5 per cent of the total
membership, ranked third in investment shown in both years. The
value of its church property amounted in 1916 to $215,998,000, or
11.4 per cent of the total, and in 1922 to an estimated $336,762,000,
or 12 per cent.
The membership of the Baptist Church in 1916 was 7,153,000, or
17.1 per cent of the total membership of all churches, and in 1922,




national . w e a l t h and

170

income

8,167,000, or 17.2 per cent, the small percentage increase indicating
a growth in membership slightly more rapid than the average for all
churches. The church investment, however, increased less than the
average, which resulted in a per member investment increase of only
34.6 per cent from $29.69 in 1916 to $39.95 in 1922. This $10.26
increase in value per member was the lowest of any of the churches
(except the Koman Catholic, which was estimated on an average
basis).
The Protestant Episcopal Church was fifth in the estimated amount
of investment in church property in both 1916 and 1922, its per cent of
the total being 9.1 in 1916 and 8.8 in 1922. The membership of this
church was only 2.6 per cent of the total church membership in 1916
and 2.3 per cent in 1922, but its indicated average investment per
member was the largest of any of the churches, amounting to $167.78
in 1916 and $223.10 in 1922. Although this increase of $55.32 was
one of the highest in dollars, it represented a gain of only 33 per cent.
It is of interest to note that this church, in spite of its high investment per member, decreased in proportion to the total in both membership and investment.
The Lutheran Church, having 5.9 and 5.3 per cent of the total
membership of all churches in 1916 and 1922, respectively, owned
6.8 and 6.7 per cent of the estimated total church property in the
two years. Its average investment per member was $51.92 in 1916
and $75.50 in 1922, a gain of $23.58, or 45.4 per cent, as against the
average of 31.6 per cent for all churches.
The Congregational Church, with but 791,000 members in 1916
and 838,000 in 1922, owned about 5 per cent of the church property
in each year and increased its per member value from $113.92 in
1916 to $176.30 in 1922, $62.38, or 54.8 per cent.
All other churches, whose combined membership was 5,278,000 in
1916 and 5,999,000 in 1922, showed an aggregate investment of
$259,473,000 in 1916 and $386,058,000 in 1922. This resulted in an
increase of $15.20 in the average investment per member.
*
These foregoing and other comparisons and proportions of interest
in regard to investment in church property are shown in the following
table :
TABLE 9 7 . — E s t i m a t e d membership

and property
and 1922

per capita

of all churches,

in

1916

Per
Per
Mem- cent of Mem- cent of
bertotal
bertotal
ships, mem- ships, mem19161
1922 2 berbership in
ship in
1916
1922

Per
cent 3
of total
value of
church
property in
1916

Per
cent of
total3
value of
church
property in
1922

Investment
per
member in
church
property,
1916

Investment
per
member in
church
property,
1922

Percentage
increase
in
investment
per
member

[In thousands]

Churches

Roman Catholic
Methodist
Presbyterian
Baptist
Protestant Episcopal
Lutheran
Congregational
All other
Total

15,722
7,166
2,256
7,153
1,093
2,468
791
5,278

37.5
17.1
5.3
17.1
2.6
5.9
1.9
12.6

18,105
8,262
2,402
8,167
1,118
2,516
838
5,999

38.2
17.4
5.1
17.2
2.3
5.3
1.8
12.7

23.0
19.5
11.4
11.2
9.7
6.8
4.7
13.7

23.0
19.0
12.0
11.6
8.8
6.7
5.2
13.7

$27.70
51.69
95.74
29.69
167. 78
51. 92
113.92
49.16

$35. 80
64. 87
140.20
39.95
223.10
75.50
176. 30
64.36

29.2
25.5
46.4
34.6
33.0
45.4
54.8
30.9

41,927

100.0

47,407

100.0

100.0

100.0

45. 21

59.49

31.6

1 Bureau of Census—Religious Bodies, 1916, Part I.
Yearbook of the Churches, 1923.
For actual values see Table 96, p. 169.

2
3




171n a t i o n a l ,w e a l t h anj> i n c o m e
GEOGRAPHIC DISTRIBUTION OF CHURCH WEALTH.—A geographical
analysis of census data and data secured by the commission indicates
that the North Atlantic States have the largest total value of church
property as well as the highest amount per church member. In this
group the ratio of total church membership to total population was also
largest. The group includes Connecticut, Maine, Massachusetts,
New Hampshire, New Jersey, New York, Pennsylvania, Rhode
Island, and Vermont.
The relative value of church property in each region in 1916 and
the estimated increases in 1922 are shown as follows:
TABLE 9 8 . — I n d i c a t e d distribution

of church property
and 1922

Value of church
property

by geographical

Church
membership

Group
19161

North Atlantic 3___
South Atlantic
South Central«
North Central6
Western ?
Total United States

1922 2
(Estimated)

ThouThousands
sands
$814,299 $1,211,590
195,766
291,279
173,000
257,405
610,032
907, 662
102,350
152,286
1,895,447

2, 820, 222

1916

1922

groups,

1916

Value of
church property
Per
per
cent of
church member total
church
property in
1922
1922
1916

Thousands
13,426
5,664
7,236
13,050
2, 551

Thousands
35,180 $60.65
6,405
34.56
8,182 23.91
14, 758 46.74
2, 882 40.12

41,927

47,407

45.21

$79. 82
45.48
31.46
61.50
53. 55

43.0
10.3
9.1
32.2
5.4

59.49

100.0

1 Religious bodies—Census of 1916, Part I, page 19.
2 The basis of this estimate of the commission is explained on p. 168.
3 Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode
Island, and Vermont.
4 Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and West Virginia.
5 Alabama, Arkansas, Kentucky, Louisiana, Mississippi, Oklahoma, Tennessee, and Texas.
6 Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio,
South Dakota, and Wisconsin.
7 Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington,
and Wyoming.

In 1922 the North Atlantic States had 28.3 per cent of the population of the country and 32 per cent of the church membership. This
compares with an indicated 43 per cent of the total value of church
property, or $79.82 per member, shown for these States in the table.
The South Atlantic group, which comprises 13.2 per cent of the
population and 13.5 per cent of the total church membership of the
country, had 10.3 per cent of the estimated total value and an average
value per member of $34.56 in 1916, and $45.48 in 1922. The south
central group, comprising 18 per cent of the population and 17.3
per cent of the membership, had an indicated 9.1 per cent of the
total church property and an average value per member of $23.91 in
1916, and $31.46 in 1922. The north central group, with 32.1 per
cent of the population and 31.2 per cent of the total church membership in 1922, had an indicated 32.2 per cent of the value -of church
property and an average investment per member of $46.74 in 1916,
and '$61.50 in 1922. The western group, embracing only 8.6 per
cent of total population and 6 per cent of membership, had an estimated 5.4 per cent of the value of church property and an average
v alue of $40.12 in 1916, and $53.55 in 1922.




national, wealth

172

anj>

income

W E A L T H IN INVESTED FUNDS.—The total outside investment of all
religious organizations in 1922, according to the commission's estimate, amounted to $387,084,000, or 11.81 per cent of the estimated
total wealth of religious organizations in this country.6
For about 70 per cent of the total investments reported to the
commission there was reported also the nature of the investment.
Using these reports as a basis, it is possible to estimate the distribution for all churches as follows:
Federal
Trade ComReported
mission
to Federal
Per cent
Trade Comestimate
of total
mission
for all
churches

Type of investment

$46,851,000
12,622,000
45,914,000
12,336,000
730,000
4,081,000

„

Total classified investments

$147,982,000
39,870,000
145,040,000
38, 979,000
2, 323,000
12,890,000

38.2
10.3
37.5
10.1
.6
3.3

122, 534,000

Bonds
Stocks
Mortgages
Real estate
Miscellaneous securities
Cash

387,084,000

100.0

It is apparent from this tabular statement that bonds and mortgages are the favorite form of church investment, comprising 75.7
per cent of the total classified investment. This is natural, since
comparative safety of investment is always a first requisite for nonprofit institutions. The nature of church investments is further
shown by an analysis of those reports to the commission which gave
the particular type of stocks and bonds held. This analysis shows
that about 92 per cent of the bonds were railroad r other public Utility,
and governmental, while only 8 per cent were industrial. These
reported may be tabulated as follows:
TABLE 9 9 . — D i s t r i b u t i o n of reported

church investments

in securities

Stocks
Type of securities

Railroad- .
_
Governmental - Public utilities (other than railroads)
Industrial
Other...
Total1

Amount
reported
,

1

Bonds

Per cent
of total

$5,243,000

41.5

528,000
2,833,000
4,018,000

4.2
22.5
31.8

12,622,000

100.0

Amount
reported

Per cent
of total

$16,533,000
13,918,000
4,799,000
3,088,000

43.1
36.3
12.5
8.1

38,338,000

100.0

Amounts shown are those actually reported to the Federal Trade Commission.

In addition to the funds reported invested by churches, individual
congregations reported endowment funds amounting to $52,609,000
and land and buildings valued at $11^643,000 given or bequeathed
• Fifty-two denominations with an aggregate membership exceeding 21,000,000, and representing about
45 per cent of the total church membership, reported endowments and Invested funds amounting in 1922 to
$174,187,000. The commission based its estimate of the total outside investment of all the churches upon
the proportion of membership represented in this figure, and increased the amount reported in ratio of
this proportion to the entire church membership.




173n a t i o n a l ,w e a l t h anj> i n c o m e

with the understanding that the income therefrom be used for specfiic
purposes. As the nature of the bequests generally takes the matter
of investment of principal or use of income entirely out of the church's
jurisdiction, they have not been included with other property or productive investments. The total value of these properties may be
estimated at about $250,000,000.
D I S T R I B U T I O N OF INCOME.—The reports received by the commission indicate that 40 per cent of the income of churches in 1922 was
used for ministerial pensions and other relief and 33 per cent for the
support of foreign and home missions. The income reported and
the several uses to which it was applied are as follows:
TABLE 1 0 0 . — D i s t r i b u t i o n of reported

Type of expenditure
Home missions (including church building)
Foreign missions
Home and foreign missions (not segregated)
Ministerial and other relief3
Church extension, including publication and promotion.
Educational...
Sunday schools
Unclassified
Total

church income

1

Amount
reported 2
$30,862,000
20,258,000
6, 559,000
70,271,000
20, 618, 000

10, 533,000
3, 830,000
11, 257,000

174,188,000

1 Amounts shown are those actually reported to the Federal Trade Commission.
2 The amount reported was from denominations having about 45 per cent of the total church membership.
* " Relief" is for the most part pensions.

Section 4. Wealth in foundations, community and public trusts.

The total value of foundations and community trusts and of public
trusts in 1922, as estimated by the commission, was $1,207,334,000.7
This is slightly more than one-third of 1 per cent of the total estimated
wealth of the country. Of this value $1,072,953,000 represents the
estimated funds of foundations and community trusts, and
$134,381,000 represents that of public trusts.
A majority of the institutions from which reports were received
exist principally for the advancement of education, and over threefourths of the total income received by them is devoted to that end.
Since their scope and organization differ from that of schools and
colleges, however, they have been treated separately for the purpose
of the present study.
Although the foundation, the community trust, and the public
trust are each alike organized on a basis of legal trusteeship, the
three differ either in the nature of the trustee or in the nature of his
duties. In a foundation the trustees are private individuals or
corporations who administer the funds intrusted to them for a
restricted and specified purpose. In a public trust a governmental
body, usually a city, is made trustee and administers for a restricted
and specified purpose. In a community trust the trustees are
individuals or corporations who administer the funds for a specified
purpose but with a certain degree of discretion allowed them in the
event of conditions arising to make unfeasible the original purpose
of the donor. The community trust is a comparatively recent
development. It is designed to make it impossible that bequests,
' For method of estimate see p. 174.




national, wealth

174

anj>

income

for a specific community purpose should, with the passage of time,
become inoperative or unavailing through the appearance of new
conditions which the donor was naturally unable to foresee. The
community trust plan is substantially as follows:
1. One or more banks or trust companies agree to accept bequests
for civic, charitable, or educational purposes and to invest the principal of such funds.
2. A selected group of citizens (the committee on distribution),
composed of representatives of the trustee banks and trust companies
and of the public, supervises the disbursement of the income, and,
under certain conditions, of portions of the principal of the bequests.
3. The committee on distribution employs income customarily
for a purpose specified by the donor, but in the absence of such specifications it determines upon the use most conducive to the interests
of the community. If originally designated beneficiaries disappear
the committee applies the income to such other objects as harmonize
with the spirit of the gift and the benefit of the community.8
SOURCE

OF

DATA

AND

METHOD

OF

ESTIMATE.—Requests

for

financial data were addressed by the commission to 124 foundations
and community trusts, comprising approximately the total number
in the country. Replies were received from 89 of these, or 72 per
cent, including 26 replies which contained no data. Nearly all of
these latter were submitted by recently organized community trusts
to which some bequests had been promised but which had no funds
actually in hand at the date of reporting. In estimating the total
wealth of the 124 foundations and community trusts listed the total
for the 89 which reported has been increased by the ratio which 124
bears to 89. On this basis the $770,081,000 of value reported by the
89 organizations was increased 39.3 per cent to arrive at an estimated
total value of $1,072,953,000 for all foundations and community
trusts in the United States.
Requests for data on public trusts were sent to all of the 253 cities
of the United States with populations of over 30,000 in 1922. Replies
were received from 157 cities, or about 60 per cent, of which public
trust funds were reported by 69, the remaining 88 stating that they
had none. The funds reported amounted to $83,389,000. On the
assumption that the 157 cities which replied were representative of all
of the 253 cities of over 30,000 population, the total reported by the
157 has been increased by the ratio which 253 bears to 157. Thus,
the $83,389,000 reported was increased 61.2 per cent to arrive at an
estimated total of $134,381,000 for the 192£ value of public trusts
in the 253 cities having a population of 30,000 or over in 1922.
N A T U R E AND AMOUNT OF INVESTMENTS.—The foundations, community trusts, and public trusts reporting to the commission were
requested to state also the nature of the investments to which their
trust funds are applied. On a basis of replies received from 89
8 A celebrated instance of the effect of changing conditions upon the fulfilment of the terms of a trust is
that of the Bryan Mullanphy emigrant and travelers' relief fund. Ex-Mayor Bryan Mullanphy, of St.
Louis, dying in 1851, during the era of the rush to settle the West, left a third of his property to aid 1' worthy
and distressed travelers and emigrants " ooming to St. Louis but bound "bona fide to settle for a home in the
West." A few years after his death, however, the railhead was pushed far beyond St. Louis and the number of qualified claimants under the will began steadily to diminish until they practically disappeared.
Year by year the bequest has increased until to-day it amounts to nearly a million dollars, but its managing
commissioners have remained fettered by the terms set down before the Civil War. Over $900,000 of the
fund is now represented by land, buildings, and equipment, while a little less than $100,000 is set aside as an
endowment.




175

national,

w e a l t h anj> i n c o m e

foundations or community trusts and 157 cities, the estimated
$1,207,334,000 total funds appear to be invested approximately as
follows:
T A B L E 1 0 1 . — D i s t r i b u t i o n of reported
and public

investments
of foundations,
trusts in 1922 1

community

trusts,

(In thousands of dollars)
Foundations and
community trusts

Public trusts

Total

Item
Amount

Per
cent

Amount

Per
cent

Amount

Per
cent

Bonds

Total bonds

47,042
84,120
16,780
252,419
19,907

4.4
7.8
1.6
23.5
1.9

60,034
929
1,505
740
733

44.7
.7
1.1
.6
.5

107,076
85,049
18,285
253,159
20,640

8.9
7.0
1.6
21.0
1.7

420,268

Governmental
Railroad
Public utility
Industrial
Other and unclassified

39.2

63,941

47.6

484,209

40.2

16,102
14,913
269,591
11,442

1.5
1.4
25.1
1.1

63
1,674
601
103

.1
1.2
.4
.1

16,165
16, 587
270,192
11, 545

1.3
1.4
22.4
1.0

Stocks
Railroad
Public utility
Industrial
Other and unclassified

312,048

29.1

'2, 441

1.8

314, 489

26.1

Total stocks and bonds
Real estate and mortgages

732,316
145, 926

68.3
13.6

66,382
64,944

49.4
48.3

798,698
210,870

66.3
17.4

Total
Miscellaneous and unclassified

878,242
194,711

81.9
18.1

131,326
3,055

97.7
2.3

1,009,568
197,766

83.7
16.3

1,072,953

100.0

134,381

100.0

1,207,334

100.0

Total stocks

Total

* Estimated for all foundations and trusts on basis of partial returns received by Federal Trade Commission.

gfAs the table shows, about 66 per cent of the total trust funds were
invested in stocks and bonds. The percentage of total foundation
and community trust funds invested m stocks alone (29.1 per cent)
was over twice as great as the percentage invested in real estate and
mortgages (13.6 per cent) in spite of the generally acknowledged
superior safety of the latter type of investment. In the case of public
trusts, however, the safer mvestment was favored, 48.3 per cent
going into real estate and mortgages and only 1.8 per cent into stocks.
It is also of interest (as indicating the more conservative investment
of public as against private trust funds) that over half of the bond
investments of foundations and community trusts were in industrial
issues rather than in the safer Government, railroad, or public-utility
ones, and that very nearly all of their stock investments were industrial. The public trust investment, in contrast, included practically
no stock issues, and of the 47.6 per cent of it invested in bonds very
nearly the whole amount was in Government issues. The large proportion of the privately-managed trust funds (foundations and community trusts) invested in industrial stocks and bonds results from the
fact tnat many of these trusts were created by individuals out of
earnings of an industrial corporation and are originally endowed in
the form of securities of that corporation. A large portion of the
103288—S. Doc. 126, 69-1




13

n a t i o n a l , w e a l t h anj> i n c o m e

176

funds df'>the Rockefeller Foundation, for example, are invested: in
Standard -Oil securities because the original gift of the donor was in
the form of these securities.
The estimated investment in stocks and bonds was about 66 per
cent of the entire investment of foundations, community, and public
trusts. It is quite probable, however, that) in addition, a large part
of the 16 per cent oi all investments which was listed as miscellaneous
and unclassified was actually invested in stocks or bonds. Of the
strictly classified investments, 47 per cent were in bonds, 31 per
cent in stocks, and 22 per cent in real estate and mortgages. The
estimated distribution of classified investments as separate from
unclassified investments was as follows:
Item

Classified:
Bonds
Stocks
Real estate and mortgages
Total
Unclassified
Grand total.

Amount

Per cent Per cent
of total
of total classified

$463,569,000
302,944, 000
210,870,000

38.4*
25.1
17.4

47.4
31.0
21.6

977,383,000
229,951,000

80.9
19.1

100.0

1,207,334,000

100.0

The foregoing totals are, of course, only estimates, but they are
based on reports received from an important proportion of the trust
institutions of the country, and it is believed that they are approximately accurate.
The actual value of the 89 foundations and community trusts which
reported to the commission was $770,081,000, while that of the public
trusts for the 157 cities was $83,389,000. Sixty-seven per cent of
the total funds reported by the 89 foundations and community trusts
was owned by four organizations—the Rockefeller Foundation, the
General Education Board, the Carnegie Corporation of New York,
and the Sailors' Snug Harbor. These four owned 68 per cent of
the total bonds reported, 97 per cent of the stock, 82 per cent of the
real estate, 87 per cent of the cash, and about 3 per cent of the miscellaneous and unclassified investment. It is of interest to note that
67 per cent of the bond and 90 per cent of the stock investments of
these four institutions were in industrial issues.
INCOME FROM INVESTMENTS.—The total estimated income in 1922
from all foundations, community trusts, and public trusts was
$54,8113,000, or about 4K.per cent of the $1,207,334,000 invested.
The average rate of return indicated for public trust fund investments
was 8 per cent, while that for foundations and community trusts
was only 4.2 per cent. The high rate of return on public trust funds *
is particularly remarkable in view of the fact that nearly half of these
funds were in Government securities and earned probably no more
than 4 per cent.
The actual income (on which these estimates are based) reported
to the commission by 89 foundations and community trusts was
9 The high rate of return on public trusts is due to the fact that about three-fourths of the reported total
was from the Girard Estate, Philadelphia, with practically all its investment in real estate, yielding over
0 per cent.




177n a t i o n a l ,w e a l t h

anj>

income

$32,021,000, while that reported for public trust funds of 157 cities
was $6,692,000. The rate indicated for three of the four abovementioned organizations owning 67 per cent of the total foundation
and community trust funds averaged 5 per cent, as compared with
the genera] average of 4.2 per cent.
As already pointed out, the indicated income of 8 per cent on the
total value of public trusts was almost twice as high as that of foundations and community trusts. If the average yield of the Government bonds in which $37,253,000 of this total was invested was 4
per cent, the income therefrom would amount to $1,490,000. This
would leave an income of $5,202,000 on the remaining $46,136,000
of public trust funds and would indicate an average rate of return
thereon of over 11 per cent. The major portion of this remaining
$46,136,000, as already stated, was invested in real estate and mortgages.
D I S T R I B U T I O N OF INCOME.—The organizations from which data
on wealth were requested were also asked to state the disposition
made of the income which they received in 1922. The distribution
indicated for the $38,713,000 of income reported by foundations,
community trusts, and public trusts was as follows:
TABLE 1 0 2 . — D i s t r i b u t i o n of reported income of foundations,
public trusts in 1922

community

trusts,

and

[In thousands of dollars]

Object

Charity
Hospitals
Education
v
Cemetery upkeep
Medals, prizes, etc
Local improvements, including parks, etc.
All other
Total income..
1
2

Foundations and
commu- Per cent
nity
trusts 1
2,125
5
24, 249
392

6.7
75.7
.......

5,250
32,021

100.0

Public
trusts 2

120
55
5, 637
131
9
78
662

Per cent

Total

1.8

2,245

84.2
2.0

29,886
131
401
78
5, 912

.8

.1

1.2

60

38,713 I

Per cent
of total

5.8
.2
77.2
.3
1.0
.2

15.3
100.0

Represents returns from 89 organizations.
Represents returns from 157 cities.

The table illustrates the preponderant proportion of trust fund
income devoted to educational purposes, amounting to 77 per cent
of the total income in 1922. Foundations and community trusts
devoted 76 per cent and public trusts 84 per cent oftheir income for
education.
Section 5. Wealth of benevolent institutions.

Benevolent institutions in this section include those both publicly
and privately owned10 for defective, dependent, and delinquent
persons; institutions and societies for the care and protection of
children; homes for adults or adults and children; hospitals and sanitariums; dispensaries; and institutions for the blind and deaf.
It is estimated by the commission that the minimum total wealth
Due to the form of Bureau of the Census reports, the classifications of publicly and privately owned
insitutions each includes some institutions properly belonging to the other, but they may be taken as substantially correct.




178

national, wealth

anj>

income

of these institutions in the United States in 192211 was over two and a
quarter billions of dollars, or over $22 per capita of population.12
This amounts to about three-fourths of 1 per cent of the total wealth
o f the country as estimated by the United States Census Bureau.
Of the total wealth of these institutions at least one and three-fourths
.billions represents those privately owned.
SOURCE OF D A T A AND M E T H O D OF ESTIMATE.—In 1 9 1 0 the Bureau
of the Census received financial data from 3,871 of the privatelyowned benevolent institutions in the United States. In the present
inquiry the commission requested data from 2,678,13 or nearly 50
per cent of the total number of these institutions. Schedules were
sent to institutions located in 13 States,14 representing all sections of
the country. The information requested included the value of land,
buildings, and equipment owned; other property owned, including
*cash or securities; endowment funds; and land and buildings given
or bequeathed for a specific purpose or purposes. The commission's
estimate of the wealth of privately-owned benevolent institutions
in 1922 is based on schedules received from 1,260 institutions, or
about 23 per cent of the total number listed by the Bureau of the
Census in 1910. The estimate was arrived at by applying to the
1910 census figures for the entire United States 15 the average percentage of increase in 1922 over 1910 for the 23 per cent reporting to
the commission.
Similar information regarding publicly-owned institutions was
secured from officials of 14 States.16 Since these 14 States in 1916
owned over 51 per cent of the total value of State-owned benevolent
institutions reported to the census for all States, the 1922 value of
this property for all States was estimated by applying the average
percentage of increase in 1922 over 1916 for the 14 States to the 1916
census figures for each other State.
W E A L T H OF P R I V A T E BENEVOLENT INSTITUTIONS.—The total
value of property and investments of privately-owned benevolent
institutions in the United States in 1922 is estimated17 at $1,848,759,000. This represents an investment of $16.92 per capita, or
slightly more than one-half of 1 per ceint of the total wealth of the
country.
The total value of 3,871 of these institutions which reported to
the Bureau of the Census for the year 1910, amounted to $643,878,141. No data for 1916 were secured by the census. The 1922 value
estimated by the commission shows an increase over 1910 of 114.7
per cent, or an.average of 9.5 per cent per year. Of the various
classes of institutions the societies for protection and care of children
it Method of estimate is explained on p. 178.
This does not include the value of all institutions owned by the United States Government.
1 Not including any dispensaries, a majority of which are owned and operated by hospitals.
3
u Alabama, California, Georgia, Illinois, Kansas, Massachusetts, Minnesota, Nebraska, New York,
Ohio, Pennsylvania, Texas, and Washington.
is See footnote, p. 178.
i8 Alabama, Arkansas, Colorado, Delaware, Florida, Illinois, Maine, Massachusetts, Minnesota, Nebraska, Nevada, New York, Ohio, and Pennsylvania.
i7 Although the report on benevolent institutions, 1910, of the Bureau of the Census covers not only the
value of land, buildings, and equipment (p. 77), but also the value of invested funds (p. 78), the data on
invested funds do not lend themselves to comparison with data obtained by the commission. The
estimate of total value (property and investments) of privately-owned benevolent institutions in 1922,
therefore, is based upon the increase in the value of tangible property alone (land, buildings, and equipment) for institutions from which the commission obtained reports. The average percentage of increase
In such value for each class of institution was applied to the total value for that class in 1910 as reported to
the Bureau of the Census. But since the censusfiguresthemselves cover only 3,871 out of the 5,408 institutions in the country the commission's estimates for the various classes of institutions have been further
increased by the respective per cent by which the total number of existing institutions of each class exceeds
the number reporting to the census. The commission's estimates do not take into consideration the
increase in number of such institutions since 1910.
12




179n a t i o n a l ,w e a l t h

anj>

income

showed 268 per cent increase, hospitals, and sanitariums 151 per
cent, homes for adults or adults and children 135 per cent, institutions
for blind or deaf 36 per cent, and institutions for care of children
only 21 per cent. The following table indicates the manner of
arriving at estimated totals and compares these totals for each class,
of institutions:
TABLE 103.—Estimated value of private benevolent institutions,
classes of
institutions
Total value of 3,871 institutions reporting to
Bureau of Census in
1910
Class of institutions

1910

1922

Bureau
of Census
figures 1

Federal
Tirade
Commission
estimate 2

Institutions for care of children
$133,932,000
Societies for protection and
care of children
6,727,000
Homes for adults or adults
158,318,000
and children
Hospitals and sanitariums.. 306,021,000
5,720,000
Dispensaries
Institutions for blind or
33,160,000
deaf
All classes

Per
cent of
increase,
1922
over
1910

1910 and 1922,

Total value
of all
institutions
(5, 408)
1922

NumPer
cent of ber of
institotal tutions

Federal
Trade
Commission
estimate 3

by

Average
value
per
institution

1,151 $178,000

$161,977,000

21.0

$204,431,000

11.1

24,753,000

268.0

62,647,000

3.4

205 306,000

134.8
430,873,000
150.7 1,039,727,000
110.2
57,983,000

23.3
56.2
3.1

1,435 300,000
1,918 542,000
574 101,000

371,731,000
767,043,000
« 12,021,000
45,067,000

643,878,000 1,382,592,000

53,098,000

2.9

125

425,000

114.7 1,848,759,000

35.9

100.0

5,408

342,000

1 Bureau of the Census, Benevolent Institutions, 1910.
2 Percentage of increase in physical property of 1,260 institutions reporting to both census and Federal
Trade Commission, applied to censusfiguresfor total wealth of 3,871 institutions in 1910.
3 Percentage of increase over 3,871 institutions based on excess of number of institutions of each classover number reporting to the census.
* Bureau of the Censusfiguresfor 119 dispensaries increased by total average increase.

As the table indicates, over half of the total estimated wealth of
privately owned benevolent institutions in 1922 was represented by
that of hospitals and sanitariums, while about 23 per cent was represented by that of homes for adults or adults and children, 11 per
cent by institutions for care of children, and about 3 per cent each oy
904 institutions of the other three classes. Hospitals and sanitariums
represent not only the greatest number of privately-owned benevolent
institutions but also the greatest unit values, averaging $542,000 per
institution, while homes for adults or adults and children averaged
$300,000; institutions for care of children, $178,000; societies for
care and protection of children, $306,000; dispensaries, $101,000;
and institutions for the blind and deaf, $425,000. The average value
for all classes was $342,000 per institution.
Analysis of the nature of the wealth of privately-owned institutions
reported to the commission indicates that 61 per cent was in land,
buildings, and equipment, 26 per cent was in endowment funds, 8
er cent in other property, and the remaining 5 per cent in land and
uildings given or bequeathed for a specific purpose. The actual
amounts of each form reported to the commission by 1,260 institu-




180

national,

wealth

anj>

income

tions, representing 35 per cent of the estimated total wealth of
privately-owned benevolent institutions, are as follows:
Item

Amount

Per cent

Total.

$388,912,608
50,514,473
170,176,743
30,662,086

60.7
7.9
26.6
4.8

640,265,910

Land, buildings, and equipment owned
Other property, including cash or securities not included under endowments
Endowment funds
Land and buildings given or bequeathed for special purposes

100.0

Of the $50,000,000 reported as " other property " only $39,000,000,
or 78 per cent, was income producing. The reports indicate that
from the $170,000,000 in endowment funds an income of $8,000,000 in
1922 was derived. This amounts to h rate of about 4.7 per cent.
W E A L T H OF PUBLIC BENEVOLENT INSTITUTIONS.—The total value
of public benevolent institutions in*1922 is estimated by the commission at $574,493,000, or $5.26 per capita. These institutions
are of four classes, viz: (1) Institutions for the feeble-minded, epileptic or insane; (2) institutions for the deaf, dumb, or blind; (3) institutions for the tuberculous, deformed, inebriate, or leprous; (4) institutions for criminals or dependents. In 1916 there were, according to
the Bureau of the Census, 553 of these institutions. This number had
increased to 720 in 1922, the largest increase occurring in class 4.
The increase in this class, which amounts to 44 per cent, compares with
an increase of only about 8 per cent in the population of the United
States and suggests one source of the large increases in State expenditures in recent years. The increases in the other classes are more
nearly in proportion with the increase in population.
The following table compares the estimated values of public institutions for 1916 and 1922 by classes:
TABLE 1 0 4 . — E s t i m a t e d value of public benevolent
classes

institutions,

1916

and 1922,

by

[In thousands of dollars}*
1916

Class

1922

Bureau of the Census
figures

Federal Trade Commission estimates

Number reporting
1. Feeble-minded, epileptic or insane
2. Deaf, dumb, or blind
3. Tuberculous, deformed, inebriate, or
leprous
4. Criminalistic or dependent
Total

Value

Per
cent of
total
value

Total
number

Value

Per
cent of
total
value

Per
cent
of increase
in
value

190
74

$213,519
22,550

56.3
5.9

221
96

$290, 591
36,219

50.6
6.3

36.1
60.6

50
239

13,079
129,885

3.5
34.3

60
343

22,516
225,167

3.9
39.2

72.5
73.4

553

379,033

100.0

720

574,493

100.0

51.6

As the table indicates, over half of the value of public benevolent
institutions in both 1916' and 1922 was represented by the value of
institutions of class 1. The value of institutions of class 4 represented 34 per cent of the total in 1916 and 39 in 1922; of class 2,




181n a t i o n a l ,w e a l t h anj> i n c o m e

about 6 per cent in each year; and of class 3, between 3 and 4 per
cent. The greatest growth in value for the period was shown for
institutions of class 4, with an increase of 73 per cent from 1916 to
1922. The increase for institutions of class 3, however, was 72 per
cent, while that for institutions of class 2 was 61 per cent and that
for institutions of class 1 was only 36 per cent. The increases in
total value of these institutions would undoubtedly be considerably
larger if all Federal-owned institutions were included. This is
especially true in the case of institutions of class 1 (for feeble-minded,
epileptic, or insane), a great number of which were established by
the United States Veterans' Bureau after the war.
WEALTH

OF B E N E V O L E N T

INSTITUTIONS

BY

GEOGRAPHICAL

RE-

GIONS.—The minimum total wealth of all benevolent institutions in
the United States is estimated at over 2.4 billions of dollars. Onehalf of this is owned by institutions in the North Atlantic group of
States.
Owing to the method of estimating, the total wealth of private
institutions (see p. 178), data by States for all of the 5,408 such
institutions were not available, and the commission's State estimates
represent only the 3,871 institutions covered by the census of 1916.
The combined State estimates, therefore, are about 19 per cent, or
$4.26 per capita, below the total for the United States. These
estimates are shown in Appendix Tables 21 to 25, inclusive.
The estimated value oi 3,871 private and 720 public benevolent
institutions in 1922, distributed by geographical divisions, is shown
in the following table:
TABLE 1 0 5 . — T o t a l estimated value of benevolent
graphical region of the United

Group

North Atlantic
South Atlantic
North Central
South Central
Western
United States
1

Public
institutions
$219,257,449
45,820,406
186, 580,259
65,454,110
57,380,302

institutions
reported
States in 1922
Private
institutions1

in each

Total

$872, 560, 525 $1,091,817,974
156,231,092
110,410,686
467, 510, 288
280,930,029
112,601,129
47,147,019
71, 544,976
128,925, 278

574,492, 526 i 1,382,593, 235

1,957,085,761

geo-

Per
capita
value
$35.63
10.83
13.32
5.73
13.66
17.92

3,871 institutions only. Total number is 5,408.

As the table.indicates, the North Atlantic group ranks first not
only in total value of benevolent institutions but also in value per
capita. In this group, which embraces 56 per cent of the total value
of all institutions, the institutions in New York State alone (see appendix table p. 351) account for 48 per cent of the group total value and
27 per cent of total for the entire United States. In per capita value
of benevolent institutions, however, that of the District of Columbia
is more than double that in any of the States. This high per capita
value for the District ($108.98) comes principally from the comparatively large value of its private benevolent institutions, reflecting, no doubt, the very large per capita wealth of District residents.
New York State ranks second with a per capita value of $48.73,
while Massachusetts comes third with $44.12. These two States are
the only ones with per capita values above $30. The lowest States




182

n a t i o n a l w e a l t h and

income
y

in per capita value are Oklahoma with $3.01; Georgia with $3.07
Alabama, $3.29; and Florida, $3.49. It is of interest to note that
as a rule the low per capita values are shown for States in which the
private institution value is less than the public. The South Central
group, which has only an average per capita value of $5.84, is the
only group in which public institutions are of greater value than
the private, the value of public institutions in this group representing
58 per cent of the group total value. In the North Atlantic group,
with a per capita value of $35.63, the value of public institutions is
only 20 per cent of the total.
The ranking State in the Western group in per capita value of
benevolent institutions is Colorado with $18.86. California ranks
second with a per capita value of $15.53, and Oregon third with one
of $14.69. These States and Washington are also the ranking ones
in the group in total values. The total for California, however,
exceeds that of Colorado by about 3 to 1.
The only two States whicn show total values of less than $3,000,000
are Wyoming with $1,327,000 and Nevada with $1,068,000. Nevada,
however, ranks seventeenth in the United States in per capita value,
while Wyoming ranks thirty-eighth (not including the District of
Columbia).
WEALTH

IN

PHYSICAL A S S E T S — L A N D ,

BUILDINGS,

AND

EQUIP-

already pointed out, 61 per cent of the wealth of the
1,260 private institutions reporting to the commission was represented by the value of their physical properties, i. e., land, buildings,
and equipment. The remainder was represented by endowments,
cash and securities, and properties devoted for a specific purpose.
No data on the value of physical properties for public institutions
were available.
The commission's estimate of the physical wealth of all private
institutions of each class is as follows:
MENT.—AS

TABLE 1 0 6 . — E s t i m a t e d value of land, buildings, and equipment
institutions,
by classes, 1910 and 1922

of private

benevolent

Estimated total for 3,867 institutions reporting to the census

Class

1. Institutions for care of children.
2. Societies for care and protection of children
3. Homes for adults or adults and
children
4. Hospitals and sanitariums
5. .Dispensaries
6. Institutions for blind or deaf. Total

Per cent Estimated
increase total for all
1922 oVer institutions
1922
1910 as re- Per cent mated as estiby Fed- Per cent 1910
(5,408) 3
ported to the of total
of total
eral Trade
census
Commission 1
$93,810,000

19.8

$113,453,000

11.1

20.9

3,728,000

.8

13,720,000

1.4

268.0

41,979

112,379,000
232,841,000
4,549,000
26,209,000

23.7
49.2
1.0
5.5

263,866,000
583,616,000
2 9,799,000
35,621,000

25.8
57.2
1.0
3.5

134.8
150.7

309,647
780,586
49,775
41,612

473,516,000

100.0

100.0

115.4

1,020,075,000

35.9"

$141,328

1,364,927

1 Estimated on basis of increases in 1,260 institutions reporting both to Census and Federal Trade Commission.
2 Bureau of the Census estimate increased bv 115.4 per cent, the average increase in classes 1, 2, 3,4, and 6.
* Percentage of increase over 3,867 institutions based on excess of total number of institutions of each class
over number of that class reporting to Census.

As in the case of the total values, the commission's estimates have
not taken into consideration the increase in number of institutions




183n a t i o n a l ,w e a l t h

anj>

income

since 1910. The average increase of 115 per cent shown for all
classes in the estimated value of physical properties, therefore,
probably represents in large part an increase in value rather than in
quantity of property owned.
Hospitals and sanitariums, as the table shows, owned 49 per cent of
the total physical wealth in 1910 and 57 per cent in 1922. Homes
for adults or adults and children were next in importance with about
25 per cent in each year. The physical wealth of these two classes
increased in substantially greater proportion than that of any other,
with the exception of that of societies for care and protection of
children, which, though unimportant in proportionate physical value,
showed a very large increase of 268 per cent in 1922 over 1910.
Section 6. Wealth of educational institutions.

The wealth of educational institutions in the United States in 1922
is estimated by the commission at about $7,600,000,000 18 or nearly
per cent of the total wealth of the country. These institutions include public and private schools, universities, and colleges; libraries,
museums and historical societies. Under public schools are included
only public graded and high schools, all other schools, from kindergarten to university19 being classed as private.
The estimated value of each class of institution in 1922 is as follows:
Estimated
value, 1922

Class of institution
Private schools and colleges
Public schools
Libraries
Museums and historical societies

$3,574,981,000
3,034,730,000
807,491,000
229,920,000

Total

7,647,122,000

This estimated total of $7,647,122,000 represents a per capita
wealth of over $70 for each individual in the United States. Eightyseven per cent of the total consists of wealth of private and public
schools and colleges, which, with a school population of the United
States of approximately 25,000,000 represents an investment of
about $264 per pupil.
SOURCE

OF

DATA

AND

METHOD

OF

ESTIMATE.—Requests

for

data on investment and property were addressed by the commission
to the educational boards of every State and to all of the educational
institutions listed in the educational directory of the United States
Bureau of Education. Requests were also sent to 1,747 libraries
and to 299 historical societies, museums, etc. In response to these
requests, information was supplied by 36 States, by over 1,600 private
educational institutions, 1,035 libraries, and 65 societies and museums. In estimating the total 1922 value of public schools (graded
and high only) in the 12 States not reporting, values reported for
these States in 1918 by the United States Bureau of Education were
increased by the percentage of increase shown for public schools
in the remaining 36 States. This percentage was arrived at by comw For method of estimate see p. 183.
19 Including State universities and normal schools which, although financed in part from public funds,
generally draw substantial proportions of their income from private funds and endowments.

103288—S. Doc. 126, 69-1




14

184

national,

wealth

anj>

income

paring the data for these States in 1922, as reported to the commission, with similar data for 1918 as reported to the Bureau of
Education.
In estimating the value of all other schools and of colleges the total
value reported by those institutions submitting data and those for
which information could be secured from published and other statistics was supplemented by an estimated value for 9,693 additional
institutions for which no data were available. The latter comprised
principally the 6,536 parochial schools of the Catholic Church and
the 2,823 schools of other religious denominations. In estimating
the 1922 value of these 9,693 institutions the 1918 figures of the
Bureau of Education for 2,058 private high schools and academies
were used. The calculated average value of these institutions
in 1918 was increased by about 53 per cent (the percentage by which
public school value increased from 1918 to 1922) to secure an average
value in 1922 applicable to each of the 9,69,3 unreported institutions.
In estimating the value of libraries the average value indicated for
those supplying information was multiplied by the total number of
libraries listed. A similar method was used in estimating the value
of the 299 historical societies, museums, etc., listed.
W E A L T H OF PUBLIC S C H O O L S . — T h e puolic graded school and the
public high school are the bedrock of America's educational system.
Their total value in 1922, as estimated by the commission, was a little
over three billions of dollars, or about 40 per cent of the total wealth
of all educational institutions and less than 1 per cent of the total
wealth of the United States. The value of public schools per capita
of population has increased 45 per cent from $19.15 in 1918 to $27.78
in 1922. In so far as the heavy increases which occurred in State
expenditures during this period came of an extension of their public
school systems it is difficult to criticise such expenditures. Of the
estimated total wealth of public schools in 1922 about $2,754,000,000,
or over 90 per cent, represented the value of lands and buildings.
WEALTH

OF PUBLIC SCHOOLS BY

GEOGRAPHICAL

REGIONS.—In

the total value of its public schools in 1922 the north-central region
ranked highest, although the ranking individual States were New
York, Pennsylvania, and Illinois. (See Appendix Tables 26 to 30.)
A more equitable comparison is that of the relative school wealth
per capita of population, and on this basis the western region leads.
The most pertinent basis of comparison, however, is that of the
increases in per capita value which have occurred in each region or
State and in this respect the Southern States (South Atlantic and
Middle Atlantic) apparently lead all the rest.
The estimated value of public schools in each region in the years
1918 and 1922, together with the relative increases in per capita
value, is shown in the following tables:




185n a t i o n a l ,w e a l t h

anj>

income

TABLE 1 0 7 . — T o t a l estimated value of public schools in each geographical
the United States in 1918 and 1922

Estimated total value

Region

North Atlantic
South Atlantic
North Central
South Central
Western
United States
1

1918 i (as
1922 (as
reported by estimated
United
by Federal
States
Bureau of Trade ComEducation) mission)
Thousands Thousands
$687,356 $1,031,228
194,462
J18,502
775, 861 1,124,551
324,588
189,085
359, 901
212, 705
1,983, 509

3,034, 730

region

Value per capita
of population

of

1918

1922

Increase
in per
capita
value
in 1922
over 1918

$23 64
8.64
23.24
10.04
24. 78

$33. 66
13.48
32.05
16. 53
38.13

Per cent
42.4
56.0
37.9
64.6
53.9

19.15

27. 78

45.1

Fiscal year ending June 30.

The table indicates that the North Central States include! the
greatest wealth in public schools, amounting in 1922 to $1,124,551,000, or 37 per cent of the United States total. The States in this
region have 32.1 per cent of the total United States population.
The individual States with highest values (see Appendix) were
New York with $401,241,000, Pennsylvania with $243,410,000, and
Illinois with $225,011,000. The comparison of more significance,
however, as regards actual distribution of educational wealth, is that
of the wealth per capita of population and in this measure the
Western States lead all the rest with an average of $38.13 in 1922,
while the Southern States (South Central and South Atlantic) have
an average of only $16.53 and $13.48 per capita, respectively. That
the comparative poverty of educational facilities in the South,
however, is being rapidly improved is indicated by the fact that these
States show the greatest increases in school wealth per capita during
the period 1918 to 1922, the average increase for the South Atlantic
States being 56 per cent and that for the South Central States 64.6
per cent. The highest per capita wealth for any particular State
was that of $45.79 for New Jersey. The District of Columbia was
second with $45.64, while the lowest was $7.87 for Mississippi. The
latter State, however, increased its per capita school wealth 190.4
per cent in the period from 1918 to 1922.
W E A L T H O F O T H E R S C H O O L S A N D COLLEGES.—The total estimated
value in 1922 of colleges and schools other than public graded and
high schools is $3,575,000,000.20 This total may be classified roughly
as follows:
Land
Buildings
Equipment

$520, 000, 000
1, 681, 000, 000
338, 000, 000

Endowments

2, 539, 000, 000
1, 036, 000, 000

Total

3,575,000,000

•

r
* For method of estimate see p. 183.




national, wealth

186

anj>

income

Of the slightly more than a billion dollars in endowments estimated, five universities hold $219,000,000, or about 22 per cent of the
total, as follows: 21 •
Harvard.
Columbia
Yale
•Chicago
Leland Stanford
Total.

$64,
56,
40,
32,
27,

000, 0 0 0
000, 0 0 0
000, 0 0 0
000, 0 0 0
000, 0 0 0

219, 000,

000

The income from endowment funds reported to the Bureau of
Education for 1917-18 22 indicates an average rate of interest received of 5.69 per cent. At this rate the 1922 estimated total endowments of over $1,000,000,000 would yield an annual income of
about $60,000,000.
W E A L T H OF L I B R A R I E S AND MUSEUMS.—The estimated total
wealth of libraries in the United States is $807,491,000,23 of which
$604,458,000 is in physical assets and $203,033,000 is endowments.
The chief value of the physical assets of libraries is in books. Equipment, including books, accounts for 43 per cent; buildings 31 and
grounds 26 per cent of the physical value.
The museums, historical societies, etc., are valued according to
the commission's estimate, at $230,000,000.23 Fifty-eight per cent
of this value is in endowment funds and the balance in physical
assets.
w Figures are approximate.
2 Bureau of Education Bulletin, 1919, No. 91, p. 342.
2
23 For method of estimate see p. 183.




PART II. NATIONAL INCOME
CHAPTER

I X

METHOD AND SCOPE
Section 1. Preliminary survey.

This part of this report analyzes certain published statistical data
on income issued by the Treasury Department and presents estimates
of the total income of the people of continental United States during"
each year of the six-year period from 1918 to 1923.
The most important existing data on income are those shown by
the published Statistics of Income of the Treasury Department in
connection with the income tax, although the income-tax returns
are made by only a small fraction of those who are gainfully employed.
These Treasury statistics constitute a very important source oi information, anu by careful analysis are capable of yielding valuable
information not hitherto available.
There is no census of incomes in the United States. But while
only a portion of the income of individuals is covered in the Statistics of Income published by the Treasury Department, every
corporation is required by law to file an income-tax report each year,
and all business partnerships are also required to file reports. The
latter, however, are used only as a checlr upon the reports filed b y
the partners individually. Every individual whose income does not
come from tax-exempt sources1 and exceeds a certain specified amount,,
even if the statutory personal deductions preserve him from taxation,,
is also required by law to file a report, but to a certain extent the
income of members of the same family may be covered in one report.
But, as already stated, these reports cover only a part of the individual or family income of the people of the United States. The
Census of Occupations shows that in January, 1920, there were nearly
42,000,000 gainfully occupied persons in the United States, but there
were less than 7,260,000 individual income-tax reports filed for that
year, and there were more reports filed for that year than for any
earlier year. Of course many of the individual income-tax reports
filed cover the incomes of two or more individuals; for exampler
where husband and wife both earn incomes, or where there are several members of one family, one or more of them being minors, who
are industrially employed, only one report may be made to cover the
incomes of all. It seems likely, however, that this consolidation accounts for only a small portion of the more than 35 millions of gainfully employed persons who do not file separate reports. Furthermore, many of the reports filed come not from the gainfully employed
but from persons whose incomes are derived wholly from investments.
Estimates made by the commission, based upon an analysis of
data published by the Bureau of Internal Revenue, indicate that for
the six-year period 1918-1923 the total incomes reported m the Federal
i The salaried and wages of State, county, and municipal officials and employees are exempt from the
Federal income tax, regardless of the amount of the salary or wage. Income derived wholly from certain
sources—e. g., income derived from interest on State, county, and municipal bonds, and certain Federal
bonds—is exempt from Federal taxation.




188

national, wealth

anj>

income

income-tax returns were received or enjoyed by about 11 to 17 per
cent of the total population of continental United States.2 The
largest proportion was for 1923, the year in which the maximum
number of returns were filed. Any measurement or estimate of the
national income, to be complete, must include the incomes not
reported as well as those reported to the Internal Revenue Bureau.
There are also certain classes of income that are exempt from
taxation. One of these, income from investments in the obligations
of the State and local governments in the United States and certain
Federal bonds, was discussed in a previous report 3 under this resolution.
Internal evidence in the income-tax statistics, it is alleged, also
suggests that there is a considerable failure to report fully incomes
just over $50,000 or else a considerable understatement of them.4
Personal incomes m a y be placed in six classes, according to the
manner in which they arise, viz: (1) From personal services rendered
as a continuing member of an organization; (2) from interest or rent,
which represent income from invested capital; (3) from business
profits or dividends, also from invested capital but not generally
made definite in accordance with a contract; (4) from the sale of
mechanical inventions and literary productions; (5) from royalties on
the sale of books and patented articles; (6) from fees (including
"admission" fees) for professional and personal services offered to
the public. The last four classes are alike, in that the income depends entirely on the demand of the public for the merchandise,
commodity, or service, and the ability to furnish these on such
terms as to leave a net income. In the first two classes the income
and the service, for a longer or shorter period, is made definite by
contract for the mutual convenience of the parties.
The first of these classes of income includes "wages," "salaries,"
"bonuses," and the like. It includes nearly three-fifths of all income
and varies in different industries from one-eighth to 98 per cent of
the value created by the industry. It probably includes the great
bulk of the individual incomes that are too small to necessitate
report for income-tax purposes.
It is likely that a large proportion of the single proprietorship
businesses, composing classes (3) and (6) above, also did not net
large enough incomes to require their proprietors to report. For
1922 income-tax reports were filed by 382,883 corporations, 287,959
partnerships, and 906,348 individual proprietorship businesses, a
total of 1,577,190 businesses. An analysis of the principal business
directories and leading credit-rating books was made m order to
arrive at an estimate of the number of single proprietorship businesses
in the United States. The rating books omit the names of a large
portion of the restaurants, barber shops, shoe-repair shops, etc.,
and practically all of the professional-service businesses, such as
those of lawyers, physicians, dentists, public accountants, and consulting engineers. It is not unlikely that there are a million individual
2 See p. 192.
Federal Trade Commission, Taxation and tax-exempt income.
This suggestion arises from graphically charting the amounts of income reported in the different income
groups. If in constructing such a chart the distances on the base line represent, not the siz6s of the incomes
but the logarithms of those sizes; and if the vertical distances represent, not the amounts of income reported
of the various sizes but the logarithms of thoSe amounts, there would result what may be called a double
logarithmic chart. The form of the graph is very nearly that of a straight line. In the region that represents incomes of $50,000 and a little more, however, the graph dips under the straight line. This dip has
suggested to certain analysts that there was an understatement of incomes of these sizes.
3
4




189n a t i o n a l ,w e a l t h anj> i n c o m e

proprietorship businesses that are not included in the mercantile
rating books, and that there are between a million and a half and
two million of such businesses that do not file income-tax reports.
It is estimated by the commission that there were 4,500,000 businesses
of all kinds in the United States in 1922.
It would, therefore, have been interesting and enlightening if
reports could have been obtained from a large sample of individual
proprietorship businesses so chosen as to be representative of the
whole mass—those with small incomes as well as those with incomes
large enough to require reports. It would also have been instructive
to have obtained data concerning the wages and salary incomes of
a similarly chosen large sample of commercial and industrial employees. By sorting these into comparatively narrow income groups
very important information could have been obtained not only as
to the average salary or wages income, but as to the range of such
incomes and tl\e numbers of individuals receiving such incomes of
the various sizes.
Investigation, however, indicated that the cost of obtaining such
information relative to a 6 per cent sample would probably exceed
$80,000. The funds were not available and the .project of collecting
such information was abandoned.
Section 2. Method of estimating income,

The method chosen for estimating the income of the people of the
United States was that of estimating the amount of value created by
industry in each of the calendar years under review, because this
method enabled use to be made of the data published by the censuses
of manufactures and other pertinent official statistics. It also enabled
the commission to avoid the collection of original data, except to
supplement existing information. The value product of an industry,
or value created by it, is not the whole value of its products or services.
The values represented, for example, by the raw materials used and
b y the transportation service necessary to bring them to the place of
use are values created by other industries. To take the gross value
of the product of each industry would involve, of course, a tremendous
duplication on this account.
The value product of an industry, or value created by it, therefore,
as previously stated, may be defined as the excess of the gross value
of its product over all that portion of its cost of acquisition, production, sale, delivery, etc., that was paid away to other businesses.
Hie two shares into which the value product of industry has been
divided for the purpose of this inquiry are: (1) Wages, salaries,
and other remuneration for services; (2) the share left to those who
put their time and money into business enterprise and take the risks
inherent therein. Taxes, the share going to Government, trench
on both the foregoing shares, and are considered separately.
The second share mentioned above consists not only of profits and
losses of the business proprietors but also of the interest on the borrowed capital and rent of property and equipment that was leased to
other business organizations. It might have been interesting to subdivide this second share into leased capital, borrowed capital, and
proprietor's capital, but it was not deemed expedient to attempt the
separation.




