distribution of income by states in 1919 · 2020. 3. 20. · state in the official statistics of...

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This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Distribution of Income by States in 1919 Volume Author/Editor: Oswald W. Knauth Volume Publisher: NBER Volume ISBN: 0-87014-002-7 Volume URL: http://www.nber.org/books/knau22-1 Publication Date: 1922 Chapter Title: Distribution of Income by States in 1919 Chapter Author: Oswald W. Knauth Chapter URL: http://www.nber.org/chapters/c4849 Chapter pages in book: (p. 1 - 36)

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Page 1: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

This PDF is a selection from an out-of-print volume from the NationalBureau of Economic Research

Volume Title: Distribution of Income by States in 1919

Volume Author/Editor: Oswald W. Knauth

Volume Publisher: NBER

Volume ISBN: 0-87014-002-7

Volume URL: http://www.nber.org/books/knau22-1

Publication Date: 1922

Chapter Title: Distribution of Income by States in 1919

Chapter Author: Oswald W. Knauth

Chapter URL: http://www.nber.org/chapters/c4849

Chapter pages in book: (p. 1 - 36)

Page 2: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

OF INCOME

IN 1919

-J

BY

OSWALD

;

OF TUE STAFF OF TUE NATIONAL BUREAU OF ECONOMIC RESEARCH

NEW YORK

HARCOURT, BRACE AND COMPANY1922

DISTRIBUTION

STATES

BY

I.i'/ J,i

.\//.

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Page 3: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

CoPmIGHT, 1922, By

}JABCOURT, BRACE AND COMPANY, INC.

Printed in the U. S. A.

Page 4: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

Publications of the National Bureau of

Economic Research, Incorporated

NO.3

DISTRIBUTION OF INCOME BY STATESIN 1919

Page 5: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

-w- - - - - - -- - - w

Page 6: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

PREFATORY NOTE

The "Distribution of Income by States in 1919" is a by-product ofthe volumes on "Income in the United States" which have already beenpublished by the Bureau. It is one of a series of studies which the Bureauis undertaking in connection with its main topics of research and whichmay later be collected in a formal volume. It is issued at this time in orderto meet the special needs of many investigators concerned with the compar-ative capacity of the various states to bear increased taxes, to buy goodsof various sorts, to absorb securities, etc. It also indicates the relativeimportance of agriculture in the different sections of the country.

The present study undertakes to distribute the aggregate income of theAmerican people among the States on the basis of such official data andother indices as are available. This distribution is based on data for 1919,and no single year is "typical." The small incomes received by farmers inMontana after the bad weather of 1919 certainly do not represent averageconditions and probably less striking anomalies exist among the figures forother States. However, the distribution must rest upon the State datagathered by the Census and those data are to be had only for 1919.

The reader who is looking for results, and is not interested in the method,will find these results presented in tabular form on pages 25 to 30.

Like all publications of the National Bureau of Economic Research, thispaper has been submitted for criticism to the Bureau's directors and ap-proved by them. Hearty thanks are due to members of the Board fortheir help in improving what remains at best a rough set of approximations.

The Directors of the Bureau are as follows:Directors-at-large:

T. S. Adams, Adviser to the U. S. Treasury Department.John R. Commons, Professor of Political Economy, University of Wisconsin.John P. Frey, Editor of the International Molders' Journal.Edwin F. Gay President of the New York Evening Post.Harry W. Laiciler, Secretary of the League for Industrial Democracy.Elwood Mead, Professor of Rural Institutions University of California.Wesley C. Mitchell, Professor of Economics, áolumbia University.J. E. Sterrett Member of the firm of Price, Waterhouse & Company.N. I. Stone, Manager, Hickey-Freeman Company.Allyn A. Young, Professor of Economics, Harvard University.

Directors-by-Appointment, nominated by organizations:Hugh Frayne, The American Federation of Labor.David Friday, The American Economic Association.W. R. Ingalls, American Engineering Council.J. M. Larkin National Personnel Association.W. H. Nichols, Jr., The National Industrial Conference Board.George E. Roberts, The American Bankers' Association.Malcolm C. Rorty, The American Statistical Association.A. W. Shaw, The Periodical Publishers' Association.Gray Silver, The American Federation of Farm Bureaus.