190

national, wealth

anj>

income

The second share designated above is not wholly net, because taxes
are not deducted. Moreover, out of the rentals received deductions
should be made to cover any depreciation incurred. However,
depreciation probably is only a small percentage of the total amount
assigned to this share. Neither has any deduction been made from
the second share on account of uncollectible debts. As the value was
actually created, the only question was as to who obtained the benefit
of it. Ordinarily this item probably amounts to not more than onehalf of 1 per cent of the total value created by industry, and it was
impracticable to allocate it. But it should also be noted that from
this point of view wages are not strictly net either, as various special
expenses are involved in connection with most occupations which
might otherwise be avoided.
Section 3. Limitations of estimates.

Any consideration of the scope of an inquiry into national income
involves the application of economic theory in some of its most
abstract and recondite phases, but theoretical discussions have been
excluded generally in the presentation of these estimates. Such
theoretical discussions would tend to show, of course, how difficult it
is to draw the line between what is income and what is not income on
the basis of any general principle. In practice the line will be drawn
variously, depending on purposes and circumstances. The national
income as estimated here includes few, if any, items that would be
seriously challenged. On the other hand there are a number of other
items that might be included. Some estimates, for example, attempt
to include the economic value of services rendered by the housewife
in providing for meals and in care of children. Some estimates include what is called u imputed interest"—that is, the estimated
potential yield of wealth which is used by the owner without expense
to him, but which could be loaned to another for compensation
(interest).
Among the items not included, but which have strong claims for
inclusion, is the rent of dwelling houses received from the occupier by
a landlord. While omitted under the original plan, it seemed desirable to make a rough estimate of the net income from such rentals
without making any theoretical argument for or against exclusion.
A study by the Bureau of Labor Statistics of the budgets of 12,096
workingmen's families in 1918 and 1919 showed that on the average
these families spent 13 per cent of their incomes for rent.6 This is
the latest information available as to the proportion of personal income spent for rent. It is assumed that rent is not paid for farm
dwellings. Hence to obtain a basis to which to apply the above stated
percentage, the total value product as previously estimated, less the
value-product of agriculture, was taken. This selection errs in the
direction of overstatement, because the base includes corporate savings as well as individual incomes. This is counteracted in part by
the omission of the wages of agricultural labor.
The estimated value-product of industry other than agriculture
was $46,000,000,000 for 1918, 53.2 billions for 1919, 65.6 billions for
1920, 45.9 billions for 1921, 52.3 billions for 1922, and 60.4 billions
for 1923. Thirteen per cent of these amounts constitutes the estimated total money rent paid for dwellings and apartments in the
6

Cost of living in the United States, 1924.




191n a t i o n a l ,w e a l t h

anj>

income

respective years. These estimates are $6,000,000,0.00 in 1918, 6.9
billions in 1919, 8.5 billions in 1920, $6,000,000,000 in 1921, 6.8 billions in 1922, and 9.9 billions in 1923. Not all of these amounts
constituted values created by the business of renting dwellings and
apartments, however. There was depreciation and maintenance of
the buildings. In the case of a large portion of the apartment houses
there were fuel and water, also expense of lighting lobbies, halls, and
stairways. In many cases there was power consumption for operating
elevators and there were other expenses paid away to other industries.
Reports of apartment houses to this inquiry indicate that 59.9 per
cent of the gross rental income was consumed by depreciation and
expenses paid away to other businesses in 1918. The like percentages
for other years were 58.2 per cent in 1919, 43.7 per cent in 1920, 46
per cent in 1921, 46.9 per cent in 1922, and 40.7 per cent in 1923.
The average for all six years was 48.7 per cent. This is probably
high for dwellings, because their tenants furnish all of the fuel,
light, and, in most cases, the water. It is commonly claimed that the
annual rental of a dwelling should be 10 per cent of the investment.
Depreciation should probably be figured at 3 to 4 per cent of the investment in the building, or 2*^ to 3 per cent of the total investment
in site and building. This would amount to from 25 to 30 per cent
of the annual rent. Repapering, repainting, and the like may
average another 5 per cent of the rent. Individual dwelling
houses probably greatly outnumber apartments; so that the average percentage of gross rent that consists of expenses paid away to
other industries is probably nearer that for dwellings than that for
apartment houses. It is assumed that the average for dwellings and
apartment houses together is 40 per cent, or that, on the average, 60
per cent of the gross rent constitutes value added by the business itself
(including what is paid to the Government).
The foregoing data for apartment houses indicate, however, that
the proportion varied from year to year. It is assumed that while
40 was the average expense percentage for all six years, the percentages for the several years varied in proportion to those for apartment houses. On this basis the percentages of value-product to
gross rent were estimated at 47 per cent in 1918, 49 per cent in 1919,
66 per cent in 1920, 63 per cent in 1921, 62 per cent in 1922, and 69
per cent in 1923. Application of these percentages to the gross
rental of dwellings and apartments as estimated above gives the following estimates of the values added by this business: 2.82 billions
of dollars in 1918, 3.38 billions in 1919, 5.62 billions in 1920, 3.78
billions in 1921, 4.22 billions in 1922, and 5.38 billions in 1923.




CHAPTER

X

PERSONAL AND CORPORATE INCOME REPORTED TO
UNITED STATES TREASURY

THE

Section 1. Distribution of income among individuals paying Federal
income tax.

The ultimate interest in a study of income lies in its relative distribution among the individuals who receive and enjoy it. Statistics
published by the United States Bureau of Internal Revenue furnish
a basis for estimating the number of individuals who receive or
enjoy the total income reported in the Federal income-tax returns.
During the seven-year period ID17-1923 this total income ranged
from a little over $12,000,000,000 in 1917 to a maximum of over
$31,000,000,000, in 1923, The total income for 1920 was nearly
$26,000,000,000, the second highest for the period. The commission
estimates that during the seven-year period 1917-1923 the aggregate
population receiving and enjoying the total income reported in Federal income tax returns ranged from a little over 7,000,000 individuals
in 1917 to a maximum of over 18,600,000 in 1923, or from 6.8 to
16.7 per cent of the total population of the country. During this
same seven-year period the average per capita income of the estimated
population receiving or enjoying the income covered by Federal
income-tax returns averaged $1,634 and ranged from a minimum of
$1,556 in 1920 to a maximum of $1,755 in 1919.
The total income reported in income-tax statistics, the commission's estimate of the aggregate population receiving and enjoying
that income, the estimated per capita income, and the proportion oi
the estimated total population included are shown in the following
table for the period 1917-1923:
TABLE 1 0 8 . — Total personal income reported to Federal Government,
percentage
of
estimated total income, and estimated population
° receiving or enjoying
reported
income, by years, 1917 to 1923

Year

1917
1918
1919
1920
1921
1922
1923
Total

Population receiving or enjoying
reported income
Per cent
of total
Total personal
Per cent
income reported income
of total
to Federal Gov- estimated Number of Average populaby comernment b
income
d
mission e population per capita tion of
United
States
$12,077,009,284
17,745,761,473
22,437,685,825
26,690,269,853
23,328,781,932
24,871,908,354
31,107,427,030
158,258,843,751

29.5
33.3
35.7
44.4
41.3
44.5
•38.7

7,064,713
11,174,307
12,784,606
17,148,549
14,590,481
15,459, 522
18, 612,482
96,834,660

$1,709
1,588
1,755
1,556
1,599
1,609
1,678
1,634

6.8
10.7
12.1
15.9
13.4
14.0
16.7
12.9

° As dependents or otherwise.
* Statistics of Income, Treasury Department. "Total income" apparently represents net income before
deducting "interest on personal indebtedness, taxes on dwellings, and personal property and other taxes
not reported elsewhere; also miscellaneous deductions, not including contributions." See 1917 report, p. 13.
«Per cent of total income of all the people as estimated by the commission, see p. 221.
Estimated by the Federal Trade Commission.
* Average for six years, 1918-1923.

192




193n a t i o n a l ,w e a l t h

anj>

income

The total income shown above for each year was compiled from
the annual reports of Statistics of Income published by the United
States Bureau of Internal Revenue. From statistics contained in
different statements and tables in these reports it was possible for
the commission to estimate quite accurately the aggregate population receiving or enjoying the total income reported. Apparently
not all of those reporting incomes in excess of $1,000,000 annually
make a deduction for personal exemption and dependents. The
aggregate population was estimated by adding to the minimum
number of individuals represented by the different types of returns
(viz, two for each joint return, one for each single return, etc.), the
number of dependents claimed for returns having a deduction for
dependents. The number of dependents was estimated by deducting
from the total reported as " personal exemption, and credit for
dependents,'7 the amount of personal exemption allowable for each
type of return, and then dividing this remainder by the amount
allowed for each dependent.
The above table shows that from 1917 to 1920 the total income
reported in Federal income-tax returns increased 121 per cent and
that the estimated aggregate population receiving and enjoying it
increased 142 per cent. Each of these totals was considerably smaller
in 1921 and 1922 than for 1920, but larger than for the earlier years;
while they were much larger for 1923 than for the previous peak year
1920. The estimated average income per capita of those receiving
and enjoying the total income reported in the Federal income-tax
returns fluctuated considerably during the 7-year period. The estimated proportion of the total population receiving and enjoying this
income increased steadily from 6.8 per cent in 1917 to 15.9 per cent
in 1920. The percentages for 1921 and 1922 were both higher than
for any preceding year excepting 1920, while that for 1923 was the
highest for the period.
It is estimated by the commission that during the 6-year period
1918-1923 the total income reported in the Federal income-tax
returns constituted from over 30 to 45.6 per cent of the total income
of all the people of the United States. The lowest percentage was
for 1918 and the highest for 1921. The average for the period was
38.7 per cent.
D I S T R I B U T I O N OF I N C O M E B Y I N C O M E G R O U P S . — A n analysis of the
total income reported in Federal income-tax returns for 1922 and
1923 shows that in each year three-fourths of the total income of
nearly $25,000,000,000 in 1922 and over $31,000,000,000 in 1923
was received by individuals reporting a net income of under $10,000,
and that 4.4 per cent in 1922 and 3.7 in 1923 were reported by individuals having net incomes of $100,000 or over. According to the
commission's estimate, the average per capita total income for the
aggregate population receiving or enjoying the income in 1922
ranged from $1,213 for the group reporting a net income 3 of less
than $1,000 to $1,616,302 for the group reporting a net income of
$1,000,000 or over, while in 1923 it was only $863 for the lowest
income group and $1,529,526 for those reporting net incomes of
$1,000,000 or over.
2 Under the law certain "general deductions" are made from the "total income" reported in income
tax returns to obtain the "net income." In 1922 these "general deductions" amounted to nearly 68 per
cent of the "total income" for the group reporting net income of less than $1,000.




194

national,

wealth

anj>

income

The following table shows the total income reported in Federal
income-tax returns, the aggregate population receiving and enjoying
this income, as estimatea by the commission, the average income
per capita of those receiving or enjoying it, and the proportions of
total income and of estimated population receiving or enjoying the
total income, by income groups, for 1922 and 1923:
TABLE 1 0 9 . — E s t i m a t e d population 1 receiving or enjoying the total personal
income
reported to the Federal Government, by income classes, in 1922 and 1923
Total personal income 2

Estimated population

Net income
Amount
1922
Under $1,000.
$1,000 to $3,000
$3,000 to $10,000
$10,000 to $30,000
$30,000 to $100,000.
$100,000 to $300,000
$300,000 to $1,000,000
$1,000,000 and over

Per cent

Number

Per cent

Average
income
per
capita

3.1
38.9
33.1
12.5
8.0
2.6
1.1
.7

628,905
7, 519,001
6,777, 783
441,882
83,045
7,171
731
104

4.1
48.6
43.8
2.9
.5
.1
(3)
(3)

$1,213
1,286
1,214
7,057
23,836
90,923
372, 503
1,616,302

24,871,908,354

Total

$763,055,689
9,671,149,005
8,225,973, 111
3,118,397,228
2,000,932,256
652,005,991
272,299,633
168, 095,441

100.0

15, 459, 522

100.0

1,609

483,950,988
10,924, 570,646
12,327,865,459
4,080,396, 597
2,163,369, 533
669,864,901
278,454,363
178,954, 543

1.5
35.1
39.6
13.1
7.0
2.2
.9
.6

560, 561
10, 588, 597
6, 770, 846
594, 477
90,133
7,074
677
117

3.0
56.9
36.4
3.2
.5
(3)
0)
(3)

31,107,427,030

100.0

18, 612, 482

100.0

1923
Under $1,000
$1,000 to $3,000
$3,000 to $10,000
$10,000 to $30,000
$30,000 to $100,000
$100,000 to $300,000
$300,000 to $1,000,000
$1,000,000 and over
Total

863
1,032
1,821
6,864
24,002
94,694
411, 306
1, 529, 526
1,671

As taxpayers, dependents, or otherwise.
Compiled from Statistics of Income, United States Bureau of Internal Revenue.
3 Less than one-tenth of 1 per cent.
1
2

The table shows that in each year the largest proportion, almost
39 per cent, of the total income was received by those having a net
income of from $l,000-$3,000, that over three-fourths of the total
was reported by the first three groups which had a net income of less
than $10,000 per return, and over seven-eighths by the four groups
with net incomes under $30,000 per annum.
In 1922 the proportion of the estimated total population 3 receiving or enjoying the income reported in Federal income-tax reports
was much larger than the proportion of the total income for the three
smallest income groups, i. e., for net incomes under $10,000 per
annum, while the opposite was true for the higher income groups.
For example, the income groups under $10,000 had three-fourths of
the total income and 96.5 per cent of the estimated population receiving or enjoying the income. In 1923 the proportion of the estimated total population receiving or enjoying this income was much
larger than the proportion of the total income reported for net incomes under $3,000 per annum, while the opposite was true for those
reporting net incomes in excess of $30,000.
The estimated total income per capita for the three lowest groups
did not differ greatly in 1922, due to the fact that the returns for the
a

See p. 193 for method of estimating.




195n a t i o n a l ,w e a l t h

anj>

income

group having a net income under $1,000 were for unmarried individuals without dependents, and those for the $l,000-$3,000 group
included many such returns, while the $3,000-$10,000 group had a
high proportion of joint returns and of dependents. For the other
groups, the average per capita varied from $7,057 in 1922 and
$6,864 in 1923 for the $10,000-$30,000 group to over $1,600,000 for
the 104 individuals in 1922 and $1,529,526 in 1923 for the 117 individuals enjoying a net income in excess of $1,000,000 per annum.
In 1923 the estimated average per capita total income was considerably lower than in 1922 for those reporting net incomes under $3,000
per annum.
DISTRIBUTION OF INCOME BY TERRITORIAL S E C T I O N S . — F r o m t h e

income-tax returns it is possible to estimate the relative distribution
oi the totfl income reported by sections of the country. The Territories of Alaska and Hawaii are included with the Pacific States.
Both in 1922 and 1923 the New England and North Atlantic States
reported about 43 per cent of the total income, but only 38 per cent
of the estimate.'! population receiving or enjoying this income, while
the Mountain States had about 2.5 per cent of the total income and
about 3.3 per cent of the estimated population.
The following table shows the total income reported in income-tax
returns, the population as estimated by the commission receiving or
enjoying this income, the estimated per capita income, and the proportions of total income and estimated population, by the principal
geographical regions, in 1922 and 1923:
TABLE 1 1 0 . — T o t a l personal income reported to Federal Government and
estimated
population 1 receiving or enjoying it, by geographical divisions,2 in 1922 and 1923
Percentage of—
Geographical divisions

1922
New England and Middle
Atlantic
South Atlantic.
East North Central
East South Central
West North Central...
West South Central
Mountain
Pacific
Total..
1923
New England and Middle
Atlantic
—
South Atlantic
East North Central
East South Central...
West North Central
West South Central
Mountain
Pacific
Total

Total personal
income

Estimated
population

Total
income

Estimated
population

EstiRatio of
mated estimated
income to total
per
populacapita
tion

$10, 733,948,708
1,931,729,764
5, 466,056, 829
690, 835, 886
2,009,937, 691
1,279,162, 509
623,093, 201
2,137,143, 766

5,939,102
1,266,830
3,504,088
482,097
1,474,285
870, 346
508,504
1,414, 270

43.2
7.7
22.0
2.8
8.1
5.1
2.5
8.6

38.4
8.2
22.7
3.1
9.5
5.6
3.3
9.2

$1,807
1,525
1,560
1,433
1,363
1,470
1,225
1, 511

19.6
8.7
15.6
5.3
11.5
8.1
14.3
22.4

24,871,908,354

15,459,522

100.0

100.0

1,609

14.0

13,302,611, 972
2,484, 573,024
7,224, 275, 822
838,181,064
2,296,707,262
1,468,439,129
764, 323, 811
2, 728, 314, 946

7,083,172
1,490,116
4,535,921
586, 673
1, 601,307
964, 327
597,132
1, 753,834

52.8
8.0
23.2
2.7
7.4
4.7
2.4
8.8

38.1
8.0
24.4
3.1
8.6
5.2
3.2
9.4

1,878
1, 667
1, 593
1,429
1,434
1,523
1,280
1,556

22.8
10.2
20.0
6.5
12.4
9.0
16.6
27.4

31,107, 427,030

18, 612,482

100.0

100.0

1,671

16.8

1 As dependents or otherwise.
2 The New England and Middle Atlantic region includes the New England States and New York, New
Jersey, and Pennsylvania; the South Atlantic includes West Virginia, the District of Columbia, and all
States south of New Jersey which border upon the Atlantic; the East North Central States embrace Wisconsin, Michigan, Illinois, Indiana, and Ohio; the East South Central region consists of Kentucky, Tennessee, Mississippi, and Alabama; the West North Central region is made up of North and South Dakota,
Minnesota, Iowa, Nebraska, Kansas, and Missouri; the West South Central region covers Arkansas,
Louisiana, Oklahoma, and Texas; the Mountain section includes Montana, Wyoming, Idaho, Utah,
Nevada, Colorado, Arizona, and New Mexico; and the Pacific region includes Alaska and Hawaii in addition
to the three Pacific Coast States.




national, wealth

196

anj>

income

The total income and the estimated population receiving or
enjoying it were larger for each section of the country in 1923 than in
1922.
The great industrial sections of New England, the Middle Atlantic,
and East North Central States, with 35 per cent of the total population
of the country, had nearly two-thirds of the total income reported in
the Federal income-tax returns in each year. The New England and
Middle Atlantic group was the only section of the country in which
the estimated average per capita income reported exceeded the
average for the country, being $1,807 in 1922 and $1,878 in 1923, as
compared with an average of $1,609 in 1922 and $1,671 in 1923 for
the entire country. The second highest estimated average income
per capita was for the East North Central States, amounting to
$1,560, or $49 below the average for the entire country for 1922, and
for the South Atlantic States in 1923, with $1,667, which was only
$4 below the average. The lowest estimated per capita average
was for the Mountain States in both years, with only $1,225 in 1922
and $1,280 in 1923.
Although the average for the Pacific States (including Alaska and
Hawaii) was low, a much larger proportion of the total population
than for any other section, viz, 22.4 per cent in 1922 and 27.4 per
cent in 1923, received or enjoyed the benefits of income reported in
the Federal income-tax returns. The second highest proportion,
19.6 percent in 1922 and 22.8 per cent in 1923, was for the New
England "and Middle Atlantic States, while the lowest was for the
West and East South Central States, with only 8.1 and 5.3 per cent,
respectively, in 1922 and 9 and 6.5 per cent, respectively, in 1923.
A M O U N T A N D T E R R I T O R I A L D I S T R I B U T I O N OF C A S H

DIVIDENDS.—

The amount of cash dividends reported annually in the personal
income-tax returns ranged from a little more than $2,000,000,000
to over $3,000,000,000 during the eight-year period 1916-1923.
The smallest amount reported was for 1916 and the largest for 1923.
The following table shows the aggregate amounts reported for these
eight years:
TABLE

1 1 1 . — A g g r e g a t e amount of cash dividends reported
returns, by years,
1916-1923
Year

1916
1917
1918
1919

Amount
$2,136,468,625
2,848,842,499
2,468,749,244
2,453,774,825

Index
100.0
133.3
115.6
114.8

Year
1920
1921
1922
1923

in personal

Amount
$2,735,845,795
2,476,952,399
2,664,219,081
3,126, 503,482

income-tax

Index
128.5
115.9
124.7
146.3

The amount of cash dividends reported was 46 per cent larger in
1923, the peak year, than in 1916. The previous peak year, 1917, was
33 per cent larger than 1916.
During the eight-year period 1916-1923, from 37.5 to 43.7 per cent
of the cash dividends reported were received by inhabitants of the
three Middle Atlantic States—New York, New Jersey, and Pennsylvania. Inhabitants of the important industrial States of the East
North Central division ranked second each year, with from 18.7
to 21.7 per cent. The New England States ranked third with from




197n a t i o n a l ,w e a l t h

anj>

income

12.5 to 14.4 per cent of the total. Inhabitants of these three geographical divisions reported from 72.5 to 76.1 per cent of the total.
The following table shows these percentages in detail.
TABLE 1 1 2 . — P e r c e n t a g e s of cash dividends reported
graphical divisions, by years,
Geographical division
New England
Middle Atlantic South Atlantic
East North Central
East South Central
West North Central
West South Central
Mountain
Pacific
Total

1916

1917

1918

in income-tax
1916-1923
1919

1920

returns,

1921

1922

by

geo-

1923

]2.8
43.7
6.5
19.5
1.4
5.9
3.8
1.6
4.7

12.8
42.0
7.7
18.7
2.0
6.4
3.0
2.0
5.4

13.8
41.1
6.7
19.5
2.0
6.6
3.0
1.7
5.6

13.4
39.1
7.2
20.7
2.1
6.7
3.1
1.7
6.0

14.1
37.5
7.2
20.9
2.0
6.8
3.3
1.5
6.7

14.4
40.9
7.0
19.7
1.9
5.8
2.6
1.3
6.4

13.5
39.5
7.1
21.4
1.9
6.0
2.8
1.4
6.4

12.5
38.8
7.5
21.7
2.4
6.2
3.0
1.7
6.2

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

The above table indicates clearly that the great bulk of corporation
stockholders, approximately three-fourths, are inhabitants of the
great industrial States in the northeastern section of the country.
The East South Central and the Mountain divisions have the
smallest percentages. While there was some fluctuation in the percentages for the different divisions from year to year, no change in the
geographical distribution of corporation stock ownership is indicated
during the period. Appendix Table 31 gives the corresponding
amounts for each geographical division for this eight-year period.
Section 2. Sources of personal incomes.

Data published by the Treasury Department show the total income
reported by all individuals making personal returns^ for the years
1918 to 1923. In each year the total income reported is classified
by sources. In the following analysis the total income has been
classified to show for each year for which the data are available, the
proportion of the total personal income reported by individuals
whose incomes fall in specified income groups, and for each group
the proportion that is derived from four broad sources, namely,
(a) Wages and salaries; (b) business and partnership profits; (c)
profits from sales of real estate, capital assets, and capital net gain;
and (d) rents, royalties, interest, and dividends. Fiduciary income,
representing at most 3.5 per cent of the total income reported by
any income group and but 1 per cent of the total income for all
groups, is shown separately by the Treasury Department for but
two years—1922 and 1923. In the following tables income from this
source has been combined with rents, royalties, interest, and dividends for 1922 and 1923. The complete analysis of personal income
by sources for the six years, 1918 to 1923, upon which the ensuing
discussion is based, will be found in Appendix Table 32.
Table 113, below, shows the total number of personal returns and
the total income reported for each of the six years, 1918 to 1923.




national, wealth

198

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income

TABLE 1 1 3 . — P e r s o n a l income reported to Federal Government
made, by years, 1918 to 1923

Year

Number

1918
1919
1920—
1921
1922
1923

4,425,114
5,332,760
7,259, 944
6,662,176
6,787,481
7,698,321

and number

Index
(1918=100)
100.0
120.5
164.0
149.6
153.4
174.0

Total

of

returns

Index
(1918=100)

$17,645,761, 473
22,437,685,825
26,690,269,853
23,328,781,932
24,871, 908,354
31,107,427,030

100.0
126.4
150.4
131.5
140.1
175.3

During the three years from 1918 to 1920, inclusive, there was a
sharp increase from year to year, both in number of returns and in
total income reported. Business depression in 1921 caused a reduction in number of returns and in total income, notwithstanding the
fact that the data for that year include statistics for reported net
incomes of less than $1,000. Since 1921 both number of returns
and total income reported have again been on the increase. Both
reached their maxima for the six years in 1923, when the index for
number of returns was 174 and tnat for total income reported was
175. In terms of percentage increases over 1918, returns increased
64 per cent in numlber and incomes 50 per cent in amount from 1918
to 1920. In 1921 both returns and income reported showed sharp
decreases which were more than recovered in 1923, when returns
increased to a number 74 per cent greater than that for 1918 and
total income to an amount 75 per cent greater than 1918.
INCOME D E R I V E D FROM SPECIFIED SOURCES.—Table 114 shows the
amounts of the total income reported that were derived from specified sources or groups of sources, together with index numbers showing for each source of income the relative increases or decreases based
on 1918 = 100.
TABLE 1 1 4 . — P e r s o n a l income reported to Federal Government
of income, by years, 1918 to 1923

Wages and
salaries

Year

191 8
1919
1920- 1921 1922.
1923

Business
and
partnership
profits

$8,267,391,550 $4,339,269,618
10,755,692, 651 5,708,980,697
4,906,784,819
15,270,373,354
3,707,504,918
13,813,169,165
4,266,898,491
13,693,992,791
14, 776,807,456 6,823,006,976

Profits from
sales of real
estate, stocks,
bonds, etc.

according

Rents,
royalties,
interest, and
dividends

to

sources

Total

$291,185, 704 $4,847,914,601 $17,745,761,473
22,437,685,825
999,364,287
4,973,648,190
26,690,269,853
1,020, 542,719 5,492, 568,961
462,858,673
5, 345, 249,176 23,328,781,932
24,871,908,354
991,351,580
5,919,665,492
1,272,607,950
8,235, 004, 648 31,107,427,030

INDEX NUMBERS (1918=100)
1918.
1919
1920
1921
1922
1923

-

100.0
130.1
184.7
167.1
165.3
178.7

100.0
131.6
113.1
85.4
98.3
157.2

100.0
343.2
350.5
160.0
340.5
437.0

100.0
102.6
113.3
110.3
122.1
169.9

100.0
126.4
150.4
131.5
140.1
175.3

Wages and salaries, constituting a larger proportion of the total
than any other source in each year, increased sharply in 1919 and
1920 and then decreased in 1921 and 1922. Business and partner-




199n a t i o n a l ,w e a l t h

anj>

income

ship profits, which showed an increase of 31.6 per cent in 1919 over
1918, were affected sharply by the business depression of 1920 and
1921. In the latter year they were but 85 per cent as large as in
1918. Business recovery in 1922 and 1923 brought about increases
in the amounts reported from these sources until in 1923 they were
57 per cent greater than in 1918. Profits from sales of real estate,
stocks, bonds, etc., were least in 1918 and largest in 1923. They
fluctuated widely from year to year, increasing sharply in 1919 and
1920 as compared with 1918, decreasing in 1921, and again increasing very sharply in 1922 and 1923, when they were nearly four and
four-tenths times as great as those reported for 1918. The total for
rents, royalties, interest, and dividends, representing investment income, shows less fluctuation from year to year than any other
source, the tendency for the entire six-year period being to increase
from year to year, except in 1921, when there was a slight decrease.
This decrease was more than regained the following year, and in
1923 the amount of profit reported from this source was over 70 per
cent greater than that for 1918. The data contained in tables 113
and 114 are graphically summarized in chart. (Opposite p. 201.)
In general the data reflect high wages, salaries, and profits during
the war and post-war period, followed by depressed business and
other profits, slightly decreased wages, and less full-time employment during the business slump of 1920 and 1921, followed by sharp
recovery in business profits and more nearly full-time employment
at permanently higher wage levels during the last two years of the
six years covered. From 1918 to 1920 income from wages and salaries increased relatively more than any other source and held their
gain better through the slump of 1921 than business profits. Property income, represented by rents, royalties, interest, and dividends,
more consistently showed gains in amount from year to year than
any other source of income.
PERCENTAGES

DERIVED

FROM

SPECIFIED

SOURCES.—Table

115

shows the percentages of total personal income reported in each
year from 1918 to 1923, inclusive, that was derived from specified
sources. The totals upon which the percentages are based are those
appearing in Table 114, above.
TABLE 1 1 5 . — P e r c e n t a g e distribution of personal
ment, according to sources of income,

income reported to Federal
by years, 1918 to 1923

Govern-

Percentages of total derived from—

Year

1918..
1919
1920
1921
1922
1923




Wages and
salaries

Business
and partnership
profits

46.6
47.9
57.2
59.2
55.1
47.5

24.5
25.4
18.4
15.9
17.1
21.9

Profits
from sales
Rents,
of real
royalties,
estate,
interest,
capital
and|
assets,
capital net dividends
gain, etc.
1.6
4.5
3.8
2.0
4.0
4.1

27.3
22.2
20.6
22.9
23.8
26.5

national, wealth

200

Diagram

anj>

income

5

AMOUNTS OF TOTAL PERSONAL INCOME
REPORTED IN F E D E R A L INCOME TAX RETURNS
FOR SPECIFIED KINDS OF INCOME , Y E A R S

Bi/lions of Oof tars

25--




1918""

1323

ff/V/t

0/7 s ofDof/ars

201n a t i o n a l ,w e a l t h anj> i n c o m e

Wages and salaries increased during the first four years of the
period from 46.6 per cent in 1918 to 59.2 per cent of the total in 1921
and dropped to 55.1 per cent in 1922 and 47.5 in 1923. Total wages
reported in 1923 were more than $1,000,000,000 greater than in 1922,
the precentage decrease being due to the greater increases shown by
business profits, profits from sale of capital assets, and income from
investments. (See p. 198.) Notwithstanding the fact that business
and partnership profits showed the effect of the depression in 1920,
wages and salaries were not* proportionately decreased, hence they
reached their maximum percentage of total income reported in 1921,
the year in which the percentage derived from business and partnership profits was smallest.
Business profits represented roughly from 16 to 25 per cent of the
total personal incomes reported, the proportion being largest in 1918
and 1919 and smallest in 1921. Investment income, including income
from rents, royalties, interest, and dividends, constituted from 20.6
to over 27 per cent of the total in different years, 1918 being, as in
the case of business profits, the year in which the proportion was largest and 1920 the year in which it was least. Profits from sale of real
estate, stocks, bonds, etc., representing capital assets, fluctuated
from year to year, within limits of from 1.6 per cent to 4.5 per, cent
of the total, 1918 being the year of minimum and 1919 the year of
maximum proportions.
Section 3. Distribution of total income by sources and size groups.

The following table shows by income groups the percentages of
total number of returns and of total incomes derived from specified
sources. The total number of returns and the total income covered
is the same as that in the preceding discussion. A detailed analysis
of the number of returns and income by sources will be. found in
Appendix Table 32.
The income groups in the table below are based upon the net
personal income as reported to the Federal Government in incometax returns.




national, wealth

202

anj>

income

TABLE 1 1 6 . — P e r c e n t a g e distribution
of personal income
ernment, according to sources of income and size groups,

reported to Federal
Govby years, 1918 to 1923

Percentages of total for each group—
Income group and item
1918
Number of returns:
Under $1,000
$1,000 to $3,000
$3,000 to $10,000
$10,000 to $30,000
$30,000 to $100,000
$100,000 to $300,000
$300,000 to $1,000,000
$1,000,000 and over
Wages and salaries:
Under $1,000
$1,000 to $3,000
$3,000 to $10,000
$10,000 to $30,000
$30,000 to $100,000
$100,000 to $300,000
$300,000 to $1,000,000
$1,000,000 and over
Business and partnership profits:
Under $1,000
$1,000 to $3,000
$3,000 to $10,000
$10,000 to $30,000
$30,000 to $100,000
$100,000 to $300,000
$300,000 to $1,000,000
$1,000,000 and over
Profits from sales of real estate, stocks, etc.:
Under $1,000
$1,000 to $3,000
$3,000 to $10,000
$10,000 to $30,000
$30,000 to $100,000
$100,000 to $300,000
$300,000 to $1,000,000
$1,000,000 and over
Rents, royalties, interest, and dividends:
Under $1,000
$1,000 to $3,000
$3,000 to $10,000
$10,000 to $30,000
$30,000 to $100,000
$100,000 to $300,000
$300,000 to $1,000,000
$1,000,030 and over
Total income:
Under $1,000
$1,000 to $3,000
$3,000 to $10,000
$10,000 to $30,000
$30,000 to $100,000
$100,000 to $300,000
$300,000 to $1,000,000
$1,000,000 and over
1

68.:
28.1
2.!
0)
0)

1919

65.5
30.4
3.3
.7
8'1

1920

72.2
25.1
2.6
0)
0)
0)

.1

1921

1922

1923

6.1
70.0
21.4
2.2
.3
0)
0)
0)

48.4
36.1
9.6
4.6
1.1
.2
0)

56.4
31.3
8.1
3.5
.6

2.3
56.6
30.4
7.4
2.9
.4

0)

0)

24.
48.
12.
7.
4.
1.

19.1
46.9
16.2
10.3
5.1
1.9
.5.

22.1
44.0
18.1
11.0
3.5
1.1
.2

4.2
25.8
41.2
16.1
9.4
2.5
.8
0)

15.
44.
23.
10.
3.
1.

14.1
40.0
21.8
13.6
6.0
1.7
3.8

13.0
53.9
22.8
8.0
1.4
.4
.5

.1

16.9

14.6
30.1
21.8
18.3
8.6
4.2
2.4

17.7
29.7
22.9
18.7
6.6
2.8
1.6

35.:
35.1
13.:
9.1
3.1
1.1
l.l

31.9
37.7
14.5
9.5
4.0
1.6
.8

' 40.5
34.2
13.5
8.2
2.4
.8
.4

.1

8.4
14.8
44.0
21.2
9.6
1.4
' .5
.1

7.9
19.0
29.3
20.4
15.5
4.8
20
1.1
4.0
42.2
32.2
12.1
6.9
1.7

Less than 0.05 of 1 per cent.

From 62 to 72 per cent of the personal returns in different years
showed total incomes of from $1,000 to $3,000 each, and this group,
together with the group reporting from $3,000 to $10,000, each
account for from 91 to 97 per cent of the total number of returns in
different years. From 32 to 42 per cent of the total income reported
falls in the group having incomes of from $1,000 to $3,000. The
group having incomes of $3,000 to $10,000, with less than half as
many returns, accounts for from 32 to nearly 40 per cent of the total
income. Together these two groups have from about 70 to nearly
75 per cent of the total income reported. In the higher income
groups a relatively small number of returns account for a relatively
large part of the total income.




203n a t i o n a l ,w e a l t h

anj>

income

From 48 to 57 per cent of the total wages and salaries reported are
accounted for by the group having incomes of from $1,000 to $3,000,
and the two groups having incomes of $1,000 to $10,000 account for
approximately 85 per cent of all wages and salaries reported.
Between 40 and 50 per cent of all business profits shown were
reported by the $3,000 to $10,000 income group and from 19 to 29
per cent by the $1,000 to $3,000 group.
From 28 to 54 per cent of the profits from sales of real estate and
capital assets were reported by persons having incomes of $3,000 to
$10,000. The next largest proportion falls in the $10,000 to $30,000
income group. These two groups account for from 50 to 75 per cent
of the profits from this source in each year.
From 29 to 37 per cent of the income from rents, royalties, and
dividends fell in the $3,000 to $10,000 group and 20 to 23 per cent in
the $10,000 to $30,000 group. These two groups together account
for approximately 50 per cent of the income from these sources.
The bulk of the remaining 50 per cent was reported by the comparatively small number of personal returns falling in the large income
groups. In the $30,000 to $100,000 group from one-tenth to sixtenths of 1 per cent of the total number of returns accounted for from
13.8 per cent to 18.7 per cent of the income from these sources. In
the higher income groups, as shown in Appendix table 32, income
from these sources constituted a large proportion of the total for the
groups, but in the aggregate represented but a small percentage of
the total reported by all groups.
PROPORTION FROM SPECIFIED SOURCES BY INCOME G R O U P S . — F r o m

statistics published by the Treasury Department it is possible to
show for all returns grouped by size of incomes the proportions of the
total personal incomes reported that were derived from specified
income sources. Table 117 shows the percentages of the total reported by specified income groups that were derived from the five
general sources named above for each of the five years from 1918 to
1922, inclusive. Statistics for incomes under $1,000 each have been
published by the Treasury Department only for the years 1921, 1922,
and 1923. The income groups specified in the table are based on
net taxable incomes. Tne percentages shown are based on total
incomes reported.




national, wealth

204

anj>

income

TABLE 1 1 7 . — P e r c e n t a g e distribution
of total income
classes,
1,918-1923

by sources

and

by

income

[Income classes based on net taxable income]

Under $1,000:
1918
1919
1920...
1921
1922..
1923
$1,000 to $3,000:
1918.
1919
1920
1921
1922
1923
$3,000 to $10,000:
1918
1919...
1920
1921
1922
1923
$10,000 to $30,000:
1918
1919
1920
1921
1922
1923....
$30,000 to $100,000:
1918
1919
1920
1921.
1922
1923
$100,000 to $300,000:
1918
1919
1920
1921
1922
1923
$300,000 to $1,000,000:
1918
1919
1920
1921
1922
1923
$1,000,000 and over:
1918
1919
1920
1921.
1922.
1923

L

Wages and
salaries

Profits
from sales
of real estate, capital assets,
capital net
gain

34.3
36.8
37.5

Income classes and years

Business
and partnership
profits

16.5
21.7
26.5

4.1
4.2
2.2

45.1
37.3
33.8

69.0
72.6
79.7
79.3
76.8.
65.6

17.2
15.3
10.1
9.7
11.4
18.4

0.7
1.9
1.2
.7
1.0
1.4

13.1
10.2
9.0
10.3
10.8
14.6

42.6
45.9
52.4
56. 1
53.8
44.5

32.9
31.7"
23.7
20.3
21.9
'27.0

2.0
4.7
6.0
2.7
3.4
3.7

22.5
17.7
17.9
20.9
20.9
24.8

32. 1
31.7
34.2
36.4
33.1
33.4

23.6
28.3
24.5
21.2
20.9
20.8

2.9
6.7
6.5
3.5
6.3
6.0

41.4
33.3
34.8
38.9
39.7
39.8

23.6
23.0
24.4
24.5
21.6
21.7

21.5
27.7
24.7
21.6
19.0
17.9

1.9
6.4
3.7
2.7
8.6
7.9

53.0
42.9
47.2
51.2
50.8
52.5

13.9
13.5
13.5
14.3
11.8
12.4

25.2
32.9
27.2
22.3
17.5
13.6

1.6
5.6
2.2
1.5
14.5
14.7

59.3
48.0
57.1
61.9
56.2
59.3

7.2
6.9
7.0
5.0
4.9
7.0

25.1
30.0
23.7
20.4
12.1
8.0

1.8
4.8
1.9
1.4
24.5
24.0

65.9
58.3
67.4
73.2
58.5
61.0

2.4
1.7
3.5
4.4
2.9
2.5

12.2
14.7
10.4
6.5
5.8
2.4

1.3
20.3
4.3
.6
35.1
40.7

84.1
63.3
81.8
88. 5
56.2
54.4

•

Rents,
royalties,
interest,
and dividends

In general wages and salaries constituted the bulk of incomes up to
$10,000 and a decreasing proportion of incomes in the higher income
groups, becoming almost negligible in the incomes of $1,000,000 and
over. Business profits constituted the next most important source
in groups up to $30,000 and are about equal to wages and salaries in
the $30,000 to $100,000 group. In the $1,000,000 and over group
they fell sharply in importance in the the last three years, amounting
in 1921 to 6.5 per cent, in 1922 to 5.8 per cent, and in 1923 to but 2.4
per cent of the total. Investment income or income from property




205n a t i o n a l ,w e a l t h

anj>

income

owned, represented by rents, royalties, interest, and dividends, in
general represents an increasing percentage of the total for the various
income groups, becoming more important than either wages and
salaries or business profits for all groups reporting incomes over
$10,000 each. The exception to this generalization to be noted is that
in the lowest income group income from rents, royalties, interest,
and dividends constituted the largest proportion of the total reported
in two of the three years for which statistics were available for the
group. This is one of the most interesting figures shown in the table.
Details are not available to explain the character of this income, but
it may be conjectured that it was composed very largely of room rent
(a single room or part of a room, not rented in the way of business),
rents of small tracts of land, and of interest from savings banks or
small investments in interest-bearing securities. Starting with the
$1,000 to $3,000 group, property income represented about 10 per
cent of the total, but increased progressively to as high as 88.5 per
cent in one year in the small group of incomes of over $1,000,000 each.
Profits from sales of real estate, stocks, and capital assets generally
represented only a small part of the total income reported by the
lower income groups, but in certain years represented from 15 to 41 per
cent of the total income of certain of the large income groups.
Income from this source, it will be recalled, varied widely in amount
from year to year, as shown in the analysis of total income previously
discussed. For certain groups its fluctuation from year to year was
very marked. (See Appendix Table 32.)
Chart (opposite p. 207) is a graphical analysis of the total income
reported during the six-year period, as shown by sources for each of
the income groups discussed above. Generalizing from the tables
and chart, it will be noted that whereas in the lower income groups
wages and salaries constitute the bulk of income, in the medium to
large income groups they yield place to income from rents, royalties,
interest, dividends, and business profits, while in the very large
income groups properties and securities owned become the predominant sources of income.
Section 4. Territorial distribution of personal income.

The following table, based on data published by the Treasury
Department, shows for the years 1922 and 1923 the territorial distribution of total income and the proportion of the total for each
territorial division derived from wages and salaries, business and
partnership profits, profits from sales of real estate, stocks, etc., and
income from rents, royalties, interest, and dividends. In the table
the territorial divisions adopted by the Bureau of the Census have
been used, except that New England and the Middle Atlantic States
have been combined to form a single division in which incomes arise
mainly from trade and manufacture.




national, wealth

206

anj>

income

Diagram 6 SIX YEAR AGGREGATE OF PERSONAL INCOME
R E P O R T E D I N F E D E R A L INCOME T A X R E T U P N S FOR
SpecifiedKindsofincome,fyincome Groups,tfifftof922.

B/tt/ons of Doftars

Bit/ions ofOo/tars

I

55-

55

50

45-

45

40
I Rea/Estate. J/ocAs
QBoncts etc CProf/tfrom)
^fie/rts. Poya/f/'es.
^/nferests
D/w/c/enr/s
3 BusinesancfPartnersh/p
^Prof/t

35-

35

I Wages and
I Sgtar/'es
30-

30

25-

25

20

201

^^^^
====]

i==i
15-

15
•
•

•

gjj^jjgj^
====

IO-

lO

EEEEE

ESEESS

$ I ooo

, TO
$ .3.OOO




TABLE 1 1 8 . — I n c o m e received

Wages and salaries

8
to

r
00

Amount

Per cent

from

specified

sources,

Business and partnership profits

Amount

Per cent

by territorial

divisions,

Real estate profits, capital net gain from sale
of assets, etc., stocks,
etc.
Amount

Per cent

1922-23

Rents, royalties, interest,
and dividends

Amount

Per cent

Total income

Amount

Per cent

1922 • '
$5,637,105,477
1,116,749,980
3,157,952,207
411,391,046
1,150,738,013
655,340,448
392,958,366
1,145,368,054

New England and Middle Atlantic
South AtlanticEast North Central
East South Central-.
West North Central
West South Central
Mountain
Pacific
Total United States and Alaska
Hawaii __

__

41.2
8.2
23.1
3.0
8.4
4.8
2.9
8.4

$1,777,324,157
316,842,371
880,449, 333
134,491,576
373,676,644
287,664,311
104, 538,186
388,869,077

41.7
7.4
20.6
3.2
8.8
6.7
2.5
9.1

$488,134,172
64,955,083
207,049,930
17,434,629
41,727,322
57,463,855
19,159,044
93,931,165

49.3
6.6
20.9
1.8
4.2
5.8
1.9
9.5

$2,831, 384, 902
433,182,330
1, 220,605, 359
127,518,635
443, 795, 712
278,693,895
106,437,605
467,629,373

13,667,603,591
26,389, 200

100.0

4,263,855,655
3,042,836

100.0

989,855,200
1,496, 380

100.0

5,909,247,811
10,417,681

4,266,898,491

13,693,992,791

Grand total

991,351,580

47.9 $10, 733r948, 708
1,931,729,764
7.3
5,466,056,829
20.7
2.2
690,835,886
7.5
2,009,937,691
1, 279,162,509
4.7
623,093,201
1.8
2,095,797,669
7.9
100.0

24,830,562,257
41,346,097

43.2
7.8
22.0
2.8
8.1
5.2
2.5
8.4
100.0

24,871,908,354

5,919,665,492

1923
New England and Middle Atlantic
South Atlantic
East North Central
East South Central
West North Central
West South Central
Mountain
Pacific
Total United States and Alaska
Hawaii
Grand total




6,272,985,498
1,195,944,238
3, 554,740,807
407,512,189
1,075,345,980
633,420,249
388, 293,358
1,218,106,865

42.6
8.1
24.1
2.8
7.3
4.1
2.7
8.3

2, 685,757,452
552, 736,176
1,584,621,226
195,355,445
547, 571,798
405,217,990
192,489, 530
650, 965, 574

39.4
8.1
23.3
2.9
8.0
5.9
2.8
9.6

554,714,310
102,374,693
292, 551,797
28,706,015
58,585,696
55,911,459
18, 740,667
158, 329,598

43.7
8.1
23.0
2.3
4.6
4.4
1.5
12.4

3, 789,154,712
633,517, 917
1,792,361,992
206,607,415
615,203, 788
373,889,431
164,800,256
641,824,399

46.1
7.7
21.8
2.5
7.5
4.6
2.0
7.8

13,302,611,972
2,484, 573,024
7,224,275,822
838,181,064
2,296,707,262
1,468,439,129
764,32», 811
2, 669,226,436

42.8
8.0
23.3
2.7
7.4
4.7
2.5
8.6

14, 746,349,184
30,458,272

100.0

6,814,715,191
8,291, 785

100.0

1,269,914, 235
2,693, 715

100.0

8,217, 359,910
17,644, 738

100.0

31,048,338,520
59,088,510

100.0

14, 776,807,456

6,823,006,976

1,272, 607,950

8,235,004,648

31,107,427^030

to
©

national, wealth

208

anj>

income

Personal returns covering the United States and Alaska but not
including Hawaii for 1923 showed marked increases over the preceding year both in number of returns and total income reported.
For 1922, 6*775,884 returns covered a total of $24,830,562,257, and
for 1923, 7,685s,900 returns reported $31,048,338,520, representing an
increase of 13.2 per cent in number of returns and 24.8 per cent in
total income reported. There were, however, no striking changes in
the proportions of the total income reported bv different territorial
divisions. In both years about 43 per cent of the total was reported
from the New England and Middle Atlantic section. The East
North Central States, also an industrial region, reported 22 per cent
of the income for 1922 and 23 per cent of the total for 1923. These
two sections together furnished about 62 per cent of the returns for
both years. These returns covered 64 per cent of the total income
for 1922 and 66 per cent for 1923. For each of the remaining divisions the proportions of the total ranged in both years from 2.5 per
cent for the Mountain States to about 8.5 per cent for the Pacific
States. Thus it will be noted that the bulk of the total personal
income reported for taxation arises in the northern and eastern industrial and commercial areas. The percentages of the total income
for the various territorial divisions that were derived from specified
sources are very similar to those for total income, and therefore require no special discussion.
The following table shows the average total income per return for
each of the territorial divisions and the amount and percentages of
the total that were derived from each of the four specified groups of
sources for the years 1922 and 1923.
TABLE 1 1 9 . — A v e r a g e income

'per return according to specified
divisions,
1922-28

Wages and
salaries

Business and
partnership
profits

Real estate
profits, capital
net gain from
sale ofassets,
etc., stocks,
etc.

sources,

Rents,
royalties,
interest, and
dividends

by

territorial

Total income

Per
Per
Per
Per
Amount cent Amount cent Amount cent Amount cent Amount
1922
New England and Middle Atlantic
South Atlantic
East North Central
East South Central
West North Central
West South Central
Mountain
Pacific
Total
1923
New England and Middle Atlantic
South Atlantic
East North Central
East South Central
West North Central
West South Central
Mountain
Pacific
Total




$2,119
2,055
2,023
2,019
1,847
1,831
1,790
1,890
2,017

52.5
57.8
57.8
59.5
57.2
51.2
63.0
54.6
55.0

2,092 47.1
1,973 48.2
1,908 49.2
1,794 48.6
1,630 46.8
1,696 43.2
1,&23 5o:$
1,689 45.7
1,919 47.5

16.6
583 16.4
564 16.1
660 19.5
600 18.6
804 22.5
476 16.8
641 18.6
629 17.2

897
909
850
864
829
1,083
805
902

20.2
22.2
21.9
23.4
23.8
27.6
25.2
24.4
22.0

$183
120
133.
86
67
160
88
155
146

4.5
3.4
3.8
2.5
2.1
4.5
3.1
4.5
4.0

187
168
159
125
91
149
80
218

4.2
4.1
4.1
3.4
2.6
3.8
2.5
5.9

$1,064 26.4
797 22.4
781 22.3
626 18.5
712 22.1
778 21.8
485 17.1
772 22.3
872 23.8

1,266
1,044
962
908
938
997
687
887
1,066

28.5
25.5
24.8
24.6
26.8
25.4
21.5
24.0

209n a t i o n a l ,w e a l t h anj> i n c o m e

The average total income per return for 1922 amounted to $3,664,
and for 1923, $4,040, an increase of 10 per cent. For 1922 the range
for different territorial divisions was from $2,839 per return for the
Mountain States to $4,034 for the New England and Middle Atlantic
region. In 1923 the range was from $3,195 for the Mountain to
$4,442 for the New England and Middle Atlantic States. The average per return increased for all regions in 1923 by percentages varying from 6.9 per cent for the Pacific States to 15 per cent for the South
Atlantic States.
Of the total income per return wages and salaries, which constitute
the largest single source of personal incomes, represented approximately 10 per cent less for every division in 1923 than in 1922. In
1922 the proportion of the total derived from this source ranged from
51.2 per cent in the West South Central States to 63 in the Mountain
States. In 1923 the proportion ranged from 43.2 per cent for the
West South Central States to 50.8 per cent in the Mountain States.
Rents, royalties, interest, and dividends represented the next
largest proportion of the total income in most sections ranging in 1922
from 17.1 per cent in the Mountain States to 26.4 per cent in the New
England and Middle Atlantic States, and in 1923 from 21.5 per cent
to 28.5 per cent, the divisions having the minimum and maximum
proportions being the same as in the preceding year.
Business and partnership profits, representing in most divisions a
slightly smaller proportion of the total income, ranged in 1922 from
16.1 per cent for the East North Central region to 22.5 per cent in
the West South Central States, and in 1923 from 20.2 per cent for
the New England and Middle Atlantic States to 27.6 per cent for the
West South Central States.
Profits from sales of real estate, stocks, and bonds, etc., represented in 1923 from 2.6 per cent for the West North Central States
to 5.9 per cent for the Pacific States.
There are marked decreases in the amounts of wages and salaries
reported per return in 1923 as compared with 1922 in every region.
Business and partnership profits and rents, royalties, interest, and
dividends, however, showed pronounced increases per return in all
divisions, and profits from sales of real estate, stocks, bonds, etc.,
showed smaller gains in amount in all but two divisions. The increases in average per return in all regions for 1923, therefore, are
due to increased income from business and property more than
counterbalancing decreases in wages and salaries.
Although wages and salaries represented the highest percentage
of total personal income for the Mountain States in both years, in
actual amount per return the New England and Middle Atlantic
region exceeded all others in average wages and salaries in both years.
For the Mountain States wages and salaries were less in amount than
in any other region, amounting to $1,790 in 1922 and $1,623 in 1923.
This corresponds with the fact that this division shows a very low
average total income per return, only $2,839 in 1922 and $3,195 in
1923, as against $3,664 in 1922 and $4,040 in 1923 for the country
as a whole.
The amount per return received from rents, royalties, interest,
and dividends was greatest in the New England and Middle Atlantic
region in both years, amounting to $1,064 in 1922 and $1,266 in 1923.
Other divisions showing high averages per return in both years were




210

n a t i o n a l , w e a l t h anj> i n c o m e

the South Atlantic States with $797 per return in 1922 and $1,044 in
1923, the $ast North Central States with $781 in 1922 and $962 in
1923, and the West South Central States with $778 in 1922 and $997
in 1923. The comparatively large amounts derived from these
sources in the New England and Middle Atlantic section are partly
the result of the large proportion of people who rent either living or
business quarters in this region of large city population^ but also due
in part to interest and dividends from large accumulations of capital.
The same is true of the east north central division. In proportion to
the total income the New England and Middle Atlantic section
derived 26.4 per cent of its personal income in 1922 and 28.5 per cent
in 1923 from rents, royalties, interest, dividends, etc., while only
17.1 per cent in 1922 and 21.5 per cent in 1923 were derived from
these sources in the Mountain States.
Business and partnership profits, the third largest source of income
for the country as a whole, furnished a smaller proportion of personal
incomes in the eastern part of the country than in other sections in
both years. The fact that only a comparatively small proportion
of the total incomes of individuals in the industrial sections is derived
from this source is due primarily to the importance of wages and
salaries as a source of income but also to the fact that a large proportion of business enterprises in these sections is incorporated and
their profits appear in personal income returns as dividends rather
than as profits derived directly from business.
Personal incomes reported for taxation purposes are largest and most
numerous in the manufacturing and business section east of the Mississippi and north of the Ohio and Potomac Rivers, and less both in
number and amount in the agricultural, grazing, mining, and lumbering
sections of the South, the Middle West, and the West. Wages and
salaries in all parts of the country account for more than half of the
total income of individuals. They are largest in amount in the
highly industrialized northeastern part of the country and decrease
westward to the Mountain States, but are larger in amount on the
Pacific coast than in the adjoining mountain section. Rents, royalties, interest, dividends, etc., representing the second largest source
of income, were largest in amount per return in the New England and
Middle Atlantic States, and least m the Mountain States. Business
and partnership profits were highest per return in the West South Central States, where a higher percentage of the businesses probably is
unincorporated, and least in the Mountain States. It is quite noticeable that, although the amounts per return from specified sources vary
considerably from one territorial division to another, the proportions
derived from each of the sources mentioned generally do not vary
widely as between divisions, nor do they, except in a few instances,
deviate greatly from the percentages for the country as a whole.
The comparatively high average income reported for the New
England and Middle Atlantic States corresponded to a comparatively large average amount for wages and salaries and with an even
more marked advantage in income from rents, interest, and dividends.
Inhabitants of this region, as is well known, have large investments in
other parts of the country. The fact that the South Atlantic States
took the second rank in tne foregoing respects is also a matter of special interest.




national, w e a l t h

and

income

2 1 1

Section 5. Income of corporations.