Page 7: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose
Page 8: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

THE DISTRIBUTION OFBY STATES

in 1919

I. INTRODUCTION

In a previous publication of this Bureau, the income of the United Statesin 1919 was estimated at 66.7 billion dollars.' This estimate was based onthe incomes received by gainfully employed persons, and was divided intothe following categories—

INCOME OF THE UNITED STATES, 1919Billiondollars

Income of persons receiving over $2,000 per year (excluding farmers and farmlaborers) $18.90

income of persons receiving under $2,000 per year (excluding farmers and farmlaborers) 32.65

Income of Farm Laborers 2.30Income of Farmers 10.85Corporate Surplus 2.00

Total $66.70 2

Many of the items on which these estimates for the country rest areavailable also by States. The Bureau of the Census has published in itsadvance bulletins the number of gainfully employed persons on January 1,1920 and most of the details concerning farmers. The Bureau of InternalRevenue has published by States the amount of income reported under theincome-tax law. Where direct data of this kind are lacking, it is possibleto construct index numbers which can be used to distribute parts of thetotal National Income among the 48 States. Such State ofcourse, cannot have the same accuracy as the larger estimate of the Na-tional Income, if for no other reason than that a small error is more impor-.tant in a small total than it is in a large

For many purposes, it is quite as important to know the proportions ofincome received by States as it is to know the total for the country. Cer-

Income in the United States, Volume II, chap. 26. Harcourt, Brace & Company.2The amount distributed in the summary table below is 66.2 billion dollars; the

difference of one-half billion dollars being the amount paid to soldiers which it wasimpossible to distribute among states m 1919.

1

Page 9: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

2 THE DISTRIBUTION OF INCOME BY STATES

tam details of this State distribution are particularly interesting: for exam-ple, the variations of per-capita income, the varying proportions of farm-ers' income to the total income, and the distribution of farmers' income.

II. THE METHOD

A: The Income of Persons Receiving Over $2,000 per Year. (ExcludingFarmers)

The income of persons receiving over $2,000 per year (excluding farmers)has been treated in the following manner: The amount shown for eachState in the official Statistics of Income, 1919, has been listed. This amountrequires adjustment for the present purpose in three ways: first, it includesa part, but only a part, of the incomes in the ranges between $1,000 and$2,000; second, it includes income due to agriculture; and third, it does notinclude income which should have been, but was not, reported. In orderto make these adjustments, (1) the amounts reported in the income-range$1,000—$2,000 have been subtracted from the total of each state; (2) theamount reported as due to agriculture, $1,211 million, has been apportionedaccording to the percentage of farmers' incomes in each state and the ratiowhich the average farmers' incomes of each state are to the average farm-ers' incomes of the whole country; and (3) the resulting income in eachstate as left by these two adjustments has been raised to bring the sum forall the States to the estimated national total of $17,500 million. (See In-come in the United States, volume II, Chapter 22.) The last adjustmentappears to be the least satisfactory; it involves the tacit assumption thatthe evasion of income taxes by failure to report and under-reporting isuniform in all states—an assumption which may or may not be valid.'

Next the non-taxable income must be apportioned. The income fromhomes owned by the individuals occupying them, amounting to 700 milliondollars, has been distributed among the States according to the percentageof the total income-tax payers resident in each State. The remaining tax-exempt income, mostly interest on exempted bonds, amounted to 710million dollars in 1919. This sum has been apportioned according to thetotal income of persons having $25,000 or more per year in the severalStates. The reason for this is that the exempt income appears to be highlyconcentrated in the higher range of incomes.

'"I am enclosing my approval of the publication of the section on the Distribution ofIncome by States. I want to place myself on record however, as believing that thefacts are not in accordance with the presumption that diere is an equal amount of failureto report and of under-reporting in every state. In my opinion there is evidence in theincome tax statistics themselves that there are very large differences in the degree ofaccuracy of these figures in different states. Nevertheless, the question is so difficultand is in particular so full of political dynamite that I do not see that the Bureau couhipossibly adopt any other course than the one it has followed."—Allyn A. Young.

Page 10: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

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Page 11: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

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Page 12: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

THE METHOD 5

B. Income of Persons Receiving under $2,000 per year. (ExcludingFarmers)

In apportioning the total sum of wages received by persons having lessthan $2,000 per year it is necessary to allow for: (1) differences in the gen-eral level of wages in different States, and (2) differences in the relativenumbers of persons following high-paid and low-paid occupations. A sam-ple table is appended to illustrate the method used.

The number of persons gainfully employed on January 1st in each ofthe eight main groups under which the Census classifies the occupationreturns is reported by States in the Census of 1920. From these data andfrom the estimated number of persons having incomes over $2,000, it ispossible to approximate the number of persons in each occupation groupin each State having incomes less than $2,000. To this end, the number ofpersons in each occupation group as reported by the Census has beenadjusted in the ratio applied to that occupation group in the estimate forthe whole country. These reducing ratios are computed from Tables 23E,F, and G of Income in the United States, volume II, chapter 23. Fromthis point forward, the general method of estimating the total wages ineach State is the same as that used for the United States. This procedureconsists in multiplying the number of persons in each occupation group bythe average wages for the corresponding group, and adding together theproducts in order to find the total wages in each state.

While this computation gives the estimated total payments for personalservices, it does not show the total income from all sources. In Chapter 23of Income in the United States, it was estimated that in the case of per-sons receiving less than $2,000 per year, income from other sources wasabout 9.5 per cent of the income from wages. This percentage was there-fore added to wages in order to arrive at the total income in each State ofpersons receiving less than $2,000. The results are shown in the summarytable.

The following form was used for estimating the total income of wage andsalary earners in each State. A complete transcription of the originaldata used in making the estimates would be extremely cumbersome and.would serve no useful purpose. The original tables, however, are open tothe inspection of anyone who is interested.

Page 13: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

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Page 14: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

-w -

THE METHOD 7

As said, to estimate the annual wages of persons in each occupationgroup, indices were found for each State, and applied to the average annualwages for each occupation group in the whole country. In this way, thedifferent wage levels obtaining in different States, as well as the differentoccupations of the gainfully employed in different States were given theirdue weight.

The sources from which the varying income from wages imputed todifferent States were drawn are as follows :—

(1) Mining. The Census of Mines and Quarries, 1919, gives the totalwages paid and the number of miners paid in each State.

(2) Manufacturing. The Census of 1919 gives the number employedin manufacturing, and also the total wages paid in each State.

(3) Transportation. The reports of the Interstate Commerce Com-mission show the wages paid for similar work in three divisions ofthe country—Eastern, Southern, and Western. These, togetherwith similar data furnished by the American Telephone andTelegraph Company, have been used as a basis for adjustingwage rates by States. The number of persons employed isestimated from the Census of Occupations, 1920.

(5) Public Service. This is a small group, for which rio systematicwage data exist. The relative wages have been apportioned ingeneral conformity with the other groups. The estimates ofnumbers employed are based on the Census of Occupations.

(6) The relative wages and salaries of persons listed under Profes-sional Service in different States have been apportioned accord-ing to an index constructed from relative rates of salaried em-ployees in manufacturing and mining. Again, the Census ofOccupations gives a basis for estimating the numbers of persons.

(7) No systematic data exist in the field of Domestic and PersonalService. Owing to this lack, an index based on manufacturingwages was used to determine the relative rates in each State; andthe number of persons employed was estimated from the Censusof Occupations.

(8) Clerical. The relative wages of clerks in manufacturing andtransportation have been used as an index for computing therate of wages in different States. The number of persons em-ployed is estimated from the Census of Occupations.

These data make possible a reasonably accurate estimate of the differ-ences in wage levels that exist among the 48 States.

Page 15: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

8 THE DISTRIBUTION OF INCOME BY STATES

C. Income of Farm Laborers.Farm laborers form a problem by themselves. Their wages, as shown

in the Year Book of the of Agriculture, vary widely from oneState to another. The rates used here are average monthly wages withoutboard, and thus furnish material only for an index of variations. Theaverage wage of farm laborers in 1919 was estimated at $518, and the totalwages at $2,302 million. This total for the entire country was apportionedamong the States according to the index of variations made by taking theproducts of the number of farm laborers in each State times the averagemonthly wages. These results appear in the summary table.