The great bulk of business activity in the United States is carried
on by corporations. The commission estimates that the wealth
devoted to corporate business in 1922 was $102,000,000,000, or
nearly one-third of the total in continental United States.4 The
income of corporations, therefore, represents a vast source of wealth,
but the net profits inure to the benefit of a multitude of owners of
corporate securities. (See Ch. VII.) Reports of the United
States Bureau of Internal Revenue show that the amount of income
in the form of corporate dividends received by persons in the United
States averaged over two and one-half billion dollars per annum for
the 8-year period from 1916 to 1923, and that interest paid by corporations averaged over two and three-quarter billion dollars per
annum for the 7-year period from 1917 to 1923.5 The earnings of
corporations, however, were much higher than the amount of cash
dividends distributed to investors, as is indicated in the discussion
and tables which follow.
C O R P O R A T I O N S R E P O R T I N G P R O F I T O R LOSS.—While during the
progress of the World War and since its termination several of the
years have been prosperous ones for corporations in general, not all
corporations, even during years of comparatively great prosperity,
succeeded in earning additional wealth for their stockholders. The
number of corporations reporting net income and the number reporting deficits, with the proportion of each to the total, are shown in
the following table for each of the years 1*916 to 1923:
T A B L E 1 2 0 . — N u m b e r of corporations
reporting
deficit, by years, 1916

net income
to 1923

and

Number of corporations
Y ears
Total

1916
1917
1918
1919
1920
1921
1922
1923

341,253
351,426
317,579
320,198
345,595
356,397
382, 883
398,933

Reporting
net income

Reporting
deficit

206,984
232,079
202,061
209,634
203,233
171,239
212,535
233,339

134,269
119,347
115,518
110,564
142,362
185,158
170,348
165, 594

number

reporting

Proportion Proportion
reporting
reporting
net income
deficit

Per cent
60.7
66 0
63.6
65.5
58.8
48.0
55.5
58.5

Per cent
39.3
34.0
36.4
34.5
41.2
52.0
44.5
41.5

As shown by the above table, of the total number of corporations
the proportion that reported deficits was not less than one-third
for any year from 1916 to 1923. Even for 1917, the peak year for high
net income, 34 per cent of all corporations reported deficits; and for
1921, a year of very low profits, the proportion reporting deficits
amountea to 52 per cent of the total, while for the other years the
proportions ranged from 34.5 per cent to 44.5 per cent.
< See p. 215.
' Reports on Statistics of Income, United States Bureau of Internal Revenue, show dividends reported
by individuals reporting to that bureau, as follows: 1916, $2,136,468,625; 1917, $2,848,862,499; 1918, $2,468,749,244; 1919, $2,453,774,825; 1920, $2,735,845,795; 1921, $2,476,952,399; 1922, $2,664,219,081; 1923, $3,126,503,482.
The reports on Statistics of Income also show interest paid by corporations as follows: I9i7, $2,150,242,894;
1918, $2,632,840,868; 1919, $2,207,694,543; 1920, $2,835,269,934; 1921, $3,141,311,388; 1922, $3,069,112,305; 1923,
$3,277,625,971.




212

national,

AGGREGATE

wealth

AMOUNTS

OF

NET

anj>

income

INCOME AND OF

DEFICITS.—The

aggregate amounts of net income and the aggregate amounts of
deficit of corporations, together with the ratios of deficits to net
income, are shown in the following table for each of the years 1916
to 1923:
TABLE 1 2 1 . — A g g r e g a t e net income and aggregate deficit of corporations,
ratios of deficit to net income, by years, 1916 to 1928
[Amounts in millions]

together

with

Combined net income
Net •
income 1

Years

1916
1917.
i
1918.
»
1919.
>
1920.
1921
»
1922
1923

.

$8,766
10,731
8,362
9,411
7,903
4,336
6,964
8,322

Deficit i

Statutory- Tax-exempt
net income interest and
dividends

$657
630
690
995
2,029
3,878
2,194
2,014

$8,109
10,101
7,672
8,416
5,874
458
4,770
6,308

Total

$8,109
10,101
8,238
8,970
6,625
1,156
5,967
7,634

$566
554
751
698
1,197
1,326

1 For years 1918 to 1922, inclusive, thefiguresshown are exclusive of items representing tax-exempt interest
and dividends received, the totals of which are shown in next to the last column. All figures are before
the deduction of Federal taxes.

The aggregate net income of corporations in 1917, according to
the above table, amounted to over $10,000,000,000. This was the
peak year for high aggregate corporate net income; both in 1916 and
1918 it amounted to over $8,000,000,000, and in 1919 it amounted
to nearly $9,000,000,000, but for no other year did corporate net
incomes aggregate these high levels. For the years 1909 to 1915,
inclusive, the aggregate net incomes of corporations, without deduction for the deficit of corporations that lost money, ranged from 3.5
billion dollars up to 5.3 billions; 6 while for 1921, as shown by the
above table, the aggregate net income after deduction of deficits,
amounted to only about 1.1 billion dollars.
The ratios of aggregate deficit of corporations reporting deficits
to aggregate net income of corporations reporting net income ranged
from 5.9 per cent to J 0.6 per cent for the years of highest net incomes,
viz, 1916 to 1919. For 1920 and 1922 the ratios amounted to 25.7
per cent and 31.5 per cent, respectively, while for 1921, the year of
extremely low aggregate net income, the ratio was over 89 per cent.
RATE

OF

RETURN

ON

THE

STOCKHOLDERS'

INVESTMENT

BY

IN-

DUSTRIES.—The total net income of corporations in 1922, before
deduction of Federal taxes, as shown by the preceding table, amounted
to nearly $6,000,000,000. When applied to the fair value 7 of
outstanding capital stock of all corporations reported by the Bureau
of Internal Revenue a return on investment of 7.9 per cent is shown.
This income includes the net income accruing to the benefit of stockholders; it differs from net profits earned in the corporate business,
referred to on a succeeding page, in that interest paid was deducted
while income from outside investments was added as part of net
income. The detailed figures for income covering the year 1922 are
United States Bureau of Internal Revenue Statistics of Income, 1916, p. 15.
' For definition of term "fair value" see footnote numbered 1 to Table 122, p. 213.

6




231n a t i o n a l ,w e a l t h

anj>

income

the latest reported by the Bureau of Internal Revenue, while data
on fair value of capital stock were not reported for prior years.
The following table shows the net income of corporations, including those reporting deficits, and the rate of return on fair value of
outstanding capital stock as reported by the Bureau of Internal
Revenue, for groups of related industries and for certain specific
industries in 1922.
TABLE 1 2 2 . — N e t income
standing capital stock,
industries,
1922

of corporations
and rate of return on "fair value"
for groups of related industries
and for certain

of outspecific

[Amounts in thousands]

Industries

Agriculture and related industries
Mining and quarrying
Manufacturing:
Food products, beverages, and tobacco.
Textiles and textile products
Leather and leather products.
Rubber and rubber goods
Lumber and wood products
Paper, pulp, and products
Printing and publishing
_.
Chemicals and allied substances 3
Stone, clay, and glass products
Metal and metal products
All other manufacturing
Total manufacturing
Construction
Transportation and other public utilities. _.
Trade
Service
Finance
All other
Grand total

"Fair value'
of outstand- Net income2
ing capital
stock i

$1,299,077
7,473,746

$11,247
101,144

3,842,402
1, 632,616
1,072,395
480, 762
951,079
885,427
873,532
3, 787, 519
897,196
10, 262, 546
3, 226, 936

332,551
476,330
66,442
18,579
167,494
65, 549
170,952
488,362
113,057
693,326
325,052

27, 912,410

2,917, <

832, 291
12,109,967
8, 640, 637
1, 253,414
14,981,265
3,280,890

46,440
1,063,410
736,025
98,462
961,112
31, 665

75,783,697

5,967,199

1 This "fair value," as defined by the Bureau of Internal Revenue, is "the value of the entire outstanding
stock of the corporation considered as a going concern, giving due consideration to the present worth of
the assets, tangible and intangible, the earning capacity, dividends disbursed, the market value of shares,
and other factors that affect values generally." (Statistics of Income, 1922, pp. 37-43.)
2 Comprises reported deficits. Figures include income from outside investments; interest paid deducted.
Compiled from "Statistics of Income," 1922, pp. 19-23.
• Composed largely of refiners of petroleum.

The rate of return in 1922 on the aggregate "fair value" of outstanding capital stock of corporations engaged in the different
industrial groups ranged from slightly less than 1 per cent for corporations engaged in agriculture and related industries to 10.5 per cent for
the group of corporations engaged in manufacture. An amount equal
to less than 1.5 per cent of the fair value of outstanding capital stock is
shown as the net income of mining and quarrying corporations; construction corporations with 5.6 per cent and finance corporations
(i. e., banks, insurance and trust companies, stocks and bonds,
loans, realty holding, etc.), with 6.4 per cent also had aggregate net
incomes below the average of 7.9 per cent shown for all corporations
combined.
For the specific manufacturing industries covered by the table
the highest rate of return on fair value of outstanding capital stock,
amounting to 29.2 per cent, is shown for textiles and textile products,




214

national, wealth

anj>

income

followed by printing and publishing with 19.6 per cent, and lumber
and wood products with 17.6 per cent.
The rates of return on "fair value" of outstanding stock, as shown
in the above table, exceeded the rates of return on the investment
devoted to the corporate business, as shown in Table 123, following, in
the case of a majority of the industrial groups and specific industries
covered. The margin of difference was especially great for textile
manufacture. It was also quite large for manufacture of lumber and
wood products, construction, and for other industries. The differences in rates are due, of course, to the-differences in the amounts of
investment applying in each case, and also to the differences in the
corresponding incomes derived from the respective investments.
With respect to the "fair values" of outstanding stock estimated
by the Bureau of Internal Revenue, shown in the above table, it
snould be remembered that these figures do not represent merely
par value of stock plus surolus but include adjustments for earning capacity, dividends disbursed, market value of shares, present
worth of assets, etc. (See footnote 1 to Table 122.)
R A T E OF RETURN ON TOTAL INVESTMENT IN CORPORATE BUSINESS

BY INDUSTRIES.—The amount of net profit earned by the total wealth
devoted to corporate business in 1922, before deduction of Federal
taxes, amounted to over 6.5 billion dollars, or 6.4 per cent on the
investment. In arriving at net profits derived from the total investment devoted to the corporate business income from sources outside
of the corporate business was excluded; interest paid, however, was
not deducted but left in as profit, since the investment in the corporate
business represents borrowed funds as well as the stockholder
investment.
The following table shows net profits before deduction of Federal
taxes earned in corporate business in 1922 (including corporations
reporting deficits), together with rate of profit on estimated investment, for groups of related industries and for certain specific manufacturing industries:




215n a t i o n a l ,w e a l t h

anj>

income

TABLE 1 2 3 . — N e t profits from investment in corporate business and rates of return
on investment, for groups of related industries and for certain specific
industries,
[Amounts in thousands]
Rate of
Investment Net profits return
from
in business 1 business 2
on investment

Industries

Per cent
0.9

937,248
074,877

2, 853, 590

8.5

31,294
1,349,703
692,308
48,904
1,580,996
19,620

1.1
4.9
6.0
3.4
13.3
1.1

102,399,065

Grand total

6.7
11.1
8.3
5.8
7.1
5.7
21.6
13.4
10.0
6.8

2,874,864
27,329,257
11,465,327
1,459,120
11,891,471
1,715,960

Construction
Transportation and other public utilities. .
Trade
Service
Finance
All other

338,411
490,331
72,985
35,350
178,234
69,146
153,689
429,238
117,673
675,842
292,691

33,650,941

Total manufacturing

$18,160

043,821
398,375
877, 624
609,666
503,873
210,461
713,037
212,281
177,735
974,608
929,460

Agriculture and related industries
Mining and quarrying
Manufacturing:
Food products, beverages, and tobacco
Textiles and textile products
Leather and leather products
Rubber and rubber goods
Lumber and wood products
Paper, pulp and products..
Printing and publishing
Chemicals and allied substances
Stone, clay, and glass products
Metal and metal products
All other manufacturing

6,589, 565

6.4

3

5,010

<)
«

7.4

1 Estimated by the Federal Trade Commission. The investment shown above includes all the investment in plant and equipment, inventories, and other current assets, net, which are used in the immediate
business, but excludes all investment outside the immediate business, such as stocks and bonds of other
companies. Government securities, etc.
2 Compiled from the reports on "Statistics of Income " of the Bureau of Internal Revenue. Income from
outside investments excluded; no deductions for interest paid. Comprises deficits.
3 Minus.
* Less than one-tenth of 1 per cent loss.

103288—S. Doc. 126, 69-1




16

216

national, wealth

anj>

income

The investment figures shown in the above table were arrived at by
the commission b y adding to the value of land, buildings, and equipment as compiled by the Bureau of Internal Revenue from corporation returns for taxation purposes estimates of the value of inventories,
cash, and other movables used in the corporate business (except good
will, patents, etc.). For 54,862 corporations, owning nearly one-fifth
of the total fixed assets of all corporations, the Bureau of Internal
Revenue furnished the commission data showing separately and by
industries the value of inventories and the value of land, buildings,
and equipment. The ratios between these two Classes of investment
thus indicated for the different industries, were applied to the total
values of land, buildings, and equipment owned by all colorations
within the various classes reported, to arrive at estimated inventory
values for all corporations comprising each class. The total amount
of cash and other movables included in the estimates was taken at 8
per cent of the combined value of fixed assets and inventories. This
estimate of 8 per cent was based on data secured for 1,660 corporations
of various sizes and activities, the aggregate value of whose net current assets (exclusive of inventories) at the end of 1922 equaled about
8 per cent of the aggregate value of their plants and inventories combined.
The rate of net profit on investment in 1922 earned by wealth devoted exclusively to corporate business, regardless of whether contributed by stockholders or borrowed, as shown by the above table for
groups of related industries, ranged from not quite 1 per cent for agriculture and related industries to 13.3 per cent lor finance corporations.
For the group of corporations engaged in mining and quarrying a net
loss of less than one-tenth of 1 per cent of investment is shown.
The percentage of net profit shown for the manufacturing industry
as a whole, amounting to 8.5 per cent, was well above the average of
6.4 per cent shown for all corporations combined. For specific
manufacturing industries, corporations engaged in printing and publishing earned over 21.5 per cent as the net return on investment in
the business; while for corporations engaged in the manufacture of
chemicals and allied substances, most of which were composed of
petroleum refiners, the return on investment amounted to nearly 13.5
per cent; for corporations engaged in the manufacture of textiles
and textile products, over 11 per cent; and for corporations engaged
in the manufacture of stone, clay, and glass products, 10 per cent.
GROSS INCOME AND N E T PROFITS BY I N D U S T R I E S . — T h e gross
income of corporations from business operations in 1922 amounted to
about $126,000,000,000, according to the estimate of the commission,
based for the most part on data reported by the Bureau of Internal
Revenue for that year. Such data as were used by the commission
in estimating gross income for 1922 were not available for any other
year. As shown in Table 123 (p. 215), the net profit of corporations
from business operations in 1922, before deduction of Federal taxes,
amounted to about 6.5 billion dollars, or 5.2 per cent of the estimated
gross income of $126,000,000,000.
The gross income from business operations as estimated by the
commission, together with the net profits earned in the business and
the ratio of net operating profit to gross operating income, are shown
in the following table for groups of related industries and for certain
specific industries covering the year 1922.




217n a t i o n a l ,w e a l t h anj> i n c o m e
TABLE 1 2 4 . — G r o s s and net income from operations, and ratio of net income
income, for groups of related industries and for certain specific industries,

to gross
1922

[Amounts in thousands]

Industries

Agriculture and related industries.
Mining and quarrying
Manufacturing:
Food products, beverages, and tobacco.
Textiles and textile products
Leather and leather products
Rubber and rubber goods
Lumber and wood products
Paper, pulp, and products
Printing and publishing
Chemicals and allied substances
Stone, clay, and glass products _ _
Metal and metal products
All other manufacturing.
Total manufacturing.
Construction
Transportation and other public utilities:
Steam railroads
All other
Total transportation and other public utilities
Trade.
Service
Finance
All other.
Grand total

Gross income Net profit
from opera- from operations 1
tions 2
$785,270
4,540,288

$18,160

8,959,052
6,838,303
1, 472,468
930,141
2,411.462
1,150, 680
2,272,336
6,112,492
1,162, 692
10,196, 616
4, 266, 936

338,411
490, 331
72,985
35,350
178,234
69,146
153,689
429,238
117,673
675, 842
292, 691

45, 773,178

2,853, 590

3 5,010

3, 264,153

31,294

5, 733,181
9, 333, 993

843, 703
506,000

15,067,174

1,349, 703

29, 735,214
3, 751,040
22, 312, 750
615, 634

692,308
48,904
1, 580,996
19,620

125, 844, 701

6, 589, 565

1 Thefiguresfor gross income from operations shown for all industries, with the exception of transportation
and other public utilities, are estimates of the Federal Trade Commission based on partial information given
for the respective industries by the Internal Revenue Bureau in "Statistics of Income" for 1922, pp. 19-25.
In that report the gross sales and gross profits from sales are stated for those companies reporting the information; also the "Profit from operations other than amounts reported as gross sales" for those companies not
reporting gross sales. In estimating the amount of gross sales for companies that failed to report the information, it was assumed by the commission that the same ratios between gross profit from sales and
gross sales as shown for companies that reported both items was applicable to the groups of companies in the
different industries that reported only gross profit from sales, and on these bases estimated totals were
arrived at for all companies in the several groups. With respect to transportation and other public utilities,
the proportion of the entire industry that failed to report gross sales was so great that a different method for
estimating gross sales was deemed advisable. Accordingly, the gross income for steam railroads was
ascertained from a report of the Interstate Commerce Commission, and from the same and other sources
data were obtained upon which to base estimates of gross sales for electric railroads, water transportation
companies, telephone, telegraph and radio companies, and express companies and the Pullman Co. For
local transportation, cartage and storage companies, gas companies, waterworks, and all other, an arbitrary estimate of about five and one-half billion dollars was added to complete the total for the industry.
2 The figures for net profit from operations, except for steam railroads, were compiled by the Federal
Trade Commission from data reported by the Internal Revenue Bureau in "Statistics of Income" for 1922,
pp. 19-22. The net income shown for steam railroads is that reported by the Interstate Commerce Commission; and the figure shown for "All other" transportation and public utility companies was obtained by
deduction.
3 Minus.

The greatest amount of gross income from business operations,
aggregating an estimated total of nearly 46 billion dollars, is shown in
the above table for the group of corporations engaged in mani^facture, followed by trading corporations with nearly 30 billions, finance
corporations with over 22 billions, and transportation and other
public utility corporations with 15 billions. For the other groups of
related industries the estimated totals ranged from $785,000,000 for
corporations engaged in agriculture and related industries to 4 %
billion dollars for mining and quarrying corporations. Of the specific
manufacturing industries covered by the table, the greatest amount
of gross income, amounting to an estimated $10,000,000,000, is
shown for manufacturers of metal and metal products, followed by




national, wealth

218

anj>

income

manufacturers of food products, beverages and tobacco with nearly
$9,000,000,000, manufacturers of textiles and textile products with
close to $7,000,000,000, and manufacturers of chemicals and allied
substances, the most important portion of which group is composed
of refiners of petroleum, with over $6,000,000,000.
For the group of corporations engaged in mining and quarrying
an aggregate net loss, amounting to an estimated one-tenth of 1 per
cent of gross income from operations is shown, but for the other
groups of industries the estimated ratios of net to gross income from
operations ranged from 1 per cent for the construction group to 9
per cent for the transportation and other public utilities group. For
steam railroads the ratio amounted to nearly 15 per cent, and for
manufacturers of stone, clay, and glass products it amounted to an
estimated 10 per cent.
T E R R I T O R I A L D I V I S I O N OF C O R P O R A T E N E T INCOME.—As shown
in Table 121, page 212, the aggregate annual net income of corporations after deduction of deficits, but before deduction of Federal
taxes, ranged from 1.1 billion dollars to 10.1 billion dollars during
the eight-year period 1916-1923. 1916, 1917, 1918, and 1919 were
all banner years for high aggregate corporate net income. The aggregate for 1917, the peak year in the history of American corporations
for high net income, was nearly one-fourth greater than that for 1916
and about one-eighth greater than the amounts shown for 1918 and
1919. At the other extreme the aggregate net income for 1921 was
only about one-ninth of that shown for 1917.
In the following table the percentage distribution of aggregate
corporate net income, after deduction of deficits but before deduction
of Federal taxes,, is shown by territorial divisions for each of the years
1916 to 1923, inclusive.
TABLE 1 2 5 . — P e r c e n t a g e distribution
of the aggregate net income
reported in income-tax
returns, by territorial divisions,

of corporations
1916-1923

as

Per cent
l erritoriai envisions
1916
New England States
Middle Atlantic States..
East North Central States
West North Central States
South Atlantic States
East South Central States
West South Central States
Mountain States
Pacific States»
Total

1917

1918

1919

1920

1921

1922

1923

9.1
42.3
23.7
7.3
6.7
1.9
3.5
2.2
3.3

11.2
36.9
25.1
7.8
7.0
2.1
3.7
2.1
4.1

10.9
39.8
24.9
7.1
7.2
2.1
2.7
1.6
3.7

10.8
38.3
25.2
7.9
7.1
2.1
2.3
1.3
5.0

5.6
41.8
26.2
7.4
7.9
2.3
2.7
.8
5.3

6.6
101.7
i 1.7
18.8
18.5
*2.8
1 21.4
1 32. 7
13.0

8.5
39.9
27.4
7.4
7.4
2.7
.6
.6
5.5

8.2
41.3
26.9
5.9
7.4
2.4
1.1
.8
6.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

» Net deficit.
* Alaska and Hawaii also included.

During the eight-year period from 1916 to 1923 from 36.1 to 101.3
per cent of the aggregate net income of corporations, after deduction
of deficits, was credited to the three Middle Atlantic States—New
York, New Jersey, and Pennsylvania. The proportion was in excess
of 100 per cent in 1921, due to the fact that net deficits were reported
for several of the territorial divisions, with the result that the aggregate corporate net income reported for the above-mentioned States
was greater than that reported for the country as a whole.




219n a t i o n a l ,w e a l t h anj> i n c o m e

The next most important territorial division covered by the above
table is the East North Central group of States, composed of Ohio,
Indiana, Illinois, Michigan, and Wisconsin. Excepting the year 1921,
the percentages of aggregate corporate net income reported for this
region ranged from 23.7 to 27.4. Third in importance was the New
England group of States, with percentages ranging from 5.6 to 11.2
for the eight-year period. Thus, in years of corporate prosperity
about three-fourths of the aggregate corporate net income, after
deduction of deficits, was credited to the territory in the northeastern corner of the country embraced by the three territorial
divisions above named.
As shown by the table, the territorial division represented by the
Mountain States, viz, Montana, Idaho, Wyoming, Colorado, New
Mexico, Arizona, Utah, and Nevada, was credited with less than 1
per cent of corporate net income in 1923, 1922, and in 1920, although
for the earlier years the proportions ranged from 1.3 to 2.2 per cent.
Section 6. Importance of income-tax data.

While most of the information given in this chapter has been
compiled by the commission from different statements appearing in
various parts of the Statistics of Income, published by the Treasury
Department, certain data, as noted in the text, were especially prepared by the courtesy of that department for the use of this, commission.
In this connection it seems pertinent to point out what extremely
important information is available in these reports and to suggest
the desirability of a much more liberal appropriation for such statistical work, in order that these valuable data may be more completely
analyzed and published. Certain important statistics, it appears,
that were formerly published are not now compiled, on account of
lack of funds for the work.
The data that this commission has particularly in mind are such
as are presented in the last section of this chapter, concerning the
results of business operations. The figures regarding corporations
which have been first compiled and presented in an instructive form
in the present report could be greatly amplified and given in more
detail by the Treasury Department Such statistics could be made
to embrace data regarding nonincorporated businesses also. As to
such details, a more specific analysis of trade, both wholesale and
retail by the different branches of business, would offer a large and
valuable field for study. The data could also be analyzed and
presented by the geographical grand divisions of the country, but a
compilation by States is probably not practicable.
Such information, if compiled and issued as promptly as available,
would have great value as a guide to the initiation and management
of business undertakings and as a guide to individual investors, both
large and small; such information would save the country and its
citizens many millions of unnecessary losses annually through imrovident investment in branches of business which are unprofitable
ecause overdeveloped. Such illjudged investment causes great
losses not only to investors but also to labor through increased
irregularity of employment and to other lines of business through
bad debts. The aggregate loss to the whole community amounts to
many millions of dollars and could be materially reduced by a better
knowledge of the general facts regarding business conditions.

E




220

national, wealth

anj>

income

The revenue act of 1924 did not require corporations to report the
amotint of capital invested in the business; It is possible, however,
by analysis 6f the balance sheet in the tax return to show the investment of the company, or the entire investment in the business.
Such information is frequently desired by Congress and would be of
great value to the business world*




CHAPTER

X I

TOTAL NATIONAL INCOME
Section 1. The estimated total income of the United States.

In the succeeding chapters of this part estimates are made of the
total value created by each of the principal groups of economic or
industrial activities in the United States and of the portions thereof,
before deducting Federal, State, and local taxes, that went to the
personnel of the industries as remuneration for their services and to
those who furnished the capital and skill with which to initiate and
carry on these enterprises. The purpose of this chapter i3 to present
the general results of these estimates which show total income of the
people of the United States.
The estimates of the total value created in the United States and
the total income reported in Federal personal income-tax returns for
the period 1918 to 1923 are as follows:
TABLE 1 2 6 . — E s t i m a t e s of the total annual income of the people of the United
and the income reported in personal income-tax returns with index numbers
upon 1918 as 100 for the six-year period,
1918-1923

Estimated total income

Income reported in pergonal income-tax returns

Year
Amount
19181919
1920192 1
1922
1923

—
—
Average

-

Index
rfumber

Amount

Index
number

States
based

Per cent
of total

$60,223,000,000
67,391,000,000
74,264,000,000
52,607,000,000
61, 738,000,000
69,833,000,000

100
112
123
f 87
103
116

$17,746,000,000
22,438,000,000
26,690,000,000
23,329,000,000
24,872,000,000
31,107,000,000

100
£26
150
131
140
175

30
33
36
44
40
45

64,343,000,000

107

24,364,000,000

137

38

It is interesting to compare the general movement of this estimated total income for the six-year period with the income reported
to the Treasury Department.
The trends of the two sets of figures are similar hi the sense that
they agree as to increases or decreases in each year. The increases for
the income shown in the tax returns were much greater in 1919 and
1920 than for the general estimates, while the fall in 1921 was not so
pronounced. Though both increased in the two following years, the
increases were not similar. For total amounts of income 1923 showed
the maximum for the tax returns and 1920 for the general estimate.
The estimated total annual income of the people of the United
States during the six-year period, 1918-1923, ranged from about $53,000,000,000 in 1921, to almost $75,000,000,000 in 1920. Although
there was a rapid recovery from the depression of 1921, the total for
1923, the second largest for the period, was about $5,000,000,000 less
than the 1920 total. The six-year average was over $64,000,000,000.




221

222

national,

wealth

anj>

income

The income reported to the Federal Government in personal income-tax returns increased from less than $18,000,000,000 in 1918
to over $31,000,000,000 in 1923, a gain of 75 per cent as contrasted
with a 16 per cent increase for the total income.
The decrease in the total income resulting from the depression of
1921 was much grater than for the income reported for Federal
taxation. From 1920 to 1921 the total income fell off $22,000,000,000
or about 3Gtper cent, ag compared with a decrease of $3^300,000,000,
or about 18 per cent for the income reported in personal income-tax
returns.
,
,
The proportion of the total national income reported in Federal
income-tax returns increased from 29 per cent in 1918 to 45 per cent
in 1923.
COMPARISON

WITH

ESTIMATES

OF

NATIONAL

BUREAU

OF

ECO-

estimates of the income of thepeople of
the United States were made by the National Bureau of Economic
Research for the years 1909 to 1918. It used two methods of estimating. The estimate for 1^918 1 made on the basis of personal
incomes received, was $62,000,000,000. The estimate that was made
for 1918 by a method practically the same as the one used in this
inquiry was 60.4 billions.2 Both of these are nearly the same as the
commission's estimates of 60,2 billions. But there were some differences, however, in the items considered as national income.
In making the estimate of 60.4 billions of dollars as the value
product of all industry in 1918 the National Bureau of Economic
Research was practically without data either on mercantile business
or on the professional and personal-service businesses. Thus the
National Bureau estimate for 1918 includes $12,442,000,000 for the
value product of these and possibly other 61 unclassified industries."
The present estimate includes slightly under 14 billions of dollar for
the three specified groups. The latter estimate, however, includes
$754,000,000 of taxes, which the former does not include, their
place being taken by an estimated value product of government.
In making its estimates of the value product of the manufacturing
industry the National Bureau did not nave certain data collected
by the commission through reports from hundreds of manufacturing
companies regarding factory repairs and depreciation and the cost
of stationery, supplies, light, etc., used in selling and general administrative divisions, which constitute costs paid away to other industries.
These made differences of from $2,000,000,000 to $4,000,000,000 in
the manufacturing estimates in the census years.
The National Bureau's estimate also includes an estimate of
$1,238,000,000 as the rental value of urban dwellings that are occupied
NOMIC RESEARCH.—Similar

* National Bureau of Economic Research, Income of the United States, New York, 1922, p. 331.
2 For convenience ih reference the total estimates by years, according to this method were as follows:
Year

1909
1910
1911...,.
1912
t.
1913

Year

Estimate
Millions
$28, 775
31,766
31,188
33,554
35,580

1914
1915
1916
1917

Estimate
Millions
33,936
36,109
45,418
53,860

Year

1918
1919...
1920
1921

Estimate
Millions
60,36667,254
74,158
62; 73ft

The estimates for 1909 to 1918, inclusive, were published in the "Income in the United States"; those for
1919 to 1921 were published in a recent volume, "Income in the Various States."




national,

wealth

and

income

223

by their owners. The National Bureau also allowed interest on
the investment in stocks of consumption goods to the extent of
$1,271,000,000. No allowance for either item has been included in the
estimates presented by this inquiry. There is no particular objection to the former item. The allowance of interest, not as a share
* .1
i„ _ t
, i
_ . additional item of created value is,
e National Bureau were put on the
same basis as the estimate in the present inquiry, the difference
would not exceed, probably, 2.7 billions of dollars, or about 4.5 per
cent of the total. Such a degree of agreement tends to confirm the
general accuracy of both calculations.3
C H A N G E S I N T O T A L I N C O M E , 1 9 1 8 - 1 9 2 3 . — T h e total national income, as estimated for 1 9 2 3 , amounted to nearly $ 7 0 , 0 0 0 , 0 0 0 , 0 0 0 ,
showing an increase of about ten billions over the estimate for 1918.
The maximum estimate for the period, however, was nearly seventyfive billions in 1920, while the minimum, in 1921, was only fifty-three
billions. Thus there was a very rapid increase from sixty billions
in 1918 to seventy-five billions in 1920, followed by an abrupt decline
of over twenty-two billions in 1921, from which point the estimate
increased during the two succeeding years by about seventeen billions.
The increase in estimated income between 1918 and 1923, as shown
above, was about 16 per cent. This does not necessarily mean,
however, that the wants and needs of the people were more abundantly provided for in 1923 than at the beginning of the half decade.
The degree of provision for these things depends not only upon the
total money income but also upon the number of people whose needs
are to be supplied by means of it and upon the prevailing prices at
which the various commodities are available for purchase. Population increased during this period by about 6 per cent, but there were
great fluctuations in prices.
The year 1918 was a period of war and of production restricted
largely to war materials and so-called essential articles. To a considerable extent it was also a year of price fixing and wage-rate setting
by governmental authority. In 1919, however, industry returned
to the peace-time basis, and most of these restrictions were removed.
It was a year of rapidly rising prices and wage rates. The total
income of the people rose to over $ 6 7 , 0 0 0 , 0 0 0 , 0 0 0 , an increase of
nearly one-eighth in one year.
The upward movement in prices and wage rates did not culminate,
however, until near the end of 1919, or in many cases until early in
1920. Although demand and the volume of business slackened considerably during the first half of 1920, prices and wage rates were
fairly well sustained throughout the year. Indeed, in some industries the peak was not reached until the second half. In consequence,
3 For years subsequent to 1918, Benjamin M. Anderson, of the Chase National Bank of the city of New
York, made estimates for certain recent years by applying to a certain estimate of the National Bureau of
Economic Research for 1919 ($66,800,000,000), index numbers based on Bureau of Labor Statistics prices,
and on production and transportation statistics ("The Income of the American People and the Ratio
of Foreign to Domestic Trade, 1890-1924"). The following tabular statement gives Doctor Anderson's
estimates. (No estimates for 1920 and 1921.)

Anderson's estimates
1918.
1919.




>62, 500,000,000
$62,500,000,000
66,800,000,000

I 1922_
I 1923-

$49,800,000,00
57, 700,000, 0C0

224

national, wealth

anj>

income

although the volume of business was reduced and there was some
depression during the last six months of 1920, nevertheless the total
money value created by industry in that year rose to nearly $75,000,000,000.
The year 1921, however, was one of extraordinarily severe depression. The Department of Labor estimated that at one time during
the year 5,750,000 workers were out of employment. Not only that,
but a considerable portion of those who continued on the pay rolls
worked only two to four days a week. This ye&r was marked by a
severe reduction in prices especially for agricultural products, and
to a considerable extent by a reduction in wage rates. The estimated total income dropped from seventy-five billions in 1920 to
about $53,000,000,000 in 1921.
With the partial recovery of business in 1922, the estimated total
value created by industry in the United States rose to nearly $62,000,000,000, and it continued to grow with the further improvement
in business, so that in 1923 it amounted, according to this estimate,
to nearly seventy billions.
Section 2. Estimates equalized for changes in purchasing power..

As stated above the estimate of national income reckoned in
dollars does not always give a reliable indication of the changes in
national well-being; and this is true of the period 1918 -1923 here
under consideration. The changes in the general price level, whether
indicated by indexes of wholesale prices or of the cost of living to
workingmen's families, show a marked variation in the value of the
dollar.
It would be extremely difficult, however, to construct index numbers of prices that would properly measure the changes in general
purchasing power of the total incomes estimated above. Wholesale
prices indices will not serve because a very large portion of these
estimated incomes is spent at retail for commodities for personal and
household consumption, and retail prices do not closely parallel
wholesale prices in short periods of time. Index numbers of the
changes in the cost of living will not serve because a considerable portion of this total income is saved and spent in the purchase of equipment and additional plant that constitute industrial expansion.
Probably no one price index could be constructed that would adequately serve the purpose, and measurement of the comparative purchasing power of these incomes would involve the splitting up of the
total income into the parts spent for the various classes of purposes
and by various groups of individuals and. the application of appropriate indices to each part.
Were it practicable to divide up the total income and devise and
apply appropriate indices in ordinary times>, however, it is extremely
doubtful whether it would be humanly possible to obtain the data
necessary to construct index numbers of sufficient accuracy to be
useful in a period of such rapid and violent change as occurred between
1918 and the early part of 1920 and as occurred during 1920, 1921,
and 1922. The month to month changes were large, and it would
be practically impossible to determine the proportions in which the
spending of each portion of the year's income was distributed in time
through the year in which earned or how far the spending lagged over
into the next year. However, as such a computation will inevitably
be made in any case, it is perhaps better to show the result on the




225n a t i o n a l ,w e a l t h anj> i n c o m e

best basis available. This basis seems to be the cost-of-living index
of the Bureau of Labor Statistics. That index, based upon 1923 as
100, is as follows:
Index
191 8
191 9
1 9 20

102
110
122

Index
1921
1922
1923

104
98
100

Applying this index to the total estimated income, with 1923 as
the Dase year, the following results are obtained:
Original
estimate

Estimate of
equalized
purchasing
power

Billion dollars
60.2
67.4
74.8

Billion dollars
59.0
61.3
61.3

Year
*

1918
1919
1920

Estimate of
equalized
purchasing
power

Original
estimate

Year

Billion dollars Billion dollars
52.6
50.6
61.7
63.0
69.8
69.8

1921
1922
1923

The general effect of correcting the dollar estimates of income on
account of changes in purchasing power is to smooth out in large part
the extremely violent fluctuations of the original estimate due to sharp
changes in prices, and to this extent, no doubt, it is important and
necessary in considering real national income, even though it is admitted that a precise method of correction has not yet been developed
by statistical science. These revised estimates tend to show the
specious character of the extremely high incomes for 1919 and 1920
which were due to speculative activity and scarcity of commodities in
certain lines rather than to extraordinary prosperity. They also
evidence a large real decrease in the production of wealth in the
depression year 1921.
Section 3. Estimates of national income by industries and occupations.

The foregoing estimated total income in dollars is found by adding
together the several estimates for the various groups of economic and
industrial activity which are set forth by years in the following table :
T A B L E 1 2 7 . — E s t i m a t e d total value
in million
Kind of activity
Agriculture
Mining, manufacturing, and construction Transportation and communication.
Mercantile...
Professional and personal service
Banking and other.
Total

1

created by specified
kinds
dollars,
1918-1923
1918

1919

$14,296
23,525
5,379
5, 660
8,304
3, 059

$14,157
26,382
5,825
7,731
9,972
3,324

60, 223

67,391 j

of economic

activity

1920

1921

1922

$9,226
34,464
6,691
8,280
11,886
3, 717

$6,667
18,007
6,591
6,939
10,696
3,707

$9,413
23,295
6,656
8,154
10,586
3,634

$9,433
29,371
7,445
8,641
11,520
3,423

74, 264

52,607

61,738

69,833

1923

Of the total estimated income in 1923, amounting to nearly $70,000,000,000, mining, manufacturing, and construction activities contributed about 29.4 billions; professional and personal-service enterprises added 11.5 billions; agriculture was third with 9.4 billions;
mercantile enterprises, including both wholesale and retail, ranked
fourth, with 8.6; transportation and communication industries were




226

national,

wealth

anj>

income

fifth, with almost 7.5 billions; and banking and other activities had
a total of 3.4 billions. The total for each of the above groups of
economic activities was higher for 1923 than for 1918, with the
single exception of agriculture.
The relative contributions of these different groups of economic
activity fluctuated considerably during the six-year period. The
changes from year to year may be readily seen from the following
table, which gives their percentage relations to the total for each
year:
TABLE 1 2 8 . — P e r c e n t a g e s of the contributions
of specified kinds of economic
to the total national income,
1918-1923
Kind of activity
Agriculture
Mining, manufacturing, and construction.
Transportation and communication
Mercantile
Professional and personal service
Banking and other
Total...

1918

1919

1920

1921

«
1922

activity

1923

23.7
39.1
8.9
9.4
13.8
5.1

21.0
39.2
8.6
1L 5
14.8
4.9

12.4
46.4
9.0
11.2
16.0
5.0

12.7
34.2
12.5
13.2
20.3
7.1

15.2
37.7
10.8
13.2
17.2
5.9

13.5
42.0
10.7
12.4
16.5
4.9

100.0

100.0

100.0

100.0

100.0

100.0

The most important variations occurred in the agricultural industry, whose contribution to the total national income during the sixyear period ranged from about 24 per cent in 1918 to not quite 13
per cent in 1921. The range for the mining, manufacturing, and
construction group was not so great, namely, from a minimum of
34.2 per cent m 1921 to 46.1 per cent in 1920. Professional and personal service enterprises ranged from 13.8 in 1918 to 20.3 in 1921.
Transportation and communication, mercantile, professional and
personal service, and banking and other groups had their largest
p oportion of the total in the depression year 1921, while mining,
manufacture, and construction and agriculture had their lowest percentage in that year.
Section 4. Estimates for different groups of economic
equalized for changes in purchasing power.

enterprise

The estimates for the principal groups of economic enterprise adjusted for changes in the purchasing power of the dollar show more
accurately the changes in their well-being from year to year than do
the unadjusted estimates. The following table shows the original
estimate and the estimate adjusted for changes in purchasing power
as shown by the cost-of-living index of the Bureau of Labor Statistics:




227n a t i o n a l ,w e a l t h

anj>

income

TABLE 1 2 9 . — C o m p a r i s o n of the commission's
original estimates of the
income with these estimates adjusted for changes in purchasing
power
principal lines of economic enterprise,
1918-1923

Group

Year

Agriculture

Mining, manufacture, and construction

Transportation and communication

Professional and personal service

Mercantile-

Banking and miscellaneous enterprises

—

1918
1919
1920
1921
1922
1923
1918
1919
1920
1921
1922
1923
1918
1919
1920
1921
1922
1923
1918
1919
1920
1921
1922
1923
1918
1919
1920
1921
1922
1923
1918
1919
1920
1921
1922
1923

Original
estimate

national
for the

Estimate of
equalized
purchasing
power

Billion dollars Billion dollars
14.2
13.9
12.9
14.2
9.2
7.6
6.4
6.7
9.4
9.6
9.4
9.4
23.5
23.1
26.4
24.0
34.5
28.3
18.0
17.3
23.3
23.8
29.4
29.4
5.4
5.3
5.8
5.3
5.5
6.7
6.6
6.3
6.8
6.7
7.4
7.4
8.3
8.1
10.0
9.1
11.9
9.7
10.7
10.3
10.8
10.6
11.5
11.5
5.7
5.6
7.7
7.0
8.3
6.8
6.9
6.7
8.2
8.3
8.6
8.6
3.0
3.1
3.3
3.0
3.7
3.1
3.7
3.6
3.6
3.7
3.4
3.4

The income for agriculture was larger in 1918 and 1919 on both
bases than for any other year of the six-year period ending in 1923,
but on the adjusted basis 1923 was the most prosperous year of the
period for the mining, manufacture, and construction, transportation and communication, mercantile, and professional and personal
service groups. For the banking and miscellaneous enterprise group
1922 was the best year on the adjusted basis.
Section 5. Division of the national income between labor and capital.

The proportions of the total value of product going to labor and to
capital and enterprise for the principal groups o f economic enterprise
vary greatly from group to group. Agriculture shows by far the
largest proportion for capital and enterprise, the percentage ranging
from a maximum of almost 92 per cent in 1918 to a little over 83 per
cent in 1920. The reason for the high proportion shown for capital
and enterprise is because most of the labor in agriculture is furnished
by the farmers themselves or by members of their families. The
smallest proportion paid for hired labor was in 1918, when there was
a shortage ot help due to the war; while the largest amount and the
highest percentage was for 1920, when farm wages were high.
The transportation and communication group shows the largest
proportions of the total value of product going to labor during the
four years 1918-1921, the range being from about 71 to nearly 84 per




22S

national,

wealth

anj>

income

cent; whilfe the mercantile group had the highest percentages in 1922
and 1923—namely, about 72 per cent in 1922 and almost 67 per cent
in 1923.
The following table shows the amounts and percentages of the total
value of .product divided between labor and capital for the principal
groups oi economic enterprise, covering the period 1918-1923:
TABLE 1 3 0 . — E s t i m a t e s of the total national income and the shares of labor
capital for the principal kinds of economic enterprise,
1918-1923
Amounts in millions

and

Per cent

Enterprise
Total

Labor

$14,219
23,525
5,378
5,660
8,304
3,059

' $1,176
13,993
3,.839
3,567
3,739
1,849

Capital

Labor

Capital

Year 1918
Agriculture

$13,043
9,532
1,539
2,093
4,565
1, 210

8.3
59.5
71.4
63.0
45.0
60.4

91. r
40.528.6
37.055.0
39.6

60,145

28,163 ' 31,982

46.8

53. 2

14,157
26,382
5,824
7,731
9,972
3,324

1,356
15, 715
4,339
4,834
4,457
2,001

12,801
10,667
1,485
2,897
5,515
1, 323

9.6
59.6
74.5
62.5
44.7
60.2

90. 4
40. 4
25. &
37. 5.
55. 3.
39. 8.

67,390

32,702

34,688

48.5

51. 5.

9,226
34,464
6,691
8,280
11,886
3,717

1,546
22,328
5,592
5,951
5,141
2,323

7,680
12,136
1,099
2,329
6,745
1,394

16.8
64.8
83.6
71.9
43.3
62.5

83. 2,
35. %
16. 4
28. 1
56. 7
37.

74,264

42,881

31/383

57,8

42. %

6,667
. 17,736
6,591
6,939
10,696
. 3,707

1,097
13,587
4,486
5,223
4,827
2,111

5,570
4,149
2,105
1,716
$,869
1, 596

16.5
76.6
68.1
75.3
45.1
56.9

83. 5.
23. 4
31. %
24. 7
54; 9
43. L

52,336

Transportation and communication
Mercantile
Professional and personal service..
Banking and miscellaneous enterprises

31,331

21,005

59.9

40. 1

9,413
23, 296
' 6j 656
8,154
10,586
.....
3,634

1,065
15,654
4,352
5,898
4,044
2,105

11.3
67.2
6&4
72.3
'43.9
57.9

'88. r
32. 8.
34. 6«
27. 7
56. 1
42. \

• 61,739

33, 71S

28,021

54.6

45.4

9,433
29,372
7,444
8,641
11,520
3', 433

1,132
19,194
4,859
5,763
4,999
2,249

8,301
10,178
2,585
2,878
6, ,521
•1,184

1210
65.3
$5. 3
66.7
43.4
65.5

88.O

69,843

38,196

31,647

54. :7

45. a

>
»

Total
Year 1919
Agriculture
'
_
.
Mining, manufacturing, and construction
Transportation and communication
Mercantile
*
Professional and personal service
Banking and miscellaneous enterprises
Total
Year 1920
Agriculture
"__
.
Mining^ manufacturing, and construction
Transportation and communication
Mercantile
Professional and personal service
Banking and miscellaneous enterprises.
Total
Year 19^1
Agriculture
Mining, manufacture, and construction
Transportation and communication J..
Mercantile
.
+
Professional and personal service
Banking and miscellaneous enterprises

!__
'

Total
Yeanim
Mining, manufacture, and construction
Transportation and communication
Mercantile
__»
Professional and personal service
Backing and miscellaneous^ enterprises...

_r

___.

Total
Year lte3
Agriculture
*
Mipipg, manufacture, and construction^
Transportation atid communication
Mercantile
_.
„
Professional and personal service
„
Banking and miscellaneous enterprises.
Total




:

_..

8,343 t
7,642
2,304
2,256
5,^942
1,529-

34.7
34.7
33.3.
56.6
34. &

n a t i o n a l w e a l t h and

ingome

229

The smallest amount received by labor during the six-year period
1918-1923 was a little oyer $28,000,000,000, which was not quite
47 per cent of the total income. The largest amount received by
labor was nearly $43,000,000,000, in 1920, but labor received the
largest proportion of the national income—almost 60 per cent—in
1921. The proportions going to labor and capital in 1922 and 1923
were almost the same—approximately 55 per cent to labor and 45
per cent to capital and enterprise.
If a comparison is made between these estimated percentages of
the total income going as wages or salaries with those reported by
the, income tax data, the figures appear to be fairly consistent with
each other. The following statement compares the above percentages of total income with the wages and salaries percentages of all
income-tax returns.

Year

1918...
1919
1920

Per cent
of total
estimated
income
47
49
58

Per cent
of all tax
returns

Year

47
48
57

1921
1922
1923.

Per cent
of total
estimated
income
60
55
55

Per cent
of all tax
returns
59
55
48

In this connection it may be considered, for example, that a large
amount of farm income is not included in the tax returns, and.of
this income the percentage going to labor is undoubtedly very low,
while there is likewise a large portion of manufacturing labor not
covered by the tax return for whom the percentage of wages income
is probably quite high.
Section 6. Proportions paid in taxes.

In the foregoing discussion it has been explained that the total
income created by each branch of economic or industrial activity
has been divided between labor on the one side and enterprise and
capital on the other side, without regard to how much either of them
might be obliged to pay out in taxes. In the case of labor it is impossible to estimate how much of the salaries and wages go to the.
Federal, State, and local governments in taxes. The same is true
of the taxes paid by investors upon their investments or upon the
interest received from them; and of the income taxes paid personally
by the owners of the unincorporated businesses. However, it was
possible to estimate the amount of taxes paid directly by business
enterprises to the various governments because of the fact that they
owned taxable real estate or personal property, paid taxes for business privileges, and the like, and, in the case of corporations, because
they paid income taxes. These are the taxes, the burden of which
business enterprise is most conscious, because they figure as deductions from income in their annual financial statements.
Of the total income estimated at $70,000,000,000 in 1923, the
taxes paid directly by business enterprises are estimated at $4,400,000,000, or 6.3 per cent of the total value of product. Five years
earlier the proportion was 7.6 per cent. Whatever the ultimate
incidence of their burden through their effect upon prices, the taxes
referred to were paid immediately out of the share designated as




230

national, wealth

anj>

income

that going to enterprise and capital. It is appropriate, therefore,
to compare them with that share. The taxes in 1923 amounted to
13.9 per cent of the gross return to capital and enterprise. In 1918,
the proportion was 14.2 per cent; in 1919, 12.8 per cent; in 1920,
13.6 per cent; in 1921, 17.9 per cent; and in 1922, 12.8 per cent.
Business enterprise, it is estimated, paid directly in taxes in these
six years nearly $25,000,000,000, which was 13.9 per cent of the
estimated gross return to capital and enterprise. However, because
of the fact that the amount of taxes levied is in part independent
of the earning power of the enterprises in the particular: year, the
tax proportion varied considerably with changing degrees of prosperity or depression.




CHAPTER

XII

AGRICULTURE

Section 1. Estimated value created by agriculture.
In estimating the value created by the agricultural industry it is
necessary to estimate the gross values of the various classes of agricultural products that were either sold off the farm or consumed as
human food on the farm, and then .estimate and deduct those operating costs of farmers that consist of payments to other businesses.
Because stocks of products on farms, especially livestock, may be
built up through production in any year of more than was sold, or
may be depleted by selling more than was produced, the estimates
of the gross value sold or consumed as human food must be adjusted
to take account of the changes in these inventories.
The products of agriculture may be treated conveniently under
the following heads: (1) The larger meat animals slaughtered; (2)
dairy products; (3) poultry; (4) eggs; (5) wool and mohair; (6)
honey and wax; (7) horses and mules sold off farms; (8) vegetable
crops. The first seven all consist of animals or animal products.
Section 2. Estimated value of the larger meat animals slaughtered.
There is room for considerable latitude in estimating the values of
these animals. Beeves, calves, sheep, lambs, goats, kids, and even
horses are slaughtered on the farm, in. retail slaughter houses, and in
wholesale slaughter houses. The census of agriculture states the
number of animals slaughtered on farms in 1919, but not the value,
and does not state the number and value sold off farms. It does
give an estimate of the total farm value of animals slaughtered on
or sold off farms in that year. However, this estimate, $3,511,000,000,
is less than a half billion dollars in excess of the figure given by the
census of manufactures as the cost of animals slaughtered for their
own account by wholesale slaughter houses. Inasmuch as these
wholesale houses also slaughtered for others, animals of nearly
$154,000,000 cost, while the farm value of animals slaughtered on
farms must have been between $700,000,000 and $800,000,000, not
to mention the slaughter in retail houses, or the value of horses, cows,
and mules that were sold off the farms for purposes other than slaughter, this estimate by the census of agriculture seems very low.
Consequently it has been necessary in this inquiry to estimate the
farm value of the larger meat animals that were slaughtered in the
census year as well as in the other years under review. The process
is long, roundabout, and tedious, and will not be described at this
point. Those who are interested are referred to the Appendix, tables
33 to 39. The results are presented in Table 131.




231

232

national,

wealth

anj>

income

TABLE 1 3 1 . — E s t i m a t e d aggregate farm values of cattle, calves, sheep, lambs,
goats, and kids slaughtered for food, by years, 1918 to 1923
Indices of
Estiaggregate mated
values
farm
slaughvalue
tered 1 (millions)

Year

1918
1919
1920
1
2

1.

100.25
100.00
78.45

$4,556
4,543
3,563

2

Year

1921
1922
1923

hogs,

EstiIndices of
aggregate mated
farm
values
value
slaughtered 1 (millions)
48.75
55.20
58.80

$2,213
2,507
2,670

For derivation see appendix, Tables 33 to 39.
For derivation see appendix, Table 39.

According to these estimates, the total farm value of all the larger
meat animals slaughtered in continental United States was greatest
in 1918, when it amounted to $4,556,000,000. It was only a few millions less in 1919/ With the appearance of the industrial depression,
which was especially severe and prolonged in agriculture, the estimated total farm value of these animals dropped nearly a billion
dollars in 1920 as compared with the preceding year, ana fell even
more in 1921,. so that in the last named year their estimated total
value was only $2,213,000,000. The estimate for 1922 showed an
increase of less than $300,000,000 over the preceding year, and the
estimate for 1923, $2,670,000,000, was only 58.8 per cent as great as
that for the census year 1919.
Section 3. The value of dairy products sold off farms or consumed
on farms as human food.
Estimating this also presents certain difficulties even for the census
year 1919, because of certain facts: (1) While the census of agriculture
states the quantities and values of butter, butterfat, cream, and cheese
produced or sold in 1919, it does not state the quantities of milk
^devoted to those purposes; nor is the quantity of milk consumed
on farms either as human food or as animal food or both stated;
(2) while it is possible to estimate the quantities of milk represented
in the reported production of butter, butterfat and cream, there is
no basis except pure conjecture on which to estimate the quantities
and values of skim milk and buttermilk used for human as distinguished from animal food. However, an estimate was made. Detailed description of the process may be found in the appendix,
Exhibit 1. (Seep. 360.)
The Agriculture Yearbook publishes estimates of the values of
various dairy products sold or made in the census and other years.
From these estimates, indices have been derived of the values of
dairy products in the other years under review as compared with the
value in 1919. Description of their derivation may also be found in
the appendix, Exhibit 1. (See p. 360.)
The results of .these processes and the indices are presented in
Table 132.




233n a t i o n a l ,w e a l t h a n d * i n c o m e
TABLE 1 3 2 . — E s t i m a t e d value of dairy products sold off farms or consumed
families
as human food, by years, 1918 to 1923

Year

191 8
191 9
1920
1921
1922
1923

Value of dairy
Index
products sold
and of butter, numbers
of total
cheese, and
values
buttermilk
made 1

$1,909, 300,000
1,934,300,000
1,529,500,000
1,362,000,000
1,621,400,000

288.65

100.00
101.30
80.10
71.40
86.00

by

farm

Estimated
total value
sold or
consumed

$1,669,000,000
3 1,879,600,000
1,904,500,000
1,505,000,000
1,342,500,000
1,616,500,000

1 Estimates by the Department of Agriculture.
See Yearbook of Agriculture, 1922 and 1923.
2 In the absence of data for 1918, the index for that year is the percentage of the estimate for that year
by the National Bureau of Economic Research ("Income in the United States," vol. 2, pp. 43 and 44),
to its estimate for 1919.
3 Census estimate of the value of dairy products.

According to these estimates the total value of dairy products
sold off farms or consumed as human food on them in 1918 was
$1,669,000,000. The value of these products increased during the
next two years and amounted to over $1,900,000,000 in 1920. The
effect of the depression is shown in a reduction of the total value of
these products to about $1,500,000,000 in 1921 and a further reduction
to about $1,340,000,000 in 1922. In 1923 the total value of these
dairy products increased to slightly more than $1,600,000,000.
Section 4. Poultry production.
The census of 1920 states there were reported as raised in 1919,
405,488,930 chickens, valued at $332,256,763. Because of the number
of chickens reported as being on farms that did not report the number
of chickens raised, the census estimates that the total farm value of
chickens raised was $386,240,367. The number reported as sold off
farms was only 140,811,045, valued at $119,722,603. Inasmuch, however, as the total number of chickens reported as remaining on farms on
January 1, 1920, was only 359,537,127, it is evident that, unless there
was a tremenduous proportionate increase in the number of chickens on
farms as compared with the beginning of 1919, there must either have
~been a larger sale or a large consumption of chickens as food for farm
families or a large noneconomic death rate among old chickens.
Comparison of the egg production of 1919 with that of 1909 and of
later years indicates that there was not more than a nominal increase
in the total number of chickens.
Therefore, the statistics of chicken and other fowl production
xather than the statistics of sales are taken as probably the more
accurately representing the net production of poultry.
The census of 1920 shows the number and value of all fowls on
farms on January 1, 1920; but, excepting chickens, it does not show
the number and value of fowls raised during 1919. If, however, it
may be assumed that the same proportion held for the values of chickens and of all fowls raised during 1919 as for the respective values on
farms on January 1, 1920, the total value of all fowls raised during
1919 may be estimated at $412,600,000.
The Agriculture Yearbook for 1923 estimates the number and value
of chickens raised each year, commencing with 1919. If it may be




234

national, w e a l t h and* income

assumed that the values of all fowls raised varied in the sameproportions, value indices may be derived for the later years as in
#
Table 133.
The Yearbooks do not give estimates for 1918, however. The
estimate for that year by the National Bureau of Economic Research 1
was 89.1 per cent of its estimate for 1919. Making use of that index,
the net value of poultry produced in the various years is estimated
as shown in Table 133.
TABLE 1 3 3 . — E s t i m a t e d total value of all poultry
for farm families,
by years,

Year

1918 _ _
1919_
1920
192119221923-

sold of farms or consumed
1918 to 1928

Estimated
value of
chickens
produced 1

$386, 240,000
412,734,000
392,334,000
378,450,000
420, 481,000

Indices
of total
values of
poultry
produced
2 89.1
100.0
106.8
101.5
97.0
108.8

as

food

Estimated
total value
of poultry
produced
$367,500,000
412,600,000
440, 800,000
419,000,000
404,300,000
449,000,000

1 Estimates by the Department of Agriculture. (See Agriculture Yearbook for 1923, p. 1036.)
2 Percentage of estimate for 1918 to estimate for 1919, by National Bureau of Economic Research, "Income
in the United States," vol. 2, p. 45.

According to these estimates the total farm value of all poultry
produced in the United States in 1 9 1 8 was $ 3 6 7 , 5 0 0 , 0 0 0 . The total
increased in 1 9 1 9 and 1 9 2 0 and amounted to nearly $ 4 4 1 , 0 0 0 , 0 0 0 in
the latter year. It fell to $ 4 1 9 , 0 0 0 , 0 0 0 in 1 9 2 1 and to a little over
$ 4 0 4 , 0 0 0 , 0 0 0 in 1 9 2 2 , two years of severe agricultural depression.
Although 1923 was also a year of severe depression in agriculture, the
estimated total value of poultry produced advanced to $ 4 4 9 , 0 0 0 , 0 0 0 .
EGG PRODUCTION.—The census of 1920 states that there were
reported as produced in 1 9 1 9 , ' 1 , 5 7 1 , 3 2 9 , 1 9 0 dozens of chicken eggs,
valued at $ 6 2 6 , 7 7 6 , 9 2 6 . Because more than a half million farms
reported chickens on hand on January 1, 1920, but did not report
egg production for 1919, the census estimates the total chicken egg^
production for that year to have been 1 , 6 5 4 , 0 4 4 , 9 3 2 dozens, valued
at

$661,082,803.

Of these eggs, 1 , 0 1 0 , 8 1 3 , 2 5 8 dozens, valued at $ 4 0 4 , 5 6 2 , 9 1 2 , were
reported as sold. The actual quantities and values were probably
larger. However, the statistical problem involved here is not to
estimate merely the total income from sales, but the total farm value
of eggs either sold off farms or consumed as human food on them.
To this end it must be remembered that every chicken raised
accounts for one egg. Due to the mortality among young chickens
and the spoilage during incubation from infertility and other causes,
the actual ratio of eggs used to chickens raised is much higher. How
much is not known; but following the lead of the National Bureau of
Economic Research, a 2 to 1 ratio is assumed.
The estimate of the net production of eggs is shown in Table 134.
i Income in the United States, vol. 2, p. 45.




235n a t i o n a l ,w e a l t h a n d * i n c o m e
TABLE 1 3 4 . — E s t i m a t e d total value of eggs sold off farms or consumed
food by farm families,
by years, 1918 to 1923

as

human

[Quantities in million dozens]

Quantity Number
of eggs
of
prochickens
duced 1
raised 1

Year

1918
1919
1920
1921
1922
1923

-

* 1,654
1,647
1,888
1,971
2,196

Number Quantity Average
Estiof eggs
of eggs
farm
mated
used in
total
sold or price per
producvalue
used as
dozen
ing
food
(cents)1 (millions)
2
chickens

39. 44
39.56
45.81
48.67
54. 52

79
79
92
97
109

1,575
1,568
1,796
1,874
2,087

40.88
44.03
29.26
25.86
27.27

3 525
644
690
525
474
570

Department of Agriculture, Crops and Markets, February, 1924, p. 49.
Allowing 2 eggs for each chicken raised, and rounding off.
The same proportion to the estimate for 1919 as the estimate for 1918 made by the National Bureau of
Economic Research is to its estimate for 1919; see Income in the United States, vol. 2, p. 46.
^ Census of 1920, Vol. V, p. 677.
1
2
3

According to these estimates/ the total value of chicken eggs sold
off farms or consumed as human food on them in 1918 was
$525,000,000. The total value increased during the next two years
so that it was $ 6 9 0 , 0 0 0 , 0 0 0 in 1 9 2 0 , but it was again $ 5 2 5 , 0 0 0 , 0 0 0 in
1 9 2 1 and declined to $ 4 7 4 , 0 0 0 , 0 0 0 the next year.
The total value of
eggs sold or used as human food increased again in 1923 when its
estimated amount was $ 5 7 0 , 0 0 0 , 0 0 0 .
Section 5. Miscellaneous agricultural products.
V A L U E OF W O O L A N D M O H A I R P R O D U C E D . — T h e census of 1 9 2 0
states the value of wool and mohair produced on farms in 1919 at
$124,007,000.
Of this, $ 3 , 5 8 9 , 0 0 0 was the value of mohair.
The Agriculture Yearbook estimates both the aggregate production
of fleece wool each year and the weighted average farm price of it,
but does not show the production or value of mohair. Desk sheets
of the Division of Livestock Estimates of the Department of Agriculture, however, give estimates of these values. These data have
been furnished to this inquiry for 1919 to 1923, respectively.
The Agriculture Yearbook shows 2 5 6 , 8 7 0 , 0 0 0 pounds of fleece
wool produced in 1918 and gives 57.9 cents as the average price
realized per pound by the farmer. According to. these data, the total
value realized by farmers for their wool crop in that year was $ 1 4 8 , 700,000.
This value may be used with those for 1 9 1 9 to 1 9 2 3 , respectively, obtained from the desk sheets. The resulting estimates are
shown in Table 135.




236
TABLE

national,
135.—'-Estimates of

w e a l t h and* income
the

value of wool
1918-1923

and

mohair

produced,

by

years,

[Valued in thousands]
Estimates by the Depaitment oi Agriculture
Year
Wool

191S
1919
1920
1921
1922
1923

i $148,700
3 125,729
3 91,887
3 36,582
3 66,323
3 87,284

Mohair

Total

$3,~589~ $129,318
2,788
94,675
1,170
37,752
2,124
68,447
3,671
90,955

Estimated
total
Index ' value of
wool and
mohair
produced
21.182
<1.000
<.732
<.292
<.529
<.703

$146,080
124,007
90,773
36,210
65,600
87,177

i Value of 256,870,000 pounds of fleece wool, at average farm price of 57:9 cents, as per Yearbook of Agriculture.
* Ratio of value of wool in 1918 to value of wool in 1919.
8 Values supplied by Department of Agriculture from desk sheets.
< Ratios of total sales into total value in 1919.

According to these estimates, the farm value of wool and mohair
produced in the United States was over $145,000,000 in 1918. The
value of these products diminished rapidly during the next three
years to $124,000,000 in 1919, $91,000,000 in 1920, and to only a
little over $36,000,000 in 1921. The value of these products increased
during the last two years of the half decade comparison, being nearly
$66,000,000 in 1922 and over $87,000,000 in 1923. In any event,
however, wool and mohair are relatively unimportant items in the
total value of agricultural products.
V A L U E OF H O N E Y AND W A X PRODUCED.—The census states
amounts for the values of honey and wax produced on farms in census
years. The census itself states, however, that those amounts may be
wide of the truth for several reasons. Beekeeping is relatively so
rare that the census enumerators probably forgot to make the
inquiries in a considerable proportion of the cases. Where the questions were asked and bees found, the farmers in a large proportion of
the cases had not kept production or sale records and were not able
even to make a good estimate.
Hence, the present estimates probably contain a large percentage
of error. However, 'the whole amount involved is only in the 'teens
of millions, and the errors make no appreciable effect upon the final
results which deal with billions of dollars.
The Agriculture Yearbook does not publish estimates of the value
of honey and wax produced. Estimates for 1919 to 1923, respectively,
were, however, obtained from desk sheets of the Division of Crops
and Livestock Estimates of the Department of Agriculture. On the
basis of these and the census of agriculture, estimates were made as
in Table 136.




237n a t i o n a l ,w e a l t h a n d * i n c o m e
TABLE 1 3 6 . — E s t i m a t e s of the value of honey and wax sold off farms
human food on farms, by years, 1918 to 1923
[Values in thousands]

as

Value
produced,
estimates Indices
of the
Final
of
Departvalues estimate
ment of produced
Agriculture 1

Year

1918.
1919
1920
1921
1922
1923

or consumed

$12,798
15,956
8,565
9,858
10, 210

„

2 1.125
1.000
1. 248
.670
.771
.799

$16,080
314,280
17,800
9,560
11,000
11,400

1 Furnished by Department of Agriculture. Division of Crops and Livestock Estimates, from desk
sheets.
2 Interpolated by assuming the same proportion of value in 1918 to value in 1919 for all other animal
products.
8 Census valuation. See text for comment on accuracy.
>

According to these estimates, the value of honey and wax produced
was almost a negligible item in the total of all agricultural products.
Its greatest amount came in 1920, when it was less than $18,000,000,
and its smallest less than $10,000,000 in 1921. Over the half decade
it diminished from a little over $16,000,000 in 1918 to $11,400,000 in
1923.
Section 6. Value of horses and mules sold off farms.
The Agriculture Yearbook gives the value of horses and mules on
farms as of January 1 each year and for each year from 1919 to 1923
the values of horses and mules produced. Under another topic
account is taken of the changes in livestock inventories. Hence, it is
necessary in this connection to estimate the value of horses and mules
sold off farms.
By adding the production of each year to the inventory at the
beginning of the year and subtracting the inventory value at the end
results are obtained that constitute estimates of the values sold.
The data furnished these estimates for the six years 1919 to 1924.
By multiplying the yearly receipts of horses and mules at the principal
markets m 1918 and 1919 b y their average prices, values are obtained
for these receipts. By comparing the total values in 1918 with the
total in 1919 a ratio is obtained that permits an estimate to be made
for the former year. The results are shown in Table 137.
TABLE 1 3 7 . — E s t i m a t e s of the values of horses and mules sold off farms,
1918 to 1923
[Values in millions, numbers in thousands]

Year

1918
1919
1920
1921
1922
1923
1924

Value
on farms
Jan. 1 1
$2,875
2,788
2,713
2,256
1,826
1,772
1,634

Value
produced 2

$206
198
188
195
177

Value
sold
« $359
293
273
645
625
249

by

years

Number
received Weighted Indices
at prin- average
of
prices3
cipal
values
markets
1,216
1,067

$130
121

1.215
1.000

1 Values 1918 to 1922, respectively, from Yearbook of Agriculture, 1921, p. 684; values for 1923 and 1924
from the Yearbook for 1923, p. 1010.
2 Yearbook of Agriculture, 1923, p. 1010. The value for 1923 is a preliminary estimate.
» Yearbook of Agriculture, 1923.
« This amount is 1.215 times the amount for 1919.




238

n a t i o n a l , w e a l t h and* income

According to these estimates, the value of horses and mules sold
off farms was $359,000,000 in 1918. That was a war year, during
which such animals were being purchased in large quantities for use in
the military organizations of the United States and its European
associates. The value of horses and mules sold declined during the
next two years and amounted to $273,000,000 in 1920. The estimates
indicate & relatively large increase in the money value of these animals
during the next biennium. The estimated value sold in 1921 was
$645,000,000; in 1922, $625,000,000. This large increase, which
accompanied a large decline in the inventory value of all livestock
during 1921 and in the inventory value of horses and mules in both
years, may have been caused b y the efforts of certain farmers to
obtain cash funds during the severe agricultural depression and by
the financial failure of others or their abandonment of farming. The
total value of such animals sold off farms dropped to $249,000,000
in 1923.
Section 7. Variations in the inventories of livestock on farms.
The livestock slaughtered on farms or sold off them may fall short
of or may exceed the value of the livestock produced. In the OBB
case the gross value of livestock produced exceeds the value slaught-,
ered or sold; in the other it falls short. Hence, the gross value figures
obtained by dealing with sales and slaughter must be adjusted by
taking into account the inventory changes.
The census enumeration of all livestock on farms, including poultry
and bees as well as cattle, sheep, hogs, goats, horses and mules, gave
total valuation of slightly over $4,925,000,000 in 1910 and slightly
over $8,013,000,000 on January 1, 1920. The Agriculture Yearbook
estimates do not include goats, kids, bees or poultry, other than
chickens, except on January 1, 1920, and January 1, 1924, nor
chickens prior to January 1, 1920. Its valuation for milk cows,
other cattle, swine, sheep, horses and mules April 15, 1910, was
$4,910,975,000; and on January 1, 1920, was $8,165,194,000. The
census valuation of all animals, including goats, poultry and bees,
was 1.002 times the Agriculture Yearbook estimates for 1910 and
0.9814 times the estimate for 1920. Since the average annual change
in this ratio is only 0.00106 points, no adjustment need be made for
this varying degree of accuracy of yearbook valuations.
Accordingly indices have been found, taking January 1, 1920; as
the base. The index numbers for January 1, 1918, and January
1, 1919, were formed by comparing yearbook valuations of milk
cows, other cattle, sheep, swine, horses and mules. The yearbook
valuations on which the index numbers for later years were based
include the value of chickens also.
These index numbers were applied to the census valuation as of
January 1, 1920, to estimate the probable values of all animals on
farms at the other dates shown in Table 138. The successive differences between these inventory values constitute the required
increases or decreases which are shown in the table.




239n a t i o n a l ,w e a l t h a n d * i n c o m e
TABLE 1 3 8 . — E s t i m a t e d variations in the value of livestock inventories
January 1, by years, 1918 to 1924

on farms,

on

[Values in millions]
Valuations of—
Ratios of
Milkcows, values in
Milk cows, other cattle, specified
other cattle,
years to
sheep, hogs, sheep, hogs, census
horses,
horses, and mules, and
year
mules1
chickens 1

Year

$4,911
8,284
8,828
8,105

1910
1918
1919
1920
1921
1922
1923
1924

*

$8,516
6,371
5,146
5,543
5, 266

1.015
1.082
1.000
.748
.615
.651
.619

Estimated Estimated
value
increase
of all
or
domestic
decrease
animals
of inon farms2 ventory 3

$8,140
8,670
8,013
5,990
4,850
5,220
4,960

4

+$530
-657
-2,023
-1,140
+370
-260

1 Compiled from Agriculture Yearbook, 1923, various pages.
2 Products of $8,013, by the respective ratios in third column.
3 Successive differences between the values; those marked with a plus sign represent increases, those
with a minus sign represent decreases.
4 Census valuation; includes goats, kids, bees, and all poultry as well as the animals named infirstcolumn.

According to these estimates there were tremendous decreases in
the value of livestock on farms during the three years 1919 to 1921,
inclusive. The decrease of more than $2,000,000,000 in 1920 and
of more than $1,000,000,000 in 1921 affect very largely the estimates
of the total value created by agricultural industry m those years.
The latter year was one of great reduction in the prices of agricultural products. Question arises as to how much of these reductions
in inventory values was caused by a reduction in the number of
animals on the farms and how much was caused by the decline in
prices. Index numbers of the number and value of the various
kinds of animals on farms are shown in appendix Tables 40 and 41.
The tables referred to show that during 1919 the number of sheep
.and hogs on farms was reduced about one-fifth and their farm
prices 10 to 15 per cent. These account mainly for the decrease of
$657,000,000 in the total inventory value in that year.
There was no marked reduction in the number of animals on
farms during 1920. There was, however, a general and large decline
in the prices that could be realized by the farmer—13 per cent for
horses, 21 per cent for mules, 25 per cent for milk cows, 28 per cent
for other cattle, 32 per cent for hogs and 40 per cent for sheep.
Evidently the $2,000,000,000 reduction in inventory value in 1920
was due mainly to u price deflation."
On the whole, the number of animals increased during 1921. A
further large decline in prices, however, converted this into an
inventory loss of $1,140,000,000.
Section 8. Gross value of all vegetable crops.
The census states the gross value of the recorded vegetable crops
produced in 1919 at $14,755,000,000. The Agricultural Yearbook
puts the value at $15,423,000,000. The former is 95.67 per cent of
the latter. It is assumed that the census figure, being the result of
.an enumeration, is the more nearly correct; also that the same
103288—S. Doc. 126, 69-1




17

240

national, w e a l t h

and* i n c o m e

corrective factor should be applied to the yearbook values for other
years. The resulting probable values of the recorded crops are
shown in the third column of Table 139.
To these have been added a few millions to represent the values
of produce from nonrecorded gardens. The amount for 1919 is
chosen on rather arbitrary assumptions. The amounts are assumed
to vary from year to year in proportion to the values of the recorded
crops.
The Agriculture Yearbook, 1923, pp. 1144-1145, presents estimates of the gross values of all crops, of animal products, and of all
agricultural products not fed to livestock. It assumes that there is
fed to livestock 75 per cent of the barley, 85 per cent of the corn,.
90 per cent of the grain sorghums, 80 per cent of the oats, 20 per
cent of the rye, 6 per cent of the wheat, 85 per cent of the hay, 100
per cent of tne forage, 10 per cent of the potatoes, and 15 per cent
of the sweet potatoes. These evidently are rough percentages.
The three sets of values referred to imply certain values of produce
fed to livestock. The same corrective factor, 95.67 per cent, has
been applied to these as was applied to the yearbook figures for
gross values. The result is the set of estimates shown in the sixth
column of Table 139.
The seed requirement has been estimated by multiplying the
yearbook figures for the acreage of each crop by its figures for the
average amount of seed required per acre and valuing these at ttie
average price prevailing for the preceding harvest.
Deduction of the feed and seed requirement gives the value of
crops sold off the farm, shown in the last column of the table.
TABLE 139.—Estimated value of crops sold off farms or consumed for human
on farms, by years, 1918 to 1923

food

[Amounts in millions]
Gross
value of
crops;
estimate
of department
of Agriculture 1

Years

1918
1919.—
1920
1921--.
1922
1923

k

-

Gross
value
of
crops'

$14,331
15,423
10,909
6,934
8,945
9,953

$18,710
«14,755
10,437
6,634
8,558
9,522

Value of
nonrecorded
gardens8

$92
99
69
45
57
64

Total
value
of all
crops

$13,802
14,854
10,506
6,679
8,615
9,586

Value
of crops
fed to
livestock 4

Cost of
seeds
used4

$5,503
5,718
4,000
2,373
3,215
3,693

$394
407
412
214
210
210

Net
value
of all
crops

$7,905
8,729
6,094
4,092

5,19a
5,68a

i Agriculture Yearbook, 1923, p. 1145.

j1 75
4 X
— o r

95.67 per cent of values in thefirstcolumn.

Based upon 707,000 farm gardens (per census of 1910) and Farm Bulletin 635, in which W . C. Funk
shows that the average garden produced $52 in 1909. This would give a valuation of $37,200,000 for farnl
gardens in that year. It is assumed that the values of farm gardens in 1918 to 1923, respectively, bore the
same proportions to the values of the recorded crops as in 1909.
4 95.67 per cent of the difference between the aggregate gross values of crpps and animal products and the
aggregate excluding crops fed to livestock, as shown in Agriculture Yearbook for 1923, p. 1145.
* Estimate^ pn the basis of the acreage planted as per the Agriculture Yearbooks, the average seed requirements per acre as per data furnished by the Department of Agriculture, and the average prices of
the products in tfce preceding year as per various publications of the Department of Agriculture.
« Census of 1920, Vol. V, p, 700.
8

According to these estimates, the total value of all vegetable
crops, including gardens in cities and villages, increased from




241n a t i o n a l ,w e a l t h a n d * i n c o m e

$13,803,000,000 in 1918 to $14,854,000,000 in 1919, then declined to
$6,679,000,000 in 1921. It rose during the last two years of the half
decade and amounted to $9,586,000,000 in 1923. Even this amount,
however, was more than one-third less than the amount for 1919.
A very considerable portion—about 40 per cent in value—of all
the crops raised on farms is fed to livestock and becomes represented
in livestock values, or in dairy and poultry products. Seed requirements also cause the net available products to fall short of the total
produced.
It is estimated that the value of vegetable crops sold off farms or
consumed as human food on them in 1918 was about $7,900,000,000.
The value of these products increased to more than $8,700,000,000
in 1919, but declined to less than $6,100,000,000 in 1920 and to less
than $4,100,000,000 in 1921. During the last two years of the half
decade, the value of these products increased and amounted to
nearly $5,700,000,000 in 1923. Even this amount, however, was
more than $2,200,000,000, or 28 per cent less than at the beginning
of the 5-year period.
Section 9. Summary of estimates of all farm products.
Table 140 brings together all these estimates of the values of the
various farm products. These estimates do not include any amount
for increase in farm values due to improvements. It is believed that
this is not an important omission. The National Bureau of Economic
Research estimated these improvements at $405,000,000 in 1918,
$520,000,000 in 1919, and $177,000,000 in 1920.2 There may have
been a certain amount of farm improvement in the ensuing three
years. However, there was an exceedingly severe depression in the
agricultural industries during those years—so severe that in the
principal agricultural States west of the Mississippi River over onefourth the farmers either lost their farms through foreclosure, or
abandoned them, or retained them only through the leniency of
their creditors who could not have recovered their loans had they
taken the farms.3 Therefore, it is inferred that such improvements
as were made on certain farms were counterbalanced by the deterioration of others to such an extent that on the whole there was no
net improvement.
TABLE 1 4 0 . — E s t i m a t e d gross value of all farm products sold off farms
as human food on farms, by years, 1918 to 1923

or

consumed

[Amounts in millionsj

Years

1918
1919
1920
1921
1922
1923
2
8

.
.
.

Larger
All
meat
farm animals Dairy
prod- slaugh- products
ucts
tered

$16,074
15,983
11,062
8,305
10,990
11,076

$4,556
4,543
3,563
2,213
2,507
2,670

$1,669
1,880
1,905
1,505
1,343
1,617

Increase
Poul- Wool Honey Horses or detry
crease
and
and
and
and
mules in liveeggs mohair wax
stock
sold
inventory
$893
1,057
1,131
944
878
1,019

$146
124
91
36
66
87

$16
14
18
10
11
11

$359 +530
-657
293
273 -2,013
645 -1,140
625 +370
249
-260

National Bureau of Economic Research, "Income in the United States," Vol. II, p. 55.
Federal Trade Commission report on "Taxation and Tax-exempt Securities," p. 124.




All
vegetable
crops

$7,905
8,729
6,094
4,092
5,190
5,685

n a t i o n a l , w e a l t h and* income

242

The total value of agricultural products sold off farms or consumed as human food on them in 1923 is estimated at $11,076,000,000.
For 1918, the beginning of the half decade, the estimate was $16,074,000,000, or practically five billions of dollars more. According to
these estimates, the total value of these products declined year b y
year until 1921. The amount was a little less than $16,000,000,000
in 1919, a little more than $11,000,000,000 in 1920, and only
$8,300,000,000 in 1921. There was recovery in the total value
during the last two years under review, so that it amounted to
nearly $11,000,000,000 in 1922 and a little more than $11,000,000,000
in 1923.
Section 10. Payments made by farmers to other industries.
Seed requirements have already been covered b y giving the net
values of the crops. The principal deductions from the foregoing
results that must be made in order to arrive at the estimate of the
net value product are for cost of fertilizer; for depreciation and
maintenance of agricultural equipment, saddles, harness, and automobiles used for Farm business; ther automobile operating expenses;
and interest on bank loans.
For the most part it is possible to estimate the items of maintenance and depreciation only as these are represented b y their
substitutes, namely, the purchase cost of new implements, saddles,
harness and automobiles.
ESTIMATED

VALUE

OF

SADDLES

AND

HARNESS

PURCHASED.—

Data on this subject are very meager. Description of the data and
the process of using them to make the estimates may be found in
the appendix, Exhibit 2 (see p. 362). Table 141 presents the data,
the process, and the results in tabular form.
TABLE 1 4 1 . — E s t i m a t e d value

of harness and saddles
1918 to 1928
Indices of
A

Year

1918
1919
1920
1921
1922
1923

0.911
1.000
.946
.577
.586
.612

1 Wholesale Prices, Bureau of Labor Statistics.
2 Monthly Labor Review, Bureau of Labor Statistics.
8 Column C multiplied by the census total for 1919.




B

Wholesale
prices Employ3
harness, ment
oak*
0.9573
1.0000
.9249
.7216
.8463
.8787

used

on farms,

by

years,

C

D

E

Indices
of total
values
AXB

Census of
manufactures

Preliminary estimate of
value of
harness
and
saddles 3

0.8721
1.0000
.8750
.4164
.4959
.5378

$73,006,000
83,713,000
73,249,000
34,858,000
30,164,000
41,513,000
42,"l23,000" 45,021,000

$83,713,000

243n a t i o n a l ,w e a l t h a n d * i n c o m e
TABLE 1 4 1 . — E s t i m a t e d value of harness and saddles used on farms,
to
1928—Continued
F

G

by years,

1918:

I

H

Estimated
value of
Ratio Per cent- Final estiharness
estimate
age of
mate of
and
enumer- correct
value
saddles
ated
amount harness of
and
used on
amount
in colfarms4
E-fD
umn E saddles E-^-G (92.33 per
cent of H)

Year

1918
1919
1920
1921
1922
1923.'.

100.00
115.56
106. 88

«92. 22
100.00
«107. 78
115. 56
Mil. 22
106.88

$79,165,000
83,713,000
67,962,000
30,164,000
37,325,000
42,123,000

$73,093,000
77,292,000
62,749,000
27,850,000
34,462,000
38,892,000

4 The census total for 1920 indicates the percentage of horses and mules on farms to be 92.33 of the total
for the United States,
s Interpolated along a straight line.

According to these estimates, shown in the last column of the
above table, the value of saddles and harness used on farms was an
item varying in the tens of millions of dollars. It fluctuated greatly
from more than $77,000,000 in 1919 to less than $28,000,000 in 1921,
and was slightly less than $39,000,000 in 1923.
THE COST OF FERTILIZER USED BY FARMERS.—The census shows
the value of fertilizers produced in the United States at $281,114,000
in 1919, $180,375,000 in 1921, andv$183,089,000 in 1923.
There are neither quantity, price, nor value indices extant on
which to base estimates for the noncensus years. Hence, an indirect
process had to be resorted to. Description of it may be found in the
appendix, Exhibit 3, page 362. However, the basic data, process, and
results are presented in tabular form in Table 142.
TABLE 1 4 2 . — E s t i m a t e d value of fertilizer

consumed

on farms,

by years,

1918 to 1928

[Amounts in thousands]
Index

Inspected slaughter in 1,000,000 pounds *
Year

1918.
1919_
19201921.
1922_
1923.

Cattle
and
calves

I
!
|

I

5,078
5, 576
4,616
4,139
4,582
5,262

Hogs

7,433
7,359
5, 796
6,098
6,564
8, s555

Sheep
and
lambs
405
500
435
459
383
447

Total

13,915
13,435
10,847
10, 696
11, 529
14, 264

Quantities 2

Price 3

104
100
81
80
86
106

113.6
100
117.3
71
61 r3
61.6

Value *

123*3
100
95
56.3
52.9
65.3

Obtained from issues of Survey of Current Business (February numbers).
May, 1923, issue of Survey of Current Business gives indices of quantities for various years. Those
of 1918 are for cattle, hogs, and sheep, 109, 101, and 81, respectively. These, when used against quantities (pounds) for 1919 give above quantities.
a Weighted averages of the wholesale price indices of six ingredients reported by Department of Labor,
Bureau of Labor Statistics, "Wholesale Prices" various numbers.
4 Obtained by multiplying indices of prices by those of quantities.
1
2




244

national,

TABLE 1 4 2 . — E s t i m a t e d value

5
6
7
8
9

.
(

anj>

income

of fertilizer
consumed
1923—Continued

on farms,

Preliminary
estimate
of values
produced

Year

1918
1919
1920
1921
1922
1923

wealth

Correc- Corrected Census
estimated
year
tive
values
values 5
factor

$346,650
8 281,144
267,087
159,690
148,725
183,587

• 0.9352
• 1.0000
7 1,0648
»1.1295
71.0648
». 9973

by years,

$324,187
281,144 $281,144
284,394
180,370 "180,"370~
158,362
183,089
183,089

Excess
of imports
over exports 6
$466
-8,954
14,598
14,571
28,483
43,323

1918

to

Values

$324,653
272,190
298,992
194,941
186,845
226,412

Values obtained and reported by the census of manufactures.
Obtained from the various issues of Commerce and Navigation.
These factors were obtained by straight-line interpolation.
Census compilation used as base in estimating other values in column.
Ratio of amount reported by the census to the corresponding amount in the preceding column.

According to these estimates the value of fertilizer used on the
farms of the United States in 1918 was a little less than $325,000,000.
It fluctuated considerably during the half decade, falling as low as
$187,000,000 in 1922, and amounted to something over $226,000,000
in 1923,
T H E COST OF AGRICULTURAL IMPLEMENTS USED UP.—The census
of manufactures stated the factory-door value of agricultural equipment sold by manufacturers to dealers in the United States at
$471,442,000 in 1920, $222,908,000 in 1922, and $312,000,000 in 1923.
It also gives the value so sold in 1921 at a little under $75,000,000.
This, however, included only corfiplete machines, omitting all accessories and extra parts. The bulletins give the factory-door value
of all such equipment manufactured each year commencing with
1919, and the Statistical Abstract states the value of exports of agricultural equipment. By deducting the latter from the former in
1919 and 1921, estimates of the factory value of such equipment
that was sold to dealers in the United States in those years are
afforded. They are $264,000,000 and $276,000,000, respectively.
These are not exact, because by building up or drawing down inventories of finished stock on hand the values sold may fall short of or
exceed the values produced.
A report of this commission 4 indicates that the net sales in the
United States of 22 implement companies in 1918 were about $260,000,000. It is estimated that these companies transacted 91.5 per
cent of the implement business, hence that the sales of all companies
in that year amounted to about $284,000,000.4
Data contained in the same report indicate that the prices of agricultural implements to the farmers are normally about 25 per cent
above the costs to the retailers, or, taking freight into consideration,
about 30 per cent above the prices at the factory door. This percentage was applied and added to the total factory-door values
mentioned abov£.
* Causes of the High Prices of Farm Implements (1920), pp. 88, 111, 116, and 120.




245n a t i o n a l ,w e a l t h a n d * i n c o m e

Question arises as to the portioh of these purchases that provides
replacement of equipment used up. In Table 143 the results stated
above are summed up and an estimate is made of the total tonnage
of agricultural implements sold by the factories to the dealers each
year.
TABLE 1 4 3 . — F a c t o r y values and tonnage of agricultural
equipment
facturers, by years, 1918 to 1928

sold by

manu-

[Values in millions, quantities in thousands]
Value
in the
United
States

Year

1918
1919
1920
1921
1922
1923

i $284
i 264
«471
276
223
312

Sold for
export

EstiPer cent
Total
mated
of total tonnage
tonnage
value
sold in originat- sold in
ing on
United railways7 United
States
States

Total
value
sold

2 $33
241
5 67
6 52
5 22
«49

3 $317
4 305
538
4 328
245
361

1, 518
1, 711
2,911
1,400
1,569
2,240

1,706
1,977
3, 324
1,667
1,720
2,596

89.6
86.6
87.6
84.0
91.2
86.3

1 Estimated by subtracting the total reported value exported from the total value manufactured, shown
in third column.
2 Statistical Abstract of the United States for 1920.
8 Estimated value manufactured. The sales of 22 implement companies, whose business amounted to
about 91.5 per cent of the total, were $339,000,000 in 1918 (see report of the Federal Trade Commission on
the Causes of High Prices of Farnl Implements, pp. 88, 111, 116, and 120).
t 4 Value manufactured; value sold not known.
f 8 Census bulletins on'the manufacture and sale of farm equipment.
f 8 Estimated by dividing the total value manufactured in proportion to the values of complete machines
sold in the United States and sold for export, respectively.
7 Interstate Commerce Commission, Statistics of Railways, various years.

It is probable, because of the severe agricultural depression, that
the equipment purchased by farmers in 1921, 1922, and 1923 w&3
confined for the most part to replacements. The growing tonnage
robably represented replacements that could no longer be deferred.

f t is likely that the purchases in 1918 were also largely for replace-

ment purposes. On this line of reasoning it is estimated that the
average annual replacement need was 1,675,000 tons. Taking the
proportion of this tonnage to the total estimated retail value of
equipment purchased by farmers in each year, the estimates of the
value of agricultural implements used up in the various years result
as in the last column of Table 144.
TABLE 1 4 4 . — E s t i m a t e s of the investment in agricultural
equipment
sumed on farms, by years, 1918 to 1923

that was

con-

[Quantities in thousands, values in millions]
A

Year

1918
1919
1920
1921
1922
1923

B

r

Estimated
consumption of
investment
in agricultural
equipment
BXDT-100

$369
343
606
359
290
406

$407
336
352
429
310
303

1,518
1,711
2,911
1,400
1,569
2,240

U0.3
97.9
57.5
119.6
106.7
74.8

i See Table 143.
is the estimated tonnage needed for annual replacement.
3 Column CXI.30.

11,675,000




E

D

C

Estimated
Estimated
Total
tonnage
retail
Factory
Per cent
of agrivalue of
value of
of
cultural
1*675,000 equipment equipment
equipment
bought by
sold in
5ol<| in to tonnage
farmers3
United
sold 3
United
States,1
states *
$284
264
471
276
223
312

national, w e a l t h and* income

246

I N T E R E S T ON B A N K L O A N S . — T h e United States Department of
Agriculture sent a questionnaire to banks throughout the countryrequesting them to report the amount of their personal and collateral
loans to farmers outstanding on December 31, 1920. The response
from 10,261 banks showed a total of such loans that amounted to
nearly $1,587,000,000. On the basis of these reports, the department
estimated that the total of such loans held by all banks was in round
numbers $3,870,000,000.
The department also gathered information as to the rates of
interest on such loans. Applications of the prevailing rates of interest
for the respective States to the estimated loans in those States
results in an estimate of $317,000,000 as the probable amount of
interest that would have been paid on the above-mentioned amount of
loans if it had been outstanding continuously throughout the year.
As a matter of fact, it is probable that the volume of loans was greater
than this during a considerable portion of the year.
In 1924 the department sent out another questionnaire on the same
subject, requesting the banks to report as of December 31, 1923.
The final estimate on the basis of the reports was not completed at
the date of preparing this text. The preliminary estimate, subject to
revision, however, and made on a basis strictly comparable with the
estimate for 1920, shows personal and collateral loans by banks to
farmers amounting to $2,944,000,000. Interest on this amount for
one vear at the rates found prevailing would be $230,000,000.
Tnese two amounts, as already intimated, probably understate the
true amounts of interest paid (or obligated) b y farmers to banks for
short-time loans. The amount estimated for 1920 wa3 2.40 per cent
of the gross value of all farm products sold off farms or consumed as
human food on them; that for 1923, 2.04 per cent. What the course
of these interest charges was in 1921 and 1922, which were years of
severe financial distress in agriculture, is not knowh. It is assumed
to have changed uniformly from the proportion in 1920 to that in
1923, namely, to 2.28 per cent'in 1921 and 2.16 per cent in 1922, For
191$ and 1919 it will probably serve the purpose to assume the same
proportions as in 1920, or 2.40 per cent of the gross value. On these
assumptions, the amounts paid by farmers tci banks as interest on
short-time loans are estimated as follows
1918.
191 9
192 0
1921
1922
1923.
COST

$374,000,000
402,000,000
317, 000, 0 0 0
205, 000, 0 0 0

220, 000, 000

230, 000, 0 0 0
OF

OPERATING

AUTOMOBILES

AND

TRACTORS

FOR

FARM

PURPOSES.—The Department of Agriculture published in Crops
and Markets for January, 1924,6 the results of a survey in 1923 of
the ownership of automolbiles by farmers and the costs of operating
these. The survey covered one county in Pennsylvania, three in
Kansas, four in South Dakota, seven in Montana, two in Colorado,
and the Palouse country of Washington and Idaho.
8 This estimate covers only bank loans to farmers.
In addition to this interest would be paid on a considerable amount of indebtedness to merchants furnishing supplies.
8 Monthly Supplement, p. 3.




247N A T I O N A L ,W E A L T H AND* I N C O M E

This survey showed among other things that the average operating
cost of a touring car for the year was $ 2 7 0 in Pennsylvania, $ 2 2 8 in
Kansas, $214 in South Dakota, $189 in Montana, $217 in Colorado,
and $ 2 8 9 in the Palouse country. The costs included were for gasoline, oil, tires, repairs, license fees, and depreciation.
It is possible by constructing and applying index numbers of the
prices of gasoline, oil, tires, etc., to estimate the like costs in other
years; ana by multiplying the results by the estimated number of
cars to which they apply, to form estimates of the total costs of operating farmer-owned automobiles. It is presumed that the t)epartment of Agriculture followed such an appropriate procedure ii} arriving at its estimates 7 published recently for the crop years 1 9 1 9 - 2 0
to 1 9 2 3 - 2 4 , inclusive. These estimates were as follows:
1 9 1 9 - 20
1920-2 1
1 9 2 1 - 22
1922-2 3
1 9 2 3 - 24

$739,000,000
805, 000, 000
782, 000, 0 0 0
826, 000, 0 0 0
845, 000, 0 0 0

The crop year varies with the crop. What the termination of the
year used for estimating automobile and tractor operating expense
was is not known. It is assumed that the amounts apply to the calendar years 1919 to 1923, respectively.
If, on this basis, the proportion of this class of expense to the total
expenses paid to other industries be ascertained for each year, the
trend of these proportions will be found to be such as to indicate that
in 1918 automobile and tractor operating expense was about 38 per
cent of the total. From this is it estimated that this item of expense
amounted to $ 6 7 6 , 0 0 0 , 0 0 0 in 1 9 1 8 .
T O T A L E X P E N S E S P A I D TO O T H E R I N D U S T R I E S . — T a b l e

145

sum-

marizes the estimates of amounts paid away to other industries.
TABLE 1 4 5 . — E s t i m a t e d costs

Year

1918
1919
1920
1921
1922.
1923

paid

by farmers
to 1923

to other industries,

Total
Implepayments ments

$1,855
1,826
1,836
1,638
1,577 ;
1,643

$407
336
352
429
310
303

Fertilizer

$325
272
299
195
187
226

by years,

1918

Operating ex- Harness Interest
penses
for autos and sad- on bank
loans
dles
and tractors
i $676
2 739
2 805
2 781
2 826
2 845

$73
77
63
28
34
39

$374
402
317
205
220
230

1 Interpolated by estimating, on the basis of trends, that in 1918 auto and tractor operating expense constituted 38 per cent of the total costs paid away to other industries.
2 Estimated by United States Department of Agriculture on crop-year basis.

According to these estimates, the total payments by farmers to
other industries as a part of the costs of farm products or as deductions
from their gross income amounted to $ 1 , 8 5 5 , 0 0 0 , 0 0 0 . These total
expenditures were slightly less in 1919 and 1920. They dropped* to
$ 1 , 6 3 8 , 0 0 0 , 0 0 0 in 1 9 2 1 , and to $ 1 , 5 7 7 , 0 0 0 , 0 0 0 in 1 9 2 2 .
They increased to $ 1 , 6 4 3 , 0 0 0 , 0 0 0 in 1 9 2 3 .
7

Income from agricultural production in the United States, 1919-1924, Table II.
103288—S. Doc. 126, 6 9 - 1
18




248

NATIONAL,

W E A L T H AND* INCOME

Of the total, the operating expenses for automobiles and tractprs
constituted, by far the largest portion,, being more than half in 1923
and more than one-third at the beginning of the half decade. The
cost of farm implements used up came second, being a Jittle less than
one-fifth of the total. Interest on bank loans and fertilizer costs were
nearly, the same in 1923.
Section 11. Estimate of the total value created by Agricultural
industfy;
The previous estimates may now be brought together to produce
the estimates of the total value-product of agriculture. This is done
in Table 146.
T A B L E 1 4 6 . — E s t i m a t e s of the total

*

by Agriculture,

by years,

Value of products Total operating
expenses paid
sold off, or consumed as human to other industries
food on farms

Year

1918
1919
1920
1921
1922
1923

value created
1928

IL

$16,074,000,000
15,983,000,000
11,062,000,000
8,305,000,000
10,990,000,000
11,076,000,000

$i; 855,000,000
1,826,000,000
1,836,000,000,
1,638,000,000
1,577,000,000
1,643,000,000

1918

io

Value created
by agriculture

$14,219,000,000
14,157,000,000
9,226,000,000
6,667,000,000
9,413,000,000
9,433,000,000

According to these estimates, the yalue created b y agricultural
industry was $14,219,000,000 in 1918, but only $9,433,000,000 five
years later, in 1923. At the depth of the agricultural depression
in 1921 it amounted to only 6 % billions of dollars.
Section 12. Shares in the v&lue created by agriculture.
.The census of agriculture for 1919 8 reported that in that year the
farmers of the United States paid $1,356,000,000 as wages of hired
employees. This included not only the actual cash payments but
also an estimate of the value of board and lodging furnished to hired
hands.
The Department of Agriculture, taking this figure as a base and
increasing it 10 per cent to allow for labor contributed toward production b y domestic servants, estimates the total hired wage bill
for the various crop years as follows:
1 9 1 9 - 20
1920-2 1
1921-22._ _
1 9 2 2 - 23
1923-24- _ _.

$1,492,000,000
1, 7 3 0 , 0 0 0 , 0 0 0
1, 1 0 3 , 0 0 0 , OO0
1, 0 7 4 , 0 0 0 , 0 0 0
1, 2 0 8 , 0 0 0 , 0 0 0

The crop year differs from the calendar year b y varying amounts
according to the crop and the region.
The Yearbook of Agriculture published indices of average wage
rates paid to hired form hands when they work. It also published
data concerning the acreage sown. If it be assumed that the need
and use of hirea labor varies with the acreage sown, estimates of the
total hired labor bill may be made as in Table 147.
s Census of 1920, Vol. V, p. 503.




249NATIONAL,W E A L T H AND* I N C O M E
TABLE 1 4 7 . — E s t i m a t e s of the aggregate wages paid by farmers
by years, 1918 to 1923

to hired farm

Indices of Indices of Indices of
wage
acreage
total
rates 1
sown 1
wages 2

Year
1918
1919
1920
1921
1922
1923

0.8675
1.000
1.156
.770
.743
.835

1.000
1.000
.985
1.050
1.055
1.059

0.8575

1.000

1.140
.809
.785
.885

workers,

Estimated
total wages
$1,176,000,000
'1,356,000,000
1,546,000,000
1,097,000,000
1,065,000,000
1,132,000,000

1 Agricultural Yearbook, 1920, p. 808, and 1923, pp. 1139 and 1148. The index numbers have been converted to a base of unity in 1919.
2 Indices of wage rates X indices of acreage shown,
a Census of 1920, vol. 5, p. 503.

In addition to this hired labor, the farmers themselves and members of their families furnish much labor, indeed probably more
than is hired. The Department of Agriculture estimates the value
of such labor at $5,314,000,000 in the crop year 1919-20, $6,131,000,000
in 1920-21, $4,089,000,000 in 1921-22, $3,945,000,000 in 1922-23,
and $4,428,000,000 in 1923-24. The remuneration for this labor of
farmers and members of their families, however, is not separable
from the return to the investment in the farm enterprises.
These estimates of the shares in the value created by agriculture
are brought together in Table 148, the composite share of the farmers,
land owners, and mortgage investors being the residuum after deducting wages from the total.
TABLE 148.—Estimates of the total value created by agricultural
industry and
shares thereof that went in wages of hired workers, rent, bond interest, profit
farmers' investment and remuneration
for labor of farmers and their families,
years, 1918 to 1923
[Millions of dollars]

Year

Total
value
product
$14,219
14,157
9,226

1918
1919
1920

Wages
of hired
workers
$1,176
1,356
1, 546

Rent,
bond
interest,
profit,
etc.
$13,043
12,801
7,680

the
on
by

1921...
1922.
1923.