D. Income of Farmers.The distribution of the total income of farmers in 1919 among the various

states is the most difficult and complicated of the various subdivisions withwhich we have to deal. Without an actual census of farmers' incomes, theextraordinary diversity of production and costs presents problems whichcan only be solved in rough approximations. In addition the reports ofthe Department of Agriculture contain duplications which may be elim-inated only in a broad way. These reports do not differentiate betweenthe crops which are sold as crops and those which are sold or used to feedanimals.

While such corrections may be made for the country as a whole with atolerable degree of accuracy, errors are apt to loom large in the subdivi-sions by States. Since it has not been possible to divide all the items ofproduct or of expenses among the States, the larger ones only have beenchosen and used as an index of the proportions in which the total farmers'income of $10,850 million was divided. As a matter of fact the total re-sulting from the use of this index came very near the national total, being$10,978 million; but the closeness of these figures is largely a matter ofchance, for among the products of each State no account has been takenof the direct income received by the farmers, such as milk, butter, vegeta-bles, home rent, etc. In the expenses no account has been taken of seed,horses sold, feed purchased, etc. These items, however, are of relativelyminor importance and do not affect the validity of the index to any markeddegree. The items comprising the index are by all odds the largest affectingfarmers' income. And they are also the items concerning whose distribu-tion by States we have the most accurate information. Most of them arereported in the Census of 1920 and the others, for the most part, rest onCensus data.

The method of attack has been to take as a basis for the farmers' incomeof each State the crops raised. These are definitely recorded for eachState, and form, for the country as a whole, about nine-tenths of the value

Page 16: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

• $1,000,000• 1,250,000

• 250,000• 1,250,000

State B from those of

of farmers of the same

$1,000,0001,250,000

250,000then the record

$1,000,0001,250,000

THE METHOD 9

product of farmers. To the value of these crops must be added the valueproduced by (1) animals slaughtered and (2) animal products over andabove the value of those crops that are fed to animals.'

The value added by animals slaughtered has been based on a large num-ber of reports of the costs of producing beef and hogs. These indicate thatthe ratio of feed costs to other costs is about four to one. On the assump-tion that total costs are roughly equal to total value, the indication is thatabout twenty per cent of the value of animals slaughtered is an additionto the value of the crops that have been fed to these animals.

While this rule seems to hold for most of the country, an exceptionmust be made in the range states (Texas, Oklahoma, Montana, Idaho,Colorado, Wyoming, New Mexico, Arizona, Utah, and Nevada) in whichthe value added by animals above the crops they are fed is estimated atfifty per cent of their total value. This change in ratio is due to the factthat crops (range grass) on which these cattle are largely fed is not countedby the Census in its value of total crops. Of course, the same remark holdstrue concerning all animals which are out at pasture; but it is "more"true of the range States. That there is a distinct difference between thesestates and the rest of the country is indicated by the fact that in all otherstates there are 54,624,057 hogs and 50,822,210 cattle; whereas in therange states there are 4,722,352 hogs and 15,830,349 cattle. In the restof the country, therefore, hogs and cattle are roughly equal. In the rangestates there are more than three times as many cattle as hogs. In addition,there is little fattening of cattle in the range States.

Having determined on the proportion of the value of animals slaughteredwhich may be considered a net addition to the value of crops which theyare fed, it remains to determine the value of animals slaughtered. This

1 Some hypothetical examples will explain this procedure.(a) If all farmers in state A raised feed worth say, a million dollars; and sold it to

farmers in state B, who raised no feed at all, but only fattened cattle, the record mightstand

State A produces crops worthState B produces cattle of gross valueState B produces cattle of net value (20%)Total value of agriculture in both states (A + B)

The million dollars worth of feed bought by the farmers ofState A is thus counted out.

(b) If one set of farmers in one state sell feed to another setstate, who raise only cattle, then the record stands

Value of crops raisedValue of cattle slaughteredNet value of cattle slaughtered

Income of Farmers(c) If all farmers raise crops and feed them to their own animals,

standsValue of crops raisedValue of animals slaughtered.Net value of animals slaughtered.