Total
value
product

Wages
of hired
workers

Rent,
bond
interest,
profit,
etc.

$6,667
9,413
9,433

Year

$1.097
1,065
1,132

$5,57
8,34
8,3

Section 13. Proportions of the various shares to the total value of
product.
Table 149 presents the percentages of wages of hired labor and of
the combined rent, mortgage interest, and return to the farmers for
their investment, enterprise, and labor to the estimated total value
created by agricultural industry.
TABLE 149.—Estimated percentages of the total value created by agriculture,
between wages of hired labor and in return to all employed capital and the
and labor of the farmers, 1918 to 1923

Year

1918 . .
1919.
1920
1921




Wages

8.3
9.6
16.7
16.4

Return to
employed
capital
and the
farmers
91.7
90.4
83.3
83.6

Year

1922
1923..
Average..

Wages

divided
enterprise

Return to
employed
capital
and the
farmers

11.3
12.0

88.7
88.0

11.7

88.3

250

NATIONAL,

WEALTH AND* INCOME

Wages of hired labor claimed only 11.7 per cent of the total value
created by agriculture during the six years. The reason for this was
that most of the labor in agriculture is furnished by the farmers
themselves and by members of their families and is not compensated
by contract money wages.
, Fo:r the last-stated reason the 88.3 per cent shown in the last
column as the part of the total that went to employed capital and
the farmers was as much a return to the labor of the farmers and
their families as it was a return to the capital invested in the farm
business.
TAXES.—The amount of taxes payable by agricultural enterprises
on real and personal property of farmers are estimated by the Department of Agriculture by crop years as follows:
1919-2 0
1920-2 1
1921-2 2
1922-2 3
1923-2 4

$532,000,000
746, 000, 0 0 0
797, 000, 0 0 0
845, 000, 0 0 0
845, 000, 0 0 0

These amounts do not include income tax. The statistics of
income, published by the Treasury Department, shows all taxes
paid by corporations in agriculture and related industries. While
showing the net taxable income of individuals, however, it does not
show the amount of taxes paid by farmers. The agricultural corporate income taxes for 1922 were only $6,622,000.9 This represented
gross income of only about $785,000,000 and a net income from the
business of only $6,908,000.10 Less than 105,000 individuals in agriculture and related industries filed reports for that year and their aggregate net income was only $231,290,000.n The average net income of
these individuals was only about $2,210, which, with the personal
deductions,. would result in no tax. It may be inferred, therefore,
that the amount of Federal income taxes paid by farmers was practically a negligible quantity. The same inference applies to the other
years.
The taxes estimated by the Department of Agriculture may,
therefore, be taken as the best available estimates for the years 1919
and 1923, respectively. The amount for 1918 is roughly estimated,
by observing the trend, at $500,000,000.
9
10
11

Statistics of Income, 1922, p. 19.
Statistics of Income.
Statistics of Income, 1922, p. 10.




CHAPTER

XIII

MINING, MANUFACTURE, AND CONSTRUCTION
Section 1.—Value created by the mining and quarrying industry.
The statistics of the fourteenth census for all mines, quarries, and
petroleum and natural-gas wells in continental United States in
1919 were used as a base for estimates for the other five years of the
>eriod 1918 to 1923. An attempt was also made to secure material
or this study from Poor's and M o o d y ' s Manuals, but was abandoned
because the published data for different companies were not comparable.
In order to utilize the census data for this period, a questionnaire
was mailed to a list of over 2,100 mining, quarrying, and crude petroleum and natural-gas producing companies, so chosen as to be representative of all branches of the industry. They were requested to
report for each of the six years, if practicable, the following items:
Net sales of products; salaries, wages, and commissions of officers
and employees; expenses incurred for work done under contract
(in cases of petroleum companies); all rents and royalties, lease
rentals and bonuses; interest on bonds and mortgages; all taxes pertaining to the business, including income taxes; and all other operating expenses. They were also asked to report income from dividends and profits of other businesses, interest on bonds and mortgages owned, and rental of sublet premises. Where it was not
>racticable for them to report for all six years, three years, preferable
or the purposes of tabulation, were requested.
About 23 per cent (485) of the companies addressed responded
with usable reports, 238 of this number reporting for all s i x years. A
few reported for only the three years specified, but for no year were
there fewer than 257 companies reporting.
The total net sales of the 21,280 mining, quarrying, and oil-well
enterprises covered by the census amounted to nearly $3,158,500,000
in 1919, of which amount about $1,445,000,000, or something over
45 per cent, was paid to officers and employees as salaries, wages,
and commissions.
Using the total value of products in 1919 as given in the census
for a base, the following table shows the increase or decrease in the
industry during each year as compared with the year preceding it:

{

J

TABLE 1 5 0 . — E s t i m a t e d total net sales of the mining, quarrying,
by years, 1918 to 1928
Year
1918
1919
1920

Net sales
i $3,305,296,117
a 3,158,463,666
5,369,186,690

Sequential ratios
1.0465
1.0000
1.6999

Year
1921
1922
1923

and oil-well

industry,

Sequential ratios

Net sales
$3,383, 502,704
3,715,811,747
4,974,018,475

* Because no data were available for 1917,1918 was compared with 1919.
2 Reported by Census of Mines and Quarries, 1919, p. 20.




251

0.6302
1.0982
1.3386

N A T I O N A L , W E A L T H AND* I N C O M E

252

The total net sales of products of the industry increased from a
little over $3,300,000,000 in 1918 to nearly $5,000,000,000 in 1923,
an increase of about 51 per cent. It will be noted that in 1921, the
year of industiial depression, there was a sharp decline from the preceding yeay of nearly $2,000,000,000 or three-eiffhths of the volume of
business. The peak came in 1920, when ihfrraiMe shows a value of
net sales of over $5,300,000,000.
Table 151 shows estimates of the value* treated by the mining,
quarrying, and oil-well industry, and the distribution between wages
and salaries, and employed capital.
TABLE 151.—Estimated value creating by the mining^ quarrying, and oil-well
industry, >and estimated
division between wages and salaries,
and rents,
royaltiesr
interest and profits, by years, 1918 to 1923
[Amounts in thousands]

1918
1919
1920

Wages and
salaries

Rents,
royalties,
interest,
and profits

$2, 646, 514 $1, 557,173
2,401,479
1,445,265
4,049,334
2,117,790

$1,089,341
956,214
1,931,944

, Total
value

Year

J.Lx.

Total
vialue

1921
1922.
1923

Wages and
salaries

$2,092,848
2,481,067
3,445,913

Year

$1,586,896
1,396,416
2,042,573

Rents,
royalties,
interest,
and profits
$505,952
1,084, 651
1, 403.340

It will be noted that, as was true of net sales, the total value
product increased during the six-year period, though not to such an
extent as the total net sales, the total increase being only 30 per cent
as against 51 per cent in net sales. Here also the depression of 1921
is clearly indicated by a decrease of about one-half from 1920. In
the matter of wages and salaries the lowest point was reached in
1922 when the industry had only partially Recovered from the slump
of 19^1. This would seem to indicate that in the mining industries
recovery fronjL the industrial depression was slower than in other
industries.
The following table shows the percentages of the estimated total
value product represented by the principal shares going to make up
that value:
TABLE 1 5 2 . — P e r c e n t a g e distributions
of the estimated total value product of the
mining, quarrying,
and oil-well industry between wages and salaries, and rents,
royalties, interest and profits, by years 1918 to 1923

Year

1918
1919
1920
1921

Wages and
salaries

Rents,
royalties,
interest,
and profits

58.8
60.2
52.3
75.8

41.2
39.8
47.7
24.2

1922_
1923Average

Wages and
salaries

Rents, •
royalties,
interest,
and profits

56.3
59.3

Year

43.7
40.7

59.3

40.7

Salaries, wages, and commissions constituted from one-half to
three-fourths of the total value product, and the part that went to
employed capital, before the deduction of taxes, ranged from 24 per
cent in, 1921 to nearly 48 per cent in 1920, the highest proportion
for the period.




253

NATIONAL,

WEALTH AND* INCOME

For comparison of the different branches of this industry a table
of net sales of products is given below:
TABLE 153.-+-TEstimated net sales of products
of each important
branch
mining, quarrying,
and oil well industry, by years,
to 192S

of

the

[Amounts in millions]
Branch

1918

19191

1920

1921

1922

1923

$325
1,531
347
79
, 158
104
621
118
22

Total

$364
1,146
181
68
218
76
932
147
26

$445
1,782
185
53
381
97
2,111
279
36

$422
1,174
61
56
114
40
1,284
218
15

$302
1,024
115
50
197
61
1,683
262
22

$576
1,413
224
39
142
73
2,167
319
21

3,305

Anthracite coal
Bifctfminous coaL
Copper
Odd and silver.-Iron ore
Lead &nd « n c
Petroleum and natural gas
Stone quarries
All other not Specified

3,158

5,369

3,384

3,716

4,974

i Fourteenth Census of the United States, Mines and Quarries, 1919, p. 20.

Mineral Resources of the United States, published annually by
the Geological Survey, places the value of mineral products in each
of the six years higher than that shown in the foregoing table.
In 1919, the year of the census upon which the estimated figures
were based, the survey showed a value of mineral products of
$4,595,370,000, as against the census figure of $3,158,464,000. The
difference is undoubtedly due to the fact that many of the products
included in the former are manufactured or partly manufactured
products and are valued at their sales price rather than th^ value of
the raw product. Examples of this are copper, pig iron, refined
lead, platinum, quicksilver, clay products, sand-lime bricks, sulphuric
acid, etc.1
Bituminous-coal mining outranked all other branches of the industry in importance in 1918 and 1919, but petroleum and natural
gas ranked first from 1920 to 1923, and showed estimated total net
sales exceeding those of the bituminous-coal business by about threequarters of a billion in 1923. The anthracite industry ranked~third
each year of the six-year period excepting in 1918, when it was fourth.
The net sales for stone quarries reflect the boom in the building industry which began in 1920.
[Amounts in millions]

Product

Anthracite coal
Bituminous coal
Copper

Aa|/I anrl siWpr

Iron ore
Lead and zinc

Census
of nlines
and
quarries
$364
1,146
181
68
218
76

Mineral
resources
of the
United
States

Censiis Mineral
of mihes resources
of the
and
quarries United
States

Product

$365 Petroleum and natural gas
1,161 Stone quarries
239 Various
124
• 197
Total
111

-

$932
147
26

$893
223
•1,487

3,158

•4,800

«Includes items listed in table but not in total of $4,595,370,000.
i For example, the differences in the two reports for the Census year, 1919, are indicated below:




2 5 4

NATIONAL,

WEALTH AND* INCOME

Appendix Table 42 shows the proportion of the total value product
of the mining, quarrying, and oil-well industry representing wages
and salaries, and rents, royalties, interest, and profits, in each of the
six years, for each branch of the industrty with the average in each
case for the six-year period.
The one branch of the industry that appears to be the least remunerative is gold and silver mining. In 1921 the estimated expenses
incidental to operating these mines exceeded the income by considerably over $15,000,000. In only two years, 1918 and 1919, was there
any estimated surplus, and that was very small—less than $10,000,000
in 1919, or a little over 14 per cent of the total net sales. When
these expenses are considered in relation to the total value product
of the industrv, conditions in the gold-mining business appear even
worse. This fact is clearly indicated in the following table showingthe estimated proportions of the total value product made up of
wages and salaries, and rent, interest, and profits, before the payment
of taxes:
T A B L E 1 5 4 . — E s t i m a t e d value product
of the gold and silver mining
industry
estimated
division
among
wages and salaries,
and rent, interest,
and profit,
years, 1918 to 1923
[Amounts in thousands!

Y*ur

1918
1919
1920

Value
product
$35,733
41,774
25,046

Rent, inWages and terest, and
salaries
profit
$29,162
29,174
28,716

$0,571
12,600
13,670

Year

1921
1922
1923...

Value
product
$13,466
24,791
22,597

and
by

Rent,' inWages and terest, and
salaries
profit
$27,165
28,003
29,991

i $13,690
13,212
i 7,394

i Estimated loss.

In 1921, wages and salaries constituted more than twice the total
value product. Furthermore, in four of the six years not only was
there no share for employed capital according to this estimate but
the capital itself was greatly trenched upon in 1921, and to a lesser
degree in the other years. There was a small amount available for
employed capital in 1918 and 1919.
From the foregoing it would seem that the fascination of gold:
mining is such that people are willing to sink large amounts of moneys
in the business year after year in the hope that eventually a large
profit will be made.
In the copper business the average estimated shares of the value
product received by labor and capital for the 6 year period were
52 per cent and 37 per cent, respectively. However, this does not
mean that those shares maintained these relative positions during
this time. On the contrary, labor's share varied from 43 per cent
to 99 per cent of the total value ^product, while capital's share,
before the payment of taxes, varied from 57 per cent to only 1 per
cent. Labor's share was smallest in the petroleum and natural gas
industry, showing, an average of 34.5 per cent of the total value
product for the six years, with a range from 27 per cent in 1919 to
62 per cent in 1921.




255N A T I O N A L ,W E A L T H AND* I N C O M E

The percentages of estimated increase or decrease in the total
value product of the principal branches of the industry from 1918
to 1923 are shown in the following tabular statement:
Product

Anthracite coal.
Bituminous coal
Copper
Gold and silver
Iron ore
Lead and zinc

j
Product

Increase, Decrease,
1923 over 1923 from
1918
1918

Petroleum and natural gas___
Stone quarries
All others, not specified

Per cent Per cent
186.0
214.2
6.1

Increase, Decrease,
1923 over 1923 from
1918
1918
Per cent
71.3

Per cent
9.1
41.6
36.8
27.3
37.4

Total mines, quarries,
and oil wells

30.2

Estimated decreases in the gross value of the products took place
during the six years of 42 per cent in the case of copper mining, 37
per cent each for the gold and silver mining, and lead and zinc
mining industries. The increases in the value of the products of the
petroleum and natural-gas producing industry, 186 per cent, and of
stone quarries, 214 per cent, reflect the rapid increase in petroleum
production and the effect of the building boom and of hard surface
road building which has lasted for several years.
TAXES.—The amounts of taxes payable by the enterprises in the
njining, quarrying and oil and gas well industries (disregarding
taxes payable by employees or lenders of capital) and percentages
of the total value product of these industries, are estimated as
follows:

Year

1918
1919_
1920

Amount of
taxes

$173,575,000
141,000,000
171,681,000

Per cent
of total
value
product
6.6
5.8
4.2

Year

1921
1922
1923

Amount of
taxes

$138,579,000
112,305,000
124,440,000

Per cent
of total
value
product
6.6
4.5
3.6

DISTRIBUTION OF W A G E S AND SALARIES BY OCCUPATIONAL GROUPS
I N THE M I N I N G , Q U A R R Y I N G , AND O I L - W E L L I N D U S T R Y . — S t a t i s t i c s

of wages and salaries for the mining, quarrying, and oil-well industry
are based on figures given in the census of mines and quarries for the
year 1919, the census being taken only every 10 years.2
The following table shows the total number of employees, by
occupational groups, for each branch of the industry, and the distribution of wages and salaries paid to those employees.
2 Producing enterprises only have been considered in this section, the operations of nonproducing enterprises being covered in another section of this investigation.




256

NATIONAL,

WEALTH AND* INCOME

TABLE 1 5 5 . — N u m b e r of employees
and amount
occupational
groups of the principal
branches
oil-well industry in 1919

of wages and salaries paid by
of the mining, quarrying9
and

Salaried employees and wage
earners
Branch of industry

Other clerical

3,961
18,166
1,498
1,091
1,245
962
7,964
2,884
720

3,390
15,407
1,681
441
1,740
772
9,718
2,176.
381

147,372
545,798
43,717
16,816
45,741
21,884
93,205
56,132
10,895

2.6
3.1
3.2
5.9
2.5
4.1
7.2
4.7
6.0

38,491

35,706

981,560

3.6

Total

Wage
earners

Total salaries and wages

Anthracite coal
Bituminous coal
Copper
Gold and silver
Iron ore
Lead and zinc
Petroleum and natural gas
Stone quarries
Variety not otherwise specified
Total

Officers,
managers,
etc.

Officers,
managers,
etc.

Anthracite coal
Bituminous coal
Copper
Gold and silver
Iron ore
Lead and zinc,
„
Petroleum and natural gas
Stone quarries
Variety not otherwise specified

Branch of industry

Per cent of total
employees

Officers,
managers,
etc.

Other Wage
clerical earners

2.2
3.7
3.6
2.4
3.6
3.3
8.7
3.6
3.2

J

Officers,
managers,
etc.
4.0
6.7
6.7
9.8
5.1
7.9
12.7
10.4
13.3

$4,146,934
18,334,820
3,020,767
595,451
2,737,828
1,120,246
12,092,996
2,602,384
442,405

$210,289,473
682,601,068
66,390,194
25,731,729
75,713,459
30,708,319
134,521,247
58,963,411
11,017,326

104,235.154

45,093,831

1,295,936,226

3.4

93.0

Per cent of total salaries and wages

Other clerical W ^ e earners

$8,848,535
50,334,218
5,018,974
2,847,103
4,198,832
2,714,694
21,375,372
7,138,126
1,759,300

95.2
94.2
93.2
91.7
93.9
92.6
84.1
91.7
90.8

7.2 j

Other Wage
clerical eari^rs

1.8
2.4
4.1
2.0
3.3
3.2
7.2
3.8
3.4

94.2
90.9
89.2
88.2
91.6
88.9
80.1
85.8
83.3

3.1

89.7

For the industry as a whole, 3.6 per cent of the employees were
officers, managers, superintendents, 3.4 per cent other clerical
employees, and 93 per cent were wage earners. Of wages and salaries
paid, 7.2 per cent went to officers, managers, and superintendents,
3.1 per cent went to other clerical employees as salaries, and 89.7 per
cent was paid to wage earners.
In the distribution of wages and salaries, officers, superintendents,
and managers representing 2.5 per cent and 7.2 per cent of the total
employees in the iron-mining and petroleum-producing businesses,
respectively, received 5.1 and 12.7 per cent of wages and salaries paid
in those industries. In the mining of minerals not otherwise specified,
officers, superintendents, and managers representing 6 per cent of
the total number of employees received 13.3 per cent of the total
wages and salaries. In this same industry wage earners, representing
90.8 per cent of the employees, received only 83.3 per cent of salaries
and wages paid.
In the two industries cited above, namely, iron mining and petroleum producing, wage earners representing 93.9 and 84.1 per cent,
respectively, of the total employees, received only 91.6 and 80.1 per
cent of wages and salaries paid.




257NATIONAL,W E A L T H AND* I N C O M E

The following table shows the per capita wages and salaries paid
during the census year 1919 in the various branches of the mining,
quarrying, and oil-well industry, by occupational groups:
TABLE 1 5 6 . — P e r capita wages and salaries paid employees of the mining,
quarryjing, and oil-well industry during the year 1919, by occupational
groups
Average compensation,1 occupational groups, and indices
Branch of industry

Anthracite coal
Bituminous coal
Copper
Gold and silver.
Iron ore
Lead and zinc
Petroleum and natural gas _
Stone quarries
.
Variety not otherwise specified
Average

Officers,
managers, and
superintendents

Index
No.

Other
clerical
employ-

Index
No.

$2,234
2,771
3,350
2,610
3,373
2,821
2,684
2,475

82.5
102.3
123.7
94.6
124.6
104.2
99.1
91.4

$1,223
1,190
1,797
1,350
1,573
1,451
1,244
1,196

96.8
94.2
142.3
106.9
124.5
148.9
98.5
94.7

$1,427
1,251
1,519
1,530
1,655
1,403
1,443
1,050

2,443

90.2

1,161

91.9

1,011

76.6

2,708

100.0

1,263 I 100.0

1,320

100.0

Index
No.

Wage
earners

All
groups

108.1
94.8
115.1
115.9
125.4
106.3
109.3
79.6

i The average of each group for the entire industry is used as the base.

The average of wages and salaries for the entire industry in each
occupational group being 100, it can readily be seen where the highest
wages and salaries per capita are paid. In the iron-ore mining business both salaried employees and wage earners were paid above the
average for the industry with an average for all employees of 124 per
cent. However, in individual groups lead and zinc paid the highest
salaries in the clerical group, showing 149 per cent of the average for
that group. The branch of this industry that seems to have paid
the lowest per capita wages and salaries, averaging 80.5 per cent, is
the mining of minerals not otherwise specified in each occupational
group of which the per cent was low, especially among wage earners,
with a per cent of 76.6.
The following table shows the employees in the mining, quarrying,
and oil-well industry, by occupational groups and geographical
divisions, during the census year 1919:
TABLE 1 5 7 . — P e r c e n t a g e distribution
of employees
and wages and salaries in the
mining, quarrying,
and oil-well industry, by geographical
divisions, for the year
1919
Percentage of total wages and
salaries

Percentage of employees
Geographical divisions

New England
Middle Atlantic
South Atlantic
East North Central.
East South CentralWest North Central
West South CentralMountain
Pacific coast
Total




Officers,
man-

Officers,
Per
mancent
Other Wage
agers,
Other Wage
of
and
clerical earners United
and
clerical earners
superinsuperinStates tendents
tendents
5.0
2.9
3.9

3.0

3.6

3.2
2.9
3.3
3.5

3.8
5.2

3.3
4.8

92.0
94.5
92.9
93.8
92.8
92.9
84.4
92.9
90.0

3.6

3.4

•3.0

6.8

2.6
8.8

0.7
33.5
13.2
19.2
9.5
6.4

6.6
8.3
2.6

100

10.7
5.2

8.2

7.4
8.4
7.0
12.7
7.0
9.2
7.2

2.4
2.3
3.0
2.9
3.3
3.6

6.6

3.4
3.7

258

NATIONAL WEALTH AND INCOME

Officers, managers, and superintendents in the New England,
South Atlantic, East North Central and East South Central divisions,
representing 5, 3.9, 3.3, and 3.9 per cent of their respective groups,
received 10.7, 8.2, 7.4, and 8.4 per cent of their total wages and
salaries. Other clerical employees' shares were more or less uniform throughout the United States. Wage earners received the
lowest compensation in the New England division, where 92 per
cent of the total employees received omy 86.9 per cent of wages and
salaries, and the highest in the Middle Atlantic division, where 94.5
per cent of wage earners received 92.5 per ceptt of the total wages and
salaries. The section in which all employees received the highest
pay was the mountain division where 8.3 per cent of the total employees in the United States received 10.1 per cent of all wages and
salaries paid.
Section 2. Value created by the manufacturing industry.
A census of manufactures is taken biennially. In these censuses
manufacturing is divided into 14 major groups. The census of
1923 included 195,714 manufacturing establishments, employing
10,029,370 salaried officers and employees and wage earners.
The data compiled b y these censuses gave the cost of materials and
value added b y manufacture. However, in the former item were
not included such costs paid to other business as ordinary repairs and
depreciation applying to the factory, the cost of light, stationery, and
other supplies used in the selling and the general administration of
the business, interest on bank loans, depreciation of buildings and
equipment used in selling and general administration, etc. In.
consequence the amount given b y the census as " value added b y
manufacture" exceeds the net value created b y these industries to
the extent of these omitted costs.
It was therefore necessary to supplement the census figures and
also to get data for the intercensual years so that estimates might be
made. Accordingly requests for information as to the amounts of
certain expenses and costs which could not be obtained otherwise
were sent to about 6,000 manufacturing concerns selected to cover all
kinds of manufacturing and include concerns of all sizes. Although
data were especially requested for two specified years, in the majority
of cases the companies reported for all six years desired. These
estimates are based upon information furnished b y 1306 companies
in 1923, with aggregate sales of $7,730,000,000. The samples for
1918 consists of 593 companies, whose sales amounted to $2,917,000,000. These are thought to be representative samples and the data
are reasonably comparable.
From these reports it has bjen estimated that the value created
b y all manufacturing industries in 1919, a census year, amounted to
$22,097,431,000, whereas the census figure for that year showed
$24,809,093,000 as the "value added b y manufacture." This
difference is chiefly due to the inclusion in the latter of interest on
bank loans and miscellaneous general and selling expenses, which, it
is estimated, amounted to about $2,660,000,000. In 1921 the
census showed a total value added b y manufacture of $18,316,666,000,




259NATIONAL,WEALTH AND* INCOME

whereas this estimate showed the value product as $14,168,862,000.
Again this difference could be accounted for by excluding from the former the interest on bank loans, rent of offices, etc., which are estimated
at $2,964,427,000, and by repairs and depreciation of factory buildings
and equipment, which the Census does not include in cost of materials.
The estimate made for 1923 shows a value-product of $24,171,000,000,
whereas the preliminary census estimate for total value added by
manufacture was $25,853,000,000. This difference of about $1,682,000,000 would probably take care of the variation in the items used.
The following table shows the estimates of the value created by
manufacturing in the United States and the portions thereof that
went as salaries and as rent, interest on bank loans and profits:
TABLE 1 5 8 . — E s t i m a t e d value created by the manufacturing
division between salaries and wages, and rent, interest,
1918 to 1923
[Amounts in millions]

1918
1919
1920

Total
value
created

Salaries
and
wages

19,344
22,097
28,486

Year

11,039
12,579
18,400

Rent,
interest,
profits
8,305
9, 518
10,086

industry and
estimated
and profits, by
years,

1921
1922
1923.

Total
value
created

Salaries
and
wages

14,168
19,167
24,172

Year

Rent,
interest,
profits

10.566
12.684
15.567

3,602
6,483
8,605

The estimated total value created by manufacture increased from
$19,344,000,000 in 1918 to $22,097,000,000 in 1919 and reached its
peak of $28,486,000,000 in 1920. Then in 1921 there came the
industrial depression, strongly reflected in a decrease of over 50 per
cent to $14,168,000,000. The year 1922 showed arise to $19,166,000,000 and in 1923 the total value reached $24,172,000,000.
The following table shows the estimated total value created by
manufacture divided into the fourteen major groups of manufacturing*
TABLE 1 5 9 . — E s t i m a t e d total value created by each of the 14 major
manufacturing
industry, by years, 1918 to 1923

groups

of the

[Amounts in millions]
Industry group

1918

1919

1921

1920

1922

Eood and kindred products
$1,203 $1; 604 $1,372 $1,079 $1,317
Textiles and their products
6,032 3,090 4, 650
3, 845 4,404
Iron and steel and their products
3,057
2,163
4,038
3,952 7,071
Lumber and its remanufactures
1,408
1,964
984
1,016
1,328
Leather and its finished product
718
796
704 1,054
918
1,404
Paper and printing
1,361
1,077
1, 313 2,251
234
Liquors and beverages
74
438
345
127
Chemicals and allied products.
807 1,497
1,709
1, 645 1,786
504
575
Stone, clay, and glass products
776
626
820
781
435
Metals and metal products other than iron and steel..
894
851
860
291
Tobacco manufactures
277
252
234
171
Vehicles for land transportation
651
658
1,625
1,257
1,420
524
Railroad repair shops
474
579
401
413
1,982
Miscellaneous industries
1,585
1,698 2,860 2,953
Total




19, 344 22,097

28,486

1

14,168

19,167

1923
$1, 369
4,364
5,499
1,794
820
1,366
26S
1, 705
69&
1,061
309
1,329
891
2,700
24,171

260

NATIONAL, W E A L T H AND* INCOME

Iron and steel and their products led the industries in 1923 with a
total value created by manufacture of $5,500,000,000, or 22.75 per
cent of the total. It led in 1918 also with 20.87 per cent and again
in 1920, when it contributed 24.82 per cent of the total. In 1919,
1921, and 1922, however, it yielded first place to textiles.
It is interesting to note how sharply business fluctuations affected
the iron and steel industry. In 1919 it showed depression more than
manufacturing in general, probably due to the discontinuance of
war work, ana the fluctuations from years of prosperity to years of
depression have been much more violent in the other years also.
For instance, the value created by iron and steel manufacturing in
1920 was 79 per cent greater than in 1919 as compared with only 29
per cefnt for manufacturing in general. In 1921, a depression year,
the reduction in the value created by general manufacturing was
approximately 50 per cent while the reduction in the value created
by iron and steel manufacturing was nearly 70 per cent.
As has been stated, textiles assumed first place among the major
groups of manufacturing in the years 1919, 1921 and 1922. In 1919
it accounted for 19.93 per cent of the total value created by manufacture, in 1921 it accounted for 21.81 per cent and in 1922 for 28.69
per cent. In the other years textile manufactures held second rank
with reference to the total, and in 1923 the value created by this
branch of manufacturing was $4,364,000,000.
Other groups in the manufacturing industry, in the order of their
importance in 1923, as indicated by the total value created were:
Lumber and its remanufactures, $1,794,000,000; chemicals and
allied products, $1,705,000,000; food and kindred products, $1,369,000,000; paper and printing, $1,366,000,000; vehicles for land transportation, $1,329,000,000; metals and metal products other than
iron and steel, $1,061,000,000; railroad repair shops, $891,000,000;
leather and its finished products, $820,000,000; stone, clay, and
glass products, $696,000,000; tobacco manufactures, $309,000,000;
liquors and beverages, $268,000,000; miscellaneous industries,
$2,700,000,000.
The manufacture of vehicles deserves special mention because,
like the iron and steel group, the value created by this industry
suffered a very large reduction during the industrial depression and a
correspondingly large increase with the recovery of prosperity.
For instance, the value created by vehicle manufacture in 1921 was
nearly 60 per cent less than in the preceding year and in 1923 it was
nearly double that of 1922.
Appendix Table 81 shows for the 14 major groups the value
created by the manufacturing industry divided into salaries and
wages and rent, royalties, and profits. The percentages of salaries
and wages and of rent, interest, and profits to the total value created
by each of the 14 major groups of manufacturing industry are shown
below:




261N A T I O N A L ,W E A L T H AND* I N C O M E
TABLE 1 6 0 . — P e r c e n t a g e distribution of the total value created by the 14 major
groups
of the manufacturing
industry
divided
between salaries and wages and
rent
interest and profits,
1918-1923
1918

Industry group

Average

1921

1920

m
T
J
•o
to C
O
0 G -d
0 Oa
G
O
0
3
3
0C ®© 0
3O
C -M °
O
t>
o
©
a
?
c o3>
o
oab
w 5 .Sft c oe
P
© U
a s
>
®£
•5 £
c
<
3
flS
>
©
"5
o
73
«a & G
G
O
O tf
W

£

Food and kindred products.
Textiles and their products..
Iron, steel, and their procucts
Lumber and its manufactures
Leather and its finished
products
Paper and printing..,Liquors and beverages
Chemicals and allied products
Stone, clay, and glass products.
Metals and metal products
other than iron and steel..
Tobacco manufactures
Vehicles for land transportation.^..—
Eailroad repair shops
Miscellaneous industries

1919

59.0
44.0
67.8

P

P

47.2
54.9
29.8

03

1922

1923

C C
O O
to c 'd
o a
0
3
0
3
S
(3 is a C
O
s'©
C83 >.Sft c Co B » Cs
O
oD
Oe
to
© 0w
©M
e
©e
•g*
BS
P tf So3 73 «a as 73 tf C
«
S S
a
>
©
C
S
O
Q
m
w.
T
3
a

39.7
42.6
12.7

59.0
60.5
75.5

41.0
39.5
24.5

66.0

34.0

61.8

38.2

63.1
71.4
12.7

36.9
28.6
87.3

62.6 37.4
65.4 34.6
13. 2- 86.8

22.8
44.0
25.5

85.6
66.6
81.1

14.4
33.4
18.9

70.3
57.4
87.3

59.7

40.3

81.7

18.3

53.6
63.0
68.3

46.4 66.6 33.4
37.0 72.0 28.0
31.7 112.5 112.5

41.0
56.0
32.2

52.8
45.1
70.2

66.7

33.3

61.5

38.5

55.3
67.1
15.0

44.7
32.9
85.0

51.7
66.0
33.3

48.3
34.0
66.7

38.9

61.1

44.4

55.6

54.2

45.8

61.4

38.6

59.2

40.8

51.2

70.3

29.7

71.4

28.6

65.0

35.0

80.3

19.7

65.5

34.5

62.9

37.1

65.3 34.7
65.5 |34.5

58.3
72.3

41.7
27.7

70.0
46.4

30.0
53.6

96.9
59.1

3.1
40.9

67.9
57.0

32.1
43.0

66.4
59.0

33.6
41.0

66.6
56.5
57.6

33.4
43.5
42.4

57.7
56.3
60.4

42.3
43.7
39.6

63.7
64.5
66.2

36.3
35.5
33.8

86.1
74.8
69.8

13.9
25.2
30.2

40.1
65.7
70.0

59.9
34.3
30.0

58.7
61.7
70.0

41.3
38.3
30.0

57.1

42.9

56.9

43.1

64.6

35.4

74.6

25.4

66.2

33.8

64.4

35.6

77.2
56.0
74.5

48.8

i Loss.

Salaries and wages varied from 13.2 per cent in the liquors and
beverages industry to 75.5 per cent in the manufacture of iron, steel,
and their products. For further details as to the distribution percentages in 1923 and the earlier years, reference is made to the table.
The National Industrial Conference Board has published index
numbers of the average weekly earnings of all wage earners, also
index numbers of wage earners employed. From these there has
been obtained the index numbers of the aggregate wages per week in
the last half of 1920, the whole of 1921, and the last half of 1922. The
aggregate wages per week during the first half of 1921 were 38 per
cent less than during the last half of 1920, and for the last half of
1921 they were 47 per cent less.
This decline in the wages and salaries in 1921 is further borne out
by the tabulation based on the reports received by this investigation*
In 1920 the salaries and wages in the manufacturing industries
amounted to $18,400,000,000, but in 1921 to only $10,566,000,000.
In spite of this heavy drop in the amount of the salaries and wages,
it is interesting to note the large percentage of the total value
>roduct that went to salaries and wages, especially in 1921. The
ollowing table shows the proportions of total value product that

J




2 6 2

NATIONAL,

WEALTH AND* INCOME

went for salaries and wages, and to rent, royalties, bond interest, and
profit for the six-year period 1918 to 1923:
T A B L E 1 6 1 . — P e r c e n t a g e distribution
of the total value created
by the
industry
between
salaries
and wages,
and rent,
interest,
and profits,
1918 to
1923
Salaries and Rent, interest,
wages
and profits

Year

1918
1919
1920
1921.

57.1
56.9
64.6
74.6

42.9
43.1
35.4
25.4

manufacturing
by
years,

Salaries and Rent,interest,
wages
and profits

Year

66.2
64.4
Average

33.8
35.6

63.2

1922
1923

36.8

For the six-year period salaries and wages averaged 63 per cent of
the total value created by manufacturing while rent, interest, and
profits retained only 36.8 per cent. In 1921 salaries and wages comprised 74.6 per cent as against 25.4 per cent for rent, interest, and
rofits. In no year except 1918 did the latter share equal much over
alf the share going to salaries and wages and, as has been shown, in
1921 it equaled only a little over a third. In 1918, however, salaries
and wages amounted to 57.1 per cent as against 42.9 per cent.
TAXES.—The amounts of taxes payable by manufacturing enterprises (disregarding those payable by employees and lenders of capital)
are estimated as follows:
Year

Amount

Per cent

Year

Amount

Per cent

$1,127,I0OO, 000

8.0

DISTRIBUTION OF W A G E S AND SALARIES BY OCCUPATIONAL

GROUPS

1918.
1919.
1920.

$2,4$3,000, otor

12.9

2,034,Q00,000

. 7.1

2,126,000,000

IN THE MANUFACTURING

1921
1922
1923

1,086,000,000
1,421,000,000

5.7
5.9

INDUSTRY,—Statistics of wages a,nd salaries

paid by the manufacturing-industry in 1914, 1918, 1921, and 1923
were published in the census of- manufactures, The following table,,
based as these data, shows the, average wages per factory employee
in these years paid by 15 branches of the industry and by miscellaneous manufacturing enterprises.
TABLE

162.—Average

annual
groups,

wage
per factory
employee,
in 1914,
1919,
1921,
and

by major
1923
1919

1921

$738
682
692
655
667
597
646
645
614
633
554
565
552
516
442
435

$1,466
. 1,449
1,409
1,107
1,242
1,222
1,177
1,195
1,100
1,104
1,076
1,056
1,040
995
920
789

$1,457
1,279
1,606
1,364
1, 257
1,197 •
1,206
1,303
1,216
1,208
1,199
1,176
1,123
953
975
806

$1,589
1,484
1,477
1,409
1,381,
1,329
1,327
1,308
1,293
1,261
1,229
1,166
1,128
1,033
1,017
823

579

1,157

1,180

1,254

1914
Transportation, air, land, apd water
Itfon and steel and their products, not including machinery
Railroad repair shops
*
Paper and printing
.
4
Machinery, not including transportation equipment
Rubber products
1
Metals and metal products, other than iron and steel
Chemical and allied products
.
Stone, clay, and glass products...
Musical instruments and phonographs
Miscellaneous industries
Food and kindred products
Leather and its finished products
Lumber and allied products
Textiles and their products
Tobacco manufacture
All manufacturing industries




manufacturing

1923

263NATIONAL,WEALTH AND* INCOME

In comparing these amounts per employee for different industries,
it should be kept in mind that, as the employment of women and
children varies widely, the differences, not only in the average income
per employee, but also in the income per family are naturally quite
large. In the textile industries, for example, women and children are
extensively employed, but only to a comparatively small extent in the
iron and steel industry.
The manufacture of vehicles for land, air, and water transportation
paid the highest average annual wages for the year 1923, namely,
$1,589. This industry also paid the highest wages in 1914, though
the amount was much less, and also in 1919. The average wages in
1921, $1,457, were exceeded by those paid by the railroad repair
shops.
The average wages in the iron and steel industry came second in
1923 when they averaged $1,484, which may be compared with $682,
the average wages in 1914. The average wages in this industry were
reduced about 11.8 per cent, as compared with 1919, to $1,279, in the
depression year of 1921, and fell to fifth rank. The total value created
by this branch of manufacturing industry declined 45 per cent at the
same time, and the aggregate amount of wages and salaries paid b y
this branch fell 36.7 per cent.
Kailroad repair shops assumed third place in 1923, and paid average
wages of $1,477, while in 1914 the average wage was higher in only
one other group. In the depression year 1921, this branch of manufacturing industry paid the highest average wages, namely, $1,606.
The industry that paid the lowest average wages was the manufacture of tobacco, which paid only $823 in 1923. The average
annual wages in this industry were the lowest in all the years covered
by the comparison.
In spite of the large increases in average wages in the textile manufactures, especially the manufacture of clothing, in recent years, the
annual average in this group was next to the lowest of all groups in
1923, namely, $1,017. They were also next to the lowest in all other
3rears except 1921.
The average annual wages per employee for all groups for 1923 were
$1,254, as compared with $1,180 for 1921, $1,157 for 1919 and $579
for 1914.
These figures of average wages are the averages paid to employees
actually on the pay rolls, and do not show the true average income of
all those who regularly depend upon the industry for a living. This is
especially true of 1921, when it was estimated by the Department of
Labor that at one time there were 5,750,000 unemployed wage
earners in the United States. Had the average been computed for all
those dependent upon the industry it is not unlikely that a considerable decrease would have been shown, instead of an increase in 1921,
as compared with 1919.
The above table also fads to take, into consideration the actual
purchasing power of a dollar in each of the ye&rs discussed. Using
1919 as a base, a series of index numbers of the cost of living Was
obtained from data published by the Department of Labor.3 These
were applied to the average wage figures previously obtained. The
3 Cost of living in the United States, 1924, p. 466.




2 6 4

NATIONAL,

WEALTH AND* INCOME

following table represents the foregoing average wages measured in
terms of dollars of the s?,me purchasing power as of 1919:
T A B L E 1 6 3 , — A v e r a g e annual
wages per factory
employee,
expressed
in dollars
of
the same purchasing
power as in 1919, by major manufacturing
groups,
in
1914,
1919, 1921, and
1928
1923
Transportation, air, land, and water
*
Iron and steel and their products, not including machinery
Railroad repair shops
r ___
Paper and printing
Machinery, not including transportation equipment
Rubber products
Metals and metal products, other than iron and steel
Chemicals and allied products
Stone, clay, and glass products
Musical instruments and phonographs.
Miscellaneous industries
Food and kindred products
Leather and itsfinishedproducts. Lumber and allied products
Textiles and their products _ . „
..
Tobacco manufacture

$1,349
1,247

1,266

1,197
1,219
1,091

1,181

1,179
1,122
1,157
1,013
1,033
914
943
808
795

$1,568
1,377
1,729
1,468
1,353

$1,466
1,449
1,409
1,107
1,242
1,222
1,177
1,195
1,100
1,104
1,076
1,056
1,040
995
920
789

1,288

1,298
1,403
1,309
1,300
1,291

• 1,266
1,209
1,026
1,050

$1,750
1,634
1,627
1,552
1,521
1,464
1,461
1,436
1,424
1,389
1,354
1,284
1,242
1,138

1,120
906

Instead of more than doubling from 1914 to 1923, as shown by
the money wages paid in all of the groups, the "real" wages, as measured by actual purchasing power, increased on an average only
about 30.5 per cent, and in no case did the increase equal 50 per cent.
It is important to note, however, that there was in every case an
increase and generallv a substantial increase in the purchasing power
of the wages received.
The following table shows the average annual wages per employee
in the manufacturing industries in each of the nine geographical
divisions of the United States in 1914, 1919, and 1921, without correction for changes in the purchasing power of the dollar.
T A B L E 1 6 4 . — A v e r a g e annual

Region
Mountain
Pacific
East North Central
West North Central
Middle Atlantic
New England

1914
$818
757
638
617
582
551

wages
1914,
1919

per factory
1919, and
1921

$1,299 < $1,446
1,33$
1,370
1,249
1,294
1,093
1,238
1,206
1,233
1,084
1,063

employee,
1921
Region

West South Central.
South Atlantic
East South Central.
All regions

by principal

1914

regions,

1919

$548- $1,027
952
428
907
446
579

1,157

in

1921
$1,037
874

1, ttO

The average annual wage by geographical regions of the United
States are not available for 1923. In 1921 the highest average wages
for the year were paid in the mountain region, where the factory
workers averaged $1,446 per annum. The Pacific region took second
rank with $1,370. The East North Central came third with $1,294,
the West North Central fourth with $1,238, the Middle Atlantic
fifth with $1,^33, and New England sixth with $1,084. In the
West South Central region the average annual wage was $1,037. In
the South Atlantic ana East South Central regions, in which there
appears to be a large proportion both of colorealabor and of women
and children in factories, the average annual earnings per employee




265NATIONAL,WEALTH AND* INCOME

were $874 and $869, respectively. This comparison, however, would
have a clearer meaning and be much more interesting if it could be
coupled with a comparison of the cost of living in the various regions
which also varies geographically.
Section 3. Value created by the construction industry.
The construction industry may be described as a manufacturing
industry that is not carried on in plants of fixed location. Generally
each unit of product is specially designed. The industry includes
not only the erection of dwelling houses, apartment and office and
factory buildings of all kinds, but also the construction of roads,
bridges, tunnels, steam railroads, electric railways, pipe lines, ship
channels, canals, docks, wharves, sewers, water works, and dams.
Preparation of an estimate of the value created by the construction
industry presents many difficulties. The industry is not covered b y
any census enumeration, except that of occupations, and this does
not deal with incomes or values in any form. The statistical abstract
of the United States sets forth for each year the g;ross estimated value
of construction for which permits were granted in each of a number
of large cities. Obviously, however, large cities are not necessarily
representative of all communities in the United States.
Owing to the complicated and lengthy discussion involved in the
estimate of the income created by the construction industry the details of the discussion regarding the data and the preliminary estimates are set forth in the appendix. (Exhibit 4, p. 363.) The principal data are certain statistics of financial results of construction
corporations published in the Statistics of Income of the Treasury
Department, the statistics of the value of construction contracts
awarded as compiled and published by the F. W. Dodge Co., and an
index of the volume of construction based on shipments of construction materials, published by a trade journal—The Constructor.
Estimates of the volume of construction based on the available
statistics of contracts awarded are compared with the specific data
for construction corporations, and as a result of comparison and correction a final estimate is arrived at by averaging the first two as
shown in the following table :
TABLE 1 6 5 . — E s t i m a t e s of the gross value of construction,

by years,

1918

to

1923

[Amounts in millions]

1918
1919
1920
1921
1922
1923

Gross
income of
construction corporations 2

Second
estimate3

Final ,
estimate4

A

Year

First
estimate 1

B

O

D

$2,638
4,181
4,108
3,538
4,877
5,168

$3,706
3,827
4,260
3,376
3,354

$5,385
5,566
6,196
4,910
4,877
5,168

$4,012
4,873
5,152
4,224
4,877
5,168

See appendix, table 47, p. 369.
2 See appendix, table 43, p. 365.
Amounts for 1918 to 1922 are proportional to the corresponding amounts in column B, $4,877,000,000
shown for 1922 in column A being taken as the base.
< Average of the estimates in column A with the corresponding estimates in column C.
1

3




266

NATIONAL,

W E A L T H AND* INCOME

Column D sets forth the final estimates of the gross value of construction in the entire country. They indicate an increase from a
little over $4,000,000,000 in 1918 to $5,168,000,000 in 1923, with an
intermediate peak almost as large in 1920, namely, $5,152,000,000.
They show a large decrease, in gross value of construction in 1921
and a considerable revival. All of this is in harmony with what is
known concerning the course of general business prosperity and depression and the course of prices of construction materials and of
wage rates.
Compared to the estimate of $4,012,000,000 as the gross value of
construction in 1918, the National Bureau of Economic Research 4
estimated $2,766,000,000. That bureau's estimate was a compromise between an estimate based on the contract awards reported by
the F. W. Dodge Co. and another estimate. The latter was a composite of estimated construction by railway companies, reported constructkwqL by the Federal Government, and an estimate of private
building based on the building permits issued by a selected list of
large cities. The estimate for the country in the latter connection
was made by applying the ratio of the population of the United States
to the population of the selected cities rather than the ratio of the
increases of population. This estimate apparently omits electric
railway, electric power and irrigation plant construction. It also
seemingly omits road construction, except to the extent of the Federal aid extended in this connection. There is, therefore, no reason
to consider the bureau's estimate superior to the one set forth in this
report. Furthermore, the latter at least has the merit of not being
less than the gross value of construction work performed by corporations.
CONSTRUCTION.—In

Ap-

TABLE 1 6 6 . — E s t i m a t e s of the total value created by the construction
industry
of the portions divided between salaries and wages, and in profits, by years,
to 1928
[Amounts in millions]

and
1918

E S T I M A T E OF THE

VALUE

PRODUCT

OF

pendix Table 44, page 365, are derived the percentages that profits
were of gross income in 1918 to 1922, respectively. Gross income
exceeds gross construction value, however, because it includes injcome from other sources. Therefore, the application of those percentages requires that estimates of gross income be formed from
the foregoing estimates of gross construction values, This can be
done by multiplying the former estimates by the factor 1.025232,
which was the ratio of gross income to gross.construction values for
corporations in 1922.5 The wages and salary percentages, however,
are to be applied to the gross construction value estimates. The
results of applying these percentages are presented in Table 166.

Year
1918
1919
1920
1921
1922
1923

Total
value
product
1,534
1,884
1,928
1,475
1,648
• 1,754

Wages
and
Profits *
salaries °
$1,397
1,691
1,810
1,434
1,574
1,584

b See appendix, Table 48.
* See appendix, Table 49.
« For derivation, see text.
Remainder after subtracting t.axes and wages from the estimated total value product.
* Income in the United States, vol. 2, p. 106.
* See appendix, p. 370.

d




$137
193
118
41
74
d 17

NATIONAL WEALTH AND INCOME

267

Wages and salaries were estimated by applying to the gross value
of construction the wage and salarv percentages found prevailing
in Pennsylvania. (See Appendix Table 48, p. 370.)
It is estimated that the total value created by the construction
industry of continental United States was, in 1918, $1,534,000,000.
It was larger in 1919, and in 1920 reached its maximum of $1,928,000,000. I t was less than a billion and a half in 1921 but increased
again in both 1922 and 1923, so as to exceed one and three-fourths
billions of dollars in the latter year.
A comparison of these estimates of the value added by the industry
with the previous estimates of the gross value of the product, shows
the remarkable indication that from 62 to 67 per cent of the gross
value is represented in the cost of materials, fuel, and other items
that are the products of other industries. Using gross income as a
base, these payments to other industries amounted to 62.4 per cent
in 1918, 62.3 per cent in 1919, 63.5 per cent in 1920, 65.9 per cent in
1921, and 67 per cent in 1922. Considering the trend of the successive differences between these percentages, it was estimated that
the proportion for 1923 was slightly less than that for 1922, hence
66.9 per cent was chosen as the most probable percentage applicable
to that }^ear. Application of this to the estimated gross income of
the construction industry in 1923, namely, $5,298,000,000, gave
$3,544,000,000 as the most probable amount paid away to other industries in that year. The difference between these two amounts is
$1,754,000,000, which was taken as the most probable amount of
the value added by the industry in 1923.
The large amounts that went to the personnel as remuneration for
their services, and the highly fluctuating amount of profits are the
outstanding features of the division of the total created value among
the three cooperating factors.
As to the amounts of profits (before the deduction of taxes) shown,
which ranged from $41,000,000 in 1921 to $170,000,000 in 1923, it
should be said that the statistics of income show that the individual
constructors had an aggregate "net income77 of more than $146,000,000 in 1922 and $110,000,000 in 1921. These are to be compared with $74,000,000 and $41,000,000, respectively, shown in the
foregoing estimates for the entire industry. On superficial consideration these reported "net incomes" discredit the estimates.
However,, an important difference between the expenses of incorporated and unincorporated businesses should be remembered. It
is altogether probable that the managers of the construction cororations are also their chief, if not sole, stockholders. Because the
usinesses are incorporated, the managers receive salaries that are
fixed by contract and these salaries are included as a part of the
operating expenses. The profits of the corporations, therefore, are
additional to the salaries of these proprietors. In the case of the
unincorporated businesses, on the contrary, the proprietors do not
receive salaries. They draw out funds, from time to time, for personal use; but these drawings are accounted for not as business expenses but as proprietors' withdrawals. The so-called profits or
"net income77 of unincorporated businesses, therefore, include the
proprietors7 remuneration for their personal work as managers (and
m many cases as manual workers also) as well as the profits ascribable
to their invested capital. Since the estimates were made with per-




268

NATIONAL, WEALTH AND* INCOME

centages derived from the corporate returns, however, they have
transferred to "wages and salaries" that portion of the profits of
the unincorporated portion of the industry that correspond to the
salaries of officers and executives of the corporations. Hence the
apparent discrepancy spoken, of above does not necessarily contain,
any real discrepancy.
The proportions in which the total value created by the industry
is divided among the two cooperating factors are more interesting
than the amounts themselves. These proportions are shown in
Table 167.
TABLE

1 6 7 . — P e r c e n t a g e s of wages
created by the construction

and salaries
and of profits
to the
industry,
by years, 1918 to 1923

total

value

Percentage of the
total value-product
Year
Salaries
and wages
1918
1919
1920
1921
1922
1923

Profits

91.1
89.75
93.88
97.3
95.5
90.31
92.83

Average.

8.9
10. 25
6.12
2.70
4.50
9.69
7.15

Wages and salaries have claimed from 90 to 97 per cent of the total
value created by the construction industry. The return to employed
capital did not account for more than one-tenth of the total except
in 1919. In 1921 it amounted to less than 3 per cent.
TAXES.—The amount of taxes payable by construction enterprises
(disregarding those payable by employees and lenders of capital) are
estimated as follows:
Year
1918
1919
1920




Amount
$86,000,000
97,000,000
53,000,000

Per cent
5.6
5.2
2.3

Year
1921
1922
1923

Amount
$38,000,000
30,000,000
24,000,000

Per cent
2.6
,1.8
1.4

CHAPTER

XIV

TRANSPORTATION AND COMMUNICATION
Section 1. Steam railroads.
ESTIMATED

VALUE

CREATED BY STEAM

RAILROAD TRANSPORTA-

TION.—All steam railroad companies in the United States make periodic
reports to the Interstate Commerce Commission, consisting of brief
monthly reports and extensive detailed annual reports. The data
contained in these reports are tabulated and published by that commission in monthly bulletins and in the tanual Statistics of Railways.
Thus there is not only a wealth of information covering the whole
of the industry, but it is in excellent condition because of the uniformity in meaning of the data furnished b y the various companies.
Railroad companies not only report on uniform blanks every item
on which is carefully defined, but they are required to keep the accounts of the same designations and definitions.1 The annual Statistics of Railways includes detailed balance sheets and income* statements for railway and terminal companies, and, also, information
concerning mileage of lines operated, the volume of traffic, the number and compensation of employees and the like.
On December 31, 1923, there were in operation in the United
States 235,563 miles of road. Counting the second, third, fourth
and all other main tracks, the sidings and yard trackage, there were
nearly 386,000 miles. The book value of the total investment 2 in
the steam railroad industry, as shown b y reports to the Interstate
Commerce Commission, was approximately $20,000,000,000.3 The
total operating revenues in 1923 were nearly $6,294,000,000. Of this
huge total, about $4,650,000,000 of value was created by the industry itself. The operatives and executives received nearly $3,200,000,000 of it as remuneration for their services, while the capital invested
in the industry received in rent, interest, and profits slightly more
than $1,443,000,000. From the latter amount the business enterprises had to pay $343,000,000 in taxes.
Table 168 presents the estimates of the total value created by the
steam railroad transportation industry of the United States (including the Pullman service) and of its constituent shares in each of the
several years under review.
TABLE 168.—Estimated value created by the steam railroad
division between wages and salaries,
and rent, interest,
1918 to 1923
[Amounts in millions]
Year
1918
1919
1920

Total
value
product

Wages
and
salaries

$3,716
3,839
4,331

$2,776
3,022
3,912

Rent,
interest,
and
profits
$940
817
419

Year
1921
1922
1923

industry and
estimated
and profits, by
years,

Total
value
product

Wages
and
salaries

$4,220
4,134
4,649

$2,984
2,842
3,193

Rent,
interest,
and
profits
$1,236
1,292
1,466

1 Similar statements are true of the reports furnished by other so-called public utility companies, such as
telephone, telegraph, gas, water, and electric railway companies, except that with some classes the prescription of accounts is made by the several States, and the reports are not published.
2 This includes the book values less depreciation of all physical properties used in the industry; also all
the cash, current assets and deferred assets less the current and deferred liabilities. It does not include
the investments in securities.
3 This figure excludes all investments by one company in the securities of other companies, also all sinking funds and the deposits in lieu of mortgaged property for the reason either that such investments represent duplication or that the funds were not invested in the railroad industry.




269

270

NATIONAL,

WEALTH AND* INCOME

The total value created by the steam railroad transportation industry, inclusive of the Pullman and dining car service was $4,649,000,000 in 1923. Five years earlier it was $3,716,000,000. The
increase during the half decade wa& Almost exactly one-fourth.
Many people do not think of the transportation of commodities
and passengers as, creating value. t The development of rapid and
relatively cneap transportation has made possible localization of
industry and business, whereby advantage could be taken of localities
offering special facilities. Consequently the l&iid and water transportation systems are prop^ly to be regarded as a necessary part of a
vast, nation-wide system of production. Without relatively cheap
transportation of the products of the manufacturing centers to other
parts of the country and of food and materials to the manufacturing
centers, each community would have had to be nearly self-sufficient.
During 1920 the average number of employees of Class I steam
railroads, representing about 90 per cent of the transportation business, numbered 2,023,000. The total number would be about 5
per cent of all the gainfully employed as reported by the census of
occupation for that year. During 1919 railroad officials and employees received in salaries and wages an aggregate of $3,022,000,000.
The previous year they had received over two and three-fourths
billions. In the year following their remuneration reached its greatest aggregate, over $3,900,000,000. As a result of the readjustments
that came after the industrial depression which began in 1920,
labor's share of the value created by the indilstry declined nearly
one and one-tenth billion dollars during the next two years. This
decline took place in spite of the fact that the whole value product
declined less than one-fifth of a billion. Most of the difference between these two amounts represented a transfer from labor's share to
capital's share, the latter increasing from $123,000,000 to $$66,000,000
during the two years. In 1923, labor's share again advanced to nearly
three and one-nfth billion dollars.
The share of the value created by the steam railroad transportation
industry that went to capital and enterprise fluctuated sharply. In
1918 and 1919 the industry wfts operated by the United States Railroad Administration. Employed capital's share the first year was
$940,000,000. The next year it was $817,000,000. The railroads
were returned to the stockholders in March, 1920. Although the
total value-product increased nearly a half billion, and wages and
salaries increased nearly ninety millions, capital's share dropped to
$419,000,000 in 1920. The depression brought a readjustment.
The next year, although the total value product of the industry was
only $111,000,000 lower, the railroad managements reduced aggregate
wages and salaries $928,000,000 and increased capital's share $817,000,000. During the next two years capital's share increased
$220,000,000 more.
The book value of the total investment in the steam railroad transEortation industry on January 1, 1923, including the Pullman service
ut excluding the railway express industry, was about $19,298,000,000.
Taking into account the income-producing or income-retarding
effect of the fresh investments ana withdrawals that were made
during the year, the $1,113,000,000 estimated as capital's share,




271

NATIONAL,

W E A L T H AND* I N C O M E

after deducting taxes of $343,000,000, of the total value-product of
that year constituted a return for the year of about 5.7 per cent.
When the industry was operated by the Federal Government in 1918
and 1919 the rates of return were 3.9 and 3 per cent, respectively. In
1920,the first year after the properties were returned to the companies,
the rate of return was only two-thirds of 1 per cent.
Table 169 shows the proportions of the three shares to the total
value created by the industry:
TABLE 1 6 9 . — D i v i s i o n of the total value created by the steam railroad
industry
between wages and salaries, and rent, interest, and profits, by years, 1918 to 1923

Year

1918
1919
1920
1921

interWages and Rent, and
est,
salaries
profits
74.7
78.7
90.4
70.7

25.3
21.3
9.6
29.3

Year

1922
1923

Wages and Rent, interest, and
salaries
profits
68.8
68.7

Average

31.2
31.3

75.2

24.8

During the six years 1918 to 1923 the personnel of the industry
received a little over three-fourths of the value-product in salaries
and wages, leaving about one-fourth of the total as the return to all
employed capital. In 1920 wages and salaries consumed over 90
per cent and rent, interest, and profits less than 10 per cent of the
total.
Question arises as to why the executives and operatives of the
steam railroad industry should receive so large a share of the income
thus shown. The reason is indicated by the proportion in which the
two factors are combined. The average number of employees of
Class I railroad and Class I terminal companies in 1922 was 1,645,233.
The average capital employed during the year was $18,956,153,000.
Thus there was $11,522 of invested capital per employee. This ratio
of the capital to the labor factor accounts in part for the proportions
in which the income was divided.
W A G E S P A I D B Y C L A S S I S T E A M R A I L R O A D S . — F o r statistical purposes
the Interstate Commerce Commission designates as " Class I " all steam
railroads having annual operating revenues of over $1,000,000 each.
Such roads do most of the country's freight and passenger traffic, employ
the majority of persons engaged in railroad transportation, andpay more
than 90 per cent of the wages and salaries of the industry. Tne Interstate Commerce Commission compiles data showing for Class I steam
railroads the average number of employees, the average number of hours
worked per employee, the average daily and hourly rates, and the average earnings per employee for specified groups of employees. In the
computation of these averages the hours worked by all salaried
executives and clerical, as well as daily and hourly wage workers,
have been computed and total wages and salaries paid divided by
the total number of hours worked.
Table 170 shows the average number of employees, the average
number of hours worked, the average compensation per hour, and the
103288— S. Doc. 126, 69-1




19

272

NATIONAL,

W E A L T H AND* I N C O M E

average compensation per employ^ by years from 1916 to 1923,
inclusive:
TABLE 1 7 0 . — A v e r a g e number of employees,
hours worked,
Class I st^am railways; by'years, 1913-1923

Year ended

June 30,1916
Dec. 31, 1916-..,
Dec. 31, 1917
Dec. 31,1918
Dec. 31, 1919
Dec. 31, 1920
Dec. 31,1921
Dec. 31, 1922
Dec. 31,1923

-

and

wages

paid

by

1

Average
Average
Average
Average
number of number of compensa- compensahours
tion per
tion per
employees
worked
hour
employee
1,599,158
1,647,097
1,732,876
1,841,575
1,913,422
2, 022,832
1, 659, 513
1,626,834
1,857, 674

3,100.2
3,150. 9
3,138.1
3,095. 9
2,630.1
2, 692. 6
2,499.1
2, 650. 0
2, 653.1

$0.276 f
.283
.320
.458
.565
.676
.667
.613
.610

$854.26
891.12
1,003.81
1,419. 34
1,485.89
1,820.12
1, 666. 28
1, 623. 29
1, 617.11

i From Statistics of Railways in the United States, 1923, p. X I X .

During the war period and the period of Government operation the
average number of persons employed increased sharply and reached
its maximum of a little over two million persons during 1920. During
this year three methods of operation prevailed at different times.
In the first two months the roads were under Federal control. From
March to August they were privately operated with income guaranteed by the Government, and after September 1, 1920, they were
privately operated without guaranty oi income. Following return
to private operation there was a sharp reduction in number of employees, probably due in part to attempts on the part of management
to increase efficiency and in part to the general business depression.
The calendar year 1916 shows the maximum number of hours
worked per person, 3,150.9. Although the Adamson 8-hour law
became effective January 1, 1917, there was no marked reduction
in average number of hours worked during that year. In 1921 not
only was the number employed reduced sharply below the maximum
of 1920, but the average hours worked per employee were at their
minimum, 2,500 for the year. In 1922 and 1923 tthe average hours
worked appear to have assumed stability at about 2,650 hours per
employee, an average representing somewhat less than 8 !hours per
day per man.
During the period covered average wages per hour moved sharply
upward From about 2$ cents per hour in 1916 to 67.6 cents in 1920,
66.7 cents in 1921, 61.3 cents in 1922, and 61 cents in 1923. AVerage compensation per employee rose sharply notwithstanding decreased hours, from $850 to $900 per employee in 1916 to $1,820 in
1920 but thereafter decreased and appear to have become stabilized
in 1922 and 1923 at about $1,620 per employee.
D I S T R I B U T I O N OF W A G E S A N D SALARIES BY CLASSES o r EMPLOYEES.—^

As shown in Tables 168 and 169, it has been estimated that from
$2,800,000,000 to $3,100,000,000, representing from 68.7 to 70.7 per
cent of the total value product of steam railroads, was paid in salaries
during the years 1921 to 1923, inclusive. Of this total from $2,600,000,000 to $3,000,000,000 was paid by class I roads. The following
table shows the amounts and percentages of the total paid to employees working on a per diem basis and to employees working on
an hourly wage basis for the last six months of 1921 and for the years
1922 and 1923:




273

NATIONAL,

WEALTH AND* INCOME

TABLE 1 7 1 . — T o t a l number of persons employed and total wages and salaries
paid
on daily and hourly payment
basis by class I steam railroads,
July, 1921, to
December.
1928
Employees
Period covered and group
Number
July to December, 1921
Daily basis.
Hourly basis

Wages

Per cent
of total

Amount

Per cent
of total

115,097
1,580,376

6.8
93.2

$142,117,873
1, 203,027,984

10.6
89.4

Total

1,695,473

100.0

1,345,145,857

100.0

Year 1922:
Daily basis
Hourly basis.

114, 799
1, 512, 035

7.1
92.9

285, 086,187
2,355, 730,818

10 8
89.2

Total.

1,626,834

100.0

2,640, 817,005

100.0

Year 1923:
Daily basis
Hourly basis

121,091
1, 736, 583

6.5
93.5

305,386, 730
2, 698,685,152

10 2
89.8

Total

1, 857, 674

100.0

3,004,071, 882

100.0

About 93 per cent of all railroad employees worked for an hourly
wage and received from 89.2 to 89.8 per cent of the total wages and
salaries paid. The remaining 7 per cent of the total number of
employees received a somewhat larger percentage of the total wages
and salaries, from 10.2 to 10.8 per cent in the different periods covered.
Table 172 shows a more detailed analysis of the number employed
• and the total salaries by classes of employees, as shown by the Interstate Commerce Commission for the same periods:
TABLE 1 7 2 . — A n a l y s i s of number of employees of and total salaries
railroads July, 1921, to December,
1923
Employees
Period covered and group
Number
July to December, 1921:
Executives, officials, and staff assistants
Professional, clerical, and general
Maintenance of way and structures
Maintenance of equipment and stores
Transportation (other than engine and yard)
Transportation (yard masters, switch tenders, and
hostlers)
Transportation (tram and engine service)
Total
Year 1922:
Executives, officials and staff assistants
Professional, clerical and general
Maintenance of way and structures...
Maintenance of equipment and stores
Transportation (other than engine and yard)
Transportation (yard masters, switch tenders, and
hostlers)
Transportation (train and engine service)
Total
Year 1923:
Executives, officials and staff assistants
Professional, clerical and general
Maintenance of way and structures
Maintenance of equipment and stores
Transportation (other than engine and yard)
Transportation (yard masters, switch tenders, and
hostlers)
Transportation (train and engine service)
Total




paid by Class

I

Wages

Per cent
of total

Amount

Per cent
of total

15,164
274,282
395,057
480,985
208,782

0.9
16.2
23.3
28.4
12.3

$38,159,797
217,565,387
209,074,007
389,774,365
148,134,818

2.8
36.2
35.6
29.0
13.0

23, 523
297, 680
1,695,473 |

1.4
17.5
100.0

24,166,427
318,271,056
3,345,145, 857

3.8
23.6
300 0

15,250
277, 514
359,885
451, 589
202, 578

.9
37.1
22.1
27.7
12.5

77,069, 701
440,771, 687
383,988,570
745,674,720
285,740, 546

2.9
16.7
14.5
28.2
10.8

22,934
297,084
1,626,834

1.4
18.3
100.0

48,153,221
661,438,560
2,640,817,005 |

1.8
25.1
300.0

16,088
282,491
398, 291
584, 573
213,455

.9
15.2
21.4
31.5
11.4

82, 624,674
447,795,995
440, 075,253
909, 204,264
302,033,038

2.8
14.9
14.7
30.2
30.0

25, 548
337,228
1,857, 674

1.4
18.2
100.0

54,051, 589
768,287,069
3,004,071,882

1.8
25.6
100.0

274

NATIONAL, W E A L T H AND* INCOME

Employees engaged in maintenance of way, structures, equipment
und stores constituted half or a little more than half of all employed
but received only 43 to 45 per cent of the total wages paid in the
different periods covered. Tnose employees engaged on maintenance
of way, constituting 21 to 23 per cent of the total number employed,
incluaed a large number of unskilled laborers who were relatively
low paid, receiving only about 15 per cent of the total wages and
salaries.
The next largest group is the transportation service, including
the last three groups in tne table. This service employed 31 to 32
per cent of the total number of persons and their wages and salaries
accounted for approximately 37 per cent of the total paid. Yard
masters, switch tenders, hostlers and train crews, representing about
19 per cent of the total number of employees, are paid relatively
higher wages than other transportation employees and received from
25 to 27 per cent of the total wages paid.
The professional and general clerical group constituted 15 to 17
per cent of the total number of employees and received practically
the same percentages of total wages paid. The executive group,
constituting less than 1 per cent of the total number employed,
is relatively the highest paid, but the salaries of the group amounted
in the aggregate to less than 3 per cent of the total in each of the
periods covered.
The predominance of the hourly basis of wage payment has been
indicated above. (See Table 171.) The following table shows the
percentage distribution of total number of employees and total
wages paid by method of payment in each employee group.
TABLE 1 7 3 . — P e r c e n t a g e distribution
of total number of employees
and total wages
paid by method of wage payment Class I steam railroads, July, 1921, to
December,
1923
Daily basis
Period covered and group

July to December,1921:
Executives, officials, and staff assistants
Professional, clerical, and general
Maintenance of way and structures
Maintenance of equipment and stores
Transportation (other than train, engine, and yard)
Transportation (yardmasters, switch tenders,and hostlers).
Transportation (train and engine service)
Total
Year 1922:
Executives, officials, and staff assistants
Professional, clerical, and general
Maintenance of way and structures
Maintenance of equipment and stores
Transportation (other than train, engine, and yard)
Transportation (yardmasters, switch tenders, and hostlers).
Transportation (train and engine service)
Total
Year 1923:
Executives, officials, and staff assistants
Professional, clerical, and general
Maintenance of way and structures
Maintenance of equipment and stores
Transportation (other than train, engine, and yard)
Transportation (yardmasters, switch tenders, and hostlers)..
Transportation (train and engine service)
Total




Hourly basis

Per cent Per cent Per cent
of total
of total
of total
ememwages
ployees
ployees
0.9
2.8
.3
.9
1.6
.4

2.8
3.7
.5
1.7
1.2
.7

6.9

10.6

.9
3.0
.3
.9
1.6
.4

2.9
3.9
.5
1.7
1.1
.7

7.1

10.8

.9
2.7
.2
.9
1.4
.4

2.8
3.5
.5
1.7
1.0
.7

6.5

10.2

Per cent
of total
wages

13.4
23.0
27.5
10.7
1.0
17.5
93.1

12.5
15.1
27.3
9.8
1.1
23.6
89.4

14.0
21.8
26.8
10.9
1.0
18.3
92.9

12.8
14.0
26.5
9.7
1.1
25.1
89.2

12.5
21.2
30.6
10.0
1.0
18.2
93.5 |

11.4
14.2
28.5
9.0
1.1
25.6
89.8

275

NATIONAL,

WEALTH AND* INCOME

One group, made up of executives and officers, shows no hourlywage employees whatever and one group, made up of trainmen, has
no daymen in it. All of the other groups have a small proportion of
day-wage and a much larger proportion of hourly-wage men. It is
quite noticeable in nearly every group that daymen receive a somewhat larger proportion of the total wages paid than do the much
larger number of hourly-wage men in the same group. The one exception to this general statement is to be noted m the case of transportation employees other than train, engine, and yard. Daymen of
this group representing about 1.5 per cent of the total number of
employees received but a little over 1 per cent of the total wages
aid. The proportions both of men employed and wages paid shows
ut little change from year to year of the period covered.
Table 174 shows the average wages paid and the average paid per
day or per hour, as the case may be, to daily-wage and hourly-wage
workers. The groupings are the same as in the preceding table:
TABLE 1 7 4 . — A v e r a g e total wages per employee
on daily and hourly pay
and average wages per day or hour paid by Class I steam railroads, July,
to December,
1923
Daily basis
Period covered and group

July to December, 1921:
Executives, officials, and staff assistants
Professional, clerical, and general
Maintenance of way and structures
Maintenance of equipment and stores
Transportation (other than engine and yard)
Transportation (yardmasters, switch tenders, and hostlers).
Transportation (train and engine service)
Average, all groups
Year 1922:
Executives, officials, and staff assistants
Professional, clerical, and general
Maintenance of way and structures
Maintenance of equipment and stores
Transportation (other than engine and yard)
Transportation (yardmasters, switch tenders, and hostlers) _
Transportation (train and engine service)
Average, all groups
Year 1923:
Executives, officials, and staff assistants
Professional, clerical, and general
Maintenance of way and structures
Maintenance of equipment and stores
Transportation (other than engine and yard)
Transportation (yardmasters, switch tenders, and hostlers).
Transportation (train and engine service)..
Average, all groups

basis
1921,

Hourly basis

Average Average Average Average
per
per
per hour
employee per day employee

$2,516
1,063
1,420
1,488
587
1,528

$15.79
6.72
8.73
8.83
3.31
8.43

1,235

7.45

5,054
2,120
2,843
2,961
1,155
3,077

15.97
6.74
8.88
8.94
3.24
8.45

2,483

7.55

5,136
2,150
2,865
2,928
1,160
3,065

16.20
8.63
8. 92
8. 82
3.24
8.40

2,522

7.64

$737
519
789
728
858
1,069

$0.58
.44
.62
.54
.61
.79

761

.60

1,476
1,039
1,606
1,447
1,768
2, 226

.57
.42
.60
.53
.62
.79

1,558

.59

1,465
1,084
1,513
1,451
1,771
2,278

.57
.43
.59
.53
.62
.79

1,554

.59

In considering the average total wages per employee it should be
noted that the amounts for 1921 are for six months only, and, therefore, are about one-half as large as in 1922 or 1923.
Those who are paid on the daily wage basis include persons in higher
paid executive and supervisory positions. Consequently the average
daily wage and the average earnings per man for the daily wage
group are higher than for the hourly wage group. In some groups




276

NATIONAL, WEALTH AND* INCOME

the average earnings per man in the daily wage group are twice those
of the hourly wage group. One exception to be noted is the transportation other than engine and yard group in which the daymen
are paid less per 8-hour day than the hourly men and receive less
as their total compensation for the periods shown.
As between different groups of daily-wage employees, the group
made up of executives, officials, and staff assistants was the highest
paid and transportation employees other than engine and yard comprised the lowest paid group. The second highest paid daily-wage
group throughout the period covered was made up of yardmasters,
switch tenders, and hostlers. Among hourly-wage men the train and
engine men are the highest paid, both per hour and in total compensation received, and the maintenance of way and structures,
made up largely of section hands, are the lowest paid.
The average daily wages of the groups made up of executives,
officials and staff assistants, professional and clerical and maintenance of way and structures employees have increased slightly since
the middle of 1921. The average wages of the remaining daily-wage
groups have remained about the same or decreased slightly during the
same period. The largest increase in daily wage shown is for executives, officials and staff assistants. The number of such employees
has increased from 15,164 to 16,088 but they represent less than 1
per cent of the total number of employees. The result of increasing
the number and paying higher wages to the group has been an
iricrease of about $6,000,000 in the total wages received by them,
but the percentage of their total wages and salaries to the total for all
groups was the same for 1923 as for the last six months of 1921. Average daily wages paid to transportation employees have shown a
tendency to decrease slightly since 1921. For all daily-wage groups
taken together the average daily wage has increased from $7.45 to
$7.64, an increase of 19 cents per day.
Average hourly wages for all but the two last groups have shown
a slight tendency to decrease, amounting, however, to but a cent or
two per hour. For yardmasters, switch tenders, and hostlers the
average has increased 1 cent per hour and for train crews has
remained unchanged since the middle of 1921. For all groups the
average hourly rate has decreased 1 cent per hour since 1921.
' Summarizing briefly, the Class I steam railroads pay total wages
and salaries of about $3,000,000,000 to somewhat more than 1,750,000
employees, representing over 4 per cent of the total population
gainfully employed. Ninety-three and a half per cent of the wage
earners are paid by the hour and received in 1923 slightly less than
90 per cent of the total wages and salaries paid. Hourly wages
ranged for different groups from about 43 cents to 79 cents per hour
and averaged 59 cents for all groups. Average annual earnings per
man working on an hourly basis in 1923 ranged from $1,084 for maintenance of way and structures men to $2,278 for trainmen, and
averaged $1,554 for all employees paid on an hourly basis.
The remaining 6.5 per cent of the total number of employees on a
daily wage basis were paid higher wages per man in most of the
employee groups and received a little more than 10 per cent of the
total wages. Their average annual compensation for the year 1923
ranged from $1,160 per man for transportation labor other than train,
engine, and yard labor to $5,136 per man for executives, officials, and




277NATIONAL,WEALTH AND* INCOME

staff assistants. Every group but one of the daily wage employees
received annually more than $2,000 per man. Tne average annual
compensation for day men in 1923 was $2,522 as against $1,554 for
employees paid by the hour. Thus the average pay of the daily wage
workers, including executives and others assuming to a greater or
less degree the responsibility of directing and supervising the operJ J'
ation and ma' '
"
' 1 ' , was about
number of
$1,000 more
employees working on the hourly wage basis. Executives, officers,
and staff assistants were paid on the average about five times as
much during the year as the least skilled hourly wage workers, but
this group is so small in number that their total wages represent less
than 3 per cent of the total wages and salaries paid.
Section 2.
VALUE

Electric railroads.
CREATED BY THE ELECTRIC

RAILWAY I N D U S T R Y . — A

cen-

sus of street railways, elevated and underground, urban and of
"interurbaji" electric railways is taken at five-year intervals. It
does not include certain electrified portions of steam railways. The
last census was taken in 1922.
The census includes cable, gas engine, horse drawn and gravity
operated railway also. However, in 1922 there were only 143 miles
of such railway compared with 43,789 miles of electric railway lines
in the United States. This comparison shows the extent to which
electric power dominates the railway industry of the country other
than steam railways.
. The total value of road and equipment in 1922, as reported by the
census, was nearly $5,059,000,000. This valuation represented a
slight decrease as compared with the corresponding amount reported
in 1917. There was also a slight decrease in mileage of line.
Electric railway companies do not report to any Federal agency
except the census, and to the Internal Revenue Bureau unless they
do an interstate business. Many States have public utility commissions which exercise a certain regulatory control over the electric
railways in their intrastate operations and to which the electric railways make periodic reports. The data in these reports are not tabulated and published, however. So that there are no available governmental data on electric railway operations during noncensus years.
The American Electric Railway Association,.however, collects
annual reports from its members and publishes extensive data in Aera,
a monthly periodical devoted to the interests of the industry. The
proportion of the industry represented in these tabulations has increased rapidly. The number of companies that reported for 1917
was not stated. Their total railway operating revenues, however,
amounted to $104,700,000 as compared with a census figure of $650,150,000 for the industry as a whole. For 1918 and 1919, 103 companies reported, showing aggregate operating revenues amounting to
nearly $193,000,000 for the former year and over $231,000,000 for
the latter. By 1922, the number of reporting companies had increased to 288.4 The operating revenues reported for that year
amounted to $539,000,000 compared with $925,477,000 reported by
the census for the industry as a whole. The sample represented in

4 In the 1922 report 225 companies were shown for that year but in the 1923 report data for 288 companies
were shown for 1922.




278

NATIONAL,

WEALTH AND* INCOME

these American Electric Railway Association data increased during
the half decade from 16 per cent to 50 per cent of the industry,
measured in terms of gross value of the service rendered. In 1923,
288 companies reported, showing aggregate railway operating revenues of nearly $550,-000,000.
These American Electric Railway Association data showed taxes
chargeable to operations and "operating income," but not wages
and salaries. To supply the deficiency a questionnaire was sent to
a representative list of these companies, asking them to report their
total railway operating revenues, total wages and salaries and total
taxes chargeable to operations, including income taxes, for each of
the years 1918 to . 1923, inclusive. The questionnaire was sent to
only 72 companies, distributed in such manner as to obtain a representation of each State. Fifty-seven companies, answered. Their
aggregate railway operating revenues in 1922 amounted to more than
$332,000,000, or considerably more than one-third of the census figure for the whole industry.
METHOD OF ESTIMATING VALUE OF PRODUCT.—The summaries of
the data obtained from these various sources and the details df their
application in arriving at the estimates of the value product of the
industry, in the six years 1918 to 1923, are shown in appendix,
Tables 52 to 61. The method of ^plication was as follows:
First, the total railway operating revenues for the years 1918 to
1923 were estimated by applying to the revenues reported h f the
census for 1917, index numbers derived by comparing the total
operating revenues reported by identical lists of companies in successive years. One list of companies was represented in the comparison
of 1918 with 1917, another for 1919 witht1918, etc. The immediate
results of the comparisons were "sequential ratios;"e. g., a ratio of
revenues in 1918 to revenues in 1917, a ratio of revenues in 1919 to
revenues in 1918, etc. Successive multiplication of the railway
operating revenues for 1917, as stated in the census, by these ratios
from 1918 to 1922, afforded a preliminary estimate of the amount
of railway operating revenues in each year.
The preliminary estimate for 1922 was compared with the census
enumeration for that year and a corrective factor derived. The
estimate was $959,168,000; the amount reported by the census was
$925,477,000. The difference of $33,691,000 in the estimate was
considered an overstatement which was only 3.64 per cent of the
enumerated amount, and even this small difference does not pertain
to the one year alone, but is the result of an accumulation in the
five successive sequential ratios for the years 1918 to 1922.
The probable cause of these differences is that the method of
deriving the individual sequential ratios did not provide for taking
into account the retarding effect ilpon the growtn in the revenues
of the industry of the dissolution of a few companies in small cities
and the abandonment of their lines and service. As before stated,
the total mileage of track and the total investment in road and
equipment in 1922 was, according to the census, slightly less than in
1917. The total operating revenues of the industry increased 42
per cent during the half decade. Apparently, however, this increase
was more than accounted for by increases in fare rates and volume
of traffic handled by those systems that survived the half decade.
The sequential ratio for any year reflected only the change in revenues




279NATIONAL,WEALTH AND* INCOME

of those systems that survived from the preceding year. Hence the
estimates made with their use slightly overstated the revenues of the
industry as a whole to the extent that the sequential ratios failed to
represent in proper proportion the drop to nil of the revenues of those
companies that dissolved and abandoned their lines.
The corrective factor for 1922 was the ratio of the census enumeration to the estimate, i. e., of $925,477,000 to $959,168,000. From
this ratio were derived corrective factors to be applied to the estimates
for the other years.5
From the American Electric Railway Association data and from
the tabulation of the data reported directly to this inquiry, average
percentages to railway operating revenues were computed for wages
and salaries, and for net operating income. The latter item was
taken to constitute the share of the product of the industry that was
available for rent, bond interest, and profits, i. e., the share going
to the capital employed in the industry. This was done because the
"operating income" seemed to be the amount contributed for these
purposes by the industry; any other income available for those purposes came from sources outside the industry and presumably was
included in the value-product estimates for other industries. Likewise, any further deductions from income represented only the distribution of these shares, except that any interest on bank loans may
have been included in such deductions; but there was no way of
determining the amount or proportion of such interest, if any.
These average percentages for the respective years were applied
to the railway operating revenues for those years. The results constituted preliminary estimates of the several shares of the value
created by the industry.
The preliminary estimates for 1922 were compared with the corresponding enumerated amounts for that year, as stated by the census,
and a corrective factor was derived for each of the three shares.
These corrective factors were applied to the preliminary estimates for
each year in order to make the final estimate. Thus, the preliminary
estimates of taxes for 1922 was $60,859,000; the amount reported by
the census was $64,788,000. Comparison of the two gave a corrective
factor of 1.06456, which means that the correct amount exceeded the
estimate by 6.456 per cent. Again, comparison of the estimate of
salaries and wages, $441,453,000, with the enumerated amount,
$445,680,000, gave a corrective factor of 1.009576. "In like manner,
the estimate of net operating income was $217,811,000, the enumerated amount was $224,136,000, and the corrective factor was found
to be 1.02913.
These same corrective factors were applied to the corresponding
preliminary estimates for each year in the period under review. The
reason for using the same set of factors for each year was that it
was not thought that the differences in the estimates for 1922 were
cumulative. There was reason to believe, rather, that they were due
to a defect in the samples, whereby not all of the taxes, wages, and
salaries, and net operating income of the samples themselves were
5 Since the preliminary estimate for 1922 was made by multiplying the census enumeration of 1917 successively by five sequential ratios, each of which probably contained an error, a corrective factor to be applied
to each of those annual ratios was derived by taking the 5th root of the ratio designated in the text.

103288—S. Doc. 126, 69-1




20

NATIONAL, WEALTH AND* INCOME

280

ascertained. Many of the electric railway companies not only sell
electric energy to municipalities and to private individuals and companies, but even maintain separate electric light and power departments for the purpose. It is known that a portion of the operating
expenses, wages and salaries, and operating income reported by the
census was properly assignable to these auxiliary operations, but
could not be segregated. It is believed, on the other hand, that the
taxes and operating income of the companies reporting to the American Electric Railway Association and the wages and salaries of
companies reporting to this inquiry pertained rather more exclusively to their transportation business. If this is true, the average
percentages derived would be somewhat too small to cover the combined transportation and light and power business of the companies in the industry. Furthermore, these differences would probably
exist in about the same proportion in each year. Hence the decision to apply to the estimates for each year the corrective factors
found for 1922.
Before presenting the final results, it may be interesting to observe
the course,.of gross railway operating revenues of the industry during
the period 1917 to 1923; these are shown in Table 175.
TABLE 175.—Estimated aggregate railway operating revenues of street and
railways industry, by years, 1917 to 1923

Year

1917
1918
1919
1920

Amount of
operating
revenue

3 $650,149,806
<686,818,000
< 817,176,000
<943,514,000

Index
numbers
(1917=
100) i

100.0
105.6
125.3
145.1

Sequential
ratios
(amount in
preceding
year=l) 2

'

1.0000
1.0564
1.1898
1.1547

Year

1921
1922
1923

Amount of
operating
revenue

< $942,382,000
a- 825,477,485
<937,694,000

electric

Sequential
Index
ratios
numbers (amount in
(1917=
preceding
100)1
year=l) a
145.0'
142.3
144.2

0.9988
0.9820
1.0132

1 Formed by successive multiplication of the ratios in column three commencing with the ratio for 1918,
the decimal point being moved two places to the right in the result.
8 For derivation, see text and appendix, Table 53.
a Census of Electric Railways, 1W2, p. 131.
< Estimated.

The railway operating xevenues of the street and electric railway
industry rose rapidly during the three years from 1917 to 1920.
In the former year they were, according to the census, a little less
than $650,150,000. In the latter year they were, according to the
estimate, $943,514,000. This represents an increase of slightly over
45 per cent in the three years. They fell off slightly in 1921, and
nearly 2 per cent in 1922, as compared with 1921. In 1923 they
increased a little less than
per cent over 1922. Electric railway
operating revenues have been nearly stationary in aggregate volume
since 1920.
The sequential ratios show the proportions of increase from one
year to the next. Thus the revenues in 1918 were 5.64 per cent
greater than in 1917; in 1919 they were 18.98 per cent greater than
in 1918; and they increased again 15.47 per cent the next year.
As before intimated, the railway operating revenues do not represent the whole of the gross operating revenues of the street and




281N A T I O N A L ,W E A L T H A N D * I N C O M E

electric railway* companies. A large proportion of the companies
also sell electric energy to municipalities and the general public.
The revenues from these "auxiliary operations" amounted to nearly
$60,000,000 in 1917 and to more than $91,000,000 in 1922.6 As the
purpose in estimating the railway operating revenues was merely to
obtain a base in each year from which to estimate the value product
of the industry, the revenues from auxiliary operations for the other
years were not estimated. The value-product as estimated, however, includes the value created in these auxiliary operations as well
as in the transportation operations.
E S T I M A T E D V A L U E PRODUCT.—The estimates of the value product
of the street and electric railway industry and its constituent shares
are presented in Table 176.
T A B L E 1 7 6 . — E s t i m a t e d total value created by the street and electric railway
and estimated
distribution
between wages and salaries,
rent, interest,
and
by years, 1918 to 1928
Total value
created

Wages and
salaries

Rent, interest,
and profits

1918— $522,152,000
1919— 645,515,000
1920— 744,142,000

$318,961,000
405,158,000
498,849,000

$203,191,000
240,357,000
245,293,000

Year

industry
profits,

Total value
created

Wages and
salaries

Rent, interest,
and profits

1921— $754,076,000
1922— 734,604,000
1923— 744,589,000

$476,178,000
445,680,000
459,326,000

$277,898,000
288,924.000
285,263,000

Year

The estimated total value created by the street and electHc railway industry of the United States was a little over a half-billion dollars in 1918. It rose rapidly during the next two years, so that it
amounted to more than $744,000,000 in 1920, and increased another
$10,000,000 the next year. It decreased nearly $20,000,000 in 1922,
and recovered only aaout half that amount in 1923. The next increase in the'total value product of the industry during the half decade
was nearly 43* per cent.
During the same period the wages and salaries of the street and
electric railway operatives and executives increased from a little
under $319,000,000 to over $459,000,000, or 44 per cent. Wages and
salaries attained their greatest aggregate in 1920, when they amounted
to nearly $499,000,000—a little under a half billion; they declined
considerably both in 1921 and 1922, but recovered slightly in 1923.
The portion of the value product of the street and electric railway
industry that went to employed capital amounted to more than $203,000,000 in 1918 and to over $285,000,000 five years later. The
increase was about 40 per cent. The greatest amount, $289,000,000
was earned in 1922.
According to the Census, the investment in the industry on January 1, 1922, was about $5,100,000,000. Taking into consideration
the amount of new investment from outside the industry during the
year and the amount of withdrawals in dividends, bond interest, and
rentals, the average investment for the year was about $5,010,000,000.
On this basis, the $224,000,000 that was available for rent, interest,
and dividends in 1922, after deducting taxes of $64,788,000, repre« Census of Electric Railways, 1922, p 131.




282

NATIONAL,

W E A L T H AND* I N C O M E

sented a return of less than 5 per cent. The proportions of the
principal shares of the total value created by the industry are more
interesting and significant than the absolute amounts themselves.
These proportions are shown in Table 177.
TABLE 1 7 7 . — E s t i m a t e d percentage
distribution
of the total value created
street and electric railway industry between wages and salaries, and rent,
and dividends, by years, 1918 to 1923

Year

1918
1919
1920
1921

Rent, inWages and terest, and
salaries
profits
61.1
62.8
67.1
63.2

38.9
37.2
32.9
36.8

by the
interest,

Rent, inWages and terest, and
salaries
profits

Year

60.7
61.7
Average

39.3
38.3

62.8

1922
1923

37.2

During the six years 1918 to 1923 the executives and operatives of
the industry received in salaries and wages for their services about
63 per cent, or practically five-eighths. The portion available for
rent, interest, and profits, before the deduction of taxes, was a little
over 37 per cent of the total value created by the industry.
TAXES.—The amount of taxes payable by the enterprises in this
industry (disregarding taxes payable by employees or lenders of
capital) and percentages of the total value product of the industry
are estimated as follows:
Year
1918
1919
1920

Amount
$48,608,000
57,477,000
63,480,000

Per cent
9.3
8.9
8.5

Amount

Year
1921
1922
1923

i,

$69,112,000
64*788,000
65,744,000

Per cent
9.2
8.8
8.8

W A G E S P A I D BY ELECTRIC RAILWAYS.—According to data published by the Bureau of the Census there were in the United States
in 1922 some 850 electric railway systems employing in their operation 300,523 persons, or seven-tenths of 1 per cent 01 the total population gainfully employed. These roads paid to their employees in
1922 a total of $445,680,135 in wages and salaries, or an average of
$1,483 per employee, including both salaried executives and wage
workers. This average is $71 per employee less than that paid to
employees of Class 1 steam railroads, which amounted to $1,554
per employee for the year 1922.
The following table shows for the census years 1912, 1917, and
1922 the number of employees, total wages and salaries paid, average wages and salaries per employee, and percentages of total number of employees and total salaries paid to specified occupational
groups:




283N A T I O N A L ,W E A L T H AND* I N C O M E
TABLE 1 7 8 . — E m p l o y e e s and wages and salaries, by occupational
railways, 1912, 1917, and 1922

Group

1912
Salaried employees:
Officials
Managers and superintendents
Clerks, stenographers, etc
Wage earners:
Conductors and motormen
All other wage earners

Number
of employees

Amount of
wages and
salaries

groups, for

Per cent
of total
employees

electric

Per cent
of total
salaries

$5,708,553
5,376, 526
15,043,707

0.6
1.0
6.6

2.8
2.7
7.5

131,321
127,869

95,451,625
79,310,558

46.5
45.3

47.5
39.5

282,461

200,890,969

100.0

100.0

1,883
2,889
22,379

6,786,469
6,205,507
20,917,698

.6
1.0
7.6

2. &
2.a
7.8-

136,184
131,491

127, 222,144
106,108,544

46.2
44.6

47. &
39.7

294, 826

Total

1,927
2,882
18,462

267, 240,362

100.0

100.0

2,017
3,358
24,864

8,946,893
10,403,759
38,138,439

.7
1.1
8.3

2.0
2.3
8.6

43.3
46.6

46.0
41.1

100.0

100.0

1917

Salaried employees:
Officials
Managers and superintendents
Clerks, stenographers, etc
Wage earners:
Conductors and motormen
All other wage earners
Total
1922

Salaried employees:
Officials
Managers and superintendents
Clerks, stenographers, etc
Wage earners:
Conductors and motormen
All other wage earners
Total

130, 224 204,690,205
i 140,060 2 183,500,839
300,523

445,680,135

i Includes 404 motor-bus operators.
1 Includes $548,273 paid in wages to motor-bus operators whose compensation averaged $1,357 per man..

Over 90 per cent of the employees were wage earners engaged in
the operation of cars, powder plants, and maintenance of track and
equipment. In the different census years from 43 to 46 per cent were
conductors and motormen, 44 to 46 per cent were power plant and
maintenance men, about 7 or 8 per cent were clerks and stenographers
and less then 2 per cent were executives and superintendents.
As in the case of steam roads the executives and superintendents
receive the highest average compensation, men engaged in
operation of cars come next, the clerical and stenographic force
third and all other wage earners receive the lowest average per man.
Officials and superintendents, representing less than 2 per cent of the
total number of employees received from 4.3 to 5.5 per cent of the
total wages and salaries in the different census years, 1922 being the
year when their percentage of the total was least.
The clerical and office force, representing in different years from
6.6 to 8.3 per cent of the total number of employees, received from
7.5 to 8.6 per cent of the wages and salaries paid, 1922 being the year
of highest percentage both of total number of employees and of total
wages and salaries.
Conductors and motormen, representing from 43 to 46.5 per cent
of all employees, received in different years, from 46.0 to 47.5 per
cent of the total wages and salaries, 1922 being the year when, due to
increased use of one-man cars, the percentages, both of total number
of employees and of total wages, were least. In 1912 the average




284

NATIONAL, W E A L T H AND* I N C O M E

compensation of motormen and conductors was less than that of the
clerical office force, but in 1922 the reverse was the case.
In contrast to the three preceding groups, each of which received
a greater proportion of salaries than its proportion of the total
number of employees, the "all other employees group, representing
from 44.6 to 46.6 per cent of the total number of employees in different years, received but 39.5 to 41.1 per cent of the total salaries and
wages.
Since 1912 there has been a marked increase in the average compensation received by all of the occupational groups. The following
table shows the average compensation received by each group in
each of the three census years and the increases of 1917 and 1922
over 1912 expressed in index numbers (1912 = 100.0).
TABLE

179.—Average

Group and year

Officials:
- 1912_
1917_
1922.
Managers and superintendents:
1912
1917
, 1922.
Clerks, stenographers, etc.:
1912_
1917.
1922

compensation
1912,

per employee
paid
1917, and 1922

Average
compensation

Index
number
1912=100

$2,962
a, 604
4,435

100.0
121.7
149.7

1,866
2,148
3,098

100.0
115.1
166.0

815
935
1,530

100.0
114.7
187.7

by

electric

Group and year

Conductors and motormen:
1912.
1917
1922
:
All other wage earners:
1912
1917.
1922
Average, all employees:
19121917
1922

railways

in

Index
Average number
compen- 1912=100

$727
934
1,572

100.0
128.5
216.2

620
807
1,310

100.0
130.2
211.3

711
907
1,483

100.0
127.5
208.6

i, During the 10 years, 1912 to 1922, the average compensation for
all employees more than doubled, increasing from $711 for 1912 to
$1,483 for 1922. The average for 1922 is comparable with the
average of $1,554 per employee paid by class I steam roads during
the same year. The greater part of the increase, it will be noted,
took place between 1917 and 1922.
The largest relative increases are shown by the two large groups
made up of conductors and motormen and all other wage earners;
The average compensation per man in both of these groups more
than doubled. The index numbers for these two groups in 1922 (using
1912 as 100) were 216 and 211, respectively, as compared with 188
for clerks and stenographers, 166 for managers and superintendents,
and 149 for officers.
In actual amount, however, the compensation of officers showed the
largest increase, amounting in 1922 to $1,473 per year more than the
average salary for 1912. For managers and superintendents the
ayerage increase, 1922 over 1912, was $1,232; for ^clerks, stenographers, etc., $715; for conductors and motormen, $845, and for all
other wage earners, $690.
In general the movement of wages and salaries for electric railways
has been quite similar to that for steam railways, but the average
salaries and wages paid are less on electric than on steam roads.




285

NATIONAL, WEALTH AND* INCOME

Section 3. Railway express industry.
VALUE

CREATED BY THE

RAILWAY

EXPRESS

INDUSTRY.—This

industry is a supplement to the railway transportation industry and
might have been treated in the section dealing with steam railroads.
The express matter is carried in railway cars, most of the transportation costs are borne directly by the railroad companies, and apparently they obtain most of the income.
Formerly there were several express companies—the Adams, the
American, the Great Northern, the Northern, the Southern, the
Western, and the Southwestern—serving for the most part different
areas. When the United States assumed the operation of the railroads in 1918, the Director General caused the formation of the
American Railway Express Co. to consolidate the express transportation business and carry it on during the period of Federal control.
This company purchased the tangible properties of the Adams Express Co., the American Express Co., the Southern Express Co., and
the Wells Fargo & Co., and leased the properties of the other three
companies.
At the time of forming this consolidation it was regarded as a
temporary war measure. However, at the conclusion of Federal
operation, arrangements were made to continue the American Railway Express Co. as the operating organization. This company
conducts all of the railway express business of the United States
except that conducted, beginning with 1921, by the Southeastern
Express Co., which was organized in that year.
The terms of the uniform contract between the American Railway
Express Co. and the railroad companies are interesting because they
indicate that the major portion of the service is regarded as being
rendered by the railway companies. These terms divide the railroads
of the country into four groups and provide—•
that the gross express transportation revenues accruing on each railroad in the
several groups shall be ascertained by crediting to each railroad the express
revenue earned wholly thereon, and prorating the revenue accruing on interline
traffic; that the expenses incident to the conduct of such business shall be charged
to the respective groups in which incurred, and shall be deducted from the gross
transportation revenues, leaving an amount termed "income for division" from
which shall first be set aside for the express company an amount equaling
per cent thereof, the remaining balance to be designated as "net income for
division" to be distributed among the railroads in the group in the proportion
that the gross express transportation revenue for the month earned on the line
of each railroad bears to the gross express transportation revenues earned on
the lines of all such railroads in that group for the month.
As a further consideration, the express company agrees that for each year in
which this contract is in force, during which the sum of the amounts set aside
for it at 23^ per cent of the "income for division" in the several groups, shall
exceed 6 per cent of the average value of the entire property and equipment and
other capital of the express company employed in the express business, such excess
shall be divided one half to the express company and the other half to the railroads. The express company's one-half proportion of the profit thus accruing
shall be accumulated by it until a sum equal to 10 per cent of the value of the
entire real property and equipment and other capital of the express company
then employed in the express transportation business shall have been reached;
after which any profits shall be divided in the ratio of one-quarter to the express
company and three-quarters to the railroad companies.7
7

See Poor's and Moody's Manuals, Industrials, 1922, vol. 1, p. 1230.




NATIONAL, WEALTH AND* INCOME

286

Thus the express company receives not more than
per cent of
what might be called the net operating profit of its business, .the
other 97HS per cent, and perhaps even more, going to the railroad
companies.
Under the operation of this contract in 1920 the American Railway
Express Co. collected in charges for express transportation $333,890,026. Out of this it paid for the express privileges $141,829,491,
leaving $192,060,535. Kevenue from other operations brought this
up to $195,665,044. Operating expenses exceeded this amount bv
$39,144,496. Express taxes amounting to $2,182,462 and uncollectible revenues from transportation brought the deficit up to
$41,364,059. In 1921 there was a small surplus of a little over a
half million dollars.
Data concerning the operating revenues, total operating expenses-,
and taxes were obtained from the express companies7 reports to the
Interstate Commerce Commission. Data concerning wages and
salaries for the years 1919 to 1923, respectively, Vere obtained by
inquiry addressed to the companies. For 1918 it was assumed that
wages and salaries amounted to 80 per cent of the reported operating
revenues. This assumption is justified by the fact that the corresponding proportions for other years fluctuated closely around that
percentage. The results may be summed up as in Table 180.
T A B L E 1 8 0 . — T h e total

value

created

by the railway

express

business

tions thereof that went in wages and salaries and as return
1918 to 1923.

and

to employed

the

por-

capital,

[Amounts in thousands]

Operating
revenues

Year

1918
1919
1921
1922
1923 „

.

_

1...

:

Wages and Return to Total value
capital and created by
salaries
enterprise the business

$103,569
$129,461
119,340
154958
165,364)
196,571 »
144,04^
187,678
123,001
156,383
126,634
161,541

i $14,489
123,261
i 30,321
2,692
3,491
3,186

$89,080
96,079
126,043
146,734
126,492
129,820

i Loss.

The operating revenues stated in the first column are not the gross
receipts out the remainder after paying for the express privileges.
The total value created by the industry was a little less than
$130,000,000 in 1923. A half decade earlier it was only a little more
than $89,000,000. Its greatest amount came in 1921, when it was
nearly $147,000,000.
Most of the value-product was taken in wages and salaries. Indeed, wages and salaries exceeded the total value created by the
business by nearly $14,500,000 in 1918, by more than $23,000,000 in
1919, and by more than $39,000,000 in 1920. Deficits were incurred
to the extent of those amounts. There were small amounts left as a
return to enterprise and employed capital in 1921, 1922, and 1923.
The proportions of the two shares to the total created value are
shown in Table 181.




287N A T I O N A L ,W E A L T H AND* I N C O M E
TABLE

1 8 1 . — P e r c e n t a g e s of the total value created by the railway express
that went to labor and to capital, by years, 1918Jo
1928

Year

Per cent
116
124
131
98

1918
1919
1920
1921
1

Share of
Share of enterprise
and
labor
capital
Per cent
i -16
l —24
i -31
2

Year

business

Share of
Share of enterprise
and
labor
capital
Per cent Per cent
97.3
2.7
97.5
2.5

1922
1923
Average

109.5

i -9.5

Loss.

During the six years wages and salaries amounted to 9.5 per cent
more than the total value created by the railway express business,
this excess constituting a liability upon the capital employed in the
industry. In every year labor's share amounted to more than 97
per cent of the total created value and exceeded the total value by 16,
24, and 31 per cent in 1918, 1919, and 1920, respectively.
TAXES.—The amounts of taxes payable by enterprises in the
express business (disregarding taxes payable by employees or lenders
of capital) and percentages of the total-value product of this industry,
are estimated as follows:
Year

Amount
$1,865,984
2,034,222
2,194,436

1918
1919
1920-

Year

Per cent
2.1
2.1
1.7

1921..
1922
1923

Amount
$2,120,204
2,293,123
2,226,560

Per cent'
1.4
1.8
1.7

The taxes paid by the railway express companies during the six
years, 1918 to 1923, inclusive, amounted to 1.8 per cent of the total
value created by the industry. They also constituted an additional
trenchment upon the capital of the industry to the extent of 12.7
per cent of that caused by the excess of operating expenses over
revenues. In 1921, when there was a small surplus after paying
operating expenses, taxes took nearly 79 per cent of it. They also
claimed nearly 66 per cent of the small surplus in 1922 and 70 per
cent of that in 1923.
Section 4. Water transportation industry.
VALUE

CREATED BY THE W A T E R

TRANSPORTATION

INDUSTRY.—

A census of the water transportation industry is taken at 10-year
intervals. The last was taken in 1916 and included all operations
of vessels of 5-ton net register and over that were American-owned,
irrespective of where the operations occurred. It also included
vessels engaged in the fisheries, as well as those engaged in transportation as public carriers.
The census shows that in 1916 there were 37,894 such vessels,
exclusive of fishing craft. Of these, 14,581 were steam driven, 3,002
were sailing vessels, and 20,311 were unrigged (largely vessels used for
towing, etc.). The gross tonnage was 12,250,000, of which over
6,000,000 of tons were steam driven and nearly 5,000,000 unrigged.