Income of Farmers......

Page 17: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

10 THE DISTRIBUTION OF INCOME BY STATES

figure is not included in the Census; but the Bureau of Animal Industryreports the total production of meat; and the average values of the differentkinds of animals slaughtered are shown in the Department of AgricultureYear Book for From these data the total value of animals slaugh-tered in the United States may be estimated as follows:

TABLE 3

TOTAL VALUE OF ANIMALS SLAUGHTERED IN 1919 1

.

U. S.inspected

OtherTotal

numberslaughtered

Averagevalue

Total value(thousanddollars)

CattleCalvesSheeps and LambsGoatsSwine

Total

10,089,9843,969,019

12,691,11787,380

41,811,830

3,545,1005,072,0003,573,700

160,10024,868,500

13,635,0849,041,019

16,264,817247,480

66,680,330

$44.2225.0011.6310.0022.00

$ 602,943226,025189,160

2,4751,466,967

$2,487,570 2

Twenty per cent of the value of animals slaughtered, $2,487,570,000, is$497,514,000, and when a correction is made for the fifty per cent which isattributed to the value of animals in the range States, this total becomes$652,952,000. This sum therefore is counted a net addition to the value ofthe total crops produced.' In order to divide this among the various Statesthe total value of beef cattle, sheep, goats, and swine was taken for eachState and the $652,952,000, was divided in accordance with this index.The assumption underlying this division is that the value of animalsslaughtered in the States varies in the same ratio as the value of the animalsin those States; an assumption which appears to be in general accord withthe facts.

The values of animal products are reported by States in the Census; but,as in dealing with meat, it is necessary to determine what proportion ofthis value may be considered a net addition to the crops that are used toproduce it. On this point the evidence is less clear than in the case of meatproduction. A study of the cost reports of the Bureau of Farm Manage-.ment indicates that about sixty per cent of the costs may be attributed tofeed and about forty per cent to other items. This proportion is broadlycorroborated by Mr. H. A. Wallace, Editor of Wallace's Magazine and byMr. F. A. Peck, formerly of the Bureau of Crop Estimates and now with

1Supplied through the courtesy of the Bureau of Animal Industry.2 The total value of animals sold and slaughtered on farms is given in an advance

bulletin of the Census at $3,511,201.21. This figure, however, contains considerableduplication, since many animals are sold twice; it is only in the range States that thereis little re-selling and in these States the values reported by the Census agree fairly.closely with those used.

Page 18: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

THE METHOD 11

the University of Minnesota. If we accept forty per cent as the net addi-tion and apply it to the total value of animal products of $2,667,072,273,1then the net addition is found to be $1,067,000,000. Since the total valueof animal products is reported by States, the amount to be added on thisaccount can be computed directly.

A broad check upon the total value added by "Animals Slaughtered"and "Animal Products" may be had by comparing the results obtained bythe preceding method on the one hand and the net value as found by sub-tracting the crops fed to animals from the total value product of thoseanimals on the other hand. These crops are mainly hay, corn, barley andoats, and the percentage of each of these crops sold is reported in the Cen-sus. From the total amounts fed must further be subtracted for ourpresent purposes the value of crops fed to horses and mules on the farms.The amounts fed to horses and mules are estimated at two thirds the Armyration—12 lbs. oats and 14 lbs. hay for horses, and 9 lbs. oats and 14 lbs.hay for mules.

This comparison works out as follows:

(1) Value added by animals slaughtered $ 652,952,000Value added by animal products 1,066,828,909

Total value added $1,719,780,909

(2) Total value of animals slaughtered and animalproducts $5,154,643,044

Less value of crops fed to live stock(total value of crops fed $5,698,995,210less value fed to horses 2,069,597,962

$3,629,397,248$1,525,245,796

The two methods of estimating the value product added by animals andanimal products over and above the crops fed to animals differ by about11 per cent—not a wide difference as such matters go—and indicate thatthe percentages used in estimating the net addition to animals slaughteredand animal products are tolerably reliable.