288

NATIONAL, WEALTH AND* INCOME

According to the census the total reported value of those vessels was
a little under $960,000,000, of which over $800,000,000 was the value
of steamers.
The gross income earned by these vessels in 1916 was, according
to the census, a little under $564,000,000. Of this, over $524,000,000
was earned by the steam or machinery propelled craft and the unrigged. Out of this gross income nearly $141,000,000 was paid as
salaries and wages to the industry's 236,882 executives and other
employees. Of these employees 153,300 worked on the vessels and
received approximately $103,236,000; nearly 19,000 consisted of
officers, managers and clerks in the offices on land, and received, in
round numbers, $16,300,000; the other 64,700 were stevedores and
other employees on land, and received practically $21,325,000 in
wages.
The census collected no other information than the above concerning the operating expenses and other outgoes of the industry. The
National Bureau of Economic Research 8 arrived at the conclusion
that the reported number of employees was approximately correct,
but that the amount reported as wages and salaries was a gross understatement. That bureau estimated the wages and salaries of all the
land employees at $67,560,000 in 1916, as compared with $37,624,000
reported by the census. It estimated the wages and salaries of vessel
employees at $206,100,000, as compared with $103,236,000 shown
above. Thus the bureau's total estimate of salaries and wages for
1916 is $273,560,000, which is about $132,800,000 greater than the
census enumeration.
The national bureau reasoned that the number of employees was
reported with approximate accuracy, and that the assumption of a
smaller number of employees would mean a great diminution since
1906, whereas the traffic statistics indicated that their number had
rather increased. Its reason for considering wages and salaries to
have been grossly understated was that acceptance of the census
results implied a decline in the average annual wage during the decade
from $665 to $450, whereas the indications from all other industries
were that wages and salaries had risen sharply.
The present report does not go into the merits of these contentions,
which are merely stated to show that there is difference of opinion
on the subject. The method used in preparing this report was to
tabulate the gross earnings and wage and salary data from the reports
of water transportation companies to the Interstate Commerce Commission for the years 1916 to 1923. Comparison of the gross earnings
afforded index numbers of gross earnings for the other years in terms
of gross earnings in 1916. Application of these to the census enumeration of gross earnings in 1916 resulted in estimates of the aggregate
gross earnings of the industry in the other years. Comparison of the
total compensatibn of executives and other employees, including food,
clothing, acddent benefits, etc., with the tabulated gross earnings
afforded an average percentage of such compensation to gross earnings in each year. These percentages, applied to the estimated gross
earnings of the industry, produced estimates of the aggregate remuneration of the industry's personnel.
Similar tabulation \Vas made of the other data needed for estimating
the value product of the industry and its distribution among the three
8

Income in the United States, vol. 2, p. 191.




289NATIONAL,W E A L T H AND* INCOME

shares. These tabulations were not confined to reports made to the
Interstate Commerce Commission, however, but included data from
reports published in Poor's and Moody's Manuals of such other companies as furnished comparable and usable data.
The processes of arriving at the indices, average percentages, and
final estimates are shown in Appendix Tables 62 to 68. The first
set of results to be presented here is the estimated gross income of
the industry in the years 1916 to 1923, which follows:
Year

1916
1917
1918...
1919

Estimated
gross earnings of all
companies
$563, 736,367
670,283,000
623, 363,000
767, 360,000

Index
numbers
of gross
earnings

Sequential
ratios

90.5
107.6
100.0
123.1

1.189
.930
1.231

Year

19201921
1922
1923

Estimated
gross earnings of all
companies
$860,977,000
712,028,000
761,870, 000
851,009,000

Index
numbers Sequential
of gross
ratios
earnings
138.0
114.2
122.2
136.5

1.122
.827
1.070
1.117

The "sequential ratios" show the proportion between the gross
earnings of each year and those of the next preceding year. They
were derived from the data tabulated from the reports of the sample
lists of companies. The index numbers are based on the gross
earnings of 1918 as u 1 0 0 " in order to show directly the growth
during the half decade that ended with 1923. The gross earnings
11
shown for 1916 are the amount r
us. '
According to these estimates
earnings of the
water transportation industry ii
_ _ _ ,700,000 in 1916
to $851,000,000 in 1923. The increase during the half decade was
$227,609,000, or 36.5 per cent. The gross earnings fluctuated
greatly; thus they were over a hundred million greater in 1917 than
in 1916, and after rising to a peak of nearly $861,000,000 in 1920, they
declined nearly $149,000,000 the following year.
Table 182 shows those portions of the gross earnings that constituted the value created by the industry.
TABLE 182.—Estimated value created by the water transportation
industry
and
estimated distribution
between wages and salaries and rent, interest, and
profits,
by years, 1918 to 1923

Year

Total value
product

Wages and
salaries

1918— $333, 686,000 $275,963,000
1919— 395, 267,000 345,849,000
422,051,000
1920— 458,900,000

Rent, interest,
and profits
$57,723,000
49,418,000
36,849,000

Year

192 1
1922
1923

Total value
product

Wages and
salaries

$345,049,000
392,363,000
462,268,000

$285,452,000
299,872,000
354,615,000

Rent, interest, and
profits
$59,597,000
92,491,000
107,653,000

The total value created by the water transportation industry was
less than a half billion dollars in each year, it amounted to a third
of a billion in 1918, and rose to nearly $459,000,000 in 1920. It
dropped back almost to the 1918 amount in 1921. With the general
business recovery in 1923 it reached its greatest magnitude, over
$462,000,000. The net increase during the half decade was about
39 per cent.
The amounts that went to personnel in wages and salaries showed
tendencies similar to those exhibited by the total value product.
The amount was a little less than $276,000,000 in 1918. In 1920 it



NATIONAL, W E A L T H AND* INCOME

2 9 0

was $422,000,000, which was the maximum. Then wages and
salaries dropped to about 285,000,000 in 1921, but rose again to nearly
$355,000,000 in 1923. The net increase over the half decade was
about 29 per cent.
Rent, interest and profits, before the deduction of taxes, give
evidence of having borne the first shocks of the economic changes.
This share amounted to about $58,000,000 at the beginning of the
half decade. In 1919, notwithstanding a considerate increase in
the other share and in the total value product of the water trans»ortation industry, this share decreased to a little over 40,000,000.
n 1920, when the other shares reached their greatest amount, the
share going to employed capital was only a little less than $37,000,000.
In 1921, however, when wages and salaries were greatly diminished,
rent, interest, and profits increased to nearly $59,600,000. This share
attained its greatest magnitude in 1923, when it was nearly
$108,000,000.
In Table 183 the proportions of these shares to the total value
created by the industry are shown:

f

TABLE 183.—Percentage
tation
industry
between
years, 1918 to 1928

distribution
wages
and

of the value created
by the
salaries
and rent, interest,

1918
1919
1920
1921

Wages
and
salaries

Rent,
interest,
and
profits

Per cent
82.7
87.5
92.0
82.7

Year

Per cent
17.3
12.5
8.0
17.3

water
transporand profits,
by

1922.
1923
Average

Wages
and
salaries

Rent,
interest,
and
profits

Per cent
76.4
76.7

Year

Per cent
23.6
23.3

83.3

16.7

The personnel of the industry received 83.3 per cent, or five-sixths
of the total value product. This share rose as high as 92 per cent in
1920 and fell to 76.4 per cent, or a little over three-fourths of the*
total, in 1922.
Rent, bond interest, and profits, before the deduction of taxes,
amounted to 16.7 per cent, practically one-sixth of the total value
created by the industry during the six years. It fell as low as 8
per cent of the total in 1920, and reached its maximum of nearly 24
per cent in 1922.
TAXES.—The amounts of taxes payable by the enterprises in the
water transportation industry (disregarding taxes payable by employees or lenders of capital) and percentages of the total valueproduct are estimated as follows:
Year
1918
1919
1920.

*




Amount
$11,158,000
15,808,000
19,802,000

Year

Per cent
3.3
4.0
4.3

1921
19221923

Amount
15,807,000
14,399,000
19,148,000

Per cent
4.6
3.7
4.1

291NATIONAL,WEALTH AND* INCOME

Section 5. Telegraph and Cable Industry.
VALUE CREATED BY THE TELEGRAPH AND CABLE INDUSTRY.—A

census of the telegraph and cable industry is taken at five-year
intervals as a part of the census of electrical industries. The census
of 1922 included 22 systems, comprising nearly 253,000 miles of pole
line and nearly 77,000 nautical miles of ocean cable, not including the
telegraph lines operated exclusively by railroad companies. The pole
lines contained over 1,853,000 miles of telegraph wire.
The total value of the telegraph and cable service rendered amounted
to nearly $147,000,000, of which a little over $76,000,000 was paid to
the 68,632 employees for their services. According to census statistics
the total capital invested in the business, exclusive of leased premises
and equipment, was in round numbers $319,000,000.
These companies furnish annual reports to the Interstate Commerce
Commission, which contain practically all of the information needed
for estimating the value created by the industry, with the exception
of the one important item of the wages, salaries, and other remuneration of personnel. Reports to this commission by 10 companies,
whose pay rolls in 1922 amounted to more than 90 per cent of the
pay rolls of the entire industry, supplied data for this important item.
These two sets of reports afford index numbers that, applied to totals
given by the census for 1922, enable estimates to be made for the
noncensus years.
The census shows in 1922 the wages and salary bill to have been a
little under $76,162,000. These constitute one of the base figures.
The census also shows " operating income" in 1922 amounting to
$26,774,038. This is the excess of operating revenues over operating
expenses and taxes chargeable against the telegraph and cable industry, inclusive of the Federal income tax. This is a little in excess
of the amount available for rent, bond interest and dividends, however, because of an item of "miscellaneous deductions from income"
amounting to $947,245, that is deducted later. It appears that this
item contains not only the loss from uncollectible revenues, which,
while not available for any of the three purposes named, is nevertheless a part of the whole value created by the industry, but also bank
interest and other outgoes that constitute payments to other industries. The uncollectible operating revenues in 1922 of the 10 companies whose reports to the Interstate Commerce Commission were
anatyzed amounted to 90 per cent of their total " miscellaneous deductions" inclusive of these last revenues. If these are a representative sample of the industry, it may be estimated that $94,725 of the
above-mentioned item consisted of amounts paid away to other industries, and that the remaining $852,520 consisted of uncollectible
operating revenues. Deduction of the former amount from $26,774,308, operating income, gives $26,680,000 in round numbers as the
estimated amount available for rent, bond interest, dividends and
uncollectible revenues.
For derivation of the indices with which to estimate the corresponding amounts for the other five years, see appendix, Tables 69
to 71. The resulting estimates of the value product of the industry




292

NATIONAL,

W E A L T H AND* I N C O M E

and the principal shares thereof in the six years are shown in Table
184 following:
TABLE 1 8 4 . — E s t i m a t e d value created by the land telegraph and ocean cable
and estimated division between wages and salaries, and rent, interest, and
by years, 1918 to 1928

Year

1918
1919
1920.
1921.
1922
1923

Total value
created by
the industry
$93,098,000
108,749,000
127,114,000
107,432,000
109,736,000
114,941,000

Wages and
salaries

industry
profits,

Rent,
interest,
and profits 1

$65,499,000
73,877,000
96,551,000
80,549,000
2 76,162,000
83,801,000

$27,599,000
34,872,000
30,563,000
26,883,000
33,574,000
31,140,000

* Also includes income losses from uncollectible debts'.
2 Census of telegraphs, 1922, p. 8.

Thus it is estimated that the total value created by the telegraph
and cable industry of the United States grew from $93,098,000 in
1918, when the industry was operated by the Federal Government,
to $114,941,000 in 1923. The increase during the half decade was
not nearly in so great proportion as in the telephone industry (see
sec. 10). Furthermore, unlike the telephone industry, there was a
large decrease in the value product in 1921, as compared with the
previous year, a decrease from a little more than $127,000,000 to a
little less than $107,500,000.
Under Government operation in 1918 the industry paid a little
less than $65,500,000 as wages and salaries. This expense rose to a
maximum of over $96,500,000 in 1920. The amount paid to employees declined in 1921 and still further in 1922, but rose to nearly
$84,000,000 in 1923.
The second share includes not only rent, bond interest, and profits,
and taxes paid directly by the enterprise as such, but also that portion of the earned revenues that was lost through uncollectibility*
If the amounts of the last item for the whole industry bore the same
proportions to the corresponding amounts lost by the sample of 10
companies in the other years as in 1922 this share would be divisible
as follows:

Year

1918
1919
1920
1921
1922
1923

Per cent
of
Estimated Estimated
amounts
amounts of
capital's
available
uncolshare to
for rent,
lectible
total
revenues interest, and
value
profits
product
$592,000
652,000
831,000
1,087,000
853,000
713,000

$21,009,000
27,252,000
24,010,000
20,281,000
25,827,000
23,368, 000

29.0
31.4
23.4
24.0
•29.8
26.4

The estimated loss from uncollectibility of earned revenues was
considerably less than $1,000,000 in every year except 1921. The
amounts available for distribution to those who furnished the industry




national

w e a l t h

and

income

293

with its capital ranged from $20,281,000 in 1921 to $27,252,000 in
1919. They varied m proportion from a little more than 23 per cent
to over 31 per cent of the whole value created hy the industry.
PROPORTIONS

OF

THE

VARIOUS

SHARES

TO

THE

TOTAL

VALUE

PRODUCT.—While the absolute amounts estimated above are of
some interest, and are necessary for combination with the estimates
for other industries to ascertain the totals for the nation, the proportions of the shares to the total value product are especially significant.
They are shown in Table 185 following:
TABLE J L 8 5 . — E s t i m a t e d percentage
interest,
and profits of the total
by years, 1918 to 1923 1

distribution
value created

Wages
and
salaries

1918
1919.
1920
1921

29.0
31.4
23.4
24.0

and
rent,
industry,

Year

1922
1923
Average

Wages
and
salaries

Rent, interest,
and
profits

68.4
72.3

Rent, interest,
and
profits

70.3
67.9
75.9
75.0

Year

between wages and salaries,
by the telegraph
and cable

29.8
26.4

72.1

27.2

1 The two percentages on any line total slightly less than 100 per cent because of the omission of the perntages of uncollectible operating revenues.

For the period as a whole, wages and salaries amounted to 72 per
cent of the total value product. The proportion was lowest in 1922,
when it was 68.4 per cent. It was highest at the wage and salary rate
peak in 1920, when it was nearly 76 per cent. Probably the fact that
this share was three-fourths of the total in 1921 was due to inability
to reduce the personnel force and rates in proportion to the decline in
the volume oi business in that year.
Capital's share in 1922 before the payment of taxes was equal to
10.3 per cent of the amount reported by the census as constituting the
invested capital. Since the latter amount did not include the
premises leased from parties outside the industry, it is probable that
the return was not much in excess of 10 per cent of the total capital
employed in the industry.
TAXES.—The amount of taxes payable by the enterprises in this
industry (disregarding taxes payable by employees or lenders of
capital) and percentages of the total value product of the industry are
estimated as follows:
Year

Amount

1918
1919
1920

WAGES

$5,998,000
6,968,000
5,722,000

PAID

BY

THE

Per cent
6.4
6.4
4.5

Year

$5,515,000
6,894,000
7,059,000

1921
1922
1923

TELEGRAPH

Amount

AND

CABLE

Per cent
5.1
6.3
6.1

INDUSTRY.—The

" Census of Electrical Industries" for 1922 gives a detailed report
of the telegraph and cable industry for that year, showing by occupational groups the total number of employees and the total amount
paid in wages and salaries. But for the other census years, 1912 and
1917, only the total number of employees and the total amount paid
are reported.




NATIONAL, W E A L T H AND* INCOME

294

Salaries and wages constitute nearly three-fifths of the total expense of this industry.9 The increase in the scale of the amounts
paid between the census years is interesting to note as compared with
the increase in number of employees for same periods of time. Between the census years 1912 and 1917 the scale of amounts paid in
wages and salaries increased 58.8 per cent, whereas between 1917
ana 1922 the increase was 91.2 per cent. The corresponding rates
of increase in number of employees for the same periods of time were
38.3 per cent and 33.1 per cent, respectively.
The following tabular statement shows the total number of employees, classified into officers, managers, clerks, operators, ind all
other wage earners, for the year 1922; the total and average amounts
received by each class; the percentage of each class to the total
number employed; and the percentage of amount received by each
class to the total amount paid all employees:
TABLE 1 8 6 . — E m p l o y e e s and

wages

and

salaries,

telegraph and cable industry

by occupational

in 1922

groups,

for

the

1

Percentage of

Occupational group

Officers
Managers
Clerks
Operators
Allfother wage earners
Total
.

1

Number
of employees

Total
amount
paid in
wages
and
salaries

Average
salary
or Wkge
per class

Each
class to
total
number

Each
class to
total
wages
and
salaries

90
1,965
20,015
23,628
22,934

$734,458
4,604,563
23,479,977
32,459,291
14,883,637

,$8,161
2,343
1,173
1,374
649

0.2
2.9
29.1
34.4
33.4

1.0
6.1
30.8
42.6
19.5

68,632

76,161, &26

1,110

100.0

100.0

Includes, in some instances, cable employees oiltside the United States.

Owing to the fact that the business of this industry is in the hands
of|comparatively few companies, the officers represent a small percentage of the total number employed, about two-tenths of 1 per
cent, and, correspondingly, the percentage of the officers' salaries to
total salaries appears small, being only 1 per cent, when, as a matter
of fact, the average salary paid to the 90 officers in this year was
$8,161. The clerks' average salary of $1,173 was the smallest received
by any single classification, while the group identified as "All other
wage earners/' with its average of $649, was the only classification
which fell below the total average of $1,110.
Section 6. Telephone industry.
V A L U E CREATED BY THE TELEPHONE I N D U S T R Y . — A census of the
telephone industry was taken in 1917 and &gain in 1922. At the
last census there were in the United States more than 57,000 telephone systems and lines separately owned. These operated more
than 37,000,000 miles of telephone line and more than 14,000,000
telephones. According to the census, the aggregate investment in
plant exceeded $2,200,000,000, and the revenue^ amounted to nearly
$685,000,000. Of the latter, nearly $35?,000,000 was paid as salaries
and wages to the employees, who numbered slightly more than 312,000.
• Census of Electrical Industries, 1922.




295NATIONAL,WEALTH AND* INCOME

Of these telephone systems and lines, nearly 56,000 consisted of
farmers' mutual systems and other small systems and lines whose
aggregate revenue in 1922 only slightly exceeded $28,000,000.
Nearly 96 per cent of all the revenue was received by 1,323 systems.
Of these, the "Bell system" alone, comprising 26 regional systems,
received more than $565,000,000, or 823^ per cent of the total for all
systems.
Most of the 1,323 telephone systems file annual reports with the
Interstate Commerce Commission. In 1922 and prior years all
companies with revenues in excess of $10,000 supplied financial data
in these reports. In 1923 only the 287 companies whose revenues
amounted to $50,000 or more reported financial data.
These financial data contained practically all the information
needed for estimating the value created by the industry, with the
exception of the one important item of the wages, salaries, and other
remuneration paid to the industry's personnel. The operating expenses as reported include this item, but, because they are classified
on a functional rather than an elementary basis, the wages and
salaries are merged with the other expenses of each function.
^ In consequence it was necessary to supplement the census and
Interstate Commerce Commission data by means of a questionnaire
to a representative list of telephone companies, in which they were
asked to report the total amounts of salaries, wages, and other compensation of personnel included in operating expenses in the years
1918 to 1923. To ascertain whether the reported "taxes chargeable
to operations" included the Federal income tax, they were also asked
to report the total taxes, inclusive of income tax, and the returns,
when compared with their reports to the Interstate Commerce Commission, showed that the Federal income tax had been included.
The plan for using these data was to obtain two sets of indices.
One set consists of index numbers of the volume of "operating
income " 10 in each of the six years 1918 to 1923 in terms of the volume
in 1922, the last being taken as the base, or 100, because it was the
year of the telephone census. Application of these index numbers
to the aggregate operating income of all telephone companies, as set
forth by the telephone census, would afford estimates of the like
aggregates for each of the other years.
The second set consists of six parts—a separate part for each of the
six years for which the estimate was to be made. Each of these comprises average percentages of taxes, of uncollectible operating re venues
of wages and salaries, of interest deductions other than interest on
funded debt, and of "miscellaneous deductions from income" to
"operating income." Of the basic data for these, all but wages and
salaries were compiled from the companies' reports to the Interstate
Commerce Commission. In the case of each of these items, the
percentage was derived by comparing the aggregate of the particular
item for all companies that reported on it with the aggregate operating income reported by the same companies. For example, for 1922
the taxes, interest and miscellaneous deductions percentages are
based on data reported by 1,115 telephone companies; the percentage of uncollectible operating revenue is based on data furnished
10 "Operating income" is the excess of "operating revenues" over operating expenses, "uncollectible
operating revenues and taxes chargeable to operations." This practice of charging taxes on profits to cost
of operations is logically indefensible, but for the present inquiry this treatment is a matter of indifference.




296

NATIONAL,

WEALTH AND* INCOME

by 285 companies; while the wages and salaries percentage is based
upon the reports of 753 companies, who reported wages and salaries
to this investigation and operating income to the Interstate Commerce Commission. Each percentage is based on the largest and
best sample obtainable.
The method of using these percentages was as follows: The data
for each year were applied to the estimated total operating income of
the entire telephone industry for that year, derived by application of
the first set of index numbers referred to. The results constituted
the estimates for the year in question of the total taxes, total uncollectible operating revenues, tot&l wages and salaries, etc., for
the entire industry. , These results were then combined in such manner as to show the total value created by the industry and its division
into the principal shares. In , this combination, the uncollectible
operating revenue was added to the operating income and from the
total were deducted the interest and the -miscellaneous deductions
items. This result was called the share of those who furnished the
industry with its capital and facilities.11
To the taxes as thus estimated should be added the total taxes on
telephone messages. For, although these message, taxes were not
counted either among the operating revenues or taxes of the tele-i
phone companies, which collected and transmitted them to the
United States Treasury, they were, nevertheless, a part of the total
amount of money paid by telephone users for telephone service, and
$re therefore properly to be included in the measurement of both
the gross value of the telephone service and the? value created by the
industry. Obviously this part of the value product was taken by the
Government. The proceeds of these taxes, however, were merged by
the local internal revenue collectors ,with the receipts from taxes
on telegraph and cable messages, and were not reported separately.
Hence, it was necessary either to estimate them, an unsatisfactory
procedure in this case, or to take them into account only as an additional item in the value product of the combined telephone, telegraph,
radio, and cable industries. The latter was considered the more
satisfactory prooedure. In the meantime, the estimates for the
telephone industry may be accepted with the mental reservation to
the effect that they understate the total value product and the share
taken by governments to an extent ranging from a fractional part of
$6,000,000 in 1918, to a fractional part of $29,000,000 in 1923.
ESTIMATES

OF

OPERATING

INCOME

IN

'NONCENSUS

YEARS.—*

The operating income of all telephone lines and systems with operating revenues in excess of $10,000 in 1922, as reported by the telephone
census,12 was a little less than $132,000,000. If the operating incomes
of the smaller companies bore the same proportion to their gross
operating revenues as in the case of the above-mentioned systems, the
operating incomes of all together amounted to nearly $137,600,000.
This figure is the base upon which the other estimates are founded.
In order to estimate the aggregate operating income of the telephone industry in the noncensus years, it is necessary to derive
index numbers of their amounts in terms of 1922 as the base or 100.
This is done in Table 187 which follows:
11 The reason for including uncollectible operating revenues was explained in sec. 1.
were deducted because it was assumed they were paid away to other industries.
12 Census of Electrical Industries, Telephones, 1922, p. 49.




The other items

297NATIONAL,WEALTH AND* INCOME
TABLE 1 8 7 . — I n d e x

numbers

of

the

industry,

aggregate

operating

income

of

the

telephone

by years, 1918 to 1923

[Amounts in thousands]

Number
of companies in
comparison

Year of comparison

1918
1919
1920
1921
1922

to
to
to
to
to

1919
1920
1921
1922
1923

314
319
329
331
284

1

Comparable aggregate operating
incomes
Base
year

Compared
year

$76,560
81,975
86,190
109,923
142,667

$81,954
86,259
109,900
131,081
129,861

Sequential
ratios

0.9342
.9503
.7843
.8386
1.0986

The "sequential ratios" are derived by dividing the amounts in
the base year by the respective amounts for the year compared.
The first ratio, 0.9342, for example, means that on the basis of data
furnished by a representative sample consisting of 314 telephone
companies, whose aggregate operating income shown in their reports
to the Interstate Commerce Commission was $76,560,000 in 1918
and $81,954,000 in 1919, it is determined that the operating income
of the entire industry in the former year was 93.42 per cent as great
as it was in the latter year. The data on the basis of which the
percentage of 1919 to 1920 operating income was determined (95.03
per cent) were obtained from a representative sample consisting of
319 companies for the following year, etc.
To properly constitute such representative samples it is necessary
to take account not only of the growth of business of companies that
operated in both of the years under comparison, but also of that
growth of the business of the industry that comes through the organization of new companies with new telephone facilities. Hence,
the endeavor was to include in these samples a proper representation
of companies that transacted no business in the earlier year of each
pair.
The index numbers were formed by letting 100 represent the
operating income in 1922 and multiplying this successively by the
ratios for each of the other years, for example, the index number for
1923 was derived by multiplying 100 by 1.0986. Application of these
index numbers, which are shown below, to the total operating income
in 1922, as previously estimated, affords the estimates of the operating
income of the industry in the other years. These estimates are
shown in Table 188.
TABLE 1 8 8 . — E s t i m a t e s

of

the

total

operating

income

of

the

telephone

industry

and index numbers based upon 1922 as 100, by years, 1918 to 1923

Year

1918
1919
1920

Index
Estimated
numbers operating
of operincome in
ating
the various
income 1
years
58.39
62.50
65.77

$80,324,000
85,978,000
90,476,000

Year

1921
1922
1923

1 See text, p. 296, census total of $137,564,000 for 1922 used as base.




Estimated
Index
numbers operating
of oper- income in
ating
the various
income 1
years
83.86 $115,361,000
100.00 1137,564,000
109.86 151,128,000

NATIONAL, WEALTH AND* INCOME

298

This table shows a rather spectacular growth in the operating
income of the telephone industry during the five-year period—from a
little over $80,000,000 in 1918 to over $151,000,000 in 1923. It
should be remembered that this is not the gross income from telephone
service, but only the excess of the receipts over operating expenses,
taxes, and losses from uncollectible revenues. During 1918 the telephone systems technically were operated by the United States Government. The properties were returned to the companies near the
middle of 1919. However, as public utilities, telephone companies are
at all times restrained at least as to their rates of charge for service by
public control; so that, even after regaining possession of their properties, the companies have not had a free hand like most otherjbusinesses
in revising their rates. In consequence the increase in operating
income after 1918 has been due probably more to increased volume of
business and to increased economy of operation than to increased
rates. It is especially noteworthy that the operating income increased
by leaps and bounds right through the industrial depression, when
most other industries were languishing.
ESTIMATES OF OTHER E L E M E N T S . — A s before intimated, from
data furnished by a representative list of companies in each year,
average percentage of taxes, wages, and salaries, and other classes of
outgo were derived. As these are of interest,not in themselves, but
only as statistical means to ends, the process of their derivation is
shown in Appendix Tables 72 and 73. All that need be said at this
point is that the representative samples contained data furnished by
from 181 to 1,115 companies.
The net results of the whole process are summed up in Table 189
following:
TABLE 1 8 9 . — E s t i m a t e d

division
1928

Year

1918
1919
1920

between

wages

value

created

and salaries,

by

the

telephone

and invested

industry,

capital,

and

by years,

estimated

1918

to

[Amounts in thousands]
Total
value
created 1

Wages
and
salaries

Rent, interest, and
profits 1

$286,426
338,287
430,711

$190,592
235,570
320,140

$95,834
102,717
110, $71

Year

1921
1922,
1923

Total
value
created 1

Wages Rent, interest,and
and
salaries profits»

$465,910 $323,496
3 523,858 » 352,926
582,115
390,923

$142,414
170,932
191,192

i These overstate the realized return to capital to the extent of the uncollectible revenues, for which see
the tabular statement and text discussion below, pp. 298 and 299. Taxes paid by the business enterprises are not deducted.
3 Reported by the census.

Table 189 shows that the total value created by the telephone industry increased from $286,426,000 in 1918 to $582,115,000 in 1923.13
The growth was steady and rapid throughout the half decade. The
share going to the industry's personnel as wages and salaries was
nearly $191^000,000 in 1918 and more than twice as much a half
decade later. Rent, interest, and profits, or the total share going to
invested capital14 amounted to a little less than $96,000,000 in
" The total value product is understated to the extent of the omitted taxes on telephone messages (see
footnote to Table 189).
w This overstates the actual share going to invested capital, due to the inclusion of uncollectible revenues,
for which see succeeding paragraphs.




299NATIONAL,WEALTH AND* INCOME

1918 and to nearly twice as much five years later. In short, the
whole value product, and each share in it, just about doubled during
the five-year period.
The amounts designated as rent, interest, and profits, or capital's
share, which include amounts paid directly by the business enterprises in taxes, were not fully realized to the capital employed in the
industry. In each year an appreciable portion of it proved uncollectible from the industry's patrons. The amounts of this value,
rendered by the industry but retained by its patrons, and the amounts
realized to the employed capital are shown in tabular form as follows:
Amount earned
by employed Estimated un- Amounts realcapital as pre- collectible reized for emviously estiserves
ployed capital
mated

Year

1918
1919
1920
1921
1922
1923

$69,030,000
74,001,000
77,420,000
101,933,000
123,904,000
137,481,000

$67,263,000
72,032,000
75,692,000
99,453,000
120,341,000
133,567,000

$1,767,000
1,969,000
1,728,000
2,480,000
3,563,000
3,914 000

From the foregoing statement it is seen that the amounts actually
realized for the employed capital rose rapidly from a little more than
$67,000,000 in 1918 to nearly $134,000,000, or twice as much, in 1923.
The amount realized in 1922 was a little less than 6 per cent of the
amount given by the census as the total invested capital.
While the amounts shown in Table 189 above are in the form needed
for combination with the like results for other industries, the facts
of greatest significance and interest are not^ these amounts but the
proportions of the several shares to the total. These are set forth in
Table 190TABLE 190.—Percentage division of the total value created by the telephone
between wages and salaries, rent, interest, and profits, and uncollectible
by years, 1918 to 1928

Year

1918
1919
1920
1921

Rent, in- UncollectWages
and sal- terest, and ible revearies
profits
nues
66.5
69.6
74.3
69.4

32.9
29.8
25.3
30.0

0.6
.6
.4
.6

Year

1922
1923

industry
revenues,

Rent, in- UncollectWages
and sal- terest, and ible reveprofits
nues
aries
67.4
67.2

Average

32.0
32.2

0.6
.6

68.9

30.5

.7

Labor in the broad sense, i. e., including the executive and supervising force as well as the great body of operatives, received in salaries,
wages, and other remuneration for their services an average of nearly
69 per cent of the total value created by the industry. Its smallest
proportion, 66.5 per cent, came in 1918, when the industry was under
Government operation, and its largest proportion, 74.3 per cent, was
received in 1920. The reason for this is not apparent. The data
already exhibited show that the total telephone ^business increased
right through the depression.
The amount actually realized for remuneration of invested capital
in the form of rent, interest, and profits, before deduction of taxes



NATIONAL, WEALTH AND* INCOME

300

paid by. these enterprises, averaged 30.5 per cent of the total value
created by tM. industry., It was only 25,3 per cent of the total in
1920, and rose as high as 32.9 per cent in 1918 and 32.2 in 1922.
TAXES.—The amounts of taxes paid by the enterprises in this
industry (disregarding the taxes payable by employees or lenders of
capital) and percentages of the total value product of the industry are
estimated as follows:
Year

Amount
$26,804,000
28,716,000
33,151,000

1918
1919
1920.-c

Year

Per cent
9.4
8.5
7.7

Amount

1921
1922
1923

Per cent
8. 7
9.0
9.2

$40,481,000
47,028.000
53, 711,000

W A G E S PAID IN THE TELEPHONE INDUSTRY.—Census figures for
the telephone industry for the years 1912, 1917, and 1922 show the
number of employees and wages and salaries paid in each year by
broad occupational groups. For the years 1917 and 1922 the totals
shown are for all companies having gross incomes of $10,000 and
over, and for *912 for all companies having gross incomes of $5,000
and over. The following table shows the total number of employees
and total wages and salaries paid in each of the census years to officers,
managers, clerks, operators, and to all other wage earners:
TABLE 1 9 1 . — N u m b e r of persons

occupational

employed

and wages

groups in the telephone industry,

and salaries

Employees
Year and group

1912

Total
Officers
Managers r
Clerks
Operators..
Other wage earners

-

1917

1.0

Officers
Managers
Clerks
Operators
Other wage earners
Total

1,753
5,673
31,327
96,332
48,276

3.1
17.1
52,5
26.3

4,118
6,406
34,181
138,971
60,814
244,490

Total
1922

specified
I

Wages and salaries

Percent
Number of total

183,361

Officers
Managers
Clerks
Operators
Other wage earners

paid

1912, 1917, and

Percent
of total

$3,086,242
7, 391,975
22,203, 265
32,474,093

3.2
7.7
23.1
33.8
32.2

100.0

6,040, 541

100.0

1.7
2.5
14.0
56.9
24.9

9,213, 516
7,355, 268
29,998,085
66,137,070
56,951,127

5.4
4.3
17.7
39.0
.33.6

169,655,066

100.0-

100.0 I

5,010
5,216
47,538
159,558
73,011

16.4
55.0
25.1

1.7

16,493,105
9,738,211
67,774,917
138,897,342
108,634,247

19.8
40.7
31.8

290,333

100.0

341,537,822

10 <
0.
0

1.8

4.8

2.$

* Based on returns of companies reporting incomes of $10,000 and over for 1917 and 1922 and incomes of
$5,000 and over for 1912.

During the 10-year period there was a sharp increase in personnel
for the industry. The total figures shown in the table, however, arecomparable as to size of companies included for 1917 and 1922 only..




301N A T I O N A L ,W E A L T H A N D * I N C O M E

During this five-year period tjie number of persons employed by
companies having gross incomes of $10,000 and over increased from
244,490 to 290,333, an increase of 18.8 per cent. The corresponding
increase in wages and salaries was from $169,655,000 to $341,538,000,
an increase of 101.3 per cent.
In this industry the largest occupational group is made up of switchboard operators, who represented in different census years from 52.5
to 56.9 per cent of the total number employed. Clerks constituted
from about 14 to 17 per cent of all employees ; all other employees
from 25 to 26 per cent, and officers and managers together, about 4
per cent.
Officers, representing 1 or 2 per cent of the total number of employees, received from 3.2 to 5.4 per cent of the total salaries and wages
in different years; managers, representing 2 or 3 per cent, received
from 2.9 to 7.7 per cent; clerks, representing 16 or 17 per cent,
received from 18 to 23 per cent; and all other employees, comprising
about 25 per cent of the employees, received from 32 to 33.6 per cent
of the wages and salaries. Operators, representing some 53 to 57
per cent of all employees, were a relatively low-paid group in all three
years, receiving about 34 per cent of the total wages and salaries
in 1912, 39 per cent in 1917, and about 41 per cent in 1922.
Table 192 shows the average compensation per employee for each
of the occupational groups in each of the census years:
TABLE 1 9 2 . — A v e r a g e compensation
per employee
in the telephone
occupational
groups,
1912, 1917, and
1922
Average compensation per
employee i

industry,

by

Index number 1912=100

Groilp
1912

1912

1917

$2,237
1,148
878
476
936

$3,292
1,867
1,426
871
1,488

100.0
100.0
100.0
100.0
100.0

127.0
88.1
123.8
141.3
146.2

186.9
143.2
201.1
258.5
232.5

524

All groups

1922

$1,761
1,303
709
337
640

Officers
Managers
Clerks
Operators
All other employees

1917

1922

694

1,176

100.0

132.5

224.4

i Based on number of employees and total wages and salaries shown in Table 191.

In every group there was a marked increase in average compensation. In actual amounts per person the officers and managers
received the largest average increases, but the increases for the lowpaid groups, though less in amounts than for the managerial groups,
represent relatively large increases of more than 100 per cent over the
average compensation for 1912. For the various groups the average
increases during the 10-year period, using the average compensation
for 1912 as the base or 100 for each group, are as follow: Officers,
86.9 per cent; managers, 43.2 per cent; clerks, 101.1 per cent; operators, 158.5 per cent; all other employees, 132.5 per cent, and average
for all employees, 124.4 per cent. It will be noted that the greater
part of the increase for every group took place between 1917 ana 1922.
Section 7. Electric light and power industry.
VALUE

CREATED

BY

THE

ELECTRIC

LIGHT

AND

POWER

INDUS-

TRY.—A census of central electric light and power stations is taken
every five years as a part of the census of the electrical industries.



302

NATIONAL, WEALTH AND* INCOME

At the time of preparing this report, the data collected by the census
of 1922 were not yet available. In consequence the census of "1917
constitutes the base from which the estimates contained in this section are made.
In 1917 there were in Continental United States 6,542 central
electric light and power stations. The aggregate, value of the service rendered was nearly $527,000,000, of which a little less than
$95,242,000 was paid as wages and salaries to the executives and
operatives of the industry. The total investment in plant and equipment at that date was, according to the census, a little over $3,060,000,000.

In addition to the electric energy generated and distributed by
central electric light and power stations, electric railway companies
sell a considerable quantity, the gross value sold, as reported for
1917, being nearly $59,630,000. Due to the impracticability of
separating the wages, salaries and other outgoes that pertained to
this portion of the electric railway revenues from those that pertained
to their transportation business, the corresponding part of the value
created by the electric light and power industry is included with the
total estimates for the street and electric railway industry.
In order to make estimates for the six years included in the period
under review, it was necessary to derive two sets of index numbers.
One consists of a set of indices of gross operating earnings that
could be applied to the total for the industry given in the census of
1917, in order to estimate the gross earnings from 1918 to 1923.
The other consists of six sets—one for each year—of average percentages to gross operating earnings of taxes, of wages and salaries,
of rentals and of all other operating expenses or outgoes, exclusive of
bond interest and dividends. It was attempted to obtain data for
these purposes at first from the statements published in Poor's and
Moody's Manuals. These statements, however, were so lacking in
uniformity of arrangement, content and definition, that the attempt
was abandoned. Accordingly a simple questionnaire was devised and
sent to a representative sample of electric light and power companies.
The response to this questionnaire was excellent. While the letter
conveying the request suggested that the companies might prefer to
confine their reports to three designated years, 125 companies
furnished the data for all seven years. Thirty-six others furnished
the data for all of the years that they were in operation. A few
reported only for the three designated years. The sample is so
representative, that, in the comparison of 1923 with the other years,
there was no group that contained less that 136 companies and no
group that had aggregate gross earnings in 1923 of less than $422,000,000. The group that afforded the comparison between 1923 and
1917 comprised 136 companies and had aggregate gross earnings from
operation that amounted to over $422,000,000 in 1923 and nearlv
$192,000,000 in 1917. The latter amount is more than 36 per cent
of the total operating revenue of the industry in 1917, as reported
by the census. The amount reported for 1922 by the 188 companies
from which the index for that year was computed, was over 39 per
cent of the total amount for the industry, as reported on the advance
sheets by the Bureau of the Census. Thus the samples represent
approximately three-eighths of the industry.




303NATIONAL,W E A L T H AND* INCOME

The basic summaries from which the index numbers and average
percentages were derived are shown in appendix, Tables 74 to 79.
Estimates showing the growth of the gross earnings of the industry,
in the seven years are as follows:
TABLE 1 9 3 . — E s t i m a t e d aggregate gross earnings from operation
light and power industry, by years, 1917 to 1923
Estimated
gross earnings

Year
1917
1918
1919
1920

...

Index
numbers

i $526, 894,000
593,812,000
694,681,000
864,607,000

1.000
1.126
1.319
1. 640

of

the

Estimated
gross earnings

Year
1921
1922
1923._

electric

Index
numbers

$955, 566,000
2 1,072,120,000
1, 237,281,000

1.813
2.032
2.349

1 Census of 1917, p. 9.
Amount reported on advance releases by the Bureau of the Census.

2

The gross value of the service rendered by the electric light and
power industry is estimated to have increased from a little less than
$527,000,000 in 1917 to more than $1,237,000,000 in 1923. This is
an increase of nearly 135 per cent. Evidenced by the proportion
of companies reporting in this inquiry whose properties were not in
existence in 1917, a very considerable portion of the increase was due
to the expansion of the industry.
It will also be noticed that, like the telephone industry, the volume
of business, measured in terms of gross earnings from operation,
continued to increase by substantial amounts right through the industrial depression. The only evidence of a depression is the fact
that the increase in gross earnings of 1921 over 1920 was somewhat
less than for either the preceding or the following year.
The estimates of the value created by the electric light and power
industry and of the three shares in it are presented in Table 194.
TABLE 194.—Estimated value created by the electric light and power industry
estimated division between wages and salaries, and rent, interest,
profits,
uncollectible revenues, by years, 1917 to 1923

and
and

[Amounts in thousands]

1917
1918
1919
1920

Total
value
created

Wages
and
salaries

$307,768
337,678
401,078
473,192

Year

Rent, interest, profits, and uncollectible
revenues

i $95,242
109,503
137,668
*78,180

Total
value
created

Year

$212,526 1 1921
228,165 1922
263,410 1923
295,012

-

Wages
and
salaries

$551,682
635,072
761,299

$192,394
2 212,433
249,825

Rent, interest, profits, and uncollectible
revenues
$359,288
422,639
511,474

Census of central light and power stations, 1917.
2 Reported in advance releases by the Bureau of the Census.
1

The total value created by the electric light and power industry is
estimated at $307,768,000 in 1917 and $337,678,000 in 1918. The
estimates made by the National Bureau of Economic Research 15
were $234,331,000 and $256,888,000, respectively. The bureau's
estimates, however, include only the privately owned plants, while
15 Income in the United States, Vol. II, p. 165.

103288—S. Doc. 126, 69-1



21

NATIONAL, WEALTH AND* INCOME

304

the present estimates include municipally owned and Operated plants
as well. The bureau treated Government as a separate industry,
whereas in this report Government is being treated as a partner in
industry. Accordingly there seems no good reason for omitting the
value created by Government owned and operated electric plants
from the total value created by the industry.
Like the gross earnings, the value product of the electric light and
power industry increased by a substantial amount each year, so that
the amount in 1923, about $761,000,000 was 147 per cent greater than
in 1917. The largest increase was in 1923 as compared with the preceding year, an increase of $126,000,000. It is noteworthy, however,
that even in the depression year, 1921, the value created by this industry was over $78,000,000 greater than in the preceding year.
What was said concerning the total value product was true on a
smaller scale, but in similar proportions, of each of the shares. The
share that was received by the industry's executives and operatives
increased from a little over $95,000,000 in 1917 to nearly $250,000,000
in 1923.
Capital's share rose from around $212,000,000 in 1917 to approximately $511,000,000 in 1923. A more significant comparison is that
of the proportions of the whole value that went to these two factors,
which are shown in Table 195.
TABLE 1 9 5 . — P e r c e n t a g e distribution
of the value created
power
industry
between
wages and salaries,
and rent,
years, 1917 to 1923

Year

1917
1918
1919
1920
1921

Wages
and
salaries

Rent,
interest,
and
profits 1

30.9
32.4
34.3
37.6
34.9

69.1
67.6
65.7
62.4
65.1

Year

1922
1923

by the electric
light
interest,
and profits,

Wages
and
salaries

and
by

Rent,
interest,
and
profits 1

33.5
32.8
Average

66.5
67.2

33.9

66.1

i These percentages also include the losses of income because of uncollectibility, the amounts of which
are not known but probably were of negligible proportion.

The electric light and power industry is remarkable because of the
fact that labor receives only about one-third and capital receives
about two-thirds of the total value product.
The large proportion obtained by capital is evidently due to the
relatively large proportion of the capital to. the labor factor in the
electric light and power industry. The investment in plant in this
industry, according to census data, amounted to $29,000 per employee.
The corresponding investment in the telephone industry in 1922 was
$7,050 and in the telegraph and cable industry was $4,650. Notwithstanding the large proportion of the value product that went to
capital in the electric light and power industry, the amount of this
share in 1917 was only about 7 per cent of the reported investment in
plant.




305NATIONAL,WEALTH AND* INCOME

TAXES.—The amounts of taxes paid by the enterprises in this
industry (disregarding the taxes payable by employees or lenders of
capital) and percentages of the total value product of the industry
are estimated as follows:
Amount
1917
1918
1919.
1920




$30,063,000
37, 264,000
42,710,000
49, 550, 000

Per cent
9.8
11.1
10.7
10. 5

Amount
1921
1922
1923

$61,725,000
73,128,000
85, 726,000

Per cent
11.2
11.5
11.3

CHAPTER

XV

MERCANTILE BUSINESS
Section 1. Basis of estimating value of product.

A few centuries ago each family produced for itself nearly all of
the articles it consumed. Their variety was of necessity a narrowly
limited one. With the advent of power-driven machinery, rapid
transportation, and rapid communication a profound change took
place in the mode of organization for production and the immediate
objective of industry. Division of labor has been carried to such an
extent that with exception of the farmers, a few individuals in other
lines, and a remnant of household production, the family no longer
produces for itself any important part of the commodities it consumes, excepting as involved in gardening and in cooking and dressmaking. Moreover, industry has largely come to be distributed
geographically.
In consequence, immensely important distributing functions have
sprung up. Not only must commodities be transported often long
distances, but often, because they are produced on a small scale by
small industrial units, they must be gathered together in larger
aggregates at the producers' end of the transportation line so that
they can be moved and handled economically. At the other end it
may be necessary to break the lots up again into smaller quantities
suitable for handling by those who sell to the ultimate purchaser.
On the one end there is the problem of studying markets so as to place
commodities most advantageously. On the other end there is the
function of studying the sources of the various commodities so as to
buy them most advantageously, and of ordering them in due season
so that they may be available in proper quantities as needed.
There is thus the wholesale function or service that is concerned
with the study of markets or of sources; the assembling into large
quantities and the breaking of the large lots up into the smaller lots.
This includes not only wholesalers so-called but also the commission
merchants and many so-called jobbing enterprises. The last named
designation, however, is also applied to the function of taking special
and unstandard lots, or lots of unstandard merchandise (such as
ready-to-wear suits that are not up to the manufacturer's standard
of quality, or lots of some design or merchandise that has gone out
of style) and finding a market for them. Somewhat similar to this
is the service rendered by the manufacturers' agent. Finally and
culminatingly there is the service that consists of having stocks of
the various kinds of articles conveniently on hand and furnishing
these, in the quantities desired, to the ultimate purchasers—the
retail function and service.
All of these may be summed as distributing or mercantile industry.
No census of this industry has ever been taken. All corporations are
required to file income-tax reports annually, and the data contained
306




307n a t i o n a l ,w e a l t h a n d * i n c o m e

in these reports are published in summary form in " Statistics of
Income." Only 131,500 mercantile businesses out of probably several
millions were so covered in these statistics in 1922. All partnerships
are also required to file income-tax reports for memorandum purposes,
but these statistics are not published. An individual whose aggregate
taxable income is large enough to subject him to income tax, or exceeds
a specified minimum, is also required to report. These, however,,
report not merely their income from the business but their income
from other sources as well. For 1922, only 297,133 individual
merchants filed such reports, and the "Statistics of Income" give no
details of information concerning them except their net income, which
aggregated $891,372,487.1 There were probably many hundreds of
thousands of individual merchants who filed no income-tax reports
because their net incomes were not large enough to require it. Furthermore the entire net income of individuals from their partnership
enterprises is omitted so far as separate statement for mercantile
business is concerned.
The Harvard University Bureau of Business Research has devised
systems of accounts for various kinds of retail and wholesale stores,
has made arrangements with hundreds of stores in each class whereby
they have kept their accounts according to these systems and have
made reports to the bureau accordingly. The accounts were carefully defined as to character of items to be included, the purpose
being to obtain comparability of items reported by the various
stores. The results of each study have been presented in bulletin
form. These studies cover the following classes of mercantile business: Department stores in 1920, 1921, and 1923; retail shoe stores
in 1919, 1920, 1921, 1922, and 1923; retail jewelry stores in 1919,
1920, 1921, and 1922; retail drug stores in 1919; retail hardware
stores in 1919; retail grocery stores in 1919, 1922, and 1923; wholesale grocery stores in 1919, 1920, 1921, 1922, and 1923, wholesale
automotive equipment stores in 1923 and wholesale drug stores in
1922. Similar researches have been started by Northwestern University, the University of Nebraska and other institutions.
These are valuable studies of the typical proportions of the various
classes of expense, of the gross profit and net profit to net; sales, and
have been used in making the present estimates. They contain
certain defects, however, from the viewpoint of this inquiry. The
rental used is in many cases a putative rental and contains the taxes
on land and building, insurance, and depreciation pertaining to the
building, and putative interest on the investment in the land and
building. In consequence the proportions given do not directly
permit entire separation of the elements constituting the value
product from the expenses paid away to other industries. A supplementary inquiry by this commission to several classes of these distributors furnished data that assist materially in this matter.
The problem, then, becomes that of estimating the total net sales
of the retail and of the wholesale branches of mercantile business
for each year under review, and of applying to these the distribution
percentages obtained from the studies referred to and from reports
received directly by this inquiry from certain classes of distributors.
1

Treasury Department Statistics of Income, 1922, p 10.




national, w e a l t h

308

E S T I M A T E S OF T O T A L

NET

and*

income

S A L E S OF R E T A I L E R S

A N D OF

WHOLE-

SALERS.—Four sets of data constitute the basis of these estimates.
The Commonwealth of Pennsylvania imposes an annual tax upon
mercantile business that consists of a small flat tax and of a tax upon
gross income. From the tax charges the department of internal
affairs of that Commonwealth computes the gross income from sales
and publishes the results in its annual reports on productive industries. These data are available for 1920 to 1923, respectively. They
can be used as a basis for estimates for the entire United States by
assuming that the same proportion exists between the sales and
population in Pennsylvania as in the entire country. The estimates
of the total sales based on these data are shown in Table 196.
TABLE 1 9 6 . — E s t i m a t e of the total sales of retail and of wholesale
mercantile
ness, based on sales in Pennsylvania,
by years, 1920 to 1928

busi-

[Population in thousands, amounts in millions]

Year

1920
192 1
1922
1923

Population of
Pennsylvania
3 8,720
8,837
* 9,005
4 9,116
4

Population of the
United
States
»105,711
107,626
108,939
110,187

4
4
4

Retail
sales in
Pennsylvania
$2,023
2,496
2,244
3,393

Estimated
retail
sales in
United
States i

Wholesale
sales in
Pennsylvania

$24,524
30,399
27,147
28,925

$1,653
1,788
1,357
1,513

Estimated
wholesale
sales in
United
States 2
$20,039
21,776
16,416
18,288

1 These amounts are in the same proportion to the corresponding amounts in column 4 as the numbers
in column 3 are to the corresponding numbers in column 2.
2 These amounts are in the same proportion to the corresponding amounts in column 6 as the numbers
in column 3 are to the corresponding numbers in column 2.
3 United States Bureau of the Census, Census of Population, 1920.
* Estimated by the commission.

On this basis the retail sales are estimated to have been twentyfour and five-tenths billions of dollars in 1920, thirty and four-tenths
billions in 1921, twenty-six and eight-tenths billions in 1922, and
twenty-eight and nine-tenths billions in 1923. The wholesale sales
are correspondingly estimated at twenty billions, twenty-one and
eight-tent Ms jbillions, sixteen and two-tenths billions, and eighteen
and three-tenths billions of dollars, respectively. The wholesale
sales include sales by wholesale, jobbing, and commission merchants
but not the sales of manufacturers or other direct producers.
These estimates would indicate that the greatest volume of sales,
measured in money values, came in 1921, the depression year. There
is good reason to doubt that this was the fact. Prices were much
lower in 1921 than in 1920, and the physical volume of business was
probably much less, especially than the physical volume in the first
half of 1920. Furthermore, it is doubtful because of lower prices,
whether the money value was greater in 1922 than in 1920, for the
same reasons. The following index numbers of the money volume
of sales, which were derived from data published in the monthly
Survey of Current Business,2 also impugn the validity of the estimates
based on the Pennsylvania data.
2 Published by the Department of Commerce.