1 Summary of the Census of Agriculture, 1919 and 1920. Table 26, page 15.

Page 19: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

TA

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Page 20: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

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Page 21: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

C) 0

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Tot

al r

ecor

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me

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tal r

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004

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552,

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2,92

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-

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Num

ber

of f

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e pe

r fa

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178,

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41

1 A

dvan

ceB

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tin2

Adv

ance

Bul

letin

of th

e 19

20 C

ensu

s of

Agr

icul

ture

, p. 5

3.of

the

1920

Cen

sus

of A

gric

ultu

re, p

. 41.

Page 22: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

TA

BL

E 4

—C

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tal

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59

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208,

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724

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01

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6

Num

ber

of f

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the

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53.

2Adv

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the

1920

Cen

sus

of A

gric

ultu

re, p

. 41.

Page 23: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

TA

BL

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—C

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Page 24: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

TA

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Num

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'Adv

ance

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letin

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the

1920

Cen

sus

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gric

ultu

re, p

. 53.

8Val

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2Adv

ance

Bul

letin

of

the

1920

Cen

sus

of A

gric

ultu

re, p

. 41.

Page 25: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

TA

BL

E 4

—C

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Tot

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Num

ber

of f

arm

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r fa

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815

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212

,084

Bul

letin

of

the

1920

Cen

sus

of A

gric

ultu

re, p

. 53.

3Adv

ance

Bul

letin

of

the

1920

Cen

sus

of A

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ultu

re, p

. 41.

-4

Page 26: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

THE METHOD 19

One other remark should be made concerning the variations amongStates in farming. Differences in crops and their values are taken accountof in the Census figures; the same is true of variations in the amount spenton fertilizer, labor, interest on mortgage, and animal products. Crops soldby farmers to other farmers and used as feed by them, tare taken account offirst by using the entire crop values for each State; and second by adding totheir value only that part of the value of animals slaughtered on the farmor sold for slaughter, and of animal products which is imputed to other ex-penses than the value of feed. There are, however, variations in the feedof animals, especially the proportion that is due to grazing, which are nottaken account of in the Census figures. Such variations cause some error;corrected in a very rough manner for the range States alone. But the errorcannot be large; for crops constitute about 90 per cent of the total valueproduct according to this method of counting; so that the error must be inthe remaining 10 per cent only.

The amounts shown, then, are not put forward as exact; they are, rather,working estimates, which appear to be substantiated fairly well by thecross checks which have been used.'

E. Corporate Surplus.The corporate surplus in 1919, which amounted to 2.0 billion (Income

in the United States, volume II, chapter 25) is a difficult item to distributeamong the States. Perhaps the best approximation is to credit it in thesame ratio as the value added by manufactures in each State, an item whichis reported in the Census of Manufactures for 1919.2 A comparison withearlier Censuses shows that this percentage distribution remains fairlyconstant from one census period to the next, so that there can be no greaterror in applying these figures to the total corporate surplus.

1 low average income per farm in Montana ($137) may not be typical. Montanacrops in 1919 were particularly bad; the composite number of all crop yields in 1919 asshown in the Department of Agriculture Year Book, 1920, p. 810, was 40, as compared to83 in 1920, 66 in 1918, 55 in 1917, 86 in 1916, 107 in 1915, and 90 in 1914. The "hypo-thetical" value of all crops in Montana2 as estimated by the Department of Agriculture(page 807), in 1919 is $71,552,000 as against $146,713,000 in 1918 and a five year average,1914 to 1918, of $95,158,000. If the value of crops raised had been what one would haveexpected in a "normal" year, then the average income per farmer would have been about$1,200 to $1,500 (instead of $137) a figure that is not out of ime with the averages ofsurrounding states.

2Various other ratios of distribution have been suggested—(1) the distribution of thenon-agricultural income of each State; (2) the distribution of dividends received as re-ported by the Bureau of Internal Revenue inStatistics of Income. Both of these methodsare logical, especially the latter. It is questioned, however, whether corporate surplusreally goes to stockholders in the sense indicated. To some extent, it goes to the com-munity. As a practical matter, the distribution resulting from the use of any one ofthese ratios is about the same.

Page 27: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

/

20 THE DISTRIBUTION OF INCOME BY STATES

F. The Totals.The preceding items need to be cast up to get the total income for each

State. While the figures for persons having incomes over and under$2,000 exclude the farmers, and are therefore rather artificial, they possess

certain independent interest. Of course this form of presentation isnecessary because the Federal Income Tax data give arbitrary prominenceto the $2,000 line.

Page 28: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

TA

BL

E 5

SUM

MA

RY

TA

BL

E O

F D

IST

RIB

UT

ION

1919

OF

INC

OM

EB

Y S

TA

TE

S

C

Stat

e

Inco

me

ofIn

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e of

non-

agri

cul-

non-

agri

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l per

sons

tura

l per

sons

havi

ng o

ver

havi

ng u

nder

$2,0

00$2

,000

Farm

Farm

ers

Cor

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s

'Iota

l exc

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Tot

alin

g fa

rmer

san

d fa

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rs

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Ver

mon

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land

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isio

n$

103,

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$23

5,74

3$

18,6

76$

73,8

67$

16,2

00$

73,8

5715

4,21

06,

412

16,6

5113

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43,0

1091

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8,97

037

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5,80

01,

139,

071

1,70

8,76

316

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29,2

0314

0,00

014

5,41

425

7,03

52,

686

3,25

326

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323,

710

578,

679

9,79

821

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56,6

00

448,

106

$35

5,56

326

4,53

024

1,46

718

6,47

914

0,28

33,

034,

020

2,98

7,83

443

4,98

842

9,04

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0,38

895

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9

New

Yor

kN

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dk A

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3,72

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74,

593,

156

127,

650

312,

996

313,

800

836,

951

1,37

2,09

119

,108

51,5

5411

2,40

01,

759,

009

3,60

6,39

844

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299,

701

248,

400

9,07

4,85

98,

634,

213

2,39

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42,

321,

442

5,95

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466,

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000

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369,

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855,

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43,6

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157

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1,62

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1,66

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800

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7,95

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57,6

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2,77

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741

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799

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1,36

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2,85

120

3,86

150

0,29

362

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7

Page 29: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

TA

BL

E 5

—C

ontin

ued

Stat

e

Inco

me

of n

on-

agri

cultu

ral

pers

ons

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ngov

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0

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of n

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ral

pers

ons

havi

ngun

der

$2,0

00

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398

0,59

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81,

141,

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406,

477

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091

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387,

907

148,

414

227,

718

143,

114

139,

499

120,

488

193,

917

105,

133

885

,817

498,

123

235,

515

484,

134

398,

742

329,

375

192,

293

405,

275

213,

348

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21,6

38

48,0

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1280

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968

28,9

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S

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537

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1,86

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946,

610

632,

689

351,

526

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3,22

217

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853,

867

554,

675

349,

647

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1624

3,14

315

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810,

226

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967

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252

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199,

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600

663,

742

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946

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9414

4,84

419

,400

771,

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566,

276

384,

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2,20

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400

281,

130

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297

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147,

107

221,

788

232,

324

65,7

91

251,

119

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2441

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29,4

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00

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846,

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1

Paci

fic

Div

isio

n

Page 30: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

THE RESTJLTS 23

III. THE RESULTS

1. New York State with an income of about nine biffion dollars, which isover one-eighth of the total National Income, has by far the largest incomeof any State. It is followed in succession by Pennsylvania, Illinois, Ohio,Massachusetts, California, Michigan, and Texas. At the other end of thelist is Nevada, with an income of less than one hundred million dollars.

2. The Middle Atlantic States (New York, New Jersey and Pennsyl-vania), taken as a group, have over one-fourth of the National Income; andwith the East North Central group and the New England States, havemore than one-half of the total.

3. New York again heads the list of per capita incomes, with $874.Nevada, California, Delaware, Wyoming, Massachusetts, and Washingtonare next with around $800. At the other end of the scale, with per capitaincomes of less than $400 each are Georgia, Kentucky, North Carolina,Arkansas, Tennessee, Mississippi, and Alabama.

4. Taken as a group, the Pacific States have the largest per capita in-come, with $796; next are the Middle Atlantic States, with $783. The percapita income of the East South Central States was less than half theseamounts, or $364.