309n a t i o n a l ,w e a l t h a n d * i n c o m e
TABLE 1 9 7 . — I n d e x numbers

of retail

Kind of store
Retail stores:
28 chains of grocery stores
5 chains of 5 and 10 cent stores.
10 chains of drug stores
3 chains of cigar stores
6 chains of shoe stores
4 chains of music stores
4 chains of candy stores
4 mail-order houses
359 department stores
Wholesale stores, Federal reserve districts:
Hardware, weighted average, 10 districts
Shoe, weighted average, 8 districts
Grocery, weighted average, 10 districts
Drug, weighted average, 7 districts
Meat
Dry goods, weighted average, 9 districts
American Wholesale Corporation
All wholesale trade
1

and

wholesale
1919

sales,
1920

100
100
100
100
100
100
100
100
100

1919

to 1923

1921

1922

1923

146
120
121
133
120
109
138
103
120

100
100
100
100
100
100
100
100

by years,

116
88
113
112
115
108^
112

130
124
123
132
113
86
142
72
110
82
68
77
97
55
83
98.7
74

1

151
140
127
128
114
101
147
79
111

187
165
144
135
123
113
176
99
124

86
65
76
100
56
83
85
75

104
68
83
111
63
99
92.3
83

Survey of Current Business, February, 1925, pp. 122-124, 125, 126, and 130.

According to these indices sales in 1921 were less in total money
value than sales in 1920, except for three classes of retail chain stores.
These were the 5 and 10 cent stores, the drug stores, and the candy
stores. In the financial pinch of industrial depression, patronage
might be expected to shift from other stores to the cheap 5 and 10
cent stores. Why the sales of drug and candy stores should have
increased is not clear. It is probable, however, that this also represented a diversion of patronage in localities in which new stores in
the chains were opened. The sales of the three cigar-store chains
show only a slight falling off in 1921. This also may have been due
to the establishment of new stores in these chains, diverting patronage from other cigar stores; or it may have been due to a greater
use of tobacco by displaced or part-time employees who had more
idle time than previously. The other classes of stores all show substantial reductions in the total volume of sales in 1921 as compared
with the previous year.
In the comparison of the money volume of business in 1922, with
that of 1920, only the chain grocery stores are added to the previously
mentioned candy, drug, and 5 and 10 cent stores in the matter of
having a larger business in the later than in the earlier year. The
wholesale stores showed a smaller volume of values in both 1921 and
1922 than in 1920.
These data are not consistent with those shown for Pennsylvania
dealers. Inasmuch as the department of internal affairs of that
Commonwealth itself believes that, due to certain defects of organization, control, and verification, there was a large understatement of
sales in the earlier years, it may be inferred that the amounts shown
for 1920 were much too small. Therefore the estimates for 1922 and
1923 are probably more reliable than those for 1920.
Sec. 2. Estimates based on working-family budgets of 1918 and 1919.

The Bureau of Labor Statistics collected in 1918 and the fore part
of 1919 data concerning the expenditures during the preceding year'
by 12,096 workingmen's families. These families were distributed
among 94 cities. The various geographical divisions of the United
States were represented by from 7 to 19 cities. The expenditures
were classified as "food," "clothing," "furniture and furnishings,"
"miscellaneous," "fuel and light," and "savings." The first four




national, w e a l t h

3 1 0

and*

income

of' these may be regarded as classes of articles the family would
purchase from retail stores. Of the "fuel and light/7 the electric
light and gas bills represent amounts paid to public utilities or
manufacturers, leaving the remainder to represent fuel purchased
at retail. The details of the expenditures were given in such manner
as to permit close approximation of the former, and, therefore, of the
latter. The details also permitted the selection of those miscellaneous
items that represented retail purchases.
Thus it was possible to obtain totals of money spent in retail
purchases by the families in each geographical division. Not only
were the numbers of families given, but also the number of persons in
the families. Thus it was possible to ascertain the average expenditures per person in the reporting families in each geographical
division. These averages were assumed to be typical of the whole
population in each division. Objection may be made that, due to
the fact that the wealthy and more well-to-do families were not
represented, the averages obtained understate the true averages for
the entire population. Over against this, however, is the fact that
in the mode of selecting the families from which to obtain the budgetary data, newly formed families and others of the lower earning power
were practically excluded. Also workingmen's families constitute
a large part of the urban population. Furthermore the average farm
family probably does not nave an income larger than that of the
workingmen's families included in the study. These facts make it
seem probable that the average expenditures per individual in these
workingmen's families were fairly representative of the expenditures
by the whole population. And it is noteworthy that the estimates
of total retail sales to the entire population based on these data are
larger than the estimates based on the reported retail sales in Pennsylvania. It should be borne in mind, however, that the amount of
retail sales so estimated includes only articles sold for household or
personal consumption. They omit all articles sold at retail for
production purposes, such as lumber, cement, hay, grain, feeds,
fertilizer, etc.
The averages for the various geographical divisions are shown in
Table 198.
TABLE 1 9 8 . — A n n u a l expenditures
per member
of workingmen's
clothing,
house furnishings,
coal and wood,
and miscellaneous
1
by geographical
divisions,
in 1918-19
[In dollars]

Division

New England
Middle Atlantic
•
South Atlantic - .
East Jtforth Central
West North Central
East South Central
West South Central..
Mountain
Pacific

Food

$116.35
119.77
106.71
106.78
112.41
110.66
109.94
113. 78
113.18

Furniture and
house
Clothing
furnishings

$44.95
51.70
49.92
46.73
46.85
48.32
43.85
54.06
52.07

$11.18
13.88
15. 78
15.78
16.05
15.28
14.34
18. 57
16. 66

Coal
and
wood

$11.71
9.34
10.92
10.80
12.53
9.20
5.56
15.30
8.50

families
retail

Total
retail
purchases
other
than
"miscellaneous"
$184.19
194.69
183.33
180.09
187.84
183.46
173.69
201. 71
190.41

for
foody
purchases,

Miscellaneous
retail
purchases

Total
retail
purchases

}

$20.38
19.29
20.61

2 $212.63
202.62
2 203.60

|

20.72

2198.94

|

25.91

2 220.42

|

Compiled from U. S. Bureau of Labor Statistics, Bulletin 357, Cost of Living in the United States.
To the average of the bracketed amounts in column 6, weighted in proportion to the estimated population Jan. 1,1918, was added the amount of miscellaneous expenditures shown in column 7 to arrive at
figures shown in the last column.
1

2




311

national,

w e a l t h and* income

If the amounts designated in Table 198 as "total retail purchases7'
may be taken as the retail purchases of articles for household and
personal consumption per capita of the entire populations of the respective geographical divisions, these per capita purchases ranged
from $198.94 in the South Central States to $220.42 in the Mountain
and Pacific States.
The year to which these budgets pertained was not the same for all
families represented. Some years ended in 1918, some early in 1919.
It is assumed that the variation was such that the number of budgets
for years ending in 1919 balanced the number for years ending prior
to December 31, 1918, so that the data are assumed to be representative of the calendar year 1918.
The estimated retail sales of articles for personal and household
consumption in the entire United States during 1918 may be estimated by multiplying the per capita retail purchases shown in Table
198 by the estimated populations on January 1, 1918, of the respective geographical divisions. The data and results are shown in
Table 199.
TABLE 199.—Estimate of the total retail sales of articles for personal consumption in
1918, based on an analysis of the purchases made by 12,096
workingmen's
families
Retail sales
per capita of
population

North Atlantic
South Atlantic
North Central
South Central
Western
Total.

Estimated
population,
Jan. 1,1918

$212. 63
202.62
203. 60
198. 94
220.42

Eegion

29,237,461
13,789,031
33,539,527
18,957,900
8,626,450

Estimate of
total retail
sales
$6,216,748,000
2,789,383, 000
6,828,508,000
3,771,454,000
1,901,471,000
21,507,564,000

Thus, it is estimated that in 1918 the total retail sales of articles for
personal consumption in continental United States amounted to
nearly $21,508,000,000. The next step is to obtain index numbers of
the change in volume of these sales in the ensuing years. The index
numbers of retail sales by various classes of stores shown in Table 197
above (see p. 309) constitute data for connecting aggregate sales
in 1919 with sales in 1920 and the following years. Unfortunately,
however, these indices do not relate back to 1918, which is the base
of the five-year comparison.
However, the United States Bureau of Labor Statistics publishes
each month in the Monthly Labor Review the summarized pay-roll
data furnished by several thousands of manufacturing companies.
These companies give representation to all the more important manufacturing industries and geographical regions. The summaries show
for each major group of industries the total amounts of wages paid
by the reporting companies for work done during the week that ended
nearest the fifteenth of the month. The summaries are comparative
in form, i. e., the pay-roll data are given not only for the chosen
week in the current month but for the corresponding week in the
preceding month and in the corresponding month in the preceding
103288—S. Doc. 126, 69-1




22

312

national, w e a l t h and* income

year. In each summary the comparative data were furnished by
identical lists of companies.
A month to month comparison of these total pay rolls gives a fairly
good index of the change in the total volume of money received
by manufacturing workers, in so far as these changes take place by
the expansion and contraction of the volume of employment within,
and by raising or lowering of rates of pay by manufacturing enterprises that were operating in both periods being compared. The
comparison does not take account of those changes in total money
wage incomes that are due to the setting up of new manufacturing
businesses or to the bankruptcy of others. The omission of the latter
probably is more serious than the former because a bankruptcy may
cause real unemployment, whereas the opening of a new factory may
mean merely the transfer of workers from one employment to another.
It is probable, however, that the Bureau of Labor Statistics data fail
to take account of the changes of wage earnings 4ue to a complete
shut down of certain plants during the week for which report is being
made, or to the resumption of such plants as reflected in the reports
for the next month; i. e., it is probable that such plants are omitted
from the comparative tabulations for identical companies.
However, these comparative pay-roll data are the best available
for the purposes in hand. Money income is the source of funds with
which to make retail purchases. If the volume of retail purchases may
be assumed to vary in proportion to the volume of these manufacturing wage incomes, the retail purchases in 1919 were 36.4 per cent
greater than in the preceding year.
Next to be considered are the indices of total retail sales in 1920
to 1923, respectively, in terms of sales in 1919. Table 197 above
shows indices for seven kinds of chain stores, for mail-order houses,
and for department stores. If the proportion of the total retail
business of the country handled by the respective kinds of store in
1919 were known, these proportions might be applied as weights to
the several series of index numbers to form a composite index for all
retail trade. These proportions are not known, however. Any other
kind of composite index that includes the data for all classes oi stores
would probably overstate the volume of sales in the later years for
the reason that the chain-store movement represents in large part a
transfer of patronage from the independent stores and the latter are
not represented in the data.
Therefore it has seemed best to base the composite index upon the
data for department stores and mail-order houses. The former reflect the urban, suburban and to a certain extent the rural retail
trade; the latter reflect rather the rural, and the country village
trade, and to a certain extent the retail purchases of the inhabitants
of small cities in the agricultural regions. These two sets of index
numbers are reproduced in Table 200 and the composite indices are
derived by weighting in proportion to the population in cities of
8,000 or more inhabitants for the department store data and to the
population outside of such cities for the mail order sales indices.




313n a t i o n a l ,w e a l t h a n d * i n c o m e
TABLE 200.—Index numbers of retail sales and estimates of aggregate retail sales
of articles for personal consumption by years, 1918 to 1923
Indices
Indices
of departComposite
of mail
ment store order sales indices of
1
sales
sales, 1919
(weight
(weight
as base 3
46,636,000) 2 59,075,000) 2

Year

1918
1919
1920
1921
1922
1923

-

100
120
110
111
124

—

1

100
103
72
79
99

Indices
of retail
sales, 1918
as base

100
110.5
88.7
93.1
110.0

Estimated
aggregate
retail sales
(millions)

4 $21,508
29,335
32,400
26,025
27,470
32,270

100
6136. 4
6150. 6
U21
6 127
6 150

1 See text, Table 197, p. 309.
2 Census of population, Jan. 1, 1920, population in cities of 8,000 or more inhabitants and outside of such
cities, respectively.
3 Weighted average of the indices on columns 2 and 3.
4 See total of column 4, text, Table 199, p. 311.
s See text for derivation of this index.
6 Formed by applying to 136.4 the index in column 4 for the year in question.

The last column in Table 200 shows the estimates of the total retail sales of articles for personal consumption in continental United
States as based on the workingmen's family budgets, the change in
the total wages paid factory workers in 1919 as compared with 1918
and the fluctuations in the sales of department stores and mail order
houses in the later years as compared with 1919.
As before intimated the estimates of retail sales based on these
workingmen's family budgets omit the sales at retail of articles not
used for household or personal consumption. It is therefore necessary to supplement them.
The section dealing with agriculture contains estimates of the
amounts of money spent by farmers for agricultural implements, fertilizers, harness and saddles (see p. 242). From data collected by this
commission in other investigations it is possible to estimate the sales
by retailers of hay, grains, mill feeds and mixed feeds. From the
data on the value of establishments manufacturing lumber and other
timber products, on the value added by planing mills and so on, and
estimates by authorities familiar with the lumber trade that about
60 per cent of the lumber is sold at retail, coupled with index numbers pertaining to lumber production in intercensal years, it is possible to estimate the total sales of lumber and the like by retailers;
and so on for each of the principal classes of articles-sold at retail.
A small added margin to represent the less important omitted articles completes the estimate. The results of this process are shown in
Table 201:
TABLE 2 0 1 . — E s t i m a t e d total retail

sales

of all articles,

by years,

1918

to

1923

[Millions]

Year

1918
1919
1920

For other
For per- than personal con- sonal consumption sumption
$21,508
29,335
32, 400




$3,948
5,500
5, 946

Total

$25,456
34,835
38, 346

Year

1921
1922
1923

For other
For per- than personal con- sonal consumption sumption
$26,025
27,470
32, 270

$4,691
5,040
5,902

Total

$30,716
32,510
38,172

314

n a t i o n a l , w e a l t h and* income

The total estimates may be compared with those based on the
Pennsylvania sales-tax data. The present estimate shows retail
sales in 1920 amounting to $38,346,000,000, as compared with
$24,524,000,000 estimated on the other basis. For 1921 the present
estimate is $30,716,000,000, as compared to $30,399,000,000 on the
other basis. The two sets of estimates move in opposite directions.
There can scarcely be question that the present estimate more truly
reflects the actual trend. The Pennsylvania Department of Internal
Affairs is of the opinion that, due to the defects of the system of
assessing the taxes in the earlier years, the reported sales grossly
understated the facts.3 For 1922 the present estimate is $32,510,000,000, as compared with $26,787,000,000 based on the Pennsylvania data. For 1.923 the present estimate again rises above $38,000,000,000, whereas the estimate based on the Pennsylvania data was
$28,925,000,000.
For the reasons already stated, the estimates based on the workingmen's family budgets, factory employee earnings, and sales indices
as supplemented by estimates for articles not used in personal consumption will be used in preference to those based on the Pennsylvania data.4
Section 3. Wholesale sales.

Table 197 (seep. 309) also shows sales volume indices in 1918 to
1923 for wholesale hardware, shoe, grocery, drug, meat, and dryoods stores in from 7 to 10 of the Federal reserve districts of the
Inited States. There is, however, no base to which to apply these
index numbers. There is, also, as much objection to using the
estimates of wholesale sales based on the Pennsylvania data as there
is of using the estimates of retail sales based on those data. It is
possible, however, that the proportions between the volume of
wholesale and of retail sales as reported in Pennsylvania may be
representative of the proportions for the country as a whole. These
proportions were 81.71 per cent in 1920, 71.64 per cent in 1921,
60.47 per cent in 1922, and 63.22 per cent in 1923. The proportions
shown for 1920 seems very large and may be due to a more accurate
approximation of that year of the reported to the actual wholesale
sales than was the case for retail sales. A similar statement, but in
less degree, probably is true of the proportion for 1921. With the
change in organization, methods, supervision, and checking control
for making the assessments, however, the proportions shown for
1923 may oe expected to constitute a closer approximation to the
actual proportions.

f

3 Information obtained in personal interview with the auditor general of the Commonwealth of Pennsylvania.
4 It is interesting to note that the domestic distribution department of the United States Chamber of
Commerce, in a pamphlet entitled "Population's Purchasing Power," estimated the total retail sales in
the United States in 1923 at $21,948,000,000, which is only about two-thirds the estimate of $32,270,000,000
shown above. The chamber of commerce, in passing from the data for 1918 to its estimates for 1923, took
only two changes into account, viz, (1) changes in the retail prices of the commodities purchased by the
workingmen's families and (2) estimated changes in the total population. The changes in the fullness of
employment, in wage and salary rates, and in the disposition to make purchases were overlooked. It will
be remembered that 1918 was a war year, in which luxury production was largely stopped by Government
action; in which everybody was urged to economize; in which there were campaigns for raising hundreds
of millions of dollars for the Red Cross work, the Y . M . C. A., Jewish Welfare, and other services to the
military forces; in which billions of dollars were subscribed for Liberty bonds. Early 1919 was a short
period of unemployment due to business uncertainty. Later, however, the restraints were removed.
The present estimates have taken account of all of these influences as far as practicable, either directly,
as in using the indices of the changes in the volume of factory wages for 1918 to 1919, or indirectly in making
use of the sales volume indices.




315n a t i o n a l ,w e a l t h

and*

income

Application of the proportions for 1923 to the accepted estimatesfor retail sales results in estimates of wholesale sales amounting to
$24,229,000,000 in that year. The index numbers of sales for "all
wholesale trade/' as computed by the Federal Reserve Board and
reproduced in the monthly Survey of Current Business, show that
wholesale sales in 1923 amounted in money value to 83 per cent
of the sales in 1919. On this basis the wholesale sales in 1919 may
be estimated at $29,192,000,000. Application of the other index
numbers yields estimates for the intervening years as shown in
Table 202.
TABLE 2 0 2 . — E s t i m a t e of the total

Index
numbers
of sales 1

Year

1918
1919
1920

Estimated
sales
(millions)
2

100
112

sales by the wholesale
1928

$21,332
29,192
32,695

trade,

by years,

1918

to

Index
Estimated
numbers
sales
of sales 1 (millions)

Year

74
75
83

1921
1922_
1923

$21,602
21,894
3 24,229

1 Department of Commerce, Survey of Current Business, August, 1924, p. 183.
2 Estimated by taking the same proportion of estimated retail sales as in 1919, namely, 83.8 per cent.
3 Estimated, on the basis of the proportion of wholesale to retail sales in Pennsylvania in 1923, as 63.22
per cent of the estimated value of merchandise sold at retail.

Section 4. Proportions of net sales income taken by salaries, taxes,
and return on employed capital.

The next step consists of ascertaining the portion of this sales
income that was required to replace the funds spent for the merchandise and other costs that represent payments to other industries;
also the portions required to reimburse the proprietors for the amounts
paid in wages and salaries and in taxes.
The Harvard University Bureau of Business Research has made
valuable compilations of tne proportions between the various classes
of expense, other outgo and profit on the one side and net sales on
the other. The proportions for retail shoe stores are presented in
Table 203 in the form most nearly adapted to the purposes of this
inquiry.
TABLE 2 0 3 . — P e r c e n t a g e s of net sales of wages and salaries,
of rent, of taxes,
of
interest,
profits, and bad debts, and of costs paid away to other businesses
by
retail
1
shoe stores by years, 1919 to 1928

Year

1919
1920
1921...
1922..
1923
1

Number
of
stores

Salaries
and
wages

197
397
407
421
499

12.5
13.6
14.3
14.9
14.7

Taxes

Rent

0.4
0.5
0.7
0.7
0.5

2.3
2.6
3.0
3.3
3.5

Interest,
profit,
and bad
debts
11.7
4.4
1.4
3.3
4.6

Cost
paid
away
72.6
78.9
80.6
77.8
76.7

From the bulletins of the Harvard University Bureau of Business Research.

This table shows that the merchandise sold, the stationery and
other supplies consumed, the light and power consumed, and the
like—items whose costs were paid to other businesses accounted for




3 1 6

national,

w e a l t h

and*

income

$72.60 out of every $100 of income received from the sale of merchandise in 1919, and for even larger proportions in the later years.
Salaries and wages of executives and employees required proportions
ranging from $12.50 in 1919 to $14.90 in 1922 and $14.70 in 1923.
The analysis also shows certain proportions required to cover
taxes, rent, and interest, profit and Dad debts. The taxes referred
to, however, were not all taxes. Taxes on land and buildings were
omitted, because of the substitution of an allowed rental for costs
pertaining to ownership of the land and buildings, where these were
owned by the proprietor of the business. Income taxes were also
omitted. The item of interest, as shown in the Harvard studies,
includes both interest on bank loans and interest on bonded debt,
where there was any. In this inquiry interest on bank loans is
treated as an item paid to other businesses, while interest on longtime debts is treated as a portion of the total return on all capital
employed in the business.
Hence it was necessary to find a means of estimating and transferring the interest on bank loans to costs paid away. To these
ends a questionnaire was sent to 708 shoe retailers asking them to
report their net sales in each of the years 1919 to 1923, and the total
amount of rent, of taxes, of interest on bonds and mortgages and of
other interest paid in each jrear. Usable replies were received from
66 dealers, all of whom furnished the data for 1923. Sixty of them
also furnished the information for 1922, 57 of them for 1921, 39 of
them for 1920, and 32 for 1919. These samples are not so good as
those obtained by the Harvard Bureau of Business Research. Nevertheless they assist in the solution of the problem. The results are
presented in Table 204.
TABLE 2 0 4 . — P e r c e n t a g e s of net sales represented
by wages and salaries,
rent,
interest,
profits, and bad debts of retail shoe stores, by years, 1919 to 1928 1
Salaries
and
wages

Year

1919
1920
1921
1922
1923
1

:
-

-

12.5
13.6
14.3
14.9
14.7

Rent

3.37
3.39
4.08
4.63
4.93

and

Interest,
profit, and Costs paid
away
bad debts
2.61
3.56
0.54
2.36
3.45

73.08
79.44
81.08
78.11
76.92

As modified in the light of reports received by the Federal Trade Commission.

The wage and salary percentages in this are the same as in the
preceding table, merely having been carried over. Furthermore,
the 66 shoe retailers showed interest on borrowed funds other than
long-time debts that amounted in 1923 to 22 cents per $100 of net
sales. This was transferred to "costs paid away.'7 Average rental
paid amounted to $4.93 per $100 of sales. These adjustments left
$3.45 to cover interest on long-time debts, profit and the losses of
income from uncollectibility of trade debts. Similar adjustments
were made for the other years, except that the bank interest averaged
31 cents per $100 of sales in 1922, 48 cents in 1921, 54 cents in 1920,
and 48 cents in 1919.
Although similar questionnaires were sent to other classes of
retailers in this inquiry, the one to shoe dealers was the only one
that afforded adequate comparison with the proportions shown in



317n a t i o n a l ,w e a l t h

and*

income

the Harvard University studies. Hence the same proportionate
adjustments were made for the proportions shown for department stores, retail drug stores, retail grocery stores, and retail
jewelry stores. The desired proportions for 1923 for general stores,
retail hardware, retail furniture, and men's furnishings stores were
obtained from reports made by those classes of retailers directly
to this inquiry. The whole set of proportions is shown in Table
205.
TABLE 2 0 5 . — E s t i m a t e d percentages
rent, bond interest,
and profits,
19231

Kind of store

Salaries
and
wages

Rent, interest,
and
profits

14.20
7.07
10.06
14.70
15.25

7.51
4.69
4.52
8.38
2.82

DepartmentGeneral
Grocery
Shoe
Men's furnishings. .

of retail sales divided among wages and
salaries,
and in costs paid away to other industries
in

Costs
paid
away
78.29
88.24
85.42
76.92
81.93

Kind of store

Furniture
Jewelry
Drug
Hardware

Salaries
and
wages

Rent, interest,
and
profits

15.93
16.40
18.50
11.74

14. 56
14.41
14.02
7.26

Costs
paid
away
69.51
69.19
67.48
81.00

i Including uncollectible trade debts, which represent value created but retained by the debtors.

These proportions varied greatly from one kind of store to another.
Wages and salaries amounted to only 7 per cent of net sales in the
case of the general stores, but twice as much for department stores,
which are themselves large general stores in large cities. The difference is no doubt due to the fact that, many of the general stores being
small, a large part of the personnel service is furnished by the proprietors and members of their families and is not compensated by
salaries. In the retail furniture business wages and salaries accounted
for nearly $16 out of every $100 of sales. In the retail jewelry business they claimed $16.40 and in the retail drug trade $18.50 out of
each $100 of sales income.
The proportions of net sales available for rent, bond interest, and
profits (including uncollectible profits in the form of bad trade debts)
were lowest in the case of men's furnishings stores and highest in the
case of the furniture and drug stores. It is commonly said that a
very large proportion of the men's furnishings stores is not profitable. The large margin in the case of the retail furniture stores may
be due to a combination of causes. The merchandise is bulky, requiring considerable storage space, hence rent or investment in store.
A large proportion of furniture sales is effected on the installment
plan, which requires considerably larger margins than do sales for
cash or 30-day account.
The proportions for the other years are not shown in the text but
are given in Appendix Table 80.
The next task is to find means of combining these widely varying
proportions into a single set that can be applied to the estimated total
retail sales of the entire United States. There are extant no data
relative to the comparative volumes of sales by these several classes
of stores. The nearest approach to such information consists of the
expenditures of the 12,096 workingmen's families in 1918 and 1919,
published by the United States Bureau of Labor Statistics.5 These
1

Cost of livingin the United States, 1924.




n a t i o n a l , w e a l t h and* income

318

data refer to a year that was not normal because it was a year of war
economy with production limited largely to necessaries and war
materials. The proportions, even with the same money incomes and
the same prices of commodities would probably have been different
in normal peace times. With the unequal advances and recessions
in prices and money incomes that have occurred in more recent years,
other alterations in the proportions have no doubt taken place, but
in which directions and to what extent are not known. However,
these are the only data available, and they are better than a simple
average or an average based on guessed weights. Table 206 shows
the average expenditure per family for the various articles that would
be purchased in one or the other of the classes of store mentioned
above.
TABLE 2 0 6 . — A v e r a g e

expenditures

per

family

made

families for various kinds of commodities in 1918-19,
which the purchases might have been made 1

Kind of article

12}096

workingmen's

from

Kind of store from which purchases might have been made
Average
expenditure
Men's
per
Depart- General Grocery Shoe
furHard- Furfamily
nish- Jewelry Drug ware niture
ment
ings
$70.73
$70.73
165. 51
165.5t
168.60
168. eo115. 37
ns. 37
'17.57
17.57
. 60. 53 . 60.53
35.49
35.49
39.54
39.54
560.Q5
560.65
17.82
6.43
2.15
2.15
17.11
17.11
32.29
32.39
38.90
38.90

Men's clothing
Boys' clothing
Women's clothm?
Girls' clothing „1
Men's shoes...,Boy?' shoes.*
Women's shoes
Girls' shoes
Groceries and meats
Drug store articles. - - .
Hardware-,...
Jewelry and watches. Furniture
..
House furnishings
Total

by

and the kind of store

$70.73
$49. 54
165. 51
72.24
168.60
115.37
17.57
$17.57
60.53
Gp.5?
35.49
35.49
39.54'
; 39. 54
560.65 $560. 65

$17.82

2.15

$17.11

38.00

1,342.26 1,330.87 1,275^Q4

5. 64

i,
560.05 153.13 121.78

$2.15

17.11

17.82

7.79

$32.29
32.29

i Tabulated from Cost of Living in the United States (U. S. Department of Labor, Bulletin of the Bureau
of Labor Statistics No. 357).

According to this analysis,, the expenditures of the 12,096 workingmen's famines for clothing, shoes, groceries, meats, medicines, toilet
articles, hardware, watches and jewelry, furniture a;nd house furnishings averaged $1,342.26 per family in, 1918 for the year ended early in
1919. Of these, articles costing $1,330.87 in the aggregate were of
such character as to be sold ordinarily by department stores. This
includes groceries and meats. Most department stores probably do
not handle meats However, many do, and there was no way of
separating the meats; so the whole was included. In like manner,
articles costing $1,275.04 were of such character as to be handled by
general stores, which are the. small city and country crossroad
counterpart of the department stores.
Groceries and meats cost $560.65. The inclusion of all meats with
groceries probably overweights the grocery store proportions. However, many grocery stores, particularly the chain cash-and-carry
stores, do.handle meats. And again, there was no means of making
the separation and reducing, the expenditures for meats to their
proper proportions.




319

national,

w e a l t h and* income

The average family expenditures for shoes amounted to $153.12,
which might De spent in a retail shoe store, a department store, or a
general store as the situation offers.
Of the total amount expended for clothing for the men and boys of
the family, $121.78 was of such character that it might have been
spent in a department store, a general store or a men's furnishing
store. The average family expenditure for furniture was $32.29; for
medicines and toilet articles $17.82; for watches and jewelry $17.11;
and for hardware $7.79.
The expenditures for hardware include only tools, stoves, ranges,
and heaters. All builder's hardware has been omitted. It is
probable that most of this is purchased at wholesale by the building
contractors. Yet nails, screws, locks, hinges, screening, bolts, and
the like are purchased at retail to a considerable extent. However,
to what extent is not known; and the omission will probably not have
an appreciable effect upon the results.
It probably would be incorrect to use weights in proportion to the
possible purchases from the various classes of stores as shown above.
While the grocery, shoe, men's furnishings, furniture, jewelry and
hardware stores are competitors of the department stores or, with
the exception of the jewelry stores, competitors of the general stores,
the department stores and general stores are not for the most part
competitors with each other. They serve different communities.
Hence it seems fitting to adjust the weights assigned to these two
classes of stores. This has been done somewhat arbitrarily by
multiplying the department store total as shown by the ratio of the
population in cities of 50,000 inhabitants or more to the entire population on January 1, 1920; and by multiplying the general store total
by the ratio of the population outside such cities to the entire population. This adjustment assigns a weight of 411 to department stores
and 884 to general stores. The entire set of weights used was as
follows:
Dollars
Department stores
General stores
Grocery stores
—
Shoe stores
Men's furnishings stores
Furniture stores

Per cent
of total

561
153
122
32

18.63
40.07
25.43
6.94
5.53
1.45

Dollars
Jewelry stores
Drug stores
Hardware stores
Total weights

Per cent
of total

18
17

0.82
.77
.36

2,206

100.00

Application of these weights to the distribution percentages previously shown for the various kinds of store results in an estimate of
10.45 as the average percentage of wages and salaries to net retail
sales, of 0.80 as the average percentage going for taxes, and of 4.83
per cent as the average percentage of net sales that went to all capital
employed in the business.
The total sales of retailers in the United States in 1923 were estimated above to have been $38,172,000,000. Combining the foregoing distribution percentages with this amount results in estimates
of $3,989,000,000 as the total wages and salaries paid by retailers
and $2,149,000,000 as the total shares of all employed capital before




national, w e a l t h

3 2 0

and*

income

the payment of taxes. The total value created by the retail mercantile industry was the sum of these, or $6,138,000,000.
The average distribution percentages derived above, together with
the like percentages for the earlier years, are summed up in Table 207.
TABLE 2 0 7 . — P e r c e n t a g e s of all retail sales divided between wages and salaries,
in rent, bond interest,
and pvofits, by years, 1919-1928
.

Wages
and
salaries

1918
1919
1920
1
2

-

Per cent
2 4.93
4.93
4.92

Wages
and
salaries

Year

1921
1922
1923

Rent,
interest,
and
profits 1

Per cent
11.24
11.12
10.45

Rent,
interest,
and
profits 1

Per cent
2 8.80
8.80
10.24

Year

and

Per cent
4.04
4.95
5.63

Includes uncollectible trade debts.
Assumed to be the same as in 1919.

Wages and salaries claimed $8.80 out of every $100 of receipts from
sales in 1919. During the depression in 1920 and, 1921 their share
rose above $11. The margin available as a return to all employed
capital before paying taxes was lowest in the depression year, 1921,
when it amounted to $4.04 out of each $100 of sales income. It was
highest in 1923, when it amounted to $5.63 per $100 of sales income.
These percentages are to be applied to the estimated totals of
retail sales shown in Table 201 (p. 313). The resulting estimates of
the total value created by retail mercantile business and of the two
main shares thereof are shown in Table 208.
TABLE 2 0 8 . — E s t i m a t e s of the total valve created by retail mercantile
of the portions
thereof divided between wages and salaries
and rent,
and profits, by years, 1918 to 1928

business
and
bond
interest

[Millions of dollars]

Year

Total
value
product

Salaries
and
wages

Return to
capital
and
enterprise

3,495
4,783
5,814

2,240
3.065
3,927

1,255
1,718
1,887

1918
1919
1920

Year

1921
1922
1923

Total
value
product
4,693
5,384
6,138

Return to
Salaries
capital
and
and
wages enterprise
3,452
3,726
3,989

1,241
1,658
2,149

According to these estimates, the total value created by retail mercantile business was $6,138,000,000 in 1923. Five years previously,
a war year, it was $3,495,000,000. Iji 1920, when the price movement had passed its peak and had commenced to decline under the
pressure of public opinion and overall parades, the total value product
of retail business amounted to $5,814,000,000. There was a sharp
recession the next year, however, a year of acute business depression
and unemployment, to less than 4.7 billions of dollars.
Wages and salaries- constitute by far the largest share of the total
created value in mercantile business as well as in most other classes of
industry. Retail mercantile business paid $3,989,000,000 to its hired
personnel in 1923. The total fluctuated with general business prosperity and with the general level of prices and wage rates. The total




321n a t i o n a l ,w e a l t h A N D * I N C O M E

wage and salary bill was $2,240,000,000 in 1918. It reached a peak,
with the peak of prosperity and prices, of $3,927,000,000 in 1920.
Depression reduced the total of this share to $3,452,000,000 in 1921—
a reduction of nearly one-eighth.
The total share oi all employed capital before deducting taxes was
$2,149,000,000 in 1923. Five years previously it was $1,255,000,000.
This share also rose and fell sharply, even more sharply than labor's
share, with the changes in the general level of prices and in business
prosperity.
* The following table expresses these estimates of the shares of labor
and of capital and enterprise in the form of proportions of each to the
total value created by this branch of mercantile business.
TABLE 2 0 9 . — P e r c e n t a g e s of the total
divided between labor and capital

value created
and enterprise,

Labor's
share

1918
1919
1920
1921

Capital's
share

64.1
64.1
67.5
73.6

Year

35.9
35.9
32.5
26.4

by retail
by years,

mercantile
1918 to

business
1923

Labor's
share

Capital's
share

69.2
65.0

Year

30.8
35.0

67.3

32.7

1922
1923Average —

-

Of the total income available for division between labor and capital
during the six years under review labor received practically twothirds, capital one-third. During three of these years, namely, 1918,
1919, and 1923, labor's share was between 64 and 65 per cent. In
1921, the depression year, when capital bore the first brunt of hard
times, labor's share, while falling in absolute amount, rose in proportion to the total to more than 69 per cent.
TAXES.—The taxes payable by retail mercantile business enterprises (disregarding those payable by employees and lenders of
capital) are estimated as follows:
Year

.

$229,000,000
314,000,000
253,000,000
224,000,000

Per cent
of total
income
6.6
6.6
4.4
4.8

Year

Amount

Per cent
of total
income

$214,000,000
305,000,000

1922
1923
Average

oo
lO

1918
1919
1920
1921..

Amount

256,500,000

5.1

According to these estimates, the taxes paid by retail mercantile
establishments averaged, during the six years 1918 to 1923, $256,500,000 a year. For the whole period they took a little over 5 per
cent of the total value created by this branch of business. Were
the taxes on bond interest and the income tax on profits from unincor>orated enterprises included, the proportion would be considerably
arger.

{

Section 5. Expenses of wholesale merchants.

The net sales by wholesale merchants were estimated above. (See
p 315.) There remains the task of ascertaining the portions of these
that went in wages and salaries, and indent, bond interest, and profits.




322

national,

w e a l t h and* income

The studies by the Harvard University Bureau of Business Research cover wholesale drug stores in 1923, wholesale dry-goods stores
in the South in the same year, and wholesale grocery stores in 1918,
1919, 1920, 1922, and 1923.
The following table sums up the percentages for grocery stores
that are of interest in the present inquiry.
TABLE 2 1 0 . — P e r c e n t a g e s of net sales of wholesale grocery stores that were
sented in various classes of expense, outgo, and profit in 1918, 1919, 1920,
and 19$ 3 1
1918

1919

1920

1922

repre1922y
«
1923

Per cent Per cent Per cent Per cent Per cent
4.93
4.8
4.9
7.85
5.8
.20
.2
.3
.29
0.3
.35
.3
.3
.49
0.5
3.49
3.65
2. 55
2. &
1.3

Wages and salaries
Taxes.
Rent
Interest, profit, and bad debts.
Costs paid away

91.03

91.05

93.2

88. 82

90.8

89.52
1.51

Cost of merchandise
Other expenses

89.60
1.45

91.7
1.5

86. 73
2.09

88.9
1.9

* Summarized from the Business Research Studies of Harvard University.

These percentages present the same difficulties for the purposes
of the present inquiry as did the corresponding percentages for retail
businesses. The taxes shown do not include the taxes on land and
buildings or, in the case of corporations, the Federal income taxes.
The rent shown is the actual rent in the case of leased premises, but
is a putative rental in the case the store and site were owned by the
business. The item of interest includes interest on bank loans as
well as on long-time borrowed funds.
In order to supplement these studies, questionnaires were sent
to an extensive list of wholesale grocers. Usable replies were received
from 77 wholesale grocers supplying the requested data for all six
years, from 3 others who supplied the data for the last five years;
from 3 more for the last four vears; from other 2 for the last three
years, and from 1 who furnished the data for 1922 and 1923. The
questionnaires dealt only with net sales, rentals, interest on bonds,
mortgages, and long-time notes outstanding and with interest on all
other borrowed funds. The results are summarized as follows:
TABLE

211.—Percentages

of

interest on bonds, mortgages,
1919 to 1923

Year

1919
1920
1921
1922
1923

ll

__

net

sales

of

and long-time

wholesale

grocers

represented

notes, and by other interest,

Rentals

0.24
.24
.38
.40
.41

Interest on
long-time
borrowed
capital
0.02
.02
.02
.02
.02

by

by

rent,

years,

Other
interest

0.46
.70
.80
.60
.62

The rentals shown by the Harvard studies were usually the larger,
due, as before stated, to the inclusion of a putative rental in case the
business owned the occupied premises. The reports to this inquiry




323n a t i o n a l ,w e a l t h

and*

income

also indicate that all but a negligible portion of the interest consists of
interest on bank loans.
Application of the data collected in reports to this commission to
the data obtained from the Harvard studies puts the latter in form
for use in this inquiry. The revised percentages are presented
below:
TABLE 2 1 2 . — P e r c e n t a g e s of wages and salaries,
and of the return on all
capital
to net sales of wholesale
grocers in 1918, 1919, 1920, 1922, and
1918

1920

1922

4.93
3.58
91.49

Wages and salaries
Rent, interest, and profits
Costs paid away

1919
4.8
3. 69
91. 51

4.9
1.10
93.90

7.85
2.53
89.42

employed
1923
1923
5.8
2.78
91.42

Wholesalers work on much narrower margins than do retailers.
In no year did the wholesale grocers have a margin as great as 11
cents out of each dollar of sales income to cover expenses, taxes, and
profits. In three of the years the margin was less than 9 cents and
m one only a little more than 6 cents.
In making use of the Harvard studies with reference to wholesale
drug store expenses and the expenses of wholesale dry goods stores in
the South, it has been assumed that the same proportionate changes
should be made in the tax and rental percentages as in the case of
the wholesale grocery stores. It has also been assumed that the
percentages in other years bore the same proportion to the percentages in 1923 as in the case of the wholesale grocers. This is the best
that can be done in the absence of data on the subject. Finally
percentages have been interpolated for 1921 according to the trend
shown above for retailers. Then to obtain a composite set of percentages to apply to the estimated net wholesale sales the percentages for the three branches of the wholesale trade were weighted
with the retail weights used for grocery stores, department stores, and
drug stores. The results are shown in Table 213.
TABLE 2 1 3 . — E s t i m a t e d percentages
of rent, bond interest,
and profits
years, 1918 to 1923

Year

Wages
and
salaries

1918.
1919
1920

6.22
6.06
6.19

to wholesale
net
and of costs paid

Rent,
interest, Cost paid
away
and
profits
3.93
4.04
1.35

89.85
89.90
92.46

Year

1921
1922
1923

sales,
away

of wages
to other

Wages
and
salaries
8. 2ft
9. 92
7. 32

and
salaries,
industries,
by

Rent,
interest, Cost paid
and
away
profits
2. 2ft
2.73
3.01

89.60
87. 35
89.67

According to these estimates, wholesalers conducted their business
on practically a 10 per cent gross margin in 1918, 1919, and 1923.
The margin rose above 12 per cent only in 1922 and was only a little
more than
per cent in 1920. Wages and salaries ranged from 6
per cent to nearly 10 per cent of the total receipts from sales. The
margin left for rent, taxes, bond interest, profit, and uncollectible
trade debts was under 4 per cent of the total receipts in all years and
was only a little more than
per cent in 1920.




324

national,

w e a l t h and* income

These percentages are to be applied to the totals of sales by wholesalers in continental United States as previously estimated. The
resulting estimates of the total value created by the wholesale
mercantile business of the country, and of the principal shares
thereof, are shown in Table 214.
TABLE 2 1 4 . — E s t i m a t e s

of

the

total

value

created

by

the

wholesale

business and of the portions thereof that went in wages and salaries,
bond interest, profits, and taxes, by years, 1918 to 1923
Total value
product

Wages and
salaries

$2,165,000,000
2,948,000,000
2, 466,000,000
2,246,000,000
2,770,000,000
2,503,000,000

_

.

rent,

Rent, interest,
profits,
and taxes 1

$1,327,000,000
1, 769,000,000
2,024,000,000
1, 771,000,000
2,172,000,000
1, 774,000,000

Year

1918
1919
1920
1921
1922
J923

mercantile

and in

$838,000,000
1,179,000,000
442,000,000
475,000,000
598,000,000
729,000,000

* Including uncollectible trade debts.

According to these estimates, the total value created by the wholesale mercantile business of continei*tal United States was $2,503,000,000 in 1923. A half decade previously it was $2,165,000,000.
The net increase in money value of the service rendered was less
than one-sixth. The greatest money value of the service came in
1919, the first year after the close of the World War, when it was
nearly $3,000,000,000.
Wages and salaries in this branch of industry ranged from $1,327,000,000 in 1918, the war year, to $2,172,000,000 in 1922. The total
wage and salary bill reached a peak in 1920, when rates of remuneration were at their highest. It fell off more than $250,000,000 in the
depression in 1921, and although it rose to a new and higher peak the
next year, in 1923 wages and salaries again aggregated almost the
same amount as in the depression year.
The share of the total value product of the wholesale mercantile
business that went to all employed capital—whether leased, borrowed, or contributed—was $729,000,000 in 1923. A half decade
previously it was greater, namely, $838,000,000. It rose to $1,179,000,000 in 1919, but in 1920, when other industries were at their
peak, measured in money values, the return to capital employed in
the wholesale trade was only $442,000,000. It was somewhat larger
even during the depression in 1921 and has continued to increase
rapidly since that year.
Interesting as the amounts may be, the proportion in which the
whole created value was divided between the two classes of factors
is more significant. Table 215 shows these proportions.
TABLE 2 1 5 . — P e r c e n t a g e s of the total value created by wholesale
received by labor and by capital by years,
1918-1923
Year
1918.
1919
1920
1921




Labor's
share
-

61.3
60.0
81.9
78.9

Capital's
share
38.7
40.0
18.1
21.1

trade

that

were

1922
1923
Average

Labor's
share

Capital's
snare

78.4
70.9

Year

21.6
29.1

71.8

28.2

325n a t i o n a l ,w e a l t h a n d * i n c o m e

Labor's share during the six years 1918 to 1923 averaged nearly
72 per cent, capital's share 28 per cent, of the total value created by
the wholesale trade. During 1918 and 1919 labor's share was only
about three-fifths of the total, but during the next three years it
fluctuated around four-fifths. In 1923, however, it dropped back
to a point midway between the two extremes.
TAXES.—The amounts of taxes payable by wholesale enterprises
(disregarding taxes payable by employees and lenders of capital)
are estimated as follows:
Year
1918—
1919
1920

Amount

Per cent

$214,000,000
292,000,000
160,000,000

-

11.7
11.8
7.7

Amount

Year
1921
1922
1923

Per cent
6.1
4.6
7.0

$116,000,000
107,000,000
147,000,000

Section 6. Summary for wholesale and retail business.

Wholesale business as the term is used in this inquiry includes
commission and jobbing business as well as the wholesale trade
so-called. Hence a combination of the estimates for the wholesale
and the retail branches will constitute similar estimates for the
whole distributing industry other than producers who sell directly
to the ultimate purchasers. The value created by the latter is inincluded in the estimates for agricultural, mining and manufacturing
industries. Table 216 presents the combined estimates.
TABLE 2 1 6 . — E s t i m a t e s

of

the

total

value

created

by

all

mercantile

business

and

the shares thereof that went in wages and salaries, in taxes, rent, bond interest and
profits, by years, 1918 to 1923
[Millions of dollars]

Year

Total
created
value

Wages
and
salaries

Rent,
interest,
profits,
and
taxes

5,660
7,731
8,280

3,567
4,834
5,951

2,093
2,897
2,329

1918
1919
1920

Year

1921
1922
1923

Total
created
value

6,939
8,154
8,641

Wages
and
salaries

5,223
5,898
5, 763

Rent,
interest,
profits,
and
taxes
1,716
2,256
2,878

According to these estimates, the total value created by all mercantile industry in continental United States was over $8,600,000,000
in 1923. Five years previously it was a little under $5,700,000,000.
It was nearly $9,800,000,000 when prices and wage rates reached
their highest levels, which was in 1920. The total value* of mercantile service dropped $2,851,000,000 with the industrial depression
and reduction in price and wage-rate levels in 1921. There was
rapid recovery during the next two years.
Mercantile business paid wages and salaries in 1923 amounting, it
is estimated, to $5,763,000,000. The estimate for the half-decade
earlier was $3,567,000,000. At the peak of prices and wage rates
in 1920, the wage and salary bill amounted to nearly $6,000,000,000.
Aggregate wages and salaries were reduced over $1,700,000,000 in
1921, the depression year.




national, w e a l t h

326

and*

income

Labor's share of the total value created by mercantile business
during the six years, 1918 to 1923, inclusive, was 68% per cent. It
was between 62 and 63 per cent during the first two years. It
increased in proportion to nearly 72 per cent in 1920 and over 75
per cent in the depression year. As business recovered, labor's share
of the total dividend dropped back toward the proportion that held
at the beginning of the period. The proportions are shown in tabular
form as follows:
TABLE 2 1 7 . — P e r c e n t a g e s of the total value created
by mercantile
between
wages and salaries
and rent, bond interest,
and profits,
1923

Year

1918
1919
1920
1921

Wages
and
salaries
63.0
62.5
71.9
75.3

Rent,
interest,
profits

Year

37.0 j 1922
37.5 j 1923
28.1
24.7 |

business,
by years,

Wages
and
salaries

divided
1918
to

Rent,
interest,
profits

72.3
66.7
Average

27.7
33.3

68.75

31. 25

TAXES.—Taxes payable by mercantile business enterprises (dis7
regarding those payable by employees and lenders of capital), are
estimated as follows :
Year
1918
1919
1920
1921

Amount
$483,000,000
661,000,000
443,000,000
362,000,000

Per cent
8. 53
8.55
5. 35
5.22

Year
1922
1923

:
Average

Amount

Per cent

$341,000,000
479,000,000

4.19
5. 54

461, 500,000

6.10

According to these estimates the taxes paid by the mercantile
business enterprises of the United States during the six years 1918 to
1923, inclusive, amounted to $2,769,000,000. This was a little over 6
per cent of the total value created by mercantile business. It also
amounted to nearly one-fifth of the entire income left after paying
salaries and wages and the other operating expenses.




CHAPTER

XVI

PROFESSIONAL AND PERSONAL ENTERPRISES
Section 1. Value created by professional service businesses.

Professional, semiprofessional, or subprofessional employment
may be described as generally requiring scientific, professional
education and training and compensated in most cases by fees charged
or salary received. In 1920, out of about 42,000,000 persons gainfully employed, it is estimated that nearly 2,144,000, or 1 out of 20,
were employed in the professional classifications mentioned. The data
presented in this report include accountants, appraisers, adjusters,
portrait painters, sculptors, engineers of all kinds, architects, photographers, chemists, assayers, lawyers, musicians, teachers of music,
nurses and midwives, physicians and surgeons, dentists, chiropodists, oculists and aurists, osteopaths, chiropractors, healers, etc.
Some few classed as professionals, such as actors and showmen,
authors, editors and reporters, clergymen, college presidents and
professors, designers, draftsmen arid inventors, teachers, aeronauts,
librarians and semiprofessionals (except healers) and attendants
and helpers were omitted, principally for the reason that most of
them are employed by other persons, firms, or corporations, and their
compensation would be reported by the employers as " salaries and
wages" paid. Part of the accountants listed in " clerical occupations/' were included. Thus about 875,000 were considered as in the
professional classes, or 1 in every 48 persons in the United States.
As there was no census of incomes from professional service,
questionnaires were mailed #to about 22,000 professional people
selected from the classified sections of city and telephone directories,
and about 1,307 answers were received which were usable in whole or
part. Samples thus obtained were representative in varying degrees,
and some of the classes of professionals had many of their number
working on salaries or wages and these were asked not to report.
Manufacturers found among engineers and chemists were eliminated.
Counts were made of the number of professional enterprises of the
various kinds whose names were listed in the business directories of
certain selected cities. In making the selection certain cities with
populations in excess of 500,000 inhabitants were chosen so as to give
proper representation to the earning power of professional businesses
in metropolitan centers. Certain cities with populations between
100,000 and 300,000 were also chosen and, to give proper representation to the professional practitioners who serve the rural communities,
a number of cities with populations of less than 25,000 inhabitants
were selected. In choosing the cities in each class, they were selected
so as to give as .wide a geographical representation as possible.
The method of estimating the total number of professional businesses of each kind was as follows. The combined population on
January 1, 1920, of the chosen metropolitan cities was ascertained
from the census, also the total population of all cities in that size




327

328

national,

w e a l t h and* income

group; and the ratio of the latter to the former was computed. The
numbers of professional enterprises of each kind found in the chosen
cities were multiplied by this ratio and the results constituted the
estimated total numbers of the respective kinds of professional
enterprises in all cities of that size group. A similar procedure was
followed for the middle size group, except that in obtaining the ratio,
the combined population of the chosen cities was compared with the
total population of all cities in the range, 25,000 to 500,000. In the
case of the small cities, the comparison was of their combined population with the total population not only of all cities below 25,000 but
of the rural population as well. The total number of professional
enterprises in tne United States was estimated by this method at
about 870,000. This is within 5,000 of the number given by the
census of occupations.
It should be noted that the count is made of professional enterprises rather than of professional persons. A good many persons of
professional training work for others on the basis of salary or wages.
Wages are also paid to other persons of nonprofessional character.
It is possible that the sample returns that were made to the inquiries
sent out, as well as the count of professional people made on the basis
of business directories, involve some duplication between professional
enterprises and professionals working for salary or wages. As,
however, the mam part of the estimated income as shown below
accrues to the professional enterprises, and as a considerable part of
the salaries and wages is undoubtedly in the form of wages, it is
apparent that such duplication, assuming it exists, must be a comparatively small proportion of the total.
The average gross income of the various classes of professional
businesses, which were ascertained from the answers to the questionnaires were used in connection with the total numbers to obtain
the grand total for the United States.
This estimated gross income for the year 1923 amounted to $6,092,000,000, and for 1922 to $5,741,00*0,000, an increase in 1923 of
$350,000,000 over 1922. The year 1921 shows an estimated gross
income of $250,000,000 more than 1922, but $640,000,000 less than
1920, showing that the depression in 1921 affected the professional
businesses. The year 1920 was by far the largest from a remunerative
standpoint for the professional businesses, showing an estimated gross
income of $6,637,000,000, nearly $1,000,000,000 greater than the year
1919, and $1,860,000,000 larger than 1918.
The value, product in the case of professional businesses consists
of (1) salaries and wages paid out in the business, (2) rent paid for
premises and equipment, together with interest on long-term debts,
and the return to the individual, firm, or corporation constit