5. The average income of the gainfully employed shows variations fromthe per capita income due to the wide differences in the character of theemployment of the population in the various States. South Dakota andNew York head the list with just over $2,000; and close to this mark areNebraska, Iowa, Delaware, Illinois, and Wyoming. At the other end ofthe list are Alabama and Mississippi, both just under $900.

6. The Middle Atlantic States have the largest average income ofgainfully employed with $1,886 and the Pacific States have $1,837. At theother end, the East South Central States have the smallest with $979.

7. The per cent of non-agricultural Income in each State received bypersons having incomes over $2,000 per year is difficult to interpret. Thepercentage is high where there are large incomes; but it may also be highowing to a large number of moderate incomes. If we had sufficient data toplot a curve representing the distribution of incomes in each state, suchvariations might be brought out, but this is not feasible with the existingdata. South Dakota shows the highest percentage, having over one-halfof its non-agricultural income received by persons with incomes over$2,000; next in order are Iowa, New York, Nebraska, Maryland, andDelaware. At the other end of the scale are North Carolina, Wisconsin,West Virginia, and Alabama, which show about one-fourth of their non-agricultural incomes received by persons having over $2,000 per annum.

8. Texas has the largest farmers' income, with nearly 900 million dol-

Page 31: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

24 THE DISTRIBUTION OF INCOME BY STATES

Jars. Iowa and Illinois come next, each just above 600 million dollars.Rhode Island farmers are last, with aggregate incomes of three milliondollars.

9. The largest average income of farmers is found in California, with$3,485; next in Nevada, with $3,354. The only other States near the$3,000 mark are Arizona, Iowa, and Nebraska. With the exception ofMontana, which had an abnormally poor year in 1919, the States havingthe lowest averages (all less than $1,000) were Kentucky Tennessee, Con-necticut, Alabama, Florida, Massachusetts, West Virginia, New Hamp-shire, and Rhode Island.

10. Taken as a group, the East North Central and the West NorthCentral States have nearly one-half of the farmers' income of the country.The Middle Atlantic States have only 6 per cent, and New England lessthan two per cent.

11. Farmers' income constitutes over one-half the total State income inNorth Dakota. It is over 40 per cent in South Dakota, South Carolina,Mississippi, Arkansas, Nebraska, and North Carolina. On the other hand,it is less than four per cent in New York, New Jersey, and Connecticut,and less than one per cent in Massachusetts and Rhode Island.

12. Taken as a group, farmers' incomes constitute about one-third of thetotal income in the West South Central, the West North Central, and theEast South Central States. On the other hand, they constitute about one-thirtieth of the total income in New England and the Middle AtlanticStates.

Page 32: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

TA

BL

E

AN

AL

YSI

S O

F IN

CO

ME

BY

ST

AT

ES,

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9

Per

cent

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1.67

624,

391

1,70

634

.04

Page 33: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

TA

BL

E 6

—C

ontin

ue4

Tot

alin

com

e(t

hous

ands

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tion

Jan.

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Per capita

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Per

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come

in th

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Per

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the

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New Mexico

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Utah

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PACIFIC

Was

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$ 17

6,59

199

9,52

9386,929

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655,723

980,596

735,398

1,141,953

406,477

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853,867

810,226

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742

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1,752,204

1,79

8,50

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8

548,

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431,

866

194,402

939,

629

360,350

334,

162

449,

396

77,4

07

1,35

6,62

178

3,38

93,426,861

$792

689

884

429

448

383

437

394

420

392

365

345

351

379

429

534

538

512

604

789

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4.24

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1.37 .4

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2

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24

cr2

'-3 '-3 'I 0 8 LTJ

91,224

603,473

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491,117

895,852

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851,122

829,875

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721,412

634,564

681,

237

681,

439

1,71

8,94

5

214,183

153,

459

81,536

366,458

122,031

130,

579

149,201

37,548

578,470

322,137

1,511,320

$1,9

361,

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1,63

91,

188

1,335

1,095

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11,

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5

1,11

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1,557

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40.4

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39.35

Page 34: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

TA

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E 7

AN

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Page 35: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

TA

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Page 36: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

TA

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Page 37: Distribution of Income by States in 1919 · 2020. 3. 20. · State in the official Statistics of Income, 1919, has been listed. This amount requires adjustment for the present purpose

OF

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